Lordy, lordy, are we in for some fun now. I just had to stop reading to give you all my impressions of Chapters 5 and 6. (Yes, through an editing error I did not mention that Chapter 4 was already included in essay number two.) But I’m the one with OCD so I don’t imagine little things like that will bother those of you who are interested in the Big Picture here. Just wanted to let you know that I do err and I am not ashamed to admit it, unlike my harshest critics. As an aside, let me address one of those criticisms now. The point was nearly beaten senseless that I did not agree with the concept of the Fair Tax and that this was wrong of me because I had not read this particular book. I have, of course, read many other articles on the Fair Tax. This book is not the End All on the subject. Other people much sharper than I, whom I respect, have also weighed in on the subject and detailed points even better than I can. It is through their insight I have formed my opinions. But once the whining began that I had not read the Boortz/Linder book and that anything I said was not to be considered seriously, I decided as a lark, to read it and analyze it to the best of my ability and to entertain other readers here. Frankly, my critics are nowhere near as fair as I am trying to be. I openly admit I dislike this “plan” and I am using this pitifully written book to explain how I see it. The critics should just stop trying to censor me and reply in a point by point assessment of my conclusions, something they have thus far refused to do. All they say is “read the book” rather than actually approach the level with a serious discourse. I also have suggested those who are interested should read the book. Don’t take my word solely on the subject. That would be as foolish as taking the author’s word for it solely. How much more fair can I be? Those of you who are following this thread, PLEASE tell me how you feel about these posts and whether or not you agree and what you think.

Meanwhile, onto the next two chapters. Chapter 5: The Embedded Cost Of Our Tax Code.

OK, without subjecting you to the mindbogglingly boring bunch of numbers inserted into this chapter regarding production (you can look it up yourself) let me just state that the authors have convinced me that although we do not have a European style VAT, the end result is pretty much the same. The authors ramble on listing many industries and the support industries for them. Again, anyone who paid attention in tenth grade already knows this whether or not they choose to recall it at any time post graduation. They also make the statement that “You’ve already learned of the extensive studies showing that the level of embedded federal taxes in the gods and services we purchase averages around 22%”.  Well, I have read that they claim this is so but I haven’t learned anything they say. Only what the authors say. Frankly, it comes down to (Cue The Fixx) one thing leads to another. I have not seen anything that states definitively that embedded taxes are “around” 22% What kind of economist would even say something like that. Economists are very number oriented. And they are extremely precise.  But in manufacturing something or in providing something, yes, other things will be produced and they will be taxed. This is not a big secret.

Next they move on to the Tee shirt industry to represent their beliefs. Start with an 8 dollar Tee shirt, claim that 22% is embedded with federal tax, remove that tax and voila!, suddenly the tee shirt will sell for $6.24 because with competition comes price reductions. They naively believe that this will happen in a relatively short time because the lure of a sudden surge in profit will be tempered by competition undercutting those who do not drop their prices immediately. As I mentioned previously, this flies in the face of past price increases due to “shortages” of components. As I stated long ago, when sugar suffered a shortage, the price of soda shot way up. Anyone ever note a subsequent drop in prices when sugar was in strong supply again and much lower priced? Not me. How about coffee? Remember the great coffee crop disaster and how much prices shot up? Remember how much it was per pound? It’s still not returned to anywhere near those levels. No, the biggest problem with these assumptions is that it never factors in Human Nature. If a business or corporation sees their customers will continue to pay extremely high prices no matter the cost, there is just no incentive to lower the price.

Finally, they move on to the airline industry and the expiration of the federal airline tax. This lead to some price wars after they found pocketing all that extra profit wasn’t nearly as valuable as increasing passenger numbers by lowering the price by the amount of extra tax they no longer had to collect for the government. While I applaud the attempt, frankly, the airline industry is not a very good example of business. I can not recall the last time any of the large airlines (taxed or not) has turned a profit. Some of the smaller ones have but it has nothing to do with federal taxes. The airline industry is a quaint little deserted island in a sea of economics that makes no sense. And although not turning or posting a profit in years, they still manage to stay in business until such time as another merger is perpetrated on them and all their employees are still paid. I am not even going to pretend that I understand this. But let those of you sharper than I explain it.

  Chapter 6 Bringing American Business Back Home 

If anything demonstrates that these two are “cheesing” their minds out, it is this chapter.

The first paragraph includes the sentence “We’ve also detailed the 22 percent embedded taxes that exist in virtually all consumer goods and services”. Well, excuse me, they have mentioned them and made these claims but “detailed” it is not. Again, this particular book is written at a Middle School level to appeal to those who are not Mensa candidates. No problem there but as a candidate who has passed Mensa exams I find it difficult to get past the vagueness of many of the statements. And no, I never joined Mensa because I just don’t join any group. (See popular Groucho Marx quote.) I still do Mensa puzzles for fun.

Coincidentally, the author drags in the Daimler Chrysler merger and attempts to scam us with the statement that corporate headquarters are (or were) in Stuttgart, Germany because of better tax conditions. This is completely false. My brother works for Chrysler and has for 14 years. He was there when they merged and he is there now when Daimler has left the union. He spent 18 months in Stuttgart bringing the Daimler group up to speed on Katia technology. Daimler had been looking to improve there bottom line. Chrysler needed new financial infusion. Therein became the union. Corporate headquarters remained in Stuttgart because they brought cash and were considered the dominant partner because of it. That’s why they got to choose where headquarters would be. It had nothing to do with taxes. Most of what the authors have written here is Blowing Smoke.

They also attempt to make us believe that there has been a major exodus of fleeing corporate tycoons to foreign countries just to avoid taxes. Yes, I’m sure some may have been some, but really, corporate executives are just as immune to federal taxes as their businesses. They just get higher salaries to offset the taxes and perks to be used at a later time such as stock options. To this end, the authors would have us believe that doing away with corporate taxes would cause jobs farmed out to the third world to come flooding back. Uhuh, no way. Yes, they might save a little by way of taxes but they could never replace third world workers in sweatshops from Mexico to Viet Nam on taxes alone. Those workers make so little in salary and even less in benefits that no treasonous corporation utilizing sweatshops will deign to give them up to employ American workers at higher salaries and benefits. Just not gonna happen. I have sent my brother an e-mail asking for more information on what exactly Chrylser is doing now. You will be amazed to know that their manufacturing facilities are actually making some Volks Wagons. I will add more about this when I hear from him.

Personal aside: Currently, as many of you recall, I have a father with terminal cancer. I have been spending most of my time here in West Palm Beach for the past few weeks and will continue to do so. To that end, let me thank you guys for the entertainment in your blogs. It helps more than you can know.