Fair Tax Fandango (Part 4)

And now the denouement

Chapter 7 is roughly 2 ½ pages long. In what we have now come to learn is the author’s style of enhanced vagueness we are introduced to “The Birth Of The Fair Tax”. Essentially, there are no names given. I find it curious that as evolutionary as a completely new way of funding government and its services as this scheme is supposed to be, no one wants to take credit for it. The proponents mentioned are shadowy and anonymous. To me it sounds like Ken Lay, Jeffrey Skilling and the board of Enron.

 Chapter 8 claims to explain the Fair Tax. This is supposed to be the heart of the matter, Unfortunately it explains nothing. It makes statements as to how all forms of taxation will be eliminated. It claims that all of the current expenditures will be covered just as efficiently with a 23% sales tax. Now, if this were true, I might embrace the plan. But ask yourself this: If corporations are currently paying taxes out of an embedded “tax” (for lack of a better word) and that tax goes to the government, and these corporate taxes replaced by  sales tax of equal percentage, why are we paying social security tax, FICA, income, medicare et al on top of what is being forwarded by corporations? Doesn’t this sound as if all corporate taxes are NOT enough to fund everything the government does? The authors claim that the Fair Tax will be revenue neutral. Since we are running deficits and have been for most of this country’s existence, I have to ask “What Is The Point”? If I were to be in charge of overhauling funding for the government and social services my first priority would be to improve what we do, not merely maintain it as it is. The authors do not address this concept at all.  Essentially, this scheme not only doesn’t improve how government functions but pointedly does not even WANT to improve things.  Chapter 9 addresses easily the most foolish part of this problem. Prebates. Maybe I am somewhat jaded. Maybe I enjoyed Rube Goldberg’s inventions more than I should but here it is in a nutshell. The government (whom many if not the majority distrusts on anything) gets to define, as they do now, who lives in poverty. The government will tax absolutely everything under the sun including your food, your medicine your doctor visits etc… Anything you can imagine. And at a start off rate of 23%. Sounds marvelous, doesn’t it? Then, to make it “Fair” this same money grubbing entity will decide who is in poverty and by how much and how much they should be entitled to spend and issue them a check accordingly. Depending on how poor these people believe you to be, in true Stalinist fashion, they will send you your own money to cover the new cost. So, here’s how it works. You give them tax money. They decide how much you need to cover the tax cost. That is how much you are allowed to purchase. Anything else is according to them NOT a necessity. Doesn’t sound like a representative republic to me. Then you give them back the very same amount of money so next month they can send it to you again to spend on subsequent necessities. What is simpler? This money daisy chain or maybe just DON’T TAX MY FOOD AND MEDICINE! How freaking callous can a government be in wanting to tax your very food? How about heart medication? Does a doctor at an accident scene who offers his services to an injured man now file to pay tax on his service? Can’t let that tax payment get away. Big Government needs that 23 cents a lot more than that doctor. This is as unconscionable as the two intellectually vapid bloggers who refuse to engage in this discussion somewhere above simply name calling. So, if a prebate is a key to fairness, we are in BIG trouble should this current idea ever see light of day.  One of the points raised was about how effectively these prebates would be sent out. Erroneously, my statement was misinterpreted by the Borg Boys and the reply was that the post office does a marvelous job with social security checks so they can do that. Well, that wasn’t what I was talking about which I why reading comprehension is so important here. What I meant was, how large a government bureaucracy will we need to do all the processing? How much more will that cost? What will the structure entail? None of these questions are addressed in the book.  Chapter 10 attempts to address the Underground and Offshore Economy. Reagan did this when he lowered the highest tax rates from 70 to 29%. Back then this was applauded as a great success, except, now apparently, it wasn’t. I don’t doubt we have an underground economy but I also don’t believe it’s that big a deal. After all, people who may evade federal taxation generally can not escape local sales tax. Someone once wrote that Americans are duty bound to avoid taxation but not evade taxation. I agree with that.  As for offshore accounts, well this is simply the rich wanting to retain the wealth they have earned no matter how one defines “earned”. I certainly have no issue with that either. One of the enticing and positive claims by the fair tax crowd is that wealth will only be taxed once unlike what we have now. Once having been taxed on earnings, that wealth should subsequently be left alone. Big Government doesn’t see it that way. No matter what one does with that money, it gets taxed again and again. Unfortunately, the authors have the naive belief that should all taxes be abolished but this national sales tax, the offshore money will come home. Maybe, but not definitively. It would all depend on the prevailing interest rates. If offshore banks are paying higher interest rates than domestic banks, that cash ain’t goin’ no where boys. To me, and this is only my view, the major flaw in this whole thing is the author’s inability to factor in Human Nature. And this shows up over and over again. As a matter of fact the only nod to Human Nature they allow for is their deceptive claim that most Americans cheat on their income taxes as they now exist. Now as most of you know, I am nowhere near a Pollyanna but I have a lot more faith in my fellow citizens than these two will ever accept. I can’t categorize their statement as a lie but it is certainly only a product of their own jaded outlook on others. They really are very down on the average everyday American if they believe most of us are liars and cheats.  Chapter 11 goes on to predict that adopting this plan will cause a well of  new jobs created as corporations once again set up shop here in this country. They do not explain why this is so. Again, they do not grasp Human Nature. The heads of these corporations having farmed jobs out to third world countries and now paying next to nothing in production cost sand health benefits have absolutely NO incentive to bring these jobs back. Fuhgeddaboutit! They are Gone With The Wind my friends. They also claim that prices will come down. Maybe not immediately (maybe?) but eventually. Only to go up again later from inflation. But as in soft drinks, I sincerely doubt it.  Chapter 12 Where Will The Opposition Come From?  Aside from people with a working cerebellum? Apparently, according to the authors, lobbyists. Probably true. Who cares? There is always opposition to any idea. Heck, Jesus Christ was “opposed” onto a cross because of the idea that people should love one another. Others opposed, IRS employees. Yup, no argument here. And you know what? I, too would like to see them gone or at least significantly reduced but as far as a problem component of government, I would prefer to see a reduction in Congressmen. They are doing far more damage to this country than the IRS.  Chapter 13 Social Security and Medicare. Astoundingly, (and the cause of heart arrhythmia in the Borg Boys is only a pleasant side effect) I have to say almost all of this chapter is true and I only find fault with the assertion that seniors will be better off. I won’t even argue the point because from what I see, better off is negligible but it could be there. I have no personal insight into either program so unlike the Borg I will not venture an opinion. How Fair can one be?  Chapter 14. Finally,we come to the crux of the whole book. It boils down to this. The IRS publicly humiliated Neal Boortz many years ago and he will do anything to get revenge. Was he mistreated? If the story related in this book is true, absolutely. Is he alone? Absolutely not. Should something be done to redress this? Yes. Will it? Nope, government will not ever apologize for its malfeasance and it can not be compelled to do so which speaks volumes on the character of the people who so completely embrace the government mindset. I am not including those who work in government who only do so for a paycheck. It is those who so thoroughly believe in thinking inside the box and one size fits all mentality I condemn.  The final chapter is a Q & A. I won’t review this as the questions are rather pedestrian and do not cover what I would ask and I have no idea that anyone reading this will be interested any more than I am. I would say if you have any other questions, go to the library and check the book out for yourself. Oh, and you will be amused at the irony. Although the book is entitled The Fair Tax Book, it does not contain the Fair Tax Plan. Only what they make statements about. Nothing is provided as a proof of theorem. It’s almost like listening to a talk show. So, to summarize, the plan really is a good start to addressing the lunacy of the current tax code in the sense that the lunacy should be stopped.  Sadly, they also state that he plan is not perfect. Well excuse me, but if this concept has been discussed for over 20 years as the authors claim, I would have expected a perfect plan by now. This just emphasizes the sloppy job done to date on the plan itself. Even the government managed to put a man on the moon from scratch in 9 years. How hard can economics be? But when it comes to fairness, it is my belief, and my belief only (I am not even trying to persuade anyone to agree with me) that a simple flat tax is the best way to go. I would make it ten percent and I would also want government spending indexed to revenue collected. (A balanced budget and requisite amendment to adhere to it. There is way too much personal wealth being amassed by elected official both in salary and perks at our expense and no benefit to those of us footing the bill.) Everyone would be required to pay it. No exceptions for anyone. If one wishes to participate in the great American experiment they should bear some of the cost. If someone is physically unable in anyway to participate then an exception and subsidy would be made because we are a generous and caring people mostly. We have those who are just the opposite right here on the blog but fortunately they are the aberration in this nation.I hope this has been informative for those of you interested in the topic. I wish there had been a lot more participation. Research this yourself. Knowledge is power.