What?!!!
He's talking about relieving the middle class's "economic anxiety" and wonders how important it is for people to keep the money they earn???
Last time I checked, it's very important.
Not only is taxing legalized theft, it can hurt the people Mr. Leonhardt seems to be concerned for: the people who need the money.
He talks about how the tax rates on the rich have been falling in recent history... but he even points out that they pay (all together) at a tax rate of 30%. Yes, you can say "well they don't need it," but I stand by my statement that taxing (read: taking money from one person to give it to another) is legalized theft.
Don't get me wrong- I know we need taxes for the country to survive... especially for things, such as defense, that benefit everyone. However, I think it's a ridiculous argument to say that we are spending too much on the war and not enough on social programs. This is based entirely on the fact that the defense of this country (ex: the war- whether you agree with it or not) benefits everyone. (I know many of you will want to bring up stories of soldiers and Iraqi citizens dying because of an "illegal" war- which it is not, but that's for another day, however- you may be forgetting that Pres. Bush has probably stopped many attacks on this country... attacks we don't know about for our own sake). So, like or not, President Bush is our commander-in-chief and therefore he gets to decide what is best for our country in terms of defense (which, I emphasize, benefits everyone). You may not think he knows what he's doing and you may even think that he is crazy, but he's still the re-elected President. However, federal funding for social programs only benefits a certain segment of the population.
Mr. Leonhardt claims that the Medicare budget is a "much bigger" problem than social security. Granted, Medicare is facing financial a huge financial crisis, but doesn't he know that the SS "money" is actually a bunch of IOU's in a warehouse? The Social Security system faces a $13.4 trillion shortfall- a number that can only grow larger because of the "pay as you go" system. Basically- my generation will most likely never see what the government has taken out of our paychecks for social security. So we're paying for other people to retire yet we have no help from the government. Great. (I could go on and on... but I'll stop here) He also says that the Medicare budget problem "could be held in check if the government figured out how to say no to some expensive medical procedures." Umm... isn't it the "expensive medical procedures" that most people need help paying for?
Just to clarify- I'm not against helping people. I myself give blood very often, I've volunteered with the United Cerebral Palsy organization, I've volunteered for Meals-on-Wheels over summers and on Thanksgiving, and the list can continue. I just don't think the government has the right to dictate what cause my money helps to further. Not to mention that most of the federal social programs have serious problems.
In an ideal world- social government programs would help the people that really, desperately need help. In the real world, the people who need the help don't get it or they abuse the system. (Trust me, I have many stories of this- like people with children spending the money they are given by social programs to fix their un-livable houses to go on trips to Disney World. So basically- the money that is taken from our pockets is given to people who blow it on stuff they DON'T need and then expect more money from us ... does this sound right to you?)
Oh, and this would be a good time to say that I don't like the FairTax idea.
I like this one.
1 comment:
The Flat tax ends up being a VAT. Witness:
(Paraphrased) Reply by Dan R Mastromarco (LL.M., Taxation, Georgetown, principal in the Argus Group, adjunct professor at the University of Maryland, International Management Program, and research consultant to Americans for Fair Taxation - FairTax.org) to:
"A National Sales Tax Doesn’t Add Up" by Bruce Bartlett, December 29, 1999
Many engaged in true tax reform find Bartlett-type attacks exasperating, if not embarrassing. I'd like to convey perspective of both flat taxers and sales taxers who believe that such attacks are counterproductive, but first provide some political history by which to frame said perspectives.
For years Conservatives have posited that a VAT is bad policy (when liberals were discussing it), fearing it would become additional to an income tax (it was called a "money machine"). Circa 1980, conservative intellectuals touted Hall-Rabushka "subtraction method"[ H-R ] VAT which taxed business value added at the business side and labor value added at the labor side. Unlike European VATs (identical in scope), H-R became favorite of Dick Armey and Steve Forbes. It eliminated steeply progressive tax rates and tax on savings. Because of the prior VAT criticisms, H-R was packaged as the "flat tax" and is sold as an income tax to this day, rather than the VAT that its DNA characterizes it as being.
Some conservative commentators have called for the repeal of the 16th Amendment and for the adoption of the flat tax, (despite the fact that it is styled as a direct tax and could not be adopted with such repeal). Mr. Bartlett has called the national sales tax [ie, the FairTax] a VAT (which it isn't), castigated VATs as evil, and has said that sales taxes have become VATs in Europe (which they didn't). In the next breath, he "throws his arms around" the flat tax (which is a VAT). He quotes Bill Gale that the [FairTax] would have to be imposed at 60 percent, but glaringly fails to recognize that if the two bases are the same, he would have to impose that rate for the flat tax to be revenue neutral. In truth, all economists know that the two plans differ NOT in economic effect or base, but in administration.
An income tax taxes savings and investment multiple times. Both flat tax and FairTax are neutral as to savings and investment, tax income only once, and are both consumption taxes. Both are single rate taxes, have nearly the same base, and would improve the U.S. standard of living. Neither redistributes wealth.
While some have even suggested that hey are the same plans under different names, the flat tax taxes value added at each stage in the production process, but the FairTax prefers to tax it when it is added up at the end and eliminate the need to make everyone a taxpayer and collector.
Substantive commonalities between the flat tax and FairTax doesn't mean that there are NO key political and policy distinctions that could be exploited in pitting one against the other. If FairTax supporters wanted to retaliate in response to the Bartlett-type critique, they would have much material with which to honestly do so:
• The flat tax will make small firms and farmers pay the tax even if they have no profit
• The flat tax is opposed by many small business groups
• The flat taxers implicitly support big government by disguising even more of the overall tax burden as the current law
• The flat tax has been kicking around for nearly 20 years
• The flat tax makes everyone a taxpayer and collector, while the FairTax exempts 115 million filers [2000 figure] from ever having to deal with the IRS
• The flat tax is regressive, but the FairTax would enable everyone to keep his full paycheck.
• The flat tax has not only stalled, it has lost public and Congressional support.
• The FairTax is instantly understood, while even some proponents of the flat tax don’t understand it
• There are no transition rules developed for the flat tax and they would be very difficult to craft
• The flat tax taxes exports and relieves imports from tax
• The flat tax confuses tax reform with temporary tax reduction and makes both twice as hard
• The flat tax retains the entire income tax apparatus which erodes as quickly as you can say, “tax bill”
FairTaxers could advance these truthful points without resorting to bigotry associated with a cultic religious organization. However, for the most part, FairTax supporters have chosen not to attack the flat tax, but rather accentuate the commonalities between the plans - despite the above-noted differences. The reason is that, in the battle for tax reform, the real enemy is our current system.
Income tax advocates look down upon the articles of Bruce Bartlett with smug chortling, as Bruce is doing their work for them. The IRS and the liberals who want an income tax to ensure (1) taxes can be raised without the American people knowing it, and (2) wealth can be redistributed from the middle class to the poor, do not even need to fight us - we're killing ourselves!
Perhaps Mr. Bartlett believes that the flat tax will help elect Republicans, effect tax reform, and provide tax cuts; however, the real effect of his criticism is to divide conservatives, to delay serious national consideration of tax reform, and to fertilize the roots of the income tax.
* (Source)
Alternatively, what would a simplified, well-organized FairTax America look like in terms of its equity to current income groups?
Prices after FairTax passage would look similar to prices before FairTax - not "30% higher" as opponents contend - competition would see to it. So, the FairTax rate (figured as an income-tax-rate-non-comparative, sales tax) on new items would be 29.85% (on the new, reduced cost of items because business isn't taxed under FairTax - thus lowering retail prices by 20% to 30%), or 23% of the "tax inclusive" price tag - this is the way INCOME TAX is figured (parts of the total dollar).
The effective tax rate percentages, that different income groups would pay under the FairTax, are calculated by crediting the monthly "prebate" (advance rebate of projected tax on necessities) against total monthly spending of citizen families (1 member and greater, Dept. of HHS poverty-level data; a single person receiving ~$200/mo, a family of four, ~$500/mo, in addition to working earners receiving paychecks with no Federal deductions) Prof.'s Kotlikoff and Rapson (10/06) concluded,
"...the FairTax imposes much lower average taxes on working-age households than does the current system. The FairTax broadens the tax base from what is now primarily a system of labor income taxation to a system that taxes, albeit indirectly, both labor income and existing wealth. By including existing wealth in the effective tax base, much of which is owned by rich and middle-class elderly households, the FairTax is able to tax labor income at a lower effective rate and, thereby, lower the average lifetime tax rates facing working-age Americans.
"Consider, as an example, a single household age 30 earning $50,000. The household’s average tax rate under the current system is 21.1 percent. It’s 13.5 percent under the FairTax. Since the FairTax would preserve the purchasing power of Social Security benefits and also provide a tax rebate, older low-income workers who will live primarily or exclusively on Social Security would be better off. As an example, the average remaining lifetime tax rate for an age 60 married couple with $20,000 of earnings falls from its current value of 7.2 percent to -11.0 percent under the FairTax. As another example, compare the current 24.0 percent remaining lifetime average tax rate of a married age 45 couple with $100,000 in earnings to the 14.7 percent rate that arises under the FairTax."
Further, per Jokischa and Kotlikoff (circa 2006?) ...
"...once one moves to generations postdating the baby boomers there are positive welfare gains for all income groups in each cohort. Under a 23 percent FairTax policy, the poorest members of the generation born in 1990 enjoy a 13.5 percent welfare gain. Their middle-class and rich contemporaries experience 5 and 2 percent welfare gains, respectively. The welfare gains are largest for future generations. Take the cohort born in 2030. The poorest members of this cohort enjoy a huge 26 percent improvement in their well-being. For middle class members of this birth group, there's a 12 percent welfare gain. And for the richest members of the group, the gain is 5 percent."
At the end of the 18th Century, America proclaimed its independence from the tax slavery of Britain, and codified our soverignty, self-rule and liberty, as citizens, in the Constitution and Bill of Rights. In 1913, the wealthy elite conspired with politicians to persuade an elitist president (a former president of Princeton University) to buy into a scheme to again make us slaves by signing the Federal Reserve and the Income Tax acts. The Fed would print money, at interest, and the income tax would ultimately be the vehicle to ensure its payment. It would be the bankers who would pat themselves on the back.
President Wilson would later say ( 3:42 into Russo video), "I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is now controlled by a system of credit. We are no longer a government of free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men."
Many Americans will refuse to work harder, today, because of the increased tax bite that will be taken from their paychecks. If you ask any worker about it, more than likely, you'll receive a remark that expresses frustration, powerlessness, and the feeling like politicians are in control. Will the FairTax movement succeed in changing this tax slave / victim psychology? Do we, as individuals, have the ability to influence Congress to relinquish the power they've usurped from We, The People, freeholders engaged in free-enterprise?
Simply put, "If it's to be, the FairTax effort requires you and me." Based on my own research, I believe the tax code must be scrapped. We must bring about a system where government is paid the way America's working men and women are paid - when, and because, something is sold. My actions? Setting up recurring donations to Mike Huckabee's organization (every two weeks through my Bill Pay service) and a monthly credit card debit to the FairTax.org. Additionally, I've voluntarily incurred opportunity costs to free up time sufficient to review blogs and articles, and to write and post comments such as this one.
We can expect our current slavemasters to scoff, "The FairTax is going nowhere." They do not believe we're capable of removing our shackles because it's all most of us have ever known.
Working together, we're on the way to making April 15th just another pretty Spring day.
(Permission is granted to reproduce any of my posts, in whole or part. - Ian)
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