Topic: Ron Paul
Tax Rebate? Try Welfare Check! How does one get a rebate when they haven't paid any taxes? Just ask Bush and Pelosi.by EJ Moosa
(libertarian)
Thursday, January 24, 2008
The deal has been struck. $300 to $1200 dollar tax rebates are coming your way. The only real truth in that statement is the dollar amounts. If you do not earn too much that is. But for many receiving these "rebates" the reality is they are Federal Welfare Checks.
In order to make this deal sound fair to the rest of us, workers would have to have "earned" at least $3,000 to collect the $300 rebate. But workers that "earn" that amount do not pay any federal income taxes. A scam pure and simple.
A single person has to earn at least $5150 before paying the first penny of federal income tax.
Imagine if I went to Best Buy and asked for the in-store instant rebate on some item they advertised. Would they laugh me out of the store? Would they hand over the rebate to me even though I did not purchase the item? If I forced them to give it to me, I would be stealing. Certainly I would not be entitled to the rebate.
Yet our fine leadership in this country seems to miss this point entirely. We continue to take as many people off the tax rolls as possible while promising more and more services.
During the upcoming debates, only one candidate is destined to point out this outright lie: Ron Paul. The rest will ponder whether or not we did enough.
Federal welfare is not the way to go. Federal welfare needs to be called what it is and not what they wish it to be: A rebate.
We continue to get taken to the cleaners, and the language being used to do it continues to be redefined.
Once we get the Federal Income Tax abolished, this sort of sham will not be able to occur.
And for you Fair Tax fans I ask you this: What would have been done in this circumstance under the Fair Tax? Bigger Prebate checks for selected citizens? Once again that would just be Federal Welfare.
Authors Note: Watching the evening news, I have learned that the new rebate numbers are even larger than I mentioned, and that earning income is no longer a requirement for the rebate. I will update tomorrow as soon as I have recovered from the shock of what I heard as the justifications for all of this.
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Since you ask what FairTaxers think would happen if we were already under the system I will answer.
First, I reject the premise. I don't think we would ever get to this point because the FairTax will greatly improve our economy over the long haul. If however a stimulus is needed under the FairTax system, I think a sales tax holiday would be appropriate. Here in Florida, there are two such holidays most years--one in the fall for back-to-school type things and one in early summer for hurricane supplies.
I could certainly envision a week-long sales tax holiday for anything with the made-in-America label.
Since we're talking about the "stimulus package" the Washington panderers are preparing, I would suggest one that does some of what the FairTax will do. First and almost immediately declare a one-month suspension of payroll taxes for employers and employees. It would give legal workers an immediate (albeit temporary) 7.5% raise and it would give honest employers a significant bump in capital. Couple that with what you seem to be advocating--a slightly smaller rebate check only to families that actually paid income tax if things don't pick up after step one.
I can't remember your objections to the fairtax. What are they again? To your question, however, we will not need these pathetic little political "stimulus" efforts. The economy is expected to grow 10-20% the very first year under the fairtax.
My main objection is that the FairTax does nothing to curb spending. Second, it conditions every American to look forward to receiving a Prebate check.
Third, I can promise you that people in different areas of the country will get different 'prebate" amounts. Cost of living differences you know? And as soon as they can figure out a means testing for the prebate, they will apply one. Net worth comes easily to my mind.
We are not in a recession now yet the Federal Government wants to do more. Recessions are what removes excesses from our economy. Here we have the government redefining what hard times are and attempting to "fix" it. So even if we have great growth, the government can always redefine what tough times are and "fix" it.
The sad part of all this is that it does not take a Doctor to see that this is just a band-aid placed over a gaping compound fracture, doing little more than making the masses feel better.
Will we also have to report these rebates as income on our 2008 tax returns, like we did the last time? Sure, I could use the rebate, but I'd rather have a real, clear-cut, solution to the whole problem. Stability and fiscal accountability, is this too much to ask?
Correct me if Im wrong. This whole mess started with greedy mortgage lenders who approved loans to individual well beyond their means (ie very risky investment by the bank and very dumb move by the individual). A free market solution would require those individuals who made high risk investments to lose their shirts - effectively providing incentive for others not to act in a similar way in the future. This requires a hit to many major financial institutions, which may well bring about a temporary recession, but smart CEOs would never allow those practices in the future.
Our governments response? Tens of billions in bailouts to the same financial institutions which print our money at whim, and a few free happymeals to every American for no apparent reason. Blatant pandering before the election IMHO.
I do not actually advocate any rebates. What I have been attempting to do through this story and others like it is to highlight the hijacking of the language used so that we cannot effectively argue against things. As the language used continues to be used for new purposes (rebate vs. welfare), we reinforce the concepts by allowing them to be used. If some people are getting federal welfare versus a rebate, we must call it that.
For me even the idea of "tax breaks for the wealthy" implies that it is the goevernment's money first. It isn't.
Yup, with the FairTax no "stimulus" would be needed.
Consider that under the current tax scheme, if you are in the 25% tax bracket (folks earning between $26k and $78k) you also pay 7.6% FICA for a total take of almost 33%... thats one third of your earnings. You keep the other two thirds. So when you buy that gallon of gas, or gallon of milk for $3.00 you first must earn $4.50. If you want to make your $600 mortgage or rent payment, you must first earn $900. If the FairTax was in effect, a three dollar price costs only three dollars in earnings.
Sure Ron Paul's pie in the sky abolision of the income tax is a great idea. But how much support does he have for that idea in congress? On the other hand, the FairTax (HR25/S1025) has over SIX DOZEN cosponsors in congress.
So get real boys... support the FairTax... and once the amount of taxes that you pay is clearly stated on your retail receipt, then we can work on reducing or eliminating the tax.
Edisto Joe
To DavidFL10 - brilliant. I hadn't even thought of this as another advantage to the Fair Tax - if the fed either collects too much, or wants to "stimulate" the economy (as with today's meddling), the mechanism is so simple - just have a tax holiday like you posted. No muss, no fuss, no checks to cut...
I'm hoping tonight (15 minutes) Huckabee hammers that detaxing businesses completely is the best stimulus the economy could ever have. I think tonight is make or break it for Huckabee
Jeff - I think Huckabee got the job done. Although when Tim Russert told him that the FairTax couldn't pass congress, I was hoping Huckabee would tell him that the FairTax (HR25) is an existing bill currently in Charlie Rangle's Ways & Means Committee and has over SIX DOZEN cosponsors.
He then should have asked Russert how many cosponsors Hillary & Obama have for THEIR tax reform proposals and then see how probably their ideas would be.
EJ, Your comment about the FairTax prebate being different across the country is somewhat true. There will be 3 different prebates, with different poverty levels for Alaska and Hawaii. The "lower 48" would all have the same rate.
Edisto - Tim Russert was WAY out of line and Huckabee did a good (not great) job of overriding him. Why didn't Russert tell Giuliani that his plan to reduce corporate taxes from 35% to 25% is only a pipe dream? I wish instead of Huckabee saying he wants to eliminate the IRS he would say he wants to get rid of the income tax and replace it with the Fair Tax. Eliminating the IRS comes with the elimination of the income tax and instituting the Fair Tax, but it shouldn't be the "objective".
I'm also constantly amazed that reporters report on "Huckabee's plan" without even understanding that the Fair Tax was/is a bill in Congress long before Huckabee decided to support it. Reporters don't even Google "fair tax", reporting that this is an "idea/plan" of Huckabee.
Even if Huckabee isn't our next President, the awareness of the Fair Tax is at an all time high. As our economy sinks lower and lower it will be evident within Congress that the BEST fix is to completely detax businesses. Giuliani's 35% to 25% is like a bandaid, and does nothing to eliminate compliance costs.
A consumption tax could garner more support if services/labor were taxed at a lower rate than new products. More US dollars would remain in domestic circulation putting Americans to work in service and repair, and less would be sent overseas to purchase cheap consumer goods. Such a plan would appeal to the labor unions, the environmentalists and the economists.
Instead of borrowing money from China to pay a "rebate" to American taxpayers, the FairTax makes America THE "offshore" investment magnet for the world. We have lost more than 12 trillion dollars of American capital to offshore locations in recent years. That money, jobs and a whole lot more capital will flow here when we have eliminated the corporate income tax, capital gains taxes and personal income taxes.
And as long as were counting wasted money, tax preparations, hours spent on returns, tax lawyers and accountants cost our economy $265 billion annually. To that figure add the $350 billion the income tax system comes up short on taxed owed every year. My goodness, that wasted money is coming close to the size of a stimulus package.
Our tax system is damaging the American economy because the tax writing process is not about the economy--or taxpayers. It is all about Members of Congress having the power to reward friends and contributors, punish opponents and inept attempts to manipulate citizen behavoir through the tax code. Add to that the profit motive of tax lobbyists and you end up with 67,500 pages of tax regulations and a system that rewards debt over wealth, encourages cheating and mistakes and has enough gimmicks to feed an army of academicians, tax lawyers and lobbyists who study the arcania. For Pete's sake, we've turned the CPA profession into seeing eye dogs leading us through the maze of tax regulations instead of a profession skilled at helping us grow our savings and investments.
Can the American people escape being victimized by the self-interest of Congress and force enactment of the FairTax? The question is really whether the citizery can still direct the government, as the Founding Fathers envisioned.
In this, the FairTax idea, now widely distorted by those who profit from the income tax system, is more than a better tax system--it is a test of whether our form of Democracy still works hundreds of years after our first tax revolution.
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