The Question? What will not Curb Spending by the Federal Government by EJ Moosa
(libertarian)
Wednesday, January 2, 2008
In case you have not noticed, the Federal Government today spends more than it takes in. Under the Fair Tax, there is simply no mechanism that forces a balanced budget.
While the Fair Tax does address many of the problems we have with the IRS, it is completely avoiding the main issue needed to address any taxing enviromnent: The reasons taxes are collected(To Spend!).
Adopting the Fair Tax will be like going on a diet and changing what you eat, but not the calories consumed. For a while you will feel better about the effort you are making, but your waistline is likely to continue to expand.
The real answer will only be achieved when we have the discipline to curb spending. Until then, we are only fooling ourselves. Our cost of compliance may drop, but the vultures at the feeding trough of taxation will believe that even some of that money should be theirs for the spending, since they are saving it for us.
We cannot continue to have a population that demands more and more from government. That must change.
Anyone who thinks the government is going to send a check out to each American each month as a prebate on their taxes, and that this mechanism will not be subject to manipulation to help those "less fortunate" need to get their heads out of the sand.
Needs testing would be a great first step for the prebate check manipulation by those well -meaning politicians. Then we can vary the prebate by the region of the nation. After all, some items are more expensive in certain regions of the country, right?
The road to hell is paved with good intentions. The Fair Tax people have good intentions. But the way it could be misused while never curbing spending are manyfold.
I encourage you Fairtaxers to think carefully before you leap, and look at resolivng the real issue first: Out of Control Spending. If we are going to put forth an effort to make changes in our nation, would it not be better to put forth that effort towards something that will make a real difference?
The FairTax book states that the Fair Tax will be revenue neutral. If we believe we are already collecting too much in taxes, and spending even more in future taxes, please tell me how revenue neutral is better. It seems to me it is the same as it was before switching to the FairTax.
By eliminating the cost of compliance, and extracting the same level of revenues as we collect today, do we not run the risk of taking the pain out of our system while still allowing the overspenders access to our wallets? Is the process by which our taxes are collected the only issue we have with this process? I do not believe that to be the case.
The pain of the system we currently have needs to stay in place until we make it our objective to eliminate the real cause of our misery. That misery begins with the spending. Leave us with a system that causes no pain in compliance, and we will become numb to it. We will not curb spending. In fact, as we detach the spending and the pain of collection of taxes, I would wager we will achieve the opposite of what we hoped for: Higher spending by the Federal Government.
If the solution is as painless as proponents of the FairTax tell us it is, you better double check to see what it is they are providing the solution for. It certainly is not for what really ails us.
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The problem with our current tax philosophy is that it tries to hide as many taxes and the cost of government from the people paying the taxes. For example, taxes on corporations aren't paid by the corporation--they're rolled into the cost of the products that the corporation produces and paid for by the people who buy the products. ALL taxes are paid by individuals, whether we see them directly or not. The beauty of the FairTax is that it exposes the cost of government. Every time we buy a loaf of bread, a gallon of milk, or a new car, we'll all be forced to recognize that 23% that is going to the Feds.
No, the FairTax doesn't do anything to reduce spending directly, but when people realize how much money they're spending to support the largess of government, hopefully we'll see a groundswell of revolt against government spending and the politicians who are spending it. Why else do you think that the liberals and most politicians are so against the FairTax--it exposes them and their spending decisions.
Dr. Paul has pointed out that all present personal income tax revenue is unneccesary if we merely roll back federal spending to the level of only a decade or less ago. He has a clear plan for doing so. Who among us can cogently argue such a rollback to be infeasible? Let's keep our eye on the prize, less government, not how to better pay for the government we've got.
Thanks for a good response to the recent Armstrong article on the chart! :)
Posted By: Jahfre Fire Eater
Date: 2008-01-02 15:59:18
I think any tax reform is of little consequence until we first reduce government drastically. Once we have scaled government back to its constitutionally defined limits, funding it will be far easir. Until then, discussing tax reform is just an academic and political distraction.
Ideally, we could limit the federal government to the point that we could support it voluntarily. We have an all volunteer Army, we could move to an all volunteer tax system. Warren Buffet feels guilty that he doesn't pay enough taxes, he would be a great volunteer to have. Bill Gates too. If a thousand of their buddies all chipped in and paid for our federal government ever year that would be fine by me.
Seriously though, I think any kind of federal or national tax system should be minimal, per the Constitution. States should collect taxes and dole them to the federal level. In the short term, nothing should be done to the tax system until we have reduced the federal government.
If the Fair Tax people have good intentions, why do they lie about the tax being 23% when it is actually 30%? Here's their deal: A tax of $30 is added to a price tag of $100 for a total of $130. They say the tax is 23% because $30 is 23% of $130. That is some convoluted math they are using.
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There are other reasons to be against the Fair Tax:
The root cause is spending which is not addressed in any of the national sales tax proposals. As Jeff points out the proponents are hoping an exposed tax will cause an uproar for reduced spending. At one point I thought it would as well yet now find myself of the belief we must attack spending before tax changes. I support ending the IRS, income taxation and the 16th Amendment immediately upon reducing government to its Constitutional level, as Ron Paul proposes. There will be no need for the Fair Tax Act and April 15th really will be a nice Spring day once again. However, it will play havoc on the Federal Reserve System...we should probably end that at the same time as the other mistakes giving politicians an excuse to have an income tax. ;0)
"Reports last week from two nonprofit groups should serve as a wake-up call to Americans to start agitating for tax reform . . .
"On Monday, the Competitive Enterprise Institute reported that the cost to consumers of complying with federal regulations exceeded $1 trillion in 2006 . . . almost 10 percent of the nation's gross domestic product. It's nearly half the amount of government spending.
"Even more worrisome, the cost of complying with these multitudinous regulations exceeds the amount of individual income tax paid in 2006, about $998 billion, as well as corporate incomes taxes of $277 billion.
"According to the Washington, DC-based advocacy group [ Americans for Tax Reform ], the average American had to work through July 11 this year just to pay all federal, state and local taxes, as well as regulatory costs including workers' compensation and unemployment benefits.
"Congress should take one of two paths: Either cut tax rates and government spending drastically, or adopt the FairTax, an innovative proposal that would involve abolishing the Internal Revenue Service and its income tax and replacing it with a simple national sales tax."
--(End excerpts)--
. . . The U.S. income tax system and the U.S. economy are inter-related, and are in DIRE trouble. If we, the citizens of these United States, do not act aggressively to spread the FairTax plan with family, friends and associates - our "nest eggs" stand to be devastated through a coming economic meltdown (Summary with podcast: "Laurence J. Kotlikoff on Long-Term Fiscal Problems in the U.S.").
Politicians are putting demogoguery and pandering above responsible governing - and they're able to do it because Americans do NOT understand - at the "get go" - politicians' / bankers' hunger for ever-increasing shares of the working person's bi-weekly paycheck; Americans do NOT understand the totality of taxes they pay. The FairTax shines the "light of day" on this, putting citizens back in charge to forcefully demand spending reductons.
YOU AND I MUST ACT to mobilize public opinion, and get the FairTax enacted, because the signs point to a probable devaluation of the dollar (reissuance of an "Amero" ? - under a U.S.-sovereignty-busting North American Union ?).
[ NOTE: Does this help clarify your understanding of what's going on globally? a) Bush's persistence on rewarding illegal immigration? b) the North American Highway now under construction in Texas (to stream cheap labor into the covertly-planned North American Union marketplace designed to compete with 21st-century China market? c) the gradual increase in value of the Chinese yuan by China corresponding to China's economic growth? (This will result in the dumping of dollar-denominated debt as its manufacturing economy grows stronger - which guarantees devaluing and ushering-in of the Amero.) ]
Keep in mind, this NAU strategy - supported by the "super-rich" (member-owners of the Fed) - together with their politician buddies who want NOTHING to do with FairTax - runs contrary to simply making the U.S. a "tax free zone" for business under the FairTax. Politicians and bankers lose power when the U.S. is returned to a "savings-driven economy" from a "debt/interest-driven" economy).
Powerful "elites," members of political and monied-interest "clubs" reaching into the halls of power in Washington, depend on keeping you and me uninformed of their plans. It is up to YOU and ME to ACT - and not live in a state of denial - based on what we now know is clearly happening to our financial futures.
After you consult the Kotlikoff interview (above):
• (If you're a member of your State FairTax organization) Contact your state or local FairTax Director to learn what you can do.
• (If you're just learning about the FairTax bill) Join FairTax.org here: Scrap The CODE, NOW !
Just a clarification...eating, say, 1000 calories of bread vs. 1000 calories of steak will make a metabolic difference. It takes the body more calories to digest the protein and fat in meat and less to digest the bread, which actually begins digesting in your mouth. The more your body must work on digestion , the less will go to your hips. Over 30 million Adkins dieters know this, as well as endocrinologist, who ALWAYS prescribe low carb diets to keep insulin levels and weight more steady.
In the same way, a sales tax (fairtax) is the only fiscal diet we should be on. It's more broad-based (only 60% of Americans pay an income tax), the prices will remain the same as now, not go up 30%, because the fairtax is simply an exchange of the embedded (inclusive) corporate tax (22%) out and embedded 23% sales tax in. 2nd grade math, really.
Bon Appetit !!!
I now live in a state that has no income taxes, only sales taxes and believe you me there is a spirited debate about state spending and it is kept well under control. None of the terrible things that opponents of the Fairtax fret over is happening in this state. In fact the economy is going like gangbusters. I think people who are opposed to the Fairtax are probably gaming the current system.
Just a brief comment due to lack of time. To use your diet anology: The FairTax isn't about losing wieght, but about putting the calories(taxes) in plain view. While one can look on the nutrition information for the calories (similar to researching where are the taxes one's pays are) the FairTax is like those foods with the Weight Watchers Points on the front. It's right in front of you and that makes it easier to notice and deal with.
The FairTax is all about making the taxes more visible. Then when the gov't tries to increase it, it hits the citizen more directly (instead of indirectly via corporate income tax or any other number of means) and we will oppose it. Spending is a seperate issue.
