Saturday, May 27, 2006

Taxes Are No Longer About Income For Government

The myth is that taxes support government’s ability to provide essential services. Further, the myth would have us believe that tax burdens are distributed equitably, everyone doing their share.


KstreetThe fact is that taxes are Congress’ tool with which to fiddle. Our Senators and Representatives use their ability to write tax law the same way bees use flowers. To make honey. The incredibly bloated K-Street conglomeration of lawyers and lobbyists exists almost entirely for the purpose of fiddling taxes on their clients’ behalf. Each self or industry-interest buys their own professional fiddler and that same interest provides funding to individual legislators so they will listen to the music.


Music, honey, bees, fiddlers, flowers—all convenient metaphors for graft. But the fact is (there's that fact again) that you and I don't have our own personal-interest fiddler. We're not supposed to need one.


IncometaxThere are those who rant that business and the rich don’t pay their fair share and an opposite bunch, equally sure of themselves, who insist that tax breaks are the growth stimulant for both jobs and economic stability. Each is an argument inspiring passion to the point of blows and neither is about money to run government.


Because taxes no longer support government. The engine of government is debt.


I’m going to make the point that Congressman John Linder, Republican of Georgia has made, eloquently, in his Fair Tax Bill (HR 25). You can check out Linder’s proposal in detail (http://www.fairtax.org) and I hope you will, because it quiets the inflamed rhetoric with good sense.


InternalrevenuecodeIf I were trying to catch your attention (and who could possibly accuse me of that?), I would point out that Fair Tax eliminates, does away with entirely,


  • Individual income taxes

  • Alternative minimum taxes (AMT)

  • Corporate taxes

  • Business taxes

  • Capital gains taxes

  • Social Security taxes

  • Medicare taxes (along with all other federal payroll taxes)

  • The self-employment tax

  • Estate taxes

  • Gift taxes   

Which is a lot of fiddling taken from the hands of Congressional fiddlers.


It also negates the embarrassment of the $350 billion annually that the IRS is unable to collect and makes unnecessary numerous offshore tax havens for businesses and wealthy individuals. Sorry 'bout that, Cayman Islands. Welcome home, American business.


A good many benefits will accrue from the drying up of K-Street and the removal of individual Senators and Representatives from the messy and addictive intra-venous drip of campaign contributions. Notably,


  • There will actually be time to legislate

  • Bipartisanship will no longer be penalized by money-interests

  • Competitive campaigns for national office will flourish instead of continuing to wither

  • The ratio of listening and deliberating vs posturing may be improved

All of which would be positive influences on a national government that is increasingly polarized and isolated from the interests of its various constituencies. Namely, you and me.


The Fair Tax does entirely away with the Internal Revenue Code. It’s not an improvement or a modification of an effort at messing with distribution or emphasis, not a political effort to do away with this in order to save that. The whole thing is out. Over. Drowned in Grover Norquist's bathtub. Send the tens of thousands of IRS employees home, close the hundreds of regional offices, sell off the computers, re-lease the office space, nail the doors shut and call it a day.


We will, each of us, pay a 23% tax on retail purchases. That floats the whole boat.


Before you go ballistic, thinking that your new Mercedes or a bag of oranges (both, actually) will cost 23% more and ‘how much of this are you actually supposed to take in this unfair world,’ be aware of a single salient and unavoidable fact. The ‘imbedded’ and hidden costs of various taxes already in our goods and services, along with the private individual and industry costs of administering them, amount to approximately 20-22%. That imbedded cost will be gone. How will we be sure it goes? Competition will take it. Competition always takes relieved costs and returns them through price reduction.


So, essentially, Fair Tax is tax neutral, replacing 40,000 pages of arcane tax code with a simple and ‘one time’ retail tax.


‘One time’ means a new car or home will be taxed once, when it is delivered and never taxed again as a used product. Congress isn’t going to like this fiddling with their fiddling, even though Linder has steadily increasing support for his bill. Democrats particularly don’t like it, because it’s a Republican sponsored bill (HR 25).


But you’re going to love it.


Check it out and tell your friends. Ask them to tell their friends. That's how the Grass Roots grow. First thing you know, something may actually happen in Washington that makes things better and who knows where that might lead? FAIR TAX
____________________________________________


See Taking My Country Personally on my personal web site.