Posted on 11/02/2006 3:04:56 PM PST by pigdog
Incentives drive all economic behavior. Taxes are a negative incentive. People do not work, invest, or engage in entrepreneurial activities in order to pay taxes. They engage in such economic activities in order to earn after-tax income. When the government increases its share of the income earned by its citizens, the incentive to engage in growth-enhancing economic activities falls; alternatively, the disincentive to these activities rises. The higher the tax on the next dollar earned (the marginal tax rate) the larger the disincentive. However, without taxes the government cannot operate. From an economic efficiency perspective, the appropriate goal for tax policy is to establish a tax system that minimizes the tax disincentives on economic activities, given the revenue needs of the government.
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Based on this criterion, the current tax code is an abysmal failure.
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This analysis shows that in both the short and long term, a policy shift from our current tax system toward the FairTax would greatly benefit the U.S. economy by increasing economic growth, savings, foreign investment, and personal income.
Both papers are good and clearly show the many benefits of converting our tax system to the FairTax since the dynamic analysis takes into account some (but not all as the paper points out) of the economic benefits of the FairTax for the country's taxpayers and its economy.
It will never happen. The tax code is a highly coveted politcal weapon, which the Washington pols will never let go of. Especially the socialists. A cancerous tax-sucking machine that will continue to run....
It's a long read, but I will do so.
Thanks.
If anyone would like to be added to this ping list let me know.
John Linder in the House(HR25) & Saxby Chambliss Senate(S25) offer a comprehensive bill to kill all federal income, SS/Medicare payroll, and gift/estate taxes outright replacing them with with a national retail sales tax administered by the states.
H.R.25,S.25
A bill to promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national retail sales tax to be administered primarily by the States.Refer for additional information:
Did you post this in the Smoky Backroom?
I am absolutely convinced of the truth of that statement!
It is good to see that someone has FINALLY done a dynamic (at least partially) analysis of the FairTax. It is LONG overdue and I look forward to reading the entire report ASAP.
LOL, beat me to that particular exerpt by about 2 seconds.
Jess gitt'n too slow on the keyboard in my ole age I guess ;O/
I doubt it. It seems that anything favorable to the Fairtax posted here of late has automatically found it's way to the SBR as if by magic and without any explanation as to why.
Good to see Laffer's participation in this evaluation.
He has been all too quiet on these issues for quite a while now.
Nah! Just a little rusty is all! ;>)
Bump for reading. SBR, huh?
Political agendas on both the left and the right are akin to asking a person if they want a fat lip or busted eyebrow. Either way, the result is abuse. Both sides think their abuse is better, or a lesser evil, than the other side of the aisle.
Bottom line, the FairTax doesn't dignify either side of the aisle's political agendas. Though, it shines a spotlight of honesty on persons that sign on to it. Those that don't, well... it's their loss of credibility.
Must is (as they say), 'cause must ain't don't sound right.
Time to git out the WD-40 I guess ;O)
A Macroeconomic Analysis of the FairTax Proposal.
Makes for a good read and if you grasp what it says about consumption you'll see that the FairTax rate will go down (not up) over the 10 years or so following implementation so long as government spending can be held in check ... or better yet, reduced.
Mint Julep taste and smell much better, and you don't care the joints aren't work'n.
WD-40, OTOH, is guaranteed to loosen any goose if'n yah don't mid the odor of a bit of oil and petrol' products in the mornings, LOL.
Incentives drive all behavior, period. That is what is so bad about the present tax system.
It rewards and punishes many behaviors, not just economic ones, and it distorts free enterprise by the economic decisions that it encourages and discourages.
Presently, we would all be wise to consult a CPA on many of the ordinary decisions we make because of tax considerations down the road that we don't even think of now.
There is a reason this insidious income tax was, and is, favored by those who want to change our system of government.
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