Posted on 01/14/2008 6:51:54 AM PST by K-oneTexas
COLUMN: The FairTax Promotes Economic Equality Submitted by on 01-13-08, 10:16 pm | Updated on 01-13-08, 10:35 pm |
by Thomas Davis
President John F. Kennedy once argued that our tax system “reduces the financial incentives for personal effort, investment and risk-taking.” Unfortunately, there has not been much improvement since JFK's presidency.
In fact, the tax code has become more complicated and burdensome. Since 1954, the number of words in the IRS regulations has increased by 939 percent. Just consider, how much time do you, or more likely your parents, spend preparing taxes? Or how much money do your parents spend having an accountant prepare your family's taxes? And how much time does a company spend making business decisions with respect to the tax code?
The answer is astounding: Economists estimate that we spend over $200 billion every year and about 5.8 billion hours complying with the tax code. American companies spend another $200-300 billion making business decisions based on tax implications. The average American spends twenty-seven hours preparing his or her income tax forms, and almost 45% of tax compliance costs are directly incurred by individuals.
While the current situation is complicated, the proposed solution is simple. It's called the FairTax. Some of the nation's most eminent economists and businesspeople have researched and developed a system applying a national sales tax of 23% on all goods and services at the retail level. In return, no more income tax. No more corporate income tax. No more payroll taxes, gift tax, alternative minimum tax, self-employment tax, capital gains tax…you get the picture. By the way, no more embedded tax in the goods and services you currently purchase, which averages around 22%.
Whether you realize it or not, the cost of corporate income taxes, payroll taxes and other taxes have been factored into the price of the goods and services you purchase. So when politicians try to tax what they deem to be greedy businesses by assessing higher corporate income taxes, those taxes are actually passed on to you, the consumer. By eliminating embedded taxes, the prices of what you buy after applying the 23% consumption tax would hardly change from current prices. The difference is that you bring home your entire paycheck and that tax is transparently assessed at the end, not through an onerous and bureaucratic system applied within a price tag.
And don't worry; this simplified system is revenue neutral. The government will collect as much money using the FairTax as it does under the current system, having no effect on current ability to fund government programs. Actually, economists expect economic growth to be around 10.5% for the first year, effectively increasing the government's revenue.
Under the FairTax, you would get your entire paycheck and would only pay tax on what you consume, encouraging Americans to do something we do not do well — save. In order to make the FairTax fair, all people would receive a prebate, or advanced rebate, that reimburses them for tax paid up to the poverty line. In other words, you only pay tax for living beyond your necessities.
Without a corporate tax, America will encourage companies to come back to the United States, providing new jobs for Americans. Without embedded taxes factored into the price of a product, American companies can export goods and sell them at prices lower than foreign products. While the benefits are numerous and the drawbacks are few, I encourage you to question the FairTax Act of 2007. Challenge it. Look for shortfalls. But don't forget to take the time to find credible answers. Read The FairTax Book by Neal Boortz and Congressman John Linder. Visit FairTax.org. Search the Web for scholarly criticism. You will see that the FairTax stands for innovation and equality. Do you?
An IRS free voluntary tax..........
THe longer I study the FairTax, the less I like it.
The longer I pay income tax, the more I like the FairTax.
I wouldn't expect the Teamsters to understand what causes inflation. I would expect a commodities trader to, however.
You don’t trade bond futures do you? Just agriculturals. You’re a farmer/hedger IOW.
ROTFLMAO!!
Thanks for the amusement. The daily xcamel hilarity. You could have been smarter and used some other number like say 478,000 just to make it look a LITTLE better. LOL.
No, it's there for everyone to see. Put down the celebrity magazine and pick up a financial newspaper sometime. You'll see.
How'd you know. We just paid our quarterly tax estimate. 2 million dollars. LOL!!
I do indeed trade bond futures. At the moment, I’m long a considerable amount of June ‘08 30-years, short an equal amount of June ‘08 10-years. We’re up about 17 ticks at the moment, but I rather fancy there’s 30-odd ticks to be made, so we’re sitting still for the time being.
Is Uncle Sam checking every dollar you make? Every dollar you spend? If the IRS isn't all up in your junk, I can only assume it's because you have no junk.
FWIW.. I just signed the check for my 4th quarter personal estimate.. it was only $500,000.
Uh-huh. I assume it was counter-signed by your wife ... Morgan Fairchild! Yeah, that's the ticket!
If you’re that worried about your freedom... start fighting for term limits, spending control, and line item vetos.
As the man sang, two out of three ain't bad. Term limits are counterproductive. Term limits give us rookie congressmen -- they take power out of the hands of representatives and place it in the hands of staffers and lobbyists who are unelected and unaccountable.
I'm for the line-item veto, but that will take a constitutional amendment. The SCOTUS precedent is clear -- spending is Congress' responsibility, one they cannot hand off to the president, even if they want to.
Spending control? I'm for it. Show me a candidate who does more than talk the talk. I've had it up to [gesture just below the nose] here with candidates who talk out of one side of their mouths about ending pork barrel spending, while bragging out the other side about how well they "bring home the bacon."
Nearly every candidate. Both parties. Year after year. They al want to win votes by taking money from folks who aren't their constituents and handing it to folks who are. Boxer and Feinstein don't give a good damn about the burden on NY taxpayers; Schumer and Clinton don't give a good damn about the burden on CA taxpayers. Why should they care? Across the state line, the votes aren't theirs to win or lose.
I've lived 37 years, and what I've learned is that pork barrel spending is like the weather. In the words of Mark Twain, "everybody talks about it, but no one ever does anything." Everyone does it while condemning it. And changing the name from "pork" to "earmarks" does not change the equation.
Then how do you explain the small yield differential between TIPS and 10 Treasuries?
If I had your view of inflation I wouldn't put on such a flattening trade but, if its working, that's all you need to know. Never assume that the markets are supposed to make sense, huh?
Frankly, most see the FT as not being anything more than the deckchairs on the titanic, I see it as the iceberg, and what you see of the bill, and the 'ad nausem' spin, is not one iota more than what they want you to see.
Fair assessment. The FT doesn't make the government spend less or get smarter. It's one step. No more, no less.
I see it as the iceberg, and what you see of the bill, and the 'ad nausem' spin, is not one iota more than what they want you to see.
I'm not feeling the analogy.
Here is how I see it: The FT takes the same amount of our money as the IRS. We don't have to work as hard for it. Your one and only tax form fits on a post card, and you don't have to file it if you don't want to.
That is a gain. It will not cut government spending. That is a separate fight. Fix revenues first and spending next. That's all I'm sayin'.
You’ll only gain the ‘right’ to work for less, and have 30% of the remainder ripped out of your hide when you spend one thin dime of it...
Not a ‘fair’ deal to me, not by a long shot.
Keep in mind that I've no plans to be in it even 2 weeks from now, and very possibly will be out of it sooner. If the mkt will give me a full handle, I'm gone, gone, gone out of it. We're not talking about a''macro'' trading position here, just a short-timer.
Second, how do I explain the differential? I don't bother. Why should I? That's not my job at all. The job of a trader is to make a profit. Period. Everything else is just a sideshow. The rationale for my current bond position is entirely sound in the context of trading, not necessarily so in the world of bond theory -- and it's posted in a previous post to you.
This is a mistake that a LOT of would-be traders make; they trade according to theory as opposed to the immediate practical considerations in a given mkt. It's also a variant of the error of the Left; when mkts don't behave according to their (asinine) theory, they invariably try to bend the mkt to their will via regulation and assorted other crapola.
It's also one of the mistakes that some real-life and quite excellent bond traders made: John Meriwether, Haghani, Hilibrand, McAtee, et al. You remember them, of course. They were once known as Long-Term Capital Management. They stuck to their theoretical models in the face of a changing practical reality in 1998...and they lost on the order of USD 3.5 billion in 90 days' time from July-Sept 1998.
Stick to the real world, and the mkt's perception of it (whether the perception is right or wrong is utterly irrelevat in the short term, btw). Leave the theory to the academics -- that's why they (cough) make the big bucks, right?
I believe it was one of your earlier posts I was referring to when you said:
Prices stable? That's the howler of the year.
Now if you are so sure that SAJ's interpretation of inflation is more accurate than the largest securitize market in the world I suggest you think twice.
Your hubris about trading is the real howler. I have been trading probably longer than you and one thing I know for sure:
Whom the market gods humble they first make proud.
Watch your step buckaroo. I have seen more "brillant" traders than you can ever imagine go down in flames aka John Meriwether, B 52 and Joseph Jett.
If you believe prices are anything remotely close to ''stable'' right now, you're welcome to that belief...and don't forget to buy the BIG bottle of aspirin when you're at the pharmacy next time, you'll need it. Do please let me trade against you with real money, because you're going to be absolutely destroyed trading futures on that belief in the next year or so.
My interpretation of inflation is very simple: I look at the change of prices on the board relative to the change in money supply. Doesn't get much simpler than that, or more useful within the context of trading.
Jett was a joke as a trader, btw. He effectively tried to past-post his own company. Nice guy.
Just FYI, my first futures trade was made in November 1972, my first option trade some 6 years before that. I'm still here, and profitable (took a hit from Katrina, as did many others), and expect to be around for a long, long time.
You keep imputing things to me that are simply false. Why you do so is a mystery, but not one worth wondering over.
Do tell: what are your current futures and/or futures/options positions?
The only thing I'll impute to you is that you sound for all the world like a ''mouth trader'', as we call it in the industry. Trust me, it is not a term of respect.
I'll give you this tip for free. So will the whole industry. Never listen to the guy who criticises your trades when he has no position(s) of his own in the same mkt(s).
Hubris, eh? Look in the mirror. Ever thought of starting a market in arrogance futures? You' qualify for commercial margins straightaway. Of course, that mkt would have considerable problems on the demand side.
Bye-bye. It's been real, and it's been fun...but it ain't been real fun.
I day trade e minis now. I used to trade open outcry markets and did very well at it in the 1980's. I'm a dinosaur who likes the idea of going to bed at night with no positions on.
We'll see who's right about inflation this year - you or the collective bond market and me. And I'm not dumb enough to think that betting on anything fundamental will make me money. I'm saying you don't have any idea what inflation is going to do. I know some people who are a lot smarter than either one of us who are advising their clients that deflation is a risk in 08 and I am at least smart enough not to bet against them.
The idea that you want to trade against me so you can make money is hilarious and is typical of someone primed for a fall. I have seen it so many times.
I'll gladly take positions opposite yours until you come back down to earth lad.
The fact that you're still around and trading with such an attitude is remarkable but, you'll see, one day that attitude will do you in. Cut your losses when that happens.
I wasn't criticizing your trades. If you'll recall I was saying: if it works, run with it. You were looking for criticism and found it where it didn't exist.
That usually is the mark of a guy who is suddenly a "trader" and knows everything about the craft.
I hate to repeat myself but when I run into traders like you I always hear these words: "whom the market gods humble they first make proud". There is no time limit on that adage, whether you've traded for 20 years or 1.
Get too smart and hit the wall.
If sales taxes are “ripped from your hide,” where are income taxes — money taken you before you even get a chance to see it — ripped from?
You score points for drama-queen phrasing, but not many for insight.
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