Posted on 06/15/2004 9:55:41 PM PDT by Remember_Salamis
Have you owned a business? Tax avoidance is an art, if a business can write off any of their spending as expenses, I see potential for a lot of abuse (what's to stop me from having a home business and writing off my consumption taxes for practically all consumer goods and then just entertaining a few 'customers' inside once a year? Not to mention the 'company' vehicles, etc. I think lower income folks would really get the shaft from this because they wouldn't have the sense, or the accountant, to take advantage of what strikes me as a monster loophole). Which requires oversight, which brings back the need for a monster IRS, which goes back to one of the key justifications for the Fair Tax as opposed to current systems.
On your second complaint, the size of government, the FairTax actually restricts the size of government. goods and servicces purchased by government entities WOULD be taxed.
What's that do to stem wealth transfers? That's the aspect of government I have the most trouble with, and it's the biggest, most expensive aspect
This would encourage outsourcing and privatization of government busineeses.
I prefer the strict elimination of most of the powers government has assumed. My experience with outsourcing and privatization have enlightened me to the fact incentives cannot be properly formed outside of the marketplace, and corruption is rampant. Being the buddy of a friend of the Speaker of the House, etc. is more imporatnt than being able to get the job done. In private markets the viability and efficiency of operations are constantly tested against the profit motive. The market wipes from the earth what people don't want done by not funding it adequately. Government knows no such brake, and the outsourcing/privatizing I've seen conducted by government sources amounts to a check handed to a politically connected entity, with no real metric for measuring how efficacious it is, while providing it with a veneer of market processes (when it's not really subject to the profit motive - the taxes are coming in to fund it regardless).
Purchases made by the Post Office or Amtrak wouldn't be taxed if they were spun off and privatized, as an example. And it would work at all government levels too.
But those are government monopolies that operate irrespective of profitability. A better solution is to just end the monopoly on letters and routes and sell off whatever the government can to actual private entitities responsive to consumer control.
What is a state going to do when purchases made by a public school are taxed while purchases made by a private school are not?
Same as above.
Regarding excise taxes, the FairTAx IS an excise tax, only applied to domestic and imports. Even if we spent only spent $500B, which we would spend if we only spent on programs specifically outlined in Article I, section VIII, we would need almost a 100% tarriff on all imported goods. That is literally impossible.
Excise tax doesn't imply just tariffs on imports. Your phone taxes are excise taxes. Excise taxes are specific to goods and services. This would serve as a brake on government confiscation better than a tax applied to everything (which the Congress would just gradually ratchet the rate of up over time like they did with income taxes). Excise taxes provide the individual his own lever on government by giving him the opportunity to do without, or explore substitutes. Just as Voice over IP threatens government taxes on phones by making phones obsolete, it would permit a continual reassessment of tax collection. We needn't repeal the tax on buggy whips if society moves away from them. Then we get to decide if we want to vote for or against the politician who has plans to institute a tax on steering wheels or not...
Regarding the 16th-- It's repeal WOULD NOT prohibit an income tax. It's repeal would only make an UNAPPORTIONED Income tax unconstitutional.
I don't have a problem with equal, direct taxes, as the U.S. Constitution originally allowed (before the 16th amendment allowed such taxes to be unequal, paving the way for progressive income taxes). The U.S. has a shade over 200 million adults. That puts government tax collection at about $10,000 per adult (not counting the ~400 billion of decifit spending). Let's do it, make it equal, and see everyone howling for relief!
Regarding the 13th, that regards slavery, and I thikn it's enforced fairly well (sarcasm). I think you may be referring to the 10th amendment
I meant the 13th. I consider the $1+ Trillion of direct wealth transfers conducted via the federal government as nothing less than involuntary servitude. It's certainly beyond the scope of Article I, Section VIII, so let's enforce the 10th and achieve respect for both amendments.
The only problem with that is FDR's court packing scandal stretched the commerce clause so bad that virtually anything is within the domain of the Feds.
Agreed. I recall during the Supreme Court's review of the federal statute restricting guns within a certain distance of schools a justice asked for the Constitutional justification. The president's attorney cited, in a convoluted manner, the commerce clause. The justice asked, given the tangential potential of any activity, if the constitution forbade the federal from doing anything. The lawyer couldn't answer. They percieve no limit to their power, so we have to take away the purse.
Here's another method, that can at least get us closer to where we want (I also don't like the checks issued under the Fair Tax, our 'progressive' friends will abuse that as a welfare and redistribution spigot). Let's quit having tax withholding (instituted in 1943 as an 'emergency wartime measure') and instead of placing taxes on the polar opposite end of the calendar, make all taxes due in full on the first Monday in November, before people head to the polls on Tuesday...
The overwhelming majority of consumption is of goods that could not be justified as business expenses (foode, medicie, etc.) Also, you are failing to recognize that tax avoidance is directly affected by the benefit from cheating. If there's a huge payoff from cheating like we have now, then people will cheat more. If there's a lower payoff, people will be less likely to take that risk. Plus, like I said, when you file for your monthly rebate, you must justify WHY it was a business expense. Nobody claims that there will be no tax avoidande under a new system, but it WILL be lower than the current system, which is over 25%.
I suggest housing, cars, etc. consume a lot more monthly income than food and medicine. Even food I could find a way to write off by pretending to sell it as well (there's a reason the mob likes owning bars and restuarants, it's so easy to launder money through one), or make that dinner trip a 'business' lunch. You're going to need an even bigger IRS to effectively scare the people aware from doing this, and god knows what regulations to decide what is really a business expense and what's not. I see that leading to the same nightmare we have now, and there's no way to guarantee they won't keep jacking the tax rate or increasing the monthly welfare check to supposedly offset whatever taxes poor people would pay. Letting the poor off the hook on taxes is part of what allowed the welfare state to explode. I'm sure you know the stats on who is and isn't paying taxes. The monthly welfare check to allegedly refund tax payments is what kills the 'Fair Tax' for me. That's the rope the socialists will hang us with if they control the tax rate and the amount of that check.
Also, you are failing to recognize that tax avoidance is directly affected by the benefit from cheating.
I see a 23% inducement to 'cheat'. That's pretty steep. That's the equivalent of not working for 3 months. Certainly worth the cost of incorporation and an accountant (so there goes the 'savings' compared to income tax compliance...)
OK, I Have more counterpoints.
On "wealth transfers"-- Regardless, the FairTax WILL discourage spending by the government. If government must pay a surcharge on all goods they buy, they might as well let people keep more of their money.
On Privatization-- When I speak of privatization, I do speak of releasing programs back into the marketplace. And the marketplace would even include the following scenarios:
*If the government were to buy Medicare coverage for recipients, they would have to pay taxes on it. To avoid paying taxes on it, they can simply send would-be recipients a check equal to their cut of the entitlement. Seniors would then be able to negotiate their own coverage in the private market. Prices would drop dramatically with that level of all-out competition. It would be like a voucher for medical coverage, except that Seniors could pocket the difference.
*Under the FairTax, the Post Office and Amtrak would probably cease to exist. Basically, the government would have to pay taxes on a losing venture, making losses that mcuh more apparent. The most likely result is that the Feds would probably auction offf the entities to the highest bidders.
*You dismissed the case of public schools without examining the issue too deeply. Under the FairTax, every item is taxed once. Either it is (1) taxed upon purchase, or (2) the tax is deferred until it gets to the retail counter. Education is excempt from the FairTax, but government spending is not. As a result, it would cost at least 23% more to spend money on a public school instead of giving the money back to taxpayers in the form of vouchers. THIS WOULD BE A BOON TO PRIVATE EDUCATION. In fact, eventually states would begin selling off puclic schools to private companies who wished to open a school. There you have it, massive privatization.
On Excise Taxes-- If excise taxes are as you have described them, the FairTax is definitely an excise tax. You mention phone taxes; well, your phone bill will have a 23% tax on it. The FairTax is a "flat excise tax". Making products subject to different rates is a HORRIBLE idea. It opens the door to massive special interest manipulation . In fact, some believe the ability to haggle over 19th century tarriffs gave rise to many special interests in the first place!
On head taxes-- You mentioned billing every adult $10,000. It sounds good, but it won't work at the national level. It could work at lower levels, however, espececially at the local level, like equally charging citizens for county services.
On the 13th-- I've never heard that argiment before. I'm not saying I disagree with you,however.
The poverty to which I refer is not economical. It is social and cultural. We live in a society that values speed and convienience above all else. Your arguments illustrate my point. We have multiple phones, computers and the ability to engorge ourselves. This is not the outline of a population that is healthy. This, and the spiritual poverty that Mother Theresa spoke of are the real problems in our society.
The problem is much deeper than taxes. The way Capitalism is practiced is the problem. Big corps are favored over small businesses. Farms are only businesses, thereore everyone is dependent for their livelyhood upon some thing else that they can't really see. If you want to know the real solution go to chesterton.org and buy The Outline of Sanity. You can sample it there for free.
I assume that you know that one of the primary desires of socialism is to motivate people through other means than competition and acquisitiveness.
That is, crass comercialism is an impediment to 'enlightenment', where all of mankind can flourish in an environment of peace, harmony and the arts.
All one has to do is eliminate (confiscate) private property and greed (by re-educating people to share and share alike eg the "new" Soviet man). The resulting productive surplus will free men from their daily toil so that they are free to pursue 'higher' callings.
Do yourself a favor and read some Hayek, Friedman, et al to understand why it is dangerous to fall into the habit of critisizing the pursuit of commercial gain.
I am not talking about commercialism per se. It is capitalism THE WAY IT IT PRACTISED that is the problem of which I speak. It has been a failure because it is anti-family. Socialism is a failure for the same reason. And yet it persists and coexists with capitalism quite comfortably.
BuMp for Friedman and Freedom.
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