Posted on 11/09/2006 6:50:19 PM PST by Principled
Hidden [income tax] costs go well beyond the question of economic incidence versus legal
incidence or the compliance burden. Every tax system distorts economic decisions, alters
economic behavior, and retards economic output below that which otherwise would occur, resulting
in what economists agree is the “deadweight loss” or “excess burden” of taxation.
Deadweight loss is a hidden extraction cost of taxation – the machine that didn’t spin,
the worker who didn’t show up – which represents a depletion in purchasing power
perhaps more nefariously improvident than if the government had collected that resource.
The average worker is of course completely anesthetized to the deleterious economic effects
of a tax system that imposes a drag on economic growth, despite its nontrivial implications.
The current system imposes such a severe relative drag on economic growth vis-à-vis
the FairTax that it will reduce capital per unit of human capital 5.0 percent over the course
of the century for an 18.0 percent long-run decline in after-tax take-home pay.10
SNIP
And because everyone pays the FairTax, and pays it at the same rate, the visibility
of the FairTax ensures a built-in downward pressure on the size of the government in
the most effective way: By requiring the government to change the rate for everyone – even
for a seemingly insignificant loophole. And the FairTax minimizes the
economic harm caused by taxes that serve as a stealthy exaction.
SNIP
Of the various forms of consumption tax, the sales tax surely has the
great advantage … of eliminating the despotic power of the government over the life of every
individual, as in the income tax, or over each business firm, as in the VAT.
It would not distort the production structure as would the VAT, and it would
not skew individual preferences as would specific excise taxes.
(Excerpt) Read more at fairtax.org ...
You know you have a fairly well read and intelligent group here at FR to discuss this stuff with.
I think the problem in our country is you have people who are mostly not interested in government and are most interested in their own little world and wallets.
In addition, their sense of history goes back about a week. They do not tend to learn from successes and mistakes made in history, they seemed doomed to repeat mistakes rather than learn from the past since they are willing to find out what the past was.
That is why lots of good ideas are hard to pull off in this country, people are too busy living in their own world and grabbing their attention for an out of the box idea for even a discussion is a major accomplishment.
They are NOT WILLING to learn from the past.
I'm having a typing challenged morning.
It gets frustrating when you try to tell someone about something that will help them and they're too lazy to learn about it.
Well, I've been on the road and here I come back to find one of the best posts ever. !!!
Pass a so-called Fairtax, and we WILL have two tax systems (income AND sales).
What indicates this to you? At the moment HR 25 is passed, withholding ends. We all begin getting our paychecks free from payroll tax deductions and income tax deductions.
At the moment HR 25 is passed, the entire income tax code is erased from law.
Anything is possible. Indeed. You could also win the lotto... three times consecutively. You could.
So why should I join you in bowing down to lick the hand that feeds you? Give me a good reason and I'll lick along with you.
Are you free or not? Is your govenment instituted by you or not? Are you enabled to abolish that government or not?
Have you given up? If so, why are you here? Why aren't you wiping the sweat off of your bureaucrat's eyebrow?
"Well, I've been on the road and here I come back to find one of the best posts ever. !!!"
That just shows that you should go on the road more often!
"I think the problem in our country is you have people who are mostly not interested in government and are most interested in their own little world and wallets."
"In the beginning of a change, the Patriot is a scarce man - brave, hated, and scorned. When his cause succeeds, however, the timid join him, for then it costs nothing to be a Patriot."
Mark Twain
“Never doubt that a small group of thoughtful, committed citizens can change the world: indeed, it’s the only thing that ever has.”
Margaret Mead
“It doesn’t require a majority to prevail, but rather an irate, tireless minority keen to set brush fires in people’s minds.”
Samuel Adams
I am reading David McCullough's excellent book: "1776". One of the more surprising tidbits is that, although support for independence from England increased during the course of the war, at no time was it as high as 50% of the colonists. When the war started, it was considered madness by many well informed people. The colonial army was a ragtag militia of farmers and tradesmen and the British army was the leading military power on the planet at that time.
If we couldn't get tax reform having all 3 houses it aint never gonna happen.
I agree with two of the points made here:
And because everyone pays the FairTax, and pays it at the same rate, the visibility of the FairTax ensures a built-in downward pressure on the size of the government in the most effective way: By requiring the government to change the rate for everyone – even for a seemingly insignificant loophole. And the FairTax minimizes the economic harm caused by taxes that serve as a stealthy exaction.
And as well:
Of the various forms of consumption tax, the sales tax surely has the great advantage … of eliminating the despotic power of the government over the life of every individual, as in the income tax, or over each business firm, as in the VAT. It would not distort the production structure as would the VAT, and it would not skew individual preferences as would specific excise taxes.
The transparency and the non-discrimination in a uniform sales tax are indeed advantages over the current income tax system, which only encourages hordes of specialists and experts in reducing tax burdens. Those are gross economic inefficiencies, and nothing but a waste of good people's time on examining and complying with the minutia of tens of thousands of pages of tax laws.
However the history of sales taxes is that they also tend to become non-uniform --- just look at Florida's sales tax. It has both exemptions and sales tax holidays. Still, they are far better than income taxes, even when sales taxes become a bit of a political football themselves.
I hope you're wrong. Methinks the pols had gotten too big for their britches having all 3 branches.
To get back in, they'll have to do something. With the success that pro nrst congresscitters had compared to non-supporters, I think it's likely to be a "contract issue" in 08. JMHO.
Nice post in many ways, thanks Phil.
The problem with the FairTax debate is that the supporters truly BELIEVE that all will be well if it is passed. And Nothing could be further from the truth.
How did we get into this mess? Do you think that Congress will stop tinkering, and never write tax law again? Do you believe that HR 25 will pass in anywhere near its current form? If you do, then you need to look a little harder at how Congress operates.
The attack of the lobbyists and the fight for exceptions/exemptions hasn't even begun!!
Go see
Winners and Losers under the 'FairTax'
http://www.freerepublic.com/focus/f-news/1493038/posts
"How did we get into this mess? Do you think that Congress will stop tinkering, and never write tax law again? Do you believe that HR 25 will pass in anywhere near its current form? If you do, then you need to look a little harder at how Congress operates."
That depends on what you think "this mess" is. To me, it is the view that we are the victims of congress, rather than its masters. Two of my favorite quotes come to mind in this regard.
"It will be of little avail to the people, that the laws are made by men of their own choice, if the laws be so voluminous that they cannot be read, or so incoherent that they cannot be understood; if they be repealed or revised before they are promulgated, or undergo such incessant changes that no man who knows what the law is today can guess what it will be tomorrow. Law is defined to be a rule of action; but how can that be a rule which is little known and less fixed?"
James Madison, Federalist #62
“I discussed the importance of abolishing the income tax because of its tendency to form a habit of servility in the souls of a people that accept it. Servility of soul is bad not only in itself, it is also an open door through which will soon walk the abuses of ambitious government power. Leaders who find themselves with governmental power over a servile people will be quick to conclude that such a people exist to serve them.”
Alan Keyes “The Power of the Purse”, WorldNet Daily, August 27,1999
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