Posted on 04/16/2003 7:28:39 AM PDT by George Frm Br00klyn Park
WorldNetDaily / Commentary
Shock and awe not only for Iraqis
Posted: April 16, 2003
1:00 a.m. Eastern
By Joan Veon
© 2003 WorldNetDaily.com
While jubilant Americans can't help but be fixated on "revolutionary" military operations they have witnessed on television for the past two weeks – called "Shock and Awe" – most are not aware that Americans are about to receive their own economic "Shock and Awe."
Many forget that while Rome burned, Nero was busy deflecting attention away from the real center of action. For example, the front page of the March 8 Washington Post featured a huge picture showing the burning of Baghdad with all but 5 percent of the front page devoted to the war in Iraq. However, at the bottom was the "bunker buster" which will shatter our own field of dreams here in America.
While the house voted well past midnight several weeks ago to approve the full tax plan of $726 billion, the Senate cut it by half when they voted several days later. While you may think this is not a sure thing, a recent editorial, entitled "Lay off the Tax Candy," in the Washington Post explained the deceptive game now being played. They said that there is some fine print in the Senate version that provides for some fancy footwork which gives them the ability to vote for the full amount, while making it look like they are against it.
Unfortunately, our government has not really made clear what this tax law is all about. From the extensive research I have done, I consider this proposal to be the most heinous change as it will destroy the ability of the middle class to sustain their economic power while enhancing the upper classes.
If enacted, this legislation, will deliver the final blow to the ability of "Joe and Jane Average" to get ahead. It should be pointed out that its title is a misnomer. This plan will not stimulate the economy but will cause much larger deficits, which will be borne by Americans as a result of the war, which is being waged.
Recently at the G7 finance ministers meeting, Secretary Snow, who likes to snow people, basically said that this increased deficit spending could be seen as a type of "capital spending" that most companies do when they want to expand. If it does not work, it is not the shareholder who has lost out, it is the entire populace of America. After the $4 to 6 trillion Nasdaq crash, most Americans who suffered any type of substantial loss are not looking to the market for answers.
The proposed legislation will, instead, change the entire tax code of America from a tax on income to a tax on consumption over a 10-year period. At this point in history, we are the only developed country not to have this form of taxation – which means Bush is globalizing our tax laws. In other words, he is harmonizing our tax laws and system to conform to what the major European industrial countries have. In my opinion, this basically will set the platform for a global IRS. By the way, the United Nations has been working on these kinds of ideas for the last 30 years.
Under this VAT (value-added tax), every time a purchase is made, there will be up to a possible 27 percent tax on it. This tax could replace the tax on income, making only consumption taxable while all forms of income are tax-free. There are some countries that have a value-added tax plus a tax on income while America is the only country without a VAT, but has a tax on income.
For those who have enough savings to live off of their income, this is a windfall, but for those who have only debt with little or no savings, this will create a financial burden equal to the Israelites having to make bricks without straw.
At the heart of this plan is the elimination of tax on corporate dividends. Again, if you obtain your living from stock dividends, this will be like going to heaven. No tax on income – only a tax on what you buy. Let's look at three different sets of individuals.
First we have Old Money Harry. He has never had to have a real job because he gets his living from the family trust. All of the family assets – the fabulous house, the cars, the summer homes, the yacht, the Mercedes and Rolls are held by the family trust, along with title to three large commercial pieces of real estate. Harry made several killings buying and selling real estate because the gains were tax-free since they were inside the family trust. The only downside is that the income from the trust is taxed.
However, under the proposal to reduce tax brackets – which is necessary in order to make the rates flat – from 38 percent to 21 percent, it won't hurt as much. Harry will have 17 percent more to spend. Only what you buy will be taxed – however, if you have it in a trust, no tax. Old Money Harry will achieve growth unsurpassed under the proposed tax-stimulus plan, just like the Kennedys, the Rockefellers, the Mellons and anyone else with this arrangement.
Next are John and Jane Middleclass. Both have reasonably good jobs with attractive incomes. They both have advanced degrees and live in the "executive home" to match their rising social status. They lease a Lexus and Jaguar and think nothing of packing up and going to Vale or to the Bahamas at a moment's notice. They have re-financed the house several times to add a new wing, exceptional landscaping and a pool.
While they know they are basically spending everything they are bringing in, they rationalize by thinking about the rising equity in their home and how much they will be able to cash out when they retire. Unfortunately their 401ks got zapped during the NASDAQ crash.
Donnie and Susie Squeeze are 25 years old. Donnie served in the military and works as a mechanic for the local Honda dealer. They have three small children and Susie works part-time at the local grocery store. They are saving for a down payment on a home and hope to send their kids to college if they can afford it. Right now they are just barely making ends meet.
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In order to explain the proposed tax stimulus program, let us take a look at who will come out like a bandit. Old Money Harry will be able to double his assets because he has the right tools: a pile of money and a trust. He will basically pay very little tax considering his income and assets. The stock dividends will be tax free, and other sources of income may be tax free, depending on if he takes advantage of the new Lifetime Savings Accounts.
Joe and Jane Middleclass will experience some drop in tax on income. However, once the proposed stealth tax is in full force, they probably will not have any tax break from the mortgage interest expense because it had to be sacrificed in order to pay for the other parts of the tax package. Since they have no savings outside of their 401ks, they won't have any benefit from the tax-free sources of income.
But because they like to spend, they will pay 21 to 27 percent every time they make a purchase. There is no doubt their spending habits will change. If the economy tanks and one of them gets laid off, they might have to sell the house. If the economy is not doing well, who will buy their house and at what price?
Donnie and Susie Squeeze are about to be squished. Their tax bracket will have to rise in order to help pay for the new tax law, but since they have very little savings they really won't feel the benefit of tax free dividends and investment income. Since they are still accumulating, every time they buy a car, a dishwasher, etc., they will pay a hefty consumption tax.
Unfortunately, the thought of buying a house might be out of the picture since it too will have a 21 to 27 percent tax. Depending on whether the U.S. can stimulate the economy enough to pay for the war, they may be on the hook for the cost of war.
This is unrelated to your claim.
How is this gonna effect labor prices? Will employers still be forced to pay laborers at the same rate or will they have to take a paycut to match the taxes they are no longer paying. Will labor unions allow this? If labor costs are not reduced, how can these non-existant savings be passed to customers?
Using your logic if there are enough suppliers we can get it to 100% and beyond.
A 20% reduction by 5 suppliers is still only a 20% reduction...not 100%.
This is unrelated to your claim.
Don't try to weasel out, it's related to your claim of price reductions.
This is not the question. The question was whether or not it could Affect price of product.
Nope. I never said savings were cumulative. I said savings from elimination of income tax will be experienced at all levels of production. Nothing more.
Making stuff up again, huh?
Nope, just caught you in another lie.
Nope. I never said savings were cumulative.
. Don't "forget" that ALL suppliers have also experienced an elimination of THEIR income taxes too.
So?
Steaming pile alert....
Once again with your empty wholesale comments. Prove me wrong.
Godgov WILL KNOW everybody's income and expenditures with either system.
With the NRST no person is required to report their income to the government. With the flat income tax every person is required to report their income to the government. I expect from here on forward that you will not make the the same error.
Do any of you really think{?} that those making millions of dollars to encourage lawmaker, and lawmakers themselves, while sitting in their dens drinking scotch, bourbon, cognac, brandy, or their favorite wine will have as much incentive to keep the NRST rate low as does Joe and Jane "Sixpack" who spend their every dollar just to get by?
I didn't respond the first time you wrote that. I wanted to see if you'd think first before posting it again. Anyways, when it comes to number of votes Joe and Jane "Sixpack" out number the wealthy millionaires fifty to one. Joe and Jane "Sixpack" are the ones that have the incentive to keep the NRST rate low and the massive number of votes to ensure that it does remain low. Compared to the small percentage of millionaires, the huge percentage of Joe and Jane "Sixpack" have an overwhelming say in which politician will win the election. Joe and Jane "Sixpack" have the incentive and the overwhelming majority of the vote. That is so glaringly obvious that I'm flabbergasted that you would even entertain the thought of making the argument you did. Oh well, as I said in another post to you: "It makes no difference to me how you chose to present yourself -- it's your credibility, not mine."
Z, When you leave your vision of libertarian utopia, I might understand your reasoning and writing.
I'm not a libertarian. My foundation is fully integrated honesty.
When most people are "given" incentives to do as you say business will do, most generally those businesses will collectively raise their prices and tell consumers, "You are getting a good deal. We didn't have to raise prices to you."
You're a real hoot. You claim that when all the business making the same generic product all get a 25% cost reduction that they'll chose to collectively raise their prices rather than competitively lower them. Free competition is about the furthest thing from collectivism. You really are a hoot!
A prime example is the medical field when medicare and insurance paid "costs". The same thing with our steel industries. The same thing with shipbuilding. Those who did lower their prices, were not able to invest in their businesses, and soon became un-competitive, lost customers, and finally the business itself.
For the third time, all companies making the same generic product will see a 25% cost reduction. The playing field is just as level after the NRST goes into effect as was prior to it being implemmented.
Human nature hasn't reached your level of understanding just yet.
You are but one lone human example that has demonstrated the lack of understanding. That is, if not as I suspect, you are merely feigning the inability to not comprehend.
Social engineering to achieve that have been abject failures, and will be for the unforseeable future, including the social engineering so proudly written of by the proponents of the NRST.
The flat income tax and the graduated income tax have their roots in the second plank of the communist manifesto. The NRST has it's roots in taxing each person's purchases at the same rate -- equality.
OK, avoid the question. But unless labor is willing to cut their wages due to their savings in taxes, prices on goods will not fall that much. I guess you just think these things will magically happen.....
Yeah, without all that extra to grease the machinery of their buddies back home, they have nothing to found their pursuit of power on. No gravy, no gravy train. Too bad presidents can only serve two terms.
The national sales tax will favor cheaper imports over more expensive home grown items...
Again, you have it exactly backwards. In fact, home grown items will enjoy a tremendous benefit under an nrst.
1) home-grown items' prices could be reduced by 25% due to the elimination of all income taxes and 95% of compliance costs - and will be exported WITHOUT the sales tax added onto the price
2) imports will have the 23% tax added onto the price when sold here
So you have it wrong.
So how all your supposive savings gets passed on to the consumer is not part of this discussion? OK, I am sorry. Obviously exposing the smoke and mirrors is off limits. I understand perfectly.
ANother invalid conclusion based on biased thought.
Of course the discussion of tax savings getting passed on to consumers in the form of lower prices, passed on to workers in the form of higher wages, and passed on to investors in the form of inproved ROI is germane to the general discussion of the benefits of the national retail sales tax!
That is not where you jumped in.
If you want to discuss the benefits (lower prices, higher wages, and improved ROI), let's go.
I'll start... I assert that all of these benefits will occur:
1) lower prices
2) higher wages
3) improved ROI
Indeed I further assert that 100% of the savings realized by eliminating ALL income and payroll taxes WILL be found in one of those categories.
Bring it on.
LOL. If wages are higher how do prices go lower? Again, unless employees are willing to accept lower wages to match the taxes they are savings, the prices of goods will not be that much lower, at least not enought to match the added sales tax. You are trying to count benefits on both ends.
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