This double whammy penalizes government vs. private expenditures
Obviously, but is what is happening in the current system. The Budget enforcement act is what demands the revenue neutrality, not considerations of efficiency of government. If we took efficiency into account, federal workers would not be taxed but would receive lower pay instead, EITC would not be necessary to offset FICA which could be done away with. We would be using point of sale taxes instead of individual and corporate taxes and exempt the government from paying those taxes. The national budget would be lower for lower costs of doing business and so would the tax rates necessary for funding government.
The reality is that government expends more than it should simply because there is no means to separate tax payments from the price structure of goods and services other than using a single stage Retail Tax that could allow government exempt purchases. Todate, social/political goals have been driving the tax code not logic or efficiency of the tax code.
The political situation is, without dynamic scoring of the budget and forced use of static analysis, such inefficiencies are demanded by the politics of the tax system debate. A sad commentary on the state of politics in this nation.
However, because we have an income/payroll/corporate tax system such penalties are the rule of the day, and are among many reasons why doing anything through the government is inefficient with regard to doing the same thing through private enterprise. Revenue neutrality demands we tax government to sustain the revenue take even in the face of "potential" reduction in the budget under dynamic considerations. The current political climate requires static analysis and no consideration of dynamic forces reducing the cost of government. Irrational, but that is what adherence to pre-existant law and the more liberal forces in the Congress demand.
You have put your finger on the problem! If HR 2525 were analyzed by dynamic scoring, it would immediately draw favorable attention of many in Congress who haven't yet given it a close look. Dynamic scoring, shows the FairTax to be an even more favorable proposition than is currently being shown under static analysis only.
The Democrats on the Ways & Means Tax Sub-Committee have stymied efforts to have the FairTax proposal dynamically scored, coz they know it will show it in an even more favorable light.
Those (mostly Democrats) who want to continue to impose the Income Tax SCAM on the taxpayers of this nation are using every trick-in-the-book to keep the FairTax (HR 2525) bottled-up in the W&M Committee. They fear (know) that if it reaches the Floor of the House for debate, it will receive widespread acceptance.
Moreover, with a growing number in Congress becoming aware of the FairTax plan, the die-hard, tax-and-spend DEMS fear that they may end-up losing their SCAM scheme, i.e. the current abominable Income Tax System (and IRS).
With the election of Saxby Chambliss (R-GA) to the Senate on Nov 5, 2002, the Senate now has an avowed supporter for the FairTax (HR 2525). He stated during his campaign that, if he were elected, he'd introduce a companion Bill to the FairTax House version in the Senate.
Here's his letter to a constituent: CHAMBLISS FAVORS FAIRTAX!
As you may know, Chambliss (as challenger) won in a stunning upset of 'Poll-favored' incumbent Senator Max Cleland (D-GA). Cleland's position with regards to the FairTax for tax reform was basically in opposition.
Now that both Houses of Congress are Republican majority, I'm hopeful that W&M Chairman, Bill Thomas (R-CA) can bring the pressure to bear to get H.R. 2525 dynamically scored. If so, when it reaches the House Floor for debate it will, IMHO, quickly gain overwhelming support in that body... and later, a similar reception in the Senate.
I'm no "economist" or "tax-guru" but here's my "country-boy" analogy of static analysis and dynamic scoring....
Your car's engine runs rough. You put in a new set of Spark Plugs. You notice that the car runs smoother.That's all you credit the new Plugs with doing. That's what I call, static analysis.
Under dynamic scoring you ALSO notice that the car starts easier & faster (even in cold weather), gets better gas milage, has more get-up-and-go when passing on the highway and runs quieter.
IOW, you give credit to the new Plugs for a-l-l the improvements they fostered.
Similarly, by dynamic scoring the proposed FairTax (HR 2525) it will be credited with a-l-l the favorable impacts it will have. For example, more Jobs Created in the USA, and U.S. made products better able to compete with Imports... just to mention a couple of the many good-things that will result from enactment of the FairTax.
Have a look at FairTax Flyer! ...in a way, it's sorta like dynamic scoring! Anyhow, it makes a nice one-page print-out for posting on Bulletin Boards.
Visit FairTax Facts! and click Link called, PAYCHECK! ...you'll love it!
"Geezer," I really enjoy reading your posts! The FairTax is fortunate in having such an enthusiastic and knowlwdgeable supporter in its corner.
Cliff Cofer - State Director, AFFT Volunteer Iowa Team