Monday, November 05, 2007

Will You Answer What Congress Won’t? The Top 20 Questions pt 7

Back in late 2004 and early 2005, I sent emails, faxes, and letters to every member of the United States House of Representatives and the United States Senate. In it, I asked them for their answer to a set of twenty questions which the readers of Polipundit wanted asked. The text of the letter was posted here.

52 Readers in 38 states joined the effort, asking their district Representatives and Senators to answer the questions. Response from our elected Representatives and Senators was poor, predictably so. Most Congressmen and Senators simply ignored the letters, emails and faxes. In the end, only seventeen answered with any degree of substance, and not one answered more than two questions.

I was looking at the set of questions this week, and you know, they still look like good questions to me, so I am going to ask you for your opinion on them. This will take a while, since I am putting up one question for each post, but please give this your serious consideration. And folks, this is not about politics or smacking down the other side; this is an opportunity to explore the issues of substance for our country. Sad that Congress was not up to it, but maybe we can get the conversation going. Thanks in advance.

7. Where do you stand on eliminating the income tax and SSI tax and replacing them with a national consumption tax?


Ian said...

At the end of the 18th Century, America proclaimed its independence from the tax slavery of Britain, and codified our soverignty, self-rule and liberty, as citizens, in the Constitution and Bill of Rights. In 1913, the wealthy elite conspired with politicians to persuade an elitist president (a former president of Princeton University) to buy into a scheme to again make us slaves by signing the Federal Reserve and the Income Tax acts. The Fed would print money, at interest, and the income tax would ultimately be the vehicle to ensure its payment. It would be the bankers who would pat themselves on the back.

President Wilson would later say ( 3:42 into Russo video), "I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is now controlled by a system of credit. We are no longer a government of free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men."

And today many Americans are caught up in that "system of credit," much to bankers' delight, instead of working longer and harder hours. Why? Because of the increased tax bite that's taken from their paychecks. If you ask any worker about it, more than likely you'll receive a remark that expresses frustration, powerlessness, and the feeling like his, or her, voice doesn't matter because it's the politicians who are in control.

Of more urgent, and immediate, concern is the taxing of business income and payroll. Businesses attempt to recoup these costs by embedding them in their prices, which are ultimately paid by consumers. This pernicious system of hidden taxation accounts for 22 cents of every retail dollar spent by consumers. This gives Congress a "lever" to extract money from businesses, via lobbyists, to secure "tax favors" resulting in

• an increasingly complex, and expensive, tax code
• higher prices (or lesser dividends to shareholders/401Ks/public retirement funds, or lost jobs to employees - where foreign competition will not let a company raise prices)
• exports not price-competitive, globally
• company relocation to foreign countries with lower costs
• foreign products going untaxed upon entry into the U.S.

How serious is this situation? Dr. Laurence Kotlikoff is on record that, unless citizens' true tax costs are made visible by virtue of enacting the FairTax, politicians will continue to pit rich against poor, individuals against corporations, while they spend us into ruin.

Will the FairTax movement succeed in changing this tax slave / victim psychology? Do we, as individuals, have the ability to influence Congress to relinquish the power they've usurped from We, The People, freeholders engaged in free-enterprise?

First, let's understand how passage of the FairTax (HR 25) would actually affect us: Prices after FairTax passage would look similar to current prices - not "30% higher" as critics contend; the increased-competitive, tax-free business environment would see to it. So, the FairTax rate (figured as an income-tax-rate-non-comparative, sales tax) on new items would be 29.85% (on the new, reduced cost of items because business isn't taxed under FairTax - thus lowering retail prices by 20% to 30%), or 23% of the "tax inclusive" price tag - this is the way INCOME TAX is figured (parts of the total dollar).

The effective tax rate percentages, that different income groups would pay under the progressive FairTax consumption tax, are calculated by crediting the monthly "prebate" (advance rebate of projected tax on necessities) against total monthly spending of citizen families (1 member and greater, Dept. of HHS poverty-level data; a single person receiving ~$200/mo, a family of four, ~$500/mo, in addition to working earners receiving paychecks with no Federal deductions) Prof.'s Kotlikoff and Rapson (10/06) concluded,

"...the FairTax imposes much lower average taxes on working-age households than does the current system. The FairTax broadens the tax base from what is now primarily a system of labor income taxation to a system that taxes, albeit indirectly, both labor income and existing wealth. By including existing wealth in the effective tax base, much of which is owned by rich and middle-class elderly households, the FairTax is able to tax labor income at a lower effective rate and, thereby, lower the average lifetime tax rates facing working-age Americans.

"Consider, as an example, a single household age 30 earning $50,000. The household’s average tax rate under the current system is 21.1 percent. It’s 13.5 percent under the FairTax. Since the FairTax would preserve the purchasing power of Social Security benefits and also provide a tax rebate, older low-income workers who will live primarily or exclusively on Social Security would be better off. As an example, the average remaining lifetime tax rate for an age 60 married couple with $20,000 of earnings falls from its current value of 7.2 percent to -11.0 percent under the FairTax. As another example, compare the current 24.0 percent remaining lifetime average tax rate of a married age 45 couple with $100,000 in earnings to the 14.7 percent rate that arises under the FairTax."

Further, per Jokischa and Kotlikoff (circa 2006?) ...

"...once one moves to generations postdating the baby boomers there are positive welfare gains for all income groups in each cohort. Under a 23 percent FairTax policy, the poorest members of the generation born in 1990 enjoy a 13.5 percent welfare gain. Their middle-class and rich contemporaries experience 5 and 2 percent welfare gains, respectively. The welfare gains are largest for future generations. Take the cohort born in 2030. The poorest members of this cohort enjoy a huge 26 percent improvement in their well-being. For middle class members of this birth group, there's a 12 percent welfare gain. And for the richest members of the group, the gain is 5 percent."

Our "slavemasters," - elected, and not - scoff, "The FairTax is going nowhere." They do not believe we're capable of removing the shackles of an income tax system most of us have been born under.

Simply put, "If it's to be, the FairTax effort requires you and me." We must compel enactment of the FairTax bill and its salient provision to pay for government the way America's working men and women are paid - when, and because, something is sold! In the present political environment, we can accomplish our quest by:

• Becoming a recurring-donor member of
• Informing, and influencing, our family and friends on - and off - the Web.
• Setting up an automatic, recurring donation to those presidential candidates who ardently support the FairTax: Mike Gravel (D) and/or Mike Huckabee (R). You can do so via credit card, or even set them up as a Payee under your bank or credit union Bill Pay service, as follows:

Mike Gravel for President
P O Box 948
Arlington, VA 22216-0948
Phone: (703) 243-8303

Huckabee for President, Inc.
P.O. Box 2008
Little Rock, Arkansas 72203
Phone: (501) 324-2008

Let us bind together, with decisive action, to ensure April 15th soon becomes just another pretty Spring day.

(Permission is granted to reproduce any of my posts, in whole or part. - Ian)

KnightHawk said...

Passionately in favor though I'm pessimistic I'll ever see it. (FairTax) or something darn near close to it.

Ian said...

The idea is to: do something in support of the FairTax. If you believe in it, then ACT. Once you do, you'll figure out something else to do, etc.

Antimedia said...

I'm in favor of it.