Tuesday, January 22, 2008

The Raw Deal

(or Shell Game Passes For Tough Love)

Big Politician Guy: Listen, I’m going to give it to you straight. This federal income tax system is dumb. It’s your hard earned money. You have a right to spend it the way you see fit. You know how to spend it better then the government. Forget about federal income tax and use your money to be happy..…… Actually, the government will need some money… Of course we’re not going to tax the people… Oh wait, I know… We’ll just impose a spending tax. That sounds fair. We’ll have a national sales tax on gas and clothing and food and stuff like that. . But why should you worry? You can afford a few extra cents with all those 1000’s of dollars you’re saving from not having to pay income tax.

Local Politician Guy: Since the taxes were cut the Federal government doesn’t have any money to give to supplement state programs so we’re going to have to increase your property taxes and also add a few more cents to the tax on goods. But why should you worry? You can afford a few extra cents with all those 1000’s of dollars you’re saving from not having to pay income tax.

Local Doctor or Pharmacist : The government is cutting back on Medicare and drug programs, so you’re going have to pay for your own drugs and treatment. But why should you worry? You can afford it with all those 1000’s of dollars you’re saving from not having to pay income tax.

Big Politician Guy: What! You need some help? Why turn to the government? The government is not a charity. . Don’t expect the government to bail you out… What?… Well, sure… the government created the New Deal to help people in the depression….. And that’s right, after WW II there was the GI Bill where the government helped millions of GI’s go to college and get an education. And sure the government bailed out a lot of corporations. And what if the government gave amnesty to a bunch of illegal immigrants back in the 80’s. What does all that got to do with you? Listen, times have changed. Your better than that. We believe in you. Pull yourself up by your own bootstraps. Keep your eye on the ball. Put your nose to the grind stone. Study hard. Then go into heavy debt and live the American dream. Of course, you can always move to China and get a good job there.


Blogger Ian said...

Gov. Huckabee's advocacy of the FairTax is the single most important policy position in this election. Research findings explain why:

The FairTax rate of 23 percent on a total taxable consumption base of $11.244 trillion will generate $2.586 trillion dollars – $358 billion more than the taxes it replaces. [BHKPT]

The FairTax has the broadest base and the lowest rate of any single-rate tax reform plan. [THBP]

Real wages are 10.3 percent, 9.5 percent, and 9.2 percent higher in years 1, 10, and 25, respectively than would otherwise be the case. [THBNP]

The economy as measured by GDP is 2.4 percent higher in the first year and 11.3 percent higher by the 10th year than it would otherwise be. [ALM]

Consumption benefits [ALM]:

• Disposable personal income is higher than if the current tax system remains in place: 1.7 percent in year 1, 8.7 percent in year 5, and 11.8 percent in year 10.

• Consumption increases by 2.4 percent more in the first year, which grows to 11.7 percent more by the tenth year than it would be if the current system were to remain in place.

• The increase in consumption is fueled by the 1.7 percent increase in disposable (after-tax) personal income that accompanies the rise in incomes from capital and labor once the FairTax is enacted.

• By the 10th year, consumption increases by 11.7 percent over what it would be if the current tax system remained in place, and disposable income is up by 11.8 percent.

Over time, the FairTax benefits all income groups. Of 42 household types (classified by income, marital status, age), all have lower average remaining lifetime tax rates under the FairTax than they would experience under the current tax system. [KR]

Implementing the FairTax at a 23 percent rate gives the poorest members of the generation born in 1990 a 13.5 percent improvement in economic well-being; their middle class and rich contemporaries experience a 5 percent and 2 percent improvement, respectively. [JK]

Based on standard measures of tax burden, the FairTax is more progressive than the individual income tax, payroll tax, and the corporate income tax. [THBPN]

Charitable giving increases by $2.1 billion (about 1 percent) in the first year over what it would be if the current system remained in place, by 2.4 percent in year 10, and by 5 percent in year 20. [THPDB]

On average, states could cut their sales tax rates by more than half, or 3.2 percentage points from 5.4 to 2.2 percent, if they conformed their state sales tax bases to the FairTax base. [TBJ]

The FairTax provides the equivalent of a supercharged mortgage interest deduction, reducing the true cost of buying a home by 19 percent. [WM]

ALERT: Kotlikoff refutes Bruce Bartlett's shabby critiques of the FairTax.

12:19 AM  

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