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Question for a 'FAIR' tax advocate

by Dave Konkel [Moderator] / March 29, 2004 12:29 PM PST

I've long held that one of the main goals of the "Fair" tax system is to starve the government for funds and thereby force massive downsizing and loss of popular programs that are otherwise untouchable. In one of the new gerrymandered districts near me [:-(] there are two Republicans in a primary runoff (the gerrymander is so effective there's no other candidate in November. One of the candidates, Ben Stusand, is making the Fair Tax the lynchpin of his campaign. He claims that Fair tax "will result in lower tax bills for 95% of all Americans." My question is, doesn't this PROVE that FAIRTAX.ORG's claim that their system would be "revenue-neutral" relative to the current system is just so much hot air?

-- Dave K, Speakeasy Moderator
click here to email semods4@yahoo.com

The opinions expressed above are my own,
and do not necessarily reflect those of CNET!

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Re:Question for a 'FAIR' tax advocate
by C1ay / March 29, 2004 12:49 PM PST

I'm not particularly a follower of the people over at fairtax.org but it looks to me that they are only advocating a consumption tax which is also what I support. Where do you get the idea that a the goal of a consumption tax is to starve the government for money?

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Re: Question for a 'FAIR' tax advocate
by Dave Konkel [Moderator] / March 29, 2004 9:50 PM PST

Hi, Clay.

>>Where do you get the idea that a the goal of a consumption tax is to starve the government for money?<<
Because it's so obvious that would be the effect that one cannot ascribe it to "the law of unintended consequences."

-- Dave K, Speakeasy Moderator
click here to email semods4@yahoo.com

The opinions expressed above are my own,
and do not necessarily reflect those of CNET!

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Re:Re: Question for a 'FAIR' tax advocate
by C1ay / March 29, 2004 10:16 PM PST
Because it's so obvious that would be the effect that one cannot ascribe it to "the law of unintended consequences.

Why is it obvious? Are you saying there is no rate, not even 100%, that would provide the government with the funding it gets now? Many analysts with more economic experience than you have, have shown it would work just fine. Please discredit Mr. Ehrbar's analysis here to show us why it is so obvious.

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What he is admitting is that...
by Edward ODaniel / March 30, 2004 1:49 AM PST

in order for government to continue to "provide" all the "goodies" people have got used to over the last many years a FAIR TAX would take so much from them that they would revolt. Under the current progressive tax structure most do not realize the free ride they are actually on.

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Re: Question for a 'FAIR' tax advocate
by Dave Konkel [Moderator] / March 30, 2004 1:55 AM PST

Hi, Clay.

>>Are you saying there is no rate, not even 100%, that would provide the government with the funding it gets now?<<
Of course. The majority of earnings in this country are investment income that's "turned over" in the protfolio and never used to buy things. While much of that (outside of sheltered retirement accounts) is taxed now, it wouldn't be subject to taxatiuon under the "Fair" plan. The higher your income, the lower the percent of it you spend on things, so the "Fair" tax is in fact a reverse graduated tax, hitting hardest those just above whatever the exempt income level is, and affecting least those who have the most wealth. Another example of reverse Robin Hood in action in a zero-sum game.

-- Dave K.
Speakeasy Moderator
click here to email semods4@yahoo.com

The opinions expressed above are my own,
and do not necessarily reflect those of CNET!

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Re:Re: Question for a 'FAIR' tax advocate
by Evie / March 30, 2004 2:43 AM PST

Hi Dave,

Exclude the necessities of food, shelter and healthcare, exempt portions of things like clothing and basic utilities, and you have no basis for argument. Nobody deserves a free ride for life just for being born. With a consumption tax each person has to balance what they need with the tax they pay. No able-bodied American is entitles to more or less benefit from the government than any other based on income, accumulated wealth, etc. Levy a stock transaction tax, etc. You portray investment as if wealthy people put their money under a mattress and it multiplies by magically. You and I know that is not the case.

The consumption tax holds politicians more accountable because it is FAR more transparent than our current layered system. You see on every receipt what you contribute. When enough Americans are effected by a tax hike, they will ALL be caused to re-evaluate what they are getting in exchange for that. Right now half don't pay income taxes, so to them, tax increases are of no concern -- let the "rich" pay more. If they are paying a tax on that second color TV they purchase while still crying poverty, that's when things will begin to change.

Don't worry, if anything you will get more from the wealthy. Kerry, for example, only reports an income around $150K -- below his line delineating rich. Tax his consumption more -- ski vacations, furniture for the several homes, that second and third SUV, etc. -- same for those like Ariana Huffington, and you REALLY see people paying a more fair share. Or do you really think that the average person making even $250K/year can even come close to living the lifestyle the Heinz fortune allows him to?

Evie Happy

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Re: Question for a 'FAIR' tax advocate
by Dave Konkel [Moderator] / March 30, 2004 2:56 AM PST

Hi, Evie.

It all sounds wonderful, but ignores the millions if not billions that would escape taxation altogether because they're invested, earn capital gains and dividends, and then passed on to the next generation without inheritance tax. The net result, over a few generations, would be further concentraion of wealth in the hands of the super-rich. It's also an absolute impossibility for 95% of Americans to pay less tax and have the total government revenue be anything close to what it is today. You speak of "free ride" because that's the long-term conservative bugaboo, but what would also disappear is money for all the other programs that the majority of citizens favor, but would "suddenly" have no money to support them (however could THAT have happened?" Things like funding for the arts, education, biomedical research -- in a word, everything that's been on the conservative hitlist for decades and never eliminated would suddenly be dropped because "there just isn't enough money to pay for it."

-- Dave K.
Speakeasy Moderator
click here to email semods4@yahoo.com

The opinions expressed above are my own,
and do not necessarily reflect those of CNET!

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Re:Re: Question for a 'FAIR' tax advocate
by Evie / March 30, 2004 3:19 AM PST

Come on Dave, that defies common sense.

Money isn't worth much until you spend it. Do you really think people just contribute to some giant fund, never take out or spend from it, pass it along and the recipient just lets it sit there?

Nope! The wealthy have more expensive tastes in cars, furniture, clothing, etc. The wealthy cater their events, entertain more and have higher travel and entertainment bills.

As to program cuts, it's about time Americans started rethinking whether the federal government ought to be spending on many of these things. But you actually wouldn't have to fret for quite some time, as a good chunk of the outlays can be cut by eliminating redundancy/waste/fraud before your precious gravy train dried up.

Evie Happy

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Re:Re:Re: Question for a 'FAIR' tax advocate
by Dave Konkel [Moderator] / March 30, 2004 12:19 PM PST

Hi, Evie.

When you reach a certain level of wealth, money is irrelevant -- it's simply a scorecard of success and means to exert power. So yes indeed, it simply accumulates. uesd to be that much was put to good use due to the charitable foundations established in preference to the inheritance tax (The Howard Hughes Medical Institute, Rockefellar Foundation, Ford Foundation, Guggenheim Foundation, and oh so many others). We've now eliminated the major impetus to creating such large foundations, though I'm sure there will be Gates, Dell, and turner Foundations founded with a small portion of their wealth. eliminate the tax on invested income (hat's simply reinvested) as well, and in 100 years we'll be the same as any South American country, where the vast majority of the country's wealth is concentrated in the hands of a relatively few wealthy families. Given our size and wealth, it won't be as few as in many of them, but the true end of America as a land of opportunity will be at hand.

-- Dave K, Speakeasy Moderator
click here to email semods4@yahoo.com

The opinions expressed above are my own,
and do not necessarily reflect those of CNET!

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Re:Re: Question for a 'FAIR' tax advocate
by C1ay / March 30, 2004 9:26 AM PST

Progressive consumption taxes have been proposed for just those reasons but it's obvious from your reasoning that you think lower income people are "entitled" to a percentage of the higher income earners.

Let's look at the extreme, Bill Gates. He has created 100s of 1000s of jobs directly and 100s of 1000s of more jobs indirectly. As the founder of the Bill and Melinda Gates foundation he has given over $7,000,000,000 dollars to charity. He is taxed at the highest rate in the country and you think it's not enough.

Don't like that example, how about Warren Buffet. With substantial stakes in American Express, Coca-Cola, Gillette, Wells Fargo, Fruit of the Loom, Pampered Chef, NetJet, etc., he too is responsible for 100s of 1000s of jobs. Despite a net worth exceeding $40,000,000,000 he pays himself an annual salary of a $100,000 and still lives in the same grey stucco house he bought forty years ago for $31,000. How much income tax do you think you're getting from him? To a question regarding plans for his vast fortune, Buffett emphatically replied that ninety-nine percent of his wealth will be applied to the benefit of society through a foundation that is is expected to become the largest endowment in the country. I guess he's not doing enough either huh? Does he need a higher tax rate.

The list goes on and on. Who do you think provides the majority of jobs in this country? Guys like these two or the middle class Joe? Why do you think their earnings should be taxed at a higher rate on top of what they already do for society? Even a progressive consumption tax that taxes luxury items at more would be more fair than what the typical liberal thinks these guys "owe" society.

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Re: Question for a 'FAIR' tax advocate
by Dave Konkel [Moderator] / March 30, 2004 12:22 PM PST

Hi, Clay.

I'm not talking about redistribution, ecept the tiny portion that happens now (well under 5% of the Federal budget). You simply can't have a system in which 95% of the population pays the same or less tax, and the total amount collected is the same, especially when the shift from income to consumption taxes eliminates large buckets of income from ever being taxed at all. I don't care who does an analysis saying otherwise -- it essential comes down to a mathematical impossibility.

-- Dave K, Speakeasy Moderator
click here to email semods4@yahoo.com

The opinions expressed above are my own,
and do not necessarily reflect those of CNET!

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