[quote]Imagine receiving 100% of your paycheck!
Neal Boortz (archive)

August 27, 2004 | printer friendly version Print | email to a friend Send

[b]Two weeks ago a man stood up at a George Bush campaign appearance in Florida to ask about a piece of legislation known as HR25.  Many, including myself, were pleased to hear Bush respond with some positive thoughts about the Fair Tax plan, a movement to replace the federal income tax with a national retail sales tax.

Washington is a city of inertia, and right now the inertia belongs to our present method of funding the operations of our government, the income tax.  Politicians will not easily surrender a funding mechanism that lends itself so well to political demagoguery and which can be used to reward political allies and punish enemies.

The Fair Tax plan deserves a thorough public examination and debate.  John Kerry seems dedicated to making sure this doesn’t happen.  Soon after Bush cited the national retail sales tax as something worthy of further exploration, Kerry stepped forward with the typical class warfare rhetoric of the left.  Acting as if he actually knew what was he was talking about (he didn’t), Kerry announced that the Fair Tax would amount to the largest increase in the tax burden on poor and middle income Americans in our history.

John Kerry was wrong.  He was either speaking out of ignorance, or he was deliberately lying about the Fair Tax proposal in order to gain a political advantage.   A politician lying in order to gain political advantage  --- imagine that.

This column is lengthier than the norm, but I promise you that if you will invest the time it takes to read it you will be well on your way to becoming yet another rabid supporter of the Fair Tax plan.  You will know that the poor and middle income Americans would be the prime beneficiaries of the proposal.  You may even organize your own neighborhood march on Washington to demand that HR25 receive a fair hearing.  In the next two minutes I’m going to turn you into a HR25 Fair Tax zealot.  Read on:

First … the briefest of overviews:  Simply put, HR25 would provide for the repeal of the 16th Amendment (the income tax amendment) and the dismantling of the IRS.  All personal and corporate income taxes would end, as would all payroll taxes.  There would not be one cent of federal taxes of any nature taken out of your paychecks.  No more Social Security taxes.  No more Medicare taxes.  You earn $2,000 a payday; you get $2,000 a payday.  The federal government would be funded through a national sales tax on goods and services sold at the retail level.  No taxes on investments.  No taxes on savings.  You only get taxed on what you spend at the retail level.  Store your earnings in a shoebox if you wish.  They won’t be taxed.

When originally proposed, calculations showed that the sales tax would have to be in the area of 23%.  A complete economic study is now being completed that is expected to bring that total to under 20%.   For the purposes of this column, we’ll stick with the 23% figure.

OK … let’s put on our sensitivity hats for a few minutes here and think of the consequences of the Fair Tax Act on our nation’s poor, poor, pitiful poor.  After all, they can hardly afford a 23% sales tax when they’re living paycheck-to-paycheck in the first place, right?

Bear in mind that for the most part those whom we define as “poor

:eek:

WOW!

That's incredible. I confess, I'm a fan now. With the following caveats:

I grow cautious, as I've seen unintended consequences occur. I won't say I know for sure that this will happen, but it could. The most obvious is the failure for prices to fall. With the current stiff competition, I think that would have to happen, but then it should have happened w/ de-regulated CaTV too.

Second, I would like to see the economic models, learn a bit more about them.

Also, I want to make sure I understand things better. Presumably this wouldn't affect local taxes. What about taxes on telephones or other services/utilities? Finally, what about "sin" taxes? I don't necessarily have a problem w/ all of those, but I'm wondering about them.

Finally, I would also like to see what the opponents say about this. Do they have any legit criticisms/concerns. I've seen plenty of people from the left come on and state supposition as "fact". It's easy to present a convincing argument when you control the dialogue.

That being said, this is an incredible position. Thanks.

I do believe there will be growing pains associated with this plan, but Capitalism itself should demand prices be lowered to remain competitive. When 22% is taken away from their operating costs, it would behove them to decrease their product by that much as it would only take one competitor to lower theirs to capture the market.

It is impractical.

The reality is that social security is an essential part of our economy. It is the only way to preserve income for people in their old age. You may say, "people should save and be responsible for their own retirement", but you know as well as I know that there are a good deal of people that aren't responsible enough to do that. When they are older, absent social security, they will become a massive drain on the economy through not being able to care for themselves. Social Security brings stability into the system so there won't be any great "age-shocks" to the economy from generation to generation (though the boomers are certainly testing this, to say the least).

The fair tax is great for a libertarian like Boortz, but the real world is interdependent. You can't say that another person's poor economic decisions don't impact on you, because they invariably do in the long run. For instance, the absurd amount in emergency care costs we already pay for people who don't have access to primary care health insurance. There's no free lunch. The costs come back to haunt eventually, which is why entitlements really exist, to give some stability and predictablity to the economy.

This is obscene.

It's plain as day that a national sales tax will punish either the poor or the middle class -- or both -- all in the interest of delivering a huge tax cut to the well-off in this country.

You can be for the middle-class or you can be for a flat tax. But you can't be for both.

Progressive taxation is a century-old bipartisan tradition. We financed two world wars through progressive taxes. We became the most prosperous nation on the planet -- with one of the largest middle classes -- under progressive taxation. And our economy surged during the 1990s, when President Clinton increased the progressivity of the federal income tax system.

The fact that so many people on the right are now champing at the bit to undo what remains of that progressive legacy shows just how out of touch the Republican Party really is with real American values.

We can see this in the man Karl Rove claims as a political role model: William McKinley, a man entirely bought and paid for by wealthy special interests.

This is an excerpt from William Jennings Bryan's famous "Cross of Gold" speech, delivered at the 1896 Democratic Convention :

...the question we are to decide is: Upon which side will the Democratic party fight; upon the side of "the idle holders of idle capital" or upon the side of "the struggling masses"? That is the question which the party must answer first, and then it must be answered by each individual hereafter. The sympathies of the Democratic party, as shown by the platform, are on the side of the struggling masses who have ever been the foundation of the Democratic party.

There are two ideas of government. There are those who believe that, if you will only legislate to make the well-to-do prosperous, their prosperity will leak through on those below. The Democratic idea, however, has been that if you legislate to make the masses prosperous, their prosperity will find its way up through every class which rests upon them.

McKinley beat Bryan twice. But he lost the war. Theodore Roosevelt took many progressive ideas to heart -- for example, he made it a national priority to rein in the "trusts" (something extremely difficult to imagine any Republican doing today). A decade after McKinley was shot, the Wilson administration instituted the first progressive income tax. The American middle-class -- still absurdly small at the time -- surged thereafter.

Republicans love talking "values." As we can see, they'll beat the "issue" of gay marriage to death this year.

But it's just another smokescreen. Eventually, Americans are going to look at their pocketbooks, see the real Republican agenda for what it is, and come home to the Democratic Party.

What scares me is just how how much damage the Republican Party is going to inflict on the middle class of our country until that happens.

Incidentally, Boortz column doesn't seem to address what would happen to Social Security -- which strikes me as more than a trifling matter.

Schadenfreude Wrote:This is obscene.

It's plain as day that a national sales tax will punish either the poor or the middle class -- or both -- all in the interest of delivering a huge tax cut to the well-off in this country.

You can be for the middle-class or you can be for a flat tax. But you can't be for both.

Progressive taxation is a century-old bipartisan tradition. We financed two world wars through progressive taxes. We became the most prosperous nation on the planet -- with one of the largest middle classes -- under progressive taxation. And our economy surged during the 1990s, when President Clinton increased the progressivity of the federal income tax system.

The fact that so many people on the right are now champing at the bit to undo what remains of that progressive legacy shows just how out of touch the Republican Party really is with real American values.

We can see this in the man Karl Rove claims as a political role model: William McKinley, a man entirely bought and paid for by wealthy special interests.

This is an excerpt from William Jennings Bryan's famous "Cross of Gold" speech, delivered at the 1896 Democratic Convention :

...the question we are to decide is: Upon which side will the Democratic party fight; upon the side of "the idle holders of idle capital" or upon the side of "the struggling masses"? That is the question which the party must answer first, and then it must be answered by each individual hereafter. The sympathies of the Democratic party, as shown by the platform, are on the side of the struggling masses who have ever been the foundation of the Democratic party.

There are two ideas of government. There are those who believe that, if you will only legislate to make the well-to-do prosperous, their prosperity will leak through on those below. The Democratic idea, however, has been that if you legislate to make the masses prosperous, their prosperity will find its way up through every class which rests upon them.

McKinley beat Bryan twice. But he lost the war. Theodore Roosevelt took many progressive ideas to heart -- for example, he made it a national priority to rein in the "trusts" (something extremely difficult to imagine any Republican doing today). A decade after McKinley was shot, the Wilson administration instituted the first progressive income tax. The American middle-class -- still absurdly small at the time -- surged thereafter.

Republicans love talking "values." As we can see, they'll beat the "issue" of gay marriage to death this year.

But it's just another smokescreen. Eventually, Americans are going to look at their pocketbooks, see the real Republican agenda for what it is, and come home to the Democratic Party.

What scares me is just how how much damage the Republican Party is going to inflict on the middle class of our country until that happens.

Incidentally, Boortz column doesn't seem to address what would happen to Social Security -- which strikes me as more than a trifling matter.

Yea.

Everyone is looking to the Democratic party for moral leadership. :rolleyes:

We're all just dying to join the Democratic party.

{Deleted}

Schadenfreude Wrote:This is obscene.

It's plain as day that a national sales tax will punish either the poor or the middle class -- or both -- all in the interest of delivering a huge tax cut to the well-off in this country.

You can be for the middle-class or you can be for a flat tax. But you can't be for both.

Progressive taxation is a century-old bipartisan tradition. We financed two world wars through progressive taxes. We became the most prosperous nation on the planet -- with one of the largest middle classes -- under progressive taxation. And our economy surged during the 1990s, when President Clinton increased the progressivity of the federal income tax system.

The fact that so many people on the right are now champing at the bit to undo what remains of that progressive legacy shows just how out of touch the Republican Party really is with real American values.

We can see this in the man Karl Rove claims as a political role model: William McKinley, a man entirely bought and paid for by wealthy special interests.

This is an excerpt from William Jennings Bryan's famous "Cross of Gold" speech, delivered at the 1896 Democratic Convention :

...the question we are to decide is: Upon which side will the Democratic party fight; upon the side of "the idle holders of idle capital" or upon the side of "the struggling masses"? That is the question which the party must answer first, and then it must be answered by each individual hereafter. The sympathies of the Democratic party, as shown by the platform, are on the side of the struggling masses who have ever been the foundation of the Democratic party.

There are two ideas of government. There are those who believe that, if you will only legislate to make the well-to-do prosperous, their prosperity will leak through on those below. The Democratic idea, however, has been that if you legislate to make the masses prosperous, their prosperity will find its way up through every class which rests upon them.

McKinley beat Bryan twice. But he lost the war. Theodore Roosevelt took many progressive ideas to heart -- for example, he made it a national priority to rein in the "trusts" (something extremely difficult to imagine any Republican doing today). A decade after McKinley was shot, the Wilson administration instituted the first progressive income tax. The American middle-class -- still absurdly small at the time -- surged thereafter.

Republicans love talking "values." As we can see, they'll beat the "issue" of gay marriage to death this year.

But it's just another smokescreen. Eventually, Americans are going to look at their pocketbooks, see the real Republican agenda for what it is, and come home to the Democratic Party.

What scares me is just how how much damage the Republican Party is going to inflict on the middle class of our country until that happens.

Incidentally, Boortz column doesn't seem to address what would happen to Social Security -- which strikes me as more than a trifling matter.

This isn't so much a Republican idea as a libertarian idea. Boortz is a libertarian, also. Although a Republican congressman probably introduced the bill, you will not see the GOP even attempt to put this bill on Bush's desk at any point.

Quote:The reality is that social security is an essential part of our economy.

In its current state, for how long? Social Security is a timebomb waiting to detonate. With continued advances in medicine, people will continue to live longer – and retire earlier – putting a constantly increasing strain on the system. It's already happening in Europe, a continent experiencing a slow (or static) birth rate. The decreasing number of young workers will find it harder and harder to fund the increasing number of seniors living on the dole.

Quote:You may say, "people should save and be responsible for their own retirement", but you know as well as I know that there are a good deal of people that aren't responsible enough to do that.

(hypothetical example)

OUWave, I've been pretty irresponsible in my budgeting lately. For instance: I went to the bar last night, blew a wad of money on drinks, cigarettes, and women. Then, to top it all off, this morning I bought a new fancy cell phone-camera combo because my friend has one. Now I don't have enough money to cover the mortgage that's due September 1st. I don’t really want to ask my friends and family for help, nor will I politely ask strangers for a few bucks to cover.

However, I am going to insist that a government agent knocks on your door and demands you pay the rest of my mortgage for this month. If you refuse, you'll be arrested. All because I wasn't "responsible enough" to set my priorities straight when it comes to money. I mean, really. I can't be held responsible for my own actions. You all know how tempting wine, women, and electronic gizmos are! Besides, I just didn't pay attention to my education in high school, so I'm disadvantaged when it comes to budget decision-making. Thus, it’s not my fault. Since you saved up well and made better decisions, you have an unfair advantage over me. So, pony up.

(/hypothetical example)

I don't mean to come across as snide or sarcastic. But I'm just illustrating how Robin Hood Economics oftentimes doesn't result in the warm, fuzzy stories you tend to believe. The above example is happening everyday, and there are millions of voters who would take my side in the above example in that it's "unfair" (read: your fault) that I didn't set aside money for the house payment.

Now, back to the issue at hand... Let the irresponsible stay within the social security system "as is", if they so desire. Why not have an opt-out clause for those who are responsible? In other words, to use a popular term championed by leftish types, let’s make social security "pro choice" and keep government's hands off your financial "body".

Here is a plan commonly circulated around by those wanting to reform the system:

Quote:-Individuals would be allowed to divert their half (6.2 percentage points) of the payroll tax to individually owned, privately invested accounts. Those who chose to do so would agree to forgo all future accrual of retirement benefits under the traditional Social Security system.

-The remaining 6.2 percentage points of payroll taxes would be used to pay transition costs and to fund disability and survivors' benefits.

-Workers who chose the individual account option would receive a "recognition bond" based on the accrued value of their lifetime-to-date benefits. Those bonds, redeemable at the worker's retirement, would be fully tradable in secondary markets.

Those who wished to remain in the traditional Social Security system would be free to do so, accepting a level of benefits payable with the current level of revenue.

Younger workers who chose the individual account option would receive benefits substantially higher than those that could be paid under traditional Social Security. At the same time, the plan would treat women and minorities more fairly and allow low-income workers to accumulate real wealth.

Most important, this proposal would reduce Americans' reliance on government and give individuals greater ownership of wealth, as well as responsibility for and control over their own lives. It would be a profound and significant increase in individual liberty.

As far as the national sales tax proposal, Boortz’ commentary is right on the mark. It’s also refreshing to see a columnist actually use numbers and examples to illustrate a potential idea, as opposed to shouting class-war slogans (with no backup research) merely for political gain and vote begging as politicians enjoy doing. Since the poor and middle class don’t buy boats, winter homes, luxury cars, designer clothes, Italian suits, sporting event tickets, time-share condos, TiVos, etc, as much as the wealthy do, it’s obvious the tax engine would still be fueled mostly by the rich. So there’s not a significant difference there…

But the key difference is that a national sales tax punishes you the more materialistic items you buy. Compare that to the IRS, which punishes success and advancement.

Quote:Also, I want to make sure I understand things better. Presumably this wouldn't affect local taxes. What about taxes on telephones or other services/utilities? Finally, what about "sin" taxes? I don't necessarily have a problem w/ all of those, but I'm wondering about them.

Actually, I do agree with Torch here. Very good questions.

Despite my interest and favor for a NST, I'd like to hear more before I give a full endorsement. Additionally, I wouldn't mind seeing some items (i.e. water, milk, vegetables, asprin...?) either exempt from the NST, or have a reduced tax. In fact, I would be curious if anyone will propose a hybrid... i.e. a significantly reduced income tax coupled with a modest NST.

Also,

The 1990s surge was partially, if not mostly, driven by policies (or lack thereof) born out of divided government - Dem president/GOP Congress - which kept bloated spending and regulations in check. Meanwhile, Bush has been quite liberal in a fiscal sense, with heavy federal spending and a number of tariffs.

Motown Bronco Wrote:(hypothetical example)

OUWave, I've been pretty irresponsible in my budgeting lately. For instance: I went to the bar last night, blew a wad of money on drinks, cigarettes, and women. Then, to top it all off, this morning I bought a new fancy cell phone-camera combo because my friend has one. Now I don't have enough money to cover the mortgage that's due September 1st. I don’t really want to ask my friends and family for help, nor will I politely ask strangers for a few bucks to cover.

However, I am going to insist that a government agent knocks on your door and demands you pay the rest of my mortgage for this month. If you refuse, you'll be arrested. All because I wasn't "responsible enough" to set my priorities straight when it comes to money. I mean, really. I can't be held responsible for my own actions. You all know how tempting wine, women, and electronic gizmos are! Besides, I just didn't pay attention to my education in high school, so I'm disadvantaged when it comes to budget decision-making. Thus, it’s not my fault. Since you saved up well and made better decisions, you have an unfair advantage over me. So, pony up.

(/hypothetical example)

I don't mean to come across as snide or sarcastic. But I'm just illustrating how Robin Hood Economics oftentimes doesn't result in the warm, fuzzy stories you tend to believe. The above example is happening everyday, and there are millions of voters who would take my side in the above example in that it's "unfair" (read: your fault) that I didn't set aside money for the house payment.

You've completely missed my point.

My point was not one of Robin Hood economics. My point was *not* that people who are financially responsible have a DUTY to cover those who are not, *nor* was it even that it is fair to expect them to do so. It isn't fair, and it certainly isn't a moral responsibility.

My point was simply that it makes better sense in terms of economic stability for people who are financially stable. Social Security ensures a level of economic tranquility that protects us all, and benefits us all, whether we are the ones ultimately making those de facto transfer payments or whether we are the ones receiving them. Absent that system, the "age shocks" the economy would see would be bad enough to dramatically hurt those who are financially stable.

I'm *not* making a moral case for the social security system, I'm making a practical one, so don't preach to me about what is fair and what isn't fair. Life isn't fair, you do what is pragmatic and throw fair out the window. It is better for EVERY member of society to prevent those generational shocks to the economy that would occur without a social security system. That is the ONLY reason why it is essential. I'm not a bleeding heart, so get that strait.

I understand your point, and I apologize if I misrepresented it.

But the words "Social Security" and "economic tranquility" in the same sentence is becoming more and more of an oxymoron with each passing day.

Even Greenspan is becoming more vocal about the futility of the program. Funding a social program whose costs greatly outpace inflation is a dead-end road. Senior citizens will soon make up 20% of the population, up from 12% today, making social security far more expensive as time goes on. Think for a moment what will need to happen in order to fund the ever-growing elderly population. That's right... income taxes through the roof. Since your main argument appears to center on the collective ripple effect of economic policy, what sort of ripple effect will massive tax hikes on young workers have over the course of the next decade or two?

There's no perfect solution, but the best one appears to be letting those who are interested in "opting out" of Social Security to a mandatory private fund allowed to do so. If an opt-out clause never happens, my thought is people should boost their own savings anyway, and not depend solely on social security.

Schadenfreude Wrote:This is obscene.

It's plain as day that a national sales tax will punish either the poor or the middle class -- or both -- all in the interest of delivering a huge tax cut to the well-off in this country.

Well, I guess I'm pretty dense, especially when it comes to all these complex systems :rolleyes:, but it's not quite plain as day.

Can you give a dimwit like me some hard evidence? You know, like Boortz just did?

And your historical analysis falls far short of the mark. That's not to say I am not concerned about mergers and reduced competition, but the structure of the stock market (for one good example) means that trusts aren't going to look anything like they did 100 years ago.

Ironically, the closest thing to them would be Microsoft and Berkshire Hathaway, both run by prominent figures who donate money to causes more favored by Democrats. :wave:

President Bush has flip-flopped on the idea of a national sales tax. He said it was a good idea worth serious study -- but then his aides said he didn't really mean that.

:laugh:

So not a lot has been written about it in the mainstream media -- and what few liberal think tanks that exist don't seem to be focused on it.

But there is an interesting debate going on in South Carolina about the idea of a national sales tax, where the Republican candidate has endorsed it. He's trying madly to explain how it won't crush the poor, but the "liberal" South Carolina media :laugh: doesn't seem to be buying it:

<a href='http://www.thestate.com/mld/state/news/opinion/9508958.htm' target='_blank'>http://www.thestate.com/mld/state/news/opi...ion/9508958.htm</a>

<a href='http://www.thestate.com/mld/thestate/9411748.htm' target='_blank'>http://www.thestate.com/mld/thestate/9411748.htm</a>

...but I thought I heard that certain necessities (like many food items) would be exempt, and those making a very low salary would get a nice rebate? Maybe I was just dreaming this. For instance, I could see milk, heat, and certain clothing exempt or having greatly reduced sales taxes, but radios, cell phones, cars, concert tickets, restaurants, furniture, and hotels as not.

I got a kick out of this quote from one of the columns:

Quote:Tenenbaum said, "Either way, there’s not enough money to fund the government."

This says it all, folks. :rolleyes:

We can argue all day about what the best tax code and structure is. But at the end of the day, very few politicians are going to sit down and figure out how to cut bloated programs and keep all these aforementioned taxes low in the first place.

To wit, Michigan has a state budget deficit. Yet, every year, there is a state fair on state owned property. Can someone point to where on the U.S. Constitution it states that a necessary function of government is to provide entertainment? Will we not survive as a people if the state doesn't provide this (and hands it over to private enterprise)?

Tenenbaum couldn't run a shaved ice stand, much less any form of government.