The Fair Tax Revisited By Jack Harry The first assumption I must make is that our present tax system and codes are antiquated at best. They tend to be tilted against the poor and middle class wage earners. Leaving the Capitalists, hence business owners and the wealthy less burden. Therefore, tax reform is in need of reform, if not a complete revision. Secondly, The Fair Tax claims to be a tool by which all these problems are cured. It is as if those promoting this Tax revision have a “Magic Wand” to cure all the ills. At first glance this would just open up a flood gate of people who they as any good salesman pushed all the right buttons to get you to buy into their “Fair Tax” reform. At a glance it just seems “too good to be true”. It is an idea that really hits home with those us carrying the burden of taxes, and Neal Boortz the pied piper has given us hope and salvation in his message. Thirdly, it is inconceivable to think I can change anyone’s mind, who like a fish swallowed the bait, hook line and sinker, thereby, having become subjective rather than objective. That being said I will still state my case against. Even though, Neal and his fellow “True Believers” do have some interesting points. However, the general scope in my observation is it doesn’t answer the problems it claims to eliminate. I would first like to point out who are the people touting this miracle of tax reform. It has been the Libertarian School of Politics and Economics. Neal Boortz one of its biggest promoters. What is it that they want as their end goal? a). a Laissez-faire government and form of Capitalism. Complete hands off from Government. So, no EPA, or Consumer Protection agencies, etc… b). Complete private property rights. c). Private ownership of schools, hospitals, prisons, healthcare, Medicare, Medicaid, and income from profits, and you guessed it, labor. It is their contention that self-ownership includes the right to subject one’s self to voluntary slavery. A scary thought in and of itself. Remember private property rights? Businesses have the right to owner capital, resources, and labor! Now that I made a case of who really is Promoting the fair tax I can now start my analysis of it. I realize as I said before I don’t expect anyone who fell for the emotional aspect of their argument to want to change their mind. Of course, I can’t stop a “true believer”. We all know the key to all mass movements whether it be religion, politics or in this case “The Fair Tax Movement”, and what attracts the masses, “is the Prospect of sudden and spectacular change in their conditions of life”…Eric Hoffer. I had to ask myself this question to start with, given all the possible reasons that these business men would now want to bring this huge undertaking to bring about the “Fair Tax” waving the flag for the poor and the middle class? We already know what they think of the poor and the middle class and labor, so this has thrown an interesting twist to the way I must approach my evaluation. No businessman has cared about the poor or the working class and their welfare to this point. As Neal Boortz stated it would bring back money in off shore accounts into America. But what and why? One, would be to escape the taxes they agreed to pay when congress and business owners got the tax breaks to move their businesses off shore. Two, with the “Fair Tax” this money could then be reinvested in stocks commodities etc. and not have to pay capital gains taxes as well. A complete win, win situation for the Businessmen who now further their income growth, even geometrically. According to Neal and his group they would spend money to build new growth industries in America. Not to mention as he says, “foreign investment would also want to come here”. Again I think this a total misconception. No one is going to come from another country and invest in new infra-structure as the cost of labor alone would prohibit such a move. The only way it would therefore be possible would be to bring wages down to a competitive level with third world countries. So this is another win, win, situation for these businessmen. So in reality the Fair Tax has not increased workers’ wages but caused them to go lower. So now the poor and middle class will be no further ahead and will have to spend more of their income. This also puts a hole in the theory that the poor and middle class will have more disposable income for investing and their retirement. Remember the goal is Capital will control all aspects of business. Wait, what about the tax rebate, you ask? From many historical models and census information, we know that poor people spend all they make to survive. The rebate would be spent and taxed again, thus still having a negative effect on the poor. At this point I would hope you could see that the income distribution gap is tilted in favor of those that are rich. Mr. Boortz even makes it a sin that poor people should know better than to spend all they have and instead save. He thinks the Fair Tax will help the poor and Middle class achieve this. But I see it having an effect that is negative for these people. Not once has any discussion from anyone in Neal’s camp used Pareto Distribution Theory. The Pareto distribution is a skewed, heavy-tailed distribution that is used to model the distribution of income. Social Security: we already know what this group of Libertarians would really like to see Social Security done away with. At best, privatized so more profit can be made. Again meaning less spendable income for the elderly. Now Mr. Boortz makes the Comment “The Fair Tax rewards those who act and live responsible”, thereby, giving cause for the Middle Class more upward Mobility. If wages go down as projected and costs raise, certainly mobility will be hindered greatly. Remember, Private Property and Privation of everything. The cost of infrastructure, education, etc. will keep raising. Not to mention the cost of education and Health Care. As well, remember these same folks want to do away with Medicare and Medicaid. Another issue, Labor, Neal says, “Jobs belong to the employer, not the employee.” Again, remember these men do not want Unions and don’t believe in Workers’ Rights. Lucky for them as the Supreme Court in its last two decisions have gutted the worker, by basically killing the effectiveness of the NLRB. This of course meaning wages will be at the whim of the owner, as to pay overtime or cut wages to minimum wage. Also, these are the same guys who are against raising the Minimum wage. Plus, lowering wages in America is the only way to be competitive with China. Once more, putting more income disparity in a geometric mode. Note: It is a lie that the rich will pay their fair share. If wages spiral downward and costs surge upward the “Fair Tax” will not foster Economic Growth. It will give the rich more money to invest in speculation. Don’t confuse Investment speculation with Economic Growth. It is what Neal would like you to believe. I also see this problem creating an underground environment of “Barter Systems” and cash and Carry propositions. I don’t see the “Fair Tax” as being fair at all, but a way to further the goals of three Billionaires who just want more money for themselves. Mr. Boortz and Company projects his vision on page 218: “Our vision for tomorrow sees a government that’s a partner with the business community and the people, not an adversary: a government with a tax system that encourages economic development and the creation of new business, rather than a government and tax system that chase valued business to foreign shores.” This to me is the most provocative statement in the book. It alludes to some of my basic fears. We have already seen the effects of Big Business in Politics and Government. It appears to me that these fellows would exasperate our lives tenfold. In conclusion ask yourself some questions: 1. Who came up with the idea? Three greedy billionaires wanting to cancel all taxes on wealth - inheritance, gifts, capital gains. 2. Who promoted the idea and wrote the book? A right-wing disc jockey - part of hate radio. 3. Who came up with the bill? A conservative bigoted congressman. 4. Who came up with the details? Right-wing think tanks. 5. Wheres the proof it will work? Supposedly in a secret unpublished study. 6. What is the only thing we know for sure? It wont cut taxes and its extremely regressive.. 7. How is the 700 billion in estate, gift, and capital gains taxes going to be made up? The middle class. 8. What if people just keep buying used? Taxes will have to go up. I still feel there is a scam in the mix of all this, all factors seemingly point to this. I appreciate the fact I won’t convince you of the deception. A good pitchman always goes for the emotions and creating instant gratification to help you buy the scam. Once you have bought it, you now own it, and usually your emotions won’t let go even when in your heart you know you were taken. “All mass movements deprecate the present by depicting it as a mean preliminary to a glorious future; a mere door mat on the threshold of the millennium.” Eric Hoffer …”The True Believer”
Posted on: Sat, 23 Aug 2014 15:33:13 +0000