Can the Government Pay Itself?

I had a comment not too long ago about whether or not the government can pay itself taxes.

The commenter believes this is impossible. On simple view of this, I would agree. For example, if I have ten $1 bills and pay myself $2 for washing the car, how much money do I have? The answer is $10. Simple math would then tell you that the government cannot pay itself taxes.

Unfortunately, simple math is not applied to how the federal government would begin to pay taxes on what it purchases.

Take that ten $1 bill example and look at it this way. If I have a budget and I pay $2 to five budget areas, I still have $10 but to be spent in different ways. Let's say I told myself that for every $1 I spend from a budgeted item, I will take 50 cents and redistribute it. So I take and spend $1 out of my budget for entertainment. I now have to take 50 cents from entertainment and redistribute it into each of the other budget areas. I now have, 60 cents left in my entertainment fund but each of my other five areas now have $2.10. Now I have to be more careful with my spending in entertainment.

Again this is way over simplified. For example, with the FairTax, experts agree that when all other tax revenues are abolished, we now have a final product or service that costs less (about 23% less). So instead of something costing $100 because it has embedded taxes, it now costs $77. Add the FairTax and the item costs $100. Add local tax (like you would do anyway) and you get the total cost. At most, an item will differ in price about a dollar (plus or minus). Very little if any change.

Now apply that to the federal government paying taxes. The federal government spends money. It pays out on services, contracts, and consumable goods. If the federal government was to have to pay the same tax rate as everyone else, it would not be any different than how we each will have to pay. Now, whoever receives payment from the federal government, will be collecting taxes from government purchases and the money will be reinvested into our government.

It is very simple when you think seriusly about it. If I have to pay $100 for an item (which includes the FairTax), then the fedral government will have to pay $100 for the same product. If I was able to afford a $100 million dollar item, then 23% of that money (already calculated into the sale) would be tax. When the federal govenrment pays for the same item, it does not get a tax break and get to pay $77 million for the same product. It has to pay the FairTax and its total costs will be $100 million. Whoever collects the payment, will then pay the sales tax.

Do not over think this. It really is that easy.

Think Fair and you will get the FairTax. Until next time.

The My FairTax Blog morphs

I cannot keep talking just about the FairTax. Yes, the FairTax is very much the main premise of this blog but when I hear things politically that do not make good sense then I plan of commenting about them also.

Take for example how socialism is being forced upon our nation through the ideas of liberal thinkers who desire socialized medicine.

I am firmly against socialized medicine. Okay, I got that out of the way. I cannot see how in any way we could want to damage our health care abilities with the monstrous tax burden that will come with socialized medicine.

How can we think that we can do better than other nations who suffer under socialized medicine - Canada and France to name two. Canadians cross the border daily to come to the US in order to get better health care (or any health care).

The thing that socialist do not tell you about such a plan is that a government employee will get to decide whether you are worth the money or not. In other words, they will no longer try to save the life of everyone. They will decide whether a premature baby is worth the money of saving. They will decide if sustaining your life with life-support is worth the money to be spent.
I could go on.

Socialized medicine is not the answer. It puts a price tag on life and that is not what America was founded upon.

Oregon is even implementing a lottery for free coverage among those who are "cash-strapped".

Why not try this answer. How about teaching people in high school how to manage money! How about introducing four years of money management classes that teach high school students not to make the same stupid spending mistakes their parents are making?

Case in point, how many cash strapped people are making car payments, cell phone payments, internet payments, and cable or satellite payments along with a large credit card payment and mortgage (on a home they really cannot afford)? Why can't they get rid of those expenses and then fund their own health care expenditures?

Do I believe that there are some people that just cannot make a insurance payment. Yes. But the answer is in how they spend their money (not on cigarettes and alcohol and worthless attempts to win the lottery). The answer is in how to assist those people who really need assistance, not those who manage their money wrong!

How about giving grants to free clinics so they can provide better services? Why not choose the FairTax which could be a better way of funding Medicare and Medicaid (didn't think I could get the FairTax in there did you)?

Socialized medicine is just another way of destroying our nation. It is the worst possible way I can think of handling health care.

Hey Mr. Buffet as you freely give your money away, why not support medical expense accounts?

The money and ability is out there. More government is not and will not ever be the answer.

My FairTax on Squidoo

I have opened a lens on Squidoo to help grow the visibility of this blog. Take a look and leave a comment.

My FairTax on Squidoo