Monday, August 4, 2008

Why The FairTax Matters Now

The closer we get to November the closer we get to more taxation.

I say this for both candidates. Why? Both have plans to increase spending in federal government. Sen. John McCain wants to cut taxes while doing so. Sen. Barack Obama wants to increase taxes on small business (the greatest contributor to our economy) and in other places.

Why not decrease spending? Why can't they cut spending and get rid of pork spending? Why can't they stand up and be a real leader who advocates real answers?

I was reading a paper in the FairTax this morning from The Beacon Hill Institute at Suffolk University: Taxing Sales Under the FairTax: What Rate Works? By Paul Bachman, Jonathan Haughton, Laurence J. Kotlikoff, Alfonso Sanchez-Penalver, and David G. Tuerck. Their bios are on the research paper.

Through their extensive calculations, they found that by implementing the FairTax, the worst thing the Federal Government would have to do is cut spending, and this was not likely to happen becuase the FairTax would generate enough new revenue to cover the government's current needs.

Now is the greatest moment to push for tax reform. If we do not, they will continue to use our taxes to manipulate the vote to create an even greater negative impact on our future economy.

Rep. John Linder says this about our future:
"Like all the great nations and societies of history the United States is rapidly coming to the end of its existence as a great and powerful country. The shackles of our nearly 70,000 page tax code are making us less and less able to compete in the global economy. Our tax on capital is cutting our businesses off at the knees. Our highest earners have half their income confiscated by the IRS. All of these taxes along with the cost of complying with nearly unfathomable tax regulations put us at a severe disadvantage as competitors in the global economy since these expenses must be added to the price of the goods and services we sell." (Read More)

I want my children to know a great America. What do you want? Email your representatives today and demand a Fair Change - the FairTax.
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2 comments:

Dutchman3 said...

David,

The BHI paper has a few errors which impact the sales tax rate. Mostly, they added federal consumption to the base, but failed to add offsetting revenue --Governments can't tax themselves!

A more recent study might be of interest to you. Two Rice Univ. economists did a study for the Homebuilders Assoc on the impact of the Fairtax. They included an excellent section comparing the BHI study to the Gale version and came up with an unbiased result. Can't link you to it, but if you just google John W. Diamond, you will find his May 5, 2008 study.

August 4, 2008 at 11:45 AM
Unknown said...

I am highly suspect of any lobbyist group like the Homebuilders Assoc. They are employed to make sure the current tax law favors their constituents. If the FairTax is passed, it will benefit builders and consumers. It will not, however, benefit the lobby - because they would be out of their high powered and lucrative jobs.

As for Dr. Diamond, who also hails in the James Baker III Institute, I find his writing fascinating. He is probably a very talented economist but his work for the lobby and for James Baker makes me wonder how much of the research is biased in favor of the Institute and the lobby.

The government can pay tax. It is similar to redistribution of funds. They pay taxes now on every employee along with Social Security and Medicare. It is exempt from sales tax. This would change under the FairTax. The federal government has expenditures and spends millions in taxes every time it purchases a product - that tax is in the form of the income tax, medicare, and social security taxes embedded in every product it purchases. That taxation will have to be replaced through applying the FairTax to every purchase the government makes.

Is this redistribution more than taxation. It could technically be called that but when you think about it, the funds being redistributed are going to become another source of funding for social security and medicare when otherwise they would be designated for other purposes.

So, yes, the government can pay taxes - it already does.

August 5, 2008 at 6:48 AM

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