But... IS It Fair? (Part 2, of hopefully 3)

One of my primary complaints about pundits like Rush Limbaugh is that while - at least in Limbaugh's case - they excel at pointing out problems, they fail miserably at either providing solutions, or alternatives, to the ideas they mock.

So, it is with the greatest chagrin that I report that apparently, i managed to do the same thing the other night. In the throes of my violent hatred of the economic scourge misnamed the "Fairtax," I totally forgot to advocate an alternative.

Mea culpa; here goes.

The notion of "fairness" in taxation is loudly bandied about, but hardly ever actually proposed. See, most people don't really understand how our economy works. They believe, really believe, that rich people each have a sort of a Scrooge McDuck vault, filled with the millions they've extorted from the poor, in which they gleefully swim while simultaneously signing over vast tracts of rainforest to their personal buddy, the unscrupulous land developer, and stepping carefully directly on the upturned, desperate faces of the downtrodden.

Um.

No.

See, I hate to break this to you, but rich people are the ones that hire poor people; they're the ones who start new businesses, or invest in others' entrepreneurial efforts. They also buy lots and lots of luxury goods, like Dodge Vipers and 60-inch plasma televisions, which require the labor - and therefore jobs - or countless poor people to produce. Tax the luxury sales, and fuck the poor with increased unemployment; that doesn't seem overly complex, but yet it gets proposed again and again, by people who want to SOUND like they're on the side of the working-class poor, while simultaneously making them ever more financially dependent on the government.

It's called socialism. But we'll get back to that. First, back up a bit. Before I really get started, let me say something about the concept of "fairness." The word has a meaning, and in the context of taxation, it means "everybody pays the same percentage." It does NOT mean - as the Left would have you believe - that the poor shouldn't have to pay at all (while still deriving benefit from the government, and maintaining the franchise, of course,) but the rich should get soaked until they don't have a pot left to piss in after they pay "their share."

In fact, not only is that about as far from fair as it is possible to get, it's STUPID; if you set a flat tax rate, and then make the rich people pay for the poor, the total personal fortunes of the rich will be completely exhausted in a single year, and the poor will still be poor - since they outnumber the rich about, say, 350 to one. Now there are quite a few rich people that make more than 350 times what, for example, I do - but a lot more of the so-called "rich" make maybe 5 times what I do, and there'd still be poor people left clamoring for a handout if you beggared every rich person in the country.

We'll come back to that, I promise.

One thing that the Fairtax advocates get right is the notion that doing away with embedded taxes will cause prices to fall sharply. That's absolutely true; replacing the often tiny embedded taxes with a much bigger, across-the-board embedded tax doesn't fix it, though - and that's what they're advocating.

The problem might lie - at least in part - with the fact that in our country, few if any, anymore, have read Mark twain's novel "A Connecticut Yankee In King Arthur's Court." There's a great scene in that book in which the narrator - the titular Yankee - tries repeatedly to explain a simple economic concept to someone else. The someone else is married to an idea that's simply wrong, and clings to it despite facts, sense, and logic. In the novel, the narrator eventually resorts to simply knocking the idiot out.

I hope I'll have a bit more luck explaining the same concept.

let's start simple. What matters, in your paycheck, is NOT the number of dollars you take home; it's a question of what you can buy with those dollars. This is the notion of the strength of a currency; a strong dollar can buy more stuff, and is therefore worth more, than a weak one. So, in an economy with a strong dollar, you can earn numerically fewer dollars than with a weak dollar, and still buy more. Coming back to this, as well.

Right.

So: fairness in taxation depends on two factors: everyone must pay the same, and EVERYONE MUST PAY. As I've pointed out before, it's only a legitimate function of government if everyone who derives benefit from it also pays for it; and if eeryone who pays for it, derives benefit from it.

As a totally unrelated aside, that last is a big part of my beef with the Pennsylvania Amish; they use the roads, and let their horses befoul the roads, but pay nothing for the upkeep of those roads, or the cleaning costs for them. (The other half being that if you're on a freeway with a speed limit of 55, and you're doing 3, and you let 25 cars stack up behind you instead of getting off on the shoulder, you're a complete dick; this is something I see the local Amish do regularly, and they ought to get citations for obstruction of traffic.)

So; the only fair tax there CAN be is one that EVERYBODY pays, without exception; the second part of that is to eliminate from the federal budget entirely any program from which any single citizen does not derive benefit. (That, of course, is a project for "But... IS It Fair? Part 3" which will come along whenever I find the time to do the research into the federal budget necessary for such a massive undertaking.)

But, ok, everybody pays. Everybody must also pay THE SAME, or it's unfair to the people paying extra.

Here's where embedded taxes rear their hugly heads again, like a sadistic, "fuck the poor" version of whack-a-mole. See, embedded taxation openly fucks the poor; the embedded taxes behind making a Hyundai are basically the same as the ones for a Dodge Viper, but they sure add up to a lot higher percentage of the Hyundai's dealer price. This, in fact, is one of the many issues with the "Fairtax;" the replacement of the embedded taxes currently in place with a much more invasive and higher embedded tax, absolutely shanks the poor, and the Fairtax authors know it. Their solution is to resort to socialist income redistribution, to take (more!) from the rich, and give it directly to the poor, so they aren't as badly shafted by the Fairtax.

Here's a hint: if it were actually fair, you wouldn't need to do that.

So: to be fair, the embedded taxes need to go away.

Now, bear with me, as this next bit may sound counter-intuitive, but trust that I will explain.

What would both be fair, and ACTUALLY WORK - which seems important - would be a flat-rate, no exemptions income tax, at a rate sufficient to support the (revised and shrunken) federal budget, while simultaneously eliminating all other taxes in their entirety. Specifically, social programs should not be a federal function; currently, they're above 50% of the federal budget, which adds up to literally two trillion dollars a year that the American taxpayer would - not have to pay anymore. If those programs are really necessary - I don't believe they are, but who am I, huh? - let them be funded at a state or local level, where they belong.

Now, that may seem crazy; I mean, we'd be putting a high tax rate on our income, making us one of the most-highly-taxed nations on earth, right? that's just crazy, isn't it?

Not so fast, slick. See, we're ALREADY one of the most - if not the single most - highly taxed nations on the planet. this is thanks to embedded taxation; remember, your dollar is only worth what you can buy with it.

And without embedded taxation, you can buy a whole lot more, because prices will drop. You'll be amazed at the scale of it. When that happens, combined with the reduction in the federal budget, an income tax of maybe 30% - about equivalent to what currently comes out of my paycheck to FICA, Medicare, Social Security, and income taxes combined - will result in your actual tax burden DEcreasing, while your buying power INcreases. The cool thing about that? your increased buying power results in spending, which strengthens the economy and makes new jobs, which results in more people to spend money, which strengthens the economy, which results in new jobs...

See, you're not RAISING taxes; you're bringing them out in the open, and since the new tax rate would be set at a rate determined as revenue-neutral with the SMALLER federal budget, you would actually be cutting taxes significantly. Historical fact: no tax hike has ever helped an economy, in any country anywhere in all the world through all of history; and in all that time and all those places, no tax cut has ever FAILED to help.

It may seem counterintuitive on its surface, but unlike our current 23,000 (!) page tax code, it would actually work, which our current system manifestly does not.

Helping things along would be two small amendments to the Constitution - a balanced budget amendment, requiring ALL Congressional spending be accounted for, and refusing anything that goes above revenues, and an amendment to revoke "Congress shall have the power to levy and assess taxes..," that same being one of the very few things i think the Founders honestly got wrong. (They had just come from a war largely fought for religious freedom and freedom from abusive taxation; they may not have realized we'd try the tax abuse again as soon as their bodies were cold.)

See, fairness is this: someone who makes 450 times as much money as I do, pays 450 times as much in taxes as 450 people at my wage. This only happens - can only happen - with a flat tax.

So, if you're advocating anything else, you're NOT advocating fairness.