Archive for category FairTax
“Those who do not know history are destined to repeat it.” – Edmund Burke
Four years ago the nation was eagerly anticipating the high hope of change that it was promised. In this lame duck session we find ourselves in a remarkably similar situation. We are in a nearly identical situation as we were merely two years ago. And the debates of the spring of 2011 are being rehashed again and again on the floor of Congress. Should we raise or extend the tax cuts signed in 2001? Do we need to curtail our spending or raise taxes on the villainous 1%? What are the ramifications of perilously skirting the edge of our debt ceiling? Why are the Republicans holding the government hostage with their intransigence? Why are the Democrats focused on a politically significant but economically irrelevant portion of the tax base instead of cutting severe government overspending? The answer is that none of the debates are centered on actually solving this recurring crisis. As we have discussed before, our current tax code is far too complicated for revenue to be its only goal. It now involves shifting societal norms through the punishment of taxes and gaining political footing by dividing the segments of the electorate.
We have not seen a brand new era of politics, only a blatant retread of the exact same arguments that we have had before. The current fiscal cliff we are approaching was set in motion because Congress could not agree in the debt discussions and the super committee talks of 2011. We decided that kicking the can down the road would give our leaders enough time to figure out an equitable solution that would resolve the problem. Yet here we are, having the same conversation. It is frustrating for me to write about; since this is a topic we have covered repeatedly. We need to remember the discussions that are taking place right now because when they inevitably recur we need to pounce. I cannot be the only person slowly losing my mind by the endless repetitive nature of our tax discussions; we can easily sell the FairTax as an answer to the constantly shifting tax rates.
The likelihood of making dramatic inroads for the FairTax during the lame duck session is remote. For now we can build the base of our support which means laying the groundwork for the upcoming intellectual argument that we will need to win. Utilizing one of my least favorite clichés, Einstein once defined insanity as, “doing the same thing over and over again and expecting different results.” As this becomes increasingly apparent we must be sure to remind people of the mistake of continuing down an already beaten path. We invariably find ourselves looking at the same fork in the road; the one we know all too well has taken us closer and closer to a steep cliff marked by economic failure. It is time for us to take the road less travelled by, to begin our journey back along a road marked with recognition of the link between individual liberty and responsibility. While some are unflinching in viewing this past election as a defeat for FairTax, we need to see the possibilities that have arisen. Government will continue as it has done, unimpeded, for nearly a century. We must use this opportunity to show the dangers of economic insanity, and the virtues of our plan. The danger of the cliff approaches, whatever action is taken we can expect to see it again. Recognize the patterns of history so that you can step into them and alter the course of destiny.
A few days before Thanksgiving the Treasury Secretary gave an assessment of what he believed should be done about our increasingly problematic debt. Instead of the responses we are used to, raising taxes or cutting spending, he believed that we should eliminate the debt ceiling altogether. Over its nearly one hundred year history the debt ceiling has shown itself to be more than flexible, after all the original 1919 ceiling was a mere $43 billion. As out debt shoots past $16 trillion it is faulty to pretend that our ceiling is protective in any way. But as porous as it is, it does serve a vital purpose.
For it to be raised it must be passed by Congress. This provides an opportunity for public debate and for the public to be informed, such as they wish to be. We have seen our government given extraordinary powers far beyond the enumerated limitations of the Constitution, but now we see the desire for the removal of any sort of accountability. As temporary as our debt limit seems to be, it at least provides parameters for a discussion and a legal limit to the expenditures of Congress. Without it, there is zero incentive for fiscal responsibility. To pretend otherwise it to be ignorant of current events. We have seen the unprecedented downgrade of our credit, which raising the debt ceiling was supposed to avoid, followed by consistent yearly $1 trillion+ deficits. Our leadership is more interested in politics than economics.
The FairTax plays into this discussion very well. It acts as a check on the unimpeded binge of government spending by placing, not the Congress but, the people front and center in the tax and spending debates. If we pay taxes on what we purchase, then we cannot avoid the reality of taxes that persist around us today. If we have a truly equitable tax structure that treats people of all income levels fairly then we do not have to worry about the division of class warfare obfuscating the debate. We can demand responsible stewardship of our tax money with a stringent refusal to accept constant tax increases to pay for irresponsible spending. Far too often Congress forgets that the money it is spending belongs to other people. We have been conditioned under this system to believe that the government has a right to remove funds from our paycheck before we even see it. It is a violation of the right to private property that has long been held as the bulwark of liberty.
When we have our next tax debate, and one is coming, we need to do our best to make sure the FairTax is featured prominently. The debate as it currently stands only offers two real options. Raise taxes or not to raise taxes. Several prominent Republicans seem to be overcome with these options and are now breaking or say that they could break pledges signed many years ago. Whether or not this is a good idea, it is always a bad thing to see politicians pushed into the corner so that they feel they must break promises they have made to constituents. That is a situation in which the people lose, not the politicians. By making the FairTax a visible alternative, some of these elected leaders could still keep their promises and change the tax system that removes the need for such pledges.
We cannot expect however, that the FairTax will rise to national prominence on merit alone. We cannot sit back and expect that leap forward to come from politicians either. Even our most dedicated sponsors in the House and Senate should not be expected to do this on their own. It is not our job to watch from afar and criticize them; it is incumbent upon us to help them.
We have to recognize that there is more than just a status-quo. A government policy, once enacted, sets us on a path. It is not a stationary beast. It grows and changes along with the times. We are now set upon a path toward a more complicated tax code that seeks to direct our behavior in ways not seen before. Unchecked, our current setting will lead us farther away from the goals surrounding the FairTax. Both parties are focused on a course directed more by politics then economic or constituent interests. With a government centered focus in the current tax debates it only stands to reason that the will or wishes of the people will continue to be lacking from the discussion and thus the outcome. That means that the only way we will be able to alter the course of the political debate, and our destiny, is to insert ourselves into the discussion. That will require our dedicated action. Our history began with individuals rising the people into action. Thomas Paine was a pamphleteer that set American minds ablaze with thoughts of freedom. General Washington was a seasoned and pragmatic leader whose bravery inspired a populace to fight. We had a Continental Congress full of leaders willing to lay their lives on the line for an idea they believed in. In the great struggles that mark our history books there is always a group of activists dedicated to an idea. Our cause is no different in its revolutionary outlook and our prospects have never looked better. People are looking for leadership on the tax debate. From Democrats they are hearing higher taxes and class warfare, the Republicans are giving them broken promises. Bureaucrats are wishing for spending without consequence and a government accountable to no one. Now is the time to move our idea into the national spotlight. Now is the time to act.
There is a great tendency in this country to root for the underdog. Those are the stories we tend to remember. Some believe that this inclination can be traced back to our roots in Minutemen and midnight rides. I think there is something to that. But regardless of its origins, the general feeling persists. It can be a powerful motivator but also a dangerous trap. The long held affinity for the underdog has created an unconscious belief that they are destined to win, despite the odds. This is especially true in politics, when the moniker of “right and wrong” are placed on ideas, candidates, or parties. We like to believe that what is right will win out in the end, and that because it is right it must be fated to do so. What very many still do not realize is that the end, in politics, is almost never decided on these arbitrarily drawn lines. The winner is never decided on who is right and who is wrong. We cannot rest assured that because our plan is the right one, and that it is better than all the others that we will end up victorious. The best ideas do not necessarily win, the simplest ones do, rocking the boat can be a bad idea, and having the “establishment” on your side is a definite benefit in terms of organization, fund raising, a volunteer force, and attention. All of which are important in a political campaign.
We have covered before here, and it bears repeating, that Abraham Lincoln’s “A house divided against itself cannot stand” speech was written and used as a part of his Senate campaign. A campaign he would go on to lose. Even if the truth is spoken eloquently, even if the message is important, even if the times are dire, we are not guaranteed an electoral victory. Our present day battle with tyranny comes under the guise of the tax code. It shares much in common with David’s battle with Goliath. A key difference in the success is David was a man described as after God’s own heart (Acts 13:22). A helpful trait to be sure. But we cannot rely upon the righteousness of God to slay our foes with sling and stone. We cannot rely on established political entities; we cannot expect their leadership, support, or their fellow activism. And we face a Goliath of our own, just as dangerous as the giant in Scripture. An enemy that is much larger and more powerful than ourselves, backed by an army that outnumbers ours, and supremely focused on our destruction, that constantly belittles our cause as something nonexistent or impossible.
The future of our cause is uncertain. But while it is far from foreseeable, I find myself optimistic in the extreme. Because my view of the future is cemented in your actions and the voice of the American people. What this past election has proven is that, while unpredictable, the vote of the public is conclusive. Which means that even the perennial politician will listen to it. That gives me hope, because we have always known that this idea relies upon the will of the American people. We recognize that this plan will not come from Congress, it will not be started in the Senate, and we have not found a reliable Presidential candidate that has made it a key plank in their platform. Our hope rests with the American people, as it always has.
My hope for our future is bright because of this fact, but not this fact alone. I also have come to know the people involved in this movement. They should be commended for all that they do and for all the work to come. They should also realize that their involvement is integral. There is no backup for our movement, no one else coming up behind to carry the torch should we fail. Without the support of those involved, the banner would fall ignominiously to the ground. Therefore the future of our movement also rests with you. We have no future without your action, and no hope without your voice. And the coming years will require action. We cannot rely on easy methods of the past. Email evangelism, sending out blanket messages is ineffective and a waste of time, armchair politicking is a useless endeavor; we require involvement in campaigns, in political parties, in local communities to spread our message on a person to person basis. Our action, not our talk of actions, gives us legitimacy in communities, then states, then the nation.
But this is the week of Thanksgiving. I encourage you to take time out, to be with family, and to reflect. Because the coming years will ask much of us. Sometimes to put our pride aside, sometimes to work with those we disagree with, sometimes to cede control in the name of unity, but all of the time to keep our gaze affixed to the bigger picture and the true goal. There are some who believe that the purity of our cause will destine us to glorious victory, but we need to realize that what is required to win is work. Keep this thought in mind though. Abraham Lincoln lost his Senate bid but became the President who restored the Union. The Israeli army lost its faith and will but a shepherd held firm and defeated a giant. As a native Texan I grew up learning that the Alamo was a military defeat, but one that galvanized a force to win the war. To those in the doldrums of defeat I offer this message. The war yet rages. Your input is invaluable and we cannot win without it. We may not be awaiting a destiny already determined, but we still live in a country where we can create our own. With effort and will we can win, as easily as anyone else. All we need is you.
As a disclaimer, the majority of this article was written on election night, mere minutes after the decision was made. I thought it best to be more removed, emotionally, from the event and have edited it for a more objective analysis.
Any opposition group runs the risk of alienating uninitiated voters by cloaking themselves in an overly self-righteous sense. Acting out of a sense of moral superiority, regardless of accuracy, is a turn off to undecided bystanders and those in actual authority. There is a pain to those who seek substantive tax reform in the outcome of the 2012 election. I do not seek to stick my thumb in that wound or to rub salt in it. But there is a failure in not realizing mistakes that create outcomes. While it may be early in the night to attempt to lay claim to a clear understanding of the complexities of national exit polls; and it may be too presumptuous to even attempt to peer into the minds of voters nationwide, it is clear that the side that argues for financial independence from government and individual responsibility did not do its job this go-around.
There is an assumption that merely stating our case is enough, and that people will follow our pied piper’s tune with the merest of mentions or the casual passing phrase. They do not. I am just as guilty of this devastating deceit. We believe that we are right and that others will simply see as we do. It is plain to us that the FairTax is obviously the best way to go, and to view those who oppose us as greedy, self-serving, or cowardly. And we might be exactly right. But to convince a majority of those in power and a majority of those voting for those in power, we cannot act on that judgment alone.
I had an entirely different idea for an article tonight. It recalled the famous speech in Shakespeare’s Henry V. It begins with a war “pep talk” with a stirring, “Once more into the breach, good friends, once more”. But as a passionate and fervent FairTax supporter, I can honestly say I feel discouraged tonight. A rousing war time speech is the last thing I want to hear, much less write. But I do hearken back to an incredible question. “Why do we fall?” It is bound to happen, to even the best of us. We can fail to gain the support we thought we could, or fall short of our own expectations. We can lose a big election which will sap our sponsorship. But to give the fall meaning, we have to act upon it. We can learn to pick ourselves up. It is this action and response that makes the tumble down, while painful, worth it. What can we learn here? While it is true that the FairTax was not up for debate, the broad principles behind it were. While we did not have a candidate that supported the FairTax, we elected one who supports furthering our current system. While we may be demoralized and worse for wear, we are not beaten and our idea still lives to fight another day. It is true that for now we toil away in darkness, away from the political limelight. Tonight we saw that this has its advantages. But we need to realize that it was really only about tonight, tomorrow is another day. And if there is a reason that we fall, it is to realize that with tomorrow comes the chance to rise again. If we fall, we learn to pick ourselves up, and in doing so become something that we were not before.
The outcome of this election has also provided us with something that we did not have before. Time. The next four years will not see our idea implemented. While lip-service is paid to some general principle of tax reform, we should know that the author of the 2011 speech at Osawatomie, Kansas does not sound like someone who will be willing to remove power from the federal government and give it back to the people. But we have an opportunity to build something over the next four years that we currently lack, a ground game. When it is time for the next national election, we will be ready to have the FairTax discussion on our terms. Our goal of education is made all the more difficult because we do not control the language of the debate, the currently entrenched interests do. And if they wish to stay entrenched then we will bombard them from the outside since we have the time to do so now.
This is a perfect chance to utilize the State Resolution Initiative. (A tab explaining this can be found at the top of the website.) If we can speak to local legislatures, where we should have more access and influence, then we can begin our revolution at the local level. Any successful regime change begins in such a way. Accomplishing this will have a multi-faceted effect. We will generate publicity, create discussion, gain authority and legitimacy, put people on record, and apply public pressure, all of which we currently do not do to effective levels. All successful revolutions are grown at the individual level, our own included. John Adams proved as such in 1818 with these words,
“The Revolution was effected before the War commenced. The Revolution was in the minds and hearts of the people; a change in their religious sentiments of their duties and obligations. … This radical change in the principles, opinions, sentiments, and affections of the people, was the real American Revolution.”
I have talked to far too many this past week that would suggest that the spirit of this great revolution has been lost in the midst of an aggressive entitlement society, a growth of moral relativism, an increased sense of selfishness, and a disrespect of history. But there are matters in life which require faith. There are moments in life where we are pushed into unfamiliar territory and spread thin. This is when we fall. And why do we fall? It is so that we can learn to pick ourselves up. And ladies and gentlemen, we have some work to do.
There are a number of similarities between this point in our Presidential contest and the final part of a long distance run. The finish line usually in sight, the work poured into the race thus far has done a great deal to determine your place, and all that is left is to push your body beyond its physical and mental limits to reach the end ahead of your opponent. You know, simple stuff. At this point, the words of the candidates are becoming lost in the fevered frenzy of an election, people are bustling to get out the vote and moving to make any and all last minute organizational moves to prepare for tomorrow. We have moved past the point of the “October surprise” and have watched all the debates; it all comes down to the voting now. The candidates have made their case and it is up to the American people to choose their government over the next four years. As FairTax advocates, the time to make our cause an issue in the campaign is long past, but our influence can still extend in the impact we make on Election Day. We still have candidates that we support and races we want to win. For us, Election Day marks an important step on the road to success but the real work we have to do begins on Wednesday, November 7. After the fallout of the election we have the task of shoring up the support that we have now and extending our reach into the newly elected officials and existing leadership structure. The FairTax will be re-filed at the start of the new Congress which means we have to regain all of our current cosponsors, we should use that opportunity to reach others as well. There is a focus on talking to members of the House Ways and Means Committee and Party leaders already. Tax reform will be addressed regardless of whoever wins at the top of the ticket and FairTax deserves to be a part of that debate. The closing arguments for both of the candidates have been made, there is little more for me to say today. The “ground game” operations are in place, the swing states seem to be up for grabs, and the future of the Senate is still undecided. Nothing I say here will change that and will only take up more of your time. We are on the eve of destiny and it is up to you to see us through. Good luck, work hard, and have fun, because when the dust finally settles the real work to pass the FairTax can begin!
We again come to the time of year that calls for an examination of the horrific and the chilling. This website will join the rest of the internet as it concerns itself with frightening aspects of our usual areas of study, and as last year , we find the tax code no less terrifying than it was before. But, as any monster movie franchise will inevitably show us, we are far more interested in the origins of the beasts that scare us. Our tax code shares many similarities with the origin found in Mary Shelley’s classic tale, Frankenstein.
The book Frankenstein follows the gruesome and profane experiments of the ambitious yet shortsighted Victor Frankenstein. In his youth he became obsessed with the unchecked power found in ancient science, which mixed logic with the mysticism of achieving the impossible. As he grew into his studies, his obsession led him to action and he quickly learned that his actions could have unalterable and burdensome consequences. His experiments with the transformation of dead flesh into a living being were regrettably successful and his monster was created, doomed to walk the earth without name, purpose, or favor. This tragic creature tore a bloody path of revenge through all of Frankenstein’s life, reaching all those he knew up until his lonely and desperate end. While it is an excellent story, and an important lesson in recognizing limits, both personally and societal, it also sheds a little light upon our current tax problems. Just as Frankenstein, the creators of our tax code were looking back to the thinkers of long before. A direct tax upon incomes was not found in the writing of our founders, it was based more on the total control of government found in the monarchies of the past. It was predicated, ideologically, on the assumption that the government owned the money being distributed and that it was in charge of ensuring that it was equally given. As often as the term progressive is applied to it one would think that it is a relatively new idea. But the central control of power, and the absolute management of the money supply, is an old idea. The use of an income tax might be a new method, but the madness is ancient.
Not only were Frankenstein and our tax code creators looking back to the forgotten past, they were creating something far beyond their ability to comprehend. Both parties, the fictional and the regrettably real, were far more interested in temporal and petty concerns. Frankenstein’s ambitions and belief in his own abilities tasked him with superseding where others had failed and selfishly proving that he was right in the ability of science to achieve great monuments to mankind’s knowledge previously thought only the realm of the magical. In his success he proved himself right, but also disastrously wrong. Frankenstein proved the limitlessness of human achievement, but also every fault of humanity, from fear and pride to resentment and depression.
Likewise, those that created our tax code were interested with forgotten political goals and temporary election results. In generating a new stream of revenue, they were able to fulfill political ambitions that are known to none now. It was the outbreak of World War I that saw the brand new tax code utilized in its current fashion. Merely three years after its passage, the Revenue Act of 1916 altered the tax code to begin modifying the goals of society and its conversation. It created an excess-profits tax. This set the level that it deemed normal for corporate profits and taxed all corporations that were able to make money above that amount. The lion’s share of the funding for the United States during the First World War was taken by corporations that succeeded beyond the allowed limits of Washington.
It is this early example that shows the greatest similarity between our tortured Frankenstein and our political leaders of 1913. They both created monsters incapable of being controlled. Frankenstein’s creation took up a life of its own, learning to speak and to read of its own volition. Over time, the continued rejection of the community that he so desperately sought turned its heart cruel and malicious. It used its education and faculties to wreak havoc upon the race and person that created it and therefore was the cause of such torment and pain. Our tax code has also taken on a life of its own. It has outlasted all of those that have added to it and continues to shift and change. Over the past ten years it has undergone over 4000 changes. That averages to more than one per day. To challenge the idea that our code is not a shifting and growing beast is to ignore the reality that surrounds it. Merely three years after its creation it was already dictating to the American economy how much our corporations were allowed to make and began punishing them for failing to adhere to its strict rules. It has grown from a tool used for a new stream of revenue to be the greatest source of revenue for the government at the expense of the people. It has gone from a flat rate taxed above a certain income level, to a multi-faceted tax that affects people at all levels. It has grown from a law that was 400 pages in length to a complex labyrinth of 70,000 pages of exemptions, loopholes, and specifics. It is this slow strangulation of the liberty promised to our citizens that makes this practice all the more devious.
But the tragic tale of Frankenstein has a glimmer of hope for us today. In the story, Frankenstein achieved a short perfect moment in his long life of misery and regret. There was a point when he abandoned his pursuits and relaxed in the glow of his loving family and friends. Mary Shelley describes it far better than I am able, “It was a strong effort of the spirit of good, but it was ineffectual. Destiny was too potent, and her immutable laws had decreed my utter and terrible destruction”.Frankenstein saw destiny draw him inexorably to ruin, his passions exceeded his discipline and brought sorrow and turmoil to the rest of his life. We face a moment of choice today. We can resign to our own self-appointed destiny to watch the monster of our own creation strangle all that we hold dear. Or we may take the initiative to create for ourselves our own destiny in the spirit of our founding. Thomas Paine wrote, “We have it in our power to begin the world over again”. While Frankenstein was unable to shake what destiny had planned for him, we are given the opportunity to shape our own. While the making of the monster was an event that was unavoidable and now is unchangeable, our future shows us that we can unmake the mistakes of the past to finally pacify the restless beast of our creation. Those that created our tax code acted as the young Frankenstein, believing they are above the established order of the day, reaching back to the past mistakes in an attempt to do the impossible. Today, we see the fruits of such past labor, in the unstoppable and unaccountable tax code that directs our society.
Unlike the horror story we have studied, the monster of our creation is not hidden from sight. While it may be just as despised, it is present for all to see and makes no attempt to flee. Our tax code is an amalgamation of dead ideas, stitched together by those who seek power and control beyond their ability, which gained a life of its own beyond the foresight of those that created it, which is destructive to the society it inhabits. Frankenstein’s monster is a tragic fiction that is entertaining to read about and valuable to learn from. Our tax code is a reality.
Although this website has explained before why the FairTax could be embraced by liberals I would like to take today to expand a little on this idea to paint a clearer picture. The FairTax is billed as a bipartisan plan and it truly is one. In fact, when the bill was first introduced, the support was split evenly between both parties. Since then however, the bill has caught on with Republican congressmen while it has been unable to make inroads with the other party. As a FairTax activist I can only postulate on theories as to exactly why, but would like to make it clear today that liberal causes are helped by this plan just as much as conservative’s are.
Without risking too much, it should be readily recognized that for many causes on the left equality is paramount. This idea that equality and liberty are taken up by the left and right and constantly fought over is not a new one. Many of today’s political arguments are attempting to find the right balance between these two concepts. That is not to suggest that conservatives shun equality or that liberals ignore liberty, but when push comes to shove, we usually fight for one at the expense of the other. Luckily, the FairTax makes no such distinction. In the current Presidential campaign we hear about the rights of the needy and the privileges of the prosperous and the difference in the way they are treated by the tax code. The sad fact of the matter is that both the rich and poor are being mistreated by our tax code. Both sides are letting the blindness of partisanship in the midst of an important campaign cloud their judgment. But, to an extent, both the arguments against each party’s plan are correct. Taxing the rich more will not ensure that they will pay it and lowering the tax rates across the board on those that do not pay into the income tax will create more of the so-called 47%.
I will try to expand on this while showing how the FairTax answers these criticisms in the best way possible. Both sides want a fair tax system, for the left, that means ensuring that the rich pay their fair share. This is a difficult measure to codify because the term is so subjective. But it usually involves raising the taxes on the rich, another term subject to change. The issue here is taxing accumulated wealth, it is the reason there is an estate, or death, tax in addition to the income, capital gains, and dividend taxes. All are attempts at evening the playing field because for the rich there are many ways to accumulate said wealth. This has obviously led to some discrepancies, the Buffett rule attempts to rectify these political arguments, pointing out that incomes that rely on capital gains are taxed at a lower rate than certain income tax brackets. The problem here is assuming that raising the tax rate will solve the problem itself.
The richest have means unavailable to others; therefore they are better equipped to dodge said taxes. They have the ability to hire accountants to pour over the complicated mess that is 70,000 pages of tax code and come out cleaner on the other side. And if all else fails, they can move their money offshore. And they do. The FairTax however, taxes accumulated wealth in the most efficient way possible. When that money is spent on luxury items, such as private jets, yachts, sprawling estates, and high end automobiles, they will pay the tax on those items regardless. Just like everyone else. It is unavoidable and simple enough that no accountant will find loopholes through it. It is designed to be as efficient as possible allowing no wiggle room for those seeking to avoid it. But, the money currently parked offshore should come back in droves, to be invested in businesses in America, allowing companies to hire people the way our economy needs.
While taxing the rich more falls into line with the ideal of equality, it does very little to help the working poor and middle class that are struggling. The idea of a fair share does little to close the gaps in their budgets. It is widely recognized that our tax code is just as unfair to these people as it is to anyone else. That is one reason that President Obama and Congressional Republicans passed a payroll tax holiday. While there were still some disagreements on particulars the idea behind the push was that the payroll taxes are regressive and punitive to the working poor segment of America. These taxes, that usually do not receive much attention, act against the progressive nature of our tax code. In addition, the high corporate tax rates make purchasing goods much more difficult for the poor and middle class. Since corporations must operate on profit the idea of a corporate tax rate is self-defeatist at face value. Any rise in that rate is likely met with three outcomes, the price of the product rises to meet the cost of doing business, the wages of workers decline to bridge the gap, or the quality of the product is reduced to make up the difference. In every one of these scenarios, the purchasing power of those without is dramatically reduced below what it already was. And we have the highest corporate tax rate in the world. Again, if raised, these corporations can always move offshore, and they are, but this time they are taking their jobs with them.
The FairTax ends the corporate tax, bringing those jobs home again, but it also ends the regressive payroll tax rates. All this sounds much like the benefits given to the wealthy, which would leave us in the same place as we are now in terms of equality, except for the prebate. The prebate is a monthly check given to all American households based upon the number of people within the house that covers the monthly cost of the sales tax on basic needs. This prebate is not based upon income and everyone gets it. It covers the cost of the new tax on a basket of goods necessary for survival according to the Department of Health and Human Services. Its basis on the size of household is very beneficial for poorer families who tend to house more people. This does far more to level the playing field then our current system. It ensures that we are indeed paying our fair share in taxes, because we are treated equally in that regard, but it helps those struggling by covering the necessities up to the poverty level.
This is also the only tax alternative for those concerned with the environment. It is rare to consider tax proposals based upon their carbon footprint, but the difference here is staggering. As of 2010 it took 6.1 billion man hours to comply with the tax code. That is nothing but 6.1 billion, with a b, hours of paperwork. Such work is decidedly harmful to the environment. This is an annual exercise that compiles upon itself the trash that comes with it. Our tax code has to account for all 311 million people and collect taxes on all businesses as well. Not to mention that to print the code itself, would take more than 70,000 pages in all. The FairTax is 131 pages, not 130 or 132, a plain 131. It collects revenue as money is spent and can be read on the receipt that is given anyway. If focuses only on businesses that act as the final point of sale and not on 311 million Americans. The time and effort expended to comply with this tax alternative cannot even be calculated on the same scale as our current system, and it is designed to be revenue neutral. Meaning that we are getting the same amount of money with only a fraction of the effort. Which only serves to make our market more efficient and our country a little greener for its efforts.
Another helpful way that the FairTax can advance the causes on the left is that it stops the social engineering in our current tax code. While this may sound like a helpful way to stop bad habits or harmful activities, that is a sword that cuts both ways. Advocates of gay marriage already know all too well how our current tax code benefits straight couples. There are a plethora of deductions and exemptions available to married couples that homosexuals cannot access. While this is neither an argument for or against the practice itself it highlights that our tax code does far more that generate revenue for the government, but makes decisions in our personal lives as well. Surprisingly, this is an issue that the church and the gay marriage advocate can equally abhor. Churches rankle at the thought that the government can strip away its exempt status based upon speaking out for traditional marriage, and the gay marriage advocate can be equally steamed that straight couples are given preferential treatment by the same tax code. That is how unsound our tax code is. It offends everyone equally. And it has gone on long enough.
For liberals and conservatives, the tax code subverts all of our rights equally. We seek bipartisanship desperately as voters, but our leaders seem unwilling to sacrifice political capital in an unending game of chicken with political brinksmanship. But this is not a game between Republicans and Democrats; it is a contest pitting citizens against those in power. I would be proud to stand with Republicans and Democrats together, united in this cause. But the question is whether we can unite, whether we can put aside other differences to stand behind a bill that benefits us all, whether we can look past petty differences to focus on a bigger picture? I say, “Yes we can!”
I wanted to start this anniversary article off with a proper acknowledgement of the friends and family that have supported and celebrated this effort over the last year. Thank you to all of you that have sent kind words and constructive criticism over the last year that has added to my immense enjoyment toiling away in an effort to pass the largest tax reform legislation in our history. An additional thank you to everyone else involved in this growing movement. Your effort is critical to our success and will not succeed without it. However, I would like to point out that the goal of this website is not its longevity; it is not my wish to stand here five years from now making the same arguments about the dire need for the FairTax. But there are many reasons why I believe that this will not be the case.
We have been gaining momentum ever since the FairTax was made a bill. Where at one time, we were an idea supported by a handful of cosponsors we are now a nationwide crusade that most politicians have an answer to. Even if Romney was incorrect about his information, and he was, it is encouraging that a Presidential candidate would know at least the basic premise of the plan. That means that we have a shoe in the door in most areas, we can correct the mischaracterizations, we can tweak our message, we can push harder on certain political leaders, but the point is people are already aware. What that means is that our efforts are having an effect. It gets difficult sometimes to judge how successful our actions are, but we can take solace in the fact that great steps have been made. There has been a hearing in front of a full panel of the House Ways and Means Committee. We have a grand total of 80 cosponsors in all of Congress. And we are on the cusp of an election that hopefully will bring more. That means our lives are about to get a little busier.
This next year will be one that will hear a crescendo of calls for tax reform. The Saturday morning financial shows are constantly jabbering about the need and probability of reform coming in the next year or two. It is frustrating to watch them have the same arguments again and again and again. Raise or lower? It is an endless cycle that will never end until we have substantial reform enough to change the system completely. That is where the FairTax steps in. This idea changes the conversation forever, and not just that conversation but so many others. The FairTax injects the American people into the decision making process in a way we never have experienced before. And for those that are cynical or jaded about the focus of politicians, and they have every reason to be, that is nothing but a very large net benefit.
But how is it that we are to accomplish our goal? Currently the FairTax movement is comprised of several local groups focused in states or localities. There is not much of an overarching structure, nor does there need to be in a grassroots-based organization. Those local groups know best how to answer the needs of their own area, but what we have noticed is a severe lack of communication and very little in the way of sharing. We do not share resources, ideas, people, tactics, or even keep each other apprised as to our actions. This can have a counter-productive effect. You may remember reading about a meeting we had in Chicago at the end of this last summer. The outcome of our conversations were very telling indeed. We recognized the need for communication and the need to unify our efforts into a cohesive, single-minded thrust to pass this bill. Luckily, I was chosen to be a member of a nine member body which was to come up with a strategic plan to do so. We are growing nearer the completion of this document and hope by the end of the year to have unveiled the final product along with a district targeting plan that will focus on priority areas to have a greater impact among other things. If we have been able to make such progress working, mostly, independent of one another, imagine what we will be able to do when unified. The opportunities we have before us are limitless and only by taking action will we be able to meet our goals. And make no mistake, action must be taken immediately. Following the election will be a lame duck period for Congress. It should not be so of us. We need to pounce on our existing support in our elected officials, we need to set up meetings with possible cosponsors for the next year, we need to contact freshly elected representatives and try and get their support out of the gate, we need to work with state leaders to pass resolutions supporting repeal of the Sixteenth Amendment. Our work is cut out for us. At the beginning of next year, H.R. 25 will be re-filed. We need to gain all of the cosponsors that we have now and add to that list. The coming months will test us, our commitment and our abilities. Hopefully this strategic plan will focus and unite our efforts so that we can act effectively without wasteful duplicative actions.
The political class is correct in the supposition and characterization of this Presidential contest. It is a decision between two competing and very different paths for this country’s future. The FairTax has the distinction of leading the way down the path of individual liberty, government accountability, and wide spread prosperity. We must choose between that or collective responsibility, government intransigence, and shared poverty. The choices we have are stark in their contrast, but our will must be strong, our gaze must be fixed, our purpose must be clear, our voice must be sustained, because our cause must be heard. If we can rise to the occasion that history presents us then we have nothing to fear, for the FairTax cometh.
Anyone with a familiarity with the FairTax would have easily concluded that the first twenty minutes of last week’s Presidential debate could have been avoided completely. We have talked before about the time wasted debating the current tax code and the critically important issues that are pushed aside to rehash the same debates that were concluded only a few years before. This is not a new problem. Part of the issue is that what is being fed to the American people is only an illusion of choice. There is nothing new placed before us in the coming election and the choices that are present have always been the arguments surrounding the tax code. Should we raise or lower the tax rate? It is a sad statement of current political discourse that if you ask those on the right or left this question the answer will always be, yes. Those on the left perennially support raising taxes, even if on certain segments of the population, while those on the right continuously argue for lowering them. Because of the competitive nature of politics and the embedded nature of the tax discussion there will always be disagreements surrounding the tax rates. We live in an era where politicians of both stripes are pledging to work in a What, historically, we have been left with is never a blissful age of political agreement but a series of electoral victories by one party that undo what the other had done in the years that they had won. The political pendulum swings to and fro granting power to opposing parties that then change the tax code up to fit their ideological views. That is why we hear about taxes in every Presidential campaign. If the code were simplified, there would be little need to go about constantly changing it. But here we are again. The beginning of the New Year will bring about drastic increases in what many are calling Taxmageddon. The thought behind this taxmageddon hits at the heart of what is wrong with the perennial tax debates and the fickleness of Washington politicians. The rise of the tax rates that hit on January 1 of the next year is a stunning show of failure on the part of those politicians promising bipartisanship or lasting solutions that have yet to deliver. The tax cuts passed in 2001 and 2003 by a Republican Congress and President and passed again by a Democrat Congress and President are going to expire which will result in automatic tax increases no matter who is elected. These tax rates, which have been passed by both parties and debated in public, at least three times, are the complaint of both parties as well. They both argue that they do not go far enough in their respective directions but all ignore that they are temporary! All this goes to prove that all the haranguing in Washington over the exact same tax rates we have operated under for a decade has far more to do with political gamesmanship than the good of the American public. This is precisely why we need to move to a tax structure that involves the public in the decision process rather than continuing to treat them like ATMs.
One undeniable fact that is obfuscated by the heightened spin of a Presidential election year is the limits that our tax code faces in combating the very real problems our country is facing. One of the lines in the debate concerned the need for a “balanced approach” to solving our out of control debt and crippling deficits. It seems that the only spending cuts that are consistently found are to future spending increases due to the nature of baseline budgeting. These future cuts do little to change the fact that we are currently more than one trillion dollars over budget. It should also be noted that these paltry cuts mixed with the proposed tax increases still cannot bridge the trillion dollar gap either. Even if the wealthy had all of their income taken in taxes it could not hope to bring in enough revenue to cover the rise in expenses. And one would only need to look to France to see how the wealthy react to overbearing tax rates. In short, they leave. The same event precedes every institution of oppressive government policy. Waves of emigration marked the rise of the Soviet Union. Taxing those that have the most means to avoid it is similar to trying to nail Jell-O to the wall. It should also be noted that those creating the tax code make sure that there are enough loopholes to exempt themselves, which necessarily leads others to follow. This endless cycle of politicizing the tax code and rewriting the actions of the recently defeated should explain why we have a code that exceeds 70,000 pages and is the topic of nearly every political debate.
In fact, this perpetual loop shows itself in the history of our tax code. Our original code was written in 1913 after the ratification of the Sixteenth Amendment. Since that time the code has been through 57 legislative changes, meaning that all of congress passed and the President signed 57 pieces of legislation that changed the tax code and how it operates. In just less than one hundred years we have passed 57 pieces of legislation. We could not go an average of two years without something passed that affects the way we collect taxes. This is an unstable tax code; it has been changed with more wanton disregard than a Latin American country’s constitution. It is a political football that is tossed around the field sometimes used by political parties to score political points. But the American people are left sitting in the stands, suffering to watch a game that has no end and forced to pay no matter who scores the points. We have ceased being part of the debate and only get to look on at party leaders as they hash it out, only every four years on national television. The rest of the time it is behind closed doors or away from our notice. We deserve something better.
The FairTax focuses on government transparency by making the people an active participant in the tax process. By switching to a consumption tax model, and repealing the current one and the government’s ability to do so, the American people are the arbiters of tax revenue and can be apprised of when and where their money is going. Spending debates on Capitol Hill will change to reflect the change in the method of revenue collection. All spent money is weighed against itself, meaning that the same account that pays for defense and road construction will pay for the ridiculous spending binges on completely unnecessary pork-barrel projects. It ends the constant change of the tax code because any change made affects everyone. That is a very important difference to our current code. Businesses will no longer have to lobby for exemptions and loopholes year round because the corporate tax is eliminated. Politicians can no longer play class warfare for the camera because everyone pays the same rate. Changes will no longer escape our notice because we see them every time we spend. Our focus can shift to watch Washington because their irresponsible spending is directly reflected to the tax rate. If we could reign in spending to match the original role of proper government function, then we could lower the rate to coincide. If we could lower the debt and cost of serving it, then we could also lower the rate to coincide. This is a dramatic shift from our current habits and actions. Even in economic crises, a consumption tax model is more stable than one based upon income. We have created for ourselves a system that is prone to wide swings based on the business cycle and the political cycle, is it any wonder why it is needlessly complex and overbearing? What the FairTax offers is a portrait of what government should be, responsive to the needs of the public, responsible in its actions, and lean enough to adequately respond. We currently have none of those traits and are pushing in the opposite direction. It is time to change that and support a code that represents our best efforts and not what we can get away with. Then we can focus on the important issues facing today without sounding like a broken record.
Part of the campaign’s swirling political debate surrounds the opposing candidate’s tax proposals. As the media talking-heads, campaign commercials, and the upcoming debates will highlight one candidate promises to raise taxes and the other to lower them. Now, of course, the taxes discussed revolve around certain segments of the population and in an election that needs to do its best to unite the public has only served to spend its time dividing it along the same lines we have seen in the past. Both parties have tax plans that are nothing more than variations of past programs and repackaging old ideas. Each candidate is presenting to the American people nothing new and the same expected lines that we have heard from countless state and national campaigns for years. It is the belief of the FairTax that it is time for something new. The current tax code has been around for 99 years and will reach the centennial mark early next year soon after the inauguration. There is a possibility that we will be swearing in a new President, but we will still be operating under the same old system, regardless. But to clarify, we should be specific, what will we see from these two candidates? And how will that stack up to the FairTax?
The Democrat’s tax plans are summed up with the Warren Buffet rule. They believe that the millionaires and billionaires should pay more, which include families making a combined income of $200,000 or more. Already the word millionaire is rather loosely defined; hardly comforting for the sake of clarity and transparency, two values sorely missing from our current code. It should be noted that there is nothing in the historical record that shows raising taxes spurring economic growth. But the argument is that the raised taxes will be used for “investment”, read increased spending, on certain hand-picked areas of the economy. It is yet another Keynesian ploy that we have seen over the past four years that rests in the belief that government spending can be used to counter the natural business cycle. This tax and spend promise ignores the past four years of over $1 trillion deficits and an $800,000,000,000 (yes, that is a billion) stimulus plan that never brought even the fake unemployment number under 8%. More of the same will only bring us more of the same. And with an overwhelming number of Americans believing that we are moving in the wrong direction and a record number of Americans on food stamps and out of the labor force, this is untenable at best.
The Republican’s plans are less ambitious as they make them sound. The line is given that the tax decreases that are planned would spark a recovery similar to that experienced after the Reagan tax cuts in the 1980’s. While there is far more historical evidence of tax decreases spurring growth, it is a mistake to pretend that there would be a recovery akin to what followed the tax cuts under Reagan. The issue at hand is that the tax structure is not as openly oppressive as it was in the 70’s. While the tax code has indeed become infinitely more complicated and intransigent the top rate is half of what it was in the 70’s. Ronald Reagan cut that rate during his term in office from 70% to 28%, there should be no doubt as to why economic success followed. The problem with the theory that another round of cuts could be just as successful lies with the fact that our tax code is too broken to effectively change it with merely a rate cut. Now the plan to repeal the dramatically outdated and regressive AMT is a step in the right direction but at this point is nowhere near enough. The Republican plan also includes the reduction of the corporate tax rate by 10%. That would mean taking our current rate, currently the highest in the world at 35%, down to 25%. While it will be better and bring down the cost of doing business we still have to realize that 25% puts us at the same rate as China, Greece, Iran, Portugal, and Vietnam among others. It does finally put us underneath Mexico, by a paltry 3%. It becomes apparent that our system is flawed when even a large cut to one rate puts us on par with countries that are financially bankrupt and others that are morally so.
Enter the FairTax. The problem surrounding tax rate inequality is erased under the FairTax. One need not pay attention long to the current debate to see just how divisive the tax code can be. Either it was Republicans cutting that tax rate so that more did not have to pay or it is Democrats complaining about how much the rich pay and demand that they be elected to bring about a sense of economic justice. Perhaps you are worried about the increasing influence of corporate lobbyists that divert the attention of our elected officials away from representing their constituents. This is the driving force behind the rapid expansion of the tax code and is a major complaint from many about how politicians do business. If you want a tax code that remains stable, even in times of economic hardship then look no further. Our deficit and increased spending can be tied to unemployment easily. For every person that loses a job, the government loses 100% of its tax revenue and starts paying out a variety of benefits. Using a consumption model, that number is guaranteed never to rise to 100%. This system is far more stable which also means that when hardship comes, our leaders are less likely to take kneejerk and divisive steps that run the risk of setting us back even more than we are now, like running up a $16 trillion debt for instance. This tax plan also has the opportunity to really let the market free again. To remove the encumbrances of the tax code, its punitive rate on businesses, the cost of time and money to file, the overhead involved in searching out and lobbying for the numerous loopholes and exemptions, will give our companies the certainty that is lacking in our markets. It will also send a clear message to companies offshore to bring their business back to the United States. The FairTax will constitute the greatest stimulus this country has ever seen by doing something radical, by letting people keep what they work to earn. The FairTax is also an ideological statement that looks at the federal government and says that it is no longer entitled to our work.
As we inevitably hear more about the candidate’s tax plans in the coming weeks please realize that whoever is talking is most likely wrong. Neither of the major parties will fix anything and will make no long term changes because the tax code is too easy to manipulate and any change made by one party can be undone within a few years by the other. The FairTax is the only chance to make substantial tax reform because it is tax replacement, not merely tweaking a system that is fundamentally flawed. As you can see, neither candidate for President is running on the issue of the FairTax. Despite whoever else is running, only one of these two candidates will win, the game is rigged that way. To ignore that fundamental rule is to invite folly. There is no hope of a third party win or of a FairTax supporting outlier to swoop in and “save the day”. 80% of the public already identifies with a particular political party, the independents only make up 20%, and no matter how hard you try you cannot cobble together a majority with a base of twenty percent. Look at the history of our own tax code, it got its start on the fringe of American politics but we did not have to elect anyone from those parties to get it. The income tax wormed its way into the discourse until 1913 when every major political candidate for President supported it. This movement needs the same wave of popular support. It can only be won by the American people and will not be given by the American politician. So, you can either sit on the sidelines and watch, achieving nothing. Or you can get in the game and make it count. The FairTax as an idea will never die; ideas have a surprising longevity to them. But the only way it will succeed is through your voice and actions. It is actually pretty simple, if you are unhappy with a service, you ought to ask for your money back. And with the trajectory we are on, it could not come a moment too soon.