Saturday, December 15, 2007

Political headlines ...

Looking for something to read? Well, I'm looking to clear out links from my bookmarks. So help yourself to some of these stories which I think are worth a look:

A better way with taxes?
First, Mike Huckabee is pushing his sales tax proposal here in the Granite State: ["Huckabee Pushes National Sales Tax in NH"].
The article offers an interesting angle - New Hampshire voters don't have a sales or income tax - so, why would they support a sales tax? How would New Hampshire collect it, since we don't collect them now? But I wonder why the mainstream press has not given Rep. Ron Paul or former Sen. Mike Gravel the same amount of time to talk about their similar plans. As well, while I personally like the concept, the idea needs some serious vetting.
In this article, the writer states that the proposal would "eliminate federal income and investment taxes" but I don't know if this is completely correct. But this is what the Americans for Fair Taxation Web site states:

The FairTax plan is a comprehensive proposal that replaces all federal income and payroll based taxes with an integrated approach including a progressive national retail sales tax, a prebate to ensure no American pays federal taxes on spending up to the poverty level, dollar-for-dollar federal revenue neutrality, and, through companion legislation, the repeal of the 16th Amendment.

The FairTax Act (HR 25, S 1025) is nonpartisan legislation. It abolishes all federal personal and corporate income taxes, gift, estate, capital gains, alternative minimum, Social Security, Medicare, and self-employment taxes and replaces them with one simple, visible, federal retail sales tax administered primarily by existing state sales tax authorities.

The FairTax taxes us only on what we choose to spend on new goods or services, not on what we earn. The FairTax is a fair, efficient, transparent, and intelligent solution to the frustration and inequity of our current tax system.

I see where the capital gains and corporate taxes are eliminated. I also see where it says "retail sales tax." But, if you tax "new goods or services," wouldn't that include stock purchases or other things purchased by the investment class but not by the majority of us? Even with prebates, this tax would seem to pass a lot of the burden to those of us who earn above the poverty level but have kids and barely scrape by.
Also, is it "or" or "and" when speaking of goods and services? If it is "and," I think it might work. Tax everything or tax everything but utilities and food purchased at the supermarket. But if it is "or," the plan will basically transfer the taxes to just retail purchases and that is not going to work. This could potentially cripple the national economy since all America does right now is retail sales. At the same time, retailers would have to lower prices in order to get people to spend their money. There would also be tax savings instead the prices of the products. So, it might actually work.
I think the key though is the Wall Street stuff. If the tax hits every stock purchase at 23 percent the same way it would tax Scotch tape or something else at a retail store, the tax will raise scads of money - which could lead to a lower rate. Again, goods AND services or just goods? It would also induce long-term stock investments instead of quickie purchases and flips and this would be healthy for the ecomomy. But if we are just going to tax Scotch tape, forget it. It will not work.

The husband on the stump
The Atlantic Magazine's blog has been offering some really choice nuggets during the campaign. I read it on a regular basis, whenever I find the time.
Last night, Marc posted this, some highlights of Bill Clinton's interview on "The Charlie Rose Show": ["Bill Clinton ... Well, He Just Puts Everything On The Table. Read It"].
Interestingly, in the comment section, a lot of folks are just calling this another calculating move by the Clintons. But, I don't know. They are totally craven. And, yeah, like others, I wish they would go away. But, he may have just been shooting the shit like any of us would only it was broadcast on television. Also, it is interesting, the take of the husband on the trail, although it might be more interesting if the husband were not a former president but maybe a normal guy, like the wives of candidates, who tend to be pretty normal.

The 'fringe' candidates get some time
Both the AP, Concord Monitor, and WMUR-TV Channel 9 give some time to the lessen-known or sometimes to referred to as "fringe" presidential candidates: ["Lesser-Known Primary Candidates Debate"].
It is funny because about two months ago, I mentioned offhandedly said to my wife that my new newspaper, OurConcord.com, should sponsor a similar debate at Concord's historic Audi theatre [citizens can rent the theatre from a small stipend].
She said the idea was, and I quote, "lame."
So, imagine our surprise when those candidates get their own debate, set up by the Manchester Community Access station, and they all get both press and television time!
"Hey," I said, "That was my idea!"
The moral of the story is that while wives are smart and cool you can't always listen to them if you have a cool idea. Just do it!

Campaign ads
Channel 9 looks at them here: ["What Do Ads Say About Candidates?"].
If anyone ought to know, Channel 9 ought to know. The ads are flooding the TV screens at this point. Also, as I was scanning the radio dial last night on my commute home from work, I heard Paul campaign ads on WHOM and WXRV. I have also heard Rudy Giuliani ads, I think on WTPL.

The Unpress, Part 2
I meant to put together a story about The Unpress event last week but time just slipped away from me. However, interestingly enough, I found this story written by someone from Connecticut who attended the event: ["Blogging in New Hampshire"]. There is also a pretty good overview here too: ["Unpress-notes"].
Since both do a pretty good job of representing what happened and what was discussed, I don't really have to now [One of my comments about hoping that with bloggers covering the primary this would allow the serious political reporters to actually spend some time reporting on public policy, which is badly needed, instead of just trying to out-snark the bloggers, went unnoticed, but whatever]. I will, however, try to post some other good quotes that I think were made ... there were so many.
One of the cool folks I met at the event was Samantha Clemens who introduced herself to me, noting that she has read some of my stuff on the Radio-Info boards. She has a Saturday morning show on WMFO 91.5 FM, the Tufts community radio station, where I got my start in radio so many years ago. She has also sat in with WRKO's Todd Feinburg when he used to do his evening show. Samantha's blog is Cause and Effect World, located here: ["Cause and Effect World"].
Here is the main site, if anyone is interested in finding out more about this group and the event: ["The Unpress"]. From there, you can download audio or view pictures and video from the event. It is well worth doing, if you have the time.

The Church of Stop-Shopping
I love pranks like this: ["Reverend Billy Preaches The Gospel of The Church of Stop-Shopping"]. I actually saw a report on this on "Nightline" a couple of weeks ago, when I couldn't fall asleep. They did a pretty good job of describing the documentary. What so amazed me was the fact that a major television network would even give any of this the time of day. Doesn't it go against everything they are trying to do for advertisers? Yeah, it does. But, good for them.

What is that?
I don't know. Do you?:


1 comment:

Anonymous said...

Economist Dale Jorgensen, Harvard University, was commissioned to find out what portion of current prices were represented by costs for complying with the federal income tax code (i.e., embedded tax costs). He concluded that 22% (average) of every retail dollar, spent by consumers, constituted a price-embedded tax. Thus, in addition to individual income tax and FICA withholding, individuals are unwittingly paying these unseen, embedded business tax costs with every purchase of a new product, or service.

Under FairTax, prices would fall, due to removal of embedded business tax-related costs. Concurrently, wages may rise due to a mix of factors, including reversion of withheld pay (or some portion thereof) to employees, advancement opportunities due to business expansion resulting from retained earnings, and/or increased demand for labor accompanying increased competition (from that expansion). Where profits (or wages) appear lucrative, competition will move into the market space, driving out excesses (immediately present after FairTax is enacted), arriving at new "market-adjusted" prices.

For FairTax to constitute 23% of new transaction cost (i.e., "market-adjusted" price plus FairTax), a mark-up of 29.9% (tax exclusive rate) on the new "market-adjusted" price is necessary. (Before balking, consider what we're paying now if income tax rates are converted to tax-exclusive sales tax rates on net income instead of percentage of gross income. The following figures can be compared to the 29.9% FairTax mark-up: Fifteen pct bracket = 17.6%, twenty-five pct bracket = 33.3%, twenty-eight pct bracket = 38.9% (! really), and thirty-five pct bracket = 53.8% (! that's how bad it is).

In order to make FairTax a progressive consumption tax (such as that recently called for by Warren Buffett), all citizen-families are simply sent a monthly consumption [tax] allowance, called a "prebate." This prebate is intended to reimburse taxes on necessities for every citizen family without need for record-keeping or reporting. Moreover, the direct payment bypasses the creation of a tax code specifying exempted products and services around which a lobbyist industry could grow. The amount is variable, based on family size, and is equal to the FairTax rate on poverty-level spending, as defined by the Dept. of Commerce. At present, a family of one would receive ~$200/month, a family of four, ~$500/month. Thus, the "effective" FairTax rate paid by citizens, will *never* equal the full 23%. Of course, U.S. visitors (legal, and illegal) will pay the full FairTax when they purchase anything new, at retail (used are not taxed again). Under FairTax, working families will have their whole paychecks (minus any state or local income tax withholding) plus their monthly family prebate.

Additionally, citizens will no longer have to spend the average 50 hours per year preparing their federal tax returns. Having more monthly income may result in using credit less, and saving more. Larger savings will make it easier to purchase a home, at a lower interest rate and monthly payment. (Thus, mortgage deductions are no longer applicable when income is not the basis for taxation).

But is FairTax actually "fairer"? To provide substantive answers, Prof.'s Kotlikoff and Rapson (10/06) have concluded,

"...the FairTax imposes much lower average taxes on working-age households than does the current system. The FairTax broadens the tax base from what is now primarily a system of labor income taxation to a system that taxes, albeit indirectly, both labor income and existing wealth. By including existing wealth in the effective tax base, much of which is owned by rich and middle-class elderly households, the FairTax is able to tax labor income at a lower effective rate and, thereby, lower the average lifetime tax rates facing working-age Americans.

"Consider, as an example, a single household age 30 earning $50,000. The household’s average tax rate under the current system is 21.1 percent. It’s 13.5 percent under the FairTax. Since the FairTax would preserve the purchasing power of Social Security benefits and also provide a tax rebate, older low-income workers who will live primarily or exclusively on Social Security would be better off. As an example, the average remaining lifetime tax rate for an age 60 married couple with $20,000 of earnings falls from its current value of 7.2 percent to -11.0 percent under the FairTax. As another example, compare the current 24.0 percent remaining lifetime average tax rate of a married age 45 couple with $100,000 in earnings to the 14.7 percent rate that arises under the FairTax."

Further, per Jokischa and Kotlikoff (2005) ...

"...once one moves to generations postdating the baby boomers there are positive welfare gains for all income groups in each cohort. Under a 23 percent FairTax policy, the poorest members of the generation born in 1990 enjoy a 13.5 percent welfare gain. Their middle-class and rich contemporaries experience 5 and 2 percent welfare gains, respectively. The welfare gains are largest for future generations. Take the cohort born in 2030. The poorest members of this cohort enjoy a huge 26 percent improvement in their well-being. For middle class members of this birth group, there's a 12 percent welfare gain. And for the richest members of the group, the gain is 5 percent."

The current income-based tax system is also more expensive to run, because of the manner in which the tax code is gamed by politicians and lobbyists. Politicians realize great power, and attract constituencies for support, by granting tax favors (i.e., credits, deductions, exemptions) through lobbyists. Fully, fifty-three percent of Washington lobbyists are there because of the tax code! The tax code is continually changing, making it more complex - more difficult to understand. And, the salaries and costs of tax lawyers and lobbyists end up in higher prices of the products and services we buy. Additionally, the time and money required to keep records, file returns, report for audits, retain accounting and legal help, pay IRS penalties and interest, is time and money lost for other productive, or recreational, activities. Depriving us of the use of withheld wages increases our expenses through zero-interest withholding, inflation, return preparation time, and interest paid on credit cards and loans that otherwise may not have been necessary. Summed up, the cost of tax compliance, nationally, has been estimated to range anywhere from $265 billion to twice that amount, depending on the extent to which tax-avoidance consultation is sought and utilized. These expenses constitute a substantial hidden tax which is incomprehensible to the average working American. And the FairTax gets rid of all of it for most Americans, and most of it for business owners.

We, as FairTax advocates, believe that government should serve We, the People, with a fair tax system that will not enable politicians to pit poor against rich (creating barriers to achieve wealth, adding tax penalty to the sacrifices made for personal success). Nor do we want politicians to continue using business as a tool to hide taxes from consumers, often villifying business, which discourages entrepreneuship, personal achievement, economic growth. Liberty and happiness depends on restoring the fruits of labor to those who produce them. We believe that the tax function should align with economic growth, not against it, that government should be paid for in the same manner as working Americans - when, and because, something is sold!

As things stand at present, the system primarily benefits politicans who cater to special interests through lobbyists who game the tax code. The politician seeks to capture them as constituent voting blocks, dependent on continued syphoning of taxpayer dollars to their members' benefit. This is increasingly repugnant to the average working American who often finds it difficult to meet the needs of his, or her, own family in an environment where federal and state business income taxes substantially contribute to trade inequities resulting in the loss of American jobs! Thus, the Sovereign are continually degraded by features of Congress's income tax policy. The most rapidly-growing needs-based "special interest" group has become the Citizens! You see? Congress has nearly all the power; and We, the People, have become We, the Serfs, robbed and enslaved. Getting the federal government's hands out of our family paychecks is the single most important reason to replace the income tax with a consumption tax, the FairTax.

Many of us have joined FairTax.org in order to build a national movement to free ourselves, our family pocketbooks, and our businesses from confiscation of income, and punishment of productivity. And this we say to our federal representatives,

"Either scrap the code and enact the FairTax, or we intend on replacing you with someone who will."

(May reproduce in whole or part. - Ian)