(Some reasons why it hasn't been working as well
as it could be and how the problems can be cured.)
Income Tax - The Fair Tax
Ignorance, Stupidity, and Greed
In ancient Persia, long before what is known as the time of Christ, people were making ice in the desert through evaporative cooling and storage techniques. They also used water, rocks, sand, heat, and wind to condition and move air so that their buildings were cool during hot times and warm during cool times. Today, the old technology is known only by a few, and the actual figures used by engineers for accurately implementing this technology are either not known or not widely published. Consequently, we are often duped into using energy that creates unnecessary expenses, excessive pollutants, and excessive carbon dioxide emissions. However, it is our outmoded system of incentives that allows this state of ignorance and gullibility to continue.
Furthermore, in an age where computers can use very little energy, the old technology can be better implemented than ever before - provided those who design our buildings will bother to use such methods as either primary or secondary systems.
On March 24, 1983, while I was working for the Pacific Telephone Company, I made some notes on a new building that a very talented engineer and myself as the coordinator had been working on for some time. The concept was to create a commercial building that would use less than 10% of the energy normally used for a building of its size and type. The name of the new building would be the Napa Field Operating Center (FOC). My notes were as follows.
Napa - electrical charges by PG&E - $3.00 per month plus 10.438 cents per kilowatt hour.
Napa Field Operating Center (FOC) - 5 horsepower (HP) supply (2.4 HP low, 4.2 HP high)
1/3 HP exhaust fan for skylights (.2 HP operating)
Heaters: EDH-1 12 Kilowatts (KW), EDH-2 27 Kilowatts (KW)
Heat pump in conference room: Cool 3.63 KW, Heat 2.79 KW
Using 736 KW/HP at 100% efficiency, actual of 1000 KW at normal efficiency/HP:
minimum load 2.4 KW, maximum about 42 KW
(24 hours)(30 days)(2.4 KW)($.10438) + $3.00 = $183.37/month
(24)(30)(42)(.10438) + 3 = $3,160.00 maximum
Lights: about 2 KW inside for 12 hours maximum
about 6 KW outside for night only
If 2.4 KW fan cycles, bill drops to $90
Lights about 8 hours/day on dim day $"0" on bright 0
Total per day, $90
Max heat: 4.2 for supply fan plus 39 for heaters + 3 for heat pump equals 46.2
3 for light for 8 hours
(46.2)(8 hours/2)(30)(.10438) = $578.00 for heat
(3)(8)(30)(.10438) = $75.00 for light
Comes to $653.00 maximum
Exterior lights (6)(8)(30)(.10438) = $225.00 for whole yard
Rock is 1 inch river run (round) "salt & pepper".
8'x12'x20 rock bed - 100 tons - total cost $4,000
Envelope is about 8,390 square feet
Loading ramp 58'x25' = 1,450 square feet
Covered storage 4,554 square feet
Inside w/o heat or A/C 3,306 square feet
Rock bin and plenum 40x23 = 920 square feet
Treated office area 9,390 square feet
Total comes to 18,620 square feet
This project required two very lengthy tries to persuade higher management to approve it. As I recall the total time for approval (through opposition) took over four years. Then there was a year or more for design and construction. Finally, the building was constructed and turned over to the Plant Department. The following news release was composed by our public relations expert.
Pacific Telephone this week officially "took off the wraps" at its energy-efficient Field Operating Center in the Napa Valley Business Park.
Located on a seven-acre site near Kelly Road, the $2.1 million facility consists of office and storage space totaling 17,200 square feet plus a 4,000 square foot garage and equipment building. It serves as headquarters for some 100 employees responsible for construction, maintenance and repair functions throughout Napa and Solano Counties.
Consistent with Pacific Telephone's energy conservation program established more than 10 years ago, the new complex incorporates numerous energy-saving features. The environmental considerations include large, automatically-controlled skylights for heating and cooling energy and a variable air flow system to recirculate hot and cold air as needed.
In addition, several passive energy-saving features have been included. Landscaped earth berms have been constructed around the building's exterior walls, allowing for more natural warmth in winter and cutting glare and radiated heat from the pavement during summer. Taking advantage of the seasons and the direction of the sun, lower-hanging eaves protect the interior from direct sunlight when it's hot but allow for increased heating during the colder months. Finally, the facility is insulated far beyond industry standards; the ratings of R11 for walls and R19 for ceilings have been upgraded to R19 and R38 respectively.
On average, the Napa Field Operating Center is expected to cost Pacific Telephone about $90 per month for heating, cooling, and lighting. A similar facility incorporating only passive energy-saving features such as thicker insulation would cost $450 per month.
Pacific Telephone General Manager, Norm Phillips, explained the company's ongoing energy conservation program has resulted in huge savings statewide.
"In the past five years," he said, "we have modified the heating, cooling, and lighting systems in more than 1,100 buildings in California and Nevada for an energy savings of $56 million."
"By 1985," he added, "the savings will total $105 million, and continue to grow as energy costs keep rising."
Contractor: Mid-State Construction of Sausalito, California.
Architects: Liske, Lionakis, Beaumont, and Engberg of Sacramento, California.
Building Design: Contemporary
Parking: Grounds will accommodate 130 employee automobiles and 128 Company Vehicles.
Rock Bed Storage: 100 tons of river rock contained within 8'x12'x20' compartment to retain heating and cooling energy.
Note that very little mention of the rock bed and its role is to be found in the news release even though the rock bed was the heart of the heating and cooling system. Cooling the rocks at night during the summer and heating them during the day during the winter required the use of an inexpensive computer and some fans. Rocks are inexpensive and low on maintenance as compared to the usual high-energy heat pump or air conditioning systems which the rock bed replaced.
In spite of dire predictions from those who wanted us to fail, the construction costs of this system were well below that of the usual contemporary designs. In the years that followed, the actual operating costs for the building turned out to be less than 10% of the operating costs of similar buildings of its size and type. But regardless of the savings and reduction of the environmental impact created by such buildings, the design was torpedoed in a future building that was slightly larger, and later in a whole new complex for company headquarters. Why?
The design for the new complex (the size of college campus) was defeated by one stupid and greedy man who happened to be the kingpin of higher management for the company. After all the design work was said and done, this man single-handedly decided that he wanted things his way and forced a re-design that placed the complex back several years in energy costs. His precise motive for so doing was not known then and he was not about to tell anyone what his actual motive was. Had the stockholders known of the waste of dollars he created, they might have removed him, but stockholders are often kept in the dark even if they are educated enough to understand the issues involved.
The design of the new and larger FOC that immediately followed the construction of the Napa FOC was taken over by those who opposed the energy-savings found in the Napa building and the reasons were well known by those of us who cared. They are symptomatic of the whole system used by large corporations today.
1. Once a building design is completed, various construction companies are contacted to bid for the job as the general contractor. Subcontractors for various trades (such and mechanical and electrical work) present their bids to the bidding construction companies for inclusion in their bids. This means that such things as air conditioning, heating, and lighting (all the energy-using things) are bid by the subcontractors.
2. The architects and their engineering consultants who design such things as air conditioning, heating, and lighting, are paid by a percentage of the actual costs as provided by the bidding subcontractors for those items. This means that it is in the best interests of the architectural and engineering consultant firms to make their designs as expensive as possible. When a contract is a large one, this factor plays a very big role - and engineers such as I was, working for the telephone company, have to spend a lot of time checking and reducing the costs of the consultants' designs. Although passive designs such as earth berms and insulation create more dollars for the architect, energy-saving designs that eliminate air conditioning and heat pumps are taking dollars from the pockets of engineering consultants.
3. Upper management in big corporations is usually composed of those who have been the most ambitious, but not necessarily the best qualified (called the "Peter Principle"). Frequently, these people are considerably less than honest with loyalties only to the stockholders who appoint them and those who can give them something under the table. As an example of their expertise, when the telephone company began downsizing, upper management decided to get rid of the majority of the departments who spent the least amount of money each year. The telephone company engineering departments, with the role of analyzing and reducing the company budgets through checking such things as blueprints and contracts, were the first to be cut back and eventually eliminated because they spent less money per year. What happened afterward was a ballooning of company costs because no one was there to prevent scams and overdesigning against the company.
The result of the above has led to a situation where real energy-saving is impossible. However, a change in the method of paying architects and their consulting engineers could easily reverse the situation. The problem is finding and hiring people for higher management of corporations who are both knowledgable and honest. Such people could cause the design contracts to be re-phrased so the architects and consultants are paid according to the construction and on-going energy savings they create in their designs - rather than how expensive they make everything.
The foregoing, which used the old telephone company as an example, is typical of most (if not all) large corporations. The total dollars that could be saved in construction and energy costs is astounding. The effect on the environment from excess production of carbon dioxide and pollutants is equally astounding.
This is the problem. Implementing the solution can only be possible through educating the public (especially the stockholders of large companies or corporations). If the stockholders knew of the waste that is created by this problem (which affects their monetary returns), they might do something about the CEOs who allow the problem to continue.
The various techniques used in Persia thousands of years ago for air conditioning, heating, and producing ice are well worth mentioning as examples of things that are possible today. Persia was the name of the country we call Iran today. I became familiar with it as a navigator for the Air Force ferrying diplomats, their staff members, and other members of the U.S. Embassy in Tehran. Iran is largely a desert with a lot of rocks in it as well as sand. Vegetation is minimal, the nights are cool, and the days are hot. Wind is the norm and sandstorms can happen.
The buildings in Persia (and many of those today in Iran) are made of masonry which warms up in the day to aid in keeping the occupants warm at night, and cools at night to aid in keeping the occupants cool during the day. Each room in a Persian building had louvers on the walls near the floor to let in cool air - or even warm air if so desired. There were wind towers with four sides (flat faces) at the top of each. They had openings at the top, one on each face, so at least one could take in the wind regardless of the direction from which the wind blew. Inside each tower, from the top to a point below the bottom, were four long chambers, one for each opening. At the bottom, the chambers led to either a manmade cave at a depth where the soil stayed at a relatively constant temperature (about 58 degrees Fahrenheit) or where there was an underground stream which kept the temperature down and humidified the incoming dry air from the tower. At the opposite end of the cave were ducts to bring the cool and humidified air up to the louvers in either a single building or a building complex.
The buildings had domes on top of them to act as funnels for warm air to rise. There were openings at the top of the domes to exhaust the air. When there was wind, the wind aided the exhausting of the warm air by using Bernoulli's principle. When there was no wind, the heat of the air and the heat from the dome created convection to exhaust the air out the top. Exhausting the air at the top sucked in cool air from the louvers at the bottom even when there was no wind and the wind towers were ineffective.
The ducts, openings, and louvers could be blocked with doors to adjust the temperature and choose which path one wanted the air to take. The only energy involved came from the wind and the sun.
There were insulated pits or vaults below ground which had water containers in them. Using evaporative cooling (10 degrees below ambient temperature) from cloths in the water dropped the night time temperature to one well below freezing - and in the morning there was ice for coolaid, tea, or whatever they drank to stay cool. There is no evidence that they had ice cream, but they could have.
Back to Capitalism - Major Modifiers
Saving Energy - The Fair Tax
Back to Exploiting Fear
Back to Communism - The Consequences of Socialist Rule 1
Back to Communism - The Consequences of Socialist Rule 2
Back to Capitalism - Major Modifiers
Also see Joe Louis.
Income tax in the United States was originally employed as a war measure during the Civil War and an attempt to re-establish it was made during the depression of the 1890s. This latter attempt was frustrated by the Supreme Court which declared it a breach of the constitutional provision that direct taxes must be apportioned among the states according to population. According to various Supreme Court cases "Apportion" means that the tax must be equal for all, and "income" means "gain" as regards corporations rather than trading labor for money.
According to the Constitution, Section 8 (Powers of Congress), "The Congress shall have the power to lay and collect taxes, duties, imposts, and excises shall be uniform throughout the United States." An excise is a tax on the manufacture, sale, or consumption of various commodities within a country.
In 1909, Congress passed a corporate income tax bill, designated as an excise on the privilege of doing corporate business. Congress also proposed a Constitutional amendment to permit the enactment of a tax unhampered by apportionment - which was adopted in 1913 with a measure that imposed a top rate of 6 percent on incomes in excess of $500,000. The 16th Amendment which supposedly was for a graduated income tax was only a few words long: "Congress shall have the power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration."
In subsequent cases ruled upon by the Supreme Court, the 16th Amendment was stated to have no new content as "income" applied to corporate gains and there was nothing in the new Amendment which stated that any individual must file a form on his earnings. The Court considered wages a trade for money.
To adopt an amendment, according the Constitution, it must first be proposed by 2/3 of both houses of Congress, or upon the application of the legislatures of 2/3 of the several States they may call a convention for proposing amendments. Once proposed, an amendment must be ratified by the legislatures of 3/4 of the States or by conventions of 3/4 of the States.
According to several sources, income tax was proposed to redistribute wealth and control the people as no new tax was necessary except to line the pockets of politicians. The common defense was paid for by corporate taxes, education was paid for by state and local property taxes, and federal highways were paid for by gasoline taxes. According to the Constitution, the federal government has no other responsibilities. Furthermore, before 1913 the government did very well with the taxes collected. However, it was the Big Bankers' Cartel we call the Federal Reserve that forced income tax upon us to pay the interest on the counterfeit money it loans the government.
The proposed amendment was not ratified by the appropriate number of states. Congress and the President (Woodrow Wilson) were aware that the 16th "Amendment" was fraudulent according to a Judge James C. Fox presiding before a district court case in July of 2003. The Secretary of State, Philander Knox, lied to the people, stating that the 16th Amendment had been legally ratified by the States. During World War I, the tax rate was rapidly increased and an excess profits tax was added.
Bill Benton finished a tour of all the state capitols in 1984. He found that not a single state had actually and legally ratified the 16th Amendment. Even if the mistakes in spelling, capitalization, and punctuation were ignored, only 2 states ratified the proposed amendment. Thirty-three states engaged in the unauthorized activity of amending the language of the proposed amendment. Thirty-six were needed for the proposed amendment to become part of the Constitution. The Kentucky Senate voted upon the resolution and rejected it 22 against and 9 for. The Oklahoma Senate amended the language of the proposed amendment to have precisely the opposite meaning. The California Assembly never recorded any vote on any proposal to adopt the 16th Amendment. Minnesota did not send anything to Secretary of State Knox. Yet Knox fraudulently stated that all four of these states had ratified the proposed amendment.
On January 10, 2008, the Federal District Court in Chicago Issued a permanent injunction against Benson on the grounds that he was falsely telling people that the 16th Amendment had not been ratified. The court refused to look at his evidence, claiming that it was not relevant. Go on search on line with "bill benson" and "income tax" to see more details.
It should be understood that $500,000 in 1913 was the equivalent of much more in today's currency, which meant that the overall tax rate was very low when compared to what it is today. The corporate tax was rather stupidly created because it was passed on the the customers of corporate products as it is today, so that in reality the only ones being taxed were the people themselves. It is difficult to say whether the Congressmen were too ignorant or just too greedy to bother to do something intelligent. At the time, the tax was considered very severe and was called "socialist finance" - which it was and still is. Subsequently, taxation was relaxed considerably and there was actually a budgetary surplus in the 1920s.
The collapse of 1929 and the ensuing depression resulted in the government increasing taxes. Even so, on the eve of World War II the levy had reached 4 or 5 million taxpayers and yielded less that 20 percent of the total national revenues. Exemptions were lessened during WWII, the populace with lower incomes were taxed, and income tax became a mass tax with a huge collection agency.
There was not and has never been any attempt by Congress to place an inflation index on the income tax - which has led to those with lower and lower real income to become targets of the IRS. Congress has used the tax as a political football and has no desire to ever give it an inflation index. As inflation continues, it serves to (1) increase the rate at which we are taxed and (2) to act as a means to create more inflation.
The treatment of corporations in regard to any form of income tax is a problem. Four alternatives are offered. First, only dividends may be taxed - but this ignores undistributed profits (those that are put back into the corporation as investments rather than being distributed). Second, corporate profits are taxed as a separate entity, ignoring dividends in the personal tax - but this fails to discriminate between large and small stockholders and ignores an important element of personal income in the measure of the individual's tax. Third, the corporation and its dividends to the individual are taxed - but this is double taxation and discriminates against profits as compared to other income. Fourth, the taxes are aimed at the corporate level of undistributed profits only - but this discourages a socially and economically desirable means of raising new capital (dollars needed for upgrading and growth).
The role of income tax today can be seen simply in the following paragraphs.
1. When a business sells goods or services to a consumer, the taxes are included in the price of the product - whether they are sales taxes, income taxes,or whatever. This is an innate law of economics that cannot be offset or removed by human law. If this innate law is not followed by the business, it goes out of business. This means that taxes are passed on to the customer.
2. In the case of income taxes, another innate law is that operating expenses are always eventually going to become deductible, while new items or services purchased will be taxed. In the case of big businesses, repairs and energy costs will not be taxed. This means that it is more lucrative for the business to spend dollars on repairs or energy than on construction. For instance, if a building is built with no energy-saving berms or insulation, its construction costs will be lower, allowing more money for the stockholders. If a building is built of wood rather than brick, the construction costs are lower and there will be more money for the stockholders. Although this leads to much higher operating expenses which continue to be a problem in the long run, this is all right because operating expenses can be written off and not ever taxed. Overall all, the waste created by having to repair the inferior wooden building and to answer to higher energy costs is never considered because these are operating expenses and not taxed. In all cases, the expenses are passed on to the customers as if they were paying additional taxes to the government - and there is much more carbon dioxide production, waste, and pollution.
Income tax was created by socialists (perhaps communists) and the Big Bankers' Cartel we know as the Federal Reserve to (1) pay for the interest on the counterfeit money that the Fed loans the government, (2) redistribute dollars from the wealthy to the poor, and (3) control the people. In practice, this does not work well for socialists because the taxes are reduced by managing the business as in number two above, and they are passed on those who buy from them. Almost every time an attempt is made to redistribute the wealth, it backfires and the expense is passed on to the poor. At the moment, I cannot think of any instances where this is not true. However, raising the minimum wage is necessary from time to time because inflation is always present in a healthy capitalistic economy where the Fed has injected counterfeit money.
In many corporations - especially those which consist of interlocking sub-corporations such as AT&T and its subsidiaries - money must be collected and re-distributed from year to year in a manner which prevents efficient allocation of the funds, creating more waste and inconvenience.
By the time one pays for the various bureaucracies which are always added along with a new tax, the main purpose of the tax has been defeated. In any case, the evils of income tax are many. First, it fails in its original intent. Second, it causes another bureaucracy to be created by those who must pay the tax and by those who must collect it. Third, it tends to cripple iniative and reduce incentives for progress. Fourth, it creates extreme waste within businesses which are passed on to the customer as hidden taxes. Fifth, it creates excessive rules and loopholes which allow legal tax evasion by those who are able to afford legal help. Sixth, it causes us to use more energy and thus create more carbon dioxide, waste, and pollution. And seventh, it taxes individual savings to such an extent as to make people more and more dependent upon the government (social security increases never begin to keep up with real inflation). People should be encouraged to save and taxing savings discourages saving.
On the program Huckabee on October 12, 2008, it was explained by Governor Huckabee and Chuck Norris that income tax is a tax on production, while a sales tax is a tax on consumption. Thus, this graduated tax on production discourages production, allows various loopholes which cause people to invest in other countries rather than the United States (which allows tax dollars and jobs to go to countries other than the United States), prevents certain people from being taxed, and prevents ministers (priests, rabbis, etc.) of religious organizations from even mentioning any political issues in their sermons (muzzles free speech). A sales tax causes everyone to pay taxes according to their rate of consumption. Huckabee explained that our politicians in Congress do not want to eliminate the income tax because they are paid by lobbyists to "adjust" income tax each year so that some people pay more and some less - the highest bidder gets the favor from the congressman. As a result, we have a large book of rules on income tax that changes from one year to the next for political reasons. This would not be tbe case with a national sales tax.
There is a proposal now to eliminate income tax in favor of a national sales tax. This would be appropriate because the bureaucracies for collecting sales taxes are already in place in most states. We could eliminate the IRS entirely. However, those who are now attempting to legislate a national sales tax are proposing one which is twice what it should be - 26% versus the original and reasonable tax proposed of 12% to 13%. Again, there is evidence that substitution of a sales tax will not be forthcoming because someone has tampered with original proposal, either hoping to kill it or to collect excessive funds for the government by enslaving our population.
Here, the cure for the problem is a national sales tax of about 12% in lieu of income tax. The dollars saved by eliminating the IRS bureaucracy would be more than adequate as a bonus. Should a larger percentage be necessary, it can be added gradually later. People should understand that a percentage is exactly that - it causes the tax to go up as prices rise, and down as they fall - so it need not ever be adjusted for inflation or deflation. For years the politicians have been using the popular ignorance of math to raise percentages. The populace must learn to understand simple math - otherwise, they are like sheep going to the slaughter.
One step that is seldom proposed is to eliminate income tax completely without adding another tax. If the government simply provides only what the Constitution authorizes that it provide, individual income tax is unnecessary. On a DVD that is a few years old called America - Freedom to Fascism by Aaron Russo, some of the taxes we pay now are listed and I am listing them here.
Accounts Receivable Tax
Automobile Registration Tax
Building Permit Tax
Capital Gains Tax
CDL License Tax
Cigarette Tax (causes kids in poor families to fare badly when raised by nicotine addicts)
Corporate Income Tax (which is passed on the individual)
Court Fines (an indirect tax)
Federal Unemployment Tax
Food License Tax
Fuel Permit Tax
Gasoline Tax (state)
Gasoline Tax (federal)
Hunting License Tax
Interest Expense (tax on money)
IRS Interest Charges (tax on a tax)
IRS Penalties (tax on a tax)
Local Income Tax
Marriage License Tax
Real Estate Tax
Recreational Vehicle Tax
Road Toll Booth Tax
Road Usage Tax (truckers)
Septic Permit Tax
Service Charge Tax
Social Security Tax
State Income Tax
State Unemployment Tax
Telephone Federal Excise Tax
Telephone Universal Service Fee Tax
Telephone Federal, State, and Local Surcharge Taxes
Telephone Minimum Usage Surcharge Tax
Telephone Recurring and Non-Recurring Charges Tax
Telephone State and Local Taxes
Telephone Usage Charge Tax
Toll Bridge Taxes
Toll Tunnel Taxes
Trailer Registration Tax
Vehicle Registration Tax (other than automobile)
Vehicle Sales Tax
Watercraft Registration Tax
Well Permit Tax
Workers Compensation Tax
The IRS has been attempting to be "user friendly" for the last few years, but it is still capable of bribing judges, entering your home without a warrant, charging you with a crime you did not commit, being used by politicians like the Clintons to intimidate, lying in court under oath, taking all you have before you are charged (you are not innocent until proven guilty), searching your home without a warrant, assaulting you with weapons (pointing a gun is an assault), slander and libel, theft, and worse (like stealing Joe Louis' kids trust fund). It is an illegal organization which was started by communists in the United States to redistribute the wealth and control the populace through fear.
At this point, until we can prevent unconstitutional spending by Congress, we still need some system of taxation such as income tax or a consumption tax. Before I knew any better, I considered it a privilege to pay my income tax. Today I still pay it - but grudgingly - and I look forward to the day we can get rid of it entirely.
Perhaps the best place to look to find out more about the fraudulent amendment is www.GiveMeLiberty.org" .
Sources: Encyclopedia Americana, DVD America - Freedom to Fascism, and personal experience.
Back to Capitalism - Major Modifiers
Saving Energy - Income Tax
The Fair Tax
Income tax and social security were established by "progressives" (communists). The intent was supposedly for the better good, but actually it was a means putting their foot in the door so the programs could be expanded later on piece-by-piece. Both were also a means for the politicians to have political footballs to kick around and make people contribute to their cause which might be couched in different language, but was always meant for their own coffers for their re-election. The social security trust fund was especially interesting because it could be raided whenever the politicians decided was a good time. Had the social security trust fund not been raided, and had it been put in a bank CD, social security would still be solvent - but instead it was treated as the Ponzi scheme that it is. The real intent of the communists in the United States has always been to overcome the Constitution in its original form (either by legislation, alteration, or discrediting) and to change the free-enterprise system that is the heart of our success as a nation.
As an alternative to income tax, a tax on consumption that has been proposed is a sales tax called the "Fair Tax". It is a threat to the communist goals, and the ranks of the "Fair Taxers" were invaded early on by communist agents who altered and confused the facts first used to sell the new type of national tax to the public. In the March 22, 2010, issue of National Review is an article by Ramesh Ponnuru on the Fair Tax. He calls it A Misleading Sales Pitch. However, his misleading statements, omissions, and general slant indicate that he has a leftist agenda. When the "Progressives" (communists) infiltrated and hijacked the Fair Tax movement, one of their tactics was to make it so high that no one would vote for it.
About forty years ago, a friend was attempting to educate people on the Fair Tax, hoping that their letters to politicians would cause them to to eliminate income tax and implement the Fair Tax. At the time, I was monitoring the maintenance and constructions budgets of the Northern Counties part of Pacific Telephone, and was intimately involved in the company politics of the budget. It was income tax that drove the politics and created excessive waste that the company was forced to pass on to the customer. Bob, my friend, had plenty of back-up data from in his studies on various tax systems. Income tax, social security, and their subsequent expansions were very definitely the work of "progressives" (communists).
Mr. Ponnuru (henceforth to be referred to as "P") misleads us in saying that Fair Taxers want a 23 percent sales tax which he states is computed such that it is actually 30 percent. This is done, he says, by taking a 100 percent sales price, adding 30 percent to it to make it 130 percent, and then dividing the 30 percent by 130 percent which can then be sold as 23 percent. Can you imagine trying this tactic on a sales slip when people are accustomed to seeing a state sales tax computed as a percentage of the 100 percent price? Yet "P" uses the usual variety of sales slip in his later arguments.
According to Bob's well-researched figures, 12 percent computed in the usual way would be more than enough to cover the federal budget providing the leftists were not overspending like they are doing today (March 2010). No amount of taxation of any kind could cover their budget - which is all right with them since their goal is to eliminate our free-enterprise system. Furthermore, Huckabee spoke of 10 percent as the correct figure while "P" implies that Huckabee was saying 23 percent. That having been said, "P's" faulty explanations of percentages (which he needs for a later argument) indicate that his computational method may be equally faulty. Bear in mind that "progressives" are not interested in something that works within the system - instead they are interested in what can be done to destroy the system. Of course, they do not want the Fair Tax.
I suspect that "P" used the 23 percent (computed by him to be 30 percent) so that he could later claim that tax cheating would be increased with such a high percent of sales tax. How, I wonder, could there be more cheating with the Fair Tax than we have already with income tax? [I define "cheating" as using tax shelters and other legal ploys as well as illegal ploys.] "P" claims a value added tax would be better because in each level, there would be less of a percentage and less cheating. However, like the income tax, the value added tax cannot be seen by the consumer and the politicians can continue to rake in the money without the consumer being aware of it. With the Fair Tax (and "P" does mention this), the percent of the tax will be on every receipt and quite visible to the consumer - just like the state sales taxes are now.
"P" goes on to say that older folks will suffer from a change in the tax system. Most older people would be more than happy to see the system change just to make things better for their children and their grandchildren. Furthermore, a transition period could be used to go from one system to the other - in which the older people could be saved from any unfairness. Bear in mind that with a Fair Tax, savings would not be taxed and more people would save. Our present system with inflation and taxing of savings discourages anyone from saving. By adjusting the means of old-age survival (saving money), we could channel payments to social security into individual savings and eliminate social security in its present form. When I did the calculations, I found that my payments into social security could have gone into a normal bank CD - with the result that my collecting of social security now would be 3.5 times what I actually get from our current social security Ponzi scheme that Congress can raid at their leisure - and the balance at my death would go to my heirs.
"P" stated that the middle class would pay higher taxes with the Fair Tax system. This statement is unsupported. He also stated that the wealthy would pay appreciably less under the Fair Tax. In truth, the wealthy are not a separate class according to the old Marxist philosophy. Marx lived in a place and time where there were class distinctions and children were expected to stay in the same class as their parents. The communists here would like to make us think that we have these same class distinctions, but American is the land of opportunity where one's income level can change. In reality, the wealthy (temporary or otherwise) buy more and invest more. Their dollars create jobs when they pass hands, and the economy grows. When these people buy more, they pay more in taxes. They do not hide their dollars under their mattress - so their dollars are always working and always buying and paying taxes. Marxist philosophy is flawed badly but "P" seems to be using it anyway.
Yes, we would be much better off without income tax and social security in its present form, but politically, this cannot be easily adjusted now because we first must remove the communists (whatever they call themselves) and the corrupt from our elected government officials and our government bureaucracies.
Regardless of "P's" assertions, today's taxes are imbedded in consumer prices. Anyone who runs a successful business knows this. If we enforce our laws against monopolies, competition will cause prices to drop with a Fair Tax - and a sales tax will be offset accordingly.
"P" says taxes are imbedded in the cost of labor - so wages will fall. As long as unions do not drive their employers out of business in a competitive market, wages will be subject to competition. Just as any contractor must bid low enough to get jobs, labor must bid low enough to keep the business afloat. This is a free-market economy unless "P" and his peers change it into a socialist economy. Labor is a commodity like any other commodity. "P" seems to believe that labor should be immune to this law - another example of Marxist philosophy on his part.
"P" mentions that households need not prepare tax returns and that privacy would improve with a Fair Tax system. He does not mention that they would not have to pay for others to do their tax returns. He then says that the government would still need a record of wages to be computed for social security purposes. As I said before, our present system of social security is wrong, untenable, and was foisted upon us by "progressives." We do not need a government to force us to save, but without taxes on savings, we could be encouraged to save. Incentives might even be devised that do not invade our privacy.
"P" mentions that income tax pushes down the return on savings. Inflation added to the equation causes less incentive to save. So we can keep our progressive income tax and deal with this problem by using "tax-exempt savings" - but how many people even know what tax-exempt savings are? And why should they be forced to do something out of the ordinary? Why should not all savings be tax-exempt?
Then "P" generalizes by stating "other methods of taxing consumption pose far fewer economic, administrative, and political problems. On the contrary, sales tax can be administered through each state - many have the bureaucracy in place for it now. Politically, there are problems because many politicians want a means to steal from us or control us surreptitiously - and they know this will be more difficult if we see their efforts on every receipt we obtain after a purchase.
The Fair Tax, without interference from communist infiltrators, would be a national sales tax somewhere between 10 and 12 percent of the 100 percent sale price on all goods and services other than food and medical expenses. It is a wonderful alternative to the income tax. It can only be implemented by first eliminating or severely reducing the communist and corrupt people in our government. Such steps are the means of taking care of all our communist and corruption-created problems. The FBI must be allowed, once again, to go after the communists and their useful idiots - including those in Hollywood. Communists are against our Constitution and our free-market system. They are our enemies and should be prosecuted as such. They lie and change their names to avoid being detected - and thus must be detected by their actions.
"P's" last statement is that [Fair Taxers] shouldn't be allowed near a "drawing board." Here, he is advocating censorship of Fair Tax advocates. The call for censorship is a tactic direct from the KGB and Saul Alinsky - which is why I wonder about Mr. Ponnuru.
Income Tax - The Fair Tax