Entries from March 2008 ↓

12 foot waves, Chi-town, and Primary Power from Justin Bradshaw & Joel Van Brunt on Vimeo.

Looking past the Hillary and McCain wins last night… the voters in a little known town in Vermont (two of them, I think) resolved to arrest George W Bush and Dick Cheney if they ever come to their town. They believe (as I do) that the Bush administration has violated the constitution, broken domestic privacy laws, flouted Habeas Corpus and more… and deserves to be impeached or arrested.

Here’s the text of the bill:

“Shall the Selectboard instruct the Town Attorney to draft indictments against President Bush and Vice President Cheney for crimes against our Constitution, and publish said indictments for consideration by other authorities and shall it be the law of the Town of Brattleboro that the Brattleboro Police, pursuant to the above-mentioned indictments, arrest and detain George Bush and Richard Cheney in Brattleboro if they are not duly impeached, and prosecute or extradite them to other authorities that may reasonably contend to prosecute them?” The people of Brattleboro answered, “yes!”

The indictment means that Bush and Cheney can be arrested for criminal acts should they ever enter Brattleboro. The indictment would go into effect after Bush and Cheney leave office.

I think this is great. It means nothing, of course, but it’s a great symbolic gesture against a regime that has somehow gotten away with the worst assault on the constitution and the rule of law, perhaps, in the history of the Presidency of the United States. I mean, it’s one thing to lie about a blowjob, it’s quite another to lie about torture.

If you want to check out the full article, here’s the link.

Due to its length, I decided to make my response a post and not a comment.  In the interest of saving space, I have not re-pasted Justin’s analysis.  Refer to his post, for the original analysis.    

Justin- the 23% versus 30% is addressed in the second book, FairTax- The Truth.  The reason it is a 23% inclusive tax rate is because it IS calculated the same way income and payroll taxes are calculated- inclusively.  Making it an exclusive tax is not being entirely honest about what the FairTax is replacing.  If we want to use the exclusive model, why not compare it to an exclusive income tax rate?  What would that be?  Between 30 and 50%?  Higher?  Now that is scary! 

The rebate is calculated based on size of family.  It makes no difference what income or social status the family is in.  Very fair.

The President’s Advisory Panal for Federal Tax Reform is also addressed in the second book.  Because the panel did not include the payroll tax in anticipated future government earnings (the payroll tax is also replaced under the FairTax), the calculations they developed are meaningless.  It is an inaccurate, and SCARY, study for opponents of the FairTax to use in spite of the criticisms on the panel’s methodology.  Here’s a quote from the panel:  “These estimates do not account for how those behavioral changes will affect the size of the overall economy.  Instead, the Treasury Department holds constant the Administration’s projections for the future size of the economy.  That means, for instance, that even if a reform option caused the total size of the economy to increase due to favorable investment incentives, these estimates would not incorporate the corresponding increase in revenues.” - FairTax- The Truth pg 121.

The FairTax would encourage Americans to save- agreed!  And invest!!

The National Retail Federation study in 2000 is further addressed in this second book.  The study looked at a national sales tax bill that was different than the proposed FairTax bill.  For one, I don’t believe that HR 2717 included replacing the payroll tax and the corporate tax.  HR 25 and S 1025 do include replacing these two taxes.  Therefore the 2000 study doesn’t really apply.  It’s like comparing apples to oranges.

Since the FairTax is designed to replace the already embedded, or hidden, taxes that exist in goods and services, the incentive on people’s spending, while fluctuating a little, will remain relatively constant.  Two things could happen.  One, employers keep their products the same price and give their employees higher wages (from income and payroll tax deductions).  Two, employers reduce employees wages to something similar to what they take home now AND reduce the cost of their goods and services because they don’t have to pay corporate taxes OR pay their employees wages over their take home pay due to payroll and income taxes.  The reality will probably be somewhere in the middle of these two options.  Those companies that try to gain one over on the consumer and keep their prices high to increase profits will not last in a competitive marketplace where competition can underbid them.  The FairTax is also embedded in the cost of goods and services.  It’s not added.  From this perspective, the disincentive to spend money argument is not very strong. 

Perhaps we can look at a small case study of two states pertinent to this particular Tuesday, March 4^th, 2008:  Texas and Ohio. This case study is found in an editorial from yesterday’s WSJ: Texas v. Ohio - WSJ.com.  Let’s look at the differences in taxes and labor in these two states.

Ohio imposes the third highest corporate income tax in the country: 10.5%

Ohio imposes the six highest income taxes in the country: 8.87%

Ohio workers are forced to join labor unions

Texas has no income taxes.

Texan workers are not forced to join labor unions.

I don’t know what Texas’ corporate income tax is.

Results:

In the last ten years, Ohio has lost 10, 400 jobs and has an unemployment rate of 6%.

In the last ten years, Texas has gained 1,615,000 jobs and has a current unemployment rate of 4.5%.

So, states with lower (or no income) taxes attract businesses and jobs.  If the country abolishes the income taxes, payroll taxes, and corporate taxes, imagine how many businesses and jobs will flock to our shores.  An informal survey by the FairTax proponents found that 400 of the top 500 international companies would build their next plant in America under a FairTax model.  The remaining 100 would move their headquarters to America.  Alan Greenspan said in an interview that the $12 trillion currently in offshore accounts from American businesses and individuals (to avoid taxes) will flood back into the domestic economy under the FairTax model.  Not in a matter of years, but in a matter of months. 

The FairTax is looking pretty attractive to me.

Texas v. Ohio - WSJ.com