Fair Taxes

by TD of The Right Track


As I see it, the main problem with the Income Tax is that it is virtually impossible to enforce completely and fairly. Compliance with the Income Tax depends on taxpayer truthfulness, which generally is motivated either by a) good character, or b) fear of an IRS audit. With the FairTax, the tax is collected when the money is spent, from everyone, with greatly reduced opportunities for non-compliance by the public.


For instance, what about the criminal element in our country? Have you ever heard of the Mafia? Or the drug dealer? Do you think that these people report 100% of their income? Of course not! They get out of paying a huge percentage of their actual tax bill by the simple expedient of not reporting all of their income. But these same individuals still have to pay utility bills, purchase prescription drugs, visit doctors, and buy food. And if they believe in the "high life" of new cars, fancy clothes and jewelry, and new homes, they're going to pay more than "Joe Six-pack" who chooses to drive a used car, or purchase a home that's not brand new.


And it's not just individuals who are managing to avoid paying taxes these days. Everyone in America has heard of the rush to move American companies "offshore", whether in whole or in part. Think about it -- have you ever seen an American-flagged commercial vessel? Oh sure, we've got our warships, but what about commercial boats that carry cargo or cruise passengers? Most of these are flying the flag of Liberia or Panama -- low-tax nations.


In the mid-1950s, about 33% of all income taxes collected were paid by American corporations. Today that number is down to approximately 10%. From "The FairTax Book" by Boortz and Linder:


"That plunge is a major factor in our recent soaring deficits. Indeed, international corporations are essentially "voluntary" taxpayers today, paying only that amount in taxes that they believe will avoid attracting embarrassing news coverage. These corporations believe that our draconian tax structures make their actions necessary. The OFCs [offshore financial centers, or banks - TD] make their plans feasible" [Emphasis added - TD]



Boortz and Linder make the point that if we eliminated all taxes on capital and labor, (which the FairTax does), the United States would become the world's tax haven.



We have the most stable economy, the most liquid and trusted markets, and the highest rates of labor productivity in the world -- and the trillions of dollars in those OFCs would flow back home to the United States for the very reason they found themselves offshore to start with.



And we're not just talking about American businesses coming home, we're talking about wooing corporations based in other countries into America. Think of the economic benefits! More productivity, lower unemployment, higher wages, and all occurring within a tax system that allows you at least partly to choose whether to pay taxes! Buy it new, pay a tax, buy it used and don't!


The FairTax Blogburst is jointly produced by Terry of The Right Track Blog and Jonathan of Publius Rendezvous. If you would like to host the weekly postings on your blog, please e-mail Terry. You will be added to our mailing list and blogroll.


TD

Posted by: Ogre at 03:09 PM

Comments

1 You are missing one of the butiful things about the income tax in relation to criminals. Many times, there is just not enough evidence to prove that someone was selling drugs or engaged in illicit activities. Or, what we have caught them doing and can prove is light compared to their actual crimes.

But it is much easier to prove that someone is not reporting all their income. Therefore, one of the best tools law enforcement can use against the criminals who would otherwise get away with their crimes is tax evasion.

If you change the tax code, criminals that would otherwise be behind bars get to scott free. There would be no way for the IRS to go after them when regular law enforcement can't.

That is how we but Capone and many other mafia/drug king pins behind bars.

Posted by: dingo at October 11, 2006 06:07 PM (8SHtH)

2 Ah, but look at this angle -- if there's a tax on consumption instead of earnings, those criminals will be PAYING taxes every time they buy something! So while they're getting away by not paying taxes now, all that drug money will be taxed when it's spent!

Posted by: Ogre at October 11, 2006 07:06 PM (oifEm)






Processing 0.0, elapsed 0.0073 seconds.
18 queries taking 0.0059 seconds, 10 records returned.
Page size 7 kb.
Powered by Minx 0.8 beta.