Fair Tax Blogburst: Jan. 10, 2007

by Debbie of Right Truth

John Edwards is running for president of the United States on his same old theme, 'two Americas'. He hopes to get votes by pitting the 'haves' against the 'have nots'. He even chose New Orleans to make his announcement, with the unspoken message that the government failed the poor people and he has stepped in to be their savior.

Edwards is promising universal health care, pulling out of Iraq ,taxing oil company profits and eliminating President Bush's tax cuts to pay for his priorities. Edwards is not alone in his thinking about the evil rich (of which he happens to BE ONE). Yesterday Thomas Sowell had a wonderful article that relates to this, titled 'A Dangerous Obsession'.

Mr. Sowell picked up on the media, the left, and academia's continuous obsession with “gaps” and “disparities” in income. 'As one talk-show host put it, “It makes no sense” that a corporate executive makes over $50 million a year.' Sowell says, "Ninety-nine percent of all the things that happen in this world “make no sense” to any given individual."

If you cannot understand something as simple as making a lead pencil, why should you be surprised that you don’t understand why someone is making a lot more money than somebody else?

Moreover, if this obsession with income disparities is to be something more than mere hand-wringing or gnashing of teeth, obviously the point is that somebody ought to “do something” to change what you don’t understand.

That's what the left, liberals, and Edwards wants to do. They want to correct what they perceive as something wrong, ...some people having more money than others. And how would one go about correcting such an atrocity? That's easy. Take away the excess from one, and give it to another. Or as Mr. Sowell puts it, "Usually that means that the government — politicians — should impose policies based on your ignorance of what is going on."

Of course, such political control of incomes is usually advocated only to deal with “the rich.” But, when income taxes were imposed in the early 20th century, they applied only to “the rich” and they took a very small percentage of their income.

Once the floodgates are opened to this kind of political power, however, we have seen with the income taxes that they not only spread far beyond “the rich,” they took a serious share of even middle class incomes.

Moreover, the income tax has spawned an intrusive bureaucracy, creating so much complexity and red tape that millions of ordinary citizens have to go get some accountant to fill out the forms for them — and then sign under penalty of perjury that it was done right.

If you knew how to do it right, you wouldn’t have to go to somebody else to have it done, would you? ...

It is also worth noting that the people who are said to be earning “obscene” amounts of money are usually corporate executives. There is no such outrage whipped up when Hollywood movie stars make some multiple of what most corporate executives make.

In short, Mr. Sowell is asking, "Whose wealth is it anyway?" Did the government earn this wealth? No, they didn't. Why should they be the ones to decide who is worthy to spend that wealth? Did the government produce any product, any widgets, any business that will employ others? Unless you count the bureaucracies needed to collect and redistribute this wealth, the answer is no.

In reading Mr. Sowell's article, I thought directly of the United States, but Tom at Libertarian Leanings looks at this from a world view.

Israel has nowhere near the natural resources of the Arab states, yet they are wealthier by far. According to the CIA World Factbook, Israel produces a measely 2740 barrels of oil per day. At the same time Saudi Arabia puts out 9,475,000, and Iran 3,979,000. Yet Israel enjoys a per capita GDP of $25,000, while Saudi Arabia and Iran come in at $13,100 and $8,400 respectively. The income gap is not a crisis in Israel because Israelis have the freedom to produce wealth. Arab state citizens have less freedom, less wealth, and less hope for getting it.

Unfortunately, leftists (and Democrats) can't bring themselves to support the spread of freedom. Their antidote to the growing gap between the rich and the poor is to prevent the creation of wealth. Taxation discourages an activity, so the lefty solution to their contrived crisis is to tax wealth (income) at ever higher rates as a person demonstrates ever higher success in creating it. The Arab solution is to wipe Israel off the map. Actually, there are Democrats who seem to be coming around to that view.

This brings me back to the United States, to the Fair Tax, which would replace the federal income tax system with a progressive national retail sales tax. It provides a "prebate" to ensure no American pays federal taxes on spending up to the poverty level, dollar-for-dollar federal revenue replacement and, through companion legislation, repeal of the 16th Amendment.

This nonpartisan legislation (HR 25/S 25) abolishes all federal personal, gift, estate, capital gains, alternative minimum, Social Security, Medicare, self-employment, and corporate taxes and replaces them all with one simple, visible, federal retail sales tax – collected by existing state sales tax authorities.

The FairTax taxes us only on what we choose to spend, not on what we earn. It does not raise any more or less revenue; it is designed to be revenue neutral. (more)

Why should people be punished because they took the risks to build a business, to produce a product, to creat a new widget? Why should they be punished by having the government take away a large portion of their profits, profits that could be used to produce MORE jobs, more widgets, more wealth? Why should the creators of wealth, who give much of that wealth away to worthy and needy organizations, be punished? They shouldn't.

On the world scene, Brad leaves a comment at Thought Streaming

"One can never force a productive, ambitious, disciplined spirit to subsidize weak mindsets girded by overactive libidos, they will always rebel,...". Graeme also leaves a comment, " ...if you give people a "voice" at work, they will produce more. They have incentive to work."

If you let people produce wealth, reinvest wealth, and use it as they see fit without government intrusion, you will actually see more help being given to those in need; more opportunities for those in need of better jobs, higher salaries, more education. Don't punish people for using the gifts and opportunities God gave them.

That my dear friends is what folks like Edwards (and Hillary Clinton) want to do.

---

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.