December 21, 2007

December 21: Morning News

The FairTax received a significant endorsement today from Louis R. Woodhill, an entrepreneur and member of the Leadership Council of the Club for Growth:

Mike Huckabee’s recent surge in the polls has focused attention on the FairTax, which would replace personal income taxes, payroll taxes, capital gains taxes, corporate income taxes, and the death tax with a national retail sales tax.

There are many benefits to the FairTax, but the most important one is economic growth. By replacing taxes that burden capital investment with a tax that falls 100% on consumption, the FairTax would produce dramatically higher levels of investment, productivity, wages, and GDP growth. You would hear a “great sucking sound” as investment was pulled into the U.S. economy, not only from the rest of the world, but via the savings of our own people.

Right now, the Social Security Trustees forecast the real long-term growth rate of the U.S. economy at about 2.0% per year. This is a reasonable projection of what current policies would yield. However, I believe that adoption of the FairTax would increase growth to at least 3.5%.

How significant is the difference between 2.0% and 3.5% real growth? Let’s look at the numbers over a 75-year period, the way the Social Security Trustees do.

Our economy would be almost three times larger in 2082 if we average 3.5% growth than it would be if growth averaged 2.0%. The “present value” of our GDP over the 75-year period would be more than 70% larger. The implications of this difference are staggering.

For one thing, the financial problems of Social Security and Medicare, which seem overwhelming today, would simply disappear.
Read the full article...

In a WorldNetDaily column titled, Is it Down to Mitt and Mike?, former presidential candidate Pat Buchanan weighs in on the Republican race and the importance of winning Iowa:
Though the 2008 GOP race may seem wide open, it is already probably down to three candidates, could be over by Jan. 4 and will probably be down to two by Jan. 9, the morning after New Hampshire.

Two weeks out from Iowa, here are the odds.

Rudy and Thompson each 20-1. John McCain 6-1. He has to win New Hampshire, and even if he wins there, he would be an underdog. Grass-roots conservatives do not like him and would prefer Huckabee.

Mitt Romney 3-2. If he wins Iowa, he is almost unstoppable. If he loses Iowa, he has to come back and beat McCain in New Hampshire. Then it would a Mitt-Mike race through Feb. 5.

And Huckabee? He has to win Iowa. If he does, he will be the favorite in South Carolina and for the nomination, as well.

Looks like a Mitt-Mike race, with Iowa and New Hampshire giving us by Jan. 9 the two candidates from whom the nominee will be chosen.
Read the whole thing...

Another new Iowa poll from Strategic Vision:
Mike Huckabee 31%
Mitt Romney 25%
Fred Thompson 16%
John McCain 8%
Rudy Giuliani 6%
Ron Paul 5%
A Zogby match up poll released yesterday shows Hillary losing to Huckabee in a general election, 48%-43%, while Romney loses to Hillary, 46%-44%. All the GOP candidates trail Obama, but with a margin of error of +-3.2%, Huckabee's deficit (5%) looks much better than Romney's (18%), Giuliani's (9%), or Thompson's (16%).

SurveyUSA just released some new state match up polls:
Alabama:
Huckabee vs. Clinton, 49% to 44%
Romney vs. Clinton, 46% to 45%

Huckabee vs. Obama, 52% to 37%
Romney vs. Obama 48% to 39%

Kansas:
Huckabee vs. Clinton, 53% to 39%
Romney vs. Clinton, 49% to 43%

Huckabee vs. Obama, 50% to 41%
Romney vs. Obama, 44% to 43%

3 comments:

STOP HILLARY! said...

A VOTE FOR HUCKABEE IS A VOTE FOR HILLARY! Let me explain:

Huckabee cannot win the election. Everyone should know this. What good is his Evangelical background going to do for us Evangelicals when he loses to Hillary in November?

Outside of the Christian Right Huckabee is viewed as yet another Christian from the South with nothing else behind him. I like huckabee but Americans view him as Bush 2.0 and there is NO way Americans are about to put another Bush into office right now.

PLEASE READ THIS BEFORE YOU VOTE FOR HUCKABEE AND SEND HILLARY INTO THE WHITE HOUSE:

http://www.evangelicalsformitt.org/why.php

Joel said...

stop hillary,
I don't know if you noticed this part of my post, but the latest Zogby poll actually showed Huckabee beating Hillary and Mitt losing. You say that Americans view Huckabee as Bush 2.0 (wouldn't that be 3.0?)... where are you getting that from? Is there some major poll or news report that substantiates this notion?

Ian 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)