Thursday, October 11, 2007

What percentage of More-or-Less Income Tax is None?

The Rudy Guiliani 2008 Presidential campaign recently announced they are launching a new radio ad in Iowa. In it, Mayor Guiliani makes a comparison between himself and Democrats respecting taxes. He contends that; "they’ll raise taxes even more then they promised"; while declaring; "I want to give the people back more of their own money, because I know that’s going to create more jobs for us." Even with my apprentice level view of economics, two things are clear to me about this statement.
1) I know you can't give something back until you first take it.
2) The Tax that is the greatest hindrance to creating non-government Jobs is the Income Tax.

Therefore, either Mayor Guiliani is saying he wants lower income taxes; or he wants to create more government jobs, like most Democrats and the big-government segment of the Republican party. Since he is trying to contrast himself with Democrats, I can only assume he's talking about lowering income taxes; either through lowering rates or increasing deductions. Again, parsing his language of "give the people back more", seems to infer the likelihood of lower via deductions/rebates.

On one hand, I have to ask how much more and how much less? On the other hand, I have to ask; if you know income taxes suppress job growth and productivity, why have an income tax at all? Have you never heard the old saw, "if you tax it, you'll get less of it"? I'm not saying lowering income taxes are a bad idea. It's just not the best idea, given the possibility of replacing it with "The Fair Tax."

I can't describe the entire concept of the FairTax here, but the most concise description is an extended quote from the about page.
"The FairTax Act (HR 25, S 1025) is nonpartisan legislation. It abolishes all federal personal and corporate income taxes, gift, estate, capital gains, alternative minimum, Social Security, Medicare, and self-employment taxes and replaces them with one simple, visible, federal retail sales tax administered primarily by existing state sales tax authorities." also has a page presenting video of presidential candidate Mike Huckabee talking about the FairTax to "Americans for Prosperity."

One of the things that qualifies the "FairTax" as "fair", is that it does away with the leverage the income tax gives the Federal Government to control our personal priorities. That may be the biggest reason there don't seem to be many political power-players among the numerous elected officials on both sides of the aisle that support the FairTax.

A second "fair" quality of the FairTax is that no-one would pay any tax on basic subsistence spending, while everyone would pay the same rate for spending beyond that. The Mike Huckabee for President campaign has posted another really great video that covers this topic on YouTube, under the title "FairTax impact on Families."

According (as of Oct-2007), the Presidential candidates who would sign the FairTax into law (if passed) are; Mike Huckabee, Tom Tancredo, Duncan Hunter, John McCain, Ron Paul, John Cox, and Mike Gravel. They also present an "Americans For Fair Taxation Scorecard", of Sponsors, Co-Sponsors, and Supporters of the FairTax in the US House and Senate.

In reading the FairTax book, by Boortz and Linder, I was enlightened as to the impact of the income tax system on driving American Jobs offshore, and hurting American productivity overall. So when it comes to a discussion of whether I want to vote for someone whose tax policies will hurt American Jobs and Productivity more or less; you can call me Crazy, but I'll choose none!

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