Herman Cain's plan is just another incarnation of the consumption tax. Mike Huckabee's Fair Tax plan was also an incarnation of the consumption tax, or VAT tax as it's known in Europe. It's also a vehicle to start an internet sales tax.
How do I feel about the "consumption tax" method of raising revenue? I wrote about it here.
Not only did I write about it, I also found a loophole around it. The gist of the loophole is to NEVER BUY NEW. Once upon a time when I had questions about the Fair Tax plan, I wrote to the bill author, Congressman John Linder (R-GA), and eventually got a response...which has since been pulled off my blog (not by me--I knew I was being watched!). The fair tax/vat tax/consumption tax only taxes NEW stuff off the shelf, but not used stuff in thrift stores, flea markets, garage sales, etc., driving most consumption underground to second-hand sources. Freecycle and local round-robin groups would drive it underground to FREE sources, and already does, even without the tax plan in place.
With virtually nobody buying new stuff off the shelf, what effect do you think that would have on our economy? It means fewer retailers to carry less goods, fewer producers making less goods, fewer suppliers of raw materials, less raw materials get sold to make items, and jobs either get lost or never get created in the first place--wouldn't THAT stick a finger in the eye of Diane Sawyer and her "Buy American" campaign, as well as the 9.1% unemployed who've been out of work nearly since Obama took office?
It wouldn't matter if the stuff was American, Chinese, or Martian--we wouldn't be buying it.
If anything, it would serve to reinforce the already hollowed-out economy we live in today. It would, by deletion of all the other federal-level taxes we pay, and the credits/deductions we get now, serve to make more of your income subject to taxation. And from what I can remember of my e-mail conversation with John Linder, the rate could change overnight, making what you're hearing of the 9-9-9-plan become something like a 23-23-23 plan (Fair Tax)--all it would take is Congressional approval (and that vote could happen in the middle of the night, just like voting for their pay raises does). The rate is NOT set in stone--politicians can raise that rate and will if they can! The 9% figure is just a teaser rate, and in very short order, we could find ourselves at the Huckabee 23% rate and beyond.
Europe admits the VAT tax gives them ABSOLUTE RIVERS of money--so what do you think Cain's plan is going to do for this country? It's all a giant hidden tax increase wrapped with a pretty bow and some colorful wrapping paper--all to make you think you're getting a gift. Sound like the Affordable Care Act?
Under the Fair Tax plan, gambling, stock/bond purchases or sales, and/or lottery winnings were exempt--those would remain at the old tax rates, and Cain's plan may have addressed these things as well. Capital gains under Cain's plan would be free from taxation, causing a huge rush to the stock market for income through dividends and appreciation instead of jobs--an answer to the coming back-turning on the unemployed through the enactment of this idea, and turning us all into gamblers in an attempt to earn a free buck...turning us into an investment economy.
What a hell of a way to encourage savings, right? So where's the productivity part of this so-called economic salvation, and where's the incentive to keep producing MORE future taxpayers?
Also, this 9% rate WILL NOT include state-level taxes--you're still on the hook for beer/wine and tobacco taxes, gas taxes, state/local sales tax, property/personal property taxes, etc. Have you checked your utility bills lately? If they charge a tax, guess what? Instant bill increase! Now add 9% FEDERAL SALES tax on top of all these other taxes, plus any internet sales, and you see what you've really got...and the next year, the 9% will have become 10%, then 11%, then 12%, and on upward, just like the rest of the taxes.
It's been written in several different articles around the web that it would take about 40% more taxes than what's collected right now to come nearer to the spending rate of Congress--and cover our deficits. Some of us already pay a combined state/federal tax total of that percentage, and an effective doubling is what it would take. By preserving the state tax structure, any federal consumption tax addition would have to equal closer to 25% to accomplish the same task so this 9% is JUST AN INTRODUCTORY TEASER RATE.
This is a way to get all those who "don't pay any taxes" to start paying taxes--through their reliance on convenience and what I call decadence. The trouble is THEY DO PAY TAXES--they just get it all back at the end of the year (some get more, depending on income level and tax credit eligibility). I prefer to pay less all year round, and get it back with each paycheck, but Cain's plan would have me (and others) scrambling for more offsets to the "newly uncovered" income--out from under payroll taxes, and into the federal income tax light. Something you all can do is to max out your 401k accounts, your IRAs (if you have payroll deduction for them), upgrade your health care insurance (assuming we have any after 2014), get a dental/vision plan whether you need it or not, basically creating your own version of "payroll taxes" with employee benefits paid for through payroll deductions. If Obama has his evil way with the plan, and decides to throw in his idea of removing the tax-exempt status of all retirement plans (he mentioned that one in his inaugural address)--then it's Sally bar the door. I'm already doing most of these, but will add some if the need arises.
Another method would be to do what low-income people already do: just make less money from the get-go, and spread your remaining needs out over the many charities/community organizations that exist, so they get filled for free. Cain's plan proposes to make charity the only tax deduction, so there you go--one more loophole to dive through!
Low income people have very effectively made themselves darn near tax-proof, as long as they too avoid buying retail whenever possible.
Back in 2008 or early 2009, I penned a long stand-alone article about the fair tax, and how to get around it, or practice it now and stop waiting for politicians to enact it. You may remember it: the D-I-Y Fair Tax. Unfortunately, I deleted that page, and can't find a backup copy anywhere. The point is to never buy new again...EVER!...when you can avoid it. If you must, purchase only raw materials and make it yourself--whatever it is, paying a tax only once, and minimizing your hit. Grow, manufacture, bake, cook, sew, paint, hunt, repair, forage, or whatever...your own, or barter/swap/trade for what you need. Don't buy retail-that's where the tax man's waiting! There's absolutely nothing illegal with this.
The less money that's involved in your "obtaining" activity, the less there is to tax. This rule of thumb is good whether or not Cain gets elected--it's good in all weather, so to speak. These consumption tax plans are really just the final nail in our economic coffin--they serve to drive everything underground, and then we collapse just like Greece is doing right now.
Why don't they just start kidnapping us, putting us into comas, and selling off our organs if they're so desperate for money? Oh yeah--they're the ones who decided that organ selling was illegal. Maybe things will change. Maybe the government will suddenly decide to make drugs legal, and stand back to collect the taxes from THAT instead.
Obviously, they intend to make serfs out of us--we just need to decide (vote) on which way they'll go about it: the Democrat way, or the Republican way. Somebody WILL get that river of money flowing!
...and they wonder why the richest of the rich cashed out, got on their yachts, and left the country back in 2008. I wish I could afford to--I'd have gone with them.
Note to whomever had my John Linder letter posting removed: I have backup copies of this post, so removing it would do you no good.
Subscribe to:
Post Comments (Atom)
Posts
0 comments:
Post a Comment