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The Grassroots Thing
It never ceases to amaze how people can be whipped into a frenzy by a bad idea. History is full of bad ideas. In the beginning it was animal sacrifice, then "the earth is flat", followed by "burn the witch", then prohibition, eight track tapes, term limits, the new Coke, line item veto's, trickle down economics, "just say no", "read my lips", and now the FairTax.
If you get the chance to go to one of these FairTax gatherings you will probably find yourself adrift in a sea of old, bald, and angry Forrest Gumps wearing white tee shirts bearing that familiar "No IRS" with a slash through it. Yes, there will be Mrs. Gump's too - sunglasses, cigarettes, and flabby white arms that rippled as they clapped. Oh, and don't for get the chubby kids with food stains on the white tee shirts waving flags and sucking on ice cream as echoing country music and garbled announcements fill the air.
The war cry is "Eliminate the IRS!!!" under a banner of the big red slash.
"WHEN DO WE WANT IT? --- NOW!!!", they yell waving their banners.
But let's think about this. Why would someone be angry at the IRS? It's Congress that passes the tax laws. Shouldn't they be mad at Congress? The only people I know that really hate the IRS as an organization are tax cheats. People that pay their taxes have no reason to fear the civil servants - the old ladies and patriotic veterans working for the IRS. But lets get real. Since Ronald Reagan defanged the power of the IRS, all you see on television now are ads from tax lawyers saying you can settle your tax bill for pennies on the dollar. The Compliance 2000 directive since 1992 forces the IRS to settle and literally ties their hands.
Why target the IRS? It's a marketing gimmick to get poor people to sign on to a tax plan that won't help them one iota. The people behind the plan needed a standard for the troops to follow. According to IRS statistics, less than three percent of all Americans have ever been audited by the IRS. Less than 1/10 of one percent has ever been charged with a crime by the IRS.
The truth is people hate TAXES more than they hate the IRS. The fact is the FairTax does NOT cut taxes for the middle class or poor. But it does help the super-wealthy in a big way. Just 12 thousand people out of over 300 million people in the United States actually have to pay the estate tax. That means LESS THAN 12 thousand out of 300 million will benefit from the estate and gift tax cut. (By the way that's 0.04 percent of the population) That's the crux of it. It cuts taxes ONLY for those 12 thousand richest people and rearranges the tax system for everyone else. What will happen is that only a handful of very very wealthy elites will get their tax cut now and forever, and you the middle class will get screwed with a tax that goes up and up and up.
If it's only 12 thousand people then why is it a big deal? Because it is a gigantic amount of money ($700 billion) and that money will have to be made up somewhere. Guess where? The middle class.
In July of 2006 it was announced that the Bush administration is crippling the IRS by firing half of all IRS lawyers who work on estate tax audits. Bush is trying to initiate a backdoor elimination of the estate tax even though officials at both the IRS and the Treasury have told Congress that cheating among the highest-income Americans is a major and growing problem. If this goes on any longer the wealthy backers of the FairTax may pull out and declare victory.
Angry, Mislead, and Ready to Follow
When you visit the various FairTax websites you may wonder why there are no Democratic, Progressive, Economic, or Academic supporters. When the FairTax was created it was promoted to a particular audience -- Conservatives who listen to talk radio. This was no accident. What the ringleaders needed was a readymade army and that's exactly what they got. No other group will listen to a negative speaker for 3, 6, or even 8 hours per day repeating the same message over and over again. No other group will follow orders blindly, learn "talking points", hold rallies, buy merchandise, and send letters like the people that listen to hate radio. These people are angry, malcontented, and don't fit in with the rest of society, and need someone to channel this anger. Using Neal Boortz as a leader and spokesman was a stroke of pure genius. Under his direction they learned how to act like a well organized army of activists.
Fortunately, this isn't any army of geniuses. When confronted with an opposing viewpoint their response is always the same - "you need to read the book!" But the fact that you did read the book and simply disagree with it is totally lost on them. Its almost an automatic response. The followers have heard the same thing on radio so many times that they are hopelessly brainwashed and incapable of understanding any other interpretation. It's quite similar to arguing with a Jehovah Witness. If you disagree with them the answer always is - "you need to read the Book". The fact that you are simply disagreeing on an interpretation is completely lost on them. Logic or scientific proof to the contrary simply aggravates them further.
Even Neal Boortz has difficulty defending the logic of the FairTax. On numerous occasions people have called in to his show asking some pointed questions about his supposed studies, his fuzzy math, and the real motivations behind his tax plan. Unfortunately for Boortz followers, they don't have a master mute button, nor can they just hang up the phone and walk away like Neal does. It's pretty pathetic when the actual spokesman/author of the FairTax plan will "cut and run" whenever he gets in over his head with the figures or if the logic is not going his way. No wonder so many FairTax supporters become so frustrated when confronted with a calculator or facts that don't jibe with their talking points. However, its typical for hate radio as Limbaugh and Hannity also employ this "panic button" approach of ending discussions they are losing.
It makes you wonder what's worse - the old fart Forrest Gumps that honestly know it won't work but push it anyway because of party loyalty, or the headstrong young kids who haven't lived through enough administrations to see what a bad idea can do to a nation but are willing to march anyway. There's nothing wrong with the current tax system that the FairTax plan will cure or correct. The notion that the current system is somehow flawed because it's too complex is spurious at best.
What the FairTax supporters lack in critical thinking, they more than make up for in donating time and energy to causes. They don't question the material. They don't look for the studies and methodologies. They don't want to analyze the data nor do they care about the scientific method. They don't question orders. They just want to get the message out at all costs and are very successful in doing so.
A wise man (Democratic Senator Daniel Patrick Moynihan) once said, "Everyone is entitled to his own opinion, but not his own facts." The "facts" that the supporters learn from all these talking points and "FAQ's" presented by fairtax.org are anything but real facts. The research material consists of nothing more than Adobe pdf files written towards a particular opinion without regard to alternatives, factual data, scientific facts, experimental models, hypothesis, or correlation with other known facts. It's as if Linder, Boortz and company paid a group of similar minded individuals with minimal credentials to write advertising copy. Look at any scientific study and you will see that they don't begin the experiments with the premise that they are right and negative findings are not allowed. If there was real research done there should be at least some CONs to go with all those PRO's. The idea can't be an unconditional utopia. Most FairTax supporters are eager to consume the advertising and propaganda without question in hopes of fulfilling some need - the need to be right, the need to change the world, the need to be part of something big, etc.
The problem with that is that they willingly submit to authority and don't differentiate between opinion and fact. They see scientific analysis and critical thinking as a distraction. They unquestioningly argue in defense of what they've been told the FairTax will do even though it hasn't been confirmed by evidence or backed up by logic or reason. Even worse, they dismiss valid criticism with childish rhetoric and phony distractions. Their argument that the majority of Americans are somehow angry with the IRS is a dead giveaway. They are very much the obedient and unquestioning cult members of this great collective passive mind. They have no clue what would really happen if the FairTax bill actually passed. If your observed facts don't jibe with the talking points, then obviously (to them) you just don't understand the FairTax. If your experiments yield different data, then it is you, not the crazy disc jockey, who is wrong. If the worlds best economists say nay, then they are wrong; but not the talk show people. Boortz (and Limbaugh and Hannity to some degree) have set up this mental wall in their minds of their followers - followers who are brainwashed by listening to the same thing day after day - 5 days a week - up to 12 hours a day. How could anyone listen to the same message (conservative talk radio) 8-12 hours a day and not be affected?
There is another explanation for the unique hatred some of these folks have for the IRS. As many of you know a few years back another grassroots group was urging their membership not to pay their federal taxes. The theory was that the Sixteenth Amendment to the U.S. Constitution was never ratified and was therefore invalid. They preached that since the Sixteenth Amendment was invalid Americans need not pay any of these "illegal" taxes and could simply not file a tax return if they wished. Members bragged to each other that they had not paid taxes for years and the IRS never bothered them because they knew they were right.
None of the cult members questioned the reasoning or asked who came up with the idea. Nobody sought out a real attorney concerning the legality of the "research" before committing themselves to tax evasion. Just like the FairTax followers, they would get angry when people questioned their leaders or their interpretations. The supporters just got on board the bandwagon and held rallies and published pamphlets until the party ended.
Eventually the IRS did find each of the tax evaders. Unfortunately for several thousand headstrong but very stupid people, they were eventually forced to realize that Congress has always had the power to tax and their argument was a moot point. Several thousand angry former followers are still paying off all the IRS interest and penalties they accrued as a result of this fiasco. Some even did jail time. However, instead of realizing that they made a mistake and learning their lesson, they want to strike back at the object of their embarrassment - the IRS. It is likely many people who embrace the FairTax idea of eliminating the IRS are doing so in retaliation for the IRS taking action on their tax evasion.
Another libertarian group insisted that people shouldn't pay taxes because the IRS form 1040 can not be issued an OMB control number. The same thing happened to the individuals that used this strategy to evade taxes.
A Wall Street Journal editorial recently exposed the fact that the FairTax was originally proposed by the Church of Scientology as a way of eliminating the IRS. This was done in the early 1990's as a retribution action against the IRS not allowing a tax exempt status for the church. Later the church received it's tax exempt status and the plan was dropped. Neal Boortz disagreed and said that the author was incorrectly identifying a Scientology "front group" known as Citizens for an Alternative Tax System that didn't include members of the AFFT. Boortz claims the FairTax was conceived independently (no matter how similar it was to the Scientology plan).
The so-called history of the FairTax is the most obvious clue that this plan is a scam. It begins like a bar joke. Something like:
A horse walks into a bar. The bartender says "why
such a long face?"
A string walks into a bar. The bartender says "aren't you that string the cops are looking for?" The string says, "No...I'm a frayed knot"
But the real FairTax story begins like this:
Three Texas billionaires walk into a bar. Having
inherited their fortunes, they have little else to do but get drunk and complain
about taxes. So after a few drinks the first one says, "I'll bet you a million
dollars I can get rid of that death tax we hate so much." The second one smiles
and exclaims, "That's nothing, I bet y'all two million dollars I can get rid of
the whole IRS and make our all-interest incomes tax free forever." Then
Leo Linbeck looks up and belches, "I got ya both beat! I'll bet you four million
dollars I can get rid of the estate tax, the gift tax, the IRS, the taxes on our
all-interest incomes, shift the tax burden to the middle class, and to top it
all off I'll get the poor people to do all the work for me!" To which the
other two replied, "Daaaamn! Cowboy!...You got yerself a bet!"
American values VS the FairTax
Ever wonder why the FairTax is called the "Fair" tax? According to the various FairTax websites, it got it's name because a group of AFFT supporters voted for it. But why would a group supposedly dedicated to cutting taxes and eliminating the IRS choose a name like "fair tax?" If they honestly believed that there are no "fair" taxes but still picked that particular name then the name becomes an oxymoron like "genuine imitation" , "found missing", "good grief" , "pretty ugly" , or "Microsoft Works". It means that they lied.
However, we suspect that this well-funded effort used an advertising firm instead. AFFT actually copyrighted the name "FairTax" in the same way that Fox News copyrighted the term "Fair and Balanced". Then they went out and bought a slew of internet domain names that had the words "Fair" and "Tax". The object was to control the media and suppress other people from publishing a tax plan that used the words "fair" and "tax" in it. This makes the term euphemistic at best and doublespeak at worst.
When most people hear "Fair Tax" the first thing that comes to mind is doublespeak terminology like saying "downsizing" when you really meant "firing", or saying "persuasion" when you really meant torture. Terms like "peacekeeper missile" , "civilian casualties" and "death tax" come to mind. The FairTax is just a nicer term for what it really is: The Paris Hilton Tax Cut. It's secret goal is to empower idiots like Paris Hilton to continue collecting money for free, propagating, and passing on massive amounts of wealth and property tax-free from one idiot generation to the next without ever working for it or earning a dime of it.
At least people on government welfare programs have some degree of humility for getting something for nothing. We see them hang their heads low when they have to use food stamps to pay for groceries – it’s an embarrassment to get money you didn't work for. Not so with the heirs of millionaire estates. They hold their heads high in defiance as they spend their own welfare dollars. They actually think that they are entitled to money that they didn't work for and didn’t earn just because they were yanked out of the right crotch at birth.
America is about working for a living and building a better country. It’s not about leading a hedonistic, material life that you didn't earn. Self-made people build businesses, put people to work, provide goods, and help America. In contrast, freeloaders have no work ethic so they run for office instead, and change the laws in their favor. America would be better off if these “children” of self-made people started from scratch - a little hard work never killed anyone!
Tax, Print, or Borrow?
What’s worse, “tax and spend” or
“borrow and spend”? There are three usual methods the government uses to fund
all of its programs – taxes, borrowing, or printing money. All involve taking
money from citizens to fund everything from defense to agriculture.
Each method has different effects on the economy and targets different groups of people to make up the majority of the funding. Each method has its advantages and disadvantages. The Republicans tend to “borrow and spend” while the Democrats tend to “tax and spend”. What’s the difference you might ask?
Taxing usually hurts middle and high income individuals most. Since most taxes are graduated, the burden tends to fall progressively according to income and wealth. The effect is immediate. Taxing can, in some cases, cause price increases and can delay investment.
Borrowing hurts middle, low income, and young individuals when the burden is
delayed and added to the national debt. Borrowing helps high-income individuals
and older individuals who won’t have to pay for the money that was borrowed.
Borrowing has a delayed effect and incurs interest and fees. Typically for every
million dollars borrowed, five million or more dollars are required to pay back
the money. Borrowing has the effect of shifting the burden to younger
generations. Money used to pay interest on the debt is borrowed from other
programs like social security and veterans benefits.
Printing money has both a great and terrible effect on the economy. However, printing money has the greatest advantage to the middle class. When money is printed inflation goes up. This means the typical middle class individual can pay off his mortgage and car quickly with inflated dollars. Middle class workers typically work under contracts that require cost of living increases so their wages keep up with inflation. Printing money hurts people who have lots of money sitting in the bank. It causes unemployment in the management ranks and can lead to bankruptcies. It also hurts the poor on fixed incomes, but typically social security and Medicare go up with the cost of living.
Which system is best? Consider this. The enormous amount of borrowing done by Ronald Reagan is still being paid off today (even though Reagan is long dead and buried). The debt is so enormous that we spend more than was borrowed each year just to pay the interest on that debt. The inflation the President Carter created by printing money was rough, but it was short-term and didn't add to the debt.
Taxing and spending may hurt right now, but at least the pain is done after the tax is paid. Politicians should choose to “tax and spend” rather than “borrow and spend”, after all it’s the only responsible way to cover your debt. What if people followed the Republican example and put all their debts on a credit card, and then passed the responsibility to their children?
Maybe the answer is a Balanced Budget Amendment. You can't really cut taxes until we make it illegal to borrow. Cutting taxes for ONE group will ALWAYS shift the burden to OTHER groups.
A Short History of The Current Income Tax
Americans have always hated taxes. In fact, the main reason the first American colonies broke away from England was "taxation without representation." When the United States first became a country there were no income taxes. Money to run the government came from duties, import taxes and excise taxes. During the war of 1812 a special "war tax" in the form of an excise tax was placed on goods, housing, slaves, and land. When the war ended in 1816 the war tax was lifted. In 1861, Congress passed an income tax of 3% on annual incomes of $600 to $10,000 and 5% on incomes from $10,000 to $50,000 with an inheritance tax. Lincoln signed the bill on July 1, 1862. When the civil war ended, the tax was kept to pay off the gigantic debt accumulated. All income taxes ceased in 1872.
Between 1895 and 1909 the differences in classes became very apparent to the American people. Robber barons, industrialists, and war profiteers were getting rich at the expense of their fellow Americans. America was starting to resemble old England in the aristocracy of the newly rich. Theodore Roosevelt was so confident in the disdain between rich and poor he publicly endorsed both an income tax and an inheritance tax. Congress drafted the Sixteenth Amendment and sent it to the states for ratification. The American people favored the idea of making the rich pay their fair share and supported passage of the 16th Amendment in all 50 states. The last state ratified the amendment in 1913 and it became law. One interesting thing about the amendment was that it allowed taxing all "lawful" forms of income. During a brief period of time shortly after the amendment was passed, people with "illegal" forms of income were actually able to escape paying taxes!
The income tax of 1913 started small, but grew quickly. The rates were from 1 percent for people making over $4000 to 7 percent for income over $500,000 per year. Less than one percent of the US population paid income tax and the government functioned quite well. Like every other great increase in income tax, the next one came from another war. World War I increased the need for money and the lowest tax rate was bumped to 2 percent and the top tax rate was bumped to 15 percent. In 1918 the bottom rate was 6 percent and the top rate jumped to 77 percent, but still only a small percentage (5%) of the American people paid income tax. By 1936 the lowest tax rate had reached 4 percent and the top rate was up to 79 percent. Then by 1941 the bottom rate was 23 percent and the top rate reached an all time high of 94 percent yet the country thrived. In 1954 the highest tax bracket was 87 percent. Yet, interestingly enough, during the 1950's Americans had the highest standard of living in the world, and it took only one income for a family to make ends meet, proving again that America worked best when the wealthy shouldered the majority of the tax burden.
The tax reform act of 1969 reduced rates for individuals and lowered tax brackets. The Economic Recovery Tax Act of 1981 drastically lowered the top rate to 50 percent and decreased exemptions for the poorer taxpayers. In 1984 President Reagan called for a sweeping reform of the income tax so it would have a broader base (more poor people paying in) and lower rates for the wealthy. The "revenue neutral" Tax Reform Act of 1986 slashed the top tax rate down to 28 percent (even though the upper middle class rate stayed at 35 percent) and more poor people were put on the tax roles. During this time America slipped in per capita income and standard of living. By 1990 Congress again raised the top rate to 31 percent. The Taxpayer Relief Act of 1997 adjusted tax rates and replaced certain deductions for everyone with tax credits. By 2000 there was a budget surplus and the standard of living for Americans was up again.
President Bush's 2001 tax cut continued the GOP move toward a consumption tax by expanding a variety of savings incentives. Another feature of the 2001 tax cut that is particularly noteworthy is that it put the estate, gift, and generation-skipping taxes on course for eventual repeal, which is also another step toward a consumption tax. During the massive spending of the Bush administration many federal dollars were diverted from the individual states which, in turn, caused state and local taxes to go up as well as college tuition. As of this writing the American standard of living has dropped to number 23 in the world.
It's interesting to note that the biggest gains for personal income and standard of living for Americans were during periods where the rich were shouldering the majority of the tax burden. While a few political pundits say that the wealthy found ways around the 16th Amendment by starting charitable foundations or educational foundations, most did not like giving up control of their own money. It would be interesting to see a modern national debate on the repeal of the 16th Amendment considering all sides and alternatives - not just the ones proposed by the FairTax proponents. Contrary to popular belief, the 16th Amendment wasn't really necessary for the government to tax individuals. Enough court cases have been litigated since the beginning of the twentieth century to readily demonstrate this fact. However without the 16th Amendment, the Constitution might have to revert to taxes by state population and amount of land owned per Article I, section 2, clause 3 and Article I, section 9, clause 4 of the United States Constitution.
Cult of Personality
Many FairTax supporters will quote the predigested FairTax talking points from the official website without ever having considered the validity of that information. When you try to sit down and discuss the evidence for these wild predictions they either have no answer or get angry. The typical conversation will go something like this:
Q: How does it let you keep 100% of your paycheck
when there are all kinds of other state and local deductions, plus health
A: Because the pamphlet says it does!
Q: How does it allow families to save more for
home ownership when it cancels the home mortgage deduction and puts a 30% tax on
A: You just need to read the book.
Q: I have read the book and it looks like a scam.
Now answer my previous question.
A: It wouldn't be pushed by Neal Boortz if it weren't true.
Q: Just answer the question, How does a new 30%
tax and canceling mortgage deductions allow for more home ownership?
A: I don't know. Just go to the website.
If you ask anybody connected to the FairTax movement, you can be guaranteed of one thing -- no one will have the answers. Even more fundamental, no one will be able to point you to the $20 million dollars in research that was supposedly accomplished by a small army of "experts". No papers, no list of participants, no methodologies used, no dates and times -- no evidence to show that the FairTax has any research at all behind it. You don't have to be a lawyer to see this is a scam. Try this as experiment the next time you meet up with a FairTax supporter: Just pretend you are a newspaper reporter and ask the basic five W's - Who, What, When, Where, and Why. Who participated in the research? What did the research consist of? When did the all the different research take place? Where did all the research take place? Why was it done that way? We should also add: Where are the research papers now? How was the research conducted? What tax systems were compared? What scientific methods were used? What were the possibilities of error?
It is hysterically ironic and tragic to hear FairTax supporters criticize this site for inaccuracy when they have absolutely nothing to back up all the claims of their own tax plan. It's even more amusing to hear them quoting these "talking points" as if they were facts or as if they had some empirical evidence. Empirical evidence is observable evidence that can be tested. If you read any article on the FairTax is will go something like this:
"The FairTax will do X, and will encourage Y, and will promote Z" Unfortunately you will never hear, "This can be objectively proved by..."
There is nothing scientific about the FairTax supporters. The FairTax supporters are more like a religious cult. They strongly resemble the followers of Jim Jones or David Koresh in their blind obedience and unquestioning faith. Like Scientologists, their dogma comes down to pamphlets and a website. Just like a cult, they support their leaders plans even though it will hurt them financially in the long run. Neal Boortz regularly insults his own minions calling the religious ones "fundies" and the anti-abortion crowd "wing-nuts." It boggles the mind to watch the condemned build their own electric chair. Here's a tool that can help a critically minded individual evaluate the FairTax Plan and it's arguments. It was invented by astronomer Carl Sagan to detect spurious and false claims. It is called Carl Sagan's Baloney Detection Kit and contains many links to critical thinking.
It's interesting to visit the Americans For Fair Taxation site and view the rebuttals that they make to the economists and financial experts that point out problems with the FairTax plan. For every point the opposition makes, the AFFT calls it a "misstatement" or accuses the writer of using the wrong data. They don't let up to agree or concede on anything. From their perspective everyone who disagrees is completely wrong. Look for yourself. Visit the AFFT site and examine all their rebuttals. According to the AFFT rebuttals, every single statement made by the opposition was a "misstatement". They go so far as to call the report issued by the Congressional Ways and Means Commission as the "Democratic Staff's Report" in which they blame Democrats for making taxes so complex and claim that it takes the average American 7.5 hours to fill out a tax return.
That's a Lot of Publicity for a First Time Author
Besides Boortz, the other celebrity lobbyist for this fiasco is from the deep south and Georgia's own former dentist and US Representative John Linder. This is the guy that put the plan into a bill and submitted it to Congress (basically doing what his handlers told him to do). Since this is pretty much his only role in the plan we won't get too much into who he is. He is however, a 100 percent pure right-wing vote-as-the-party-tells-you conservative fanatic without the slightest inclination to the left (or to the poor or middle class). His voting record speaks for itself:
One has to wonder how a conservative neo-Confederate Christian bigot got together with an angry right-wing disc jockey to write a bestselling book on tax cuts. Go figure.
Hate Radio Supports the FairTax Plan
The infamous supporters for the FairTax Plan.