The Benefits of the Fair Tax
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20-02-2014, 05:26 PM
RE: The Benefits of the Fair Tax
(20-02-2014 10:58 AM)frankksj Wrote:  Not true. Gold was fixed at $35/oz.

Except when it wasn't. The official exchange rate changed multiple times:
$19.75 1792
$20.67 in 1834
$35 in 1934 ----> Shocking a 43% devaluation overnight
$38 in 1972
$42.22 in 1973
...and then we went off the gold standard completely

You can't devalue gold by fiat, but you can devalue "dollars" by fiat, even if there is some notional quantity of gold backing it.

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20-02-2014, 05:49 PM
RE: The Benefits of the Fair Tax
(20-02-2014 05:26 PM)toadaly Wrote:  
(20-02-2014 10:58 AM)frankksj Wrote:  Not true. Gold was fixed at $35/oz.

Except when it wasn't. The official exchange rate changed multiple times:
$19.75 1792
$20.67 in 1834
$35 in 1934 ----> Shocking a 43% devaluation overnight
$38 in 1972
$42.22 in 1973
...and then we went off the gold standard completely

You can't devalue gold by fiat, but you can devalue "dollars" by fiat, even if there is some notional quantity of gold backing it.

How is that different than what I've been saying? Like I said, when the country was formed, the founders, particularly Jefferson, understood very well the importance of sound money. The law was explicit: "If any of the gold or silver coins ... shall be debased .... or shall be of less ... value.... every such ... person ... shall suffer death." (full text)

Yes, several times in the US's history the government DID default and either devalue the currency, or switch to a fiat currency. The US has actually tried a fiat currency 6 times since 1776. That is why the relative value of gold to the dollar keeps changing. BUT, you're looking at it backwards. It's not that the value of gold is changing--it's that the value of the dollar is less. IF the dollar remained a claim check redeemable for a fixed amount of gold and the government never defaulted, then the price of gold in dollars would be exactly the same now as it was in 1792.

When I said the value was 'fixed' at $35/oz, that was in Bretton Woods, after WWII. The US kept that gold standard until August 15, 1971. Check the historic value of gold between 1945 and 1971. It was always $35/oz. Never $34.99, never $35.01. $35. always. that's what a gold stand means. $1 was a claim check for 1/35oz of gold. When the US defaults by abandoning the gold standard or devaluing the currency, THEN, at the moment, it is no longer a gold standard, and thus the value can change.

Thomas Jefferson warned about the dangers of a central bank: "I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a money aristocracy that has set the government at defiance. This issuing power should be taken from the banks and restored to the people to whom it properly belongs. If the American people ever allow private banks to control the issue of currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children will wake up homeless on the continent their fathers conquered. I hope we shall crush in its birth the aristocracy of the moneyed corporations which already dare to challenge our Government to a trial of strength and bid defiance to the laws of our country"

We think we're so much more advanced today and the rules don't apply anymore. But read what Jefferson wrong 223 years ago. Nothing has changed. History keeps repeating itself. Here's the US's historic gini coefficient, tracking income inequality. The bottom of the 'V' when the poor and middle class started losing ground is precisely at the very moment we did what Jefferson warned us not to do--we gave the banks (the Fed) the power to manipulate the money supply. And the results are exactly what Jefferson said they would be--the middle class is losing ground, and the corporations are getting more and more powerful.

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20-02-2014, 06:12 PM
RE: The Benefits of the Fair Tax
P.S. Lest anybody say Jefferson was exaggerating and the results of the switch to fiat currency in 1971 haven't been AS BAD as he warned, remember, Jefferson never said how long it would take to get to the ultimate endpoint. Now, look at the gini coefficient. Ever since we've been on a fiat currency 43 years ago all the wealth is getting concentrated at the top, even when liberals are in charge promising to do more for the middle class. So, if we keep doing this EVENTUALLY we will be in the state Jefferson predicted; the masses are homeless, and ALL the wealth of the nation is concentrated in the hands of a few. Thus Jefferson's prediction 223 years ago is spot on--we just don't know how many year it will before inequality reaches the ultimate breaking point.
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20-02-2014, 07:34 PM
RE: The Benefits of the Fair Tax


The “Fair Tax” is a Fraud – we need a 10% “Tithe” Tax!

I am a retired lifetime tax consulting professional (JD, LLM in Taxation, CPA, co-author of a 3 volume tax treatise, lecturer), with no financial stake in ANY tax system. This only a brief summary - for supporting details of all comments, call Stephen C. Eldridge tel. 423-532-7337.

The so-called “Fair Tax” (“FT”) is a fraud – it is MORE WEALTH REDISTRIBUTION, AND a financial SCAM.

In their own words, FT proudly advertises that it is MORE PROGRESSIVE (yes, it INCREASES WELFARE).

Of prime importance, the Prebate is NOT a real refund of FT paid as it appears to be. It is a new $600B ENTITLEMENT, which would have ALL Americans receiving a substantial monthly check from the federal govt – a very bad idea for those of us who are not Socialists. We simply cannot afford yet another huge entitlement that will only be increased in the future.

The FT and the Prebate would leave the working poor making no contribution at all to funding the federal budget and paying nothing even for their personal SS/Medi benefits. The FT and the Prebate FT then extend tax welfare to the non-working poor –and also take the next Progressive Cloward-Piven step towards giving SS/Medi to all regardless of work, by removing the tax “penalty” for reporting SS Wages, thereby “inviting” the fraudulent reporting of SS Wages.

The Prebate is apparently calculated to merely repay the poor for any FT they pay, but actually would pay them far MORE than any FT they might pay (by “assuming” the poor spend MORE than the underlying HHS Poverty Guidelines and also by “assuming” they will pay FT on ALL of their purchases, but they WON’T) - and FT also provides free SS/Medi to the working (and some non-working) poor.

The FT produces a 40-70% in-your-face retail sales tax that would spark a taxpayer rebellion that would destroy our retail-sales-sensitive economy. 40% = 30% (not 23%) FT + e.g., 10% S/L sales tax and 70% is the rate needed at a sample 30% FT evasion rate (the FT incredibly assumes ZERO evasion and ZERO intentional reduction in spending and ZERO migration from new to used goods).

IN ADDITION to that 40-70% tax, the FT contains several HIDDEN TAXES. 1) FT’s 30% rate is really 42+%; the 12+% is hidden by having fed + S/L govts paying FT – ultimately, they must get that money from you. 2) The initial 30% rate is 1-5% short and that plus any other revenue shortfall will have to be made up by raising more FT (or a NEW Income Tax), 3) The fed budget will rise for a) higher SS benefits and higher COLA’s payable to all federal retirees, both induced by FT’s price increase of nearly 30%, and for b) fraudulent new SS benefits invited by FT’s removal of the “tax penalty” for reporting SS Wages, – more FT (or a NEW Income Tax) we be required to fund these.

The NEW IRS (i.e., the STAA) may well be far worse, far more invasive than today’s IRS (the buyer is liable to pay FT and get/show a receipt – The STAA may audit consumers) – also we may well have to file an “Annual FT Summary”.

We may well wind up with BOTH a NEW Income Tax AND the FT, when Congress repeals the FT’s Sunset Clause and enact a NEW Income Tax .

Seniors will start to pay for SS/Medi again and some will pay a 2nd-3rd tax on their earnings. Many middle class seniors will pay more FT than they would have paid in Income Tax and many will lose purchasing power because of 1) the nearly 30% price increases and 2) the higher S/L & federal taxes required because they must pay FT and can only get the funds from us, and 3) higher federal taxes due to higher SS & pension COLA’s and fraudulent SS benefits.

The FT promises grand economic benefits which are all UNPREDICTABLE - mere Hype & Change.

What we need is a Flat Income Tax with No Deductions, No Exemptions, No Credits and a 10% rate, with business income taxed to shareholders on a very simple basis (i.e., no corporate income tax) - See H.R. 1040, but with changes as noted here (IRS is neutered, 1 page tax filing, everyone pays - more evolutionary). Call your representatives in Congress and let them know that this is what you want.
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20-02-2014, 10:58 PM
RE: The Benefits of the Fair Tax
(20-02-2014 07:34 PM)Stephen Eldridge Wrote:  What we need is a Flat Income Tax with No Deductions, No Exemptions, No Credits and a 10% rate, with business income taxed to shareholders on a very simple basis (i.e., no corporate income tax) - See H.R. 1040, but with changes as noted here (IRS is neutered, 1 page tax filing, everyone pays - more evolutionary). Call your representatives in Congress and let them know that this is what you want.

...or get rid of income taxes, and replace them with other taxes. It's amazing to me, how people think these are all theoretical discussions, when there are real world examples of this approach working just fine. Texas has an economy roughly the size of Russia, but (a small franchise tax notwithstanding), but no income taxes.

I agree that prebate aspect of the Fair Tax is a deal breaker to me, but a progressive sales tax without a prebate could work just fine. What I mean by that, is certain basic necessities would be free of sales tax - milk, bread, eggs, chicken, bananas, thrift store clothing, etc. The next level would have low taxes. This might include new shoes priced under $20/pair, for example. Between $20/pair and $1000/pair the tax might increase proportionately until it maxes out at 200% (or whatever).

The same items are taxed the same for everyone, but the items people of more and more means tend to buy, are taxed more heavily.

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20-02-2014, 11:34 PM (This post was last modified: 20-02-2014 11:42 PM by Chas.)
RE: The Benefits of the Fair Tax
(20-02-2014 04:25 PM)frankksj Wrote:  
(20-02-2014 12:53 PM)Chas Wrote:  What's not true? I said that it has had a fiat currency and that is true.

Sorry, your facts are confused. Read the Coinage act of 1792. The Federal government could ONLY use gold and silver as money, and it actually carried the DEATH PENALTY for anyone who tried to devalue the currency. The founders saw the unbroken record of failure in fiat currencies and went on the record that they would EXECUTE anybody who tried to bring it back.

Oh, moving the goalposts again. You stated that it was in the Constitution. It isn't.
And that act provided for copper cents, as well. So there's that.

Of course, there are also the Coinage Act of 1834, the Coinage Act of 1849, the Coinage Act of 1857, the Coinage Act of 1864, the Coinage Act of 1873,
and the Coinage Act of 1965. There is nothing sacrosanct about the Coinage act of 1792.

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(20-02-2014 12:53 PM)Chas Wrote:  The federal government is given the power to regulate the value of the currency - that is the very essence of a fiat currency.

You're confusing currency and money. YES, they can issue WHATEVER paper notes (currencies) they wanted, like they did with the: dollar, greenback, continental, etc. And they could set the value: 1 dollar is worth 1oz of gold. BUT, the paper currency was just claim checks for the money--and the money was gold and silver. So, you can issue a paper currency that is convertible for gold and silver at a given rate what you want. BUT..... if you later change the rate or cancel the convertibility, IT IS A DEFAULT.

Again, none of that is in the fucking Constitution. The value of the dollar is not defined in the Constitution.
The government can base the currency on pig shit if Congress so chooses.

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20-02-2014, 11:43 PM (This post was last modified: 20-02-2014 11:46 PM by toadaly.)
RE: The Benefits of the Fair Tax
(20-02-2014 05:49 PM)frankksj Wrote:  [Image: images?q=tbn:ANd9GcTdLMjqkmYwp0TuaXE0BFO...wZ7ONnha_n]

http://scholar.lib.vt.edu/theses/availab...HAP2-3.PDF

Take a look at this PDF. You'll see that the median age in the US began to rise dramatically, exactly coincidnet with the gini curve. One of the factors economists have noted for higher gini, is an aging population.

As an Austrian myself, I can argue that a state of permanent inflation made possible by pure paper currency harms the middle class the most, but I think you need more than a gini curve to make the point that it's responsible for the increasing wealth disparity. That might be an aging population causing that, or it could be what Nixon did, or it could be an exponential increase in the role of the federal government, or any number of other factors in whole and in part.

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20-02-2014, 11:50 PM
RE: The Benefits of the Fair Tax
(20-02-2014 10:58 PM)toadaly Wrote:  
(20-02-2014 07:34 PM)Stephen Eldridge Wrote:  What we need is a Flat Income Tax with No Deductions, No Exemptions, No Credits and a 10% rate, with business income taxed to shareholders on a very simple basis (i.e., no corporate income tax) - See H.R. 1040, but with changes as noted here (IRS is neutered, 1 page tax filing, everyone pays - more evolutionary). Call your representatives in Congress and let them know that this is what you want.

...or get rid of income taxes, and replace them with other taxes. It's amazing to me, how people think these are all theoretical discussions, when there are real world examples of this approach working just fine. Texas has an economy roughly the size of Russia, but (a small franchise tax notwithstanding), but no income taxes.

I agree that prebate aspect of the Fair Tax is a deal breaker to me, but a progressive sales tax without a prebate could work just fine. What I mean by that, is certain basic necessities would be free of sales tax - milk, bread, eggs, chicken, bananas, thrift store clothing, etc. The next level would have low taxes. This might include new shoes priced under $20/pair, for example. Between $20/pair and $1000/pair the tax might increase proportionately until it maxes out at 200% (or whatever).

The same items are taxed the same for everyone, but the items people of more and more means tend to buy, are taxed more heavily.

Please tell me what the Texas budget is for foreign aid, space program, blue-water navy, consumer safety, embassies, etc. Consider

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21-02-2014, 09:43 AM
RE: The Benefits of the Fair Tax
(20-02-2014 11:50 PM)Chas Wrote:  Please tell me what the Texas budget is for foreign aid, space program, blue-water navy, consumer safety, embassies, etc. Consider

Probably not a lot different from that of any country without a Navy or a space program.

The President's own staff has shown that the Fair Tax would indeed collect enough revenue to not only replace the federal income taxes, but to also provide this prebate to all citizens. Get rid of the $800 billion/year prebate and use that to create progressive sales taxes in its place.

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21-02-2014, 09:48 AM
RE: The Benefits of the Fair Tax
(20-02-2014 11:43 PM)toadaly Wrote:  I think you need more than a gini curve to make the point that it's responsible for the increasing wealth disparity

Consider: There is a logical explanation why "a" must cause "b", one which nobody refutes, and in the past every time you had "a" it was followed by "b" in proportion to the amount of "a", and this pattern repeated unbroken thousands of times. It's always impossible to prove causation instead of correlation, but with that background, imo, it's hard to deny.

In our case, nobody refutes that when you debase a currency the people who lose are those who get paid in or save in that currency. Further, nobody refutes that the poor and middle class have a much, much higher percentage of their income and savings currency denominated (ie $10/hour or $1,000 savings), whereas the rich do not: their income is from dividends and profits, and their wealth is held in commodities.

Now, google for all instances of high inflation. Can you find even one example where (a) the high inflation was not a result of a fiat currency and loose monetary policy, and (b) it resulted in inequality in proportion to the amount of money printing? One of the famous examples of massive fiat currency printing was Germany post WWI, and it resulted in a destitute population with the entire wealth of the nation concentrated in the hands of the bankers who controlled the printing press. But, look at Argentina, Russia, etc. The pattern is unbroken. And when Thomas Jefferson wrote that 232 years ago it was because back then the same thing was happening: for centuries fiat currency printing has always resulted in massive inequality wiping out the middle class and a concentration of wealth.

The US started doing the same thing in 1971, and we've seen the same result. If this were the only instance of fiat currency printing we could debate the cause-and-effect. But since it's happened 3,000 times over 1,000 years in all sorts of different cultures and demographics and the pattern is unbroken, to me the cause-and-effect is hard to deny.
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