Sailor John's Blog
Fair Tax - A Misnomer
When we race sailboats, we use a handicapping system to make it fair. It is difficult to do because various boats perform differently under different conditions, but at least when we use the word fair, we are using it in an honest way. In politics, it seems that the word is used to mislead.
Recently the News Journal published an editorial about the Fair Tax Act. This was followed by several letters to the editor both in favor of and against such a taxation system. I have been intrigued by this proposal, so I visited the Fair Tax web site www.fairtax.org and attempted to understand what it is all about. I find that neither the News Journal Editorial nor the letters to the editor addressed the real core purpose of this proposal or its consequences, neither of which is fairness.
As an illustration, suppose that Bill is a family man with children. He and his wife both work and bring home about $150,000 a year. It takes nearly all of this to support their family in their lifestyle. Since most of Bill’s family income is spent on goods and services, his basic flat tax rate (sales tax on his expenditures) will amount to approximately 23% of his family income. Now consider Joe, who is also a family man. Joe is a hedge fund manager and makes around $5,000,000 a year. He has a couple of mansions and lives a lavish lifestyle, but still, he only spends about half of his income on goods and services. His tax rate will be around 12% of his income. Hence he is getting about $2,500,000 tax fee because he invests it. In addition, the income from his investments, which he reinvests, will be tax free, so his $2,500,000 will become $5,000,000 in seven or eight years or sooner if he is an expert investor.
Another point that has not been mentioned is that the inheritance tax will be abolished. This represents a gigantic savings for the very wealthy. Statistics show that only about 1.6% of Americans inherit $100,000 or more, so it has no benefit at all for most of us. For the estate of Bill Gates, it represents about $25,000,000,000. Joe will probably accumulate an estate worth hundreds of millions of dollars, so it will save his estate a substantial fortune. His children will never have to work.
I have to assume that the real objective of the Fair Tax Act is to create a plutocracy, which is defined as rule by the wealthy, or power provided by wealth; a form of government where the country is ruled by the wealthy. We have been moving in that direction. In 2007 (it has gotten worse since) 1% of the citizens of the U. S. owned 49.7% of the financial wealth. The top 10% owned 87.8%. To see more detailed statistic on this, look at the web page sociology.ucsc.edu/whorulesamerica/power/wealth.html. The Fair Tax Act will simply allow the wealthy to accumulate more wealth. You can decide whether or not this is good for our country.
Sailing Up Wind
We were in an important race and we had to fetch the windward mark. It was a beautiful day with a brisk breeze. I was sailing as hard on the wind as I could and the choppy seas were sending spray back into the cockpit. The crew suggested that we sail a little more off the wind so they would be more comfortable, so I obliged them. We sailed on with everyone happy and dry. When we tacked the boat and sailed back towards the other side of the course, I noticed that we were just as far away from the windward mark as we had been on the previous tack. We were all comfortable and dry, but we were not making any progress. Make no mistake, we are in a race. The outcome is far more important than winning a trophy. To win we have to keep our focus on the windward mark, even if the seas and spray make it uncomfortable.
The Democratic Club of Southeast Volusia County has only one real reason for its existence; to help Democratic candidates win elections. Although we should enjoy getting together, it is not a social club. There is always a lot of good charitable work that needs to be done in our community, but our club is not a charity. Getting together, doing good work, and supporting charities all make us feel good and participating in these activities help the image of Democrats, but this is not our real mission. Our mission is winning elections for Democrats. The politics of the past year should make it absolutely clear that there is a wide gulf between our philosophy, no matter how diverse, and the singular ideology of the Republican Party.
Right now it is primary season. We may each have our preference, but we should be listening to all of the Democratic candidates. Once the primaries are over, whether our preference wins or not, we must support the winning candidates with all of the enthusiasm, vigor, and money that we can muster. Remember that a Republican in congress always votes against the things that we think are important. Things that will allow our children and grandchildren have a better life.
