The Fair Tax Fallacy
This is my response to a New York Times editorial by Cornell Professor Robert H. Frank regarding a National consumption tax.
Consumption is “discretionary” only for the wealthy -- who already save much/most of their income anyway. Thus while one might argue that a tax on consumption perhaps ultimately incentivizes this country's non-savers to finally save, most U.S. citizens simply can’t afford to -- not without draconian reductions in living standards.
Also because 2/3 of the U.S. economy is based solely on the consumption of the "lower" classes, of which I am a proud member, if households from the 75th percentile and below did actually start saving substantially in this country, the effect would be one of drastic deflation -- and we all know just how little the Fed desires deflation – which I would argue is its de facto “bogey-man” – not inflation as it claims.
So, NO, your Wall Street (and Walton family) Fair Tax fantasy, titillatingly pornographic as it must be for your ilk, simply won’t do! And the U.S. will continue its progressive income tax AND (finally) remove caps on SSA and Medicare taxes. To paraphrase John Edwards, “there is no reason that a hedge fund manager earning $150M per year should not pay Social Security and Medicare taxes on every dollar of income, instead of exempting all of it above $89K.” This alone saves Social Security and goes a long way to saving Medicare -- even before Federalizing health care under a single-payer system (Medicare for all) and/or regulating health care profits and/or simply legislating health care (not to mention energy production) as a not-for-profit segment of our economy. To paraphrase Michael Moore, "Should your Fire Department turn a profit? Should it make decisions regarding which houses to save, based on its quarterly bottom line? NO! Then why does your hospital?" There is arguably little/nothing discretionary about good luck, bad luck or bad health -- and any civilized society eventually realizes this.
Fair is fair but your “fair tax” is simply not. If our country is in trouble financially, and who could argue that it is not, then your friends on Wall Street must share in the burden of paying down our debts -- instead of encouraging more and devaluing our currency in the process, with the Federal Reserve as enabler. Furthermore, the truly wealthy must fairly contribute to funding solutions to catastrophic social ills-- like poverty, insurmountable health care costs and prison overcrowding from Reagan/Bush's positively Kafka-esque War on Drugs. These problems have largely been solved by other, less rich and arguably less innovative nations over the last 30-50 years. And it is time that we solve them here.
So, while your trickle-down, social Darwinist rhetoric and policies floated for a time in this country, you Laissez-faire worshippers of Ayn Rand's religion of Capitalist Cleptocracy, hiding as you have behind Jesus and social conservativism, to win elections, have finally “screwed your pooch” by twice electing the stupidest President of any government in human history.
This has finally undone you! And I welcome the next two decades -- witnessing Populism’s just revenge!