The FairTax

There have been some great discussions over at Jabley. Anyone who is interested in the taxing system should read through that area.

There have been many good points raised about The FairTax. I am quickly becoming a proponent. However, I am still bothered by two implications of one big idea. The idea is that any given item is taxed once and only once, at the point where a consumer buys it from a business. Not before, not after.

Not before:
Companies are not taxed on their purchases. The stated reason was not the one I gave in the above paragraph. The stated reason is that business profits eventually end up in the hands of an actual person, which must eventually spend it, and thus pay tax on it. And that any money that remains in the business is by definition investment, and therefore worthy of tax-free status. It’s the second rationale that bothers me. Not all purchases a business makes are investments, and plenty of investments that citizens make are.

I got a good comment from Micah Martello. Among other points, he says that “People already do this very same thing under the current system. Instead of paying the income tax, payroll tax, social security tax, medicare tax and compliance costs when you give yourself a salary to but that car you just pay yourself less and have the company buy the car. It’s still tax evasion under either system.”

I disagree. The difference is that under the current system, when the company bought the car, it paid sales taxes. Under The FairTax, it does not. Under the current system, when the company got the money to buy the car, it paid income tax on that. Under The FairTax it does not.

Not after: Under The FairTax, once an item has been taxed, it is never taxed again. Buying a used item is therefore tax free. I have troubles with this too. I see three related issues.
1) As I posted over at Jabley, it creates a perverse incentive if the value of a new item is more than 23% over the value of that same item used. Jabley dubbed this “Taxitrage”.
2) Who is checking? I don’t see any way to enforce this except to actually have an enormous data warehouse checking the status of every item in the USA. It’s absurd. Businesses have a huge incentive to commit fraud. “Sir, we have a special sale on ‘used’ computers, wink wink”
3) As a consumer, I’d be crazy to buy anything new. Why would I buy a new home, and pay an extra 23% on that price? Why would I buy a wireless router new, or a book, or just about anything. If I can get it used, I will. What does this do to the manufacturer? It amounts to a 23% hurdle that must be overcome in order to get the consumer to buy your product. In fact, it is very much like a tarriff that a foreign country must overcome to sell their goods in the USA, and high tarriffs are generally considered bad economics.

(Point 3 also leads to a 23% incentive to recycle consumer goods, and additionally gives the poorer people a way to purchase goods tax-free. Maybe that’s the point, though I don’t recall seeing that anywhere.)

Paying at the grocery

I’ve been awfully political lately, here’s some lighthearted stuff to break the mood.

OK, you know those things that you use to pay with a credit/debit card at the grocery? This is one of the worst machines I’ve ever seen. I’ve used it well over one hundred times, and I still have to stop and read every button every time. Have you ever seen someone try to use it for the first time? You might as well be in line behind some who wants to pay by trading leftover kleenex — it’s gonna be a while.

The sad part is that 95% of patrons are using it to do the exact same thing — pay with a card. How hard is that? The price comes up, you swipe your card, you push yes. How many buttons do you need? Two? They have over 20. A standard numeric keypad. 3 keys that change their function depending what point you are in the process. Another 3 or 6 with various payment options. It’s insane. Think about this device the next time you use it. Then tell me I’m wrong.

Sadly, I feel just as strongly about this as I do the political material. There will be more posts on bad user interfaces in normal life. It drives me crazy. I actually spend time nodding my head while I read sites like this.

Update: Here is a pic of the interface so you can see how ridiculous it is.

Bush and the Media

Earlier, I said that the media let the Bushies get away with their lies. They have, so the Bushies lie more. If you can make up quotes about Gore, make up stories about Gore, and no one calls you on it, then why would you stop? Until the Bushies are shown some negative reinforcement, they have every reason to grow more secretive, more autocratic, more arrogant, more insular, and more deceptive. Yglesias says it better:

I used to get mad at the administration for trying to manipulate people all the time. I don’t anymore. You can hardly blame them. Everyone would act this way if the media were so casual about letting them get away with it. But now we’re well beyond letting them get away and deep into aiding-and-abetting territoriy.

The only difference between us is that I am still mad.

2004 Election Analysis

GWB is president because he lied and got away with it. Too many people believed the lies.

Consider Iraq. Either you believe it was connected to 9/11 in some way or you don’t. If you do believe that Iraq has a connection to 9/11, then the invasion makes sense. And whatever bad things happen there are unfortunate, but neccessary to effectively take on the bad guys. On the other hand, if you think they are unrelated, then you think it was a gigantic mistake on ever level.
Fact: Iraq has nothing to do with 9/11. There is no reputable independent source that will say otherwise.
Fact: The Bush administration knew this, and decided to go to Iraq anyways, spreading lies to the American public.
What did the exit polls show? 55% of the voters believed that Iraq was part of the war on terrorism, and the voted 81%-18% for Bush.

Consider the WMDs. If you believed that Iraq had WMDs, and you believe that Sadaam was a nutjob who was unpredictable, then you might reasonably feel we had to do something about it. If you thought there were never WMDs and we had defanged Saddam back in Gulf War I, then you didn’t see what the all the fuss was about.

Fact: Iraq did not have WMDs. They had close to zero offensive capability. We were more threatened by Australia then we were by Iraq.
Fact: The Bush administration knew this, and decided to go to Iraq anyways, spreading lies to the American public.
What does/did the public believe about this? In November 2003 (the closest date I can find), polls showed that about half the country overall believed there were WMDs in Iraq, while 80% of Republicans did. (According to Gallup, over half the country now believes they were lied to about WMDs.)

And Iraq and related issues were the #1 issue for voters, not “moral issues”. Of the 46% who bought into the fantasy that the Iraq War made the US more secure, 90% voted for Bush.

How about the economy?
Fact: The Bush taxcuts were bad economic policy, roundly denounced by hordes of economists. They were not designed to help the economy. Yet, 41% of the populace believed that they were even after 4 years of job losses and poor economic news, and they broke 92%-7% for Bush.

So what do have here? We have a country were roughly half the people believe in fairy tales they’ve been told. In fact, as the article nicely demonstrates (and has been shown elsewhere), the majority of Bush supporters simply don’t know what the hell they’re talking about.


72% of Bush supporters continue to believe that Iraq had actual WMD (47%) or a major program for developing them (25%). Fifty-six percent assume that most experts believe Iraq had actual WMD and 57% also assume, incorrectly, that Duelfer concluded Iraq had at least a major WMD program. ..
Similarly, 75% of Bush supporters continue to believe that Iraq was providing substantial support to al Qaeda, and 63% believe that clear evidence of this support has been found. Sixty percent of Bush supporters assume that this is also the conclusion of most experts, and 55% assume, incorrectly, that this was the conclusion of the 9/11 Commission. Here again, large majorities of Kerry supporters have exactly opposite perceptions….
only 31% of Bush supporters recognize that the majority of people in the world oppose the US having gone to war with Iraq.

So are people idiots? Well, there’s never a shortage of idiots. But for the most part, that isn’t the answer, and it ain’t their fault. Citizens shouldn’t have to spend their time investigating to see if their leaders are telling the truth. I spend a lot of time diving through news sources, going to primary sources, reading informed commentary. Most people don’t. Most people shouldn’t. In a well-functioning democracy, there is no need to. Your leaders normally aren’t presumed to be liars, and a properly-functioning media will let you know when they are. We do not have a properly-functioning media. I will simply point you to 6 years of cites at The Daily Howler.

Yep, GWB lied. He wasn’t called on it. Enough people believed. He won. He continues to lie. The US, and the world, is the worse for it.

(“Lies” is a term that carries a lot of meaning behind it. If it makes you feel better, substitute in “a careful program of misstatements, misrepresentations, and disinformation designed in such a way that they could always be defended on some tortuous hair-splitting fine point, but were designed purely to decieve” To me, that’s a lie.)

(Any uncited poll data comes from here or here.)