Originally Posted by David '47

This all started with the idea that we can drastically reduce income taxes by replacing them (or at least MOST of them) with consumption taxes. If we do that, we must raise the consumption tax level high enought o compensate, which would be in the range of 35-45%.

This is false. This is not even true with a direct conversion of the federal income tax to a national sales tax because the average person is not paying 35-45% in federal income tax. A national sales tax rate would in fact be considerably less than the average rate of taxation under the federal income tax simply because a much greater pool of money is subject to a national sales tax. All that money hidden by the "rich" offshore and elsewhere would be now taxed. All that wealth generated in the drug trade would now be taxed. And we are talking about one hell of a lot of money which is currently "undetected" under the federal income tax. All that money will be taxed thereby greatly offsetting the burden on everyone else across the board.

I believe a figure of 17% is often put forth for an NST even with a "market basket" of exempt essential goods. I believe even that is high and taxes should be lower. That is the point. All Americans will once again have a personal stake in keeping taxes low, unlike today under the income tax. This will drive the NST lower. If 10% is good enough for God, it sure as hell is good enough for Uncle Sam. There would be ample incentive among all Americans to cut federal spending so as to reduce a national sales tax to non-hubristic levels. And the sooner the better!

So first you encourage production, then you discourage consumption.

People will have more disposal income. That only encourages consumption. It encourages investment. It is good all the way around.

Originally Posted by Stonewall Patton

Originally Posted by David '47

This all started with the idea that we can drastically reduce income taxes by replacing them (or at least MOST of them) with consumption taxes. If we do that, we must raise the consumption tax level high enought o compensate, which would be in the range of 35-45%.

This is false. This is not even true with a direct conversion of the federal income tax to a national sales tax because the average person is not paying 35-45% in federal income tax. A national sales tax rate would in fact be considerably less than the average rate of taxation under the federal income tax simply because a much greater pool of money is subject to a national sales tax. All that money hidden by the "rich" offshore and elsewhere would be now taxed. All that wealth generated in the drug trade would now be taxed. And we are talking about one hell of a lot of money which is currently "undetected" under the federal income tax. All that money will be taxed thereby greatly offsetting the burden on everyone else across the board.

I believe a figure of 17% is often put forth for an NST even with a "market basket" of exempt essential goods. I believe even that is high and taxes should be lower. That is the point. All Americans will once again have a personal stake in keeping taxes low, unlike today under the income tax. This will drive the NST lower. If 10% is good enough for God, it sure as hell is good enough for Uncle Sam. There would be ample incentive among all Americans to cut federal spending so as to reduce a national sales tax to non-hubristic levels. And the sooner the better!

I actually calculated the amount needed to offset personal income taxes (pre-Bush tax insanity) at 19%, if and only if there were NO exemptions. If you exempt food, basic needs such as prescription drugs and some services like medical bills, you get to the 35-45% level with no difficulty. Do the math!

So first you encourage production, then you discourage consumption.

People will have more disposal income. That only encourages consumption. It encourages investment. It is good all the way around.

How is consumptuion encouraged? In fact, it's not. I'm back to my earlier example - the Toyota at Lexus prices. This is exactly what occurs in much of Europe - even in the less taxed UK. For an economy built on consumption, that will not fly. Since we seem destined to ignore communal spending as an offset, just what drives the economy?

With depressed demand, what investments are desirable?

Originally Posted by David '47

I actually calculated the amount needed to offset personal income taxes (pre-Bush tax insanity) at 19%, if and only if there were NO exemptions. If you exempt food, basic needs such as prescription drugs and some services like medical bills, you get to the 35-45% level with no difficulty. Do the math!

You have not factored in the money which the "rich" currently hide which they will be spending. Nor have you factored in all the money in the underground economy. A vast chunk of the economy is not currently taxed. It would be taxed under a national sales tax, thereby lowering the tax burden most of us currently experience.

Additionally your list of exempt goods may be more extensive than someone else's list. As a matter of fact, I am sure it is. I have seen estimates by liberals that a 21% tax would be required. Similarly, I have seen estimates by non-liberals that a tax of about 13% would be required. I am willing to bet that the 13% included no exemptions. I am further willing to bet that the 21% estimate included a liberal's list of exemptions (no doubt overly generous). I think Alan Keyes spoke of 17% with his exempt "market basket." That is probably reasonable. And with everyone paying the tax at the register, seeing it first-hand rather than having it stolen by the federal government before they ever lay eyes upon it, the disgust and incentive is there to drive that rate lower and to bring down federal spending accordingly.

How is consumptuion encouraged? In fact, it's not. I'm back to my earlier example - the Toyota at Lexus prices. This is exactly what occurs in much of Europe - even in the less taxed UK. For an economy built on consumption, that will not fly. Since we seem destined to ignore communal spending as an offset, just what drives the economy?

With depressed demand, what investments are desirable?

People can neither consume nor invest unless they have money in their pocket. The more money they have in their pocket, the more they are willing (and able to) consume and invest.

Your example of Europe is invalid because Europe combines a VAT with the income tax, which is the worst of all possible worlds.

With regard to your car example, a Toyota will not be priced like a Lexus. Regardless, the amount of disposable income the average buyer will gain from a replacement of the income tax with the NST outstrips whatever increase in price the Toyota experiences when assessed against the NST. The Toyota is cheaper in proportion.

So first you encourage production, then you discourage consumption. May I ask how you keep things afloat without a boom-bust cycle or worse, endemic deflation?

Answer: you don't - not even with occassional tax rate changes!

Deflation is avoided through the miracle of capitalism's corrective mechanisms. Let me turn your argument around: today's tax code favors consumption over investment. If you pay say 35% income tax on your earnings and then invest in a savings account you'll pay 35% on the interest earned and then 35% on the interest earned on the interest earned and so on. This bias doesn't cause endemic inflation, however, and neither will a move to consumption tax cause endemic deflation.

Consumption taxes are, if done correctly, a huge advance in tax simplification and fairness. You could conceivably turn the 20 odd million words in the IRS tax code into a few thousand and save many billions of dollars in tax preparation. Further, as has been mentioned the tax code allows the rich to escape nearly all taxation. You can't fix this with incremental changes to the income tax - to truly eliminate this problem you almost certainly need a radical shift to a consumption tax.

Originally Posted by Stonewall Patton

Originally Posted by David '47

I actually calculated the amount needed to offset personal income taxes (pre-Bush tax insanity) at 19%, if and only if there were NO exemptions. If you exempt food, basic needs such as prescription drugs and some services like medical bills, you get to the 35-45% level with no difficulty. Do the math!

You have not factored in the money which the "rich" currently hide which they will be spending. Nor have you factored in all the money in the underground economy. A vast chunk of the economy is not currently taxed. It would be taxed under a national sales tax, thereby lowering the tax burden most of us currently experience.

You make several specious points, so let me respond in kind:

• If the rich aren't spending under the current low consumption-tax regime, why would they gleefully spend when everything costs more?

• Money in the underground economy is there for a reason. If the transaction are illegal, drug purchases for example, tax policy will have no effect. If they are there to keep costs down, buying services "under the table" for example, this would only increase when above the table costs increase.

• You mention the untaxed economy, but you list nothing specific. If you have anything to add that's outside the two areas I already covered, I'll address them separately

Originally Posted by ... continuing, Stoney

Additionally your list of exempt goods may be more extensive than someone else's list. As a matter of fact, I am sure it is. I have seen estimates by liberals that a 21% tax would be required. Similarly, I have seen estimates by non-liberals that a tax of about 13% would be required. I am willing to bet that the 13% included no exemptions. I am further willing to bet that the 21% estimate included a liberal's list of exemptions (no doubt overly generous). I think Alan Keyes spoke of 17% with his exempt "market basket." That is probably reasonable. And with everyone paying the tax at the register, seeing it first-hand rather than having it stolen by the federal government before they ever lay eyes upon it, the disgust and incentive is there to drive that rate lower and to bring down federal spending accordingly.

You can't just pull numbers out of the sky, though I admit I did much the same myself. You need to decide:

• Just what taxes are you offsetting?

• What will be taxed, or exempt if you prefer. On this note, let me ask about taxing items used to produce other items (machine tools for example) or items intended for resale?

• Will business join in paying these taxes or will these be levied only on individuals?

I offset personal income tax with personal sales tax as I described. My exempt list included medical care and prescription drugs, food, basic utilities: water electricity and heating fuels, and transprotatin fuels: gasoline and diesel. If you do not wish to include the last item, you can reduce the 35-45% by ~ 10%, but I'd park my SUV somewhere if I was you.

Originally Posted by ... continuing, Stoney

Originally Posted by ... when I

How is consumption encouraged? In fact, it's not. I'm back to my earlier example - the Toyota at Lexus prices. This is exactly what occurs in much of Europe - even in the less taxed UK. For an economy built on consumption, that will not fly. Since we seem destined to ignore communal spending as an offset, just what drives the economy?

With depressed demand, what investments are desirable?

People can neither consume nor invest unless they have money in their pocket. The more money they have in their pocket, the more they are willing (and able to) consume and invest.

Your example of Europe is invalid because Europe combines a VAT with the income tax, which is the worst of all possible worlds.

With regard to your car example, a Toyota will not be priced like a Lexus. Regardless, the amount of disposable income the average buyer will gain from a replacement of the income tax with the NST outstrips whatever increase in price the Toyota experiences when assessed against the NST. The Toyota is cheaper in proportion.

Oh puh-leeze. People do not spend because they can. They spend because they value the items they buy more highly than retaining the money for other uses and doing without. Adding money makes buying easier. Increasing prices makes it less likely.

Originally Posted by Stonewall Patton

Originally Posted by David '47

Wrong on all counts, but TOTALLY wrong on the ownership of 'money'. ALL money belongs to the government, which created it in the ifrst place.

David, you have your moments of brilliance but this is not one of them. :wink: Government prints money as a unit of exchange. But government does not produce the wealth that money is intended to represent. We do! The fruits of our labor belong to us, not to government. Government simply prints money so that we do not have to barter directly. It facilitates trade. But it is we who produce the wealth, not government.

I admit to making my comments tongue-in-cheek, but they aren't as far off the mark as yours. Nobody makes their money by themselves, and the services provided directly or indirectly by governement have more than a little to do with everyone's success. That's why Bill Gates Sr. is lobbying strongly to retain inheritence taxes. For the rich, it's often the only time Uncle Sam gets any return on public investments turned to private profit.

If we didn't have it, and chose to barter for exchange, we would all live in caves. I think the governemtn is generous giving us some of their money to spend on ourselves. :lol:

Again, government does not produce wealth. It simply prints money to facilitate trade among We The People who actually do produce wealth.

I'll just give two examples of why your comment is ridiculous. The governement produced almost 80% of thehealth research product that we now pay-for a second time to private drug companies in the form of inflated prices for patented drugs. And remember, you're reading this courtesy of a governement created medium.

Originally Posted by Crispy '59

So first you encourage production, then you discourage consumption. May I ask how you keep things afloat without a boom-bust cycle or worse, endemic deflation?

Answer: you don't - not even with occassional tax rate changes!

Deflation is avoided through the miracle of capitalism's corrective mechanisms.

H-m-m-m. Sorry, I don't pray in that church. I'm not a "miracles" kinda guy. 8)

Let me turn your argument around: today's tax code favors consumption over investment. If you pay say 35% income tax on your earnings and then invest in a savings account you'll pay 35% on the interest earned and then 35% on the interest earned on the interest earned and so on. This bias doesn't cause endemic inflation, however, and neither will a move to consumption tax cause endemic deflation.

No one does any of those things. First, I don't know who pays 35% income tax, but it cerainly isn's me. Second, No one puts their money in a savings account anymore. Third, I don't see any relevence to the topic in either comment.

Consumption taxes are, if done correctly, a huge advance in tax simplification and fairness. You could conceivably turn the 20 odd million words in the IRS tax code into a few thousand and save many billions of dollars in tax preparation.

I think that's very unlikely. There is zero likelihood that a VAT or sales tax would apply to everything. Once you start making exceptions, the lobbyists line up 50 deep to get theirs. If you think that won't create a rolling mess ...

Further, as has been mentioned the tax code allows the rich to escape nearly all taxation. You can't fix this with incremental changes to the income tax - to truly eliminate this problem you almost certainly need a radical shift to a consumption tax.

If you switch to consumption taxes, you also switch to regressive taxation. Are you also willing to shift the service-provision part of the government in a similar vein? Can we load the SEC with consumer advocates who will demand that executive compensation be cut 90%? How about the banking industry being accountable to account holders, and getting out of the fleece-the-customer businesses they've acquired in the past 30 years? Can we tell the electric utilities that deregulation is off - forever? And last but not least, can we focus the justice department on prosecuting and incarcerating white-collar swindlers FIRST, and worrying about the small fry LAST?

There are far too many pro-business, pro-wealthy biases to list, so this will have do.

Originally Posted by David '47

Money in the underground economy is there for a reason. If the transaction are illegal, drug purchases for example, tax policy will have no effect. If they are there to keep costs down, buying services "under the table" for example, this would only increase when above the table costs increase.

I think what Stonewall was trying to say is that you can't tax the income of a drug dealer because it is all under the table. However, you can tax the consumption of that drug dealer when he goes out and buys his fancy Cadillac.

FWIW.

Originally Posted by The Wonk

Originally Posted by David '47

Money in the underground economy is there for a reason. If the transaction are illegal, drug purchases for example, tax policy will have no effect. If they are there to keep costs down, buying services "under the table" for example, this would only increase when above the table costs increase.

I think what Stonewall was trying to say is that you can't tax the income of a drug dealer because it is all under the table. However, you can tax the consumption of that drug dealer when he goes out and buys his fancy Cadillac.

FWIW.

Perhaps, but that didn't stop us from nailing Al Cappone on income tax evasion 70 years ago. I assume we can do a better job today.

I guess I should just admit that the thought of a regressive tax system in this country makes me ill. We already have an uberclasse that's getting further and further in front of the pack, and now we're actually considering a tax system that makes that worse.

And yes, I DO mean worse. The strength of America is its broad middle class. Making a purposeful decision to shift even more wealth into the hands of the wealthiest among us sounds a lot more like we're on the road to making the US the world's weathiest 3rd world nation.

This is depressing, in more ways than one. At least it's having a positive effect on community college enrollments--for two semesters running, I've been teaching two completely full sections of Geology and am looking to teach two full sections of Anatomy and Physiology this summer (there is still a nursing shortage!).

Standard disclaimers apply.

U.S. Economy in Worst Hiring Slump in 20 Years
By DAVID LEONHARDT


The economy has fallen into its worst hiring slump in almost 20 years, and many business executives say they remain unsure when it will end.

The employment decline has become even worse than it was at a comparable point in the so-called jobless recovery of the early 1990's, according to recently revised statistics from the Labor Department. The economy has lost more than two million jobs, a drop of 1.5 percent, since the most recent recession began in March 2001, as layoffs have continued despite the resumption of economic growth more than a year ago. The decline was 1.3 percent at the same point in the business cycle a decade ago.

About one million people appear to have dropped out of the labor force since last summer, neither working nor looking for a job, according to government figures.

The surge in discouraged workers is the most significant since the months immediately after the recession's start. This suggests that the pain of joblessness has worsened even though the official unemployment rate, which counts only people looking for work, held steady at 6 percent in December.

"Last year," said Tom Koehn, 50, who lost his job at a machinery maker in South Bend, Ind., in May, "I heard a lot of people say, `Come back after the first of the year; if the economy picks up, we might hire some people.' But so far, I haven't found anybody who's hiring."

The shortage of jobs has also slowed wage growth so that only workers in the most affluent groups are still gaining ground on inflation, ending a six-year streak of broad increases in buying power.

Manufacturers of durable goods like computers, furniture and steel have made the deepest cuts, with one of every nine jobs in these industries eliminated since early 2001. Airlines, brokerage firms and makers of clothing and textiles have also each cut at least a tenth of their work forces. Government agencies have been among the few employers that continue to expand, although many states are now laying off employees to close budget deficits.

Executives say they have been disappointed too many times by the halting growth of the last year to begin hiring workers in significant numbers. While the government is likely to report tomorrow that the economy added some jobs in January, many executives are still waiting to be convinced that business has regained a solid footing after the collapse of the bubble of the late 1990's.

The possibility of a war with Iraq and an increase in oil prices offers another reason for hesitation, they say. Many companies have also used new technologies and management techniques to produce more with the same number of employees.

"This is what I call the new reality," said Robert M. Dutkowsky, the chief executive of J. D. Edwards, a software maker in Denver that has kept its work force at 5,000 people for the last few years. "The environment we're operating in is what it's going to be like for a while."

In his State of the Union address last week, President Bush called the improvement of the job market his "first goal" for the coming year and asked Congress to pass a $670 billion, 10-year tax cut.

"We must have an economy that grows fast enough to employ every man and woman who seeks a job," Mr. Bush said. "With unemployment rising, our nation needs more small businesses to open, more companies to invest and expand, more employers to put up the sign that says, `Help Wanted.' "

Most economists say that the tax plan and another $4 billion in help for the jobless would have only a small effect on the economy this year.

The number of companies cutting jobs has spiked since November, with AOL Time Warner, Boeing, Dow Jones, Eastman Kodak, Goodyear, J. C. Penney, McDonald's, Merrill Lynch, Sara Lee, and Verizon all announcing new layoffs. Barring a sustained rise in oil prices, however, the cuts appear likely to taper off in the coming months as the economy continues its slow recovery, most forecasters say.

The bigger problem seems to be the unwillingness of companies to hire new workers. In December, the number of help-wanted advertisements in newspapers across the country fell to the lowest level in almost 40 years, according to the Conference Board, a research group in New York.

"There isn't the confidence level in business today that we need for growth," said Cinda Hallman, chief executive of the Spherion Corporation, a staffing company based in Fort Lauderdale, Fla., that places almost 400,000 people in jobs, down from 600,000 three years ago. "There's uncertainty. Companies are being much more cautious than they used to be."

The labor market entered the 2001 recession tighter than it had been in 30 years, with the jobless rate falling below 4 percent in late 2000. Even at 6 percent ? its level in December, the most recent reading ? it remains lower than it was during the aftermath of most other recessions.

But the reluctance of companies to hire is causing pain in ways that the jobless rate does not measure.

An unusually large number of today's unemployed have been out of work for months, including Mr. Koehn, the South Bend manufacturing worker, who lost his job last spring. Almost 1.9 million people still looking for work have been unemployed for at least six months, triple the number of two years ago.

"There are a lot of people out there who aren't used to asking for help who need some help," said Mr. Koehn, who plans on applying to convenience stores if he has not found other work before his jobless benefits expire in mid-February. "It's a tough pill to swallow when people say, `Oh, you still haven't found work,' and you know you've been looking."

Many other people seem to have stopped looking. Since June, the number of adults not in the labor force has jumped by more than one million, to 72.4 million, according to the Labor Department. Many are retired, still in school or raising children, but the sharp change suggests that a growing number have become too frustrated to continue applying.

"I went out and pounded the pavement faithfully," said Theresa H. Washington, who lost her $60,000-a-year electrician's job more than a year ago at a Cleveland steel mill closed by the LTV Corporation. "I did the whole nine yards in terms of looking for work, and I never had an interview.

"There is no job market right now," Ms. Washington, 47, added. She estimated that she had applied to more than 50 companies.

In May, she enrolled in a community college and is studying to become a counselor to people addicted to alcohol or drugs, a job that will pay about $40,000 a year. Until she finishes the program in May 2004, she and her two children will rely on extended jobless benefits of about $370 a week, a local health care clinic, a food bank and help from friends and family, she said.

"It's been a complete change in lifestyle," she added.

The prolonged jobs slump has also taken away much of the bargaining power that workers had in the 1990's.

Qualcomm, the technology company based in San Diego, receives 200 r?sum?s a day, up almost 25 percent from a year ago, and the applicants are generally more qualified than in the past, said Daniel Sullivan, executive vice president for human resources.

At 7-Eleven stores, employee turnover remains high, but it has fallen in the last year. "One of our biggest challenges was getting people," said James W. Keyes, 7-Eleven's chief executive. Now, he said, "it's much, much easier to both recruit and retain employees."

With little need for companies to compete for workers, wage growth has ground almost to a halt, after inflation takes its bite, for people in the bottom of the income distribution. That is a sharp reversal from the late 1990's, when low unemployment and increases in the minimum wage allowed low-income workers to receive bigger proportional raises than those in the middle.

Workers at the 20th percentile of earners made $8.31 an hourat the end of last year, up only 1.1 percent from a year earlier, according to an analysis of government data by the Economic Policy Institute, a liberal group in Washington. Over the same span, inflation was about 2.2 percent.

The median worker ? the one falling squarely in the middle of the distribution ? received a 2.1 percent raise over the same span, to $13.36. The top third of earners received increases of about 2.7 percent.

In the late 1990's and 2000, workers near the bottom were receiving annual raises of more than 4 percent, slightly better than the increases for those at the median or for most of those near the top.

The economy has shown signs of picking up in recent weeks, including a survey of service-sector managers released yesterday that showed their business improved in January. But the hints of recovery are difficult to distinguish from ones that proved false in the last year or so, executives say. Many companies still have more stores and factories than they can profitably use, and little need to add new workers.

The effects of the bubble of the late 90's in the stock market and business investment will eventually wear off, but the recent increases in corporate efficiency appear to have created a long-term change in the level of economic growth needed for an improving job market. The economy advanced 2.8 percent from the end of 2001 to the end of last year, which was once a growth rate capable of generating demand for tens of thousands of new workers a month. Yet payrolls still declined significantly, as companies used both new technologies and strategies forced on them by an increasingly competitive economy to produce more goods and services with fewer people.

In the last few years, for example, Applebee's, the restaurant chain based in Overland Park, Kan., has centralized its purchasing of food to save costs and begun varying the pay of its workers more than it had been, in order to retain the most productive ones. The steps have allowed its sales to grow faster than its employment, said Lloyd L. Hill, the chief executive.

"It's not brain surgery," Mr. Hill said. "We just recognized we had to do better."

BASF, the world's largest chemical company, spent $4 billion investing in new plants and equipment in the United States in the last five years. Like many companies, it will turn to its new machines to increase production.

"Now," said Klaus Peter L?bbe, who runs BASF's North American operations, "comes the time to make the assets sweat."

Soft Patch?
Would anyone care for a Soft Patch?



_____________________________





NEW RECESSION LURKING?
February 6, 2003
BY MARTIN CRUTSINGER
THE ASSOCIATED PRESS

WASHINGTON -- Worried about a possible war, Wall Street has been in a funk this year and the news on Main Street hasn't been any better. Business executives are freezing new spending and hiring, fearful of big commitments in the face of so much uncertainty.

Some analysts think the national anxiety, heightened by the loss of the space shuttle Columbia, could be enough to derail the feeble recovery and throw the country back into recession.

"The probability of a double-dip recession has certainly risen," said Sung Won Sohn, chief economist at Wells Fargo in Minneapolis. "The economy is still mired in a pretty soft patch and we have not made it to firmer ground."

"Soft patch" was the phrase Federal Reserve Chairman Alan Green- span began using last fall to describe a significant slowdown in economic growth. The economy, which had been growing at a solid 4 percent rate in the summer, screeched to a near halt during the final three months of the year, managing to eke out a tiny 0.7 percent growth rate.

To buy some insurance against a possible double-dip recession, the Federal Reserve in November cut interest rates by a bigger-than-expected half point, pushing the overnight borrowing cost for banks down to a 41-year low of 1.25 percent.

But so far, the extra boost from lower interest rates has not been enough to jump-start the economy. Unemployment has been stuck at an eight-year high of 6 percent as businesses have laid off nearly 200,000 workers over the past two months.

Many analysts believe when the government reports the January unemployment figure on Friday it will show that businesses did add a small number of workers last month but not enough to show an improvement in the 6 percent jobless rate. In fact, they are forecasting that unemployment will hit 6.5 percent or even higher by this summer.

"The economy is very fragile right now," said Mark Zandi, chief economist at Economy.com. "Businesses are queasy. They are not investing or hiring and consumer confidence is still weakening. Any little thing that went wrong could push us back into recession."

The Conference Board reported consumer confidence fell again in January and now stands at a nine-year low, adding to worries that consumers, who have been the one bright spot in the economy for over a year, could put away their pocketbooks.

The report on the anemic 0.7 percent growth rate for the gross domestic product in the October-December quarter showed that consumer spending, which accounts for nearly two-thirds of the economy, slowed to a 1 percent growth rate, the weakest performance in nearly 10 years.

The concern is that more bad news -- such as a U.S. invasion of Iraq that took an unexpected turn for the worse or a new terrorist attack in the United States -- could be the final blow that would guarantee another recession.

"The real risk is the war," said David Wyss, chief economist at Standard & Poor's in New York. "It can go bad in all sorts of ways and that could push us into a double-dip."

Still, even economists who are worried that the weak economy could slip back into recession rate the possibility of that occurring at only a one-in-three chance -- although they say the odds have gone up in recent weeks, especially in light of the new tumble stock prices took in January.

But many economists say the most likely prospect is that the economy will gradually improve this year, helped along by continued low interest rates supplied by the Fed and further tax cuts from Washington.

Is anyone here familiar with Larson Rose's contention that section 861 and following of the IRS code means that most Americans do not in fact owe any income tax and that the government has been illegally comfiscating our money for many years basically through extortion?

What are your thoughts on this? I have read the codes over and over again and can find no fault with his views.

Originally Posted by David '47

Perhaps, but that didn't stop us from nailing Al Cappone on income tax evasion 70 years ago. I assume we can do a better job today.

Why waste all the money investigating that sort of thing while continually violating the privacy of every American by forcing him to disclose his finances? It is nobody's business, least of all government's.

I guess I should just admit that the thought of a regressive tax system in this country makes me ill. We already have an uberclasse that's getting further and further in front of the pack, and now we're actually considering a tax system that makes that worse.

No, you keep missing this point, David. As I believe Robert originally stated in this thread, it is specifically the overclass which most desires to maintain the status quo with the income tax because they have the most to loose by its elimination. They would no longer be able to hide all their money and it would be taxed at the register. It is the middle class which gets stuck with the current burden which is why no one can rise above "wage slave." No more with the NST.

And yes, I DO mean worse. The strength of America is its broad middle class.

Right and that strength will only return with the NST.

Making a purposeful decision to shift even more wealth into the hands of the wealthiest among us sounds a lot more like we're on the road to making the US the world's weathiest 3rd world nation.

No, their hidden money will now be taxed.

Originally Posted by buzzard44

Is anyone here familiar with Larson Rose's contention that section 861 and following of the IRS code means that most Americans do not in fact owe any income tax and that the government has been illegally comfiscating our money for many years basically through extortion?

What are your thoughts on this? I have read the codes over and over again and can find no fault with his views.

The fact is, regardless of the legality and your views, it's not you who controls the guns, tanks, courts, and jails upon which the "legitimacy" rests. Better to find a less nonproductive way to piss away your life than wrestling with the taxmen over technicalities.

Originally Posted by buzzard44

Is anyone here familiar with Larson Rose's contention that section 861 and following of the IRS code means that most Americans do not in fact owe any income tax and that the government has been illegally comfiscating our money for many years basically through extortion?

What are your thoughts on this? I have read the codes over and over again and can find no fault with his views.

Yes. My brother thought he'd try it, until I pointed-out that the SCOTUS disagreed with that interpretation. Essentially, the argument fails in large part due to the broad authority granted by Amendment XVI to the Constitution. Here's a good overview of every variation on the no-tax theme.

No one does any of those things. First, I don't know who pays 35% income tax, but it cerainly isn's me. Second, No one puts their money in a savings account anymore. Third, I don't see any relevence to the topic in either comment.

This was a hypothetical example of how our current tax code is biased against investment. I was pointing out that just because our tax code is biased towards consumption doesn't mean there are endemic inflationary consequences, thus, the converse should also be true: a bias against consumption won't lead to endemic deflation.

I think that's very unlikely. There is zero likelihood that a VAT or sales tax would apply to everything. Once you start making exceptions, the lobbyists line up 50 deep to get theirs. If you think that won't create a rolling mess ...

Of course there will be exceptions but, with consumption taxes in general, they will be more transparent and easily debated among all, unlike the current code which is impossible for anyone to even remotely comprehend.

If you switch to consumption taxes, you also switch to regressive taxation. Are you also willing to shift the service-provision part of the government in a similar vein? Can we load the SEC with consumer advocates who will demand that executive compensation be cut 90%? How about the banking industry being accountable to account holders, and getting out of the fleece-the-customer businesses they've acquired in the past 30 years? Can we tell the electric utilities that deregulation is off - forever? And last but not least, can we focus the justice department on prosecuting and incarcerating white-collar swindlers FIRST, and worrying about the small fry LAST?

Consumption taxes can be designed to be heavily progressive. Further the level of progressivity we desired in a consumption tax could be understood by all and implemented easily. Today we have little idea how progressive the income tax is because so many loopholes exist.

If the consumption tax were more progressive than today's, taxed wealthy spenders substantially more, decreased the time for you to prepare your taxes, and didn't affect overall economic output much would you then be interested?

Originally Posted by Stonewall Patton

Originally Posted by David '47

Perhaps, but that didn't stop us from nailing Al Cappone on income tax evasion 70 years ago. I assume we can do a better job today.

Why waste all the money investigating that sort of thing while continually violating the privacy of every American by forcing him to disclose his finances? It is nobody's business, least of all government's.

I disagree that the government has no business knowing who has enough money to corrupt the system, among other needs, but the fact is, the income tax has the potential to be the most fair tax available. Consumption taxes aren't even in the running.

I guess I should just admit that the thought of a regressive tax system in this country makes me ill. We already have an uberclasse that's getting further and further in front of the pack, and now we're actually considering a tax system that makes that worse.

No, you keep missing this point, David. As I believe Robert originally stated in this thread, it is specifically the overclass which most desires to maintain the status quo with the income tax because they have the most to loose by its elimination. They would no longer be able to hide all their money and it would be taxed at the register. It is the middle class which gets stuck with the current burden which is why no one can rise above "wage slave." No more with the NST.

They desire to maintain the CURRENT income tax, surely. And it get's worse as the rich get ever-more tax breaks. Do you believe that starting with an inherently unfair system will generate a better result? Come-on! The rich can move money around, spend only what they want , where they want, and currently, duty-free zones are on the top of their list. Why do you think the Sylvester Stallones and Michael Jordans, to say nothing of the quietly wealthy, maintain so many off-shore residences?

And yes, I DO mean worse. The strength of America is its broad middle class.

Right and that strength will only return with the NST.

For one final time. The poorer you are, the more of your income you spend. WIth the NST, the more you spend, the more you're taxed. Tax rates are going to be very high, all disclaimers to the contrary. The system stinks Q.E.D

Making a purposeful decision to shift even more wealth into the hands of the wealthiest among us sounds a lot more like we're on the road to making the US the world's weathiest 3rd world nation.

No, their hidden money will now be taxed.

You can't tax what they don't spend, and you also can't tax what they spend elsewhere. It stinks!

Originally Posted by The Wonk

I think what Stonewall was trying to say is that you can't tax the income of a drug dealer because it is all under the table. However, you can tax the consumption of that drug dealer when he goes out and buys his fancy Cadillac.

FWIW.

Ah, thank you, Wonk! I have not been able to keep pace all the threads and I missed this earlier. But that is indeed what I meant. Thank you.

Sorry, folks, I hate to be the bearer of bad news, but...

From the Washington Post, today:
Jobless Rate Down to 5.7%
Jobs created in January at fastest rate in more than two years. ? Neil Irwin


Oh well, maybe it start going back up soon. :wink:

From today's CBS Marketwatch:

February 7, 2003
...........The U.S. jobless rate fell to 5.7 percent in January from 6 percent in December as businesses added about 143,000 workers, the Labor Department said Friday. It was the strongest job growth since November 2000, but the number may overstate the pace of actual hiring in the economy. Excluding the 101,000 jobs added in retail, the economy added 42,000 jobs in January. See Economic Report.

Art Hogan, market strategist with Jefferies & Co. said traders were dismissing the jobs report for the most part.

"The employment rate is history -- a lagging indicator -- as well as non farm payrolls," he said. "It's difficult to say it's good news when there's still stubborn unemployment out there. A lot of folks are poo-pooing the number."

________________________
From CBS Marketwatch Economic Report:

It was the strongest job growth since November 2000, but the number may overstate the pace of actual hiring in the economy. Read the full release.

About two-thirds of the job growth -- 101, 000 jobs -- was in the retail sector, which largely offset a 99,000 decline in December.

Because of the way the government adjusts the figures for seasonal factors, both December's loss and January's gains in retail are probably illusory. Read more about the seasonal problems.

"At best, it's a wash," said Irwin Kellner, chief economist for CBS.MarketWatch.com and the Weller professor of economics at Hofstra University. "Realistically, people are not hiring."

Originally Posted by cbailey

From today's CBS Marketwatch:

"The employment rate is history -- a lagging indicator -- as well as non farm payrolls," he said. "It's difficult to say it's good news when there's still stubborn unemployment out there. A lot of folks are poo-pooing the number."

Whew, for that, cbailey, gosh for a moment there it looked like some awful news -- this falling unemployment rate. Thanks be to God that it wasn't. Nope, only the Democrats can "bring back prosperity."

Happy days will be here again, just you wait... till the Democrats are running the show! :wink:

Originally Posted by Marc S. Lamb

Originally Posted by cbailey

From today's CBS Marketwatch:

"The employment rate is history -- a lagging indicator -- as well as non farm payrolls," he said. "It's difficult to say it's good news when there's still stubborn unemployment out there. A lot of folks are poo-pooing the number."

Whew, for that, cbailey, gosh for a moment there it looked like some awful news -- this falling unemployment rate. Thanks be to God that it wasn't. Nope, only the Democrats can "bring back prosperity."

Happy days will be here again, just you wait... till the Democrats are running the show! :wink:

Look, you have a President who decided to fudge the numbers or worse, not even release them at all. We don't know about massive layoffs, courtesty of our sainted leader, and we can't count discouraged workers because we just don't do that sort of thing. In other words, we got a positive report on numbers with little meaning. Why celebrate?

Intelligence is not knowledge, knowledge is not wisdom, wisdom is not religion, and religion is not truth, and all but one of these play well together.

Originally Posted by Marc S. Lamb

Whew, for that, cbailey, gosh for a moment there it looked like some awful news -- this falling unemployment rate. Thanks be to God that it wasn't. Nope, only the Democrats can "bring back prosperity."

Wishing Ill

It might come as a smallish shock to some of you, if you don't know already, but I not only voted for Jimmy Carter in 1980, I did so eagerly and wholeheartedly. I did so not because I had grown up a Democrat household, but rather because I was quite sure that the "gunslinger for the wild west" was going to solve America economic woes, and America's "crisis of confidence," as Carter had termed it, the old fashion way: War

It had happened before, you know. And somehow, quite instinctively really -- I knew enough about history to be dangerous, back then -- I suspected Reagan was going to pull an FDR, forty years later, on the America of 1980.

In 1932, America's darkest year since the Civil War, there were 11,385,000 unemployed, by all reasonable accounts. During FDR's first term, this number dropped every year. By June, 1937 unemployment was down to 4,464,000. Sill sizable, but much better than 1932. But then, "As early as July men were asking," as one observer put it, "What has become of the boom?" But November, 1937, there were 7,000,000 people out of work. Suddenly, the big bad New Deal began to leak, and Roosevelt myth began to melt. Columnist John T. Flynn laid out what happen next:

"In January [of 1938], John D. Biggers staggered the administration with his report after a survey that there were 10 million out of work. Soon it would be 11,800,000 ? more than were unemployed when Roosevelt was elected in 1932."

In his wonderful tribute to historian Charles A. Beard, Dr. James J. Martin, writing for the Journal for Historical Review, was quite succinct about what this would mean for America by the end of the decade:

Few persons of prominence in the land were as generous as Beard in affording the New Deal a chance to succeed. He wavered back and forth between an eagerness to believe it could succeed in bringing about national economic recovery and a kind of hardheaded realization, which probably stemmed from his own canny business sense, that it could not. And if it did not, then what? Right away he sensed the likelihood that a very attractive alternative scheme would be to try to solve the nation's dolors by dissolving them into a much bigger pool of such: the world's. As early as the winter of 1934-35 we find Beard making a remarkable speculation in this direction, published in the February, 1935 issue of Scribner's Magazine ("National Politics and War," pp.65-70): "Confronted by the difficulties of a deepening domestic crisis and by the comparative ease of a foreign war, what will President Roosevelt do? judging by the history of American politicians, he will choose the latter." FDR's discovery of sin abroad in the early fall of 1937 after the horrendous return of depression collapse that summer seemed to be an almost eerie following-out of a course already planned, and previously divulged, by Beard. One can see in Beard's piece in Scribner's in 1935 the germ of the much more expanded version of this thesis in his 1939 book, Giddy Minds and Foreign Quarrels.

Prevailing wisdom in the Democratic Party, as well as within these threads, is that the future hope of liberalism resides in a failure of conservatives and their leader, president George Bush.

In effect, wishing ill that good may come.

One wouldn't mind seeing the economy falter, umemployment to rise etc... ala Herbert Hoover -- of whom the head of the Democratic National Committee compared to Bush last October -- in order that liberals might recapture power in Washington. But as was the case with FDR in 1938, and forty years later with regards to my misplaced fears about Ronald Reagan: Nothing good come from ill, but just more ill.

Wish George Bush well, folks. On the economy, and even more so on the war the American people support. Wish for good, that no ill may come to America.

I'm not wishing for anything, Marc.
I just have an aversion to Denial.