Tuesday, August 05, 2008

Monday, August 04, 2008

Sunday, August 03, 2008

FAIR TAX?

After repeated urging, I finally read both of the Boortz / Linder Fair Tax books.

My impression?

It’s an intriguing idea, and in the second book, the authors have done a credible job answering the critics of the first. A couple of minor nits:

1) Given the necessity of the “prebate” to make the Fair Tax politically acceptable, the IRS isn’t going away. It’s a lovely idea, but it ain’t gonna happen. Downsize, maybe; go away, no way.

2) Nor are lobbyists going to go the way of the dinosaur. Strategy and focus will change, but for as long as there is a Federal government, there will be a K Street.


A more substantive concern is the calculation of the “embedded tax” – the sum of all taxes levied during the production cycle. No one with a lick of common sense doubts the existence of an embedded tax; ultimately the consumer pays every tax, no matter where it’s levied.

But here’s the rub.

Boortz and Linder estimate the embedded tax as 22% of any good sold; yet they need a 23% Fair Tax embedded in the sale price of all goods and services to bring the Federal government an equivalent amount of income as the current income/FICA/Medicare tax system.

A higher tax rate on a broader range of goods and services to generate equivalent income. That doesn’t pass my “reasonable-ness” test. I won’t argue that the numbers are wrong; I will argue that strict scrutiny is needed.

Boortz and Linder significantly underestimate the complexity of implementing the Fair Tax. A January 1, 20XX transition just ain’t gonna happen. Think of all the wailing and gnashing of teeth about the millennium bug – and that was a trivial problem compared to Fair Tax implementation. The authors have far too much confidence in capitalism – especially America’s constrained capitalism – to regulate wages and prices during the post-transition. That part of the Fair Tax proposal still needs serious thought.

All that said, however, I’d vote for the Fair Tax – and risk the transition chaos -- for one simple reason: a 23% tax bill, presented clearly on every single sales receipt in America, might be the enabler required to control government spending

SAVING GAS AND DRIVING LESS?

It has been widely reported that Americans are driving less this year than last.

Having just completed a 5,000 mile road trip from Virginia to Florida to Texas and back to Virginia, it seems to me that Americans are driving significantly less. Interstates 95 and 75 to Tampa were dramatically less crowded compared to our previous vacation 18 months ago. Both my wife and I remarked on the lack of congestion, even near the cities. There was so little that we were able to leave the car on cruise control for most of the trip.

On the return through Texas, Arkansas, Tennesee, and Virginia along Interstates 30, 40, and 81, I did a little random sampling: big rigs outnumbered passenger vehicles about 14 to 10 on the intercity stretches. The ratio held at most of the rest stops as well, indicating that most of the long-haul traffic is business trucking. I’m not sure what ratio I was expecting, but 14:10 wasn’t it.

As we closed into the cities (or at least to the loops around the city centers), the ratio did change to something on the order of 2:1 favoring automobiles, but even that was less than I expected (my off-peak commute on I-95 to Washington DC is typically 20-30 to one).

Anecdotally then, Americans aren’t traveling for pleasure; and when they do, they stay close to home.

VACATION PHOTOS

Entrance to Pelican Alley, a small bar and grill on the intercoastal waterway at Casey Key, near Venice, Florida. It has changed only its name (from Fred and Alice's) since 1967 when I was first introduced to it.


















Venice Train Station, Venice, FL. The track will eventually be replaced by a bike path.



















Parasailing at Nokomis Beach on Casey Key.



















Downtown Memphis, TN.



















Douglas Lake, near Knoxville, TN.