U.S. presidential candidate cites tax reform
During a recent televised debate among contenders for the Democratic nomination for the 2008 presidential elections, dark-horse candidate Senator Mike Gravelle (Dem., AK) surprised the CNN host by answering a question about so-called 'global warming' by advocating a tax change:
"Simple," he said. "Adopt a fair tax policy: tax what people spend, instead of what they earn. Our tax system is totally corrupt… A retail sales tax will take this nation from a consuming nation to a saving nation… "
Economists stress that whatever we subsidize will increase; and what we tax will always diminish. Let me repeat that: if we tax an activity, it will decrease; if we subsidize an activity, it will increase.
Liberal/socialist politicians have subsidized the begetting of children by illegitimate parents (NB: there are no illegitimate children; only illegitimate parents), while taxing efforts to create wealth for families. Now, given the economists' dictum cited above, what would you expect to be the result of such policies? If you said: "More children born out of wedlock or into single-parent families; and less wealth creation," you're right.
The graduated income tax—less than a century old—creates a disincentive for people to enrich society by working hard, saving diligently, and amassing wealth for their children and grandchildren. But "theft-by-the-ballot-box" (which is the very heart and soul of the left-liberal idea of "redistribution of wealth") discourages initiative and wealth-creation.
What we wish to achieve—e.g., cleaning up the environment and/or eliminating poverty—utterly depends on the creation of wealth; whatever discourages wealth creation prevents us from achieving our noble goals.
That's one of the reasons I believe we should abolish the income tax and replace it with a national consumer tax. Another reason is the Sixth Commandment—"Thou shalt not steal"—which sanctifies private property.
That means that when you receive your paycheque, it becomes your property—and Jim Flaherty has no right to ask, "How much did you make last year?"—and even less right to demand, "Send us half."
So let's consider how a fair tax regime might work:
If Canada abolished the income tax—which now devours all your earnings until about June 27 each year—and replace it with (say) a 20 percent federal sales tax, we'd reduce the overall impact on your earnings by about 32 percent.
But more important, we'd give you control over how much money you send to Ottawa each year. Suppose you plan to buy a new car. Perhaps you want a $60,000 Lexus. Fine. Buy it—and send another $12,000 to Jim Flaherty. Total cost: $72,000. Or, you could buy a $10,000 Firefly, and send only $2,000 to Ottawa. Total cost: $12,000. Bank the other $10,000, or invest it for your retirement.
Remember: there'd be no income tax. So the average family's net tax savings on the car purchase would be enough to jump from the Firefly to a Camry.
Even more significant is the fact that since only expenditures are taxed, there'd be a strong incentive to save—and to invest. That would stimulate the economy, to the benefit of everyone. And with more people saving and investing, we wouldn't have to depend on hostile nations (like China) to buy our bonds, and thus to own our currency—and to control (even threaten) our economy.
Sen. Gravelle is wrong about a lot of things; but he's surely right about the urgent need to move from the regressive graduated income tax to a sensible, fair tax regime.
The income tax must go.
Other Commentary by Ron Gray:
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