The Mother of All Dumb Ideas

[Daveparts]

The Mother of All Dumb Ideas
By David Glenn Cox



We’ve all had dumb ideas in our past and I don’t exempt myself from this. I once threw Gunk engine degreaser on the floor to degrease it. Just one thing, I forgot to turn off the pilot light on the water heater first. Dumb? Man, that was dumb. After I got the fire put out my boss asked me, "Did you learn anything today?" I slowly shook my head and humbly answered, "Yes, yes I did."

But my mistake was an error, not of comprehension but of not planning before acting. These are simple mistakes and we’ve all made them and usually they don’t require the fire department to correct them. We lock our keys in the car or give our keys to the spouse and forget to get them back.

On a grander scope are the errors that our mothers once advised about, "Look before you leap" and "All that glitters is not gold." I pointed out my own errors here because I’m going to point out the error of others. There’s errors and then there are mistakes and then there’s just plain stupid.

I speak of none other than the so-called "Fair Tax." The mother of all dumb ideas, there are no errors of any consequence in the world today compared to the "Fair Tax." George W. Bush has the intellect of Chomsky and the oratory skills of Churchill when compared to the "Fair Tax." But, don’t you see? It’s fair! No, it’s not, it’s a farce!

A tax plan where you pay a 27% federal sales tax on all retail purchases. Your paycheck will be free of all deductions except for health insurance and, of course, your state withholding but this bullshit bamboozle is a bait and switch scam.

Proponents lead you to believe your paycheck will be all yours, free and clear, but it’s a lie and no, it won’t. Nor will the 27% federal sales tax free you from any city, county or state sales taxes, which, here in Cobb County, Georgia, is 7% so we are up to 34% right off the bat.

$100.00 worth of groceries will cost $134.00, times 52 = $1768 in sales tax per year. Now, if you have a family, it’s hard to get by on less than $150.00 a week so your, "Fair Tax" is $2,652 per year, when most American’s only pay around $3,000 per year in federal tax now and that is deducted from your pay check. The "Fair Tax" will be deducted from your children, as well; you'll pay tax on the food they eat, not dollars you earn. The "Fair Tax" will not free you from property taxes, state taxes, liquor taxes and cigarette taxes, occupational taxes, license taxes, automobile taxes, ad nauseum.

Want to buy a new car? A $30,000 vehicle will be an additional $8,100 dollars, will that be cash or check? Or, would you like to finance the balance for five years, if so that will add another $400.00 a year in interest on the sales tax alone! Or ten grand for sales tax in five years. Yessiree sir, that’s gonna create lots of automotive jobs. So, you take your new car to gas it up at the pump and, although we’ve deducted the Federal excise tax and replaced it with the "Fair Tax", we’ve also left in place the state tax and you’re right, at $4.00 dollars a gallon, that’s bad. But its "Fair." Remember, every time that the price of gasoline goes up so does your tax bill because that’s "Fair."

Now, with the current Real Estate slump as it is, maybe the "Fair Tax" can help us out! A $200,000 house note balloons to $254,000. Just think, you get to finance $54,000 in sales tax for 30 years at say 7% or over $100,000 in interest over the life of the loan and that’s just on the sales tax. "Honey, call the movers!"

The "Fair Tax" scheme was instigated by Representative John Linder of Georgia, a man who listed his own net assets at $33 million dollars. So when a man with $33 million dollars tells you he has a "Fair Tax " plan, who do you think that fairness applies to? You? Or him? Linder first proposed his plan as "income tax reform" but it never caught on with the public so they took it back into the shop and retooled it as, "Fair." Everybody likes "Fair." How can you be against "Fair?"

Everybody likes hot showers, too, that’s why the Nazis led their victims to showers. If the sign on the door had said "gas chamber", no one would go in! So they bill the rape of the working public as "Fair." If enacted, the "Fair Tax" would be the largest tax increase on working people in recorded human history. Mr. Linder believes that there shouldn’t be any capital gains taxes because that’s not "Fair." Or taxes on foreign investments, no taxes of any kind on investments as, you see, that’s not "Fair."

What is "Fair" is you paying the taxes on every morsel of food that you put in your mouth or stick of gum or every pair of kid's shoes that you buy. Every dollar you earn goes down in value by 27% but the good news is! The "Fair Tax" will eliminate the IRS. That’s right! According to Linder, the billions in federal revenue collected by the "Fair Tax " will magically find its way into the appropriate coffers. How that will work, Mr. Linder is a little sketchy about, but with his giant brain working like it is, I suppose we should just trust him, right?

But, what about the poor? How will those unable to make ends meet now handle a 27% sales tax? Why, we’ll just issue rebates to the poor, Linder says confidently. But Mr. Linder? Isn’t that what the IRS does now? Are we to turn the world on its head just to get right back to where we started?

I should confess, I used to live in Linder’s district when he was a state Senator and first hatched this colossal humbug. My computer was new and I was reveling in the novelty of the Internet. I would ask questions to stymie him because I didn’t think that he could answer them. I asked, "If you add 27% to the purchase price of house and the home owner defaults on the loan, who takes the hit? Is the Mortgage Company liable for the unpaid taxes on the transaction? Are the taxes paid in a lump sum or is it handled in the escrow? Would the debtor still be liable for the tax debt? How would the banks resell a $200,000 house with a $54,000 tax loss on top of the purchase price? Would it then be $254,000 plus 27%?" I don't think Realtors would like this plan.

What will happen to the bond market when every Real Estate purchase is escalated by 27% in price? I don’t think the bond market is going to like that very much. What will happen to interest rates when 27% of all available Real Estate capital is sucked out of the market to be paid in, "Fair" taxes? I don’t think the stock market would like that very much, either. When the economy slows down, tax collection will slow as well, many states are facing this problem with sales taxes now. How will the "Fair Tax" address that, as costs will remain constant?

We all make mistakes but when some conspire to cheat you, that’s no error, that’s a con. When a man with $33 million in net assets devises a system where he pays less and you pay more, it’s a scam, bunko, a crime. Not only does he not belong in Congress, I’m not so sure he should be allowed to run loose on the streets. Point blank, for those of you who use 100% of your income to just keep the wolf from the door, you will pay 27% tax on 100% of your income. We will then magically reimburse those of you who didn’t have the money in the first place.

Now, if you’ve got 33 million in net assets, you probably live on 5% percent of your income. So 5% of your income will be taxed at 27% and 95% of your income will be tax-free, and that’s called "Fair." That’s what is called the "Fair Tax" but it''s a patent, medicine show huckster making fantastic promises that they could never keep and dodging any questions or responsibility for the societal side-effects. A snake oil promise and a tent revival sales pitch, a modern day rainmaker.

Instead, we should offer Mr. Linder first class accommodations on the classic split timber transport. Where his body will be gently massaged with a specially heated petroleum-based sealant and his skin covered in a soft and fluffy, all natural, poultry down. And, arriving at journeys end, he should receive an all- over, full body massage with our specially made Louisville massaging wands.

That’s the way you deal with a fraud that’s called "Fair!"

[Demeter]

1. Yessiree!

That's why if a Republican's for it, I'm against it. They put the CON in CONservative. Con games are their only pleasure in life, and this one is the mother of all con games.

Taxing excess income, where the basic amount to live on some humane standard is fully exempt, is the only way to support a society. Anything else is a cheat and a fraud. And that's where we are right now, in one of the biggest, longest-running frauds ever perpetrated on a nation supposedly with free will and self-determination. At long last the crooks are out in the open--and the game is down to the last call. Now is the time to clean the house, learn from our history of errors, and throw the rascals out--out of business, out of government, hell, out of the country! And seize ill-gotten gains, while we are at it.

[Mountainman]

2. When ever the right wants to sell you on something they know isn't in your favor they give it a

favorable name like "fair" tax or "paycheck protection" yet people fall for it over and over. It works. You'd think by now that so many people have been screwed by the right that they would have learned by now. That is the duty of the wing nut media, to make the lies palatable. For the most part, Americans lack the ability to think, they just let the media do that for them while they watch "reality TV."

[varelse]

21. Yeah or "right to work"

and sadly, it does work. What does that say about us poor feckless humans?

[Hydra]

3. Because of how our economy works

I would normally say that this would never happen- but it's already happening. The dollar's value has declined by more than 40%, while wages have stayed the same.

While that happened to most of us, people like Cheney bought gold, oil and euros...and doubled their worth here in the US.

[sepulveda]

4. dems can be investors too

i bought gold oil and euro (specifically EURUSD)

i started buying gold in 1998.

believe it or not, a hell of a lot of investors and traders are not rightwingers!

when i was pimping gold in 1998 to 2000, nobody wanted to hear it. it was tech stocks, tech stocks, go go go!




:eyes:

[Hydra]

5. That's nice for you

My paycheck is gone every 2 weeks, so even though I was smart enough to buy gold and oil, I wasn't able to.

[sepulveda]

6. that sux

my grandfather, who lived through the depression, got me into investing early

i am a firm believer in the markets as a tool to build wealth - for ANYBODY.

i started with $20 a week and been investing since i was 18

grandpas are smart!

[Hydra]

7. Mine was into hard work and catholicism

But I always kept my eyes open. Why were some people not working as hard, and doing better?

I wanted to be one of those people, but economic conditions in my area have always been precarious. Still, this is where I can get work. Every attempt I've made to go elsewhere resulted in no opportunities.

Sucks being of the low worker class, even given my talents. Good view of the collapse of america, though.

[sepulveda]

8. the market is not

a perfect meritocracy. far from it.

lots of factors play a part

but the great thing about the market is that ANYBODY can ride the coattails of the business geniuses and make money off THEIR great businesses.

when steve jobs took over Apple computer, that was the stock buy from heaven.

a smart manager produces value.

i would recommend investing, no matter HOW little - every month

i make my $$ as a trader (day and swing mostly), so i am always in and out of trades, sometimes 30-50 trades a day. that is NOT for everybody

but the market itself is for anybody.

when you invest money, your money is working for you, not the other way around. that's how wealth is built

[Daveparts]

9. Did Grandpa forget to tell you about 1929?

Groucho Marx was once asked to ring the opening bell on Wall Street but before he did he broke into song to the amazment of all on the trading floor. Marx said, "I took a bath here in 1929 and I always sing in the tub." Marx lost his entire fortune of $250,000 saying."It was a lot of years of rooms without baths and eating in Greek restuarants." Making Marx a supporter of Roosevelt and a lifelong Democrat.

[Hydra]

10. Bwahaha!

That sounds like Groucho, all right. Nothing like getting burned by someone else to make you skeptical for life.

[sepulveda]

11. that's exactly my point

my grandfather lived through that

the market works. crashes and bubbles are part of it

there has never been a 20 yr period in HISTORY (and that includes the depression) where dollar cost averaging into the index )or it's proxy) did not yield decent returns.

in many cases, excellent returns

this is how i make my money.

1929 sucked

so did 1987

but in the long run, the market builds wealth. that's how YOU build wealth. you take advantage of great businesses by buying a piece of them.

you can also hedge. i have 30% of my portfolio dedicated to currency, agriculturals, metals, etc. when oilsold off last year during the hedge fund capitulation (many many hedge funds got wiped out on that drop) it was a HUGE buy opp.

1929 is not a reason NOT to invest. it's a reason to invest smartly. don't leverage (no average investor should. traders like me do, but we manage risk)

bucket shops at the time were offering massive leverage

and there was a goldilocks mentality. muchlike real estate before it crashed. need i say more

iow, yes 1929 sucked. but the markets recovered. and every crash is a HUGE buy opp. as was that one
"Marx lost his entire fortune of $250,000 saying."It was a lot of years of rooms without baths and eating in Greek restuarants"

the only way you could lose your fortune was if you were overleveraged or not diversified.

i am sorry he lost his fortune but it says nothing about the greatness of the stock market for building wealth

[Daveparts]

15. The Stone age worked too!

Dinosaurs and volcano's were just a part of that too!

[sepulveda]

16. way to ignore evidence

capital markets work to help build wealth

if you want to ignore that, bully for you.

they have built wealth for investors since they were invented (centuries ago, i might add), and they are one of the best tools for average joe's to take ownership in great companies, and share in their profits

if you want to ignore the irrefutable evidence of that, there's not a lot i can do about that.

it's inarguable that they work. feel free to pull up long term charts. those are evidence. stone age analogies aren't.

[Daveparts]

17. I don't Ignore that

or say that your wrong but you must love your baby warts and all. Dinosaurs and volcano's were inescapable events in the stone age.

Bubbles and crashes are frauds perpetrated on an unsuspecting public.
They are not accidents they are criminal undertakings from 1932 to 1980 investments was highly regulated and the first President to deregulate them suffered through the S & L crises and that crash you mentioned in 1987 but still they insist that they can be trusted when time after time they prove they can't be.

The tax paying public must pick up the pieces and the innocent pay the price. The Enron employee's were told stock was better than a 401K you think that they believe that now? You think anyone could ever convince them of that again? The executives walk away fat and happy the employees screwed out of their retirement with promises. steal with a gun get 20 years steal with a pen and walk away.

The stock market is just like a mother guppy, she will eat her children without qualms.

[sepulveda]

18. correct

and bubbles and crashes are also inevitable

but they Are NOT bad things if you are in the for the long haul

assuming you are average joe (or jane ) :) and DCA into yuor investments, bubbles and crashes don't hurt that much. in the long run, the crashes improve your average price

of course, the enron employees were screwed. that was because enron was crooked. an investor who is DIVERSIFIED (no more than 5% of assets in any one stock) can only be minimally hurt by an enron.

people who were FORCED to rollover their retirement (like the public utilities guys in oregon) and then prevented from selling otoh are victims of corruption

absolutely

the stock market doesn't hate you, and it dosn't love you. it does not favor the rich (plenty of arrogant rich have blown ALL their money through hedge funds or greedy overleveraged investments)

it favors the patient, diligent investor who dollar cost averages into quality companies- peter lynchian stocks esepcially

bubbles are not criminal undertakings

they are natural and they are GOOD in the same way that natural forest fires can be good. they clear out the deadweight and the weak hands and pave the way for further growth

i make my $$$ from markets and i don't cheat anybody

i trade (very very differnet from investing) and also invest

bringing up ONE company as an example to supposedly claim the whole system is corrupt is neither logically valid nor useful

there will always be corruption in business, just like ANYWHERE else, because some businesspeople are corrupt .

so what?

like i said, pull up a chart of the S&P the DJIA or any benchmark index espceially a value/blue chip one over any long period and you can see the price appreciation

and that does NOT even include dividends and most of my longterm investments pay a fat dividend, that gets reinvested

if you don't want to participate in the wealth building engine that is the stock marke, that's your prerogative. but my grandpa getting me into investing when i was 18 was the SMARTEST THING I EVER DID.

and even WITH THE 1987 crash, the dotcom crash, etc. i have multiplied my money many many many times. not because i am a genius but because the engine of capitalism is genius and works to build wealth

the stock market is there for anybody who has a few extra dollars and a desire to participate in great companies.

[varelse]

22. Congratulations on your stock market skills and knowledge - they are impressive

but what is your opinion of the topic brought up in the OP? What do you think of the "Fair" tax?

[Puzzler]

12. What about the black market?

A huge increase in sales tax will make for a huge black market in everything... everywhere.

-P

[Daveparts]

13. Limited Time Offer!! Quantities Limited!

But for those enamored with the "Fair Tax" I offer Dave's magic beans. These beans will grow beanstalks clear up to the clouds. Why Jack C. of Lomboc says, "I planted my Dave's magic beans and in just one week I had earned a goose that layed golden eggs and a magic talking harp! True, I was later indicted for voluntary manslaughter and reckless endangerment when the beanstalk crashed into several homes. But for $19.95 it was a heck of a deal!

Order now and receive a ginzu knife so sharp it cuts itself!

We accept Visa, Master Card and livestock.

[Deny and Shred]

14. It is also a massive disincentive to consume. Consumer Confidence

would plummet immediately.
The basic fraud that has been perpetrated with respect to taxes is the Ray-Gun legacy of rewarding wealth over work. Middle class workers pay more in net tax through payroll & income taxes than they would from equal income 'earned' through capital gains and dividends. Wealthier individuals earn more through the market than mid and low income people, so they pay less comparative tax. Though Ronnie expected these wealthy individuals to put that $$$ to work by opening new businesses in America, many never did vis a vis putting the $$$ to work in the stock market, emerging markets or moving their growing riches offshore.
A strong argument can be made that supply-side econ has pulled $$$ out of U.S. new business investment. These investments do far more for the overall US economy through the multiplier effect than investing it in the market. Fortune 500 companies are multi-national, and put their profits to work wherever they deem best, not necessarily domestically.
Rule of Thumb - A suspicious name for a Republican initiative will accomplish the opposite of its name, like Operations Just Cause, Enduring Freedom, and Infinite Justice, or carry an obvious connotation indicating how the masses ought to feel about it, like Death Tax, or in this case, Fair Tax.
Low income individuals who hardly save would get killed, paying tax on 100% of their income. Billionaires would pay tax only on what they spend, a % potentially in the single digits.

It is Fair Tax on the Poor, fair, good, very good, outstanding scale, and that's being generous.

[bulloney]

19. You know that Repbublicans will like eliminating an income tax in favor of a sales tax.

REpublicans are generally wealthier, therefore, they will spend a lower percentage of their income on the same things that middle and lower-classed people will buy. And you know the initial estimate of where to set such a tax will be low. So, if we start paying more than a third of the cost of products in taxes, it will be ratcheted upward so that revenues meet the government's appetite for money.

This will put a screeching halt to consumer spending which is a big chunk of this economy. Lord knows what kind of economic calamity that will lead to.

[lildreamer316]

20. Thanks! I needed a good real-world explination of this.

Bookmarked and Rec'd.

[varelse]

23. yeah I know this is my third post on this thread

what can I say... except that I think this is an awesome post... especially the punch line:

Instead, we should offer Mr. Linder first class accommodations on the classic split timber transport. Where his body will be gently massaged with a specially heated petroleum-based sealant and his skin covered in a soft and fluffy, all natural, poultry down. And, arriving at journeys end, he should receive an all- over, full body massage with our specially made Louisville massaging wands.

This is a euphemistic masterpiece!!!!!!!!!

:thumbsup:

[yurbud]

24. cons say we have to do this because if we tax businesses, they will likely pass it on to consumers

but their solution is to remove even the option of businesses choosing to absorb part of the tax. It just puts it all on consumers.

[Daveparts]

25. I think the Film

Thank You For Smoking illustrates best, Every tax on business will hurt every thing every tax on consumers won't hurt a thing.

The tobacco lobby cloaks it in Freedom, personal choice, patriotism
but its all just greed.