Third Party & Independents: Archives

Has anyone proposed any bill such as this in Congress that you know?

Sorry, I mean the flat tax, I’ve been reading all the stuff on HR25.

David -

I’m a lot younger than you, so I dearly hope you’re wrong. Fortunately, I also believe so. America will most likely see some market corrections in the future, but I do not think we are so distantly removed from our mid-20th-century forebears who lived below their means and worked their butts off to create a consumer utopia for their children.

We may see a sharp decrease in consumer spending in the future, but I have no reason to believe that we will lose productivity. America will continue to be better educated, more equal, more opportunity-rich, cleaner, safer, and more democratic than any of the large Asian economies.

Asian stocks may be strong now, but that is simply because they have so much ground to make up. As we saw with Japan in the 1990’s, it is one thing to catch up with the world’s best economies, but it’s much harder to surpass them.

Has anyone proposed any bill such as this in Congress that you know?

Steve Forbes is leading the charge on the Flat Tax proposal… Not sure if it has actually been introduced as a bill yet or not though.

David,

Your snapshot will most likely prove correct

The rich adore the notion of a flat tax. Ask yourself why.

The working middle class would like it too, Reed. Ask yourself why? The wealthy’s rate would come down a bit, but, also, they would have no loopholes. Cheating on one’s taxes will become a level playing field. The big shots can try to hide income overseas, while the little guy who wants to beat the system just continues to work on a cash basis.

When the wealthy and the middle class pay the same rate, and see that rate increase due to inefficiencies, they will speak with a common voice which politicians will dare not ignore. Everyone will benefit in the long run, except politicians who will have to be more responsive to taxpayers, who will speak with the same voice regardless of wealth.

David:

I think your centering your argument around class struggle is out of focus a bit.

A better focus would be technology and demographics. Technology makes it possible to offshore many of our jobs. This has at least two positive effects. One is that it lengthens the time between recessions because it holds down US labor costs. As you know inflation in Labor costs is a large contributor to inflation. Inflation brings about higher interest rates and higher interest rates chokes off capital and produces a recession. With a more modest increase in our labor force we should have more moderate and longer recoveries. The economy should be more stable. Second is cheaper consumer goods and services. Both of these reasons point to low inflation and low interest rates for a long long time.

Demographics are important because the future belongs to the young. We have an aging population India and China have millions of younger people who will grow into a great middle class. This helps all “baby boomer” Americans because they will be the ones who support the US stock market when we are retired by purchacing US stock.

I do agree with you this time in part. I think the US percentage of World GDP will decline over then next 30 years. I think all of us need to think more globally in our investments.

I think predicting stock market returns long term is beyond your and my ability. I have read extensively on this subject and our countries best economic minds are mixed. Siegel (author of Stocks for the long run) things globalization will actually make the future very bright!! Others such as Dent etc think we are heading for a depression like the 30’s next decade.

I actually think Siegel’s analysis is the more thoughtful. He has better research and looks at our economy in the context of globalization.

I think another factor you should look at is the improvement Technology is going to bring in the next 10 to 20 years. Productivity gains should be pretty amazing. Economic growth in the US and the countries you mention should be very strong.

I also think national boundries will mean less and less as time moves forward. If we take out national boundries and instead look at the economy it terms of age, with Japan and Europe being the oldest then the US and finally the countries you mentioned being the young. (I am thinking of demographics). Money should flow between these generations, not unlike it does traditionally inside a country.

So the future does belong to the young. And since we did not produce enough young americans to follow us, we are going to look for them across the seas. This will be good for baby boomers because these people are who we will sell our retirment assets to 20 or 30 years from now.

Craig

David:

The future is in the Asian Pacific rim.

I disagree. The future (as far as untapped markets go) is in India and China, which combine for 1/3 of the world’s population. The only thing hampering growth in both countries is over-controlling, corrupt, and anti-democratic governments - and this is changing.

Asian Pacific countries such as Japan are rather unstable economically. Check out analysis from Wall Street on economic growth trends.

US stocks aren’t moving because they were previously overinflated, and manufacturing has been becoming more efficient (rather than bloated). Stocks are hardly an indicator of US affulence. GNP and GDP are far better indicators.

By the way, I like your last paragraph David, but it seems completely detached from the rest of your post!

Gandhi, I’m sure you realize China is on the Pacific rim.

Technology makes it possible to offshore many of our jobs. This has at least two positive effects.

Craig, this is brilliant. It really warms my cockles to see Republicans tell us that moving jobs outside the US is a good thing. Keep up the good work!

Stocks are hardly an indicator of US affulence. GNP and GDP are far better indicators.

Gandhi, that’s absolutely correct. I hope you’ll back me up the next time I skewer one of your compatriots for using the stock market as evidence that President Bush’s economic policies are working.

David—

I have an advocate of the Flat Tax for quite some time, and I only sheer when I hear it raised again as an alternative to the bloated, overly complicated system we have now. It could work if done right, and in Congress these days nothing seems to be done right. Lets pass an energy bill designed to wean America off foreign sources of energy, but not raise the fuel economy standards; Duh!

I agree—regretfully—with your analysis of the future of America. We have our collective heads in the sand, and the Chinese, Japanese, and Koreans, not to mention the Indians and Malaysians are eating our economic lunch. Next course: dinner. I will never be convinced that moving American jobs overseas is good for American workers…

Craig, the flat tax on personal income has exactly the same benefits to technology, industry, and jobs as a sales tax does. In other words, it affects them not at all differently than HR25.

I think the US needs to establish an Environmental Resource Escrow Fund, EREF, however for corporations and businesses which have the potential of fouling or consuming large quantities of America’s natural resources. This escrow fund could be used to make loans to companies who incur cleanup orders from the courts to help them stay solvent over the cleanup period. Those businesses which consume natural resources belonging to all Americans would pay through their contributions to the EREF for the elimination of those natural resources. And those businesses which conduct their business without polluting for 5 years would be rebated the previous 5 year period’s contributions.

As for the flat tax, all I hear from your analysis is that any other tax system is more complicated and therefore better. I don’t agree. The simplest and easiest tax system to comply with is the cheapest one to administer - and that is the flat tax.

The tax system which treats all folks above poverty equally is also the fairest. That is the flat tax system.

Just because the flat tax system is relatively simpler and more elegant and fair is obviously one many Republicans won’t support. Not enough wriggle room I guess.

You do realize I hope that a sales tax system will be a huge incentive for folks to move to cash only businesses or transactions such that their income is not traceable, don’t you?

Mr. Martin, I used to be opposed to the flat tax. But having come to understand the complexities and implications of all other systems, I was forced by logic to join this bandwagon.

Globalized job shifting is underway, and therefore inevitable. However, I agree with you that the Republican approach of taking its inevitability and enhancing and hastening the export of jobs does a tremendous disservice to American workers.

There is so much more that our government could be doing to make globalization less detrimental to American workers. Driving down health care costs would be one of the most beneficial, but, they are not even looking in that direction. All talk, no walk.

The government could also be creating innovation think tanks that establish the direction of new trends and innovations and partner with graduates of the appropriate expertise to make small business loans to them, help them incoporate and realize those next inventions and innovations. But the Republicans aren’t even looking in that direction, they want to decouple government from the private sector.

And this as much as any other reason, is why other nations will supercede us. Their governments are, and will continue, to work with their private sectors in a concerted effort to join the forces of their educational systems, labor, management, and markets in a focused effort to maximize their economic and market potential. The US is longing for the days of the 1920’s when laissez faire and separation of these resources were heralded.

Unless our government gets its act together post haste, we will be facing the 1920’s again, specifically, 1929 at some point. And immediately after that, we may face another 1860 secessionist movement by the likes of Texas, Hawaii, Alaska, Arizona, New Mexico, Utah, Nevada, Montana, Idaho, Kansas.

It is happening under our noses. People in America are seeking ever more say and power over government, and because of the factionalization of competing interests, our government is unable to respond in ways that garner majority support. This is creating a growing malaise, disappointment and loss of faith in our government reminiscent of sentiments and factionalization which lead to the first Civil War. And politicians are at the forefront of creating this factionalization and dividing of the American public in ways which cannot produce majority support. These seeds will bear destructive and poisonous fruit unless something drastic changes soon.

I hope you’ll back me up the next time I skewer one of your compatriots for using the stock market as evidence that President Bush’s economic policies are working.

Of course I will! Does that also mean that you’re going to give Bush credit for turning around the economic TREND handed to him by Clinton? See here.

All, a perfect example of what this article discusses appears in the news just yesterday. Take note:

Yahoo announced Thursday it would pay $1 billion in cash to acquire a 40% stake in the Chinese e-commerce firm Alibaba.com.

American investors in Yahoo as well as foreign investors in Yahoo, will be investing in the corporate operations of foreign nations increasingly fueling ever more their increases in market share, creating pressures which American corporations cannot survive as solely American corporations. Thus, American corporations will continue to migrate to the status of international corporations with increasing ownership and operations by foreign peoples and in foreign demand markets. Corporations only allegiance is to profit. And if maximum demand and profits exist overseas, coprorations will become overseas corporations leaving behind any allegiance to the nation in which it was founded. The American people and its government has no requirement for American corporations to remain American.

That is not true of Chinese corporations or Japanese corporations, or Malaysian, Korean, or Indian corporations where labor and management identity remain very strongly nationalistic. This is the dilemma that needs to be dealt with, and which is not even on the Republican or Bush Whitehouse radar screen. They instead continue to divide our people on cultural and management/labor issues, instead of plotting actions and governance that appeal to great majorities of Americans.

This was my first time to read your blog. Very interesting. Some people have never really studied history.

Welcome Judy. Could you be more specific on what segments of history you are referring to?

David,

Ideally, I’m opposed to a flat tax. As much as we ask less of those below the poverty line, because they will feel the burden the most, we should ask more of those in the highest income brackets, because they will feel the burden the least.

Realistically, though, a flat tax (whether on income or on sales — each has pros and cons) would probably work better than most schemes. The biggest advantage to a flat tax, with no loopholes, is that it makes it harder for lawmakers to “buy votes” with tax incentives. Politicians will find another method, of course, but it will keep them away from tampering with tax law.

So, I guess that, while I don’t support the Flat Tax, I’m less opposed to it than I am to any other system I’ve seen introduced.

Still, with all this talk about income tax vs. sales tax, I wonder why nobody is suggesting replacing it all with a federal Property Tax. The wealthy own more property than the poor, and corporations own a LOT more property than the poor.

The rich adore the notion of a flat tax. Ask yourself why.

Reed, the current progressive tax system is a punishment for success. It’s a device that maintains the chasm between those who already have the mechanisms to be rich, and those who don’t by upping the stakes for those of us on the bottom end. Not only will we have to make more money to become rich but we have to roll uphill to do it. It’s theft and I abhor it - why? Because I’m rich? Nope…born into poverty actually - I abhor it because it keeps the American dream of financial independance just out of my grasp.

Mr. Remer,

I agree that there is much more the government could and should be doing to better protect the American worker, and it starts with lowering the obscene cost of healthcare; perhaps a partnership between government and industry is in order. And the government should further encourage the move away from traditional retirement system(s) built around the industry sponsored/guaranteed/funded pension plans and towards 401(k) plans, Savings Bonds, IRA, etc. as vehicles for retirement.

Along with this I truly believe that those of retirement age under a certain income level should no longer be burdened with income and SSN taxes. Retirement should be a time of comfort and (relatively) worry-free living; it is not for far to many of our seniors.

But under the current leadership, the will and vision necessary to make such futurist changes does not exist. Congress too is populated by a myopic leadership who only seem to care about the upper 1% of the population. And while I do not see another Civil War like fracturing of the nation like you, I do see a further erosion of the relationship between the federal government and the states. Where this will lead I don’t know, but a complete collapse of the current Republican model as set forth by the constitution is not out of the realm of possibilities.

Bill Clinton said it well, that in each new decade we must discover a new source of well paying jobs to increase the workforce and strenghten the economy. Clinton has suggested that this new source of high paying jobs is in an energy revolution in the United States, moving towards localized, home-based sources of energy (solar power, wind power, etc.) Not only will this greatly increase the availability of well paying jobs for skilled installers of such energy products, but it will also help to increase our national security and help the environment. We have already developed a very good set of products that effectively and rather cheaply produce electricity on the local level. Our efforts to produce mass renewable energy sources through solar and wind power have proved null, and home-based solar panels and wind turbines have proven much more efficient. Furthermore, if the United States is able to push ahead in this industry, many other countries may become dependent on America for the technologies needed to create cheap, reliable, renewable energy. Thus, we could see an complete turnaround in the energy market of the world, as America could become the chief exporter of energy sources rather than the chief importer.

As our economy continually becomes more service based than manufacturing based, it becomes more important for us to develop new industries through which we can create new jobs and strengthen our economy at home. This home-based energy revolution could be a solution to our problem, but it can only happen one house at a time.

David, I agree with you that at this point in time, we are definitely on a downward slope towards a decrease in value against Asia, but I think that through a solution such as this, we can turn around our path. However, with the people currently in power in our country, who would like to see nothing but a continuation of the status quo in the energy picture of this country, I think that such an energy revolution must truly happen on a grass roots level. Hopefully the steady increase in conventional energy costs will help strengthen this movement.

Ryan, great comments.

Practical steps needed:

First and foremost, the US gov’t should halt all taxpayer funding for corporations. Then, it needs to offer R&D dollars with one or both of 2 strings attached. String one: On certain technologies, the corporation must agree not to export the technology, similar to military contractual agreements. This will help to preserve mfg. jobs for new technologies for a longer period here in the USA. Second string: The Gov’t. (meaning the tax payers, own a 1/4% royalty on all sales emanating from R&D which tax payer dollars subsidized, and this royalty is inheritable by any and every company that manfactures and or sells products directly resulting from public subsidized new technologies.

This will have the effect of spurring R&D while permitting the American people to recoup some of their tax dollars as compensation for technologies they paid for which will eventually result in the export of jobs through foreign competition in labor markets. This addresses the reality of our future, in which we invent, and other nations soon profit from that invention.

You are right, energy development must be a local/state/federal partnership. Local building codes, local resources, local climatic and environmental conditions will dictate to some large extent which technologies will have the best cost advantage for particular locales. And mutual cooperation between all levels of government and private industry will need to be forged to make this happen.

Its a tall order, but the infrastructure for such progress already exists. We just need a few laws, and federal seed money to move us in that direction. Of course, we must get this word out. I will contact my Congresspersons with this message. If you and others will do the same, we might be able to get this ball rolling.

One thing we can’t do, is sit idly by waiting for a president to come along with enough vision to initiate such an innovative and comprehensive futuristic agenda. It is up to us, a vocal number of citizens to make this happen. Governor’s may also be key in getting this word out, and excellent political pressure points for citizens committed to make this happen.

VEM, ryan, and David, I totally agree. One of the reasons I’m a big Clinton fan is that he understood both the benefits and the problems of globalization. To paraphrase, “A strong economy is the best social program, but it’s not enough.”

David, excellent point about the Governors. There are several states who are working - often with strong resistence from the Bush administration - to implement innovative research and job opportunities.

One of the coolest projects IMO is the Apollo Alliance.

David:

Craig, the flat tax on personal income has exactly the same benefits to technology, industry, and jobs as a sales tax does. In other words, it affects them not at all differently than HR25.

Was this addressed to me?

Craig

AP:

Craig, this is brilliant. It really warms my cockles to see Republicans tell us that moving jobs outside the US is a good thing. Keep up the good work!

There are positives and negatives. The negatives are obviously displaced workers. Unfortunately, displaced workers is a part of capitalism. (I think New England once had a great whaling industry!!)

It doesn’t matter what I think of jobs moving off shore, as it is going to happen. I didn’t say it was a good thing. What I said was that there are two positives. Those are cheaper prices for consumers, and longer distances between recessions. Some others are low inflation, and low interest rates.

Another negative is slow increases in wages.

Basically, consumers win, workers that are not able to retrain loose. Homeowners win as well. (lower interest rates).

Craig

I didn’t say it was a good thing. What I said was that there are two positives.

I’m sorry. Maybe I just forgot the definition of the word ‘positive’. Umm… Nope. Says here, ‘positive’ is a good thing.

Unfortunately, displaced workers is a part of capitalism.

Yeah, that must be a big bummer for you Republicans. I’m just glad you guys in the white-collar sector who aren’t losing your jobs can always look on the bright side. Makes me proud to see Americans who are so optimistic - not like those gloomy blue-collar joes.

Thanks Craig. Keep talkin! :)