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Now is the time

By Frank Salvato
web posted September 19, 2011

Unless you've been living under a soundproofed rock for the past two and a half years you know that the approval rating for our nation's politicians is pathetically low. President Obama's approvals are hovering around 44 percent while Congress' approval rating hardly shows-up on the radar screen at 13 percent, and rightfully so. Those elected to federal office (and for that matter, the many State houses) have ignored the basic responsibilities of their offices -- to represent their constituencies -- and have, instead, arrived inside the Washington DC beltway to execute their stations in the best interests of their political parties and associated special interest groups.

Incredibly, some in the political talking-head and spin doctor class try to explain away the dismal approval ratings as repercussions from the maladies of our time; they try to rationalize that the cause of public discontent, where their elected officials are concerned, is more about an unsophisticated and less realistic interpretation of all the bad news emanating from across the world. These contentions might very well be true if it weren't for the truth of extremely elevated non-approval ratings received by the elected class. President Obama's negatives are over 50 percent and Congress' negative rating is at a stunning 83.5 percent. In fact, the only leader not to have a negative rating over 50 percent is House Speaker John Boehner (R-OH), who stands at 41 percent.

Keep in mind that, traditionally, approval ratings can bounce up and down quite erratically, but once a voter has established a negative view of a candidate it is very hard to flip that view to the positive. It is for this reason that a unique opportunity presents itself; an opportunity that even the doomed politician can use to throw a lifeline to his or her legacy.

With nothing to lose, many in the elected class (many would call it the elitist class) are finally addressing the national debt, deficit spending, the creation of jobs, and -- most importantly -- tax reform. Truth be told, if they had the courage to forgo all but radical and transformative tax reform not only wouldn't they have to address the other issues, they could facilitate a stronger US economy, reform the way the federal government spends taxpayer money and set the stage for eradicating all debt and eliminating routine deficit spending forever, all while allowing for modestly liberal government spending on "help-me-get-re-elected" spending programs.

Wouldn't it make sense for the elected class -- doomed and wounded, as well as the newly enlisted and entrusted TEA Party contingent -- to embrace an absolute restructuring of the United States Tax Code and the Internal Revenue Service so that they played to America's financial strengths rather than to a limited and volatile root element? Today, out tax system is based on income -- corporate income, investment income, personal income, etc. Yet our culture is a consumer society, perhaps the most potent consumer society on the plant. Wouldn't it make more sense to completely scrap the income-based tax system, replacing it with a consumer driven tax system?

First and foremost, the establishment of a consumption-based tax system would eliminate the inequitable "progressive" tax structure we have today. Agree with the motives behind it or not, our current tax system treats individuals differently according to their wealth or income. Article I, Section 8, of the United States Constitution states:

"The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;..."

Even though the Founders and Framers meant this to address trade and commerce between the States, the verbiage is generally stated enough to lay legitimate claim to the notion that, as Americans, we ought not be treated inequitably where wealth and income are concerned.

Additionally, when one understands the cultural antagonism provided by Karl Marx's famous -- or infamous -- ideological tenet, "From each according to his abilities, to each according to his needs," it is easy to see how our current progressive system of taxation indeed facilitates an enticement for mischievous and nefarious opportunistic politicians to foment an air of class warfare amongst the people in order to divide and in order to capitalize on that said division.

Of course, we could go on and on about whether the progressive tax code is working or not. Researchers in Canada and the US recently concluded that people living in countries with progressive tax systems were happier because they got more "for free." Evidently no one asked the countries' producing demographic about having more of their earned income confiscated by their governments in order to facilitate these "warm and fuzzies" among the masses.

The larger points to consider when entertaining the notion of reconstructing the US tax code from income to consumption are these:

  • After a baseline across the board deduction to cover food and other essential needs, every American would automatically be treated equally, paying equally into the federal system according to their expenditures. If a billionaire wanted to buy a private jet or a yacht, that billionaire would have to pay the established consumption tax applied to everyone. Individuals not lucky enough to be in the upper 2 percent of earners wouldn't be forced to subsidize these purchases via tax loopholes or concocted special interest write-offs.
  • In a consumption tax system there would be no need for corporations to be taxed as the tax responsibility would lay with the purchaser. In this instance alone, the myth that corporations and businesses can be taxed is vanquished. Today, under the progressive tax system, businesses and corporations pass any and all taxes onto the consumers in the form of higher prices.
  • A consumption tax system effectively eliminates the need for earnings withholding for the simple fact that taxes are levied on the consumption end, not the earnings end. This eliminates bureaucracy not only in the private sector, where whole corporate accounting departments are charged with withholding and submitting collected taxes, but whole legions of the IRS. There would be no more personal tax audits because there would be no system providing for deductions or write-offs, but for the universal basics needs deduction and charitable contributions.
  • Corporations would be less inclined to hoard capital in order to prepare for over-taxation imposed by the federal government and would, instead, be devoid of the gross amount of uncertainty in the marketplace created by ever-changing tax codes. Uncertainty, where taxes are concerned, would be eliminated from the corporate world, thus, creating a positive economic atmosphere, which, we all know -- but for Mr. Krugman at the New York Times -- creates jobs.
  • Perhaps most enticing, anyone purchasing anything in the United States or her territories would be paying into the system each time they purchased anything. Those here illegally would be paying into the system that they now abuse creating an entirely different debate surrounding the issues of illegal immigration and immigration reform. Even those foreign nationals traveling to the United States for business and/or pleasure (the United States is still one of the top destinations for travel in the world) would be paying into our system each time they purchased anything, i.e., hotel rooms, airline tickets, clothing, souvenirs, etc. Foreign corporations who maintain locations in the United States would be paying into the system when they purchased fleets of cars, office equipment, housing, etc.
  • And because more people (not just American citizens) would be paying into the system the federal government would glean more operating capital. Further, because the elected class would have to address a universal tax rate, should it want to raise taxes, they would face the consternation of both the corporations and the individuals who would be affected by said tax increase; individuals -- wealthy and not -- along with corporations would stand side-by-side in opposition to gratuitous tax increases meant to enrich the few and the special interests at a cost to the rest of the populace. In fact, instituting a consumption tax eliminates much of our elected class's ability to manipulate our nation's finances altogether. A consumption tax forces fiscal responsibility upon the elected class.

These are just six of the many reasons why deconstructing the progressive tax system to establish a consumption tax system would not only be effective in balancing our nation's books and strengthening our economy, but would help ferret out the graft in our federally elected community.

Getting back to the dismal approval ratings and the unique opportunity they present...

If every federally elected politician is shaking in his or her boots in the run up to the 2012 General Elections -- and an overwhelming majority are, wouldn't now be the "no hurt" time for them to actually do something good for the country; for our citizenry; for our corporations? For those who are doomed, campaigning on having eliminated paycheck withholding could just be the breath of life needed to resuscitate their political livelihoods. For the fiscally responsible, eliminating political graft, strengthening the economy, creating jobs and creating a tax system that safeguards against debt and deficit spending is equally attractive to the voters. Frankly, I fail to see the down side to the conversion for any politician from any party.

Now, I ask you, what reasons would an elected official have for not pursuing the genius of this conversion? Pardon me? Did I hear someone say corruption, greed, a lust for power and...dare I say, a want to centralize government into the hands of the elite? ESR

Frank Salvato is the Executive Director and Director of Terrorism Research for BasicsProject.org a non-profit, non-partisan, 501(c)(3) research and education initiative. His writing has been recognized by the US House International Relations Committee and the Japan Center for Conflict Prevention. His organization, BasicsProject.org, partnered in producing the original national symposium series addressing the root causes of radical Islamist terrorism. He is a member of the International Analyst Network and has been a featured guest on al Jazeera's Listening Post and on Russia Today. He also serves as the managing editor for The New Media Journal. Mr. Salvato has appeared on The O'Reilly Factor on FOX News Channel, and was featured in the documentary, "Ezekiel and the MidEast 'Piece' Process: Israel's Neighbor States." He is a regular guest on talk radio including on The Captain's America Radio Show, nationally syndicated by the Phoenix Broadcasting Network and on NetTalkWorld Global Talk Radio catering to the US Armed Forces around the world. Mr. Salvato is also heard weekly on The Roth Show with Dr. Laurie Roth syndicated nationally on the USA Radio Network. His opinion-editorials have been published by The American Enterprise Institute, The Washington Times, Accuracy in Media, Human Events, BigGovernment.com and are syndicated nationally. He is a featured political writer for EducationNews.org and is occasionally quoted in The Federalist. Mr. Salvato is available for public speaking engagements. He can be contacted at contact@newmediajournal.us.

 

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