I set up this site to promote the FairTax. It’s reasonable to provide some basic info about myself. My name is
. I was born before 1980. I have some degree. I’ve been lucky to enjoy some success first as an entrepreneur and later as an investor. I’m not rich but I spend little so I’m borderline financially independent. I did not and will not receive any payment for promoting the FairTax.
How I come across this idea
In 1997 I had an import business in Romania (annual inflation was 150%) and was doing my own accounting. Profit numbers were sky high yet cash felt suspiciously scarce, hampering growth. Looking into it I realized that, due to inflation, accounting was overstating the real profit (by basically measuring equity with an increasingly shorter yardstick) and, consequently, wildly inflating the tax liability. Under hyper-inflation the income tax liability can easily end up exceeding (!) real profits. It's even possible to owe income tax when in fact the business is losing money (imagine what such scenario does to economic growth). The income tax revealed itself to be a deeply flawed, broken fiscal instrument. I started thinking about what tax system would make sense and logic quickly leads to the sales tax. Since then I spent much time analyzing this. My analytical skills are decent, my math background is rather good, I looked for flaws but could not find much. This system appears sound, in spite of looking so good.
I believe promoting the FairTax is the best way to invest my effort
I’ve been through some difficult stuff not too long ago, and wanted to finally do something useful. Many initiatives are worthwhile: ensuring universal access to basic necessities; campaigning against violence in all forms; fixing mass media; protecting the environment; or suppressing cruelty against animals (just to name a few). But after careful consideration I concluded that promoting the FairTax, while it doesn't strike as a priority, it's actually the reasonable way to start. Why? Because the FairTax should transform society in a way that leads to significantly larger resources being made available to the above initiatives in the future (first free the resources, then deal with the issues).
The expected consequences of the FairTax
These are the main points:
- The FairTax terminates the income tax' discrimination against domestic producers because, unlike the income tax, the sales tax either applies to both domestic and foreign products (if they compete internally), or to neither of them (if they compete abroad). Ending such discrimination breaks the inverse relation between government revenues and the economy’s competitiveness. This in turn neutralizes the pressure that capital markets put on “big government” to lower tax rates and scale down social programs. Thus, social democracy becomes economically sustainable and therefore politically viable.
- The FairTax is a clever tax on luxury and redistributes wealth (through the monthly check) from the big spenders to the thrifty. This redistribution widens the accessibility of basic necessities, both directly (by endowing everybody with a minimal income stream), and indirectly (through the innovation/efficiency the free market brings).
- All luxury ads share a common underlying message: “you’re a loser if you don’t own our cool stuff”. By compressing luxury advertisement budgets, the FairTax will curtail such nonsense giving people a chance to be less ego-centric. If people worry less about how products reflect on social status and focus instead on how well they achieve their purpose, that alone will remove a significant constraint on free market’s ability to innovate.
- Democracy makes it highly unlikely that the monthly check will ever be reversed, on the contrary it should gradually increase. In time, through the combined effects mentioned above, this FairTax safety net should become significant enough to make life simpler and less stressful. Or at least it will blunt people’s current unhealthy drive to compete (and “keep up with the Joneses”), allowing them to realize that chasing luxury is a flawed route to life satisfaction.
- The above developments (jointly) will, on one hand, make people more willing to contribute, and on the other, make it easier for them to do so. The end result should be a significant increase in resources available to tackle the many worthwhile, not-for-profit initiatives.
It’s important to “keep feet on ground”, but it’s also difficult not to be optimistic about what this fiscal reform can achieve. The FairTax might look from afar like any other fiscal system, but, on closer inspection, it reveals itself to be in a league of its own. And it all starts with the dramatic boost it brings to economic competitiveness, which will both ensure long term sustainability and force other countries to adopt. Democracy itself will then prevent the FairTax from ever being reversed (at least not the monthly check). The result will be an efficient, competitive economy geared towards needs that matter, and a more cohesive society that sets a civilized threshold for living standards. People will be able to worry less and enjoy life more.
The FairTax is not about “left” or “right” politics
The FairTax is not a political matter of contention between left and right at all, because, whatever the political choice of a nation, the FairTax is the optimal system for implementing it. Two numbers define the FairTax’s scale and scope: 1) the sales tax rate; and 2) the percentage of government revenues that gets redistributed through the monthly check. Setting these percentages appropriately allows the FairTax to optimally accommodate any political choice: “wild capitalism” (both percentages close to zero), “nanny state” (both percentages very high), or anything in between. It makes sense for the left and right to debate the optimal values for the two defining variables, but it doesn't make sense to debate the FairTax adoption per se.
Promoting is not my thing but will put some effort into this (here’s an account of my previous efforts
). You should do the same, it’s worth it.
Email me, if you are confident you have a good suggestion, using the address displayed below. But I might be slow or even unable to reply if I get overwhelmed. That doesn't mean I don't appreciate your ideas and effort. And it doesn't mean I underestimate them either. Tanks for your understanding :)
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