Letter to Ron Paul on the Fair Tax

09/16/07 fcofer to Ron Paul

A Plea to Put a Fat Man on a Diet
I'm in agreement with Ron Paul on most things he wants to accomplish, but I disagree with how to get there.

We need to address the problem head on rather than wimp around that oppressive taxation is just a problem with the federal government. State and local governments are less corrupt merely because the federal government has taken the first bite out of the apple. If they didn't, the others would just take up the slack and have any time they have gotten the opportunity.

These three monopolies (state, local and federal governments) now consume over 40% of everything we make, making other monopolies pale in comparison. Scientific American observed (Dec, 2001) that state, federal and local tax rates increased from 1-2% of our Gross National Product (GNP) in 1900, to over 36% in the year 2000 ending. This is in addition to inflation (which Ron Paul points out) and it is even more regressive then inflation.

We need to reduce government size. I submit to Doctor Paul that he should certainly know that there are only three ways to do this:


 * 1) Reduce its caloric intake (diet), or
 * 2) Increase its caloric consumption (exercise), or
 * 3) Surgically intervene (remove the fat, tie off the intestines, etc).

Out of these, the least messy and the most effective is to control the intake which forces the organism to go about reducing the fat on its on.

Fat people and fat governments like nothing more than eating. They already know over indulgence is not good for them, but they have been so conditioned by the process that putting our money in their mouth is something they thoroughly enjoy and they can't even imagine what life would be without doing it. They have an overwhelming compulsion to do so because it gives them pleasure. It is this process that taking in far more than the body needs gets stored in unsightly pockets of fat. Just carrying this fat around is a strain and there can be no doubt that it alone is responsible for inflation, lack of agility, clumsiness, shortness of breath, and general lethargy.

Now I ask you Doctor Paul, what would you say to an obese fat man that insists that you proscribe a diet (like done in the Fair Tax) that promises to be "caloric neutral?" Common sense (plus your training in metabolic process) should tell us that he will stay fat. But, if you are like most politicians, you also realize that you have to persuade the fat man to come to his senses and realize that his diet has to be reduced.

But there is no way to sweet talk a tick off a dog's ear. Regardless of how you put it to the most bloated tick, he will not get off on his own. If you intervene and forcibly remove the tick, he will never thank you for it. Even the dog, who most certainly will certainly benefit from your intervention, will howl in pain when it is removed.

Nevertheless, that is what must be done.

So, we need to set an objective to limit all revenue of all governments to an ideal ratio. That includes not just dinner meals, but breakfast, lunch, snacks and late night raids on the refrigerator, particularly the binge forays of buttermilk and cornbread, pork, bagels and cream cheese... all of it. No payment, of any kind, should escape scrutiny. All calories should be restricted.

As you are aware, to bring the weight down to this ideal rate, it must be less than the organism needs to sustain itself, thus forcing it to consume the fat it has cached away. But no fat man is willing to do this. He must be coerced.

As proposition 13 demonstrated, they ain't going to like it.

Huckabee knows this first hand. You know it. Everybody else knows it, even Hillary. It's just common sense and not rocket science.

So how many calories does the federal government need? Local? State? Entitlement? Charity?

We need to put these government functions on commission, just like a real estate agent. Real estate agents really don't build the house, they simply help sell it. Government doesn't do anything, they just monitor what is done. We need to listen to their advice. But no one in their right mind would let their real estate agents set their own commission, nor should we continue to let government set their own tax rates. Imagine how absurd a real estate commission of 34.5% really is. That's what our government has set as their commission. Just like here is no way to build houses and sell them with that much of a take from the real estate agent, there is no way to support such a big tick or hog like government.

We went a long way when we said we wanted a say in setting tax rates. "No taxation without representation," our forefathers chanted. That was real improvement over a fat king George, but it is not enough. We need to limit the size of government to a ratio of the free economy.

I believe out of the choices the only way to do it is to control what it eats. We've tried the surgical strikes and they have failed. We've tried to get more out of government and that, too, has failed. So that objective I've codified into a constitutional amendment that limits government revenue and sets it to a ratio of the free economy.

No tax (or combination of taxes) should ever be more than ten percent of the gross price, else it will provide the margin and incentive to bootleg. Adam Smith made this admonition many years back in his seminal work The Wealth of Nations.

This can be simply accomplished by establish a gross receipts tax that is limited to ten percent, but it needs to average five percent.

Now there's a funny thing about such a gross receipts tax. A five percent gross receipts tax on every sale is one hell of a lot more than five percent of the Gross National Product. It's 25% of the gross national product. That's because it is compounded within the distribution chain and it is compounded indirectly as well, plus it is off the top of the deck instead of the bottom. A Dartmouth city planner knows that a one percent sales tax produces the same amount of revenue as a five percent payroll income tax.

So why do we divide by our shoe size and multiply by our social security number as dictated by the IRS? Because it hides who is being taxed. It's not the fault of the IRS, but they certainly are culpable. It is the free rein given to Congress to make it anything they please. Most of our Congress has sold out, legally stealing from one group to satisfy another. Just like Price Waterhouse and Enron, no amount of laws will fix it. You can never leave the fox in charge of the chickens.

So John Linder and the gang (talk show promoter Neil Boortz) like the national sales tax scheme. They insist it is better, so we might as well at least go in that direction.

Fact is, it is worse. The tax rate of 23.5% to start with has no limit. The income tax amendment is left in place. It does nothing to control state and local taxes, tolls and fees. It admits to being "revenue neutral" (i. e., it doesn't do a damn thing). That's why the status quo is so for it.

Now imagine what a 23.5% price rise would have on the economy. Does China have a 23.5% sales tax? No. Mexico? No. India? No. So when these countries manufacture any product or produce any service, is this tax glut including in their labor demands for subsistence? No. So, with the "Fair Tax" All-Middle-Men-Are-Exempt-From-Tax provision, tax collected is only collected from the consumer, i. e., all international imports get a free ride. It would make what Ross Perot called the Giant Sucking Sound seem like a blown kiss compared to the tornado-like torrent that would ensue. Sheer nonsense.

Instead, what if we clamped government down to ten percent maximum tax on any sale, a la California's Proposition 13? Then, if we added that our total tax rate must average five percent and can vary only by product or service, not by market or territory, and there were no exemptions, we could level the playing field. Add that the revenues must be distributed equally to the state, federal and local governments of the buyer and seller, plus an equal amount to individual entitlement (social security, health care, etc.) and a final one fifth to charities. This makes ten fiscal accounts (five for the buyer and five for the seller). Restrict government revenues to be only from this tax. Put a progressive super majority clamp on changing any tax rate, such that it takes an increasing plurality to approve any rate that differs from five percent. This will truly be fair (one divide, the other choose).

With a five percent gross receipts tax, it will establish a ratio of government revenue to about 20-25% of GDP, with a reserved savings budget for individual entitlements. This would include state, federal and local government operating budgets and essential entitlements (provisions for social security and essential health care of 5% of GDP).