Seriously. I'll be adding the Great Orange Satan to my blog roll, too. Benen's WaMo blog and GOS do broad coverage of so much stupid, and BJ and Krugthulu hit their marks hard. So rather than do a "me, too" that could have gone into any of their comments, I'll pick on different stupid.
Edit: speaking of killing it, Boehner is absolutely crucified by Political Correction. Seriously, find some time to at least scroll through to see just how hard a take-down it is, even if TL;DR.
And this is frivolous stupid to cover because he won't win. Which he? The stupid flavor of the week who won't win. No, not The Donald the Birther. Herman the [atrocious] pizza man. He won't win the nomination, but he did get the nod at the South Carolina geek show. One of his idiot positions is advocacy of the "Fair [sic] Tax". Stupid policy is stupid, especially when stupid policy is a bad prescription for the actual current crisis.
The "Fair [sic] Tax" is a consumption tax in the form of a retail sales tax. A consumption tax could also be implemented by exempted savings or investment, as through an IRA, but then you wouldn't get to offer up the red meat of killing the IRS. Never mind that the Dept. of Treasury would need to implement a new bureaucracy to institute this fevered fiction.
Today I'll look past the touted fiction of the tax rates necessary to meet our revenue needs (probably 50%-ish by most realistic estimates) and how retail sales taxes and their kissing cousin the Value Added Tax, are easily and notoriously evaded. I'll just look at the main benefit promised, and how it's a load of horse shit.
The problem with the current income tax system, we're told, is that savings and investments are taxed twice, once when the money was earned in the first place, and a second time on the earnings from the investment. If the money was just spent for current consumption instead of investment, it's only taxed when earned. To me, income is income is income, and it ought to be part of the tax base, but we'll let that pass, as well as the nonsense that any more is taxed than the accretion on top of the invested principal. A consumption tax, it is promised, is supposed to put the decision to save or invest on an even footing with current consumption.
The principles are connected with academic principles that as a body are called "commodity taxation." If you have two types of goods with differential taxation that are roughly interchangeable, the higher tax on one will shift the preference of the consumer towards the other. Ideally, and I don't disagree with this, the tax system ought not favor one consumption choice over another.
So isn't the "Fair [sic] Tax" a wonderful curative that will spur our savings and investment rates? Depends whether you have any awareness of macroeconomics and our current macroeconomics. We're in a liquidity trap, and there's the classic babysitting co-op example. If saving for the future is valuable enough, the paradox of thrift can reduce current aggregate demand for consumption. The central-banking response would be to lower interest rates so that future use of saved or invested assets is not as valuable in comparison to current consumption. Or increase the inflation rate by loosening the money supply so that the saving isn't worth as much.
We don't have enough demand for consumption right now. Corporations and entrepreneurs are sitting on cash and unused capacity. Only current demand for goods and services will turn that around. So what is the curative proposed by a moron? Making current consumption less desirable. Awesome! You know what's even more awesome? That to correct for the dip in current consumption that idiocy would add on to the current hell we would have to implement policy moves that would offset the savings incentives that the "Fair [sic] Tax" is supposed to provide. Yep, lower interest rates and/or turn to inflation [like all the times it's been helpful in economic history, not the three times it's been a disaster], and all of the sudden putting savings/investment on an even footing doesn't deliver as promised.
Which would all be a fun frivolity if there weren't the enormous transition costs and inefficient transition rules. Oh, and Herman, have fun not being electable as dog catcher when you have to explain that the entire principal amount of a home mortgage would be includable in income the moment hardworking Americans sign the paperwork on their American dream.
But he won't be the last idiot to sign on. Mark my words.
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