…and a post for you “flat-tax”ers…and balanced budgeters

Flat tax woes:

Let’s say a national sales tax of %10 goes into effect.

Man/woman who makes $20,000 a year spends approximately $20,000 a year. Every person at this income level does. Nominal tax rate = 10%.

Man/woman who makes a $1,000,000 is not likely to spend 100% in income in a year. Some will, most wont. Let’s be generous and say a person spends $990,000, and only saves or donates $10,000. Nominal tax rate = 9.9%.

Rich person will nearly ALWAYS have a lower tax rate. Usually much lower, like in the 1-5% range. And they get to accumulate more in savings that doesn’t contribute to the general welfare,  nor provide for the common defense, nor secure the blessings of liberty. (That’s from the constitution, folks. That little document you like to wave around…or is that waive…?)

Balanced budget woes:

I will fully admit, that a sound byte for a balanced budget amendment sounds like a no brainer. I mean, really-Why should the government be able to spend more than it brings in? I can’t do that! I have to balance my checkbook!?

Sounds good, except it’s bullshit. No you don’t. And the great majority of you don’t either. And if you are lucky enough not to be one of the millions who have a mortgage, or car loan, or student loans, or credit cards, or anything else where you agreed to pay something later, more power to you. However, if we did away with loans of all types (which is EXACTLY what a balanced budget amendment does) then there would be a few million less homes built, cars sold, college degrees awarded, flat screen TV’s bought, etc.

If you said something like, “why is that a bad thing?”, consider that our whole economy is based on consumer goods and services. If everyone had to wait until they saved up to buy a house, or buy a car, or whatever, it would seriously wreak havoc on everyone else who had a job of any sort. It’d put a 4-5 year hold on 90% of car sales. A 15-20 year wait on all home sales, assuming that they lived with their parent rent free in order to save up a mortgage equivalent payment every month. That theory does not hold ANY water.

The same applies to the government. There are substantial differences, of course. If the balanced budget amendment were something proposed as a rolling 5-10-20 year debt limit, or all debts must have a set payment schedule, etc, that could absolutely make sense. However, that’s EXACTLY what we already do. Are we overstretched? Probably. But as long as people are stupid about fiscal policy, it’s going to stay that way.

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