of America’s system of
government comes hand-in-hand with the understanding of America’s
economy. Ever since the 16th amendment was ratified, the government
has had copious amounts of money at their disposal. With that money, the
government has funded the Federal Reserve and all their banks, Fannie Mae,
Freddie Mac, countless other GSE’s, and given subsidies to many businesses. The
reality is that the contemporary government works with its constitution and its
with the idea of a Fair Tax. That is, no income tax. If the government were not
integrated with the economy, that would seem like a fair way to tax the people.
What people forget is that the economy relies on the government to supply the
Fed with money, give subsidies to many businesses that would otherwise not be
able to survive, and support huge GSEs like Fannie Mae and Freddie Mac. When
the economy is in a recession, the federal government has always played the
leading role in turning around the economy.
Tax is basically a sales tax, which relies on the sales of goods to be
obtained. Here is how the Fair Tax would not be reliable: Say, we have a
working Fair Tax. We then experience a recession as foreign markets surpass
ours and investment goes to foreign businesses. With the investment in American
companies dropping, a recession ensues. With a recession comes less
consumption, as people are more likely to save during a recession. Less
spending means less tax collection, and less money for the government. The
government now cannot sponsor those GSEs (which millions depend on), give
subsidies (which many industries depend on), and cannot afford to drop Fed
interest rates in the fear of major inflation, all because the government has
not collected enough money.
say the Fair Tax is revoked and the 16th amendment is ratified. The
government, now in the aforementioned recession, is taxing income. People may
stop spending, but people will not stop working, so we don’t lose tax
collection. Now that the government has some funds, they can subsidize, sponsor
those GSEs, and drop the interest rates a bit, because they will have the money
to dispense rather than having to print more money. This would stimulate the
economy and lead it away from recession.
the income tax is the safer option.
and Mike Huckabee are sponsors of the Fair Tax. Politically, it makes sense,
because people do not want to be taxed. As explained above, it would not work very
well. If people understood how the economy and the government work together, it
would not be a good political move to support the Fair Tax. We need to educate.
PS check out Common Market's album. it's called Common Market. Really sick. Word to Seattle and Blue Scholars