"Once abolish God and the government becomes the God." -G.K. Chesterton

Tuesday, November 9, 2010

Creating an Economy of Abundance

We live in an economy of attrition brought on by a progressive and abusive income tax scheme. The average American goes out and creates wealth, either by working or starting a business, and before he or she can even bring home the fruits of their labor, the federal government steps in and takes a huge chunk. They force us to pay off the special interests in the swamps of D.C. before we are even allowed to take care of our own families. What we are allowed to keep is often a third less than what we earned, meaning we take home no money for almost two full days of work each week. In return, the government creates more entitlement programs that are guaranteed to cost us more in the long run, creating runaway debt and ensuring that funds are at a minimum when it comes time to collect our share of benefits.

This is not the freedom our founding fathers promised us. This is indentured servitude. This is why our economy is mired in anemic growth, high unemployment, and stagnant wages. We have constricted free enterprise with a bureaucratic empire of red tape and a tax code that's over 78,000 pages long. One in three dollars spent by businesses today goes toward paying accountants and lawyers to meet the onerous rules and regulations created by Washington. Many large corporations move overseas or find a way to pay smaller taxes in other countries rather than face the huge burden placed on their fiscal heath by Uncle Sam.

This ultimately leads to an attrition of wealth, and the evidence of this attrition in the United States today is everywhere. Fewer entrepreneurs create businesses, fewer venture capitalists take risks, fewer companies hire, fewer banks lend, fewer families spend money out and even fewer have savings left over, fewer nonprofits raise money, fewer churches build hospitals, fewer tax revenues come in locally, and fewer of the downtrodden receive the help they need. The more the government is allowed to confiscate, the more selfishly people hang on to what they have. The more laws that are created to seize assets, the more everyone finds tax shelters to skirt the letter of the law.

Possessions become more valuable in an economy of attrition. At the height of the Soviet Union, formed with the naive goal of creating a Worker’s Paradise where everything belonged to everybody, it became common for citizens to hide their most prized possessions from even their relatives, to steal from the state factories and farms where they worked, and even rarer to offer a helping hand to one’s neighbors, an act which could only arouse suspicions. 

Granting the state ever-increasing power to take more of our private property and to have a larger stake in the fruits of our labor is not only a peril to our freedom, but it costs us in goodwill towards men. To continue down this course is insanity. What we need, in fact what America once had as an advantage over the rest of the world, is an economy of abundance. An economy of abundance is built on the idea of free enterprise, private property free from government seizure, allowing the individual to keep more wealth with the understanding that he or she is more likely to share it, either by spending it in the local economy or donating it to the causes closest to their heart.

Imagine if you could create a permanent stimulus in which 30% more dollars circulated through the U.S. economy. This is not a pie in the sky idea. It’s the economy of abundance that would be created by abolishing the IRS and switching to a FairTax, and it’s the fastest, freest way to permanently jump start the economy to deliver an increase in real wages to workers. 

President Obama and the Democrats printed and borrowed a trillion dollars to pump into the economy in hopes of boosting GDP and easing us out of a recession. The idea of this so-called stimulus was more money circulating through more hands and businesses would create jobs. The reason it failed so miserably isn’t because a trillion dollars was pumped into circulation, but because it was pumped into pet projects and left wing causes by politicians completely detached from anything greater than their own self interest.

What if that same trillion dollars wasn’t steered from the government downward to the select few with ties to the ruling class, but instead flowed upward from the people? By taxing individuals on what they consume voluntarily, rather than confiscating what they earn, the FairTax pumps more money through the economy. Instead of the current tax system sucking a trillion and a half dollars out of circulation and into the hands of government bureaucrats, removing money from the pockets of wage-earners and businesses before it can be spent, we let all that currency enter the market and exchange hands freely before we tax it. In doing so, we have created a permanent stimulus without the government having to print dollars or borrow money from China.

The FairTax usually gets a bad rap because it’s easy to mischaracterize and it takes more than a sound bite to explain. Thus, you get wild claims from career politicians addicted to exploiting the current tax scheme to curry favor with voting blocs and lobbyists that a FairTax will add 23% to the cost of everything you buy. This is completely bogus. Besides ignoring the advantages of workers getting to keep every dime they earn, this claim ignores the embedded taxes currently configured into the price of goods and services, which amount to approximately 22% of the cost. By abolishing the IRS and eliminating corporate taxes, you drive the cost of all products down. It's a win-win situation for everyone except the politicians.

We’ve only had an income tax in this country for the past 100 years, and it took a constitutional amendment to institute such an invasion of privacy and abuse of power. It was not part of the vision of our founding fathers, and for good reason. To argue its existence as necessary would suggest America couldn’t succeed and thrive for our first 140 years. But of course we did just fine, and states like Texas continue to prove that not having an income tax leads to a more accountable government, higher quality of living, job creation, freedom to innovate, unprecedented population growth, and a general abundance of wealth.

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