Unintended Consequences of the Fair Tax

Tim Cavanaugh | April 13, 2006

With the disturbingly plausible headline, "I think the Cato Institute will be intrigued by this idea," the Comics Curmudgeon assesses the latest laff riot from the Browne family:

Gloss:

Anyway, the joke, such as it is, revolves around the sheer number of leaves on the The Horribles' trees, and the sky-high tax bills that will no doubt result. This strikes me as the sort of thing that the artist thought was a great idea until he suddenly found himself in the position of having to draw all the damn leaves. So, he loses points on foresight, but kudos to him for following through to the bitter, hand-cramping end anyway.

More.

The terrible truth about Viking taxation.

Abraham casting out Hagar.

More than you want to know about tariffs on unassembled Haggar slacks.

Sammy Hagar contributes to Bush, Rohrabacher campaigns.

Comments

|4.13.06 @ 7:29PM|#

"Sammy Hagar contributes to Bush, Rohrabacher campaigns.."

Geez..what's next? Ted Nugent joining in on the next Million Mom March?

Taylor|4.13.06 @ 7:42PM|#

Some people are just visual learners.

|4.13.06 @ 7:59PM|#

Interesting article on the Viking Free State. I had not heard about it before.

Jeff P.|4.13.06 @ 8:18PM|#

As the leaf was made the standard of currency at the end of Restaurant at the End of the Universe, such tax reform would make little difference.

|4.13.06 @ 8:48PM|#

An interesting look at Icelandic Free State, but just as clearly biased as the piece it is refuting.

The tie from the tithe to the downfall is no more supported than the poverty due to geography leads to minimal government argument.

I wonder how well the Icelandic system would scale up to a community with 300 million individuals. Not well, I would predict. At certain levels of complexity, any system will find itself in need of another layer of regulation to reduce the information load (see the work of Jost on how systems offload complexity onto layers either up or down the scale of complexity-- a natural emergent property of all complex adaptive systems).

The downfall may have been the result of increased population as easily as the introduction of the tithe.

uncle sam|4.13.06 @ 10:58PM|#

A community of 300 million individuals would have to become many communities in order to have community.

The Wine Commonsewer|4.13.06 @ 10:59PM|#

Sammy likes Republicans because now he doesn't get ticketed if he can't drive 55.

Boy, how long ago was that? And was it really the last positive thing the Repubs did?

|4.14.06 @ 2:55AM|#

MainStreamMan

I too am biased towards free markets in any form and on any scale. I call it 'being right.'

Linguist

There was an Onion article that was something to the effect of 'College Apartment a Microcosm of Why Marxism Doesn't Work.' I am sure it was worded better, but... Communist governments only work if everyone agrees unequivocally not to hold private property. So, as a function of size, such governments are more likely to fail with higher numbers.

Since I am biased (right) I think there is a continuum of success based how close one is to the polar extremes of pure Capitalism and pure Communism/Totalitarianism/Anarchy (they are in the end the same). Thus, as the Icelanders slipped away from the Capitalist side, they self-destructed, just as we are doing now.

|4.14.06 @ 3:02AM|#

Off the marxism thing, but just so you know I have drawed plenty and those leaves do not nearly rise to the level of hand-cramping.

I remember, as a lad, reading something in an intro to a B.C. comics paperback collection about how the way to wow your reader is to draw every dern leaf on the tree.

Ron Hardin|4.14.06 @ 6:10AM|#

The trouble with the ``fair'' tax is that it instantly confiscates 25% of your savings.

You've already paid income tax on money you've saved. Now you get to pay it again when you spend it.

I imagine that won't get past retirees and near-retirees very easily.

In general, you can't move the time of taxation in the earn-save-spend cycle _later in the cycle without hitting people twice.

It's not the fair tax itself that's the problem, but that the change moves the point of taxation later in the cycle, wiping out savings everywhere.

|4.14.06 @ 8:27AM|#

Drawing cartoon leaves is easy.

|4.14.06 @ 10:54AM|#

To continue my sermon from the other thread about taxes, the choice of how to tax the trees, there are two common ways:

1. INCOME TAX WAY. You tax the "appreciation" of the trees, that is, the amount the trees increase in value over time. Often this capital gains type income tax is paid when the gain is realized. The other thing that would get taxed is the income of the man that Hagar hires to tend the trees.

2. PROPERTY TAX WAY (or Wealth Tax Way): The tax is based on the value of the trees. There are different ways to evaluate what the trees are worth. One (not particularly gr8) way would be to count the leaves and tax based on that. More realistically, property taxes are based on an overall evaluation of a real estate property called an assessment. Presumably one factor in the assessment is whether you have some nice, beutiful trees on your parcel, or alternatively whether the parcel has only leafless trees or none at all.

I argued on the other thread that the wealth tax system is better as more fairly distributing the tax burden. Can you see why I think it is better to tax the value of the trees, rather than the appreciation of the trees and the wages of the treetender?

|4.14.06 @ 12:02PM|#

I agree that the "fair tax" will clobber the elderly who already paid income taxes and various investment taxes. I had not thought of that. It is not the main reason why I am opposed to it though.

The big problem with the "fair" tax is that it won't stay "fair". Government changes the tax rules basically each year, and what we'll get is our current hodge podge of taxes and a consumption tax of some sort as well. This why I am adamantly opposed to Paul Krugman's deisre for a VAT instead of an income tax. He is probably right that it is better from an economic standpoint, but he ignores the fact that we will wind up the the income tax again in addition to the VAT, and then we will be taxed up to the eyeballs like the Europeans are.

On the other hand, perhaps he is not overlooking it....