Masters and Serfs

[NOTE - the numbers and amounts in this article are not official numbers and are used strictly for sake of argument.]

Okay ... an opinion piece in the local paper happened to catch my eye today and I just can't let slide. The letter was in responce to a writter who had asked (as a responce to another writer) that people take the time to learn about the facts of the Fair Tax bill before trying to write articles or letters against it. The writer of the letter in today's paper said:

"...its (the Fair Tax) core is a consummate cut of any obligatory federal taxes. That leaves the wealthiest in our country with no federal taxes to compensate the U.S. for the gifts showered upon them or to keep the wealth gap at a reasonable level." (bolding added for emphasis)

Excuse me? GIFTS? Most of the 'wealthiest' people in the U.S. have worked hard for their income ... it is not 'given' to them and thus it is not a 'gift' .... I suppose you might consider it a 'gift' if you believe that you are giving Walmart a 'gift' every time that you buy something there ....

The writter is technically correct in saying that it does remove 'obligatory' federal taxes .... the Fair Tax, however, does NOT leave anyone with "No federal taxes" it gives everyone the same tax ... the sales tax on the items that they buy.

Now ... lets look at something for a moment ... lets say I make 100,000 a year (Upper middle class by some definitions) ... and lets say that of that 100,000 after bills I have 50,000 (50%) that is disposable income ... and I save 20% of that ... leaving 40,000 that I spend on items ranging from food to TVs. Taxed at 23% (the estimated federal sales tax under the Fair Tax) I'll pay something like 9200 in taxes. (Less actually given the 'pre-bate' to compensate for the tax on normal living expenses ... but let's keep it simple here and ignore that for now.)

Let's take those percents and apply them to higher income levels ... 250,000 (the income level that the majority of american's consider 'wealty') .. that's 125,000 after bills ... 100,000 spent and 23,000 in taxes ... 2.5 times the income = 2.5 times the tax ... now ... lets consider the fact that the average 'wealthy' family generally has more disposable income (meaning a smaller % of their income is tied up in their monthly bills) meaning that the 250,000 household likely has more than 100,000 that is spent on items ... and more of it is likely to be on luxeries.

If we throw the 'pre-bate' into the equation ... lets say everyone gets 3000 a year (250/month) from the government to compensate for taxes on normal 'living expenses' (we're assuming here that both families have the same make up and thereby get the same amount as a pre-bate ... we'll say 2 adults no children. That brings the 100,000 a year family down to 6200 in taxes and the 250,000 family to 20,000 in tax paid ... and now the 250,000 family is making 2.5 times the income of the other family but paying just shy of 3.25 times the taxes....

[EDIT - I'm dropping a clarification here as upon re-reading this I wasn't quite clear on the assumption with the pre-bate. Under the Fair Tax each household is given a fixed amount monthly based on the number of people in the household. So in my above example where I said 'everyone gets 3000 a year' what I meant was that for the example lets say both households recieved 3000 a year. Since we're assuming that these are 2 adult no child households then that would be 1500 a year per adult ... and again, I do not know what the estimated pre-bate is actually going to be, this number is used solely as an example.]

Now let's take a 50,000 a year house (again 2 adults no children) ... thier disposable income is 25,000 (actually it's probably less) of which they save 5,000 leaving 20,000 spent ... so 4600 in tax ... BUT, when you account for the pre-bate they'll only pay 1600 in tax ... so they have half the income of the 100,000 house, but pay a quarter of the taxes ....

Oh, but rich people will just save more of their money and thus get even more money from the interest ... that's a guess and there is no research to back that up ... but lets play that game ... the rich save more (read 'invest') putting more money into the growth of business and the economy ... leading to more jobs, and better pay. But lets face it ... do you REALLY think that the 'rich' are just going to stop spending? That they'll stop buying their expensive sports or luxury cars (which will be taxed) or houses, or entertainment centers, movies, music, concerts, sporting events ... yeah ... they're just going to stop doing any of that so that they can pay less in taxes ... Riiiiiiight.

The fact of the matter is ... that the 'poor' and 'middle-class' WILL be more likely to save or invest more than they currently do because they will have more of the income that they earn to do so with.

Another writter did bring up the point that many retirees that have already paid a lot of tax on their IRAs and other after tax retirement money will then get taxed on that money when they spend it in their retirement (where they are not taxed on the 'income' of recieving it in retirement currently) ... however, it's no different than the fact that I'll get taxed on spending the money that I've already saved over the years and it's no different than the argument against private social security accounts ... I don't like it because it might hurt me a little bit ... never mind that it might greatly help my kids or grandkids ... who cares about them having it better it's all about ME ME ME MEMEMEMEMEME! Don't solve the problems that the country has, let my kids deal with it later!

Generally this kind of thinking is both shallow and selfish and it is this kind of short sighted foolishness that allows and even encourages politicians to continue to do nothing on major issues. If we can't get over such pettiness then this country is going straight to the toilet because as the tax code (along with governmental regulations) becomes more and more of a burden on the corporations in this country this economy is going to wither and die ......

Boycott Exxon

The cry goes up around the country in break rooms and email in boxes everywhere ... boycott Exxon and they'll be forced to lower their prices and that will make the other stations lower their prices to stay competitive. Sounds great, let's everybody jump on the bandwagon and start buying our gas someplace else. I mean they'll have to lower their gas prices right?

WRONG.

First off ... you would have to get a large % of gas purchasers who currently use Exxon to stop using them for a couple months for them to even notice that's not a likely situation to start with, but let's say you manage to get over 50% of their regular customers to switch to other brands ... that will lower prices, right?

Wrong again. But why not you ask ... simple economics. If you're buying gas somewhere else you're increasing demand for their product ... so Exxon's demand falls by 50% demand across the board is unchanged and other stations see an increase in market share ... they have higher demand and therefore no motivation to lower prices ... in fact if the demand increased substantially they're more likely to INCREASE their price, not lower it ... as a result Exxon has no strong motivation to lower the price and even if they do lower it slightly to try to pick up a bit in sales, unless people come back (driving their demand up and thus making it more likely that they'll just bring their price back in line with other retailers, not the other way around.) there's no motivation for the other retailers to match the drop.

The other thing is ... the only people you're going to hurt at all with this is the local retailer ... not Exxon. Exxon will just sell their gas unbranded to non-affiliated stores, just as they do currently. The Exxon retailers ... who have already PAID for the gas in the tanks (and have to be able to afford to fill the tanks again) are the only ones that are going to potentially take a loss in the situation.

If you want to lower gas prices ... boycotting any SINGLE oil company won't work ... you will have to lower consumption (and thus demand) DRASTICALLY across the board to all companies. And when you're talking about lowering consumption you're going to have to get the big fleets to do it, not just Joe Average American. You're also going to have to get people to use less heating oil and/or any other oil product that is refined from crude oil ... and to cause any drastic change in the cost of gas you're really going to need to do this all on a global scale.

If you want to do it faster ... get Congress and Local and State governments to repeal the various taxes rolled into the costs. Exxon, for example, paid more last year in taxes than it made in profits .... yes that'd right, the government made more off of Exxon's gas than Exxon did. (I've seen the exact numbers for that, but I can't find them at the moment ... if I do find them I'll add them as an edit to the article later.)

Add to that the cost of compliance with various governmental regulations (all of which gets passed on to the consumer) and all of the various different blends required by different states meaning that they have to split production and try to match their demand as closely as possible running 10 or so different batches ... increasing their production costs through waste if nothing else.

Which brings me to the California nutcases that are trying to further increase their fuel and automotive standards even further beyond the current federal regulations (increasing production costs further) ... personally I think that fuel and automotive manufacturers should give California the one finger salute and say 'if you want to require that fine ... we just won't sell in California' ... see how Cali likes not having gas for their cars ... or any new cars for that matter.....

Anyway ... I've got work and writting to get back to ... until my next ramble ... be alert! The world needs more lerts. (nope, not original ... but hey that's life. :p)

April FOOLS!

The post title comes from the writing 'event' in April is officially titled 'April Fools' not because this post is an April Fools day joke or hoax.....

*BANG* goes the gun and off the wife and I go into another writing adventure of epic proportions.... okay maybe not but we are off and writing again. This will be my first attempt at a project in this new 'novel' software and we'll see how things go with that ... On the one hand I'm hoping that it will help keep me organized and on task by tracking my word goals and keeping my plans organized and outlined. On the other I'm wondering if it's organization will hamper my writting and flow....

I'm actually going back and making a second attempt at last summers failed novel ... starting from scratch of course (well ... I have my notes and I am looking those over for character info as well as story flow ... but I had most of that in place before we started last summer's failed project). Wish us both luck as we dive into the insanity of writing once more....

I had some other things I was going to ramble on about ... but at the moment I can't think of them and I've got a word count goal to shoot for, so I'll either post again later or catch up later in the week....