Despite the fact Treasury Secretary designate Timothy Geithner managed to mess up his taxes over several years to the tune of underpaying $34,000 – even though his employer gave him instructions on how to deal with the issue and reimbursed him for the taxes paid – it appears he’ll be confirmed nonetheless; that is if the overwhelming vote to bring him out of committee is any indication.
But this post isn’t intended to bring up that old news; after all, don’t we all mess up on our taxes to the tune of many months’ salary for those of us who don’t work in the elite financial world? On the contrary, I think it’s a perfect time to discuss a subject I’ve waxed eloquent on a number of times before.
Little noticed among the hundreds of bills introduced in the House of Representatives is yet another attempt to implement the FairTax. For the fourth Congress in a row, H.R. 25 is sponsored by Georgia Rep. John Linder and will likely again never see the light of day, buried in committee. (Maybe he needs a new bill number since 25 isn’t cutting it.) The only problem I see with it is H.R. 25 doesn’t repeal the Sixteenth Amendment. (However, there is an aptly-numbered resolution in this Congress which does call for repeal.)
This would be perfect for someone like Tim Geithner, who claimed to simply use TurboTax to do his returns. (Listen, I used that program last year and will do so again – there’s no way I was $34,000 off! My refund wasn’t even a tenth of that.)
Some may argue that a recession is a poor time to enact a tax which is based on consumption, but I heartily disagree.
Now is the perfect time for the FairTax because we’d have a worst-case scenario for revenue generation. As economic conditions improve – as they surely would if those of us who are working no longer have to deal with the IRS backup withholding out of our check, meaning more money in our pockets to spend – the government could start gaining the funds to pay for other important items like an enhanced military and backstopping entitlements (at least until they’re sunsetted; hey if I’m going to dream I’m dreaming big!)
The problem with the Obama Administration’s favored solution to our economic woes is that they determine where the money goes and how it’s spent. (Not to mention they’re essentially creating the cash from whole cloth and adding trillions to our budget deficit. Didn’t the Democrats complain about the GOP presidents’ huge deficits? Why yes they did, just read a few of Final Frontier’s comments and somewhere she’ll make mention of that very point!)
Instead of bailing out every bank and automaker who has run into trouble because they couldn’t say no, why not truly stimulate the economy by allowing the public (read: the market) to determine where they spend their own money? I know, they may do something stupid like put it in the bank or invest the money in tax-free municipal bonds instead of buying the latest made-in-China electronic gadgets, but to each his or her own, right?
The more I think about the situation with taxation in our state and our nation, the more I think a consumption tax makes sense. I realize Maryland went to increase their sales tax and didn’t draw the revenue they expected, but that was because of competition from adjoining states. If every state has to collect a particular percentage federal tax, it may level the playing field to some extent. (I’d still go to Delaware for big-ticket items but perhaps that threshold would increase.)
So while I’m probably beating my head against the wall expecting some sort of sane action out of this edition of Congress, hope does spring eternal and perhaps Linder’s idea may finally get some traction.