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As many who know me are aware, I’m a proponent of the Fair Tax, an income tax reform idea introduced by John Linder (R-GA) that is being pushed heavily by him and Neal Boortz. There are more and more members of Congress coming on board with this idea as the days and weeks go by, but many members of the Democratic Party are starting to line up on the other side of the fence, wanting absolutely nothing to do with it. I will freely admit to being confused by this. After all, the Fair Tax removes the vast majority (and in many cases all) of the tax burden from the lower income brackets.

It hit me last week when thinking about it, however, what it was that is poking the Democrats into action. In the current income tax system, there are a number of different little things here and there in the code that provide for Income Redistribution. Under the Fair Tax, however, all of these would disappear and putting in items to put them back into the Government’s toybox would require some rather blatant legislation for taking money from one group of people and giving it to another.

One of the largest of these in the current tax code is the Earned Income Tax Credit. With the EIC (as I understand it, which may not be as good as an accountant, mind you), taxpayers are granted a credit on their taxes if they meet certain guidelines based on income, number of dependents, and the like. Logic would say that if the EIC amount exceeds your tax liability, then the remainder would simply stay with the government. This, however, is not the case. If the EIC amount puts you into a situation where there is some left over after you zero out your tax liability, then you receive the remainder of it a refund. This, in my opinion, is rather blatant income redistribution. Some other taxpayer provided the money that went to fund the EIC for that taxpayer. The taxpayer receiving the payout from the government didn’t work for it or earn it. Yet, due to its inclusion in the labyrinthine tax code of the United States, people fail to actually look at it in that manner.

If the Fair Tax is implemented, the EIC will go away. You won’t be filing your taxes every year, so there will be no “hidden” means of putting in income redistribution of this type. It would be much harder to set up a system where people pay a different Federal Sales Tax based on their income than it is to give money to them when they file their tax return.

One of the major ways that politicians stay in office is by giving largess to their constituents. This could be anything from funneling money to a special project in the district from the governmental coffers to situations like the EIC. Given that the Democratic Party bills itself as the party of the lower and middle classes in the country, the EIC (and programs like it) have been part of their arsenal for remaining in office and attempting to make gains in the political arena. If those things were removed, it would be a painful blow to their political goals. Therefore it really doesn’t surprise me all that now that Democrats are lining up against the Fair Tax. Given the realities of the Fair Tax, it disappoints me, but it doesn’t surprise me.

stranger Uncategorized

With little fanfare, and even less media reporting, the Senate voted down a bill that would increase the minimum wage from $5.15 an hour to $6.25 an hour. The vote, which was 51-49 and needed 60 votes to pass because of a Senate agreement, was split mostly down party lines. The few Republicans who did vote for the bill were going to be up for re-election in 2006, in what are turning out to be close races and probably did not want to explain this vote to their constituents.

The last time the minimum wage was increased it was 1997, at that time the average salary of a member of the US Senate was $133,600. In the past 8 years the Senate has increased its salary a number of times, their salary as of the last increase puts each Senator receiving on average $162,100 a year (that is $150,139 in 1997 adjusted dollars, an adjusted 11% increase). Comparatively the minimum wage in the past 8 years is now worth an equivalent of $4.77 in adjusted 1997 dollars, an 8% decrease. Ironically if the senate had passed the $1.10 increase to minimum wage, the resulting increase in 1997 adjusted dollars would be the same percentage increase as the one that the Senators have enjoyed over the past eight years.

This increase was mostly aimed at helping workers in small cities and rural communities who now are finding it harder to make ends meet than they were in 1997, and are having to take multiple jobs to be able to put food on the table and gas in their car. Over the past the four years the Department of Labor has recorded yearly increases in the number of workers filing tax returns for multiple jobs in rural states. In fiscal year 2003 the percentage of workers in multiple jobs in states like Kansas, Nebraska, and Utah was exceeding 10%. A poll of workers working multiple jobs in these states found that nearly three quarters of these workers were working multiple jobs to pay off debt or make ends meet.

In more urbanized states the number of workers in multiple jobs is about half what it is in rural states. The reason for this disparity is that with the larger pool of potential jobs in urban areas there is more competition for workers. This inflates the amount that employers are willing to pay, but it is also one of the contributing factors to the increased prices for basic goods and services in metropolitan areas. But most workers in metropolitan areas are able to afford to live on a single job. Rural workers do not have the advantage of a worker’s market, and therefore get paid the minimum wage… inflation though waits for no Senate bill, and has been rapidly eroding the buying power of single job workers in rural communities.

While it is admirable that the Senate has given up their scheduled pay increase for this year, it is unconscionable for them to ignore the fact that inflation over the past eight years has made the minimum wage unlivable. It is also hard to imagine the reason why the Republicans would snub workers from states that have been so kind to them at the polls over the past ten years. Adding to this the rocket ship of oil and gas prices that is driving inflation rates this year (and likely many years to come) and the reasoning for denying an increase to minimum wage becomes completely counterintuitive. The longer we wait to adjust minimum wage for cost of living and inflation increases, the more people we are going to have who are going to slip into poverty because they need to work more than one job just to live. And workers who have to take more than one job are not able to do things like take job training classes or finish a degree to improve themselves so that they no longer have to settle for the lowest common denominator of pay rates.

code_archaeologist Uncategorized

The Iraqi Constitution has been drafted, voted on, and approved by the citizens of Iraq. And it was suggested last year, that after such a step forward we would be able to withdrawal our troops from Iraq… but this is not likely to happen. It seems every time we reach a milestone in Iraq that would allow us to leave, we find another milestone on the horizon that still needs to be passed.

Even though Iraq now has the facade of a functioning government and a Constitution it is excluding a section of its population from having effective representation in that government. What I am speaking of is our allowance of the provisional Iraqi government to create an anti-Baathification committee which checks each Sunni who wishes to either work for the government or be a government recognized leader of the Sunni people. Any person who was once a member of the Baath party is excluded from public service jobs and political office. Considering that the Baath party was mostly made up of Sunnis… and to get a job in the government as a Sunni, you had to be member of the party, they are in effect excluding all of the most experienced leaders of the Sunni people from the political process. Any person who already holds legitimacy to the Sunni people is unable to serve the interests of those people.

It is because of this lack of effective representation that there are rules in the Constitution that make Kurdish and Shiite controlled provinces able to choose to ignore laws created by the Federal governing body… a privilege not enjoyed by the Sunni controlled provinces. So in effect Kurdish and Shiite leaders can create draconian and destructive laws and then ignore them. These are not the makings of a fair and just Constitution that will support a democratic republic in that region. It is a recipe for apartheid and oppression that can only lead to civil war and incite further violence in the Middle East.

Consequently the Sunnis rightly feel like they are being punished for the actions of Saddam Hussein. The Sunnis are being transformed from a position of supremacy into a disaffected minority in Iraq, and history has shown that such disaffected minorities will strike out violently against their perceived oppressors. This is a situation that has been repeated over and over and over again, and we are letting it happen. Actually we are encouraging it to happen, I am not sure if this is by design or by incompetence… but we are allowing an environment to be created in Iraq that guarantees there will not be any peace in that country for at least a decade.

Add to this the fact that we have yet to succeed to create a coherent police or defense force among the Iraqis that can fight without our assistance, and we see that the next milestone will keep us in Iraq for at least another year maybe more. Why has this happened? Why have we allowed this to happen?

We went into Iraq without a plan on how to win the peace. Our only plan was to invade, and topple Saddam… it is obvious we didn’t plan for anything past that, expecting the Iraqi people to miraculously form a spontaneous democratic republic that praised and loved us. Where do we go from here?

My answer is that we don’t do anything else in Iraq, we have already done enough damage and our very presence is a rallying point for terrorists and insurgents. We need to approach the UN and the Arab League with our hat in our hand and admit the mistake that we made. We then need to ask them very politely for their assistance in bringing peace to Iraq and helping it finish its transformation into a republic that treats all its citizens equitably. But this is not going to happen any time in the near future; we are still too filled with the hubris of being the only remaining super power to admit any of our mistakes. So we shall remain in Iraq, pouring a billion a month and our young men and women into a black hole, with no discernible bottom.

code_archaeologist Uncategorized