Sales Taxes vs Tariffs

With the President pushing tariffs to level the international playing field for American producers, he and his administration should seriously consider a National Sales Tax (NST) as an alternative or at least in concert with targeted tariffs. By getting rid of the Income Tax (IT) and replacing it with a NST, the burden of maintaining the U.S. market is shared by all who participate in it.

Let's first look at the current situation with the cost of the U.S. Government being primarily carried by U.S. citizens under the IT. Even with the new 'tax reform', a dollar earned by a typical citizen is first reduced by 25 cents with federal IT and a nickel for payroll tax. Then in most states, at least another nickel is appropriated by state IT, and a further nickel in state sales tax on the products bought with the 65 cents remaining. Thus the American consumer loses a third of his buying power regardless of where the products originate.

The labor cost for the U.S. producer is the full dollar cited above plus the employer's share of the payroll tax, plus of course any additional overhead for health benefits, etc. If the employee then buys his company's product, he is in effect paying, say, $1.10 (just for the labor costs) for which he netted about 60 cents. His own labor is costing him twice what he received for it.

The additional cost of a tariff on the imports used in making a given product could vary widely, but even for an equivalent product (a TV or an auto) subject to a tariff, the consumer ultimately pays the extra amount with the reduced buying power of his taxed income.

If the income taxes (and payroll taxes) are replaced by a NST of 30% (the rate proposed by the Fair Tax), the consumer will pay $1.30 for the labor share of a domestic product for which he received $1.00, or about 30% more. He will still bear the extra amount of a tariff, but with a net income of the full dollar rather than 60 cents. The tariff will still penalize the foreign producer relative to the domestic producer, but the impact to the U.S. consumer is a third less.

Even without a tariff, a NST taxes the foreign product at the same rate as the domestic product. This not only levels the tax burden between the foreign and domestic producers, but considerably enhances the competitive position of the domestic producer in the foreign markets since there is no taxation on labor for exported products. And, since the product rather than the labor involved in producing it is taxed in the U.S. market, automation and foreign labor (or even undocumented labor) hold no advantage for the domestic producer.

As we see, in many respects the NST achieves the same result as an import tariff, with considerable benefit to domestic production and consumption as well. Since all imports are equally affected, a retaliation in the form of a 'trade war' is unlikely. If, alternately, a penalty is intended for a given country's products, selective tariffs can still be imposed for political reasons.

The use of a National Sales Tax instead of the fatally flawed Income Tax is a no-brainer, but implementation in the short run begs caution based on system engineering considerations. Step functions - a sudden major change in inputs or characteristics in a dynamic system - can produce wild deviations before ultimately settling out to the long term behavior. Thus, although the NST in the long run is to be preferred, ramping it up as the IT is ramped down (say over 5 years) may be necessary. However, in no way must the IT be allowed to exist past the phase-out period. Ultimately the 16th Amendment must be repealed, and ITs forever banished in the U.S.

An Ethical and/or Moral Conundrum

I apparently either read or was aware of John B. Calhoun's mice and rat experiments in the 1960's and '70's and have used the phrase "too many mice (or rats) in a cage" frequently as a comment on the ever increasing problems due to population growth. I had assumed that the problems of Calhoun's mice, their extreme population growth followed by their ultimate total demise, were due to overcrowding, as apparently most people had. There is little doubt that overcrowding played a part in their abrupt change in behavior, but ultimately other factors may have contributed to the final result. A recent VDARE.com post by Lance Welton was an eye-opening re-appraisal of the reasons for the disasters, and their application to human populations.

As was discussed in the post, the affluence of the West made possible by the Industrial Revolution and the attendant decrease in mortality resulting from better nutrition, better medical care and an overall rise in the standard of living has virtually erased natural selection from the first world human population. Now most people think of natural selection as improving a species, or allowing a species to cope with changes in their environment, but there is also a very necessary weeding out of negative attributes. In addition to the occasional mutant resulting from environmental accidents, sexual reproduction intentionally tries many variations of genetic characteristics. In the natural state, defective combinations usually fail to reproduce. But in the modern human Welfare societies, we go to extreme efforts to salvage every fertilized human egg. Thus defectives have a high likelihood of not only surviving, but reproducing. As Welton noted, these defective genes are then able to spread throughout the gene pool, thus debasing it. This does not bode well for Western societies.

There have always been some doubts as to whether 'helping' people is always desirable. The old truth that giving a man a fish feeds him for a day but teaching him how to fish feeds him for a lifetime emphasizes the relative importance of education over welfare. In addition, however, giving him a fish may feed him for the day, but it also encourages him to resort to looking for another handout the next day rather than trying to feed himself. This shows that charity can produce cultural distortions that, if allowed to fester and reproduce, are as detrimental to societal health as genetic defects. One must conclude that charity or welfare for all but the most disabled is not a good idea, and even sparing those that cannot survive without help still poses a question of whether they should be allowed to reproduce.

To paraphrase an old wheeze, it's not nice to try to frustrate Mother Nature. Our culture frowns on the subject of eugenics, where the term is referring to attempts to intentionally improve the gene pool (although animal breeders have been using it for ages). But in effect we have, for the last couple of centuries, been practicing what might be called inverse eugenics, where, by frustrating natural selection, we are unintentionally debasing the human gene pool. What seems to be a noble principle of taking care of the less fortunate members of our society has a dark side. This creates what seems to be a moral or ethical dilemma. We must take steps to counter the reproduction of defective genes, or humans will suffer the same fate as Calhoun's mice, at least in the Western welfare states,. As Welton observes, this seems to be further along than we would like to think.

The moral dilemma is that any attempts to purge defective genes flies in the face of religious and cultural taboos. Even current research trying to edit genes before they can be passed to future generations is under attack, and sterilization or worse is virtually unthinkable, especially if it can be labeled genocide. Yet ignoring the problem may well not be an option. Although termination of carriers of defective genes would be a repugnant and unnecessary extreme, rethinking Western Civilization's religious and cultural proscriptions against abortion, testing of fetuses for genetic abnormalities, and sterilizing obvious mutants might be necessary.

There are some things that can be done to stop making the situation worse. A first mandatory step in the U.S. would be to stop importing defective genes from third world populations. Whether any immigration is necessary or desirable, a minimum response to the problem must be to set the bar for admission very high for genetic traits such as intelligence and industriousness, and against negatives such as criminality and genetic diseases. In their native environments a significant number of third worlders would perish from natural selection, but not only do we keep them alive if they get here, but pay them to breed. This is insane.

The second step of a sane response to the problem is to stop paying welfarites to breed. Although not every welfarite has defective genes that cause diseases, the likelihood that they have undesirable genetic characteristics is sufficiently high that encouraging the propagation of their genes is a poor policy. Trying to test for bad vs. good genes in the welfare community smacks of eugenics, and therefore it would be best to just not provide public reward or even support for welfare breeding.

Forced sterilization is a solution of last resort, although it might be worth seriously considering in the case of those convicted of violent criminal behavior. Short of refinement and acceptance of genetic engineering to eliminate less blatant cases of defective genes, voluntary contraception or sterilization would be commendable, but as a compassionate society one hopes that such drastic measures could ultimately be unnecessary with technology. Currently abortion or sterilization of Downs Syndrome children is tolerated or even encouraged, but ultimately gene editing or other high tech solutions may be able to identify and remove such defective genes from the gene pool.

The problem of affluence frustrating natural selection is sufficiently subtle that its magnitude has only recently come to light. As was pointed out in Welton's post, we are already seeing increases in genetic diseases such as autism, and a decrease in intelligence. Western civilization is already mired in a morass of problems, although many may be related to this one. In any case, as Welton said, we're headed for a disaster, and time to reflect may not be on our side. Some form of eugenics to offset the inverse eugenics of Western civilization's incredible survival successes is necessary.

Tax Reform - Yet Again

Once again, for the umpty-umpth time, Congress is going to come up with 'Tax Reform'. What we are likely to get again is (maybe) a slightly simplified version of the current tax law monstrosity, which will last until the next batch of politicians engage in the next round of vote-buying. The likelihood of meaningful reform, which would require eliminating the Income Tax, is remote.

The Income Tax, a treachery so heinous that it required amending the Constitution (the 16th Amendment) to be legal, should be temporarily eliminated. I say temporarily since the only way to effect even a semi-permanent elimination is a Constitutional Amendment, and as was shown by the 16th Amendment, even that can be undone. In any case, a law temporarily eliminating the Income Tax could be the basis of true Tax Reform. One could further hope that the wisdom of such an improvement would be sufficiently apparent to promptly re-amend the Constitution to eliminate the possibility of it reappearing with the next Congress.

To fully understand the virtues of eliminating income taxes it is helpful to consider the problem in somewhat different terminology. An income tax is primarily a tax on labor, with a secondary emphasis on taxing investment. Since taxing something is, in a sense, equivalent to penalizing it, income taxes penalize labor and investment, neither of which is a desirable policy.

Consumption, on the other hand, could easily withstand a modest tax burden. In fact, an alternative view of the consumption tax, or sales tax, is in part a tax on products. It seems fairly obvious that taxing products rather than labor is a more rational approach in general. But in terms of current American concerns it also has other desirable characteristics.

Taxing the product puts the American producer on the same playing field as foreign producers. Imported goods would suffer the same tax burden in the American market as domestically produced goods. In addition, by not taxing labor with the income tax, American goods would be more competitive in global markets. All the taxes on the American worker that are paid by him directly and by his employer directly and/or indirectly must be added to the price in and out of the country. No wonder we can't compete in international markets.

Another benefit relevant to current American concerns is how to level the playing field between the American worker and automation. By taxing products instead of labor, there is less of an advantage of replacing workers with machines unless efficiency is considerably enhanced, and one does not have to consider 'taxing robots' as one wag has suggested. In fact, the American worker then has an advantage over the foreign worker due to his higher productivity, and thus can command a higher wage without restricting trade imports.

Consumption taxes, or sales taxes, have of course been a favorite of State Governments for a century or more. These, however, have several drawbacks in their current form. Since American States are a common market, the main drawback is that different sales taxes in different localities cause considerable distortion to interstate and even intrastate commerce. There is a temptation to consumers to deal with retail outlets that are in low or zero taxed states, or by mail with out of state companies. States with higher taxes try to avoid this by supposedly requiring their citizens to forward a 'use' tax to the State tax authority, but in practice this is rarely done. A similar problem is found in State income taxes, where people with high incomes tend to move to low income tax states. Since the higher taxed states also tend to embrace more socialistic and welfare oriented policies, they will ultimately end up with all welfarites and no working schmucks, and therefore severe financial problems. Of course, the extreme example of this is the current influx of low-skilled indigents who may or may not seek menial labor jobs, but are also drawn by the lure of multitudinous welfare services and giveaways.

Another drawback with sales taxes as currently implemented by States is the collection method. Adding the sales tax at the point of sale is an annoyance both to the seller and the buyer. With electronic payment extracting small percentages on small sales is easily handled by computers, but sales taxes on cash sales are why we still have pennies in our currency. Due to inflation, the value of a penny is near zip, but to the state a penny extra from each sale is more loot to waste.

So implementation of a National Sales Tax should be carefully designed. Since the tax on a given product would be uniform across all States, the tax on retail products could be computed and remitted by the manufacturer, leaving the States to implement their point of sale taxes as is currently done. Federal Income Tax would be eliminated, but the States again would be free to keep or change their income taxes to compete for residents. Taxing new products is reasonably straightforward, but it is not obvious how to define 'services' to tax without in effect taxing individual income.

Notwithstanding the drawbacks and implementation challenges of a national consumption tax, the benefits far outweigh the negatives. It must be appreciated that most of the difficulty is due, as is often the case, with having the bad solution (income tax) to have gotten such a deeply embedded existence in our country. Any thing short of purging that demon and its burdens that have hampered American economic health for a century will not result in meaningful 'Tax Reform'.

The 'Fair Tax Act' is legislation which has been proposed to every Congress since 1999. It temporarily eliminates income taxes, estates taxes and payroll taxes and creates a National Sales Tax on all retail sales of new products and services. Since it includes provisions for refinement and includes a 'sunset' provision after a trial period if found lacking, it should be considered for a serious candidate for this iteration's 'Tax Reform'.

My book, Musings and Rants - 1985-2016 addresses the tax problem with several essays.

(c) Copyright 2017 Marcus Everett

marcus.everett@citlink.net

Population and Immigration

Most animals instinctively understand that, to the extent that one's territory is necessary to survival and reproduction, that territory must be defended against encroachment by others that would threaten one's survival. All resources are finite, and must not be over-consumed. This is especially relevant to the human immigration problem. Whereas immigration may be easily accommodated if population density is low, and may even be beneficial, once a certain population density is achieved, additional immigration becomes detrimental.

Currently the United States population density is a little under 100 persons per square mile of land, including marshes, swamps, deserts, mountain ridges and other unusable terrain. Although this translates to about 6-7 acres per U. S. resident, probably a quarter or so is unusable, and the remainder must not only provide living space but also supply food and other necessities and absorb the wastes. So far this density has been tolerable, although consumption of water supplies and other resources may be pushing critical limits.

The world population density is somewhere around 140 per square mile, and again this includes all mountains, deserts, and other unusable areas except Antarctica, which we cede to the penguins. Thus we in the U. S. are a little better off than most, but even increasing our density to the world average would not make a dent in conditions elsewhere. China and India, both large geographical areas, have densities in the order of 1000 per square mile, and this in spite of unusable areas in the Himalayas and the Gobi Desert. Again, we could double our population density by absorbing 150 million from each of these two countries, and not make a noticeable dent in the density of either. And since the human population is currently increasing at a rate of more than a quarter million per day, during the time that it might take to move 300 million people to the U. S. the population of the rest of the world could easily increase by more than the 300 million, and therefore nothing would be achieved except basically destroying the U. S.

As I discussed in my essay 'Population'(1), the growth rate of a bisexual species is primarily a function of the female reproduction success rate (the average number of successfully breeding females each female produces), and depends much less on the number of males. This presents an interesting conundrum with respect to war philosophies. In the past, with adequate land and resources, the objective of wars was to annex the opponent's land and resources, including their breeding stock (females). This bluntly translated into killing off or enslaving the males, but not killing the females. One could then spread one's own genes by breeding the conquered females. In this scenario, the invading army consisted solely of male combatants.

The problem facing Western Civilization in the 21st Century differs in several respects. In addition to a horde of invading male 'combatants', e.g., the illegals, refugees, etc., that are pouring into First World Western countries, part of the invading army consists of immigrating women, children and complete immigrating families. These members of the invading 'army' intend to win the war of conquest by out reproducing the native population, and incredibly the invaded countries are supporting their attempt to do so. Once the resident 'army' is sufficiently large, the male combatants will attempt to kill or enslave the native population.

The moral of all this is that, unlike in previous wars, women and children cannot be spared. If possible, they, along with the invading male battalions, must be removed as soon as and as completely as possible. Territorial borders must be defended from any and all encroachment. Any residue of the resident 'army' must be required to obey all laws and must NOT be supported to breed (welfare) here or abroad. If this is not successfully implemented immediately, Western Civilization is over, we will lose the 'war', and will be the subjects/slaves of the occupying invaders. The only alternative will be a no-holds-barred ethnic/race/religious conflagration where all men, women and children will be fair game. Humanity has achieved a 'critical mass', and avoiding a runaway detonation may not even be possible. As an aside, Google 'too many mice in a cage' and read the report entitled 'Behavioral Sink' by John B. Calhoun on the experiments he ran from 1947 to 1973. It's a little scary.

(1) Musings and Rants, p. 173, Marcus Everett, CKCPC3 publishing, March 2016, RR1 Box 510. Nowata, Oklahoma 74048

(c) Copyright 2016 by Marcus Everett, Wallback, WV

marcus.everett@citlink.net

The Left, Socialism, and Open Borders Immigration

It's not where you are that determines your prosperity, it's who you are.

For some reason unfathomable to a rational person the Political Left always seems to prefer being the last to sink in a bog to grazing with everyone else in a lush meadow. Since Marx promulgated his egalitarian anti-capitalist drivel, the Left has tried over and over to implement his flawed political/economic model, always with the same disastrous results. Whether the example is the communist versions of the USSR, the People's Republic of China, Castro's Cuba, or the Social Welfare States of Europe and Latin America, the final outcome is always a stagnant economy with a starving population.

These people never give up. Their mendacious rhetoric is always able to convince the ignorant and stupid to implement their schemes, always with the same long term disaster. In the worst cases cited above, the mob was stampeded into a 'revolution' to put the Political Left in power. In the more insidious implementations in the modern Western Democracies, the Left has utilized the ignorant and stupid mob to vote them into power. Once their foot is in the door, promises of something for nothing keeps the mob in their pocket no matter how obvious it becomes that the promises are blatant lies.

To guarantee that the gullible mob continues to dominate the electorate, the Left has refined two schemes to drastically increase their numbers. The first is to not only support the mob by wealth transfer, but to actually pay them to breed. The Welfare States in Europe and North America have become baby factories for the Left's constituency. In this scheme, the Left is seeking to augment their supporters by in effect an inverse eugenics mechanism.

Not content with destroying from within the prosperous civilization created by the Western peoples (primarily the currently despised 'white males' and the Judeo-Christian religion), the Left has a second game plan to guarantee the total collapse of Western Civilization. They have opened the doors of the Western Democracies to the Third World, and convinced the unwashed masses that they can all be prosperous by merely moving. But, as the first line of this essay implies, those that invade the First World will not become prosperous First Worlders, but the countries that they invade will become Third World hellholes like the ones they left behind. This has already become painfully apparent with the Muslim invasion of Europe. They have added virtually nothing to the economies of the invaded countries, and the Islamic 'no go' slums that they have created are cancers that will quickly kill their hosts. The U.S. Southwest is on the verge of economic collapse due to the Latin American invasion there. And in both the U.S. and Europe the threat of open borders enabling infiltration of Islamic Jihad is a serious security problem.

The thing that is difficult to understand is why the Left thinks that any of these schemes are in their long term interest. Not only does history demonstrate a high likelihood that their dominance will not last their own expected lifetimes, but their descendants are guaranteed a much less desirable world to live in. These people seem to exhibit a shortsightedness that can only be viewed to be as ignorant and stupid as the mob they exploit.