The Third Rail

Dare to discuss charged topics!

Playing the race card

I’ve created a new category I’m calling “Off the Rails” to discuss topics that are so vile, so outrageous, and/or so ludicrous that it needs its own category.

There isn’t anything more despicable than someone who is so two-faced that they harm the very community that they profess to be fighting for. Perfect examples of this type person are Jesse Jackson and Al Sharpton.These two men hold themselves up as defenders of black people. They claim to fight for improvement of the situations of poor, black people. That’s what they say. Now, lets look at what they do.

Just today, the fiasco of the Duke lacrosse player “scandal” finally had its last death throes – the case was finally dropped. When it all began, what did Jackson and Sharpton do? They grabbed the headlines to decry the horrible situation, in front of any camera that they could find. They lamented how rich white men could do such horrible things to a poor black woman.

Now, lets remember – this is without any evidence – and this is supposed to be a country where you are innocent until proven guilty. But that didn’t seem to matter to Jackson and Sharpton. No, no. Jackson even went so far as to offer a scholarship to the “victim” – no matter the outcome of the trial! What message is that supposed to send?! “Guilt and innocence don’t matter”? “Black trumps white”?

Somehow, these two stooges – Jackson and Sharpton – always come out of the woodwork when anything involves a black person in any way. Truth has no involvement. Morality has no involvement. All that is needed are two things: (1) a black person, and (2) media attention.

Wouldn’t it be nice if sometime these two cretins would actually do something of true value to their race, as they claim to be spending their lives doing?! Instead they treat blacks as if they can’t take care of themselves…and of course, who should take care of them? Why of course – Jackson and Sharpton.

If everything is defined in terms of race, then voila: racism rears its ugly head again and again. These two men yell “exploitation” every chance they get. What do you know – they are right for a change…because they exploit blacks worse than anyone else around! If I were black, I would be ashamed to have these two “men” representing my race.

Some interesting reading that applies here:

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April 11, 2007 Posted by | Off the Rails | Leave a comment

The FairTax: Attacks and Facts

Much has been written about the FairTax. Some of it has even been true. The following table is an attempt to examine many of the attacks on the FairTax and provide facts to refute the negative claims.

Attack Fact
“You’re talking about putting a large number of people into unemployment from not being needed. Even if the IRS isn’t counted, there’s a huge industry around filing taxes today. Putting that many people out of a job instantly would be felt.”
Source: devil’s advocate on the flat(-ish) national sales tax
All changes in the economy and marketplace cause some people to (temporarily) lose. This is not a long-term problem in a strong economy such as we have today. If nothing else, the IRS employees can start guarding the border. But seriously, the buggy whip, 8-track tape, punched card machine, … manufacturers and related employees adapted fine. To be against the FairTax for this reason is to say that we have to get rid of the free market system.
Reference: “The Fair Tax would create jobs and make America a welcoming place to do business.” (Marietta Daily Journal)
“Whether they’d admit to it or not, most people get huge refunds (because they don’t get the ‘interest-free loan’ idea) around April 15th and consider it some kind of gift from the govt. Trying to explain that those $3k is actually their money just doesn’t stick. There are always signficant spikes in the sales of ‘big ticket’/’luxury items’ (big screen tv’s, for instance) around April/May due to this refund effect – another net economic negative to consider.”
Source: devil’s advocate on the flat(-ish) national sales tax
Wow. This one is really a stretch. So…since people don’t realize that all their money paid in is, well, their money, we are supposed to view letting them keep their entire paycheck free of federal withholding as a bad thing?! They may miss a refund of a portion of their money each year, but they will notice the big increase in take-home pay every paycheck! What about the market benefit from that on an ongoing basis?!
The FairTax will have a dramatic positive impact on the standard of living of the American people and lead to higher rates of economic growth.” (Leo Linbeck)
Reference: “…in 1993 the Cato Institute commissioned a study by economist Lawrence Kotlikoff of Boston University to examine the economic impact of replacing federal income taxes with a national sales tax… the Kotlikoff study finds that after ten years, a national sales tax would:

  1. More than double the national savings rate.
  2. Increase the capital stock by 8 percent above the level attained under the current tax system.
  3. Raise income and output by 6 percent more than would be achieved under the current tax system. That would increase national output by almost $400 billion per year.
  4. Lift the real wage rate by 3 percent.
  5. Reduce interest rates by 50 to 100 basis points.” (The Cato Institute Congressional Testimony)
“The FairTax is intended to be revenue neutral; that is, the federal leviathan and all of its programs will receive exactly the same amount of funding as under the current tax system. Federal spending will remain at the same obscene level that it is now.”
Source: The Fraudulent Tax
I agree that the US Government budget is out of control. I would love to reduce it significantly. However, passing the FairTax is hard enough. One of the rules I live by is “pick your battles”. When we get the FairTax passed and the amount of taxation we are enduring is much more transparent, then we can start dismantling bloated, useless bureaucracies (starting with the Department of Education). However, those that oppose the FairTax because it doesn’t greatly reduce government intrusion in our lives are dismissing an opportunity for great improvement in our current situation because it doesn’t go far enough. All I can say is “one step at a time” – lets take this important step and then I will join you to take more steps.
“Boortz’s rate of 23 percent (which is actually 30 percent)…”
Source: The Fraudulent TaxAlthough Boortz explains that he is using an exclusive rate rather than an inclusive rate to figure the percentage, his “mathematical equivalent of a game of semantics” still results in a FairTax rate of 30 percent.
Source: There is no such thing as a fair taxMany other places…
This one has been around a long time, but people still hang onto statistical manipulations to try to make their point (and confuse people). Those that argue that the figure is 30% are really being disingenuous. The way our tax is reported goes something like this: if your taxable income is $100,000 and your tax rate is 25%, you owe $25,000 in taxes, leaving you with $75,000. That’s how the FairTax is calculated as being approximately 23% – the same way our taxes work and are understood by everyone. The opponents that claim it is over 30% use the $75,000 after tax number to figure out the tax. To be fair, this is how sales taxes work…but the FairTax proposal is an income tax. That’s why the FairTax defines it as a 23% tax – so that we don’t mix apples and oranges (sales tax and income tax).
Reference: Compare: Income Tax vs Sales Tax
Reference: The FairTax Book, pp. 151-3
Reference: FairTax not what it appears
The FairTax is progressive. Boortz correctly identifies a progressive income tax with Karl Marx. Yet, because of the prebate, the FairTax sets up a progressive tax system like we have now. Millions of Americans will pay no taxes at all.
Source: There is no such thing as a fair tax
Well, this is correct. But it is not appropriate to expect someone living below the poverty level ($14,386 for a family of four) to pay tax on basic needs, such as food, electricity, and shelter. Sorry, but it just seems mean-spirited to want the poorest among us to pay the same as everyone else…and is not necessary to keep the FairTax to the 23% rate.
The FairTax does not abolish the IRS. Changing the name and some of the functions of the IRS does not mean that it will go away. The FairTax simply exchanges one federal agency for another. If there were no IRS or other enforcement bureau to enforce the collection of a national sales tax, then why would anyone bother paying or collecting the tax?
The Fraudulent Tax
There is a big difference between collecting taxes from a few tens of thousands of businesses and hundreds of millions of individuals. How many IBMs or Targets or even a local restaurant are likely to try to stiff the government out of the sales tax owed? So, yes, the objection is correct – there will have to be a group to audit and enforce a sales tax…uh, just as there is today! And at way lower levels than required for the income tax. The IRS as we know it will go away with the FairTax.
Enforcement Mechanisms of the FairTax
…in order for pre-tax prices to fall so sharply, companies would also have to cut wages they pay.
Source: Money Magazine uncovers flaw in FairTax Book
“In an open letter to the President, the Congress, and the American people, seventy-five economists, including Nobel Laureate Vernon L. Smith, stated that the FairTax would boost the United States economy…Laurence Kotlikoff of Boston University finds that the shift to the FairTax would raise marginal labor productivity and real wages over the course of the century by 18.9% and long-run output by 10.6%.”
Reference: Predicted effects of the FairTax
This doesn’t help me with my NC income taxes. States aren’t going to roll over and adopt this just because the fed said so, so I’m still stuck with the current system in one way (filing taxes once a year).
devil’s advocate on the flat(-ish) national sales tax
State tax returns are usually based on federal tax returns. I would wager that when the federal government goes to a consumption tax, the states will follow. They will not want to tackle the complexities of 50,000+ pages of tax laws themselves. They will surely follow the lead of states such as Michigan: “To achieve the maximum economic benefit of enacting a MI FairTax it is imperative that Michigan be the first
state to adopt such a business friendly tax. Time is of the essence, as some other states are already
looking at adopting a state FairTax. In order to compete with Michigan, other states will soon follow our
lead. A MI FairTax will cause us to be the most attractive state in the Union in which to do business.” (Michigan State FairTax Estimates)
What’s the economic motivation? Similar to #6, once the tax burden is solely on consumption, you’re motivating people to a) stop consuming more than they need to (chilling effect on economy and cash flow) and b) when they do consume, do so outside of the normal sales method which incurs this high sales tax.
devil’s advocate on the flat(-ish) national sales tax
This complaint is ironic to me – we know that Americans have a very low savings rate; so low that most are nowhere near ready for retirement and many have recently had foreclosures on houses they can’t afford. So, what is the problem with “stop consuming more than they need to”?I am also skeptical that many people will go the “black market” route. Do you know anyone who would risk jail to buy a TV without paying sales tax? I don’t. This one seems ludicrous.
The FairTax makes it easier for the federal government to raise taxes.
There is no such thing as a fair tax
Actually, just the opposite is true. Currently, many taxes are “hidden” in our daily lives. Do you know how much tax has been paid to produce some product you are considering buying in WalMart? Nope. Do you even know how much tax you are paying when you pump a gallon of gas? Probably not. When the FairTax becomes law, you will see exactly (on your receipt) what you are paying. And no politician will be able to raise taxes without everyone being aware of it. Do you think that motivates politicians to raise taxes? I think not.
Lifting the Lid on Hidden Taxes
The FairTax makes certain exceptions while supposedly having none. After saying that there are “no exclusions or exemptions” under the FairTax, Boortz specifically mentions exemptions for Internet access services and tuition.
There is no such thing as a fair tax
Sorry, but this is at best a misunderstanding and at worst a bald-faced lie. On page 170 of The FairTax Book, it clearly states:
“While we agree with Congress’ law forbidding government from taxing access to the Internet, we believe that the only fair way to handle sales conducted over the Internet is to tax them in just the same way as any other sale of goods or services.”

The FairTax does not repeal the Sixteenth Amendment. When FairTax advocates discuss their plan, they talk as though the FairTax would result in the repeal of the Sixteenth Amendment that gave us the income tax. To his credit, Boortz doesn’t make that mistake, but when many people read about “saying goodbye to the income tax,” that is what they think. The FairTax bill now pending in Congress ( H.R. 25 in the House and the identical S. 25 in the Senate), repeals Subtitle A of the Internal Revenue Code of 1986 that relates to income taxes and self-employment taxes and Subtitle C that relates to payroll taxes and the withholding of income taxes.

The only mention of the Sixteenth Amendment in H.R. 25 is when it reports: “Congress further finds that the 16th amendment to the United States Constitution should be repealed.”

Source: There is no such thing as a fair tax

This is clearly answered on Congressman Linder’s site:The FairTax, H.R. 25, cannot include legislative text to repeal the Sixteenth Amendment. To become law, the FairTax simply needs a simple majority approval by both the House and Senate and the signature of the President. A repeal of the Sixteenth Amendment requires a House Joint Resolution (H.J. Res) and the approval by two-thirds of the U.S. House, two-thirds of the U.S. Senate, and three quarters of the 50 states–the standard that all constitutional amendments must meet for passage. Therefore, we must move legislation that repeals the Sixteenth Amendment separately from H.R. 25.If the FairTax is enacted, I expect that the Congress and states would promptly begin consideration of legislation to repeal the Sixteenth Amendment. To make certain that occurs, however, I am in favor of adding language to H.R. 25 during the 111th Congress that includes a sunset provision, meaning that either we succeed in repealing the Sixteenth Amendment within 5 years after the implementation of the FairTax or the FairTax goes away. In my view, we simply cannot risk having both a national income tax and a national sales tax in place at the same time.
FairTax FAQs
The FairTax does not eliminate all federal taxes. Although it is implied throughout the book that the FairTax will be a replacement for the various federal taxes, there are some federal taxes that will still be with us under the FairTax… Two examples of federal taxes that will still be with us under the FairTax are the excise tax on gasoline and the various taxes that one pays when purchasing an airline ticket.
There is no such thing as a fair tax
OK, so let me get this straight… Are you saying that “the FairTax solves a lot of problems, but because it doesn’t solve them all it is not worth doing”? Well, I’m sorry but I’d rather solve what we can and deal with remaining problems later. We will get nowhere if we take an “all of nothing” approach!
Countries that have tried to enforce retail sales taxes at rates above 10 percent have uniformly given up because of evasion.
Source: William Gale’s Argument Against the FairTax
Hmmm…a quick search found up to 25% – much higher than 10%.“…most of the European Union, Mexico and other countries which charge on average a 15-25% VAT rate.”
Sales tax
Although the FairTax would eliminate the filing of all individual tax returns, the FairTax turns every business into a tax collector. Every small service business and every Internet business that does not currently collect state sales taxes will have to collect taxes for the federal government.
Source: The FairTax Fraud
“Under the FairTax, small businesses enjoy a zero tax rate. And zero compliance cost.
Corporations, subchapter S corporations, partnerships, limited liability companies, and sole proprietorships pay no tax on their income. Both the employee and employer share of payroll taxes, the self-employment tax rate, and the estate and gift tax are abolished.”

The Impact of the FairTax on Small Business
Under the FairTax system, there are no longer any Social Security and Medicare taxes. However, this does not mean that Social Security and Medicare will be eliminated. The inclusion in the combined percentage of the old-age, survivors and disability insurance and the hospital insurance rates means that the Ponzi scheme known as Social Security will continue as is—only the way it is funded will change.
The FairTax Fraud
The FairTax is revenue neutral, which means that Social Security and Medicare are fully funded just the same as with the income tax. The difference is that the tax base is broader due to the fact that tourists, illegals, criminals, and virtually anyone that buys anything in America contributes. So, these programs are arguably better off with the FairTax.I agree that the funding of Social Security is broken and is heading for a fiscal fiasco. This, however, has nothing to do with the FairTax.
What’s stopping retailers from collecting 23 percent more obscene profit and simply adding the tax to the current price?”
Source: Received via email from Paul Bergener
The short answer is: competition. If one company tries to keep inflated prices to achieve more profit, a competitor will undercut the higher price. Read more at How the FairTax Affects Retailers.
Good idea, but it’ll never happen.  The politicians are too entrenched in the current system.
Received via email from Paul Bergener
That’s why the grassroots program is so important. The politicians don’t want it – they like spending our money. The special interests don’t want it – they like playing games with 65,000+ pages of tax laws. The only way it will happen is if we want it badly enough to make it happen. The best place to start is the Grassroots FairTax page.
But the filthy rich can’t possibly spend ALL their money on retail items.  They won’t be taxed much at all.
Received via email from Paul Bergener
You are correct that as a percentage of net worth, the more money someone has, the less tax paid. Of course, this is offset by the fact that a richer person will undoubtedly spend more also, and thus pay more taxes.  I for one don’t mind.  I hope to be rich someday too! 😀

I and the other FairTax proponents welcome healthy debate. But there are a lot of people who seem to have agendas (think accountants, lawyers, politicians) that lead them to fight against the FairTax. It is interesting to me that as I went through this exercise, I saw the same arguments over and over. I purposely left some of them out, such as some of the more extreme Libertarian harangues against the government. I get it that Libertarian “purists” are against the FairTax because it doesn’t wipe out all government interference in their lives.

I have been reading and researching the FairTax pros and cons for literally years and I have yet to come across an argument that holds up under scrutiny. If you have an argument against the FairTax, please tell me what it is…and back it up with facts. No room for “global warming” type scare tactics. I also welcome other attack/fact pairs.

Further reading:

April 11, 2007 Posted by | Policy, Politics, Tax | 4 Comments

United Democracies (U.D.)

Diplomatic Divorce: Why America Should End Its Love Affair with the United Nations – By Thomas P. Kilgannon
“The UN General Assembly is littered with terrorist governments, human rights abusers, corrupt regimes, dictatorships, and political deviants of all stripes. The United Nations provides them membership and grants them legitimacy; in so doing, it absolves them of their sins.”

For a long time, I have felt that the United Nations (U.N.) is not only “not helpful” as a world body, but is downright harmful and definitely corrupt.

Why would I say that!? Lets take a look at just one aspect of this “august” body, the UN Human Rights Council. Here are some facts from the last few months:

Forward Magazine:

“In recent months Israeli officials and Jewish organizations had expressed some guarded optimism that the new council would not follow in the anti-Israel footsteps of the much-maligned Human Rights Commission that it replaced. By this week, however, those hopes appeared to have been dashed.”

United Nations Human Rights Council on Wikipedia:

“The United Nations Human Rights Council is an international body within the United Nations System. Its purpose is to address human rights violations, and it is the successor to the United Nations Commission on Human Rights, which was often criticised for the high-profile positions it gave to member states that did not guarantee the human rights of their own citizens.”

The first election of members was held at the General Assembly on May 9, 2006. The successful candidates [included]:

  • People’s Republic of China
  • Cuba
  • Russian Federation
  • Saudi Arabia
  • Nigeria

So, lets take a look at some of these stellar bastions of human rights:

Business Week magazine:

“For more than a year, Westerners have watched Russian President Vladimir V. Putin wield an iron fist against the media, against political rivals, and against the titular representative of private corporate power, Yukos, the huge Russian oil giant, built by Mikhail B. Khodorkovsky. Putin has imposed censorship rules on TV, proposed replacing elected provincial officials with appointees, and called on his state’s vast taxing power to frighten Russia’s resistant oligarchs into submission. He has turned Parliament into a rubber stamp. Even the secret police is making a comeback”

““DO YOU know how serious a mistake you’ve made?” Yan Yuanzhang recalls an official asking him not long ago. Mr Yan had been summoned to Beijing’s Internet Propaganda Management Office to talk about his websites. They were causing, he was told, the Communist Party to lose face. They were providing material that foreign media could use to attack China. They were illegal and must be closed down within 24 hours.”

The Economist magazine:

Six years ago Bill Clinton described China’s efforts to restrict the internet as “sort of like trying to nail Jell-O to the wall”. But as China’s web-filtering technology has grown more sophisticated, and the ranks of its internet police have swelled, some have begun to wonder.

The government has also spent freely to keep its liberating side-effects under control. The committed few who are brave or foolhardy enough to use the internet to challenge the authorities now face a police force of some 30,000 online monitors, say foreign human-rights groups. They also say that China has jailed over 50 people for expressing views online or in text messages. Worried about the forces unleashed by rapid economic and social change, China’s leaders have stepped up their efforts in recent months to control not only the internet but other media too. A handful of outspoken newspapers have been closed and their editors sacked.

Amnesty International:

“In the most severe crackdown on the dissident movement since the years following the 1959 revolution, Cuban authorities arrested 75 dissidents in the space of several days in mid-March. They were subjected to summary trials and were quickly sentenced to long prison terms of up to 28 years.”

Human Rights in Saudi Arabia in Wikipedia:

Saudi Arabia
“The situation of human rights in Saudi Arabia is generally considered to be very poor. Under the authoritarian rule of the Saudi royal family, the Kingdom of Saudi Arabia has enforced strict laws under a doctrine of Wahabism (a fundamentalist interpretation of sharia, Islamic religious law). Many basic freedoms as described in the Universal Declaration of Human Rights do not exist; it is alleged that capital punishment and other penalties are often given to suspected criminals without due process.”

Nation by Nation magazine:

“Domestic violence against women remained widespread, and some forms were sanctioned by traditional, customary, or Shari’a law. Discrimination against women remained a problem. Female genital mutilation (FGM) remained widely practiced…”

These are the countries put in place to monitor human rights?! And these are after the scandal and supposed cleanup! How absurd. If it wasn’t so serious a problem, it would be laughable.


So…What is to be done? Just like our tax system (a topic for another day), the U.N. is beyond salvaging.

I propose that we create a United Democracies (U.D.) organization. As the name implies, only countries that meet the published criteria to be called a “democracy” can become members. The criteria would be things such as:

  • The rule of law – this includes an independent judiciary.
  • Respect for individual rights – this includes protection for minorities
  • Freedom of the press and speech
  • Property ownership

No true democracy has ever attacked another country without provocation. This of course is different than dictatorships like Iraq under Saddam and Iran via Hezbollah.

The founding members would be the United States, Britain, Japan, and Australia. Other countries could petition to be accepted into the organization. Their ability to be called a democracy would be verified by independent, unbiased organizations like Reporters without Borders.

On a pragmatic side, we would kick the UN out of its building in New York city and use the building for the United Democracies. The US would drop its UN membership and use half the money currently used for the UN to support the UD.

This would greatly improve the situation and the UD members could provide real help for trouble spots in the world.

The UN is beyond repair, as witnessed by the oil for food scandal, the Darfur genocide, and basically no accountability. It’s time to move on.


Not convinced? We only looked at one aspect of the cesspool that is the UN. Do a search on “UN Oil for Food program” and see what France and Russia have been up to.

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April 10, 2007 Posted by | International, Policy, Politics | Leave a comment