Position: Taxes

During the Great Depression, FDR turned to an economist, John Maynard Keynes, for advice. Keynes’ advice: borrow and spend, rinse, repeat. Since that time, Washington politicians and economists have fallen in love with Keynesian economics. It’s easy to see why. Keynes’ economic prescription for tough economic times? Borrow and spend. His economic solution for good times? Borrow and spend. His economic solution for a hangnail? Borrow and spend.

Someone once suggested to Keynes that, in the long run, his economic plans would lead to financial ruin. His famous reply, “In the long run, we’ll all be dead.” No. We’ll all be living through an Obama Administration desperate to revive the ghoul of Keynesian borrowing and spending.

If the economy takes a fall, let’s borrow $850 BN dollars for a “bailout”. A few months later, lets borrow another $900 BN dollars for a “stimulus” bill. (Edwards voted for both.) This is just another failed Keynesian – borrow and spend – solution. A decade of borrow and spend didn’t end the Great Depression and it won’t solve our current economic problems, either.

The key to Keynesian economics is that we must all be borrowers and spenders for it to work. As such, the government must discourage savings – and it does, through a series of taxation and interest rate policies. Even now, you’re being told that you aren’t borrowing and spending enough. The Administration’s solution to this downturn is to make more money available – surprise! – for you to borrow and spend even more.

It’s no surprise that, just like our government, Americans are borrowers and spenders. 7 out of 10 American families live paycheck to paycheck. The added stress, distress, and overtime necessary to make ends meet as a result is just – un-Christian. Economic stress is the number one cause of divorce and leads to high rates of depression. Proverbs has this right: the borrower is slave to the lender. We are called to live a life of peace. Our government, obsessed with Keynesian economics, calls us to a life of hectic consumption.

Something’s not right.

The economic policies of John Maynard Keynes are a moral blight on this nation. Your Grandmother knew best: “Save for a rainy day.” We must end this culture of borrow and spend. We must return to a culture of savers.

I support the FairTax. You can read more about it at fairtax.org. The FairTax is a consumption tax. It discourages consumption and encourages savings (because you would not be taxed on savings). It puts you in control of your taxes. If you want to pay less in taxes, consume less. Being savers and givers instead of borrowers and spenders is the Christian pathway to economics.

The tax code is the largest area of government intrusion into your life. Not surprisingly, it is also the largest area of lobbyist activity. We have 66,000 pages of tax code for a reason, and it’s not to provide you with good service. When the current head of the IRS, Timothy Geithner, can claim that he didn’t understand how to do HIS taxes, something is seriously amiss in Washington. The current tax code must be replaced. The FairTax is a revenue neutral approach to getting the government out of your lives when it comes to taxes.

It’s simply not –and shouldn’t be – the government’s business how much money you make. Can we agree to that? We’ve given Washington too much power and now it’s time to take it back.

As a nation of savers, we could much better weather rough economic times. As a nation of savers, we could better live lives of Christian peace. As a nation of savers, we could return to the Greatness of our forefathers.

I support the FairTax because the current tax code is immoral and must be replaced.

I am against Tax increases. If asked, I would gladly sign a pledge not to raise the marginal rates on income taxes and not to create a net decrease in deductions or credits for taxpayers. In addition, I would fight to reduce – to the point of elimination – corporate and capital gains taxes (the FairTax would eliminate both).

You cannot separate economics from morality. Money is too much an all-invasive tool in our lives. As such, our economic policy does have moral consequences. Those consequences are readily apparent in our world and our economy today. That is why we must completely overhaul our tax system in order to encourage saving.

It’s time to return to God’s plan for us and money. It’s time to return to a culture of saving. I oppose borrow and spend. I oppose tax increases. Period.

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I would like to discuss some criticisms of the FairTax. Chet Edwards ran blatantly misleading ads in the final days of the last election regarding the FairTax and they were left uncontested.

1. Myth: The FairTax is a heavy new tax on Americans.

Fact: The FairTax will replace both corporate and income taxes. You’ll have a much bigger paycheck because of the elimination of BOTH Withholding and Payroll taxes – the government will leave your entire check alone. Next, because the FairTax eliminates corporate and capital gains taxes that are passed along to you, the final price of the goods and services you buy will be much cheaper in the first place. The fair tax is intended to be “revenue neutral” in that it will not tax more than the current system. There are also three powerful new incentives in the FairTax that could save you taxes. First, everybody would get a monthly rebate check for the amount of taxation on income that falls below the poverty level for his or her sized household. Next, because it is a consumption tax, individuals have some real control in their level of taxation by reducing their level of consumption. Finally, the FairTax is only a tax on NEW items. Used items would be tax free. This both encourages thrift and allows for another method to reduce taxation: buy used.

2. Myth: If we should be consuming more to save the economy, wouldn’t encouraging savings and discouraging spending be BAD for the economy?

Fact: No. First, it’s a Keynesian myth that spending is the cure for all our ills. The Bible is clear on this: savings is better than wasteful spending. I simply trust my Bible more than I do zealots of John Maynard Keynes. Second, there wouldn’t be an overall decrease in spending. While the average individual would spend less and save more, the FairTax would bring many more people into our economy, resulting in higher overall levels of both savings and consumption.

The FairTax would eliminate corporate, employee, and capital gains taxes on businesses and that would immediately make America the best environment in the World for business creation. There would be an explosion of capital, business expansion and re-employment as businesses rushed to take advantage of the opportunity to make profits free of the government’s coercive hand in the till. There is an economic law called Say’s Law that says ‘supply will create its own demand’. What this means is that businesses cannot create more supply without first spending on the resources and the employment that ultimately will expand the economy with new workers and businesses to support that level of supply. The real result would be a return to a manufacturing jobs base in America. Growing the economy means just that – and the FairTax would grow the economy. The FairTax would be a REAL stimulus plan. Instead of hurting the economy, the FairTax would help restore our economy to greatness – and it would do so by encouraging increased individual savings while continuing higher levels of overall consumption.

A nation of savers can ultimately AFFORD to spend more money because all their money isn’t tied up in debt payments. Imagine THAT.