How the Fair Tax is not Regressive

Herman Cain, now a candidate for the Republican nominee for President, is proposing a 999 tax plan that would put a 9 percent tax on income, 9 percent tax on business, and a 9 percent sales tax as a tax system that would replace the entire tax code. This plan is not permanent and eventually becomes the "Fair Tax". The Fair Tax would replace the entire tax code that we currently have and replace it with a simple 23% sales tax. The number is not official but it would be around that amount.

The purpose of this blog entry will be to explain how the number one argument against this tax system, its regressiveness, is false. Regressive meaning it will penalize the poor and middle class more so than the rich. Our current tax system in progressive in that it taxes rich people more as you make more money. That is absolute truth contrary to what you see in the media and by some on the left who try to mischaracterize the truth.

The reason Cain's "Fair Tax" is NOT regressive is because of a number of reasons:

First: The elimination of the Payroll tax. All workers who work legally and are paid legally pay two taxes on Medicare and Social Security even if they end up paying no other Federal Income Tax (FICA). That tax is roughly 7%. In reality it is 14% because your employer must match that tax with what is termed their "payroll tax". Now businesses are not stupid. When they hired you they took into consideration what it costs to hire you and adjust your pay accordingly. In other words, you would be paid slightly more if not for this payroll tax. Well now this tax is eliminated. Thus not only do you not pay that tax, but your employer will likely pay you more since they no longer have to match your contribution as well.

Second: You get a Pre-bate check for all products up to the poverty level. In other words, whatever the government statistic is for what it would cost to raise a family and pay for food to feed that family and other necessities, you would receive a check to cover that part of the tax. In other words, the "Fair Tax" will only be a sales tax on items you buy that are above the necessity level. Thus the poorest among us will continue to not pay taxes on those items. If your income is only at the level in which you can only afford the basic necessities of life, you will still not be paying taxes to the federal government on those necessary items.

Third: With businesses no longer paying taxes, it will now be easier to get a job and wage rates are likely to rise as well. this helps the poor and the working class, as well as the middle class more than anyone. That is not regressive that is amazing!

Fourth: this tax will not cause the price to change that much. Some are confused because you were just told that the tax would be a new sales tax of roughly 23%. That is true. But currently due to our tax structure where all businesses pay taxes, and often in large amounts, those taxes are passed down already into the price of goods. You just don't see it. When a business provides the raw materials for a good, that business is taxed on its profits. The business that transports the goods to the company that makes it into a saleable item also pays taxes. The marketing firm that is paid to advertise the product is also paying taxes. And finally the store and company that you buy from as a consumer, also pays taxes. Those taxes are passed down to you as the customer. Why? Because the money companies use to pay those taxes are obviously from their constomers. So when all those taxes are eliminated, as they would be under the Fair Tax, prices would drop. Many economist believe roughly as much as 20-22%. Thus when the Fair tax is then placed on that good, the price will only go back up to where it was originally and maybe just slightly more. But hey remember earlier, you are making more money now and you are not paying income taxes, so you have more money to spend anyways.

Lastly: The tax is only on new items bought not old or used items. Thus since most working class people buy "Durable" items that are most often used, such as a house or car, they will not be paying taxes on it. It is the more wealthy that buy new things, they will pay the "Fair Tax".

This tax system is not regressive. It will help the poor in fact. There are concerns that I have for it. But those concerns are not NEAR the concerns I have with the current tax structure. Thus I can fully support this new tax structure. I would also support the Flat tax as well. But the current tax system, is a failure and is outdated... and quite frankly, should never have been started to begin with.

In Defense of Derek Dooley

In a shift away from the political or economic discussion, I'm going to give my take on Dooley and his football coaching staff in regards to what they should be doing with this team.

I'm one of the most passionate Tennessee Football fans I know. My Ringback tone is Rocky Top and my actual ringtone is John Ward saying "Its Football Time in Tennessee!" I read every News Sentinel article on the football and basketball team for that matter. I also have a subscription for GVX 247 to get up to the minute recruiting information and other deeper sports information than you can get from the main sports page of Knoxnews where they have to cover all sorts of other sports news. So some would say my passion might blind me from reality. No my passion is what brings to light the reality to me.

Our starting defense is composed of a DE that has have multiple knee surgeries and is not the same player he game to TN to be when he was much lighter and faster out of high school. The other DE is our "stud" pass rusher but can barely get to the QB because while he is our best, he was not recruited out of high school like many of the starting DE at the other SEC schools. I know because he is from the Chattanooga area. He was good and recruited, but not as a guy to come in day one and be a stud like many of the other DE in this league are. Our DTs include a guy who was suppose to play DE at a high level. The other kid from Catholic that I love everything about did not originally go to Tennessee to the the Starting DT as a sophomore. A guy like him is not suppose to start. And he came as an OL but was not good enough there so they moved him to DT where he was more needed. He is suppose to be the guy that plugs up the middle on early down plays when the starter is hurt or tired. The guy that was projected to start at DT-Nose Guard has been kicked off the team in Hughes. Their backups are also players that have converted from other positions or are also young.

Our LBs were suppose to be a stud from West TN in King, a stud from Virginia in Askew, and Herman Lathers. Instead the first two have done nothing like many of the other Kiffin recruited kids and the latter has a broken foot. Instead we have a guy who was a 3star RB that has converted to MLB and two Freshmen linebackers that are arguably our best Pro prospects on Defense. They are Freshmen none the less. We have Seniors who sometimes back up these guys and starts in Nickel situations only.

In our secondary, we were suppose to have Jackson the best player on the team, another stud who can't get into school in Lofton, and a stud at CB that was a trouble maker and was also kicked off a while ago in 5 star athlete Vinson. Instead our best CB is a converted WR. Our second best CB is having to play safety because our best player on the entire team got kicked off. We have a converted professional baseball player at the other safety position that had everyone excited because of the hits he puts on people. His cover skills are very low, and he is still trying to relearn how to play a sport he did not play for years before now. We have a JUCO guy competing with a Senior(Evans) who was at best suppose to be a pure backup if not third string CB when recruited as a 3star guy. We also have a who I do feel will be good one day but not good enough to play big minutes now in Coleman. Our back up safety is a Freshmen and our other CB is often a kid from Tennessee who is a great athlete but was not suppose to be a starter on a team that was suppose to have multiple studs who have been dismissed from the team.

That is out Defense. We have some really young guys who are suppose to be really good. We have had two Freshmen groups come in under Dooley in which many are making contributions and being productive players young in their careers which is a good sign. We have a good and could be great recruiting class coming in. This would be the second in a row that were really good but this one could be great. I have not even began to talk about our offense which is even YOUNGER if you could believe it. We have a new strength coach in his first year there to add strength to the team.

This team is not good. But we are not suppose to be good. We are suppose to be good next year. And maybe great the year after. If that does not happen, then I will begin to question this coaching staff. for Heaven's sake lets not try to judge Dooley and his staff now as if they are suppose to be wining this year.

We cannot stop the run because our DL is small and not deep. Our best DT this year is suppose to be a kid named Arthur Jeffery Jr. You recognize the name? No! Not unless you follow recruiting like I do. He can't get on the field. Our LBs are young and our DBs are not good yet because of the attrition. We can't blitz much because of the youth and therefore can't get pressure because our DL is not good enough to do it without help. Lets relax a bit. I can write a a column on the offense but it would sound the same. In fact we have been hurt more there possibly. Next year if we are not back on track as a top 25 team in the nation... then I will begin to question Dooley. But as a coach... its way too early with what team he took over. Lets wait until his recruiting classes can get up there.. Lets wait until way over half our team is not Freshmen and Sophomores and many of the other starters who are not young are 3 star guys that have not been kicked off the team or left already. Lets be patient. We said we would be... Lets follow through with that.