FairTax 3: Draft and Poor Cards

The discussion ranged to include a possible permanent exemption from income tax for those who have served:

“It COULD be a great incentive to get people to join, since we don’t have a draft.”

In the US, there is a perceived surplus of volunteers, and many trying to get in and not succeeding. This has been true since before the Obama administration. Some leaving from the Marines switch to the Army, and vice versa, to try to get around the desire to reduce our military force as much as possible by discouraging re-enlistment. (I have a family member involved in this as a sort of “de-recruitment” and “re-recruitment” counselor.)

There was a media flurry about not meeting quotas several years ago, but the quotas themselves were rather peculiar and the situation was brief. Since then, over-quota has been the standard, so the media does not mention it. Morale is now low enough where less encouragement to leave is needed.

Nevertheless, I support extensive benefits and incentives to those who serve in harm’s way to protect us. We need the best people possible between us and those who seek to destroy us, of which there are far too many.

But back to the taxes themselves, and Pete’s sort of independent invention of the FairTax: I could see an alternative plan to the “prebate” — instead, there could be a federally issued, numbered “fair card” issued to low-income folks that exempt the holder from taxes on certain items. It would be similar to the “for resale” cards now used (and that would still be used) to prevent double-taxation.

I don’t like this much, but I recognize that it would be attractive to many. My objections:
• There is much opportunity for abuse.
• It could spawn a new sort of identity theft.
• It increases complexity for retailers, many of whom don’t deal with resale transactions.
• The selection of products and services to exempt would be controversial. (We currently allow purchases of lobster and caviar on EBT welfare cards.)
• It takes away a key motivation to keep government lean, since it takes the “sting” away of paying sales taxes from a chunk of the population.

That last item, in particular, would make this scheme very popular with politicians.

==============/ Keith DeHavelle

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