‘Terrorist Puppet’

Re: “Terrorist Puppet,” David Gelertner, Editorial, July 19, 2005. Professor Gelernter believes that the Jewish defense organizations in Mandatory Palestine known as the Irgun and Stern groups were “terrorists.”

These organizations never attacked or harmed civilians intentionally. Their targets were limited to Arab terrorists, the illegal blockade, and their military establishment, including army bases, air fields, headquarters, and prisons where Jews were held and several hanged for possessing guns and defending Jewish communities against Arab marauders.

These Jews were not terrorists but resistance fighters, like the Underground in Europe under the Nazi occupation.

GEORGE E. RUBIN
Manhattan

‘After the AMT’

Re: “After the AMT,” Editorial, July 22, 2005. I was gratified to read that you are taking Rep. John Linder’s proposal seriously. There is just one small error in your description, which I feel should be corrected. I quote: “Unless the Congress overturns the 16th Amendment, we could end up with both a national sales tax and an income tax.” Actually we already have both an income tax and a national sales tax now. The sales tax we have now is corporate tax, which is passed on to consumers in the form of higher prices.

JOSHUA PRITIKIN
Santa Barbara, Calif.

Re: “After the AMT,” Editorial, July 22, 2005. Thanks for covering the subject of changing the tax system. There are a couple of points with which I would take issue, however:

1. A National Retail Sales Tax is nothing at all like a Value Added Tax – both are ultimately paid by the consumer, but an NRST is collected by retailers, whereas VATs are paid by manufacturers, on the “value added” at each step in bringing a product to the market.

2. An NRST will be obvious and easy for everyone to understand – its visibility will make it difficult for Congress to raise the rate – VATs are “invisible,” and would be easy for Congress to quietly raise VAT rates.

3. An NRST will be highly efficient. It will save the 6 billion man-hours and hundreds of billions we now invest in preparing tax returns – the collection mechanism is already in place; error and crime rates associated with it are low. VATs are very inefficient, e.g., they involve horrendous overhead (bookkeeping, reporting, legal wrangling, etc.), plus high associated error and crime rates. Like the Income Tax Code, VAT tax codes are very complicated and difficult to administer fairly. As a result, it is relatively easy (compared to the Income Tax) to “cheat” on VATs, whereas it is relatively difficult to cheat on sales tax payments, collections, and audits.

4. Repealing the 16th Amendment is part of the Fair Tax proposal, to ensure that we could not end up with both a National Retail Sales Tax and an Income Tax.

5. The flat tax proposal amounts to a single rate under the current system. The proposal is to simplify the tax code, but there is nothing to ensure that it would stay that way – the armies of lobbyists that battle in Washington would still be able to protect their “special interests.”

6. The flat tax would do nothing to bring those who now avoid paying into the taxpayers’ fold. It would also do nothing to eliminate the corporate tax component in the pricing of our products. The corporate tax component in the pricing of American goods is a major cause of our balance of payments problem, “outsourcing,” etc.

7. The Fair Tax will broaden the tax base, by making taxpayers of all those who now don’t pay. Today, one out of four who incurs an obligation to pay in come taxes doesn’t even file and, of the three who file, the tax code gives one a “pass,” so only “half” the people are paying the Income Tax. That is patently unfair. Under the Fair Tax, everyone will pay according to their spending.

8. By broadening the tax base and disconnecting Social Security and Medicare from the workforce, the Fair Tax will make it possible to “secure” those programs. “Reforming” Social Security and Medicare will never be popular with Congress and only a second-term president can politically afford to broach the subject. Since the well will run dry (unless Congress suddenly finds a way to make good on its more than $1.7 trillion in IOUs, which is highly unlikely) in about 2017, this may be our last opportunity to address the actuarial faults in those programs, before benefits would have to be curtailed.

It is a complicated subject, one which people have difficulty comprehending in this age of “sound bites.” Thanks again for your coverage of changing the tax system.

PETER G. MALONE
St. Charles, Ill.

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