Letters

RON BAKER REPLIESJohn Maynard Keynes was once asked why he changed his mind on a particular topic, and he replied: "When somebody persuades me that I am wrong, I change my mind. What do you do?"

Apparently, in her letter to the editor in the Oct. 24-Nov. 6, 2005, Accounting Today (page 6), Cynthia Page, when confronted with facts she feels are offensive, doesn't change her mind, but instead engages in ad hominem attacks. Calling me a "racist" and a "bigot" for simply reporting an irrefutable historical reality is not only an appallingly illiterate usage of those words, it's also much easier than actually refuting the facts in my article.

None of what you stated in your letter, Cynthia, refutes one sentence in the article. Your attempt at calculating the average age of the Manhattan Project scientists, even though it is wrong (look it up), still makes my point about innovation not happening much after age 45. The fact that Benjamin Franklin innovated well into his later years also does not refute the general hypothesis. Indeed, there are some two dozen men who innovated well into their 80s, but these exceptions do not disprove the general rule. Richard Feynman may have identified the Challenger explosion, but that is not innovation, merely intelligent diagnostics.

I also suppose you would feel that the book I cited, Human Accomplishment, written by scholar Charles Murray, is the equivalent of Mein Kampf simply because you find the facts he documents offensive. It is a good thing scholars are not ruled by their emotions, but rather the dispassionate pursuit of the truth.

Of course, I would expect puerile name-calling from someone who is offended by Larry Summers - a true scholar at an institution of higher learning supposedly dedicated to the pursuit of the truth - for merely hypothesizing a theory about science and women. How fortunate it is for the human race that the search for truth is not guided by politically correct condemnation and petty irrational grievances such as those contained in your letter.

Congratulations on becoming a CPA at 57; that is quite an accomplishment, and even proves my point that old dogs can, indeed, learn new tricks.

But it is hardly innovation.

Ron Baker

Founder, VeraSage Institute

Petaluma, Calif.

KUDOS TO BRILOFF

I have been an avid fan of Dr. Briloff for more than 40 years, as he has repeatedly revealed so many accounting debacles. This most recent article ("The 'wickedness' of the wicked and the 'mischief' of the virtuous," Accounting Today, Oct. 10-23, 2005, page 6) is Briloff at his best and should be considered for the best accounting article of the year award. The erudite discussion and analysis of the AIG fiasco is more than worth the cost of my annual subscription.

Ira M. Landis, CPA

Los Angeles

FAIRTAX FANS

I've read the vast number of suggestions and concerns posted about tax reform.

One thing stands out to me each time someone mentions a consumption tax or national sales tax. Everyone is concerned that a pure consumption tax would be regressive and hurt the lowest-income families.

Their concerns have been addressed in the legislative bill called the FairTax (H.R. 25/S. 25). The FairTax eliminates all taxes to businesses, including payroll taxes.

The payroll tax has been the most regressive tax in America, because even those wage earners who pay no income tax have payroll taxes taken from their paychecks.

The FairTax also has a built-in refund system. To keep lawmakers from manipulating the tax by exempting certain items, and to make the FairTax progressive to low-income earners, each family will automatically receive a refund of the taxes paid up to the national poverty level.

Like now, families earning at or below the poverty level would pay nothing to the government. Middle-income families would be taxed only on purchases made with income above the poverty level.

CPAs need to be educated on the benefits of the FairTax. They have valid concerns about a pure consumption tax, but the FairTax was written after years of research, so those concerns have already been addressed.

Steve Harris

Waco, Texas

The FairTax will let us gain in several ways. Gross income is irrelevant under the FairTax - instead of taxing what people report as earnings, the FairTax is based on retail purchases. That means money that you put into savings, for instance, isn't taxed before you get it or when it earns interest. It also isn't taxed when you spend it on used items or give it to charity - only when you spend it on new purchases, and even then only after you have spent what amounts to a poverty-level income, so the poor and those on fixed incomes can be essentially exempt from this tax and even come out ahead.

Also, by taxing retail purchases, the FairTax ensures that the tax burden is shared fairly by everyone, no matter how or where they got the money that they spend. Under the current system, wage earners actually wind up underwriting part of the cost of items purchased by foreign investors, tourists, and even criminals. Under the FairTax, all of these would contribute to the tax base and make your gross income go farther.

There are many more benefits, but I guess that this is a good place to summarize the benefits, because under the FairTax, even the term "gross income" no longer has the meaning we've given it.

We're accustomed now to thinking of gross income as sort of a fictional amount up there at the top of the pay stub or the W-2, and far from the actual amount of our paycheck. But under the FairTax our gross income and our net income become pretty much the same thing. We take home what we actually earn, rather than just what's left.

To me, that's a significant gain all by itself.

Mike Dickson

South Haven, Mich.

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