\-\-\-\--Original Message\-\-\-\--

From: Phil Hinson
\[[[mailto:plh001@comcast.net]{.underline}](mailto:plh001@comcast.net)\]

Sent: Friday, March 18, 2005 7:58 PM

To: comments@taxreformpanel.gov

Subject: The FairTax and the Global Economy

\<\<\...\>\>

While waiting to meet someone today at Barnes & Noble, I picked up a
book that caught my eye entitled China, Inc. It was written by Ted C.
Fishman. It has some eye-popping statistics in it. For example:

\* China is home to 1.5 billion people, probably, which would make the

official census count of 1.3 billion too low by roughly the population
of Germany, France and the United Kingdom combined. Put another way,
China\'s uncounted multitude, were it a country on its own, would be the
fifth largest in the world.

\* The United States has 9 cities with populations in excess of 1

million. Eastern and western Europe combined have 36. China has between
100 and 160.

\* There are 220 million \"surplus workers\" in China\'s central and

western regions. The number of people working in the United States is
about 140 million.

\* Three hundred million rural Chinese will move to cities in the next

fifteen years. China must build urban infrastructure equivalent to
Houston\'s every month in order to absorb them. This is the largest
human migration in world history.

\* General Motors expects the Chinese automobile market to be bigger

than the U. S. market by 2025. Some 74 million Chinese families can now
afford cars.

There is more, but I think you get the jist. The author poses the
question: what could happen when China can manufacture nearly
everything - computers, cars, jumbo jets and pharmaceuticals - that the
United States and Europe can, at perhaps half the cost?

In a Nov 30 column, NYT columnist David Brooks offered the following
data points

1990 473 million

2001 272 million

2015 19 million

Those numbers represent the number of people living in extreme poverty
(less than \$1/day) in the far east and Pacific rim countries. That is
an astounding 96% reduction in that part of the world during a 25 year
period in which world population is increasing by more than 33%. We are
right in the middle of that period.

I saw Newt Gingrich on one of the evening news talk shows a couple of
weeks ago talking about his new book; I think it is called \"Winning the
Future\". He made the point that we are faced with something in the 21st
century that we have never before been challenged by and that is
economic competitors which will have economies on the scale of ours. He
was speaking, of course, of India and China. He identified three areas
where reform is critical in order to meet this new challenge, which is
unlike any that we have ever seen before.

1\. litigation

2\. education

3\. tax

Although Mr. Gingrich had not been a strong supporter of our proposal
previously, I heard that he said, while doing a guest spot on Sean
Hannity\'s radio show a couple of weeks ago, that he supported a sales
tax which replaced the income tax along the lines of the proposal of
John Linder and Neal Boortz.

It should be apparent that we are at a pivotal juncture in our national
history. I do not think that it is any exaggeration to say that what is
at stake is the standard of living we have become accustomed to as a
people and the economic strength that has enabled us to become a beacon
of freedom respected by the rest of the world. Since this country was
founded, every generation has left a higher standard of living to their
children than the one they inherited. It is not inevitable that this
track record continue, however.

The FairTax is not the entire solution to this challenge and IMHO we
should not represent it as such. However, it should be obvious to all
that continuing into this new environment with a tax system which puts
US producers at such a decided disadvantage as our current one does is a
luxury which we can no longer afford. Every institution that we have
should be reexamined from a new perspective. This country has risen to
every challenge that we have been faced with in our history up until now
and I am confident that we can prevail against this new one, also.
However, for that to happen, the American people need to awaken from
their slumber and realize the seriousness of the threat.

Philip Hinson

**The FairTax and the Global Economy**

While waiting to meet someone today at Barnes & Noble, I picked up a
book that caught my eye entitled China, Inc. It was written by Ted C.
Fishman. It has some eye-popping statistics in it. For example:

-   China is home to 1.5 billion people, probably, which would make the
    official census count of 1.3 billion too low by roughly the
    population of Germany, France and the United Kingdom *combined*. Put
    another way, China's uncounted multitude, were it a country on its
    own, would be the fifth largest in the world.

-   The United States has 9 cities with populations in excess of 1
    million+. Eastern and western Europe combined have 36. China has
    between 100 and 160.

-   There are 220 million "surplus workers" in China's central and
    western regions. The number of people working in the United States
    is about 140 million.

-   Three hundred million rural Chinese will move to cities in the next
    fifteen years. China must build urban infrastructure equivalent to
    Houston's every *month* in order to absorb them. This is the largest
    human migration in world history.

-   General Motors expects the Chinese automobile market to be bigger
    than the U. S. market by 2025. Some 74 million Chinese families can
    now afford cars.

There is more, but I think you get the jist. The author poses the
question: what could happen when China can manufacture nearly everything
-- computers, cars, jumbo jets and pharmaceuticals -- that the United
States and Europe can, at perhaps half the cost?

In a Nov 30 column, NYT columnist David Brooks offered the following
data points

1990 473 million

2001 272 million

2015 19 million

Those numbers represent the number of people living in extreme poverty
(less than \$1/day) in the far east and Pacific rim countries. That is
an astounding 96% reduction in that part of the world during a 25 year
period in which world population is increasing by more than 33%. We are
right in the middle of that period.

I saw Newt Gingrich on one of the evening news talk shows a couple of
weeks ago talking about his new book; I think it is called "Winning the
Future". He made the point that we are faced with something in the
21^st^ century that we have never before been challenged by and that is
economic competitors which will have economies on the scale of ours. He
was speaking, of course, of India and China. He identified three areas
where reform is critical in order to meet this new challenge, which is
unlike any that we have ever seen before.

1.  litigation

```{=html}
<!-- -->
```
1.  education

2.  tax

Although Mr. Gingrich had not been a strong supporter of our proposal
previously, I heard that he said, while doing a guest spot on Sean
Hannity's radio show a couple of weeks ago, that he supported a sales
tax which replaced the income tax along the lines of the proposal of
John Linder and Neal Boortz.

It should be apparent that we are at a pivotal juncture in our national
history. I do not think that it is any exaggeration to say that what is
at stake is the standard of living we have become accustomed to as a
people and the economic strength that has enabled us to become a beacon
of freedom respected by the rest of the world. Since this country was
founded, every generation has left a higher standard of living to their
children than the one they inherited. It is not inevitable that this
track record continue, however.

The FairTax is not the entire solution to this challenge and IMHO we
should not represent it as such. However, it should be obvious to all
that continuing into this new environment with a tax system which puts
US producers at such a decided disadvantage as our current one does is a
luxury which we can no longer afford. Every institution that we have
should be reexamined from a new perspective. This country has risen to
every challenge that we have been faced with in our history up until now
and I am confident that we can prevail against this new one, also.
However, for that to happen, the American people need to awaken from
their slumber and realize the seriousness of the threat.

Philip Hinson