The FairTax has far more pros than cons. I have trouble dredging up even one con.
To date, all the objections to the FairTax I have heard are from people who haven't read up on it, or who have an axe to grind. Mrs. P once expressed a concern relative to her hubby's business, as I recall, and many people wax horrified when they contemplate that "I won't be able to deduct interest on my mortgage!!" We have all been schooled in the importance of taking advantage of ALL the legal outs so lovingly provided by our benevolent Uncle Sam. Thus, we quail when our favorite loophole is unaddressed or eliminated in discussion of the FairTax. I would have to say that ALL objections to the FairTax stem from a single misapprehension of the facts; not recognizing one salient point:
Under the FairTax, there will be NO I.R.S. Period.
The most important part of the FairTax is the repeal of the Sixteenth Amendment. There will be NO withholding, No FICA, no need for deductions. No I.R.S. No government bullies holding a gun to your head, robbing you of your pay to hand to some bureaucrat to disburse.
You will take home your entire paycheck. Your first check after the enactment of the FairTax will be like getting a raise.
You won't need deductions, because the government won't be taking your money.
"But Mr. Aardvark, sir, isn't the FairTax still a tax?"
Yes. Yes it is. But it is truly a voluntary tax.The FairTax is a national retail sales tax, a tax you pay when you purchase something at retail. If you buy a new car, 23% of the cost of that car is what you pay as FairTax. (NOT 23% added to the price of the car. It is a part of the sticker. The lying liars in Washington like to accuse the FairTax proponents of wanting to add 23% tax ON TOP OF all the current taxes. This is NOT TRUE.
Every can of beans, DVD, or automobile that you buy already has 22% of its price as tax. Each time a raw material is changed, at each level of manufacture, a tax is levied by the government, so that by the time it hits the shelf or the showroom, 22% of its price consists of tax. At the abolition of the I.R.S., all of those taxes will vanish in a puff of justice. The FairTax will then be made a part of the price of your beans. Your $1 can of beans will remain your $1 can of beans (it may go up a penny, but with the business cost of manufacturers' compliance with I.R.S. regs vanishing, their cost of doing business decreases dramatically, and they may choose to eat the penny. I would.)
Considering that your take-home pay has increased by a third or better, you could afford a penny on the dollar.
You will have no tax forms to fill out, no accountants or tax preparers to hire, no headaches. You pay your tax when you buy your beans, your steak, your new car.
Golly, Madge, let's go to Target and pay our tax!
You even get a check or credit at the first of each month, a prebate check, to cover whatever tax would be paid up to the poverty line, meaning that the poor will pay no tax on the necessities of life, and neither will you.
If you buy a used car, no national retail sales tax. Buy a used TV, no FairTax. Only new, retail sales will have the FairTax.
All this, and no I.R.S.
But what about the Flat Tax?
You will still have the I.R.S. You will still have to file. The Givemint will still be in your bidness.
Go HERE to read the basics of the FairTax, including answers to the most popular attacks used against it.
The FairTax will truly make April 15th just a pretty Spring day.
12 comments:
Why is it that every time this wonderful solution is brought up, the percentage is always higher?
Maybe we should focus on getting rid of the welfare state, the warfare state and the alphabet soup bureaucracies first, so government is living within its means, then alter the revenue stream.
Plenty in the old-school conservative GOP have suggested this, most of them getting branded kooks by the internationalists and altruists in both parties, but it's still an idea long past due.
Dunno what you've been reading, but it has always been 23% as long as I've known about it.
At this point, you have a better chance of electing a cross-dressing pedophile than "getting rid of the welfare state". Not that it is a bad idea, but the drumbeat will be "WHY DO YOU HATE THE POOR!?!". It won't play well to the dumb masses.
We are at a peculiar cusp in American politics. A lot of the Little Pee-pul are getting sufficiently riled to Do Something. The fight is about What, and Who Will Lead Them.
The FairTax offers a well-thought out plan for regenerating the US as an industrial economy. Get rid of corporate taxes, and the businesses that fled the poisonous taxation before will come back, bringing jobs and development with them. The US will become a producer nation again, with the attendant prosperity and spending that accompanies the position. Being revenue neutral, the FairTax will provide for current levels of spending. The Tea Party - type vigilance will serve well, because we will HAVE to elect reps who do not overspend. (Before you laugh, it CAN be done, especially since we are already reaping the economy that flagrant deficit spending has sown. People are seeing the problems, and are ready for real solutions.
The FairTax would certainly be better than what we have now. Reporting income is an evil.
However, the welfare slugs at the bottom and the banker wolves at the top have too much invested. We'll probably have a collapse of the entire state before they let go of their ability to dig their grimy IRS fingers into our personal affairs.
Your scenario is more likely than not at this point, even if Barry-o is a mere one-termer. We're balancing a mastodon on top of a house of cards.
The biggest obstacles to the FairTax is the people who immediately intone "Oh, that'll NEVER happen!". Limbaugh is the biggest one of all. If he would see his way to get behind it, there would be far more support for the plan.
It all depends on where one's personal energy goes.
That's why I love ya!
Limbilge is an internationalist, in bed with the bankers and will condemn fair tax as isolationist.
I don't hate the poor...I DO HATE THE LAZY AND DISHONEST WHO REFUSE TO PULL THEIR OWN WEIGHT AS LONG AS GOV'T BUREAUCRATS AND LOBBYISTS DO IT FOR THEM.
Like I said in my blog post, you'll get your rapacious national sales tax...IN ADDITION to the income tax. Especially with two parties as corrupt as what we have now. Their excuse will be that "we asked for it."
We're closing fast on 100 years of expecting government to solve personal problems...With predictable results!
Since government spending is constantly on the increase, do you think the tax will stay a measily 23%? For how long?
I have one question: Have you read the FairTax site, and have you read Boortz and Linder's book on the subject? If not, do so. I am almost 53, I have seen a ton of political fads come and go, mostly ill-thought-out. Not so the Fair Tax. Some 22$ million has been spent on the research, and it is sound. I do not want some jackleg "national retail sales tax" added onto our current abusive system. I would not support it. I would fight against it.
What I support is the FairTax as written. It stands and falls as a whole. It would only go into place upon the repeal of the Sixteenth Amendment.
Lookit...we can either kvetch about how corrupt and evil The System is and what can we do about it anyway I'm only one voice, OR we can study the plan, and if it has the merit that I have come to see, get behind it and push. I would far rather die having tried to pass a good thing than blogifying my life away, whinging about all the many and vast conspiracies ranged against us. The US revolution was fought against the British Empire, for criyi.
The various tax revolt and tea party movements at work today offer a unique opportunity to present good ideas, AND have warm bodies to get behind them for support. If even the mere chance of abolishing the current tax system, and replacing it with the FairTax exists, I want to give it a try. If we waste a time when the pee-pul are truly beginning to be sick of things as they are, future generations will curse us for missing the opportunity.
Aardvark,
Reading a couple of "comic books" written by a radio talk show jock and an obscure Georgia Congressman, and reading all that "research" on the Fairtax site does not qualify anyone to be an expert on the Fairtax and HR25. You only know one side of the story, a side produced by advocates, for advocates. Try fairtaxblog.com where both sides of the plan are discussed in a civil manner.
You are mistaken if you believe that the Fairtax won't be implemented until the 16th Amendment is repealed. Title 4 of HR25 says that the Fairtax will be dropped if the 16th isn't repealed within seven years of enacting HR25.
You clearly don't understand the embedded tax story, and you seem to have made up your own explanation. The 1997 Dale Jorgenson embedded costs of the income tax study showed that, on average across 35 industry segments, income tax costs were 22% of producer costs. But Jorgenson assumed that employee tax withholding would go to the producer in order to lower costs the most. Isn't going to happen for legal, fairness, and contractual reasons. You will get all your gross pay, and only business tax costs will be available for price reductions. Using 2007 actual tax data, business tax costs averaged 10% when considering business income taxes, business share of payroll contributions, and compliance costs.
Your explanation about cascading cost savings is incorrect. While dollar cost savings do cascade up through the levels of production, percentage cost savings do not. It doesn't matter if there is one level or ten, the percentage cost savings remains the same. This is true because the cost savings at each level only apply to that level.
Retail prices aren't going to remain the same. Take away 10% in business tax costs and add the 30% sales tax and average retail prices will rise by 17%. Simple math. (1.00 x .9 x 1.30 = 1.17)
You want to see some cons from someone who has been studying this Fairtax scheme for six years? Try these.
(1) Federal taxation of State and Local government consumption is unconstitutional.
(2) After having paid in to the SS Trust Funds for 45 years or so, retirees will be forced to resume paying for their health care and pension benefits with their sales tax dollars. And, everyone's after tax savings will be double taxed when spent. Is that fair?
(3) The prebate would be scored as a $600 billion annual cash grant entitlement at a time when entitlements are rapidly squeezing out discretionary spending in the federal budget. The last thing we need is another huge entitlement program. And do you really believe that the Congress would ever agree to write everyone a monthly welfare check? Isn't going to happen!
(4) Your argument that we can choose how much tax to pay under the Fairtax is nonsense. Half of the family budget is for services and there are no tax free services. There are no tax free groceries, restaurant meals, home heating gas/oil, gas for your car, nothing tax free at Wal Mart, etc. Check your current budget and see just how much "used stuff" you purchased last year. And, don't expect an added cash windfall by buying used stuff. Prices for used goods will quickly adjust to the current new/used price relationship. Think about it as the embedded cost of the Fairtax. It's true that no tax revenue will be generated by buying used, but you aren't going to save any extra money. If you don't buy your underwear at Goodwill today, there would be no reason to do so under the Fairtax.
There is lots more wrong with the Fairtax, but I think you get the idea? Do some more homework and then make up your mind.
Dutchman3 - thanks for the valuable input. Goodie. I have more to study, now! I'll take your advice.
Dutchman3-, I guess that you are Van Gieson over at FTB, it being such a fine Irish name, and all... ;^)
Aardvark,
That is me? Or is it (I)?
Let me suggest you go to the FTB archives and select November 2006. That is where a blogger named James Kidd started to blog the whole bill, HR25. It will take time, but when you get to the finish line, you will understand both sides of most issues.
Good luck!
Hank
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