Video: John Linder and Neal Boortz on the Fair Tax
Ron Paul as President and the Fair Tax. What dreams are made of:)
H Res. 78: Representation Without Taxation
That's right, this rule change allows non-members of the House of Representatives to vote in favor of raising your federal income tax, even though their constituents (excluding DC) don't pay it. (While Puerto Ricans usually aren't subject to the federal income tax, they do pay payroll taxes.)
The non-members are Guam, American Samoa, Virgin Islands, Puerto Rico and the District of Columbia.
What should really worry you is that, of the five, only Puerto Rico doesn't lean socialist Democrat.
Link: House Roll Call Votes
FairTax Blogburst For January 17, 2007
The following is a press release from Representative John Linder, and published at the FairTax.org web site. With each new Congress, the FairTax bill must be reintroduced. Please make sure you let your Senators and Representative know of your support for the FairTax.
Washington, D.C. - Today, Representative John Linder (R-GA) introduced H.R. 25, the “The FairTax Act of 2007.” This bill was first introduced by Congressman Linder in 1999, and has become increasingly popular since that time. At the close of the 109th Congress the FairTax Act was the most popular tax reform bill in Congress with 59 supporters in the House, which far exceeded any other piece of tax reform legislation.
“The progress we have made since first introducing the FairTax is simply amazing. The grassroots growth has been phenomenal and it is evident that Americans get it. They are way ahead of the politicians on this one. In the 109th Congress, we had 59 supporters on the bill, and we did not solicit a single one. They came to my office because their constituents demanded it. That is happening all over the country.”
This bi-partisan legislation, with Congressman Dan Boren (D-OK) as an original co-sponsor, will repeal all corporate and individual income taxes, payroll taxes, self-employment taxes, capital gains taxes, estate taxes and gift taxes and replace them with a revenue-neutral personal consumption tax. The revenue neutral number advocated in the bill is 23%, which is very near to the average 22% embedded cost of the current system in every good purchased today. This embedded cost will be driven out of the price of goods because the FairTax will also eliminate all business to business taxes.
“Americans realize that we can achieve a voluntary tax system by allowing everyone to pay taxes when they choose and how much they choose by how they choose to spend. We are giving Americans an option of paying 23 cents of every dollar they spend with the freedom of anonymity, or paying 33 cents of every dollar they earn and the fear that the IRS will come knocking because of some unintentional mistake. They get it, and they are coming in droves to support change.”
The FairTax achieves voluntary taxation by providing a prebate to all Americans that offsets the tax consequences of spending up to the poverty level. This aspect of the bill makes it the most progressive tax proposal today. In essence, if a family of four does not exceed the poverty level spending which is established by the U.S. Department of Health and Human Services, then, with the prebate, they will pay no federal taxes for that year.
“Big ideas take a long time to achieve in Washington D.C., and I am excited with the progress we have made in such a short period of time. There are certain economic forces that are pushing us toward the FairTax. If we are going to continue to compete in a global economy, then we will have to move towards a system that removes the foot of the IRS from the throat of our economy.”
Congressman Linder added that he has a new grassroots oriented website, linderfairtax.house.gov that contains answers to any FairTax related questions.
Of course, you may also find the latest and most definitive information about the FairTax right here at FairTax.org.
Fair Tax Blogburst for January 10, 2007
by Debbie of Right Truth
John Edwards is running for president of the United States on his same old theme, 'two Americas'. He hopes to get votes by pitting the 'haves' against the 'have nots'. He even chose New Orleans to make his announcement, with the unspoken message that the government failed the poor people and he has stepped in to be their savior.
Edwards is promising universal health care, pulling out of Iraq ,taxing oil company profits and eliminating President Bush's tax cuts to pay for his priorities. Edwards is not alone in his thinking about the evil rich (of which he happens to BE ONE). Yesterday Thomas Sowell had a wonderful article that relates to this, titled 'A Dangerous Obsession'.
Mr. Sowell picked up on the media, the left, and academia's continuous obsession with “gaps” and “disparities” in income. 'As one talk-show host put it, “It makes no sense” that a corporate executive makes over $50 million a year.' Sowell says, "Ninety-nine percent of all the things that happen in this world “make no sense” to any given individual."
If you cannot understand something as simple as making a lead pencil, why should you be surprised that you don’t understand why someone is making a lot more money than somebody else?
Moreover, if this obsession with income disparities is to be something more than mere hand-wringing or gnashing of teeth, obviously the point is that somebody ought to “do something” to change what you don’t understand.
That's what the left, liberals, and Edwards wants to do. They want to correct what they perceive as something wrong, ...some people having more money than others. And how would one go about correcting such an atrocity? That's easy. Take away the excess from one, and give it to another. Or as Mr. Sowell puts it, "Usually that means that the government — politicians — should impose policies based on your ignorance of what is going on."
Of course, such political control of incomes is usually advocated only to deal with “the rich.” But, when income taxes were imposed in the early 20th century, they applied only to “the rich” and they took a very small percentage of their income.
Once the floodgates are opened to this kind of political power, however, we have seen with the income taxes that they not only spread far beyond “the rich,” they took a serious share of even middle class incomes.
Moreover, the income tax has spawned an intrusive bureaucracy, creating so much complexity and red tape that millions of ordinary citizens have to go get some accountant to fill out the forms for them — and then sign under penalty of perjury that it was done right.
If you knew how to do it right, you wouldn’t have to go to somebody else to have it done, would you? ...
It is also worth noting that the people who are said to be earning “obscene” amounts of money are usually corporate executives. There is no such outrage whipped up when Hollywood movie stars make some multiple of what most corporate executives make.
In short, Mr. Sowell is asking, "Whose wealth is it anyway?" Did the government earn this wealth? No, they didn't. Why should they be the ones to decide who is worthy to spend that wealth? Did the government produce any product, any widgets, any business that will employ others? Unless you count the bureaucracies needed to collect and redistribute this wealth, the answer is no.
In reading Mr. Sowell's article, I thought directly of the United States, but Tom at Libertarian Leanings looks at this from a world view.
Israel has nowhere near the natural resources of the Arab states, yet they are wealthier by far. According to the CIA World Factbook, Israel produces a measely 2740 barrels of oil per day. At the same time Saudi Arabia puts out 9,475,000, and Iran 3,979,000. Yet Israel enjoys a per capita GDP of $25,000, while Saudi Arabia and Iran come in at $13,100 and $8,400 respectively. The income gap is not a crisis in Israel because Israelis have the freedom to produce wealth. Arab state citizens have less freedom, less wealth, and less hope for getting it.
Unfortunately, leftists (and Democrats) can't bring themselves to support the spread of freedom. Their antidote to the growing gap between the rich and the poor is to prevent the creation of wealth. Taxation discourages an activity, so the lefty solution to their contrived crisis is to tax wealth (income) at ever higher rates as a person demonstrates ever higher success in creating it. The Arab solution is to wipe Israel off the map. Actually, there are Democrats who seem to be coming around to that view.
This brings me back to the United States, to the Fair Tax, which would replace the federal income tax system with a progressive national retail sales tax. It provides a "prebate" to ensure no American pays federal taxes on spending up to the poverty level, dollar-for-dollar federal revenue replacement and, through companion legislation, repeal of the 16th Amendment.
This nonpartisan legislation (HR 25/S 25) abolishes all federal personal, gift, estate, capital gains, alternative minimum, Social Security, Medicare, self-employment, and corporate taxes and replaces them all with one simple, visible, federal retail sales tax – collected by existing state sales tax authorities.
The FairTax taxes us only on what we choose to spend, not on what we earn. It does not raise any more or less revenue; it is designed to be revenue neutral. (more)
Why should people be punished because they took the risks to build a business, to produce a product, to creat a new widget? Why should they be punished by having the government take away a large portion of their profits, profits that could be used to produce MORE jobs, more widgets, more wealth? Why should the creators of wealth, who give much of that wealth away to worthy and needy organizations, be punished? They shouldn't.
On the world scene, Brad leaves a comment at Thought Streaming
"One can never force a productive, ambitious, disciplined spirit to subsidize weak mindsets girded by overactive libidos, they will always rebel,...". Graeme also leaves a comment, " ...if you give people a "voice" at work, they will produce more. They have incentive to work."
If you let people produce wealth, reinvest wealth, and use it as they see fit without government intrusion, you will actually see more help being given to those in need; more opportunities for those in need of better jobs, higher salaries, more education. Don't punish people for using the gifts and opportunities God gave them.
That my dear friends is what folks like Edwards (and Hillary Clinton) want to do.
Fair Tax Blogburst For Nov. 15, 2006
by
Terry Dillard of The Right Track
Well,
the elections are over and I've heard everything from "It's a sure
thing" to "No way it'll even make it out of committee now"
regarding the FairTax.
One
thing I do know -- never underestimate the power of a grassroots movement.
Democrats were shown in 1994 not to take their power for granted, and
Republicans had that same lesson hammered home to them a week ago. The American
people have no hesitation whatsoever about "flushing the toilet" as I
prefer to call it.
Whatever
your political orientation, it's been amply proven by now that lower taxes
produce a stronger economy -- if we can keep spending in check. Giving
Americans the ability to choose exactly how much they pay in taxes via the
FairTax is a win-win situation for individuals and our government.
I
found an interesting blog article that managed to work the FairTax into a post
on national security. From "Freedom Is Always the Right Answer", the
post is titled "Defeating China,
Russia, North Korea, and Iran in the Cold War of Terror". The post
begins:
China and Russia are allied and using all the tools at
their disposal, including supporting North Korea and Iran, and to a lessor
extent Venezuela, to defeat us in a new Cold War of Terror.
China and Russia have supplied weapons, diplomatic cover, and economic support to these rogue states to drain American resources, our respect in the international community, and generally create chaos.
China is stealing our technological secrets through a coordinated program of traditional intelligence and computer infiltration.
China and Russia are threatening our satellites. China constantly threatens our ally, Taiwan. We can use the lessons from the first Cold War to figure out how to win this new one.
The
author postulates that winning the war against terror and those who sponsor it
-- directly or indirectly, it would seem -- will require the same tactics used
by JFK to get the missiles out of Cuba, and by Reagan to defeat the Soviet Union. Part of this, of course, is
economic in nature. According to the author's theory:
Once we put China in this position, it won't allow North Korea to be the tail that wags the dog. China will be upset with the U.S., as will the rest of the world who will call us dangerous cowboys, like they did Reagan, but China's only good option would be to work for a nuclear free Korean peninsula. China would suffer the economic pain (no more Kentucky Fried Chicken) of losing the world's greatest consumer as a costumer, plus it would be in the untenable position of being at the mercy of the madman in North Korea. America could get China's support for regime change or some other policy to remove the nukes in North Korea.
America would also suffer economic pain (T-Shirt prices would rise) from these trade restrictions, but domestic policy would limit that pain, and turn it into an advantage. By adopting the FairTax, America would begin to return as a manufacturing juggernaut. Reducing government interference in the free market would assist this process. American products, no longer burdened by the income tax, would compete with Chinese made products on the world market, further enriching America and hurting China/NK. This American growth in manufacturing would drive prices lower to compensate for the price increases from restricted trade with China/NK. This would put pressure on China to democratize. [TD - emphasis added]
But
aside from National Security, the FairTax is just a good idea. The Kodiak Daily
Mirror came out in favor of it because it is grassroots in nature. You
know, "We the people" kind of thinking. In "New Tax Act Gives Power to the People",
the Daily Mirror gives its reasons for supporting the FairTax:
A proposed bill, The Fair Tax Act, would change the way
our government collects our tax money. It sounds the death toll for the
Internal Revenue Service, paycheck withholdings and tax returns. As the
replacement, a national sales tax, designed to fund our government at its current
rate, would replace our old system. It relieves the burden of an overly
complicated tax code as special interests lobby for loopholes.
The national sales tax will be collected on all new goods
and services and takes the place of our income withholdings. The system is
blind to income levels, yet ensures the basic necessities of life are not taxed
through a tax pre-bate system. This
prevents the government from dictating what the basic necessities are and
affords us the ability to make our own decisions. [TD - emphasis added]
How
cool is that? What a novel idea! Letting us make our own decisions! I like it!
The Daily Mirror finishes the article by referring to no less a document than
our own Declaration of Independence:
As stated so eloquently in our Declaration of
Independence, we hold the power, not the government or our elected officials.
It is time for a real change offered by the Fair Tax Act to encourage
economical growth and investment. It is time to do away with the burdensome
taxation system that we detest and political officials use to gain votes.
All
I can add to that is a hearty "Amen"!
The FairTax Blogburst is jointly produced by Terry of The Right Track Blog and Jonathan of Publius Rendezvous. If you would like to host the
weekly postings on your blog, please e-mail Terry. You will be added to our mailing list and
blogroll.
Fair Tax Blogburst For Nov. 2, 2006
By Jonathan of Publius Rendezvous
Here is an update of
candidate positions/incumbent positions on the FairTax. More information like
this can be found at the “FairTax
Scorecard.”
Position Updates
Nelson, Bill FL (D) Changed from WNC to Leans Against 10/12/2006
Goode,
Vergil H., Jr. VA-05 (R) Cosponsors H.25 on 9/13/2006
Pence, Mike IN-06 (R) Cosponsors H.25 on 9/06/2006
Boren, Dan OK-02 (D) Cosponsors H.25 on 9/06/2006
Granger, Kay TX-12 (R) Cosponsors H.25 on 6/19/2006
Mica, John
L. FL-07 (R) Cosponsors H.25 on 6/12/2006
Drake,
Thelma D. VA-02 (R) Cosponsors H.25 on 6/08/2006
Isakson,
Johnny GA (R) Cosponsors S.25 on 5/22/2006
Weldon, Dave FL-15 (R) Changed from Leans Against to Against (4/11/06)
Cornyn, John TX (R) Cosponsors S.25 on4/3/2006
Crenshaw,
Ander FL-04 (R) Cosponsors bill on 3/16/2006
Bonner, Jo AL-01 (R) Cosponsors bill on 3/14/2006, Changed from Leans For to For
Feeney, Tom FL-24 (R) Cosponsors bill on 3/14/2006, Changed from Leans For to For
Moran, Jerry KS-01 (R) Cosponsors bill on 2/28/2006, Changed from Leans For to For
Tiahrt, Todd KS-04 (R) Cosponsors bill on 2/8/2006, Changed from WNC to For
Davis, Susan CA-53 (D) C 2/2/2006, Changed from WNC to Against
Bachus, Spencer AL-06 (R) Cosponsors bill on 1/31/2006, Changed from Leans For to For
Sullivan, John OK-01 (R) Cosponsors bill on 1/31/2006, Changed from Leans For to For
Davis, Lincoln TN-04 (D) Changed from Leans Against to Will Not commit (1/25/06)
Weldon, Dave FL-15 (R) Changed from Leans For to Leans Against
Fair Tax (1/25/06)
(Corrected 2/7/2006)
Terry and I encourage
each of you to consider writing and asking your candidates/incumbents in this,
the final week before the election. Terry and I, as I am sure most of you,
consider this to be a non-partisan, no-brainer and would like to see
Republicans and Democrats alike come together over such a proposal.
The FairTax Blogburst is jointly produced by Terry of The Right Track Blog and Jonathan of Publius Rendezvous. If you would like to host the weekly postings on your blog, please e-mail Terry. You will be added to our mailing list and blogroll.
FairTax Blogburst for Oct. 11, 2006
by
TD of The Right Track
As
I see it, the main problem with the Income Tax is that it is virtually
impossible to enforce completely and fairly. Compliance with the Income Tax
depends on taxpayer truthfulness, which generally is motivated either by a)
good character, or b) fear of an IRS audit. With the FairTax, the tax is
collected when the money is spent, from everyone, with greatly reduced
opportunities for non-compliance by the public.
For
instance, what about the criminal element in our country? Have you ever heard
of the Mafia? Or the drug dealer? Do you think that these people report 100% of
their income? Of course not! They get out of paying a huge percentage of their
actual tax bill by the simple expedient of not reporting all of their income.
But these same individuals still have to pay utility bills, purchase
prescription drugs, visit doctors, and buy food. And if they believe in the
"high life" of new cars, fancy clothes and jewelry, and new homes,
they're going to pay more than "Joe Six-pack" who chooses to drive a
used car, or purchase a home that's not brand new.
And
it's not just individuals who are managing to avoid paying taxes these days.
Everyone in America has heard of the rush to move
American companies "offshore", whether in whole or in part. Think
about it -- have you ever seen an American-flagged commercial vessel? Oh sure,
we've got our warships, but what about commercial boats that carry cargo or
cruise passengers? Most of these are flying the flag of Liberia or Panama-- low-tax nations.
In
the mid-1950s, about 33% of all income taxes collected were paid by American
corporations. Today that number is down to approximately 10%. From "The FairTax Book" by Boortz
and Linder:
"That
plunge is a major factor in our recent soaring deficits. Indeed, international
corporations are essentially "voluntary" taxpayers today, paying only that amount in taxes that they believe
will avoid attracting embarrassing news coverage. These
corporations believe that our draconian tax structures make their actions
necessary. The OFCs [offshore financial centers, or banks - TD] make their
plans feasible" [Emphasis added - TD]
Boortz
and Linder make the point that if we eliminated all taxes on capital and labor,
(which the FairTax does), the United States would become the world's tax
haven.
We
have the most stable economy, the most liquid and trusted markets, and the
highest rates of labor productivity in the world -- and the trillions of
dollars in those OFCs would flow back home to the United States for the very
reason they found themselves offshore to start with.
And
we're not just talking about American businesses coming home, we're talking
about wooing corporations based in other countries into America. Think of the economic benefits!
More productivity, lower unemployment, higher wages, and all occurring within a
tax system that allows you at least partly to choose whether to pay
taxes! Buy it new, pay a tax, buy it used and don't!
The FairTax Blogburst is jointly produced by Terry of The Right Track Blog and
Jonathan of Publius
Rendezvous. If you would like to host the weekly postings on your blog,
please e-mail Terry. You will be added
to our mailing list and blogroll.
TD
FairTax Blogburst for Oct. 4, 2006
by
Jonathan Garner of Publius
Rendezvous
It
has been interesting lately to observe just what the critics of the Fair Tax
have to say. Lately, much of what has been said has centered around percentages.
Clever as it may be to confuse people with cleverly worded assertions that tend
to fool the average American when it comes to these issues. If anyone in the
audience is similar to me, it takes focused attention lest my eyes glaze over
at the thought of following someone's lessons involving percentages, statistics
and numbers in general.
Succinctly,
what has been asserted that I have seen generally resembles something such as
this: (http://www.jpfo.org/fairtax.htm)
Remember, even the proponents admit they'd need a 23
percent tax rate to fund the current size of the federal government. However,
they are starting out their new "fair" tax system with highly
deceptive language.
H.R. 25, Section 101(b)(1) states "FOR 2005- In the
calendar year 2005, the rate of tax is 23 percent of the gross payments for the
taxable property or service." Note the phrase "of the gross
payment."
Here's how it works: You buy a candy bar for a total
price, including tax, of $1.30. One dollar of that price pays for the candy
bar; $.30 goes to the federal government.
One dollar purchase + $.30 in tax sounds like 30 percent
to you and me (and to every state that currently has a sales tax). But the
"FairTaxers" don't calculate it that way. They say: $1.30 total
price. $.30 = 23 percent of $1.30, therefore the tax is 23 percent.
Many critics have pointed out that this is a deceptive way
to calculate a sales tax. AFT rebuts the critics by saying (we paraphrase for
simplicity), "If you made $1.30 in income and paid $.30 of it in tax,
you'd call it a 23 percent tax rate." The 23 percent figure is what AFT
refers to as the "tax inclusive" rate.
But a sales tax is not an income tax, and when we see
national sales tax advocates and uncritical journalists promoting the 23
percent figure without giving the underlying explanation, we can only think
that some very thick wool is being pulled over people's eyes.
But,
as we shall see, there is yet again another major study that has been conducted
that definitively illustrates the merit of the Fair Tax. As has been reported
by The Fair Tax Blog (http://www.fairtaxblog.com/20061002/kotlikoff-study-23-fairtax-revenue-neutral/),
Boston University Economics Professor Laurence Kotlikoff's much-anticipated
study of the necessary revenue-neutral rate for the FairTax has been published
and released. Terry and I will refrain from reproducing the entire study, but
peruse through the abstract below to see just how much the supporters already
know!
As
specified in Congressional bill H.R. 25/S. 25, the FairTax is a proposal to
replace the federal personal income tax, corporate income tax, payroll (FICA)
tax, capital gains, alternative minimum, self-employment, and estate and gifts
taxes with a single-rate federal retail sales tax. The FairTax also provides a
prebate to each household based on its demographic composition. The prebate is
set to ensure that households pay no taxes net on spending up to the poverty
level.
Bill
Gale (2005) and the President's Advisory Panel on Federal Tax Reform (2005)
suggest that the effective (tax inclusive) tax rate needed to implement H.R. 25
is far higher than the proposed 23% rate. This study, which builds on Gale's
(2005) analysis, shows that a 23% rate is eminently feasible and suggests why
Gale and the Tax Panel reached the opposite conclusion.
This
paper begins by projecting the FairTax's 2007 tax base net of its rebate. Next
it calculates the tax rate needed to maintain the real levels of federal and
state spending under the FairTax. It then determines if an effective rate of
23% would be sufficient to fund 2007 estimated spending or if not, the amount
by which non-Social Security federal expenditures would need to be reduced.
Finally, it shows that the FairTax imposes no additional real fiscal burdens on
state and local government, notwithstanding the requirement that such
governments pay the FairTax when they purchase goods and services.
Implementing
the FairTax rate of 23% would produce $2,586 billion in federal tax revenues
which is $358 billion more than the $2,228 billion in tax revenues generated by
the taxes it repeals. Adjusting the base for the prebate and the administrative
credit paid to businesses and states for collecting the tax results in a net
tax base of $9,355 billion. In 2007, spending at current levels is projected to
be $3,285 billion. Revenues from the FairTax at a 23% tax rate, plus other federal
revenues, are estimated to yield $3,209 billion which is $76 billion less than
current CBO spending projections for 2007. The $76 billion amounts to only
2.73% of non-Social Security spending ($2,177 - $2,101). This is a remarkably
small adjustment when set against the more than 30% rise in the real value of
these expenditures since 2000.
Ensuring
real revenue neutrality at the federal level, given the net base of $9,355
billion, implies a rate of 23.82% on a tax-inclusive basis and 31.27% on a
tax-exclusive basis. These and other calculations presented here ignore a)
general equilibrium feedback (supply-side and demand-side) effects that could
significantly raise the FairTax base (see, for example, Kotlikoff and Jokisch,
2005), b) the possibility that tax evasion would exceed the considerable amount
automatically incorporated here via the use of NIPA data, which undercount
consumption expenditures due to evasion under the current tax system, and c)
the roughly $1 trillion real capital gain the federal government would secure
on its outstanding nominal debt, were consumer prices to rise by the full
amount of the FairTax.
The
FairTax redistributes real purchasing power from state and local governments to
their state and local income-tax taxpayers. It does so by reducing factor
prices relative to consumer prices and, thereby, reducing the real value
(measured at consumer prices) of state and local income tax payments, which are
assessed on factor incomes (namely, factor supplies times factor prices).
Gale
(2005) and the Tax Panel (2005) recognized this loss in real state and local
government revenues in claiming that these governments need to be compensated
for having to pay the FairTax. But what they apparently missed is that this
loss to these governments is exactly offset by a gain to their taxpayers.
Were
state and local governments to maintain their real income tax collections - the
assumption made here - by increasing their tax rates appropriately, their
taxpayers' real tax burdens would remain unchanged and there would be no need
for the federal government to compensate state and local governments for having
to pay the FairTax on their purchases. The second is that H.R. 25 does not
preclude state and local governments from levying their sales taxes on the FairTax-inclusive
price of consumer goods and services. This produces significantly more revenue
compared to levying their sales taxes on producer prices.
Moreover,
Gale (2005) and the Tax Panel (2005) arrived at a higher tax rate because they
did not estimate the FairTax rate, but instead estimated a sales tax of their
own design which had a substantially narrower base.
The FairTax Blogburst is jointly produced by Terry of The Right Track Blog and Jonathan of Publius Rendezvous. If you would like to host the weekly postings on your blog, please e-mail Terry. You will be added to our mailing list and blogroll.
FairTax Blogburst For Sept. 27, 2006
by
TD of The Right Track
A
quick and dirty search through Google News for articles, news, and
editorials revealed no less than 14 pieces written in the last month
regarding the FairTax. Fully 1/3 of those were editorials agreeing with the
need for the FairTax.
A
sampling:
From
the Denver Daily News, an editorial titled "FairTax, not flat tax, needed to fix
nation’s taxation woes":
Dear editor,
The IRS needs to be eliminated and replaced with the
FairTax, not the flat tax, as suggested by columnist Aaron Harber in Monday’s
Denver Daily News.
The flat tax changes absolutely nothing — the IRS, tax
code, regulations, 16th Amendment, corporate taxation and payroll taxes (the
way Social Security is funded) stay exactly the same under the flat tax.
At best, the flat tax is temporary, the wrong direction to
move towards simplification.
From
the Pittsburgh Tribune-Review, "The Fairer Tax":
The Fair Tax (FairTax.org) will
make our true tax burden -- most of which is concealed in the price of goods
and services -- visible to all and is a necessary first step toward smaller and
less-intrusive government.
We cannot allow the perfect to become the enemy of the
good.
So first, let's replace the current complex and dishonest
system of taxation with a fair and transparent system that will allow the
people to choose how much government they can afford in full knowledge of how
much it really costs.
The
Raleigh/Durham News & Observer has an editorial headlined "Total
Replacement":
Our tax code has grown steadily more complex, unwieldy,
expensive and out of control ever since its overhaul in 1986. The IRS is
increasingly unable to cope with the tax code, and puts much of its resources
to uses unrelated to raising revenue and contrary to the wishes of the
Founders.
Like Icarus flying ever closer to the sun, the tax system
appears to be headed for self-destruction. It is far beyond any fix and is
losing respect and credibility. The only reasonable solution is to finally and
completely scrap it and replace it. I support the revenue-neutral FairTax plan.
(http://www.fairtax.org/
1-800-FairTax).
This
is just a sampling of what people are saying all across the country. Truly a
grassroots effort, it takes people willing to step up and show public support
for the FairTax to convince politicians that it's in their best interest to
support the bills.
One
way to show public support is to write an editorial to your local paper,
no matter how large or small. Use the FairTax category that may appear on this
participant blog, visit http://www.fairtax.org/,
or read the FairTax book by Boortz and Linder to learn more. Get your facts
straight, then write your editorial and submit it. Many papers now have a way
to submit online or via e-mail.
However
you decide to do it, your public support for the FairTax is vital.
The FairTax Blogburst is jointly produced by Terry of The Right Track Blog and
Jonathan of Publius
Rendezvous. If you would like to host the weekly postings on your blog,
please e-mail Terry. You will be added
to our mailing list and blogroll.
Fair Tax Blogburst For Sept. 13, 2006
by Jonathan of Publius Rendezvous
To borrow what was spoken of last week in the Fair Tax BlogBurst, I thought I would take this burst, and build upon the debate begun by one of Debbie's readers at Right Truth. For those of you knew to the audience, here is the original burst, and here is the assertion made by "Ralph Ekwall."
We now have a progressive income tax system that imposes a higher rate of taxation for high income earners. The so-called “Fair Tax” would impose a higher rate of taxation on middle and low income earners and allow most of the money earned by wealthy people to be untaxed.
I tend to disagree entirely with the thesis underpinning any progressive tax system delineating that there are certain brackets of individuals who should be punished just for the simple fact that they earn higher incomes than other individuals.
The fundamental creed of this dogma accepts the premise that the spectrum of incomes is nothing more than a zero-sum game. Thus, individuals do not have any chance whatsoever to rise to those higher brackets and better themselves as they move throughout life.
However, I digress, for I wanted to discuss was the specifics surrounding "the prebate." I believe this scheme encapsulates the “equality” sought by “progressive” proponents of any progressive tax scheme better than the progressive tax could ever hope to achieve. That is, equality can be seen only if one does not have class warfare and envy as the basis for their tax structure.
So, how does this “prebate” work?
All valid Social Security cardholders who are U.S. residents receive a monthly rebate equivalent to the FairTax paid on essential goods and services, also known as the poverty level expenditures. The rebate is paid in advance, in equal installments each month. The size of the rebate is determined by the Department of Health & Human Services’ poverty level guideline multiplied by the tax rate. This is a well-accepted, long-used poverty-level calculation that includes food, clothing, shelter, transportation, medical care, etc. (See chart in Figure 1 below)
And, as we see in how this "prebate" works, one is able to ascertain the notion of equality realized by the "prebate." The prebate seeks to treat a "necessity" just as their name implies they should be treated. The necessities are the substance and the needs that every American needs in order to survive. It treats every American as if they are the same in the basics of what they need to survive.
It treats all Americans equally.
In this definition of "equal" all Americans are treated the same no matter their socio-economic status, which brings up another subject....constitutional history.
At this moment, I would really like to express my appreciation to TD for being patient with me throughout the course of this summer. As some of you may know, I sat for the bar recently and I have been detained with an interstate move, new employment and biting my fingernails off as I wait for the bar results. But, enough of my excuses, Terry and I started this BlogBurst and, unfortunately, Terry has had to shoulder much of the load this summer. He has done a tremendous job and I know all of you appreciate his hard work and dedication. I just wanted to say thanks, good buddy!
The FairTax Blogburst is jointly produced by Terry of The Right Track Blog and Jonathan of Publius Rendezvous. If you would like to host the weekly postings on your blog, please e-mail Terry. You will be added to our mailing list and blogroll.
FairTax Blogburst For Sept. 6, 2006
by Debbie of The Right Truth
A reader here at Right Truth, Ralph Ekwall, who doesn’t like the Fair Tax sent me an email. He seemed to think that I would not be interested in hearing his opinions, but that could not be further from the truth. I think healthy debate is good and encourage it. Below are his arguments and our reply:
I doubt you will print this since it is in opposition to the “Fair Tax.” The “Fair Tax” is really unfair because it taxes middle and low income people at a higher rate than wealthy income people. Here is an example.
Let us consider a tax rate of 30% for the so-called “Fair Tax.” Let us look at how it affects two different American families: Mr. Average Joe and Mr. Rich.
Mr. Average Joe makes just $45,000 per year. At that salary he must spend everything that he makes to support his family. So, almost all of his income is taxed. His rate of taxation is between 27- and 30% He may give money to his church or to a charity and that would not be taxed.
Now consider Mr. Rich who has an income of $10,000,000 per year. He is really rich. Most of his income will be reinvested in his business and not taxed. He will put some of his money into an education trust for his children and that is not taxed. It may be possible that he will spend $1,000,000 of his income, but that is doubtful. If so then $1,000,000 of his income is taxed and he has $9,000,000 of income that is not touched by taxation. His rate of taxation is about 3%. I ask you - is that a fair tax?????????
We now have a progressive income tax system that imposes a higher rate of taxation for high income earners. The so-called “Fair Tax” would impose a higher rate of taxation on middle and low income earners and allow most of the money earned by wealthy people to be untaxed.
It does not seem fair to me. –by Ralph Ekwall
Our reply:
You fail to mention that Mr. Average Joe will benefit tremendously from the PREBATE included in the FairTax. Your statement that “almost all” of his income would be taxed is erroneous. I cannot off the top of my head tell you how much of a prebate Mr. Average Joe and his family would receive, but it would be substantial.
You also fail to consider that Mr. Rich who will not have to pay tax on his income or on returns from his investments will now have more money to re-invest and he will probably have more money to return to his business which in turn creates jobs for people like Mr. Average Joe. The economy prospers, Mr. Rich is rewarded rather than punished for his entrepreneurship, and Mr. Average Joe and his friends would be assured of good jobs.
Hmmmmmmmmmm, I’m doing a little math here:
If Mr. Average Joe spends all of his 45,000 dollars and is taxed at say 23 percent he would pay $10,350 in taxes most of which he would get back in the prebate.
If Mr. Rich spends a million dollars at 23 percent his tax would be $230,000 and his prebate would be insignificant to the tax that he paid.
Hmmmmmmmmmmmmm, sounds fair to me.
Also, don’t forget that the tax is paid ONLY on NEW goods and services. If Mr. Average Joe buys that decent used minivan for his family, guess what! NO TAX! –by Thomas Hamilton
We welcome any other comments or opinions, and thanks Mr. Ekwall for this opportunity to address your questions.
The FairTax Blogburst is jointly produced by Terry of The Right Track Blog and Jonathan of Publius Rendezvous. If you would like to host the weekly postings on your blog, please e-mail Terry. You will be added to our mailing list and blogroll.
Dead Silence In Missouri
The Federal Funding Accountability and Transparency Act of 2006 calls for a public database of entities that receive your tax dollars via Federal funding. You can read the text of the bill, S2590 (there are two versions) here.
Missouri taxpayers might want to contact Senators Bond and Talent and ask them why they aren't among the 29 cosponsors of this bill.
While we're on the subject, would you people in Alaska do the rest of us a favor and GET RID OF TED STEVENS! Citizens Against Government waste has the pork-filled Stevens profile here, where they note that Stevens has been holding up S2590.
Fair Tax Blogburst For August 30, 2006
by
Julie of Degree of Madness
Follow-up on last week's Blogburst about the outside collection
agencies the IRS is employing to collect delinquent taxes.
On
August 23, this was the headline: IRS
Warns Against Phony Debt Collectors.
The IRS warned taxpayers Wednesday not to be duped by
scammers posing as private debt collectors the agency has hired to chase unpaid
tax debts.
The
program isn't even in place yet and concerns are already being raised, and not
just by this Blogburst writer.
The Internal Revenue Service designed the debt collection
program to minimize that risk "because we know what it's like out there
with regard to identity theft nowadays," said Brady Bennett, IRS Director
of Collections.
The
IRS designed the program to minimize the risk. Well that's comforting. The IRS
is looking out for you.
And
this article addresses something I wasn't sure about and that is whether the
private collection agencies would have access to social security numbers. They
will.
The IRS plans to give the collection agencies basic
identifying and account information about the chosen taxpayers, including their
names, addresses and Social Security numbers. The agencies do not have access
to tax returns.
Also
from the article:
Identity thieves have posed as IRS agents in
"phishing" schemes that use the tax agency's logo to lure victims.
The e-mail schemes are designed to dupe taxpayers into revealing personal
financial information.
The IRS does not communicate with taxpayers through
e-mail, and it will not e-mail taxpayers about debts turned over to private
collectors. The IRS also does not ask taxpayers for any passwords or PIN
numbers that would allow the agency to access bank or credit card accounts.
Bennett also cautioned taxpayers chosen for the debt
collection effort to make any check or money order payable to the U.S.
Treasury, not a private company, and to send the money to the IRS. The
collection agencies have been told to provide addresses to the taxpayers they
contact.
This
is all well and good but the IRS cautioning taxpayers via articles such as this
probably won't be very widely read. Is the IRS planning to contact taxpayers
directly to advise them of this program? I've not received anything from them.
And from the first line of the article, "The IRS warned taxpayers",
how did they warn them? By telling the AP?
I
read some of the comments last week on blogs that posted the Blogburst. One
commenter responded to the statement I made about our tax information being
private by suggesting that since the government knows our tax information it is
not private. Good point, but that doesn't mean I want them passing it out to
employees of private companies. And if we had the Fair Tax the government would
know much less about our private financial information. KnightHawk at PoliPundit
had some really good responses to some of the questions raised. There were some
good questions raised and worth a look.
Now
on to this week's blogburst.
Our
representatives in Congress are finally getting the message that Americans are
"fed up" with the current tax code. The question is, how do we fix
it?
I
contacted my (Alabama) Senators and Representative in Washington to let them know of my support
for the Fair Tax. Three letters, three different responses. Congressman Spencer
Bachus (6th district) is a co-sponsor of the Fair Tax Act of 2005, H.R. 25.
Good news. Senator Jeff Sessions has not endorsed any specific proposal for
reform, but does agree something has to be done about the tax code. From his
letter: "Most taxpayers that I talk to are not only fed up with the
complexity of the tax code, but the enormous tax burden that has been placed on
them." Senator Richard Shelby supports "a flat tax, as opposed to a
national sales tax". I wanted to address Senator Shelby's position because
I believe his concerns about the Fair Tax are probably shared by many on
Capitol Hill.
From
his letter:
I support a flat tax, as opposed to a national sales tax,
because I believe that the flat tax encourages savings in a more effective
manner without leaving the federal budget vulnerable to fluctuations in our
economy. Under a flat tax, government revenues would not fluctuate as severely
because of changes in the economy as they would with a national sales tax. This
is the same problem that many state budgets are facing today because they
depend too much on sales taxes.
I'm
not really sure about the "encourages savings in a more effective
manner", but his concern about the fluctuations in the economy is
interesting. In other words, if our economy slows down the government should
not have to slow down. Changes, I'm assuming he means negative changes, in the
economy would surely affect the taxpayer but he would get no relief from Uncle
Sam. While the taxpayer's personal economy fluctuates (downward), the government
keeps right on spending. To me, this would be a good argument for the Fair Tax.
If the American taxpayer had to cut back and budget better, why not the federal
government? But according to a study by American Farm Bureau, #9 in the Fair
Tax FAQ, consumption is a more reliable source of revenue anyway.
Is
consumption a reliable source of revenue? Yes, in fact, consumption is a more
stable source of revenue than income. A recent study by American Farm Bureau
economist Ross Korves shows the FairTax base is less variable than the income
tax base. Why? Because during difficult times due to loss of a job or an
inability to work, people may not have as much income, or may have no income at
all. They borrow funds or use savings. They may not have earnings, but they
still continue to consume.
Another
argument from Senator Shelby:
Additionally, a flat tax better protects poor and
low-income Americans because they are not forced to overpay taxes through their
daily purchases, and then wait until the end of the month for a rebate check,
as many national sales tax plans have proposed. These Americans need this money
immediately to pay their bills and meet their needs. Under my proposal, the
"Tax Simplification Act," low-income Americans would not have to pay
for these distortions in the first place because of a personal deduction that
would apply to all Americans.
The
Fair Tax proposes a "prebate", paid at the beginning of the month. And
low-income Americans would have the same advantage as everyone else, no
deductions from their paychecks for federal withholding or social security and
Medicare. This is important. Even if the low-income American has no federal tax
withheld, the social security and Medicare taxes will still be deducted under
the Flat Tax. Currently it is 7.65% and everyone pays the same regardless of
income bracket.
Please
follow this link for Senator Shelby's proposal for a flat tax. It
certainly would be better than the current system, but it doesn't get rid of
the IRS, it does not eliminate the corporate tax which is a huge plus for the
Fair Tax, and it doesn't get rid of the social security and Medicare tax. The
Fair Tax does.
The FairTax Blogburst is jointly produced by Terry of The Right Track Blog and Jonathan of Publius Rendezvous. If you would like to host the weekly postings on your blog, please e-mail Terry. You will be added to our mailing list and blogroll.
Fair Tax Blogburst For August 23, 2006
by Julie of Degree of Madness
If you owe back taxes to the federal government, the next
call asking you to pay may come not from an Internal
Revenue Service officer, but from a private debt collector.
Within two weeks, the I.R.S. will turn over data on 12,500
taxpayers — each of whom owes $25,000 or less in back taxes — to three
collection agencies. Larger debtors will continue to be pursued by I.R.S.
officers. (link)
So
now, private firms will have access to our tax information, or at minimum how
much you (may or may not) owe to Uncle Sam. Our tax information is private. Or
it was up until now.
Within two weeks, the I.R.S. will turn over data on 12,500 taxpayers
— each of whom owes $25,000 or less in back taxes — to three collection
agencies. Larger debtors will continue to be pursued by I.R.S. officers. (my
emphasis).
And
the IRS isn't too particular about the business ethics of the firms they select
to receive our tax data:
One of the three companies selected by the I.R.S. is a law
firm in Austin, Tex., where a former partner, Juan
Peña, admitted in 2002 that he paid bribes to win a collection contract from
the city of San Antonio. He went to jail for the crime.
Last month the same law firm, Linebarger Goggan Blair
& Sampson, was again in the news. One of its competitors, Municipal
Services Bureau, also of Austin, sued Brownsville,Tex., charging that the city
improperly gave the Linebarger firm a collections contract that it suggested
was influenced by campaign contributions to two city commissioners.
And
how will these debt collectors be paid? They will receive 25%
of what they collect. Whether or not the tax bill is accurate or actually
owed at all (the IRS is in a league of its own when it comes to mistakes,
errors and general incompetence), will not be the concern of these collectors.
And
the privacy issue is not insignificant. It's not clear whether these firms will
be given the taxpayer social security number, but:
Private collectors will have authority to set up installment payment agreements,
and gather financial information about those targeted, presumably to assess
their ability to pay or to locate assets that might be attached.
Private
collectors will have the authority to gather our personal financial
information. Authority handed over to them by the federal government. Most
everyone is aware of the aggressive, heavy-handed methods of collections agencies.
I guess a partnership with the IRS just makes sense. A marriage made in heaven,
so to speak.
The
federal government already has too much access to our private financial
information. And the ability of the IRS to audit at will, with no constraints
or accountability is something we should not tolerate. And should not be forced
to tolerate. And now private firms can get in on the action. And profit from
it. At our expense.
There
are so many good reasons to support the Fair Tax. Preventing the IRS from
giving our private financial information to outside firms is just one more.
With
the Fair Tax, the IRS will be abolished. No other tax plan under consideration
abolishes the IRS. This is important. The IRS operates under the "guilty
until proven innocent" theory. And however unjust that may be, that's the
way it is. It will never change. The IRS has power that most politicians only
dream about. And IRS abuses are legend. And most of the abuses never make the
headlines. They are relatively small in nature but very significant to those
involved.
The
convoluted tax code is an outrage. The enforcer is an even greater outrage.
Leave your Constitutional rights at the door when the IRS shows up, 'cause you
no longer have any. The IRS has virtually free will to demand access to every
single detail of your financial life. With no probable cause.
Some
things just can't be reformed. Our tax code is one of them. The IRS is another.
With the Fair Tax, we will all pay our fair share, but we won't have to give up
our privacy, or our sanity, to do it.
The FairTax Blogburst is jointly produced by Terry of The Right Track Blog and Jonathan of Publius Rendezvous. If you would like to host the
weekly postings on your blog, please e-mail Terry. You will be added to our mailing list and
blogroll.
Fair Tax Blogburst for Aug. 8, 2006
by
TD of The Right Track
More
and more, I am hearing of people advocating for the FairTax in print, speeches,
symposia, television, and radio. I've gathered a few of the more recent
articles and provided links and a summary below each link. I've also quoted
from several of the articles. Seems like support for the FairTax is pretty
diverse!
Economic outlook: Georgia No. 1 in U.S. -
July 16, 2006
Georgia's economic outlook is
rosier than that of any other state in the nation, according to a new study by
the father of supply-side economics.
Arthur Laffer, an influential adviser to former President
Ronald Reagan, put Georgia
at the top of his annual
comparative ranking of state economies, a seven-category analysis that
primarily focuses on tax and fiscal policy. That's up from fifth place in 2005
and a marked improvement from a No. 24 finish in 2002.
...Laffer suggested the state might want to shift
more of the tax burden to sales from property or income, an idea popular among
state Republican lawmakers, who are currently examining the possibilities. Even
without such a shift, he advocated expanding the sales tax to encompass food
and services in exchange for a lower rate.
"You want to tax those factors the most that can
escape the least ... and in the least damaging fashion," Laffer said.
"The broader the base, the lower the rate, the better the tax."
Perdue agreed that the state might do well to adopt a more
consumption-focused tax system, perhaps after the fashion of the FairTax
proposed by U.S. Rep. John Linder, a Republican who represents parts of north
metro Atlanta.
July 18, 2006
Candidates in Colorado support the FairTax:
"We need to get rid of the IRS," said candidate
Jeff Crank. "We've got to allow people in the free market to make choices,
choose whether they want to pay taxes."
Some Republicans also voiced support for the proposed
"FairTax" that would replace all income, payroll, capital gains and
inheritance taxes with a 23 percent sales tax on new goods. All five
Republicans also favored abolishing the inheritance tax.
July 27, 2006
Congressional candidates in Arizona were asked about taxes
and spending:
Frank Antenori, the former Green Beret now working for
Raytheon, says the Bush tax cuts have resulted in "money pouring into the
treasury."
He says establishing an income tax was a big mistake.
"The Founding Fathers knew that imposing an income
tax would bring this country down," he says. "We screwed up with the
16th Amendment when we allowed the federal government the ability to levy taxes
on personal income."
Antenori favors a national sales tax and tariffs, which he
says "would be far less regressive than income taxes."
He likewise says the estate tax should be repealed because
"you should only pay taxes while you're alive."
Gravel:
'Let the people decide',
July 27, 2006
2008 Democrat and Presidential hopeful Mike Gravel supports the FairTax:
Another of Mr. Gravel’s major campaign points is the value
of implementing the so-called FairTax. Essentially, the FairTax system calls
for the abolishment of all federal taxes, including income taxes, with revenue
being replaced by a higher sales tax, likely between 20% and 30%.
Mr. Gravel said the prices of most goods would remain
fairly constant, since companies, no longer burdened with federal taxes, could
set their prices 20% to 30% lower.
“In the end, after a year’s transition, you’re not paying
any more in taxes than you were before,” he said. “That’s to keep it
revenue-neutral.”
For poor and middle class families, Mr. Gravel supports
the idea of the government sending monthly cash-flow checks.
“Then, you go get your paycheck, and there are no federal
deductions,” he said. “Now, that’s pretty good.”
...
“We will turn this country from the largest economic unit in the world to the
largest tax haven in the world,” he said. “Money will flow in. Investments will
flow in, investments to do things, and that will create jobs.
“You’re talking about leading the entire world on an
economic thrust forward,” he added.
Liberal Idealist Gives
Fair Tax Big Thumbs Up,
July 28, 2006
Ron Deval, a humanist, peace activist, and political agnostic strongly supports
the FairTax:
Reliably left on most issues, Deval is nonetheless
passionate about a tax revolution whose growing army is populated largely by
conservatives and libertarians. Describing himself as an "advocate of
things that favor humanity," Deval is, in short, a Fair Tax maniac.
Encouragingly, the Land O' Lakes man is not just another
guy with an opinion and a couple of Web sites. He can navigate a spread sheet.
After about 20 years designing programs that helped
wealthy clients of Northwestern Mutual in Milwaukee and Tampa pass inheritances
to their heirs, Deval, 53, became a real estate agent and tax preparer - two
professions keenly opposed to seeing the current system, with its designed-in
winners and losers, scrapped.
"If all taxpayers knew about the benefits" of
the Fair Tax, a proposed national sales tax designed to replace America's current complicated,
cumbersome and anti-competitive tax code, "it would pass in a
heartbeat," Deval says.
Read
the entire article, it will be well worth your time.
TD
The FairTax Blogburst is jointly produced by Terry of The Right Track Blog and Jonathan of Publius Rendezvous. If you would like to host the weekly postings on your blog, please e-mail Terry. You will be added to our mailing list and blogroll.
Fair Tax Blogburst For August 2, 2006
by TD of The Right Track
with special thanks to KnightHawk of Your Two Sense
Laurence J. Kotlikoff has written an article published by the Federal Reserve Bank of St. Louis Review in which he predicted bankruptcy for the United States -- unless serious reforms are put in place to raise revenue or cut spending.
While it's hard to agree with all of Kotlikoff's conclusions, one in particular is worth examining. According to Kotlikoff, his proposed policies would put America on track to eliminate the nation's "enormous fiscal gap" and avert bankruptcy.
Here's a summary of his plan (page 12 of the PDF file linked above):
The three proposals I recommend cover taxes, Social Security, and healthcare and are interconnected and interdependent. In particular, tax reform provides the funding needed to finance Social Security and healthcare reform. It also ensures that the rich and middle class elderly pay their fair share in resolving our fiscal gap.
And what of the proposed tax reform? What form would it take? Apparently, Kotlikoff likes the FairTax:
The plan here is to replace the personal income tax, the corporate income tax, the payroll (FICA) tax, and the estate and gift tax with a federal retail sales tax plus a rebate. The rebate would be paid monthly to households, based on the household’s demographic composition, and would be equal to the sales taxes paid, on average, by households at the federal poverty line with the same demographics.
The proposed sales tax has three highly progressive elements. First, thanks to the rebate, poor households would pay no sales taxes in net terms. Second, the reform would eliminate the highly regressive FICA tax, which is levied only on the first $90,000 of earnings. Third, the sales tax would effectively tax wealth as well as wages, because when the rich spent their wealth and when workers spent their wages, they would both pay sales taxes.
The single, flat-rate sales tax would pay for all federal expenditures. The tax would be highly transparent and efficient. It would save hundreds of billions of dollars in tax compliance costs. And it would either reduce or significantly reduce effective marginal taxes facing most Americans when they work and save.
The sales tax would also enhance generational equity by asking rich and middle class older Americans to pay taxes when they spend their wealth. The poor elderly, living on Social Security, would end up better off. They would receive the sales tax rebate even though the purchasing power of their Social Security benefits would remain unchanged (thanks to the automatic adjustment to the consumer price index that would raise their Social Security benefits to account for the increase in the retail-price level).
The sales tax would be levied on all final consumption goods and services and would be set at 33 percent—high enough to cover the costs of this “New New Deal’s” Social Security and healthcare reforms as well as meet the government’s other spending needs. On a tax-inclusive basis, this is a 25 percent tax rate, which is a lower or much lower marginal rate than most workers pay on their labor supply. The marginal tax on saving under the sales tax would be zero, which is dramatically lower than the effective rate now facing most savers.
While Kotlikoff's tax-inclusive rate is a couple of percentage points higher than that currently being proposed in the House and Senate Bills, the method is identical.
The arguments for the FairTax just keep coming in. That's because the FairTax is the best thing for America with regard to serious tax reform.
Just an FYI, KnightHawk also published the results of a ballot initiative on the FairTax from three metropolitan Atlanta counties. The question was only on the Republican ballot (aren't Dems for the FairTax?), and only in the three Atlanta-area counties, and it was non-binding. It was meant to gauge reaction to the FairTax. The results:
Gwinnett County:
Total Votes: 35,755
Yes - 31,068. 86.9% / No - 4,687 13.1%Cobb County:
Total votes: 39,458
Yes - 33,598. 85.15% / No - 5,860. 14.85%Fayette County:
Total votes: 11,517
Yes - 9,828. 85.33% / No - 1,689. 14.67%
An average of 85.79% of the voters in these three counties favor the FairTax! Senators? Representatives? Are you listening? Don't make us shout!
The FairTax Blogburst is jointly produced by Terry of The Right Track Blog and Jonathan of Publius Rendezvous. If you would like to host the weekly postings on your blog, please e-mail Terry. You will be added to our mailing list and blogroll.
Fair Tax Blogburst For June 28, 2006
by TD of The Right Track
With any proposal, sooner or later the naysayers start their doom-and-gloom predictions. The FairTax proposal is no exception. There are those out there whining and crying about how "it won't really work that way", despite the fact that the current income tax system isn't working the way it's supposed to work. I suppose their fear is exchanging the devil they know for the devil they don't know. In this article, I'll highlight some of their worries and attempt to dispel them.
A national sales tax will create a huge black market.
Among all the arguments to be made against the FairTax, perhaps this one holds the least water. Arguments are made that this "black market" will spring up, with people "illegally trading DVDs, cigarettes, canned foods" yada yada yada. OK, illegally trading? What's illegal today about trading those items? Nothing! So what's the problem?
"They'll be avoiding the tax!”
And that's bad, why? My wife buys romance novels at a used book store now. She'd be avoiding the tax, too. She's also reading books that everyone else read weeks or months ago. I say, "Come on, black market!" Only the market won't be black. It can be right in a store front, advertising used books, consignment shops for clothes, furniture, camping equipment, you name it! A whole new type of business will emerge! That will be great for the economy, right? Right!
The national sales tax will give government another reason to make cash purchases illegal.
Those making this argument claim that paying with cash will make it easier to avoid paying the tax. This is simply ridiculous. Number one, most businesses are run by honest, dependable people. It's not the business owner that's being taxed, remember, it's the purchaser of goods and services. With penalties for those who attempt to cheat the system, the onus is on the business to be open and above-board in collecting and paying the tax. The businesses will keep a small percentage of what they collect in order to offset their expenses in collecting and reporting the tax! While the consumer might hope for a break from the tax, it would be the rare businessman who would collude with the consumer in his scheme to avoid the tax!
The tax will be used to track your entire financial life.
Coming so closely after the previous argument, you have to laugh. First folks are going to pay with cash to avoid the tax, then the tax will be used to track your entire financial life. Unbelievable. How so? You're not filing a return, are you? To do this, the government would have to:
- Obtain records of your purchases from retail or service center outlets
- Obtain records of your purchases from your financial institution
- Collate the records in order to see what went where
- Have a really good reason to waste their time doing this
But remember, the tax applies to new goods and services only. Don't want the government to know you bought that new Humvee? Get last year's model from a used car dealer. Want a couple of evening gowns? Hit the new consignment shop that just opened up a few blocks from your work. But do you know why the government won't track your entire financial life? Simply put, you're not that big a deal. Sorry to deflate your ego, but why would the government care to delve into your personal finances? They don't care what you spend money on, as long as they get their cut!
Simply put, any tax scheme can run rampant over the American people without diligent and unceasing attention on the part of the American taxpayer. It is up to you and I to keep our government on a short leash. We must realize that there are no free rides. When the government gives you something, they have to take something away from you first in order to do so.
As author Edward Abbey said, "A patriot must always be ready to defend his country against its government."
TD
The FairTax Blogburst is jointly produced by Terry of The Right Track Blog and Jonathan of Publius Rendezvous. If you would like to host the weekly postings on your blog, please e-mail Terry. You will be added to our mailing list and blogroll.
FairTax Blogburst for Jun 2, 2006
As I see it, the main problem with the Income Tax is that it is virtually impossible to enforce completely and fairly. Compliance with the Income Tax depends on taxpayer truthfulness, which generally is motivated either by a) good chara