Friday, May 29, 2009

There Is Still No Such Thing As a Fair Tax

The FairTax Plan
Mises Daily by Laurence M. Vance | Posted on 5/15/2008 12:00:00 AM

This the great debate going on today. Do we adopt a taxing plan that conforms with the rest of the world even though it defies all logic and conformity to the Constitution? Is it the name of the tax that excites you? FairTax? Did the Patriot Act excite you also? How about the Military Commission Act? The Federal Reserve Act? Internal Revenue Act? Which of these excited you the most?

[Review of FairTax: The Truth: Answering the Critics (Harper, 2008)]


As a critic of the national retail sales tax plan known as the FairTax, I take Neal Boortz's new book on the FairTax very personally. The book is titled FairTax: The Truth: Answering the Critics. It is intended to be a sequel to The FairTax Book, published in 2005, that offers "eye-opening new insights not covered in the original book."

Boortz is right. There are some eye-opening new insights unique to this sequel. Like the disclosure that you might "owe more in taxes in the first year of a FairTax system than you do today."[1] Or the admission that "the FairTax could be even more progressive than our current system."[2] Or the confession that the "implementation of the FairTax doesn't mean complete annihilation of the IRS."[3] Or the proposal that "a procedure should be set up in the Treasury Department to collect taxes on Internet and catalog sales, remitting the state and local governments' share to them."[4]

As with Boortz's original work, this book is coauthored by Congressman John Linder (R-GA). New this time, however, is the addition of "with Rob Woodall" on the front cover and title page. But although the back cover contains brief bios for Boortz and Linder, there is no information on Woodall, Congressman Linder's chief of staff. As I said when I reviewed Boortz's original book on the FairTax in "There Is No Such Thing As a Fair Tax," since Boortz has previous writing experience, and his name appears in larger letters on the book's cover, I will refer to him as the author.
The FairTax is a revenue-neutral consumption tax in the form of a national retail sales tax on all new goods and services that is designed to replace most federal taxes: personal income taxes, corporate income taxes, estate taxes, gift taxes, unemployment taxes, alternative minimum taxes, capital gains taxes, Social Security taxes, and Medicare taxes.

Although it seems like the price we would have to pay for the elimination of these taxes is higher prices on all new goods and services because of the imposition of a high sales tax, FairTax proponents claim that the removal of embedded taxes — the tax burdens of businesses that contribute to the overall cost of products — will result in the prices of goods and services falling by enough to offset the amount of the FairTax imposed. In addition to this dubious conclusion, there are some misconceptions about the FairTax that should be pointed out.

I will be quoting Boortz extensively throughout this review since he believes that "opponents who want to criticize the FairTax often feel compelled to misrepresent its principles — or to lie about it outright — to give themselves something to shout about."[5] No shouting on my part will be required. The deceptions, half-truths, and lies of the FairTax will speak for themselves.

The FairTax does not eliminate all taxes. It does not eliminate tariffs on imported goods, federal excise taxes on products like gasoline and tobacco, special taxes on things like telephone service and airline tickets, or any state and local sales, gasoline, or hotel taxes.

The FairTax does not lower the overall tax burden. Since it is revenue neutral, the total amount of taxes the federal government extracts from the citizens of the United States would be the same as it is now.

The FairTax does not eliminate the Sixteenth Amendment. To repeal the Sixteenth Amendment would require a constitutional amendment to that effect, as the Twenty-First Amendment repealed the Eighteenth. Not only is there no guarantee that Congress would propose such an amendment, it would still have to be sent to the states and approved by three-fourths of them.

Even if the prices of goods and services fall after the change to the FairTax system, with the sale of new homes and cars being taxed, as well as services from heart surgeries down to haircuts, the FairTax would result in a tremendous change in American society. Is it worth expending so much effort on changing the way the federal government collects taxes instead of changing the amount that the federal government collects in taxes? This is a question that doesn't even have to be answered since the stated rate of the FairTax is too low to achieve revenue neutrality and the amount by which prices would fall under a FairTax system has been grossly exaggerated.FULL STORY.

16 comments:

Richard Paul Flosi said...

Fair for whom? The collectors?

Rose said...

Richard, I know that you didn't even have time to read this entire article to even make a constructive comment.

I really feel for you guy. But then I feel sorry for ALL the brainwashed sheeple in this country today.

Richard, try to think for yourself and outside the BOX for once.

Richard, despite what Daar and the others tell you, it is possible to repeal the 16th Amendment and the Federal Reserve Act.

Richard, get on the phone to that Republican you most admire and VOTE for and tell him/her to get the job done.

Richard Paul Flosi said...

You were on the call with Larken Rose yesterday. The system doesn't need fixing. The system needs to be abolished. Theft (taxation) is never fair.

Richard Paul Flosi said...

My first comment was intended as a joke. Of course I didn't read your post. I've familiar with the FairTax movement and dismissed it a long time ago.

Rose said...

I agree the system needs to be abolished. But Richard, why do we need to replace it with this insane thing called a Fair Tax?

Rose said...
This comment has been removed by the author.
Richard Paul Flosi said...

We don't. I'm don't see where I've indicated anything of the sort.

Richard Paul Flosi said...

When did I attack your position? Besides, shouldn't I be allowed to disagree if I did? Even if I was wrong?

Matt said...

Would you prefer to call it the Uniform Tax? The Non-discriminatory Tax? The Transparent Tax? You are correct that no tax is fair, but the "FairTax" is a hell of a lot less immoral than the current tax code, which applies unevenly to differing segments of the population. Baby steps, Rose. We'll get liberty if we keep at it, but let's take any opportunity we can to lessen the evils of big government as we go.

Richard Paul Flosi said...

Matt, if it's revenue neutral, and all taxes are on income, how can shifting how taxes are collected be "more" moral?

Why must change be incremental? Would we go through taxation withdrawl?

Rose said...

Thank You Richard. I was just going to respond to Matt but you already have.

R. George Dunn said...

Shifting the tax structure from the socialist progressive income tax and the hidden tax in product to the consumption tax does bring liberty to the individual. Under the FairTax plan, one can be self sufficient and having earnings to boot, to which no tax is collected. Note that the FairTax is an indirect tax and not directly taken from you, but one you must volunteer to pay. If we were to protext today and not pay our taxes, where do you suppose you will end up?

R. George Dunn said...

As to the FairTax Plan being too progressive, nonsense. The progressive part of the plan returns the amount of consumption tax at the maximum level of the poverty wage to everyone rich or poor, working or not.

Also, the tax is more then neutral in change as it will create jobs by making domestic product cheaper and thus competative with imports. Tarriffs are very few also.

Ending the lobbyist corruption in DC is also a plus for FairTax. Also note that VAT is not FairTax. VAT is very destructive. Changing the tax structure is not the same as demanding constitutional spending. We need both and repealing the 16th Amendment is part of the Fair Tax legislation which demands it repealed in 5 years or the Fair TAx plan dies on the vine.

Rose said...

George, I'm sure that Daar has told you that I do not and will not support this fairtax crap so save your breath.

Everything you stated is addressed in the article. Maybe you should go read it. You have the right to your opinion, but when you keep repeating the sales pitch, it gets old and stale and no one is listening.

Clay Pigeon said...

Unfortunately positions harden and there isn't much that can be said to change people's minds. As for me, I've read both books, The Fair Tax, and The Fair Tax: Answers to the Critics by G-7 Rep. John Linder and Neal Boortz. I find their arguments compelling and the research done prior to the recommendation of the Fair Tax to be comprehensive. The present Income Tax legislation takes up over 60,000 pages. Its time to abolish the Income Tax and start fresh. In my opinion the Fair Tax is the way to go. That's my personal opinion.

Richard Paul Flosi said...

Clay, why do we need to be taxed to begin with?