Watching the President’s Tax Panel on C-Span
I’m elevating the following remarks by Merrill Bender from the comments section of another post, because they provide valuable (and disconcerting) insight into why the President’s tax panel eliminated the FairTax from its list of options for simplifying the federal tax code:
I watched the C-span coverage of the the President’s Tax Reform Panel Hearing and more specifically Edward Lazear’s presentation of a National Sales Tax Option.
I have reviewed again what I had recorded and am struck by the stumbling and mixing up of numbers and concepts in his presentation.
It was such a cursory overview and no one seemed to have gone into great depth on the numbers. Though Mr. Lazear tried to point out pros and cons he got his numbers mixed up and certainly did not seem to have a true mastery of the concepts and was more keen on finding the negatives for the panel to hang their hat on. ( though inaccurate use of data)
Other panel memebers questions were also lacking in depth or understanding of such a major tax replacement plan.
For their own convienance they used a negative argument about a National Sales Tax plan to justify their position but left out the many facts and features of the Fair Tax which have already addressed those concerns.
Mr. Lazear did not lay out the full features of the Fair Tax Plan that addressed almost all of his negative points.
None of the Panelists seemed to be even knowledgeable enough to discuss the plan. Their questions and points to Mr. Lazear showed a shockingly poor understanding of even the 45 FAQs on the Fair Tax web site letr alone theother research that supports the concept.
No one challenged his assertion that this tax change would hit the Middle class more than the working poor or the Rich. The Fair Tax numbers disagree with that. No one challenged his tax evasion numbers, which I beleive are way off. Porterba question what the evasion numbers were from and Lazear said they were anecdotal from two swiss tax experts but had no supporting data.
If they showed up to my class and had demonstrated such a poor understanding of this issue, I to would have given them a Grade of F.
LaZear left out many positive points and supporting data of the Fair Tax including:
1. Replacement of the Payroll Tax. Providing a better funding source for Social Security and Medicare.
2. Easier Home ownership under the Fair Tax. ( certainly better than capping the mortgage deduction)
3. Fair Tax allows the US to compete with low wage countries because of Zero Corporate and business taxes under the Fair Tax. The Fair Tax creates Lower priced manufactured goods for export. In turn providing tremendous economic growth, increased manufacturing jobs, greater exports.
Locally, our Dephi plant may shut down because we can not compete with low wage Mexican production. The Fair Tax will help Delphi stay open and help save our local economy.
4. The economy will save billions in tax compliance costs.
We could go on but the shock is this is not what was discussed by the Panel and their questions and dismissal of the paln shows they have not studied its merits in a detailed and thoughtful way.
Let’s dissolve this panel and start over.
If anyone else watched the C-Span coverage and has comments, please post them here.
Personally, I see nothing in the FairTax that will enable me to own a home. Even if all my taxes magically disappeared, I wouldn’t be able to buy a home.
First, to the article: another important positive is transparency. You allude to it through mentioning compliance costs and lower prices for manufactured goods, but from a freedom perspective the “hidden taxes” aspect of the current tax system need to be squarely in our cross-hairs. Knowing exactly how much we pay per $1 in taxes is important.
Second, to Terry: I feel for you there, but there is no god-given or otherwise-given right to own a home, and so a tax system need not “enable you to own a home”. I don’t know why Merrill uses point #2 above about making home ownership easier, though. Back to you: with extra take-home pay, if you cannot afford a non-new home of any kind, I would wonder what tax system you envision that would enable you to own a home? Not trying to be confrontational by any means. Remember that a non-new home purchase would not fall under any retail sales tax and interest rates are predicted to be lower. Your take-home pay is predicted to be higher, and your house payments are predicted to be lower.
Terry - if you consistently stay in minimum wage jobs (as you’ve posted before) nobody owes you sufficient income to buy a house. I used to love one of my previous jobs, working retail in a bookstore - but it didn’t pay enough to live on comfortably, so I gave it up and did something else for a living.
I feel for ya, man, but sometimes you’ve got to look at what you’re doing - and if it’s not getting you where you want to be you have to figure out what will - and change.
And the only person who can decide that is you.
J.
President’s Tax Panel
They aren’t doing much to make the tax code simpler, the changes may be fairer in the long term but will have drastic short-term transition effects, and only one portion (the investment changes) will help economic growth. My only hope is that Bush re...
The tax code should not engage in social engineering, therefore it is inappropriate to tax homeownership and home rental unequally. Currently the federal tax subsidy to homeownership exceeds $60 billion. Under the FairTax, the federal subsidy to homeownership will be in the hundreds of billions. Upward redistribution is just as wrong as downward redistribution, and even Thomas Sowell (in Markets and Minorities) couldn’t endorse it.
Terry,
I do not understand how the federal subsidy to homeownership will be in the “hundreds of billions” under the FairTax. There won’t be any subsidy whatsoever that I can see. Where is the form that gets me a bigger rebate for being a homeowner? Are you thinking that housing rents will be subject to a retail service or sales tax? In fact, the purchase of a new home will be subject to the sales tax. Thus, when Mr. Smith has a $4 Million manshion constructed, he will pay an additional $1.2 Million in tax (at a 30% “cashier” rate). When I buy a new $150K home, I’ll pay an additional $45K in taxes. Additionally, I’ll still be paying $1500 yearly in property taxes. Mr. Smith would be paying a lot of property taxes.
To what deduction or subsidy are you referring? This is an honest question, I’d be interested to know what I’m missing here.