Liars use Double Talk to Lie about Lies in the Fair Tax
Ludwig von Mises Institute: Laurence Vance’s December 12, 2005 “There is No Such Thing as a Fair Tax” review of The FairTax Book asserts three lies found in the book and asserts 17 problems with the Fair Tax. For brevity, this article shall only address the three lies. A follow-up article will debunk the perceived problems.
Lie #1: taxes would be voluntary under the FairTax.
First we must realize that all of our actions have consequences. If an individual chooses to buy a new luxury car, he/she would have to pay federal sales tax. When the individual chooses to buy the new car, he/she is also choosing to pay federal sales tax. Section 505 of H.R.25, entitled PENALTIES details the civil and criminal penalties for non-compliance.
Under the Fair Tax, the federal sales tax would be reimbursed up to poverty level spending via the Family Consumption Allowance (FCA). An individual could purchase new food and services and still survive at poverty level spending. After the FCA, the net tax payments would be $0. The individual could spend significant additional sums of money on used items tax free. The individual could work and earn as much money as he/she possibly could—untaxed. If the individual chooses to purchase a standard of living above the meek poverty level, then net sales taxes would be due.
Under the current tax system, an individual, without dependents, is taxed from the first dollar earned at the FICA/Medicare rate of 7.65%. As annual earnings increase, additional progressive income taxes are due. Under the current system, the only option to not pay any federal income tax is to not work. That is not a valid option.
Given the above two alternatives, the Fair Tax provides the only valid choice. Although the qualifying “Tax Free” situation is narrow in scope, it is possible. When an individual chooses to purchase a standard of living above the poverty level, he/she is choosing to pay the federal sales tax. Therefore, the tax is voluntary. The assertion that item #1 is a Lie is false.
Lie #2: the FairTax rate would be 23 percent.
We are talking apples and oranges here. Anyone who claims that both are just fruit is attempting to mislead and misinform the public. The Fair Tax is presented to replace the income tax. The income tax is an inclusive tax. The appropriate Fair Tax percentage for an inclusive comparison is 23%. Recognizing that some comparisons could benefit from an exclusive tax analysis, the following conversion table is provided.
| Apples | Oranges | |
| Tax | (inclusive) | (exclusive) |
| Fair Tax | 23% | 29.9% |
| Payroll: FICA | 6.2% | N/A |
| Payroll: Medicare | 1.45% | N/A |
| Income Tax | 10%-35% | N/A |
| Income & Payroll | ||
| 10% Bracket | 17.65% | 21.4% |
| 15% Bracket | 22.65% | 29.3% |
| 25% Bracket | 32.65% | 48.5% |
| 28% Bracket < $90K | 35.65% | 55.4% |
| 28% Bracket >$90K | 29.45% | 41.7% |
| 33% Bracket | 34.45% | 52.6% |
| 35% Bracket | 36.45% | 57.4% |
When making comparisons, the appropriate inclusive/exclusive percentage must be used. Either column can be used, but a comparison of taxes between columns is wrong. Only apples to apples or oranges to oranges comparisons are valid. While we are at the comparison game, the following table provides sales verses income tax percentages with the average state sales and income taxes included.
| Tax | Inclusive | Exclusive |
| Fair Tax + 6.33% Ave. State Sales Tax | 26.6% | 36.2% |
| 35% Bracket + Medicare + 4.44% Ave. State Income Tax | 40.9% | 94.3% |
Any argument quoting a combined Fair Tax and state sales tax rate above 36% exclusive is only valid when it is compared to a 94% exclusive combined state and federal income tax rate. However, as a business person filling out the national sales tax form, under the line that says “Gross retail sales of new goods and services,” I’m going to put down the 23% inclusive rate. The assertion that item #2 is a Lie is false.
Lie #3: the Fair Tax would abolish the IRS.
Laurence Vance debunks this one himself. “The Fair Tax will abolish the IRS in the same way that it will abolish the income tax—by replacing it with something else.” The assertion that item #3 is a Lie is false.
The Fair Tax Act of 2005 does not call for a total closure of the federal government—not even a modest 1% cut in spending. In fact, Boortz and Linder promote the Fair Tax as revenue neutral. What does this have to do with abolishing the IRS? Nothing! Just as Vance’s accusations have nothing to do with tax reform.
When Boortz talks about abolishing the IRS, he is referring to abolishing the intrusive nature of government inquisition into our personal and business finances. He is referring to eliminating a tax system where the government gets paid as a result of our individual and business efforts before we do. Income and payroll taxes are deducted from our pay before we see the first dime. Businesses must pay matching payroll taxes while the manufactured goods sit in the warehouse.
Will there still be inquisition into our personal finances? Sure, some. Employers will still report gross earnings to the Social Security Administration for calculation of retirement benefits. If a family wants to receive the FCA, they must file with the appropriate agency. The employer will file one form, and the head of household will file the other. Compare this to the current 1040 with the associated schedules A, B, C, SE, and so on. The inquisition will hardly be intrusive.
What about businesses, will their books be scrutinized? Again, yes, of course. Under Fair Tax, the burden of the tax collection process and paperwork will be shifted to businesses. However, this new responsibility for the collection process and paperwork will be significantly less cumbersome and intrusive than the current system. Let’s look at a business situation, a Motion Picture Business. A big star with a lot of clout will demand a percentage of gross sales. Gross sales are easy to calculate. Just add up all sales and calculate the split. The Fair Tax is similar to this example. Businesses must track and total gross consumer sales, an easy number. Twenty-three percent of that tally is consumption tax. Send it in.
Applying this analogy with the current tax system, the actor would demand a cut of net profits. What are net profits? Bingo. They have to be defined. What are the valid expenses? Can the “Making of Footage” for the DVD’s be counted as a legitimate expense? What about product placement fees? Does that income count when calculating net profits? The actor’s agent and lawyer will lobby one way on an issue and the movie company’s lawyer will lobby the other way. A lot of time and effort will be spent on details as each side lobbies for a better deal. Under the current tax system, the IRS will audit a business and demand justifications for every expense. Collecting, maintaining, and defending such justifications becomes a dauntingly expensive task, just to comply with the tax code.
The market (buyers and sellers) determines the prices of goods and services. Under the Fair Tax, businesses will be taxed 23% of the gross sales—an easy calculation. Businesses must operate within the means provided by their remaining 77% share of the gross sale. Alternately, a business could determine the pretax market price for their goods and services and keep 100%. They would then add an additional 29.9% at the till for sales tax—again, easy calculations. Both methods result in the same dollar amount of taxes; it really is just a matter of semantics. If the wrong semantics (math equations) are used, however, the numbers will not work out.
We must look beyond the rhetoric for or against the Fair Tax. We must develop an understanding of how Fair Tax changes will impact our individual lives. We must look through the rhetoric and determine the motives of the activists that lobby for or against the Fair Tax and then make our own decisions. Regardless of choosing 23% or 30%, the dollars involved are the same when used in the proper equations. The Fair Tax is revenue neutral. The IRS will be replaced by another agency that has a less intrusive reach into our personal and business lives. This change will save individuals time and stress. The change will save businesses time and money. The vast majority of the people will benefit, only a small number of accountants, tax lawyers, and bookkeeping professors making their livelihood off the current inefficient system will suffer.
References: http://taxes.yahoo.com/rates.html, http://thestc.com/STrates.stm, http://www.nber.org/~taxsim/state-marginal/, Fair Tax Act of 2005
Great write-up, Bill. As Joshua pointed out in his last entry, we’re arguing with folks who wear the badge of ideological purity with pride. They aren’t willing to accept an improvement when it’s in front of their face, because accepting the improvement is “accepting the legitimacy of taxation in the first place”.
As much as I’d love to see all taxes end, I also realize that it’s not going to happen any time soon. I’d rather have a good tax system than a bad tax system, though. Those Rothbardians, though, would rather keep paying into the current system than accept anything but a complete end to taxation.
Our current big government wasn’t created in a day, it was incrementalism. Why some people won’t accept incrementalism to reduce it to its Constitutional levels is beyond my comprehension.
This is a poorly executed persuasive essay by a vanity publishing “adjunct instructor” at a Junior College in nowhereville, FL. The fact that some people will use his oft repeated fallacies to affirm their bias while ignoring the scores of respected economists like Alan Greenspan who support the Fair Tax is mind-boggling.
Laurence Vance is a fraud. He is also a rude and bitter man. Email him about his article and point out his flawed logic and he’ll return with a personal attack in an email.
He also mentions that he really doesn’t care about the benefits the FairTax will bring about, he only believes a FairTax is a very low tax.
On the blog for his recent anti-FairTax article his last comment was the following:
“This is my last word on the FairTax. Even if everything the FairTax supporters say about the FairTax is true, I still object to the FairTax because I don’t think it is fair that the government impose a 23 percent tax on the purchase of new goods and services. FairTax people think it is. I think it is legalized theft. FairTax people think it isn’t. We can argue all we want about the method the state should use to collect taxes, but it is all a waste of time as long as FairTax supporters think that the state taking a 23 percent cut on all transactions of new goods and services is a fair thing. I consider it highway robbery. Good day.”
It is quite obvious HE is the fraud.
I cannot understand why anybody wants to believe that everybody is honest to the IRS, that everybody is so afraid that they pay their income taxes when the audit comes around so they pay it now. BS, I say. I have been working around this black market labor scenario for over 12 years now. I have started to see it in NYC and now I see it in Oak Ridge, TN. If you step into my shoes and see the unpaid income taxes of these black market laborers only reinforces that the Feds will have MORE revenue with the Fair Tax than what they can enforce to collect with today’s tax system. Revenue Neutral is not what I would call the Fair Tax; Revenue efficient is what my business would encounter with the Fair Tax.
I just finished reading an Ocala, Star-Banner newspaper article where Bill Hirsch mentions how much citizens earn compared to how much they spend. I still do not understand how these NO FAIR TAX citizens can come to understand how a person earning $8200 a year can spend $18,500 a year, without mentioning that the citizen is involved in untaxed earnings. Sure I see the welfare and section 8 individuals in my community and understand that they do not earn much (legally), but how are they able to afford to drive another car after it has been seized by the Police. How can these people afford cell-phones and continually to eat take-out meals and have new home appliances and electronics to be delivered to their homes. Yet, these people qualify for federal and state funding to subsidize their lives. I want the Fair Tax now. I want everybody to see how much revenue the Federal and State governments are not collecting with the IRS.
Thank you Neal Boortz and Congressman John Linder for a new horizon to American lives.
Ray Kircher
Oak Ridge, TN
Well said, Ray.
Fair Tax? Are you nuts? In simple language, H.R. 25 is a wealth based tax, meaning: the most productive members of society shoulder the burden of the cost of government and do so without a proportional representation, or voice, in the determination of how their money is spent!
H.R. 25, as does an income tax, as does a flat tax, allows the spending of tax revenue without regard to a proportional influence by those who filled the national treasury.
In short and simple language, it ignores the Founding Founder’s rule of representation with proportional obligation and embraces a Marxist idea: “from each according to their ability to each according to their need”.
For a full explanation see:
The Fair Tax Con Artists
Regards
JWK
ACRS
P.S.
If H.R. 25 was enacted into law tomorrow, and a future Congress followed its language to the letter, would that future Congress have authority to calculate a tax from corporate income as upheld in FLINT v. STONE TRACY CO., 220 U.S. 107 (1911)? The answer is, YES! Our socialists in Congress would still be able to lay and collect a tax calculated from income just as is
That’s just silly John W K. Let’s take your first statement, “[T]he most productive members of society shoulder the burden of the cost of government…”
Those who have money are the ones able to spend it. The government cannot tax imaginary money, it has to tax real money. And the people who earn and spend real money are the people who are going to “shoulder the burden of the cost of government”. The FairTax dictates that government revenue is now made up from what people spend, not what they earn or produce. Production is what people make or create, earning is simply an income, and spending is simply spending or expenditures. What one spends and what one produces are entirely different things, so your apparent claim of the FairTax harming solely the most “productive members of our society” is false from the start.
Another point to make is in the second part of your first paragraph, “…and do so without a proportional representation, or voice, in the determination of how their money is spent!” In case you forgot (as it seems people often do these days) our government from the beginning has been a Republic. In a Republic each individual is entitled to representation, irrespective of his income, race, creed, religion, background or any other characteristic belonging to an individual. What you seem to be agitating for is a Plutocracy (or perhaps an Oligarchy, or Meritocracy), rather than a Republic. We are not nor have we ever been such a society. No one’s monetary worth before the government should ever be a determining factor in the amount of influence he has. A man with a million dollars certainly should not be allowed twice as many votes as a man with$500,000.
You’re the only one pushing the socialist idea “from each according to their ability to each according to their need” if you believe that a person’s productivity/ability entitles them (or should accord them) to more government influence. Do try to get the facts straight before you mouth off about Marxism.
What is really silly Nesta, is your apparent rejection of the founding father’s agreed upon rule governing a general tax when the member states are called upon to fill the national treasury…that rule requires the general tax to be apportioned among the states basing each states share on its voting strength in Congress…a rule which the friends of big government and socialists dread.
But, just in case you are interested in the wisdom of the founding fathers, I suggest you study the following:
Another observation concerning H.R. 25, the alleged Fair Tax.
Another objection to H.R. 25, the alleged FairTax, is its attempt to resurrect a socialist type of tax allowable under the Articles of Confederation___ a general across the board tax based upon wealth in which each member state agreed to contribute into the common treasury in proportion to its assessed wealth.
Article VIII. of the Articles of Confederation states:
“All charges of war, and all other expences that shall be incurred for the common defence or general welfare, and allowed by the united states in congress assembled, shall be defrayed out of a common treasury, which shall be supplied by the several states in proportion to the value of all land within each state, granted to or surveyed for any Person, as such land and the buildings and improvements thereon shall be estimated according to such mode as the united states in congress assembled, shall from time to time direct and appoint.”
But this kind of tax, a general tax based upon wealth by which the various member states agreed to contribute into the common treasury under the Articles of Confederation, was rejected during the Convention of 1787 and protection was afforded against it by a new rule requiring the general tax to be apportioned among the states and basing each state’s share, not upon wealth, not upon “income”, but upon each state’s number of representatives in Congress—in other words representation with proportional obligation___ the new rule for a general tax which socialists and the friends a profligate big government hate with a passion because it is an antidote to a spendthrift big government and takes the socialist sting out of a general across the board tax upon wealth in which member states are to contribute into the common treasury.
Although H.R. 25 does not calculate each state’s share of the tax upon its assessed land value as done under the Articles of Confederation, it attempts to accomplish the same socialist objective by calculating the contributions of each member state by the value of property sold and its economic enterprises as reflected in business transactions within each particular state, and is, without question, a general wealth based tax which the wise Framers agreed, and those ratifying our Constitution agreed, may be laid among the states, but requires an apportionment based upon each state’s number of representatives in Congress Assembled, which was an important compromise during the Convention of 1787!
H.R. 25 is another attack upon federalism, attempts to accomplish indirectly what the Constitution was intended to forbid directly, and seeks to establish a socialist friendly type of wealth based tax in which the most productive member states in the Union would be compelled to carry the burden of taxation while the least productive states may feed from the public trough using their vote without contributing in proportion to their voting strength.
In harmony with the new rule of apportionment agreed to by the ratification of our Constitution, and when the various states are required to contribute into the common treasury in a general tax such as H.R. 25 is, Congress is required to determine a total sum needed to be collected under the general tax and then notify each member state of its share of the total amount to being collected, basing each state’s apportioned share on its allotted number of representatives, and, when each state`s share of the total being collected is raised and deposited with the Treasury of the United States, the tax is to be suspended in those states having paid their apportioned share of the general tax being collected.
Now, how does one confirm the historical truth of this matter, and, was this the intention of the framers and ratifiers of our Constitution? Well, we can do this by reading from the state ratification documents as to what the founders intended with regard to the various member states contributing into the common treasury in a general direct tax.
.
EXAMPLE:
Ratification of the Constitution by the State of New Hampshire
“Fourthly That Congress do not lay direct Taxes but when the money arising from Impost, Excise and their other resources are insufficient for the Publick Exigencies; nor then, untill Congress shall have first made a Requisition upon the States, to Assess, Levy, & pay their respective proportions, of such requisitions agreeably to the Census fixed in the said Constitution in such way & manner as the Legislature of the State shall think best and in such Case if any State shall neglect, then Congress may Assess & Levy such States proportion together with the Interest thereon at the rate of six per Cent per Annum from the Time of payment prescribed in such requisition- ”
But were the above stated intentions generally understood and agreed to by the founders and then practiced by actual legislation for a general tax which would confirm such intentions? Well, let us read from the legislative Acts in which the general tax is involved:
APPORTIONMENT OF A DIRECT TAX TO RAISE A TOTAL OF $ 2 MILLION TREASURY DEPARTMENT MAY 25TH 1798
An Act to lay and collect a direct tax within the united states [1st direct tax July 14, 1789 for $2 million and each state’s share of the $2million being raised.]
An Act to repeal the internal taxes April 3rd, 1802
An Act for the assessment and collection of direct taxes, July 22, 1813
Act laying a direct tax for $3 million August 2, 1813, and each state’s share of the tax.
Section 7 of direct tax of 1813 allowing states to pay their respective quotas and be entitled to certain deductions.
And, for a $20 million direct tax being imposed upon the states in 1861, and the amounts required to be paid by each of the various states,
CLICK HERE
Bottom line: the only stinking tax reform we need is for the people to demand their employees in Washington add the following words to our Constitution, bringing us back to our Nation’s original tax plan:
The Sixteenth Amendment is hereby repealed and Congress is henceforth forbidden to lay “any“ tax or burden calculated from profits, gains, interest, salaries, wages, tips, inheritances or any other lawfully realized money.
Regards,
JWK
ACRS
More on The FairTax Con Artists!
To understand the FairTax fraud being perpetrated by Neal Boortz, one must first understand the 16th Amendment did not create any new tax. The Amendment merely clarified a question about a constitutional provision requiring an “apportioning” with regard to an excise tax calculated from income!
This happens to be an extremely important point and exposes why the sales pitch given by the FAIR TAX CON ARTISTS, especially Neal Boortz, their ring leader, is just that—-a con job plain and simple!
We are told by Boortz his plan will eliminate “income taxes” [taxes calculated from income] and the massive paper work and man hours wasted with such a tax. But this is a bold face lie made by Boortz for two reasons:
1.
The tax Boortz mentions can only be “eliminated” by a constitutional amendment forbidding Congress to calculate a tax from profits, gains, interest, salaries, wages, tips, inheritances or any other lawfully realized money.
To this day, and to the best of my knowledge, there is no pending legislation on Capitol Hill promoted by the Fair Tax Con Artists which proposes: The Sixteenth Amendment is hereby repealed and Congress is henceforth forbidden to lay “any“ tax or burden calculated from profits, gains, interest, salaries, wages, tips, inheritances or any other lawfully realized money.
Without such an amendment, the tax mentioned by Boortz is not eliminated as his book fraudulently portrays on its cover!
2.
But let’s give Boortz the benefit of doubt and that it is his intention, by the language of H.R. 25, to “eliminate taxes calculated from income“.
Sad to say even this turns out to be wishful thinking. If H.R. 25 was enacted into law tomorrow, and Congress followed its language to the letter, H.R. 25 makes no attempt by its language to prohibit Congress from laying an “excise tax” as upheld in FLINT v. STONE TRACY CO., 220 U.S. 107 (1911), a case decided prior to the adoption of the 16th Amendment, allowing a tax calculated from corporate profits, gains, and income.
The Fair Tax Con Artists having left this loophole, invites a future Congress, in order to be in compliance with H.R. 25, to simply erase the word “Revenue” from “Internal Revenue Code” and replace that word with “Excise“, as in “Internal Excise Code,” and likewise erase the word “Revenue” from “Internal Revenue Service” and replace it with “Excise“, as in “Internal Excise Service“, and go about its business inflicting the same time consuming and costly misery upon Corporations as now done under “income taxation“, but in addition, these corporations will also have to abide by and follow an additional rule book created by Boortz under H.R. 25, with all its new regulations for record keeping as stipulated in its language!
And if you think this would not quickly happen with Congress’ never ending appetite to increase its piece of the pie from the productivity of the people, you would also have to believe there would be an earth shattering outcry from the people of America if H. R. 25 was adopted and then Congress decided to enact a small “pay their fair share” additional excise tax upon corporations and other wealthy scoundrels who make millions of dollars a year in “profits” and bleed the poor working people, as was alleged about Leona Helmsley, who just happened to pay more in taxes than the combined taxes paid by any 20 average working people in New York, but was then sent to jail
But wait! I though Boortz was a defender of people being free to earn a profit. So why, tell me why on earth does he promote a plan which provides the tools to Ted Socialist Kennedy, and his disciples in Congress, to continue to bleed the productive members of society, while giving a $ 400 per month bonus to un-wed moms to stay at home and make babies under his family consumption allowance?
Of course, the family consumption allowance would provide a very valuable tool to Ted Socialist Kennedy, which he and his socialist disciples in Congress will promise to increase during election time to buy millions of votes to remain in power, just as these socialists now do with the minimum wage, social security payments, aid to families with dependant children, Pell Grants, and you name it from the shopping list of government give-away- programs created by Congress___ the only difference with H.R. 25 is, its family consumption allowance promises to extend the tentacles of socialism to every American household with a monthly government subsistence check, making the majority of American households dependent upon a monthly government check!
The family consumption allowance would create a massive, never-before-heard-of entitlement which would encourage welfare recipients to continue sitting at home and receive their government check, only now, under H.R. 25 they receive a bonus of almost $400 per month which is to be taxed away from hard working Americans and businesses___ an entitlement which is estimated would cost $ 600 BILLION a year!
The cost of H.R. 25 to the American Taxpayers with regard to the family consumption allowance would make the projected cost of Hilary Health Care look like chicken feed.
Sure smell like, looks like, and operates as a Marxists type of idea…from each according to their ability to each according to their needs.
Come on all you Boortz Fair Tax stooges, answer the question! Why does Neal support a socialist friendly, big government friendly tax plan?
Regards,
JWK
ACRS
The only stinking tax reform we need is to demand our employees add the following words to our Constitution:
The Sixteenth Amendment is hereby repealed and Congress is henceforth forbidden to lay “any” tax or burden calculated from profits, gains, interest, salaries, wages, tips, inheritances or any other lawfully realized money.
It doesn’t tax 135 pages of bullstuff [H.R. 25] to accomplish real tax reform, it only takes the will of the people to rise up and demand their employees, their public servants, add the above words to their Constitution!
Under the current system, congress can yield to taxpayer demands to cut taxes in one area and raise rates in another area. Class warfare is used to accomplish most of this shell game. Professional lobbyists churn taxpayer dollars gaming the system.
The Fair Tax is proposed as a Fair, Simple, and Transparent tax system. It is fair because it treats all businesses, consumers, and products the same. If you think “fair” refers to how responsible congress is with our dollars, you are wrong. The Fair Tax reform does not fix that.
The Fair Tax is simple because it is calculated off gross sales, not net income. The tax is also only collected one time per product, not every step along the way.
The Fair Tax is Transparent because a single tax is calculated and collected in a simple manner. The current shell game used by congress is destroyed.
I encourage you to keep looking for your silver bullet that will accomplishes all that you desire, but in the mean time, can we take the first step in the right direction with the Fair Tax?
Mr. K,
Could you please explain your position of repealing the 16th Amendment would not come to realization or accomplishment under The Fair Tax Plan, and could you please read the book before you reply? As all poor and working poor citizens and non-citizens, and only those citizens I mean to include in my realization, shop for their goods at the cheapest places, including markets and pawnshops, will pay a sales tax upon the product. The Fair Tax Plan adopted as written will provide a model of tax collection that will treat all citizens and non-citizens from all states fairly. The Fair Tax Plan will provide a tax model for The United States of America, and as the states repeal the old ways of taxation to model the federal taxation policy, the states become commerce friendly from a citizens point of view; thus, goods for the poor and working poor are readily available without a sales tax plus a federal stipend to cover household taxed expenses. And I do not mean cell phones, beepers, new TV and stereo, or rims with a sub-woofer for a vehicle. Doesn’t states rally with revenue as they introduce tax free weeks for goods due to expanded spending in all aspects of going shopping or out on the town? So forth, state governments will realize a revenue increase as people are free to shop brick and mortar or online, in their home state or neighboring states all due to a competitive commerce society instead of a income tax restrictive commerce growth as states battle other states and companies to get their fair share of the tax pie. Please, Mr. K., You can find all the faults with The Fair Tax Plan that your mind allows, but how about finding all the faults with the current tax plan, or are you relying on the federal tax subsidies that will be considered pork barrel spending that will affect your lifestyle, and possibly you have to change your lifestyle because you can no longer prosper from the taxation of income?
Ray Kircher
Oak Ridge, TN
Also Mr. K,
Your comparisons are not in relation with what goods will cost after the embedded taxes are removed. This is revenue neutral which you forget to do your homework on. At worst, I see a 1% increase of final good cost under The Fair Tax Plan, and that is with giving my employees their 7.65% increase in pay which is the business contribution upon the repeal of the 16th Amendment and introduction of Neal Boortz and The Honorable John Linder’s book, The Fair Tax Book.
Hey all you doubting dillies, when the Fair Tax is enacted, everybody will be a part of a great awareness of these silly dingbats that waste the money that is given to them by all of us who pay taxes. When the dingbats wake up and see that they are poor by their decisions and not by the man or woman, and then the money GIVEN to dingbats would be taxed appropriately. It is about time that we are taxed by our spending habits and NOT WORKING HABITS. Good habits are hardly given and never lost.
It seems to me, after reading many of the rebuttals to the Fair Tax, that opponents simply use ideas and concepts well beyond the reach or intentions of the Fair Tax bill to point out problems that would not be solved by the Fair Tax. Over half of the article written by the Von Mises Inst. is devoted to pointing out problems with government spending and fraud. These topics are totally off-point. The Fair-Tax is not a bill intended to address government over-spending, tax-evasion, misappropriation, inflation, or any of the problems that are cited as the bill’s downfall. The Fair Tax is simply a way to rearrange the manner in which the government collects its revenue. If you are interested in addressing the problems with government spending and the like, good for you, but the Fair-Tax is not meant to address these issues and therefore is simply the wrong forum under which to address these issues. On the contrary, the Fair Tax is meant to be revenue neutral. This means that the govenment has the same amount of money after the Bill as it did before to misuse. Sure, I think we would all agree (most of us anyway) that there needs to be a drastic overhaul of all government spending, a task too massive to even begin discussion on here, but using those problems in an effort to dispute the claims of the Fair Tax are ridiculous. It’s apples and oranges. It’s like saying that Healthcare reform could not help us any because people will still get sick. It’s like saying that developing a safer automobile is not going to work because people will still drive irresponsibly. This bill is not a cure-all to the problems this government has created for its self and its citizens as a result of decades of government socialist programs with its hands deep in the pockets of John and Jane American. We as a nation are in a place where we are dependant on the govenment, some more than others. Maybe you live entirely on welfare or maybe you just need the government funded highway system to get to your vacation home, but one way or the other you need the government money, at least in our present state of affairs. We have to pay taxes, so lets address how we pay them, not why. I am open to debate on the principles of the Fair Tax as they relate to the collection of taxes and the effects on the economy, federal revenue, etc., but let’s leave the greater issue of why so many taxes are collected to begin with to a different venue, a separate issue as it should be. Another issue that opponents simply avoid when discussing the possibility of an increase in prices, especially in the housing market, is that even if there is a, say even a 30% increase in the price of goods and services (which of course is nonsense provided that you are even remotely famaliar with the basic economics discussed in the proposal), that each and everyone of us that pays taxes to begin with will have an increased buying power of an amount at least equal to that increase simply by banking full amount of our paycheck every month. Why is that so hard to understand. Those that call a national sales tax robbery, what do you call the income tax?? If paying a quarter more per dollar you spend is unfair, what do you call collecting a quarter less of every dollar you earn? Does that position make sense to anyone?? You can’t simply say that you disagree with tax all-together and have any credible position on the advantages of a revised tax system. That is simply illogical.
Just thought you guys might be interested in an ongoing poll concerning tax reform
Flat, H.R. 25., current, or Constitution`s original tax plan?
At present the results are:
Current system______________________0
Forbes flat tax______________________12
H.R. 25 [asserted “FairTax“]_________13
Constitution`s original tax plan________11
Other [explain]_______________________1
One thing seems certain, people want a change!
Regards,
JWK
H.R. 25, the alleged fair tax, is rejected in a NEW POLLby more than a two to one margin in favor of our Constitution’s original tax plan!
Seems the supporters of H.R. 25 in this poll were unable to defend their socialist friendly proposal against the wisdom of our Founder’s plan.
Regards,
The alleged fair tax, H.R.25, is rejected at a conservative site in a NEW POLL by more than a two to one margin in favor of our Constitution’s original tax plan!
Seems the supporters of H.R. 25 are unable to defend their socialist friendly proposal against the wisdom of our Founder’s original tax plan.
The only tax reform we need is to have the following words added to our Constitution:
The Sixteenth Amendment is hereby repealed and Congress is henceforth forbidden to lay “any“ tax or burden calculated from profits, gains, interest, salaries, wages, tips, inheritances or any other lawfully realized money
Here is an HONEST COMPARISON between H.R. 25 and our Constitution’s original tax plan.
Regards,
JWK
HONEST COMPARISON “>CONSTITUTION‘S ORIGINAL TAX PLAN
JWK,
Haven’t been following your posts too closely, but always glad to see anyone trying to revert to Constitutional principles and the intent of our founding fathers. What I think you are suggesting is to levy each state for their apportioned share of the revenue needed to run the federal government based on each state’s population. For 2007, this means roughly $7500 for each of our 300 million citizens or if you prefer, around $15,000 for every voting member. I gather you leave it up to the states to raise this revenue (in addition to the revenue needed to operate state agencies) as they see fit? That seems to me to be a gigantic task, complicated by the “law of unintended consequences”. Do I understand your proposal correctly? Thanks.
JWK,
You’re an idiot. There is no proposal for a “Founding Father’s Tax Plan”.
The option is the current system + a VAT, or the National Retail Sales Tax in lieu of an Income Tax. Because you’re going to get the current mess PLUS a VAT if you keep undermining the FairTax.
Hank,
Here is a link to a SUMMARY OF THE FOUNDER‘S PLAN
Keep in mind it allows for imposts, duties, and excise taxes, and then, the direct tax apportioned among the states to make up any shorfall.
JWK
How does your plan attempt to address the national debt? I assume of course it does not require the national debt to be paid in full in one fiscal year, which is impossible.
I’ll put this plan on the bookshelf with my other fiction. Interesting poll - I’d probably choose it too. However, such does not equate into what is achievable today.
NONINCOMETAX WROTE:
“JWK,
You’re an idiot. There is no proposal for a “Founding Father’s Tax Plan”.
The option is the current system + a VAT, or the National Retail Sales Tax in lieu of an Income Tax. Because you’re going to get the current mess PLUS a VAT if you keep undermining the FairTax. “
Adding the following words to our Constitution brings us back to our Constitution’s original tax plan:
The Sixteenth Amendment is hereby repealed and Congress is henceforth forbidden to lay “any“ tax or burden calculated from profits, gains, interest, salaries, wages, tips, inheritances or any other lawfully realized money
The options you offer are intentionally designed to support our existing big socialist government without any meaningful restraints controlling the actions of Congress. Your graciously offered “options” add new meaning to “Hobson’s choice” ___ allowing four choices instead of two, each of which is intentionally designed to ignore the most fundamental rule for taxation which our founding fathers agreed upon for a general tax among the states, the rule being, representation with proportional obligation
Those who have studied the debates during which time our Constitution was framed know that the allowance of a wealth based tax [which all of you options are] was a bone of contention during the framing of our Constitution. A compromise was agreed upon that representation and taxation were to be tied together by the rule of apportionment in order to insure if Congress found it necessary to lay a general tax among the states, and particularly if it were a wealth based tax, to fill the national treasury, those states contributing the lion’s share of the tax would be compensated by a proportionate vote in Congress equal to their contribution…a vote to be exercised when their money would be spent!
Of course, we all know that socialists and the friends of big government do not like this rule [Representatives and direct taxes shall be apportioned among the several states] and we all know socialist and the friends of big government just love the one man one vote idea when it comes to spending money from the federal treasury. But, when it comes to filling that treasury by the rule of one vote one dollar, socialists and the friends of big government run and hide and make things up about our Constitution in an attempt to subjugate the intended rule of representation with proportional financial obligation.
For details concerning the rule of apportionment CLICK HERE
BTW, NONINCOMETAX, why on earth would you support a proposal intentionally designed to put the majority of voters on the public dole so our socialists in Congress may then bribe them for their votes during election time and remain in power by promising to increase the proposed family consumption allowance contained in H.R. 25?
Keep in mind the Nancy Pelosy/Ted socialist Kennedy crowd is already gearing up to bribe next election`s voters with an increase in the minimum wage. But unlike the number of voters the minimum wage would actually affect, which is relatively small, the family consumption allowance bribery check would significantly affect the majority of voters in America who would be very much dependent upon that monthly government subsistence check!
Were we not warned in the Federalist Papers that a control over a man`s subsistence amounts to a power over their will?
JWK
I understand to some degree the notion that getting more votes for more dollars in congress, but I disagree with the notion that one’s monetary contribution should be equated with voting power.
Such a system would mean that Bill Gates’ vote means more than mine, and it should not, for we are all citizens, equal under the law if not in finance.
Such a system implemented today would create huge influxes of power in California, New York, and other highly urban areas. The rest of middle America would be ignored in favor of courting the biggest government contributors for votes in their states.
Poor states would have, instead of a disproportionate financial burden, a disporportionate amount of actual representation in congress. A lack of deserving representation for any sparsely populated or less than wealthy state would result.
I am sorry but I cannot support such an idea.
Well, James, if you do not agree with our Constitution and the rule of apportionment, especially as applied to taxation, why not propose amending the Constitution to allow the tax described in H.R. 25, e.g.:
“The Congress shall have power to lay and collect taxes on property, real and personal, without apportionment among the several states, and without regard to any census of enumeration.”
I get the feeling the supporters of H.R. 25 will not proposes the necessary amendment because it would immediately draw attention to the socialist nauture of H.R. 25...another wealth based socialist tax just like our current income tax.
The only tax reform we need to remove the existing socialist iron fist of government from the American People’s financial resources and economic enterprise is to demand the following words to be added to our Constitution:
“The Sixteenth Amendment is hereby repealed and Congress is henceforth forbidden to lay “any“ tax or burden calculated from profits, gains, interest, salaries, wages, tips, inheritances or any other lawfully realized money”
JWK
“…a national revenue must be obtained; but the system must be such a one, that, while it secures the object of revenue it shall not be oppressive to our constituents.”___ ___Madison, during the creation of our Nation’s first revenue raising Act
I agree with the notion of fair apportionment. I simply feel that paying per citizen pretty much accomplishes apportionment. The numbers aren’t quite the same, but very close:
Using 2003 data from the tax foundation located at http://www.taxfoundation.org/files/sr132.pdf
and 2000 census data from www.census.gov I found the following:
California was the #1 tax contributing state in 2003, contributing 234.6 billion dollars, about 13.4% of 2003’s Federal tax burden. According to 2000 census data, California has about 12% of the population of the USA inside its borders. Considering the disporportionate wealth and costs of living in California, a 1.4% change in contribution is to be somewhat expected. Under your proposal, that 1.4% would shift to poorer states.
Most states are very close to being completely proportional. For example, Michigan is 3.5% of the population contributing 3.3% of the federal tax base. Alabama is 1.6% of the population contributing 1.15% of the tax base.
The only thing not ‘apportioned’ is the DC area, which represents 0.3% of the tax burden that would need to be added to the state bills, if it was not billed as a state would be. Only 0.2% of the US population resides in DC.
Now I believe this to be pretty well apportioned already, and I believe similar numbers would result from sales-based taxes.
I bring this up to say that giving the states the bill does little to change tax burdens for anyone, presuming the bill doesn’t change and the states all must still pay it somehow. Be it Federal income taxes or state income taxes, the Fed will get the money it asks for (unless we revolt and stop paying it). We will instead of Federal income taxes have high state income taxes, property taxes, excise taxes and sales taxes. We will pay the same amount of money (probably a little more for most of us, since we’d be making up for California’s and New York’s dispoportionate wealth) individually.
Instead your proposal seems to have more to do with re-asserting Federalism than truly reforming tax problems. If so, fine. If you want to empower the states and their myriad tax systems in such a manner, fine. But your proposal would do little to change our social welfare programs, our entitlement programs, the tax systems of the states, or the economy in general. (It might get rid of the IRS, though) The states would continue to tax wealth, income, or whatever else they wished. Congress would not and could not mitigate the bill significantly with excise taxes and tariffs due to our significant trade deficit and increasingly service-based economy.
Is there any further benefit to such a system? Please enlighten me. So far all I have heard from you is how any other tax system is a socialist nightmare. Are there any pragmatic benefits that we would enjoy under this system? Can it maintain a decent revenue stream in the face of today’s economic realities? I am trying to remain open-minded, so please let me know.
I sat down and decided to crunch these numbers a bit. My curiosity was piqued by the notion of determing how close the current system is to this apportionment system, and also determining how much money would shuffle about to reach this particular formula of apportionment.
By using the 2003 tax foundation data and 2005 census estimates I made a big spreadsheet noting previous tax burdens compared to what they might be under this proposal.
The interesting thing about the apportionment point I was making is that in terms of populations and tax burdens, we are pretty close, but the money involved in getting to apportionment under this proposal can be a lot for some states to handle.
Some states gain, some lose. The biggest winners and losers is something of a debatable point, but I’ll put out the highlights.
The states that gain the most in terms of raw dollars are:
New York, losing 1.78% of overall Tax burden ($3.11 Billion).
New Jersey, losing 1.26% of overall Tax burden ($2.2 Billion).
California, losing 1.2a3% of overall Tax burden ($2.15 Billion).
The states that lose the most in terms of raw dollars are:
Texas, gaining .73% of overall Tax burden ($1.27 Billion)
North Carolina, gaining .53% of overall Tax burden ($0.92 Billion)
Arizona, gaining .43% of overall Tax burden ($0.76 Billion)
The state that deviates the most from apportionment in terms of burden is New York (1.78%) and the state that deviates the least is Alaska (0.001%). The standard deviation Excel spits at me for that column is 0.471 or about half of a percent. So while our current system isn’t quite apportioned as JWK suggests, it isn’t far off from it, and the reason for this deviation is the difference in wealth between states.
Now we review the relative change in tax burdens for states.
The states that gain the most in relative terms are:
Connecticut (a 40% decrease)
DC area (a 37% decrease if treated as a state)
Massachusetts (a 30% decrease)
The states that lose the most in relative terms are:
Mississippi (a 57% increase)
West Virginia (a 48% increase)
Utah (a 45% increase)
Note that I am speaking of an increase/decrease in effective Federal tax burdens, assuming Federal tax needs aren’t decreased.
The greatest deviation in terms of tax burdens is Mississippi’s 57% increase, the smallest deviation is Alaska again, with a 0.7% increase in burdens.
If you want my spreadsheet email me!
James Kidd wrote:
“Instead your proposal seems to have more to do with re-asserting Federalism than truly reforming tax problems. If so, fine. …..Is there any further benefit to such a system? Please enlighten me.”
My “proposal”? You did mean our Constitution’s original tax plan, didn’t you?
As for ‘enlightenment” I believe you say that in jest! I did point out to you ___ our Constitution’s original tax plan does not create a massive and dangerous voting constituency as the proposed family consumption entitlement would do under H.R. 25.
Seems that you do not want to acknowledge the danger of putting every American household on the public dole___ making the majority of voters very much dependent upon a monthly government subsistence check, and making them useful pawns for socialists in Congress who would promise to increase that “allowance” to buy their vote during election time and remain in power.
In addition, you assert “giving the states the bill does little to change tax burdens for anyone”. What you fail to mention is requiring members of Congress to return home with a bill for their state’s share in extinguishing a deficit created by Congress’s borrowing establishes a very real moment of accountability in which the various state Governors and Legislators are left with the responsibility of having to transfer their state’s apportioned share into the treasury of the united States or raising additional taxes within their state and then transferring that money into the treasury of the united State. For some reason I just don’t thing the various state Governors and Legislatures would take too kindly into being made into subservient tax collectors to extinguish Congress’s profligate spending and borrowing practices. Accountability, its all about creating a moment of accountability and our Constitution’s original tax plan did that! H.R. 25, on the other hand, promises to raise existing levels of revenue without any such accountability!
As to your spread sheet, great work, but is irrelevant, and speculative figures at best!
In any event, there is a rule to be followed … a specific amount is to be determined to be raised by Congress, the formula applied and a bill is to be sent to each state for their apportioned share of the total sum being raised. As each state meets its obligation, the pending tax is ended in those states until and if Congress decides to once again lay the apportioned tax. Also, keep in mind the apportioned tax is only to be imposed if imposts, duties and excise taxes are found insufficient … in which case the states are to then be called upon in the general tax among the states to fill the national treasury.
JWK
JWK
I’m just curious as to exactly what sanctions the Federal government might be able to apply if one or more states refused to help “extinguish the national debt”?
I happen to believe that we all are working the wrong problem when we focus on the method of raising revenue for the national government. The problem is really how to reduce spending. My solution includes term limits and a balanced budget amendment. I can’t believe that our founders ever envisioned “career politicians” with absolutely obscene perks.
Someone needs to explain to me just how HR25 will lead to reduced government spending?
In the past, I believe such accountability might have made a real difference in the behavior of the federal government. Particularly at the time of its founding, the various colonies and would-be states were all somewhat skeptical of their ability to retain autonomy under a federated government.
Such is not the case today. Today’s federal government is very powerful and many states have become dependent upon it for funding for schools, roads, research, economic development, and the like. The federal government simply does not answer to the state governors and legislatures the way it might have in the past.
If there is no measure to allow the states to simply not pay the federal government, if the federal government is empowered to simply take whatever it decides it needs, I don’t believe any real accountability would be created. Instead, I believe that after a few short years, the routine of receiving the federal bill and raising taxes (again) to keep paying the escalating costs will simply become second nature to everyone, as inflation continues to empower us to do so.
Now if the states could simply not pay, it might be something to see.
Also, I take a degree of umbrage at the notion that attempting to determine the effects of a tax system is irrelevant.
Why would we have a tax debate at all if it weren’t relevant to all of us?
I think it is simply honest to attempt to estimate some of the benefits and impacts of what you suggest.
If you think my numbers speculative, then I would assume you have done more in-depth work yourself. I would appreciate looking your numbers over.
hey guys, i would like to inform all here about johnWK, here is an internet troll/flamer. he has spread misinformation about fairtax and that same sean hannity website that he referenced has another poll where the fairtax beat the founding fathers plan by a large margin.
here is a link to the thread that exposes him as the dishonest person he is.
http://hannity.com/forum/showthread.php?t=1159&page=82
he just constantly copy pastes and repeats himself, dont take a word he says seirously as he is a nutcase.
the link to the other poll he didnt bother to mention
http://hannity.com/forum/showthread.php?t=89693&highlight=fairtax
we handled him accordingly on hannitys website, he guy has no substance or integrity what so ever.
have a nice day.