FairTax Nation - A center for grassroots action
I’ve long felt that FairTax.org was missing something in organizing grassroots members and maintaining their participation. I’ve spoken in the past with AFFT representatives on the need for district level communication and a website where organization and focus was on social networks at the local level. I thought that this was the type of structure that was needed to address state representatives as a unified and educated group.
Many states have their own website and Yahoo has state groups, we’ve got Myspace groups and Facebook groups, but I never felt I could connect easily with people in my area. FairTax.org had planned to launch such a site.. groups or clubs.. something - but I think its just turned into another state area to post stuff with little organization and inter-communication. In any event, I don’t think it took off.
To the rescue... Marilyn Rickert has put together an excellent site called FairTax Nation that I think will accomplish many of these goals. You can subscribe to state and district level groups, blog, upload pics, and communicate with people in your area. A social network site for the FairTax with a grassroots focus, which I hope will be very successful in organizing supporters.
Morphh,
While I agree that social networking is very important in any grass roots effort, education is sadly lacking on Marilyn’s FairtaxNation site. What has evolved is a network of individuals that have no idea about the details of HR25.
Recently, I was banned from Fairtax Nation for trying to correct a young man who wanted AFFT to climb all over Mr Hewitt for suggesting that all government employee salaries and wages would be taxed at. After providing all the necessary references from the legislation to prove that Hewitt was correct, I was still attacked for trying to set the record straight, and subsequently banned.
What possible good is it to the larger Fairtax cause to have a bunch of folks repeating the lies and misstatements of certain Fairtax advocates (you know who I mean)? At some point, those lies will catch up to the advocates to their detriment. Honesty and integrity still count for something, no matter what the issue is.
Makes me appreciate the value of your Fairtaxblog, where civil discussion is allowed. Fairtax Nation would be well advised to somehow incorporate the wisdom of your blog in order to put forth the best case for the Fairtax without all the lies and misstatements.
Good thoughts Hank, I haven’t gotten into the discussions much and as you stated, perhaps it’s not the best place to learn about the plan. Wouldn’t want to imply I was pushing anyone away from our great blog.
I certainly agree with you that we should educate individuals that misunderstand the plan. My main thought was that I found it interesting as an organization and local communication tool among supporters.
Morphh,
The following post on FairtaxNation is a perfect example of “the blind leading the blind”, and why civil discussion of the Fairtax details is so important.
” * Posted by Sean Fagan on May 22, 2009 at 8:20pm in General FairTax Topics
* Ok folks, so what’s it going to be?
Boortz/Linder have so screwed up the price issue that it isn’t surprising that Fairtax advocates would subscribe to this type of misunderstanding. I don’t mind if folks want to believe that prices will remain constant, but they should understand that the only way that can happen is if all of us take a pay cut to the tune of our SS and income tax withholding.
Jorgenson’s study has been used and abused for years, despite his assurance that he included employee taxes in his 22%. Too many times I’ve read that the 22% embedded taxes will be removed and the 23% sales tax implemented for little or no net change. Arithmetically incorrect, (one has to use 30%, not 23%), and removing all embedded costs means a pay cut, a very unlikely outcome. According to most independent economists as well as the AFFT Research Director, the most likely outcome will be some reduction in costs, (10%?) and an increase in retail prices, (17%?). But, those aren’t Linder’s economists???
Mr. Fagen needs help, but he probably isn’t going to get it from Marilyn Richter or Jim Tomacik, the leaders of FTN. Is ignorance really bliss???
I do have one clarification to your comment Hank. The statement “Arithmetically incorrect, (one has to use 30%, not 23%)” is confusing. Both the 22% and the 23% are inclusive figures and are “swappable”. We can not use 22% as only replacing a portion of 30%, having 8% left. So, it is correct when using a non-accommodation model that 22% would be subtracted from 23%, leaving prices nearly the same. I don’t think that would happen, but that math is correct. I think what you were meaning was that you can remove the dollar value of 22% inclusive and then multiple that base by 30% exclusive to bring it back up to the same dollar value - that would also be mathematically correct.
I’ll see if I can post something sensible to the forum.
Hank — I’m afraid you’re fighting an uphill battle. Obviously, I’m no fan of the FairTax, but FairTax supporters have the right to have their own website where they can post whatever they want, regardless of whether it is true or not. That’s just the way it is.
Think of it this way. There are websites out there devoted to the notion that the Earth was created in six days. I have no doubt that if you and I posted very often on those websites we would quickly be banned. We might think they’re nuts, but we’d recognize they can have their own websites if they want.
By the way, there are websites out there devoted to debunking or attacking the FairTax. I’m sure you and I could post to our hearts content on those websites if we wanted, while pro-FairTaxers would likely get banned after a while. That’s just the way it is.
Morphh,
No matter what happens to costs, they must have 30%, not 23%, added at the cash register. The AFFT FAQ which is 4th from the bottom of their list clearly states that fact. I would argue that in the non-accommodation model, 22% of costs comes out, and 30% in sales taxes goes in for a net retail price increase of 1.4%. Not the same as simply subtracting 22% from 23%?
I appreciate your interest, but would caution against trying too hard to fulfill the education goal of FairtaxNation. It turns out that there are a few members of that blog that really are looking for the facts, but they seem to be few and far between.
You might also be alert to a price related issue we discussed on your blog called “cascading embedded costs”. An old friend from Fairtaxgroups (what happened to their site?), is still trying to make the case that the 22% is a result of rolling up the cost savings from each level of production. As you pointed out, dollar cost savings do accumulate, but percentage cost savings do not. The simple reason which you adequately displayed on a chart, is that the percentage cost savings only apply to the value added at each stage of production. It doesn’t matter if there are is one level or 121, the percentage cost savings will be the same.
Hayden,
You are absolutely correct, although it is difficult for me, (an officer and gentleman by an act of Congress?), to accept being banned from Fairtax group discussions for trying to tell the truth. You and my wife are in violent agreement–there must be better ways to spend one’s time and energy.
Cheers!
Ok Hank... I see your logic and you’ve got me puzzled. While the increase would be 1.29%, as the real figure is 29.87% (not 30%), I get your point and it sounds correct. So this opens a mathematical question for me.
So, what the heck is going on here. Subtracting inclusive rates gives us 1% (a 1.01 exclusive value), while subtracting the equivalent exclusive rates, gives us a 1.66 exclusive value. The real figure (?) seems to fall in-between at 1.29 exclusive. How come we get different numbers depending on how we compute the math? Should they not all equal out to the same thing dollar wise? What am I missing - where does the variance come from? This reminds me of the missing dollar paradox.
Morph,
The big difference is that it is not correct to take the 22% and 23% from the same base, i.e. X. If X is the prefairtax price, then the 22% can be applied to it to get the cost without embedded taxes. The 23%, however, would appropriately be applied to 1.013X (0.78 * 1.2987 * X).
To be honest, I still have trouble reconciling the 22% number. If we estimate the value of everything we produce yearly as GDP and the federal government takes 18.5% of that number, the cost of embedded taxes is necessarily 18.5%. Maybe the 22% is based on the average of the industries that absorb the majority of the tax burden, but spread out it is on an annualized average 18.5%.
Andrew,
I wouldn’t lose too much sleep trying to reconcile Jorgenson’s 22% number. The 22% average cost reduction assumes that all State/Local governments adopt the Fairtax. The 22% is for all governments tax burden on businesses and individuals. You might sleep better knowing that Jorgenson also wrote that for the federal government taxes alone, the cost reduction would average 18.4%. A familiar number???
Jorgenson did not include compliance costs in his study, a fact that further complicates and confuses this issue. He also assumed that workers would accept their current net pay, an assumption you probably agree with. Many other experts do not!
If you take the time to do it, using the famous 35 industry chart in the Boortz/Linder books, the sum of the cost savings across the 35 industries does average 22%. I just don’t know how meaningful that might be, nor do I know how Jorgenson developed those percentages. Perhaps labor intensive industries were assigned higher percentage costs??
Jorgenson’s 1997 study has been used and abused for years. And the 22% now seems to be written on clay tablets–unfortunately! I much prefer the Kotlikoff/BHI study data that uses actual tax burdens for 2007. A case can be made that business costs, including compliance costs, are 10% of sales.
Morphh,
Great job responding to the price issue on FairtaxNation. It is probable that your Fairtax 401 explanation will be wasted on some who haven’t passed Fairtax 101 yet, but an excellent piece in any event.
I think that Andrew is right about your version of the “missing dollar paradox” and the answer is similar to the answer for that old saw. It’s a matter of mixing up inclusive and exclusive data in ways that don’t work.
I have a question for you. On the subject of monetary accommodation, I’m not convinced. Ever since I read Kotlikoff’s study where he claims that prices can’t rise without an increase in the money supply, I’ve had questions. The actual Quantity Theory can be expressed by MV=PY where M is the money supply, V is velocity, P is prices and Y is real income. As Kotlikoff wrote, he assumed that V and Y would be unchanged under the Fairtax, so prices can’t rise without an increase in the money supply.
To me, this meant that unless the Fed printed more paper money, prices would be static. But, what about plastic “money? Most retail purchases today are made with credit cards. When a credit card is used, isn’t money being created? Does the Fed really control the money supply, or do we all play a role? At what point in the billing cycle, if ever, does credit card “money” require the printing of cash?
Is it possible that the Quantity Theory is a nice economics gadget that has no bearing on the real world? I’m confused! Help!
Thanks for the complement on Fairtax 401. I’ll take a look at the figures above and think about your question on quantity theory.
Hank, do you even know Marilyn?, and by the way its Rickert. Seems kind of odd for someone to group the members and leaders of FTN into being ignorant for one persons comment , when they have no clue who the others are and what they know? I know many informed people involved with FTN. I think you may be a little blinded. gorny
Gorny,
All I know about Marilyn Rickert is what I read on her profile. Seems to be a solid citizen, which makes it even more puzzling why she and Jim don’t even try to correct the many Fairtax fallacies which abound on her site. If it was just one person’s incorrect comments, I might agree with you, but there are too many to ignore.
What is your definition of “informed”? Reading two comic books written by a radio talk show host and an obscure Georgia Congressman doesn’t qualify anyone as informed, imho. Just take a look at the references list on this blog. Slog through all of that stuff and you will certainly be a Fairtax expert!
But use caution, you may not be a Fairtax advocate any longer???