It seems to be very well organized and up to date. Highlights of the site include a state by state action guide, sponser bios, and ways to get involved in the grass roots effort to support the FairTax.

So, take a moment and check it out.

Someone is posting dozens of duplicate negative reviews on Amazon’s site for the FT Book. Not only are the breaking Amazon’s rules by reviewing multiple times under fake accounts, but they’re copying and pasting the latest manifesto of lies by everyone’s favorite idiot idealogue, Lawrence Vance. Write Amazon.com and voice your displeasure. If they don’t hear it loud, they won’t do anything about it.

I checked Amazon, and Lee’s right. Currently, three of the four “customer reviews” for the FairTax Book are simply copied and pasted from Lawrence Vance’s miserable review of the FairTax Book for the Ludwig von Mises Institute.

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.

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.

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

As far as I can tell, his basic gripe is that the FairTax won’t roll us back to the size of federal government that existed before the industrial revolution took place.

The antidote to the fraud of the FairTax is a good dose of the wisdom of Murray Rothbard: “There can be no such thing as ‘fairness in taxation.’ Taxation is nothing but organized theft, and the concept of a ‘fair tax’ is therefore every bit as absurd as that of ‘fair theft.’”

Gotta love that Rothbardian outlook. “Why accomplish some good today when you can piss and moan about the need for perfection tomorrow, instead.”

It works like this: Everyone would receive a monthly check from the government to reimburse them for taxes paid on the basic necessities of life.

For a married couple with one child, those necessities are estimated to cost $22,400 a year, the tax on which would amount to $5,152. So that amount would be sent to the taxpaying household in 12 equal payments disbursed each month. According to Boortz and Linder, that keeps the “FairTax” from being regressive — that is, one in which those with the lowest incomes pay the highest percentage of their income in taxes.

Here’s the sleight of hand. According to the U.S. Bureau of Labor Statistics, a household in the lowest 20 percent of wage earners surveyed in 2003 made an average of $8,201 in pre-tax income and spent $18,492 that year. You read that right. According to the BLS, the average household is in deficit until annual income reaches about $35,000.

With a 23-percent sales tax, that household would pay $4,253 in taxes. Under the “FairTax,” they would receive $5,152 in “prebate” checks. Presto! Not only did our family pay zero taxes, they actually came out about $899 ahead!

But that’s not how it would work.

Because the “prebate” comes in the form of a check from the government, it doesn’t exempt our family from paying the 23-percent sales tax on any of their spending, unless they buy second-hand goods.

It simply boosts their annual income by $5,152, giving them a real income of $13,353. But they’re still spending $18,492, and still paying $4,253 in “FairTax.” Taken as a percentage of their post-”prebate” income, that amounts to a tax rate of 31.85 percent.

In contrast, a household of three in the top 20 percent of wage earners surveyed made an average of $127,146 before taxes in 2003 and spent an average of $81,731, according to the BLS. Boosting their income by $5,152, then calculating the “FairTax” paid on their spending, yields a tax rate of only 14.21 percent.

That’s a textbook example of a regressive tax. And that’s not “fair.”

Responses, anyone? What’s he missing?

In “The FairTax Book,” the syndicated radio host Neal Boortz and Representative John Linder, Republican of Georgia, claim that replacing all federal taxes – income, payroll and estate taxes – with a national sales tax would increase the average household’s purchasing power by about 20 percent, end the need for the I.R.S. and turn April 15 into just another spring day. “Once the FairTax takes effect,” they declare, “you’ll be receiving 100 percent of every paycheck, with no withholding of federal income taxes, Social Security taxes or Medicare taxes – and you’ll be paying just about the same price for T-shirts and other consumer goods and services that you were paying before the FairTax.”

For a book that claims in its introduction to be “about honesty,” this statement falls far short. No reputable economist of any political stripe would support it. The honest truth is that replacing the current tax system with any system that raises the same amount of revenue (as Boortz and Linder claim their plan does) may make us better off, but only by redirecting our resources away from dealing with complex filing requirements and improving our incentives to work, save and innovate – not by creating the kind of free-lunch miracle suggested here.

As for “saying goodbye” to the I.R.S., the authors’ plan does so only by passing the responsibility for tax collection to the states. And what a responsibility it would be. In order to fully replace all federal taxes, the sales tax would probably have to be at least 40 percent – possibly even more than twice the 23 percent rate the authors claim, and certainly far higher than anything ever levied by any country. The enforcement problems would be different than those the I.R.S. now faces, but they would not necessarily be smaller. Even at an average rate of around 5 percent, state sales taxes are difficult to administer. Apparently the authors have not talked much to administrators who have to deal with, among other things, ineligible people declaring themselves to be businesses to qualify for the business exemption.

Oh, yes, Boortz and Linder’s claim that their plan would make April 15 another ordinary day is true, because no individuals – just retail businesses – would have to file tax returns. Instead, every day is tax day as people pay their taxes on every trip to the grocery store, the car dealer or even the doctor, since the FairTax base extends to services that nearly all states exempt.

There’s one more problem. Moving to a national sales tax would drastically shift the tax burden away from high-income families and toward low-income families. To remedy this, under the FairTax plan the government would send each taxpayer a monthly “prebate” based on family size, which would amount to $492 per month for a married couple with two children. But Boortz and Linder offer few details about the costs and complications of this vast system of transfers.

In my book, this doesn’t count as a review. It’s just a trashing. It provides little objective information about what the plan would consist of, what the public reaction has been so far (#1 on NYTimes Bestseller list, anyone? Just how often does that happen for a book on tax reform?), or where these contentious counterclaims (like that “the sales tax would probably have to be at least 40 percent”) come from.

And they don’t give any better treatment to Forbes’s book on the flat tax, which they “review” in the same article. Notice a trend here?

Sigh.

TO rally Americans for a radical new tax system, radio host Neil Boortz and Rep. John Linder have written a New York Times bestseller called “The FairTax Book.” It’s more of a campaign document than a tax book, and an ambitious campaign it is: To abolish the IRS and enact a national sales tax to replace income taxes.

So who would collect the taxes if the IRS’s 100,000 employees were suddenly looking for work? The authors envision state tax collectors doing the heavy lifting, collecting the national sales tax along with their own state-level sales — for a piece of the action, of course.

Actually it’s not just the individual income tax that Boortz and Linder would banish but also the corporate income tax, the estate tax and even payroll taxes — both Social Security and Medicare.

They are right on target in their scathing critique of our inefficient income and payroll taxes. Economists of all political stripes make the same charge, accusing our tax system of costing us far more than the money collected — in wasted administrative costs and so-called opportunity costs, the value of all the better mousetraps we’d invent if we weren’t inventing tax shelters. (Full disclosure: the FairTax estimates of tax compliance costs come largely from Tax Foundation, my employer.)

So what about the rate? How high would the FairTax have to be to pay all the same bills we’re currently paying?

There’s the rub.

Boortz and Linder predict that when income taxes are abolished, the price of everything will drop about 22 percent, so it would be fair to replace that revenue with a national sales tax. Prices of most things would allegedly stay about the same.

President Bush’s Federal Tax Reform Panel is about to throw some cold water on that calculation by announcing that the rate would have to be three or four times higher. (The panel’s final report is due Nov. 1.) Since President Bush and several other prominent Republicans have said nice things about the concept, the report will be a bitter pill.

But “The FairTax Book” is prepared for every betrayal. The typically militant member of the FairTax movement (www.fairtax.org) will assail the panel members for being creatures of Washington, who are incapable of thinking and acting radically for the good of the country.

Some fairly good reading on taxes
By Christopher Crain
October 24, 2005

One of the reasons Delphi collapsed is its heavy legacy costs, shared by much of the U.S. automotive industry. The costs hurt its ability to be globally competitive.

The high cost of health care is a serious issue, one I don’t have a solution for.

But what if we could help reduce another cost with perhaps an easier fix?

The cost I refer to is the federal income tax.

On Oct. 31, U.S. Treasury Secretary John Snow will speak to the Detroit Economic Club about ideas for tax reform. A panel of academics will react to his remarks.

If you’re interested in the topic, I suggest that you read The FairTax Book before you go. I know “taxes,” for most people, means dense and dull reading. But authors Neal Boortz, a radio talk-show host, and U.S. Rep. John Linder, R-Georgia, offer an eye-opening look at an alternative tax.

Boortz proposes repealing the federal tax code, the whole schmear: individual income tax, alternative minimum tax, corporate and business income taxes, capital gains, social security, Medicare, payroll taxes, estate and gift taxes. Not a bad start: No more IRS!

Instead, “consumers would pay an embedded personal consumption tax of 23 percent on all goods and services sold at the retail level.” That means from a sandwich to a Ferrari 360 Spider, we’d pay taves on everything we buy. It’s slightly more complicated than this (it also includes a monthly “pre-bate” to all households, including low-income families, to compensate for sales taxes on the necessities).

This could help companies like Delphi and GM compete globally.

The federal income tax that comes out of our paychecks is not the end of the story. For every retail dollar we spend, 22 percent represents embedded federal taxes that are passed along from the manufacturers to the consumer. Add to that the enormous cost to individuals and corporations just trying to adhere to our insanely complicated tax code, a cost estimated at $500 billion (or one-third of what the IRS generates each year).

These costs get passed along to consumers in higher prices. And our companies are at a significant tax disadvantage compared with companies abroad, which don’t have the same oppressive tax code.

The “FairTax” would level the playing field and significantly reduce the cost of manufacturing in the U.S.

Found via today’s Nuze.

I have long championed radical tax reform, as you know. I’ve leaned toward the flat tax, rather than a Boortz-Linder-style consumption tax. But The Fair Tax Book is a serious argument, offering, as the authors say, “tremendous hope” that ordinary Americans can force the Beltway to repeal some 54,000 pages of growth-killing, freedom-limiting, Internal Revenue Code gobbledygook. Besides, any book that uses my term, “the achievers,” instead of “the rich” — and that pushes to reclaim the economic liberty our Founders shed blood to protect — is worth reading.

The more I read about the president’s so-called tax reform panel the worse it gets. Essentially, the panel has done exactly what critics said the panel would do … propose tax increases for the evil achievers. You already know that the panel wants to cut into the home mortgage interest deduction while leaving the income tax in place. But … did you know that the panel has recommended eliminating ALL interest deductions on all home equity loans and loans for second homes?

This is a repeat of what we saw in 1986. Almost 20 years ago the congress eliminate a huge cache of tax deductions and established two flat rates, 15 and 25%. The tax code has now been modified and amended about 10,000 times since then, leaving us with the monster we now have. This “reform” plan is essentially the same. Eliminate more deductions, raise taxes on businesses and the repugnant rich, create some “refundable” tax credits, and set some flat rates.

It leaves the income tax in place and the K Street lobbyists inside the beltway licking their chops. As soon as the panel’s suggestions become law they would go right to work trying to carve out specific tax breaks for their high-paying clients. Right behind the lobbyists you’ll find the Democrats renewing their efforts to shift the entire tax burden onto America’s high-achievers with bill after bill and amendment after amendment, all in the name of reform.

Reform? This is not reform. This is, pardon the cliché, just rearranging the deck chairs on the Titanic. The IRS? Still there. Social Security and Medicare taxes? Still there. Business taxes will still be there and they will still be passed on to the consumer through the pricing structure.

Even more interesting:

The good news is that there is renewed interest in The FairTax Book and H.R. 25 with the impending release of the tax reform panel’s report. I’m told there will be a review of the book in the The New York Post this coming Sunday, and on November 6th there will be a review of The FairTax Book in the New York Times.

I have no real idea what to expect from the Post, but I think it’s probably safe to say that The New York Times will not exactly be a fan of the plan. When, after all, was the last time you saw the New York Times back any initiative that actually transferred power from the government to the people?

Here’s one thing I do expect from the Times review. They will change the terms of H.R.25, the FairTax Act, and then critique the plan as they wrote it, not as it is actually written. This has been the favorite techniques of those who want to keep our present tax system, and my guess is that the Times will follow suit.

To amplify my prediction — the Times will create exemptions to the consumption tax — and then write that the actual sales tax rate would have to be much higher. They will ignore, for the most part, the monthly “prebate” under the FairTax Act. Maybe it’s just me, but wouldn’t it be more fair to review and critique the FairTax Act as it is written, instead of rewriting the bill and then critiquing your rewrite?

I’ve been telling you on the air, and Congressman Linder and I told you in the book that the lobbyists were going to react with full force once they saw the FairTax as a threat to their livings. Now there’s a prediction that has more than come true. Listen today for more details on lobbyist tactics to kill meaningful tax reform.