DISQUS

Frank · 2 years ago

Rogel,You Said, "For me the first question that needed to be asked is should the government collect the tax in the first place?", Of course the Government needs some funds to operate for the purpose that it was intended to. However the total Change Cannot happen overnight. What the "FairTax" Does is Way more Fair than the current system.  The First question I would ask you is. Who Pays All the taxes in this Country? Answer: The Individuals of this country.  Corporations Pay Taxes only on Paper. Income Taxes to a Corporation or business are considered a, "Cost Of Business", So who pays the Taxes for the Corporation? Consumers Do! So why not just be Honest in the collection of Taxes and put it on the receipt when you buy that new car, Flashlight, or Bar of soap? This does Three things.A. Puts the information Power Back to the people and removes a Ton of Corruption from Washington by taking away the "Tax Lobbyist for Corporations" looking for a Tax Break. Because there would not be any "Taxes" for them to buy a loop hole. B. This will bring the cost of Service and Production down Enabling Businesses to Make decisions based on sound Business Practices instead of on Tax Code and loopholes.  C. This puts American Businesses Back on level playing ground in the International Level reducing Final export pricing down from 18% -26%. by doing this you bring more jobs and businesses to America.  Example: Chrysler would have become Chrysler Daimler instead. Privacy: Right now the Tax Code uses all the deductions and "Loop Holes" to into our Private Lives. Example, how Much Money we Make, save, spend, assets, charities Etc. The FairTax reduces that intrusion because you are only taxed on Purchases of New goods and Services above the poverty level, One Time, at the Point of Sale. It is on the receipt. and You have the option to control how much you pay in taxes depending on your spending habits not on how much you Earn. With the FairTax The scope of Government is reduced in a very large way. They are no longer going to be able to manipulate the tax code for socialized behavior control. The K-Street Lobbyists will no longer be sending money into Campaigns for Tax Favors. If you want to get a rise out of people about Government waste then watch it happen when enough people see the money Government receives on their receipt. In short the “FairTax” Provides a Revenue Neutral switch on How taxes are collected. Reduces Government waste, intrusiveness and Gives you 100% of your paycheck. It is so simple a 4th Grader can understand how to figure the Taxes. It is transparent and provides “everyone” with no tax costs up to the National Poverty Level. Please go read the Bill “HR 25”, it is only 138 pages. Try that with the Current tax Code which is almost 67,000 pages. Go to www.fairtax.org and read more.Frank  

Rogel · 2 years ago

Thank you for the detailed response Frank. I will try to explain in some length why I do not agree with what you wrote.

Lets call the child by its name, this isn't a fair tax but rather a tax elimination for corporations. It is much easier to discuss an issue once we making sure that we are talking about the same thing. I also adopted an habit, which I'll admit is somewhat annoying, not to accept something just because someone called it so. The fact that you called something fair doesn't necessarily make it so, and you failed to make the case why is this tax actually fair.

I will admit that simplifying the tax code, and reducing the tax burden on corporations has many benefits. I'll be happy if we will apply flat tax code, and much happier if we will eliminate most of the tax burden. But the so called "fair" tax agenda isn't aiming to achieve any of this. Under the disguise of lobbying newspeak you trying to convince me that the government should operate the same way its operate now but that corporation should not pay taxes. However the idea that the business of America is business, is as wrong as its opposite. 

Your suggestion that this new taxation system will magically eliminate the corruption in the government, and will "removes a Ton of Corruption from Washington by taking away the "Tax Lobbyist for Corporations" looking for a Tax Break. Because there would not be any "Taxes" for them to buy a loop hole" is either naive or a PR talk. Giving the Tax Lobbies what they want isn't a way to fight corruption, is it  cooperation with it. Secondly since the government will remain in the business of distribution of the money collected it will remain open to the same level of corruption. The handout will just be bigger, because those who will get the money wouldn't need to participate in giving it.

You might want to check the logic behind the following arguments you made: first you claimed that the tax is being payed by individuals anyway and that the corporations just passing the charges to the consumers,  and than you claimed that the tax burden is an obstacle that prevent from American corporations from compete efficiently. You need to choose one of those, they can't really co-exist (I personally favor the second). Just as a side note, the first argument is inline with the theory behind the McCain-Feingold Act, which I hope you do not support.

Creating a tax system that favor one segment of the society on the others isn't by any measure a "fair". It might be efficient, or have some benefits. I can, hardly, digest the idea that the government collect taxes to help the poor and to better distribute the society's wealth. It is wrong, but has some logic. The so called fair tax keeping the evil of the tax collection, but removes the good intentions.

We should focus in changing the role of government, and eliminate the idea that the government is distributing our money. Creating a program that benefit the rich isn't capitalism, and never was.

And one last comment - you guys might want to rethink the idea of "consumption allowances". The government should be in the business of giving allowances. The paternalistic view derive from such terminology is essence of what wrong with the entire idea.

DavidFL10 · 2 years ago

Hi Rogel, Under the FairTax there will be no handout for any American that isn't given equally to all.  Wouldn't it be great if the only way Congress could raise taxes on anyone were to raise them for exactly everyone?  The tax favors sold by candidates over the years have produced considerable inequities in our present tax system.  The FairTax goes a long way to leveling the playing field.You say your first question is "should we collect tax at all?"  I respect the question, but the answer is politically irrelevant until our system is more transparent.  Most Libertarians believe, I think, that if the general population had any idea at all how much our government is costing us, they'd pay more attention to how the money is spent.  Politicians love how the invisible and semi-visible taxes in our current system enhance the apathy.  The FairTax makes it visible with every purchase of a new good or service.The proposal is not at all a partisan thing; it is an American thing.   You know that the only way to get most libertarian ideals into congress is through the Republicans.  We can only hope that there are enough statesmen in the Democratic Party willing to accept an idea proposed by the "other side" and give it fair consideration.  The FairTax proposal deserves thorough consideration from all sides.  Please take a look at http://FairTax.org for more information.  A good place to start is the thumbnail sketch and then the FAQ.Thanks for your time, Rogel.DavidN@TampaBayFairTax.org   

DavidFL10 · 2 years ago

Rogel, I can tell by your writing that you agree with many of the goals of the FairTax proposal.  Unfortunately, Frank and I are not doing a great job of presenting how those goals will be met with the FairTax.  I suggest you read the thumbnail sketch I mentioned above as they have outlined it far better than we can in this forum (a forum in which I can't even figure out how to divide paragraphs[grin]).   Please pardon my flaws in communication and don't hold it against the FairTax proposal.  Americans For Fair Taxation have put millions of dollars and years of research into finding the best, most efficient, and most fair way to collect revenue for this country.  Some of the brightest minds in the nation have contributed to the result called the FairTax. DavidN@TampaBayFairTax.org

Rogel · 2 years ago

You know that the only way to get most libertarian ideals into congress is through the Republicans.

This statement is proven, paunfully, wrong since 1994 - and mostly during the current administration.  Watching the leading candidates running for office, giving very little reason for hope.

And by the way, eliminnating taxes on corporations is handout - doesn't matter how mch you try to hide it.

DavidFL10 · 2 years ago

I said nothing about the current administration being Libertarian nor that many Republicans are Libertarians.  What I meant to say is that the only way for a Libertarian (i.e. Ron Paul) to be elected to congress is by putting an (R) after his name.DavidN@TampaBayFairTax.org

DavidFL10 · 2 years ago

Eliminating taxes on a single corporation is indeed a handout and there are tens of thousands of examples in the current tax code that I would like to see revoked.  However, eliminating taxes on all corporations across the board will have the dual effect of removing the cost of those taxes from the prices we have to pay for stuff and bringing the price of American made goods exported from this country closer to the price of the goods produced elsewhere.    ---David

Rogel · 2 years ago

Some of the brightest minds in the nation have contributed to the result called the FairTax

I have natural suspicion toward centralized programs designed by "the brightest minds of our nation", I have to admit it sound to soviet to me. This is obviously not your fault, rather than mine.
But joking aside, I wrote what I wrote after visiting and reading the web site of the so called Fair Tax, and I don't think that you doing bad job representing this agenda. The idea itself isn't as fair as you might want to believe. You might want to consider as interim solution the idea of flat-tax, which was tried successfully in other places.

I meant to say is that the only way for a Libertarian (i.e. Ron Paul) to be elected to congress is by putting an (R) after his

This is a correct statement, although I don't see many chances that being a Republican help Ron's chances, or effects the Republican party, even a little bit.

Judy · 2 years ago

Please read the FairTax book in its entirety...And the follow up which is coming out to answer any of the many critics who question the fairness of this idea...

Wayne · 2 years ago

Rogel,

Based on your comments, it appears there is a fundamental flaw in your concept of "corporate taxes".  I own a business.  If the government raises taxes on my company here's who it affects:

a) Consumers - I have to raise my prices to pay for the new tax.
b) Shareholders - Shareholders (myself included) now recieve less return for the money and time we've invested.
c) Employees - I will have less capital to attract and retain the top talent in my industry.

As you can see, taxes on corporations are simply passed on to one of these three entitites.   The practice of taxing businesses is favored by politicians because the cost to the people it affects is hidden.  This makes it possible for politicians to make promises to voters and say they are going to tax businesses to pay for those promises.

Keeping taxes hidden from voters is very important to politicians.  That's why money is taken out of an employee's paycheck to pay for Federal & State Income Tax, FICA, etc.  If you recieved your full paycheck and recieved a bill each month from the government for each of these taxes, their would be public outrage.  Other types of embedded taxes drive up the cost of our good and services.  There are heavy taxes on gasoline that are embedded in the price you see at the pump.  If it was widely know how much of the cost of a gallon of gas was paid in taxes, people would be demanding the government lower gas taxes.   Overall, the cost of embedded taxes raises the price of everything we purchase by twenty two percent.  That means when anyone, rich or poor, goes to the store and buys a gallon of milk for $2.50, $0.55 cents of the price of the gallon of milk is used by "corporations" to pay taxes.  Jack up the taxes on companies that make milk, sell milk, ship milk, market milk, or use milk in their products and the cost of a gallon of milk will go up.

I hope this simplified example makes it clear to you that taxes on businesses are always passed on to individuals.

I strongly encourage you to read the Fairtax book.  I think you'll change your mind once you have an understanding of what the Fairtax is truly about.   Another good read is Basic Economics by Thomas Sowell.

Good Luck!

Rogel · 2 years ago

Wayne,
I don't know what gave you the impression that I'm against abolishing taxes. What I argue is that you should not change ,only, the collection system rather the distribution idea as a whole.  This is true, as many comments here argued, that it is unlikely to change the system in the near future. However institute a tax collection system that favor one segment of the society is neither fair nor helpful to promote the ideas of Liberty.

It is better for the society to pay less tax in general. It is good for corporations and it is very good for individuals, but it seems that you forget that when you advocating for eliminating the corporate share of the burden. I'm on board for eliminating most of the tax burden, but I would like to see the distribution system going away with it as well. In the interim the flat tax is the fairest, and the least offensive, collection system I can see.

And last remark for you Judy, thank you for your offer but I think I'll pass. I don't need to listen to the complete sales pitch to know it is a another idea that intend to take for me for the benefit of someone else. I don't like it now, and I have no reason to like it in other disguise.

Colonel Robert Fullenkamp · 2 years ago

Dear Sir,

Your lack of information is making you look less intelligent that I am sure your mother believes you to be. Suggest you go to www.fairtax.org and do a bit of reading. When finished you may rejoin the educated masses and be wecomed with open arms. If you wish not to read the facts, refrain from wasting our time!

Robert Fullenkamp

Rogel · 2 years ago

Colonel Fullenkamp,
let a lowly Major give you a simple lesson in civil behavior. You are in my blog, where I can waste time as much as I like. If you don't like what you read you are welcome not to comeback. While you are here, you will maintain proper language or refrain from commenting.

For anybody else - You are welcome to debate and to prove how wrong I am, the only rule apply is to keep the discussion civilized. I have very liberal commenting policy and I didn't need to delete comments so far, I don't see a reason to start now.

Phil_will1 · 2 years ago

Rogel:One of the other posters explained that corporations don't pay taxes; they are merely a conduit through which taxes pass.  Nevertheless, you insist on viewing the FairTax as a special favor to one group - namely corporations.  We probably will have to just agree to disagree.I would rather respond to your support for a flat tax.  There are several problems with a flat tax.There is no flat tax bill which has any real political traction in spite of the fact that this form of taxation has been around for decades now.  The leading flat tax bill in the house is the Burgess bill.  Rep. Burgess now represents the TX house district formerly represented by Dick Armey.  The bill he has introduced into congress is a flat tax option - meaning that it retains the 66,000+ pages which noone understands and actually adds additional pages to describe the new option.  Because it is an option, it isn't revenue neutral.  The reason I say that is because if you give taxpayers an option of how to calculate their taxes, which option do you think 99% will elect?  Right - the one which has the lowest tax burden.  If only those saving money on their taxes exercise the option, then the proposal cannot be revenue neutral.I am well aware that you may not support revenue neutrality as an important criteria ofr tax reform, but congress makes the rules and congress has made it mandatory.  If you want to support a tax reduction under the guise of tax reform, then you need to explain how you are going to get congress to change their current procedural rules.Another major problem of the flat tax is that it does not address the broad range of economic challenges this country faces which are contributed to in varying degrees by our current tax system. Among these challenges are the following: 1.   An enormous trade deficit which is on a glide path which will take us to $1 trillion per year before the end of this decade,  2.   The demographic time bomb in the Social Security and Medicare programs,   3.  the spiral of complexity and higher and higher compliance costs of the current system,  4.  the AMTThat is an illustrative, rather than an exhaustive list.  In each case, the flat tax either does not address the issue at all, or does so less effectively than the FairTax would. Last but not least, let's remember two things:  1.  the current system started off as a flat tax many years ago, and 2.  the Founders categorically rejected this type of tax system, fully understanding that it would grow into an out of control, liberty destroying monster.  That is why an amendment to the Constitution was necessary, in effect overruling the wisdom of the Founders.    

Mike Blanchard · 2 years ago

Rogel, Your logic has a couple of flaws i would like to point out.  First- It would be more productive if you would address one issue at a time.  The issue of whether or not the fair tax changes the amount of revenue the government raises or distributes is completely separate from the issue of whether it is a better system than our current tax code.  Almost every detractor of the fair tax tries to muddy the waters using this argument.  Please try to focus on the issue of whether or not it's a better method of collecting the taxes.  The issue of the amount of taxes collected, the size of our imperial federal government, or the way the money is distributed is another subject altogether.Second -  The current income tax we have now started out as a flat tax.  If the flat tax was passed, we would immediately have pressure from special interest groups to start the deductions and loopholes.  When reagan simplified the tax code in the 80's, the next year there were 1,100 proposals to change the code.  How long do you honestly think it would take before the democrats demanded that the rich pay a higher rate?  You will still have to report your income to the government.  The flat tax is the worst idea ever. Third - You are as suspicious of business as you are of the government.  It is a simple economic principle that untaxing business would spur growth. I own a business and I pass the taxes I pay straight to my customers.  If the embedded taxes were removed, competition would force me to immediately lower my prices.    

Daniel N. Adams · 2 years ago

Rogel,From one Libertarian to another, I agree that reducing taxes all together is the ultimate goal for us.  But when you compare the flat tax to the Fair Tax, there are many aspects of the Fair Tax that appeals to me:  I get my whole paycheck and I get to choose when I pay my taxes (When I decide to make a purchase) ,  the IRS and those  #%?# forms  will no longer exist for the individual,  and those that do decide to have extravagant  lifestyles and therefore benefit the most by living in the greatest country will pay the most,  That's FAIR!.ps. Just read the book... it's not a sales pitch... the Fair Tax will tranfer power away from Washington and give it to the people.  No more promises to special groups for special tax favors.  The flat tax does none of this.

Ashford Schwall · 2 years ago

What are we taxing when we tax income? We tax work. We tax prosperity. We tax upward mobility. We tax success. Many economists believe that if you tax something more, you get les of it. Do we really want less work, less prosperity, less upward mobility, less productivity and less success?   SUPPORT H.R. 25  WWW.FAIRTAX.NET

Rogel · 2 years ago

This is wonderful, really.

Lets start with some clarifications - all of those who try to convince me that taxes are bad, and taxes on corporations are bad, are wasting time - I'm completely on board. Second clarification about the statement that taxing corporations is always being passed to the consumer - guys, you all are much smarter than that as your thoughtful comments demonstrates. Many times a company might decide, because of many reasons not to pass the charge to the consumers and to lower their margin. Will this effect individuals, obviously but any taxation effecting individuals. The question is, is it fair to eliminate tax from one, major, segment of the society while many other individuals will keep pay (and if the total is the same - that for the argument sake I accept as an axiom - in higher rate). The argument is simplistic also when you trying to factor many other factors. And last but not least clarification - I'm not a fun of the flat tax rate, although it has a proven record of relative success in other places. If you will examine what happens in Estonia, a country that decided to adopt a free market policy you will be able to see a very nice example of flat tax.

The argument that the founders didn't support flat tax is somewhat incomplete. They didn't support taxes , period. The establishment of income tax, and later setting it as a progressive tax system was bad - but not because it started as a flat tax.

The idea that by merely changing the tax code, without stopping the government being a wealth distributer, will eliminate the tax benefits lobbies is, sadly, no more than wishful thinking. The problem lay, and will remain, in the fact that the government can grant economical favors as it please.  And, come to think about it, aren't you in a very obvious way just another big lobby group? :)

To argue about the total effect on the economy, as did phil, only from the perspective of tax collection is simplistic. I do agree that we are facing serious issues when discussing social security, Medicare programs the trade deficit and the inflationary measures that the government will impose to reduce its war debts. The answer isn't in the way we collecting our taxes, at least not predominantly rather than, again, minimizing the government to its original role.

Mike, I would thank you if you will point to a place where I compared the amount of tax collected between the different methods. Not only I didn't do so, I find it philosophically irrelevant.

And last, but not least I have to thank Ashford for opening my eyes to the problems with income tax in general.  I'm still impress with the quantum leap you made from claiming that income tax is bad to the support in the so called Fair Tax :)

Chris Larkby · 2 years ago

The power to tax is the power to destroy, and if you tax something you will certainly get less of it.A flat tax is a tax on productive enterprise (work, investing, saving).The FairTax is a tax on consumption. While a flat tax and The FairTax are both better than the current 60,000 page nightmare, the FairTax is better because it does not tax productive enterprise.

Terry · 2 years ago

Rogel;Was reading your blog and the responses from some of my Fairtax friends. Maybe it's not perfect. But it's the BEST thing out there considering the present tax code.The thing I like most about the Fairtax is that those who aren't paying taxes now (criminals, illegal aliens, foreign tourists) would be paying the tax anytime they spend money (the tax is only applied on new goods and services). Is that so horrible?

Bob · 2 years ago

Rogel,My goodness!!  I realize it is your blog (to do as you please) and you have requested "proper language"; but what about proper english, punctuation and grammer?  I'm honestly trying to understand your viewpoint, but it sure does diminish your relativity when you articulate your views written at the level of a student (maybe) in middle school.  Good luck trying to get your points across.  I wish you the best.By the way, you'll want to read the next book coming out (written by Neal Boortz and John Linder) that specifically discusses opposing viewpoints on the FAIR TAX.  It should be very enlightening. 

Tony Maitilasso · 2 years ago

The person who wrote Handout in Disguise has demonstrated several traits. One he can't spell 'hear'  or 'these'. He is also incapable of studying the facts before he puts his foot in his mouuth. The Fair Tax is a nonpartisan grass roots movement. It is not coming 'down' from any party but going up from the people. Other grassroots movements have been the Women's Right to Vote movement, The Civil Rights Movement, even our Revolutionary War. When the people get fed up with something they start a grassroots movement. Maybe he should have been in Columbia S.C. May 15th to see 8,000 plus Americans from all walks of life marching and shouting "Fair Tax now!"Millions of Americans have already signed petitions asking their Congressional Representative to vote for the Fair Tax. The writer also questions why the government should collect the tax. Let's get real-who gets the income tax money with the present system.. Maybe he should also look up the definition of an interest group and a grassroots movement. Keep in mind that interest groups hire high paid lobbyists to sway our representatives in Congress to enact legislation that benefits their clients not the American people. I have heard a few rediculous arguments aginst the Fair Tax but this one takes the cake. Read the book. Go online and check out the rebuttals to some of the lame reports and arguments against the Fair Tax. Check out FairTax.org and read what the experts that have more degrees than you have brains have figured out.

Rogel · 2 years ago

I wonder what can cause people to come to someone's house and litter, like some of the people commenting here are doing. I don't understand why do they have to make any civil discourse an unpleasant thing. I read here many thoughtful comment that made me reevaluate my position and think. Reading the last few trolls make me wonder if it was worth it.

Wayne · 2 years ago

Rogel,

Your wrote "The question is, is it fair to eliminate tax from one, major, segment of the society while many other individuals will keep pay(ing)".

By your logic, the current tax system unfairly taxes the wealthy.  The top 50% of income earners in the US pay over 95% of all federal income tax revenues.  The top 33% pay over 85% of federal income taxes.  I'm not making this up - check out IRS.gov.  Only "rich" people pay any significant amount of federal income taxes.  This is why liberals are able to call any tax cut a "tax cut for the rich".

The Fair Tax proposal has a prebate provision that provides every person with a monthly check to cover the tax he/she would pay on basic living expenses.  It basically removes the federal tax burden from millions of americans.  This too is "unfair" by your logic.

One of the most important benefits of the Fair Tax is that it exposes the cost of taxes to the general public.  This would create a tremendous amount of political pressure to keep goverment small and lower taxes.  And, it would make it much more difficult for to lobby for special tax breaks.

One last thought, companies cannot simply lower their profit margins.  Lower margins mean less money to pay out to shareholders, less money for employees, less money to advertise, less money to invest in equipment, less money for research and development, etc.  Lower margins means thousands, perhaps millions of people who invested money in your company with the hope (but not guarantee) of a return will be penalized.  Many of them will invest their money elsewhere; in other companies that have more favorable tax burden.  Many global companies choose to locate their offices outside america to avoid paying taxes that make their products and services less competitive.

I get the impression that you feel taxing businesses is a "free lunch".  Nothing could be further from the truth.  The tax is ALWAYS passed on to one of the three groups I previously mentioned.

It's fantastic that you post your opinions online and encourage others to respond.  I hope you do it in the spirit that you might learn something from the comments of others.  It's clear that you'd benefit from a better understanding of economics before you can have an educated discussion about these issues.  If you're truly interested, start by reading Basic Economics by Thomas Sowell before you pickup a copy of the Fairtax book.

Hank Van Gieson · 2 years ago

Wayne wrote "The Fair Tax proposal has a prebate provision that provides every person with a monthly check to cover the tax he/she would pay on basic living expenses.  It basically removes the federal tax burden from millions of americans.  This too is "unfair" by your logic."What's unfair about this IMHO is that, because the authors of HR25 included FICA taxes among the taxes to be replaced by the Fairtax,  approximately 30 million workers may never pay one cent in net federal taxes, yet all will qualify for full Social Security retirement and health care benefits.  Is that the kind of welfare state we want our nation to become?  As a senior retiree, I strongly object to having to resume paying into the SS trust funds with my sales tax dollars, while millions of  workers would pay nothing and get the same benefits.   I'm not opposed to replacing the income tax with a consumption tax.  I'm opposed to the Fairtax version and believe that the Houston tax lawyers that came up with this scheme badly overreached.

Frank · 2 years ago

Hank Van Gieson,The FairTAx was constructed with replacing all funds necessary to fully fund the Government including Medicare and Social Security.  Social Security is paid from the general fund anyway! If you think there is a trust fund out there you are sadly Mistaken. Any time you make purchases you are paying all taxes collected now just up front and on the receipt. Also all tourists, approximately (50 Million of them each year), buying goods hear supporting our system as well. This sounds good to me. Did you know that Hundreds of companies were surveyed and  about the Fairtax and that 450 of them said if it passed here they would be building their next factory/Headquarters here in t he U.S. ? Can you imagine the amount of Jobs that would Create? I have a feeling we would be Importing People to work in the U.S. do to lack of workers to fill the job positions.Frank  

William Roberts · 2 years ago

RogelOne of the main reasons I support the fair tax is because it will place the tax burden on all NEW goods sold in the United States and no tax burden on any goods which are exported.This will cause goods made in other countries to compete on a level playing field with goods made in the USA and hopefully greatly reduce the trade deficit. One other thing that should happen is that the money in off shore accounts (and probably much more) will be returned to accounts in the USA because it will no longer be taxed. This will make it available for investments in the USA and not in some other country.William M Roberts

Art Mathews · 2 years ago

Rogel,It appears to me that you are unable to control your temper.  When someone opposes your view, you respond in haste, mis-spelling many words and making LARGE grammatical  errors.  Reread your own messages.  It wouldn't hurt to get your facts straight as well. Good Luck!  

Tony · 2 years ago

Great comments by both the originator and the responders.  The biggest problem I have seen in this blog is that most of the comments are based on a shotgun approach to the FairTax.  All would be better served if very specific aspects of the FairTax and the economic and cultural aspects of each are debated separately.  I have listened to, and read, many, many debates about this proposal (FairTax) over the past few years and have yet to find an opposing view that cannot be adequately dispelled by a knowledgeable FairTax supporter or by the wording of the bill itself.  The vast majority of the opposing views concern the impact on the poor, the aged, and the collection and distribution of taxes.  I have been personally satisfied that the proposed application of the FairTax will dispel my concerns.  And, as a matter of information, the FAQ's on the FairTax website deal with many of the issues posed here in minute detail.  But - we all know that as long as we have politicians looking to elevate their status, we will always have some sort of corruption to deal with.  That, my friends, is a fact of live that we must all live with. 

Hank Van Gieson · 2 years ago

Frank--"idiot lessons" about the Fairtax really aren't required.  I've been at this for several years and believe I know as much or more about HR25 than the average bear.  For the record, there certainly are social security trust funds- the sad/disturbing news is that there is nothing but Treasury bill "IOU's" in the funds.  The  issue is whether or not the federal government will remain solvent in order to redeem those bills when needed to pay benefits of the coming generations of baby boomers.As for the Fairtax, it isn't correct to say that the system was designed to fund the entire federal government.  HR25 does not address the current annual deficit, nor does it do anything but change the method of extracting the same amount of revenue that the income tax and other taxes  do today.  But that's nit-picking, so who really cares?You haven't addressed my concern, so I'll state it again.  Do you really support the creation of 30 million "welfare" families, caused by the combination of the inclusion of FICA taxes in those to be replaced, and the prebate?  Don't believe me?  Do your own homework.  Using the Fairtax calculation worksheet provided by the Fairtax Research director, I found that singles grossing $10,000 or less, married grossing $20,000 or less, and married with two children grossing $35,000 or less will pay no net federal tax under the Fairtax.  Ping that data against the 2004 IRS filing data and it is possible to estimate that 30 million workers will pay no net tax.  And those accustomed to getting just a cost of living pay raise each year will never pay any net tax.  Yet, they will all qualify for Social Security retirement and medical care benefits.  By comparison, very few workers today are able to use tax credits to reduce their income tax liability to zero and then, using the refundable tax credits (EITC and Additional Child Care) offset the entire amount of the 7.65% payroll tax deduction. Once again, is the creation of millions of welfare families really  what this country is all about?Tony--I agree that it would be better to focus on single issues such as the one above, but it seems very difficult to stay on point.  I once prepared a list of 24 Fairtax criticisms.  Here are just four for your consideration.  I really haven't seen any rebuttals by AFFT or anyone else that would make me more comfortable with the Fairtax.(1)  After tax prices will initially rise by 15-18% for all services, and will stabalize at 15-18% higher for new goods once the existing inventory works through the system.(2)  Most senior retirees would have an equal or lower effective tax rate under current law.(3)  Roth savings plans as well as all after tax savings will be double taxed under the Fairtax.(4)  It will very likely be found to be unconstitutional for the Federal government to tax State/Local government agencies under the doctrine of intergovernmental tax immunity.  (In a previous post, someone wrote that "the power to tax is the power to destroy" in a somewhat different context.  Actually that was first said by Chief Justice Marshall in a decision dealing with the sovereign rights of both the Federal and State governments.)  When the constitutional issue is held up to the rationale given by AFFT for taxing government consumption, namely to keep government agencies from competing with the private sector, I believe there might be a better way to protect the private sector without running afoul of the Constitution.  For instance, a sense of the Congress resolution might be sufficient to prevent State governments from competing with private enterprise in areas where government doesn't belong?

Bob · 2 years ago

Hank,Have you researched what we should do (if anything) with our present tax system.  Please enlighten us?  Thanking you in advance.

Hank Van Gieson · 2 years ago

Bob, I have and I'm glad you asked, even though there seemed to be a bit of "tongue in cheek" (enlighten?) in your request.  First, let me repeat that I would support replacing the income tax with a national consumption tax.  The arguments for taxing consumption rather than labor are compelling!  So, here are my earnest suggestions for how to modify HR25 in order to create legislation that is politically acceptable, economically feasible, and socially supportable.  I call it  "Fairtax-Lite".(1)  Replace just the income tax with a broad based 15% national sales tax phased in over five years.(2)  Scrap the one-size-fits-all, $600 billion annual prebate entitlement concept.  (3)  Retain education expenses, including tuition, in the consumption base.(4)  Remove government consumption from the base.(5)  Scrap the inventory credit.That's pretty much it.  FICA taxes are in reality just insurance premiums on a policy which provides minimum pension and health care security in old age.  Removing payroll taxes from the revenue to be replaced lowers the Fairtax-Lite sales tax rate significantly and ensures that the nation doesn't wind up supporting 10's of millions of workers that pay no net federal tax  due to the prebate.  It also tends to mollify those critics that don't want to let businesses completely off the tax hook. Retaining the gift and "death" taxes furthur lowers the Fairtax-Lite sales tax rate, and addresses the frequent complaint that the wealthy would have lower taxes under the Fairtax.  Congress is basically conservative and prefers evolution to revolution.  The five year phase in rather than the Fairtax "cold turkey" approach will make the change more evolutionary and less risky in nature.  Adjustments for unintended consequences, if needed, can be made without major upheaval.  The prebate entitlement is a budget disaster. In a time where entitlements are rapidly crowding out discretionary spending, including Defense, the Fairtax prebate would simply accelerate the lurking budget trainwreck.  Concern for the impact of a regressive sales tax on the poor is warrented, but the State and Local governments are better able to deal with the issue at far less cost in targeted assistance such as food stamps, and transportation and rental assistance.  Exempting education tuition from the Fairtax was a mistake, and would have "let the camel's nose under the tent flap".  With the tuition exemption as a precedent , how long would it be before some Senator proposed to exempt medical care or some other pet issue?  And the race would be on, to include the evils of lobbying.  Governments can't tax themselves into prosperity, and it should be possible to head off the threat of government competition with the private sector by other legislative means that would meet the constitutional test.  And finally, the inventory tax credit, when spread over the five year implementation period, would be cumbersome, complex, and more trouble than it's worth.  Removing the inventory credit would also eliminate the $365 billion revenue shortfall associated with year one of the Fairtax implementation.You say you want to get rid of the IRS and IRC?  Well, I do too and here is one way to get the job done that has a far better chance of positive Congressional action than does HR25.  Is it perfect?  Of course not, but it's a start with some chance of success.

Bob · 2 years ago

I have been enlightened and concur.  Keep spreading the word my friend!

Phil_will1 · 2 years ago

Hank, one of the primary economic benefits of the FairTax is that it addresses the demographic problem with SS and Medicare, namely that we will have many more people retiring ocer the next couple of decades than we have people entering the workforce.  If you don't support shifting the tax base for those social safety net programs from a payroll base to a broader one on the entire economy, then we are left with 3 options1.   Just let the system collapse,2.  Huge tax increases3. Reneging on the promises madeWhich option do you support?Secondly, I don't consider the exclusion of education expenses from the tax base an "exception", since this is a consumption tax.  The FairTax's position is that education is an investment in human capital.  Can you explain why it is that you believe that education is a consumption item? 

Hank Van Gieson · 2 years ago

Phil,(1)  Despite scare stories to the contrary, Social Security is not broken.  I don't believe that any of the draconian options you listed  are appropriate, although raising taxes comes the closest to what probably needs to be done.  I'm no big fan of Bill Bradley, but you might check out his latest book, "The New American Story".  He claims, (and I believe), that the Social Security trust funds could be made solvent for the next hundred years by: (a)  gradually raising the retirement age to 70; (b)  make 2% of the 6.2% tax on individuals apply to all income, not just up to the current cap of $94,200; (c)  bring new hire state and local employees into the SS system over a 5 year phase in period; and (d)  change the way the annual cost of living increase is calculated to the "chained consumer price index", which takes into account purchasing substitutions as prices fluctuate.  As you can see, there would be minimum impact on the vast majority of Americans.  (2)  Education is a consumption of a service provided by our higher education facilities.   Why should it be treated any differently than any other  consumption of services?  My point was that, having exempted education tuition, the precedent is set for Congress to make other exceptions over time for services that may be considered just as important as education.  Is higher education more important than medical care or home ownership?  Not everyone thinks so!  Once you let the camel's nose under the tent flap, all bets are off!

Winford · 2 years ago

After reading the previous postings on this blog, it occurs to me that the Fair Tax would be the most radical shift of power away from the politicians in Washington, back, to the citizens of the United States, that has occurred in the last 230 years.  Wow!  A positive change, for a change.  Glad I live in these, interesting times!