| WIKI | FAQ | Tech FAQ | |
 http://csua.com/feed/ | |
| ||||||
| 5/24 |
| 2007/8/30-9/3 [Reference/Tax] UID:47826 Activity:moderate |
8/30 which one of you was pimping the FairTax?
Noted bastion of socialism the Wall Street Journal
says it is a Scientology plot:
http://www.opinionjournal.com/extra/?id=110010523
\_ The summary isn't quite right, but I'll take good ideas from any
source. But a national sales tax is hardly a new idea. Oh, and the
article makes some pretty insightful criticisms, thanks for the
link. -emarkp
\_ Which point is insightful?
\_ Primarily the exposing of the smoke and mirrors on the
estimates. Claiming it's 23% when it's really 30%, and
pointing out that gov't agencies would be paying taxes on
things they aren't now, which would increase costs, etc. I
still think it's an improvement over the IRS. -emarkp
\_ The 23 vs 30 is an old hat red herring. Many people bring
it up but it's been covered a lot already. Do they have
to repeatedly rebut the same old arguments? It is
linked from the front page of http://fairtax.org (under "learn
about the fairtax"). The government tax issue is also
irrelevant; the tax paid shows up in the tax income.
The government ALREADY pays itself taxes when it buys
stuff; the companies selling to it pay income tax (and
government employees pay income and payroll taxes.)
Here is an old rebuttal arguing against many of the same
exact points:
http://www.fairtax.org/site/PageServer?pagename=news_myths_factcheck
http://xrl.us/5hcg
This guy's article is really weak. There are reasonable
arguments to be made about the fairtax but most of this
guy's points are not.
\_ The comment about the 23% in that link is laughable,
because while it's true that income tax is
"tax-inclusive" sales tax is not. So when the average
Joe hears 23% sales tax, he thinks of the current state
tax and adds 23 points. This increases my dislike
because I think it's deceptive. -emarkp
\_ Who cares what the average Joe thinks? Use your
brain. It's not deceptive. Does the average Joe
have any clue at all anyway? No. Joe is watching
TV. By using the 23% number, it forces this issue
to be discussed. If they simply used 30% then
average Joe would still be deceived. How is he
to interpret that in comparison with income taxes?
(This is why I don't have much hope for this plan.
It's so difficult to even get to the point where
we're talking about the same thing, even in a
neutral environment of educated people. At the
level of politics it will be impossible.)
\_ Uh that sounds plausible? I haven't had time to read the articles
yet but in the interest of fairness I would at least take a look
at the http://fairtax.org rebuttal: http://urltea.com/1d1v
I guess you can just say anything and get it published in the WSJ.
Ok I read it. Almost every point is irrelevant or false.
\_ The rebuttal doesn't address the 23% vs. 30% issue.
\_ As a neutral 3rd party learning about the "fair tax" for
the first time, it was *very clearly explained* about
the difference between the 23% vs 30%.
\_ It's still deceptive. When you hear that the sales
tax in CA is 8.25%, how much do you expect to spend
on a $100 purchase?
\_ They usually refer to it as the "FairTax rate".
Since it is a proposal to replace the income tax
you need to use the same accounting. It's only
deceptive if you hear a soundbite and don't
actually learn about the plan.
\_ It's deceptive and intentionally so. It's about
marketing, not accounting.
\_ Yes it is about marketing. It's not deceptive.
It's about marketing against income tax.
Let's just disagree and drop it.
\_ See above.
\_ Anything that starts out with scare tactics about it being created
by the Scientologists (it wasn't, they had their own similar
sounding but different idea and are not related to the fairtax
people) isn't worth reading. That the WSJ couldn't figure out
who was responsible for what when they went on the war path just
makes me sad for the state of journalism in this country. They're
*supposed* to be the best and probably are which says too much about
how lame the rest of them must be. I don't know much about the
fairtax but it didn't take more than 5 minutes to figure out this
article is FUD and just flat out wrong on several points.
\_ To be fair, that was on opinion piece from the WSJ. Not
journalism. I still respect WSJ's journalism. -op
\_ Journalism is, by definition, opinion. What is it that
journalists do for a living? They present a narrative
for the world. Journalism isn't grounded in anything
that would make this narrative privileged. -- ilyas
\_ If you're too dense to differentiate between the
way the fuck out there on Pluto WSJ Opinion page, and
their news reporting, I have lost all faith in you.
\_ 'Facts' exist, but it's not possible to talk about
them without a lengthy 'pre-processing stage.' No
one bothers to establish common ground for a
discussion about 'facts' anymore. Certainly not
journalists, they are hostage to their business
like everyone else. -- ilyas
\_ Soon they will be part of the Murdoch empire and just as
full of crap as the rest of the stuff he makes.
\_ I don't care if it was an opinion piece. They published it
in their paper and I expect basic *facts* to be correct. If
their opinion piece writers can't get publicly available
*facts* right then what's the point of having ops in the
first place? I expect a highly respected paper like the wsj
to at least spend the same 5 minutes fact checking something
so inflamatory that I spent to find out it was just 100%
flat out wrong. This isn't the sacramento bee, its the wsj.
\_ Have you ever read the WSJ opinion page? Basic facts
need not apply.
\_ I regularly do. It isn't often that something so
inflamtory *and* easily checked is right there at the
inflammatory *and* easily checked is right there at the
top of the op screaming FUD!!! at you.
\_ I think that woman who writes about central and
south america all of the time, I'm too lazy to
up here name, spouts lies all of the time but
who cares, it's just south america. |
| 5/24 |
|
| www.opinionjournal.com/extra/?id=110010523 Register for MarketWatch MONEY MATTERS Fair Tax, Flawed Tax Does adding 30% to the price of every house sold sound like a good idea to you? BY BRUCE BARTLETT Sunday, August 26, 2007 12:01 am EDT Former Arkansas Gov. Mike Huckabee's unexpectedly strong second-place showing in the recent Iowa Republican straw poll is widely attributed to his support for the FairTax. For those who never heard about it, the FairTax is a national retail sales tax that would replace the entire current federal tax system. It was originally devised by the Church of Scientology in the early 1990s as a way to get rid of the Internal Revenue Service, with which the church was then at war (at the time the IRS refused to recognize it as a legitimate religion). The Scientologists' idea was that since almost all states have sales taxes, replacing federal taxes with the same sort of tax would allow them to collect the federal government's revenue and thereby get rid of their hated enemy, the IRS. They assert that a rate of 23% would be sufficient to replace federal individual and corporate income taxes as well as payroll and estate taxes. Linder and Chambliss get this figure by calculating the tax as if it were already incorporated into the price of goods and services. This is only the beginning of the deceptions in the FairTax. Under the Linder-Chambliss bill, the federal government would have to pay taxes to itself on all of its purchases of goods and services. Thus if the Defense Department buys a tank that now costs $1 million, the manufacturer would have to add the FairTax and send it to the Treasury Department. The tank would then cost the federal government $300,000 more than it does today, but its tax collection will also be $300,000 higher. This legerdemain is done solely to make revenues under the FairTax seem larger than they really are, so that its supporters can claim that it is revenue-neutral. But for the government to afford to purchase the same goods and services, it would have to raise spending by the amount of the tax it pays to itself. The FairTax rate, however, is not high enough to finance the higher spending it imposes. Therefore the proposal only works if federal purchases are cut by 30%, close to $300 billion--the increased cost imposed by the FairTax. Similarly, state and local governments would have to pay the FairTax on most of their purchases. This means that it is partly financed by higher state and local taxes. It's also worth remembering that state sales taxes now average 6%, which means that the total tax rate will be 36% on retail sales. State sales taxes have long exempted all but a few services because of the enormous difficulty in taxing intangibles. But the FairTax would apply to 100% of services, including medical care, thus increasing their cost by 30%. Consumers would also find themselves taxed on newly constructed homes. Imagine paying 30% to the federal government on top of the purchase price of your next house. Since sales taxes are regressive--taking more in percentage terms from the incomes of the poor and middle class than the rich--some provision is needed to prevent a vast increase in taxation on the nonwealthy. The FairTax does this by sending monthly checks to every household based on income. Aside from the incredible complexity and intrusiveness of tracking every American's monthly income--and creating a de facto national welfare program--the FairTax does not include the cost of this rebate in the tax rate. As noted earlier, the FairTax is designed only to match current revenues and does not cover any increased spending that it may require. Since the rebate will cost at least $600 billion the first year, either federal discretionary spending would have to be cut by 60% or the rate would have to be five percentage points higher than advertised. Rejecting all the tricks of FairTax supporters and calculating the tax rate honestly--by including the higher spending that it mandates and by being realistic about what could actually be taxed--professional revenue estimators have always concluded that a national retail sales tax would have to be much, much higher than 23%. A 2000 estimate by Congress's Joint Committee on Taxation found the tax-inclusive rate would have to be 36% and the tax-exclusive rate would be 57%. In 2005, the US Treasury Department calculated that a tax-exclusive rate of 34% would be needed just to replace the income tax, leaving the payroll tax in place. But if evasion were high then the rate might have to rise to 49%. If the FairTax were only able to cover the limited sales tax base of a typical state, then a rate of 64% would be required (89% with high evasion). I've emphasized problems with the FairTax rate because public opinion polls have long shown that support for flat-rate tax reforms is extremely sensitive to the proposed rate, with support dropping off sharply at a rate higher than 23%. But there are also massive technical and administrative problems with collecting all federal taxes at the checkout counter and relying entirely on state governments to collect the federal government's revenue. Among the problems: What possible incentive would the states have to be vigorous in their federal tax collections? What is to stop them from slacking off and giving their citizens a tax cut at federal expense? What's to stop people from bypassing retail outlets and buying their goods from producers or at wholesale, tax-free? Perhaps the biggest deception in the FairTax, however, is its promise to relieve individuals from having to file income tax returns, keep extensive financial records and potentially suffer audits. Judging by the emphasis FairTax supporters place on the idea of making April 15 just another day, this seems to be a major selling point for their proposal. So unless one lives in one of those states, this promise is an empty one indeed. In short, the FairTax is too good to be true, and voters should not take seriously any candidate who supports it. Mr Bartlett was deputy assistant secretary of the Treasury for economic policy from 1988 to 1993. |
| www.fairtax.org/site/PageServer?pagename=news_myths_factcheck Any reasonable person will conclude, after reading through the specifics, that Mr Miller based negative conclusions, pejorative in nature, on erroneous assumptions that, in themselves, reveal either a bias or a faulty process of analysis. org: remove the article from your Web site until we are able to resolve the key errors we have brought to your attention (or at least agree that we cannot reach a resolution); org article for the same period of time the at-issue article is available to visitors to your Web site; org's senior editors to discuss our concerns in greater detail. I would ask that you provide me your response to these requests in writing. There is little doubt Mr Miller has spent much time researching the FairTax, but either because he was determined to produce a "gotcha!" org has now published an unfair and factually inaccurate analysis of the FairTax. As a follow-up to our telephone conversation with Mr Miller on Friday, I want to reiterate our disappointment with what can only be described as an unfair and unsupported analysis of the FairTax Plan. In addition to the attached rebuttal document, I would like to list a few key points that have caused me great concern as to whether your writer conducted a fair and impartial review of the FairTax Plan: 1) As I stated in my May 29, 2007 e-mail to Messrs. Jackson and Miller, Americans For Fair Taxation would make available to your organization the entirety of the $20 million in research that well-respected economists across the country have conducted in review of the FairTax proposal. Mr Miller dismissed this research out of hand in our last phone conversation with him because it was, in his words, "commissioned," which assumes that the nation's foremost public finance economists can be swayed by a contract, ignores the fact that most research is commissioned and that all of our research has been subject to critical peer review over many years. And please consider this another request on behalf of Americans For Fair Taxation and our hundreds of thousands of supporters nationwide to provide us with the "research" Mr Miller relied upon to reach the conclusions stated in this article. Clearly, the citations he points to are not sufficient to come to the assumptions and incorrect conclusions he makes in the article. That the graph does not relate to the FairTax is made even more clear in the text of the Treasury study. The graph looked at a proposal with a different tax base and that did not repeal the regressive payroll tax. Mr Miller states that as a result, "many FairTax supporters do not understand that the 23 percent number is tax inclusive." Notwithstanding our very own explicit notation of "inclusive," he insists that we intend to mislead, even though, as we tried to patiently explain, the coporate tax, individual income tax, capital gains taxes and estate and gift taxes, the flat tax proposal, and every other tax reform proposal introduced uses the exact same method of calculation. org understood the difference between tax-inclusive and exclusive, and then he tellingly spins the remaining 15 percent who misunderstood as evidence that we have misled the public. He ignored our point to him that numerous places on our Web site and in our materials we define the difference between "inclusive" and "exclusive" and he was similarly unmoved by our honest plea that our only alternative for those seeking a comparison to the present system was to express income tax rates in "exclusive" terms which we feel would make us subject to the very charges of misleading the public we are now suffering at Mr Miller's hands. He also seemed unmoved that, in light of his first stated discomfort, we published again in a most visible manner yet another explanation of the different calculation methods on our Web site. org to express their displeasure with the illogical conclusions of the article understood the difference present plain evidence that an overwhelming number of supporters understand the exclusive vs. The only data he uses to justify the statement that most FairTax supporters are unaware of the difference between "inclusive" and "exclusive" taxation nomenclature is the fact that 85 percent of FairTax respondents who made contact with him did understand the difference. How can we or any other reader when presented these facts not conclude that Mr Miller's logic is either flawed or his conclusions fundamentally disingenuous in presentation? If in your polling you found the United States Congress had reached an 85 percent approval rating, would you declare that "15 percent of Americans disapprove of Congress?" We spent a considerable amount of time with Mr Miller on the phone Friday even offering to conference in Dr. Laurence Kotlikoff, a respected economist who has written on this very area in an effort to put Mr Miller's charges of an "accounting trick" to rest. When he refused this offer, we suggested that he, at the very least, modify his language to more fairly indicate that a difference of opinion on this highly complex subject exists and that Dr. Kotlikoff's scholarly paper on the subject published in Tax Notes, to date has not been refuted or criticized even by Mr Miller's advisor, Mr Gale, who recently lost a debate at AEI on the subject. We had understood from Mr Miller that he would, at the very least, use less pejorative language that would indicate a difference of opinion on this subject by experts, but such a change has not been made to the article. This unfounded accusation of "trickery" on the part of me, my board of directors, my staff, consulting team, independent researchers, and our hundreds of thousands of supporters nationwide is insulting and without merit and would seem to require of any fair editor the wholesale revision of this section, if not deletion. While Mr Miller briefly mentions the fact that the panel failed to release its methodology, why not take the time to investigate our supportable assertion that the presidential panel never conducted an in-depth analysis of the FairTax Plan itself? In fact, I specifically asked Mr Miller to request clarification on this point from the Treasury Department and/or from members of the 2005 panel a responsible request that seems to have fallen on deaf ears. org regarding your story was merely the afternoon prior to your hoped-for publication date. Certainly it would have been fairer had we been given a greater opportunity to work through Mr Miller's questions on the FairTax days in advance a benefit that was undoubtedly bestowed upon FairTax detractors. Our sources indicate that some of your "advisors" on this article were contacted about a month ago. Gentlemen, I have provided you with a concise rebuttal to many of the glaring inaccuracies and biased commentary found in the at-issue article. This type of unfair writing is inexcusable and does great harm to our honest effort. It is for these reasons and more that I must assure you that we will do what is necessary to make these facts known. Therefore, I must once again reiterate my request that you immediately take down the article in question and/or allow us to post our attached rebuttal on your Web site. Should you not meet this request, I will be posting our rebuttal on our Web site and will publicly release our claims after 2:00 pm EDT today. My hope is that we can work towards a fair and amicable resolution of this issue without having to move our conversation to the public forum. I look forward to your positive response to my stated concerns. org/Joe Miller article conclusion: "We stand behind our earlier analysis of the FairTax. Huckabee referred is not a 23 percent tax, but rather a 30 percent tax. And it is revenue-neutral only through an accounting trick. It will collect more money from those earning between $15,000 and $200,000 per year and less from those earning more than $200,000 per year. It is possible that the FairTax would make most people better off, but much of that gain would be a direct result of making the tax code less fair." The letters in parentheses have been added to aid the reader in following the response. Introductory remarks Americans For F... |
| xrl.us/5hcg -> www.fairtax.org/site/PageServer?pagename=news_myths_factcheck Any reasonable person will conclude, after reading through the specifics, that Mr Miller based negative conclusions, pejorative in nature, on erroneous assumptions that, in themselves, reveal either a bias or a faulty process of analysis. org: remove the article from your Web site until we are able to resolve the key errors we have brought to your attention (or at least agree that we cannot reach a resolution); org article for the same period of time the at-issue article is available to visitors to your Web site; org's senior editors to discuss our concerns in greater detail. I would ask that you provide me your response to these requests in writing. There is little doubt Mr Miller has spent much time researching the FairTax, but either because he was determined to produce a "gotcha!" org has now published an unfair and factually inaccurate analysis of the FairTax. As a follow-up to our telephone conversation with Mr Miller on Friday, I want to reiterate our disappointment with what can only be described as an unfair and unsupported analysis of the FairTax Plan. In addition to the attached rebuttal document, I would like to list a few key points that have caused me great concern as to whether your writer conducted a fair and impartial review of the FairTax Plan: 1) As I stated in my May 29, 2007 e-mail to Messrs. Jackson and Miller, Americans For Fair Taxation would make available to your organization the entirety of the $20 million in research that well-respected economists across the country have conducted in review of the FairTax proposal. Mr Miller dismissed this research out of hand in our last phone conversation with him because it was, in his words, "commissioned," which assumes that the nation's foremost public finance economists can be swayed by a contract, ignores the fact that most research is commissioned and that all of our research has been subject to critical peer review over many years. And please consider this another request on behalf of Americans For Fair Taxation and our hundreds of thousands of supporters nationwide to provide us with the "research" Mr Miller relied upon to reach the conclusions stated in this article. Clearly, the citations he points to are not sufficient to come to the assumptions and incorrect conclusions he makes in the article. That the graph does not relate to the FairTax is made even more clear in the text of the Treasury study. The graph looked at a proposal with a different tax base and that did not repeal the regressive payroll tax. Mr Miller states that as a result, "many FairTax supporters do not understand that the 23 percent number is tax inclusive." Notwithstanding our very own explicit notation of "inclusive," he insists that we intend to mislead, even though, as we tried to patiently explain, the coporate tax, individual income tax, capital gains taxes and estate and gift taxes, the flat tax proposal, and every other tax reform proposal introduced uses the exact same method of calculation. org understood the difference between tax-inclusive and exclusive, and then he tellingly spins the remaining 15 percent who misunderstood as evidence that we have misled the public. He ignored our point to him that numerous places on our Web site and in our materials we define the difference between "inclusive" and "exclusive" and he was similarly unmoved by our honest plea that our only alternative for those seeking a comparison to the present system was to express income tax rates in "exclusive" terms which we feel would make us subject to the very charges of misleading the public we are now suffering at Mr Miller's hands. He also seemed unmoved that, in light of his first stated discomfort, we published again in a most visible manner yet another explanation of the different calculation methods on our Web site. org to express their displeasure with the illogical conclusions of the article understood the difference present plain evidence that an overwhelming number of supporters understand the exclusive vs. The only data he uses to justify the statement that most FairTax supporters are unaware of the difference between "inclusive" and "exclusive" taxation nomenclature is the fact that 85 percent of FairTax respondents who made contact with him did understand the difference. How can we or any other reader when presented these facts not conclude that Mr Miller's logic is either flawed or his conclusions fundamentally disingenuous in presentation? If in your polling you found the United States Congress had reached an 85 percent approval rating, would you declare that "15 percent of Americans disapprove of Congress?" We spent a considerable amount of time with Mr Miller on the phone Friday even offering to conference in Dr. Laurence Kotlikoff, a respected economist who has written on this very area in an effort to put Mr Miller's charges of an "accounting trick" to rest. When he refused this offer, we suggested that he, at the very least, modify his language to more fairly indicate that a difference of opinion on this highly complex subject exists and that Dr. Kotlikoff's scholarly paper on the subject published in Tax Notes, to date has not been refuted or criticized even by Mr Miller's advisor, Mr Gale, who recently lost a debate at AEI on the subject. We had understood from Mr Miller that he would, at the very least, use less pejorative language that would indicate a difference of opinion on this subject by experts, but such a change has not been made to the article. This unfounded accusation of "trickery" on the part of me, my board of directors, my staff, consulting team, independent researchers, and our hundreds of thousands of supporters nationwide is insulting and without merit and would seem to require of any fair editor the wholesale revision of this section, if not deletion. While Mr Miller briefly mentions the fact that the panel failed to release its methodology, why not take the time to investigate our supportable assertion that the presidential panel never conducted an in-depth analysis of the FairTax Plan itself? In fact, I specifically asked Mr Miller to request clarification on this point from the Treasury Department and/or from members of the 2005 panel a responsible request that seems to have fallen on deaf ears. org regarding your story was merely the afternoon prior to your hoped-for publication date. Certainly it would have been fairer had we been given a greater opportunity to work through Mr Miller's questions on the FairTax days in advance a benefit that was undoubtedly bestowed upon FairTax detractors. Our sources indicate that some of your "advisors" on this article were contacted about a month ago. Gentlemen, I have provided you with a concise rebuttal to many of the glaring inaccuracies and biased commentary found in the at-issue article. This type of unfair writing is inexcusable and does great harm to our honest effort. It is for these reasons and more that I must assure you that we will do what is necessary to make these facts known. Therefore, I must once again reiterate my request that you immediately take down the article in question and/or allow us to post our attached rebuttal on your Web site. Should you not meet this request, I will be posting our rebuttal on our Web site and will publicly release our claims after 2:00 pm EDT today. My hope is that we can work towards a fair and amicable resolution of this issue without having to move our conversation to the public forum. I look forward to your positive response to my stated concerns. org/Joe Miller article conclusion: "We stand behind our earlier analysis of the FairTax. Huckabee referred is not a 23 percent tax, but rather a 30 percent tax. And it is revenue-neutral only through an accounting trick. It will collect more money from those earning between $15,000 and $200,000 per year and less from those earning more than $200,000 per year. It is possible that the FairTax would make most people better off, but much of that gain would be a direct result of making the tax code less fair." The letters in parentheses have been added to aid the reader in following the response. Introductory remarks Americans For F... |
| urltea.com/1d1v -> www.fairtax.org/site/PageServer?pagename=news_myths_082907_redherrings mod=google news_wsj It is apparently getting so difficult to defend the current income tax system that its guardians must use smear tactics to slow down its best replacement. Bruce Bartlett ("FairTax, Flawed Tax," editorial page, Aug. The FairTax was developed many years ago, totally independently of any other proposal, group or movement. It is a product of more than $20 million of advanced economic research, as well as detailed conversations with citizens as to their preferences defining the best possible national tax system. Many groups and individuals have agitated to replace the deeply flawed income tax system, including, apparently, the Church of Scientology. As a founder of Americans For Fair Taxation, I can state categorically, however, that Scientology played no role in the founding, research or crafting of the legislation giving expression to the FairTax. Mr Bartlett is equally wrong about many other aspects of the FairTax. We are disappointed but hardly surprised by such distortions about it coming from the very economist who once opined that the income tax system just needed a little "tweaking." Leo Linbeck Chairman and CEO Americans for Fair Taxation Houston My guess is that few readers made it with an open mind past Mr Bartlett attributing the FairTax's origins to the Church of Scientology. I know this because the two principal founders of the FairTax movement, Leo Linbeck and Bob McNair of Houston, are friends of mine who served on my board at the Dallas Fed. I was there as they began to develop their proposal in the mid-1990s. I watched them pitch their fledgling idea to their friends and business associates, and I watched them urge prominent economists to do independent research on their proposal. I even accompanied them to San Francisco to pitch it to Milton and Rose Friedman. In fact, I posted a blog with that title a few weeks ago. A fair chance means a thorough evaluation and discussion of its merits without the distraction of a red herring. Bob McTeer Distinguished Fellow National Center for Policy Analysis Former President of the Dallas Fed Frisco, Texas The FairTax would replace the federal corporate and individual income tax, payroll taxes and the estate and gift tax with a 23% national retail sales tax on all goods and services. Each household would be provided with a monthly prebate equal to the sales tax rate times the federal poverty level plus a small extra amount in the case of a married couple to prevent a marriage penalty. The FairTax bill (HR 25) was developed by economists, business people and tax lawyers who understood that the current tax system is dysfunctional. Specifying the criteria by which successful reform should be evaluated, they engineered the tax around the notion that reform should minimize the adverse growth effects of the tax system, be neutral between debt and equity, consumption and savings, and among industries, should reduce compliance burdens that waste more than a quarter trillion dollars today, respect civil liberties instead of requiring Americans to reveal virtually every aspect of their lives to government, eliminate favoritism shown imports and remove the penalty on exports, enhance the competitiveness of the US as an investment destination and a location for headquartering businesses, eliminate the bias against upward mobility, and increase transparency and comprehension of the tax system. Michael Boskin, former chairman of the Council of Economic Advisers, estimates long-term gain to GDP from a consumption-based tax reform would be about 10%. Laurence Kotlikoff estimated a 7% to 14% increase in GDP. Many others find high single digit to low double digit gains. Lowering marginal rates and eliminating double and triple taxation of savings will increase the well-being of the American people by a trillion dollars per year and perhaps much more. The FairTax would untax existing homes that represent three-quarters of all homes bought and sold. And by allowing mortgage interest payments to be paid with both pre-income and pre-payroll tax dollars, the tax is the equivalent of allowing mortgage interest to be deductible against payroll taxes today. Interest rates will drop by 25% for the same reason municipal bond rates are lower than taxable bond rates. And of course there is the benefit of having the only developed economy in the world with a zero rate of tax on income. Mike Huckabee's unexpectedly strong second-place showing in the recent Iowa Republican straw poll is widely attributed to his support for the FairTax. For those who never heard about it, the FairTax is a national retail sales tax that would replace the entire current federal tax system. It was originally devised by the Church of Scientology in the early 1990s as a way to get rid of the Internal Revenue Service, with which the church was then at war (at the time the IRS refused to recognize it as a legitimate religion). The Scientologists' idea was that since almost all states have sales taxes, replacing federal taxes with the same sort of tax would allow them to collect the federal government's revenue and thereby get rid of their hated enemy, the IRS. They assert that a rate of 23% would be sufficient to replace federal individual and corporate income taxes as well as payroll and estate taxes. Linder and Chambliss get this figure by calculating the tax as if it were already incorporated into the price of goods and services. This is only the beginning of the deceptions in the FairTax. Under the Linder-Chambliss bill, the federal government would have to pay taxes to itself on all of its purchases of goods and services. Thus if the Defense Department buys a tank that now costs $1 million, the manufacturer would have to add the FairTax and send it to the Treasury Department. The tank would then cost the federal government $300,000 more than it does today, but its tax collection will also be $300,000 higher. This legerdemain is done solely to make revenues under the FairTax seem larger than they really are, so that its supporters can claim that it is revenue-neutral. But for the government to afford to purchase the same goods and services, it would have to raise spending by the amount of the tax it pays to itself. The FairTax rate, however, is not high enough to finance the higher spending it imposes. Therefore the proposal only works if federal purchases are cut by 30%, close to $300 billion -- the increased cost imposed by the FairTax. Similarly, state and local governments would have to pay the FairTax on most of their purchases. This means that it is partly financed by higher state and local taxes. It's also worth remembering that state sales taxes now average 6%, which means that the total tax rate will be 36% on retail sales. State sales taxes have long exempted all but a few services because of the enormous difficulty in taxing intangibles. But the FairTax would apply to 100% of services, including medical care, thus increasing their cost by 30%. Consumers would also find themselves taxed on newly constructed homes. Imagine paying 30% to the federal government on top of the purchase price of your next house. Since sales taxes are regressive -- taking more in percentage terms from the incomes of the poor and middle class than the rich -- some provision is needed to prevent a vast increase in taxation on the nonwealthy. The FairTax does this by sending monthly checks to every household based on income. Aside from the incredible complexity and intrusiveness of tracking every American's monthly income -- and creating a de facto national welfare program -- the FairTax does not include the cost of this rebate in the tax rate. As noted earlier, the FairTax is designed only to match current revenues and does not cover any increased spending that it may require. Since the rebate will cost at least $600 billion the first year, either federal discretionary spending would have to be cut by 60% or the rate would have to be five percentage points higher than advertised. Rejecting all the tricks of FairTax supporters and calculating the tax rate honestly -- by including the higher spending that it mandates and by being real... |
| fairtax.org -> www.fairtax.org/site/PageServer The FairTax Plan is a nonpartisan national grassroots campaign to replace the federal income tax system with a progressive national retail sales tax. It provides a "prebate" to ensure no American pays federal taxes on spending up to the poverty level, dollar-for-dollar federal revenue replacement and, through companion legislation, repeal of the 16th Amendment. "Taking it to the streets" Team FairTax at RAGBRAI 08/06/2007 RAGBRAI - 3 riders - thumb Organized cycling clubs from Alaska to Florida were joined by the FairTax team in the Great Bicycle Ride Across Iowa. |