Posted on 01/08/2006 11:18:14 AM PST by Eaglewatcher
FairTax promoters are all over the Lake Region. They've shown up at recent Rotary meetings, and at the Keystone Lake Area Business Association. Another FairTax speaker hits the Republican Club next Monday night.
The FairTax's first and biggest proponent is Americans For Fair Taxation, which introduced legislation currently before Congress, H.R. 25 and S.25.
A number of economists listed on the AFFT's Web site also support the FairTax. Oddly, however, none of them are from the big gorillas of economics schools: Harvard, Yale, MIT, The Wharton School and Stanford University. More popularly visible is "The FairTax Book; Saying Goodbye to Income Tax and the IRS." The book's black and white cover with a red circle and bar over the IRS on its front, and over Income Tax on the back is hard to miss. Or ignore.
Right wing radio talk show host Neil Boortz and Georgia Congressman John Linder, who authored the book, say a national sales tax, or FairTax, allows you to receive 100 percent of your paycheck and pay or not pay federal taxes depending on whether or not you decide to spend it. A national sales tax, the authors contend, would encourage Americans to save.
At its best moments, Boortz's book gives a good if overly-simplified view of our current tax structure and its flaws. The FairTax Book also provides a good introduction to one alternative. It's not the only possible alternative nor is the whole cloth of the Boortz-Linder plan likely to be adopted. Not even everyone right or rightish is on board.
Libertarian Lew Rockwell of the von Mises Institute seems to be dead set against taxes of any stripe. "... We hear about how bad the current tax code is," he writes. "It is this message that compels us ... It is the second part of the message where the trouble comes: the proposal to replace what we have now with something new ... In the end,... the average taxpayer will have nothing to show for it."
It's not as if an American economy and government based on a consumption tax is impossible or even a bad idea. Whether and how to get from here to there is the question. And who is best to lead the reforms, given the magnitude of the coming debate? Boortz assumes he's drawn the road map to take us to paradise overnight, but his readers might want to think twice before they pack their bags for the trip.
According to the authors, The FairTax would produce more than the government's current revenue stream. A national sales tax, they say, would save Social Security, cut the federal deficit and bring American jobs back to our shores. It would eliminate tax cheats in the underground economy-porn, drugs, illegal immigration'-and, as the authors oft repeat, turn April 15 into just another spring day.
All this thanks to a national sales tax which everyone excluding nonprofit corporations, but including the federal government, would pay for the merchandise they buy.
FairTax adherents contend the measures are free of political partisanship, and while Republicans support the measure more than Democrats, the nonpartisan argument has legs.
According to last week's AFFT scorecard, House Democrats in favor of H.R 25 are Colin Peterson of Minnesota and Ralph Hall from Texas. Republican representatives who have taken a stand against the measure include Tom Latham of Iowa, Mark Souder of Indiana, Howard Coble of North Carolina, Sherwood Boehlert of New York, and Zach Wamp of Tennessee.
All told, 130 members of the House are for or are learning toward the consumption tax measure; 87 are against or leaning against it. As of last week, 219 were typically unwilling to commit.
No Democrats in the Senate support the measure yet. Republican senators against it include Ted Stevens of Alaska, Judd Gregg and John Sununu of New Hampshire, Pete Domenici of New Mexico, and Rick Santorum of Pennsylvania. Only 21 senators have come out for or are leaning toward the bill; 24 senators are against or are leaning against the bill with 58 uncommitted.
If passed, the measure is not likely to eliminate the Internal Revenue Service as Boortz claims. One IRS customer service representative recently said he had never heard of Neil Boortz, nor of the FairTax. Furthermore, he added, the Bush administration's current IRS agenda seemed not to be pushing a sales tax but instead was cutting customer service slots and moving them over to enforcement of the current income tax codes to increase revenue.
Whether collecting sales or income taxes, some agency will have to apportion the work, and it's not as if tax audits will entirely disappear. The national sales tax would likely take audit nightmares off private citizens and put them squarely on every business that sells any product or service. They would be assigned the formidable task of collecting- and then coughing up again- the proceeds generated by a national sales tax.
Boortz may not be the best of all possible voices to promote the FairTax. First, there's his own hucksterism: "On second thought," he says, "don't give this book to a friend, make them buy their own copy." He can't suppress that cocky radio talk show tone that distracts from his otherwise convincing arguments. His book raises as many doubts as it allays. The authors present a dismal picture of listless workers who'd just as soon not work at all rather than pay those high, confusing payroll taxes.
But then Linder says he's watched Boortz go from a tax status of less than four figures to one which just paid for some tax accountant's luxury auto. Apparently, the author's own initiative has not been crushed by income taxes as he contends everyone else's has. There doesn't seem to be any place in their scenario for a Bill Gates cranking it out despite the graduated income tax. You wonder how, or why, he ever did it.
Boortz paints income taxes as a communist plot because Karl Marx at least once spoke kindly of them. If that's not enough, the authors throw in America's other favorite boogeymen: tax accountants and lobbyists. And to get you really riled up, on page XV they calls the IRS "the enemy."
On the other hand Boortz draws a patronizing portrait, against all evidence to the contrary, of dull-witted Americans with no idea how much of their paycheck and their expendable income actually goes for federal taxes. Welfare candidates are lazy, shiftless and fraudulent, he assumes. The authors decry the graduated income tax that takes your money and gives it to such folks. But after they've set up their straw men, they propose their consumption tax "prebate" that takes your sales tax money and gives it to those same ne'er-do-wells. To be fair, they are trying to create a progressive consumption tax which avoids penalizing the poor when basic necessities are taxed. The fact that their system returns an equal amount to you too, whatever your income level, will assuage some.
Their monthly prebate to every head of household ostensibly neutralizes what the authors call a burning American class warfare. And though they flatly state Americans are born to cheat on their taxes, there's hardly a page about the potential for prebate and national sales tax cheats and fraud.
Boortz says the main reason corporations move overseas is America's income tax, but he fails to mention that Americans simply expect higher wages, period, than workers expect in Mexico, Indonesia or China. Surely wage demands, never mind taxes, are part of the corporate motive to go offshore. And don't forget environmental regulation. These demands would still exist whether a federal sales tax were passed or not; American business would act accordingly.
Boortz and Linder make much of the work of Dale Jorgenson, former Chairman of the Department of Economics at Harvard University from 1994 to 1997. Jorgenson specializes in tax issues and testified before the House Ways and Means Committee in 2002. It was Jorgenson's work that determined that as much as 22 percent of the cost of all consumer goods was due to embedded income taxes. With this removed, Boortz and Linder argue, there's room for a national sales tax of anywhere from 23 to 30 percent, depending on how you figure it. Prices, they point out, would not go up. Via email, Professor Jorgenson said, "A number of prominent economists have endorsed the FairTax, including Nobel laureate Vernon Smith...You will note that I am not among them."
Fortunately, tax reform and even the consumption tax proposal are being considered by other writers. "The Greedy Hand," by former Wall Street Journalist Amity Shlaes, does a better job of describing how America got into its current tax morass and is a calmer exploration of where we are now. Whether or not it's to her credit, Shlaes appears to have no defined agenda for reforming the current tax structure, and certainly nothing so neat, tidy and all encompassing as Linder and Boortz propose.
Read "The FairTax Book"? Absolutely. And give the local speakers a fair hearing. But do your own homework elsewhere before you make up your mind to jump on the Boortz bandwagon.
The book is available at most public libraries. Or you can borrow it from a willing friend.
How about the "No Tax Bandwagon?"
Fair Tax Ping!
No..
there is no fair tax..the best is a flat tax
Snowballs in hell mean anything to ya?
And I challenge you to convince retirees that it'll be a good thing to have the same money they paid income tax on when they earned it taxed once again, at 30+ percent, when they retire.
The Magic Faery Tax is a trojan horse. Prepare for both kinds of tax.
Bingo. The "Fair Tax" isn't.
Right on. I want to see the flat income tax. I think it would take a lot of the mystery out of the whole thing.
The best tax is NO TAX!
How in the hell did this nation get along before Woodrow (Socialist) Wilson?
Thie more money that gets pumped in to this science-fiction creature in Washington the more the political class spends.
Kentucky flintlock rifles and Scot-Irish fervor,blood & spirit...
...at least, during the beginning of the 1800's.
I think before tax reform will even matter we have to get the government off of its addiction to money. The federal government needs to be restricted to its original constitutional obligations: to represent these United States in foreign affairs and provide for the national defense. And nothing else. That means no welfare spending, no education spending, nothing. Those matters were meant to be left to the States. A very modest flat income or sales tax (that applies the same percentage of tax to everyone, no matter their income bracket) should be more than sufficient to provide for national defense.
Yup. 16th Amendment passed in 1913. What did we do before then?
Abolishing the IRS and income taxes, keeping the IRS out of our business? Yes, I support Linder's FairTax as does everyone else I know.
How about the "No Tax Bandwagon?"
Sounds good, until one takes a look at the Consitution and find the only authority Congress is given to pay the nation's bills is with taxes.
The federal government selling services for fees or handing out freebees is not found anywhere in the Constititution.
Been there, done that.
We already have a federal sales tax?
No. I asked, do we have a federal sales tax (a federal tax imposed directly on retail sales)?
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