Wow!!! What a mental giant wrote that blog posting.
He starts out: "I created a list of 4 reasons why you should support the Fair Tax." Then he proceeds with: "1. Taxed At The Point Of Consumption … 2. Cash Paid Occupations Won't Be Neglected … 3. No More IRS … 4. Monthly Prebate System … 5. The Fair Tax Is Revenue Neutral."
Somewhere in there, there might be one good reason to support the FairTax. I doubt there are 4. And he tried for 5 after claiming 4.
Specific rebuttals:
- The problem we have today isn't that we're taxed the wrong way. The problem is that we are taxed excessively. Actually, the biggest problem facing Congress today is too much spending. Changing the method of taxation doesn't reduce the tax burden, nor does it reduce spending.
- The author obviously hasn't thought this through. Does he believe that purchasers of illegal drugs and services from prostitutes, who currently don't file 1099's for the money they spend on these purchase from individuals, will begin to insist that their hookers and drug sources provide proper receipts, in compliance with Section 509 of the FairTax Act. And obviously, prostitutes and drug dealers who currently don't file yearly or quarterly income tax paperwork for their earnings will be excited to file the proper monthly reports with their state to properly remit the fair tax on their taxable sales. I live in the real world, where all black market transactions go untaxed by all taxation systems. The FairTax will never change that reality.
- Since the FairTax bill doesn't start with the repeal of the 16th amendment, it just promises that some future Congress will allow the FairTax to sunset if that amendment isn't repealed, the IRS won't be gone for long. A simple majority vote from both houses of congress plus a signature from a president will bring back the good old IRS, along with the progressive income tax system. Count on that.
- I believe that having anyone expecting a monthly check from the government for no particular reason is a very bad idea. Having everyone expecting a monthly prebate check from the government is an even worse idea. There will be "means testing" and various other social meddling inserted into this process, and it will be a perfect way for progressives to pay off their constituencies from the public treasury. This will become orders of magnitude worse than the current "refundable tax credit" system.
- Since we are taxed excessively now, "Revenue neutral" just means that we will continue to be taxed excessively in the future. Also, since, theoretically everything the government buys will be reduced in price (due to there being no more "embedded taxes" and "compliance costs"), a government which collects the same revenue will be enabled to be something like 30% larger if the budgets aren't cut.
Having said all that, a national sales tax is inevitable. It doesn't happen today because conservatives don't like it because it's a nearly limitless supply of funds to enlarge the government, and liberals don't like it because it's regressive and taxes the poor more than the rich. When conservatives figure out that it's regressive, and when liberals figure out it's a nearly limitless supply of cash for their programs, a national sales tax of some kind (VAT or consumption tax) will be a done deal. That might happen with the "SuperCommittee," or sometime soon.