Posted on 12/15/2005 10:33:58 AM PST by Eaglewatcher
The author Laurence Vance gives a lengthy critic of Neal Boortz's and John Linder's book The Fair Tax Book. In Short, he misunderstands and misquotes (as many critics do) the actual workings of the Fair Tax.
Once you read his entire article you realize his real objection is not with the Fair Tax but with any Federal Taxation at all.
His Anarchist approach to no taxation in which he hates all forms of taxation is found at: http://www.mises.org/story/1975
The National Tax Payer's Union (NTU), Americans for Fair Taxation(AFFT), American Farm Bureau Federation (AFBF), and many more support the Fair Tax HR25/S25. The Fair Tax is much more than just a book by a radio talk show host.
The Fair Tax is a well thought out and extensively researched Legislative package that takes a responsible approach to replacing the current archaic income and payroll tax system with a revenue neutral National Sales Tax system.
Unlike the Laurence Vance Article, the Fair Tax gives an alternative to the Income tax, Vance arguments are against all federal taxation whether it is Income tax or the Fair Tax.
For specific rebuttals read on:
Dec 14th, 2005: 08:29:48
Jeff Horgan writes: Hello Mr. Vance,
I started to read your review of the FairTax book and had to stop. I finished by skimming it. I realized what this was, a publish or parish review. Your review of the FairTax was so superficial that your review lacks any real weight or thought. You didn't understand that the 23% tax and the 30% tax reflected the same real amount. Simpler still you didn't even grasp that prices on the shelf would be represented in a tax inclusive form so that the consumer would more easily calculate the amount they are intending to spend but that at the moment of purchase the price of the product and the tax would be separated so the consumer could see their true tax burden. You made so many lazy and misleading arguments that this review will lacks substance to your peers. You needed to get your name on a published article as prerequisite to applying for jobs at a 4 year business school. If any of those schools read this article they will not be pleased with the quality of your work. I am sorry you wasted your time to write the review and I am sorry I wasted mine to read it.
Regards,
Jeff Horgan Richmond, Va
From the Fair Tax Blog Bill Rook Posts: http://www.fairtaxblog.com/20051213/liars-use-double-talk/
Liars use Double Talk to Lie about Lies in the Fair Tax
Ludwig von Mises Institute: Laurence Vance's December 12, 2005 "There is No Such Thing as a Fair Tax" review of The FairTax Book asserts three lies found in the book and asserts 17 problems with the Fair Tax. For brevity, this article shall only address the three lies. A follow-up article will debunk the perceived problems.
Lie #1: taxes would be voluntary under the FairTax. First we must realize that all of our actions have consequences. If an individual chooses to buy a new luxury car, he/she would have to pay federal sales tax. When the individual chooses to buy the new car, he/she is also choosing to pay federal sales tax. Section 505 of H.R.25, entitled PENALTIES details the civil and criminal penalties for non-compliance.
Under the Fair Tax, the federal sales tax would be reimbursed up to poverty level spending via the Family Consumption Allowance (FCA). An individual could purchase new food and services and still survive at poverty level spending. After the FCA, the net tax payments would be $0. The individual could spend significant additional sums of money on used items tax free. The individual could work and earn as much money as he/she possibly could--untaxed. If the individual chooses to purchase a standard of living above the meek poverty level, then net sales taxes would be due.
Under the current tax system, an individual, without dependents, is taxed from the first dollar earned at the FICA/Medicare rate of 7.65%. As annual earnings increase, additional progressive income taxes are due. Under the current system, the only option to not pay any federal income tax is to not work. That is not a valid option.
Given the above two alternatives, the Fair Tax provides the only valid choice. Although the qualifying "Tax Free" situation is narrow in scope, it is possible. When an individual chooses to purchase a standard of living above the poverty level, he/she is choosing to pay the federal sales tax. Therefore, the tax is voluntary. The assertion that item #1 is a Lie is false.
Lie #2: the FairTax rate would be 23 percent. We are talking apples and oranges here. Anyone who claims that both are just fruit is attempting to mislead and misinform the public. The Fair Tax is presented to replace the income tax. The income tax is an inclusive tax. The appropriate Fair Tax percentage for an inclusive comparison is 23%. Recognizing that some comparisons could benefit from an exclusive tax analysis, the following conversion table is provided.
Apples Oranges
Tax (inclusive) (exclusive)
Fair Tax 23% 29.9%
Payroll: FICA 6.2% N/A
Payroll: Medicare 1.45% N/A
Income Tax 10%-35% N/A
Income & Payroll
10% Bracket 17.65% 21.4%
15% Bracket 22.65% 29.3%
25% Bracket 32.65% 48.5%
28% Bracket <$90K 35.65% 55.4%
28% Bracket >$90K 29.45% 41.7%
33% Bracket 34.45% 52.6%
35% Bracket 36.45% 57.4%
When making comparisons, the appropriate inclusive/exclusive percentage must be used. Either column can be used, but a comparison of taxes between columns is wrong. Only apples to apples or oranges to oranges comparisons are valid. While we are at the comparison game, the following table provides sales verses income tax percentages with the average state sales and income taxes included.
Tax Inclusive Exclusive
Fair Tax + 6.33% Ave. State Sales Tax 26.6% 36.2%
35% Bracket + Medicare + 4.44% Ave. State Income Tax 40.9% 94.3%
Any argument quoting a combined Fair Tax and state sales tax rate above 36% exclusive is only valid when it is compared to a 94% exclusive combined state and federal income tax rate. However, as a business person filling out the national sales tax form, under the line that says "Gross retail sales of new goods and services," I'm going to put down the 23% inclusive rate. The assertion that item #2 is a Lie is false.
Lie #3: the Fair Tax would abolish the IRS. Laurence Vance debunks this one himself. "The Fair Tax will abolish the IRS in the same way that it will abolish the income tax--by replacing it with something else." The assertion that item #3 is a Lie is false.
The Fair Tax Act of 2005 does not call for a total closure of the federal government--not even a modest 1% cut in spending. In fact, Boortz and Linder promote the Fair Tax as revenue neutral. What does this have to do with abolishing the IRS? Nothing! Just as Vance's accusations have nothing to do with tax reform.
When Boortz talks about abolishing the IRS, he is referring to abolishing the intrusive nature of government inquisition into our personal and business finances. He is referring to eliminating a tax system where the government gets paid as a result of our individual and business efforts before we do. Income and payroll taxes are deducted from our pay before we see the first dime. Businesses must pay matching payroll taxes while the manufactured goods sit in the warehouse.
Will there still be inquisition into our personal finances? Sure, some. Employers will still report gross earnings to the Social Security Administration for calculation of retirement benefits. If a family wants to receive the FCA, they must file with the appropriate agency. The employer will file one form, and the head of household will file the other. Compare this to the current 1040 with the associated schedules A, B, C, SE, and so on. The inquisition will hardly be intrusive.
What about businesses, will their books be scrutinized? Again, yes, of course. Under Fair Tax, the burden of the tax collection process and paperwork will be shifted to businesses. However, this new responsibility for the collection process and paperwork will be significantly less cumbersome and intrusive than the current system. Let's look at a business situation, a Motion Picture Business. A big star with a lot of clout will demand a percentage of gross sales. Gross sales are easy to calculate. Just add up all sales and calculate the split. The Fair Tax is similar to this example. Businesses must track and total gross consumer sales, an easy number. Twenty-three percent of that tally is consumption tax. Send it in.
Applying this analogy with the current tax system, the actor would demand a cut of net profits. What are net profits? Bingo. They have to be defined. What are the valid expenses? Can the "Making of Footage" for the DVD's be counted as a legitimate expense? What about product placement fees? Does that income count when calculating net profits? The actor's agent and lawyer will lobby one way on an issue and the movie company's lawyer will lobby the other way. A lot of time and effort will be spent on details as each side lobbies for a better deal. Under the current tax system, the IRS will audit a business and demand justifications for every expense. Collecting, maintaining, and defending such justifications becomes a dauntingly expensive task, just to comply with the tax code.
The market (buyers and sellers) determines the prices of goods and services. Under the Fair Tax, businesses will be taxed 23% of the gross sales--an easy calculation. Businesses must operate within the means provided by their remaining 77% share of the gross sale. Alternately, a business could determine the pretax market price for their goods and services and keep 100%. They would then add an additional 29.9% at the till for sales tax--again, easy calculations. Both methods result in the same dollar amount of taxes; it really is just a matter of semantics. If the wrong semantics (math equations) are used, however, the numbers will not work out.
We must look beyond the rhetoric for or against the Fair Tax. We must develop an understanding of how Fair Tax changes will impact our individual lives. We must look through the rhetoric and determine the motives of the activists that lobby for or against the Fair Tax and then make our own decisions. Regardless of choosing 23% or 30%, the dollars involved are the same when used in the proper equations. The Fair Tax is revenue neutral. The IRS will be replaced by another agency that has a less intrusive reach into our personal and business lives. This change will save individuals time and stress. The change will save businesses time and money. The vast majority of the people will benefit, only a small number of accountants, tax lawyers, and bookkeeping professors making their livelihood off the current inefficient system will suffer.
References: http://taxes.yahoo.com/rates.html, http://thestc.com/STrates.stm, http://www.nber.org/~taxsim/state-marginal/, Fair Tax Act of 2005
Because I think many of your arguements are dishonest. I see this as a big entitlement, although I understand the politics and the reasoning. I think fairtaxers economic bliss predictions are based on demonstratably bad analysis. The real area the fairtax is better than the income tax is in the area of exports. It will significantly reduce the costs of our exports. I think most of the other claims are bunk or at the very least exagerations. Besides, I have disclosed my true motivation numerous times. It is no secret that I am a home builder.
Beyond that little detail, using your definition (and lewislynn's - ooohh you're in with it now!)...
Using your definition, today's income tax refunds are entitlements too.
Are you going to tell this forum that income tax refunds are entitlements?!
Great - then let's talk about those - that would make us all smarter. But being dishonest because you believe others are is childish.
Significantly? How's that?
No, you hadn't. You'd been making up dumb stuff for some still unexplained reason.
It is no secret that I am a home builder.
No, none at all. But that we know you're a home builder does not indicate your "real" motivation for posting such foolishness.
By your definition, today's income tax refunds are entitlements - after all, they're intended for a specific group - those that overpaidThat was your definition.
But yes, as a matter of fact as much as you might not like it, everyone is "entitled" to a refund of their overpaid taxes, retard.
...everyone is "entitled" to a refund of their overpaid taxes, retard.
OK, another flip flop. First, you were saying that the nrst would create the largest entitlement program in history. When pressed, you now say that, well, you meant that folks are "entitled to" refunds of overpaid taxes.
Nice, really nice.
I can't believe you don't have someone telling you to stop being so dumb. Really, think things through a bit before you head down the plank, 100-22 boy.
If it were an entitlement, there would be an appropriations bill, by law. There isn't one.What law?
First, you were saying that the nrst would create the largest entitlement program in historyNow you're a retarded liar. I never said any such thing.
But the prebate goes to everyone (legal). An entitlement goes to a specifed group based on income (or some qualifier).See, you are a lying retard.
http://www.m-w.com/dictionary/entitlement
no, you're just a teenager looking for some fun.
A simple google would've turned it up. Too anxious to call names, like any 14 year old.
No for two reasons. First you are not required to submit that money. Second, that is your money you paid. Under the fair tax, you are obligated to pay extra sales tax, and it is not neccessarily your money.
I don't know what you mean - this was amounts withheld from your paycheck... please clarify.
Second, that is your money you paid.
THis is indeed something that makes income tax refunds and prebates different, but it does not make either fall into or out of your entitlement definition.
That the prebate comes before you spend it is different too. That's how the intrusion is minimized - otherwise it's back to exempting certain items... doritos are food, not taxed while fritos are a snack and are taxed. Best to stay away from that nightmare IMO.
THen the next thing some people say is well, maybe there's someone who didn't spend any money one month, then they'll get the prebate anyway... I agree. But it isn't possible to do so continously... you may buy up one month and spend less the next month - but you can't always not spend for necessities - after all, they're necessities.
Even a homeless guy with no income at all spends some money on food or whatever. He likely buys used coats , but he'll eat - or die.
BTW, why back to arguing things that aren't important to you? I thought we'd discuss why you believe this would be bad for housing industry? Or is there more to it?
Your numbers are suspect, Nightie, since you've tried to peel the onion too finely and re-combining the numbers leads to cross-tallying and double counting. The Census Bureau Current Population Survey (Mar 2004) for total family household members to be 76,217,000.You knucklehead. Do you notice the two "Family Household" tables I posted? They total 76,216,000. But single people get the FCA, too. There are 35,783,000 "Non-family Households" (43,881,000 individuals) that you are ignoring.
This number gives a prebate of a bit over $396 billion rather that the inflated figures you (or your sidekick) offer.Your method is flawed [what a shock]. The total FCA for families is $363.5 billion. Add $94 billion for the single people and you get $457.5 billion (not the $440 billion I stated).
In any event the prebate is not an entitlement but a refund of tax money to the household much as with the income tax with refunds on Apreil 15. It's ridiculous to try to pretend it is an entitlement - it isn't. You guys are really getting desperate to find something to attack it seems.No. I'm entitled to the FCA whether I pay a penny in taxes or not. It's not a rebate/prebate/refund/prefund. It's an entitlement!
I don't know what you mean - this was amounts withheld from your paycheck... please clarify.
What don't you get? All you do is add exemptions so the withholding is correct. The reason so many people get refunds is because they set their withholdings too low. It is not a requirement that your employer withholds too much money.
No your numbers are not correct. the 100 million were undoubtedly never there to begin with. The Census Bureau population numbers are statistical projections based upon estimates made many years in advance and not frequently updated. As such they are subject (as with most governmen statistics) to a good bit of error. In addition they take in more than just U. S. citizens but all persons present.
The household numbers do not count many millions who are not U. S. citizens (20 million or more alone are illegal aliens) or the millions who are incarcerated. There are additional millions of people working and living in this country who are counted as numbers "being here" but are still not U. S. citizens, but here legally. They are also not householders for the purposes of the Census Bureau. All of these things can easily make up for the difference,
Your number grossly overstates the amount of the prebate as I've said. Taking some will number such as the total of 197 million individuals (if that's even close to correct) and making the assumption that they are all neatly arranged into households capable of receiving the prebate is bizarre since as I've said, many fit no such category and are not legal U. S, citizens at all so would not be able to recieve the prebate. You've never even begun to justify your claims with anything resembling reason. You just continue to make off-the-wall and wildly wrong claims.
So you are telling me the US only has a population of 197 million not 297 million??????????? Arguing with a complete moron is pointless.
2004 Family Consumption Allowance
Married Family Households Two members Three members Four members Five members Six members Seven or more members Non-married Family Households Two members Three members Four members Five members Six members Seven or more members Non-family Households One member Two members Three members Four members Five members Six members Seven or more members
The information y'all need is right here:
http://www.census.gov/population/socdemo/hh-fam/cps2004/tabH1-all.csv
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