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
A truly bogus analysis based on nothing but speculative excess and whims of fantasy ... but that's you all over schoolmarm!!
What orphace did you pull out that $369 number??? Just curious, you have offer no support for it.
Since some of you started out loudly yelling that the prebate amounted to $600 billion, that's a 20% improvement already
Actually, I usually estimated it about $500 Billion. After crunching the census details for households and discounting for non-citizens, I have concluded the actual number will be $480 Billion, which is about $500 Billion for all practicle purposes.
and I haven't even begun to show your errors.
I am not exactly holding my breath for that since you haven't a clue what you are talking about anyways. But please show me my errors. I can't wait for the queen fairy finally speak.
What are they 2/3rds of a person????? Do you qualify blacks as only 1/2 of a person???? Are you really that much of a dufus you can't figure this out????? Really???? If a person is not part of that defintion, that means they qualify as a separate family. Gee so instead of qualifying for a joint $4282 prebate, they qualify for two separate $2141 prebates. Hey Eistein, they add up to the same thing.
I used the census figure of 18 million. So no, there is no further reductions.
I subtracted out all known non-citizens. Everyone else left in the census were citizens. This is your third attempt to try to factor out the same people. Once you factor them out, you don't get to keep factoring them out some more.
My $480 Billion number is rock solid. Anything lower is ancient data or miscalculated.
Read post #299 again. Also read how the prebate is defined in the bill. A lot of the numbers you use clearly won't get the preate - and that's what #299 shows.
Those are certainly errors on the part of both you and Nightie. Either that or lies - you may decide which.
The $368 B estimate I used came from the family households number (an estimated 76,217,000) times the average prebate YOU figured of $4,845 per household. That works out to a bit over $369 B. THAT'S the orifice it came out of - yours.
Had you read more closely you world already have known that.
YOU may have used $500 B (more recently upped to $557 B and now dropped to $480 B), but others in you tribe of lost souls have screamed continually about the number being $600 B or more. It hardly matters since as I show in #299 (where your errors are described), it is clearly under $400 B ... WELL under).
IAE the discussion is meaningless since the prebate is not an entitlement but a refund of sales tax paid (or to be paid).
No one said single people did not get the prebate. You've misread (again) what was said.Really? I seem to recall you stating this:
Sorry, but it's YOUR method that is flawed [what a shock] since the non-family households cannot be counted. It is a FAMILY Consumption Allowance for families in a single household.
"2/3rds of a person"??? Wher do you think I even inferred that, fool. (Though actually, a home-builder that meets your description of hardheaded ignorance should PROBABLY be classified as 0.000001% of a person).
And you're wrong they won't qualify for two separate rebates in a single household. Read the bill double-dip.
Come on pigdog, stop acting dumb. If they are not married, they are not part of the same family according to the bill. However they still fully qualify for a prebate as a separate family. I am serious. You are really not this stupid are you???? I can't believe anybody is.
There is no such thing as people whom "does not qualify fully" in the bill. Everyone qualifies fully if they are citizens. The only difference is adults qualify for $2181 and children qualify for $736 (2004 figures). There is no marriage advantage or penalty. Anyway you group them into families, it all adds up to the same. The simpliest way to calculate it is to find out how many adult and children citizens there are and multiply $2181 and $736, respectively. That would get you 2004 numbers, which is closer to what Your_Nightmare calculated.
If you used 2005 data it would be close to the $480 number.
In fact it can't be told definitely from the numbers in the tables but some portion of any of those "households" or some living in them would undoubtedly not qualify for the prebate anyway.It can't be told, but theres no doubt? Why not? Because they're single? Or is this an observation of the neighbors from the pigsty?
You did not infer it, you stated it. You said there are people who do not fully qualify. That is nothing in the bill about people who do not 'fully qualify'. So I asked you a question question about what you meant. You are the one pulling crap out of your butt.
As I showed in #299, there are at least another 11 Million you didn't count in the way of illegal aliens - and that does not count legal non-citizens residing here.
Read the bill, Nightie.
So you don't get to take all of your non-family household members and give them the prebate. In fact it can't be told definitely from the numbers in the tables but some portion of any of those "households" or some living in them would undoubtedly not qualify for the prebate anyway.Maybe you would like to give an example where non-family members living together wouldn't each get the full FCA.
That's what he is saying. But we will have better luck trying to lift up Mount Everest than having pigdog admit he is completely full of it.
I know you are "serious" - that's the sad part.
Read the bill. You don't understand what it says.
I don't know if you're just pretending to be this ignorant or not, but whatever it is it sure works.
Your figure is, simply, wrong. Too large by a good amount.
I multiplied 18 Million (not 9 million) times $1700 allowance. There are not another 11 million non-citizens I did not count. If there are another 11 million illegals out there it does not matter, since they were not counted in the census to began with. I accounted for everyone included in the census.
Read the bill, Nightie.I have. It doesn't say anything about individuals living in the same household not getting their full FCA. In fact, it say the opposite. Both individuals would be considered an individual "qualified family" for reasons of the bill.
Let's cool off the rhetoric now, or I'll start sending folks to the shower.
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