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
It makes no difference. The census 2000 counted more than 282 million people of which more than 264 million were citizens. If anything the census probably missed citizens too, which means the number is low. I know i was almost missed by the census count, but got caught by a census worker who stopped by.
Believe me there are some illegal aliens in the Census figures (in fact, many). You claim this is not so merely shows you are not aware of how the numbers are generated.
Yes, there were 9 million illegals counted by the census. Probably another 9 million that avoided the census.
Nope it is a refund plain and simple. there is no entitlement without appropriations and there are no appropriations for the FairTax prebate.
It goes to "bums on the street" (your wording) because they pay sales tax when they buy taxable things. the money is taken from them just as well as from you. Perhaps they should be bitching to high heaven about YOU getting THEIR money. Either way - that's just foolishness.
It is a refund very much like the income tax refund ... or do you call that an "entitlement", too??? After all, those folks are "entitled" to their refund, right???
It is a refund since an entitlement is a government program (meaning that it must be created by law and have ongoing separate appropriations to fund it. The FairTax is not such a program but a tax law. They are different things.
As I showed you earlier, there were 20 million illegals from south of the border, not 9.
I also pointed out that there would be a good number of additional non-qualifying people in the household categories you used. You surely aren't arrogant/ignorant enough to think that the Census Bureau figures are 100% accurate and tally all instances of non-citizens ... or do you??? Have you ever worked for the Census Bureau???
It is a refund very much like the income tax refund ...You're such a fraud.
First you get all giddy about everyone receiving a "prebate" now you say it's a "refund" ...It can't be both.
How does the government know how much to "refund" a "qualified family" that buys only used goods or are you now saying they won't get their "prebate" because they didn't pay any taxes?
You have showed nothing. You haven't showed those people were counted by the census. In fact you know those people were not counted. So it doesn't matter. What is your point? To post mindless babble to bump threads? You are pitiful
I also pointed out that there would be a good number of additional non-qualifying people in the household categories you used.
The only non-qualifying people are illegals and we already subtracted them out. What, should we subtract them out twice? You are such a phoney. You like to double count everything to make your numbers look the way you want. What a load of crap and you know it.
You surely aren't arrogant/ignorant enough to think that the Census Bureau figures are 100% accurate and tally all instances of non-citizens ... or do you??? Have you ever worked for the Census Bureau???
Who said that, you lying sac. However if anything, the census UNDERCOUNTED citizens. You continual posting of babble and lies is unbelievable.
Man! Only one day later and here it goes again. Y'all are begging for the shower huh?
Most people (roughly 85%) are enumerated on what's called the short form (about 6 pages long) which asks no questions relating to citizenship or legal residency at all. The rest of the people are enumerated on a long form (about 40 pages long) which, while more intrusive in asking things like how many people ride to work with in the morning and what time you leave for work (in a census?????), also has no provision to prevent anyone being enumerated to duck any intrusive questions by merely not answering a particular question. There is no penalty (up to a point) for not answering nor is the enumerator empowered to challenge the answers given (or to change them for the most part).
So in view of the mechanics of how people are counted, your 20 million PLUS illegal aliens ARE included and not just the 8 million you envision. The Bear Stearns study on illegal aliens uses very good methodoligy (far better than the nonexistent methodology of the Census Bureas guesses).
Note that the data from the 20 million derivation comes from 2004 and earlier and the number is undoubtedly much greater now with the rate of illegal immigration that has been going on for years now. The point is that undoubtedly even the 20 million figure is too low.
This little educational dissertation for you (though you certainly don't deserve it in view of your childlike insults and continual sniping) is to help you realize that there are, indeed, many non-qualifying individuals included in the census figures since there is no attempt to qualify the head count in any manner meaningful to the prebate qualification (aside from an APPROXIMATION of the number residing in the 3 household categories you've fastened upon). Those non-qualifiers are also included in your numbers helping to make them, clearly, WRONG!!
If anything, you are the one doing the double counting and cross counting and you are too ignorant to realize it. Wise up. The census is not a count only of citizens - not at all as I have just described to you. It covers all sorts of strange folk - and even catches and counts some visitors from other countries.
The warning was for everyone on the rhread, including pigdog. I was responding to a post where he referred to me as 'arrogant/ignorant'. Go bitch at pigdog.
And I substracted out 18 million, not 8 million. I have no idea why you keep saying 8 million. I subtracted out 18 million. At the time I thought all non-Citizens did not qualify, but if I understand AG correctly, all legal residents qualify. Besides, I really think a good portion of those illegals were not counted.
"Didn't you hear me?"
I laughed out loud at that one!
"... the population number does include some non-citizens which the census puts at 18 million, with about 9 million being illegal ..."
As I've just pointed out to you the census figure DOES include illegal aliens (and many other non citizens) but does not classify them as such so that your claim of 9 million is bogus. The Bear Stearns study is clearly more correct for illegal aliens at 20 million (but even that is undoubtedly too low since the data was taken from 2004 or before).
"Besides, I really think a good portion of those illegals were not counted. "
You seem unable to understand plain English. I said that illegal aliens (and other non-qualifiers) WERE counted - but not classified as "illegal aliens", etc. You can think whatever you like no matter how wrong it is, but your statement just quoted is absolutely wrong.
And you are a lying fool. I know you read the very next sentence where I showed the multiplication. It was 18 million I multiplied by. You can't tell the truth if your life depended on it.
Yep, 18 million is what I used.
You don't even know what those words mean let alone notice how they were used in the subject post.
Instead you use any pretext to hurl insults and belittlement at others and continually so in spite of the Moderator trying to shut you up.
It would be impossible to belittle you anymore than what you have already done yourself.
"And you are a lying fool."
... and yet it is YOU, not I, who misstates what the census collects in the way of information. I pointed out to you that the most recent census did not collect illegal alien NOR non-citizen data as part of the enumeration and yet you continue to undercount the number of illegal aliens (for one thing) which are clearly 20 million or more using something far more rigorous that the guess of the Census Bureau.
In addition the non-citizen data is likewise nothing but an absolute guess since the census did not collect that information either. The number you use for illegal aliens is low by more that 11 million as I have repeated pointed out to you.
The upshot of all this is that you have overstated your numbers considerably and yet continually call others "lying fools" (and use even more graphic descriptions). Your numbers are both pointless AND wrong since the amount of money (whatever it might be which is certainly less that what you "calculate" with phony statistics) involved is neither an entitlement nor a cost to the government. It is a refund of sales taxes paid just as the April 15 tax refunds are a return of tax paid.
You have merely a tempest in a teapot and it'll likely boil over and burn you unless you stop the instults and name-calling.
Oh puh_leeeez. It was post #10 were you started in the the Status Quo Lover and Lie crap. You can try to rewrite history, but a look at the record shows the truth.
Whose "truth" ... yours??? Some "truth"!!!
Post #10 was to Eaglewatcher, not you ... and it was remarking about the lead-in to the thread which was rebutting a lie-laden article originally posted on another thread. And Status Quo Lover is a generic description - if the shoe fits ...
Post #10 was not in any way directed at you (unless perhaps you ARE a Status Quo Lover) - or are you trying to audition as Moderator??? Perhaps you just needed an excuse - any excuse - to start name-calling.
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