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Shame on DeMint, trying to raise my taxes by 23%. Inez told me so :)
Posted by upchuck, trying to live up to the Swampmeister's standards for a week or so.
Posted on 10/26/2004 4:47:02 AM PDT by NotchJohnson
LET'S DEMAGOGUE THE FAIR TAX
Perhaps you noticed that in quite a few congressional races around the country Democratic candidates have been attempting to frighten voters into believing that the evil Republican candidate is going to burden them with a horrible new tax. More specifically, the wicked Republican is going to add a 23% federal retail sales tax on everything they buy .. and this is in addition to all the other taxes they're already paying!
Effective politics? You bet! Can you imagine how frightened some middle or lower income American would be at the prospect of paying another 23 cents on the dollar for everything they bought? If I believed that a Republican was going to do such a thing ... hell, I"D vote for the Democrat. And there aren't many things that could cause me to vote for a Democrat. A threatened beheading might do it, but I'm not even sure about that.
The big problem with this particular Democratic campaign charge is that it is simply not true. It's a lie. Not only is it a lie, but every single Democrat who has made this charge against their Republican opponent knows it to be a lie. In the Boortz book, that makes these Democratic candidates, and that includes Congresswoman Denise Majette running for the U.S. Senate in Georgia, and Inez Tenenbaum who is running against Republican Jim DeMint in South Carolina, bold, intentional, premeditated liars.
I've been studying the Fair Tax proposal in its various forms for 20 years. I am convinced that this plan to replace virtually all personal and corporate taxes with a national retail sales tax would bring a period of transformation and economic growth to America such as has never been seen before. On top of that, it would be a financial boon to the poor and the middle class.
First ... A Brief Overview
You can learn all of the details of the Fair Tax play by clicking on this link. In case you don't have the time, here's your brief overview.
The Fair Tax (HR-25) would eliminate all personal corporate and personal federal income taxes. It would eliminate all federal payroll taxes, including Social Security and Medicare. The Death Tax ... gone. Capital gains taxes ... gone. Gift taxes ... gone. Excise taxes .. gone. In the place of all of those taxes we would have one national retail sales tax on all purchase at the retail level. This means you would get 100% of your paycheck. The amount you place into an investment .. not taxed. The amount you put into a savings account .. not taxes. Money you give to your kids ... not taxed, neither to you nor to them. You make a consumer purchase, you pay the federal sales tax.
One more thing. The Fair Tax plan calls for the repeal of the 16th Amendment. That's the Amendment that brought us the federal income tax.
When the Fair Tax plan was first being developed it was believed that in order to be revenue neutral ... that is, to make sure that there is no decrease or interruption in the flow of tax revenue ... the national sales tax would be around 23%. I'm led to understand that soon-to-be-released research will show that the actual tax would be around 20% or slightly less. Since I've already run the numbers, we'll stick to the 23% figure for the purpose of this essay. Call me lazy.
So ... let's get on to the Democrat's charges that these evil, wicked, mean and nasty Republicans are plotting a financial Armageddon for poor and middle income Americans.
What Happens to Poor and Middle Income Americans? OK ... let's put on our sensitivity hats for a few minutes here and think of the consequences of the Fair Tax Act on our nation's poor, poor, pitiful poor. After all, they can hardly afford a 23% sales tax when they're living paycheck-to-paycheck in the first place, right?
Remember ... right now, for the most part, those whom we define as "poor" aren't paying any income tax anyway. In fact, many of them are getting checks from the government. The absurdly-named Earned Income Tax Credit, for example. So, how can these people survive if suddenly they're paying a 23% retail sales tax?
There's no doubt that any implementation of the Fair Tax would fail in short order if nothing were to change except that the poor would be paying today's prices for a gallon of milk or a loaf of bread, plus a 23% sales tax. But ... that would be far from the reality under the Fair Tax. Under the Fair Tax the poor won't only survive, they'll positively thrive! The Fair Tax could turn out to be the best poverty-fighting tool devised in this country since the concept of hard work.
Let's begin by considering two realities.
First, remember, please, that the poor, along with everybody else, will no longer have Social Security taxes or Medicare taxes withheld from their paychecks. Whatever they earn, they get on payday. For most of them this means an immediate 10 to 15% increase in their earnings.
Second. There's that 22% in imbedded taxes buried in the cost of all consumer goods. This isn't my figure; it comes from respected economists. That 22% is sitting there in virtually everything Americans have to buy.. and that includes poor Americans. As soon as the competitive forces of the free market work their magic, and they always do, consumers, including the poor, will be paying at least 20% less for virtually everything they buy, including the basics of food, clothing, shelter and transportation. Yes .. they'll have to pay the new national sales tax, but when you factor in the lower prices caused by the disappearance of the embedded taxes you'll see that the total price paid for consumer goods will remain very nearly the same.
So ... just considering these factors, the Fair Tax delivers a winning hand to people living in or near to what we call poverty. They get every penny they earn on payday, and when you factor in the Fair Tax and the lower prices, they're actually spending less of their money for a retail purchase than before.
A practical example: Let's pull out the calculators. Let's say that a single mother with two children spends $45 a week on groceries. The removal of the 22% embedded tax would bring the price of those groceries down to $35.10. The sales tax would be $8.07. This brings the total price to $43.17. That's less than our poor mother would have paid under today's tax system. This single mother, whom we'll consider "poor," has just received a 10% to 15% increase in her weekly paychecks, and she's paying less at the grocery story for her basic necessities! Does that sound like such a rotten deal to you?
At this point you should be thoroughly convinced that the Fair Tax would actually benefit, rather than harm the poor. But, then again, maybe not. Perhaps you were educated in government schools, or you're just hard to convince. Sit down. Here's where I close the sale.
The Rebate
The folks who wrote the Fair Tax plan knew that burdening the poor with a 23% retail sales tax would doom the plan from the outset. They decided to devise a way were nobody, rich or poor, would ever have to pay the sales tax on the basic necessities of life. So, under the Fair Tax plan every consumer will receive a credit to their checking account or to a debit card equal to the sales tax that person would be expected to pay on the purchase of the basic necessities of life for that month. The size of the monthly payment will be based on the government's published poverty levels for various sized households. Considering the number of checks and financial transactions of this type the feds undertake every single month, this is entirely "doable."
Here's an example of how the rebate payments would have worked in 2003.
You are now a married couple with two children. The Fair Tax Act sets forth a formula for computing the poverty level, based on government figures, which negates any marriage penalty. Under the Fair Tax Act in 2003 you would have been granted an annual consumption allowance of $24,240. This is what the government would assume you would have to spend during that one year to buy the basic necessities of life for your family. The sales tax on this amount would equal $5,575. The government will rebate this amount to you in 12 equal monthly installments of $465. It's clear .. you're better off, MUCH better off, under the fair tax plan.
But what about a single woman with one child? Her monthly rebate in 2003 would have been $232. The lowest rebate payment would be to a single person with no dependents. That person would receive $172 per month.
Now ... bear in mind, this rebate isn't only paid to the poor. It is paid to everyone, rich and poor alike. The purpose here is to make sure that no American has to pay the Fair Tax sales tax on the basic necessities of life. Unlike the present income tax system, the Fair Tax treats each and every person in this country exactly the same. This, of course, presents somewhat of a problem to politicians who like to use the tax code to foment class distrust or outright warfare.
OK ... let's add it up for America's lower income citizens:
They get their entire paycheck. Even with the sales tax, and considering the drop in prices, they'll be paying essentially the same for everything they buy. They get a check from the federal government every month to rebate any sales taxes they had to pay. Though their tax returns aren't that complex, let's also include the time these the poor (all of us, really) will save by not having to keep tax records or file tax returns.
If you're looking for some reason to oppose the Fair Tax plan, you're going to have to find a better excuse than its effect on the poor.
The Democrats who are using sponsorship of the Fair Tax proposal against their Republican opponents know the real story. They also know that for the most part the media doesn't understand the plan and will make no effort to learn the truth. Print this, copy it, spread it among your friends. Expose the lies of Denise Majette and Inez Tennenbaum and other like them. This tax reform idea is simply too good to allow it to be destroyed by desperate campaign lies.
Hey, the Socialists want people to think that we need that tax to pay for the draft and more Halliburton contracts.
Neal is depressing me - he keeps predicting a Kerry win...
His full-color (mailout) ads claim that his Repub. opponent wants to tax everything Texans buy --but he doesn't mention anywhere that this is a proposal to eliminate the national income tax! (Texas has no state income tax...)
Da*n Dims flat-out lie -- and think everyone is too stupid to catch them at it! :-(
Thanks for posting this! Since I have seen this addressed nowhere in the news, you saved me from having to post one of those dreaded vanities myself...
JimRob: A significant number of the "Vanities" posted lately have been, in reality, genuine un-published news items. True, there are too many actual "Vanities" -- but, is there some way we FReepers could post unpublished or strictly local news items... without calling them "Vanity"? (If nothing else, could we label them "[UPN]" or something...?)
I pray you're right - the thought had crossed my mind, but the thought of Kerry in the White House scares and disgusts me to the point that I can't discount any bad news. Will be most relieved when Nov 3 rolls around and Bush is the winner. Of course the law suits will p*** me off and hopefully they will also outrage the rest of the country...
Fair tax ping.
Can one of you better explain the process of eliminating the income tax. Is it, as Neal claims, calling for a repeal of the 16th? I thought that any constitutional amendment could not be linked to other legislation.
The only legitimate argument against HR25 that I see is the risk of being taxed by both systems. I know this is considered a replacement tax, but without the repeal of the 16th the risk still exists......
I may be wrong, but I believe that a piece of legislation, such as H.B. 25, could be contingent upon a constitutional amendment, rather than the amendment being linked to the legislation.
Good point. I'm sure that the experts will clarify it for us, but I think your point sounds very valid. I expect to see a lot of discussion regarding this question when the ping list is woken up.
If you would like to be added to this ping list let me know.
John Linder in the House & Saxby Chambliss Senate, offer a comprehensive bill to kill all income and payroll taxes outright, and provide a IRS free replacement in the form of a retail sales tax:
H.R.25, S.1493
A bill to promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national retail sales tax to be administered primarily by the States.Refer for additional information: http://www.fairtax.org & http://www.salestax.org
A very cogent article.
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Shame on DeMint, trying to raise my taxes by 23%. Inez told me so :)
Posted by upchuck, trying to live up to the Swampmeister's standards for a week or so.
"Can one of you better explain the process of eliminating the income tax. Is it, as Neal claims, calling for a repeal of the 16th? I thought that any constitutional amendment could not be linked to other legislation."
Correct. The process of ratifying or repealing a constitutional amendment follows an entirely different procedure than that of passing federal legislation. For example, ratifying/repealing a constitutional amendment does not require the president's signature, while it does require a 2/3 vote in both houses of congress and passage by 3/4 of the states. I believe that the FairTax bill does, however, include language which supports the repeal of the 16th.
As a practical matter, trying to get a constitutional amendment passed ending the income tax before a consensus is reached relative to what will replace it is politically a non-starter. It will be much more achievable once the FairTax is in place and Americans are enjoying the freedome from that system and the economy is booming. It will be obvious then to all but the most left-wing ideologues what an enormous drag on our economy our tax system has been.
Getting 3/4 of the states is never an easy matter - the founding fathers didn't WANT it to be easy. However, it will become much more practical after the FairTax is passed. In the meantime, the Internal Revenue Code will have been repealed and Americans will have enough of a basis of comparison that they won't want anything to do with an income tax again.
I may be wrong, but I believe that a piece of legislation, such as H.B. 25, could be contingent upon a constitutional amendment, rather than the amendment being linked to the legislation.
While that is undoubtedly true, such legislation has been introduced in the past to no avail. The simple fact is that in nearly 100 yrs of legislation of all kinds proposing the repeal of the 16th amendment while the income tax is still active and in place has not led to the repeal of the 16th or even the enactment of the proposal to repeal that amentmendment.
!00 years of history as regards this issue make it clear at the very least that to wait for repeal of the 16th is simply nothing more than to continue waiting and paying the income tax with all its problems.
The direction of HR25, the Fair Tax, is to remove the income tax statutes, and destroy the underlying infrastructure(i.e. abolish in the IRS & destory all tax payer records) putting in place a viable alternative tax system, the NRST in place. Then push the repeal based on a fait accompi, and obsolecence of income taxes.
For those that object that this may lead to re-intstitution of the federal income tax again giving us both the income tax and national retail sales taxes, please note that in that same hundred years not once has the US ever been successful in implementing either VATs or retail sales taxes ontop on income taxes even though there is no impedement to that other than the lack of political viability and will to do so.
There is no evidence whatso ever that a move to re-institute the income tax over an inplace NRST would be successful or tolerated by the electorate, especially considering the American experience with the overbearing presence of the IRS. The negative memory of that institution of itself acts as a barrior to re-introduction, not to mention that it would take getting past Senate filibuster of very determined conservatives to prevent such a possiblity.
I have no fear whatsoever that once the NRST is in place, the rapid enactment of Sam Johnson's amendment to the constitution
H.J.RES.61
Title: Proposing an amendment to the Constitution of the United States to abolish the Federal income tax.
Sponsor: Rep Johnson, Sam [TX-3] (introduced 6/24/2003) Cosponsors: 5
Latest Major Action: 9/4/2003 Referred to House subcommittee. Status: Referred to the Subcommittee on the Constitution.
or one like it will go forward and be ratified rapidly with the NRST in place an law of the land.
Sheesh, Notch! You mean I won't have that $78 Medicare premium deducted from my Social Security check anymore? I'll get Medicare free? (It's only $67 now, but it's going up to $78 next year).
Forgot to mention that the "fair tax" sounds a helluva lot more complicated than a 1040 to me!
You have to understand that Neal thinks 90% of the population are either dopes, more concerned with People magazine, on some kind of handout, or are blind with rage over W. He is right a lot of the time but not here.
Specifically where is he wrong with his article?
Remember rule one, whatever the Democrats accuse the Republicans of plotting is exactly what the Democrats will do if given the chance, or they are already trying to do it. The 16th would have to be repealed to stop the Democrats from piling on more taxes.
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