OK, let's make the statement honest.
We're not going to have to have the tax exclusive vs. tax inclusive lesson again, are we? Haven't you learned anything, yet?
The so-called FairTax is such a simplistic, nonsensical idea that it's hard to know where to start in criticizing it, but here goes:
1. The 23% Rate is a Lie. The book claims that the FairTax rate would be as low as 23% (on all goods a services, including new homes, cars medical treatments, insurance, rent, food, basically everything you spend money on to survive). But look at Boortz's own examples. An item that costs $100 pre-tax would cost $130 with the tax. That's a 30% tax rate any way you slice it (in addition to state sales taxes, which would boost the rate even higher). When they lie about the rate, how can you trust them with anything else? Also, the true tax rate would have to be to around 50%-60% in order to collect as much tax revenue as our current system does. Don't take my word for it, though, look at an objective source on this subject, such as the Brookings Institution webite.
Well, I co-authored the book, and for the life of me I can't find anywhere in the book where we say that an item that costs $100 before the tax would cost $130 after the tax. It's simply not there .. not anywhere. In fact, due to price reductions brought about by the elimination of embedded taxes in all consumer goods, the price after the FairTax would be pretty much the same as the price under the current tax system. What's the problem here? Why did Mr. Kepner find it necessary to lie about what is written in the book in order to critique it? He says "look at Boortz's own examples:" Well, go ahead and look You won't find that example in the book! Amazing, isn't it? Kepner says "When they lie about the rate, how can you trust them with anything else?" My question is when Kepner lies about what's in the book, how can you trust him with anything else?
Kepner also refers to a Brookings Institution article which says that the tax would have to be 50 to 60%. Sorry, but that's not the FairTax plan. Brookings is talking about making many consumer items exempt from the tax ... food, clothing, medicines. Brookings changes the provisions of the FairTax in other ways to arrive at that higher tax figure. That's what the prebate is for. Again, Mr. Kepner tries to mislead. Did he do so out of ignorance, or malice? Wonder why?
2. Tax avoidance would skyrocket. Boortz claims the FairTax would eliminate tax avoidance. Wrong! Here's a simple example. Let's say I'm Neil Boortz and I want to buy a $200,000 yacht. Under the FairTax plan, I'd need to pay at least $60,000 in taxes to buy that yacht if I purchase it in the US. But if I go to the Bahamas and buy it, I don't pay any tax. Let's see, do I be a good citizen and pay the $60,000, or do I vacation to the Bahamas, buy the yacht there and pocket the $60,000? Gee, tough decision, but I know what ol' Neil would do. Same thing with expensive jewelery, vacations (why ski in Colorado and pay taxes on lift tickets, hotel and restaurants when you can ski tax free in Canada), you name it.
Once again ... either an intentional lie or honest misrepresentation. Nowhere in The FairTax Book do we say that "the FairTax would eliminate tax avoidance." In fact, we say just the opposite. We note that some degree of avoidance is a certainty ... just as it is under out present system. What was it that Kepner said? Oh ... I think it was something like "When they lie about the rate, how can you trust them with anything else?" Well .. here's another Kepner lie. What does that say about the rest of his critique? Now ... about that $200,000 yacht. First problem. $200,000 doesn't buy much more than a mid-sized Boston Whaler fishing boat. Pricing aside, If I were to go to the Bahamas and buy that yacht, as soon as I bring it into this country I pay the tax. Ditto for trying to buy an airplane in Switzerland, a car in Germany, Diamonds in South Africa ... whatever. I guess Mr. Kepner hasn't heard of the U.S. Customs Service. Not surprised. Also .. since when is Canada tax free?
3. It would destroy our economy. Remember, under Boortz's plan, virtually all purchases of new items by individuals would be subject to the FairTax. So when you go to buy a brand new house for $300,000, you now need to pay at least $90,000 in taxes. Are you going to buy a new house and fork over $90,000 in taxes, or are you going to buy a used home and not pay any taxes? Easy choice. Good-bye, construction jobs. Same with new cars and consumer goods. Nobody will buy new. Good-bye, Detroit. Good-bye, Wal-Mart (which might be a good thing).
OK ... now we know that Kepner hasn't read the book and hasn't read H.R. 25, the FairTax Act. The FairTax is inclusive in the price of a consumer item. When you buy a $300,000 home ... the price is $300,000. No tax is added. The tax is inclusive in the price. Further, a $300,000 home before the FairTax will cost approximately the same after the FairTax. Why? Because the embedded taxes incurred in the construction of that home ... taxes that will be removed from the pricing ... will be gone. Poor Heyden Kepner. That's strike three.
4. More tax avoidance. Remember, businesses aren't subject to the FairTax for their "investments". So I set up an LLC, buy a vacation home, and rent it out a couple nights a year. Bingo! It's now an "investment". No tax. Hey, why don't I do the same thing with my primary residence? After all, there won't be any IRS looking over my shoulder, will there Neil? In fact, maybe everything I buy from now on (clothes, restaurant meals, cars) will be for my LLC. Hey, good thing there won't be any IRS around to make sure these aren't for personal use.
That's called tax avoidance, Hayden. It's illegal now .. it will be illegal then. That same tax avoidance scheme is available to you right now. Why don't you get out there and try it? Let us know how it works out. It seems that Hayden Kepner's critique gets weaker as we go along.
5. Even more tax avoidance. Is a drug dealer going to pay taxes on the drugs he sells? What about deli's or retaurants that operate a cash business. Are they suddenly going to report all of their sales and pay taxes on them? Uh, let me guess.
These delis (there's no apostrophe, Hayden) and restaurants (that's the proper spelling) can do that now. Do they? Yes ... some do. Most don't. Again, there will be enforcement of the rules and regulations of the FairTax. Running out of steam, aren't you Mr. Kepner?
6. Fairness. I got news for you, Boortz. Poor and middle class people spend a much higher percentage of their income than do the rich. They need to, just to get by. The rich, on the other hand, have plenty of money left over to save and invest. So, by definition, the FairTax would fall disproportionaly harder on the poor and middle class. Maybe Marie Antoinette would think that's fair, but most American's don't. 'Nuff said about that.
The president's tax reform commission scored all of the proposals for tax reform, including the FairTax. The commission reported that the FairTax was the only tax reform proposal out there that completely relieves the poor of the burden of paying federal taxes. The only one. How many strikes does that make it now for Kepner? Not a very good at bat.
7. One good thing: No corporate tax. The only redeeming value of the FairTax system would be the elimination of corporate income tax. That in itself would make our corporations more competitive by eliminating the incredible expenses they incur in accounting costs as well as in paying the corporate income tax itself (the dreaded "imbedded taxes" as the book calls them). But we could accomplish the same thing under our current system by simply abolishing the corporate income tax today and taxing dividends and capital gains at the same rate we tax ordinary income (i.e., wages). After all, if the corporate income tax is eliminated, corporations' share prices will go up and/or they will pay out more in dividends. So what do we need a corporate income tax for? But we don't need to throw out the personal income tax just to eliminate the corporate tax.
Mr. Kepner doesn't recognize that all corporate taxes are paid by individuals anyway ... consumers, employees or shareholders. But then by now we understand that he hasn't read the book; so, no surprise here either.
How do we really know what the FairTax would generate in total taxation? Isn't that a guess...maybe albeit an educated one?????
I dunno...help me out here.
TIA
Yes, by all means compare apples to oranges so that you can scare people into thinking that the NRST is really high compared to income tax rates. Why is expressing both types of rates in the same terms so people can compare them head-to-head not considered by you to be "honest"?