Posted on 03/22/2006 2:35:07 PM PST by Your Nightmare
As tax day approaches, anguish over the monolithic federal tax code swells, creating fertile ground for crackpot ideas like the FairyTax.
No, it's not a tax on fairies. Technically, its supporters call their plan to replace current federal taxes with a national sales tax "the FairTax," but one would have to be the sort who believes in elves repairing shoes, gnomes managing Zurich banks and pixies dancing under the full moon to buy into it.
Besides, calling it the unFairTax is too easy.
The FairyTax's two chief prophets are Neal Boortz and Rep. John Linder, R-Ga., who coauthored "The FairTax Book" published last year. Boortz also spreads the bad word on his syndicated conservative radio talk show, while Linder has introduced it into Congress as HR 25, which has 52 gullible cosponsors.
The idea is deceptively simple.
The federal government would first eliminate its existing taxes. Goodbye income, corporate, payroll, capital gains, estate and all the other taxes. No more 1040s, paycheck deductions, accountants or IRS.
Then it would levy a 23 percent tax-inclusive sales tax on all retail purchases and services. That rate, Fairy-Taxers say, would provide the federal government with the same funding it now receives.
Finally, a monthly "prebate" check sent to every household would offset any disproportionate effect on the poor.
Once in place, the new system would eliminate tax season headaches, boost the economy, bring jobs back to America, end tax evasion, reduce the costs of goods, give everyone a virtual raise in the absence of payroll taxes and probably cure cancer.
OK, maybe not cure cancer, but Boortz and Linder could have included that in their book, and it would have fit right in with the rest of the litany.
It sounds sweet, at least until anti-tax exultation gives way to rational analysis.
For starters, the prebate system would be a dismayingly large welfare program. Every household would depend on monthly federal payments. Sure, the IRS might be gone, but some comparable agency would have to handle the prebates, not to mention enforcement.
Moreover, the national poverty measure is hopelessly outdated and does not reflect regional variations. Prepare for a flood of poor families moving to rural, low-cost communities.
Then there's that misleading 23 percent rate.
Say you buy a $100 iPod shuffle. Under the FairyTax plan, you'd pay $130 for it. The retailer would get $100 and the government $30.
FairyTaxers count that as a 23 percent "tax inclusive" rate because $30 is 23 percent of $130.
But that's not how people usually talk about sales taxes. Thirty dollars on top of $100 is a 30 percent tax.
FairyTaxers prefer the tax-inclusive formula because it lets them directly compare their tax to income taxes, which people do think about tax inclusively. Fair enough. It's probably just a coincidence that the smaller number makes selling their plan easier.
Not that 30 percent -- 23 percent tax inclusive -- would be revenue neutral anyway.
The same dislike of taxes that sparked the FairyTax will lead to black markets and shopping in Canada to avoid the tax. Tax cheats, despite what Linder and Boortz claim, will not disappear. They will find new ways to cheat.
Even more unlikely, FairyTaxers believe Congress could resist the temptation to use tax breaks for social engineering. The tax would apply to every service and new good, including health care and homes. Americans would give up mortgage deductions, religious exemptions and family bonuses.
Right. That would happen.
The Treasury Department calculates that with modest black market evasion and tax breaks comparable to those available in most states, the sales tax would need to be 64 percent to replace just the income tax -- not even all of the other lost taxes under the FairyTax.
Other economists who have looked at the idea share the Treasury Department's pessimism and predict similarly high rates.
So how has such an inane idea gained traction? It helps that wealthy donors are pumping millions of dollars into a group called Americans for Fair Taxation to pay for research and propaganda. Their money will be well spent if the FairyTax becomes reality because it would represent a massive shift of the tax burden from the rich to the middle class.
Households earning $30,000 to $200,000 would all pay more under the FairyTax, while those earning more than $200,000 would pay less, turning the spirit of a progressive tax system on its head.
Even President Bush's advisory panel on federal tax reform, a group hardly averse to lightening the tax load on the rich, could not stomach moving so much tax burden from the rich to the rest.
The current tax system has problems, headaches and annoyances, but the FairyTax would replace them with something far worse.
christian.trejbal@roanoke.com
Are you ever asking for it!
When an author resorts to such childish name-calling right up front, it's hard to take them seriously. Does the author actually advance any rational arguments against the Fair Tax proposal? Taking a cue from the author, I won't actually read the article, because Christian Trejbal is a doody-head.
"Prepare for a flood of poor families moving to rural"
i don't jump into these threads but that HAS to be the biggest dumbass statement i have EVER heard against the fairtax.
as if poor people are so well served in big cities right now.
Dumb
Emasculated
Moronic
Obscene
Cretin
Rat
Abortionist
Traiters
What qualifies the author to define gullible?
BTW, I'm not a nutjob.
Sex for hire.
Exactly. Without repeal of the 16th, you'd have to be an idiot to support this.
Christian Trejbal is obviously very ignorant of the FairTax. I stay in a state of amazement at the number of people who comment on the FairTax but have not read the book. Mr. Trejbal does not state that he has read it and from his article he evidently has not. The FairTax is a tax system that everyone needs to educate themselves about and let their representatives know their educated opinion of. In my opinion it is a brilliant system whose advantages far outweigh the flaws. Yes, there are flaws; it is not a perfect system. (The only perfect system would be a total Laissez-Faire “night watchman” state – don’t hold your breath)
I will not take the effort to defend the FairTax against Mr. Trejbal on this forum but simply encourage everyone to read the book. I will however point out that Mr. Trejbal has no concept of imbedded taxes which makes his entire article intellectually suspect.
Christian Trejbal is obviously very ignorant of the FairTax. I stay in a state of amazement at the number of people who comment on the FairTax but have not read the book. Mr. Trejbal does not state that he has read it and from his article he evidently has not. The FairTax is a tax system that everyone needs to educate themselves about and let their representatives know their educated opinion of. In my opinion it is a brilliant system whose advantages far outweigh the flaws. Yes, there are flaws; it is not a perfect system. (The only perfect system would be a total Laissez-Faire “night watchman” state – don’t hold your breath)
I will not take the effort to defend the FairTax against Mr. Trejbal on this forum but simply encourage everyone to read the book. I will however point out that Mr. Trejbal has no concept of imbedded taxes which makes his entire article intellectually suspect.
Do you work for H&R Block or are you just one of these?Are you a Democrat? Only a Democrat would favor a plan that has the Social Security Administration sending a check once a month to every family in America.
I will not take the effort to defend the FairTax against Mr. Trejbal on this forum but simply encourage everyone to read the book. I will however point out that Mr. Trejbal has no concept of imbedded taxes which makes his entire article intellectually suspect.Actully, the "embedded taxes" being 22% of prices myth has been debunked...and by a fellow Freeper, no less.
JORGENSON EXPLODES FAIRTAX MYTH (FR Exclusive)
WHY should the tax be maintained at 64%???? Maybe, some of the SPENDING should be nixed? Hmmmmm? You don't talk about WHY we'd need such a high tax rate - it would be to maintain all the spending - all those pet projects. IF we could get rid of them, we could reduce the tax. Didn't think of that, didja? HUH, Mr. FairyBrains?
This article is full of misconceptions.
It is apparent the author did not read the " Fair Tax' book.
I did.
The percentage needed for a consumption tax to be revenue neutral is NOT a comment on the consumption tax.
It IS a comment on government spending. That's all.
Congressman Steve King of Iowa has a bill to begin the process of doing exactly that. Let him and his co-sponsors know you support it.
No need to wait in tearing out the income tax by its roots, though.
My last post should have gone to you as well.
The FairTax bill ends the income tax and disassembles the IRS...whether the 16th has been repealed yet or not.
That humpty-dumpty is one the Left is going to find it hard to reassemble once it's broken in pieces...
Ending the income tax without repeal of the 16th Amendment is precisely the danger. You need to do both in order to permanently remove the option of an income tax or else, as you well understand, we'll wind up with both types of tax in a very short time.
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