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Fair Tax, Foul Politics [NRO on FairTax]
Fair Tax, Foul Politics ^ | August 16, 2007 | NRO Editors

Posted on 08/16/2007 6:10:39 PM PDT by RobFromGa

Fair Tax, Foul Politics

By The Editors

Advocates of a national sales tax to replace the income tax have built an impressive grassroots army. They have given their idea an appealing, if somewhat gimmicky, name: the Fair Tax. And they have managed to get five Republican presidential candidates to suggest that they would sign a sales-tax bill if it reached their desk. Some observers credit the enthusiasm of the Fair Taxers for Gov. Mike Huckabee’s surprisingly strong showing in the Iowa straw poll. Huckabee is the candidate most committed to the Fair Tax.

Former senator Fred Thompson is, however, backing away from the idea. Fair Tax advocates have released a video in which Thompson, asked about the proposal, appears to say he would “absolutely” sign it if elected. On August 10, however, Thompson wrote those advocates a letter that said merely that the Fair Tax was a good starting point in thinking about tax reform. Mitt Romney’s campaign says that the Fair Tax has some attractive elements, but that the candidate would need to see details before making any pledges. Rudolph Giuliani has said that he does not think he would sign any such legislation.

The leading candidates are right to be wary. The tax code needs major reform to become fairer, simpler, and more efficient. The Fair Tax is one instantiation of those goals, but its political impracticality makes it fatally flawed. If conservatives force a choice between a Fair Tax and no tax reform at all, the latter is what they are likely to get.

There is widespread confusion about what the Fair Tax would entail. If you bought $100 of clothing and paid a $30 tax on it, you would probably think you had paid a 30 percent tax. The Fair Taxers say that you paid a 23 percent tax: $30 is 23 percent of the $130 you paid in total. When they say they want a 23 percent tax, that’s what they mean.

Since there would be no more income tax in this system, there would also be no more standard exemption to make sure that the basic necessities of life went untaxed. The Fair Taxers would solve this problem by sending out monthly “prebate” checks to all Americans.

The great, undeniably attractive selling point of the Fair Tax is that it would allow the country to dispense with the IRS. But the sad truth is that if the federal government is going to collect as much money as it currently does—which the Fair Taxers say their system would—its methods of tax collection will inevitably be intrusive. The real difference between the current system and this proposal is that the primary brunt of tax collection will be borne by a smaller group of people: business owners.

Over time, then, enforcement measures could become more draconian than they are today: especially since a massive retail sales tax would create a massive incentive to evade it. That’s why every country that has ever tried to impose retail sales taxes this high has quickly moved to a Value Added Tax levied at every stage of production. Consumers rarely see or keep track of these taxes, and they seem to be fairly easy for governments to raise.

These pitfalls are beside the point, however, since a national sales tax is not going to become law. No presidential candidate could be elected on a sales-tax platform, and no Congress would enact one if he were.

A candidate who ran on the national sales tax would be able to run on nothing else. He would have to spend all of his time defending the idea. Off the top of our heads, we can think of three devastating lines of attack an opponent could use in television ads. One ad could argue that getting rid of the mortgage deduction would send home prices into free fall (something that voters are going to find especially worrisome now). Another could ask why senior citizens, having paid taxes all their lives as they made income, should have to spend their retirements paying taxes on everything they use that money to buy. A third could simply ask voters if they look forward to paying a brand new tax.

There are answers to each attack. But no Republican candidate, especially in the daunting environment of 2008, is going to want to have to make them. Republicans cannot win a national election without the tax issue. If they ran on the national sales tax, Republicans would be taking one of their natural strengths and making it into a liability. Which is why we expect them to say nice things about the Fair Taxers’ passion, and move on.


TOPICS: Politics/Elections
KEYWORDS: fairtax; fraudulent; freelunch
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To: ari-freedom

The prebate is a political hackjob done to try and get liberals to support the plan.

Ask yourself, would the average citizen feel MORE or LESS dependent on big government if every man, woman and child in America received a nice government check every month?

And then ask yourself, would future politicans be tempted to adjust the amount of this check for certain voting blocs in order to secure votes?

And would a 30-50% sales tax cause people to try and evade the tax? The remedy for that is a higher tax rate, causing more evasion. And then the reinstatement of the income tax on an emergency basis, only on the RICH people making say $50,000 per year and more...


21 posted on 08/16/2007 6:31:16 PM PDT by RobFromGa (FDT/TBD in 2008!)
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To: xcamel
It is the brainchild of an extremely wealthy texas developer on a lifelong “jihad” against the IRS who got caught cheating the system,
To the Fairtaxer there are only 2 possible ways one can get wealthy.

1) If it's the income tax, cheat...

2) The Fairtax

22 posted on 08/16/2007 6:31:49 PM PDT by lewislynn (What does the global warming movement and the Fairtax movement have in common? Disinformation)
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To: FewsOrange
If you go into a store and see an item of clothing with a price label of $100 you will end up paying $130 under the Fair Tax system.

Generally you are correct. Your take home pay will also be higher so it offsets.

23 posted on 08/16/2007 6:31:55 PM PDT by groanup (Limited government is the answer. What's the question?)
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To: FewsOrange
"TANSTAAFL!"

Robert Heinlein

24 posted on 08/16/2007 6:33:59 PM PDT by xcamel ("It's Talk Thompson Time!" >> irc://irc.freenode.net/fredthompson)
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To: groanup

A dollar will buy approximately 20-30% less than it does now. Just because some people will have more dollars doesn’t mean everyone will. Everyone that owes credit card debts or mortgage debts will repay them with these new dollars that are more abundant. Everyone that has lended money like banks will be repaid with these less valuable dollars.

People with money get screwed, people that owe money are better off. Until the economy collapses.


25 posted on 08/16/2007 6:34:27 PM PDT by RobFromGa (FDT/TBD in 2008!)
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To: xcamel

“Look up the history of AFFT, and the players, and you’ll find out everything they don’t want you to know.....”

Ya wanna do us al a favor and throw out some support...maybe a link or two to educate us peons who just don’t “get it” yet!!


26 posted on 08/16/2007 6:36:04 PM PDT by mo
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To: RobFromGa
A dollar will buy approximately 20-30% less than it does now.

Have I got to explain this to you AGAIN?

27 posted on 08/16/2007 6:37:29 PM PDT by groanup (Limited government is the answer. What's the question?)
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To: bahblahbah
There are crane operators out there who know that if you buy $100 worth of clothes the 23% FairTax comes out of the $100.
You must be a crane operator that read "the book" and not the bill.

`SEC. 510. TAX TO BE SEPARATELY STATED AND CHARGED.


28 posted on 08/16/2007 6:39:05 PM PDT by lewislynn (What does the global warming movement and the Fairtax movement have in common? Disinformation)
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To: ari-freedom
The flat tax is already tried and tested in Hong Kong, Russia, several European countries as well as Alberta, Illinois, Indiana, Massachusetts, Michigan and Pennsylvania.

And in the United States of America I might add. The monstrosity we suffer today started out as a "flat tax".

why not go with that?

We did and you can see the results!

Income taxes, in any form, tax the complete wrong end of the spectrum i.e. initiative, effort, frugality etc. while taxes on articles of consumption - sales taxes - tax what one takes OUT of the economy vs what he put's in.

Fact is that The The income tax is the root of all evil.

29 posted on 08/16/2007 6:39:58 PM PDT by Bigun (IRS sucks @getridof it.com)
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To: bahblahbah

Bravo Sierra. When he buys something for $100 and pays a 6% state sales tax, he knows he pays a total of $106. Your approach is highly deceptive.


30 posted on 08/16/2007 6:40:37 PM PDT by expatpat
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To: groanup
A thread that needs some truth injection.
Who's stopping you?
31 posted on 08/16/2007 6:40:44 PM PDT by lewislynn (What does the global warming movement and the Fairtax movement have in common? Disinformation)
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To: lewislynn
That must have been the large type easy eye version using words of one syllable or less...
32 posted on 08/16/2007 6:41:01 PM PDT by xcamel ("It's Talk Thompson Time!" >> irc://irc.freenode.net/fredthompson)
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To: RobFromGa

Yes, the fairtax people are missing this basic psychological problem. It’s the same trick that credit cards use to get people to spend more money. You have the ‘money’ now and you get a cashback reward. You end up spending more money thinking you’ll end up ahead.

Lots of retail stores already evade the state sales tax by transacting in mostly cash and keeping it under the table. So of course we will expect more underreporting under a fairtax which focuses on this mostly cash business. Higher rates will be required.


33 posted on 08/16/2007 6:41:26 PM PDT by ari-freedom (I am for traditional moral values, a strong national defense, and free markets.)
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To: groanup

See post #6 then.


34 posted on 08/16/2007 6:41:34 PM PDT by expatpat
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To: groanup
Your take home pay will also be higher so it offsets.
Other than AFT and "the book" where is that written?
35 posted on 08/16/2007 6:43:26 PM PDT by lewislynn (What does the global warming movement and the Fairtax movement have in common? Disinformation)
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To: Bigun
Guarantee what happened to your beloved 1913 "flat tax" example won't happen to your beloved "fair tax" and I might listen... or not.
36 posted on 08/16/2007 6:43:30 PM PDT by xcamel ("It's Talk Thompson Time!" >> irc://irc.freenode.net/fredthompson)
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To: groanup
Have I got to explain this to you AGAIN?

You haven't got enough brainpower unfortunately. If you did, you wouldn't ask the question.

37 posted on 08/16/2007 6:45:00 PM PDT by RobFromGa (FDT/TBD in 2008!)
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To: ari-freedom
Yes, the fairtax people are missing this basic psychological problem.

They are missing a lot of obvious things...

38 posted on 08/16/2007 6:45:41 PM PDT by RobFromGa (FDT/TBD in 2008!)
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To: Bigun
The monstrosity we suffer today started out as a "flat tax".
Do you have any idea what the Flat Tax is?
39 posted on 08/16/2007 6:48:52 PM PDT by Your Nightmare
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To: xcamel
Guarantee what happened to your beloved 1913 "flat tax" example won't happen to your beloved "fair tax" and I might listen... or not.

I'm just a nobody but if my guarantee is all you are waiting for, you have it!

Personally however, LONG experience leads me to believe you quite incapable of "listening" to anything beyond your preconceived notions of reality.

40 posted on 08/16/2007 6:49:33 PM PDT by Bigun (IRS sucks @getridof it.com)
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