Posted on 08/27/2007 7:53:49 AM PDT by Turret Gunner A20
This is what The Wall Street Journal had to say about the FairTax.
http://www.opinionjournal.com/extra/?id=110010523
And boy did they get it very, very wrong.
Evidently the FairTax is making some people nervous. The attacks are increasing, and there's a striking similarity in the fabrications being offered by columnists and pundits from coast to coast.
The heaviest, and possibly the strangest, attack over the weekend came from Wall Street Journal columnist Bruce Bartlett. Bartlett's column was titled "Fair Tax, Flawed Tax," and by Sunday morning it had generated hundreds of emails. When I finally read Bartlett's column I was completely stunned. I've referred to his commentary dozens of times in the last few years on the show, so for him to be so far off – so bizarrely wrong – about the FairTax was stunning.
OK ... by now you've probably read the column, so let's deal first with what I feel to be Bartlett's libelous assertion that the FairTax was " ...originally devised by the Church of Scientology in the early 1990s as a way to get rid of the Internal Revenue Service,"
Where in the hell did that come from?
This assertion – that the FairTax was developed by the Church of Scientology – is flat-out false. I suspect that Bartlett allowed someone else to do his research for him on this issue; someone with an agenda. Perhaps he blindly accepted some information from a Washington insider, perhaps a K Street denizen who fears the loss of power and income should the FairTax become law.
What Bartlett did was very simple, and astonishingly careless. He mistook a group called Citizens for an Alternative Tax System (CATS) for the people who developed the FairTax.
Now CATS did have a plan for a national retail sales tax, but it was in no way connected with Americans for Fair Taxation (AFFT) and the FairTax.
http://www.fairtax.org/site/PageServer
I was familiar with the CATS program. I had them on my radio repeatedly. As I've told you, I've been interested in this idea of replacing the income tax with the sales tax for some time.
The CATS idea was simply to do away with income taxes and replace them with a 17% sales tax. Payroll taxes would stay with you, as would many other federal tax levies. As you can see, this is substantially different from the program offered by the FairTax.
I'm going to lead you to several articles here. The first link will take you a document detailing the history of CATS.
http://www.fairtax.org/site/PageServer
If you read this carefully you will see absolutely no reference to the FairTax. There is no reference to Congressman John Linder or H.R. 25, the FairTax Act. All of the references are to CATS and their own idea of a national retail sales tax.
Moving right along here, next you have a list of articles detailing the connection between CATS and Scientology.
http://www.google.com/search?hl=en&q=%22Citizens+for+an+Alternative+Tax+System%22%2BScientology&btnG=Google+Search
That's right. It was CATS, not Americans for Fair Taxation with the strong connection to Scientology. In fact, here's another link setting for Scientology front groups.
http://www.google.com/search?hl=en&q=%22Citizens+for+an+Alternative+Tax+System%22%2BScientology&btnG=Google+Search
Scroll down the list a bit and you'll see CATS! You will not see AFFT or the FairTax mentioned.
The people responsible for creating AFFT and the Fair Tax are Houston Businessmen Leo Linbek and Robert McNair. Neither one of these people are Scientologists.
These men and their associates raised over $20 million for a study on finding an alternative to the federal income tax. That research was conducted by a coalition of market and academic experts from places such as MIT and Harvard, none of whom were associated in any way with Scientology. From that research came the FairTax.
Just an interesting historical note: When the research for a new tax system was commissioned with the $20 million raised by Linbeck, McNair and their associates, they made a commitment to accept whatever findings the research developed, strongly suspecting that their efforts were going to lead to the endorsement of some sort of a flat tax. The market and academic researchers came forth with an idea for a national retail sales tax instead, and the FairTax was born.
Bruce Bartlett owes Leo Linbeck, Robert McNair and the hundreds of thousands of FairTax volunteers across an America an apology. I suspect that apology will be forthcoming before too many days pass.
There were many other inaccuracies in Bartlett's column. As you know Congressman Linder and I, with the help of a brilliant analyst named Rob Woodall, are busy writing another FairTax book that will address virtually every meaningful criticism you may have heard or read. In Reader's Digest form, here are some quick response to other charges by Bartlett:
Bartlett jumps right into the middle of this nonsense over what the real tax rate is; 23 percent or 30 percent. He correctly points out that we don't quote the FairTax rate the way conventional sales taxes are quoted. The reason is simple; the FairTax will replace the embedded taxes and already exist in every item or service we purchase; and secondly, the FairTax will replace the income tax. Both the embedded taxes in the prices of what we buy now and the income taxes we pay now are inclusive taxes. We're replacing inclusive taxes with inclusive taxes.
It's so very simple: When you see a lamp on the shelf marked $100, you will pay $100 for that lamp when you get to the checkout. You will receive a receipt which shows that $23 of the $100 you have paid represents the FairTax. You do the math for yourself, but every time I work it out it comes to 23%
Bartlett also joins other critics in another blatant falsehood about the FairTax. Here's a sentence from his column: "If a product costs $1 at retail, the FairTax adds 30%, for a total of $1.30. Since the 30-cent tax is 23% of $1.30, FairTax supporters say the rate is 23% rather than 30%." In another paragraph Bartlett also says "Imagine paying 30 percent to the federal government on top of the purchase price of your next house."
Wrong, wrong, wrong. If a product costs $1 at retail .... It costs $1, with the FairTax already included. This is so easy to understand, you almost get the idea that people are intentionally trying to confuse the facts here. That $1 item Bartlett is referring to costs $1 at retail today! But instead of including the FairTax in that price, all of the embedded taxes from every business and individual involved in bringing that item to the marketplace are included. You remove one, you add the other. And that bit about 30 percent to the federal government on top of the purchase price of your new home?
Another lie. The embedded taxes are so high on the price of a new home today that when they are removed and the FairTax added, that home could be a percent or two cheaper! Come on, Bruce. This really isn't that hard. Let's try to spell this out plainly for everyone:
In another astonishing falsehood Bartlett says that the cost of providing the prebate to every household in America is not factored into the FairTax rate. He says it would cost at least $600 billion the first year. Again, Bartlett is just flat wrong. The cost of the rebate most certainly was included in the 23 percent rate. Congressman Linder tells me that if the rebate had not been included the FairTax rate could have been lowered to 18 percent.
The fact is that the rebate is projected to cost 5 percent, and that 5 percent is most certainly included in the rate.
Bartlett makes another huge mistake(?) regarding the prebate. He says that the FairTax sends monthly checks to every household based on income. Then he speaks of the "complexity and intrusiveness of tracking every American's monthly income .." Wrong ... completely and absolutely wrong. As anyone who has read the book knows, the prebate is not based on income, it's based on family size. There is no need to track anyone's monthly income. The only thing the government needs is a valid Social Security number and the number of people in the household.
Then, of course, Bartlett gets into the question of whether or not you can fund the federal government at present levels with a 23 percent inclusive sales tax rate. He cites numerous sources that say the tax rate would have to be much higher than 23 percent.
Know this ... in every case where some individual or organization has come forward to say that the tax rate would have to be higher than 23 percent, they have first changed the terms of the FairTax. That is, they have created exemptions. For instance, they assume that congress would never agree to tax food and medicines, therefore the tax would have to be XX percent, or that congress wouldn't tax transportation and housing, therefore the tax would have to be XX percent. Again .. the fact that the taxes are already there in the form of embedded taxes – embedded taxes to be replaced by the fair tax – is ignored.
Instead of me arguing about the sufficiency of the 23 percent rate, perhaps you would like to read it for yourself. Here's a link to a study by several economists titled "Taxing Sales under the FairTax: What Rate Works?"
http://people.bu.edu/kotlikof/Taxing%20Sales%20under%20the%20FairTax,%20What%20Rate%20Works,%20October%206,%202006.pdf
Don't take my word for it. I'm just a second-tier talk show host. See what several renowned economists have to say in a 34-page report.
Let's face it. The FairTax is a ripe target. It is easy to demagogue.
"Candidate Smith wants to add 30 percent to the price of everything you buy."
"Candidate Jones wants to add 23 percent to the price of your new home"
Can you imagine some uninformed voter (remember, most voters are government educated) hearing something like that? You just know how they're going to vote, don't you?
Is it possible that some of these irresponsible attacks are being mounted right now to prevent a new candidate, Fred Thompson, for instance, from running on this issue? Is a shot being fired across some political bows?
http://boortz.com/nuze/200708/08272007.html - fairtax
It’s pointless to even discuss it.
It sure is -- with you.
Sorry if it is over your head, which by you repetitive comments illustrating such says that it is way over your head, but it does support exactly what I have been saying.
If you are referring to taxing your savings again when you spend them then you should know we've heard that tired AARP scare tactic many times before and it won't work. If you bothered to study the issue you would know that you are paying embedded federal taxes on every retail purchase so there is no way to get around paying federal taxes on purchases whether under the Income tax or the FairTax.
and I don’t want the government to have the chance to add new taxes later. If the 16th isn’t repealed and replaced with an unimpeachable ban on future income taxes then we’ll be just like Europe with an income tax and a VAT within a decade or less. Count on it.
And the FairTax movement will immediately move to repeal the 16th Amendment just as they point out on their website http://www.fairtax.org , and they are correct in pointing out that once Americans are free of the Income tax, they will never allow it to return. And this will be done with a bill to repeal the 16th Amendment. As soon as the FairTax is enacted the IRS is abolished and the Income tax is repealed. And the very same day of FairTax enactment the bill to repeal the 16th Amendment will be introduced.
8.8% sales tax, property taxes, levies, Business & Occupation tax (B&O tax).
Most revenues from sales taxes. People are fed up with the property taxes here and have begun talking about a Georgia One type of sales tax.
Lets see. I make $100,000 today but my take home pay is $80,000. Tomorrow the FairTax is implemented and my take home pay is $80,000.
Wrong. Assuming for this excample that the $18,000 of the deductions are going to the Federal Government as taxes of one sort or another (IncTax, Fica, etc. The FairTax is implemented, the Feds no longer takes the $18,000 -- your take-home pay is now $98,000.
You paid taxes that you didn't owe, that were embedded in things you didn't buy, because only your income was taxed, because what you might buy will have to be taxed again, especially if you had after tax money, to spend on untaxed things with embedded taxes, that aren't taxed because corporations don't pay taxes, because you paid the taxes you didn't owe.
Got all that?
Now rinse, and repeat.
And the question every fairtaxer since the beginning of time fails to answer, if the employee is taking that money home in the form of a bigger paycheck, how does that reduce prices? It does not, those costs are still embedded in the cost of goods and the new tax will increase the costs of goods and services to the consumer.
I do believe that is alredy filed as HJR 16 in the Congress. See post # 63.
Are you honestly suggesting, and do you honestly believe there isn't heavy competition for the electronics consumer?
If there isn't why have HDTV prices dropped more than 50% in the past year and half?
Why has HD-DVD prices dropped so much and Blu-Ray prices come down, though slower than HD-DVD?
Why are personal computers more powerful, have more options, and more capability at a lower price year after year after year?
You don’t know that you will pay more. You may think it but you don’t know.
You will if you choose get a rebate every month to use for necessities to offset the NRST.
You likely have your home paid off and all material things as you want them so you will not have a large amount of spending. You may travel but travel products and services will be reduced in costs and then brought back to today’s price via imposition of the NRST, i.e. a wash to your budget.
Your social security will not be taxed and your savings and investment interest will not be taxed.
The bottom line is you don’t know that you will pay more and very likely you will be better off.
I appreciate you wanting to do right by the country, it shows a lack of selfishness.
I would say instead “I don’t know if I will be better off or not under the FairTax, some say I will be better off, some say I will pay a little more but I think it is right for the country.”
The FairTax movement is working to initiate the Federal FairTax in certain selected states and territories to evaluate the effects. After the results come in we will have a better idea about retirement living under the FairTax.
Nothing will be done in a rash manner. As Americans we will test and verify as we are a practical innovative people.
And many a real price DROPS over time.And many a mickle makes a muckle. What does that have to do with what we were discussing?
“Boortz spends 75% of the article refuting a non-point about CATS. It makes no difference to the debate. “
I think it does makea difference. An attempt to associate anything with Scientology is a smear tactic, since most of America thinks Scientologists are a bunch of loons.
Why else do you suppose Bartlett included it, if he himself didn’t think it would be important to people ?
If it's stupid, why is Wal-Mart one of the largest companies in the world?
The reason you compete on price is because you feel that you can make higher profits by selling more volume. The reason you do that despite the fact that your competitor might also lower their prices is because you think you run your business more efficiently. If your competitor has more overhead, or is simply unwilling to accept lower profit margins on that product, then they can't compete with you on price.
They can try and compete by adding value to their products in some way such as better service, better quality. They can also try and compete by adding perceived value through better marketing or more skilled sales people.
Usually competition isn't just done on price alone. It is a combination of price and value, and retailers offer different versions of the same product that have different values to the customers at different prices.
Read some game theory.
Play some more complex games.
I think it does makea difference. An attempt to associate anything with Scientology is a smear tactic, since most of America thinks Scientologists are a bunch of loons. Why else do you suppose Bartlett included it, if he himself didn’t think it would be important to people ?BTW, the AFFT's Director of Research, Karen Walby, is a Scientologist. I don't if that really means anything (although Scientologists are known for spreading truth and she is Director of Research for an organization known for stretching the truth).
Who said anything about giving away money ? The issue is about dropping PRICES.
You’d only be giving away MONEY if your lower prices failed to increase the QUANTITY of your sales. Sellers in a free market drop their prices to increase market share, and the larger volume at the lower price gets them MORE MONEY, not less. Only through price-collusion can a market comprising many sellers maintain high prices. You can’t stop the other guy from being first to drop prices, which means you have to follow or go out of business.
I agree. For Boortz to continue using the 23% embedded tax cost figure means he is counting the employee’s taxes, which would require a pay cut down to the employee’s current net paycheck.
That won’t fly. Can’t fly with all the collective bargaining, minimum wage laws, and contractual pay scales. I don’t know why Boortz continues to use it. It is just silly.
As you said, prices can drop 10% if business taxes and tax-related costs are removed. So tax-inclusive prices go up 18%, while my net income goes up 40% to match my gross. The numbers still work out great, so why doesn’t Boortz use the more realistic gross-pay-stays-the-same scenario ?
No, it doesn’t. Price wars are a death spiral, and everyone always thinks the other guy is going to go away first.
Anyone whose first method of competition is price cutting won’t be in business long.
Wal-Mart thrived because they were in rural towns, made money and grew. They dominated when they came to suburbia; but their margins are horrible, and ownership makes their living from another corporation which gets rent from Wal-Mart stores.
That won’t fly. Can’t fly with all the collective bargaining, minimum wage laws, and contractual pay scales. I don’t know why Boortz continues to use it. It is just silly.It wouldn't have anything to do with the fact that he's a lying sack of $h17, would it?
Just caused its filed means jack.
Without it actually happening, the FairTax will just be an additional tax.
Keep in mind I support the FairTax and want to see it replaced the income tax. But without the actual repeal of the 16th amendment, I can't support it in full.
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