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
You should also pay more for a Quarter Pounder than me, because you can afford it.
You should pay more to see a movie, too.
You should pay a higher percentage of your income than me for your electricity and gas bills. After all, you can afford it. Not the same price per unit, nonono... and not the same percentage of your income, either... can't even have that... but a higher percentage of your overall income.
Seems fair, doesn't it? You have more money than me and a larger house, so it's okay, right? I'll pay 2% of my income for home heating and power, and you pay 4% of your income. Under your rules, that should be hunky-dory, right?
I mean, sure we can talk about equal treatment under the law, but I'm glad you recognize the notion that some are more equal than others. That's a great plan to follow! It always works out in the end.
Now, let's see, you'll agree to 4% of your total income for home heating and power, 4% for health insurance, 40% for federal taxes, 9% for state taxes, 2% for local taxes, 35% for your mortgage, and 8% for food and clothing. That's only 102% total.
I'll pay 2% for heat and power, 2% for health insurance, 10% for federal taxes, 3% for state, 1% for local, 20% for my house, 5% for food and clothing... totalling only 43%.
Yep, seems fair to me, and obviously to you, too... after all, you got more, so you should be punished, errrr, I mean taxed, more.
That’s ridiculous! Ever if the government had to pay the fair tax it would not need more revenue because it would be receiving all the money back!
Read the bill, all governments pay the full FairTax on every purchase, salary and fringe benefit. State, local, Federal governments. Everything but education.
it would not need more revenue because it would be receiving all the money back!
Look at how they calculated the FairTax rate and where the money is coming from. A bunch of it is coming from the FedGov, they are counting the money that the FedGov pays as revenue. They also have the state and local governments paying a lot of FairTax revenue (so your state and local governments will be raising taxes substantially to pay the FairTax, but that is a digression)
But the FedGov don't collect enough total revenue to pay the FairTax on their purchasers, they just collect enough to pay the suppliers of goods and services and their employees and their fringe benefits. In order to have enough money to pay the FairTax back to themselves, they need to collect more.
If what you are saying were true, then there wouldn't be ANY FairTax revenue from the FedGov shown on the income side of the FairTax rate calculation. And there shouldn't be, but there is. And since there is, they need to collect enough money to pay the bills PLUS the FairTax.
It's a tragic combination.
[So Boortz says something he knows isn’t going happen is going to happen and how is he not a liar?]
Just because you know it and I know it and Karl knows it doesn’t mean Boortz “knows” it can’t happen. Somebody being wrong doesn’t make them a liar. Next you’ll jump on the “Bush Lied, People Died” bandwagon.
Just because you know it and I know it and Karl knows it doesn’t mean Boortz “knows” it can’t happen. Somebody being wrong doesn’t make them a liar. Next you’ll jump on the “Bush Lied, People Died” bandwagon.HUH? He's making the same claims he did in the first edition of his book - the claims he corrected in the second edition. It's hard for him to plead ignorance. He's a liar.
Maybe Boortz needs to reread his STRAIGHTENING OUT SOME CONFUSION confession from 2005 as a memory jogger...
THE FAIRTAX -— STRAIGHTENING OUT SOME CONFUSION
http://www.freerepublic.com/focus/f-news/1485008/posts
When Congressman Linder and I were busy researching and writing The FairTax Book we knew full well that it would one day become the focal point for those opposed to this tax reform idea. We tried, therefore, to make sure that our numbers and claims were correct and consistent with the research that went into the drafting of HR 25.
On review, and after reading the critiques of opponents to the FairTax plan, we have concluded that there is one element of the FairTax that could have been present with more clarity in the book; the concept of embedded taxes and keeping 100% of your paycheck. Those who have much to lose if the FairTax were to become law will focus on these areas in an attempt to undermine support, so let’s put their objections and distortions to rest by addressing those matters here and now.
We explained in the book that the FairTax plan was revenue neutral. By this we meant revenue neutral for everyone ... the government, businesses and individuals. You can’t put more money in the pockets of one without taking money out of the pockets of another. The harsh reality is that politicians would not support the FairTax if it meant less revenue for the federal government; business leaders would not support the FairTax if it meant a decrease in corporate earnings and profits, and the people would most certainly not support the FairTax if it meant a decrease in their income. Taking an snapshot view of our economy, an increase in income in one of these sectors would necessarily mean a decrease in another. This is why the FairTax was designed to be absolutely revenue neutral – leaving everyone pretty much where they are in terms of income or revenue. To put it more bluntly, there is no free lunch in the FairTax plan. There is no “something-for-nothing.”
This brings us to the question of embedded taxes in the cost of consumer goods and services, and your paychecks.
As explained in The FairTax Book, there are taxes embedded in everything we buy. Every entity which provides a product or service in the design, production, marketing, distribution and sale of every consumer good or service will incur some tax liability as they perform their particular function. This tax liability will be incorporated into whatever these individuals or business entitles charge for their services, and will all passed through to become a part of the final cost of the product or service.
Now here’s what we didn’t explain well in the book.
Every employee of any company involved in American commerce is also a provider of a service, and, as such, the employee incurs a tax liability as a result of his or her work. This tax liability is incorporated into what the employee charges the employer for their services, and is eventually incorporated into the final retail cost of the employer’s product or service. Each employee is essentially a separate business entity providing a product, be it physical or mental labor, to the employer.
The extensive research behind HR 25, The FairTax Bill, shows that the average embedded taxes in every consumer product or service is about 22%. In some industries, such as leather goods, the embedded tax is smaller. In other industries, such as homebuilding and construction, the embedded tax is higher, but it averages out to somewhere between 22 and 23%. With the passage of The FairTax Bill, those embedded taxes disappear. These embedded taxes include the combined tax burdens of all entities involved in bringing those goods or services to market, and that includes you, the employee, and the taxes you incur as a result of your employment.
We write in The FairTax Book that the competitive pressures of the marketplace will force prices down when embedded taxes disappear from the cost of retail goods and services, and we cite 22% as the average amount of those embedded taxes. Does this 22% include the income and payroll taxes that are paid by employees? Yes, it does. So ... what does this mean to your paycheck after the FairTax becomes law?
When the FairTax is implemented, and when business and personal income and payroll taxes disappear, your employer is going to have to make a decision. He will either take some or the entire amount he had been withholding for federal income and payroll taxes and add it to your weekly check, or he will readjust your pay figures so that your entire paycheck will be equal to what you used to call “take home pay” before the FairTax. The employer may also decide to do a little of both. Either way, you can see that the amount of money you actually receive as pay – the amount you can put into your bank account – will not decrease, and may actually increase.
On a larger scale real wages will rise to the extent to which the nation’s employers decide to return the embedded costs of their employee’s income and payroll taxes to the employee. Likewise, the cost of the products or services produced by the employer will be reduced to the extent to which that employer retains all or a portion of those income and payroll taxes together with the other taxes on capital and labor eliminated by the FairTax. Once again, a zero-sum, revenue neutral game.
Now, let’s elaborate on the “keep 100% of your paycheck” line that appears in The FairTax Book. It is certainly true that after the FairTax becomes law there will be no more withholding from your paycheck for any federal taxes. What you earn is what you get. This is not to say that your gross pay will equal what it was before the FairTax. This will depend on what your employer does when the embedded costs represented by the tax burden you have passed on to your employer disappear. One thing is certain: You will suffer no decrease in real or net earnings -— the amount of each paycheck you deposit into your bank account every other week. The “keep 100% of your paycheck” concept can more easily be applied to those who either change jobs or come into the labor force after the implementation of the FairTax. A new worker will negotiate a wage with an employer knowing that the amount negotiated will be the amount that worker receives every two weeks ... no deductions. Likewise, when you change employers you, too, will negotiate a wage that will not be subject to withholding, and you will get 100% of your wages in each paycheck.
Some of you reading this amplification of the principle’s of the FairTax may have come to a rather interesting and accurate conclusion. The reality is that in America we’re already operating our federal government off a consumption tax. A convoluted and impossible to understand consumption tax, but consumption tax nonetheless. We say this because ultimately all taxes paid by businesses or individuals eventually make their way through our economic system until they are embedded in the cost of some consumer item or service. In other words, taxes, like that other stuff you’ve heard about, roll down hill. At the bottom of that hill we find the retail sale and you, the ultimate consumer.
As we said in the book, and as we repeat here, the FairTax is not a “something for nothing” scheme. It was designed to be and, in fact, is revenue neutral. Having said that; the non-government economists who studied the FairTax play are nearly unanimous in their agreement that the implementation of the FairTax will lead to unprecedented economic growth in the United States. We will see economic growth in our economy of such magnitude that it will, sooner rather than later, lift all boats —— including yours.
"On review, and after reading the critiques of opponents to the FairTax plan, we have concluded that there is one element of the FairTax that could have been present with more clarity in the book."So it wasn't that he was wrong, it's just that he didn't present it clearly!
I agree, the FairTax cannot stand up under any serious analysis. Whenever a spotlight is shined on any piece of it, another roach crawls out. The thing is infested.
I agree, the FairTax cannot stand up under any serious analysis. Whenever a spotlight is shined on any piece of it, another roach crawls out. The thing is infested.The problem is that there will never be any serious tax reform while the FairTaxers are still holding on to their fantasy. They are sucking all of the oxygen out of the air when it comes to tax reform. Let's have it out and get it over with. Only then can we move on to realistic options.
What about people making minimum wage today? Do you lower mw to reflect the embedded tax, or do you raise it to accommodate? Because even though today, the majority of people making mw do not pay income taxes, the are still taken out, just refunded at a different time.
Maybe I am reading your argument all wrong, I am not a follower of fair tax with the exception of reading an occasional post, I am not necessarily against it, I just found a gaping flaw in your argument that I wanted to point out. Please correct me if I misunderstood.
I agree, there is only so much “reform energy” available at any one time, and the FairTax has given a false mission to those that might be able to make a difference behind an intelligent reform plan.
Re: taxes we need to continue the Bush cuts, and work on reducing corporate taxes and at least indexing the AMT. And the death tax needs to be phased out or eliminated.
But, the problem is the spending first, and the entitlements are the worst of the spending problems. Bush tried and failed. Maybe Fred can make better headway.
Because you make no sense. Individuals pay the FairTax at the point-of-sale for anything they purchase. There is no submitting anything.
The criminal is avoiding $2300 worth of taxes. It works out the same under either tax scheme.
That is not true. It does not work out the same under both tax schemes. I say again, each individual person pays the FairTax at the point-of-sale for the taxable goods or services he or she wishes to purchase.
You seem to be faulting the FairTax because a Drug Dealer would not collect taxes on behalf of the government for the contraband he sells. A sane person would only consider that valid if illicit drug dealing were decriminalized.
It is not a valid criticism of the FairTax, especially because the current income tax scheme can not collect any tax from drug dealers and all other individuals in the underground society. The FairTax will.
No current supporter of the FairTax would support the FairTax unless the entire income tax is repealed. Moreover, concurrent with the repeal of the income tax, a constitutional amendment repealing the 16th Amendment and prohibiting an income tax will be pushed through Congress for ratification by the states (filed as HJR 16 in the 109th Congress).LOL! That is an out right (copy and pasted lie) And a hilarious one to boot.
If the clowns at AFFT can simply "push" anything through Congress why isn't the Fairtax anything more than your wet dream?
There is NOTHING in the Fairtax plan that compels any other legislation be "pushed" through Congress and HR 16 is NOT a "sister" to the Fairtax...except, like everything else said about the fairtax, in your dreams.
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.The difference is, before, your $80,000 was after taxes...After, your $80,000 is yet to be taxed.The difference is and I am worse off how?
Secondly, your 'argument' is just that, it is not research. There is no research plan, means of data collection, data description, hypotheses, model or analytical methods defined. So it is useless as a policy instrument.
And it is flawed, very much so to the point of embarrassment but that is the advantage of an anonymous forum, you can withstand challenges without impugning your real reputation.
I will instruct you and then let you fly off the handle as I expect you to do. Because most of the FairTax haters have hot air arguments with no real research results. They are not interested in discourse but rather rants. For example, one FT hater clings to the absurdity that the current federal gas tax is a hidden tax and weaves some bizarre logic to defend this absurdity. I expect you to fall in the same category. If I don't respond to your clinging absurdities post-response it is because I really don't have time for the incorrigible. Anyways it is not for you I write but for those looking in.
For the purposes of our discussion let's say that the components of the Fair Tax (F) charged for a given product are the "hidden taxes" (H) and the open taxes (O) that are paid on said product. Both are positive numbers.
Your 'O' is undefined. This is a fatal flaw in any attempt at logical argument even in the absence of data.
However, when I buy said product with money earned before the implementation of the fair tax I have already paid taxes (T) on that money.
The federal taxes paid on present products and services are nearly all unlisted and are therefore labeled the hidden or embedded federal taxes. The federal gas tax is an exception as are various federal telecommunication taxes. So your 'T' is 'H'. This is another flaw related to the failure to properly define terms.
So, when I buy the aforementioned product, I am actually paying F + T in taxes.
You are using 'F' apparently to denote the NRST and if you had read HR 25 or studied any number of papers concerning the FairTax legislation then you would know that the NRST is only applied to products and services that came into existence post enactment of the FairTax legislation.
For example, if you buy a standard 2X4 stud from Home Depot for $2 prior to the FairTax passage, then you are going to pay the same $2 for that same stud if it is still sitting on the shelf post-enactment and there will be no NRST applied to it because it is considered pre-enactment inventory. This also applies to wholesalers and manufacturers with inventory on their loading docks.
Once that inventory clears, all post-enactment inventory will be subject to the NRST but the cost of the new inventory will have decreased. It is expected that the new lower price of that stud and the NRST applied to it will still equal $2. That is the purpose of current studies, to look at price stability across broad product categories. And that is also why the FairTax will be implemented in selected participating states first, to evaluate price stability and other issues.
I do hope you will at least understand there will be a transition period as old inventories get cleared out. Those inventories will not have the NRST applied to them. Any product manufactured before or in the process of manufacture when the FairTax is enacted will not be subject to the NRST. Anything manufactured or any service performed after enactment of the FairTax will be subject to the NRST at the retail level.
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.WTF? Are we supposed to take this as anything near credible? Is that Fairtax accounting? Nothing you said adds up/makes sense...
There's a couple thousand dollars not accounted for there
http://www.fairtax.org/site/PageServer?pagename=about_faq
...and study the Questions and Answers -- and the whole site sections.
The reason an inclusive number is used for the fair tax is that it is replacing the income tax, which is an inclusive tax. So to compare apples to apples, both must be quoted at an inclusive rate.Pure BS. The reason (besides AFFT deceit) is the law is written for the business subject to the tax, not the consumer...
Government to business: Total your "gross payments", send 23%.
Oh wait the reason it's stated as 23% rather than 30% sales tax rate is because the Fairtax wants the cost of government visible, and 23% is more visible than 30%.< /sarcasm >
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