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
I think I did so, just not in the post you're responding to.
Jeez, dude! I was saying that people contemplating a change to a sales tax system would need to take this issue into account, becauae to do otherwise is to base your expectations on ripping off the people with savings. Who the hell pissed in your Wheaties? I'm just trying to have a civil, reasoned discussion here.
I make perfect sense. A drug dealer is a seller of goods, which under the fairtax are suppose to be taxed. If I sell $10,000 worth of consumable goods, I would be absolutely liable under the fairtax to submit $2300. I must pay a gross retail sales tax, period. I would only net $7700 if I followed the law. The drug dealer nets $10,000 and will pocket the extra $2300 he is legally liable to submit. He has that extra $2300 to spend. It works out EXACTLY the same under both systems. I am not being critical of the fairtax, I am pointing out a simple fact.
You want to get in to sematics about who pays it and claim it is the buyer. Under the fairtax, it is the seller who pays it. It comes off of his profit. As a seller of goods or services, I have to convince my customer that my goods are worth $100 eventhough I only get to keep $77. A drug dealer or prostitute doesn't. They cheat the fairtax system, period.
I bet the modeling is complex!
I can guarantee you that the results from the FairTax cosponsors will be published well before you have anything published.
You make it sound as if the FairTax strategy is to get to the market first with a new set of lies, sell it hard to vest the grass roots in the free lunch before the truth is revealed.
And the federal gas tax?
To repeat; the FairTax is a replacement tax, it is not a tax on a tax.
The FairTax does tax the federal gas tax.
It’s still a shame that this debate about much needed tax reforms and all of the “pros” and “cons” of each and every tax reform idea is presently going on only on this thread instead of also presently going on in Congress! Serious headway on this issue should of really been done years ago while the Republicans were still the majority in Congress!
Seems the Republicans in congress need a Democrat president to get interested in fiscal responsibility. The speed with which balanced budgets, reduction in the size of government, and paying down the debt got dropped by Washington was stunning.
Yes and no.
Today my salary is $100,000 and I get $80,000 after taxes. I then take that $80K and purchase products. The price of these products contain @ 23% embedded taxes. So I get hit on the income and FICA taxes before I get my money, and then when I spend it I pay the embedded taxes.
With the FairTax my salary is $80,000 and no income or FICA taxes are taken out. When I spend the money I pay a 23% NRST.
Seems a better deal to me.
What is there, some government agent there to grab it out of the "individual's" hand?
Is there a government agent there to grab it out of your hand today when you make a purchase and pay sales tax? No? Well then I guess the NRST would be collected the same way that sales taxes are collected today.
Fair Tax is spin and will only see the life if it can be used to screw the public in new ways.
It hoses all those who have Roth Ira or have set up tax exempt planning.
IOW no thanks unless current estate and financial planning is factored in.
from watching c-span this NRST aka fair tax will also tax SERVICES which are not taxed now.
Thus Dr. Services, Legal Services, and any other service will be taxed which was not taxed before.
And today that drug dealer sells $10,000 worth of drugs and thus is liable for income and FICA taxes but doesn't pay a penny.
You want to get in to sematics about who pays it and claim it is the buyer. Under the fairtax, it is the seller who pays it.
The buyer pays ALL taxes. While yes, legally the retailer "pays" it and submits it to the government, you know, I know, everyone knows (or should know) that the one who really "pays" it is the consumer.
I have to convince my customer that my goods are worth $100 eventhough I only get to keep $77. A drug dealer or prostitute doesn't. They cheat the fairtax system, period.
As do your competitors. Do the drug dealers and prostitutes cheat the income tax system?
Please explain to me the real world, actual difference to you the consumer when you take make a $100 purchase today with 23% embedded taxes in it and under the FairTax take money from your Roth and make a $100 purchase with a 23% NRST?
HA! You think when you hire a plumber he hasn't factored his taxes into his hourly rate?
Who will follow the plumber around to make sure he is properly collecting and remitting the FairTax?
Who follows him around today to make sure when you pay him in cash he properly accounts for it and pays income and FICA taxes? Or when you write a check to him in his name instead of to a corporate name?
I thought the purpose of the FairTax was to improve collections with a minimum of government intrusion, not be just as bad as...
I thought the FairTax was to remove the massive government intrusion into every Americans personal finance while removing the hidious income tax and payroll taxes and shrink the IRS down to a much much smaller size.
Services presently add their payroll taxes and income taxes, personal and business to their cost structure, as well as those passed on from their suppliers and contractors.
When we pay for services we are paying these embedded taxes but they are not listed or broken down, they are not visible to us.
The FairTax ***replaces*** these taxes that we do not presently see.
So when you say the NRST will tax services which are not taxed now, you are mistating it.
The correct statement is:
“... from watching c-span this NRST aka fair tax will also tax SERVICES which are not taxed EXPLICITLY now.”
But keep in mind the FairTax only applies to the consumer, not the business itself. For example, a builder will not pay the NRST to his lumber supplier, the lumber supplier will not pay an NRST to the lumber transport provider or the lumber mill, etc.
The FairTax rolls all the federal embedded taxes up into one retail level tax. It does not relieve anyone from having to pay taxes, it merely changes the process of tax collection, to make it more efficient, less intrusive, less prone to abuse or manipulation. It also enables American manufacturing to be more competitive overseas where there is no NRST.
The only shock imposed by the FairTax is that it will make hidden federal taxation visible to the consumer for the first time since 1913. Even when price stability is established and the amount of purchases are the same, the consumer will see federal taxation at every purchase. This will be a reoccurring reminder to the electorate of the level of federal taxation.
again the fair tax SCREWS the service industry.
It turns small companies into tax collectors.
Thanks but your points make me even more certain I do now want the NATIONAL SALES TAX (aka Fair Tax scam) anywhere near my business.
The BUSINESS is going to have to hold this money, the business will have to pay this money out to the government.
This is no different than stores that have to collect sales taxes, or gas stations which has to deposit gas taxes. This is ON TOP OF LOCAL TAXES!!!!! (Lets not even discuss all the loss of internet sales to us locations. given the flight from US businesses)
MORE PAPERWORK FOR BUSINESSES?
Are these people INSANE to pay 20 MILLION DOLLARS to produce this snake oil!
I was really on the fence with this, did not pay attention but DAMN!!
It DESTROYS all previous financial planning.
It GIVES US MORE BUREACRATS intruding in our lives.
It institutionalizes “where did you buy that” taxation when you buy from taxfree havens.
It taxes the service industry.
It cripples US internet sales.
It creates a NEW ENTITLEMENT WITH THE PRE-BATE!!!! (that is the MOST BONEHEAD snake oil part)
Fair Tax= Snake Oil. There is NOTHING FAIR about this SCAM to put in a national sales tax.
THANKS for convincing me further.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.