Posted on 01/20/2008 6:29:07 AM PST by Man50D
During an election season, one of the first losers is the truth. The current misinformation campaign against the FairTax has been particularly virulent. Last month the FairTax was being panned by some columnists as a "crackpot scheme," even though it could be collected exactly the same way as its close cousin, the value-added tax, which is the most successful tax in the world. This month the FairTax is being vilified by various columnists as a tax increase for the middle class, even though it would provide a substantial tax cut for two-parent middle class families. Specifically, in a recent column, George Will asked, "Do you want a president (Mike Huckabee, proponent of a national sales tax of at least 30 percent) pledged to radically increase the proportion of federal taxes paid by the middle class?" Similarly, Time magazine's business and economics columnist Justin Fox wrote a blog piece entitled, "The FairTax and its big break for the $200,000-plus crowd."
The FairTax is a national sales tax that would replace the income taxes, the payroll taxes, and the gift and inheritance taxes. It would be a 30 percent sales tax on retail purchases. Since 30 cents is 23 percent of $1.30 (the amount you would pay on a $1 item), a 30 percent FairTax would cost you about 23 percent of your consumption. To help you pay the tax, you would get a prebate check or a debit card credit at the beginning of each month equivalent to the amount you would pay when buying necessities. In 2007, that amount would have been based upon $10,210 spending per adult and $3,480 spending per child.
(Excerpt) Read more at worldnetdaily.com ...
“I could say all you fairtaxers are nothing but scientologists shilling for AFFT...”
You could say that and you and your SQL buddies have said that on multiple occasions. That doesn’t make it true.
“The prebate in and of itself would create a bureauracy similar in scope to the IRS.”
I’m sure you have support for that wild assertion. Care to cite a study on that?
See what I mean about the SQLs making exaggerated objections and not having any idea how we figure out they have hidden agendas?
Believe it or not, the US is considered a tax haven now.
“....both can easily be marxist.”
Then why was only an income tax specified in “The Communist Manifesto”? Are you saying that you know more about Marxism than Karl Marx?
“Many FairTax supporters are wildly enthusiastic about the plan, and some have certainly made fantastic claims in its name that have no economic merit.”
That is certainly a problem when you have a proposal which is supported by tens (or hundreds) of thousands of people, most of whom are not professional economists. Of course, many of the FT critics don’t have that problem, since they support proposals whose supporters can be counted on the fingers of one hand.
“2) annual tuition payments made for education....”
“How is this NOT an exemption of a good or service from the FT?”
This is a consumption tax. Education is not a consummable item; it is an investment in human capital.
I performed my own $22 million study that indicated that there are more people getting prebates than file tax returns. As there is all kinds of reporting requirements to get and keep prebates flowing, it would require a bureaucracy of similar size to administer and have its own Congressional lobbyists, public relations departments etc..
After reading HNR25, I see that the SSA will have to be enlarged to handle the load.
So is getting breast enhancements and dental work.
“Also note that the current IT, FICA & Medicare legislation was built in a day. The FT code page count is likely to be expanded greatly over the years. That’s what we have a full time (cough, cough) Congress for!”
The FT probably will be expanded prior to its passage; however, its sponsors will fight to minimize that. The plan, for example, is to pass it out of Ways and Means as a closed bill; no amendments may be offered on the floor of the house.
Treasury will, no doubt, have to issue clarifications prior to implementation. I suspect the entire “system” will be more than the current bill language of less than 150 pages. It will probably end up being between 500 and 1,000 pages (including Treasury’s clarifications) by the time the system is ready to roll out.
CCH currently counts the entire tax system at more than 66,000 pages - and that was the number at the end of 06. I would say a simplification on the order of magnitude of more than 98.5% is worth doing.
Edumacation is so much a consumer item, it isn’t funny. Must have been all those academic studies.
“Yes, but it’s smaller at the point of sale since it’s collected at each stage along the way. The Fair Tax is a one-time tax at the point of sale and is therefore large.”
A VAT taxes consumption, just as the FT does. Because it taxes at each step in the production chain, it does break up collection into smaller increments, as you stated. It does so at the cost of greater complexity and higher transaction volumes, however.
Another key difference is that most VATs are hidden from consumers at the levels prior to the final one. IOW, if there are 6 levels in the production chain, the end using consumer only sees (in many cases) only the taxes at the final level.
Therefore, the FT has advantages of simplicity and transparency vis a vis a VAT.
Both do have the major advantages over the income tax of being border adjustable. In a world where globalization is the biggest transformational change taking place, that is a very significant distinguishing characteristic.
Books and text books aren't consummable either.
This is pure sophistry.
The FT legislation will probably be amended/expanded after its passage. Likely annually. Since there needs to be close cooperation withn the States, there is likely quite a bit to be done by the 50 States (+ DC, PR, and other entities) that should be counted in the total.
“I have no business plan to become a DD. It’s just an observation that the disincentives to become a DD are lower with the FT than now. Unintended consequences and all.”
It’s an observation based on a faulty assumption.
Universities have whole departments who believe that that is not only possible, it's a requirement of Marxism.
The Fair Tax is the wrong solution to the wrong question.
It’s the Spending, Stupid.
The root problem is NOT how the guvmint gets the money it uses to wield its corrupt power. The root problem is how, and how much of our money, the guvmint spends as it bribes us for our votes to keep themselves in power.
It’s the Spending, Stupid.
That is why the Fair Tax is the wrong solution to the wrong problem.
Which assumption is that?
“As there is all kinds of reporting requirements to get and keep prebates flowing....”
Typical SQL exaggeration. “all kinds of reporting requirements” consists of a simple one page form submitted periodically (probably annually). Compared to a 1040 and schedules A & E, it is child’s play.
Why aren’t you concerned about “all kinds of reporting requirements” of the current system, which are exponentially greater than the FT?
Computers take care of a quickly increasing amount of the IT filing and analysis/matching.
“The FT legislation will probably be amended/expanded after its passage.”
That concern isn’t specific to the FT; you could say that about any tax reform plan. In fact, becuase the Ft is the simplest proposal that I am aware of, it would be more of a concern with any alternative reform proposal and much much more of a concern with the current system.
Why is it that your concern over future potential amendments is limited to the FT when it would seem so much serious with the alternatives?
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