ANOTHER UNINFORMED FAIRTAX CRITIC

Nelz Nuze ^ | May 6, 2009 | Neal Boortz

[Turret Gunner A20]

... and this time it's none other than Dave Ramsey. The FairTax is a bold proposal. It is only natural that people are going to try to criticize it. Is it too much to ask for these people to do at least a modicum of research so that they at least appear to know what they're talking about?

This time the culprit is Dave Ramsey. I like the guy, and I like his approach. His sermons on living debt free are right on, and no doubt he's helped millions of people to improve their financial. OK .. mighty fine. But now he's taken it upon himself to opine that the FairTax simply isn't, in his words, "fair."

Let's take this quote from Ramsey's article: "People would only pay taxes on items they buy, except for food, basic clothing and other kinds of necessities." Most of the FairTax supporters know that this is just flat-out wrong. The explanation is incomplete.

If Ramsey really was informed on the FairTax he would know that you pay taxes only on items that you buy at the retail level, and that food, basic clothing and other kinds of necessities are included. Ramsey would also know about the prebate. He would know that every household in this country --- that is, every legal household --- would get a credit or check from the Treasury Department every single month equal to the FairTax they would be expected to pay on the basic necessities of life during the following month. This FairTax prebate is so essential to the FairTax plan that to ignore it, or to be unaware of it entirely, is worse than careless.

Ramsey also writes of the FairTax "This means it's more of a burden on poor people, because they would pay a higher percentage of their overall income."

Sorry, wrong. The poor, poor pitiful poor would pay virtually nothing - zero percent of their income - to the federal government. [ALERT! Brilliant thought follows!] To pay any taxes at all to the feds the poor would have to spend above the poverty level. If they're doing that ... they're not poor. Pretty easy, isn't it?

I wonder why Dave Ramsey doesn't get it? Is there a chance he just shot from the hip here without doing any real research? The FairTax deserves better than this flippant, uninformed treatment.

Dave Ramsey could be a good proponent of the FairTax. He's very bright, and he would recognize the beauty of this plan if he just would take the time to actually study it. Knowing what you're talking about .... Is that too much to ask?

Weird, this audio clip on YouTube seems to show Ramsey supporting the FairTax. Huh. Maybe he's lost changed his mind since that was recorded.

[Principled]

You already pay that much. Making it visible makes you mad. That’s the idea.

[Principled]

Ramsey isn't educated on the fairtax, scamel.

[JRochelle]

Do not.

You are so misinformed.

[taxcontrol]

The true is the problem is not the tax collection system. There are several of those flat tax / fair tax / income tax / direct apportionment, etc

The PROBLEM is spending and until that gets put under control, it wont matter what type of tax collection system is place.

[PubliusMM]

I am a FairTax supporter. However, I don’t totally agree with the plan as it is currently cast.
I agree that the prebate is a bad idea, and one element that could lead future legislators to attempts at ‘tweaking’. That’s where the current income tax model started going way wrong, years ago, and now leaves us with over 60,000 pages of legalese that likely make a tax cheat out of all of us in one way or another.
In addition, I believe the proposed rate is too high.
Further, I don’t believe the ‘double tax’ argument is a show stopper. I’m sure we can find a way around this concern.
The long and short of it: Taxing INCOME is the wrong way to fund government. Taxing CONSUMPTION is fair, equitable, and less prone to fraud.

And, lastly, I firmly believe that ANY tax reform without SPENDING reform is a recipe for disaster.

We must rein in the Federal government and return it to its Constitutional limitations.

[Turret Gunner A20]

Fairtax bad

Flattax good

Please give us your comparison.

[Turret Gunner A20]

By the way x -- it'a spelled really.

[Man50D]

1. Prebate is socialist

I suggest you read Karl Marx's Communist Manifesto. One plank is a heavy progressive tax on income. Communists support any tax on productivity as it will discourage people from working, making them depend on the government and thereby empower socialism. The prebate only covers taxes on necessities up to the cost of living. The amount will be far too small for a household to sustain itself on the prebate alone. At least one member in the household will still have to work just as they do currently.

2. pre-earned/saved money is re-taxed when plan is implemented

Savings will no longer be taxed under The Fair Tax as it is with the income tax since any tax on income will be eliminated. That will more than offset what has been taxed.

3. tax rate is way too high

Based on what data do you make such an otherwise vague and empty claim? The tax burden with the income tax is far greater than the what the rate will be for The Fair Tax. Most people fall into the 15% income tax bracket. Add in the 7.65% payroll tax along with the same rate for the employer matching. Then factor the nearly 23% embedded taxes in every thing we buy due corporate income taxes being passed onto the consumer at each stage of production and the current rate is over 53%! That will be replaced with the 23% consumption tax rate. I don't know about you but I'll take a 30% reduction any day!

[Principled]

What is your net effective federal tax rate? Do you know?

[toast]

I don’t get the prebate.

Fair tax is supposed to relieve us from the need for the IRS and reporting our income to the government.

How are they going to determine what the prebate should be if they don’t know what our income is?

[Principled]

How are they going to determine what the prebate should be if they don’t know what our income is?

They don't base it on income.

It's based on poverty level spending.

[taxcontrol]

Turret, you and I have discussed this on other posts, no need to consume more bandwidth rehashing the same points.

[TheOldLady]

"2. pre-earned/saved money is re-taxed when plan is implemented"

"Savings will no longer be taxed under The Fair Tax as it is with the income tax since any tax on income will be eliminated. That will more than offset what has been taxed."

I think he means that when you have savings now, that money, and the interest on that money has been heavily taxed. So if the fair tax is implemented, and you spend any of your savings, it will be taxed again with the "fair tax." That's a really serious problem. You would lose a huge chunk of money that has already been taxed to the hilt.

[Man50D]

Fairtax bad

Flattax good

The Fair Tax is a flat tax but on consumption instead of productivity with only one rate charged at the point of sale. A flat tax on income is a plank in the Communist Manifesto. To quote "A heavy progressive or graduated income tax".. Marx and Engels understood taxing productivity discourages people from working and forces them to turn to the state for dependence.

This country already tried a flat tax on income and it has turned into the oppressive system we have today. People were taxed 1% on their first $20,000 of income and 7% on income over $500,000 when the 16th Amendment was enacted in 1913. It was essentially a flat tax since so few people earned more than $500,000 in 1913. Another flat tax on income will morph back into the same mutli tiered increasingly complex, indecipherable monstrosity we have today only faster thanks to the thousands of lobbyists that didn't exist in 1913.

[Principled]

This is the problem the nrst faces IMO. It is mitigated by some things but this is the major obstacle. They gotta figure a way to avoid this. jmho

[JRochelle]

I don't know. But I do know we got most of what we paid in income taxes back last year.

And I do know that should I buy a 200,000 home, and the sales tax was 23%, I would have to get a loan for that. And then pay interest on that loan. That would suck. My property taxes are about 1%.

So the fair tax sucks.

[Man50D]

The "prebates" in the Fair Tax is a recipe for disaster and makes absolutely no sense

Care to elaborate how lowering the tax rate by ensuring people don't pay taxes on necessities up to the poverty level will be a disaster?

[Turret Gunner A20]

Once you’ve completely convinced yourself you can fly, throwing yourself off a cliff is “perfectly logical”.

ditto the fairtax.

Hey, that's real cutesy -- wrong though it is -- where did you plagarize it from?

[Man50D]

How are they going to determine what the prebate should be if they don’t know what our income is?

Per the Fair Tax Act:

(d) Annual Registration- In order to receive the family consumption allowance provided by section 301, a qualified family must register with the sales tax administering authority in a form prescribed by the Secretary. The annual registration form shall provide--