“Pass an amendment abolishing the income tax first. Then we can talk about Fair Tax.”
Bingo. The so-called Fair Tax is just another name for a national sales tax. If you don’t rip out the income tax by it’s roots, you’re likely to end up with both an income tax AND a national sales tax.
“The so-called Fair Tax is just another name for a national sales tax.”
Close. The “so-called FairTax” is the name of a SPECIFIC sales tax proposal which is laid out in bill language and is available for anyone to see on the internet. It is the most thoroughly researched tax reform proposal ever presented to congress and addresses the broad range of adverse economic trends that the current system exacerbates more comprehensively and effectively than any other alternative.
Compare that to “the so-called flat tax”, which is the preferred form of tax reform of the Republican establishment. If you ask 5 flat taxers what version of flat tax they support, you are quite likely to get 5 different answers, or some sort of evasive answer, such as “any”. None of those answers will correspond to HR 1040, which was the only flat tax bill in the house last session. In actuality, there is no such thing as “the flat tax” in the sense of a single proposal that enjoys the support of even a majority of those who call themselves flat taxers. A flat INCOME tax is a form of taxation, rather than a specific proposal, just as a sales tax, VAT, excise, etc. is.
For this reason, comparing the FairTax to “the flat tax” is a bit of an apples to oranges proposition. The various flat tax proposals (other than hr 1040) typically do not have enough support to have been drafted into bills* and I have never seen an economic study done on one. Hr 1040 isn’t even revenue neutral, which is a minimum requirement for a tax reform proposal to be taken seriously in congress. Many flat taxers don’t even know that it is a flat tax OPTION, meaning that it does not get rid of a single word of the current mess that no one understands.
Little wonder, then, that the Republican establishment keeps introducing “new and improved” versions of “the flat tax” every few months or so in an effort to find one that resonates with voters. I think that Laffer alone has touted two different flat tax versions within the past year. All of those misguided efforts to date have fallen flat (pardon the pun).
“The fight for fundamental tax reform is such a difficult uphill battle that requires so much energy and political capital, why would you go through all that and come up with the wrong answer?”
Dick Armey
Former House Majority Leader
Current Lobbyist
Indeed, FairTaxers agree with Mr. Armey’s statement - we just don’t agree with what constitutes “the wrong answer”. Why go through the effort to pass tax reform and not address the trade deficit and the ongoing erosion of our manufacturing sector, the crisis in SS & Medicare, etc, etc, etc?
* In addition to HR 1040, there were a couple of “flat tax” bills in the senate, none of which have more than a couple of co-sponsors and none of which have companion bills in the house where tax reform legislation is supposed to originate in our form of government.