Tax Reform Panel Picks Apart FairTax Proposal

Tax Analyists ^ | 5/12/2005

[Your Nightmare]

Members of the President's Advisory Panel on Federal Tax Reform on May 11 expressed concerns over the FairTax national retail sales tax, a plan that has emerged as an alternative with a major grass-roots push.

Panel chair Connie Mack, vice chair John B. Breaux, and other members worried the plan would be difficult to enforce, would be regressive, and would require a high rate in order to take in enough money to fund the government.

Breaux raised concerns that the proposed 23 percent (tax-inclusive) rate would not be sufficient to raise the revenue necessary to fund the government. The Joint Committee on Taxation estimated that it would take as much as a 57 percent (tax-exclusive) rate to be revenue-neutral. Further, Breaux said he thought exemptions that would be carved out to make the sales tax progressive would also complicate it.

Mack, who raised concerns similar to his fellow panelists', said he was "intrigued" by the plan. "But if it's such a great idea, why haven't other political entities around the world pursued it?" he asked.

Americans for Fair Taxation Executive Director Tom Wright emphasized that the plan emerged after "thorough academic research" and "thorough polling" The strong grass-roots push has resulted in some of the group's 600,000 members appearing at each of the panel's hearings and has inspired a large comment-writing campaign to the panel in support of the plan.

Sales tax advocates were among the 20 witnesses who gathered before the panel for a full day of testimony on tax reform proposals. Although the group has held several other hearings in Washington and around the country, the May 11 meeting was its first hearing on specific reform plans since Bush appointed the panel in January. The panel has been charged with identifying tax reform proposals that are progressive, encourage charitable giving and home purchases, and are revenue-neutral. The proposals are due by July 31.

Among the tax replacement and reform plans presented to the panel were the value added tax, consumption-based tax, and the flat tax, as well as proposals that would use the current income tax as the foundation.

Witnesses generally claimed that theirs was the fairest, simplest, most flexible, most transparent revenue-neutral proposal that would improve economic growth and savings while meeting the president's criteria of encouraging charitable giving and home buying. Witnesses presenting consumption-based plans praised their overhaul as taking millions of low-income taxpayers off the rolls, being easy to transition to on a worldwide basis, and including safeguards to prevent new loopholes that would result in increased complexity down the road.

Tax reform panel members, who agree the current tax system needs to be fixed, grilled witnesses without revealing whether they will ultimately endorse a consumption- or income-based tax or a different mixture of the two.

[Conservative til I die]

Some people, who sell "Pay No INcome Tax" kits for $49 will be out of a racket. Others (who currently evade taxes) will actually have to begin paying taxes.

I am neither of these, and I have some concerns about a FairTax. So what's my moral failing then?

[pigdog]

I think it would easy your concerns a good bit if you do some reading of hr25 which actually is a pretty easy read.

You can click on the "bill number" choice and enter "hr25" (without the quotes) here:

http://thomas.loc.gov

The "loc" in the URL means Library of Congress; an official government website. Selecting the "Printer Friendly Display" option usuallw works out well.

[pigdog]

You've just caught the Nightmare Tax fellow in another of his little nip-ups of the truth, it seems.

He just HATES that.

[groanup]

Moving to a national sales tax or flat tax system won't happen without a major fight.

You are absolutely right. And who will we be fighting? The same breed of lawyer that feasts on tort injury, corporate statism, congressional perks, huge lobbying salaries and unequal treatment for those of us not able to afford a lobbyist.

Frankly, gsg, I relish that fight. I really relish that fight.

[pigdog]

Well, actually before 1913 the idea of an income tax was prety much thought to be unconstitutional BUT ...

There was one tried in the Civil War era - 1862/63 as I recall and I've got a copy around here somewhere (kinda moth-eaten and dusty, though). It didn't last long I think because of the legal problems but it WAS passed into law and put into effect.

[groanup]

I am neither of these, and I have some concerns about a FairTax. So what's my moral failing then?

What are your concerns? What are your preferences on tax policy?

[pigdog]

But NOTHING on your Nightmare Tax??? Didn't you get your invite?

Or maybe you were merely overcommited, eh???

[pigdog]

Certainly true - you can clearly see that from these threads.

These naysayers, however, mistake how committed some who favor the FairTax might be. 'Twill be interesting.

[pigdog]

None at all, actually, and that's a healthy sign.

I'm sure it would help you - answering both your #100 and #101 - to see that the FairTax is actually pretty progressive. Any regressivity is largely alleviated by the "prebate" (Family Consumption Allowance) plus some of the other features of the bill itself.

There are several good sources of information:

http://www.fairtax.org/

http://www.fairtaxvolunteer.org/smart/faq.html

http://www.fairtaxvolunteer.org/smart/rebuttals.html

For a really good insight to the proposed law, you can read the bill itself - it is a rather quick read and is written in fairly pain English compared to the present Tax Code.

Just click on the "bill number" choice under the search box and enter "hr25" (without the quotes) here:

http://thomas.loc.gov

The "loc" is Library of Congres - this is an official government website. I usually click on :Printer Freiendly Display" in the resulting window for the bill.

I'm sure you'll have other questions after your reading so just post them on the thread and someone will answer them. Keep in mind, please, that there are a number of vehement FairTax opponents (or status quo defenders) such as Willie Green, Your Nightmare, lewislynn, and even others so please keep that in mind when judging their posts.

A number of us are enthusiastic proponents of the FairTax
and like to help others learn about it. If you should view the comments to the President's Tax Panel you will note that the FairTax (hr25, s25) has more favorable comment activity than any other.

[Principled]

I too have concerns about the Fair Tax. I too have moral failings. I don't know what your moral failings is/are.

Why would you think someone on an internet board would know this?

[Principled]

Happens all the time.

[Conservative til I die]

I too have moral failings. I don't know what your moral failings is/are. Why would you think someone on an internet board would know this?

I was being slightly sarcastic, as it seemed a couple pro-FairTax folk here were being a bit paranoid toward those who aren't (yet).

[numberonepal]

Are you sure you pinged the right person?

[Your Nightmare]

You've just caught the Nightmare Tax fellow in another of his little nip-ups of the truth, it seems.

Except he hasn't been able to tell me in which post I "fabricated" something.

Just like you, unPrincipled makes a lot of claims he can't back up.

[Principled]

It's easy for everyone to see you misquoted Conservative Goddess. Nobody needs post numbers to see that. If you want to pretend it didn't happen because I won't spend my time posting links to it, fine - you do that all the time and I expected you to claim such.

Again and again, you get caught making stuff up.

Remember the quote which you postion portions of that said in part, "...the Fair Tax rate would have to be 20-25% higher to be revenue neutral..."? Then we find the paper you're quoting and you left out a part of the quote that makes all the difference...

That paper was saying the rate had to be 20-25% higher compared to a situation with no taxes.

As with the other misquotes, when taken in its entirety it buttresses the position of the Fair Tax suppporters.

I'm not the only one who's tired of you misquoting and misrepresenting.

No I bet you're gonna ask for post numbers! He he.... you just keep waiting for them, ok? If it gets dark, just keep waiitng, ok?

[Your Nightmare]

It's easy for everyone to see you misquoted Conservative Goddess. Nobody needs post numbers to see that.

Can't find the post, can you? So you do your usual and say "everyone knows where it is." This has happened way too many times with you for you to be able to call yourself "Principled." You should get with the Admins and see if you can change your handle.

[Your Nightmare]

Remember the quote which you postion portions of that said in part, "...the Fair Tax rate would have to be 20-25% higher to be revenue neutral..."? Then we find the paper you're quoting and you left out a part of the quote that makes all the difference...That paper was saying the rate had to be 20-25% higher compared to a situation with no taxes.

I remember y'all trying to parse the words of an economist to make it fit your needs (especially considering a tax rate 20-25% higher than no tax rate is no tax rate - 0.25 x 0% = 0%). Got a post number.

Didn't think so.

[Final Authority]

What will happen is that the President and the leadership in Congress will see the idea of a NRST as the method which they can augment the "take" of our property by phasing in, say, a 3% sales tax and still keep the income tax. Of course they will say that over time the income tax rate will decrease and the sales tax rates will increase but the IRS and the income tax will never go away because the liberals won't let them because it is the means to keep progressivity and the means to soak the "rich".

All sorts of programs will be identified for this tax to be ear-marked for such as propping up the IR in hospitals across the nation. Essentially, this tax pays for all of the criminal aliens health care. Or, it will be ear-marked for job training for jobs we no longer need or have because of our free and fair trade policies. But we will need nurses and other allied health care workers to keep all of the criminal aliens healthy so they can work the fields, clean our swimming pools, and mow our golf courses.

I love the FairTaxers, they are doing exactly what the government leadership needs, that is, they are designing a illusion or trick play to make us think the outcome will be different from reality.

[Final Authority]

IR s/b ER

[pigdog]

'Pologies - deed I did, I think!

Oh, well, read it again anyway ... I always am finding new things to like as I read it again.