Posted on 08/16/2007 6:10:39 PM PDT by RobFromGa
Fair Tax, Foul Politics
By The Editors
Advocates of a national sales tax to replace the income tax have built an impressive grassroots army. They have given their idea an appealing, if somewhat gimmicky, name: the Fair Tax. And they have managed to get five Republican presidential candidates to suggest that they would sign a sales-tax bill if it reached their desk. Some observers credit the enthusiasm of the Fair Taxers for Gov. Mike Huckabee’s surprisingly strong showing in the Iowa straw poll. Huckabee is the candidate most committed to the Fair Tax.
Former senator Fred Thompson is, however, backing away from the idea. Fair Tax advocates have released a video in which Thompson, asked about the proposal, appears to say he would “absolutely” sign it if elected. On August 10, however, Thompson wrote those advocates a letter that said merely that the Fair Tax was a good starting point in thinking about tax reform. Mitt Romney’s campaign says that the Fair Tax has some attractive elements, but that the candidate would need to see details before making any pledges. Rudolph Giuliani has said that he does not think he would sign any such legislation.
The leading candidates are right to be wary. The tax code needs major reform to become fairer, simpler, and more efficient. The Fair Tax is one instantiation of those goals, but its political impracticality makes it fatally flawed. If conservatives force a choice between a Fair Tax and no tax reform at all, the latter is what they are likely to get.
There is widespread confusion about what the Fair Tax would entail. If you bought $100 of clothing and paid a $30 tax on it, you would probably think you had paid a 30 percent tax. The Fair Taxers say that you paid a 23 percent tax: $30 is 23 percent of the $130 you paid in total. When they say they want a 23 percent tax, that’s what they mean.
Since there would be no more income tax in this system, there would also be no more standard exemption to make sure that the basic necessities of life went untaxed. The Fair Taxers would solve this problem by sending out monthly “prebate” checks to all Americans.
The great, undeniably attractive selling point of the Fair Tax is that it would allow the country to dispense with the IRS. But the sad truth is that if the federal government is going to collect as much money as it currently does—which the Fair Taxers say their system would—its methods of tax collection will inevitably be intrusive. The real difference between the current system and this proposal is that the primary brunt of tax collection will be borne by a smaller group of people: business owners.
Over time, then, enforcement measures could become more draconian than they are today: especially since a massive retail sales tax would create a massive incentive to evade it. That’s why every country that has ever tried to impose retail sales taxes this high has quickly moved to a Value Added Tax levied at every stage of production. Consumers rarely see or keep track of these taxes, and they seem to be fairly easy for governments to raise.
These pitfalls are beside the point, however, since a national sales tax is not going to become law. No presidential candidate could be elected on a sales-tax platform, and no Congress would enact one if he were.
A candidate who ran on the national sales tax would be able to run on nothing else. He would have to spend all of his time defending the idea. Off the top of our heads, we can think of three devastating lines of attack an opponent could use in television ads. One ad could argue that getting rid of the mortgage deduction would send home prices into free fall (something that voters are going to find especially worrisome now). Another could ask why senior citizens, having paid taxes all their lives as they made income, should have to spend their retirements paying taxes on everything they use that money to buy. A third could simply ask voters if they look forward to paying a brand new tax.
There are answers to each attack. But no Republican candidate, especially in the daunting environment of 2008, is going to want to have to make them. Republicans cannot win a national election without the tax issue. If they ran on the national sales tax, Republicans would be taking one of their natural strengths and making it into a liability. Which is why we expect them to say nice things about the Fair Taxers’ passion, and move on.
Nor could they imagine all the vote-buying pork-barrel spending that is done, or the levels and levels of agencies and bureaucracies that we have allowed to be built up.
That is precisely WHY we need the FairTax!
When EVERYONE is paying, and feeling the pain of doing so, only then will we begin to reduce the size and scope of the government!
I thought the prebate made sure some people didn't feel the pain?
Most FairTaxers do eventually resort to ad hominem attacks on the supposedly evil and/or selfish motives of those who oppose their illogical and fraudulent plan.
My only motive is that I love this country and I think it is a great country with an awesome and resilient economy that is the best the world has ever known.
And I have travelled extensively and seen Europe where they have income taxes, and 19% VAT on all purchases, and employer paid "contributions" to all their social programs that end up totalling over half of the persons income. And I don't want us to end up with a FairTax and an income tax which is the only logical conclusion as to what will happen with a failed FairTax collection scheme, as would almost surely happen.
So stuff your talk of my evil motives or personal profits from the present system. As a small business owner I pay a ton of taxes.
that was the response I expected - get tromped in a debate and plead ignorance.
NO! Everyone would pay the tax! EVERYONE!
And the poor people would get them refunded.
Go to Mexico, do some shopping, then come back and tell me how much tax you paid, and to whom. You cant. Welcome to the NRST.
Wrong again! Every legal resident who wants to gets them refunded up to the poverty level!
Is your attention span so short that you have no idea what you have previously posted?
Let’s review: your first post to me was a reply to my statement that a couple decades ago, something very close to a flat tax was passed, and it was quickly corrupted. Your reply had no valid content; it was a disingenuous snipe pretending that I was referring to the original income tax, and not the 1986 reform.
I gave you the benefit of the doubt, and clarified that I was referring to the 1986 act, passed just about twenty years ago. You then replied again with some incoherent nonsense about seagull poop.
And now you appear to have the delusion that not only did you at some point respond in a relevant fashion to anything I said, but that there was an actual debate, which you won. Now, I’m willing to help the confused, but there needs to be some effort on your part to post things that have at least tangential relevance both to the topic of the thread and to to the post to which you are replying. You’ve already lost the plot on this thread, but you’re welcome to try again another time.
Mexico doesn’t have anything like the Fairtax but you damned well know that already!
Yes, so the effective rate for people at the poverty level is zero. So how do they feel the pain of paying taxes?
And I believe that to the extent our future is being destroyed for our children and grandchildren, it is because of the creeping socialism ON THE SPENDING SIDE, not on the collection side.
As I have said before, I would likely agree with most FairTaxers on almost any other subject, I just think you have been sold a bill of goods with the FairTax.
That fact WILL make a huge difference in reducing the size and scope of government.
But government is not costing them anything. They feel no pain.
Taxpayers see what government costs them, every time they file. That hasn't reduced the size or scope of government.
Under the FairTax, if the tax rate is increased, the prebates go up automatically. So the “poor” would see a rise in tax rates as More Free Money every month.
I have a residence in Lapaz, BCS, Mexico, and stay there on a regular basis - it proves you have no idea what you're talking about... but we knew that already...
Mexico has exactly what the unfairtax would become if (god forbid) it ever became law.
http://www.mexconnect.com/business/mex2000taxesinmexico.html
It is ALWAYS the same with conservatives! We all want to get to the same place but end up going nowhere because we spend all our time arguing over which vehicle to ride in getting there!
Mexico has nothing like the FairTax and you know it!
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