RANT: The “Fair Tax” debate distracts us from our problems!

FROM MY FAVORITE LUDDITE’S COMMENT ABOUT THE FAIR TAX

http://online.wsj.com/article/SB119863013677849835.html?mod=opinion_main_commentaries

COMMENTARY
FairTax Facts
By LEO LINBECK
December 26, 2007; Page A10

*** begin quote ***

Much has been written lately about the FairTax, the proposal to replace the current federal income tax with a national retail sales tax. Unfortunately, much of it is wrong.

This country needs a spirited and wide-ranging debate about fundamental tax reform. But that debate is not advanced by misimpressions and distortions of the FairTax.

*** end quote ***

Let’s take on a few points.

>What emerged from this research is that a national retail sales tax
> is a preferred method of taxation
> among most Americans surveyed.

Sorry, but no one asked me! This ASSUMES that there is a moral basis for FORCING people to pay a “tax”. It’s theft. Pure and simple.

>Another is that the tax would have significant benefits for the nation’s economy.

It’s just a different way of robbing people.

>Why? Because it eliminates income taxes and payroll taxes (for Social Security and Medicare)

Does it “eliminate” them?

Assume for a minute that we overlook the moral argument about theft!

Unless the repeal of the Sixteenth precedes the implantation of the “Fair Tax”, you can rest assured that we will have every manner of taxation available.

>the FairTax would eliminate the distorting effect that
>income and payroll taxes have on the economy.

It would create it’s own set of unintended consequences.

For example, I have already been “taxed” and “inflated” on my “savings and investments”. Now, I get taxed again when I spend this money. What happens when I die? I get taxed again. :-)

>Research on the price of consumer goods reveals that up to 20% of all
>prices today represent hidden income
>taxes and payroll taxes. Once these taxes are repealed and replaced
> with the FairTax, it is likely that market
>pressure would force retail prices to fall.

All this does is rearrange the deck chairs on the Titanic.

>Eliminating embedded taxes will also do something else —
> it will remove significant price disadvantages

In your dreams.

>Another benefit of the FairTax is that, unlike other sales taxes, it would not hit the poorest Americans the
>hardest. The FairTax proposal calls for sending every American a “prebate” check to offset the cost of the

So like Social Security, we will now put EVERY American on the dole.

>The FairTax rate is 23% on retail sales when calculated “inclusively,” as are income tax rates.

The tax is buried in the price of the goods being sold. Let’s at least have the stones to have it printed on the grocery receipt.

>It will, in a fairer, more transparent and less-expensive way, raise the same amount of money the federal >government now collects through the income and payroll taxes.

But, the biggest tax is inflation and it doesn’t do anything about that.

>Significantly, the FairTax eliminates all loopholes, gimmicks, exemptions and deductions from the federal tax

Yeah, right, how long will that last?

>Politically, the FairTax will only become law once enough citizens demand that it be enacted

Since when does it matter what the citizens demand. The gang in Washington is in power, regardless of which of the duopoly is the titular head, based on the voting minority. It’s a waste of time to “demand” anything.

>It is debatable whether a modern, citizen-led tax revolution is possible.

Carla Howell is leading a Income tax repeal referendum in Taxzachussetts.

>But the growing popularity (even among presidential candidates) of the FairTax suggests that

They see that they can keep the scam going and get more people to buy into the delusion that it does anything at all to CUT SPENDING!

>another Boston Tea Party may be at hand.

One can only hope.

The American Experiment ended with the War of Northern Aggression in the 1860’s. That started as a tax fight. And, the USA has been in a downward spiral ever since. Like plane heading to the ground nose first, it may well be too late to pull out. (I hope not.)

The problem I have with the whole Fair Tax movement is that it distracts us from the real problems:

0. Honest money (i.e., the banking cartel’s “federal reserve” is inflating us into poverty);

1. The dole (The non-productive people are voting themselves benefits paid for by the productive people!);

2. The gooferment public education system is brainwashing all the future voters into the gooferments paradigms (when the nazis and the communists did it we were horrified; when our own gooferment does it, that’s fine.)

3. The gooferment is imprisoning us (i.e., the “war” on drugs – poverty – smoking) and killing those who resist (Ruby Ridge – Waco);

4. We can’t afford to be the “world’s policeman” (i.e.,Repatriate the troops home);

5. We can’t afford ANY and ALL gooferments with their unintended consequences.

It’ll be the biggest crash in the history of mankind.

# # # # #

10 Responses to RANT: The “Fair Tax” debate distracts us from our problems!

  1. Annoyed says:

    How come the people against the FairTax never understand it? If you read about the FairTax you’ll prove yourself wrong on most points…

  2. reinkefj says:

    >How come everyone who knocks the Fair Tax concept always complains about paying 23% more as a sales tax?

    Because when they don’t repeal the 16th, you’ll be paying BOTH!

    >Don’t you get it?

    I get it all to well. I am robbed in all sorts of ways everyday.

    Taxes are theft. I have to “pay” for services I can’t use (like educating children of people who could pay to educate their own children). I have to pay for services I don’t want (like BATF, Agriculture, FDA, FAA, TSA, etc. etc.)! AND, even if I might actually be able to use a “service” — like the Post Office — it poor and overpriced.

    Screw the tax and how the thieves steal it! Focus on the spending and what they spend it on.

    The Fair Tax, and most “reforms”, do nothing about the biggest tax of all (monetary) inflation!

    >You WILL NOT be paying that much more for a product….products currently have about 20-22% of taxes already included as a cost, and those will no longer exist.

    So you — and other proponents — claim. BUT, we know that the devil is ALWAYS in the details.

    >And…the big kicker, if you end up having to pay 1-3% more (the 23% sales tax minus the 20-22% of taxes in the cost of the product), so what!!!!

    The big so what is what about “old money”. My Mom paid her taxes through the nose over the years. Now she’s in retirement. And you’re going to make her pay a 23% sales tax on what ever she buys. It’s not fair to people who have already paid the taxes.

    >You will have thousands in your pocket that you never had to pay Uncle Sam, all those income taxes and entitlement taxes!!

    No sorry. It’s designed to be revenue neutral to the gooferment; not to the tax payers.

    And, you are MISSING the indirect effects.

    My other taxes at the state and local level will rise due to the National Sales Tax.

    And, it’s disruptive. It represents a fiscal discontinuity that invalidates all the other planning done and options previously given.

    The mortgage tax deduction is ripped out of peoples plans. IRAs, 401ks, and 403bs are screwed. Anyone, who did a Roth conversion, would have paid taxes THREE times — one to earn the money, once to do the conversion, and once under the new regime.

    > Open the minds my friend, you are not giving it a ‘FAIR’ shot.

    No, friend, be more suspicious when you’re being sold a pig in poke!

    It’s a disaster.

    :-(

  3. John F says:

    How come everyone who knocks the Fair Tax concept always complains about paying 23% more as a sales tax? Don’t you get it? You WILL NOT be paying that much more for a product….products currently have about 20-22% of taxes alrady included as a cost, and those will no longer exist. Merchants will have to lower their prices and remove those costs from the price of the item, in order to stay competitive with those that do. And…the big kicker, if you end up having to pay 1-3% more (the 23% sales tax minus the 20-22% of taxes in the cost of the product), so what!!!! You will have thousands in your pocket that you never had to pay Uncle Sam, all those income taxes and entitlement taxes!! Open the minds my friend, you are not giving it a ‘FAIR’ shot.

  4. reinkefj says:

    >If you want instead to rid ourselves of the IRS and obtain all the advantages of the (un)Fair Tax with none of the negatives
    >consider the Automated Payment Transaction Tax concept.

    Well, sorry, Bill, but I don’t like that tax either.

    :-)

    Never met a tax I did like.

    I have the same moral objection, and one tactical objection to the proposal.

    Moral one is always the same. Why do I have to pay taxes? From whence was this obligation created? I didn’t agree to it. I don’t agree to it. And, I won’t agree to it. By just being born on Master (Bush, Clinton, or ) plantation doesn’t obligate me in any way. Don’t tell me I have to leave; you leave. Just because you hold the guns and can force me to pay, let’s not pretend it’s anything else. At least when the Kings ruled the world, there was no pretense. That’s why there was the various revolutions. Freedom. I think we have to figure out how everything is a voluntary market transaction. (It certainly will take some paradigm shifting and meme improvements!) But, you have to love how a market can satisfy EVERYONE to share equally the unhappiness of not having everything you want. Markets also reward cooperation; gooferments compel. The beneficial effects of everyone’s greed / need for those certificates of appreciation (money) ensure that everyone gets a slice of the American Dream. Only when the gooferment gets involved do we seem to revert to the caveman mentality where Ugg muggs Ogg for his eggs.

    On a tactical basis, the tax being extracted by the APT is not visible enough to the people paying it. Other than at a very gross level. I can see the federal budget and I KNOW that has been stolen from the productive part of society. I think we need to go back to where I have to write a very BIG check to pay for gooferment. And, we need to go back to doing it say one week before the elections. (It’s no secret why election day and tax day are as far apart as possible!)

    APT might minimize the cost of collection, but morally taxation is theft and tactically, like EZPASS the toll transponder, it might make it just too easy to pay.

    When King John had to send out the Sherriff of Nottingham to collect his taxes, at least there was a possibility of Robin Hood stealing them back for us.

    Only the gooferment by force can make us pay for services we don’t want, can’t use, a substandard, dangerous, and at best overpriced.

    Sorry, but I appreciate the dialogue,
    fjohn

  5. reinkefj says:

    >America should adopt a tax system based on net worth for the following reasons.

    No taxes are theft. No one agreed to pay for the gooferment’s services, which are unwanted, unasked for, unused, unusable, and over-priced. I have yet to hear a moral basis for being forced to pay. It’s just a gang dressed in fancy uniforms with flags. Sorry, no to ALL taxes period. fjohn

  6. reinkefj says:

    >The consumption tax is not fair. When a company has a dispute with a customer, they may find themselves in a court that only
    >the customer has funded and to add insult to injury, the customer has to pay his lawyer 23 % more than the company does.

    I thought this was a humorous (but could be truly) unanticipated unintended consequence!

  7. Bill Hermann says:

    Ferdinand,

    Very interesting blog. I agree with you the (un)Fair Tax will never fly — it simply provides covers for politicians on this issue. After all their goal is to sip wine in the White House and appoint all their buddies to high positions for which they are in no way qualified. Then after the term is over they are set for life. Who wants to face real issues – just defuse them and keep the party going.

    Well, you and Bruce probably want to really solve some things since I don’t think your running for President ….. yet. Bruce is rigth to look for a larger tax base BUT using NET worth will require the IRS to be that much more intrusive to check if your definition of net worth is the same as theirs. Don’t want to go there.

    If you want instead to rid ourselves of the IRS and obtain all the advantages of the (un)Fair Tax with none of the negatives consider the Automated Payment Transaction Tax concept. I am the national project director and after supporting the Fair Tax for several years I found this to be far superior. Anxious to hear what you think – review at http://www.apttax.com and email me at driector@apttax.com.

    Happy New Year

  8. Bruce Barnes says:

    Reasons for a Net Worth Tax System

    America should adopt a tax system based on net worth for the following reasons.

    A tax on net worth has the largest tax base. The net worth of this country is larger than the income system, about $9 trillion, and the consumption system, less than the gross domestic product, (GDP) about $14 trillion. The individual assets of $55 trillion and business assets of about $60 trillion is over 8 times larger than the consumption system.
    Income is not a measure of being rich, net worth is. George Will has said that the wealthiest 1-percent of households have more assets than the lowest 90%, $16 trillion. Since the total individual assets are $55 trillion. The wealthiest 10% own about 73% of the net worth in the USA. The biggest 1-percent of corporations own 80 % of the business net worth.
    Taxes should be based on ones ability to pay. A tax on net worth is the fairest tax to all. Net Worth is the measure of ones ability to pay.
    Taxes on net worth have the lowest percentage. America’s budget is about $3 trillion. A consumption system requires a sales tax of over 21%. A net worth tax would be less than 3%.
    A tax on net worth is the most versatile. Besides a flat tax of 3% for individuals and businesses, there are other possibilities. Some people say we have double taxation. We could tax only people at 6% or only businesses at 6%. Since businesses can’t vote and they pass there cost on to their customers, that is the best way to go. Next is the progressive path. The first $1 million could be tax-free and increase by 0.1 % for each $1 million up to 5% after $50 million.
    A tax on net worth is the simplest to file. Take what you own minus what you owe. Our present tax system is 63,000 pages of loopholes. Example: a person leases a car. The lessee does not own the car, so no tax. The leasing company owns the $25,000 car, but has a $10,000 loan. The company is taxed on $15,000. ($25,000 minus $10,000) The loan entity has $10,000 of assets so it pays tax on $10,000.
    A tax on net worth is the easiest to enforce. Since this is a property rights country, all assets are traceable. Taxing only the most prosperous 10 % of businesses and people is the most efficient tax system.
    Like the consumption tax, all of our present taxes could be replaced, Individual income tax, corporation income tax, employment taxes, gift tax, and estate tax. Plus the excise tax.
    Guarantees funding for all budget items like social security and Medicare by eliminating use taxes. User fees or tolls are another way for the wealthy and businesses to avoid paying taxes. Budget items come out of general funds.
    A tax on net worth promotes transparency. When a company shows an annual report with a book value of $1 billion and only $10 million in taxes, they aren’t paying their full taxes.
    A tax on net worth promotes free trade. Money, inventory, buildings, etc. are all assets so everyone can move assets around for the best effect.
    Eliminate inflation. Dr. Milton Friedman said to end inflation, stop printing money. By increasing the tax rate 1%, the national debt of $9 trillion could be paid off in 10 years.
    We start collecting 100 percent of our earnings in every paycheck. We all get virtual raises, since payroll taxes are no longer siphoned from our checks.
    Reducing taxes on the poorest 90% will raise revenue. When people have more money to spend, they buy more goods, which means more profit for businesses and the wealthiest 10%. Money flows up, water trickles down.
    A tax on net worth promotes jobs. Employees cost companies less since the employment taxes are repealed and therefore employees become more competitive in the global market.
    A progressive tax on net worth levels the playing field. Small companies that create the most jobs become more competitive with large companies.
    A tax on net worth removes some incentive to move plants overseas. Taxes are based on assets no matter where they are located. What you own minus what you owe.

  9. Bruce Barnes says:

    “FairTax” Scorecard
    FairTax.org has a presidential and congressional scorecard that shows 5 GOP and one democratic presidential candidate would sign a fair tax bill. On the congressional side, in the house 76 republican and 4 democrats and in the senate 9 republicans support the fair tax bill. These people that support the consumption tax have not shown good judgment for the greater good of all our citizens. The fair tax is a misguided attempt to benefit business and the wealthy. This just goes to show you that you can fool some of the people all of the time but you can’t fool all of the people all of the time.

  10. Bruce Barnes says:

    The Fair Tax Act of 2007 – HR 25/S 1025
    For FY 2006, the IRS reports collections of 44.7% of Individual Income tax and 13.8% of Corporation income tax for the budget of $2.76 trillion. When employment taxes are included, individuals contribute 60 % to the budget while corporations only pay 28.5%. Income is not a measure of being rich, net worth is. Taxes should be based on ones ability to pay. Individuals have assets of $55 trillion and corporations have over $60 trillion. If corporations were paying their fair share, we would not have a budget deficit of 9%.

    The wealthiest 10 % own 80% of all stock and 73% of all individual assets. Shouldn’t the wealthiest 10 % be paying 73 % of the individual income taxes? The wealthiest 1-percent make 25% of all individual income and the wealthiest 0.5 % make more than the lowest 50%. Does anyone really think that the poorest 50 % of taxpayers should or could finance 50% of the income tax budget? Our present tax system is not doing a good job.

    America should not adopt this tax system, HR 25/S 1025, that is based on all retail sales for personal consumption of new goods and services, for the following reasons.

    The tax base is not much more than the present system. The base is less than the Gross Domestic Product, (GDP) $14 trillion. A tax on net worth is 8 times more, $115 trillion.
    The consumption tax will increase the tax on people about 28.5 %. Instead of individuals paying 60 % of taxes, they will pay 100% of the budget. In FY 2006, corporation income tax was 13.8 % of the federal budget and corporate employment taxes were 14.7 %. Under the “Fairtax plan,” businesses do not pay taxes. Corporations enjoy all of the privileges of persons except the vote. They benefit from infrastructure, employee public education, law enforcement and limited liability. If corporations do not pay taxes, their privileges should be revoked.
    A sales tax is regressive. In a study of Texas sales tax, those who earn less than $22,000 a year pay 14.2 percent in state and local taxes, those who earn more than $60,000 wind up paying about 5 percent. Even with the rebate, wealthier people and older people that have already purchased most of their needs will pay less than 23% of their income.
    Taxable property is what most of the people have. Intangible property which is not taxable is what the wealthiest people have the most of. Taxable property – any property (including a leasehold of any term or rents for such property), but excluding intangible property and used property. Intangible property – an asset that is not physical and not real property. It includes copyrights, trademarks, patents, goodwill, financial instruments, securities, commercial paper, debts, notes, and bonds. Taxable property or services purchased from a seller for a business purpose in an active trade or business, or for export from the United States for use or consumption outside the United States are not taxed. Purchases by consumers are taxed. Investments (property purchased exclusively for purposes of appreciation of income or the production of income) are not taxed. Used property – defined as property on which the federal sales tax has been collected already, and property that was held for other than a business purpose on December 31, 2008 (the day before the sales tax became effective). The term “used” relates to whether or not the sales tax has been paid previously, and not just to whether or not the item has been sold previously. It appears that almost everything will be taxed for the first few years.
    Insurance will cost 23% more. All types of insurance: Life, health, property and casualty, liability, marine, fire, accident, disability, and long-term care will be taxed.
    The consumption tax is not fair. When a company has a dispute with a customer, they may find themselves in a court that only the customer has funded and to add insult to injury, the customer has to pay his lawyer 23 % more than the company does.
    Everyone will start their own business. If a business pays Fair Tax on items for business use, the owner can get that FairTax back. Investments (property purchased exclusively for purposes of appreciation of income or the production of income) are not taxed.
    The FairTax Act will phase out appropriations for the Internal Revenue Service and then spend billions recreating bureaus to administer the Fair Tax. The IRS is uniquely qualified to administer the Fair Tax with people, computers, and facilities in every state and major city. The fair Tax Act will pay retailers to collect taxes and keep records for six years and pay states to collect from retailers. An administering state enters into a cooperative agreement with the U.S. Treasury Department governing the administration of the FairTax by such state. The Social Security Administration sends out the monthly rebates. The Secretary of the Treasury is given the authority to promulgate regulations, to provide guidelines, to assist states in administering the FairTax, to provide for uniformity in the administration of the tax, and to provide guidance to the general public. The Secretary of the Treasury is required to establish an Office of Revenue Allocation to arbitrate any disputes between states regarding the destination of sales for purposes of allocating sales tax revenue among the states. The Secretary of the Treasury and each state sales tax administering authority may employ persons as necessary for the administration of the FairTax and may delegate to employees the authority to conduct hearings, prescribe rules and regulations, and perform other such duties. Following due process of law, the tax administering authority can seize property, garnish wages, and file liens to collect FairTax amounts due. Each sales tax administering authority must establish, maintain, and adequately staff an effective, independent Problem Resolution Office to protect citizens from abusive administration. The sales tax administering authority must establish and maintain an appeals process that provides a full and fair hearing of any dispute regarding tax liability. The Treasury Department may use FairTax data in preparing economic or financial forecasts, projections, analyses, or estimates. The fair Tax Act establishes an Excise Tax Bureau within the Treasury Department to administer those excise taxes not administered by the Bureau of Alcohol, Tobacco and Firearms. It also establishes a Sales Tax Bureau to administer the national sales tax in those states where the federal government directly administers the tax and to discharge other federal duties and powers relating to the FairTax. Does a rose by any other name still smell as sweet?
    More information on the fair tax act can be found at “Americans for Fair Taxation http://www.fairtax.org/.”

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