Replace All Federal Taxes on Income with the Fair Tax Act , HR 25 and S 122

The FairTax Fantasy

That's the title of a new book by national radio talk-show host and Law Professor Hugh Hewitt, and Assistant Professor of accounting, and tax accountant Hank Adler. They sub-head is "An Honest Look at a Very, Very Bad Idea".

I just received my copy, am currently reading it, and will try to give as fair a summary as possible of what the authors focus on, as well as comparing it to the FairTax as presented by national talk show host and author Neal Boortz, and Representative John Linder.

Full disclosure: I have been a proponent of the FairTax for years, and although there are certainly serious questions raised by Hewitt and Adler, I find their arguments on the whole less than compelling so far.

First of all, the fact that a book like this has been researched and written is actually a good thing. It not only brings FairTax questions and shortcomings to light--which is the only way they can be adequately and effectively addressed--but it gives significant additional credibility to how much headway the FairTax has gained over the years as more people learn about it.

Hewitt and Adler both agree that the tax system as we know it is a mess, and that major reforms are needed. Their premise is that the FairTax is so flawed that a huge amount of energy is being wasted by the hundreds of thousands of us on a tax system that hasn't a prayer of passing. They feel the energies should be focused elsewhere.

Part One of a summary follows:

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Permalink Reply by cary henderson on May 5, 2009 at 2:07pm

> In 45 of the 57 states (using Obama's number) there is already a State sales tax authority. They might have to add some employees to track the FairTax. More likely it would simply be done by computer, since there is a single rate and there are no deductions, etc. At the Federal level, one person with a laptop computer could oversee the whole thing. I'll bet however that they won't keep it that simple!
The names of the other states? Give him Guam and Puerto Rico as they have Representatives in Congress. Denial and Drunk with Power come to mind as these are present throughout both parties in Washington D.C. Others?

Permalink Reply by Todd McLaren on May 5, 2009 at 10:57am

David:

The FairTax Fantasy authors are apparently in favor of some kind of flat tax--although I don't have the details of their arguments in front of me.

We all know the advantages that the FairTax has over any flat tax, but I believe Hewitt and Adler's opinion is that the flat tax is at least do-able, and they believe the FairTax involves too big a change to be accomplished by the feds.

(Can agree that if we leave it to the feds, NOTHING will be accomplished...?)

Permalink Reply by micheleking on May 5, 2009 at 10:13am

Mr. Shipp, perhaps you will condescend to help me. I'm trying to send a nag to ways-n-means committee members on HR25. c.Rangle went okay, but the rest-no. I am on "open congress." thanks.

Permalink Reply by David Shipp on May 5, 2009 at 11:48am

did you start here; http://www.opencongress.org/person/representatives

or ways and means specific here: http://www.opencongress.org/committee/show/200_house_ways_and_means

Not sure exactly what help you need.

also here is a link to 9-12 project (Asheville, NC link) which is essentially trying to take the fairtax nation (ning) idea to another step and give local issues a sounding board and place to communicate. http://9-12projectashevillenc.ning.com/

Had an issue posting this. Hope it only posts once ds

Permalink Reply by Todd McLaren on May 6, 2009 at 9:54pm

Chapter Five of the FairTax Fantasy is an explanation of the so called, "prebate", or pre-rebate of all the FairTax expected to be paid on items of necessity, up to the poverty level, each month. This amount will be paid to every American, regardless of income or need, who is a legal resident of the United States. Only those with valid Social Security numbers are eligible.

This feature was designed to guarantee that the FairTax would not be "regressive"--in other words, a tax that would hurt the least fortunate. The authors of The FairTax claim that the prebate, combined with the elimination of payroll and social security tax withholding, will actually help the poor most of all.

Hewitt and Adler call this "absurd nonsense" because--they claim--as soon as the FairTax is enacted, the poor will suffer from an immediate price increase on everything of 30%.

The authors also point out that the prebate would go to people such as those who work at the United Nations, foreigners going to school here, and anyone else who has established legal residency and has a Social Security number.

It specifically excludes those in the country illegally which will, they say, "shock the conscience of many, and make passage of the FairTax as drafted impossible"

They claim that the prebate system will be rife with fraud, extraordinarily difficult to administer because of the nightmare of tracking and separating genuine social security cards from the millions of fakes., and would decrease incentives for the States to cooperate with immigration authorities because every fraudulent prebate check sent to a state means more money in that state's economy.

They also claim that the FairTax authors have mis-figured the proper prebate amount. The discrepancy stems from the Boortz/Linder claim that after the FairTax goes into effect, prices will be approximately the same as they are now; and the Hewitt/Adler counterclaim that that is impossible--and that prices will immediately and permanently rise by 30%.

Just a few of the major flaws I find in this chapter include one they called "inflation and price surprises". They use as their example the spike in gasoline prices last summer, and the fact that the FairTax prebate would not have reflected those increased costs. Well, gosh...guess we oughta scrap the whole thing because sometimes prices fluctuate unexpectedly!

Another is the separation of genuine from phony Social Security numbers, how to track where people live, and when they move, how to administer funds, and how to deal with getting the homeless their monthly check! No, really.

Excuse me, but if there are hundreds of dollars due me every month, I'm going to make damn sure that the right agency knows where I am. I understand that VISA is already interested in exploring the administration of the prebate in cash-cards...you know, the same ones that people are using every month RIGHT NOW? And isn't it the Social Security Administration's JOB to validate the numbers? If someone is using a fake Social Security card to fill out a job application, that's one thing--some of those people are going to sneak through.

But if a number is assigned to Alice B. McFrye, and Jose Al-Assan, or Fatima Chen tries to use it to get a prebate, I'm guessing catching that won't be too big an issue.

Permalink Reply by David Shipp on May 6, 2009 at 11:16pm

ALL of these lies have been refuted on Fairtax.org Your review has proven to me this book is absolute trash. Full of lies. Oh and You left out the fact that if you do not sign up for a prebate, you will not get one even if you have a Social security number. My Gawd,,,, How unfair that is ?
PLEASE DON"T BUY THIS BOOK> It is trash.
Go to Amazon.com and give this book the review it deserves. Let people know the book is full of Lies and should be in the Trash.

Permalink Reply by David Shipp on May 6, 2009 at 11:20pm

Todd, you should definitely just start reading Fairtax.org You will get more out of it and your mind won't accidentally get warped. You are going to forget what is true and what is in this book of lies.

Permalink Reply by David Shipp on May 6, 2009 at 11:39pm

Allow me to direct you to something more uplifting to read and they come with references and foot notes.

1)http://www.fairtax.org/site/PageServer?pagename=about_basics_main#3

2) http://www.fairtax.org/site/PageServer?pagename=about_basics_thumbnail

I hope you find these enjoyable! If you follow all the footnotes and references, these should keep you reading for a long time. However, If you need something more specific, please let me know.

Permalink Reply by Todd McLaren on May 7, 2009 at 12:25am

David, I'll reiterate again: I'm a strong FairTax supporter, and I offer these summaries just as information.

Like any attorney, Hewitt will toss everything he can against the wall--arguments strong, weak, and silly--and hopes something sticks.

Unfortunately, you can't call something a "lie" if it relies on a theoretical premise, even if we believe that premise won't come to pass. I believe Hewitt and Adler are wrong; that doesn't make them liars.

Thanks for the links, though. I'm thoroughly familiar with the FairTax website, but I look forward to reading more.

Permalink Reply by David Shipp on May 7, 2009 at 2:08am

Ok just one item.... since I do not want to go through every thing you wrote.

"It specifically excludes those in the country illegally which will, they say, "shock the conscience of many, and make passage of the FairTax as drafted impossible""

This is not a premise, It is a lie!!!! Fairtax SPECIFICALLY INCLUDES the illegals (which are not taxed Now) because they pay tax on any thing they buy even if they do not have a ss number. These authors(?) are bending every line they can think of in any way they can bend.

Permalink Reply by Brian on May 7, 2009 at 3:42am

I haven't read the book and don't know if I want to waste my time after reading your summary. Thanks for that by the way. As a non minutia person I really don't think their arguments hold much water. They act like the current tax system isn't burdensome and "uncomfortable". The most important thing about the FairTax and the only thing that really needs to be understood as far as I'm concerned is it repeals the Marxist 16th amendment and takes the ownership of our Private Property back from the goverment. The current Income Tax isn't American, is confiscatory and all the "uncomfortable" laws and regulations needed to implement and sustain it are never a concern for the government, in fact there is a distinct can do attitude to "make it work" no matter the cost to our Republic and society. Why should we let particulars and what if "scary" scenarios stop or bother us. It didn't bother or slow down the Marxists who passed the Income Tax.
Remember right now the government owns us, if you don't believe that then try not to pay your property, ownership or income taxes. You don't have the choice. We simply lease our stuff from the government, actually more like a protection racket. The FairTax is a step in the right direction to save this Republic. Repeal the 16th Amendment is the Number One step in the FairTax, everything else is secondary.

Permalink Reply by Jim Tomasik on May 7, 2009 at 6:37am