In general, I have been a promoter of The Fair Tax for several years now. However. recently I have been trying to better inform myself about the provisions of H.R. 25 so that I might be better armed to defend The Fair Tax from those who raise objections to it. In studying the bill itself, I have discovered additional questions THAT I HAVE about it, which I must ask and have answered before I can continue my support for it.
As I read through all 131 pages of the bill, I discovered how very difficult it
is to actually follow with any degree of clarity and continuity what the measure is or isn't saying. The legalese and verbiage becomes so incomprehensible that I get lost and find it impossible to make sense of it. I need someone to help clarify in plain English what it is saying . Also, IF I am understanding it correctly, although I definitely see the superiority of a consumption tax over an income-tax based system for raising revenue to fund government, I find some areas of H.R. 25 that are so OBJECTIONABLE that I foresee MAJOR and INSURMOUNTABLE stumbling blocks to it ever becoming law, unless H.R. 25 is amended to address certain specific issues.
For example, I now foresee a number of enforcement problems I had not
previously thought about when I had envisioned H.R. 25 as a simple 'sales tax' to be collected on 'merchandise' to be collected at the cash register. In reading the measure, I now realize all the 'services' and service oriented businesses that are to be included in the scope of H.R. 25, and it is clear to me that enforcement is going to become a much bigger headache than I had originally imagined.
I can see thousands of small contractors trying to 'outbid' their competitors for various kinds of home improvements, using shelter from the NRST as leverage, and homeowners gladly going along. And then there are lawn and pool specialists, and exterminators, carpet cleaning and replacement firms, auto mechanics, etc.,etc. ad infinitem, an enforcement nightmare. Merchandise is one thing, but services??? That's going to be problematic, big time.
Furthermore, I began to feel the resistance building in myself that will
be common to all in paying 'sales taxes' on medical services and providers, which we all feel are already at out of control levels now, and are causing insurance rates to soar. I can't imagine being asked to pay a retail sales tax on any Medical service. Sales tax on medicine is already accepted in States where there is a sales tax, but NOT Doctors, Dentists, Clinics, Obstetricians, Veterinarians, & Hospitals. That would never fly.
Another thought came to mind from reading the bill: without setting a
ceiling--say, $10K for imposing the NRST, buying some "big ticket" items
would become so expensive as to make them cost prohibitive for many and
would actually hurt the economy to the degree that sales of such items
would be inhibited. Cost for things like New Cars, Tractors, Mobile Homes, and even stationary houses would be increased way too much unless a ceiling were set for imposing the NRST.
In my opinion, those who calculated the necessary 'revenue neutral' rate
were much too conservative in estimating the impact of revenue to be derived from the 'underground' economy, which is not presently contributing to Federal revenues. Therefore, 23% is way too high as a starting point. I think a smart way to make the bill easier to sell and a more practical way to test its revenue producing properties, would be to set up an incremental plan of implementation. Gradually phase out the income taxes, while phasing in the NRST over five years, or even ten. Start by reducing all income taxes by 50% and add a 10% NRST. In this way, it would become clear the effective revenue production of the NRST as well as identifying the problems that were going to accrue to it as it kicked in.
So, there are definitely questions/issues that need to be discussed and
worked through before H.R. 25 is actually re-introduced and voted on in
the next Congress.
Arthur Bruce Robertson
Lake St. Louis, MO.