Truth of tax plans everyone needs

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Comment by Pat Conroy on April 9, 2009 at 9:52am

There is a long thread of comments to Vance's article at http://blog.mises.org/archives/009731.asp. Toward the bottom, a comment by a FairTax supporter named Chris Long (I don't know if he is a FairTaxNation member) very eloquently responds to some of the opponents http://blog.mises.org/archives/009731.asp#comment-525815. It's worth reading.

Comment by Keith Reynolds on April 8, 2009 at 6:10pm

The "supposed" Lies of the FairTax.

Lie #1: taxes would be voluntary under the FairTax.

They are voluntary in that you pay taxes as you wish to purchase. if you chose to live frugal, then your effective tax rate will be near 0.

Lie #2:the FairTax rate would be 23 percent.

It is 23% of the cost of an item this is inclusive tax its the same as 30% exclusive tax, this is not a lie or new math but fact, same as a person taxed 30%(inclusive) pays 42% tax exclusive of his take home. fairtax supporters have been leaders in educating the difference between the 2.

Lie #3: the FairTax would abolish the IRS.
Calling the IRS by another name doesn't mean that its functions will be eliminated.

It does eliminate the IRS over a couple years just read the bill. it repeals roughly 70,000 pages of tax code. one of the things that make it so abhorrent. just because a cat and a dog both breath air doesn't mean they are the same thing

The proposed "Problems of the FairTax"

Problem #1:The FairTax hides the amount of sales tax being paid.

this is an outright blatant lie. All you have to do is read the bill to know that this is factually incorrect. The bill calls for the amount of sales tax to be on the receipt.

Problem #2:The FairTax is progressive. Boortz correctly identifies a progressive income tax with Karl Marx. Yet, because of the prebate, the FairTax sets up a progressive tax system like we have now

progressive income taxes are Marxist but the fairtax is not a progressive income tax, but progressively taxes consumption more above the poverty level of spending. that this is not a problem but a feature that is good for America.

Problem #3: The FairTax is an income redistribution scheme

paying you with a prebate the taxes you payed on a poverty level consumption is not income redistribution. The issue of government taking from those that work to give to those that did earn it is not a fairtax issue and should be debated in a different forums.

Problem #4:The FairTax creates new tax collectors

seriously..... which business is not already collecting money from its customers and withholding its employees income tax? to give to the federal government.

Problem #5:The FairTax creates new taxes. All Internet purchases will be subject to the national sales tax. So will heart surgeries, ect....

Don't you know that your already paying 22% inclusive cost of income, payroll, corporate income, capitol gains taxes along with the excessive compliance cost, the fairtax simply replaces them with a sales tax.

Problem #6: The FairTax creates new taxpayers. i.e. charities

They are already paying the cost of production taxes embedded in the cost of their purchases to the tune of 22% of their purchases. Their cost remain about the same with the fairtax or income tax. but charities benefit with people having more of their income to donate with out waiting to deduct if from their taxable income next year.

Problem #7: The FairTax makes it easier for the federal government to raise taxes.

the same as it is now, arguably easer with the income tax because most people don't know who is paying what with the level of complexity. With the fairtax people will know what they are being charged because its on their receipts and will be better able to judge what the function of government should be and their respective cost.

Problem #8: The FairTax makes it easier for state governments to raise taxes

same garbage as above

Problem #9: The FairTax has unknown and potentially huge transition costs

There will be some transition cost, but are more then offset 10 times over with the savings by eliminating $350 billion in compliance cost and and other $150 billion waisted guessing the tax implications of business decisions

Problem #10:The FairTax makes certain exceptions while supposedly having none.

It still has none. education is an investment into human capital, therefor not an exception.

Problem #11: The FairTax has great potential for fraud.

Any less then now? Besides the books wont add up. Because the fairtax is simpler then the IRS code it would take fewer resources to audit. Presently the IRS audits about 5% of filers or 5 out of 100 are audited. Under the fairtax there are 84%fewer filers assuming the same 5 audits on 16 filers is a 30% chance of being audited. Arguably audits could be done much simpler and cover more business to get tax cheats. Do not forget, one reason for the current level of tax cheating is the complexity of the tax code that is done away when we implement the fairtax.

Problem #12:The FairTax has the potential to turn thousands of law-abiding Americans into criminals.

what a waste of breath, what about the existing tax cheats?

Problem #14: The FairTax does not eliminate all federal taxes.

Who said it did? besides, is it really that big of a problem that couldn't be addressed with a different bill? down the road?

Problem #15: The FairTax is not at all about lowering the amount of taxes the government collects.

True it replaces most of the current federal revenue streams while maintaining revenue neutrality with the revenue streams it does replace. the debate over should government grow or shrink is a debate for a different topic.

Problem #16: The FairTax doesn't even begin to address the root of the problem.

Same as arguing the fairtax doesnt do the dishes. The size of government government consumption should be debated in another forum. While the level of consumption is troubling to many, the fairtax concerns itself with how government collects money and the effect it has on production.

Problem #17: The FairTax makes welfare universal.

It is lunacy to propose that taxes you pay though purchases, given back to you thought the prebate is welfare.

Comment by Keith Reynolds on April 8, 2009 at 4:43pm

i noticed a big glaring problem with an issue fairtax opposers bring up in shifting taxes from production to consumption, they fallaciously argue that taxing consumption will cause less of it and slow the economy. While this may be true if we added a consumption tax along with keeping the existing production taxes, but the fairtax replaces those production taxes, effectually not changing the average domestic price, therefor not discouraging consumption beyond that which you already do, besides production taxes are just a convoluted consumption tax payed through the purchase at consumption.

Comment by Dave Sibole on April 8, 2009 at 1:10pm

Vance is not new. He has been around a while and has been rebutted quite frequently.

Dave