Fair Tax Nation

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

Action Needed: Respond to Worstall Article: "Why the FairTax Will Fail"


We need a flood of responses to this Forbes Magazine article by  Tim Worstall, Contributor, "Why The Fair Tax Will Fail," that appeared in the August 22, 2012 issue. Here is the link:


You can send a letter to the editor at readers@forbes.com.  Letters to the editor are like Sherman Tanks in World War II. If we throw enough at the Forbes army, some will get through - and be published. Keep your letters brief, on topic and factual.

The author’s two angles of attack on the FairTax are non-compliance/evasion and the alleged preferability of a VAT. Below are some talking points you can use in your responses:

Talking points about non-compliance/evasion:

1. Collection points are reduced with the FairTax from 55 million to 20 million - easier to enforce.

2. To cheat on a sales tax, there needs to be collusion between a willing buyer and a willing seller. To cheat on an income tax, there usually needs to be only the taxpayer.

3. The FairTax is simple, raising the perception of fairness, thereby raising voluntary compliance and reducing honest mistakes. Tbhe current system suppresses the perception of fairness.

4. 80% of retail sales in the US are through large chains, Wal-Marts, Targets, Home Depots, etc. There will be little evasion through these chains.

5. Under the FairTax manufacturers and wholesalers are required to register. This requirement enables much the same control as there is with a VAT but not the transfer of cash. If FairTax suppliers report $25 million worth of inventory sales to a retailer, and the retailer reports no sales tax because his sales are all cash sales under the table, the state sales tax authority will scrutinize the retailer.

6. There is a 25% non-complaince "tax gap" today - and that's just what the IRS acknowledges. In other words, if everybody paid his or her taxes that are due, we honest taxpayers would see our taxes drop by a third. Economist David Tuerck estimates that the evasion rate would be 2-3% under the FairTax.

 Talking Points about the VAT:

1. The VAT can be hidden as it is in Italy. People do not see the true cost of government. (Note: in Germany and the Netherlands, the VAT is clearly shown.) The FairTax is transparent.

2. The VAT will increase consumer prices because mark-ups along the chain of production and distribution are generally based on the seller's invoice to the next buyer. The interim invoices will be higher under the VAT than they would be under the FairTax because they include tax.

3.  The VAT necessitates unnecessary exchanges of cash. The FairTax requires only one cash transfer when the good or service reaches the retail stage.

FairTaxers, start your keyboards clicking!

Best regards,
~Jim Bennett

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Guess who showed up in the replies? Good ole Hank! Worstall did reply to one of my remarks but I can't get it to show up. The way they show comments doesn't allow much visibility so we can see how it's going.


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