Bruce Bartlett Isn't Fair

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In the Wall Street Journal he picks apart the Fair Tax like a hungry vulture come upon an abandoned skeleton depot:

State sales taxes have long exempted all but a few services because of the enormous difficulty in taxing intangibles. But the FairTax would apply to 100% of services, including medical care, thus increasing their cost by 30%. No state comes close to taxing services so broadly.

Consumers would also find themselves taxed on newly constructed homes. Imagine paying 30% to the federal government on top of the purchase price of your next house.

Since sales taxes are regressive–taking more in percentage terms from the incomes of the poor and middle class than the rich–some provision is needed to prevent a vast increase in taxation on the nonwealthy. The FairTax does this by sending monthly checks to every household based on income.

Aside from the incredible complexity and intrusiveness of tracking every American's monthly income–and creating a de facto national welfare program–the FairTax does not include the cost of this rebate in the tax rate. As noted earlier, the FairTax is designed only to match current revenues and does not cover any increased spending that it may require. Since the rebate will cost at least $600 billion the first year, either federal discretionary spending would have to be cut by 60% or the rate would have to be five percentage points higher than advertised.

Also, a funny thing about the Fair Taxers propelling Mike Huckabee to (de facto) victory in Iowa… Huckabee doesn't really support the Fair Tax. He says he does, but when you ask him about taxes he starts rapping about "the four Fs"—flatter, fairer, finite, and family-friendly. He wants to scrap income taxes while maintaining some kind of progressivity and regulatory system making sure taxes serve a social function. That's not really the Fair Tax.

Bartlett's done a good job analyzing the tax, but lot of the Fair Tax's appeal is to angry, populist, Buchanan-ish Republicans who hold the Wall Street Journal in equal esteem with Pravda and Black Inches (arguably NSFW), so I doubt this'll have much impact.

Bartlett's reason archive is here.

(Via Ramesh Ponnuru)

NEXT: Krugman Says Health Care Is Like Education

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  1. Consumers would also find themselves taxed on newly constructed homes. Imagine paying 30% to the federal government on top of the purchase price of your next house.

    Imagine the hatred for federal taxes that would be brew amongst millions of homebuyers…

  2. “The FairTax does this by sending monthly checks to every household based on income.”

    I was under the impression that this was not done based on individual income, but based upon some agreed upon poverty level. In other words, nobody pays tax for expenditures below the poverty level.

    “Consumers would also find themselves taxed on newly constructed homes. Imagine paying 30% to the federal government on top of the purchase price of your next house.”

    A. The homes would be built with non-taxed material, therefore they would be cheaper to build

    B. So what?

    “But the FairTax would apply to 100% of services, including medical care, thus increasing their cost by 30%.”

    And your income would be higher due to a lack of an income tax, making it a wash.

  3. Since sales taxes are regressive–taking more in percentage terms from the incomes of the poor and middle class than the rich–some provision is needed to prevent a vast increase in taxation on the nonwealthy.

    How exactly does a fixed percentage, across the board, qualify for “taking more, percentage wise,” from the poor?

  4. What people really want is a “fair tax” system, where congress cannot create billions of stupid, pointless exemptions for cronies and add ever more complicated laws like the AMT that screw over joe taxpayer.

    While I still do not like “productivity taxes”, I can understand the complexity of trying to get people to adapt to the new system. I’m neither for regressive or progressive taxes, I’m for people paying for what they use by the simplest possible method.

  5. How exactly does a fixed percentage, across the board, qualify for “taking more, percentage wise,” from the poor?

    Because in liberal speak, poor people that buy the flat screen television pay more of their earnings than rich people that buy a flat screen television. And because we have a constitutional right to buy things, the poor are getting screwed….or something.

  6. How exactly does a fixed percentage, across the board, qualify for “taking more, percentage wise,” from the poor?

    Because they spend a higher proportion of their income on taxable consumables.

  7. This is a pretty misleading and shallow article.

    First of all, Bartlett makes it seem as if the Scientologists invented the idea of a consumption tax, which is pure rubbish. They may have come up with the name “Fair Tax” (I have no idea if that’s true), but they were at least several centuries late regarding the invention of consumption taxes.

    Second, Bartlett’s “but everything will be 30%” more expensive rhetoric doesn’t account for the increase in take home wages (already noted by T).

    Third, the notion that taxing services is a bad idea is completely boneheaded — why would we want to distort consumer purchases in favor of services over goods?

  8. I still think simpler & fairer than a rebate would be an exemption for necessities. Decide which types of goods are necessities and then by definition you’re only taxing sale to consumers of luxuries.

    And none of this business distinguishing between necessities & luxuries based on their value, only on their type. No matter how expensive is shelter or clothing or medical care, either the whole category is exempt or not. Keep it simple. If that means people buy fancier clothes instead of fancier cars, so be it.

  9. What the hell? I click the link and up comes porn. I should have known by the title, but some warning next time, I am at work.

  10. Except Bartlett seems to have flubbed a bit of the research, including things like confusing the CATS and the AFFT (hence saying Scientologists are behind the FairTax), and seeming to mis-understand the prebate (saying it was based on income instead of it being based on family size)…

    Nephilium

  11. At least Pravda wasn’t hotlinked.

  12. Weigel,

    You’re a pig-fucker,…and I mean that in the nicest possible way. I burst out laughing when I saw that Black Inches linked somewhere that I really should have anticipated…and not clicked on at work.

  13. OK so I’m a hard liner but I don’t want any new “national tax scheme”…I just want the truth about the current income tax to be acknowledged, and we can all go home. Liberals and neocons or those who believe that the paperwork is worth the benefits can go on paying, and those of us who are not beholden to Leviathan can simply spend April 15th as just another Spring day…

    Is that too much to ask?

    Ron Paul has the right idea, no income tax and no substitute. Cut the federalies by 30%. But although he flirts with the truth, he won’t come right out and say it: Show me the Law!

  14. Fair Tax’s appeal is to angry, populist, Buchanan-ish Republicans…

    …who are oh so successful at coming up with policy ideas that actually get any traction.

    That’s the whole problem with the Fair Taxers…they want it their way and only their way and they want it right now…they’re like bratty little kids.

    If they had any sense, they’d support something that had more than a snowball’s chance in hell of actually becoming a reality…instead of reading like a plot for a bad science fiction story.

  15. I am glad I checked the comments before randomly clickin’ on links. DaveWeigel, some of us in the working world can’t randomly browse porn while on the clock.

    As for the WSJ comment, is that true? I mean, I was never a Righty but I thought that Repubs, or at least the proto-capitalistic ones, loved the WSJ.

  16. And because we have a constitutional right to buy things, the poor are getting screwed….or something.

    LiT, were you being serious or snarky here? Yes, I would have a problem with a poor family that needs to spend every penny they earn having 30% of their income taken away, while a coporate CEO who can save most of his income only gets taxed at a 10% rate. Call me a bleeding heart liberal.

    Without any tweaks, the “Fair Tax” would consume a much higher percentage of the income of poor people than rich people, because as MP notes above, the poor must spend a much higher proportion of their income on consumables.

  17. Kwix,

    I think Mr Weigel is saying that the Repubs who support the Fair Tax are not the pro-capitalistic ones but the populist ones who need to be slaughtered immediately without mercy.

  18. Black Inches? Black Inches?

    How does anyone even become aware of the existence of such a publication? Is this the kind of “research” Gillespie’s got you doing, Dave?

    Of course, we know that Big Porn is a major benefactor to libertarian causes, but still … Black Inches?

    How about linking Abby Winters next time?

  19. Most tax proposals offered by politicians are nothing more than shell games. My guess is that most folks would love a simpler tax system, as long as they don’t have to pay more.

    But that is the problem. These alternative systems always create areas where someone feels the burn in some area more than someone else. And these proposals rarely address the fact that the US spends more than it takes in. The result would be the govt gets continues to grow like it always does, some folks are happy, some really pissed off. Really, mostly symbolic change, not likely for the better.

  20. Dave Weigel, the expression you forgot is NSFW/Not Safe For Work

  21. Bartlett must sell services instead of goods.

    Bartlett, quit trying to be a social engineer with your tax policy. God knows we have enough lawyers as it is.

  22. Without taking a position on the “Fair Tax,” it was pretty obvious Bartlett was distorting
    its results (and, given his background, he certainly knows better.) Competition would drive most prices down, probably by the amount that is currently imbedded in them for federal and state taxes that would be eliminated. Yes, I know prices are not set in a free market by the cost to make the product; however, prices will come down when costs are
    reduced whenever there is competition.

  23. The FairTax does this by sending monthly checks to every household based on income.

    Doesn’t the fact that the plan would require the government to send refund checks out to folks in order to make up for overtaxing them in the first place mean it’s not actually a ‘Fair’ tax?

  24. Doesn’t the fact that the plan would require the government to send refund checks out to folks in order to make up for overtaxing them in the first place mean it’s not actually a ‘Fair’ tax?

    You have to look at it from a high level, to see the full “Fair” picture.

    I think at about 30,000 feet, the oxygen deprivation will make it look “Fair”.

  25. I think at about 30,000 feet, the oxygen deprivation will make it look “Fair”.

    ohmygod…it IS a bad sci fi story…in this case, Total Recall.

  26. Three points:
    1) The Fair Tax chooses to tax all goods and services precisely because declaring exemptions requires too much regulation and opportunity for fraud. (“If you get a haircut from us for $20,000, you’ll get a free Pontiac Vibe”).

    2) There would be no need to monitor everyone’s income. That is the most seductive trait of the Fair Tax, IMHO.
    The prebate is given to all households, rich or poor, based purely on number of people within the household.

    3) I don’t know if it’s mentioned in the article, but the Fair Tax also gets rid of the payroll taxes. That’s 15.3% that everyone currently pays (although the rich currently get a break here because of the SS tax cap).

  27. Somehow, the idea of a program that’s supposed to – among other things – reduce government waste and potentials for excess, relying on a scheme to give back large amounts of cash it shouldn’t have taken in the first place seems pretty stupid.

  28. “The FairTax does this by sending monthly checks to every household based on income.”

    I was under the impression that this was not done based on individual income, but based upon some agreed upon poverty level. In other words, nobody pays tax for expenditures below the poverty level.

    It’s based on the amount of people in a family I believe.

    There’s a lot wrong with this article. I don’t think Bartlett really has any idea wtf he’s talking about.

  29. I really can’t see how a simple plan that would encourage saving instead of spending would be so controversial. Not having to have already paid taxes on my income, and then getting to invest them tax-free until I decide to spend those funds would do a lot to improve my economic situation. People buying yachts and mansions (and even McMansions) would be paying an extra 30% (or whatever), while people who wanted to save for their first house (like me) could build up a nice nest egg tax-free.

  30. Whenever I hear about all these tax “reform” proposals, I think how they’re trying to gild a turd; that is to say, how they’re trying to make armed robbery seem less horrific. “Oh, you mean I only have to pay for the protection scheme when I decide to SPEND my money? What a deal!”

    Here’s a novel idea: how about not robbing from me for engaging in voluntary trade with others, regardless of whether I’m paying or being paid?

  31. Remember, also, that a consumption tax would require a massive readjustment of the monetary system and government spending: the structure of a mercantilist system such as ours depends on people constantly spending rather than saving.

    A consumption tax encourages savings, which would cause the funds available to business and to government to come up way short, resulting in the central bankers printing money to make up for reduced tax revenue and monetary liquidity. This leads to hyperinflation.

    You don’t have to be a supporter of gold/silver/other commodity as currency to see that Keynes has dug the grave of any policy that leads to increased savings.

  32. I think that that last comment appears to be the only valid criticism I have seen of the Fair Tax

  33. I don’t see how a consumption tax could raise all that much money…? I mean, hardly anyone gets consumption any more.

    Geez, why not a dropsy tax, or one on the vapors?

    What? Oh, ah, never mind.

  34. Paying a 30% tax on buying a home would destroy the real estate market and trap everyone in their existing home, regardless of the fact that you’d have no income tax.

    This is because the overwhelming majority of new home purchases are at least partially financed.

    If you were taxed 30% of the sales price of a new home and had to pay it at the point of sale, essentially to buy a new home you’d have to save 30% plus X of the value of the home you want to buy, where X is whatever down payment and closing costs you would previously have had to save. I know the news is full of stories of crazy mortgage lenders, but NO ONE is crazy enough to lend you the money you need to pay a 30% sales tax.

  35. In addition, I think these people are nuts if they think they won’t need machinery to regulate compliance. On the basis of the plank in the plan that says B2B purchases won’t be taxed, I already have devised my own personal scheme to never pay the final tax. Ever. Who can guess what it is?

  36. People buying yachts and mansions (and even McMansions) would be paying an extra 30% (or whatever), while people who wanted to save for their first house (like me) could build up a nice nest egg tax-free.

    Your nest egg is only tax-free until you decide to actually use it — then the govt snags ~25%. Pay them now or pay them later, dude.

  37. ouch – gay porno hit on my GF’s computer history! Oh well, I guess the horses are out of the barn now….

  38. One of the problems with the Fair Tax is the transition costs. For example…Seniors that have saved money for 30 years did so after tax. Now, with the Fair Tax, they would be taxed again on each purchase. Those people would have to be compensated. It’s a nightmare really.

    If we were starting all over again, the Fair Tax would be the obvious choice. As it stands, it’s pretty much only good on paper.

  39. Eliminate federal income taxes and make the federal government depend on import duties. That would also help with illegal immigration because the feds would HAVE to protect the border against smuggling and they could prevent illegal immigration at the same time.

  40. “Seniors that have saved money for 30 years did so after tax. Now, with the Fair Tax, they would be taxed again on each purchase. Those people would have to be compensated.”

    This will be how those with Roth IRA accounts will be taxed someday. A VAT or national sales tax will make the promised freedom fro income tax a big joke – on them. PS. the income tax will be with us always – look at how long the telecom “luxury tax” to pay off the Spanish American war lasted.

  41. His article is absolutely asinine and if you think it “picks apart” the Fair Tax, you obviously have set your standards really low in that regard. Furthermore, the swipe at Scientology is stupid and useless.

  42. Reducing spending and the scope of government is more important than changing the tax code.

  43. Reducing spending and the scope of government is more important than changing the tax code.

    Amen.

  44. His article is absolutely asinine and if you think it “picks apart” the Fair Tax, you obviously have set your standards really low in that regard. Furthermore, the swipe at Scientology is stupid and useless.

    Heh. I suppose you’re right if by stupid and useless you mean the author utterly failed to take a swipe at Scientology where he could have because I, rather disappointedly, didn’t see any swipe at Scientology. If simply stating that

    It was originally devised by the Church of Scientology in the early 1990s as a way to get rid of the Internal Revenue Service, with which the church was then at war (at the time the IRS refused to recognize it as a legitimate religion)

    counts as a swipe in your book you obviously have set your standards really low in that regard.

    Perhaps, like they say about stupid questions, the only stupid swipe at Scientology is the one you don’t take.

  45. That would also help with illegal immigration because the feds would HAVE to protect the border against smuggling and they could prevent illegal immigration at the same time.

    Getting far afield here, but that really depends on your definition of “help” because if it is what you apparently think it is, I’d just as soon not be “helped” by the government. There is a much simpler, cheaper and vastly more helpful way to deal with “illegal” immigration.

  46. I get the feeling the FairTax isn’t going anywhere.

  47. Reducing spending and the scope of government is more important than changing the tax code.

    Sure it is, but since those are not mutually exclusive goals there is no reason to avoid doing the latter just because you haven’t yet found a way to accomplished the former. Buying a home is more important than buying a car, but if your car is an always-breaking-down, gas-guzzling, money sucking piece of shit you shouldn’t avoid replacing it simply because you can’t quite find a way to buy a house yet.

    Having said that, I am not taking any position on the “Fair Tax” itself – I just think the current system is so insanely wasteful on so many levels that almost any randomly selected tax scheme would probably end up being better in the long run. Whatever attention the Fair Tax debate brings to the issue of the current tax code and IRS is, therefore, probably a good thing overall.

  48. I don’t know that much about the specifics of the “fair tax” plan but I know I can slam Bartlett for echoing that old liberal squawk about “regressive” taxation.

    What percentage of his or her income a person pays in taxes has nothing to to with the “fairness” of it.

    Fairness in paying for government goods and services is no different than paying for private sector goods and services – on a user fee basis.

    A McDonalds resturaunt charnges everybody who comes in and orders a quarter pounder the same price for it. Percentages of income have nothing to do with it. McDonalds didnt’ create anyone’s income for them.

    And neither has the federal government. No one’s income is a “service” provided to them by the federal government.

    Fairness is each person paying for the dollar value of services received by him from the federal government.

    The main function of the government as it operates today is wealth redistribution. The fact is that most of those lower income folks are getting government services that they are paying little or nothing for. The top 50% of income earners pay 96% of federal income taxes. The bottom 50% are sure getting more than 4% of government services.

    Anything that would make all those people currently getting a free ride start paying more of the actual cost of what they are using is a good thing – whether anybody thinks that’s “regressive” or not.

  49. Gilbert…I don’t think you have a very keen grasp of basic economics, taxation (fair or otherwise) or of clear and consistent thinking.

    The main function of the government as it operates today is wealth redistribution.

    And I don’t think you have a very strong understanding of politics either…or you’ve been asleep for the past 6 years.

  50. All good points, Brian. I think the tax code needs to be reformed. I’m just against politicians and wonks who seem to think that some fiddling with the tax code is going to let us have our cake and eat it too. Even some liberal democrats like Mike Gravel support the fair tax because they think it will allow them to spend MORE, not less. With the amount our government spends, a Fair Tax would ultimately just be shuffling around burdens.

  51. Actually, madpad, I think Gilbert has it exactly right. His is one of the most clear-cut and insightful posts I’ve ever read here.

  52. How naive one must be to NOT expect porn ( and gay-targeted porn at that) from something called “Back Inches.”

  53. Time for a Wealth Tax. A wealth tax of less than 1% would easily replace the income tax. Of course, the wealthy, who have benefitted the most from the current swamp of loopholes and exemptions do not desire to entertain a truely fair tax.

  54. For a full view of both sides of the Fairtax issue I strongly recommend reading the Wikipedia article on it. http://en.wikipedia.org/wiki/FairTax

  55. One good thing about the Fair Tax; Social Security payments start being paid out of general revenue. No more imaginary Social Security Trust Fund. It becomes just another welfare payment. That should make it easier to reform.

  56. The idea behind the Fair Tax is the embedded tax. Because of the income, SS matching and other fed taxes business pays about 23% of the cost of every new item we buy is taxes. The Fair Tax just shifts the point of payment.

  57. The most plausible scenario for a fair tax is that the gross price that buyers pay for consumer goods would rise about 30%. Their net (after tax) incomes would increase about the same (because there is no income or federal payroll taxes.)

    However, it all depends on monetary policy–that is, what the Federal Reserve chooses to do about it.

    If the Federal Reserve acts to prevent gross prices from rising (or from a quantity theory perspective, faills to act in a way that would let those prices rise,) then net prices (what the sellers set and what they receive) would fall about 23% or so, leaving the gross prices unchanged. But that would also require that gross incomes be reduced (pre-tax incomes) so that they are roughly equivalent to todays take home pay.

    In other words, your employer would give you a pay cut, so that your pay check would remain about he same.

    I think this scenario is very unlikely. So, as I said above, the most likely scenario is little change in gross pay, with net pay rising because of the aboltion of verious federal taxes. And then, an increase in gross prices by 30% and pre-tax prices being little changed.

    The efficiency gains would, in the long run, result more rapid increases in incomes. The most likely scenario is that prices (pre and post tax) would continue to rise at a low rate–which is what the Fed is trying to do.

    Some advocates of a fair tax count twice. Higher after tax incomes because no taxes and lower prices because the taxes are competed away. No… it won’t be both.

  58. I admit almost complete ignorance of this Fair Tax plan / scheme.

    Is material consumed by manufacturing taxed? And is the manufactured good also taxed, or is it done ad valorem (the margin is taxed to the final consumer)?

  59. If a Fair Tax is not regressive then a wealth tax is not progressive. In reality, both are the case.

    The reason the Fair Tax is regressive is that basic necessities are a higher percentage of a lower income household’s total income. So the “base” tax that would be spent on necessities would be higher on the poor. Just like if there was a 1% wealth tax, the moderately wealthy would be disproportionately hit because they are the ones with the most domestic wealth. The ultra-wealthy would be able to hide their money overseas.

    The true solution is a flat tax with a high deductible. It gets rid of the transition costs and the potential black market that would arise from a Fair Tax (can we call it a sales tax or VAT?) system.

  60. Mo, that’s only the true solution if you think some people should subsidize the needs and wants of others. If OTOH you think people should pay for what they use, then user fees are the “true solution”.

    A reasonable transition to such a system IMO would be to charge a head tax: everyone pays $6000/year or something, and those who choose not to pay are not permitted the use of any divisible public services, and must pay all back taxes with penalty to get those privileges back.

  61. There you go.

    Step one – actually enforce the 10th Amendment and get rid of all unconstitutional government activities. That shoud cut out about 70% to 75% of government spending.

    Step two – Divide the cost of the rest by the total population and send each person an equal bill to pay (children’s bills would be the responsibilty of their parents to pay).

    Nice and simple.

  62. Yesterday, MP answered the question about how “a fixed percentage, across the board, qualify for ‘taking more, percentage wise,’ from the poor?” The “obvious, common sense” answer: “Because they spend a higher proportion of their income on taxable consumables.”

    Besides being obvious and common sense, this answer is plain wrong!

    Consider what the Odious Rich do with their “excess” income. Basically, the choices are (a) give it away, (b) invest it, and (c) keep it forever and ever, not even letting the heirs spend it. Choice (c) is silly; no one ever does that. If they did, it would still be the same as choice (a), a gift to the economy in the form of reduced inflation.

    So what about choice (a)? We don’t tax it today, so the question is a non-issue relative to the FairTax. Also, one would assume that the beneficiaries would spend it, so a FairTaxing government would get its cut anyhow.

    We’re down to (b), investment and presumed growth of the unspent, excess income. It’s unspent until… when? Until retirement? Then it’s spent and taxed. Until the spendthrift heirs get it? Then it’s spent and taxed. Until the second generation of spendthrift heirs … no matter! As long as none of ’em spend it, it’s the same as choice (c), a benefit to society generally. High income types can shift their spending to a later time; that’s the only difference.

    Let’s not perpetuate the myth that the Odious Rich don’t spend their money. Everybody spends their money, one way or another.

  63. There is a lot to like about the Fair Tax and a lot to dislike about it. Overall, I think it would be better than our current system, but that’s not saying much.

    Bartlett seems to have only a cursory understanding of the Fair Tax, but trashes it nonetheless.

  64. Um, has anyone thought about the following:

    1. We still have the State income tax, so you’re still going to be doing paperwork on April 15.

    2. Compliance costs. How long before a sizeable number of transactions never get recorded? One of the reasons holding VAT tax down and similar is beyond a certain point, people start to evade it. So how are you going to monitor this?

    3. “Investing”–right. You’ll have to pay up front 30% on the price of stocks when you purchase them and another 30% when you sell them and purchase something else? Well, there goes the stock market….

  65. “We still have the State income tax, so you’re still going to be doing paperwork on April 15.:”

    That depends on what state you live in.

    Some states have an income tax and some don’t.

  66. There are many dirty little secrets about the FairTax that the media never covers. If you would care to read about them they are on fairtaxfraud.com. Please read both sides and then make up your mind.

  67. Grumpy realist complained, “Investing”–right. You’ll have to pay up front 30% on the price of stocks when you purchase them…”

    Gee, Grumpy, you should do a bit of research first. Quoting from fairtax.org, “Under the FairTax, equities, treasuries, bonds, and other investments are all tax free.” It’s one of the most quoted benefits of the FairTax: incentives to save and invest.

  68. Huckabee is all about calling his listeners to “do something,” to awaken them to their own empowerment, and summon them to action in order that “Main Street,” and not “Wall Street,” will prevail in guarding the values and beliefs upon which the Republic was founded.

    Huckabee puts his listeners at ease, and reassures them, articulating clear concepts in a natural, easy style (no doubt something well-cultivated as a pastor). He’s not angry or demanding, like a Ron Paul, nor is he as “rigidly-scripted” as Romney, and his large brown eyes peer through a humble demeanor, drawing a striking contrast to a somewhat mechanical-squinty Brownback. One can easily imagine sitting comfortably with this man over a cup of coffee at the Main Street Cafe.

    Huckabee’s former advocacy of the FLAT tax has succumbed to a saner consumption approach. He is ONE with the FairTax grassroots movement. While many – like Romney, and others, who are invested in the current income tax system – seek to demagog the well-researched FairTax plan, its acceptance in the professional / academic community continues to grow. Renown economist Laurence Kotlikoff believes that failure to enact the FairTax – choosing instead to try to “flatten” what he deems to be a non-flattenable income tax system – will eventuate into an irrevocable economic meltdown because of the hidden aspects of the current system that make political accountability impossible.

    Romney’s recent WEAK response to FairTax questioning on “This Week with Geo. Stephanopoulos” drew a sharper contrast between Huckabee and all other presidential front-runners who will not embrace it. Huckabee understands that what’s wrong with the income tax can’t be fixed with “a tap of the hammer, nor a twist of the screwdriver.” That his opponents cling to the destructive Tax Code, the IRS, preserving political power of granting tax favors at continued cost to – and misery of – American families, invigorates his campaign’s raison d’etre.

    Of the FairTax, Huckabee asserts that it’s…

    ? SIMPLE, easy to understand
    ? EFFICIENT, inexpensive to comply with and doesn’t cause less-than-optimal business decisions for tax minimization purposes
    ? FAIR, FLAT, and FAMILY FRIENDLY, loophole-free, and everyone pays their share
    ? LOW TAX RATE is achieved by broad base with no exclusions
    ? PREDICTABLE, doesn’t change, so financial planning is possible
    ? UNINTRUSIVE, doesn’t intrude into our personal affairs or limit our liberty
    ? VISIBLE, not hidden from the public in tax-inflated prices or otherwise
    ? PRODUCTIVE, rewards – rather than penalizes – work and productivity

    A detailed benefits analysis of the plan (from The FairTax Book) explains Huckabee’s ardent advocacy:

    FOR INDIVIDUALS:
    ? No more tax on income – make as much as you wish
    ? You receive your full paycheck – no more deductions
    ? You pay the tax when you buy “at retail” – not “used”
    ? No more double taxation (e.g. like on current Capital Gains)
    ? Reduction of “pre-FairTaxed” retail prices by 20%-30%
    ? Adding back 29.9% FairTax maintains current price levels
    ? FairTax would constitute 23% portion of new prices
    ? Every household receives a monthly check, or “pre-bate”
    ? “Prebate” is “advance payback” for monthly consumption to poverty level
    ? FairTax’s “prebate” ensures progressivity, poverty protection
    ? Finally, citizens are knowledgeable of what their tax IS
    ? Elimination of “parasitic” Income Tax industry
    ? NO MORE IRS. NO MORE FILING OF TAX RETURNS by individuals
    ? Those possessing illicit forms of income will ALSO pay the FairTax
    ? Households have more disposable income to purchase goods
    ? Savings is bolstered with reduction of interest rates

    FOR BUSINESSES:
    ? Corporate income and payroll taxes revoked under FairTax
    ? Business compensated for collecting tax at “cash register”
    ? No more tax-related lawyers, lobbyists on company payrolls
    ? No more embedded (hidden) income/payroll taxes in prices
    ? Reduced costs. Competition – not tax policy – drives prices
    ? Off-shore “tax haven” headquarters can now return to U.S
    ? No more “favors” from politicians at expense of taxpayers
    ? Resources go to R&D and study of competition – not taxes
    ? Marketplace distortions eliminated for fair competition
    ? US exports increase their share of foreign markets

    FOR THE COUNTRY:
    ? 7% – 13% economic growth projected in the first year of the FairTax
    ? Jobs return to the U.S.
    ? Foreign corporations “set up shop” in the U.S.
    ? Tax system trends are corrected to “enlarge the pie”
    ? Larger economic “pie,” means thinner tax rate “slices”
    ? Initial 23% portion of price is pressured downward as “pie” increases
    ? No more “closed door” tax deals by politicians and business
    ? FairTax sets new global standard. Other countries will follow

    While passionately supporting FairTax, Huckabee understands that, if elected President, Congress will have to present the bill for his signature. His call to action goes beyond his candidacy, Main Street will have to demand that their legislators deliver the bill.

  69. Bill Barlett is obviously certifiable. As “creech” said earlier, competition in the marketplace will even the playing field. And, by the way, it’s 23% not 30%. Please stop spreading THAT lie, everyone! The income tax must be scrapped as obviously regressive (and illegal, but that’s another story …) and replaced with a consumption tax which is purely progressive and out of the control of our government no matter what anyone here says.

  70. Illumineer, calculated as a sales tax (on post-FairTax prices which will be lower than at present because of the reduced cost of production) IS 29.85%. Calculated as a rate that can be compared with “inclusive” income tax rates (i.e. “parts of a dollar earned”), it would be 23% of the acquisition cost (product/service + tax). Thus, the dollars to gov’t are the same – it’s the terminology that’s different. FairTax.org features an explanation of this on their homepage.

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