Economics

Fair Tax or Foul?

The promise and peril of changing the way we pay for government

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During the first Republican presidential debate in May, erstwhile Godfather's Pizza CEO Herman Cain was asked about expert projections that his proposal for a national sales tax would hurt poorer Americans and involve taxation of real estate and rental property. Cain got a round of applause for shooting back, "With all due respect, your experts are dead wrong." Although the rest of his reply avoided responding to the question, Cain's barb was the point: All discussion of the national sales tax must commence with the assertion that your interlocutor is either malicious or misinformed. Several Republican presidential candidates, 61 members of Congress, and six senators support a "Fair Tax" that would replace the income tax with a levy on retail sales. And very few of these people are lukewarm about the idea.

"Any politician or political group who claims or implies that the Fair Tax adds a 23 percent national consumption tax on top of [existing federal taxes] is either lying to you or is ignorant of the facts," activist Dale Johnson wrote recently at FairTax.org. According to one YouTube uploader, a Chris Matthews interview with a Fair Tax–supporting politician shows the MSNBC hothead is "trying to carry the water for the cause of statism with the usual distortions and fear mongering, but since he is doing so from a foundation of ignorance on the simple details of the Fair Tax, his statements come across as sad."

It's not just Fair Tax proponents but also detractors who presume their opponents are dishonest or ignorant. When I published a largely negative take on the Fair Tax bill H.R. 25 at reason online, several commenters disdained my assessment as insufficiently negative. "Tim, I am deeply disappointed in the shallow way you 'examined' Fairtax," wrote reader Mark Curran. "Fairtax is profoundly bogus, it is very much a literal farce. Someone of your 'critical thinking skills' should have spotted this long ago. Fairtax is based not just on one absurdity, but layers of absurdity."

To be fair, the Fair Tax proposal, in all its instantiations, provides plenty of room for ignorance. In sharp contrast to the 30-word 16th Amendment of 1913 (which established Congress' authority "to lay and collect taxes on incomes, from whatever source derived"), H.R. 25 is 131 pages long, going into microscopic specifics about circumstances under which taxes would or would not be levied.

Supporters reasonably argue that all this verbiage is necessary to distinguish the Fair Tax from a value-added tax, with which it is often confused. While the VAT lays taxes at every stage of production (and thus drives up the cost of the final retail product), H.R. 25 is painstakingly crafted to ensure that the sales tax is applied only at the retail level, which makes for highly prescriptive legislation. What happens, for example, when a manufacturer buys something with the intent of using it in production but then changes his or her mind? Would the sales tax apply at that point? (It would.) Would there be any penalties for this change? (Yes, under certain circumstances.)

What if you've been taxed on your health insurance premium and your insurance company pays for a doctor's visit on your behalf? Should the insurance company have to pay tax on that purchase? My reading of H.R. 25's Title II, Subtitle A suggests the doctor's fee, since it was "used to produce, provide, render, or sell taxable property or services" (i.e., the medical coverage provided by the insurer), would not be taxed. But what about your copayment?

This level of detail may be necessary to levy a retail tax without boosting the cost of doing business. But what to make of the family consumption allowance, or "prebate"? Fair Tax proponents would give qualified families a sales tax rebate each month, calculated as the product of the 23 percent national sales tax and the monthly poverty level. This is the "fair" part of the tax: Since taxing consumption rather than income is regressive, the prebate attempts to give lower-income Americans enough money up front to cover taxation on their monthly purchases. But in practice, it's hard to see how sending a monthly check to every household in the country would reduce the role of government in our lives.

Nevertheless, these are bold ideas in the stagnant debate on taxation in the United States. I suspect the high level of vituperation in the Fair Tax discussion comes from people's excitement at finding new ways to talk about how the government takes our money and for what purposes. 

The 16th Amendment has been with us for nearly a century, and to the extent that we can determine the income tax's effects on wealth formation and saving rates, there's a lot to be unhappy about. (Equity as a percentage of home ownership and personal saving rates have been falling more or less steadily during the more than 50 years these numbers have been tracked.) The current tax system also has taken tax policy far beyond the arguably legitimate function of raising necessary revenue and into a wide range of social engineering projects (for example, encouraging Americans to take on more real estate debt and rely on employer-provided health insurance). Shifting to a consumption tax could revive the long-neglected idea that you have a right to accumulate wealth without explaining it, justifying it, or finding clever ways to conceal it.

But these advantages rest on the assumption that a consumption tax would replace the income tax rather than supplementing it. H.R. 25 contains a sunset provision that takes effect if the 16th Amendment is not repealed within five years, but this safeguard would not provide much protection. Repealing an amendment is very hard. Renewing a bad law when its expiration date is up—as we've found through endless renewals of the USA PATRIOT Act—is easy. For this reason and others, Americans fear the Fair Tax. In the Reason/Rupe Public Opinion Survey conducted in May (see "Cut the Debt by Cutting Government," page 42), only 33 percent of respondents supported eliminating federal income taxes and replacing them with a national sales tax.

As long as the legislation is doomed, however, the debate over the Fair Tax is a good one to be having. The income tax, and the central banking system that is its handmaiden, are morally corrosive in ways that can't be reduced to dollars and cents. A sales tax may not be the solution, but it does help us understand that we have a problem.  

Tim Cavanaugh (tcavanaugh@reason.com) is a reason senior editor.

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  1. Reason is the #2 ranked libertarian website and Radly come in tenth.

    http://deathby1000papercuts.co…..july-2011/

    God job folks. Now to get higher in the overall rankings.

    1. ‘Good’ job.

    2. The Big Picture #5 WTF?

      I read Ritholtz’s blog at least several times a week and it isn’t remotely libertarian. Barry and “Invictus” often go out of their way to attack libertarian ideology. Good luck commenting over there too.

      1. How can anybody stand reading Lew Rockwell? It looks like something out of 1998. Gave me a headache.

        1. I like the content, but agree w/ you on the format, blech.

          1. Fuck that racist Lew Rockwell.

            1. I’ve only read one article by he himself ever. I guess he was on good behavior because I didn’t detect it. Provide a link and I’ll join you in your epithet.

              1. http://www.economist.com/blogs…..well_files

                Don’t just look at Rockwell’s writings, but also his associates. He and the Von Mises Institute are openly accepting of the League of the South (neo-Confederates) and publish the works of many individuals with questionable racial views (e.g., Tom Woods)

                1. I read all three in the order posted.
                  That’s EXTREMELY disappointing.
                  I’m really disappointed in Rothbard- I’m halfway through “For A New Liberty” right now. Oh well, I can agree politically and disagree on the dumbass opportunistic strategy of catering to racists.

                  one.. two.. three..
                  Fuck that racist Lew Rockwell.

                2. The newsletters were awful and deserve to be repudiated. If Rockwell and Rothbard wrote in their paleo phases should be ignored.

                  But the Mises Institute’s “links” to the League of the South are overplayed. So far as I can tell, the only link is that Tom DiLorenzo once gave lectures for LoTS (which is apparently dead now, FWIW).

                  That’s hardly a smoking gun, although it appears to have been enough for the SPLC to add them to their list of white supremacist groups, or whatever.

                  I’m not aware of Tom Woods being a racist either, although I understand he did write a nauseatingly jingoistic book about American history a while back.

                  1. And of course that should say “Anything Rockwell and Rothbard wrote…”

                  2. Well, given that I _am_ Tom Woods, I resolutely deny that I have ever written any kind of “jingoistic” book. Which American war have I promoted?

          2. Really. How hard would it be to add to the main table’s attributes? Or get rid of the table structure, use floating divs and add “margin:0 auto” to your stylesheet? Arg arg arg.

            1. Heh. Does it have frames, too? (It’s been a while since I’ve been there.

        2. Simplicity is a virtue, particularly when reading it on a cell phone.

      2. And Gary North (#12) is a Christian Reconstructionist.

        1. I already knew he was close to R.J. Rushdoony (son in law) and avoid him.

        2. He does a good job of translating the Bernank into English though.

    3. Top 50 libertarian sites?

      Every single libertarian has their own website?

      1. Zing….

      2. I was really thinking that sugarfree and URKOBOLD would be in the top 5.

        1. It’s based on traffic. I don’t track mine, but it can’t be much. And Urkobold is really only popular in Austria.

          1. I was hoping my name change would help spread that to Prussia, too. So far, no luck.

            1. Well, it was pretty goddam saddening to discover that the 51st most popular Libertarian site is called “Tony”

    4. Wait a second, paleocons are libertarians now? I know there’s a lot of overlap, but they do have their own label and movement.

      1. Pat Buchanan, Tom Tancredo, Ron Paul and Chuck Baldwin are all “paleocons”. Paleoconservative is not synonymous with “paleolibertarian”.

      2. oh for god’s sake.

  2. Fuck the Boortz/Linder VAT

  3. Threadjack:

    Sorry, but this steaming pile of leftism was just too good to keep to myself.

    Apparently the PIIGS nations were taken down by the EVIL bond markets, not their own out-sized spending:

    http://globalspin.blogs.time.c…..opstories+(TIME:+Top+Stories)

    1. Stop cheering TEAM RED Jim! You’re just a rabid partisan!!

    2. “When you’re responsible for ?1.8 trillion in debt that was ?900 billion in 2002, you don’t come proposing rules to parliament about limiting deficits,” mused Socialist legislator Henri Emmanuelli. “It’s virtually intellectual fraud.”

      He makes a good point. Why DO Republicans feel entitled to lecture the country and propose constitutional debt amendments when most of the US’s debt is their doing?

      1. Thank goodness Obama reduced overall spending or else we would be in a heap of trouble. /sarc

      2. Goddammit Tony. Had you stopped at “amendments”, we could have been friends.

        Instead, your jersey is showing. Again.

        1. I don’t try to hide it. But I don’t choose a team for arbitrary reasons. Why would anyone want anything to do with people who destroy the economy and then dare to lecture the country on how to solve it?

          1. as will rogers noted, politics is the last refuge of scoundrals

            1. Why would anyone want anything to do with people who destroy the economy and then dare to lecture the country on how to solve it?

              Is this aimed at Republicans, or Democrats, or both?

              1. Should be aimed at both (or should be), but I will admit I find the Republican lectures recently a bit more galling, but only by a bit.

      3. Any rational person would be ashamed of the government of this country in general. You sound like someone must be paying you to spew stupid comments like that…

      4. To be honest, the current deficit is neither a TEAM RED nor TEAM BLUE specific creation. Even had the GOP balanced the budget throughout the 2000’s and even had Bush and Obama not enacted TARP and stimulus spending, we’d still be staring at a cratering deficit due to the simple demographics of entitlement spending.

        The first of the baby boomer retirements began in FY 2008 (62 y/o early SS collection from the boomers born in 1946). FY2011 marks the year that the standard 65 y/o wil retire and the collection of Medicare bennies too. It is disingeneous to blame either Obama or Bush entirely for the current state of affairs because it is a simple demographic timebomb that anyone and everyone could see coming from two decades away. Now, neither guy helped the issue much, but the current deficits are largely the creations of FDR and LBJ, with the shortsighted complicity of congresses in every year since the enaction of those two programs in looting the reserves and replacing them with IOUs in order to fund the spending in excess of income tax receipts in those years.

        1. I hate to go all Team Red here, but I do recall Bush campaigning on and attempting a Soc Sec reform in 2004-05 that likely would have blunted the impact a bit. It was promptly and thoroughly defeated in the midst of his approval rating death spiral, but I do have to give him points for trying.

          1. I’ll concede that, even considered mentioning it in my post above. As for the TEAM RED/TEAM BLUE divide, I’ll always give credit to TEAM RED for at least being more willing to take a look at meaningful reforms to entitlements, but the problem is that their electoral base skews old (due to SoConism) and therefore they always fail to actually make any headway in entitlement reform. Although, even had Bush’s SS reform gone through in 2005, it still would’ve been too little, too late for the entitlement spending boom of 2008 and beyond, and it he gets double fail for not only not addressing Medicare but fucking it even worse with Part D (although, thankfully, Part D came with some limited market forces in it so that its become the template for larger Medicare reform.)

            1. You give extra credit to people because they lie through their teeth about wanting to shrink government?

              I suppose the current crop isn’t really lying–they’re actually crazy.

              1. Hey my Lock box is still good and strong!

                1. …at least they mention shrinking government, whereas Team Blue just wants it to increase forever and ever and… well, forever.

                  1. The GOP has been ‘mentioning’ shrinking government for decades, yet are by far the worse perpetrators of expanded government in all the worse ways and massively increasing debt. Mentioning it does not merit brownie points, it should make you all the more skeptical.

                    1. …so, is an ever-expanding state only good when Team Blue does the expanding?

                    2. There are some, albeit far too few, on the TEAM RED side that actually have proposed some slight tweaks to the entitlement state as a means of controlling and reducing costs, i.e. Paul Ryan. Of course, anyone that does ends up having to deal with youtube vidos depicting him murdering the elderly. So, naturally, many of them talk a better generic game than they do actually addressing the issue with substantive policies. But there are far more TEAM REDs that will talk about ways to reform the system to pare back on spending than TEAM BLUEs.

                    3. slight tweaks to the entitlement state… i.e. Paul Ryan

                      If by slight tweaks you mean destroying it while piling on more debt (for the sake of the true sufferers in this economy, rich people without more tax cuts).

                    4. “destroying it”

                      Alarmist much?

        2. No, current deficits are largely the creation of one George W. Bush.

          1. Because he didn’t take enough of our money, right?

            1. It’s not “our” money. It belongs to the government.

              Didn’t you get the memo?

          2. Perhaps try addressing the substantive points with those pernicious little things called facts instead of making some worthless accusation unfounded in any reality.

            God you are a worthless waste of human material, you dumbfuck.

              1. Estimated total cost of the total Bush tax cut package: $3 tr (according to CBO August 2010, and this figure includes $0.66 tr debt service). Over a 10 year period, that amounts to $300bn/year. Moreover, the analysis is static and cannot account for whatever growth occurred as a result of the tax cuts.

                Wars: $1.3 through 2011 tr rounded up, per Congressional Research Service, so around $110 bn/year.

                War$/year + Tax Cuts$/per year = Total annual Cost Attributed to War and Tax Cuts:

                $110bn + $300bn = $410bn

                Federal Deficit = $1,600bn

                Federal Deficit – Total cost of war and tax cuts = 1,600 – 410 = $1,190 bn.

                WTF Tony? What happened to the tax cuts and war being the cause of half the deficit?!?!?!?!?!?

                DOES NOT COMPUTE!!1!!!!

                1. cannot account for whatever growth occurred as a result of the tax cuts.

                  None. No growth occurred! What country are you living in? Is this sort of like no terrorist attacks happened under Bush? There was no financial crisis either?

                  Anyway, that chart addresses current and projected debt. I can frame their relationship to the deficit in another way: they caused it. They are more expensive than both wars, and there possibly would have been a surplus still without them but with two wars.

                1. Oh I don’t dispute that Medicare/aid are in an unsustainable place. (SS is not even part of this conversation, as that chart depicts.)

                  Still, the only people interested in making savings in Medicare in a way that doesn’t just obliterate it are Democrats–and when they attempt the slightest thing, they are assaulted over it and lose elections.

      5. I dunno, why do certain fatasses feel entitled to lecture the country about what they eat and propose government programs?

      6. Try looking forward instead of backward.

        1. Wouldn’t that be convenient for the perpetrators.

          1. …how much more in debt are we thanks to Obama, again?

            UNNECESSARILY in debt, that is.

            1. Not very much at all. Obama’s social programs, unlike those of Bush, were paid for and even projected to reduce the deficit (I know you will quibble). It’s hard to blame Obama for the economic conditions too. It’s really mostly Bush and congressional Republicans. Back then when they said deficits don’t matter, they really meant it.

              1. Look, I agree with you up above when you say that we shouldn’t give extra points to repubs for talking about shrinking gov’t if they don’t actually do it. To me, that just makes them ever worse: blatant liars about a subject I hold near and dear to my heart (shrinking gov’t).

                But cut out this blame bullshit. Dems have controlled congress since 2006. At what point do you start to realize that they were also a huge part of this problem? Do they have to control all branches of gov’t for at least a decade before you’ll concede that? I mean, we’re talking about 5 years now holding the purse strings, two years with a super-majority, and they didn’t fix a goddamn thing.

                1. Democrats may have controlled Congress from 2006 on, but they had to rubber stamp Bush’s spending spree and freedom-rape binge. They just had to!

                2. Well, neither I nor they accept that debt is the problem to be worried about now. That’s why all solutions being proposed by anyone but the crazies are long-term ones. Cutting spending when trying to recover from a recession is a recipe for more recession. So this is a Republican argument, which incidentally the Democrats are winning.

                  1. Nice goal-post shift, asshole. You claim the current record deficits came about because of Bush. I refute with the fact that dems have been in control of the purse since 06, and two years of that with a supermajority.

                    You then come back with, “well debt isn’t really the problem right now”.

                    That wasn’t the fucking question. The question was, why didn’t the dems trim the deficit starting in 06, instead of spending more and more? And don’t you DARE say “there wasn’t a crisis yet so they didn’t know they needed to!”, because by that logic, then one can spend when one isn’t in a crisis, and then must also spend ones way out of the crisis. So basically, a never-ending spew of cash.

              2. …we’re how many trillions in NEW debt, again?

                1. It’s all the fault of the Republicans and their superminority!

      7. So politicians should be banned from trying to correct their mistakes? That sounds like a recipe for quickened disaster.

      8. Tony, you seem willing to ignore the fact that this year’s $1.5 trillion (last I checked) deficit is the largest in history. And if you factor in implicit debt in the form of Social Security or Medicare, it seems the Dems have contributed the most. I’m not defending the GOP here – spending was certainly out of control during the Bush years. Just pointing out the confirmation bias you seem to always be suffering from. We’ll cure you someday!

  4. why is this preferable to a flat tax?

    1. Because a flat tax still requiring the governmetn to dig into your financial life.

      1. The Government will still have to look into everyones income every year under this plan as well. How else will they know if you qualify for a tax-Back if your low income or that your purchases fall into the non-tax catagory. the IRS is here to stay no matter what program we use.

        1. That’s not how it works. EVERYONE gets the prebate. You don’t have to qualify for it.

          The only people that would have to file would be people that sell a good or a service, and then that would be simply a remitance based on sales. No other calculations needed.

          1. If everyone gets it, how does that stop it from being a regressive tax?

            1. It’s kind of like a negative income tax.

          2. Fair Tax proponents would give qualified families a sales tax rebate each month, calculated as the product of the 23 percent national sales tax and the monthly poverty level.

            Explain in 50 words or less how one becomes “qualified” without someone digging through your financials.

            1. Don’t need 50 words, I can do it in 4.

              Because Cavanaugh is wrong.

    2. Because a flat tax is even less likely to pass than a sales tax. Try to find a politician with the will to raise poor people’s taxes while giving huge tax breaks to the rich.

      1. It needn’t be a huge tax break to the rich at all. Up the taxable income threshold and make them pay a smaller percentage of a larger number.

      2. actually the way to triangulate it would be to figure out how much the rich actually pay on average, and what the actual bracket is. Pick a number between those, and say, hey, honest rich people who have been paying their fair share will get a break, but most rich people will start paying more.

      3. A flat tax is a relatively easy sell. A complicated tax code only benefits the wealthy. The rich will have their tax cut they will either create tax deductions through campaign contributions or they will find it in the tax code… By eliminating it a flat tax will be the most progressive tax code there is… Most tax deductions are based on the more you spend the greater deduction which is incredibly regressive.

        Also the raise taxes on the poor… the argument can be made that everyone should contribute on the question of fairness…

    3. it’s not.

      How about a constitutional amendment stating that personal income taxes are earmarked for paying off the debt and expenditures for congressionally declared wars. Tariffs and corporate taxes can go to pay for everything else. (Nautrally expanding the debt would only be allowed for war expenditures)

      1. that way there’s a real pressure to keep congress from declaring war – you will start to see an income tax.

        1. that way there’s a real pressure to keep congress from declaring war – you will start to see an income tax.

          Sounds to me like that way there’s a real pressure to keep congress declaring new wars, so they can keep the income tax revenues coming in, so lobbyists keep supplying them with vacations and women/men.

      2. How about a constitutional amendment stating that personal income taxes are earmarked for paying off the debt and expenditures for congressionally declared wars.

        Excellent! We’ll put those taxes into a lock box.

      3. With all the transparancy we have into current government taxing and spending I am sure this will work great.

        1. if it’s off by more than about 75% it will be hard to notice.

          1. hard to *not* notice

  5. “But in practice, it’s hard to see how sending a monthly check to every household in the country would reduce the role of government in our lives.

    Really? The prebate is very simple, based on the number of people in your household. It doesn’t require you to go into detail on all financial transactions every year and provide them to the government.

    And the execuse that after the Fair tax was enacted they could start to sneak in an income tax again is bullshit as well.

    If that’s your line of reasoning, then we can never make any changes, because there’s always the possiblity that a bad change could be enacted later.

    As an economist and a CPA, I believe that the Fair tax while not being perfect, is about 1000% better than what we currently have.

    1. Less government intrustion in your life
    2. taxes consumption instead of income, thus encouraging people to work and save
    3. Taxes underground economic activity (good until we get around to ending the WoD)
    4. Brings back those trillions stored offshore in tax evasion
    5. Removes hidden tax costs in American exports thus making our goods more competitive (IE Employer share of FICA etc)
    6. Saves about 200b a year in tax compliance costs.
    7. Goes from 60,000+ pages of tax code to under 200, thus allowing pretty much anyone that wants to to actually understand the tax code.

    1. The article brings up some good points though. The complexity required to determine what goods will be taxed introduces a new area where lobbying and social engineering can be introduced.

      We just need a way to make a VAT more transparent so when people buy a good, they know exactly how much of the final cost was due to taxes (embedded taxes as well as the final VAT added by the vendor). If you can increase the transparency, a VAT is by far the most simple and most likely, hardest to manipulate tax system.

      1. a VAT is by far the most simple and most likely, hardest to manipulate tax system.

        cash transactions?

        1. a VAT is by far the most simple and most likely, hardest to manipulate tax system.

          Head tax?

          1. Who pays the Head Tax? The pitcher or the catcher?

    2. I engage in a lot of “underground” economic activity, and would prefer to continue not having it taxed, thank you very much.

      That aside, I could get behind it IF the 16th was removed FIRST. Not in 5 years, not maybe down the road…first. Part of the repeal could include the language that as soon as the repeal is valid, the fair tax will immediately kick in.

      I just don’t trust the gov’t enough to leave them any wiggle room.

      1. I would imagine that if you gave people a couple of years without having to file taxes it would be pretty hard to NOT get the amendment passed. Trying to get it passed now just makes it that much more likely that we will never get reform.

        @ Brian,
        You are worried about complixity when the Fair Tax is 131 pages, but not when we have 60,000 !!! pages of current tax regulation?

        131 pages isn’t much at all. It can be read and comperhending in an afternoon. No more tax comliance departments needed, or $200+ an hour CPA costs.

        1. Problem being, as long as that amendment is there, people won’t get those years of not filing taxes.

          Do you seriously trust their “take our word for it, even with the capability, we’ll just voluntarily stop the income tax” bullshit line?

          1. The Fair Tax emliminates all those other taxes when it’s passed. So they would have to be re-enacted again.

            So the congress and senate which just passed the Fair Tax would have to turn right around and reinstate a new tax. That seems unlikely to me (at least right away).

            Longer term I agree it would be good to repeal the 16th. That way in 10-20 years when people forget how much they hated filing taxes, or paying accountants a new income tax isn’t enacted.

            1. So the congress and senate which just passed the Fair Tax would have to turn right around and reinstate a new tax. That seems unlikely to me (at least right away).

              I find your overabundence of faith disturbing.

            2. He does kind of have a point. Congresscritters love to take money when it is not obvious that they are taking money. It’s not totally crazy to think the public would notice if they were paying both income and sales taxes and vote accordingly.

        2. The current code didn’t start at 60,000 pages and because of the need to distinguish between taxed and non-taxed goods, the fair tax would not stay 131 pages very long.

          That said, I’m sure for a while, it would be a vast improvement over the current system. But then again, there are probably easier ways to improve the system without needing to repeal an amendment.

          1. When I was reading over the Fair Tax one of their main points is there shouldn’t be a lot of distictions. That’s why no carve outs for food etc. Keep it simple, and keep the lobbyists out

    3. If the FairTax is enacted, how long before some politician starts making a stink about how it’s unfair that rich people get a rebate check they “don’t need”, while poor people still don’t have enough to make ends meet? I’d set the over/under at 15 minutes.

      I agree that “it might be better than what we’re doing now, but what if it leads to something bad in the future?” is usually not an especially sound argument, but this goes beyond mere speculation. We have about a century worth of evidence for why it’s a bad idea for the government to start sending checks to people, and I don’t see how the FairTax would be any different. Sure, it’s more philosophically-justifiable, but politicians will still use it for fear-mongering and vote-buying, and people will still flip out over any attempt to reduce taxes (and concurrently reduce the prebate amount), just like with any other entitlement program.

      1. +1

        I really like the idea of taxing consumption instead of taxing production. I really like the idea of dramatically simplifying the tax code. I really do not like the idea of government sending the entire US population checks every month.

        1. I agree the prebate is rife with potential abuse; however, I think any special treatment becomes a lot more obvious and hopefully, a bit harder politically to justify.

          With the current system of tax credits, the fact that money is being taken from some people and given to others is obscured because the credit is subtracted from the amount of taxes you owe. With the prebate, an extra check is sent to some people but not others. If I were getting an extra check from the government, I would have a hard time convincing myself that I somehow had earned it.

          1. You’re not a welfare stater though. Most people’s sense of entitlement to government largess astounds me.

            I do like your point about the prebate making favoritism easier to spot for the lay public though.

          2. In the Fairtax, the prebate is sent to everyone, not certain people and not others.

      2. I’ll take the under.

    4. Fuck the “prebate.” It is the single dumbest policy idea I’ve ever heard. How do Boortz, Cain and co. think they’re going to get rid of the IRS?! Are you the checks going to send themselves out? Do you think fraud will just go away? You really want to NATIONALIZE the sales tax?!

      1. I think the prebate is a great idea to untax people up to the poverty level. That way people don’t pay taxes on the bare minium they would normally purchase. Although, I suspect an especially frugual person that just purchased used goods and did most things themselves might come out ahead.

        And yes I would MUCH rather have a national sales tax, than a national income tax.

        1. A flat tax would do the same thing with a fraction of the administrative cost.

        2. That doesn’t translate to any meaningful difference in bureaucracy. The only effect will be making low-income people pay more and the wealthy pay less–the principal goal of this endeavor.

          1. …with the prebate, the poor wouldn’t be any worse off than they are right now.

            But if it helps the Team Blue Glee Club, you can bet Tony is in favor of spouting whatever he’s told to say.

            1. Fine so with your socialist handouts to the poor, only the middle class gets squeezed in order to benefit the rich.

              1. You can’t seem to do math, Tony. With the prebate, a poor person who makes close to the poverty level essentially pays no taxes (basically what happens now). How is paying no taxes oppressing the poor? When you spend above the poverty level, you pay tax. High income earners (not the same as the rich, it kills me to continue to read that false equivalence) tend to spend more, meaning they pay quite a bit more in tax. That doesn’t unfairly benefit them either. Seriously, your complete lack of grasp of these concepts in favor of team blue talking points is nothing short of amazing.

                1. Not to mention the additional taxes gained from tourists and the black market economy including illegal immigrants.

                  Also, it might give the economy a bit of a jump start since a flat tax means prices go up, people will rush to buy certain goods (new tvs, cars etc) before the increase deadline.

                2. No, it’s NOT the same as what happens now. This is now:

                  http://www.flickr.com/photos/fyngyrz/5152147883/

                  …and this is with the prebate:

                  http://www.flickr.com/photos/fyngyrz/5152145729/

                  People who think income taxes don’t affect the poor who have a nominal 0% rate simply haven’t thought it through.

          2. kind of like the principal goal of inflation!

          3. I’m beginning to think that everyone is right and you are a sock puppet. But just for the heck of it: why the fuck shouldn’t the poor pay their fair share of taxes? Nevermind that the proposed plan wouldn’t do that.

            Oh, and you’re gonna sit there and try to bitch about it screwing the middle class? You do realize that in order to reap the benefits of repealing the Bush tax cuts, the majority of the burden would have fallen on the middle class?

            I’m not an anarchist so I can swallow consumption taxes, but fuck you if you think I should pay to have a job to support my family.

        3. Instead of a prebate, just make things such as groceries, rent, and other necessities exempt from the sales tax.

          1. That’s what I’m thinking. Food and rent should be exempt, like they are from the current sales tax, because they’re necessities (though I think if you buy a house, it should be taxed.)

    5. 8. Eliminates some of the absurd social engineering in the tax code such as the home mortgage interest deduction, which encourages leveraging as opposed to actual equity ownership and penalizes those who cannot afford to purchase a home. It pisses me off to no end that I can deduct only $60 for being a renter while someone who purchased a home with 5% down will be able to write off exponential multiples of that amount.

      1. You get the same thing with a flat tax.

        And, ya, it pisses me off too, but it pisses me off more that people who have no business being parents get to deduct children and actually get PAID (through the Earned Income Tax Credit) for having kids.

        1. agreed on both points.

      2. Renters benefit from mortgage deductions as much as home owners. They would certainly pay more in rent if the mortgage payments are non-tax deductible.

        Let me put it another way…. “Renters are lucky because they don’t have to pay property taxes”…..

    6. I think he tried to make the point that enacting a consumption tax without repealing the 16th could leave open the possibility of having both a consumption tax and a income tax. Thus giving Washington yet another way to take our money.

      1. change your handle. Trust me.

  6. What about a flat tax, that could trim it down even more? What, 15% of all income up to, and above, certain points? (i’d like it to be completely flat, but that will lead to more bitchin’) Why would this be better?

    1. Do you like forms, deadlines and audits? That’s what you keep with a flat tax.

      1. Also when the Fair Tax was designed it was to be revenue neutral compared to our current system. That way we seperate the lower taxes debate from the simplfy taxes debate.

        1. THIS is the single WORST argument for the “fair” tax. You have NO IDEA if it is revenue neutral or not. The “idea” was devised back in the 90s, during a booming economy. Do you REALLY think you’re making the same on sales tax revenue now?

          Furthermore, sales tax is far more volatile than an income tax. This isn’t a reason to have an income tax, but it’s a great reason to stop acting like you can accurately forecast revenues with the “fair” tax, because you can’t.

          1. Fine. Let’s stay with the fucked-up system we have now, Fred.

            That make ya happy?

          2. You can’t forecast revenue reliably with income taxes either. Income does not remain stable in a recession, because people lose their jobs. Income and spending both decline.

      2. A flat tax on all income with no deductions would be simple. You could do all the math on a calculator watch.

        1. Yeah, but if you did it on a watch you’d look like a douche therefore we should keep our current million page tax
          – eventual congressional response to anything remotely constructive

      3. There would still be forms to file, it would just be done by employees at retail stores instead of by the public.

        1. Those forms would need to be filed by anyone who sells anything. I give the over/under on exempting used goods at -15 months.

          1. actually it’s only on new goods and services. Used goods are exempt.

            1. In the bill and the book.They’ll throw that out first thing. No legislation is passed as written. The real estate /homebuilder industry won’t stand for the used housing exemption.exempting used goods is the easiest way to dodge the tax as well.

  7. The only question that matters in a tax policy change is whether it makes the system more progressive or more regressive. You can be sure any proposal coming from any Republican makes it more regressive. Which fits their bizarre narrative that the poor and middle class have it way too good in this country, and the wealthy are practically slaves.

    1. Mmmm. Plump, slow-moving trollpuppet. Must . . . resist. . . urge. . . to. . . pounce.

    2. So you don’t think questions such as what type of economic distortions a particular tax causes are important? Or the amount of time and money that is wasted in tax compliance?

      What about the bad business decisions that are made stricktly for tax purposes, some of which include moving jobs offshore.

      None of those matter?

      1. Yes, after you answer the first question.

        1. I disagree. I think progressivness if you so desire it is, should only be one thing you look at. The others are equally important.

    3. No, that’s YOUR, unthinking question only, not everybody’s.

    4. Re: Tony,

      The only question that matters in a tax policy change is whether it makes the system more progressive or more regressive.

      News to you:

      ALL TAX SYSTEMS ARE REGRESSIVE. ALL OF THEM.

      Think about it for a minute and you will realize why.

      1. Good to see you again, OM.

      2. Because of an array of assumptions you expect me to buy? Sorry, find someone who believes in forests to explain it to me and I’ll take it under advisement.

    5. Ok, flat % income tax coupled with a per-capital payout of about 20k/adult.

    6. No, the only question is how much revenue it raises.

    7. Higher gas and energy taxes are “regressive”.

      Fucking regressive.

  8. OT: 14 Cities being consumed by their employees
    http://www.businessinsider.com…..011-7?op=1

    1. yummy yummy cities.

      1. …except I really hate the crunchy bits, but love the soft chewy centers.

  9. As long as the legislation is doomed, however, the debate over the Fair Tax is a good one to be having.

    I want to go back to talking about Dole’s 15% flat income tax.

  10. A national sales tax means the poor pay more taxes, the middle class pay more taxes, and the rich pay less taxes. A national sales tax with a check sent to all citizens means the poor pay about the same, the middle class pay more taxes, and the rich pay less taxes. (All scenerios assume revenue neutral proposals.)

    The goal of a flat tax is to make the rich pay less taxes and the middle class pay more. Even if that is not the goal, it is the result.

    1. DAMMIT. “Fair Tax” is NOT a FLAT TAX!!!!! Stop saying stupid things.

      You can structure a flat tax (like in TONS of places in Europe) where people below a certain income threshold pay ZERO tax (just like in the status quo). Please pull your head out before you start talking.

      1. Fine, whatever. Change the word “flat” to “fair” in the final sentence of my post. Nothing else changes, including the fact that the middle class will pay more taxes and the rich less.

        1. Last time I checked, Rich people bought more stuff then Poor people. How do they manage to pay less in taxes under a consumption tax?

          1. Less as a percentage of income.

            1. I don’t think so. Check my math here:

              Bill makes $1000 and spends every penny of it. Lets assume he gets a prebate of $200. For a 23% sales tax, he ends up paying only $30 in net taxes or 3% of his income.

              Frank makes $10,000. First, assume he spends it all and we have the same $200 prebate. At 23%, he pays $2100 in net taxes or 21% of his income. To be more realistic, lets assume Frank saves of his income and spends the rest (spends $8000 dollars). Net, he pays $1640 in taxes or 16.4% of his income.

              The formula for taxes as a percentage of income ends up being (rate)*(fraction you save)-(prebate/income). Hence as income grows, your rate gets higher, not smaller.

            2. Not over time. They (or their heirs) consume it eventually. Income gets consumed eventually.

              1. Yep, what’s the point of having money if you can’t ever consume.

  11. A VAT – or any consumption tax that could be easily opted out of (i.e. saving) – would be dandy if we got rid of the income tax.

    The income tax is just a form of slavery: either you don’t work at all or you work and give the government a cut. And if you don’t give them a piece you can go to jail. That is, they have the right to repossess your body for non-payment of debts, just like a defaulted car note or a foreclosed home. There’s no liberty in that at all. That’s slavery.

    If all we truly own are our own bodies, and all property comes out of labor from our bodies, then a tax on our labor cannot be in accordance with natural law.

    1. but what about our precious bodily fluids?

    2. A sales tax doesn’t satisfy natural law. If our labor is ours, it is also our to trade freely. All we are doing is trading a penalty on income for a penalty on trading.

      The government merely becomes a pimp rather than a mugger.

      1. Is there a way to fund government that satisfies natural law/respects property rights? Mind you, not the 40% of GDP leviathan we have now, but some minarchist ideal of government.

        1. I struggle with this, because there is still a question of the commons that needs to be addressed in society.

          Most libertarians are quite fond of pointing out that they’re not anarchists, but then it’s also hard to logically draw that line somewhere. (at least for me)

          That said, I think a tax on consumption is the least bad because it’s the least intrusive. Income taxes are slavery and property taxes are extortion. Consumption taxes are… I dunno.

        2. It would have to be voluntary, with a fee for service model for most things and for truly common things (like defense) relying on strong social pressure to keep down the free-rider problem.

          Or it could be a true social contract, a binding sunsetting document that outlines the relationship of the individual to the state and the responsibilities therein on both parties. If you don’t want to sign, you become a true sovereign individual and can either contract out defense of your self-ownership or assume that defense yourself.

          In a truly libertarian society, there almost couldn’t be a single state, but rather competing services that act in quasi-state functions that may or may not band together for a common defense.

          1. There’s a good back-and-forth about this in Singularity Sky by Charlie Stross. Also totally awesome dystopian post-Singularity fiction.

          2. The form “strong social pressure” takes to eradicate free riders in a complex society is “law enforcement.”

            1. Fuck off, sockpuppet.

              1. I first read this as “Sock off, fuckpuppet”.

            2. Replace “law enforcement” with “lynch mob of people with pitchforks” and see if you can still get behind the idea.

              1. I should have qualified it with “democratic legitimacy.”

      2. I know, I know. But I think the former is still better less worse than the latter.

        1. This was for Mr Nutrasweet.

          1. Your moral quandry is what first led me to anarcho-capitalism. I couldn’t logically justify drawing an arbitrary line at what point I could consider “minarchy” justifiable.

            1. So stop worrying and accept taxes as the fee people pay for civilization… most people don’t want to give up civilization, so what’s the point in supporting something only for the purposes of satisfying your moral hangups? That’s not meaningfully contributing to political thought, it’s narcissism.

              1. If it moves people in the right direction it’s contributing, and best of all, I get to look at myself in the mirror without seeing a massive TEAM SHILL turd staring back at me.

                1. “…what’s the point in supporting something only for the purposes of satisfying your moral hangups?”

                  Like raising taxes when they don’t need to be raised?

              2. most people don’t want to give up civilization, so what’s the point in supporting something only for the purposes of satisfying your moral hangups?

                Libertarians don’t want to give up civilisation either. Don’t be dishonest. We just don’t think civilisation needs the life-support machine of government – it can breathe on its own. And don’t call peoples’ morality narcissism – that’s downright rude.

              3. So, the US pre 1917 was not civilized?

              4. Government does not equal Civilization. Government equals control of anything they like by coercion. Witness our current oath-breaking rulers.

                Control of injury and theft, plus defense from external threats, equals civilization. Everything else is overkill.

            2. I think it is easy to draw a line as to what a government can and cannot do morally. A minarchist government may respond to the initiation of force just like an individual. Government is just a means by which individuals may efficiently respond to force.

              Now, the funding of said government. Now that is a tough nut to crack. Aside from the collection plate, I don’t see a moral way to do it.

        2. It might be less worse, I just think that it can really only be a pragmatic argument, not a moral one.

          1. Oh, I dunno. Given two options, the one that is less bad is more moral.

            Otherwise, anything not perfect is immoral, meaning everything is immoral.

            1. I don’t think so. The immoral act is taking something without someone’s consent. As long as that’s happening, the mechanism can only be judged based on the harm it does. Which is a strictly pragmatic argument over ethics.

              If you believe life begins at conception, is there really a moral argument about the method? If you disagree with the death penalty being administered by the state, isn’t lethal injection vs. the electric chair a post-facto argument about pain and efficacy? Is it more our less moral to hit some with a baseball bat or a bike chain? Isn’t the immorality in the act of aggression, not the method?

              The deliberate confusion of ethics and morality is the utilitarian way, not ours.

      3. The only funding option I can think of that doesn’t violate someone’s rights somewhere is voluntary donations. So just as soon as the Warren Buffets start matching their actions to their talk we’re golden!

    3. This is the ONLY good argument for the Fair Tax.

    4. Do we also not have a right to live? And does life in the modern world typically requiring buying stuff (food itself or agricultural/hunting supplies, that sort of thing)?

      If the income tax is slavery, then VAT is armed robbery. Either you live, and pay the government for the means of life, or you die.

      1. VAT =/= Fair Tax

        VAT = Productivity Tax
        Fair Tax = Consumption Tax

        There is a clear difference in the two tax schemes.

    5. Unless you’ve actually been a slave–a person forced to work for no wages under most likely horrific conditions–let’s leave that comparison aside, how about? It tarnishes any argument you make. Why is it any more slavery to take taxes out at the income stage than the purchasing stage?

      1. Fine.

        Stop comparing states’ rights to a desire to go back to slavery.

        It tarnishes any argument you make.

        1. You don’t find it just a little relevant to an argument for individual liberty that it originates in a movement to keep people as chattel, and thereafter as second-class citizens?

          1. How long ago was slavery abolished here, Tony?

            Never mind the tiny, tiny percentage of morons who pine for those days… It. Will. Never. Happen. Here. Again.

            Get the fuck over it.

            1. You’re only against the concept of states’ rights because it interferes with your big-assed, planned-from-top-to-bottom state wet-dream.

              I don’t need help. YOU don’t need help. People who can dress themselves, drag their asses to work every day, manage to not pound the fuck out of the moron who scraped against your car in the parking lot, feed and care for themselves, and maybe manage to enjoy life in between the daily drudgery… don’t need help.

              Your Team, and Theirs, see us as five-year-olds. The whole fucking nation, viewed as kindergarteners, by Those Who Appoint Themselves to Know Better.

              Fuck that.

              1. I’m just asking for an explanation about why more power vested in states means more liberty. It makes no sense, especially considering the history of the movement, which was all about denying individual rights.

                1. I’m just asking for an explanation about why more power vested in the federal government. It makes no sense, especially considering the recent history of the movement, which was all about deleting individual rights.

                  Perhaps we should vest more power in the UN. You know, the organization that made North Korea the head of the disarmament comittee.

                  1. The general trajectory of the federal government for the better part of a century has been to increase individual rights, sometimes fundamentally. Some states are better, a lot, especially lately, are worse. And it’s the latter who are populated by people who care about states’ rights.

                    1. I’ll say it right now. States don’t have rights. It doesn’t matter whether individual rights are violated at a state level or a federal level. In either case, they’re evil. However, don’t pretend like the federal government has only ever upheld individual rights. The history of the U.S. is replete with violations thereof. Aggressions against Indian nations. An illegitimate war w/ Mexico. Internment of U.S. citizens. The deliberate targeting of civilians in WWII. Conscription. All violations of individual rights. I don’t pretend that putting more power in states’ hands will do anything. Stop claiming that it’s better in federal hands.

                    2. I’ll say it right now. States don’t have rights. It doesn’t matter whether individual rights are violated at a state level or a federal level. In either case, they’re evil. However, don’t pretend like the federal government has only ever upheld individual rights. The history of the U.S. is replete with violations thereof. Aggressions against Indian nations. An illegitimate war w/ Mexico. Internment of U.S. citizens. The deliberate targeting of civilians in WWII. Conscription. All violations of individual rights. I don’t pretend that putting more power in states’ hands will do anything. Stop claiming that it’s better in federal hands.

      2. Re: Tony,

        Unless you’ve actually been a slave–a person forced to work for no wages under most likely horrific conditions–

        You mean to tell me that the Mamelukes were not slaves?

        Why is it any more slavery to take taxes out at the income stage than the purchasing stage?

        Because at the income stage you are toiling, whereas at the consumption state you are not. Hence, taking from your income is enslavement; taking before you buy is simple thievery.

      3. “a slave–a person forced to work for no wages”

        Slaves were given food, clothing, and shelter, such as it was, just as the government doesn’t confiscate all of our income.

      4. Slavery is forced labour. It’s wrong. It doesn’t matter if you get wages. You can’t proclaim an argument taboo.

  12. The spending side of government is going to have to get fixed first or tax reform won’t matter.

    The federal government needs to be significantly shunk in size and scope so that the spending requirements are drastically reduced.

    Then let a new tax system be designed that is more fair and only collects enough revenue to finance the reduced level of government.

    Otherwise tax reform is constrained by a requirement that whatever system is proposed produce as much or more tax revenue as the current system.

    1. If reason were reddit, this comment would deserve to be upvoted to the top of the discussion.

      How about we got back to 1991 levels of government spending, and then eliminate the income tax, and replace it with nothing?

      Flat vs. fair vs. cheesecake doesn’t matter. As Ye Olde Man from Mexico said, all tax systems are regressive. I would have thought libertarians would be more reflexive in asserting this.

      1. See my comment above at 2:34 PM. We can’t just easily go back to 1991 levels of spending, we can’t go back to 2001 levels of spending even.

        So much of the spending is the direct result of SS/MC. Those two entitlement programs are the clusterfuck that created this situation, and until politicians get the balls and the voting public (esp the elderly) realize what those programs are doing to the federal ledger, all hope is lost.

        Bush averaged deficits in the 2001-2007 period of around $350bn. Granted, shouldn’t have been that high even, but that was still manageable. What happened in FY2008 to drive it north of a trillion. Well, yes, the economy shit the bed. But the real loses in income didn’t materialize until FY2009 (FY 2008 revenue was about equal to FY 2006 revenue, although a little below FY2007 revenue).

        The real change wasn’t the income side, it was the expense side. And there was one fundamental thing that happened in 2008 that changed the expense side: The first baby boomers, born in 1946, turned 62 y/o and started early retirement collections from SS. Now 2011 is set to be a monumentally worse year in spending, not because of TARP or the stimulus (both of which are obviously dumb policies, but not the main drivers of the deficit/debt), but rather because those same boomers are now turning 65 and starting to collect SS regularly and getting their medicare.

        Entitlements are the problem. Anything else that oversimplifies the argument or tries blaming this POTUS or that POTUS is just partisan dumbfuckerry.

        1. So much of the spending is the direct result of SS/MC. Those two entitlement programs are the clusterfuck that created this situation, and until politicians get the balls and the voting public (esp the elderly) realize what those programs are doing to the federal ledger, all hope is lost.

          Completely correct. Have a look at the 2010 budget expenditures chart here. http://en.wikipedia.org/wiki/F…..tegory.jpg

          The top categories:

          19.6% SSI
          18.7% DoD
          16.1% Unemployment/Welfare/other mandatory spending
          12.8% Medicare
          8.2% Medicaid/CHIPS
          4.6% Debt Service

          Total: 80.0% Even if you take out debt service and DoD, you’re looking at over half of the budget being SS/Medicare-Medicaid/Welfare. And, as Sudden accurately notes, it is only going to get worse.

          You cannot fix the U.S. Federal fiscal problem without changing the entitlements in some way. Period. (I like the idea of means-testing Medicare and SSI and removing the income caps on contributions, but I’m willing to listen to other suggestions.)

          Preaching to the choir, I know, but I thought it bore repeating.

          1. Raise the cap to $500,000 and increase the retirement age one year every fifteen years starting in ten years. Means testing creates a moral hazard to try to retire broke.

            1. Means testing can be based on average annual lifetime salary instead of net worth. No need to punish those who saved from their relatively modest incomes; way to punish idiots who chose not to save in spite of lavish incomes.

              Moreover, means testing strips SS of its majoritarian structure and thereby makes it less of a third rail.

              1. What about the moral hazard of not really giving a shit about ever making a decent living?

                1. I don’t imagine it would be an issue. Such a policy would likely involve a scale of diminishing SS bennies based on average annual income. Most people aren’t willing to short themselves in the here and now as a means to massage their SS collection potential 2 or 3 decades hence. There are ways the system could be structured and organized to limit moral hazard and still achieve gains in/towards solvency.

                  1. First off, I could give a crap about whether socialism security stays solvent. But your ideas on equal protection under the law doesn’t sound so libertarian.

                    1. Never edit half a sentence at a time.

                    2. Its a transfer payment welfare program; equal protection of the law doesn’t exist in such programs. Medicaid is means tested, but never once has it been said to discriminate against the better off and apply an unequal protection in violation of the 14th. If there were true equal protection of the law, tax rates would be flat, or even moreso, capitation taxes instead of income taxes. If there were true equal protection, all people would qualify for any subsidies that some people do (i.e. welfare).

                      Its not an insurance system, its a transfer payment system. The sooner we recognize that and make reforms based upon that underlying reality, the better off we’ll all be.

                    3. Again, what Sudden said. SSI is welfare for old people: a way so seniors at the very bottom don’t have to eat dog food. Or, in the case of Medicare, have to do without basic medical care. As such, means testing SSI and Medicare seems very proper.

                      Seniors are vastly more likely than other age cohorts to have savings, investments, a house, other assets. For those that weren’t able to acquire such things, O.K., provide a minimum level of subsistence, but otherwise, why should a group with assets get to transfer wealth away from a group without?

        2. “Those two entitlement programs are the clusterfuck that created this situation, and until politicians get the balls and the voting public (esp the elderly) realize what those programs are doing to the federal ledger, all hope is lost.”

          All of that is true, but what you’re asking the elderly to do is vote against their rational self interest. “You paid into this pyramid scheme your whole life, but now that it’s time for you to collect your return we need you to voluntarily not take it” is not a winning argument.


      2. Flat vs. fair vs. cheesecake doesn’t matter. As Ye Olde Man from Mexico said, all tax systems are regressive.
        ~ poetry

        Of course, Old Mexican is wrong and most likely he meant that all taxes are punitive.

        In the U.S.A., in all states that levy taxes on income as well as the U.S. itself, the tax systems are progressive — the tax rate increases as the taxable sum increases (progresses).

        That right there stands as damning evidence to refute his wrongheaded claim that all taxes are regressive — the tax rate decreases (regresses) as the taxable sum increases.

        FICA taxes levied on wage income use the same rate regardless of taxable sum. Thus neither such a tax is neither regressive or progressive.

        Sales taxes levied in many taxing jurisdictions of the U.S.A use the same rate regardless of the taxable sum, again like the FICA taxes, neither regressive or progressive.

        1. Of course, Old Mexican is wrong and most likely he meant that all taxes are punitive.

          All voluntary transactions create 1rst class positive externalizes. 3rd parties benefit because the exchange made the transacting parties better then they were before the transaction and more apt to enter into transactions with 3rd parties.

          All taxes discourage voluntary transaction by the simple fact that parties have less to transact with. The poorest, those with less always are harmed more because they are the ones in most need of benefit.

          Thus all taxes are regressive.

          Oh by the way it is not true that people must agree with you in order to be libertarian.

          The fact is you must agree with me to be true libertarian.

          Joshua Corning, the real libertarian key master!

          1. A regressive tax means a tax with a rate decreasing as the taxable sum increases.

            You’re conflating the word regressive with punitive.

            Regressive Tax has specific meaning in both public finance and economics.

            Likewise, a progressive tax is one where the tax rate increases as the taxable sum increases.

            Both regressive and progressive taxes can get levied on either income or sales.

            Did you want to talk about taxation Joshua Corning or were you merely making chit chat?

      3. How about we got back to 1991 levels of government spending, and then eliminate the income tax, and replace it with nothing?

        How about we go back to 2003 levels of government spending first, and balance the budget without increasing taxes?

      4. They may all be regressive, but some are more regressive than others.

        If you’re telling me “We’re taxing all sales, but in order to not make it a regressive tax, we’re sending out prebates,” then you follow that up with “…to everyone,” then you’re not reducing the amount of regressiveness at all.

    2. Spending will only stop when there is nothing to spend.

      The only solution available before that day comes is secession.

      This is a country populated with large numbers of useless, underachieving parasites and corrupt, manipulative, corporate and government swineherds. They will not stop spending and they will not even consider any tax reform proposal that reduces their power.

      The people running this country and the idiot rabble that supports them are actively at war against individualism, against self-reliance, against independent thought, and against entrepreneurial endeavors. You are not going to successfully negotiate, compromise, or convince them to support a pro-freedom, responsible approach to government. Such a thing is the very object of their scorn.

      As such, debates over the FairTax, the Flat Tax, or any other tax reform proposal are meaningless so long as we live under a government terminally ill with gluttony.

      1. Free State New Hampshire?

        South California?

      2. Woah, tone it down a bit there, Ayn.

        1. Fine. It’s harshly phrased. Now find an untruth. Good luck.

  13. Here’s my suggestion for a national tax program:

    1) Create a budget.

    2) Send a bill to the 50 states, prorated by their share of electoral college votes, e.g. # Reps + # Sens.

    3) Let the states figure out the least socially destructive method of taxation. Progressive states can throw 100% marginal income tax rates out, conservative states can go with sales tax, georgist states can go with LVT, etc.

    4) If the states fail to pay, burn their capital to the ground as an example to the rest. We’re an empire and have been at least since half the states were subordinated to the superstate through military conquest. We may as well make peace with it.

    1. When Idaho was considering various methods of nullification of Obamacare, I wanted to see them go a little further. They should pass a law saying that they will nullify those aspects of the federal government that they deem clearly unconstitutional, and then serve as a clearinghouse for their residents’ tax payments. If they nullified, say, programs that constitute 20% of the federal government’s budget, then they would send 80% of each person’s total tax liability to the feds, while refunding the remaining 20% back to the people. They would then be opting out of the cost and the benefit of such programs. Even though it would likely get destroyed in the courts (maybe not until exercised, though), it would still have been a nice fuck you to the feds.

    2. burn their capital to the ground

      Send in General Bernanke?

      Smartass spelling corrections aside, I’ve never understood why this approach doesn’t get more play. Why do those who oppose the federal income tax take for granted that federal revenue must be collected at the federal level?

      1. That’s another benefit the Fair Tax: the actual collections are left to the states, which then remit it to the Feds.

      2. Spelling correction? I meant the whole fucking city.

    3. If the states fail to pay, burn their capital to the ground as an example to the rest.

      You idea has great potential.

      1. It might reduce subsequent tax revenues, though.

  14. Cavanaugh, will you please fix the heading on the main page to say FAIR tax instead of FLAT tax? Some of the simpletons here apparently do not realize it was a typo and think you are talking about a flat tax in this article.

  15. The sales tax could be lower for green stuff like burgers made of human feces
    http://gothamist.com/2011/06/1…..s_and.php.

    And higher for stuff like burgers made out of meat. That way we can make everybody live the way I want!

  16. 23% is too much. I think it should be graduated based off of the type of purchase… grocery purchases should be 5% or less. School supplies and clothing should be 10% or less with tax holidays. Consumer electronics should be 15-20%. Vehicles should be about 5%, because 23% on a $30k vehicle is $6900. That’s quite a lot, especially if it is financed.

    Besides, you’d also have to add state and local sales taxes on top of that, which in some places may make you pay 50% in taxes on a purchase. Hot damn!

    But this type of taxation should encourage savings and investment more than income taxes, which actually discourage such things.

    1. Graduated would be nice but you just opened up a new way for politicians to grant favors and attempt social engineering. Tax credits for ethanol production will be replaced by a low sales tax on ethanol. GM needs a bailout, tax holiday on GM cars.

      Any good tax proposal should reduce the number of ways politicians can attempt to influence our behavior.

    2. Vehicles should be about 5%, because 23% on a $30k vehicle is $6900. That’s quite a lot, especially if it is financed.

      You don’t need a $30k car, you richest 1%!!! 1!!!1!! Unless its a Prius, which will be tax exempt.

    3. Proponents of the plan claim that the 23% would mostly be offset by the fact that FICA costs are not added to the product at every level of production. They claim that the out-the-door price, including tax, would be largely unchanged for most products.

      1. Proponents pitch the “fairtax” as bucket loads of free money. Employers and others are going to take the embedded tax out of what you sell your labor/services for so you’ll get less on the income end.

    4. Theoretically this isn’t a bad line of thinking, but isn’t it what a VAT does, and avoids all the special interest group/corporate lobbyist rent-seeking?

    5. That’s getting complicated… we wouldn’t want too many pages!

      1. Fuck Obama.

        Fuck Cantor, too, but Obama first.

      2. Quoth the Obamaswami: “Healthcare is complicated”

        Well, no shit. That’s why physicians are trained for upwards of 8 years post-Bachelors.

        Paying for it, on the other hand…..

    6. 23% is too much.

      23% was picked back in the day to match what income taxes were then bringing in. If we wanted to balance the budget, the rate would have to be closer to 40% now.

      Personally, I think a national sales tax would be a great way to pay for government — if it were capped at 5%, and if food was exempt.

  17. The only question that matters in a tax policy change is whether it makes the system more fairer according to me.

    You guys are all a bunch of heartless monsters.

    *sobs, runs off*

    1. Life isn’t fair. Life should be fair. Tax windfall fairness and redistribute to the fiarness challenged.

      Yes, and I am a fucking retard.

      1. Life isn’t fair, so we should actively make it as unfair as possible.

        1. Life isn’t fair, which is why we need a Department of Fairness!

  18. While the VAT lays taxes at every stage of production (and thus drives up the cost of the final retail product), H.R. 25 is painstakingly crafted to ensure that the sales tax is applied only at the retail level, which makes for highly prescriptive legislation. What happens, for example, when a manufacturer buys something with the intent of using it in production but then changes his or her mind? Would the sales tax apply at that point? (It would.) Would there be any penalties for this change? (Yes, under certain circumstances.)

    This is one major reason I don’t like it. As has already been pointed out, special pleading will in no way be reduced or controlled by this.

    Tax every dollar, from any source (doctor’s office visits, real estate, bananas, aspirin, titanium sheet, ANY GOODS OR SERVICES. At a low, low rate.

    A gross receipts tax would be indistinguishable in its effect from a national sales tax. I think 3% would probably be higher than necessary or desirable.

    Presto! No more social engineering or gaming the tax code (which is why it is an utter impossibility).

    1. FWIW, that would give a big boost to conglomerates that can pass goods and services around internally without being sold.

  19. Since taxing consumption rather than income is regressive … ~ Tim Cavanaugh

    Sadly, Tim, you’re mistaken.

    A regressive tax is one that that the rate decreases (regresses) as the taxable sum increases.

    A regressive tax tax is opposite to a progressive one, where the rate increases (progresses) as the taxable sum increases.

    Such taxes can get levied on any sum — whether income or a price tag.

    A regressive tax HAS NOTHING TO DO with consumption. You’ve conflated the regressive concept with PUNITIVE (punishing), Tim.

    Rhetoric swirls around regressive taxes and this is why dummies conflate the concept with punishment on the poor. For the suckered dummies, it seems “unfair” that a poor person pays taxes on products that such a poor person uses to sustain his or her life, like food, water, energy; because the sum of the taxes paid on such products over a year would constitute a higher percentage of that poor person’s income relative to a so-called richer person.

    Of course no one questions exactly why the concept of taking care of oneself as an adult is “unfair.”

    Tim Cavanaugh and many others at Reason.com (Peter Sudeman and Veronique de Rugy excluded) have woefuly lacking understand of all things economics and economy.

    Tim’s quoted expression above serves yet more evidence to this glaring truth.

    1. You’re being unfair. Cavanaugh merely used the term “regressive” as it’s commonly used, i.e., higher tax rate relative to income. To do otherwise at this point looks like sophistry intended to avoid a key issue: will the poor pay a greater proportion of their income in taxes?

      You may well make the case that this is irrelevant, that everyone benefits equally from government, and should pay equally. That Cavanaugh or de Rugy don’t make your case for you does not mean thay are ignorant of all things economic.

      1. Words are mere labels to concepts. So because most people mislabel concepts with words, everyone should go along with it?

        What would be the point of academia or of dictionaries or any human endeavor which seeks to come to know and to better understand the human experience?

        By his own words, Tim Cavanaugh does not get at all what regressive taxation means. Such taxation has nothing to do with consumption.

        Consumption means something precise in economics. Regressive taxation means something precise in economics.

        Yet you want Tim Cavanaugh to get a mulligan because he has conflated ideas and thus revealed his misunderstanding?

        That said, sales taxes get levied on the seller and not the buyer by law in all states of the United States of America that levy sales taxes.

        Merely it is practice that sellers charge customers the amount of the sales tax on a purchase. Typically, states require by law that sellers reveal such charges on sales receipts so customers can know what they paid for products and what sellers charged above the product prices.

        “Poor” and “rich” are subjective terms.

        Beyond the minimal uptake of calories and water to sustain life (putting aside air intake), everyone is rich.

        Putting all that aside, you might want to hire someone, say through craigslist.org, to teach you reading comprehension skills. A re-read of my previous comment shall reveal to you that excluded de Rugy from lacking knowing economics.

        Yet, you seem to have hallucinated and misread that somehow she was included as evidenced by your “…or de Rugy don’t make your case … ignorant of all things economic”

        1. “Poor” and “rich” are subjective terms.

          Actually, they’re relative terms.

          You can’t even follow your own pedantry.

          You can apply a rate beforehand OR you can calculate the realized rate afterward. You seem to be the only person here who couldn’t figure that out. Perhaps we can call you David Cay?

          1. And concepts that derive from subjective belief cannot also be relative?

            So no concept that you can conjure in your mind relates to any other concept that also you conjure in your mind?

            You amuse, Invisible Finger.

            1. “Poor” and rich” are opposites, like “boiling” and “freezing” – there is no need for subjectivity; we are conversing in informal, conversational English here. One could write “bottom quintile” and “upper quintile” but there is no need for it.

              One can conjure in the mind subjectivity in the terms, but the purpose of doing so is obfuscation. In which case you aren’t even trying to have an honest debate.

              So you’re either David Cay whatisname or Lonewacko. Essentially a distinction without a difference.

            2. Only in your mind are poor and rich “opposites.”

              Easily, one can make the case that rich is merely the superlative of poor, as best is the superlative of good.

              That you made a horrible gaff, pigeonholing yourself with the claim that “rich” and “poor” are relative but not subjective, amuses, Invisible Finger.

              Keep amusing, Invisible Finger!

        2. A re-read of my previous comment shall reveal to you that excluded de Rugy from lacking knowing economics.

          My mistake.

          If all these lame insults, nit-picks, and appeals to authority are just an argument that US tax policy is irrational, then for God’s sake man, just say so. You won’t find a more sympathetic audience.

        3. I think you’re missing the point. Reason is designed to be able to be read and understood by people of all ranges of understanding of economics – from Friedman or Smith or Von Mises all the way down to your neighbor who thinks Obama’s economic policies are pretty good. To use “regressive” in the way that everyone understands it makes sense in that context. If Reason were an economics journal you’d have a point, but it’s made for laypeople. And I think even the most brilliant academic economists can figure out what he meant there.

          1. So Nate, your argument is that it is OK to be conflate concepts in order to become better understood?

            And that is going to help the layman, how, exactly?

    2. You want to throw everyone to the whims of the unregulated market, then blame them when they don’t succeed in it?

      1. Yeah! We need a planned economy, at ALL levels!

      2. I have no responsibility to take care of you if don’t succeed.

        I don’t know you.

        I don’t care about you.

        I’m not your nanny.

        Imagine somebody with a spine and do what they would do.

        1. When those people you don’t know and don’t care about gather together in a shack community and breed up a nice colony of tuberculosis and worse, and those bugs come a-visiting, you’ll begin to realize why even a heartless idiot like yourself needs to make allowance for safety nets. Likewise, when they have nothing, and you have a lot, the poor will come visiting you personally, and they will take your stuff by force. Because that’s human nature, pal.

          Somebody with a spine (as opposed to someone who is a selfish, unimaginative prick like yourself) would act to protect their family and their community by ensuring that the poor don’t drop down into the gutter.

          1. Luckily, I am vertebrate and both selfish and imaginative. Therefore I would opt for ensuring that the poor never leave the gutter. If they climb out, we merely grind them into food for their equally worthless brethren.

      3. Who would you blame?

        1. Tony will blame the Republican Party and the libertarians on this message board, who are, each and every one, operatives of the GOP.

        2. Circumstance, nature, and luck are all good alternatives. You guys are the ones who want policy based on people’s alleged moral worth. I don’t care about that, I care about what makes economic sense.

    3. Of course no one questions exactly why the concept of taking care of oneself as an adult is “unfair.”

      Who the fuck are you arguing with?

      Not one person on the planet is saying the concept of taking care of oneself is unfair; some are saying the taxation is unfair.

  20. My takeaways from this:

    (1) As long as our republic is populated with kleptocratic crypto-fascist nanny-state corpocrats, any tax system will be rife with special pleading, rent-seeking, social engineering, and complexity.

    (2) Tax reform is largely irrelevant to the pressing question of the day, which is debts, deficits and spending. Not saying it may not be worthwhile, but its kind of deck chairs on the Titanic thing.

    (3) I learned at 3:04 pm that the “progressive/regressive” tax rhetoric has been corrupted by redistributionist fuckwads.

    1. As long as our republic is populated with kleptocratic crypto-fascist nanny-state corpocrats, any tax system will be rife with special pleading, rent-seeking, social engineering, and complexity.

      That is not a product of the type of people living in a society, but the weakness of government in dealing with such efforts.

      Tax reform is largely irrelevant to the pressing question of the day, which is debts, deficits and spending.

      What about employment?

      I learned at 3:04 pm that the “progressive/regressive” tax rhetoric has been corrupted by redistributionist fuckwads.

      Don’t you find it useful to know whether the poor and middle class are paying more or less in a given scheme?

      1. That is not a product of the type of people living in a society, but the weakness complicity of government in dealing with such efforts.

        FTFY

  21. The Fair Tax isn’t all that different from the excise taxes the country relied upon over a century ago. Calling it “fair” doesn’t make it so.

    As much as I detest income taxes, it is actually a fairer way of taxation that VAT or excise taxes. As completely fucked up as the income tax code is, it is still much cleaner than the silliness that excise taxes devolved into and the silliness the VAT systems are in Europe.

    A much simpler and fairer tax is a flat income tax with deductions that actually make sense – one can start with the standard deduction and dependents. Anyone that thinks 3000 some-odd dollars is a fair deduction of annual living expenses should be drawn and quartered. Put in a real deduction of $11,000 per dependent along with complete interest expense deduction and full property tax and charitable contribution deductions and the actual tax rates don’t need to be progressive because the median income family won’t be getting ripped off by the laughable standard deduction.

    1. Why should anyone get legalized deduction for children?

      Are children chattel who can be bought and sold, put into tilling land against their will?

      If a people are going to operate an income taxation system, correct deduction would be those for writing off transportation — cars, train fares, bus fares; writing off expenses for all forms of energy — food, gasoline, heat, electricity; writing off expenses for all forms of skills acquisition — schooling, training.

      Such are expenses incurred by the individual in the sale of his labor. After all labor is the poor man’s capital.

      1. Are children chattel who can be bought and sold, put into tilling land against their will?

        Yes. Duh.

        1. We could hand the dependents over to the state and not take care of them in a household at all. But unless the state is going to make soup and hamburger out said dependents, the state is going to have expenses in caring for them. And they’re going to spend a shit-ton more than the standard deduction on each.

          More to the point, I do not disagree with all the other household business expenses. It’s just that the standard deduction should make a reasonable estimation of those expenses to make the job simple – accounting for all those expenses would be a lot of state-mandated work for people to do (and require a lot of state labor to audit). Look at all the bullshit the average taxpayer has to do to account in his tax return for things like health savings accounts, mileage to and from the doctor, etc. People go through that bullshit, wasting thousands of hours of labor because the standard deduction is such a joke.

          1. Why should dependents get handed over to the state? What is the rational basis for that claim?

            How does the standard deduction should make a reasonable estimation, exactly?

            If that would be true, why then isn’t there a blanket standard deduction for corporations filing taxes? Why go through all of that itemized deduction if it so easy to produce a “reasonable deduction?”

          2. P Brooks|7.14.11 @ 4:42PM|#

            Why go through all of that itemized deduction if it so easy to produce a “reasonable deduction?”

            Why should we go through a lot of idiotic fucking around and jumping through hoops defining and categorizing “legitimate” business expenses and “net income” at all? Pay a couple of pennies on the dollar, and do as you will with what’s left.

            Why should the government subsidize your bad decisions by allowing you to write off losses? Fuck you, try harder next time.

            Putting aside dummy P. Brooks inability to attach his responses to the appropriate comments, the argument made in my comment is thus:

            Why should there be an arbitrary money amount called a “standard deduction” for individuals and not one for incorporated entities or entities filing P&L schedules?

            After all, labor is the poor man’s capital and if firms get granted the privilege of itemized deduction for expenses, then so too should the individual. Likewise, if the individual only gets standard deduction, then so too, should this apply to firms.

            Yet, no logical basis exists for granting any deduction for people merely for birthing children as children are not chattel. Children cannot be bought and sold and pressed into production like oxen, horses, tractors.

            Clearly though, from his whining, all can see that P. Brooks never put money at risk in any venture, turning money capital into material capital, and thus lacks any experience in knowing what expenses get incurred in pursuit of profit.

            This is understandable as most in America are either workers or welfare collectors. Either way, such Americans need daddy figures (entrepreneurs) to provide them with real work, make work or excuses to work so that they can get an allowance from their daddies.

            1. Putting aside dummy P. Brooks…

              Is there any limit to your smug sense of superiority?

            2. Is there any limit to your smug sense of superiority? ~ Jim

              That is what you believe, Jim.

    2. So, it doesn’t matter to you that the sales tax system costs hundreds of billions less per year to administer than any income tax?

    3. I’d prefer not subsidize the procreation of others.

      If you can’t afford to have kids, then don’t have kids.

      With regard to the “flat tax”, I’d be all for a truly FLAT tax – but that’s not what he “flat tax” is. The “flat tax” is a flat-rate tax, not a flat tax.

  22. lol, sorry, that dude jsut looks corrupt as the day is long.

    http://www.anonymous-tools.tk

  23. All taxes are income taxes. Think about it.

    1. I did.

      You’re wrong.

  24. The federal government should be funded by the State governments, and an agreement made amongst them how much each of the 50 is supposed to give. Sort of how the UN gets its funding.

    The founders fucked up big time when they gave the fedgov the unrestricted power to tax the citizenry at large.

    1. Maybe it’s because I’m from the South, but I will never understand what’s pro-liberty about handing more control over people’s lives to state governments.

      1. Yeah, like, why don’t we just give the UN total authority over all goings on in the United States then?

        That’s what your argument boils down to, you liberal idiot. And I have no doubt that you think it would be a fine idea.

        The bigger and less accountable the government, the more free we’ll be! Hurrrr.

        1. Size is a distraction. Government will be as “big” as it needs to be for its jurisdiction. All I’m saying is that among all of the laws in this country, without question the most oppressive anti-freedom ones come from my state, not the feds. The feds protect me from my state more than it oppresses me. I’m sorry, I just don’t get it. Remember where states rights activism came from: certain states wanted to maintain the ability to keep people as slaves. The liberty equation is not so obvious to me.

          On the UN: no, I don’t want the UN having total authority. However, answer this question: are there global problems? Is there a global economy? If yes, doesn’t that imply that there should be global governance?

          1. Government will never be big enough.

          2. I would agree with Tony here if he actually gave a damn about individual liberty.

          3. But get this, your anti-liberty state infects the entire federal government. The federal government hosts dozens of these infections at once, and allows an easy and powerful vessel to vector their pathogens to other states.

            See, without the power of the federal government, my state would unreservedly by MORE free.

            And States’ rights is THE ORIGINAL political hot button issue of the United States. LONG before the civil war shit you’re alluding to. Fat,drunk, and stupid is no way to go through life, Tony. States’ rights arguments is why we’re on our second constitution, and its why the bill of rights was explicitly included in said constitution.

            The Articles of Confederation never “failed”, they were simply replaced when power-hungry “leaders” realized they hadn’t given themselves enough power. There was no crisis, no governmental collapse, no foreign invasion, nothing that could credibly be claimed as a reason the AoC were replaced. The hunger for power is the sole reason. And if it wasn’t for the states rightists, the second constitution wouldn’t even have the BoR. And again, that’d probably be just fine with you.

            As for a global economy and global problems “implying” there should be global governance: wait, you’re serious?

            1. And States’ rights is THE ORIGINAL political hot button issue of the United States. LONG before the civil war shit you’re alluding to.

              You’re right. Slavery did predate the civil war, and so did the political arguments surrounding it.

              The Articles of Confederation never “failed”, they were simply replaced when power-hungry blahblahblah

              What is your standard of success exactly?

              And if it wasn’t for the states rightists, the second constitution wouldn’t even have the BoR.

              Good for them. And was it states’ righters who worked to extend it to nonwhite people? And what does it have to do with the current world?

              As for a global economy and global problems “implying” there should be global governance: wait, you’re serious?

              Yeah, the globe is an interconnected society in some ways, and increasingly so. I don’t like anarchy at any level of society. Why do you?

          4. “Government will be as “big” as it needs to be for its jurisdiction.”

            ….. You’re beyond our help on this one.

            Keep in mind that states can grant rights that don’t exist on the federal level, like, say, the right for 2 men to marry. I would bet that you would change your tune real quick on the matter of state vs. federal if a president Gingrich started pushing for a “defense of marriage act”.

            1. You’re right, the states can be ahead of or behind the federal government. It’s not the ones that are ahead that are concerned with states’ rights.

          5. Because the closer the governed is to the government, the more personal it is and the more he can influence it and affect it. It’s a lot easier to go argue in front of the school board or the city council than it is the United States Senate. So if most of your government is at the local level,you can actually go and speak up and have an influence on the laws that affect you, which is the very essence of liberty. People here talk about “states” because that’s the level directly below the federal government, but what they really mean is states, and cities, and school boards, and homeowners associations, and PTA’s, etc etc.

            If 535 people control the lives of 300 million, it’s a lot harder for any single 1 of those 300 million to have an influence on the decision being made than it is if 3 people are making decisions that affect 1000 people. It’s basic math.

            1. Because the closer the governed is to the government, the more personal it is and the more he can influence it and affect it.

              That’s a lovely defense of more direct democracy, but what about individual rights? Policies tend to be more radical in one direction or the other the smaller the constituency. That can mean more rights or less… in some places in the country the only thing keeping people free of theocratic tyranny or even racial oppression is the federal constitution.

  25. Why go through all of that itemized deduction if it so easy to produce a “reasonable deduction?”

    Why should we go through a lot of idiotic fucking around and jumping through hoops defining and categorizing “legitimate” business expenses and “net income” at all? Pay a couple of pennies on the dollar, and do as you will with what’s left.

    Why should the government subsidize your bad decisions by allowing you to write off losses? Fuck you, try harder next time.

    1. If it was a couple of pennies, none but the most argumentative would even discuss it.

      Why should a loss not count against income? No one is suggesting the government cover losses.

  26. Now that’s a real black man and real American unlike the Marxist Mulatto in the not so White House. 😉

    Kudos to the Pizza Man for his views, I’ll take a slice of capitalism over a pie of socialism any day.

    With that said, I favor the flat tax over the fair tax.

    This “let’s be fair tax” is BS. It’s better than the Progressive Income Tax, sure, but going from bad to better isn’t best for me.

    1. See guys, the worse liberals have to deal with in their ranks are vege-nazis and Bradley Manning cultists.

      1. Troll-puppets unite!

        1. If I could nuke this thread and take you three with me, I would do it in a heartbeat.

          1. …activate!

      2. And pop-control/eugenics schemers, fatty haters, the aw-shucks blackface minstrelsy shillin’ outfit known as Hollywood, Israel-obsessers, Muslim fundie apologists, identity cultists, Castrofans, etc. Oh, and Manning violated UCMJ, but we could give him a trial instead of just torturing his ass indefinitely.

        Granted that the “con” side probably has a few more (non-union) old coots who tell black jokes amongst themselves. That’s really the biggest threat to this country at this point. Those guys, yep.

        1. The important difference is that “fatty haters” do not control a house of congress.

          1. The fact that they even exist, is saf fucking enough.

            Besides, fatty-haters don’ hve to be directly in power – CSPI ring a bell?

      3. Ok, what did my post have to do with Bradley Manning? BM was a traitor, Obama is a commie, and the Pizza Man is true red, white and blue American.

    2. [Fair Tax is] better than the Progressive Income Tax, sure, but going from bad to better isn’t best for me.

      Holy Shit! Gregooo said something halfway intelligent!

  27. “Any politician or political group who claims or implies that the Fair Tax adds a 23 percent national consumption tax on top of [existing federal taxes] is either lying to you or is ignorant of the facts”

    Anyone who claims or implies that FairTax and the income tax will no co-exist is either lying to you or is ignorant of the facts.

    1. I basically said as much up-thread. There’s a disturbing number of people who believe that politicians will do what they “promise” and not tax us both ways.

  28. Pompous ass is pompous.

  29. A VAT by any other name would stink as bad as the Eurotrash that promulgate them.

    What we need to do with the tax system is to get rid of all deductions (yes even your favorites). Then we have a slope that is calculated to collect the needed money and do no more. Set up a minimal income exclusion (say $30K/yr) below which you pay nothing, and then tax every one at the same rate on ALL income above 30K.

    A guy making $35K, would pay X percent of $5K, his wealthy neighbor making $130K, would pay X percent on $100K.

    More income means more tax, but no more economy busting jumps to higher brackets, nor bracket creep due to inflation, nor the gauling sense that you pay more than other people who make what you do.

    1. It is not a VAT.

      Look up “straw man fallacy”

      1. No, its not a VAT—Yet. It will rapidly decay into one. Once the budget gets bigger than receipts, the dems will cry for a tax increase. The repubs will try to cut the number of people getting or the size of the “prebate”. The dems will cry foul and claim that the evil republicans are trying to balance the budget on the backs of the poor huddled masses, and the “brilliant idea” will arise to add the tax to the wholesale and retail costs or tax both finished goods as well as the goods used to make those goods and whammo, you got a VAT.

  30. How is it that states like Florida can handle running a sales tax without an income tax, but anti-FairTax robots keep saying it is impractical for the United States to do the same thing?

  31. The fairest tax of all would be to just charge everyone who wants to vote $10,000 each.

    1. Intriguing. No limit to the number of votes per person if s/he can afford it, right? Also, charge everyone who wants to run for office $1,000,000 and everyone who wins $10,000,000.

  32. The problem with the Fair Tax is it overlooks the police enforcement aspect of the IRS. Al Capone would never have faced criminal charges, Eliot Spitzer would still be Gov of NY, etc. The Bank Security Act through the PATRIOT Act makes the IRS an organization fighting terrorism, and the average voter is going to balk at a theoretical debate about taxes when we would be losing an extremely effective police agency. By putting so much into arguing for the Fair tax, the opportunity is being lost to discuss real changes to the tax code. The end result of the debate is the eventual introduction of a VAT that is called the “Fair Tax.”

    1. introduction of the VAT without abolishing the income tax.

  33. I see no reason to believe that there would be any less social engineering in the tax code if we moved to the FairTax, so this needs to die as a talking point.

    What mechanism is there that would magically prevent Congress from saying, “Get an extra $5000 on your prebate and pay no FairTax on your Chevy Volt”

    If you think I’m advocating for the status quo, kill yourself.

    1. You are absolutely correct that this is a very real and likely possibility. However, the Fair tax should make it more obvious that some are getting special treatment. Instead of hiding the subsidy using a tax credit as is currently done, the subsidy is sent out directly as part of the prebate or is seen as offering a huge discount in the case of some sort of tax holiday.

      None of this precludes the possibility of social engineering and favoritism but at least it is more visible and hopefully, less popular politically.

      1. So you’re saying that instead of a check in the mail for their tax rebate, favored groups would get a check in the mail for the tax prebate which would be totally different and no one would stand for it?

        Just curious, but have you ever actually met an average American?

  34. There have so many tax,who know which one is foul.Sometimes we have to take.But the online shopping is a good way.
    http://www.coniefoxdresses.com

    1. God, that’s not even mediocre anon-botting.

  35. ” But in practice, it’s hard to see how sending a monthly check to every household in the country would reduce the role of government in our lives.”

    Since most people with jobs are getting taxed twice a month now, once a month interference sounds like less to me. Further, a government that writes checks to everyone is not that intrusive. Government gets intrusive when it writes checks to some and not others, and demands paperwork and obedience to regulation to get your check.

    Milton Friedman was in favor of a basic guaranteed income – writing checks – over the intrusive and wasteful welfare bureaucracy precisely because it was much simpler, less wasteful, and less intrusive into our lives.

  36. I have been a staunch supporter of the FaixTax since its inception. I truly believe it is a better way for government to collect necessary taxes.

    Having said that, I agree that the implementation of any new national tax, BEFORE the repeal of the 16th amendment, is an invitation to disaster.

    I would be inclined to favor a Flat Tax, under current tax law, except for the obvious historical fact that flat taxes do not stay flat. So long as politicians can trade “tax indulgences” for bribes and other “campaign contributions” our tax system will remain a disgrace and destructive to our economy.

    Troy L Robinson

  37. The comparison of the length of HR 25 to the 16th amendment (30 words) is disingenuous. The 16th amendment merely AUTHORIZED the tax code. The appropriate comparison would be between the 131 page HR 25 and the >3500 page current tax code.

  38. Although failing to get rid of the 16 amendment would be ideal, eleminating the current tax system and implanting the FairTax would at the very least give business in the U.S. A shot in the arm for a few years, and the American public a taste of what they could have. After that, I can only assume that full repeal of the 16th would become more likly.

  39. I think you’re handling the Fair Tax with kid gloves. This is such a fiasco, with so many wrong assumptions, that you should be tearing into it. Start with lie #1: that our take-home pay will increase while prices will stay the same. This is demonstrably false and mathematically impossible. Even the architect of the Fair Tax — Jorgenson — has called Boortz and his fellows out for lying about it. The Fair Tax changes how taxes are collected not how much of them are collected.

  40. Did you actually compare the 16th amendment’s wording to H.R. 25 in an attempt to state that current tax code is less confusing? Really?

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  47. Dont feel bad Tim. Fairtax is a pretty slick hustle. They pretend to be a simple retail sales tax.

    Oh, yes, about 1/4 of Fairtax is a normal personal retail tax. Absolultely. A personal retail sales tax of 23%, brings in about 1 trillion dollars, round numbers.

    Fairtax claims it can collect about 3.4 trillion in todays dollars. Where does the other 2.4 trillion come from? Other taxes. That’s right, OTHER taxes. Taxes they “hide” in the fine print.

    William Gale, PhD Stanford, was picked by President Bush in 2005 to study Fairtax. Gale headed up Bush’s “Tax Advisory Panel”.

    Gale found that a 23% retail personal sales tax, in the regular sense of that word “sales”, would bring in about 800 billion. At the time, Fairtax claimed it would bring in 2 trillion or so.

    Gale showed that to replace all the federal taxes, with JUST a retail sales tax, you would need a sales tax rate of 60-90%. Not 23%.

    How did Fairtax make it seem like 23%? Audaciously, actually, they insert a few lines of text where they tax “all government expenditures” except education. Wallaaaaa. Massive revenue, by taxing the government!

    ITs a “tax base trick”. Fairtax did not just put personal retail sales in their tax base. They put all city county state and FED gov “expenditures” in the tax base.

    Call William Gale at Brookings, or check out my blog, or read HR25 very very closely. U been snookered.

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