"Fair" Tax Scam
Sep. 11th, 2007 10:51 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
forsythThe following is the text of an email I sent to NPR's Marketplace show today, after they had a hack from the WSJ editorial page spouting nonsense straight out of the "Fairtax" book. Here's the article in question.
And my letter:
This morning, on the Marketplace Morning Report, you had Stephen Moore on, praising the benefits of a national sales tax. His ideas and numbers come entirely from the book "FairTax" by Neal Boortz and John Linder. And unfortunately, most of what he quoted is inaccurate or false. A 23% sales tax would not replace all of the government income, the percentage was picked as near the maximum amount people would tolerate as a sales tax. A national sales tax, despite his claim, would be extremely regressive and complex. Most families who are out of the top 1% spend most of their income each year, which would make their net tax rate at LEAST 23%, plus the increases in cost that would come from this kind of tax. Whereas the richest few don't spend all their money, which would make their net tax rate far below the 23% the rest of us would pay. That hardly qualifies as "fair" by any stretch of the imagination. And his idea of a $20,000 rebate for the sales tax spent? That would be at least as complicated as the current income tax. The rest of the work of tax collection would then be pushed on to the companies who sell products. It would require just as much work, and we would still require the IRS to investigate cheats and other things.
His entire presentation was misleading at best, and outright false at worst. The entire idea of a "fair" national sales tax is snake oil, designed to cover up for a gigantic tax cut for the rich and a tax hike for the rest of us, not any kind of serious policy suggestion.
And my letter:
This morning, on the Marketplace Morning Report, you had Stephen Moore on, praising the benefits of a national sales tax. His ideas and numbers come entirely from the book "FairTax" by Neal Boortz and John Linder. And unfortunately, most of what he quoted is inaccurate or false. A 23% sales tax would not replace all of the government income, the percentage was picked as near the maximum amount people would tolerate as a sales tax. A national sales tax, despite his claim, would be extremely regressive and complex. Most families who are out of the top 1% spend most of their income each year, which would make their net tax rate at LEAST 23%, plus the increases in cost that would come from this kind of tax. Whereas the richest few don't spend all their money, which would make their net tax rate far below the 23% the rest of us would pay. That hardly qualifies as "fair" by any stretch of the imagination. And his idea of a $20,000 rebate for the sales tax spent? That would be at least as complicated as the current income tax. The rest of the work of tax collection would then be pushed on to the companies who sell products. It would require just as much work, and we would still require the IRS to investigate cheats and other things.
His entire presentation was misleading at best, and outright false at worst. The entire idea of a "fair" national sales tax is snake oil, designed to cover up for a gigantic tax cut for the rich and a tax hike for the rest of us, not any kind of serious policy suggestion.
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Reply, Part 5
Date: 2007-09-12 06:41 am (UTC)I didn't mention Gale's testimony. I counted around 77 signatures on the letter you linked to, which is hardly nothing. But neither is it an overwhelming number of economists. I know of several economists who disagree, for examples, Brad Delong and Paul Krugman. Or, heck, journalists, like this review of the FairTax book (which mentions many of the same problems I have). Even libretarians who call any taxes "theft" are against the "FairTax", because it'd be a cure worse than the disease. Or even FreeRepublic posters. (Which also addresses the "22% price decrease" claim, among many others I've mentioned as well)
Yes, having experts back up your claims can help your case. But it's not going to carry your case on its own, not when other experts disagree, or when there's flaws in your idea that don't get addressed at all. It doesn't matter who agrees with you if your idea's a bad one, it still won't work.
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There, I think that addresses all of the things you asked if I believe, which I never mentioned. Yet, none of them addressed my main points.
First, the "FairTax" would be extremely regressive, regardless of any "prebates". That's one of the biggest ones for me, because it would shift most of the tax burden off of those who make and control most of the money in the country, and drop it solidly on the backs of those who have to work and spend to just keep even. Which, these days, is the middle class.
Second, would it even work as claimed? I doubt it. I'm skeptical of the "revenue neutral" part of it, I don't think the claimed 23% rate would be enough to break even. Add in to this the price increases, the fact the tax rate would really be 30%. And the IRS might be gone, but there'd be new and expanded agencies to administrate the tax. And would people really get to keep 100% of their paycheck? Not without prices going up, which would be inflation, which would mean their real actual pay would go down.
Third, the dishonesty in the presentation. Claiming the "FairTax" is progressive, when it's a regressive sales tax with a "prebate" tacked on. Claiming the rate is 23%, when it'd really be 30%.
Those are the major reasons I dismiss the "FairTax" as a scam. I haven't really seen anything to convince me otherwise.