"Fair" Tax Scam

[forsyth]

The 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.

Comments

Actually

[(Anonymous)]

His numbers come from the over $20 million worth of independent research done by Americans for Fair Taxation. www.fairtax.org
The 23% was not picked out of thin air as the research showed that the revenue neutral rate would in fact be an inclusive sales tax of 23%.
You are right that many people spend nearly all their income some because they don't make much and some because they spend above their means as reflected in our countries negative savings rate.
What is so complicated about every legal household be refunded the tax paid up to the poverty level of spending? Most states have a sales tax so retailers are already used to collecting that and under the FairTax companies would be paid a very tiny percentage to cover the cost to the retailers of collecting the tax. The FairTax book is a good introduction to the FairTax but if you want to real numbers you need to go to FairTax.org and see what the research says.

Is there anything worse than the present system?

[ih2005.livejournal.com]

FFerret, is the current income tax system something you really want to work hard to defend? Renown economist Larry Kotlikoff believes that the current tax system IS bringing the country to nothing less than an "economic meltdown (http://snipurl.com/meltdowninprogress)" by virtue of the invisibility to the taxpayer of actual taxes paid. If Americans do not understand the true cost of their government, they're unlikely to hold Congress accountable - thus the enabling mechanism to continued profligate spending.

Even with the foregoing notwithstanding, do you really believe ...

• Workers love having their pay confiscated, hourly, through gov't withholding and don't mind getting their money back by involuntary servitude - to the tune of 50 hours/year (on average) - preparing an annual tax return?

• That certifying the number of persons in your family (annually, and, ancillarily, upon change in household) is an abrogation of our freedom - more intrusive and complex than filing a tax return every year subject to threats and intimidation by theIRS.

• It's better to have theIRS fishing through citizens' income transactions (complete with audits, interest, penalties, and threats against individuals, families, businesses as well as confiscation of their homes, property, and bank accounts) rather than - Gawd forbid - issuing a gov't check to an individual (while pretending that Social Security payments disbursement logistics really can't work for "prebates")?

• That an monthly advance tax rebate is the same thing as "being on the dole" ? (Only lobbyists, special interests, and business deserve "handouts" ? - the politician gets a payoff from a lobbyist, the lobbyist gets a payoff from its client, and the citizen gets higher taxes and/or prices that pay for it all.)

• "Hidden taxes" in higher prices are fine because they're not "taxes," per se? (Hey, forget that families are really paying business's costs for complying with a business income tax code - staff, consultants, submittals, etc.)

• It's far better to have a gargantuan tax collection "service" in Washington, than to have 50 decentralized, smaller, leaner state collection agencies collecting taxes from fewer sources?

• That the work by notable economists (paid tens of millions of $'s by Americans for Fair Taxation) doesn't carry weight because it was paid for by private funds instead of some gov't / quasi-gov't enterprise?

• That FairTax's backing by many economists (http://snipurl.com/econsopenletter) doesn't carry any weight because (the Brookings') Wm Gale's testimony before the President's Commission on Tax Reform is - somehow - above all that?!

(NOTE: The Commission/Gale made up their own "consumption tax" requirements, as if that constituted a legitimate rebuke (http://snipurl.com/taxpanelrebutted) of the FairTax plan. Dr. Kotlikoff has requested - but never received - Gale's technical "modus operandi" which would definitively explain just how Gale's conclusions can be reconciled with Kotlikoff's well-documented technical work (http://www.fairtax.org/PDF/TaxingSalesUnderFairTax.pdf).

[dirkdada.livejournal.com]

Wow. Remind me never to use the words "fair tax" in my blog.

Whatever you do, don't look in a mirror and say "National Sales Tax" five times in a row, or Neal Boortz will appear and bore you to death.