There is No Such Thing as a Fair Tax
Writes Laurence Vance: Syndicated talk show host Neal Boortz and Congressman John Linder (R-GA) have joined forces to write a book on the FairTax Plan—a proposal to replace the current system of federal income taxes, corporate taxes, Social Security and Medicare taxes, capital gains taxes, gift taxes, and estate taxes with a national sales tax on new goods and services that does not reduce the government's overall tax revenue. They have never been so right and never been so wrong. [FULL ARTICLE]
Comments (483)
"If you have someone over for dinner and they talk about tax fairness, check your silverware before they leave!"
Published: December 11, 2005 2:07 PM
Mr. Vance,
I very disappointed. You must have been writing this article since your last one has lost its authority and has become widely known as misinformation. You start off this article by attacking the authors of the book who had no hand in the creation of the FairTax. Then again you present many half-truths and misinformation in your article.
You are attempting to undermine a proposal that would be eliminate the INCOME TAX and the IRS, eliminate the $250-$500 BILLION compliance burden, would increase the economy's GDP by 10.5% within the first year, double it within 15 years, reverse the trade deficit, and you offer no solution. You are either part of the problem or part of the solution Mr. Vance. Without any proposed solution in your hands you are doing nothing but supporting the current income tax code. Thank you,
Tom Leser
FairTax Volunteer
www.fairtaxindiana.net
Published: December 11, 2005 3:40 PM
In his critique of Neil Boortz, Laurence Vane made this remark:
"... Boortz prefers the national sales tax to be included in the price of each item—so the consumer doesn't realize that he is really paying an extra 30 percent in sales tax, not Boortz's new math amount of 23 percent."
There is a serious problem with statement arising from the fact that consumption can never be taxed. Sales tax cannot be passed onto consumers in form of higher retail prices. If all firms were able to pass their costs forward no business would ever go bankrupt. What prevents businesses to charge these higher prices before such tax is introduced?
Real market prices are formed by free agreements between buyers and sellers. Relative strength of these negotiators determines these price outcomes. When a sales tax is imposed, sellers must still face their current demand and prices, swallow that additional cost, lower their retained earnings, and hope it will not drive them out of business. Therefore, all sales taxes are de facto income taxes.
Boortz's "fair tax" would not be a 30% consumption tax, but rather a 23% income tax. A price increase induced by a national sales tax would only happen with a corresponding drop in supply, and only for those markets in which sellers currently pay lower income taxes.
Published: December 11, 2005 3:49 PM
Another important implication of the "Fair Tax" proposal is the transformation of tax-collecting agents. The "Fair Tax" act states that sellers themselves would become tax collectors and they would even get the government's checks for this service. Since customers do not pay a sales tax (sellers do), this means that firms would get paid to monitor themselves. At the same time, these same firms would have a large incentive (23% of their income) to evade these taxes.
Tax evasions would be much more difficult to control in a national sales tax system. According to the "Fair Tax" proposal only the sellers of final goods would get taxed. Unlike a value-added-tax system in which input producers have a real tax incentive to control and report someone else’s taxes, in a "Fair Tax" world the government would have to only guess about the amount of inputs purchased and the total output of final goods and services. This provides a great opportunity for businesses to save 23% of their income.
Ironically, many positive aspects of the Fair Tax act lie in its ignorance of basic economics.
Published: December 11, 2005 4:39 PM
I am with Ron Paul (R-TX), "The real issue is total spending by government, not tax reform."
Discussing the FairTax is dodging the real debate about government spending and central banking.
Published: December 11, 2005 6:26 PM
I agree that the real issue is total spending by government, but we can't just stay silent to tax-reform propaganda. I am also concerned about the ability of government to plunder our money. If this plundering (taxing) mechanism is inefficient and does not provide enough booty, big government will have to finance itself through deficits and inflation (more sophisticated plunder). But as Austrians know, increased inflation would act destructively and reduce our ability to finance this huge government's spending.
In order to send a convincing message about the evils of government's spending, Austrians have to analyze negative effects that go beyond simple thievery. That's why it's important to understand and explain mechanisms and consequences of different tax types.
Published: December 11, 2005 7:25 PM
"There is a serious problem with statement arising from the fact that consumption can never be taxed. Sales tax cannot be passed onto consumers in form of higher retail prices".
This statement appears to be empirically false. Here are some actual examples:
Massachussets has no sales tax on childrens clothes. A flight attendant friend who lives in LA buys all her childrens clothes in Boston. The price in WalMart is the same. The difference is in the sales tax.
Check out internet stores. Same price nationwide, with the exception that if you live in a state where the company does business you get dinged for sales tax.
Why do people who live in New York buy cigarettes from out of state?
Published: December 11, 2005 7:53 PM
Tom Leser @ FairTax Volunteer said,
"You are either part of the problem or part of the solution Mr. Vance. "
Mr. Leser's statement sounds very familiar. Where have I read that before?
http://en.wikipedia.org/wiki/False_dilemma
Also, I believe Mr. Vance is correct that taxes are not being reduced or eliminated. A visible tax is being replaced with a less visible tax. I prefer the visible tax so I can hopefully avoid it.
Published: December 11, 2005 7:57 PM
Walt D,
Do you suppose I'm suggesting that a single internet company will post same product for different prices, based on geographical location? Aside, from a public outrage, that would constitute illegal price discrimination (because our bright politicians do not understand Aristotle and Carl Menger, and believe that sale's tax will be simply passed to consumers).
Are you suggesting is that in a free market competition, sellers would not drop their prices, even if their going out of business and their stuck with surplus? No comment.
Prices of cigarettes in New York reflect their market conditions. Most of New Yorkers no not buy cigarettes elsewhere, and that's the reason for higher prices there. And many people will travel away from big cities to get their goods cheaper, just like some people move out of Manhattan and buy less expensive houses far away upstate.
----
Siggyboss,
Austrian theory of value clearly explains why a national sales tax would be totally visible to suppliers of final goods and services.
Published: December 11, 2005 8:24 PM
Tom:
We are all disappointed. For not only is Vance undermining a proposal that would do the amazing things you mention. Boortz says it would also
- "send the American economy into warp drive."
- "bring a period of transformation and economic growth to America such as has never been seen before."
- create “Millions of new jobs"
- increase "capital investment … by a staggering 76 percent,"
- cause "interest rates [to] decline by almost 30 percent,"
- "create a financial bonanza for the poor and the middle class."
- "all but eliminate the tax burden on the middle class."
- "give the average income worker a 50 percent increase in take-home pay."
- be "all benefit and no burden [to the lowest income earners]."
- Provide "money left over" for the poor "to invest in their own futures."
How can anyone argue against a tax program with such benefits? And imagine all this will be accomplished without a single reduction in government expenditures or a reduction in its meddling in the economy. As Boortz puts it, “It's simply a plan to change the way Americans fund their federal government.�
On second thought, I’ll have to go along with Vance in this assessment:
“The book should therefore be discarded…�
Published: December 11, 2005 8:42 PM
The article is very bad. Let's look at the lies section:
Lie #1: taxes would be voluntary under the FairTax.
The article is attacking a strawman here. Yes, you would still, at some point, if you want to eat, end up paying taxes. But the point Boortz tries to make is you would have much more control over your tax burden. Imagine if the government shifted all taxes onto Teddy Bears. That tax would certainly be more voluntary because you have more power not to buy teddy bears than not to buy retail items at all. But according to Vance, such a tax shift would be a HORRIBLE idea, because it's still a tax! And the world is black and white!
Lie #2:the FairTax rate would be 23 percent.
Not a lie. The book is very clear that the purpose of quoting the 23% rate is for an apples to apples comparison - it has the same burden as a 23% income tax. Apparently, Vance missed that part of the book.
Lie #3: the FairTax would abolish the IRS.
Okay, I'll grant this is a lie. Someone still has to administer revenue collection issues, and that organization would, effectively, be the IRS. But this ignores the more important point that far fewer people would have to deal with the IRS and be at risk of having to suffer their punishments. Again, looking at things in black and white.
Now, looking at the problems section: The FairTax hides the amount of sales tax being paid.
No, it's printed on the receit. Next?
The FairTax is progressive.
So is the current tax system. Way to use marginal analysis there.
The FairTax is an income redistribution scheme.
The FairTax does redistribute income, as does the present system. It is not a scheme for that specific purpose.
The FairTax creates new tax collectors.
Sure, and it also eliminates some -- all the people who fill out a 1040 but don't personally run a business (that's a lot of people!).
The FairTax creates new taxes.
It creates a new tax; taxes implies specific items being targeted, which they are not. Particularly dishonest is "Want to attend a baseball, football, or basketball game? Better save up a little extra to take care of the FairTax that will be imposed on your tickets." since you pay increases by the same amount.
The FairTax makes it easier for the federal government to raise taxes. All Congress has to do is slightly increase the initial 23 percent rate.
Right, and it could do the same thing with the income tax today.
The FairTax makes it easier for state governments to raise taxes.
And the current tax system makes it easier for states to raise income taxes.
The FairTax has unknown and potentially huge transition costs.
As does any substantial change in laws, including eliminating them. Better for bad laws to persist, right?
The FairTax makes certain exceptions while supposedly having none.
Sure, but it's far fewer than the current code; why not reset the clock?
I could go on, but most of this is just bad, and it keeps making the same error of letting the perfect be the enemy of the good. Sure, Boortz doesn't advocate the abolition of the government, so I guess he's just as bad as the rest of them. Please.
Published: December 11, 2005 9:01 PM
To explain the issue further:
Current level of supply and demand cannot be held with prices above the real market level. When additional sales tax is imposed, some suppliers will not be able to swallow this additional cost and they will be driven out of business due to this income tax. Only in that case we can have an increase in market prices.
If most of New Yorkers went elsewhere to buy their cigarettes (holding their current demand), companies would eventually reduce their supply, driven out of city. A price increase can only occur only when some percentage of suppliers is driven out of business or when some sales are driven out of domestic market. But that's exactly the effect of an income tax.
If we imposed a higher income tax for tobacco earnings in New York, there would be an identical effect to this "sin tax". Some suppliers would be driven out of this market, just like companies are driven out of the USA by our income taxation. Like said before, in case of the Fair Tax Act, those sellers that currently pay lower taxes would have their incomes reduced, have a greater risk of going out of business, and we would have a decrease of aggregate supply in these markets.
It’s just an income tax, wrapped differently.
Published: December 11, 2005 9:08 PM
For libertarians, taxation is theft, and its avoidance, legitimate. Thus, a more visible theft is better than a non-visible theft. Also, it is better to have a tax that is easier to evade.
Those heroes (yes, they are heroes since they are fighting a killing-stealing machine) who avoid paying taxes will have a much harder time doing so under the Fair Tax since there would be a lot less fewer exceptions and loopholes.
If a robber comes to your house to steal your property, I personally would prefer for my stuff to be taken all at once instead of little by little, since there's a better chance to stop it. So, again, the problem is taxation, and not so much how you tax.
Also, this Fair Tax increases central control of government, decreases federalism (whatever that means these days), and is also unconstitutional (again, not that it matters, but since we're playing the "legal" card...). If it was ever possible to be in states with low (or no) income/sales tax, the Fair Tax totally shatters possibility. Moreover, the problem over the last hundred or so years has been the increasing centralization of power. The Far Tax would hegemonize the states into one all-reaching central government. The libertarian prefers decentralization, even, yes, for taxes, if they cannot be avoided.
Published: December 11, 2005 9:12 PM
Person,
Look at this Boortz's claim: "taxes would be voluntary under the FairTax"
Of course they would not be voluntary. Actually, both tax types are similar in their coerciveness. In order to avoid paying or participating in sales tax we have to restrain from purchasing goods and services, and to consume only what we can produce ourselves. Likewise, we can escape paying income tax if we stop selling our own goods and labor services. Either way, voluntary market exchanges of goods and services are forcibly taxed. In order to completely stay out of each "voluntary" tax system one must abandon civilization and live a life of a Stone Age hunter-gatherer.
As far as IRS goes, I explained why a substantial national sales tax would call for even larger machinery of bureaucrats. Call it any way you want it, but a large bureaucratic mechanism will have to exist under a “Fair Tax� proposal. This tax scheme would try to turn almost every single seller of final goods and services in this country into a government-paid tax collector... But at the same time, these new tax collectors have a huge incentive to evade taxes and a great opportunity to successfully do it. This is why a larger control of quasi-IRS would have to take place, to spy on businesses, etc.
Not to mention the fact that every single household would receive a monthly check from Uncle Sam for “poverty-line� tax-expenses. There would also have to be a large control apparatus of this system in place.
I already explained why this tax would make US market less profitable and attractive for both foreign and domestic goods and services.
Even if we follow marginal analysis, the Fair Tax Act is not very good idea for what it tries to accomplish.
Published: December 11, 2005 9:33 PM
Doesn't the transition to FairTax punish savers tremendously? Money in your savings account that you earned under the current system and paid tax on would be taxed again when you spent it. I could see people going on wild spending sprees just before FairTax was to take effect. Like we need more of that.
The FairTax book seems to claim both an increase in the average person's purchasing power and no reduction in government spending. Are these not mutually exclusive? The only real wealth being returned to the individual is the (admittedly, considerable) resources currently wasted on compliance with the tax code. But that will quickly get sucked away again when the lobbyists get done adding exemptions for this and that. Boortz himself has already opened the door for this by granting FairTax exceptions for education and other "investments," loosely defined.
All in all, FairTax struck me as a huge step sideways, nothing to get distracted about either way.
Published: December 11, 2005 9:50 PM
PR,
the transition to FairTax would not punish savers any more than keeping our current income tax would. Again, individuals do not pay taxes on consumption - firms do it in a for of quasi-income tax. Real prices are determened only by our market agreements. Given a same demand and supply, sellers cannot charge above the market price (or what customers are willing to pay).
Only after the income tax effect kicks in (for those sellers who currently pay lower thax than 23%) we would see a drop in supply.
But let's examine one of the Boortz's arguments: "A National sales tax would not tax savings."
The argument fails to consider the very purpose of saving. A person does not save just for the sake of that activity or for the love of our banking system, but to have that money available for the future consumption. Every penny of our savings would be taxed under the “Fair Tax� proposal when we start spending that money, or when our successors spend what is left to them. Since we don't know that taxes will be lower in the future, our saving preferences would not increase as a result of this shift in method of taxation.
Published: December 11, 2005 10:07 PM
Just to avoid any confusion: when I say that our savings would be taxed in the "Fair Tax" system, I don't mean that consumption itself would be taxed directly. It's a price-increasing, supply-decrasing, quasi-income tax.
Published: December 11, 2005 10:25 PM
Seems like anybody can pick a point or two that they don't like and expand on it.
Come on folks, the Fair Tax represents a major step forward. For all you people that pick a point or topic that *offends* you, I dare you to read our current tax code and *not* find less than 50 items that just rub you the wrong way.
Has anybody here taken the time to do that? Has Mr. Vance? Someone already pointed out that perfect is the enemy of good enough.
So lets stop criticizing on the difference between inclusive & exclusive.
You think that the buracracy needed to collect and monitor the sales tax is as large as the current IRS... you're dreaming; the IRS knows it's dealing with disorganized filers. The sales tax gets filed by businesses, on a regular basis. Sure the first few filings will be new, but a bookkeeper will figure out the best way to deal with the new forms in a month or so. And the big boys, Walmart, Target, Stop&Shop, Winn Dixie, Sears, etc. well gee-wiz they have IT departments that know how to implement & collect a sales tax in 45 states right now. Does the fact that they will earn 1/4% of the tax bother you? They earn that now on state sales tax... did you think of that?
I'm going to lay this out for all you complainers. The current system is broken. It's incomprehensible. If anyone out there claims to understand the current tax system, please come forward. Say "I'm the smartest accountant in the USA. I think the current tax code is almost perfect. It can only get better if fewer folks like you understand it. No one can improve on perfection." And sign your name to it. We'll con-call Neal, he's a fun to talk to guy. If you can prove that you're right, he'll even admit it. He'll make a joke of it, but he'll admit it.
For all the rest of you Fair Tax volunteers out there, we have to keep calling & faxing our congressmen. I've been chatting with my guy's office since October. Tomorrow's Monday, time to call again.
Mr. Vance seems bitter, I dunno why. Maybe he makes his $$$ from lobbyists, maybe he's a got a personal interest in a few pages of those millions that make up the tax code... I dunno. What he has done is demonstrate in print his lack of understanding of some basic economic principles. He has called the average Americal too stupid to calculate a percentage. He has ignores entire sections of the book... What he has done is to generate a weak synopsis (20 points) of a book that in a few hundred pages puts forth a plan that replaces the tens of thousands of conditiond & exceptions that are the curent tax code.
One last thing, on which we all agree. Gummint spending is the real problem! The defecit will be the destruction of us all. If the monster isn't tamed... well. We can outgrow "debt", but the defecit will crush us. The Fair Tax doesn't claim to alter spending, neither does the Income Tax. The Fair Tax claims to be fairer than the Income Tax, revenue neutral, and simpler to implement. That's it. If $194 billion (that's $650/person per year) isn't a good enough reason to switch, then you opponents are just too smart for me.
Published: December 11, 2005 11:28 PM
None of this gets at the heart of the matter. The Fairtax will never replace the income tax, even if that's what Boortz et al want. By the time Congress gets done fooling with it, we will have an income tax AND the Fraudtax. Can't you see it?
They will plan their own transition period, where we will have both the income and the sales tax. Just temporary, you know. Then some invented emergecy will come along, and they'll have to extend the transition period. People will gradually come to accept having both taxes, and various wasteful programs will come to depend on the revenue (can you say, "Social security and Medicare are in crisis"?) and Congress will realize they can get away with never repealing the income tax. We will then have two awful taxes, thanks to Neal Boortz and the rest of the Fair Taxers who lent their support. They will all say "This is not what we wanted!!". It will not matter. It is what they will get. Call me a cynic, but this is how politicians operate. The Fair Tax is dangerous and a wasteful diversion of energy. Says me, anyway.
Published: December 11, 2005 11:34 PM
Jim,
Great point! If the 16th Amendment to the US Constitution is not repealed than an income AND consumption tax WILL be "fair" game.
16th Amendment
If anybody has read Crisis and Leviathan by Robert Higgs, they know that the government NEVER goes back to its original level after a crisis.
Published: December 12, 2005 12:05 AM
Ctyankee comments:
"And the big boys, Walmart, Target, Stop&Shop, Winn Dixie, Sears, etc. well gee-wiz they have IT departments that know how to implement & collect a sales tax in 45 states right now. Does the fact that they will earn 1/4% of the tax bother you?"
Oh no, that doesn't bother me at all (that's just some of their own money, given back)!
The problem is in implementation of such tax, because firms would have a much larger incentive to hide these taxes compared to smaller state retail taxes, and they would be able to do so. This would create a need for a massive monitoring agency that would probably make IRS look like a benign dwarf.
As I explained, businesses pay 23% tax - not the individuals. If customers are willing and able to pay, let's say $4,558 for a good or service, seller gets to keep only $3,510, after tax is paid to government. Seller now has an incentive to make a deal with a consumer to only charge him, let's say, $4,000 - but not to report this transaction to government. In that case, both sides are benefiting from tax evasion. And since the Fair Tax Act would make purchases of inputs tax free, government would be clueless about the total output of goods and services that can be sold in a black market. In order to control every single seller, government would have to organize something larger than IRS.
I've seen this first hand in Serbia-Montenegro, Croatia, Bulgaria..., before they introduced value-added-tax. Their governments' collection did not meet their projections and budgets. Meanwhile, black markets flourished, and they had to organize an inefficient, expensive oppressive, and enormous apparatus called “financial police�. On the top of that, they never abolished income tax, because sales tax did not work.
Published: December 12, 2005 12:13 AM
Ctyankee, you state,
I'm going to lay this out for all you complainers. The current system is broken. It's incomprehensible.
It was designed that way. When something is working as designed, it is not broken by definition.
There is only one problem: Government Spending. I don't care if they take my left arm and leg, or my right arm and leg, I object to their taking an arm and a leg!
If you want to be personally offended, you go right ahead. No one is objecting to you. You can spend your time doing anything you want. I object to your spending your time figuring out how to take my money, but in that you're no different than any government bureaucrat. So you might consider yourself in good company.
Published: December 12, 2005 7:18 AM
Jim Waddell has nailed it, and Keith Derrick is right to cite Crisis and Leviathan accordingly. Watch for politicians to get behind the FairTax in the run-up to the fiancial meltdown that gold is already signaling.
Published: December 12, 2005 7:22 AM
I disagree with points in this article. One of his central points is wrapped up in this quote...
{snip}
He claims that the removal of the taxes currently embedded in the price would lower the cost of the groceries to $35.10 (a dubious proposition).{/snip}
It certainly sounds to me like the author doesnt believe that prices will drop when the underlying taxes are removed...that competition wouldnt push the prices down at all. Dubious hardly.
Published: December 12, 2005 8:24 AM
Sasha Radeta stated,
"Siggyboss, Austrian theory of value clearly explains why a national sales tax would be totally visible to suppliers of final goods and services."
I believe you misunderstood my post. The point was the consumer doesn't realize what percentage of the purchase went to taxes easily under the proposed tax reform; as referenced in the article itself. Of course the total price, including taxes, is always clearly visible as a total.
Published: December 12, 2005 8:37 AM
Let me get this straight... a libertarian is excoriating (not just dismissing, but outright calling for opposition to) a proposal to replace a hideously progressive income tax with a mildly progressive consumption tax, because the proposal doesn't call for the abolition of government spending?
How do you get up in the morning and brush your teeth, given that your toothbrushing fails to abolish the government?
Published: December 12, 2005 8:43 AM
Jim Waddell is correct- you would end up with a national consumption tax and an income tax. Seriously, does anyone here really doubt this?
In addition, Sasha Radeta is correct. There is no real difference between consumption taxes and income taxes.
If you really want reform and a smaller government, then there is one really good reform. End withholding. Make it necessary to write a check yearly or quarterly to the IRS. The hidden nature of our taxes is what allows the government to grow so malignantly.
Published: December 12, 2005 9:02 AM
Rothbard: "There can be no such thing as 'fairness in taxation.' Taxation is nothing but organized theft, and the concept of a 'fair tax' is therefore every bit as absurd as that of 'fair theft.'"
Now we have 3 kind of tax:
- standard taxes;
- inflation;
- seigniorage (i.e. the USD cost the US the FACE value instead of only ink and paper).
If the US Treasury retain the seigniorage, there is non need for any tax. It is called 'monetary sovereignty', something the US has lost long, long ago.
Published: December 12, 2005 9:11 AM
The Fair Tax proposal is dangerous and downright scary. When will the American people ever learn their lesson? Don't give the government any new ways of taxing you. They don't and won't replace the old ones, they will be added on top of them. Those misguided do-gooders who advocate this plan are playing right into the hands of the federal leviathan.
If anything I think Vance understated the dangers of the Fair Tax. I am not opposed to it just because it doesn't decrease government spending, I am opposed to it because it makes increases in government spending easier, it produces widespread dependence on checks from the federal government, causes serious problems for firms facing elastic demand curves, and perhaps the scariest thing of all, it elminates virtually all exemptions.
In my mind, anything that decreases exemptions, loopholes etc., and in general makes it harder to avoid paying taxes is BAD. Why can't we take all the hard work, planning, effort and political action that went into the Fair Tax Act, and instead get a serious movement going for REDUCING SPENDING and really lowering taxes overall? To me that just serves to further illuminate the motives behind the whole Fair Tax scam.
Published: December 12, 2005 9:15 AM
I don't know how many babysitters currently pay income tax. The ones I know don't. I'm sure the kids that mow my grass and clean up the trash don't either. I'm sure all the legal and illegal workers paid in cash all file tax returns faithfully. Therefore, since we're reasonably sure they won't collect an additional 23% and send it off to Uncle Sam then we ought to forget about the entire FairTax proposal and declear it useless or unworkable.
Sounds a little lame folks.
Published: December 12, 2005 9:35 AM
"He claims that the removal of the taxes currently embedded in the price would lower the cost of the groceries to $35.10 (a dubious proposition)." Unless Vance has an issue with the exact amount Boortz says prices will drop (through the elimination of corporate income taxes, payroll taxes, self employment taxes, compliance costs, etc.) he leads me to believe he's never heard of a price war before.
"Lie #3: the FairTax would abolish the IRS." True, true, true! HR 25 eliminates the IRS. Defunds it and strikes it from the books. A National Sales Tax Bureau would be set up within Treasury to collect WHAT THE STATES SEND IN. You'll never be dealing with a federal tax man. The states already have systems set up. WHICH IS WHY AMERICA IS NOT LIKE "...Serbia-Montenegro, Croatia, Bulgaria..." We have infrastructure. That is also why tax evasion will be dramatically less under the FairTax than the feds have ever been able to achieve under our inconprehensable income tax code.
Go to http://www.fairtax.org/pdfs/theundergroundeconomy.pdf or http://www.fairtax.org/research.html for more details.
Published: December 12, 2005 9:48 AM
The NSTB (National Sales Tax Bureau) seems ominuous to me... So we lost the IRS and we gain the NST. Thank you! All the energy invested in this new tax would be so much better spent on cutting spendings.
Published: December 12, 2005 9:56 AM
IF....we truly had the Rule of Law, the Fair Tax could Constitutionally only be collected on things that moved in Inter-state commerce, per the Commerce Clause in Article I, Sec. 8., which lays out the powers of the Federal Congress. It could NOT be collected on items produced and sold within a state.
IF....we truly had the rule of law, the general public would be educated to understand that the 16th Amendment gave no new powers to Congress. They already had the power to tax income, BUT NOT PERSONAL EARNINGS ! All the early cases revolving around the 16th Amendment only proved that Congress had before AND after the 16th Amendment, the power to tax the INCOME or PROFITS of corporations. The 16th Amendment gave Congress NO NEW POWER, nor did it overturn the Constitutional requirements for Apportionment for Direct Taxes, nor the long established requirements for an Indirect Tax, i.e., imposts, duties and excises.
What has happened is "income tax" by corruption in the courts via redefinition of the word "income". Compensation for one's Time of Life in laboring was NEVER defined as income or profit. BUT.........when one is in the employ of another, and that employer sells the laborer's work product at a higher price than the cost of labor and resources, then the amount collected above the cost basis (labor & resources) is profit and taxable income.
By ignorance and corruption, Americans have become slaves.
A simple definition of a slave is one who's labor is taxed. Those who held slaves prior to the Civil War taxed their labor product at around 90%, leaving only enough for a subsistance existence.
But the principle is the same. Once your labor is taxed, you are a slave to the tax collector. To the degree or percent your labor is taxed, to that same degree you are a slave.
The question is put more directly as follows:
What could the Black man do AFTER the Civil War, that he could not do before? ? ? ? ?
THE ANSWER: SELL HIS LABOR AND NOLONGER BE TAXED ON IT!
THAT.....is what made him FREE!
There are TWO PRIMARY FACTS that determine whether on not a Nation or Union of States is Free.
They are as follows:
1. The Labor and land owned by the Citizen are not taxed.
2. The People regulate and control the issuance of their own currency.
Lacking these two primary conditions, human beings are NOT Free. They remain in a condition of slavery and debt, being at the whim of those who tax their labor (Life) and fluctuate their currency.
To paraphrase a statement from the movie, "THE GOOD, THE BAD & THE UGLY",
"There are two kinds of people in this world: those with loaded guns, and those who dig."
Those who benefit from taxing labor and manipulating money, do not have to work. They control the courts and police to enforce the modern slavery we find ourselves in. They have the "guns" necessary to perpetuate the ongoing slavery.
As long as the Public at large remains ignorant and their attention diverted away by amusements (sports, TV, video games etc) our Union of states will remain in the present condition of slavery.
Sincerely,
Dave Franklin
Published: December 12, 2005 10:16 AM
IF....we truly had the Rule of Law, the Fair Tax could Constitutionally only be collected on things that moved in Inter-state commerce, per the Commerce Clause in Article I, Sec. 8., which lays out the powers of the Federal Congress. It could NOT be collected on items produced and sold within a state.
IF....we truly had the rule of law, the general public would be educated to understand that the 16th Amendment gave no new powers to Congress. They already had the power to tax income, BUT NOT PERSONAL EARNINGS ! All the early cases revolving around the 16th Amendment only proved that Congress had before AND after the 16th Amendment, the power to tax the INCOME or PROFITS of corporations. The 16th Amendment gave Congress NO NEW POWER, nor did it overturn the Constitutional requirements for Apportionment for Direct Taxes, nor the long established requirements for an Indirect Tax, i.e., imposts, duties and excises.
What has happened is "income tax" by corruption in the courts via redefinition of the word "income". Compensation for one's Time of Life in laboring was NEVER defined as income or profit. BUT.........when one is in the employ of another, and that employer sells the laborer's work product at a higher price than the cost of labor and resources, then the amount collected above the cost basis (labor & resources) is profit and taxable income.
By ignorance and corruption, Americans have become slaves.
A simple definition of a slave is one who's labor is taxed. Those who held slaves prior to the Civil War taxed their labor product at around 90%, leaving only enough for a subsistance existence.
But the principle is the same. Once your labor is taxed, you are a slave to the tax collector. To the degree or percent your labor is taxed, to that same degree you are a slave.
The question is put more directly as follows:
What could the Black man do AFTER the Civil War, that he could not do before? ? ? ? ?
THE ANSWER: SELL HIS LABOR AND NOLONGER BE TAXED ON IT!
THAT.....is what made him FREE!
There are TWO PRIMARY FACTS that determine whether on not a Nation or Union of States is Free.
They are as follows:
1. The Labor and land owned by the Citizen are not taxed.
2. The People regulate and control the issuance of their own currency.
Lacking these two primary conditions, human beings are NOT Free. They remain in a condition of slavery and debt, being at the whim of those who tax their labor (Life) and fluctuate their currency.
To paraphrase a statement from the movie, "THE GOOD, THE BAD & THE UGLY",
"There are two kinds of people in this world: those with loaded guns, and those who dig."
Those who benefit from taxing labor and manipulating money, do not have to work. They control the courts and police to enforce the modern slavery we find ourselves in. They have the "guns" necessary to perpetuate the ongoing slavery.
As long as the Public at large remains ignorant and their attention diverted away by amusements (sports, TV, video games etc) our Union of states will remain in the present condition of slavery.
Sincerely,
Dave Franklin
Published: December 12, 2005 10:16 AM
Aaron S, it does not matter what HR 25 says. Do you earnestly believe it will be passed as it is written at this moment?
"That is also why tax evasion will be dramatically less under the FairTax..." - Yet another reason to oppose the Fairtax.
Published: December 12, 2005 10:22 AM
Dear Aaron, why would dramatically less tax evasion under the FairTax than the feds have ever been able to achieve under our inconprehensable income tax code be good?
Published: December 12, 2005 10:29 AM
"The NSTB (National Sales Tax Bureau) seems ominuous to me... So we lost the IRS and we gain the NST. Thank you! All the energy invested in this new tax would be so much better spent on cutting spendings."
John, the simple fact is that Americans HAVE NO IDEA HOW MUCH THEY ARE PAYING IN FEDERAL TAXES. If an American has no idea that THEY are actually paying EVERY CENT of their employer's matching payroll tax, corporate taxes and all the compliance cost OR they are losing their job to China, HOW can you convince them to cut government spending? If you discard every benifit of the FairTax, from an increase in individual liberty to cutting over $250 BILLION in annual compliance costs to eliminating the punishment for personal and corporate success, you still have an EDUCATION of the American public who has never known how much the federal government was costing them. What better way to do this than printing it on every receipt? Even those at or below the powerty line who end up paying zero taxes under the FairTax will still complain that they are being taxed to high heaven. The FairTax educates where government schools have failed for decades.
Published: December 12, 2005 10:33 AM
Lie #1: taxes would be voluntary under the FairTax.
First we must realize that all of our actions have consequences. If an individual chooses to buy a new luxury car, he/she would have to pay federal sales tax. Section 505 of H.R.25, entitled PENALTIES details the civil and criminal penalties for non-compliance.
Under the Fair Tax, the federal sales tax would be reimbursed up to poverty level spending via the Family Consumption Allowance (FCA). An individual could purchase new food and services and still survive at poverty level spending. After the FCA, the net tax payments would be $0. The individual could spend significant additional sums of money on used items tax free. The individual could work and earn as much money as he/she possibly could—untaxed. If the individual chooses to purchase a standard of living above the meek poverty level, then net sales taxes would be due.
Under the current tax system, an individual, without dependents, is taxed from the first dollar earned at the FICA/Medicare rate of 7.65%. As annual earnings increase, additional progressive income taxes are due. Under the current system, the only option to not pay any federal income tax is to not work. That is not a valid option.
Given the above two alternatives, the Fair Tax provides the only valid alternative. Although the qualifying “Tax Free� situation is narrow in scope, it is possible. For anyone with the means, purchasing a standard of living above the poverty level is voluntary; accordingly the federal sales tax would also be voluntary. The assertion that item #1 is a Lie is false.
Published: December 12, 2005 10:53 AM
I did some simple math. I am a simple consumer. If i know that i bring in 40728.32 gross for the year and i figure my income tax it figures out to 35%.(I think this % includes Matching FICA.) That 35% could be spent in consumer goods. Sure i pay higher taxes but i purchase more goods and i see where my money actually goes. I have control not the government. And sure everyone is addressing the fact that Government spends way too much.
A concerned American.
Published: December 12, 2005 10:57 AM
Scineram and Jim Waddell,
I believe that the FairTax is fair and our current federal tax code is not. This may not be your opinion, but one of the arguements against the FairTax was that it would difficult to enforce. I responded to that point. I think that if the FairTax was a truely unenforceable tax it would be criticized for being uneffective.
Also, under our current tax code, its uncomprehensible factor is harder on the small guy than those with larger resources.
Published: December 12, 2005 11:03 AM
Josh, did you also factor in the cost of the hidden taxes politicans prefer Americans not know about? Or loss of productivity or comliance cost?
Published: December 12, 2005 11:06 AM
A tax is an assault on freedom not an educative tool.
Canadians pay 15% in sales tax and they know it because prices are displayed before sales tax. Do they loathe government for that? No. 99% of the population support socialism. In the Socialist Republic of France, employers do not collect income taxes; every citizen writes a fat check every quarter (at least that was the situation ten years ago). The French therefore know how much government cost them. Still, they beg government to guide them in their lives.
Reforming taxes is at best a loss of time. At worst, it is a cunning strategy to get elected and grow government always bigger. The reality is that Americans are politically socialists. Tailoring a Smart/Fair tax systems is not going to change their mindsets. Cutting government spending and kicking government people out of our lives is the real fight. It is a tough and demanding fight, so please don't lose your time on trivial tax reforms.
Published: December 12, 2005 11:07 AM
Aaron S than says:
"The states already have systems set up. WHICH IS WHY AMERICA IS NOT LIKE "...Serbia-Montenegro, Croatia, Bulgaria..." We have infrastructure."
BUT THEY HAD IT TOO... And it was a much larger and more powerful infrastructure (compared to size of their population). They were forced to expand this inefficient system, simply because sales tax did not work. In such system, government is clueless about the amount of input purchases and it relies on taxpayers to monitor themselves.
Sorry, but I have to repeat myself: "If customers are willing and able to pay, let's say $4,558 for a good or service, seller gets to keep only $3,510, after tax is paid to government. Seller now has an incentive to make a deal with a consumer to only charge him, let's say, $4,000 - but not to report this transaction to government. In that case, both sides are benefiting from tax evasion. And since the Fair Tax Act would make purchases of inputs tax free, government would be clueless about the total output of goods and services that can be sold in a black market. In order to control every single seller, government would have to organize something larger than IRS."
A national sales tax promotes tax evasions and black markets, because SELLERS ("TAX COLLECTORS" UNDER "FAIRTAX") PAY SALES AND INCOME TAX - not the individual buyers. Printing sales tax on a customer's receipt is completely misguided, since customer never pays this tax! Taxes are not embedded in a final market price. Instead, market prices are formed by the agreements between buyers and sellers. Like any other cost or government's regulation, taxes reflect negatively on firms ability to make profit, which drives some firms out of business, reduces the supply and puts upward pressure on prices. But it would be totally incorrect to suggest that customers currently pay a definite percentage in taxes, when they buy their goods and services.
If you suggest that the USA can ignore law of demand and that Americans are different in that respect from Eastern Europe, it's only the evidence that many did not learn anything from the collapse of Soviet block.
Published: December 12, 2005 11:33 AM
Good essay! On the other hand, nothing is "fair" in this world except maybe "My Fair Lady."
Talk about net tax reduction is silly because nothing will stop the transfer from the working class to our owners except armed revolution.
Published: December 12, 2005 11:43 AM
Couple points...
--"For libertarians, taxation is theft, and its avoidance, legitimate... easier to evade."
The two terms are not interchangeable. Avoidance is perfectly legal; it just means using your money in ways that are taxed less than other ways you can use it. Evasion is the illegal bit about doing things that are taxed and then not paying the taxes. Very different, even if you have problems with neither.
--"No, it's printed on the receit."
I haven't read the full proposal, but this right here would be my biggest objection. As others have noted, government taxation is hidden; it comes out of the paycheck before you get it. This is a bad thing. But if the FairTax is as outlined by its supporters here, then how does this change it? My pay stub shows the amount the income tax takes out. Most of my coworkers have no comprehension of how much money the feds are taking, even with this. Printing it on the receipt doesn't change this mind-set.
I'd be more inclined to favor it if it acted as sales taxes currently do. You get the total, then a big chunk is added to the price for tax. That makes it a lot more obvious on just how much Uncle Sugar's tithe is. The same effect could be achieved with much less political problems by simply stopping withholding and requiring everyone to pay their income tax in a lump sum once a year. Watch government spending plunge the year after this is implemented...
Published: December 12, 2005 11:44 AM
If the "Fair Tax" Act authors really wanted to remove all income taxes, they would have stated that a national sales tax will take place only after the 16th amendment is repealed. Instead, we will have to trust government that it would not exercise all its "constitutional" powers, when we know that they already extended their powers far beyond Article I, Section 8 of the US Constitution.
Published: December 12, 2005 11:49 AM
Lie #2: the FairTax rate would be 23 percent.
We are talking apples and oranges here. Anyone who claims that both are just fruit is attempting to mislead and misinform the public. The Fair Tax is presented to replace the income tax. The income tax is an inclusive tax. The appropriate Fair Tax percentage for an inclusive comparison is 23%. Recognizing that some comparisons could benefit from an exclusive tax analysis, the following conversion table is provided.
When making comparisons, the appropriate inclusive/exclusive percentage must be used. Either column can be used, but a comparison of different taxes between columns is wrong. While we are at the comparison game, the following table provides sales verses income tax percentages with the average state sales and income taxes included.
35% Bracket +
Medicare + 4.44%
Ave. State Income Tax 40.9% 94.3%
Any argument quoting a combined federal and state sales tax rate above 36% is only valid when it is compared to a 94% combined income tax rate. The assertion that item #2 is a Lie is false.
Published: December 12, 2005 11:52 AM
Sasha, you have a very valid point that cannot be answered by supporters of the new tax. Evasion gains remarkable incentive.
To counter the increased incentive to evade, there will have to be massive bureaucracy with powers of enforcement at least on par with the worst of the IRS. I expect it would be far more intrusive than the IRS dreams of being, because of those incentives.
For instance, right now if I buy something I might get away from 8% in sales tax if I offer service in trade or money under the table. Suddenly raise that to 37% (don't forget, states, counties and localities still add their % on to the total too!), I am much more likely to go looking for an underhanded deal no matter now otherwise "law abiding" I am.
Published: December 12, 2005 12:10 PM
To the "Fair Tax" Supporters; Your logic is wrong because it assumes to be true something that is not - that it is ok for the federal government to tax people. The 16th Amendment aside, no one I know ever consented to the current level of Federal theft - why should anyone here be forced to consent to it now? As others have argued, this has a chance to pass in exactly the same proportion as it's chances to increase total government revenue.
My predictions about the "Fair Tax":
1) It will get passed when revenues from the current tax regime collapse;
2) It will be "inclusive",meaning we will NOT be allowed to see it on the receipt, making a visible tax into an invisible one;
3) The IRS will be replaced with an even MORE intrusive gang of busybodies-with-guns that WILL make sure babysitting and the like are taxed, and;
4) The 16th amendment will not be repealed, and slowly but surely, income taxation will be reintroduced.
Don't you pro-"Fair Tax" people see - the government will never allow its source of funding to be trifled with? You are opening a very dangerous can of worms here.
Published: December 12, 2005 12:21 PM
It is reasonable that libertarians will disagree about something contentious like a tax system. All you can do is go with what you know:
--Government will abuse any power it gets its hands on.
--If we have a sales tax now, eventually we will have an income tax AND a sales tax ("it's not fair those rich guys can save more by not buying something than poor people")
--It will be easier to raise taxes under a sales tax--imagine our noble government representatives having the ability to tweak one little number half a percent and collect billions more, a little bit from every person every day.
--Keep your taxes where you can see them. The fair tax is even worse than withholding in terms of invisibility once people adjust to it.
I have little doubt that a consumption based tax will be better for the economy over some period of time. There has been alot of quality work done in this area (Cato). But there is no such thing as a "fair tax." Justice means getting what you deserve, and you deserve every penny of what you work for, and full control over its utilization.
A tax reform that simplifies and keeps/makes the burden of taxation highly visible is the only "reform" a libertarian should consider choking down.
A flat income tax with no other taxes of any kind (corp., cap gains, FICA, etc.) that applies to everyone with no exceptions and with no deductions and no withholding is one possiblity. There's nothing magical about it, it just eliminates the games, the progressive elements, and much of the IRS, and makes everyone see and feel the pain of paying taxes--trust me, as someone who makes quarterly payments, it makes it far more real writing that a check out of your account each quarter than when you simply adjust your life to your "net" on a paycheck.
The "Fair Tax" does none of these things. It makes the tax process more stealthy and we will be paying MUCH higher taxes over time as a result of it. KEEP YOUR TAXES WHERE YOU CAN SEE THEM.
All change is not automatically good just because the current situation is bad. On the other hand, it will be one more chapter of excellent Austrian education in the real world to see how bad the unintended side effects are of yet another government program designed to cure its prior mistakes.
Published: December 12, 2005 12:29 PM
Why has no one reacted to Dave Franklin's post.
He nailed it.
I would add:
If. . .we truly had a rule of law the public would not be "schooled" at public expense under government control and might be able to understand what is going on.
Published: December 12, 2005 12:31 PM
Tax reform, Boortz's or otherwise is just another scheme to legitimize government robbery. The title of the article is correct, there is no such thing as a fair tax, because the ones who received the tax benefit at the expense of the ones forced to pay it. What we need is a tax revolt and not another attempt at tax reform.
Published: December 12, 2005 12:32 PM
Oops!
Change that first period to a question mark.
Published: December 12, 2005 12:34 PM
I was glad to hear from someone who is opposed to the FairTax and appears to actually have researched it. It seems that most opposition is from those who are ignorant of what it actually is. However, I can’t agree with him on his overall assessment.
Mr. Vance attacks (among other things) the FairTax because no tax is fair. He is correct in that no tax is fair. The current income tax is not fair. Would Mr. Vance feel better about the FairTax if it were renamed the TaxThatIsMoreFairThanTheCurrentIncomeTax?
It seems to me that most of Mr. Vance’s attack is not against the concept of the FairTax but the writing style and articulation of Mr. Boortz. I too had problems with that.
Mr. Vance tells us that the problem is Government spending not the current tax system. He is wrong. It is both. Maybe, just maybe, if we get one of them fixed then it will be easier to fix the other. But probably not. Because we may never be able to reign in government spending, does that mean we should not simplify our current system?
Published: December 12, 2005 12:37 PM
A consumption tax of anything close to 23% WILL result in an enormous black market. When the gov't fails to derive the anticipated revenues it will attempt to gain more control at the point of sale. One way of doing this might be a transition to electronic only transactions, eventually eliminating coins and notes from circulation entirely, or even making them illegal. When people resort to barter and other forms of "money", such transactions could also be banned, creating a whole new class of "criminals". The IRS could be transformed from a bunch of paper pushers to S.W.A.T trained street enforcers. "Fair Tax"? Puleeeze!
Published: December 12, 2005 12:39 PM
"Because we may never be able to reign in government spending, does that mean we should not simplify our current system?"
Yep, that's exactly what it means. If government spending is not contained, it doesn't matter what forms are filled in or where the money is taken, we are all impoverished anyway.
If government spending were contained, and the IRS took at most 3% from people earning more than $1M, and corporation taxes were in the same scope, we could argue all day about how unfair any tax is but no one would pay any attention because the real burden would be so small.
Published: December 12, 2005 12:51 PM
The arguments on both sides have some merit, but for me, it is time for a change. The staus quo has had enough time to prove it is a failure. For my childrens sake I am ready to try something new.
I don't fear the rate going up because for once we will all KNOW it is going up (or down). No more news bites about how party X is lowering the rate, only to discover later that they changed others areas as well and in fact, your tax bite just went up.
The current system has companies struggling to move work out of America. Chrysler is in Germany now. Why? Better work force? No. Better tax advantages.
My kids will come out of college with huge debts that require they get good jobs. If the trend continues, why should they go to college? Maybe they should just get started in the first of many low paying jobs supplying services to the leadership that runs the companies moving the good jobs to other countries.
I'm ready. Let's change. It may not be perfect but I believe it is better than what I've had to deal with for the last 30+ years.
Gary
Published: December 12, 2005 1:01 PM
ctyankee writes:
"What [Vance] has done is to generate a weak synopsis (20 points) of a book that in a few hundred pages puts forth a plan that replaces the tens of thousands of conditiond & exceptions that are the curent tax code."
Hmm. So Boortz *only* takes a "a few hundred pages" to set forth his plan to replace "the tens of thousands" of clauses in our present federal tax code.
Call me a nervous nellie, but if it takes hundreds of pages to lay out a tax reform, that sounds way too complicated to me. Of course, the original tax code of the US once the 16th Amendment had gone into effect was pretty short too by contemporary standards. There's no reason to think Boortz's, uh, *reforms* won't be similarly corrupted.
Now, some general comments about Boortz's and other similar would-be single-tax substitution reform schemes that some conservatives and libertarians go in for:
(1) Whatever prospective net benefit they may offer, which are always marginal at best, tend to be undercut by the added costs, direct and indirect, of complying with the many changes. These costs will continue for years, as Congress and the revenue bureaucracy then proceed to "fine-tune" the tax reforms.
(2) The political and intellectual resources that go into these marginally beneficial -- if not counterproductive -- reforms are squandered on a fool's errand. How much more productive those voices would be raised against high taxes and spending generally! How useful someone like Boortz would be, focusing his frustrations on this Republican president and Congress, than diffusing his energies on byzantine tax "reform" and promoting ceaseless ill-defined military ventures abroad!
But then, I can't help but think, maybe that's the point: Fool your supporters into accepting and promoting big government via distractions and diversions.
Published: December 12, 2005 1:09 PM
Sasha Radeta, did the other countries have state or provincial sales taxes in place before a national one was implemented?
"My pay stub shows the amount the income tax takes out. Most of my coworkers have no comprehension of how much money the feds are taking, even with this. Printing it on the receipt doesn't change this mind-set."
Again, even the poor will be griping about the amount of taxes they will be paying.
For tax evasion under the FairTax, see http://www.fairtax.org/pdfs/theundergroundeconomy.pdf.
True, but Americans are in a net-income mindset. When they head to the stores and see price tags, then pay and get hit with a 30% sales tax, THAT is what hurts. Suddenly Americans will be eager to talk about the role of government and be open to shrinking it once they realize that the NST they are paying is the cost of replacing personal and corporate income taxes, estate, gift, capital gains, alternative minimum, Social Security, Medicare and self-employment taxes.
Published: December 12, 2005 1:12 PM
Lie #3: the Fair Tax would abolish the IRS.
Laurence Vance debunks this one himself. “The Fair Tax will abolish the IRS in the same way that it will abolish the income tax—by replacing it with something else.� The assertion that item #3 is a Lie is false.
Published: December 12, 2005 1:31 PM
Really? You mean that one hundred years of the welfare-warfare state doesn't show that people support taxation/debt/fiat money/war/unconstitutionality? What more proof do you need? Most people like and want welfare and their inflated lifestyle. Everyone is aware of what they pay and have been paying. People complain about Social Security but no politician wants to get rid of it. Same goes for Medicare, and any tax. No one LIKES what they pay for, but at the same time people don't want to repeal anything. The Fair Tax willl extend that mindset too.
Published: December 12, 2005 1:38 PM
R.P. McCosker says;
"How useful someone like Boortz would be, focusing his frustrations on this Republican president and Congress, than diffusing his energies on byzantine tax "reform" and promoting ceaseless ill-defined military ventures abroad!"
Great idea, R.P., except that can never be allowed to happen. A guy like Boortz only has a soapbox like this because most of what he says is useful to the Republicrats and the Demoblicans. The minute he turned on them, his career would be over.
Published: December 12, 2005 2:04 PM
Bill Rook sez;
"Lie #3: the Fair Tax would abolish the IRS.
Laurence Vance debunks this one himself. “The Fair Tax will abolish the IRS in the same way that it will abolish the income tax—by replacing it with something else.� The assertion that item #3 is a Lie is false."
Bill, your argument is pure sophistry. What's the difference between abolishing and simultaneously replacing the IRS (with an agency that will likely hire all of the former agency's managers and employees)and not abolishing the IRS at all? NONE, as far as I can tell. We will be left with in all likelihood an even more obnoxious, intrusive agency. What difference does it make whether it is called IRS, or NSTS?
Why don't we just agree to call it Murder Incorporated, Larceny Division?
Published: December 12, 2005 2:50 PM
Gary said:
"The current system has companies struggling to move work out of America. Chrysler is in Germany now. Why? Better work force? No. Better tax advantages."
Wrong. Chrysler moved out of America because their business model failed and they were bought by a German company. The company's business model did not fail due to tax advantages or disadvantages, because various other companies in the same industry manage to operate effectively. Now, admittedly, most American auto manufacturers are struggling. But their struggles are not driven by taxation, and any modifications to the tax code will not alleviate their failing business models.
Though the Fair Tax may provide more money for the government to offer those companies subsidies in return for votes and support.
In the end, if the Germans offer a better product that consumers are more willing to buy, who are you to tell them they're wrong?
Published: December 12, 2005 4:16 PM
(Comment on Lie #1) This is ridiculous! Of course there is no way to avoid buying new items. Of course you can’t buy used food. All Neal Boortz means when he says voluntary is that you decide when to pay your tax by deciding when to buy something. As long as you keep your spending under the poverty level, you will pay no tax. Since you have this choice, I would call it voluntary. Mr, Vance states “What happens if someone decides that they don't want to pay any taxes to the federal government? The same thing that happens now: fines and imprisonment.� Again, a ridiculous statement! The only way someone can decide not to pay taxes is to not buy anything. This is not against the law. If you don’t buy anything, you won’t need to worry about fines or imprisonment, you will starve first.
(Comment on Lie #2) I get so tired of FairTax opponents, using their 30% argument. THE QUESTION IS, what percentage of your income will go to the government in the form of federal tax? If you earn $100,000 during the year and you spent your entire $100,000, $23,000 would go to the government. For those of you who needs a math lesson $23,000 is 23% of $100,000.
(Comment on Lie #3) So what is your point. The IRS would be abolished and a different agency will be needed to oversee the FairTax. The big plus is that individuals will no longer be subjected to IRS tax audits. The other positive, it will cost millions less to operate this new agency. There will be millions less returns to audit and it will be a much simpler job. The audit will consist of, what were your gross sales? Did you send 23% of these gross sales to the government?
(Comment on Problem #1) How many average Americans can tell you how much embedded taxes they currently pay when they buy something? If you gave a calculator to the greatest mathematician, he could not come up with the answer. At least with the FairTax, even if someone can’t figure percentages, most of them can tell you that 23% of the price of the item will go to the government. If they just spent $100, most Americans can tell you that Uncle Sam will get $23 of it.
(Comment on Problem #2) I don’t see this as a problem!
(Comment on Problem #3) Again, I don’t see this as a problem. Unlike the Earned Income Tax Credit, everyone will receive the prebate. This is fair to all.
(Comment on Problem #4) My doctor is for the FairTax. He said he would much rather file a Federal Sales tax return than a Federal Income Tax return.
(Comment on Problem #5) Better start to save up a little extra if you want to attend a baseball, football, or basketball game; what a joke! The extra income I will begin to receive when I start getting 100% of my paycheck and a $492 per month rebate will be more than enough to make my house payment plus buy tickets to a ballgame.
(Comments on Problem #6) The FairTax doesn’t create new taxpayers. Churches and other non –profit organizations already pay 22% to 30% in embedded taxes every time they buy something.
(Comment on Problem #7) There is no easier way to increase taxes than under our current system. With all the ways our current system can be manipulated, we can actually have a tax increase and made to believe we received a decrease. How many Americans can tell you all the recommendations the tax panel for reform just presented to Secretary Snow? With the Fair Tax, camouflage tactics will be eliminated. Knowing the exact proposed increase will result in a greater opposition to that increase.
(Comments on Problem #8) When the states see how well the FairTax works, I hope they all follow suit by eliminating all current state taxes an replacing them with a sales tax. A sales tax is the fairest tax, it should be the one used by all states.
(Comments on Problem #9) Yes, there will be a transition costs. It will be about as much as it costs to operate the IRS for one month. Yes, there will be transition problems, but the benefits of the Fair Tax sure out way any transition problems that may take place. Seeing transition as a problem to bring about the FairTax is like liquor companies telling alcoholic not to quit drinking because of the withdrawal problems he will face during his transition to becoming sober. It’s like telling a farmer to not replace his team of horses with a tractor because all the transition problems. You are always going to have problems when you try to improve something; the largest being those who want to keep you from doing so.
(Comments on Problem #10) Two exemptions, wow this is terrible, there are so many exclusions and exemptions under our current system, no one can keep track of them all.
(Comments on Problem #11) There is going to be fraud and criminal activity no matter what system you have. No tax system is going to eliminate this. The question is which system will result in the least amount of fraud? The best way to determine this is to answer these questions: How many drug dealers pay income tax? NONE! How many drug dealers will pay the FairTax? ALL! How many does it take to cheat on an income tax? ONE! (you). How many does it take to cheat with the fair tax? TWO (the buyer and the seller)
The idea of not charging sales tax on used merchandise is to eliminate double taxation. Under our current tax system, double taxation might as well be a part of the code. Under HR25 the term “used� relates to whether or not the sales tax has been paid previously, and not just to whether or not the item has been physically used. If you are going to classify something as used, you better be able to prove that sales tax has been previously paid on that item.
(Comments on Problem #12) Get real! How many 13 year old babysitters will be audited? Oh, I’m going to report Billy. My neighbor paid him $20 to mow his lawn and he never sent $4.60 to the government.
(Comments on Problem #13) The bottom line, our government can do pretty much what ever it wants to when it comes to collecting taxes. The question is which way is the best, which way is the most fair? No mater what, the one thing our government wants is to maintain a strong economy. It just comes down to, what is the best way of doing so? Which way will create more jobs? Which way will stimulate our economy the most? Which way will improve our balance of trade. The answer is the Fair Tax.
(Comments on Problem #14) No, it doesn’t eliminate all other federal taxes. The book doesn’t suggest that it would. It’s designed to replace all income taxes, payroll taxes, capital gains taxes, the alternative minimum tax, corporate income tax, and the estate and gift tax.
(Comments on Problem #15) Taxation and the tax code are two separate subjects. Yes, we need to reduce government spending. One thing the FairTax will do is expose just how much the government does spend. Under our current system, there is so much smoke and mirrors, no one really knows how much of their income ends up in the governments hands. If they did there would be a greater urgency to reduce spending. The FairTax will create this urgency. By the way, Ron Paul is in favor of the FairTax.
(Comments on Problem #16) As stated in comment #15, the FairFax is not meant to reduce the $3 trillion, it’s meant to be a fairer way of collecting taxes and at the same time stimulate our economy. You would probably be in favor of the FairTax if written this way. “The FairTax is a simple tax reform bill that repeals all Federal Taxes. As a result, all armed forces will be eliminated, all potholes in our national highways will be allowed to grow bigger, everyone over 65 must now pay all their own medical bills, and every one on Social Security can visit their local unemployment office to apply for zero unemployment benefits.
(Comments on Problem #17) The prebate is just another way to simplify our system. It is much easer to charge a sales tax on everything and then rebate a determined amount to offset the tax on necessity items. It is much easier than categorizing everything into either a taxable or a nontaxable necessity item.
Published: December 12, 2005 4:28 PM
Sure, we should find the most "fair" way for the government to steal from us? The issue is moot.
Published: December 12, 2005 4:59 PM
I want to thank everyone who sent me their e-mails with valuable comments.
AaronS said: "Sasha Radeta, did the other countries have state or provincial sales taxes in place before a national one was implemented?"
Yes, they did. They had local sales taxes and they used the same infrastructure. But they still had a huge problem with black markets, so they had to activate the notorious "financial police"... And it still did not work. Unless you don't have a value-added tax (which is a vicious and dangerous tax, by the way), you simply have no idea how much output is produced and what amount of revenue should you expect. No way of knowing.
Don't get me wrong... I think it's great that it's easier to evade sales taxes, and black markets are beautiful example of free market inevitability - but like I said, there is nothing to stop the US government adds the income tax on the top of the "FairTax".
ONE IMPORTANT POINT (going back to Aristotle's axioms): sellers are those who pay income tax. Market pricing mechanism is not based on costs of production, but on negotiation process between buyers and sellers. That's why we have those companies that suffer losses and go bankrupt.
AND MOST IMPORTANTLY (connected to previous point): a sales tax is not like a classic income tax that applies to your taxable income (minus all loopholes). Sales tax will simply reduce a seller's TOTAL REVENUE by 23%, regardless of his profits or losses. It could become a 100% income tax, if it wipes out your profit margin in this unpredictable world. Imagine how that would affect employment. While it is true that common workers would not have to pay their taxes on sales of their labor services, their abilities to find buyers (employers) would be negatively affected by this tax.
In response to Steve Keller: NO, "FAIR TAX" IS NOT VOLUNTARY. In principle, itćs the same as income tax.You can avoid sales tax only if you stop selling your own goods and services and if you consume only what you produce or hunt down yourself (back to Stone Age). Likewise, we can avoid paying our current income tax if we stopped selling our labor (services), or if we stop our credit services (banking and investing). EITHER WAY, we are forcibly taxed for market exhanges - or if we try to avoid taxes, we would be forced out of our civilization, and back to Paleolithic era.
Published: December 12, 2005 5:36 PM
What many of you don't seem to understand is that the FairTax Act is not meant to cut government spending, which we all agree needs to be done. The law currently requires that all tax reform bills be "revenue-neutral", meaning they have to produce as much income for the government after the reform as before. The FairTax is just a reform designed to make taxation transparent and simple, which is does. From my seat, the best way to get the populace to realize how much of their money the government takes, and thus to plant seeds of spending reduction activism, is to tell them on every single receipt. The income tax and all other forms of taxation, excepting sales tax!!, are hidden. The FairTax is as transparant as can be.
The FairTax is not perfect because it still feeds the beast, but I've never understood the mentality that if you can't make something perfect, then you shouldn't make it better.
Published: December 12, 2005 5:43 PM
Sasha Radeta,
The FairTax is voluntary in that you can choose when to pay it, if you pay it.
Plant a garden. Barter. Buy a used car. Buy second-hand clothes, etc...
Voluntary doesn't mean that you can go buy new Nikes and choose not to pay the tax.
Published: December 12, 2005 5:47 PM
Brian,
I can choose when to pay, if I pay, income tax - just like a sales tax. Identically!
All I have to do is to stop engaging in market transactions, only to produce goods for my own production (hunt or farm for meet), and never to engage in monetary transactions.
Back to Stone Age in both "voluntary" examples...
And yes, we realize that "FairTax" is not designed to cut government's spending. It's only a bad way for government to impose an additional tax (note that Fair Tax Act does not make a condition that it will be implemented only after 16th amendment is removed), to crate more harm, and to expand government's monitoring of our lives.
Published: December 12, 2005 6:01 PM
Brian,
I can choose when to pay, if I pay, income tax - just like a sales tax. Identically!
All I have to do is to stop engaging in market transactions, only to produce goods for my own production (hunt or farm for meat), and never to engage in monetary transactions.
Back to Stone Age...
And yes, we realize that "FairTax" is not designed to cut government's spending. It's only a bad way for government to impose an additional tax (note that Fair Tax Act does not make a condition that it will be implemented only after 16th amendment is removed), to create more harm, and to expand government's monitoring of our lives.
Published: December 12, 2005 6:04 PM
The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the least possible amount of hissing.
Discounting the hissing on this and a few other blogs, I am inclined to think of the FairTax as a work of art. Mind you, money is not everything. Scrapping the income tax would deprive us of lots and lots of information that is as vital to governing as money is. If it were all about money then we'd be content to abolish taxation entirely and make do with a friendly soul in charge of the Federal Reserve.
Published: December 12, 2005 6:08 PM
A consumption tax of anything close to 23% WILL result in an enormous black market.
I would consider it a highly desireable outcome. The more people feel that government makes criminals out of decent people, the more inclined they'd be to take it down.
Besides, tax evasion reduces ability of the government to pay thugs and bribe fraction of populace, thus reducing its political effectiveness.
Consider me *for* the so-called Fair Tax. Another wrench into the collectivist works, heh.
Published: December 12, 2005 6:47 PM
Interesting article and very interesting comments on this blog. Don't pay attention to what my left hand is doing while you focus on my right hand. This tax and this discussion is just slight of hand. The right is distracting us with triumphalism and the left is distracting us with empty volleys against the right. And this blog is distracting us from the real issue:
We live in a tyranny of the majority.
A lazy, ignorant and envious majority that is pandered to by the power elite who say jump (read pay tax) and the mob asks, how high? (read how much tax can I get the other guy to pay for my benefit?). How we pay the tax isn't important. The important concept is that we want to pay tax so we can be taken care of. We simply want to make sure the other guy pays more for less service than we do. How do we accomplish this? By belonging to a group that has advantages and using the governments guns to rob more from the other guy. As long as we think the other guy is the enemy, we think the government is a neutral tool. And as long as I can keep that tool tilted in my favor then what they take pales in comparison to what I get.
Most people cannot turn over the second, third, etc. stone. Since they cannot see the damage done by any tax and only remember the good feelings of paternal safety they feel, they will continue to support a tax system, no matter what kind.
In this country we tax individual success and glorify collective success. Some of you say that freedom is the price and slavery is the result of taxation. You are wrong and everyone else agrees with me. Why are you wrong? Becuase I will make sure to belong to the group that has the benefits and I know you belong to the group that doesn't, else why would you be complaining.
Moreover, this whole discussion is moot becuase this tax will NOT pass. Becuase my group -- one of the most powerful -- will not allow it. We want people to have disposable income so we can convince them to save and invest it. We want them to have an 'income' tax because we can create vehicles that will delay the pain of the tax to line our coffers. Why do you think we want you, that's right you, you silly little laboring citizen, to max out your 401(k). No, no, my idealisitc friends -- the financial institutions will never let the income tax be replaced or have to compete with an alternative tax (I don't mean the AMT, that's just fine with us). The financial institutions make too much money because of the 'income' tax. So do the lawyers, accountants and numerous other financial services professionals. No this tax will NOT replace the current one, but keep up your academic distraction, er, I mean discussion.
FairTax is an Orwellian shell game designed to get you to feel better about the current tax. It won't happen and it shouldn't happen. of course, neither should this tax, but it has persited for almost a century.
So stop your whining, your anlayzing and go fill out your tax form. If you're lucky you will benefit and if you don't, well that just means you're in the minority and in a Democracy, we don't care about minorities -- this is a tyrany of the majority.
Sic Semper Tyranus!
Published: December 12, 2005 8:14 PM
Averros said:
"A consumption tax of anything close to 23% WILL result in an enormous black market.
I would consider it a highly desirable outcome. The more people feel that government makes criminals out of decent people, the more inclined they'd be to take it down."
I said that too. The only advantage of "FairTax" is in its inefficiency and disregard for basic economics.
Unfortunately, life thought me that this outcome will not be the end of this story. Like I said, black markets are beautiful and they prove that free market will always find a way to emerge, despite all tyrants, price controls, prohibition... But, what do you think that government's response is going to be, when they realize that sales tax revenue is not filling their budget projection and that there is a parallel untaxed economy in this country? What will they do, when they still have a constitutional amendment that allows them to tax income, regardless of the existence of a sales tax? Not only will they probably increase government repression on citizens, to increase potential cost of tax evasion, but also they could implement income tax." What could stop them, when we face the "war on terror", so many internal and external enemies, imminent social security crisis, hurricanes, tornados, earthquakes, floods...?
Published: December 12, 2005 9:06 PM
Another thing about black markets: they were heavily considered when calculating the 23% figure. Linder, et al., are counting on black markets to emerge.
Published: December 12, 2005 10:26 PM
Brian, regarding your comment…
First response of an Austrian economist would be: how can anyone in their right mind claim they know exact response of black markets, to predict it numerically? That's just irrational.
But second response is more important, and again is inspired by works of Aristotle and Carl Menger: those calculations are wrong because they are based on a premise that a national sales tax is consumption tax that seller pass forward to consumers (that's why they want to even send checks to businesses from Washington, DC for this service). What they don't consider is the fact that market prices are formed in a process separate from a company's balance sheet. Our willingness and ability to buy something (known as demand in economics) has nothing to do with some company's costs, but it determines market prices for a given supply.
This means that all revenue from sales of goods and services will be taxed 23%, regardless of profit or losses. This could in fact represent a 100% income tax (with an additional confiscation) for those businesses that don't have a pre-tax net profit margin above 23%. THAT IS A MIGHTY INCENTIVE FOR TAX EVASION THAT CAN NEVER BE NUMERICALLY PREDICTED. How could someone forecast profit margins and all possible business outcomes for every single business - and even predict it for future businesses???
Give me a break.
Published: December 12, 2005 11:03 PM
Sasha,
Assume I'm educated in economics. Defining "demand" is unnecessary.
The incentive to evade taxation exists in our current system. The first example that comes to mind is Dennis Koslowski, ex-CEO of Tyco, Inc. He claimed to have "not been thinking" when he signed a return omitting a $25 million dollar bonus. Do you know anyone who babysits or mows lawns that files a return? Or how about anyone who makes a little cash on the side doing odd jobs for neighbors? Didn't think so. The incentive exists, and it will exist under any form of taxation.
The question here is, is the FairTax an improvement over the current system? From my seat, and after having read countless articles and one book, I think that it is, if for no other reason than it shows the populace exactly how much of their money the government takes and spends.
Published: December 12, 2005 11:29 PM
FairTax is a "point of beginning" to do several things this author apparently does NOT comprehend:
1) FairTax establishes a basis of tax revenue that is comprehensible to the country's payers of taxes - it's citizens. This is perhaps THE MOST IMPORTANT REASON to enact the FairTax consumption tax. (And, by the way Boortz does NOT hide the 30% exclusive tax - he even says that it will be visible on receipts for purchases. This is essential for the very reason that we WANT taxpayers to know EXACTLY what their tax IS. Any discussion of the tax rate will be a discussion about the ECONOMY - not chatter about this, or that, deduction incomprehensible to the state of the economy. With the FairTax, one will be able to rationally discuss a tax rate in terms of GDP - and vice-versa. No more tinkering, manipulation, spinning, and pitting one segment of society against the other. We're all in this together.)
2) FairTax removes the "straw man" of "don't tax him, don't tax me, tax that rich greedy corporation behind the tree." Greenspan stated that businesses don't pay taxes - consumers do inasmuch as businesses pass their costs through in their products or services. Businesses can resume developing business strategies around product research and development and competition (at least in the American market - however, if America goes FairTax, I agree that it will go global. It is the next logical step for new Eastern Bloc democracies who have chosen a Flat Income Tax Rate - including Russia).
3) The "political class" will no longer have at least half the 40,000 lobbyists in Washington daily streaming quid pro quo interactions for income tax credits, and tax deductions. The FairTax will go a long way toward detaching tax policy from social engineering, which - after all - distorts markets and favors sectors at the expense of other sectors, and taxpayers.
4) That 5.2 billion human hours spent complying with complex income tax instructions, and returns, - that Mr. Vance casually glosses over - will increase much-needed family time, giving citizens back their lives from being unpaid tax accountants.
5) Politicians will no longer be able to game the system in concert with business and social-cause Lobbyists in a "quid pro quo" game that guarantees certain tax advantages to certain interests and sectors at the expense of others, all at the expense of the taxpayers.
6) And, MOST IMPORTANTLY, tax revenues will be positively aligned with the fruits of our capitalist republic's production, both in goods and services. It will be properly aligned NOT to punish those who succeed financially. It will be properly aligned to pressure the FairTax rate DOWNWARD with a GROWING ECONOMIC PIE. As the pie gets larger, the "tax slice" gets thinner such that increased revenue is achievable at lower and lower tax rates.
-df
Published: December 12, 2005 11:57 PM
Brian,
assume I'm not educated in economics, but I'm a black market salesman, with some real-world experience of price formation and effect of sales tax. With all due respect to all you economists out there, I found it necessary to define "demand", because even Laurence Vance (the author of this article) completely missed its basic application when he tried to suggest how the "FairTax" is actually 30% and that consumers pay that "hidden tax".
Market prices are formed in a negotiation process between buyers an sellers. Outcomes of these implicit and explicit negotiations result in such arrangement that ensures that sellers are squeezing the most revenue they can get for a given market supply. If they try to go beyond market prices (or if government impose a price floor), they will get stuck with surplus. If they charge below market prices they will have shortages and lost revenue.
Let me try to give you some numerical examples since that is how most of economists are taught to think:
If market price for my supply of goods is $455,800 and government hits me with a 23% tax, there is no way I can increase my price above current market level. If did that persistently for similar market conditions, I would have a large surplus and a total loss for goods unsold. INSTEAD, I would still meet the same purchasing willingness and ability of my customers (also known as demand in economics) and I would have to accept current market price for a supply in this market. It means that I would have to pay 23% of my revenue to government, leaving me only with $351,000. But what if my relevant costs amount to $355,800? I would not only loose all my income as a result of this sales tax (that's what makes it a 100% income tax) - but I would also suffer losses.
In our current system (no matter how broken it is), I would only pay taxes on my taxable income. For simplicity purposes, imagine the same scenario in which I generate $455,800 in revenue this year and all my costs and deductions amount to $355,800. I would only get taxed on this $100,000, which means $14,652.50 plus 28% of the amount over 71,950. In other words: I would get to keep most of my income and I would manage to stay in business.
So tell me what's better for this situation: to loose all your income or to keep most of it?
This is why in case of a national sales tax many businesses would join those who baby-sit or mow lawns - in their tax evasion. It's the only reason many of them can only survive. Like I said, system has no way of knowing about the amount of inputs purchased or goods produced and it makes it easier for black markets to emerge - but don’t cheer too soon. That would only lead us to more government's interventions and oppression.
Published: December 13, 2005 12:21 AM
I forgot to apply Social Security... self-employment tax.., etc. in my example above, but you get the picture. I used a single, sole-proprietor as my example... But I hope you get the point.
Income tax only applies to taxable income. The "FairTax" would hit you with a 23% tax, while you still face some current market price. You would have no choice but to loose 23% of your revenue, regardless of your profits or loss. No loopholes there. Only black markets...
I rest my case.
Published: December 13, 2005 12:34 AM
"The only mention of the Sixteenth Amendment in H.R. 25 is when it reports: 'Congress further finds that the 16th amendment to the United States Constitution should be repealed.' But to repeal [the] Sixteenth Amendment would require a constitutional amendment. Are we to believe that Congress would vote to repeal the Sixteenth Amendment after the passage of the FairTax?"
The 16th amendment, so called, was never ratified at all, unless a bare assertion by the secretary of state is sufficient to ratify. So what difference does it make whether a new tax system is constitutional or not? The 13th before it does not prevent a military conscription whenever congress feels a slave ("conscript") army is needed, and certainly does not prevent taxation (which is slavery) of living, breathing humans.
"Honest Abe" Lincoln demonstrated that scraps of parchment are not as strong as powder & shot, and bayonets.
As long as a substantial minority are willing to earn their bread by riveting chains on their fellow citizens we will have government like it is. The slavedrivers themselves wore collars, and do today.
Slaves can be armed. Union soldiers were amazed to be confronted by slaves armed with muskets. The slaves benefited so much from the current system (they ate, had clothes and had roofs to sleep under) that many did not wish to risk throwing out their entire system of goverment and society for dubious benefits. So the premise of TGTB&TU is not altogether true. Americans are probably the most heavily armed people on earth, yet tolerate heavy taxation and massive intrusion by bureaucrats. The benefits of resistance are outweighed by the costs. Modern day taxes are extracted mostly from the output of machines and energy extracted from the earth, not from human sweat.
Any slave owner benefited by giving his more diligent slaves spending money, and even letting them have little plots of ground to raise specialties on that they could sell and keep the profits from, or even let them have businesses in town. The whip was reserved for those who refused to learn how to obtain his favor, though an occasional pop of the whip might be applied to good slaves to remind them that it was still there. Our modern day slave masters recognize this principle. We today are slaves of an entire system, not of individual slave masters. We get to choose our own foremen (employers). And who gives us that occasional pop of the whip (audits, anyone?).
Published: December 13, 2005 12:35 AM
No time for a detailed comment or good responses, but I'll just say that I believe the FairTax is the very best way to fund the current federal government, as horrific as an amount is neeed to sustain its size. No other plan comes close in my opinion.
The only reason I can say the FairTax is not perfect is because it is forced to be the collection device of an out of control government. But it is the best one.
Published: December 13, 2005 12:54 AM
AaronS,
Since you still hold your position, it would be interesting to read your comment about my previous two posts. I think they explain why the "FairTax" is a recipe for disaster, far more harmful than income tax.
Published: December 13, 2005 1:18 AM
Vince Daliessio writes:
"Great idea, R.P., except that can never be allowed to happen. A guy like Boortz only has a soapbox like this because most of what he says is useful to the Republicrats and the Demoblicans. The minute he turned on them, his career would be over."
Here we're getting somewhere. Boortz is, like Larry Elder, a court libertarian. He pays lip service to what he calls libertarianism, but he never shakes up the political and intellectual establishments, least of all where the fortunes of the Republican Party are at stake. If he was a distinct foe of the Zeitgeist, he wouldn't be a highly visible Cato employee, and he certainly wouldn't have a berth in the MSM.
I don't know how sincere people like that are. But, like the Republican politicians they cheerlead for, they create an illusion of productivity by promoting causes that do nothing more than tweak the system (when not simply promoting more government on behalf of corporativism and the Republican Party):
Fight tax oppression by imposing a single massive sales tax. Fight the socialist school system by putting private schools on federal payola. Fight the government's "Social Security" compulsory retirement insurance system by shifting those tax revenues into government-authorized investments.
This kind of activism amounts to running in place -- and, by misdirection, deluding the grassroots that important reform is happening.
It's actually worse than that. All that pent-up rage at the State is diffused as the grassroots is taught to talk up and contribute to worthless projects. If the grassroots was taught that State power itself is the problem -- and that State power is inherently, inescapably corrupted, unproductive, and oppressive -- then there'd be a chance to mobilize against the growth of the State, if not for the rollback of the State.
But libertarians, or even conservatives, who talk this way make the Establishment feel threatened, and don't get those Boortz-Elder-lapdog radio jobs.
Published: December 13, 2005 2:10 AM
At least, the procedure of collecting tax would become much more simpler, so one would spend less time filling in the forms... I'm for this FairTax Act, it is a step in the right way...
Published: December 13, 2005 3:18 AM
I agree Porko Stado,
It is much easier to simply take 23% of someone’s sales (even if his/her business does not even break-even) than to bother with calculating someone's taxable income or earnings.
And I also agree that this Fair Tax Act is a step in the right way... It’s the right way for those with large profit-margins to monopolize market and force the rest of us into black markets or criminal enterprise.
Published: December 13, 2005 3:29 AM
It is undoubtedly possible that for a given tax burden, some tax arrangements will do even more harm than others in just the same way that there are better and worse ways to run State schools. However, it hardly seems like something that libertarians should devoting their energy to. Our point is not that taxes should be made fairer or more efficient, it is that there should be less or no tax. We should leave arguments about "fair" or "efficient" taxes to conservatives and socialists.
Published: December 13, 2005 5:13 AM
Julius,
Austrian school of economics is the only one that could d