MOTHER JONES BY E-MAIL

Mike Huckabee's Fair Tax Fallacies

News: Huckabee says replacing all federal taxes with the fair tax "will be like waving a magic wand." Actually, its economic benefits are nothing more than an illusion.

December 13, 2007


TOOLS

EmailE-mail article
PrintPrint article




BACKTALK

E-mail the editor





Google


RELATED ARTICLES

As Mike Huckabee travels the country trying to build on his momentum in the Republican presidential race, he claims he has a plan to ease the tax burden on all Americans and abolish the universally loathed IRS.

Huckabee's IRS killer is the "fair tax," a policy idea originally thought up in the mid-1990s by the Texas-based Americans for Fair Taxation. The concept behind the fair tax is simple: abolish all federal income taxes and replace them with a national consumption (a.k.a. sales) tax that states will collect and forward to the federal government. According to Huckabee and other fair tax supporters, this setup would ensure a fair, progressive, and fiscally sustainable tax system that would foster economic growth—all while letting Americans take home 100 percent of their paychecks.

These are bold promises. But behind the rhetoric, the fair tax is an uneven policy built on a slew of hidden equivocations.

The fair tax is often confused with the flat tax, but the two are very different. The flat tax is about setting one income-tax rate for everyone, regardless of what she earns. Fair taxers want to scrap the entire federal tax system. Payroll taxes, corporate taxes, capital-gains taxes, the estate tax, you name it—all gone. In their place would be a national sales tax of 23 cents for every dollar spent on a new purchase.

Supporters of the fair tax say that this amounts to a tax rate of 23 percent; but it's really more like 30 percent. As is currently understood, a $100 good with a 30 percent sales tax is promoted on the shelf as $100 and is sold at the register for $130. Under the fair tax, the list price and the register price would be the same—$130. The retailer would give 23 percent of that $130 to the government. But the math works out the same: The retailer keeps $100 and the government collects 30. The consumer, therefore, has actually paid a 30 percent premium despite the fact that the fair tax itself is nominally—and misleadingly—listed at 23 percent.

Fair tax math isn't completely disingenuous. It just doesn't square with how we currently think about sales tax. Advocates claim that they use a tax-inclusive rate because today's income taxes are tax-inclusive. Opponents say that this is irrelevant—we still need to talk about sales tax consistently or risk misleading the public.

Other fair tax fundamentals are just as unclear as this basic issue of tax rate. Consider this essential question: Does the fair tax impose a higher tax burden on those who are richer (making it progressive) or on those who are poorer (making it regressive)? Sales tax is traditionally regressive because the less money you make, the larger share of it you lose to spending—and thus a sales tax hits a greater proportion of your income.

Fair taxers offer a solution to this problem through "prebates," monthly government checks sent to every household in the United States. At the end of the year, a household's prebates would add up to 23 percent of the poverty line for that household size. For example, a couple with two children would have received $6,297 in 2007, according to Americans for Fair Taxation. Since the prebate would cover taxes for those who spend less than or equal to the poverty line, Huckabee and company argue that the fair tax is progressive.

But according to Department of Labor data for 2006, households at every income level spend more than the poverty line. For spending beyond the poverty line, that is, over the amount that prebates cover, regression kicks back in. The average American family that makes less than $70,000 a year spends more than it earns, and a prebate wouldn't do much to make up the difference. Meanwhile, the average family that brings in more than $150,000 spends barely more than half of what it makes. Sure, the wealthy would pay more in total taxes because they're spending more money. But middle-class families that spend more than the poverty line and most, if not all, of their income would still get hit hardest. The fair tax is regressive for everyone but the destitute for whom the prebate would be enough.

The progressive/regressive issue isn't the only elaborate balancing act surrounding this policy proposal. Supporters insist that the fair tax is revenue neutral, meaning that under the fair tax the federal government would bring in exactly as much money as it does today. Skeptics argue that this is mathematically impossible. A 2005 President's Advisory Panel on Federal Tax Reform study concluded that it would take a 34 percent tax-exclusive rate, not the fair tax's 30 percent, to keep the fiscal status quo. Brookings Institution economist William Gale has pegged the magic number at 39.3 percent. It could rise even higher if consumers seeking to avoid the high sales tax develop a strong black market that sucks money out of federal coffers. Buying in Canada or Mexico would have the same effect.

Combating that black market and keeping tax payers honest in the collection of their prebates would likely require a tax-enforcement agency that would resemble the IRS. The hated taxman that Huckabee invokes would not be dead.



 

Post a Comment

Your Name: 

Your Comment: 
 
Please press "Submit" only once to avoid double-posting.
All HTML formatting is removed from comments.
Read the Mother Jones community rules here.

Comments:

You fail to take into account in your calculations in your article, the billions saved by eliminating the IRS. The Fair Tax, is the only fair way to do taxes. When I went into selling commercial real estate, it was an eye opener for me, as to how many people own cash businesses for the express purpose of not paying taxes. This is especially true with people coming here from India and Asia, who operate cash operations, such as motels, convenience stores, etc. They also pay their employees in cash in many cases, thus avoiding the system entirely. Everyone has to purchase 'stuff', not everyone has to pay income taxes.
Posted by:Sharon AshDecember 13, 2007 7:43:28 AMRespond ^
Sharon Ash's statement ignores the fact that though the "IRS" may vanish in mae only, there WILL have to be an audit agency at the federal level that insures proper collection of sales taxes, and that may consume just as many resources as the IRS currently uses.
Posted by:Bill SimonDecember 13, 2007 8:37:13 AMRespond ^
How many times must this be said!?! The tax rate IS 23 %. Read the FairTax book and you'll understand. If something costs $100 NOW it will cost $100 under the fair tax. The %23 percent is an inclusive tax. It will replace the taxes hidden in the current sales prices, such as the manufacturers payroll taxes, business income taxes etc. If you people to tax you seriously, quit lying about the FairTax and read the book. There is a second book coming out in the next few months that answers all the questions people seem to have. Hopefully the people lying about the fair tax will read that one as well.
Posted by:EdDecember 13, 2007 9:02:21 AMRespond ^
I really like the fair tax in principal and I really don't think it's all that regressive, assuming certain vital things like most health care (trips to the dentist etc...) are exempt. If it reduces consumption, that's a GOOD THING. We're obscene materialists and I'm all for less spending on crap. The problem with the tax is mainly that it will cause a massive black market - don't underestimate that. Talk about the need to build a wall on the borders. People will be smuggling everything imaginable into the country to save 30%!
Posted by:RalstonDecember 13, 2007 9:07:17 AMRespond ^
Ed - you are correct in principal, but let's be honest, merchants are going to do a lot of "rounding up" if this goes through. I'm still a cautious supporter of the Fair Tax, but I guarantee prices will go up quite a bit!
Posted by:ReskoDecember 13, 2007 9:09:13 AMRespond ^
I'm simultaneously intrigued and skeptical of the Fair Tax. A friend of mine (who supports it) wrote a pretty good review of it and there is some good, fairly high-level back and forth in the comments. Check it out here: http://www.triplepundit.com/pages/p romote-sustainability-by-reth-002510.php
Posted by:Nick AsterDecember 13, 2007 9:27:33 AMRespond ^
oh yes - a secondary problem is in the used-goods market. What in the world would this do to Craig's List? Would the gov try to tax it? Recycled Goods are a great way to save on waste so I want to encourage it whenever possible. If there were a sales tax, then people would try to do as much as possible second-hand, which would be great till the gov got involved!
Posted by:RalstonDecember 13, 2007 9:44:25 AMRespond ^
Why the attack on Huckabee? Other candidates like the Fair Tax...where are they mentioned in the article? Even Democrat candidate Mike Gravel supports it. I don't see him name. This is just another attempt to bring down the good name of Governor Mike Huckabee. www.vetsformike.com
Posted by:JohnDecember 13, 2007 9:45:57 AMRespond ^
Used items are not taxed under the Fair Tax. Visit www.fairtax.org to read the truth.
Posted by:JohnDecember 13, 2007 9:47:37 AMRespond ^
How noble of you idiotic sheep, to want to pay more in taxes, so that the wealthy can pay less! I salute you. Because that is exactly what this Trojan Horse is all about. What position do you all prefer when the wealthy elite are reaming your bunghole - bent over a chair or freestyle? Morons. Huckabee needs to read his New Testament, particularly the Book of Acts, which talks about "taking from each according to their ability and giving to those based on their need". He is the biggest phony Christian since, well, George W. Bush!
Posted by:The Conservative DeflatorDecember 13, 2007 10:16:23 AMRespond ^
I've seen several references to Huckabee's lowering certain taxes and raising others but no mention of specific items. A listing of these items would give a good picture of Huckabee's priorities, especially which groups would prosper and those that wouldn't.
Posted by:LynnDecember 13, 2007 10:20:47 AMRespond ^
I didn't say that used items were taxed. What i implied was that everything will somehow become a "used item" - ie - people will play shenenegins to avoid the tax, which will incite the government to get involved and either try to tax used items or get on people's backs big-time about what they buy and sell.
Posted by:RalstonDecember 13, 2007 10:42:49 AMRespond ^
The Fair Tax is a great idea, but it does not go far enough. To be truly fair it must be on EVERYTHING, the chewing gum and the meat at the supermarket, the tires and new transmission at the shop, the car at the dealer, the yacht at the marina, the stock at the broker, the $30B company on the open market.
Posted by:Lou SanchezDecember 13, 2007 10:57:49 AMRespond ^
This article is full of false statements. This is the easy overview of the FairTax proposal that is already before congress and is picking up steam with the media attention that Gov. Mike Huckabee has been giving to it. I will give a couple of reasons why it is imperative that this proposal passes. The tax system as we know it has only been in existence since 1913. It used to be against the constitution but our government pushed it through the states to ratify the constitution and make it legal. The government made a good case for an income tax saying that only the rich people would be taxed. Sadly that was wrong because rich people don’t pay taxes they just make you pay more for their product or get a good lawyer to put their funds places that will not be taxed. The FairTax. Abolishes the IRS – The IRS will no longer be around to audit you and take your property. Implements a 23% nationwide federal sales tax on things that you buy or pay for – Because of all the corporate taxes there is an estimated 27% - 31% imbedded taxes on everything that you buy. Because we live in a capitalistic (competitive) society when those imbedded taxes are gone the cost of the product will drop by that much. For Example: If you bought a loaf of bread right now for $1.00 and paid a local tax of 6% you would pay $1.06 for that loaf of bread. Now if the FairTax is put in place that loaf of bread would drop from $1.00 to $0.73 you would then have a 23% Federal Tax and a 6% Local tax your total would be $0.95 that is including your local tax-------you pay less. Gives a Pre-bate on all taxes up to the Poverty level for all U.S. citizens. For Example: If the poverty level for 4 people is $10000.00 a year then that family would receive $191.66 a month even if they don’t need it. No more Income tax, Social Security tax, Medicare tax. What you make before taxes is what you bring home. The only time you will get taxed is when you buy something. No more taxes on dividends, no more taxes on retirements, etc. I do not have any affiliations with the FairTax people other than that I support this plan. If there are any inaccuracies in what I have told I apologize in advance because there was none intended. The best option to find out more about the FairTax is to go to www.fairtax.org , pick up the book at your local bookstore or there is some information on www.mikehuckabee.com
Posted by:David LeavinsDecember 13, 2007 11:12:39 AMRespond ^
Except for the linking of an anti-Huckabee bias with the FairTax plan, which preceded him, the article does a fair job of evoking awareness about the FairTax plan. Nonetheless, some important, corrective comments are necessary. With regard to post-poverty-level spending, the use of credit may have something to do with this. FairTax ends zero-interest withholding providing for more disposable family income. Further, Prof.'s Kotlikoff and Rapson (10/06) have concluded ( from http://snipurl.com/kotcomparetaxrates ), "...the FairTax imposes much lower average taxes on working-age households than does the current system. The FairTax broadens the tax base from what is now primarily a system of labor income taxation to a system that taxes, albeit indirectly, both labor income and existing wealth. By including existing wealth in the effective tax base, much of which is owned by rich and middle-class elderly households, the FairTax is able to tax labor income at a lower effective rate and, thereby, lower the average lifetime tax rates facing working-age Americans. "Consider, as an example, a single household age 30 earning $50,000. The household’s average tax rate under the current system is 21.1 percent. It’s 13.5 percent under the FairTax. Since the FairTax would preserve the purchasing power of Social Security benefits and also provide a tax rebate, older low-income workers who will live primarily or exclusively on Social Security would be better off. As an example, the average remaining lifetime tax rate for an age 60 married couple with $20,000 of earnings falls from its current value of 7.2 percent to -11.0 percent under the FairTax. As another example, compare the current 24.0 percent remaining lifetime average tax rate of a married age 45 couple with $100,000 in earnings to the 14.7 percent rate that arises under the FairTax." Moreover, per Jokischa and Kotlikoff (2005 http://snipurl.com/kotftmacromicro ), "...once one moves to generations postdating the baby boomers there are positive welfare gains for all income groups in each cohort. Under a 23 percent FairTax policy, the poorest members of the generation born in 1990 enjoy a 13.5 percent welfare gain. Their middle-class and rich contemporaries experience 5 and 2 percent welfare gains, respectively. The welfare gains are largest for future generations. Take the cohort born in 2030. The poorest members of this cohort enjoy a huge 26 percent improvement in their well-being. For middle class members of this birth group, there's a 12 percent welfare gain. And for the richest members of the group, the gain is 5 percent." Additionally, under FairTax, families have options to control the outgo in tax payments by deciding to purchase used goods which are not taxed again. With regard to the 2005 Presidential Panel, readers should refer to Dr. Kotlikoff's response to William Gale's assertions ( http://snipurl.com/taxnotes_galerebut ). Keep in mind that the need for "revenue neutrality" arises from the past, and present, spending by Congress. So badly has this been handled, that the economy is now headed toward a major economic collapse, according to Dr. Kotlikoff ( http://snipr.com/meltdowninprogress ). Kotlikoff sees FairTax's heightened visibility of the consumer's tax load. Consumers will know that it is they who ultimately pay for everything, and that 23 cents from every spendable dollar is taken by Uncle Sam. FairTax ends politicians stating that they're going to tax business incomes and payrolls, which simply hides the tax in higher consumer prices. It should be noted that supply-side economics, that guided the Reagan '86 tax code revisions, were quickly undone by subsequent modifications to the tax code and Congressional spending. Such tax code modifications are going on all the time, whenever a lobbyist and a politician get together! FairTax ends a proliferating tax code as a mechanism by which additional spending can be justified. Seriously, to call the FairTax "ambiguous" when looking at a tax code with 60,000 pages that no two tax advisors can interpret the same way, is too much. In fact, the FairTax IS "all things to all people," except to politicians (and, perhaps, the growing percentage of their constituencies that are carrying little of tax load), lobbyists, bankers and the super-rich all of whom benefit marvelously under the current system - contrary to your assertions. (Warren Buffett believes this - note 3:30 into this video: http://snipr.com/buffett330 ). Ian Repley, Ann Arbor, MI
Posted by:Ian RepleyDecember 13, 2007 12:03:26 PMRespond ^
This is a far better researched piece than most recent reports in the press despite Mr. Karavounis' skepticism. He did, however, fail to account for the transformational change on low and moderate income Americans of also eliminating the highly regressive FICA payroll tax under the FairTax. Either 7.65% or 15.3% (for the self employed)comes off the first dollar earned up to $97,500 of annual earnings. Most low and moderate income taxpayers pay far more under this regressive tax than under the income tax system. Elimination of this tax is the missing element in this analysis that makes the FairTax far more progressive than the current system. We believe at FairTax.org that this proposal, unlike all other tax proposals, does not pit income groups against each other. It may be hard to accept because we have been conditioned by our elected officials for years to believe that for one group to gain another must lose, but in the FairTax there are advantages across the income spectrum. Essentially, those with more money to spend, pay more taxes under the FairTax and existing wealth is taxed when spent--unlike the current system. That the wealthy may pay a smaller percentage of total wealth in taxes than others has no real import if every other income group has so much more left for themselves after taxes. The plain fact of the matter is, the wealthy today are able to "game" the income tax system with tax lobbyists and tax lawyers to escape a fair share--a benefit not usually enjoyed by average Americans. The FairTax eliminates both politics and tax lobbyists from the federal tax system because there are no loopholes, gimmicks or arcane provisions that now serve to primarily benefit the very wealthy. Instead, the prebate has the greatest effect on one's annual tax burden the closer one is to the poverty line. While Nico is correct that some taxes will be paid for spending over the poverty line, the annual tax burden paid only grows significantly the further one is from that point. The income tax code stopped being about the national economy and the well being of taxpayers decades ago. Today it is a politics and profit driven system that makes Members of Congress powerful, tax lobbyists rich and tax experts in demand in Washington, DC. We believe that the FairTax has the unusual potential to unite the left, right and center against the self dealing of Washington. In our view it would a nice change for once, healthy for the nation and a great benefit to every taxpayer. Both this and the end of the huge cottage industry that exists to lobby, research and manipulate the income tax system is, of course, a huge threat to those in Washington, DC and they have gone to great lengths recently to distort the issue. The more the public learns about the actual details of the idea, however, the more the public embraces the FairTax and seen through these distortions. For the FairTax to ever see enactment both Democrats and Republican citizens will have to join together to overcome the vested self interests of Congress (both parties) and Washington power brokers. This is clearly no small task. Our greatest frustration is that while we have made significant progress "getting through" to Republican presidential candidates (many more than Mike Huckabee) we have been unable, to date, to explain in detail to Democratic front runners why we think the FairTax will save union jobs, stop the movement of wealth offshore, give the poor real upward mobility and let every worker begin to accumulate wealth without penalty by the federal government. So far, only Mike Gravel has listened--and he also supports the FairTax. Details about our national movement to unite the nation against the power elite who profit very nicely from the income tax system can be found at: www.fairtax.org All are welcome.
Posted by:Ken Hoagland at FairTaxDecember 13, 2007 1:10:07 PMRespond ^
Wow. no where in your article did you say you read the book or the legislation. This in my opinion renders your article totaly useless. My children in school are required to cite sources for factual papers. There are only to factual sources you could list, or even mention before you critize the fair tax. You did neither. You simply cut and pasted from other articles written about the fair tax. You should be ashamed of yourself. The book is a short read. The legislation is the same way. Please be honest with yourself and read the book and the legislation. Then write another article without trying to twist the facts around. I bet you can not do that. Nobody has been able to yet. I bet somebody cuts and pastes off your article with in the next week.
Posted by:mikeDecember 13, 2007 1:38:55 PMRespond ^
Your article is inaccurate. The assumptions you make to support your viewpoint are erroneous. Before you write you should research your subject. You have obviously taken your information from previously written discredited sources.
Posted by:FrankDecember 13, 2007 2:21:08 PMRespond ^
Used goods are not taxed under the FairTax. Only new goods and services. Please read the book
Posted by:Jeff WangsgardDecember 13, 2007 2:26:04 PMRespond ^
This is only on sales at the retail level. If you buy a loaf of bread at the store and pay a dollar (including the FairTax) you can turn around and sell it to your neighbor for what ever you want to. If he wants to pay you $2.00 for it he can...and you wont be sending in anything to the govt cause you are not a retailer. Or he can go to the store and buy it for a dollar.
Posted by:JeffDecember 13, 2007 2:33:57 PMRespond ^
It is too bad Niko and other pro-government 'staffers' don't realize the Fairtax Program attacks all the major issues of our time, immigration, medicare, social security, massive non productive workforce (100k IRS employees), and the huge international bank accounts that do not produce a penny's worth of income for the USA. Surely there are issues with Fairtax, but the incredibly positive impact on our economy far outweighs anything remotely on the table today. Read the best book ever written, The Fairtax Book. Can you imagine 5.2 billion hours a year currently spent on 'tax planning' that will now be spent on productive revenue producing goods and services for industry.
Posted by:DaveDecember 13, 2007 2:50:33 PMRespond ^
As long as there are taxes there will be cheating. The Federal government, under Republicans and Democrats consistently spend about 18 - 22% of GDP. Why not just let the government spend up to 22% ?(Yes, print the money) Where will it come from? The same place as always - the U.S. economy. You save all the aggravation of tax compliance, avoidance, and redirected nonproductive activity. Will it cause inflation? Only for the first year, and then less than you might imagine. With globalization, the extra money will be diluted worldwide. Much of the extra money will go into investments (not considered as inflation) and businesses will still have to compete with overseas companies' prices. You effectivley catch all the cheaters, eliminate the need to borrow (except maybe for a war) and make the U.S. a business tax haven. Maybe best of all, you permantly eliminate the tax issue from the Republicans.
Posted by:awmarchDecember 13, 2007 3:26:40 PMRespond ^
It gets a lot worse than what you've mentioned. The FairTax has dozens of Dirty Little Secrets, it shifts the tax burden to the middle class and taxes poor people at nearly 100 percent of their incomes. For the truth see fairtaxfraud.com.
Posted by:FairTaxFraudDecember 13, 2007 4:59:28 PMRespond ^
The savings from abolishing the IRS and all that goes with it -- CPAs, tax lawyers, paper shufflers, NTEU -- would be huge. The idea is worthy of serious consideration.
Posted by:QUESTION HILLARY tmDecember 13, 2007 6:28:53 PMRespond ^
I did not read anything about embedded tax currently in every product or service you buy which on average is 22% which will be completely removed by the Fairtax. Now with the truth in mind, re-figure the final price at the cash register and you find that they cost about the same or will be less than today if factor in state sales tax. Other than that one key point you did a good job.
Posted by:James HodgesDecember 14, 2007 4:55:07 AMRespond ^
You also completely forgot embedded taxes on EVERY product and service that we buy which would be eliminated with the FairTax! Get it right.
Posted by:Stan FiskDecember 14, 2007 7:49:56 AMRespond ^
Mr. Karvounis, you have obviously not studied the FairTax bill yourself! And William Gale made those statements in 1997, five years before the FairTax was first introduced in Congress. The tax system we've been crushed under the last ninety-five years is broken beyond repair. What ideas do you have that would be better? Either that FairTax bill will become law or you liberals can forget about getting another dollar in taxes from me. We're the ones paying the taxes, WE will decide how they're paid!
Posted by:Heather CzerniakDecember 14, 2007 8:34:54 AMRespond ^
I respectfully suggest that you would do well to get correct facts and speak to Americans for Fair Taxation to understand what the Fair Tax does and does not do. And ubderstand The FairTax.
Posted by:Robert F. LikerDecember 14, 2007 8:36:35 AMRespond ^
I suggest you dim-witted people who think that eliminating the IRS is panacea for all of our ills, use a little mental floss and start using that lump that sits on your shoulders. Are you all retarded in-breds from Arkansas like Mike Huckabee or something? Sheesh! Do the math - You wanna pay more, so that some rich guy can pay less? Boy, are you brainwashed little neocons! The average American would pay more, under this bogus scheme. Not to mention the disruption in financial institution processes and revenue collections. What do you plan to tell all the accountants and CPAs who make their livelihoods from taxes - get a job as a ditchdigger? Further, you would need to build the largest welfare system in human history to administer the "prebates" some people mentioned above. It ain't gonna work, chumps! Why don't you just send a little extra each money to the rich c*cksuckers you love so much?
Posted by:The Conservative DeflatorDecember 14, 2007 10:50:56 AMRespond ^
Prices would only go up maybe for a while. Free trade would set the prices, remember. How quickly we forgot, if cost goes down, price goes down OR profits go up (only for a while). i recommend that you study price elasticity and the effects of free trade on retail pricing strategies.
Posted by:Greg HDecember 14, 2007 12:13:22 PMRespond ^
The primary source of American environmental damage is our incredible consumption of goods. 40% of the world's goods are consumed by 4% of the world's population here in America. An increased sales tax would deter such consumption. However, a sharply increased income tax on the rich would also decrease overconsumption.
Posted by:David LymanDecember 14, 2007 12:17:36 PMRespond ^
If we want to debate about the evil of regressive taxes, consider social security. Those who make over about $100K per year only pay social security on the first $100K. (i.e. a person who makes $100 Million would only pay SS on his first .1% of her earnings. Someone who makes $99K pays social security on 100% of her earnings.
Posted by:David LymanDecember 14, 2007 12:17:48 PMRespond ^
Would this create a disincentive for individuals and businesses to make charitbale donations? Wouldn't there be no financial benefit in for of a tax deduction?
Posted by:James SchubertDecember 14, 2007 1:17:38 PMRespond ^
Let's attack the real source of waste and fraud in govenrment and lay-off 75% of the Pentagon employees. THAT is where you could really reduce costs and improve governmental efficiency. Those unproductive bastards produce nothing of any value - just death and suffering.....
Posted by:GodDecember 14, 2007 1:19:22 PMRespond ^
Huckabee's "fair tax" is a scam. It is a regressive tax that hits those among us least able to pay. Why people would support the Huckster in this is beyond me.
Posted by:Len CarrierDecember 14, 2007 2:37:46 PMRespond ^
There is no way that the general public will pay 23 or 30% GST/VAT on top of local sales taxes. It would be political suicide once people realise what fair-tax means for shelf prices. I still see this as a regressive tax (even with prebates), because the poor & middle class spend 100%+ of their income, while the rich may only spend 10% of their income that would be subject to national & local sales tax.
Posted by:Dan HDecember 14, 2007 2:50:26 PMRespond ^
what is needed is a progressive tax rate system that was in place prior to the 1986 "simplification" of the tax system. Wealthy people should be pleased to be able to pay more and still not have to worry about making ends meet. Their problem is they only want to count their money, not out it to use for the common good.
Posted by:john worsleyDecember 14, 2007 3:00:17 PMRespond ^
This is a tax increase for the middle class and the working class. This campaign is strictly 3rd world where illiteracy prevails. I was living in Jamaica in 1989 when a campaign for this same type tax was widely advertised with jingoism to go with it advertising how much benefit this new tax will be to those paying it. Why the Democrats don't hop on this huge tax increase is mind boggling. I mean Democrats lose elections by promising tax increases, the Republican shove it up their asses.The Republican campaign on what would be the biggest tax increase in world history and not even a peep from the Democrats. These DLC' consultants have got to go, this is ridiculous.
Posted by:bogi666December 14, 2007 4:07:37 PMRespond ^
Simple patch: add a flat tax on all property, moveable or unmoveable. Make it simple: you owe a flat tax of 5% per year on all "property" in your name. If it is a liquid asset, the tax is collected directly by the bank or other financial institution. If it is a non-liquid asset, a simple rule: you pay the cumulative tax owed at time of sale. The formula can be simple based on constant factor interpolation over the duration that the asset was held. This can be automatically calculated for all transactions intermediated by financial institutions and can be self-reported by individuals much as the current system is. Incentives can be given to set up a system of property-registries that can be used to help people keep track of difference between the purchase price and the sales price. (If there is no record of the purchase price, it is simply assumed to be zero = you made it.) This solves two problems: 1) It removes any of the distortion in the marketplace between different kinds of activities. This tax system is totally neutral between consumption, savings, and different investments. 2) It is not going to be perceived as being unfair to any party. A millionaire will pay 1/1000-th of what a billionaire pays and so on. This tax system neither favors nor disfavors concentrations of wealth. 3) It does not penalize people who are in a bad cash-flow situation and makes the inheritance tax transparent as a simple way to collect the accumulated taxes. 4) It is fair and does not care how many transactions occur. For most Americans, this will be essentially as painless as a flat tax on purchases. The only difference is that it will be fair (not discriminate against those buying milk as compared to those buying a corporation) and the rates will likely be much much lower. 5% was calculated using the following guesstimate: total US wealth = 50 trillion. 5% of that is 2.5 trillion which is about the federal budget. Fold in the state and local taxes to push it up to 8-9% max. It is easy to think about. Consider it the expense-ratio we all need to pay for the mutual-fund that is the government.
Posted by:PropertyTaxTooDecember 14, 2007 7:07:09 PMRespond ^
FAIR TAX is fair - for the rich and the poor. Even criminals - both rich and poor - will not escape taxation. The have to buy, too. No matter how much they black market. And their black markets will be far easier to close in on once we have freed the tied-up resources attempting to enforce the current tax system. By the way, this article is typical of the "false progressive" reporting Mother Jones is doing now whether out of laziness or hidden control (with hidden agendas). Someone should check out their funding and why they recently gave David "left gatekeeper" Corn the Washington DC bureau position - he did yesterday's hit piece on Huckabee. This is shabby journalism that would shame the real Mother Jones.
Posted by:ScottGordonDecember 14, 2007 8:00:28 PMRespond ^
Anyway you slice it, the fact of the matter is that, proportionally, the Fair Sales Tax scam would fall most heavily on the middle class: 1) Potentially, the very poor would probably pay little or no FST because of limited income and the so-called Prebates (which would likely keep them passive though they are economically and socially abused.) 2) A middle class example: Total income $75,000; portion of income spent on annual living expenses $60,000 X 23% = $13,800. Effective tax rate on total income of $75,000 is 18.4%. 3) A upper income example: Total income $1,000,000; portion of income spent on annual living expenses $200,000 X 23% = $46,000. Effective tax rate on total income of $1,000,000 is 4.6%. Aside from the unfairness of the FST burden, the system would be doomed to eventual failure because the inevitable consequences of a sales tax replacing an income tax would be the growth of a secondary informal and illegal economy to serve the interests of the tax-abused middle class, an economy that avoided making sales tax collection part of the transactions, an economy that would have all of the negative social, law- enforcement, and economic consequences of the illegal trafficking in recreational drugs. What really needs to be done is to make the current system fairer by having the political will to end all the current hi-end abuses of the IRS code, to the great benefit of us all
Posted by:Ernest J. SmithDecember 14, 2007 10:58:26 PMRespond ^
Any system put in place will have its flaws. But the bottom line is that a simpler system is easier run and therefore cheaper to run. The current system, over a hundred years old, is still so very complicated that most people dread April 15. Like I said, every system has its flaws, but the Fair Tax has got to be better than our current system.
Posted by:RaulDecember 15, 2007 7:03:40 AMRespond ^
The corporate czars will have their yachts, airplanes, cars, second homes, etc all owned by the corporations that don't pay taxes. Also - without tax exemptions, no incentives for various good causes i.e environment, ag production, etc. If exemptions are allowed - there will be no end to them.
Posted by:William HallDecember 15, 2007 9:51:24 AMRespond ^
WRONG!!!! When will people do their own research, or at least read the FairTax book before passing along these untruths?? Under the FairTax, an item that currently costs $100 has about $23 of embedded tax. That's CURRENT. Under the FairTax, those taxes are dropped along with ALL payroll and income taxes and replaced with a 23% sales tax, effectively leaving prices the same but you get to keep your whole paycheck. Add to that the pre-bate feature reimbursing anyone who signs on the cost of the basic necessities in life and you have effectively untaxed the poor. I don't know which lobbying group Mr. Karvounis works for, but HR 25 must really have them scared because of all the lies and mistruths being passed about it. Just read the book to get the real facts a to how the program works.
Posted by:Boortz FanDecember 15, 2007 11:05:03 AMRespond ^
How to Succeed in a Global Economy For decades the United States was economy was overwhelmingly dominant. We had such a tremendous advantage in wealth, manufacturing power and technology that we could afford to toss away resources, whether it be on rebuilding Europe and Japan, on engaging in the expensive arms race that broke the Soviet economy, or on misguided policies that encouraged U.S. firms to locate their activities abroad. That time is gone. We now owe more than $9,000,000,000,000 to foreign countries because we no longer sell enough things that other countries want to be able to pay for the goods that we import. Our manufacturing operations have largely relocated to other countries – we became a net importer of high technology goods for the first time in 2002, and our deficit has increased each year since then. America’s dominance of technical publications and college degrees is fading quickly and surely. Globalization was supposed to help our country by opening up foreign markets for our products, but that presupposes that the United States produces things that other people want to buy. As foreign nations with low wage rates have improved their infrastructure, though, companies have naturally moved their manufacturing operations to locations where the wage rates are a fraction of what they are in America. The economists tell us that fact should not worry us, because of the theory of “comparative advantage”. Low value, labor intensive production will move to developing nations with low wage rates, but it will be replaced by the production of high value, high technology goods here in the U.S., which will benefit everyone. If the U.S. had sensible tax policies, that might be true. But we don’t. In our system, a corporation that earns a dollar from manufacturing high technology goods in certain countries will keep the full dollar. If they manufacture the same goods in the United States, they will keep only about 60 cents after federal and state taxes. In other words, simply by locating their high value activities abroad, a company can earn more than 50% more than if they performed the same activities in the U.S. Corporate managers are not stupid. They respond to these incentives, and the rapidly increasing number of well educated foreign workers enables corporations to shift activities to the most tax efficient location. Our “comparative advantage” thus dissolves. In direct consequence, the market power of middle class American workers has been fading, leading to nearly 30 years of stagnant real income growth for the bottom 99% of our population. The responses proposed by Congress and the I.R.S. so far have just made matters worse. The I.R.S. has been attacking U.S. research operations in a way that just encourages corporations to move their R&D to other countries. Chairman Rangel has recently proposed a measure that would encourage multinationals to fire their U.S. administrative personnel and move those activities abroad. Some in Congress have proposed subjecting U.S. multinationals to current world-wide taxation of all of their income, a move that would decrease the value of many companies by 25% or more and cause them to be acquired by foreigners with large reserves of cash in strong currencies. We cannot afford such policies any more. There is a simple solution. The Shared Economic Growth proposal, explained in detail at www.sharedeconomicgrowth.org , would instead provide a strong incentive for corporations to move their valuable operations back inside the U.S. borders, simply by allowing corporations a deduction for dividends that they pay out. At the same time, it would increase the earnings working people receive on their pension savings by over 50%. The proposal is largely self-funding (no voodoo economics here – the corporate tax savings are directly made up for by taxes on the shareholders receiving the dividends), with the balance of the revenue made up by eliminating a couple of unnecessary and unfair distortions in our tax code, and by an extra 7.5% tax on individual income in excess of $500,000 per year. This is a small price to pay for saving our economy, restoring our economic security, giving market power back to the middle class, and boosting pension savings. The problem with the proposal is that it does not fit neatly into either party’s usual set of canned speaking points. Enacting it would require politicians to care more about policy than about politics. Does anyone out there care enough about America’s future to stop bickering and do something useful for a change?
Posted by:Shared GrowthDecember 15, 2007 3:45:25 PMRespond ^
Uh, hello? Am I in an alternate universe or something? I'm a working class American and NOBODY where I work earns 70,000 a year! Guess we must not be 'average Americans', huh? I'm really starting to wonder what the mythological creature known in the media as an 'average American' actually looks like! Do they all live in condos and make 100,000 a year or am I somehow just living in one of the back water abnormalities in the USA where people are doomed to be lower class and even Jesus can't bring you Salvation? This always freaks me out when I read that the 'average American' makes 70 grand a year when everybody I know is just barely getting by with car insurance, rent, medical bills, local taxes, utility bills and every other form of nickel and dime rape this governmental system burdens them with in the name of 'capitalism.' When is reality finally going to dawn on the American people and they realize that Corporations have replaced the Government that they held their trust in and, if you are willing to work for a minimum wage of 52 cents an hour, as they do in China for Wal-Mart, then you have a job. And, if not, then you and your children can starve to death and the Constitution will just be a common joke we all once shared. God, this country needs a Hero!
Posted by:steppenRazorDecember 15, 2007 4:55:07 PMRespond ^
withthe falling Dollar other countries are having a field day coming to the United States with a stronger dollar also illegal aliens would have to pay a sales tax where now they pay zero
Posted by:Thomas CaseyDecember 15, 2007 9:16:38 PMRespond ^
What no one is saying, and I know this because I was a top tax expert in my state for more than twenty years and I have actually read the entire tax code (one of the few in the country who has), it is ILLEGAL to tax income earned from your labors. The income tax of 1913 was to end one full year following the end of the war. This was a temporary tax to fund the war. When the tax was supposed to expire, the government did what government does best: it ignored the fact that the tax had expired and pretended it was still in effect. Sure enough, the people didn't know enough about the tax enacted in 1913 and continued to pay income tax and that is how we ended up with the current situation. The illegal part of income tax is ONLY on money earned from your direct labor, in other words, your salary or wages for the work you perform. All other taxes, such as on interest income, capital tax gains, and any income other than from your direct labor are still applicable. And here's the real kicker: the government has used the public's continued blind payment of income tax on the "fruits of their labors" to continue a standing military; the taxes you pay on your income derived directly from your labor goes SOLELY to pay for the military and whatever wars are being fought at any given time. That is all it goes for. All the other money spent by government comes from the myriad other "hidden" taxes we all pay plus other taxes paid by only certain groups such as corporations (which, of course, are passed on to the consumer). As for estate tax, or as the republicans like to call it to get people upset, the "death tax", this tax only applies to millionaires, and even then only on estates with a NET value of more than $5 million (this may have risen since I stopped doing taxes). How many people do you know with that kind of net estate? (Net estate means the gross value of the estate minus all the allowed deductions prior to additional deductions allowed in the actual estate tax return.) Usually a net estate of $5mil ends up paying no taxes. Although this tax applies to only a very small percentage of people, I do not think it is a fair tax because the money passing in the estate was taxed when it was originally accumulated so whether you call it estate tax, inheritance tax (which in truth is a separate tax but most people don't know that) or death tax, it is a double taxation. I have never thought it is a legitimate tax. The IRS could be streamlined, and the tax code most certainly could be simplified, and fewer people would be subject to the jurisdiction of the IRS if all people would simply realize that taxation on income derived from your labors is NOT legal and hasn't been for about 90 years. Why hasn't anyone running for political office told you this? Because THEY DON'T KNOW. Even most people working for the IRS don't know because no one has bothered to find out. But someone finally discovered this little piece of information and made an excellent documentary called "America: Freedom to Fascism", which can be bought from or viewed on the website freedomtofascism.com, which also includes information on the privatization of our monetary system (also done in 1913, with minimal if any information being given to the public) and the implementation of the Radio Frequency ID (RFID) which goes into effect May 11, 2008, and which begins the process of ensuring the government can control everything you do, an equivalent of the number tattoos of Jewish people in Hitler's Germany and the showing of papers. This documentary is produced, written and directed by Aaron Russo. It should make everyone mutinously angry at our government. Check it out.
Posted by:YMRDecember 15, 2007 10:11:24 PMRespond ^
Southern Baptists of the Southern Convention are a very conservative bunch. They have, geneally, the idea that no makeup, no working outside the home is supposed to be the law of these folks aws far as women go. "No homos need apply!" either. So I don't know how Huckabee can get away with insinuating the Mormons are a cult.
Posted by:TheDirtyDemocratDecember 16, 2007 4:36:17 PMRespond ^
If families that make $70,000 or less spend more than they make, but families that make $150,000 or more spend less than half of their earnings, does this mean that a living wage for the American family is approximately $75,000? Wouldn't a truly socially just economic policy bring wages to that level irrespective of tax methodology?
Posted by:Bernard P.December 16, 2007 6:43:34 PMRespond ^
Mike Huckabee's Fair Tax proposal would replace the Payroll Tax (Social Security and Medicare), the personal Income Tax, and the corporate Income Tax. He neglects to mention a few points: (1) Retired Americans pay income tax on all their retirement income and up to 85% of their Social Security. Mr. Huckabee would now have them pay a 30% sales tax in lieu of the current tax of 10% or 15% which is the tax bracket for most retirees. (2)Mr. Huckabee would also extend the 30% sales tax to all income received from Roth-IRAs, which are currently tax free because they were established with income already taxed. (3) People will currently drive from Manhattan, NY to Paramus, NJ to avoid the NYC sales tax, does he not think that they would drive or fly a lot further to avoid a 30% sales tax. (4) Teenagers who work minimum-wage jobs and only pay 7.75% in payroll taxes and 0.0% in Federal Income Taxes will be introduced to paying a 30% sales tax on everything they buy. (5) There is no mention as to how he will fund Social Security and Medicare. (6) Does Mr. Huckabee really think corporations will pass their tax savings onto employees and workers in the form of higher wages and lower prices? They haven't done it with any other reductions in costs, including US Government subsidies to Medicare Advantage Plans, transferring jobs off-shore, and importing manufactured products from Asian sweatshops. (7) Is adding a 30% sales tax to medical costs (doctors, hospitals, prescriptions, and all other health providers) the way to provide adequate medical care to Americans? The long term goals of the fair tax proposal are to kill and eliminate Social Security and Medicare and walk away from repaying the Trillions of Dollars owed to the Social Security Trust Fund. Apparently the Republicans and Americans in the top 1% income bracket in the country will not be happy with anything less than 100% of all the income in the country.
Posted by:Alan LidstoneDecember 16, 2007 8:20:58 PMRespond ^
It has to cover all spending therefore we should charge the fair tax rate on purchases of stocks and bonds as well. Watch the right drop the proposal like the proverbial "hot potato".
Posted by:Don LogsdonDecember 16, 2007 8:32:10 PMRespond ^
I have visited the Fair Tax website. I am a bit skeptical of this proposal. The current federal budget is in the 2-2.5 trillion range. Take that amount and divide by 0.23, which will give you the amount of retail that would have to be taxed to ensure revenue neutrality. Do we really do ~8.5-11 trillion in retail in this country? Maybe we do, I don't know. I reviewed the example provided and put in my own information (I make >80k per year). From what I calculated, I would do great (basically due to the prebate). From what I can understand so far, it would be a wash for lower income people, but a bigger and bigger benefit as you move up in income. The biggest loser would be the Treasury Dept.
Posted by:AnthonyDecember 16, 2007 10:07:28 PMRespond ^
I am still developing my opinion on this subject, but I do like the idea of gaining personal (buying) power at the expense of the goverment (taxes). If you take away the embedded tax, and of course have a true free market that has real competition rather than (corporitist price fixing) then it makes sense that a price for goods would stay about the same--- yet I decide how much tax I pay rather than the IRS!
Posted by:dustinDecember 18, 2007 2:09:40 PMRespond ^
And I'd like to know more about the Federal Reserve. Are they really NOT a public/goverment institution? Do we really pay them (billions) to print our own money?
Posted by:DustinDecember 18, 2007 2:11:38 PMRespond ^
"How noble of you idiotic sheep, to want to pay more in taxes, so that the wealthy can pay less! I salute you. Because that is exactly what this Trojan Horse is all about." You're the idiot being lead around by the wealthy so they can pay less taxes. The wealthy, like John Kerry, have a myriad of ways to hide or reclassify income so as to avoid paying taxes on it - that's how he and his wife managed to pay 1% federal tax on their 50 million in earn income in 2004. With fair tax the Kerry's, Gore's, Edward's and other wealthy hypocrites of the left won't be able to avoid taxes with fancy book keeping and loop-holes. When they buy the private jets, fill them with fuel, build 25,000 square foot mansions and furnish them they'll actually have to pay tax on it instead of being able to use them as tax writes offs and deductions. Nobody's even mentioned the ability the fair tax has to collect taxes on the underground economy... drug dealers, pimps and thieves will have to start paying taxes with Fair Tax as well. No doubt wealthy liberal elitists are petrified at the concept of Fair Tax as they'll finally be held accountable for the decadent lifestyles and have to pay the taxes for the first time as well as lose a source of enormous power over the lives of others.
Posted by:PaulDecember 19, 2007 11:12:48 AMRespond ^
The comments about seniors, minimum wage earns and other classes of working poor fail to take in to account the pre-bate portion of the Fair Tax proposal that address these issues. All the negative comments about the Fair Tax are based on incomplete knowledge and/or ignorance of the proposal's details due in no small part to misinformation like that Niko Karvounis spread on behalf of his wealthly, leftist freinds.
Posted by:PaulDecember 19, 2007 11:18:21 AMRespond ^
It's always easier to give someone the shirt off someone else's back. With all do respect, I think you're backwards on this. It seems like you'd rather keep paying the government 15%-25% of your income just to keep the rich from keeping more of their money. Why so much anger toward the wealthy? The rich are not holding you back at all, it's the IRS. Having just taken hours to work all of these numbers with my budget, I'd have an extra $1,000 per month to give, save, invest, spend, etc... Forget the rich, I'd like that $1,000 back please.
Posted by:Randy RoperDecember 19, 2007 10:50:45 PMRespond ^
That statement was directed toward the conservative deflator.
Posted by:Randy RoperDecember 19, 2007 10:52:50 PMRespond ^
Ralston, people already evade taxes. That's never going to change. You'll always have the criminal. And about used goods...frugal people will always be frugal and big spenders will always be big spenders. There's too many people that just can't imagine buying used clothes and the "new car smell" will always tempt the fool.
Posted by:RandyDecember 19, 2007 11:08:20 PMRespond ^
I never knew that Americans love income taxes so much!! How is this even debatable?? Read the book! I keep reading about how the Fair Tax is "regressive". Totally not true! Having done the detailed math, I've found that the "prebates" are extremely conservative. My family of three only spends $13,000/year on necessary goods and services. I know this because we actually budget. According to the fair tax, a family of three would need to spend about $23,000 on necessary goods and services at the poverty level. That means we get a prebate of $458!!! Except we only need a prebate of $250!! Not to mention that we get our whole paycheck...AND embedded taxes on goods go away due to market competition. If you live paycheck to paycheck (as most americans do) you will have an opportunity to gain major traction from the Fairtax because you'll immediatley have your whole paycheck plus a generous prebate which does more that untax necessary purchases. But more important, if you live paycheck to paycheck, you don't have a tax problem, you have a SPENDING problem! Here's a concept...spend less than you make!
Posted by:RandyDecember 19, 2007 11:55:00 PMRespond ^
Randy - you seem like you have a strong need to "own" your assets, right? Do you have an equally strong need to "own" your liabilities? Because you (and every other taxpayer in America) have a liability of several thousands of dollars, due to the overspending of the American govenrment, mostly under the last three Republican presidents - Bush I, Reagan and Bush II (the Dumber). When are you going to pay up???? Don't give me this crap about "It's my money". Well, jerko, "it's your debt, too!!!!" Pay up, creep.
Posted by:The Conservative DeflatorDecember 20, 2007 10:06:03 AMRespond ^
And I'd like to know more about the Federal Reserve. Are they really NOT a public/goverment institution? Do we really pay them (billions) to print our own money?" -- dustin Dustin, first, forget all the garbage you may have read about the Federal Reserve from Ron Paul and other dim-witted conservatives - they don't have a friggin' clue. There is no Illuminati. The Fed is a quasi-governmental organization - and they act as AGENT to the U.S. government. Do you understand what an agency relationship means? Agents typically take a fee for their services. The Fed is a linchpin of the U.S. banking system - take it away and the wheels of commerce grind to a halt very quickly. Demonizing the Fed may play well to idiotic, illiterate Texans who have chewing tobacco dribbling out of both sides of their mouth, but our country literally WOULD NOT FUNCTION without the Federal Reserve system. They clear checks, run the FedWire wire transfer system, facilitate ACH transactions, pay money into and retire it from circulation, operate the Discount Window, regulate Fed member banks, monitor reserves, do economic research, set and monitor margin lending requirements and a thousand other things that you and Ron Paul don't have a freakin' idea about. So, get educated or shut your stinking piehole about the Fed!!!
Posted by:The Conservative DeflatorDecember 20, 2007 10:33:29 AMRespond ^
Huckabee, smuckabee, just another right wing Christian who knows squat about government. We don't need another President who talks to God for answers. We need a President who talks to the people for answers. And as far as a fair tax goes in this country, it will never work as long as we have the carpet bagging corporate lobbyists running Washington. Any new tax laws or tax regulations will have the imprint of corporate mauling and the majority of America will end up paying for the new corporate tax language. The simplest way to insure equitable taxation is to have those who can afford to pay more, for the blessings they enjoy and have received in this great country, pay more, while at the same time keeping the promise of our founding fathers to promote domestic tranquility and the blessings of liberty for all by assuring all Americans benefit from the affluence we the people generate. If we want to fix our tax problems lets start with Social Security taxes. Social Security should have no income cap what so ever especially when you realize that the Social Security fund has been raided by the federal government to pay for corporate wars and corporate largess for the last 7 years. And the great tax give aways and favorable lease benefits that oil corporations enjoy at the average taxpayers expense should be revoked and that money put to reducing the tax of the average Joe or at least funding programs to repair this country's infrastructure. Huckabee is a right wing darling because he is a right wing Christian. These right wing Christians are more akin to Judaism than Christianity with the way they not only accepted the invasion of Iraq but pushed for it to rid the world of Hussein. Well, speaking for myself, I have had enough of right wing Christians in government to last me through eternity and if I knew I had to deal with them in any after life I'd take the other place and I wouldn't be surprised if the "other" place was the better place after all.
Posted by:Al ComstockDecember 20, 2007 11:00:40 AMRespond ^
Conservative Deflator...We've all been "paying up" and it's clear, based on the $9 trillion debt, that it's not working. The government doesn't have an income problem but a spending problem. The fair tax isn't designed to address the government spending problem because, as you have heard, it's revenue neutral. But it would allow americans an opportunity to get ahead financially while also expanding the economy. How do we get out of the national debt of 9.2 trillion? Well, our government has taken extreme measures to spend us into trillions of debt...we need to take extreme measures in the opposite direction to get out of debt...major reduction in the federal government. Sure, Ron Paul is extreme, but isn't our current system the extreme one?
Posted by:randyDecember 20, 2007 10:17:07 PMRespond ^
The two-fold Fair Tax proposal is based on two premises with major shortcomings: (1) Replace the Federal personal income tax, Federal corporate tax, and they payroll tax (Medicare and Social Security) with a 23% sales tax to provide the funding to run the US Government. (2) Providers of goods and services will reduce prices up to 30% offsetting the 30% sales tax applied to new purchases and all services. The problem with item (1) is that the Fair Tax is in effect a 30% tax. The proponents arrive at 23% sales tax rate by saying the $30 tax on a $100 purchase of goods and services is really 30/130, or 23%. In addition, it overlooks the massive tax evasion that will occur as consumers either order goods from abroad, or go to Mexico or Canada to purchase goods, and those who will make “under the table” cash purchases. The problem with item (2) is that providers of goods and services will not reduce prices up to 30% to offset the new sales tax of 30%. Many products, including imported items such as oil, do not have a product price based on the US tax code. In addition, it is intuitively obvious that the vast amount of the tax savings, reduced costs, and increased profits will flow to the bottom line and be passed onto executives and investors, not the customers or employees. The savings and increased profits gained from moving millions of manufacturing, service, and technical jobs that began in the early 1990s to low-cost sweat shops in Asia, China, India, and Mexico, cutting millions of US jobs, and dropping Federal Corporate taxes to 5% to bring back money from overseas entities went directly to the executives and investors and no one else. When the Medicare Advantage HMOs talked the Government into giving them a $7 – $9 Billion dollars more than Medicare spends on Medicare Part A and Part B beneficiaries, most went to executive perks, bonuses, and retirement for the HMO executives (such as the $400-Million Dollar retirement bonus taken by one HMO executive). In addition to eliminating the payroll tax (social security and Medicare), the Federal personal income tax, and the Federal corporate income tax, the Fair Tax proposal in effect also eliminates the system used to report earnings to calculate Social Security benefits and would eliminate the Social Security Trust Fund. They have not mentioned how they would calculate a Social Security benefit since the earned income will no longer be reported. The program is in essence a reverse “Robin Hood scheme” that shifts raising funds to finance the US Government by shifting the raising of tax revenues) from the higher income Americans (top 5%) to the Middle Class and retirees via the proposed (the 30% National Sales Tax). The Fair Tax proposal works directly against the needs and contribution of tens of millions of current retirees and increasing numbers of baby boomer retirees approaching retirement. With no mention or statement of intent that the Social Security program and Medicare will be maintained and no way to determine individual Social Security benefits could be calculated, it’s a safe assumption that the Social Security and Medicare programs will be declared “no longer required” and the Social Security Trust Fund eliminated (no return of the Trillions borrowed, just eliminated). The Fair Tax proposal will enable retirees, most of whom have a Federal Tax obligation of less than 10% and no payroll tax to pay a tax of 30% on all their purchases with an offset for people below the poverty line. Retirees will also pay a 30% tax rate on purchases made with Roth-IRA income which was supposed to be tax free, and a 30% tax on purchases/services made with Social Security income that is currently tax free for many retired individuals and couples, and partially taxed for others. The fun will only be starting. If the Fair Tax is enacted, the proponents will then recommend the following: (1) Eliminate the Social Security Trust Fund (which has loaned Trillions of Dollars to the US Government) and state there is no need to return the Trillions they borrowed and spent. They will propose funding Social Security and Medicare out of the annual Federal budget. (2) Declare the Social Security and Medicare beneficiaries to be "freeloaders sponging off the largesse and charity of the Government" and guilty of a giant entitlement fraud perpetrated upon the hardworking titans of industry, notwithstanding that tens of millions of Americans have prepaid payroll contributions that will sustain current Social Security benefits for another 30-35 years. This was based on the foolish assumption that the US Government will pay back funds borrowed from the Social Security Trust Fund (the Payroll Taxes paid by working Americans and legal resident aliens). Note: If we can pay back funds borrowed from China and Saudi Arabia, we ought to be able to pay back the contributions borrowed from the Social Security Trust Fund (that were received as payroll taxes paid by working American citizens and legal resident aliens. (3) The final step will be to means-test the receipt of Social Security and Medicare to make sure that no one ever receives back benefits they paid for over working careers of 40-50 years or more. (4) Now that they have decimated retirement and health care for tens of millions of retired Americans, they will now subject them to a 30% sales tax for the rest of their lives to continue the charity program for the friends of the Fair Tax and Global Economy (does not include the middle class). American Industry, Members of Congress and the current Administration have participated in the decimation of defined benefit pension plans, eliminated millions of US jobs and run the Federal deficit from approximately 5 Trillions Dollars to well over 9 Trillion Dollars in the name of Global Economy (and a welfare program for their friends). The name of the proposal should be “Your Money is My Money”. The quote that comes to mind on this giant Ponzi scheme, which I believe was made by Joseph Welch at the Congressional Army hearings in the late 1950's regarding Congressman Miller (R-Buffalo, NY), is “HAVE YOU NO SHAME”?
Posted by:Concerned CitizenDecember 22, 2007 10:16:01 AMRespond ^
The Fair Tax will NOT cause a black market. Rather it will end the black market. Why would people go to a black market when the price of good under the Fair Tax does NOT increase??!! You obviously have not done your homework.
Posted by:EricDecember 23, 2007 7:46:57 PMRespond ^
The impact of taxation on people making less then $100,000 and those making more is so enormous that a change in the "how" it's collected would do little to help. With mortgages costing $3000 per month, a 70K job is barely scraping by. The 25% and 28% rates for people in the 30-70K and 70K-100K ranges are a heavy burden for them and for families. It's time to take the pen and wipe out these high minimum taxes ($4000 for the 30K people!) and the quarter of the income taken away by the Federal government. So, Mr. Huckabee, instead of shuffling the deck, how about a new deck. For incomes under $100,000 the tax should be 10% -- period, end of story. As far as loopholes and schemes on the people above $100,000 -- who cares! As I said, this is completely different world. Let them fight among themselves, because at that point its a game of who eats two lobsters and who eats three. But in the true middle class world, the thousands of dollars that could be returned to households is the difference between owning a home without being on the border line of involvency...and not!
Posted by:John BailoDecember 23, 2007 8:09:57 PMRespond ^
You sound like a friend of mine that runs a large plumbing co.If you are currently in an all, or most, cash business you are not in favor of the fairtax plan.If you are paid like "most" americans it will most certainly benifit you and your family.
Posted by:PatDecember 28, 2007 12:31:32 PMRespond ^
Prima Donnas First Ladies of the State: Chancellor: Golan (Goal) Cipel (to Cripple) I Crippled Golan Cipel. Break a Leg, Congratulations, Good Luck, Good Luck, Good Luck, Congratulations Throw Rice-Toast to Adolph Hitlers understudy Czar Michael Chertoff: The Producers of the Opera. We never seen [deleted] like this, He has the whole world in his hands, Their freaking out in foreign lands. The 911 Emmy Osama Award goes to Wolf Blitzer, Situation Room. Awarded for picking up a 1938 Hollywood Contract, a script murdering Non Jews. No Jews or Presidential Candidates were prosicuted for picking up the old Hollywood Contract murdereing non Jews, killing our children for Christmas. Listen to The Phantom of the Opera: 1. Overture 7. Prima Donna 11. Wishing You Were Here Again 10. Masquerade. Israel caused the USA dearly in terms of the costs of the "War on Iran" and in terms of its "hated image" here and around the world. I am demanding immediate monetary relief from all parties to Americans with their sincerest apologies, respect, dignity and integrity unveiled, and the satisfaction I deserve for catastrophic, permanent damages this Israeli operation cost America $900 Trillion Dollars. There are no facts in dispute and as a matter of law, Lawrence De Marco is entitled a default judgment. I deserve for catastrophic, permanent damages this Israeli operation cost America. In God We Trust. Decadence and disillusion pervade, and the spiritual core of the people was decimated by the inquisition. Hollywood Royalty, Senators, News people and Congressmen on live television. Prosecute everyone of them now. Start with Home Land Security Michael Chertoff polygraph to distinguish truthful from deceptive individuals, script readers polygraphed on live television to distinguish truthful from deceptive representatives. Subprime Foreclosures, Swindlers List of Traitors. Normandy, Sicily, Hiroshima, Nagasaki, Manhattan, Come and get it wholesale. Inside Traitors: Russia Knew in Advance and Encouraged Russian Citizens, Sell Dollars, Buy “Judas Euros, Cursed as Blood Money, Dammed For All Time, Let Them Eat Euros”. Jesus Mohammed Christ Bloodlines are all God’s Children, named of the Father, Jesus Christ Super Star. ANGELS IN AMERICA Demanding Reward Money Promised to Lawrence De Marco will unveil the perpetrators of 911 forbidden to say my name, Lawrence De Marco. My Reward Money is Past Due. My salary has not yet been paid. No one likes a debtor so its better that my salary be paid. Who would have the balls to send this. OG Honorable United States Military are US FALLEN ANGELS IN AMERICA, Jewish Lightning Murdered. US soldiers are dumb stupid animals who are good for nothing but pawns for our foreign policy. Kissinger. Senator Frank Lautenberg of NJ is knowingly throwing the United States Military under a Amtrak train. We will end euthanasia as the primary means of population control and enhance quality of life matters. The Crucifixion Missal, Jewish Infamy Has Never Been Exceeded: Until Armageddon, and hence, Judas, thou art proved more criminal and unhappier than all; for when repentance should have called thee back to the Lord, and rescued thee from thy headlong fall. Why dost thou distrust the goodness of Him, But O man that nothing could convert, O "spirit going and not returning," thou didst follow thy heart's rage, and, the devil standing at thy right hand, didst turn the wickedness, which thou hadst prepared against the life of all the saints, to thine own destruction, so that, because thy crime had exceeded all measure of punishment, thy wickedness might make thee thine own judge, thy punishment allow thee to be thine own hangman, the rule of law, thine own judge, thy punishment be crucified. Reward Money Promised to Lawrence De Marco is For Lawrence and not for the English Court Jews. We remember the English Jews sending the German Jews to Auschwitz and too America Must Perish. Dear Mrs. Sullivan: We remember your boys. And Now, Its Spring Time for Hitler Around The World. Bush, Cheney, Rumsfeld, other new fascists, and yes, OUR CONGRESS are not incompetent, they are following the plan precisely: Their job. Destroy America, and that's exactly what they are doing. To empty the US Treasury through a long series of wars from the Civil War to present day, deliberately prolonged, in order to transfer as much of the nation's money as possible to the elite royals sworn to death...... to have deliberate "no win" wars, i.e., Korea, Viet Nam, Iraq, (Iran, Israel, England). Ask a Viet Nam Vet about the "Rules of Engagement". Psychopaths sworn to the death, this is the end. To demoralize the people non-stop through relentless assassinations, black ops, false flags, that never get fully investigated and resolved, Oklahoma City, Waco, Texas, out source, take citizens jobs, pensions, their houses, their savings, to the point they'll be desperate for the government's intervention, even to the point of agreeing to giving up their guns, and martial law. Today's War is not a war against Adolph Hitler. Nor is it a war against the Nazis. It is a war against the Jews systematically killing Non Jews. Baiting and Switching, Israeli Manufactured Osama Terror. Israel caused the USA dearly in terms of the costs of the “War on Iran” and in terms of its “hated image” here and around the world. Limiting choices of Presidential Candidates fast track primaries, media drives players and kill hope.
Posted by:LawrenceDecember 30, 2007 12:51:41 PMRespond ^
You obviously read mostly fiction. You are insane. Shame on you.
Posted by:star555December 31, 2007 9:00:19 PMRespond ^
Fair tax, flat tax. All Huchabuck did for Arkansas was RAISE TAXES.
Posted by:DarbyJanuary 1, 2008 2:57:59 PMRespond ^
One hopes that the Huckabee campaign will counter Romney attacks by pointing out how, at Bain Capital, Mr. Romney used offshore corporations to avoid U.S. taxation, and he fee-milked acquired businesses before firing workers and taking them into bankruptcy ( http://snipr.com/romneyoffshore ), to amass his great $250,000,000 wealth. So, when you compare how Mr. Huckabee's visionary FairTax advocacy ( http://snipr.com/nextrung ) compares to Romney's interest in the current tax system, it's pretty easy to see who will lead us out of tax slavery ( http://snipr.com/taxburden ) - $265 billion annual tax code compliance costs representing 5 billion wasted hours, annually.
Posted by:Ian Repley of Ann ArborJanuary 1, 2008 3:20:33 PMRespond ^
From Taxfoundation.org the tax freddom date for the last 27 yrs has varied from the 109th to the 126th day, not taking into account leap year and rounding to the nearest 1/10th that is 29.9% to 34.5% by my calculations. This is supposed to cover all Fed and State taxes. Living in Texas with the other tobaccco spit dripping idiots means I'd pay the 23% FST plus the 6.25% SST plus any LST we have which are as much as 2.5% so it'd be pretty much a wash. The biggest difference is I get to decide when I spend my money if I buy new or used goods so initiallly it doesn't sound unreasonable. To eleminate concerns about crossing the border(s) for a better deal, isn't that what US Customs is for. Heavy tarriffs on "imported" finished goods, new or used, might do alot to discourage such activities. Encouraging importation of raw materials could help to bring back our mfg jobs. Producing those materials here might be more expensive and add cost but you'd be helpng out others US CITIZENS earn a decent wage. One thing I wasn't aware of that troubles me from reading all this is that currently no SS taxes are levied on income > $100k. This seems very shortsighted on .gov's part, just think of all the potential revenue that would be gained just from professional sports, movie stars and corporate fat-cats. Oh, but these are all their buddies that benifit from the fleecing of the rest of us working class(less)CITIZENS.
Posted by:m(not mother)jonesJanuary 2, 2008 11:24:49 AMRespond ^
The article states the income tax is universally loathed. Let me say it's universally loathed minus one -- me. I can swoon giddy in love with it. I only loath the way presidents and Congress have tried to flatten it and pile in thousands of pages of exemptions over the decades. Blaming the IRS for our tax code is like blaming the Army for the decision to invade Iraq. You can shrink the IRS, you can change its name, you can move it to a different building. But you can't have a civilization with taxation. Even the most Utopian libertarian will concede that.
Posted by:JimJanuary 2, 2008 1:53:31 PMRespond ^
D'oh! The sentence should read: You can't have a civilization WITHOUT taxation. Sorry, gang.
Posted by:jimJanuary 2, 2008 1:55:23 PMRespond ^
*sigh* this is the same proposal that was rammed through as Value Added Tax in the UK, Goods & Services Tax in Canada and Australia. /// in every case the following events occurred: /// 1) certainly a raft of weird wholesale sales taxes got dumped, which was good /// 2) the price of everything rose immediately, not so good /// 3) the tax is regressive, poorer pay a bigger proportion of their income to this tax /// 4) federal govt becomes dependent on the income stream, no plans to reduce it /// 5) the idea of increasing the rate make govts sweat votes, so they don't do it much /// --- so go look at the UK, Canada and Australia and see it for what it is: a mixed bag, with some good, some bad, bits ... but with the overwhelming disadvantage of being regressive -- of course, if you don't give a rat's ass about the poor, it's perfect!!!
Posted by:EleanorJanuary 2, 2008 3:16:03 PMRespond ^
Regarding the comment that "Why would people go to a black market when the price of good under the Fair Tax does NOT increase??!!" The first concern is that there is no way to ensure that the price of goods after subtracting embedded costs and adding the Federal Sales Tax under the Fair Tax does not increase over the existing tax system. The writer makes the assumption that the price of a service or new product under the Fair Tax will have been reduced by the 23% embedded cost and that the application of a 30% tax on the reduced price brings the cost of the new product or service back to its original price. The problem is that although the Federal sales tax of 30% will be applied to the purchase of services and new products, the provider is under no legal requirement to lower the price by 23%. For example, many of the prescripton drugs sold by US Pharmaceutical companies are manufactured overseas with no embedded taxes for payroll taxes (and corporate taxes that evaporate while crossing the ocean) or in Puerto Rico with no US corporate taxes, but Americans pay the highest prices in the world for US pharmaceutical products. The savings went to executives and investors. My second concern is that reliance of black markets if the Fair Tax is implemented. The black market will have little to do with the selling price, but a lot with being able to sell products or services that do not have a 30% Federal sales price and applicable sales tax added to the cost of the service or new product. What do you think most people would do when offered the option of paying $100 in cash for a service call or paying $100 + $30 Federal sales tax + $xx State sales tax because it was paid with a credit card, leaving an audit trail.
Posted by:ConcernedCitizenJanuary 2, 2008 4:16:55 PMRespond ^
The other problem is that everyone becomes tax collectors. Your landlord, your babysitter, youur gardener will all collect taxes. You will never be able to purchase a new home since investors get a 23% discount on home purchases (since they don't have to pay the sales tax). For an economists' description of what happens with the Fair Tax, search for Hank Adler's piece on the conservative Townhall.com.
Posted by:HankJanuary 2, 2008 9:05:04 PMRespond ^
Your facts are completely wrong. I would read the book before writing about a subject your are unfamiliar with. I support freedom of speech but a professional has a responsibility to research what he/she writes. This is irresponsible journalism and gives all media a bad reputation.
Posted by:RobinJanuary 4, 2008 10:55:14 AMRespond ^
an item costing $100 then paying $30 in tax is a 30% tax not 23%
Posted by:Big GJanuary 4, 2008 12:17:07 PMRespond ^
30/130=23% you don't have to be a math major!
Posted by:LarryJanuary 4, 2008 5:01:41 PMRespond ^
Amen
Posted by:SusanJanuary 6, 2008 3:16:32 AMRespond ^
How noble of you idiotic sheep, to want to pay more in taxes, so that the wealthy can pay less! I salute you. Because that is exactly what this Trojan Horse is all about. What position do you all prefer when the wealthy elite are reaming your bunghole - bent over a chair or freestyle? Morons. Huckabee needs to read his New Testament, particularly the Book of Acts, which talks about "taking from each according to their ability and giving to those based on their need". He is the biggest phony Christian since, well, George W. Bush! Posted by:The Conservative DeflatorDecember 13, 2007 10:16:23 AMRespond ^ When are these false "christian" politicians going to understand? Taking care of the elderly, (social security) and the poor is what Jesus taught.Hoarding your money and saying "I earned it" or "everyone should only be responsible for themslves" via investing or other selcted few schemes is selfish and incredibly arrogant). Thanks all you politicians for truly caring about your own welfare and attempting to bring us all down with you.
Posted by:SusanJanuary 6, 2008 3:38:27 AMRespond ^
What. the. hell. This is the most ridiculous thing I have ever heard of. It just helps the rich and big and not the poor and middle class. How are so many Americans always conned by rich (like the health insurance companies right now) into thinking a way that is better for the big companies and rich is better for them? Are they just uber-gullible?
Posted by:WTH?January 7, 2008 2:51:20 AMRespond ^
there are so many things wrong with this article. lets say you are right about the higher taxes- ill ask one question- is it better (lets take into account i dont know maybe the trade deficit and SS problems)to encourage people to save money- or discourage it.
Posted by:ErikJanuary 8, 2008 7:51:41 AMRespond ^
i like taxes :)
Posted by:YaukgruoJanuary 10, 2008 8:12:39 AMRespond ^
You are an idiot.
Posted by:YugoJanuary 10, 2008 8:13:48 AMRespond ^
WTF. I HATE taxes. I bought a hoodie, and it cost like five dollars more just because of the stupid sales tax. NOT fair.
Posted by:CaligirlJanuary 10, 2008 8:16:44 AMRespond ^
I do not care if the national sales tax is 100%. It is WORTH it to Get Rid of the IRS......America's Gestapo! Huckabee supports a SALES tax and NOT a Flat Tax. You can't get rid of the IRS with a flat tax.
Posted by:PeteJanuary 10, 2008 1:47:17 PMRespond ^
Politicians aside, I have had a FairTax sticker on my car since 1995. Yup, same car. Abolish the IRS Gestapo!
Posted by:PeteJanuary 10, 2008 1:53:40 PMRespond ^
Call it what you want, but I want a fair tax. If someone earns $20 million (number used to get into or above 50% bracket), this person will pay $10 million in taxes, the first time. If this person gives $5 million of this money that has already had taxes paid on it to a family member or friend, he is liable for paying gift taxes on that money, which may well be another 50%. This meaning that a total "income" tax of 62.5%. That is not including sales taxes, property taxes, and what ever other tax they can hit us with. I think a fair tax is one that taxes money only once. How ever it is done. One dollar should be taxed once, regardless of how many hands it goes through. I am American, and love it, but when I hear about an old woman losing her home that her husband built, because the home location is "now" in a high class area, and she can't afford property taxes, something is wrong. Again, I don't care what it is called, I want to be taxed on my dollar once.
Posted by:Joe AllenJanuary 14, 2008 12:55:55 PMRespond ^
I keep hearing about this 30% tax. How do we come up with this number? I hear what you are saying, but the way you are saying it, the price of the product is $130, and taxes are paid from that. No!! The price is $100, and the taxes are paid on that, which would be $23, or a total of $123. That is the amazing thing about numbers and statistics. No matter what numbers are given, both sides can prove their point...with the same numbers. If we calculated how much sales tax we are paying now the same way you are claiming 30% tax, then we are only paying 7% tax now, instead of 8%. $100 + 8%= $108. $8/$108= 7.4%. Therefore we would have to be charged $109 to equal 8% with that backwards math. No! If we were to do it that way, that actual 8% would be 9%. We don't do that now, so why would be calculate it that way then. Sales tax now is added to the base price, as it would then. Added to the base price, which would equal $123. Numbers and statistics. Both sides can be wrong, and both sides can be right, to the unsuspecting!
Posted by:Ralph ReedJanuary 14, 2008 1:38:32 PMRespond ^
It's a lot more complicated than either side say. The pro side says it's a 23% tax because $100 is 23% down from $130. The Con side say it's 30% because if something cose $100 now it will cost $130 with the Fair Tax. Both are right and wrong. In reality, the abolition of income, social security and employer taxes will LOWER cost and prices in time. Also, goods coming from U.S. trading partners, that pay no taxes now, will be taxed making the U.S. more competitive. It will give the U.S. the same advantages that now favor our trading partners that have a VAT tax. When the U.S. tries to sell something overseas that VAT gets added making us less competitive. I favor this tax as is gives us jobs, and civil liberties. The fair tax is basically a VAT tax in one lump and IS fair when you look at the total picture.
Posted by:Paul DuncansonJanuary 15, 2008 2:36:45 AMRespond ^
There's a number of problems with the "Fair Tax" which makes it hardly fair at all: 1) It's blatent theft of assets currently in Roth IRA plans, on which all taxes have already been paid. I understand Hillary Clinton suggested taxing IRA assets during Bill's administration. Huckabee has just found a "workaround" to do the same, and call it "fair"...??!! Whatta joke..! 2) A 30% tax on homes is ridiculous, especially after Greenspans money-printing operation has bumped prices up 150 - 200 percent already. Another bad joke...! 3) Paying a 30% tax on health care is just downright mean-spirited...! I recommend Mike Huckabee take a long, hard look at Steve Forbes FLAT TAX, which offers all the advantages of the unFair Tax, without the three above-mentioned problems. While he's at it, he might well consider asking Steve Forbes to run with him on the ticket...!! As far as I'm concerned, either one could be Top Dog...!
Posted by:GerryJanuary 15, 2008 6:46:04 PMRespond ^
You got issues... if it doesn't work...we can adjust it ...ok?
Posted by:Paul ThompsonJanuary 17, 2008 9:59:28 PMRespond ^
Lawrence, please go back to your parents' basement and stay there! We don't need your hatemongering!!
Posted by:Heather CzerniakJanuary 19, 2008 3:23:53 PMRespond ^
I am in large agreement with much of this article. I have long concluded that Huckabee is not serious. Also people who believe the IRS will go away under ANY tax plan are kidding themselves (although some taxes like seigniorage don't require the IRS, they have serious economic consequences if the government comes to rely on it, as Weimar Germany and Argentina under Alfonsín found out). One way in which I disagree is that it is regressive. Theoretically, at least, it would be proportional, because it would reduce everyone's purchasing power by a proportional amount. Sure, the rich can put their money away in bank accounts and investments, but it makes little difference if they cannot consume it without paying the tax.
Posted by:MichaelJanuary 20, 2008 1:06:37 AMRespond ^
It's real simple. If the wealthy pay less(and they will), the non-wealthy pay more(and they will).
Posted by:atheistJanuary 20, 2008 5:05:44 AMRespond ^
Karvounis' analysis about the distributive fairness of the tax misleads the reader into thinking that the Fair Tax is regressive, when it's not. It in fact is progressive. For a correct analysis of the progressivity of the Fair Tax (which was named by an outside focus group) see Tuerck, Haughton, Bachman, Sanchez-Penalver and Ngo "A Distribtional Analysis of Adopting the FairTax: A Comparison of the Current Tax System and the FairTax Plan," The Beacon Hill Institute at Suffolk University, February 2007 ~Jim Bennett Summit, NJ
Posted by:Jim BennettJanuary 20, 2008 7:08:37 AMRespond ^
Everyone seems to be crunching disembodied numbers on the issue of fair/single tax Vs. income/payroll tax. Although simplification of the tax system holds out a sweet dream, taxes can never be reduced to any single source in the real world. A network of dynamic conflicts between diverse social and political interest groups will determine how tax burdens are distributed among the population based on the differential influence and power such groups happen to wield at any given time. Our complex and maddening tax systems, national, state, and local, are contrived by diverse groups competing, indeed crusading, for that elusive goal of "Fairness," or more presicely "Fairness to ME!" A national sales tax like any other single form of taxation would paint government into a corner and the system itself like Custer at the Little Big Horn would be quickly hacked to death by groups who perceived themselves as unfairly "singled" out by its provisions and penalties. Sooner rather than later special interest "reforms" would eviscerate the coherence of any attempt to establish a single tax in the political arena.
Posted by:Jim Val