Skip to comments.Fair Tax, Flawed Tax
Posted on 08/25/2007 9:11:11 PM PDT by gpapa
Does adding 30% to the price of every house sold sound like a good idea to you?
Former Arkansas Gov. Mike Huckabee's unexpectedly strong second-place showing in the recent Iowa Republican straw poll is widely attributed to his support for the FairTax.
For those who never heard about it, the FairTax is a national retail sales tax that would replace the entire current federal tax system. It was originally devised by the Church of Scientology in the early 1990s as a way to get rid of the Internal Revenue Service, with which the church was then at war (at the time the IRS refused to recognize it as a legitimate religion). The Scientologists' idea was that since almost all states have sales taxes, replacing federal taxes with the same sort of tax would allow them to collect the federal government's revenue and thereby get rid of their hated enemy, the IRS.
Rep. John Linder (R., Ga.) and Sen. Saxby Chambliss (R., Ga.) have introduced legislation (H.R. 25/S. 1025) to implement the FairTax. They assert that a rate of 23% would be sufficient to replace federal individual and corporate income taxes as well as payroll and estate taxes. Mr. Linder's Web site claims that U.S. gross domestic product will rise 10.5% the first year after enactment, exports will grow by 26%, and real investment spending will increase an astonishing 76%.
(Excerpt) Read more at opinionjournal.com ...
Oops! Bartlett forgot to mention that the embedded income tax costs in the items he mentioned will be gone.
That dramatically changes the economic model.
The fact that he would gloss over this CRITICAL fact demonstrates that his analysis is flawed poop.
Ping of interest.
Bartlett begins by saying that the FT would add a 30% tax on top of the price already paid for goods. His example states that an item that costs a dollar now would cost $1.30 under the FT. Most of the rest of his article follows from this.
He’s wrong and I can only assume he hasn’t actually read the FT book or, better, the bill. Maybe he’s working for a lobby with an interest against the FT. In any event, he’s wrong.
That is exactly right. People don’t realize the amount of invisible tax they pay in increased costs.
It isn’t that he doesn’t know what the FT is. It is he is opposed to it because it would sweep away the current tax system.
The 30% or Whatever the rate would be is already added into everything anyway. That’s how economics works. This is a change in HOW it is collected and WHO pays the bulk of it. But nothing will cost more in actual money and likely will cost far LESS in the long run.
Right, but why is he opposed to getting rid of the current tax system?
Not everyone seeing flaws in the proposed “fair tax” desire to see the IRS and current income tax remain.
As I have said many times in many discussions, the answer isn’t in how we change the manner of tax collection, it is getting out of control spending in check.
Any tax reform that doesn’t do anything to curb the outrageous way money is spent in D.C. is worthless, even if it ultimately eleminates the IRS.
As long as they are collecting the money, politicans will find ways to spend it to buy votes to remain in power and seek even more.
We desperatley need tax reform, but first there has to be a curb on out of control federal spending.
How about No one pays taxes who makes less than 250,000.00 a year and then you pay 50%?
that ought to fix Pelosi, Heinz, Clintoons,
Edwards, and company
How does this compare to a flat tax of 17%?
Bartlett has been trashing the Fair Tax from Day One. I’m pretty sure the guy is tight with Dick Armey and is pushing for Armey’s flat INCOME tax which, like the current income tax was once a cute little monkey that grew into the monster we suffer under today.
I always liked the idea of a National Sales Tax to get at the illegal monies made in this country from the various illicit activities. Drug dealers, pimps and bookies do not file with the IRS but they do buy. Now you have access to those dollars that otherwise go unreported.
The rich will simply move their money into tax free bonds to avoid losing more of their money to taxes or hide it in good quality stocks and never sell it. The first thing will happen is Wall Street will slowdown (cities like Chicago, San Francisco and New York will feel its effect) because less stocks will be sold for profit and less money will flow as all of it is hidden in tax free bonds. Only the bond businesss will do well, everyone else will slowdown. Ironicly the cities affected are in blue states (IL, CA, NY). The key thing to government finances (lesson learned in NJ) is not tax increase or tax reduction, but curbing government spending. NJ did both (increase and reduction) and she is really in a financial hole. NJ may be the first state in the union to go bankrupt within ten years. She has a $ 5 billion annual deficit plus a $ 58 billion shortfall in her health insurance fund for state workers and teachers. If NJ fired all their state workers they could not close the annual budget gap. The health fund shortage was caused by the state when they stop funding the fund in 1994 due to other pressing spending needs. Result is the fund is short and by law this is a contract between the state and the state workers that cannot be brokened (unlike federal social security which is not a contract but a legislative entitlement). If the state cannot raise the taxes it can declare bankruptcy to avoid the contract obligations. My town tax assessor told me that my property tax could rise 12 percent just to cover the initial payments for the state worker/teacher health fund shortfalls.
well, then there is no such thing as a fair tax.
The idea of a national sales tax has been around long before Scientolgy. Bartlett bringing this up first in the article is a scare tactic and poisons any good argument he might be making afterwards. We’re not stupid, you know.
Bartlett begins by saying that the FT would add a 30% tax on top of the price already paid for goods. His example states that an item that costs a dollar now would cost $1.30 under the FT. Most of the rest of his article follows from this.The bill doesn't say anything about prices. The bill is written for the business that would be subject to the tax, not the consumer. The tax (for the first year) is "23%of the gross payments".
Hes wrong and I can only assume he hasnt actually read the FT book or, better, the bill.
IOW, the business would add up their gross payments (gross payments would have to include other taxes) and remit 23%.
For a business to be able to remit 23% of their gross income and not come out broke as a result, they'd have to add 30% to their prices to cover their new tax.
$0.30 tax OF $1.30 after tax price is 23%...
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