For the FairTax Haters

Why do people attack things that they don’t understand.

 

Is it outta fear of the unkown?

 

Is it because they don’t want to appear not to know something?

 

Do they think that any new idea could not possibly be better than the way things are currently done?

 

I have to ask myself these questions when I debate someone on the fair tax. They don’t know what it is or what it is designed to do, yet they will fervently bad mouth it.

 

I don’t know what would compel someone to take a position on something they have done no research on. Why not say, I haven’t done my homework on this and from there either say, and I’m not going to or say, I’ll look into it.

 

I first heard of the fair tax about a year ago. One of the guys I was stationed with was a big Gov. Huckabee fan and brought up the fair tax. A different guy started laying into him about how stupid that was even though it was obvious he had not researched the subject. They appealed to me for my opinions to settle the dispute, I told them I didn’t know anything about it, I would have to do my homework.

 

So I read two books on the subject and looked through various internet articles. I can’t say that I am an expert, but I do at least have enough to form an educated opinion.

 

It is easy to see why some people would oppose the idea with the amount of misinformation that is pushed upon us by the government.

 

On Thursday, Neil Boortz was taking about a congressional race in Georgia. Saxby Chambliss, a fair tax supporter, is running against a democat newcomer, Jim Martin. Jim Martin’s platform is Bush did X and Bush did Y, Bush screwed us all. Take what you want from that, but Mr. Martin is also getting a lot of help from Chuck Schumer’s Democrat Senatorial Campaign Committee, which has sunk about a million bucks in ads that spread lies about the fair tax. They say that the Sen. Chambliss wants to increase the tax on everything you buy by 23%.

 

That is a flat out lie! But if you don’t know anything else about it, it is easy to see why you would be opposed to this.

 

It is weird, I figured the one thing on this good Earth that nobody would ever defend is the Internal Revenue Service. But when you offer an alternative, the barriers fly up and they don’t want to listen. I guess it is more popular than I anticipated.

 

They great hurdle is getting people to understand that it is not a tax increase, it is a change in the method by which taxes are collected.

 

It streamlines a complex and cumbersome system.

 

It shuts the door on tax loop holes and tax evasion.

 

It makes things simple, transparent, and easy to understand.

 

I think that if most Americans would look at the plan objectively, they would eventually become supporters. The problem is, most people fear real change. They ask themselves, if this is so great, why don’t we already do it this way? Why don’t other countries do it like this?

 

We don’t do it like this because of politicians. Most Americans don’t want it because they don’t understand it; most politicians don’t want it because they do understand it. Under the current system, it is very easy for politicians to manipulate tax rates to do favors for people who give them contributions and kick-backs. They can also use it to flex muscle on industries that they don’t like. And since there is no transparency and the system is so complex, nobody is the wiser. It is one little line buried in hundreds of thousands of pages of tax code. The fair tax will take that power away from members of congress.

 

Also, America has been without a tax on income longer than it has had one. The 16th Amendment is less than 100 years old.

 

I’m not going to go into the details of the fair tax.

 

But I will say, do some research before you bad mouth the thing. Check out Congressman John Linder’s website or google Americans for Fair Taxation. Read the Fair Tax Book. Then form your own opinion.

If you still don’t like it, come seek me out and give me a piece of your mind. Then we could have a worthwhile debate.

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11 Responses to For the FairTax Haters

  1. KBCraig says:

    I will stipulate that the FairTax advocates are correct that the plan would be cost-neutral to the consumer, and revenue-neutral to the government, since those seem to be critics’ biggest issues.

    And that is exactly why I oppose the plan.

    You see, I don’t want taxation to be neutral: I want it to be drastically slashed. I don’t want the government to enjoy a more efficient, less visible collection system: I want them to have to fight for every penny wrenched out of the hands of producers and consumers. I don’t want to repeal the income tax and replace it with a sales tax, value added tax, or flat tax: I want it repealed and replaced with nothing.

    Remember how conservatives and libertarians railed against the size of the federal government under Bill Clinton? If we rolled back federal spending to what it was during the Clinton administration, we could completely eliminate the federal income tax. Go ahead, check the numbers: I think you’ll be surprised.

    My biggest concern with the FairTax is that it could become law with the approval of just 218 Representatives, 51 Senators, and 1 President. Unless the 16th Amendment is repealed first (which is a much more cumbersome process), that same simple majority could reinstate the income tax right alongside the sales tax scheme.

    I don’t fear changing the tax collection system. I fear adding yet another mechanism by which government can take our money. Ask any locale that has added a “temporary” sales, property, or income tax: decades later, it’s still in effect.

    Repeal the 16th, and then we’ll talk.

  2. I understand the Fair Tax, and not too long ago I supported it. I’ve still not removed the bumper sticker from the back of my van. My support for it has waned, because Dr. Paul illuminated for me that if the federal income tax were to be repealed altogether, with nothing to replace it, the federal government would continue to take in the same revenue, adjusted for inflation, as in 1996. In my humble opinion, they were spending too much back then! I say starve the beast. Eliminate it altogether.

    Then again, I’m in favor of secession.

  3. Rich Roberts says:

    Repealing the 16th amendment is part of implementing the Fair Tax.

    I’m all for slashing taxes too. The problem now is that legislators can manipulate the code hear and there and raise taxes on selected few without it anyone really knowing it. Even if the fair tax comes in at revenue neutral, if congress decied to raise it, everyone would know about it and it would affect them directely. it would be political suicide for them.

    If we can make the tax system transparent, we reduce the power of congress.

    Cutting taxes is a different issue.

    Rick is correct too. Congress can continue to erode the value of the dollar but manufacturing inflation regardless of the tax system. They are doing that now and have been for years. The fair tax won’t increase their ability to do it. If we implement the fair tax, then they will be left with one way to screw us monitarily instead of the two they currently have.

    In order to deal with the inflation problem, we’d need to return to a gold standard so the money supply become fixed. again, a different issue. and one that does need to be adressed and resolved, but doesn’t ahve anything to do with the fair tax

  4. KBCraig says:

    Rich,

    I agree taxation should be more transparent. I support eliminating tax witholding; anyone paying income tax (or any other tax scheme) should have to write a personal check every payday. If we ever hope to have true spending reform (which has to come before tax reform), every taxpayer must feel outrage at what is being taken from them.

    I’ve often heard FairTax advocates speaking in favor of tax transparency. That’s why I’m so baffled at Boortz’s outright blind rage when anyone points out that the 23% inclusive tax, is a 30% sales tax. Boortz wants the sticker price and the checkout price to be the same; there’s no doubt that this would help consumers be more accepting of the FT plan. Most wouldn’t even know the tax existed, especially if we stipulate that it would be cost-neutral to the consumer.

    This is the very opposite of transparency.

    If FairTax advocates truly want transparency, then let’s have every item priced without the tax, and add 30% at checkout. Every taxpayer would see the amount of tax paid on every transaction. When enough people walk away in disgust without paying for merchandise that’s already been rung up, we’d be on our way to *spending* reform and slashing the tax rate.

    I have no doubt that Boortz gets tired of addressing the same issues over and over, but his way of responding to anyone with questions or concerns about the FairTax, has completely turned me off to his show. That, and his decidedly non-libertarian advocacy of foreign interventionism.

    Thanks for the civil and informed discussion, though. My typical conversations with FairTax advocates show little of either. It’s the opposite of the column’s opening line: why would anyone *support* something they don’t understand? I fear too many FairTax advocates hear “eliminate the IRS” and sign on without hearing anything else.

    Kevin

  5. Rich Roberts says:

    Kevin,

    I’m with you in the sticker price being different than the ring up price.

    One of my big beefs right now is that no matter how hard I tried to figure out how much tax i pay each year, i couldn’t do it.

    Any finished good I buy was taxed on every step of production. From the raw materials, to the manufacture of the individual components, to the assembler, to the product distribution, to the retailer. I don’t know how much tax i’m paying on each item I buy because all those cost are imbeded in the final sticker price.

    I want to get rid of all that. That way i can put an absolute dollar amount on what I give to the government. “give” i mean that the government extorts from me.

    and if more people knew what that dollar amount they pay is each year exactly. I think we’d have a lot more pissed off people holding their elected officals to task to reign in their wasteful spending.

  6. Don Tabor says:

    I dare say I have been beating the limited government, reduced spending, drum longer than any of you has been alive, if I am guessing your ages correctly. That effort by me and many others has been a total failure. Spending has grown no matter who was in office. It even grew under Reagan, who certainly knew better. So, at some point you have to ask why such a good idea as limited government cannot be sold to the American people.

    I think I know why, and the FairTax is the best method I know for getting around that problem.

    Forty-four percent of wage earners pay no income tax directly. On top of that, you have to get above the 80th percentile before directly paid income taxes become a significant burden on the wage earner. So, for an overwhelming majority of the people, taxes, and thus Federal spending, are perceived as “someone else’s problem. With the majority seeing Federal spending as something for nothing, or at least a good buy, naturally, there is no constituency for the radical downsizing of government we need and desire as Libertarians.

    Of course, this majority is not unaffected by taxes, but few outside our circle really understand the concept of embedded taxes. Even within Libertarian groups, few understand that our hidden tax burden is far larger than our direct tax bill. When you combine the employee half of FICA and the 22.4% embedded tax, the Federal tax bite even for those who pay no direct income tax is 28.34% of their income.

    And they are blissfully unaware of it, and actively demand more Federal spending to be paid for by taxes on business and business owners, further contributing to their own destruction. Education in economics being what it is, combined with people’s disinclination to look below the surface on their own, we will never make that point to them by reasoned arguments in essays and letters to the editor. It has to be made plainly visible to them how much they really pay.

    The FairTax does that. The tax component of every purchase will, by law, be plainly printed on every receipt. The concept of embedded taxes will be made clear. People will know the true cost of government. Further, the price of any new program, like socialized health care, can be quantified in advance by simply calculating how much the tax rate will have to be raised to cover it. There will be no confusion that someone else will pay for it.

    The FairTax is not perfect. No tax ever will be. You can’t make something fundamentally wrong perfect and all taxes are wrong. But at least we can make the wrong plainly visible so people can judge how much evil they are willing to accept.

    There are many things I would like to see added. Primarily a sunset provision so that the FairTax would be discontinued after 10 years if the 16th Amendment was not repealed, leaving no tax system in place at all.

    But first of all. if we are ever to win the battle against the growth of government, we must make the costs visible. That can only be done with a consumption tax. No flat tax or other income based tax can ever be made fully visible as they all become embedded in prices. So, it is either the FairTax or a VAT tax, and VAT’s are even worse than income taxes in terms of complexity and manipulation by government.

    So, it is literally either we pass the FairTax or the nation slips into socialism without even seeing it coming.

  7. One of the "FairTax Haters" says:

    First, please don’t take this post personally. Many people support the FairTax for one reason or another and get very offended when someone opposes it, so I’d like to try to politely answer your question as to why someone would oppose the FairTax.

    The reason we “FairTax haters” don’t like the FairTax is not because we are ignorant of it but because we have examined the independent research on it.. You said you’ve read two books on the FairTax. I can guess what they were. Now try to find where in either of those books the author’s show how a 23% tax will fund the federal government. You won’t find it because it can’t. That’s the most obvious problem with the FairTax: the proponents make claim after claim that they simply can’t back up. In fact, when you start examining their claims one by one, you will find that there is either no academic support for their claims or what little support there is has been produced by a certain unknown economics group that has been paid by AFFT to produce reports which — surprise, surprise — turn out to be favorable to the FairTax.

    On the other hand, the FairTax has been studied several times over the last decade by a number of independent economists, government agencies and policy groups who aren’t being compensated for taking one position or the other. Each of those independent studies have concluded that the FairTax rate would need to be much higher than 23%, usually somewhere between 50% and 60% (not including state and local taxes.)

    At those rates, the problems with the FairTax become obvious. First, it will be impossible to enforce because nobody will buy a new house, for example, and pay hundreds of thousands of dollars in taxes when they can buy an existing house tax free. Second, even if the government could get past the enforcement issue, the FairTax would shift the tax burden onto the backs of middle class families and retirees.

    That’s why we “FairTax haters” (including Allen Buckley, Libertarian candidate for Senate from Georgia) oppose the FairTax. By the way, if you want to read any independent research on the FairTax, you won’t find it from any books or websites that advocte for the FairTax. (Don’t you wonder why?) You will need to go to an independent website, such as http://www.fairtaxblog.com.

    Good luck with your investigation. I look forward to reading your blog after you’ve read some of the independent studies.

  8. Don Tabor says:

    OK, I wasted an hour or so on the fairtaxblog site and found mostly unsupported opinion, but of the published research cited criticizing the FairTax, I found these authors:

    Bartlett, Bruce – Flat Tax advocate and nutcase who still repeats the disproved claim that the FairTax is a project of the Church of Scientolgy

    Buckley, Allen – Tax Lawyer

    Diamond, John W.; Zodrow, George – Members of a Tax Policy think tank.

    Gale, William – of the Tax Policy Center, and the Brookings Inst.

    and so on. In short, the criticism comes from people who’s own interests are contrary to any form of fundamental tax reform.

    Hardly unbiased sources.

    There is enough written about the FairTax now that it is like the Bible. If you quote it selectively, you can support any position.

    Diamond and Zudrow, for example, publish a long analysis opposing the FairTax, but when you read the PDF, you find they made huge alterations in the FairTax plan and then analyzed their version, not the FairTax as written.

    In short, the whole site is a hatchet job by people who will mostly be unemployed when the FairTax becomes law.

  9. One of the "FairTax Haters" says:

    Well, I’m not trying to start an argument here. The original post asked why anyone would oppose the FairTax. I’ve tried to explain why. You don’t have to agree with the arguments against the FairTax, but at least now you know where to find some.

  10. Len Rothman says:

    In surfing through the site, I noticed your statement:

    “The FairTax is not perfect. No tax ever will be. You can’t make something fundamentally wrong perfect and all taxes are wrong. But at least we can make the wrong plainly visible so people can judge how much evil they are willing to accept.”

    My question is how do you form a government to even provide protection from “force or fraud” that is available to all citizens?

  11. Don Tabor says:

    You are getting into areas of theory vs practice.

    In general, user fees are better support for government services when that is workable because they are voluntary. You don’t use the service, you don’t pay the fee. Tolls are the most obvious user fee arrangement, but there have been subscription fire departments, where if you have a fire and do not subscribe, you are billed for the service and a lien is placed on your property to collect. Where I used to live in LA, there is still a subscription Ambulance and EMT service that provides excellent service at a reasonable cost. (You can Google ‘Acadian Ambulance’)

    But that is impractical for things like national defense. The Air Force cannot defend my house if I subscribe but let yours next door get bombed, so some things must be supported by taxation. When that is necessary, it should be done in accordance with Libertarian policy

    So, some taxes are a necessary evil. To the extent we must tax, it is important that they be visible and universal, so people can see the true cost of government. Many of the things we currently get through government we really could get a lot cheaper and better through the private sector, particularly through insurance, but because the costs of private sector purchases are visible while the cost of government services are well hidden, we make the poor choice of getting those services through government.

    George Washington warned “Government is not reason; it is not eloquent; it is force. Like fire, it is a dangerous servant and a fearful master.” and taxes are the epitome of force.

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