On my desk: The Fair Tax Fantasy
posted at 2:12 pm on April 23, 2009 by Ed Morrissey
The Fair Tax Fantasy is not quite on my desk, but it’s on the way there. My friend Hugh Hewitt has cowritten an extensive critique of the Fair Tax proposal with Hank Adler, and I suspect it will be as provocative and intriguing as his other books; the title is certainly inflammatory enough! Hugh argued against the plan that Mike Huckabee wound up adopting as a major campaign plank. That led to a surprisingly emotional debate on the merits of the Fair Tax versus a Flat Tax, which Steve Forbes has pushed for decades.
Hugh, being the prolific writer that he is, has another book out as well. He looks at the prospects for a party in the wilderness in GOP 5.0: Republican Renewal Under President Obama. Even though he’s a Cleveland Browns fan, Hugh’s an adept political analyst, and this should be required reading for the RNC and state organizations in the next two years. I’ll get Hugh on my show, in a bit of a role reversal, to talk about both books soon.
Blowback
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Even though he’s a Cleveland Browns fan
Are you sure the man is completely sane?
Bishop on April 23, 2009 at 2:14 PM
I’ll guess that Neal Boortz didn’t write the forward.
BigD on April 23, 2009 at 2:14 PM
I have not read the book so I am unfamiliar with his arguments against the “Fair Tax” but I am not a supporter. I support Fobes’ Flat Tax plan set forth in the 90s.
The National Sales Tax (“Fair tax”) will be an unfair burden on the Nations poor and middle class, they always are. It will also be counter productive since our economy relies heavily on consumption. By taking away income tax revenue from not just individuals but businesses as well, our entire budget will not be able to sustain itself. The National Sales Tax will have difficulty funding our super powered Military let alone everything else. Yes we need a reformed tax code and a smaller budget, but the National Sales Tax is not the answer. The Flat Tax is the way to go.
ust think of a 25%-35% National sales tax. What if you want to buy a car? Even a used one at $10,000 will set you back $3,300 and that is from one purchase. The tax code will not be as simple as people think and buying luxuries will be eneconomical for so many Americans.
Daemonocracy on April 23, 2009 at 2:21 PM
I woke up from the Fair Tax hypnosis after reading what the JPFO had to say about it. I don’t need an entire book to recognize the Fair Tax is a fantasy.
http://www.jpfo.org/filegen-a-m/fairtax.htm
Durham68 on April 23, 2009 at 2:23 PM
politically its definitely a pipe dream, barring a war
jp on April 23, 2009 at 2:23 PM
Oh, not to mention a new Constitutional amendment will have to be passed to repeal the Income Tax. Last thing you want to do is pass this “fair tax” law and then lose the next election and have a liberal keep the “fair tax” but also bring back the progressive income tax. Only way to prevent that from happeneing is to repeal the 16th amendment. This takes serious time and guys like Huckabee act like it would be so easy.
Daemonocracy on April 23, 2009 at 2:25 PM
Read Boortz’s book. It attempts to address everything you just mentioned. I still think it’s a bad idea, but it’s an easy read if you are interested in the debate.
Durham68 on April 23, 2009 at 2:25 PM
We tried what was essentially a flat tax back in the 1980′s, and Congress started screwing with it immediately.
The FairTax gets rid of the IRS forever, and requires the repeal of the hideous 16th Amendment.
The so-called Flat Tax leaves those two hideous things in place, which are both unacceptable in a truly free society.
-Dave
Dave R. on April 23, 2009 at 2:27 PM
Hewitt is yet another dismal example of a “conservative” these days. To defend the income tax, which punishes work, rather than a consumption tax, which punishes extravagance, is all the evidence you need.
corona on April 23, 2009 at 2:28 PM
You know who this benefits? Mitt Romney.
lorien1973 on April 23, 2009 at 2:29 PM
Have you even read the FairTax book?
Lower income Americans make out like bandits under the FairTax.
-Dave
Dave R. on April 23, 2009 at 2:30 PM
What exactly is “progressive” about income tax?
ALL taxes are regressive! There is no such thing as a progressive income tax. It is a liberal lie to cover for the redistribution of wealth.
jdkchem on April 23, 2009 at 2:30 PM
Can I get an Amen to that? We need Steve Forbes more than ever before.
Knucklehead on April 23, 2009 at 2:31 PM
I listened to Boortz describe the “fair tax” on his radio and it just had me scratching my head more and more. There were just too many things that just didn’t seem right.
Personally, I prefer the flat tax. I think even the poor ought to pay something simply out of them needing to take responsibility as a citizen of this country.
GT on April 23, 2009 at 2:32 PM
FairTax does not seem fair bcs it’s evidently based upon consumption.
If this is true about the Flat Tax-then re-write the damned thing to get rid of the IRS & 16th.
I realize I am fantasizing here.
Common sense doesn’t seem to mesh well with politics.
Badger40 on April 23, 2009 at 2:33 PM
And while we’re at it, get rid of ALL onerous taxes, like for instance, the Death Tax.
What in the hell is that about? Just bcs you die you pay a tax?!
You paid taxes on what you acquired & now simply by dying you have to pay on it again?
Class warfare if I ever saw it.
Badger40 on April 23, 2009 at 2:34 PM
problem 923,523,634 with the GOP establishment – it is far simpler to cut each other down with these little turf wars than it is to take on the real issues and challenges facing our nation. So, no, Hugh, I won’t be reading your book.
gatorboy on April 23, 2009 at 2:36 PM
Setting a federal sales tax rate in excess of 23% in addition to state and local sales taxes will only serve to drive an incredible amount of tax evasion. Which to some would be the point, but it would still be unworkable as a taxation scheme.
starfleet_dude on April 23, 2009 at 2:37 PM
Why tax reform is nice, but the big target is spending. Less spending => less taxes => tax system burdens decreases (or at least it is easier to reform).
WashJeff on April 23, 2009 at 2:40 PM
The fair tax gives a pre-bate of the cost of the sales taxes on the first N amount of income. (Where N is a basic cost of living ) This means the taxes you will pay on the first 20,000$ would be tax free- you get a check for them before you spend it.
Two big problems with this:
1 – The amount of cost-of-living will be changed based on who is in power politically. Proof: Our current minimum wage will be 7.55$ in a few months.
2 – The cost of living is different in different parts of the country. I can only guess this might drive out low income people from high cost of living areas.
Of course the elephant in the room is passing not one but TWO Constitutional amendments. One to repeal the 16th and another to enact the fair tax.
Forbes plan could be enacted immediately.
DavidM on April 23, 2009 at 2:40 PM
If Hugh is anything, its a partisan hack. Remember “Painting the Map Red?” yeah hows that working out, oh and lets ignore his ignorance on Romney, way to hook your wagon to that dead horse. He is the consummate suck up, and while he does have some interesting interview guests on, his show is far too Washington friendly.
thegreatsatan on April 23, 2009 at 2:40 PM
The tax rate wouldn’t need to be that high. Not nearly that high.
If you have no exemptions on it. So fees (lawyer fees, doctor fees, etc) are all taxable; as are stock trades, etc. The tax rate is very low. And simpler. Which saves billions of dollars in compliance costs.
lorien1973 on April 23, 2009 at 2:40 PM
That is the problem. You cannot have any actual tax reform until spending reform happens. And even if spending reform happens, you have maintain an onerous tax system until the debts are paid down.
lorien1973 on April 23, 2009 at 2:42 PM
I love listening to Hugh, but he’s a very hard headed sort. Once he gets his mind around something, there’s no turning back. The fact that he believes this is very hard to understand (for me), it seems he’s assuming way to much. Now I could be wrong, but so could Hugh.
jainphx on April 23, 2009 at 2:42 PM
I haven’t read the book either, but the Fair Tax IS a fantasy. It hurts more people than it helps, so no Congressman in his right mind will vote for it.
The basic plan is to suddenly impose a 30% national sales tax while simultaneously eliminating income tax and payroll taxes. One major problem is that about 45% of taxpayers don’t pay income tax, but they would be hit by a huge sales tax, so that low-income people would be big losers.
Proponents argue that businesses would avoid payroll taxes and corporate income taxes and pass the savings to consumers, but payroll taxes are paid on salaries, and corporate income taxes are paid on PROFITS, not revenues. In a downturn, corporate profits are down or non-existent, so the income-tax saving would be nil, and saving payroll taxes helps labor-intensive companies over capital-intensive companies, but everybody’s sales prices would increase dramatically, and people would stop buying non-essential items.
Another major problem would be foreign trade. If a product is made in a foreign country, its manufacturer would NOT benefit from payroll tax and income tax being repealed, but its sales price in the USA would suddenly increase by 30%. Foreign governments would consider that as a punitive tariff, and retaliate with tariffs against American-made goods.
In principle, sales taxes may be “fairer” than income taxes, but you can’t switch from the current system to a sales-tax-only system suddenly without tremendous disruption, which this economy can’t afford right now.
In order to work, a Fair-Tax-like system would have to be phased in gradually. Instead of suddenly repealing all income and payroll taxes and imposing a 30% sales tax, Congress could try, for example, reducing income and payroll taxes by 10% and imposing a 3% sales tax (1/10 of the Fair Tax change), and see whether it helped or hurt the economy. If it helped, then the next year, cut income and payroll taxes by another 10% and impose a 6% sales tax. If things got worse, they can go back to the current situation without much disruption.
Steve Z on April 23, 2009 at 2:42 PM
I’m a convert to the flat tax.
A true flat tax would require an amendment to keep congress from fooling with it, though, so its probably a bit of a pipe dream, too. Who is up for starting the process?
Count to 10 on April 23, 2009 at 2:42 PM
Hugh was pretty brutal the other night on his show when he introduced the book. He made it very clear he thinks the FairTax is so stupid he shouldn’t even have to be refuting it.
On his blog he mentioned that a lot of people have suggested he debate Boortz and offered an hour on each show (Hewitt’s and Boortz’s). I hope they do it.
Quisp on April 23, 2009 at 2:44 PM
And why is taxing people based on what they spend less fair than taxing them on what they earn?
If you don’t want to pay the tax, then you don’t have to buy the item. A flat tax doesn’t give you that option, nor does the current system, which takes away part of the money you earn before you even see it.
There are no losers under the FairTax.
None.
-Dave
Dave R. on April 23, 2009 at 2:45 PM
There’s a rebate built into the plan that refunds to everyone here legally the tax rate multiplied by the poverty index. If the poverty index is set at $5000 for an individual will get a check for $5000 multiplied by the tax rate. The poor will get a complete refund of their taxes under this plan.
This section is practically incoherent. Just how are businesses funded by the income tax.
The Fair Tax will bring in just as much revenue as does the current tax.
1) Your cash on hand will have increased by the amount that you now pay in income and payroll taxes.
2) Most businesses pay at least 30% of their income in income taxes, plus the money needed to comply with the income tax, as a result that car will now be 30% cheaper.
MarkTheGreat on April 23, 2009 at 2:45 PM
One way to lessen the burden is to constitutionally cap a national sales tax at, say, 5%, only allowing a year to year increase above 5%. And have it on all goods and services, excepting: food, clothing, medical care and primary residential real estate. As poorer people tend to put more of their income towards these basics, they’ll pay less in taxes. But they should be paying taxes.
Would this tend to lower the amount of revenue brought in? I hope so, that would be a feature, not a bug. Starve the monster in DC.
Most people are going to continue shopping at legitimate stores, but if an “off the grid” economy starts up, with trading labor for goods, or buying at a yard sale, I don’t see a problem.
rbj on April 23, 2009 at 2:46 PM
Boortz would mop the floor with Hewitt’s ass.
-Dave
Dave R. on April 23, 2009 at 2:46 PM
I realize there are lots of issues getting to the fair tax, specifically all of the lawyers and accountants that would be put out of work, but the fundamental issue for me is we should be behind something that rewards work (income) and discourages (taxes) excessive spending. Those that argue it will punish the poor, maybe I am missing something but the poor should be getting a rebate, as long as they do not spend excessively.
You want to really eliminate poverty though? Invert the tax brackets, make the highest income the lowest rate. Then lets see what those able bodied welfare receipiants do with all of the extra free time.
AndrewsDad on April 23, 2009 at 2:47 PM
The Fair Tax gets rid of the death tax.
MarkTheGreat on April 23, 2009 at 2:47 PM
gatorboy on April 23, 2009 at 2:36 PM
Hear, hear.
The very worst argument against something is that “it’ll be hard to implement”. You think that stops the socialized medicine people? No! They roll up their sleeves and start a long war, and gain piecemeal victories.
All it takes is to sell it. If there are problems with the idea and you have a better one, say so (thank you, flat tax-ers). But the fact is the FairTax would be a vast improvement on what we have now.
And does anyone think Hewitt would be so opposed to the idea of Mitt proposed it instead of Mike? Those 2 guys (MorM) really need to sit down and talk this thing through. Methinks neither of them will, so I guess we’ll get ANOTHER! FOUR! YEARS! of Barack because these two idiots can’t grow up and settle their playground dispute over who gets to be king of the hill. Who wins doesn’t matter if there’s no hill left to stand on. Ugh.
bcm4134 on April 23, 2009 at 2:48 PM
Uh. Consumption taxes are the epitome of fairness. You have the choice to get taxed or not get taxed. What could possibly be more fair?
I’m totally in favor of a no exemption consumption tax. You pay money on anything you purchase, including services (which are non taxable right now). Factor those in, and your tax rate is like 10 or 12 percent at current spending levels.
lorien1973 on April 23, 2009 at 2:48 PM
Interesting, a 23% sales tax will drive tax avoidance, but a 40% income tax won’t.
By the way, it’s a heck of a lot easier to avoid an income tax than it is a sales tax.
MarkTheGreat on April 23, 2009 at 2:49 PM
Both of those problems exist with any income tax scheme.
MarkTheGreat on April 23, 2009 at 2:50 PM
Yep. 23% is a myth anyways. Properly implemented, it’d be a lot lower than that.
If government were run as intended, the tax rate would be microscopic.
People getting 100% of their paychecks instead of 60-70% would do wonders for the economy as well.
lorien1973 on April 23, 2009 at 2:51 PM
Maybe you should read the book before you criticize the plan. All of your complaints are dealt with.
MarkTheGreat on April 23, 2009 at 2:52 PM
I like Hugh Hewitt as a commentator but he sucks as a political analyst. He is a GOP Kool-Aid drinker, a walking Republican talking point.
I remember when he thought that Bush would win California in ’04.
dKap on April 23, 2009 at 2:52 PM
Hugh Hewitt is a machine Republican. He is a nice guy but in the end he’s a system guy.
True_King on April 23, 2009 at 2:54 PM
What I find facinating is the number of people who confess that they haven’t read the book, so they have no idea what the plan is, yet they are 100% against the plan.
MarkTheGreat on April 23, 2009 at 2:54 PM
the thing I see is that the tax we now have, taxes all the way up and down the food chain. We tax the farmer, then the trucker, then the supplier, then the wholesaler, then the retailer, and then ultimately the consumer, but in reality the consumer pays the full tax because it’s all added in at the end. I see this Fair tax eliminating all the above. You now assess 35% sales tax and your almost at the same place. Am I wrong, or is there something I’m not seeing.
jainphx on April 23, 2009 at 2:57 PM
Hewitt? Isn’t he one of the mopes who supported Harriet Miers’s appointment to the USSC? I’m sure this book is full of similarly fine analysis.
edshepp on April 23, 2009 at 2:57 PM
They think it’s an additional tax. That payroll taxes would still in place and then they get hit with a new tax as well. I see the legislation that’s been sitting in DC since 1999 has a 23% tax rate, but doesn’t quite go as far as other plans that I’ve seen or heard about.
lorien1973 on April 23, 2009 at 2:58 PM
Alright let me make an attempt to explain the Fair Tax to the best of my ability. The only credibility that I can provide here is that I have read both Fair Tax books that Neal Boortz and John Linder have written. So take this for what it is.
The Fair Tax
Disclaimer: All points can be found on http://www.fairtax.org. I will not be citing any info as that would take way to long. If you want to challenge me on something specific I will be happy to point you to the research on that specific topic.
Assumptions:
1.) Due to our current tax structure, consumers have to suffer a price increase of roughly 22% on average for everything they buy (Example: you want to buy a toaster you pay $100, $22 goes to the government $78 goes to the business to take care of expenses and profit).
2.) The IRS costs anywhere between $300-$500 Billion (with a ‘B’) each year to maintain. Our tax revenue may be $3T but in reality it is $2.7-2.5T due to the cost of the IRS.
Explanation
1.) The Fair Tax Act comes into place the year after the 16th amendment is repealed. This is to prevent being tax under the current tax structure and being taxed under the FairTax.
2.) Since the 16th amendment is appealed this would remove all income tax, FICA, death tax and a number of other “income” taxes. As a result the 22% burden on consumer products is lifted.
3.) The Fair Tax is a 23% tax on brand new retail products. Essentially replacing the 22% tax burden created by corp. tax, FICA and other forms of income tax repealed by the Fair Tax act (Example: Assuming the toaster we are buying is brand new on the retail market it would now cost $101 instead of $100).
4.) To combat repressiveness in the Sales tax a “pre-bate” is sent out to every American every month (You choice how you want it sent to you; mail, direct deposit, credit card what). The amount of the “pre-bate” is equal to 23% of whatever the poverty level is for that year (Example: for Single people the poverty line is set at ~$10900 in 2009, so over the course of the year every single individual will receive $2507 or ~$208.92). This is the “untax” the basic necessities of life.
Effect
1.) This will destroy the Lobbyist industry.
2.) This will dramatically shrink the IRS
3.) This will take away power from the politician and give it back to the individual (this means you).
4.) $13 trillion dollars of off shore money comes back home to enhance our economy.
5.) You control how much you get taxed.
chb03c on April 23, 2009 at 2:59 PM
Its pretty easy to see who it is in here that has actually bothered to read the FairTax book, and its sequel, FairTax: The Truth: Answering the Critics, in which Boortz does an excellent job of picking apart the arguments against it.
There is currently about $14 trillion in corporate money that is being held off shore and being used to create jobs in places like China and India. As long as the 35% corporate tax rate remains in place, that money is going to stay offshore, as most of it has already been taxed once.
Its just too bad so many so-called conservatives are opposed to the FairTax, which would do away with that hideous American-job destroying tax, and get much of that money beck here, expanding American companies and creating jobs in THIS country.
You would have to literally hide under a rock not to get a job.
-Dave
Dave R. on April 23, 2009 at 3:00 PM
Also the under ground economy will be no more, every thing they buy is taxed, taxes that they now avoid 100%. The best agument for me though is the elimination of IRS and the billions in that bloated section of the government.
jainphx on April 23, 2009 at 3:06 PM
sounds like a charlie going to candy mountain moment
gatorboy on April 23, 2009 at 3:07 PM
I like Hewitt, I really do. But I’m don’t see why he doesn’t like the FairTax. I wanna get the book just to see most of his arguments, but I hope they aren’t ones easily taken care of by Boortz.
Trov on April 23, 2009 at 3:08 PM
The problem with the flat tax is the same problem with the current tax system. It taxes you on reported income, if you don’t report income there is no tax.
The fair tax, is a tax on consumption and everyone gets to pay their fair share, even those that have CASH ONLY businesses. The grey economy goes away and those that consume at Neiman-Marcus pay much more tax than someone that shops at Walmart. The left and dubious business owners(cash only, no credit cards, no check, no paper trail) don’t like it because the left loses control and the cheaters can’t cheat any more. There is no need for a bloated IRS, tax accountants, tax lawyers and financial planning based on tax advantages(loop-holes in the tax code).
Everyone pays something and the poor now have ownership in the country.
belad on April 23, 2009 at 3:11 PM
I guess I don’t need to add any arguments since some of you have done so well, but I am also a big proponent of the Fair Tax. The two books together really do an outstanding job of combatting the myths and explaining the nuts and bolts. I used to be a fan of the Flat Tax and I would still choose that over the current system, but I agree that once the politicians got a hold of the Flat Tax and added their own exemptions and tinkered with it, then it wouldn’t be that much more effective than what we have now. But then that is always the danger isn’t it? Politicians…
XWing5 on April 23, 2009 at 3:13 PM
Income tax is all or nothing for most people: all legal or all illegal, forcing most people to walk the strait and narrow. A national sales tax is a little bit here and there, meaning everyone can break the law just a little, and then just a little more. We are talking a gateway drug to lawlessness here. You thought Prohibition was bad? Just wait until you go to a speakeasy to buy bread, because it is 20% off.
Count to 10 on April 23, 2009 at 3:13 PM
Also, by basing taxes on comsumption, illegal aliens will be putting something into the system instead of just taking away.
XWing5 on April 23, 2009 at 3:14 PM
The income tax is a tax on both indivudual and business income.
This is all speculation on your part. I hear 23%, 30%, 36% and even as high as 50%. We know what we take in now, but we don’t know what this National Sales tax will take in. It is all speculation.
Those businesses will be paying an extra 30% on all of their purchases for parts and services as well. Plus, I will also have to pay 30% more everytime I get the car serviced.
And what if I purcahse a house in the hopes of flipping it for a profit? 30% more on the house plus 30% more on renovations. That will inflate the price of the house to a point where I will have serious difficulty in reselling it for a decent profit. When you tax consumption like this, there are many unintended consequences.
Want to make products cheaper? Cut the Corprorate Tax to 15%. want to pay less in taxes in a simplified tax code? Implement the Forbes Flat Tax.
A true “fair tax” could be something we ecentually work towards, but you need to cut your emotions out of this and look at this objectively. We have a lot of work to do before the Fair tax is practical.
i don’t care who whoops who. I have no interest in playing cheerleader for anyone. I will be interested in the facts. I will check out the Boortz book, but so far every argument I have heard in favor of the flat tax is based on idealism. Nothing I have heard beats the Flat Tax.
Daemonocracy on April 23, 2009 at 3:15 PM
Look, you would need an amendment to protect either the flat tax or the “Faretax” from tampering. If you want to keep the politicians’ hands off it, you have to reduce the degree’s of freedom to one nob. If congress has any control over it besides the overall level, it is going to get just as hairy as what we have now.
Count to 10 on April 23, 2009 at 3:16 PM
No they will just buy their goods off the flourishing black market. So will many Americans.
Daemonocracy on April 23, 2009 at 3:18 PM
You don’t pay taxes on used materials. An item only gets taxed once, the first time it is purchased, including houses and cars (if I remember correctly. And the tax isn’t on top of what is paid now. The increase in cost would be negligble. It really is explained in detail in the books.
XWing5 on April 23, 2009 at 3:18 PM
) <—forgot one of those
XWing5 on April 23, 2009 at 3:18 PM
The one thing I like about the Fair Tax is that it would help our exports, IF it replaced payroll taxes. Right now, the cost of Social Security, Medicare, etc ad nauseum, is built into the labor cost of every product. If you export to a country with a VAT tax, it gets taxed on top of all that, while that country’s exports to us are essentially tax free.
JohnW on April 23, 2009 at 3:19 PM
Why would they buy goods off the balck market if there is no increase in costs?
XWing5 on April 23, 2009 at 3:19 PM
Neal will have this book debunked in no time. Furthermore, Hugh is a far cry from being a “prolific writer.” I read his book “If It’s Not Close, They Can’t Cheat.” It was poorly written and contained nothing original. Maybe he should write a book explaining why so many “conservatives” latched onto Mitt Romney, the guy who changed his mind on everything when he decided to run for president.
V15J on April 23, 2009 at 3:19 PM
Not if they are buying everything on the black market. Hey, they are already here illegally, why not? Besides, they spend most of their earnings back in Mexico, anyway.
Count to 10 on April 23, 2009 at 3:19 PM
Regardless of what happens to the cost of legal goods, the cost of black market goods will be smaller still.
Count to 10 on April 23, 2009 at 3:21 PM
Several benefits of the FairTax:
1) It permanently disbands the tyrannical IRS. No more harassment, and no more federal tax audits. Ever.
2) You are taxed on what you spend, not what you earn.
3) It ends forever the federal government’s ability to use tax policy for social engineering.
4) It is the largest transfer of power from the federal government to the people in the history of this country. That is a good thing.
5) It will do away with the billions of dollars now spent by corporations, large and small, to comply with the current tax code, thus freeing up money for business expansion, research and development, and hiring employees.
6) You will no-longer have to waste all that time and effort (not to mention money) keeping up with all the stupid information you currently have to keep for your tax records each year.
7) All those illegals who are currently not paying federal income taxes because they are being payed under the table will now start actually paying taxes when they buy things at the retail level.
-Dave
Dave R. on April 23, 2009 at 3:21 PM
And how long will this last? Especially when a liberal gets elected to office. What is stopping the government from taxing used items? Especially on products such as cars where people will be looking to avoid the 30% sales tax on new cars?
Daemonocracy on April 23, 2009 at 3:26 PM
As I noted above, we tried a flat tax in the 1980s, and the congress-critters began tampering with it before the ink was even dry.
They have amended it over 9000 times since, which has brought us to the sorry point we have reached today.
Besides, a flat tax leaves the IRS intact, which rivals the Gestapo when it comes to tyrannical government agencies with guns.
The FairTax eliminates the IRS completely, as the mechanism to collect taxes at the retail level is already in place.
-Dave
Dave R. on April 23, 2009 at 3:27 PM
Repealing the 16th Amendment would not remove the ability of Congress to impose an income tax. What it would do is remove the ability of Congress to impose an income tax without apportionment. There were income taxes before the ratification of the 16th Amendment. However, the SCOTUS found (in a very odd decision….) that a tax on income derived from property (like rent) had to be apportioned, whereas tax on income from wages and such didn’t have to be. Rather than craft an extremely messy income tax code trying to apportion tax on property-based income, the 16th Amendment was brought up as a way to go around that requirement.
In order to remove the Congress’ power to impose an income tax, a specific amendment would have to be added to the Constitution specifically providing such…not merely a simple repeal of the 16A.
JohnTant on April 23, 2009 at 3:31 PM
Dave R. on April 23, 2009 at 2:27 PM
The fair tax would not get rid of the IRS, neither would the flat tax. You would still have the tax police checking on the taxpayer to make sure they were paying their taxes.
The fair tax puts the burden on the business owner to collect taxes. And until we get rid of the income tax, the sales tax is a bad idea.
Personally, God requires a flat 10% tax…if that is good enough for God, that is good enough for me.
Conservative Voice on April 23, 2009 at 3:31 PM
But leave in place a bureaucracy to track you down and pay you a prebate, plus one to enforce the sales tax.
Nice, but you will also be taxed on what earnings you have had taxed before. Debtors make out like bandits, savers loose big time.
Unless congress can tailor tax levels for various items, or exempt items from the tax. But, sure.
?
Which could also be done by eliminating corporate taxes, and only taxing individual incomes.
True for any system that does away with exemptions, deductions, and credits.
Except that they will by things from Mexico (or the black market), because it will be that much cheaper there without the tax.
Count to 10 on April 23, 2009 at 3:31 PM
If anyone thinks that the United States will become a manufacturing nation again because of the Fair Tax, you’re blowing smoke. If we are going to compete with China, Taiwan, Mexico, or any other similar manufacturing economy, then prevailing wages here will have to sink to nothing, or prevailing wages in those other countries will have to go stratospheric.
Sending a check once a month to every American is no simple task, and would be rife with fraud. Yeah, we currently send tax rebates, but not that many, and it’s typically once a year, not 12 times a year. Plus, it’s more government do-good-ism: Look, we’re giving you money every month.
Restricting spending is the best place to start. Get spending to a manageable level, then you could take on the entire tax structure a piece at a time.
juanito on April 23, 2009 at 3:33 PM
This is why it would have to be done by constitutional amendment, not by congress.
Count to 10 on April 23, 2009 at 3:34 PM
On the larger point, FairTax shifts the burden from the individual to the business for tax compliance. Net/Net I think it will end up being a wash in terms of bureaucratic hassle. On the other hand, businesses will need to keep extra people on hand to comply with the new tax administration, which creates more overhead.
JohnTant on April 23, 2009 at 3:35 PM
Not at the federal level. Also there are states with zero retail sales tax….
JohnTant on April 23, 2009 at 3:37 PM
A sustained Flat Tax could be a gateway to a working Fair Tax. One could be the means to the other.
Daemonocracy on April 23, 2009 at 3:39 PM
Hugh Hewitt is right. It is a stupid idea. Very few if any women will vote for it. A republican congressman, who was for Fair tax, was running in the next district a few years ago. The democrat running against him did a ad with a woman with a cart full of food and tax bill over her head. The Republican congressman lost by just a few votes.
If you want to keep the Tax and Spend Democrats in office, just keep pushing the Fair Tax idea.
jeannie on April 23, 2009 at 3:39 PM
True, it does place burden businesses for tax compliance, but it will be a smaller burden overall since businesses arealy have a burden placed on them buy taxes. The fairtax would just simplify it for them.
Trov on April 23, 2009 at 3:39 PM
Reasons for the flat tax…countries that just took off the shackles of communism, went with the flat tax and have a much stronger economy.
Steve Forbes is for the flat tax, Mike Huckster is for the fair tax ( need I say more? )
The flat tax is more stable ( predictable ) than the fair tax.
We should have a flat tax, no more than 10%…the government should adjust its budgets to fit that amount. And it should be paid in October instead of April…the closer it is to voting day the better…And we should get rid of withholdings, when people have to write a check they are more aware what they pay.
Conservative Voice on April 23, 2009 at 3:42 PM
I caught a few minutes of Boortz this morning in the car and he is furious about this, first because he thinks he should have been given the “courtesy” of seeing the galleys, and because he disputes data and analysis in the book. Not having pen and paper handy I can’t reliably report the nature of his specific disputes over the facts…
Buy Danish on April 23, 2009 at 3:43 PM
Not all businesses. For instance, Amazon.com probably doesn’t have much in the way of sales tax compliance requirements, being that the majority of its business is interstate and therefore does not collect sales tax. A new tax scheme would require them to implement a compliance mechanism.
Also, are there not states with zero retail sales taxes?
Lastly, the mechanism for “enforcing” sales tax compliance, at least in the states I’ve done it, is kind of laughable. Get the Feds involved in having this be their single largest source of income and you’ll see heavy-handed compliance audits left and right…and it will be PC because, hey, businesses can afford the burden, right?!?
JohnTant on April 23, 2009 at 3:44 PM
Another reason…the flat tax is the most fair, because its across the board. Sales tax is still social engineering…its out to punish the consumer.
Conservative Voice on April 23, 2009 at 3:45 PM
Thanks for that link. I just read the whole thing. Wow!
RushBaby on April 23, 2009 at 3:49 PM
As a freedom loving Ammurrican, I am just damn glad that those of you who are so opposed to the idea of the FairTax weren’t around during the revolution, else we would still be paying taxes to the friggin’ English Royal Family!
Sine when did we can’t become so deeply ingrained into the American psyche?
What if George Washington had said we can’t?
What if Abe Lincoln had said we can’t?
What if General George S. Patten, Jr. had said we can’t?
Good grief, what has happened to this country?
I just cannot believe that so many conservatives out there, who are watching this nation die right before their eyes, don’t seem interested in doing away with one of the main things that is killing it, and that is our current, broken beyond repair federal income tax system!
Imagine had we lived under the FairTax for the last 236 years, then one day, some idiot congress-critter was to decide to implement the confiscatory tax system we have now.
Most people would be screaming for an armed revolt!
-Dave
-Dave
Dave R. on April 23, 2009 at 3:52 PM
You know, I’ve noticed that proponents of FairTax tend to follow a pattern.
First they present their assumptions as self-evident fact.
When criticized, they accuse critics of not having read the book.
And when further criticized, they start drawing lines and saying if you don’t agree with FairTax, you’re some kind of tyrant-enabler…or some will extend it to more outright ad hominem attacks on the character of the critics.
I think this, above all else, is damaging any case the FairTax is trying to make. There’s certainly room for honest dialogue and criticism of Boortz’s scheme. Going off the deep end when questioned, on the other hand, makes proponents look like Ron Paul supporters.
Let’s abandon the pro-tyranny hyperbole and debate on the merits.
JohnTant on April 23, 2009 at 3:56 PM
That burden is already there.
Most all businesses already collect state and local sales taxes at the retail level anyway. Modifying the software to collect the federal sales tax would be a minor modification.
-Dave
Dave R. on April 23, 2009 at 4:01 PM
The echo chamber of ignorance found in this comment thread represents the biggest hurdle the Fair Tax has to being implemented. People who don’t have any understanding of the proposal (Daemonocracy, Conservative Voice, Count to 10, et al) ranting about how bad an idea it is, polluting the discussion with uninformed, and often absurd, comments. Read the books, learn about the proposal, and understand the implementation before making a fool of yourself. No better than the blowhard who curses the horrible call in a football game, THAT HE DIDN’T EVEN WATCH.
There are fair criticisms to be made, certainly, but none of them are represented here.
hbinva on April 23, 2009 at 4:04 PM
Ed, here is a better idea: get Neal Boortz and Hugh Hewitt on your show to talk about the fairtax. Make it an even debate instead of Hewitt just bashing the Fairtax.
texasconserv on April 23, 2009 at 4:10 PM
It’s more than a “minor modification” to software, inasmuch as FairTax proposes to tax some transactions that aren’t historically hit by consumption taxes…such as medical care, transportation, professional fees, HVAC repair, insurance premiums, etc.
In those instances, which are not minor, new compliance will need to be engineered. There is no state which imposes a consumption tax as broadly as the FairTax is proposing.
Ann hbinva…I did read the book(s), I did learn about the proposal, and I am speaking an informed opinion. I think it’s a little cheap to suggest that if one disagrees with the FairTax scheme, one must be ignorant.
JohnTant on April 23, 2009 at 4:10 PM
Hewitt’s been off his game the last few years and this book is no doubt as prophetic as “A Mormon in the White House”….
pffffttt
katy on April 23, 2009 at 4:13 PM
Hey quit flaming God’s team!
Did I say God’s…? Why yes I did. God tests Cleveland fans every year in a Job like way because he knows it hardens us and makes us better, stronger people!
@ntif@n on April 23, 2009 at 4:13 PM
Have you or anyone you know ever had a problem with the IRS?
Apparently not.
As things currently stand, if they even think you owe them money, the IRS can, without anything even resembling a court order, send people with guns to your home or business and seize just about anything of yours they like. They can also take your bank accounts, and any other assets you may have anywhere in this country.
Yet you don’t consider this tyrannical?
Just exactly how do you define tyrannical?
-Dave
Dave R. on April 23, 2009 at 4:16 PM
Dave R. on April 23, 2009 at 4:01 PM
The problem with the current tax system is the 60 thousand pages of social engineering that is both confusing and requires professionals to help the average citizen to pay taxes right?
Shifting the burden of who collects the taxes…the retail owner or your boss, doesn’t change the problem. First the likelihood that the IRS goes away is zero. Government is slow to remove agencies, and they will still be around to make sure all taxes are collected. Second, the social engineering is still there. They can say charge 20% on food, 30% on processed food, 50% on “luxury items” as defined by them…etc, meaning they can still use the tax code for social engineering.
The best way is to do a cross the board flat tax, of no more than 10%, paid in October before elections, and no withholdings.
Conservative Voice on April 23, 2009 at 4:17 PM
I’d be gung-ho for the FairTax even if ALL it did in the end was get rid of the IRS bully-boys and scrap the abominition that is 16th Amendment.
Oh and BTW, the argument the Fairtax is unfair b/c it taxes consumption is a load of tripe. Not only is it no different from taxing earnings (our current system), the Fairtax at least gives you a BIG opportunity to reduce your tax load by consuming less. Right now all the best you can do in that regard is try to avoid sales-taxed items, and the savings are pathetic for the effort involved.
Sorry to say it but Mr.Hewitt has struck out big time on this one.
Dark-Star on April 23, 2009 at 4:17 PM
sorry, I can’t follow the logic behind this at all.
Quisp on April 23, 2009 at 4:21 PM
I’ll grant you that the arguments in the link that someone posted above are weak, but the problem of the black market still stands. Not only is it much more enforceable to collect the taxes at the income source for each individual, collecting it sale by sale sets up overwhelming incentives for illegal behavior. This is the “unintended consequences”.
The “Faretax” is simple in statement: “All federal income will be generated by a sales tax, with some ‘prefund’ money sent to each person to offset the tax for the poor.” In practice, though, that is much more complicated, and has consequences for personal behavior that could really bare some scrutiny.
Count to 10 on April 23, 2009 at 4:23 PM
Those of you who have not read the book or bothered to study up on the fair tax, please yourself a favor and read the book rather than posting your incorrect ideas about what you think it is.
ParalleL on April 23, 2009 at 4:25 PM
Excuse me? How do you justify deciding what anyone else gets to do with his resources? Your inability to afford a personal 787 has no bearing on my use of mine.
I do like your suggestion to invert the tax rates, though, from the “you get less of what you punish” point of view.
Troll Feeder on April 23, 2009 at 4:27 PM
This a sales tax, not a VAT.
The tax is only applied when sold to the consumer.
As to your being able to flip a house, every other house being sold also has to pay a 30% tax.
MarkTheGreat on April 23, 2009 at 4:28 PM
Nah. You still have the IRS having to check around to make sure everyone has payed. If you just collect it at payment, from wages, capital gains, dividends, and interest, it is nicely centralized, and, if it is a true flat tax with no deductions, exemptions, etc., there is no need for all that intrusive record shuffling, and no tax day. If there is only one tax rate, people will know how much of their income is going out the door, so you don’t need to hit them in the face with it once a year (can you imagine the nightmare of trying to collect that from all the people that don’t have the money handy because they blew it already?).
Count to 10 on April 23, 2009 at 4:29 PM
lowering the corporate Tax rate to 15% would lead to cheaper products and more jobs creation in America.
Daemonocracy on April 23, 2009 at 4:33 PM
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