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Yesterday, Krusty Konservative posted about the Fair Tax system that strips all taxes on income, institutes a national sales tax, and ends all taxes on corporations.
The FairTax proposal is a comprehensive plan to replace federal income and payroll taxes, including personal, gift, estate, capital gains, alternative minimum, Social Security/Medicare, self-employment, and corporate taxes. The FairTax proposal integrates such features as a progressive national retail sales tax, dollar-for-dollar revenue replacement, and a rebate to ensure that no American pays such federal taxes up to the poverty level. Included in the FairTax plan is the repeal of the 16th Amendment to the Constitution. The FairTax allows Americans to keep 100 percent of their paychecks (minus any state income taxes), ends corporate taxes and compliance costs hidden in the retail cost of goods and services, and fully funds the federal government while fulfilling the promise of Social Security and Medicare.There is nothing Fair at all about this tax. Let's say a husband and wife are a teacher and a nurse and make $60,000 a year combined. Then look at a CEO who makes $600,000 a year and his wife does not work. Just because the CEO makes 10 times as much money, does that mean his family buys 10 times as many clothes, eats 10 times as much food, goes to the doctor 10 times as many times, buys 10 times as many prescription drugs, buys 10 times as much gas for their cars, and goes on 10 times as many vacations? The answer is no. Does the CEO work 10 times as hard as the teacher and the nurse? Again the answer is no. There is nothing fair at all about this tax.
The response from one of Krusty's readers to my commments...
The CEO probably gets a tailored suit, not one from JC Penney. The CEO probably drives a BMW, not a '98 Taurus. The CEO probably eats at Splash, not at Applebee's. The CEO probably goes to Tahiti for vacation, not to Adventureland. There's nothing wrong with being poor, you're just really dumb if you are.I agree that the CEO probably buys nicer things, but is it fair that they do? Do they really need 8 cars in their driveway, a closet full of designer shoes that is bigger than my house when so many Americans are without health insurance and children are growing up in poverty?
Any tax based on consumption is regressive. There should be a tax system that provides the help to end poverty, provide the basic needs a person has, and to invest in our future. The government should not be giving hand outs, rather hand ups. A Fair Tax does not do that, it just allows a concentration of wealth in the hands of a few.
4 comments:
Remeber, CHOICE is the key word.
Under the FairTax, consumers will have the ability to choose if, when, and how much taxes they pay based on their spending beyond poverty level. The prebate will untax spending up to the poverty level, totally untaxing the working poor. If liberals really believed their own rhetoric, they would love this idea. Yes, all households will receive the prebate regardelss of their income, to untax those necessary items like food, shelter and clothing up to the poverty level, that's why its "fair". Otherwise, we'd have the government tracking American's incomes, and all the games people go through to hide it, like under the current system.
I, too, would like to downsize government, and even get rid of several departments. The FairTax is revenue-neutral, which means the Feds will get the same amount of money they do now to fund the fraud, waste, and abuse. But, we have to start somewhere. No use getting the cart in good working order unless the horse is taken care of, because, without the horse, the cart is useless. The FairTax will enable us to use our restored power as consumers (rendered impotent by the current system), to reign in the unabated Congressional spending.
The current system has American taxpayers divided and conquered. It plays the class warfare game - we'll just tax the corporation, not the middle class. The individual pays the corporate tax, because all cost of business is passed on. The FairTax will unite Americans. The policitians won't be able play the class warfare game anymore. If they try to raise my taxed, they're raising yours as well, and no matter our differences (political, religious, ethnic, class...) very few of us will want to see our taxes increased. Just look what happened in Tennessee when the politicians there tried to implement a state income tax. We will, as the TN residents did, be able to speak with one voice to the politician: "cut out the fraud, waste, and abuse, and cut the tax rate".
Retail prices will remain essentially the same as they are now, so there will be no new incentive for "black markets". There will always be those who try to cheat the system, but under the FairTax, it will take at least 2 people to cheat, whereas now it takes just one, and the cheating will be more tansparent (as the tax itself will be), the penalty more severe, and enforcement much easier.
Retail prices will actually begin to drop under the FairTax due to the efficiencies that will develop when businesses get to operate without the heavy chain of the income tax and the present cost of compliance and legal avoidance - something none of us have experienced in our lifetimes. We will see "made in America" again as business is freed to conduct business and our manufacturing base is restored.
Compliance will dramatically improve over our current system because Americans don't mind paying taxes if the tax is fair, and the people have choice.
The cost to collect $100 will drop from $33 now to just $2.50 under the FairTax. It is fair and effcient, and 45 states already have the collecting mechanism in place; the others who do not will have several easy options to with which to implement it.
At 23% inclusive (30% exclusive), the FairTax is revenue-neutral, generating the same amount of money to the federal government as our current system, without the expense of the current system, and the iron hand of the IRS.
It's true that the rich will bear the greater burden under the FairTax, (as they do now, dollar-wise, not percentage-wise) because those who spend the most money are those who have the most money to spend. But, unlike now, they will have choice - once a reality, but now a novel idea in America.
The FairTax is truly "voluntary" -- everyone in America has a choice of whether to pay federal taxes. If they choose not to, then they simply don't buy retail goods and services beyond their poverty level spending.
The FairTax rate is 23% inclusive, and 30% exclusive. Wal-Mart knows it needs to sell a lawnmower for $77 to cover all their costs and profit; now to determine the shelf price, they multiply $77 by .30 (which is $23) and the retail price is $100. When its time for them to send in the tax to the federal government, they multiply the $100 by .23 (which is $23). So, the consumer has paid a 23% inclusive tax on the mower, or a 30% tax exlcusive on the mower -- its the same mower and the same $23 -- just depends on what you make it relative to - the base price, or the retail price. But, your receipt will be clear, the tax transparent.
Yes, the IRS will actually go away. The IRS will be funded for 36 months to only wrap up loose ends, not be involved in the FairTax. Relatively few people will be needed to administer the FairTax at the federal level, and it won't be an "IRS".
I hope this addresses your reservations about the FairTax, if not, please email me: marshacat80@yahoo.com
I dont see how fairtax can work as advertised. I wish it could.
But unless there is some alternate universe, where math has no meaning, then Fairtax has fatal flaws.
For one thing — Fairtax pretends to tax the federal government, to pay the federal government, about 300 billion dollars.
Boortz writes “the federal government itself becomes a major taxpayer” Page 148.
Can the federal government can really pay the federal government 300 billion dollars.
Its like me saying I will tax myself 10,000 dollars a day. Oh, I can write a check for i10K, I can even deposit my own check in my own account. But at the end of the month, I dont have 300,000.
Incredibly, Fairtax thinks they will have 300,000. Well — they pretend they have 300 billion, just from taxing themselves, along with everything else.
For example, when the Fairtax makes the US Navy pay 4 billion in “sales tax” on a 12 billion dollar aircraft carrier — the Navy can write the check, The Treasury can even deposit the check.
But the Treasury isnt a dime ahead. The treasury had to issue the money to cover the check it cashed.
But Fairtax acts as if they are getting 4 billion into the treasury from the Navy. Fairtax advocates think they are ahead 296 other billions from taxing government overall. But they aren't.
As a result, the Fairtax budget would be 300 billion dollars shy -- and the rate would have to go up on the fairtax to cover that. So the rate would have to at least be 35% for that one fallacy.
Another major fallacy — Fairtax pretends it will be able to tax health care. Fairtax looks to tax the 2 trillion dollar health care industry — to the tune of 460 Billion.
If Fair tax CAN NOT tax health care for political reasons — they lose 460 Billion more in revenue, and the tax rate has to go up to 50-55% percent.
Lets see if the Fairtax can really tax health care and get 460 billion from these people.
Will Fairtax get away with taxing health care?
Depends. Depends what a cancer patients does when just ONE patient gets a tax bill of 40,000 dollars on their surgery, chemo, and hospital bill. Will they go ahead an pay it?
Or scream like bloody murder?
Keep in mind, there are 15 million people dealing with cancer at any one time.
Even if they cancer victims have insurance — insurance doesnt cover this extra 35% tax. So if you survive cancer and your insurance pays the doctor and hosptial 100K, you still owe the 35,000 for the tax.
The Fairtax would be the new -- and absurdly high -- co-pay.
What do you think nursing home patient will say, or the famlies, they see a 25,000 tax, per year, on their nursing home care?
Will they just pay it? Or scream like bloody murder?
What would the parents of an 8 year old leukemia victim say, when they see a “sales tax” bill of 70,000 dollars, on their effort to keep their child alive. Suppose further that the parents only make 35,000 a year.
Will they just pay it -- using magic -- or will they phone their congressmen? Their Senator?
What will millions of people say when they see their bills — second opinions are taxed — lab tests — taxed — ER visits — taxed. Dental care -taxed. Doctor visits — taxed. Knee replacement — taxed. Child birth — taxed.
The outcry from these folks will be like nothing US history has ever seen before.
Congress would quickly exempt health care expenses from a high sales tax.
If any Congressman dared to suggest the parents of a cancer victim should pay a sales tax — they wont be a congressmen very long.
So the rate would have to be adjusted up — to 55-65%
My point is — you wont be ABLE to tax health care. And you CAN'T tax the federal government.
The Fairtax budget would be 800 billion dollars shy --
And we havent even discussed other huge markets which will demand exemptions. Renters -- Car sales, new home sales -- new moblie homes.
Of the 40 million renters in the USA - I bet not 12 individual renters know their taxes would skyrocket the moment this bill is passed. And wow, will they have a few words.
ALready, you have nearly a trillion dollar shortfall!!
Fair tax can’t work. And Im really sorry that it can't.
You say under fair tax, consumers decide how much tax they pay?
Hey - sounds lovely bro.
And the prebate will totally untax the poor?
Hey -- sounds lovely bro.
I'm about to show both those statements are bogus nonsense. Don't get mad at me. Get mad at the people who pulled the wool over your eyes.
So its voluntary? How voluntary is cancer surgery?
How voluntary is a nursing home for an 80 year old woman with a broken hip?
How voluntary is the spending for the the parents of a four year old with leukemia?
How voluntary is going to ER if you have having a heart attack?
Ironically, the huge shift in the tax burden is to the people who get health care. Cancer patients, nursing home patients, for example.
One cancer patient could get a tax bill of 50,000 -- not for the surgery and chemo -- for the TAX on it!
And insurance doesnt pay the tax. Insurance tops out. Insurance has certian amounts it pays for certain things -- and huge new sales taxes aren't covered.
The huge new sales tax would be the new "copay".
In fact, Fairtax counts on taxing the 2 trillion dollar health care market the 23%. Meaning it counts on getting 460 billion dollars from the people who get health care.
Now clearly -- those people who make 30K, wont be able to pay 50K tax on their surgery and chemo.
Thats really my point. You CAN'T tax health care. You CAN'T shift 460 billion in taxes to these people. They will HAVE to get exemptions, one way or another. Cause they won't be paying that tax to the treasury.
So what happens when they don't pay it? Nothing -- but the fairtax budget would come up short.
It would come up short cause it wont be ABLE to get 460 billion from these folks.
In fact, the millions of cancer patients, nursing home patients, ect would complain, scream bloody murder -- and health care would rightfully get an exemption.
Why does that make a difference?
Because the fairtax rate would have to increase, to bring in enough to replace that.
Fair tax would have to go up to 40% or so, just to make up for that 460 billion in lost revenue.
What else won't materialize as Fairtax claims?
Well -- Fairtax pretends to tax the federal goverment the same high sales tax. Only now, its a 40% sales tax, cause of the above problem with health care.
Will Fairtax really get the government to pay a 40% sales tax?
No. You cant. You physically can not tax the government to pay for the government. Thats a shell game.
Thats like taxing yourself 10,000 dollars a day, and pretending you have 300,000 at the end of the month. Its like pretending to pay yourself 1000 dollars a day to cut your own grass. Its a farce.
Oh -- you can make the US Navy write the check for 4 billion in sales tax, on a 12 billion dollars aircraft carrier. Sure.
And the Navy will write it. And the Treasury can deposit it. But the treasury had to write the check for the Navy in the first place. The Treasury doesnt come out 4 billion ahead.
Thats the same way on the entire 300 billion that Fairttax pretends to tax the government.
So thats just two areas -- health care, and the government taxing itself - that are bogus.
There are OTHER things that are equally as bogus. But lets just deal with these two fallacies.
With just these two fallacies, the fairtax is 800 billion dollars shy. So the fairtax rate would have to be adjusted - to about 50%.
Fifty percent sales tax on new homes?
Fifty percent sales tax on rent?
I bet not 12 renters out of 40 million renters know their tax would go up under this fairtax. And I bet they would be pissed as hello.
What do you think Ford and GM will say, when US government puts a 50% sales tax on their product?
You have to realize what a high sales tax actually would do to the economy.
Wishful thinking won't cut it.
Actually I hope the fairtax passes. I think it would be a riot. I would sure have fun watching all this.
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Mark said...
You think the fairtax is voluntary?
Well if its about buying a shirt, yes. Its voluntary, don't buy the shirt.
But is rent voluntary?
If you have a stroke and need to go to ER -- is that voluntary?
If you need brain surgery to remove a blood clot or tumor -- is that voluntary?
If you need to go to a nursing home for rehab -- is that voluntary?
If you pay insurance premiums -- is that voluntary?
The fairtax sounds great, it sounds fantastic! I can see why people love it.
But you wouldn't love it if you went to the hospital for surgery, and got a 30,000 sales tax on a surgery.
The sad fact is, the people who get the brunt of this tax would be people who need medical care. People who pay rent.
This tax isn't what a lot of its fans think it is. IT would work much much differently than advertized.
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