DISQUS

Oh, these Americans, they're so smart (bleechh), take, for example, Publia Padena, above. Publia is so concerned about wasting a tea bags, stamps, and government employee time. What about the $1 TRILLION wasted by that very same gov't EVERY YEAR???! (based on Readers Digest investigation a year, or two, ago). Now, mind you, the US collects $3 TRIL in income taxes; the waste is at least 1/3 of what it collects! And what about the $4 Trill unaccounted for on the books for the New York Fed which DOES NOT ALLOW ITSELF TO BE AUDITED as required by Law??? (Read solari.com) WAKE UP SHEEP, YOU'RE BEING FLEECED AND YOUR KIDS' FUTURE IS IN GREAT DOUBT.

Congress does what IT wants to benefit ITS members. Screw US who pay for all of it. They TAKE TheIRS 1st by reaching into our pay - wages, trade for our training, NO GAIN - then screw us again under FEAR and INTIMIDATION. And we go "bahhhhhhhh" Now THEY REWARD their MASTERS, the MONEY MASTERS, by printing them a whole bunch of BONUS MONEY, and BAILOUT MONEY, so they can build their GREAT COLLECTIVE, BEHOLDEN, DEPENDENT constituency. I say LET THE TEAPARTY BEGIN!

(Paraphrased) REPLY BY DAN R. MASTROMARCO (LL.M., Taxation, Georgetown, principal in the Argus Group, adjunct professor at the University of Maryland, International Management Program, and research consultant to Americans for Fair Taxation - FairTax.org) TO:

"A National Sales Tax Doesn’t Add Up" by Bruce Bartlett, December 29, 1999

Many engaged in true tax reform find Bartlett-type attacks exasperating, if not embarrassing. I'd like to convey perspective of both flat taxers and sales taxers who believe that such attacks are counterproductive, but first provide some political history by which to frame said perspectives.

For years Conservatives have posited that a VAT is bad policy (when liberals were discussing it), fearing it would become additional to an income tax (it was called a "money machine"). Circa 1980, conservative intellectuals touted Hall-Rabushka "subtraction method" [H-R] VAT which taxed business value added at the business side and labor value added at the labor side. Unlike European VATs (identical in scope), H-R became favorite of Dick Armey and Steve Forbes. It eliminated steeply progressive tax rates and tax on savings. Because of the prior VAT criticisms, H-R was packaged as the "flat tax" and is sold as an income tax to this day, rather than the VAT that "its DNA characterizes it as."

Some conservative commentators have called for the repeal of the 16th Amendment and for the adoption of the flat tax, (despite the fact that it is styled as a direct tax and could not be adopted with such repeal). Mr. Bartlett has called the national sales tax [ie, the FairTax] a VAT (which it isn't), castigated VATs as evil, and has said that sales taxes have become VATs in Europe (which they didn't). In the next breath, he "throws his arms around" the flat tax (which is a VAT). He quotes Bill Gale that the [FairTax] would have to be imposed at 60 percent, but glaringly fails to recognize that if the two bases are the same, he would have to impose that rate for the flat tax to be revenue neutral. In truth, all economists know that the two plans differ NOT in economic effect or base, but in administration.

An income tax taxes savings and investment multiple times. Both flat tax and FairTax are neutral as to savings and investment, tax income only once, and are both consumption taxes. Both are single rate taxes, have nearly the same base, and would improve the U.S. standard of living. Neither redistributes wealth.

While some have even suggested that they are the same plans under different names, the flat tax taxes value added at each stage in the production process, but the FairTax prefers to tax it when it is added up at the end and eliminate the need to make everyone a taxpayer and collector.

Substantive commonalities between the flat tax and FairTax doesn't mean that there are NO key political and policy distinctions that could be exploited in pitting one against the other. If FairTax supporters wanted to retaliate in response to the Bartlett-type critique, they would have MUCH material with which to HONESTLY do so:

• The flat tax will make small firms and farmers pay the tax even if they have no profit
• The flat tax is opposed by many small business groups
• The flat taxers implicitly support big government by disguising even more of the overall tax burden as the current law
• The flat tax has been kicking around for nearly 20 years
• The flat tax makes everyone a taxpayer and collector, while the FairTax exempts 115 million filers [2000 figure] from ever having to deal with the IRS
• The flat tax is regressive, but the FairTax would enable everyone to keep his full paycheck.
• The flat tax has not only stalled, it has lost public and Congressional support.
• The FairTax is instantly understood, while even some proponents of the flat tax don’t understand it
• There are no transition rules developed for the flat tax and they would be very difficult to craft
• The flat tax taxes exports and relieves imports from tax
• The flat tax confuses tax reform with temporary tax reduction and makes both twice as hard
• The flat tax retains the entire income tax apparatus which erodes as quickly as you can say, “tax bill”

FairTaxers could advance these truthful points without resorting to bigotry associated with a cultic religious organization. However, for the most part, FairTax supporters have chosen not to attack the flat tax, but rather accentuate the commonalities between the plans - despite the above-noted differences. The reason is that, in the battle for tax reform, the real enemy is our current system.

Income tax advocates look down upon the articles of Bruce Bartlett with smug chortling, as Bruce is doing their work for them. The IRS and the liberals who want an income tax to ensure (1) taxes can be raised without the American people knowing it, and (2) wealth can be redistributed from the middle class to the poor, do not even need to fight us - we're killing ourselves!

Perhaps Mr. Bartlett believes that the flat tax will help elect Republicans, effect tax reform, and provide tax cuts; however, the real effect of his criticism is to divide conservatives, to delay serious national consideration of tax reform, and to fertilize the roots of the income tax.

(Paraphrased from http://snipr.com/mastroflatvsfair - Addit'l at FairTax.org Whitepaper http://snipr.com/fairvsflat - May republish in whole, or part. -Ian)

All one has to do is know that Huckabee will sell the FairTax to We, the People, as President. The FairTax ends export-import trade inequities ( http://snipr.com/tradeinequity ) and it restores the principle of putting families first, and paying for gov't in the process of families meeting their needs. Mike Huckabee, increasingly, is what leadership looks like ( http://snipr.com/fthuckabeeonirs ).

Mike Huckabee is an adroit public speaker; he communicates his message in life-like, cogent terms, with compelling examples like the story he told (at the Ames Straw Poll) of what his then-11-yo daughter entered into the "Comments" section of a Visitors Book after visiting the Yad Vashem holocaust museum: “Why didn't somebody do something?” Very effective.

Huckabee is all about calling his listeners to "do something," to awaken them to their own empowerment, and summon them to action in order that "Main Street," and not "Wall Street," will prevail in guarding the values and beliefs upon which the Republic was founded.

Huckabee puts his listeners at ease, and reassures them, articulating clear concepts in a natural, easy style (no doubt something well-cultivated as a pastor). He’s not as “mechanically-scripted” as Romney, nor angry or demanding, like a Ron Paul, and his large brown eyes, peering through a humble demeanor, draw a striking contrast to a unconvincing, tired-looking Thompson. One can easily imagine sitting comfortably with Mike over a cup of coffee at the Main Street Cafe.

Most importantly, Huckabee convinces many that he is ONE with the FairTax grassroots movement ( http://snipr.com/fthuckabeeonirs ). While many - like Romney, and others, who are invested in the current income tax system - seek to demagog ( http://snipurl.com/taxpanelrebutted ) the well-researched FairTax plan, its acceptance in the professional / academic community ( http://snipurl.com/econsopenletter ) continues to grow. Renown economist Laurence Kotlikoff believes that failure to enact the FairTax - choosing instead to try to "flatten" what he deems to be a non-flattenable income tax system - will eventuate into an irrevocable economic meltdown ( http://snipurl.com/meltdowninprogress ) because of the hidden aspects of the current system that make political accountability impossible.

Romney's recent WEAK response to FairTax questioning on “This Week with Geo. Stephanopoulos ( http://snipurl.com/stephanopoulosdebate )” drew a sharp contrast between Huckabee and all other presidential front-runners who will not embrace it. Huckabee understands that what's wrong with the income tax can't be fixed with "a tap of the hammer, nor a twist of the screwdriver." That his opponents cling to the destructive Tax Code, the IRS, preserving political power of granting tax favors at continued cost to - and misery of - American families, invigorates his campaign's raison d'etre.

Of the FairTax, Huckabee asserts that it's...

• SIMPLE, easy to understand
• EFFICIENT, inexpensive to comply with and doesn't cause less-than-optimal business decisions for tax minimization purposes
• FAIR, FLAT, and FAMILY FRIENDLY, loophole-free, and everyone pays their share
• LOW TAX RATE is achieved by broad base with no exclusions
• PREDICTABLE, doesn't change, so financial planning is possible
• UNINTRUSIVE, doesn't intrude into our personal affairs or limit our liberty
• VISIBLE, not hidden from the public in tax-inflated prices or otherwise
• PRODUCTIVE, rewards - rather than penalizes - work and productivity

A detailed benefits analysis of the plan (from The FairTax Book) explains Huckabee's ardent advocacy:

For INDIVIDUALS:
• No more tax on income - make as much as you wish
• You receive your full paycheck - no more deductions
• You pay the tax when you buy "at retail" - not "used"
• No more double taxation (e.g. like on current Capital Gains)
• Reduction of "pre-FairTaxed" retail prices by 20%-30%
• Adding back 29.9% FairTax maintains current price levels
• FairTax would constitute 23% portion of new prices
• Every household receives a monthly check, or "pre-bate"
• "Prebate" is "advance tax payback" for monthly consumption to poverty level
• FairTax's "prebate" ensures progressivity, poverty protection
• Finally, citizens are knowledgeable of what their tax IS
• Elimination of "parasitic" Income Tax industry
• NO MORE IRS. NO MORE FILING OF TAX RETURNS by individuals
• Those possessing illicit forms of income will ALSO pay the FairTax
• Households have more disposable income to purchase goods
• Savings is bolstered with reduction of interest rates

For BUSINESSES:
• Corporate income and payroll taxes revoked under FairTax
• Business compensated for collecting tax at "cash register"
• No more tax-related lawyers, lobbyists on company payrolls
• No more embedded (hidden) income/payroll taxes in prices
• Reduced costs. Competition - not tax policy - drives prices
• Off-shore "tax haven" headquarters can now return to U.S
• No more "favors" from politicians at expense of taxpayers
• Resources go to R&D and study of competition - not taxes
• Global "free (and equitable) trade" becomes possible for currently-disadvanted ( http://snipurl.com/tradeinequity ) U.S. exports
• US exports increase their share of foreign markets

For THE COUNTRY:
• 7% - 13% economic growth projected in the first year of the FairTax
• Jobs return to the U.S.
• Foreign corporations "set up shop" in the U.S.
• Tax system trends are corrected to "enlarge the pie"
• Larger economic "pie," means thinner tax rate "slices"
• Initial 23% portion of price is pressured downward as "pie" increases
• No more "closed door" tax deals by politicians and business
• FairTax sets new global standard. Other countries will follow

While passionately supporting FairTax, Huckabee understands that, if elected President, Congress will have to present the bill for his signature. His call to action goes beyond his candidacy, Main Street will have to demand ( http://snipr.com/scrapthecode ) that their legislators deliver the bill.

(Permission granted to republish, in whole or part. -Ian)

The "steepness" of progressivity is just another ruse that will lead to more manipulation and political control by the privileged class (politicians and lobbyists for the wealthy and special interests).
The freedom of enterprise in this country is being systematically destroyed by our "social activists" in Washington.

The plan that truly returns power to the people is the FairTax plan ( http://www.fairtax.org/site/PageServer?pagename... )which untaxes income, scraps the tax code ( http://snipurl.com/scrapthecode ), eliminates 53% of the Washington lobbyists that game it, and it eliminates hiding taxes in the cost of goods and services by eliminating business income and payroll taxes (that puts us at a competitive disadvantage, globally, because of 22% price inflation built into prices, on average).

Since, as Greenspan has instructed, only citizens end up paying taxes, it is VISIBILITY that will ensure our economic system's survival. Renown economist Laurence Kotlikoff believes that failure to enact the FairTax - choosing instead to try to "flatten" what he deems to be a non-flattenable income tax system - will eventuate into an irrevocable economic meltdown ( http://snipurl.com/meltdowninprogress ), because of the hidden aspects of the current system that make political accountability impossible.

Prices AFTER FairTax would look SIMILAR to prices BEFORE FairTax - NOT 30% HIGHER - as opponents contend; competition would see to it. The FairTax rate on new items would be 29.9% (on the new, reduced cost of items because business isn't taxed under FairTax - thus lowering retail prices by 20% to 30%), or 23% of the "tax inclusive" price tag - this is the way INCOME TAX is figured (parts of the total dollar).

The effective tax rate percentages, that different income groups would pay under a FairTax consumption tax, are calculated by crediting the monthly "prebate" (rebate of tax on necessities) against all likely monthly spending of citizen families (1 member, and greater based on figures established by the Dept. of HHS - a single person receiving ~$200/mo. A family of four receiving ~$500, in addition to family earners receiving their WHOLE paycheck). Prof.'s Kotlikoff and Rapson (10/06) have concluded,

(From study: 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."

Further,

(From study: 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."

While many who are invested in the current income tax system seek to demagog the well-researched FairTax plan, FairTax's theoretical underpinnings have been professionally reviewed, and its acceptance in the professional / academic community continues to grow.




Renown economist Laurence Kotlikoff believes that failure to enact the FairTax - choosing instead to try to "flatten" what he deems to be a non-flattenable income tax system - will eventuate into an irrevocable economic meltdown, because of the hidden aspects of the current system that make political accountability impossible. Tom Frey, of the DiVinci Institute, foresees the coming collapse of the income tax system.





Here is why the FairTax MUST replace the income tax. It's:





• SIMPLE, easy to understand


• EFFICIENT, inexpensive to comply with and doesn't cause less-than-optimal business decisions for tax minimization purposes


• FAIR, loophole free and everyone pays their share


• LOW TAX RATE, achieved by broad base with no exclusions


• PREDICTABLE, doesn't change, so financial planning is possible


• UNINTRUSIVE, doesn't intrude into our personal affairs or limit our liberty


• VISIBLE, not hidden from the public in tax-inflated prices or otherwise


• PRODUCTIVE, rewards, rather than penalizes, work and productivity





Its benefits are as follows:





For INDIVIDUALS:


• No more tax on income - make as much as you wish


• You receive your full paycheck - no more deductions


• You pay the tax when you buy "at retail" - not "used"


• No more double taxation (e.g. like on current Capital Gains)


• Reduction of "pre-FairTaxed" retail prices by 20%-30%


• Adding back 29.9% FairTax maintains current price levels


• FairTax would constitute 23% portion of new prices


• Every household receives a monthly check, or "pre-bate"


• "Prebate" is "advance payback" for taxes payable on monthly consumption to poverty level


• FairTax's "prebate" ensures progressivity, poverty protection


• Finally, citizens are knowledgeable of what their tax IS


• Elimination of "parasitic" Income Tax industry


• NO MORE IRS. NO MORE FILING OF TAX RETURNS by individuals


• Those possessing illicit forms of income will ALSO pay the FairTax


• Households have more disposable income to purchase goods


• Savings is bolstered with reduction of interest rates





For BUSINESSES:


• Corporate income and payroll taxes revoked under FairTax


• Business compensated for collecting tax at "cash register"


• No more tax-related lawyers, lobbyists on company payrolls


• No more embedded (hidden) income/payroll taxes in prices


• Reduced costs. Competition - not tax policy - drives prices


• Off-shore "tax haven" headquarters can now return to U.S


• No more "favors" from politicians at expense of taxpayers


• Resources go to R&D; and study of competition - not taxes


• Marketplace distortions eliminated for fair competition


• US exports increase their share of foreign markets





For the COUNTRY:


• 7% - 13% economic growth projected in the first year of the FairTax


• Jobs return to the U.S.


• Foreign corporations "set up shop" in the U.S.


• Tax system trends are corrected to "enlarge the pie"


• Larger economic "pie," means thinner tax rate "slices"


• Initial 23% portion of price is pressured downward as "pie" increases


• No more "closed door" tax deals by politicians and business


• FairTax sets new global standard. Other countries will follow





It's well past time to scrap the tax code and pay for government the way that America's working men and women are paid - when something is sold.

FairTax, Flawed Commentary
August 25, 2007; Page A7
by Bruce Bartlett (hereinafter called BB, with apologies to BB King, a true great)"Hit piece" on the FairTax.BB:"It was originally devised by the Church of Scientology in the early 1990s as a way to get rid of the Internal Revenue Service" Me: This seems like a scientific approach to the review of FairTax; Scientologists are kooks, the FairTax must be a kooky idea.BB: "In reality, the FairTax rate is not 23%. Messrs. Linder and Chambliss get this figure by calculating the tax as if it were already incorporated into the price of goods and services. (This is known as the tax-inclusive rate.)" Me: Hmmm, I wonder what income tax rates begin to look like, if calculated, "externally" - as a percentage of what's left of taxpayers' income?  Care to tell us THAT, BB?BB: "This is only the beginning of the deceptions in the FairTax." Me: Oh, like their website, FairTax.org, hasn't already thoroughly debunked most of these "straw men" that have been floated (all, that is, except this newest Scientology angle - and I doubt that they'll spend much time on that one - preposterous).BB: "the federal government would have to pay taxes to itself"Me: The idea here is to prevent government from competing with the private sector. But why even mention this, when later you say, "but its tax collection will also be ... higher."BB: "The FairTax rate, however, is not high enough to finance the higher spending it imposes."Me:  Didn't do your research: "...The Beacon Hill Institute at Suffolk University and Laurence Kotlikoff, Professor of Economics at Boston University, have teamed up to provide a sound methodology for estimating the FairTax base and computing the FairTax rate. Their paper demonstrates that the 23 percent rate specified by the Fair Tax Act (HR 25) is eminently feasible and suggests what led Gale and the President’s Advisory Panel on Federal Tax Reform6 to reach the opposite – and incorrect – conclusion. (Paper available at http://www.fairtax.org/PDF/TaxingSalesUnderFairTax.pdf .)" See also: http://snipurl.com/taxpanelrebutted + http://snipurl.com/ftgalerebuttalBB: (Regarding the blanket 30% increase attributed in multiple places in your article, "tanks," "newly-constructed homes," the added amount that would be paid by "state and local governments.")Me: Nowhere do you point out the price efficiencies that would be gained under FairTax.  Kotlikoff and associates found that these ranged from 20% - 30%, and averaged them to 22% across the economy.  Thus, we're ALREADY PAYING an embedded 22% in our retail prices.  If you believe in market competition (do you?), then you must allow for the elimination of these embedded taxes - which means relative price stability (due to lower costs of doing business - for every business entity contributing at every stage of production). Thus, representing an add-on of 30% is blatant demogoguery.BB: "Aside from the incredible complexity and intrusiveness of tracking every American's monthly income -- and creating a de facto national welfare program -- the FairTax does not include the cost of this rebate in the tax rate."Me: The only purpose for tracking income, is for social security payouts. That "incredible complexity and intrusiveness of tracing every American's ... income" - last time I checked - is what the current income tax system, and theIRS, are all about.  FairTax bases "prebates" on family size.  Prebates are sent to ALL American families to untax the necessities, thus eliminating wasteful bureaucracy,and corruption-producing tax code rules and regulations.BB: "the FairTax does not include the cost of this rebate in the tax rate."Me: Somebody told ya wrong - like Prego spaghetti sauce, "It's in deah."  That extra 5% you then introduce is the amount that Kotlikoff DEDUCTS from the 23%.BB: "Rejecting all the tricks of FairTax supporters..."Me: Hey, you calling me a trickster?BB: "...professional revenue estimators have always concluded that a national retail sales tax would have to be much, much higher than 23%."Me: Then, why hasn't William Gale, and the president's Tax Panel, delivered their economic methodology (substantiating higher quoted tax rates) to Kotlikoff or FairTax.org? Hmmm?BB: "Perhaps the biggest deception in the FairTax, however, is its promise to relieve individuals from having to file income tax returns, keep extensive financial records and potentially suffer audits."Me: Huh?  What's to deceive?  Individuals do not file income tax returns.  Businesses don't either; businesses will file basically an expanded state sales tax return. Individuals would keep financial records, but not for the purposes of filing a return.  And working families would not be subject to audit unless they ran a business.BB: "the idea of making April 15 just another day, this seems to be a major selling point for their proposal"Me: Duh. Like that's bad to get out from under the thumb of an intrusive government that has been proven arbitrary in the manner in which it administers the current tax code?BB: "In short, the FairTax is too good to be true, and voters should not take seriously any candidate who supports it."Me: Sorry, BB.  Your commentary is to bad to be credible.  Next time, at least familiarize yourself with the research and rebuttals to the demogoguery that is sure to assail it.Readers should expect these assaults on FairTax to increase as this eminently workable - in fact, URGENTLY REQUIRED - tax plan gains adherents.