Tuesday, February 12, 2008

IT'S IN THE BOOK! FAIRTAX: THE TRUTH

I guess you guys are too young to remember the song "It's in the Book", but I grew up with it and we loved it and quoted it constantly. Whenever we threw out a "fact" for consideration, we would say for emphasis: "It's in the book!" Now we have a new FairTax book and it just popped right back into my head.

This new book "FairTax: The Truth" answers the critics. It is written by the same guys who wrote The FairTax Book, John Linder and Neal Boortz. I have just begun to read it so cannot give you a book report; however, I picked up one thing so far:

The FairTax vision is "a collection of fundamental economic principles". "What are those principles? In short words, here's what we think the American tax system should be:
  • SIMPLE
  • FAIR
  • VOLUNTARY
  • TRANSPARENT
  • BORDER NEUTRAL
  • INDUSTRY NEUTRAL
  • GOOD FOR SOCIAL SECURITY AND MEDICARE"

It's in the book - pick it up and read it.

8 comments:

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.

betty said...

Billary's 'Universal Health Care' package FOR EVERYONE works much much differently than she advertises. What she is not telling you is that, it is FORCED health care coverage that YOU PAY for. Every employed American will get their wages garnished if they refuse to pay for it. And, you will definitely get garnished to pay for the Universal Health Care pkg. EVEN IF YOU DON'T WANT IT. Okay, Mark, tell me what you think of that mess!

On top of that, you will no longer get to choose your health care provider, Hillary chooses for you dependent upon demographics, AND, we working class will continue to pay for the lazy ones! Tah, Tah.

Mark said...

Tah tah! LOL

Im not for Hillary and her mess. You are right --its just forced insurance, with the government paying the insurance for many.

Its like car insurance laws in some states now - people have to buy it. But unlike those laws -- the government doesnt pay your car insurance if you can not.

Hillary's plan was a "something for nothing" ruse. Right or wrong, its forced insurance.

But its a piker compared to the something for nothing ruse from the fair tax.

Everyone would have to pay the fair tax.

Uh -- supposedly.

Supposedly -- those on welfare will pay that sales tax on stuff they buy?

Really?

Supposedly -- those getting free or subsidized housing will pay a sales tax on their rent?

Really?

How will they pay that sales tax?

Supposedly -- those on medicare and medicaid will pay a sales tax on their medical bills

Really?

How will they pay that tax?

Obviously, the government (us) will just pay the tax.


SO really, the very high sales taxes on health care has to be a farce -- since the government will have to pay much of it.

WHich means -- guess what -- the sales tax rate would have to go way up to "pay" all of their taxes. It can't be 23%.

Which is probably why the study done by a Presidental Commission said a consumption tax would have to be 57%.

Thats right -- an impartial group of experts looked at a consumption tax -- and found 57%. And thats without the prebate. Put that in there, the tax would have to go up to 80%.

Fairtax not only pretends the government can pay taxes to itself on medicaid --it also pretends the government can pay billions of dollars to itself in taxes from aircraft carriers, to jets, to the Space Shuttle.

Its hard to get more silly than that. When you start to understand that about half the money fairtax pretends to collect -- the government itself is paying that.

Heck, why would anyone pay ANY taxes, if the government can pay it to itself? Really, answer that question. If the government can pay 1/2 of its own taxes -- why not all?

Well, thats just impossible. The government has to write the checks to itself to pay the tax.

Oh the government can pretend to pay it, it can write itself a check. Sure. But it doesnt get any money out of the tax - it wrote the check to pay the tax.

Its like me pretending I can pay myself 10,000 to cut my own grass. I can write and deposit the check, and cut it every day. But at the end of the month, I don't have 300,000 dollars.

Anonymous said...

Here's a very simple question regarding the fair tax that nobody has been able (or perhaps willing) to answer: A person has saved after-tax (i.e. already taxed) money for 20 years for retirement (lets say $100,000) - how does the transition to the fair tax avoid taxing this money again when it is spent?

Mark said...

anonymous -- right. Thats another very valid real world question.

What about people who saved 100K after years of work. Now, they have to be taxed on everything they spend?

Im sure the answer is this -- its their stock answer -- prices won't go up!. People will pay 2.3 trillion, but it won't cost anyone anything.

You could say "well I already PAID taxes on my 100,000. Now I have to pay taxes AGAIN"

Very true. Really there is no answer for it. And of course, prices will go up anyway.

Fairtax sounded good when it first came out - IF you didn't look too closely. The closer you look, the more cracks in the dam.

Dutchman3 said...

In the new Boortz/Linder book, they answer this criticism by basically claiming that they are simply replacing the embedded taxes with the Fairtax, so it's a wash. The problem with this answer is that they are misrepresenting those "embedded taxes".

There is no such thing as an embedded tax. Only the embedded costs of the income tax system which impact prices, not taxes you pay. And two thirds of that 22% embedded costs are employee payroll and income tax withholding.

Boortz and Linder are saying that everyone's current net pay after withholding will become their gross pay/pension under the Fairtax. And that isn't about to happen for fairness and contractual reasons. How many of you are willing to reduce your gross pay in the hopes that businesses will reduce their prices?

So, Mark is correct. Retail prices are going up. There have been no price impact studies done by AFFT as far as I know, but the most likely outcome will be a 10% recuction in producer costs when the income tax costs go away, and a 17% increase in retail prices. Simple math!(1.00 x .9 x 1.3 = 1.17).

At the end of the day, your take home pay will increase by the amount of your withholding, and prices will increase by 17%. Your standard of living isn't likely to change very much. And yes, you will also get the prebate, which you can think of as a tax refund if you like, but it is really a cash grant entitlement that can be saved, or spent and taxed.

You will be double taxed on much of your savings, therefore, and that isn't really fair, is it? Only those who have their savings in a tax deferred plan will benefit, so there will be winners and losers under the Fairtax. Bad idea!!! It seems odd to me that the AFFT folks created the business inventory tax credit at a first year cost of $600 billion, but didn't address this basic unfairness for individuals who have after tax savings?

Betty said...

Not to fret - the states' have an administrative tax authority, arbitration, and vouchers where you can be credited up to your amount accrued on December 31, 2008. In other words, you won't pay FairTax up to that amount of $$ that you spend beginning 1/1/09 if you choose to go through the process. Winners are winners and losers pay for the process.

Dutchman3 said...

Betty,

I'm sorry, but I don't have the slightest idea about what you are writing about. Mike is currently tax free, and he is worried about life under the Fairtax. Are you suggesting that there is a process he can go through in order to exempt himself from paying the sales tax? If so, where is that covered in HR25? If not, just what are you talking about?

Help!