Topic: Presidential Campaign 2008
Is the Fair Tax(Mike Huckabee) Better than No Tax(Ron Paul)? Is Mike Huckabee's Fair Tax Plan Better for America than Ron Paul's Elimination of the IRS?by EJ Moosa
(Libertarian)
Tuesday, December 18, 2007
Two years ago I gave out copies of John Linder and Neal Boortz’s "The FairTax Book". This year I am giving out copies of Ron Paul’s "A Foreign Policy of Freedom: Peace, Commerce, and Honest Friendship". These two books are currently connected to the campaigns of these two republican presidential candidates.
Americans are so fed up with the federal income tax system, and all of the games and gimmicks that are part of it, that they are ready for change. The Fair Tax has the potential to make that change happen. If enacted, all of the disparate taxes along the production chain of a product will be collected at the end, when the product is purchased by the consumer. This allows each of us to know how much we are really paying in Federal Taxes. To get this plan past liberals it has been touted as "revenue neutral" by Boortz and Linder.
Under the Fair Tax, you could purchase an item at the store for $100, and $23 of the cost would be imbedded Federal Income taxes.
That is a great idea. Before Ron Paul’s campaign began to grow at the grassroots level, I may have even agreed that this was the best that we can do. But Ron Paul plans to go one step further: Eliminate the IRS and the Federal Income Tax.
Mike Huckabee has said that he supports the idea of the Fair Tax, and there is no doubt in my mind this has brought him even more support than his public broadcasting of his faith. Mike S. Adams, the columnist at Townhall.com, believes the Fair Tax is America’s Last Best Hope. I disagree.
The Fair Tax will continue to feed the Beast(Unconstitutional Federal Spending). Yes, it would be clearer to most of us what we contribute to feed the Beast, but the Beast will continue to grow. The Fair Tax does absolutely nothing to curtail the feeding of the Beast. To have hope, we have to curtail feeding this Beast now. Revenue neutral is not good enough.
I am a strong believer in unintentional consequences. The Fair Tax has the potential to provide an immediate boost to the US economy. The cost savings from accountants, tax lawyers and compliance alone would be a tremendous cost savings. The removal of unproductive labor from our system and those folks displaced would find ways to add value to our economy. But when the Federal government sees the increase in Federal receipts because of the Fair Tax, I will state here and now that they will spend that money three times over. There is nothing about the Fair Tax to curtail the spending of the Federal government. The $23 embedded tax in the item above is still used to feed the Beast.
Instead, the complete elimination of the IRS and the Federal Tax Code, as Ron Paul advocates, will do all of the things the Fair Tax promises to do and goes one major step further. It will curtail the spending side of the equation. Cut the spending and we can kill the Beast. There is no other way.
Under the Paul plan, the $100 item used in the example above would be much less . Then, instead of feeding the Beast, you can take the the difference and feed yourself.
Mike Huckabee has stated that he cut taxes while governor of Arkansas. Yet the state income tax was 1% higher when he left office than when he took office. Ron Paul is known as Dr. No, and he have voted against tax increases each and every time. Can we afford cuts from Huckabee if we end up with higher rates than when we started?
It will be your choice to either change our system and kill the Beast, or change the system and feed the Beast.
Frankly, I think it is time to kill the Beast. Don’t you?
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2007 EJ Moosa, all rights reserved.
Published: Tuesday, December 18, 2007
Last modified: Tuesday, December 18, 2007
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"There is nothing about the Fair Tax to curtail the spending of the Federal government." -- Not really true. The transparency of the tax is what will help curtail spending. When it is clearer what government costs it will be more difficult for politicians to increase that cost.
The Socialist Party has had as one of its planks an agressive graduated income tax to punish those who make those obscene profits. I had an economics professor show me that plank has been there since the 1920s (I wish I could find the reference). But they also despise private ownership and believe in the inherent goodness of government to solve problems. I think those of us who have been burned by government know better.
ANY tax is a form of control by the government, and therefore power. Property taxes will cause you to forfeit your property if you can't pay. Labor taxes (withholding) causes you to work less. Income tax discourage investment. Inflation tax and flat tax will hit the poor first. Tax exemptions provide a means of social engineering. Deductions and exemptions aren't carot and stick, but little stick vs. red hot poker in the eye.
Although I don't like any taxes, tarrifs are least invasive. They can be put on temporarily against nations that unfairly subsidise their goods, and sell them below market prices. Some user fees make sense, such as those to maintain parks and national museums. And those can be subsidised by charities if they get too high for poor people.
Unfortunately, until government gets spending under control, tax cuts will lead to deficits. The Laffer curve only works when you're in a growth mode, and with government spending limits.
If we can run the country without an income tax, it would save me tens of hours every year trying to prove that I'm not a criminal. Let's keep nudging the iceberg that way!
I'd have to say that my all time favorite trick of the polititian is wordplay. Let's call this thing a fair tax! Everyone will jump on board, because who doesn't want fair tax! Sure some people will actually read it, but they don't matter. Who is going to oppose the PATRIOT Act? People who hate America that's who!
You are certainly correct. There is nothing fair about the Fair Tax. All it does is redistribute taxation to the poor, and reduced taxation of the rich who can afford to save more money.
In order to restore the republic and prevent this country from going bankrupt, we certainly do need to reduce unconstitutional spending, eliminate the income tax, and replace it with nothing. Only Dr. Paul will do that.
The FairTax does not redistribute taxation to the poor.
Cynics like you, need to read the proposed legislation and learn before shooting from the hip. The FairTax is non-regressive and provides for a monthly prebate which protects the "poor" and lets them keep ALL of their paycheck. The FairTax provides transparency such that voters can reign in the idiotic spending of congress. Once the voting public becomes more educated as to the FairTax and its benefits, it will be demanded. Until then, it is necessary to try to educate cynics "who can't see the forest for the trees".
Actually you wouldn't see large price drops under "no income tax" because I've never heard RP say we need to eliminate corporate taxation. So if you don't touch corporate taxation or payroll taxes (medicare, SS that most Americans pay more of anyway) you don't get price drops. And because RP isn't preaching the message that corporations don't pass taxes, they pass them to people, I can see the liberals try to raise them on American businesses to make up some of the income tax loss.
I personally think with the massive amount of grassroots pressure to get the FairTax passed, there would be additional pressure to lower the rate when every American sees it printed on every receipt every day. People just don't care as much about taxes now as they never see it get taken from their paycheck. One of the biggest obsticals with the FairTax has been "It'll never happen" Ron Paul too. If he wins do you think the federal reserve might actually be abolished? In the same way under the FairTax Americans would rise up to tell Congress who's boss. And be able to compete with China (or at least European) manufacturing at the same time.
Posted By: Walt Thiessen
Date: 2007-12-18 12:34:31
Aaron: you wrote, "So if you don't touch corporate taxation or payroll taxes (medicare, SS that most Americans pay more of anyway) you don't get price drops."
The FairTax doesn't eliminate Medicare or Social Security funding from taxes either, according to most Fair Tax advocates. It merely replaces the Medicare and Social Security taxes with the FairTax, which is supposedly "revenue neutral" according to its advocates and doesn't change Social Security or Medicare funding at all (so they claim). So what you're saying effectively is that prices will drop because employers don't have to process payroll taxes anymore.
I've heard that argument before. It sounds just as dumb now as it did the first time I heard it.
Aaron, your point on corporate taxes is noted. Though the point of abolishing the IRS would hopefully be across the board. Corporate earnings are so convuluted today because of the cat and mouse game played with the tax code. It would be a benefit to see real earnings numbers without all of the manipulation for tax reasons.
On the other hand, every mom and pop business entity, who pays taxes on their enterprise via their personal income tax, would seem to be exempt from federal income tax under Paul. This would certainly lower the costs of the goods and services they produce.
Also, under the Fair Tax,a prebate check would be sent to everyone each month. I am not sure about you,but I do not want the Federal government sending out checks to everyone on a monthly basis. What are we setting ourselves up for? And if goods in NYC cost more than those in Montana, are we going to get higher prebate checks for New Yorkers?
Walt, that's correct. As I wrote, I was talking about price drops due to eliminating corporate taxes, not the elimination of the Social (in)Security program. Yes, prices will drop as long as Americans still shop for the best prices due to corporate income taxes, compliance costs and payroll tax 'matching' being eliminated from every US businesses' bottom line
Yes, the FairTax is revenue neutral but at least your tax burden should go down as the people gaming the system, tourists and illegal immigrants would be paying their full share of federal taxes. If you want federal taxes and spending to go down (as I do), we need to come up with a better plan than we have in place now to convince the rest of America. The FairTax is that better plan. Plus we'd get a much stronger economy with more privacy without the IRS and a people who know they can force Congress into action.
Where does the government get off telling people to collect a tax for them without any compensation at all.
If you think this is a fair tax then lets not stop here. Let divide up areas into sectors and appoint one person per sector to collect the property Tax.
You let this happen - it's only store owners and they are not really people. Who cares if they are slaves to the government.
EJ, first thanks for the article, its very good. Under a Paul administration I think he'd still need the IRS to collect corporate taxes. As RP is just one man, I think Congress (Dems and some GOP) would try to tweak the tax code to pull the mom and pop shops back into the the federal coffers. They'd call it a 'loophole.'
Vincent, you have to think through the FairTax before coming to those rash conclusions and ultimately comparing some mutated version of it to Nazi policies. If you look at the FairTax.org website you'll see retailers get a fee for collecting the FairTax. It's 1/4 of 1%. But I don't think you can seriously oppose the FairTax on that basis as instead of paying federal taxes on income and employee wages they simply collect tax from customers in a (pre-16th amendment) Constitutional way.
The flat tax would be struck down in state courts. The US Constitution could not abrogate that. The 14th amendment makes the 16th possible. They don't tax your employment earnings, they tax the privilege you recieve as a 14th amendment US (federal) citizen. Benifits of the privileges are considered income. It will take more than amending the US constitution to make the flat/fair tax happen!
Jeff Roark has it wrong. 26 USC is currently either incorrectly applied, meaning we're all getting royally screwed out of money we should keep, or it is correctly applied, meaning our labor is worthless. Let me explain both.
The Supreme Court has long recognized the commonsense proposition that labor, like money, is a tradeable commodity. There was a time pre-16th Amendment that the exchange of one's labor for another's money was considered a property exchange of equal value. This is still the case. See Coppage V. Kansas (1915), which had never been overturned.
Therefore if equal value is exchanged in the transaction, there is no gain or income. By this definition all withholding and "income" taxation on the money property we receive (wages) in exchange for our labor property (work) is improperly assessed by the IRS as income. (But try to claim this and they claim it's frivolous. Nevermind the fact that nowhere in 26 USC does it list what a "source" that income is derived from actually is!). This is direct line with 26 USC, BTW, but not the IRS forms. Taxing the exchange of labor for money is actually in proper form an excise tax, which Article 1 Section 8 requires to be uniform, and it's obviously not in our graduated system.
But if there is an income assessed on that exchange, then what level is the income? According to the IRS, that level of income is 100% of the exchange you get, meaning that your labor has no value against the money you receive that is taxed. That ought to really PO everybody. This is what the IRS forms tell us all.
Which is it? The IRS claims the latter. The tax protestors claim the former. But the IRS has the force of government violence behind it...
So applying that back to what Jeff is talking about, the 14th Amendment really has little to do with how the 16th is misapplied. The ability to be employed is not a "privilege" under the 14th Amendment. It existed before 1868 and has not changed. Note that there are plenty of Americans out there who are not captured by the SSA/IRS tax system and are easily employed. They may get paid cash and have no benefits, but they still are employed and engaging in prefectly legal property exchanges outside the income tax system. The income tax system that exists only exists to fund government "benefits" via redistribution of money, and we have little say in how that happens or where the money goes (which is why user fees and pay-as-you-go plans make more sense!). In other words, the income tax system is a socialist sytem that has no place in our Republic. Heck, that's why the Founders considered it and rejected it, unless it was done per Article 1 Section 9 rules.
So it really comes back to what is income vs. what sources it is derived from, and the controversy continues there because the law itself does not clearly define it. If it did this would all be a moot point.
Applying that all to the fair tax vs. the flat tax vs. no income tax, obviously if the income tax were eliminated or if the fair tax were implemented the income question goes away. It does not with a flat tax. So skip the flat tax idea, UNLESS the income and source defintions in the law are clearly defined.
Personally I'd rather see the 20% pay raise each check and pay higher prices on tariffed imports.
Jeff Roark has it wrong. 26 USC is currently either incorrectly applied, meaning we're all getting royally screwed out of money we should keep, or it is correctly applied, meaning our labor is worthless. Let me explain both.
The Supreme Court has long recognized the commonsense proposition that labor, like money, is a tradeable commodity. There was a time pre-16th Amendment that the exchange of one's labor for another's money was considered a property exchange of equal value. This is still the case. See Coppage V. Kansas (1915), which had never been overturned.
Therefore if equal value is exchanged in the transaction, there is no gain or income. By this definition all withholding and "income" taxation on the money property we receive (wages) in exchange for our labor property (work) is improperly assessed by the IRS as income. (But try to claim this and they claim it's frivolous. Nevermind the fact that nowhere in 26 USC does it list what a "source" that income is derived from actually is!). This is direct line with 26 USC, BTW, but not the IRS forms. Taxing the exchange of labor for money is actually in proper form an excise tax, which Article 1 Section 8 requires to be uniform, and it's obviously not in our graduated system.
But if there is an income assessed on that exchange, then what level is the income? According to the IRS, that level of income is 100% of the exchange you get, meaning that your labor has no value against the money you receive that is taxed. That ought to really PO everybody. This is what the IRS forms tell us all.
Which is it? The IRS claims the latter. The tax protestors claim the former. But the IRS has the force of government violence behind it...
So applying that back to what Jeff is talking about, the 14th Amendment really has little to do with how the 16th is misapplied. The ability to be employed is not a "privilege" under the 14th Amendment. It existed before 1868 and has not changed. Note that there are plenty of Americans out there who are not captured by the SSA/IRS tax system and are easily employed. They may get paid cash and have no benefits, but they still are employed and engaging in prefectly legal property exchanges outside the income tax system. The income tax system that exists only exists to fund government "benefits" via redistribution of money, and we have little say in how that happens or where the money goes (which is why user fees and pay-as-you-go plans make more sense!). In other words, the income tax system is a socialist sytem that has no place in our Republic. Heck, that's why the Founders considered it and rejected it, unless it was done per Article 1 Section 9 rules.
So it really comes back to what is income vs. what sources it is derived from, and the controversy continues there because the law itself does not clearly define it. If it did this would all be a moot point.
Applying that all to the fair tax vs. the flat tax vs. no income tax, obviously if the income tax were eliminated or if the fair tax were implemented the income question goes away. It does not with a flat tax. So skip the flat tax idea, UNLESS the income and source defintions in the law are clearly defined.
Personally I'd rather see the 20% pay raise each check and pay higher prices on tariffed imports.
Posted By: James A. Hodges
Date: 2007-12-19 02:01:18
Tariffs are a really poor idea. Someone needs tell Libertarians to stop supporting government control over your consumption. The Fairtax is the only tax based on the free market. Libertarians live on another planet in the Waco Wacko solar system next door to liberals.
Posted By: Ian from Ann Arbor
Date: 2007-12-19 02:02:14
Economist Dale Jorgensen, Harvard University, was commissioned to find out what portion of current prices were represented by costs for complying with the federal income tax code (i.e., embedded tax costs). He concluded that 22% (average) of every retail dollar, spent by consumers, constituted a price-embedded tax. Thus, in addition to individual income tax and FICA withholding, individuals are unwittingly paying these unseen, embedded business tax costs with every purchase of a new product, or service.
Under FairTax ( http://snipr.com/irsgone ), prices would fall due to removal of embedded business tax-related costs. Concurrently, wages may rise due to a mix of factors, including reversion of withheld pay (or some portion thereof) to employees, advancement opportunities due to business expansion resulting from retained earnings, and/or increased demand for labor accompanying increased competition (from that expansion). Where profits (or wages) appear lucrative, competition will move into the market space, driving out excesses (immediately present after FairTax is enacted), arriving at new "market-adjusted" prices.
For FairTax to constitute 23% of the transaction cost (i.e., "market-adjusted" price plus FairTax), a mark-up of 29.9% on the new "market-adjusted" price is necessary. (Before balking, consider what we're paying NOW after converting income tax rates to sales tax rates on NET income instead of gross income. The following figures can be compared to the 29.9% FairTax mark-up: Fifteen pct bracket = 17.6%, twenty-five pct bracket = 33.3%, twenty-eight pct bracket = 38.9%, and thirty-five pct bracket = 53.8% of what's left over after the tax is deducted from gross pay.)
In order to make FairTax a PROGRESSIVE consumption tax (such as that called for, recently, by Warren Buffett), all legal-citizen families are simply sent a "monthly consumption [tax] allowance," called a "prebate." This prebate is intended to reimburse taxes on necessities without need for record-keeping or reporting. Moreover, the direct payment bypasses the creation of a tax code specifying exempted products and services around which a lobbyist industry could grow. The amount is variable, based on family size, and is equal to the FairTax rate on poverty-level spending, as defined by the Dept. of Commerce. At present, a family of one would receive ~$200/month, a family of four, ~$500/month. Thus, the "effective" FairTax rate paid by citizens, will *never* equal the full 23%. Of course, U.S. visitors (legal, and illegal) will pay the full FairTax when they purchase anything new, at retail (used are not taxed again). Under FairTax, working families will have their whole paychecks (minus any state or local income tax withholding) plus their monthly family prebate.
Additionally, citizens will no longer have to spend the average 50 hours per year preparing their federal tax returns. Having more monthly income may result in using credit less, and saving more. Larger savings will make it easier to purchase a home, at a lower interest rate and monthly payment. (Thus, mortgage deductions are no longer applicable when income is not the basis for taxation).
But is FairTax "fairer"? To provide substantive answers, Prof.'s Kotlikoff and Rapson (10/06) have concluded ( (Link Edited For Length) ),
"...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."
"...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."
The current income-based tax system is also more expensive to run, because of the manner in which the tax code is gamed by politicians and lobbyists. Politicians realize great power, and attract constituencies for support, by granting tax favors (i.e., credits, deductions, exemptions) through lobbyists. Fully, fifty-three percent (that's 53%!) of Washington lobbyists are there because of the tax code! The tax code is continually changing, making it more complex and more difficult to understand. And, the salaries and costs of tax lawyers and lobbyists end up in the prices of the products and services we buy. Additionally, the time and money required to keep records, file returns, report for audits, retain accounting and legal help, pay IRS penalties and interest, is time and money lost for other productive, or recreational, activities. Depriving us of the use of withheld wages increases our expenses through zero-interest withholding, inflation, return preparation time, and interest paid on credit cards and loans that otherwise may not have been necessary. Summed up, the cost of tax compliance, nationally, has been estimated to range anywhere from $265 billion to twice that amount, depending on the extent to which tax-avoidance consultation is sought and utilized. These expenses constitute a substantial "hidden tax" which is incomprehensible to the average working American. And the FairTax gets rid of all of it for most Americans, and most of it for business owners.
It is our belief that government should serve We, the People, with a fair tax system that will not enable politicians to pit poor against rich (creating barriers to achieve wealth, adding tax penalty to the sacrifices made for personal success). Nor do we want politicians to continue using business as a tool to hide taxes from consumers, often villifying business, which discourages entrepreneuship, personal achievement, economic growth. Liberty and happiness depends on restoring the fruits of labor to those who produce them. We believe that the tax function should align with economic growth, not against it, that government should be paid for in the same manner as working Americans - when, and because, something is sold.
As things stand at present, Americans labor under nothing less than "tax slavery," having our wages confiscated every working hour, as reflected in our paychecks every two weeks.
Many of us have joined FairTax.org ( http://snipr.com/becomeamember ) in order to build a national movement to free ourselves, our family pocketbooks, and our businesses from confiscation of income, and punishment of productivity. And this we say to our federal representatives, "Either scrap the code ( http://snipr.com/scrapthecode ) and enact the FairTax, or we intend on replacing you with someone who will."
(Permission is granted to reproduce in whole or part. - Ian)
Clearly you have not read the legislation or the books. The lazy slackers (poor as you call them) are exempted from the tax. How does that shift the cost of running this joint from the industrious top 2% earners to them? What about all the illegal aliens here NOT PAYING ANY TAXES AND SENDING THEIR WAGES HOME TO MEXICO. You and all your libtard buddies need a swift kick in the nuts to wake your happy ass up. The only thing your BS blathering says is that #1 You dont have a job that pays much more than minimum wage. Hence the hatred of the "Rich" #2 You are such a loser that you have no family to support or save for.
Here is a hint . STFU and read the legislation, if you made any money or filed a 1040 you would care but since you don't...
Get rid of the IRS and the income tax? And then what? The country goes bankrupt? While I agree with a lot of what libertarians think, and believe it's necessary to have a spokeman like Ron Paul out there espousing this platform, it's unrealistic to think anyone would vote to get rid of all taxes if they knew all the services we take for granted would end. And exactly who do you think will vote for such a thing in our current government system? Very few. Only the complete overthrow of the current dictatorship would allow this to even be considered. Whether we need to get rid of all taxes or not is not the point now; it's transferring the control of the process back to the people where it belongs. This is what the FairTax does. Is it a perfect system? Probably not, but what is? I'm sure Social Security sounded like a grand idea when it was first adopted, but look what happened to it. I am in total agreement the FairTax must be adopted, but then it must be followed by spending reform to reduce the proposed rate as well as the federal government's powers. This will be a struggle as well. One step at a time is the only approach that makes sense. As much as I like the other pie-in-the-sky idea, it won't work in the current environment. People would have to get a lot more teed off.
The two-fold Fair Tax proposal is based on two premises with major shortcomings:
(1) Replace the Federal personal income tax, Federal corporate tax, and they payroll tax (Medicare and Social Security) with a 23% sales tax to provide the funding to run the US Government.
(2) Providers of goods and services will reduce prices up to 30% offsetting the 30% sales tax applied to new purchases and all services.
The problem with item (1) is that the Fair Tax is in effect a 30% tax. The proponents arrive at 23% sales tax rate by saying the $30 tax on a $100 purchase of goods and services is really 30/130, or 23%. In addition, it overlooks the massive tax evasion that will occur as consumers either order goods from abroad, or go to Mexico or Canada to purchase goods, and those who will make “under the table” cash purchases.
The problem with item (2) is that providers of goods and services will not reduce prices up to 30% to offset the new sales tax of 30%. Many products, including imported items such as oil, do not have a product price based on the US tax code. In addition, it is intuitively obvious that the vast amount of the tax savings, reduced costs, and increased profits will flow to the bottom line and be passed onto executives and investors, not the customers or employees.
The savings and increased profits gained from moving millions of manufacturing, service, and technical jobs that began in the early 1990s to low-cost sweat shops in Asia, China, India, and Mexico, cutting millions of US jobs, and dropping Federal Corporate taxes to 5% to bring back money from overseas entities went directly to the executives and investors and no one else.
When the Medicare Advantage HMOs talked the Government into giving them a $7 – $9 Billion dollars more than Medicare spends on Medicare Part A and Part B beneficiaries, most went to executive perks, bonuses, and retirement for the HMO executives (such as the $400-Million Dollar retirement bonus taken by one HMO executive).
In addition to eliminating the payroll tax (Social Security and Medicare), the Federal personal income tax, and the Federal corporate income tax, the Fair Tax proposal in effect also eliminates the system used to report earnings to calculate Social Security benefits and would eliminate the Social Security Trust Fund.
The Fair Tax proponents have not mentioned how they would calculate a Social Security benefit since the earned income will no longer be reported under the Fair Tax plan.
The program is in essence a reverse “Robin Hood scheme” that shifts raising funds to finance the US Government by shifting the raising of tax revenues) from the higher income Americans (top 5%) to the Middle Class and retirees via the proposed (the 30% National Sales Tax).
The Fair Tax proposal works directly against the needs and contribution of tens of millions of current retirees and increasing numbers of baby boomer retirees approaching retirement.
With no mention or statement of intent that the Social Security program and Medicare will be maintained and no way to caluate individual Social Security benefits, it’s a safe assumption that the Social Security and Medicare programs will be declared “no longer required” and the Social Security Trust Fund eliminated (no return of the Trillions borrowed or returned to the individuals who provided them via the payroll tax, just eliminated).
The Fair Tax proposal will enable retirees, most of whom have a Federal Tax obligation of less than 10% of their gross income and no payroll tax to now pay a sales tax of 30% on all their purchases of services and new products with an offset for people below the poverty line.
Retirees will also pay a 30% tax rate on purchases made with Roth-IRA income which was supposed to be tax free, and a 30% tax on services and new productys made with Social Security income that is currently tax free for many retired individuals and couples, and partially taxed for the rest.
The fun will only be starting. If the Fair Tax is enacted, the proponents will then recommend the following: (1) Eliminate the Social Security Trust Fund (which has loaned Trillions of Dollars to the US Government) and state there is no need to return the Trillions they borrowed and spent. They will propose funding Social Security and Medicare out of the annual Federal budget.
(2) Declare the Social Security and Medicare beneficiaries to be "freeloaders sponging off the largesse and charity of the Government" and guilty of a giant entitlement fraud perpetrated upon the hardworking titans of industry, notwithstanding that tens of millions of Americans have prepaid payroll contributions that will sustain current Social Security benefits for another 30-35 years. This was based on the foolish assumption that the US Government will pay back funds borrowed from the Social Security Trust Fund (the Payroll Taxes paid by tens of millions of working Americans and legal resident aliens).
Note: If we can pay back funds borrowed from China and Saudi Arabia, we ought to be able to pay back the contributions borrowed from the Social Security Trust Fund (that were received as payroll taxes paid by working American citizens and legal resident aliens.
(3) The final step will be to means-test the receipt of Social Security and Medicare to make sure that no one ever receives back benefits they paid for over working careers of 40-50 years or more.
(4) Now that they have decimated retirement and health care for tens of millions of retired Americans, they will now subject them to a 30% sales tax for the rest of their lives to continue the charity program for the friends of the Fair Tax and Global Economy (does not include the middle class). American Industry,
Members of Congress and the current Administration have participated in the decimation of defined benefit pension plans, eliminated millions of US jobs and run the Federal deficit from approximately 5 Trillions Dollars to well over 9 Trillion Dollars in the name of Global Economy (and a welfare program for their friends).
The name of the proposal should be “Your Money is My Money”. The quote that comes to mind on this giant Ponzi scheme, which I believe was made by Joseph Welch at the Congressional Army hearings in the late 1950's regarding Congressman Miller (R-Buffalo, NY), is “HAVE YOU NO SHAME”?
Posted By: John Médaille
Date: 2007-12-26 21:05:15
Ian’s long post is the same one he posts to every site that questions this hare-brained scheme. Its just a cut and paste job, with no real answers to the questions posed. The questions he will not answers are legion. I have asked any number of times, for example, just why the Arabs and Hugo Chavez are going to lower the price of oil because we have switched to a consumption tax. He has declined to answer on any number of occasions. And since oil is basic to any number of industries, it is difficult to see how his “price reduction” estimates can be correct.
In fact, many industries are structured like the oil industry, and the fair tax will have no effect on them. Even if you grant his dubious assumptions about how the market sets prices, he estimates cannot be correct.
Nor can he answer the question about how the massive fraud that will be occasioned by a 30% sales tax will affect “revenue neutrality.” Nor can he answer the fact that tax government purchases will require an additional $300 Billion be added to state and local taxes will force taxes to go up at the state and local level. Nor can he answer questions about the massive bureaucracy that this tax will require, both on the enforcement side, and on the national identity card side (since the “prebate” will require a national ID).
Ian is good at hitting the “repeat” button to re-post the same Huckabee propaganda, but less accomplished at answering real questions. Could that be because he has no answers?
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2007 EJ Moosa, all rights reserved.
Ian’s long post is the same one he posts to every site that questions this hare-brained scheme. Its just a cut and paste job, with no real answers to the questions posed. The questions he will not answers are legion. I have asked any number of times, for example, just why the Arabs and Hugo Chavez are going to lower the price of oil because we have switched to a consumption tax. He has declined to answer on any number of occasions. And since oil is basic to any number of industries, it is difficult to see how his “price reduction” estimates can be correct.
In fact, many industries are structured like the oil industry, and the fair tax will have no effect on them. Even if you grant his dubious assumptions about how the market sets prices, he estimates cannot be correct.
Nor can he answer the question about how the massive fraud that will be occasioned by a 30% sales tax will affect “revenue neutrality.” Nor can he answer the fact that tax government purchases will require an additional $300 Billion be added to state and local taxes will force taxes to go up at the state and local level. Nor can he answer questions about the massive bureaucracy that this tax will require, both on the enforcement side, and on the national identity card side (since the “prebate” will require a national ID).
Ian is good at hitting the “repeat” button to re-post the same Huckabee propaganda, but less accomplished at answering real questions. Could that be because he has no answers?