Wednesday, August 25, 2010

A FEW MORE THOUGHTS ON THE FAIR TAX

When things get really really bad, people are likely to start grasping at straws to fix what is wrong.  The people of the United States are fed up with the Feds.  We are watching elite politicians throw our country down the tubes, spending borrowed money on pay-back schemes, and turning the good people into a debtor nation on a scale unheard of in America.  We're sick of it.  We're mad.  We've had it.  And we have few options to stop this insanity.

So one of the floating ideas is that it must be the tax system that is at fault.  It follows that Congress has too much power to manipulate current tax policies to suit their own power and political agendas, thereby leaving the burden on the backs of the public.  This is true.  But do you fix that with another grand sweeping tax scheme?  If you use the "bad husband" analogy, as someone recently did while rebutting me, I do not recommend replacing a bad husband with a worse husband....or even an equally bad husband. 

Along comes the Fair Tax idea.  This is a worse or equally bad husband wanting to take advantage of an abused wife who is desperate to get out of the marriage to the first bad husband.  Be careful what you wish for, comes to mind. Wikipedia Fair Tax Explanation Here Per this article here is the tax rate described in the Fair Tax Bill:

Tax rate
The sales tax rate, as defined in the legislation for the first year, is 23 percent of the total payment including the tax ($23 of every $100 spent in total—calculated similar to income taxes). This would be equivalent to a 30 percent traditional U.S. sales tax ($23 on top of every $77 spent—$100 total, or $30 on top of every $100 spent—$130 total).[5] After the first year of implementation, this rate is automatically adjusted annually using a predefined formula reflecting actual federal receipts in the previous fiscal year.
The effective tax rate for any household would be variable due to the fixed monthly tax rebates that are used to "untax" purchases up to the poverty level.[4] The tax would be levied on all U.S. retail sales for personal consumption on new goods and services. Critics argue that the sales tax rate defined in the legislation would not be revenue neutral (that is, it would collect less for the government than the current tax system), and thus would increase the budget deficit, unless government spending were equally reduced.[5]


Notice that "after the first year of implementation, this rate is automatically adjusted annually using a predefined formula reflecting actual federal receipts in the previous fiscal year." 

So if you think that after passing the Fair Tax Bill you can breathe a sigh of relief that the rates are set in stone and all will be well in the world, realize that the beginning rate is what sales people call a "loss leader."  They get you in the door and then the other shoe drops with higher costs.  It's a "come on."  A "teaser" rate.  And notice that the ACTUAL rate is 30%, not 23%.  The bill is written and supported by politicians, so what would make anyone think this is more "fair" to the tax payers?  

In all likelihood, as critics point out, the first year receipts from this plan will create deficits.  When that happens, what do you think will happen to the rate of taxation?  The Fair Tax Bill calls for annual assessments of the rates, opening the door to increasing the rates to meet the Federal spending sprees.  That 30% will be 50% before you can blink your eyes.  Do you suppose the Federal government will suddenly shrink to fit the receipts?  And if you think that, you must immediately go to have your head examined.  Post haste!

Also in the article is this: 
Personal services such as health care, legal services, financial services, haircuts, and auto repairs would be subject to the FairTax, as would renting apartments and other real property.[5] In comparison, the current system taxes income prior to purchasing such personal services. State sales taxes generally exempt certain goods and services in an effort to reduce the tax burden on low-income families. The FairTax would use a monthly "prebate" system instead of the common state exclusions. The FairTax would apply to Internet purchases and would tax retail international purchases (such as a boat or car) that are imported to the United States (collected by the U.S. Customs and Border Protection).[33]

 So the Fair Tax will open internet sales to a Federal sales tax.  Which, using court precedents, will automatically open the door for State sales taxes on internet sales.  Another consequence of this so-called Fair Tax.
The proponents of the Fair Tax say that their scheme will save us from the horrible ramifications we have been suffering under the income tax system.  They say that the income tax system will be eliminated and that will make you so rich that you will gladly pay all of these sales taxes. Since it is the rich who pay the bulk of the income taxes, who do you think will reap the most benefits from the Fair Tax.  If you said the rich, go to the head of the line.  Of course the Fair Tax people say they can fix that with a "prebate" program by sending rebate checks to every household in America.  This creates yet another entitlement program, in fact the largest in American history which includes the entire population.  Dependency anyone?  

Replacing the income tax with a sales tax on everything you buy is their idea of 'freeing the people' from oppressive taxation.  They say the Fair Tax is just a voluntary tax, that if you don't want to pay the sales taxes you can just not buy anything.  Hmmmm....how does that work for a young family starting out who needs housing and goods for their growing families? By all means, let's punish those who are trying to buy a house, baby clothes, cribs and strollers, etc.  Make them pay more.   

Another fall-out discussed on some sites is the pain the Fair Tax creates for retirees.  Sure those folks aren't buying as much, but if and when they do, they will be paying twice the taxes.  How?  Their incomes were already taxed under the current system.  Then they will be taxed again by paying the Fair Tax sales taxes if they purchase a new retirement home, or anything else.  Whammo....

And, (if I am repeating myself forgive me) the worst part of all of this that I can envision is the Federal government tracking every purchase anyone makes in the United States.  When the Federal government decided last year that all of our health information is to be tracked in a Federal data base, where was the outrage?  Now people are saying let's go with this Fair Tax which wants to track every single purchase you make in your life.  Where is the outrage?  How many weapons are you going to give the government to manipulate you and control your life? 
Bottom line:  The Fair Tax is anything but fair.  It is another convoluted boondoggle created by politicians and egghead economists who are just trying to squeeze more money for the government out of the American public and set up a power structure that Americans cannot over-come.  Why?  Because they can.  This Fair Tax is no better than Obamacare.  It is a misrepresented scheme brought to you by politicians who do not have the interest of the American people at heart....rather they are lying to get their hands on control over the American people.  They would say it is voluntary.  Just like Obama said you could keep your insurance policy.  The lies just keep coming....from BOTH sides of the aisle.

What I purchase is no damn business of the Federal government.  What I buy to eat is no damn business of the Federal government.  What doctor I choose is no damn business of the Federal government.  What I do with my money is no damn business of the Federal government.  If  you want to know where we are headed, watch a movie called "Enemy of the State."   

If you believe in freedom, do not swallow the propaganda of the Fair Tax.  If you want to have your entire life tracked by a Federal data base, you are not an American.


7 comments:

  1. gee, do you suppose that your purchases are not already tracked because you used you debit/credit/member card? Cash purchases are not usually tracked unless you use a "member" discount card.

    The current system says "We think you earned this much and here is the tax regardless of you using any services or purchasing anything. Now keep track of every little thing that we have created this massive regulation book for so we can give back a little of what we already took. Oh! We see you don't want to tell us what you purchased. Well... we will just keep it all then."

    Grow up! If we see them raise the rate over 23% (or 30%) after the first year do you honestly think most people will say "oh poor me, I'm such a sucker" or do you think people, since they can now see how much more those lying scum want, will say "bite me! Cut your spending or you are fired!".

    Or are you just one of those people who just take whatever is given to you or demanded from you without giving any kind of fight?

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  2. The author states the critics believe the FairTax will create deficits. They need to wake up. We currently have the worst deficit our country has ever seen and federal receipts are down almost 30% which ads to this deficit. Since a tax on spending is a much more reliable base than a tax on income, there is no way the FairTax would worsen our deficit.

    The author states “If you believe in freedom, do not swallow the propaganda of the FairTax. If you want to have your entire life tracked by a Federal data base, you are not an American.” Now I call that propaganda. Let’s see, under our current system you must file an income tax return; you could be audited; if so you will need to prove every entry you made on this return. I would say this is having your entire life tracked by a Federal database. Under the FairTax, you file no tax returns, so there is no need to prove your income or expenditures. Please let me know where in the FairTax bill it states the Federal Government will be tracking every purchase we make. Besides what would be their reasoning for doing so?

    The author states the FairTax punishes young families by charging a sales tax on baby clothes, cribs and strollers. Well let’s see, I guess our current system doesn’t punish young families by taking a huge chunk of their income before they even have a chance to purchase these items. I guess our current system doesn’t punish young families when they pay all the embedded taxes in the price of baby clothes, cribs and strollers. When we were young we purchased a used crib and stroller for our first child. Under the FairTax we would have paid no tax.

    Yes the FairTax is not perfect, but when you look at all the ways to fund our Federal Government it is by far the best.

    Not wanting to replace our current tax system with the FairTax is like someone refusing to have a cancerous tumor removed because it may leave a scar.

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  3. Good grief, I am amazed at the zealous and extreme reactions to my position. It is as if "It's the Fair Tax or nothing" to you guys. And telling me to grow up because I don't buy the Fair Tax idea is just like the Alinsky method of ridiculing the opposition. No room for dissent for you.

    Where have I said anything that supports our current system? I haven't. I'd replace the current system with something better tomorrow if I thought there were something better. I don't happen to see the Fair Tax as better. And there is nothing in the Fair Tax that repeals or eliminates the income tax system we have now, so we could end up with both, the income tax and a consumption tax.

    Yes, our purchases are tracked by businesses because of member cards which are VOLUNTARY. Tracking our purchases by the Federal government involuntarily is entirely a different animal. If you would read my words, you would know that I don't like having my income or my purchases tracked by anyone..but when it is the Federal government doing it, it is a set up for control and tyranny. At least with income tax they don't have a control mechanism over what I purchase. The Fair Tax gives them that.

    I've made the point the Feds will be "nudging" you into purchases, or not, by manipulating the taxes. So it doesn't say the Fair Tax will do that....are you seriously thinking it would not turn into that?

    Steve Keller wants to know: "Besides what would their reason be for doing so?" The same reason the Feds are now pushing higher taxes on soda pop, salt, or so-called high fat foods. The same reason they increased taxes on cigarettes. The same reason they are taking whole milk out of the schools. The same reason Michelle Obama is out there telling everyone how to eat which foods. Their excuse is controlling health costs for the Federal government. Whatever the excuse they come up with for manipulating or nudging, you can bet your fanny they will manipulate the taxes in the Fair Tax system. There is nothing in the bill that prevents that from happening.

    Abolishers: There is nothing in the Fair Tax Bill that prevents increases at whatever level the Feds decide to make them. The point you make about it being more transparent to the public is very nice, expecting riots in the streets if they do increase the rates..you are forgetting to notice that the Congress and the Feds are not listening to us anyway. The public did not want Obamacare. The public demonstrated opposition, went to town hall meetings, wrote letters, called, did everything they could to say NO. Did Congress care? NO. If we actually had a representational government today I might agree with you, but we don't. Entrenched politicians don't give a whit what the American people want or don't want.

    What in history has convinced you to trust politicians to run a consumption tax any better than they have the income tax? Or that this is any less invasive?

    Maybe Neal Boortz is selling this thing by telling everyone they are stupid if they don't buy it. I don't know why either of you would come at me in the way you did...but you haven't convinced me of anything other than there are evidently a lot of people out there who drank the Fair Tax Kool-ade.

    There has to be a better solution to the tax problem than this one. The underlying root of all of our economic problems is corrupt politicians who are ignoring us and the Constitution. The Fair Tax does nothing to fix that. The Fair Tax does nothing to increase freedom and get the Feds to stop spending.

    Your cancer analogy is just silly...The Fair Tax is not the ONE And ONLY answer to our systemic problems. There are other options....why don't we go looking into them. Jack Kemp had a great solution with the Flat Tax, but once again politicians evidently screwed that up. If we could get some politicians who are uncorrupted, maybe there would be some hope. Until then, we are sitting ducks.

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  4. You should read HR25 there is a 7 year sunset clause

    After the FairTax is enacted we citizens have 7 years to have the 16th amendment repealed. That will be fairly easy. After just a few months with a full paycheck, a prebate of about $195 per month and a revitalized economy who would want to go back to the income tax

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  5. John, I am responding to you and others in a new post.
    Quickly, on the 7 yr. sunset and repeal of the 16th amendment... I don't mean to be flippant, but pigs will fly before that happens. I know you and others are sincere in defending the Fair Tax, but I think it is much more hideous than you know.

    Anyway, read the next post if you wish..

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  6. Cheryl Pass states “Tracking our purchases by the Federal government involuntarily is entirely a different animal.” Please explain to me how the government would track our purchases under the FairTax.” I guess there will be some elaborate computer system that will know every time I purchase a can of soup.

    Cheryl Pass states “The Fair Tax does nothing to get the Feds to stop spending.” What a ridiculous statement. To say the FairTax or any tax system needs to reduce government spending is like saying for a new improved surgical procedure to be any good, it must also insure the reduction in surgeons’ fees. The way our government collect revenue has nothing to do with government spending; this is a completely different issue. At least with the FairTax, you will know the high cost of government every time you look at your sales receipt. This may cause more Americans to become more active in our pursuit to reduce government spending.

    Cheryl Pass states “At least with income tax they don't have a control mechanism over what I purchase. The Fair Tax gives them that.” No, our current tax system just has total control of how much tax I pay regardless on how much I spend. Under the FairTax I have total control of how much tax I pay based on how much I spend. And how do you figure that under the FairTax the government wound have control of what I purchase? I guess they are telling me I’m required to purchase a used car because I can’t afford a new one.

    Cheryl Pass states “Steve Keller wants to know: "Besides what would their reason be for doing so?" The same reason the Feds are now pushing higher taxes on soda pop, salt, or so-called high fat foods. The same reason they increased taxes on cigarettes. The same reason they are taking whole milk out of the schools. The same reason Michelle Obama is out there telling everyone how to eat which foods. Their excuse is controlling health costs for the Federal government. Whatever the excuse they come up with for manipulating or nudging, you can bet your fanny they will manipulate the taxes in the Fair Tax system. There is nothing in the bill that prevents that from happening.”

    This has nothing to do with the reason for tracking our spending and there is no reason for tracking what we spend our money on. Under the FairTax is it possible that you may receive a letter for the IRS stating we are going to audit your spending. You will need to prove how much you spent on bread, how much you spent on shoes; did you buy a new baby crib or a used one. I don’t think so.

    As far as placing higher taxes on certain items; they can do this under any tax system.

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