Reply
Fri 21 Dec, 2007 09:46 am
Huckabee's FairTax proposal is unfair and a nonstarter.
The Atlanta Journal-Constitution
Published on: 12/20/07
There is indeed a cult member among the frontrunners for the GOP presidential nomination. But it isn't Mitt Romney, the Mormon from Massachusetts, despite what some in the evangelical community might tell you.
It's Mike Huckabee, the Baptist preacher, former Arkansas governor and fervent believer in the cult of the FairTax.
JAY BOOKMAN
MY OPINION
For those unfamiliar with the FairTax creed, it goes something like this: Let us go forth and abolish the federal income tax, the estate tax, corporate taxes, capital gains taxes and payroll taxes, as well as the IRS. Let us then replace all those taxes with a 30 percent national sales tax collected on all services and goods, from a new house to chemotherapy treatments to a gallon of milk.
If we do that, economic heaven is within our reach.
Or, as Huckabee says, "when the FairTax becomes law, it will be like waving a magic wand releasing us from pain and unfairness."
That does sound wonderful. Don't we all want to be released from pain and unfairness? Don't we all yearn for a magic wand that would bring such a glorious day to pass?
Sadly, though, there's this little matter of reality. Reality says taxes are going to hurt, and no magic wand will ever change that. For time immemorial, taxes have been perceived as unjust, and nothing will change that either.
According to Huckabee and other proponents, the FairTax will raise just as much revenue as the current system. They also believe that, somehow, almost everyone will pay less in taxes. They believe that under the FairTax, the economy will grow at double-digit rates, interest rates will fall, exports will boom and the Falcons will win the Super Bowl.
OK, they don't really mention the Falcons. Even the FairTax magic wand has its limitations.
In effect, the FairTax is the tax equivalent of those automobile engines designed to run on water. It sounds great, but it doesn't have a chance of working.
The proposed 30 percent sales tax, for example, wouldn't come close to being revenue neutral. A tax commission convened by the Bush administration found that eliminating just the federal income tax ?- leaving all other federal taxes intact ?- would require a sales tax of at least 34 percent, a finding backed by other economists.
To a cult, of course, the scorn of nonbelievers is transformed into proof that their cause is righteous; likewise, outside criticism is typically dismissed as the work of conspiracy. In this case, the FairTax cultists dismiss the findings of the Bush tax panel on grounds that it was stacked with liberals.
Uh huh.
The FairTax cult also boasts its own holy manuscript, in this case "The FairTax Book: Saying Goodbye to the Income Tax and the IRS," by radio talk show host Neal Boortz and his congressional sidekick, U.S. Rep. John Linder (R-Ga.). Cultists insist that the book, like the Bible, is inerrant and answers all doubts, and that all who read it will earn enlightenment.
The fantasy nature of the FairTax is perhaps most glaring in its approach to enforcement. Advocates believe that under their system, tax fraud would essentially cease to be a problem and that the new system would almost enforce itself, allowing the IRS to fade away.
But we all know human nature. Ask yourself how many people would be lured into the black-market economy to avoid paying a sales tax of 30, 40, 50 or even 60 percent on expensive items? The FairTax cult says very few ?- maybe they're counting on that magic wand again.
The grassroots fervor for the FairTax is fed by a growing and all-too-legitimate frustration among working-class and middle-class Americans, a sense that they're working harder than ever yet losing ground every year. Huckabee isn't shy about appealing to that frustration, not just with the FairTax but with other rhetoric as well.
However, under the FairTax, those folks would end up paying significantly more in taxes, while the tax burden for the wealthy would fall dramatically. It would victimize the very people who look to it for salvation.
The FairTax, like other cults, plays its followers for suckers.
Of course the concept is "UNFAIR" to low and middle income wage earners and nothing is really mentioned about Corporations, manufacturers and re-sellers specifically.
This is just another scam by the elite, especially any suggestion of a repeal of the Estate Tax, to stick it to the middle and low income wage earners.
Beware of any politician who favors repeal of the Estate Tax. They are only suggesting it to satisfy the elite and themselves (got it Mitt Romney!)
The plan won't be simple and won't eliminate the IRS. Certainly, there will have to be someway to exempt,or rebate tax to, the poor. For this, income returns would have to be filed, and people would have to audit these. It would be a huge can of worms and a complete loser.
ANOTHER LEFTIST FAIRTAX HATCHET JOB
Look, I'm on vacation far, far away from home base. Maybe I shouldn't have brought a computer with me, but I did, and I read Jay Bookman's inane column in the Atlanta Journal-Constitution, and I just had to respond ... though briefly.
I suppose we deserve this. I spend no small amount of time on my show talking about the circulation slide of the Atlanta Journal-Constitution. It's a left wing newspaper ... and getting more so every day. They write articles about how much Jane Fonda is "loved" and have established themselves as the go-to newspaper when when you want the latest news about your favorite rapper or hip hop "star."
The one word that comes to mind after reading Bookman's screed is "childish." I can just picture him laying on his back on his office floor flailing his arms and legs and crying in frustration as he dictates this column. He refers to FairTax supporters as a "cult." Were Bookman alive in 1776 he most certainly would have used that same word to define those who were fighting for independence from Great Britain. Then, of course, he pulls out that tired old "30 percent" nonsense. Once you hear that 30 percent line from a FairTax opponent you know that you're not dealing with a serious critic who knows what he's talking about.
Let me just highlight one section of Bookman's column to illustrate the fact that he has not done his homework; or worse, he has just chosen the path of journalistic dishonesty:
"The proposed 30 percent sales tax, for example, wouldn't come close to being revenue neutral. A tax commission convened by the Bush administration found that eliminating just the federal income tax ?- leaving all other federal taxes intact ?- would require a sales tax of at least 34 percent, a finding backed by other economists.
To a cult, of course, the scorn of nonbelievers is transformed into proof that their cause is righteous; likewise, outside criticism is typically dismissed as the work of conspiracy. In this case, the FairTax cultists dismiss the findings of the Bush tax panel on grounds that it was stacked with liberals."
What Bookman either doesn't realize, or doesn't want you to know, is that the president's tax reform commission was not permitted to consider the FairTax as it was written. They first were compelled by their own rules to rewrite H.R. 25, and then they considered the idea as reformulated by them! This is covered extensively in "FairTax, The Truth" which will hit the bookstores in about six or seven weeks.
What really bothers Bookman ... besides me, that is? My guess is that he knows that the FairTax would, as we have said, be the most massive transfer of power from the government to the people since our Republic was founded. No liberal worth their Depends is going to allow that to happen without a fight.
Even if it wouldn't solve everything, I think a flat tax like this would be way closer to being "fair" than the mess we have now. If nothing else, it would be a good launching point for the future.
McG, you provide a lot of generalizations and innuendo. A point-by-point rebuttal would be much more interesting and useful. I think that, if anything, Bookman understates the FairTax problems.
The graduated income tax system, which is based on ability-to-pay, is complex, and that is because our economy is complex. It is not a mess at all, and has worked well for over 70 years, helping to make this country as strong as it is. Moreover, due the flattening of the rates, and loopholes for the wealthy, we have become a growing plutocracy. This will only grow bigger were, god forbid, the FairTax enacted.
I think you should read more about what the Fair Tax really is.
No tax system is ever fair for the simple fact that the government will always target the rich with taxes because the rich are the ones with the most money. The rich will always be made to pay more in taxes because the rich can afford to pay more in taxes.
As it stands now our tax system is likely as fair as it ever could be. The rich pay a higher percentage of their money in income taxes while the poor pay a higher percentage of their money in sales taxes (especially in states where necessities such as food and medicines are taxed).
At the same time both the poor and rich receive welfare in one form or another with the poor receiving more than the rich do as a proportion of the taxes they pay.
Advocate wrote:The right is working very hard to kill the income tax, as well as the federal estate and gift taxes. This will be a great gift to the wealthy, whose income and wealth has been soaring.
As well as anyone else who has ever been subjected to the income tax or the estate tax.
Since before I was born my mother worked a good 50-60 hours a week first as a cashier, then as a bookkeeper and finally as a comptroller for a private country club. Her highest yearly income was never much more than $60,000 and she had worked a good 30 years before she came close to earning this much on an annual basis.
My mother had to take medical retirement in 2001 due to lupus, and after fighting the Social Security Administration for SSI disability for 3 years she was awarded back benefits going back to the time she retired. However, the federal government retained 1/3 of the back benefits to pay for its cost of the court fight and then my mother had to pay her own lawyer $5000, which is the government mandated fee. Social Security disability has been her only source of income except for 2005 when she inherited some cash from her brother's estate. Her brother had been a local haul truck driver and he left an estate worth maybe $150,000 in cash (IRA and other pension accounts) and real estate (his home). And the only reason my uncle had so much money when he died was because he didn't have children, worked 40-60 hours a week and never lived an extravagant lifestyle. But my mother had to pay not only estate taxes on what her brother left to her, she had to file an income tax return for that year. The IRS counted her lump sum retroactive SSI as a single year's income instead of dividing it among the years it would have been paid out. That income, paid out in yearly amounts, was not enough to be taxable, but because of the way the IRS is considering it the IRS says it is taxable. It all likelihood this is a clerical or arithmetic error on the part of the IRS (as some of the IRS agents she has talked to says it is). But even after giving the IRS the worksheets that show how the income should be considered for tax purposes, my mother cannot get anyone with the IRS to officially correct the IRS error.
Furthermore, my mother is in very poor health and is facing surgery that could be bad. When she dies I will have pay estate taxes on what she is able to leave me.
The estate tax is the most unfair tax imaginable and the income tax isn't much different. Both should be abolished.
Quote:The U.S. government collected income taxes for the first time during the American Civil War (1861-65) and again in 1894,
Unconstitutional both times since the taxes weren't apportioned among the states based on population as the Constitution originally required.
Quote:Tax rates have fluctuated since the passage of the Sixteenth Amendment, reaching their highest mark during World War II (1939-45) when the rate soared to 91 percent.
Certain people were paying taxes at this rate as late as the 1970s. I've heard that Elvis Presley donated his entire income from his Hawaii concert to charity rather than pay taxes on it.
Quote:The war effort also brought the innovation of automatic withholdings, whereby taxes are deducted directly from paychecks.
Like I said, most Americans didn't pay any federal income taxes until World War II.
"When she dies I will have pay estate taxes on what she is able to leave me.
The estate tax is the most unfair tax imaginable and the income tax isn't much different. Both should be abolished"
Nothing in your post indicates that your Mom's net worth exceeds $2,000,000. You will NOT be subject to Federl Estate Tax upon her death unless she exceeds that threshold.
Apparently, you do not understand the Federal Estate and Gift Tax system.
McGentrix wrote:I think you should read more about what the Fair Tax really is.
It is a "scam" by the elite to further seperate the "classes" and further secure the concentration of wealth in the hands of the few.
I have a feeling you already know that.
woiyo wrote:"When she dies I will have pay estate taxes on what she is able to leave me.
The estate tax is the most unfair tax imaginable and the income tax isn't much different. Both should be abolished"
Nothing in your post indicates that your Mom's net worth exceeds $2,000,000. You will NOT be subject to Federl Estate Tax upon her death unless she exceeds that threshold.
Apparently, you do not understand the Federal Estate and Gift Tax system.
Then why did my mother have to pay estate taxes on her brother's estate? She had to fill out a tax return form for the estate and she had to send the IRS a check for taxes due. If it wasn't an estate tax what was it?
flaja, the estate tax was probably something imposed by state law, not by federal law.
You say that the IRS did various things. You must know that the IRS has to enforce the law passed by congress.
The tax code use to have an income tax averaging provision, which would allow a taxpayer to average over a number of years a particularly large income amount received in a single year. For some reason, congress repealed this in '80's, probably before your mother received her large payout.
A FairTaxSM White Paper
The FairTax: Fundamentals and facts
These points address common questions regarding the FairTax plan:
- The FairTax is revenue neutral at $0.23 out of every retail dollar spent.
- The FairTax lowers the lifetime tax burden for most Americans.
- The FairTax benefits retirees who depend mostly on Social Security.
- The FairTax preserves the overall progressivity of the federal tax burden.
- The FairTax dramatically improves the U.S. economy.
- The FairTax improves the international competitiveness of American producers.
- The FairTax promotes home ownership better than the current system.
- The FairTax simplifies tax compliance, thereby reducing tax evasion.
read the rest by following the link above (pdf).
I read the White Paper, and was totally underwhelmed. It is pie in the sky with huge and really obvious flaws. It would be exceedingly reckless to implement this, even more reckless than the right's supply-side economics, which continues to damage this country.
Please see
http://www.brookings.edu/views/testimony/gale/20041006.pdf
Advocate wrote:flaja, the estate tax was probably something imposed by state law, not by federal law.
It was a federal tax form that my mother filled out. To my knowledge Florida does not have an estate tax since the state constitution prohibits a state income tax.
Quote:You say that the IRS did various things. You must know that the IRS has to enforce the law passed by congress.
The IRS is a bureaucracy that assumes all taxpayers are guilty until the taxpayers prove their innocence to the satisfaction of the IRS.
Quote:The tax code use to have an income tax averaging provision, which would allow a taxpayer to average over a number of years a particularly large income amount received in a single year.
My mother didn't receive a large income in a single year. She received back SSI benefits that the government had illegally withheld from her.
Advocate wrote:
flaja, the estate tax was probably something imposed by state law, not by federal law.
It was a federal tax form that my mother filled out. To my knowledge Florida does not have an estate tax since the state constitution prohibits a state income tax. AN ESTATE TAX IS NOT AN INCOME TAX. IT TAXES WEALTH, NOT INCOME.
Quote:
You say that the IRS did various things. You must know that the IRS has to enforce the law passed by congress.
The IRS is a bureaucracy that assumes all taxpayers are guilty until the taxpayers prove their innocence to the satisfaction of the IRS. YOU ARE BASICALLY CORRECT. WE HAVE THE OBLIGATION TO ESTABLISH OUR INCOME, CREDITS, AND DEDUCTIONS.
Quote:
The tax code use to have an income tax averaging provision, which would allow a taxpayer to average over a number of years a particularly large income amount received in a single year.
My mother didn't receive a large income in a single year. She received back SSI benefits that the government had illegally withheld from her.
FOR WHATEVER REASON, SHE EFFECTIVELY RECEIVED A LOT OF TAXABLE INCOME IN A SINGLE YEAR. SHE HAD NO GROUNDS TO EXCLUDE IT FROM TAXABLE INCOME.
Advocate wrote:AN ESTATE TAX IS NOT AN INCOME TAX. IT TAXES WEALTH, NOT INCOME.
What is an estate if not the accumulation of a lifetime's income? The government taxed my uncle's income before he could spend it or invest it to generate more income, and then the government taxed that income again as part of his estate.
And don't forget that be it income or be it an estate it's still not the government's money to begin with. How much we pay in taxes is just as much an issue as what we pay taxes on is.
Quote:YOU ARE BASICALLY CORRECT. WE HAVE THE OBLIGATION TO ESTABLISH OUR INCOME, CREDITS, AND DEDUCTIONS.
And if the IRS makes a clerical error that makes a taxpayer appear to be guilty of not paying his taxes the IRS can seize the taxpayer's assets in a heartbeat without indictment, trial or jury deliberations. I have absolutely no doubt that the IRS intentionally makes errors and sends taxpayers a bill knowing that many taxpayers either won't know any difference or will simply pay the bill because they are too afraid of the IRS to protest or question the bill.
Quote:FOR WHATEVER REASON, SHE EFFECTIVELY RECEIVED A LOT OF TAXABLE INCOME IN A SINGLE YEAR. SHE HAD NO GROUNDS TO EXCLUDE IT FROM TAXABLE INCOME.
The income wasn't attributable to her in a single year. It was not a single year's income. It was paid out for a multiple year period and the yearly amount was not enough to be taxable according to what the IRS has told her. By all right the federal government should have to pay my mother interest for having the use of
her money.
Stumble It!
Tweet This
Bookmark on Delicious
Share on Facebook
Share on MySpace