Fair Tax? Ya Gotta Be Kidding!
It would seem the ONLY people paying attention to tax reform are the Fair Tax supporters and all the rest just want to get rid of the current 75,000+ pages of the current tax code and get the IRS off their back. I will state unequivocally that the Fair Tax is the most misguided idea to come along… to the point, that I believe it has been introduced and promoted by leftists to distract from a reasonable approach via Flat Tax legislation. I’ve copied a number of links below for you to review and to help you to come to your own conclusion. I lived in a place (Hong Kong) where the Flat Tax worked very well at 15%. Even at that level, there was tax evasion, but that is for another essay. I know it works reasonably well because EVERYBODY has skin in the game… something Bobby Jindal is keen about besides myself (This keeps the takers off the makers backs). Singapore and Russia also have flat tax systems. I am repulsed by the idea that a person who earns more should also pay a higher percentage of their income in taxes, when some pay none and are stirred up by the puppet-masters to support more taxation of the higher wage earners. This continues to fall on the middle class more than the persons able afford accountants to find holes in those aforementioned 75,000+ pages.
I will not argue the merits of the Flat Tax OR the Fair Tax, but will focus my vitriol on the naïveté of the Fair Tax via pointed critiques…
1. The bureaucracy elimination and Constitutional amendment repeal are bridges too far. To say that the IRS will be eliminated is downright stupid (I do wish it were so). They will simply be re-purposed to administer what ever new revenue stream needs policing. The Fair Tax people continue to “promise” this red herring. Getting the Amendment repeal train in motion will only be accomplished in a police state from my viewpoint. There are too many vested interests to allow that to happen.
2. Next, what I call the “Kerry Effect” is so big a hole in the plan, one could “sail a boat” through it. Bermuda decides to be a tax-free harbor for yachts. The million dollar yacht is bought for $750,000 or less and the retail tax is avoided. Of late, Fidel may even jump into this game… only 90 miles off-shore. The same could apply for aircraft, vacation homes, you name it. The U.S. will be “circled” with new tax havens for the ultra-rich. Who gets clobbered? The middle class.
3. The old adage “If you want less of something, tax it!” There will be new volumes of new regulations defining what is considered new and what is used in order to reduce the tax burden. Since business wishes to move NEW product to the marketplace, this obvious tax burden of 23% will dramatically curtail sales. We will start looking like Havana with infinitely refurbished old cars, etc.
4. The elimination of Social Security and Medicare taxes at the payroll point will be another insurmountable barrier. Again, too many vested interests in the status quo.
5. I can’t even envision the new gray markets and various forms of smuggling which will rise up from this Fair Tax system. Look at the Californians traveling to Oregon to save sales tax.
The change in the current tax system will have to be evolutionary, not revolutionary via a Fair Tax implementation. How many state tax systems are also based on the U.S. Tax Code? Another momentum barrier.
As far as I am concerned, the above five items are deal killers, but please read the links below and come to your own conclusions and let me know what you think. I’ve read the Neal Boortz book “The Fair Tax Book”. I am not moved. I focus on the possible, not the impossible.
P.S. If you want to get a deer-in-the-headlights look from a “Fair Tax” supporter, present Item 2 to them for a rebuttal.