The “FairTax” Fraud
Bruce Bartlett tax a look at the latest scam to harness the power of antitax sentiment without actually cutting taxes, the so-called FairTax. Something in general that the not-very-rich, which is most of us, should keep in mind: any revenue-neutral tax reform is going to be a massive tax hike on people like you and me. If it’s revenue neutral, it must bring in as much revenue as the current system, which disproportionately taxes the wealthy. Basic math: if you keep that equals sign and you lower the amount the rich are paying, somebody has to make up the shortfall. Usually the revenue-neutralists say that they’ll do that by getting rid of loopholes and exemptions — such as the home mortgage tax exemption. You can see that that’ll be a political non-starter.
These kinds of things make me see blood red. The conservatives and libertarians who get behind them are the worst sorts of frauds. The problem with our current tax system is not that it’s “unfair” (boo hoo!) or imposes a lot of external costs (which it does), the problem is that the taxes are too high across the board and government at every level is as bloated and inefficient as you would expect of any socialist institution. “Reform” ought to be a dirty word; we want cuts. Slash, eviscerate, take a chainsaw to present levels of spending and taxation. Productive Americans should not be yielding up a third of their incomes (which is about what taxation at all levels amounts to, in my experience) to finance bombs, bums, and collapsing bridges.
By the way, a point that Bartlett doesn’t raise–perhaps the FairFraudsters address this themselves–is that you can’t slap a tax on a product and expect it to sell as well as it does when it’s untaxed. Sprockets at a FairTax price of $1.30 or $1.57 are not going to sell in the quantities of sprockets at $1.00. So to meet the sacred goal of “revenue neutrality” — God forbid the state should have to tighten its belt! — the tax might have to be higher still.
Addendum: Here’s a classic Lew Rockwell article on the “Tax Reform Racket.”
August 27, 2007 at 9:08 am
A third might be optimistic: http://antifeds.com/2007/08/01/study-government-costs-half-a-year-of-income/
September 9, 2007 at 12:49 am
The FairTax has many dirty little secrets that get very little media attention. For a complete list of them see: fairtaxfraud.com.
April 20, 2008 at 1:08 am
If a FairTax was fair, it would be worth investigating. The problem is that no matter who is in power, they will always want more power. How to get more power? Raise more money. Hence the problem with every tax system on the planet.
July 28, 2008 at 9:40 pm
You are way oversimplifying quite a few things. If the FairTax ever did pass you can expect to see a drop in consumer goods prices by as much as %30 due to the money producers would save. Tack on the FairTaxes’ %23 and you are paying approximately the same amount or less for goods you buy. The government would prebate lower income families for all necessities they had to pay taxes on. And did you ever stop to think about the increase in your pay check that would occur with the end of income tax?
Illegals could not avoid taxation also.
May 19, 2009 at 12:00 am
Colin, you’ve been drinking the kool-aid a bit too deeply I’m afraid. You first say there will be a reduction in price, but then say your paycheck will increase. You’ve obiviosly don’t read Money Magazine, the Wall Street Journal, or Fortune…..all of whom have pointed out the obvious: where is the price reduction for goods going to come from? Simple, from you. That money that your employer is currently paying the government in taxes….isn’t going to you. It’s being elimated completely. And as far as your comment on “illegals” — you’re even more wrong. Most of the “illegals” are living at or below the poverty line in the country. The volume of new goods they’re consuming is minimal. Under Boortz’s plan the market for used goods would increase. So riddle me this, Batman: Why would you expect “illegals” to start purchasing new items, when the market for used ones are going to exponetially increase? This idea is a FRAUD.