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Posted by mac56 in General Discussion: Presidential (Through Nov 2009)
Tue Mar 14th 2006, 01:06 PM
The "fair tax" that Neil Boortz wrote a book about? That simple fact alone should convince you that the idea is FUBAR.

More arguments against it?

We'll most likely end up with both a national sales tax and an income tax. Even if legislation requires abolition of the income tax, some “national crisis” (e.g., war on terror) will soon cause the income tax to be reinstated. And of course, bureaucracies never simply disappear. Income tax enforcers would get new life as fair tax enforcers.

The rate of the fair tax would be colossal. Its proponents admit they'll need a 23 percent tax rate to fund the current size of the federal government. However, the Brookings Institute calculates that to pay all current government expenditures while also compensating for such factors as tax evasion, the national sales tax might have to run as high as 67 percent.

Inflation will kill you. As goods become more expensive, you'll pay more in taxes or do without the things you need. As your food, clothing, vehicles, and medical care get more and more expensive, you'll pay more and more and more sales tax.

The fair tax is unfair to retirees. People who have paid 1/4 or 1/3 of their income in taxes for 40 years will now have to pay an equally high tax on all the after tax income they've managed to put aside for their retirement. Every time retirees buy anything with their lifelong savings, they'll be double taxed.

The fair tax will require a tracking of your entire financial life. How else will the government know if you're being taxed fairly? They'll then decree that it has a vital interest in knowing exactly who is buying too much unhealthy food, the “wrong” kinds or amounts of medicine, ammunition, or unapproved reading matter. Your purchases could lead to criminal investigations, denial of insurance, suspension of your drivers license, and other bureaucratic punishments.

A fair tax will create a huge black market. If people can evade a 30+ percent tax, they will. Such down home places as swap meets, farmers' markets, and garage sales will automatically become prime places for black market activity. Either the tax will eventually be extended to used items, or all such markets will be heavily regulated. And while some people keep more of their money through black-market purchases, those who play by the rules will end up paying higher taxes.

The fair tax is regressive: the poorer you are, the more you pay, proportional to your income. Sponsors of the new tax have come up with the worst possible solution for making it more “fair.” Instead of just not taxing essential items like food, health care, transportation, or clothing, they want the federal government to cut each of us a reimbursement check every month. Think of the bureaucracy! Think of the government dependence this will create!

Many industries may collapse. Just before the fair tax goes into effect, many Americans will fear that retail prices will all go up 30+ pervent to adjust for the new tax. So they'll go out in a buying frenzy. The economy will boom as Americans race out to buy cars, electronic gear, or stock up on food. Then sales will plummet. Some industries producing high-ticket items might never recover.

New homes will suddenly become 30 percent more expensive than existing ones because all new construction will be subject to the tax. Two homes could sit side-by-side – each with four bedrooms, two baths, and comparable features – and one would cost $50,000 or $100,000 more than the other, simply because it was being marketed by its builder, rather than a resident. No one would want new homes.

You'll have to have a receipt to prove you bought that can of beans, that computer, or that car “legally.” Lose your receipt and you could be required to pay that 30+ percent tax all over again – plus penalties and interest.

As it gets closer to being law, you can bet that it will get more and more complicated. What do you mean the tax is the same for bibles as it is for pornography? Are you saying that someone buying good, wholesome Iowa corn has to pay the same tax as someone who buys French wine? A poor family pays the same sales tax on baby food that a rich bachelor spends on his sports car? Voila: a thousand pages of regulations describing which custom sales tax rates apply to which items.

It's a sucky idea.
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Scott McKinney
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