More FairTax Problems
December 31st, 2007 by Peter SudermanVolokh’s Ilya Somin points out another problem with the FairTax: It doesn’t provide an easy, efficient way of figuring out exactly how much your total tax liability is:
For all its flaws, the income tax system at least gives taxpayers a fairly clear indication of what their total income tax liability is: every April you have to calculate it, or hire an accountant to do it for you. In a sales tax system, by contrast, you don’t really know how much money you’re paying the federal government in all. To be sure, you can calculate the amount by keeping close track of all your purchases and then multiplying by 0.23 at the end of the year (assuming the proposed Fair Tax rate of 23% is the one enacted). However, given that most voters are “rationally ignorant” and have little incentive to keep close tabs on government policy, it’s unlikely that many will do so. Moreover, as Bartlett explains, Fair Tax supporters intend to supplement their basic proposal with a complex system of rebates that would make the total tax burden even more difficult to calculate. The net result of the Fair Tax would be to make the true cost of government less visible to voters. That, I would argue, has been one of the effects of the somewhat similar value added tax (VAT) by which many European countries raise a large part of their revenue.
FairTax supporters often tout the policy as the best small-government solution because of how it would (supposedly) get rid of the IRS. But enacting it would also be a pretty serious blow to government transparancy as well.
January 2nd, 2008 at 12:24 pm
This is why FreedomWorks.org needs to create a Flat Tax website like FairTax.org.
FreedomWorks.org needs to create a Flat Tax website like FairTax.org. With the same amount of detail, except about the Flat Tax not the FairTax. The Flat Tax website would need Activist Tools/Features (i.e. a contact lawmakers, a pledge, a petition, etc). Do what FairTax.org does, except for the Flat Tax instead.
February 6th, 2008 at 12:14 am
Fairtax can not possibly work. For one thing — it pretends to tax the federal government, to pay the federal government Boortz writes “the federal government itself becomes a major taxpayer” Page 148.
This is a farce, it can not happen. Its like me saying I will tax myself 10,000 dollars a day. Oh, I can write a check for it, I can even deposit my own check in my own account. But at the end of the month, I dont have 300,000.
Incredibly, Fairtax thinks they will have 300,000.
For example, when the Fairtax makes the US Navy pay 4 billion in “sales tax” on a 12 billion dollar aircraft carrier — the Navy can write the check, The Treasury can even cash the check But the Treasury isnt a dime ahead. The treasury had to issue the money to cover the check.
This fallacy — one of many in Fairtax — means the 23% will have to be 35%.
Another major fallacy — Fairtax pretends it will be able to tax health care. That means cancer patients, stroke victims, nursing home patients, kidnes transplant patients — all of them will get huge tax bills. One cancer patient could easly get a tax bill for 50,000 in sales tax on their surgery and chemo,.
A single nursing home patient could easily be charged 25,000 in sales taxes per year. The parents of a child with luekemia could be charged 50,000 sales tax on expensive drugs and care.
The outcry from these folks will be like nothing US history has ever seen before. Congress would quickly exempt health care expenses from a high sales tax.
So the rate would have to be adjusted up — to 55%. Then auto manufactures willl have to get an exemption, or go out of business. New Home sales — will get an exemption.