The "Fair" Tax is a welfare scam

Thomas L. Knapp

Infuriating Blowhard
Note: This article originally appears on my blog. Rather than advertise that blog, I'll just post the whole thing here for comment/discussion -- it's licensed under a Creative Commons attribution license, so feel free to redistribute it as you think appropriate - TLK

Over on one of the Yahoo! Groups I frequent, a poster wrote the following:

There is an old saying that says that the perfect is the enemy of the better. The fair tax while not perfect is clearly much better.

Below, I extend and revise my reply, which I figure is both detailed and succinct enough to make a good blog post/capsule argument (since I've been alluding to the "Fair" Tax now and again, but haven't actually taken it head on). I've also linked some of my claims to supporting source material:

Only if by "clearly much better" you mean it:

- Results in the theft by government of just as much money as the income tax (the "Fair" Taxers boast that their proposal is "revenue neutral");

- Results in the same amount of, or perhaps more, redistribution of wealth than the income tax (the "Fair" Taxers boast that their proposal is at least as "progressive" as the income tax);

- Puts every American on the dole so that they're recipients of monthly government welfare checks which the majority will likely fight tooth and nail to keep coming in perpetuity (the "prebate"); and

- The "Fair" Taxers' arguments about eliminating the IRS aside, will require a bureaucracy to administer (both to collect and to send out the welfare checks).

The "Fair Tax" is at least as bad as the income tax in every way, and worse in some ways. It's not a tax cut. It's not a tax elimination. It's just a strengthening of the tax system by linking it to a welfare program -- just like Social Security, which has been a "third rail" issue in American politics for half a century precisely because millions of Americans have a vested interest in keeping the checks coming.

It may not be politically possible to get the income tax straight-out eliminated right now, but it is politically possible to get it CUT, which would be a far superior alternative to the "Fair" Tax.

The Boston Tea Party's program calls for universal, bottom-up tax cuts as follows:

The Boston Tea Party calls for legislation adopting an annual, regularized increase in the personal exemption to the federal income tax of $1,000 or more, and the additional application of said personal exemption to all FICA/Social Security taxes paid by employees and employers.

Members of Congress (mostly Democrats) routinely propose and vote for increases to the personal exemption, so it's politically doable.

Increases to the personal exemption give EVERYONE who pays taxes a tax cut, from the janitor at the local factory to Bill Gates.

Increases to the personal exemption remove people from the tax rolls and withholding treadmill entirely (every time the exemption goes up, more people's income falls below the taxable amount).

Applying the personal exemption to Social Security payments would address the extreme regressivity of the Social Security system. The poorest people pay proportionately the most in Social Security taxes (since the requirement to pay is capped at a certain income level in, I believe, the $60K range), and they receive the fewest benefits (due to shorter lifespan).

Eliminating the income tax is the best option. Failing that, cutting it is. Replacing it with a tax that doesn't cut taxes, doesn't remedy redistribution problems, doesn't eliminate (or probably even reduce) the associated bureaucratic and administrative costs, and puts every American on government welfare is just a scam if the goal is to reduce or eliminate taxation.
 
Remember that the SS Taxes are used in the General Funds... Fricking morons. I hate the way these people have spent our money.
 
IMHO ... the only true fair tax is a sales "consumption" Tax .... it collects from all sources and people will be taxed accordingingly. The wealthy get taxed on their Rolex... (% of 2g's), The middle get taxed on their Bulova (200.00) and the budget shoppers get taxed on their Geneva's (20.00). Makes sense to me.
Of course.. there would need to be special rules in place for Real Estate ... and such.. we wouldnt want to be taxing on the total sale of house or business as we would a consumable item.
 
Even if those objects are bought in another country Klaatu ?
wouldn't the ritch just take their business out of the country ?
 
Even if those objects are bought in another country Klaatu ?
wouldn't the ritch just take their business out of the country ?
They would have to never use any of those new products within the country, or they'd have to pay the taxes on the value...

It doesn't take much to realize the rich like using the stuff they buy and they like living here too.
 
Even if those objects are bought in another country Klaatu ?
wouldn't the ritch just take their business out of the country ?

I was waiting for this response .. lol ... assuming that everything is going to be cheaper out of the country? What prevents them from doing that now?
A sales tax takes all the loopholes out.. you know the loopholes for the rich that you Dems cry about. A sales tax would probably collect more from the rich... isnt that what you want?

For any type of Commerce to succeed you need a level of Consumer Confidence.... assuming that the rich understand this..and they are the likely ones to depend on Consumer confidence to succeed in their own businesses ... they will avoid playing trivial games as to run out of the country to save a few bucks ... actually.. the middle class are more likely to do that.... run to Canada or Mexico if they can save a few bucks.
The rich depend on the working class having a free flow of cash to spend .. this is something that liberals tend to forget.
 
Perhaps not but would the sales tax apply to the coprs that the rich control. simple matter to have your company buy your Hummer for you. happens all the time now for tax avoidance.
 
There would have to be rules in place to keep from over taxing or double, triple taxing. If an executive of a company is using his Corp. to purchase a personal consumable to avoid paying tax .. he then is breaking the law... same rules apply.
 
Then I am for the consumption tax if it's tax is at least cut from the regular income tax or does away with the income tax.
I would prefer it do away with income tax. The whole income tax system has become a tool for the Feds to give money away to specific groups...
 
I would prefer it do away with income tax. The whole income tax system has become a tool for the Feds to give money away to specific groups...
Why do you think any funds raised by any tax system would be any different Damo ? Same govt in place, just new tax.
 
Why do you think any funds raised by any tax system would be any different Damo ? Same govt in place, just new tax.
Much easier to see whether there is an exemption in place...

And when you file your taxes you get money back... This is the tool they use to give the money away without others realizing it. They are just getting a "return", not a giveaway. Of course many of the 'returns' are to people that never actually payed income taxes. EIC comes to mind, as well as those corporate returns for specific cost outlays...

In a system where everybody pays the consumption tax exemptions would not only be easy to detect but also more difficult in implementation.
 
I agree.

And tax everything but the necessities for a household to survive.
but what are the necessities ?
I am curerently taxed on my home, I think I sort of need that :)
Medical care ? food yes but what food ? electricity ? Gasoline to get to work ?
Any exception opens the door for all.
 
Only things needed for survival. You cannot eat your automobile. Drink your gasoline. One can survive without a job, ask the homeless.

Necessities are what you buy to live.
 
I would prefer it do away with income tax. The whole income tax system has become a tool for the Feds to give money away to specific groups...
I still don't see how it would be any different, they can still legislate law in other ways to accomodate their friends, like laxing Epa Regulations, absolving the payment of land lease fees in the gulf of mexico worth billions to the tax payer, paying for the pipeline from ANWR to the mainland states for the oil companies, giving credits for building new refineries, rewriting bankruptcy laws in the FAVOR of the bank without requiring them to pass these savings on to the customer, Pill bill legislation where the HMO'S AND PHARMA made out like bandits, especiall pharma not having to negotiate bulk discounts and locking us out of Canada...

I can go on and on and changing the tax system will not prevent any of the above from happening imo...thus, IT AIN'T WORTH IT! imho....

And they can raise the consumption tax rate as easily as the income tax rate...ya know they will do it, over and over again....this won't stop spending at all imo, and SPENDING is where the problem begins, it's the ROOT of the problem....

care
 
I would die without some of my medicines....I would freeze without a home and heat....
No, you would not freeze without a home and heat. Ask the homeless...

And Prescribed medication would be included in necessitites. Therefore they would not be taxed. They aren't now either unless you are buying OTC drugs which still would not be excluded...
 
Back
Top