Freeing Up the FairTax

Julie Borowski of FreedomWorks put out a nice little article titled “Flat Tax vs. Fair Tax” on July 06, 2011, but seems to have omitted (unintentionally, I’m assuming) some very pertinent facts about the FairTax.

I will agree with Julie in that most people I’ve spoken with will agree wholeheartedly that our current tax system needs a serious overhaul. In addition to information Julie presented in her article, I recently read that according to Art Laffer, the IRS itself has testified before Congress (in 2008, 2009 and 2010) that tax code complexity is the biggest threat to the IRS and to U.S. taxpayers. (Thanks to J.C. for that interesting tidbit).

That being said, which “tax reform system” is best for Americans; the FairTax or a flat tax? Some will opine that a flat tax is best, but according to their own poll (“Reform Poll: Flat Tax or Fair Tax?“) 55% of FreedomWorks’ own visitors prefer the FairTax over a flat tax. Add to that the heated discussion with over 500 comments (mostly pro-FairTax) on this FreedomWorks Facebook thread.

So, what is it that makes the FairTax so enticing to flat taxers? Here’s the short list:

  • The FairTax is a “flat tax” on consumption. A flat 23% at the register to everyone; including illegal aliens, drug dealers/distributors, tourists, and the underground economy. Effectively taxing those groups of individuals has not been accomplished here in the U.S. and can only be found in the FairTax Act (HR 25).
  • The FairTax effectively untaxes those living at or below the poverty line; otherwise known as “the poor”. This is something the flat tax does not propose and cannot accomplish because of its income tax nature of “taxing everyone at the same flat rate”. For the vast majority of Americans, living anywhere near the poverty line isn’t an option. But for those who don’t have the option the FairTax is there to assist them, temporarily, until they can afford to spend more money.
  • The FairTax completely eliminates the need for any U.S. citizen to ever file another “tax return” – ever. And yes, a flat tax would only require a “post card” sized return, but the fact remains that you still have to deal with the IRS when you make a mistake on that form – or when they THINK you made a mistake on that form.
  • The FairTax is not a VAT; whereas the flat tax is. Since the FairTax is ONLY collected at the retail level there are no upstream or intermediate taxes imposed on goods sold between businesses; effectively removing the consumer’s tax burden.

According to Julie, “So far, the flat tax has been adopted in roughly 24 countries. There’s a flat tax revolution going on around the globe and the United States needs to jump on the bandwagon.” Since when has the United States of America ever “jumped on a bandwagon”? Have we not always been The Trendsetters? The Innovators? The Trail Blazers? Don’t you think it’s about time WE set a worldwide trend? The FairTax can do that by eliminating corporate business taxes. Consumers pay all the taxes anyways, let’s make it transparently so and invite corporations from around the world to settle here in the United States. They can bring their jobs and their money with them; and we won’t charge them a dime for being here or selling their goods to U.S. citizens.

Before I close this up, I want to address a couple common misconceptions of Julie’s:

  • If we don’t repeal the 16th Amendment first, we could end up with both an income tax and a national sales tax.” That is incorrect. First, the FairTax untaxes our income completely and removes the tax burden from our corporations. Second, the FairTax has a sunset clause that will prevent that from happening. And third, if Congress wanted to impose a sales tax along side our income taxes they could do that right now. There is absolutely nothing stopping them from doing so – except us, their bosses – and nothing in any flat tax proposal prevents that from happening either.
  • Several European governments have added a national sales tax on top of their federal income tax.” Hmm, I wonder if any of those are the same European governments that have implemented a flat tax? (See the chart in the comments below).
  • The proposal promises that individuals under a certain income threshold would get some money back at the end of the year.” I have never heard this promise, nor have I heard a claim of this promise before. The FairTax actually promises that every legal U.S. citizen will receive a monthly prebate which returns your taxes (in advance) based on the size and type of your family. I believe Julie needs to read up on the FairTax before she tries to report what it does or does not do.

That being said, the FairTax is the obvious choice here. If you would like to learn more about the differences between the FairTax and a flat tax, please take a few moments to read “The FairTax (real reform) vs. the flat tax (more of the same): A comparison

And with that, I’m going to leave you with this very appropriate quote from a great proponent of the FairTax:

I find it interesting that those who choose to challenge the FairTax in its “Fairness” somehow have to distort the facts in order make their point. Yet time and time again, FairTaxers need NOT distort the facts in order to disprove the anti-FairTaxers ridiculous statements. ~Dale

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Posted in Fact, FairTax, FairTax vs. flat tax, FreedomWorks, Prebate, Progressiveness, Tax Reform
7 comments on “Freeing Up the FairTax
  1. Bill E. Payne says:

    Excellent commentary and explanations! In answer to one of your questions (“Hmm, I wonder if any of those are the same European governments that have implemented a flat tax?”), I did a little research and found, through several sources including, but not limited to, Cato.org and Wikipedia, that a number of countries with flat income taxes indeed have national sales taxes too. There may be more, but here’s my short list:

    Country Flat tax rate Nat’l sales tax rate
    Estonia 22% 9-20% (type of goods)
    Latvia 25 22
    Lithuania 27 21
    Russia 13 0-18
    Serbia 14 0-18
    Slovakia 19 20
    Ukraine 15 17
    Iceland 35.7 !! 0-25.5
    Romania 16 4-24
    Georgia 12 18

    The “flat tax revolution” going on around the world seems to be confined to 3rd world countries. I know we are headed that way here in the US, but I hope the citizens will not stand for us becoming such. I also hope that enough people will wake up and realize that, if we follow these third world countries in their taxation methods, we may become one of them. As you say, why should we follow when we should be setting a worldwide trend?

  2. Bill E. Payne says:

    Well, the “chart” doesn’t look good, but it’s decipherable. I didn’t know wordpress was going to compact everything and take out all my spaces.

  3. Bill E. Payne says:

    It looks like a chart should – thanks!

  4. How much do you want to bet, Mark, that you will tell me that the research I provide you “isn’t real research”, or “doesn’t prove anything”, or something along those lines to disprove the research that you say isn’t there? It IS there, and you KNOW it’s there, you’re only looking for people to play your silly little games.

    Nobody will EVER believe that you are going to give them $50K. Hell, I don’t believe that you would even put up $50. You’re a quack and the entire FairTax community knows it.

    And FYI, this website is run by a goon that knows you’re a crook, a crock, and a loon. I mean, c’mon, Mark, look at the goofy look on your face. Who could ever take that seriously?

  5. Jeff, I’m not going to waste my time proving anything TO Mark, it does absolutely no good. When I have the information I will post it for everyone. I just want Mark to be accountable for the money he says he will pay – which he should be. Don’t you agree?

    As for your comments: Take a look at this chart (https://fairtaxer.files.wordpress.com/2011/06/table1-2011updatehowtheprebatemakesthefairtaxafairtax1.jpg) and you might gain a better understanding of how the “lower incomes” will actually [pay] less in taxes, the middle-class won’t be “hit hard” like some claim, and the “rich” will actually pay more than most FairTax opponents claim.

    Please understand, Jeff, that the term “corporations” includes the term “small businesses”. In fact, the NSBA Supports the FairTax. All any small business will have to do is provide their “tax exempt” business card in order to benefit.

    As for the “budget gap”, Jeff, the FairTax is not designed to, nor has it ever purported to make any changes in the budget. Some studies have shown that spending may increase and that the U.S. economy may improve with the FairTax, but they’re only studies and should always be taken at face value.

    Thanks for the reply.

  6. Mark, I like how you block me the minute I ask to see proof you have the money. If I’m going to do $50,000 worth of work, I want to make sure the money is available. Why are you being so evasive? You want us to show you proof there is research, but you won’t show us proof that there is money available to cover your side of the bet? That’s pretty cowardly if you ask me.

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