Claims Against FairTax Fairness
Let’s start with the most infamous of all, the attacks directly from the horse’s mouth, Mr. Lawrence M. Vance.
- Well, first of all, what’s fair about a consumption tax? The FairTax perpetuates the fallacy that the government has a right to confiscate a percentage of the value of each new good sold and every service rendered. This is no different than claiming that the government has a right to the portion of each American’s income.
FairTaxer Answer: Income Taxes tax you on what you CAN spend. Consumption taxes tax you on what you actually DO spend. THAT is what is fair about the FairTax. If you don’t want to pay taxes under the FairTax, you can spend $30,000 per year or less. The less you spend, the more taxes you collect from the government.
- The FairTax is also not fair because of the rate.What is fair about the government taking a 30 percent cut on every transaction? I know the FairTaxers claim that the rate is only 23 percent, but when I buy an item for $1.00 and end up paying $1.30, the basic math I learned in elementary school tells me that I paid a tax rate of 30 percent. But regardless of whether the rate is 23 or 30 percent, why should the bloated, pork-laden leviathan we call the US government get anywhere near this much of our income.
FairTaxer Answer: There are two fallacies Mr. Vance is perpetrating here. First, that the FairTax is an added 30% on the dollar. That is not how the FairTax is calculated. The FairTax is inclusive of the cost of new goods and services – not exclusive as Mr. Vance wants you to believe. If you buy an item that is $100, then $23 of that $100 (23%) is FairTax. The second fallacy is that the government currently takes less than that from you now. If you’re the average person making between $8,026 – $32,550 ($16,051 – $65,100 if you’re married) you’re in the 15% tax bracket. On top of your income taxes, you and your employer each pay 7.65% into Social Security/Medicare. So, let’s add this up really quick: Income Taxes + FICA Taxes = Effective Tax Rate (15% + 7.65% = 22.65%). As you can see, you’ve nearly received the entire 23% just from your paycheck. In addition to that, your employer is off the hook for their 7.65%. Additionally, embedded taxes are partially removed from new goods and services; and used goods are untaxed completely.
Why the FairTax IS fair
- The FairTax is fair because everyone pays the same tax rate on their purchases and everyone gets the same prebate (varying by family size only).
- The FairTax is fair, because if Bill Gates, Warren Buffet, Oprah Winfrey, you or me buy that bottle of Coke or a Big Mac, we will all pay the same amount of tax. No longer would someone in Washington need to know your personal business, your earnings, your marital status, whether you own or rent, or what you invest in or what you buy. Your privacy is yours again. No longer does a mortgage payment get preferential treatment over a rent payment. No longer is hard work and achievement punished as income increases. No longer would risk taking and investment capital be penalized while failure is rewarded. Everyone pays the same sales tax and everyone gets the same prebate.
- The FairTax is fair because it takes the politics out of revenue generation. With the FairTax, Washington would no longer be able to use the tax code to reward their cronies and punish their enemies. The FairTax gives people the freedom to choose when and how much they want to pay for the government they desire.
- The FairTax is fair because it applies to everyone.
- The FairTax is fair because there are no exemptions.
IS IT FAIR THAT…
- … 12 Million Illegal Immigrants live here and use the same resources we use without paying taxes? The FairTax will fix that.
- … one person be taxes at one rate and another person is taxed at another? The FairTax will fix that.
- … the Government tax you on what you CAN spend instead of what you DO spend? The FairTax will fix that.
- … the rich pay fewer taxes than the poor, just because they know where to find the tax deductions? The FairTax will fix that.