WHo likes fair-Tax (the way Neal Boortz explains them)?

Question

I like the idea but don't know what the cons would be. (Don't say it would be unfair to the poor and rich would not pay thier fair share, that is BS).

Answer 1

Tell the couple with 2 kids making $20,000 a year how fair it is when even with the prebate, they still end up paying some tax instead of getting back everything they paid in plus over $4000 EIC.

Tell the laid-off auto workers and home builders how fair it is when many of their jobs evaporate because a new house or a new car costs much more than a used one because the new one has a huge tax on it that the used ones don't.

I'm sure those people will be really happy to hear how fair this is.

And of course the IRS will just be renamed, not go away - SOMEBODY has to administer this program.  Take just something as supposedly straightforward as the prebate - who is going to decide how many people REALLY live in each household?  Or is everyone suddenly just going to turn totally honest, and the prebate checks will prepare and mail themselves?

These are only a couple of the very major problems with this proposal, which get ignored in Mr. Boortz's feel-good books..

And yes, I've read them.

Answer 2

Fabulous answer Bostonian!  I agree 100%, the Fair Tax is hardly fair!  Who could say it better than that??!!  So as the answer to the questioner I do not like the Fair Tax proposal either! We families with children could hardly benefit.

Answer 3

There would be few cons other then the initial loss of government jobs.  Regardless, I love the idea.

Answer 4

The only con I see would be the initial adjustment period, until the capitalist market kicks in and decreases the cost of consumer goods because the imbedded taxes in said products are eliminated.  I wish Neal could speak with every American to explain how this system would work...It may be a bit painful in the beginning, but in the long run it would be so worth it.  And our forefathers, whom were disgusted at the idea of an income tax, would be thrilled!

Judy -- The couple that has two kids and makes $20K a year would make money off of the "prebate" cuz they don't make enough to spend to be taxed in the first place.  Personally, I would probably lose money because I MAKE money off of the current system due to the number of children I have.   I want to be supporting my government, not leaching off of it!  In the long run, under the fair tax we have a gov't that WANTS to promote consumer spnding/free trade, not one that taxes our income which is one of the reasons that we declared our independence from England in the first place!!!!!

Answer 5

It's a GREAT deal if you're wealthy. If you're poor or middle class it will clean your clock.  (Your assertion to the contrary is BS itself; it DOES disproportionally affect the poor and middle class as you'll soon see.)

Answer the following questions, please. If you can, you will be the FIRST "Fair Tax" proponent to do so! I've yet to have a single one of them address them, including Neil Boortz who hung up on me on his radio show and called me an idiot. (He wasn't even willing to discuss or debate the issues which tells me that he has no answers for my objections.)  I've interspersed my own commentary on the issues but feel free to tear it up with FACTUAL information -- platitudes are worthless.

1. If you are going to do away with the IRS, who will collect the tax. (It will still be the IRS, we'll just give them a sweet sounding name. You can call a t**d a rose if you wish, but it will still smell badly.)

2. How do you intend to deal with "prebate" fraud? (The IRS can't track income in real time -- it takes about 18 MONTHS to match W-2s with tax returns in the SAME computer system -- so how will they (or whomever) track family composition in real time?)

3. With a 30% tax on ALL new goods, how do you intend to deal with the massive black marketing that will result. (Any city or state with high tobacco or alcohol taxes will tell you that black marketing is a REAL problem.)

3a. OK, Congress dealt with that with tax stamps like on liquor and tobacco. (How about "The Audit of the New Millennium" now as armies of IRS agents descend on neighborhoods on trash day looking for evidence of untaxed goods. Or worse yet, burst into your home and rummage through your dresser looking for untaxed gruns and s*x toys?)

4. How do you intend to deal with financing of the $60,000 tax on a new $200,000 home -- a modest price in much of the nation? (The home is still only worth $200,000 since pre-existing homes aren't taxed, so the lenders won't lend the extra $60,000.)

4a. How will you deal with the collapse of the construction industry that will result from #4. (The resale market will take off, but new construction will grind to a halt.)

5. Ditto for the $6,000 tax on a new $20,000 car. (Same as #4.)

5a. How will you deal with the collapse of the auto industry in the US as a result of #5. (Before long US roads will look like Cuba with ancient pollution-belching relics being pushed along far past their sell-by dates.)

4b & 5b combined. Now that the US economy itself has collapsed following the collapse of its two primary movers, what next? (I'd LOVE to hear their answers on this!)

6. While you claim that the manufacturers of goods and the providers of services will reduce their prices due to the lack of corporate taxes, how to you plan on ensuring that that actually happens? (Sounds like quasi-communism with central control on prices. Shudder!)

6a. And what about corporations that are bleeding money like Ford and GM and pay no income taxes since they're LOSING money. Where will THEIR price cuts come from?? THEIR costs will actually RISE as money spent on infrastructure investment will be taxed so their prices will RISE substantially. Uh-oh, Houston we have a problem!

7. How to you explain to the single mother with 2 kids that the EIC that she was depending upon for basic survival is being replaced by the "prebate" BUT she'll now pay about $5,400 in taxes that she didn't have to pay before? (Virtually every penny she earns pays for essential goods and services. She'll be crucified by the added tax burden as she doesn't pay any income taxes now but WILL pay heavily under the co-called "Fair Tax.")

8. How do you plan to deal with the outcry from the World Trade Organization as untaxed American goods (those that exist anyway) flood the global markets, shutting out imports in the US and local products overseas? (Hmmm... Go back to corporate income taxes? Whoops! There goes a prime argument for the "Fair Tax!")

9. How will you deal with the Paris Hiltons, Steve Forbeses, Bill Gateses (insert favorite rich person's names 1,500 times) who will simply make their major purchases overseas and bring them into the US as used and therefore tax-free. (Remember the failed Luxury Tax from the 80s that put yacht dealers out of business in droves and tossed their employees onto the unemployment and welfare lines.)

10. Finally, how to you explain to the middle class taxpayer earning $50,000 per year with a family of 4 and paying almost no income tax that he now has to pay $10,000 in taxes MORE than his "prebate" amount? (I'd love to hear that one too!)

I could go on for hours on the unintended consequences of the grossly misnamed "Fair Tax" but my fingers are getting tired. In the end it's a SWEET deal for the wealthy (who tend to amass wealth, not spend it all) but would crucify the poor and bring the middle class to their knees. The economists who dreamed this up have no focus on the social impact of this and were told to ignore any impact other than the bottom line for the US government. Hardly "Fair" IMHO.

The ONLY good tax is a graduated income tax. It's the ONLY tax that adheres to the first rule of taxation: Make sure that the taxpayer can AFFORD to pay the tax.

The wealthy support the misnamed "Fair Tax" (or the Flat Tax) since they'd pay MUCH less in taxes. If you lessen the burden on one group you either must cut services or transfer the burden to another group. That leaves the poor and middle class to shoulder the burden of a tax cut for the wealthy. Sorry, but I flatly refuse to subsidize your next BMW!

Lastly, and most importantly, you obviously don't understand why the "Fair Tax" has languished in committee for over a decade in one form or another. It's simple, really, since its proponents have NO desire for it to be debated on the floor of the House. If it is, it will quickly die an ignominious death as even the farthest right-wing hacks won't be able to support it and keep their jobs. It's proponents have never actually requested that it be scheduled for debate! They don't WANT debate on it. It's strictly a political ploy so that they can say to their constituents, "Hey, I'm trying to make a difference, but nobody will move on it."

I patiently await YOUR response to the issues raised above -- but I'm betting you won't be able to address them with anything concrete. Prove me wrong and you'll be the FIRST to do so.  I've had this challenge up for over a year now and the only responses I've received are rants or personal attacks.  This leads me to believe that nobody can examine it closely and counter my objections, and that goes all the way to the top -- Neil Boortz, Ron Paul, Mike Huckabee in particular.

Note to SteelKraut26:   Our founding fathers never HEARD of an income tax.  Income taxes didn't exist in Colonial times, either in the Colonies or England.  The hew and cry of the day was "No Taxation Without Representation!" not "No Income Taxes."  Taxes in Colonial times were property taxes, duties on goods (similar to "consumption" taxes) and capitation taxes, i.e. "head" taxes on each resident.  Maybe you should repeat US History as you're obviously extremely uninformed on it.

Answer 6

The fact is most tax preparers hate the idea, simply because it would put them out of business.  Most of the people who complain forget (or simply ignore) that imbedded in the price of the items they buy now is the tax that corporations pay to produce that item.  Those taxes would go away and in an economy with so much competition, prices for items would go down as companies have less cost to pass onto consumers.  The new tax would replace those savings.

Also, there are many ways now for the rich to avoid paying taxes.  They do not pay into social security or medicare with the money the get from capital gains, dividends, interest.  There is no social security tax on earned income over $96k.  Since the Fair Tax wold pay into both of those systems, it would mean more higher income individuals would be paying more tax.