Unfair to the Fair Tax, Can you “Libel” an Idea?

Simply Annoyed
Villa Rica, Ga.
SimplyAnnoyed.net

   Unless you have been living under a rock you have probably heard of a tax reform plan called the FairTax. Rep. John Linder (R., Ga.) along with 65 co-sponsors in the house has introduced HR-25, The FairTax act of 2007. This bill has created quite a stir in the recent months.

At present six Republican presidential candidates, and one Democrat, have endorsed the plan. Former Arkansas Governor Mike Huckabee’s endorsement of the Fair Tax played well among the crowd and brought him a second place finish in the Republican Iowa straw poll several weeks ago. In addition, the GOP’s newest candidate, Fred Thompson, has said that he would sign the bill if it were passed by Congress.

Libertarian radio host, Neal Boortz, has discussed it in detail and has answered the multitude of questions from callers on his syndicated show. This, along with the massive success of his book, The FairTax, written along with Linder, more and more Americans are becoming familiar with the FairTax and H.R. 25 everyday. They seem to like what they see. Those who have read the book and have studied the FairTax website want to know what they can do to bring about this tax reform. Alas, due to its popularity, more and more of the Washington insiders whom make their livings off the present tax system have become quite nervous.It is not surprising that the proposal has met stern opposition. Many individuals owe their livelihood to the complexity of the current tax system. K-street lobbyists earn six figure fees for obtaining tax breaks for various entities. By some estimates more than one-half of the people earning a living in Washington lobbying congress do so by requesting tax breaks for clients. In addition, every elected official in Washington has an advisor on staff whose function it is to keep their congressman or senator current on the latest tax legislation. When asked for an appraisal of the FairTax do you really expect them to praise a plan which would send them looking for another source of employment.Then, of course, there are people who pontificate daily about the advantages and disadvantages which accompany changes in our tax code. With the tax code reduced to 123 pages, the simplicity of H.R. 25 would quickly force these individuals to become experts in some other field.Clearly not everyone would benefit from simplifying the method we use to fund our federal government. Those who would be hurt are on the attack in an effort to save their jobs. There are those like Giuliani, claiming to have read the book, spouting erroneous information proving his ignorance concerning the bill. Then there are those who knowingly lie or spread misinformation about the plan. Bruce Bartlett, former assistant secretary to the U.S. Treasury and current columnist for the Wall Street Journal appears to be of the latter.Mr. Bartlett wrote a column several weeks ago attacking the FairTax. Reading his article it becomes obvious that he did not even make a casual attempt to research the issue. He begins his diatribe with an easily refuted claim that the FairTax was originally devised by the Church of Scientology in the early 90’s. This is absolutely absurd.Years before the FairTax was developed a group called Citizens for an Alternative Tax System developed a plan for a national retail sales tax. The plan was wholly different from the FairTax in that it called for an exclusive, rather than an inclusive sales tax, it did not eliminate payroll taxes, it had no provision to rebate taxes paid on life’s essentials and it left the corporate tax structure in place. Bartlett’s FairTax-Scientology connection is ridiculous.  A Scientologist member spoke with an individual in Texas who dismissed him out of hand. Sometime later this individual in Texas, who was not a Scientologist, became involved with Leo Linbeck and Robert McNair; the fathers, if you will, of the FairTax movement. Bartlett’s assumption is that since some Scientologist once talked to a person now associated with the people who created the FairTax, the FairTax must be a Scientologist plot. Just to make it clear, neither Linbeck nor McNair have had any connection whatsoever with Scientology. I’m not sure of neither McNair’s nor Linbeck’s religious affiliation, but it is definitely not Scientology. By the way, Congressman John Linder, the author of H.R. 25, the FairTax Act, is an elder in the Presbyterian Church and Neal Boortz happens to be Episcopalian I believe.Bartlett’s attacks on the FairTax (see beyond the basics) don’t end with the Scientology angle. Bartlett misrepresents the FairTax as an exclusive tax added to the price. The FairTax is an inclusive tax, as are the income taxes the FairTax is designed to replace. Every item you buy has embedded taxes. The government has taxed that item every step of the way. The FairTax removes these embedded taxes and replaces them (and others) with an inclusive 23% tax on new items. (Used items are not subject to the tax)

Bartlett insisted on quoting the income tax as inclusive while at the Treasury. Why does he refuse to quote the tax that seeks to replace the income tax the same way? He also plays with the math. I’m not the smartest guy in the room (and I’m alone with Dusty, my deaf, albino Blue Healer), but I understand that out of every dollar paid 23 cents goes to Uncle Sam. Remember, the cost of the taxes paid during production, corporate taxes, payroll taxes, etc. have been eliminated. So, the cost to bring the item to the public is reduced. If an item costs $100 now, it will cost about $100 after. We have removed the embedded taxes on each step of the process, (the average is around 24%) plus the payroll and corporate taxes the retailer pays. The retailer can still sell the item for $100 and make the same profit as before, (if not more) and still give Uncle Sam his $23. If the item costs $50 then $11.50 would go to Uncle Sam. Remember, you also get to keep your entire paycheck, so not only will you be paying roughly the same, you will have increased your buying power. It is also highly probable that due to competition you will be paying less.       In a column on FairTax.org, Neal Boortz states that Bartlett completely (intentionally?) mischaracterizes the FairTax prebate, the FairTax provision that insures that no American family would pay the FairTax on the basic necessities of life, by stating in two columns that the government would have to track individual family incomes to implement the prebate plan. Boortz continues, stating that a sixth-grader could read the bill or The FairTax Book and understand that the prebate is predicated on the size of the family, not the family income; yet Bartlett continues to insist that income must be tracked! Is this out of desperation, carelessness or ignorance? Bartlett also states “Since sales taxes are regressive — taking more in percentage terms from the incomes of the poor and middle class than the rich — some provision is needed to prevent a vast increase in taxation on the nonwealthy. The FairTax does this by sending monthly checks to every household based on income.” The prebate takes care of that. As stated above it is based on the size of the family and covers taxes paid up to the poverty level. Bartlett claims deception on the part of FairTax supporters. Well, it is obvious that the deception lies within Bartlett’s outlandish accusations. He continues his attack by stating, “The federal government would have to pay taxes to itself on all of its purchases of goods and services. Thus if the Defense Department buys a tank that now costs $1 million, the manufacturer would have to add the FairTax and send it to the Treasury Department. The tank would then cost the federal government $300,000 more than it does today, but its tax collection will also be $300,000 higher.” Again, nothing is added. The FairTax is inclusive. The million dollar tank would still cost about a million dollars. Another “deception” by Bartlett concerns the non-existent rise in spending by the government, “the proposal only works if federal purchases are cut by 30%, close to $300 billion — the increased cost imposed by the FairTax.” As I have stated earlier, there will not be any price increase. All corporate, payroll taxes etc. are removed as well as the cost of compliance. The services of tax lawyers and accountants are not cheap. Yes, services, including medical will be taxed. But, consumer costs will remain the same. You always have to remember that all operational taxes are gone, so our prices will remain the same.He also poses these questions, “What possible incentive would the states have to be vigorous in their federal tax collections? What is to stop them from slacking off and giving their citizens a tax cut at federal expense? What about states with no sales taxes? What’s to stop people from bypassing retail outlets and buying their goods from producers or at wholesale, tax-free?” 1. The incentive would be to maintain the federal funding states receive. 2. If the states could do so, why not now with federal gasoline taxes, or liquor and other “sin” taxes? 3. What’s to stop people now from bypassing retailers and going straight to the producer or a wholesaler? Convenience and the fact that most producers and wholesalers only sell in bulk quantities. That would not change.Bartlett’s claim of difficulty in collections at the counter is without merit as well. Businesses are used to collecting sales taxes in most cases and those that aren’t can hire a 4^th grader to handle it. Gee, we sold $100, 000 so, hmm, uh, duh, how much does Uncle Sam get? I’m not going to do the math for you, but my first grade step-daughter just answered it.

Bartlett insults proponents by stating, “The biggest deception in the FairTax, however, is its promise to relieve individuals from having to file income tax returns, keep extensive financial records and potentially suffer audits making April 15 just another day. Yet, all but six states now have state income taxes. So unless one lives in one of those states, this promise is an empty one indeed.” There is no deception here. Once the national system is up and running the states would probably follow suit, thus making April 15 just another day. Bartlett concludes by getting in one more shot. “In short, the FairTax is too good to be true, and voters should not take seriously any candidate who supports it.” If Mr. Bartlett would have done a little research he would realize it is both good and true, and any candidate who supports it believes the power belongs to the people. Power belongs to the people? What does the FairTax have to do with empowerment? Politicians will not be able to use taxes as an election or money raising tool. Class warfare will come to an end. We have lost control of our government and this is the first step in getting it back. Bartlett has illustrated one fundamental truth about the FairTax. It is easy to elicit emotive bias. The FairTax seems to have alarmed advocates of big government. They have resorted to absurd attacks such as the Scientology conspiracy? (Ooh, where are the black helicopters?) You would think FairTax opponents would base their attacks on the FairTax with solid and defensible criticisms or objections and not easily refutable and angry fear mongering. Could these baseless attacks be evidence of concern that the idea has wings? Self preservation over the good of the nation is how these attacks by Bartlett, et al appear. In upcoming pages I will illustrate how government uses our current tax system for their self interests and to retain and expand their power. Also, even though the courts have decreed that our income tax system is constitutional, many of the projects and programs our money is spent on are not.

Simply Annoyed

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