Fair Tax is Bullshit

Honestly, there's a lot of BS out there masquerading as truth. There always has been, and in fact there's probably less today, if you think about it. It was in most of our lifetimes that plenty of idiots actually believed that divorce was evil.

But I digress.

One of the absolute worst ideas to ever come down the pike is the idea of Fair Tax. Fair Tax is a new tax plan proposed by a number of disingenuous scumbags, chief among them Neal Boortz, who wrote a book on Fair Tax. The basic idea of Fair Tax is to replace the current Federal Income Tax with a sales tax on all new goods, but not used goods. This new program is claimed to be able to do a number of things including revitalize the economy, lower prices, and goodness knows what else, but in truth why people promote the Fair Tax boils down to two reasons:

1. they think they will have to pay less taxes under Fair Tax

or

2. they want to piss off citizens and make people realize how eeeevil taxes are and therefore create a firestorm of anti-tax anger to shrink the size of government in general.

Both are stupid and Fair Tax actually will not help accomplish either goal.

Let's start with the basic premise and why it's garbage. First, the Fair Tax proponents lie through their teeth and say that the proposed Fair Tax is 23%. Even reading Neal Boortz's book shows that in their own example given, the Fair Tax imposed is 30%. If I buy a candy bar for $1.00 and you tax me 30 cents, that's a 30% tax rate. The Fair Tax people use a complicated algorithm based on gross payment to get that 30 cent tax to 23%. Even their basic figures lie. And that should raise a red flag right there for most people, but with quite a few people Fair Tax has become almost a religion.

Secondly, even at 30% tax rate, the Fair Tax proponents claim this will result in most people's taxes going down. Now, being that the top marginal income tax rate in 2008 is 35% for the ultra-wealthy and is likely to only be raised to 38% even if Obama let's Bush's tax cuts expire, this means the vast majority of the middle class pay around 20-22% Federal income tax now in real dollars. Believe me, your taxes will go up under Fair Tax and people who know more about this than I do calculate you'd have to be making well over $200,000 a year now to break even. Which is why the Fair Tax proponents love Fair Tax. You'll notice most of them are rich jerks or wannabes.

The astute among you might have also noticed that Fair Tax only replaces Federal Withholding and does not replace social security or medicare taxes. Nor does it replace any state income taxes, local or state sales taxes, excise taxes, corporate taxes, gasoline taxes, tariffs, user fees, tolls, property taxes, and so on. All this would continue under Fair Tax. So basically the very rich would be crying all the way to the bank and the rest of us would pay more money so that the well-to-do could be even more well-to-do.

Fourth, Fair Tax is basically a consumption tax and it will nail the poor to the wall. The poor have less discretionary income and have a lot more fixed expenses than the rich. The rich can invest, save, or spend money overseas. The poor have to buy shelter, food, clothes, and transportation. While Fair Tax does have an allotment for the poor and does not tax food, you can bet your life that the poor will still get hosed under this plan. Now, this rebate is monthly and is that everyone gets a credit under Fair Tax based on income. Only problem is that this wonderful allotment is a rebate after the fact. If you are a single mom washing toilets for a living you first have to pony up for the tax, and only after you prove your income is lower class do you get the wondrous tax rebate. Ask yourself how many people making minimum wage could fork over 30% of their income to get it back at the end of the month. My guess is, oh, about 0%.

Three people who make $30,000 a year spend more money on goods than one guy making $90,000 and Fair Tax would therefore hit the people making $30,000 the hardest, without question.

Far from being a boon to the economy, the Fair Tax would cripple the economy. If all prices suddenly went up 30% even if you didn't have to pay any income tax anymore, would you start buying? I bet not. Consumption would plummet, at least initially, and the economy would go into a tailspin.

Gets better. Neal Boortz assumes 100% compliance when he trots out his 30% tax rate. And lies about it. But anyway. Show me a tax and I'll show you someone who is trying to get out of paying it. No tax has ever had 100% compliance. Furthermore, a 30% consumption tax is not going to collect the same amount of revenue as a 30% tax rate, and even libertarian economists think that a more reasonable Fair Tax rate is at least 33% if not 39%. National Review, not known for it's socialistic bent, calculates 36% as a reasonable figure.

Still sounding like a good plan, peeps?

Even better, remember that you have to pay up front and receive a rebate. Far from weaning the American citizenry off government, Fair Tax would make a government dolee of every single one of us since the feds would be sending each of us a check every month. It's 100% government dependency. No one supporting Fair Tax can even remotely call themselves libertarian, egalitarian, or sane.

Even the basic premise is flawed. If the rich pay less tax, where do you think the shortfall is going to come from? Just simple logic says this: if one person is paying LESS tax, someone else is paying MORE tax.

Oh, and what happens when prices go up? Inflation. Remember inflation? Now, the Fair Tax proponents believe that companies who sell goods will lower their prices because they themselves will be paying less taxes.

I will stop and wait for you to stop laughing out loud. Because that should be your response to this. I advise you to go look at gasoline prices and tell me how corporations will lower prices in response to lower costs.

And even if domestic goods get cheaper, foreign goods won't. How much of what you buy was actually made in this country?

And, while you're at it, you might want to look at the fact that Fair Tax does not stop the federal tax agency (whatever it's called under Fair Tax since they want to replace the IRS) from auditing you. And you have to prove, just like now, that you've paid the tax. Except that with the current federal withholding tax, you can easily prove this. Since Fair Tax is based on what you buy over the course of a year, you have to save every single receipt to prove you paid your tax. Anyone want to do this? I want a show of hands.

Yes, you, the buyer are responsible for this tax, not the seller. You'll have to have a receipt to prove you bought that can of beans, that computer, or that car “legally.” Lose your receipt and you could be required to pay that 30+ percent tax all over again – plus penalties and interest. And since Fair Tax is reported monthly, instead of doing your taxes once a year, you get to do them once a month.

Fair Tax would be so wretched that people would do damn near anything to get out of paying it. Which means a nice, thriving black market.

Now, Neal Boortz and people supporting this measure in Congress and the media and business are not stupid men. They know precisely how the Fair Tax will affect the poor, the middle class, you, and me. They are bald-faced liars and they are greedy, grasping prevaricators and anything that comes out of their mouths should be fact-checked.

Fair Tax is the worst idea since Adolf Hitler said "Hey, dudes, let's invade Russia. It worked out great for that Napoleon guy."