Debating The “Fair Tax” Plan

The whole “Fair Tax” idea is a subject I’ve raised on the TPW message boards not too long ago, and now it appears some affiliates of the Libertarian Party are starting to warm up to the proposal.

Texas LP Chairman Pat Dixion had this to say in a posting on the party’s national website:

On Saturday the State Libertarian Executive Committee of Texas (SLECT) considered endorsing the Fair Tax bill (HR 25). Both the Libertarian Party of Maryland and the Libertarian Party of Virginia have already endorsed it. Local representatives from Americans for Fair Taxation and former Maryland Libertarian gubernatorial candidate Spear Lancaster presented the issue to our committee. SLECT decided not to endorse the Fair Tax bill.

Read the full post.

What do you think? Should the LP endorse this plan? Is it better than the Forbes Flat Tax plan… or, as some have suggested, should we just eliminate the income tax and replace it with nothing?

6 Responses to “Debating The “Fair Tax” Plan”

  1. Joe Says:

    I agree with Jim Cox’s recent column at LRC: The FairTax proposal can be passed by a simple majority of both houses of Congress plus the President’s signature, while the much-touted repeal of the 16th Amendment, which authorizes the income tax, requires a much more demanding 2/3 vote in each house and then approval by ¾ of state legislatures. So, the likelihood of ending up with both the 23% federal tax (which is actually 30% the way everyone except FairTaxers calculate sales taxes) and the current income tax is serious, indeed

  2. R. Paul Says:

    This whole debate about Fair, Flat, Income taxes is beside the point, focusing as it does upon the alleged “fairness” of the respective formulae for collecting revenue.

    The only appropriate focus is upon the individuals upon whom the tax money so collected is bestowed. If you pay a million in taxes 9however collected) but you receive two million in direct/indirect subsidies, services and other public largess, you were subsidized, not taxed.

    On the other hand, if you paid a dollar in taxes (however collected) and received nothing in return, you were taxed.

    The Libertarian Party is currently engaged in such meaningless conversations out of political frustration, not out of a real need to change its own platform or “incrementalism”.

    It ought not to change its message. The message is and always was right. It needs to work on organization and public relations.

  3. Fair Tax Party Says:

    The Libertarians are too far away from the mainstream to ever attain widespread support. For this reason the Fair Tax Party was trademarked (to keep it from being hijacked) and to recruit leaders who in turn will attract one-issue voters and not distract from the issue with fringe beliefs.

    Currently the ‘one issue’ is the war in Iraq but that issue cannot be the top issue forever. The Fair Tax could be the issue that becomes most important to voters.

  4. johnwk Says:

    The alleged fair tax, H.R. 25 is rejected in a NEW POLL at a conservative site by more than a two to one margin in favor of our Constitution’s original tax plan!

    Seems the supporters of H.R. 25 are unable to defend their socialist friendly proposal in an un-manipulated debate.

    The only tax reform we need is to have the following words added to our Constitution bringing us back to the founder‘s plan:

    The Sixteenth Amendment is hereby repealed and Congress is henceforth forbidden to lay ``any`` tax or burden calculated from profits, gains, interest, salaries, wages, tips, inheritances or any other lawfully realized money

    Here is an INTERESTING COMPARISON between H.R. 25 and our Constitution’s original tax plan.

    Please visit the poll and vote, I am trying to get Hannity to do a show on the Constitution’s original tax plan! I need to show there is support for it and need a substantial number of votes.



  5. johnwk Says:

    Why does Socialist Harry Reid Support the alleged fairtax?


    “However Washington think tanks and academics have massaged and honed the concept and the proposal is now before Congress as H.R. 25 and S. 25. At present 128 house members, including Nevada’s Jim Gibbons and John Porter, have taken positions favoring the concept as have 21 senators, including Nevada’s John Ensign and Harry Reid. Additionally 81 economists from major US universities have signed an open letter to President Bush and Congress endorsing the proposal. What would this legislation do if passed and signed into law?”

    What would it do? Harry Reid knows exactly what it would do for Congress. In addition to having power to calculate a tax from “income” “without apportionment among the several states, and without regard to any census or enumeration“ [the socialist income tax], a power which H.R.25 does not repeal, H.R. 25 proposes to extend Congress’s reach and go after property, real and personal, and calculate a tax from the value of property, which H.R. 25 proposes to tax. without apportionment among the several states, and without regard to any census or enumeration, and thereby close the circle of an iron fisted socialist taxing system which not only reaches “income” but property___ real and personal!

    In addition, the socialist friendly H.R. 25, as pointed out in the ARTICLE will probably generate ``higher revenues`` for folks in government and thus may be used to support all the new socialist expenditures Harry Reid/Ted socialist Kennedy and our gal Nancy Pelosy expect to legislate into law.

    And where will the ``higher revenues`` come from? Harry Reid also knows the answer to this. The money will not come from those who are made a privileged class created under H.R. 25 who will actually receive a bonus [H.R.25’s family consumption allowance] each month for already being on the public dole, collecting a welfare check and are not working for a living___ and are thus, not contributing into the federal treasury. Is this why Reid supports H.R. 25, so welfare moms, and those who steal for a living and others who do not contribute into the federal treasury will get a bonus check each month?

    My Goodness, I just figured it out. H.R. 25 is an anti-crime anti-poverty bill…paying crooks to not steal and thereby lower the crime in America while redistributing more taxpayer money to slugs and leaches already on the public dole! How compassionate of Senator Reid! Giving a helping hand to unwed welfare moms and crooks taken from hard working Americans!

    BTW, our Constitution’s original tax plan is still in the lead in a NEW POLL at a conservative site:

    H.R.25, alleged fair tax 20 votes

    Constitution`s original tax plan 54 votes!

    Want real tax reform? Here is the real deal___ adding the following words to our Constitution, bringing us back to our Founder`s plan:

    ``The Sixteenth Amendment is hereby repealed and Congress is henceforth forbidden to lay ``any`` tax or burden calculated from profits, gains, interest, salaries, wages, tips, inheritances or any other lawfully realized money``




  6. Mark Curran Says:

    Fairtax wont work as claimed. I wish it could.

    Whenever anyone “debates” for the Fairtax—they simply tell how wonderful it will be—“it will eliminate the tax burden on middle-and lower income Americans” and “be the greatest poverty fighting machine since work” says Neal Boortz.

    Superlatives fall from Neals lips like dandruff on a blue suit.

    Neal can claim anything he wants, but math matters. Math and logic.

    Fairtax isnt going to work anything like Neal Boortz and the other folks tell you. And Im about to prove it.

    Fairtax is its based on at least one major math fallacy, and several political miscalculations.

    One math fallacy—Fairt tax puts a tax on the federal government, to PAY the federal government. Boortz wrote in his book (Page 148) “The federal government itself will be a major taxpayer.”

    Major taxpayer. Now, imagine that trick.

    Thats like me paying myself $10,000 a day to cut my own grass. I can write the check - and deposit it in that same account. But at the end of the month, I dont have $300,000.

    Thats the same thing that fairtax would encounter if it had the federal goverment pay the federal goverment a huge sales tax on all purchases.

    Yes, Fairtax law could mandate that the US Navy write a check for 4 billion, as the “sales tax” portion of a 12 billion dollar aircraft carrier. And the Treasury can deposit the check.

    But he Treasury doesnt get 4 billion. It gets zero.

    As crazy as it sounds—Fairtax and Boortz count that 4 billion as a governement receipt. Any first year econ 101 student should spot that fallacy.

    The Treasury would get no spendable money from that 4 billion sales tax it was paid—because it had to pay it out.

    And thats what the effect would be taxes on the federal goverment. Zero effect.

    Boortz doesnt want to give the federal government an “exemption” because he desperately needs to PRETEND that money would exist.

    But the federal government would get a defact exemption—just because its impossible to pay your own tax to yourself. Neal can pretend all he wants. Doesnt change the inherent mathematical effect of paying a tax to yourself.

    Fair tax plans to tax aircraft carriers, NASA space shuttles, tanks, jets, B1Bombers, pencils, submarines, whatever. But they cant really tax it.

    Since Fairtax depends on the government “paying” that tax. When its clear that it can not possibly do that — the tax rate would have to be adjusted up, to about 40%.

    So then the Fairtax would be up to, say, 40%. What happens then?

    Maybe we could all pay 40% more for everything. That is — unless we have high unexpected expenses.

    What if we get cancer? Thats very expensive disease, and 20 million Americans are dealing with it at any one time.

    A tax on cancer surgery? Chemo? Rehab? Hospital bills? Kindey transplants? Open heart surgery?

    Keep in mind, the tax on medical care would have to be 40% - - not 23% because of the fallacy explained above. And even at 23%, that could easily be a 40,000 tax on one cancer patient.

    What about nursing home patients? They are taxed 2,000- 4,000 per month. Thats 25 - 48 thousand a year — just in TAX on ONE nursing home patient.

    In fact, people needing health care will be hit—by far—the hardest with this sales tax. Cancer patients dont have a lot of choice—they need medical intervention. Nursing home patients don’t have a lot of choice. The parents of a child with leukemia dont have a lot of choice.

    There goes the myth that this is a “voluntary tax”. The people who will be impacted the most—health care patients - will be hit with it the hardest.

    What do you think these patients will do? I think many would be very upset, and very vocal.

    And it wont matter if they have insurance - insurance wont pay these extra costs. Insurance pays up to a certain point—and at agreed upon rates. This 40% will be the new “Co-pay”

    Insurance simply CAN NOT pay the taxes of 460 billion. For one thing, the insurance industry isnt even that large. For another reason - they have a few other claims they must pay—like the medical cost for 100 million people.

    What will the 15 million cancer patients do? The 2 million nursing home patients - the 20 million people who get some kind of surgery?

    I got a sneaky suspicion, many of them will complain —loudly. And Congress will pay attention, and correctly give health care an exemption.

    That would make the fair tax rate go up even more — to 55% or more.

    Plus - fair tax taxes RENT. Won’t renters be surprised! Wont car dealers? Wont new homes sales? Rent, new cars, new houses, will now face an incredible 55% sales tax.

    And of course, the system would break down. The nation would have to rescine the Fairtax.

    Fairtax will never be passed. Its just too illogical. It might sound nice—if you dont mind basic fallacies on math, and logic. Congress won’t enrage the senior citizens with the huge tax .

    Fairtax is just not practical. Im sorry, I wish it were. When you use real math— and look at the real effects—you will see the fairtax can not work.

    Lets get a tax system that stops punishing works—earned income. Lets tax all income types the same. Lets get a simple tax system, and then require 2/3 vote in both houses to change any part of the tax code. But first, get it simple, and tax all income types exactly the same.

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