so simple, so misunderstood
The editors of National Review are usually a smart bunch of people, but they’re having a hard time understanding the FairTax. NRO Editorial: Fair Tax, Foul Politics.
The tax code needs major reform to become fairer, simpler, and more efficient. The Fair Tax is one instantiation of those goals, but its political impracticality makes it fatally flawed. If conservatives force a choice between a Fair Tax and no tax reform at all, the latter is what they are likely to get.
There is widespread confusion about what the Fair Tax would entail. If you bought $100 of clothing and paid a $30 tax on it, you would probably think you had paid a 30 percent tax. The Fair Taxers say that you paid a 23 percent tax: $30 is 23 percent of the $130 you paid in total. When they say they want a 23 percent tax, that’s what they mean.
Though, a month later, a different view at NRO.
The FairTax Book author Neal Boortz refuted all this on the radio and on his website, but the FairTax plan is so simple even a cartoonist can point out the problems in NRO’s arguement:
- Under the FairTax, $100 worth of clothing would cost you $100. There is no price increase. The FairTax will already be included in the list price of what you are buying. The price of everything you buy now is already inflated roughly 22% by the current tax code. These taxes will be abolished and replaced with the FairTax.
- Under the FairTax, $100 buys a lot more clothing than it does now. The FairTax abolishes all corporate tax burdens. Lower business expenses mean lower prices.
- Under the FairTax, $100 is a lot easier to come by than it is now. The FairTax abolishes the income tax. You take home your entire paycheck.
- Under the FairTax, that pile of clothing you just bought is much more likely to have been manufactured in the USA rather than in China or Mexico. No other country can compete with a tax code this simple. The FairTax makes America “the greatest tax haven the industrialized world has ever known“.
… let’s work on the assumption that these editors are actually intelligent. You don’t get to be an editor at NRO by filling out an end panel on a box of Grape Nuts. So … if these guys have any brains at all, how can they so badly misrepresent the FairTax? There are crane operators out there who know that if you buy $100 worth of clothes the 23% FairTax comes out of the $100. Nothing is added to the price. The clothes don’t cost you $130 in total … they cost you $100. The 23% FairTax merely replaces the imbedded tax that would be there if you bought those clothes today!
Look … if you’re going to criticize the FairTax, can you at least read the book before you make fools out of yourselves?
Zell Miller on the FairTax:
The current income tax taxes savings, labor, investment and productivity not once but many times. The FairTax takes the tax off wages, savings, and investment. It also increases productivity and produces signifigant economic growth. The current income tax code places unfair tax burden on U.S. imports and fails to neutralize tax advantages for imports. With the FairTax foreign companies are forced to compete on even terms with U.S. companies for the first time in ninty years!
