Reply to Fair Tax Comment II

With regard to "not sure if worth writing"... I can only say that it is difficult to discuss something with someone who prefaces most posts with something along the lines of can't be bothered to read a 200 page book... The book does answer many questions.

1. If you are not sure about indian reservations why bring it up? Don't you think folks on an indian reservation will purchase goods and services like everyone else?

2. The FT is designed to be revenue neutral now. My point was that it grows with national prosperity without choking national prosperity.

3. If you read the book you will understand that consumption in U.S. lands is taxed. That means that imports for resale arrive in our lands untaxed but then get taxed at the register. Duty is something paid on items purchased by individuals away from our lands meant for direct consumption within our lands vs. for resale.

4. State Sales Tax Compliance is currently monitored by the state... Of course there will be a record of sales (receipts). State Sales Tax audits occur in the course of business today. How difficult will it be to do a sampling of, say, 1% of businesses with resale licenses vs. 1% of all income-related activities of all tax payers?

5. SSA adding new people or costs? To what extent? The way you present it it becomes a huge burden. It might add 10% to the overhead of SSA (probably less). Remember, we are not hand-writing checks any longer.

6. Child Custody… how about the last legal custodian gets the tax prebate and any other claim will be rejected unless there is mutual agreement (or court order) to change custody. Mountain vs. mole hill?

7. State Sovereignty… really? If the state is in the union and gets the benefits of being in the union… do you think they will put up a huge fight? If they do, perhaps the Fed sets up shop for that one (at most 5) state(s). Those states will still have to adjust their tax system if they rely on 1040 filing. Besides, what state in their right mind would want to tax income and chase away all of their business (and residents) when every other state goes to a form of the FairTax?

8. I don’t see every citizen turning into a welfare case. You do… too bad. I would consider the $537 that my family would get a tax prebate and nothing more. The other nice thing about the prebate is that it goes to legal residents. Illegal aliens are not in the system and, therefore, do not get the rebate check. Think some might want to become legal or exit the country in this case?

9. re you doing a bate-and-switch here? I thought you were talking about state taxes. I am not suggesting that any other federal tax will be hooked beyond the FT. In fact, if the gov’t voted one into law… don’t you think it would cause a revolution? Let’s say we were taxed on consumption all of our years and then the government voted to add a VAT or income tax or anything… Want another tea party?

10. Now, let me address your tone since you were kind enough to address mine… it is your blog and I did take time out of my day to reply. I received a thank you and for the most part a civil discussion. You do have a condescending tone to your message though (as if “you” know better). I invite you to turn it around though… Since you know better, defend the 66,000 pages of tax code. Why are all of the issues that you raise better under the income/corporate/payroll/death tax system that we have? Are you really interested in seeing more business relocate away from our lands? More capital investment in other lands? Opportunity and prosperity going to other lands?

Open your mind… This would be an amazing thing for our country. It makes soo much sense. Unfortunately, it isn’t as easy of a concept as an amendment to give women the right to vote (simple black and white… little grey area there). It is more complex. The FairTax is not perfect but it is night-and-day better than anything else going.

Peace,

YK

Andrews... you can now find my posts at http://ytknight.blogtownhall.com/.

Cheers,

YK

Not reading the book-

As I said in another comment, if you are trying to sell me on something, you have to sell me, not tell me to read a book that will sell me. Sorry, if it is so simple, then why do I have to read a book to understand? I am not adverse to reading books, I do have a problem when questions I raise are answered with "Read the book". It was arrogant and stupid when Unix admins wrote RTFM, and it is just as arrogant and stupid when FairTaxers do it.

Indians- Read what Iw rote. They ahve no sales tax infrastructure now, so I doubt the feds will have the backbone to force one on them. Even if they do, it gives lie to the "no bureaucracy" argument.

Revenue Neutral- That is not what you said. Reread your post

Duty- Then it does not remove all taxes, and if you raise duty to equal the fair tax, all my complaints still stand, you did not reply to my mention of WTO and retaliatory tariffs.

Sales Taxes- You are moving your costs to the states, which means it is not revenue neutral nor keeping the bureaucracy the same, you are using accounting tricks to hide costs and personnel.

SSA - Yes, it is a HUGE burden to validate 300 million people are how they say. Administering a few thousand welfare cases took almost 100 people. You have no idea how many employees the government uses in these functions. I was one for years.

Child custody - and joint custody? And how do we determine that without investigators and adjudicators? You are ignoring my questions about bureaucracy.

State Sovereignty - Again, you are saying you know better. And if the feds "set up shop" for one, wouldn't the others want it as well so they don't have to pay for it? And then you get that massive bureaucracy you said would not exist.

Prebate - if everyone gets a check from the state they are a welfare case. They think of the gov't as people who send checks, just like the lie fo the tax refund today. The gov't knows it, that is why Nixon adjusted withholding to give bigger refunds when he was in political trouble. You are the only one who does not see it.

Taxes- No, I am saying the feds could add taxes, nothing prevents them from doing so. And your belief we would revolt is absurd. we did not revolt when the 16th amendment was passed, why would we now? That is just absurd.

And I have no reason to defend the current systm, and have proposed several alternatives. Why do you ask me to defend the current system. Is the FairTax the ONLY alternative? That is just absurd. But that is usually the way FairTaxers argue, FairTax or our current system, no other alternatives.

That is just not true.

I HAVE opened my mind, your seems closed. You argue as if the FairTax is the only alternative to our present tax system. I provided links to essays on at least two alternatives. How is that you can still ask me to defend the present system, as if the FairTax were the only possible alternative?

As I have proposed besides the two I mentioned, two other plans, I think my mind is quite open. You are the one proposing an either/or solution.

One last thing, I do admit my tone became a bit more confrontational in the second post, as I took a bit of offense at the initial statement. However, I still never questioned your motive.

I did say you appeared to be saying you thought you knew better, because that is the only way to read your suggestion we force sales tax on the five states that do not want it. How else can it be read?

I took offense at the suggestion that I was arguing out of some irrational motive, which you seem to continue in your replies here. Or the suggestion that I am somehow arguing "for" the current tax system.

You are creating false dichotomies and thus deciding I must have some irrational reason.

As I said clearly, I do not want the FairTax to become the face of tax reform, as I think it is flawed and inferior to other options, so I do not want it ruining all prospects of other tax reforms being passed, should it ever be enacted and fail to deliver.

It is similar to how the overemphasis of NORML inside the libertarian party tarred libertarians as stoners for decades, I don't want the flaws of the FairTax to be attributed to anyone who argues for tax reform.

I now understand why folks don't debate this with you.

You have got to be a tax lobbyist, right? Or a paid staffer who has his hand so deep in the 66,000 page honeyjar that going transparent would mean his/her livelihood?

Andrews, you overreach on so many insignificant issues and you marginalize all of the good that the FairTax does. Heck, I could make a statement that the sky is blue & you would find some abstract reasoning to oppose me.

So, I will no longer try to sell you on it. Too much effort... Not enough of an open mind.

Care to try to sell me on something (alternative taxing system? current system?)? I can give you a taste of your own medicine if you like. Come'on it would be fun.

Kind of reminds me of the old Monty Python skit about the argument clinic. Go here for a good laugh about it.

Cheers,

YK

I half expected that. Well, as you have dropped into "impugn his motives" I respectfully decline to answer any more comments.

I will say that I mentioned two proposals in the response I gave, so go ahead, do your worst. You can look through my blog for other suggestions if you want.

http://www.mindspring.com/~mfpatton/sketch.htm

By the way, after reading your more recent comments I no longer think you are a lobbyist or staffer.

I will attempt to find your alternative tax plans but I also need to balance my time (invested more on this than I thought I would).

I do maintain that no tax system can be 100% fullproof and perfect and I do honestly believe that the FairTax is the way to go.

Finally, not sure if you are aware of this but... 1% of the tax collected is split between the collection agency and the business that collects the FairTax. .5% of sales of all goods/services for any state should be sufficient to administer.

Cheers,

YK

First, I'll admit that I really like the IDEA of the FairTax. I'm not really sure on the details of how it would work. (No, I haven't read the books, YET.)

That being said, andrews has raised some good points, and some minor points, and, yes, does some nit-picking. But that should be an opportunity to strengthen your position, not take away from it by getting defensive. I would suggest, if you really believe in the system, perhaps sending the questions to Boortz. Maybe he could answer better.

I would expect that Andrew welcomes another voice as well. Sometimes its a bit tough for both opposing sides. Do me a favor and restate the relevant issues to address about the FairTax from your perspective and I will attempt to address. I may do so on Andrew's blog or on my blog at ytknight.blogtownhall.com. This is a very good exercise to go through.

Cheers,

YK

I admit to nitpicking some of the claims, such as the claim that there will be NO fraud as they are so far fetched that I have to point out even a technical violation.

I would normally allow small problems to slide, but the FairTax has been so over sold, with such preposterously optimistic claims that I feel the need to take them to task for even the smallest error.

The second reason I nit pick a bit more is, I admit, because the FairTax proponents have been so insufferable in their arguments. Every argument ends with 'read the book". And they respond to any criticism by accusing you of loving the IRS or being a paid lobbyist. I confess that their behavior has made me less patient than normal, and left me more inclined to pick apart every little fault.

That said, I still think there are objectively much better systems. The fact that the FairTax is "embedded" and thus invisible to those who don't look for it, for example, makes it easy to play games with the rate, and easy for voters to forget how much they pay in taxes, that is a bad feature.

Just one example, but something I rarely see mentioned. I prefer any system which makes it immediately obvious how badly you are getting robbed. The FairTax does not do that.

Well, went over all this several times, so I will be quiet now.

advocate the fair tax. I myself am a bit leery, because it does seem awfully complex logistically. I personally like the flat tax. 10,000 deducted per adult, 5,000 per child, all above that taxed at a flat rate. Simple, logical, easy to figure, and eliminates the thick book of tax law. Every system has flaws but at this point, that is the most appealong to me.

I am in somewhat of the same position as you are, people with whom I usually agree are supporting the FairTax. However, the initial claims seemed far too optimistic, and, the more I thought about it, the more convinced I became that there were problems that were simply being ignored. Later I also noticed that costs were being hidden by accounting sleight of hand, such as saying "oh, the states will collect it" or "the SSA will handle that".

I feel the FairTax is the libertarian Enron. A lot of respectable, smart people thought Enron was good investment, and a lot think the FairTax is a good idea. I just think it is more smoke and mirrors.

I agree with the flat tax, though personally I would allow no deductions, simply because I want to hit everyone as hard as possible. I want tax to hurt, it is the only way we will ever see real reform.

This is posted in full at ytknight.blogtownhall.com as well.

I do think the nitpickiness caused impatience on my end. Apologies.
I have a blog started now but hope a civil reply here is welcome.
Here are the main advantages in my view that the FairTax has over the Flat Tax:
1. Pricing of U.S.-made products. Under any income tax, tax costs must ultimately be priced into the product before going to the register. This means that many imports have an unfair advantage since many have taxes stripped away (credited back) when the leave the country for export.
2. Flat Tax still has a major tax avoidance issue – more-so than what I believe is possible by the FairTax. I personally really like that illegal aliens and other tax evaders/tax avoiders would pay into the system (and relieve some of the excess tax for those of us who tow the line). How does the Flat Tax invite those who don’t file into the system?
3. I personally like that we don’t pay into the system until we consume basic necessities with the tax prebate. I also like that those who don’t reside here legally do not participate in the prebate.
4. Not sure what the Flat Tax does with corp taxes, capital gains, and estate taxes but I can’t imagine that payroll taxes (SocSec, Medicare) go away on the production side. I really like that the FairTax strips all of this away and invites jobs, capital, and opportunity back to our lands to help our economy and national competitiveness.
5. I like the transparency of the FairTax. I also like that we have control over when we contribute and how much base on choosing to consume or not. We can go into savings/investment mode early in our careers and then contribute more to the gov’t more when we are more financially secure.
6. I like the idea of not having to file an income tax return.

There are really a lot of really great reasons. Yes, there will need administration… but 30 million businesses vs. 300 million taxable individuals? It just seems that administration is much easier than under a Flat Tax and infinitely easier than under the current tax system.
Are there issues? Yes. Corrupt people will still evade the system but my sense tells me that it will be more difficult to fully evade. Besides, greater prosperity and freedom will lift our country out of much of this evasion mindset.
Would it be difficult for states to administrate? No
Would it be difficult for SSA to handle prebates? No
Are there issues to work out? Yes. But nothing major.
For all that I have studied (and yes, I read both books) I haven’t seen anything as positive as the FairTax. I hope folks continue to have the conversation.

Peace,

YK

Still a bit annoyed about the whole "must be a lobbyist" thing. But you are back to civil responses, so I am sure that annoyance will pass. I am loathe to refuse any sort of olive branch, even one which still calls my criticisms nit picking.

However, too much writing has made my hands mostly useless again, so any response will need to wait. Sleep usually resets my nerves, so I am sure they will continue to work tomorrow. (Actually they work, my hands and arms just hurt like mad after a minute or two of typing. Which is why "useless" hands can still type a longish reply.)

Probably for the best, as I will be less irritated tomorrow as well.

Until then, read my newest post. I think it explains well one of my more unusual complaints with what seems a "nit picking" detail, but one I think is more important than others believe.

FairTax vs SCHEME 1

YK

I’ll stop calling it a SCHEME if you and others stop calling it a FairTax. I find it just as offensive to refer to this abomination as a FairTax as you seem to feel it is not a SCHEME.

IF you really want to change the tax structure of the country which I agree is abysmal then open your eyes and realize that many of the savers of this country did so in spite of the government confiscation a large portion of their wages. They did so by depriving themselves of some of what you regard as necessities of life. They did not go on vacations, they did not own atvs or water jets or speed boats, they mowed their own lawns, drove used cars, wore the same winter coat for several years instead of buying new each year, and in many other ways cut corners so that they could save and would have a relative independence in their declining years. In addition to having paid a 15% income tax on their saving this SCHEME would tax them another 30% for a total of 45+%. That’s confiscatory taxation. Now you wish to steal their savings/independence/dignity from them so you can try a THEORY that has NEVER been tried anywhere in the world. You are young enough to recuperate in the event this SCHEME fails. Most of the savers who will be living on their savings cannot recuperate because they are literally burned out and/or do not have enough years left ro recuperate any loses.

That is just your interpretation of what boortz/Simpson said of the effect on savers. I prefer a more literal reading of boortz and he said “ that, unfortunately they (retirees) were not getting "as good a deal" as current workers. That retired people fell in the same category as anyone who had saved money previously and was now ready to spend it.” He said that there was nothing they

could do to alleviate the fact that you were going to pay taxes on income that was already ravaged by taxes, but you (the saver)would benefit from the (non existent) 22% reduction in prices and the pre-BAIT.

There is no other reasonable interpretation/meaning, it is stated quite simply. You must also remember that this is boortz/Simpson stating his opinion and boortz is just a layman/loudmouth radio personality stating how he reads the proposed law. He has no legal training or expertise.

There are numerous ways that savers could be reimbursed for the taxes they have already paid. Did you even bother to read some of them? If you want the backing of the savers of the nation find a way to incorporate relief for savers in the original proposal.

Lets put it another way the saver works and earns $100 and is forced to pay 15% in income taxes. That leaves him $85. He can spend it and get $85 of merchandise for his labor or save it. Contrast that to the post SCHEME scenario. The SCHEMER works and earns $100 and spend it he gets $77 worth of merchandise. The saver takes his after income tax $85 and spends it gets $65 worth of merchandise. The SCHEMER pays a 30% tax on his $100 (100 - 77 = 23 (23/77= 30% tax of earnings and the saver has to pay 53%tax that’s Fair??? Get Real
(100 - 65 = 35) (35/65=53%)
Retired or savers are not gaining anything they are LOSING with the 30% SCHEME tax. Losing another 30% of their savings and with it their independence/dignity.

Thanks for he comment and welcome to the blog.

And thank you for reminding me of this issue. I think I may have mentioned it previously, but it is one very real problem I seem to forget when writing on this topic.

Then again as there are a number of issues that have been raised, it is easy to forget some of them.

You are correct that there will clearly be a net loss for saver under this plan. Those who have invested may benefit form the end of the capital gains tax, which may offset part of the loss, but they will still lose.

Thanks for reminding me of a very valid argument I forgot in my writing.

As insomnia has called me back to my computer, I would recommend you read the very short old post I inked several places about state funding of the federal government.

One benefit, as I wrote there, is with 50 states funding the feds, we get 50 different tax schemes. We can then move to a FairTax state if we wish, or a flat tax state, or whatever states exist.

What would be the argument about returning taxation to the states rather than forcing a FairTAx plan on all 50? I thin that is truly the ideal, allowing each state to try its own solution, and allowing citizens to vote with their feet and pocketbooks.

When we have but one federal tax scheme we cannot see the harm and benefits of alternatives. With 50 states we can.

And as you asked what the benefit of my two plans were, that is the benefit of plan #2.

My last post of the night explained the benefit of plan #1, which is my second choice.

And now I will try to sleep again.

I didn't mean for the "nitpicking" comment to rile you. I think you raise many good points that I haven't seen address elsewhere. (not that I've done much research...)

Personally, if I was as opposed to the idea, I would have nitpicked it as well. And it does seem to be rather easy to do. I wouldn't have been as polite as you, however.

Yt Knight lost a good opportunity to spell things out, and really lost the debate when he resorted to the tax lobbyist bull. Yt, with your blog, if you wish to carry this on, I would suggest addressing each point with a lengthy post. Just keep it civil. And I'm a firm believer that you can keep it civil, and still offer some witty comebacks and challenges.

I did not take offense. Despite claims of my wife and a few others, I actually have a pretty well controlled temper. I argue quite aggressively, but I don't take offense easily.

Why I even dropped my refusal to answer yt_knight (Though I haven't yet replied to his last post. But blame work and other blog posts for that, not anger.)

My main argument is simple, and stated elsewhere. The FairTax proponents tell me how simple and obvious the system is, yet when I raise an objection, most tell me I have to read the book. If it were as simple as they say, they should be able to answer. Simple things do not require 200 pages to explain.

My other real objection is the way they so often posit that if you don't want the FairTax you want the current system. That is akin to Anthony Burgess' description of religious designation in the British Army "C of E or fancy buggers". There are alternatives to the FairTax that are not the current system.

But, to cut this off before I write a book here, I did not take offense to your statement. No need to worry.

Click on my name to go to my blog...

Folks, I care about our country. As much as some think I have been less-than-kind with my questions I honestly do think there are lobbyists and staffers whose job it is to spread misinformation. I no longer consider that about Andrew. I believe GyroTyro has real concerns. Keep in mind that he doesn't need to call the FairTax a "scheme" either. I also believe that I address many issues & I hope people take the time to consider them.

Redhead, I do have to balance my time so rather than write pages and pages of what I think your concerns are I would appreciate your recap of issues with the FairTax that peaked your interest. Otherwise I could write many paragraphs but not ever address your issues.

Peace,

YK

If you ever find one of those lobbyists, pass along my name. If someone would pay me for doing this I could forget all about my day job.

I would like to see some of the same issues that andrews addressed covered better. I would like to see answers other than, "But people do it now!" That sounds too much like, "but all my friends jumped from the bridge..." At the very least, I would like to see some numbers to show why it would be better than the present system, or better than the flat tax system.

Personally, I'm not worried about the rate being 23% or 30%. That's just a trick of how it's calculated. I'm not worried about whether or not it's "revenue neutral," although if there were too many loopholes for people to take advantage of, that would become a problem.

So I guess, what I'm saying is, I’d like to see andrews objections addressed in more detail, or at least with a little witticism. I love a good debate, but it's even better when both parties are clearly enjoying themselves.

I have to run off to see a client right now (gotta pay the bills...) so I will be gone for a while.

It would be really helpful to me if concise questions were asked so that I don't have to take a shotgun approach to clarifying what "I" think could be clarified but then still completely miss the mark.

On the revenue neutrality issue, wikipedia does a really good job of providing a balanced write-up of this and other issues. Please see http://en.wikipedia.org/wiki/Revenue_neutrality_of_the_Fai rTax for this write-up.

From what I have read, it might fall just a bit short (like by 1%) in the initial year but is then projected to surpass IRS incomes in subsequent years. There are variations with even our existing tax code year to year thought & what does the gov't do now? They print more money (& cause inflation which is something else we should be up in arms about).

Cheers,

YK