Daily Archives: August 7, 2011

A Fair Look at the “Fair” Tax

 


There are few things in the political discourse of today that infuriates me more than the sanctimonious, self-serving and misleading propaganda of the proponents of the “fair” tax. Consider, for example, the two following statements.

Statement No. 1: “Everybody should pay their fair share.”
Statement No. 2: “Everybody should pay their fair share.”

The first statement is made by a socialist advocating for more taxes. The second is made by a conservative advocating for the “fair” tax.  Can you tell which was made by the socialist and which by the conservative?  It really doesn’t matter because both are motivated by the same feelings of envy and jealousy. With one the jealousy is directed toward the more productive people who use their time and intellect to raise their income level and increase their wealth. The other directs his jealousy toward those who do not earn enough income to make it more advantageous for politicians to take part of it than to let them keep it, hopefully, in exchange for his or her vote.

Anyway, just what is our fair share? Don’t worry about that. That will be decided by those more knowledgeable about such things. You know, socialists like Nancy Pelosi and Harry Reid or conservatives like Neil Bortz. Whoever decides, it seems to amount to a large chunk of the money you earn above what is needed for the “necessities” of life. For the socialists, necessity is figured on a sliding scale. Those on the bottom of the income ladder pay no taxes, while those above pay at an increasing percentage rate depending on how far up the ladder they have progressed.

Those touting the “fair” tax are more “fair” in their assessment. Fat Cats like Warren Buffet would pay the same as the single mom with two small children, whose husband abandoned her for a less demanding life with his new “honey”. Oh, but not to worry, the mom is going to get a “pre-bate” check on the first of every month to pay the taxes on her “necessities”. In fact, the “fair” tax is so fair that they are going to send Mr. Buffet the same amount in his pre-bate check. The pre-bate is based on the poverty level. Each family would receive a pre-bate check adequate to pay the taxes on an amount of purchases equal to the government determined poverty level.

Mr. Buffet can entertain a friend at a five-star restaurant with his pre-bate check, meanwhile, the single mom has to figure out how to stretch hers to cover her loss of buying power since suddenly, the cost of her “necessities” has increased 30%. The one bedroom apartment she has been paying $800 for, now costs $1,040 per month. The baby sitter she has been paying $600 per month, now costs $780, the $3 gallon of milk now costs $3.93 and the gallon of gas for her car to get back and forth to work, now costs $5.20 instead of the $4 she has been paying. I forgot to mention, the mom works as a cashier at the local convenience store at minimum wage. And then there is the homeless man who lost his job and his home and who can’t get a re-bate check because he has no address to send it to.  Before he could always panhandle $1 for the $.99 special at McDonalds or Burger King; now he has to beg for an extra 30 cents to pay the tax.

I suppose we should be grateful for all the advantages of the fair tax. For instance, the IRS will no longer be bugging ordinary hard working citizens, instead they will be policing the local doctor’s offices and landlords to make sure they are passing through all the “fair” taxes they collected to the federal government. Best of all, we will finally be taxing all those deadbeats who work in the “underground economy” and have been getting away without paying “their fair share” in income tax for years. There are a few people, no doubt, who make a good buck off the underground economy. However, the overwhelming majority of people working in it are the working poor, struggling to keep a roof over their heads and food on the table, who work “off the books” for pay that is far below the prevailing wage at a job that would not exist if his employer was forced to pay the prevailing wage in his area.

Best of all, the “fair” tax will not take away any money from the cash strapped government and it will do away with that pesky tax Mr. Buffet and others in his income range have to pay on the interest earned from their saving or dividends on their investments. The “fair” tax is “revenue neutral”, meaning the federal government will still get its same amount of income, it will just be collected in a different way from different sources. For example, all government agencies, religious institutions, and charitable organization will have to pay taxes on every purchase they make. Imagine that; government paying taxes to itself. And, where will it get the money to pay its taxes? Why, from the taxpaying citizens, of course.

Please Mr. Bortz, we don’t want a revenue neutral “fair tax“, we want NO tax. Of course, we know that a certain amount of taxation is necessary to support the essential functions of government. But, how much is a fair amount to pay? Under Old Testament law in the nation of Israel, God required ten percent. That seems fair. In fact, if the federal government followed the Constitution and only levied taxes necessary to carry out the functions delegated to it by the states in 1787, it could probably get by quite well on a lot less than ten percent.

A tax on income is probably the most equitable tax possible, and a tax of five to ten percent on every dollar earned, from the poorest to the richest, would not be a burden on anyone. That amount would also provide enough money to the federal government for it to perform all the legitimate duties assigned to it by the Constitution and everyone would have “skin in the game”, therefore the average citizen would be much more sensitive to proposed tax increases. Now that I think about it, I guess I am in favor of a “real” fair tax after all.

For a more objective treatment of the fair tax see my article of a couple of years ago, “Beware of the Fair Tax”. Be sure to read the comments, they offer even more insights into the issue. If you have read this far you have surely concluded that I could be nothing but objective concerning the “fair” tax.