Reddit reviews FairTax: The Truth: Answering the Critics

It so rare to find someone on reddit who is open to at least learning about a new idea. :)

If you want to learn more you can check out the FairTax.org website. There was also a book and a follow-up book written about it. Finally, you can check out the actual text of the proposed House bill.

Is the plan perfect? Nope, but there are no perfect plans when people are involved. I just think its better what we have right now and its the best idea I've seen to replace the current system.

They answer this critique on pages 110-117 of their latest book. Sounds like a lot of semantics on both sides of the argument, and I've yet to wrap my head around what real consequences there are to the different calculation methods, but I suspect there are at least a few. To summarize:

There are two kinds of taxes, inclusive and exclusive. For example, assume that for every $1 dollar, you keep/spend $.70 and send the government $.30. Calculated inclusively, the tax rate is $.30/$1.00 = 30%. Calculated exclusively, the tax rate is $.30/$.70 = 43%.

Since all the Federal embedded taxes that the Fair Tax is intended to replace - the Income Tax, Payroll Tax, etc. - are inclusive, the Fair Tax advocates say it should be calculated inclusively also. That does not include the state sales taxes, which are exclusive taxes. If you want to calculate the Fair Tax exclusively, fine, just calculate the Income Tax, Payroll Tax, etc. exclusively too.

Good Wikipedia page on it too, for anyone who doesn't want to read the whole book.

> Your attempt at an ad hominem attack on my bravery is duly noted.

My comment regarding your willingness to consider presented evidence isn't part of my argument for the FairTax. It was an observation on your unwillingness to participate in good-faith conversation by availing yourself of presented information.

> As I mentioned elsewhere, with this 'prebate' we'd still have conservatives arguing what costs are basic, and what are not.

No, it's spelled out in the plan. I haven't read the newer critic rebuttal book yet.

> In the end, the fair tax would hurt the poor more than the rich.

I presented evidence that it wouldn't; where's your evidence? Regardless, I will concede this: it's hard to imagine a new, more equitable, tax program that wouldn't tax lower-income people more.

Also from Walter Williams:
> Aside from the fairness issue, 47 percent of taxpayers having no federal income tax liability is dangerous for our nation. These people become natural constituents for big-spending, budget-wrecking, debt-creating politicians. After all, if you have no income tax liability, what do you care about either raising or lowering taxes? That might explain why the so-called Bush tax cuts were not more popular. If you’re not paying income taxes, why should you be happy about an income tax cut? Instead, you might view tax cuts as a threat to various handout programs that nearly 50 percent of Americans enjoy.

Pretty much all businesses employ accountants. Bigger ones even more so. Some can get by with QuickBooks. (I work in IT and handle the small business sector, including accounting firms)

I didn't make the assertion, economists did. If you ran a business, you'd see all the times goods change hands throughout the supply chain and all the taxes and costs associated with it. I don't have the studies on me, but they're in The Fair Tax Book. There's also Answering the Critics.

Corporate taxes take away incentives to re-invest in business. The government is in the business of protecting its citizens and providing certain services. (Which services is not germane to the discussion) It's not in the business (or should not be) of picking winners and losers or encouraging or discouraging certain behaviors via the tax code. Let individuals and companies decide what to do with their money. Of course, if they were truly charitable, with a 0% corporate tax rate, they could donate even more money to charity without affecting the bottom line.

There's no disincentive to consumption. Prices would be about the same. Further, used goods are not taxed, so if anything, there would be an incentive for things to not be so disposable. But this taxes services, too.

If this would cause economic calamity, how can all the states I listed before do just fine? It's not like they don't have sales tax data and models for all the figures for these equations. It's not a leap in the dark. And all the wealthy that people think are dodging taxes wouldn't be able to avoid the Fair Tax. People that work under the table. Black market money. All taxed. And the repatriation of the trillions of dollars from the subject of the article could bring a flood of jobs to the market.

I disagree. I rather enjoyed the book, and I should probably pick up the sequel.