This is as important as the Constitutional Amendments, and I believe it can be done either in Washington or in an Article V convention. The “Fair Tax” is a proposed national sales tax. I describe it in these five columns that all appeared in the newspaper in December, 2016. For those who are familiar with the Fair Tax, some of this will be a refresher but it all leads to something in the final column that I don’t think has been proposed yet – a way to solve our health care mess by simultaneously providing universal coverage and enabling free markets. The opponents to all the common sense I’m about to propose will be Establishment politicians who earn their votes by incessant manipulations of the current tax code.
YOU SAY YOU WANT A REVOLUTION? (December 2, 2016)
When aliens exhume our civilization a few million years from now, they will uncover those things which cause us shame. Wars that killed hundreds of thousand fought over dirt or, worse, ideas. Endless attempts at socialist engineering only to find that people are, after all, people and not compliant worker drones. Justin Bieber music.
They’ll discover America, the beacon of light that created the Technology Age, instant communication, and probably whatever follows that. An enlightened people, born free to determine their own fates and elect their own leaders. And in the middle of all that they’ll find the greatest absurdity of all – the United States Tax Code. A tome of over 70,000 pages that none of these free people understood. Even so, they were willing to subject each other to penalties when any of the myriad of indecipherable forms were not filled out correctly. And these free people were told that none of this could be changed. Until the election of 2016, these free people believed this lie and many others.
The Trump triumph instantly accomplished many things, not the least of which was the emasculation of the national media. The hysterically liberal press went all in for the democratic nominee and lost. Because this group lost domination of the national dialogue, what Middle America has long viewed as simple common sense suddenly became possible again.
Nothing would revolutionize the United States (in a good way) and epitomize this common sense more than the implementation of a national sales tax to replace the current tax code. DON’T STOP READING! Although concerning taxes, a topic about which our government has literally bored us into submission, I swear this is interesting.
The Fair Tax, a bona fide plan for a national sales tax, was first introduced over a decade ago and received a brief heyday when a book was released in 2006 and became an instant best seller. The authors of that book started holding rallies and thousands attended. It made incredible sense and politicians, including then President George W. Bush, began examining the practicality of its implementation. The Fair Tax Book can still be purchased on Amazon and is a must read.
Progressives didn’t like the Fair Tax because it eliminated their ability to pick winners and losers through confiscation and redistribution. Progressives not liking something meant that the media didn’t cover it. Soon, we elected the first black president and anything not of the Progressive persuasion was slammed in the press as an ism (racism, sexism, fascism) or a phobia (homophobia, xenophobia, Islamophobia). The Fair Tax got sent to the fringe in all that and the momentum died.
But the idea never went away. As of last year [this was written in 2016 and references 2015], six Senators and 72 Representatives (including recent Trump cabinet appointees Mike Pompeo and Tom Price) have expressed support for the Fair Tax. And here we are, republicans in control with no excuses for not implementing the best policies. For its scope and what it would accomplish for the country, the Fair Tax is the best piece of legislation proposed in over a century and the ultimate achievement in practical thought on taxing a free people.
The Fair Tax would eliminate personal and corporate income taxes, payroll taxes, the estate and gift tax, and the capital gains tax and replace all of those with one national sales tax on all new goods and services. Shockingly, this could be accomplished without an appreciable increase in the cost of goods and services by eliminating most of the IRS and the costs of tax compliance. Tax compliance, the machinations of lawyers and accountants to comply with and avoid the tax code, is a hidden expense in all of the things we purchase amounting to about 22% of their cost.
That’s right. You could keep your entire paycheck, the costs of the things you buy would go up only slightly if at all and the country would receive revenue identical to what it receives now. But wait, there’s more. Because everything would have the sales tax included, even groceries and medicine, all citizens would receive a Prebate check every month for the costs of the tax on necessary items. The amount of the monthly Prebate check in 2016 would have been $226 for one person and $690 for a family of six.
Everyone pays this tax. Sell drugs – guess what? You pay the tax when you purchase something. Here working illegally? You pay the tax. Avoid the tax by accepting payments under the table for your services? At least you’ll pay the tax with that money when you buy something at the retail shops instead of avoiding federal taxes altogether as happens now.
Certainly there’s more to it than what can be covered in one column, so I’ll be delving into it over a few weeks. Stay with it because the implementation of the Fair Tax could help solve more than just the issue of taxation for our country.
THE FAIR TAX PART 2: AN ECONOMIC EXPLOSION (December 9, 2016)
Got some bad news, but you’ve heard it before. You’ve been hearing it for years. You’ve been hearing it for so long that it has become background noise, something that can be postponed indefinitely. The sad truth is that we are broke. Actually, that doesn’t accurately describe what we are. What we are is exponentially broke beyond practical imagination.
Our national debt is approaching twenty trillion dollars. A trillion dollars is actually beyond anyone’s imagination but let’s pretend. Say you started a business on the day Jesus was born and that business lost a million dollars a day until today. You would still have to wait another seven hundred years losing that same one million dollars a day until you will have lost a trillion dollars. (Analogy stolen from The Fair Tax Book.) Ok, now for the exponential part – our federal government has done that twenty times over, which isn’t really exponential because there is no real number exponent of a trillion that makes a number you can write on this page.
But that’s literally not the half of it. Our debt might be $20 trillion, but our unfunded obligations, meaning future payments guaranteed by our federal government for which money has not yet been collected, is over $100 trillion. (That equates to a million dollars a day for 273,972 years – I did that math on my own.) Much of this is owed in Social Security, Medicare and other obligations to our own people. If you think we can default our way out of this, you must reconcile yourself with the idea of kicking grandpa to the curb. Very roughly.
Are we past the point of no return? Are we headed not toward a recession or even a depression but rather toward becoming a failed state? Well, it’s pretty to think we aren’t quite there yet, but we all share a sense of the impending doom. Try suggesting in a group of intelligent people that Social Security will be there for our kids or that our politicians are going to fix any part of this problem. Guaranteed laugh. There is no political will in Washington to even address this problem, much less provide a remedy. They’re just hoping to postpone it all until they gracefully exit office in a gavotte.
The best we can do in the short term is to make this a longer term problem and hope our nation evolves some political will over time. The implementation of a national sales tax to replace all income taxes, payroll taxes, estate taxes and capital gains taxes might be the only thing that can save us, our children and maybe even our grandchildren from this economic catastrophe – our greatgrandchildren might need a different kind of miracle.
The Fair Tax can do this because, while providing revenue to the government equal to what the feds collect now, it eliminates income tax on corporations. Whoa, cry Bernie Sanders and Elizabeth Warren, we’re not letting corporations off the hook even if the country does collect the same revenue. And to what end, Bernie-boy?
You can punish corporations with taxation if you like, but if you tax a corporation 35% on its income, all that does is increase the cost of the widget that that corporation produces by 35% for consumers If the increase in cost of that item causes the corporation to be uncompetitive and go out of business, they now pay no taxes anyway, produce nothing and you’ve just cost some people their jobs. Besides, although the Fair Tax would eliminate corporate income tax, the shareholders would still pay the consumption tax.
All industrialized countries have a corporate income tax of some kind. If we were the first to eliminate ours, foreign companies would flock here, just as ours now flock to places like Ireland. Everybody already wants to be here – we are still, by far, the world’s best market. But many stay away because of the costly tax compliance and high corporate tax rate. President-elect Trump has proposed reducing the corporate tax rate from 35% to 15% and economists are predicting rapid economic growth. Imagine if we went to zero? It would make no sense to invest anywhere else.
There are also trillions of dollars kept by Americans and American corporations in offshore accounts, most of which is kept there for income tax avoidance. That money would also flood back into the country seeking productive use if the corporate income tax were eliminated. If the Fair Tax were implemented, this repatriation would take only months.
President-elect Trump is also currently talking about a tariff on imported goods. A tariff is unnecessary if we impose a national sales tax. Everything produced in China, with the embedded income tax costs of that country already included, would be taxed again, by us, upon sale in the United States. Wal-Mart might have to start selling some American products. The Fair Tax would be a substantial natural tariff on all imported items – that is, unless that Chinese company wants to locate some of its production here. Wouldn’t that be ironic?
An economic explosion is no longer a nice thing to have happen. It has become a necessity to postpone the inevitable long enough to concoct a solution. The Fair Tax is the only plan on the table that would guarantee such a boom.
THE FAIR TAX PART 3: SUBTERRANEAN BLUES (December 16, 2016)
Ah, that first paycheck. Mine was from the Brookside Beverage Drive Thru in 1989. Like many country kids, the jobs of my youth were on farms where I was paid (maybe illegally, for all any of us really know) in cash. At $3.75 per hour, the minimum wage of that time, I was due a handsome sum after that first week working at Brookside and was headed to the record store to buy a couple new Metallica and/or AC/DC tapes. Yes, tapes. And yes, record store.
Then came that “what the hell?” moment. My $3.75 hourly wage had been reduced closer to $3 an hour in that first paycheck through a nefarious process known simply as “withholdings.” Having been naïve and protected in a rural economy where $5 an hour for stacking hay bales calculated to exactly $5 for every hour I worked, I felt robbed and I had been. It was far from the last time. Those older and wiser shrugged their shoulders and laughed. Silly teenager, that’s just the way things are.
Withholdings, like our unique employer-based health care system, were born in the patriotic fervor of World War II, back when believing in the intentions of our government was a given. The sordid history of how an innocent small deduction from everyone’s paycheck grew into the underhanded taking and interference between employers and employees that it has become is almost a perfect metaphor for how, over the same period, our government transformed into an untrusted and clandestine behemoth that uses its taxing system to pick winners and losers and manipulate us. [And spy on us!]
That’s the world we live in, but it’s hard to explain why it should stay that way. As John Lennon once mused, the first step in accomplishing anything is imagining that it’s possible. Well, imagine there’s no withholdings. It’s easy if you try. No need for receipts or accountants. Above us only sky.
A national sales tax would eliminate the subterranean and confrontational manner in which our government deals with us by first, eliminating withholdings from paychecks and second, allowing us to be taxed only when we choose to be taxed and at a rate we well know. The percentage of the tax under the Fair Tax, estimated to be a 23% inclusive tax, would be part of the price of the product on the shelf and the services we purchase. The rate would be open and notorious – no special calculations for deductions and tax brackets. If the government wanted to increase the rate, the cost of every item at the store would immediately go up and perhaps that wouldn’t be so easy for politicians to confuse or ignore. Perhaps every time a politician announced a new giveaway, Americans would say, “Hey, wait a minute, what about the price of my ravioli?”
Indeed, it would be great for employees to keep the money they earn and spend it when they choose, but the Fair Tax system offers something even better to business owners. For those who write paychecks rather than receive them, imagine needing to keep track of only two numbers: how much you pay your employees and how much money you take in. Accounting would be important only for business analysis and you would never be forced to produce proof of the expenses you claim.
When you become a business owner, it is shocking how desperate our taxing agencies are to discourage you from hiring people. Employees may know about the payroll taxes withheld from their checks but they may not know that their employers have to match the Social Security and Medicare withholdings from their own funds – and likely hire someone to keep track of all that and make the payments. If you are making $10 per hour, you pay 76.5 cents every hour for those programs and so does your employer. Your employer could actually pay you $10.77 per hour with no additional expense tomorrow if the Fair Tax were instituted, and you would keep every penny of it.
Employers would still have to deal with the punitive Unemployment Tax and Worker’s Compensation contributions, but one fight at a time brother. If your business is farming, it’s even better. If you do not produce a finished product for retail sale and most farmers don’t, you would not be taxed, meaning a farmer would need little bookkeeping if any at all. Imagine a world where a farmer’s business is simply farming, it’s easy if you try.
In stark contrast to what we have, The Fair Tax would be simple, open and easy to understand. Our current tax system is so confusing that most people don’t even comprehend what makes it that way. Writing in 2013, George Will thought back nine years to the words of that time’s President: “At the 2004 Republican convention, George W. Bush vowed to ‘simplify’ the tax code’s ‘complicated mess.’ The convention roared approval. Next, he promised new complexities — tax benefits for ‘opportunity zones’ in depressed areas and a tax credit to encourage businesses to offer health savings accounts. Another roar of approval.” You can mock Bush, but you would also have to mock the roaring crowd.
With the Fair Tax, this nightmare of intentional and unintentional obfuscation would be over. And who knows, after a time, we might even start to trust our government again. Imagine all the people, living life in freedom.
THE FAIR TAX PART 4 – THE PREBATE (December 23, 2016)
“A tax system is only fair if the wealthiest among us pay their fair share.” – Barack Obama, Hillary Clinton, Bernie Sanders, Nancy Pelosi – pretty much every Democrat in front of a microphone last year.
The mythical “fair share.” If we could only figure out what that means. There is no specific demand, only a general call for more. While the wealthiest 1% of Americans pay half of the country’s income taxes and 45% pay no income tax at all, there seems a blatant perversion of the word “fair” in it all. In a debate with a “fair sharer”, it becomes evident that they don’t hate that successful people aren’t paying enough as much as they hate that successful people exist.
Consider, if you will, Bernie Sanders. If not for shenanigans inside the democratic party, Sanders might have been the first viable socialist candidate for President in our nation’s history and his popularity was based entirely on the idea that equality is to be found in eliminating the rich. His was not a message for creating general prosperity through work and sacrifice, it was one celebrating all the possible giveaways he could bestow from a greater confiscation. [Of course, we later learned that President Trump pays a higher tax rate on his income than Sanders, who, incidentally, also owns three expensive homes. All prominent socialists should own at least two!]
Unfortunately, the argument that higher earners should pay a higher percentage of their income in taxes has some merit. Their contributions are supporting a system that works for them. A strong military benefits those who have things – those who have nothing don’t need it protected. Further, keeping the less fortunate fed and sheltered helps eliminate the possibility of what happened in Russia in 1917 and has happened in so many other places ever since. Pay something now so you don’t pay everything later, comrade.
With that, a tax system that is truly flat – taxing all citizens equally – is no longer possible. Get over that dream so we can move on. The Fair Tax accounts for this reality with a monthly reimbursement for the sales tax paid on necessities called the Prebate. Every household would receive a monthly check or, more likely, a monthly bank deposit. The monthly Prebate in 2016 would have been $226 for one person up to $1009 for a couple with seven children. (The Brady Bunch after Oliver moved in and made the show unwatchable.) The expense of these payments would constitute about 3%.of the 23% inclusive sales tax rate estimated by the Fair Tax.
What this means is that people living at the poverty level buying only the necessities of life would pay the tax at the store when they purchase an item but would receive that tax back every month. Why not just exempt life’s necessities from the tax? For a few reasons. First, if you do that, you start picking winners and losers. With a 23% rate, although prices won’t change substantially because of the elimination of the imbedded costs of the current tax system, the favored items would suddenly be 23% cheaper and think of all the games politicians could play with that. Better to just tax everything, let people decide what they want to buy, and Prebate back the tax on what would be necessities.
A second major benefit of taxing everything and giving Americans a Prebate is that people here illegally will not get it. Whether or not Mr. Trump’s wall slows illegal immigration, people who do come here without permission will pay the tax and help support our system. [President Trump was not yet president when this was written – no disrespect intended with the “Mr.”] If an illegal immigrant family of three live and work here, they essentially would be paying a penalty of $531 per month by not getting the Prebate. Most pay nothing now, by the way.
With the Fair Tax, the working poor would instantly find themselves in a richer world. They would immediately start keeping their entire paycheck – no payroll tax deductions – would likely get a raise as their employer also would not have to pay payroll taxes on their behalf, and would get a check in the mail every month from the government. All of this and the prices of items at the store would not significantly increase due to the elimination of the imbedded cost of tax compliance.
Still, that won’t be enough for Progressives. Even with the Prebate, and even if it can be demonstrated that everyone, especially the poor, would be better off under the Fair Tax, Progressives will oppose it because it reduces government power and control. One need only look at the inner cities to see that Progressives do not care whether their programs make peoples’ lives better, they only care that there are omnipotent Progressive programs.
This is where I make a proposed supplement to the orthodox of the Fair Tax to make it harder to argue against – an additional luxury tax on high-priced items. Not a tax on items themselves, a tax on the price of items. Take automobiles, for instance. If a luxury tax is imposed on all cars costing over $30,000 of 10% for every dollar over that amount, a $40,000 car would cost $41,000. It would provide a little more revenue, would help satisfy Progressive demands, and, let’s face it, if you’re able to spend $40k on a car the extra k ain’t gonna be a deal breaker. You have more money anyway because of the elimination of the old tax system.
I know, not uniform and not really fair in the traditional meaning of that word, but do you want to talk theory for another decade or do you want to get something done? The Fair Tax had great initial enthusiasm but has maintained at about the same level of support since 2008. Most people have still never heard of it. Time to move forward and that will take some tweaks.
THE FAIR TAX PART 5: HEALTH INSURANCE (December 30, 2016)
“How do you tell a Communist? Well, it’s someone who reads Marx and Lenin. And how do you tell an anti-Communist? It’s someone who understands Marx and Lenin.” – Ronald Reagan.
If people were machines, communism would be the answer. Given the goal of producing the best and most equitable society for a like-minded people, what algorithm wouldn’t suggest people jointly owning everything and working together for the common good? Except that people aren’t like-minded. Mostly, they aren’t even similarly-minded on the issue of what is the one true and common good. The communist then has to decide that issue and force everyone else to the same conclusion, which is why every attempt at communism in history has devolved into a dictatorship and mass murder instead of the envisioned utopia.
Obamacare failed for the same reason. (Yes, gratefully, it is fair to begin talking about it in the past tense.) Like communism, the premise was noble in spirit: health insurance for everyone and everyone to contribute according to their ability to pay. Then came the kickbacks to get politicians to sign on and the exemptions for special interests. Once passage was secured, the “ability to pay” concept was modified steeply downward so that it all became northing more than a wealth redistribution scheme hidden in a nightmare of bureaucracy. Mao couldn’t have arranged it better.
In the end, Obamacare accomplished precious little. Providing health insurance for those that didn’t have it is only an accomplishment if it is paid for by someone other than our grandchildren. It actually would have been much less disruptive to simply raise taxes substantially and give away yet more freebies but that all would have been too blatant amidst a skyrocketing national debt. In pretending to solve a problem, Obamacare created more unaffordable government spending that no one will ever have the political will to eliminate.
But there was a problem that needed fixed. If you don’t think so, you likely weren’t self-employed or you didn’t have a family member with a pre-existing condition. Despite the usual Conservative mantra, there are some societal ills for which hard work is not the remedy. Oddly, the very poor had some of the best coverage even prior to Obamacare – they could walk into a hospital emergency room, get treatment and walk out. They couldn’t be collected on, so everyone who could afford care would just pay higher rates to cover them – a kind of reverse insurance.
The one good in Obamacare was that it guaranteed that health insurance could be purchased by everyone. Republicans will never be able to entirely repeal the giveaways, but they can build off this one achievement. What if they started by financially enabling every American to buy a health insurance policy of their choice? And not just the poor. Every single American.
Last week, I covered the Prebate element of the Fair Tax. The Prebate would refund the tax on necessities up to the poverty line. All items would be taxed, including food and medicine, but Americans would get the tax on those items back in the form of a monthly payment.
The amount of the Prebate is in the range of what a simple high-deductible insurance policy might cost – $226 for one person, $690 for a family of five. What if the Prebate, instead of paid directly to the recipient monthly, was deposited into a Health Savings Account from which the recipient could purchase his or her own insurance and pay other health costs? If the luxury tax discussed last week is also dedicated to the Prebate, decent policies and additional money for out-of-pocket expenses are well within range.
And dig this: If a person seeking health care hadn’t bothered to purchase insurance with his or her Prebate funds, that’s when the government could step in – not to protect the person but to protect the health care providers and other consumers who would heretofore have had to make up the difference. If an American shows up at a doctor or hospital without insurance, he or she would automatically be covered by a government policy. That person’s Health Savings Account, which could only be accessed for personal withdrawal once a year, would be deducted for all months that a person couldn’t provide proof of private insurance and an apportioned amount of money sent back to pay for the default government insurance.
In this system, you are always covered and with your own money. You are encouraged to be a good steward of your Prebate because you can cash out what you don’t spend. If that happens once a year, why not on a person’s birthday? This is just for Americans by the way – illegals, you can buy insurance with your own money but no Prebate or government default insurance for you. Rather, illegals and foreign visitors would be supplementing our health care when they buy necessities here and pay our tax.
Just as good, this system would free Americans from the employer-based health care system we currently have. How many small businesses have not been started because a person could not afford to leave their employment’s health insurance? Your employer could still provide bonus coverage, but it would be the fringiest of benefits. More likely, your employer would discontinue health coverage and be able to give you a substantial raise.
Oh, and I almost forgot to mention, with health insurance being universally provided in this way, much of Medicaid could be eliminated right along with the income tax, payroll taxes, estate taxes and corporate taxes. This means your state taxes would substantially decrease. Our country, and our lives, would begin to be affordable again. Then to Marx and Lenin’s horror, outside of national defense, we would start to wonder what any of us need a big government for.
There is a lot in these five columns and the subject needed maybe twice as many. The Prebate as health insurance and the luxury tax components were my additions. The luxury tax is not what I would have liked to find myself arguing for, but I wanted to demonstrate that there are possible ways to negotiate with Establishment democrats and republicans to get it done.
The Prebate as health insurance is the motivation to get it done. I would love for the national debt to be the motivation, but politicians are scared to even pretend that the debt is an issue. Health insurance, however – well, you know the story. And that story isn’t ending with an Obamacare repeal or whatever Washington comes up with next because the underlying problem, which is the cost of the health care and not the cost of the insurance, is not being addressed. The Prebate alternative allows universal coverage and free market competition in the health insurance industry. It would instantly drive down the costs of health care for the average person because no one would be getting the freebies for which everyone else pays. Your employer could still provide supplemental coverage, but it would be entirely unnecessary – another move toward freedom for our employers and small businesses.
The Fair Tax has been around awhile and has been subjected to criticism. I didn’t have room to cover the main critiques in the columns, but here they are.
The first is that the Fair Tax is actually 30% and not 23%, which is true in a sense. The Fair Tax proponents figure the tax as inclusive, meaning that if your widget cost $77 as produced, it would cost $100 at the point of purchase with the Fair Tax added. In traditional sales tax analysis, this would be a 29.8% tax. Why the Fair Tax uses the 23% inclusive figure is that it is replacing an inclusive tax – the income and payroll taxes. In every widget you buy, the cost is increased by tax compliance, corporate income taxes and payroll taxes. The cost to produce the $98 widget is expected to fall to $77 under the Fair Tax because of this and then cost $100 at the point of sale with the Fair Tax added – essentially the same. The big difference is that the person buying the widget will have much more money in their pocket when they go to the store. Call it a 30% tax or a 23% tax, the effect is that the cost of items will not go up significantly and every working citizen will have increased purchasing power.
Another criticism is that the Fair Tax is regressive and benefits the wealthy. I covered that briefly in my columns and offered a solution – a luxury tax on the price of certain items of 10%. This could be expanded to an additional tax on items costing over $100,000 and so on. The argument will persist that the wealthy do not pay their fair share even with the luxury tax because they don’t spend as large a percentage of their income on consumption. Ok – let’s examine the other things on which wealthy people might spend money their money. They might invest in business enterprise. They might hire people to provide them greater ease. They might put it into savings whereby banks will have more money to lend. Of business investment, hiring employees, or bank savings, which use of money by rich people is a detriment to society?
More often, the super-rich give to charity or create charitable foundations. This is another critique of the Fair Tax, however – that since it eliminates the tax code, it eliminates the incentive to buy a home (mortgage interest deduction) and give to charity (charitable deductions). The government’s incentivizing of home ownership caused the economic collapse in 2007-08 so one might suggest that the government should not involve itself in such shenanigans. And the charitable deduction argument is just silly. Who gives money to charity to pay less in taxes? Besides, everyone would have more money to give to charity if they received their entire paycheck.
Anti-Fair Tax forces rally attorneys, doctors and other professionals with the alarming information that all things would be taxed, including services. As an attorney, let me tell you what this does for me. I receive $100 for drafting a will and have to pay $23 to the federal government. Normally, I would have to pay that and a little more in income and payroll taxes anyway. Under the Fair Tax, I don’t have to keep receipts or spend a week of evenings and a weekend filling out tax forms. Guess the loudest group of professionals who oppose the Fair Tax – accountants who prepare income tax returns.
A final argument is that massive tax evasion will ensue. Likely, the hopes of The Fair Tax Book to entirely abolish the IRS is not realizable. There would need to be an enforcement agency of some sort, and also an agency to administer the Prebate checks. But why would evasion be any greater than currently exists under the income tax system? Most of the Fair Tax would be collected by big box stores like Wal-Mart, Menards and Kroeger’s. With the Fair Tax, it would be mostly business enterprises paying the tax and not individuals who would no longer suffer IRS invasion into their lives or have to hire an accountant to fill out tax forms. It is difficult to see how tax evasion under a sales tax would be greater than it is under an income tax anyway – the same kinds of transactions are open to evasion in both systems and there would be less of those transactions occurring with a sales tax.
There are smaller arguments against a national sales tax such as that Americans will buy more products abroad and that there is no way of knowing for sure the exact amount of the tax needed until it is put into effect. Once the rest of the world sees what happens here, however, most countries will likely follow our lead and there will be no advantage to buying abroad. And the 23% might be an educated guess, but it was made with no adjustment for the likely economic boom that would follow the tax’s implementation. It is just as likely to be lower as slightly higher.
These are the main opposition points to the Fair Tax and none of them lands a solid punch. But even if any or all of them did have some merit, the Fair Tax system would still be vastly preferable to the absolute mess of a tax system that we have. As a business owner, not having to keep track of receipts and doing the bookkeeping and excruciating steps of tax compliance seems almost too good to be true. It is hard to imagine as an employee getting a paycheck for every penny earned. And it is hard to imagine the government not being able to meddle in our lives as it does daily with the current tax code. But all of that is how we used to live a century ago.
The implementation of the Fair Tax would be a revolution comparable to what they fought for back in the Revolution, and it is a cause just as worthy. The way to make the fight would be to ask this question of every Congressman: If we started from scratch tomorrow, would you vote to implement the Fair Tax or the United States Tax Code? If they said the later because of any of the false objections listed above, begin listing the litany of problems with the current tax code and make them defend every one of them as their own policies. Make the Establishment either own what it does to Americans with the tax code or admit it is time for something else.
Either that, or bring it to the Constitutional Convention of the States.