Shelby, Gene, Don and the FairTax Response

First Jeffc, I would like to thank you for keeping the FairTax in the discussion. As you are congratulating yourself on how clever you are, you need to realize that these attack items have been around for years. You are not the first to “uncover” “flaws” in the FairTax legislation. These concerns have been answered many times over. In fact, most of us that support the FairTax had some of these same concerns as we first heard of the plan. We studied in more detail about the structure of the overall concept and realize that, although it is not perfect, it is an extremely well designed and sound replacement for the current income tax system.

I’m not sure of your motivation but I suspect that you are looking at the FairTax through the prism of either 1. your hatred of Neal Boortz (based on your earlier comments) or 2. your desire to find a mechanism for political gain or both in which case you are not going to want to know the truth. Neal Boortz had nothing to do with the development of FairTax. This plan was designed without the aid of “Black Helicopters” or some secret federal agency out to take advantage of the citizens. It was developed as a result of asking average citizens about how they would prefer to pay their taxes. It does not give any group any advantage over any other. It is simply a method to fund the federal government in a more efficient and fair method. I, obviously, don’t know how old you are, but I would hope that you would evaluate the plan with a more open mind before you make your defacto vote for the income tax. You are condemning your children and grandchildren to a lifetime of an increasingly overburdening and extremely inefficient tax collection system. With the FairTax, we have a sound, logical alternative to the burden that we have to deal with everyday.

You identified yourself as a democrat. We have many active workers who are democrats. In fact, Dr. Lawrence Kotlicoff, who has done much research on the FairTax, identifies himself as a very liberal democrat. He said in an interview that he particularly likes that the FairTax successfully taxes wealth, which is something that democrats have been unsuccessfully trying to do for years.

You did mention an item that I haven’t seen discussed in 4 or 5 years and that is the issue of paying the tax on interest above the going rate. That issue was raised at the meeting that you referred to and it is there for a very good reason and not to secretly catch some unsuspecting citizen. We were discussing possible ways that FairTax could be scammed and wondered what would keep someone from reaching agreement with, say a new car dealer, to finance a new car at a very high interest rate with a corresponding substantial reduction in the sales price, thereby avoiding taxes. This section of the FairTax legislation was highlighted to avoid the scam and the tax would be collected through an alternative mechanism. My thought, at the time, was not that they were out to get me but that this plan really been HAS been researched well. If you purchase as you do today, you will not be penalized.

You referred to prices not dropping as much as advertised. If you had come to the meeting, you would have seen a chart depicting a comparison of the current system and the FairTax. The chart worked through the costs of an average new car. It compared the taxes involved with both systems and showed the amount of money that needed to be earned with both systems. The result showed that you would have to earn approximately 10% less with the FairTax with the original price of the car staying the same. If the price dropped from the elimination of imbedded taxes by a conservative 10%, you would have benefited by 20%. That means that you could have worked one day a week less, purchased a nicer car, or invested the extra money without tax consequences and still have the same lifestyle. Actually, you didn’t have to come to the meeting to learn this. You would have found that information in your research at

I realize that people are encouraging you to learn more because they realize that they had some of the same concerns early in their education process. The FairTax has many positive benefits for the nation as a whole that easily overshadow the benefits that we would enjoy as individuals. Hopefully, as you continue to try to identify flaws, you will try to put everything in perspective and be honest with yourself.

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JeffC's picture
Submitted by JeffC on Tue, 01/08/2008 - 7:00pm.

First of all let me assure you that I harbor no hated for my friend Neal Boortz! Far from it. I’ve ridden in Neal’s balloon! I listen to him all the time and like him. Please ask him if you know him. We just disagree politically which I believe that both Neal and I enjoy. So please strike that misconception from your mind!

My interest is purely political in that I am concerned about the ultimate damage Gov. Huckabee is going to incur from his support of the FairTax. Truly, I do not have a dog in this fight except for the attacks that Huckabee has to be prepared for and only those as friendly warning to the opposition. If Huckabee wins the nomination the Democrats are going to wrap the FairTax around him and sink him like a stone with it. I will be joyful! But not because the FairTax was defeated, but because the Democrat won.

I hope that my support or non-support of the FairTax is not relevant to your pursuing it. I do not really care about it one way or the other as I believe it to be a fantasy which will never ever be implemented. The more it is examined by people qualified to assess it, the shakier it becomes. If you exempt the poor then don’t tax income that is saved, then the wealthy who save money each year (like me) make out great. But who pays? The middle class of course; those that spend what they make. And, as you know, in the US now we have a negative savings rate so by definition taxes are going up on the vast majority of people for the benefit of the few wealthy savers. Might be a good idea but in reality it isn’t going to happen.

The Bush administration looked at it and fled. Brookings looked it at and all but called it fraudulent. I especially liked the FairTaxers claiming that the Wall Street Journal didn’t understand tax policy! That was rich! I'm not even going to mention the Scientology thing.

So as I told Shelby, Mike has got to come up with answers to my (uneducated) questions and comments. And he’s got to be able to do it in 90 seconds.

The bottom line fact is that the tax is set at 23% by law and all the benefits in your charts, however multi-colored they are, are based not on law but on arguable suppositions that you can’t even get the WSJ to endorse and that I can call up a hundred articles to refute and so can the Democratic Party. And they will, you know it.

It’s the politics!

I can’t wait until the debate and Huckabee tells the American people that the reason he’s for taxing the interest on their mortgages and credit card debts is so that the government won’t get cheated when they but a new car!

Submitted by Gene Key on Wed, 01/09/2008 - 12:40am.

Jeff, you're right, it is easy attack the FairTax with minor distortions and telling half truths. That is too bad since the plan was developed across the political spectrum and is apolitical. Even a liberal Democratic Presidental candidate is running on the FairTax.

I appreciate your concern for Mike Huckabee but he is the most knowledgeable candidate on the FairTax that has ever been associated with it. He can easily handle the questions that you have posed, if given the chance.

Submitted by Sniffles3 on Tue, 01/08/2008 - 9:39pm.

Jeff,if by some miracle the unFairTax gathers enough gullible fools to become law, I can think of one positive aspect.

When new houses cost 30% more overnight, developers will be wiped out.

Just think! No more purchased elections in PTC!!

Submitted by tkrop on Wed, 01/09/2008 - 10:04am.

Tom Kropewnicki

Sniffles3 I like your comment. I think you should forward it to The National Association Of General Contractors, they support the FairTax and have done so for years.

Submitted by sageadvice on Wed, 01/09/2008 - 4:00am.

If a new house costs 30% more, how will it ever sell compared to old houses of the same quality?
Oh, it won't cost more, you say? Materials and labor going down, you say? Right!!!!

Robert W. Morgan's picture
Submitted by Robert W. Morgan on Wed, 01/09/2008 - 7:37am.

The embedded tax of about 22% on labor and materials will go away because the people producing the materials and labor will not be paying income taxes. Remember, the purpose of the Fair Tax is to get rid of income tax and the IRS.

The 23% (not 30%) Fair Tax will put the cost of a new home right where it is now. Used or resale homes will not be taxed,but the prices will be about the same as comparable new homes or slightly less which is a win/win for everyone.

Submitted by Gene Key on Wed, 01/09/2008 - 12:45am.

Just for your information, when you add a 30% tax to a house without reducing the imbedded costs, you still have to earn 19% less money to purchase it than you do under the present income tax code. The truth will set you free.

Submitted by ih2005 on Tue, 01/08/2008 - 9:32pm.

One hopes that, absent a Huckabee campaign effort to defend itself, the media will counter Romney attacks by pointing out how, at Bain Capital, Mr. Romney used

(and continues to) in order to avoid U.S. taxation, and he fee-milked acquired businesses before firing workers and taking them into bankruptcy, to amass his great $250,000,000 wealth.

So, when you compare how Mr. Huckabee's

advocacy compares to Romney's interest in the current tax system, it's pretty easy to see who will lead us out of

- the $265 billion annual tax code compliance costs representing 5 billion wasted hours, annually.

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