Misguided: Revisited

8 Responses to Misguided: Revisited

1. Pingback: University Update

2. DJ says:

   June 13, 2007 at 1:25 pm

   It’s quite obvious that it was my comment that led to this, well, this tirade of yours, so I’ll respond to it. I’ll do it in my order, not yours, and in my way, not yours. If I don’t respond to it precisely on a point-by-point basis, then perhaps you should try presenting your tirades on a point-by-point basis so such would be a bit easier to do.

   You jump to conclusions as if it were a virtue. It is not. So, let us dispel a few of those conclusions at the start, shall we? For example:

   “I also don’t like getting sushine (sic) blown up my ass by people who haven’t got a clue as to what they’re wishing for.”

   And you base this statement about me on one comment, which consisted of three words and a link?

   You don’t know me from Adam. You don’t know what I think or why I think it. You don’t know what analysis I have done about this issue. If you want to know what I think and why I think it, then try asking me.

   I don’t put words in your mouth and I expect the same from you. Have you no shame?

   For the record, I am not a member of any political party and I never have been. I do not favor the Libertarian Party, nor do I subscribe to its platform, I tend to be fiscally very conservative, and I evaluate each issue on its merits, and not according to someone else’s doctrine. I am extremely anti-communist and anti-socialist. In short, I think for myself, and I believe in this Republic, the Constitution, and its amendments.

   I’ll start with this, in your earlier comments about it:

   “Go ahead, follow DJ’s link and read about all the class warfare exemptions, how you have to deal with the feds every month instead of once a year …”

   I now deal directly with the feds five times a year¸ four times to make estimated income tax payments and one time to file a return and make the final payment. I deal indirectly with the Feds every month, as I keep track of income and expenses necessary to comply with the rules of the IRS. And I’m just a retired guy with income who therefore has to pay taxes. If I don’t do it myself, I have to pay someone else to do it and check to make sure they get it right. As to dealing with the feds “every month”, read on.

   Why did I start with this statement of yours? It shows you setting up a straw man, which you do over and over and over. Get your facts right, back them up with cold, hard analysis, and you won’t need such. More on this later, too.

   There are only a few ways a gubmint can generate revenue: 1) tax imports; 2) tax exports; 3) tax property; 4) tax use; 5) tax income; and 6) tax spending. As Jack Kemp noted, you get more of what you subsidize and less of what you tax. The only two ways to generate revenue that can provide the huge amounts that the federal gubmint spends are taxing income and taxing spending. Of the two, I prefer taxing spending, i.e. a national sales tax, over taxing income.

   There are two aspects which draw me to the Fair Tax as proposed (and you can call it what you want, but I call it by the name given it by those who thought it up). The first is that the Fair Tax is the only way that I see to do away with the astonishing inefficiencies involved in collecting revenue via an income tax. Regardless of whether it is a flat tax, a graduated tax, a value-added tax, or some combination thereof, simply accounting for and computing the amount to pay in such taxes requires spending many hundreds of billions of dollars a year over and above what is actually collected by the gubmint. It’s like filling the gas tank on your truck and dumping a gallon on the ground every time you do.

   The other aspect that draws me to the Fair Tax is that it would make a clean sweep of the social engineering that the goddamned gubmint has implemented over nearly a century via the income tax code. Would it end such social engineering? No, of course not. But, sometimes a clean sweep is the proper way to clean something up, and I think this is one of those times. More about that later on.

   With that context in mind, let’s look at some of the details of your rant. I’ll do it in the same way you did, just a long bunch of words. I’ll ignore your comments about what Libertarians want or promote or think, for the simple reason that I am not one of them – in short, I won’t address your crapola that doesn’t apply to me.

   The tax would be imposed on the spending by a family that exceeds the basic spending for the year for a family of the size of that family. Sounds fair to me.

   But, how do you implement it? By imposing an accounting requirement on each family that exceeds the requirement now for figuring income tax? And how do you prevent outright fraud with such accounting? That would be worse than what we have now.

   The system proposed is simply to rebate an amount that is a somewhat educated guess about the amount of those taxes, based on family size. Its appeal to me is efficiency. Get rid of the goddamned accounting requirements we have now. This proposed rebate system isn’t perfect, but it’s cheap.

   Yeah, it is open to fraud, as if the gubmint weren’t just giving money away now to millions of people now. Yeah, it is open to social engineering by the gubmint, as if it weren’t doing that now. More about that later on.

   Yup, there would be a great potential for social engineering by the gubmint if categories of goods were exempted or had different rates. Again, the appeal to me is efficiency.

   “There is, of course, no plan in this “Fair Tax” fantasy to keep legislators from playing one group against the other by increasing any of the “Rebate Check” values. So much for future “Fairness”. Sounds like Wlefare (sic) Queens getting paid to have kids to me.”

   They’re getting paid to have kids now. Clean sweep, remember? More about that later on.

   “And speaking of getting a check every month, can we demand that it be sent as a check and not directly depositied (sic) into our bank accounts? I like to keep the fed as far away from my account routing number as possible, thank you.”

   Sure, why not spend at least a half-billion dollars a year in postage alone, just to send the checks out, plus whatever it takes to print them, process them, and dispose of them when they’re finished? What are computers and landfills for, anyway? If the feds want the number of the account you deposit the check in, they can get it without any stress on their part. They simply ask for the bank and account to which a particular check was processed and their computers give it to them. I have the same sentiments, but I designed computers for decades and I understand banking. I’m after not wasting the money the gubmint takes from me.

   “Also, the plan does not mention if this Fantasy will be tied to our SSI numbers.”

   It does if you read it. In the answer to FAQ #3, you can find: “All valid Social Security cardholders who are U.S. residents receive a monthly rebate equivalent to the Fair Tax paid on essential goods and services, also known as the poverty level expenditures.” But you have to actually read it to see that.

   “The “Fair Tax” fantasy folks also claim that the plan will be the end of the Internal Revenue Service”

   It would indeed be the end of what the Internal Revenue Service does now. The army of bureaucrats who now enforce thousands of pages of regulations and process more than a hundred million tax returns each year would no longer do these things. Sounds better every time I hear it.

   “If you’ve been paying attention, there is a mandatory citizen interaction with the fed every month …”

   Meaning what, exactly? You sign up once, and every month a deposit appears in the account of your choice. That beats the living goddamned hell out of the interactions I have now, and I follow the rules and have never been audited.

   “… and someone is going to have to verify 1. Those fantastic “Rebate Checks”, 2. Your marital status, and 3. The size of your household each and every month.”

   What does it mean to “verify a rebate check”? The IRS has never verified my marital status or the size of my household, and I don’t know anyone for whom they have. And you think they would do this every month? You are just making crap up.

   The implementation of the Fair Tax, as proposed, does not require the gubmint to know any more about me than they already know to implement the income tax. Your “big brother is watching” innuendo is just another straw man.

   “You need to read FAQ #48 and read about how this tax fantasy plan also comes with multiple new provisions as to who and what can become a business. Whole new agencies worth of registration of private citizens(sic) and how they interact with one another.”

   We have this same system in my state now and I “interact with it” for my wife’s Schedule C business. It’s nothing new, and it works. For business, it is one HELL of a lot less than they currently have to comply with the federal gubmint.

   “…Why not have a different “Fair Tax Rebates” for states with smaller populations or some other determining factor?”

   Base it on the cost of living where the family lives. I live where the cost of living is low and the quality of life is high. I spend a whole lot less than is spent by those in New York or San Francisco. Base the rebate accordingly. Sounds fair to me.

   “Don’t worry, I am abslutely (sic) positive that some state’s group of Senators and Representatives would figure this out shortly after this legislation was enacted and make it happen.”

   Yup, they will try. Again, more on this a bit later.

   “FYI, one of the reasons the income tax was chosen was because of regional disparities in income were more accurate than regional disparities in the costs of consumer goods. It wasn’t a conspiracy thought up so that they could have a look at your income. Essentially, the guy who lives in Two Dot, Montana will be making less income than the guy living in California, but will be paying the same if not more for his big screen TV. Not exactly ‘Fair’ now, it (sic) it?”

   It was thought up so the gubmint could generate revenue for itself. And, yes, if the guy in Montana buys a big screen TV, I can safely assume that such spending is more than the basic amount his family spends to live, and so it should be taxed the same as if I bought such a TV. To suggest otherwise is to say that I should subsidize his living indirectly through the gubmint. How much social engineering and such are you in favor of?

   “Another one of the half-truths that is commonly spoken of is how this sales tax will not be combined with the sales tax in your current state of residence. The fed cannot tell states how they will collect their operating revenue, so now not only would I have to pay a 23% federal sales tax, I also have to pay another 8.9% to the State of Washington for a grand total of 31.9% in sales taxes.”

   The FAQ’s explain this very clearly. For the life of me, I don’t understand your objection. The states collect their revenue independently of the feds, and they can opt to collect the fed tax and be paid by the feds to do so, or they can outsource the collection, or they can let the feds collect it directly from business. Um, yeah, so what’s the problem?

   “To me, the most annoying slight of hand involved in selling the “Fair Tax” fantasy to the general public is how much weight it puts on sticking it to “The Rich”.”

   I don’t bash the rich. If you want a job, do you ask a poor person?

   “Soaking the rich” is the main theme of taxation politics as practiced by the Democrat Party and it minions. The topic is addressed in the FAQ’s to show that the rich, to the extent they spend more, would also pay more in taxes, and would do so at a higher net rate than the poor. What did you expect the explanations of the plan to do, ignore the subject?

   “But only 5% of the population will be the suppliers of an item that the other 95% of the population needs.”

   You’re making crap up again, unless you think that only rich people sell off automobiles, that the only used automobiles are those left over from the rich, and so on. Read on; you’ve missed something big.

   “And don’t forget the troubles of buying used. You could be buying a “someone else’s problem” car with no factory warranty. That $1500 repair just got bumped over $1800, not counting your state’s sales tax, of course.”

   How so? Try addressing the cost to the mechanic of providing that repair, such as the cost of the parts that he buys, and so on. You haven’t done that. The tax would be applied to what, precisely? In your example, it ain’t $1500, and you don’t know what it would be.

   “And what about things like “garage sales” and “flea markets”. If you believe in the “FairTax Fantasy” and do not think that a black market for new items would pop up almost immediately, you are a fool”

   Sure there would. They exist now. I sometimes buy things at ‘em.

   “If the believers in this tax fantasy actually understood everything included there, they would also see FAQ #12 as the destroyer of not only the new car market, but also of the new housing construction market.”

   I don’t see anything in this rant of yours addressing the notion that the prices of the goods and services to which the national sales tax would be applied would likely be reduced because of the elimination of the taxes therein now that are hidden to the consumer. Without that analysis, your statements in this vein are just hot air.

   Would such prices go down? Of course they would. Competition does that. The single biggest unknown and unproven statement in the published support of the Fair Tax is the factor by which they would go down.

   I’ll give you a simple example, working strictly from memory.

   Some years ago, during the earlier years of the personal computer industry, the single biggest headache the industry faced was the cost of putting RAM in the computer. The problem was the prices charged by the makers of DRAM (Dynamic Random Access Memory) chips. Like any integrated circuits of the time, the price and capacity followed Moore’s Law, which states that the number of transistors on an integrated circuit for minimum cost doubles every 24 months. So, DRAM’s capacity doubled regularly and their actual cost to produce halved regularly, yet the prices charged by the manufacturers remained VERY high.

   Today, if you buy a computer, the seller throws in another half gigabyte of RAM as a “freebie”, a come-on to get you in the store. A gigabyte is 1024 megabytes. How would like to pay $50 per megabyte? That extra half-gigabyte would cost you $25,600.

   The manufacturers kept their DRAM prices high as hell until ONE manufacturer cracked. He reduced his price to gain market share and the bottom fell out like an avalanche. Within a few months, they were cheap. It’s called competition.

   That’s what will happen in the new car market and the new house market, and indeed in all the markets for new goods. The questions involve how it all will settle out and the process by which it will get there.

   You have not addressed this part of the issue at all. That’s usually what opponents of the Fair Tax jump all over, and you have ignored it completely.

   “Nevermind (sic) all that, just how many used houses are there out in the market versus people who will want them? Surely you’ve heard of San Francisco’s housing market, how’d you like that market inflicted upon Anytown, USA?”

   Same lack of analysis, different market.

   “Under this plan, in terms express by this plan, the lower and middle classes will be scavengers feeding off “The Wealthy”, hoping that “The Wealthy” make a shopping decision that will benefit them.”

   So you think. Again and again and again, you have not addressed the notion that the cost to produce new goods and services will drop. To me, that it is the most important aspect of the Fair Tax and the biggest unknown in its support. Until you do that CONVINCINGLY, you’re just spouting hot air.

   I really like this one:

   “Can you imagine what a nearly 32% tax on my gun show ammo sales would do to the price”

   See? You don’t have a clue what it would do to your selling price, and thus to your sales, if you don’t address it’s effect on the cost to you of that ammo, and you haven’t done that.

   Amazing, ain’t it?

   “The premise that the “Fair Tax” supporters use to sell it is no more honest than that used by supporters of socialized medicine, oops, I meant “National Single Payer Health Care”. Both use the income classifications against one another and both of them have rather innocuous names that make people feel shiny and happy.”

   And you think your straw men constitute an honest argument?

   And, I very strongly oppose socialized medicine, no matter what pretty name it’s given.

   “If you want the fed to get some fiscal sanity, then stop campaigning for an idea in the form of a new tax code and get to campaigning for some decent people.”

   Golly, now why didn’t I ever think of getting qualified people in gubmint?

   “Elect the people first, then get your ideas made into law. To do it backwards is only begging to be let down and used.”

   How does one do that except to promote one’s ideas and elect those who rise up to support them? What in hell do you think the campaign for the Fair Tax is about?

   And, finally, we come to the notion of a “clean sweep”, as I said earlier that I would.

   Do you keep house by never sweeping the floor, saying, “Aw, it’ll just get dirt on it again?” Or do you keep sweeping the dirt out now and then?

   We have an income tax code that is the accumulation of about 90 years of never sweeping the house. The current US tax code is 3.4 million words long. If printed 60 lines to the page, it would consume 7,500 letter-sized pages. It has been band-aided, patched, revised, corrected, and reformed until it is incomprehensible even to the people who are charged with enforcing it.

   Consider the last “reformation”, the changes made in the earlier part of the current administration. The changes made were in rates, exemptions, and credits, all to expire in four more years.

   Will Congress make the changes permanent? Beats me, and it currently beats them, too. Wouldn’t you like to plan a business, hire people, and try to run that business with this unknown hammer hanging over your ledger? It is a monstrous impediment to free enterprise. It is a gigantic deterrent to the very thing it taxes.

   Golly, what an intelligent way to raise revenue, huh?

   Would a change to the Fair Tax stop such political tinkering and social engineering? Nope. Nothing will do that. But, I think a clean sweep is long overdue, and I like the Fair Tax, both in principle and in practice. It would greatly reduce the opportunities for such shenanigans by Congress, and that makes them easier to watch out for.

   I don’t represent the Fair Tax, as proposed, as being perfect, or even anywhere near perfect. I represent it as being one HELL of a lot better than the system we have now. To me, the only way it would not be is if it acted as a deterrent or depressant to economic activity. You think it would, but you have not addressed in any way the single most important factor in that regard, namely its effect on the cost to produce and market new goods and services.

   In summary, your rant is long on anger, invective, spittle, and made up stuff, and is bereft of the most important part of any real analysis of the proposed tax. Stick to the facts, back up those facts with cold, hard analysis, and leave the shouting out of it. You haven’t convinced me of anything concerning the Fair Tax. That doesn’t mean you can’t, but you aren’t going to with this approach.
3. Phil says:

   June 14, 2007 at 6:03 am

   Actually, you’re quite wrong, DJ. Your comment did not lead to my “tirade”, as you call it. If you had read the opening of the post, I wrote this “tirade” nearly a year ago, and only cut and pasted the guts of it here. While you did supply the kernel, by promoting an insipid tax plan in a previous post, to which I supplied a reply, after which another reader asked about my reply. This is a post length comment that I decided to just post. Sorry if you don’t care for it. I didn’t make you read it and this isn’t about you in particular.

   You say you are not a Libertarian, but you have the self-centrism and the persecution complex ready to go, so maybe you should check you heading. My first piece of advice is to stop feeling attacked. You’re correct in that I don’t know you from Adam. But this isn’t about you. This is about people wishing to inflict an overly complicated replacement to our current overly complicated federal tax collection system. You may be one of them, but I’m not singling you out.

   I’m sorry to hear that you made the choice to deal with the feds every month, DJ, but again, that was YOUR choice. I deal with them once a year when we dicker over how much of my money they’re going to send me back. You want to deal with them less, make different choices. Don’t support an idea that will inflict them on me more so that you can feel better.

   I’m glad to hear that you prefer to tax spending. That is a wonderful idea. That is not what the FairTax Fantasy is. If you want to promote taxing spending then support taxing spending. No rebate bullshit. No household income bullshit. Point of sale tax. Fine with me. I live in a state that currently has one. Easy, no issues (other than the fact that it is too high).

   It is when someone complicates the process by wanting the fed to send money to everyone and give the government the power to decide how much everyone gets in said check and starts exempting certain items, and basically starts screwing with the very simple idea of a point of sale tax that sets me off.

   You want a National Sales Tax. Fine. Great. But unfortunately for your whole spiel, the FairTax Fantasy is not a National Sales Tax. It starts out as such, but then some retarded tax mutant with a calculator comes in and fucks the whole thing in the ass.

   The first aspect that you said draws you to the Fantasy is how it dumps the calculation and collection of taxes upon businesses. You say that this will save us money by the gov’t not having to do the math. Yeah, sorry, I don’t think so. In fact I know it won’t. With large amounts of money coming in from businesses and large numbers of small amounts of money going out to households, they’re going to need someone to crunch the numbers. Computers are wonderful and they can do amazing things, but anyone with any sense knows that even companies with as few as 100 emplyees has a crew of payroll workers to check everything over. This idea that the computers will do all the work and no one will have to check on each account and everything will be automatic is insane.

   You know and I know that if you give the gov’t a new agency to replace the IRS that they will never get rid of the IRS employees. It will spend a years worth of legislative time thinking up a handy-dandy name for the new tax collection agency, then shut down the IRS and transfer these people all over to the new agency. Not a dollar will be saved. They’ll have these employees re-re-re-calculating collection and distribution numbers to meet their payroll budgets.

   Sorry to be pessimistic about this, but anyone who knows anything about gov’t knows it is true. Remember what FDR did with the alcohol enforcement officers when Prohibition went away? History, my man.

   Later on you tell me that transferring the calculation and collection of taxes will cause the cost of items to go down. Sorry DJ, I disagree. Once again, I am not attacking you by saying that this concept is wrong, I’m just pointing out that VAT taxes elsewhere have not caused this to happen to anywhere near the extent that the plans supporters say it will. Hell, it hasn’t even happened in my home state. If anything, items are more expensive here than in the surrounding states.

   And no, a “if we didn’t nationally it would be different” statement won’t make it true either. That doesn’t work for gun control advocates and it doesn’t work here.

   The second point you mentioned that draws you to The Fantasy is pure, unadulterated BS through which you yourself put a stake through its heart in both your next sentence and then again a few paragraphs later. I quote:

   “The other aspect that draws me to the Fair Tax is that it would make a clean sweep of the social engineering that the goddamned gubmint has implemented over nearly a century via the income tax code.”Your next sentence:

   “Would it end such social engineering? No, of course not”

   So it will and it won’t? Make up your mind. Or maybe you’re bi-polar?

   Then a few paragraphs later:

   “Yup, there would be a great potential for social engineering by the gubmint if categories of goods were exempted or had different rates.”

   The plan already comes with different categories of goods, which haven’t even been fully defined in the plan, so right off the bat we have social engineering ready, willing and able to be manipulated before the plan even goes into effect.

   Later, you go on to talk up the idea that the rebates could be based “on the cost of living where the family lives.”

   If that isn’t the dumbest thing I’ve heard in relation to this plan, I don’t know what is. You’ve got how many Representatives in California? You don’t think they would lobby to vote their constituents an increase? Good god man, think for a moment.

   One last quote before I go:

   “Its appeal to me is efficiency.”

   This Fantasy Plan is not efficient. It is overburdened with rates, codes, guidelines, etc. from the outset.

   You want efficiency?

   10%. Everyone pays.

   You make $8000 a year. Send $800 to the Fed. You make $1,000,000 a year. Send $100,000 to the Fed. No exceptions. No exemptions. No bullshit.

   No “I need to pay less in taxes because I have five kids.”

   No “We’re married and want to pay together.”

   No “I made some of it in the stock market” (or the horse track).

   No “I’m paying interest on my home loan.”

   You can teach 10% to a 3rd grader. Take it out every paycheck or lump sum it every three months or at the end of the year, I don’t care.

   Two lines of tax code. One for the percentage and whether the decimal is rounded up or down. One line for a “Due By” date. If you want a wartime exception raising taxes to 12%, then add a third line. If you want to exempt military personnel or retirees, then four lines.

   A tax code you can put on a 3×5 card. Imagine that! Now that is simple.

   Of course it has the same probability of getting passed as the “FairTax”, but hey, if we’re fantasizing, why not go whole hog?

   I’ll point-by-point your reply if you want to, but it’ll have to wait until I get more than a few minutes.
4. DJ says:

   June 14, 2007 at 1:19 pm

   I presume that you posted your “reply”, or, as I called it, a “tirade”, again because you meant it again. I missed it when you posted it before, so I commented on it here. If you didn’t want comments on it again, then you could have said so.

   You say you are not a Libertarian, but you have the self-centrism and the persecution complex ready to go, so maybe you should check you heading. My first piece of advice is to stop feeling attacked.

   Then don’t word your posts as an attack on those who support something you oppose. I’m interested in the Fair Tax and I support it, but I’m interested in it on its merits, not on mine or yours. I’m a retired engineer, and I deal in facts and analysis, not invective, hyperbole, and insults.

   I’m sorry to hear that you made the choice to deal with the feds every month, DJ, but again, that was YOUR choice.”

   C’mon, guy, improve your own reading skills. I wrote, “I now deal directly with the feds five times a year, four times to make estimated income tax payments and one time to file a return and make the final payment.” That is not “every month”.

   It is also not “my choice”. I do so because the feds require me to, not because I choose to. I simply follow those thousands of rules, remember? I don’t have an employer who withholds part of my paycheck, so I have to pay my income taxes quarterly. When you retire (and let’s both hope that someday you can), likely you’ll find yourself doing the same, and you won’t have any other choice either.

   “I deal with them once a year when we dicker over how much of my money they’re going to send me back. You want to deal with them less, make different choices.

   I don’t make interest-free loans to the gubmint. I keep my money earning interest for me, and I send them the final amount for the year on April 15th.

   Don’t support an idea that will inflict them on me more so that you can feel better.”

   Don’t impute my reasons based on your misconceptions.

   Let’s look at how the current system is inflicted on me. Let’s see what I have to tell the federal gubmint about me just to file my return, shall we?

   Let’s see now … I tell them about what I have invested, where I have it invested, what it has earned, what I have withdrawn, what I have sold, where I have money in the bank, what it has earned, what my wife’s business is, what it has earned, what its expenses were, what my medical expenses are, what my other taxes are, what I’m paying for my house, who I gave money to and how much, and so on, and so on, and so on.

   None of this is the gubmint’s business, and you think getting rid of this intrusive gubmint reporting requirement and replacing it with almost nothing is inflicting something on you? You really haven’t thought this through, have you?

   I’m glad to hear that you prefer to tax spending. That is a wonderful idea. That is not what the FairTax Fantasy is.

   Yes, it is. You can call it what you want, but it is a national sales tax. It is also a few other things, such a tax-rebate-subsidy to benefit the poor (more about that later). The current system is an income tax, but it is also an income redistribution scheme, an involuntary and inefficient retirement system, and a Ponzi scheme, but that doesn’t mean that it shouldn’t be called an “income tax”. I’m not interested in a semantic quibble.

   Point of sale tax. Fine with me.

   Good. Then your objections center on the details, not the principle or the practice. Don’t quibble about the name, focus on the details.

   Easy, no issues (other than the fact that it is too high).

   Yup, and the national sales tax would be just as easy, because when you pay for something, it would work the same way at the same time.

   It is when someone complicates the process by wanting the fed to send money to everyone and give the government the power to decide how much everyone gets in said check and starts exempting certain items, and basically starts screwing with the very simple idea of a point of sale tax that sets me off.

   Agreed. I never said that I favored tha idea of “no taxes on basic cost-of-living spending” (which is my term for it). But, I understand a simple political reality, which is that it would never be adopted without such a provision. It is not fundamentally unfair, it is simply a complication on something that is otherwise simple. I can live with it, and I wouldn’t reject the plan because it embodies this part.

   But, I don’t mischaracterize what the plan is because I don’t like this part of it, and you shouldn’t either.

   It is when someone complicates the process by wanting the fed to send money to everyone and give the government the power to decide how much everyone gets in said check and starts exempting certain items, and basically starts screwing with the very simple idea of a point of sale tax that sets me off.

   Again, agreed. But, again, I can live with it.

   … This idea that the computers will do all the work and no one will have to check on each account and everything will be automatic is insane.

   Yes, such a notion is insane. It is also a straw man. Of course it will require a bureaucracy to administer, but that bureaucracy would be about two orders of magnitude less than what the IRS and Social Security Administration is now.

   … Not a dollar will be saved.

   Well, now who found that out? Save the hyperbole, guy.

   Later on you tell me that transferring the calculation and collection of taxes will cause the cost of items to go down. Sorry DJ, I disagree. …

   VAT taxes require an army of bean counters to account for and compute. It is really difficult and cosstly to administer. A sales tax on the final price requires almost NONE. A sales tax is not a VAT and doesn’t compare to one.

   The expectation of the Fair Tax is that the price of new goods will go down because income taxes will not take a big, wet bite out of the profit margin. A smaller, but significant reduction will occur because business will not have to undertand and follow thousands of pages of rules involved in reporting those profits to the gubmint.

   I’ll give you a simple real-world example to make sure you understand what I mean.

   I have a good friend who’s second business (after his “day job”) is installing and servicing garage doors and operators. He goes to a door distributor, loads up a door and operator, gives them a check, drives to the customer’s house, installs the door and operator, collects a check from the customer, deposits the check in the bank, and then goes home. He makes a very decent living.

   If the Fair Tax were in place (and I am ignoring the transition period here), what would be different? Only four things: 1) the price he pays for the door would be lower; 2) the price he charges his customer for the job would be lower; 3) he would collect national as well as state, county, and local sales taxes from the customer and would forward the sales taxes to the federal gubmint in addition to the state gubmint; and 4) he would not file a federal income tax return or make quarterly estimated federal income tax payments.

   Of interest here is why those prices would go down. That’s the reason for this example.

   Look at it from his end backward through the food chain. He would not have to cough up about half of his profits to the gubmint, so he would lower his price to the customer and still make a nice profit. Why would he lower his price? Because his competitors would lower their prices, and so he would have to follow suit or lose business. It’s called “competition”, and that’s how it works.

   Next, his distributors would lower their prices, and for the same reason. They would not have to cough up half of their profits to the gubmint, and they would compete with each other. So, their price to him drops, and his price to his customer drops even more.

   And so it goes. The price drops at each step in the food chain, and the net price to the end customer drops in a compound manner. To get a flavor of it, consider, for example, a five percent drop in each of five steps in the chain; the net drop is to 77% of what it is now. That’s what the sales tax rate then applies to.

   Do you get it? The big reduction is not in the cost of accounting, it is in the compound effect of not coughing up a big chunk of the profits at every step of the food chain. The additional drop due to the reduction in accounting costs is gravy.

   So, I’ll save you some more straw. This is my one concern about how it would work. What would the transition process be, and how would it shake out? What would the final reductions in price be in practice?

   … So it will and it won’t? Make up your mind. Or maybe you’re bi-polar?

   You can read better than that. It would sweep aside what we have now. No, it would not prevent the process from restarting. Just like sweeping the floor, it starts to get dirty again as soon as you finish sweeping. Just what part of this don’t you understand?

   And again, why do you hurl invective at me instead of addressing what I said?

   This Fantasy Plan is not efficient.

   Yes, it is efficient.

   Current estimates are that about six billion hours of work are spent each year just in figuring out how much to send to the gubmint and complying with the rules therefore, and the cost to do so is about $500 billion over and above what is actually received by the gubmint. Do you think spending 500 billion dollars to collect about three times that amount is efficient?

   Collecting and sending in sales tax is cheap. Again, an example will suffice.

   My wife has a Schedule C business, which is really an overgrown hobby. She makes jewelry with semi-precious stones (nice stuff, actually) and sells it at craft and art fairs. She collects sales taxes (state, county, and local) and sends it to the state monthly. I do the accounting, and handling the sales tax requires me to spend about 20 minutes per month in total, and is done entirely on-line. That’s about four hours per year. Handling our federal income tax takes me at least forty hours per year, sometimes more. Yeah, I’m experienced and good at it, but it ain’t simple.

   Sales taxes are efficient to administer and collect. Income taxes are not.

   You want efficiency? 10%. Everyone pays.

   Don’t confuse efficiency with simplicity. Yes, you are.

   I like the idea of a flat tax. It’s my second choice.

   But, look beyond the simple form of the tax return. Businesses would pay it, and would still have to account for the income to which the tax is applied, which inevitably involves understanding and following a huge list of rules about expenses, depreciation, and so on, and so on. You would too, but using a different set of rules.

   It’s easy to apply. It’s simple to apply.

   But, it’s inefficient because of having to compute what it applies to, and it’s still an income tax.

   Of course it has the same probability of getting passed as the “FairTax”, but hey, if we’re fantasizing, why not go whole hog?

   Because any attempt at a flat tax would inevitably be, yet again, just another set of band-aids to the current system. It would not sweep the floor clean.

   If this subject really interests you, then you should hold your nose, buy Neal Boortz’s book, and read it. Or do you have the courage of your convictions?
5. Phil says:

   June 17, 2007 at 9:06 pm

   You misread my reply, just as you misread my post, DJ. I did mean it, but I did not mean it against you or anyone else in particular. I simply found it much simpler to cut and past than to write something new.

   As for my reading skills, in your original comment you said

   “I deal indirectly with the Feds every month, as I keep track of income and expenses necessary to comply with the rules of the IRS.”

   You might want to remember what you wrote before you go telling me to check my reading comprehension skills, m-kay? I was simply reiterating what you wrote. Nothing more.

   You chose to create a situation where you have income beyond whatever you get from your retirement. That is a choice that you and she made that creates a situation where you have to deal with the Feds more often than others. Don’t go playing like you were just wandering along and someone whipped that on you for shits-n-giggles. The tax plan was there when the business was started. It is too late to bitch about it now.

   Under the FairTax Fantasy, any and all business owners will suddenly become the gov’ts sole tax collectors, and you actually think that your worries will go away? I may remind you that under current law, your marriage contract is a legal business contract, making you partially responsible for her business and all of its receipts. If you think that the gov’t wouldn’t use this tax plan to put a microscope so far up your collective keisters that light will shine out your ears, you are a fool. Plain and simple.

   Growing up the son of a small business owner, I got to see exactly what the gov’t will do to make sure you have collected their taxes. There is a reason that the largest employer in Washington State is the state gov’t: They like to harass business owners who collect their sales taxes for them. There is no way in hell that the Fed wouldn’t do the same to make absolutly positively sure that they got every red cent out of their new tax collectors.

   The FairTax does start out as a National Sales Tax. Unfortunately, like I said before, a retarded mutant then comes along and wants to give credits for this and rebates for that and because the moon had a purpleish shade this afternoon this group will get this, but that group will have to pay more for that. It starts out as a good idea then gets very, very heavy into social engineering and Keynseian economics, and frankly, I’ve had enough of that bullshit. You know it is true, yet you refuse to admit it. There is enough market manipulation built into the Fantasy that the free market will never stand a chance to make any fixes. And you know this and yet you still defend the damn thing.

   You wrote, with heavily inflected distain, I might add

   “The current system is an income tax, but it is also an income redistribution scheme”

   But in your previous sentence you wrote

   “You can call it what you want, but it is a national sales tax. It is also a few other things, such a tax-rebate-subsidy to benefit the poor”

   So what about the the “tax rebate subsidy to benefit the poor” is not an income redistribution plan? Why should any tax plan have any benefits towards those of a lower socioeconomic class? Just because they’re broke, they get benefits that others are not allowed to have? You must really be deseperate to love this Tax Fantasy plan if you still want to redistribute wealth by giving tax breaks. Where is the difference between the two redistribution plans? If it is wrong in one plan, why is it right in the other?

   You may be able to live with that, but I am unable. That is one of the details that I don’t like and I will quibble with the details if I so choose. You apparently don’t like me doing so because it shows the basic flaws in the idea. Tough.

   Your hypothetical idea leaves out one big part of the pie in the FairTax plan: Each step of the “food chain” has to charge the next one sales tax. The manufacturer has to pay for the matierials, the distributor has to pay for the finished product, the retailer has to pay the tax to the distributor and your friend has to pay the retailer. Busiensses have to pay other businesses the sales tax and they then get to calculate how much sales tax they paid when they send of their collected taxes to the fed.

   Great, so were passing the buck on for the calculations from a gov’t employee to a private one. Mmmm, sounds tasty. Sounds like something a Fed who wanted a reason to put their foot in the door of small business would love.

   Here’s my hypothetical:

   Hello, we’re from the newly created office of Federal Retail Revenue Collection and we’re here to go over your books again. Yes, we know that our friendly Collectors were out to visit you last month too, but these audits are necessary to make sure that all rightful federal monies are collected properly. Why are there three of us this time? To make sure that I don’t miscalculate or take a bribe from you. That and Collector Jones here didn’t have anything else to do and we need to justify her payroll hours.

   C’mon, get real, DJ. Either you didn’t know about how businesses would have to charge each other or you were being disingenuous.

   Lastly, while I can pretty much believe that 300,000,000 people (110,000,000 households and 40,000,000 businesses) spend the 20 hours a year to calculate their federal taxes (that is the 6,000,000,000 hour figure you used), I do not believe that each of them is spending $83 an hour to do so (that is the $500,000,000,000 figure you used, most likely from the FairTax site). I’m not claiming to be any smarter than the majority of them, but I had mine done in 30 minutes. So we’re going to have to agree that it costs more than $83 an hour for businesses to calculate taxes than it does for households.

   Now, remember that none of those numbers includes what businesses pay to figure out their state, county and other local taxes. Do you see where I’m going here, DJ? Since it costs business more to calculate and you will now be increasing the number of man hours spent calculating taxes, will we really be saving any money in doing so? Especially with the extra audits that businesses currently don’t have to go through because the Fed doesn’t focus on businesses the way they will under the FairTax?

   Sorry DJ, but this idea is one that, while changing the revenue stream, will not improve it in the least. It will ruin small business by making them the sole income stream for the federal gov’t. It keeps all the bad parts of the old system and ruins a wonderful idea: The National Sales Tax.

   You can’t polish a turd. And the FairTaxFantasy is quite the loaf of it.
6. DJ says:

   June 18, 2007 at 7:33 am

   Well, I wrote

   “I deal indirectly with the Feds every month, as I keep track of income and expenses necessary to comply with the rules of the IRS.”

   and

   “I now deal directly with the feds five times a year, four times to make estimated income tax payments and one time to file a return and make the final payment.”

   “Directly” and “indirectly” are a bit too subtle, perhaps? Mea culpa.

   “Don’t go playing like you were just wandering along and someone whipped that on you for shits-n-giggles. The tax plan was there when the business was started. It is too late to bitch about it now.”

   Again, don’t impugn my reasons based on your own misconceptions.

   Of course we knew what the tax laws were when she decided to start selling what she had been making for years. In fact, she almost decided not to sell anything at all, simply because the hassles of complying with federal tax laws are such a pain in the ass. The current tax code is really conducive to economic activity and growth, ain’t it?

   “Under the FairTax Fantasy, any and all business owners will suddenly become the gov’ts sole tax collectors, …”

   Businesses already collect taxes for the gubmint, so none would “suddenly become” tax collectors. Under the Fair Tax, a huge number of them would be relieved of that responsibility and expense. Those who would collect the national sales tax would find it quite easy to do, using revised point-of-sale software that they already use.

   “If you think that the gov’t wouldn’t use this tax plan to put a microscope so far up your collective keisters that light will shine out your ears, you are a fool. Plain and simple.”

   So you think. I think otherwise. If you’re right, then you don’t need such hyperbole and insults, but if you’re wrong, they won’t make you right.

   “The FairTax does start out as a National Sales Tax. […] It starts out as a good idea then gets very, very heavy into social engineering and Keynseian economics, and frankly, I’ve had enough of that bullshit. You know it is true, yet you refuse to admit it.”

   I did admit it. I’ve had enough of the current system, and this sounds much better to me, regardless of what few faults it has.

   “There is enough market manipulation built into the Fantasy that the free market will never stand a chance to make any fixes. And you know this and yet you still defend the damn thing.”

   I don’t know this, as I can’t quite understand what your statement means.

   “So what about the the “tax rebate subsidy to benefit the poor” is not an income redistribution plan?”

   It does not take “income” from one person and “distribute” it to another, thus it is not an “income redistribution scheme”. It is a “sales tax rebate subsidy to benefit the poor”, which is both an accurate and descriptive statement.

   “Why should any tax plan have any benefits towards those of a lower socioeconomic class? Just because they’re broke, they get benefits that others are not allowed to have?”

   It shouldn’t, but, as I stated before, I understand the political reality that the Fair Tax plan would never be passed if it didn’t contain such a provision. I also stated explicitly that I don’t like this part of the plan and that I have never stated that I was in favor of it. But, I like the plan otherwise and I can live with this part of it.

   “You must really be deseperate to love this Tax Fantasy plan if you still want to redistribute wealth by giving tax breaks.”

   Again, read what I actually wrote. I don’t want to “redistribute wealth by giving tax breaks” and never stated that I did. I can live with this part of the plan because the rest of the plan is worth this corruption of it.

   “You may be able to live with that, but I am unable.”

   So, what will you do if it becomes law? Or is this just hyperbole again?

   “That is one of the details that I don’t like and I will quibble with the details if I so choose. You apparently don’t like me doing so because it shows the basic flaws in the idea. Tough.”

   Then kindly make your quibbling accurate and relevant. Save the straw.

   “Your hypothetical idea leaves out one big part of the pie in the FairTax plan: Each step of the “food chain” has to charge the next one sales tax.”

   NO. It is now quite obvious that you haven’t actually learned how the Pair Tax works.

   To quote Neal Boortz, “… the Fair Tax is levied once and only once — at the retail cash register — and is printed on the sales receipt for all to see”.

   To quote the Fair Tax FAQ, “Retail businesses collect the tax from the consumer, just as state sales tax systems already do in 45 states; the FairTax is simply an additional line on the current sales tax reporting form. Retailers simply collect the tax and send it to the state taxing authority. All businesses serving as collection agents receive a fee for collection, and the states also receive a collection fee. The tax revenues from the states are then sent to the U.S. Treasury.”

   Do you get it? The tax is levied once, in the whole food chain, at the point of retail sale, just as state, county, and local sales taxes are now.

   “C’mon, get real, DJ. Either you didn’t know about how businesses would have to charge each other or you were being disingenuous.”

   No, unlike you, I actually read what is proposed and I actually do know what is planned.

   You can have whatever opinion of this plan you wish, but you really ought to learn what it is before forming that opinion.

   “Hello, we’re from the newly created office of Federal Retail Revenue Collection and we’re here to go over your books again. Yes, we know that our friendly Collectors were out to visit you last month too, but these audits are necessary to make sure that all rightful federal monies are collected properly. Why are there three of us this time? To make sure that I don’t miscalculate or take a bribe from you. That and Collector Jones here didn’t have anything else to do and we need to justify her payroll hours.”

   My state doesn’t do this now with a tax rate that is 1/3 what the fed tax rate would be. Why should I believe the feds would?

   “Lastly, while I can pretty much believe that 300,000,000 people (110,000,000 households and 40,000,000 businesses) spend the 20 hours a year to calculate their federal taxes (that is the 6,000,000,000 hour figure you used), I do not believe that each of them is spending $83 an hour to do so (that is the $500,000,000,000 figure you used, most likely from the FairTax site). I’m not claiming to be any smarter than the majority of them, but I had mine done in 30 minutes. So we’re going to have to agree that it costs more than $83 an hour for businesses to calculate taxes than it does for households.”

   I was hoping you would think about this, so I deliberately didn’t explain it further.

   Here is what Neal Boortz says about it, which is where those figures come from:

   “As discussed earlier, the Tax Foundation estimates of compliance costs cover only those costs incurred responding to the IRS. Earlier in this chapter, we recited Tax Foundation figures showing the number of man-hours and the total cost for individual compliance at $194 billion. In 2003, the last year for which statistics were available, the Tax Foundation estimated that cost at $203 billion. Add to that the time and money spent by business and investors calculating the tax implications of their business decisions, and you can figure in at least half again as much. According to the current director of the Congressional Budget Office, making “tax decisions” rather than “economic decisions” (that is, making decisions that will reduce your taxes rather than increase your income) is a practice that costs our economy 18 percent of our gross domestic product — a whopping $200 billion loss in the GDP.”

   The effect is real, and the costs are much more than just the cost per hour of computing the taxes to be paid. As I noted earlier, my wife and I made such a decision only after considering the tax implications, and we nearly decided not to sell products simply because of those tax implications. Yeah, that’s peanuts. Now multiply it by a few million such decisions made by other people.

   Consider also the merger of Daimler Benz and Chrysler. Why did it become “Daimler/Chrysler” instead of “Chrysler/Daimler”, and why did it incorporate in Germany rather than here? Because of the tax implications, that’s why.

   I don’t claim to know what the “real” numbers are for these effects of the current tax code, I simply repeated what the Fair Tax Organization is putting out. But, I do claim to have got you to thinking about them, and such was my intent. I hope you go read it for yourself.

   “Sorry DJ, but this idea is one that, while changing the revenue stream, will not improve it in the least. It will ruin small business by making them the sole income stream for the federal gov’t. It keeps all the bad parts of the old system and ruins a wonderful idea: The National Sales Tax.”

   You’ve contradicted yourself quite thoroughly, guy.

   You say you are turned off the Fair Tax because of its “prebate to the poor”, but that part of the Fair Tax is totally between individual people and the gubmint. Businesses do not participate in the prebate in any way, and it imposes no accounting or reporting requirements on them at all. Thus, the prebate to the poor has no effect on business.

   You claim that a “National Sales Tax” is a wonderful idea. Indeed it is. But, businesses would see the Fair Tax as nothing but a National Sales Tax. Your statement that “It will ruin small business …” is quite at odds with that, isn’t it? It is sheer demagoguery, isn’t it?

   Indeed, your statement that “It keeps all the bad parts of the old system and ruins a wonderful idea: The National Sales Tax” is just plain silly.

   The Fair Tax would totally eliminate

   o individual income tax
   o corporate income tax
   o alternative minimum tax
   o capital gains tax
   o Social Security tax
   o Medicare tax
   o self-employment tax
   o estate tax
   o gift tax

   along all of the accounting and reporting requirements thereof. That’s one hell of a lot of things that ought to be got rid of, isn’t it?

   Businesses would see the Fair Tax as nothing but a National Sales Tax. You claim that the National Sales Tax is (your words) “a wonderful idea”. So, what bugs you about the Fair Tax is just the prebate to the poor, isn’t it? How is that prebate a worse thing than all the bad things in the present system?
7. Phil says:

   June 24, 2007 at 2:03 am

   Real quickly, something I forgot out of your previous comments

   “I don’t make interest free loans to the gubment.”

   If you have to wait for a “rebate check”, yes you do. You can call it a “prebate check” if you like, but that is bullshit hyperbole and you know it. If the tax plan went into effect, the taxes would start before the checks left the office, so it is actually a “rebate check”.

   You know and I know that gov’t will harrass business owners via their agents and use of the courts to get what they perceive to be “their money” out of businesses. You speak ever so fondly of “the software” that businesses “already use” to collect point of sale taxes, but what about small businesses that don’t use software, or don’t use a program that the fed approves of (and yes, there are still small businesses who don’t use computers to do their books. Mostly because they are that damn small). They will have to “get with the gov’t program” in order to be in compliance. I’m speaking here of folks such as swap-meet sellers, home based mail-order operations and people who don’t currently have business licenses and do their business as more of a hobby. Or how about eBay sellers who pick up stuff at garage and estate sales and the try to turn a profit via the internet, are they going to have to get license to keep doing what they’re currently doing or will they simply be put out of business? Hell, are they even going to qualify under the fed’s new rules as to who and what can be a business? Will you and your wife qualify since it doesn’t sound as though you have an actual storefront? What is the definition the plan uses?

   It is nice to hear that your state doesn’t make it’s living harassing business owners for 1/3 of the proposed fed rate. Why do I think this would happen? Firstly, because my state does. Secondly, because if there is one thing I’ve learned about the fed, is that they’ll do whatever they like. If you read your history properly, you’ll find that the 16th Amendment was never properly ratified. But that doesn’t stop the gov’t from collecting their taxes at the point of a gun every single day of the year. There is no pimp like gov’t and they have the same methods of collecting their money, only an actual pimp doesn’t have the courts backing him up.

   Sure, you got me thinking about “the numbers”, but unfortunately, you’ve got me thinking that they’re based on a calculation that no normal person would think of. Likewise, I noticed that they have no numbers published for how much it costs business to comply with the current P.O.S tax regs.

   Also, it became “Daimler/Chrysler” because the Germans bough out the Americans. Fucking ignorant conspiracy theories from Boortz again. Keeping his train of thought running on the Buffalo Chips it uses for fuel, I guess the reason Mercedes still imports cars is because the German worker is so much more productive than the American, right?

   You also wrote:

   “Businesses do not praticipate in the prebate in any way, and it imposes no accounting or reporting requirements on them at all”

   You are correct about the “prebate” in that they don’t get one, but they still have to show what sales taxes they paid out so that they can deduct them from the money they’ve collected, since they are also exempt from business to business taxes. No state that I’ve ever lived in exempts businesses from sales tax, so this would be a new requirement, would it not? This is where businesses would be weakest as the gov’t will audit every single one of these reports trying to eke the last penny of their revenue stream out of business.

   It wouldn’t be so easy as to just show the retailer your business license or “Business tax exemption card” (another layer of complexity, mayhaps?). The gov’t will want proof that it wasn’t taken home buy the business owner. Businesses would have to prove that you used the item you purchased for the business.

   As you can tell by the length of time between my replies, I don’t have time to write repeated essays going over the same facts as before, so let me make this quick and simple:

   My basic problem with the FairTaxFantasy is that while I do indeed have a deep dislike the current system, this one takes all of it’s bad points and drops them on a very simple idea of a P.O.S tax. If you’re going to get behind a P.O.S tax, why not just do that. Get a spine and stand up for what you want. It would get rid of the same list of taxes you listed out as well, except with no compromises to the Keynseians or the social engineers, period. End of story.

   You wrote:

   “I can live with this part of the plan because the rest of the plan is worth this corruption of it”

   Sorry, you are wrong. There is no plan worth this much corruption/corruptabilty, but it is good to see where your price stands. I’m a whore too, but I’m much more expensive than that.

   This plan has the same chance of passing as my 10% flat tax or an actual P.O.S tax, and no amount of BS from Boortz or anyone else for that matter will change that fact. So why not get behind an actual idea with morals instead of half-assing it?

   I don’t go for “reasonable restrictions on firearms purchases” because there aren’t any. And I don’t go for “reasonable concessions” to getting my personal wealth taken away and redistributed to someone who didn’t work for it. If it is wrong with the income tax, it is wrong with the sales tax. You may be able to cut the Marxists some slack, but I am not. They can go to hell and smoke barbed pole. You probably didn’t hear “Christian Socialism” when Bush said “Compassionate Conservatism” either. I voted for him because at least “Christian Socialism” has a moral base of an actual religion and not the straight-up religion of “The State” that Gore and Kerry were pushing.

   The FairTaxFantasy is just another tool that would be manipulated by the gov’t to pit one citizen against another. Saying that a flat tax “can easily revert to a graduated, convoluted mess” (as the FAQ does in #36) and then use the turd of an excuse of “shame on us” when a future, hypothetical Congress raises the tax rate (as is done in FAQ #37) is called propagandizing. Saying that something will happen with one but “won’t if we stand strong” is the worst kind of grandstanding I’ve seen in a long time. I can guarantee it will happen with both because that is what gov’t does.

   The FairTaxFantasy is not a “clean slate” as you and the FAQ have claimed, it is a “redistribution” of the worst points of the current system into a new system. If you cannot see that, then I cannot help you. Likewise, if you don’t like my invective and insults, my apologies, but I’m trying to shock some sense into you. You probably don’t want my pity either, but if you are so fed up with the current system that you’re willing to bend over and spread ’em for a plan as disgusting as this one, then you have it in spades.
8. DJ says:

   June 24, 2007 at 1:43 pm

   It appears you’ve done a bit of reading, and your comments are not simply layers of hyperbole and insult. I suggest you continue the reading and the trend; it’s quite refreshing in comparison.

   My statement that “I don’t make interest free loans to the gubment” concerned your statement that you dealt with the gubmint only once a year, when you dickered over how much you had overpaid your taxes. You’ve probably noticed that your income tax refund doesn’t include interest paid you by the gubmint for the loan of your money to them. My point was perhaps too subtle, but it was that I don’t overpay my taxes, as such constitutes an interest-free loan to the gubmint, and I pay attention to such details.

   “If you have to wait for a “rebate check”, yes you do.”

   My understanding is that the checks from the gubmint, whatever they are called and whether they arrive by snail-mail or direct-deposit, would come once per month. I suspect that sometimes they would, in effect, be a “prebate” and sometimes a “rebate”. I don’t see that it is important either way. I used the term “prebate” simply because the Fair Tax Foundation does, and I hoped that you would correlate what I wrote to what you might (hopefully) read on their site.

   “You speak ever so fondly of “the software” that businesses “already use” to collect point of sale taxes, but what about small businesses that don’t use software, or don’t use a program that the fed approves of (and yes, there are still small businesses who don’t use computers to do their books.”

   I was speaking primarily of the notion of cash registers and such. It is relatively rare that a business doesn’t use such methods to compute the final price at a point of sale. A few examples would be where service work is done and a service ticket is written up that requires a “gross receipts tax”, such as is done in New Mexico. The point of my comment is that such mechanisms can apply a national sales tax rate simultaneously with a state, county, and city tax rate, and so, at the point of sale, implementing the national sales tax in addition is hardly a burden.

   “I’m speaking here of folks such as swap-meet sellers, home based mail-order operations and people who don’t currently have business licenses and do their business as more of a hobby. Or how about eBay sellers who pick up stuff at garage and estate sales and the try to turn a profit via the internet … What is the definition the plan uses?”

   Keep in mind a key concept. The Fair Tax, as proposed in Congress and described by the Fair Tax Foundation and as it applies to merchandise of any kind, applies only to the retail sale of new merchandise. Items sold at swap meets, garage sales, and on eBay are usually, but not always, used goods, to which the national sales tax would not apply. Of course, some such operations sell used goods, some sell new goods, and some sell a mix of both.

   My wife’s products are “new”, and so the national sales tax would apply, the same as state, county, and local taxes apply. She would simply collect the latter simultaneously with the former, and likely the state would act as the collection and forwarding agent for the feds. For us, it would not be an additional burden, it would simply slightly affect what we do already. She computes a price that is rounded to a whole dollar amount, and we back the sales taxes out of it later, as this avoids having to make change using coins. Nearly everyone where she sells things does it that way.

   How would such shake out overall? I don’t claim to know, but it seems to me that it would not be any more burden for the feds than it already is now for the states. It is the same mechanism applied in the same way. Conjuring up scare stories of the federal boogeyman and the imperial proctoscope don’t scare me.

   “Why do I think this would happen? Firstly, because my state does.”

   I understand that the far northwest has such a reputation. Things are nice here.

   “Also, it became “Daimler/Chrysler” because the Germans bough out the Americans.”

   Yup, they did. But they could have called it anything and they could have incorporated it anywhere. They did what they did because the tax advantages were in their favor. Wouldn’t it have been nice if the tax advantage were in their favor to incorporate here? With the Fair Tax in place, it would have been.

   “You are correct about the “prebate” in that they don’t get one …”

   I think you missed my point completely. It was that the “prebate” involves interactions between individuals and the federal gubmint, but it does not involve interactions between individuals and business or between business and the federal gubmint. Thus, business does not “interact in the prebate in any way”.

   Well, that’s not only true, it is reasonable, isn’t it? The point of the prebate is to exempt each household from having to pay the national sales tax on “basic household necessities”. Businesses aren’t people, are they? Business don’t spend anything on “basic household necessities”, do they? So, the prebate applies to people, not business. Thus, business would see the Fair Tax only as a national sales tax, a “point-of-retail-sale” tax, and as nothing else.

   … but they still have to show what sales taxes they paid out so that they can deduct them from the money they’ve collected, since they are also exempt from business to business taxes.

   NO, and this is why I wrote above that you continue the reading. You still don’t quite understand a vital aspect of the Fair Tax plan.

   The Fair Tax plan eliminates business income tax, and so it eliminates all accounting that is required by the gubmint regarding income, deductions, and the like. Kindly think about that.

   The national sales tax applies to the retail sales of new items only. It does not apply to the sales of items, whether they are new or old, that are sold by one business to another. That means that a business that purchases items for resale or to include in items that it manufactures and then sells does not pay the national sales tax on those items.

   Now, keep in mind that business owners are not required to be intelligent or to think clearly. Some do, some don’t. If a business owner wishes, he can purchase items at retail, paying national, state, county, and local sales tax as he does, stock his store with those items, and then sell them at retail, collecting national state, county, and local sales taxes as he does. That would be pretty stupid, wouldn’t it? It is a business practice known as “buy high and sell higher”, and is usually followed by a business practice known as “failure”.

   A much more intelligent way for a business to operate is to buy his merchandise without paying the sales taxes, which he does simply by informing the seller and providing his tax ID number, who then does not collect any sales tax on the sale. This is done routinely gazillions of times each day already. The same practice with the national sales tax in place would be no different, and would occur simultaneously with no extra effort.

   Now, here is where I think you don’t quite understand it, and I’m quite serious here.

   If a business wishes to buy at retail, paying the sales taxes, and then re-selling at retail, collecting more sales taxes, he can do so. If he did, there would be no mechanism by which he could “deduct” those sales taxes that he paid, because from a tax point of view, there is nothing to deduct them from. There would be no more business income tax, thus there is no gross income to deduct them from as an expense to arrive at net income, to which a business income tax would be applied. His expenses would be his concern, not the gubmint’s. It would be greatly to his advantage to buy his products wholesale and not retail, and so he would likely do so.

   Seriously, guy, get that last paragraph into your brain. It is a very key aspect of the Fair Tax plan. Income taxes go away, along with the gubmint accounting requirements thereof, and along with all tax implications thereof.

   It wouldn’t be so easy as to just show the retailer your business license or “Business tax exemption card” (another layer of complexity, mayhaps?). The gov’t will want proof that it wasn’t taken home buy the business owner. Businesses would have to prove that you used the item you purchased for the business.

   The concern you describe is real, but the point is, as I noted above, businesses already do this gazillions of times a day concerning state, county, and local taxes. Doing it with a national sales tax would occur simultaneously without any additional effort. You don’t need to invoke scare stories about what a nightmare it would be, just go around the country and see how it actually works. Your scare stories are no more credible than those who favor gun control, and for the same reason.

   “My basic problem with the FairTaxFantasy is that while I do indeed have a deep dislike the current system, this one takes all of it’s bad points and drops them on a very simple idea of a P.O.S tax. If you’re going to get behind a P.O.S tax, why not just do that.”

   I do just that. Again, from the point of view of business, the Fair Tax is nothing but a national sales tax, a point-of-retail-sale tax. I think you are simply conjuring the boogeyman again. The Fair Tax eliminates the bad points of the current system because it eliminates the current system.

   “Get a spine and stand up for what you want. It would get rid of the same list of taxes you listed out as well, except with no compromises to the Keynseians or the social engineers …”

   I have a spine. Why the bloody hell do you think I’m commenting here? I also give donations to the Fair Tax Foundation. I want them to succeed.

   There is no plan worth this much corruption/corruptabilty …

   I do not understand why you think this plan is so much worse than the current system that it should not replace the current system. The current system literally gives money to the poor via the horribly misnamed “child tax credit” and “earned income credit”, in which, if the “credit” exceeds the income taxes owed in total, then the “tax payer” becomes a “tax receiver” and simply gets a subsidy from the gubmint. It has thousands of special provisions either to benefit one industry or to punish another, or to benefit one class of taxpayer at the expense of another. It is more a tool of socialist members of gubmint than it is a method of gathering revenue to the gubmint. It wastes hundreds of billions of dollars a year just complying with it and/or avoiding its consequences.

   “This plan has the same chance of passing as my 10% flat tax …”

   The flat taxes that have been proposed in Congress are nothing more than a slight tinkering with the current system, meaning that the final computation of taxes is simplified, but the the gazillions of current special provisions have been left in. A “real” flat tax, as either you or I might propose, has, to my knowledge, not been proposed in Congress in a long time. The Fair Tax has currently 62 co-sponsors in the House and four in the Senate. That’s more than any flat tax proposal currently has.

   “The FairTaxFantasy is just another tool that would be manipulated by the gov’t to pit one citizen against another.”

   Yup, it would inevitably be used in that manner. So is the current system.

   “The FairTaxFantasy is not a “clean slate” as you and the FAQ have claimed, it is a “redistribution” of the worst points of the current system into a new system. If you cannot see that, then I cannot help you.”

   And if you cannot or will not see how the proposed system would actually work, or the benefits thereof, then I cannot help you.

   “Likewise, if you don’t like my invective and insults, my apologies, but I’m trying to shock some sense into you.”

   Pot, meet kettle.

   I’m trying to get you to actually read and understand what you’re opposing and oppose it with logical, rational arguments, not with scare stories, invective, and insults. Again, if you are correct, then you need nothing else, but if you are wrong, then nothing else will make you correct. Pardon the pun, but merit has merit, and I’m concerned with merit.

   “You probably don’t want my pity either, but if you are so fed up with the current system that you’re willing to bend over and spread ‘em for a plan as disgusting as this one, then you have it in spades.”

   What I want is (to the extent I want anything here), in the future, for you to actually read what you form an opinion on before publishing such in-your-face pronouncements as “I have no love whatsoever for the “FairTax” and will not let folks sing its praises without confrontation.” In brief, I suggest learning what you’re talking about before talking about it, which you demonstrably didn’t do with this issue. I really don’t care what you think about it, but I submit to you that the readers of your blog, and the commenters thereon, deserve better treatment from you than you have given them in this matter, and that is why I responded in the first place. If your comments had been accurate, I never would have commented at all.

   Fair enough?

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