The-Hogs.net - Washington Football Discussion, Redskins to Commanders Era

I thought I'd start a new thread since this will probably warrant its own discussion.

KazooSkinsFan wrote:What's terrible about it? It reduces waste (CPAs, tax lawyers, corporate staff dedicated to taxes, corporate incentives driven by taxes not efficiency) eliminates all taxes for the poor (in fact the ultra poor make money on taxes), shifts the burden of taxes from US to foreign companies, incents foreign investment in the US (for that reason), forces the cash society to become taxpayers and elminates a complicated system with nothing to do with "fairness."

The only losers are politicans who can't use the tax code to line their war chests. I consider that a good thing, personally.

I'll try to outline some of my objections to it here -- I hope you don't mind if I quote an author or two.

* I'm fairly confident that the FairTax does not abolish the 16th amendment. It doesn't really matter to me whether that is in the plans of the future, or phase II, or what have you. If a piece of legislation does not repeal the 16th, there is no constitutional reason that congress can't simply tack on the Fair Tax to additional taxes.

The Fair Tax legislation proposes that the 16th amendment should be repealed, but only a constitutional amendment can do that. I simply don't trust congress to pass the FT and then follow up on their promise to repeal an amendment that gives them that much power.

* There is no such thing as a "Fair Tax," period. This may seem like an irrelevant semantic debate but I think it's crucial. Some arguments run that the tax is voluntary because it's a tax on sales and purchases (and I can of course refrain from purchasing). If the tax were truly 'voluntary' that would mean that I could refuse to pay it -- but we all know what would happen if were I to do that. So somehow this tax is 'fair' and 'voluntary' when I would argue that it is quite the opposite.

* Henry Hazlitt, a libertarian thinker, wrote a great piece explaining why he once supported but then revoked his support for a 'negative income tax.' The FT uses a negative income tax to moderate its effects on the poor (who will have a hard time seeing 23+% of their money taken in each transaction). In short, Hazlitt's argument is that it is impossible to redistribute income without destroying some of the very incentives that make social progress possible. (Here is where I suspect we disagree on the nature of a 'safety net').

* I don't see what incentives will keep congressmen from raising the national sales tax any more than they currently raise taxes. When the income tax was first introduced it was a few percentage points of only the highest incomes; even its ardent supporters never dreamed that it would take a third of the average American's income.

* Murray N Rothbard, who I think is probably the greatest libertarian thinker of the 20th century, wrote this about proposed tax reforms -- and he wrote this in the 70's, by the way:

"An example of such counterproductive and opportunistic strategy may be taken from the tax system. The libertarian looks forward to eventual abolition of taxes. It is perfectly legitimate for him, as a strategic measure in that desired direction, to push for a drastic reduction or repeal of the income tax. But the libertarian must never support any new tax or tax increase. For example, he must not, while advocating a large cut in income taxes, also call for its replacement by a sales or other form of tax. The reduction or, better, the abolition of a tax is always a noncontradictory reduction of State power and a significant step to­ward liberty; but its replacement by a new or increased tax elsewhere does just the opposite, for it signifies a new and additional imposition of the State on some other front. The imposition of a new or higher tax flatly contradicts and undercuts the libertarian goal itself."


So those are some of my reasons for opposing the FT. I simply don't see it have a net positive effect after considering how harmful it will (in all likelihood) be.

Irn-Bru wrote:I'll try to outline some of my objections to it here -- I hope you don't mind if I quote an author or two.

* I'm fairly confident that the FairTax does not abolish the 16th amendment. It doesn't really matter to me whether that is in the plans of the future, or phase II, or what have you. If a piece of legislation does not repeal the 16th, there is no constitutional reason that congress can't simply tack on the Fair Tax to additional taxes.

The Fair Tax legislation proposes that the 16th amendment should be repealed, but only a constitutional amendment can do that. I simply don't trust congress to pass the FT and then follow up on their promise to repeal an amendment that gives them that much power.

Yes, this is I agree the strongest argument against it. I would certainly repeal the 16th amendment However, keep in mind in the end we need to be vigilant with politicians or we are screwed anyway. I have no safe solution to that but not doing it doesn't save us from that either.

Aside (not for "In-Bru" who clearly knows this): The 16h amendment authorizes the income tax. The original constitution prohibited the direct taxation of citizens, a basic libertarian principle. The fear is we go to the national sales tax and eliminate the income tax, then the greedy politicans in a future time re-instate the income tax keeping the sales tax. Repealing the 16th amendment would in theory eliminate that risk. Though the current courts have no hesitation to ignore the constitution and rule by their own views rather then what the constitution actually said anyway so it may or may not work in practicality.

Irn-Bru wrote:* There is no such thing as a "Fair Tax," period. This may seem like an irrelevant semantic debate but I think it's crucial. Some arguments run that the tax is voluntary because it's a tax on sales and purchases (and I can of course refrain from purchasing). If the tax were truly 'voluntary' that would mean that I could refuse to pay it -- but we all know what would happen if were I to do that. So somehow this tax is 'fair' and 'voluntary' when I would argue that it is quite the opposite.

On the name "fair tax" I agree with you and it's not just semantic. I haven't heard where the name came from but I believe it's a play on the left and how they refer to anything they want as "fair" to justify their overt, blatant "unfairness." It could be called a "fairer" tax. I would call it a National Sales Tax. But while I agree with the point on the name I don't see it as an argument against it.

On Voluntary, I didn't get your point here at first, but I get it now. The term "voluntary" is certainly not true, it is not voluntary. I would say a better way to describe it is as not disincentive to investing. I don't really see a point here against the Fair Tax though.

Irn-Bru wrote:* Henry Hazlitt, a libertarian thinker, wrote a great piece explaining why he once supported but then revoked his support for a 'negative income tax.' The FT uses a negative income tax to moderate its effects on the poor (who will have a hard time seeing 23+% of their money taken in each transaction). In short, Hazlitt's argument is that it is impossible to redistribute income without destroying some of the very incentives that make social progress possible. (Here is where I suspect we disagree on the nature of a 'safety net').

Actually I agree with this also and would prefer to not have the rebate (you are referring to as the "negative tax"). Though the quote accurately says it destroys "some" of the value the postitive benefit of destroying our monstorous system with a simple tax still overwhelms the negatives.

Two asides. I'm sure In-Bru knows these as his comments indicate a lot of understanding of this:

Aside 1: The "Negative Tax" or Rebate: According to the Fair Tax proposal, the projected taxes below the povertyline would be "prebated" to everyone. That way, no on at the poverty line would pay any taxes. Those above would. Those below actually make money.

I believe this to appeal to the left. I would not include it mostly because while this is far simpler than what we have now the beauty of the Fair Tax is its's incredible simplicity and low overhead. The poor could be compensated as part of their welfare package.

Aside 2: Under the fair tax, the poor would pay less taxes then they do now. Ignored by the left and the politicans, ALL TAXES are already included in the price of products. All corporate taxes, personal taxes, social security taxes etc. Companies compute their cost and roll them into the price of the product. There is no such thing as a tax on corporations, corporations only collect taxes.

The implication of this is that the poor are now paying corporate taxes and other taxes that are rolled into the price of everything they buy. Since under the Fair Tax that is paid to them, they actually don't pay it and they are getting a tax cut from the supposedly zero they pay now because they dont' really pay zero, it's burried in the cost of the products they buy.

Irn-Bru wrote:* I don't see what incentives will keep congressmen from raising the national sales tax any more than they currently raise taxes. When the income tax was first introduced it was a few percentage points of only the highest incomes; even its ardent supporters never dreamed that it would take a third of the average American's income.

Again correct, but how is arguing it doesn't solve a problem mean we shouldn't go to a better system? This is not intended to end taxes, it is intended to have a better system. Again we have to be vigilent with Congress, but that's the same now. At least they have fewer variables to play with for special interest.

Irn-Bru wrote:* Murray N Rothbard, who I think is probably the greatest libertarian thinker of the 20th century, wrote this about proposed tax reforms -- and he wrote this in the 70's, by the way:

"An example of such counterproductive and opportunistic strategy may be taken from the tax system. The libertarian looks forward to eventual abolition of taxes. It is perfectly legitimate for him, as a strategic measure in that desired direction, to push for a drastic reduction or repeal of the income tax. But the libertarian must never support any new tax or tax increase. For example, he must not, while advocating a large cut in income taxes, also call for its replacement by a sales or other form of tax. The reduction or, better, the abolition of a tax is always a noncontradictory reduction of State power and a significant step to­ward liberty; but its replacement by a new or increased tax elsewhere does just the opposite, for it signifies a new and additional imposition of the State on some other front. The imposition of a new or higher tax flatly contradicts and undercuts the libertarian goal itself."

Mostly he's saying no new taxes or tax increases, obviously I'm in agreement with that. The one part he says is "the libertarian must never support any new tax or tax increase. For example, he must not, while advocating a large cut in income taxes, also call for its replacement by a sales or other form of tax." I believe in principle with his point given politicians replacing a tax code are likely to be using some subrefuge to screw us. But I can't accept a sweeping statement as a veto of a specific proposal. If you are saying that's a reason to be suspicous and look carefully, then I agree. I've spent a lot of time studying this and with my background have a lot of knowledge of what they are trying to do.

Irn-Bru wrote:So those are some of my reasons for opposing the FT. I simply don't see it have a net positive effect after considering how harmful it will (in all likelihood) be.

Really though your arguments are valid in that it doesn't solve all problems (true) replace vigilence of keeping politicans in check (true) and that we should look carefully (again true). Nowhere do you actually oppose it or disagree with any of my points on the benefits.

Fair Tax = bad idea

Flat tax = has my support but will sadly never come to fruition b/c of special interests.

nuskins wrote:Fair Tax = bad idea

because...

KazooSkinsFan wrote:

nuskins wrote:Fair Tax = bad idea

because...

Exactly!

Why doesn't the government spend money wisely instead of throwing it away? That would be good for tax relief.

Cappster wrote:Why doesn't the government spend money wisely instead of throwing it away? That would be good for tax relief.

And I was told I was dreaming if I think the Fair Tax will ever be passed....

Actually though, the fair tax isn't about tax relief. I support tax relief, but the fair tax is about improving the economy by reducing the inefficiency of the tax code and the resulting drag on our economy and increasing our personal privacy by eliminating the IRS and it's eyes on what we earn, invest, spend, donate, ...

More Taxes= More money outta my check!

Do you realize that the "complicated" tax codes actually benefits the "average Joe" taxpayer? All the tax codes, rules, etc... actually are there to benefit the average family, take them away and you allow the "high rollers" to be taxed the same way we are. And I take offense to you calling me a waste (CPA here).

KazooSkinsFan, you wrote:

Really though your arguments are valid in that it doesn't solve all problems (true) replace vigilence of keeping politicans in check (true) and that we should look carefully (again true). Nowhere do you actually oppose it or disagree with any of my points on the benefits.

I do oppose the FT in a few specific areas, and my general skepticism of government reform has me thinking that any perceived advantages now would be outweighed heavily in the future. Let me point out the areas where I oppose the FT itself.

KazooSkinsFan wrote:Yes, this is I agree the strongest argument against it. I would certainly repeal the 16th amendment However, keep in mind in the end we need to be vigilant with politicians or we are screwed anyway. I have no safe solution to that but not doing it doesn't save us from that either.

and again later:

Again correct, but how is arguing it doesn't solve a problem mean we shouldn't go to a better system? This is not intended to end taxes, it is intended to have a better system. Again we have to be vigilent with Congress, but that's the same now. At least they have fewer variables to play with for special interest.

The crucial point here isn't simply that the FT doesn't repeal the 16th amendment or that politicians can't be trusted. It is a combination of those two things. We must be vigilant against politicians right now, true, but how much harder will it be to keep congress from taxing us heavily once we give them the tools to levy both a federal income and sales tax?

I'd prefer to see the 16th repealed first or simultaneously (which, as we noted, looks unlikely since that requires an amendment to the constitution). The consequences of even opening the door for a sales and income tax are far too great, and that was the point I was trying to get at.

On the name "fair tax" I agree with you and it's not just semantic. I haven't heard where the name came from but I believe it's a play on the left and how they refer to anything they want as "fair" to justify their overt, blatant "unfairness." It could be called a "fairer" tax. I would call it a National Sales Tax. But while I agree with the point on the name I don't see it as an argument against it.

On Voluntary, I didn't get your point here at first, but I get it now. The term "voluntary" is certainly not true, it is not voluntary. I would say a better way to describe it is as not disincentive to investing. I don't really see a point here against the Fair Tax though.

The semantics is another thing that I oppose. My feeling is that it can't be a sarcastic play on words, and even if it is it will be misconstrued in the future.

As for the 'voluntary' argument; I have heard it from two sources primarily. Neal Boortz has used that argument repeatedly, and I have friends that support the FT and use that argument. And, like my skepticism of calling it a Fair Tax, my feeling is that the 'voluntary' aspect of it will be played on in the future to coerce people.

Let me give you an example of something that I think is similar. Buildings such as restaraunts, offices, etc. were considered private property (as they should have been) for a long time. People might also refer to them as 'public spaces,' not because they were owned by the government but rather because so many people had access to it.

However, many of the laws that are today aimed at businesses are done so in the name of keeping 'public' spaces to certain standards. Smoking laws, anti-discrimination laws, and all kinds of crimes against private property are passed and accepted at large in the name of democracy.

What's my point? At least as things stand now it is clear that the government is taking money from our wallets and that we don't have a choice in the matter. I can see the general public opinion of the future thinking "you don't like taxes? Well, no one is forcing you to buy anything!" So much for semantics. . .

Actually I agree with this also and would prefer to not have the rebate (you are referring to as the "negative tax").

This is another point where I oppose the FT itself. Again, whatever its benefits, I can't in good conscience support a tax that creates new problems.

ALL TAXES are already included in the price of products. All corporate taxes, personal taxes, social security taxes etc. Companies compute their cost and roll them into the price of the product. There is no such thing as a tax on corporations, corporations only collect taxes.

This is a huge point that I forgot to mention, and it is another reason that I really don't like the FT. As of today, who collects taxes? The government. If the FT goes as planned, who will be the tax collectors of tomorrow? Businesses. Any bill that turns citizen against citizen like this is not a victory for the populace. Let the State do its work if it has to, not businesses.

I believe in principle with his point given politicians replacing a tax code are likely to be using some subrefuge to screw us. But I can't accept a sweeping statement as a veto of a specific proposal. If you are saying that's a reason to be suspicous and look carefully, then I agree. I've spent a lot of time studying this and with my background have a lot of knowledge of what they are trying to do.

I think that you've obviously spent more time looking at the FT than I have, so I respect what you are saying -- I also have gleaned enough off of the boards to understand that you know what you are talking about (being in the legal profession, no?). I wouldn't go and commit suicide were the FT passes tomorrow, but I don't see how it would improve my life in the long run.

Again, my concern is that there will undoubtedly be myriad hidden problems caused by the FT that will only become apparent once it is enacted. The lingering 16th amendment is one issue, the semantics and effect on the public's attitude to taxes another. And any tax reform that doesn't involve slashing taxes will, in my opinion, add to bureaucracy and not reduce it -- whatever the intentions of those who propose the bill.

I can honestly see the national sales tax being around or above 70-100% within a few decades of the FT passing -- perhaps even more.

To sum up rather clumsily, one thing that I think history clearly shows is that no government reform looks like you think it will once it is enacted. That's why (I think) Rothbard writes that no new tax system -- simplified though it may be -- will do any good. Only repeals, cuts, and abolishments will have the positive effect that we hope it will.


(Not to open another can of worms here, but taxes are not the worst 'government size' issue facing the nation right now, anyway. With a few hundred billion being collected in taxes every year and a government debt of some 8-9 trillion dollars, it is clear that inflation is the MUCH bigger issue. In fact, if I were somehow appointed supreme dictator, my attention would be first directed toward the Federal Reserve and not towards redoing the tax code.

This isn't an argument against the FT; I'm just trying to put some perspective on things.)