Usual caveat: While I oppose the Fair Tax, that doesn’t mean I support the current system. I would just prefer a VAT or a flat tax.
I’ve attacked the Fair Tax because it falsely promises a big pay hike for Americans (a claim Boortz himself has withdrawn) and because I think the prebate would be a disaster. But I’ll hit it again because I need the blog traffic from the Fair Tax Movementarians responding.
One common argument for the Fair Tax over the flat tax goes like so:
We tried a flat tax with Reagan’s tax reform. And it wasn’t flat for long. Congress immediately began revising the tax and making it hideously complicated again.
This has two problems. The first is factual — the 1986 Tax Reform did not create anything approaching a flat tax. It simplified the taxes but not very much, as anyone who owns a business could tell you. It created all kinds of tax incentives and breaks. Claiming that the 1986 Tax Reform Act was the equivalent of a flat tax is like claiming my cat is a hippopotamus. Yes, they are both fat mammals. The similarities end there.
The second problem is naivete. The Fair Taxers assert that the Fair Tax will start simple and stay simple. That Congress will be unable to work all kinds of strange complications into it.
This is total garbage. Just to list a few things Congress will try to do with the the Fair Tax:
Granted, the potential for political abuse is a little lower and more transparent than with the current system. But to sit here and claim that the Fair Tax will be magically immune from the Washington need to endlessly tinker and update and improve is incredibly naive.