Fair Tax Straw Men

Neal Boortz, fresh back from vacation:

Slemrod says in that article that there is not one reputable economist of any political stripe that would support the FairTax. Tell that to the economists who support the FairTax, like Lawrence Koltikoff, the chairman of Boston University’s Economics department.

What Slemrod actually says:

In “The FairTax Book,” the syndicated radio host Neal Boortz and Representative John Linder, Republican of Georgia, claim that replacing all federal taxes – income, payroll and estate taxes – with a national sales tax would increase the average household’s purchasing power by about 20 percent, end the need for the I.R.S. and turn April 15 into just another spring day. “Once the FairTax takes effect,” they declare, “you’ll be receiving 100 percent of every paycheck, with no withholding of federal income taxes, Social Security taxes or Medicare taxes – and you’ll be paying just about the same price for T-shirts and other consumer goods and services that you were paying before the FairTax.”

For a book that claims in its introduction to be “about honesty,” this statement falls far short. No reputable economist of any political stripe would support it. The honest truth is that replacing the current tax system with any system that raises the same amount of revenue (as Boortz and Linder claim their plan does) may make us better off, but only by redirecting our resources away from dealing with complex filing requirements and improving our incentives to work, save and innovate – not by creating the kind of free-lunch miracle suggested here.

Slemrod is right and Boortz is wrong. No economists would agree with the statement that, under the Fair Tax, prices won’t go up but takehome pay will. That is mathematically impossible. And Boortz himself has admitted it.

One Response to “Fair Tax Straw Men”

  1. 836oak says:

    Fairtax is a complete farce. First of all — its based on getting most government revenue — FROM the government.

    Let me repeat that – because its so astonishing, its hard to get your mind around it.

    Fairtax actuallly counts – -as income — a sales tax they will put on ALL government entities — from military jets, to NASA, to medicare payments to new highways.

    All government spending — has to pay the tax. It’s hard to write such a sentence – because spending can’t pay a tax — people do.

    But Fairtax math is based on the GOVERNMENT paying itself a tax on its own spending.

    Read page 148 – the Fairtax book “The federal government itself will become a MAJOR taxpayer.”

    Fairtax isn’t a little off – sorta bullshit. Its pure bullshit. What’s more — the leaders KNOW it. Its pure bullshit — they aren’t trying to pass it. They are spewing this nonsense because some Texas millionare paid 22 million to promote it. My guess is, the liars at Fairtax.org got most of that money.

    Huckabee is pushing the farce too — it sounds great. Stupid people eat it up. But then — Fairtax just lies to their dumb ass, and they are too sheep like to wonder how this amazing plan could be true.

    Fairtax tells dumb asses the tax “is a wash” in that they will add 23% to the price of everything — but prices will drop 22%. And these dumb asses believe it.

    Its pure bullshit — oh, check out the Fairtax calculator page

    http://comparefairtax.blogspot.com/