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Fair Tax: The Mother of All Dumb Ideas

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We’ve all had dumb ideas in our past and I don’t exempt myself from this. I once threw Gunk engine degreaser on the floor to degrease it. Just one thing, I forgot to turn off the pilot light on the water heater first. Dumb? Man, that was dumb. After I got the fire put out my boss asked me, "Did you learn anything today?" I slowly shook my head and humbly answered, "Yes, yes I did."

But my mistake was an error, not of comprehension but of not planning before acting. These are simple mistakes and we’ve all made them and usually they don’t require the fire department to correct them. We lock our keys in the car or give our keys to the spouse and forget to get them back.

On a grander scope are the errors that our mothers once advised about, "Look before you leap" and "All that glitters is not gold." I pointed out my own errors here because I’m going to point out the error of others. There’s errors and then there are mistakes and then there’s just plain stupid.

I speak of none other than the so-called "Fair Tax." The mother of all dumb ideas, there are no errors of any consequence in the world today compared to the "Fair Tax." George W. Bush has the intellect of Chomsky and the oratory skills of Churchill when compared to the "Fair Tax." But, don’t you see? It’s fair! No, it’s not, it’s a farce!

A tax plan where you pay a 27% federal sales tax on all retail purchases. Your paycheck will be free of all deductions except for health insurance and, of course, your state withholding but this bullshit bamboozle is a bait and switch scam.

Proponents lead you to believe your paycheck will be all yours, free and clear, but it’s a lie and no, it won’t. Nor will the 27% federal sales tax free you from any city, county or state sales taxes, which, here in Cobb County, Georgia, is 7% so we are up to 34% right off the bat.


$100.00 worth of groceries will cost $134.00, times 52 = $1768 in sales tax per year. Now, if you have a family, it’s hard to get by on less than $150.00 a week so your, "Fair Tax" is $2,652 per year, when most American’s only pay around $3,000 per year in federal tax now and that is deducted from your pay check. The "Fair Tax" will be deducted from your children, as well; you'll pay tax on the food they eat, not dollars you earn. The "Fair Tax" will not free you from property taxes, state taxes, liquor taxes and cigarette taxes, occupational taxes, license taxes, automobile taxes, ad nauseum.

Want to buy a new car? A $30,000 vehicle will be an additional $8,100 dollars, will that be cash or check? Or, would you like to finance the balance for five years, if so that will add another $400.00 a year in interest on the sales tax alone! Or ten grand for sales tax in five years. Yessiree sir, that’s gonna create lots of automotive jobs. So, you take your new car to gas it up at the pump and, although we’ve deducted the Federal excise tax and replaced it with the "Fair Tax", we’ve also left in place the state tax and you’re right, at $4.00 dollars a gallon, that’s bad. But its "Fair." Remember, every time that the price of gasoline goes up so does your tax bill because that’s "Fair."

Now, with the current Real Estate slump as it is, maybe the "Fair Tax" can help us out! A $200,000 house note balloons to $254,000. Just think, you get to finance $54,000 in sales tax for 30 years at say 7% or over $100,000 in interest over the life of the loan and that’s just on the sales tax. "Honey, call the movers!"

The "Fair Tax" scheme was instigated by Representative John Linder of Georgia, a man who listed his own net assets at $33 million dollars. So when a man with $33 million dollars tells you he has a "Fair Tax " plan, who do you think that fairness applies to? You? Or him? Linder first proposed his plan as "income tax reform" but it never caught on with the public so they took it back into the shop and retooled it as, "Fair." Everybody likes "Fair." How can you be against "Fair?"

Everybody likes hot showers, too, that’s why the Nazis led their victims to showers. If the sign on the door had said "gas chamber", no one would go in! So they bill the rape of the working public as "Fair." If enacted, the "Fair Tax" would be the largest tax increase on working people in recorded human history. Mr. Linder believes that there shouldn’t be any capital gains taxes because that’s not "Fair." Or taxes on foreign investments, no taxes of any kind on investments as, you see, that’s not "Fair."

What is "Fair" is you paying the taxes on every morsel of food that you put in your mouth or stick of gum or every pair of kid's shoes that you buy. Every dollar you earn goes down in value by 27% but the good news is! The "Fair Tax" will eliminate the IRS. That’s right! According to Linder, the billions in federal revenue collected by the "Fair Tax " will magically find its way into the appropriate coffers. How that will work, Mr. Linder is a little sketchy about, but with his giant brain working like it is, I suppose we should just trust him, right?

But, what about the poor? How will those unable to make ends meet now handle a 27% sales tax? Why, we’ll just issue rebates to the poor, Linder says confidently. But Mr. Linder? Isn’t that what the IRS does now? Are we to turn the world on its head just to get right back to where we started?

I should confess, I used to live in Linder’s district when he was a state Senator and first hatched this colossal humbug. My computer was new and I was reveling in the novelty of the Internet. I would ask questions to stymie him because I didn’t think that he could answer them. I asked, "If you add 27% to the purchase price of house and the home owner defaults on the loan, who takes the hit? Is the Mortgage Company liable for the unpaid taxes on the transaction? Are the taxes paid in a lump sum or is it handled in the escrow? Would the debtor still be liable for the tax debt? How would the banks resell a $200,000 house with a $54,000 tax loss on top of the purchase price? Would it then be $254,000 plus 27%?" I don't think Realtors would like this plan.

What will happen to the bond market when every Real Estate purchase is escalated by 27% in price? I don’t think the bond market is going to like that very much. What will happen to interest rates when 27% of all available Real Estate capital is sucked out of the market to be paid in, "Fair" taxes? I don’t think the stock market would like that very much, either. When the economy slows down, tax collection will slow as well, many states are facing this problem with sales taxes now. How will the "Fair Tax" address that, as costs will remain constant?

We all make mistakes but when some conspire to cheat you, that’s no error, that’s a con. When a man with $33 million in net assets devises a system where he pays less and you pay more, it’s a scam, bunko, a crime. Not only does he not belong in Congress, I’m not so sure he should be allowed to run loose on the streets. Point blank, for those of you who use 100% of your income to just keep the wolf from the door, you will pay 27% tax on 100% of your income. We will then magically reimburse those of you who didn’t have the money in the first place.

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I was born and raised in Chicago in a liberal Democratic home my Grandfather was a labor union organizer my Father a Democratic district committeeman my Mother was an election judge. My earliest memories were of passing out Kennedy yard signs from (more...)
 
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Your analysis is more in depth and vastly more ent... by John Sanchez Jr. on Thursday, Feb 28, 2008 at 12:36:31 PM
and you are spot on it is fairly insane, so I offe... by David Glenn Cox on Thursday, Feb 28, 2008 at 1:08:44 PM
Your analysis seems to ignore the rebate which eff... by John Howes on Saturday, Mar 1, 2008 at 7:45:06 AM
The rebates, I only mentioned that people who don&... by David Glenn Cox on Saturday, Mar 1, 2008 at 8:28:40 AM
If you don't spend any money on anything but i... by John Howes on Saturday, Mar 1, 2008 at 3:30:45 PM
What is so artfully called a rebate is actually an... by John Sanchez Jr. on Saturday, Mar 1, 2008 at 9:50:48 AM
It is only a loan if the money is paid in taxes be... by John Howes on Saturday, Mar 1, 2008 at 3:40:57 PM
Here is another way of understanding this misunder... by John Howes on Saturday, Mar 1, 2008 at 3:35:59 PM
Mr. Cox makes several errors in his lead piece who... by Jim Bennett on Tuesday, Mar 11, 2008 at 1:17:10 PM