Friday, May 27

Taking Browne Down

It's downright cowardly to post opinions on a blog without allowing comment on them. That's what this fellow called Harry Browne has done. He says he has too many things going right now and doesn't have time for responses but he'll read e-mail. If he's THAT busy, he'll just delete e-mail and no one will see your carefully researched and thought-out responses so I've decided to post mine publicly. I'll quote his statements directly (and put them in italics) and answer each with mine.

Browne writes: "National Sales Tax: I've been opposed to the idea of a national sales tax from the first time I heard of it — so long as it does not involve a dramatic reduction in federal spending. Without a reduction in spending, it is just rearranging the burden of big government (which is also the case for any tax cut that doesn't involve a reduction in spending). And thus is a complete waste of our time and effort if we support it." Yes, government spending should be cut but that has nothing to do with the issue at hand. Tax collection and tax spending are two entirely different issues. HOW taxes are collected does not affect how government spends the money.

"I've said that, once the poor have been made exempt and all the politically strongest industries have exempted their products from the tax, the rate will have to be at least 30% — and probably even more than that. Because of this, it's very unlikely that the tax will ever even be enacted."
"People who say it can't be done should get out of the way of those who are doing it" Chinese Proverb.
Under the FairTax the poor are not exempt. No one is exempt from anything, which is one of its strong points. With FairTax, everyone pays the same amount on new goods, approximately what we're paying now. However, everyone gets a rebate to keep everyone from paying tax of any kind up to the poverty level. It's a great idea -- NO ONE pays taxes up to the poverty level.

"Now Bryan Russel has written to me to provide a number of other reasons to shun the idea of a national sales tax. Here's some of what he said:• It would hurt the economy because it would be an incentive for people not to buy new products, but to buy used items instead (garage sales etc.) to avoid the huge tax." This argument is an un-thinkiing one. Take new cars, for example. Everyone knows that when you drive a new car off the lot, it depreciates in value by some 20% or more immediately, before you even park it in your driveway. Also, you could rent a new car for less than you can buy one. Neither fact has hurt new car sales at all. People still buy new cars for many reasons that have nothing to do with saving money: They can afford it, or they like the smell of a new car, or they're wealthy and want to show off their wealth. (Like buying a new Cadillac every year!)

"• Immediate criminal element in all retailing. Can you say "black markets"?! " Do we have a huge black market in new cars? The same analogy works here.

"• Endless companies lobbying for their product to be tax exempt or at a reduced tax because it is environmentally friendly or is produced by a minority owned company, etc. In short, we would end up with a complicated sales tax code similar to the income tax mess." Read my lips -- NO exemptions. No need to lobby because there are NO exemptions. The fact that the current income tax has those is what has prompted this move to the FairTax in the first place. Besides, when companies are not taxed on their production, they have a built-in incentive to produce more.

"• We might end up having to carry "tax I.D. cards" because sooner or later the politicians would decide that poor people should pay at a lower rate and maybe rich people would pay at a higher rate." "We might" have to fly to the moon for breakfast, too. "We might" is meaningless fop. Do you have a social security card? That's all you need to get your prebate. Poor people pay less tax because they spend less money. The wealthy buy mansions instead of houses, are dressed by Lagerfeld and Versace instead of Penney's and Dillards. They travel in lear jets, jags and limousines instead of Chevys and Toyotas to places like Monaco instead of Las Vegas. Donald Trump is not going to suddenly start buying at WalMart to save money. Part of the fun of being wealthy is showing off, living high, and spending the money.

"• We would need to keep records of how much sales tax we pay — to make sure someone who is making $200,000.00 a year is not paying only $500 in sales tax and thus must be "cheating" by buying things in the new black market or whatever."
With FairTax only merchants keep records on the tax -- they do that for state taxes now, anyway. And they are repaid a quarter of !% on the dollar for being the middleman. It's easy for everyone to know just exactly how much they do pay because it's right there on the sales slip but it's already paid.

As for tax evasion -- sure. Some people will find a way to evade some taxes. If a person is a crook, changing the tax structure isn't going to change his ways. However, FairTax will bring $350 BILLION of now-evaded taxes into the tax base, along with drug dealers, porn dealers, prostitutes and illegal immigrants who do not pay taxes at all now. Also 40 million foreign tourists a year will pay into the tax base. FairTax will broaden and strengthen our economy far beyond what it is at present.

"• Government regulations would be overwhelming. The government would be prying into inventory books, as well as tracking all goods to make sure the tax is paid. TVs and other high dollar items might have to include microchips to track them to make sure the tax gets paid." That's what the IRS is now. That's part of the reason to get rid of the income tax and install a new and much more visible FairTax.

Perhaps you've noticed that every one of these arguments is a pie-in-the-sky argument, based on myth rather than fact. "What if," "it might," "it would be" -- all naysaying negativism based on false probabilities rather than facts. Silly, ineffective arguments, each and every one.

The FairTax is a consumption tax that gets rid of the IRS and all the attendant time and effort spent on income taxes while funding the government at current levels, including social security and medicare. It solves the social security problem.

It also gets rid of employee taxes and other corporate taxes.

FairTax requires people to pay a tax on new goods and services only without raising those prices significantly. It provides a montly rebate to everyone who holds a valid social security card and thereby assures that no one pays tax on anything up to the poverty level.

The FairTax gives you your entire paycheck to do with as you choose -- spend, save or invest. Whichever you choose of those options is good for the national economy. Pay your entire house payment with pretax dollars.

FairTax strips hidden Federal income taxes and compliance costs and makes US goods more competitive in international markets and brings outsourced jobs home along with foreign companies to the USA since we'll be the only country in the world that doesn't tax productivity.

I think Mr. Browne has been too busy to do his research on the FairTax. And, folks, your comments, pro or con, are welcome on this blog.

2 comments:

gownland said...

Black markets often thrive when the government introduces price controls to affect the normal workings of the free-market price mechanism.

Sunnye T said...

Black markets thrive for many reasons -- government rationing during WWII, for example. The drug culture, for another example, is a black market that thrives because the purchase of certain drugs is illegal.

By the same argument that Browne makes, one would have expected black markets to thrive once the states imposed state sales taxes. It didn't happen.

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