Summary LTE & Supporting Papers
I suggest you begin with my 2-page Letter to the Editor, (1/11/23) which is an overview that exposes the FAIRtax(sm)'s (FT) fatal flaws and notes the essence of my very Flat Income Tax. See it also posted in full below on this page.
A companion 2-page paper is (2016) SYNOPSIS - FAIRtax(sm)Tax Fatal Flaws
Next are a series of (mostly) 1-2 page papers that provide details supporting my conclusions;
FT Increases Tax Welfare illustration: how the Prebate overpays the poor
FT's Progressive-Socialist Heart (in their own words)
FT's Hidden Taxes (so much for its advertised "transparency")
The Myth that the FT "Abolishes the IRS"
FT Prices Will Increase by Nearly 30%
Many Seniors Pay MORE in FT than IT
LETTER TO THE EDITOR
FAIRtax℠- i.e., H.R. 25 (FT) is a Progressive Scam – instead, we need a 10% “Tithe” Tax!
I am a retired tax professional (JD, LLM-Tax, CPA, co-author of 3-volume tax treatise, lecturer), with no financial stake in ANY tax system. This is only a brief summary - for supporting details, see: http://sceldridge.wixsite.com/sceldridge & YouTube video https://youtu.be/wiVLf1vrQX8
It’s a 30% sales tax, not 23%. If an item costs $100 before adding FT, you add $30 (not $23), a total of $130. They deceptively divide the $30 FT by the total $130. Pretty sneaky, eh? When exposed, they babble on that it “compares to” a 23% income tax, but FT is a sales tax of 30%.
The 30% FT is applied to virtually every dollar you spend on goods and services.
FT admits readily (advertises) that it is MORE Progressive (more welfare) – see http://sceldridge.wixsite.com/sceldridge%23!fairtaxs-progressive-socialist-heart/c1hzm
The Prebate is not a real refund of FT paid, as it appears to be. It is a $600B NEW ENTITLEMENT, with all Americans receiving a big monthly federal check. It is financially and politically unwise to create yet another huge entitlement that will only increase in the future.
FT (Prebate) has the poor pay for no part of the fed budget, pay nothing for their personal SS/Medicare benefits, AND give them a big tax welfare check. FT (Prebate) extends tax welfare to the non-working poor – and takes the next Progressive Cloward-Piven step towards giving SS/Medicare to all regardless of work, by removing the tax cost of reporting SS Wages, which “invites” fraud in reporting them (as also noted by other authors).
The Prebate purports to merely repay the poor for any FT they pay (as if we all agree with that), but it would actually pay them far MORE by “assuming” the poor spend more than the underlying HHS Poverty Guidelines and that they will pay FT on all of their purchases (but they WON’T) – see http://sceldridge.wixsite.com/sceldridge#!ft-increases-tax-welfare/copu
Some still market the old FT lie that we get a big raise (no Income & P/R taxes) AND FT prices would be the same as today’s - that just cannot be true. FT is merely supposed to change the method of paying the same total tax dollars we pay today, so if you get a big raise, prices must go up by the same total dollar amount (except for minor savings in compliance costs). Retail prices would rise by nearly the full 30%. Even the AFFT, and an economist it engaged, now admit that prices would rise substantially, and perhaps the full 30% - see http://sceldridge.wixsite.com/sceldridge/ft-will-increase-prices-by-nearly-30
This results in a combined fed+S/L 30-45% initial in-your-face sales tax that would spark a
taxpayer revolt that would destroy our retail-sales-sensitive economy - that’s 30% FT (not 23%) plus 0-15% S/L. Those rates might go up to (say) 50-60% at an illustrative 30% evasion/avoidance rate (incredibly, FT “assumes “zero evasion, zero intentional reduction in spending, and zero migration from new to used goods – instead of increasing the FT rates, the $600-$900B shortfall will more likely result in a new Income tax, see below).
FT’s 30% rate is closer to 50% (It HIDES another appx. 20%) by; 1) fed + S/L govts pay FT (likely unconstitutional) – ultimately, they must get that money from us, 2) fed budget must rise for a) SS & all fed pension COLA’s caused by FT’s 30% price increase, and for b) fraudulent new SS benefits “invited” by FT’s removal of the tax cost for reporting SS Wages (as noted by other authors ), 3) FT economists have admitted that the FT is 5% short.
Incidentally, USED property is advertised as exempt from FT, but that may be a cruel hoax, because of the practical difficulty of establishing that the buyer has met the requirements that FT was paid AND that none of 3 listed credits against the FT were claimed.
It is a myth that “IRS is Abolished.” FT’s new IRS (i.e., STAA) may be more invasive than today’s IRS - the buyer is liable to pay FT and receive/show a receipt and so STAA may audit consumers – see Sec 101(d). Also, we may well have to file an “Annual FT Summary”. See http://sceldridge.wixsite.com/sceldridge#!the-myth-that-the-irs-is-abolished-/c1tu0
As also noted by Cato Institute (see https://danieljmitchell.wordpress.com/2012/08/11/a-primer-on-the-flat-tax-and-fundamental-tax-reform/), FT leaves us more vulnerable to winding up with both a NEW Income Tax and FT (instead of adding 20-30% on top of the FT’s already high explicit 30% rate). Congress would surely repeal FT’s laughable Sunset Clause and (with the 16th Amendment surely still firmly in place) would use the excuse of the large revenue shortfall from evasion/avoidance to enact a new Income Tax which I believe is Congress’ ultimate objective of stealing even more of our money to redistribute to those who will vote for them.
To summarize, it appears that FT required a much higher tax rate. AFFT simply “assumed” away 20-30% evasion/avoidance, hid 12% by taxing fed +S/L govts, reduced the rate by 5%, and ignored the FT-caused fed budget increases - to get the rate down to 30%. Then a clever AFFT lawyer deceptively twisted the statute to make 30% superficially appear to be “only” 23%.
Seniors would start to pay for SS/Medicare again and some would pay a 2nd-3rd tax on their earnings. Many middle-class seniors would pay more FT than they would have paid in Income Tax and many would lose purchasing power because of 1) the nearly 30% price increase and 2) the higher S/L & federal taxes required because they must pay FT and can only get those funds from us, and 3) higher federal taxes due to nearly 30% higher SS & federal pension COLAs and fraudulent SS benefits.
FT promises grand economic benefits which are all entirely unpredictable - mere Hype & Change. FT employs marketing hype and hyperbole, making countless undeliverable claims.
We need a Flat Income Tax; No: Deductions/Exemptions/Credits, a 10% rate, business income taxed only once on a very simple basis - IRS neutered, 1-page filing, everyone pays, more evolutionary. See, A Very Flat Income Tax, http://sceldridge.wixsite.com/sceldridge#!page-2/cjg9 Let your representatives in Congress know that this is what you want