Among others, former governors Huckabee and and Romney are advocating the “Fair Tax,” which is pretty much Steve Forbes’s “Flat Tax” renamed. It would, according to them, and according to commentators such as George Stephanopoulos, “eliminate all those [federal taxes], and replace it with a 23 percent sales tax.”
That is, it would be a national sales tax that replaces the federal income tax and some other taxes, like that pesky “death tax.”
23%.
Want to know how they get that figure?
According to Bruce Bartlett, a deputy assistant secretary of the Treasury for economic policy under Reagan and Bush I, writing in The Wall Street Journal, the actual rate in the proposal is 30%.
Say something costs a dollar. You will pay (not counting state sales tax) $1.30.
But, you see, 30 cents is only 23% of $1.30. So they call it a 23% “Fair Tax.”
That is intellectual dishonesty at a level that just leaves me aghast.
(Not to even get into the fact that the proposal would tack the 30% on everything — new houses, tanks and airplanes the government buys, school buses and school books, new cars, clothes, food, medical care!
I gleaned all this from the Daily Howler.
It gets even worse.
The actual number required to be revenue-neutral would be somewhat more than 60%. Unfortunately, opinion polling says that few people would accept such a large, visible tax increase. (Duh!).
The polls revealed that the most people said they would be willing to live with was 23%. So they had to, basically, lie, and propose 23%. Even the howler of the 30% is only half of what would really be needed.
As usual for the current crop of Republicans. All that matters is the politics. Actual thoughtful policy just isn’t important to them.
Odd fact: The proposal of a flat national sales tax to replace the federal income tax comes originally from the Church of Scientology.
Details here.
If it would take 60% to be revenue neutral doesn’t that mean that 60% is what we’re paying now?
That means that for every dollar you earn, sixty cents goes to the federal government. I’ve heard numbers closer to 40% for TOTAL taxes. Still outrageous, but not 60%. Whatever number is right a tax cut to 23% would be a good thing.
Reagan was right when, as governor of California, he opposed a state tax withholding scheme because he said it hides the actual tax rate from the taxpayer. He felt that taxes should hurt, that way people would be much better informed about the actual tax rate.
Apples and oranges. 60% of all sales is not the same as 60% of every dollar one earns. Do you spend all of your earnings on things you buy? Do you not pay taxes and mortgage interest, save money, give cash to family or make charitable contributions, etc., etc.?
Also, note that in his message, Ephraim incorrectly refers to the plan as a “23%” tax.
So either he didn’t understand your original post, which explains that it is NOT a 23% tax, or he still thinks he can fool us by just repeating the wrong number until we give up on correcting it.
30-60% on all sales to corporations. 30-60% on all sales of stocks and bonds. Somehow I think those advocating such a system are already envisioning exemptions, sorry, insertion of many pages of clarification of the term sales into the code of federal regulations.