Fairtax.org Revs Up Iowa Bus Tour

I've so far been unimpressed by the seeming dozens of well-funded outside groups that are spending literally millions to influence the presidential election this cycle. Save two: The anti-poverty One Campaign has the ear of the top-tier candidates from both parties.

And Fairtax.org has built sizable crowds at major events in every early primary state and its activists have managed to pin the presidential candidates down on what had been a fairly obscure public policy proposal: a non-regressive national sales tax.

FairTax plans a 25-city "Dare to be Fair" bus tour through Iowa beginning July 26. It will end two weeks later at the Ames straw poll, where the group plans a major rally. The group claims to have 700,000 supporters and has drawn thousands to events in Orlando and Atlanta. The group has spent approx. $500K on radio and direct mail int he past three months. Radio host Sean Hannity supports it; libertarian radio jock Neil Boortz is the father of the movement.

The Democrats are paying the group no heed.

Republicans are always asked about it. Rudy Giuliani was booed two weeks ago when he said the tax was unworkable; Mike Huckabee endorses it. Fred Thompson says he's "looking very closely at the fair tax." It's not part of Mitt Romney's platform, but he recognizes its appeal.

BTW: Americans For Fair Taxation is a 501(c)4 founded in 1995 by rich Texas businessmen.

Comments

Yeah, these people have been everywhere it seems. It sounds like a very intriguing proposal, then again almost anything sounds good compared to the current mess.

Posted by John | July 17, 2007 3:53 PM

Thanks for pointing out that people outside the government put 20 plus million dollars together to fund the research thru non political means.

It's odd to me that the Democrats aren't all over this proposal being that it totaly untaxes low income people. Why they are not is beyond me unless they do not want to give up the power they have to give tax breaks to their contributers. This proposal takes that power away from the elected officials and returns it to the people where it belongs.

Some of us are tired of watching billions of dollars being thrown away year after year. 500k is nothing in comparison to what is being spent on this election. I wish those FairTax folks had a few million to spend educating everyone to what a rip-off our current system has become. It would be money well spent.

Posted by Jim Tomasik | July 17, 2007 6:40 PM

Marc, Thanks for a very informative article. I must object to one line though. You say the Democrats are paying the group no heed. While that is true at the top of the heap, the very first American to announce for president in 2008 happens to be a Democrat and embraced the FairTax as part of his opening salvo. (See this Drudge-cloned article from April 06: http://www.commondreams.org/headlines06/0413-11.htm)
Senator Mike Gravel will be at the upcoming debate in Charleston and may take the opportunity to address the FairTax crowd if invited.

Posted by David Nelson_VanDette | July 18, 2007 8:29 AM

You say the FairTax is a "non-regressive national sales tax." Sorry, but you've adopted their talking points. Of course the FairTax is regressive -- as any consumption-based tax would be. Even if the FairTax somehow "untaxes the poor," as FairTax advocates claim, that would just push the full brunt of the tax up a notch -- onto the backs of the middle class.

Read the studies of independent economists on the FairTax plan. The FairTax rate would have to be around 50%-60% (at the federal level; higher when you add state and local taxes), there would be massive tax avoidance and tax evasion, and the middle class would be burned. Other than that, it's the perfect plan.

Posted by FairTax Critic | July 18, 2007 9:06 AM

Actually, FairTax Critic, your post confuses me. Paragraph one sounds as though you are unaware of how the prebate portion of the FairTax works...
1) What is the calculated "poverty-level" for your household?
http://aspe.hhs.gov/poverty/07poverty.shtml
2) Multiply that number by 30% (sorry FairTaxers for setting this up tax "exclusive")
3) Divide the result of step #2 by 12 and that is the amount of the prebate you receive from Uncle Sam every month REGARDLESS OF WHAT YOU MAKE OR SPEND. It is a rebate of the taxes that you are spending up to the poverty level whether you are poor, wealthy, or middle class. The more you consume above the poverty level the more you spend on total taxes.
That is the genius of the plan and what makes it "Fair" and progressive. Everybody gets a rebate for the taxes they are charged for everything up to the poverty level.

Here is my confusion... For missing the key component of the FairTax you cite studies that have erroneously inflated the rate. These "straw man" rates suppose exemptions on things like food, medicine, and who knows what else. Even the presidential advisory panel on tax reform made this error. These exemptions aren't necessary because of the prebate provision. Basic living costs are already freed from tax up to the poverty level for everyone. That's a quick summary from my perspective...for the real deal, check out www.fairtax.org

Posted by Brian Mitchell | July 18, 2007 9:45 AM

Brian -- Two quick points.

1. A consumption tax is regressive because the rich tend to spend a smaller percentage of their incomes on goods and services than do the middle class and the poor. The "prebate" doesn't change this basic economic fact. All it does is push up the rate (in order to pay for the "prebate") and, as I said, pushes the full brunt of the FairTax up a notch onto the backs of the middle class.

2. It's a common misconception (pushed by certain talk show hosts) that the critical studies of the FairTax exempted things like food, medicine, etc. That's not true. You (or anyone else) can read the studies for yourselves. Start with William Gale's study in the May 15, 2005 edition of TaxNotes Magazine. You can also read Chapter 9 of the President's Tax Reform Commission's report, published in November 2005. Then call up the talk show hosts and ask them why they claimed the studies exempted food, medicine, etc. when they clearly did not.

Posted by Fair Tax Critic | July 18, 2007 10:40 AM

Brian, I think the reason the "fair tax" plan hasn't gotten much traction is because none of its advocates seem to be able to do anything other than recite a list of talking points. I'll probably faint from astonishment if I ever see any of them do any kind of analysis - you know, if you make this much, you are likely to spend this much on average on consumption and therefore pay a tax of this much, over all income distributions in the U.S., revenues would be such and such, etc.

No, all you ever hear is vague, unsupported claims.

And why wouldn't thus huge tax on consumption cause a sharp falloff on consumer spending, with a resulting economic collapse?

Posted by Mike Toreno | July 18, 2007 3:18 PM

Why does everyone of the arguments against the Fairtax seem uninformed to me? I guess it is that the people who criticise it are so obviously and hopelessly uninformed when they try to argue against it.

Posted by Darrell Sikes | July 18, 2007 6:26 PM

We here in Texas have a state sales tax and it has resulted in NONE! of the dire predictions some have foreseen. There has been no scandal, corruption, or cheating in relation to it. It has funded our state government SPLENDIDLY! We Texans, tourists, illegal aliens, criminals, etc. are all in INSTANT COMPLIANCE!! every time we go through the "cash-register-check-out-line". Virtually no one escapes paying. If it works for Texas it will work for the nation.

THINK ABOUT IT MORE...................................................

Read and Enjoy..................................................

APRIL 15TH????? Let's make it just another Spring day.

HR 25, the Fair Tax Act, is in the House Ways and Means Committee of
congress, waiting to be passed into law. If passed, the Income Tax &
IRS would be abolished and replaced with a national (retail only) sales
tax.

Everyone shoud go to: www.congress.org and tell their congressmen that
they want HR 25 passed into law ASAP!!!! If we all "push together", we
can make it happen. There's nothing to it, BUT TO DO IT!!!!!!

Read and Enjoy.

The FINAL SOLUTION!! for the IRS & Income Tax Problem

50 Reasons I Support the FairTax
(How many reasons can you give for supporting the present obsolete IRS
& income tax system?)

Those Who Know the Facts Love the Fair Tax
"Family Friendly Tax Reform"
Tax Reform with far less pain and much more gain!
Out with the Old Code and in with the New (national RETAIL ONLY sales
tax).

www.fairtax.org

1. It allows you to keep 100% of your paycheck, with nothing withheld
for Social Security and Medicare payments.
2. It eliminates the regressive payroll tax that hurts the poor.
Currently, every one of us is taxed a minimum of 7.65% on our first-dollar of
wages up to $90,000, if we earn that much.
3. It assures that the wealthiest Americans will be voluntarily helping
to fund social security with every last dollar they spend above the
poverty level. Today, earnings are subject to payroll taxes only up to
$90,000. The wealthiest Americans therefore do not pay into the system
above that amount. If their earnings are from investments, no earnings
fund the Social Security system. Under the FairTax, a single purchase
(regardless of the source of the earnings) can result in greater
contributions to the Social Security system than would be paid by an individual
under the payroll tax of today.
4. It provides funding for Social Security and Medicare at a level
equal to or greater than at present, with a stronger and broader tax base.
5. It secures the future of Social Security and Medicare because all
spenders fund it and not just the workers.
6. It eliminates all personal income taxes, payroll taxes, corporate
income taxes, gift taxes, death taxes, and capital gains taxes.
7. It eliminates the income tax and the IRS. Members of Congress and
the public overwhelmingly agree that the current internal revenue code is
cumbersome, intrusive, coercive, and inefficient.
8. It is revenue neutral with the present income tax system, funding
the federal budget at current levels.
9. It will remove an average of 22% of the cost of American made goods
by removing the built-in payroll tax (the other 7.65% of earnings that
employers pay) and other business taxes that are now passed to
consumers as an "embedded" tax of approximately 22% due to the cascading of
income and payroll taxes paid by U.S. employers, at every step of
production, to the U.S. Treasury.
10. It doesn't tax used items ? clothes, cars, homes. Only new items
are taxed when sold by a business to an individual.
11. It is progressive, a "prebate" of the tax amount up to the poverty
level is given to everyone. This means that those spending below the
poverty level have a net gain because the "prebate" exceeds the amount
paid in taxes. (Under the present system they pay the payroll tax even if
they get a full refund of income tax withheld.)

12. It eliminates 90% of the cost of compliance. American families and
American businesses waste an estimated $250 ? $600 billion per year
doing the paperwork necessary to comply with the tax code. That is roughly
$1,000 ? $2,000 annually for every man, woman and child in the U.S.
13. It creates an opportunity for our products to leave this country
costing an average of 25% less, thus increasing our exports, lower our
deficit balance of trade, and increasing employment at home.
14. It encourages investment in companies located in the U.S., thus
providing a home for money already in the US and attracting more. The U.S.
will be the most attractive tax-free haven in the world for doing
business. American companies will return from offshore and overseas.
15. It encourages repatriation to the U.S. of money held by U.S.
individuals and companies now in foreign countries, with no tax consequence.
16. All 290 million Americans and 51 million visiting tourists fund
Social Security and Medicare with their purchases. Today only 110 million
workers fund these programs via deductions from their paychecks.
17. The broader tax base includes the ten percent of our economy, an
estimated $1 trillion, that today is underground or under the table.
Under the FairTax, the illegal drug dealer will pay his tax just like the
rest of us when he buys his sunglasses, BMW, and other items, as will
those who do business for cash.
18. It allows families to save more for home ownership, education, and
retirement. An average family making $50,000 will have $7,500 more
spendable income.
19. It makes educational tuition a tax-free expenditure of tax-free
income.
20. It makes American products more competitive overseas by removing
the embedded tax from them, thus lowering their prices, which compensates
for low foreign wages.
21. It makes American products more competitive at home by removing the
embedded tax from them, compensating for the low cost of imported
products not burdened by taxes imposed by exporting countries.
22. It removes the need for formal 401-K's, IRAs, HSA, etc. Anyone will
be able to set up any kind of savings or investment account without
regard to taxes or the government.
23. It frees churches and other non-profit organizations from the
expense of filing tax returns and paying their half of Social Security and
Medicare payments for employees. There will no longer be any 501.c.3 or
501.c.4 non-profit tax status, because there will be no more tax to be
exempt from.
24. It restores to churches and non-profit organizations the 1st
Amendment right to engage in free speech, without fear of losing their
tax-free status.
25. It gives individuals and businesses the right to donate as much as
they want to in a given year to charitable causes.
26. It restores the 4th Amendment, protecting against unreasonable
searches and seizures, from which the IRS presently is exempt.
27. It restores the 5th Amendment, which guarantees the right to due
process. Under current systems the IRS has their own courts with their
own set of rules not included in the 5th.
28. It cleans up a major flaw in campaign financing, eliminating
campaign donations for "tax favors".
29. It eliminates wrangling in Congress over tax cuts, the tax code,
and who is or is not paying a fair share of the tax bill.
30. It encourages work by letting workers keep 100% of their earnings
and giving a rebate, to boot, making the notion that the more you work,
the more money you have, a reality, unlike the current system where
welfare is lost when you go to work, so your first dollars earned after
taxes just offset what you were currently getting in welfare, making you
no better off.
31. It allows more of the lower income families to become home owners
by allowing a second job income above their current income (all tax
free) to be applied to a mortgage. Money for down payments for homes is
also saved totally tax free so that it will accumulate faster.
32. It allows families to retain farms and businesses in the hands of
those who built them through the elimination of the death tax.
33. It allows families to help each other out tax-free, by eliminating
the gift tax.
34. It encourages individuals to self-insure, making the health system
more direct pay (no 3rd party pay), thus bringing costs down.
35. Without FICA to pay, most states, counties, municipalities, and
school districts will see a large increase in their state budget revenues,
additionally lowering the overall tax burden (State & Federal) for most
Americans.
36. It assures that no American will find, at the end of the year, a
need to get a loan to pay taxes as an alternative to penalties, interest,
or cheating.
37. It restores individual privacy. The government no longer needs to
know where you work, what you are earning, and what you are doing with
it.
38. It eliminates the need to have a "marriage" clarification declaring
who you live with, as that has no bearing at all on a state or federal
sales tax.
39. It eliminates the need for courts to decide which divorced parent
gets to take the tax deduction for children.
40. It reduces production costs for farmers and other subsidized
businesses, leading to a reduction in subsidies, thus reducing the federal
budget.
41. It eliminates the administrative costs incurred by states in
collection of state sales taxes because states will piggyback the state tax
collection onto the national tax collection, for which they are
compensated by the FairTax ?% administrative cost give-back. [Doesn't this go
to the retailers?]
42. It results in a windfall profit for many of those holding taxable
corporate high interest bonds at the time of passage of FairTax, since
they will not be taxed under FairTax. (A higher interest rate is usually
paid to entice investors to buy the corporate bonds rather than go with
the lower interest, but tax free, municipal bonds, now.)
43. It shifts the tax to consumption, which consumption tables over
time show is more stable than income, therefore the tax revenue stream is
likely to be a more stable and predictable amount.
44. It results in Federal Reserve rates being based on current
consumption, which is rather stable, instead of future earnings, which are less
predictable, resulting in surer inflation prevention.
45. It allows for better planning by businesses, because they no longer
have to consider tax implications for everything they do.
46. It makes higher employment or better compensation possible in the
small business sector where today it costs approximately three dollars
in compliance costs to pay one dollar in payroll and income taxes.
47. It moves many now providing tax preparation, advice, accounting,
planning, and records maintenance into an expansive economy where they
will be producing goods and services. There they can add to the standard
of living of all Americans and likely earn more than they do currently,
instead of shuffling paper for the government (and not contributing
anything economically to society).
48. It relieves citizens of the risk of facing the shift in burden of
proof that is so common with the current system, i.e., the taxpayer is
guilty unless innocence can be proved, when even IRS staff sometimes
give conflicting interpretations.
49. It's simple, unambiguous, and certain, the opposite of the current
tax code.
50. It's good for the environment. It reportedly would save about
300,000 trees a year that are needed to produce the paper for the IRS
compliance and tax forms, enough to reach around the equator placed end to
end 28 times. Also, since it taxes only new items, it would encourage
buying tax-free pre-owned cars, clothes, furniture, houses, etc. Reuse is
good for the environment, too.

Best Regards,
John Paul McDaniel

Go to: www.fairtax.org

PLEASE CONSIDER THIS ALSO:

22% of all that you buy currently is tax / tax compliance cost. When that cost goes away (under the Fair Tax) the price of your $1.00 item (purchased at Wal-Mart, for example) drops in price to 78 cents (without damaging the profit margin).

1.23 X 78 cents = 96 cents.

Seeeeeeeeeeeeeeee!!!! Even with the 23% Fair Tax added on, your originally $1.00 item is now 4 cents cheaper.

The "out-of-pocket" cost of living , under the Fair Tax , will be no more than it is now.

Under the Fair Tax there are NO LOSERS, only winners, the difference being that some win BIGGER!!!! than others due to their increased FRUGALITY.

Best Regards,
John Paul McDaniel

Go to: www.fairtax.org

Posted by John Paul McDaniel | July 18, 2007 6:48 PM

If there are no losers, only winners, how can it be revenue neutral?

Posted by FairTax Critic | July 18, 2007 7:40 PM

The Fair Tax is revenue neutral since it "brings-in" the same amount of funding as the income tax does now.

That is what "revenue neutral" means.

Posted by John Paul McDaniel | July 19, 2007 5:41 PM

The Fair Tax is revenue neutral since it "brings-in" the same amount of funding as the income tax does now.

That is what "revenue neutral" means.

Posted by John Paul McDaniel | July 19, 2007 5:42 PM

Darrel,

"Why does everyone of the arguments against the Fairtax seem uninformed to me?"

Ummm, because you're stupid?

Posted by Mike Toreno | July 19, 2007 7:18 PM

Oh, I see. Everyone saves money (i.e., we're all "winners"). Nobody's taxes go up (i.e., there are no "losers"). And the FairTax still brings in the same amount of money as our current system.

Wow! Why don't we just wave a magic wand and give us all free money. Of, I forgot, the FairTax does that too!

Hallelujah! It's a miracle, a MIRACLE!!!

(Mathematically impossible, but still a miracle.)

Posted by FairTax Critic | July 20, 2007 9:01 AM

It completely amazes me that we continue to play the politics of envy to the point where we care more about what our neighbor pays is she/he paying enough rather then being concerned about the oppressive nature of the IRS. I do understand the lack of involvement I was that person before being victimized by the Gestapo known as the IRS and I am not being melodramatic they are truly our version………It’s a classic example of by the grace of god there go I. The IRS depends on a divide and conquer tactic. I’m not an anti tax nut I’m ok with paying taxes…..I find it very attractive that we can control our own destiny. If you are a undisciplined person and spend beyond your means then you should learn (not by a government program) to control yourself….The politics of envy folks will not fix that human behavior even if the rich pay 95% of there income or wealth in taxes. You would have to build the assumption on the premise that the government is a well run efficient organization………look at the post office/ or if you’ve had the pleasure of flying lately TSA/ or been in a endless line at the DMV. The list is at least as long as the above list that shows why the Fairtax is a good idea………..So please put the politics of envy aside and do this thing if for no other reason that the IRS needs to go or you could be next…..believe me I know of what I speak (did nothing wrong got sucked in the black hole with no end in sight).

Posted by jp | July 20, 2007 2:25 PM

TO: "Fair Tax Critic", and all,

The "magic" in the Fair Tax is the wide latitude-of-choice given to the taxpayer.......If you make $300K per year, choose a $50K to $100K per year budget/lifestyle and put the rest in GROWTH investments. Do this for a few years and you will retire very comfortably on a six-figured retirement income.

Or be STUPID!!!!!!!!!!!!! and spend all the $300,000 every year to get the best that money can buy. If the $300K isn't enough to do it, charge up a whole lot more on the credit cards.

The latter choice will leave you in BANKRUPTCY!! and living your retirement years in poverty.

The choice is yours. Which way do you want it??????????

The great "miracle" of the Fair Tax is in giving YOU!!!!!!!!! the choice of which way you want it.

The IRS is no longer there to CONFISCATE!!!! your money, giving you no chance to decide what to do with it.

THINK ABOUT THIS, LONG AND HARD.

Posted by John Paul McDaniel | July 20, 2007 4:35 PM

To Fair Tax Critic,
Not a miracle, not magic. Implementation of the Fair Tax will collect the same amount of taxes without increasing anyone's taxes by the interaction of several affects.

1. Fair Tax will increase the tax base or the number of people that will be paying taxes. The more who pay, the less each must pay. Tourists, illegals, current tax evaders, etc. will start paying taxes. A larger number of people paying means lower rates to collect the same total tax. These would be the losers, if not for the offsetting affects of number 2 and 3 below.

2. The large amount of money that is currently spent by businesses to ensure that they are in compliance with the current tax laws will be available to reduce prices. This includes their own corporate taxes and the personal income taxes they collect from us, and the 7.5% of our pay that they have to pay for us that we never even see. This price reduction, whether 22% or 2%, will reduce the amount of tax all consumers pay. We all win.

3. All Americans will be able to save for retirement, health care, child care, down payment for a house, payments on a house or a college education with before-tax dollars. I don't know how that sounds to you, but I like it. Everybody wins again, especially the middle class.

4. All American companies will be able to export at "before-tax" prices, improving the ability of American companies to compete. Working citizens are winners. Yes, the companies win, too, but you can't really have one without the other, it is not sustainable.

5. It is progressive. A "prebate" of the tax amount up to the poverty level is given to everyone. This means that those spending below the
poverty level have a net gain because the prebate" exceeds the amount paid in taxes. (Under the present system they pay the payroll tax even if
they get a full refund of income tax withheld.) The working poor are winners.

6. It is progressive. While the truly wealthy may not bear the lion's share of the total tax bill, as they do now, they will still pay their fair share. Giving the wealthy the ability to put their money where it will grow best benefits everybody.

No miracles, no magic, no fiscal slight-of-hand, just simple numbers and economics. The more who pay, the less each must pay, the tax system becomes much more efficient, and it is progressive.

Posted by Roger Sherman | July 22, 2007 10:04 PM

The Fair tax is such a radical way to look at funding government activities that many people have a hard time transitioning their thought processes to understand how it will benefit our nation:
It completely untaxes the poor.
Social Security and Medicare crisis is averted.
Corporate welfare is slashed
Black Market is taxed.
Productivity is rewarded.
Manufacturing returns to USA.
True cost of government is realized.
Savings is rewarded.
Those desiring to avoid all taxes can buy used products.
Millions of people employed to comply with tax regulations are available to do productive work.
"Tax Gap" is closed by 90%.
If you will spend some time looking at the specifics of the Fairtax with a view on the long term outcome, you will see that it will be beneficial to the health of the Union.

Posted by Charlie | July 24, 2007 9:22 AM

The fairtax pushes the tax burden to the middle class. It eliminates middle class tax deductions like the mortgage interest deduction. It makes billionaire estates, capital gains, interest income, and huge gifts tax free while putting a 30 percent tax on new homes, 30 percent tax on medical bills like expensive operations, a 30 percent tax on legal services, a new 30 percent tax on FOOD, HEAT, RENT, and everything a poor and middle class person would pay. This perverted tax plan would destroy America - for the truth see http://fairtaxfraud.com

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Posted by Cash Advances | December 4, 2007 8:11 PM

Actually it sounds like the middle class will benefit from the Fair Tax. Lets see, I don't drive a new car, so no new taxes there for me, I don't have to worry about payroll and other deductions, other than the usual unemployment insurance, medicare and Social Security. I normally do most of the work around the house so no extra taxes on the services. I believe I would really save money. It would actually cause me to save money by buying used and fixing things myself. I think it will work well for most middle class folks.

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