Wednesday, September 06, 2006

GOP tax-sugar designed to ensnare the unwary

There's a little item I stumbled across on the Web site of Georgia U.S. Representative John Linder, Reactionary

I am the primary sponsor of the FairTax, legislation that will repeal all corporate and individual income taxes, payroll taxes, self-employment taxes, capital gains taxes, estate taxes and gift taxes - and replace it with a revenue-neutral personal consumption tax.
The FairTax Act:

  • Repeals all corporate and individual income taxes, payroll taxes, self-employment taxes, capital gains taxes, estate taxes and gift taxes.Imposes a revenue-neutral personal consumption tax on all new goods and services at the point of final purchase. Business-to-business transactions and used products (which have already been taxed) are not subject to the sales tax.
  • Rebates the sales tax on all spending up to the poverty level.

  • Results of the FairTax:

  • Dramatically reduce the costs of goods and services by 20 to 30 percent.Allows you to keep 100 percent of your paycheck, pension, and Social Security payments.
  • Gross Domestic Product will increase by almost 10.5 percent in the first year after enactment.
  • Compliance costs would decrease by 90 percent.
  • Real investment would initially increase by 76 percent relative to the investment that would be made under present law. While this increase would gradually decline, it remains 15 percent higher than under the existing tax structure.
  • Exports would increase by 26 percent initially and would remain more than 13 percent above the level under the current tax system.
  • Real wages will increase.
  • Increases incentives to work by as much as 20 percent in many households, leading to higher economic growth and efficiency.
  • Interest rates will fall 25 to 35 percent.

  • I'm no economist but every one I've read says that these kinds of tax schemes are no good. It's essentially desigend to forever shift the tax burden of the country off the nation's wealthiest and onto the backs of the poor. I mean, just look at that list! Exports increase, keep more take-home pay, weages increase. Where does this Linder come up with this bullshit?

    From his own Fair Tax Web site. And from the looks of it, it is a very professionally designed site indeed. You can bet this cracker has plently of corporate dough behind this little charade.

    As early as 1998 Citizens for Tax director Robert McIntyre pointed out that Linder's "facts" were sheer fantasy. A study the CTJ did in 2004 concluded:
    # In virtually every state in the union, the bottom 80 percent of taxpayers would face much higher taxes under a sales tax. Nationwide, these tax increases would
    average about $3,200 a year.
    # Put another way, on average the 80 percent of Americans in the middle- and lowerincome ranges would pay 51 percent more in sales taxes than they now pay in the federal taxes that the proposed national sales tax would replace.
    # In contrast, the best-off one percent of all taxpayers nationwide would get average tax reductions of about $225,000 each per year.
    Besides shifting the tax burden away from the well off and onto low- and middle income taxpayers, a national sales tax would also shift aggregate taxes away from better off states and onto poorer states and states with a high proportion of elderly residents.
    # Overall, we calculate that 13 states and the District of Columbia would pay less in
    aggregate taxes under a national sales tax, while the remaining 37 states would
    pay more.
    # Of the total amount that is shifted among states, just over half of the total
    winnings would go to California and New York (even though most Californians and
    New Yorkers would nevertheless pay considerably higher taxes.)
    But this chimera won't go away. It sounds so simple and that's what makes it attractive to simple minds.

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