The Democrats have been running blatantly false ads about the FairTax.
Of course this is nothing new. The most common attack on the FairTax is to twist it into something it isn’t and then complain about the problems it creates.
Sen. Blanche Lincoln (D-Ark.) is just one of several Democratic candidates saying the FairTax -- a levy that replaces the federal income tax with a 23 percent sales tax on everything, including the purchase of a new home or car – is backed by Republicans and will bust family budgets if enacted into law.
Research supplied by FairTax.org shows that Democrats in 16 districts have run at least 31 ads blasting Republicans for supporting the tax. But many of these ads neglect to mention the levy is essentially a national sales tax that would replace the current federal tax system.
It’s even worse than that. Not only does it replace your income tax, it replaces all of the current federal tax system, including corporate taxes. The price of your goods isn’t going to go up by 23%, because you’re already paying that tax!
Also, the FairTax only applies to new goods and services. Don’t want to pay the FairTax on a car? Buy a used one.
The tax is extremely popular with the Tea Party movement, according to a recent poll by the Tea Party Patriots. The tax received an extremely high rating, beating out other tax proposals, like the flat tax, as well non-tax issues like the balanced budget amendment and term limits.
However, Jim Nunns, senior fellow at the Tax Policy Center, said factors like noncompliance and including government purchases in the tax could make it hard to implement the levy.
“If we wanted to get all of our revenue from a consumption-type tax, administratively, it’s probably much better to form a VAT [Value-Added Tax] or some variant of a VAT rather than a retail sales tax,” he told The Hill.
According to several sources, talks are under way on Capitol Hill to create a consumption tax, perhaps a VAT, that would be added to the current tax system to help the country get out of debt. There has been no serious discussion on implementing the FairTax, these sources said.
Wrong, wrong, wrong, wrong.
You often hear about noncompliance as the biggest issue of the FairTax. This from people who are at least trying to attack the actual FairTax, and not some trumped up other thing.
Who will collect the FairTax and pay it to the government? Business owners. There’s about 100,000 of those in the United States. Who pays income taxes? Anyone who receives income in the U.S. That’s about 100,000,000 people. Now which do you think is likelier to have trouble with non-compliance? This is a dumb criticism.
As for all the problems with a VAT, I detailed them extensively here. The short version is this. A VAT that replaces an income tax can barely be classified as reform. A VAT in addition to an income tax is completely the opposite of reform. It would make our tax situation an order of magnitude worse.