The Real Lie behind it all

To respond to Mr. Barnes' letter in the Gainesville Times

Barnes: The tax you now pay is unconstitutional.

Reply: “Prove it. Just saying it’s unconstitutional doesn’t make it really unconstitutional.”

Barnes: The Fair Tax in no way increases the upfront amount consumers pay in taxes, as Mr. Parker suggests. This 23 percent consumption tax is not in addition to any tax already on any product, as he would have you believe. Read the book and check it out.

Reply: “Oddly enough I can quote the previous sentence from Mr. Barnes to rebut his point. ‘I guess Mr. Parker thinks we do not pay tariffs on imported goods now.’ We can include state sales tax to the tariffs Mr. Barnes so conveniently forgot.

“That should remind readers of how the FairTax posse isn’t quite believable.”

Barnes: It is a voluntary consumption tax; the more you buy the more tax you pay, [versus] the less consumer goods you buy the less tax you pay.

Reply: “So the FairTax is as ‘voluntary’ as the income tax? Isn't that what you're saying, Mr. Barnes? The more income you make, the more you pay versus the less income you make, the less tax you pay.

[Yes, he did misspell verses/versus without the newspaper catching it.]

Barnes: Under the Fair Tax, a $20,000 Toyota would cost you $4,600 in taxes, which is 23 percent, and not the $9,200 Mr. Parker suggests, which would be double the 23 percent.

Reply: “I just hate people who make math errors, don’t you? My original example:

'If you are paying 23 percent income tax on $40,000 of income, spend everything you make, you pay $9,200. Under the proposed FairTax, if you make $40,000, live paycheck to paycheck, borrow $20,000 to buy a new Toyota; you will pay $13,800 in federal sales taxes. WHAT A DEAL! Who wants to increase their taxes?'

So, the current system taxes only the $40k of income. The FairTax would collect a federal sales tax on consumption, including borrowing. As my example is for someone living paycheck to paycheck … i.e. they spend all $40k of income and borrows for a new Toyota, their federal taxes paid would increase to $13,800. If both systems of taxation have a real tax rate of 23 percent.

Barnes: The Union you speak of will in no way be affected negatively. However, the United States will experience a growth in jobs and industry as has never in history been seen.

Reply: “Here is the real lie.

“If, as the magic book says, employers pay a 23 percent embedded tax in ‘compliance costs’ which gets passed directly on to all consumers, and in my opinion, if that fictional embedded tax gets removed, employment will fall by an equal amount. I hope I explain this simply enough.

“The theory being applied in the FairTax book says that prices shift costs from sellers to buyers.

“Now, the FairTax posse calls this embedding. Embedding is passing a hidden cost on to consumers. Compliance with government taxes is therefore a hidden cost to consumers.

“If the government eliminates all hidden taxes, they reason, including compliance costs, the economy will boom ‘as has never in history been seen.’

“Bullshit!

“If a corporation cuts costs because of a change in tax code, do you think it’s rental expenses being cut? Utility expenses being cut? Transportation being cut?

“No. The cuts will be direct cuts in employment, even if the theory is true.

“For the theory to be true, 23 percent of all employees are working in compliance.

“Look around our places of employment, are 1 out of 4 employees working to comply with tax record keeping?

“The FairTax posse wants you to believe that 23 percent of all business activity is compliance costs. And, those compliance costs are directly passed on to retail buyers as a part of the price of consumer goods. (Pages 106 – 107 and pages 39 - 50).

“If we buy into reducing all business costs (price) by 23 percent, should we believe employment will remain exactly the same? If we believe all prices will fall by 23 percent, doesn’t that mean the economy will fall by 23 percent. Wouldn’t this be especially true if ‘price’ is a direct transfer of tax, compliance, and all legitimate business costs to retail buyers?

“If prices (revenue) fell 23 percent at your place of employment, would you be one of the people whose job would be cut?

“This plan is all about causing chaos to existing businesses and the Federal Government. The FairTax plan would devastate your country.

“It would not boost the economy ‘as has never in history been seen.’

"Into that vacuum would ride the Sons of the Confederacy, complete with fully automatic weapons to restore order.

"I ain't whistling Dixie."

More promises to be broken.

Your views

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LETTER

I would like to respond to Saturday's letter by Mike Parker ("Fair tax is unconstitutional and won't save money"): Mr. Parker either has not read "The Fair Tax Book" by U.S. Rep. John Linder and Neal Boortz, doesn't understand what he read, or he has been grossly misinformed. The tax you now pay is unconstitutional.

The fair tax replaces the way we are presently taxed. It is a voluntary consumption tax; the more you buy the more tax you pay, verses the less consumer goods you buy the less tax you pay.

The Fair Tax would:

1. Abolish the IRS.

2. Close all tax loopholes and brings fairness to taxation.

3. Maintain our current Social Security and Medicare benefits.

4. Bring transparency and accountability to tax policy.

5. Allow American products to compete fairly.

6. Reimburse the tax on purchases of basic necessities.

7. Enable retirees to keep their entire pension.

8. Enable workers to keep their entire paycheck.

Yes, the Fair Tax would eliminate the IRS. The Fair Tax violates nothing. I guess Mr. Parker thinks we do not pay tariffs on imported goods now.

The Fair Tax in no way increases the upfront amount consumers pay in taxes, as Mr. Parker suggests. This 23 percent consumption tax is not in addition to any tax already on any product, as he would have you believe. Read the book and check it out.

Under the Fair Tax, a $20,000 Toyota would cost you $4,600 in taxes, which is 23 percent, and not the $9,200 Mr. Parker suggests, which would be double the 23 percent.

It appears Mr. Parker likes paying the first 4 1/2 months of his income to the federal government. The Union you speak of will in no way be affected negatively. However, the United States will experience a growth in jobs and industry as has never in history been seen.

Paul S. Barnes

Flowery Branch

Response to Kaulbach

In keeping with this fairness theme, I always get the final word.

Kaulbach: Mike Parker, please tell me you have read "The Fair Tax Book." Your letter doesn't seem to indicate that you have. We spend $87 billion to collect taxes. Crime families, prostitutes, drug dealers, thieves and others do not pay taxes. Is that fair?

Reply: To address your point about reading THE BOOK, “Yes, I’ve read da book! I’ve also read War and Peace. Doesn’t make me Russian. Nor does reading ONE book on taxes make anyone a tax expert. Especially a book as flawed as ‘The Fair Tax Book.’

So Mr. Kaulbach, you’re absolutely okay with drug dealers, prostitution, muggers, bank robbery, etc… as long as taxes get collected? It seems you are more worried about money (or something else) than you are concerned about law and order.”

Kaulbach: It is estimated that $20 billion or more escape income taxes by these people. They are not stealing from the government. They are stealing from honest citizens who pay taxes.

Reply: “Now you’re worried about stealing since the money is being taken from you? Wow. Given that the Enron scandal cost us over $35 billion in one lump sum, you’re talking chump change from “prostitutes, drug dealers, thieves, and others. Actually, legal prostitutes, in Nevada, pay taxes. Most large-scale criminal activity results in money laundering through legit business, where taxes are collected as a part of the cleaning. But, again, your theme is not ‘crime and punishment’ or ‘law and order.’ You’re only worried about a lesser standard, your sense of fairness.”

Kaulbach: Under the plan, Ms. Weeks will keep her entire paycheck minus state income tax. Mr. Parker, do you realize that under the plan, there will be no embedded taxes, which currently amount to nearly 23 percent. Thus a new car under would cost almost 23 percent less with all embedded taxes deleted. Add 23 percent federal sales tax and the cost will be about $20,000.

Reply: “Ms. Weeks will not get to keep her paycheck minus state taxes. Whatever her bills are now, according to the book, she will still pay the same amount. Kaulbach, you’re engaging in double speak. If the cost before implementing a ‘FairTax’ is the same as after implementing a ‘FairTax,’ then Ms. Weeks doesn’t get to keep anymore of her paycheck than before. You explain that with your new car example. The cost of the car before and after is still $20,000 in your wacky math. Did you misunderstand what you said? Your math is wacky. If you reduce the price of the car by 23 percent then you must add back 29.9 percent in taxes to have a car that still costs $20,000.

“23 percent of $20,000 is $4,600. Subtracting $4,600 from $20,000 leaves $15,400. Then, 23 percent of $15,400 is $3,542. That would be $18, 942 when tax is added. But, to get back to a $20,000 car, the tax added would have to be $4,600. That’s about 30 percent, the real tax rate being proposed in the book and in your example.

“Further, my original example was a new Toyota. Imports would not see this mystical 23 percent reduction as explained in your favorite book. So, the new Toyota would have that 30 percent tax added to it. Then, the total would be over $26,000.”

I see no reason to believe you, Mr. Kaulbach. Or, your favorite book. I suggest you try reading Playboy. Then, at least you can pretend to be Hugh Hefner and walk around in pajamas all the time.

Please read on for more about your mystical 23 percent embedded tax.

More from the Dark Side

Gainesville Times Friday, July 21, 2005


Mike Parker, please tell me you have read "The Fair Tax Book." Your letter doesn't seem to indicate that you have. We spend $87 billion to collect taxes. Crime families, prostitutes, drug dealers, thieves and others do not pay taxes. Is that fair?

It is estimated that $20 billion or more escape income taxes by these people. They are not stealing from the government. They are stealing from honest citizens who pay taxes.

Under the plan, Ms. Weeks will keep her entire paycheck minus state income tax. Mr. Parker, do you realize that under the plan, there will be no embedded taxes, which currently amount to nearly 23 percent. Thus a new car under would cost almost 23 percent less with all embedded taxes deleted. Add 23 percent federal sales tax and the cost will be about $20,000.

A $2 loaf of bread has about 43 cents in hidden taxes. Delete the hidden taxes and the loaf would be $1.57. Add a 23 percent national sales tax and it will be back to around $2.

Citizen George Soros has his great fortune in off shore banks. He pays no federal taxes. Under the plan, every dime he spends in the United States will have the national sales taxes added. There will be no tax loopholes for the wealthy to jump through.

There is more. My email address is suladu@alltel.net. Any one desiring further information, please send me your e-mail address and I will send you a seven-page summary of The Fair Tax Plan at no cost to you.

George C. Kaulbach

Cornelia