People just don’t know what they are paying for- especially when it comes to standard procedures. I agree that if you are seriously ill, you are willing to pay for the best. But what if the best isn’t necessary the most expensive? Most patients may never know how to rank provides. And, when it comes to GYN visits, children’s physicals or other common procedures, the prices discrepancy can be pretty extreme. Would you buy a car (or even a new pair of jeans) without shopping around? Nope. But people don’t realize that with hospitals and healthcare, they have a choice. Other than emergency situations, almost anyone has the time to seriously reflect on their choice of health CARE. Doctors help people, and strive to rise to the top of their industry just like anyone else. Let them work for your business! In this sense, yes let’s be capitalistic.

However, I believe that health insurance should be operated more like a credit union or a co-op (non government run). At year’s end, unused funds then go back to those paying into the fund and not lining the pockets of executives …. alas that is a whole other conversation to have on this topic.

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Point 1: Socialism relies on the people’s belief that government can do for them what they can not do for themselves. While the (un)FairTax distributes the funds “equally”, it still will reinforce the idea to the vast majority of the people that “The Government” is “giving” them something every month. Think about how the majority of the people view their Income Tax Refund. The vast majority miss the point that it is merely their money which was confiscated and held, forcibly, at no interest, and is now merely being returned to them. There are ways around that, but most people think that little present in April is nice, because the Government Schools have done a good job in not teaching economics.

Point 2: I am merely using their own boast that the tax is “Progressive”. And “Progressive” always means exactly what I said in the first message. The productive pay and the unproductive absorb. Productivity falls and dependency grows. As an example, I retired at the earliest possible date because I was tired of working 40% or so of my hours on the job to pay for government. Most of which I feel is not only non-productive, but counter productive.

Point 3: Seems to be the same excuse for not reducing taxes in the past by the people we are trying to oust. “Revenue Neutral”, in reality, is just a shorter means of saying “We are going to spend whatever we want and take it from you anyway we can, so mind your business and let us mind ours!”. The dynamics of an economy is totally alien to our political “leaders”.

Point 4: I did not read the book itself, but have read from the web site frequently since the proposal first saw public exposure. I have listened to the arguments by Bortz and others from time to time. I find nothing in either of those which would change anything I wrote in the first post.

Point 5: I take issue with your item 5. I am making perfect sense here. I do not pay Social Security “Contributions” nor Medicare Payroll Taxes since I am retired! The same holds true for anyone who has retired. We had the promise that we were “Paid in full” on those two taxes. (We do pay some current “premiums” for Medicare, even after retirement.) Under the (un)FairTax, having paid them for all our working lives, we would be forced to start again, tearing up our previously issued receipt. Those two “entitlements” are going to make up the largest share of taxes in the future and the ones most likely to drive increases in the (un)FairTax making current retirees not only pay again, but pay for services they will probably not live to see. This is obviously not the only reason I reject this plan, but the one which justified the “(un)”. I also realize that those plans will perhaps pay a higher return to me than I paid in. (Then again, any keystroke may be my last!) That will not be true for the next wave of retirees, who paid even more of their wages toward the promise of a “Paid in Full” receipt. One thing government should never do is break a promise. That strikes me as kind of an ex-post-facto thing.)

Also, the (un)FairTax is not like I describe as my initial support for a consumption tax.. It does not show as a line entry on the sales slips. Just as a VAT is a “hidden” tax, the (un)FairTax will make the same ignorant people that I mentioned in Point 1 to believe that the culprit is the manufacturer/retailer, not that the government is merely taxing the daylights out of them. (I do not mean the “ignorant” in the pejorative sense, but as the dictionary definition. Again, they are merely a product of our current educational system where to truly understand government or finances, a student is on his own.) I do not buy the argument the supporters present that prices will reach equilibrium with current prices. That takes glasses with a deeper shade of rose than I own.

I fully agree the tax code is a mess. As a retiree with “conventional” investments, I probably spend 40 to 80 hours preparing my taxes each year when record keeping and calculation is considered. I do support a consumption tax, but as an “open” and “explicit” sales tax. I don’t think that is politically viable since it doesn’t conceal government costs from the public well enough. I don’t hold much hope for a 5-liner either, mainly because of the many benefits to the political structure provided by favorable treatment to certain constituency, i.e. those that pay the most!

I suspect we agree on most of the points behind each other’s viewpoints. I also suspect there is a better solution than the (un)FairTax. (I also hope you will forgive my little idiosyncratic reference, but I find it is effective in getting folks with whom I discuss the plan to look at the downsides and the unintended and/or unadvertised consequences.)

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Actually I’ve read the FairTax book and the sequel, which answers a lot of questions that people have brought up. I also bought a book that bashed the FairTax plan and read it. And I’m well aware Mises.org opposes this tax as well, since I’ve read at least one article there on the subject. So I know the plan fairly well. Let’s go over your qualms with the FairTax.

1. The Government will be giving out prebate checks to cover the necessities and that’s it. It will be based on some measure where you are defined as at the poverty level or below. So it’s possible to not pay any taxes at all, if you just consume up to the level of poverty. Could promote savings among lower income families, could promote laziness in people hovering around the line, depending on other policies. With other sound policies, the latter would not occur. But to say this is “socialism” is absurd. Every family would get the prebate, so it’s equal, and thus fits the “FairTax” moniker. Again, Bill Gates as well as the local bum would get the same amount. The exact opposite of socialism, because if it was socialistic people would claim that Gates “doesn’t need” the prebate check.

2. You aren’t taxing production at all, you are actually removing the current taxes that hinder production. You are only taxing consumption, and less consumption would actually help our economy long term, until we get our finances in order. Again, other sound policies would help make this a reality.

3. The plan is only revenue neutral because the authors of the plan recognize how hard it’s going to be to implement any change of this magnitude in today’s political climate. They specifically mention this in the book, and state that reducing government spending is a whole different book. And they have a point. Let’s simplify the tax code, then people will come around to the evils of a bigger government. This will come slowly at first, but when combined with other policies (ie sound money, more government control at the state level vs federal, etc) it will catch on very fast.

4. Did you read the FairTax book? It specifically says in the book that the Bill (which I think is stuck in the House) needs a higher than normal majority to pass a rate change. In other words, if this becomes law, the rate can’t just go up with a slight majority. It needs (I think) 75% of the vote (it may have changed since the bill gets updated from time to time). The authors are also very wise here, because they know how poisonous big government can be, and the incentives for it to grow are all too great. They are trying to put a “check” on the power here and return some to the people. More power to them.

5. You aren’t making much sense here. First of all, the FairTax would be exactly like what you are describing when you go into the sales tax example. There would be one, 23% (or 30% depending on how you compute it) tax on all purchases. What do you mean by “pay all over again?” You don’t pay taxes now???

Under a FairTax, your savings won’t be taxed, your capital gains won’t be taxed. your paycheck won’t be taxed, no more added “gas taxes” etc etc. We are in dire need of tax overhaul. If you can’t say for sure how much tax a person pays on an income of $100,000 without going into his marital status, age, occupation, location, how much he has invested, deductions, write offs, etc etc it’s just insane. We need something simple.

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One possible addition: Make health care capitolistic. Force health care to post prices! Allow users to shop for their health care. Allow competition to work!
This is after all America a capitolistic country isn’t it?
Nationalizing health care may be the only viable option but let us first try Capitolism.

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First, the “Prebate” aspect makes it look like Government is a benevolent distributor of money from the money tree that grows in the Potomac Basin. Everyone will receive a check from Uncle Sugar every month. How’s that for promoting Socialism?

“Progressive” simply means the productive pay the taxes, the unproductive do not. Want less of something (e.g. production) tax it. Want more of something (e.g. dependency and lassitude) subsidize it.

“Revenue Neutral”. If anyone who believes he is in one of the categories I listed in the first sentence wants the government to have the amount of money to spend in the future that it spends now, he needs to reexamine his political philosophy and start searching other web sites like maybe ACORN, or The Socialist Party, USA.

And the rate. How easy to change 23% to 32%, then 40%. It only takes 51 Senators, 218 Representatives, and 1 president! Think about how well they all listened to the ordinary citizen about the bailout (oh, sorry, the “rescue”)?

Least “Fair” of all, it makes those folks (like myself, I will admit) who paid our bills “in full” start paying all over again. Retirees who paid their Social Security “contributions” all their working lives and paid the Medicare taxes for most of their working lives (post-LBJ) can now start paying all over again with every purchase.

I happen to support consumption taxes. But I only support one where each and every purchase slip carries a tax line for the Federal amount like is generally done for State and Local taxes now. I want everyone to know what all those government “goodies” actually cost! No VAT, not the (un)FairTax, both of which are essentially “hidden” taxes and therefore make it look like the “Filthy Capitalist Pigs” are robbing everyone again.

If the (un)FairTax is the best they can do, I’ll take the current tax code, thank you! Better yet, let’s all compromise and ask to have Dick Armey’s plan reintroduced with a rate-guarantee clause (I know!) included.

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Not to debunk you, Dazed, but what you said is incorrect, I think. The fact that the exchange rate with the other countries is better and the dollar is getting stronger while compared to other currencies, doesn’t mean that inflation of the dollar isn’t weakening it significantly. When money is introduced into the economy, as it has been at an unprecidented rate recently, every dollar that existed previously become less valuable, because now there are more of them to go around. It means that no matter where you go, you won’t be able to buy as much with that dollar as you did before. This weakening is what I think Ron was referring to. This video explains this to an extent.

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Even if your ideas make sense in economic terms, they’ll never be accepted by the mainstream media or the population. And you know why? Because people don´t make decisions based on economics only! Emotions, ethics, solidarity also play an important role. When are you guys gonna understand this simple concept? Didn´t you learn that from the Austrian School of Economics??

Your proposals are a waste of time.

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