Top Ten Reasons Why I, Travis Gearhart, Support the Fair Tax

Posted By Travis Gearhart at 5:22 pm on February 6, 2010

There is an almost never ending list of reasons to support the Fair Tax, but I’m convinced that this 10 is enough to sway those that are on the fence. This list, which is a variation of a list that pushed me over the edge and convinced me, is found in the book “FairTax: The Truth”, by Neal Boortz and Congressman John Linder.

1. No Capital Gains Tax. Those the feverishly oppose the Fair Tax will tell you that this just makes the rich richer, and yes, it does. You know who else it makes richer? EVERYBODY ELSE. What this really is is a tax on capitalism. With no capital gains tax, everybody will be free to invest in whatever they choose with out worrying about being double taxed. Having a capital gains tax at all is a determent on real “progress”.

2. No Death Tax. The fact that there is a tax even after you DIE brings new meaning to the phrase “Nothing is certain in life but death and taxes.” The death tax was the most ridiculous idea ever conceived. Why shouldn’t I be able to leave ALL of my wordly possesions to my son and wife? All the death tax is is a cheap trick to bring in some extra revenue, and it is unfair.

3. No Keeping Records of Financial Transactions. Hell, I don’t do that now, and I’m probably screwing myself out of a whollllle lot of money. Those pesky receipts are washed and lost and chewed up (between a dog and a baby, EVERYTHING gets chewed up) and are NEVER around when tax time comes around.

4. No More Filling Out Tax Forms. The amount of time that is spent by every family in the US just to comply with the tax code is ridiculous. The only other option (which I have to admit is what I do) is to forfeit a huge chunk of my tax check in order to have somebody else do my taxes (yes, I’m lazy, leave me alone). Eliminating this waste of time would not only free me up to do other things, but would give me an opportunity to spend my money and stimulate the economy because, let’s face it, we all like to buy useless crap.

5. Will Help Keep US Jobs IN The US. I actually wrote out a huge piece specifically about this, see a couple blog posts down on the INFairTax site to see it.

6. No More Penalties For Messing Up On Your Taxes. No tax forms to fill out, no more bogus mistakes that continually hit your wallet. Let me tell you all a little story about a friend of mine that I work with and the number of times that his home state, the state of Michigan, has contacted him with new “mistakes”, claiming that he owes more money. Between him and his wife, they make around 200 grand. His salary is around 60 grand. ALL of his salary plus a good chunk of his wifes goes towards taxes. Just something to think about.

7. The Government Will No Longer Have Access To Your Financial History. Why should they, after all? What business is it of the governments to have that kind of information that is reserved for my wife and I?

8. No More Class Warfare Used In Politics. In case you haven’t noticed, President Obama used class warfar A LOT during his campaign. He continually talked about raising taxes and having “the rich” pay their “fair share”, and he isn’t the only politician guilty of such rhetoric. If the tax system is broken down and replaced, no longer will the “soak the rich” rhetoric be useable, and it will help to keep me from blowing my brains out while watching political debates.

9. Less Lobbyist Influence. Lobbyists are, in my opinion, one of those necessary evils. I know that this is a hotly debated subject, but it’s just how I feel. For example, I’m a big fan of my gun rights, and so I enjoy the political pull that the NRA has in Congress. Sue me. However, if the Fair Tax were to be enacted, I wouldn’t protest to less lobbyist influence because the lessening of influence would be across the political board.

10. America Will Become The New Tax Haven. There is a very good reason that people have Swiss bank accounts: they HAVE paying unfair taxes. No more unfair taxes, no more foreign tax havens. In fact, it would probably be the exact opposite! The US would become the tax haven!

I could have probably made this list go on…and on…and on…but hey, I write a weekly column here! I have to save something for me to write about!

Cross-posted and originally written for Indiana Fair Tax

Comments (7)

7 Comments »

Comment by WKen on February 6, 2010

I hate sales taxes because they’re regressive. About three years ago, I went to fairtax.org specifically to prove to a friend of mine that even this system, which he said sounded pretty good, was as bad as any other sales tax.

Two days later, having spent hours on the site looking over the plan, googling criticisms and rebuttals, so on and so forth, I went back to that friend and admitted that I was wrong. It was possible to make a sales tax work. The Fair Tax had me from then on.

The income tax is a dinosaur in almost every way. It’s far too large, not very intelligent, and doesn’t fit into the modern world. The only thing it’s missing is one we should take care of — it isn’t yet extinct.

Comment by Steve on February 8, 2010

Any thoughts on Paul Ryan’s tax ideas from his “Roadmap for America”? From George Will’s recent op-ed…”To make the economy — on which all else hinges — hum, Ryan proposes tax reform. Masochists would be permitted to continue paying income taxes under the current system. Others could use a radically simplified code, filing a form that fits on a postcard. It would have just two rates: 10 percent on incomes up to $100,000 for joint filers and $50,000 for single filers; 25 percent on higher incomes. There would be no deductions, credits or exclusions, other than a health care tax credit. Ryan would eliminate taxes on interest, capital gains, dividends and death. The corporate income tax, the world’s second-highest, would be replaced by an 8.5 percent business consumption tax. Because this would be about half the average tax burden that other nations place on corporations, U.S. companies would instantly become more competitive — and more able and eager to hire.

Comment by Travis Gearhart on February 8, 2010

That sounds pretty interesting, as well. I’m for all kinds of tax reform, whether it’s lowering taxes tremendously across the board, a flat tax, a v.a.t. tax, or a Fair Tax. If I had to choose one, however, the Fair Tax would win in a land slide.

Comment by FairTax Skeptic on February 8, 2010

For what they’re worth, here are some counter-arguments to your Top Ten Reasons to Support the Fairtax.

1 & 2. If we want to eliminate the capital gains tax and the estate tax, we can do so under our current system. (By the way, I think that would be a bad idea, but that’s a different argument.)

3, 4, 6 & 7. These all go to record-keeping requirements. Record keeping under the income tax system is only burdensome for individuals if they have small businesses, rental property or complicated investments. The reason record-keeping is burdensome is because tax-payers naturally want to deduct as many expenses as they can, but need to keep records to evidence both the expense and the business purpose of it.

Well, guess what? Under the FairTax, since small businesses, rental property owners and holders of complicated investments will not pay the FairTax on purchases related to the foregoing, they will need to keep records (in the case of rental property, for up to 30 years) to evidence that the tax-free purchases were actually for a legitimate business purpose. (Guess who gets to decide what is a “legitimate business purpose? You guessed it — the government.) The bottom line is that there will still be substantial record-keeping requirements under the FairTax for the same folks that are most burdened by the record-keeping requirements under the current Tax Code.

5 – Why will the FairTax increase jobs? If prices of goods and services sold in the US increase under the FairTax (as even the few economists who support the FairTax agree would occur), that would mean that goods and services sold overseas would be relatively cheaper. Thus, the FairTax could very well be a jobs-killer.

8 — No more class warfare? Some would argue that the FairTax is the ultimate class warfare. Sort of a Marie Antoinette tax. Eliminate taxes on the wealthy, and push them onto the middle class (who make up the vast bulk of consumption in this country.)

9 — If the FairTax destroys the housing and auto markets (since nobody in their right mind would buy a brand new house or car, both of which would be taxed, when you could buy used homes and cars tax-free), you’ll see plenty of lobbying, real quick.

10 — Yes. The US would become a tax-haven. So what?

Note — You can disregard these if you like. I’m just trying to present reasoned counter-arguments for you to consider.

Comment by Travis Gearhart on February 9, 2010

Sorry it took me a bit to respond, Skeptic, by no means would I disregard fair questions. The only time I disregard comments (or worse, call people idiots for commenting) is when that individual starts the comments of like “If you had a brain in your head…” or “if you’re not retarded”. I always like reasonable debate. While I don’t claim to be the utmost knowledgeable on the Fair Tax, I can take a stab at addressing your concerns.

1&2: You’re right, we could eliminate the capital gains tax under our current tax system and I believe we should (or at least lower them tremendously). Capital gains is a double tax and is unfair to those that want to invest money and helps to ensure that only the upper crust can afford to invest.

3,4,6,7: I don’t know about you, but I’m burdened by the record keeping enough that I would like it eliminated. Yes, businesses would need to keep some kind of records. However, since the number of small businesses is exponentially smaller than the number of people that pay taxes, there would be much more accountability regarding the paying of these taxes. It’s easier to make sure that the money is going where it needs to go. And it still wouldn’t be near as burdensome for a small business because the business isn’t dealing with all of the tax holes and credits and requirements. All they would have to do is cut the government a check for taxes collected and be able to prove that they aren’t stiffing Uncle Sam. That would make more tax revenue for the government.

5. On this point there is some debate regarding prices rising. Competition would ensure that the prices are at their lowest point. What you aren’t realizing is that we already pay an embedded tax that is just as high (in some cases higher) than the proposed Fair Tax rate. If this info. is spread to the consumer, they can use their spending power to purchase goods from the company that adjusts this and doesn’t try to fleece the consumer. With no more embedded taxes, the price SHOULD be the same. As far as job creation, that deals with both the capital gains tax elimination as well as no more tax on savings. With more money flowing out to small busninesses that want to start up, that means more jobs, and that cycle works throughout the entire economy.

8. Let them eat cake! But seriously. If it is a sales tax, how many boats and houses does the middle class own? MAYBE one of each? A rich person will obviously be paying more in taxes because the old saying is true: The more you make the more you spend.

9. First of all I don’t mind lobbyists. They have a part in the system of representing differnet groups’ interest (as long as there are some reigns on what the lobbyists can do). Second, read the past few responses. Isn’t there a sales tax on used vehicles? Same with houses? You’re assuming that the automobile and housing industry would be worse for the wear: I don’t think so at all.

10. The important part of the US becoming a tax haven is that instead of OUR money going overseas, THEIR money would be coming here. That adds up to more money to be lended out, again, for business ventures. Not to mention what I think everyone wants: more US jobs, less shipping them off overseas.

Comment by FairTax Skeptic on February 9, 2010

Travis — I must say that you are the most agreeable FairTax proponent I’ve come across. Between you and me, baby, we could really fix the tax code.

A few additional comments.

Capital Gains Taxes. I agree that taxing capital gains is double-taxation. But what I would rather do is eliminate the corporate income tax and, instead, tax capital gains as ordinary income. that way it wouldn’t be taxed twice, but the ditch-digger (who earns his money through labor) wouldn’t pay a higher tax rate than Warren Buffet (who earns his money through capital gains.)

Record Keeping. I concede that for most people record keeping under the FairTax would be far simpler than under our existing Tax Code. And, yes, it is more transparent, simpler to collect, etc. I guess my point is that it would not be as simple as many of its proponents claim it would be. Hell — the 1040EZ Form is as simple as can be. And the 1040A is pretty easy, too. It’s only when you need to use to the real 1040 that the complexity sinks in. It would be the same under the FairTax (or any tax system).

Prices. With all due respect, most economists who’ve studied the FairTax over the last decade (and there have been several published studies and reports) have concluded that the required tax rate under the FairTax would be over 50%, which would boost prices far above any reduction in “embedded taxes.” By the way, Dale Jorgenson, who’s the Harvard economist who came up with the 22% “embedded tax” rate, does not support the FairTax and has said several times that the “embedded taxes” wouldn’t disappear under the FairTax unless wages and salaries were slashed. That is, while you might take home 100% of your paycheck, your paycheck would be a lot smaller than it is today.

Spending. Yes, the rich spend more than the middle class, but as a proportion of their income they spend less. Look at Warren Buffet as an extreme example. He might make $1 billion in a year, yet only spends $100,000 on what would be taxable under the FairTax. Even if he spent $1 million or $10 million, or $100 million, it would still be a small fraction of his income. In contrast, the typical middle class family spends 80-90% of their income just trying to keep their heads above water.

Taxes on Used Vehicles. You might want to review faitax.org about the FairTax. Under the FairTax, there would be no tax on used cars, existing homes, used furniture, etc. (All of which, particularly regarding houses, would create a huge loophole.) Paris Hilton could purchase an existing $20 million mansion in Beverley Hills and not pay a dime under the FairTax. But the poor shmuck who rents an apartment would pay the FairTax on every monthly rent payment he makes. There are plenty of other loopholes as well — in particular, purchases overseas are not taxed, nor is the purchase of items for business or investment purposes. You will see a huge shift in consumption patters, away from new consumer goods purchased in this country (all of which would be subject to the FairTax), to used goods, foreign purchases and business/investment purchases. All of which would lead to lower tax revenues.

Finally, the tax haven issue. Just because money would not be taxed here, doesn’t mean that it would be invested here. Money is fungible. It can go anywhere. And investment dollars are going to go where the growth is — e.g., China, India — not where there would be a huge drag on consumption. And the countries that are “tax havens,” say Switzerland, Cayman Islands, Panama, don’t necessarily see much of that hidden money invested in their own economies, so I don’t see why it would happen here.

Just a few random thoughts. I appreciate the opportunity to vent.

Comment by Travis Gearhart on February 10, 2010

No problem my friend, vent away. As I wrote above, dissenting thought is good. It means there are at least a handful of people that don’t write in a zombie-like fashion, lol. Some good points above (the biggest was the one on used goods…I had not read that, I’ll have to look it up sometime), and in luie of going back through point by point, I’ll just give you my broad answer. I don’t know 100% of everything there is to know about the Fair Tax. Another frequent commenter on here also writes for the IN Fair Tax site, so maybe he’ll come across and tie up the loose ends, but mostly I support the Fair Tax because while it may not be perfect, it’s a Hell of a lot better than what we have now, and I haven’t found anything that is better and has the kind of grass roots momentum that the Fair Tax has behind it. Perhaps some day the two of us could, as you suggested, be in a position to really fix the tax code, but since I’m no economist I doubt I’ll be too involved lol. I appreciate the comments and look forward to your continued viewership (listenership if you follow my radio show). Hell, maybe you’d even be interested in being a guest, I’m always looking for new people to come on and give their ten cents worth.

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Top Ten Reasons Why I, Travis Gearhart, Support the Fair Tax

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