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Find out what your state is doing to promote the FairTax:
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Atlanta Journal Constitution
FairTax Proposal Could Unite the Country
April 25, 2007 - http://www.ajc.com/opinion/content/opinion/stories/2007/04/25/0425edfair.html - By KEN HOAGLAND
Our income tax system gives foreign manufacturers tax advantages over the "Made in America" label, makes debt more favorable than wealth, and — against all reason — costs taxpayers $265 billion a year in hours and money just to obey the law.
That average citizens are tirelessly inspired to organize and rally for an alternative that is simple, transparent and fair apparently makes Atlanta Journal-Constitution writer Jay Bookman so uncomfortable he resorts to comparisons with cults and misstates the actual tax-inclusive FairTax rate of 23 percent ("Fervent faith in Fair Tax defies reason," @issue, April 23).
In his cranky, contrarian quest to prove to the masses just how wrong they are, he asks how the Fair Tax can be revenue neutral if everyone pays less. First, some will pay more depending on how much they spend — this is a tax on consumption, after all. Secondly, he misses the larger point. Consumption is a far broader base for taxation than earnings and, therefore, generally requires less of each.
Dr. Laurence Kotlikoff, Boston University economist, finds that married couples earning from $30,000 to $50,000 with two children would have a lifetime average tax rate of from 3.4 to 11.1 percent compared to the current tax system's rate of 15.3 to 19.6 percent. This is such a fundamental concept; it is difficult to understand how Bookman missed this bedrock truth about the FairTax.
Under the FairTax, 10 million to 20 million illegal immigrants, who today do not file income taxes, will pay federal taxes as consumers. The underground economy, which now escapes income taxes, also contributes under the FairTax. Wealthy clients of tax lobbyists and favored constituents who won shelters and generous breaks on their income taxes from congressional power players will also be paying, as consumers, the very same rate as every other taxpayer. These are all new revenues and are central facts missing from Bookman's flawed analysis.
The FairTax is not a tax cut proposal, but a replacement of the most counterproductive and inefficient system of tax collection ever devised. The idea is not to tax income but consumption, over which we have the greatest control. The concept has been endorsed by economists ranging from Milton Friedman to Alan Greenspan. Economic science has also settled the question, despite Bookman's doubts, that savings will increase, causing interest rates to fall.
Bookman heralds the "sophisticated" analysis by the President's Advisory Panel on Federal Tax Reform that rejected the Fair Tax last year. They were, in fact, so "sophisticated" they ignored $20 million of respected research provided to them and, instead, created their own flawed and exemption-riddled consumption tax that they then, predictably, found sadly wanting.
Could the fact that the two top former senators leading this "sophisticated" exercise now work in firms lucratively lobbying the income tax code have anything to do with their conclusions? Unfortunately, Bookman's cynical eye overlooked this obvious conflict.
Finally, Bookman's critique comes down to his calculation of what happens to a family of four annually earning $40,000 who rent. Unfortunately, he made math errors in his own best argument calculation against the FairTax. This family, in fact, will see an $862 decrease in federal taxes, dropping from 12 percent of income paid in taxes to 10 percent – not to mention the money saved on aspirin trying to deal with 67,500 indecipherable pages of tax regulations.
The passions of FairTaxers that inspire such disdain in Bookman are not only well-founded but also a refreshing contrast to the usual bleak outlook on tax policy issues by the public. Supporters find great joy in the idea that this proposal could unite our divided country —Bookman's cynicism notwithstanding —against the dysfunctional income tax and the self-dealing of Congress.
We welcome such enthusiasm and see it as a healthy counterpoint to the usual apathy that is strangling participatory democracy.
• Ken Hoagland is communications director of FairTax.org in Houston.
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