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The following are articles and letters from other
people and organizations that are also critical of the FairTax.
Twenty Two FairTax Criticisms by Hank
- Describing the sales tax rate as “a 23%
sales tax” is false and misleading. The sales tax rate in terms all
Americans understand is currently estimated to be 31%, or, if preferred, 23%
of every dollar spent. Integrity demands clarity!
- After tax prices will initially rise by an
average of 15%.
- Effective tax rates for most retirees will
be higher under the Fairtax than under current law.
- Federal government taxation of state/local
governments may be unconstitutional under the doctrine of intergovernmental
- State and local bond issues will have to
offer higher than basic interest rates in order to attract investors.
- The implicit taxation provisions of Section
801 of HR25 will add to consumer debt costs and reduce investment returns.
- State/local taxes will increase by an
estimated $300 billion annually.
- Government enterprises are not taxed under
HR25 and will continue to compete with the private sector.
- Placing a tax on permits at the local level
will adversely impact the construction industry.
- Retiree and Roth type savings will be
essentially double taxed.
- In year one of the Fairtax implementation,
the national annual budget deficit will approach $1 trillion.
- At an estimated $600 billion, the annual
prebate will become the largest single entitlement program in history.
- Adding the prebate to the federal budget
will result in entitlements becoming the largest share of the federal budget
and will put increased pressure on discretionary spending.
- Inducements for social policy change through
use of the income tax code will be lost forever.
- The time honored separation of church and
state will be placed at risk by removing the income tax restrictions on
- Governments cannot tax themselves into
prosperity. Under HR25, the estimated $200 billion in annual taxes owed by
the federal government to themselves is nothing but a shell game for the
purpose of lowering the proposed sales tax rate by several percentage
- Tax transparency claimed by Fairtax
advocates is a myth. The only way to determine an individual’s annual tax
burden with the same degree of accuracy enjoyed under current law would be
to collect and add up every expenditure bill and receipt during the course
of the year, an unlikely process for all but the most anal!
- Claims of “controlling taxes by controlling
spending” are misleading. Half of the average person’s budget is services
and there are no “used” services. As a practical matter, the availability of
used goods is limited to automobiles, houses, boats and similar infrequent
- Purchasing used goods will avoid federal
taxes, but the prices paid for all used goods will include a portion of the
embedded costs of the Fairtax.
- While purporting to eliminate all income
taxes, under the provisions of HR25, foreign corporations with income from
US sources must pay a 23% income tax.
- Adding the 31% national sales tax to the
normal customs duty charges for all foreign imports could clear the retail
shelves of inexpensive foreign made products, and adversely impact every
- In order to raise the revenue needed by
state and local governments to pay the national sales tax, cascading
taxation may become a reality. This is in direct conflict with one of the
stated goals of HR25.
"The problem, the biggest problem by far, with a
consumption tax is that it directly promotes an underground economy. If the only
time you get taxed is if you "officially" purchase an item, then there's a huge
incentive to "unofficially" purchase things." -Ed
"The FairTax will result in the largest double
taxation in American history. Upon transition, all sources of funds which have
been previously taxed will suddenly become taxable again upon consumption as the
bill contains no intervening mechanism to alleviate such unjust double taxation.
When passed, everyone with any form of savings will be faced with the decision
of losing upwards of 50% of purchasing power or immediately rushing to the store
to acquire as much as possible before the sales tax is in force." - Mike M.
"Suppose a bunch of rich
people want to promote a national sales tax to replace the Federal income tax.
How do they try to persuade the public to support such a plan? Simple: play with
the arithmetic." -Traveshamockery
"Taxes are the price of civilization. They are what you pay to
live in America – your dues – to have democracy, opportunity and access to all
the infrastructure that previous taxpayers have built up and made available to
you. No entrepreneur makes it on his own in America. The American infrastructure
makes entrepreneurship possible, and others have put it in place. If you've made
a bundle, you owe a bundle. The least painful way to repay your debt to the
nation is posthumously, through the inheritance tax. " - Oliver Wendell Holmes
“Government is the people's business and every
man, woman and child becomes a shareholder with the first penny of tax paid.” --
A tax loophole is "something that benefits the
other guy. If it benefits you, it is tax reform.''
— Russell B. Long, U.S. Senator
“A lot of Americans think they got a tax cut, and
they didn't because their local property tax went up, their excise tax went up,
their sales tax went up, and their prices went up and everything else, because
we failed to invest in some of these other things we ought to be doing. ... We
are squeezing the middle class, we are losing the middle class, and the gap
between the haves and the have-nots is growing wider and wider, not closing as
it used to be.” -- John Kerry
"" by Lawrence Vance.
"" by Allen Buckley
"" by John Sugg.
"" by RobFromGa.
"" by Lawrence Vance
"" by LittleDavid
"" by John Sugg
"" by CrellMosett (Daily KOS)
"" by Bruce Bartlett
"" by Justin Raimondo
"" by David Cay Johnston
"" by Michael J.