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Other Voices

The following are articles and letters from other people and organizations that are also critical of the FairTax.

Twenty Two FairTax Criticisms by Hank Van Gieson

1. 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!
2. After tax prices will initially rise by an average of 15%.
3. Effective tax rates for most retirees will be higher under the Fairtax than under current law.
4. Federal government taxation of state/local governments may be unconstitutional under the doctrine of intergovernmental tax immunity.
5. State and local bond issues will have to offer higher than basic interest rates in order to attract investors.
6. The implicit taxation provisions of Section 801 of HR25 will add to consumer debt costs and reduce investment returns.
7. State/local taxes will increase by an estimated $300 billion annually.
8. Government enterprises are not taxed under HR25 and will continue to compete with the private sector.
9. Placing a tax on permits at the local level will adversely impact the construction industry.
10. Retiree and Roth type savings will be essentially double taxed.
11. In year one of the Fairtax implementation, the national annual budget deficit will approach $1 trillion.
12. At an estimated $600 billion, the annual prebate will become the largest single entitlement program in history.
13. 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.
14. Inducements for social policy change through use of the income tax code will be lost forever.
15. The time honored separation of church and state will be placed at risk by removing the income tax restrictions on churches.
16. 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 points.
17. 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!
18. 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 purchases.
19. 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.
20. 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.
21. 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 American’s budget.
22. 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.

Miscellaneous Quotes

"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.” -- Ronald Reagan

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

Miscellaneous Links

"There is No Such Thing as a Fair Tax" by Lawrence Vance.

"Why the FairTax is a Sham" by Allen Buckley

"Here we go again: More Boortz lies about Fair Tax" by John Sugg.

"A FairTax Primer" by RobFromGa.

"The FairTax Fraud" by Lawrence Vance

"The Unfair FairTax" by LittleDavid

"March of the FairTax Sheep" by John Sugg

"Debunking The FairTax Myth" by CrellMosett (Daily KOS)

"Benefits of the Estate Tax" by Bruce Bartlett

"Boot Boortz" by Justin Raimondo

"Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich - and Cheat Everybody Else" by David Cay Johnston

"Death by a Thousand Cuts: The Fight over Taxing Inherited Wealth" by Michael J. Graetz