Monday, August 27, 2007

The National Sales Tax

Fun fact: the national sales tax is an idea originated by the Church of Scientology. Bruce Bartlett explains:

For those who never heard about it, the FairTax is a national retail sales tax that would replace the entire current federal tax system. It was originally devised by the Church of Scientology in the early 1990s as a way to get rid of the Internal Revenue Service, with which the church was then at war (at the time the IRS refused to recognize it as a legitimate religion). The Scientologists' idea was that since almost all states have sales taxes, replacing federal taxes with the same sort of tax would allow them to collect the federal government's revenue and thereby get rid of their hated enemy, the IRS.

L. Ron Hubbard and the Church of Scientology didn't pitch a national sales tax because it was a good idea. They just hated the IRS. That might have something to do with Hubbard embezzling millions.

A national sales tax has been pitched in Freedom Magazine. The publication is run by (you guessed it) the Church of Scientology.

Find an economic idea conservatives love and it is bound to have a bizarre origin.

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At August 28, 2007 1:35 AM , Anonymous Anonymous said...

"Can you say, 'hit piece,' Mr. Bartlett?" According to Bruce Bartlett's WSJ article:

Bruce Bartlett (BB, with apologies to a true great, BB King):"It was originally devised by the Church of Scientology in the early 1990s as a way to get rid of the Internal Revenue Service"

Me: This seems like a scientific approach to the review of FairTax; Scientologists are kooks, the FairTax must be a kooky idea.

BB: "In reality, the FairTax rate is not 23%. Messrs. Linder and Chambliss get this figure by calculating the tax as if it were already incorporated into the price of goods and services. (This is known as the tax-inclusive rate.)"

Me: Hmmm, I wonder what income tax rates begin to look like, if calculated, "externally" - as a percentage of what's left of taxpayers' income? Care to tell us THAT, BB?

BB: "This is only the beginning of the deceptions in the FairTax."

Me: Oh, like their website,, hasn't already thoroughly debunked most of these "straw men" that have been floated (all, that is, except this newest Scientology angle - and I doubt that they'll spend much time on that one - preposterous).

BB: "the federal government would have to pay taxes to itself"

Me: The idea here is to prevent government from competing with the private sector. But why even mention this, when later you say, "but its tax collection will also be ... higher."

BB: "The FairTax rate, however, is not high enough to finance the higher spending it imposes."

Me: Didn't do your research: "...The Beacon Hill Institute at Suffolk University and Laurence Kotlikoff, Professor of Economics at Boston University, have teamed up to provide a sound methodology for estimating the FairTax base and computing the FairTax rate. Their paper demonstrates that the 23 percent rate specified by the Fair Tax Act (HR 25) is eminently feasible and suggests what led Gale and the President’s Advisory Panel on Federal Tax Reform6 to reach the opposite – and incorrect – conclusion. (See Paper )" See also: Tax Panel rebuttal + Wm Gale rebuttal

BB: (Regarding the blanket 30% increase attributed in multiple places in your article, "tanks," "newly-constructed homes," the added amount that would be paid by "state and local governments.")

Me: Nowhere do you point out the price efficiencies that would be gained under FairTax. Kotlikoff and associates found that these ranged from 20% - 30%, and averaged them to 22% across the economy. Thus, we're ALREADY PAYING an embedded 22% in our retail prices. If you believe in market competition (do you?), then you must allow for the elimination of these embedded taxes - which means relative price stability (due to lower costs of doing business - for every business entity contributing at every stage of production). Thus, representing an add-on of 30% is blatant demogoguery.

BB: "Aside from the incredible complexity and intrusiveness of tracking every American's monthly income -- and creating a de facto national welfare program -- the FairTax does not include the cost of this rebate in the tax rate."

Me: The only purpose for tracking income, is for social security payouts. That "incredible complexity and intrusiveness of tracing every American's ... income" - last time I checked - is what the current income tax system, and theIRS, are all about. FairTax bases "prebates" on family size. Prebates are sent to ALL American families to untax the necessities, thus eliminating wasteful bureaucracy,and corruption-producing tax code rules and regulations.

BB: "the FairTax does not include the cost of this rebate in the tax rate."

Me: Somebody told ya wrong - like Prego spaghetti sauce, "It's in deah." That extra 5% you then introduce is the amount that Kotlikoff DEDUCTS from the 23% to derive the rate sans prebate.

BB: "Rejecting all the tricks of FairTax supporters..."

Me: Hey, you calling me a trickster?

BB: "...professional revenue estimators have always concluded that a national retail sales tax would have to be much, much higher than 23%."

Me: Then, why hasn't William Gale, and the president's Tax Panel, delivered their economic methodology (substantiating higher quoted tax rates) to Kotlikoff or Hmmm?

BB: "Perhaps the biggest deception in the FairTax, however, is its promise to relieve individuals from having to file income tax returns, keep extensive financial records and potentially suffer audits."

Me: Huh? What's to deceive? Individuals do not file income tax returns. Businesses don't either; businesses will file basically an expanded state sales tax return. Individuals would keep financial records, but not for the purposes of filing a return. And working families would not be subject to audit unless they ran a business.

BB: "the idea of making April 15 just another day, this seems to be a major selling point for their proposal"

Me: Duh. Like that's bad to get out from under the thumb of an intrusive government that has been proven arbitrary in the manner in which it administers the current tax code?

BB: "In short, the FairTax is too good to be true, and voters should not take seriously any candidate who supports it."

Me: Sorry, BB. Your commentary is to bad to be credible. Next time, at least familiarize yourself with the research and rebuttals to the demogoguery that is sure to assail it.

Readers should expect these assaults on FairTax to increase as this eminently workable - in fact, URGENTLY REQUIRED - tax plan gains adherents.

At August 28, 2007 11:28 AM , Blogger Vox Populi said...

Whoa, that explains a LOT. This mason guy that has stalked me from place to place (work, school, library, grocery ----- TBCN with other Masons in tow, etc....) has all the mason props AND that fair tax sticker on his car.
That makes even more sense than it did. Thanks for this post.


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