The following is an editorial written by State Senator John Douglas on the Georgia FairTax.
The “Georgia Fair Tax” & Illegal Immigration
During the course of the 2006 Georgia legislative session, your state House and Senate passed a strong anti illegal immigration measure in Senate Bill (SB) 529. The bill puts the burden on not only those here illegally, but also those who employ them. I was pleased to vote for the bill and enthusiastically support it.
However, illegal immigration continues to be primarily a federal problem. We cannot round up illegals in Georgia and deport them do another state or country. We can also not afford to shut down our state economy by forcing these people out overnight. We didn’t get into this situation overnight and wont get out of it in that time period. Homebuilding, agriculture, chicken processing and carpet production are four areas that would suffer greatly if there was a sudden outflow of Hispanic labor. All of those industries are vital to the economy of our state.
So with that in mind, what are we to do? First, the US government must get control of the border. A continual flood of illegal immigrants negates everything we are trying to do here in Georgia. Secondly, there can be no amnesty for those breaking the law. “Illegal” means just that. No fuzzy areas, no doubt, no waffling on the law. Enforce it.
At the state level, while these illegal immigrants are still here, they continue to use public facilities just as honest taxpayers do. Roads, schools, hospital emergency rooms, parks and other areas suffer wear and tear from everyone, not just American citizens. Unfortunately, under our current tax laws, its only honest American paying for the benefits of our society. That has to change. Those being paid in cash to avoid government scrutiny and income taxes must be brought into the system.
As a result, I am proposing the “Georgia Fair Tax” which would eliminate the state income tax and replace it with a 4-5 cents sales tax. There are two great reasons for the proposal. First, it brings everyone in Georgia into the equation for paying their share of the upkeep of our state. No longer would working for cash exempt you from the taxes honest citizens are paying. No longer would those living within the law carry the financial burden for those outside the law. Everyone, from the illegals to drug dealers to the most honest citizens would immediately begin paying their fair share.
The second reason a Georgia Fair Tax would be important is because it coincides with what Congressman John Linder is doing in Washington. For several years, Linder has worked to eliminate the federal income tax in favor of a national sales tax. What better example for us to set than for him to be able to point to Georgia and tell the country, even my own state has now gone to a fair tax.
The time has come to make this change. Ten states currently have no income tax. Georgia has to become number 11.
However, being a Senator means I can’t introduce the legislation myself. Our Constitution requires all revenue bills begin in the House of Representatives. As a result, what I intend to do is use my Senate position as a “bully pulpit” to push this idea and work to see it implemented. Just as John Linder has encountered steadfast, entrenched bureaucrats in Washington, so too will I in Atlanta. But I intend to keep working and get the idea across to my colleagues at the capitol that the time has come for this and the burden of paying for Georgia has to be shared by all.
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Bill,
I did vote for the FY 07 state budget. Its a wise use of taxpayer funds and will benefit our state during the next 12 months.
John
John,
I’ve figured out after talking to my parents (who reside in this state and are legal citizens by birth) that they aren’t real keen on the concept of raising the state sales tax by any amount.
They spent the last 27 years paying state income tax and what they had left over, they invested it where they could so they could continue living in retirement based on the balance of income and expenses. Their income is fixed, and they have a certain amount of buying power each year to match that income.
You levy a sales tax of 5-7% for you to collect your largesse to play with in a budget, and they’re not going to have that same buying power they once did because they cannot automatically raise their income to pay for the increase in sales tax. (I’ve said this before, but maybe you are too focused on illegals only, and don’t have any need to consider any other segment of the population.)
While your idea may sound good, in reality, there are a LOT more people who will be affected by the change than just illegal immigrants. You, Harry, and Atlantaman may think that “not enough people are paying their fair share,” but THAT thinking is identical to the Left’s thinking about who is and who is not paying enough taxes.
You, Harry, and Atlantaman are likely in the upper-middle class to lower wealthy-class of income (and make more than a comfortable income) and you have no concept of what the rest of the working world has to contend with in terms of making a living and paying to support themselves.
If that sounds like a lefty-socialist, it’s not. It’s me who is in the process of building a new business and who is not paying a whole lot of state income tax right now because I’m not earning a whole lot of money. You levy a 5% sales tax on top of the 6% I pay now in Cobb, and immediately increase my cost of living month-to-month, and I’ll be declaring bankruptcy (or worse) in no time at all.
I’m not speaking on behalf of myself for selfish reasons, John. There are many folks like me who cannot rely on lobbyists to shove money down my throat OR rely on people doing business with me because they perceive I am in a position of power (unlike you). I’m just an average Georgian trying to make a living with as little interference from the power of government taxes as possible.
Tell you what, make sure that you amend the Georgia Constitution to outlaw all income tax in this state before you switch to a sales tax system, John. Otherwise, I’m certain legislators in the future will not be able to resist applying both taxes on residents, income and sales.
Oops! One correction to my previous post, John. It doesn’t look like you attract lobbyist money as much as you are a lobbyist (from your financial disclosure). So, unlike a lot of folks who don’t get their meals paid for, is it fair to say that you have it pretty good because a lot of your living expenses are paid for by the association you “advocate” for?
“So, unlike a lot of folks who don’t get their meals paid for, is it fair to say that you have it pretty good because a lot of your living expenses are paid for by the association you “advocate
I am sorry, John, for my earlier comment.
It’s not that I have a chip on my shoulder per se; it’s that I’ve become quite jaded about politicians ever since I’ve seen elected Republicans (mainly in Congress, but also in the state legislature) do the complete opposite of nearly everything that was once in the original goals/principles of the Republican Party.
But, I will refrain from judging you in any future conversations.
good to go.
“Tell you what, make sure that you amend the Georgia Constitution to outlaw all income tax in this state before you switch to a sales tax system, John. Otherwise, I’m certain legislators in the future will not be able to resist applying both taxes on residents, income and sales…”
Bill, I would absolutely make sure the income tax was dead before starting the new sales tax. My intent is not to raise taxes at all, just change the collection method. And I would likely look favorably on requiring a 2/3 majority in the House and Senate to raise the sales tax so as to avoid “tax creep” and the idea we can get pie-in-the-sky with just another penny added here and there by the state. I have never voted for a tax increase and wont start now.
I appreciate your principles very much, John.
Just to give you something tougher to chew-on than my objections to the possible switch, I can predict a group of entities (on the order of 159 of them to be exact) who will likely fight you tooth and nail on this proposal.
The “159″ entities are the county commissions in this state. If the sales taxes become on the order of 10-12% in any county (or, perhaps even cities, as in the case of Atlanta with an 8% sales tax) jurisdiction, think about how darn near impossible it will be for any county to get a SPLOST through their electorate.
See, in Cobb last year, I voted for the 1% SPLOST because I was personally promised by Sam Olens that he would put forth a rollback on property taxes…and, if the SPLOST didn’t go through, he said there would be an increase in property taxes in order to pay for the increase in infrastucture needs.
But, I can pretty much assure you that if a sales tax burden is already above 10% in any jurisdiction, voters will reject any potential increase due to a SPLOST…regardless of the consequences. Psychologically, there is a mental limit, I think, for most voters at the 10% level or below to pay in sales tax where they live.
This inability for a county to raise/renew any SPLOST (or, for even a school board to renew a SPLOST) will cause that county or school board (or, whatever jurisdiction) to slam the property tax owners for the extra money they need for their infrastructure improvements.
In every change in law, there is always another law that rears its head that the writer of the law didn’t anticipate. It’s called the Law of Unintended Consequences.
Go talk to your school board members…or county commissioners…and ask them if they think they will be able to get SPLOSTS through their electorate if the electorate is already paying above 10% in sales taxes. I could be dead wrong here.
I’d like to make a couple of quick points. First of all, I would guess most (>70%) illegal immigrants work in jobs that pay more than the minimum wage already. I think this is definately true for construction and probably true in agriculture as well. Maybe they make about the minimum wage in Ocilla and Vidalia, but that also goes a lot further than it does in Atlanta.
Second, there seems to be a lot of middle class resentment on this board towards the poor/people who pay less in taxes. That’s fine, but most of it is rooted in the overall tax burden that these individuals face, which isn’t really going to change under a fair tax (and actually might go up). Max Burns said during the ‘04 campaign that everyone would basically pay about the same under the fair tax, which begs the question why bother with the change, but anyway…I personally look at tax policy/politics from a personal standpoint — will I pay less taxes under a change, as opposed to will someone else pay more. And anyway, a lot of the “have nots” who don’t pay (much) taxes are downscale conservative whites, who currently vote for the Republican Party out of social concerns. I think if the Republican Party basically stands as the party that will actually raise their tax burden, it will be hard to put together a winning coallition in the future without these folks.
Finally, lets examine the idea that businesses pass on the taxes they pay to their customers. I may suprise some of you on this site, but I agree. Businesses pass on taxes to their customers, and the tax revenue benefits — those customers (for the most part). Since no one on this site suggests (or believes) that government spending will actually be reduced, I have a hard time seeing how the end price that customers will pay will go down that much. That government revenue still needs to be collected, and if it won’t be paid by businesses along the manufacturing and delivery chain, it will just be in the form of a very large sales tax at the purchasing point for the consumer.
IF business passes on 100% of the savings that they get from not paying taxes, whatever cost savings are incurred will be completely wiped out by the massive sales tax that will be charged at the register because income is no longer being taxed on corporate profits, dividends, etc.
The Fair Taxers themselves admit that the switch would be revenue neutral as a whole. The Paris Hiltons and Warren Buffets of the world will see their tax rate reduced effectively to 0%. That means at some point on the scale, others will be paying more. I think a lot of people on this site think the shortfall will be made up by people on welfare who don’t currently pay much taxes. I think they are correct (that those people’s tax burden would go up) but they are misled about their own. Even if welfare recipients and illegal immigrants started paying more taxes, it wouldn’t be enough (in a revenue neutral world) to make up for Warren Buffett and his pals not paying theirs.
So our (middle class) taxes would go up too, and because it’s revenue neutral and I don’t expect the way money is spent in Washington or Atlanta to change, we won’t get a damn thing in return for our tax increase. So Sen. Douglas, Mr. Linder, etc, if you still think raising the tax burden for 90% of America while not increasing government spending that is targetted at them will cement the Republican Party’s electoral hold on Congress and the Georgia legislature, please, be my guest.
Chris,
You still don’t know the plan. How can you possibly judge it merits if you don’t know the first damn thing about it?
Anyone that lives below the poverty level will not pay taxes, therefore nothing changes for them. Why will they not pay taxes? Due to the “prebate.” A monthly check based on the poverty index that will each family will be expected to spend on the necessities of life (ie. food, medicine…)
- The FairTax Act calls for the repeal of the 16th Amendment.
- All embedded corporate taxes, payroll taxes and other taxes levied on goods during production would no longer exist which will result in a 22% to 30% drop on all goods and services.
- The FairTax would be an inclusive tax of 23% to all goods and services which will result in essentially make all items be about the same prices as they were before the tax.
- You will get to keep 100% of your paycheck.
I’ll buy you the damn book if you’ll actually read it to get an basic understanding of it. You are debating something that you don’t even have a grasp of.
Jase,
The oft-quoted “23%” was the number calculated after the study was done in the late 1990s. Though it was bandied about in 2004 as remaining at “23%”, do you still believe that after 10 years (2008-2009 being the earliest years this would get enacted), that number would still be 23%? Even after the freakin’ expansion of our annual spending budget (by Republicans, no less)?
Jase, I’ve read the book. I asked some questions upthread that John’s not answered, but let me revisit my concerns here.
Issue one. On a flat translation the minimum state sales tax increase required to maintain revenue neutrality just for the individual income tax is 5.5%. To replace corporate income taxes it needs to be 6%. (This is based on the reported income and sales tax revenues of last FY, ended 9 months ago.) This gives us a state sales tax rate of 10% to which county and municipal taxes will be added, coming in at 13 to 16%. Politically speaking, what makes you believe that most people will accept a 250% increase in their sales tax rates?
Related – call it issue 1A. The FAIRtax plan gives a prebate for poverty level expenditure to all citizens. Nominally, this is at least a full quarter of current sales, or 1% of tax revenue. Which means the preceding values 11% state and 14 to 17% total to sustain revenue neutrality. Again, how do you expect to persuade most people to accept this tax rate increase?
Issue 2 (though still related). Approximately 7% of the state’s population lives close enough to a state border to shop in the other state with minimal discomfort. All the border states – to include Tennessee and Florida which have no income taxes – have total sales tax rates below 11%. Based on surveys of sales in Chattanooga (Chattanooga citizens going to Catoosa/Walker/Whitfield counties for goods to purchase at a 2% discount due to sales tax differential), we can anticipate a measurable reduction in sales in border counties. Are we prepared to balance the economic downturn of these counties? I will note that while the above mentioned counties plus the counties near Valdosta would suffer, the counties which would be facing the greatest impact would be those near Fort Benning. That base is preparing to receive an additional 5,000 soldiers and their families. Taxes – to include sales taxes – are going to hahve some impact on where they actually live, and Phenix City Alabama is a very easy commute for those residing off-post. 15% (11 state, 3 local general, 1 splost) compared to 8% (IIRC – do not have it at hand) is significant. Again, between declining sales and places of new residence, border counties will suffer economically. What plan is in place to counter these effects?
Issue 2A. Is the plan prepared for the inevitable increase in internet sales and its impact on sales tax revenues?
Issue 3 – future plans. One of my major problems with TABOR in Colorado (as mentioned before, I come from there) was and is the lack of planning for economic rough times. What plan is being prepared to cope with the inevitable slow sales cycles? As I read the book, nothing – instead, the government will be expected to cut services to match. This is stupidity in any business – it’s why businesses are expected to maintain a reserve on hand as part of their plans. So why are we planning to force our government to be stupider than businesses? Or are you proposing a reserve as part of the plan, contrary to the recommendation of the national FAIRtx proposal?
Issue 4 – totality. Are we truly going to have a full sales tax or are we going to continue limiting it to ephemerals? At this point in time, “property” – to include exchange of ownership of companies and debt notes – is exempt from sales taxes. Is this going to continue? According to FAIRtax directions, yes. Sales/purchases of Stocks and their dividends will be, therefore, untaxed, as will purchase of properties to lease to renters. The imbalance this creates is obvious to me, and needs addressed to avoid even more political resistance.
Issue 5 – enforcement. One of the arguments presented in the FAIRtax proposal is that there would be a reduction in size of the revenue department. How, then, do we intend to enforce the collection of receipts? This is especially applicable to barter – already a fly in the ointment of income tax calculations.
Issue 6 – fairness and encouragement. Most of the complexity of the Federal and State income tax plans come from attempts to be fair and to encourage or discourage certain behaviors. [For those who would challenge this, I point to the 1040EZ. If you wish a simple tax form and process it exists. It is not the tax that is complex.] Presently certain businesses are allowed to be sales tax exempt though they must report and pay corporate income taxes. Likewise, individuals are encouraged to purchase and improve houses through a variety of tax credits and deductions. Are the FAIRtax proponents prepared to offer equivalents to continue being fair and to encourage/discourage, or is the state willing to forego these effects?
Note that some of the above are covered in the FAIRtax book, but it does so inadequately (IMO).
Final note – not an issue, but a concern. I live next to the state of Tennessee. I can see the effect of that state’s revenue plan (no income tax) on a regular basis. Of particular note over the past two years has been the extraordinary number of people who pay tuition to get their children into Georgia schools. Road conditions and difficulty paying for emergency services are two more data points. It is my belief that if you want it you have to pay for it, and that most people take for granted far too much of what they get from the government. I note these because the “obvious” method of selling all this is to have the rate be less, which means reduction in revenues and subsequently services. I live in Georgia because it’s better than Tennessee, and would rather that Georgia didn’t become that state.
Now I don’t have the patience to read the past 62 comments on here, but I wanted to add my two cents. I would love to see a consumption tax in GA, but it’s just not do-able until there is a national consumption tax.
Auto dealers in GA would lose their shirts – among many others.
Demon,
‘Spain to me, please, why auto dealers would lose their shirt?
I dont understand either how Auto dealers would loose their shirts.
I also disagree that the tax change has to happen in DC before it can happen in Atlanta. I see little progress in Washington. We need to take the initiative here to try and get the ball rolling again.
You buy a new car. You pay taxes on the purchase of that car. Now say for argument’s sake, that Georgia’s current taxes are 6%. When you buy an auto that is $20,000, you pay $1200 in taxes. In order for us to moves to a consumption tax, we are going to have to increase the sales tax to what? 10%? That’s an extra $1000 you wouldn’t be paying for the same car in Alabama or South Carolina.
Who is going to buy a car in GA when they can get the same car for less across the border? Think about the implications for other large item purchases…Stereo equipment, televisions, houses, farm equipment, back-to-school needs, computers, etc. Outside of personal needs, think about business needs and the costs to business.
I understand that these businesses will pass these costs onto the customers but state taxes aren’t the real culprit here. Federal taxes is the problem. Unfortunately, there is very little progress in fixing this problem in DC and I wish that wasn’t the case. However, even John Linder and Neil Boortz will tell you, for a state to attempt the consumption tax before the feds do, is foolish.
Sen Douglas,
First off, as a Covington resident, I’m proud to have you representing me in Atlanta. However, I agree with the above comment that in order for a sales tax to maximize its efficiency, it needs to be implemented at the federal level first.
Because so many goods & services originate in multiple states, the embedded federal tax won’t be affected and I suspect that businesses would have no reason to engage in a price war, ultimately lowering prices of the actual good. If the state income tax is eliminated, would this eliminate much of the sales tax and all of the gas tax as well?
Without reading any state version, I’m assuming that there are no provisions such as a reimbursement check for necessities as proposed on the federal level. What would be the defense to the typical obtuse class warfare argument ?
Chris-
I realize the Fed Sales tax and GA sales tax is getting mixed into the debate here. But in general, if you believe the end tax amount is the same (reduction in income tax is offset by the increase in sales tax) would you not at least agree this puts our domestic manufacturing plants on a better footing with foreign manufacturing plants who do not have the “hidden tax” burden American companies are paying?
Danny:
Thank you for your kind words. As for the chicken or the egg first, I am not optomistic on the federal level. I dont want to wait while honest taxpayers continue to pay for dishonest residents.
As for autos being bought out of state, TN and FLA already have high sales taxes in place of income tax. There would have to be a system in place to collect GA taxes if a car is bought out of state. The county could collect it when the GA tag is purchased.
Of course few details are set at this point since this is still an idea with many miles to go before implementation. But the level of discussion here is indicative of the interest in such a tax.
Hmm…I wasn’t aware my parents were “dishonest residents”…I’d better go tell them to get their act together.
Now Danny, don’t put words in my mouth. I would love to see a consumption tax here in GA. I am merely saying that it is just not do-able at the moment.
Don’t get me involved in the class warfare department, because I think that’s a bunch of bull.
The state income tax is about half of the federal taxes and I would welcome the extra cash flow eagerly. Of course, I also live close enough to the border that a quick trip for shopping is not a big deal. You can bet your bottom dollar that a lot of others would join me in shopping in other states.
Not only what Demon says, but a lot of would-be tourists to the state will AVOID Georgia like the plague with those kinds of taxes.
Sen. Douglas,
Excellent answer on the auto situation. Goes to show why you are a Senator and I am not. (Yes folks, I can admit when I am wrong.)
I’ll tell you what, if you can resolve the situation to where Georgia Business is not affected by this change, I will support your efforts 110%. I sure as heck don’t want to keep giving the tax man my hard earned money whether I spend it or not. If it’s gonna go somewhere, I would rather it go to the Georgia tax man, however, if I keep more of my money by going to another state – my allegiances won’t win out.
What about smaller items or items that aren’t registered with the state? (Like computers.) How will Georgia regulate internet sales?
It’s not that I don’t have faith in the General Assembly, I just feel that there may be too many what ifs for us to a pass comprehensive state tax reform like this. I do want to say, however, that this is the best way to fix the illegal immigrant problem. (They will have to pay taxes when they purchase anything.)
One thing to think about – and I don’t want to put words into Sen. Douglas’ mouth – is that because of the lack of state taxes prices on hotels will go down only to be replaced by the new consumption tax. A consumption tax has not hurt Florida’s tourist business at all. To say it would affect tourism is as much a red herring as the class warfare tactic.
Sorry, but I gotta call it like I see it.
And another thing. (The dreaded triple post.)
We must all recognize that it takes some guts to be the first to put this out there, but it takes a set of ten pound steel huevos to get on here and hash it out with us. Agree or disagree – You have to give him that.
Much respect for the Senator from the 17th.
Demonbeck,
You’re right about the tourism aspect. Tennessee and Florida have both maintained a good tourist industry with their consumption tax.
And, you two (Demon and Jase) know this how? Are you economists? Have you performed any actual research to confirm this, or, are these statements you want everyone to accept as factual whether or not they may actually be factual?
No Bill, I am not an economist, but last I checked, Disney World is still open and doing quite well. You don’t see people turning away from Florida’s beaches in droves either.
I will ask a simple question:
If the amount of money the government raises is going to stay the same, and the poor/middle class will pay less taxes under the Fair Tax, then who is going to pay more to make up for that shortfall?
I’m not sure I should read a book recommended by people who don’t have an answer to that question when that’s pretty much the premise of the question.
Demonbeck,
Ah, another armchair observation to rely on for changing tax policy.
Tell me, does evolution exist in your world, or are you a Creationist only guy?
Chris..a very insightful question. I look forward to the answer as well.
Bill,
I am an evolutionist all the way.
It is not a matter of who will be paying more or less in taxes, but the fact that Georgians will be getting more of their paychecks back each pay period. When one chooses to consume, then one pays taxes. When one decides to save, taxes are not deducted.
This helps cut down on tax evasion costs and forces drug dealers, illegal immigrants and other tax evaders to start paying into the system as well. (An entirely new source of revenue that no one disagrees with!)
Just for a data point, I present Tennessee (and in particular Chattanooga) vs Catoosa (and Walker) counties of Georgia.
The state has a 7% sales tax rate – 6% on food. The city of Chattanooga also has a local 2.25% sales tax for a total sales tax of 9.25. There is also a state high-value-item sales tax. Any item sold for over $1600 ALSO gets a higher sales tax rate of 2.75% applied to the subsequent $1600. Everything above $3200 is charged at the 7% rate. That means the highest sales tax rate is 3200*9.25% plus 1600*2.75% for a total of $340 or 10.625%.
In comparison, Catoosa County has a sales tax rate of 7% with only 3% on food. If the state rate were to increase ‘only’ another 4% (which is too low as already discussed) then Catoosa County’s rate would exceed the worst value of Chattanooga – 11% vs 9.25%. A 1.75% discount is enough to encourage some Georgians in Walker and Catoosa counties to go to Chattanooga for their small item purchases – small meaning less than $1600 for an item. This would be balanced by a 1.25% Georgian advantage on food items (8.25 TN vs 7.0 GA).
Again, the increase needed to approximately replace the Georgia IIT would be 5.5%, bringing the Catoosa county rate to 12.5% (8.5% food), which gives a significant motivation to purchase small goods in Tennessee.
Kirk,
Great research. Nothing like hard facts to beat out “Neither Dollyworld, nor Disney World are closed yet with all those states’ increases…so it’ll werk jest fahn rite heah in Jawja…”
Demon/Jase: Would you folks care to back-up your claims with any kind of research? Or, are you guys like Mark Burkhalter who operates on his “gut” rather than what the facts might say otherwise?
Bill,
I can make it even blunter.
I pay a couple of thousand in state income taxes, and another couple of grand in sales taxes. If my local sales tax rate goes to 10% or more, I go a few miles north and spend my money in Chattanooga. The county loses $300, and the state loses $3700 (approximately), and Chattanooga + Tennessee gains about $3900.
I think it’s called penny wise and pound foolish.
Oh. If the legislature of Georgia passes a bill requiring me to pay money to Georgia when I shop in Tennessee because Georgia costs too much, I’ll do my best to replace the legislature come next election. And for at least the border counties I betcha it happens. If.
If Georgia were to try to pass that type of law (i.e., requiring money owned by Georgians to only be spent in Georgia), I predict a lawsuit against the State of Georgia based on unconstitutionality.
At one time, I would have stated emphatically that it would be the “Southeastern Legal Foundation” who would file that lawsuit.
BUT, ever since Shannon “Yes-I-will-pander-to-everything-Christian-because-that-is-really-what-those-louts-who-drew-up-our-Constitution-really-meant-to-do” Goessling has decided to turn it into the Southeastern Christian Legal Defense Foundation, they aren’t very reliable when it comes to defending violations of the U.S. Constitution…unless, as I imply, it has to do with Christianity being attacked.
Guess it’ll have to be the ACLU to file that lawsuit.
Bill,
The bill that Douglas is talking about introducing, I don’t know all the facts.
The FairTax, I only know what I’ve read in the book and heard Boortz say. I recommend you do the same…read the book. Check it out at your local library. That’s where I’ve gotten my info from.
Jase,
To be quite truthful, I know lots about the FairTrax, having studied it when Linder ran against Barr in 2002. At the time, I was in favor of it.
HOWEVER, from a practical standpoint today, there is no way I would support it now. The main reason being the absolute cluster-**** that is caused by nearly every domestic improvement plan being implemented by the bureaucracy in Washington, D.C.
Look at how much money has been buried in Homeland Security with much left to be desired in effectiveness. Look at No Child Left Behind, which, according to this AP report, has states all over the country skewing results out the yin-yang, including the stellar State of Texas.
And, then there’s the “prescription drug plan” debacle.
Jase, the system we have right now sucks, I’ll grant you. But, I’m not willing to trust this federal government and all these bureacrats to implement any better plan. In fact, I’ll bet they screw it up worse than the current plan.
Chris, I’ll answer your question, at least on the federal level. It is the belief that if we went to a nat’l sales tax corporations would no longer be paying income taxes nor would they pay the cost to manage their business around the various tax laws.
Because we all know that businesses are actually tax collectors rather than tax payers, the expense to bring a product to the shelf would theoretically be less if they weren’t paying the price of collecting. It is believed that the lower cost of production would initiate competition between companies and thus the price of a good would soon come down.
Each family would receive a “rebate check” every month to cover the cost of necessities, i.e. food. The amount would depend on some gov’t statistics based on your geographic area.
Based on this premise, a low income family would pay less tax because they they’re not buying high priced items that they can’t afford. They’re paying for necessities like food & shelter, while their extracurriculars would be subject to the tax. Those with higher incomes would continue to buy their regular goods and services because once the price competition begins, things will be less expensive in lieu of the cheaper overhead during production.
Also, people would keep their entire check. One more thing is that companies that moved overseas would be more inclined to come back to the US. From books that I’ve read, comparatively the US has some very high corporate tax rates.
With all that being said, I’m not convinced it would work. Just because Boortz writes a book saying it will isn’t enough to convince me. Just because Linder says it’s so doesn’t make it the gospel. Saxby Chambliss told me he wants to cut gov’t waste too. Also, I’ve heard but haven’t researched it, that there have been a other countries that have adapted the sales tax method of taxation. If that’s true, I’d like to see how their economies went.
Danny,
Did Saxby Chambliss tell you that just as a herd of pigs flew past the window?
Now that you mention it Bill… I wondered why I heard an oinking noise four stories in the air while reading his token response email. You may be onto something there. I guess it depends on how many subisidies a Moultrie hog farmer can get.
Demonbeck:
“We must all recognize that it takes some guts to be the first to put this out there, but it takes a set of ten pound steel huevos……..”
LMAO, next session you’ll understand if I wear baggy pants
Bill,
At least you and I agree that what we have now sucks.
I’d rather stick with the devil I know, Jase…
Bill Simon, I was probably over the top in that part (the law to pursue taxes that went out of state). On the other hand given some things I’ve seen, maybe not. But that’s the minor point.
Again, if the sales tax around here went over 10%, I’d do my shopping in Chattanooga. And I suspect i’d be a long way from alone. The loss of tax money for the county and state is bad enough. Worse, though, is the effect on businesses.
Swagging, I’d figure that half the sales in Fort Oglethorpe and Rossville would disappear. Maybe a third of those from Ringgold would do the same. I can’t think of any business that can withstand a 25% reduction in sales, much less a third or half. And the higher the sales tax differential the worse it gets. I’d be unsurprised to see similar results around Columbus and Valdosta (among other places).
It’s the unintended consequences that’ll hurt the most. Hopefully any plan to make these changes at least watches for the most obvious of the problems.
I just find it hilarious that a bunch of “free market conservatives” would justify their support of this scheme with a monthly welfare check doled out to everyone. No matter whether you’re rich or poor, you would be entitled to your monthly check.
… not “socialist” at all.
rrrrrr
Kirk, “being over the top” is not uncommon for this state’s legislature.
Boortz (www.boortz.com) is working on a major Fair Tax Rally tentatively scheduled for May 24th in Metro Atlanta. Venue announcement may come as early as today. No matter how one feels about the Fair Tax, this will provide an opportunity to express dissent against the current failed system.
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