The FairTax "Abolish the IRS" Lie
Mike Huckabee (R-Jesusland), leading huckster of the “FairTax” proposal, during his Super Tuesday speech:
I really do look forward to nailing the “going out of business” sign on the front door of the IRS.
To which I replied at another blog:
If the “FairTax” would abolish the IRS, then who is going to calculate and distribute its “prebate” provision?Since the “FairTax” exempts some nebulous entity called “tuition,” who other than the IRS is going to promulgate rules and regulations deciding what is and is not “tuition”?
Since the “FairTax” considers mortgage interest above the risk-free rate to be a “service” subject to the tax, who other than the IRS is going to determine exactly what that risk-free rate is over what periods and how it is to be applied?
Since the “FairTax” applies to sales of new homes but not to existing homes, who other than the IRS is going to set the rules for deciding what does and does constitute “new” or “existing”?
I could go on, but you get the idea.
They lie about their proposal being a 23% tax and not 30%. They lie about how the reality-based rate would have to be at least 44% and possibly as high as 82%. And they lie about abolishing the IRS.
It’s quite simple really: Keep tax rates low for all, and “fairness” will inevitably follow.
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I pay almost no attention to the Fair Tax unless you write about it precisely because of things like the "abolish the IRS" silliness. Some government agency or other is going to have to administer the tax. It may not be called the IRS, it may even have historical ties to the IRS, but it will still be doing what the IRS does.
Since the "FairTax" applies to sales of new homes but not to existing homes, who other than the IRS is going to set the rules for deciding what does and does constitute "new" or "existing"?
I used to work on Chicago's near south side in a revitalizing industrial neighborhood. Over the years, we used to watch building after building get torn down and rebuilt, except for one wall of the original building which was left standing and used in the new building so that it didn't count as new construction for tax purposes. Tax distortion at work.
Anyway, I still think the worst thing about the Fair Tax would be the inevitable transition period, during which we would be subject to both taxes…and which would never end.
I saw the "R-Jesusland" and almost spit out my coffee. You have to give a little warning next time.
Very funny. Well done.
To be fair to the fair tax, supporters advocate that the tax would be collected by the states. This may violate the appointments clause of the constitution, but could possibly be worked around. I think the point however, is that other taxing agencies (such as Customs) don't have the same reputation for annoying the taxpayer as the IRS does.
Looking at state sales taxes, the type of issues you raise don't seem to generate a need for excessive regulations. Many states exempt food from sales tax, but you don't see a lot of executive edicts on what food is. If there are legitmate issues, they can be decided by the courts and the legislature.
FWIW, HR 25 Title III, Sec. 301 (c) (2) (I can only hope I didn't butcher the nomenclature) replaces all instances of "IRS" with "Department of the Treasury."
302 (a). creates a Sales Tax Bureau within the Treasury that would ostensibly handle all matters with regards to the collection of the tax and the determination of rates and conditions.
This is coming from a layperson, so I reserve the right to be wrong/misled/ignorant on all counts.