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'Fair Tax' deserves a fair shake

Friday, June 19, 2009 | 10:15 a.m. CDT

I attended the "Fair Tax" rally in Columbia last weekend anticipating a right-wing fringe group advocating anti-government sentiments just shy of armed revolt. I expected anger, threats and podium-pounding, in tune with the wave of Obama-hating diatribes that recently crested on conservative talk radio. 

In actuality, the rally was anything but. There was plenty of frustration to go around for the residents who trekked to the Boone County Fairgrounds for the all-day event, but they’re hardly alone. As deficits continue to skyrocket and high unemployment continues to fester, people are thirsting for new ideas — and this one sounds halfway reasonable. 

Paying taxes brings to mind many ideas, few of them pleasant. One of the most irksome is that of individuals with the most money finding clever ways to pay the least. It’s hard not to get swept up in the simplicity of what the "Fair Tax" would do. Not to be confused with a flat tax, the "Fair Tax" would replace income tax with a national sales tax, or consumption tax, in effect abolishing the IRS and morphing April 15 into just another spring day. The more money you spend on goods and services, the more you pay in sales taxes. 

Though presenters at Saturday’s rally offered the usual crop of liberal jokes, the words “Obama” and “socialism” didn’t appear in the same sentence nearly as many times as I’d expected. Their diverse roster of speakers included Democrats, Libertarians and Independents, of whom nearly all noted the importance of reaching out across the aisle.

Most notably — or perhaps notoriously — was the appearance of Samuel Wurzelbacher, better known as Joe the Plumber, who took to the mic with a stump speech on community involvement.  

Joe being Joe couldn’t resist using some of his face time to plug torture techniques for terrorists (“Waterboarding is too tough on them? Come on, man!”), but at least he kept it short and for his efforts received several standing ovations. He might be a joke to the mainstream media, but he’s a hero in the heartland. More folks stood in his line for handshakes and photo-ops than for anyone else’s. 

During our interview, Joe claimed he was a "Fair Tax" advocate long before he became the centerpiece of the McCain campaign after asking Obama a tax question during election season. He’s “tired of partisan politics something fierce,” and he’s just doing his part to help out at the grassroots level. That is, when he’s not hawking his co-authored book, "Fighting For the American Dream." At least he promised not to run for office.

Wurzelbacher wasn’t the only recognizable name. Missouri Rep. Ed Emery, former Missouri Lt. Gov. Bill Phelps, Georgia State Rep. Tom Graves, and U.S. Rep. John Linder, R-Ga., all of whom spoke at the rally, gave the issue much-needed legitimacy. 

So far, those who have jumped on the "Fair Tax" bandwagon have been largely Republican, a party in desperate need of a good idea. But some Democrats in the region are on board as well. Chris Kelly was one of eight on the left to vote for House Joint Resolution 36, calling for a consumption tax, which passed the House in April before getting bogged down in the Senate. Having covered the state Capitol last semester and witnessed firsthand the degree of rancor between parties, I consider that bill’s passage a bipartisan achievement during a session many derided as “do-nothing” because of the dominance of the budget.

If the resolution ever becomes law, the Show-Me State could become the first to adopt a tax system based solely on spending. And if it actually works, you can bet that Congress will take a closer look. Nine other states do not levy income taxes, including Alaska, Texas, Nevada and Florida. None have adopted a sales tax in their place, instead balancing their budgets through higher property taxes, excise taxes or corporate franchise taxes.

Few would disagree that our current system is a convoluted mess, with 67 pages of exemptions and loopholes so complex and continuously changing that even H&R Block employees often need annual refresher courses. I’ve never been able to calculate my own taxes without assistance, and unless the system changes, I doubt that I ever will.

Some proponents speak of the "Fair Tax" as a panacea that will level the playing field so no one gets special treatment, as well as a vehicle to stimulate the economy by reigning in corporations that escape high taxes by setting up shop overseas. Monthly refunds would offset the losses suffered by low-income families.

Critics argue that the "Fair Tax" will not generate enough revenue to keep states afloat and will unfairly punish those who hover near or below the poverty level. Or it could send residents online or to other states to purchase goods, though I can’t picture driving to Illinois for groceries if gas prices keep climbing.

The only way to find out if a "Fair Tax" works is to try it. Now may not be the best time for an economic experiment, but when is it ever?

Brian Jarvis is a journalism graduate student at MU.

 


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Comments

Charles Carter June 21, 2009 | 10:35 p.m.

How about the people who have saved down through the years to build up some sort of nest egg or retirement account. They have already paid income tax on this money once. Why should they have to pay another heafty tax on it AGAIN when they spend it. The "fair" tax is UNFAIR to all retired people and to all people who have any savings in the bank.

(Report Comment)
John Schultz June 21, 2009 | 11:54 p.m.

By your logic, the existing sales tax (state, county, city) should not be collected if paid using post-tax (IRA or savings account) money. People who saved using pre-tax dollars, such as 401k or 403b programs, will not pay any income taxes on those funds until they make a withdrawal, and would pay no income tax under a national Fair Tax scenario. If I wanted to gift my children more than the current limit, $12K I think, taxes would be due even though I've already paid income tax on that money. And we all know about the estate tax if you dare make too much money and want to pass along the whole kit and kaboodle to your descendants.

The point I'm trying to make is that our existing tax structure is a mess and there will be winners or losers regardless of any changes that are made. I'm all for decreasing the individual tax burden people have to pay, however we get there, although I'm not particularly excited about the national Fair Tax since it does nothing to reduce the size of government.

(Report Comment)
Charles Carter June 23, 2009 | 3:21 p.m.

This talk about "fair tax" verses "income tax" is all just semantics. Most taxes in reality are income taxes of one sort or another. In order to spend money, most people have to make the money in the first place.
Your 401k and IRA arguement does not hold water. Most savings are NOT made with pre-tax dollars. They are made with after-tax dollars in the form of bank accounts, bank CD's, etc. The "fair tax" would be an extremely high double taxation on all this money - much more than the current sales tax is.
The fact is, the "fair tax" is simply a ruse whereby the wealthy will shift a HUGE portion of their taxes onto the poor and lower wage earners. The lower income people will be hurt significantly by being forced to pay a large portion of the taxes that the wealthy now pay.
In addition, how fair will the "fair tax" be to other low wage earners like old people on fixed incomes and kids with summer jobs (most of which don't even qualify for current income taxes because their wages are so low)?
The "fair tax" is simply a BAD idea for Missouri and for our country.

(Report Comment)
Josh Gilzow June 23, 2009 | 3:39 p.m.

Charles you must read up on the fair tax. Low wage earners are covered by the prebate so they end up not paying any taxes at all (which they are now paying sales tax anyway). Those that earn an income by illegal means will also now start to contributing to they system. How can these two things be a bad idea.

(Report Comment)
Marty Mathis April 25, 2010 | 9:31 p.m.

I like the idea of the Fairtax. Will the Fairtax make property taxes go up.

(Report Comment)

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