Talk:FairTax/Archive 6

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This is an archive of past discussions. Do not edit the contents of this page. If you wish to start a new discussion or revive an old one, please do so on the current talk page.

Contents 1 No criticism? 2 Scientology 3 Economic Effects 4 Revenue Neutral 5 Revenue Neutral Part II 6 Comments 7 Graphs in the main article 8 Criticism section 9 Templates 10 Distributive Effects 11 Abolition of IRS 12 Featured Article? 13 Removed some organizations 14 Revenue neutral question 15 2008 presidential election 16 NPOV concerns and criticism 17 Lead 18 Ames Straw Poll 19 Gales comments on AMT 20 Book cover 21 Sales Tax Not Progressive 22 re Effects on tax code comliance 23 Production cost, personal service, and time arbitrage credit 24 Economist article 25 Per Person Expenditures

No criticism?

why is the criticism of this radical tax shift SO minutely covered in the article, when it is NOT minute in the world of economics and politics?

This article is one long, very clear, very biased, yet intelligently argued, argument for the "fair tax". It is not an article discussing the argument for fair tax, and its counter arguments. it is, essentially, a partisan article.

This needs to be fixed. —Preceding unsigned comment added by 64.229.31.198 (talk) 06:07, 29 November 2007 (UTC)

There is criticism throughout the article. If there is criticism for a particular area that is missing and you have a reliable source for it, then please present it and we'll consider inclusion. Morphh ^(talk) 14:02, 29 November 2007 (UTC)

I agree as well. Although there is criticism listed throughout the article (less than I think there should be), there is not the ubiquitous "criticism" section which we find throughout the rest of wikipedia. I think it would be beneficial to include one, if only for ease of reading. 148.85.199.30 (talk) 09:16, 11 December 2007 (UTC)

This article reeks of POV. The criticism is minimal and the rest of the article is highly biased in favor of FairTax, treating it as if it is something that is obviously and universally better than other systems. This is in no way a balanced or reasonable article. --Adelesse (talk) 19:20, 23 December 2007 (UTC)

Scientology

The FairTax was not created by scientologists. Bartlett was wrong in his opinion piece. He confused the group Citizens for an Alternative Tax System with the group Americans For Fair Taxation They are not the same, and the FairTax was created with AFFT not CATS (which created a different NRST).--Wynler | Talk 13:49, 27 August 2007 (UTC) Oops forgot to sign.

[1] reference, from one of the architects of the FairTax. --Wynler | Talk 13:50, 27 August 2007 (UTC)

Yes, Bartlett had many statements that were just plain false. Government and the prebate are included in the major studies, prebate is not based on income, etc. We may want to add the "CoS" charege under the AFFT article, though I'm not sure it deserves the weight. Morphh ^(talk) 15:34, 27 August 2007 (UTC)

I've looked into this and it turns out that there is a Scientology connection after all. The basic idea behind FairTax seems to have been devised by the Scientology-linked Citizens for an Alternative Tax System (CATS) around 1990 and was subsequently adopted by the AFFT. Bartlett's mistake was to assume that the present FairTax was devised by CATS, which plainly it wasn't, but the underlying principle does seem to have been first proposed by CATS. -- ChrisO 10:56, 2 September 2007 (UTC)

AFFT did not adopt the NST by CATS and CATS did not devise the National Sales Tax. The national sales tax has been around for years (look at the political cartoon on the article from 1933). The people responsible for creating AFFT and the Fair Tax are Houston Businessmen Leo Linbek and Robert McNair. Neither one of these people are Scientologists. These men and their associates raised over $20 million for a study on finding an alternative to the federal income tax. That research was conducted by a coalition of market and academic experts from places such as MIT and Harvard, none of whom were associated in any way with Scientology. From that research came the FairTax. When the research for a new tax system was commissioned with the $20 million raised by Linbeck, McNair and their associates, they made a commitment to accept whatever findings the research developed, strongly suspecting that their efforts were going to lead to the endorsement of some sort of a flat tax. The market and academic researchers came forth with an idea for a national retail sales tax instead, and the FairTax was born. Their is not "adoption" of the CATS plan. The CATS plan is very different from the FairTax. Just because they both currently have the terms "National Sales Tax" does not tie them together in some "connection". Morphh ^(talk) 12:49, 02 September 2007 (UTC)

Statement by Leo Linbeck

The FairTax was developed many years ago, totally independently of any other proposal, group or movement. It is a product of more than $20 million of advanced economic research, as well as detailed conversations with citizens as to their preferences defining the best possible national tax system. Many groups and individuals have agitated to replace the deeply flawed income tax system, including, apparently, the Church of Scientology. As a founder of Americans For Fair Taxation, I can state categorically, however, that Scientology played no role in the founding, research or crafting of the legislation giving expression to the FairTax.

I have nothing against the Church of Scientology and don't quite understand why such a connection is "bad" in regard to tax reform if there was one, but there is no connection - just an untrue red herring. There is no connection between the organizations so the latest statement tries to connect them through the NST. This would assume that CATS devised the NST and that AFFT adopted their NST. Neither of which is true. The idea for a NST has been around for a while and their have been several sales tax bills in congress during this time period... why is the FairTax "linked"? Also, the fact that the research did not start with a NST and the NST plan AFFT did devise is different from the CATS plan.. I don't see how this makes any connection except that they both have plans for a NST, which is an extremely weak association. In addition, the statement on CATS doesn't even really make sense as their plan would not abolish the IRS (since it only replaces the income tax), the IRS would still exist to administer all the other income taxes. The CATS plan replaces about half the income taxes that the FairTax replaces (which replaces all of them). Morphh ^(talk) 12:49, 02 September 2007 (UTC)

I reworded the prior changes to address my concerns but keep main points. Morphh ^(talk) 3:04, 03 September 2007 (UTC)

Looking at the CATS NST proposal, it occurred to me that their plan is very similar to that analyzed by the President's tax panel in 2005 (minus corporate income taxes). It's much closer than the FairTax anyway... Morphh ^(talk) 13:50, 03 September 2007 (UTC)

Economic Effects

I have never been so disappointed in Wikipedia or its peer review process. To award "featured article" status to this piece is to overlook, and implicitly sanction, its many biases, as well as its intellectual deficiencies (for one, as others have pointed out, there are far too many bold claims with citations to op-ed pieces). I made a few small corrections in the introductory section in order to try to introduce a little more balance in the language of the article. (E.g.: the tax proposals defenders included "many mainstream economists and tax experts"--alert, weasel words!--whereas the opponents were nothing more than "critics.")

I would very much like to point to one salient deficiency that I was not able to correct, short of deleting an entire passage. The problem is this: at the end of the second paragraph, broad arguments in favor of consumption taxes in general are introduced, while the rebuttal is only addressed to certain operational limitations in collecting this particular tax. Of course the argument between consumption and income taxes is broad and far-ranging, and in not recognizing the breadth of this argument, particularly from the point of view of the critics of consumption taxes, this article gives short shrift to the intellectual weight of the opponents of this tax.

Finally I would like to see a heading on controversy over the very name of this tax, which was obviously a PR move from the start. This may be what the tax is called from the point of view of its supporters, but its hardly a title worthy of entering into serious intellectual debate. Good grief indeed.Right honorable dr. zombie (talk) 20:58, 28 November 2007 (UTC)

The statement of "many mainstream economists and tax experts" is a direct statement from Money Magazine, so it is not a weasel word. Nothing more than "critics"? What is the definition of "critic"? Seems you take this as some derogatory term or something. Keep in mind that this is only a summary of the article. If you have sources for more general opponent arguments for a sales tax that can easily be seen as applying to the FairTax, the I have no problem with including them in the appropriate section. Some of the changes are inaccurate, such as saying it "would" make it highly regressive as such is depending on income, spending, and timeline. So it "could" make it regressive on income, which in itself is a distortion and false use of the term regressive since income is not the tax base but anyway... As far as the name, it is the title of the bill but I'd be fine with making mention of the issue in the second sentence of the legislative section, where we discuss the name. "Fair" is certainly a subjective term. Morphh ^(talk) 14:20, 29 November 2007 (UTC)

Good grief! I hate to keep sounding like a broken record, but there are still WAY too many bogus cites in this article -- all of which conveniently support the FairTax. But when anyone says there should be more balance, the lead editor of this article says that the critic needs to come up with legitimate citations to support the criticism. It seems that what constitutes a legitimate citation lies in the eye of the beholder (or the editor).

In particular, I'm looking at the citations to the alleged studies about all the great economic effects of the FairTax (see, e.g., footnotes 41 and 43), and it turns out there aren't any citations to the actual studies, but rather citations to STATEMENTS made by FairTax proponents, including John Linder, the primary sponsor of the FairTax legislation, and Christopher Trowell (who the hell is he?) Those are NOT legitimate citations, because the claims being made cannot be examined, challenged or verified because there are no citations to the actual studies themselves, just people's CLAIMS or OPINIONS as to what the studies say. And the people making the claims or giving their opinions just happen to be proponents of the FairTax.

Thus, it seems to me that if you need citations for criticism of the FairTax, just cite some of the negative reviews of The FairTax Book on Amazon.com. They have as much legitimacy as some of the citations contained in the article that allegedly support the FairTax.

I am not merely trying to beat a dead horse. I am constantly doing research on the FairTax and try to use Wikipedia to understand some of the issues and examine some of the claims (made by both sides.) Presumably, an enclycopedia would contain relevant, legitimate citations from which one could use as a basis for researching on issue. Sadly, time and again I find that the citations in the FairTax article are beyond useless.

Sorry for the rant. I know you put in a lot of time and effort into this, but I guess some folks out there don't get quite as hung up on footnotes and citations as I do.

P.S. I have not tried to fix the section on Economic Effects because I know you are fair enough to take care of it and would probably not agree with my propose revisions.

64.94.224.248 22:52, 16 July 2007 (UTC)GeorgiaTex

I'll see what I can dig up on the statistics. The sources we have are fine for the content for Wikipedia secondary sources, but we can always try to find more sources or direct statements for the content (I'd like to get them as well). If you have something from the Committee on Ways and Means (like Chris Trowell) that criticizes the FairTax, then that would be fine for sources. I'm sorry but Amazon book reviews won't cut it (I'm sure this was in jest). :-) Morphh ^(talk) 2:20, 17 July 2007 (UTC)

Morph -- I tried to link to a Bruce Bartlett article that the Church of Scientology is pushing the FairTax. Surely Bruce Bartlett is more credible than Chris Trowell or some of those anti-tax nutso websites that are currently being cited in the article. If the Scientologists are supporting the FairTax, I think that's an important point to show its broad support. I've got a legitimate citation. So far, I haven't seen any citations to articles that claim the Scientologist are NOT supporting the FairTax. So, how 'bout it?

64.94.224.248 15:50, 17 July 2007 (UTC)GeorgiaTex

I have no problem with the citation. The Washington Times is legitimate and Bruce Bartlett is fine. I removed it for undue weight and its placement was deceptive. It certainly wasn't anything that would go into the lead. The placement gave the impression that the FairTax movement was led by the Church of Scientology, which it is not. The statement said "of a few radicals, led by the "church" of Scientology", which I believe he was probably referring to Jack Trotter, Bob McNair, and Leo Linbeck, though I have no idea if they are with the Church. The idea that the FairTax was led by the CoS was refuted by Linder (also published in the Washington Times). If we can confirm who Barlett was talking about, we could add it to the AFFT article that discusses these businessmen if you'd like. Morphh ^(talk) 16:25, 17 July 2007 (UTC)

Revenue Neutral

I revised this section for a number of reasons.

First, I put in tax-inclusive and tax-exclusive rates to make the various studies easier to understand. (In my opinion, using only tax-inclusive rates is artificially confusing.)

Second, I reorganized the section to put the studies that supported the FairTax first, then the studies that opposed the FairTax second. I think that makes more sense and is easier to follow.

Third, I got rid of some of the alleged studies that really didn't exist. Such as the Jorgenson study, the Poterba study and the earlier Kotlikoff study. I don't think AFFT even refers to these "studies" anymore and the purported authors of those studies have all renounced them. In any event, there are far more recent, detailed, published studies that are discussed in the article, so those older, so-called studies really aren't relevant. (I left in some other "studies" that probably should have been deleted for the same reason, but I didn't want to appear to be hacking away too much.)

Fourth, I tried to high-light some key parts of the main studies. For example, the Beacon Hill study only looked at tax year 2007, and assumed that the deficit for that year would be $476 billion. I think those points are pretty relevant. Merely saying that a 23.8% tax-inclusive rate would be "revenue neutral" without explaining a bit more is misleading. Similarly, I pointed out that Gale's study took a ten-year projection. In order to be fair, I put in what Gale's study showed would happen with 10% tax evasion, but also pointed out that Gale's study did not take into consideration either economic growth or decline under the FairTax.

Fifth, I eliminated a lot of the criticisms of the studies, that was really POV and really didn't add anything. I think its better to just say "proponents say X" and "opponents say Y" without going on and on.

Anyway, hope this helps, although I'm sure Morph is going to throw a fit.

Regards, GeorgiaTex

eliminated some of thecorrected some POV editorializing about the studies —Preceding unsigned comment added by GeorgiaTex (talk • contribs)

Funny, I knew it was you that made the edits before I even read your name. I'm reading through it and this talk and I think you may have some good suggestions in there, of course I do have some objections too. I was considering breaking this section off into its own article because I think this area needs to be given a lot more attention. Then this article would become a summary which would cover the main points. I also want to reread Gale's study.. Does Gale include the deficit? If so, then this would not be revenue neutral. I find it odd to bring up the deficit when we're discussing brining in the same amount unless we explicitly state that covering the deficit would be a tax increase. I also find it odd that Gale's rate increases as the years increase. Since it would be revenue neutral and consumption is based on GDP, which out paces income, how could a revenue neutral solution (that is taking in the same amount as the system it is replacing) go up with time without a likewise increase in income tax rates? Do you have any sources that the authors of those other studies have renounced them. I'd agree that perhaps they're not studies but an early analysis of the basic numbers to get an estimate of the rate based on the tax base. However, to say otherwise or to say they renounced them without referencing a reliable source would be original research, which Wikipedia doesn't allow. Stay tuned... Morphh ^(talk) 1:44, 01 June 2007 (UTC)

Morph --

Of course it's me. I didn't want you to think it was some hack messing with your article!

The rate increases in the Gale analysis over time because the Bush tax cuts are expected to expire over time. Hence the projected deficit would decline (under our current tax system) because there would be increased future tax revenues as the tax cuts expire. Gale tried to make his analysis revenue neutral, in that it would track the projected tax receipts. That's why the FairTax rate would need to go up over time. Eventually, I believe the deficit gets eliminated, but you need the higher rate.

The Beacon Hill study, on the other hand, is a one-year study (2007) in which the projected deficit was higher than in any time in history ($473 billion). The actual deficit, of course, is much lower -- something lik $200 billion. It seems to me to be misleading to imply that the Beacon Hill study showed the FairTax to be close to revenue-neutral without pointing out that it would leave the federal government with a larger deficit that it had ever had in history (which, of course, could only be reduced by higher tax rates.)

Regarding the earlier "studies" of Jorgenson, Poterba and Kotlikoff. In the first place, if you simply email the purported authors (which I have done), they will tell you either that they did not conduct studies of the FairTax rate or, alternatively, that they did "back-of-the-envelope" calculations that were never intended as serious studies. If contating the purported authors is "original research" that is prohibited by Wikipedia, I don't know what to say.

The article refers the these "studies" but do not cite them (because they don't exist). Instead, it cites some footnote somewhere that supposedly references these studies, but again, doesn't cite the studies themselves. If the studies themselves are not available to be cited, I don' think they should be referenced. Maybe there's a way to finess this by saying something to the effect that:

"AFFT has alleged that studies done in the 1990s by various economists supported the notion that the 23/30 rate would be revenue-neutral. However, none of these studies were ever made public. In 2006, it commissioned a study from Beacon Hill Institute which did publish a study . . ."

Something like that.

For that matter, I don't think the ITEP study was a real study of the tax rate, so that could be deleted as well. And the President's Tax Panel apparently did not release it's methodology, so that could be pointed out (but I think the article goes to far in criticizing the Tax Panel's conclusions.) For what it's worth, I assume that since the FairTax is getting some more publicity during the presidential debates, there might be some more legitimate studies done in the future that will eventually make their way into future versions of the article.

Regards, GeorgiaTex

If you have actually contacted the authors of the studies, I'd be interested in receiving a copy of the email (or you could just paste it here). I was under the impression that these were actual studies, but if this is not the case, it would definitely affect the article in significant ways. -- Cielomobile ^{talk / contribs} 20:15, 1 June 2007 (UTC)

Unfortunately, I am not at liberty to forward or paste the emails of Jorgenson or Poterba. Here is what Kotlikoff said in an email to me some time ago regarding the earlier studies of the FairTax.

Early on, Jorgenson was a very strong support of the FairTax and its rate. Poterba seems to have endorsed the rate. But that was a while ago and it's not clear if the 23 percent rate work based on nominal or real revenue neutrality. For my part, I did an early, highly stylized simulation study of the FairTax and determined a real revenue neutral rate, but I never considered this a basis for defending a 23 percent rate. The model I used is too stylized for that purpose.

He went on to endorse the Beacon Hill study that was done last year. The bottom line is the Gale (2005) study and the Beacon Hill (2006) studies are the only detailed studies out there of the FairTax. —Preceding unsigned comment added by 64.94.224.248 (talk)

That changes a lot; thanks for shedding light on this. Morphh, we should make the appropriate changes, but I want to discuss the impact of this before making any myself.

By the way, Georgia, please don't forget to sign your posts with the four tildes (~~~~) to automatically produce your signature and a timestamp. It makes it easier for others to identify who is writing what. Thanks. -- Cielomobile ^{talk / contribs} 02:52, 2 June 2007 (UTC)

We can not use any of this unless it is published in a reliable source stating such. To GeorgiaTex's comments, I contacted AFFT and ask them about the authors of the studies renouncing the results, which they refuted and provided me with the studies done. They did say that Jorgenson thought they misrepresented his research (but I think we're talking about the embedded tax number and not the rate). In most cases the studies are not small, 18 pages, 32 pages, 33 pages, 61 pages, 1 page. I'd agree though that these were working studies / analysis (and in some cases back-of-the-envelope calculations) to build a foundation and methodology for calculating the rate. This was a big change to the article and I need time to work on it as there were several issues (FA and personal). I think there are some good thoughts in here so I've copied the changes to my sandbox to work on it and I'll post it to the talk for review. For the time, I reverted it back to the last version. I'm doing some more research on the Gale study. Oh, Beacon Hill used 473 billion as that was the deficit at the time they did the calculation. If you recall, Bush cut the deficit a lot faster then expected. When they released the deficit numbers, it was half what was expected due to the economic growth. This is not misleading of the Beacon Hill Institute - they're only trying to calculate what the current system would take in and what deficit it would have. Also keep in mind that the GDP and growth numbers they used were those that would have created a deficit of 473 billion. Since economic growth would boost FairTax revenue (more so then the income tax since GDP out-paces income), recalculation of the Beacon Hill study using the latest figures would likely show 200 billion or less of a deficit. You're trying to use old numbers with new numbers... Seems like the Gale study is the one that needs a preclusion of assuming all Bush tax cuts repealed and assuming a growing deficit (which neither party seems to support), assuming economic growth would decrease. Anyway... I'm on a bit of a wikibreak - kidney stones, just had a lithotripsy. Morphh ^(talk) 3:48, 03 June 2007 (UTC)

No, Morphh, you do not need reliable sources to question the validity of other sources in the first place. AFFT will of course defend the studies (they're about the most biased source you can get), but I think the authors of the studies in the first place are better to ask. I've emailed Kotlikoff and now await a response from him. -- Cielomobile ^{talk / contribs} 18:35, 3 June 2007 (UTC)

We can question it... but when it comes to rewriting the article I don't think we can remove published information based on non-published information (such as an e-mail exchange). I think that would fall under original research as "unpublished analysis". What we could do is if said economist disagrees with a published statement made in their name, ask them if they have anything published anywhere that expresses their true feeling on the rate. It's a fuzzy line there so I'll have to look into this more. But like GeorgiaTex said, these are old and minor studies. Morphh ^(talk) 0:41, 04 June 2007 (UTC)

Actually, Kotlikoff responded to me just like that, writing: "I did write this, but I've also done a very detailed study with four other economists showing that a rate just above 23.0 percent works. It's posted at (link to Beacon Hill study)." Hence, I think that the Beacon Hill study should be used in favor of Kotlikoff's previous work. It does seem that the Beacon Hill and Gale studies are the only truly legitimate ones, but I'll email Jorgenson and Poterba too. -- Cielomobile ^{talk / contribs} 17:51, 4 June 2007 (UTC)

Cielomobile -- I would suggest you email Jorgenson and Poterba as well. If you go through Jorgenson's published papers on his website, you will find one or two critizing consumption taxes in general as (a) requiring a very high rate, and (b) being regressive. But I did not find one specifically addressing the FairTax. Poterba, as you might know, was on the President's Tax Reform Commission, so he might be able to provide some insight as to how the Commission came up with its calculations.

Morph -- While you go through Gale's analysis, try to figure out what it's results were so different from the Beacon Hill study. It's not at all clear, but it looks to me that the Beacon Hill study included the taxation of federal government spending as a source of tax revenue, while Gale had excluded it since he had concluded that the increased revenue would be cancelled out by the increased obligations. But maybe I've misinterpreted that.

Can't find the damn tilde sign. (I've got a weird computer with Thai characters.) --GeorgiaTex. June 3.

My sympathies on the kidney stone. Had one last year, but it came out by itself (thank god!).

By the way, I think Morph has done a great job on this article, even though he and I disagree endlessly on the FairTax. But i'm glad that Cielomobile seems to be keeping him honest.

Hey.. I'm honest :-p GeorgiaTex, haven't made it down your way yet. Still would like to get together for lunch... if you're ever up this way let me know. I'm not sure how Gale handled the Fed. I think the difference might have had more to do with local and state. The Beacon Hill study built upon the Gale methodology but Beacon Hill did state that Gale and the Tax Panel "arrived at a higher tax rate because they did not estimate the Fairtax rate, but instead estimated a sales tax of their own design which had a substantially narrower base." Morphh ^(talk) 0:41, 04 June 2007 (UTC)

Morph -- What state do you live in again? I do travel for work from time to time and would love to get together.

Regarding your comment about published versus unpublished work. As I understand it, none of the earlier work was ever published, which is why it should not be used in the article. (I still question whether the studies really existed. From what I saw, Poterba's "study" was a one-page letter based on AFFT's assumptions. Kotlikoff said that his was too stylistic to be used to support the 23% rate (though, of course, he later endorsed the Beacon Hill study). And Jorgenson has certainly made it clear that he does not endorse the FairTax.

Also, I don't know if you saw the mini-debate between Kotlikoff and Beacon Hill economists on the one hand, and Gale and someone else on the other hand sponsered by the American Enterprise Institute. (It was, and perhaps still is, available on their website.) Gale ademately states that he did not narrow the FairTax base and that Kotlikoff and Beacon Hill are way off-base in making that charge. So, it's sort of a he-said vs. she-said sort of thing at this point. Which is why I think it's best to refer to each of the studies without a lot of further references to criticism of each study.

68.211.162.77 03:07, 4 June 2007 (UTC)GeorgiaTax

I live in NC. We do not discuss the details of the studies only what was published, which was they reported such and such a rate. I did see the debate - they didn't give enough time. A couple times I wanted to jump through the computer as some of the information stated was simply incorrect. I'll have to watch it again.. it was a bit ago and I forgot about it. I don't take issue so much with the Gale study. I really have a problem with the Tax Panel study and that needs criticism. Morphh ^(talk) 4:13, 04 June 2007 (UTC)

Morph --

You are doing a good job of trying to be objective, but you are inadvertantly letting your POV come through in the article. For example, you say you have a problem with the Tax Panel study and therefore want to put in criticism of it in the article (even though that criticism is itself suspect). In the Tax Panel study, they explicitly stated that they did NOT narrow the tax base (other than excluding federal government spending and making a reasonable assumption for tax avoidance). Yet the article quoted Beacon Hill economists (who were PAID by AFFT, which was NOT disclosed in the article) as claiming the Tax Panel wrongly narrowed the tax base.

Similarly, I have a problem with the Beacon Hill study which, after all, was paid for by AFFT so it certainly cannot be considered an objective study and they clearly did everything they could to make their conclusions sound favorable to t. Yet the article makes the Tax Panel look like a bunch of hired lobbyist hacks and the Beacon Hill group a source of clear reasoning. (OK, I'm exagerating.)

Anyway, I know there is know way of making this section perfect and totally free from bias, but I'm sure you will do the best you can. 63.166.114.11 13:38, 4 June 2007 (UTC)GeorgiaTex

It is more than just a matter of narrowing the tax base to exclude the Fed (which is 18% of the consumption tax base). They created their own hybrid plan that kept payroll taxes, which is almost half of the current tax base (the regressive half, which more then 75% of Americans pay more of). We'll just have to disagree on who is more trustworthy - Treasury Department (IRS employees) that will not publish the economists, their methodology, or numbers vs. the university setting where the economists, methodology, numbers, and analysis is published for all to see and criticize. Also note that several tax panel members (including the chairman), were quickly hired as tax lobbyists with million dollar salaries - no conflict of interest there.[2] It's always a chicken and the egg thing with research. No one will take it seriously until you have some detailed research, which generally only comes about after those interested in it pay for it or on the other side opponents pay for it. Then the other side switches from - they don't have research to they "paid" for the research - questioning the integrity of researchers. You can't win. Anyway, the tax panel study is vastly different from the FairTax legislation and that needs to be stated. Non-POV is to present both sides, not exclude. Morphh ^(talk) 14:11, 04 June 2007 (UTC)

Why am I not surprised that members of a Bush-appointed team would go on to lobby for interests they were supposed to be examining/simplifying? Pretty par for the course. However, look at what you just wrote above. You said its standard operating procedure for critics to question the integrity of researchers. Then you go and question the integrity of the Tax Panel (since some of them went on to be lobbyests) without pointing out that the critics of the Tax Panel have their own agenda. (The article cites an op-ed piece by Leo Linbeck, for crying out loud. It also cites Karen Walby, director of research of AFFT. Good grief. I know they are nice people, but how in the world can they be cited as legitimate critics of those who criticize the FairTax.)

Also, this section of article has a statement regarding the relative size of the tax base (which is in dispute by the way) that doesn't seem to belong in this section. There are also factual errors re the percentage differences between the relative size of the tax bases (pull out your calculator).

In any event, as I understand it, you are working on this section in your sandbox, so I'm sure you will clean it it.

64.94.224.248 16:29, 4 June 2007 (UTC)GeorgiaTex

Actually, I just recalled something about the Tax Panel. It was appointed by the President for the sole purpose of reforming the individual income tax. It was not charged with reforming the corporate tax, social security tax or medicare tax. So the fact that some members of the panel went to work for corporations is pretty irrelevant, since the Tax Panel was not addressing corporate tax issues. It's disingenuous to suggest that they killed reforming INDIVIDUAL income taxes so they could make millions lobbying for CORPORATE tax breaks.

Moreover, when the Tax Panel was first announced, Boortz repeatedly urged his listeners to email the Tax Panel demanding that it consider the FairTax. The Tax Panel responded by considering the FairTax as a replacement for the individual income tax and concluding that the rate would need to be too high and the impact would be too regressive. You might not like the result, and you might even argue with their methology, but to imply that the somehow "changed" the FairTax as some sort of sneaky fashion to "prove" that it wouldn't work is just wrong. They could only consider the FairTax in the context of replacing individual income taxes. If they had ignored the FairTax altogether, FairTaxers would have screamed bloody murder. When they considered a limited scope of the FairTax as a possible replacement of the individual income tax (which was all they were allowed to do) and rejected it, FairTaxer's scream bloody murder. Something tells me that FairTaxers will scream bloody murder no matter who reviews their plan unless the reviewer regurgitates exactly what FairTaxers already believe.

I only mentioned it as you were bringing up the aspect of paid research, which implies conflict of interest and questions the integrity of the researchers. I was just flipping the coin. Their is no FairTax plan that addresses individual income taxes only. Of course they rejected it, so would just about every FairTax supporter. What the heck were they doing wasting time evaluating a imaginary plan that has zero support? If your not evaluating the FairTax, don't pass it off as the FairTax. This is particularly important to the aspect of tax burden distribution as they removed the most beneficial aspects of the plan. Now you have all these reports that say the FairTax would have this effect and that effect based on the tax panel study (which was dramatically different in what they analyzed). As far as their lobbying, any support of the FairTax model is promotion of the entire plan, which includes corporate taxes (since no other plan exists). The FairTax pretty much kills lobbying (debatable I know...). So yes - I think this was a major conflict of interest in regard to the FairTax but not to their specific task on the panel. Did you read the mid-term tax panel report? They trashed the current system - It was titled "America needs a new tax system". Then they turned around and suggested tweaking this and that... hmmm what happened during that time in between.. I wonder. Consider what they suggested - a 25% inclusive tax for income taxes - probably 50% inclusive when you add in the other taxation, which would make a 100% exclusive tax on all consumption. That is just completely insane and it is no wonder that they won't release their methodology. Kotlikoff is having to file through the Freedom of Information Act to try and get it released. Our government - rediculous... If we are taxed at such a level that we're paying close to 50% of GDP federally (not including state and local), then we clearly have an issue with tax visibility. While I certainly do think we pay more taxes then people see, we're not anywhere close to this. Anyway - I'm ranting. Deep breaths.. serenity now.. serenity now.. Did I mention that I have high blood pressure? haha Morphh ^(talk) 20:54, 04 June 2007 (UTC)

Actually, I would like to see a copy of the mid-term Tax Panel report, just out of curiosity. If you could email me or forward me a cite, I would appreciate it. I would also like to learn the results of Kotlikoff's FOIA request. I cannot imagine what the big secret would be. (Of course, this is the same administration that would not release even the NAMES of the participants of the closed door meetings on energy policy early in the adminstration. So, I suppose, they might be concerned about setting a precedent by disclosing too much to the public. Ha!)

Finally, enough about this FairTax stuff. Tell me about the kidney stone removal. Was it as terrible as one would imagine?

Regards, GeorgiaTex 64.94.224.248 00:05, 5 June 2007 (UTC)

Kidney stone stuff is painful and still ongoing. I've had it block the kidney a couple times and that will put you on the floor in a fetal position. The stone was the size of a marble and they broke it up with the lithotripsy. Lithotripsy was ok as they drug you up pretty good during the procedure but I was sore for several days afterward. Doing better now and trying to catch up on work after being out for a week. Also moving into a new home, so my Wikipedia time will be limited for a couple weeks. America Needs a Better Tax System, first paragraph — "For millions of Americans, the annual rite of filing taxes has become a headache of burdensome record-keeping, lengthy instructions, and complicated schedules, worksheets, and forms – often requiring multiple computations that are neither logical nor intuitive. Not only is our tax system maddeningly complex, it penalizes work, discourages saving and investment, and hinders the competitiveness of American businesses. The tax code is riddled with tax provisions that treat similarly situated taxpayers differently and create perceptions of unfairness." You read the report and say to yourself.. "Are these they same people that released the final report recommendation?" My bias view is: No - they became lobbyist puppets. Even if it wasn't the FairTax recommended, but something like you prefer.. that would at least have been respectable. The final report was a joke and thus it sits on a shelf collecting dust. Point to the status-quo. But that's just my personal view - I could be completely wrong. Morphh ^(talk) 14:16, 05 June 2007 (UTC)

Morph -- Thanks for the link. Upon a quick perusal of the mid-term report, it is clear that the President imposed certain requirements on any tax reform. Besides reducing complexity and increasing savings (each of which even I believe the FairTax would achieve), the recommendations were required to maintain progressivity and encourage home ownership and charitable giving. Without rehashing whether those are worthwhile goals or our disputes about whether the FairTax would further those goals, they could have constrained the Tax Panel's ability to make more dramatic recommendations than they did. —Preceding unsigned comment added by GeorgiaTex (talk • contribs)

I believe I understand why the rate increases each year under Gale's model and provides a larger average for the decade then for today. I was banging my head trying to figure out why such would occur as such a change would require a tax increase under the current system since the economic models are static. With GDP outpacing income, even under a static model the FairTax rate should have fallen every year. Reading through the study.. it clicked - it is the AMT pulling in the middle class and providing a steady tax increase throughout the next decade (to the tune of $3 trillion). The FairTax has to account for this under his study by also increasing each year. Morphh ^(talk) 1:23, 07 June 2007 (UTC)

My sandbox progress - see below

Revenue Neutral Part II

Main article: Revenue neutrality of the FairTax A key question surrounding the FairTax rate is the ability to be revenue-neutral; that is, whether it would result in an increase or reduction in overall federal tax revenues.[1] Economists, advisory groups, and political advocacy groups disagree about the tax rate required for the FairTax to be truly revenue-neutral. Different researchers use different time-frames and methodologies that make direct comparison among estimates difficult. The choice between static or dynamic scoring further complicates any estimate of revenue-neutral rates,[2] with the rates presented below based on a static scoring analysis. The primary rate presented adheres to the legislative framework of the FairTax bill in rate presentation, which is calculated as a percentage of total spending, sometimes called a tax-inclusive rate. The rate presentation of a traditional sales tax is also included and referred to as the tax-exclusive rate (see Presentation of tax rate). A leading economist supporting the FairTax is Dr. Laurence Kotlikoff of Boston University. A detailed 2006 study published in Tax Notes by Beacon Hill Institute at Suffolk University and Dr. Kotlikoff concluded the FairTax would be revenue neutral for the tax year 2007 at a tax-inclusive rate 23.82% (31.27% tax-exclusive).[3] However, this study assumed full taxpayer compliance with the FairTax. In addition, the Argus Group and Arduin, Laffer & Moore Econometrics each published an analysis that defended the 23% rate.[4][5][6] While proponents of the FairTax concede that the above studies did not explicitly account for tax evasion, they claim that the studies did not altogether ignore tax evasion under the FairTax. These studies implicitly incorporated some degree of tax evasion in their calculations simply by using National Income and Product Account based figures that presumably understate total household consumption.[3] Moreover, these studies did not account for the expected capital gains that would result from a reduction in the real nominal value of U.S. government debt and the increased economic growth that economists believe would occur.[7][3] In contrast to the above studies, a leading economist opposing the FairTax, William Gale of the Brookings Institution, published a detailed 2005 study in Tax Notes that estimated a rate of 28.2% (39.3% tax-exclusive) for 2007 assuming full taxpayer compliance and an average rate of 31% (44% tax-exclusive) from 2006–2015 (an increase that accounts for the additional $3 trillion in revenue collected through the AMT impacting the middle class over the 10 year period).[8][9][10] The study also concluded that if the tax base were eroded by 10% due to tax evasion, tax avoidance, and/or legislative adjustments, the average rate would be 34% (53% tax-exclusive) for the 10 year period. The study did not take into consideration the increase in economic activity that Gale expects would result from the imposition of the FairTax. The President's Advisory Panel for Federal Tax Reform performed an analysis to replace the personal income tax (excluding payroll taxes) with a retail sales tax and found the rate to be 25% (34% tax-exclusive) for 2006.[11] The rate would need by be substantially higher to replace the additional taxes replaced by the FairTax. In determining the rate, the panel assumed that there would be a tax-evasion rate of at least 10% and that revenue generated from taxing federal spending would be canceled out by increased government expenditures required to pay such taxes.[11] FairTax proponents, including the Beacon Hill Institute and Dr. Kotlikoff, have criticized the President's Advisory Panel's study as having altered the terms of the FairTax and using unsound methodology.[3][12]

Ok, I'm still tweaking it but I wanted to put this on the talk page so everyone could have a look. It maintains most of the strucutre and changes that GeorgiaTex suggested. I cleaned it up, tightend the prose, applied MoS, clarified, and reduced some POV points. I would also suggest that if we make this change, we reorder the article to put "Presentation of tax rate" above "Revenue neutrality" since this section now has a great deal of inclusive / exclusive lingo. Morphh ^(talk) 13:50, 07 June 2007 (UTC)

Morph -- Much better. Here is my only suggestion it to modify one of the sentances.

Various analysts make different assumptions or use different time-frames and methodologies that result in dramatically different tax rates and make direct comparison among the studies extremely difficult.

Something like that.

GeorgiaTex64.94.224.248 14:03, 8 June 2007 (UTC)

Sounds pretty good - though I'd probably take out the words "dramatically" and "extremely" since these seem to be subjective terms that I'm not sure we can support (from a validity standpoint). I agree with it though and I'll give it some thought. Might reword it slightly to reduce the number of "or" / "and" conjunctions. Thanks Morphh ^(talk) 21:52, 08 June 2007 (UTC)

That looks great, Morphh. I would also take Georgia's suggestion into consideration, and I noticed a little awkward phrasing (which I will correct if it makes its way into the article once you are finished), but other than that, well done. -- Cielomobile ^{talk / contribs} 23:38, 8 June 2007 (UTC)

Done - Added it to the article. Morphh ^(talk) 1:37, 10 June 2007 (UTC)

One word or phrase I see missing here is "because...". Proponents say this because...? Opponents say such and such because...?

Also, as I mentioned earlier, various studies tend to leave things out -- "virtually all studies ignored one factor or another..."... (not to mention the disastrous Treasury study!) Brian Pearson 00:06, 14 August 2007 (UTC)

Comments

The graphs in this article all seem to show the surprising result that everyone pays less under the FairTax. But it references a subsection in which two graphs are shown - one as in the main article, and one in which middle class people pay about 25% more taxes than before. How is that? I am very skeptical of a tax reform article that says everyone gets to pay less.204.186.148.18 18:12, 27 March 2007 (UTC)

The tax base is much larger under the FairTax than the current income tax system, so marginal tax rates can be lower. The one that shows an increase on the middle class is not a chart of the FairTax but of a hybrid national sales tax that keeps payroll taxes. The plan is very different but is often used when discussing the FairTax and is often used as criticism for the FairTax plan. Morphh ^(talk) 18:28, 27 March 2007 (UTC)

I went through the archives, and I still don't think anyone has addressed the fact that all of the FairTax articles are void of real criticism. It's like the crap you see on late-night TV. If there really was a pill to help you lose 30 pounds in 30 days, don't you think everyone would know about it and that it would push competitors out of the market? In the same vein, if FairTax really is without flaws and such a perfection alternate taxation system, wouldn't more people know about it and read about it in the press and hear about it on TV? I myself only heard of it today while browsing wikipedia, and I've got an MA in Economics.—Preceding unsigned comment added by 206.57.121.14 (talk • contribs)

Not sure what you mean. The article has criticism where criticism has been presented. Not sure where you got that the FairTax was without flaws (though such is open to multiple points of view). It has been presented on most of the major news networks, had a NYT bestselling book, published in trade publications, and currently pushed by at least 3 presidential candidates (both parties). It is pretty big in the south, since Neal Boortz discusses it a lot on his radio show. The idea for a National Sales Tax has been around for a while. I think people not knowing about it says more about the people and the media than the FairTax. People are too busy watching American Idol or the next Rosie clip to be concerned with tax reform. Watch for the South Carolina rally on May 15th with 10,000 expected accross the street from the first GOP presidential debate. Morphh ^(talk) 19:24, 26 April 2007 (UTC)

I'd disagree. The intro, for instance, contains lines like The plan is expected to have advantages with taxing illegal activity, taxing illegal immigrants, and cost transparency for funding the federal government.. This is presented as if it is an uncontested fact, not a claim made by a specific group of people. --Starwed 05:30, 29 April 2007 (UTC)

Do you have a reliable source that states critics do not expect the FairTax to have advantages in these areas (that would meet undue weight)? Even the largest opponents like William Gale suggest positive areas of the plan. There are just aspects of tax reform that have little criticism - this is not a flaw in the article. Please explain how collecting taxes through a wide variety of systems on individuals and businesses in the current system (that spreads out the cost among many different avenues that are not fully visible to individual citizens), is more visible than a single tax presented on each sale receipt. So because the article does not have criticism against areas of consumption taxes that are considered positive by virtually everyone, you claim it is void of real criticism? Every section that has significant views of criticism (that we are aware of) has it included. From everything that I have seen on the topic (and that is quite a bit as I've been following it for at least 4), this article is the most accurate and balanced piece of verifiable information available. Morphh ^(talk) 16:14, 29 April 2007 (UTC)

In response to the fact that FairTax had a NYT best-seller, I would like to quote from the article on the book itself, "However, the New York Times Book Review gave the book a negative review, claiming that '[f]or a book that claims in its introduction to be 'about honesty,' this statement falls far short.'"

I know about the idea of a national sales tax, and popularity for it waxes and wanes as it does with many other issues. Also, could you please note which three presidential candidates support the FairTax - are they all Libertarian throwaways? —Preceding unsigned comment added by 206.57.121.14 (talk • contribs)

The book was co-authored by a Libertarian - Would you really expect to get anything but a negative review from the NYT - they're about as biased as it gets and bash Boortz on a regualar basis (latest one was for his computer selected "bumber music" going into a commercial - read No Correction - No Supprise). However, the bestseller list is not biased - that is just pure sales numbers. I'm not sure what your point was as we could find a hundred reviews that praise the book as well.. the NYT review has little to do with it being a bestseller. The candidates that support the FairTax are John H. Cox (R), Former Governor Tommy Thompson (R), Representative Tom Tancredo (R), Representative Duncan Hunter (R), Former Governor Mike Huckabee (R), Former Senator Mike Gravel (D), Representative Ron Paul (R)/(L) (though he is much more interested in tax cuts), and Former House Speaker Newt Gingrich (R) (though he prefers the Flat Tax). Also note that it is the most sponsored tax reform proposal in Congress, with more than 10x the cosponsors of Flat Tax legislation (62 vs 4). Since I'm bring up Flat Tax comparisions - Here is a recent article from the former chief of staff to Congressman Dick Armey - Confessions of a former flat taxer: FairTax is better. Morphh ^(talk) 15:16, 04 May 2007 (UTC)

Even with a "fair tax" (National sales tax), you would still have an IRS (or equivalent) to 1) enforce collection, 2) define what income is, 3) collect death (inheritance) tax, 4) account for excise taxes, 5) collect capital gains taxes, etc. So it is nonsense to say that the IRS would be abolished. What we would really end up with is BOTH an income tax and national sales tax (the worst of all outcomes). And soon after passage, political tinkering will begin defining what products are exempt (milk, newspapers, snacks). How would the sales tax be collected at vending machines and other automated device? (Answer price would be rounded UP to the nearest nickel or dollar costing us MORE than the estimated 23%). Worst of all, suddenly EVERY merchant becomes an agent of the federal government. And then shenanigans begin: what is retail? what is wholesale? Where are these criticisms in this article? —Preceding unsigned comment added by 68.58.20.4 (talk • contribs)

The FairTax disbands the Internal Revenue Service and creates a National Sales Tax Bureau, which would reduce the size of federal tax administration by an estimated 73%. To your numbers 1) enforce collection is done at the already existing State level 2) Doesn't matter what income is.. no need to define it 3) this tax is eliminated 4) true 5) this tax is eliminated. All income based taxes are eliminated. The National Sales Tax Bureau would serve as over-site and administration for State collection / enforcement and to collect other taxes not eliminated (like excise). I guess you could make the argument that no matter what the size, shape, function of a Federal Tax administration - it is the IRS, but I don't see much relation. Even in a libertarian idealist setting - such an agency would exist to collect voluntary taxes. As to your second point that we would end up with both an income tax and a national sales tax, there is nothing that is stopping this from happening today. In fact economically and many other aspects, it would be a great benefit to reduce income taxation and implement a VAT or Sales tax like other countries that utilize border adjustment in free trade (so I would argue the point that it is worst of all outcomes). However, the FairTax repeals all existing income tax code and orders the destruction of income tax records, so they would have to introduce new legislation and start over to accomplish adding new income taxation. The FairTax also calls for an aggressive repeal of the 16th Amendment, which would remove the possibility of introducing new legislation to tax income. They are planning to put in a sunset provision (next Congress or in Committee) that states that if the 16th Amendment is not repealed within 5 years, the FairTax is removed and the old system comes back.

To your third point, the FairTax does not use exemptions for the very reason you describe. It offers a rebate so that people can determine what is a life necessity. Any adjustment to the tax base is an adjustment to the tax rate imposed on everyone, which gives the tax transparency. As for vending machines, that tax would be included in the price of the good. The company would pay 23% on the total of its retail sales and would adjust the price accordingly. Keep in mind production costs are expected to decrease by at least 11.55%, you'd keep your gross income, plus your rebate. The 23% rate is the statutory rate, not the effective rate. So I'm not sure having a Coke cost 5 cents more is much of an issue. As for your "Worst of All" every merchant becomes an agent of the fed government, what do you think they are now? Companies spend $250 billion a year in compliance and $250 billion more in decisions regarding the tax code. They manage corporate taxes, payroll taxes, income taxes, and state sales taxes. The FairTax is expected to reduce the compliance and efficiency burden on companies by 90% and then it pays them for the other 10% they do incur (receiving .25% of the tax collected). The FairTax would reduce the number of tax filers by about 80% (from 145 million to 25 million) and reduce the filing complexity to a simplified state sales tax form. Shenanigans? You state this like we don't have a sales tax in 45 states plus the District of Columbia (accounting for over 97% of both population and economic output) that have already defined these terms. As for your last comment, it is apparent to me that you haven't even read the article as some of your points don't even describe the FairTax (and would not be included) and the other criticisms are included if they have a reliable source (no original research) and satisfy undue weight and notability (for example, while the vending machine criticism is applicable, it would not meet these requirements). Morphh ^(talk) 14:31, 04 May 2007 (UTC)

There are a few issues which I would like to see addressed by the article:

1) The international impact, including terms of trade: Other countries are going to respond to the USA's artificially increased competitiveness; if this leads to lots of protectionism (i.e. high import taxes) this could be disastrous for world trade, especially developing nations.

2) The black market: Incentive to secretly import goods from abroad to resell will be huge, since the profitability of smuggling is MASSIVELY increased. Demand for domestic goods will be severely damaged by this kind of thing (even e.g. individual importing via eBay, etc.); alternatively vastly increased spending on Customs and Excise is required.

3) Transitional problems: The issue of people borrowing and spending before the Fair Tax, then paying off debt once income tax disappears is trivialised by the article. If I were an American citizen I would beg and borrow as much money as I could before Fair Tax, buy durable goods then resell them as tax-free second hand items afterwards. Any corporation with a half-decent management team would do something similar, and on a far larger scale. Huge land-grabs and acquisition of assets would result, which would massively distort the economy, be inefficient and damage economic growth for years to come.

I'll come back and add more thoughts as they come to me... --adamski 17:30, 09 May 2007 (UTC)

If you find any research on these topics related to the FairTax then we can include them. Otherwise it is speculation and original research. Your concerns may be better addressed at one of the blog web forum sites. Some of your points have research available that show the opposite of what you stated. Borrowing is address a little bit more in Predicted effects of the FairTax#Time arbitrage. Morphh ^(talk) 1:16, 10 May 2007 (UTC)

It doesn't matter if readers bring original research ideas to the talk page-- this is the place to discuss the article and any areas it doesn't cover that readers think it should. I'm suprised that you would rather an inquiring reader go to a blog or web forum to find information about the subject than improve the Wikipedia article to meet these concerns. Adamski brings up some excellent points and these arguments must have been dealt with by those who have done research on the Fair Tax or they're not doing their job. I would also like to see coverage of these points in the article; they must be out there.--Gloriamarie 16:59, 25 June 2007 (UTC)

If the concerns are have appropriate weight and reliable sources to verify the information, then I have no problem with improving the article. Even if they don't have sources, if I'm familar with the argument, I'll try to find them. But I've never seen research supporting the points he/she wanted addressed and I have seen research that contradicts some of those points (which is included in the article). I refereed them to a blog as they can often discuss points to a much greater degree. Then perhaps they'll come back with more information regarding their request. Morphh ^(talk) 20:51, 25 June 2007 (UTC)

Wow! Adamski has some ideas that even I didn't think of. Hey, Adamski, get over to fairtaxblog.com and share your thoughts. You'll find an informed and intelligent audience there, even for dissenters (which is more than I can say for certain other unnamed FairTax websites.)

Hey, Morph! I was just on a (very, very small market) radio show discussing the FairTax. Can I now cite myself?

63.166.114.11 20:30, 3 July 2007 (UTC)GeorgiaTex

As a sales/use tax professional, I initially supported the Fair Tax. It was after dwelling on some of the finer points that I now support the APT tax proposal (http://www.apttax.com/index.htm). My concerns follow.

1. Claim: Illegal drug traffickers will buy food, cars, etc., that will be taxed by the Fair Tax. Fact: The food and cars they buy now are already taxed at the cash register. How does the Fair Tax change that? And besides, any time a person exchanges goods and services for cash, a transaction tax can be easily avoided. (My brother, traveling in Canada, required a vehicle repair. The repairman asked him if he wanted the cash price or the check price. My brother asked him what was the difference between the two. "If you pay by cash, you get a 15% discount." The discount being the PST/HST. If this is what Canadians offer a Yank, what do you think they offer themselves? And more to the point, what will Americans offer to themselves with a 23% Fair Tax on top of state and local sales taxes?) The least FT supporters could do here is acknowledge that there will always be tax cheats, because that is the reality. When Feds are running dip sticks down diesel fuel tanks to see if motorists have evaded the federal highway tax by using off-road, dyed diesel fuel, who can honestly argue that people will not attempt to evade a 23% tax?

2. Claim: The IRS Code has become too complex. Fact: This is not because of any one event at any one time, and it is not a problem that is intrinsic to the IRS Code. Go back to the initial imposition of the US income tax. Simple rate, simple basis. What happened between then and now? Politics. ANY tax code administered by politicians will be subject to this same dynamic. Period. The idea that some new scheme will occupy some higher moral/ethical plateau beyond the reach of tawdry influence peddlers and power mongers is hardly worth discussing. Ditto the history of every single state sales tax: started off simple, ended up with countless exemptions, exclusions, and hair-splitting caveats. The point is this: no one can seriously argue that even if the Fair Tax succeeds in starting off simple, that it will remain simple over the decades. Do not think for one minute that industry lobbyists will not do to the Fair Tax what they've done to every tax regime in the US.

3. Claim: The Fair Tax will be administered at the state level by state departments of revenue. Fact: Even here in the State of Georgia, the application of the Georgia sales and use tax laws differs between the various district offices. Are we to believe that the Georgia, Alabama, Alaska, fill-in-the-blank states will ALL administer the Fair Tax exactly the same? Uh huh. Sure. I can see it now: "Relocate your plant to our state, and let's just say our Fair Tax enforcement guys won't be coming around for awhile." States compete against each other now with serious tax credits and deferments. What Fair Tax provision keeps the states from adopting interpretations that favor one industry or another (as they do repeatedly with their own native tax regimes)? Consider that proponents have yet to even acknowledge the glaring inconsistency of having a revenue department administer a tax whose revenues it does not benefit from ostensibly to the benefit of other states. Do you honestly think tourist-rich (thus, sales tax-rich) Florida and California are going to do a bang-up job collecting a national sales tax that will benefit sales tax-poor states like Wyoming and Montana? When the various district offices of state departments of revenue cannot even administer their own native sales and use taxes with consistency? Oh...and don't you just relish the idea of the states fighting over who gets to audit Wal-Mart? Which state will have jurisdiction? Will all the states with Wal-Marts have jurisdiction? We don't know because Fair Tax supporters have opted not to think this far ahead (by which I mean, to consider the problems with state-based administration of multi-state operations).

4. Claim: The Fair Tax will tax only new items, not used items. Fact: There are sectors of the retail economy where the value of an item derives precisely from its used status: antiques and collectibles. Are we to believe that ALL antique and collectible dealers are off the hook for Fair Tax compliance? And what is to keep a car dealer from advertising its demos as "used," and thus exempt from the Fair Tax?

There are other substantive issues as well. Taxing the sale of a new house? This turns the concept of contract labor, as applied by ALL the 45 states that have a sales tax, completely on its head. Per the states, and at the risk of over-simplifying, one does not buy a home or a swimming pool or a room addition. Rather, one buys a contract to perform, an intangible. Intangibles (contracts, insurance, stocks, etc.) are not taxable in any of the states. The states consider the contractor to be the consumer of tangible personal property in the performance of a contract. Why should 45 states be forced to fly in the face of decades of laws and legal decisions for one "iffy" tax proposal? And this is let alone the ability of the states to hire tax-savvy personnel able to deftly "change gears" between their own tax and the Fair Tax when currently they are over-staffed with people who can't even get their own tax laws straight. Or are they proposing that the states add staff trained for only the Fair Tax? The states will love that.

Also, the Fair Tax proposes that to avoid "sticker shock," the tax will be embedded in the price and will not appear as a line item on an invoice or advice. Fine. How do you audit the transaction? And remember, it is a transaction tax. How does an auditor walk into a company, review its sales and/or purchase invoices, and determine that it either collected or paid the Fair Tax on all its sales and purchases? Have Fair Tax supporters even thought of why most of the 45 states make it illegal to absorb the sales tax or claim that tangible personal property includes the sales tax? (On this note, the European VAT system is much more sensible and easier to audit than either US sales taxes or the Fair Tax.) I'm not clear on this next angle, but if I understand Neal Boortz correctly, he claims that businesses won't have to pay the Fair Tax as they will have a "cost of doing business" exemption. Really? So a corporate office can install exercise equipment, pool tables, lounges, buy club/golf memeberships for its executives, etc., and pay absolutely no Fair Tax on any of these items? I think we all know how corporate officers will benefit from this "cost of doing business" exemption, if indeed this loophole is this broad. So...is it? Have Fair Tax proponents even contemplated how many states with exemptions for this or that have extensive case law histories derived from constant challenges and questions that turn on the smallest of minute fact patterns? What is the "cost of doing business"? I recall escorting a sales tax auditor through a textile plant in a state with favorable treatment for manufacturers. I told my plant guide: "We need to see your production equipment...just the equipment used for production." His perfectly understandable, but never-the-less layperson's response was: "Heck...it's ALL used for production." In his mind as a foreman, yes. Under that state's laws, no, not all equipment qualified for favorable treatment as production equipment. Fair Tax? I guess we have to pin the tail on the donkey. Proponents have no idea of the magnitude of establishing this definition for all industrial sectors, much less putting their interpretation in writing. My god...at least toss a bone to the Ohio Rule or to Integrated Plant Theory as a starting point.

And finally, the Fair Tax, as proposed, actually intends to implement the very thing its supporters claim it is opposed to: income tax withholding. H.R. 25 §905(a) reads:

In General- All persons, in whatever capacity acting (including lessees or mortgagors or real or personal property, fiduciaries, employers, and all officers and employees of the United States) having control, receipt, custody, disposal, or payment of any income to the extent such income constitutes gross income from sources within the United States of any nonresident alien individual, foreign partnership, or foreign corporation shall deduct and withhold from that income a tax equal to 23 percent thereof.

All in favor of trusting future pols never to modify or expand this provision, say, "aye".

Let me say several things in favor of the Fair Tax: the idea that it's voluntary, to the extent it's based on discretionary spending, appeals to me. And I am not bothered that rich people will seemingly pay a smaller percentage of their wealth or income. I prefer that the rich use their money to create wealth...that's how an economy grows and prospers. Finally, the most bothersome thing to me about the IRS Code and state/local income tax is the complete lack of privacy. Good principles, bad approach to achieving them. FWIW, I consider myself somewhat a fan of Boortz, and I believe John Linder is an honorable man with honorable intentions.Sequoia50 13:39, 16 August 2007 (UTC)Sequoia50

Graphs in the main article

A graph in the article shows the impact on incomes up to $320,000. Actual income in the US goes up into the billions. How much tax does this let Bill Gates and Warren Buffett off? What fraction of the current taxes is paid by people with income over $320,000? Cherlin 18:24, 12 August 2007 (UTC)

Currently, every single graph in the main article is in support of the FairTax. I would like to replace the graph in the distribution of the tax burden section with one of the graphs from the Presidents' Advisory Panel. I know your objection will be that it is not a study of the FairTax itself, but in the interest of NPOV, there really needs to be some variety. Thus, I am going to replace the graph. -- Cielomobile ^{talk / contribs} 01:44, 10 May 2007 (UTC)

You hit it on the head - it is not the FairTax and thus will not be acceptable to replace an image that is an actual study of the FairTax. It would be POV to place a hybrid NRST graph in this section. Why would you place a graph known to be based on a very different model in this section? Here is an article about the FairTax but we've chosen to put a graph of some hybrid system that has little resemblance??? The two most important points that effect the distribution of tax burden under the FairTax is that it removes regressive payroll taxes and it has a very large tax base (the largest). The hybrid chart does not remove payroll taxes and greatly cuts the tax base. I find it ridiculous that we even include it at all as some form of meaningful comparison. Apples and Oranges, with a claim that they're both fruit so they have similarities. Morphh ^(talk) 3:20, 10 May 2007 (UTC)

Whatever POV you allege does not supercede the blatant POV of every single chart in the main article supporting the tax. Morphh, I know that you want this article to be balanced. Are the constant calls for NPOV on the talk page not evidence of some bias here? I would hate to put the article up for FAR, because it really is an otherwise excellent article.. -- Cielomobile ^{talk / contribs} 05:45, 12 May 2007 (UTC)

I was working on a compromise for this but got distracted and forgot about it. I've uploaded a trimmed version of the image that you've been adding. I'll add it along with the other image and reduce the size of both to try and have both images in that section. Morphh ^(talk) 12:32, 12 May 2007 (UTC)

And as for the OR, you need to provide references if it is indeed not OR. I suspect that the figures are correct, but their inclusion without being attributed to a reliable source violated WP:A. Also, I made some editing to make the prose flow better; please do not revert that. -- Cielomobile ^{talk / contribs} 05:46, 12 May 2007 (UTC)

I'm not sure what you're wanting here. It is an example using math. Are we to source the incomes - it is an example and does not require it? Are we sourcing the math - it is defined above as effective tax rate? However, I do see an assumption that I will clear up on family size and I'll source that math. It shows the difference between the base used as the source of the definition of progressive / regressive. Gale defines a base on consumption using the term of income. You changed the last statement to say that "Still, proponents argue that the effective tax rate is progressive on consumption." This is sort of misleading as it seems to imply that opponents argue that it is not progressive on consumption, which is incorrect. Opponents state it is regressive on income, not consumption. Proponents do not define it on income as income is not the base, since it is an arbitrary comparison. This example tries to show this using math already presented in the article - the relationship between defining what % of taxes are paid on income verses the effective rate paid on that consumption. I also don't understand why you're wikilinking regressive a second time in the same paragraph, which is not recommended practice - WP:MOS. Morphh ^(talk) 12:32, 12 May 2007 (UTC)

I found a source for the comparisons and added it. As a side note in the future, you may want to consider using the {{or}} tag rather then deleting the information, which adds a source like tag after the sentence.^{[original research?]} Just to discuss the idea a little further, the definition of a progressive tax is a tax imposed so that the tax rate increases as the amount to which the rate is applied increases. However, opponents do not apply it to that which the rate is applied - they apply it to that which it is not applied (income). By changing the base of comparison, the term takes on different meaning. That is why it is important to state regressive "on income" or progressive "on consumption" and how they can both be true statements (though the tax could also be progressive on income depending on the situation). To say it is just regressive (without defining the base) is incorrect, as per the definition, the tax would be progressive. However, stating it to be progressive seems POV as, of course, others do define it as regressive (using an income base). Morphh ^(talk) 15:42, 12 May 2007 (UTC)

Thank you for compromising with the charts and sourcing the math. It seems alright now. -- Cielomobile ^{talk / contribs} 23:32, 12 May 2007 (UTC)

I have a problem with the leading graph in the section 2.2 Effective tax rate, as it seems to violate the idea of neutrality put forward in 2.5 Revenue neutrality. I'm no expert in the FairTax specifically, or in economics in general, but that doesn't seem right to me. How can it be neutral if everyone pays less taxes? I'm guessing this graph was designed by someone who wants to advocate the FairTax without realizing that it disputes their argument that the tax is revenue neutral. However, that's just a guess, and I'll be happy if I'm proven wrong. Ben Hocking ^{(talk|contribs)} 18:55, 14 August 2007 (UTC)

Lower rates are claimed due to a larger tax base ($11.467 trillion compared with $9.706 trillion of taxable income), replacing regressive taxes, and wealth taxation. This is discussed under the section Distribution of tax burden. It is not in conflict with revenue neutrality; although the rate required for neutrality is disputed. This does bring up the point though as to if this graph should be doing any form of comparision between the income tax. While a effective rate on consumption is easy to show, the income tax system is more difficult and subjective. Morphh ^(talk) 19:18, 14 August 2007 (UTC)

Thanks for the response, but that section just raises more questions. It simultaneously states that "supporters argue that it would broaden the tax base" and:

Sales taxes are normally considered regressive, but the FairTax provides a rebate that supporters argue would create a progressive effective rate on consumption. For example, a family of four (a couple with two children) earning about $25,000 and spending this on taxable goods and services, would consume 100% of their income. A higher income family of four making about $100,000, spending $75,000, and saving $25,000, would consume only 75% of their income on taxable goods and services.

Those two statements seem contradictory (and note that this 75% does not include the $25,000 exemption - doing so would reduce it to 50%). Where does the larger tax base come from? Is it coming from our tendency to spend more than we earn (which contradicts the 75% figure)? (I do want to clarify my own "bias" here. I'm not anti-FairTax at all, but I do believe that it gets oversimplified by many of its supporters. I agree wholeheartedly with the idea that our current tax system is a mess. Again, I'm no expert in economics, but I'm quite handy with math, and if I'm having trouble understanding this, my ego requires me to believe that the material as presented is actually difficult to understand.) Ben Hocking ^{(talk|contribs)} 19:48, 14 August 2007 (UTC)

Since Morphh hasn't responded, I'll take a wag at your delimma, Ben. Income and Consumption are two different things. The increased base referenced is not based on overspending by lower income people; it's realized by a larger number of dollars taxed by the FT that are currently untaxed by the Federal Income Tax system. Under the FT consumption is taxed. Under the current IT system, only income is taxed. Consumption is ALWAYS greater than taxed income.

I agree the article is a little confusing in this section. Many people do not recognize the difference between income and consumption because there isn't a difference for most people between the two. Most people do spend 100% (or more) of their taxed income. However, there are many people who have a low federally taxed income that spend 200% and more at the retail level (visitors, undocumented workers, underground economy earners, welfare/EIC recpients, trust fund babies, etc.)

Upon reflection, maybe I can better explain it this way: Income is what everyone makes this year, Consumption is what everyone spends. However, you don't have to make it this year in order to spend it. The trite but obvious example is Paris Hilton. Sure she had 2006 income from the Simple Life and that Carl's Jr. commercial, (and possibly a certain video) but I can guarantee she spent WAY more than she made in 2006. How? She's spending her wealth. She's spending money she got/earned/had before Jan 1, 2006. And...she's buying new stuff with that wealth, she's not the used car/ garage sale type. Under the FT, 23% of nearly every dollar she spent in 2006 would pay the her tax burden. Under the current IT, some percentage of every dollar she earned in 2006 paid her tax burden. Which of those two dollar amounts was higher? Even if the IT rate were higher (and it's probably not), the federal revenue out of her pocket was most assuredly less.

I probably rambled in this response, and obviously without a tax return for Ms Hilton, using her for a wiki-reference would be improper, but I'd be willing to lay money on the idea that I'm closer to correct than I am wrong. But hopefully that can provide you a real-world example of how spending can outpace income and increase the base. In the example of the $100,000 family saving $25,000....they are only saving it for now....they will eventually spend it.

Justin in Oklahoma Aug 30, 1:00pm CDT —Preceding unsigned comment added by 66.210.187.162 (talk) 17:58, August 30, 2007 (UTC)

Criticism section

Where is the 'criticisms' section? I was expecting to see one, in so long an article. Just Another Fat Guy 04:14, 13 May 2007 (UTC)

Well written articles will not have a criticism section. It is the lower quality articles that start out with such a structure. Criticism is spread throughout the article in each section as the topic points are addressed.

See {{criticism-section}} and WP:Criticism. In general, making separate sections with the title "Criticism" is discouraged. The main argument for this is that they are often a troll magnet. Morphh ^(talk) 11:45, 13 May 2007 (UTC)

And I agree with the view expressed by others that often, they are a symptom of bad writing. That is, it isn't that we should not include the criticisms, but that the information should be properly incorporated throughout the article rather than having a troll magnet section of random criticisms.

Almost every article i have seen has a criticism section. It just seems that if one is not included, there is no criticism of it. Marxism, Communism, liberalism, Wikipedia, Religion, and so on, all have criticism sections. are they less well written than the Fair Tax Page? It just seems a little odd

--130.108.192.223 13:09, 22 May 2007 (UTC)

Yes they are "less well written" than the FairTax article. You'll note that none of the articles that you mentioned are featured articles. The FairTax article is considered to be one of the best articles in Wikipedia, as determined by Wikipedia's editors. Before being listed, articles are reviewed for accuracy, neutrality, completeness, and style according to our featured article criteria. This is an encyclopedia, not a blog or website that just lists pros and cons. With that said, it is not always the case that a criticism section is a mark of bad writing. The section may be appropriate in certain situations: film, literature, and works of art come to mind. I understand what your saying. It would be nice to look at a simple good/bad; however, the topics require enough explanation on each side to do justice. This is why each topic is broken down into sections where both pro and con are provided. For example, one side may say a con is that it is regressive with the other side saying a pro is that it is progressive. Pros and cons are dependent on the point of view and without any context or explanation it makes little sense. Critical analysis of the proposal itself should go in the main body of the article as appropriate. Likewise, counter-analysis of factual and statistical data should go right beside the original analysis. Finally, such sections lead to "cherry-picking" of favorable facts from third-party sources (by both pro and anti sides) — a POV troll magnet with no context. Morphh ^(talk) 14:10, 22 May 2007 (UTC)

Speaking of criticisms, the JPFO has an article on their website in opposition to FairTax that is exceptionally well-written and better researched than most. I found it, just like I found this article, while looking for information about the FairTax proposal. While I'm not sure if its appropriate as a link to be included at the end of the article, I think that perhaps some of the editors involved in this article might wish to look it over to consider inclusion of some of the ideas into the article. It is located at http://www.jpfo.org/fairtax.htm 12.206.99.214 07:38, 25 May 2007 (UTC)

Thank you for the link - I have read this before and at one time we did have it used as a source for some material in the article. While the material is still there if verifiable elsewhere, the reference to this site was removed based on peer-review and the basic statement "is a website for 'Jews for the Preservation of Gun Ownership' really the best place to find economic policy expertise?" Based on our policy, this article can not be considered a reliable source as the basis for the information. Some of the statements are just unsubstantiated speculation and claims that have no verifiability, with some being outright incorrect based on the legislation or describing AFFT positions. It would be like using a blog thread as the source. However, some of the criticism was verifiable elsewhere and relevant, which was incorporated in the article. I'll review it again to see if there is anything we missed that can be substantiated and merits weight. Morphh ^(talk) 13:05, 25 May 2007 (UTC)

I agree that sometimes criticism sections are not handled well. However, they are convenient for the reader. When reading this article, I found that it was difficult to string together all the different proponents' arguments and criticisms cohesively to try to see what this is all about and whether it's a good thing. A Criticisms section may help with that aspect.--Gloriamarie 16:54, 25 June 2007 (UTC)

I don't think it would make the article better to create a criticism section though I understand the desire for the quick run down. Per NPOV policy we want to avoid "segregate" text or other content into different regions or subsections, based solely on the apparent POV of the content itself; arrangements of formatting, headers, footnotes or other elements that appear to give exclusive emphasis to a particular "side" of an issue. Creating a criticism section would do just that without the area to expand both sides for neutral presentation and without the background of the subject matter. Morphh ^(talk) 19:54, 25 June 2007 (UTC)

I agree with Morphh here. When I first started watching this article, I too called for a criticism section, but it really works out much better like this, with criticism weaved into the rest of the article. -- Cielomobile ^{talk / contribs} 20:01, 25 June 2007 (UTC)

Templates

Recently, user Old Hoss added a couple templates to the article ({{FairTax}} that he created and the other {{UStaxation}} that I had created). I didn't put it on this article as I did not think the formating fit well and I didn't see that it added anything to this particular article. I find the template works best in the main articles to help direct to the other related articles, particularly to less known topics but do not find that the reverse is as important. If it was a smaller article with few images, I could see it fitting well but I think it does more to distract and overload in this FA article. To the other template, this is a good faith template and I appreciate someone taking the time to do it, but I'm not sure it was necessary - the main articles has sections on each of the things listed with main tags to those sections. The sub articles have these listed in the See also but I sort of like it on the subs. Not sure I like it on the main article. Seems like overload. Thoughts... Morphh ^(talk) 1:51, 10 June 2007 (UTC)

I believe I've fixed the formating issues. However, I'm still not sure I like the {{FairTax}} template on the main article - might be confused for a TOC, though I sort of like it on the subarticles. Thoughts? Morphh ^(talk) 1:39, 12 June 2007 (UTC)

I edited the template to make it look less like a TOC by adding "FairTax subarticles" above them. Morphh ^(talk) 12:46, 12 June 2007 (UTC)

I moved the FairTax template down to the "See also" section on this page; it seems to be more appropriate there for this page I guess.--Old Hoss 03:06, 4 July 2007 (UTC)

Distributive Effects

Although this article is getting better, there is still a lot of assertions of fact that, when you check the footnotes, are really statements made in Op-Ed pieces by FairTax supporters that are not verified. You should not be able to cite a statement made in Op-Ed piece and claim it is a factually true statement. At best, you need to add some qualifying language such as "Supporters claim . . .".

Examples. The article states as fact that the FairTax will broaden the tax base. I have heard various economists and professors(William Gale; Michael Graetz)question that assumption. Yet, the footnotes in the article refer to an op-ed piece by Saxby Chambliss (who supports the FairTax in the Senate) and an AFFT articles. These are hardly unbiased articles. Even if they had utilized unbiased research (which is impossible to tell), the research is at best guessing what the tax base would be.

The article claims the FairTax will be substantially tax free for mortgages and charitable contributions. Again, at best these are opinions; at worst they are false assumptions. As Morph knows, mortgage interest will be taxed under the FairTax to the extent the mortgage interest rate exceeds the Federal Funds rate (or some other rate). For folks with excellent credit who get low, fixed rate mortgages, that amount might not be very much. But for folks with bad credit who must get expensive mortgages (e.g. sub-prime borrowers), the tax on the mortgage interest will be substantial. For charitable contributions, the costs and expenses of charities will be TAXED under the FairTax system (where they are not tax-free), which means they will need much more donations to pay expenses than they currently do, so it is misleading to say that the FairTax will make charitable contributions tax-free.

Regarding tax status, the article fails to point out that health insurance premiums will no longer be tax-exempt for employers, which will therefore shift the cost of health insurance directly onto employees, who must also pay a tax on top of the health insurance premiums. So, come on, lets be balanced here.

The effect of taxing illegal criminal activities, illegal aliens and cost transparency is, at best, in dispute. The article should not make a blanket statment that these are benefits without pointing out that the SUPPORTERS claim these will be benefits.

Finally, I would also note that the article makes claims about what Dale Jorgenson concluded in a study, but does not cite the study or Jorgenson himself. Instead it cites an AFFT statement about what Jorgenson's study concluded. So I would say that statement is suspect as well.

The point is that I think there are now sufficient legitimate studies out there to cite to so that the article can be more careful about what it states as fact (or at least a conclusion of a published study) versus what is merely an unverfied opinion of FairTax supporters.

63.166.114.11 14:29, 20 June 2007 (UTC)GeorgiaTex

The point of the FairTax is to broaden the tax base and make it as broad as possible. Perhaps Gale is speaking of his made up plan (excluding Government) when he discusses the base. Please provide a source that states that the tax base defined in the Fair Tax legislation would be smaller then the current income tax system. We could use the Beacon Hill study as the source or even Gales study for the current statement. There is study that was specificly performed on the tax base by the Beacon Hill Institute and should be released any time now according to Dr. Walby. Since it studies the base in detail, that would be the best source.

The article does not claim the FairTax will be "substantially" tax free for mortgages and charitable contributions - it says it will be "essentially" tax free, which is an accurate statement. The FairTax does tax the loan service charges or fees charged by the lending institution to the borrower. If the lending institution does not separately state these charges, but rather rolls them into the interest rate for the loan, then a portion of the interest is really hidden services charges. The FairTax taxes only that small portion of interest. For example, on a typical home mortgage only about one-half of one percent of interest is subject to tax. This represents the value of the financial intermediation services provided (such as loan origination fees, loan servicing fees, etc.) that are disguised as “interest” today. You also have to compare it with today's non-itemized income tax return and non-deductable payroll taxes. As the FairTax would only tax new retail purchases, donations to charity would be made with untaxed income (today you have itemization and non-deductable payroll taxes). Taxable property and services purchased by a qualified non-profit or religious organization 'for business purposes' would not be taxable. The statement is just a quick summary, which is described in more detail in the article which expands on the topic to include the aspect of financial services.

The article does state that "Personal services such as health care, legal services, haircuts, and auto repairs would be subject to the FairTax, as would renting apartments and other real property." Health care is normally considered a necessity and would fall under the U.S. Department of Health and Human Services for poverty level spending and as such would be covered by the rebate - untaxing health care. Though not in the article, let's not forget, it will remove the unfair advantage that companies have over individuals when purchasing health care plans. "So, come on, lets be balanced here."

Please find a source that says the FairTax will be less transparent the our (convoluted, distributed, employee/employer hiding, withholding) tax system, less effective at taxing illegal immigrents and activity and then we'll going on to discuss undue weight. Which aspect of Jorgenson's figures are you talking about here? Morphh ^(talk) 15:29, 20 June 2007 (UTC)

Morph -- It sounds like you are starting to get cranky in your old age. : ) Maybe the stress of Wikipedia is getting to you. I know you're doing your best to be fair (well, sort of), but the article still has too many opinions posing as fact, which is just not appropriate for a encyclopedia-type article. In response to your post:

1. I agree that one point of the FairTax is to increase the tax base, but do not agree that it succeeds. Moreover, the statement cannot be PROVEN one way or the other; at best it's only a prediction, generally made by FairTax supporters. If you want to say the tax base will be expanded, then cite to a specific study and say "According to a study done by . . . ., the tax base will be expanded by . . . .. If you want a source that says the tax base cannot be expanded to the extent FairTaxer's claim it will be, then go back and watch the CSPAN debate between Boortz and Graetz, where Graetz makes that very statement that it is completely unrealistic to expect the tax base to be as large as AFFT claims it will be.

2. Saying in the article that mortgage interest will be essentially tax free is misleading at best. I've already pointed out above that sub-prime mortgages will be heavily taxed. No offense, but perhaps you are unaware that many people have mortgages in the 10%-15% rate; which means than more than 50% of their interest expense will be taxed. (Whether you call it interest or finance charges, it's still the same. It will be taxed.) But even more importantly, the FairTax eliminates the mortgage interest deduction. So saying that mortgages will essentially be free of tax (which SOUNDS like a good thing, even though it is not entirely true) without specifically pointing out that the mortgage interest deduction will disappear is totally misleading. Similarly, saying charitable donations will be tax free without pointing out that the charitabl tax deduction will be lost is also misleading. Yes, the article makes a subsequent reference to "concerns" some lawmakers have over the impact on housing and charitable donations, but that hardly corrects the misimpression the article gives that housing and charities will somehow benefit from the FairTax.

3. Health care is one of the most-misleading aspects of the prebate. Health care is NOT included in the poverty level spending guidelines supposedly covered by the prebate. Poverty level spending assumes that poor people's health care will be paid for by the state or federal government (which means paid for by tax-payers; which also means that since state and federal spending will be taxed under the FairTax, we'll have to pay the FairTax for spending for poor people's health care.) Health insurance costs alone cost many, many thousands of dollars a year for healthy families. (It's completely unaffordable, and even unavailble, if a family has a history of health problems, cancer, etc.) For the uninsured, health care for catestrophic illnesses can easily exceed several hundreds of thousands of dollars. Under the FairTax, businesses will no longer have any tax incentive to provide health insurance (since they will lose the tax benefit from doing so), which means more folks will go without health insurance.

Now, this argument might be way beyond the scope of the Wikipedia article, but my point is that it is misleading and definitely POV to imply certain tax benefits (the "essentially" tax free mortgages and charitable giving) without also discussing the negative effects of removing certain tax donations. But, I wasn't even going that far with my suggested changes. All I suggested doing was qualify the glowing statements of the FairTax's alleged benefits by saying "Supporters claim . . . "

3. The article's SOURCE for the statement that the FairTax will have the advantage of taxing illegal aliens, illegal activity and transparency is The FairTax Book. Come off it, Morph! That's not evidence of an undisputed fact! Virtually every statement in that book is opinion, and most of it has been disproven, retracted, changed, or disputed since the book was first published. If you want a source for the assertiong that the FairTax will have no effect on the taxation of illegal activity, refer to the AEI debate between Kotlikoff and Gale where that very point was made towards the end of the debate. NOBODY who has studied the issue really believes that the FairTax will increase the taxation of illegal activity, and the fact that the article cannot cite a source for this statement (other than the FairTax Book) essentially proves my point.

4. In the section on Predicted Effects, the article refers to a Jorgenson study. But in reviewing footnote 11, the footnote does not cite to the study itself. Rather, it cites that an AFFT article on "Frequently Asked Questions". I mean, come on, Morph. Then, in the same section the article references Congressman Bill Archer allegedly surveying foreign businesses about a sales tax, but the CITATION is to an annonymous FREE REPUBLIC post. You've got to be kidding me!

Tell you what, if I can cite to my Op-Ed piece in the Atlanta Journal-Constitution of a year ago, I can put in plenty of statements in the Wikipedia article that the required tax rate would be 50-60%, that tax evasion would run rampant, and the middle class would get screwed. But those citations would not be evidence that the statements are actually true; they would only be my opinion, and should be qualified as such. Similarly, you need to qualify statements in the article where the only source is an op-ed piece or some similarly biased source. And delete the Free Republic crap.

63.166.114.11 18:11, 20 June 2007 (UTC)GeorgiaTex

I'm trying to understand your logic on the tax deduction issue, which is irrelevant. You make it sound like they're loosing something, when in fact they are gaining. They only thing being lost is the ability of politicians to use the tax code to make one form of consumption favorable to another - social engineering. The tax payer will actually pay less tax. Example: Someone paying a 25% income tax rate would receive $250 back from the government for a $1,000 donation (itemization issues aside). They receive nothing back on the $150 they paid in payroll taxes (or $75 if you prefer to exclude employer funding). Under the FairTax, there is nothing to deduct as the government hasn't already taken it. You earn and donate $1000 with no tax burden. It is misleading to say that such is tax free but you loose your deduction, as this implies some form of loss. The only reason for the statement is to say that they lose social engineer to control spending behavior. It's like going to a store and complaining that you don't get to use your $1.00 off coupon when the item is free. If you take the dollar and give it back - oh a great deduction.. but if I never take the dollar to begin with.. now you're losing something??? As far as the illegal activity in the debate, they did not have enough time to discuss or rebuttal the stupid statement. I can't believe it came out of Gales mouth as it is really a distortion. They should have allowed more time. The cost paid by the underground economy through embedded taxes is the cost associated with those paying into the income tax base. If black market activity was taxed today, the tax burden on the rest of the population would decrease from the larger base. Likewise, the large base of consumption would have illegal activity paying into the FairTax base. As far as your tax base statement, we are going off what is defined in the current legislation. We can't take every made up tax base that someone comes up and there is no way that it would be smaller then the current tax base. However, I'll give on the point that supports make the statement specifying the figures in regard to the base difference. Morphh ^(talk) 18:50, 20 June 2007 (UTC)

Morph --

I actually agree with you that eliminating the social engineering under our current Tax Code is a good thing. That is, why should you or I pay higher taxes to make up for the tax revenue lost when someone else buys a mansion with borrowed money or makes a large donation to a government-approved charity? And, I suppose, to the extent the FairTax accomplishes that objective, that is a good thing that could be highlighted in the article. But my problem with the wording in the article was that it implied that mortgage interest and charitable contributions would somehow receive some special benefit under the FairTax because they would be "essentially tax-free" without pointing out that the current favorable tax treatment for mortgage interest and charitable giving would be lost. Clearly, a lot of folks (including builders, realtors and chairities) would very concerned about the impact of the loss of the mortgage interest deduction and the charitable tax deduction. In the debate of the elimination of the estate tax, for example, a number of charities argued that the elimination of the estate tax would decrease giving to charities since there would no longer be a tax incentive to donate a part of one's estate to charity.

It was not Gale who said at the AEI debate that the underground economy would not be taxed any more under the FairTax than under the current tax code. It was the moderator. He then asked if any of the panelists disagreed with that statement, and it's clear from the tape that nobody disagreed. A tax dealer does not report his income or pay income taxes under the current system. Nor will he collect and remit the FairTax on his drug sales under the FairTax system. On the other hand, when the drug dealer buys his Cadillac under our current system, the car dealer, the salesman and the manufacturer will all pay income taxes. Under the FairTax, the car dealer will collect the FairTax upon the sale of the Cadillac and remit that to the government. So, it is not at all clear that the FairTax will result in any net tax increase from the underground economy.

As to illegal aliens, most illegal aliens already pay federal taxes. (Most work regular jobs; they just use fake SS numbers. Their taxes are withheld like everybody elses.) Moreover, no illegal aliens I know buy new cars, new homes, new furniture or even many new clothes. They tend to shop a garage sales, live in crowded, cheap apartments (for which they pay cash). Most don't have a checking account. They spend very little in this country, and try to send as much as possible home to their families. Since they pay in cash for what they spend here, their spending will often end up untaxed under the FairTax. They don't have health insurance, so you and I pick up the tab for their health care (which will be taxed under the FairTax.) Thus, illegal aliens will contribute very little to tax revenues under the FairTax system. In fact, we will probably LOSE more tax revenue from illegal aliens under the FairTax system than we would gain. None of this ever gets discussed because it is easier for FairTax advocates, like Boortz and Linder, to make sweeping claims that the FairTax will tax illegal aliens.

Finally, with respect to tourists, for every tax dollar gained when a foreign tourist spends money in this country, the same amount (or more) would be lost when an American tourist spends money in a foreign country. —Preceding unsigned comment added by GeorgiaTex (talk • contribs)

Some very good points. I thought it was Gale that made that statement when I watched it. And doing a quick listen to it again, it was Gale (little over half way through) and one of the other guys rebuts it toward the end directing it toward "Bill". For some reason the video won't let me skip around and the audio doesn't give me a timestamp. I don't have time to listen to the entire thing at the moment. However, I wouldn't take lack of responce as agreement - it was an off the cuff statement that I expect they weren't prepared to answer and had little time to do so. I will give that it is disputed so we can tweak this. With the charities, I can see your point but I'm not sure this is the sentence to discuss it. It is a summary and directed at the tax payer, not the nonprofit. More details are found under that topic where it does discuss the lost of the deduction. It is estimated that approximately 5 million illegal immigrants are paid off the books ("under the table") in cash allowing employee and employer to avoid paying federal taxes estimated at $35 billion a year. I'm not saying that we would get more revenue from them but it does change the incentives and changes it from illegal evasion to legal avoidance (under your senario). Illegal immigrants would pay the maximum effective tax rate. There would also be no federal tax savings to companies that hire illegal immigrants (off the books). Other measures may offset some avoidance - for example, North Carolina is considering a bill to tax wire transfers of illegal immigrants. Morphh ^(talk) 20:24, 20 June 2007 (UTC)

Morph -- We know we will never agree on this stuff, but at least you are polite and well-informed (and work amazingly fast). I haven't looked at the AEI tape, so if you say it was a statement Gale made I won't try to refute it.

In your comment above, you say that under the FairTax "[t]here would also be no federal tax savings to companies that hire illegal immigrants (off the books)." Well, there are no federal tax savings TODAY for companies that hire illegal immigrants off the books. If the company hires someone under the table today, then they aren't reporting his wages, which therefore will not be allowed as an expense to reduce the company's reported profits.

Finally, the source of the Archer quote is BS. The article states that Archer commissioned Princeton University Econometrics to survey CEOs of other countries, etc., etc.

Here's what the direct quote from the anti-tax website you cite:

Former House Ways and Means Committee Chairman, Bill Archer reported, "A recent survey was done, in Europe and Japan, of the major corporations and I was astounded at the results. They were asked, 'If the US abolished its income tax and went to a sales tax, would that have any impact on your decisions?' Eighty percent of the corporations said they would build their factories in the United States of America. Twenty percent said they would move their international headquarters to the United States of America!"

Nothing about Princeton University Econometrics. Nor is there any citation to Archer's actual words (i.e. no newspaper reference, etc.) For all you know, this anti-tax nut made the quote up. This is one of the many problems with the FairTax: radio talk-show hosts make unsubstantiated claims loosely based on something someone at AFFT said, which get picked up and exaggerated on the web, which get picked up by Wikipedia, etc. Pretty soon the same lie/mischaracterization/exageration/whatever gets repeated enough times that it becomes taken as an article of faith, even if it's not true. So you, of all people, should be very careful with the citations in the article. (As you know, I'm a lawyer. We are forced to verify every cite before putting anything in writing, or we'll get murdered by the other side (and the judge). That's one of the things that pisses me off about Boortz. He knows better than to throw out his BS when he doesn't have anything to back it up; he just doesn't give a damn. 64.94.224.248 22:13, 20 June 2007 (UTC)GeorgiaTex

The main purpose of "off the books" is to save the company and the employee the burden of taxation. Such a competitive advantage can greatly effect business. Companies can write off reported profits in lots of ways - they probably much rather write it off into research, inventory, bonuses, advertising, or philanthropy (just to name a few). Sure there are other aspects to consider but to say there are no federal tax savings to a company when you add up all the tax costs involved (income, SS, Medicare, unemployment, compliance) is a far stretch. Also consider that production performed by someone off the books may not go reported for business income. As far as the cite, I've seen the quote in so many different places with different amounts of information about it. I pretty sure I have seen it with the supporting Princeton Econometrics information, which I think John Linder discussed it in the Ways and Means. I also think I've even heard Bill Archer speak about it as he's a big sales tax proponent. The information was also published in a CATS newsletter - we could use this source if you prefer.[3] I think it was published in Al Ose's book as well (I'll check when I get a chance). I'll send out some e-mails to try and get a more direct source, but such is unnecessary in regard to Wikipedia policy - many secondary sources make the statement. We could remove the phrase of Princeton University if you think this part is false, though it wouldn't have been added without something to base it off of. Morphh ^(talk) 15:00, 21 June 2007 (UTC)

OK, Morph. Can't say you met me half-way, but at least you went a third of the way or so. Anyway, at least your trying! Keep up the good work.

63.166.114.11 17:32, 21 June 2007 (UTC)GeorgiaTex

Actually, now that I read the article once more, I'm still steamed about the Archer quote. Think about it. Back in the early 90', Bill Archer, an early and passionate advocate of a consumption tax, CLAIMED that he sent a survey of 500 CEOs of foreign companies. Then he CLAIMS that, lo and behold, they overwhelmingly were favorable idea. We don't know what the survey actually said, who prepared it, who sent it out, who received them, who returned them or what the results actually said. Yet the wikipedia article refers to this claim as a "Predicted Effect."

If you've ever received one of the bullshit "surveys" sent out by the Repulican National Committee or the Democrat National Committee, you know that they are totally rigged to get a particular response. This unknown, unseen survey could have been (and probably was) the same sort of bullshit survey. It's a small point, but Wikipedia is supposed to be an ENCYLCLOPEDIA; that is, its articles are supposed to contain actual, verifiable FACTS.

I only focused on this one section of the article, but, sadly, I'm beginning to suspect that if I looked through the footnotes in the remainder of the article I'd find the same poor quality of citations.

Calm down, Calm down - WP:AGF - I'm still working on several of these things (research wise) to include better sourcing for Bill Archer and the tax base study. I do plan to rewrite a little bit in light of our discussion after researching some more of the details. It will take a little bit of time though as I'm going on vacation next week. In regard to the sources, Wikipedia prefers secondary sources to primary sources. The reader can decide if the study (based on the source provided) is one they think is BS. I'm not saying that I wouldn't like to have a better source but we didn't make it up - it has been published in numerous places. If you have anything published that suggests that it is inaccurate, then we have something to go on. Wikipedia wants verifiability, not truth. "Verifiable" in this context means that a reader should be able to check that material added to Wikipedia has already been published. Of course anyone can pop up a website or publish an article so we strive to be as factual as possible to the content with proper weight and verify with other sources and consider the reliability of those sources. I'm pretty sure Al Ose's book discusses the aspects of Princeton University and goes into more detail. I don't think Bill Archer sent a bullshit survey to European and Japanese CEOs - I mean common.. it would be in the trash a second after it got to their secretary. But anyway... The source for the information is verifiable. We don't have to research the information itself as this would be all but impossible in many cases. Perhaps it's a fault in Wikipedia but we're talking about volunteer editors, in many cases anonymous - we're not Britannica researchers with tons of connections. It is what it is. I edit over 1000 articles in my spare time... Geezz give me a break here. This predicted effect of "tax haven" is not limited to the quote and is discussed in many publications. This is only one example of how it may impact global business decisions. Morphh ^(talk) 18:21, 21 June 2007 (UTC)

OK. I'm calmed down. You edit 1000 articles? You are totally weird, dude! Have a good vacation. I'll be on vacation as well, in Colorado. 63.166.114.11 20:07, 21 June 2007 (UTC)GeorgiaTex

Just a real quick post. I verified that the Bill Archer statement is in Al Ose's book to include Princeton University Econometrics. It does not have a direct reference but looking through the bibliography I found a reference to "Opening Statement of Chairman Archer Fundamental Tax Reform Hearing," Archer, Rep. Bill, (R-TX), Chairman, House Ways and Means Committee, June 6, 1995. I haven't been able to find the hearing on the Ways and Means archives but it is referenced in other web searches. I found this tax reform hearing from June 8th, 2005 but it doesn't list Archer (although it does list Linder for opening statements). Not sure if Archer made some opening statements a couple days before to kick it off or something (the 6th was a Monday and the 8th a Wednesday). Reading through this Testimony Before the House Committee on Ways and Means on some tax base info. It discusses that the proposals have broader, more uniform tax bases. Anyway.. enough research for tonight - getting some sleep. Morphh ^(talk) 3:11, 22 June 2007 (UTC)

Update - Found this tax reform transcript where on page 8 (page 14 in PDF count) Linder states "You, Mr. Chairman [speaking of Archer], have said—you have quoted on this floor on several occasions that a research group interviewed 500 international corporations domiciled overseas, asked them what they would do if we abolished all taxes on income and went to a sales tax. Eighty percent said they would build their next plant in America; 20 percent said they would relocate to America. ..." On page 23 (page 29 in PDF count) Linder states "Let me add something to that. I mentioned in my opening statement that the chairman often refers to the poll done by Princeton Group of foreign companies wanting to relocate here. ..." I haven't been able to find a transcript yet of Archer actually saying it but hopefully this is satisfactory as I'm about worn out researching it. You can only look through so many Ways and Means transcripts before you're out cold and drooling on the keyboard. Morphh ^(talk) 0:47, 24 June 2007 (UTC)

Abolition of IRS

I see a discussion above in which it is noted that the IRS would be abolished and replaced by a National Sales Tax Bureau, and administration costs will be reduced by more than 70%. How exactly are the administration costs for this NSTB being calculated in these studies? I didn't find this in the article, I apologize if it's already there. I would imagine it's difficult to classify administration costs before something has begun-- is this being based on other countries' experiences? Is the IRS being abolished a central part of the Fair Tax plan that absolutely cannot be taken out? Bills always get negotiated and changed before they're passed. Have any critics of the Fair Tax proposal mentioned the possibility of the IRS remaining (possibly for capital gains taxes or inheritance taxes, maybe as a compromise with Democrats who seem to mostly oppose this bill, to get it passed) and then Americans paying both kinds of taxes? I read a criticism similar to this on another website, which led me here to see if that was a possibility and I found no discussion of this.--Gloriamarie 17:09, 25 June 2007 (UTC)

Removing the IRS is central to the FairTax and I don't think it would ever come out of the bill. This is probably one of the biggest crowd pleasers when politicians promote the bill. I have not heard of anyone arguing to keep the IRS. I'm sure it will be debated but Wikipedia should not speculate on changes that could be made - Wikipedia is not a crystal ball. Criticism regarding the IRS has been that the FairTax just renames it - That the NSTB is the IRS with a new name arguing that any federal tax agency consitutes the "IRS". But the legislation does elliminate the agency and has them destroy all income tax records. The NSTB would be much smaller as it only needs to administer and provide oversite to the states (and collect other taxes that are not repealed such as excise). Here is the Beacon Hill study - you might be able to understand it in all that math. Paying both the FairTax and some form of income taxation is discussed in relation to repealing the 16th Amendment. Morphh ^(talk) 20:24, 25 June 2007 (UTC)

Featured Article?

Frankly, you have got to be joking. This article reads like a pamphlet put out by proponents of this legislation; it has almost no balance at all. Reputable economists will tell you that replacing all of your taxes with a massive consumption tax is radically regressive with regards to income. If you kick back some to the poor, that still leaves the middle class in the lurch. Warren Buffett, living his modest lifestyle in the Midwest, worth billions and earning hundreds of millions/year, would pay the same taxes as his middle class neighbors - that is good tax policy? I doubt it. I will try to find some better criticism of this and similar proposals to add to the article. Brianyoumans 03:48, 14 July 2007 (UTC)

This is discussed under Distribution of tax burden and further under the sub-article. Perhaps your not adding in the rebate when you discuss progressivity but this could be a matter of definition. Using an income base to define a consumption tax is a bit of trickery but to each his own. If you actually look at progressive tax you'll note that it is a tax imposed so that the tax rate increases as the amount to which the rate is applied increases. The rate is applied to consumption, not income. It is an arbitrary association to apply it not to consumption but to income, however, even in that case it is only regressive under certain conditions such as a cross section time frame and purchase choices. Perhaps you should read the article before jumping to conclusions on balance as this article has been heavily reviewed and contains all major viewpoints. Morphh ^(talk) 3:56, 14 July 2007 (UTC)

Actually, I think I did read enough of the article to understand the proposal. Because of the rebate, the tax would be progressive for low levels of income, and in fact for high levels of income... but, the progressivity would decline as your income went up, to the point where at high levels of income, the progressivity would be basically flat... IF people spent their entire income. Actually, of course, wealthy folks save and invest much more than the middle class and poor, so past a fairly low level of income, the tax would become regressive, i.e. a person making $1 million a year would probably pay out a lower percentage of his income than someone making $100k or $50k.

One can of course make the argument that many of the rich pay little or no income tax under the present system and would pay more under the FairTax, but I think that is a misunderstanding of the present system. Many of the tax breaks the rich enjoy are actually, in deep disguise, government spending; when the government gives tax breaks to encourage oil drilling, low income housing, charitable giving, etc., many economists would advise that this be viewed as government spending. Is all of this spending good and advisable? No, but some of it is, and much of it does serve some public purpose. One should not simply condemn the rich as tax-avoiders; in large part, they are simply investing their money in ways that our government wishes to encourage, for reasons of public policy. They are paying hidden taxes, in that they are not using their money as they otherwise would. Brianyoumans 04:00, 16 July 2007 (UTC)

Yes - The section covers this. The FairTax is regressive on income and progressive on consumption. Not to debate it but just so we see the full picture - your example assumes that tax deferred savings and investment are never taxed. So the base of argument could be framed in taxing savings and investment. If either of these change to consumption, it is taxed at that time. So then aspects of regressive criticism lend the question - does it make sense to tax savings and investment before it's used for personal consumption? Again, I'm not wanting to create a debate or discussion on this.. we'll leave that for the blogs but I just wanted to get a little below the surface of the regressive question and clarify what is really being criticized. Morphh ^(talk) 16:55, 16 July 2007 (UTC)

Since you mentioned Warren Buffett, which in no way would pay what his middle class neighbors pay - % or otherwise (unless they consumed the same amount), he recently stated that the current tax system "lets him pay less tax than his secretary". He and Gates have talked about how they could pay no tax under the current system by using credit against their assests. As far as your comment on "good tax policy", I'd like to point out that it is almost conventional wisdom for economists and tax experts that consumption taxes are superior.[4] The rebate is provided to middle class as well - not just the poor. Your thoughts might be best addressed under the section Progressive / Regressive debate. This describes both points of view (as it does throughout the article with regard to progressivity). Morphh ^(talk) 12:37, 14 July 2007 (UTC)

Morph -- A minor correction to your above statement. Buffett does not claim that he pays less in tax than his secretary; he claims that his effective tax rate on his income is less than (or about the same as his secretary). I believe his effective tax rate is around 17%, since the vast bulk of his income is from capital gains and dividends. Of course, if we assume his income last year was $1 billion (I'm just making this up), 17% of one billion dollars is still $170 million in taxes per year. 17% of 100 million is $17 million; etc. I strongly doubt that Buffett would pay even $1 million in taxes under the FairTax. And, of course, his entire $60 billion estate will be subject to estate taxes (unless he gives it all away, which he intends to do), whereas it would all be tax-free under the FairTax. Finally, I seriously doubt you will find Mr. Buffet in favor of the FairTax. GeorgiaTex (talk · contribs)

I was only quoting what was quoted in the article and made no comment on the actual content of it. My only point is that the current system is not as "progressive" as many think or claim. I'm also not going to add speculation here on what he would pay under the FairTax. We can personally agree or disagree on if wealth is taxed as advocates claim but this is not the place to debate it - we leave that for the blog sites. Morphh ^(talk) 19:41, 15 July 2007 (UTC)

Morph -- You know I like you. And I agree that this discussion belongs on the blogs, not on Wikipedia. But you've got to start being more careful with your citations (whether on the blogs, Wikipedia, or anywhere else.) The article said:

"According to Buffett, he pays taxes at a lower tax rate than does his $60,000-a-year secretary, 17.7 percent and 30 percent, respectively."

As we all know, a lower tax RATE does not equal lower taxes. Anyway. 'nuff said.

68.155.147.170 01:53, 16 July 2007 (UTC)GeorgiaTex

I don't think I argued otherwise - I agree. I made no comment at all. I was only quoting the opening line "'Buffett Blasts System That Lets Him Pay Less Tax Than Secretary' blared a recent headline." Morphh ^(talk) 14:20, 16 July 2007 (UTC)

I agree with Brianyoumans--the early part of this article reads strongly in favor of the fair tax. Criticism in the opening section, and in a couple of other sections throughout the article (see Distribution of Tax Burden), is short and buffered on both sides by arguments in favor of the system. The image in the Distribution section shows a graph of a statistic--average remaining life time tax rates for married couples--which isn't explained at all in the article, from what I can see, and isn't even explained in the source. Lacking any explanation, the graph gives the impression that all taxes will magically decrease. It demands either further explanation or removal. Furthermore, there appear to be only 3 pieces of criticism in the entire Predicted Effects section, while largely the rest of the section is in favor of the system. This article may contain all major viewpoints on both sides of the issue, but those against it are severely underrepresented in comparison with those for it. Finally, Morphh, you appear to be responding to Brianyoumans' call for neutrality and his examples of viewpoints that ought to be represented by arguing against those viewpoints and highlighting the flaws of the current system. Keep it a discussion of the article, not of the issues.Tyharvey313 09:22, 16 July 2007 (UTC)

The early part of the article, including much of the lead, has to first discuss what the legislation is and what it does. Proponent or opponent viewpoints don't get introduced until the second paragraph of the lead and appear to be well balanced. We have certain restrictions on introduction size and it tries to summarize the article's content. Many of the sections first introduce the topic, which is discussion of the legislation or the argument/dispute and then go into pro/con. The graph in Distribution of Tax burden is discussed in this section (generally in the second sentence, more directly in the last sentence in second paragraph and the second to last sentence of the third paragraph) and further discussed in the sub-article. Yes - It does suggest that all tax levels in the graph would decrease due to the larger tax base, replacement of regressive taxes, and taxation of wealth. The source is also provided for those that want more details from the study. This is a summary so we had to condense the information and try to present the major viewpoints. Reorganization is welcome so long as both views are presented. Of the "Predicted effects" section, I don't disagree that the "economic effects" section has much pro content, but the sections "transition effects" and "other effects" have heavy criticism. It is a summary of the sub-article, which has a lot of positive information. I think it shows neutrality that we split off much of the positive information into a sub-article. Advocates could charge that we created a POV fork. If there is something that is not represented there for criticism from a reputable source and sufficient weight, please add it. Don't blame the article for POV if there is no significant criticism to present on these areas. Many of these points are accepted benefits by both proponents and critics. There are just some things that are positive for any particular tax reform. I responded to Brianyouman that regressive points were addressed in the article and was describing the points of argument. I did go outside the discussion of the article to point out some things that he was using for examples. Much of the debate is contrast from the current system to the FairTax. There are basic definitions of progressive and regressive but many frame them as regressive compared to what (the current system) or progressive compared to... Anyway... Perhaps we're hitting on Raul654's fifth law. :-) Morphh ^(talk) 14:20, 16 July 2007 (UTC)

Added more description to the graphs' caption per request. Morphh ^(talk) 15:24, 16 July 2007 (UTC)

I have put NPOV on the main page and FAR on this page, and I'm not accepting reverts. The next one goes straight to management. This is pure propaganda. See comments on FAR page.Cherlin 01:06, 13 August 2007 (UTC)

Management ? SandyGeorgia (Talk) 01:10, 13 August 2007 (UTC)

Removed some organizations

I have removed some organizations of dubious value from the list of supporters. Some appeared to be merely lobbying groups, of uncertain membership or significance. I don't believe that the National Bureau of Economic Research as a whole endorses policy alternatives; several of its members have published studies in favor of the FairTax, but they publish a large amount of material. Brianyoumans 10:23, 20 July 2007 (UTC)

Not sure how big NASCON is (now called American Seniors Association) but I do know they were a sponsor at some of the FairTax events (such as the Orlando rally). So this may make them more significant in regard to tax reform and the FairTax. On the Small Business Survival Committee, does it matter who funds them or what they lobby? They claim to have 50,000 members. The Mises Institute has only written a couple articles published by one individual (Vance), should this be removed under the same statement as the NBER? Doesn't bother me too much one way or another but I'd like to understand your basis of significance to make sure we're applying things evenly, appropriately and that we're benefiting the reader by doing so. On this edit, I'm wondering if it was best to remove home ownership. While I understand your point and it is argued in the article, politicians still have concerns (substantiated or not). Morphh ^(talk) 12:48, 20 July 2007 (UTC)

I removed the bit about home ownership because the point was arguable. I think the home mortgage exemption in the FairTax would not actually promote home ownership to the extent that the present tax credit does, but there is at least some incentive there; the charitable contribution issue is more clear.

As to the American Seniors Association and the SBSC, it is unclear what sort of organizations these are, or how many members they really have. They have relatively few Google hits. The SBSC claims 50000 members, but I don't see any signs that that is true. Perhaps 50,000 people have given them money at some point? The Mises Institute seems to be worth a link simply because it has been a prominent critic of the proposal. Brianyoumans 00:26, 25 July 2007 (UTC)

I think with the American Seniors Association you have to take into account hits under NASCON, which counts 70,000 in Google. "Small Business Survival Committee" hits with 28,000. I'm not sure we should be the judge that this org is good and this one is not. It seems we should be considering - is it a legitimate organization with reasonable membership that supports or opposes the FairTax. Once we start getting into our opinion on an org for inclusion, we may hit a slippery slope of POV. Morphh ^(talk) 1:06, 25 July 2007 (UTC)

Thinking of Mises... David Burton of the Argus Group, one of the authors of the FairTax bill, is a Mises faculty member[5] and has written many pro publications. I don't know that the Mises Institute has come out against it, other than Vance's freelance articles. Morphh ^(talk) 13:38, 25 July 2007 (UTC)

Revenue neutral question

I saw it argued earlier that it's questionable whether or not the FairTax would be revenue neutral. Given that there is a broader base (whether or not many drug dealers will buy used), that the cost of compliance which is very high and increasing [6] would be greatly reduced. Trillions of dollars which are out of country (estimated to be at 11 trillion) will become repatriated, according to Greenspan, within a few months. That money will most likely be invested or spent. [7]

It may be that the people who are most against the Fair Tax are CPA,s many of whom will lose their jobs.

It could be argued, given the above, that it will make it easier to fund SS, Medicare, Medicaid, and so forth. It has been argued that it will be harder for politicians to spend necessary monies. Brian Pearson 01:38, 29 July 2007 (UTC)

Brian, I'm not sure I understand your question. Morphh ^(talk) 13:00, 30 July 2007 (UTC)

I'm not sure it turned out to be a question, but I was suggesting that if the Fair Tax were not revenue neutral -- that if we took in more than the current tax system -- it wouldn't be a bad thing at least temporarily. It could be adjusted down, later. Brian Pearson 16:14, 30 July 2007 (UTC)

Brian. Those of us who complain that the FairTax will not be revenue neutral are not saying that it will bring in too much revenue, but that it will bring in too little. And none of the critics of the FairTax that I know of are worried about losing our jobs if the FairTax is implemented. Though we are worried about what would happen to the country. —Preceding unsigned comment added by GeorigaTex (talk • contribs)

Seems to me it would be more streamlined. With less waste and less cost, plus what I mentioned earlier -- 11 trillion dollars returning to the country -- why wouldn't it be more than enough? I'm not worried about the country. Brian Pearson 22:17, 30 July 2007 (UTC)

Yes, what you mentioned would fall under economic growth, which has not been factored into any of the rate studies. They were all static as oppose to a dynamic scoring analysis. Most economists and tax experts believe there would be positive economic growth from a consumption tax and removing taxes from business. However, the studies have not include evasion - so this is one of those aspects (along with a few others) that proponents feel would balance out. In the long run (5 years out), I think even the most pessimistic studies show economic growth. It is believed that a consumption tax will provide a much stronger base as the baby boomer's move out of the workforce but continue to consume (taxation of wealth shown in Kotlikoff's studies). From the CPA's that I've spoken with, I haven't met one that was fearful of their job. Many thought it would favor them as they could focus on other areas (savings, investment, business) rather then taxes. The southeast director of Americans for Fair Taxation (Phil Hinson) is a CPA (GeorgiaTex has spoken with him). Morphh ^(talk) 0:59, 31 July 2007 (UTC)

It is good to hear that CPA's won't be losing their jobs. I also would agree that though there may be some evasion, it won't be significant. I do think there would be growth but I think there'll be a nice kick at the beginning, over and beyond what is expected from lower prices and the like. I'm very glad to see your input on this. Brian Pearson 04:29, 31 July 2007 (UTC)

I was just re-reading the article. Under Distribution of FairTax burden I noticed that virtually all studies ignored one factor or another. Particularly interesting was the Treasury Department's refusal to disclose their figures and methodology. I wonder if the latter could provide an opportunity to take advantage of the Freedom of Information Act. Brian Pearson 00:11, 5 August 2007 (UTC)

Yes - I know Kotlikoff has requested it many times and has discussed using the Freedom of Information Act to try and get the methodology. He is quite certain they botched it up pretty bad to get such numbers. I'm sure it is being pursued by AFFT. If you think about it... they got a 25% rate (inclusive on income taxes alone, which is half the income tax base) so it would be something like 50% to cover all taxes. Exclusively that would be 100%. So if we're really taxed at almost 100% on all consumption (most of GDP), then we have some very serious tax visibility issues. Morphh ^(talk) 0:29, 05 August 2007 (UTC)

2008 presidential election

Reub2000, I don't agree that this is significant enough to recieve its own section. Could you explain why you think an article of this size and with the different areas it covers, that we should devote a section to three sentences on the 2008 election candidates? Morphh ^(talk) 10:58, 03 August 2007 (UTC)

You do have a point. I wanted to separate the 3 sentences from the legislative history, because I don't consider support during a campaign as part of it's legislative history. Reub2000 06:23, 4 August 2007 (UTC)

I've tried to work this into the lead and the section on Grassroots. I've removed the header but left the statement as a separate paragraph. Morphh ^(talk) 11:46, 04 August 2007 (UTC)

NPOV concerns and criticism

I agree with the above posters that this article significantly violates NPOV. It seems that the lack of a criticism section has had the side effect of making it much easier to insert biased information supporting FairTax. Criticism not only makes NPOV behavior more apparent, but makes it easier to read--people reading most often want to see a arguments for and against (especially as an executive summary).

I'm surprised that this made it as a featured article. I'll note that it only has 5 support votes (mostly people who support FairTax--it would be impossible for it to be a remotely accurate cross-section of Wikipedians) total and even with a lack of opposition, that shouldn't be enough to make it featured. The only qualifications it has is that from a purely literary standpoint it's good and includes many citations.

The article itself is quite unbalanced and at this point I can see only one person supporting it as balanced, with various people coming in and saying otherwise. At most, 10% of this article is for the opponents' side--probably more like 5%. Even in the revenue neutral section, the paragraph for the opponents is over half a refutation of what was said. The fact of the matter is the supporters of FairTax are a MINORITY and as such, NPOV requires that the article showing support for FairTax has much less than 50% coverage in the article.

Beyond that, many statements are made supporting FairTax _as statements of fact_ (e.g. things like "this is what the effective tax rate will be" or "this is what will happen under this system" [paraphrased]). Although virtually all of the statements by opponents are qualified with 'the opponents claim,,' but only about 10-20% of the proponent statements are qualified in a similar fashion (instead as statements of fact). Even some calculations are made that way. More experts are cited in support of FairTax (when presumably they're the minority) and more criticisms (including non-specific or non-calculation supported) of non-FairTax systems. There is also more math/calculations supporting FairTax, with much, much less showing the counter side of it.

-Nathan J. Yoder 09:14, 12 August 2007 (UTC)

I disagree with every one of your points. Most of the article is describing the plan, which is based on legislation that has factual points. A portion is description, a portion is proponent, and a portion is opponent - 50% of the article does not need to be criticism. You address criticism where it has been presented. If there is something in the article that does not address both sides sufficently, please present the statement and we can work to address it. Econmists or arguments for or against other tax systems will be presented in their tax articles. Someone for an income tax but makes no statement about the FairTax will not be presented in the FairTax article as a critic or disagreeing. It is unknown what the support is and your charge at the FAC is unfounded. A criticism section has been discussed and is against guidelines - the article already meets Wikipedias goals to include criticism under each area where criticism is raised. Morphh ^(talk) 12:38, 12 August 2007 (UTC)

I appreciate the "troll warning," way to assume good faith when people disagree with you. I'll take an assumption of bad faith with a nother one, especially considering you seem to be basically alone your assertions, but because you spend more time on this article you get more of your way. You need to familiarize yourself with NPOV policy; it REQUIRES that there is representation proportional to how widely the views are held. In other words, a view held by 50% requires 50% representation. You cite undue weight, but it is quite obviously that undue weight is being given in support of FairTax--how is it a correct amount of weight when a minority supported viewpoint (FairTax) is given 90% support in the article? You didn't address what I said about FAC except to say it was wrong--please explain why a featured article should be passed with only 5 people supporting it and plase give your count of FairTax supporters in it.

A criticism section is well within consensus, hence why the vast majority of articles with any significant criticism have a criticism section--please try to demonstrate that it's against consensus. You also didn't address the lack of calculations, graphics and less studies and experts given to the contrary. Please address these concerns instead of jsut saying "they're wrong." I particularly like the missing graph showing what the predicted effective tax rates would be for those who are opponents. Look at the tax rate sections and subsections, including the first paragraph at that. I'm sorry, but stating what the effective tax rate would be under _any_ given plan is definitely POV as it inherently relies on disagreed-upon assumptions and studies. -Nathan J. Yoder 20:44, 12 August 2007 (UTC)

Please show me where you get that 50% oppose the FairTax. I can show you a study that shows that 85% people informed on the FairTax support it.

Precisely not the way to argue on Wikipedia.Cherlin 01:33, 13 August 2007 (UTC)

This is also not proper use of undue weight or NPOV policy. I am quite familar with it as I have over 8000 edits on Wikipedia and I'm quite familar with tax policy, being the founder of WikiProject Taxation. I put the troll warning as we often have people that just hear about the FairTax that pop by and make comments without understanding policy or fully reading the article. We have the same issues on several tax articles (particularly those on tax protesting). I've been meaning to put it up for a while. There is a proper process with adding a POV tag. First the issue should be discussed on the talk page dicussing what in particular violates the policy, which has not been done.

What do you call this, then?

You should specify what section or what area needs to be addressed and why. There are sentence tags, section tags, and then finaly an article tag if absolutely necessary - which should only be put on a FA article with great dispute and discussion, which hasn't happened here.

What do you call this, then?

The tag is way excessive and you have not demonstrated that anything is POV. Please see the NPOV policy on criticism sections as well as the criticism template. If you really want me to raise the flag, I assure you that your call for a criticims section does not stand a chance on an FA article that already has the criticism interwoven into the article as suggested by the policy (note that Cielomobile - an opponent also supports this position).

The mere fact that you cite opposition arguments does not make your article neutral. You fail to note the political leanings and possible biases of proponents and opponents, and quote those you favor as if they were authorities rather than the special pleaders they are. Yes, I did read the NPOV article, and cited it in my complaint.

Most editors that are familar with the article don't post much as they know that I watch it pretty good but I can certainly pull them in if need be.

You don't own this article. I think you need pulling in.

Please expand on the "lack of calculations, graphics, and "less studies and experts" given to the contrary. I don't know what the heck your talking about. There is a graph there for the "opponents" (mind you it is not of the FairTax plan but it is included anyway). I actually think the article is biased against the FairTax by including studies and such that are not of the plan.

I don't know how to put it any plainer: YOU LEFT OUT THE IMPACT ON THOSE OVER $320,000. The so-called "FairTax" becomes increasingly more income-regressive at higher incomes.

Please state what you mean with the rate sections - I'm not sure what your refering to address the problem or discuss it. I also just noticed that you're putting this article up for FAR. This is way out of line. Morphh ^(talk) 0:34, 13 August 2007 (UTC)

No, I'm the one who put it up for FAR, and it is not way out of line. This is, from top to bottom, the second-worst NPOV article I have encountered on Wikipedia, the worst being the one on Free Trade (Free for us, but not for you, suckers). You show clear bias. Your references are biased. It is not enough to cite references. They must be reliable references, or their biases and other inadequacies acknowledged. We don't care how much you believe in what you post, if you don't know how to post properly. Cherlin 01:33, 13 August 2007 (UTC)

If you believe references are biased, could you say why? Or, if you believe cites are not reliable, say why? I don't agree there has to be a section specifically for criticism. Just because there are many such articles with such sections, it does not follow that this particular article should be changed, thusly. I agree with Morphh that if criticism is lacking, according to your opinion, then it cannot be created out of nothing in order to satisfy the critics of this article. It does not follow that information in the article that doesn't have a con for every pro should be deleted. My own opinion is that, if a person understands the Fair Tax, then that person will be more likely to agree it is a good thing. It is far better than the current system, which to my mind, should have many more cons than pros. What would that make an article about the current system with your logic? Brian Pearson 14:41, 13 August 2007 (UTC)

Cherlin, you generally aren't supposed to respond "inside" of someone else's talk, but what's done is done. Morph, I am not the one who put it up for FAR, please read more carefully before making accusations, as I'm hardly the only one opposing the article's FA status. All that's required for an NPOV tag is that a discussion of the NPOV issues be initiated, which it has, along with responses from both sides.

"Please show me where you get that 50% oppose the FairTax. I can show you a study that shows that 85% people informed on the FairTax support it." - Please don't misinterpret the meaning of the statistic. The measure of due weight has nothing to do with how well informed people are of a subject, just how many support or oppose it. This is assuming we had a NPOV-compliant way of measuring how informed people are (which doesn't exist). I don't need to cite the obvious--if FairTax was actually supported by the majority, it wouldn't be anywhere near this controversial and so widely opposed, in addition to not being made into law by now.

"The effective tax rate would be X." - factual statement, not NPOV compliant. "It is claimed by group A that the effective tax rate would be X, while group B claims that it is Y." - NPOV compliant. If you read through the article, you'll also notice that a surprising amount of statements are phrased as a matter of fact while the opposing views are presented in the form of "the opponents claim."

If you think that inclusion of studies in opposition to it are a violation of NPOV, then you need to reread the undue weight article, because they are absolutely required. You present studies of view A, then you must present studies of view B in proportion to how popular those views are. If you do not have enough information from the opposing side (in the form of graphs, studies or otherwise), then you are required (as per NPOV/due weight) to limit the amount of information from proponents you use to balance it out. It is simply not acceptable to do something like "well it is 75% in support of it because I could only find 25% against it"--in a case like that you'd need to deliberately remove things in support of it to alter the percentage.

I don't really know what's hard to understand about giving more citations of studies, experts , graphs and other material in support of something as opposed to against it.-Nathan J. Yoder 07:10, 13 August 2007 (UTC)

Almost forgot, consensus on Wikipedia has clearly been for criticism sections (it should be obvious given the massive number of them compared to interwoven articles), although that's not my primary concern. Again, if you disagree that there is consensus, please state your reasons for believing so, otherwise I'll assume that you agree and are going only by the _ESSAY_ (not a guideline nor even policy) you linked to earlier. -Nathan J. Yoder 07:21, 13 August 2007 (UTC)

Cherlin - it seems your main contention is the impact of those over $320,000. I don't know of any studies that discuss this or what we should use as a reference for your objection. The graphs we used were from studies. How did we leave it out? - I can't make up data. There would also have to be a comparison against income taxation, which have to take into account loopholes that allow those over $320,000 to pay much less then expected (Warren Buffet, John Kerry, etc.) Again, we don't have the data to include. This is not a POV issue, it's a data issue - we don't have it to include it. If you can find it, then by all means. In regard to discussing the objections, I wasn't getting any details in something that I could work on. It seems like a blanket statement with no specific statement of what in particluar violated the policy - what POV was missing with a reference to dicuss the point. Morphh ^(talk) 13:38, 13 August 2007 (UTC)

Nathan - I appologize for including the FAR comment in my reply to you. It was late and I had guests over (wife got pretty mad that I was replying at all). We have no way to measure how many people oppose the FairTax. I expect that it is not even a blip on most peoples screens. Some have come out against it in Congress, but no vote has been done. First thing is to describe what the plan is (based on the legislation) and then include the criticism that exists and supports claims. In regard to the effective tax rate, the rate per the legislation is 23% (fact). The effective rate is based on this so long as you qualify that it includes spending all income on new goods and services, which I believe it does. The examples quoted are referenced. I expect your speaking of the revenue neutral rates and objections to 23% fully funding the government. This still does not change the FairTax rate of 23% - it may fall short of funding and may require being increased but this is a different point. The rebate is based on the rate, so even an increased rate may not change the effective rate structure as they would be receiving a larger rebate - % would be about the same I imagine. Do you have any source data that presents what opponents think the effective rate would be? I have no problem specifying if proponents claim something, but like the rate - we do have legislation that is the basis of fact. Morphh ^(talk) 13:38, 13 August 2007 (UTC)

Nathan - Could you provide the citations of studies, experts, graphs and other material that you are suggesting we include? I have no problem adding in such content, I just don't know what your referring too. I don't think it would be proper to remove content because opponents haven't come out against it in some regard. There are several aspects of the plan that have no criticism. Shocking as it may be, their is a lot of criticism of the current system and some tax reform benefits are acknowledged by both sides. To remove such information would be bias in presenting the benefits of the plan. In regard to the criticism section, please read through the NPOV policy on Article structure, which specifically footnotes criticism sections. Cielomobile also supports this position. This is not a vote, it is a discussion. Please present reasoning as to why we should have a collection of criticism in one section with no other viewpoint and with no context to the arguement. Morphh ^(talk) 13:38, 13 August 2007 (UTC)

I never said anything about a vote, I just said that the overwhelming consensus was for criticism sections (since Wikipedia is consensus driven). Don't cite essays/guidelines/policies as the sole basis of your argument if you're going to say that I must present more than consensus. Even the NPOV page you link to is conditional--a segregated section *may* be POV, but it's not inherently such. I think I've already said it, but here it is again: criticism sections allow for easier and quicker reading when people want to simply find a comparison of pro vs. con of a given view. Interwoven like this (and I'm not inherently against that, but in this case it doesn't really work) you should at least have a side-by-side comparison of all the main points rather than redistributing a lot of stuff.

"so long as you qualify that it includes spending all income on new goods and services, which I believe it does." or that something "may" be the case, you think etc -- that's the thing, you're making a personal assumption here to state it as fact, one which isn't universally accepted. This also applies to other statements stating certain equivalents based on assumptions of the FairTax system, especially the graph (which doesn't have a qualifier like that) and other statements in the effective tax rate section. You must qualify it by saying that a certain group believes this. I don't understand your question, you're asking me if anyone disagrees with the calculations of effective and equivalent tax rates? They're calculated from pro-FairTax sources. The very fact that someone disagrees with FairTax studies means they disagree with the assumptions that lead to those calculated values--after all, you even cite the "fairtax calculator" as one of the sources.

You can present the basics of FairTax without needing to go into this much details, plus I see a lot of repetition anyway. NPOV doesn't necessitate that a given subject have all of its details covered; they're detailed only to the extent that they are proportional to the beliefs. You concede that FairTax is just a blip on people's radars...but that implies that there are only a few FairTax supporters. How could someone support it without knowing about it or at least something equivalent? Should we create an article this size for every single economic theory as long as it has a few supporters, a book and studies? -Nathan J. Yoder 21:45, 14 August 2007 (UTC)

I read this post after posting to the FAR so sorry if I missed some points in here, while posting there. I don't see any overwhelming consensus for a criticism section, particularly for FA articles. There is way to much information and background on each one of these issues to do some side-by-side. The effective tax rate is not based on studies. It is based on the legislation, which is a 23% rate. It doesn't matter what Beacon Hill or William Gale thinks the rate needs to be to be Revenue Neutral. The rate is 23%. I don't understand what your refering to in regard to personal assumptions or what is not universally accepted - please explain. The graph does have a qualifier in the graph itself, although I do agree that we need to remove the comparision to the income tax. Most of the population knows very little about any one particular subject. Most people don't even know who their Congressmen and Senators are. If you limited the articles to those that most people know about, we'd be left with American Idol and the Pope. Morphh ^(talk) 14:00, 15 August 2007 (UTC)

I don't understand your confusion in regard to making personal assumptions, but perhaps someone else could explain it better than me. In regard to effective tax rates, what do you mean that it is set by legislature? The legislature would set the "statutory tax rate" (what is set by law) and the "effective tax rate" is what an individual would get with various tax deductions taken into consideration. Tax rate explains both of these, defining "effective tax rate" as: "the amount of tax an individual or firm pays when all other government tax offsets or payments are included, divided by the individual or firm's total income or taxable income." In other words, if you are suggesting what the effective tax rate would be, you're making a (hopefully scientific) estimate of what sort of deductions would be received by the population. Regardless of whether or not this is based on studies or a personal guess, it's still particular POV for the purposes of Wikipedia and can't be simply stated as fact on Wikipedia (it needs to be qualified with "acccording to study X" or "group A believes ...."). -Nathan J. Yoder 06:17, 16 August 2007 (UTC)

Nathan, there are no tax deductions to consider, only the rebate. There is nothing to deduct from under the FairTax, there is no withholding. Everyone is treated the same based on family size, which is qualified in the statements. The effective rate is based on the statutory tax rate minus the prebate on spending of taxable goods and services. If you spend $10, pay $2 tax, and recieve a $2 rebate, your effective tax rate is 0%. The tax rate is determined by the legislation and the rebate is determined by family size. These are static values. Funny that you quoted the tax rate article - I wrote most of it, so I'm quite familar with the terms and methods of calculation. Morphh ^(talk) 13:19, 16 August 2007 (UTC)

Nathan, as you're currently discussing the effective tax rate, perhaps you could begin the process of more clearly specifying your concerns by telling us exactly which parts of that section you feel violates NPOV? If you were to quote specific sentences, and explain how you view them, that would be very helpful. It seems as good a place to start as any, and then perhaps we can discuss it. J.Winklethorpe ^talk 19:33, 16 August 2007 (UTC)

That makes more sense. As long as the claims are specific family sizes, then there shouldn't be a problem with it. I don't have much time to edit this and other pages now, so I'll just say a bit before I leave concerning the criticism section. All that has been cited is a guideline saying that all criticism shouldn't be packed into one section, but that is not the same as saying that no criticism section should exist at all. They cite a good example comparing history pages of the MSIE article, where there are criticism sections that are well written. The fact is, many articles where people are learning something new, especially ones about proposed systems, people will want to know right away what the main proposed advantages and disadvantages are. In its current state, you at least have to skim the entire article (and a lot of redundant info at that), which is annoying. There are already sections summarizing fairtax, so you could likewise have a criticism section (whether it's called "disadvanteges" or divided up like differently). If you don't want an explicit 'criticism' section, you could do something like sections covering assumptions on both sides (e.g. "Spending assumptions"). Even if you keep an entirely interwoven approach, it definitely needs to be made easier to read to find advantages and disadvantages quickly. At the least, there needs to be a better summar section (with subsections) that just get to the points of both sides. -Nathan J. Yoder 10:29, 25 August 2007 (UTC)

Nathan, the lead of the article hits on the major pro / con points of view in a summary format. There is also a summary section in each area that has multiple subareas that briefly states the points of the section. Your point on making it easier to read and find advantages and disadvantages is noted and I'll try to see how we can reorder sections to provide such a layout. I'll also try to review the summaries and see where we can be more complete. I'm not sure what you mean regarding the spending assumptions. I expect such assumptions would be in regard to the distribution of the tax burden. The only detail study in this regard was done by Kotlikoff which had 42 stylized households. While I don't know of any criticism for this study, we did state in the main article that "Consumption assumptions for the 42 stylized households in the study are the basis for the relative progressivity over the current system. If the assumptions are changed, the adjusted tax rates below would also change." I don't know that it would benefit the article to try and lay out the households spending in his study. If we did, we would have no critic for the assumptions used and what the relative change would be. Morphh ^(talk) 12:13, 25 August 2007 (UTC)

Some of the obove observations about the POV of the article may have merit. However the statement that the article is POV because it doesn't have a criticism section is off base. An article does not need a criticism section unless criticism of the topic is a specific facet of the topic, demonstrably important enough to justify such placement. In general it's better to weave the dissenting views into the article according to the undue weight concept and have them placed in the appropriate sections discussing each topic. I suggest everyone take a step back a bit and reallize we're all working to improve Wikipedia. Refocus comments just on the article, remove the veiled insults, and please try to stick to just facts, unemotionally. Please work to be specific on suggestions for the article's improvement and support the suggestions with Wikipedia policy. If you can demonstrate a section violates undue weight, it should be fixed, but you may need to do the research to support your position. - Taxman ^Talk 14:24, 13 August 2007 (UTC)

I feel the approach taken to criticism within the article is the correct one; a criticism section would simply fragment details (with differing views of aspects of the plan appearing in totally different sections). I have every confidence that any specific POV concerns can be dealt with by discussion. J.Winklethorpe ^talk 21:08, 13 August 2007 (UTC)

Lead

Lead suggested by Cherlin

The FairTax (H.R.25/S.1025) is a bill in the United States Congress for changing tax laws to replace the Internal Revenue Service (IRS) and all federal income taxes (including Alternative Minimum Tax), payroll taxes (including Social Security and Medicare taxes), corporate taxes, capital gains taxes, gift taxes, and estate taxes with a national retail sales tax, to be levied once at the point of purchase on all new goods and services. The proposal also calls for a monthly tax "prebate" to households of citizens and legal resident aliens, to "untax" purchases up to the poverty level.[13] The sales tax rate, as defined in the legislation, is 23% of the total register price (23¢ of every $1—calculated the same way as income taxes), which is comparable to a 30% traditional state sales tax (30¢ on top of every $1).[8] Conservatives claim that the U.S. tax system has a hidden, deleterious effect on prices,[14] but that the so-called FairTax will not. They further claim that moving to the FairTax would decrease production costs from the removal of business taxes and compliance costs, which proponents predict will offset a portion of the FairTax effect on prices.[15] "Compliance costs" in the FairTax context means costs of accounting and paperwork for filing every kind of business tax. With the rebate taken into consideration, proponents claim that the effective tax rate would be progressive on consumption and could result in a tax burden of zero or less.[13] However, opponents assert that while progressive on consumption, the tax would be regressive on income.[16] Opponents claim it would decrease the tax burden on high income earners and increase the tax burden on the middle class,[8][11] while the plan's supporters argue that it would increase purchasing power,[17] and decrease tax burdens by broadening the tax base and effectively taxing wealth.[18][13] Many conservative economists and tax specialists claim that consumption taxes, such as the FairTax, would have a positive impact on savings and investment (not taxed), ease of tax compliance, increased economic growth, incentives for international business to locate in the U.S., and increased U.S. international competitiveness (border tax adjustment in global trade).[8][15][7] However, economists and tax specialists critical of the proposal argue that it could be difficult to collect, having challenges with tax evasion,[16][8] and that it will not yield enough money for the government, resulting in cutbacks in spending, a larger deficit, or a higher sales tax rate.[8] In particular, they say, repeal of all taxes on investments and inheritances would result in a loss of hundreds of billions of dollars in tax revenue, requiring an increase in the single tax rate, in addition to being increasingly regressive at the highest income levels. The FairTax has generated a large (grassroots or AstroTurf, depending on the observer) tax reform movement in recent years, led by the non-partisan group Americans For Fair Taxation.[19] Increased support was created after talk radio personality Neal Boortz and Georgia Congressman John Linder published The FairTax Book in 2005 and additional visibility is being gained in the 2008 presidential campaign. While the proposed bill has yet to have a major effect on the tax system, the Fair Tax Act has the highest number of cosponsors among tax reform proposals (attracting 67 in the 110th United States Congress), gathering much stronger support than popular flat tax legislation. A number of congressional committees have heard testimony on the FairTax; however, it has not been voted on in either Chamber. The plan is claimed to increase cost transparency for funding the federal government and supporters believe it would have advantages with taxing illegal activity and illegal immigrants.[15] Because the FairTax plan would remove taxes on income, tax deductions would have no meaning or value and some law makers have concerns about losing this method of social incentive. The legislation calls for repeal of the Sixteenth Amendment, in order to prevent Congress from introducing new income tax legislation in the future.[20]

I have several issues with the changes to the lead (above) made by Cherlin. The summary stated NPOV, but many of the changes greatly disrupted prose, were POV, or did not contain sources. Do we have any reliable source that states that AFFT is astroturf and does it deserve that much weight in the lead. Introducing words such as "so-called" FairTax is blatantly bias. Changes like "Conservatives claim that the U.S. tax system has a hidden, deleterious effect on prices" - Is there any economist in the world that would say that taxes have no effect on prices? Do Progressives or Liberals take this opposing viewpoint - source? Mike Gravel doesn't. Let's discuss the changes here and come to some agreement as this will just end in a revert war otherwise. Morphh ^(talk) 17:26, 13 August 2007 (UTC)

More on the lead - Cherlin, why are you trying to turn this into a conservative vs. liberal thing? This is non-partisan. Changes like "Many conservative economists and tax specialists"... "conservative"? - the source says "Many mainstream economists and tax experts like the idea of some kind of consumption tax -- in fact, the superiority of consumption taxes is almost conventional wisdom these days." Where do you get "conservative"? Another example: "The plan is claimed to increase cost transparency" - claimed? Does anyone claim otherwise? Your taking multiple taxes in many areas and bring it to one tax. You keep injecting words to make everything a claim by conservatives. While this certainly applies in some cases, there are things that apply to both sides. You're trying to polorize the article where there is no polorization needed. There are certainly things that people disagree about, but you don't have to put "claim" and "conservative" before every statement like they're the only ones suggesting it. There is no serious dispute about this information. In another edit, you changed aggressive repeal to repeal - there is a technical difference here. You've added sentences with no source into the lead, which is suppose to be a summary of the article not new info. Since the lead is such an important part of the article, we're going to need to review everything on the talk and gain some agreement before making these changes. To end on a good note, I did like the change "which would" -> "in order to". Morphh ^(talk) 20:28, 13 August 2007 (UTC)

I would suggest that the best way to give due consideration to Cherlin's points, while ensuring that the quality of the lead does not drop below that of a FA, is to return to the original version, and then discuss Cherlin's desired changes here. Cherlin, if you are amenable to this course of action, please indicate so. J.Winklethorpe ^talk 21:34, 13 August 2007 (UTC)

I believe there are rebuttals to this [8].

Also, I believe the above proposed lead should include "because...", instead of making them stand-alone statements. Brian Pearson 00:45, 14 August 2007 (UTC)

Could you expand upon your thoughts here Brian? I'm not sure I understand. I don't think we want to go into "because" in the lead as this is a summary and we don't want to do a lot of defining. For example, Cherlin added the statement '"Compliance costs" in the FairTax context means costs of accounting and paperwork for filing every kind of business tax.' While it's an incomplete definition, it is also not needed in the lead. They can go to the article if they need further definition of a particular terms use. Our lead per needs to be limited to three paragraphs or four small paragraphs and be able to convey a summary of the articles content (see WP:LEAD). Morphh ^(talk) 17:29, 15 August 2007 (UTC)

Point taken. One more or two more items I'd like to mention. Some suggest that the tax base may be smaller due to increased evasion. I from what I've read [9] [10], it looks like the point has been made that the base for the FairTax would in fact be larger than the for the current base. It seems to me, evasion would almost have to be rampant.

Also mentioned is that government expenditures would be taxed, and this is counted as part of the base according to the two links I posted above. Even without the government paying taxes, the base would still be larger. On top of that, it seems what we would be paying and what the government would be paying would cancel out. It looks as if the article doesn't mention the government aspect nor does it make an educated estimate of the relative base size between the two tax systems. Brian Pearson 20:27, 15 August 2007 (UTC)

Another point, the sources above weren't counting illegal immigrants or the effect created by taxing goods from out of country, nor were they taking into consideration the repatriation of 10 trillion dollars and so forth. Brian Pearson 20:31, 15 August 2007 (UTC)

It's entirely possible I'm missing something, but how will the tax base be bigger unless people are spending more than they are earning? The article suggests that proponents of the FairTax believe that it will encourage saving (a worthy goal), so that people will be spending less than they earn (hopefully). Is this because capital gains aren't being included in income taxes, or is there possibly something else I'm missing? Ben Hocking ^{(talk|contribs)} 20:34, 15 August 2007 (UTC)

The figures for the tax base are briefly discussed in Distribution of tax burden ($11.467 trillion consumption base compared with $9.706 trillion of taxable income). Aspects of government paying into the base would be covered by the tax rate studies. Morphh ^(talk) 20:45, 15 August 2007 (UTC)

Ben, income does not equal taxable income. In regard to consumption, it includes visitors and consumption of U.S. goods and services that may not pay income taxation. Each tax system has its own defined tax base - the flat tax is estimated to be $10.347 trillion. The larger the base, the lower the average marginal rate possible. They claim the FairTax has the largest base that doesn't double tax income. A study was to be done by Beacon Hill but I'm not sure they have published it yet. From what I understand, it was completed. Morphh ^(talk) 20:55, 15 August 2007 (UTC)

Thanks for the info, and I'd like to invite you over to my talk page (since I feel a little guilty spending too much time on this talk page working on my own "education") to expand on my question about "who pays more"? An easy political answer is "foreigners", but I'm quite skeptical if that's the answer given. Ben Hocking ^{(talk|contribs)} 21:13, 15 August 2007 (UTC)

The amount of money that foreigners will spend for each good or service will be the about the same (note how after-tax prices hardly change). But since their currency will appreciate relative to our currency (note the cheaper exports from the United States), they will be able to get more US currency for their money and thus be able to spend more money in our country. I think that's what would happen. Morphh or anyone just as knowledgable about the FairTax will be able to correct me if I'm wrong.◙◙◙ I M Kmarinas86 U O 2¢ ◙◙◙ 21:43, 15 August 2007 (UTC)

I'm not an authority like some, but I remember reading that a lot of tourists like to spend here, because of the discrepancy between our cheap dollar and their Euro. It goes without saying that that money would include their support to our government via the FairTax. If you use this calculator [11] you'll see that one euro would be about 1.3402 dollars. That's just a hair over what they would be a four cents advantage. But that's not taking into consideration that prices will be lower because embedded taxes are gone and cost of tax compliance will largely disappear. Brian Pearson 01:13, 17 August 2007 (UTC)

Ames Straw Poll

Does anyone have any good information or sources on the FairTax tent at the Ames Straw Poll? Any good pictures that could be included in the article?Reub2000 07:51, 13 August 2007 (UTC)

Gales comments on AMT

I'm not clear on why the FT would have to increase the tax in order to make up for tax revenue from the AMT. I went to the AMT site and got even more confused when I learned that there was an AMT for companies as well as individuals. Also there were several alternative ways suggested about dealing with problems with the AMT.

Anyway, we are talking about two different tax bases, here, when talking about evasion -- There's already a certain percentage of evasion with the current tax, and it's probably higher than what the FT would see, IMO. That there are two tax bases also applies to the AMT. Does Gale use the GDP as a guide?

Is all of this clear to ya'll? If so, it may be that many of you are already experts in economics and tax theory, or have done a lot more study compared to the casual reader. Brian Pearson 23:52, 17 August 2007 (UTC)

Well, it is my understanding that the AMT provides a steady tax increase every year. So each year the current tax base gets larger (since the AMT has little decutions or exemptions) and collects more as a percentage. In Gale's revnue neutral study, if you calculate in a static way the tax rate for each year for the next 10 years, your going to end up with an increased rate every year because it has to make up for replacing the AMT tax increase that is projected. Of course no one expects we'll have the AMT over this time period as both parties seem to be in agreement that something needs to be done, but Gale calculated for it. The only thing that bothers me is that the ten year figure is the one that is often quoted without any qualification. Of course the 10 year period is very speculative and does not take into account any economic effects. I don't know what he uses as a guide. Morphh ^(talk) 12:41, 18 August 2007 (UTC)

Yes, I think he is assuming we'll need the increase whether we keep the old system or go to the FairTax. BTW, I remember reading that it would be easier to keep the AMT -- using it as a base to work on -- and get rid of the rest of the current income tax. They'd have to tinker with the AMT. Brian Pearson 22:43, 18 August 2007 (UTC)

Book cover

I've been thinking about the book cover that is the main image of the article since fair use was brought up at the FAR. I think I've addressed the fair use issues that were brought up, but this got me thinking a little more. In the past, the image has been brought up as a bias advertisement for the book and Boortz. I've argued that it is the most widely known image of the FairTax issue, since the book was a NYT bestseller and concensus was to keep. At the time, it was a good image for the top right corner as we had nothing else. However, now we have the U.S. taxation template that could serve as some article decoration and we provide a wikilink to the book (which didn't exist in the past). So to get to my question, what are the thoughts on this image? Does it give the first impression of bias? Does it add anything to the article anymore? Would the article be better with it or without it? Thanks Morphh ^(talk) 14:39, 21 August 2007 (UTC)

I think it's perfectly valid to have it there...but that it will cause claims of bias for as long as it is. I just had a quick look at the article with the template alone, and it's not bad, but not great either. Ideally, some other decent main image could be used...but there isn't one (unless we use a photo of the bill itself, or something, but that's rather boring). I think my conclusion is one of indecision, which isn't much help :) J.Winklethorpe

^talk 17:19, 21 August 2007 (UTC)

I bought that book when it was on the NYT best seller list. I was already a supporter of the Fair Tax Act. I really didn't care for the book and hated that image. To me it makes the claim we are not going to be enforcing tax collection any longer, but then we find that we are going to be enforcing tax collection, which makes the thing sound like a scam. I say get rid of it.--I Use Dial 10:11, 25 August 2007 (UTC)

I didn't have a negative view of the image, either for the book or the article. Nor did I have the connotation that the FairTax was a scam, certainly not because there's an enforcement aspect to it. Brian Pearson 02:04, 29 August 2007 (UTC)

Sales Tax Not Progressive

Is this tax really progressive? Rebates are not truly progressive since not all people apply for them and they don't really directly correlate with increases in income. Charles Carroll 01:52, 18 September 2007 (UTC)

Any citizen that wants the rebate can get it (which I'm sure all low and middle income families will), so I don't see that as a point of contention. There are many options in economics that could make a tax progressive besides a stepped marginal rate on income. Flat taxes often exempt a certain amount of income to make a plan progressive. Progressive essentially means a tax imposed so that the effective tax rate increases as the amount to which the rate is applied increases (the rich pay a larger effective percentage). Effective rates are determined when all other government tax offsets or payments are included (which includes the rebate), divided by the tax base. As far as directly correlating with increases in income - you are correct here.. however, you are defining a consumption base tax and using income as your base of reference, which is an arbitrary correlation. You use a consumption base in determining the effective rate (not income). Correlating to income is playing with the definition by defining the base to something other than the tax base. If you hear a regressive statement by an economist such as William Gale, he'll say something specific like "the percentage of income taxed is regressive", which is pseudo-accurate as he defined the base. So comes the conflict in definition - regressive on income or progressive on consumption. What is more accurate, a better indicator, and what does it mean? You could be taxed on 100% of your income (regressive on income) but pay an effective rate of 0% after the rebate (progressive on consumption). Using income as the base also assumes a cross section time, so the assumption that you never spend any savings. Income also is limited as a measurement as it doesn't include wealth. The progressive / regressive point is debatable and is discussed in the section Distribution of tax burden and in more detail under the sub-article in the section Progressive / regressive debate. In this article, we define the base being referenced and present both views. Morphh ^(talk) 13:26, 18 September 2007 (UTC)

re Effects on tax code comliance

There are three cites supporting the $1 to $3 trillion dollar shadow economy [12]. The first link may have changed, since there is no mention of the underground economy. The second one suggests a figure close to $1 trillion, so I'm guessing the third one -- a paper source -- has a figure for the $3 trillion? Brian Pearson 13:09, 31 October 2007 (UTC) PS: Also, the article Underground economy doesn't have a total figure for the underground economy. Brian Pearson 13:12, 31 October 2007 (UTC)

I updated the link to the first ref, which states $3 trillion. The third ref, the book, uses a percentage of GDP to state the underground economy, which I think also calculates to $3 trillion. Morphh ^(talk) 15:49, 31 October 2007 (UTC)

Thanks! My problem now is figuring out why I was looking at that stuff... Brian Pearson 00:31, 1 November 2007 (UTC)

Production cost, personal service, and time arbitrage credit

"it is expected that moving to the FairTax would decrease production costs from the removal of business taxes and compliance costs,"

Textbook case of weasel words. Who expects this? Also, I find the word "from" to be awkward here (and similar problems exist throughout the article). I'm going to change it to "due to".

"Personal services such as health care, legal services, financial services, haircuts, and auto repairs would be subject to the FairTax, as would renting apartments and other real property.^[8] In comparison, the income tax system also taxes such consumption indirectly by taxing the income used for purchase."

Wildly inaccurate. Health care and tax planning are tax deductible, and legal services and auto repairs are often as well.

Something else that I don't get: what exactly is a "personal" service? Is designing a website a "personal" service? If everyone who produces a service is considered to be "selling" that service, isn't everyone who works for a living going to be subject to the tax, and thus isn't it basically the same thing as an income tax?

"In the period before the FairTax was implemented, there could be a strong incentive for individuals to buy goods without the sales tax using credit."

I pointed out that this would occur only if the creditors did not increase their rates to compensate, and it was deleted for want of a cite. But the passage that I am correcting has no cite, either. Either both or neither should be deleted.

"On the other hand, proponents of the FairTax note that this effect could also allow individuals to pay off their existing (pre-FairTax) debt quicker."

Gross violation of NPOV. The phrase "on the other hand" contrasts it with a problem, thus clearly implying that it would be a good thing. Which is a matter of opinion (and, in my opinion, a rather disgusting one. Why should investors have their savings stolen to bail out irresponsible spenders?). Also, the word "note" implies that Wikipedia agrees with the assessment, rather than merely commenting on it.

Also, "quicker" is an adjective, not an adverb.Heqwm (talk) 21:04, 22 November 2007 (UTC)

I didn't see your talk post before I edited... In the first instance, we're talking about production cost and not prices, so I removed the expect part. Business taxes and compliance costs are part of the production cost, and their removal would decrease the production cost. This is not disputed so it doesn't make sense to say "it is expected" or "proponents expect". "Wildly inaccurate"? As I said in the summary, this is the entire income tax system - payroll taxes are not deductible, which 75%-80% of Americans pay more of according to studies. In addition, health care is primarily tax deductible for businesses and the others you stated are very limited. An estimated 200 billion a year is spent on "tax planning", which is not tax deductable. Anyway.. I tried to compromise by not referencing the above consumption but consumption in general. In regard to the other statement, we can not predict it "would only exist", that such would be "unlikely", or what method, if any, they choose to compensate - WP:CBALL, WP:NOR. I don't understand what you mean by investors having their savings stolen to bail out irresponsible spenders. The first statement is saying that due to price increases of the FairTax, people may increase debt (consume more) before the FairTax goes into effect (which I agree is not sufficiently sourced and perhaps should be removed although I think the criticism is valid). The last sentence is intending to state that the debt would be paid with untaxed (gross) income, allowing consumers to pay the debt quicker. So I'm not sure how this relates to savings stolen to bail out irresponsible spenders. Why would creditors raise interest rates (which may be limited due to credit laws) when it is their business to have people consume credit? I would think the exact opposite would happen, creditors competing to get you to use their credit by lowering rates. With regard to "note", I don't care for the change to "claim", which implies that it is disputed. I don't think either side disputes the others point - it is what it is - they're both correct. I haven't had any issues with your other copyedits - I think they improve the article. Morphh ^(talk) 3:31, 23 November 2007 (UTC)

A personal service may include building a website if you're self-employed and selling to the final consumer. If you work for someone else, then your "service" is part of their service or good, which gets taxed at final consumption. "Personal" refers to the consumer with such things like hair cuts, oil changes, etc. Morphh ^(talk) 4:06, 23 November 2007 (UTC)

The current wording implies that the total costs will dercrease. Just because there are aspects of the production costs that will decrease doesn't mean that the net cost is guaranteed to decrease.

Payrall and income taxes are treated as separate, so they should not be discussed interchangeably.

We absolutely can say that taking out loans will be profitable only if interest rates are sufficiently low. That's not a "prediction", that's a statement of fact. That it is unlikely that creditors will hand out free money is hardly a violation of WP:CBALL.

Money doesn't magically fall from the sky. If debtors are relieved of their real debt burden through changing nominal value, that money must be coming from somewhere. Where is it coming from if not from the crediotrs? Note that this also contradicts the earlier claim that the nominal value of savings won't change.

As for intesrest rates, that's just basic economics. Any effect due to competition would already be present. In the event of a FairTax, competition would decrease rates only if there were MORE competition. On the contrary, there would be more competion on to GET credit, rather than to SUPPLY credit (if everyone's running up credit bills, the law of supply and demand will increase rates). Suppose there's a FairTax of 23% scheduled to take effect in a year. Now, suppose a credit card company has $100 they're trying to decide what to do with. They can either use it to buy $100 worth of stuff now, or they can wait, charge 20% interest, and then buy $92 worth of stuff with it in a year (with 20% interest, it will be $120, but with the tax, that will only buy $92 worth of stuff). Why in the world would the credit card company agree to that? They would have to complete morons to not raise their rates (or, if they are prohibited from raising their rates, getting out of the business).Heqwm (talk) 00:33, 24 November 2007 (UTC)

I don't think it implies that total cost will decrease. It says that it will only offset a "portion" of the FairTax effect on prices. It clearly makes a distinction between production cost and prices. The reason we didn't include any specific effect on prices was that pricing may be dependent on the Federal Reserve (see Theories of retail pricing). Prices will likely increase but some believe prices will stay the same (employees receive net income as described in the FairTax book). The article tries not take a position on how much prices will increase or stay the same.. it just describes the theories. It is correct to say that the removal of these taxes at least will decrease production cost (that is something everyone agrees on) and that it will have some offsetting effect on prices, but to say it specifically will increase prices would be taking a position. For income taxes and payroll taxes, by adding system in "income tax system" it is meant to imply the entire system as collecting on income and not just "income taxes". The FairTax replaces the income tax system, not just the income tax. Perhaps we can reword it to say the "current tax system", "taxation of income", or perhaps my earlier change was sufficient. As to the interest rate stuff, why would creditors counteract themselves receiving business? They may increase rates as you suggest but to a point of maximizing profit, which is usually not price maximization (or rates in this case). I just don't understand your last point. Are you talking about rates raising before the FairTax or after? Studies show rates decreasing by one-third after the FairTax, so this would be a contradiction of the research done. But anyway... creditors finance embedded taxes and sales taxes today.. and they would finance taxes after the FairTax. The good is worth what it cost someone to by it new, which includes the tax - this is the value of the item. IMO, creditors will likely maintain the same profit margins as this has been shown to gain maximum profit through customers, when basic rates drop, they will likely lower their rates or suffer losses to competition that does lower prices (to maintain margin). I don't think we need to have an economics discussion here, perhaps we can just reword it so that where not making a bunch of predictions and original research. How about something simple like "If credit incentives do not change, opponents of the FairTax worry it could exacerbate an existing consumer debt problem." I think this avoids all the problems that I mentioned but still addresses your point. Morphh ^(talk) 14:27, 24 November 2007 (UTC)

I went ahead and made some of the changes.. I changed it to "current tax system" instead of "income tax system" (to avoid confusion) and I added the addition of "If credit incentives do not change". Morphh ^(talk) 18:46, 24 November 2007 (UTC)

Economist article

This entry was added and I object to the conclusion presented in the statement.

An article in The Economist on Mike Huckabee condemned the Fair Tax as "horribly regressive" and called it a "non-starter".^[21], for that and other reasons.

The article does not condemn the Fair Tax as "horribly regressive". It is making a statement about a sales tax with a 30% rate being horribly regressive, which both proponents and opponents agree. The next statement is that "Mr Huckabee says he can solve that problem by giving monthly rebate cheques to those who need them." Not sure what the "those who need them" bit is about - an inaccuracy. Also, the next sentence is completely false - "But to track Americans' income month by month would require a bureaucracy nearly as intrusive as the one Mr Huckabee hopes to abolish by repealing the income tax." Who the heck is tracking income - this is completely false and based on the prior inaccuracy. No wonder it's a "non-starter", the author doesn't know what the heck he's talking about. But anyway.. I don't see that it states the conclusion being presented here. A 30% sales tax is "horribly regressive" but then it goes on to mention the difference with the FairTax, of which it does not comment on regressivity. Morphh ^(talk) 14:38, 29 November 2007 (UTC)

• Huckabee's tax plan is the FairTax (look at his campaign site under "Taxes/Economy"). The Economist article first points out that the 23% is actually a "sleight of hand", equivalent to 30% as sales taxes are conventionally calculated. I'm not going to argue about the income tracking bit; I didn't mention that part in our article, except to say that they had other reasons as well for labeling it a "non-starter". The point is that they labeled it as "horribly regressive", which is relevant to the section in question. Brianyoumans (talk) 15:21, 29 November 2007 (UTC)

They're laying out the plan - "he proposes a federal sales tax".. "Calculated the way sales taxes usually are, the rate would have to be at least 30% and possibly much higher. This would be horribly regressive." True and True "Mr Huckabee says he can solve that problem by giving monthly rebate cheques".. The first statement does not include the aspect of "rebate cheques" as they are setting up the aspect of the plan that is intented to make the plan progressive. They are discussing a federal sales tax at a rate of 30%, being regressive but Huckabee (the FairTax) can solve that problem with rebate cheques. They don't say "the FairTax" and they don't say "Huckabee's plan". They say "this" refering to a 30% federal sales tax, and then go into the rest of the plan ment to address regressivity. I don't see that the article supports the statement. If you did happen to take it to mean the FairTax, then the statement would be false as they don't specify the tax base (ment to change it from the normal definition). Even in the case of specifying an income base, such is dependent on spending, income, and timelines examined (the assumption that savings is never spent). Now if you want to say that a sales thx at 30% is horribly regressive, I have no issue but that is already stated in the article. With all the facts they got wrong in that small paragraph, I'm not sure we should even consider this source as reliable. They offer nothing in regard to the statements. Seems like inaccurate pot shots, with "sound bite" quality. Not sure that it is in the best interest of an encyclopedia. Morphh ^(talk) 15:30, 29 November 2007 (UTC)

Per Person Expenditures

I am wondering why the article doesn't include a per person required expenditure in the article.

Current annual government spending: about $2.5 trillion. Annual cost of prebate: about $0.5 trillion. Total annual government spending under Fairtax: about $3 trillion.

Since there are approximately 100 million families in the US, that works out to a tax obligation of approximately $30,000 per family per year.

That would require an annual taxable per-family expenditure of approximately $130,000 per year. ($130,000 x .23% = $30,000). And, of course, since many expenditures are not taxed, (i.e., used cars, existing homes, foreign travel, business expenditures, education) that probably translates to an actual required expenditure per family of around $260,000.

I think this would be useful information to include in the article. Particularly since the census bureau reports that the average income per family is about $60,000.

Just a thought. 63.166.114.11 00:18, 1 December 2007 (UTC) GeorgiaTex

Do you a source for the study? I'm not entirely sure what it is trying to say.. is this an opponent argument for revenue neutrality? Since taxable income is a smaller base then the FairTax's consumption, this would show a higher income or tax rate under the current system. This also does not consider foreign visitors and such. If you have a reliable source that states this, I'll take a look and see how we can include it. Morphh ^(talk) 13:44, 02 December 2007 (UTC)

Hi, Morph -- You know I love you, so I hope you don't mind me ribbing you. I didn't realize that Wikipedia required "reliable sources" to do simple math. Are addition, subtraction and division prohibitted in FairTax articles?

If you look at Table 6 of the Kotlikoff/Beacon Hill study of 2006, you will see that government expenditures under the FairTax for 2007 would total $3.285 trillion dollars.

Then go to the census burea website, and you'll see that the number of American families is around 100 million. $3.2 trillion divided by 100 million equals $32,000 per family. $32,000 divided by .23 equals $139,000, which would be the required average taxable spending per family to general $3.2 trillion dollars in taxes. This is a mathematical fact, not an opinion. I think this is a relevant fact to put in the article.

The census bureau cite will also show that the mean family income is around around $60,000. (The median income is even less.) Thus, it is mathmatically impossible for the FairTax to work at a tax rate of 23%.

What I'd really like you to do is take those numbers to the fairtax.org folks and ask them to explain how the FairTax could possibly work, given those numbers. If they are relying on the super-rich among us to spend millions and millions in TAXABLE purchases every year for the priviledge of funding the government, you might subtly remind them that the rich didn't get that way by being stupid.

Regards, GeorgiaTex —Preceding unsigned comment added by 63.166.114.11 (talk) 16:31, 3 December 2007 (UTC)

I understand what you're saying and I agree that normal math would not need a source. However, this is math that could include many variables that are not considered here (such as including the debt, visitors, etc.). We are also drawing conclusions to back up a position, otherwise the math is meaningless. If you don't consider the FairTax component, the argument could still be made that it is impossible to collect $3.2 trillion when the mean family income is around $60,000. Very odd indeed.. where do we get all that consumption? Interesting question aside, Wikipedia has a policy called no original research, which refers to unpublished facts, arguments, concepts, statements, or theories. The term also applies to any unpublished analysis or synthesis of published material that appears to advance a position. This would fall under that policy as it tries to use facts to make an unpublished argument using a synthesis of published material. I do like the argument though - nice one. I'd like to see it posted to one of the groups.. let me know if you do. :-) Although, it somehow reminds me of that riddle where three guys pay $10 each for a hotel and the bell boy gives back $5, which asks the end question of "where's the missing dollar"? Morphh ^(talk) 19:30, 03 December 2007 (UTC)

After thinking about this last night, Government and Business also have final consumption. Also if you took the tax base of 9.7 trillion and divided it by the families, it would be lower then what was presented above. This would also exclude foriegn, with is about 1/7th the base - 50 million. So if you took that tax base with both families, gov, and business... it would be lower. Anyway.. if revenue neutrality were that easy, it wouldn't be debated. Morphh ^(talk) 14:22, 04 December 2007 (UTC)

Morph -- That's what I like about you. You actually think about these things. Now if only some of your reasonableness would rub off on others.

Business purchases are included in the FairTax tax base? Come on. (OK, I realize employer provided health insurance will be taxed -- something the Boortz's of the world don't like to mention -- but I include that as personal consumption.)

Government purchases will be taxed, but the governments must get their money from taxing their own citizens. So it comes out of our pockets one way or the other.

If you include the 50 million foreigners visiting America in the tax base, then you certainly need to EXCLUDE all the Americans who visit and/or live overseas. (And, of course, we would get fewer foreign visitors and illegal aliens if we started taxing them out the yin-yang, so the foreigner tax base would be smaller. Conversely, you would see more Americans traveling and living abroad to avoid the FairTax.)

I'm glad to hear you say that revenue neutrality is debatable. Obviously, some of your colleages don't agree. I'm banned from the fairtaxgroups.com board. Why don't you through this issue out and see what responses you get. (Careful, or you might get banned as well.) I'll email Kotlikoff and see if he has any thoughts.

GeorgiaTex —Preceding unsigned comment added by 63.166.114.11 (talk) 21:26, 4 December 2007 (UTC)