5 Response to "Harrell challenger to offer Pre-paid Legal for legislators?"

1. 

   Anonymous 8/8/12 12:25

   I'm certainly not sold on the Fairtax scheme either. Here are seven criticisms that John might try to rebut:
   
   (1) HR25 proposes that the Federal government tax State and Local government consumption of all new goods and all services,including a significant portion of State and Local government employee payrolls as representative of services provided. Under the long held Supreme Court doctrine of intergovernmental tax immunity, this taxation would likely be found to be unconstitutional.
   
   (2) Although Fairtaxers claim that the Family Consumption Allowance (FCA) or “prebate” is similar to a tax refund, it is not! The FCA is an income supplement that can be spent (and taxed), or saved as financial circumstances allow. The FCA would be scored by CBO/OMB as a cash grant entitlement costing $600 billion annually at a time when entitlements are squeezing out federal discretionary spending.
   
   (3) The Fairtax could destroy the new housing market! Banks typically loan the sales price or the appraised value, whichever is less. Appraisers generally do not include commissions or taxes in their valuation. There is no collateral value in a federal sales tax. In order to purchase a new house, buyers may have to come up with funds for not only a 20% down payment but also the 30% sales tax.
   
   (4) All fifty Governors, through the National Governors Association, oppose any type of national sales tax. The current NGA tax policy paper states: “The nation’s Governors oppose a national sales or transactional value-added tax. Such taxes would intrude into a tax area that has traditionally been reserved for and relied on by state and local governments. If enacted, either of these taxes would seriously threaten the ability of state and local governments to maintain their tax base.”
   
   (5) The Fairtax plan would destroy our Social Security system as presently structured. (1) Today, workers typically pay FICA for 45 years or so. Under the Fairtax, everyone pays sales taxes on purchases for all their life. (2) Upon reaching retirement age, today’s workers begin to draw benefits and make no further FICA contributions. Under the Fairtax, everyone, including retirees drawing benefits, continue to pay sales taxes for life. (3) Today, benefit amounts are tied to income earned during work years. But, under the Fairtax, that would be unfair because the Fairtax taxes both income and wealth. A major restructuring of Social Security would be necessary under the Fairtax.
   
   (6) The Fairtax scheme throws middle class retirees under the bus. After tax savings accumulated under current tax law would be directly double taxed when spent, retirees would be forced to resume paying for their benefits with their sales tax dollars, and middle class retirees would see a significant increase in their federal tax burden along with a reduction in their purchasing power.
   
   (7) The Fairtax rationale for treating all government agencies as consumers is that it would prevent unfair government competition with the private sector. But that issue was dealt with in Section 704 of HR25. Any government agency that sells $2500 or more per quarter would be considered a Government Enterprise, and would have to collect and remit the 23% sales tax. There was no need to tax all government consumption.

   
2. 

   Anonymous 8/8/12 12:26

   That being said, who would want to bail out legislators anyway? We need longer terms - in prison.

   
3. 

   Mike Hunt 8/8/12 14:21

   Great points, Anonymous, but don't hold your breath for any answers. Fairtaxers haven't thought through their plan because they're too emotionally invested to look at it logically. They have never come up with a smart way to market it, yet blame their failure on others. The only people begging the SC legislature to pass Fairtax are the small group of zealots who show up at every meeting in their Fairtax shirts.

   
4. 

   Anonymous 8/8/12 14:49

   Mike, your point that they're too jacked up on their bright ideas is rather evident. The way they attack and challenge anyone who questions them says a lot.
   
   The funny thing is that cutting taxes does no good when you have nothing in there to rein in spending. Cut Obama's cash flow and he'll just go out and borrow a trillion here and a trillon there.
   
   IT'S THE SPENDING, STUPID!

   
5. 

   Mike Hunt 8/8/12 15:59

   Well, I know when I've questioned any of them, they look at me like I'm an idiot. In all fairness John is the best of of them in terms of explaining and I admire his dedication, I just don't like the plan. As you said spending has to be cut and the beast starved. Fairtax isn't simple and that's what always comes back to bite them.