After listening to the debate (if you haven't listened click here) I kept thinking about Matheson’s oft repeated refrain that Morgan wants to tax everything you buy at 23% and in reality that rate would likely be 30%. There is some truth to this statement but Matheson leaves a lot of information out as well.
What Morgan has said on a couple of occasions is that he could support a national sales tax such as the proposed Fair Tax Act of 2005 (HR 25 and S 25) which call for a 23% sales tax on all new goods and services. This proposal is explained in detail by the Americans for Fair Taxation on their website www.fairtax.org for those who want to learn more.
What Matheson left out was that the fair tax initiative would only be enacted if the 16th Amendment was repealed (this is the one that gives the federal government the right to tax our income) and it It abolishes all federal personal and corporate income taxes, gift, estate, capital gains, alternative minimum, Social Security, Medicare, and self-employment taxes.
The FairTax replaces the revenue collected by the taxes enumerated above with a national sales tax. It was designed to be revenue neutral. So if we are bothered by 23% (or in 30%) sales tax then our anger should be directed at those in government who are spending our money at a rate equivalent to that kind of a sales tax. As someone who has been in office for 10 years and voted for the stimulus bill, cash for clunkers and numerous other programs Matheson should be the last person who would want talk about issues related to the cost of government.
What I love about a sales tax versus an income tax is that it decreases the federal government's involvement in my life. No longer do they need to concern themselves with how much I make and my sources of income. Nor do I need go through an annual exercise in determining how much I owe the government. If I’m wrong and underpay I’m subject to varying degrees of penalties and interest charges. However, if I overpay the government then, oh well, the government has benefitted from my money but only pays me the principle back. The more I think about it the more I like the idea of a national sales tax (again, if and only if the 16th amendment is repealed).
Back to the debate, I have the mental picture of Matheson waving his finger at Morgan and touting how naive he would be to consider a tax program like the FairTax which could impact the economy in such as negative way.
Tell me again Mr. Matheson, how a program which takes the same amount of money from us but eliminates the IRS, means I don’t have to file income tax reports, and has the potential to generate income from people who currently don’t pay income taxes (criminals, workers paid on a cash basis …) is bad. That finger and the self-righteous attitude that goes with it should be more introspective.
I looked (see When is a Blue Dog only a Mirage?) and at no time in his last term in office did Matheson cast a deciding vote or was even one of several deciding votes on spending bills that were conservative in nature. Any votes against bills that I feel were terrible such as ObamaCare were cast only after the fix was in for these monstrosities.
I loved Morgan’s comment that he fully supports Milton Friedman’s stance that “I am in favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it's possible.” Additionally, I thought Morgan’s comment that he thought Matheson’s assertion that a 23% or higher sales tax was necessary simply reflected the typical Washington attitude that spending must increase not decrease.
We need people like Morgan in office who will seek to cut taxes and spending wherever and whenever possible.
Go Morgan!
By the way did you know that 9 states have no personal income tax and use a state sales tax (Alaska, Florida, Nevada, New Hampshire, South Dakota, Texas, Tennessee, Washington, Wyoming)? And how do they rank in a survey of the best and worst managed states in America (note, Utah was 6th).
- (14) Alaska
- (42) Florida
- (41) Nevada
- (8) New Hampshire
- (13) South Dakota
- (36) Texas
- (35) Tennessee
- (15) Washington
- (1) Wyoming
The average ranking was 22. So these states are in general better than average and don’t burden their citizens with annual income tax filing nor do they invade their privacy. So tell me again Mr. Matheson how terrible the FairTax concept is and why I shouldn’t vote for Morgan because he said he would consider such a proposal. Maybe I shouldn’t vote for you because you think it is such an awful idea. Good idea. I think I’ll do that :)
Go Morgan!
2 comments:
While I do agree that not having to deal with income taxes sounds like a wonderful idea, I am concerned about a two things: (a) the cost of goods and services rising, (b) the lower income family.
Increasing sales tax nationally has a much more wide spread effect than what seems like a dream of no tax filing or no IRS. As the sales tax increases the cost of goods and services increases. This is demonstrated in the current wrestling with the commerce clause in the Constitution, the Quill case, and the Amazon law that was recently disputed in New York. States are already concerned about sales tax and being able to collect it from out of territory businesses. Just the other day I received a phone call from somebody asking me how much a dvd was on Amazon.com because if it was cheaper she would not buy it at the bricks and mortar store she was at, but wait to buy it on Amazon and not pay sales tax. Currently, $20B a year is going uncollected due to such commerce. If a national sales tax was to be assessed, who's responsibility would it be to remit the tax to the government? What portion would be federal, what portion goes to the state? If I purchase something from amazon.com, does amazon charge me sales tax and remit to the federal government? Or are they also responsible for collecting and remitting the sales or use tax in the state I reside?
To get back on track with my main point, if that much tax is to be remitted, the cost of goods or services will obviously be higher. The higher price tag my be comparable to other businesses because they too have to pay the tax, but what about those families who can barely afford their weekly trip to the grocery store as it is? Will this benefit them? Those in lower tax brackets may not have the income to manage the increase in prices that would result from a higher sales and use tax rate. What would this lead to? Would not the rich, who do not have to hand over half of their income to the federal government any more, be able to acquire more wealth, while the poor, who don't gain much from not paying income taxes, get poorer? I may not understand the fair tax proposal, but from this article I see a few problems. If I am showing my lack of understanding, please enlighten.
Victor, The FairTax proposal does include a "prebate" (like your income tax refund but this will be sent to you before you pay the tax) for taxes. The amount of the prebate is determined based on the size and composition of families. This is designed to help low income families. The FairTax also exempts business to business transactions (i.e. the manufacturer who purchases raw goods to create products will not pay tax on these items. Yes of course prices will go up but the tax will be much more visible and hopefully we will be reminded on a daily basis of the price of government. States which currently raise revenue by sales tax seem to be able to deal with people who go to other states to buy goods now so I don't really see the issue here. I'm quite sure that all goods purchased in the US whether they be via the web or in brick and mortar stores will be subject to the national sales tax. In the Amazon case you cited Amazon would be responsible for collecting the federal tax and remitting it to the federal government. State taxes would be collected or not just as they are today. Additionally, tax will be collected from everyone regardless of their source of income. This means the tax base will increase (tourists, illegal workers who are paid in cash ...). For me it is pretty simple, the federal government will still collect the same amount of money it does today but the taxes will be completely visible not hidden by price increases that manufacturers give when their industry is subjected to a special tax because the government deems that they are somehow not paying their fair share or that they are too profitable. The privacy issue for me is compelling. Right now the government demands to know all my sources of income and in some cases wants to know how I'm spending it. It puts upon me the burden of understanding and complying with complex tax laws that tax attorneys and accountants interpret in a variety of ways. The website fairtax.org is the best source of information on this. Some of it is difficult to understand. I'm certainly not an expert. There are also books that have been written on the concept. Morgan Philpot is not campaigning on this issue but it is a proposal he is willing to consider.
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