Leading Illinois Down the FairTax Path

The Illinois Leader recently published a letter from a Dr. Waters in Georgia, objecting to the FairTax. The good doctor, unfortunately, had not done his homework. The following is my response to his mis-statements:

Dear Editor;

Let's cast a little light of truth on Dr. Rick Waters's objections to the FairTax> He wrote:

"The "Fair Tax" has several harmful elements. It will: 1. Tax already-taxed monies when you spend them (Roth IRA)."
Not if you don't spend them. Say you have $5000 in a little Roth account when the FairTax goes into affect. Say you continue to add to that amount over the years -- at a faster rate when you're rid of the income tax and can spend or save or invest ALL your money. Say when you retire you have $160,000 in that account. Say you transfer $105,000 to an interest-bearing payout account and spend the other $55,000. Only the portion you spend on new goods and services will be taxed. Meanwhile the original $5,000 is in that interest-bearing account, untaxed.

"2. Tax promised tax-free monies (certain disability benefits, pensions, insurance proceeds, etc.)."
Again, those will be taxed only if the recipient buys new goods and services, and only if s/he has already spent past the poverty level. The FairTax provides a monthly stipend to everyone to assure that no one pays tax up to the poverty level.

"3. Kill the economy by driving purchasers from 30+%* (*23% federal sales tax plus any related state and local sales taxes) taxed new items to buying used (the "Fair Tax" only taxes new items)."
This argument assumes that the wealthy will suddenly decide to forego buying Vera Wang and Versace gowns, limousines and Jaguars, two or three mansions, Rolex watches and dining at Le Cirque and suddenly patronize WalMart, buy their clothes at Lerner's and ride around in Kias. I don't think so. The wealthy will pay more in taxes because they buy more luxurious goods.

"4. When added to Social Security's 7.5% tax and state income taxes, everyone could end up in essentially a 30-40% tax bracket. "
AHAH -- Gotcha! Dr. Waters didn't do his homework, and speaks what he knows not of! The FairTax REPEALS the income tax, social security taxes, employee taxes, corporate taxes and more. But because it taxes a broader spectrum of the economy (the $6 TRILLION crime industry, for example, plus illegal immigrants, drug and porn dealers, tax evaders -- the IRS says that's an additional $350 BILLION -- and 40 million foreign tourists annually), the economy will grow -- and that's good for us all.

Dr. Waters needs to check his facts at www.fairtax.org so he can write more accurately.

Sincerely,
Sunnye Tiedemann