Fair Tax wins CNBC Poll 74% to 26%

CNBC's Kudlow & Company hosted by Larry Kudlow held a short debate or discussion of the Fair Tax and the Flat Tax on Wednesday nights show. Larry encouraged viewers in the first half hour to go on line and enter their opinion on whether they liked a 17% Flat Tax or the 23% Fair tax. As of the close of the poll 2952 votes were cast and the Fair Tax Won 74% to 26%.

The Discussion included Radio Talk Show Host Neil Boortz and Wall Street Journal contributor Stephen Moore.
I wrote an article in January in response to his support of the Flat Tax:
http://fairtaxreform.blogspot.com/2005/05/zero-income-tax-and-zero-payroll-tax.html

Neil started the discussion with a fun jab at Stephen Moore and said, Let's declare the winner by who has the highest sales and ranking on the NY times Best Seller List. Neil Boortz's Book "The Fair Tax Book" is currently #1 and Steve Forbes's Book on the Flat Tax(which Moore supports) is far behind.

Stephen Moore pointed out that the popularity of both books shows that the American people are very interested in changing the current system to something new and not just tinkering around the edges of the current Income tax code. Stephen and Larry also discussed that their sources had indicated that the President's Tax Reform Panel will not recommend major reform in its report at the end of September but only suggest minor changes in the current code.

This certainly flys in the face of the popularity of the Fair Tax and the disgust the American people feel toward the IRS and the complicated tax code that requires a tax accountant to prepare.

What is required is a ground swell by the public in support of the Fair Tax. Much Like the problems on the Border with Mexico and illegal immigration, it takes the public demanding change to push politicians to action.

The Fair Tax certainly won the debate last night and that is inspite of the fact that the poll question was misleading in favor of the Flat Tax. You see the 17% Flat tax still leaves in place the payroll tax of 7.65% for a total rate on income of 24.65%.

The Fair Tax replaces both Income and payroll taxes with a 23% Inclusive sales tax rate.If the Poll asked; Do you want a Flat Tax with a total 24.65% rate OR Do you want a Fair Tax with a 23% Rate on Purchases?

I am sure the results would have been even better.For an honest poll see this article repeated with a poll at RedState.org
http://merrill-bender.redstate.org/story/2005/8/25/15831/5293

For more information on the Fairtax read the FAQ section of www.fairtax.org

and read " Give Every American Family a Raise"
http://fairtaxreform.blogspot.com/2005/02/give-every-american-family-raise.html

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So, What is Really Fair?

As many people know, it is no secret that many citizens, especially seniors, have contributed money to investment accounts (i.e. Roth IRAs) that have already been taxed through income. That is exactly why I was planning to write a letter to Mr. Linder and start a discussion about how the H.R. 25 bill could be manipulated slightly to compensate this disadvantage for Roth investors. I could venture to say that I am one of the FairTax bill’s biggest supporters, since I jumped on board about one year ago. However, no plan is perfect, and this is the one thing I saw as imperfect.

So, I was barely into my discussion with my wife about the letter I was going to write, when she throws out something mind-blowing. My original thought was to provide an exemption for the people that have already paid income taxes on their investments, much like the Inventory provision in the HR 25 bill for retail businesses that are affected. (For those of you who do not know, the HR 25 bill includes a section that states that no inventories of businesses in place at the time of enactment will be charged the tax, as a transition clause.) She asked me what investments I was talking about. My response was that I was talking about investments that have already been taxed once through the redistribution tax, (I’m sorry, I mean the Income Tax) like Roth IRAs, as opposed to 401Ks and Traditional IRAs. So, what about my dad’s guitars, she asks? If you couldn’t figure it out, her dad is into collecting guitars as an investment. “Um…” She adds, “Would he be compensated?”

You might think that would be rare, but she made me think more broadly. Yes, it would be great to provide some compensation to the people that put money into their Roth IRAs, BUT what about the house that I bought with after-tax money, which I will sell eventually. I don’t buy them, but what about those people that buy gold coins? My point is, that everything that you buy, especially real estate and items you sell later, has already been taxed via your income. Not only that, but it has been taxed (approximately 22%) additionally without you knowing it through hidden passed-on corporate taxes.

Also, keep in mind that the government has needed to fund itself up to this point. It will still need to fund itself, even after the FairTax is enacted. Should we take back the money that we paid to the government already, just because we will have a different way of funding the monstrosity after the FairTax is enacted?

Well, there would be one way the government could overcome the dilemma, which is to stick it the “other people”. We could tax the people that have invested in the 401Ks more heavily after the FairTax, to compensate. Or we could let everyone that bought anything, off the hook, but make the pre-tax investors pay the future sales tax. Would that be fair? Unless you follow Marxism, I would say “absolutely not”. This is why the FairTax was brought about in the first place. It keeps the deductions and loopholes out of the way.

So, what it comes down to is that no system is perfect, nor will any ever be. But, even with this dilemma, the FairTax is as close as possible and will require some transition costs. There is no denial about this quandary. Sometimes it is very necessary to take one step back to move two steps forward.

So let’s get rid of the 22% embedded taxes for everyone and let the people alone that haven’t been taxed that extra confiscatory income tax already. That is fantastic for them. If I am being taxed less in the first place, what would it matter if someone is being taxed less than I am. People should mind their own business.

It is understandable that many people would have felt that this would be a disadvantage. Look at me; I did. Education is the key; much like my wife did for me today. Learn from other people, and use the truth. There will be nothing we can do about how the government has funded the services that we all use, already. Let us move on.

This country will continue without you, after you leave here. Keep in mind the people that will follow: your children and grandchildren. Let us not ruin their livelihood by being caught up in this one snag.

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