So apparently you think we should admire the Europeans and copy their VAT system. I believe they all also pay income taxes. Do you really want even more paperwork?
One of the main advantages of the FairTax is doing away with the paperwork and the associated costs. The AFFT estimates compliance costs around $265 billion. But if you read deeper into the research you’ll find they did not use other potential areas of compliance cost savings which apparently were not reliable enough for them. If you add up these “guesstimates” the real savings in compliance costs may well be 1 trillion or more. The VAT plus income taxes of Europe sounds like a compliance cost nightmare.
Then there’s the issue of evasion. Switching to the FairTax means that around 86% of those businesses sending in the tax will be big companies like Wal-Mart. Can you tell me why Wal-Mart would risk losing its business license by giving you or me a deal out the back door? Of course they won’t. Currently evasion rates are around 25%. How many of those are just individuals frustrated by the mountain of forms they have to fill out and decide to just take the chance and not file at all?
Personally I think the best way to reduce evasion is rewards for informants. I think there is something to that effect in the bill, but I don’t think it was very high. I’d like to see a reward based on the taxes evaded like 10 times that amount. With all the little voice and video recorders out there now wouldn’t a shady dealer trying to save $100 bucks be worried that who they’re dealing with may be trying for $1000 reward?
You really need to read the rebuttals at the AFFT site fairTax.org to see Bruce Bartlett has been thoroughly discredited. Many of his arguments start from the work President’s Advisory Panel on Federal Tax Reform as do so many other opponents. Let’s look at that report carefully now.
http://www.taxreformpanel.gov/final-report/
Notice, no where do they show their assumptions, equations or calculations. Do you see the colorful graphics? How about the fancy fonts? How about the freaking cartoons? Do you see what it is? A sales brochure!
Now why would anyone believe an undocumented sales brochure put out to sell the ideas of some bureaucrats and thus themselves? This “so impressive” document is the foundation of almost all arguments against the FairTax. Until the Panel releases their methodology, which they have refused to do for years, it is irrational to think of it as anything other than the biased advertisement it is.
Businesses have to register, just like now, to get their supplies tax free. I doubt farmer’s market type businesses are paying income taxes on those sales now.
The FairTax is, thankfully, not a VAT. Our exports will have not one bit of tax or compliance cost embedded in their prices. It will give our products a significant price advantage in world markets since most foreign products still have their embedded income tax and compliance costs in their prices.
This is America. We lead the world, we don’t follow it.
