“For every tax problem there is a solution which is straightforward, uncomplicated and wrong.” -Unknown

The Truth About "The Fair Tax"
...and why it isn't fair!
One of our nations best selling books on taxes “The Fair Tax Book” written by Congressman John Linder and Atlanta talk show host turned tax law expert Neal Boortz. This column is dedicated to the facts related to this proposal so you may be informed as to how you and your family might be affected by the change in the way income taxes are collected.

The fair tax is a very clever idea because it would not tax a very large portion of the upper income payer’s earnings, such as Neal Boortz. A family of 4 earning $50,000 a year normally spends most of it to get by, whereas Neal would pay taxes on only a very small portion of his income. Assuming his earnings are $2,000,000 per year, and he spends approximately $30,000 per month, Neal would save over $600,000 each year in taxes; no wonder he wrote a book!

Another flaw is that it doesn’t address human psychology. Given the opportunity, a person rich or poor will avoid paying taxes, regardless of whether their take home pay is higher. Most people will not go out and buy a new home or car if they have to pay an additional 30% over what they paid the last time they made that purchase. The “Fair Tax” would kill the construction and automobile industry and devastate the United States economy. In addition, these two gentlemen are only telling half the story. There is the State of Georgia Income Tax that must be dealt with as a part of the fair tax. So add the 6% onto the proposed 23% national sales tax along with the current State of Georgia and Local 7% sales tax and all of a sudden, we are looking at adding 36% to everything purchased. Fair tax advocates say prices will come down 22%, but that is based only on undocumented forecasts.

If the “Fair Tax” became law, it would lead to an unprecedented spending spree, with expansion of the economy, followed by a rapid economic collapse, depression and national bankruptcy. Day One of the Fair Tax would yield no decrease in prices. Consumption necessary to run the county would fall like a rock off Stone Mountain.

Imagine if the United States had initially adopted a National Sales Tax instead of the current system. Today the rate would exceed 60% and someone would be writing a book about a system to replace the sales tax. “Imagine paying as little as 10% of your income in taxes and a small payroll tax and getting a deduction for your mortgage interest, taxes paid and your contributions. Best of all, corporations will now have to pay taxes!”

Fair Tax advocates such as Boortz and Linder are making an irresponsible pitch at a time when our country has substantial economic problems. The claims made are not logical and the numbers don’t come close to working. The fair tax is an irresponsible self-serving attempt to make the rich richer and to pass the tax burden over to the middle and upper-middle class.