Fair tax discussion...

There has been considerable hullabaloo about the possibility of enacting "Fair Tax" for our country. National radio talk show hosts are advocating it, along with our own hometown talk guru on the local AM station. A handful of individuals in our community who are quietly being backed by members of HCREC are pushing for passage of H.R. 25, Section 101(b)(1) which states the rate of tax is 23 percent of the gross payments for the taxable property or service.” Please note the phrase “of the gross payment” and not the actual inclusive rate.

Last August, Congresswoman Ginny Brown-Waite hosted a Small Business Advisory Council meeting at the Jerome Brown Center in Brooksville. Guest speakers for this meeting were Bob Carroll, Deputy Assistant Secretary for Tax Policy, United States Treasury and Tom Wright, Executive Director for Americans for Fair Tax. A large number of individuals and business owners were invited to attend this informational forum, including our local talk show host. I was privileged to attend this event and came away with some very interesting information on the pros and cons of the Fair Tax. I might add that the local talk show host did not attend this meeting.

So far the discussion locally on the Fair Tax has been one-sided with those having questions being drummed down by the local roar of the radio show audience, driven by their host. Even though the talk show host advertised their event last Saturday as being open to everyone, pro or con, that concept fell on death ears after he attacked Mayor Rudy Guilliani on the air for having doubts about the Fair Tax.

Do we need open, honest, debate about the IRS and the way we are currently taxed in this country? You bet we do but the debate needs to be balanced on both sides to insure this is the right approach for our future. For example, these are a few of the things that the local discussion has not included in their push for their Fair Tax legislation:

• Here's how it works: You buy a candy bar for a total price, including tax, of $1.30. One dollar of that price pays for the candy bar, $.30 goes to the federal government.
  One dollar purchase + $.30 in tax sounds like 30 percent to you and me (and to every state that currently has a sales tax). But the “Fair Taxers” don't calculate it that way. They say: $1.30 total price. $.30 = 23 percent of $1.30, therefore the tax is 23 percent.
• The 23 percent number in H.R. 25 is the equivalent of the 4.8 percent. To calculate the real rate of the sales tax, determine the original purchase price of an item. Begin with a $100 item, keeping in mind that a price tag that reads $100 has sales tax already built in. If our tax rate is 23 percent of the tax-inclusive sales price, then of the $100 final price, $23 of those dollars will be for taxes, meaning that the original pre-tax price of the item is $77. To get $23 in taxes on a $77 item, one must impose a 30 percent tax. In other words, a 23 percent sales tax on the tax-inclusive sales price is equivalent to a 30 percent tax on the actual price of the item.
• With the Fair Tax's 100 percent base, consumers would pay taxes on a great many things that may not intuitively seem like consumption. The list would include:
  **Purchases of new homes
  **Rent
  **Interest on credit cards, mortgages and car loans
  **Doctor bills
  **Utilities
  **Gasoline (30 percent in addition to current taxes, which would not be repealed)
  **Legal fees
  (At today's prices, gasoline would cost almost $1 per gallon more. A $150,000 new home would run $195,000 – plus the 30 percent tax that the buyer would pay on the interest on the mortgage. In short, the Fair Tax taxes everything that one buys, with the one notable exception of education).
• Fair Tax advocate state that you can regulate how much tax you pay with their system, by choosing to buy new items that are taxed, or used items which are not taxed which would have a dramatic effect on our economy.

The information listed above is only the tip of the iceberg for the concerns those the opposing of the Fair Tax issue. For a starting point to look at this Fair Tax issue realistically, try logging onto this link: http://www.factcheck.org/

Congresswoman Ginny Brown Waite has consistently stated that she is willing to listen to both sides of the debate without passing judgement on HB 25. Our congresswoman has stated on local talk radio her desire to wait until Congress holds hearings on the Fair Tax where both sides of the debate are heard by the public. Unfortunately, Ginny Brown-Waite has been unfairly criticized by the local talk show host, along with his army of callers that support this Fair Tax issue. Some very familiar voices of the local republican party have also been heard on this program voicing their discontent with Congresswoman Brown-Waite, or her assistants, for not attending last Saturday's Fair Tax Rally. I can't say as I blame Ginny Brown-Waite for not attending this event because she would have become the target of their debate.

***Some of the information listed above was obtained from Factcheck.org