We Get to Hear SC FairTax Straight From the Horse's Mouth... And We STILL Ain't Buying Into It...
For those of you that have read us for a while, you know that we are not fans of the FairTax. To us, it's a nice title that doesn't live up to it's name... The reasons haven't changed why we don't like it, but sometimes the plan will change. So, we keep in touch to see if the plan changes. We always are willing to listen to any and all plans, but if they don't really change, we still call the bullshit...
Here's the base problem with the FairTax: it is based on consumption, not on income. The only truly fair way to measure a person's ability to pay taxes is their INCOME, which is why we have an income tax on both the state and Federal levels. Consumption taxes are inherently regressive. FairTax has plans for both the Federal and State level, and as bad as the Federal plan may be, the state plan may be worse....
I got to listen to John Steinberger, head of the SCFairTax group, and a candidate to replace Glenn McConnell in the Senate, on Bill Pickle's radio show.. Steinberger focused mainly on the state plan, because the Federal plan has been languishing in the House since when I was running for Congress... Currently, we all pay a flat 7% tax on income, in addition to sales taxes that are split on the state and local levels. The plan would be to end the state income tax, and replace it with it a 6% sales tax on all retail goods and services...
OK, where do we start? We've already pointed out the worst part of it - the regressiveness. It's a fact that lower income people spend a higher percentage of their incomes on what will be taxed by the FairTax... Say you make $20k a year.... Spending half of that on the basics wouldn't outrageous, so at $10k you'd pay $600 per year or 3%... If you make $100k, you sure aren't going to spend $50000 of it on food and shopping. You might spend $20000, which is 2% - the actual effect rate is lower for higher income people. So, they tried to fix that with another crappy idea - the Prebate.
A "prebate" is a monthly check sent to South Carolinians from the state for their expected grocery taxes. Nice try, but yet another inequity. The amount of the check is based on the family size, so since I'm single, I get a smaller check than a family making the same income. Yeah, maybe that is the way it should be, but I may be spending more on food than that whole family is. The biggest problem with the Prebate is the idea of it. For a party that espouses independence and freedom from government, I can't think of a bigger dependence on government than every citizen having to wait on a check every month!
Lastly, Steinberger said the net effect of implementing the FairTax would be a 7% cut in taxes for citizens of South Carolina. The tax is already a Flat Tax, so a 7% discount on that would be the same as moving the tax rate to 6.5%... So, why not save all the time, paperwork and aggravation of the impending foulup that will inevitably come when the checks don't come, and just cut the tax rate to 6.5% ????
Sure, there are other problems with it on the state level, like what happens to car tax caps? Watch car sales in SC drop and jump in NC and Georgia when buyers realize they have to pay another $1200-2400 in sales taxes on the lot... They say it would be good for businesses, but there bads for it as well. This happens when people whose job it is to push a plan give most of the information... For a guy who says he's contraversial and tells it like it is, Bill Pickle does a bad job of cross examining his interviewees.. It IS a skill...There's a good reason why the FairTax hasn't gotten much support by voters or politicians - it's a bad idea. And it sure isn't Fair.....
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