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FairTax New Math


It would take another article (here is the original and discussion on it) to respond to all the bogus claims of the FairTax supporters. However, I would like to settle once and for all, as simply as possible, the dispute about the FairTax percentage—whether it is 23 percent or 30 percent.

I live in Florida. The sales tax rate is 6 percent (some counties have an extra penny but that is immaterial). If I buy something for $1.00, I pay an extra 6 cents, for a total of $1.06. Since the proposed FairTax is not an excise tax that the seller must pay no matter how much he sells the product for, but is in fact a sales tax that is added on to the price of a good, if I buy an item under the FairTax system for $1.00, I will pay an extra 30 cents, for a total of $1.30. That is a 30 percent sales tax rate. Boortz and his FairTax supporters want us to take the $1.30 and say that since 23 percent of that is 30 cents then the FairTax rate is 23 percent when in fact it is really 30 percent.

I am still with Murray Rothbard: "There can be no such thing as 'fairness in taxation.' Taxation is nothing but organized theft, and the concept of a 'fair tax' is therefore every bit as absurd as that of 'fair theft.'"

One basic problem with the FairTax people is that they don't consider taxation by the state to be legalized theft.

And what makes FairTax supporters think that all merchants will price their goods with the sales tax included in the price? That will make their goods appear more expensive than they really are. I suppose that FairTax supporters will want the state to mandate that all prices include the federal sales tax. That brings up the other basic problem with FairTax supporters—their view of the state. But that is the subject of another article.

Laurence M. Vance is an Associated Scholar of the Mises Institute, columnist and policy adviser for the Future of Freedom Foundation, and a columnist, blogger, and book reviewer at LewRockwell.com. He is also the author of Gun Control and the Second AmendmentThe War on Drugs Is a War on Freedom, and War, Empire and the Military: Essays on the Follies of War and U.S. Foreign Policy. His newest books are Free Trade or Protectionism? and The Free Society. Visit his website: www.vancepublications.com.

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