Letter to Gwinnett Daily News

Although I agree with the intent of Mr. Dick Bachert's letter and U. S. Representative John Linder's FairTax proposal, I am inclined to agree with Georgia State University associate professor Daniel Franklin that a 23.5 percent, single-bite sales tax is just absurd. Such a difference between the wholesale and retail prices would have bootleggers gunning their engines. A similar idea entitled the "National Sales Tax" was proposed earlier by a group called CATS (Citizens for Alternative Tax System) and their similarities outweigh their differences. Both proposed a consumer-only universal sales tax, both passed out exemptions to wholesalers, and neither did anything about limiting other taxes. Of course the 23 percent initial rate sallied forth for the FairTax really isn't necessary. In fact, if all transactions were taxed the same rate with no exemptions, the tax rate could be lowered to less than ten percent and still produce the same revenue. But the advocates of both these plans seem to let how outrank what, and see large retailers as the panacea for administration and collection of tax instead of the IRS.

The FairTax as now construed seems unfair. Under the proposal, large retailers like Sears and Target would be exempt from sales tax on products they resell (since they buy wholesale and sell retail) and under this new proposal there would be no income tax. So what tax will Sears and Target pay? Why wouldn't it be simpler to scrap all exemptions and lower the rate to less than ten percent and have Sears and Target pay the same as everyone else? And if the latter were done, couldn't the "Fair Tax" scrap the tortured logic of the "universal rebate" for the poor?

The FairTax may just be Another Tax. The proposal does not limit either the amount the tax can be nor how many other taxes there can be. Will there still be property taxes? License tags? Excise taxes? State income taxes? And will the (God forbid) 23.5 percent bite be just the starting point? Bear in mind, the original income tax was proposed in 1913 was to tax only the richest one percent one percent of their income. Now the total tax bite (state, federal and local combined) has risen from 1 or 2 percent in the 1900's to over 34 percent of GDNP by the year 2000 (see Scientific American, Dec, '01) and the tax now collects the most from the poorest, not the richest. The typical Fortune 500 company pays less than six percent of its gross revenues in taxes of any kind (you can check this out yourself; just divide gross revenues into "reserve for taxes"); a school teacher or truck driver pays out over forty percent of their income in state, federal or local taxes.

Ticks do not voluntarily jump off a dog. I am inclined to agree with Mr. Bachert that the "Fair Tax" may be a literal "no-brainer" if he doesn't fix the obvious problems pointed out by GSU Prof. Franklin.