SECOND SUBMISSION
TESTIMONY TO WAYS AND MEANS COMMITTEE
SEPTEMBER, 2011.
HEARING ON TAX REFORM AND CONSUMPTION BASED TAX SYSTEMS
FAIRTAX FINE PRINT
AS AN ADDENDUM TO PREVIOUS TESTIMONY
The calculator doesn't ask you anything taxable consumption is. Fairtax, by definition, is a tax on your taxable consumption. There is only one question needed to determine your Fairtax -- what is your taxable consumption? And there is only one thing Fairtax calculator did not allow you to enter -- your taxable consumption.
MASSIVE TAX ON CITY AND STATES:
Fairtax is a massive tax on city county and state government. Fairtax HR25, Section 2a, subsection 7, defines a person as "any government". Governments are not only taxed on all "consumption expenditures" -- as people are --- but additionally, all city, county, state, and federal pensions, benefits, wages, insurance, and investment are taxed.
The money coming from all cities, states, and counties, would be almost 40% of Fairtax supposed revenue. See the Fairtax document "Comparison of the Fairtax Base"
Let's see how the effect of this tax on just a few cities.
FACT 3: LESS THAN 20% OF FAIRTAX IS ON RETAIL SALES -THE REST IS ON THINGS LIKE A TAX ON MILITARY SPENDING, WAGE PENSIONS, DEATH BENEFITS.
Fairtax has a massive tax on all city, all state, all county, and all military spending. This is not a retail tax, or a tax on what a city spends for retail items. This is drastically larger tax. Yes, local and state governments would have to pay "retail sales taxes". But Fairtax is on all military pensions wages, death benefits, health care support, and disability pay.
FACT 4) Fairtax hides operational and basic parts of the legislation in deceptive ways, deliberately.
Just like Fairtax was deceptive in the "calculator" they are deceptive in the fine print -- about the same issue.
What in HR25 allows them to tax city and states anyway? What is the legal basis for this massive tax on city counties and states? Shouldn't the legal basis for an almost trillion dollars, be cleanly shown?
We asked Fairtax spokesmen repeatedly what their legal basis was for this massive tax on government -- we never got a straight answer.
Then according to attorney and Fairtax Spokesmen James Bennett, the following fine print in HR25 is in fact, a "legal basis" for the massive tax on city and states. It's in part of HR 25 devoted to definitions, long, rambling, almost incomprehensible definitions, about such things as "Private Personal Courier Services", whatever that is. The point is, mixed into these goofy definitions, is THIS one -- which their own spokesmen say the the legal basis.
This one word, in a sentence, is the legal basis? It doesn't even say city, or county, or state. It doesn't even say pay, or tax. It doesn't even say how much, or who, or why.
It's just a rambling definition that doesn't make any sense. It's too goofy to believe, even as a joke, even if an attorney for Fairtax said it.
But this was confirmed by PhD Fairtax spokesmen David Kendall, a national spokesmen for Fairtax. Yes, there are other bits of Fairtax scattered about in the fine print, that are about this massive government tax. But this sentence, literally, is the "legal basis" for those.
Kendall tried to explain it away by saying "I see nothing wrong in asking city and states to pay."
Asking? What asking? Who is asking? Do you mean hiding this stuff in goofy definitions is how you ask? Seriously, what does Kendall mean by "asking"
Is New York City is supposed to see this definition, and tell Fairtax if it will pay 8 billion dollars? This is what you mean by asking?
Kendall wouldn't say what he meant by asking city and states to pay. We suggest this Committee call David Kendall, or other Fairtax spokesmen, and ask them to point out the legal basis for this massive tax on city and states, if HR 25, 2(a) subsection 7 is not it.
James Bennett, the attorney, insists city and states would pay less than our figures, he indicated about half that high. But any money supposedly paid by all city, county and states, is balderdash nonsense anyway. Only people pay taxes.
FACT 4) Fairtax hides what it taxes. While technically they do have language indicating what they tax, it's never specific, and in such vast generalities, that the statement is meaningless.
To tax all CONSUMPTION -- without exception. Fine, but the devil is in the details.
When you read that, you probably think that means retail taxes -- especially if you read their books, saw their videos, etc. All examples ever given by Fairtax spokesmen are about retail sales -- purchasing a coat, a toaster, or lunch.
We had to scour their "supporting documents" to get some information, even then it's vague, purposely. This table below is in the context of Fairtax explaining their "TAX BASE"
Essentially Fairtax can be called "a tax base" sleight of hand. Here is how the do it.
Notice Personal consumption expenditures?
Notice Government Consumption Expenditures?
Add those together, and you get some idea of the "tax base"
Everything in those figures are taxed. This is the biggest part of what Fairtax calls "the tax base" But notice, even there, they do NOT make it clear this is even their tax base. Then they don't make it clear this is what they TAX.
YOu don't know, looking at that, that this is a tax on all military pensions and death benefits. You don't know looking at that, that New York City would have to pay 8 billion dollars, Houston 620 million, and so on. Why don't you know? They don't ever put anything direct, honest, and candid.
By definition, anything in the tax base, is taxed. So all personal and government "consumption expenditures" are in the tax base.
The "government" in this chart, from 2005 (they have not updated the charts) is therefore taxed 23% of almost 2 trillion.
Does Fairtax even say this plainly? No, of course not. The government from that year will pay almost 500 billion dollars. Remember, every dollar they have the "government" paying as a tax, is an absurdity - only people pay taxes. And they know it.
Fairtax "removes" education spending and foreign travel from the tax base", in other words, because that is not in the tax base, it won't be taxed. Fairtax "removes" then adds a few things to the "tax base" which make it as confusing as possible. But whatever is not removed, is in the tax base!
They say "we adopt a pre-payment approach"
The entire plan is riddled with such double talk. When you understand the audacity of a 14 billion dollar tax on the state of Texas -- a tax on every Texas prison, every California highway, every Oklahoma court system -- whatever it is, wherever it is, it's taxed, unless it's one of the few things Fairtax "removes" from the "tax base"
Fairtax HR 25 will need more than a definition about "persons" being "any government" to collect, even on paper 800 billion dollars.
So, spread around in various places -- widely scattered , or as we call it, "camouflage" are other bits of HR25, which give information. Here is one showing that any government is a "taxable employer"
So any government is a taxable employer. Notice the definition didn't say anything about "taxes" It doesn't say governments will pay or not pay. Just like the "definition of a person" didn't say government will pay. Fairtax uses the trick of clever definitions in one part of HR25, and then in another part, uses those words to pull the wool over your yes.
So the above citation from Fairtax is "any government is a taxable employer." That still doesnt jump out at you.
Does this taxable employer pay a tax just on wages?
They cleverly define wages as any compensation whatsoever. But they don't do that at the same subsection as "taxable employer" These are all spread out.
The federal government can not force states to pay taxes, of course. It's about as unconstitutional as it gets. Fairtax can no more tax states on their consumption and expenditures than they can tax states on their income. It's that silly.
And Fairtax is not going to try. Fairtax is not going to try to tax cancer victims, or the state of Texas. They aren't going to try to tax the military pensons and spending and equip ment.
But they had to get their math to add up. Fairtax knows they can't tax states in this manner, they know they can't tax cancer victims with no money, the know they can't tax the federal government or the military.
All the effort putting into hiding this in the tax base, all the slick defintions, were not done by accident. They were done to hide the fact that much of the revenue they pretend to get, can not materialize. They were done to hide the fact, they know very well their own plan is a fraud.
States would have to pass a constitutional amendment to allow this -- in effect, volunteer to be taxed in this way. Since Fairtax has tried to hide it anyway, you can be sure no state, much less 3/4 of them, would agree to such foolish deceptions.
And Fairtax knows it.
Does Fairtax hate people who have heart bypass surgery?Or cancer? No. But they had to make their math add up. Even if the person goes into debt, or can't pay the surgical cost ever -- they are liable for the tax. Fairtax math is based on that.
We encourage the committee to seek further answers from Fairtax about these matters.
AS AN ADDENDUM TO PREVIOUS TESTIMONY
Fairtax sounds great. No tax plan has even promised as much, or done so as loudly. Neal Boortz and Herman Cain sing its praises. FOX news has supported it, talk radio supports it.
We were fooled by Fairtax until three things happened.
1) Fairtax.org published three fraudulent "calculators" on line, which they called "DARE TO COMPARE": all three calculators use the same hustle -- they simply don't allow you to enter any information that matters.
2) Fairtax is based on 1.4 trillion dollars in tax revenue (almost half total Fairtax revenue) that is impossible to collect, and, or would cause massive tax increases at state and local level.
3) Fairtax has absolutely no independent research. The research often cited by Fairtax as supporting them, actually repudiates Fairtax.
The Fairtax Book, by Neal Boortz, made it seem like Harvard's Dale Jorgenson, PhD did "extensive research" that supported Fairtax claims -- 50% more take home pay, 22% drop in prices, 76% increase in investments in US companies.
But immediately after the book came out, Jorgeson said his research shows something almost opposite of that. Instead of 50% more take home pay, Jorgenson said everyone would have to take a 20% pay cut.
4) President Bush asked for a report on Fairtax. The Joint Committee on Taxation reported that to replace all federal taxes, a retail sales tax on personal consumption would be drastically higher than 23% -- in fact, it could be as high as 89%.
5) Fairtax hired Beacon Hill -- a for profit company -- to publish "position papers" Fairax pretends these "position papers" are academic research. Nothing could be further from the truth.
6) Fairtax fine print is deceptive, disingenuous, and deliberately misleading. Only a very close reading of the documents that most Fairtax supporters never see show the underlying deceptions.
A tax plan doesn't need a fraudulent calculator, other than to cover up a deception in the underlying plan.
1) Fairtax.org published three fraudulent "calculators" on line, which they called "DARE TO COMPARE": all three calculators use the same hustle -- they simply don't allow you to enter any information that matters.
2) Fairtax is based on 1.4 trillion dollars in tax revenue (almost half total Fairtax revenue) that is impossible to collect, and, or would cause massive tax increases at state and local level.
3) Fairtax has absolutely no independent research. The research often cited by Fairtax as supporting them, actually repudiates Fairtax.
The Fairtax Book, by Neal Boortz, made it seem like Harvard's Dale Jorgenson, PhD did "extensive research" that supported Fairtax claims -- 50% more take home pay, 22% drop in prices, 76% increase in investments in US companies.
But immediately after the book came out, Jorgeson said his research shows something almost opposite of that. Instead of 50% more take home pay, Jorgenson said everyone would have to take a 20% pay cut.
4) President Bush asked for a report on Fairtax. The Joint Committee on Taxation reported that to replace all federal taxes, a retail sales tax on personal consumption would be drastically higher than 23% -- in fact, it could be as high as 89%.
5) Fairtax hired Beacon Hill -- a for profit company -- to publish "position papers" Fairax pretends these "position papers" are academic research. Nothing could be further from the truth.
6) Fairtax fine print is deceptive, disingenuous, and deliberately misleading. Only a very close reading of the documents that most Fairtax supporters never see show the underlying deceptions.
A tax plan doesn't need a fraudulent calculator, other than to cover up a deception in the underlying plan.
FACT 1: FAIRTAX HAS A FRAUDULENT CALCULATOR.
We urge every committee member, and every member of the public, to use the Fairtax calculator. The calculator gives glowing reports of "savings" even if the user would pay 10 times as much taxes.
We urge every committee member, and every member of the public, to use the Fairtax calculator. The calculator gives glowing reports of "savings" even if the user would pay 10 times as much taxes.
A person's federal tax could increa from 4,000 to 40,000 and the Fairtax.org calculator would tell him he saved 50% Because the questions Fairtax calculator asks are meaningless. No infomration the calculator asked for has anything to do with your Fairtax.
The calculator doesn't ask you anything taxable consumption is. Fairtax, by definition, is a tax on your taxable consumption. There is only one question needed to determine your Fairtax -- what is your taxable consumption? And there is only one thing Fairtax calculator did not allow you to enter -- your taxable consumption.
MASSIVE TAX ON CITY AND STATES:
Fairtax is a massive tax on city county and state government. Fairtax HR25, Section 2a, subsection 7, defines a person as "any government". Governments are not only taxed on all "consumption expenditures" -- as people are --- but additionally, all city, county, state, and federal pensions, benefits, wages, insurance, and investment are taxed.
The money coming from all cities, states, and counties, would be almost 40% of Fairtax supposed revenue. See the Fairtax document "Comparison of the Fairtax Base"
Let's see how the effect of this tax on just a few cities.
City Government MUST PAY TO FED GOV MUST PAY IN ADVANCE
1 New York City 8.1 Billion dollars 3 BILLION
2 Los Angeles 799 Million dollars 300 million
3 Chicago 640 million dollars 250 million
4 Houston, 620 million dollar 240 million
5 Philadelphia 610million dollars 230 million
6 Phoenix 590 million 210 million
7 San Diego, 580 million dollars 200 million
8 Dallas 360 million 180 million
9 San Antonio 450 million 160 million
10 Detroit 360 million 110 million
Fairtax has a massive tax on all city, all state, all county, and all military spending. This is not a retail tax, or a tax on what a city spends for retail items. This is drastically larger tax. Yes, local and state governments would have to pay "retail sales taxes". But Fairtax is on all military pensions wages, death benefits, health care support, and disability pay.
FACT 4) Fairtax hides operational and basic parts of the legislation in deceptive ways, deliberately.
Just like Fairtax was deceptive in the "calculator" they are deceptive in the fine print -- about the same issue.
What in HR25 allows them to tax city and states anyway? What is the legal basis for this massive tax on city counties and states? Shouldn't the legal basis for an almost trillion dollars, be cleanly shown?
We asked Fairtax spokesmen repeatedly what their legal basis was for this massive tax on government -- we never got a straight answer.
Then according to attorney and Fairtax Spokesmen James Bennett, the following fine print in HR25 is in fact, a "legal basis" for the massive tax on city and states. It's in part of HR 25 devoted to definitions, long, rambling, almost incomprehensible definitions, about such things as "Private Personal Courier Services", whatever that is. The point is, mixed into these goofy definitions, is THIS one -- which their own spokesmen say the the legal basis.
This one word, in a sentence, is the legal basis? It doesn't even say city, or county, or state. It doesn't even say pay, or tax. It doesn't even say how much, or who, or why.
It's just a rambling definition that doesn't make any sense. It's too goofy to believe, even as a joke, even if an attorney for Fairtax said it.
But this was confirmed by PhD Fairtax spokesmen David Kendall, a national spokesmen for Fairtax. Yes, there are other bits of Fairtax scattered about in the fine print, that are about this massive government tax. But this sentence, literally, is the "legal basis" for those.
Kendall tried to explain it away by saying "I see nothing wrong in asking city and states to pay."
Asking? What asking? Who is asking? Do you mean hiding this stuff in goofy definitions is how you ask? Seriously, what does Kendall mean by "asking"
Is New York City is supposed to see this definition, and tell Fairtax if it will pay 8 billion dollars? This is what you mean by asking?
Kendall wouldn't say what he meant by asking city and states to pay. We suggest this Committee call David Kendall, or other Fairtax spokesmen, and ask them to point out the legal basis for this massive tax on city and states, if HR 25, 2(a) subsection 7 is not it.
James Bennett, the attorney, insists city and states would pay less than our figures, he indicated about half that high. But any money supposedly paid by all city, county and states, is balderdash nonsense anyway. Only people pay taxes.
FACT 4) Fairtax hides what it taxes. While technically they do have language indicating what they tax, it's never specific, and in such vast generalities, that the statement is meaningless.
To tax all CONSUMPTION -- without exception. Fine, but the devil is in the details.
When you read that, you probably think that means retail taxes -- especially if you read their books, saw their videos, etc. All examples ever given by Fairtax spokesmen are about retail sales -- purchasing a coat, a toaster, or lunch.
We had to scour their "supporting documents" to get some information, even then it's vague, purposely. This table below is in the context of Fairtax explaining their "TAX BASE"
Essentially Fairtax can be called "a tax base" sleight of hand. Here is how the do it.
Notice Personal consumption expenditures?
Notice Government Consumption Expenditures?
Add those together, and you get some idea of the "tax base"
Everything in those figures are taxed. This is the biggest part of what Fairtax calls "the tax base" But notice, even there, they do NOT make it clear this is even their tax base. Then they don't make it clear this is what they TAX.
YOu don't know, looking at that, that this is a tax on all military pensions and death benefits. You don't know looking at that, that New York City would have to pay 8 billion dollars, Houston 620 million, and so on. Why don't you know? They don't ever put anything direct, honest, and candid.
By definition, anything in the tax base, is taxed. So all personal and government "consumption expenditures" are in the tax base.
The "government" in this chart, from 2005 (they have not updated the charts) is therefore taxed 23% of almost 2 trillion.
Does Fairtax even say this plainly? No, of course not. The government from that year will pay almost 500 billion dollars. Remember, every dollar they have the "government" paying as a tax, is an absurdity - only people pay taxes. And they know it.
Fairtax "removes" education spending and foreign travel from the tax base", in other words, because that is not in the tax base, it won't be taxed. Fairtax "removes" then adds a few things to the "tax base" which make it as confusing as possible. But whatever is not removed, is in the tax base!
DO you see that? They "add government consumption at state, local and federal levels" This is so audacious, so goofy, so preposterous, few people can spot the hustle. It's as if someone walked into your bank, opened the bank door while you stood there, borrowed put all the money in a wheel barrow, and walked out. You would almost think the guy was a security guard.
They "add spending for new buildings and equipment" -- that is all new buildings and equipment for all states, cities, counties, even the military equipment. That is all in the tax base. That means, it's taxed!
If you didn't know they had the goofy calculator, if you didn't have their own spokesmen admitting the legal basis for this tax is a word in a definition, if you didn't read the fine print and math, you would assume what they said in the speeches, videos, and books was what Fairtax was.
FACT 6) Fairtax has nothing to do with what they say in books, videos, and speeches. Those are all, by design, misleading to the point of absurdity. The books videos and speeches say nothing about these things, in away anyone could understand.
But the books, videos and speeches are not the legislation. And as we show above (and this is only part of it) the legislation is deceptive double talk.
All spending by cities, by states, by counties are in the tax base. Notice, city and states are NOT just taxed on retail sales, for example if your city buys police vehicles. Rather, cities are taxed on operating jails, court houses, all pensions and benefits to current and retired employees, etc. All buildings, equipment, all pensions, wages, all benefits, all insurance, health care, given to military or government employees is taxed.
Operating a prison? Taxed. Paying wages, pensions, death benefits to soldiers? Taxed. Combat pay? Medical care for wounded vets? Taxed.
Building highways, sewer systems, bridges? Taxed.
HOW CAN CITIES AND STATES PAY?
How are cities supposed to pay this? How are counties supposed to pay? How are states supposed to pay these billions?
Look in the fine print. Same place they have hidden the tax itself, they hide how everyone is supposed to pay for it.
INCREASE TAXES? All state and local government are supposed to INCREASE their tax rates. Not just some cities, all cities. All states. All counties -- should raise their taxes to pay this?
Fairtax spokesmen testified in July to this Committee. Did they mention that their plan calls for massive tax increases on city, county and states? No. Did they mention that all military pensions, wages, and even death benefits would be taxed?
No. Did they mention that Texas state legislature would have to pay massive taxes, and increase their tax rates to pay for it?
But technically, it's in their plan, because the say "all consumption" and "government consumption and expenditures". They hoped no one would notice. But we noticed.
Others noticed too -- William Gale of Brookings Institute, and Bruce Bartlett, of National Review, have exposed Fairtax for years as unworkable, even preposterous.
All cities states and counties would have to "raise their taxes". That is not what we say, that is what Fairtax fine print says.
Fairtax detractors don't say that -- Fairtax does, in their own fine print, in documents no one reads. .
If you think the 800 billion dollar raise in taxes is something -- wait till you see how city and states have to pay it. Get this -- they have to pay much of this -- IN ADVANCE.
Why in advance? Because Fairtax says so, in a footnote. A footnote! Footnote 19.
Fairtax spokesmen testified in July to this Committee. Did they mention that their plan calls for massive tax increases on city, county and states? No. Did they mention that all military pensions, wages, and even death benefits would be taxed?
No. Did they mention that Texas state legislature would have to pay massive taxes, and increase their tax rates to pay for it?
But technically, it's in their plan, because the say "all consumption" and "government consumption and expenditures". They hoped no one would notice. But we noticed.
Others noticed too -- William Gale of Brookings Institute, and Bruce Bartlett, of National Review, have exposed Fairtax for years as unworkable, even preposterous.
All cities states and counties would have to "raise their taxes". That is not what we say, that is what Fairtax fine print says.
Fairtax detractors don't say that -- Fairtax does, in their own fine print, in documents no one reads. .
If you think the 800 billion dollar raise in taxes is something -- wait till you see how city and states have to pay it. Get this -- they have to pay much of this -- IN ADVANCE.
Why in advance? Because Fairtax says so, in a footnote. A footnote! Footnote 19.
This is footnote 19, page 10, on their document "Comparison of the Fairtax Tax Base" Even in the footnote, they don't say "city states and counties must pay in advance"
They say "we adopt a pre-payment approach"
The entire plan is riddled with such double talk. When you understand the audacity of a 14 billion dollar tax on the state of Texas -- a tax on every Texas prison, every California highway, every Oklahoma court system -- whatever it is, wherever it is, it's taxed, unless it's one of the few things Fairtax "removes" from the "tax base"
Fairtax HR 25 will need more than a definition about "persons" being "any government" to collect, even on paper 800 billion dollars.
So, spread around in various places -- widely scattered , or as we call it, "camouflage" are other bits of HR25, which give information. Here is one showing that any government is a "taxable employer"
So any government is a taxable employer. Notice the definition didn't say anything about "taxes" It doesn't say governments will pay or not pay. Just like the "definition of a person" didn't say government will pay. Fairtax uses the trick of clever definitions in one part of HR25, and then in another part, uses those words to pull the wool over your yes.
So the above citation from Fairtax is "any government is a taxable employer." That still doesnt jump out at you.
Does this taxable employer pay a tax just on wages?
They cleverly define wages as any compensation whatsoever. But they don't do that at the same subsection as "taxable employer" These are all spread out.
Notice this is another definition. Again, the definition part doesn't say a word about city county and states paying taxes. It's just a definition of wages.
So they don't say government has to pay taxes on pensions, workers comp, unemployment, insurance, etc etc. That would be too obvious
Who pays the tax on pensions wages, etc? Remember, in retail sales, the business sends in the tax, on the "final consumption". But in government wages, pensions, etc, the government, who has to pay the compensation, ALSO has to send in the tax on top of that pay.
Why say "CERTAIN WAGES"? Because if they said "All military wages, all state employee wages, all federal employee wages, all city wages, all county wages" you might notice. They use the word "certain" to fool people into thinking this would not be a big deal -- just "certain" wages, as if that is a small matter.
The point is, this is important because the GOVERNMENT has to send in -- remit -- the tax. The city has to send in the tax on all wages benefits, pensions, to the federal government. The counties must, and the states must too.
The tax on these wages are 300 billion dollars -- at a minimum. Don't you think a 300 billion dollar tax should be explained a little more clearly?
NO MATTER WHAT TRICK LANGUAGE THEY USE, THEY CANT DO IT.
The federal government can not force states to pay taxes, of course. It's about as unconstitutional as it gets. Fairtax can no more tax states on their consumption and expenditures than they can tax states on their income. It's that silly.
And Fairtax is not going to try. Fairtax is not going to try to tax cancer victims, or the state of Texas. They aren't going to try to tax the military pensons and spending and equip ment.
But they had to get their math to add up. Fairtax knows they can't tax states in this manner, they know they can't tax cancer victims with no money, the know they can't tax the federal government or the military.
All the effort putting into hiding this in the tax base, all the slick defintions, were not done by accident. They were done to hide the fact that much of the revenue they pretend to get, can not materialize. They were done to hide the fact, they know very well their own plan is a fraud.
States would have to pass a constitutional amendment to allow this -- in effect, volunteer to be taxed in this way. Since Fairtax has tried to hide it anyway, you can be sure no state, much less 3/4 of them, would agree to such foolish deceptions.
And Fairtax knows it.
Does Fairtax hate people who have heart bypass surgery?Or cancer? No. But they had to make their math add up. Even if the person goes into debt, or can't pay the surgical cost ever -- they are liable for the tax. Fairtax math is based on that.
We encourage the committee to seek further answers from Fairtax about these matters.
