(C) Daily Kos This story was originally published by Daily Kos and is unaltered. . . . . . . . . . . The Orwellian-named & economy-busting "Fair Tax" is the GOP's latest scheme to hurt the poor [1] ['This Content Is Not Subject To Review Daily Kos Staff Prior To Publication.', 'Backgroundurl Avatar_Large', 'Nickname', 'Joined', 'Created_At', 'Story Count', 'N_Stories', 'Comment Count', 'N_Comments', 'Popular Tags'] Date: 2023-01-21 The Republicans have a feral skill at giving laws or policies names that distract the citizens from their contents. In 2001, using the attacks of 9/11 as justification, the Bush administration lobbied for “PUBLIC LAW 107–56”. But that name was too blandly bureaucratic. The GOP had to sex it up and make Americans feel good about the measure. So the conservative disinformation apparatus christened this vast expansion of the federal government’s surveillance of the law-abiding citizen the ‘‘Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001’’. Thus the acronymic USA PATRIOT ACT granted the state enhanced powers to spy on Americans by expanding the government’s authority to monitor phone and email communications, collect bank and credit records, and track the internet activity of innocent Americans. And who would dare to question a law with “Patriot” in its name? Fast forward to 2023. House Republicans, emboldened by their new razor-thin majority and catering to the extreme right of the extreme right, are talking about instituting the “FAIR Tax”. It is an idea so punitive that even traditional reactionaries like Steve “FLAT Tax” Forbes have called it unworkable. And so politically toxic it would be a "huge but belated Christmas present" to Democrats for Republicans to even hold a public vote on the matter. Why his angst? Simply put, Forbes’ Flat Tax requires that all Americans, regardless of their income, pay the same tax rate. This means the poor, who do not currently pay income tax because their income has fallen so far behind, would get a tax increase. And the rich would get a tax cut. The Flat Tax is superficially “fair” as every taxpayer pays the same income tax rate — although no industrial nation has adopted the policy. In contrast, the Fair Tax is never fair unless you redefine “fair”. Under a Fair Tax mandate, the poor would pay a higher tax rate than the rich. How? On the other hand, the House GOP’s Fair Tax replaces the federal income tax with a national 30% sales tax. It is regressive as the poor spend a higher percentage of their income on stuff than the rich do. If almost all of your non-housing income is taxed, you will pay a higher net tax rate than someone who invests a lot of their income and does not spend it all on consumer goods. To sugar the political poison, Fair Tax proponents argue that the very poor will receive tax rebates. This runs contrary to one of the main selling points of a Fair Tax — that it will get rid of the IRS, streamline the tax collection bureaucracy, and save money. I would bet that if these financially illiterate zealots achieve their dream, we will see no diminution of the bureaucratic load while the rich get richer on the backs of the poor. It is unalloyed cynicism at its most expedient. Republicans expect their base will see “it gets rid of the IRS” and become fanatics for the Fair Tax without looking under the hood. However, unlike abstractions such as hating foreigners, gays, and school teachers, the Fair Tax directly affects the pocketbook. The biggest political problem the Republicans face in trying to sell their latest tax relief for the rich is that its effects are so visible. People do not notice income tax as much as they might because they do not pay it like a cable bill. Instead, the employer deducts the tax before workers get their paychecks. However, with the Fair Tax, a shirt that retailed at $50 would immediately cost $65 (+ whatever local sales tax might be). Economics 101 states that the more something costs, the less the consumer buys. A national sales tax would cripple any business selling consumer goods. And as people buying stuff accounts for over 68% of the US economy, the Fair Tax guarantees an immediate recession. But this is hardly the first time American conservatives have tried to kill the golden-egg-laying goose. They promoted increased tariffs on imports while lobbying against the lower tariffs the Trans-Pacific Partnership ( TPP ) would have generated. There are two problems with this tariff strategy. One, just like the Fair Tax, it increases the price of consumer goods. How? Conservatives say that tariffs penalize the exporting country. That is hardly the complete picture. In the global economy, companies work on a profit margin that must be small enough to remain competitive — leaving them with little wriggle room. Therefore, they will have to pass some of the tariff cost on to the consumer. If that pass-along cost is too high, the consumer will turn to whatever low-tariff country produces the goods for less (which might be America itself) But their price will still be higher than the original price before tariffs. Because if it were lower, people would have bought from them in the first place. Two, tariffs do nothing to prevent companies from replacing many workers with robots if the costs get too high. A Republican selling point is the simplicity of a fair tax. Indeed, it is simple, because everything the current tax code promotes with tax deductions, e.g. charity, home ownership, savings for college, etc. — would be tossed aside. The Fair Tax is more evidence — even conclusive proof — that conservatives are economic illiterates, sadists, or both. [END] --- [1] Url: https://www.dailykos.com/stories/2023/1/21/2148067/-The-Orwellian-named-economy-busting-Fair-Tax-is-the-GOP-s-latest-scheme-to-hurt-the-poor Published and (C) by Daily Kos Content appears here under this condition or license: Site content may be used for any purpose without permission unless otherwise specified. via Magical.Fish Gopher News Feeds: gopher://magical.fish/1/feeds/news/dailykos/