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Why is a Flat Income Tax More Stable than a Flat National Sales Tax? It’s Not.

In Response to our Nations’ national anti-holiday, April 15th, it would appear that the over-taxed bloggers of Virginia are indeed interested in tax reform. We’re not the only ones. The debate between a flat income tax and a steady national sales tax is a debate worth having, since either option is better than the catastrophic system our federal government employees today.

As a staunch advocate of the Fair Tax (a 23% national sales tax and an initial repeal of all income, payroll, estate, and gift taxes), I have specific reasons for preferring a national sales tax to all other options, which I outlined in my previous post Why I Endorse the Fair Tax. That said, not everyone agrees that a national sales tax is a good idea.

Shaun Kenney, the former “Executive Director of the Republican Party of Virginia, the former Chairman of the Fluvanna County Board of Supervisors, the former Communications Director for the Republican Party of Virginia, and an active blogger since 2002”, and contributor at Bearing Drift, writes a compelling piece against The Fair Tax. His concerns are shared by many, are not unsupported by history, and require a serious rebuttal, minus the obvious talking points.

Kenney writes,

The single greatest argument against a national sales tax?  Alabama in the 1990s.

The State of Alabama shifted its entire tax collection mechanism to a state sales tax of 9%.  At the time, it was a fair tax solution — no income taxes and a total reliance upon the performance of the economy, a bubble that burst in the early naughties with the Dot Com Bubble.  Alabama Democrats, seeing the cuts to government and all the pet projects a roaring economy subsidized, came over the wall and imposed an income tax while maintaining the enormously high sales taxes that crushed working class Alabamans caught in the middle.

This is, quite honestly, a very real threat; and I am exhausted by the amount of time we spend not doing the right thing, because of what the Democrats might do in response. However, the current version of the Fair Tax (HR 25) sunsets in 7 years, unless we repeal the Income Tax itself. In politics, there are no easy solutions and all our attempts at what seems “easy” or “feasible” has only ever resulted in compromise upon compromise and a deepening national debt.

Passing HR 25 is only the first step. The second step is to repeal the 16th Amendment. The 3rd step is to pass a balanced budget amendment. Yes, of course, in times of economic austerity a flat national sales tax is going to cut into the governments ability to fund many of its’ wasteful projects. Yes, the Democrats will always be looking for new and old ways to take money from the American People to funnel to their voters in exchange for their votes and to funnel to their Wall Street and K Street benefactors in exchange for their campaign contributions.

This contemporary objection to the principle of the Fair Tax plan, however, does not lead us toward faith in a flat income tax. What is one of the few things we can all count on during the worst times of economic austerity? Unemployment.

We’re in the middle of a supposed economic recovery today, but how many of our citizens are actually working, and therefore paying income and payroll taxes?

The answer? Only 62.8% of Americans are even paying income and payroll taxes today, which is the lowest rate we’ve seen in 37 years! (CNSNEWS). Meanwhile the other 37.2% of Americans are still eating, drinking, using energy (sorry Obama), talking on cell phones, and, often, receiving federal subsidies. In fact, in Virginia, when a SNAP (Food Stamp) recipient spends their food stamps at a store, they pay no sales taxes on that purchase! Our Welfare State is out of control and the government is floating money to millions who are not paying taxes on their subsidies.

A Flat Income Tax Rate, while preferable to what we have today, does nothing to ensure that everyone has “skin in the game”. In fact, it ensures that 37.2% of Americans do not!

Not only do the proponents of a Flat Tax plan ignore the fact that a smaller percentage of Americans are actually working today, but they ignore the fact that we have very little access to the money earned by illegal immigrants in America.

Under a flat national sales tax (The Fair Tax), illegal immigrants will immediately begin paying the exact same taxes you and I are paying. The money given to Americans, from the tax payers, will be taxed as soon as it is spent. Even those without jobs will be participating in the tax-economy under the Fair Tax. A Flat Tax does nothing to address the black market economy established by illegal black market labor in this country, while the Fair Tax does.

So, a brief review then: The Fair Tax taxes illegal immigrants and it taxes those who are not producing wealth, but are most certainly spending it. A Flat Income Tax does not. The Fair Tax taxes all commerce in an austere economy, while a flat tax only taxes the few Americans still lucky enough to have jobs. Even in the worst times, the Fair Tax is better for the American People and our government. Everyone participates. Everyone has skin in the game. Most importantly, when things are hard, as they are today, we are not increasing the burden on working Americans before they ever receive their paycheck. Yes, regardless which model we use, we still have the same finite amount of wealth creation with which to work; but under the Fair Tax, we the citizens decide when and how to spend that capital. We are entitled to 100% of what we earn. That is the nature of freedom.

Thus, while a Flat Income Tax is better than what we have now, it is certainly much worse than what we could have under the proposed Fair Tax legislation before us today in The House of Representatives.

About Steven Brodie Tucker

Graduated with a degree in Philosophy from Virginia Polytechnic Institute and State University. Also studied economics and political science at George Mason.

7 Responses to “Why is a Flat Income Tax More Stable than a Flat National Sales Tax? It’s Not.”

  1. Michael Whittaker says:

    The sales tax is more stable, more fair, and more efficient than any other tax system. PLUS we can get rid of the IRS!!!! I am 100% in for the FairTax.

    Vince Haley is pushing this for Virginia as well. It is a no brainer. As is supporting him in this upcoming primary!!

    ~~Michael Whittaker, April 17th, 2015.

  2. Tom White says:

    You need to add the word “former” to Kenney’s tenure as “the Executive Director of the Republican Party of Virginia”. The new chairman of the RPV obviously does not want divisive RINO’s like Kenney there. Which is a good thing.

    Kenney has an impressive list of “former” jobs. And that is not all of them by a long shot. And it should be noted that the self described “conservative” raised taxes as a BOS member.

    I am working on a short video on Kenney. “Clueless in Fluvanna” is the working title.
    Tom White recently posted…Why is a Flat Income Tax More Stable than a Flat National Sales Tax? It’s Not.My Profile

    • Gene Lefty says:

      Finally something we can agree on.

      Shaun Kenny (slave owner type) could best be described as what is wrong with the Republican Party.

      He seems to have held just about every position with RPV except janitor, and has apparently failed in each. I look forward to your video.

      Just what has Kenney been successful at except chaos and division?

      Now, it seems that your misinformed writer has jumped into bed with that loser? Two Liberal losers in the same pod?

      Makes little difference about any type of tax reform, as the House, Senate, and President cannot agree on the time of day much less anything else. Neither can the Republican Party, even without the Democrats.

      The Republican’s know that you and Tucker will in the end vote Republican no matter what type of trash they throw into your can as a Candidate.

      I will cross Party lines to straighten out the Republican Party. They know that. They are trembling due to fear that I am developing (slowly) a following.

      A vote for Hillary is a vote to reform the Republican Party. It is a vote against Corporate rule. Why do Corporations pay no tax in HR 25?

      As long as these “Slave Owner” types run the Republican Party, I will not shut up.

  3. Steven Brodie Tucker
    Twitter:
    says:

    I voted for Robert Sarvis and Anthony Riedel sir. I rarely vote republican. Are there any facts that contribute to your thinking?

    • Gene Lefty says:

      You support HR 25.

      How can you support a bill that is called a fair tax, when corporations would pay no tax?

      When I was working the phones against HR 25, I added up the 23%, the state tax, and the county tax. What is fair about the government taking one third or more of our income? Corporations 0.

      Tax reform is simple. You make this much, you pay this much tax. Corporations included. NO deductions or loopholes. Why can’t we have this? Simple, PAC and campaign finance laws. Mostly corporate money. Wall St. runs this country. Dominion runs Virginia government with a checkbook.

      Our problems cannot be solved with the current campaign and PAC finance laws. We also need to bring back the FCC fairness act.

      A perfect example? Would Virginia’s new ethics laws have done anything to stop what former Governor
      McDonnell did?

      HR25 or any major legislation is DOA. The Congress and President cannot agree on anything. Putting a Republican in the WH is simply going back to 2008.

    • Gene Lefty says:

      Let’s look at something else.

      Shaun Kenny wants to talk about Alabama taxes in the nineties?

      Well let’s get closer to home. Under his establishment Republican Party, in Virginia from 2010 to 2014, with Republican control of government, the state budget increased from about $75 Billion to about $96 Billion. Bi-annual increases many times the increases in the cost of living or inflation. Increases of over $5 Billion per year!

      Paychecks decreased.

      These same Liberal Republican’s, passed the largest tax increase in Virginia history. HB 2313. In what some would call a zero growth economy. These are the facts, the numbers do not lie.

      But yet, Kenny would like to deceive us all by talking about a state a thousand miles away, with claims about Democrats in the nineties??????

      Anything Kenney is for, I am against.

      What do you say about this? I say stick it to him and his bunch by voting for Hillary?

      What say you now? Still want to debate?

  4. Paula says:

    All you need to know about Lefty Gene is that he has a VERY big mouth and is willing to offer full support of fraudsters like www. FastTerry.com in order to “reform the Republican party.”

    Mr. Tucker, plz don’t let the personal attacks of leftist loons discourage you. You are right on so many issues & I’ve also seen u say many times that you don’t have all the answers or even A answer but you are doing the good work of initiating a dialogue & discussion.

    I love your work & know of hundreds of others that do as well. Hopefully u will run for office, and soon.

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    Tom White Says:

    Nothing is more conservative than a republican wanting to get their majority back. And nothing is more liberal than a republican WITH a majority.

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