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Letter 1
After reading your article "FairTax - Income Taxes vs. Sales Taxes" in "About" I wish to make several comments. Overall I found the article to be only somewhat fair and balanced. You left out some important points which, if included, would have painted a more accurate picture of the FairTax.
First, you left out reference to the more than three years of academic research that suggests the FairTax will, in fact, cause a spirt of major growth in the economy the first year it is instituted. Now, you may dispute this assurtion but this comes directly from Jim Poterba of the National Bureau of Economic Research and Professor Dale Jorgenson of the School of Business at Harvard University. During the time of that research the FairTax idea was constantly exposed to real-life taxpayers and developed like any successful product - with both market acceptability and theoretical efficacy.
In your article, under the heading of Changing in Spending Patterns, you suggest that many more Americans will go outside of the U.S. for their vacations and to spend their money to avoid the tax. Some will, of course, but the vast majority will not. Again from the research that was done by AFFT, estimates are that this percentage will be somewhere in the range of .10-1.5%. If you were to take a much larger figure, 10-20%, it would still be much smaller than the 44% of income tax payers, of whom the IRS claims, are out of compliance with the income tax code now. Then, when you factor in the twenty to forty billion dollars of revenue lost each year throught the operations illegal enterprises (the drug trade, Prostitution, etc) the loss of revenue going overseas is small by comparison.
You claim that seniors will loose under the sales tax. Again the research by AFFT suggests that Seniors will actually gain. More than 80% of all savings by seniors are held in tax deferred accounts. When the FairTax becomes law these IRA, insurance savings plans, retirement accounts, 401k plans, etc, will actually become more valuable. Further you fail to even mention the fact that money earned over the Social Security limited amount will no longer be subject to taxation.
Then you suggest the poor will take a hit because they pay little or no taxes. This is a total misconception! The fact is that the poor are taxed most heavily under the present income tax system. First, the working poor as we all do, pay for everything they buy in "after withholding" dollars. Then they, the unemployed, seniors and the rest of us actually pay corporate America's income taxes and compliance costs in the form of lower wages, highter prices at the chechout counters and lower returns on our investment dollars.
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