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March of the 'Fair Tax' sheep 

Primary election ballot questions measure nothing but ignorance

Oh, such wonderful charlatanism! What a cornucopia of tomfoolery! I'm speaking, of course, of only one thing: The transformation of the "fair tax" from bumper sticker nonsense into an issue its proponents want us to believe is serious policy discussion.

Neal Boortz. That should say it all about veracity shenanigans. To use the talk-radio demagogue's own words, broadcast in October: "I'd lie through my teeth to entertain you."

Unfortunately, too many people don't heed Boortz's warnings about his intellectual sludge. Take the latest fair tax claim. Cobb, Gwinnett and Fayette counties featured referendums on Boortz's bogus tax scheme on their primary election ballots.

But, of course, the straw questions were only on Republican ballots. Who votes in primaries? The party faithful and the extremists.

So, in three conservative counties, about 85 percent of the most doctrinaire Republicans affirmed vaguely worded questions that pitted the unexplained fair tax against the income tax. Cobb County's ballot item, for example, asked: "Do you support the Fair Tax which is a federal national sales tax to replace the income tax?"

Bill Bozarth, director of Georgia Common Cause, called the referendums "silly. They're not polls. They're just to give politicians a few numbers to toss around."

Boortz bellows on air that the referendums "prove the fair tax will get votes." He's claiming citizens went to the polls only because of the tax. But he cites only a dozen e-mails as proof, an insignificant number even among the roughly 75,000 Republicans who did vote for the deceptively worded questions.

But I have no doubt many of the elected boobs who inhabit the Gold Dome and the U.S. Congress will wet their pants when they hear the fabulous fabrication that "voters want the fair tax." They'll be stampeded on the very complicated issue of tax policy by Boortz, a guy who flunked out of college and who gained a veneer of academic credentials by getting a law degree from an accreditation-challenged school.

Fortunately, there are folks around who know that if something smells like bullshit and looks like bullshit, it's unlikely to be a bouquet of roses.

Take state Rep. Larry O'Neal, a Republican representing parts of Houston County who heads the recently formed Georgia House Tax Reform Study Committee.

Illustrating the complexities of taxation, O'Neal cites a 2004 law he sponsored. It changed the formula for taxing large corporations, ending penalties for the number of employees in Georgia. "We were punishing companies for investing here," he says. That law is often cited as giving a billion dollars in tax breaks to large companies over 10 years. "That's true," O'Neal says, "but we closed loopholes" that allowed companies to shift much or all of their profits to other states. "The net impact will be a gain of $250 million in revenue. These things aren't simple," he says.

"I hate the income tax," adds O'Neal, a Warner Robins tax lawyer. "And I've talked to [fair tax congressional sponsor, U.S. Rep.] John Linder and read Neal Boortz's book. I'm deathly afraid of the proposal. Sales taxes by nature fluctuate with the economy. If we have a recession, revenues will nosedive. On a national level, we could bankrupt the nation and impair national defense.

"It's dangerous," he worries.

Even if dangerous, more than 50 congressional co-sponsors have signed onto Linder's bill. That, along with an inquiry from Coca-Cola on how the tax would impact its operations, prompted Georgia State's Andrew Young School of Public Policy to publish a report last December on the fair tax.

Sally Wallace, who authored the GSU study, believes a federal fair tax would have tremendous impacts on state revenue systems. After all, state income taxes, such as Georgia's, are largely made possible by piggybacking onto the federal income tax.

The fair tax calls for a "prebate," checks to be mailed to every household in America equal to the taxes paid on income up to the poverty level. It's a $600 billion-a-year gimmick, and would quickly become the biggest source of fraud since FEMA.

Even the libertarian Cato Institute stated in a 2005 report that the prebate "would get Americans hooked on receiving money from Washington each month, akin to a welfare check."

But, even if it did work, Wallace concludes, "It's the next rung up from the very poor, the lower class and the lower middle class, that will bear a bigger share of the tax burden."

In November, a presidential panel headed by former U.S. Sen. Connie Mack, R-Florida, found that while the poorest would gain a little with the prebate, the biggest winners would be those making more than $200,000. Everyone else -- those making from $15,000 to $200,000 -- would pay more in taxes.

Wallace's study and Mack's panel also see great potential for cheating. Since new houses will be taxed while used homes won't, for example, Wallace predicts developers will lease new homes for a short time, and then sell them as used.

"Retailers and shoppers could use a number of techniques to evade" the fair tax, the presidential panel observed. Since only retail sales would be taxed, "individuals might create 'paper' businesses solely to obtain business exemption certificates and avoid taxes on purchases for personal use."

Why do I suspect that Boortz has already thought of that?

Wallace notes that independent analyses put the fair tax rate needed to replace federal revenue at double or triple advocates' lowball guesses. "At those rates," she says, "people are going to look for ways to avoid paying the tax. That's for sure."

Get Involved

· For more information: The "Fair Tax" website, www.fairtax.org. For critiques of the proposal, see the Brookings Institution, www.brookings.edu/views/articles/gale/20050516.pdf and the President's Advisory Panel on Tax Reform, www.taxreformpanel.gov/final-report/TaxReform_Ch9.pdf.

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12/11/2014

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