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Location: LaGrange, Kentucky, United States

The opinions and interests of a husband, analyst and Iraq war veteran.


Monday, August 27, 2007

FairTax Smackdown

Writing in yesterday's Wall Street Journal, Bruce Bartlett lowered the boom on the Fair Tax proposal, an idea that, until now at least, had intrigued me. I'll quote a bit of his piece below, in bullet format.

- The FairTax rate is not 23% as advertised.

"If a product costs $1 at retail, the FairTax adds 30%, for a total of $1.30. Since the 30-cent tax is 23% of $1.30, FairTax supporters say the rate is 23% rather than 30%."

- FairTax by design will drive up health care costs.

"State sales taxes have long exempted all but a few services because of the enormous difficulty in taxing intangibles. But the FairTax would apply to 100% of services, including medical care, thus increasing their cost by 30%. No state comes close to taxing services so broadly."

- Your home? Yep, that too will cost more

"Consumers would also find themselves taxed on newly constructed homes. Imagine paying 30% to the federal government on top of the purchase price of your next house."

There's much more at the link, but I have to say that those three alone are enough to give me pause.

UPDATE: Ramesh noted Bartlett's piece as well, and FairTax.org is objecting to that first point.

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