Friday, September 30, 2011

Interview with Gary Johnson: "Fair Tax" questions...



This Blogger has always greatly appreciated Gary Johnson’s social libertarianism and record as Governor of New Mexico. In fact, of all the GOP candidates, Johnson is by far my favorite. And so, this afternoon, I had the opportunity to participate in a blogger’s Conference Call with the Governor to ask him policy questions.

I decided to ask him about his one position that bothers me the most: his support for the so-called “Fair Tax,” a national 23% sales tax he would like to use to replace both the federal income tax and the social security tax. Those who support the Fair Tax point to the fact that it taxes consumption, not income and that the IRS and the insanely complicated income tax code could both be abolished. A major criticism of that plan - that poor people will be significantly affected - is countered by Fair Tax proponent’s plan to send every household a $200 monthly check (called a “Prebate,” since it is a rebate of taxes to be paid that month) to help them pay for the new tax they would be paying on all goods. Here is how our discussion went”

Tully: Governor, I have three questions about your Fair Tax proposal. First, given your proposal for a “Prebate,” aren’t you really just encouraging a society-wide sense of dependency on Government checks?

Johnson: “The Prebate would amount to $200/mo, or $2,400 a year…you can’t avoid paying taxes, so everyone would get a check up to the poverty level, and that would cover the amount of tax you’d be paying.”

[I found the response disappointing, and not at all on-point. He told me how it would work, but never addressed my question which was about creating a societal dependence on checks from the government.]

Tully: Second, at a time when consumer spending and confidence is at a low, wouldn’t the shock value of a large sales tax reduce consumer spending even more?

Johnson: “There might be a very temporary withdrawal of consumerism, but we’re going to have to buy food, we’re going to have to buy gasoline, we’re going to have to buy clothing”

[His response ignored the economic concept of Opportunity Cost. If I am spending more of my income on gasoline or food, then I will have to spend less on some other item somewhere. I understand the idea is that by eliminating an income tax, each worker would have more disposable income in their pocket because they wouldn’t have those deductions; but even Governor Johnson had to admit to a ‘temporary withdrawal of consumerism.’ That ‘temporary’ withdrawal would lead to decreased GDP, increased unemployment as businesses lay off workers because fewer products are being purchased, and lower consumer confidence over all – none of which would be helpful in this economy. In fact, a ‘temporary’ withdrawal might lead to a very long-term downward spiral.]

Tully: You claim that you would be able to eliminate the IRS through this proposal, but who would collect the Fair Tax and send out the prebate checks? States that have sales taxes still have Departments of Revenue to collect them.”

Johnson
: “The prebate checks would be mailed by the Social Security administration…states that have sales taxes have agencies that collect them…it’s fairly easy.”

[Again, I was unsatisfied with Johnson’s response here. If the Social Security Administration – which currently sends out checks to retirees only – will have to send checks to every household, this will require a massive increase in the agency’s size. There will be abominable record-keeping as the agency tracks the moves, divorces, separation and deaths of every single American. The IRS might be abolished, but the SSA would have to take up the slack.

Further, *some* agency would have to receive and log and track sales tax receipts, which would be coming from every business in the United States. And – as has so often been the case in this poor economy, and as every state Department of Revenue will confirm – some agency will have to track down the thousands of businesses that will be late in sending this tax to the federal government (Cash-strapped businesses are notorious for using tax receipts to help with their own cash flow in poor economic times.) The notion that the IRS will just disappear and not be replaced by an even greater agency is unrealistic.]

Johnson has a decent track record as Governor, and in the private sector. He has Executive experience, and grew his construction company from one person to 1,000, the largest in his state. His opposition to the war on drugs and support for civil liberties makes him a likable candidate on social issues (certainly more likeable than any other Republican), and his fiscal conservatism was realistic and tested as Governor of New Mexico.

But his support for the Fair Tax is not well-thought through…or at least not well articulated...and not a campaign strength.

6 comments:

Dutchman3 said...

Tully,

I couldn't agree with you more! My guess is that Johnson chose political expediency over any understanding of the Fairtax.

Here are three more questions from a retired senior citizen that I'd like Johnson to answer, if he can?

(1) Isn't federal taxation of State and Local government operations unconstitutional? Our Republic consists of two sovereign powers, Federal and State, and sovereign powers do not tax each other!

(2) How is it fair to force all retirees to resume paying for their SS benefits with their sales tax dollars?

(3) As a Governor, is Johnson aware that the nations Governors, through the National Governors Association, are opposed to any kind of national sales tax?

Lots more criticisms, but we have made a good start. Now, if we could only get some good answers, I'd be satisfied.

Anonymous said...

I think your first question would address your second. Your point about creating "societal dependence" was well taken, and I will pomder that further, but there is no question to me that the first thing most people would do upon receiving their prebate would be to hotfoot down to the store to buy something. Not to mention that e eryone's checks are bigger with no tax bite. And it does address the issue of the poor, so it is fair. And, there are only five states with no sales tax, so there are already mechanisms for reporting sales; just the percentages change. And, no taxes on savings. Seems fair to me.

Seeker said...
This comment has been removed by the author.
Seeker said...

Dutchman above is right, of course, but not pissed off enough, IMHO.

Tully - and Dutch -- you seem to grasp there are "problems" with Fairtax.

You think Fairtax is a retail sales tax? HELL NO. That's only 1/5 of Fairtax. 4/5 of Fairtax has nothing to do with retail sales tax

That's like saying there is something odd about that magic pony that poops Gold.

As a former Faritax cult member, I know all the glitter. But if you get into the fine print and tax tables, get into the math, you realize, this is a bat shit crazy fraud.

Dutch pointed out some good things, but he doesnt get it. Dutch, Fairtax completely UNFUNDS social security. Did you know that? No more funding mechanism for SOc Sec or Medicare. This alone is so goofy that most people just walk right by it, and don't notice that pile of crazy. But that is just one of the many many piles of crazy if Fairtax.

Fairtax claims they will fund Soc Sec and Medicare, but check the math. A 23% retail sales tax, according to JCT, would bring in about 800 billion. Guess what? That 800 billion, the ENTIRE revenue from a federal tax on retail spending, would about equal the prebate. Let that sink in.

The ENTIRE revenue from a 23% retail sales tax would only fund their goofy prebate.

You are dealing with a bat shit crazy fraud here. It'ss so goofy I wonder if its really some giant test by a university pysch department to see how stupid and gullible people can be.

Did you know millions of people-- litarally millions -- would owe more in federal taxes than they had in come? Do you know that or not? This would actually be common occurance in people making less than 20K, but who had high medical benefits, even if thost benefits are paid by insurance or medicare.

In fact, go to my Fairtax calculator page, and I bet your own Fairtax would be over 50% of your income. Fairtax has a calculator which is a goofy fraud. I show you how to figure your Fairtaxes correctly. http://taxhustles.blogspot.com/

Massive taxes on the poor -- without exception, is just one goofy part. Oh yes, I know the HUSTLE says they untax the poor. Screw the hustle, look at the legislation and fine print.

All cancer surgery, nursing home care, heart disease care, is taxes, WITHOUT EXCEPTION.

One child with leukemia could easily amass 200,000 in tax obligation. And there are NO EXCEPTIONS whatsoever. This is so goofy people hear it, and it does not compute. Yet Neal Boortz defends it. Boortz logic is that the poor person paid it before Fairtax, in embedded taxes, so it won't matter. They can pay it after Fairtax.

An absurdity beyond measure. No, poor people did NOT pay massive federal taxes before Fairtax, so they can not pay them after. Plus, by definition, destitute people can't pay a dime, much less 1 million dimes, in taxes.

But goofy people will sit there and listen to Neal Boortz and these other lunatics, and just accept it. Very gullible, sheep like stupidity.

Fairtax math is based on actually collecting about 300 billion dollars in taxes on health care "consumption".

You think Fairtax is a retail sales tax? HELL NO. That's only 1/5 of Fairtax. 4/5 of Fairtax has nothing to do with retail sales tax.

Millions of poor people, and middle class people, would owe well over 100% of their income tax fed taxes. Try to grasp the idiocy of that.

That is just the START of the absurdity. Do you think Houston City council will write a check for 220 million IN ADVANCE, and another 400 million dollars not in advance?

Oh you didn't know about the 300 billion city and states will have to pay in advance? Gee, maybe you should read the fine print.

Do you realize Texas state legislature would owe a stunning 14 billion dollars? 5 billion in advance?

Do you have any clue what's in the plan?This is not a study in economics, it is a study in gullibility.

http://fairtaxgoofy.blogspot.com/

Anonymous said...

What ever it is that people do, it will have to be geared towards keeping super rich from enriching themselves at the rest of the people's expense. I do not see how allowing 1% if the population to claim ownership of over 50% of the assets is healthy. These people should be considered mentally unhealthy like someone with compulsive hoarding syndrome. The only reason to be that rich is to have control over other peoples lives so they can make sure people do what they think is right for them never mind that means staying subjugated to the ultra wealthy.

We could operate off a tax system like the one being discussed here if economic polarity is reduced to an appropriate level- most likely somewhere around 20:1 for top earners in real exchange rates. So for example, you would make $30,000 a year and I wold make $600,000 a year instead of $3,450,000 a year. No one who is able to work would bring in less than $30,000 and this would be sufficient to supply for living standards, a small savings, and some leisure spending.

Unless you can get greedy power mongers to willfully not take that stuff in the first place, stop leveraging against hungry/disadvantaged people, and stop using misleading concepts to enrich their pockets at everyone else's expense (it is their expense too at the end of the day unless they can colonize space and leave the "commoners" to dissolve in the waste they left behind), it will be a graduated income tax for all.

It is wrong to look to wealthy profit takers for permission to work or produce something. This is what we have as it is nearly impossible to get anything done without placating some rich person and their minions.

Anonymous said...

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Source: Johnson & Johnson interview questions

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Henry