Fair Tax Vs. Flat Tax: Which Is Right For America?

Photo Credit: Gage Skidmore

In light of rampant government waste and corruption within the IRS, more Americans than ever are calling for a complete overhaul of this nation’s tax system. Among conservatives, two potential solutions – the Fair Tax and a flat-rate tax system – are often among the most popular options.

During the recent Western Conservative Conference, a showdown between the two proposed revenue systems presented the pros and cons of each plan. Former syndicated radio host Neal Boortz, co-author of two books supporting the Fair Tax, squared off against Americans for Tax Reform’s Grover Norquist, who spoke in favor of a flat tax.

In reality, there was significant common ground between the two as both expressed the impending necessity of repealing a broken tax system. The pathway to achieving that common goal, however, offers several defining differences.

Flat Tax

Norquist expressed his desire to simplify the process by installing one rate for all American taxpayers. Under a flat tax, he said, he would recommend eliminating the so-called “death tax,” along with all state income and capital gains taxes.

“We need to tax consumption,” he explained, “not investment and savings. We need to tax income at one rate at the same rate.”

He said his “first objection to the Fair Tax is its name,” adding there are only “less destructive and more destructive ways to handle it … but fairness is not a part of it.”

In the end, he insisted, his goal would be to lower the tax rate to zero.

A major reason he supports one prevailing rate is to increase public involvement in the tax system.

“They always start with ‘I’m going to tax the rich,’” Norquist noted, explaining that when individuals hear only another segment of the population will be affected by a tax hike, they stop paying attention.

He concluded that a number of states are paving the way for his plan by eliminating or reducing the income tax burden on their residents.

“There are already nine states without income tax. We want to abolish them in all 57 states,” he said, referencing Barack Obama’s infamous campaign flub regarding the number of American states.

Norquist offered a level of support for the Flat Tax, though he explained that “we are more likely to get there first and more permanently” with the flat tax system.

Fair Tax

Boortz offered a somewhat more nuanced plan with his support of the Fair Tax, a proposal that has gained traction across the nation in part due to his work on two bestselling books. He explained that the plan is basically a nationwide sales tax; however, the cost of retail goods would not actually increase.

“Every single thing you buy, whether it’s an iPhone or a toaster or a blender or weed in Colorado,” he said, “everything has an embedded tax.”

Each of those incremental taxes would be erased under the Fair Tax model.

“If we get rid of all these taxes on individuals and on businesses, then that embedded tax disappears,” he explained. The result would be an approximate 23 percent drop in retail prices, which would be replaced with the Fair Tax.

Furthermore, he said the flat tax proposal “left the IRS in place,” while the Fair Tax could would only take effect after the repeal of the 16th Amendment.

The tax code, he explained, offered a version of a flat rate in 1986. Since then, however, it has been revised 11,000 times to become the incomprehensible mess taxpayers currently face each year.

According to surveys conducted with corporations located around the world, Boortz explained that virtually all would either expand or relocate to the U.S. under a Fair Tax system that removes the tax burden American companies currently encounter.

“You would have to hide under a bed to avoid getting a good job,” he said.

While there are important differences between the two proposals, both sides generally agree that either option is infinitely more desirable than the current system.

–B. Christopher Agee

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Photo Credit: Gage Skidmore

This post originally appeared on Western Journalism – Informing And Equipping Americans Who Love Freedom

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