National Sales Tax Debate: Bob vs. the Top Advocates

2012 Update: Retiring Neal Boortz Never Kept His Word to BEL: During the Boortz/Enyart Debate on a National Sales Tax, Neal Boortz promised the audience that he would put a link to that debate on his own homepage for a week. Never did. :(

Bob Enyart debated fellow radio host Neal Boortz over a national sales tax. As a national spokesman for FairTax, a national 22% sales tax, this is a major issue for libertarian Boortz, but a topic hardly ever addressed by Bob, who is more focused on presenting God as Creator, and other such matters. Yet even though The Enyart-Boortz Sales Tax Debate moves Bob squarely onto libertarian turf, still the fight hardly seems fair. For if the biblical worldview is correct, Christians should be able to demonstrate the truth and expose error far more effectively than others. Boortz then broke his promise and so far has not posted a link to the debate as he had said he would.

Bob also debated Ken Hoagland, author of the The FairTax Solution, arguing the objections below against the FairTax. Hoagland's rebuttals are summarized here, as Boortz' similar comments appear on the summary to the Enyart-Boortz debate.

TEN OBJECTIONS TO THE NATIONAL SALES TAX

1. No Right of Conscription: The government does not have the right to force a businessman to become a tax collector, something that millions rightfully hate. Hoagland Reply: Just like Neal Boortz and other FairTax leaders over the last twenty years on BEL, Hoagland could not give a defense for this. And of course, excusing an injustice by saying we already do this is simply an admission that the proponent has no answer. (Boortz said he'd look into this point, and four years later, he's still looking into it.)

2. The FairTax Continues Confiscatory Taxation: Ken Hoagland's homepage admits, "The FairTax produces the same amount of revenue" as the current oppressive tax system. Bob Enyart argues that the biggest problem with taxes in America is the horrendous amount of money taken. Regardless of how it is taken and of where the money comes from, giving absurdly vast tax revenues to a bloated socialist government is like giving heroin to an addict. Ken agreed with that lesser point, but he missed Bob's bigger point. "You're rearranging the deck chairs on the Titanic when you change the method of confiscatory taxation but continue to rob the country of trillions of dollars." Hoagland Reply (this is the best BEL could make of it; listen to the show to get Ken's exact words): Ken justified the government's over-taxation throughout a man's life as a defense for the confiscatory amount of taxes raised by his own FairTax Solution. The argument appears convoluted and seems to go like this: Because the government has taken so much from a worker for fifty years, we propose continuing to take this money from everyone so that the government can pay us all back for the money it has taken from us all our lives. Huh? Bob responds to that: Valid tax reform would both cut the amount of taxes and remove injustices in the collection system (see 1 above).

3. Fraud Enticement to Strangers: A sales tax entices millions of strangers, who briefly meet, to conspire together to defraud the government, fueling an illicit underground economy with far more interactions between individuals. Why? Because we all buy and sell from a hundred times more people than we employ. This systemic encouragement for strangers to conspire to defraud the government makes a terrible impression on the children who grow up around such transactions and it generally undermines respect for government itself. Hoagland Reply: Disagreed that the buying and selling relationship will give opportunity to more people to defraud the government than the employment relationship does. (Ken probably misunderstood the point.)

Listener's comment: "From what I have seen in Canada, Bob Enyart is right on the money. This 22% tax seems downright socialist, and the scheme is filled with other pitfalls. Our 7% to 15% sales taxes in Canada has created a vast underground economy. Bob is right when he says that a sales tax will encourage strangers to conspire to commit tax fraud. Since the implementation of the 7% Goods and Services Act Revenue Canada doubled the number of auditors it employed. Also, in communities that are close to the boarder, a number of Canadians do their shopping in the United States to avoid our 15% sales tax. This has caused our customs service to become more concerned with the collection of the 7% GST than securing the border."

4. Start-up Impediment: A sales tax makes it far more difficult to enter into business, especially for the poor, the young, and those with less business sense. Not only do they have to meet all the demands of operating a competitive and profitable business, but the government forces them, for each transaction, to calculate a sales tax, to collect the tax, to segregate those funds, to resist temptation to use those funds in emergencies, to remit those funds, and to keep records of all those transactions. Hoagland Reply: The current system is bad, to which Bob replied, "Of course it's bad, so let's not fix it with something else that's bad." Update: A young man in Golden, Colorado (for example) who wants to start selling homemade widgets online will have to also start collecting and remitting sales tax for six districts: state, city, county, transportation, football, and the regional transportation district, each with their varying rates.

5. Vastly Greater Transaction Cost: There are a billion sales transactions per day, but vastly fewer income tax transactions, which means that there is a far greater transaction cost to a sales tax than to an income tax. So the cost of processing 400 billion sales tax transactions per year is more than processing perhaps four billion income tax transactions per year. Hoagland Reply: The current system is bad, to which Bob replied, "Ken, your arguments are sounding to me like the man once a week beats a woman and says, "I used to beat you twice a week. What are you complaining about?"

6. Conflict of Economic Interest: Government will obsessively encourage spending and borrowing, rather than increased incomes, saving and investment. Hoagland: Bob raised this at the end of the show so Ken had no time to reply. Neal Boortz said this was a valid argument.

7. To Not Tax the Poor Hurts Them: Families earning under $30,000 annually should be able to walk down the street with their heads held high. However, the Fair Tax completely exempts those earning less than $27,000 from paying any tax, and so they will not have ownership in our society. The poor need to pay the same percent, as they will with a flat income tax, the same as everyone else, especially to build their own self respect. Hoagland Reply: The poor won't be exempted because everyone gets the "prebate" which is a monthly government check to a hundred million households to give everyone the amount of money that a "poor" family would pay monthly in taxes. Bob replied that this "prebate" was calculated specifically so that those with incomes under $27,000 would pay no taxes, so as with most of Bob's questions, Ken was not answering the question nor the objection, but just repeating details or changing the subject and not being responsive. Those making $25,000 a year need to pay taxes also.

8. You Don't Need a Sales Tax to Eliminate the IRS: A flat income tax does not require a tax collection agency. People can simply remit their taxes, just as a hundred million households currently pay their rent, utilities, cable bills, etc., and as businesses under an unjust sales tax would remit taxes. People are people, whether they own a business or not. Just do away with the IRS. Hoagland Reply: Ken didn't really have time to respond to this.

These final two points further the argument made against a sales tax during Bob Enyart's Boortz and Hoagland debates.

9. It's the UnFair Tax: Paying a 22% sales tax on new goods is grossly unfair comparing the middle class to the poor and the super wealthy, with the unfair burden falling disproportionately on the middle class, as it often does with creative economic proposals. With the "FairTax", lower income households pay no taxes. The super rich, who easily spend only a small percent of their income, get taxed only on that small percent of their income. Whereas, the middle class gets taxed on approximately half of its income, much of which is effectively non-discretionary spending necessary for survival.

10. God Did It: The Scriptures record God's solution to the problem of equitably and efficiently collecting revenue from the entire population for a centralized fund. God implemented a flat income tax of ten percent to fund the operations of the priesthood.

Bob's Assessment of Ken Hoagland: Human beings have limitations on our ability to quickly comprehend and respond to arguments. Clearly, Ken Hoagland, like anyone else, would have a hard time responding to substantive objections like the ones above while hearing them in a quick radio interview. However, this is the third leader in the FairTax movement that Bob has interviewed, and it has become obvious that, to their credit, not one of them will say that the government has the right to force a man to become a tax collector. Debate over. Bob Enyart wins, and the national sales tax loses. These debates illustrate a specific, and then a general observation: Specifically, these FairTax leaders have not considered these substantive objections to their proposal and they are not comfortable thinking in terms of right and wrong, but rather, they use moral relativism: we're already doing this, etc. The general observation is that authors, talk show hosts, political activists, and the population at large have generally lost the ability to think in terms of right and wrong.

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