Classic Robert Gauntlet Tournament: The current tax system should be replaced by the fair tax.

I'm going to address PRO's Rd. 4 responses, and wrap this shindig up. Let's get to it. Once more, many thanks to PRO and all judges. PRO claims that the FT is simpler and more transparent. This is not the case because while the FT may only be 135 pages, it is a logistical nightmare because it places the sole point of collection at the retail level. Bartlett (2007), explains the implications: "Massive evasion is inevitable with [FT] because all revenue would be collected at just one point in the entire economic system: "the point of sale, which is the point of "greatest evasion." So, in abandoning the status quo to achieve transparency, PRO champions a system in which locates the sole point of collecting taxes is the point at which tax evasion is greatest -implicitly incentivizing corruption and reducing the government's ability to collect taxes altogether. It should also be noted that a "simpler" tax code does not imply a more "transparent" one. In simplifying regulation, PRO creates greater opportunity for evasion because of the impact his proposal will have on tax collection. He has furthermore not explained how the FT will not incentivize massive evasion, as Bartlett (2007) predicts and likewise ignored the reality that, as Sullivan (1995) articulates "there is nothing in the history of the federal tax legislative process to suggest that a federal consumption tax would be untainted by special interest provisions." (5) PRO has ignored my point that the FT fails to account for the massive transition cost of implementing FT while similarly he has not addressed my explanation on what impact the FT will have on the economy, wages and inflation. He merely talked past it, while maintaining the fiction of revenue neutrality. While I appreciate that tax policy and economic theory are complicated, PRO maintains the fiction that FT is revenue neutral. As I have previously mentioned, what PRO doesn't realize is that FT is only revenue neutral if it achieves (a) 100% compliance for all those kinds of new taxes on things that weren't previously taxed like new houses, labor services, food (in some states), medical care and supplies, government transactions and the like and (b) people spend 100% of their annual incomes -which, as I explained in the previous round, just doesn't happen in all cases because as income rates go up, percentage of consumed income drops -and would probably drop even more because taxes on final sales would disincentivize consumption. (1, 4) It is not enough to say that retail stores already have a means to collect sales tax, where the only sales tax collected presently is at the state level and only on retail goods. FT proposes taxing ALL goods and services, many of which are not presently taxed, and so therefore there is no infrastructure in place to collect them. I don't understand why PRO repeated his point about the 23% vs. 30 %. It's not a reason why we should adopt FT, it's only an explanation of the dichotomy between inclusive and exclusive taxation rates. The fact is that any sales tax like the one PRO proposes would subject those who saved income at a time when income was taxed to double taxation, which he completely ignores. In PRO's world, retirees who saved their income which was subject to taxation would be then subject to taxation on that income again when they spent it. How is this fair? His prebate does not offset the additional burden placed on those who saved when income was taxed directly, rather than under his plan because the prebate does not account for income earned before the FT was implemented. So, it can't be a wash. I also don't understand PRO's responses to my responses on corporations and banking. He just claims I'm wrong, without explaining why while maintaining his warrantless claim that under the FT corporations will "flock" to the US. As I previously said, there is no evidence that corporations would come to the United States if the FT were implemented because there is no evidence that the FT would make the US any more desirable to do business. There is likewise no evidence that corporations are shifting out of the United States, as PRO claims, or that, even if they are, that corporations leaving the US was because our present tax policy. Likewise, there is no evidence presented by my opponent that even if some corporations are leaving that the reason for their doing so would be remediated by the FT. The point is that his crying wolf is unsubstantiated, and there are too many holes in his logic for him to win this point. He similarly fails to respond to the possibility that the aggregate economic costs of implementing or transition to the FT, or the new tax regime of the FT itself would make the US a more hostile place to do business altogether when accounting for the impact that FT is going to have (and that my opponent has consistently failed to explain) on prices, wages and inflation. Similarly, he totally ignores my earlier point that there's no reason to think that not only the rich -but everyone- would collectively consume fewer goods and services if a 30% increase was to be leveraged on all goods and services in the US. Rather, there are a whole lot of reasons to assume that economic activity, when consumption is taxed, is going to stagnate whether there's a prebate or not -which is a harm that far outweighs any achievable good PRO's suggested might follow. (1, 2, 4) So, PRO's point about banking holds no water. That impacts both his banking point and his revenue neutrality point because if people are consuming less under the FT, as is predictably the case, then the amount of tax collected is going to be less than under the present regime, and the FT therefore cannot be revenue neutral. Even worse, PRO didn't actually even begin to explain that the prebate, even if it is intended to offset some new taxes in PRO's proposal, does not account for (sometimes widely) divergent costs of living. He even goes so far as to say that "cost of living can vary from one neighborhood," which is even more reason to be profoundly skeptical of his proposal because, as Bartlett (2007) says and which PRO ignores, "there is essentially no relationship between the rebate and the cost of living or raising children." (1) Once more, PRO just explained why the rebate would exist under FT, but does not account for divergent costs of living in, say, New York versus Texas. This is especially significant because new houses and rent are taxed at the same rate in both places, but the actual amount of tax paid even for commensurate goods and services is vastly divergent but the prebate is the same across the board. How is this fair? Under FT, both New Yorker and Texan taxpayers get the same proportion of tax rebates paid to them every month -which both does not account for the difference in cost of living between NY and TX and amounts to a universal welfare policy insofar as it grants a literal stipend of cash to everyone without regard to whether they have income of their own or not. But even still, the prebate is still welfare whether PRO wants to acknowledge that or not, because changing the name of monthly distributed cash doesn't change its function. PRO ignored most of the problems with his plan that I pointed out, or misunderstands what I wrote. The problems with his plan are vast: (a) the FairTax creates an entirely new method of collecting taxes without precluding those already in existence while likewise creating entirely new kinds of taxes and entirely new varieties of tax collectors. (4) (b) Where previously the federal government had no means to collect taxes on all sold goods and services, the FT would create an apparatus to do so -and it would create that apparatus without repealing the 16th Amendment. So, Vance (2005) asks, "what is there to prevent a [federal] income tax from being from being imposed after a national sales tax has been enacted?" Nothing. (4) (c) Similarly, due to the increased transactional costs the FT would impose on state and local government, it is entirely foreseeable that the FT would actually necessitate states increasing their income tax rates just to achieve revenue neutrality. (1, 4) The FT would therefore not only make it easier for the federal government to raise taxes, but it would also increase the mechanisms at their disposal to tax -while at the same time not eliminating all federal taxes by any measure. We can know this because the FairTax Act makes no mention of repealing the federal excise tax on gasoline nor the federal taxes imposed on numerous other things like airline tickets. (4) All in all, there is no reason to adopt his proposal. Even if you buy his logic and the best case scenario which (myopically) assumes 100% compliance, no one is any better off other than that individuals would not have to not file a federal 1040. His method to that end, however, locates the sole point of tax collection at the level which has the highest rates of evasion and claims that this is going to promote transparency. It just doesn't work. The reality is that his proposal is going to create an unworkable system which imposes double taxation on those who saved when income was directly taxed by the IRS and severely harm the economy in predictable ways (which I explained in earlier rounds that PRO never response to), whose supposed benefits are based on faulty economic logic and whose implications (even if FT's faulty economic logic was valid) impose new taxes and new kinds of taxation in ways that even in the best case demonstrate no aggregate economic improvement from the status quo. Many thanks to PRO. I urge a CON ballot.