Finally got my hands on a FairTax book (the red one)

A couple of years ago, I heard a rerun interview on NPR with some guy who was talking about getting rid of the IRS. I only heard the last few minutes of the interview, but I liked what I heard and he finished with a website where people could go get more information. That website was FairTax.org. So started my support of the best federal tax reform plan I have ever heard.

Normally I don't care much for discussing politics, but I really don't see any reason why everyone can't agree that the FairTax plan is much better than the current federal tax plan that we have now. FairTax: The Truth - Answering the Critics is the second book on the topic. The first I have not read, but describes the entire tax reform plan in detail. In summary, the FairTax would replace all (and I stress all) current federal taxes with a single inclusive (already included in the shelf price) consumption tax (or sales tax). No IRS, no April tax day, no income tax, no payroll tax, no tax on investments (or college tuition which is considered an investment), no federal taxes at all on anyone except for the sales tax. In addition, every household in America of legal residents with a social security number get a prebate every single month. The prebate is money from the government so that all spending up to the poverty level is tax free (net cost). The bulk of this book is geared toward answering criticisms of that plan. The beginning is a general description of the principles of tax reform that the FairTax addresses and why tax reform is needed. The authors then give some attention to the merits of the FairTax plan, and finally they move into discussion of how the FairTax, when properly understood, adequately meets all of the criticisms it has faced so far.

Some of the criticisms addressed in the book are the 23% or 30% tax rate confusion, volatility of the tax base, the relationship between price change and purchasing power, the effect of tax evasion, and the burden on the middle class. Each argument is given with references to where any reader can find the data that was used.

The book is not heavy reading. There are plenty of statistics, graphs, and dollar figures to back up all of the arguments, but the pace is slow enough that a reader doesn't feel crushed under meaningless numbers. Each argument is made in several different ways so the message is clear and the numerous footnotes contain references to all of the primary sources quoted other than original FairTax documents found on the website. The authors even attempted to throw in some humor throughout the chapters to keep the reading light (your mileage will vary on their success here). I think they did a good job of providing the detail and references needed to satisfy a technical mind (at least an engineers mind... economist I am not) while also allowing someone not interested in the exact numbers an easily approachable discussion of the topic. The discussion is intentionally kept non-partisan and only in rare cases do the authors name and shame their critics. Their purpose is to persuade those who criticise the plan, not make them look bad.

I would actually recommend this as the FairTax book to read first, even though it was written second. If you like what you read here, then you'll be in a better mood for reading through all the details in the first book (which I would be reading now if it was possible find in any used bookstore anywhere - I guess those who do read it hold on to it). If you are completely new to the FairTax idea, start at the beginning of the book and work your way through. If you think you already know the basics, just go straight to chapter 3 and skip all the sunshine in the beginning. Be sure to stay around for the appendix as well. It discusses the report from the 2005 President's Advisory Panel on Tax Reform. That report is the source for both a great deal of support for the principles behind the FairTax and some apparent criticisms of consumption taxes in general (again written in a very approachable manner).

I think that after reading FairTax: The Truth - Answering the Critics you will be a FairTax supporter. At the very least, the early chapters will help you understand why some type of radical tax reform is going to be required in this country in the near future.

Author: Neal Boortz, John Linder, Rob Woodall
Title: FairTax: The Truth - Answering the Critics
Genre: Business and Economics, Tax Reform
Year: 2008