Goodlatte’s FairTax doesn’t add up

Submitted, letter to the editor
Published: June 9, 2008

Every few years, U.S. Rep. Bob Goodlatte, R-Roanoke, comes out with a “bright” idea. When he was running unopposed, it was a constitutional amendment to limit congressional terms. Two years ago, it was a constitutional amendment to require a balanced budget. That was after a Democratic majority ended six years of a Republican pork-barrel feeding frenzy without a single presidential veto. Now it is the so-called FairTax.
You should always be skeptical when Republicans use uplifting terms to describe bad ideas, like “personal savings accounts” to replace Social Security or No Child Left Behind as code for privatizing public schools.
The “fair tax” is a national sales tax on all goods and services with a flat rate of 23 cents on the dollar. That’s a 30-percent tax, which replaces income taxes. There are three problems with this idea.
First, even though you don’t pay income taxes, a 30-percent tax could actually cost you more in the long run. To offset this tax burden, you’d receive a monthly tax rebate, which has led some conservative economists to describe it as the largest welfare program in history.
Second, some economists predict a recession — or worse, a depression — when consumers are hit with a 30-percent tax combined with state and local sales taxes. You’ll pay $182 for $140 of groceries and $31,200 for a $24,000 new car, and that doesn’t include state sales tax. And this tax applies to everything, including utilities such as heating oil, electricity and natural gas.
Third, there is nothing fair about the “fair tax” as everyone pays the same regardless of income. Obviously, someone making $300,000 can absorb the $7,200 sales tax on a new car better than someone making $50,000 a year.
With bright ideas like this, maybe Goodlatte would like to make this term his limit.
David Colton
Waynesboro