[Jefferson]

Ken Hoagland vs. Bob on Nat'l Sales Tax

This is the show from Tuesday March 30th, 2010.

SUMMARY:

* Ten Objections: Bob gave National Sales Tax author Ken Hoagland the first eight objections below to the FairTax, a National 22% Sales Tax (and he kept the last two objections for this list):

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 goverment 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 convulted 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 inustices 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 capability. 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 tempation 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."

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?"

[u]6. Conflict of Economic Interest[u]: 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.

Two Bonus Points

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 on the middle class, as it generally does with all creative economic proposals. With the "FairTax", the lower class pays 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, all of which they spend just to survive.

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 perecnt 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 has generally lost the ability to think in terms of right and wrong.

Listen to Bob and Neal Boortz: Hear also Bob's FairTax debate with national spokesman and libertarian talk show host Neal Boortz. On air Boortz said he thought he did well in answering Bob's objections and promised the audience that he would link to his debate on KGOV from his own website. Neal Boortz broke his promise and to this date he has not kept his word and has not linked to his debate with Bob.

Today's Resource: Sometimes we Christians need a push forward to grow spiritually. After forty years as a Christian, these Growth Pack teachings represent Bob's best effort at discipling other Christians to mature in his or her relationship with God!

[drbrumley]

I love Bob when he gets into these topics in depth and not drive by.

Outstanding points made by Bob and I support what he said entirely.

[Nick M]

So do I. I have argued this with Tea partiers. The poorer people will still pay less. Divide the tax bill by the number of households. It is that simple.

[tigerone]

Hi all, new here. I'm surprised the registration doesn't let me sit on the fence as far as political disposition, I honestly don't know what right or left means and I don't follow politics or the news much so I picked something that sounded in the middle.

Jefferson, thanks for posting this summary from Bob Enyart. I only know him by name and am not so familiar with who he is, but he brings up some interesting points, many of them I have contentions with that I'd like to express here.

So you know where I'm coming from...I'm a business owner with a family in the USofA and I support the FairTax. If you don't like me already and want to stop reading, please do, but please do not respond to my post if you haven't any intention of hearing me out.

First off, my understanding of politics is that, in general, every piece of legislation that has become law in this country, including the very first piece (The US Constitution), is a compromise. However, these laws are not a compromise between democrats and republicans or the right and the left, but between the haves, and the have-nots. Politics were invented in the same spirit as weapons, to get or protect what we think we deserve. I'm generally very passive, but when it comes to the US income tax system, I'm moved to brandish my arms.

The reason I support the FairTax is not because it is true to the ideals of our founding fathers or the word or intent of the constitution, but because, as far as compromises go, (at least my perspective of them) the FairTax provides more power and privacy to the average citizen than the current system. Currently I do not see any other movement on the horizon with as much backing as the FairTax has, so I'm going to take it.


Several contentions with Bob's objections:

1. Maybe the word/intent of the law is that gov't hasn't the right to force a business to be a tax collector, but under the current tax code, the reality is that all businesses are tax collectors for state and local taxes (some states excepted), as well collectors of income tax from their employees. I PROMISE you, that the years of built up legacy and heavy dependence on this reality cannot be stopped cold turkey tomorrow morning. So when Bob, or anyone else professes *intent of law* to this tune, it isn't even worth arguing with or trying to defend, because there is no tax plan that can be concocted to bring this ideal to fruition tomorrow morning. Bob, and other idealists MUST come to terms with this reality because they are only working against the possibility of ever achieving such an ideal by making these kinds of arguments.

FACT: We've created a stable system with an immeasurable number of inter-dependencies - so you have 2 choices to bring about change in such a system:

A. destroy everything and HOPE that you can rebuild things to the word of your ideal

OR

B. Accept that STABLE systems *must* change gradually in order to avoid catastrophe.
(Granted the system allows for change, I'd argue that option B causes less disruption to the current level of society in the USofA)

2. Not sure I understand the difference between "confiscatory taxation" and "taxation", they're the same to me. Putting the word "confiscatory" in front of tax doesn't change it if both are obligatory...In any case, Bob's analogy:

" giving absurdly vast tax revenues to a bloated socialist goverment is like giving heroin to an addict "

...well, it is but... First of all, if you're addict, regardless of the nature of your habit, then stopping your habit cold turkey usually has consequences and/or withdrawals. And as we all know, in general, the stronger the habit, the worse the withdrawal. This touches back to my contention with Bob's first objection: You can't stop such a system Monday morning without major consequences. Consider the world of hurt we'd be in, given our gov'ts current domestic and international commitments, if no one paid their Federal taxes this year. (Talk about anarchy) You can't do it, and Ken Hoagland knows this, the FairTax bill actually expires if the 16th constitutional amendment isn't repealed in 7 years. Why 7 years and not the day after the bill passes? Because changes to our system must happen gradually. We have to wean our gov't off of the current system. the FairTax bill assumes (through a calculation that I'm not knowledgeable of) that if FairTax, and the will of the people, doesn't work after 7 years, then we need to try something else.

Moving away from a system that currently requires businesses to garnish your wages and gives the average citizen 100% of their paycheck is a very important step in right direction. I say we take it and see what we can do with it and where we can go with it, of course if a better "first step" comes along then GREAT, but it takes a lot of time and a lot of organization to bring change of this magnitude to a national level. The FairTax was first drafted 11 years ago. 11 YEARS to build the current momentum to introduce people to taking a step like this. So you really have to consider your options if you're going to pick a side in this matter. I think Bob missed the point here again.

3. Fraud? We already have fraud. Illegal immigrants that don't pay taxes, restaurant waiters that don't' report tips, and innumerable others that store money offshore or otherwise don't report income. At the very least FairTax will give citizens their financial privacy back and will reclaim some of the taxes that the current system can't collect from illegal citizens and others that currently pay zero taxes. So we're all used to fraud, nothing changes in this respect, the gov't will go after these people, but this small step gives us PRIVACY in our income and financial dealings. I'll take a some more fraud if I can at least have my privacy.

Ken's understanding of fraud and statistical cases proving one way or the other is probably as measurable if not more than that of Bob's (Ken did a write a book on it after all) so unless both men are going to lay down the numbers, there is no point being misunderstood by Ken here, Bob just failed to make a strong enough case.

4. This one I disagree with the most. I don't know how Bob justifies this position of "Impediment." I'm a business owner and entrepreneur and I know what it takes to start and run a business, and HANDS DOWN, the biggest burden on business owners is the IRS. If I woke up tomorrow morning and all I had to do was segregate sales taxes and balance my books - good god - what a beautiful day that would be. If you have never run a business then you have NO IDEA. Bob is so off the mark here I'm in disbelief. Every single move I make in my business has a hurdle or wall in front of it. Every single expense or decision I make attempting to achieve success must be prefaced with the thought "How is the IRS going to like this?" Really and truly, It be like being cured of terminal cancer if sales taxes were my only concern. If you want a taste, take a look at the IRS tax calendar for 2010 (it gets more complicated every single year):

DUBYADUBYADUBYA DOT tax DOT gov SLASH calendar

(sorry I can't point links yet, under 5 posts :\ so you'll have to remove the spaces )

(Go ahead and browse through the months, and look at the requirements on businesses and the self employed.)

As far as business goes, the FairTax is a BOON. If FairTax is enacted I will start 2 more companies and higher numerous more employees the day after.

5. Maybe someone can clarify what Bob is trying to say here if I'm misunderstanding it, but my understanding is that there are already XXX billion sales tax transactions in all the states that have sales tax and the cost of scaling this hasn't been measured. I doubt this scaling is anything that a business, who has just freed up 10 tax accountants to do something productive for the company can't handle The key part here is the income tax is eliminated. A step in the direction of freedom. You can't discount the money everyone will gain by NOT having to fill out, or pay someone to fill out, income tax forms and paying tax lawyers and millions of IRS employees that chase the average Joe down the street for the change in his pocket. Not to mention the billions of hours and energy we will save by NOT having to decipher 16 thousand (and growing) pages of tax code. We can use that time and energy to think about what the next step is after the FairTax to ween the gov't off of their heroin. Bob, we need to take what we can get now.

6. You have to pick your evils. This world we live in today is built of social constructs based on consumption. We're a social species, we live with others and their actions affect our existence, we hurt from their wrong doings and we gain from their good deeds and contribution to the community. Consumption is KEY to our existence, and we have to accept some level of gov't involvement in promoting this circulatory process. Wouldn't taking a step towards having more privacy, more time, more money in your pocket so that you can keep an eye on this balance would be a positive thing? For me it is the right direction. Bob is still arguing with ideals and absolutes, this is not conducive to change, and Hoagland and Boortz need to sell it like this if we're going to get anywhere.

7. Yes, personal contribution is important for more than economic reasons. However, once again, steps in the right direction are compromises that we must take to achieve our goals. The current system makes criminals or welfare dependents of low wage earners. Pick your evil.

8. The current tax system had it's beginnings as a flat income tax, and the IRS is the administrator. We'd only be starting over on the same path to the abuse of freedoms we currently are under, someone still needs to collect a flat tax and handle the exceptions that will undoubtedly be present, so you wouldn't be abolishing the IRS per se.

We first need to get control of our own money and how it is accounted for. With the power and transparency the FairTax would give us over progressive OR flat taxes on income, we might actually have a chance and pulling in the reins on big gov't spending. Currently, all our income-based taxes are collected forcefully in the dark and spent without any say. At the very least with FairTax, we'd have the power to grow our own garden and not spend a dime to protest gov't spending.

9. Once implemented, the FairTax WILL change the dynamics of employment, income, and spending habits. So how heavy 22% will be on any particular individual or family is difficult to assess. That said, I feel that like all other parts of the bill, we have to view 22 (or 23?) % as a compromise. We must see it as a first step, it will give us more discretion, transparency, and control in where the money comes from and where it goes. So at the very least we'd have a fighting chance at bringing this 22% tax (gov't heroin) down over time, a goal which seems near impossible with our current system.

10. There's money in heaven? What ever happened to "you can't take it with you"? If I was wrong then maybe I'm already in heaven...or is it that other place?


Bob...I'm going to say it one last time...positioning yourself in a bed of ideals and asserting that "we're already doing this" as being moral relativism is detracting from any chance you have of ever bringing the light you seek to the public. Every step along the way to truth is a compromise because we do not have the power to just jump or fly there (hence we take steps).

I hope Bob learns, over time (nothing changes overnight!), that FairTax is in his interest and is the only first step towards his ideals that has a chance today. Opportunity often only knocks once, and if we let the momentum of FairTax pass us by, it may be a very very long time under the current worsening system before some bill or idea finds and organizes enough following and momentum to bring back a fight.

If you read all of this with an intent to comprehend, I thank you. It's rare that I have or take the time to participate in public discussion, but during this time of year (the time of IRS appeasement) I get a little emotional from the pain I must endure.

[MarkP]

Bob did a great job in the debate!

[Jefferson]

tigerone:

You should take to heart Bob's summary of the debate:

It's a waste of your life campaigning for something like term limits. It's just rearanging the deck chairs on the Titanic. Trying to change our tax system to a national sales tax is a waste of your life. When you spend your life on something, let it be something of eternal value and worth.

[tigerone]

Originally Posted by Jefferson

tigerone:

You should take to heart Bob's summary of the debate:

I should be impatient, stubborn, and uncooperative? What was the last piece of sweeping legislation to bring about a change of this magnitude? Civil Rights? Womens sufferage?

Sorry Jefferson, I think you're missing my whole point. I have no argument with Bob's ideals for gov't, I find them and his mission commendable. I just think he's passing up an opportunity to take a step in the direction of what he professes. I think he's the one who is wasting his breath and his life if he continues to stubbornly insist and wait for some shining day when we're going to march the kind of change he's talking about right through the US gov't. It is very very hard to do, and I contend that as our gov't grows, so does the mountain we must climb to change it.

Am I wasting my life by solving the problem differently than Bob even though we have the same end result in mind??

I'd bet the farm that taking small gradual steps RIGHT NOW, and when we can, will get us there sooner.

[The Graphite]

Originally Posted by tigerone

I should be impatient, stubborn, and uncooperative? What was the last piece of sweeping legislation to bring about a change of this magnitude? Civil Rights? Womens sufferage?

Sorry Jefferson, I think you're missing my whole point. I have no argument with Bob's ideals for gov't, I find them and his mission commendable. I just think he's passing up an opportunity to take a step in the direction of what he professes. I think he's the one who is wasting his breath and his life if he continues to stubbornly insist and wait for some shining day when we're going to march the kind of change he's talking about right through the US gov't. It is very very hard to do, and I contend that as our gov't grows, so does the mountain we must climb to change it.

Am I wasting my life by solving the problem differently than Bob even though we have the same end result in mind??

I'd bet the farm that taking small gradual steps RIGHT NOW, and when we can, will get us there sooner.

When aiming for the bullseye, you may or may not hit it.

However, if you don't even know what the bullseye is... you can't even aim for it, to begin with, so you just end up shooting wild, or God forbid, hitting innocent people and doing more harm than good.

Clearly, Hoagland doesn't have a clue what the bullseye is (the divinely-ordained ideal, according to scripture).

[tigerone]

Originally Posted by The Graphite

When aiming for the bullseye, you may or may not hit it.

However, if you don't even know what the bullseye is... you can't even aim for it, to begin with, so you just end up shooting wild, or God forbid, hitting innocent people and doing more harm than good.

Clearly, Hoagland doesn't have a clue what the bullseye is (the divinely-ordained ideal, according to scripture).

Is there any public policy that has no side effect? No losers? I doubt it.

I'm not talking about bullseye, and if you read any of my contentions 2 posts back you might understand that. I'm talking about taking a measured risk to at least hit the board, cause right now we aren't even near it.

As I've already said, and as any policy maker will tell you, the system must be changed gradually. We wouldn't be locked into the FairTax legislation to any higher degree of imprisonment than we're already in with the current tax code and 16th amendment. So how bad could it hurt? We're already hurting, and unless you want to continue the injustice and pain of the current system and wait another 30 years for ANY kind of tax initiative to gain enough momentum to make a change...

[MarkP]

Originally Posted by tigerone

I just think he's passing up an opportunity to take a step in the direction of what he professes.

It would just be a side step. It may also be a step back if you consider the wasted time and money that has been and would be invested in another corrupt tax system.
Bob gave his reasons why he doesn't support the fairtax so I don't need to rehash any of it here.

[tigerone]

Originally Posted by MarkP

It would just be a side step. It may also be a step back if you consider the wasted time and money that has been and would be invested in another corrupt tax system.
Bob gave his reasons why he doesn't support the fairtax so I don't need to rehash any of it here.

No reason to "rehash" it?

Is this not a discussion group?

I disagreed with Bob's assessment that is why posted my contentions above. This is the reason to "rehash" it. I don't believe Bob is a prophet...

[MarkP]

Originally Posted by tigerone

No reason to "rehash" it?

Is this not a discussion group?

I disagreed with Bob's assessment that is why posted my contentions above. This is the reason to "rehash" it. I don't believe Bob is a prophet...

I said that I don't not need to rehash it. I was trying to make the point that you have already listened to Bob's debate and there is nothing I have to add to it. There is nothing I would have to say that you haven't already heard.

Originally Posted by tigerone

I don't believe Bob is a prophet...

I think everyone agrees with this statement.