Meridian Star

February 14, 2006

Nothing fair about columnist's tax reform


First off, you have to wonder why they insist on calling it a "fair tax"? Why not call it what it is? It's a consumption tax. The more you buy, the more you pay in taxes no matter what your income level. What's fair about that?

First, some states don't have a state income tax, while others do. Those lucky enough to live in a state like Alaska, which doesn't have an income tax, would have more disposable income than those of us from a state with a state income tax. Under the current tax code you can deduct state income tax from your federal income tax, thereby leveling the playing field.

Then there is state sales tax. Not all states collect a sales tax. Again, Alaska doesn't. But Mississippians already labor under the eighth highest sales tax burden in the nation. We already pay a 7 percent sales tax on goods including groceries; this is the second highest state level statutory sales tax rate in the nation, and results in collections of approximately $814 per person per year.

If Lenny Joiner ("Return power to the people," Sunday, Feb. 12) and crew get their way, every time you buy something, including milk and eggs, you'll be stuck paying 30 percent in sales tax, if you are unfortunate enough to live in Mississippi.

Joiner claims that all necessities will be tax-free thanks to a rebate that everyone will get, from the poorest to the richest. But what if you spend more on groceries and medicine than the rebate? According to fairtax.org a family consisting of a married couple with two kids would get a $479 rebate for necessities each month (unless you happen to live in Hawaii or Alaska, in which case you'll get a larger rebate).

Our groceries alone for January went over the rebate amount. Necessities for my household for January included $578 for groceries, $80 for medical care and $267 for prescription medicine. That's $925 total and $446 more then the rebate that would supposedly make necessities free.

Then there is the fact this unfair consumption tax would cripple the economy. Consider the price of a new car. We'll say the car cost $24,000. You have to pay the 5 percent sales tax Mississippi levies on new cars plus the 23 percent federal tax. The car now costs $30,720, including $6,720 in taxes. But wait: Used cars aren't taxed under the unfair federal consumption tax. So the demand for used cars goes up, driving the price of used cars up. On the other hand the demand for new cars goes down, not only driving the prices down but causing factory shutdowns and layoffs. Car companies are not going to continue to make cars that people aren't buying.

And what is to keep the wealthiest individuals from going abroad to spend their money, thereby depriving the United States of revenue? And what about people who lose everything in a natural disaster like Katrina. Are we really comfortable forcing them to shoulder more of the tax burden because they are unfortunate enough to have to replace everything they owned?

While the current tax code has its problems, it's a lot fairer than the unfair federal consumption tax.



Ella Johnson

Meridian