Excerpt:

• "The FairTax is electable in that the choice is not between making income or not, it is between spending beyond the necessities of life or saving, investing, gifting or educating oneself. Under the so-called "flat tax" (VAT) if you earn income you pay a tax.

• The "flat tax" retains the payroll taxes, which is the most onerous tax for three- quarters of the lower income Americans. The "flat tax" seems to have a lower rate, but that's an illusion. It keeps payroll taxes of over 15% and actually increases hidden taxes paid through corporations. When you count all taxes, the FairTax has the lowest marginal tax rate of any plan because it has the broadest base.

• Also, the "flat tax" is not revenue neutral -- the FairTax is.

• The FairTax lets you keep your whole paycheck or pension. The "flat tax" keeps tax withholding.

• While the "flat tax" makes tax filing simpler than the present Income Tax System, the FairTax would put an end to the IRS and to all individual tax returns, tax audits, and tax frustration... making April 15th just another day. Bureaucrats would never again know how much money you make or snoop into your finances.

• The FairTax eliminates all federal taxes on the poor. The "flat tax" would actually raise taxes on the working poor since it abolishes the Earned Income Tax Credit, which offsets some of the payroll tax burden.

• The FairTax eliminates all hidden taxes and shows the true cost of government to all Americans, even children, with every purchase on every receipt. The "flat tax" would increase the burden of hidden taxes because more taxes would be paid through corporations. It is the hidden taxes that have caused taxes to be the highest levels they have ever been.

Another important advantage to the FairTax is that this reform will be easier to keep intact after becoming law. In 1986, Congress and the president adopted a tax reform plan that lowered the top income tax rate to 28%, but it lasted less than five years, and the top rate today is well over 40% (considering tax deduction phase-outs).

Since the FairTax would scrap the entire income tax apparatus, including the IRS, it would be much more difficult to bring back an income tax. We also believe that once people get used to keeping their entire paycheck, pension and Social Security benefits, they will never want to go back to the old system. The "flat tax" was also tried in 1982.

• The "flat tax" taxes exports and exempts imports from the tax. The FairTax taxes U.S. produced and foreign produced goods the same when they are sold at retail in the U.S. The FairTax does not tax exports. We think it is sound policy to not punish U.S. exports and to place U.S. and foreign goods on an equal footing in the marketplace.

• The "flat tax" would tax businesses whether they have a net profit or not since interest and other items are not deductible.

• The "flat tax" has much more difficult transition rules that are not even considered.

• The FairTax shares every benefit of the "flat tax", and the FairTax has advantages that can't be matched by the "flat tax".

But while these are fair criticisms, the common enemy to both plans is the current law."

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-- Dan R. Mastromarco (LL.M. Taxation, Georgetown) is a partner in the Argus Group and an adjunct professor at the University of Maryland, International Management Program. He is also one of the authors of both NRST bills (Tauzin & Linder) before Congress.

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