Paying taxes is no fun. For many taxpayers, the worst cost isn't even the money that the federal government takes out of their pockets, it's the hassle of filing a return. Even with tax preparation software, it's still a pain, and one can never be sure that some mistake hasn't been made that will lead to audits and penalties. And these problems aren't limited to the well-to-do; among the more complicated and error-prone parts of the tax code is the Earned Income Tax Credit, which is available only to those with very low incomes.

Consequently, this is the time of year when Americans are especially sympathetic to tax reform. Among these is the so-called FairTax, which would replace all federal taxes with a national retail sales tax. Among the biggest selling points for this plan is the total elimination of tax filing, its supporters claim. People will simply pay their taxes as they buy things.

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Bruce Bartlett was a U.S. Treasury Department economist during the administration of President George H.W. Bush.

This sounds pretty good to millions of Americans who believe that the FairTax is the silver bullet that will slay the tax vampire once and for all. Unfortunately, it is my experience that almost no one understands how the FairTax really works or anything about the nature of tax collection.

For one thing, unless every state replaces its income tax with its own version of the FairTax, the vast majority of Americans are still going to have to file tax returns every year, keep all the records necessary for doing so and potentially suffer audits.

For another thing, the cost of everything you buy — including many, many items not now covered by state sales taxes — is going to rise by 23 percent, the FairTax rate. This includes things like new homes and medical care. It even includes the cost of local government services other than education, which the FairTax considers to be ordinary "consumption." This means that police and fire protection and road maintenance, among other things, will be taxable by the federal government. Local governments will have to send checks to Washington for 23 percent of their cost — a cost that will be passed on in the form of higher local taxes.

FairTax supporters implausibly claim that no one will have to pay more for anything once embedded federal income taxes are removed from the prices of goods and services. But this can only happen if producer costs instantly fall by 23 percent. And this can happen only if all workers take a 23 percent pay cut, since wages are the biggest cost of production. How likely is that to happen?

Another problem with the FairTax is that only a tiny number of Americans pay more than 23 percent of their income in taxes now. To prevent a massive tax increase on the poor and middle class, the FairTax would send out monthly rebate checks to every American for 23 percent of the poverty-level income.

I have never understood why this rebate is necessary if all prices are going to fall by 23 percent when the FairTax is imposed, as its supporters claim. If this is right, then there is no burden to the tax and nothing that needs to be rebated.

Leaving that problem aside, the creation of a de facto national welfare program for every American is an open invitation to fraud and abuse. It will also cost a vast amount of money to administer. According to the Congressional Budget Office, it will cost the U.S. Treasury $300 million this year just to send out the one-shot tax rebate that people will receive next month as an economic stimulus. And the FairTax would send out such checks on a monthly basis.

Space prohibits discussion of all the problems and absurd claims made on behalf of the FairTax. Suffice it to say that things that are too good to be true usually are. The FairTax is no answer to tax day's woes.