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Fair Tax Pros and Cons

April 16th, 2007

In a follow-up to yesterday’s post about the Fair Tax debate, here is a summary of what I have been able to determine are the major pros and cons of the Fair Tax (or national sales tax) as it is currently written:

Pros:

1. Federal income taxes would be completely abolished. According to Fairtax.org, this would include all ancillary taxes on personal income such as estate, gift, capital gains, alternative minimum, self-employment, Social Security, Medicare, and payroll taxes.

2. With the repeal of federal income taxes, the IRS (Internal Revenue Service or Income Robbery Service, depending on one’s perspective) would have much less power to snoop into the personal and private financial lives of American individuals. Ideally, the IRS would simply cease to exist.

3. The Fair Tax would be “progressive” in the sense that it would avoid taxing financially challenged (i.e., poor) people for basic necessities. This is accomplished by means of a “prebate”, which according to Fairtax.org would be $2,348 per year for a single person or $6,297 per year for a family of four.

4. The Fair Tax is calculated to be “revenue neutral”, meaning that all current government services would continue to be fully funded because the money that is raised from this national sales tax would be equal to the amount of revenue that is lost due to the repeal of federal income taxes. Programs such as Social Security, Medicare, etc. would be unaffected.

5. Because this tax system is consumption-based rather than income-based, people could exercise a certain amount of control over how much tax they pay. Since the tax is only applied to new (not used, secondhand, etc.) items at the point of sale, a relatively frugal person could avoid paying taxes on most things, and might even make money because of the “prebate”. Meanwhile, wealthy people who choose to live “high on the hog” without paying attention to their spending choices would probably pay more tax.

6. Since the Fair Tax only taxes consumption, it would not punish businesses for expanding and creating more jobs, investing in research and development, or donating to charity. Also, the individuals who create and maintain those businesses would have more disposable income to expand and compete in international markets (assuming that they make relatively wise choices, see the point above).

7. The base price of goods and services (that is, their cost of production before adding any taxes, profits, etc.) would be lower because the embedded costs of the current income tax system would no longer be a factor. This would partially offset the increase in the total price of new products and services that would result from the Fair Tax.

8. From the standpoint of government revenue collection, the “problem” of tax evasion would be reduced because people who currently resist paying income taxes and/or derive their income from black market sources would be taxed automatically at the point of sale whenever they purchase new goods and services. Moreover, the government would no longer need to spend taxpayer money in order to chase down income tax evaders.

9. A national sales tax such as this would be much more transparent than the current tax system. There would be no more loopholes, special exemptions, payroll taxes, embedded costs, or other factors that allow people under the current system to avoid realizing how much tax they are actually paying. With the amount of taxation clearly visible to the general public, people (hopefully) would be less likely to tolerate wasteful spending, corruption, and inefficiency in government, resulting in lower levels of taxation and a stronger economy overall.




Cons:

1. The retail price of new goods and services would increase. Although the actual cost of these items would arguably remain the same due to the elimination of embedded income taxes mentioned in Pro #7 above, the initial “sticker shock” of apparently higher prices could have a dampening effect on the economy.

2. If the income tax is not fully repealed as promised OR a future president and/or Congress decides to re-instate some portion of the income tax code under the guise of a “national emergency” or something similar, we could end up with a national sales tax AND an income tax, which would be disastrous for our economic freedom.

3. The actual rate of the national sales tax would be 30%, not 23% as the Fair Tax proponents claim. This difference is due to the deceptive language that the proponents use to describe the tax rate calculation. Not only is this deception insulting, but it also makes it easier for the government to raise the tax rate in the future because people will think that the current rate is lower than it actually is.

4. Unlike the income tax brackets, this national sales tax proposal is not indexed for inflation, meaning that as inflation increases the base price of goods and services, the amount of sales tax that you pay will also increase.

5. People who have paid into the Social Security system and/or private savings accounts for retirement will be effectively double taxed when they begin withdrawing their money and spending it. This is because most of the money that people have managed to save up to this point already has been taxed under the current system.

6. Because tax rates would be simplified under the national sales tax system, this could ironically make it easier for the government to raise the tax rate on certain items that it deems “unhealthy” or “dangerous”. If this occurs, things such as fatty foods, cigarettes, firearms, and an indeterminate number of other politically unpopular items could wind up being taxed at exorbitant rates, which would certainly go against the spirit of a “fair” tax system.

7. If the Fair Tax is sufficiently high (like 30% or more), this could encourage more people to enter the black market in order to avoid the tax. This could cause crime that is often associated with black markets to escalate and effectively criminalize otherwise ordinary people.

8. The “prebate” that is built into the Fair Tax system could actually do more harm than good in the long run because it would effectively put all Americans (except those without Social Security numbers) on the government dole, and this could create problems with dependency and the “free lunch” mentality as experienced by recipients of current government welfare programs.

9. The Fair Tax does nothing to solve the underlying cause of high taxation, which is excessive government spending. As long as the federal government keeps spending taxpayer dollars on things that it has no business being involved with in the first place, it will continue to require high taxes in order to finance its expenditures, including the increasing cost of the national debt. Simply changing the method of taxation is not going to change the root causes of unfair taxes.


UPDATE 11/04/09: For a more thorough education on the Fair Tax issue, you can look at The Fair Tax Book: Saying Goodbye to the Income Tax and the IRS by authors John Linder and Neal Boortz, who provide a good overview of what the Fair Tax proposal is and what it would (and would not) do.

Another highly recommended book that was published more recently is called FairTax: The Truth: Answering the Critics. This one has been getting relatively good reviews at Amazon.com and was written to address the major objections to the Fair Tax that have been raised by various critics. It offers new insights into the issue and is NOT a rehash of the first book.

For the other side of the argument, there is a book called Fair Tax: A Wolf in Sheep’s Clothing by Nelson Warwick that is supposed to be a critique of the Fair Tax and poses some of the more common questions about this proposal. It has been slammed pretty badly at Amazon (almost all reviews are 1 star - ouch!), but it is the only book that I could find to represent the “Cons”.



244 Responses to “Fair Tax Pros and Cons”

  1. comment number 1 by: highly intelligent

    Your firet con about the cost of goods increasing fails to incorporate the fact that the “hidden” taxes on retail items has been eliminated.
    Retail goods today include corporate taexes, salaries of tax lawyers and accountants, the employer portion of the social security tax is also added to the cost of retail goods with the current system. And thes taxes that are added to the retail goods is a cascading tax that goes all the way back to the raw materials of the retail goods, the manufacturing of all the components. These “hidden” taxes only apply to products made in the USA not in foreign countries so foreign products are cheaper due to not having any US taxes imposed. If we had the “fair tax” then our manufactured products would be cheaper or at least the same to produce as the “made in china” products.
    Therefore stop misleading people with your false statements about the increase in products and services. You just don’t get it.

  2. comment number 2 by: ireland5

    I think ‘Highly Intelligent” needs to read the entire article. He/she makes a point that current retail costs incorporate hidden taxes. Certainly, if these hidden taxes were eliminated, the retail cost of our products would be significantly lower.

    Indeed, the original author of the article states, “The base price of goods and services (that is, their cost of production before adding any taxes, profits, etc.) would be lower because the embedded costs of the current income tax system would no longer be a factor.”

    However, you must advance to the next step - production costs are projected to be lower, but then the “fair tax” (an accumulation of all current hidden taxes) must be added to arrive at the final retail price. This translates into higher retail costs. The benefit? we’d know what we’re paying and could have some control over the amount we pay.

  3. comment number 3 by: eicrifle

    The book (FairTax: The Truth: Answering the Critics) devotes most of its pages to answering the many criticisms often raised about the FairTax proposal. With few exceptions, it thoroughly addresses all nine of the “cons” listed in this post. As with any plan the size of the FairTax proposal there are bound to be problems and things that require closer scrutiny, but this sort of dialog does not forward the debate in any meaningful way. As it is, considerable sums of money have been spent in the employ of scores of respected economists in both academia and the business world to do a very impressive amount of peer-reviewed research that the FairTax is based on. Disputing the conclusions drawn from this research, and offering alternative thesis’s in an intellectually honest way is where we need to take this debate. Compiling a list of supposed shortcomings and offering nothing but unsupported personal opinion simply falls short of the sort of discussion we should be having about this important idea.

  4. comment number 4 by: RedRon

    I do not propose to be any sort of scholar or authority on either the current tax system or the fair tax plan, however, I do know that the current system favors the “haves” and punishes the “havenots”. For example. Did you know that only the first $97000 of your income is subject to “income taxes”? Any amount above $97000 is taxed at a lower tax rate. Currently 15%. It is, at its core, overly convoluted and antiquated. So much so, that even those that are considered professionals in the tax field cannot make heads or tails of much of the tax code. That being the case, how is the “average Joe” supposed to understand and make it work to his advantage? In my opinion, almost anything would be better than what we have now. And the Fair Tax makes about as much sense as anything I have heard of to this point. I pay about $250.00 per week in payroll taxes. Thats $13000 per year. Add that to the $2348 from the “prebate”, and I would have an extra $15348 per year of spendable income. I think that money would be better managed in my hands rather than the governments hands given their ridiculous track record.

    Something else to think about for those that think the Fair Tax would not generate enough revenue to maintain the current programs. i.e. medicare, social security…etc. All the drug dealers, pimps, prostitutes, street hustlers, bootleggers and the like, none of which pay into the current tax system, would instantly be paying the same rate as the hardest working person you know. Now, if that is not “Fair”, I do not know what is.

    RedRon

  5. comment number 5 by: Anonymous

    If someone chooses to live here, then he/she needs to contribute. If you want the benefits, then you can pay for them, too. Everyone buys “things,” so, everyone will pay tax. No more hiding or evading the law. Consider illegal immigrants and lazies who don’t pay taxes.

  6. comment number 6 by: Fatwolf

    I am often in agreement with the idea of a fair tax and I was with “Anonymous” on the expectations of huge tax revenue generated from illegal activities but I was much suprised when I read that “The Internal Revenue Service estimates that over two-thirds of underground income comes from legitimate wages, salaries, profits, interest, and pensions that simply aren’t reported…The volume of such mundane transactions greatly exceeds the underground income generated by drug dealers, prostitutes, or illegal gambling.” This includes lawnmowing, manual labor and other sorts so only about a third of the blame, and I’m not siding with scum, should be directed at criminals.

    Schiller, Bradley R.. The Macro Economy Today. 11th. New York: McGraw- Hill/Irwin, 2008.91

  7. comment number 7 by: SABNW

    I have listened to the points of the fair tax for several months now, and am in the process of reading the book. So far, and based on what we have now, this fair tax proposal would open up our economy to the world’s capital. We would be the new “tax haven” around the world and would not have needed a “bailout” for our latest woes (Thanks to the politicians). Can you imagine having control over OUR own money now? To some people, that may seem scary since it appears we have been heading towards a Roman Style Patronage system for years. Why do we allow the Government to TAKE our money, waste our money (Obama thinks 18 Billion of waste is minuscule), and cheer when they decide to send a portion of it back to us? We need to take the current Tax Code away from the politicians so they can’t use it as a Carrot or a Stick to sway votes. Each State should compete for our residency with the same incentives by being more responsible with the taxes they do receive. More inhabitants would create more tax revenues for the infrastructure improvements. It is so simple of a plan that the current politicians will never endorse it.

  8. comment number 8 by: chorti7

    How do we support our military, build roads, bridges, maintain our sewage systems? Who pays the salaries of the government employees?

  9. comment number 9 by: Karlonia

    @chorti7:

    This particular proposal is supposed to be “revenue neutral”, which means that it is designed to generate the same amount of funding that the current tax system does. Therefore, things like military, infrastructure, etc. will continue to be funded just as they are now. As for government employees, frankly we could use fewer of those anyway, but that is probably a topic for another article.

  10. comment number 10 by: wbgcpa

    I think it is funny that the proponents assume the cost of the goods leading to the final user will decrease. We live in a free market an the sellers will get as much as they can, whether they are paying “tax attorneys and accountants” or not. The price will be determined by what they think and can get, regardless of the costs and related expenses.

    Another thing, do you really think that the government is willing to give up this ability to manipulate the behaivior of the masses? Taxes, and the lack thereof, make people do things. Certain deductions/credits encourage home ownership, education, charitable contributions, etc.

    Ain’t gonna happen….

  11. comment number 11 by: jimbob

    For someone who titles themself highly intelligent, they really cannot spell. Use spellcheck next time you care to expound on a topic!

  12. comment number 12 by: as

    wbgcpa -

    Companies will charge “whatever they think we will pay” but when the items don’t move the prices will come down even at a loss.

    I don’t think the government is willing to give up the ability to “manipulate the masses.” But what exactly is the problem with taxing things at different rates. If I wanted a gun, or liquor or a twinkie for that matter, I wouldn’t cry about spending a couple extra bucks for them. Conversely we could help the poor immensely and the general public as well by taxing fresh produce and certain packaged goods LESS than other items, thus providing incentives to live a healthier life. We could tax things like cars more and hybrids less and on and on and on.

    The only problem would be for utilities since most consumers can’t choose their own, and any tax on the company goes directly to the consumer. Which is why they should be regulated but that’s another story. Of course these “powers” could be used for evil but that’s why we vote right?

  13. comment number 13 by: Rick V

    In the Cons section number 3 the author states that the real rate would be 30% and not 23%. I read the same information he did and without the liberal blinders and found that statement to be very misleading. What the opponents will tell you is that when the real cost for an item is $100 the retailer will add $30 to the cost making it a $130 item and in effect a 30% tax. Lets say a retailer believes someone will pay $130 for am item. He rings it up for a total price of $130 and then he give 23% of that to Uncle Sam. That would be $29.90 in tax ($30 to round it up). 23% of the price you paid for your item was the tax. The opponents want you to think the proponents and creators of the fair tax are being misleading about it but they stated it exactly as it should have been stated. The only part of this that can be considered Con is that it is money we would have to pay to government. There is where the statement “Freedom isn’t free” fits, even in the monetary sense.

  14. comment number 14 by: mike

    the con about the tax rate being 30% instead of 23% does not really make sence because these taxes will be collected at the check out. so if i buy $100.00 of stuff i will pay $23.00 in tax even if the store buys the products then sells them the cost should not be more then $123.00 because the tax has already been payed and the items become second hand that are not taxed.

  15. comment number 15 by: Think please

    to: wbgcpa

    You are correct, we do live in a free market society, somewaht. If I sell widgets and you sell widgets and the Fair Tax is implemented each of our costs to make those widgets will go down by the same amount. (the embedded income taxes we used to pay). Now if I am greedy, I will keep my price the same so I can make more money, right? But if I see an opportunity to lower my sales price because my cost went down, I can sell more widgets than you can. But then you will lower your price too in order not to lose market share. Oh, so that means through competition, the price of widgets will decline proportionately and adding back the sales tax means there is virtually no change in the end cost to the consumer! Oh yea, and you and I as widget sellers are still making about the same gross profit margin but selling more widgets because our customers have more money in their pocket!

  16. comment number 16 by: Sammy O'Banion

    I have just finished reading the book The Fair Tax and it addresses all 9 of your cons of a fair tax system. It’s much easier and transparent than our current tax structure and it eliminates anyone from not paying taxes and fairly. The prebate actually takes care of the problems of people on lower income and this system encourages people to do a better job of climbing the ladder of success and at worse case sceanrio encourages people to live within their means and thereby eliminating poverty. It causes billions of increased revenue to the Federal Government just from illegal money earned and spent at the point of sale for which very little is currently being collected, never mind what would be saved by getting rid of the IRS. Basically from a business perspective, you’re eliminating the middle man (the gov.) from choosing their own price to pass on to the consumer (us) in the form of taxes. There is general conception that our law makers are trying to what’s best for us as needed, and instead what they are actually doing is planning what they decide we need and what we should be able to afford to pay for it with no regard for our opinion. Congress is out of control mostly because most of it’s members have been there so long, they either never have been in business or they’ve forgotten or just don’t give a damn.

  17. comment number 17 by: Aram

    FAIR TAX is the only way to prevent the communists from controlling each and every American.They will not be able to control you. Also people will save lots of money from buying and selling used items like cars etc.

    Hey, we pay sales tax in CA now plus hundreds of other taxes

    The eliminating only of the property tax is worth voting for the Fair Tax. With only one tax will be realy easy to control where the money is spent by the government.

  18. comment number 18 by: wwfk

    what about state taxes. much of our property taxes support our school system. does the fair tax eliminate the state and property tax?

  19. comment number 19 by: Mr. Frank

    This was a great article. Unfortunately, the Fair Tax constitutes a major shift in control from us..to the people. That is something that we will not tolerate. We are smarter than you, and we know what’s best for you. Yes we know that you vote. Big deal. We just tell you what you want to hear and then do the opposite. That’s called ’standard operating procedure’. We are really good at it. We have been in office so long that it’s become second nature. Oh, and don’t bother trying to get our term limits shortened, we just won’t vote on it. That’s how we roll, and what are you gonna do about it?

  20. comment number 20 by: wade

    the problem is it’s entirely consumption driven. look at the economic downturns we’ve suffered the last decade. our economic system is flawed in that it needs consumption to grow to keep from imploding.

    I fear a consumption led tax would result in the cyclical imploding of a tax system badly needed for national defense and various other infrastructure needs for the health and well being of all americans.

    Also I believe the wealthy will find a way out of paying the consumption tax by buying non-american goods. And the lazy folks that don’t want to work will just live on the prebate and buy on the black market. Which would leave the working class to carry the burden.

  21. comment number 21 by: Karlonia

    @wwfk:

    My understanding is that the FairTax is supposed to be a replacement for federal income taxes, which are the taxes imposed on us at the national level. State taxes would be unaffected.

  22. comment number 22 by: Anonymous

    you are also forgetting to include that by eliminating the department of the IRS that deals with income taxes it would free up 50-80 million dollars of revenue. plus anyone who buys anything who is not from this country, drug dealer, pimp, or prostitute who in the past had no taxable income would now pay income tax just like the rest of us hard working Americans. The best advantage though would be with all the embedded taxes taken off the cost of producing goods in America it would make it roughly the same price as making the same item overseas ( if you calculate in the cost of shipping.) so companies could than bring those jobs back home. this is predicted to put an extra 500 - 800 million dollars in to the economy within 5 - 10 years. I suppose I don’t have to say i support the fair tax plan. people are always going to complain about taxes i just think this makes the most sense, no loopholes

  23. comment number 23 by: Jerry Smith

    This sound like Brian’s Tax from the mid 1980s in Canada. A Sales Tax was to be the savior of the people of Canada, now they have the GST or the Gouge and Screw Tax as well as income tax.

    Jerry

  24. comment number 24 by: Mr. Frank

    Now that’s what I’m talkin about Jerry. Trick these silly folks into what they think is going to be a “Fair Tax”, then in the middle of night, re-enact to old system on one of those ear mark thingies. That gives me goose bumps just thinking about it. We’ve managed to give our pitbull of an IRS the power to arrest, seize property, and find guilty anyone it pleases without a trial. Could you imagine what it would be like if we could manage to get everyone coming AND going?

  25. comment number 25 by: rain

    One problem with the fair tax I have never seen addressed is multiple taxation.

    My husband is a self employed contractor. He buys most of the material he uses for his customers projects at retail stores, like Home Depot and Lowes. He could not get them at contractor only outlet, since they do not exist. So he pays the tax at check out, like you do, when he buys the material for a job, passing the cost on to the customer and has to charge them the fair tax for the entire cost of the new fence, deck, etc he has just built for them, including the material he has already paid the tax on and charged them for.

    Most home builders get alot of their material from retail outlets. How do they not pay the tax. To solve problems like this I see simplicity going out the window for business.

  26. comment number 26 by: Mr. Deeds

    I’ll say, this discussion is more interesting to me with every new spending bill that is passed. I’ve been trying to get my arms around the entirety of the Fair Tax, and I gotta say, the more I get into it, the more it looks like our current system. I suppose the problem is that anything “fair” will never fly with our government, so as a result, we will always have to settle for “concessions” in order to get any meaningful legislation passed. Now as I write that I see that I am mistaken. We need a mandate the size of the one our current congress believes it has.

  27. comment number 27 by: Re: Rain

    “One problem with the fair tax I have never seen addressed is multiple taxation.

    My husband is a self employed contractor. He buys most of the material he uses for his customers projects at retail stores, like Home Depot and Lowes. He could not get them at contractor only outlet, since they do not exist. So he pays the tax at check out, like you do, when he buys the material for a job, passing the cost on to the customer and has to charge them the fair tax for the entire cost of the new fence, deck, etc he has just built for them, including the material he has already paid the tax on and charged them for.

    Most home builders get alot of their material from retail outlets. How do they not pay the tax. To solve problems like this I see simplicity going out the window for business.”

    It is ok for contractors to pass on the taxes they had to pay for materials, as long as its in the contract. Your husband will still be paying the tax on his personal items. No one is exempt.

  28. comment number 28 by: Hugh

    Hey all,
    Ok, I think the fairtax would suck and everyone will hate it……AT FIRST! For about 1-3 months the companies prices will stay the same and when that first company slashes prices and the others follow suite then we will be paying about the same for our goods and services like the book says. To the lady whose husband is a self employed contractor and is concerned about the fair tax….he will be saving so much money under the fair tax. Self employed americans pay more in taxes than people that work for another company. No more savings accounts just for taxes and quarterly trips to the accountants to pay into our failing system. When he buys his supplies at Homedepot or Lowes he has already paid his taxes. DONE. Cashiers are a lot cheaper than H and R block any day! Your husband will get the same amount per job as he does now or more because he isn’t putting away 25-30 % into a bank to give to Comrade Obama. Understand it is you and your husbands bread and butter, but ma’am, with all due respect. Do your homework. You and him will be 100% better off.

  29. comment number 29 by: RAF

    To jimbob:

    You used improper grammar when accosting the author over his incorrect spelling. Your comment, “For someone who titles themself highly …” should be, “For someone who titles himself highly …”.

    RAF

  30. comment number 30 by: Bradleyson

    Why not simply eliminate the Federal Income Tax and reign in government spending??? This give the power of the purse back to the people to make financial decisions (charities, savings, education ect.) and not the government. This would be more akin to the founders tax plan. That makes more sense to me. For more information please watch this video…..http://video.google.com/videoplay?docid=-1656880303867390173

  31. comment number 31 by: MS

    RedRon
    You are mistaken on the comment about the first 97,000 being taxed a t a higher rate. Did you mean your fisrt 102,000 is included in the medicare/SS tax then everything abouve that is free and clear of that particular tax? Google Tax Rate go to the first selection in the search. Gives a good look at our tax structure.

  32. comment number 32 by: mb

    a very important aspect that the fair tax that is not talked much about is that the cost to all america of the K Street lobbyist. Companies that hire and pay these lobbyist millions of dollars write this off with their corporate accounts advising theme. In effect, we the people are paying for the special interest, to keep our politicians corrupted and that is why many do not support the fair tax. Their elected office they serve we are all in a hidden way paying for. in the meantime our polical system keeps getting more and more corrupt. Like Will Rogers said many years ago that the US TAX CODE WILL EVENTUALLY TURN OUR NATION INTO A NATION OF LIARS AND CHEATS. A NATION OF LIARS AND CHEATS EVENTUALLY CANNOT STAND. The fair tax is the answer. We need to keep up the good fight and remind our frends and famaillies that our nation is at stake here.

  33. comment number 33 by: Michael

    I have paid taxes on the money I have saved. With the Fair Tax I will pay taxes again when I spend it. That does not seem fair to me. I think a better idea is to remove all deductions from our current tax system.

  34. comment number 34 by: Donald Neeley

    Fair Tax is plainly visible to the public.
    This is replacing a tax system that is largely covert.
    All people will look at their store receipts and understand the cost of gov’t.

    This TRANSPARENCY will produce the biggest results.

    The above listed “cons” are minor or not completely thought through. Two cons that are valid are:
    (1) older Americans whose savings has already been taxed (as income), will be taxed again when they spend. There are many ways to mitigate for this.
    (2) transition will be difficult. With current economic crisis, should phase in in 2010, begining with 2% in Jan10, rising by 2% each month to 23% in Dec08 and thereafter. This will jump-start the economy as everyone runs out to make major purchases (cars, homes, etc ….) will go through the roof. If economy heats up too much, accelerate the phase-in.

  35. comment number 35 by: Sick and Tired

    Our Government and all that support them are crooks. I am a 20 year Combat Veteran and ashamed to be called an American. As Americans what power do we have to make changes? None! Speak out and be heard, gather in great numbers to force change? Ha! You will feel the wrath of your government, they will turn on you like rabid dogs. We need morality and persons willing to make the right decision for our country not just their bank account.

  36. comment number 36 by: hogwild

    I’ve been interested in the fair tax for some time. The only thing I’m waiting to see is in any given year what the IRS collected in taxes under our current system compared to what would have been collected under the fair tax. I realize this may be difficult, if not impossible, to come up with exactly but I would think someone should be able to get very very close. That it would give all of us something tangible to look at and see which of the two may be the better option. Am I off the chart here or are there more who have the same question?

  37. comment number 37 by: Wildthingmax

    the fair tax will lead to higher sales tax which will in turn lead to more importing of goods from countries with lower prices, locking up our ports, lowering standards of “checking” items before they come into the US and allowing some camel humping son of a sheet head to sneak a dirty bomb into the US, killing Americans. therefore, if you accept the fair tax you’re a commie terrorist.

  38. comment number 38 by: Mike

    I was just wondering how many IRS jobs will be lost with the fair tax?
    I can’t see gov’t allowing more job losses.

  39. comment number 39 by: trapp

    I can see the validity in a few of the cons. But to suggest that everyone who thinks this is bad idea is stupid is just plan silly. Everyone is entitled to their own opinions. This Tax idea seems like it should work given the following.

    Companies lower their product price in adjustment to the new system thus making each product cost the same when the tax is introduced.

    If all taxes that were eliminated really add up to what the new tax would cost.

    The thing is that we would pay the same amount for a product, we would just have more money to be spending. Spending money is good for economy.

  40. comment number 40 by: J Davis

    First to Rain - Under the Fairtax, every business would have a tax exempt ID number just like the current state tax systems. Even at Lowes you wouldn’t pay the sales tax for any product that would be re-sold. This concept is nothing new. At Lowes today, if a company has their tax exempt ID number on file and certifies the products being purchased are for resale, can purchase goods free of sales tax. That’s exactly how it would work under the fair tax.

    Currently however the construction industry is a bit different because as Rain said, the way it works now is that IF the contractor pays the sales tax at the point of purchase THEN they do not collect the sales tax on those materials from the homeowner. Under the fair tax if the product is “consumed” ie. a gallon of milk then it would be taxed but if it’s an investment, ie. new house, a fence to go around the yard of the new house, college education, or a hundred million dollars to create 5,000 new jobs then the investment is not taxed.

    Can you imagine what the US economy would do if business owners didn’t have to waste a combined $600 billion in tax planning? The US Economy would become the world’s new tax haven. Companies from all over the world would pump their dollars into our economy. The $11 trillion (that’s 11,000 billion) that is being held by US citizens over seas would come back to the US economy. Millions of new jobs would be created.

    The principles of supply and demand would continue to be in place. Turning that off is like trying to turn off the law of gravity; therefore prices might go up and down at first but would level out to whatever the market demanded. Wouldn’t that be fantastic if companies started to make, what the brain dead libs call “obscene” profits? That just means opportunity for more businesses to enter the industry and create more jobs. For Rain that would mean lots more rich people could buy those really expensive rot iron fences and low and behold Rain and her husband would have so much work that they could raise their prices and make some of those obscene profits and employ 50 more workers to install all of the fences. That’s because trickle down economics is a true principle just like gravity that you cannot turn off.

    Free market capitalism is the best system the world has ever known. Under the fair tax our dying country with its dying economy would come back to life and once again the American dream would be a reality for hundreds of millions of people. Yes, the transition would be tough, and IRS jobs would be lost, and accountants would have to spend their time helping business grow in lieu of filling out tax forms, and yes April 15th would just be another beautiful Spring day but in the end it would save our republic. How in anyone’s mind (unless you’re bent on seeing the destruction of the US) could the process not be worth the final reward?

  41. comment number 41 by: J Davis

    hog wild - The answer to your question is simple - the first year it would be the same becuase the 23% tax rate is set by dividing total taxes paid divided by the total spent on retail goods and services. The good news is that as the economy takes off due capitalism, americans no longer being penalized for working and investing, the trillions of dollars from foreign investors, the trillions in foreign banks coming back to america can only mean on thing, revenue to the government would increase. We could finally have a shot a not only balancing the budget but of actually paying back the trillions in debt. The US could also have a chce of being able to fund future liablities such as social security, medicare, and all of the liberal causes that have thus far destroyed our republic and our economy.

  42. comment number 42 by: J Davis

    Michael - There are at least 5 reasons that you and others with savings will not be taxed twice. Please read the bill or the books.
    1. First and foremost, you need to understand that currently all of the taxes that are paid to the government are embeded in every product that you currently buy. Under the fair tax, the price of goods wont change. Under the current system you are paying an average of 23% embeded tax in everything you now buy. Seeing the amount itemized on the receipt wont change that. In reality you are being taxed twice right now. Under the fair tax you would only be taxed once. This is why even people with hundreds of millions in savings and investments, even though they may have already paid income tax on the earnings are overwhelmingly in favor of the fair tax.
    2. The prebate will reimburse you each month for the sales tax paid up to the poverty level.
    3. You will no longer pay income tax on the gains that you see from your savings and investments. Which means you can reinvest 100% of your capital gains without having to give any money to the feds. In other words, the savings you have will grow even faster.
    4. Under our current system, a significant portion of any of that savings that you dont spend before you die gets taken from your children by the death tax also know as the inheritance tax. Under the fair tax your beneficiaries would not be taxed whether you gave it to them now or whether they inherit it after you die.
    5. Currently any retirement benefits are subject to income tax. Under the fair tax, social security benefits, retirement, divends etc are not taxed.

    Once you add up the benefits, under the fair tax, americans who save are actually the biggest winners. In fact thats one of the primary benefits of the fair tax is that saving and working is rewarded whereas right now the government penalizes hard work and savings.

  43. comment number 43 by: J

    I feel comfortable in stating that Con number 3 should not be included in this article. The reason that 23% is used instead of 30% is to compare the plan to the current income tax which is deceptive. If you make $200,000 and pay $50,000 in tax you have spent 25% on tax by the lingo of our tax laws. However, with an income tax the government has claim to that $50,000 so in reality your income is $150,000. Therefore you’ve actually paid over 33.33% of your income in taxes (50000 / 150000). The fair tax only uses the deceptive lingo in comparing its system to the income tax system. The fact that the number is 30% based on the sales price of the goods purchased is found at fairtax.org as the site makes the distinction using the terms “tax-inclusive” and “tax-exclusive” and the creators of the site have posted articles attempting to clarify this point on multiple occasions (http://www.fairtax.org/site/News2?news_iv_ctrl=1541&page=NewsArticle&id=8248). The author did not do their research on that one…

    Also, in regards to the price of goods increasing I would like to add some additional thoughts. It is worth noting that various industries may be affected differently by the fair tax. It is possible for some industries to actually see decreases in prices while others see increases.

    I would also like to make another point in favor of the fair tax for those who are concerned that the fair tax may not be fair to the poor. It is true that refundable credits are not built into the fair tax, as they shouldn’t be as the receivers of EIC and other refundable credits have not earned that money but someone else has. However, regardless of whether you agree with me on the last point, those currently receiving EIC are not necessarily negatively impacted because they will be receiving some, all, or more than the income that is taken from them under the income tax through medicare and social security withholding (these are paid for as a part of the national sales tax as well). This helps offset not getting refundable credits. Consider: someone making about 20000 with 1 kid would get about 2200 in EIC. Not paying into social security or medicare gives back over 1500 of this amount that they would not longer receive. Someone who makes 20000 but doesnt have children would see a total gain as they would not be eligible for EIC. The same applies to all Americans that don’t get EIC.

    Another positive aspect of the fair tax: All non-Americans visiting or living in the country would help pay the tax when purchasing goods. Therefore, they help pay for our system to the extent they enjoy it, just as Americans do. This removes part of the tax burden from Americans as well.

    And with that, I’m off my soap box…..

  44. comment number 44 by: Dan

    I disagree that the fairtax does nothing to fix the root cause of the problem. By making it very clear how much is being paid be each and everyone, people will be motivated to stop wasteful spending! Right now, tax day is a celebration for many folks because they get a check!!!!

  45. comment number 45 by: Fair Tax Revolution 190

    You want real change? It doesn’t come from politicians it comes from us at the grass roots level. If you haven’t read the two books by Neal Boortz and John Linder “The Fair Tax Book” and “Answering the Critics” you shouldn’t be allowed to comment on this subject. I’m not saying this to be mean or disruptive. If you have read these two books you would understand how ignorant and uninformed you actually sound when you make the comments you do about the Fair Tax Act of 2009. All I or anyone else asks is that you read the two books first before commenting. I spend more time correcting people who are spreading incorrect information than I do introducing people to what is going to change our nation and allow us to take back control of our country. I’ve been spreading the word for almost a year now and I have never run into anybody, once I’ve explained the system to them correctly, that hasn’t become an instant supporter. If everyone in the United States was informed and knew exactly how the system works there would be a revolution overnight and this bill would be passed by the end of the month in the House and Senate. There’s no doubt in my mind. I applaud the comments of those who explained the embedded tax and how the opponents try and twist the 23% tax into more than what it actually is, it’s refreshing to see it explained correctly. The Fair Tax is for everyone poor to rich. And for those who hate the rich get over it they are always going to be rich. Deal with it. Truth be told most of them don’t even pay taxes like you and I do, read the books I’m not going to explain that one. The comment about people looking at April 15th, tax day as a day to get money back was right on. Most of the citizens here have that mentality they think they are getting extra money. If you knew how much money was being pulled out of your paycheck every week it would make you sick, literally. I’m a retired veteran from the military. Last year I paid more in taxes from my current job than I made off my entire military retirement for last year. That’s why I tell everyone I know or meet about the Fair Tax. It starts by reading and understanding the books. If you truly understand how the system works I won’t be able to hold you back you will want to tell everyone you know about the Fair Tax Act of 2009. After we get this bill passed we can move on to the next phase of taking back our country…..Term limits for the House and Senate….don’t think it’s possible? Ask Thomas Paine and John Adams about the impossible. You want real change?….Not just change of scenery… real change starts at the grass roots level…you and I united as a nation coming together to better our country.

  46. comment number 46 by: Dave

    Basic math says it is not 23%. It is not 30% either. It is actually less. What we pay today in embedded income taxes of corporations would lower the cost of products. Yes companies will keep products at the same price trying to get more money, but one company will eventually lower their price to sell more product and you’ll see prices drop. It will be less than 23% when it is all said and done. The Fair Tax is simple answer to complex problem. And washington politics becomes weekend, by not having a complicated tax code to hold over our heads.

  47. comment number 47 by: taxmunch

    i would love to understand this stuff is there anyone out there who would like to educate me on this??? i’m serious, thanks

  48. comment number 48 by: Jonny

    Under the current tax system anything u buy Has on average of 23% hidden tax in what u bought. Plus u have to paid about 6% sales tax.

    Under the fair tax system anything u buy willnot have hidden taxs.
    U will pay 23% on that product or service.

    1.So u are actually paying the same or less depending on what u are buying.

    A vehicle has a 23% hidden taxs.Plus u paid sales tax.

    So if u buy a car under the current system If the car is $15,000 dollars U have to paid sales tax. Which the sales tax would equal $900 dollars. ( if at 6%)

    The total cost of the car will be $15,900

    Under the fair tax system the car price would go down. The $15,000 care will have the hidden taxs which equals 23% took out.
    Thats 15,000 x 6% = $11,550 x 23% (fair tax) = $14,206.50

    Total cost of car $14,206,50

    How about we compare the total cost of the car under the two tax systems

    Current tax system $15,900 and Fair tax system %14,206.50.

    U would save $ 1,693.50

    So How does that increase the price of goods or services ?

  49. comment number 49 by: Karlonia

    @Taxmunch and others:

    I have now updated the article to include links to some good resource books about the Fair Tax issue (two pro and one con). If you manage to find any others, feel free to mention these and I will include them in the list.

  50. comment number 50 by: charles

    I’m 100% for the Fair Tax. Yet we need a balance budget amendment to go along with it. To prevent this bill getting passed and we have a deficit equal to the obama deficit. I’m for eliminating most government departments,privatizing medicaid,medicare,social security, and welfare, bringing some of the 700 US bases home, and bringing all the departments you keep back to the size it was in 2000. If we did this we could probably get it around a cool 15% and that’s it. To get it at 23% first off we need to go back to the 2007 budget and cutting from there. Which would probably be the most practical thing to do. In my mind the easiest way to getting this thing passed would be through making it temporary. Make it so that if it doesn’t work out it can easily be reversed. To get it passed it’ll require a president who’s willing to support it and conservative to moderate congress. Lets say Huckabee won in 2008 and Pelosi and Reid were in charge. What would we do about that is the question. I believe the only way to get it passed from there would be 5 on TV debates. You get Huckabee and Pelosi on TV talking about it for an hour. Huckabee would win hands down do to his speaking skills compared to Pelosi bitching off with her plastic surgery loaded face. You get a senate debate where it would be lets say Jim Demint vs I don’t know Chuck Shumer. A congress debate where the debate would be John Linder vs one of Pelosi lap dogs. The fourth debate would be where you get the countries governors going head to head I would say Palin “who if Huckabee was elected would still be governor vs most likely Tim Kaine or maybe Blago. And than the fifth debate would be one where you get the experts in you get someone who’s not in politics like lets say Rush Limbaugh vs Michael Moore. I think that would be the best way to get this whole reform done. I mean this is just an example to show how when we win 2012 we can get this passed.

  51. comment number 51 by: Dillon

    Well from what I hear is that this is a very heated debate. I’m a student in debate and I don’t want to state my personal opinion on here but just hear this:

    The government has offered many plans before. Some were instantly put down. Others were debated heavily like this one. It’s obvious that the American public is losing faith in its own government. I believe that the government has good intentions for the American people, but is just sometimes plain dumb in executing many of its plans. So the real question is: do you trust the government?
    Trusting the government so far has gotten us to where we are today. I’m not just talking about the economic recession and all the problems today, but rather everything that has led us up until today. This includes trusting our Founding Fathers, past presidents, and past decisions.

    So trusting the government isn’t as fatal as everyone thinks. Perhaps this time, they will be able to come up with a quick, easy, cheap solution that will put an end to our problems. But by then, what if everyone had lost so much faith that they voted against this bill? America would be brought back to its pre-industrialized era with nothing but farmers and ranchers.

    So again, the real question is quite simply:
    Do you still have faith in our government?

    Dillon

    You can email me at hoangdillon@yahoo.com if you wish to argue with me. Feel free to criticize as I can only learn from my mistakes, although I would prefer you not use any profanity or harsh cruelty, but rather persuasion to alter my view on this topic right now.

  52. comment number 52 by: elrodovich

    I’m an old man. Just give me the Fair Tax

  53. comment number 53 by: djd_201

    Just give us the truth, and that is…everyone thinks they know the answers, but no one is willing to admit the truth. A change is needed but surely not if it throws us into economic turmoil. For all those out there willing to say they KNOW, I ask them to join a bank we will set up pjust for them as members only, and they can openly support the currently proposed fair tax program all they want. However, all I ask is that they allow that bank hold there properties, savings, IRA’s and 401K’s in bond for any possible catastrophy that may occur once fair tax is imposed. If it works and we save all that righteous money they claim, we pay a fair interest rate to their accumulated bond and they profit greatly. Yet if it fails, they lose their investmnet to help counter the economic turmoil our country is thrown into.

    Come on now know-it-alls! I agree we need change and reform, but I am tired of the idiots who have all the answers and no brains to make it work! If you are so sure its the answer, put your money where your mouth is. Hidden taxes from manufacturing in the US? Do you really think that with all the loopholes and tax credits and such that coperative America uses now, that when they lose those options, the consumer won’t have to pay for it in one way or another. As stocks drop during the climb from our current tax system into full fledged Fair Tax, we won’t ecperience a recession folks, welcome to another depression.

    those folks that own all those stocks are gonna trash sell them the minute the market drops the day fair tax hits in affect. The peope with all their money in so many banks around our nation are gonna pull those funds to sit on them safely until the market mellows out. How do you think that affect started back in the 1900’s? The US has flood gates in affect to prevent that, but then look at our bank bailouts currently that rocked the world. If your gonna preach economic salvation, put your money where your mouth is and invest in our “I’m Right!” bank account, who knows? You could make a fortune 500 club next year after the Fair Tax is put into affect.

  54. comment number 54 by: david

    I don’t want to waste my time or yours with long nonsensical rhetoric over the fair tax. I simply can say, with out a doubt, this is the stupidest idea I’ve ever heard. If you like it, want it, you are a moron! This way of taxation wouldn’t help large poor families, young singles, small business or any one thats saved or invested a dime. Forget about the f___ing seniors and soon to be seniors would take. This coming from a non proffesional, white male from the Mid-West at the age of 35 who’s divorced, remarried with custody of 6 kids.

    And I’ve read some of you supporters blogs and you guys are diluted and delusional! Any facts encompassing the big picture as well as details? NONE! More over whats wrong with America is not our representatives, it’s all you stupid idiots who believe them and have been going along with what they say. Yes, they are crooked and on the take, at least the majority are. Yes, they are out for their own party and own reelection. No, they don’t really care about you unless you support them with money or votes. Get a clue America!

  55. comment number 55 by: Commonsense

    Wait until the babyboomers retire and spend their savings and the equity in their homes. Allready paid INCOME TAX on all that money. NOW PAY MORE TAX ON THE SAME MONEY, some idiots 30% sales tax.

    Good plan for the government.

  56. comment number 56 by: Julius

    I don’t agree with CON”s 6, 7, 8 or 9. They are poor arguments!

    6. The tax rate is to be “the same” on everything.

    7. The black market “already exists” today.

    8. The “prebate” would be fairer that the present welfare system.

    9. The excessive government spending would be the same with any tax plan.

  57. comment number 57 by: David Fletcher

    The best function of the Fair tax proposal is it’s exposure of the thousands of legislatively disguised taxes that few voters ever know they pay. Once it is combined so that everyone has to write a 23-30% check to Washington, Everyone will vote more intelligently, commerce would explode and the US would take back it’s world leadership. Life would be better for everyone over the long term.

  58. comment number 58 by: John D. George

    What’s the mechanism for collecting from drug dealers, prostitutes,etc.?

  59. comment number 59 by: Bob

    Opponets seem to forget also that all the illegals would have to pay and that people that are now living for free would have to pay so there is so many MORE revenue streams that the cons don’t really add up. What does add up is that government does NOT want us to control our own money, they want to control it because without the control over us then they may have to work for our vote. Hmmmm….what a concept.

  60. comment number 60 by: Bob

    Frankly I agree with all the PROS and feel sorry for all the CONS.

  61. comment number 61 by: Karlonia

    @John D. George:

    The basic idea is that drug dealers and other people who participate in the underground economy will eventually spend some of the funds obtained through their black market activities, after which they will pay the sales tax on their purchases. Currently most of these people do not pay income tax because they are not foolish enough to report their black market income. Therefore any tax that they end up paying under the new system would be a net gain in terms of government revenues.

  62. comment number 62 by: Taxadoodle

    If the Fair Tax is revenue neutral then the same overall amount of money has to be coming from the end consumers. So all you can say is that where ever anyone ends up paying LESS in taxes, others must be paying MORE.

    So a fairer distribution of taxes will mean that most will see more taxes come out of our pockets while a few will fork over less taxes — because, after all, isn’t our current tax structure weighted where the top small percent of earners pay the majority of taxes?

  63. comment number 63 by: marfdave

    to J Davis.

    Obviously you have read a lot about the fair tax and I applaud you for that. The only thing that you said that I believe is incorrect is that one WOULD’NT pay tax on a NEW house, I believe they WOULD.(pg 160 of the Fair Tax Book by Boortz and Linder)

    To the retirees.

    When you buy anything now, you pay the same tax as you will with the Fair Tax. Remember EMBEDDED taxes will be taken out and the Fair Tax put in. What you won’t pay is income taxes on your retirement income, so you’ll come out ahead.

    To david

    It embarrasses me that you have the same first name as I.

    You are incapable of stating your point without pseudo-vulgarity and name calling. Read the books, do some research and come back with intelligent comments and, maybe, someone will listen to you.

  64. comment number 64 by: nail

    I truly believe that after four years of Obama, the Fairtax will be the only thing that will save our country!!!!

  65. comment number 65 by: NBS

    The Fair Tax is the only political cause I’ve donated to. I went to the Fair Tax rally in Columbia, SC last April. But I have a couple of questions about the implementation of the Fair Tax that I’ve never seen answered. I’ve emailed the main Fair Tax website many times with no reply. Obviously they do not have a manned response team. I asked my questions to other attendees at the Fair Tax rally last year, but those that tried to answer didn’t know the answers either, based on what they told me. The questions are, and I hope someone out there can answer them, are;
    1. Everyone knows that when you change laws you change behaviors. Have there ever been any studies conducted that are predictive of the changes that would take place of the spending habits of the people under the full implementation of the Fair Tax? If so, what were the results?
    2. I have more computing power in my cell phone today than what took Buzz Aldrin to the moon. Almost every citizen has a tremendously powerful computer at his fingertips today. We already have hundreds of computer operated barter systems in place to help folks save money and avoid transaction charges now. I see that activity exploding with the implementation of the Fair Tax. What enforcement mechanism would or could be implemented to control the efforts of those who wanted to circumvent the Fair Tax by joining a barter system or club, thus getting their goods and services without having to pay the Fair Tax?
    These are not gotcha questions, but legitimate questions I haven’t seen answered in any of the books or articles I’ve read.

    Next, I have a proposal that I believe makes so much sense that Congress could never go for it. Each time I hear a debate about a significant policy (right now it’s health care reform) the politicians speak as though their opinions are facts. Anyone with any intelligence knows they are guessing at best. Since we are a nation of states (supposedly sovrein), why can’t we test the big ideas and proposals at the state level before it is implemented nationwide? Have Georgia, Wyoming and Rhode Island try the Fair Tax ans see how it works there. Let Arizona, Florida, Noth Dakota and Pensylvania try the House and Senate Health care proposals, and a few more states try some of the Republican ideas and let’s see which ones actually increase coverage and decrease expenses. I just don’t see much of a downside to using the states as incubators for the big ideas coming out of the minds of who are supposed to be our leaders. But what do I know? I’m just a little ole financial planner in little ole South Carolina.

  66. comment number 66 by: chad

    What a great idea would be able to kept your own money I don’t think it would ever pass sounds like everybody would pay taxes that’s how it should be if you leave or visit this country you should pay taxes and stop spreading the wealth

  67. comment number 67 by: Cary Henderson

    > NBS To question 1; Yes, it has been studied, look on the website of Professor Laurence Kotlikoff. He and others have published articles on the macroeconomic effects of the FairTax.
    Question 2; As presented in the FairTax books a very high percentage of all retail trade is concentrated in transactions of only a few large retailers. Further defeating the implementing structures of the FairTax requires 2 parties in each transaction. If you’ve ever dealt with State sales tax agencies you will have found it much more difficult than with the current system.

  68. comment number 68 by: Grant Swanson

    I have one point to make to all the doubters of the Fair Tax.
    Read the Books, and read the Open Letter. If anyone thinks they know better then 80 economic pros and profs including a Nobel Peace Prize winner in Economics, they are lost in confusion. Heck, the CEO of HR Block supports it knowing it would put him out of business. He would rather help people make investments. Our economy would explode. We would become the worlds economic super power once again. Come to Washington DC on April 15th and join us with 200,000 fellow Fair Tax supporters. This plan will truly “Save America”. I’m sold, I don’t care what anyone says. :-) It would be so much better then what we have, don’t ya think?
    I guess I made more then one point. lolol ;-0

  69. comment number 69 by: Hank Van Gieson

    Karla,

    As you approach the three year anniversary of this (mostly) informative blog, let me suggest a few more reference books you might add. (1) Ken Clark’s “Pocket Idiots Guide to the Fairtax”, (2) Ken Hoagland’s recent release “The Fairtax Solution”, and (3) an unbiased citizens guide to the debate over taxes written by Joel Slemrod and Jon Bakija, released in 2008, entitled “Taxing Ourselves. Of the three, only Slemrod/Bakija tell both sides of the story, although Clark tries.

    Your original nine “Cons” were right on the mark and pretty well reflect my paper entitled “A Fifteen Count Indictment of the Fairtax”. None of these Fairtax criticisms have been fairly rebutted, although many have tried.

    15 Count Indictment of the Fairtax

    (1) HR25 proposes that the federal government tax State and Local purchases of new goods, and tax all State and Local employee payrolls as representative of services provided. This would be unconstitutional under our federal form of government. However, if allowed by the Courts, 12% of the revenue raised by the Fairtax would then be hidden in higher State/Local taxes. That is hardly the transparent tax that Fairtaxers claim.

    (2) The AFFT rationale for treating governments as consumers is that it would prevent unfair government competition with the private sector. But that issue was dealt with in Section 704 of HR25. Any government agency that sells $2500 or more per quarter would be considered a Government Enterprise, and would have to collect and remit the 23% sales tax. There was no need to tax all government consumption. The playing field was already level.

    (3) By including payroll contributions (FICA, the 3rd rail of politics) on the list of taxes to be replaced, retirees would be forced to resume paying for their hard earned pension and health care benefits with their sales tax dollars. Hardly fair!

    (4) Everyone’s after tax savings accumulated under current law would be double taxed when spent under the Fairtax. Is that fair?

    (5) Although Fairtaxers claim that the Family Consumption Allowance (FCA) or “prebate” is similar to a tax refund, it is not! The FCA is an income supplement that can be spent (and taxed), or saved as financial circumstances allow. The FCA would be scored by CBO/OMB as a cash grant entitlement costing $600 billion annually at a time when other entitlements are squeezing out discretionary spending, including Defense discretionary. Where is it written that no one should pay taxes on essentials?

    (6) One of the most egregious Fairtax claims is that retail prices would remain about the same. More than half of the Jorgenson 22% “embedded taxes” consists of employee tax withholding and payroll contributions. Unless you choose to believe that everyone’s current net pay after federal withholding would become your future gross under the Fairtax, nominal retail prices have to rise substantially. And, a reduction in gross pay isn’t going to happen for legal, fairness and contractual reasons. The AFFT Director of Research and other expert economists have written that the most likely scenario would be that everyone would get 100% of their gross pay and retail prices would rise. A best estimate, based on 2007 actual revenue data, is that business tax costs of 9.2% of sales could be removed and retail prices would rise by 18% on average after adding the 30% sales tax. There is no free lunch!

    (7) Despite repeated claims by Fairtaxers that investments wouldn’t be taxed, Section 801-806 of HR25 lays a large implicit tax on both interest bearing investments, and debt instruments such as mortgages and credit cards.

    (8) HR25 provides for an inventory tax credit which would add about $600 billion to the federal budget deficit with no offsets in the first year of implementation.

    (9) HR25 proposes to implement the national sales tax “cold turkey”, despite the fact that no other country has successfully funded their central government with a sales tax. According to a former Ranking Member of the Joint Economic Committee, “Congress is institutionally conservative and much prefers evolutionary change to revolutions” — such as the Fairtax.

    (10) There is no data supporting the claim that there is $13 trillion in US owned wealth located offshore to avoid US taxes. According to the Tax Justice Network, an international organization which tracks offshore wealth, there was $1.6 trillion in offshore wealth owned by North Americans in 2005. There are 23 sovereign nations in North America, so the best estimate for US owned wealth offshore is $700-800 billion. And, lacking some sort of amnesty provision from IRS penalties in HR25, why would any of that wealth come “rushing home”?

    (11) No list of Fairtax issues would be complete without including the disingenuous claim that the revenue neutral Fairtax rate would be 23%. In terms all Americans understand, the rate is actually 30%. Retail merchants will have to add a 30% sales tax to their costs in order to arrive at the 23% tax inclusive price. Yet, nowhere on your sales receipt will a 30% tax be found? Is that transparency?

    (12) Fairtax claims that the US would become the world’s finest tax haven, and droves of foreign owned corporations would relocate here, overlooks the fact that Section 905 of HR25 lays a 23% tax on all income generated in the US by foreign owned individuals or companies. Hardly a tax incentive to relocate business operations!

    (13) All fifty Governors, through the National Governors Association, oppose any type of national sales tax. Repealing the 16th Amendment would be difficult if not impossible with that sort of headwind!

    (14) Fairtax savings from buying “used”, (tax previously paid), are highly overstated. There are no used services, which make up half of the typical family budget. No used groceries, no used restaurant meals, no used heating oil, no used gas for the family auto, nothing used at Wal-Mart, etc. etc. The opportunities to buy used would be limited to infrequent purchases of houses, cars, boats, etc. And, after a short transition period, supply and demand will restore the current new/used price relationship. There will be no windfall price savings by buying used. Think about it as the embedded cost of the Fairtax!

    (15) Due to the prebate, approximately 30 million working family units could pay no net federal tax annually under HR25, but will still qualify for all Social Security pension and medical care benefits when eligible. Compare that to the less than 1 million workers under current law that can use refundable tax credits to totally offset the 7.65% payroll tax. Is it a good thing to have 30 million workers disconnected from the cost of the federal government?

  70. comment number 70 by: blah blah blacksheep

    You can argue all kinds of crap about this, but I’ll be very plain & simple.

    I just got done doing my 2009 taxes.

    $200 = Total Fed Taxes Due
    $50 = Total Paid to Turbo Tax to do my taxes, since it’s too complicated to do it myself.

    I’ve already been taxed on that $50 from income tax. But, I get to spend it to get help doing my Federal Taxes. It’s like a slap in the face.

    Also, I live in Texas. Texas charges a flat 8.5% sales tax on consumables. So, at the end of the year, no filing a state tax return. Texas has a strong economy, and has weathered the recession quite well. There are federal tax evaders in Texas, drug dealers, prostitutes, and a large illegal immigrant population. But, they get taxed just like I do, because they pay state sales tax on consumables, too.

    Just ramp up the state tax model to the federal gov’t and get on with it.

  71. comment number 71 by: Texas

    Actually blacksheep the sales tax in Texas is 6.25%. Your local jurisdiction is charging you the difference.

  72. comment number 72 by: Don tx

    Don’t forget all FICA is removed in the fair tax too. You and your employer would not pay that. So more money in your check and lower cost to do business for the employer.

  73. comment number 73 by: William Condon

    I have just begun studying the Fair tax. It seems to me that most of the problems can be fixed. Also, most of what has been said misses the most important point. And that is a fair tax would eliminate the immoral income taxes, which are collected using force.
    The government needs money to carry out its constitutional functions and has chosen to use force to get it. As stated above*: “Because this tax system is consumption-based rather than income-based, people could exercise a certain amount of control over how much tax they pay.” The Prebate feature practically ensures that no one would be forced, at the point of a gun, to pay taxes. Our founding fathers pledged their life, liberty and property and sacred honor in the cause of freedom. Many men have died for that freedom. Economic freedom is as important as any item in the Bill of Rights. I truly have an open mind on the subject and reserve the right to change it, my opinion that is.

  74. comment number 74 by: John Blixx

    One huge disadvantage of the FairTax is the actual fairness. The website FairTaxFraud.com goes into great detail on it.

  75. comment number 75 by: so uhm what about

    taxation of services? i saw no mention but i’m almost sure i’ve heard before that would be one aspect of the fair tax.

  76. comment number 76 by: signbuilder

    Another pro I do not see mentioned. I have heard the figure of about 30% that the IRS spends in manpower, enforcement, auditing and collecting the taxes. This is a huge bureaucracy. Now please tell me what business could possibly exist with that kind of inefficiency?? I understand the states would be doing the collection of the Fair tax with systems already put in place which are quite efficient. I understand the state collection costs are about 1 percent of revenues collected.

    As for cheating on this system, about 90% of the revenue would be collected by large corporate retailers who could not risk the “under the table” transactions of not collecting the tax - or collecting and not paying.. States are much more efficient in identifying and prosecuting dodgers. Even if states spent 5% instead of 1 to 2 percent to collect, an additional 25% (30% now spent by IRS less the high figure of 5% spent by states) would be productive tax dollars to fund the government. OR as we all know our frugal politicians we put in office would do - the overall tax rate could be reduced?? Now I’m dreaming.

  77. comment number 77 by: grassroots granny

    The Fair Tax would be such a dream come true if they truly would get rid of the IRS and all the other taxes, that are described. We would have to have a limit on the % that they can hit us with and have an iron clad contract with the Government that they have to live within that limit. I suggest 25% If they do only the things that they have a Constitutional Limit to do, and do it well, we would all be alright.

  78. comment number 78 by: Elaine Parras Kent

    Dear Fellow Americans….
    Your comments above are very thoughtful (just a few exceptions). Obviously, every program has its’ plusses and minuses. With the Fair Tax, however, the positives far outweigh the negatives. It’s difficult to place a tangible value on our ‘freedom’, freedom to keep the fruits of our labor, freedom from being penalized for being societal producers and freedom from picking up the tab for the criminals and tax evaders (many of whom can be found in Congress), to name a few. You know as do I that the value of our Freedom is not only great, but is both essential and indispensable for the survival of our America, a country like no other. The cost savings of dismantling the IRS alone make it worthwhile. My suggestion is that we begin a nationwide campaign, from the local levels, to educate our communities on the Fair Tax, pass around petitions for its implementation and get this issue on the ballot and in the campaign speeches for 2010 as well as 2012. God Bless our Country and those of you who know what it is to be a true American.

  79. comment number 79 by: Helz

    What would the Fair Tax do to Obamacare? The govt is now saying they can foist this bucket of turds upon us because it’s a tax.

    If the Fair Tax can render Obamacare redundant it would be just what the doctor ordered.

  80. comment number 80 by: Len

    I have a question. Does one pay the FairTax every time you buy stock? What about buying a home? Len

  81. comment number 81 by: MadMax8600

    How come no one is focusing on the fact that “What you earn is what you bring home.” No more gross vs. net pay that changes at the whim of the gov’t. If you earn $50,000/year that’s what you take home. Right now if I earn $100,000, I pay $40,000 of it in taxes. That’s obscene. Even if the price of goods goes up 30% and I spend my entire paycheck that’s still a net gain of 10%. And most importantly it’s my choice to purchase those goods.

  82. comment number 82 by: warrior wheatman

    With few exceptions, most of these commenters fell prey to the POLITICS OF GREED. The ‘haves’ wanting to keep; the ‘not haves’ wanting to get; All wanting security from the wolf at the door, or the toys befitting big boys.

    A whole-scale change to ‘Fair Tax’, or ‘Flat Tax’ isn’t going to change that. The economy still needs to keep rolling; bills still need to be paid; the disabled still need your support; you’ll still need to be taxed on your obscenely hard work – just like that ‘illegal’, waitress, and laborer.

    In a world where everything is automated, and where there are more enthusiastic workers than jobs, we need to ask “why are you working?” It is the wolf at the door, the boss that might fire you, or that your assets that aren’t worth peanuts when luck changes; or maybe you don’t know anything else worthwhile.

    Instead of getting rid of the machines (providing more jobs), or ramping up the consumption of resources to provide those jobs – we should consider a Guaranteed Minimum Income.

    The very minimum need for every American is already available if you know which line to get in, and which white lies to twist; but providing it as a guarantee and taxing it back keeps all honest to their needs – without the qualifying regulatory overhead. Having a security net (for if things fail) does wonders for our freedom.

    Stay-at-home-moms and part-time jobs and neighborhood childcare, would again become available. The spirit of abundance is what made our nation great.

  83. comment number 83 by: Robert

    We need to charge more on incoming products so it would cost companies more to make their product outside the u.s. This may bring back the companies business to the u.s. This should creat new jobs for the working class +

  84. comment number 84 by: oh my

    Funny stuff. People just want “real” change. Real change because people feel like they are getting screwed. (I love when someone brings up the pimp, that makes me giggle thinking about pimps, like there is millions of pimps that are “gonna have to pay too”) Are there really that many pimps?

    There is a tax system in place that is abused, and obviously broken. If a NEW system is put in place, it will surely get abused.

    If common sense was the answer, then common sense could fix the current system.

    Fair. Fair just seems too subjective. You can manipulate any tax system, and we will. Before I made any real dough I remember Steve Forbes running on a Flat tax platform and I thought how great it was that someone wanted real change that would be fair. I am a sucker. It seems like it would be easier to fix the tax system, then create a new one, and then donkey that one up.

  85. comment number 85 by: The Olde Man

    Two things;

    1. Conventional Wisdom is that 10% of the income taxpayers currenntly pay 90% (or whatever) of the income tax. As it seems highly likely they will pay much less under the Fair Tax, who takes up the slack?

    2. I assume any money that leaves the US to be spent somewhere else (tourists foreign investment) will be taxed at the standard ‘fair’ rate before it leaves the country.
    Right?

  86. comment number 86 by: Shannon B.

    I’m just an 18 year old guy working on my construction engineering major right now, but I gotta say fairtax is the most common sense idea I’ve ever heard. I hope one day I’m rich, and when I am rich, isn’t it fair that I pay the same percentage of tax as someone who is middle or lower class? The point of percentages is that even if they are the same, if the sh*t I’m buying is more expensive, I’m still giving more to the government (AKA the Ferrari and tremendous house I plan on owning).

    Oh and “The Olde Man” many highly skilled and professional mathematicians and economists got together and found out that 23% is the number that would bring in the same amount of tax as we do now. And to your second point I’m not sure but I do know that every tourist who comes to the U.S. would become instant tax payers during their stay.

  87. comment number 87 by: Collector

    If the Fair Tax is a tax only on retail items, why is it desirable to leave retail merchants as the only tax collectors (under threat of fine or imprisonment for failure to comply) in the US. As retail businesses fail or as the owners end up in jail for making mistakes that the “massa’ won’t tolerate, there will be fewer tax collectors to involuntarily labor for the government,resulting in less revenue.

  88. comment number 88 by: Pessimistic

    I would love to see the “Fair Tax” replace the Federal Income Tax even if it did no more than save me the hours I spend every year wading thorough my 1040 and the eighty or so accompanying pages of instructions, worksheets, forms, and schedules. I shudder to think of what those with investments or employees must go through.

    Regarding the quibbling over the actual rate, the final price to the consumer will be what it will be, whatever the rate. If a $20,000 car is now $26,000 you can say that the rate is 23% of $26,000 or 30% of $20,000 - the price will still be $26,000.

    I envy those of you whose savings consist only of after-tax contributions. I have been retired for over ten years now, and every time I cash in some of my retirement savings I have to pay about a quarter of the withdrawal in taxes. In my case most of what I have in the bank consists of earnings on my savings, and the government says that I have to take out the earnings first, so I am still a ways off from getting any distributions tax free. I would just as soon get all my money out and pay the tax on it when I spend it.

    I would also like to see the tax applied to all transactions that require a receipt, not just to “new” transactions. As Hank noted, there are no “used” meals, groceries, or gasoline. I think the tax should apply to used houses, cars, boats, paintings, etc. The person selling his home could split the tax with the buyer - say 13% and 10% - but the government would rake in a lot of money, especially in the weeks following the NBA and NFL drafts and trade deadlines.

    One item that is seldom mentioned is the problem of “undocumented workers.” This would cease to be a problem, because they would no longer be a burden on the tax system. They would, by definition, pay taxes - unless they could live without making any transactions the required a receipt - and there would no longer be any tax advantage to an employer to hire them. They could, of course, still work for less pay, but an employer could not force them into doing so because of their legal status. Given that their cost of living would suddenly go up by 23% (or 30%, if you prefer), and that they would not receive the $2400 or so yearly “prebate,” many would probably find it too expensive to remain in the U.S.

    Finally, much as I would love to see the Fair Tax implemented, I have no expectation that it will happen. Congress will never give up its ability to buy votes by promising “tax rebates” or “tax exemptions” to various groups in exchange for those votes, and, given that a major portion of the work of the K Street lobbyists is to obtain tax breaks for their clients, they would certainly do everything they could to safeguard their jobs. Throw in the tax lawyers and others who live off the tax code and you can expect an avalanche of negative publicity about the Fair Tax.

  89. comment number 89 by: Henry

    I am late on this one. The one problem I have with the Fair Tax is the prebates. As you know food, clothing, rent, housing, everything medical which are necessities are taxed by Fair Tax, NO EXEMPTIONS. I would support the Fair Tax if food, clothing, rent, housing, everything medical are EXEMPTED from Fair Tax. With these exemptions, there is no need for a prebate. The prebate will already be in your pocket. Do you know how much will it cost to process the prebates and sent them out? It will cost in the millions and a waste of money. John Linder and the people involved with this proposal must have been on drugs when they wrote it.

  90. comment number 90 by: William R. Cousert

    Would the “Fair” tax be in addition to the current sales tax most states have?

  91. comment number 91 by: Mike

    As Henry mentioned, there would be no need for the prebate if food, clothing, rent, housing, everything medical are EXEMPTED from Fair Tax.

    If they are NOT exempt, then where would would the money come from to pay out the first round of prebates? Just asking.

  92. comment number 92 by: MadMax8600

    @Mike - Exempting items by category is neither fair nor simple. Respected economists have shown that the wealthy spend much more on unprepared food, clothing, housing, and medical care than do the poor. Exempting these goods, as many state sales taxes do, actually gives the wealthy a disproportionate benefit. Also, today these purchases are not exempted from federal taxation. The purchase of food, clothing, and medical services is made from after-income-tax and after-payroll-tax dollars, while their purchase price hides the cost of corporate taxes and private sector compliance costs.

    Finally, exempting one product or service, but not another, opens the door to the army of lobbyists and special interest groups that plague and distort our taxation system today. Those who have the money will send lobbyists to Washington to obtain special tax breaks in their own self-interest. This process causes unfair and inefficient distortions in our economy and must be stopped.

  93. comment number 93 by: Gordon Landry

    The fair tax would do away with Social Security taxes. Currently, employers deduct Social Security taxes from pay, match it and report the employee’s earnings to the Social Security Administration. When it comes time to receive your Social Security, the more earnings you have on which Social Security taxes have been paid, the more Social Security benefits you receive. If SS taxes and reporting of income is abolished, how do you figure out how much Social Security you are entitled to?

  94. comment number 94 by: mike

    Just curious how “fair” it will be to eliminate the roughly 3 million jobs involved in the current tax system. I’m not talking about just the “evil” IRS government employees, but also all the accountants who have spent a lot of money educating themselves to do the job that no one else can, because of our confusing tax laws. How many accountants have done this their whole lives and now they are expected to spend a ton of money to reeducate themselves and start a new career in their 50s and 60s. Good luck.

    I was curious what would keep people from buying things from say Canada, and ship them via UPS and avoid the taxes?

    Is everything you purchase on the internet now going to be taxed at 30%?

    What effect will this have on US tourism? I think tourists will go elsewhere if everything now costs 30% more.

    If there is no sales tax on used houses, only new houses, wouldn’t this drive up the demand for used houses and thus drive up the prices to almost that of a new house, with the 30 percent additional tax?

    I think a lot of people will cut their descretionary spending if everything suddenly gets much more expensive. I think that people will buy used much more and maybe online barter systems will set up. This will lead to an increase of the national sales tax rate to make up the difference.

  95. comment number 95 by: Ted

    I was refered to research fair tax after my initial response to the positive reception of Herman Cain at the recent republican debate. The fair tax favors people with more resources in that they spend less of a percentage of their income on necessities of life. The 6000 dollar prebate is an insult to middle class working americans the fact is with a consumption tax on new items the cost of everything else would go up with the demand of new goods trailing off. When consumption of new items falls of they would have to raise the flat tax to make up for the falling demand for new goods and maybe find another way to increase revenue. Also I believe that it would cause a huge black market as people avoid taxes making regular citizens criminals and what government bureau would combat that. The fair tax imo is essentially a tax cut for the rich don’t be fooled. The rich don’t spend their income they keep it and build wealth. If you already live in a big house, furnished and have 3 cars what do they actually need to buy besides consumer electronics? Fact is it would be more difficult to start a family if you think all prices would just be slashed automatically you are sorely mistaken no telling how long of a cycle of increased prices we would have to do for this experiment and it will be done on the backs of people that can’t afford it.

  96. comment number 96 by: MadMax8600

    @Ted:

    Did you actually do some research and look at the numbers before posting or are you just going on “gut instincts”? Over 20 million dollars in research have proven that the FairTax will be better for all income levels. Your comment regarding, “rich” people not consuming is ridiculous. The wealthy consume at a much higher rate than the poor. Who do you think buys all those expensive homes, cars, boats, jewelry, electronics, etc? America is a consumer driven economy and it’s not the poor that drive consumption. And as far as a “black market” goes, over 95% off consumer goods are purchased at large retail outlets such as Walmart, Costco, Target, etc, meaning they would be hard pressed to avoid paying taxes out of fear of losing their retail license. Plus only new goods are taxed. I doubt the average American will start manufacturing retail goods out of their basement.

    If you don’t support the FairTax, that’s your business, but at least do your research and understand the benefits before posting “gut feelings”.

    @William R. Cousert - “Would the “Fair” tax be in addition to the current sales tax most states have?”

    No state is required to repeal its income tax or piggyback its sales tax on the federal tax. All states have the opportunity to collect the FairTax; states will find it beneficial to conform their sales tax to the federal tax. Most states will probably choose to conform. It makes the administrative costs of businesses in that state much lower. The state is paid a one-quarter of one percent fee by the federal government to collect the tax. For states that already collect a sales tax, this fee proves generous. A state can choose not to collect the federal sales tax, and either outsource the collection to another state, or opt to have the federal government collect it directly. If a state chooses to conform to the federal tax base, they will raise the same amount of state sales tax with a lower tax rate — in some cases more than 50 percent lower — since the FairTax base is broader than their current tax base. States may also consider the reduction or elimination of property taxes by keeping their sales tax rate at or near where it is currently. Finally, conforming states that are part of the FairTax system will find collection of sales tax on Internet and mail-order retail sales greatly simplified.

  97. comment number 97 by: Ted

    I didn’t say manufacturing would occur in basements. I said there would be black market meaning illegal economies. These ideas on fair tax makes a lot of assumptions on peoples behavior would not change but stay the same with a huge consumption tax. Also just because someone spends millions on research doesn’t make it good research and unbiased. I equate fair tax with communism works well in theory doesn’t work in reality.

  98. comment number 98 by: MadMax8600

    I think you’re missing the fact that the FairTax is reality, has been around for a long time and is in use today. Most states have a sales tax. Retailers collect that tax and forward it to the state. What is easier, paying the sales tax at checkout or doing your state income taxes??? Also, I think it’s interesting that you use the term “huge consumption tax”, but don’t seem to get the point that it replaces the “huge income tax”. In other words, you get to keep your entire paycheck. If you make $10/hr and work 40 hours a week, you get to put $400/week in your pocket. In comparison, how much of that $400 do you get to keep today? Because of the uncertainty and stupidity of the current income tax, the answer would depend on what state you live in, how much your spouse makes, what tax bracket you’re in, how many deductions you have, etc.

    And in response to illegal economy: Illegal economies (for legal products) are typically based on tax disparity. For example, do you know why cigarettes are boot legged from NC to NY? Because the tax on Cigarettes in NC are $2 pack while in NY they’re $8/pack (plus or minus). The Fair Tax will be consistent nationally so there would be no Fair Tax benefit to move products across state lines. From an economic impact perspective, the majority of consumer goods are purchased from national retailers who would not risk losing their license. Again, look at the cigarette example. Even though there are a lot of boot legged cigarettes sold in NY, the percentage as compared to legal sales from national chains is negligible.

    Though unintentionally, you do bring up a good point about illegal economies for illegal goods or activities. Under the current income tax, illegal behavior such as dealing drugs, prostitution, hiring illegal aliens, robbing, etc, are not taxed. Under the FairTax, individuals who participate in illegal activities will still have to pay tax on goods and services they acquire with their illegal funds.

  99. comment number 99 by: Ted Skinner

    Something that has to be so vigorously defended and explained seems to fail the common sense test for me. It really boils down to do you think people or basically good or basically selfish or is government basically good or a necessary evil. I’m not gonna give the government a right to take my consumption so someone doesn’t have to pay capital gains on their investment income when I’m worried about feeding my family and keeping a roof over our head. I think this issue stinks of the haves trying to use fuzzy math to get a tax break when the issue should be reducing the size of the federal government instead. What happens when consumption doesn’t live up to expectation they gonna find another way to tax me.

  100. comment number 100 by: MadMax8600

    @Gordon. Under the FairTax employees are still required to report income to the gov’t. The reporting provision is independent of the unconstitutional 16th Amendment and is not touched by the HR25 FairTax bill. HR25 greatly simplifies reporting and eases the burden on businesses but assuming Social Security will still be solvent by the time someone retires, their SS Benefits are not affected by the FairTax.

    @Ted Skinner. What is more common sense than taxing consumption, ie. lifestyle, instead of income? The reason that the FairTax needs to be defended is because most people do not bother to do their research and get the facts before forming an opinion. Nearly everyone who has done their research supports the FairTax. In addition, we’re talking about a fundamental change in how the gov’t takes your money. To many people, change is scary. As of today, more than 50% of the US population pays no income taxes. They have grown so accustomed to sucking on the gov’ts teat that the mere idea of something different frightens them. Ironically, even these “tax eaters” would be better off with the FairTax.

    The greatest things in life need to be defended. Freedom and liberty are not free.

  101. comment number 101 by: Econ Guy

    The Fair Tax is a fascinating concept. I’m sure it will be debated and analyzed for sometime. There are always going to be Pros and Cons with any system; whether it be with the actual policy or possible unintended consequences and the incentives those create. I think the Fair Tax could be a better option if implemented correctly.

    I would like to point out a simple fact though - even if the Fair tax raises the same amount of money or even MORE money than our current system, our GOVERNMENT is still running an astounding annual DEFICIT including an additional $5 billion in compound interest added every day to our current debt.
    We cant have a serious debate about our tax policies if it doesn’t even make a difference in the overall financial health of the United States. We have to have real reform to our government SPENDING programs/habits and a balanced budget amendment before any real change makes sense. Just my two cents.

  102. comment number 102 by: Lloyd

    Apparently there are no persons adept at grammar school arithmetic, even the writers of the FairTax concept. If an item sells for $100 and the embedded tax is 23%, then the cost of the item less the embedded tax is $81.30 ($100 divided by 123%), not $77.00. Then you add back the Tax $18.70 (23% X $81.30) and the cost remains $100.00. No wonder the country is so screwed up; no one in this country even knows basic arithmetic.

  103. comment number 103 by: Henry

    This is another thing about Fair Tax is that the rich will gain on it. As you know Fair Tax was brought up by 3 wealthy businessmen. Texas billionaire Leo Linbeck is the founder and head of Fair Tax.org. Some people said that when the rich buy corporate jets, yachts, limos, mansions,etc, they will have to pay Fair Tax for these items. In reality, when the rich want to buy these luxury items, they will not buy them. Their corporations will purchase them as business expenses meaning no Fair Tax. I saw it in Fair Tax.org website. The rich really done their homework on this so call Fair Tax,

  104. comment number 104 by: MadMax8600

    @Henry, Can you please show me where on FairTax.org you saw this because it is the exact opposite of what will happen with the FairTax. In fact, in the FAQs there is a question specifically addressing your comment. I’ve posted it below and I encourage everyone to go to FairTax.org and learn the facts before posting hearsay, rumors and outright lies.

    Since business purchases are not taxable, how does the FairTax keep individuals from pretending to have a business so they can buy things tax free?

    The FairTax has several features that make it difficult and very risky for persons to have a scam business in order to purchase items tax free. First, in order for any person to purchase items tax free for business purposes, the business has to be a registered seller and possess a registered seller certificate issued by the state sales tax authority. Registered sellers are expected to file monthly or quarterly sales tax returns with the state (depending on sales volume). The certificate enables the business to purchase tax free from wholesale vendors, but the vendor must retain a copy of the registration certificate to justify not having collected tax on the sale. When a business purchases items for business use from a retail vendor, they have to pay the tax on the purchase and take a credit against the tax due on their monthly sales tax return. They must keep invoices/receipts to document what they purchased and the amount of the purchase. They might also make note of the purpose of the purchase on the invoice.

    Also, as registered sellers, they are subject to the possibility of being audited by the state. During such an audit, they will have to produce the invoices for all the “business purchases” that they did not pay sales tax on and will have to be able to show that they were bona fide business expenses. If they cannot prove this, then they will have to pay the taxes that should have been paid when the items were purchased, plus interest and penalties. The probability of being audited will be much greater than it is under the current system with its over 140 million tax filers. Under the FairTax, there will be less than 20 million businesses that will be filing sales tax returns and thus subject to the possibility of being audited. Thus, the probability of tax cheats getting caught will be much greater than it is today, making tax evasion riskier than it is today. Additionally, while the FairTax has much stronger taxpayer rights than does the current tax system, the FairTax legislation provides for a number of fines and penalties for noncompliance. It also authorizes a mechanism for reporting tax cheats and obtaining a reward. An example would be 1-800-TAX-CHET.

    Another potential scam would be to have a “fake” family business in order to buy things for family members tax free. The FairTax has a specific provision to prevent this. Although it does not prohibit businesses from providing taxable property or services as gifts, prizes, rewards, or as remuneration for employment, the gift, reward, etc. is considered to be the conversion of property or services from business use to personal use and is therefore taxable. Likewise, there is a similar provision to prevent abuse of employee discounts. Under the FairTax, employer-provided employee discounts over 20 percent are taxable. The term “employee discount” means an employer’s offer of taxable property or services for sale to its employees or their families for less than the offer of such taxable property or services to the general public. If the employee discount amount exceeds 20 percent of the price to the general public, then the sale of such taxable property or services by the employer to the employee is considered the conversion of property or services to personal use and is subject to tax. The taxable amount is the amount by which the discount exceeds 20 percent of the price to the general public.

  105. comment number 105 by: MadMax8600

    @Lloyd, you are confusing inclusive vs. exclusive. Inclusive means that the tax is already included in the price so a 23% inclusive tax is calculated by multiplying the full amount by 23% (ie. $100 * .23 = $77). What you’re doing is calculating an exclusive rate and that’s not right. Again, I would encourage you and everyone else to go to FairTax.org and learn the facts. The question of inclusive 23% or exclusive 30% is addressed several times. In brief, Income taxes are inclusive while sales taxes are exclusive. Since the FairTax will replace Income taxes, it only makes sense to use the same “inclusive” calculation. If you want to do a “Fair” comparison with the income tax using the exclusive rate then a 15% inclusive income tax rate would be 18% exclusive, 28% would be 39% and 38% would be 61%. Personally, I don’t care whether you use Exclusive or Inclusive as long as you’re comparing apples to apples and using the same method across all tax systems.

    I know the FairTax rate is 23 percent when compared to current income and Social Security rate quotes. What is the rate of the sales tax at the retail counter?

    30 percent. This issue is often confusing, so we explain more here.

    When income tax rates are quoted, economists call that a tax-inclusive quote: “I paid 23 percent last year.” For every $100 earned, $23 went to Uncle Sam. Or, “I had to make $130 to have $100 to spend.” That’s a 23-percent tax-inclusive rate.

    We choose to compare the FairTax to income taxes, quoting the rate the same way, because the FairTax replaces such taxes. That rate is 23 percent.

    Sales taxes, on the other hand, are generally quoted tax exclusive: “I bought a $77 shirt and had to pay that same $23 in sales tax.” This is a 30-percent sales tax. Or, “I spent a dollar, 77¢ for the product and 23¢ in tax.” This rate, when programmed into a point-of-purchase terminal, is 30 percent.

    Note that no matter which way it is quoted, the amount of tax is the same. Under an income tax rate of 23 percent, you have to earn $130 to spend $100.

    Spend that same $100 under a sales tax, you pay that same tax of $30, and the rate is quoted as 30 percent.

    Perhaps the biggest difference between the two is that under the income tax, controlling the amount of tax you pay is a complex nightmare. Under the FairTax, you may simply choose not to spend, or to spend less.

  106. comment number 106 by: MadMax8600

    @Econ Guy, since I’m on a roll, I’ll address your comment too. First, I will say that I absolutely agree with you that we need significant spending reform, however the FairTax has nothing to do with spending. It addresses the complexity, unfairness and 67,000 pages of loopholes and special interests found in the current tax system. In other words, it is not meant to address spending and has nothing to do with spending.

    That said, as a side effect, the FairTax brings transparency to gov’t spending. Every consumer in America will see how much the gov’t spends with every retail purchase made. For every dollar purchased by every person in the US, the gov’t spends 23 cents. So what will happen when the gov’t wants to increase spending? Right now they can manipulate the 67,000 pages of the tax code, add hidden taxes, take away “incentives”, target a small group of people, etc, and they can do it all in the background with no one really noticing. But with the FairTax their only option would be to raise the 23% consumer tax that everyone person pays (or borrow and create more debt, but that’s another issue altogether). Now what do you think would happen if gov’t tries to increase a tax that every single person sees and pays? Do you think that would be more difficult than the current system?

    To reiterate, the FairTax is about replacing the current income & payroll tax with a fairer, simpler, transparent tax system. It is revenue neutral so has nothing to do with spending. However, there are many side benefits, including making gov’t spending more transparent.

  107. comment number 107 by: Anonymous

    I like the ‘pre-bate’ concept. It gets to become the Guaranteed Minimum Income needed just to survive. That becomes the safety-net for every child and individual. It will result in less suicide, incarceration, and violence; and create a saner, more honest, and self-valuing citizenry. It will nurture the individualism America is known for.

    If you could add that to a transaction tax on every transaction over a month’s wages, (0.05%), I’d holler haleluya!!!

  108. comment number 108 by: Cara

    One thing that may or may not have been hit on here. When everyone is feeling sorry for the “IRS people and the accountants ” who will lose their jobs, they are failing to realize that there will be job growth! When it does not cost anything tax wise to produce goods, every product company will want to have a base here. It will be cheaper for them and create jobs. New jobs boosts economy and stimulates spending…and spending gets us more tax money. It’s a beautiful thing ;)

  109. comment number 109 by: Henry

    Cara: Under Fair Tax, people in the IRS will not lose their jobs. The IRS will become the Sales Tax Bureau. A new agency. It is in their proposal. Another new agency will be created: the Excise Tax Bureau, not to mention keeping the Bureau of Alcohol, Tobacco and Firearms collection agency. 3 tax collection agencies. Anonymous: I would not like the prebate concept. The Republican Party has been behind the Fair Tax. According to the Fair Tax plan, the Social Security Administration processes and handles prebates. This same administration processes S.S. benefits for retirees, seniors, Medicare and Medicaid. The Republican Party has been against this agency calling S.S. benefits, entitlements but yet wants this agency to handle the so-call prebates. They can’t have it both ways, for or against. They are thinking about privatizing S.S. Even one Republican Presidential candidate called S.S. a Ponzi Scheme. Fair Tax looks good on paper but what is it like in reality?

  110. comment number 110 by: MadMax8600

    @Henry - Please stop with petty partisan bickering. The Republican party is NOT behind the FairTax. The FairTax is a bi-partisan, independently studied piece of legislation. Over 20 million dollars of non-government money has been spent studying the FairTax. In fact, if you actually do some research, the FairTax is a Democrats wet dream because it is extremely progressive and actually taxes wealth. All those millionaire/billionaires the left hates so much and wants to increase income taxes on don’t pay income taxes. A majority of their money comes from wealth and the FairTax will finally tax their wealth at the point of consumption. With respect to Democrats, the FairTax was gaining traction in the Democrat party until Nancy Pelosi realized that the FairTax would eliminate much of the power of the Federal gov’t to reward special interest contributions by providing them tax favors so she put a gag order on the FairTax. Even so, several Democrats have broke rank and openly support the FairTax.

    @Cara, No one should feel sorry for IRS agents. The typical IRS agent is smart and good at math. Those are very employable skills. Besides, the FairTax will transform the country into a nation of investors. A high level H&R Block executive came out and said that he fully supported the FairTax because his employs would be much better off helping people invest and grow their money than filling out compliance forms.

  111. comment number 111 by: Henry

    @MadMax8600: I did do some research and there was no 20 million research done studying the Fair Tax. I saw it in The Book, The Crook and The Followers under Fair Tax Fraud. If the research was done, how come there are no “Research Papers” on the matter. The Fair Tax people said they have the ” Research Papers” but why don’t they bring it out? You notice they don’t say anything about the research. The Fair Tax was thought up by 3 very wealthy businessmen. The word “Fair Tax” was first used in 1983. The Fair Tax Act-1983. The authors were Bill Bradley and Richard Gephardt. This act was on tax reform and the VAT. It had nothing to do with national sales tax. The Fair Tax group used that word for their proposal. I’ve done research on it and 20 million research is a fraud. If they done the research, PROVE IT with the Research Papers. It is true about the so-call prebates what I have written. I always say exempt basic necessities from Fair Tax and no prebates. The Republican Party IS behind the Fair Tax.

  112. comment number 112 by: nawe

    I am new to this discussion of the Fair Tax and find it intriguing. I am just getting started on research, and as with all things of this ilk there are many sides and opinions. The question that comes to my mind is: the state income taxes, I assume they will stay in place, which means the states will receive more income because of the Pre-bate will be taxable and the increase in everyone’s income. Am I making a correct assumption?

  113. comment number 113 by: Henry

    nawe: This so call Fair Tax will not eliminate any state income. It will increase it because the states will have to pay the Federal government. It’s all in Fair Tax fineprint.blogspot.

  114. comment number 114 by: Dave

    A lot of the arguments against it have no real information backing it up. A good is sold for $100 and from that $23 is handed over to the government, the tax is imbedded into the sale as it is today.

    Yes some states will have state income taxes. This plan only addresses the federal income tax. I am lost as to how it will increase it? Do not give me a blog, a blog is about useful as people typing on here. I am a millionaire, I typed it must be true. Do states pay the federal government today? This tax will be collected at the cash register, and I would imagine companies collecting state sales tax at the register would pay the fair tax the same exact way.

    @henry, if you want research papers contact congressmen John Linder I am sure his office will put you in contact with a source.

  115. comment number 115 by: Henry

    @Dave: I don’t care about John Linder or any people connected with Fair Tax and especially Neal Boortz. If I want information on this so call Fair Tax, I look up Fair Tax-Wikipedia. They are up front with no political connections. How you know if those so call research papers are for real? You’re a millionaire, O.K., I’m retired and Fair Tax will not work for me. I check up on it. Don’t say it will, it won’t.

  116. comment number 116 by: Henry

    @Dave: I forgot to say this. There was a debate of Republican Presidential candidates. Herman Cain introduced his tax plan. It is called 9-9-9. 9% sales tax, 9% income tax and 9% corporate tax. What happen on his endorsement of the Fair Tax? He knows it is not going to go. The Fair Tax will not work for me. Don’t say it will. As being retired, I talk with other retirees. Some of them don’t pay any Federal taxes. I don’t care about their so call Fair Tax calculator. I rather use my own calculator. As for John Linder, I don’t care for him or any people connected with Fair Tax.

  117. comment number 117 by: MadMax8600

    @Henry. Over 20 million dollars of non-gov’t funds have been spent researching the FairTax. You ask for research check out, http:/www.fairtax.org/site/PageServer?pagename=about_research. There are roughly 5 research papers for 10 different industries. What’s interesting is that you say you want the research papers then when Dave sends you a recommendation you don’t believe him.

    Also you claim that you did your research at Wikipedia. I’ve checked Wikipedia and there’s nothing on Wikipedia that counters the claims of FairTax supporters. What did you find that makes you believe that as a retired person you would be worse off? The FairTax will be better for most retired people (unless you’re extremely wealthy or an illegal).

    Can you provide some research that shows you’d be worse off or is your entire argument based off of you not liking it so it has to be bad?

  118. comment number 118 by: MadMax8600

    @Nawe - If you continue to do your research you will discover that there is a provision in the FairTax that allows states to take advantage of the FairTax. Here’s the appropriate FAQ from Fairtax.org.

    How are state tax systems affected, and can states adequately collect a federal sales tax?

    No state is required to repeal its income tax or piggyback its sales tax on the federal tax. All states have the opportunity to collect the FairTax; states will find it beneficial to conform their sales tax to the federal tax. Most states will probably choose to conform. It makes the administrative costs of businesses in that state much lower. The state is paid a one-quarter of one percent fee by the federal government to collect the tax. For states that already collect a sales tax, this fee proves generous. A state can choose not to collect the federal sales tax, and either outsource the collection to another state, or opt to have the federal government collect it directly. If a state chooses to conform to the federal tax base, they will raise the same amount of state sales tax with a lower tax rate — in some cases more than 50 percent lower — since the FairTax base is broader than their current tax base. States may also consider the reduction or elimination of property taxes by keeping their sales tax rate at or near where it is currently. Finally, conforming states that are part of the FairTax system will find collection of sales tax on Internet and mail-order retail sales greatly simplified.

  119. comment number 119 by: Henry

    @MadMax8600: Are you retired? Don’t say Fair Tax would be better off for retirees until you experience retirement. Some retired people live on fixed income and I was lucky I had a retirement plan set up when I started working at 19 in 1966. I am 64 now. Some retirees I talk to, never set up a retirement plan. They only rely on Social Security. On my part, S.S. is only part of it. That 20 million dollars research and they got 5 papers on it? I went to their website and they only show 2 people issue statements but there were websites stating that there was no research done. One of them was The Book, The Crook and the Followers by Fair Tax Fraud. Some research. I don’t need any research that Fair Tax will not work for retirees. You experience retirement and living with a fixed income before you ever make a statement like that.

  120. comment number 120 by: Henry

    @MadMax8600: Also I still prefer Fair Tax-Wikipedia. They are up front with the information with no political connections and no ties with Fair Tax.org. And Wikipedia is not the only source of information, there are other sources.

  121. comment number 121 by: MadMax8600

    @Henry, the link I sent you has 10 industries listed. Click on any industry and there are roughly 5 research papers per industry, so that yields roughly 50 research papers (they could be doubled up, I didn’t go through all of them). I don’t have an issue with Wikipedia as a source of information. From what I could tell the information was accurate and consistent with what I’ve seen on other sites.

    Thank you for your background but from what you posted, you would be better off with the FairTax. In fact, SS will be strengthened under the FairTax. You keep saying the FairTax won’t work for retirees, can you show some facts? You said that you don’t like the FairTax calculator because you have your own calculator, can you post your calculator?

    BTW, I’m familiar with the FairTaxFraud site and it is filled with so many lies, distortions and half-truths that it has been debunked numerous times. For example, its ironic that the author uses Paris Hilton as an example of why we should keep the income tax. What he fails to mention is that Paris Hilton doesn’t work. She doesn’t make income so the reality is that she doesn’t pay any income taxes. He also mentions that “The only things they (Paris Hilton) would need to buy are food, electricity, heat, gas, and health insurance”. Here’s a shocker for you Henry - Paris Hilton probably buys more stuff in one day than you earn in social security in one year (tax free for her by the way). In fact, check out the link below. The title, “Paris Hilton drops $23,000 in Shopping Spree”, (a quick Google search reveals it’s just one of several multi-thousand dollar a day shopping sprees she’s done just this year). Under the current income tax, Paris Hilton pays 0% taxes because her money is based on wealth not income. If we had the FairTax her $23,000 shopping spree would’ve netted the Federal Gov’t $5,290 in taxes.

    http:/www.tmz.com/2010/04/30/paris-hilton-shopping-spree-live-on-sunset-doug-reinhardt-breakup-video/

    Look, I don’t have a problem with you not supporting the FairTax. There is always a small minority who look at the facts and then somehow twist them to fit their beliefs. The bottom line is that the FairTax has been studied by hundreds of Economists. They have concluded that nearly everyone would be better off with the FairTax, including the retired and especially the poor. If you can show me how you would be worse off by providing your numbers or calculator, I would love to look at them.

  122. comment number 122 by: MadMax8600

    BTW Henry, I’m curious. You said you have a retirement account. I’m assuming it’s a traditional IRA and that you’re paying taxes on it when you take it out, correct? Do you realize that under the FairTax you wouldn’t pay any taxes on that money? You would also get a prebate check every month for all the taxes paid on essential goods and services up to the poverty level. You would also continue to receive your social security check, which would be strengthened by the FairTax. All this sounds like you would be better off with the FairTax than the current income tax. What am I missing?

  123. comment number 123 by: Henry

    @MadMax8600: Don’t tell me I’ll be better off with Fair Tax. I’m going to say again, Are you retired? Do you know how it is to be retired and living with a fixed income? I don’t care about their so call research and what Paris Hilton does. Rich people have ways to get around Fair Tax, they are the ones who have brought it up. Texas billionaire Leo Linbeck is the founder and head of Fair Tax.org. You said we are the minority? That is your conclusion. We could be the majority. In Missouri, 80% of the voters rejected Fair Tax as the state tax in the last election. Fair Tax taxes food, clothing, rent, housing, everything medical, prescriptions and so on which are basic necessities. I saw their so call prebates table. I always say exempt basic necessities from Fair Tax and no prebates and then I will back it.

  124. comment number 124 by: Henry

    @MadMax8600: I look up Missouri vote on Fair Tax for state taxes. The measure did not appear on the ballot for their Nov., 2010 election. Too much opposition to it. The people in Missouri don’t like this type of tax.

  125. comment number 125 by: MadMax8600

    Henry, what do you consider necessities? Food? Great so you exempt potatoes, right? How about Potato Chips? How about French Fries? You say everything medical, does that include cotton balls? How about aroma candles? How about vitamins and if vitamins are ok, does that include products like 5 Hour Energy which contain a bunch of B-Vitamins? Do you hear Pandora’s box opening? Do you see the problem with exemptions? As soon as you open the door to one exemption you will see a flock of lobbyists storm the hill faster than flies on sh..honey. What if I told you that instead of allowing the gov’t to pick winners and losers, I would just credit you all the taxes on your first 25,000 in income? That way you can decide what’s a necessity. That’s exactly what the FairTax does.

    I did a quick Google search on Missouri FairTax and don’t see it ever going to a vote. Can you post a link showing an 80% rejection rate? Regardless, the Missouri Sales Tax is not the FairTax. From what I read, Missouri is looking to replace it’s income tax with a sales tax. That doesn’t include the highly regressive payroll tax. It doesn’t include the corporate tax, capital gains tax, death tax, alternative minimum tax and so on. Also it doesn’t look like it’s an inclusive tax but an exclusive tax, which is a big difference. Though it shares some elements of the FairTax, it’s not the same thing.

    And finally, you claim that the FairTax would be worse for you and you’ve run your own calculations. Please post your calculations. I want to see the numbers that show you worse off.

  126. comment number 126 by: Henry

    @MadMax8600: And I ask you a question and you seem to avoid it. I ask you are you retired? Do you know how if feels to be retired and living on a fixed income. Now we are going to look at one word, “Reality”. Fair Tax was first introduced to Congress in 1999. When it was introduced, it had 72 co-sponsors. Now there are about 60. About little over 50 in Congress and about 5 or 6 in the Senate. Where has Fair Tax gone so far? Saxby Chambliss (sponsor of the Fair Tax in the Senate) was interviewed by newsmen and he was talking about reforming the present system. Herman Cain endorsed the Fair Tax, introduced the 9-9-9 tax plan. These people are talking about reality. You talk about we are the minority, that is your conclusion. Majority of the people never heard of it. There is nothing in the newspapers of it, maybe some small article of it. Most of it is in the internet. I told some people about it. I told them that they would eliminate the income tax and replace it with a national sales tax of about 23-30%. The tax would be on food, clothing, rent, housing, medical and so on and we were suppose to get a prebate. Prebate goes by family not by income. They laughed at it and they said it will never go. They did not like about the tax on rent. It has been 12 years since Fair Tax has been introduced. Where has it gone? In July, the House Ways & Means Committee had a hearing on it. It did not do well. The Committee went on to other issues. Fair Tax is an illusion, a dream. Maybe it is a good tax system but we have to look at reality. They talk about repealing the 16th Amendment. It requires a Constitutional Convention which will introduce legislation to Congress requiring 2/3 vote of each House of Congress and 3/4 ratification of the State. Last time they did this, it was Prohibition. It took 17 years. But this was different. This was an amendment on a vice, a lifestyle. Do you know Congress does not need the 16th Amendment to impose an income tax? It was done during the Civil War. Look at the states with state income taxes. There is nothing in their state constitutions that say that they can do it or not. Look at reality.

  127. comment number 127 by: MadMax8600

    I’m not retired, now show me your numbers that prove you would be worse off with the FairTax than the current system. You claim that you would be worse off and that you have your own calculator. Post your numbers and prove that you would be worse off with the FairTax than the current system.

  128. comment number 128 by: Henry

    MadMax8600: So finally you said you’re not retired. You withheld that. Some retired people on S.S. don’t pay Fed. income tax and with Fair Tax. they will be pay Fed. tax through their rent, medical, doctor visits, prescriptions, hospital stays and so on. Imagine a $600 rent with $138 tax added on to it. That is $738 rent. On gasoline with Fair Tax, add a dollar more over existing prices. On food, there will be Fair Tax on food while food is exempt from state sales tax. Plus utilities, Fair Tax on them. Unless retirees goes to farmers market for food. These markets are held on weekends and nobody will enforce anything. Elderly people use more medical than anyone else. These so call prebates will not cover 2/3 of this. These are my figures. I am looking at what the retirees go through. You have to experience retirement to see this. I say look at reality and not at illusions.

  129. comment number 129 by: MadMax8600

    First off your assumption that prices would go up is a fallacy, especially gas since a large portion of gas is hidden taxes. Secondly, I didn’t withhold anything. Whether I’m retired or not is irrelevant, you mentioned you would be worse off with the FairTax than the current system without stating any facts. I asked you to prove it. To prove you’re worse off post how much income you earn on a yearly basis, what your current tax liability is (if any) and how much you spend. Then compare that to the FairTax. Your example above only includes rent. Saying “will not cover 2/3 of this” without identifying what “this” means nothing.

    In fact, let’s look at your numbers. The 2009 Prebate for a couple (no children) is based on a poverty level of $21,660 or a yearly refund of $4,982 (415 monthly). If Seniors are making over the poverty level then they are paying Federal taxes on it, so those seniors that you mention who are paying no Fed taxes are below the poverty level. Subtract your rent example of $138, you get $277. That leaves a monthly spending level of $1,204 tax free. Are you spending more than $1204 a month (not including 600 in rent)? If so, then you’re above the poverty level and paying Federal taxes on your income. If not, then the Prebate is putting extra money in your pocket every month. Either way, above or below you’re spending less money on taxes under the FairTax than the current system.

  130. comment number 130 by: Henry

    MadMax8600: That is why I’m still against the Fair Tax. Exempt basic necessities from Fair Tax and no prebates. The Republican Party is behind the Fair Tax. According to the Fair Tax proposal, the Social Security Administration will process the prebates. As you know this agency processes S.S. benefits for retirees. The Republican Party has been against this agency calling S.S. benefits, entitlements but yet wants to use this agency to process these so call prebates. They can’t have it both ways, for or against. As you look at the GOP debates set by the Tea Party, Gov. Perry was calling Social Security a Ponzi Scheme. These people are talking about privatizing Social Security. They even talk about having the states handle Social Security. If the GOP considers S.S. benefits for retirees, entitlements, then the prebates are considered entitlements. To me prebates are considered money going in, money coming back. It will cost the Fed. Government billions to process and send the prebates out. A total waste. Exempt basic necessities from Fair Tax and no prebates.

  131. comment number 131 by: MadMax8600

    Henry, you are talking in circles. Did you read my comment on what constitutes a basic necessity? Do you believe that if you open the door to one exemption the flood gates won’t open to all the rest? Just answer this one simple question. Do you exempt potatoes and if so, do you exempt potato chips or french fries? Do you see the problem. What you consider a necessity, someone else could consider a luxury.

    The Prebate is the easiest way of exempting basic necessities. And I have proven with numbers and real money, that Seniors are better off with the FairTax than the current income tax. If you refuse to believe the numbers and you still can’t see this then all we’re going to do is argue opinion and that’s a waste of time.

  132. comment number 132 by: Henry

    @MadMax8600: You’re right and I can’t talk with someone who is obsessed with Fair Tax. Fair Tax is nothing but an illusion. How come those co-sponsors of Fair Tax are not pushing it. Saxby Chambliss and Herman Cain. They are now talking about different tax plans. These men are into reality, not fantasy. Those prebates are nothing but a scam and a gimmick. They are not the easiest way to exempt. Potatoes are exempt from any state sales tax but potato chips and french fries are not. When you go to a grocery store to buy food and items, look at the sales receipt and see which items are exempt and which are not by any state sales tax. It doesn’t take a genius to see that. They can exempt basic necessities from Fair Tax and no prebates. The prebates are the problem. In some circles, they are considered entitlements. This is the con on prebates: The prebate that is built into the Fair Tax system could actually do more harm than good in a long run because it would effectively put all Americans ( except those without S.S. numbers) on a government dole, and this could create problems with dependency and the “free lunch” mentality as experienced by recipients of current government welfare programs. That is the reason I’m against the prebates. This is reality and I’m not talking in circles.

  133. comment number 133 by: MadMax8600

    So your issue is the Prebate and since you continue to refuse to post your income and spending and prove why you would be worse off under the FairTax, let me see if I can understand your concern. Your concern is that you (and other retires) spend more on necessities than you would receive back under the Prebate. Is that correct? What I would say is that’s impossible. Either you make more or less than the poverty level. If you make less than the poverty level and you spend it all on necessities then the Prebate will actually give you more money back then you spend. If you earn more than the poverty level then you will only be Prebated up to the poverty level and everything over that will be taxed at 23% inclusive. However, don’t forget that under the current system everything over the poverty level will get taxed as income, so you will still be better off.

    And let’s talk reality for a moment. I think you have a misunderstanding of the Prebate. The point of the Prebate is to exempt all necessities up to the poverty level, not exempt ALL necessities. The current income tax does NOT exempt all necessities. If you make 50K and spend it all on food the gov’t still taxes you on the 50K in income (minus standard deductions which results in taxes much higher than the FairTax). Also, let’s be clear on necessity? Necessity is what you need to survive. A certain amount of food is a necessity but unlimited food is not. Buying bread and water is a necessity, buying 20 lbs of caviar and $5,000 in steaks is not and under your plan those luxuries wouldn’t be taxed. You can spend $600 on rent while someone with a lot more money could spend $25,000 a month in rent. Is that $25,000 a month rental really a necessity? Under your plan rent wouldn’t be taxed. See what the FairTax does. It taxes wealth not income. Those trust fund babies who never worked yet live like Kings (or Queens) will finally pay taxes on their wealth.

    Also do you consider the earned income tax credit an entitlement? Everyone gets it. Under a Flat Tax, if the first 25,000 is exempt from taxes would you consider that an entitlement? That’s what the Prebate is. It exempts the first 25,000 (or whatever the poverty level is for your situation) in spending. However, unlike an income tax where the gov’t forcefully take your money every month and then gives it back at the end of the year, the FairTax doesn’t take your money so the only way to get it back is through the Prebate.

    Lastly, you should do some research before posting about Cain. Herman Cain is a strong supporter of the FairTax. Check out his plan and you will see that the FairTax is specifically mentioned as the final tax system.
    http:/www.hermancain.com/images/economicgrowth.pdf

  134. comment number 134 by: Henry

    @MadMax8600: On Herman Cain, I did check out his tax plan. It is called 9-9-9 tax plan. 9% income tax, 9% sales tax and 9% corporate tax. Herman Cain and Saxby Chambliss are for the Fair Tax. But these people are looking at alternatives. They know that Fair Tax is not going to go. It did not do well in the House Ways & Means Committee hearing. The prebates are the problem as I stated in my last comment. Other people and politicians see that as a problem. It puts everybody with legal S.S. numbers on a government dole. I’m not the only one who sees it, there are others. Plus the Social Security Administration that is going to process the prebates. The Republican Party is against this agency calling S.S. benefits, entitlements. They are talking about privatizing S.S. The Republican Party is behind the Fair Tax. For or against. Gov. Perry calls S.S. a Ponzi Scheme. This is reality.

  135. comment number 135 by: MadMax8600

    @Henry. So now you’re saying that you don’t support the FairTax because it would be too difficult to pass. That’s a lot different than your original post which was that you didn’t support the FairTax because it was worse for retired people. I’m glad that you now admit that the FairTax is in fact BETTER for retired people.

    I will agree with you that it will be very difficult to pass the FairTax, no FairTax supporter that I know, disputes that. The Federal gov’t is entrenched in special interest groups, back door deals, bribes and social engineering. They use the current Income tax as their own personal piggy bank, giving out special favors for campaign contributions. Change is hard. However, just because something is hard, doesn’t mean the people shouldn’t fight for it. Ending slavery was hard, giving women the right to vote was hard, passing then repealing prohibition was hard. Heck seceding from the British and starting the greatest country in the world was hard. But if the final result is better for everyone then it’s worth pursuing.

  136. comment number 136 by: Henry

    @MadMax8600: I’m looking at reality. I don’t support any tax system. There is no such thing as a fair tax. Every tax system has its faults. The one problem with Fair Tax is the prebates in which I discuss in my previous comments. Comment#131. I have to let go on this discussion. Something happen in my family. We had a good discussion, pros and cons. Take care until next time.

  137. comment number 137 by: warrior wheatman

    Thank you MADMAX for your patience. You did a good job addressing the minutia of reality at the bottom. Henry portrayed and feared everyone being on the dole with Republicans in charge and having everyone’s social security number. He fears their ideology and the BIG BROTHER reality that would ensue.

    As is, everyone has to report their income with a SS# or taxpayer-identification number; and all poor and destitute needing consideration for dental, health, etc already are looking at Big Brother.

    What I like of Fair Tax is the consideration of a new direction. As I stated in #107, any citizen should get a Guaranteed Minimum Income to cover at least the bare necessities we all have. You call this a Prebate. This applies to each and every child and dependent, immaterial who buys the food. If you still call this a Prebate then, we agree. Special consideration agencies (like welfare or housing support or heating subsidies) will still be with us, however: the DOLE mentality will be broken for all who are positive. The Rebate (GMI) automatically deposited into an account needs not be touched. One can be free of Big Brother this way, and not be taxed on blood, sweat, and tears (income).

    I do however still insist on taxing property and its transfer: A Fair Tax applied to all assessed exchanges, or a transaction tax of 0.005% on all financial instruments greater than the yearly poverty level. This would apply to stocks, pay-outs, and account closings. (%50 on $10,000). This will leave the Fair Tax more manageable at the cash register.

    I like the simplicity of the Fair Tax, and the ridding of bureaucracy with its loopholes. I forsee a future where all work is automated, and blood-sweat and tears is rewarded for its contribution. Thank you MadMax for yours.

  138. comment number 138 by: MadMax8600

    @Warrior - I appreciate the feedback. You can think of the Prebate as the guaranteed minimum income to survive, so we’re on the same page there. I’m more than happy to consider ways of making the FairTax better but we’ll have to agree to disagree on the “taxing property & its transfer idea”. I don’t see how that will simplify the tax code nor make the FairTax more manageable at the cash register. I would also worry that this would lead us to the same class warfare that we have today. The transfer rate would start out small such as your .005% but then I fear would quickly escalate because it would really only tax a small portion of the population. This is the same divide & conquer tactic that Congress uses today with the income tax. 23% inclusive means that the FairTax is included in the price of every item bought. So if the price on the shelf says $10, that means the consumer pays 10. The $2.30 in FairTax is managed by the Cash register and in fact is even simpler to handle than any current sales tax.

    Once again, I’m all for ideas to make the FairTax better but creating new tax basis and singling out specific transactions for taxation are what got us 71,000 pages of the income tax code.

    @Henry - We can agree that all taxes suck but if you’re looking at reality, then there’s a reason for the saying, “there are only two certainties in life, Death & Taxes”. The word “Fair” is subjective so instead let’s use principals we can all agree on. The principals of Taxation could be defined as:

    Simple
    Voluntary
    Fair - As in it protects the poor and treats everyone else equally.
    Transparent
    Border Neutral
    Industry Neutral
    Good for Social Security & Medicare

    Find me a tax system that meets all these principals better than the FairTax and I will support it.

    All the best with your family situation. I hope everything turns out ok.

  139. comment number 139 by: warrior wheatman

    Response to MadMax:

    You’re like a dog with a bone. You even repeat yourself for the ignorant. I wish I had you on my side.

    So we agree on a Guaranteed Minimum Income for every citizen, child and dependent? Please state so.

    Now, If you will apply that Fair Tax on all sales of property — houses, stocks, patents, and financial instruments — I think you might have won me over.

    You see, we have a problem with ‘Property’ and with automation. Even communist China now is ruled by their capitalists - still stuck with that concept of property as theirs in perpetuity. Big Brother there is now into automation.

    We’ve come out of the recession — but have used the cheap money on technology — replaced jobs with machines. Technology has automated factories, freed women from the house and kitchen, has left the high school crowd of the past generation in the unemployment lines. Isn’t it about a fair wage, it’s about benefits and the ability to maintain a decent quality of life and an open future. As a elder working-stiff: when doctors, lawyers, and good auto-mechanics are only affordable by young professionals and the union-protected, there is an economic/culture gap of not being able to keep up with the changes ahead.

    There is a convergence of automation and communication ahead. As a people, we have never dealt with this degree of connectedness before in our society. And this is going to bring havoc, not just to the economic sphere, which it already has, but also to the political sphere, as well. The Class War we abhor, with a resulting Big Brother rule, is about upon us.

    Yet, this is the future we were all dreaming about. We are living in the days of automation, when all hard work is done by machines. Automation allows anyone with a smart idea to make the world better. Anyone can be enormously rich if that’s desired. Everyone can do the work that they prefer; quit, or start something new and promising. Except that we need to reform our consensus of PROPERTY.

    If ownership is perpetual, then the disadvantaged will forever be struggling to make ends meet; blood, sweat, and tears will be the lot of the underclass. Of course it’s possible to have a fair economic system. It’s just that those with the power to bring it about have no interest in doing so. Big Brother will rule a two class system.
    As we enter the realm of total automation, the concepts and values of work and ownership need to be reformed into contribution and stewardship — stewardship of property.
    I’m reminded of the LUDD REBELLION. Ned Ludd’s argument was that inventions (such as the spinning wheel and weaving looms) are property of people - not of factory owners. Ludd put up a valiant fight that some might have called communist, but he didn’t have the accounting technology we have today. So he lost.

    I wish you would reflect on this. Intellectual Property in Public Domain belongs to the People. A People’s Tax on all automated fabrication (maybe at the source), should be dedicated to healthcare and education. Beyond that, it is akin to your Fair Tax.

    I think signing up to Fair Tax (as is), is selling your soul to Big Brother. I pray to have your insight on my side. It will be a bitter fight.

  140. comment number 140 by: MadMax8600

    Hi Warrior - Yes, I said we were on the same page regarding the Prebate being the guaranteed minimum income, so I do agree with you on that.

    Also, large durable goods like homes, cars, boats etc are all subject to the FairTax. As far as stocks, “The purchase of stocks is considered a purchase for investment purposes and not personal consumption so they are purchased tax free. The service fees charged by the broker, however, are personal consumption and therefore subject to tax.” The same holds true with financial instruments. If they are purchased for the sake of investment they are not taxed. Instead all services associated with the sale or purchase of such instruments are taxed.

    I don’t however agree with your assertion that automation will create a 2 class system. Yes for every ATM put in service it may put a teller out of a job but you need people to make the ATM. You need programmers to write all the code. You need machinists to design the parts. You need drivers to deliver them. You need security guards to fill them. You need mechanics to maintain them. And, you need tellers to take the deposits out and deposit them. Automation does not destroy jobs, it instead transforms and evolves the workforce.

    I would argue that it’s the current tax code (and gov’t) that is creating the 2 class system. The Rich can afford to hire lobbyists to manipulate the tax code in their favor. The poor are caught in the vicious cycle of poverty because their lifestyle is subsidized by the gov’t and the only way to break that cycle is to give up their subsidies. This leaves the middle class who gets squeezed and shrunk.

    The FairTax frees everyone to produce. It creates a social safety net with the Prebate and rewards innovation and labor. Unlike the current tax system the poor don’t lose their benefits if they try to better themselves. Jobs can be created with no tax implications. Human innovation will always thrive. The innovation and automation of today will be replaced by the innovation and automation of tomorrow, all created by the entrepreneurial spirit of the people.

    FairTax: Those Who Understand It, Demand It.

  141. comment number 141 by: Henry

    Hi, Max. The family situation I have is my father. He is 95 and I don’t think he is going to make it. One question I have is the prebates. The Fair Tax is a Republican tax plan. According to the Fair Tax plan, the Social Security Administration will process and handle the prebates. The Republican Party has been against this agency and one of them is caling Social Security a Ponzi Scheme. They even talk about privatizing Social Security. If that happens and if Fair Tax goes through, who will handle and process the so call prebates? You look at the debates and the Republican Party has been on S.S.’s throat for a while. I tried to put this through but you have been avoiding this topic. I am still against the prebates.

  142. comment number 142 by: MadMax8600

    Henry, I’m sorry to hear about your father and I wish you & him all the best.

    However, with regards to the FairTax, I am tired of hearing the lies that the FairTax is a Republican invention. It is party neutral, bi-partisan. Until you stop spreading this lie then your argument will hold no credibility. Here’s the reality, before the economists started they were told to create a tax system given 7 guiding principals (Pay attention to the last one):

    Simple,
    Fair,
    Voluntary,
    Transparent,
    Border Neutral,
    Industry Neutral,
    GOOD FOR SOCIAL SECURITY AND MEDICARE (See this one, it’s important)

    This is not a site to debate social security but regardless of what party you’re affiliated with, everyone knows its broken. Between SS & Medicare there is an estimated 40 - 100 Trillion in unfunded liabilities. The entire GDP is only 14 Trillion. While the Republicans are trying to reform and save it, the Democrats are burying their heads in the sand, and twiddling their thumbs. Either way, the FairTax is GOOD for Social Security because it increases the tax base and creates economic growth. This in turn is a huge boost for Social Security. I will say this one last time, ONE OF THE FOUNDING PRINCIPALS OF THE FAIRTAX IS THAT IT HAD TO BE GOOD FOR SOCIAL SECURITY AND MEDICARE.

    With all due respect Henry, until you are ready to drop your biases and false talking points I’m done having this conversation with you. I have shown you how the FairTax is better for retirees and I have shown you how Social Security and Medicare will be strengthened by the FairTax. If your only argument is that you don’t like the PreBate nor the Republican party, that’s your own personal bias and has nothing to do with the facts regarding the FairTax.

  143. comment number 143 by: Henry

    Max, I’m not spreading any lies. The Republicans are the ones behind Fair Tax. Look at the sponsors of Fair Tax. They’re all Republicans. They are the ones who introduce the Fair Tax proposal to the House Way & Means Committee. I know what Republicans are, I used to been one. After Nixon and Watergate, I resigned from that party. I’m unaffiliated now. I’m not crazy about Democrats, either. You still haven’t answer my question. If the GOP has it their way of privatizing Social Security, who is going to process and handle the so call prebates? This has nothing to do with Fair Tax, retirement and Social Security. You saw the debates. One of the candidates call Social Security, a Ponzi Scheme. I don’t want to hear answers, Fair Tax is good for Social Security. I heard it so many times. According to the Fair Tax plan, the Social Security Administration will process and handle the so call prebates. If privatizing does happen, who is going to process and handle the prebates? Simple question.

  144. comment number 144 by: MadMax8600

    Henry if you don’t want to hear answers then why are you here? If your goal is tell people what you think and feel about the FairTax without regard for the facts then save your breath. It’s obvious that your issue is not the FairTax but your fear of losing Social Security. Yes I did hear the Republican debate and every single one of them said there will be no changes for current retires and those close to retirement age. However, we have to face the fact that Social Security is broken (and broke) and needs to be reformed so that it will be around for people my age. By definition a Ponzi scheme is “an investment swindle in which some early investors are paid off with money put up by later ones” - Webster dictionary or “A Ponzi scheme is a fraudulent investment operation that pays returns to separate investors from their own money or money paid by subsequent investors, rather than from any actual profit earned.” - Wikipedia.

    By those definitions, Social Security is a Ponzi scheme. The money you paid into SS was not invested for you it was given to retirees and the money I pay into SS is not invested for me, it is paid to you. And if you think there’s a bank account locked away somewhere with Trillions of dollars in it for SS that is making profits you are mistaken. The Federal gov’t has raided those funds and left nothing there except IOUs. You can call it whatever you want but it’s a Ponzi scheme, it’s broken and it’s unsustainable. Again, people in your age group don’t have to worry but if we want it to be around for those currently paying in then we have to fix it.

    Now as far as who will pay the Prebate, the SS administration will do it. Even if SS is privatized as it has been done in Chile (which fixed their version of SS) and a county in TX (where retirees actually earned 2x as much money than if they left it in SS), the SS department won’t go away. They will still need an administration to manage the funds, collect the payroll taxes, etc. Regardless, with tens of thousands of gov’t agencies, I’m sure they’ll find one that could distribute Prebate checks. Think of it this way, right now you and other retirees are scared about losing your SS check. Take that same feeling and expand it out to every single legal voting citizen in the United States. In other words, if your main concern regarding the FairTax is who will send a check, rest assured if every single US Citizen with a valid social security number becomes accustomed to receiving a Prebate check to off-set the tax on essential goods and services up to the poverty level, it won’t just go away.

    Also you might want to be aware that when the FairTax was first proposed as bi-partisan legislation one of the first co-sponsors was Harry Reid, along with several other prominent liberal democrats. He dropped sponsorship after Pelosi realized it would stop Congress from using the Tax code for social engineering purposes. No matter, just this week the FairTax added 3 new co-sponsors. In addition, last election only one candidate, Mike Huckabee, ran on the FairTax. Only 4 years later, every candidate has to address the FairTax.

    For a liberal view on the FairTax check out this article that was written in 2005 (yes 2005) by a progressive liberal - http:/fairtaxer.wordpress.com/2011/08/29/the-progressive-democrat%E2%80%99s-sales-tax-by-connor-carney-running-with-rocks-and-paper/

    Finally, I know I said I was done with this conversation, but I just had to make the point that you are not concerned about the FairTax, you are concerned about Social Security. Whether you want to believe it or not, the FairTax will strengthen social security. It will create a more stable revenue stream and grow the economy out of the recession that we’re in. Both sides agree that the only thing that will get the US out of our financial troubles is to grow the economy. The FairTax will do that. BTW, you think if we passed the FairTax and the SS administration was sending out checks to all Americans, that there may be a vested interest by the entire population to keep the SS administration around?

    The FairTax: Those who Understand It, Demand It!

  145. comment number 145 by: Henry

    Max, you answered my question. The Fair Tax sounds good but what is it like in reality? It has never been tested. Beware of tax plans that look good on paper, what is it like in reality. Chances of Fair Tax going through is very small. It did not do well in the House Ways & Means Committee hearing. You don’t hear very much from the co-sponsors. I notice some of them are looking at other tax plans. Herman Cain is trying to go for his 9-9-9 tax plan. When Fair Tax started, they had 72 co-sponsors. Now they are down to 60. Good luck with your Fair Tax. This is my last comment, take care.

  146. comment number 146 by: Glen Luecke

    Max, Thanks to you for yeomans work on explaining the Fair Tax and for your patience with some posters. I have been a Fair Tax advocate for many years and have had the good fortune to expose hundreds of citizens to the idea. Not one person has ever given me an argument that “it won’t work”. Indeed, they have all been eager to have the idea become the law of the land. I think it is important to remember that everybody you speak with acknowledges that our current system is flawed beyond repair and is used inappropriately for social engineering. I think we can all agree there is no good,fun easy way to levy taxes. I also think we should keep in mind the waste, fraud and huge costs associated with compliance that would disappear if our country was on the Fair Tax system. And as for those who suggest the idea be tried somewhere before it goes national, that trial already exists in several states, among them are Florida, Texas and Tennessee where there is no state income tax and all state revenue comes from a consumption tax levied at the point of sale. That is a healthy chunk of the national population being readily served by a system that could be rolled out in simple fashion to collect and pass along taxes to the Feds and in return be compensated for their effort……..a new stream of profit for them! (estimated at $750million for Walmart alone)

    Think also about all the 401k and IRA accounts that would benefit from the stock market growth that would occur as the economy expands. Our country desperately needs economic growth and the Fair Tax is the way to go. We are looking at very low growth this year and next in America. The Fair Tax could help us to easily grow our economy 5-6% or more without kicking up inflation. If you project that growth forward it would double the GDP in about 12 years resulting in a GDP of over 30 trillion dollars. That in turn will provide the tax revenue to run the country and pay down off our obscene debt.

    Keep up the good fight Max and remember it took a long and a hard fight for women to get the right to vote and for civil rights legislation to pass. Fair Tax is worth the fight and as I tell all with whom I have the discussion, you don’t have to agree with me but tell me your plan to fix what we know is not working!!

  147. comment number 147 by: Henry

    Glen Luecke: I thought that was my last comment. I had a little problem with your comment. You said that Florida, Texas and Tennessee have no state income taxes. Have you ever talk to a resident in these states about how they like their tax systems? I had a conversation with a resident from Texas. He was not crazy about that state’s tax system. He said his property taxes are high and Texas has a lot of fees. Tennessee has a very high sales tax, almost 10% plus you have to consider border states. I live in Connecticut. Before 1991, Ct. did not have an income tax. Their sales tax was 8.5%. In order for their books to balance, Ct. would have to raise their sales tax to 13%. The state has 3 border states with sales taxes half that amount. An income tax was enacted and the sales tax was lowered to 6%. The high sales tax system in Ct. failed. We look at New Hampshire. That state has no income tax and no sales tax but it has one of the highest property taxes in the nation. That state has fees and $2 tolls on interstate highways plus state run liqueor stores. It doesn’t matter what kind of tax systems that are out there , there will always be winners and losers. Also look at states with no income taxes and how are their budget deficits? Don’t compare women’s rights and civil rights with tax systems. 3 different topics.

  148. comment number 148 by: MadMax8600

    For those interested in the FairTax there is a petition going on today on the White House site. We need 5000 signatures in 30 days to have the petition escalated to the White house so please click on the link (yeah it’s slow, that’s gov’t efficiency for you :)) and cast your vote.

    http:/wh.gov/gQn

    @Glen - Thanks Glen. I don’t plan on giving up the fight any time soon :)

    BTW, with respect to growth here are two quotes put together. One from a recent article and one from Wikipedia.

    “In a survey of 500 foreign companies, Bill Archer, FORMER HEAD OF THE HOUSE WAYS & MEANS COMMITTEE, asked Princeton University Econometrics to survey 500 European and Asian companies regarding the effect on their business decisions if the United States enacted the FairTax. 400 of those companies stated they would build their next plant in the United States, and 100 companies said they would move their corporate headquarters to the United States.

    Economists estimate that the FairTax, by bringing jobs back to the US
    and creating new ones due to increased demand and exports, would
    provide approximately 10 million new jobs in the first two years.
    Based on an estimated 15 million unemployed right now, the FairTax
    would reduce the unemployment rate to approximately 3%, or
    statistically full employment. By contrast, Ben Bernanke projects that
    continuing down the road Congress has created will require six years
    to get the unemployment rate down to 6%, if everything goes as
    planned.”

    Want prosperity to return? Want to bring back jobs from overseas? Then pass the Fair Tax. Now.”

  149. comment number 149 by: glen luecke

    Henry,
    My post was made as a comment to MadMax. I cannot engage you in a lengthy exchange of back and forth. I surmise from your posts that you are against the Fair Tax. So be it; we all get to have our opinions and to express them and I fully support that. However, you sure do like to mix the oranges with the apples. My post was not an evaluation of the sales tax rates of the respective states mentioned who rely on a sales tax to provide their revenue. Rather,it was offered as proof that a system is in place and is being used by a significant portion of the population of America to collect revenue, thus could be rolled out nationally. Also, if and when the Fair Tax becomes law it has zero to do with the current STATE sales Tax and has zero to do with the taxes your county levies on your property.
    Finally, my comments on civil rights and women’s suffrage were included to point out that movements (of which the Fair Tax is one) can and do sometimes take a long time and a lot of effort to bear fruit or overcome obstacles.

    Henry, you might be better served to propose a plan that you feel is better than the Fair Tax.

    I think with people like Madmax dedicating time to explain and “sell” the Fair Tax to all he encounters we stand a great chance of seeing this legislation enacted……..it is the old, “he told two people and they told two people.” For certain, Max has to be enjoying better than a .750 batting average and we can live with that.

    MadMax: I know you probably know this but the list of co-sponsors in the House is now up to 66! Jeb Hensarling from Texas just got on board!

    Herman Cain was on the radio the other day and was asked about his shift to his 999 plan. He said he had not changed his opinion of the Fair Tax but rather that the 999 Plan was a transitional move to get us there and to satisfy the Flat Tax supporters.

    I live in both Florida and Tennessee and I can tell you that when Connie Mack (my rep here in FL) has his town hall meetings there are now many who show up with signs, hats and shirts supporting the Fair Tax. It is a process……and the process is worth fighting for and it may be our salvation, it is that important.

    Thanks also for the heads up on the website…..I will sign the petition post haste. Cheers!

  150. comment number 150 by: glen luecke

    MadMax,
    Got the petition signed but it sure was not easy!!!! Lots of confusion but I hung in there and you can see me as #88…………feel like a train engine, Old #88. I sent the info out to my entire email list and will herd them along to get signors for the petition supporting the Fair Tax. I reviewed some of the petitions on the site and was depressed to see so much effort behind wacky ideas on drugs, removing God from our money, etc. Have you looked at the petitions list?

    Meanwhile, back on the Fair Tax, I attended a rally in Nashville a couple years back and Alan Keyes was the featured speaker. He was dynamite. He asked the question; “what would you say to a person on the street who accosted you and asked, ‘how much money did you make last year’???????????” Then he asked, “what would a duly appointed officer of the law say to you after he informed you that he/she had a warrant for your arrest”?????

    Of course, the answer is they would Mirandize you. And then Mr. Keyes asked, “why is that”???? Meaning why must they Mirandize you. And the answer is you have a right under the constitution against self incrimination!!!!!! And as part of the Bill of Rights it is a God given right not subject to abrogation by the federal government.

    So then it follows, why is it that every April 15th you must submit information to the federal government and sign your name to the tax return that can be used to prosecute and incarcerate you! Nor is there a provision for you to use your fifth amendment right against self incrimination. On its face the demand that you certify your tax return as correct and factual is unconstitutional and at odds with your rights.

  151. comment number 151 by: Henry

    Max, I saw the petition on the website. Some of you guys say it was hard to get on. It was easy and fast but the reason you said it was hard, you gave the wrong website. You said it was: http:/wh.gov.gQn. It is really: wh.gov.gQn. I use that website and it came on fast. Don’t use http:/. I saw the petition, it needs 4,910 signatures, it only has 90. I didn’t sign because I don’t back this tax system and the 2 other tax systems, Flat Tax and the present system. I don’t lika a tax system that is one sided, the Republican Party. You can say it is bi-partisan but the Republican Party is still involved with it. I use to be a Republican but I left the party when I saw what they really were. Nixon and his involvement with Watergate. I’m not crazy about Democrats, either. Good luck with your so call Fair Tax. Remember, there is no such thing as a fair tax. They should change that name. Something like National Consumption Tax or Federal Sales Tax.

  152. comment number 152 by: MadMax8600

    Hi Glen,

    Sorry to do this to you but the apparently there will be an “official” FairTax petition sponsored by fairtax.org posted the the White House site next week. I’ll post the link as soon as I get it.

    Thanks,
    Max

  153. comment number 153 by: Johnny Jefferson

    Your site has a lot of great stuff. I hate to even mention IRS, but if you have tax problems there are only two guys that even count. Check them out. They will take care of you and your readers!

  154. comment number 154 by: MadMax8600

    Great survey regarding the momentum of the FairTax in Congress.

    FairTax Summary from 2010 Election

    House Candidates backing FairTax did very well in 2010 races across the country

    Of the 435 races for the U.S. House, FairTax was a significant issue in 30 of the races; 1 FairTax candidate was an Incumbent, and 29 FairTax candidates were Challengers. The FairTax Incumbent won his race for 100% success rate.

    In the 29 Challenger races, 17 were won by the FairTax candidate for a 58.6% success rate overall.

    In cases where the FairTax candidate and/or the grassroots responded aggressively to the FairTax challenge, the success rate for Republican FairTax candidates jumped to an astonishing 84.6% success rate. This demonstrates that candidates that support the FairTax, and aggressively promote it, receive nearly a 50% advantage over passively favoring the FairTax.

    Compared to Republicans who were not identified as supporters of the FairTax, those aggressively promoting and defending it enjoyed a 58.8% advantage.

    The conclusion is clear: The more that the public hears about the FairTax the more they like it and will support advocates of the proposal. FairTax candidates are much more likely to be elected, and candidates that adopt the FairTax as a key plank in their political platform and aggressively promote it are far more likely to win than those that are less enthusiastic in their support of the FairTax.

    ————–
    No update on the official Petition yet. I’ll keep you posted.

  155. comment number 155 by: Rosa McCurdy

    I have thoroughly studied the Fair Tax proposal and it is the only tax system that makes any sense at all. If you carefully study it, you will see that it provides a way of having retirement funds whether you save or spend. Look at it carefully. Believe me, it is the only way we will ever be able to turn the economic situation around and bring American Industry back to America. With the Fair Tax, no country in the world can compete with America.The rich will definitely be taxed more because they spend more and even they will have more to spend.

  156. comment number 156 by: warrior wheatman

    Response to MadMax:
    Like a dog with an agenda you did not consider my two sugestive concerns. 1) it hurts the poor and benefits the rich. 2) it will perpetuate a two class society unless wealth is taxed.

    1a) the poor end up paying for their prebate without an increase in discreationary income; the rich can invest in wealth. Unless a Guaranteed Minimum Income pays more than the (prebate) taxes incurred, the poor lose, having a larger budget without benefit.
    2a) Unless both a severe inheritance tax, and a severe capital gains tax is incurred: wealth is left untouched. Your FT should apply to ALL financial transactions, purchases of money and financial vehicles; unless a lower Transaction tax is enacted. Shucks, even banks charge a transaction fee.

    Contra to catastrophic projections, an interest on unpaid inheritance tax need not be devastating, and need never be paid until liquedated.
    Applying your FT ONLY on end-user personal consumption and not on contracts, leaves commercial enterprises and anyone with a whole-sale licence-fee a gaping loophole to retain wealth.

    You are hurting your fellow citizens by blindly following the agenda layed out for you.

  157. comment number 157 by: MadMax8600

    Below is the link to the official FairTax petition. It’s been up since Friday and already has around 3500 signatures. We only need 1500 more so if you support the FairTax, please add your name.

    fairtax.org/petition

  158. comment number 158 by: MadMax8600

    @Warrior - First off, what is your infatuation with dogs and bones? If you’d like to have a discussion regarding the FairTax, let’s keep it mature and refrain from name calling. Based on your last post, I thought I addressed your concerns but apparently I didn’t, so let me reiterate.

    1) 100% LIE. Every independent study has shown that the FairTax is better for the poor. Unless you can provide some real data showing otherwise then I won’t even bother with this falsehood. It has been debunked too many times already.

    2) The FairTax is a consumption tax which by definition is a tax on wealth. Wealth is useless without consumption. Without consumption, wealth is just paper and totally worthless. Today the income tax does not tax wealth, it taxes production. The “rich” continue to live off their wealth with no real tax burden.

    2a) Are you aware that the 2nd and 4th pillar of the Communist Manifesto calls for a highly progressive Income tax and high Inheritance tax. So what you’re advocating is exactly what Karl Marx wanted for “his people”.

    You are right that I have an agenda. I have an agenda to free the people of America from the corrupt, communist workings of the income tax. I have an agenda to remove the bribes, special interest and social engineering that has created a 72,000 page tax code and replace it with a Fair, Progressive tax system, that is simple and transparent. I have an agenda to get the gov’t to work for its citizens like it was meant to instead of the other way around.

  159. comment number 159 by: warrior wheatman

    Fair Tax is unfair. Its rate is tremendously high on low discretionary income, and tremendously low on high discretionary income. It is a tax on the blood-seat-and tears wage inherent in the product - while the profit goes to the bank for reinvestment. What is so fair about that?

    You mentioned Marx, who before the accounting technology, predicted that wealth would go to the rich, untill the collapse of capitalism.

    Fair tax would accelerate this.

  160. comment number 160 by: MadMax8600

    Hi Warrior. Can you please provide some data to support your claim? The maximum FairTax rate is 23% and it is extremely progressive. How about I provide some real data and you tell me where it’s wrong.

    Let’s assume we have a family of four (married with 2 children) and look at their FairTax rate using 5 income levels, 30K, 60K, 100K, 250K, 1M. The 2010 poverty level for a family of four is $29,140 (assume 30,000 for easy math).

    Scenario 1: The family lives at the poverty level, earns 30K and spends it all. The Prebate refunds every penny they spend on the FairTax.

    Effective Rate = 0/30K = 0% - That’s a 0% tax rate.

    Scenario 2: The family earns 60K and spends 60K. The first 30K in spending is exempted with the Prebate. The second 30K in spending is taxed at 23% = $6900.

    Effective Rate = $6900/60,000 = 11.5%

    Scenario 3: $70,000 * .23 = 16,100
    Effective Rate = 16,100/100,000 = 16.1%

    Scenario 4: $220,000 * .23 = $50,600
    Effective Rate = 50,600/250,000 = 20.24%

    Scenario 5: 970,000 * .23 = $223,100
    Effective Rate = 22.3%

    Of course, each family can decide not to spend all their money and instead save their money tax free while also lowering their effective tax rate even further. Wow, what a concept, tax free savings and choice over when and how much to pay taxes. However, for every family that earns a million in income who decides not to spend it all, there will be trust fund babies who have never earned a penny in their life who will finally be paying taxes with their consumption. Plus let’s not forget the underground economy, illegals and tourists who would be subject to the same tax rate as legal working Americans.

    So to recap, the poor family living at the poverty level pays 0% in taxes. A family earning twice the poverty level pays 11.5% in taxes. Families earning 100K, 250K and 1M pay 16.1%, 20.24% and 22.3% respectively - sure sounds progressive. Compare this to current rates and I think you will find that everyone is better off with the poor making out the best.

    These facts seem to contradict your rantings. If you have some documentation, data or real numbers that really show that the poor would be worse off then please post them for review. If all you plan to do is rant and rave and make comments like “it’s not fair”, “it’ll hurt the poor” without any facts to back up your statements then don’t bother.

  161. comment number 161 by: MadMax8600

    Only 344 signatures to go (over 4600 in less than a week). Please sign the petition and encourage your friends to do so as well.

    fairtax.org/petition

  162. comment number 162 by: Henry

    Max, I saw the petition and I’m sorry I will not sign it. I will not sign any petition on tax systems especially with the Republican Party involved. I know you are going to say it is non-partitsan but it is still involves the Republican Party. I don’t like Leo Linbeck. John Linder and especially Mike Huckabee and Neal Boortz. Mike Huckabee was a lousy governor. Ask the families of the 4 police officers who were killed by the criminal pardoned by Huckabee when he was a governor. Also I am not fond of Democrats either. They got their problem people also. Good luck with your so-call Fair Tax.

  163. comment number 163 by: MadMax8600

    Hi Henry,

    This is a free country and the beauty of America is that you have the freedom to vote for or against anything you like. However, I have to admit, out of all the people on this site, your support was not one I really wasn’t counting on. And the fact that you can’t support the FairTax (even though it would be better for you) because you don’t like the people involved is also your choice. Seeing as a highly progressive Income tax was the brainchild of Karl Marx and the 2nd pillar in the Communist Manifesto, I’ll personally stick with the founders of the FairTax.

    Regardless, as of this moment we are only 166 votes away from 5000 with 23 days to go. Even without your vote Henry, I still think we’re going to make it.

    Thanks,
    Max

  164. comment number 164 by: Henry

    Max, I don’t like the present tax system either DON”T include me with Karl Marx and the Communist Manifesto. My father and my grandfather fought the Communist when they lived in Europe. To me, the founders of the Fair Tax remind me of the Nationalist Socialist Party especially Neal Boortz. Good Luck with your so-call Fair Tax.

  165. comment number 165 by: Glen Luecke

    Max
    I looked over your breakdown of the effect of the Fair Tax on various levels of wages and the only question I have is what about those who are receiving the Earned Income Tax Credit? Seems to me they will lose out as the EITC will be done away with……………and by the way, I have no problem with that because that is really a big redistribution program but I just wanted to point that out. Of course, they will benefit from receiving ALL their wages with no payroll tax but I don’t know if that gives them more or less money than their EITC.

    Keep up the good work,
    Glen

  166. comment number 166 by: MadMax8600

    Glen - You are correct, I was just trying to prove a point that the FairTax is highly progressive and that the poor come out much better. For a more detailed analysis that includes things like the EITC, tax brackets, deductions etc, check out FairTax.org, they’ve done all the calculations and have lots of independent studies. You will find that even when you include the EITC, the poor still make out much better under the FairTax.

    BTW, since you mention the EITC you should also take into account the payroll tax, which for the poor, is by far the most regressive tax. The payroll tax is 15.3% and would be eliminated with the FairTax.

    146 and counting down…

  167. comment number 167 by: MadMax8600

    Glen - Sorry I skimmed your post and missed the fact that you mentioned the payroll tax. FairTax.org has a calculator that takes into account the EITC. Also, they have the study done by Kotlikoff that compares 40+ families in all income brackets and shows how they would all be better off under the FT.

  168. comment number 168 by: Henry

    Max, word of caution: Fair Tax is STILL a tax. Nothing fair about that. What is it going be, getting taxed while getting paid or paying a tax when you buy something? No difference. A tax is a tax. I am STILL against the prebates. A gimmick a minute. This tax has never been tested. It’s all theory. You better hope it works. On this petition, it is just to get it through the front door. There is still Congress to contend with. When it gets to Congress, they are going to tear it apart and put it together. They are going to put amendments to it, exemptions. It may not be the same Fair Tax when it comes out than when it was put in. Knowing Congress and how they are. Good Luck with your so call Fair Tax. You need it.

  169. comment number 169 by: MadMax8600

    Hi Henry,

    I think you have made it abundantly clear that you are not a fan of the FairTax (even though it will be better for you than the current system) nor a fan of the Prebate. In fact, if I was to recap everything that you have stated that you don’t like then it would go something like this. You don’t like the FairTax, you don’t like the Prebate, you don’t like taxes on income and you don’t like taxes on consumption, you just don’t like any taxes of any kind. You don’t like Republicans, you don’t like Democrats and you don’t like Karl Marx or Communism. I’m guessing you probably don’t like me neither (but you haven’t said that directly). Regardless I wish you the best of luck with your opinions. Since their are only two certainties in life, death and taxes, I hope you find one tax system you like and can support before the other certainty comes calling.

    Either way, unless you have some factual points you would like to discuss, I’m done with this conversation.

    All the best - Max

  170. comment number 170 by: Henry

    Max, I like a tax system that will work for everybody but not this Fair Tax and especially the people involved with it. Leo Linbeck, John Linder, Mike Huckabee and especially Neal Boortz. I don’t like racism. I am looking at other tax systems. Herman Cain came out with the 9-9-9 tax plan. I might support that tax plan. Sounds interesting. There is something about this Fair Tax I don’t like. To me, the prebates are a gimmick. Money going in, money coming back. I never said, I didn’t like you. We have difference in opinions. I hope this Fair Tax is what you said it is. I don’t trust the Fair Tax and I don’t trust the people behind it. In the Bible, it says, beware of false prophets, they come like wolves in sheep’s clothing. It goes the same with tax systems. Word of Caution: There is no such thing as a fair tax. Take Care, Henry. I’m done.

  171. comment number 171 by: Henry

    Max, one I forgot to mention is some of the people pushing for the Fair Tax. Little lies. You’re not one of them. One person said Fair Tax will eliminate all Fed. and state income taxes. There is nothing in the Fair Tax plan that said any thing about state income taxes. It shows the taxes it eliminates, any state income taxes are not one of them. Fed. government has nothing to do with any state income taxes. Another person said it eliminates Fed. gas taxes. Another tax that doesn’t show. Some people says it eliminates the IRS. According to the Fair Tax plan, a new agency will take place of the IRS. It will be the Sales Tax Bureau. What it does, it changes the IRS’s name. There is going to be enforcement on this tax. There will be envasion of this tax just like they did on the income tax. There will be agents at border crossings of Canada and Mexico. People will go to these countries to buy stuff to avoid the tax. They are allowed to bring a certain amount in but if it exceeds that certain amount, the agents will take names and addresses and they will be sent a tax bill. There will be tax courts. What it does, it changes from an income tax phase to a sales tax phase. One thing that is going to happen is flea markets and farmer’s markets. These markets only run on weekends and certain days. They will sell food and new items. By the time the agents get there, they’re gone. There are things to take account for on this Fair Tax. Take care Max.

  172. comment number 172 by: MadMax8600

    Hi Henry,

    Now those are some great comments, which I would be happy to discuss. First off, I’m sure there’s misinformation on both sides of the isle. I do my best to stick to the facts, but I’m sure on occasion I’ve accidentally misrepresented the FairTax. If I have then it was completely unintentional and I’m happy to admit when I’m wrong. Now back to your comments.

    You are correct, the FairTax is a replacement of the Federal income tax, payroll tax, corporate tax, inheritance tax, AMT and several other federal taxes. It has nothing to do with state taxes. However, the States do receive a .25% commission for processing the FairTax. Since the tax base is much broader, it has been shown that the .25% would generate more revenue for most states than their current income, sales or property tax. The states could either decide to lower or eliminate some of those taxes or they could decide to keep the windfall. That is a state decision and entirely up to them. However, in my opinion, I believe once people are use to getting their entire paycheck from the federal gov’t, the states would be hard pressed to maintain their income tax (but again, that’s just my opinion).

    You are also correct that the FairTax would eliminate the IRS and create a new agency called the Sales Tax Bureau. Personally I don’t care if the FairTax eliminates the IRS or renames it, what’s important is that it removes the power and tyranny the IRS holds over 150,000,000 (that’s million) individual tax paying citizens, returns 400 Billion in compliance costs and makes it harder to evade paying taxes by lowering the amount of tax collectors to 70,000 (that’s thousand) businesses. Like any other tax system I’m sure there will be some amount of evasion but it will be a fraction of what occurs today. As far as flea markets and farmers markets, I would argue that just as many vendors don’t pay income taxes on those sales as wouldn’t pay the FairTax. Regardless, as a % of total US retail sales I doubt that flea markets, yard sales, farmer markets and the like would even make up a fraction of 1%. Remember 70%-80% of retail sales are done by a handful of large companies, such as Walmart, Target, Costco, BestBuy, etc. I doubt these large retailers would risk their retail license to help someone else cheat. In fact, the current compliance rate in the US is roughly 80% so if only these stores complied and every single other business cheated and paid $0, we’d still have the same compliance rate as we have today. Obviously every other business wouldn’t cheat 100%. And my final personal thought on flea markets and farmers markets is that if they do expand due to the FairTax then good for them. We should all be buying more local products anyway.

    And as far as Canada goes, maybe if you’re on the border you would go to Canada but I doubt anyone more than 50 miles away would bother crossing the border to save a $1 on milk. Assuming it’s even cheaper in Canada, seeing as the FairTax eliminates all the hidden taxes that are currently embedded in the price of all goods and services sold. I think the crossing the border argument is ridiculous. 99.9+% of all retail sales will be in the US. BTW, how about the other side of the argument? When a Canadian or Mexican comes over the border into the United States and buys goods or services how much in income taxes do they pay? $0. Under the FairTax they would pay US taxes.

    Instead of talking about the insignificant negatives how about I bring up a huge positive. Do you realize there is roughly 12 Trillion dollars ($12,000,000,000,000), LEGALLY parked overseas that can’t come back to America because of our current tax system. That’s 12 Trillion real dollars, not gov’t issued, debt ridden, fake stimulus dollars. Since the FT eliminates Repatriation taxes, that 12 Trillion would flood back to America and create the largest stimulus in history.

    The bottom line is that when the FairTax reduces the tax payer base from 150 million individuals to 70 thousand businesses it will be much more difficult to evade paying taxes. There is a lot more risk to a business who doesn’t pay taxes than an individual. The examples of flea markets, farmers markets, crossing the border, etc are all fringe cases and make up an extremely small fraction of the US economy, while the benefit of bringing back 12 Trillion dollars and creating 10 million new private sector jobs in the first two years is a huge positive.

    BTW, I know you don’t like the architects of the FairTax but I would encourage you to judge the plan based on its Merits not who sponsored it. Personally I didn’t like how the Egyptians treated their slaves but you have to admit the Pyramids are pretty impressive.

  173. comment number 173 by: Henry

    Max, on Canada, I went to visit my father. He is all right but at 95 years old, he knows his time is limited. He lives in New Limerick, Maine. It is located near the U.S./ Canadian border. You be surprised how many Canadians come to shop in Maine. Maine has a 5% sales tax while Canada has a 13% sales tax. I studied Canada’s tax system. 8% VAT and 5% Province tax. I talk with a Canadian getting gas for his car. He told me in Canada, the gas cost $4.60 a gal. compared to $3.35 a gal. in that part of Maine. On the IRS, the IRS will become the Sales Tax Bureau, same people, same building but the only change will be the tax system and how they process it. As for the state and their taxes. I live in CT. and before 1991, that state did not have an income tax only a sales tax. The sales tax was 8.5%. CT. has 3 border states and their sales tax were lower. In order for CT. to balance their books, they would have to raise their sales tax to 13%. Now CT. has a state income tax with 6.5% sales tax in line with the 3 border states. The sales tax system in CT. failed. As for the people behind the Fair Tax, I don’t like any of them especially Mike Huckabee and Neal Boortz. Neal Boortz is a liar and a fraud. He’s also a racist. I studied him in Neal Boortz- Wikipedia. It said he is a lawyer. He graduated from an uncredited law school. How did they let him passed the bar exam is beyond me. When people go through the bar exam, they check to make sure of ther law degrees. A lot of people don’t like him. So much for the Fair Tax people. I still have doubts over this tax. There are parts I don’t like about this tax especially the tax on food,clothing,rent,housing, medical and etc. If I was a landlord, I will not add Fair Tax on top of the rent of my tenants. We talk about prebates but to no avail. I don’t like the prebates. On chances of Fair Tax passing is very nil considering how Congress is. You talk about women’s rights, civil rights and Prohibition but they were totally different issues. There will be evasion of it. You said a fraction but there will be more. If it goes through Congress, they will tear it apart, add amendments to it, add exemptions to it. It may not be the same Fair Tax that was put in. Look what happen to the debt ceiling. Nobody in Congress and the Preident got what they really wanted but it went through. Take care, Max.

  174. comment number 174 by: Henry

    Max, I forgot to mention this, in order for Fair Tax to go through, they will have to make some changes in it. Just like they did on debt ceiling, nobody got what they really wanted. The President and Congress have to give in. In my opinion, the tax on food, clothing, rent, housing,everything medical, etc are the ones. To me and a lot of people and including people in government consider the prebates are nothing but entitlements. If you look at any state sales taxes, they do have exemptions on food, some clothing and I know they don’t have sales tax on rent. I talk with one another Fair Tax person and he told me they did do some minor changes from the first proposal to the present one. In order for this plan to go through, they must be willing to compromise. Just like the debt ceiling, everybody compromised and they got it through. This is my opinion on this Fair Tax. Take care, Max

  175. comment number 175 by: Carroll

    I am a strong FairTax proponent. It will be very hard to pass because our government is powerful, corrupt, greedy, etc…. An objection I noted repeatedly was that prices would go up with the imposition of a 23% FairTax. On average, the cost of Fed. govt. which will go away under the FairTax is 22%. So: on average goods will increase in price by a mere one percent. Average. Another thing I noticed was that several people wanted food, medicine, etc… to be exempt from the FairTax. No! We should have NO exemptions. When you start having exemptions you start having disagreements. Let’s keep it simple and not exempt anything. Also, I noted that several people spoke of the Prebate as exempting poverty-level (poor) people from taxes on the basic necessities of life. If the govt. doesn’t track people’s incomes then how will it know who’s poor? Not a problem. EVERYONE is paid the Prebate–rich and poor alike. So easy: just send Prebate to everyone who is a citizen or has a Green Card. Lots of discussion too about the 23% FT actually being a 30% tax. Not so. If the price of an item at Wal-Mart is $1.00 the your receipt at check-out will say 77 cents to Wal-Mart and 23 cents to the Federal Govt. There is your $1 item. The FT is included in the price. At check-out there will be additional taxes (local, state, etc) added. The people who say that the FT is actually 30% because 23 is 30 percent of 77 are misleading: the price of the item is 1.00 and not 77 cents. The FairTax was developed by top economists in 1995 and although not perfect–nothing is–really is the best idea out there. HOWEVER, I think Herman Cain is right in thinking that his 9-9-9 plan would have a better chance of passing. It would be a step in the right direction: replace Federal taxes with 9 percent capital gains tax, 9 percent personal income tax, and 9 percent federal sales tax. Sorry this was so long. Hope some of you have the patience to read it.

  176. comment number 176 by: Henry

    Carroll, I read your comment and I disagree with you. On any state sales taxes, there are exemptions on food, certain clothing and there are no sales taxes on rent. I am against the prebates. Some people including myself consider prebates nothing but entitlements. Somebody is going to gain and somebody is going to lose on this Fair Tax. One word: There is no such thing as a fair tax- Laurence Vance.

  177. comment number 177 by: MadMax8600

    The Prebate is no more an entitlement than the standard income tax deduction. The only difference is that unlike the standard income tax deduction, which is paid once per year, the Prebate is paid every month. The standard income tax deduction exempts income up to a certain threshold then taxes all income beyond that threshold. The Prebate does exactly the same thing, it exempts income up to a certain threshold (poverty level) then imposes a flat consumption tax beyond that threshold. Anyone who thinks the Prebate is an entitlement must also believe that the standard deduction is an entitlement, otherwise their argument is invalid.

  178. comment number 178 by: Henry

    Max, I’m still against the prebate. There will be people who will be getting it that don’t deserve it. Criminals, drug dealers, members of organized crime, anyone with legal S.S.#’s. It also will open to fraud. Unless there is some other way, exempt basic necessities and no prebates, final offer. I just noticed in the news, the GOP Presidential candidates are locking at the Flat Tax. 22 countries have this type of tax system even the former Soviet Union (Russia}. Gov. Perry is leaning toward backing it. Herman Cain is looking at the 9-9-9 plan. Every tax system has some faults in it even this so call Fair Tax. There is no such thing as a fair tax- Laurence Vance.

  179. comment number 179 by: MadMax8600

    Ok Henry, let me see if I can understand your argument. Under the current tax system, drug dealers, prostitutes and members of organized crime pay ZERO income tax because they don’t show their income. Under the FairTax all those criminals you mentioned would pay the same FairTax rate as everyone else whenever they bought anything. So even though they would pay the exact same tax as everyone else, in your opinion they don’t deserve the Prebate? In other words, if you and a criminal walk into a store and each buy a shirt for $10. Both you and the criminal would pay the exact same amount for the shirt and the gov’t would collect the exact same amount of taxes from each of you and your argument is that one of you deserves the Prebate while the other doesn’t.

    As far as a Flat Tax, I support it. I don’t support it as much as the FairTax but throwing out the 71,000 page tax code and replacing it with a Flat Tax would be significantly better than what we have today. The problem I have with a Flat Tax is that it’s still a tax on income. So all those drug dealers, prostitutes and members of organized crime would still pay ZERO under a Flat Tax. Not only will criminals pay ZERO but also all those super rich who supposedly don’t pay their “fair share”, would also continue to pay a very small percentage because they live off of accumulated wealth not income. My biggest problem with a Flat Tax is that since it’s still a tax on income, it is prone to corruption. The original income tax started out as essentially a flat tax with the highest rate being 7% (that was on $500,000 in income in around 1913). In less than a century the rate had jumped to a high of 90%. In 1986, the tax code was “flattened” out again. Since then we have had over 16,000 special interest bribes, loopholes and changes. That’s why any tax on income be it Flat, progressive, regressive, etc is worse than a tax on consumption.

    However, let’s get real Henry. You could care less about the Flat Tax, FairTax, income tax, FICA tax or any other tax. All you care about is your social security check. And even though I have proven to you over and over again that you would be significantly better off under the FairTax than the current system, the mere thought that any change could affect your social security check scares the heck out of you. That’s why it doesn’t matter how many statistics, reports or facts I present. When your only argument is, “I don’t like” then everything else is just a waste of time.

  180. comment number 180 by: Henry

    Max, I am still against the prebates. For example, a criminal gets a prebate just like everyone else. He gets arrested, tried and convicted and he goes to jail. Will he still get a prebate while he is in jail? Anyone who is on S.S. and goes through the same process, will lose his or her S.S. checks. I saw this in Social Security Administration booklets. This is one thing the Fair Tax does not address. Does your facts show that? There will be exemptions with Fair Tax. Any business buying material will be exempted from Fair Tax providing the material is bought as a business expense. The rich covered that pretty well. As far as the Flat Tax, I will support it. I don’t like sales taxes especially sales taxes on rent and housing. If I was a landlord, I would not add Fair Tax on top of rent of my tennets. Exempted basic necessities from Fair Tax and no prebates iust like they do on any state sales taxes.

  181. comment number 181 by: MadMax8600

    Henry, I believe if you’re in jail then you would not get the Prebate, but I will look it up and confirm. If it’s not addressed it should be because I agree that someone in jail should not get the Prebate.

    Your business argument makes no sense. Under any tax system, items purchased for business use are not taxed. That’s exactly what happens today under the current income tax. Any business that buys something for their business is not taxed on that item today, it’s called an expense. I don’t understand how this argument only applies to the FairTax. Regardless of which tax system it is, the issue is compliance and since the FairTax lowers the number of tax payers from 150 million to 70 thousand, it will be a lot more difficult for business owners to buy personal items and claim they are for business use. Also, I won’t post it here but check out the FAQs on Fairtax.org. The FairTax has a couple of provisions that make it even more difficult to buy personal items and claim they are for business use.

    I also support the Flat Tax, though I don’t think it’s as good as the FairTax. I’m just curious, Henry, do you think a flat tax should start on the first dollar earned or should their be a standard deduction? Paul Ryan’s plan calls for the first $60,000 to be tax exempt. Steve Forbes said the first $40,000 should be exempt. Personally I think there should be a standard deduction (at least up to the poverty level), but based on your comments about the Prebate, I’m sure you would consider that an entitlement.

    BTW, why would a landlord not collect the FairTax? That makes no sense to me. If you’re a landlord, why would you help someone else cheat on their taxes? You get no benefit out of it. In fact, the FairTax reduces the amount of tax filers from 150 million to 70 thousand, meaning it will be much more difficult to cheat and not get caught. As a landlord are you going to risk your property so that your tenant can save some money in taxes. In other words, assume your tenant pays you 1000/mth. Under the FairTax, as a business owner it is your responsibility to remit $230/mth to the Federal gov’t. Let’s assume you choose not to and either a) let your tenant stay there for $770 or b) pocket the extra $230. Assume you’ve been doing this for a year and then get caught. In scenario a) you would have to cut the gov’t a check for $2125 (770*12*.23). Scenario b) you would have to cut the gov’t a check for $2300 (1000*12*.23). As the landlord, all the risk is on you. Why in the world would any landlord not collect the FairTax?

    Update: Henry, I confirmed and if you’re in jail for 6 months out of any year, you do not get the Prebate. It’s written in the bill. So there you go, inmates do not get the Prebate.

    Here’s the specific wording in the bill

    ‘(l) Incarcerated Individuals- An individual shall not be eligible under this chapter to be included as a member of any qualified family if that individual–
    ‘(1) is incarcerated in a local, State, or Federal jail, prison, mental hospital, or other institution on the family determination date, and
    ‘(2) is scheduled to be incarcerated for 6 months or more in the 12-month period following the effective date of the annual registration or the revised registration of said qualified family.

  182. comment number 182 by: warrior wheatman

    You now say renters, and thus landlords, have to pay ‘FT’. “FairTax lowers the number of tax payers from 150 million to 70 thousand” ? I thought I read that contracts and services were not taxable; only new-bought items?

    PS: while not implying I’m warming to this, I do thank you for the % breakdown in cm#60.

    Still think a Transaction Tax for (fast furious ?) trading is called for; As well a high inheritance tax.

  183. comment number 183 by: Henry

    Max, you talk as if Fair Tax is law. We don’t know if Fair Tax will ever go through. Too much opposition on it. There is more talk on the Flat Tax. 22 countries are using it. Fair Tax didn’t do well in House Ways & Means Commitee hearing. What you and I are doing is expressing our opinions. In 1999, Fair Tax had 72 co-sponsors. Now they’re down to 60. I read other comments and people don’t like the prebates. If it was something like any state sales, it might get through. One thing, I don’t like is the tax on rent and housing. Plus the Republican Party is behind it. On the record, the Republican Party has never been behind the working people. 40 years ago, the Republican Party was the most hated party. Richard Nixon and Watergate was the reason. I used to been a Republican and I resigned when I found out what the Republicans really are. I am not crazy about the Democrats either. If Fair Tax does get to Congress, they are going to take it apart, add amendments to it, add exemptions to it, they might get rid of the prebates. If it comes out, it might be the same Fair Tax that went in. Look what happen to the debt ceiling. As I said again: Exempt Basic Necessities from Fair Tax and no prebates. It will save the Fed. government money, sending out these so call prebates. Take care.

  184. comment number 184 by: Henry

    Max, I left out one word. It might not be the same Fair Tax that came out of Congress. Look what happen to debt ceiling law. Both sides compromised. Take care.

  185. comment number 185 by: MadMax8600

    Looks like you’re arguing in circles again Henry. You mentioned 3 issues against the FairTax 1) Criminals getting the Prebate 2) Individuals buying goods under a business and 3) Landlords.

    1) I showed you that Criminals would not get the Prebate and even posted the exact text in the FairTax bill that mentions it.

    2) I showed you how it would be more difficult for business owners to purchase personal items tax free under the FairTax than the current income tax.
    If you want further info on this check out this FAQ.
    http:/www.fairtax.org/site/PageServer?pagename=about_faq_answers#48

    3) I showed you why it would be stupid for a landlord to not collect the FairTax

    Having addressed all your concerns, you’re back to “just not liking it”.

    I will make a couple more points, as of today there are officially 74 cosponsors (66 house, 8 senate) with roughly 100+ “soft-sponsors”.

    The Prebate is purely optional. If you don’t like the Prebate then don’t sign up for it.

    I watched the entire WM hearing and it went horribly. Kotlikoff was more interested in pushing his “Purple Tax” than supporting the FairTax (though I’m not sure he could’ve supported it as he was a terrible speaker). Thank goodness for Dr. Tuerck, he was at least coherent and made good points. However, what I think you fail to understand is that those hearings are just for show. The real works starts when they’re done and though I may be mistaken I believe at least one member who talked like he was opposed to the FairTax has signed on as a cosponsor (or came out in favor of it) once he understood it.

    @warrior - Glad to see you coming around :) A high inheritance tax is a tax on private property and a form of double taxation under the current system. It takes away the sum of an entire life’s worth of work and gives it back to the gov’t. There’s a reason why it’s the 4th pillar of the Communist Manifesto.

    As far as a Transaction tax on Day Traders, what you’re trying to do is social engineer with the tax code. That’s what I’m trying to get away from.

    BTW, I misspoke. The number of tax filers will drop from roughly 140 million to roughly 20 million businesses. That’s definitely more than the 70,000 I mentioned earlier but still a staggering drop of nearly 90% from what we have today.

  186. comment number 186 by: MadMax8600

    Henry, you mention what could happen with the FairTax bill once it starts making it’s way through Congress. It’s roughly 130 pages and you are correct, it could possibly get amended or changed. The Prebate could be removed, other provisions added, etc.

    So you know what Henry, I have decided to listen to you and all the naysayers and drop my support of the FairTax. Instead, I have come up with and will be pushing my own tax plan. My tax plan along with all the amendments and additions will consist of over 71,000 pages and 10,000,000 words. It will be so complex that the average American will have to spend 57 hours every year and hire special help to fill out their tax return at an average compliance cost of between $300,000,000,000 and $500,000,000,000 annually. It will be so complex that even those who enforce it, when asked for clarification, will give the wrong answers 70% of the time. To enforce my tax code, I will create a tyrannical organization that will have the right to siphon money directly out of personal bank accounts and I will assume all tax payers are guilty until proven innocent, bestowing the burden of proof on the individual and not me. I will create a culture of class envy and warfare where every class will feel alienated. I will allow the poor to hate the rich for not paying their fair share despite all the evidence to the contrary. I will allow the rich to hate the poor for not paying anything even though I will make them pay a highly regressive payroll tax and I will squeeze the middle class until there is none left.

    Furthermore, I will make my tax code available to the highest bidder. Anyone with enough money would be able to lobby me for special tax breaks, and subsidies would be sold to anyone who can afford it. I will pick winners and losers based on who gives me more money and I will dictate behavior by rewarding and punishing as I see fit.

    I will reward illegal activity and only tax those who work legally. I will also increase the tax on corporations to the point where they can no longer produce in the my country and force them to move overseas. I will not only tax corporations income in my country but I will tax their income anywhere else in the world and I will not allow them to bring money in from overseas and invest in my country without a hefty repatriation tax. To top it all off, I will demonize the corporations for leaving due to my tax plan, even while I continue to subsidize them, sell them deductions and eventually bail them out with debt & tax payer dollars.

    And I will do all this in the background. I will automatically deduct my taxes from everyone’s paycheck without them being able to stop me. I will change how much I take out with every loophole & exemption that I sell. By controlling everyone’s money I will be the most powerful person in the world.

    Forget the FairTax Henry, this is my Brave New World. Will you join me?

  187. comment number 187 by: Henry

    Max, you said Fair Tax is good for retirees and seniors. No, it is not. Some retirees, I talk to, rely only on S.S. I was fortunate to have a retirement plan set up. S.S. is only part of it. These retirees are on fixed incomes and they rent apartments. The rents are fixed according to their income. These retirees pay little or no Fed. income tax. They use to have homes but couldn’t afford the upkeep. Now with Fair Tax added on top of their rent, you call that fair? You are not retired so you don’t know how it feels to be retired and living on fixed income. On the prebates, who figures out the consumption and the prebates? I noticed the prebates go by family. It says $208 a month, single and $415 a month, couple. That is not enough. It should be $600 to $800 a month, single and $1200 to $1400 a month, couple. The cost of living is different in every state. That is why they should exempt basic necessities from Fair Tax and no prebates. Fair Tax should be like any state sales tax. I am looking at Herman Cain’s 9-9-9 plan. If that 9% sales tax is similar to any state sales tax, I would back it. I don’t care about Fair Tax.org facts and figures. If I want to get facts and figures about the Fair Tax, I look at Fair Tax- Wikipedia. They are upfront with the information, no political ties and no connection with Fair Tax.org. I am leaning toward the Flat Tax. I am looking at all tax systems. Also: There is no such thing as a fair tax- Laurence Vance.

  188. comment number 188 by: Henry

    Max, I did watch HW&M hearing. You said Kortlikoff was a poor speaker? I noticed that Mike Huckabee is a very poor spokesman for the Fair Tax. Every time he speaks, his face twitches all the time as if he got something to hide. He was a very lousy governor. He got this talk show and I watch how he speaks. If Fair Tax want to bring their message across, they should exclude Huckabee as a spokesman. Even though I’m against the Fair Tax, they should get a better spokesman for their cause.

  189. comment number 189 by: MadMax8600

    Henry - are we back to this again? The Prebate is not an arbitrary number it is based on the US Poverty level. Under the FairTax, anyone living at the Poverty level pays ZERO (0) tax. So any senior or retiree who’s only living on S.S. would pay ZERO taxes, in fact, if they’re living below the poverty level they would get more money back than they spend. And as far as cost of living in different areas, how does that affect SS? Do you get more SS when you live in NY vs. TN?

    I’m glad you look at Wikipedia because they explain the FairTax Prebate correctly and clearly say that it is based on the Poverty level.

    I’ve said it before, post your numbers (or other seniors that you know) and we can do the calculations on which tax system is better for them. So far you have refused to post any numbers because you claim you don’t care what the numbers say, you just “feel” like it would be worse, despite all the proof to the contrary. Until you post actual numbers so we can do an impartial analysis to see what system is better for seniors, I’m done with this conversation. If you want to argue opinions and gut feel you can do it by yourself.

    BTW, Even though this is irrelevant to the facts, since you keep bringing it up, I have a pretty good idea about what it’s like to be a senior on SS. My grandfather is 85 and my grandmother is 83. They live on SS & I’ve been taking care of them for the last 15+ years.

  190. comment number 190 by: Henry

    Max, I just saw this in the Website. It looks like it just came in. It is called: Perry Tax, Flat Tax, Fair Tax, VAT (tax}: What’s the Difference? It is by The Atlantic. It shows all the tax systems. Worth reading. This is what they say on the Fair Tax. There are enforcement problems. With today’s tax evasion rates, the Fair Tax would have to be greater than 50% for Washington to make as much as today’s system, according to the Brookings Institution’s Bill Gale. That is why the sales tax system in Ct. failed because the state would have to raise the rate to 13% in order to balance. Ct. has 3 border states with half that rate. One thing, it shows all the tax systems and their problems. As i said it is worth reading.

  191. comment number 191 by: MadMax8600

    The Gale study has been debunked numerous times. They didn’t take into account gov’t spending which is how they concluded that the FT rate would have to be higher. Considering that gov’t spending makes up somewhere around 20% of GDP, it’s no surprise that when you miraculously don’t count it that the rate would have to be higher. Like I said, David Tuerck and Kotlikoff have shown that the rate has consistently been around 23%. In fact, Tuerck just published another article debunking Gale’s falsehoods.

    I’ll definitely read the article but it’s hilarious that someone would site enforcement problems as a negative with the FT. Just use common sense. We go from 150 million tax filers to 20 million businesses, a reduction of nearly 90%. Out of these 20 million businesses a mere fraction of them are responsible for 80% of all retail sales. These companies include Walmart, Costco, Bestbuy, etc. If an individual tax filer cheats and gets caught then only they’re affected. If a business cheats and gets caught then the entire business could suffer and go under. With the income tax, it only takes one person to cheat (write down the wrong amount on a personal return), with the FT it takes 2 to cheat (the retailer and the consumer).

    I neither support nor condemn Huckabee. Personally I don’t know much about him or his politics. I think he’s a high-profile enthusiastic supporter of the FairTax but he’s definitely not an expert. He said several times during the hearing that he didn’t know the answer to certain questions, some of which I thought were pretty basic.

    Ok, so I just read the article in the Atlantic. The explanation of the FairTax is a 3 paragraph blurb and shows that the author has no understanding of the FairTax. He cites the same misinformation that has been addressed for over a decade. The misconstruing of 23% vs 30%, the Treasury Department’s politically motivated analysis that rejected the FT without studying it and Gale’s erroneous analysis where he still refuses to release his data.

    If you read further the author is advocating a VAT (which is probably the worst tax of all) accompanied with another progressive tax.

    BTW, if you like the Flat Tax, you should check out Newt Gingrich’s plan. He also allows tax payers to choose between the current plan and a Flat Tax. He actually came out with it first and his rate is 15% not 20%.

  192. comment number 192 by: Henry

    Max, I checked both men , William Gale- Brookings Institution and David Tuerck- Beacon Hill Institude. They are both very intelligent men and both known in their fields. If David Tuerck said something about William Gale, he is entitled to his opinion. This tax has never been tested, it’s all theory. As I said before about landlords, there are a million landlords out there who are not registered as landlords. These people rent rooms or part of the house to others. Their houses are not zoned for apartments. If Fair Tax is enacted, these landlords will never collect Fair Tax on top of rent. I know some of these landlords. These people own large houses and the property taxes on them, these people rent parts of the houses. The rents are in cash and no paper work. Because of enforcement problems on Fair Tax, they will never get these people. Take care

  193. comment number 193 by: MadMax8600

    Henry, Please tell me how much income taxes these “unregistered” landlords currently pay to the gov’t for the rent they receive? People who cheat will always cheat, under the FairTax it will be easier to catch them. Also, to stay with your example, under the current income tax unregistered landlords pay ZERO. Under the FairTax, those landlords will eventually spend the money they get. Once they spend it, that money will be taxed.

    Do some more research, William Gale and the Tax Commission did not study the FairTax. They studied a generic national sales tax which exempted gov’t spending. Why don’t you go back and read the Atlantic article, I think you will find some really good responses.

  194. comment number 194 by: Henry

    Max, I will always be against the Fair Tax. The reason: the people involved with it especially Leo Linbeck and Neal Boortz. I don’t like billionaires set up tax systems. Also it is unfair for retirees and seniors. Max, you are not retired and you don’t know how it is to be retired and living on fixed income. These people use to own homes but they sold them because they couldn’t afford the upkeep. That is why they rent and their rent is fixed in line with their income. I don’t want to see Fair Tax added on top of it. I don’t want to hear that the Fair Tax is good for retirees from Fair Tax people who are not retired and had never experienced it. These people rely only on S.S. as their income. I was fortunate to have a retirement plan set up and S.S. is only part of it. My plan is not 401K. As for the landlords, a lot of these people have large homes and they rent rooms or part of the house. Some of these renters are college students and working people. These landlords work and they do pay income taxes. The rent goes for the upkeep of the house. That is why exempt basic necessities from Fair Tax and no prebates. As for the prebates, I saw the chart. It is $208 a month, single and $ 415 a month, couple. To me, that is too low. It should be $600 a month, single and $1200 a month, couple. I don’t know who figured out the consumptions? The cost of living is different in every state and everyone’s consumption is different. As for William Gale, if David Tuerck said something on William Gale, Tuerck is entitled is entitled to his opinions. I saw the statements Gale made on the National Sales Tax. He made those statements in 1998. 13 years ago. I saw the website. Fair Tax. org brought it up in 2005. A lot of things happened in 13 years. This is 2011. Take care.

  195. comment number 195 by: MadMax8600

    I was debating with someone else about the merits of the FairTax and as we were talking about exports & imports, job creators, affect on the poor, rich, middle class, etc., when all the sudden I had an internal epiphany. I’m not a Macro Economist nor was the person I was debating.

    So I started looking at the FairTax from a different perspective. I realized, when we start talking about new tax plans, every one of us suddenly turns into a Macro Economist. We start discussing compliance costs, human behavior, cheating, exports, imports, etc but the reality is that we’re not Macro Economists and even if we were, there’s still no guarantee we would be right. So instead of worrying about stuff we have no control over I encourage anyone who is interested in the FairTax (or any other tax) to ask themselves, “Is the FairTax better for me.” Take the FairTax challenge and go to fairtax.org and enter your numbers. Based on the FairTax, as it is written and presented to Congress, you will get a comparison between your current tax burden and the tax burden under the FairTax. These are just the straight numbers, no assumptions on economic growth, job creation, etc. A straight comparison on what you pay today under the Income tax, and what you would pay under the FairTax.

    Once we understand if we’re better off with or without the FairTax then:

    Let’s stop debating Compliance costs. Do you currently care or have any idea what Walmart’s or Joe’s Diner pays in compliance costs. Do you care how much McDonald’s or your next door neighbor fibs when they fill in their income tax? If they cheat, that’s the gov’ts problem.

    Let’s stop debating consumer behavior. The FairTax is written as 23% inclusive. That’s what’s currently in the bill. Anyone can argue if it will have to be more or less but it doesn’t matter. The bill in front of Congress says 23%. And for the sake of argument, let’s say it’s not 23% but 30%. So what happens? The gov’t raises the rate to 30%. The poverty level is multiplied by 30% now, still making all spending up to the poverty level tax free, and everything above the poverty level is taxed at that rate. Remember it has to be revenue neutral. The gov’t currently takes in 2.2 Trillion. So if the rate is 23% to get to 2.2 Trillion that’s what it is. If it’s 30% then that’s what everyone is paying anyway under the income tax. So the gov’t will have to convince the people that it’s the same thing and raise the rates.

    Let’s stop debating if it will hurt the poor or help the rich. Instead, find out if it will help you? The only way the FairTax will pass is if it has broad base support. Let the poor, middle and wealthy enter their numbers and see if they’re better off. If greater than 1/2 the nation is better off then the FT has a chance. If it’s > than 80% then it has a really good chance.

    Let’s stop debating the merits of the Prebate. If you don’t like it, then don’t take it. The gov’t is not putting a gun to your head to take any deductions. You don’t want the home mortgage deduction, don’t take it. You don’t want the child tax credit, don’t take it. You want to pay more in income taxes, that’s your right. Same goes with the Prebate, don’t want, don’t take it. Instead pay a flat tax of 23% on every new good or service you buy. That’s your choice, just like it’s someone else’s choice to take it. If they decide to take it, that’s their business. You can also change your mind since you have to sign up for it every year. Don’t like it to start, don’t get it. Decide that it’s good in a few years, then sign up.

    The gov’t bureaucrats, lobbyists, special interest do not want the FairTax as it takes away a tremendous amount of their power. The only way this will pass is if a majority of the people demand it. So find out if it’s better for you. If it is, support it. If not, then don’t. Just do this simple thing and worry about yourself. If you just do that and the FairTax passes then it was better for a majority of the people, if it never passes then it wasn’t better for the majority of the people.

  196. comment number 196 by: Henry

    Max, there is still that problem with Fair Tax. The problem is toward retirees and seniors. Most seniors, whom I met, rely on S.S. as their income. I also met people who are disabled and they get SSI. There are some like myself had retirement plans set up while we were working. S.S. is only part of it. My plan is not 401K. The seniors, whom I met, rent apartments at apartment residences and senior housing. The problem is Fair Tax will tax their rents. Their rents are set according to their incomes. Like I said exempt basic necessities frm Fair Tax and no prebates. The prebates are a gimmick. $208 a month, single and $415 a month, couple. Not enough. It should be $600 a month, single and $1200 a month, couple. Unless Fair Tax addresses toward seniors, disabled people, low and middle income people, I urge Congress to reject the Fair Tax plan. I don’t want to hear any comments from Fair Tax people saying that Fair Tax is good for retirees and seniors and those same people are not retired and have never experienced being retired and living on fixed income. Working and being retired are 2 different worlds.

  197. comment number 197 by: MadMax8600

    Henry - This is very simple. Have you entered your specific numbers into the FairTax calculator and if so are you better off? If you’re not better off then don’t support the FairTax. If you are better off then not supporting the FairTax hurts you and if you want to hurt yourself, that’s your choice but don’t tell others that it would be bad for them.

    Go to FairTax.org and fill out the calculator. Compare your situation under the Income tax and the FairTax then make your choice.

  198. comment number 198 by: Henry

    Max, I don’t care about their so call calculator. What I’m looking at about seniors and retirees and you keep going into other issues. The seniors I talk with pay very little or no Fed. income tax. Their S.S. is below what is taxed. When they were working, they paid into Fed. income tax. Their rent is set according to their income. With Fair Tax in there, their rent will be taxed. For instance, if their rent is set at $300, they will have to cough up additional $69 to pay the tax for the rent. Thanks a lot, Fair Tax. The illiterates who wrote the Fair Tax plan never thought of this. They were only looking at people making over $200,000 a year. I’m not the only one bringing this up. There are others and they are more volatile. For me not supporting Fair Tax doesn’t hurt me one bit and I will tell others Fair Tax has problems.

  199. comment number 199 by: FairTax Guy #12

    I am a student at Ivy Tech and I am studying fair tax. I think con # 7 is a good way to put it out if the percentage of fair tax goes up then no one will buy anything

  200. comment number 200 by: MadMax8600

    If there is one thing that is certain, Americans consume. If something gets too expensive, they will buy something cheaper but they will always buy. In fact, just look at the cost of goods over the last couple of years. Edy’s ice cream used to be 2 for $5 now they’re $7 each. Jeans used to cost $20, now they’re over $100. Gas was $1.79 and now it’s $3.50. Look at nearly every item and just through inflation it has gone up and regardless, US consumers continue to purchase. Also, the laws of supply and demand will ALWAYS kick in. If things get too expensive and no one buys them, then suppliers will have to bring down their prices to equilibrium, otherwise they will go out of business. This is basic economics and independent of the FairTax.

    With respect to the FairTax, there are three things to remember 1) the price will be included in the cost of the item, so when you go to a retail store and see something priced at $10, that already includes the $2.30 FairTax. There will be no sticker shock at the cash register. 2) PEOPLE WILL KEEP THEIR ENTIRE PAYCHECK. It’s like getting a 30% raise. Think of what would happen today if you got a 30% raise. Would you go out and buy some more expensive items? and 3) The FT will result in one of the largest economic booms in history. When the economy is growing, unemployment is shrinking and consumer confidence is high, consumption will skyrocket.

  201. comment number 201 by: MadMax8600

    Henry, thanks for proving my point. You have no interest in actually doing the math and seeing if the FairTax is better for you. You make completely false statements like “They were only looking at people making over $200,000 a year”, when in fact, they looked at hundreds of family combinations, with 98% of them making less than $200K and found that the poor and middle class would be significantly better off with those making over 200K only slightly better off. These are the facts, they’ve been published and can be reviewed anytime you like. Please provide one factual study that supports your claim? You can’t.

    But you’re not interested in the truth, instead you’re scared to death about any plan that could possibly affect social security (even for the better) so you automatically demagogue it. DO THE MATH and find out if the FairTax is better for you. You don’t like the calculator provided then create your own. Enter your specific numbers and see which way you’d be better off. As an example, you mention $300/mth in rent going up by $69. Assuming you’re an individual you would get back $208 with the Prebate. That leaves you with an additional $139 just to cover the FairTax, meaning you could spend an additional $604/mth tax free. Also under the FairTax, your Social Security payments would no longer get taxed. How much extra does that leave you? I don’t know for certain if the FairTax will be better for you because you refuse to post your numbers or do your own calculations. As long as you’re not willing to do the numbers and learn the truth then your arguments are based in here-say and assumptions and are a waste of time.

  202. comment number 202 by: FairTax guy7

    My biggest fear is who is suppose to vote this bill in, Congress. Maybe they should be fixed first. Great ideas are brought about by great men, and we seem to have a shortage.

  203. comment number 203 by: Henry

    Max, you still don’t get what I’m talking about. Some retirees don’t pay any Fed. income tax because their S.S. is below what is taxed. As a individual, I would get $208 a month prebate? That is not enough. It should be $600 a month prebate and $1200 a month, couple. You avoid the issue on retirees. These people are on FIXED incomes and they rent apartments. That is why I always say EXEMPT basic necessities from Fair Tax and no prebates. Talk to retirees and seniors and people who are disabled. The best math a retiree can do is add up what they spend in a month. Rent, food, utilities, clothes, medical, gas, auto needs, doctor visits, prescriptions, etc. multiple that by 23% or 30% and that is total Fair Tax in a month. These people pay little or no Fed. income tax. Does the so call prebate cover all that? There is no used food, used gas, used rent, there may be used clothes, no used medical. You said people will keep their entire paychecks? It depends on where you live. “There are still state income taxes to content with”. Fair Tax does NOT eliminate them. Fair Tax ignores retirees and seniors. Max, I am not afraid of anything. You said they have done $200 million of research on this? Fair Tax- Wikipedia says this that the Fair Tax people CLAIMED they have done $200 million of research on this. It never said they have done it. You look at people who work, I look at people who are retired. There are so many different types of retirement. Some retirees and people who are disabled just get S.S. As I said Fair Tax IGNORES retirees, seniors, and disabled people. It takes simple math to figured that out. Max, you are not retired and you do not know how it is to be retired. It is a different world.

  204. comment number 204 by: Henry

    Max, this just came in : Letter: The Pros of a Federal Sales Tax by Joel Prudhomme. It was in Grand Junction Free Press. Now this is more like it. It is worth reading. This is what I like to see. This would be better than this so call Fair Tax.

  205. comment number 205 by: MadMax8600

    Hi Henry. The letter looks good but it’s a 9 paragraph opinion piece. If you can show me significant, peer reviewed research on a way to exempt certain items without having to file tax returns, and without opening the doors to the litany of tax lobbyists and special interest groups all while raising the same amount of revenue, I’m all for it. So far the only way that has been shown to do that is with the Standard Monthly Tax Credit, ie. Prebate.

    I fully comprehend what you’re talking about and it once again boils down to, “IS THE FAIRTAX BETTER FOR YOU” (or other retirees) and you refuse to actually do the math and find out. Based on your comment, you’re not against the Prebate, you just want more money, correct? You want a minimum of $600 for an individual and $1200 for a family of 2. If you do the math that equates to an individual spending $31,304 on “necessities” which is 3 times the poverty level. Is that what you’re advocating? The tax payers should credit an individual the FairTax amount of 3 times the poverty level?

    Like I said, post your numbers and let’s do the math. If you’re not better off mathematically then don’t support the FairTax, if you are then you’re only hurting yourself by spreading lies and misinformation.

    BTW, please quote me correctly. The FairTax has had over 20 million in research, not 200 million. I stated it as 20 million in posts 96, 117 and others and you even confirmed it in post 119. Also from your favorite site Wikipedia, “This organization, founded in 1994, claims to have spent over $20 million in research, marketing, lobbying, and organizing efforts over a ten year period”. The 20+ million is quoted in every book published, on the FairTax.org website, and has never been disputed.

  206. comment number 206 by: Henry

    Max, I like that Federal Sales Tax by Joel Prudhomme. As you noticed there are no prebates and it doesn’t tax basic necessities. This will save the Fed. government $600 million on processing and sending out those so call prebates. That is what I’m for. Of the $600 a month, single and $1200 a month, couple, Fair Tax’s prebate rate is NOT enough. I don’t know who figured out the prebates and consumption? The people must have been on drugs when they figured that out. Everyone’s consumption is different. The Federal Sales Tax system will be better for retirees and seniors than this so call Fair Tax. I talk to seniors and retirees about the Fair Tax and what it taxes especially rent. They went heavily against it. I told them about the prebates. They laughed at it. I don’t care about Fair Tax.org. I prefer Fair Tax- Wikipedia. Wikipedia says Fair Tax “claims” to have spent $20 million of research. Wikipedia never says they “have” done the research. “Claims” and “have” are 2 different words. As I said about Wikipedia, they are straight forward with the information, no political connections and especially NO ties with Fair Tax.org. I wrote to another Fair Tax person from another website about Federal Sales Tax by Joel Pudhomme. I know he will be for it. I’m going to back Federal Sales Tax instead of this so call Fair Tax.

  207. comment number 207 by: MadMax8600

    If it was not 20 Million then someone on Wikipedia would’ve changed it, that’s how Wikipedia works. The FairTax Prebate is based on the poverty level. All spending up to the poverty level is tax free.

    I don’t have a problem with Joel’s Federal Sales Tax letter but where are the details. If you’re going to exempt caviar, Kobe beef, 10,000/mth rental property, etc, then what is the sales tax rate? Is it 60%? Show me some research. Show me the math? If it’s truly better then I’ll support it but a 9 paragraph letter is irrelevant.

    I’m getting tired of your opinions Henry. POST YOUR NUMBERS AND PROVE THAT YOU WOULD BE WORSE OFF WITH THE FAIRTAX. Unless you’re willing to put up some facts, stop wasting my time.

  208. comment number 208 by: Fair Tax Guy 5

    i am a student at Ivy Tech Community college and as a class we are doing a study as a class about fair tax. I have been to many sites and seen why people are for fair tax and why people are against fair tax. After all the stuff that I have seen i think there will never be a fair taxation in the United States of America because there are too many sharks out there that will not allow that to happen. Plus there will be a chance that workers from the IRS will lose a job.

  209. comment number 209 by: Henry

    Fair Tax Guy 5: The people in the IRS will not lose their jobs under Fair Tax. The IRS will become the Sales Tax Bureau {New IRS}

  210. comment number 210 by: Henry

    Max, I’m not wasting anybody’s time. As you know this is a free country. Everyone has a right to express their opinions whether you agree with them or not. As you know Fair Tax is not the tax system of this country. I don’t think Fair Tax will ever become law. Too much opposition to it. On Joel’s Federal Sales Tax letter, I know there was no numbers to it. One thing I like about it, there are no prebates and it doesn’t tax basic necessities. Whether I or the people will be better off or worse with the Fair Tax? Who knows? Fair Tax is just a theory. It has never been tested. Joel’s Federal Sales Tax letter is just a start. May be later on he will be more specific on it. I hope he will be and give some numbers and details in it. I know you want me to give numbers. The numbers are in your sales receipts in what a person spends in a month. It changes every month.

  211. comment number 211 by: MadMax8600

    You can easily calculate your lifetime or yearly welfare under the current tax code and the FairTax. All you need is how much you make. Assume you spend every single penny of what you make, you can do a calculation of what system is better for you. FairTax.org provides a calculator (and no it is not a “SO CALLED CALCULATOR”, it really is a calculator) which shows all it’s work and provides you all the data - there’s no magic in it. If you don’t like the data then make adjustments for your specific scenario. Your refusal to fill out the numbers just shows that you don’t really care about the truth, only spouting your opinion.

    As far as IRS agents, you are both right. The IRS will be abolished and replaced with a much smaller organization. Some IRS agents will transition but since the number of filers will drop from 150 million to around 20 million there will obviously be some down sizing. That said, I don’t think anyone should feel sorry for IRS agents. Most IRS agents are good at math and smart. Those are very employable skills.

  212. comment number 212 by: Henry

    Max, how you know it will be a smaller organization? That is Fair Tax .org conclusion. It is a so call calculator. Anything by Fair Tax.org is so call. I am not talking about figures and numbers. There are problems with the Fair Tax. (1) Taxing basic necessities and (2) prebates. If you look at Joel’s Federal Sales Tax letter, there is no taxing of basic necessities and no prebates. Too bad, he didn’t put numbers or specifics on his plan. May be later on he will. The other problem is the people behind it. Leo Limbeck, founder and head of Fair Tax.org. Linbeck is a Texas billionaire. He and his rich cronies put the Fair Tax together. Neal Boortz, author of 3 Fair Tax books. Boortz is nothing but a loud mouth agitator and a racist. I saw some of his transcripts of his radio talk show. I would never say that stuff in front of a child or at a street corner. Boortz is protected by the 1st. Amendment and the safety of the radio station. John Linder, Congressman who put the first Fair Tax bill to the House Ways & Means. I check him out. Non-disclosed travel paid for by a client of lobbyist Jack Abramoff. He almost got in trouble on that one. Typical Politician. It is not the figures or numbers of the Fair Tax but the Fair Tax itself. I cannot back it for what it is.

    P.S. Max, it should have been Leo Linbeck, not Limbeck.

  213. comment number 213 by: Henry

    Max, I tried Fair Tax.org so call calculator. I put down what I make on retirement and other things. All their figures came out wrong. This calculator was set up for people who are working and not for retirements. A retiree who has a retirement plan and S.S. does not pay any Social Security or Medicare deductions. The minute retirement happens, those deductions are eliminated. I know I’m retired, you aren’t. This calculator is useless to me. Some retirees don’t pay any Fed. income taxes. As far I as I know, this calculator is out.

  214. comment number 214 by: Fairtax Guy#2

    I think it is time to change our tax system before we get any deeper. The I.R.S. should be eliminated and replaced with the Fair Tax. The name alone speaks for itself, we deserve fairness in this country. Something has to change, so why not change for the better?

  215. comment number 215 by: Fair_Tax_Dude12

    Make Them Pay

    Recently we’ve all had our attention turned to a new version of our beloved country’s tax laws. Several people agree with the new concept and many don’t want anything to do with it. The proposed version of this tax is is to have no federal income tax but have a higher national sales tax. Our current system is full of loop-holes that those who can afford to hire an accountant to use and abuse these loop-holes don’t end up paying taxes. Those of us who can’t afford such “help” pay our normal base rate of tax and we move on.

    We’ve tried proposing an “equal tax” law where everyone pays the same base rate no matter their income. Such ideas were rejected an thrown out. Another action we’ve tried to take is to ask those who make over a million dollars a year pay a 5.6% tax. Congress threw that out quite quickly. According to those two failed attempts at restoring our nation, those who have the money to pay taxes comfortably, ( like our nation’s millionaires ), do not want to. So to that we propose this new tax on our nation’s sales tax.

    This sales tax would have a surplus of positive effects on our nation. For example, the nation’s stock market would not be taxed. This would really encourage a lot of sales and stimulation in our stock market, turning it around and helping smaller businesses’ stocks to be bought without so much risk. These low risk encourages the stimulation of our nation’s small business’ and would only help create jobs.

    One activity of that is evading our tax laws would be illegal narcotics. This law would make those who make such large amounts of money actually have to pay the tax because anything they buy would have the tax added on to it. Another problem it would solve is our problem with the increase of illegal immigrants. In the same fashion, they would also pay taxes because the goods the buy from anywhere would have our new tax on it.

    This new law also includes an allowance for families depending on their size. Almost like welfare, but for any income level. This would help many families pay off whatever bills they deemed the money necessary, whether it be the electric bill or their child’s books for school.

    The Fair Tax Act has my vote. When we have so many of our “upper-class” not willing to help our economy then this new law would make them. No one can evade a sales tax if enforced on the whole nation. Hopefully President Obama will give this law a chance and help renew our nation in its current economic turmoil.

  216. comment number 216 by: Henry

    Fair-Tax-Dude12: You talk about illegal activity like drugs and Fair Tax is going after them? Who is going enforce this so call Fair Tax on them? You guys want to rid of the IRS and any enforcement. This so call Fair Tax is not going to affect any underground economy or illegal drug trade. On paper, they don’t exist. FairtaxGuy#2: On Fair Tax, the name speaks for itself on fairness? I wish it does. Fair Tax is very unfair for seniors and retirees. Fair Tax taxes food, clothing, rent, housing, utilities, everything medical, gas, hospital stays, doctor visits, prescriptions, gas, auto repairs and so on. Their so call prebates don’t even cover that much. You call that fair for retirees? I don’t want to hear any comment from any Fair Tax people saying Fair Tax is good for retirees and that person is not retired and has experience retirement any living under fixed income. Fair-Tax-Dude12: Fair Tax is not a Law. It hasn’t been voted on by Congress and signed by the President. It is still a bill, not law. Chances of it becoming law are very slim. What they should do is fix the bill.

  217. comment number 217 by: Henry

    Also I forgot to mention on these so call prebates. It will cost the Federal government over $600 billion a year to process and send out. It will be the largest entitlement program ever. This country is in debt and you want to start this? What they should do is exempt basic necessities from Fair Tax and no prebates. Prebates are money going in-money coming back.

  218. comment number 218 by: Henry

    I just got this from Political Correction Website: This is according to Bruce Bartlett, Tax Analyst Report: Under the Fair Tax, every time you purchase a service, you will probably get 2 prices_ one you can pay with a check or credit card that includes the Fair Tax and one you can pay in cash and save 23%. Because there would no longer be any audits of income, since the IRS would have been abolished, tracing such tax evasion would be extremely difficult. This is what you call cash under the table. That is how the underground economy and illegal drug activities are going to run under Fair Tax. No paper trace. On paper, these economies don’t exist. Some Fair Tax, isn’t it?

  219. comment number 219 by: Bobby

    You forget as a con that the fair tax is quite regressive. It’s a fact that as income increases, consumption as a percent of said income decreases, thereby decreasing the effective tax rate of the richest americans.

  220. comment number 220 by: William Condon

    “The Fair Tax would be “progressive” in the sense that it would avoid taxing financially challenged (i.e., poor) people for basic necessities. This is accomplished by means of a “prebate”, which according to Fairtax.org would be $2,348 per year for a single person or $6,297 per year for a family of four.” From above.
    Progressive yes however I took an informal survey of knowledgeable conservative Republicans . To the extent there was a consensus it, the fair tax, had to be more progressive before it would be enacted.

  221. comment number 221 by: Henry

    There is one problem with this so called Fair Tax. If the IRS is eliminated, who is going to collected the tax and enforce it? The Fair Tax people wrote in their plan that the states are going to collect the tax and they will be paid a percentage. That is in violation of Article I, section 8, U.S. Constitution: The Congress Shall Have The Power To Lay And Collect Taxes. It doesn’t say anything of states being tax collectors for the Federal government. Even under the present system, the IRS handles Federal tax collection. Neal Boortz wrote it in his book,”Fair Tax Book” of a federal agency, “Sales Tax Bureau” plus there will be the ,”Excise Tax Bureau”. Whoever wrote this in the Fair Tax Plan of states doing this should have known better. There are others who have brought this up, I”m not the only one. Plus of the so called prebates: There is no income or consumption test for the prebate. It would go equally to those who buy nothing in the course of a month, as well as to billionaires like Warren Buffett and Bill Gates, in effect, it would constitute a National Welfare Program with a flat payment, regardless of need. That is why I am against the so called Fair Tax because of lies involved of the collection and of these people thinking they are above the Constitution.

  222. comment number 222 by: MadMax8600

    Hey Henry, glad to see that you’re finally using the term “so called” correctly, there may be hope for you yet. I’m also glad to hear that you’re a Constitutional lawyer and know more than the lawyers that have studied the FairTax and said it was Constitutional. BTW, speaking of misleading facts, the States DO NOT have to collect the FairTax. They are given the option to do so. If they choose not to they can outsource it to another state or an independent company. Since 45 out of 50 states already collect a state sales tax and they would be get paid to collect the FairTax, it’s highly unlikely that any of them would choose not to but again it would be VOLUNTARY.

    As far as the Prebate goes, how is this any different than the earned income tax credit? What if you don’t spend anything all year and Bill Gates spends 10 bazillion dollars? You both can apply for the Earned Income Tax Credit. Do you consider the EITC to be a National Welfare Program? The Prebate refunds all taxes spent up to the poverty level. Anyone who spends less than the poverty level will get a credit. Great, so you think people will live in abject poverty and not buy basic goods and services just so they can put a couple of dollars into their bank account?

    The bottom line is that all of your arguments are ridiculous. Just tell people the truth. You don’t support the FairTax because you are afraid that it will affect your Social Security check. I have proven to you on numerous occasions (and different sites) that you would be better off under the FairTax, but the uncertainty of change scares the daylights out of you.

  223. comment number 223 by: Henry

    Max: I don’t care how many law degrees these so called lawyers have, the so called Fair Tax STILL violates the U.S. Constitution for the states to collect the Federal tax for the Federal government. Even with the present system, the Federal government uses the IRS. Even Neal Boortz wrote in his book, “Fair Tax Book” that there has to be a Federal agency handling this, “Sales Tax Bureau”. Federal government handles their taxes and the states handles theirs. For the states getting paid to collect, constitutes a bribe or kickback. It could also violate any state constitution. Look at the gas tax, Federal and state. Federal government handles theirs and the state handles theirs. As for the so called prebates, It is called a National Welfare Program. There is no consumption test. Your statement: how is this any different than the earn income tax credit? It is different. “Pre” means before. Earned income tax credit is after the tax is paid and the returns are processed. As for the spelling lessons: Cut out the spelling lessons on telling people how to write. According to the dictionary, there is no such word as prebate. Typical Fair Tax statement. Also capitalizing the P on prebate is not needed. It is not a name or title. My arguments being ridiculous? Your conclusion. As for me not supporting the so called Fair Tax because I’m afraid it will affect my Social Security check? Your conclusion. I will not back a tax system that is full of half truths and lies and by people who think they are above the Constitution. During the state governors convention, the governors voted not to support any type of national sales tax.

  224. comment number 224 by: Henry

    Max: you think I’m the only one who brought this up on states collecting this so called Fair Tax? Others have brought it up in different websites. As you know, the Federal government always collects their taxes and the states collect their taxes. The Federal government has their agencies and the states have their agencies. No one interferes with the other. That is how it should be. As for the states in voluntary collection? The states should stay with their tax system. The Federal government should handle theirs. As for your so called lawyers with their law degrees? Being lawyers doesn’t make them above the people or the Constitution. A regular person can read the Constitution and understand it. It does not have to be a lawyer. Our Founding Fathers wrote the Constitution. If you look at their lives, some of them were lawyers. There were men in other professions. George Washington was not a lawyer. Just like the Bible, a person can read and understand it. It does not have to be a priest or another clergy to interpret it. As for your so called Fair Tax? It will not pass as it is written in its present form. The collection part should be changed and the so called prebates eliminated. There should be some exemptions like they give to businesses as business expense. The tax on rents and some necessities should be eliminated. I talked to people especially people on fixed incomes. The one part, they don’t like is the tax on rent. These people’s rent is set according to their income. I will not back this so called Fair Tax is the reasons I stated.

  225. comment number 225 by: MadMax8600

    OK Henry. Over 20 Million dollars was spent on hiring the best tax attorneys and Constitutional Lawyers that money can buy who all say the law is Constitutional but because you can read, you’ve convinced me. Since you are so convinced that the FairTax is unConstitutional then feel free to stop wasting your time spreading lies and misinformation about it, since it will never be ratified.

    For those who would rather take the advice of experts, here’s some info regarding this topic.

    I have seen some information posted in a various places that the FairTax is unconstitutional. Here are the basics from the Constitution regarding taxation. The language in section 9 about direct taxes does not apply to the FairTax because the FairTax is an an indirect tax. Below I have a quote from a CBO paper defining it as an indirect tax.

    Karen Walby, Ph.D.
    FairTax.org

    The US Constitution sets forth only a few criteria regarding taxation.
    Section 8, Clause 1 states that “The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States.” Section 9, Clause 5 states that “No Tax or Duty shall be laid on Articles exported from any State.” .

    The FairTax is by definition a form of excise tax (see the definition of excise tax below) so it meets the first criteria of the type of taxes that Congress can levy. Since the FairTax rate and definition of the tax base would be the same in every state, it meets the second criteria that excises shall be uniform throughout the United States. In addition, the FairTax does not tax exports. Therefore, the FairTax appears to meet both the spirit and the letter of the Constitution, and would therefore be in compliance with the Constitution.

    In the case of the income tax, it is a different story. Section 9 states that “No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.” The income tax is a direct tax, but the only direct tax that the Constitution allows would be one that is based on the population, for example, what is known as a “head tax”, i.e. so much money per person. That is why the 16th amendment was necessary.

    Definition of excise taxes:
    Excise taxes are categorized into two categories by their structures: (1) Ad Valorem - A fixed percentage charged on a particular good or service. These are normally referred to as sales taxes. This is what the FairTax is. (2) Specific - A fixed dollar amount dependent upon the quantity purchased. Today, these are still referred to as excise taxes, i.e. so many cents per gallon of gas.

    [“An indirect consumption tax in which the base consists of the sales of businesses to non-businesses (a value-added tax or the retail sales tax)” Quote from Congressional Budget Office paper, “Comparing Income and Consumption Tax Bases,” July 1997, page 37.

    Excerpts from the US Constitution related to taxation powers of federal government.
    Article. I.
    Section. 2.
    Clause 3: Representatives and direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers, which shall be determined by adding to the whole Number of free Persons, including those bound to Service for a Term of Years, and excluding Indians not taxed, three fifths of all other Persons.
    Section. 8.
    Clause 1: The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States; [The FairTax is uniform throughout the US.]
    Section. 9.
    Clause 4: No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.
    Clause 5: No Tax or Duty shall be laid on Articles exported from any State. [The FairTax does not tax exports. It only taxes goods/services consumed in the United States.]
    16th Amendment
    The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration. [This is further evidence that an income tax is a direct tax; a consumption tax is an indirect tax, it is not levied directly on the individual himself or herself but only indirectly as the individual consumes.]

    Karen Walby, Ph.D.
    Consultant

  226. comment number 226 by: William Condon

    Like it or not a recent unscientific poll of rich Republicans indicated to me that the fair tax would never pass because it appears to be insufficiently progressive. It could raise the rate as the cost of the item purchased increase. This change could be sold as taxing the rich so that everyone was paying their fair share. The fair tax would remain a voluntary tax thus eliminating the mandated immoral federal income tax mandate. (Immoral because taking by force is stealing)

  227. comment number 227 by: MadMax8600

    Actually William, you do have one thing right, the FairTax is a tax on wealth, so the rich Republicans (and Democrates, Libertarians, and Independents) will be taxed. I’m not sure what “insufficiently progressive” means since it’s subjective but the Average Effective tax rate ranges from -23% to 23%. Here’s a good link showing what the effective rate would be based on spending levels. Looks pretty darn progressive to me.

    http://fairtaxer.files.wordpress.com/2011/06/table1-2011updatehowtheprebatemakesthefairtaxafairtax1.jpg

  228. comment number 228 by: William Condon

    Max in order to get the necessary votes to pass the fair tax it must APPEAR to be more progressive. Half of the country believes the rich do not pay their (subjective) fair share. I think the fair tax is sufficiently progressive. A little more progressivity would be a small price to pay to remove the immoral income tax.

  229. comment number 229 by: MadMax8600

    It’s about education not some mythical subjective words like “fairness”. You understand that the FairTax is sufficiently progressive because you understand the FairTax. Those who think it’s not, just don’t understand the FairTax. Instead of messing with the FairTax by adding different levels, exemptions, preferences, etc (which is exactly why we have an 80,000 page income tax code), we’d be much better off educating those who think the FairTax is not progressive enough.

  230. comment number 230 by: Henry

    Max: I don’t care about the 20 million dollars of research and the lawyers and Constitution lawyers. That is Fair Tax.org’s conclusion if that 20 million dollars was spent. Federal government handles their taxes, the states handles theirs and the local governments, theirs. Max, I TOTALLY DISAGREE WITH YOU. I am talking about the collection of taxes. I saw the amendments. It doesn’t say anything of states collecting Federal taxes for the Federal government. Sorry, Max, NO SELL.

  231. comment number 231 by: MadMax8600

    Perfect Henry, you are convinced that the FairTax is unConstitutional so stop wasting your time with it. Stop spreading lies and misinformation and accept the fact that the FairTax will never pass because you think it’s unConstitutional.

    As I said in my previous post, the proof I provided regarding the Constitutionality of the FairTax was not intended for you because no amount of proof will ever change your “opinion”. I merely provided the proof for anyone who doesn’t have a closed mind and is willing to accept the facts & learn from them.

  232. comment number 232 by: Henry

    Perfect, Max, now that I don’t like your so called Fair Tax, are you going to check my spelling on every one of my comments? LOL. May be you are going to send me some place so I can be INDROCTRINATED into your so called Fair Tax. Read some of your comments, you really get into it. No tax system is fair whether it is this system or any other system. There is no such thing as a fair tax. About me spreading lies, it could be the truth. Have those Fair Tax people ever told the truth? Your conclusion. Now you can check my spelling. Why don’t you check the writers’ spelling also.

  233. comment number 233 by: MadMax8600

    I will waste no more time with you Henry. You’ve already admitted that you would support the FairTax if the Prebate was bigger so it’s not about the FairTax model, it’s about you wanting more money.

    To refresh your memory, these are your words from a post above:
    “As a individual, I would get $208 a month prebate? That is not enough. It should be $600 a month prebate and $1200 a month, couple.” - Henry

    Apparently you’re not concerned about the Constitutionality of the FairTax as long as you got at least $600/mth.

  234. comment number 234 by: Henry

    Max: You didn’t answer my question. I never questioned the constitutionality of the so called Fair Tax. ArticleI, section 8, U.S. Constitution: The Congress Shall Have The Power To Lay And Collect Taxes: THERE IS YOUR CONSTITUTIONALITY OF YOUR SO CALLED FAIR TAX. Isn’t it that hard for you to answer my question? I don’t care how much those Fair Tax clowns spent on their so called research. I got this from Fair Tax.org on how the tax is collected: Retail businesses cllect the tax from the consumer, just as state sales tax systems do in 45 states: the Fair Tax is simply an additional line on the current sales tax reporting form.Retailers simply collect the tax and send it to the state taxing authority. All businessess serving as tax collectors receive a fee for collection and the states also receive a collection fee. The tax received from the states are then sent to the U.S. Treasury. There is nothing in the U.S. Constitution for the states acting as a tax collector for the Federal government to collect Federal taxes. Even Neal Boortz, a lawyer himself, wrote in the “Fair Tax Book” that there has to be a Federal agency, “Sales Tax Bureau” to handle and process the tax. For states doing that may violate the U.S. Constitution and any state constitutions. For the states doing that would increase the workforce of the state agency, constituting higher state taxes to pay for the workforce. The Fedral government has the IRS to process and handle the Federal tax, the states have their agencies and the local governments, their agencies. Nobody interferes with each other. They do that with the gas tax. I am looking at the constitutionality of the states’ involvement in the collection of the Federal tax and not the constitutionality of the Fair Tax itself. One finiancial person said this on the Fair Tax that there has to be 2 Federal agencies to handle and process the so called Fair Tax. “Sales Tax Bureau” and the “Excise Tax Bureau”. Now, was that hard? Also you don’t have to capitalize the “P” on prebate. It is not a name or a title. NOw chew on this one, Max.

  235. comment number 235 by: William Condon

    Author: MadMax8600
    Comment:
    It’s about education not some mythical subjective words like “fairness”. You understand that the FairTax is sufficiently progressive Max You could raise the tax rate and the amount of the prebate. Sell the size of the prebate. No additional complications. We all know the rate will increase anyway. My point is that the product requires more sizzle as in, sell the sizzle not the steak, or it won’t sell. What that change should be is above my pay grade but it does need to happen. Bill

  236. comment number 236 by: MadMax8600

    Interesting point William. Personally I think the FairTax sizzles pretty well as is. Of the studies I have seen, those who take the time to learn about the FairTax overwhelmingly support it, roughly 80%. I also don’t necessarily agree that the rate will go up. The FairTax is one rate for everyone, meaning if the gov’t wants more money they will have to raise the rate on everyone. No more class warfare, divide and conquer tactics. In fact, if every single voting (and non voting) America sees how much the gov’t takes out of each dollar that is spent, I think there will be a lot of pressure to lower the rate, not raise it. Right now, the masses vote for the politician who promises them more benefits and says they’ll pay for it with other people’s money. I doubt that many people will vote for a politician who promises to raise their taxes so they can give them their money back in welfare programs.

  237. comment number 237 by: Henry

    Max: You didn’t answer my comment because you don’t have any answers. You said in your studies, that people who study the so called Fair Tax that 80% support it? Your conclusion. The most I heard is that most people want the rich to pay their fair share of taxes. Most politicians are talking about cleaning up the present tax system making it more fairer. There were 72 sponsors in Congress for the so called Fair Tax when it started. Now it is down to 66 sponsors. Mike Huckabee who spoke at the House Ways & Means Committee for the so called Fair Tax was laughed at. Mike Huckabee was the Worst Spokesman for the so called Fair Tax. Sen. Saxby Chambliss, sponsor of the so called Fair Tax, when interviewed, spoke of making the present tax system more fairer. Not once did he ever said anything of the so called Fair Tax. He had a very good chance, not one word. Dream on , Max.

  238. comment number 238 by: Llorta

    It certainly is a very interesting proposal after looking at it through and through. The concept of replacing all present federal taxes with one single sales tax is nice and easy enough to understand, for someone such as myself. And, the FT does present a very clear logistical upside to the present tax system in the fact that businesses currently spend billions of dollars on hiring accountants and tax attorneys to waddle through payroll, corporate, and excise taxes AND all the deductions/loopholes that ensue. All they now have to do under a FT is report their sales and the tax, just like in my homestate. Finally, those accountants can work on more useful things!

    The prebate is perhaps the most interesting twist to this entire thing, it seems like a combination of an actual tax rebate and the concept of a guaranteed minimum income (GMI). Definitely better than having an infinite tirade of loopholes for “necessities”

    My only objection comes down to two things:

    1) In the current proposal (HR25) section 905 seems to be worded as though there is a 23% income tax on foreign nationals living in the US (?) or something to that degree. If anyone can cut through that legal jargon that would be much appreciated.

    2) Financial institutions: How are they taxed? Their goods/services are a bit more complex than perse, a manufacturer or a mom & pop store.

  239. comment number 239 by: Madmax8600

    @Llorta - Good comment. I’m getting clarification on question 1) and will post a response as soon as I get it.

    As far as question 2) “The purchase of stocks is considered a purchase for investment purposes and not personal consumption so they are purchased tax free. The service fees charged by the broker, however, are personal consumption and therefore subject to tax.”

  240. comment number 240 by: Madmax8600

    @Llorta - here’s a response for question #1.

    1) The U.S. has tax treaties with other countries and those treaties at times require the U.S. to withhold income tax from foreign nationals under the treaty. The FairTax Act cannot renege on the Treaty, so this is how those situations are addressed. What about the non-treaty countries and their nationals within the U.S.? Their income is taxed at 23%. That is an attempt to level the playing field insofar as practical between foreign nationals covered and not covered by treaties.

  241. comment number 241 by: Henry

    Max: You are still avoiding my question on the collection process. I have brought that up to some Fair Tax.org people and they were very mute on it. As I said there is nothing in the U.S. Constitution that says the states will be tax collectors for the Federal government, collecting Federal taxes. Even under the present system, the Federal government uses the IRS to handle Federal taxes. Even Boortz said it in his book of a Federal agency handling this tax. They do the same thing with the gas taxes. I’m going to bring this up when your so called Fair Tax is mentioned.

  242. comment number 242 by: Madmax8600

    I said I was done with you Henry but you keep bringing up this issue like you’ve figured something out and it makes any difference. As I’ve said before on numerous occasions, the states DO NOT have to collect the tax. They have the OPTION to collect the tax and will receive PAYMENT of 1/4 of 1% to do so. If the states CHOOSE not to collect the tax they can outsource it to another state or a private company. There’s no FORCE involved. What do you not understand about the words OPTION or VOLUNTARY?

    All that said, what do you care? How does it make any difference to you how and who collects the tax? Are you an attorney, are you an accountant, do you work for any state or federal tax collection agency? You don’t like the FairTax so you come up with one idiotic reason after another to try and poke holes in it. As an average citizen, the only time you have to worry about the FairTax is when you go to the store and buy something or when you receive your Prebate refund. Everything else will be worked out between the business the state and the federal gov’t without any further assistance from you.

  243. comment number 243 by: Henry

    Max: I’m not done with your so called Fair Tax, yet. It doesn’t matter whether it’s voluntary or not, it is STILL in violation of the U.S. Constitution on the collection part. It doesn’t matter whether I’m an attorney, accountant or a collection agency, ANYBODY can read the U.S. Constitution and understand it. Look up Webster’s Dictionary, there is no such word as prebate. Typical Fair Tax word. And AGAIN, you do not have to capitalize th “P” on prebate. It is not a name or title. And how your so called Fair Tax is doing? Not very well. Your so called sponsors are not even pushing it. They’re more in involved with the Bush tax cuts than with your so called Fair Tax. Tell the truth, don’t stretch it.

  244. comment number 244 by: Jim Brown

    When a few folks do their best to write up the problems with the Fair Tax Bill, you know they are involved in a business that gets big tax breaks anyway and don’t want to loose them or they do taxes for a living. Tax people will just have to more into other areas like business profit and loss.

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