The Fair Tax (And Why I Support It)

The Band Of Patriots ^ | 8/17/11 | Bryan Thomas

[bthockey]

For the past couple of weeks, I've been looking into the Fair Tax, a tax law that is picking up a lot of momentum since many GOP candidates, including Herman Cain, support it. For those who don't know what the Fair Tax is, it is essentially a national sales tax of 23%. Even though that might not sound too pleasing, what makes the fair tax so great is that it abolishes all other federal taxes. Income, capital gains, and payroll taxes would all cease to exist.

To bring support to the Fair Tax, which I believe is much better than our current system, I created a list of 4 reasons why you should support the Fair Tax.

[BillT]

There would be huge tax evasion, bartering, underground sales, etc...

Unlike now where all criminal activity is exempt from the Income tax;...

At least with a sale tax the 50% who do not pay any income tax, would also be paying their "fair share".

[RoadTest]

Wouldn’t a 23% tax on purchases bite people harder the farther down the economic strata they reside? Seems to me it would be a pittance for the affluent but a big obstacle for people struggling to make ends meet.

It should not applied to food and drugs.

[arthurus]

The Fair Tax as explicated by Neil Boortz includes one element that is identical to the very worst and biggest single negative of the current iteration of the Income Tax. It takes the “poor” essentially off the tax rolls with the “prebate” and leaves in place a whole class of people who pay no tax and are therefore a ravening constituency for ever greater spending and higher rates. The prebate will also drive low earners off the books and into the drug trade etc just as removing great numbers of people from the necessity of paying the income tax does now.
Better would be a flat 9 or 10% personal income tax with no exceptions, deductions or exemptions accompanied by no cap gains tax and no business taxes.

[all the best]

Wow! Cool! Devising a more efficient way to take our money and support/perpetuate the federal monster that is destroying our future and our way of life. Will conservatives never end their schemes to create a better way to rob us? Heaven help us. How about cutting the federal government down to its constitutional size then it really won’t matter how we collect the minimal taxes.

[Bigun]

YOU need to follow the link below and READ before you further embarrass yourself!

http://www.fairtax.org

[Bigun]

Not at all! In fact the fairtax is the ONLY proposal that would completely untax the poor!

http://www.fairtax.org

[cc2k]

Wow!!! What a mental giant wrote that blog posting.

He starts out: "I created a list of 4 reasons why you should support the Fair Tax." Then he proceeds with: "1. Taxed At The Point Of Consumption … 2. Cash Paid Occupations Won't Be Neglected … 3. No More IRS … 4. Monthly Prebate System … 5. The Fair Tax Is Revenue Neutral."

Somewhere in there, there might be one good reason to support the FairTax. I doubt there are 4. And he tried for 5 after claiming 4.

Specific rebuttals:

1. The problem we have today isn't that we're taxed the wrong way. The problem is that we are taxed excessively. Actually, the biggest problem facing Congress today is too much spending. Changing the method of taxation doesn't reduce the tax burden, nor does it reduce spending.
2. The author obviously hasn't thought this through. Does he believe that purchasers of illegal drugs and services from prostitutes, who currently don't file 1099's for the money they spend on these purchase from individuals, will begin to insist that their hookers and drug sources provide proper receipts, in compliance with Section 509 of the FairTax Act. And obviously, prostitutes and drug dealers who currently don't file yearly or quarterly income tax paperwork for their earnings will be excited to file the proper monthly reports with their state to properly remit the fair tax on their taxable sales. I live in the real world, where all black market transactions go untaxed by all taxation systems. The FairTax will never change that reality.
3. Since the FairTax bill doesn't start with the repeal of the 16th amendment, it just promises that some future Congress will allow the FairTax to sunset if that amendment isn't repealed, the IRS won't be gone for long. A simple majority vote from both houses of congress plus a signature from a president will bring back the good old IRS, along with the progressive income tax system. Count on that.
4. I believe that having anyone expecting a monthly check from the government for no particular reason is a very bad idea. Having everyone expecting a monthly prebate check from the government is an even worse idea. There will be "means testing" and various other social meddling inserted into this process, and it will be a perfect way for progressives to pay off their constituencies from the public treasury. This will become orders of magnitude worse than the current "refundable tax credit" system.
5. Since we are taxed excessively now, "Revenue neutral" just means that we will continue to be taxed excessively in the future. Also, since, theoretically everything the government buys will be reduced in price (due to there being no more "embedded taxes" and "compliance costs"), a government which collects the same revenue will be enabled to be something like 30% larger if the budgets aren't cut.

Having said all that, a national sales tax is inevitable. It doesn't happen today because conservatives don't like it because it's a nearly limitless supply of funds to enlarge the government, and liberals don't like it because it's regressive and taxes the poor more than the rich. When conservatives figure out that it's regressive, and when liberals figure out it's a nearly limitless supply of cash for their programs, a national sales tax of some kind (VAT or consumption tax) will be a done deal. That might happen with the "SuperCommittee," or sometime soon.

[SES1066]

BTT for later read

[cc2k]

Bigun wrote:

Not at all! In fact the fairtax is the ONLY proposal that would completely untax the poor!

You say that like it's a good thing. Progressives and Socialists love that idea. Creating an untaxed, dependent class which survives on their monthly fix of "gubmint checks." The FairTax will add to that.

[Cheburashka]

There would be huge tax evasion, bartering, underground sales, etc...

Unlike now where all criminal activity is exempt from the Income tax;...

At least with a sale tax the 50% who do not pay any income tax, would also be paying their “fair share”.

---

1) So we will make the entire American population into either tax-paying chumps or tax-evading criminals. Sweet. Actually everybody will be criminals, the corruption of the black market will seduce everybody sooner or later. The only question will be: How much do you cheat? That's all? You pansy!

2) You don't understand the Fair Tax proposal. The people who don't pay their fair share will be sent quarterly checks as refunds of the Fair Tax they theoretically do pay. Note the word theoretically. Of course that is only if the Fair Tax proposal is actually passed and never amended. No chance of that - Congress will screw with the original law (count on it) before it is ever passed and over time will add to the quarterly refund checks and turn them into an another Government Free Giveaway. We need so many more of those.

[so_real]

if you think for one minute that congress is gonna enact this sales tax and abolish the income tax, you are sadly naive. a flat tax that includes all Americans is more fair, less complicated, and cheaper than this monstrosity.

And if you believe a flat income tax will ever or can ever remain *flat* where politicians are involved, you are even more "sadly naive" than you accuse us the FairTax crowd of being. A Flat Tax has the same odds of being passed as the Fair Tax, and few of the same benefits.

[so_real]

Except for the ones that it doesn't and the ones that they add later.

We have that same concern today with the tax code as it is. Even with the income tax we face today, the government is considering the addition of a VAT (value added tax) on top of it. Implementing or not implementing the Fair Tax does not add or remove the concern you express. We are already under that thumb.

[Georgia Girl 2]

The Fair Tax does away with the payroll tax and the IRS. It also includes a monthly “pre-bate” up to the poverty line to keep it from being oppressive to the poor.

The Fair Tax does not do away with State and local taxes. But remember that the Fair Tax is only on things you purchase not on every dime you make. It is also only on new items. If you want to avoid the tax on an auto then buy a 1 year old car and you pay no tax. Same deal on a home or anything else. This is not a VAT tax. Items are only taxed one time when they are sold new.

The general premise of the Fair Tax is that since Companies currently embed about 22% into their product prices to cover taxes they will through competition lower the prices of products about that much shortly after the Fair Tax goes into effect so in the end prices will come down and with the tax you will end up not paying much more than you do right now.

[lewislynn]

he tried for 5 after claiming 4.

About Bryan Thomas:

Bryan is a senior at Mars Area High School in Mars, PA.

Nuff said.

[so_real]

Adding on the state and local sales taxes would make the effective sales tax somewhere between 30 and 40 percent. There would be huge tax evasion, bartering, underground sales, etc.

The current Fair Tax rate is calculated to *replace* the effect of the current income tax rate. That is to say, we are already paying the Fair Tax rate today. But because it is hidden in payroll taxes and costs of goods sold, we aren't aware of that -- we aren't aware of the true level of our taxation.

Because it is hidden from us, we as citizens aren't up in arms (as much as we all should be) about the excesses of government. That's why the government tends to want to keep the hidden income tax code -- and why We the People should insist on exposing it for the nation to see in the form of a sales tax.

[E. Pluribus Unum]

Implementing or not implementing the Fair Tax does not add or remove the concern you express.

It gives them another pocket to pick.

They'll wind up with the income tax AND a national sales tax.

With exemptions for Democrat voters, of course.

[lewislynn]

For those who don't know what the Fair Tax is, it is essentially a national sales tax of 23%.

Hate to be the one to tell you Bryan but you're being lied to.

Actually Bryan the sales tax would have to be 30%.

The 23% rate is what the business collecting the tax pays. IOW Bryan, the business makes a $100 sale, charges you 30% tax, making the "gross payment" $130.00

The business would be required by law to remit "23% of the gross payments" to the greedy Nazi tax collectors...Sooo, 23% of $130.00 is $30.00 making the net to his/her business $100.00

See how easy it is to be misinformed and lied to when it comes to government and so called "fairtaxes" Bryan?

[so_real]

It punishes those who saved for their retirement by adding a new high sales tax to income taxes already paid on their savings.

FINALLY a true and valid criticism of the Fair Tax! You are correct. In the years that I've studied the Fair Tax, this is the perhaps the largest legitimate criticism I've uncovered.

There may yet be a way to overcome this short-coming. Perhaps that will come when the bill is brought up for discussion in the Houses.

However, and this will sound very callous of me, this retirement generation at any point in their years of influence could have stood up and said "Enough! We can no longer abide by the theft of future generations." They did not. And we, having replaced them, are loath to revisit their mistake upon the generations that follow us.

I say "Enough!". It is past time to fix the system for the sake of those who follow us. I will happily feel that burn visited upon the decades of my retirement efforts in order to spare the income tax menace from the nation's children and grandchildren.

[so_real]

My personal objection to it is that the voters of this country aren’t smart enough to repeal the 16th Amendment. Otherwise, we will see a sales tax on top of income tax.

How would you like to be the politician up for re-election if the Fair Tax is passed but the 16th is not repealed? One will give or the other.

[bthockey]

Sadly, I don’t think it will pass congress. In an ideal world, I would love to have this as our tax system but I’ll still support it because I think it’s a great idea. A flat tax still isn’t as good as the fair tax for many of the reasons I list. But at least a flat tax could pass congress.