50 Reasons I Support the FairTax

Comment: 50 Reasons I Support the FairTax (How many reasons can you give for supporting the present IRS tax system?)

1. It allows workers to keep 100% of their pay, with nothing withheld the IRS or for Social Security and Medicare payments.

2. It is revenue neutral with the present income tax system, funding the federal budget at current levels.

3. It shifts the tax to consumption. Records show that consumption is more stable than income, therefore the tax revenue stream is likely to be a more stable and predictable amount.

4. It is progressive, a “prebate” of the tax amount up to the poverty level is given to everyone. This means that those spending below the poverty level have a net gain because the “prebate” exceeds the amount paid in taxes. (Under the present system the working poor pay the payroll tax even if they get a full refund of income tax withheld.)

5. It doesn’t tax pre-owned items – clothes, cars, homes. Only new items are taxed when sold by a business to an individual.

6. It is expected to remove an average of 22% of the cost of American made goods by removing the built-in payroll tax (the other 7.65% of earnings that employers pay), corporate income tax, and other business taxes that are now passed to consumers as an “embedded" tax of approximately 22% due to the cascading of income and payroll taxes paid by U.S. employers, at every step of production, to the U.S. Treasury. Competition will cause prices to fall by approximately that amount, on average.

7. It allows families to save more for home ownership, education, and retirement. An average family making $50,000 will have $7,500 more spendable income.

8. It removes the need for formal accounts of the 401(k), IRA, HSA, etc., varieties. Anyone, rich or poor, will be able to set up any kind of savings or investment account without regard to taxes or the government. No special knowledge of tax law is necessary.

10. It eliminates the income tax and the IRS. Members of Congress and the public overwhelmingly agree that the current internal revenue code is cumbersome, intrusive, coercive, and inefficient.

11. It eliminates 90% of the cost of compliance. American families and American businesses waste an estimated $250 – $600 billion per year (and countless hours of time) doing the paperwork necessary to comply with the current tax code. That is roughly $1,000 – $2,000 annually for every man, woman and child in the U.S. (Businesses typically pass their tax bills and compliance costs on to the consumer, i.e., individuals and families.)

12. It’s simple, unambiguous, and certain, the opposite of the current tax code, 60,044 pages and counting.

13. It assures that no American will find, at the end of the year, a need to get a loan to pay taxes as an alternative to penalties, interest, or cheating.

14. The broader tax base comprises everyone spending money in the U.S., including the ten percent of our economy (an estimated $1 trillion) that today is underground or under the table. Under the FairTax, the illegal drug dealer will pay his tax just like the rest of us when he buys his sunglasses, BMW, and other items, as will those who work for cash and undocumented immigrants, all of whom receive government and societal benefits.

15. It encourages work by letting workers keep 100% of their earnings and giving a rebate, in addition, making the notion that “the more you work, the more money you have”, a reality, unlike the current system where welfare is lost when you go to work, so the first dollars earned after taxes just offset what a welfare recipient is currently receiving in assistance, so working is perceived as disadvantageous.

16. It allows more of the lower income families to become home owners by allowing a second job income above their current income (all tax free) to be applied to a mortgage. Money for down payments for homes is also saved totally tax free, causing it to accumulate faster.

17. It has the result that all lending in America will be at the equivalent of today’s tax exempt interest rates, which are 25%-30% less than today’s taxable home mortgage interest rates. This will create a huge boom in housing purchases and allow existing homeowners to refinance and reduce their cost of homeownership substantially.

18. It allows families to retain farms and businesses in the hands of those who built them through the elimination of the death tax.

19. It allows families to give tax-free assistance to one another by eliminating the gift tax.

20. It gives individuals (and businesses) the right to donate as much as they want to in a given year to charitable causes, without concern for exceeding an allowed limit on giving.

21. It encourages individuals to self-insure, making the health system more direct-pay (no 3rd party pay), thus bringing costs down.

22. It puts an end to the anxiety for honest taxpayers that begins soon after January 1 for most of use, culminating in wondering whether we’ve claimed everything we legally could and nothing we shouldn’t, all without raising questions at the IRS. It makes April 15 just another day. (Perhaps it will be a holiday after the FairTax is enacted!) FairTax and Social Security and Medicare

23. It eliminates the regressive payroll tax that hurts the poor. Currently, every one of us is taxed a minimum of 7.65% on our first-dollar of wages up to $90,000 (the cap for FICA, not Medicare), if we earn that much. It provides funding for Social Security and Medicare at a level equal to or greater than the present.

24. It provides that all 290 million Americans and 51 million visiting tourists fund Social Security and Medicare with their purchases. Today only 110 million workers fund these programs via deductions from their paychecks.

25. It assures that the wealthiest Americans will be voluntarily helping to fund social security with every last dollar they spend above the poverty level. Today, earnings are subject to FICA taxes only up to $90,000. The wealthiest Americans therefore do not pay into the system above that amount. If their earnings are from investments, no earnings fund the Social Security system.

27. It allows for better planning by businesses, because they no longer have to consider tax implications for everything they do.

28. It makes higher employment or better compensation possible in the small business sector, where today it costs approximately three dollars in compliance costs to pay one dollar in payroll and income taxes.

29. It makes American products more competitive overseas by removing the embedded tax from them, thus lowering the prices of our exports, which compensates for low foreign wages.

30. By making our exports more competitive overseas, it lowers our balance of trade deficit and increases employment at home.

31. By removing the embedded tax from them, it makes American products more competitive with imports here, compensating for the low cost of imported products from which taxes have been removed before exportation to the U.S.

32. It encourages investment in companies located in the U.S., thus providing a home for money already in the U.S. and attracting more. The U.S. will be the most attractive tax-free haven in the world for doing business.

33. It encourages repatriation to the U.S. of money held by U.S. individuals and companies now in foreign countries, with no tax consequence. American companies will return from offshore and overseas.

34. It results in a windfall profit, likely to be invested in job-making businesses, for many of those holding taxable corporate high interest bonds at the time of passage of FairTax, since the bonds will not be taxed under FairTax. (Currently, a higher interest rate is usually paid to entice investors to buy the corporate bonds rather than go with the lower interest, but tax free, municipal bonds.)

35. It results in Federal Reserve rates being based on current consumption, which is rather stable, instead of future earnings, which are less predictable, resulting in surer inflation prevention.

36. It reduces production costs for farmers and other subsidized businesses, leading to a reduction in subsidies, thus reducing the federal budget.

37. It moves many individuals now providing tax advice (return preparation, advice, accounting, planning, and records maintenance) into an expansive economy where they will be producing goods and services. There they can add to the standard of living of all Americans and likely earn more than they do currently, instead of shuffling paper for the government (and not contributing anything economically to society).

38. It frees churches and other non-profit organizations from the expense of filing tax returns and paying their half of Social Security and Medicare payments for employees. There will no longer be any 501(c) (3), 501(c) (4), etc., non-profit tax status, because there will be no more tax to be exempt from.

39. It restores to churches and non-profit organizations the 1st Amendment right to engage in free speech, without fear of losing their tax-free status. FairTax and Rights and Freedoms

40. It restores the 4th Amendment, protecting against unreasonable searches and seizures, from which the IRS presently is exempt.

41. It restores the 5th Amendment, which guarantees the right to due process. Under current systems the IRS has their own courts with their own set of rules not included in the 5th.

42. It restores individual privacy. The government no longer needs to know where you work, what you are earning, and what you are doing with it.

43. It relieves citizens of the risk of facing the shift in burden of proof that is so common with the current system, i.e., the taxpayer is guilty unless innocence can be proved, but even the IRS staff sometimes gives conflicting interpretations.

44. It eliminates the need to have a "marriage" clarification declaring who you live with, as that no longer has any bearing at all on a state or federal sales tax.

45. It eliminates the need for courts to decide which divorced parent gets to take the tax deduction for children.

46. Without FICA to pay, most states, counties, municipalities, and school districts will see a large increase in their state budget revenues, additionally lowering the overall tax burden (State & Federal) for most Americans.

47. It eliminates the administrative costs incurred by states in collection of state sales taxes because states will piggyback the state tax collection onto the national tax collection, for which they are compensated by the FairTax ¼% administrative cost give-back. (Retailers receive an equal amount for collecting the FairTax.)

48. It cleans up a major flaw in campaign financing, eliminating campaign donations for "tax favors".

49. It eliminates wrangling in Congress over tax cuts, the tax code, and who is or is not paying a fair share of the tax bill, providing more time for debate on more productive issues.

50. It’s good for the environment. Reportedly, the IRS sends out 8 billion pages of forms and instructions each year. Laid end to end, they would stretch 28 times around the earth. Nearly 300,000 trees are cut down yearly to produce the paper for all the IRS forms and instructions. Also, since it taxes only new items, it would encourage buying tax-free pre-owned cars, clothes, furniture, houses, etc. Reuse is good for the environment, too.

Too, too phunnie, Looey. Check post #78 before running your mouth off. It's been posted for a long time. Perhaps you just to read phaster???

Your beloved post only says employees get to keep 100% of their paychecks. I don't see where they are saying prices are also coming down 22%. Those two items are mutually exclusive, even by your 75 economists. If they believed both would happen, they would have stated so.

They do semi-incorrectly say that compliance costs of $250 Billion are embedded in the price of goods. The economists don't understand how that number was arrived or they would realize many of those costs are time spent by individuals and have no bearing on costs of goods. That is an indication your 75 experts really only have a surface understanding of what they signed.

Frequently Asked Question:

Question: If most taxes are pocketed by individuals, how can prices fall after a 23 percent tax is applied?

Fairy Tax Wizard: Well Dr. Jorgenson tells us prices fall 22 percent because of all the embedded taxes.

Question: But doesn’t Dr. Jorgenson include employee paid taxes as part of embedded tax.

Fairy Tax Wizard: Yes, but since we don’t make the details of Dr. Jorgenson work available, no one should know.

Question: But hasn’t this been exposed to as a lie, how do you respond?

Fairy Tax Wizard: Well, don’t call it a lie; it was a simple mistake we have been covering up for many many years. The best way to respond is to use Pixie Dust.

Question: Pixie Dust, what is Pixie Dust?

Fairy Tax Wizard: Pixie Dust is the use of fuzzy undefined terms to make false claims. Embedded Taxes was our favorite Pixie Dust, but as the truth to that one is being exposed we are switching to Cascading Taxes as our favorite form of Pixie Dust.

Question: So if prices are going to rise, won’t people who have previously earned and paid tax their money be at a disadvantage and have to pay taxes twice.

Fairy Tax Wizard: Oh young one, you fail to understand the real power of Pixie Dust. With Pixie Dust all claims are possible. You can still claim prices will fall. You can claim outrageous economic growth and fuller than full employment, and at the same time claim the fed will lower interest rates. As our great founder said, “All you need is faith and trust... and a little bit of pixie dust!”

Dear ancient_geezer,

Oh, heck, getting the income tax back is a piece o' cake.

Wait a few years, when the first crisis appears, say, "Here's the solution! Tax the rich! We'll just nick 'em a little!"

Or, let the liberal lamestream media do lots of news stories on how people can hardly afford their health insurance because they have to pay 30% on the premium.

"Introduce a 2% [or whatever percent] income tax on the rich, to pay for exempting health insurance!" will go the cry.

Then, it will be the high cost of food!

"We can add a little to the income tax on the rich to pay for that exemption!" and the lower classes will rally to their patrons.

LOL. This is too easy.

sitetest

I've worked hard, paid taxes, and saved and invested, to where I have, if not a fortune at least a comfortable retirement account - already taxed.

You could be saving much more if you kept 100% of your paycheck, no longer had to pay capital gains taxes, received a rebate to cover the cost on taxes for necessities up to the poverty level. Read http://www.fairtaxvolunteer.org/smart/faq-main.html#15 for more information.

Now this plan will tax all that money again, at confiscatory rates, since a federal consumption tax will be ON TOP OF all state and local sales taxes.

You assume all states will want to maintain their own complex tax structure. They can choose to conform to the much simpler Fair Tax code and collect a fee from the federal government (http://www.fairtaxvolunteer.org/smart/faq-main.html#25

Dear Mind-numbed Robot,

Oh, I got a bunch of them.

To me, the 16th amendment dealie, though, is a killer.

To see an example of an amendment to the Constitution where there is delayed enforcement, look at my post #65. Honestly, this just isn't difficult to remedy.

Even under the most ideal NRST legislation, I'd work rabidly against any politician who voted in the NRST before we got rid of the 16th amendment.

Other than that, I have a whole host of issues with the proposed NRST.

Most of them, however, intersect a deeper problem, which is that the government wants to collect to damned much money with the NRST.

If they were going to collect 8% of GDP or maybe even 10%, a lot of my objections (not all) would go away. A 12% (exclusive rate) sales tax would work. Maybe even a 15% sales tax.

30% ain't gonna work too good for a whole lot of reasons.

But you gotta fix the 16th amendment problem first.

Unlike some, I just don't trust those congresscritters.

I work in DC. I've seen these folks up close and personal.

sitetest

More from Mr. Keyes:

Last week I discussed the importance of abolishing the income tax because of its tendency to form a habit of servility in the souls of a people that accepts it. Servility of soul is bad not only in itself, it is also an open door through which will soon walk the abuses of ambitious government power. Leaders who find themselves with governmental power over a servile people will be quick to conclude that such a people exist to serve them. And in the 20th century we have seen the horrors to which such conclusions tend.

President Clinton is a kind of prophetic precursor of the kind of leader we can expect increasingly to see -- naturally and easily presuming that the entire people he leads is merely an instrument of his own ego. ...

The habits of shame and respect for the rule of law will not restrain our presidents, at least until the disgraceful Clinton precedents are reversed, and the Senate's pusillanimous acquittal of Clinton shows that the people's representatives cannot be relied upon either. The break-up of centralized governmental authority over our economic lives, and above all the elimination of the income tax, has never been a more pressing moral and political imperative. We must reclaim our economic sovereignty, so we can limit the damage our increasingly corrupt political class can inflict on our property, our wills, and our character.

Oh, heck, getting the income tax back is a piece o' cake.

1) Not with a sales tax in place.

2) You going to support it? I won't.

3) What makes you think businesses that have had a taste of not dealing with federal taxes are going to do, roll over? I doubt that very much, they'll be fighting tooth and nail against any such imposition.

Saying getting the income tax back is a "piece o' cake." and doing it in face of conservative filibusters, businesses rolling up the contributitions to their favorite charity's Congress Critters doing it their way and those of us who have paid income taxes and dealt with an IRS are not going to just roll over for a re-instatement. We will be pushing hard for that 16th amendment repeal.

Yeh sure, the income tax will just pop right back like it had never been. Baloney!!

You may claim all kinds of dire predictions, the fact remains that this nation has had clear experience with what an income tax is about, there will be no rollover allowing a " "piece o' cake" return with an electorate that continues to go more conservative each year.

Sorry sitetest, it looks more an more to me that you prefer to stay with the comfortable nitch rather than go for the brass ring and fight to keep it. Your choice certainly, but one that I for one do not choose to go with.

Conditions are never just right. People who delay action until all factors are favorable do nothing.
--William Feather

"The only thing necessary for the triumph of evil is for good men to do nothing."
--Edmund Burke (1729-1797)

"If ye love wealth better than liberty, the tranquility of servitude better than the animating contest of freedom, go home from us in peace."
--- Samuel Adams

I work in DC. I've seen these folks up close and personal.

Then you have seen how they manipulate the present system. Your working against changing it is confusing, to me.

To me, the 16th amendment dealie, though, is a killer.

Even under the most ideal NRST legislation, I'd work rabidly against any politician who voted in the NRST before we got rid of the 16th amendment.

But you gotta fix the 16th amendment problem first.

Unlike some, I just don't trust those congresscritters.

I think that all of us who favor the NRST don't trust those Congresscritters either. We see in the present system how they do their self dealing to the detriment of us all. Since you seem to share our opinion, I am at a lost as to why you don't want to neuter them.

There are technical reasons why it is best not to try to amend the Constitution first, in addition to the time factor I mentioned. Those have been pointed out and explained by others. However, what the Fair Tax does is disarm it in the meantime.

Just as the Phoenix arose from the ashes, politicians can do anything, as you have witnessed. There is no antidote to crooked politicians in a free society. The Fair Tax nor anything else can make them honest. However, we can take them back to square one and make them start over while being wary of them and their techniques from past experience.

Also keep in mind, there are those who support the present system. Some are misguided, some think they are profiting from it, while many are simply anti-American and anti-free enterprise. Please be aware I am not labeling you as either one.

Most of them, however, intersect a deeper problem, which is that the government wants to collect to damned much money with the NRST.

If they were going to collect 8% of GDP or maybe even 10%, a lot of my objections (not all) would go away. A 12% (exclusive rate) sales tax would work. Maybe even a 15% sales tax.

After all this discussion, I would assume that you know that the Fair Tax does not tax the entire GDP. That is one of its unique features and one reason it is called Fair. To repeat for the at least zillioneth time, it taxes only things not previously taxed. That is to eliminate double taxation as we often see in the present system. Those not previously taxed items are new items sold at retail, and services, which by their nature are always new. That is only a portion of the GDP and it is the reason that the NRST has to be a higher rate than you prefer in order to bring in the same amount of tax revenue as the present system. Were the entire GDP taxed the rates could be as you desire but that would be a whole new and more complicated animal.

As I have said before, the advantages of the NRST seem so obvious to me it is hard to imagine opposition. I think that even if we granted all your objections, you meaning all those who oppose the NRST, that it would still be a good deal.

Some other reasons to add to your list. Of course, these would be some reasons to NOT have a "fair tax":

51. It encourages a "black-market" un-taxed economy.

No tax system can or will eliminate tax evasion but the fair Tax can reduce it dramatically( http://www.fairtaxvolunteer.org/smart/faq-main.html#33).

52. It makes it very easy for some taxpayers to "cheat" -- thereby increasing the tax burden on honest taxpayers.

This is the same as question #51. See answer for #51

53. It will probably decrease consumption.

The Fair Tax will increase consumption. People will keep 100% of their paychecks. Typically people spend more as their income grows. Consequently more money will be pumped into the economy (http://www.fairtaxvolunteer.org/smart/faq-main.html#26

54. Poor taxpayers would pay substantially more tax, unless a mammoth "rebate bureaucracy" is established.

Poorer people will pay less taxes because they the less money people have the less they tend to spend. Consequently the will be taxed less with the Fair Tax (http://www.fairtaxvolunteer.org/smart/faq-main.html#48). Also all taxpayers, including the poor will get a rebate for the taxes on necessities up to the poverty levelhttp://www.fairtaxvolunteer.org/smart/faq-main.html#3

55. There is no proof that the "rebate bureaucracy" would be more competent or smaller or less expensive than the IRS is now.

The bureaucracy is already in place to collect the tax. The U.S. Treasury would ultimately be in charge of collecting the tax (http://www.fairtaxvolunteer.org/smart/faq-main.html#10).

56. As that "rebate bureaucracy" would be disbursing rather than collecting dollars, it would be more prone to corruption than the IRS is now.

Congress is and would be in charge of disbursing tax dollars regardless of the tax collection system.
57. The income tax wouldn't "go away" anyway. So we would have both: an income tax AND a consumption tax.

Fair Tax supporters demand the 16th Amendment be repealed and would never support any other plan (http://www.fairtaxvolunteer.org/smart/faq-main.html#38

58. etc..

etc??? What kind of a reason is that?

I suggest you read information on the Fair Tax http://www.fairtax.org before you make anymore statements.

A better understanding of the mechanism by which businesses are going to have the FairTax excluded on their business purchases-- how intrusive vs. how easy to cheat?

In reponse to this once before, I posted for you a section of the actual bill, H.R. 25. Did you not read it? Have you forgotten what you read? Did you not believe it?

As I recall, it said that those selling business to businees, that was the situation you asked about I think, that the sales tax would be charged on all purchases and credited against any taxes you collected as an NRST. If as a business to business seller you collected no NRST, then you would submit the amount to the government and be refunded that amount.

How do you prevent cheating? Ask your wife. Ask your best friend. Ask your preacher. Then share the secret with the rest of us. No tax can prevent a sly and determined cheat but with the NRST there are fewer people to chase down and a clearer trail to what they are doing.

As you say, I think that most of our existing tax code is "etc".

But I also think the K-Street lobbyists would "help" draft any so-called "Fair Tax" to exempt "necessary" goods and services from that tax.

Isn't baby-formula a "necessity"?
Isn't telephone service a "necessity"?
Isn't heating oil a "necessity"?
Isn't "etc" a "necessity"

Therefore, before saddling our economy with a "stealth" Value-Added Tax, I'd like to see our tax-cutting efforts directed to:

(1) keep the marginal tax rates coming down

(2) broaden the tax base by:

a) making more of our currently "tax-exempt"
entities pay tax
b) restricting the ability of so-called "non-profit"
entities to avoid tax.
c) placing a "cap" on the amount of charitable
contributions that may be tax-deductible on
individual tax returns.
d) denying deductibility to any "charitable
contribution" which is not cash

(3) require each Congressman to prepare his own tax return, line by line, without the help of any lawyer or accountant.

If it is as you say, then compliance costs will still be high under the FairTax. After I do my expense reports for the month, someone will need to provide the paperwork on every transaction (including whatever documentation they are going to require to substantiate the purchase) in a massive database and send that off to the government to get the refund. So, it will cost more.

SInce you are prepaying the FairTax, in effect they are "withholding" the tax and yu apply for a refund.

It will be intrusive because these beauracrats will have every single transaction for every single business in America to examine and potentially analyze/audit. Much more intrusive than the present system.

For Joe Sixpack all of this is no big deal. For a business, where you are expecting them to save money in compliance costs, I don't see the savings or the additional freedom.

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