Posted on 04/04/2006 2:17:28 PM PDT by Eaglewatcher
The FairTax (HR 25 in the US House and S 25 in the US Senate) is a federal retail sales tax that replaces the entire federal income and Social Security tax systems, including personal, gift, estate, capital gains, alternative minimum, Social Security/Medicare, self-employment, and corporate taxes. The FairTax allows Americans to keep 100 percent of their paychecks (minus any state income taxes), ends corporate taxes and compliance costs hidden in the retail cost of goods and services, and fully funds the federal government while fulfilling the promise of Social Security and Medicare.
More FairTax benefits:
No tax on used goods. No tax on business inputs. With the FairTax, if you choose to buy any new good or service, the sales tax is charged just as state sales taxes are computed today. If you choose to buy used goods - used car, used home, used appliances - you do not pay the FairTax. If, as a business owner or farmer, you buy something for strictly business purposes (not for personal consumption), you pay no FairTax. So, in deciding what to buy, you get to choose whether or not you pay the FairTax.
No federal sales tax up to the poverty level means progressivity like today's tax system. Furthermore, to ensure that no American pays tax on necessities, the FairTax plan provides a prepaid, monthly rebate for every registered household to cover the consumption tax spent on necessities up to the federal poverty level. This, along with several other features, is how the FairTax completely untaxes the poor, lowers the tax burden on most, while making the overall rate progressive. However, the FairTax is progressive based on lifestyle/spending choices, rather than simply punishing those taxpayers who are successful. Do you see how much freer life is with the FairTax instead of the income tax?
All Americans take home their whole paychecks. Not only do more Americans have jobs, but they also take home 100 percent of their paychecks (except where state income taxes apply). No federal income taxes or payroll taxes are withheld from paychecks, pensions, or Social Security checks. Retail prices no longer hide corporate taxes or their compliance costs, which drive up costs for those who can least afford to pay. Did you know that hidden income taxes and the cost of complying with them currently make up 20 to 30 percent of all retail prices? It's true. According to Dr. Dale Jorgenson of Harvard University, hidden income taxes are passed on to the consumer in the form of higher prices - from 20 to 30 percent higher than they would otherwise be - for everything you buy.
Tax criminals - don't make criminals out of honest taxpayers. Today, the IRS admits to 25 percent non-compliance with the code. However, this does not take into account the criminal/drug/porn economy, which conservative estimates put at one trillion dollars of untaxed activity. The FairTax taxes those engaged in the underground economy capturing their income at the cash register. The substantial decrease in points of compliance - from every wage earner, investor, and retiree, down to only retailers - also allows enforcement to concentrate on following the money to criminal activity, rather than making potential criminals out of every taxpayer struggling to decipher the code.
The income tax exports our jobs, rather than our products. The FairTax brings jobs home. Most importantly, U.S. exports are not burdened by the FairTax, as they are with the current income tax. So the FairTax allows U.S. exports to sell overseas for prices 22 percent lower, on average, than they do now, with similar profit margins. Lower prices sharply increase demand for U.S. exports, thereby increasing job creation in U.S. manufacturing sectors. At home, foreign imports are subject to the same FairTax rate as domestically produced goods. Not only does the FairTax put U.S. products sold here on the same tax footing as foreign imports, but the dramatic lowering of compliance costs in comparison to other countries' value-added taxes also gives U.S. products a definitive pricing advantage which foreign tax systems cannot match.
YOU are in charge! The FairTax moves us from a system that taxes what we earn to a system that taxes what we spend. Under the FairTax, you control your tax liability, not the government. The FairTax puts "we the people" in charge of our money, and puts us all on the path to economic freedom!
To enact the FairTax and unleash the full economic potential of the U.S., we must apply Vocal and Persistent pressure on Congress each week.
Email, call or fax your members of Congress today. Send them this simple message: "Please support replacing the federal income tax code and become a co-sponsor of HR 25 or S 25, the FairTax."
Oh, so you really think an illegal economy of services and black market goods that has the very real potential to increase by, at least, an order of magnetude is not going to turn the "fair tax" scam into a nightmare for most Americans?
I have not identified anyone lately that would even come close to qualifying.
Compliance cost is a completely different subject than illegal economy. I suppose you could make the case that prostitution and accounting are similar (rolling eyes)...
as you point out, I very specifically said 'you are not gaining a dime from the illegal economy', and then you claim billions in savings from compliance costs. Really, not the same the same thing. Two completely different issues.
a person spending less than that gets money redistributed into his pocket.
It would be tiny fraction of the population.
Another major negative: all we need is for every American to get used to cashing government checks.
Most of it will be electronic transfer with few checks being cashed. IIRC, if the HCA prebate was eliminated the rate would drop from 23% to 17%. The reason the HCA prebate was included is so the FairTax is not regressive -- an overburden on persons and families living at or below the poverty level.
a_g can you post the table for the FairTax rate with various government programs not included in the rate? Thanks.
I build and sell new homes. It is not a promising future if I have to add a 30% sales tax on top of my price. If I could find anywhere close to even a 20% potential savings, it might work. But without my employees, my subcontractor employees, and my suppliers employees taking pay cuts, new homes will be at a major disadvantage competing against existing homes. I figure a new home will cost 20% more than an existing home. Of course the fairtax website makes other claims, but I know my numbers a heck of a lot better than some pointie-headed biased number cruncher that the fairtax people hire.
The VAT already does that,
No it doesn't. VAT does not facilitate economic freedom. VAT is a nightmare and most countries that use it also have an income tax.
In some ways it is amazing that America has stayed competitive with Europe since our products have embedded taxes and theirs have much of them taken out when they are exported.
The FairTax would easily out-compete the VAT in creating new jobs and economic growth.
And you are naive to think we will really adopt the fairtax and completely eliminate the income tax. When we do adopt a sales tax, it will be in conjunction with the income tax no matter what the current bill says. BTW, that is why Europe still can't beat us. Even with the VAT their government is so big Europe has to maintain a large income tax as well.
The FairTax would easily out-compete the VAT in creating new jobs and economic growth.
The fairtax has only limited advantages over the VAT, mainly being quite a bit simplier. The impact on products will be pretty much the same with some benefit in compliance costs.
Oh, so you really think an illegal economy of services and black market goods that has the very real potential to increase by, at least, an order of magnetude
Your "arguments" get more absurd with each post. The loss of tax revenue under the present tax system will be about the same or less under the FairTax. Your comment is blatant sensationalism of a boogieman. A boogieman is a fabricated fear.
a_g can you post the table for the FairTax rate with various government programs not included in the rate? Thanks.
Just a rough estimate, but here is what I came up with.
23%........... Effective total federal tax rate with respect to gross expenditure for consumption:
15% ..... rate if Social Security and Medicare were eliminated
14% .......... rate if Nat'l Endowment for the Arts were eliminated
12%........ rate if Dept. of Education were eliminated
10%.......... rate if welfare & foreign aid were eliminated
etc.
So lets look at what the maximum it would take to fund those functions clearly authorized under Article I Section 8 of the Constitution, in current dollars:
http://w3.access.gpo.gov/usbudget/fy2001/guide02.html#Spending
- $334 Billion --- Defense & Military related expenditure
- $ 31 Billion ---- Administration of Justice
- $ 16 Billion ---- General Government
- $199 Billion ---- Interest on the Debt
=========================
$580 Billion ---- Total
Institute an across the board, Flat rate, single stage National Retail Sales Tax, which taxes all imports and domestic products with the same rate.
Replacing all current federal tax law with a retail sales tax would be 23% on new goods and services paid and receipted at the retail register. No hidden tax, no exceptions, exemptions everyone participates.
Such a tax acts in a natural manner to encourage the elimination of excess government functions through visibility of burden among all constituencies of the electorate.
The total federal government budget would move from $2,000 billions towards something less than $580 billions calculated.
The across the board federal tax rate on new goods and services would decline towards less than 6.7%.
As tax rate on sales decreases the economic burden on retail items, the sales volumes and growth in the economy would be tremendous allowing even further reductions in tax rates below that less than 6.7% theoretic level.
That is what I perceive as the ultimate achievements possible under a National Retail Sales Tax structured in the manner of the revenue bill H.R.25. Simple common sense applied to the principal of TANSTAFFEL,( no free lunch, everyone participates in paying their way in proportion to the benefit they extract from their consumption over necessity.) encourages the natural change in attitudes required of the electorate as regards the burden of government largess in their lives.
- It is fairer to tax people on what they extract from the economy, as roughly measured by their consumption, than to tax them on what they produce for the economy, as roughly measured by their income
Hmmmmmm....... It's do able, with time and effort, once the blinders are removed from the electorate.
I suspect you did not like the question and had to offer something like that in lieu of a rational response.
Let's try again. Would an illegal economy of services and black market goods that increased by, at least, an order of magnetude cause the "fair tax" scheme to not function as planned?
Compliance cost is a completely different subject than illegal economy.
Now you're intentionally obfuscating. You made the point. I refuted that point in my post 75 and consolidated it into one post at 100.
I very specifically said 'you are not gaining a dime from the illegal economy', and then you claim billions in savings from compliance costs. Really, not the same the same thing. Two completely different issues.
They pay embedded tax and embedded compliance cost now. With the Fair tax they will pay a sales tax equivalent to the embedded tax. They will not pay what was an embedded compliance cost because their will be no compliance cost. The $400 compliance cost will be gained.
Always Right: Just because she has to pay sales tax when she buys goods is no different than today, as embedded taxes are included in legal purchases today. You are not gaining a dime from the illegal economy, but you do open the door for even more illegal activity from the black markets.69
See! You acknowledge that embedded tax is replaced by the FairTax. The compliance cost will not be replaced with anything because they are eliminated. It will be gained in the economy.
Way to miss the point completely! The last thing we need is for every American to get in the habit of expecting money from the government.
That is what I perceive as the ultimate achievements possible under a National Retail Sales Tax structured in the manner of the revenue bill H.R.25. Simple common sense applied to the principal of TANSTAFFEL,( no free lunch, everyone participates in paying their way in proportion to the benefit they extract from their consumption over necessity.) encourages the natural change in attitudes required of the electorate as regards the burden of government largess in their lives.
I see it the same way. Most people with an honest desire to educate themselves can grasp that with moderate effort. I think that when a person does get it they feel rewarded with having cut through the fog to see the light at the end of the tunnel. And that motivates them to support the FairTax. For some people eliminating the IRS/Gestapo and returning liberty is icing on the cake, while for others it is the cake.
It's do able, with time and effort, once the blinders are removed from the electorate.
Most definitely. Thanks for your post.
I think there is enough of a distinction between the taxes that a business pays and builds into products vs. wages that must cover the taxes for personal consumption.
Taxes should all be paid by an individual that has the ability to vote for the spending the taxes will pay for. Taxing it at this one level means the end-result of productive effort is taxed only once. Taxing the inputs to businesses in the middle of the supply chain is what the FairTax avoids. This leaves the entire true tax burden visible as a tax on the end-product at retail. The customer/taxpayer/voter then has all the info he needs about how the cost of government affects his purchasing power and standard of living. The way things are now, many people mistakenly think they pay very little in taxes.
I suspect you did not like the question and had to offer something like that in lieu of a rational response.
To be honest, I laughed when I read it. What you called "the very real potential..." was as absurd as if you said you're growing a third eyebrow.
Would an illegal economy of services and black market goods that increased by, at least, an order of magnetude cause the "fair tax" scheme to not function as planned?
No more than if that happened under the present tax system. Under the present tax system it takes only one person to cheat the system. With the FairTax it would take two people in collusion to cheat.
I wasn't referring to the States knowing about employees and wages due to an income tax. I was speaking about their role in collecting the FairTax.
The FairTax requires information from Employers in order to maintain the benefit calculations for future SS payments. Where you work, and what your compensation is, will still be info the government has in its database because it is necessary for the SS participation.
Now you've got me laughing. Perhaps a little personal introspection and a good history book would help you.
No more than if that happened under the present tax system.
LOL! That's like saying that if everyone got paid under the table instead of having to suffer immediate confiscation that the present tax scam would not be affected. Just who do you expect is going to believe this stuff.
Shalom Israel: Another major negative: all we need is for every American to get used to cashing government checks. 88
Zon: Most of it will be electronic transfer with few checks being cashed. IIRC, if the HCA prebate was eliminated the rate would drop from 23% to 17%. The reason the HCA prebate was included is so the FairTax is not regressive -- an overburden on persons and families living at or below the poverty level. 104 To: Zon
Most of it will be electronic transfer with few checks being cashed.104Shalom Israel: Way to miss the point completely! The last thing we need is for every American to get in the habit of expecting money from the government.
I didn't miss the point. I notice you omitted my explanation of why the HCA prebate is part of H.R.25. For all but a tiny fraction of the population (less than 1%) the HCA prebate will be money that they already paid to the government. The prebate is an advanced "refund" of the sales tax paid up to poverty level spending. Plus, the HCA prebate is distributed equally to every person, not according to income, age or special minority status etc., that is prevalent with the present tax system. Every person treated equally.
The interesting thing is that once people get the HCA prebate when they pay the fairtax/sales tax at the cash register they will perceive it as their hard-earned money they are parting with, not a government "check" because, you know what, it is their money. They government is only giving back (though in advance) what they already paid the government in the first place.
I don't see any evidence of that. People know that government takes a huge chunk. The biggest expenses of government are the entitlements, and converting to a "Fair Tax" or any other type of supposedly more visible tax is not going to take away people's addiction to those things. The only way that we'll ultimately be successful at doing so is by working the system around so that individuals are paying into their own SS and Medicare accounts, instead of having the current generation of workers pay for the current generation of retirees. Once that's done, then people will be more apt to ask themselves why they're going through the government and using its rules to save for their retirement, when they could instead just be saving on their own and setting their own rules.
It's completely irrelevant: government checks are always bad. That includes tax refunds, for example. People are too ignorant to distinguish money they might legitimately be owed, and money they aren't owed. Observe that some people get tax refund checks that exceed their withholdings--yet those people are not correctly identified as the thieves they are.
Even if the "prebate" check were completely legitimate, which it isn't, it would still be bad. It sets the stage for poiltically popular efforts to increase the "prebate", until it equals a handout for the bottom third or half of Americans. After all, a government check is a government check, right?
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