What is the FairTax?

Economic Freedom Coalition . Org ^ | current | Herman Cain

[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."

[Zon]

Seriously, you can't be that naive. Talk to some who lived through WWII or even some of their children.

I'm not naive nor will I let you get away with that. If I talked to them what would they say? You want the reader to think people that lived through WWII will say the worst so why don't you just say the worst for them. Here, I'll help with a history lesson:

"During World War II the personal income tax rose to a peak of 94 percent, and the corporate income tax to 40 percent.  For the first time in United States history (and thereafter) middle income citizens became subject to the levies of the IRS, not just the wealthy.  But a tax rebellion ensued as the consequence.  The IRS resolved this impasse by blackmail; any taxpayer who would give permission for withholding 1943 income tax was forgiven paying 1942 income taxes. 

"This level of taxation was perhaps understandable given the state of total mobilization for a national emergency.  But why should tax rates have been left at wartime personal level until 1963, and on corporations until 1981 during peacetime?  The war had continued – against American taxpayers". REVOLTING TAXATION

You compare that very real history to your sensationalism of what possibly potentially, may, could happen with the FairTax. The FairTax is 23% and only applies to new retail purchase for consumption, not 94% tax on personal income nor 40% corporate tax. The FairTax eliminates personal income tax. The FairTax eliminates corporate tax and associated compliance cost. The Fair tax eliminates withholding that the federal government convinced the people to swallow by using propaganda and Donald Duck to send its message. Plus the deception of forgoing 1942 income taxes. Rather than paying 1942 taxes in one lump sum on March 15, 1943 people paid those taxes via withholding every week of 1943. 

[Shalom Israel]

one can choose to not purchase new concentrating on used items

..and yet the FairTax is "revenue neutral"! Hint: it can't be revenue neutral if purchases of used goods increases significantly. The "used goods loophole" will have to be closed first thing. Espcially since "used" is not a legal term. Hint: I can call a car you've test-driven "used".

[Shalom Israel]

Yeah sure and live off of the government system that you seem to love.

Don't be childish. If you want to abolish taxes, I'm behind you 100%. If you want to play a shell-game of "where are the taxes now?" you can play by yourself. I'm not interested.

[Zon]

A "strawman" is an argument that I put in your mouth, for the purposes of refuting it.

That's but one definition of a strawman. One which you used earlier in this thread. That's not the reason your post at 120 is a strawman. It's a strawman because your premise is invalid. In your words: "government checks are always bad." 120

[ancient_geezer]

In one paragraph you say it was based on Tauzin's NRST rate and the next you say the rate is lower due to "economic growth potential." Which is it?

Try both, the 15% static estimate of the Tauzin bill establishing the high boundry a rate also held to be reasonable from replacing income tax only situations by many. A tax rate that would substantially lower with economic growth providing a lower boundery with due consideration of dynamic effects would be much more likely.

But then your interests have nothing to do with estabilishing a precise number which is actually irrelevant to your objectives as even the upper boundry of 15% is less than your opinion in any case.

[ancient_geezer]

..and yet the FairTax is "revenue neutral"! Hint: it can't be revenue neutral if purchases of used goods increases significantly.

Sure it can, as the measure of revenue neutral criteria is a static calculation used by Congress and CBO for such measure does not take taxpayer behaviour into account at all. That is one reason static estimation of national budgets and the use of that measure is rapidly changing. Revenue neutrality is no longer the rule governing tax rates or anything else since the Budget Enforcement Act and PayGo rules were allowed to sunset and not revived. It always has been hokey accounting in any case.

The "used goods loophole" will have to be closed first thing.

LOL the used goods "loophole". Is not a loophole but a provision of the legislation that prohibits the taxation of goods more than one time under the FairTax NRST. Tax once but only once is the rule that is explicitly provided for in HR25

Espcially since "used" is not a legal term. Hint: I can call a car you've test-driven "used".

Actually "used" is a legal term defined in the primary way that such terms are establish in most legislation, by explicit definition of what is meant by "used property" in the bill itself.

A fact that tells me that you have not even bothered to actually read the legislation and are merely throwing sphegetti at the wall to see what sticks rather than presenting rational arguments.

 

H.R.25

Fair Tax Act of 2005 (Introduced in House)
http://thomas.loc.gov/cgi-bin/query/z?c109:H.R.25:

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`SEC. 1. PRINCIPLES OF INTERPRETATION.

`(a) In General- Any court, the Secretary, and any sales tax administering authority shall consider the purposes of this subtitle (as set forth in subsection (b)) as the primary aid in statutory construction.

`(b) Purposes- The purposes of this subtitle are as follows:

• `(1) To raise revenue needed by the Federal Government in a manner consistent with the other purposes of this subtitle.
• `(2) To tax all consumption of goods and services in the United States once, without exception, but only once.
• `(3) To prevent double, multiple, or cascading taxation.
• `(4) To simplify the tax law and reduce the administration costs of, and the costs of compliance with, the tax law.
• `(5) To provide for the administration of the tax law in a manner that respects privacy, due process, individual rights when interacting with the government, the presumption of innocence in criminal proceedings, and the presumption of lawful behavior in civil proceedings.
• `(6) To increase the role of State governments in Federal tax administration because of State government expertise in sales tax administration.
• `(7) To enhance generally cooperation and coordination among State tax administrators; and to enhance cooperation and coordination among Federal and State tax administrators, consistent with the principle of intergovernmental tax immunity.

 

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SEC. 2. DEFINITIONS AND SPECIAL RULES.

`(a) IN GENERAL- For purposes of this subtitle--

`(14) Taxable property or service-

`(A) GENERAL RULE- The term `taxable property or service' means--

• `(i) any property (including leaseholds of any term or rents with respect to such property) but excluding--

`(I) intangible property, and

`(II) used property, and

• `(ii) any service (including any financial intermediation services as determined by section 801).

 

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`(16) USED PROPERTY- The term `used property' means--

`(A) property on which the tax imposed by section 101 has been collected and for which no credit has been allowed under section 203, and

`(B) property that was held other than for a business purpose (as defined in section 102(b)) on December 31, 2004.

[Zon]

1% of the population is 3 million people. 3 million people each receiving their $732 "prebate"(gag!) would be $2.2 BILLION dollars a year...Where would that extra welfare money come from?

The top 50% of wage earners pay 96% of the Federal income tax. They are paying for the 50% that don't. How much is that? A trillion dollars and 100 million people and you're quibbling about the very poorest people (1% of the population) not paying tax but pocketing $367 of their prebate. Most of the $2.2 billion HCA would be used to pay tax with some of it pocketed. Conservatively half that would be FairTax and half pocketed. People have to eat.

I get the money I paid before I pay it...Pure idiocy!

Ahh, the little status quo lover is quibbling over semantics. It suits you well.

[eskimo]

I'm not naive nor will I let you get away with that. If I talked to them what would they say?

Why don't you ask them, you obviously don't believe me. If you can put aside the propaganda job for a time and discuss the same things we just discussed with some with a little more first hand knowledge of history, you might see things differently.

[Shalom Israel]

That's but one definition of a strawman.

LOL. Alrighty then. Have a nice day.

[Shalom Israel]

Sure it can, as the measure of revenue neutral criteria is a static calculation used by Congress and CBO for such measure does not take taxpayer behaviour into account at all.

Which is exactly why the calculation is hogwash.

LOL the used goods "loophole".

Oh, I thought from your nick that you were older. Apparently not. When you've been around the block a few times, you'll realize that every loophole is a a provision of some legislation. It becomes a "loophole" after the fact, when someone or other decides he doesn't like the unexpected consequences of the original law.

[Zon]

... merely throwing sphegetti at the wall to see what sticks...

LOL!!! Artful words. A very poignant description.

[Zon]

government checks are always bad.

I called you on that in my 128 post. No response from you. I wrote: "You created a closed loop where government checks are always bad. You said it and will be back tracking, claiming that you didn't mean government checks are always bad and that there are exceptions." 128

If you weren't protecting a vested interest in the present tax system or whatever your agenda is you'd be learning, educating yourself to what errors and mistakes you may make in your arguments. But since you won't even question why some government checks are not bad and why those checks exist in the first place it 's clear that you are not here to learn. Rather, you have an agenda that you believe is more important than educating your way out of ignorance.

Here's but one example: Many people have such fear of the IRS that they overpay their tax via withholding. They fear the IRS will come after them if the have too little tax withheld. They get a tax refund for their interest-free loan to the government. Call it a fear loan and the refund check a fear check. Because fear is the reason they over pay. Seeing that the IRS considers people they audit guilty until proven innocent their fear is warranted. According to you, when the IRS frightens people into overpayment the government should keep they money and not pay out refunds. 

You could have easily figured that out on your own had you questioned your premise that government checks are always bad. But you have an agenda that's more important than dispelling your ignorance. Your willful ignorance is your loss to burden. Keep it to yourself, please.

[Zon]

If you can put aside the propaganda job for a time and discuss the same things we just discussed with some with a little more first hand knowledge of history, you might see things differently.

I posted no propaganda in my 141 post. What part of the following do you think is propaganda and/or do you disagree with? 

"During World War II the personal income tax rose to a peak of 94 percent, and the corporate income tax to 40 percent.  For the first time in United States history (and thereafter) middle income citizens became subject to the levies of the IRS, not just the wealthy.  But a tax rebellion ensued as the consequence.  The IRS resolved this impasse by blackmail; any taxpayer who would give permission for withholding 1943 income tax was forgiven paying 1942 income taxes. 

"This level of taxation was perhaps understandable given the state of total mobilization for a national emergency.  But why should tax rates have been left at wartime personal level until 1963, and on corporations until 1981 during peacetime?  The war had continued – against American taxpayers". REVOLTING TAXATION

Should I assume that you didn't like the history lesson (in post 141) and above and that you chose to call it propaganda as a futile attempt to escape the reality of it?

[Always Right]

This crap about the FairTax being "voluntary" is too typical of FairTax supporters. It would not be voluntary. Voluntary would be if they asked me when I bought a new car "Do you want us to add $10,000 in FairTax to the price?" That would be voluntary.

The income tax is voluntary too, but everytime a tax protestor tries to test it he gets thrown in jail.

[Zon]

Zon: That's but one definition of a strawman.

LOL. Alrighty then. Have a nice day.

Your implication that there is only one definition is not only wrong, it doesn't save face for you. Rather, it exposes your ignorance.

Main Entry: straw man
Function: noun
1 : a weak or imaginary opposition (as an argument or adversary) set up only to be easily confuted
2 : a person set up to serve as a cover for a usually questionable transactionDefinition of straw man - Merriam-Webster Online Dictionary

[Shalom Israel]

You could have easily figured that out on your own had you questioned your premise that government checks are always bad.

You have real difficulty reasoning logically. In this case, what you called a "premise" is in fact a "conclusion". All taxation is theft. Any distribution of tax funds is a distribution of stolen goods. It is de facto theft whenever the money is given to anyone but its original owner.

It is also bad when given to its original owner, because people are stupid enough to think they are being given something, rather than recovering their stolen property. For proof: keep your eyes open around April 15.

[freedumb2003]

Well then the fair tax would go away. The way the proposal is written is that you can only have one, and not both.

No tax has ever "gone away." The civilization will go away before a tax will "go away."

[Shalom Israel]

Your implication that there is only one definition is not only wrong, it doesn't save face for you. Rather, it exposes your ignorance.

Congratulations: you are officially an idiot. Not only are you telling a PhD mathematician what a "straw man" is, but you proceed to quote the dictionary, not realizing that it proves you wrong.

(Free clue: definition #1 relates to logic. Definition #2 has nothing whatsoever to do with logic. You are trying to say that I undertake questionable transactions on behalf of an anonymous third party. That's definition #2, though you appear not to have read the definition with comprehension.)

[goldstategop]

They are. I have to pay taxes tomorrow.... just shy of the April 16th deadline. And every time I shop for non-food items and eat out, I also pay taxes. So we're taxed both on our income and what we spend. Right now we have the worst of all possible worlds. The FairTax would dramatically simplify a tax system no one, not even accountants, completely understand.

(Denny Crane: "I Don't Want To Socialize With A Pinko Liberal Democrat Commie. Say What You Like About Republicans. We Stick To Our Convictions. Even When We Know We're Dead Wrong.")

[goldstategop]

The FairTax taxes consumption, not income. If you save your money, its not taxed. But if you take it out and spend it, its taxed. The income tax taxes the money regardless of the use of which its put to. It has a bias against savings and don't stop and wonder about the abysmally low savings rate in this country.

(Denny Crane: "I Don't Want To Socialize With A Pinko Liberal Democrat Commie. Say What You Like About Republicans. We Stick To Our Convictions. Even When We Know We're Dead Wrong.")