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."

[Shalom Israel]

rationalize your no government stand forgetting that religion supports the existance of human govenments and due respect of them including the payment of tribute (i.e. taxes).

Scripture commands us to put up with all manner of injustice: to turn the other cheek; to go the second mile; to accept slavery if it's imposed upon us. Arguing scripture with you is likely to be as unenlightening as any other topic. Have a good night.

[ancient_geezer]

Scripture commands us to put up with all manner of injustice: to turn the other cheek; to go the second mile; to accept slavery if it's imposed upon us. Arguing scripture with you is likely to be as unenlightening as any other topic. Have a good night.

Religion is your argument, not mine. I'm ok with "human government" as long as it conforms to the principles of our Constitution as characterised by its authors and proponents.

To quote your statement,

I believe in eliminating human government, because humans are unfit to rule each other. If God wants to take over, I'm all for it. No contradiction there.

 

In view of the declarations of your FR home page it is apparent you have managed to demonstrate your lack intellectual honesty in making that statement figuring not to be called on it.

[Shalom Israel]

In view of the declarations of your FR home page it is apparent you have managed to demonstrate your lack intellectual honesty in making that statement figuring not to be called on it.

I'm afraid you aren't making a shred of sense. You are not only claiming that I've contradicted myself in some way, but also that I've engaged in some sort of intellectual dishonesty. Neither is true, but I can't even tell where you're getting that crazy idea.

[ancient_geezer]

Whatever. Your responses speak for themselves. Good day to you.

[Shalom Israel]

Whatever. Your responses speak for themselves. Good day to you.

Same to you. Free tip, though: in intelligent discourse, you don't keep making vague allusions such as, "Your intellectual dishonesty speaks for itself," or the like. You have to actually justify such claims, by pointing out the nature of the "dishonesty", or fallacious reasoning, or whatever. It's typical of muddy thinking that one doesn't even realize he needs to back up his statements, because he's so sure he's right that even he doesn't need to understand his position clearly, let alone state it for others.

[Badray]

You don't read.

You don't comprehend.

You can't or won't answer direct questions.

I'll not waste any more time with you.

Good night.

[Shalom Israel]

You don't read. You don't comprehend.

Neither of those things is true, and I don't see how you're reaching that conclusion. Your position is that we must make people aware of the disgusting tax burden by putting it in their face. My reply, repeated three times now, is that people who are net beneficiaries of tax dollars, which is a majority of people, will be intelligent enough to realize that, whatever the sales tax, they still win.

Put differently, by your own reasoning the people of Canada should have risen up in outrage and lynched their rulers by now. Mysteriously, it hasn't happened.

[wgflyer]

"And BYW, your 401k contains your pre-tax savings, not after-tax ones."

Yes, that is correct. However, under the current system I have to pay tax on it when I withdraw it. Under the FairTax I could withdraw it, invest it in something more productive and not pay tax on it or it's returns until I spend it, which is quite ok by me. Under a flat tax I would be taxed just as in the current system. Both the flat tax and the current system maintain all the flaws, and threats and intimidation, of the current system.

Paying tax when one consumes seems fair. Paying tax simply because it's there doesn't. In the former, I balance my consumption against the tax. In the latter, I am hounded and harassed on a continuing basis by a government that knows no respect for it's citizens. Do you really prefer the latter?

[wgflyer]

"Thanks for confirming my low opinion of intellectual honesty and/or IQ of "fair tax" fraud proponents."

You seem angry. I suppose you have more invested in your argument than you let on. Good luck to you.

[wgflyer]

"Yeah right, it's already a given that previously taxed savings will be taxed again when spent."

I don't think any fair tax proponents will argue that point. Future savings will only be taxed once, when you spend them. The interest, or capital gains you receive from investing those savings will not be taxed until you spend them. You realize, of course, that your current savings will be taxed when you spend them under the current system, just as they will under the FairTax. Only it's that sneaky embedded tax that gets you, which is almost the same tax levied by the fair tax. There is virtually no difference in how current savings are taxed under either system, but the FairTax won't charge you a further tax on your interest income. So, explain again how it is you prefer the current system?

[GSlob]

You keep confirming my low opinion:
In your 401k even under the present system you already have enough flexibility to invest in what in your opinion would be more profitable variant - either in that same 401k or in a rollover IRA. Thus the reinvestment and flexibility option till the final withdrawal you already have, and it does not count - it will be taxable for you, this way or that - either as an income at withdrawal, or as a sales tax at spending. The times of withdrawal and spending could be very close, so there need not be missed investment income - just imagine that you withdraw your 401/IRA funds at ATM in the supermarket in "as needed" amounts, like $40 at a time.
In reality it is a bit more complicated, but with judicious monthly withdrawals to fund the current spending one misses on average half a month worth of the investment return - and gains more than half a month worth of time if one pays estimated tax on the withdrawals at the last possible moment. Thus the spending money does have enough time to sit in the interest bearing senior checking account.

[John SBM]

Guesses and estimates - refer to the Fair Tax research - the book is clear - economists who have studied the plan made that "estiamte" about the level of imbedded taxation.

As to pricing, compteitive forces do not change because taxes do - prices reflect competition. Where prices do not come down in order to reap exaggerated profits, compeitors will see the opportunity to gain market share by lower prices. Learn economics.

[John SBM]

How is this so unclear. When you get your part of your paycheck the government allows you to keep, you spend the left-over money. Everything you buy has taxes in the price - payroll taxes for workers, corporate income taxes, the cost of complying with the tax code, etc. Seems to me the real double taxation is occurring now!

[eskimo]

...economists who have studied the plan made that "estiamte" about the level of imbedded taxation.

Look, they still make guesses and it's not like they have not been wrong before.

[eskimo]

I don't think any fair tax proponents will argue that point.

I hope not, it is a serious flaw affecting a large portion of the population. It needs to fixed not argued for.

[Badray]

Please reread the next to the last line of #279.

[Shalom Israel]

I refuse to discuss a question that's completely irrelevant. "Mrs. Lincoln, you keep dodging my question: How was the play?"

[Badray]

See #296

Hint:

I want no further communication with you. You may use whatever excuse you choose to avoid answering questions and engaging in true debate, but you won't do it with me. I don't have time for your nonsense.

Our goal is the same -- which you won't even acknowledge. We differ on how to get there. The path that you advocate hasn't worked and can't. I want to try something new that I believe will be better, but you persist in holding your breath til things change.

And I thought that I was too rigid. Sheesh.

[Kellis91789]

You stop after reading the first line that says what you want to hear ?

wgflyer gave you two points: a new tax where there wasn't one before; an elimination of existing taxes, ie, a hidden tax on purchases and future income taxes on the ROI of the savings.

Sure there will be a new tax, but existing taxes go away.

So what is the NET effect ?

[eskimo]

So what is the NET effect ?

Many people will be taxed again when they spend under the new tax what has already been taxed under the old tax. What in hell is so difficult to understand about that?