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."

[Hong Kong Expat]

Yeah, I mean look how well the Fair Tax works in Europe!!

[chainsaw]

Think its a pipedream with the dishonest powerbrokers in DC? Absolutely.

Right. The Social Security tax was supposed to be voluntary too.

[eskimo]

The motives of people who oppose the FairTax must be examined. Are they just protectiong thier personal loop hole?

How about all those over 50 who already paid tax on all their savings and will now be taxed again when they retire and begin to spend what they saved? Ask one of them, they will tell you where to stick your "fair tax" scam.

[Man50D]

There's the main problem with the idea right there. One of the worst features of the present tax system is the ability of some people to shelter their income using various legal pretenses. This "Fair" Tax would preserve and enshrine that basic concept.

Everybody needs to pay. Everybody.

That same business owner or farmer will pay taxes because they will buy goods and services for their personal consumption as a consumer. The advantage with the Fair Tax is they will not be taxed twice as a business person and as a consumer.

[Kellis91789]

So if you got a debit card (for the tax amount on the already-taxed savings) that could only be used to pay the FairTax on items you purchase, then you'd be a FairTax supporter ?

Minus the income tax you'd have owed on the future earnings of that savings, of course.

And also minus the income tax you would have owed on other unrealized gains in assets such as your home, stocks and bonds, gold, collectibles, etc., of course.

And, of course, minus the taxes deferred but still owed on any 401k, pension payments, or (non-Roth) IRA disbursements.

Right ? I mean, you wouldn't want to unfairly get all the benefits of eliminated income taxes and ALSO be compensated for the taxes on spent savings. Right ?

[Kellis91789]

Do you think it is logically possible for a business -- a legal fiction -- to pay taxes ? Do you think it happens now ? Not hardly. Every dollar in taxes that a business pays is added -- plus overhead -- into the selling price of their goods and services.

[Man50D]

A fair tax would be an equal tax where every one is treated equally under the law and is given the same tax bill. How one arranges one financial affairs, should have no bearing on ones tax status. Should one freedom of speech, be dependent on the amount one has to say?

You're speaking of a flat income tax.You may not realize the current tax code started out with the same concept. When the income tax was enacted on February 12, 1913 there were only two income tax brackets: the first tax ranged from merely 1% on the first $20,000 of taxable income and was only 7% on incomes above $500,000. In the beginning, hardly anyone had to file a tax return because the tax did not apply to the vast majority of America's work-a-day citizens. For example, in 1939, 26 years after the Sixteenth Amendment was adopted, only 5% of the population, counting both taxpayers and their dependents, was required to file returns. Today, more than 80% of the population is under the income tax.

Another flat tax would only morph into another oppressive and complicated tax system.

[Kellis91789]

What country in Europe has the FairTax?

If you mean the VAT in Europe, then you need to go back and do your homework. The FairTax is not a VAT, which is added at EVERY STAGE OF PRODUCTION and was added ON TOP OF the income taxes, not as a replacement. A RETAIL SALES TAX is very different from a VAT.

[Man50D]

Of course increasing tarrifs and duties on imported goods isn't a bad way to raise revenue and protect certain critical sectors of the economy from ruin or outsourcing.

There will be no need for tariffs with the Fair Tax because all embedded VATs in good and services with the current tax code will be eliminated. Competition will force companies to lower their prices. Lower prices will make U.S. goods and services more competitive with foreign businesses. Also companies who left the U.S. to lower their tax burden will return because the cost of tax compliance will be reduced considerably.

[Kellis91789]

Actually, I think Mark is a "head taxer". The same AMOUNT, not the same PERCENTAGE. Divide the total spending equally by every man, woman, and child and you get an annual Federal tax bill of $8K per person. Same way you'd split the check at a restaurant with your friends. $32K for every family of four. Got seven kids ? Pay $72K in Federal taxes. Every year.

I agree with him, but government would have to shrink to almost nothing before you could get that $8K/ea down to an amount that uneducated, unskilled laborers could afford to pay.

I'd love to see it happen, but it is a long way from the socialist big-government America we've got.

[Badray]

Well for Heaven's sake, let's just sit here and do nothing then.

No, it won't be easy but we can get this done and we can and will stop them from putting the income tax back in place.

[Man50D]

Yeah, I mean look how well the Fair Tax works in Europe!!

There is no Fair Tax in Europe. European countries impose a VAT. That is far different than the Fair Tax bill (H.R. 25) and (S. 25) before Congress.

[Badray]

The tax RATE should be equal, not the dollar amount. I would suggest that you spend some time reading about the plan and the philosophy behind it.

Can you tell me of a plan in congress that has support that works better than this one?

[Man50D]

Think its a pipedream with the dishonest powerbrokers in DC? Absolutely.

Many people were just as skeptical about women's right to vote but a strong grass roots effort resulted in the 19th Amendment.

[R.W.Ratikal]

You and others are being distracted from the real tax problem. What we need is LESS taxes. If we are all equally sheared alike does that make it fair?

It's not just a question of whether we are being fairly taxed but that taxes have reached confiscatory levels. Non-government economists have estimated that Americans are over-taxed some 70 percent!

What we need are massive tax reductions, fair or not.

We should be careful what we ask for. We might wind up with a "fair" tax on top of the present IRS tax.

[Badray]

The prebate is a precursor to a communistic society?

WFT do you call the income tax? It's right out of Marx's playbook.

A lot of that 'tax free' investment money out there will be taxed one way or another and in much larger bites if something isn't done to protect it. The FairTax does just that.

[Badray]

No one is calling for a phase in. Greenspan asked that there be a 6 months waiting period before it took effect.

The imposition of the FairTax means the end of the income tax.

Are you deliberately misrepresenting the FairTax or are you ignorant of the facts?

[Kellis91789]

You'll never get massive tax reductions when the number of non-taxpaying voters gets closer to passing the 50% mark every year.

How will you get lower taxes once a majority on non-payers can vote for whatever government spending they want ?

The "fairness" issue is all about making EVERYONE feel the pain, so they vote for less spending to get less taxes.

[Badray]

Right now the government tells you how much you can put away and when you must take it out. They'll tax you on when you do and tax it more when you die. They 'allow' you to give some of it to your kids. If there is an emergency and you withdraw your money too soon, you get hit with a penalty as well as the tax.

Do you see the problem with the current system? It's your money but you can't decide what's best for you. The FairTax puts you back in control of your money.

There will be some unpleasant consequences for some, but there will be benefits for all and for our posterity and for the country.

[gafusa]

The fair tax is still good even with our level of taxation as the current taxation punishes success and is driving our jobs and companies oversees. The fair tax will put our companies on more even ground. First we should impose the fair tax, then reduce the level of taxation. The two are not mutually exclusive.