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."

[Your Nightmare]

Oh, and BTW Nightie, giving soup away by the qualified NFP organization does not qualify as consumption since it is not a taxable event

That's circular logic - "it's not consumption because it's not a taxable event and it's not a taxable event because it's not consumption."

it is a gift by that organization, not a sale to a consumer.

So? The government doesn't sell their services and they pay the sales tax. The stated purpose of the bill is not to tax all retail sales, it's "to tax all consumption of goods and services in the United States once, without exception, but only once." Taxing retail sales is just one of the means given in the bill toward that end.

[Kellis91789]

The end result of their rate calculation in that table was only 19.3% for the "inclusive with rebate".

That would indeed be wrong if there are $219B NFP expenditures incorrectly included. The actual revenue-nuetral rate would then be 19.7% instead of 19.3%

I'd rather find that this is the error, rather than the language of HR25 really means NFP expenditures are FairTaxable events.

This really needs to be clarified, and if necessary the language changed to exclude those expenditures. HR25 would never get off the ground if those expenditures are taxable. Contributors need to be assured their favorite charity will be able to make full use of their donations.

The language seems clear to me, but not to you, and none of us wants ambiguous language in a Bill. Changing the language now is easy, but realistically, we all know it would never come out of committee without language crystal clear to the NFP lobby.

[Your Nightmare]

That would indeed be wrong if there are $219B NFP expenditures incorrectly included. The actual revenue-nuetral rate would then be 19.7% instead of 19.3%

The "revenue neutrality" of their rate is another issue.

[pigdog]

No, not at all ... but you're welcome to think they are the recipe for moonshine if you prefer (which is about as likely as your notion).

[pigdog]

You gave "conclusive evidence"??? Not hardly. All that showed up was merely your interpretation which, as we know, is biased against anything Fairtax though you can't admit it.

Actually several of your bits of "misinformation" have been pointed out in past threads (including the one with the 400% plus "oversight") but you really needn't look further than your trying to imply that soup given away by a charitable organization is taxable. As I told you, Nightie, that isn't consumption.

As I said it:

"... does not qualify as consumption since it is not a taxable event - it is a gift by that organization, not a sale to a consumer. It's what they're "in business" for, you see."

... so there is no circular logic involved at all except yours in trying to claim something that was not said and is not true. The soup is given away as a normal course of "business" and is never taxed since it is not consumption under the FairTax and is not purchased.

The operative phrase in the bill is "purchased for final consumption" - and while the soup may be for final consumption, it is not purchased by an end consumer. It's a gift ... charity.

OTOH the government IS taxed because they are taxed now in much the same manner (and should therefore be part of the tax base) and they are - in effect - selling their services to taxpayers who "consume" as well as pay for those services. The bill doesn't say you have to get GOOD services or get your money's worth but just that such are "purchased for final consumption" by a consumer even though he gets poor results for his money in many cases.

Perhaps having the FairTax as the law will help people see that and demand "more for their money" - because it IS our money Nightie (despite what you and your kind like to believe).

[pigdog]

Why, Nightie, merely because you choose not to believe it??? You didn't believe any other rate, either. By your lights they're all wrong, dishonest, fakery, crooked, etc.

Sure, Nightie ...

[Your Nightmare]

You gave "conclusive evidence"??? Not hardly. All that showed up was merely your interpretation which, as we know, is biased against anything Fairtax though you can't admit it.

If what I showed isn't good enough for you, nothing is.

Actually several of your bits of "misinformation" have been pointed out in past threads (including the one with the 400% plus "oversight") but

You mean the one you refuse to post so everyone can see you have no idea what you are talking about?

[pigdog]

In fact, Nightie a few threads you were attacking the Transitional Inventory Credit, claiming (erroneously - which you have never admitted BTW) that items qualifying for the credit did not have to be taxable under the FairTax (they do).

In addition, you several times pushed a number of the inventory subject to the credit to be $1,224 billion (or some such preposterous amount and you finally after much urging posted your source from which it could be seen that "your number" represented all possible inventory in the entire economy qualifying or not. You kept insisting that $1,224 was the right number but finally realized that it wasn't but never admitted that you had lied.

I said at the time:

"To: Your Nightmare Well, nightie, what you've actually admitted is that you lied in #186 which is where you tried to make the people think the number was $1,224B. And you (lamely) tried to claim that you didn't lie. Why not just confess? It is very clear.

I was being generous (to you) by saying you had inflated the number by over 300%. If the comments Linder made are correct, that makes you as big a liar and fool as looey at a 400% error rate (or to be more precise - a 409% error rate - sorry looey). I think you owe looey an apology for out-lying him. You're a real piece of work and still haven't admitted to your lie. Why is that?

And why is it that you do not go on with the passage in that same part of his testimony where he says in connection with this "cost" that this allows fixing S/S in less than 15 years rather than the present evaluation of 75 years. That more than pays for it right there you see."

That was actually far more than just "misinformation" - and Looey is probably still mad at you for outdoing him.

[Your Nightmare]

In fact, Nightie a few threads you were attacking the Transitional Inventory Credit, claiming (erroneously - which you have never admitted BTW) that items qualifying for the credit did not have to be taxable under the FairTax (they do).

You don't want to accept that the Transitional Inventory Credit applies to "work in process" and that the credit rights can be sold with the goods.

Is it so hard to believe that in a $12 trillion economy, there are $1.2 trillion goods in inventory or work in process at any particular time? Seems reasonable to me.

[pigdog]

Sorry, Nightie. Your number was in error by 400+ percent as I showed you.

You're just not honest enough to admit it. The number you used was not "in process" but was the total inventory in the entire economy (manufacturers, wholesalers, etc.). Whatever "seems reasonable" to you is almost undoubtedly wrong since you merely attempt to warp the truth to fit your attacks on the Fairtax.

You were also wrong when you claimed the inventory involved did not have to be taxable under the FairTax (it does) ... and you've never admitted THAT either. It's hard to see why anyone would be foolish enough to believe your "stuff".

[Your Nightmare]

You were also wrong when you claimed the inventory involved did not have to be taxable under the FairTax (it does) ... and you've never admitted THAT either.

It doesn't:

`(c) Qualified Inventory Held by Businesses not Selling Said Qualified Inventory at Retail-

`(1) IN GENERAL- Qualified inventory held by businesses that sells said qualified inventory not subject to tax pursuant to section 102(a) shall be eligible for the transitional inventory credit only if that business (or a business that has successor rights pursuant to paragraph (2)) receives certification in a form satisfactory to the Secretary that the qualified inventory was subsequently sold subject to the tax imposed by this subtitle.

If you don't like my number, give us a number, bright guy. What would the Transitional Inventory Credit be. You claim I made an error but don't give a number of your own. Pathetic, as usual.

[pigdog]

Oh, but it does need to be taxable, Nightie, and the very last line of just the part you quoted shows that when it says:

"... receives certification in a form satisfactory to the Secretary that the qualified inventory was subsequently sold subject to the tax imposed by this subtitle ..."

(emphasis added)

And it's not a matter of "liking" your numbers or not, Nightie, merely that they are grossly wrong covering all inventory even that held by manufacturers, wholesalers, etc. In short - all inventory in the US. That's not what the bill said and you know it.

Most of us on these threads know of your disinclination to admit your errors and I'm certainly willing to think that the figure Linder offered of less than 1/3 of "your number" is more correct. All this is just more of your nonsense and hope to derail ay FairTax discussion by claiming no one was willing to post SOME of your past lies/misstatements. I just did so.

[Your Nightmare]

`(2) TRANSITIONAL INVENTORY CREDIT RIGHT MAY BE SOLD- The business entitled to the transitional inventory credit may sell the right to receive said transitional inventory credit to the purchaser of the qualified inventory that gave rise to the credit entitlement. Any purchaser of such qualified inventory (or property or services into which the qualified inventory has been incorporated) may sell the right to said transitional inventory credit to a subsequent purchaser of said qualified inventory (or property or services into which the qualified inventory has been incorporated).

Oy.

As I tried to explain to you before, the credit right can be sold with the inventory even if the inventory is to be later incorporated in other taxable goods or services.

`(2) TRANSITIONAL INVENTORY CREDIT RIGHT MAY BE SOLD- The business entitled to the transitional inventory credit may sell the right to receive said transitional inventory credit to the purchaser of the qualified inventory that gave rise to the credit entitlement. Any purchaser of such qualified inventory (or property or services into which the qualified inventory has been incorporated) may sell the right to said transitional inventory credit to a subsequent purchaser of said qualified inventory (or property or services into which the qualified inventory has been incorporated).

According to your logic, if I'm a wholesaler, I don't get the credit because my sales are not a taxable event. That's not what the bill states. The bill reads that if you have inventory that is not taxable, you can recieve the credit and later sell that credit with the inventory. The person who sells the inventory, or any inventory it's been incorporated into, at retail can then use the credit.

[pigdog]

That's merely more of you Out of Contex nonsense attempting to justify your gross lie that all inventory anyplace in the US counts toward the credit. It doesn't and that's not what your snippet means either.

Here's the whole applicable portion of the bill. Others may judge from their own interpretation if the thing needs to be taxable or not:

"`(a) Inventory-

`(1) QUALIFIED INVENTORY- Inventory held by a trade or business on the close of business on December 31, 2006, shall be qualified inventory if it is sold--

`(A) before December 31, 2008;

`(B) by a registered person; and

`(C) subject to the tax imposed by section 101.

`(2) COSTS- For purposes of this section, qualified inventory shall have the cost that it had for Federal income tax purposes for the trade or business as of December 31, 2006 (including any amounts capitalized by reason of section 263A of the Internal Revenue Code of 1986 as in effect on December 31, 2006).

`(3) TRANSITIONAL INVENTORY CREDIT- The trade or business which held the qualified inventory on the close of business on December 31, 2006, shall be entitled to a transitional inventory credit equal to the cost of the qualified inventory (determined in accordance with paragraph (2)) times the rate of tax imposed by section 101.

`(4) TIMING OF CREDIT- The credit provided under paragraph (3) shall be allowed with respect to the month when the inventory is sold subject to the tax imposed by this subtitle. Said credit shall be reported as an intermediate and export sales credit and the person claiming said credit shall attach supporting schedules in the form that the Secretary may prescribe.

`(b) Work-in-Process- For purposes of this section, inventory shall include work-in-process.

`(c) Qualified Inventory Held by Businesses not Selling Said Qualified Inventory at Retail-

`(1) IN GENERAL- Qualified inventory held by businesses that sells said qualified inventory not subject to tax pursuant to section 102(a) shall be eligible for the transitional inventory credit only if that business (or a business that has successor rights pursuant to paragraph (2)) receives certification in a form satisfactory to the Secretary that the qualified inventory was subsequently sold subject to the tax imposed by this subtitle.

`(2) TRANSITIONAL INVENTORY CREDIT RIGHT MAY BE SOLD- The business entitled to the transitional inventory credit may sell the right to receive said transitional inventory credit to the purchaser of the qualified inventory that gave rise to the credit entitlement. Any purchaser of such qualified inventory (or property or services into which the qualified inventory has been incorporated) may sell the right to said transitional inventory credit to a subsequent purchaser of said qualified inventory (or property or services into which the qualified inventory has been incorporated)."

You can pull your frequently used tactic of posting only part of something if you like and, like Rumplestilskin, continue to stamp your foot and claim "I didn't lie., I DIDN'T lie ..." ... but remember what happened to him Nightie.

[Your Nightmare]

Although the majority of PEOPLE that give money to charities do so from after-tax income because they don't itemize deductions, I suspect the larger contributions ARE from untaxed income because the larger contributors do itemize.

If it isn't worth itemizing your deductions, your marginal tax rate is unlikely to be over 23%, even including SS/M. So this crowd is not going to be able to donate 30% more than they used to.

The itemizers are already donating untaxed dollars, so they see no benefit on the donation side.

If the charity then had to go and pay 30% more for all their operating expenses, there is no way they would come out ahead. Yet the FairTax is touted -- in whitepapers, FAQs, and even the presentation they gave to the Tax Reform Panel last year -- as BETTER for charities than the current system.

It just doesn't add up to your interpretation. I'd be likelier to believe you are misinterpreting the links to the NIPA data -- or even that Karen Walby made a mistake in including that consumption from the base. I posted a message to her last night and provided a link to your post here. Hopefully she'll respond.

Just curious, did you ever hear from Karen Walby on this issue?

[Kellis91789]

Karen Walby did not respond. But I posted thru a moderated Yahoo group, and I do not see my question there either. So either the moderator didn't approve of my post, or it got lost in the shuffle. It doesn't speak well for the moderator in either case.

I've sent a regular e-mail thru the fairtax.org contact page. Maybe I'll get a response that way.