FairTax Attack

I noted with interest the letter to the editor from Mr. Ed Outlaw with his concerns for the Fair Tax plan. I have promoted the Fair Tax for several years now, and I have rarely come across anyone that was such a proponent of the present tax system. The Income Tax is out of control, inefficient, and penalizes U.S. business and manufacturing competing within an escalating global economy. The Fair Tax is a simple alternative method to fund the Federal Government that is fair, simple, and visible. As a by-product, it just happens to solve some very serious economic problems that are caused by the present Income Tax.

I find it interesting that Mr. Outlaw listened to a 20 minute presentation on the Fair Tax and came away “convinced” that the plan was bad. His main concern seemed to revolve around whether the plan was “progressive”. By every definition that I could find, the Fair Tax plan is progressive because of the “prebate” given to each family. No one will have to pay Federal taxes on their basic needs. The more money that you spend above the poverty level, the more the effective tax rate you pay. No one’s total tax obligation will ever exceed 23%. The debate is how progressive do you want it to be, and there are infinite opinions on that issue. I suspect that Mr. Outlaw suffers from the “Sin of Envy”. Arguing that some should pay more because they took advantage of the opportunities available to everyone is the same as saying that we should limit a person’s educational opportunity because they would have an unfair advantage over someone that dropped out of High School.

The Fair Tax benefits poor and middle income Americans. The largest tax impact on lower income Americans is the payroll tax. The Fair Tax eliminates Medicare and Social Security withholding. In fact the Presidential Tax Advisory Panel issued a statement last summer that the Fair Tax was the only plan presented to them that “totally untaxed the poor”. It benefits all but the people that have been avoiding taxes, either legally or illegally in the past. Plus, you never have to maintain tax records, file tax returns, or worry about the IRS seizing homes or accounts.

The Fair Tax will return this country to one envisioned by the founding fathers. The Constitution specifically forbids an income type tax to fund the Union. In Federalist Papers 21, Alexander Hamilton explains that they were afraid that an income type tax would “of itself be sufficient in America to work the eventual destruction of the Union” whereas, a consumption tax “contain in their own nature a security against excess”. He also stated that a consumption tax would be like a fluid and would reach it’s own natural balance.

I believe that Mr. Outlaw is consumed with many issues and chose the Fair Tax as a vessel to vent. The Fair Tax plan is apolitical and was developed by the American people and academia outside of Washington. I challenge anyone to start from scratch and develop a tax plan that is simpler and fairer to all Americans.

"I challenge anyone to start from scratch and develop a tax plan that is simpler and fairer to all Americans."
Nothing's easier. Fairness is not being forced to pay for anybody else, and not being forced to pay twice. Taxes are payment for social services. The list of services supported by taxation is to be kept to the absolute minimum, with user fees for everything else. Defense [internal - law enforcement - and external, maintenance of public records, administrative apparatus, standards of weights and measures [here one could add the standards of professional certification and standards on food and drugs] and monetary unity - pretty libertarian list. These services are extended to persons [i.e. poll tax - Bill Gates' person ought to be worth the same as that of a penniless street bum in the eyes of law] and to their property [again, servicing $1 of Bill Gates' stuff ought to be charged at the same rate as $1 of the bum's]- flat rate property taxation here. Thus it would have to be a combination of a flat rate property tax and a poll tax. Precise ratio depends on the value [arbitrary] one would put on a person, like the old vergeld. Say, 2Mil. Then the bum pays the taxes on 2 mil, and Gates on 50002 mil.

These services are extended to persons [i.e. poll tax - Bill Gates' person ought to be worth the same as that of a penniless street bum in the eyes of law] and to their property [again, servicing $1 of Bill Gates' stuff ought to be charged at the same rate as $1 of the bum's]- flat rate property taxation here.,?P>

Our current oppressive 60,000+ page tax code began in 1913 as a two tiered flat tax. The first tax ranged from merely 1% on the first $20,000 of taxable income and was only 7% on incomes above $500,000. Only two percent of the population, counting taxpayers and dependents were required to file a return. Today, more than 80% of the population is under the income tax. Proposing another flat tax will eventually evolve into another oppressive tax code.

No. Everyone pays, and everyone pays for oneself only, and pays only once [a year] - nothing's fairer.
"Fair tax" is a double taxation fraud, pure and simple. Take 3 people: A, B, C. Each has 100K, but A has his in an IRA or 401k [i.e. has not yet paid any taxes on the money], B has his in a Roth or as a capital cost base of a taxable investment [hopefully not a losing investment], and C has his as cash. To come into their 100K, both B and C have already paid something like 25K into the system as income tax. Now, under existing system, both B and C can be spending their money with minimal taxation, but A has to pay what he has not yet paid - fair enough. What would happen to these people under "fair tax" fraud? A pays consumption tax instead of income tax - no problem with that. But both B and C are forced into double taxation, unless you provide specific refunds for all the sales taxes on the expenditure of their previously taxed monies.

A flat income tax also retains paycheck withholding - an insidious way for goverment's full cost to be painless to much of the voting populace.

A flat income also retains payroll taxes for the employee AND employer - also withheld as above.

A flat income tax also continues to hide the cost of government by taxing business. Of course, business only increases prices (or in the short run lowers wages and/or ROI) to cover these tax costs - costs paid by individual consumers.

Also important is that a flat income tax is NOT border adjustable. A flat income tax retains the tax cost component in US exports.

Why is it called 'fair tax' - well it wouldn't see the time of day if it was called what is really is 'tax break for those rich enough who don't have to spend every dime they earn to live'.

The rich will receive the least amount benefit with the Fair Tax. The amount of tax will be determined based on how much a person spends. The more income an individual has the more he or she tends to spend. Consequently that person will be taxed more Fair Tax FAQ #12.

The wealthier one is the more that person will pay as a percentage of their spending Fair Tax FAQ #48

You obviously have not done your research on the Fair Tax. You should read more about The Fair Tax before making anymore erroneous statements.

Why is it called 'fair tax' - well it wouldn't see the time of day if it was called what is really is 'tax break for those rich enough who don't have to spend every dime they earn to live'.

Have you taken into account the fact that the old INCOME tax hurts those still TRYING to get rich, NOT the ALREADY-rich. And with the FairTax: EVERY family gets a PREBATE of $180-$700 a MONTH, depending on family size. ???

Oh, and by the way, what do you think of the idea of giving tax breaks to people who actually create jobs for OTHER people -- which might give them and incentive to create even MORE jobs -- even though they might happen to be "rich"?

"You may not like rich people, but when was the last time a poor person gave you a job?" -- Gene Simmons
"I'd rather work for a happy rich person than a miserable poor person any day." -- Randy Richards
"I have nothing against rich people. In fact, I've been struggling most of my life to join them." -- Walter E. Williams

But both B and C are forced into double taxation,...

I understand your point. B and C, doing what's right, have saved all their lives. It seems that their savings would buy less when we switch to the nrst HR 25.

As always, there will be some that come out ahead (anyone and everyone who has any tax deferred plans) and some not. THose who have saved after-tax will not get a windfall like those who saved tax deferred. They will end up being able to buy about exactly what they planned. That they do not get a windfall isn't a negative to me.

However, it is not the case that their purchasing power will be reduced by the amount of the nrst. If one assumes pre-nrst nominal prices rise by 13% (this is not my POV), then without any gains, this person would suffer a loss in purchasing power. To what extent? Not 13%.

-Not all things are taxed.
-Necessity level spending is not taxed. See rebate chart.
-Any amounts in tax deferred plans will gain in purchasing power.
-Social security is never taxed - and will be around and easily solvent with the greatly expanded base (making reform easier.)

So yes, some may lose some purchasing power. If you ask me, I'll trade the slight loss I'd see in order to pass my wealth on tax free - in order to know my grandchildren would be free of the income tax.

services supported by taxation is to be kept to the absolute minimum,

Congress is not going to stop spending, which is really vote buying, as long as they can keep taking our money.

Entitlement spending (60% of the budget) is not going to end...it is mandatory spending ...funds automatically obligated b/c of previous laws.

If you want for Congress to stop spending then take control of the purse strings and put a choke hold on the money flow. Get rid of the IRS and the stealth income tax and then put them on a budget.

If you earn more than $28,000 you are in the top 50% of wage earners and the top 50% pay 98% of taxes. Of those in the bottom 50%, they still have to pay Social Secutity and Medicare taxes which they would keep under the fairtax, plus they would get the prebate! If they buy used goods (houses, cars, books)they will pay no taxes and education is not taxed. Even if they buy new goods, prices would come down once business doesn't have to bake tax costs into the prices so purchasing power goes way up!
Privacy is better under the fairtax as filing with the IRS will be a thing of the past.
Tax loopholes go away so no more freebies to the rich.
Job's will return to the US from overseas.
This is the best idea in our country!

If you have to spend every dime you earn to live, then you'd have a zero(or close to it) tax rate under HR 25.

All valid Social Security cardholders who are U.S. residents receive a monthly rebate equivalent to the FairTax paid on essential goods and services, also known as the poverty level expenditures.

Illegals will NOT get the rebate. They'll be paying the full tax every taxable purchase ... finally paying their way. A good way to discourage them imo.

How about we call it:

A tax that is visible to all (are you aware how much you are paying now in embedded taxes?)

A tax that you can choose not to pay (thanks to the rebate and your choice to buy used)

A tax that Illegals will pay.

A tax that prostitutes, drug dealers and people paid under the table will pay.

A tax that gives control back to We the people.

A tax that cuts down on lobbyist's palm grease (no more lobbying for tax loop holes).

A tax that allows for you to keep ALL of the money that you have earned. No more working through the month of May to pay Uncle Sam.

A tax that makes April 15th just another spring day.

Nobody should be forced into losing, especially after having done "what's right all their lives". Unless the economy dramatically changes overnight, the govermnent take will be the same % of it, business profitability will be the same, the amounts of money and the goods offered will be the same and so will be the prices. Thus this "fair tax" is nothing but double taxation fraud - hitting more worthy B and C so that less worthy A could fart and breath easier. Sorry, but I'm not going to buy it.

No. Everyone pays, and everyone pays for oneself only, and pays only once [a year] - nothing's fairer.

You won't be paying only once per year with a flat tax. The flat tax will still employ taxes on business transactions. Each business transaction incurs a tax at each stage of production. These Value Added Taxes(VATS) will be passed onto the consumer. You and everyone else will still be paying taxes many times over the course of a year in addition to the flat tax. The Fair Tax eliminates taxes on business to business transactions Fair Tax FAQ #2 Any individual making a purchase under The Fair Tax will be paying the tax only on their purchases.

But both B and C are forced into double taxation, unless you provide specific refunds for all the sales taxes on the expenditure of their previously taxed monies.

B and C will not be taxed in your scenario because the Fair Tax will abolish taxes on capital gains.

You really need to read the bill before making statements about the Fair Tax.

The challenge was to design a system "from scratch", de novo. Thus neither the congressional spending habits nor the existing entitlement infrastructure could be rightly figured into it, for that would be violating "from scratch" provision. In the same "from scratch" spirit, the legislative chamber with powers over taxation would be elected on the basis of "shareholders' voting", i.e. you will be voting the number of the dollars you paid as the tax in the prior year.

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