Save America with the ‘Fair Tax Act’

The Courier ^ | August 31,2006 | Gordon Bishop

[Man50D]

Abolish the federal income tax!

No more taxes on savings and investments!

A "Fair Tax" can completely fund the federal government, Social Security and Medicare!

You control how much you spend!

So what are we waiting for?

You, the taxpayers of America burdened with an income tax that is costly, wasteful and sinking America into inevitable bankruptcy. All current forms of federal taxation would end! You would keep 100 percent of your paycheck. You control how you spend your paycheck. It's your money. You make the decisions as to how you want to spend your money.

The Fair Tax would create more jobs and give the USA a level playing field when selling overseas. United States Senator John Linder (R-Georgia) is sponsoring the "Fair Tax Act of 2005." If enacted by Congress, it would accomplish all of the above. Simple. Easy. And affordable.

It's the best way to downsize government without disrupting the economy.

To join the "Fair Tax" movement in America, just sign the "Economic Freedom & Fairness" Petition supporting forward-thinking solutions. Go to www.grassfire.net and liberate the working class of taxpayers. Grassfire is trying to give the working class the same kind of freedom America's founders gave to those who joined the American Revolution in 1776 with the "Declaration of Independence." We won the Revolutionary War, but have lost our country since the 16th Amendment (income tax) became "Law" in 1913.

[Zon]

I did. If you don't like the answer that's your problem. Not mine. Deal with it -- or don't. Makes no difference to me.

[RobFromGa]

Which edition of the the FairTax book did you read?

[Principled]

What? I ask you for details about your plan and you call it a stupid liberal tactic? Then I ask again and you say nobody believes me?

Whatever you're smoking is too strong for you.

[kingu]

If you do not support the Fair Tax then what sort of tax reform do you support?

The only kind that works, slicing and dicing the federal government to get rid of the bloat.

Right now, the federal government takes in 17.5% of the GDP, and spends 20% of the GDP. That's just plain insane. There's 'mandatory spending' - gosh, missed that part of the constitution - where's the amendment that requires Congress to spend much of anything? There's discretionary spending. We spend 3.8 billion dollars to have Congress. That's a bit over seven million a year for every congressman and senator. And it's a billion dollar increase in the last four years, one third of the 2001 budget for those who like to keep track.

[Zon]

I'd like to see the specifics too.

[Principled]

Sorry, the post above should read,

Does someone who earns 26400 today get tobuy $26400 worth of goods?

Of course not.

This igores the effect of the income/payroll tax system on the buying power of earned dollars.

[Always Right]

Wrong again. The FT is in fact the model for the Florida and Texas state tax systems. Thats just a simple fact.

Ummm, I gave you five major differences between the fairtax and those states and you gave 5 incoherent responses that had nothing to do with the points and then told me to read the fairtax book. You make the perfect fairtax supporter.

[navyguy]

"Sorry, IRS rate tables are not inclusive. Never will be. If they were, they would be impossible to calculate."

The IRS most certainly does calculate individual income taxes inclusively. You couldn't be more wrong. If you don't understand this then you don't understand the difference between an inclusive and an exclusive tax. You can learn about the difference here...

http://www.fairtax.net/24.htm

It's ridiculous to claim that calculating an inclusive tax is impossible. For more discussion on this I refer you to The Cato Institute...

http://cato.org/pubs/pas/pa-272.html

Were you an English major?

You also stated...

"Gross income - deductions = AGI
AGI * tax rate = amount due."


So what? The Adjusted Gross Income has nothing at all to do with whether a tax is calculated as inclusive or exclusive. It merely changes the amount against which the tax is levied. It says nothing whatsoever about how the amount will be taxed. Note also that under the Fair Tax this calculation will no longer be necessary.


"Items consumed are priced as "corporate tax/fee burden included"


That is EXACTLY how we are currently taxed now on anything we purchase now. Under the FT, which eliminates so called 'corporate taxes', these embedded taxes would be replaced by the NST.

"but that is in effect a flat tax, as it is the same for anyone would potentially consume that product."

Thats right. But so what? You are wandering into irrelevancy.

Its clear to me that you haven't read the Fair Tax book. I've tried to educate you but you simply don't know what you're talking about.

And I will ask you again: If you do not support the Fair Tax then what sort of tax reform do you support? Or do you like things the way they are now?

[Principled]

You make the perfect income taxer. You endeavor to ignore the substance of what is said in favor of something unimportant you want to argue.

What everyone else is reading is that the idea of taxing spending to the exclusion of taxing income is the idea on which fair tax and the other states in question is built.

There are obviously going to be diffenerences - the poster did not say otherwise. But the differences are what YOU want to say he's focusing on. He isn't. He's focusing on the similarity.

But who cares? This is just another example of anti-nrst people reducing threads to meaningless minutia.

[groanup]

WAGES: Why wouldn't a wage earner keep 100% of his gross pay. Nowhere in any fair tax proposal or in HR 25 does anyone propose invalidating employment contracts.

BUSINESS COSTS: So your number for cost savings is 8%. Mine is 10-15%. You can't know the actual cost savings to all businesses at once. The sole proprietor who would have to spend thousands a year on life insurance to protect his estate, the widely held corp. that buys section 29 tax credits. The whole entrenched system is so wacky it's impossible.

PRICES: You can't assume that switching tax methods is infaltionary. I showed you the numbers a long time ago and all you did was tell me I was a liar:

If I earn 100 dollars I know I can only spend 75 of it because I will have pay 25 dollars in taxes. Under the fair tax if I earn 100 dollars I know I can only spend 75 of it because I will have to pay taxes. The fact that you deny that doesn't make it false. But it CERTAINLY is not inflationary. You are making a ridiculous assumption of which you know nothing about. If your economist, Gale, saw the inflation aspect of it he would have listed it. It doesn't exist.

GOVENMENT EXPENSES: Since the government currently taxes the wages it pays, how would you have those wages taxed under a fair tax? Why would the government have to raise more revenue when the consumption tax would come right back to them anyway. This is one of your lamest arguments and you keep bringing it up. And this business about SS payments going to the moon under Rob's scenario is just as bogus. As I showed you in the previous example (and other times) there is no inflation component without an increase in the money stock. But then again, you know much more than Milton Friedman.

FAIR TAX RATE: One can only get to your incredible conclusion by accepting your ludicrous assumptions to begin with. No one in their right mind accepts them except you.

SAVED MONEY: Again, there is no devaluation of purchasing power EXCEPT in some instances of saved after tax money and only then in circumstances that must include: purchases over and above the poverty line, purchases over and above the net savings on investment earnings, and purchases on new items. I have said before that since the MAJORITY of saved money is pre-tax and that it will be so benefited that perhaps those with after tax savings should be compensated early on.

Does this sound like a utopia to anyone?

First of all, no one says it's utopia. Taxes are vile things anyway. Secondly, every point you make is overflowing with wild assumption, exagerration, and implausibilities that only a fool could buy into.

You have this strange way of presenting your numbers as facts when they aren't. They are ASSumptions. How you derived at them is an excercise in disneyland as well.

[navyguy]

I read the first edition and was going to read the second edition as well but it had a printing error in it so I'm waiting for the corrected version to come out. I've also read all of the materials at fairtax.org and I've been to FT rallies. I am also a FT volunteer in my own state.

Which edition have you read?

[Principled]

He thinks income taxes are not figured inclusively.

Interesting, there's another poster who insists that income taxes cannot be figured exclusively.

PT Barnum comes to mind.

He wants people to embrace his flat tax, which isn't a bill or even near being one. He thinks the rate is about 19.5%, but doesn't know if it included er fica or included ee fica or includes business taxes or has any deductions/exemptions....

I can't believe he doesn't sign up under another name after this one.

THen there was the guy (lewislynn) who went on for a week or so saying that those eeeeevil afft guys are eeeeeviler than ever, because on their website, they say that 100-22=78. He went on for gosh knows how long about 100-22 is really 88 and those eeeevil nrst guys are fooling us all. Really. He did. There's another anti-nrst poster who claims the IRS agents are "really nice guys" - that one even came to their door and gave them $125,000 in cash just for doing a nice, neat job filling out 1040s for all those years. Really - you can't make this stuff up.

Among other things, this is why so many assert that they're not telling the real reason they oppose reform.

It's really amusing when you look at the big picture. Enjoy!

[navyguy]

I agree with you. The US gov't spends WAY too much money. But that has nothing at all to do with tax reform. The Fair Tax does one thing and one thing only: It changes the way government COLLECTS federal taxes. It says nothing about how the gov't spends those dollars because that is outside the scope of its purpose.

And complaining about federal spending, while warranted, does nothing to change the current tax code fiasco. Its not an alternative plan to the Fair Tax.

[Principled]

He's read and believes, without any corroboration, one William Gale of the Brookings Institute.

He does not have an open mind and is not looking for information. He's looking to misinform.

[Principled]

Indeed I assert that changing the method of collection can and will have a major impact on gov't spending.

When each and every individual pays the same marginal rate, we are united against increase and united in favor of decreases. Along with the fact that withholding will be gone.

Ignoring the method of collection is retarded.

[Principled]

I don't know if there are any specifics. You can follow the thread up to see he gave some rate (19.5%?) and made reference to some group - but he will not provide any specifics - nor will he provide generalities for that matter.

The mind boggles - why would he push a flat tax and not be willing to talk about it?

[RobFromGa]

Which edition have you read?

I've read both very carefully.

Here was my response to the First Edition: OPEN LETTER TO BOORTZ/LINDER (FairTax)

Then I spoke with the FairTax's favorite economist, and got the truth about the 22-23% embedded taxes, and wrote another letter to Linder and Boortz here: JORGENSON EXPLODES FAIRTAX MYTH (FR Exclusive)

Then Boortz posted a clarification on his website about how the book was unclear in its discussion of the "100% paycheck and prices will stay the same" (it revoked that promise completely and said basically that one or the other could occur but not both together). The thread about the clarification is here: Fair Tax - Straightening Out Some Confusion

Then the eagerly awaited second edition came out which removed all of the Free Lunch claims, and we discussed it here: FAIR TAX BOOK- 2nd Ed. Revisions

Most recently the FairTax commission found that the FairTax Rate was grossly understated by the FairTax people and that the actual rate would have to be MUCH HIGHER than 29.87% exclusive due to 1)government paying itself tax and 2) erosion of the taxable base due to all factors. Just a 15% erosion in base, coupled with a Federal government costing 20% more than presently (the cost with the FairTax added) makes the rate 33% inclusive which is 50% exclusive.

The FairTax people need to go back to the drawing board and plug in the new reality where prices go up 18-25% and stick that in their models and see what somes out the other side. It won't be pretty is my expectation.

[navyguy]

"There is no prebate like the fairtax. There is no tax on services like the fairtax. They don't tax federal and state expenditures like the fairtax. They certainly don't add a 30% tax like the fairtax. They don't tax the sale of new homes like the fairtax."

1) The prebate is not a necessary feature of the FT. It was added essentially as a selling measure. But the core concept of the FT has no requirement for a prebate.

2) "There is no tax on services like the fairtax." ... Irrelevant whether they tax this or not. The essential point is that they do NOT take income tax out of your paycheck. In other words, the method by which the state collects taxes is consistent with the FT model. Whether the state taxes services is entirely up to them.

3) "They certainly don't add a 30% tax like the fairtax." ... The FT does not ADD 30% tax to anything. Its clear that you do NOT understand the FT.

4) "They don't tax the sale of new homes like the fairtax." The FT has no provision to 'tax the sale of new homes'. It will replace the tax you ALREADY PAY when you buy a new home. The taxes YOU ALREADY are a conglomeration of many different taxes paid by everyone involved in the construction of the home. THEY paid the state tax and passed that cost onto you when you bought the home.

These differences are almost entirely irrelevant. The core concept of the FT is that it ELIMINATES FEDERAL WITHOLDING OF INCOME TAXES FROM YOUR PAYCHECK. States that use the same basic model ELIMINATE STATE WITHOLDING OF INCOME TAXES FROM YOUR PAYCHECK. You can quibble till your blue in the face about whether states have implemented the FT to the letter, but the fact remains that they have done exactly what the FT suggests: Eliminating income tax witholding.

You are trying to split hairs about state level implementation of the elimination of income tax witholding rather than arguing up front about why income tax witholding is superior to the Fair Tax.

Now, have you read the Fair Tax book or not?

[RobFromGa]

It says nothing about how the gov't spends those dollars

Actually that is not correct, the FairTax bill creates the largest entitlement program yet, in the form of the socialist prebate, which puts every man, woman and child in America on the government teat. The prebate is so wide open to political manipulation and vote-buying it isn't even funny. They would also manipulate credits for various items and we would end up with the income tax as well, probably only on the EVIL RICH.

And I do not believe that there is any way the the 16th will be abolished because there are at least 13 Blue States that will never agree to get rid of the power to tax EVIL RICH people more than poor people.

[navyguy]

"When each and every individual pays the same marginal rate, we are united against increase and united in favor of decreases."


You make a good point. My issue in the post you refer to was to point out that the FT doesn't address, in any direct way, how or how much the government spends. But I agree that it will unite us and force the gov't to be far more accountable.