[phil_will1]

Another very good explanation of the benefits of the FairTax - or some of them, anyway.

[Cobra64]

Everyone would know exactly what government costs them, it would be on every receipt they get for a hamburger or a new house. And they would know that the burden falls proportionately on all, as it always has, even though they do not know it now.

I've been saying this since I started working in 1970. My father's words rang true when I saw the deductions on my pay stub.

[Willie Green]

It would be a lot easier to get support from Republicans if it were called the ClearTax or the TrueTax, since 'fairness', in the political arena, has become a synonym for redistribution of wealth. But the FairTax is the road out of this class warfare mess that paralyzes the country and prevents the Congress and President from attending to the country's business.

The NRST is an inherently regressive form of taxation that is truly despotic.
Long term, it would result in a two-tiered socio-economic stratification of our society.
It is not disimilar to a 21st Century eco-feudal system where the corporate aristocracy invest and expand their property holdings completely tax-free, while the serfs are overburdened with the excessive taxation on consumption and persuaded that it's supposedly "fair" because the consumption taxes are redistributed through the formal social welfare system.

[kevkrom]

Tax reform bump.

[Gorjus]

Another very good explanation....

Well, if that's a good explanation, then it's clear this thing called a 'Fair Tax' is not at all what's being claimed. .

The specific example is not a sales tax at all! It's an income tax. It happens to be a flat tax of 28%, rather than a graduated income tax, but it's still - as the essay explicitly states - a tax on income taken from your paycheck, not a tax on any sale.

And there is an even greater flaw. I'll buy that all taxes are ultimately sales taxes. Certainly the consumer pays all taxes. But the issue is not and never has been where the total sum of taxes come from. The issue is the distribution of how the total burden is applied. Right now, if one assumes that the nominal pay is 'right' in some sense of value rendered to the organization, then the burden of taxes is higher on higher incomes. If one went to the flat income tax this essay really advocates, then it would either amount to a pay increase for upper brackets and a penalty to lower brackets, or salaries would need to be adjusted so that take home pay remains the same, in which case the only real difference is semantics.

The real problem is that there is any tax on income at all. It sends the wrong message - that the official government policy is to penalize people for providing services others are willing to pay for. Instead, we should have a true 'sales' tax, collected at point of sale of some good or service someone is willing to pay for. In the end, labor can be considered such a service - and after all, the true source of tax revenue is always the consumer - but if it's treated exactly the same for federal tax tax purposes as every other sales transaction, the proportion of the total tax burden collected for providing a service someone is willing to pay for would go down, and that's a good thing.

[labard1]

Although not necessarily show stoppers, I see two problems. First, there is a big transition problem. Do folks with huge Profit Sharing Plans avoid EVER facing an income tax, even though they got tax deductions for contributions to the plans in prior years? Same issue with stock options and appreciated property when the new system is implemented.

Second, do we no longer distinguish between payroll taxes that in theory were to fund "social insurance" for the earner? Historically, we've been pretty consistent in accounting for those taxes separately from general government revenues, though there has been some erosion in recent years. The theory was that general tax revenues are not subject to claims for social security and medicare. I suspect we're moving to blur that historical distinction, but given the massive shortfalls coming in future years on social security and medicare, those decisions should not be made lightly.

[hilaryrhymeswithrich]

Georgians remember that Herman Cain, running for Zell Miller's seat, is a STRONG Fairtax supporter.

[LowCountryJoe]

It's kind of related but not entirely, has anybody read The Economic Report of the President? In particular, chapters 4 through 6.

If interested, curious, or just plain bored:

http://a257.g.akamaitech.net/7/257/2422/09feb20040900/www.gpoaccess.gov/usbudget/fy05/pdf/2004_erp.pdf

[ancient_geezer]

For all the fighting and demagoguery over every change in the tax code, those complex schemes are no more than changing assignments over who will be required to COLLECT a hidden sales tax from consumers.

Precisely!!!, this guy gets it.

Also nailed in:

DO YOU PAY YOUR INCOME TAX
AT THE SUPERMARKET?
by D. Sherman Cox J.D. L.L.M. Taxation

The full impact of the federal tax system(taxes in gross wage/salaries & other compensation + business income/payroll taxes) added onto the base(taxfree) price of retail consumption goods and services is 36% for federal taxes alone.

If we add in the cost of federal tax compliance, planning, litigation & enforcement, the percentage that truely represents the burden on the family due to the Federal income/payroll tax system, product prices are increased by more than 55% over taxfree prices.

[free me]

Good explanation. I pray that one day it becomes a reality.

[Texas Federalist]

The best part about this proposal is that the federal government could never sustain enough revenues to support current levels of spending with a 28% sales tax. At around 10%, the marginal gain in revenues from an increase in the sales tax rates turn negative as the incentive grows to avoid those taxes and turn to black markets. 28% is WAY over that number. Unfortunately, that is also a reason why the tax may not gain support in Congress.

As much as I loathe an income tax, the best bet we may have for sustained reform is to push for a flat rate income tax of around 20%. It is not ideal, but is certainly preferable to the Leviathan that is our tax system now.

[WhiteGuy]

Any reform plan that end "withholding" and tax on productivity is something I am 100% behind.

It breaks the hold of government on the productive citizens.

[wgeorge2001]

"Class Warfare would be DEAD forever and..."

Though that would be a beautiful thing, it won't happen because of any government intervention or programs. Class warfare will exist until God finishes his work on the earth, this is why Christians call on the name of the Lord Jesus Christ to come and set up his government on the earth( after the 7 year tribulation to bring all nations to the rule and reaign of Lord Jesus).
As long as there is sin, there is class warfare.

[PhilipFreneau]

>>Under the FairTax plan, (www.FairTax.org) the IRS and FICA are gone. You get your whole paycheck with no Federal deductions. There would instead be a 28% Federal sales tax.

A sales tax (consumption tax) is the only fair tax. But don't limit it to the federal level. This must be the only way taxes can be collected at federal, state, county, local, whatever, levels. This would instantly eliminate government ownership of our properties (You think you own your home? Don't pay your taxes and you will see how ignorant you have been). It would also continuously inform the citizens how much it costs to run the individual governments (e.g., 20% federal, 10% state, 5% county, 5% local, etc.), making governments more accountable.