[OHelix]

You have a common misunderstanding of the dynamics involved with the FairTax, and it has been addressed already on this thread:

You percieve that the FairTax switches from the system where you already paid taxes and replaces it with a sales tax which would essentially tax your already taxed savings. What you miss is that the existing system ALREADY is going to tax your savings again, in the form of all of the corporate, income, ss, etc taxes embedded into the price of goods you buy.

The FiarTax does not swap what you've already paid for a sales tax, it swaps the system that embeds those prices with a more visible sales tax.

So even though it appears it has ADDED a very visible tax, it has also REMOVED a very invisible tax. The FairTax does NOT reduce the value of your savings by 23% as is commonly asserted on these threads.

There will certainly be some products, especially in the short term, whose prices will not correct immediately. However in the long run there should be no significant difference in the value of your savings. Considering the positive effects on American industry, the ability to purchase used items tax-free, and the visible nature of the tax likely resulting in popular demand to reduce the tax rate, I expect the value of your savings will go up significantly under the FiarTax.

Further, there are many other benefits to the FairTax, such as the elimination of inheritance taxes, no tax on additional savings or investments, no caps on how much you can save tax free, no tax on income from investments...

I believe as you become more familiar with the FairTax, you will begin to realize how you will benefit greatly from the FairTax, and that the concept that you are going to get slammed with an additional tax that wasn't there before, is misleading.

[mongrel]

Thank you for your answer. It was very helpful and makes a lot of sense. I was involved in this thread early on, but now it has balloned to over 900 replies and there's no way I'll be able to catch up on all of them.

Another question I had (and it may also have already been answered) had to do with the economic impact of the changeover. I understand that the decreased cost of tax compliance will have a positive economic impact. Over time, this will generate wealth and have an ultimately positive effect on the economy.

In the short term it seems to me that much of the impact will be felt rather harshly. In other words, the positive effects of the change will filter down over time, but the negative effects of the change will be felt immediately. Am I incorrect in this?

[robertpaulsen]

Correct me if I'm wrong, but imports will not be reduced by 30%. Services (like healthcare, a $3 trillion market) will now be taxed. Those who are working will have 30% larger paychecks to pay for these increases -- but my savings are now reduced by 30% to pay for this.

What else did I miss?

[SCALEMAN]

"the ability to purchase used items tax-free"

Now I know what all of the unemployed IRS workers and tax accountants are gonna do...they will all be opening up booths in flea markets... and running continuous garage sales.

[phil_will1]

"However in the long run there should be no significant difference in the value of your savings."

I beg to differ. A couple of nationally known money managers have expressed the opinion that the DJI would double within 24 months of the FairTax's passage. When that happens, guess who the primary beneficiaries would be?

Young couples just starting out with no savings? NOT!!

The US of A would become the largest tax haven in the world and a magnet for international capital.