Let’s try FairTax, flat tax

Interest in the flat tax has been elbowed aside on Capitol Hill in favor of the FairTax concept, which is a progressive national sales tax that not only would replace the federal income tax but also could put an end to Social Security payroll taxes. Either would be an excellent replacement for the paperwork-heavy, cumbersome U.S. Tax Code.

The advantage of the FairTax is, of course, that it is fair and simple. Only those spending $250,000 or more would pay the highest rate. Other rates would reflect spending levels, and a rebate mechanism would get money back to the poor. And, if the House and Senate get antsy about potential backlash, they could exempt taxes on food and medicines. The big plus for Uncle Sam is that the FairTax is viewed as conducive to revenue growth. Unfortunately, politicians love the complex and overwhelming U.S. Tax Code because it provides them with ways to tinker with taxes for social engineering or dispensing corporate welfare.

And so, despite a growing number of people calling for a major overhaul of the tax system, Americans once more will have to deal in April with the voluminous code.

When the 16th Amendment established the federal income tax in 1913, the code was only a couple of pages long and the rate was a flat 1 percent.

Now fast forward to today. The code contains more than 3.4 million words. According to Tax Code On-Line, 7,500 letter-size pages would be needed if the code were printed 60 lines to a page. Furthermore, interpretations of the code can vary from Internal Revenue Service office to office. It has been estimated that the nation’s gross national product would increase by 10.5 percent in the first year of the FairTax. “By removing the embedded cost of the income-tax system,” says Tom Wright, executive director of FairTax.org, American-made goods would be more affordable at home and competitive abroad.

A predictable result would be the return of more U.S. jobs from overseas. Congress has a full plate with the war in Iraq, the threat of terrorism, Medicare and Social Security and sundry other issues. But the FairTax — and, for that matter, the flat tax — should not get lost in the Capitol Hill shuffle.

Slowhand luke is worried that this is income redistribution.

Not at All.

IT really is a tax credit of your own money, prefunded at the beginning of the month with a Prebate.

The concept is to give you or your family a credit up to the poverty line of spending that refunds you the tax you paid on those purchases up to that level. No receipts to keep, no complicated IRS forms, jsut a simple form with family names and valid Social Security numbers to determine family size and size of your prebate. Maid or millionaire you recieve the same sized prebate. That's Fair and simpler to administer.

A Family of 4 has a 2005 povertyline level on "necessities" of $25,660 the tax on that spending is $5,902. In 95% of the cases, the Federal Government is giving that family a credti of their own money to be spent. $492/m to cover the National Sales tax on all purchases of new products and services for that month. The family at this level will have a net efeective rate of ZERO.

The Best introduction and overview is the read through the 40+ FAQs at; http://www.fairtaxvolunteer.org/smart/faq.html

Slowhand luke is worried that this is income redistribution.

Not at All.

IT really is a tax credit of your own money, prefunded at the beginning of the month with a Prebate.

It is a payment of money that you have not yet spent and may never spend. That's pretty much fits the definition of redistribution.

This just provides a policy lever for redistribution to the politicians. They'll just jack up the prebate to increase the size of the population getting more in prebate than they spend in taxes.

You might have the best of intentions, but this is replacing one gun with another in the hands of an idiot child (politicians as a group).

So, I'm in the camp of those who think 'better the devil I know'.

Now, if you want to go to a no-exemption sales tax, I'm on board. Or, if you want to exempt food & clothes for all, I'm ok with that. Neither requires me to register with the government to let them know where to send the 'prebate. There's no income redistribution in the first, little in the second suggestion.

To suggest that just because HR25 says the 16th "should be repealed" doesn't mean it's going to repeal it.

True, but when an appendage becomes useless it must be removed. The 16th Amendment would be useless after the actual 3 taxing provisions are removed from the IRS Code. Realistically the amendment must be repealed and it will take the efforts of contentious elected officials (yes, there are some) and the voters to ensure that it happens. To ensure this it takes a concerned citizenry telling their elected representatives that on a constant and constant basis.

The alternative is of course that you want to impose that income tax again and the 16th Amendment remaining in place would allow the re-imposition of the income tax on top of any other tax the Congress might pass. Then the citizens will then be paying tax to Washington twice ... giving them total control over your money and economic condition. Not very realistic.

"If you've spent 27yrs reading statutes and law you know the words "should be" aren't compelling...nice try though" plus your tagline "Fairtax = lies, hope, wishful thinking, conjecture and lies. (no it's not a mistake)" should have told me very emphatically that you really seem willing to give nothing but the income tax a try or no taxes period. You can continue to talk it (The FairTax) down and be a nay sayer. Or maybe you have a better alternative no one else has thought about, you should bring it forward.

The Income Tax and its new hybrid the Flat Tax are both failed propositions as both require a bloated IRS Code to keep their income stream afloat. As far as the Income Tax and the Flat Tax, the only difference and it's not a difference is that a flat tax will in essence become a graduated tax as the rate will constantly change to insure a rise income, as revenue streams ebb and flow over time. Or Congressional spending is not curtailed.

As I said both rely upon a code to ensure a continued source of income. Why? Because as one source (the item/idea such as salary, dividend, etc) dies or becomes revenue neutral than another must be found to take its place and added to the code or as new endeavors, ideas and technological advances are introduced into the marketplace they too must be added to the code to insure their potential value is captured and tax.

Remember Congress doesn't remove or take away anything because it might come back or still has some vestiges in place (i.e., phone tax from Spanish-American War) and they want to keep a marker on it to insure future control over it. Adding to the bloatedness of the Code is the convoluted language which is a necessary requirement so only those with the "special handshake can understand it" and utilize it and nonspecific so anything and everything can be included by it vagueness. Thus a continual increase in the behemoth called the IRS Code insured and is truly 'The Never Ending Story'.

The Presidents latest 'Blue Ribbon Panel of Has-Been Politicians' with "no political aspirations" (according to them) have given us the same result as in decades past - a tried and true politician's refrain, "Give us your money" and the tried and true method of legislating taxation by amending and adding to a bloated IRS Code. It simply must be stopped, not just lessened.

A real change in the tax structure and mechanism of taxation of this country must occur. So there must be an simple, realistic and understandable alternative. That alternative will have to be a grass roots effort from the citizens as there is not sufficient will power in the elected officials to mandate that change. Too many have simply been there too long and like the status quo and the power they enjoy.

We must start being realistic and talk about the reality of today not processes of what is done, not campaign rhetoric and stop believing the lies that all corporations make too much money. Some do, many don't. I think simple answers maybe well be realistic ones. The FairTax is the best alternative to come down the pike in many a year. True it is not perfect but nothing is perfect.

One aspect, for me, that must be addressed is corporations. As they receive the status of "persons" in a court of law by virtue of the incorporation statutes, as persons they too to be brought to the table and pay their fair share. Another aspect for me is the possibility of unrestricted congressional rate increases to met their needs. That can become as bad as the income tax (remember the 60-70's) in that rate 'creep' and that must be somehow be controlled by the citizens to keep it stable at 23% or hopefully less, even with the built-ins of Social Security and Medicare.

The federal government has a valid role to play in the life of its citizens and needs funding to accomplish those legitimate responsibilities. The same is true for state and local governments. All levels of government are presently, IMHO larger than necessary but admittedly they all "have a dog in this hunt" for money. As citizens we need to have the say in where the monies comes from (what will be taxed) and how much (the method and rate) will be seperated from us.

In many ways I believe former President Reagan said it best when he said "There are no easy answers ... but there are simple answers. We must have the courage to do what we know is morally right."

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