Replies

I really want to support the Fair Tax but I was surprised by the debate last night between Neal Boortz and a tax professor on CSPAN last night.

The biggest stunner was the discovery that the Fair Tax taxes interest above the Fed Rate on mortgages, credit cards, etc.

Evading the Fair Tax sounds like it would be shooting fish in a barrel. Form an offshore web site, sell whatever, ship in to the US, voila no collection of the tax.

I can even imagine boats just outside the three mile limit surrounding the country selling anything and everything "tax free". Likewise I can see rich people making their money here and then spending it abroad to avoid the consumption tax.

There is no doubt the current system is terrible.

Also discussed by the tax prof is the history of Congress turning every tax law into a Christmas tree. As he correctly pointed out there is no reason to believe they wouldn't amend the Fair Tax to death to exempt A,B,C and D which in turn would raise the rates on everything else.

The current system is an abomination.

The Fair Tax would be an improvement.

But everyone needs to keep their head here--there are big big issues that have not been resolved with this proposal.

The biggest stunner was the discovery that the Fair Tax taxes interest above the Fed Rate on mortgages, credit cards, etc. What is the source for this? I believe it is a false statement, and I have read the legislation. In fact, interest income is untaxed by the Fair Tax, which is why interest rates are projected to decline by about 25% (to tax exempt rates) when the Fair Tax is enacted.