Why the FairTax Army Grows

Americans For Fair Taxation ^ | June 22, 2007 | Ken Hoagland

[meyer]

Under the Fair Tax plan every consumer will receive a check from the federal government every single month equal to the sales tax that person would be expected to pay on the purchase of the basic necessities of life for that month. The size of the monthly payment will be based on the government's published poverty levels for various sized households.

This is were the plan loses my interest. Any talk of charging different rates to different "classes" of people takes us right back to where we are now, punishing success while rewarding the lazy. As long as there's a redistributionist concept being presented, the tax scheme will NOT get my support.

Tax all at an equal rate - period.

[Man50D]

Additionally, the “ifs” “ands” and “wherefores” are mind numbing. Read the examples given on page 9 of the proposed legislation. Read the rest of it. It’s more Play Doh for politicians. Hardly an improvement over the convoluted mess we have now.

The Fair Tax code is mind numbing? What about the 67,000+ pages in our current tax code? The Fair Tax code is only 133 pages! How you fail to see that alone is not an improvement is amazing.

[Man50D]

This is were the plan loses my interest. Any talk of charging different rates to different "classes" of people takes us right back to where we are now, punishing success while rewarding the lazy. As long as there's a redistributionist concept being presented, the tax scheme will NOT get my support.Tax all at an equal rate - period.

All we bill be taxed at an equal rate. Everyone will pay 23% at the point of purchase. The rebate is not a handout. It will reimburse people for taxes paid on necessities up to the poverty line. The rebate is tantamount to a tax refund that pays back people who pay too much in taxes. The difference is The Fair tax reimburses people before they pay the tax not after as our current oppressive tax code.

[Man50D]

Just don’t tax ‘basic necessities of life’.

That creates more problems. Fair Tax FAQ #4 People with higher incomes spend more unprepared food, clothing, housing, and medical care than do the poor. Exempting those items would give the wealthy a disproportionate benefit. The purchase of food, clothing, and medical services is made from after-income-tax and after-payroll-tax dollars, while their purchase price hides the cost of corporate taxes and private sector compliance costs. Exempting some items but not others would result in lobbyists and special interest groups demanding tax breaks for their products. The end result would be the very same distorted tax system we have presently.

“receive a check from the federal government every month”

Is trouble.

It is not a handout. It is tantamount to a tax refund. The difference is the Fair Tax reimburses the tax before it is paid each month.

[A_Tradition_Continues]

"Once again you ignore two key points. If the car is used it will not be taxed! Fair Tax FAQ #1. Used items are not taxed. . Also the rebate will lower the effective tax rate on the vehicle."

No, I didn't miss the provisions for an article being "used" including autos, but remember, not everyone buys a "used" car. With the "FairTax" the single male uses their total annual "government" provided rebate plus more in just one auto purchase.

Another point, with the total tax liability tacked on to the end of "new" product pricing how does that effect the retail end? Does purchasing "used" discourage the purchase of buying new? How does that effect the auto industry, the housing industry, the boating industry? How does that effect the young couple saving to purchase their first $100,000.00 home when suddenly an additional $30K is added to the end cost? I guess they can wait another 3-5 years to save for the increased down payment required.

Nope, I don't see the "FairTax" being any better than our current "unfair" tax policies.

[meyer]

The rebate is not a handout. It will reimburse people for taxes paid on necessities up to the poverty line.

In other words, it is a handout to people who's earnings are below the poverty line. And how is that poverty line determined?

The difference is The Fair tax reimburses people before they pay the tax not after as our current oppressive tax code.

The current tax code is only oppressive to the 50% or so of us that actually pay income tax. Of course, the complexity of the code is also oppressive. My thought is to simplify - 10% tax on all earnings. No deductions, no credits - all earnings to all people earning. No earned income credit, no poverty-level deductions. Everybody pays the same rate.

The code could be written on 10 pages instead of tens of thousands. Payroll deductions would be exact - 10%.

[Man50D]

Does purchasing "used" discourage the purchase of buying new? How does that effect the auto industry, the housing industry, the boating industry?

What about all those hidden taxes added onto each stage of production with the current income tax code that result in much higher prices passed onto the consumer? Those value added taxes will be eliminated. Businesses will reduce their prices due to competition or go out of business. The price of goods and services will remain the same after factoring in the lower price, the Fair Tax rate and the rebate.

Nope, I don't see the "FairTax" being any better than our current "unfair" tax policies.

Yup you haven't seen the bill or the Americans For Fair Taxation website.

[Man50D]

The current tax code is only oppressive to the 50% or so of us that actually pay income tax.

Youe statement couldn't be more incorrect. The current tax code is oppressive for everybody. Everyone pays taxes. The problem is they are hidden/value added taxes that people, including yourself, do not see. Out of sight, out of mind. VATs are added onto each stage of production. This becomes a cost to businesses who in turn pass that cost onto the consumer. The result is higher prices. Your comment clearly proves my point.

[AFreeBird]

Who is going to stake an entire tax system on assumptions of lower prices by end sellers.

All it takes is for one business to pass along his tax savings on to the customer. Other business' will have no choice but to follow suit, or lose business.

The customer will *know* they no longer have that burden, and they know that in the past business has passed that expense on to them; they'll demand it.

[A_Tradition_Continues]

Businesses will reduce their prices due to competition or go out of business.

That's simply not true. I look only to our businesses. A twenty year history of growth and increased revenues. All we have to do is look at the decline of our operating cost and a steady increase in our profit margins. Did we pass our increased profits along to our clients in the way of lower pricing....absolutely not. Did our business suffer because we didn't pass along these operational saving? Again, NO. Business only increased. I mean, honestly, do you expect me to decrease my normal, industry accepted rates 23%-30% of $10K to $7K for a tax system that would actual increase my Net Tax Liability. After making standard deductions of operational expenses such as healthcare premiums, other benefits and other allowable expenses our tax liability is less than 12%. Why would we trade that for the "Fairtax" rate of a minimum of 23%?

[lewislynn]

What about all those hidden taxes added onto each stage of production with the current income tax code that result in much higher prices passed onto the consumer?

1) Oil drilling company makes 10% profit, pays 25% tax that's 2.5% of their gross.

2)Pipe line company the same: 10% profit, pays 25% tax that's 2.5% of their gross.

3)Refinery the same: 10% profit, pays 25% tax that's 2.5% of their gross.

4) Distributor the same: 10% profit, pays 25% tax that's 2.5% of their gross.

5) Retail outlet the same: 10% profit, pays 25% tax that's 2.5% of their gross.

All 5 are in the 25% tax bracket, what is the total percentage the gas price can be reduced at the pump?
A 125%?
B) 12.5%?
C) 2.5%?

If you said "C" 2.5% you would be correct.

Taxes aren't "added on" at each stage and they don't compound because there is no tax due untill the product is sold. Then, the price it's sold for minus costs (IOW profits) determines the tax...It would be impossible to add the tax before you even know what price or volume your product sells for...

If every employer in the nation reduced their tax by 7.65% what total percentage could products be reduced?

Example: The employer half of FICA (7.65%) times every employee in the nation is still 7.65% of payroll.

[lewislynn]

I recently took over two of the family's multimillion dollar businesses due to the death of my Dad. At the age of 18 I'm trying to learn and absorb as much as I can on the tax side of operations.

Wow! I'm sorry about your dad but he would be proud of having done a good job of raisng you...You're wise beyond your years...all the best to you.

Louie

[Man50D]

That's simply not true. I look only to our businesses.


It's absolutely true! Tell that to the airline industry. When one airline lowers its prices the others follow suit. Gas stations do the same. The others do so because they know maintaining the status quo will cause them to lose business to those who do lower their prices. It's called competition.

I look only to our businesses. A twenty year history of growth and increased revenues. All we have to do is look at the decline of our operating cost and a steady increase in our profit margins.

This vague statement lacks any credibility without citing a specific data source.

Did we pass our increased profits along to our clients in the way of lower pricing....absolutely not. Did our business suffer because we didn't pass along these operational saving? Again, NO. Business only increased.

Your statements become more ludicrous. You are denying competition exists in a free market place. In each industry business grow while others go out of business.they don;t all grow! Setting a price on a good or service is an essential element to the survival of any business. The Fair Tax will be a significant factor for companies to determine how much of the savings they pass onto the consumer.

Why would we trade that for the "Fairtax" rate of a minimum of 23%?

You're still not paying attention! 23% will be the maximum tax rate, not the minimum! That maximum will happen only for the very wealthy! Fair Tax FAQ #49 Big difference! Once again your statements clearly show you still haven't taking the time to read The Fair Tax Act Of 2007 or visited The Americans For Fair Taxation website.

[lewislynn]

All it takes is for one business to pass along his tax savings on to the customer. Other business' will have no choice but to follow suit, or lose business

Right that's why there are no Macy's, Pennies, Sears etc. stores only WalMarts. Or why there are no Chevron or Shell stations, only independents. Or why the only business that sells lumber and hardware is Home Depot or Lowes.
< /sarcasm >

[Postman]

Agree and disagree. Let’s definitely shrink government. I don’t think the Fair Tax will do it. If consumers start limiting expenditures to more or less basics and revenue goes down, the politicians will simply raise the percentage from 23% (or the actual 30% posited by lewislynn) to ??????

[Postman]

Don’t be amazed. I’m not into recreational or comparative reading or hefting of the current tax code. Certainly, 133 pages is much lighter than 67000+ pages. On the other hand one page stating that all retail transactions will carry a 49% tax to be paid by the purchaser would be much lighter but not better, I think. What I did read of the FT proposed legislation is still mind numbing all by itself. Just you wait until the Federal bureaucracy gets hold of its svelte 133 pages and turns it into Rosie’s Novacaine City. I presume there’s a middle ground somewhere
——400 to 500 pages might be about right.

[Jacquerie]

Don’t forget that under FairTax math that 23% “sales tax” equals about a 31% tax rate the way sales tax is currently figured.

The fair tax math is figured the same way as the income tax it replaces.

[Man50D]

Let’s definitely shrink government. I don’t think the Fair Tax will do it.

The Fair Tax will shrink government as the IRS will be abolished.

If consumers start limiting expenditures to more or less basics and revenue goes down, the politicians will simply raise the percentage from 23% (or the actual 30% posited by lewislynn) to ??????

On the contrary. Consumer will spend more when they receive 100% of their paycheck and have a lower effective tax rate on average(approximately 15%) with The Fair Tax than they have currently. Raising the tax rate will not be as simple as you claim. The Fair Tax will be highly visible and transparent as it will be itemized a receipt for every purchase. Fair Tax FAQ #37 An increase will likely occur if the size of government increases. That would likely become a futile proposition for the reason one of our founding fathers and first Secretary Of The Treasury, Alexander Hamilton explained:

"It is a signal advantage of taxes on articles of consumption, that they contain in their own nature a security against excess. They prescribe their own limit; which cannot be exceeded without defeating the end proposed, that is, an extension of the revenue. When applied to this object, the saying is as just as it is witty, that, "in political arithmetic, two and two do not always make four ." If duties are too high, they lessen the consumption; the collection is eluded; and the product to the treasury is not so great as when they are confined within proper and moderate bounds. This forms a complete barrier against any material oppression of the citizens by taxes of this class, and is itself a natural limitation of the power of imposing them."

In other words if the government raises the rate too high, people will spend less. Consequently The government will receive less in taxes. The dollar amount of the tax collected will be the same regardless if you are referring to the 23% income tax inclusive rate or the 30% sales tax exclusive rate.

[RFC_Gal]

Then they should not refer to is as “like a sales tax” and/or a “sales tax”

[RobFromGa]

I am so happy to read this thread and see that some people are able to think for themselves and not to buy into the lies of the FairTax peddlers. So many errors, lies and ommissions all rolled into one bill can’t all be an accident.