Replies

“What’s to keep them from just upping the rate like the states do?”

The founders got it right!

“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.”
Alexander Hamilton in Federalist #21

It is very likely that every man, woman and child would know what the tax rate was before the FairTax was ever implemented. After all, there would be at least a 6 month delay between its enactment in congress and its implementation date. Can you imagine the pressure on congress to reduce the rate if everyone were paying the same rate on everything?

From Federalist No. 21:

“...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.

Impositions of this kind usually fall under the denomination of indirect taxes, and must for a long time constitute the chief part of the revenue raised in this country....”

What’s to keep them from just upping the rate like the states do?

The Fair Tax will be transparent since the hidden taxes will be eliminated and the Fair Tax rate will be a separate item on the receipt. If Congress were to attempt a tax hike people could see the raise and respond immediately. More importantly if the rate is raised too high then people will respond by reducing their purchases. Doing so would lessen the amount of taxes collected. It will force Congress to keep The Fair Tax within reasonable boundaries. Founding father and first Secretary Of The Treasury Alexander Hamilton stated this concept in his Federalist Paper #21. To quote:

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 sayin 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.

What’s to keep them from just upping the rate like the states do?

Today, Congress and lobbyists divide up the tax code to reward or punish small segments of the population. It's popular to tax the rich and most who are not rich will not object to that. Farmers or Oil companies want a break on certain activities? Just slide it into the tax code and you have corporate welfare without it showing up as an expense of Government.

Under the FairTax, everyone is treated equally. If Congress wants to raise the rate, it will be raised equally on everyone. Also, although the poor will pay little or no net tax, everyone pays the same marginal tax rate. This gives all taxpayers a vested interest in keeping rates as low as possible.

Ultimately, at all levels of government and with all means of taxation, it's the voters and taxpayers who are the only force restricting how much taxes are extracted from their pockets. The Government bureaucracy will grow to consume all the taxes that the population will bear. When taxes get too high, the population revolts and politicians either lower taxes or get replaced.

What’s to keep them from just upping the rate like the states do?

WE ARE! When a state talks about upping the sales tax, it is usually pretty big news and is hotly contested. The reality is, citizens can see it. It is right in front of them. They know immediately how it affects them. They can understand and fight against it.

Under the system today, hardly anyone has any idea what they actually pay out in taxes because it is muddled in withholdings, exemptions, returns, etc. At the end of the year, we fools just want to know how much we short paid the government or how much we overpaid them.

When tax legislation is debated at the federal level, it is mired in lengthy bills that add some here, take away some here, make exemptions for this or that until someone sells it as a tax code revision instead of a hike. We don't understand it and neither do half the people voting for it. But nobody knows any better to argue for it or against it because we don't know how it affects us until it is implemented. By then it is to late.

Fair Tax? They say, we need more of your money so we are raising taxes by 1/2%. We say "Hell no!" There should be no new laws added to modify a Fair Tax Code that involve extra taxes or exemptions.

It might actually make a different with citizens when they go to buy something and realize that 37% of everything they make is taken by the State and Federal Government (More if you get income tax taken out in the state you live in).

People do not realize that our state and federal governments combined are fleecing us already at a rate of about 40%. ALMOST HALF OF OUR EARNINGS GO TO GOVERNMENTS!

The Fair Tax would at a minimum put the number out there and expose what we are paying for all these social niceties.