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Review: The FairTax Book

I recently purchased The FairTax Book for two reasons: Because I believe that Americans could be paying far less in taxes if a more efficient way of taxing them existed and because the FairTax has been talked about more than once on this blog and I wanted to learn more. What I got when I purchased this book was not just the informative pamphlet full of facts and figures I had expected but rather a full-on call for a tax revolution.

The authors, radio personality Neal Boortz and Rep. John Linder, aren't fooling around.

I'm not going to go to far into the contents of the book. It is relatively short and surprisingly entertaining given the subject matter. I'd recommend that you read it for yourself as it wouldn't take all that long and is well worth your time. I'll simply illustrate here a few of the points I found the most interesting.

First and foremost among these is a perspective on our current tax system that I hadn't even considered before reading this book. The fourth amendment guarantees our right to privacy from unreasonable searches and seizures, yet the IRS has full authority to look into even the most obscure of my financial transactions based on nothing more than a suspicious whim. If some auditor at that bureaucratic feels the need he or she can force me to lay open my personal finances so that they can see if I've been spending my money at church bake sales or strip clubs. Which is, of course, none of their damn business. But in order to enforce our current tax system they are invested with the power to know.

Something else I hadn't considered before is just how deceptive the tax refunds most of us receive from the government are. We are all grateful for that check at the end of a tax season, but do any of us really know just how much money we gave our government or is that little refund masking it? I'd advise all of you to go and gather up some of your paychecks and apply a little simple arithmetic as to how much you give to the government each pay day. I think you'll find that your "refund" (hard to call it that when its your money to begin with) is a paltry sum compared to what you're paying.

The FairTax system would also make fraud a lot more difficult than it is now. Our current tax code is so ungodly complicated that its difficult for IRS auditors to investigate and catch people who aren't paying their fair share. Its also so complicated that a lot of well-meaning people are also probably guilty of not paying their fair share without even knowing it. Because the FairTax system is so simple its much, much harder to game the system. After all, you pay it every time you purchase something. Everybody has to buy stuff, even criminals.

One thing about the plan that did confuse me, however, was the talk of a prebate. A prebate in the FairTax system would be a monthly check from the government calculated to cover the sales tax you'd pay on necessities. Like bread. Milk. That sort of thing. What I don't understand is why we'd need it. It seems to me that the increase in the price of goods we'd see with a national sales tax would be effectively offset by the increase in our paychecks once the payroll taxes were done away with. Add that into the fact that the prices of a lot of goods would go down once businesses felt the effects of a lighter tax load (less bookkeeping expenses, no businesses taxes, no payroll tax withholding) and the prebate seems like unnecessary complication.

That aside, though, this book has converted me. Before reading it I the only thing I was certain about with regard to this country's tax system was that what we have now just isn't working. Now I'm a FairTax backer. This system would be such a vast improvement over income tax that anyone who opposes has to be putting partisan or private interests above the interests of the people of this country.

You can learn more about the FairTax (and get a lot of questions about it answered) here.

By Rob Port of Say Anything.


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Comments (41)

Hmmmm.1. The probl... (Below threshold)
ed:

Hmmmm.

1. The problem, the biggest problem by far, with a consumption tax is that it directly promotes an underground economy. If the only time you get taxed is if you "officially" purchase an item, then there's a huge incentive to "unofficially" purchase things.

This is not to say that it couldn't work. It's just that it won't be the ultimate fix for everything. I rather like the consumption tax myself but it's still prone to abuse. And to fight that abuse the IRS, or whatever replacement agency, would end up having to do the exact same things in order to enforce the tax code.

Then there's the issue of how much you pay in taxes. When you get your annual tax statement you are told how much you earned and how much you're paying in taxes. With the consumption tax system what mechanism is there to tell you how much you've paid in taxes?

There really isn't as big a win here.

2. The point is to reduce your annual rebate, not to get a big one. If you're getting a large rebate that means your income tax deductions needs adjusting.

The encouraging of a black ... (Below threshold)
Inquiring:

The encouraging of a black market as a con to the consumption tax is weak. Very weak. How many people are really going to go looking for some underground Borders or Barnes&Noble everytime they want to purchase a book?

Paying an extra 30 cents for an item is less hassle than looking for some black market that might have what you are looking for, and if you get caught purchasing from there a risk of jail time (go to prison for picking up printer paper? No thank you). The underground economy will not experience some great upswelling because the price on goods has increased slightly, especially not when there is more pocket money to make up for that increase.

Who cares how much you pay in taxes under this system? If you do not have to pay such things as payroll tax then you know how much money you have and how much money you lose by purchasing goods. All it would take to figure out would be a simple matter of looking at how much you earned, how much you spent, and then the % of the consumption tax of that expenditure.

It is questionable about the whole groceries prebate thing though. Why not just make food exempt? After all, they are necessities.

Inquiring,You're r... (Below threshold)

Inquiring,

You're right about the underground economy. Yes there will be some - just like there is now with people working "off the books."

As for making items exempt i think that opens the door to political manipulation of what gets and exemption and what doesn't and the tax system would quickly become a twisted system of political favors and kickbacks. Like ti is now.

1. As a manufacturer of pro... (Below threshold)
CandyMan53:

1. As a manufacturer of products that I sell in my own retail store I already have to deal with New York State for the consumption tax I collect for them. And I tell you, I'd rather deal with IRS first. BUT the quarterly tax return is fairly quick and clean. If we go to a federal consumption tax I already am resolved to the fact I'll still be spending lots of time on record keeping. It's just the way business is.

2. I believe (if I remember correctly) the prebate issue has to do with lower income tax fairness. A prebate would return to every taxpayer that amount of money you would be taxed up to the poverty-line so no-one would be actually paying consumption tax on those purchases it takes to get by.

Glad to see another blogger... (Below threshold)

Glad to see another blogger promoting the FairTax on his blog. I think it's tremendously important.

You can find breaking news and discussion of the subject at The Fair Tax Blog.

Joshua

One of the big plus' of the... (Below threshold)

One of the big plus' of the Fair Tax system would be that you really couldn't muck around with it. Consider, back early in reagans Presidency, he tried to reform the Tax Code. He had folks strip it to nada. Taxes were low. The someone said "what about the interest deduction on your first home?" and BAMM! We come to the current tax regs. Check out a book called "Showdown at Gucci Gulf." Actually rather interesting for a book on taxes.

I listen to Boortz almost every day, but the prebate doesn't make sense to me, either.

I haven't had a chance to read the book yet, but, does it cover internet purchases? If so, that is alot of revenue right there.

The reason we'll very unlik... (Below threshold)

The reason we'll very unlikely to see a fair tax is because politicians from both parties have convinced a lot of voters that they are only taxing the rich with our current system. The poor are silly enough to believe that those taxes aren't passed along in the prices they pay for goods and services, since they don't see the tax deducted on their check stubs on payday they really believe the rich are picking up their tab. The poor do little to force the government to spend the tax money wisely because as far as they are concerned it's someone else's money anyway. The Fair Tax, or a flat rate across the board tax on everyone would make people rich or poor pay more attention to what's going on, as it is now the majority feel like it's not costing them a thing when there's a deficit.

The reason for the prebate ... (Below threshold)

The reason for the prebate is to pay for the "basic necessities of life" up to the poverty level. The poor are now exempt from paying that "tax". The reason for a prebate instead of exempting the goods in the first place eliminates the possiblity of Congress instituting more exemptions. If one thing is exempted, then where would they end? After all, some feel Jack Daniels is a basic necessity of life. The FairTax isn't perfect, but with it, everyone pays their fair share and everyone pays the same rate. And it keeps government out of our personal business!

The only people this... (Below threshold)
B Moe:


The only people this tax will hurt are lobbyists, lawyers, and trust funders like the Kennedys and Heinz-Kerrys. In other words it is gonna be a bitch of a fight.


Open italics tag in the pos... (Below threshold)
jen:

Open italics tag in the post.

Wouldn't it be easier just ... (Below threshold)

Wouldn't it be easier just not to place a tax on necessities in the first place? I'm from PA, and sales tax covers everything except "necessities" (unprepared food and all clothing). Then everybody gets the same treatment.

Hmmmm."How many pe... (Below threshold)
ed:

Hmmmm.

"How many people are really going to go looking for some underground Borders or Barnes&Noble everytime they want to purchase a book?"

Color me unimpressed. Why not do the most basic form of research and Google "underground economy" and "europe". Especially since the implementation of a consumption tax, otherwise known as a VAT in Europe, has a long history there.

The simple fact is that anyone who believes that either a flat tax or a consumption tax will somehow make all things better is a fool. The state isn't going to accept a situation where it evolves a new tax system that actually returns less revenue than the previous one. And if it doesn't return less revenue, then all you've done is shifted the burden around.

And do you really think the people getting the shaft are going to sit there and take it?

Nonsense.

I like some aspects of the consumption tax and the flat tax, but nobody should think for a moment that it's anything but a gimmick.

And what would you do about the massive record keeping requirements? Are you thinking of making it completely electronic? Wouldn't that give the state an incentive to up the tax in small painless increments? Instead of telling you that you'll owe another $1,000 a year, they'll just up your consumption tax by $0.01 for everything.

The only difference is that upping the federal income tax is big news right now. Would upping the consumption tax on soda by $0.01 per can be big news? Or would it simply fall by the wayside?

Do you really think you'd end up with less tax?

One issue : wouldn't this o... (Below threshold)
blueeyes:

One issue : wouldn't this overly benefit the 'fat cats'? The poor may be tax-free (at least if they only buy essentials), but they've already got that distinction. It's the middeling middle class that seems to get shafted.
Everyone pays no tax on the essentials, but when it comes to anything over the basic cost of life, the middle class would end up bearing a disproportion sum. They're most likely to spend the largest percentage of their savings under this tax - the rich can save, while the poor won't be paying anything taxable. Someone making 10,000 a year and spending it all on the basics won't pay any taxes, someone making 20,000 a year and spending half of it on basics and the rest on general stuff will end up paying 1/8 or so ($2,500), and someone making 100,000 a year and spending only 10,000 on non-basics will end up paying 1/20 of their money into taxes ($2,500). I won't debate whether or not the rich person deserves their money, but is it a good idea to encourage the rich to save?
Also, what about business which can afford to work out of country? I mean, a toilet paper black market isn't very likely, but people buying stock or mass purchase items could easily fall under that distinction, by having headquarters in another country. No jurisdiction, no inforcement abilities.

Do you believe that raising the (visible) prices of goods will not have a negative effect on total sales during the switch from IRS to FairTax? When I just payed my taxes last April, will I be willing to pay another 24% on a case of cola?

Haven't read the book, plan (when I can find it), but if I went over something that's inside there, please explain what I'm doing wrong.

The rational for the... (Below threshold)
B Moe:


The rational for the rebate rather than exemptions is that people who spend money on "luxury" food should be taxed on the excess.

The example Boortz has used on the radio is that a family spending frugally to feed themselves should be exempt, but someone like himself who frequently entertains socially and spends alot of money on expensive spreads doesn't need a break.


(Full disclosure: I fall in... (Below threshold)
fatman:

(Full disclosure: I fall into one of the categories I'm about to describe.)

What happens to people on Social Security, Social Security Disability or Supplemental Security Income? Many of them (particularly SSI recipients)have no other source of income and thus, pay no income tax. While I haven't read the book (I will try to), it sounds like this would be a major financial shock to their wallets. How do we deal with that?

A number of years ago, (I forget exactly how long ago) Jerry "Govenor Moonbeam" Brown (D-CA) ran for president espousing, among other things, a flat, no deductions, thirteen percent income tax. Dick Armey also proposed a flat tax, though his proposal would have allowed deductions and called for a higher rate. (Around twenty percent, as I recall.) Anybody have any idea of how those proposals would stack up against the FairTax?

blueyes, the poor aren't ta... (Below threshold)

blueyes, the poor aren't tax-free, that's an illusion. They don't have it deducted from their paychecks but they make up for it in increased prices for goods and services. The tax burden is always re-distributed back to the consumer. Some even believe they don't pay property taxes if they rent but I can assure the landlord passes the property taxes to the tenant in increased rent. Until the poor figure out that they aren't gaining anything from the supposed tax cuts they don't seem to really care how the tax money is spent. The noble sounding idea of taxing the rich to feed the poor is a joke. If someone truly wants the poor to have a higher standard of living they should want lower taxes across the board, not the hidden taxes many of the poor don't even realize they are paying. The whole idea that income redistribution is robbing Peter to pay Paul is ridiculous, it's really robbing Peter to Peter. It's government's way of making people think they are getting something for nothing and too many people are greedy enough and stupid enough to believe that's what's really happening and they are benefitting from it.

Re: underground economy: In... (Below threshold)
Jezebel:

Re: underground economy: In Italy, today, they have receipt police walking the streets that can demand to see the receipt for anything they think has been recently purchased. While the tax code would be simpler, the energy spent policing compliance probably wouldn't change much.

Re: The rich not getting soaked. Look if you are a billionaire, yet live in a suburban house and spend the same as a middle income family, who the hell cares if you aren't taxed like a billionaire under the fair tax system? Someone will eventually spend the money (heirs, charities you donate to, etc.) and those folks will get taxed. The Fair Tax lives up to its name in this case.

What it doesn't do is be as 'progressive' as our current income tax. Middle income people can pay say 25% of their income in taxes, but the rich pay 40% or so. In the Fair Tax system, the rich aren't soaked as much as in the current system. Not that it matters much, since the rich contribute only a small amount of money to the public till since there are so few of them. But it does matter politically.

First, underground economy ... (Below threshold)
kbiel:

First, underground economy arguments do not work against the consumption tax because there would be no more underground transactions than there are already with the income tax. How many people report the 20 bucks they paid to the babysitter last Friday? How many people send in paper work and report contractor pay for the 25 bucks they pay to the boy down the street for mowing the lawn?

There are exactly two reasons to NOT institute a nationwide consumption tax:

1. If you are already surprised by how much you paid in taxes each year when you receive your W2, then you will be completely ignorant of how much you pay with a consumption tax. Who takes the time to add up the 15 cents they paid in sales tax here and buck-fifty you paid there? Who goes through their current receipts and add all they pay in sales tax? Damn few if any. The American public would be even more ignorant of what they pay in taxes than they already are.

2. Consumption taxes offer an even greater temptation for loopholes and social engineering. Already, the authors of The FairTax Book are working in a bit of social engineering. They are offering a "prebate" for necessities. Next Congress will make it so sales tax is not paid on necessities at all (as is the case in most states now). Then you have to decide what necessities are. Perhaps diapers are included. What about clothes? Perhaps only clothes made in the U.S. are eligible. What about eeevil tobacco? Perhaps we no longer need a sales tax on yachts because that industry is failing. Hmmm, American car makers are bleeding cash, how about making cars tax free?

I say no to this idiocy. I'm already fed up with my state sales taxes and those who don't have to pay them and the sales tax holiday where work boots are tax free but book bags aren't and the states who want to apply sales tax on interstate transaction over the internet but not on catalog sales or phone sales. It's ridiculous.

For my money, only a simple flat tax will do. Steve Forbes may have been a goofy millionaire, only a little more sane than ol' Ross Perot, but he was right about one thing: flat tax. No deductions, one rate, nationwide, no exceptions. Only I would add one twist to it, make it a constitutional admendment and require a 2/3 super majority in each house to pass a rate increase while leaving rate decreases as a simple %50 + 1 majority.

When you think about the Fa... (Below threshold)
Al:

When you think about the Fat Cats, think about what _kind_ of Fat Cats are punished versus which are not.

I'm perfectly content to have a 'PlayBoy' - yachts, cars, more cars, house-for-forty end up paying a lot higher total tax than the guy living in a modest house and investing the rest.

Under the current rules, the PlayBoy would leave the money in his company and deduct everything as a corporate expense, where the saver ends up paying additional taxes on the appreciation of his assets. This is directly opposed to one of the tenants of western capitalism - saving things is good. (Spending is good too, but our current rules reward debt-financing everything - which is _not_ good.)

It _is_ just shuffling things around. The key is not the actual form of the tax, but wiping out the incentive for politicians to mess with it every freaking year. This doesn't quite manage that, unless the line can be held at 'no exceptions'. But it does wipe the slate clean.

The hardest hit folks under the fair tax are the middle-to-upper-middle folks. As always. But _they_ still end up with an effective tax break, since the new tax rate won't be 35%+.

kbiel:The pro... (Below threshold)
B Moe:


kbiel:
The problem with a flat income tax is determining what someones income is, I don't see anyway to avoid a mammoth tax code and lawyers gone wild if you have to figure out income from expense. And you still have to face the fact that the consumers are the ones footing the bill in this case also.

The thing I like most about a consumption tax is it is real easy to keep track of how much someone spends.


The problem with a flat ... (Below threshold)
kbiel:

The problem with a flat income tax is determining what someones income is, I don't see anyway to avoid a mammoth tax code and lawyers gone wild if you have to figure out income from expense.

I would say that the W2 and 1099 forms are probably the least complicated part of our tax code as it stands. At least, I'm not confused by box A stating that I made X dollars in the past year and box B stating that I paid Y dollars in FICA. As far as figur[ing] out income from expense, I clearly stated no deductions.

The thing I like most about a consumption tax is it is real easy to keep track of how much someone spends.

Really? Do you total your receipts for every purchase you make each year? What is easy about it is that the stores do the work for the government and you remain blissfully ignorant of just how much you pay in taxes through the sales tax. But then again, ignorance really is easy, so you might have a point.

So a self employed s... (Below threshold)
B Moe:


So a self employed small business man is going to get taxed on his gross? That should do wonders for the economy. And if the government passes a law that says there is a 23% embedded sales tax, I don't think you would have to be an accounting genius to figure out that 23% of your bill is tax. What most people, including you apparently, are blissfully ignorant of is how much embedded tax they are currently paying in consumer goods.

When you buy a loaf of bread, YOU, as the final consumer, are actually paying a small percentage of the income tax of everyone involved in getting that bread to the store. All of that percentage of the labor cost that went to income tax is passed on to the consumer. That is the shit that is hard to calculate, and carefully hidden from the "blissfully ignorant".

My trouble with this comes ... (Below threshold)
Baggi:

My trouble with this comes from the following.

I live in California and have to commute 65 miles each way to work and back every day. The reason I have to commute is because we are a family of 6 and in order to afford a home we have to live far from where I work (San Diego). Even though I work 65 miles from home, my house was still very expensive and difficult to afford.

Under this new tax system my house would cost me 25 percent more. Alright, 25 percent more on groceries doesn't seem like all that much. But 25 percent more on a new car or on a new house makes these things almost unaffordable.

And what happens to used items? The way I understand it these things are only taxed one time. So my house was built in 2003 and the new house 4 blocks from my house was built this year. Both are relatively the same size. What if I put my house up for sale? The new house cannot compete with my 2 year old home. The new house has to charge 25 percent more (Say 500k for a 400k house) while I don't, so I can sell my house (Same house with 2 years difference) for 400k, or 450k, etc.

How would that work?

The one thing I do like about this tax is that services won't be taxed. At least, I think this is how it works. So paying for your internet might get cheaper (Or do you have to pay 25 percenet tax now on monthly phone, internet, cable charges?). And of course, Ebay will make a killing because everything sold on Ebay (Or at least most things) are being sold for the 2nd time, or 3rd, etc.

Hey, I've got a crazy idea.... (Below threshold)
Gringo:

Hey, I've got a crazy idea...

How about states collect taxes and the fedgov collects from the states, like it's f'ing supposed to be?

Also, anyone with half an o... (Below threshold)
Gringo:

Also, anyone with half an ounce of sense knows that if we implement the fair tax, we're just going to end up with a consumption tax AND an income tax in the end.

I'm with Grinco: repeal the... (Below threshold)

I'm with Grinco: repeal the 16th Amendment first. Then we'll talk.

That is an integral part of... (Below threshold)
B Moe:

That is an integral part of the Fair Tax Bill, to ban income tax.

As for the new/used questions, part of the cost of the new items will be eliminated with the now embedded income tax, that will make up for most of the difference. Whatever small difference is remaining will be compensated for by the market.

The tricky part of this to get your head around is that most people don't actually pay their own income taxes now. They never see the money. The money is payed by the employer who then tacks it on the the price of whatever goods or services he is selling and passes it on to the consumer. The same people will be paying about the same amount as always, this bill just eliminates alot of confusion and waste and has many benefits as far as making the US more competitive in the global market. If you can't get the book, go to the Fairtax website and check it out.


<a href="http://www.... (Below threshold)
B Moe:


http://www.fairtax.org/

I can't believe I just posted "payed" as a word.
Need more coffee.

Just think of all the new t... (Below threshold)
John:

Just think of all the new taxpayers we would have helping with the tax burden, I would venture around 30 million. 13 million Illegal aliens, the rest would be Prostitues, Pimps, Drug Dealers, Foreign Tourists. You would only pay on things that you bought that was new, ie: car, house, boat, plane. Used already had the tax paid on it. the reason we have the tax system we have now is due to exempted items, that is why the prebate. The book is a must read.

So much to talk about on th... (Below threshold)
Mary:

So much to talk about on this:-)

First the FairTax does repeal the 16th amendment. No more Income Tax... period!

The prebate makes very good sense. The poor will be able to survive at the same conditions as before the change. If you add 23% to their survival expenses you could suddenly find families on the streets. Not good. It also covers the neccessary taxes for Seniors. Again a good thing. The point of a prebate instead of exempting necessities is to disallow expemptions of any kind in the tax code. In fact there was extensive talk about not allowing excemptions to protect it from crooked politicians and their pork handouts. You know like they do with the income tax code!

Let's not forget that the prebate is only available to legal citizens. Illegal aliens will not get this prebate and therefore will have to pay the 23% sales tax even for necessities. America just won't look like so good a place to sneak into. And all the foriegn people with money that visit here will be paying taxes. The drug dealers will be paying taxes & tax evaders will be paying taxes.

The cost of building a new home will go down because B2B is tax free. No taxes on any supplies, no payroll taxes on labor at all stages. Prices of everything will start dropping.

The Cost of Compliance costs businesses billions each year. Remove that cost and again you get lower prices. And the business owner complaining about having to fill out state sales taxes & groaning about the extra compliance paperwork and figures is worrying over nothing. The tax will be paid as another line on the State sales tax form. You report gross sales same as you do now and the federal tax collected is on a line, just like the state sales tax collected is. The only extra thing you have to figure is how much you get to keep of the sales tax collected in exchange for filing this form. 1/2 of 1% is the figure business keeps just for filing. States get a percentage to collect the federal sales tax and pass it on. This is to try to get states to discontinue their income taxes. I am a business owner and I have no problem with this at all. Finally I don't have to pay twice the SS & Medicare of everyone else. That double taxation hurts me and affects the prices of my products! If this was inacted my prices would go down. My business sense tells me that bringing my prices down will convert to more sales in this environment & as I will no longer be paying what amounts to almost 45% tax rate I can afford to do this and still have money left to pay my own sales tax. Oh and let's not forget the SS & Medicare that I now pay for my employees.

Businesses can again afford to do business here. There will be no reason to relocate to tax havens, because America will be a business tax haven. That means jobs will be coming back to America & more jobs means more competition for qualified labor which leads to higher wages. This will effectively end the exporting America problem we have going on here.

The huge trade deficit will be no more either. Those cheap foriegn built items will be subject to the sales tax also, but we will be able to export our items with no tax and at cheaper prices since we remove the compliance costs and built in taxes priced into them. We can compete in foriegn markets finally.

The person claiming the income tax was more visible needs to look again. If they were to up a national sales tax by even 1/2 of 1 percent everyone would know it & be letting government know their displeasure. The current income tax code is so filled with pork giveaways... oh I mean excemptions & sliding scales & additional taxes. It is just a crazy madhouse & they are constantly adding things that cost us more, while lining their buddies pockets, but we just can't see it. Now you are taxed heavily on savings and investments, among other things. That just doesn't lead to a good economic environment.

Many people just look at things from the tax percepective, when in fact this is much bigger than taxes. It can change our country for the better in so many ways. It isn't perfect, but no tax system ever is or ever will be. There will be an underground market and evaders just like we have now, but there will be departments to deal with it. As a business I could be put under their scope, but my personal finances will still be my business and not the business of the government!

I am strongly in favor of t... (Below threshold)
Ken Howe:

I am strongly in favor of the FairTax. I have worked at the promotion of a consumption tax for about fifteen years.
The question of whether or not congress will make it happen depends on us. You and me, with our sleeves rolled up and talking to those we elected to make them do as we want or their knowledge that this is their last term in office. Frankly we could do very well if some of them are gone.

Making them make this happen will go a long ways toward our recovering our nation, giving up and we continue the slavery that is income taxes. Please help.
Go to www,fairtax.org and click on volunteer. You will be glad you did.

First, someone previously s... (Below threshold)

First, someone previously said that they liked the fact that services wouldn't be taxed--that is incorrect. When you pay for a service, you will be taxed. Some states already tax services (mine isn't one of them.)

As far as SSI etc, I don't see that as a problem, even if you aren't being taxed now. By the time everthing washes, you'll be paying just about what you pay now for goods & services--sometimes less, sometimes a little more--AND you'll be getting the prebate.

As a lower-middle class person myself, I don't see the fair tax as burdening the middle class. By my lifestyle choices, I can control how much I am paying. Why would I worry that "the Fat Cats" aren't getting properly soaked? Besides, by their lifestyle choices, you can be assured that they'll be paying a lot more in sales tax on that private jet that you will on a new TV.

The absolute best thing you can do with that money you'll be seeing back on your pay stub is to pay down any debt you're carrying. Pay off your debt, start saving, enjoy your life and stop worrying that someone else has more than you do. There will ALWAYS be someone richer, smarter, or better looking (or all three) so forget the envy and class hatred. If you're realy that into socialism, you're in the wrong country. At least until Hillary gets elected.

Not sure what you meant by ... (Below threshold)

Not sure what you meant by most people don't pay their own income taxes. All they have to do is look at their pay stub and see how much they are paying. Their employer figures the cost of "matching" amounts and that reduces your pay rate. What gouges the employer is the cost of compliance.

Hey Ed, have you read the B... (Below threshold)
Mike:

Hey Ed, have you read the Book? It doesn't sound like it. If you did, try reading it again - slowly. Hmmmmmmmm.

Hi, I am an expat living in... (Below threshold)
Amani S.:

Hi, I am an expat living in Germany.

We have 8% on food and 16% on everything else.(Oh they are thinking of raising it. Ours is one of the lowest in Europe.) Including income tax.
The tax is embedded in the price. So if you see 4.99, you pay 4.99. At the bottom of your receipt is how much of that is tax. From experience, after a year you will not even notice the tax.
Also, those coming in for visit can receive the tax money back. But no many go through the process.

1. Prebate is a fixed am... (Below threshold)

1. Prebate is a fixed amount based on Family size and Health and Human Services Poverty line numbers.

Whether you are a maid or a millionaire you receive the same size check. This avoids the problem states have with what is taxed and what is not. It is easier for cash registers and small business.

More importantly you keep the door closed on special interests tinkering with the FairTax and getting exemptions for their special group.

Married family of 4, doesn't keep receipts or file quarterly forms to get the Rebate(Prebate).

They get a monthly $492/m to cover sales tax on spending up to $25,550 ( 2005 HHS Povertyline)

2. State Sales Tax - For easier collection States could mirror the Fair Tax and lower their State tax rate by at least half.
I never understood why States have certain exemptions. In order to collect hte same revenue the State Sales tax has to be higher on Non Exempt items to cover no tax collected on tax exempt items like food or clothing in Pennsylvania. Or tax everything the same and the rate is much lower.

Those that know the Facts Love the FairTax

Read more at the FAQ section of www.fairtax.org

Or vist my Blog for articles on the FairTax

Tax Reform Fair To All

Specific Articles:

Give Every American Family a Raise

Great Picture:

Time to bury the old code and bring in the new

So a self employed small... (Below threshold)
kbiel:

So a self employed small business man is going to get taxed on his gross? That should do wonders for the economy.

Gee, I dunno, the economy seems to be doing OK now even though the self employed have to pay taxes. Do you think there won't be any effect on the economy with a consumption tax? Just as a small business has to price their products now knowing that they will have to pay federal taxes each quarter, they will have to price their products accordingly with a consumption tax. The difference between the income tax and the consumption tax is not how much one pays or the effect on the economy, it's how obvious it is to those who are paying it and how much the politicians can corrupt it.

And if the government passes a law that says there is a 23% embedded sales tax, I don't think you would have to be an accounting genius to figure out that 23% of your bill is tax. What most people, including you apparently, are blissfully ignorant of is how much embedded tax they are currently paying in consumer goods.

When you buy a loaf of bread, YOU, as the final consumer, are actually paying a small percentage of the income tax of everyone involved in getting that bread to the store. All of that percentage of the labor cost that went to income tax is passed on to the consumer.

I also am completely unaware how much of the cost of a loaf of bread goes to pay property taxes and how much goes to employee benefits. Worst of all, I don't know how much the bakery paid per bushel of wheat and how much the utility companies charged them for electricity and water!

That is the shit that is hard to calculate, and carefully hidden from the "blissfully ignorant".

Don't be dense. Of course any tax is going to add to the cost of goods eventually, the question is how much do you and I pay directly to the government. I contend that tax-payers are better informed by receiving W2's and 1099's at the end of the year than they will be by keeping every receipt from every transaction and adding up every penny they paid in consumption taxes. Do you know how much you paid last year in sales tax? Why not if it's so easy to track?

What if I put my house u... (Below threshold)
NotThatStupid:

What if I put my house up for sale? The new house cannot compete with my 2 year old home. The new house has to charge 25 percent more (Say 500k for a 400k house) while I don't, so I can sell my house (Same house with 2 years difference) for 400k, or 450k, etc.

Um. You need a lesson in pricing your house: If a new house down the street is selling for 500K (which includes the Fair Tax), and you own a nearly identical two-year-old house nearby (say, worth 400K tax-free), you would be well advised to sell your old house for 499K and keep the 99K difference. Most people will be smart enough to sell their (used) houses for about the same price as a new house of the same quality in the same area. As the owner of a used home, that's enough incentive right there for me to want the FairTax passed.

I'm sorry, but isn't "refun... (Below threshold)
Mavis Beacon:

I'm sorry, but isn't "refund" the precise word intended. To "refund" is to pay back borrowed money. That's exactly what the government is doing, paying back the money it borrowed from you. Small point.

blueyes,You should really r... (Below threshold)
Linda:

blueyes,You should really read the book,It is a very good book and most of your Questions are answered in there. I am seeing that most of the replies here are very non-informed about the Fair Tax act. The prices of goods would go down because of all the taxes that are put on the goods before we actually purchase them, will be deleted.About 22% As for as services, thats up to the service provider. Another thing about state property taxes, thats a state issue. The Fair tax (HR25) is a Government policy. Two totally difeerent Tax issues. Just like now, you file two forms. As far as the tax on goods during the swithchfrom IRS to Fairtax, they have a plan for that too. Sounds all very reasonable to me. Try really hard to read the book. Sams club for $15

And what happens to used... (Below threshold)
Andrew:

And what happens to used items? The way I understand it these things are only taxed one time. So my house was built in 2003 and the new house 4 blocks from my house was built this year. Both are relatively the same size. What if I put my house up for sale? The new house cannot compete with my 2 year old home. The new house has to charge 25 percent more (Say 500k for a 400k house) while I don't, so I can sell my house (Same house with 2 years difference) for 400k, or 450k, etc.

Like said above, you would sell the house for 489K or 499K. And this would be necessary anyways in order to buy your next house. What you paid for the house is history, what it is worth at any given time is economics.




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