Democrats & Liberals: Archives

one thing you should consider is that the person making $400 a week would instead be making $560 a week due to lack of income tax. Still is a raw deal for the poor person. Could add the option of not applying that sales tax to food, vehicle maintenance, no sales tax on used items, and probably a few other things.

Poor person pays $160 a week.
Rich person pays $160,000 a week.
The lefts mantra is to punish people who work hard and make lots of money.
He’s being punished for doing that.
I can see why a magazine that speaks for liberals would endorse such an idea.
Wheres the beef? Are they not giving away enough “freebies” to buy votes to make you happy?
Those dependent on you will always vote for you, right.

I used to like the idea of a National Sales Tax, believing that wealthy people also spend and consume more. But after studying it a while, and seeing many here post many valid pros and cons, a sales tax would be a bad idea.

No tax system will go unabused, but the current tax system is ridiculous, unfair, and abused.
So is property tax (but that’s another story for later).

Taxation is very contentious, and it’s hard to devise a tax system that everyone will believe is fair.
But, the most fair system is probably a tax system based on a very simple Flat Income Tax Percentage Rate and the following constraints:
[01] it is the ONE and ONLY federal tax for each tax payer;
[02] the same income tax percentage rate applies to all tax payers;
[03] there are NO graduated income tax rate percentages;
[04] there are NO upper-level income caps;
[05] there are NO tax loop-holes;
[06] there are NO tax deductions of any kind;
[07] there are NO subsidies for any industry or group;
[08] there are NO lower-level income caps (the truly needy can receive welfare if necessary);
[09] all income is taxed at the same tax percentage rate, including: inheritance, gifts, payroll, wages, prizes, etc.; i.e. all money that exchanges ownership;
[10] NO exceptions; the poor, those living below the poverty level, and truly needy should apply for welfare; the purpose of the tax system and the welfare system must not overlap; it causes unnecessary complication which leads to abuses of both systems;

The benefits of a Flat Income Tax Percentage Rate, which make it more fair is the:
[a] elimination of the graduated tax scale that forces the wealthy to pay higher percentages based on income; insisting on a graduated tax scale will most likely sabotage any tax reform;
[b] and the elimination of the tax loop-holes and deductions, which makes the tax system very complicated, and allows everyone (but the lower income groups) to reduce or avoid paying taxes, and allows too much tax evasion.

And, the following tax systems would be recommended for states too:
[a] implement a similar state flat Income Tax Percentage Rate system;
[b] eliminate all other taxes (e.g. sales tax, property tax, etc.);

The danger will be from the start, that many will want all sorts of exceptions. Let that happen, and we’ll end where we started.

I have to agree with you on this one, Paul. Even if you factor in the Federal Taxes that wage earners are paying now, they will still have less money to buy the things the need, because everything that is subject to sales tax will cast them more. People in the poor and lower-middle income brackets aren’t in the 30%+ tax brackets, and so it amounts to increasing taxes on the poor. Those with higher incomes, on the other hand, get a tax break. All this seems to do, to me, is increase the economic gap between the rich and the poor in this country. A question that might help clarify the specific economic factors is what exactly will be subject to federal sales tax? Food? Housing? Transportation? What? I’ve not seen any specifcs like that, yet.

If it applies to gasoline sales, care to pay 33% more than you already do for a tank of gas to get you to work? I certainly don’t care to.

Most people making minimum wage don’t buy expensive things like big screen TV’s and new cars and houses and ATV’s. The things that would not be taxed (food, meds and the like) would mean more to them while the financially able would pay for health care, ect through the sales tax. I personally am more in favor of a flat tax - 10% accross the board - no deductions, no exemptions, no forms, no nothing. Just 10% of every dime you make, rich or poor, young or old. That would be fair. Then we could impose a flat sales tax of say 3% on EVERYTHING to pay for state and local services. This is a flat rate, not one for state, one for local. The state and cities would have to divy up their share maybe on a per capita basis. I pay enormous amounts of taxes as an employee and as an employer, a homeowner and a busines owner. I don’t have health insurance and I’m pretty sure social security will not be around when I need it. Even if it is, it won’t be near enough to live on.

Old arguments may be old, but maybe they would work.

How about we only tax BMW’s, Mercedes-Benz’s, caviar, fur coats, high-priced liqour, chihuaha purchases, and the like? At least then we have a reasonable likelihood of taxing those who can afford to be taxed.

On a more serious note, I make less than $400 per week, I live in California, and I can attest to the spending everything I make on essentials (needless to say, pasta and tomato paste are my friends). A tax such as the one discussed above is unfair, plain and simple.

If In The USA We Can’t Come Up With A Tax Plan What Will They Think Over Sea’s

Here’s a couple of interesting facts:

The annual federal tax revenue (everything) is about $2.2 trillion.

If half the people in the country work, and all paid an equal portion, their annual share would be $7,857 .

The top 1% of wealthiest Americans have 38% of all wealth.

The top 5% of wealthiest Americans have 59% of all wealth.

The top 10% of wealthiest Americans have 70% of all wealth.

The bottom 40% of Americans have less than 1% of all wealth.

The bottom 90% of Americans only have 29.6% of all wealth.

The wealthy are using tax shelters and tax loop holes to avoid paying their fair share.

But, we should not turn this into a wealth issue.

The wealthy may pay more tax, but not an equal percentage of income, because of tax loop holes, tax shelters, etc.

Our ridiculous tax system is one of our biggest problems. This should not become a class warfare thing, but some are not paying their fair share. The wealthy are not paying the percentage they should, because of the severely abused, unfair tax system we have now, which mostly benefits who? We need to fix this, otherwise, most Americans won’t have any respect for the tax system. And, who could blame them?

But, people should also ask themselves how it got this way? Well, it’s not that complicated. When 10% of the wealthiest have most the wealth (i.e. 70% of all wealth), and 90% of all Americans only have 30% of all wealth, how can that 90% (most Americans) compete at the voting booths? They can’t! Who has the loudest voice? Since we have a government that is for sale to the highest bidder, how can 90% of Americans have a voice? They can’t. Not as long as government is for sale (but, that’s another lurid story for later).

Great idea. Let’s punish people for keeping money moving in the economy, especially those who who move practically everything they get with each paycheck.

Leave it to the leadership of the GOP to suggest economical policies that are simple at the expense of being intelligent.

Sales tax would be a amazingly stupid way to fund our government. Quick example:

I produce commercials and videos. The average cost of a production is $40,000, more or less. I mark everything off at rental on gear or labor costs. The only expense taxed is the cost of the tape or DVD media I record their show to. At most, for broadcast media, $45… roughly $5.50 tax on $40, 000 purchase.

If you make audio commercials - you must charge sales tax on the full amount. Makes no sense, but there it is… and the layers of exceptions, and exemptions and additions …

Can you image the ridiculous degree of pork-barrel interest in a sales tax system?

Another example - if case you want to know: my company is producing several shows for a client who provides lumber and installation (floors, kitchen and bathroom cabinets, etc.) We traded services. $28,000 is production services for $28,000 for materials and installation. $0.00 sales tax.

kctim, the gaping hole in your comment is the assumption that those who don’t earn much, don’t work hard. Fact is, folks earning under 70,000 a year work as hard as those who make 7 mil, a year. It is not about how hard folks work. Construction crews work as hard or harder than CEO’s.

So, your plea for empathy for those “hard working” wealthy folks falls on deaf ears down here at levels of modest incomes.

I can understand and am simpithetic to only one aspect of this sales tax proposal and that is the simplicity of the tax.

But simplicity and “fair” are not the same thing. A fairer system is to refund the average sales tax paid on the average consumption of an individual, or family with 1, 2, 3 (or whatever number of dependents) at the poverty level. This is the “pre-bate” proposal currently bouncing around.

All the same, a graduated income tax is by far the most fair system and I am still in support of this system as long is it is simple, no special deductions on the front end.

Another proposal: an excise tax.

There is something wrong with a sales tax at its very core: it is the product of the industrial age where the majority of business activity was the production/construction of durable goods sold retail. Therefore a sales tax (which only taxes retail sales) was an adequate way of raising revenue from the economy.

But we live in a service economy now. A service is not a retail sale and in many states is not taxed.

In Hawaii there is a General Excise Tax or GET, which is a 4% tax on all an any business sales. This is usually passed on to the consumer like a sales tax. This means that a sales business (like a corner store) and a service business (like a plumber or computer programer) each must must send the state 4% of the sales income.

This captures sales across the entire market.

Downsides: the GET is charged at every sale every step of the way from the manufacturer selling to the wholesaler who in turn sells to the retailer and onward to the consumer. Each sale incurs the 4% tax.

This was designed to make money of Hawaii’s tourists but has slowed down Hawaii’s economy significantly, making regular goods and services expensive.

Ditch consumer charged sales taxes. The income tax is the only fair way to go.

I can think of only one way to ensure a sales tax wouldn’t hurt the poor and it would end the whole “simple” portion. It would have to be tiered and would have to replace all other taxes. As a person among this nation’s poor, I could afford a one-time sales tax on my home, that could be tacked on to my mortgage, if I wasn’t paying property taxes as well. I could afford a moderate increase of taxes on household items if I wasn’t paying income taxes (or FICA) as well. I could even afford higher taxes on the purchase of a car, since such a purchase is rare. Then nail people on all luxury items and status symbols (which the poor do occasionally buy, so it wouldn’t be “class warfare”).

And, most importantly, nail people on purchases made outside the US to be used inside the US. If the rich really wanted to save themselves from paying taxes, they would simply purchase big ticket items outside our country and ship it in. There would have to be stop-gap measures for this. Stocks should also be taxed every time they are bought and sold as a luxury item, which would probably create a lot of revenue by itself. I don’t know if they are taxed, as I’ve never had enough disposable income to buy any.

p.s. Stephen, Paul said he saw this in a “magazine that claims to speak for liberals.” So what does the GOP have to do with it?

I could support a national sales tax if it was done correctly.

There would have to be a start point of say $40,000 at which you would pay no tax if you made less that that. That should take care of the poor. Details would have to be worked out as to how the exemption would be done, but I’m sure it could.

The sales tax rate would have to be somewhere around 23% I believe to be rvenue neutral and would have to replace all other forms of tax.

The real beauty of the idea is to get rid of the IRS.

Another advantage would be that everyone would pay except our poor. Tourists would pay since they spend money here, illegals would pay since they also consume,

Corporations would be exempt since they are not people and people pay tax. By corporations not payint tax, they could lower their prices.

I believe the cost of all goods would be reduced by around the same amount (around 23%) so by adding back the sales tax we would pay roughly the same for goods that we pay now.

And since the rich buy more than the poor, they will still be paying a lot more than anyone else.

There is a book from Neal Boortz, a libitarian, that details this and more, unfortunately I can’t find or remember the name of the book. I’m sure Google can help.

I haven’t figured out how to add links yet, but for a good explanation of a workable sales tax, go to fairtax.org. Be sure and check out the FAQs and a lot of your questions will be answered.

I like the progressive tax. In fact, I’d like to see reinstatement of the 90% tax on the top bracket like we had back in the booming economy of the 50s and 60s.

Seriously, there’s nothing fundamentally wrong with the progressive system we have, once the more eggregious loopholes are plugged (though it’s become a little too flat across the brackets for my taste).

Oh, and somebody needs to do something about the AMT.

A fed sales tax screws the poor, and a lux. tax screws the economy.

The middle income folks would develope a barter system to get around most of it, the rich would likely do much the same thing.

The poor have little to barter with as far as goods or services.

If you go to burger doodle you pay state sales tax, how much do you think the mgr. pays?

If you go homedepot and buy a washing machine you pay full price + tax, what do you think the mgr. pays?

Tax the hell out of a new car, do you really think the guy that owns the dealership will pay one dime?

The guy that owns the gas station ?

THe rich pay little to nothing now for goods and services, they would pay zero under that plan.

The only good thing about a sales tax of this nature is that it can be collected at point of sale, guaranteeing it’s payment.

Any tax or assessment on income that it based on a percentage (a static percentage) will always result in the lower levels of income paying more than the upper levels.

The only argument for it is that everybody pays the same percentage and it is not the “rich” persons fault that he or she has achieved a high earnings level.

As well, although I cannot name them, there are items that are sold that are not taxable.

“kctim, the gaping hole in your comment is the assumption that those who don’t earn much, don’t work hard.”

What did you get that from? “who work hard AND make lots of money”
I didn’t assume anything like that. Fact is, some people work hard and do better than others.

“It is not about how hard folks work.”

I know. Its about how unfair our tax system is.

“So, your plea for empathy for those “hard working” wealthy folks falls on deaf ears down here at levels of modest incomes.”

I made no such plea.
It is the common tactic of the left to steer the issue from facts to feelings that is falling on deaf ears.

A good tax system is extremely hard to devise. Maybe, there is no such thing? But, it’s unrealistic to expect government to do anything without funding.

I read the fairtax.org plan, and did some calculations. It’s not too bad, since it’s not really only a simple flat sales tax. It actually seems to protect the poorest.

At first, the fairtax plan creates a bit of skepticism. It almost seemed certain that the poor would get hammered, but the rebates will prevent that. At first, a flat sales tax sounds abominable (especially hard on the poorest), but after the rebate (which is paid in advance), the tax on the poor is low to near zero (or even negative). Essentially, a poor person living at or below poverty level will pay zero tax (those making below poverty level could actually receive some money; upto $1648 tax free for the single person).
One part that’s hard to understand is why a married couple living below poverty level receives no rebate? Wouldn’t a married couple with an income of $9310 be poorer than the single person with an income of $9310 ?

Under the fairtax plan, married couples get a smaller rebate, which could cause some people to just live together instead. It seems similar to the current marriage penalty tax. And, different states have different rebate rates? That may receive some of scrutiny.

One huge advantage of the fairtax plan is that the IRS would no longer be needed.

The fairtax (sales tax) may be better than the flat income tax rate, but the wealthy will probably hate the fairtax more, since they already paid income tax on what they have now, and it’s a lot more than most, since the top 5% of the wealthiest have 59% of all wealth, and the top 10% of the wealthiest have 70% of all wealth. Also, the political voice of the weatlthy is much louder, and they’ll probably reject the idea of the fairtax plan, since they have much more money they’ve already paid income tax on.

The flat 23% sales tax of the fairtax plan seems too high also. If it’s too high, it will give rise to bartering and black markets. I’d prefer 13%, and then require federal government to shrink to exist with those revenues. Especially, since there’s still state sales, income, and property taxes to deal with also.

At any rate, either plan:
(a) the fairtax (fairtax.org), or
(b) the flat income tax rate ( en.wikipedia.org/wiki/Flat_tax )
would both be better than what we have now; a severely abused, overly complicated, tax everything (sometimes, more than once) system, full of gaping loop holes, tax shelters, and exceptions, that gives rise to a multi-billion dollar industry just to calculate taxes.

tomd, Thank you… you pretty much said much of what I was going to say in your post. The “Fair Tax” is already in bill form by the name of HR25 (introduced by John Linder)

In addition I would like to add:

Once every step of the road a “consumer good” takes before it gets to the consumer is no longer taxed (i.e. “corporate taxes”) the cost of that good will go down. Studies have shown that the reduction in thecost of most goods to the customer would be around 23% (my thought is that it will not end up being quite that high, maybe around 19-20%, just a gut feeling). So the addition of a 23% tax on top of that would not be as big of a hit as people might think. And those people who think that the cost of those items would not indeed go down do not understand the market. Any company says “we will just keep this money as profit” would be eaten alive by their competition.

In addition the “pre-bate” check that everybody gets (rich and poor) would effectivly eliminate this tax for the necessities of life. Therefore the poor will be able to use that prebate check to “pay” for the taxes on everything they buy (because all they should be buying are the necessities). The rich would also receive the check but since they will be buying far more than the necessities it will not cover much of their taxes at all. leaving them to foot the vast majority of the bill for the taxes.

Also please do not forget that a large amount of taxes would then be collected from those folks living “outside the system”. Illegal Aliens that are working here and sending the money home will be taxed just like all of us because they have to buy things to live (and they will get no pre-bate check). Drug Dealers and other such people that make a lot of un-taxed money will now be taxed when they buy their expensive cars, and such… Tourists that come here will help us foot the taxs bill as well on what they spend here.

Not to mention that if Corporations are no longer part of the tax structure this countries economy will skyrocket.
1) They will have no reason to send money off-shore to be “tax-sheltered” … In fact I believe that many many overseas companies would move operations here because there would be no corporate taxes.
2) Companies will no longer have to make business decisions based off of a fear of a “tax penalty” and can get back to making all their decisions based off of additional revenue it generates.

Obviously I am a huge HR25 supporter and feel that regardless of what side you lean toward politically, if you take the time to understand the entire plan you would not hesitate to support it. (Exceptions to this would be if you work for the IRS or are a Corporate Lobbyist in Washington who gets paid big money to argue for plans that make the tax code more complicated in order to help their corporate backers.) :-)

btw… I think that the flat tax is a good one as well (I just happen to like the “Fair Tax” better). IMO either of these 2 would be better than the current tax system.

Steve Smith,

“The only good thing about a sales tax of this nature is that it can be collected at point of sale, guaranteeing it’s payment.”

My point is that for the very rich, there is NO sale!
Its damn hard to tax something that didn’t occur ( atleast on paper).

The rich seldom pay full price for anything.
An attorny can trade knowledge for a discount on most everything.
How do you tax knowledge with a sales tax?

Put a 33% tax on microsoft’s new software, Bill Gates will never pay one dime.
Now if he needs his roof re-done, that roofer could likely use a new puter for his business, heres a demo to try, write it off. There is no sale.
Rich people don’t pay for everything, and they pay full price for nothing.

Beagle,

I agree that the tax should not be considered and, also that the rich will benefit.

My point is that if there is anything positive that could be said it would be that anyone who made a physical purchase would have to pay the tax at point of sale. The tax is collectible at point of sale or there is no sale.

People seem to be talking about two different definitions of “the Rich”, when there really are different meanings. Let me explain, There are the accumulated rich, wealth passed down through the generations,(usually democrats) and there are the high income rich, wealth accumulated from means other than existing wealth, which are subjected to the current income tax code.(usually republicans) Taxation discussions should discern between the two.

The accumualted rich, dont want to be taxed on what they spend because their taxation would skyrocket, since as we all know they pay little in the current tax code due to loopholes and deductions. With a sales tax, they would lose the ability to avoid payment. The accumulated rich also don’t want people to succeed for fear that they may ascend to their class in life. Which would actually lower the accumulated rich’s quality of life because of supply and demand, they will be able to afford less of lifes luxuries. So they want the high income to be taxed to death so they don’t catch up to them in the accumualated wealth.

It really is that simple.

brad

Beagle’s right. They gave a federal tax like that in Singapore. You can avoid it by paying cash. It just encourages businesses to use two sets of books.

My point is that for the very rich, there is NO sale! Its damn hard to tax something that didn’t occur ( atleast on paper).

The rich seldom pay full price for anything.
An attorny can trade knowledge for a discount on most everything.
How do you tax knowledge with a sales tax?

Put a 33% tax on microsoft’s new software, Bill Gates will never pay one dime.
Now if he needs his roof re-done, that roofer could likely use a new puter for his business, heres a demo to try, write it off. There is no sale.
Rich people don’t pay for everything, and they pay full price for nothing.

While I know that this does happen (and will continue to happen regardless of what the tax system is) it really is a bad argument against the Fair Tax system… It is unrealistic to think that the rich people in the world never buy anything and “barter” with other rich people for everything. That just does not happen. If they need a big screen TV they go buy a big screen TV. If they want a new car they go buy a new car. If they need groceries they go buy groceries (a lot more expensive groceries than most folks to)… All of these things will be taxed (and the pre-bate will not help them much because of their lifestyle choices).

If a lawyer wants to give knowledge away that is his right, and if another rich person wants to give him something in return that is theirs (if they own it) thats fine too. If either decides to use their business to “provide the service” and does not tax them for it then they are breaking the law and may or may not be caught for it. Point is, how is this any different than under todays tax system? It’s not, which makes the argument a moot point.

Plus those same “rich” folks will no longer have to send their money out of the country to avoid taxation, the money they make off of investments will no longer be taxed, and there will be no deth tax. These people are the people who start and run businesses… The more of their money that is here the better the economy, jobs, etc will be. I think that alone makes up for Bill Gates “free” roof.

btw… looks like there are 2 Brads posting here. lol. I’ll start posting under BradM…

“The lefts mantra is to punish people who work hard and make lots of money.”

Not everyone who works hard makes lots of money. Should they be punished? Not everyone who makes a lot of money works hard. Should they be rewarded. Statistically the best way to get rich is to be born into it. Much like our beloved president. He has worked so hard for his money that when he got be be president he needed to spend 20% of his time on vacation.

note to Kctim just saying it’s the left or liberal isn’t really good enough of an arguement for anyone who gets their information from sources other than Fox or Rush. Try sound reasoning once see how it works.

Any tax system designed around class warfare will never work.
The rich got that way by working very hard, being very smart, or being lucky.

Screw over those working very hard, and you destroy the economy.

The lucky likely wont be smart enough to stay rich for long.

I don’t know how the hell to tax “being smart”?

Any tax system should be designed to screw over those making less than 500k a year the least that you can. Forget about trying to transfer wealth from the very rich and smart, it will never happen.

Some form of flat tax with no deductions is the best plan for most people.

Zero tax on the first 25K, zero tax on overtime for hourly workers at any level of income, and a flat tax on anything over that.

To prevent the managers and CEO from scamming the hourly rule, require everyone to have the same rules, timeclock, benifits, perks, ins., ect to be classified as hourly workers.

The guy that works 60 hours a week to provide a lil more for his family, or to get ahead, shouldn’t be taxed on his 70k at the same rate as the guy sitting on his ass at a desk getting the same 70k, and only showing up for 5 hours a day.

Its not class warfare at that point, because the guy at the desk wouldn’t trade jobs with the guy working his ass off.

Yes, it’s got to be fair.
I think the Flat Income Tax Rate and
the Flat Sales Tax with Rebate Based on COS
both are fair to the wealthiest.

The only part the wealthiest won’t like about a sales tax is that much of their money has already been taxed once. For the least wealthy, it’s not as big a deal.

Given the conditions/laws, etc. under which we all live and work, there will always be people who have (however achieved) more money and assets than others.

Few would agree that the greater burden of taxes should be borne by either extreme of wealth. To do so would be unfair. Most, I think would agree that the tax contributions of the lower, middle and upper wealth/income brackets should be somehow more closely aligned.

The Federal Income Tax structure compensates for inequities in wealth/income through a progressively higher rate of tax based on income and deductions, etc. A variety of credits are also built in.

It seems that the real issue is that the upper income people, the wealthy and, big business have provisions in the Tax structure that enables them to “work the system” to their advantage. This is not their fault. They are not breaking the law, they are using it to it’s maximum.

It is not a crime or, something to be ashamed of to be rich.

IMO the entire tax structure needs to be overhauled. Also the advantages to large corporations headquartering themselves offshore should be disallowed or addressed in the tax structure. The same would apply to big business having it’s operations out of country.

That said, as nice as all of this would be, money drives government and real significant changes to equalize taxes among the classes are not likely to be made in our lifetime.

And, naturally just so I am not surprised by the responses, Conservatives/Republicans have by far much greater wealth, better jobs, better living conditions, etc. than do the Liberals/Democrats or, for that matter any other political group.

Some certainly have a louder voice than others.
The top 1% of the wealthiest have 38% of all wealth, and the top 5% of the wealthiest have 59% of all wealth (in the U.S.).
Who has the most influence on government?

Still, it shouldn’t become a class warfare thing.
Just make it fair.
Right now, it isn’t fair.

Brad, which ever one posted this;

“If a lawyer wants to give knowledge away that is his right, and if another rich person wants to give him something in return that is theirs (if they own it) thats fine too. If either decides to use their business to “provide the service” and does not tax them for it then they are breaking the law and may or may not be caught for it. Point is, how is this any different than under todays tax system? It’s not, which makes the argument a moot point.”

The point isn’t moot. The difference in a sales tax system and the current system(flawed) is that the lower and moderate income persons would take it up the pa-toot.
They don’t have the contacts and bartering power like the very rich does. They pay full price.
If you really think thats not how it works, you’ve never been, or known the rich, owned a business, or are a lil naive about the system.

I could give a shit less if Bill Gates ever pays any income tax at all. He will give away everything that he feels he dosen’t need, and good luck trying to extract what he wants to keep!

“Not everyone who works hard makes lots of money. Should they be punished?”

No, but they are. Gotta support those feel good social programs some how.

“Not everyone who makes a lot of money works hard. Should they be rewarded.”

So being forced to pay ten or a hundred times more in taxes is now considered a reward?

“Try sound reasoning once see how it works.”

Ok, I’ll try.
All men are created equal, so why do some people believe its ok to treat them differently?
Your right, it does work.
Now you liberals try it, it may help with that little envy problem you have.

kctim, my heart bleeds for those rich guys who, after taxes, only get to keep a few billion dollars. I can’t believe we punish them that way. Oh, the humanity!

To prevent the managers and CEO from scamming the hourly rule, require everyone to have the same rules, timeclock, benifits, perks, ins., ect to be classified as hourly workers.

Beagle, I think the Soviets had a centralized system like that. I’m not sure that any plan containing the words “require everyone to…” in relation to business is going to fly.

Envy masked with sarcasm, most common and predictable way to sidestep the issues.
Patented and perfected by the left.

What an intersting topic. Here are my 2 cents…

My first set of comments:

-I personally believe that rich people should pay more in taxes than they do. I do pretty well myself - about $90k - and, after deductions, my 2004 federal tax burden was only 6.1%.

-The people who write the tax code and their supporters are all wealthy, so, of course, the tax code favors the wealthy.

-There are so many “hidden taxes” that it is almost extortion. It wouldn’t surprise me if feredal income tax were only 1/2 of the federal taxes that I pay.

My second set of comments:

-Does everybody deserve the same lifestyle? Do smarter, more motivated, more risk-taking people deserve to have a better life style than others?

-I think many people misunderstand the term “hard work”. It’s my experience that people who make it far up the corporate ladder sacrifice pratically everything else to do it. There is a difference between working hard (i.e. construction worker) and giving everything to your career. I know several directors and vice presidents that work essentially 7 days a week 20 hours per day. It isn’t uncommon for them to send email at 3:00 am Sunday morning or to hold conference calls when they’re supposed to be on vacation.

-Is “fair share” based on services received or on ability to pay? For example, the poor guy and the rich guy receive the same benefit from national defense, yet the rich guy pays more dollars for it.

So, what is a fair tax system?
-It depends on your perspective - is it funded based on ability to pay or on services received.
-It depends on what you’re trying to do with it. For example, should the tax code be used to encourage retirement savings? encourage savings for health care costs? encourage investment in capital goods? encourage home ownership? encourage entrepenaural activity? discourage purchasing cars with poor gas mileage? etc. etc…

Here is my suggestion for a “fair tax”:
- Eliminate welfare
- Eliminate all taxes except for personal income tax.
- Provide a $10,000 tax deduction per income earner.
- Provide an $8,000 tax credit per dependent (up to $24,000).
- Have a flat tax at whatever percentage is needed to fund government spending.
- Include a deduction for mortgage interest (or many people would need to sell their current homes).
- Include a dollar-for-dollar tax credit (up to 5% of gross income, max at $3,000) for charitible donations to organizations that provide public support programs (like homeless shelters, meals-on-wheels, etc.)
- Allow non-incorporated businesses (sole proprietors and partnerships) to deduct business expenses to the extent that it offsets the income generated by the business.
- Provide a tax credit for retirement savings of a max of 10% of income or $10,000 per year (which ever comes first).
- Allow investment income of up to $25,000 per year to be tax free.

AP,

Perhaps business would try to scam the hourly rule. But I would try to start out with a system that didn’t screw over those working their ass off to make the 70k.

Even though I’m a “mean ole Republican”, I belive in a fair tax system that doesn’t screw over the hard working average joe’s, and the poor.

If I had Bill Gates’s money, and he had feathers in his ass, we would both be tickled.

However, I have no envy of his cash, and if I had it I likely would give away the same ammout he does.

He is very smart, perhaps lucky, but he earned it somehow, and seems to be a good person.

I guess the difference is that I would feel guilty trying to extract the cash he didn’t wish to give freely, and he earned.

I mostly am concerned with a tax system for the average joe, the poor, and the moderatly wealthy, they are the only ones hurt by a flawed tax system.

The very rich only pay what they wish to give.

The point isn’t moot. The difference in a sales tax system and the current system(flawed) is that the lower and moderate income persons would take it up the pa-toot. They don’t have the contacts and bartering power like the very rich does. They pay full price. If you really think thats not how it works, you’ve never been, or known the rich, owned a business, or are a lil naive about the system.

My point in saying that it is moot is that the very rich will do this regardless of what system of taxation we have in place. The current system, the Fair Tax (sales tax), a Flat Tax…. It does not matter. People that cheat the system will always find a way to cheat the system. It is inevitable. I just don’t believe that this is a good reason to oppose the “Fair Tax”.

First off I do know several people I consider to be rich (though I am not yet one of them try as I might). And I do own my own business in addition to working for someone else for the time being on my “Day job”. I feel that I understand pretty well how the system works.

The very rich typically use their contacts and bartering power to enhance their businesses (which in turn puts more money in their pockets). Not when they go buy a TV. They will not be able to do this as easily under the Fair Tax system. It will be up to the retailer (their business) to maintain their records of the taxes that they collect and in turn send to the state taxing authorities (Who in turn send it to the Federal Government). The federal government will be able to focus their efforts on catching those businesses who are “trading services” and avoiding the tax system because they will only have to audit each business in the country regarding the taxes they collected, as opposed to each citizen and business in the country as they do now. In addition, with this system it will always take 2 entities to “cheat the system” Right now it only takes 1 for the vast majority of the tax fraud that happens in the US.

Again, I’m not even arguing that the “Fair Tax” will reduce the amount of fraud, but I do argue that it will not increase it.

Since nobody is sure how to tax, we have a play-it-safe tax: tax everything: federal income tax, Social Security, Medicare, unemployment tax, import tax, export tax, capital gains tax, dividend tax, interest tax, corporate tax, fuel tax, parking tax, amusement/entertainment tax, insurance tax, city/county/state sales tax, telephone tax, 911 tax, service tax, city/county/school property tax, excise tax, tarrifs, customs tax, utility tax, vehicle tax, inventory tax, estate tax, gift tax, retirement tax, value added tax, nnet worth tax, transfer tax, transportation tax, bridge tax, road tax, alcohol tax, cigarette tax, carbon/gas tax, etc. (were any missed?)

What’s next? Poll tax?
What we’ll probably end up with soon is a national sales tax too.

_____________________________________________
YEAR 2002:
The top 1% of taxpayers by income pay 33% of all individual income taxes, and 22.7% of all federal taxes.
The top 5% of taxpayers pay 54.5% of all individual income taxes, and 38.5% of all federal taxes.
The top 10% of taxpayers pay 67.4% of all individual income taxes, and 50% of all federal taxes.
The top 20% pays 82.5% of all individual income taxes, and 65.3% of all federal taxes.

“The lefts mantra is to punish people who work hard and make lots of money”

Just what in the hell tells these Repug, Rich bastards that just because you earn more money you work harder??? That’s BS!!!

The only reason the rich have what they have is because the poor work like hell to give it to them.

I think this has to be said. There is a significant, relavent difference between those who receive welfare because they CANNOT work and those who receive welfare because they DO NOT WANT to work. With the value system in America, you’re not going to be able to eliminate welfare entirely because too many people care about those who CANNOT work. However, the government could do a better job about differentiating between the two. It would also have to be done in such a way that children of parents who choose not to work, despite being completely able to work, do not suffer needlessly from their parents’ choice, since the children themselves cannot choose to work to meet their own needs.

I am a “poor” person, I work as a Janitor, your telling me that my pay would go from $400 to $560 per week? I am all for it I could really use that extra money. And isn’t part of the plan to totally eliminate the IRS? This idea can’t be so bad, the rich will always finds ways to cheat the system but the wealthy do spend more so the flat rate would make them pay more than they do now, wouldn’t it? I can buy used clothing and cars to eliminate the tax, but the rich guys want new stuff.

I think assuming the tax wouldn’t apply to used items is overly hopeful. You avoid paying sales tax on used clothing from rummage sales, but not Good Will type entities. And you would get taxed on your used car regardless of where you buy it when you registered your vehicle.

“I think assuming the tax wouldn’t apply to used items is overly hopeful.”

Not so, Stephanie,
According to the FAQ for the Fairtax plan.
“What is taxed? The FairTax is a single-rate, federal sales tax collected only once, at the final point of purchase of new goods and services for personal consumption. Used items are not taxed. Business-to-business purchases for the production of goods and services are not taxed.”

I referenced the Fair Tax in an earlier post. After reading more about it at Fairtax.org, I can’t find very much wrong with it.

This is not a partisan plan by any means I can see.

Will some of you more astute math people please read about the plan and share your views?

Nick, I’m glad to see sombody getting that this is not a plan that is designed to screw the poor… And don’t forget the prebate. As an example, for a (married) family of 3 you would get a check from the government for $416 every month to help you offset the costs of the taxes that you will be charged on the necessities of life. But you are correct, if you buy used cars, homes, clothes… then no taxes for you! It then becomes your choice instead of the money being gone before you even see it… I can not see why once someone actually takes the time to understand the entire FairTax system they would not see how this would work, and work very well.

Tomd, I am (and have been for over 2 years) fully on board with the FairTax plan. You are correct in that it is not a partisan plan at all. It has a fairly equal number of supporters in Washington from both sides of the fence.

I’ve heard a lot of knee jerk reactions from folks who obviously have not taken the time to understand it fully. I have yet to find someone (who actually has read and understands the plan) that can tell me a reason why this would not work.

I personally think it is a great plan and I am working to get more support for it in my state.

Tomd,

I transfered my comments to the center column that onld deals with the “Fairtax?” plan.

I read the fairtax.org plan and liked it a lot (despite some initial skepticism).
In fact, I became a member this week.

For those that have always previously believed any sales tax was bad because it hammers the poorest, should read this plan. It eliminates that problem.

The fairtax.org offers more advantages in the long run. The fairtax.org plan is much much better than what we have now, but a lower rate combined with a reduction of the size of the federal government to exist with those revenues, would be nice too. But, that’s pushing our luck to ever hope for a smaller federal government?

A major resistance to a new tax plan is that many in government like the current tax system the way they designed it (full of tax loop holes and tax shelters). It took a lot of time and work to make it work to their advantage, and they won’t abandon it so easily.

For any tax plan to be successful, it must be reasonable, fair, not cause the poorest to pay a larger percentage of income toward taxes, not tax those below the poverty level, not punish the children of the poorest (80% of all Americans only have 17.7% of all wealth), and still provide for national defense.

Unfortunately, the federal government has grown to such nightmare proportions, meddles in virtually everything. How do we devise a tax plan that can generate the current revenues ($2.2 trillion per year). Perhaps the size of federal government needs a reduction? (but, that’s another lurid story for later)

Do we really need all of these? :
home.comcast.net/~d.a.n/DoWeNeedAllOfTheseGovernmentOfficesDepartmentsAgenciesCommitteesEtc.htm

Does federal government need to be involved in all of this? :
$107,000 to study the sex life of the Japanese quail.
$1.2 million to study the breeding habits of the woodchuck.
$150,000 to study the Hatfield-McCoy feud.
$84,000 to find out why people fall in love.
$1 million to study why people don’t ride bikes to work.
$19 million to examine gas emissions from cow flatulence.
$144,000 to see if pigeons follow human economic laws.
Funds to study the cause of rudeness on tennis courts and examine smiling patterns in bowling alleys.
$219,000 to teach college students how to watch television.
$2 million to construct an ancient Hawaiian canoe.
$20 million for a demonstration project to build wooden bridges.
$160,000 to study if you can hex an opponent by drawing an X on his chest.
$800,000 for a restroom on Mt. McKinley.
$100,000 to study how to avoid falling spacecraft.
$16,000 to study the operation of the komungo, a Korean stringed instrument.
$1 million to preserve a sewer in Trenton, NJ, as a historic monument.
$6,000 for a document on Worcestershire sauce.
$10,000 to study the effect of naval communications on a bull’s potency.
$100,000 to research soybean-based ink.
$1 million for a Seafood Consumer Center.
$57,000 spent by the Executive Branch for gold-embossed playing cards on Air Force Two.

Stephanie
VERY well said and a very level headed approach to the situation. TY!

Poorman
“Just what in the hell tells these Repug, Rich bastards that just because you earn more money you work harder??? That’s BS!!!”

It would do you well to read with an open mind.

-punish people who work hard AND make lots of money-

People work hard and make squat, others work hard and make alot.
Nowhere does it say that rich people work harder.

I mostly am concerned with a tax system for the average joe, the poor, and the moderatly wealthy, they are the only ones hurt by a flawed tax system.

Ditto, Beagle, but here’s the problem. Having a government costs a certain amount of money. If the rich pay less taxes, the rest of us have to make up for it… Unless you think it’s a good idea to keep borrowing from China to make up the difference, like we are now.

Hi Folks,
Slightly off the subject, but:
I’d be happy if they would do away the double - no make that triple taxes on large items - like cars and house.
Ex. You pay sales tax when you purchase a car.
Then you pay property tax yearly for the right to own the car you have already paid sales tax for.
Then you pay anywhere from $100.+ (in my state $400+)yearly for a stamp to put on your tag to legally drive the fool thing. And of course don’t forget the driver’s license fee to be able to drive your car, and of course, insurance.I realize that the last two aren’t techncally taxes but by the time one forks over all the money for that you have to have to purchase a car, is it any wonder I feel like I’m in a “taxation without representation” country?

I said
“Not everyone who works hard makes lots of money. Should they be punished?”

you reponded
No, but they are. Gotta support those feel good social programs some how.

to that I say
They also have to support corporate welfare, roads, miltary, ect. Ever hear of those things?

I said
“Not everyone who makes a lot of money works hard. Should they be rewarded.”

Your response
So being forced to pay ten or a hundred times more in taxes is now considered a reward?

my response
A flat tax would be a reward from the current system.

I somewhat snidely said (I try to be more respectful sometimes I fail when I see posts with no individual thought whatsoever)
“Try sound reasoning once see how it works.”

your response
Ok, I’ll try.
All men are created equal, so why do some people believe its ok to treat them differently?
Your right, it does work.
Now you liberals try it, it may help with that little envy problem you have.

My response
First of all I am not a liberal. That is a favorite tactic of neocons to falsly label and lump together. I am a progressive. The differance is the same as that between conservatives (of whom I respect and have had constructive discussions with) and neocons. Liberals to me are far left, neocons are far right. 95% of us fall somewhere far short of that. Second of all I own my own business and am quite comfortable in life so I have no envy for anyones life. It is also probably false that all liberals are envious and no neocon could be. More of that labeling and lumping together tactic.

By the way reasoning is usually given in answer form with examples to back up the statement. Not a one line question. Perhaps you should use a dictionary for words you don’t understand.

To answer your question though, all men are created equal only in the respect of civil rights. They are not created equal finacially. Obviously someone born into a rich family is not equal to one born in poverty. As a country we should assist those who, through no fault of their own, did not get an equal start in life. If you believe all men should be created equal in all respects then you should not be against something that helps equalize such inequities as who you are born to.
To answer your line in a form you may understand I will put it in a one question format for you. If all men were truly created equal, even finacially, would our current president have gotten as far as he did? Taking into consideration he failed in all his business ventures I bet not.

See, reasoning, a statement backed up by examples. If you can give counter examples without the usual clouding tactics I would be happy to have an intelligent dialogue with you. If not just call me a liberal, that seems to work for Rush and Rove. I guess I can live with that more than I would being called a lemming.

Linda H.
Yes, we currently get taxed on everything, sometimes several times.

This is for a later disscusion, but property tax is also an awful tax, in which you get taxed every year, over and over, for something you already own. And, it doesn’t matter that you may have no income, and retired and living off of savings. Many elderly sell their homes, and downsize merely because of property tax. Property tax is my 2nd highest monthly expense (more than utilities and food).

“They also have to support corporate welfare, roads, miltary, ect. Ever hear of those things?”

A little. I drive on roads and served in the military.
I’m no fan of corporate welfare, it ranks right up there with the govt spending tax money to encourage teen sex, enable drug abuse, encourage unemployment, promote race discrimination etc…
Ever hear of those things?

“A flat tax would be a reward from the current system.”

Yes it would. And if it treated everybody as equals, it work better.

“First of all I am not a liberal. That is a favorite tactic of neocons to falsly label and lump together.”

Talk about lumping.
How many of these evil neocons that you know so much about, support RvW? gay marriage? or that Iraq was wrong? and who is an atheist?

“Perhaps you should use a dictionary for words you don’t understand.”

Whats a dictionary? God I wish there was a book to tell me what words mean.

“Obviously someone born into a rich family is not equal to one born in poverty.”

Bull. It is up to the individual if they succeed or not. Anything else is just an excuse.

“As a country we should assist those who, through no fault of their own, did not get an equal start in life.”

What about the ones who are at fault?

“See, reasoning, a statement backed up by examples. If you can give counter examples without the usual clouding tactics I would be happy to have an intelligent dialogue with you.”

Statement: If people “really” believe in giving handouts to others, they would lead by example.

Example1: Multi-millionaire says ALL Americans should give at least 70% of their income to the govt. to support all these “freebies” that he believes in.
Does he lead by example and give 70% of what he earns to the govt. now? NO!

Example2: A person lives a comfortable life and believes everybody deserves these “freebies.”
Does that person REALLY believe in what they preach? Does that person lead by example? Does that person take it upon themself to live abandon the comfortable life and live a modest life, using the money saved to “help” more of these people they say they care so much about?
They don’t, do they.

Neither one of these people believe in sacrificing that much. Instead, they believe everybody should pay to support the programs that they say is so important to “them.”

Statement: Everyday, hard working people who live paycheck to paycheck, have excessive taxes taken from their family budget in order to support these feel-good programs.

Example: Working guy/gal takes home $50 less than he/she earns each week. After fuel, utilities and food, they always come up about $40 short each week.
Why is it ok to lessen their quality of life in order to make somebody elses quality of life better than their very own?

Paul:

You obviously have not done you homework on the Fair Tax Plan. So here is the details. After you read this you will have a better understanding of the Fair Tax Plan and how it works. You will see that this plan is the best out there and will rid us of a wholey opressive tax system we now have.

FairTax Frequently Asked Questions

1. What is taxed? The FairTax is applied to the sale of all new consumer goods and services at the final point of consumption. Used items are not taxed. Business-to-business purchases for the production of goods and services are not taxed.
2. Exactly what taxes are abolished? The FairTax is replacement, not reform. It replaces federal income taxes including, personal, estate, gift, capital gains, alternative minimum, Social Security, Medicare, self-employment, and corporate taxes.
3. How does the rebate work? All valid Social Security cardholders who are U.S. residents receive a monthly rebate equivalent to the FairTax paid on essential goods and services, also known as the poverty level expenditures. The rebate is paid in advance, in equal installments each month. The size of the rebate is determined by the Department

of Health & Human Services’ poverty level multiplied by the tax rate. This is a well-accepted, long-used, poverty-level calculation that includes food, clothing, shelter, transportation, medical care, etc. See chart in Figure 1 below.
4. Why not just exempt food and medicine from the tax? Wouldn’t that be fair and simple? Exempting items by category is neither fair nor simple. Respected economists have shown that the wealthy spend much more on unprepared food, clothing, housing, and medical care than do the poor. Exempting these goods, as many state sales taxes do, actually gives the wealthy a disproportionate benefit. Also, today these purchases are not exempted from federal taxation. 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.
Finally, exempting one product or service, but not another, opens the door to the army of lobbyists and special interest groups that plague and distort our taxation system today. Those who have the money will send their lobbyists to Washington to obtain special tax breaks in their own self-interest. This process causes unfair and inefficient distortions in our economy and must be stopped.

5. Is the 23% FairTax higher or lower when compared to the income taxes people pay today? Most people are paying that much or more today – much of it is just hidden from view. The income tax bracket most people fall into is 15 percent, and all wage earners pay 7.65 percent in payroll taxes. That’s 23 percent right there, without taking into account the 7.65 percent employer matching! On top of that, you have to add in all of the taxes embedded in the goods you buy (another 20 to 30 percent). Effective tax rates vs. stated tax rates Because the 23-percent FairTax would not be imposed on necessities, an individual spending $28,808 would pay an effective tax rate of only 15.6 percent, not 23 percent. That same individual will pay 17.3 percent of his or her income to federal taxes under current law.
6. Does the FairTax rate need to be much higher to be revenue neutral? The proper tax rate has been carefully worked out; 23 percent does the job of: (1) raising the same amount of federal funds as are raised by the current system, (2) paying the universal rebate, and (3) paying the collection fees to retailers and state governments. Unlike some other proposals, this rate has been independently confirmed by several different, non-partisan institutions across the country. Detailed calculations are available from FairTax.org.
7. How is the Social Security system affected? Like all federal spending programs, Social Security operates exactly as it does today, except that its funds come from a broad, progressive sales tax, rather than a narrow, regressive payroll tax. Employers will continue to report wages for each employee, though, to the Social Security Administration for the determination of benefits. The transition to a reformed Social Security system will be eased while ensuring there is sufficient funding to continue promised benefits.
8. How does the FairTax affect Social Security reform? FairTax.org is a one-issue organization: Tax replacement. However, its proposal does benefit any Social Security reform proposal. The FairTax.org plan does not change Social Security benefits or the structure of the Social Security system. All it does is replace the current revenue source (narrow, regressive payroll taxes) with a new revenue source (broad, progressive sales taxes paid by all consumers). Additionally, research shows that consumption is a more stable revenue source than income. If Social Security is reformed or privatized in a way that reduces the government’s need for revenue, then the FairTax rate can be reduced. For example, if a mandatory private savings program is implemented where people must save 10 percent of their income and Social Security benefits are curtailed, then the FairTax rate can be reduced just as payroll taxes would be reduced.
9. Is consumption a reliable source of revenue? Yes, in fact, consumption is a more stable source of revenue than income. A recent study by American Farm Bureau economist Ross Korves shows the FairTax base was less variable than the income tax base. Why? Because during difficult times due to loss of a job or an inability to work, people may not have as much income, or may have no income at all. They borrow funds or use savings. They may not have earnings, but they still continue to consume. Korves’s Figure 2 below shows the yearly changes in the tax base, adjusted gross income (AGI), under the current tax system for 1971-2001 and changes in personal consumption expenditures (PCE) of the same time period.

Figure 2: Stability of the tax base2 1971 to 2001
10. How is the tax collected? Retail businesses collect the tax from the consumer, just as state sales tax systems already do in 45 states; the FairTax will simply be an additional line on the current sales tax reporting form. Retailers simply collect the tax and send it to the state taxing authority. All businesses serving as collection agents will receive a fee for collection, and the states will also receive a collection fee. The tax revenues from the states will then be sent to the U.S. Treasury.

11. Why is the FairTax better than our current system? Our present tax system is one of the reasons that people are finding it so difficult to get ahead these days. It is one of the reasons the next generation may not have a standard of living as high as this generation. Cars replaced the horse and buggy, the telephone replaced the telegraph, and the FairTax replaces the income tax. The income tax is holding us back and making it more difficult than it needs to be to improve our families’ standard of living. It makes it needlessly difficult for our businesses to compete in international markets. It wastes vast resources on complying with needless paperwork. We can do better and we must.
12. Is the FairTax fair? Yes, the FairTax is fair, and in fact, much fairer than the income tax. Wealthy people spend more money than other individuals. They buy expensive cars, big houses, and yachts. They buy filet mignon instead of hamburger, fine wine instead of beer, designer dresses and expensive jewelry. The FairTax taxes them on these purchases. If, however, they use their money to build job-creating factories, finance research and development to create new products, or fund charitable activities (all of which help improve the standard of living of others), then those activities are not taxed.
13. How does the FairTax protect low-income families and individuals and retirees on fixed incomes? Under the FairTax plan, poor people pay no federal taxes at all up to the poverty level! Every household receives a rebate that is equal to the FairTax paid on essential goods and services, and wage earners are no longer subject to the most regressive and burdensome tax of all, the payroll tax. Those spending at twice the poverty level will pay a tax of only 11.5 percent – a rate much lower than the income and payroll tax burden they bear today. Moreover, slow economic growth and recessions have a disproportionately adverse impact on lower income families. Breadwinners in these families are more likely to lose their jobs, are less likely to have the resources to weather bad economic times, and are more in need of the initial employment opportunities that a dynamic, growing economy provides. The FairTax dramatically improves economic growth and wage rates. Retaining the present tax system makes economic progress needlessly slow, thus harming low-income people the most.
14. Is it fair for rich people to get the exact same FairTax rebate from the federal government as the poorest person in America? Let’s look at a billionaire under the FairTax – if he spends $10,000,000 dollars he pays a tax of $2,300,000 and gets a rebate of $4,283 (assuming he is married and has no children). His effective tax rate is 22.96 percent.
Now, let’s look at a middle-income married couple, under the FairTax, with no children – if they spend $40,000, they pay $4,917 net of their rebate for an effective tax rate of 12.3 percent. The effective tax rate increases as spending increases, but never exceeds 23 percent!
Figure 3: Comparison of effective tax rates
In contrast, this same couple, if they earn $40,000 in wages today under the income tax, pays $3,060 in payroll taxes and $2,945 in income taxes for a total of $6,005 in taxes (15.0 percent). In addition, their employer pays another $3,060 in payroll taxes. Most economists agree that the employer payroll tax is actually borne by employees in the form of lower wages. Looked at this way, this couple is paying $9,065 (22.6 percent) in taxes today, which doesn’t even include the hidden taxes they pay every time they make a purchase. Therefore, a middle-income married couple with no children has an effective FairTax rate of 12.3 percent, compared to their effective income tax rate of 22.6 percent!
Finally, let’s look at a low-income couple under the FairTax – they pay no federal tax at all. Today, under the income tax system, they not only pay 15 percent in payroll taxes, but they also pay at least 20 percent in hidden corporate taxes, private sector compliance costs, and payroll taxes buried in the cost of every product they buy.
15. What about senior citizens and retired people? As a group, seniors do very well under the FairTax. Low-income seniors are much better off under the FairTax than under the current income tax system. Seniors, like everyone else, receive a monthly rebate, in advance of purchases, for taxes paid on the cost of necessities. The income tax imposed on Social Security benefits is repealed. The income tax imposed on investment income and pension benefits or IRA withdrawals is repealed. Pension funds, IRAs, and 401(k) plans had assets of $6.5 trillion in 1994. An income tax deduction was taken for contributions to most of these plans. All beneficiaries and owners of these plans expected to pay income tax on them upon withdrawal but will not be required to do so after passage of the FairTax.
All owners of existing homes experience large capital gains due to the repeal of the income tax and implementation of the FairTax plan. Seniors have dramatically higher home ownership rates than other age groups (81 percent for seniors compared to 65 percent on average). Homes are often a family’s largest asset. Gains are likely to be in the range of 20 percent.
The FairTax makes the economy much more dynamic and prosperous. Consequently, federal tax revenues grow. This makes it less likely that federal budget pressures require Medicare or Social Security benefit cuts.
16. Are seniors taxed twice on savings, once when they saved it, and now again when the spend it? No. As surprising as it may sound, prices at the cash register will not go up under the FairTax. Simply put, the FairTax is a revenue-neutral proposal, raising no more money than does the current system. The FairTax only changes where the money is raised, not the amount. Therefore, the FairTax is also price neutral. The price of every good or service we buy today is inflated by the cost of corporate income taxes, private sector compliance, and payroll tax matching. These costs are passed on to consumers in the form of higher prices (or lost jobs or lower profits/dividends). When income and payroll taxes are repealed, pre-tax prices can come down 20 to 25 percent according to Dale Jorgenson, Ph.D., chairman of the Harvard University Economics Department. Furthermore, used goods are not taxed because they have already been taxed once – when they were new. Therefore senior citizens, like all Americans, do not lose purchasing power, but gain it instead. Government benefits are maintained. Seniors receive a monthly rebate so they don’t pay taxes on the purchase of necessities. Tax-deferred investments get a one-time windfall. Savings invested in any long-term, income-generating asset such as a stock, real estate, or a long-term bond that can’t be called, will increase substantially in value. Finally, complex estate planning is an artifact of an earlier age.
17. How much do prices for goods and services go down under the FairTax? All goods and services already contain the embedded costs of the current tax system in their prices. When these embedded taxes are removed, prices come down. Dale Jorgenson, Ph.D., chairman of the Economics Department at Harvard University, has projected an average producer price reduction of 20 percent in just the first year after the adoption of the FairTax. In addition, the FairTax lowers compliance costs by an estimated 95 percent and the removal of these costs will force prices down even lower.
18. Should the government tax medicine and health care? Because federal income and payroll taxes are embedded in the price of everything you buy, you are already paying federal taxes on the drugs and other health care services that you buy today – they are just hidden. After passage of the FairTax, prices (even including the FairTax) may not go up at all. Harvard economist Dale Jorgenson estimates that service prices will decline by 25 percent because of the repeal of the income tax.
19. Should the government tax services? Service providers are not exempt from the income tax today, and should not be exempt from the FairTax. Services now account for well over one-half of the gross domestic product (GDP). Neither consumption of services nor consumption of goods should be tax preferred. And it is economically foolish not to tax the fastest growing segment of our economy. Competition, not politics, should determine what goods and services cost.
20. How does the FairTax affect income tax preparers, accountants, and many government employees? There will, of course, still be some people who are involved in sales tax return preparation and sales administration under the FairTax, but many fewer than those involved with the income tax today. Those tax preparers, tax lawyers, and Internal Revenue Service employees will have to find other, more productive work. We have nothing to show for the $250 billion (three Iraq wars worth) that we spend each year measuring, tracking, sheltering, documenting, and filing our annual income. Surely these valuable labor and capital resources can be employed more productively, such as following the money trails left by terrorist, drug, and other criminal enterprises, rather than tracking every American wage earner.
21. What about the home mortgage deduction? The FairTax has positive effects on residential real estate far beyond this narrow question. Today’s homeowners, if they itemize (and 70% do not), pay their interest with post-Social Security/pre-income tax dollars. They then pay their principal with post-SS/post-income tax dollars. Those who do not itemize get no advantages at all. Under the FairTax, all homeowners make their entire house payment with pre-tax dollars.
With the FairTax, mortgage interest rates fall by about 25 percent (about 1.75 points) as bank overhead falls; this is a huge savings for consumers. For example, on a $150,000, thirty-year home mortgage at an interest rate of 7.00 percent, the monthly mortgage payment would be $999.12. On that same mortgage at a 5.25 percent interest rate, the monthly payment would be $830.01. Over 30 years, the 1.75-percent decrease in interest rates in this instance would result in a $60,879 cost savings to the consumer. Finally, first-time buyers save for that down payment much faster, as savings are not taxed.
Under the FairTax, home ownership is a possibility for many who have never had that option under the income tax system. Lower interest rates, the repeal of the income tax, the repeal of all payroll taxes, and the rebate mean that people have more money to spend, and have an increased opportunity to become home owners.
22. What will happen to charitable giving? Charitable contributions depend on one factor more than any other: The health of the economy (not tax benefits). As a wide range of economists agree on the economic expansion the FairTax delivers, charitable contributions benefit also. For all of the money that pours into churches every Sunday and into a broad range of charities every day, only the 30 percent who itemize get any tax benefit. The other 70 percent have given and keep giving with no tax benefit whatsoever. The FairTax allows people to make charitable contributions out of pre-tax dollars. Thus those generally less affluent taxpayers who do not itemize see their cost of charitable giving go down under the FairTax. Finally, the wealthy make decisions on charitable giving based on the cause. Once they have determined the cause is worthy, their contribution is structured to maximize the gift and minimize the tax. But the intention to give comes first; taxes simply determine the structure – rarely the amount – of the gift.
23. Will corporations get a windfall with the abolition of the corporate tax? Corporations are legal fictions that have not, do not, and never will bear the burden of taxation. Only people pay taxes. Corporations pass on their tax burden in the form of higher prices to consumers, lower wages to workers, and/or lower returns to investors. The idea that taxing a corporation reduces taxes on, say the working poor, is a cruel hoax. A corporate tax only makes what the working poor buy more expensive, costs them jobs, lowers their lifestyle, or delays their retirement. Under the FairTax plan, money retained in the business and reinvested to create jobs, build factories, or develop new technologies, pays no tax. This is the most honest, fair, productive tax system possible. Free market competition will do the rest.
24. Does the FairTax burden the retail industry? All businesses are tax collectors today. They withhold income and payroll taxes from their employees. Moreover, the vast majority of retail businesses operating in states with a sales tax (45 states currently use a sales tax) are already sales tax collectors. Under the FairTax, retailers are paid a fee equal to one-quarter of one percent of federal sales tax they collect and remit. In addition, of course, retailers no longer bear the cost of complying with the income tax, including the uniform capitalization requirements, the various depreciation schemes, and the various employee benefit and pension rules. Finally, the aggregate, beneficial effects of dramatically lower income tax compliance costs, no income taxes, and a reasonable fee for collecting the FairTax, ensure that retailers will do quite well.
25. How are state tax systems affected, and can states adequately collect a federal sales tax? No state is required to repeal its income tax or piggyback its sales tax on the federal tax. All states have the opportunity to collect the FairTax; states will find it beneficial to conform their sales tax to the federal tax. Most states will probably choose to conform. It makes the administrative costs of businesses in that state much lower. The state is paid a ¼ of one percent fee by the federal government to collect the tax. For states that already collect a sales tax, this fee proves generous. A state can choose not to collect the federal sales tax, and either outsource the collection to another state, or opt to have the federal government collect it directly. If a state chooses to conform to the federal tax base, they will raise the same amount of state sales tax with a lower tax rate – in some cases more than 50 percent lower – since the FairTax base is broader than their current tax base. States may also consider the reduction or elimination of property taxes by keeping their sales tax rate at or near where it is currently. Finally, conforming states that are part of the FairTax system will find collection of sales tax on Internet and mail-order retail sales greatly simplified.
26. How will the plan affect economic growth? With the penalty for working harder and producing more removed, Americans are free to keep every dollar they earn, and a new era of economic growth and job creation is unleashed. Americans are able to save more, and businesses will invest more. Capital formation, the real source of job creation and innovation, is facilitated. Gross domestic product (GDP) increases by an estimated 10.5 percent in the first year alone. The FairTax as proposed raises the economy’s capital stock by 42 percent, its labor supply by four percent, its output by 12 percent, and its real wage rate by eight percent.
As U.S. companies and individuals repatriate, on a tax-free basis, income generated overseas, huge amounts of new capital flood into the United States. With such a huge capital supply, real interest rates remain low. Additionally, other international investors will seek to invest here to avoid taxes on income in their own countries, thereby further spurring the growth of our own economy.
27. What economic changes come at the retail level with the FairTax? Our baby boom generation has been trained to spend money before inflation eats it up or savings is taxed away. This group, for good or evil, will likely spend their initial pay raise. Others will recognize the advantages of savings and investment. There will be a whole new round of home refinancings. There will likely be a lot of interest in the actual cost of the federal government when consumers see their most recent contribution at the bottom of each retail receipt.
Since the FairTax plan is revenue neutral, the same amount of resources is extracted from the economy as is extracted under current law. These funds are, however, extracted in a less economically damaging way. Every known economic projection shows the economy doing better, often much better, under the FairTax.
Because the economy grows, is more efficient, and more productive, while investment, wages and consumption are higher than they are under the income tax.
28. What happens to interest rates? First, interest rates drop quickly by approximately one-quarter. Interest rates include compensation to the lender for the tax that they must pay on interest you pay them. That is why taxable bonds bear a higher interest rate than tax-exempt bonds. When the tax on interest is removed, interest rates will drop toward today’s tax-exempt rate.
Second, under the current system, savings and investments are taxed. Under the FairTax, savings and investments are not be taxed at all. As Americans save more money, the pool of funds in lending institutions grows. When you add to this the flood of capital currently trapped offshore, we realize a huge increase in the pool of capital, thereby causing the cost of borrowing funds to drop.
29. What happens to the stock market, mutual funds, and retirement funds? Investors prosper greatly under this plan, since corporations face lower operating costs and individuals have more money to save and invest. The reform significantly enhances the retirement savings and/or retirement spending power of most Americans.
30. What happens to tax-free bonds? Tax-free bonds are still tax-free, though they are now directly competitive with corporate bonds. Under the FairTax equities, treasuries, bonds, and other investments are all tax-free. There is a one-time windfall in non-callable instruments, such as corporate bonds; this windfall also has a positive effect on callable instruments with some time remaining to the call date, including treasuries.
31. How does this affect U.S. competitiveness in foreign trade? Since all U.S. exporters immediately see an average 20-percent reduction in their production costs, they experience an immediate boost in their competitiveness overseas. American companies doing business internationally are able to sell their goods at lower prices but similar margins, and this brings jobs to America. In addition, U.S. companies with investments or plants abroad will bring home overseas profits without the penalty of paying income taxes, thus resulting in more U.S. capital investment. And at last, imports and domestic production are on a level playing field. Exported goods are not subject to the FairTax, since they are not consumed in the U.S.; but imported goods sold in the U.S. are subject to the FairTax because these products are consumed domestically.
32. What about border issues? It is unlikely that “shopping across the border” in Canada or Mexico will result in any cost savings to the consumer. Remember, the FairTax is revenue neutral and therefore price neutral. This means the final cost of retail goods and services after the FairTax remains very close to the same levels found in the marketplace today. With regard to interstate competition, since all states have the same federal sales tax rate, the federal sales tax is not an incentive to cross state lines to avoid the tax.
33. Does the FairTax improve compliance and reduce evasion when compared to the current income tax? The old aphorism that nothing is certain except death and taxes should be modified to include tax evasion. Tax evasion is chronic under any system so complex as to be incomprehensible. As a percentage of gross domestic product (GDP), tax evasion is beyond 2.0 percent, compared to 1.6 percent in 1991. Tax evasion continues to be in the range of one quarter of income taxes collected. Almost 40 percent of the public, according to the IRS, is out of compliance with the present tax system, mostly unintentionally due to the enormous complexity of the present system. These IRS figures do not include taxes lost on illegal sources of income with a criminal economy estimated at a trillion dollars. All this, despite a major enforcement effort and assessment of tens of millions of civil penalties on American taxpayers in an effort to force compliance with the tax system. Disrespect for the tax system and the law has reached dangerous levels and makes a system based on taxpayer self-assessment less and less viable.
The FairTax reduces rather than increases the problem of tax evasion. The increased fairness, transparency, and legitimacy of the system will induce more compliance. The roughly 90-percent reduction in filers enables tax administrators more narrowly and effectively to address non-compliance and increases the likelihood of tax evasion discovery. The relative simplicity of the FairTax promotes compliance. Businesses need answer only one question to determine the tax due: How much was sold to consumers? Finally, because tax rates decrease, tax evasion is less profitable; and because of the dramatic reduction in the number of tax filers, tax evaders are be more easily monitored and caught under the FairTax system.
34. Can the FairTax really be passed into law? Do women have the right to vote in this country? Did we pass Prohibition? Did we repeal it? Do Blacks enjoy freedoms far beyond the lunch counter and mass transit? Do free-market economies dominate Eastern Europe, peoples once under the boot of communism? All these were grassroots efforts that effected significant changes in our nation and the world. Is the current income tax system any less a yoke around the necks of otherwise free peoples? We think not. Passing the original 16th Amendment and the income tax wasn’t easy and repealing the income tax and the 16th Amendment won’t be easy either. That is why the FairTax has undertaken to build a grassroots movement and grassroots alliances to support the effort. When enough people make it clear to Washington that they want change, it will happen. But it will only happen if the American people rally behind the effort, throw off the yoke, and demand a redress of wrongs.
35. What other significant economies use such a tax plan? Two of the largest economies in the world rely almost solely on sales taxes: Florida and Texas. Many civilizations in history have relied solely on transaction-based consumption taxes: A percentage of a grain shipment in exchange for a safe harbor. Even a cursory study of history shows that nation/states that relied on consumption taxes flourished and prospered, supported democracies/republics, had expanding economies, and high levels of civil rights for their citizens. The exact opposite is true for empires that relied on income/poll/head taxes. These taxes were used to support despots, eventually collapsed the economies in which they were applied, and sundered civil rights. The sales tax is a familiar tax, being a major source of revenue in 45 states and the District of Columbia. It is true, however, that no post-industrial nation, until now, has ever repealed its income tax and replaced it with a federal retail sales tax. However, England did repeal its detested income tax upon the defeat of Napoleon and enjoyed the fastest, longest expansion of its economy in its long history. An expansion that ended only with the – you guessed it – re-imposition of an income tax. No other country has a system of government like ours, and no other country has led the world in so many fields as ours. It was France and Germany that forced the imposition of a VAT in addition to income taxes across the European Community. Shall we follow France’s lead? In contrast, we can observe the Irish Miracle that stems from their refusal to join the EC and their choice to follow their own path on taxation. Thus, we should simply strive to have the best tax system, period.
36. What about the flat tax? Would it be better and easier to pass? The flat tax and the FairTax share some important similarities. They are both flat-rate taxes that are neutral with respect to savings and investment. The flat tax, however, retains the invasive income tax administration apparatus and can easily revert to a graduated, convoluted mess, as it has many times over many years. Very few people really understand the flat tax. Its authors will tell you it is a consumption tax that uses the income tax system for implementation. Only an academic or government bureaucrat would dream up a consumption tax that needs the invasive income tax apparatus for its application, when one can simply have a retail sales tax and reduce the bureaucracy by 90 percent or more! In addition, a large part of the burden of the flat tax – the business tax – will remain hidden from people in the retail price of goods and services. In contrast, the FairTax is simple, easy to understand, and visible. It cannot be converted into an income tax.
Under a flat tax, individuals would still file an income tax return each year similar to today’s 1040 EZ. While this is a simple postcard, the record keeping required to fill in the blanks is still long and burdensome. Under the FairTax, individuals would never file a tax return again, ever! Under the flat tax, the payroll tax would be retained and income tax withholding would still be with us. Under the FairTax, the payroll tax, which is a larger and more regressive tax burden for most Americans than is the income tax, would be repealed. Under the FairTax, what you earn is what you keep. No more with-holding taxes; no more income tax.
Notwithstanding flat tax proponents’ honorable intentions, income tax reform has been less than a success in the past. Congress has tried to reform the income tax again and again, with the result being greater complexity and, generally, higher rates. The problem is the income tax, and it is time to stop tinkering with it. Flat tax supporters have made major political attempts to pass their reform, including the efforts of former Majority Leader Dick Armey and presidential candidate Steve Forbes, and yet, their efforts have not progressed politically for several years. With every debate, the flat tax loses grassroots and congressional support to the FairTax. It is time to junk the entire income tax system and start over with a tax system that is more appropriate for a free society and better able to meet the needs of the information age.
37. Can Congress just simply raise the rate once the FairTax is passed into law? Yes, of course Congress can raise the FairTax rate just as it could raise the flat tax rate or can and does raise the income tax rate. And if we in the grassroots allow them to do it, shame on us! However, the FairTax is highly visible. And because there is only one tax rate, it will be very hard for Congress to adopt the typical divide-and-conquer, hide-and-disguise, strategy employed today to ratchet up the burden gradually, by manipulating the income tax code. Ultimately, the tax rate will be dictated by the size of government. If government gets larger, higher tax rates will be required. If government shrinks relative to the economy, then the tax rate will fall. Federalist 21, by Alexander Hamilton, is a great read on the futility of government raising a consumption tax too high, and thus reducing revenues.
38. Could we end up with both the FairTax and an income tax? No current supporter of the FairTax would support the FairTax unless the entire income tax is repealed. Moreover, concurrent with the repeal of the income tax, a constitutional amendment repealing the 16th Amendment and prohibiting an income tax will be pushed through Congress for ratification by the states.
39. Is the FairTax just another conservative tax scheme? Or just another liberal tax scheme? The FairTax has non-partisan support from people in all walks of life. From both major parties and several third parties. Its supporters need only have one common belief: That it is a fairer, simpler, more efficient way to raise federal revenue. The FairTax delivers these benefits to all American people and more. More government accountability for taxpayer dollars, a tax system that is less susceptible to being manipulated by special interests, a tax system that will make it easier – not harder – for the average person to get ahead, and perhaps most importantly, a tax system that provides real, honest, and transparent tax relief for those who need it most.
40. What assumptions have been made about government spending? The FairTax plan is devised to be revenue neutral for the first year of operation. It raises the same amount of revenue as is raised by current law. After the first year, revenue is expected to rise because of the growth generated by this plan. At that time the American people, the Congress, and the President will have to decide whether to lower the tax rate, or to spend the additional revenue.
41. How does the FairTax affect government spending? The public must remain vigilant to ensure that the economic gains caused by the FairTax benefit the people and the causes they deem worthy. However, it is easier to determine if your elected representatives are acting in your best interest. Legislators can more easily be held accountable for their decisions. For the first time in decades, it is simple to see whether a politician is advocating an increase in taxes or a restraint on government spending as the economic pie gets bigger. This is not the case today.
42. Why is it necessary to have a constitutional amendment? It is not the intention of this plan, or the desire of the American people, to end up with both a federal income tax and a federal sales tax. The objective is to ensure that one is replaced by the other, not added on top of the other. By repealing the 16th Amendment, we close the door on an income tax for generations to come.
43. How does the income tax affect our economy? How does dragging an anchor affect the speed of a ship? Our entire economy is not dependent on the income tax. Instead our economy is held back by the income tax. There was no income tax for the first 124 years of our history – that’s more than half the time we have existed as a nation. Under the FairTax, within ten years, average Americans will be at least 10 percent and probably 15 percent better off than they would be under the current system. That translates to an increase of $3,000 to $4,500 per household, per year.
44. How will this plan affect compliance costs? It is estimated that Americans spend at least $250 billion a year to comply with the tax code – that’s $850 for every man, woman, and child in America. That is the cost of three Iraq wars. Billions of dollars in compliance costs are wasted each year, and we have nothing of value to show for this expenditure – not one single productive service or product is added to our nation’s wealth. It is estimated that the FairTax dramatically cuts such compliance costs, perhaps as much as 95 percent.
45. What about value-added taxes (VATs), like they have in Europe and Canada? Are they not consumption taxes? While VATs are also consumption taxes, and better than income taxes, the FairTax is not a VAT. A VAT works very differently. It taxes every stage of production. It is much more complex, and is typically hidden from the retail consumer. Second, in industrialized countries that have a VAT, it coexists with high-rate income tax, payroll and many other taxes that, in some instances, have led to marginal tax rates as high as 70 percent. Third, all other industrialized countries, except Australia and Japan, have a much larger tax burden than the U.S., which requires higher rates and makes tax administration much more difficult. Lastly, a VAT is a lobbyist’s dream, allowing them to install their loopholes unbeknownst to the retail purchaser. A retail sales tax, in contrast, is a lobbyist’s nightmare, applied as it is under the bright lights of the retail counter.
46. What will we experience in the transition from the income tax to the FairTax? Everyone will have to think about taxes in a different way. Income – what we earn – will no longer have to be documented, measured and kept-track-of for tax purposes. The only relevant measure of our tax liability will be the amount we choose to spend on final, discretionary consumption. Tax-related issues will suddenly be a lot simpler and more straightforward than they used to be. The aggravation and anxiety associated with “April 15th ” will disappear forever after passage of the FairTax. The FairTax is not new; most Americans come into contact with such taxes daily, since 45 states currently use them to collect state revenues. It is easier to switch from an income tax to the FairTax system than it is to switch from gallons to liters, or from feet to meters! Of course, those who depend on the structure and complexity of our current system (e.g., tax lobbyists, tax preparers, and tax shelter promoters) will have to find more productive economic pursuits. However, everyone will have enough advance notice to adjust to the new system. Job creation will boom. Residential real estate will boom. Financial services will boom. Exports will boom. Retail will prosper. Farming and ranching will prosper. Churches and charities will prosper. Civil liberties will be enhanced. In short, it is difficult to imagine the far-reaching, positive effects of this change. Though this tax policy is exactly what our Founding Fathers counseled us to do with the Federalist Papers and the Constitution.
47. I know the FairTax rate is 23 percent when compared to current income taxes. What will the rate of the sales tax be at the retail counter? 30 percent. This issue is often confusing, so we explain more here. When income tax rates are quoted, economists call that a tax-inclusive quote: “I paid 23 percent last year.” If that were the case, for $100 one earned, $23 went to Uncle Sam. Or, “I had to make $130 to have $100 to spend.” That’s a 23-percent tax-inclusive rate. We choose to compare the FairTax to income taxes, quoting the rate the same way, because the FairTax replaces such taxes. That rate is 23 percent.

Sales taxes, on the other hand, are generally quoted tax-exclusive: “I bought a $77 shirt and had to pay that same $23 in sales tax. This is a 30-percent sales tax.” Or, “I spent a dollar, 77¢ for the product and 23¢ in tax.” This rate, when programmed into a point-of-purchase terminal, is 30 percent. Note that no matter which way it is quoted, the amount of tax is the same. Under an income tax rate of 23 percent, you have to earn $130 to spend $100. Spend that same $100 under a sales tax, you pay that same $30, and the rate is quoted as 30 percent.
Perhaps the biggest difference between the two is under the income tax, controlling the amount of tax you pay is a complex nightmare. Under the FairTax, you may simply choose not to spend, or to spend less.



48. Is the FairTax progressive? Do the rich pay more and the poor pay less as a percentage of their spending? Absolutely, as you can see in Figure 4 below – where the graph shows annual expenditures for a family of four and the corresponding FairTax effective tax rates. The poor actually pay less than zero-percent retail sales tax on their spending. Much like with the earned income tax credit of today, the rebate may give them more money than they actually spend on retail taxes. Especially if they are frugal and buy mostly used products. On the other hand, the wealthy approach a maximum of 23-percent retail sales tax on their spending.
Figure 4: Annual expenditures vs. FairTax effective tax rates, for a family of four

What is the FairTax? The FairTax is a non-partisan proposal (HR 25/S 1493) that abolishes all federal income taxes, including personal, estate, gift, capital gains, alternative minimum, corporate, Social Security, other payroll, and self-employment taxes, and replaces them all with one simple, visible, federal retail sales tax. The FairTax dramatically changes the basis for taxation by eliminating the root of the problem: Taxing income. The FairTax taxes us only on what we choose to spend, not on what we earn. It does not raise any more or less revenue; it is designed to be revenue neutral. The FairTax is a fair, efficient, and intelligent solution to the frustration and inequity of our current tax system.

What is FairTax.org?
FairTax.org is a non-profit, non-partisan, grassroots organization dedicated to replacing the current tax. The organization has hundreds of thousands of members and volunteers nationwide. Its plan supports sound economic research, education of citizens and community leaders, and grassroots mobilization efforts. For more information visit the web page, www.fairtax.org , or call 1-800-FAIRTAX.

2 Korves, Ross; senior economist, “An Economic View of the FairTax Proposal,” American Farm Bureau Federation, December 1, 2003
FairTax Income tax
Expenditures = income $40,000 $40,000
Net tax $4,917 $6,005
Effective tax rate 12.3% 15.0%

Quoting a tax-inclusive rate vs. quoting a tax-exclusive rate
The rates are stated differently, but the taxes you pay are identical.
Income taxes are quoted tax-inclusive.

Your income Gov’t
You earn You keep tax rate keeps
$100 $77 23% $23
Sales taxes are quoted tax-exclusive.
Choose to FairTax Gov’t
You earn You keep spend rate gets
$100 $100 $77 30% $23

Richard,

I read every word of your “mini-book”, I also read everything the “fairtax ?” had posted there.

It still screws over the poor.

A little. I drive on roads and served in the military
I’m no fan of corporate welfare, it ranks right up there with the govt spending tax money to encourage teen sex, enable drug abuse, encourage unemployment, promote race discrimination etc…
Ever hear of those things?

Good we are on the same page there. Just to be clear though all the social programs you are against didn’t come close to defense spending. As a matter of fact they are a drop in the bucket. Our little war now cost us more than those programs. But thanks for pointing out all the things I didn’t realize the government spent money on. I wonder why they want all those negative things to go on in our society. It’s really surprising to me that after controling both congress and the white house for 5 1/2 years the republicans have managed to continue to support such evil goals. BTW I was also in the military. It’s not just for conservatives anymore.

“A flat tax would be a reward from the current system.”

Yes it would. And if it treated everybody as equals, it work better.

Tell me that when you are paying more than you are now in taxes. Unless of corse you are one of those in the top 5%.

Talk about lumping.
How many of these evil neocons that you know so much about, support RvW? gay marriage? or that Iraq was wrong? and who is an atheist?

I’m not sure if it is sarcasm or you actually mean some neocons do all those things. As far as Iraq goes it always surprises me when military guys support it. Except those who date back to Vietnam that is.
I thought you might appreciate the consequenses of your words better if I used them as you did. After all you started the mud slinging. Can’t handle it when it’s thrown back? I know as much about the neocons as you know about the liberals. If you wish others not to lump you into that group refrane from using it yourself.

“Perhaps you should use a dictionary for words you don’t understand.”

Whats a dictionary? God I wish there was a book to tell me what words mean.

I thought that might be the case. That’s why I told you what it was.

“Obviously someone born into a rich family is not equal to one born in poverty.”

Bull. It is up to the individual if they succeed or not. Anything else is just an excuse.

Really? It is just as easy for someone born into poverty to be presedent as someone born into the upperclass? I have beachfront property in Montana you might be interested in. I do agree it shouldn&