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10 Pros and Cons of the Fair Tax

January 29th, 2009

The idea behind the fair tax is to eliminate the federal income tax and replace it with a national sales tax. There are some strong opinions on both sides of the fair tax issue so I thought I’d share a few of the pros and cons. It is not a flat tax, though I think that would be more fair than our current system as well.

1. Pro: The fair tax is much easier to understand than the current convoluted tax income tax system. When an entire industry (tax accountants) has been created to understand paying taxes, there is a problem. The picture below is Representative John Linder holding the 132 page Fair Tax Act in contrast to over 60,000 pages of U.S. tax code.

2. Con: That industry would be completely destroyed, and many jobs in the IRS would be lost. There would still be jobs to work on taking in the money, but many less than what is needed currently.

3. Pro: Transparency. Transparency in government is always a good thing. With over 60,000 pages in the current tax code, most people have no idea what is in it. What happens is the people who have more money pay accountants to find loop holes that get them out of paying taxes. Poorer people can’t afford the accountant so they just end up paying the base rate. With the fair tax it is easy to see that everyone pays the same rate on the things they buy.

4. Con: The sales tax would have to be pretty high to stay revenue neutral, i.e. bring in the same revenue for government as the current system. The bill that is currently in Congress is at 30% and independent groups have said the number is probably closer to 34%. This is a pretty large amount of money added to each thing we buy. This is especially true when you think of big ticket items. A $20,000 car suddenly cost $26,000. For somebody who has been saving under the current tax code, this would be a hard hit.

5. Pro: With a national sales tax, there would no longer be a tax on investments. This would obviously be really great for the stock market. There would be a lot of money that would come in from the sidelines and help turn the markets around. It would also encourage venture capital to invest in entrepreneurs to help fuel the American dream. Many jobs could be created with this new influx of capital.

6: Con: Along the same lines as number 4, the large sales tax would discourage people from buying things. Our economy is very heavily dependent on consumers, and a large sales tax would probably make some people spend less on things, save more, and pay off debt. Now, personally I would take almost all of that as a pro. In the long term it would be a benefit, with more people out of debt they could really stimulate the economy as opposed to spending money they don’t have which got us into the current mess. However, in the short term reducing consumer spending could have some impact, and this is an argument anyone against the fair tax will probably give.

7: Pro: The fair tax would hopefully increase productivity in our country. Currently, we have an income tax that gets progressively more burdensome the more money you make. This reduces the incentive to work harder and be productive the higher you move up the ladder. Taxing consumption makes a lot more sense than taxing production.

8: Con: The fair tax increases entitlements. From Wikipedia:

Under the FairTax, family households of lawful U.S. residents would receive a “Family Consumption Allowance” (FCA) based on family size (regardless of income) that is equal to the estimated total FairTax paid on poverty level spending according to the poverty guidelines published by the U.S. Department of Health and Human Services … Opponents of the plan criticize this tax rebate due to its costs. Economists at the Beacon Hill Institute estimated the overall rebate cost to be $489 billion (assuming 100 percent participation). In addition, economist Bruce Bartlett has argued that the rebate would create a large opportunity for fraud, treats children disparately, and would constitute a welfare payment regardless of need.

9. Pro: A huge pro of the fair tax is it would significantly broaden the tax base. Illegal activity (such as selling drugs) that creates large amounts of income would now get taxed. Under the current system we just get lots of rich drug dealers. Under this system they now get taxed every time they buy something. Along the same lines, this would also tax illegal immigrants. This would go a long way towards solving the illegal immigration problem.

10. Con: Opponents of the fair tax claim it could create an underground economy of people trying to evade taxes. Under a sales tax, intermediate goods that are a part of production would not be taxed. This creates potential for businesses to claim something is an intermediate good when really it is the end product that should be taxed. This would however constitute evasion and the bookkeeping that would be mandated for businesses should prevent most of this.

Overall I think the pros significantly outweigh the cons for the fair tax. I think the idea of taxing consumption instead of production makes a lot of sense, and taxing illegal activities and illegal immigrants sounds great to me. However, nothing here can solve the real problem that we have. The thing that needs changed is the out of control spending habits of our government. Until that is curbed, how we pay taxes isn’t the big issue.

Let me know if you support the fair tax or not and why in the comments below.

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  1. Steve Keller
    January 29th, 2009 at 07:08 | #1

    I hope President-elect Obama has taken the time to really study H.R. 25 the FairTax bill. I know for some strange reason this has become a partisan bill. This bill will help all Americans not just Republicans. I’m a Democrat and I’m sure it will help our family. With the state our economy is in, President-elect Obama should give this bill some real consideration. Talk about a stimulus package; everyone receives their gross paycheck and a prebate “stimulus” check at the beginning of each month. A family of four would receive over $500 at the beginning of each month. This alone will pay a huge portion of their mortgage payment, thus preventing many, would be foreclosures. Honest taxpaying Americans are getting tired of making up the revenue that is lost because of the huge group of people living in our country who don’t contribute one dime to support our Federal Government.

  2. January 29th, 2009 at 10:32 | #2

    I would consider #2 a “pro”. While H&R block would have to change it’s focus (and they could diversify into money management) I wouldn’t mind seeing the IRS being slashed back to a tiny fraction of it’s current size. Yeah, people would lose cushy government jobs, but people lose jobs every day and the world keeps on turning. Reducing the size of government is far more important in my opinion.

  3. Peter
    January 29th, 2009 at 22:52 | #3

    I am sorry to say but many of your Con’s are inaccurate.
    #2 not that big of a deal, there are not that many people working in that industry compared to the benefits that would be brought by the fairtax being inacted, including much more money coming back to the states to be invested because there are no taxes on investements nor doing business.
    #4/6 the tax would not be 30% unless you look at it as a exclusive tax, being proposed currently is an inclusive tax, you see is has been studied that their is roughly 22% of embeded taxes in all goods and services already because of business taxes, compliance costs and taxes in the supply chain. When you inact the fairtax those taxes of 22% will reduce the cost of the goods and services due to competition. So a $100 dollar coat now costs $78, add $22 of taxes and being inclusive that coat is still $100 and $22 of $100 is 22% inclusively. Exclusivly is appears to be 30%. Also at the same time though everyone is taking home their full paycheck as opposed to only 75%. This ends up meaning you take home 25% more or all of your paycheck and your goods and services costs the same. This would result in the ability to buy more goods. People would spend more, businesses would come home to the states because they aren’t being taxed and therefore more jobs being available.
    #8 Entitlements would not be increased already no one is taxed on income up to the poverty line. In fact this would encourage people to work more because if they work harder and make more money they keep it. They can buy 2nd hand and not paying taxes and save easier. The 489 billion is already lost due to the fact that we don’t collect taxes on the wages up to the poverty level. Also plz don’t use wikipedia for quotes.
    #10 taxes will be collected from roughly 22 million businesses rather then 158 million people and business which means tax evasion should be less because companies have much more at stake as opposed to an individual, there are less points to keep track of and a business has little to gain but alot to risk with high penalties for not paying taxes.

    Plz take these points into consideration and spread the word. It is very easy to misunderstand the fairtax theory and misrepresent it as its opposition does often. But it remains the best idea for our country. Plz visit http://www.fairtax.org for more info and possibly pick up the fairtax book.

    PS - #9 is huge. Broadening the tax base will healp keep SS and Medicare from going out of business. Also it’s fair, it gets everyone to pay up while providing the poor with enough to compensate for the taxes they would have to pay for necessary goods and services. All this while the payments out only go to legal US citizen. More people paying in less people taking out. Its the only sustainable solution to our unsustainable mess.

  4. Peter
    January 29th, 2009 at 22:56 | #4

    Just read your about the blog and just want to say I hope you dont take my previous message as rude. Nice to see other young people interested in our economy, now if only we could get these idiots out of congress.

  5. January 29th, 2009 at 23:10 | #5

    @Peter, I mostly agree with your analysis. If you note in some of my comments I say that these are arguments that opponents of the fair tax will try to use. I am personally in favor of the fair tax, but I am trying to present both sides of the issue.
    Also, they may not actually be huge cons, they are not inaccurate. I was looking at it as an exclusive tax because that is generally how people are used to seeing a sales tax. It is easier for people to understand it that way.

  6. Tkrop
    January 30th, 2009 at 10:12 | #6

    Quoting the FairTax on an exclusive manner may be easier for people to understand but it is incorrect unless you show the current income tax rates on an exclusive basis. Otherwise this gives a false impression of the FairTax. It replaces the income tax so therefore should be quoted the same way.

    The FairTax is not added ontop of the price of goods.
    Lastly, many current IRS workers would be transfered to the S.S. Dept. to handle the prebate checks. This would be a much more constructive job for them.

  7. February 1st, 2009 at 15:56 | #7

    I not only support FairTax but I am trying to get others to support Fair Tax as well.
    You claim that on some of your Con’s and you are not correct. As in Con #4, It is not 30% to 34% on Consumption Tax is not true at all . Economist have studied this and the tax on New Consumption will be at 23%. So an American car like Ford would be competitive with foreign car like Toyota which would cost much more, Therefore a Ford would be competitive overseas Market as well creating jobs here in American not in a Toyota factory.

    You also will get a “prebate” every month so to help the poor at or below poverty level based on SS # if you don’t have a SS# you will not be getting a “prebate”. Even if you are not working you still pay taxes not collection from those who are working like today.There for every one who is not a citizen will not get a “prebate” and still will have to pay taxes. So your claim to Con# 8 is not true either.

    Do not be worry about IRS workers, Instead of wasting about $300,000 billion in trying to collect your taxes and find a way to to “catch” people cheating on the taxation which consisted of 67,000 pages of a Income Tax Code that the IRS can not understand and even Congress has published it does not understand.

    It has been studied by Economist that if FairTax was implemented that $ 13 Trillion in foreign banks that is ‘hidden” from the IRS to avoided the taxation of this country government would in MONTHS would start to flow back into our country’s economy. Yes $ 13 Trillion would pay off the national debt as it stands today and another saving of $ 300,000 from downsizing the government by abolishing the IRS. Therefore this will cause our Corporations and small companies to return creating more jobs and trust me plenty of work with more jobs than American worker including IRS who loss their job. IRS job that WAS trying to “catch’ you cheating.. I am happy to tell you all this is your stimulus package your government is looking for it’s under their noise. FairTax is the most studies Taxation in the world by many economist and all agreed it is the only taxation to be progressive to create not destroy an economy.

    Fair Tax IS NOT Flat Tax! Flat Tax is another way to be call Income Taxation the same thing we have today. Please do not let anyone tell you different! If Flat Tax is implemented it would revert back to Income Taxation is a few years thus keeping what we have today.
    Fair Tax is the only answer to stimulate the country economy and make every American live their American Dream life again.
    Please ask yourself to check our FairTax on http://www.fairtax.org it is worth you time.
    Thank you
    Charlie Prochaska
    Leesburg Ga

  8. It’s a tax increase for me
    February 19th, 2009 at 15:38 | #8

    I’ve read a number of articles on the so called “fair tax” and it seems to me that there is an aggresive and vocal minority putting the most optimistic spin on a plan that would actually amount to a tax INCREASE for anyone making $25,000 to $1,000,000. That’s me and almost everyone I know. Also, it doesn’t address current deficit spending and where Clinton did balance budgets - Pres. Bush reversed course which makes this all the harder to implement. Deficit spending is not going away under Pres. Obama either. Then you have the expansion of taxable goods and services which would include rent, legal fees, utilities, Doctor bills, etc. under the fair tax’s proposed 100% base. Tough sale.

    It’s an interesting theory that I was initially in favor of but upon further inspection it’s a free lunch for the poor and a handout to the super rich - all of whom will be able to live tax free as a percentage of their income. Also, never underestimate the ability of citizens to avoid paying taxes! Eventually people will end up paying a higher sales tax rate to make up for the shortfalls in avoided taxes and optimistic spending projections that may not occur. Given the roller coaster ride the nation has been on a the fuel pump in the last 12 months the pain at the pump would’ve been made worse by the massive tax increase the fair tax would impose on consumers. There is too much instabity in the market for the fair tax to work. I think for any fair tax plan to really work it would still need to include some income tax for the highest incomes and some market controls that most would rightly oppose out of principle. Like the saying goes, if it sounds too good to be true it probably is.

  9. February 24th, 2009 at 15:48 | #9

    I support the “Fair Tax Act of 2009″ because I believe that it is not only fair but the best course for everyone. The current system of taxation unduly taxes the middle and lower income wage earners. This burdens the “free capitalism” economic system that we have, forcing the U.S. Government to intervene at inopportune times with terrible repercussions. The WAGE tax not only taxes the individual, but also creates a barrier to business expansion by reducing revenue that could be used to hire more employees, about 10 to 15% more employees, in my estimation. This alone would stimulate the economy more than the stimulus packages already passed. And look at the savings. 23 – 27 percent increase in state sales tax, for most people, will balance with a 20 – 30 percent reduction in IRS taxes. However, don’t overlook that the estate and gift taxes will be repealed. For those who are savers, this will allow you to save and invest that much more.

  10. March 24th, 2009 at 15:28 | #10

    I do not support the so called fair tax, I am now retired and do not pay too much taxes these days, but the lord knows I paid more then my share over the years,and I do not think it would be fair now for me to pay extreme taxes on things I want and need, no it is not fair, to me and my wife at all, please dont come back with the little you get returned, ti wouldnt help much, and the only thing I would have is I would not be able to buy any extras or very few, no thanks, it is not fair especially to the old folks like myself

  11. andrew
    March 26th, 2009 at 14:56 | #11

    No disrespect intended to Jimmy, but his view is part of the problem. Holding on to an out of date unfair practice because the “Old People” have done it this way and it would not be fair to them now is just silly. The Fair Tax benefits all individuals and business alike. We need to get past this like minded “old people” in congresses that are unwilling to branch out to something new because it’s not how our dads did it. Is the Status quo the best we can do? Jimmy, what about your Kids, Grandkids, Great Grand Kids? Don’t they deserve better? Fight for the Fair Tax act.

  12. Mark
    March 30th, 2009 at 15:35 | #12

    Another con I have heard: businesses will have the burden of collecting the national sales tax and reporting/submitting it, which is an expense they will shoulder for the rest of us
    Solution: Allow them to keep a small portion to cover their expenses.

    However, I suspect that this burden compared to filing under the current system will be less expensive anyway.

  13. Mark
    March 30th, 2009 at 16:01 | #13

    I believe that National Security is the #1 reason to support the fair tax. Our current system puts domestic business and production at such a disadvantage vs. China, India, etc that we have largely lost our industrial base and we are now losing our service base AND white collar jobs. Some estimate that we will lose 40,000,000 more jobs (yes, that’s million). In 2008, IBM cut 6000 US jobs and added 18000 in India. A March 09 WSJ article says, “IBM plans to lay off about 5,000 U.S. employees, with many of the jobs being transferred to India, according to people familiar with the situation.” http://online.wsj.com/article/SB123799610031239341.html

    We can debate how adopting the fair tax will affect you or me or the rich or the poor or the working or the retired, but unless we level the playing field for US production vs. China and India, we will all be living out a slow economic suicide. Patriotism and pragmatism demands that we find a better way — soon.

    The best description I have seen of where we are headed without change is in the book, “The War for Wealth” by Gabor Steingart. The front cover quote of Dr. Henry Kissenger reads, “A lucid and compelling reality check.” Read this book, get a grip on where we are headed, THEN critique the fair tax.

  14. April 11th, 2009 at 21:16 | #14

    Jimmy, I would like you to reconsider your position on the fair tax. I have copied an excerpt from the fairtax.org website for you to read. I hope this helps change your mind. Please reconsider the facts.


    What about senior citizens, retired people, and anyone on a fixed income?

    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.

    Some erroneously believe that people who live exclusively on Social Security pay no taxes. They may not know it, but they are paying hidden corporate income taxes and employer payroll taxes whenever they buy anything. Under the FairTax, seniors pay $0.23 out of every dollar they choose to spend on new goods and services.

    Plus, seniors, like everyone else, receive a monthly prebate, in advance of purchases, for taxes paid on the cost of necessities which more than pays for all of the taxes they would pay if they received the average Social Security benefit amount and spent it all. If seniors choose to work, they are freed from regressive payroll taxes, the federal income tax on wages, and the compliance burdens associated with each. They pay no more hidden taxes on goods or services, and used goods are tax free. There is no income tax on their Social Security benefits.

    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 $12 trillion in 2004. 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 are not required to do so under 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.

  15. mike
    May 23rd, 2009 at 14:12 | #15

    @It’s a tax increase for me
    True, but considering we are already taxed at between 22 to 23% on our income (in my case weekly). This would go away to be replaced by a national sales tax. Lets not forget it also would abolish import taxes. Which would lower production costs, which in turn would mean lower over counter costs for goods.
    And one other good point alot of people miss is that now the 100 billion drug trade would be paying there fair share which is not possible under current taxation.

  16. mike
    May 23rd, 2009 at 14:20 | #16

    Jimmy did you vote for Obama? If you did he is the reason why your grandchildren and possible your great grandchildren will be paying for his new budget. Is that fair to them? Besides there are provisions in the fair tax for people on fixed incomes its called a prebate check.

  17. Eric
    May 26th, 2009 at 00:01 | #17

    I agree, the pros far outweigh the cons. However, one issue that is not even addressed in this analysis is the 13 trillion dollars worth of outsourced revenue that would be attracted back to the US. And that’s just the beginning. As stated in the article, the fair tax is levied on consumption, rather than production. Therefore, Con #4 is completely bogus. Upon enaction of the fair tax, we would not only recoup the money that is now being spent to feed the economies of countries overseas, not all of them friendly to us, but we would have other countries bringing their businesses here, simply because it would make so much more sense for them to do so on their bottom line. When that happens, there will be more work to be done than people available to do it, which would actually mean a job for everyone who wants to work. Really, has anyone even considered what it would be like to have an unemployment rating on the negative side of zero? That would certainly raise the wages of American workers my leaps and bounds. Of course, there are those who are unable to work, or just don’t want to. That’s a consideration, but the potential influx of revenue to our economy, when you think of all the sources this would present, is staggering! Our economy would once again be the giant it once was, and, once again, the envy of the world. (with exception of the third world dictatorships whose nations have always been, and will always be in economic ruin.) But even they would be making secret investments in our economy, and denying it at every turn. Fair tax now, abolish the IRS. It’s time to turn this nation around, for the better, for a change.

  18. Charlie Reed
    June 11th, 2009 at 09:08 | #18

    What about tourists visiting the U.S.? Subjecting them to this tax is unfair, essentially a massive tariff, and once the word gets out about how expensive it is to visit, nobody will come. This will drive us to create tax exempt cards for tourists, but then these would be counterfeited.

    Or maybe tourists save receipts and get reimbursed on the way out.

  19. Charlie Reed
    June 11th, 2009 at 09:13 | #19


    Um, my children and grandchildren will be paying for Bush’s war. Obama’s additions account for 7% of the current deficit, whereas Bush took an $800 billion surplus and inverted it. Obama’s “bailouts” are to be repaid; Bush’s spending was waste.

    Finally, Bush raised spending and lowered tax revenue. What happens when you increase spending and lower income? Take some time to figure that out if you must. When Obama increases taxes, as he certainly HAS to do before our creditors come calling, it will be to pay off Bush’s debt. Point your arrows toward the correct target and stop hamstringing the people who are trying to fix your broken country.

  20. June 11th, 2009 at 16:48 | #20

    While I agree that Bush spent way too much money, you need to look at facts a little bit. Bush took about a 200 billion surplus and turned it to a 400 billion deficit. Obama on the other hand is giving us an almost 2 TRILLION deficit this year.

    Bush did raise spending, but he did not lower tax revenue. He lowered taxes to help get us out of the recession he inherited, and tax revenues went up sharply due to the economic growth. When Kennedy lowered taxes in the 60’s, revenue went up. When Reagan lowered taxes in the 80’s, revenue went up. When Bush lowered taxes the government’s revenue went up. You should check your facts. The key is to stop the ridiculous spending on both sides of the aisle.

    Obama in no way HAS to increase taxes. Certainly not in the middle of a recession. It will only slow the recovery and because of this lower government revenue. Stop spending the money on things like healthcare that we don’t want, need, or can in any way afford.

  21. Scott Turner
    June 12th, 2009 at 10:18 | #21

    I agree with you Derek. What I think people are forgeting is how devistating 9/11 was on the economy. I also argree that spending Trillions of dollars of the American publics money is wrong and irresponsible. Something is really going wrong in the minds of some Americans. Common since will tell me at 26 years old that the government of the USA has no place running car companies and giving money to financial institutions. One of the big reasons these companies are having such a hard time is the fact of too much government regulation unfair trade policies.

  22. John Beam
    June 16th, 2009 at 20:26 | #22

    I am sure that I am not the first to point this out, but whoever wrote this obviously does NOT understand how the fair tax works. It will not INCREASE the cost of ANYTHING we buy. The fair tax REPLACES the imbedded taxes ALREADY in everything we currently buy. So what costs you $100 before the fair tax will still cost $100 after the fair tax. So items #4 and #6 are incorrect.

    I encourage ALL to read the Fair Tax book and its follow up Answering the Critics, so that when you read articles like this one, you know whats true and what isn’t. GO FAIR TAX!

  23. June 16th, 2009 at 21:55 | #23

    @John Beam

    No, the fair tax replaces the income tax. Something that costs $100 before will cost $130ish after. But you will have a lot more money to spend so it isn’t much of a problem. The cost at the register most definitely will be higher though. I would like to add that I am very much a supporter of the fair tax.

  24. sycolowz
    July 9th, 2009 at 22:56 | #24

    i think this is a great idea and i never considered that everyone gets taxed citizen or not and the drug dealers to

  25. July 10th, 2009 at 11:10 | #25

    To the advocates of fair tax. Have any of you investigated why it took so long for us to get out of the Great Depression? The answer:
    the people who had money and could afford to spend it, did not!
    Since spending for all discretionary items would be totally optional,
    What makes you think they would necessarily spend large amounts so they would pay there fair share of taxes?
    What is wrong with a flat tax, no other tax but a complusory amount, less only a break for the lowest incomes.
    It would be removed by the giver and sent to the fed.
    Some said a nagative would be that it could revert to our current income tax method, wouldn’t that also apply to a fair tax?
    Also some claim drug money would be included with a fair tax, how do you know that drug cartel money is spent in the US?
    Also Russia and several other countries in eastern Europe are using the flat tax and love it. Big money people are suddenly paying their share.
    So it is a proven. Fair tax has not been proven.

  26. Ryan
    July 10th, 2009 at 11:32 | #26


    The basic cocept of a sales tax is well proven. Several of the united states have no state income tax and use a sales tax instead. I believe Texas, Florida, and Tennesee are among them.

    Fair Tax is a sales tax, not hard to do or prove.

  27. Marv
    August 13th, 2009 at 14:26 | #27

    @Derek Clark
    Actually, during Reagan’s tour tax revenues decreased by 1.2% of GDP according to the GAO. Bush did even worse 1.5% decrease. Tax revenues do sometimes increase but not always when taxes are lowered. It depends on the situation and what other events are taking place. The Fair Tax replaces many taxes already being collected.

  28. Ed Selander
    August 18th, 2009 at 19:54 | #28

    You’ve got it wrong. It is NOT a “sales tax” ADD ON as you imply. Since the tax which WAS paid formerly along the line to bring the product or service to availability has been removed and no longer has to be covered the COST of bringing the product or service to availability is less, so that when the Fair Tax is included the final price to the consumer will be the same as it was. Now if there is a separate STATE SALES TAX that is something else, but all federal tax, payroll tax, inheritance tax, etc will no longer exist for anyone. The Fair Tax is an included or embedded tax. See “The Fair Tax Book” and “FairTax:THETRUTH” (Both Neal Boortz/Linder) and read carefully and completely

  29. Ed Selander
    August 18th, 2009 at 20:32 | #29

    The message “It looks like you’ve already said that’, is incorrect. Nothing I have said appeared! Third try:
    Your number 4 and number 6 are misleading and incorrect. The Fair Tax is not an ADD ON “sales tax”. The Fair Tax is a tax included in the price to the consumer such that the price to the consumer is the SAME as it was before the Fair Tax. In bringing a product or service to availability all taxes along the line of bringing that product or service to the consumer must be included in that price. If ALL such federal taxes are removed and he Fair Tax then added as an included (embedded) tax then the overall price to the consumer will be the SAME (but now including the Fair Tax) as it was. The difference is that NO ONE pays ANY federal tax. (Now STATE SALES TAX etc may still exist)

  30. Hank Van Gieson
    September 27th, 2009 at 19:48 | #30

    Ed Selander,

    You seem to believe in the Fairtax myth that all embedded costs of the income tax system would be removed and, after adding the sales tax, retail prices would be about the same. This is just not true! Here’s why:

    First, you need to understand just what percentage cost savings can be made by eliminating the income tax and payroll contribution. The 1998 study by Dr Dale Jorgenson concluded that 22% in costs could be removed from the 35 business sectors he studied for AFFT. But he has readily admitted that he assumed that employee income tax withholding and the employee share of FICA would be available to businesses to reduce costs. In other words, he assumed that your gross pay would be reduced to your current net after withholding. A large gross pay cut for most of us, whether working or retired. Most experts agree that this isn’t going to happen for fairness and contractual reasons. So, what purely business tax costs can be removed?

    Using the 2007 data found in the Kotlikoff/BHI Fairtax rate study, with retail sales of $9.5 trillion, businesses paid $291 billion or 3% of sales in income taxes, $435 billion or 4.5% in FICA contributions, and $265 billion or 2.5% of sales in tax compliance costs. Add them up and businesses can reduce costs 10% on average, and after adding the 30% sales tax, prices have to rise by 17%. (1.00 x /9 x 1/30 = 1.17) Simple math. Prices are not going to remain the same. However, with take home pay increasing, and in view of the Fairtax prebate, “real” prices may be unchanged. Retirees who currently pay no income tax or payroll contributions would have only the prebate as added income, and could be adversely impacted by the Fairtax.

    By the way, you also seem to believe that cost savings cascade or accumulate up through the various levels of production. Dollar savings do accumulate, but percentage cost savings do not! It doesn’t matter if there is one level of production or ten, the percentage cost savings remains the same. And that percentage is 10% on average as discussed above. Percentage cost savings do not accumulate because the cost savings apply only to the value added at a particular level of production You can’t add them up!

  31. October 4th, 2009 at 17:10 | #31

    After reading all of the comments made it is obvious that we as Americans are mostly confused and poorly informed regarding the tax system. This is understandable since the tax code is 60,000 pages long. We also get fed misleading information about our government’s spending. This makes our ability to have intelligent informed conversations difficult. Personally, I would like to keep it simple. Fair tax offers me the opportunity to receive all of my earned income. That is a big bonus for me as I loose about 30% to the current system. The fair tax will not increase the amount paid at the register by 25-30% because the “hidden tax” will be removed. However even if I see an increase at the register, I will pay it with the satisfaction that everyone else is paying the same fair amount (those making money legally and illegally, immigrants and citizens). I am frustrated with seeing less and less of my earned income knowing that my money is being used to fund things that I do not support. Changing to the fair tax can give me another voice to the government. If I do not agree with what they are spending I can spend less thereby giving me the power to control there spending. The thought of it makes me smile.

  32. October 9th, 2009 at 23:43 | #32

    An awful lot of good points have been made in the above comments, and I would like to make a couple more. I am retired, but I still pick up a couple of odd carpenter jobs from time to time. Even though my SS earnings and my small auxillary income does not require that I pay income tax, I still have to ante up 15.3% of what I earn as self-employment tax. Pretty steep, in my opinion, and not necessarily fair. Also, I want to remind you that the 22% figure for the imbedded tax and the 23% figure for the Fairtax amount are the product of the study by the bevy of accountants, businessmen, statiticians, and others who originally conceived the Fairtax idea in the mid 90’s. The data still looked good in 2007, but it would certainly be easy to adjust if the need were there. I would like to go back to the $100 coat we were talking about. Under Fairtax, you would still pay $100; the retailer would remit the $23, minus about 58 cents handling fee (1/4 of 1%), to the government. Remember, you have done away with the embedded costs of $22, so there is about a dollar difference to quibble about. Don’t forget - if you are rich and spend a lot, you pay more taxes; if you are poor, you don’t spend as much and you pay less taxes. To a degree, you can choose the amount of taxes you want to pay.

  33. Bob
    November 23rd, 2009 at 08:40 | #33
  34. Robert Heiney
    February 5th, 2010 at 23:20 | #34

    As far as I’m concerned, the Con’s are minute compared to the many Pro’s. First of all. If the Fair Tax gets enacted, one of the Federal Taxes that disappears will be the Corporate tax. Doing away with this tax will make setting up manufacturing industry a no brainer, even for foreign corporations. It’ll bring back American built products. More Built in America, means more American jobs.

    Second. Who doesn’t want to take home almost every dime you work for, every dime of interest you earn, and every dollar of retirement saving you’ve saved up for all your life. Giving us more to spend, means more to buy, hyper-stimulating the consumer based economy.

    It means even the illegals pay some taxes. They have to eat and buy cars too. Right now, they don’t pay a dime, because they all get paid under the table with cash (which most of gets sent to Mexico). Why we don’t tax the crap out of money sent out of country to Mexico, is beyond me.

    The Fair Tax is a win, win for hard working Americans. As for the IRS and Tax preparers. Trust me, they’ll find new work elsewhere. Accountants will still be needed.

    Bring on HR25. Let’s Git R Done!

  35. February 6th, 2010 at 09:50 | #35

    I agree Robert. I think the cons are minimal compared to the potential benefits, I was just trying to point out what the other side has to say. I say we pass it tomorrow.

  36. Jimmy
    February 7th, 2010 at 02:06 | #36

    The only way to fairly charge tax is by sales taxes. Income tax can’t do it because not everyone will work. EVERYONE spends money on food, clothing, cars, gas, etc.. This way EVERYONE pays taxes, you don’t want to pay taxes, don’t eat. But since we live in the same city, receive the same services from the gov. on road repair protection from our armies in the same manner, The price for these services should be equal. I should pay not more or no less than you who live down the street. I should not be paying 3 times more than you because my income is higher. I now have an incentative to become better at work and increase my income. The percentage of the income will not pay my government funding benefits and yours. That should be our choice, and we can choose that when we decide to purchase items that will include a higher sales tax. Sign me up, I’ll vote on it tomorrow and tell everyone I know to do so also. How do I get the word out to others to help get the fair tax passed and working?

    Sighn me up now
    Jimmy Head

    Tell me how I can help get this done.

  37. Roger Biggs
    February 7th, 2010 at 11:20 | #37

    The fair tax isn’t progressive enough. Investments have to be taxed some how. you can’t expect the less investment incline of us (called them simple if you want, but they deserve fair policies too) to accept that the income a CEO makes on his dividends will no longer be taxed. The prebate is a limp cold fix-it-all in the currently proposed fairtax and while I don’t support it’s elimination, I don’t find it adequate in making the proposed system fair enough.

    Okay, now tell me how I don’t know the bill and haven’t read it, that’s fine. But if I’m ever going to support a national sales tax, there HAS to be 1: some sort of tax gradient (more tax as cost of purchase increases, effectively taxing those more “extravagant” consumers”) 2: taxation of capital gains and 3: taxation and tariff protecting and supporting American business and industry.

    The fairtax is called “bipartisan”, but when the vast majority of it’s supporters are R’s and some blue dog dem’s, I think the bill itself can stand to be a little more bipartisan. it’s not a poison pill, but fairtax proponent’s are, IMO, secret flat tax proponents with a wise idea. But a wise idea none the less.

  38. Tom Kaye
    February 11th, 2010 at 15:05 | #38

    Taxes on the rich will never be high enough for some people. I am by no means rich, nor has a poor person ever offered me a job. As far as an old person being against the FairTax I see two things. One like many others, he has not actually read up on the FairTax, and two he has no children or grand children or he just dosen’t give a damn about them or were this country is headed.

  39. Roger Biggs
    February 12th, 2010 at 11:09 | #39

    his stupid? compelling argument!

  40. Robert Heiney
    February 14th, 2010 at 12:56 | #40

    Look! It all comes down to this simple fact. Is it really fair to tax what you work so hard for to bring home every two weeks. That’s how simple this is. The income/payroll tax will only get larger and larger as costs of running a government keep going up. Until they’re taking more than 50% of “your” hard earned money. No one is saying that the FairTax is the final solution. It’s not. But it’s better than taxing income. Even at it’s inception, the tax rate of 24% is lower than the 28% you pay now through payroll deductions. There is no guarantee, of coarse, that millions of Americans will take their extra income and spend it, but I could certainly see it happening more with the FairTax, than when the Payroll tax goes up again.

    We are NEVER going to be free of higher taxes until hard working Americans tell their Congressmen/Senators to stop wasting our money on earmarks, pet projects and Pork. While we’re at it let’s outlaw lobbyists and political PAC’s. How about letting us, the tax payer, vote on Federal spending legislation. In this age of computerization, why do we even need a representative government anymore.

  41. kay
    February 15th, 2010 at 12:17 | #41

    I agree with you. Terrible idea! Would kill retail? Retail would take the
    brunt and then give a no sales tax discount - but increase their prices
    to cover. A real free ride for Welfare! Drug dealers and fraudsters would just find some other way to launder money.
    Illegal immigrants would not be subject to taxes as they would only buy
    food or none taxable items - they could get their other necessary consumer goods from their respective countries with no sales tax.
    The tax system is cumbersome and much to difficult but as I see it -
    Bush admin never went after the lawbreakers - Obama admin has actively
    pursued the fraudsters and brought back a healthy sum of money.
    opens the door to a supreme kleptocracy!
    sales tax

  42. Jack
    February 18th, 2010 at 14:18 | #42

    I like the fair tax for one major reason, it is tough to get earnings of all US and illegals taxed. However, all of these people must eat/buy goods to live in the USA. At least they would be included by fair tax. I am all for the concept of keep it simple with a straight tax method. All the reasons were discussed in the articles. The real question is can taxes be spent for the reasons collected and eliminate deficit spending. Everything from collecting wheel tax for roads but spending elsewhere to not having a funded budjet goal.

  43. Robert Heiney
    February 18th, 2010 at 19:50 | #43

    Yes, taxes can be spent with collected reasons, “if” we citizens of the capitalistic utopia, demand congress change our constitution to include a balanced budget amendment, and a Presidential line item veto. Until we, as the ultimate society of free people, demand our elected officials listen to us and not the lobby contingent, there will always be ways of screw this opportunity up.

    I say, let’s make April 15th just another spring day. Close down the IRS forever. Make lots of noise! I constantly write my political hacks to demand a fair vote on the FairTax.

  44. Seth
    March 7th, 2010 at 20:51 | #44

    I’m reading Fair Tax right now, so am very interested in this topic - what to do to fix our broken system and save our country from being foreclosed by foreign governments. I’m still working through the debate of whether to support this specific movement or not, but know something does have to change. As a 30something, I see our future retirement plans being delayed inevitably (if at all possible) because of the number of retirees we’ll each have to support with all the Baby Boomers reaching that age soon.

    The way I see it now, with my limited economic education, is we can either reduce government costs or have the govt make more money. Making more money would either be done by taxing everyone more or by getting new streams of income. For example, if drugs or prostitution were legalized federally, taxes could be collected and the problem could be fixed for now. To save money, the govt can either limit spending on programs (like not paying for any social security but still taxing people for it) or revamp a broken system thats in place now. Which route would be easier, more balanced, and provide faster results?

    We can’t keep the status quo in place. To keep doing the same thing and expect different results, as they say, is madness.

  45. justaminute
    March 8th, 2010 at 14:27 | #45

    A fair tax is simple and fair. A sales tax will decrease spending for the poor and middle classes and once again allow the Federal Government to meddle in our finances and our way of living. I thought this approach was exactly what conservatives didn’t want.

  46. justaminute
    March 8th, 2010 at 14:31 | #46

    correction: A FLAT TAX is simple and fair…not a Fair Tax.

  47. kc bach
    March 8th, 2010 at 22:34 | #47

    It sounds like a great idea and I have heard arguments that it can generate upwards of fifteen trillion dollars annually at twenty three percent. One thing to consider is the service industry which generates billions of dollars in unclaimed cash tips. I think there would be a major economic adjustment that would be considered by many to be negative but I think the long term benefits in the abolition of corruption and the taxing of under-the-table and black market dollars far outweighs any negative aspects of this concept. I think its the way to go. I just worry about the government figuring ways to abuse this system too. In addition, I think this kind of revenue could be a means to a great compromise between fair taxation and also a healthy social healthcare plan that eliminates abuses in the health care and insurance industries. I like it.

  48. kc bach
    March 8th, 2010 at 22:42 | #48

    It sounds like a great idea and I have heard arguments that it can generate upwards of fifteen trillion dollars annually at twenty three percent. One thing to consider is the service industry which generates billions of dollars in unclaimed cash tips. I think there would be a major economic adjustment that would be considered by many to be negative but I think the long term benefits in the abolition of corruption and the taxing of under-the-table and black market dollars far outweighs any negative aspects of this concept. I think its the way to go. I just worry about the government figuring ways to abuse this system too. In addition, I think this kind of revenue could be a means to a great compromise between fair taxation and also a healthy social healthcare plan that eliminates abuses in the health care and insurance industries. I like it. Also, one thing our people who think this would kill retail seem to forget is that everyone would be keeping their entire paycheck. A $1200 paycheck would suddenly become $1800 bucks. You don’t have to buy anything! You can pay bills. Save it! Whatever! I think this is a great thing.

  49. Mr Ray
    March 24th, 2010 at 23:54 | #49

    Overall a good idea except: medical services, nursing home care, school room & board will be taxed at 23/30%. There will be a lot of pressure to untax those things, since there would already be the exception of school tuition. I understand that education is considered an investment and therefore should not be taxed, but then it gets a little fuzzy. Is the tax exemption only for accredited schools, or does any kind of education qualify?

  50. Kahanamoko
    March 30th, 2010 at 20:28 | #50

    “Fair Tax” = BAD!! It would result in an increase in taxes for most Americans. Less for the rich. Period. Anyone who tries to tell you different has either drank the Kool-Aid or has an agenda. If you and the good Congressman sponsoring the bill do not understand the current tax code, then perhaps that is the biggest problem. I do not like certain provisions in the current tax code either. But I certainly do not want to throw away a bad tax system for something which will be worse for me and most Americans I know. Simplifying the tax system is a good idea. Oversimplifying it is not. Gone would be tax on income from investments. Do rich people invest because they think it is currently tax free, only to be shocked when they find out their investment income is taxed? No. Who gains the most income from investments? The rich or the poor? What percentage of a poor person’s income is spent on items taxable by the sales tax compared to the rich person?

  51. Parso
    March 30th, 2010 at 23:35 | #51

    Many comments have been made about how drug dealers would now be forced to pay tax. Unless I am missing something here, how is this ever going to happen? Drug dealers don’t carry cash registers with printed receipts. Fair Tax surely can never work until such time as we have a cashless economy. Any smart small trader will ring some of their transactions through the cash register and then “no sale” a portion to avoid paying tax, just as they do now in avoiding business taxes. Unless huge amounts of money are spent to police these activities, people will flock to cash trading at much higher levels. I’m a huge supporter of the Fair Tax concept but it must be aligned with the removal of physical currency from circulation,….we have the technology!

  52. Robert Heiney
    March 31st, 2010 at 00:07 | #52

    What part of this don’t you get! The drug dealers would pay the tax when they buy the food they eat, the cars (some expensive) they drive, the guns they kill with and the fancy jewelry they wear to flaunt their importance. The FairTax is a “consumption tax” you buy, you pay. Everyone buys! Some buy more than others, which separates the middle class, poor and rich societies.

    Taxing investments is backwards philosophy, hence the corporate tax. We don’t want to tax forward thinking investors, we want them to invest more. More investments means more employment.

    The FairTax also makes undocumented workers and illegal immigrants pay a fair share as well. While the current system penalizes us for their sake. Now what makes more sense to you.

  53. March 31st, 2010 at 12:42 | #53

    Well said Robert. I think Parso and Kahanamoko aren’t understanding the concept. Yes, the rich make more money on investments. But guess what, those investments are what give you a job. More investment = more jobs. Period.

  54. Robert Heiney
    March 31st, 2010 at 21:47 | #54

    OK! Here are the quick bullet points most misunderstood about the FairTax.

    The first and most important, you get to keep virtually all the money you work hard for 40 hours of every week of every year. (including all that lottery money)

    You don’t need to report income to any governmental agency, namely the IRS. Because the IRS will no longer be needed, and April 15th becomes just another spring day.

    Corporate taxes disappear completely. This is good for a couple of reasons. First, corporate taxes are hidden in the retail price of everything you buy now, inflating that price so that you and I actually pay those corporate taxes, not the corporations. Take away the corp tax and prices come down. Yes corporate big wigs “could” keep the price higher to make more profits, but you and I are looking for the cheapest prices, right? So that pitts same corporations in a price war to get your business. ( plus, the less you pay, the less tax. WIN, WIN!)
    With no corporate tax to pay, companies would be free to build new manufacturing plants here, in the USA. Thereby hiring more Americans, lowering unemployment. More foreign companies would be eager to build their factories here because of no taxes, less hassle.

    No more Estate Taxes. No brain needed there. Why should we pay taxes on stuff our relatives have already paid taxes on before.

    No more Capital Gains Taxes. Want your money to earn money? Sure you do! Why should the government get their hands on any of it? No matter how much money you make or save, you should be rewarded, not penalized. If I could save more of my 401k money without paying Capital gains Tax, that’s less I’ll need in Social Security (more for the lower income groups)

    Speaking of Social Security. It’s fully funded through FairTax. No more shell games.


    This is the best idea since sliced bread.

  55. Ed Selander
    April 1st, 2010 at 00:35 | #55

    Yes, I agree that the “Fair Tax” is in my opinion the best and most “fair” tax of any I have heard of. It would seem to me that the “Fair Tax” would assume a relatively stable currency as a store of value. All currencies I know of are “fiat currencies” , that is, these pieces of paper are backed by nothing and have value only because the government deems it so by “fiat”.(There is not enough gold for backing currency of today’s economies) So It is the duty of government to maintain the integrity of currency. It is also known that the end cycle of all fiat currency has ended in hyper-inflation. Governments tend to tax by means of inflating the currency surreptitiously (often for vote buying projects) eventually leading to hyperinflation. Whether a “Fair Tax” has any real meaning with unstable currency seems doubtful to me

  56. Roger Biggs
    April 1st, 2010 at 11:04 | #56

    this conservative idea that giving more money to the rich will spur job growth is a uniquely conservative idea and frankly shows how this proposed fairtax breaks directly down party lines. Reagan cut taxes for the top earners, did it prevent the collapes of 87? bush cut taxes for the top wage earners twice, did it prevent the meltdown? Bush’s weren’t paid for, they just expected the government not to need the money, leaving a gigantic budget deficit, will eliminating estate and dividend taxes move us closer to having a balanced budget? Did low corporate taxes save Ireland from financial collapse? ask any Irishman if it brought down prices of good. They’ll tell you it raised the price 30% because of inflation.

    a lot of the comments you hear on this blog have been drinking the koolaid. there isn’t a way to further cut taxes for the rich and maintain the current budget. You wanna talk fiscal responsibility? hows about proposing a tax system that isn’t regressive? one that can raise the sort of money needed to pay our bills. The middle class is suffering more now than ever, and you want to increase their tax burden because you’ve bought the line that giving rich people more money will “trickle down”? it’s shown time and again not to work in anything but the shortest of terms.

    We’ve lived with reaganomics for 30 years now, and what do you have? 7% of our workforce is unionized as opposed to 38% in 1950. the middle class has shrunk. Retirement ages have risen, people work more hours for less money. People move from job to job to job. pensions have all but been replaced by 401ks/IRAs subject to markets hurling themselves over cliffs, outsourcing has destroyed american manufacturing. Under reaganomics, we’ve lost financial security.

    It’s these sort of ideas that lead to the repeal of glass-stegall. that led to santa clara county decision. That give the america we live in the bubble-and-bust economy that threatens not just it’s own citizens well being, but shakes the global marketplace. and they are conservative ideas. The conservative idea that manipulation of taxes can have positive outcomes for the economy have been debunked over and over. The best way to spur an economy is to spend. But since we’re broke, we need to earn, not cut. All other facets of removing our nation from the boom-and-bust market cycle cannot be solved with income tax reform, and it’s become entirely apparent that proponents of the fairtax have no interest in removing the nation from the boom/bust cycle.

    but again, a good idea is a good idea. And these are days needing pragmatism. I agree with 75% of what the goals of a FairTax are, I really do! I admire the simple yet effective way of taxing illegal immigrants and black market criminals. I agree with eliminating April 15th from our lexicon. I agree with replacing income taxes with sales taxes. I even agree with ending the IRS as we know it. Most of all, I agree with middle class people being able to save more of their money. But life, like all things, is a compromise.. and if the Fairtax is not subject to compromise, if it’s supporters really think it’s perfect just the way it is, they’re going to find themselves very alone in the political world, and their measure will gather dust on the shelf.

  57. April 1st, 2010 at 17:02 | #57

    @Roger Biggs
    the problem isn’t cutting taxes, the problem is not reducing spending. spending for huge government entitlement programs that don’t work. If you will notice, each time we cut those taxes government revenues went up. Stop spending like drunken sailors and you fix the problems. Raising taxes doesn’t solve anything.

  58. Robert Heiney
    April 1st, 2010 at 18:39 | #58

    @Roger Biggs
    You have some valid points. As a moderate voter (I refuse to align myself with either party) I have no allegiance to anything “as written”. There probably are a few items in the fair tax that could use a tweak or two. My main concern is the elimination of the payroll/income tax, and the possibility of those who aren’t citizens, while taking advantage of our social/medical programs, paying “something”.

    I work very hard for my paycheck. What infuriates me is that the government has the right to take any of my hard earned money to pay for programs and entitlements that I don’t benefit from.

    I’m not saying the FairTax is the end all and be all of our tax problems. I’m saying, it’s a great start on the road to prosperity. It can always be tweaked, in the tax “payers” favor.

  59. Ed Selander
    April 1st, 2010 at 20:29 | #59

    There seems to be much displeasure expressed here ,and that’s it.

  60. Peter
    April 1st, 2010 at 22:15 | #60

    Robert while that is true….illegals dont pay taxes most of the time and use the services so under the Fairtax you get all your money and everyone is taxed for the services when they purchase goods and services.

  61. Robert Heiney
    April 2nd, 2010 at 00:16 | #61

    Yes, I agree. I must have written my comment the wrong way. I want the illegals to pay their fair share of taxes for services rendered. I am 100% for the FairTax

  62. Ron Meier
    April 4th, 2010 at 00:43 | #62

    I think it is very important to be aware of what is happening in Washington at this particular time. Congress has grossly overspent and is desperately trying to come up with additional ways to collect more taxes. High on the list of possibilities is the enactment of a Value Added Tax. If you add this nightmare to our current 70,000 page current tax code, the result would be a bureaucratic catastrophe. If our government was operating under the FairTax system and needed to raise more tax money, they would only need to adjust the percentage amount. This action would be very transparent, and the lawmakers would be taken to task if the voters thought the increase was out of line. Obviously, a flat-tax proposal is also on the table, and it would only be slightly better than the system we have now, in that the Internal Revenue Service would still be calling the shots. The problem is that in either case, you would be taxing production, and penalizing those that work hardest to succeed. If you think that this aspect does not affect our manufacturing industries, just go to your local Walmart and check item by item where it is manufactured. I did just that last Christmas, and was appalled at the few items that we manufacture here at home. FairTax, if enacted, would make the United States the tax-friendliest place in the world to set up a business. An estimated 13 trillion dollars that are now nesting offshore would come back home because it would not be necessary to hide “Income” anymore. For me, personally, I really like the idea that politicians would no longer be able to use the tax code to punish their enemies or reward their cronies. It is nice to be able to read these posts and tackle a couple of issues at a time, but I would strongly recommend that you go to http://www.fairtax.org and find a description of the FairTax Bill in Plain English. I printed out the 30-odd pages and took it to a FairTax meeting that I co-hosted. Using this information, I was able to answer every question that came up. Here is a word of caution. Don’t be so hasty to demonize the rich - for two reasons. First, they are the ones who have taken the risks, put their fortunes on the line and have provided the bulk of the jobs that are there. Second, they are already paying more than the lion’s share of the taxes. This is America, and any one of us could be rich, as well, if we had the brains and the fortitude to make it happen.

  63. ChicagoGman
    April 4th, 2010 at 17:23 | #63

    I think the “fair tax” would work well on income. But what about savings? For anyone who has earned and saved money, they have already paid tax on that money. Under the fair tax system, they would pay tax a second time on everything they spent. How would we transition from the current system to the fair tax system? Would we just say “too bad” but you have to pay taxes again to people that currently have savings? The fair tax system would be great for anyone who has not accumulated anything in their lifetime.

  64. Bryan
    April 4th, 2010 at 21:08 | #64

    As a resident of Texas where we already have a state sales tax I can tell you that it doesnt hurt anyone to pay one. Here something that is $1.00 costs $1.08 after tax. This tax isnt applied to each individual item, but the gross total. I read on one comment that a national sales tax would discourage tourism, if that were true Texas would not have one of the highest tourist industries in the country. Also the arguement that a sales tax would hurt the economy, well if that were true then why was Texas ( Austin especially) one of the least affected states of the economic downturn? I know for a fact that a sales tax would affect drug dealers (if you consider giving god loving Americans their herb dealing drugs) Every time a dealer in Texasbuys bags to keep drugs in he supports Texas schools, and roads and pays Govt salaries, when he buys scales to weigh them, or gas to deliver them, or any number of things he needs to support his business he’s paying taxes! Do people really think their will be an underground movement to start smuggling things like baggies? Thats just fear of change. The same thing goes for illegals (which texas has its fair share of), here they pay taxes just the same as citizens for goods and services and none of the ones I know go to Mexico to get things. Why would they risk having to go back over the border not just once but multiple times? Thats just not logical thinking.

    ok no more about how good of an example Texas is/ has been to this country..

  65. ChicagoGman
    April 5th, 2010 at 05:54 | #65

    Bryan: It hurts here in Chicago, because we pay over 10% in sales taxes and we have a state income tax which I do not believe Texas has. We currently pay 3.5% income tax and the state income tax is probably going to 5% after the 2010 elections. The sales taxes would still need to be levied somehow, so the state would have an income tax of 5% the sales tax of over 10% (at least here in Cook county), and that would need to be added to the 23-35% fair tax that would be needed for the federal government. Even at the lowest estimated federal rate of 23%, the state would need to add 15% for a total fair tax of 38%. Therefore a $1 item would cost $1.38 (at the lowest estimated rate and $1.50 at a 35% federal fair tax rate. And, with the new health care mandates on the states, the state portion would probably need to go up another 1-2 percentage points. I understand that there is a huge amount of unreported income, but people will undoubtedly find a way around the new system as well.

  66. Lawrence
    April 5th, 2010 at 07:49 | #66

    First off Consumption tax would greatly hurt people on a fixed income who do not pay income tax such as social security. They still receive the same amount of money per month that would figure this way: For every $100
    they receive they could only spend $65-$75. A person with only $1000/month would be only able to spend $650-$750. Rent would go up, car leases would go up, car rentals would go up, airline tickets would go up, food taxes would go up… Also the State portion of the sales tax would go up. You think gas prices are high now wait until there is an consumption tax. Alcohol and Tobacco prices would also be affected too.

  67. Robert Heiney
    April 5th, 2010 at 11:49 | #67

    Yes! But your paychecks go up too, when they stop taking income taxes out of it! Right now, the government takes a minimum 28% out of every paycheck. And yes, the lower income folks get most of that back. The Fair Tax starts out at 21%. That’s 7% less than your paying now. So you’re getting a tax cut! If you make more than 200,000 a year, that’s a huge tax cut.

    The Fair Tax legislation I read has protection for lower income folks, so they don’t end up paying much, if any at all.

  68. Robert Heiney
    April 5th, 2010 at 11:56 | #68

    Maybe you need to take a hard hard look at how expensive Illinois government is cost you. Time for some hard bad medicine. I live in Texas also, and yes we don’t have an Income Tax here, but we also don’t have a very big government infrastructure either.

    You could easily do away with the state income tax, raise the sales tax to make up for it, and I’d bet a paycheck Illinois treasury would overflow.

  69. ChicagoGman
    April 5th, 2010 at 12:06 | #69

    Robert Heiney: Illinois is run by Democrats, so the Illinois coffers will never overflow. But, back to the fair tax, I think you are talking about a “flat tax” not the fair tax. The “fair tax” as I understand it, would be like the VAT in Europe, where everyone pays a surcharge for everything they buy. How could that start out at 21% for low income earners, and progress upward for higher income earners? To do that, you would have to know each purchaser’s income level before a salesperson decided how much tax surcharge to apply to a purchase. If you are talking a flat tax, I can see how that could be incrementally increased as the person’s income rose. I would agree with a flat tax that eliminated all of the tax loopholes and deductions allowing the rich to pay little of no federal income tax in some cases. Even if they pay lots of taxes, they can legally take advantage of tax loopholes to minimize the tax they pay.

  70. Peter
    April 5th, 2010 at 12:11 | #70

    No the VAT tax is a tax that is charged to biz along the process of making something and then passed onto the consumer at the end of the chain. It is not transparent at all. The fair tax does not discriminate based on income it is like a flat tax in the sense it taxes everything at 21% but included in the fair tax proposal is the elimination of all other taxes…all. So I guess you can say a flat tax is part of the fair tax proposal but the fairtax proposal only works if all of its components are puit into law.

  71. ChicagoGman
    April 5th, 2010 at 12:14 | #71

    To Robert Heiney: I have taken a hard look on how much it costs to run Illinois. I even offered to balance the budget for Governor Quinn. He did not contact me to take me up on the offer. He is hell bent on raising the Illinois income tax rate to 5% this fall. The only thing Illinois politicians know how to cut is fire protection, police protection, and education. Then, they say they need the tax increase to replace the funds lost in those programs. What about all of the other non-essential programs, grants, and expenditures in the state? But that’s an Illinois problem, not yours.

  72. ChicagoGman
    April 5th, 2010 at 12:20 | #72

    Peter: Its pretty much the same thing as the VAT then. The fair tax is not applied to vendors supplying parts to the manufacturer. The tax is applied at the end when the consumer pays. I guess the difference is that with the VAT they charge you $130 and tell you the price includes the VAT of $30. Here, using the flat tax, the item costs $100, and they add the $30 fair tax. Either way it would cost $130. I realize that the VAT and the fair tax rates would be different, but I used 30% in my example.

  73. Peter
    April 5th, 2010 at 12:31 | #73

    True…it may end in the same charge to the consumer but the VAT also requires a much larger federal processing because of its complexity and requires industries to spend money on implementing and controling their VAT obligations where as the Fairtax trys to minimize those “complience costs”. Also the VAT is very easy to manipulate as govt can apply exemptions to products like our own tax code. Under the fairtax nothing is exempt and rebates are given to everyone based on size of family. So it would be a big deal to have an exemption put in place or the govt would want to increase the rebate which you would have to do to everyone and would be a big outlay of money or expense for the govt they would have to justify. Much more transparent then the VAT which Britian has large problems with.

    Example of the randomness of the VAT rules in Britian.

  74. Peter
    April 5th, 2010 at 12:38 | #74

    Lawrence…one thing to think about is that everyone who doesnt pay taxes now because they are too poor or are on fix income like the retired will still be better off. 1st the 100 dollar jacket that includes roughly 21% of taxes from the manufacturing and businesses that are taxed through the process of manufacturing should go down in price by 21% thru competition. So that jacket would be still 100 dollars with the fairtax 21% tax rate. 2nd the Fairtax gives everyone a rebate for the taxes they will pay buying goods that are essential for living pending on size of family. So now the goods all cost the same and they are getting the tax rebate up front for esstential items. Essentially they will benefit, poor, retire…everyone.

  75. Ron Meier
    April 5th, 2010 at 21:15 | #75

    I know that the Prebate feature of FairTax has been discussed somewhat, but I would like to touch on the subject quickly again. The Prebate is computed based on what the government considers is the poverty level for a family unit of a given size. The amount of the Prebate is determined as the amount of tax that a family unit would spend on purchased goods if that unit had income equal to the poverty level, and this amount would be sent to the head of that family unit once each month. The last time I looked it up, a family of two parents and two children would receive a monthly check of $529.00. Since it is a “Fair”tax, every family unit in the country would receive a Prebate check, even Warren Buffet’s. Based on the above, you can see that anyone who earns under the poverty level would be reimbursed for the taxes he pays. One feature that I like is that only American citizens can receive the Prebate check, which kind of hits illegals where it hurts. For purposes of our discussion here, it doesn’t help to go into individual state financing. FairTax deals only with obtaining revenue at the Faderal level.

  76. Ron Meier
    April 5th, 2010 at 21:36 | #76

    Gman - You would come out OK on svaings. Right now, you probably like to contribute to a 401K or and IRA account because you can invest pre-tax dollars. Under FairTax, all money you put into a savings account would be pre-tax. Under our current system, any money you take out of your savings is subject to taxation. If your money was saved on a pre-tax basis, your withdrawal will be taxed as ordinary income. If your savings earned interest or increased in value because of capital gains distributions, these are subect to tax as well. FairTax does away with all these taxes on savings. I can see that if you have saved money that you have already paid taxes on, you will be hit again when you buy something with that money. Most people, though, if they have sizable amounts to save, would have tried to save it on a pre-tax basis and wouldn’t be hurt.

  77. Roger Biggs
    April 5th, 2010 at 22:07 | #77

    @Ron Meier

    “One feature that I like is that only American citizens can receive the Prebate check, which kind of hits illegals where it hurts.”

    good to know spite is a fairtax supporter’s talking-point.

    that sort of thing doesn’t help you move the idea forward.

  78. Peter
    April 5th, 2010 at 22:20 | #78

    @Roger Biggs
    Just because he mentioned it doesnt mean its a talking point….just a side benefit. It creates a benefit to people who are here legally and would give an incentive to get citizenship as opposed to now where they get the benefits but do not pay anything for them.

  79. ChicagoGman
    April 6th, 2010 at 10:33 | #79

    to Ron Meier: I have about half of my savings that are tax-deferred. I was concerned about the half that are not tax deferred as far as my being taxed on that money twice (when I made it and when I spend it). I now also have the delemma of wanting to cash in some of my tax deferred
    investments before the federal tax increases start kicking in next year, of keeping them in the hopes that I would never have to pay any income tax on that money if the fair tax were ever to be adopted. I suppose the tax-deferred aspect of the investments will still outweigh a 5 or 10% in federal income taxes.

  80. ChicagoGman
    April 6th, 2010 at 10:33 | #80

    to Ron Meier: I have about half of my savings that are tax-deferred. I was concerned about the half that are not tax deferred as far as my being taxed on that money twice (when I made it and when I spend it). I now also have the delemma of wanting to cash in some of my tax deferred
    investments before the federal tax increases start kicking in next year, of keeping them in the hopes that I would never have to pay any income tax on that money if the fair tax were ever to be adopted. I suppose the tax-deferred aspect of the investments will still outweigh a 5 or 10% increase in federal income taxes.

  81. ChicagoGman
    April 6th, 2010 at 10:38 | #81

    to Ron Meier: I realize it is a discussion of the Federal fair tax system, but as a conservative, I always want to look at possible repercussions of legislation. The Illinois tax system is based on the federal tax system. In fact, they use the “adjusted gross income” line from the federal tax return. I would think the states might want to also change to the fair tax system if the IRS does.

  82. Robert Heiney
    April 6th, 2010 at 18:24 | #82

    I would think that all the states that currently have an income tax would probably raise more money, if they adopted the fair tax in its place. BUT, those states probably don’t want to risk the presumption of raising sales taxes to incorporate their income tax savings, simply because it still looks as though they are raising taxes, even though they’d be eliminating a whole tax structure.

  83. Robert Heiney
    April 6th, 2010 at 18:30 | #83

    Well we’re going to have to start somewhere, right? I have lots of money tied up in both pre and post tax accounts, and I’m willing to bite the bullet and take what loss I have to, in order to get the IRS demolished. I want the extra money I work for, that the government takes from me every pay day.

  84. Hank Van Gieson
    April 7th, 2010 at 06:35 | #84

    Ron Meier,

    One thing about the prebate you might not have considered ia that it would create a group of 30 million working families each year that wouldn’t pay any net federal tax. Compare that to current tax law where less than 1 million workers can use refundable tax credits to totally offset their payroll contributions. Do you really believe that it would be a good idea to have 30 million workers disconnected from the cost of the federal government each year?

  85. Robert Heiney
    April 7th, 2010 at 08:34 | #85

    @Hank Van Gieson
    Come on. How’d you come up with this figure. OK. So it creates 30 millions people not paying any tax at all. And I’ll bet, based on their yearly income and family size and support structure, they’d deserve it!

    I can’t believe anyone out there thinks, what we have now is the perfect way to fund our federal government. Penalizing workers, by taking their hard earned paychecks.

  86. Peter
    April 7th, 2010 at 08:47 | #86

    @Hank Van Gieson

    Yeah where does this 30 mill number come from? And how about all the people who are not working and living off of welfare from the govt and pay no taxes? I would severly doubt that this would create 30 mill familes that would not pay taxes.

  87. Cort
    April 7th, 2010 at 10:34 | #87

    I would love to see the “Fair Tax Act” The IRS is so out of reach with reality this would make things understandable for everyone. I love that our present tax laws are 60,000 pages and the Fair tax Act is 132 pages. to many “Loop Holds” in our current taxation. Please pass this bill! I live in NJ and our taxes here are just plain criminal!!

  88. Robert Heiney
    April 7th, 2010 at 12:30 | #88

    We used to live in NJ also, and you’re right, they are almost criminal. However, the FairTax bill will only cure our Federal Tax criminals. You’re going to have to elect more local politicians that aren’t cronies to corruption. That’s one of the reasons we left.

    However, you will get more money in your paycheck to pay more of those criminal NJ taxes. Good Luck!

  89. Peter
    April 7th, 2010 at 15:59 | #89

    @Hank Van Gieson

    Just out tdy…2009 47% of all households will pay no money to the Federal Govt. So I do disagree with your 1 mill person assertion of people who do not pay under the current system.

  90. Hank Van Gieson
    April 7th, 2010 at 16:02 | #90


    The 30 million “freeloaders” is based on actual IRS data. You should first recall that the prebate is not based on HHS official poverty level data,but it is based on the AFFT revision that removes the “marriage penalty”. I guess AFFT doesn’t believe that two can live as cheaply as one and a half? In other words, the AFFT defined poverty level increases the cost of the prebate by 25%. For example, the poverty level for a family of four is $21,000 according to HHS, but $28,000 according to AFFT.

    Using the higher poverty level, you can determine just how many families would pay no net tax. The total was 50 million in 2008, but I removed the 20 million retirees because they don’t pay any payroll taxes. Bottom line is that those 30 million working families at or below the AFFT adjusted poverty level pay no net federal tax annually, yet they all qualify for full pension and health care benefits when eligible.

    Under current law, it is clear that over 40% pay no income tax, but all workers pay at least the 7.65% payroll contributions. And, again using IRS data, it looks like less than 1 million workers can qualify for the refundable tax credits such as the EITC and child care credits which would totally offset that payroll contribution. 1 million versus 30 million workers disconnected from the cost of the federal government annually. Is that a good thing for America?

    The next time you hear someone claiming that the Fairtax prebate totally untaxes those up to poverty level spending, why not ask just how many people we are talking about.

  91. April 7th, 2010 at 16:02 | #91

    According to this article - http://m.apnews.com/ap/db_16048/contentdetail.htm?contentguid=GUJ0jE65 - 47% of people won’t pay any taxes for 2009. 30 million might be small.

  92. Peter
    April 7th, 2010 at 16:10 | #92

    @Hank Van Gieson

    Hank I do see what you are saying…using two different sets of data to determine cutoff for poverty level will drastically make that difference. In that case the Fairtax should use HHS poverty level. Still the 7.65% payroll your mention workers never see. I assume you are talking about the part that the company pays on behalf of every worker it hires, the other equal half is taken from workers salary which would be accounted for the in the article I quoted. This first 7.65% payroll paid by the company is never taken out of their “salary” it is just an assumed expense taken by the company. So the 47% number I showed you in the article still stands, and I would assume that would equal more then 1 mill people and most likely more then 30 mill.

  93. Hank Van Gieson
    April 7th, 2010 at 20:09 | #93


    Your referenced article was talking only about income taxes, and it appears that 47% didn’t pay any in 2009. But less than 1 million qualified for the refundable credits in an amount that totally offset their payroll contributions. I’m talking about the 7.65% the employee paid, not the matching contribution from the employer. Only around 1 million therefore paid no net federal tax under current law. 30 million workers would pay no net federal tax annually under the Fairtax due to the prebate and the AFFT defined poverty level.

    As others have pointed our, this years group of 30 million may eventually move up in salary so that they start to make a contribution, but because the prebate is inflation protected, those workers that are accustomed to getting only a cost of living increase each year may never pay any federal taxes. Yet they would still receive full SS/Medicare benefits. That is not what our country is all about, imho!

    I believe that everyone should contribute for the federal benefits, and I don’t approve of freeloaders. My bottom line is that the Fairtax authors never should have included FICA payments on the list of taxes to be replaced. Not only does that force all current retirees to resume paying for their benefits with their sales tax dollars, but as I’ve shown, it creates a huge group of non contribiters to the cost of the federal government. The Fairtax isn’t fair!

  94. blah blah blacksheep
    April 13th, 2010 at 14:52 | #94

    This is a pretty good pro/con. However, I feel …

    #2 is a Pro … we don’t need an entire industry just to help folks figure out their taxes (Tax Preparation & Tax Prep Software) and collect Taxes (IRS)

    #10 … we already have an underground economy. How many folks who sell their crap on Craigslist report the income from the sale? As you pointed out, how many drug dealers report their earnings? How many prostitutes? My sister lived for 2 years as an erotic massage “therapist” without paying taxes, earning ~$30,000/yr. She didn’t have a bank account, and during that time just claimed herself as “unemployed” so she never filed a tax return.

    Since there’s a ton of people skipping out on paying taxes due to BS tax breaks, saying 20-30% taxes are necessary I think is over-estimating. I think once you start taxing everyone on consumption, regardless of social status or earning power, then you broaden that base so much that you could probably reduce this to 10% or less. Plus, it would give the government a flexibility to alter the taxes quickly as needed. EG: one month they could make it 12% to cover a shortfall due to something, then lower it to 8% during a period of prosperity.

    I currently live in Texas, and we’ve had an 8.5% sales tax for the longest time. We’ve been doing a lot better than most other states during the recession, and our economy is still strong. Just expand that model to cover the whole nation, get rid of taxing pay-checks, get rid of tax-breaks, etc. If poor folks need help, then the government can expand some social programs like food stamps to help them.

    Any program which reduces governmental burden on people and industry is a good thing. If you think about it, during tax season most folks pay an additional $50+ “tax” to get someone to prepare their taxes since it’s so convoluted. That’s $50 that’s going to a bogus industry, because the government has made things too difficult. If we’re to stay competitive in the global market, we need to optimize government.

  95. Robert Heiney
    April 13th, 2010 at 16:08 | #95

    @blah blah blacksheep
    Excellent points! You’re absolutely right on all counts. Part of the problem is getting people to stop fearing change and embrace the future. The second problem is congress itself. They currently use the Income Tax as fodder when grilling appointees confirmations and election mud slinging. Without the Income Tax, they’d have to rely on doing the right thing. And we can’t have that!

  96. Peter
  97. Emily
    April 15th, 2010 at 02:24 | #97

    @Bob Jones
    I am very interested in both the fair tax and flat tax. I have heard great things about both! Ultimately, something needs to change in our current tax system. We are killing our jobs and almost half the country isn’t paying them!

  98. Chuck
    April 15th, 2010 at 08:25 | #98

    Fair Tax is the Answer.
    That $20,000 car will be $26,000. Well probably not. That $20,000 car will now be $16,000 due to the amount of with holding taxes are paid by employers, now will NOT be paid.

    Taxes will be higher on the poor and lower middle class…Not true! if the Fair Tax kicks in at products over $4,000.00, For example groceries, medicines, daily essentials WOULD NOT be taxed. Now if buy a $70,000 yacht gues what it would be taxed. So the poor and the lower middle class would keep more of their money. Oh they may even put a little in the bank, which they do not have now.

    To stimulate the housing market, only charge a 10% rate for 5 years on all new home purchases. Guess what it is 10% more then they are making now on a stale housing market. 20% on purchases of second and third , etc homes.

    For me the money the is being taken out each week could make my monthly nut with some left over. Savings would go up allowing banks to be more flexible with credit now they have some capital to invest.

    People would have MORE MONEY for down payments on items thus less credit is being extended. (see sub prime mortgage crisis)

    Companies would now have money to hire more employees since their tax responsibilities on employees is now eliminated. Obviously with the prices of their products dropping they would sell more therefore would be making more.

    The billions and billions of corporate taxes not being paid when companies divert income to other countries, will now collect taxes on their products they are selling here.

    No one likes change, The IRS and accountants will be the hardest hit here. But the IRS will still need to collect from businesses on a daily basis so that busineeses dont walk off with tax revenue they collected. One tax form would need to be sent. Any purchase made by anyone over $4,000.00 the IRS would need to know where and how much paid so they can verify the tax was indeed sent to the government. Accountants would still be required not to do tax forms but to help monitor retirement plans and the like. What is the best way to invest my new found money.

    The imigration problem is half solved. Those who are here illegally will be paying their share at the time of purchase. Now reporting may be an issue if they do not report the purchase, but guess what we have collected the money.

    Government all phases, would not pay the normal rate of 23% they would pay 10% on ALL purchases over $4,000.00.

    Service companies, Banks, etc. that do not sell products but sell service would pay a 10% tax on all services. Currently there is no tax on labor now there will be. Labor over $4,000.00.

    States that have income tax, would have a 2% allowable sales tax to provide their tax replacement. 2% is considerable considering there will be more revenue being spent in their state.

    Here is my favorite. This is why Politicians do NOT like this system. They spend what they collect. You can not go into the RED if you are not spending what you do not have. Eliminating pork barrel programs and agencies, would ultimately begin to pay down the debt and produce a better future for our country. The term BUDGET is the biggest farce in the world. They sell programs (like heath care) on the projected cost. There has NEVER , and I challenge anyone to find one, NEVER been a government ran program that has come in under budget. Now they spend what they collect. Example numbers only. The collect in 2012 3 trillion dollars. The next years spending is 3 trillion or less. If your spending needs are over that number better start cutting. Any excess would be used to pay down the debt.

    What a concept. Americans have more money in their pockets and the government must spend only what they collect.

  99. ChicagoGman
    April 15th, 2010 at 09:09 | #99

    Chuck: There are several flaws in your approach. For example:

    You say “…Here is my favorite. This is why Politicians do NOT like this system. They spend what they collect. You can not go into the RED if you are not spending what you do not have.” We have the same situation today where the Government spends more than they take in. It is the federal deficit. Why would the “fair tax” plan be any different. The Government would still spend more than they take in, it would just affect how the taxes were collected. There would still be no requirement to spend no more than is taken in, unless we passed a law that required a balanced budget, and actually enforced that law. Since the Federal Government has the ability to print as much money as they want, uncontrolled spending would still continue.

    Also, if labor that cost over $4,000 was taxable, contractors, for example, would just write a contract for building the east wall of the new living room for $3,999, another contract for building the north wall of the living room for another $3,999, etc, and not be required to collect the fair tax. People will always find a way around caviats, such as the $4,000 limit. I think a better way is just to tax everything at a smaller rate.

  100. Roger Biggs
    April 15th, 2010 at 09:15 | #100

    100% agree.. a fair tax is not a flat tax, it’s gotta show some sort of gradient.

    Also mentioned in other places on the thread was welfare reform. I don’t think a proposed fair tax should come to the table looking to reform welfare, it’s not the bill to do that. Now if it were ever taken seriously, welfare adjustments are probably warranted if needed to win votes, but it probably shouldn’t start that way.

  101. Peter
    April 15th, 2010 at 09:37 | #101


    Chuck: The way you state how the fairtax works is not how I understand it and I have read the book. Everything is taxed and the reason the 20k car still costs 20k is because their is an embedded cost now of about 20% to pay for taxs on companies and compliance costs etc….add on the fairtax which is 27% on the 16k or 20% of the original price of 20k and the cost of the good is 20k still. Meanwhile you just recieved your paycheck…all of it w/o taxes taken out. Also every family is recieving a check monthly to cover the cost of the taxes you would pay up to the poverty level for necessary goods based on the size of your family. That way there are no caviats like Chicagogma easily pointed out.

    -Cost of goods stay the same: cause once the burden of compliance and taxes etc are taken off the businesses competition will drive those now inflated prices down then fairtax on top brings the true tax on those goods to the consumers eye instead of being hidden
    -You recieve your entire paycheck: fairtax gets rid of income and all other taxes
    -You recieve a monthly check from the govt based on family size that covers the estimated taxes that would be paid on goods necessary to live up to the poverty level.

    Also that % was studied so it would result in a net 0 change in govt income. The fair part is it hits all equally and people have to choice what to buy, it also increases the poeple who are taxed across the board including tourists, illegals, and anyone spending money in the states. While only citizens recieve SS or medicare benefits.

  102. Roger Biggs
    April 15th, 2010 at 09:53 | #102


    Where has this notion come from, that if taxes on corporations are cut that would reduce the cost of goods by some arbitrary amount you or I or anyone could say is 4000 dollars off a 20,000 dollar purchase? WHAT? econ 101. supply and demand. Not Taxes! taxes are not 20% of the price we see on the tag. they can hardly be called a function of price at all. And even if it were 20% of the cost, how on earth do you figure that the savings can simultaneously be passed on to the consumer AND used to hire new workers? what stops a CEO from just pocketing it, your trust in that CEO? if there isn’t an increase in demand, there will not be an increase in workers. This has so little to do with taxes, it hurts. I’m not saying prices won’t drop, but they won’t drop any more than what it would take to keep the out-the-door price the item has today constant to tomorrow where a fairtax might be law. Furthermore, did you know that some things are sold at cost on the market and even below their cost of manufacture? How has tax played into the equation of price on these products? it’s all in the market strategy. some things are sold at cost and money is made on servicing and accessories. I got a Palm Pre. cost me 80 dollars. This Sprint made money on this phone? don’t count on it.

    Oh, and about government projects.. well.. I know you won’t take obama’s word for it, but

    And a quick google search of the subject finds that within the first 10 results (just 10 measly google hits), what obama said is being backed up by two local newspapers you’re free to catagorize as socialist dossiers.

  103. RobInDaBurgh
    April 15th, 2010 at 11:40 | #103

    How does the taxing of things like drug dealers work??? Are we expecting drug dealers to actually ask for a tax collection???

  104. Don Short
    April 15th, 2010 at 11:42 | #104

    There is a false notion that the 23% tax would somehow make items costing x today more expensive when the opposite is true.

    Income tax, or even excise tax, compliance has been computed to make up approximately 22% of the cost of any item sold today. Without that compliance, look for prices to drop. So, the $20,000 car would not ultimately cost $26,000 but only $21,648 ($20,000-22@*23%).

    Prices of items would fall to more sensible levels and would reflect a truer picture of its true cost.

    The Fair Tax is THE way to go!!

  105. Peter
    April 15th, 2010 at 11:43 | #105

    Drug Dealers currently are “unemployed” and are only taxed when they purchase things and are hit with the sales tax. Essentially if the full tax on people is levied at consumption or sales level then it doesnt matter where your money came from you are paying taxes.

  106. Peter
    April 15th, 2010 at 11:45 | #106

    Peter :@RobInDaBurgh Drug Dealers currently are “unemployed” and are only taxed when they purchase things and are hit with the sales tax. Essentially if the full tax on people is levied at consumption or sales level then it doesnt matter where your money came from you are paying taxes.

    Oh and everyone would be paying their fair amount as opposed to now where only legally employed people pay taxes on their income and then also pay state sales taxes.

  107. Don Short
    April 15th, 2010 at 11:46 | #107

    Further, why does the rate HAVE to be 23%?? Who says that revenue neutrality has to be the litmus test?

    Our government is way too large and the cost of feeding this pig is rising all the time.

    If government shrinks because things like the IRS is no longer needed, and other agencies are needed less, then why does 23% have to be the benchmark. I can honestly see where a rate of 15% (sound familiar Flat Taxers?) would work just as well…

  108. Peter
    April 15th, 2010 at 11:54 | #108

    @Don Short
    Don I completely agree but I believe the Fairtaxers wanted to show that would could make this switch cleanly and not make huge headaches the first year. As the embedded costs would be very close to equal the necessary tax.

    It is true after the first year you have a huge surplus you can cut the rate. And manage one tax rate year to year. And if people notice it is slowly going up they will ask why and if the govt is spending more and more then they will take action because that tax is right in front of your face where as every individually now has no clue how much they actually are paying in taxes because they are hidden in payroll taxes, embedded in the cost of goods they buy etc.

  109. Robert Heiney
    April 15th, 2010 at 12:55 | #109

    @Don Short
    23, 21, 20% Does it really matter, when the government taxes you 28% right now. And that 28% comes out of the paycheck you’ve worked hard to earn. 23% would be a bargain. Not to mention that you’d pay it only when you buy something. Don’t forget! You’re getting 28% more in TAKE HOME pay.

  110. Robert Heiney
    April 15th, 2010 at 12:58 | #110

    Every time they buy something to eat, drink, smoke, make more drugs, drive, etc. We won’t need to “ask” them to pay. They will pay.

  111. Robert Heiney
    April 15th, 2010 at 13:04 | #111

    But all those other taxes go away if the Fair Tax gets enacted! We’re answering our own questions here. If Company A and Company B both stop paying corporate taxes, and Company B refuses to lower the price of it’s product to reflect the absence of the embedded corporate tax, why on earth would anyone buy his product? I’d go right to companyA, because he dropped the price. Wouldn’t you?

  112. Peter
    April 15th, 2010 at 13:05 | #112

    @Roger Biggs
    Govt project is a seperate issue but it would be interesting to see how they make that budget. Very easy to over budget to say they came in under budget, on the other side if they are using 2 years ago budgets for the same type of work there are different economic factors going on including lower gas prices etc which can lead to work being done for less. Just putting that sie out there too.

    On the fairtax part there definitly is a cost of 20% on avg of products sold due to taxes. When corporations have to pay all different taxes for the company, plus taxes on employees, plus have whole departments just to comply with the tax code every year it adds up.
    This alone explains how on avg it can cost a company 50 cents for every $1 paid in taxes just to prepare that companies taxes. Thats alot of money.
    And yes supply and demand will bring the cost of those goods down. CEO’s wont pocket the money because they can’t. If the cost of doing biz is lowered they will drop their price under the competition in order to increase sales and market share this is what competition leads to until the cost of the product is unable to go lower because then the company would be losing money. It is simple and the fact that you don’t believe taxes comprise 20% of the cost of goods on avg, and it was studied and proven, just shows how avg consumers even myself dont really understand how much money we are paying to the govt in taxes. Businesses never pay taxes they always pass those costs down to the consumer.

  113. Jim
    April 15th, 2010 at 13:53 | #113

    I would really like to know why a “Family Consumption Allowance” (FCA) ‘prebate’ check would be sent out to everyone. A better idea would be to make certain items tax exempt, e.g. food at the grocery store (not prepared foods), clothing under a minimum price. If we make the essentials tax exempt then we wouldn’t foster entitlement and problems with dependency and the “free lunch” mentality as experienced by recipients of current government welfare programs.

  114. Peter
    April 15th, 2010 at 14:05 | #114

    Problem is once you start with tax exemptions it leads to very minute changes to make things expempt. In Britian they do this.
    Gives the govt the ability to favor certain industries or things. They start defining what a food is and what clothes are. Are bathing suits clothes or how about a wet suit? Food wise would soda be exempt or taxed, how about juice from concentrate vs pure juice? It can be made complicated and invites favoritism. The point of the fairtax is to keep things simple. It is much easier for the govt to cut a check for the expected cost of taxes on items needed to surive depending on the size of a family.

  115. Hank Van Gieson
    April 16th, 2010 at 10:16 | #115

    Too much misinformation here about the likely impact of the Fairtax on retail prices. Pay attention, particularly those of you who seem to think that retail prices would remain about the same and you would take home your entire paycheck/pension.

    The 1997 Jorgenson study done for AFFT concluded that there was an average tax cost of 22% of sales across the 35 industry segments studied. But, Jorgenson readily admitted that he included the employee income tax and payroll contributions in his 22%. So, if you claim to be going to get all your pay, then only business tax costs can be eliminated.

    How much are the business tax costs? Using 2007 revenue data, retail sales were $9.5 trillion and business income taxes were $291 billion or 3% of sales. Business payroll contributions were $435 billion or 4.5% of sales. And, tax compliance costs were $147 billion or 1.5% of sales. Add up all the tax related costs for businesses and it comes to 9% of sales in 2007.

    Reduce business costs by 9% and add the 30% Fairtax and retail prices have to rise by 18% on average. (1.00 x .91 x 1.30 = 1.18) Please note that you have to add 30% in order to get a 23% tax inclusive amount.

    Too many of you still believe in the free lunch myth. That is, reduce costs by 22% and add the 23% sales tax and prices are actually lower. That just isn’t true. There is no free lunch. Take home all of your pay, but you are going to need it to pay the higher retail prices!

  116. Chuck
    April 16th, 2010 at 13:30 | #116


    They do not spend what they collect, if they did we would not be 13 trillion in debt. They spend constantly what they do not have. if they go over budget all well, we will just appropiate more and move on. That my friend is the entire problem. You are right on the instance that labor is AT $4,000.00 I do expect that to happen. 1 in a million would be at that price. In the Fair Tax system there is far less bullshit than in our current system. And everybody pays the drug dealers, the immigrants, everyone who does not pay now will then.

  117. Chuck
    April 16th, 2010 at 13:38 | #117

    @Hank Van Gieson
    Hank my man you may be right, I simply do not agree. The car example I used has say 100 different parts from contrators. each one of those parts would now be cheaper as their expenses would drop. Correct me if I am wrong but isn’t FICA alone 7.5% corporate match for every employee. In our system of heavy over head I still conquer with about 20% of the over head is tax related, if a company under the fair tax system does not drop their prices conducively to their costs dropping someone else will. We get back into the system where we are making great products for a FAIR price. Competion is the key.

  118. deb fordel
    April 16th, 2010 at 15:16 | #118

    In the car scenario, I MIGHT pay an extra $6k in taxes for a new car … however, I no longer pay $5k a year in Federal taxes, not to mention FICA, SS and all the rest, and If I buy a used car (which I usually do) I pay ZERO tax on used goods.

    The “entitlements” are even and fair, and considered a basic tax break for all living ESSENTIALS per person for every LEGAL citizen. If I spend more than that, I can afford it and should pay taxes.

  119. Hank Van Gieson
    April 16th, 2010 at 15:52 | #119


    You may disagree all you want to, but the facts are clear. I would hope you would agree that businesses can’t save any more than they pay in tax related costs. As I went into some detail to explain, using 2007 actual revenue from the Kotlikoff/BHI study done for AFFT, total business tax costs were an average of 9% of sales. Retail prices have to rise by 18%, period. It might be that using a different year’s data, the cost savings might be slightly more or less, but I believe that an 18% retail price is an absolute minimum, and is highly dependent on the final revenue neutral rate. There is not one study supporting the 23% inclusive rate, and most of the unbiased economists come up with 28% to 34%. Stay tuned!

    One other thing you might consider is that you seem to believe that cost savings cascade or accumulate up through the various levels of production. While it is true that dollar cost savings do accumulate, percentage cost savings do not! It doesn’t matter if there is one level of production or ten, the percentage cost savings remains the same, and that percentage is 9% per my explanation. The reason percentage cost savings don’t cascade is that the cost savings only apply to the value added at any level. To clarify, if business cost savings average 9%, then if there were six levels of production, the percentage cost savings would still be 9%, not 54%. May not be intuitively obvious, but it is a fact that all economists agree with. Quoting from the AFFT Director of Research, she wrote that the most likely scenario is that everyone gets all their pay/pension and retail prices rise. The “free lunch” myth has been thoroughly debunked!

  120. Peter
    April 16th, 2010 at 15:58 | #120

    @Hank Van Gieson
    Hank what about the savings companies would have from not needing a whole compliance and tax department nor tax preperation services from outside companies which the WSJ says can cost 50 cents for every dollar paid in taxes. Would these be included in that 9%?

  121. Hank Van Gieson
    April 16th, 2010 at 16:09 | #121

    Deb Fordel,

    Each person has to do their own calculations as to which tax system is best for them. But not everyone comes out ahead under the Fairtax. For instance, a single minimum wage earner would have paid around $200 more in sales taxes in 2009 than what was paid under the current income tax and payroll contributions. A retired couple living on Social Security pensions of $30,000 plus $18,000 in investment income paid zero income tax in 2009, and of course paid zero SS contributions. Under the Fairtax they would have paid almost $11,000 in sales taxes. The Fairtax is not fair for everyone!

    Watch out for the impact of buying used goods. True, no revenue would go to the federal Treasurer, but after a short adjustment period, supply and demand forces will return prices to the current used/new relationship. I would expect used goods to be in demand based on new stuff sticker shock if nothing else. But when prices reestablish to the current relationship, you won’t be getting any windfall cost savings. In other words, if you don’t buy your underwear at Goodwill now, there would be no reason to buy used under the Fairtax.

  122. Roger Biggs
    April 16th, 2010 at 16:55 | #122

    @Hank Van Gieson
    What you’re saying makes a lot of sense.. and if I may put on my Fairtax supporting hat, would you not agree though, that national sales tax legislation has within it’s ability to dial in the fairness to make the tax more progressive? reducing but retaining corporate, capital gains, and inheritance taxes, as well as setting in place a gradient scale of taxes (higher dollar items demand higher tax rates), while maintaining a prebate to ensure poorer wage earners can manage it are all possibilities. Couldn’t a FairTax structured correctly meet our needs at a micro and macro level while still offering the benefits? and if it could, why would/should we let it pass us by? =) certainly nothing would be the easier thing to do, but as a progressive democrat, I’m not interested in passing easy legislation!

    Also, to other progressive democrats who might be reading this, don’t dismiss the national sales tax proposal. familiarize yourself with it and you’ll find that it’s not an entirely bad model. it just needs a few dashes of progressiveism and a pinch of protectionism and I see it as being extremely agreeable.

  123. Hank Van Gieson
    April 16th, 2010 at 20:45 | #123


    I believe that the $147 billion represents the cost estimated by the IRS to prepare and submit a business income tax return. I think you also have to recognize that the accounting folks at a typical firm have to deal with much more than the federal income tax and payroll contributions. State and Local taxes play a big part, and any firm that is publically traded has to deal with the voluminous SEC reports required. Take away income taxes and I don’t believe that a lot of business number crunchers would be displaced. CPA’s I have talked to say that there is a lot of other responsibilities that would still need to be met.

  124. Hank Van Gieson
    April 16th, 2010 at 21:07 | #124

    Roger Biggs,

    I don’t agree that the Fairtax is progressive unless you want to redefine “progressive”. That term has a fairly rigid business dictionary definition that is related to income, not consumption. The prebate is advertised as somehow making the Fairtax progressive, but in my opinion, the prebate simply moves the point of regressivity from zero to the poverty level as redefined by AFFT.

    Turns out I do believe that a national consumption tax would be better for our economy than the income tax, but I don’t think the Fairtax scheme as defined by HR25 is the way to go. In my opinion, the creators of the Fairtax badly overreached.

    (1) They taxed government consumption at all levels in order to prevent unfair government competition with the private sector, but incurred the strong possibility that that portion of HR25 will be found to be unconstitutional. Under our federal form of government it is unconstitutional for one sovereign power (federal) to tax the other sovereign power (states). Taxing state/local governments also has the effect of hiding almost 15% of the federal revenue needed in higher state/local taxes or reduced State/Local services.

    (2) They added payroll taxes to the mix of taxes to be replaced, and thereby treated all retirees unfairly. After paying into the Social Security trust funds for typically 45 years, under the Fairtax, retirees would be forced to resume paying into the trust funds with their sales tax dollars, depending on their income level.

    (3) Seniors would see their after tax savings essentially double taxed under the Fairtax. Lower income families who depend on non taxed income from accumulated savings would pay much higher taxes and would have significantly less purchasing power under the Fairtax.

    (4) Completely untaxing businesses was a major political mistake. It is true that businesses really don’t pay taxes, but simply pass any tax costs on to consumers in the form of higher prices. But this obvious truth has not been accepted or acted upon by the Congress, especially by the Congress currently in the leadership role. Completely untaxing businesses is probably a non starter in the existing political environment.

    (5) They adopted a prebate, the largest cash grant entitlement in the history of the country at a time when entitlements are squeezing out discretionary spending, including critical Defense spending. Described as a monthly refund in advance of sales taxes paid for essential spending up to the poverty level, the prebate is in fact an entitlement with an annual cost approaching $600 billion. Adding the prebate entitlement to the entitlements already in the federal budget will move the percent of entitlements from around 60% to 70%. The Fairtax prebate entitlement will only serve to accelerate the coming federal “budgetary train wreck”.

    (6) They adopted an inventory tax credit which will contribute to a very large federal budget deficit in the first year of implementation. The inventory tax credit is estimated to cost $600 billion in lost federal revenue and no offsets have been proposed.

    (7) They excluded education tuition, thus allowing the “camel’s nose under the tent flap”. That precedent would certainly encourage future politicians to try to exclude such things as medical expenses, home ownership or anything else they might consider as important as education.

    (8) HR25 proposes to eliminate the gift and estate taxes, giving support to critics claims that the Fairtax benefits the wealthy unfairly.

    (9) And finally, they chose a “cold turkey” implementation schedule. HR25 proposes to make the change over from the income tax to the Fairtax overnight, although certainly with adequate notice. Congressman Jim Saxton, the former minority leader of the Joint Economic Committee, wrote in February 2006 that, “The US Government is institutionally conservative, resistant to change, and generally supports the status quo. They need incremental change, not wholesale reforms.”

    A simplified version of the Fairtax might correct these issues and might have a better chance of Congressional consideration. I call it Fairtax-Lite. Fairtax-Lite is a broad based, 12% national consumption tax with (1) no exclusions, (2) a targeted prebate costing an estimated $59 billion or, alternatively, retention of the EITC at approximately the same cost, (3) no government taxation, (4) leaves payroll contributions and estate/gift taxes in place, (5) no inventory tax credits, and (6) implements the plan over five years.

    Compared to the Fairtax, the Fairtax-Lite proposal would: (1) Remove the likely constitutional challenge from the States; (2) Make good on the Federal government commitments to retirees who have paid into the Social Security Trust Funds during their work years. (3) Retain some economic fairness to our nations lower income retired community who are depending on their accumulated savings to maintain their lifestyle; (4) Continue to have businesses contribute their share to the Social Security Trust Funds; (5) Reduce the coming federal government entitlement crunch; (6) Eliminate the excessive budget deficit in year one of implementation; (7) Reduce the possibility of future exemptions; (8) Assure the wealthy pay their fair share; and, (9) Allow the government to “try before buy” with ample opportunity to correct unforeseen problems without wrecking the national economy.

    Fairtax-Lite is a far less complex plan to rid the country of the income tax and replace it with a national consumption tax, and would have a significantly better chance of Congressional approval than HR25 as written.

  125. Roger Biggs
    April 16th, 2010 at 22:14 | #125

    @Hank Van Gieson
    I like it a lot, hank! I can see you’ve really spent some time thinking about this.. do you have a website I can reference?

    one thing I really like about how you’ve approached this is the targeted prebate. I can see how something like that can help out retirees who have already paid their share of SS and the poor who couldn’t afford to have their savings diminished to pay more for their goods.

    one thing I’d like to change though is payroll taxes. as it stands, payroll taxes are the main reason I think people turn to the fairtax as a solution. SS tax in particular is severely faulted because there is a cap. you’ll never pay SS on more than 106k of ones income. I just don’t think that’s right when it’s clear SS is going to be out of money years before I ever retire. also, half of SS is paid by the employee, the other half by the employer, which, as stated, reflects in cost (however little) so we end up paying for all of it anyways. Wouldn’t it be better to elimate the SS and Medicare payroll taxes and offset it with a 80’s era capital gains tax?

    Ideally, I’d like to see a consumption tax be limited to replacing payroll taxes and reducing corporate tax marginally (to attract american investors back to america, and maybe some foreign ones too).

    I also agree with you about comprehensive legislation’s chances of passing, so the integration approach will make Fairtax-Lite more palatable. For this reason also I’d like to see any tax reform legislation not bundled with immigration or welfare reform, labour, trade, or energy reform either.

    But please! if you have a website or blog of yours I can reference, that’d be awesome!

  126. Peter
    April 16th, 2010 at 22:23 | #126

    @Hank Van Gieson
    I commend you as as well Hank for your obviously detailed look at this. I unfortunatly am not blessed with enough time to look into this as you are able to commit but also believe with Roger that this can always be improved. I still think the ultimate end game should be a total single tax at the consumption end but also agree that constitutionally this should be looked at. I believe we should also make your concerns and ideas known to he fairtax group so that may look into them.

    The point I like about this though is I think the consumer should really see how much of their money is actually needed to support our govt as opposed to now where much of that is hidden.

  127. Sharon Burress
    April 17th, 2010 at 06:29 | #127

    I am for it! We are paying approximately the 34% now, but it is on earnings and the only ways to control that is to either hire someone to look for loopholes or to earn less. That is not the American way, or shouldn’t be. At least, with a tax on consumption instead of earnings, I can control the outgo directly and honestly, by controlling my consumption. If I could keep more of my money, I might not miss the extra dollars I spend on a new car. I would have more of my money to spend on it. Or, I could just not buy one until I could save more for that purchase. Either way, it puts ME in control. Businesses would save money, too, by not having the expenses involved in withholding their employees’ earnings to pay those income taxes.

  128. ChicagoGman
    April 17th, 2010 at 06:32 | #128

    Certainly, not everyone is in agreement on the fair tax issue, but this is the first web site I have seen where a civil discussion is taking place. There is no swearing, nobody calling anyone stupid or ignorant. Its very refreshing and informative. Thanks to all of the participants.

  129. Chuck
    April 17th, 2010 at 09:23 | #129

    HANK, and the rest.

    I must admit that Hank’s theory is brilliant. Your plan still has the my mandatory aspects which are stimulating the economy with the moeny that regular Americans earn. Not with massive stimulus packages that do not get to the regular Joe. The economy with stimulate from the bottom up. Not from the top down. It is the same corporate greed that put us in this position to begin with.
    Giving Citi 80 Billion to do what. Clean up their books buy a Spanish bank, and make their stock worth more. What credit was freed up?

    The real numbers of a successful economy are Retail numbers, consumer confidence, money in investments.

    The problem here is that HR25 does have it’s flaws. But it does interject many outstanding starting points. Our tax code is rediculous. If any measure can be passed without bribing Senators with pork barrel promises for their states it would be a miracle. IE the Health Care Bill.

    Any tax reform measure must come with additional measures by big government to tighten up. To the dismay of my liberal friends, if you do not see that our government is mis managed, over valued, then we certainly need to revisit the issue. Any corporation that ran itself under the rules that the government does would be hauled in to Congress or possibly jail.

    I encourage everyone to visit and educate themselves on the issue. Sites like Fairtax.org. Cat.org and the like to educate yourselves on the issue. Brilliant minds like Hank have propsed solid theories that will work.

    Once the education process is complete, get the word out to your friends and family. Tell your representatives that you want change or you want them out. The funny thing on this is I asked Congressman Ron Klien and Senator Bill Nelson my so called representation about their opinions regarding this issue. I received the prototypical political response. Regarding spending and simplifying the current tax code. That my friends is the real problem. The political machine just does the minimum to keep their jobs. Let us please as many as we can without taking a stand on anything. if they take a stand they can simply be bought with a 400 million dollar hospital tucked into a Health Care bill.
    But I am digressing.

    The Dems will not pass the issue without solid confirmation that any government programs and yes even agencies are not to be touched.

    The Reps will not pass the issue without big business being protected.

    It is now time to get the work done from outside Washington. It is no longer about the right or the left, It is about America getting back to the country it once was. It is time that all of our leaders become accountable to us. If they do not do what we want them to do, remove them from office. Not that they care hell when they spend one term in office they are now eligible for Government retirement and benefits. That is another problem for another day.

    Everyone here has shown not only interest in the issue, but superior intelect as well. Go get it done. Get out and take this country back.

    Hank , thank you for your insight my friend. Maybe we can meet one day. I would be honored. Let us keep this chat going.

  130. Hank Van Gieson
    April 17th, 2010 at 11:58 | #130


    Thanks for your cordial comments. Too often my posts are met with name calling and agenda accusations of one kind or another. My goal is simply to keep the facts in play.

    Unfortunately, I’m kind of a Neanderthal when it comes to blogs and I have never tried to create my own. Might be a good thing to work on. Stay tuned!

    Let me talk about Social Security futures for a minute. I assume you all understand that FICA stands for Federal Insurance Contribution Act, passed in 1931. The Social Security plan is just like an insurance policy. Pay your premiums and collect your rewards when eligible. As an aside, I do believe that FICA was unconstitutional when it was passed, but Roosevelt put a lot of pressure on the courts, even threatening to pack the Supreme Court with supporters. As a result, the SC dodged the issue and has refused to call it an insurance plan, although that is really what it is. Too late now to change things and I think the best solution is to correct the actuarial problems that occur ever 30-50 years or so. Former Senator Bill Bradley wrote in his new book that Social Security could be returned to solvency for another 100 years by (1) raising the eligibility age, (2)lifting the cap on earnings, (3)bringing into the plan all State and Local employees that currently are enrolled in other plans, and (4) Switching to a chained method of calculating cost of living increases, in effect recognizing that buying habits change as prices increase.

    For those of you younger folks, you don’t need to worry about getting your promised benefits. After all, you support the Fairtax plan which proposes to pay benefits from the general fund, so why can’t that happen if the trust funds run out of cash and IOU’s? I think our country is good for it and you will get yours. If I’m wrong, the demonstrations to follow would make the tax day affair look like kids at kindergarten.

    Including the SS and Medicare contributions on the list of things to be replaced with the Fairtax created two important issues. First, the transition issue, which has no good solution. All of us old folks that paid in for 45 years or so would pay a sales tax that is higher by 6% in order to cover SS obligations. Also, as I’ve written, the Fairtax creates a group of 30 million workers that may never pay any net federal tax due to the prebate, yet they all will qualify for full SS benefits. 30 million freeloaders is not what our nation is all about, imho. I’ve paid my premiums over my working lifetime, why should I pay someone elses premiums with my sales tax dollars. Leave SS out of the Fairtax plan, make everyone pay their premiums, and fix the current shortfall as Bradley suggested.

  131. Hank Van Gieson
    April 17th, 2010 at 12:23 | #131

    The following are some Fairtax statements I have heard or read over the last six years. You are probably familiar with most of them already. Please read each of them and consider whether they are true or false. Anyone who is interested can take a shot, and I will provide answers a bit later.

    (1) HR25 abolishes the IRS and the IRC.

    (2) There are 67,000 pages in the Internal Revenue Code and supporting Regulations.

    (3) A sales tax inclusive rate of 23% would be revenue neutral.

    (4) The after tax price of retail purchases will be about the same.

    (5) The “prebate” is a tax refund paid in advance.

    (6) Your dollars will purchase more under the Fairtax.

    (7) You choose when and how much tax to pay.

    (8) Everyone will be economically better off under the Fairtax.

    (9) Interest bearing investment and debt instruments are not taxed.

    (10) There is $10-$15 trillion of US owned assets in offshore accounts.

    (11) Buying “used” goods, (tax previously paid), eliminates the tax costs from the sales price.

    (12) A national sales tax would have no impact on State and Local governments.

    (13) The GDP will rise by around 10% in the first year of implementation.

    (14) The Fairtax will save Social Security.

    (15) The Fairtax is progressive.

    (16) The Fairtax plan will insure that everyone pays their fair share of taxes.

    To simplify your responses, just list the number of those statements you believe to be false.

    Good luck!

  132. Tom Kaye
    April 17th, 2010 at 12:50 | #132

    1, is false and 13 is iffy. I know that’s what some economists project.

  133. Roger Biggs
    April 18th, 2010 at 09:31 | #133

    @Hank Van Gieson
    I’m waiting for you to tell us they’re all false haha =)

    Addressing your comments about SS and transition, wouldn’t a targeted prebate as you’ve proposed offset the “double tax” as it were on seniors who paid their share of SS over the course of their working years? I don’t see why the same program can’t target lower income people to reduce their tax, but maintain some contribution for their eventual SS and healthcare benefits. I can see however, how a few adjustments to the current payroll taxes can resolve the issue without extra reform, which could very well be preferable to seniors who might feel anxious over the change.

    Now onto the 4 point made by Senator Bradley. #2 and #3 could be resolved by including SS into the consumption tax since there is no cap on your spending and everyone (state, local, and federal employees) will be purchasing too. Point #4 needs doing anyways and I’m stupefied it’s not something done already.

    #1 is difficult to assess.. If you raise the eligibility age, you run the risk that people waiting till they receive SS benefits to retire will continue to work and stagnate the job market further. Some propose that *lowering* the eligibility age will convince senior workers to retire early, freeing up millions of jobs for newcomers, laid off, and the like. I’m not sure what will happen one way or another, but if all 4 changes can achieve solvency for 100 years, I think doing 3 out of 4 can at least extend solvency until a more permanent solution can be reached.

  134. Waco John
    April 18th, 2010 at 12:17 | #134

    I asked my Congressman to give me his position on Fair Tax H.R.25. I am no expert on the subject, but am disappointed he is not more for it. I am not convinced he is as informed as many in this thread are. In any case, thought some would be interested on his ‘position’.

    Besides his ‘position’ he also states that he is not on the committee where the bill has been referred to. Here is his reply IN SUMMARY:

    First, although the sponsors of the bill argue that the tax rate would be just 23%, the experts estimate that the tax would have to be quite a bit higher than that in order to remain revenues neutral (meaning that the tax would bring in the same amount of revenues as our current system). The Joint Committee on Taxation estimated that, in order to remain revenue neutral the tax would actually have to be over 50%. I do not think that citizens would support this drastic price increase on top of other state and local taxes.

    Next, this sales tax proposal is unlike any sales tax imposed by any sate or local government. This tax would be applied to all goods and services, including food, health care, legal fees, prescription drugs, home rents, and new home purchases. This could have drastic unintended consequences on nearly every sector of our society. For example, the proposal would tax the purchases of goods and services (other than education-related) by Federal, State, and local governments, including all government services and purchases, such as salaries for police officers and other public employees, as well as for new police cars.

    This would be a huge additional burden placed on State and local governments and could result in an increase in local bond rates. It has been estimated by the Committee on Ways and Means that State and local governments would have to increase their taxes by $300 billion pr year or reduce their level of services by $300 billion per year under the proposal. Additionally, the Federal government would have to pay the sales tax when purchasing military equipment and when it makes payments of wages to servicemen and women — assuming revenue levels based on the Federal government paying itself taxes defies common sense.

    Additionally, the national sales tax would place a great burden on retired individuals, particularly those on Social Security, who would face very large tax increases, since the burden of tax would be shifted from wages and capital gains to consumption. Most Social Security benefits are not taxed under current law, so with the national sales tax, seniors would be forced to pay high tax rates on goods and services they purchase with their Social Security checks.

    Finally, the Congressional Budget Office has estimated that the current income tax system has a noncompliance rate of about 15%. Most of this occurs at the business level and consists of non reporting of business sales. Since the retail sales tax will be collected at the business level, any realistic revenue estimate of the tax would have to assume significant levels of noncompliance. The Congressional Research Service anticipates that the retail sales taxes would increase the incentive for firms to avoid tax. For example, for a retailer with a 2% profit margin, the benefit of avoiding a profits tax is less than 1% of profits. However, if the retailer stands to save 20% of each dollar, the incentive to avoid is much greater. This is the reason that many tax scholars doubt that a high retail sales tax is feasible, and why no such high rate of the retail sales tax exists anywhere in the world. In fact, because of compliance problems, most countries imposing significant levels of consumption taxes use value-added taxes, which levy taxes on all stages of production of a product.

  135. Robert Heiney
    April 18th, 2010 at 21:26 | #135

    @Waco John
    I’m guessing your a Texan, like me. I, too, asked my congressmen how they felt about Fair Tax. The amount of doublespeak that came spewing from his, and her mouths was astronomical. There must be a school for politicians, that teaches them how to sound like they’re answering our questions, while talking about something completely different.

    I’m guessing, not a single member of the House or Senate (except for those who wrote and co-sponsored it)know what HB25 is. And why would they “want” to change a system that right now benefits them financially, while screwing us in the end (no pun intended). Anyone who thinks we live in the land of the free, need only look at our tax code to see how much we are under their thumbs, just waiting to be squashed like bugs.

    We need to clean house in both houses.

  136. Waco John
    April 18th, 2010 at 21:34 | #136

    I agree .. I don’t think this Congressman (Tex) knows as much as what is discussed at this website. I look forward to when all of Wash. that is presently ‘in’, is voted out. All of ‘em.

  137. Hank Van Gieson
    April 19th, 2010 at 08:15 | #137

    Waco John,

    Who is your Congressman? Rarely have I seen such an excellent summary or what is wrong with the Fairtax scheme, particularly coming from one of our elected officials. He nailed it and there should be no doubt as to why he doesn’t support HR25.

  138. Hank Van Gieson
    April 19th, 2010 at 08:26 | #138

    Tom, Roger, et al,

    Before providing the answers to my little Fairtax quiz, let me assure you that my intent was not to embarass anyone, or throw someone like Tom, who had the guts to respond, under the bus. The whole purpose of the quiz was to demonstrate the difference between what is in the actual legislation, and the Fairtax advocate’s claims found in various books and blogs. So, here are my answers for your consideration. Due to the length of my response, I have split my response into thirds and will post one section a day. Feel free to disagree!

    (1) HR25 abolishes the IRS and the Internal Revenue Code.

    False! HR25 does eliminate the IRS as constituted today, but the Internal Revenue Code will remain. HR25 replaces four of the eleven Titles in the current Code with sales tax Titles. Whatever it might be called, Treasury will have to reconstitute the IRS to assist the States in regulating and enforcing the Fairtax.

    (2) There are 67,000 pages in the Internal Revenue Code and supporting Regulations.

    False! According to a Tax Foundation report, in 2009 the entire code and supporting regulations could be printed on 20,000 double sided pages using normal legal paragraphing and assuming 250 words per page. The income tax portion of the code plus supporting regulations could be printed on 13,000 pages.

    (3) A sales tax inclusive rate of 23% would be revenue neutral.

    False! There is not one study that would support this claim. The AFFT base/rate study done in 2006 showed that the rate would have to be 23.8%, and most estimates by unbiased economists show that the inclusive rate would have to be in excess of 30% when factoring in tax evasion, tax avoidance, and the unconstitutional federal taxation of State and Local government consumption.

    (4) The after tax price of retail purchases will be about the same.

    False! Unless one believes that all gross pay and pensions would be reduced by the amount of current tax withholding, retail prices will rise by 18%. Based on actual revenue data from 2007, business embedded costs of the income tax system as a percent of retail sales consisted of 4.5% for payroll contributions, 3% for income taxes, and 1.5% for compliance costs. Removing the 9% in business tax costs and adding the 30% sales tax will result in an 18% retail sales price increase. (1.00 x .91 x 1.30 = 1.18)

    (5) The “prebate” is a tax refund paid in advance.

    False! While AFFT might want everyone to believe that the prebate is similar to a tax refund, in fact, the prebate is a cash grant entitlement costing an estimated $600 billion annually. Unlike an income tax refund, the prebate increases everyone’s gross income. The prebate can be spent and taxed or saved as circumstances dictate. The prebate is an entitlement that comes at a time when entitlements are rapidly squeezing out discretionary spending, including Defense discretionary in the federal budget.

  139. Kortney Kugel
    April 19th, 2010 at 19:17 | #139

    This makes so much sense!

  140. Kortney Kugel
    April 19th, 2010 at 19:20 | #140

    I am PRO Fair Tax. The current system is broken.

  141. Hank Van Gieson
    April 20th, 2010 at 08:03 | #141

    Here is the second installment of quiz answers.

    (6) Your dollars will purchase more under the Fairtax.

    False! While many people will have more take home pay, the 18% rise in nominal retail prices means that dollars will purchase less, not more.

    (7) You choose when and how much tax to pay.

    Disingenuous! Unless you choose to not live, choices about paying taxes would be quite limited. Half of a typical family budget goes towards services, and all services would be taxed. There are no untaxed groceries, no untaxed restaurant meals, no untaxed home heating oil or gas for automobiles, nothing untaxed in Wal-mart, etc. etc. Untaxed or “used” goods would be limited to the infrequent purchase of homes, automobiles, clothing, appliances, and so forth.

    (8) Everyone will be economically better off under the Fairtax.

    False! Many groups of family units will pay more in taxes and/or have less purchasing power under the Fairtax. For instance, a retired couple living on $30,000 from Social Security plus $18,000 of investment income would pay no income tax or payroll contributions on the $48,000 under current law. Under the Fairtax, their income would increase by the $4784 prebate, and if they spent all of it on taxable consumption, they would pay a gross sales tax of over $12,000. After deducting the prebate, their net taxes would still be $7350 more than under current law.

    (9) Interest bearing investment and debt instruments are not taxed.

    False! Section 801-806 of HR25 mandates an implicit tax on both investment and debt instruments based on the differential between the interest rate paid or received on debt/investment instruments, and the applicable Treasury rate. For instance, a short term $100,000 CD paying 2% would be charged a monthly implicit tax of $28.75 if the short term Treasury rate was 3.5%. ($100,000 x .015% x .23 / 12 = $28.75). A maxed out credit card with a balance of $10,000 charging 18% interest would be charged a monthly implicit tax of $27.79 if the mid term Treasury rate was 3.5%. ($10,000 x .145 x .23/ 12 = $27.79). These implicit taxes would be in addition to any normal service charges.

    (10) There is $10-$15 trillion of US owned assets in offshore accounts.

    False! There is not one shred of data supporting this Fairtax claim. There are many trillions in offshore assets, but those assets are owned by wealthy individuals from all over the world. According to the Tax Justice Network, an organization that tracks offshore holdings, there was $11.5 trillion in offshore assets in 2005, of which $1.6 trillion was owned by North American wealthy individuals. There are 23 sovereign nations in NA, so the best estimate for American owned offshore liquid assets would be significantly less than $1 trillion. And, failing an IRS amnesty provision in HR25, that offshore wealth is not likely to come rushing home.

  142. Hank Van Gieson
    April 21st, 2010 at 07:38 | #142

    Here are the last six answers to the Fairtax quiz. Kudo’s to Roger for guessing that all 16 were false. Perhaps Fairtax advocates will now understand the need to follow Neal Boortz’s advice and “believe nothing you hear, do your own homework, and make up your own mind!”

    (11) Buying “used” goods, (tax previously paid), eliminates the tax costs from the sales price.

    False! The retail price of untaxed goods would quickly adjust to the current new/used relationship due to competitive pressures. No federal tax revenue would be generated by the sale of “used” goods, but there would still be a significant tax cost element in the resale price. Think about it as the “embedded cost of the Fairtax”!! For instance, purchasing a new car with a dealer cost of $30,000 would result in an after tax price of $39,000. Subsequent resale of the car would include some portion of the $9,000 sales tax.

    (12) A national sales tax would have no impact on State and Local governments.

    False! The Fairtax proposes to tax State and Local consumption which would be unconstitutional under our federal form of government. 12-15% of the needed federal revenue would be hidden in higher State/Local taxes if this provision was retained.

    (13) The GDP will rise by 10% in the first year of implementation

    False! Taxes are not included in the GDP calculations according to many economists. Assuming that producer prices fall by 9%, then GDP should also fall by a like amount.

    (14) The Fairtax will save Social Security.

    False! The Fairtax only changes the method of collecting revenue from an income tax to a consumption tax. The Fairtax Social Security set aside amounts do nothing to address the looming crisis brought on by the imbalance between revenue collected and benefits paid.
    (15) The Fairtax is progressive.
    False! “Regressive” is an economic term with a precise definition - when a tax is regressive, the higher one’s income, the lower the proportion of that income that actually goes to paying the tax - and vice versa. Either a tax is “regressive” or it isn’t. The FairTax is regressive. Low income workers will pay a larger percentage of their income in taxes than middle class workers, and middle class workers will pay a larger percentage of their income than high income earners. The Fairtax “prebate” simply moves the point of “regressivity” from zero to the AFFT adjusted poverty level amount.

    (16) The Fairtax plan ensures that everyone pays their fair share of taxes.

    False! Due to the Family Consumption Allowance, 30 million lower income workers would pay no net federal tax annually, yet would still qualify for full Social Security pension and health care benefits.

  143. April 21st, 2010 at 22:52 | #143

    @Hank Van Gieson
    A few things.

    Hank Van Gieson :

    (6) Your dollars will purchase more under the Fairtax.

    False! While many people will have more take home pay, the 18% rise in nominal retail prices means that dollars will purchase less, not more.

    Assuming a current 25% tax rate for somebody, they will now be taking home 33% more money.

    Hank Van Gieson :

    (16) The Fairtax plan ensures that everyone pays their fair share of taxes.

    False! Due to the Family Consumption Allowance, 30 million lower income workers would pay no net federal tax annually, yet would still qualify for full Social Security pension and health care benefits.

    This year 47% of Americans will pay 0 in taxes. That is a bit more than 30 million.

  144. Hank Van Gieson
    April 22nd, 2010 at 03:34 | #144


    True, 47% pay no INCOME taxes, but all workers pay their 7.65%
    FICA premiums. Under the Fairtax, FICA contributions are included on the list of taxes to be replaced, so, due to the prebate, there are 30 million workers that would pay no net federal tax annually, but still qualify for full SS benefits. At the AFFT adjusted poverty level, there are actually 50 million families that would pay no net tax due to the prebate, but 20 million of them are retirees who pay no FICA taxes. I stand by my claim that we would have 30 million “free loaders” compared to the less than 1 million workers under current law that can qualify for refundable tax credits in an amount that would totally offset their FICA payments. 1 million versus 30 million! Disconnecting 30 million workers from the cost of the federal government does not seem to me to be good for the country.

  145. Chuck
    April 22nd, 2010 at 07:53 | #145

    Sorry for my tardiness midterms this week. As I stated last week you are brilliant my friend. But let’s look at the issue logically, for a period. I want to start with the obvious Government Reporting and the like. According to our government we have a national unemployment rate of 9.7% The Labor Dept. equates this number by new jobless claims for benefits as the main tabulator for that number. However, there are unknown millions who have exhausted their benefits and are no where to be found on the unemployment numbers. Maryland for example has shown the highest rate of job creation in the last year. Due in large part to the Census Bureau being located there. Artifical Creation. This term has no meaning in politics. The politicians will run on this all election season. Since Obama has been in office there has been xxx number of jobs created. Let’s figure out a way to count ALL of the unemployed. My hypothesis the rate is nearly 16%

    Then we have the Dept of Education. They have a budget of nearly 70 Billion. I can not find anywhere in the Constitution where it states that the Federal Government needs to have this entity. I am quite sure that the states are fully capable of monitoring their educational needs.

    The Defense Dept. Here is one that is near and dear to my heart. As a Navy fellow I understand the role of our military in defending our freedom. I for one trust the military leaders when they come to the hill each year and state their needs for the upcoming budget year, and state why they need these things. Over the last 20 years or so they have been telling Congress that certain military bases, certain weapon projects are no longer needed. The politicians do not listen as they cannot have bases closed in their districts. They cannot have defense contractors laying off people in their districts. That politician would be axed if this happened. So we have useless bases kept open, useless planes and other instruments being kept afloat by them. Again Artificial job creation. Instead of slowly working these people into the next great project they continue to build obsolete projects.

    As I said in one of prior posts, we continue to make theories based on outdated information. See the Health Care Bill. This theory has been constantly done in highway projects. They build a highway based on 5 year growth projections, but if it takes 5 years to finish the highway then the numbers were incorrect and the highway before it even opens is useless. We must come back and widen it again.

    I say all of that to say this, Every year that our unemploment is at (the true number) around 15% these people are not paying into the SS system. But will expect benefits when their time comes. They pay no income tax obviously! So in essence our current revenue generating system is so flawed it is appalling. The GDP is another scewed number. Maybe with your brilliance you can help me understand. This number incorporates ALL things built in America. So I proffer this, If I am building a house, My concrete comes from Mexico, My drywall from Canada, My lumber from Canada, and my furniture from Europe, what part of the house is counted towards the GDP? For the record I am being series here, I do not know the answer to this question.

    I believe I read somewhere that in 2008 the government collected 3 trillion in revenue. I believe I read somewhere that the entire retail sector from Autos to Zambonis including food at bars etc. was around 29.7 trillion. Now if this number is true and again I am not sure as my previously mentioned recording issues, this would be a revenue collection measure of 7.4 Trillion at an average of 25% tax rate. Not changing any spending, not changing any GDP number, not changing any unemployment rates true or not. If this number is true then it reflects the the TRUE purchases of the country. Not only it legal residents but anyone who visited here and/or lives here illegally.
    Of course I am sure you will help nme with the accuracy of that retail number.

    Now, while I am for a Fair Tax System, the key word here is FAIR. What I mean is this, Groceries, utility bills, home heating oil, etc. would be taxed at a much lower rate. For example 10% why you ask, these products are purchased daily by nearly everyone. Having a 20 to 30% rate on these is counter productive. Even the poor illegal residents by groceries. We are now collecting a 10% tax on their existance. The true poor struggling Americans will be also paying their FAIR share, a share that is truly affordable.

    Now, non luxury vehicles, would have a 15% tax on these. moderate number and FAIR to the people buying them.

    Luxury vehicles, yachts, homes over 1 million dollars, other higher income luxuries would pay the 30% number. This, in my estimation, would do two things. First the drug dealers, the businesses that send money out of the country, etc. would now be paying their share. Did I mention that it now no longer legal to purchase a car oversees and bring it here. A dealer in America must process the deal and collect the tax. Same with yachts, etc.
    In summary we are having a FAIR tax just the rates are adjusted accordingly.

    The biggy here is internet purchases. I believe I read that Americans are somewhere near 300 Billion annually and 85% of these purchases are not taxed. They are only taxed in some states that have state level taxes for companies in their states selling and buying the merchandise.

    We as a nation need to stop using bogus reporting tools the drive consumer habits. That drive government spending, that drive budgetary movement. Give the American people that are truly legal back their money let them decide what they need, what they want, what they can afford. Then the government gets theirs on the back end not the front end.

    Finally, if these number are correct, I would assume that the Feds could take a certain percentage out of the revenue to pay for medicare and social security. There
    is certainly enough revenue to do so. Quite possibly do so without a loss.

    I am certainly not as intelligent as you, I still have two more years of college to go, but logic dictates that the system is broke. It has been broken for years. I personally can not think of a better way not only to drive the economy, but actually get one number to understand the economy. The jobs will come back under this system, employer costs must go down it is obvious. That number is not so obvious as you have explained, but a drop none the less.

    Now in a non related issue. I received this email yesterday. The movie is nearly 2 hours long, after viewing it last evening, I am no longer sure what to believe. Since I have read soem brilliance here on this site, I am asking all of you to take some time and view this video and let me know what your opinion is on the issue. The video is regarding our government and it direction.


    God Bless


  146. Hank Van Gieson
    April 22nd, 2010 at 08:51 | #146


    Excellent post, and I would suggest that I am no more intellegent than you, just more experienced. It greatly encourages me (at age 77) to find someone your age genuinely interested in the future of our republic, and with a good grasp of the major issues.

    As for the GDP issue, here is a short definition: “It is the market value of all final goods and services made within the borders of a country in a year”. The key word here is “final”. It is the retail value of all goods and services. The National Income Product Accounts (NIPA) is the source for determinimg the GDP. By the way, those tables were used by the Fairtax economists to determine the Fairtax taxable base, which in 2007 was around $11 trillion after removing education tuition, etc. In 2008, the GDP was around $14 trillion, so I’m not sure what your $29 trillion is?

    A bit of trivia for you to think about. When President Washington sat down at his first cabinet meeting, there were five department heads at the table, plus the VP. Present were Knox, War Department, Jefferson, State Department, and Hamilton, Treasury plus the Attorney General and the Postmaster General. When Obama held his first cabinet meeting, there were 15 Department heads present plus countless heads of independent agencies lining the walls. One of the more important tasks for your generation would be to reduce the size and cost of the federal government. I’m a strict Constitutionalist, and there are numerous Cabinet Departments that we can do without, including Education, Homeland Security, Commerce, HHS, HUD, etc. etc. I would hope you will support a “10th Amendment Commission” charged with reducing the size and cost of the federal government by 10% annually, with their recommendations subject to an up or down vote by Congress with no amendments. Worked for the Base Realignment and Closing Commission, it could work here, but the Obama Commission has no Congressional authority and will probably fail.

    I’ll take a look at the video and let you know my reaction.


  147. FinancialBondage
    April 29th, 2010 at 18:22 | #147

    I hate to see anyone lose a job, but if the IRS was gone, hmm. Not sure if that bothers me much. that is one agency that should have never been created in my view. EPA is another. There is just too much waste in government, esp at the federal level. Many agencies are not needed.

  148. Beverly Davis
    May 14th, 2010 at 11:37 | #148

    Anything would be better than the tax system we have now. The IRS is becoming nothing short of a sword used by every politician to instil fear and buy favors. If all the hidden taxes we now pay for were erased (as with the Fair Tax) the cost of the final products should not rise in any significant way.

  149. May 20th, 2010 at 17:51 | #149

    Hello there, I couldn’t see a means to contact you, and so I really hope that you read this comment. I own a website about ladies wetsuits, and thought you would like to exchange links with me. I have submitted my email address if you would like to get in contact. Thanks.

  150. Carol Carrier
    May 23rd, 2010 at 14:15 | #150

    President Obama would never agree to the Fair Tax, because it minimizes governmental power and control over the people. It would also force all the crooked politicians to pay taxes and not be able to hide or divert their incomes. We would no longer need the IRS and we would no longer have payroll taxes, giving us the full amount of our earnings to spend and likely, stimulate the economy hugely without help (or hindrance) from the government! All illegal activity, drugs, prostitution etc. would now pay taxes, creating a huge base, since crime creates more money than average wage earners.

    It would create transparency and Americans could see where their money is actually going. Remember, Obama has given the IRS huge control in implementing the healthcare bill and assessing fines and penalties to those who refuse to buy health insurance. The government would lose control over spending OUR money and they will stop this bill at all cost to remove this freedom from the people, to spend their own money as they see fit!

  151. Carol Carrier
    May 23rd, 2010 at 14:56 | #151


    You responses are a bit skewed and not totally accurate. Your answers can only indicate to me that either you are a lobbyist, work for the IRS or some governmental group that would be eliminated, thus eliminating your job!

    Let’s face it. Who in their right mind would want to replace the existing tax code of 54,000 pages, containing more than 2.8 million words which has been revised 16,000 times, for a simple, clear 133 page H.R. 25 tax reform bill? Research has recently been completed on the IRS where the researcher stated, if you took the returns of 20 families from various income levels, and gave them to 20 different IRS agents to complete, it would be virtually impossible for 2 of them to come up with the same tax number. Doesn’t this tell you the current tax system is an abomination? Anyone who supports it MUST have a vested interest!

  152. Bill
    July 25th, 2010 at 16:10 | #152

    We must buy new items to pay taxes? How about everyone paying the same percentage of tax on all income, without exemptions or deductions? Medicare and my city collects taxes this way and it works. For example, if a couple that both works, with one making substantially more money than the other, should they both share the expenses equally? With that method, they may as well live individually. I pay taxes for schooling, but never had children. I still understand the need for a public school system and don’t complain about paying for one. The wealthy shouldn’t complain either as they are blessed with wealth!

  153. Robert Heiney
    July 26th, 2010 at 08:46 | #153

    OK. Bill. Let’s say this. If you get paid cash, and never deposit that money in a savings or checking account, how would the IRS know you made that money, and how much to tax you for it. The person who gave it to you would have to report it to the IRS. This doesn’t happen when cash is used as payment, because the company paying you would then have to pay their half of your Social Security, Medicare/Medicade and offer you Health Insurance.

    Another scenario would be if you sold some of your household goods to buy new stuff. If you hold a garage sale and clear out all your old things, technically, you’re required to report all of that money you made, as income. DO YOU? I’ll say no, you don’t.

    The FairTax puts an end to all the guess work involved in your income, lets you keep all of it, then taxes you when you buy new stuff (there is no tax on items that are used because they’ve already had the taxes paid when they were new). So you control how much tax you pay, not the government.

    Of course, the government has to agree with this method taxation, and I’m guessing you and I will be long dead before any smart politicians endorse the FairTax.

  154. Ray White
    July 27th, 2010 at 20:07 | #154

    I agree with you that the Fair Tax will not eliminate criminal enterprise, except possibly that particular one known as our overreaching Government. No tax system will eliminate crime.

    I also agree that we’ll be long dead before any incumbent politician sponsors a Fair Tax bill with a chance of passing.

  155. JabboDog
    July 28th, 2010 at 05:24 | #155

    Fair Tax! Because the rich don’t have enough money!

  156. ben
    July 28th, 2010 at 15:01 | #156

    the fair tax wont work great idea but wont work, say you sell a car for 5k, you tell the buyer there is a sale today car is 500.00 but he must leave you a 4500 tip, buyer saves big on tax, government gets next to no money, it wont work

  157. Peter
    July 28th, 2010 at 15:24 | #157


    Ben if you read clearly any used item is not taxed because it was taxed when it was sold new.

  158. Robert Heiney
    July 29th, 2010 at 00:29 | #158

    ONLY NEW ITEMS GET TAXED! Used are tax free. We’ve been over this a lot. And the rich don’t get anymore money than they get now. They just pay more taxes for their vanity purchases. They won’t get caught dead driving a Hyundai.

  159. William
    August 4th, 2010 at 04:09 | #159

    It’s not how the government taxes that’s the problem, it’s how much the government spends. The fair tax does not alter that. The Fair Tax will still require an IRS to collect the trillions of dollars of Internal Revenue

  160. William
    August 4th, 2010 at 05:17 | #160

    A Fair Tax would lead to a more intrusive IRS with reporting required by everyone to prove their purchases are final point of purchase rather than small or large business purchases prior to final sale. Reporting would also be required to prove existence of individuals/families who will get prebates. That does not just drop out of the sky. In other words, everyone would still have to have a federal tax number with reporting done to prove their purchases were final and not for future final sale.

    If a business hires contract labor such as an attorney, would that be final point of purchase service or would it be part of the cost of a final point of purchase product? Woujld the attorney have to keep records as to which of his services are final point sales of included in someone elses final procust sale Records would need to be kept and filed to distinguish the distinctions, for everyone. Just as cumbersome and just as onerous; and for a revenue neutral change, it makes no sense to go to the trouble. The IRS code did not start out a thick as it is now, and the Fair Tax would exlode into an equally complicated mess in very short order. All taxes are unfair. Spend less.

  161. William
    August 4th, 2010 at 05:25 | #161

    A Fair Tax would lead to a more intrusive IRS with reporting required by everyone to prove their purchases are final point of purchase rather than small or large business purchases prior to final sale. Reporting would also be required to prove existence of individuals/families who will get prebates. That does not just drop out of the sky. In other words, everyone would still have to have a federal tax number with reporting done to prove their purchases were final and not for future final sale.

    If a business hires contract labor such as an attorney, would that be final point of purchase service or would it be part of the cost of a final point of purchase product? Would the attorney have to keep records as to which of his services are final point sales or included in someone elses final product sale Records would need to be kept and filed to distinguish the distinctions, for everyone. Just as cumbersome and just as onerous; and for a revenue neutral change, it makes no sense to go to the trouble. The IRS code did not start out as thick as it is now, and the Fair Tax would explode into an equally complicated mess in very short order. All taxes are unfair. Spend less.

  162. Charlynn
    August 4th, 2010 at 21:06 | #162

    But how will a fair tax effect me? I work and pay income taxes but I live in Oregon and there is no sales tax right now. What happens when I want to buy a house? It seems like things like that would cost me way more.

  163. Robert Heiney
    August 5th, 2010 at 00:30 | #163

    You still won’t pay any Oregon sales tax. This is not state. It’s Federal. Oregon will collect the Federal Sales Tax and hand it over to the US Treasury. Depending on whether real estate will be taxed, is something worth discussing. But since taxes will no longer be taken out of your paychecks, your take home pay will rise depending on what tax bracket you’re in when and IF Fair Tax ever gets passed. So if your in the 28% tax bracket, you’ll see close to 28% more in your paycheck. For most, it balances out. Things will cost more at first, until corporations lower their prices when they don’t have to pay the corporate tax (which you pay every time you buy stuff now. It’s hidden in the cost.)

  164. Gerald Shilling
    August 26th, 2010 at 15:53 | #164

    As a person who is about ready to retire with a more than adequate amount of wealth and retirement that will be taxed heavily when it take it out I support this kind of tax. I have already been able to acquire many of the nice things in life or have owned them and know I really don’t need them so I don’t plan to spend a large portion of my income as will be true for younger people who think they need to buy these things and thus they can pick up some of the tax burden that I would have had given an income tax. I think this should be sold to young people as a fair tax even though the burden will probably be shifted away from older people like myself. I simply will vacation in Europe rather than pay a higher sales tax in the United States. Please don’t tax medical care as I think this would be unfair to us seniors. Again, I think younger people will spend a larger portion of their income than older people and thus in the end pay a larger portion of their income than us older people.
    I think they taxed luxury lots at a very high rate and almost destroyed the industry. So you that support it may lose your job because of a decrease in demand-but you probably deserve to lose your job if you support it.
    Anyway, I welcome it because I think it will lower my taxes and raise taxes on younger workers.
    Just don’t mess with my Social Security and Medicare!! Long live the Tea Party.

  165. Mike Gautreaux
    August 27th, 2010 at 01:33 | #165

    I am a Consumption Tax Supporter, and, to Hank Von Bomma-Lamma-Ding-Dong, your analysis ROCKS! It has definitely challenged my 35 year old brain, but I see most of your points. BLUF: Reward what you want to see more of, and Punish what you don’t want to see more of. I do believe the truth of the FAIR TAX lies somewhere between Mr. Bortz’s rosy projections, and your candid critiscism. The slippery slope in this approach comes is what has convuluted our current tax system - Goverment picking winners and losers. I do think Food, Water, and Shelter could be exempted.

    FOOD: plucked from the branch, pulled from the ground or skinned from the animal - add salt & add tax!!

    SHELTER: Home ownership incentive will not go away because I gotta think you as a renter will be paying the cost at some level.

    WATER: Just from the tap. No Evian discounts.

    Thats it.

    I have a question I would like you to think about. If business to business purchases would not be taxed because till the final point of sale, what would stop a glut of new “home business” applications from being submitted to take advantage of some the obvious loopholes.

    Hank, you mentioned you were 77. Nothing should change for you. You are a part of the “Greatest Generation”. Unfortunately, a truth has not been mentioned to this point. While I completely agree with Bradley’s recommendations as stated above:

    -Former Senator Bill Bradley wrote in his new book that Social Security could be returned to solvency for another 100 years by (1) raising the eligibility age, (2)lifting the cap on earnings, (3)bringing into the plan all State and Local employees that currently are enrolled in other plans, and (4) Switching to a chained method of calculating cost of living increases, in effect recognizing that buying habits change as prices increase.

    DUH!! The ugly truth of the matter is the “Baby Boomers” (born 1945 and later) didn’t have enough kids to take care of them all, and have benefitted the most from your Generations sacrifices. That generation could take a lesson from your generation, and realize they didn’t pay enough through their working years, and should be really upset at those they elected from 1963-present who left them in this situation. SS & Medicare benefits will be altered if not cut at some level. I’m sorry, but I can’t take care of them all to the same level you are being taken care of with the way things are currently set-up. We can’t print funny money indefinitely.

    I really do not like the idea of the prebate at all for any, but those like yourself, born before 1945, who have been in the retirement system and should be protected if the prices go up as you project. Unfortunately, that prebate shouldn’t apply to anyone born after 1945. Boy, that is going to piss some old dudes off I know, but they have to continue to pay because they didn’t have enough kids and didn’t elect the politicians who would set the conditions for them to not have this burden.

    There is no perfect tax system, but consumption based taxing is the cultural bent we should go after. As an Inde-Libertarian, born from a teacher and mud engineer to 20 year old parents living in a garage apartment in front of the Black Frat house, I know what being poor is like, and I have eaten more than my fair share of beans and rice. If it is uncofortable, people will decide what they need to do to get out of being ucomfortable. The idea of the self-made man though lines up with the possibility to denay myself today to save for tomorrow as much as I can/want with no tax penalty, and be able to pass that on to my daughters with no tax penalty…. can you say generational progress??

    I will end with this. When I was an Army Captain, I sponsored a Lithuanian Captain during our Captain’s Career Course. As a citizen in a country where taxation has moved almost entirely to consumption based taxation, they are just fine, and quite pleased with their system. Imperfect - yes. Better - DEFINITELY!!

    Mike Gautreaux

  166. Mike Gautreaux
    August 27th, 2010 at 01:38 | #166

    and now I am going to bed, and I apologize for all of my typo’s and misspellings. I am tired.

  167. bill
    September 7th, 2010 at 13:10 | #167

    people get a life .

  168. Len
    September 18th, 2010 at 14:34 | #168

    Does the tax also apply to stock buys? Len

  169. John
    September 21st, 2010 at 08:25 | #169

    I should imagine that the business community would love the Fair Tax! Just don’t expect them to lower prices due to savings because of it. And the “prebate” idea sure leaves a lot open to give a lot of money to people who really have no right to it. Kind of like expanding the welfare base. Maybe an ID card to give them a discount on sales taxes at point of purchase? So now we will have a 23% Federal tax on good AND the usual state taxes? Government, the invisible hand in everyone’s pocket! How about a drastic reduction of government, instead?

  170. John
    September 21st, 2010 at 09:12 | #170

    And by the way, has anyone actually sat down and figured just how much the fair tax would cost them? A lot of us live from paycheck to paycheck. That means we pay out every penny we get in, and every one of those pennies would be subject to this tax, or $2,300 for every $10,000 of income if everything, even groceries, were included! That means if you spent all of your $44,000 income just getting by, you would have to pay out $9,200 in Federal taxes! Do you now pay that much in income taxes? Plus, with the increased cost of goods because of this tax, you wouldn’t be able to afford as much! For instance, if you were just barely able to afford a $1,000 rent payment, how about your new $1,230 rent payment? Meanwhile that family with $100,000 income which only spends $44,000 has $56,000 in the bank! This “Fair Tax” is a scam, pure and simple!

  171. Craig
    September 21st, 2010 at 10:37 | #171


    You are forgetting that everything you buy already has taxes added into it. If I sell widgets I need to add 30% in State and Federal taxes to the cost of that widget. If I don’t have to pay the Federal Income tax on all the Widgets I sell, I can lower the cost of it to be competitive.


  172. Robert Heiney
    September 21st, 2010 at 11:05 | #172

    John, you’re listening to the wrong people. Your paycheck, with the Fair Tax implemented, “ELIMINATES” the income tax, and the IRS. This means you get (on average) the 28% they take out now for the income tax alone as extra pay every check. Add to that the 6% you pay towards Social Security. And what ever comes out for Medicare/Medicaid. So you actually get a 30+% raise in take home pay. The beauty of the Fair Tax, is that “you” pay as much tax, as you want to spend. If you don’t want to pay that much, then you don’t buy that much new goods (don’t forget, used goods are not taxed, because the tax was already paid for when that item was bought new).

    Second of all, with the Corporate Tax going away, retail prices should go down because then the manufacturers won’t have to add their Corporate Tax into the retail price. (You do know we pay their Corporate Taxes too, don’t you?). Anyone who thinks that corporations don’t pass on their corporate taxes to the consumer, is fooling themselves.

    The Fair Tax makes sense in so many ways. Just the amount of paper it takes for the yearly tax returns is enough reason to pass this for me. Not to mention that April 15th will be just another day in spring.

  173. Karl Llewellyn
    October 3rd, 2010 at 15:09 | #173

    I am a huge supporter of the Fair tax. It would get rid of alot of unnessary taxes. Plus the illegals would pay like we do. No more working under the table. That means more money for the Government.

  174. Tim
    October 4th, 2010 at 11:49 | #174

    I’m not buying that 22% of a products cost is taxes. I own a company with $7 million in revenue. We pretty much break even every year and don’t pay much in federal income tax. We pay a lot in FICA but that’s another story. I agree you will get some revenue from illegals on the amount they consume - but you won’t get any from what they send home. You may be fine with that and figure something is better than nothing - then think about single moms - many pay nothing in federal tax now. Small business would fail - but again they don’t pay much in taxes anyway.

  175. Tim
    October 4th, 2010 at 11:57 | #175

    Robert Heiney :@JohnJohn, you’re listening to the wrong people. Your paycheck, with the Fair Tax implemented, “ELIMINATES” the income tax, and the IRS. This means you get (on average) the 28% they take out now for the income tax alone as extra pay every check. Add to that the 6% you pay towards Social Security. And what ever comes out for Medicare/Medicaid. So you actually get a 30+% raise in take home pay. The beauty of the Fair Tax, is that “you” pay as much tax, as you want to spend. If you don’t want to pay that much, then you don’t buy that much new goods (don’t forget, used goods are not taxed, because the tax was already paid for when that item was bought new).
    Second of all, with the Corporate Tax going away, retail prices should go down because then the manufacturers won’t have to add their Corporate Tax into the retail price. (You do know we pay their Corporate Taxes too, don’t you?). Anyone who thinks that corporations don’t pass on their corporate taxes to the consumer, is fooling themselves.
    The Fair Tax makes sense in so many ways. Just the amount of paper it takes for the yearly tax returns is enough reason to pass this for me. Not to mention that April 15th will be just another day in spring.

    They are not talking about getting rid of FICA. My wife and I make $110,000 and pay about $6,000 - That’s about 5% not 28% (I have AGI of $63,000 and two kids). Fair tax doesn’t work for me - and if the fair tax is included on tuition for my kids - forget it.

  176. Robert Heiney
    October 4th, 2010 at 19:07 | #176

    FICA is costing you 6%. Your company pays the other 6%. Alright! Even if it doesn’t include FICA, the lowest tax bracket for you and I (my wife and I make about the same as you) is 28%, and that’s with 2 kids and a mortgage. The Fair Tax, at its inception, is only 23%. That’s 5% less than what’s taken out of you check right now. Plus everyone receives the prebate, which is calculated on your current salary (about $2500) every year. Those who make less get more. The Fair Tax also has some exemptions too. I’m not sure if tuition is one of them though. So you’re telling me that you’d rather they take the money you work so hard for, right out of your check, rather than you controlling the amount of tax you pay by what you buy.

    And go ahead and let the illegals send their money home. They have to pay Western Union for that feature, and that would be taxed, as well as the food, gas and other goods they have to buy to stay in this country. So they get to participate a little more. Read the facts. I hope you have, and are not just giving knee jerk replies listening to the politicians who don’t want this to come to fruition.

  177. Robert Heiney
    October 4th, 2010 at 19:20 | #177

    Yes you will get some from what they send home. Western Union, and other money transfer services, aren’t free. They have to pay for that, and that’s taxed at 23% as well.

  178. Tim
    October 11th, 2010 at 16:17 | #178

    Robert Heiney :@TimTim,FICA is costing you 6%. Your company pays the other 6%. Alright! Even if it doesn’t include FICA, the lowest tax bracket for you and I (my wife and I make about the same as you) is 28%, and that’s with 2 kids and a mortgage. The Fair Tax, at its inception, is only 23%. That’s 5% less than what’s taken out of you check right now. Plus everyone receives the prebate, which is calculated on your current salary (about $2500) every year. Those who make less get more. The Fair Tax also has some exemptions too. I’m not sure if tuition is one of them though. So you’re telling me that you’d rather they take the money you work so hard for, right out of your check, rather than you controlling the amount of tax you pay by what you buy.
    And go ahead and let the illegals send their money home. They have to pay Western Union for that feature, and that would be taxed, as well as the food, gas and other goods they have to buy to stay in this country. So they get to participate a little more. Read the facts. I hope you have, and are not just giving knee jerk replies listening to the politicians who don’t want this to come to fruition.

    Robert, If you and your wife make $110,000 like we do and your AGI is $73,000 Your tax would be:

    $9,350 plus 25% of the amount over $67,900 which for $73,000 is $1,275.

    That amount is $10,625. You have two kids so take off $1,000 each and you get a tax liability of $8,625. So you pay about 8% in Federal tax not 28%.

  179. Robert Heiney
    October 11th, 2010 at 18:02 | #179

    Look, I’ll give you that by the time I’m done with my deductions, yes, I’ll end up with less than the 28%. But, the 28% comes right out of my paycheck every two weeks. I have to file a return, every year to get the majority of that back. That’s 20%, I could have put into my 401k or my Mutual funds, to make even more money.

    I’m not in any way, saying the Fair Tax is the “Best”. I just think it’s the best solution to an unjust and cheat friendly system we have now. At the very least, I can decide how much tax I want to pay, by what I choose to buy. Then keep the rest. That’s all I’m saying. I work hard for my money, and I’d love to keep what I make. All of it.

  180. Tim
    October 12th, 2010 at 15:38 | #180

    Robert, you can change your W4. There is no law saying you have to have 28% taken out of your check. I tell my payroll to withhold a set amount each paycheck (10%).

    The problem I see with the fair tax is there is no way they are going to collect enough to fund Medicare, Medicaid and two wars at 23%. The middle class will be hit with all the short falls (increase in the 23% and less on the “prorate”). The budget was fine before we lowered the top rate from 39% to 35%

  181. Peter
    October 12th, 2010 at 15:46 | #181

    The budget was/will never be fine as long as they keep kicking Medicare, Medicaid, and SS down the road. We don’t have a problem with the revenue to the govt we have a problem with entitlement spending that is growing at an unsustainable rate. The fairtax was designed to roughly equal in revenue what we take in currently. So the real problem is how much spending increases.

  182. Tim
    October 12th, 2010 at 15:55 | #182

    Craig :@John
    You are forgetting that everything you buy already has taxes added into it. If I sell widgets I need to add 30% in State and Federal taxes to the cost of that widget. If I don’t have to pay the Federal Income tax on all the Widgets I sell, I can lower the cost of it to be competitive.

    If I sell $1,000,000 worth of widgets and it cost me $950,000 to make them. I pay myself $50,000. I pay ZERO federal income taxes from my business and not much in personal federal income tax.

  183. Robert Heiney
    October 12th, 2010 at 16:46 | #183

    Tim, I can appreciate your concerns. I don’t like the income tax, because it punishes hard working people by taking money they’ve earned. The government is like the robber on the street who demands your wallet. They didn’t work for that money, what right do they have to any of it. I would like to have some control as to how much I send to Uncle Sam. Consumption tax lets me decide how much I spend and send. I believe that even at 23%, it will be enough to keep SS and Medicare/caid solvent. I would “hope” that some companion legislation could be enacted that strictly curtails Government spending through elimination of PACs, Earmarks and lobbyists. All spending legislation should also have the vote of the people who have to pay for it.

    I know we disagree on this, so we’ll just agree to disagree.

  184. Tim
    October 12th, 2010 at 17:59 | #184

    If you see the government as a robber on the street what is the difference between either tax? To be honest I think the 9% I pay in taxes on $110,000 is a bargin - I can see why people that have taxable income of $1 million a year have a problem paying $390,000 (at 39%) as opposed to the Bush tax cut $350,000 (at 35%)and I just have to say “freedom is not free”.

  185. Robert Heiney
    October 12th, 2010 at 21:19 | #185

    I see Government as a necessary evil. Someone has to pay for it. I just think taxing income is counter productive. A lot of workers feel they work for the government, the first 4 months of every year, and it keeps going up and up. In my humble opinion, employees would feel much more productive with a whole lot more in their paychecks.

  186. Tim
    October 13th, 2010 at 13:10 | #186

    Again, I don’t see the difference between paying in your paycheck or the grocery store. My daughter is going to college and right now she makes about $8,000/year for rent/stuff. She pays zero in federal income tax because of the personal exemption ($3,650) and making work pay tax credit (Obama’s $400 tax CREDIT gift to her). I’m still not bying that FICA would stop, but to be fair that would be $612. Under fair tax she would pay $1,840.

    I pay her tuition $9,000/year and will be using the hope tax credit ($2,000 TAX CREDIT - Thanks Obama!).

    I was on the USS Macklin Island over the Holiday’s and my thought was “damm this must cost a pretty penny to operate” Price of Freedom.

  187. Stanford Pape
    October 22nd, 2010 at 16:53 | #187

    I do not see, in any of the comments or article, the mention of actual pay. An hourly worker making $20.00 under our current system is actually making approximately $15.00/hr(take home). A person making $50,000 in salary in actually making $35,000(net). With the Fair Tax the hourly worker bring home $800/wk ($20 x 40 hrs) not $600/wk and the salaried person brings home $50,000. By eliminating the IRS and receiving full paychecks, you’ll have more than enough to pay the sales tax. As a single individual in a high income bracket, the Fair Tax makes the most siense to me. Granted, for some, like Tim’s daughter above, may pay more, but not for the majority.

  188. Steverooni
    October 25th, 2010 at 03:40 | #188

    Just freekin wow. I was all for fair or even flat taxation before I started reading through here. Now I’m avidly Fair Tax. Although frankly I’d still like to see a mix of the two. What can I say I like seeing what Americans can do with the 10% deductions to charities :D. Either way Fair Tax=freedom and should be implemented as soon as possible but it’ll never happen if we keep electing lawyers :P

  189. Jim P
    October 27th, 2010 at 18:48 | #189

    I’ve been retired for a few years and no longer pay federal taxes. My question is this: what does this do to people in my situation? Does it mean that I’ll start paying what amounts to a federal tax again?

  190. Tim
    October 29th, 2010 at 15:16 | #190

    Jim P :I’ve been retired for a few years and no longer pay federal taxes. My question is this: what does this do to people in my situation? Does it mean that I’ll start paying what amounts to a federal tax again?

    Yes Jim it does because now you are a consumer and not an earner. You will be taxed at least 23% more when buying gas, airline tickets, hotel stays, assisted living. The reason they call it a fair tax is because they beleive it’s not fair you do not pay taxes in your retirement.

  191. Ron Meier
    October 29th, 2010 at 22:32 | #191

    @Jim P
    Jim, you will receive a “prebate” check every month that reimburses you for the amount of tax you would typically pay based on your income up to the poverty level. In effect, if your income is below the poverty level, you still won’t be paying any tax. I believe your question is covered on http://www.fairtax.org under FAQ. There are better answers than what Tim gave you.

  192. Jim P
    October 29th, 2010 at 22:55 | #192

    Thanks, Ron. I’m well above the poverty level due to SS and retirement income. I’ll check fairtax.org but now feel that a flat tax might be better for everyone. Seniors with decent income retirment income will be hit hard with the fair tax. I love the idea of the IRS becoming irrelevant, but think that too many older folks will see their retirment income dwindle considerably.

  193. Robert Heiney
    October 30th, 2010 at 00:51 | #193

    @Jim P
    That’s going to depend on how much above the poverty level you are. You will still get a prebate every month, equal to the amount up to the poverty level. So I think the amount you will pay will still fall well below even a Flat Tax amount. I could be wrong however. But that’s how I understood it to be.

  194. Jim P
    October 30th, 2010 at 09:20 | #194

    @Robert Heiney
    Thanks, Robert. I’m nowhere close to the poverty level. I’ll just wait to see what shakes out for the upcoming discussions and hassles in congress and the press.

  195. Arne
    October 31st, 2010 at 07:49 | #195

    As far as the tax being regressive, the system already is in place to not make it regressive. Grocery stores do not charge sales tax on unprepared foods and this same system can be used by all retailers. The list of essential items can be built to include for example tennis shoes or jeans less than $50 in price. Therefore, low income people who spend the majority of their income on essentials would pay no tax unless they buy luxury items. Home ownership can still be promoted by not charging sales tax on the first $500,000 of purchase price on a primary residence. New cars can have the first $15,000 of purchase price be tax exempt.

    As far as retirees who have paid income tax being forced to adjust. First, they are paying income tax on social security, investment income and pension payments. Eliminating the income tax burden would have more money going into their pocket and if they are spending their money on essentials not subject to tax, they will pay no tax.

  196. Arne
    October 31st, 2010 at 08:02 | #196

    Adding to my previous post,,, here is a list of items that could be tax exempt using the grocery store model that has been in use for decades.

    1. unprepared food - grocery items like meat, fruit, veggies, milk, butter, eggs, bread
    2. clothing below a certain threshold of price - jeans or tennis shoes below $50.00 in price, infant and toddler clothing.
    3. day care centers - helping working mothers
    4. healthcare expenses - doctors, dentists and vision
    5. prescription drugs & over the counter medication
    6. electricity, natural gas, water utilities
    7. interest expense - home mortgages, car loans and other consumer debt giving consumers the same benefit that businesses have always had.

  197. Len
    October 31st, 2010 at 11:33 | #197

    I am all for the FairTax and i am 79 nyears old! We should not start putting some products in a tax free zone. That is only a way for politicians to start complicating the the tax code again. It would also open up for lobbying and corruption. Do not forget you get every penny you earn untaxed in your pocket. Whenever we talk about FairTax we should mention the prebate. Opponents of the FairTax never mention that. They only talk about a tax on evereything you buy!

  198. Stone
    November 1st, 2010 at 16:25 | #198

    I guess I’m the simple type. To me, the concept of a “flat tax” is just that… flat. Follow me here for a second, and feel free to disparage my ignorance of tax code, etc.

    How does this sound? For every person working, and making an income, they will pay 10% of said income. No “tax code” past what I just stated. This means that the poor rube working at McNasty’s making $320.00 a week (at best) pays $32.00 a week to the US Government. Remember, we’re talking FEDERAL taxes here, absolutely nothing to do with state and/or local taxes.
    Here’s the fun part. The part that warms the cockles of my heart. Oprah Winfried makes (typically) around $60 MILLION a year, with all her shows, TV income, etc. Now, instead of paying whatever pittance she now pays, she would pay $6 MILLION a YEAR in taxes. Company CEOs making obnoxious amounts of income would pay a flat 10% percent on their income. Another thing to consider. There would be no age limit on this tax. If you’re a “child star”, working on a TV show making $150,000.00 an episode, well junior, you’re also paying $15,000.00 an episode. I’m sure this sounds downright communist, where everyone pays their fair and EQUAL share, but so be it.

    Ok, I’m climbing off my soapbox now.

  199. Stone2065
    November 1st, 2010 at 16:43 | #199

    One other thing while I’m thinking about it… companies would NOT pay taxes. Now, before everyone has as stroke over THAT one, bear with me once again, fair reader.

    Most companies don’t pay income taxes anymore anyhow. Between tax loopholes, and writeoffs, it’s rare for ANY large company to pay anything resembling a tax. BUT… under this idea of mine, all the employees would pay taxes… those receiving dividends would pay taxes on them (they’re income, remember?). As far as who would pay on what, it’s a simple question. First, is the recipient of the money a person? Yes. Ok, second question. Did said person receive income from a source? Yes. Well then bub, it’s taxed.

    Simple, eh?

  200. Peter
    November 1st, 2010 at 16:57 | #200

    Stone2065- Just a thought. The one slight difference between the two taxes is that the flat tax still only relies on people who are legally working to pay while the fairtax relies on a much larger group of people. Everyone who spends in the US pays but only the legally registered people get the benefit check to offset the taxes up to the poverty level. So tourism sends money to the govt and even money paid under the table or obtained illegally. Just a thought because I would think the larger the pool of people the more stable the revenue source.

  201. Jim P
    November 1st, 2010 at 17:26 | #201

    Both are good ideas but I don’t think that the 10% will be enough to fund the federal government. Not taxing companies will create jobs, and they don’t pay taxes anyway. We pay their share through the cost of the service or merchandize.

  202. Roger Biggs
    November 1st, 2010 at 17:38 | #202

    I’m thrilled to see this conversation remaining so vibrant.

    On a somewhat related note, why is it always so necessary to bribe America’s wealthiest citizens and corporations to invest in the American society to create jobs? One would think it’s part of the social contract of America for the rich to invest in good times as well as in bad, in Democratic administrations as well as Republican, but it simply isn’t. And if it is (and I do believe it is), why do rich people chose to forego the contract of the nation that enabled them to achieve and sustain their wealth to take their marbles and go home to play in China etc? These are rhetorical questions, I know why.. I just want to insist upon people that they have a choice.. To bribe or not to bribe.

  203. Peter
    November 1st, 2010 at 17:52 | #203

    @Roger Biggs
    Roger what do you mean bribe? By giving them tax incentives? I whole heartedly agree they should not be given loopholes to help them pay less money in taxes but when it comes to investing abroad a person will invest in places where they can get the best return at the risk they want. China is risky but high returns where as in the US you tend to see less risk politically but already have high costs of biz which results in lower returns.

    I think thats where you were going with that but plz let me know if I am wrong. I understand the idea of the social contract but when you have a govt that attacks the rich as evil then raises the cost of investing in the US can you blame them for trying to get around any idea of the socail contract?

  204. Jim P
    November 1st, 2010 at 19:10 | #204

    Roger Biggs, great question. Why not ask it of George Soros, a scum-bag who gets richer and richer by destroying the economies of small countries. His current target is the USA.

  205. Robert Heiney
    November 1st, 2010 at 20:15 | #205

    The only problem with this idea, is that $32.00 to that poor schmo at McNasty’s, making $320 a week is a lot of money.

    Oprah, making 60mil, doesn’t think twice about shelling out 6mil. She’ll make that up in interest within 3 months. If she can buy every single person in her audience a brand new car, I don’t think she’ll wince at all shelling out 6mil a year.

    At least with the Fair Tax, the poor schmo gets all of the estimated tax he has paid through the year, back.

  206. Peter
    November 1st, 2010 at 20:20 | #206

    @Robert Heiney
    Also Robert and Stone
    That guy can go purchased used clothing and be thrifty and not pay any taxes. The fairtax helps give the benefit to people who save their money and helps give incentive to save because they would not be taxed on any interest they get in a savings account. Meanwhile all the cars Oprah just purchased would be taxed and all the expensive things richer people purchase would be taxed. Its a great system I believe.

  207. Samurai
    November 8th, 2010 at 20:57 | #207

    Do you really think drug dealers and people who buy illeagal drugs will pay a tax on drugs or some other illegal substance? I think a much simpler plan would be to tax everyone at the same rate with no exemptions or credits. A 20% tax on every dollar is the best way to go. If you make $100 you pay $20. If you make $1,000,000 you pay $200,000. I think it would signifigantly improve revenues and also eliminate some of the IRS.

  208. Robert Heiney
    November 8th, 2010 at 22:04 | #208

    They’re not paying taxes on the drugs! They’re paying taxes on the items they buy to make, sell, transport and distribute the drugs. The problem with 20% on every dollar, is that it doesn’t take much to fudge how many dollars you report. Besides, what’s the difference. You pay 20-23% for every dollar at the cash register or you get 20% less out of you paycheck. You can’t cheat at the cash register. We don’t want to eliminate some of the IRS, we to eliminate all of the IRS.

    With the Fair Tax, the illegals, criminals and even the tourists pay taxes.

  209. Jessica V.
    November 9th, 2010 at 15:53 | #209

    I am a 26 yr. old living in Ar. on a very fixed income, family of four. My husband and I are both teachers so we are obviously not really well off, but we live within our means. One thing that has really weighed on me is the entitlement programs in this country and all the money that is thrown at it. Out of every single one of mine and my husbands paycheck is roughly a couple hundred dollars to Medicare. Money is taken out of my hard earned money for other families before I can use it to provide for my own family. How will this “Fair Tax” affect the entitlement programs, if at all? I have a very dear friend who works (barely) but literally is living off the government in every way possible and as if thats not enough, at the end of the year, she usually receives around a $6,000 tax return and this past year she only paid $900 in federal taxes. My family could definitely use a tax return like that and those few hundred dollars taken out of our checks every month would make a difference. I would really like to know how exactly some of us that are picking up the “slack” for others, while having to live on a very scarce budget will be relieved of this duty under the “Fair Tax”. I am a moderate and don’t mean to sound bitter about the entitlement programs, but ever since graduating college and really being out in the “real world”, I realize how much taxes and entitlements affect a familys income and livelihood.

  210. Peter
    November 9th, 2010 at 17:05 | #210

    @Jessica V.
    Jessica - If I am correct and others can correct me if I am wrong. The fairtax does not address entitlement spending or any govt spending at all. It has been calculated to bring in the same amount of money as taxes currently do now. Under fairtax though people who are thrifty would end paying less taxes because used items are not taxed and the lower the cost of the new item the less taxes are paid. Also the fairtax is spread over many more people which takes the burden off just the legally working people, larger pool of people less per person needs to be taken to get the same amount. Thats what I understand of it and why I like it.

  211. Robert Heiney
    November 9th, 2010 at 22:59 | #211

    @Jessica V.
    The Fair Tax, as written in HR25, fully funds all current entitlements. Social Security, Medicare and Medicaid. I’m not sure about Food Stamps though. I do know that the 200 dollars you say come out of your checks, you’ll get as extra income. Every penny you earn, is your to keep or spend as you wish. In addition, you both will more than likely get a monthly “Prebate” since your salaries are lower. The Prebate is to make up for your lower income, so that you end up paying less tax than everyone else that make more money.

    The Fair Tax is a win win for me. Everyone pays. Illegals, tourists and criminals alike. Plus there’s no cheating the system. Eventually, the tax rate could be lowered as more money enters the treasury.

  212. Roger Biggs
    November 10th, 2010 at 12:41 | #212

    @Jessica V.
    as said above, it does cover entitlements. But I’d submit to you that social security, medicare, medicaid, unemployment, and food stamps are expensive services… and that a modest couple of teachers living modestly on modest means might feel like they are picking up the “slack” of those down the ladder from them, someone up the ladder of them are picking up their “slack”. It’s easy to feel compelled to think you’re getting the worst of both worlds, just well off enough to not benefit, just poor enough to be ruined by the taxes, but the beauty of of our entitlement system isn’t realized when you’re paying for it, rather when you’re needing it and receiving it. The word “entitlement” has gotten such a negative connotation. Such a greedy and conceded connotation. All it was supposed to mean is that being an american provided you certain rights, amongst them the right to enjoy a healthy comfortable retirement and some level of protection that allows us to make mistakes and fail in a cut throat economy instead of deciding as an able voter that free markets don’t work.

    Don’t judge that low income friend of yours.. any given day that could have been you. and perhaps you’d not afford a marriage, perhaps it would smash your spirit and leave you under a mountain of debt and maybe the best you’d hope for then is to pay off your debt in time to retire on social security alone. =(

  213. Moon
    November 10th, 2010 at 22:48 | #213


    Really? How can they charge taxes on illegal drug sales?? Or other illegal activities?? You think all of a sudden drug dealers are going to pay taxes on drug sales??

  214. Moon
    November 10th, 2010 at 23:13 | #214

    @Robert Heiney

    You really tourists are going to come to the US to pay 34% sales taxes? Their hotel room would go from $200/day to $300/day!

  215. Peter
    November 11th, 2010 at 01:06 | #215

    Moon…any money that drug dealer makes will not be taxed as he makes it. Its when he goes to buy toilet paper or a new mercedes or anything new he will get hit with the tax just like every other person buying things in the US. Tourist will still come and visit the US and also pay the tax. That 200 dollar room already includes SS and employee taxes and corp tax the company must pick up. When those taxes are taken out competition will drive prices down to their true cost as hotels are able to cut the price to beat other hotels. That cost is roughly 21% which would be the tax added on by the fairtax. So in the end the 200 room is still 200 dollars. Currently the system now taxes only people making legal wages so the drug dealer isnt paying any taxes other then state sales taxes etc. This broadens the people who would be paying and therefore should easy the tax burden per person.

  216. Robert Heiney
    November 11th, 2010 at 01:16 | #216

    Yes I do think tourists will pay. Has the higher price of gas kept you from going on trips? I guess not. Rich Europeans will still come here to party in NY, LA and Miami. And like Peter says. With the absence of all the hidden taxes, already embedded into the price now, I’ll bet they won’t pay all that much more.

    Why does anybody still think that the current system works great? I for one would love to keep every penny I earn, and only pay the taxes I feel I need to pay, by being frugal with my spending. Man I thought this would be a no brainer!

  217. E. Press
    November 11th, 2010 at 08:26 | #217

    When we realize that we are not an exceptional country and do not have to protect the world from “enemies”, real and imagined, then we can reduce our military and foreign commitments, and perhaps get the deficit under control. The real problems of climate change and restoring our infrastructure can then be properly addressed. By allowing corp. to avoid taxes by loop holes is a crime and should then by a priority.

  218. Jessica V
    November 11th, 2010 at 10:10 | #218

    @ Roger
    Thanks for the response, but you are wrong. I am not talking about people who have hit hard times and need help getting back on their feet, or social security at all, I am talking about people who literally make a living off of the government. This is America, you make of your life what you wish, we have more oppurtunities in this country than anywhere else in the world. I have seen kids who come from some of the worst possible situations work diligently day in and day out to do good in school and change their lives for the better. Also, my family has hit very hard times and when we did, I got a waitressing job to supplement our income. Governement help would be a last resort and IF it ever happened it would be temporary. I would suggestyou not commenton this friend of mine without knowing the situation. Its beyond ridiculous and she has now quit her job because in doing so, the goverment is paying 100% of her daycare. How nice that would be. At a time when people are praying for jobs, we have people out there quiting theirs to receive more tax payers dollars. If you are ok with footingtheir bill, then more power to you I guess you are a better person than I. I put myself through college working and one of my jobs was at a low income daycare. I saw things that completely jaded my perspective on ENTITLEMENT programs and with all do respect, thats exactly what they are in too many situations. When you have a parent who brings their child in stoned out of their mind and beyond comprehension, while she is telling another mom she wants to have another child to receive more money, it tends to take a toll on your view of things. Times are tough right now and I am thankful for having a job and for those that lost theirs, I gladly offer my hand and my money. You sir, don’t pick up the slack of ANY hard working man, women or family. I work hard for what I have and before I can provide for my own family I am forced to provide for someone else’s and in times like these we all could use that extra little bit of money. Something needs to be done in our tax system that makes sure those families that NEED help receive it and those that are taking advantage do not.

  219. Roger Biggs
    November 11th, 2010 at 11:18 | #219

    @Jessica V
    well it’s something we have in common jessica, I’m putting myself through college now working midnights as a laborer. But I’ve been on welfare and I got off of it too. And while it’s nice you have an example of someone using the system to prop themselves up, the image of the welfare king or queen is largely a false image propagated by those who want to end entitlement programs in all forms, fed to voters fearful of “urban” subcultures. I’ve stood there by my friends, scrutinized by my government, examined to see whether or not i was poor or just an idiot with my money (and what they consider idiotic includes paying for college tuition). Had to convince them I deserved to eat. And it isn’t the first time, I had to do the same dance when I applied for student aid, except then I had to explain to them why my parents weren’t liable for any of my living costs. As an independent adult scrutinized to prove i am just that, an independent adult. I’m telling you all this to emphasize that the process of receiving government aid is exactly how you imagine it is. It’s embarrassing. It makes one feel overwhelming shame, rightly or wrongly. Most people are like you in this way too. Most people don’t want to be on it.

    Welfare reform took place under Clinton, but continuing lies about the average welfare consumer doesn’t aim to improve the welfare system, ultimately it aims to destroy it. Did you know that’s what you’ve been sold..?

  220. Jeremiah
    December 4th, 2010 at 05:08 | #220

    It been a great discussion so far a few points i would like to make thought on whats been said.

    - The only way to to truly cut the amount of taxes we pay as a nation is to cut spending no amount of changing the tax system will change that

    - There are a few reasons why the fair tax is a good option for our tax system. The first of these being that fair tax is very transparent at 23% on all sales would be very easy to collect and harder to avoid than the current income tax system with all the loop holes and special interest perks. On that same line of thinking when your charged 23% at the register you feel the pain every time you make a purchase instead of hidden taxes. If we do feel that we spend too much in government this would be one of the perks of this tax system. Second point is that people will be promoted to invest, in stocks,bonds,savings its my hope that this type of thinking will lead people to take care of there ones self in terms of retirement, maybe we can reduce the dependency on SS. If fair tax was enacted i agree with one of the previous comments that it would have to be done in stages over the course of several years (4 is a good number) The reason behind this is that it could give businesses time to adjust their prices and not sticker shock consumers. The other reason is that we need to give time for those tax preparation workers at least some of them to transfer over to other trades. Something pretty fantastic about this is it would require less labor to collect taxes so that would be an increase in efficacy of the government (maybe the first time!!) This would seriously help the battle against special interests and lobbyist as nothing with the exception of perhaps education and medical(non-cosmetic) would be exempt. For those of the group that believe its unfair to tax the retiring because they already have paid on there benefits I hate to point out but you as voting citizens allowed your Representatives to take from the SSI trust and its empty now so current employees are footing your bill. I have no problem with the older generations sharing some of the burden for all of our retirement. Unless i put the responsibility on the wrong people for the SSI raid. Though granted you will have several years before the full tax amount to move your cash around (Is it possible to pre order a car?) and you will have the prebate check as well as you had the change to draw SS several years before most in my generation will. It’s not perfect it will in my opinion increase job growth, decrease the trade deficit, provide a more transparent government, promote savings and investing, solve some of the problems with tax evasion including illegal immigrants and black market transactions, simplify taxes, increase government efficacy, Increase investment in US business from abroad, etc. It could also increase prices on products, slow consumption, put burdens on the retired cause greedy politicians to loose bribe money, i’m sure someone can throw in some more negative aspects on this list.

    #3 About corporate CEO,s and prices: I know that with the reduction of costs on the corporate level the CEOs can indeed in the short term pocket the money. First, as long as they don’t hide the money under the bed it will be taxed on his/her purchases and the revenue will go to the government. On the longer term (1-12 months) they are going to have to be competitive with both their workers and the product prices, so wages will go up or prices will go down either one will work fine with me.

  221. Steve
    December 7th, 2010 at 16:29 | #221

    Not only do I fully support the Fair Tax but something I had hoped would be mentioned in #9 is that the 50 million or so visitors to this country each year as tourists or business people would pay into our system to support things such as SS and Medicare. Foreigners who now visit the US and avail themselves of everything we have to offer would now be able to help pay for them. This would relieve the burden on the rest of us.

    December 9th, 2010 at 11:05 | #222


  223. Jeremiah
    December 9th, 2010 at 22:14 | #223

    Taxes on homes would be 23% on fairtax.org the worked up a nice little chart that shows the breakdown of housing the short of it is you would save by their numbers 19% on costs of housing. Some key things to think about though would be that houses would costs less under fairtax because the businesses that are building houses wouldn’t be taxed and only new houses would be taxed. The 19% is including the extra money you would have from no income and payroll taxes. You can read about it at http://www.fairtax.org/PDF/PromotingHomeOwnership.pdf kind of interesting idea really.

  224. DLC
    December 10th, 2010 at 15:01 | #224

    Just found this site. Fantastic conversations on the topic and much food for thought. To add, I love the idea that with the fair tax - as proposed - that in order to attempt to raise taxes in the future, our government must answer to everyone at once. No more of the time honored “push me pull you” games used currently to justify a tweak here or a tweak there. If all other taxes are eliminated and all loopholes are gone, the average american is in a much better position to hold our representatives accountable. You want to take more of our money - justify it to all of us and at the same time, not just the ones you can get angry over something at a given moment. And they can’t play rich vs poor to cloud their spending problems, at least not in the same way. Once all of americans have a very clear view of a single tax that directly effects them - they will not be as easily distracted from the question - Where does all that money go?

  225. Robert Heiney
    December 10th, 2010 at 17:51 | #225

    Great we’re glad you like the idea. Please pass this along to as many friends and relatives as you can. The more people on board with this idea, the better chance it has to come up for a vote of passage.

  226. Taxes solved
    December 15th, 2010 at 14:41 | #226

    Progressive taxation is the worst idea ever spun out of the hellhole of liberalism.

    What we need is a regressive tax. With a regressive tax, you create incentive for people to earn more money. Eventually with proper incentive, like death for those who refuse to earn more money, we get rid of the poor and enter into a paradise where everyone is wealthy. And tasteful.

    Actually I’m being facetious about tasteful. I don’t know how to solve the problem of tasteless people.

    Thanks peace out.

  227. Robert Heiney
    December 15th, 2010 at 21:27 | #227

    @Taxes solved
    Just to clear things up. The Fair Tax is more from the hellhole of conservatism than liberalism. Hard core liberals don’t want the Fair Tax. It discriminates against the poor, those pesky illegals, tourists and all those drug dealers and other criminals who fly under the income tax radar.

  228. Chuck
    December 18th, 2010 at 17:57 | #228

    You think after 24 months of talking about this we put people in office that get it done. It is possibly the only way to save our country from financial ruin.

  229. Robert Heiney
    December 19th, 2010 at 00:52 | #229

    Look, I’m more than 100% for the Fair Tax. Do I think it will ever get to the house floor for a vote? I’m not holding my breath.

    Politicians on both sides of the isle love the income tax for what it really is. A political weapon. You can’t hold anything over anyone’s head without the income tax, and big brothers long arm reach.

    Republicans talk a good game, but when push comes to shove, they love the status quo.

  230. William Mincy
    January 2nd, 2011 at 11:14 | #230

    I think the Fair Tax is a revolutionary idea. Not only does it hold every American to pull their own weight, but it also allows for more business to flourish here in the United States. If one were to argue that they could not afford the new tax on items I would say that that dilema will be quickly solved by the massive influx of new jobs. Just imagin how appealing our country will look to all the major busineses around the world. So we are creating jobs, stimulating the economy, and making every American accountable for their share of the American Dream.

  231. drkrdr
    January 7th, 2011 at 06:46 | #231

    Well you have a few valid points, but arguably most of the cons you have stated are well established in the current system.
    1) Jobs are being destroyed now, the IRS is just a small token of the masses, and accountants will always have an opportunity for services, in other businesses, i.e. corporate structures.
    2) Sales taxes would be greater, but with high interest loans based on the current debt to income ratio on the U.S. we now are paying three to four times more for a product over a span of years. Majority of middle income families live in debt without a decent savings to back the payments while trying to live the American dream.
    3)Saving money has always been an issue with inflation, the masses want bigger pay, industry has to raise prices to cover the cost of manufacturing, paying higher salaries for expertise, there is no way around inflation unless you cap all salaries across the board for all employees in the industry.
    4)Nature of people, working less for more money is always an ideal; “mom’s apple pie” folks are few to non-existent when you look at the current psychology of the populace. When you review the current stigma that most young Americans feel is to be paid for as little work as possible leaving more time to do other endeavors. Although there is quite a few who aspire to make more then what they have had growing up.
    5) Illegal drugs and syndication will always be an issue; no matter how you justify the losses it is an inevitable problem. Even legalization of drugs to benefit the income base for the country you lose the moral aspects of how to manage greater problems afflicted by the usage versus control. Alcohol is a legal drug, thousands die each year just from related deaths, i.e. DD, misuse, abuse, medical complications.

    In all, taxation will never be dismissed; everyone looks to the government to cut spending, which, yes, in hindsight is a major spender. But we also have to look at the index of ourselves in the scheme, if everyone took a pay cut (not going to happen due to gluttony), corporations reduce the cost after the pay cuts (again money is power and gluttony rules), and the entire economy pay itself to a lower debt (American dream outweighs social and economic endeavors) then we could have a better system. The FairTax is closer to a robust government reform that would stimulate some economic growth. No matter how you would justify illegalities this is something the world is plagued with, human nature will always play bigger roles versus social etiquette.

  232. Jeremiah
    January 7th, 2011 at 15:33 | #232

    After having a month or so to reflect on this post the fairtax idea is a hard concept to sell. What you have right now in taxes, it’s a very hidden processes. Between payroll tax, income tax, Medicare tax, and the list of miscellaneous taxes like cell phone and gas taxes. It allows people to fool themselves into believing they aren’t taxed as much as they are. On the other hand a fairtax system is like a slap in the face every time you make a purchase, under the current tax burden I believe strongly that if we wanted to change just one thing about the government that would make our lives at citizens better it would be the tax system. The slap in the face with the fairtax system would force politicians to be more responsible in their actions. If for example the federal government wanted to give free healthcare to everybody in the United States people could simply ask what type of increase in percentage can we expect to pay for this. I believe that excessive taxes are a theft not of money but people’s lives, when you have to work from January till April/May to pay the tax man his dues something is wrong with the system. The reason people don’t feel the same way I do is because the tax system is built to hide the truth. Passing the fairtax is a battle much like that of slavery, it won’t be won in just one day, and it will take sacrifice for those people that do support it. Lincoln went to war to free slaves, those that support the fair tax system politically battle to free every American from the burdens of our current tax system.

  233. Robert Boothe
    January 16th, 2011 at 08:14 | #233

    You did not mention in your list that every person would get their entire pay check, NO taxes would be taken out of your pay check.
    If you make $1000 a week you receive $1000 a week.
    The boost to the economy would be substancial.

  234. Robert Heiney
    January 16th, 2011 at 12:53 | #234

    @Robert Boothe
    Those of us who believe in the Fair Tax, can’t seem to get through to the ones who don’t see anything wrong with the current tax system. Getting my entire paycheck would be a substantial increase for me. I also realize, for some it wouldn’t. But it’s still everything you’ve earned. And that extra money, if you were smart enough, could go into a high interest savings plan. Or you could spend it. Either way, you and the economy would benefit. Some people only see the extra money they will have to shell out when buying “NEW” goods and services, which if you do the math, ends up about the same, if not a little less, than you’re paying now. The BEST part is not having to worry about the IRS and April 15th anymore.

  235. Question
    January 20th, 2011 at 08:28 | #235

    How do you think you will be able to tax illegal drug activity? That is a completely false statement. I agree that the current system is bad, but that’s no reason to go to a fair tax system that will punish the poor even more than the current system. This fair tax system will also not bring in as much money to support our nation. If fact, it will bring in significantly less money. While I agree that there would be no federal tax taken out of your check, there would still be State tax (most states), SS, Retirement (401K), etc. So, no. If you earned $1000 a week, you would not receive a check for $1000. And you still would have to worry about the IRS. There would still be a need to regulate this new system. Companies, and Individuals would still be held responsible for paying the tax. The difference would be, you would be watched all year round instead of just once a year. Think about it.

  236. Robert
    January 20th, 2011 at 12:29 | #236

    First of all, who said anything about taxing illegal drug “Activity”. We’re taxing the drug maker/dealers purchase of materials to make his junk, the cars he buys to distribute his junk. Second, the poor won’t be punished at all. In fact they will get the biggest share of the “Prebate”, a monthly re-payment of taxes paid by the poor. So they’ll actually get all their money back. State taxes aren’t part of this equation. That’s between you and the state you live in. If you don’t like State Income Taxes, move to a state that doesn’t have them. Besides, States don’t usually take more than 8%, compared to the 28% taken out for Federal.

    With Fair Tax, you keep the 28% as well as the SS (which, if you actually read the bill, would be fully funded under Fair Tax). 401k’s, health plans, Retirement plans etc. Are savings plans you have control over. They’re not taken out of you check unless you want them to be. Most companies I know of let you opt out of health insurance, if you don’t want it. And why would anyone NOT invest in a 401k. I maxed mine out, so I can have a nice retirement. I, personally, am tired of the yearly tap dance with the IRS and it’s many rules and forms to fill out. This makes it simple, and practically invisible to the taxpayer. How can anyone want to keep the current system. Are we that afraid of change, and taking a chance to make things easier?

  237. Jeff
    January 21st, 2011 at 09:57 | #237

    I think a better way to tax is on consumption rate. It makes sense because the rich probably tend to buy more, so they are taxed more. The lower class can’t afford as much and would therefore purchase less meaning they have a lower tax rate. It would be simple and fair insteaad of being based on income. I think that it would be unfair to tax the rich more simply because they are rich. They worked hard to get to where they are and they deserve it. Why should they pay more taxes when either illegal immigrants or high school dropouts don’t?

  238. Jeff
    January 21st, 2011 at 09:57 | #238

    I think a better way to tax is on consumption rate. It makes sense because the rich probably tend to buy more, so they are taxed more. The lower class can’t afford as much and would therefore purchase less meaning they have a lower tax rate. It would be simple and fair insteaad of being based on income. I think that it would be unfair to tax the rich more simply because they are rich. They worked hard to get to where they are and they deserve it. Why should they pay more taxes when either illegal immigrants or high school dropouts don’t? .

  239. January 22nd, 2011 at 07:20 | #239

    If the Fair Tax were structured in such a way as to exclude medicines, unprepared food, have everyone qualify for an energy exemption equal to the requirements of a 2,500 sq. ft. home, and have the first $10,000 toward the purchase of a new automobile non-taxed. I think under this structure those who have the where with all spend beyond the bare necessities of life also have the where withall to carry a greater load. People talk of this punishing the rich, I disagree. Near me lives a man who made millions as an adjuster for hurricane Katrina. He purchase a large parcel of valuable land, I’ll guess 50 acres, built a house with, I am estimating here, 7,000 square feet, not counting a five bay garage. It appears driving each bay is filled with a large new vehicle such as Cadillac Escallide or a sports car. I think medical procedures should be tax free except for elective cosmetic surgery.

    I know many businessmen would strongly disagree and claim added effort. Believe me that complaint is a sham, it requires very little effort to add the tax and collect it and forward it on to the govt. We do it all the time in most states with the sales tax. With a well run business it is but a pimple on a gnat’s rump.

  240. Robert Heiney
    January 22nd, 2011 at 10:38 | #240

    We’re still thinking IRS here. The only reason you have exemptions now, is to give you the happy feeling your getting some taxes taken off your yearly return, when in fact you’re not really saving all that much. Yes they lower your reporting income a bit, but the true amount of tax saving is less than you think.

    Last I checked, unprepared food products and prescription medicines will be exempt. Real Estate (the ground itself)is already taxed, so that be included, but the structure purchase will be, IF IT’S A NEW, FRESHLY BUILD HOME. If it’s a home that’s already had it’s tax paid, then it won’t be taxed again.

    Energy exemptions are a joke. They only encourage us to burn more energy by giving us money back, that just goes right back to the utility companies. If you’re serious about saving energy, then buy an efficient appliance, and don’t run it as often.

    Tax on the first 10,000 of a new car is only 2100. A 5 year note increase would be a whopping 35 dollars more in monthly payments.

    The Fair Tax is fair, because it’s simple. Instead of taking 28% out of our checks, we pay “21%” at the cash register. You’re still getting to keep 7% more than you did under the income tax. You’re also not taking into account the reduction in pricing due to the elimination of corporate taxes (currently hidden into all prices). Those savings should be passed on to the consumer as a price reduction. If the corporations don’t lower their prices, then you have the power to shop elsewhere. Competition is oh so powerful.

  241. January 23rd, 2011 at 14:26 | #241

    @Steve Keller
    HR25 is a partisan measure for the same reason as any other economic proposal in Congress. It pits those who understand economic principles and productivity (conservatives) against those who don’t (liberals).

  242. Jeremiah
    January 23rd, 2011 at 15:52 | #242

    I recently read an article from http://www.nowandfutures.com/taxes.html that states that the average tax rate if you include all the fees plus state and local taxes is somewhere in the 50% range. That would mean that you work from January to June just for the government. I believe the majority of the people in this group do agree that the fair tax is a good idea for a variety of reasons from boosting the economy, rewarding work, to making our Representatives more responsible with our money. What we haven’t talked about much is how to make fair tax a reality, and this is where i want to bring up a few point. To implement fairtax is a massive change for the government, more so then even the recent health care changes. If we wanted to see these changes happen within the relitively near future i believe it would require three things. First unemployment would have to stay above 6% for the 2012 presidential election or barring that we would have to have a situation that underminded the public’s confidence in the IRS which required congress to reform it. Second, growing support would have to exist within organizations like the tea party for the fairtax proposition as a way to boost the economy. Third a chrismatic presidential canadite would need to use the fair tax as his solution to the slow economey and unemployment. If these three factors were in place i believe that it would be possible to see within the next few years the fair tax as our tax system in the USA..

  243. Chuck
    January 24th, 2011 at 05:26 | #243

    Well Jeremiah you have hit the nail on the head. We do not talk much about how to get it done. If everyone who has posted on this site the last 2 years simply with every breath they take, get the word out, that any 2012 candidate that will not put into place a FAIR TAX schematic, than do not elect them. It has to stop and stop now. Lets just get it done. I ask my congressman last year about his position on fair tax, he simply laughed, I simply worked on his opponents campaign and Mr. Klien was not elected. BYE BYE.
    We have to work at this my friends. Or soon it will be too late. You must understand that the rich do not want this. Thys have gotten rich on the current tax system. That also is a huge hurdle. But one that certainly can be jumped.

  244. Robert Heiney
    January 24th, 2011 at 08:31 | #244

    The hurdles are tremendous. I email Fair Tax info all over the place, hoping they’ll understand it and pass it along as well. I won’t vote for anyone who at the very least, has signed on as a co-sponsor of the bill. Every single politician, whether a D or a R has to know, we, the American tax payer, have had enough. Either you fix it in our favor, or you’re out the door! I’m sick and tired of the lame excuses as to why this won’t work. YES IT WILL!

  245. Jeremiah
    January 24th, 2011 at 09:55 | #245

    What is your guys thoughts on the flat tax vers the fair tax. I realize that you don’t get the tax free effect to businesses and your still punishing work. The up side to the flat tax is it’s a much easier bite to swallow for the american people. Its a old system with a proven track record and wouldn’t require an amendment change, a bit selling point because you won’t need 3/4’s of the states to ratify it. I think someone from CATO was arguing for a lets do flat tax first until we can get the ban on income tax passed then go for fair tax.

  246. Robert
    January 24th, 2011 at 16:15 | #246

    Hey! If spending time on the Flat Tax as a way to move on to the Fair Tax is the way they want to move, I’ll agree as long as the bite gets taken out of the IRS, which politicians are hesitant to abolish due to it’s punitive structure. Of course, with a flat tax, there really isn’t a need for the IRS either. Fair Tax puts more money in your control than the governments. But what the heck, anything’s better than what have now.

  247. Tripmom92
    January 25th, 2011 at 09:35 | #247

    I think #2 is a pro
    The IRS is an unconstitutional agency in the first place.
    Secondly, anything that would lessen the governments spending would be a pro. Less workers means less money needed to run the agency.
    I like the idea of ALL people paying taxes instead of the about 47% who do not pay any taxes. All of us should be responsible for this country tax burden not just part of the people. The Fair Tax also lets you decide how much taxes you pay… if you save more, you spend less, thus paying less in taxes. It put you in control of your own money. The Fair Tax is not perfect, but it makes better sense that continuing with the unconstitutional IRS.

  248. Tripmom92
    January 25th, 2011 at 09:50 | #248

    @Jessica V.
    Jessica, I know how you feel. Entitlements are way out of control.
    With the Fair Tax ALL people will pay taxes even those on entitlements.
    If you buy something new… you pay taxes. Now they do get a prebate check but so do you. You get to control how your money is spent not the government.

  249. Emily
    January 25th, 2011 at 14:36 | #249

    It is clear that the reporting of collected sales tax will be an extra burden placed on businesses.
    However, the author’s concern about #2 (That industry would be completely destroyed, and many jobs in the IRS would be lost. There would still be jobs to work on taking in the money, but many less than what is needed currently.) makes me wonder if all existing independent accountants as well as IRS personnel would not be able to instead find work by serving businesses that would like to hire someone whose specialty is taking care of the complexities of this sort of thing, as well as working on the side of the govt’s collection of tax collected by businesses and the “doling out” of the prebates.
    I do not think the “elimination of the IRS” could be complete (unfortunately), but it could definitely be greatly downsized, and the accounting industry would not be completely destroyed.

  250. Emily
    January 25th, 2011 at 15:49 | #250

    @Robert Heiney
    You are absolutely right.
    I want to point out that we should not underestimate the effect of the spending power and therefore “stimulus” that high-earners will have on the economy if this is enacted.
    We know that high-earners find ways to tax shelter as much of their earnings as possible, due to such a high percentage of their income being taken by taxes. I am salaried and paid monthly. Tax shelters notwithstanding, I receive a little over 60% and like many others, if I received closer to 100% of my earnings, I would save and stash some of it as well as pay off the debts I have (student loans and mortgage) at a faster rate. The other thing I would do with my earnings which is the most important thing to take into account when evaluating the effect of this tax, is spend and consume more! Most Americans would act in a similar manner, rich and poor alike. It is clear that those who are able to spend a lot on goods would more than compensate for the losses or lack in consumerism many seem to fear that would occur due to a relative increase in the cost of goods.
    Someone pointed out that political supporters of the FairTax are comprised of more Republicans than Democrats, which numbers-wise is true and may be reflected in the opinions of general citizenry who claim to be members of those parties as well. But when you look at our voters, almost all Libertarians (our 3rd largest political party, with which I affiliate) and many Independents want this to happen as well. There are few to no representatives that claim Libertarian or Independent affiliations, and the number of cosponsors of this are too few right now. This is a non-partisan bill and does not hurt the “working poor,” which makes me surprised that there is not more Dem support.
    We need to get the word out and educate more people on this and encourage them to contact our representatives! I will say I am glad this subject is getting more airtime on television now but most if not all of it airs on Fox. We need to hit a diverse cross-section of political viewers. I think we may gain more support from Dems that way. Does anyone have ideas about how to get this discussion going on networks with a more balanced or those with a more liberal slant so their audiences will better understand the facts? I only watch Fox when discussions on FairTax are taking place, as I dislike the rest of their programming. I know I am not the only one avoiding that network!

  251. Robert Heiney
    January 25th, 2011 at 16:57 | #251

    You’re right. This is mostly a Republican venture. There are some Dems as cosponsors, but not many. That’s why the issue is mostly on Fox. The liberal media outlets don’t think this is that hot of an issue to waste prime viewer hours on. They tend to air this in the overnight hours, when not many air watching.
    I’m an Independent voter, who has Libertarian leanings. I think most of us in Indy and Libertarian land want this to happen, but the problem is the ones that are elected don’t listen to us because we don’t belong to their party. The tried and true way to get this passed is to hold Fair Tax info parties in your neighborhoods and make sure a lot of Independents and Libertarians come to it. Be prepared to explain why this is the best for our country’s economy until your blue in the face. Many people are like lemmings, they get so used to filing their taxes, they become brainwashed that it’s the only way. You need plenty of literature to back up your explanations. And always, always, always email your representative in the House and your Senators, that you want this to happen, or your vote will go to someone who’ll listen. They don’t like losing votes. Make a pest of yourself.
    This would truly transform our country into an economic powerhouse. We’d no longer have to ship manufacturing out of the country. In fact, foreign companies would be scrambling to build factories in our country to take advantage of the tax savings. This is such a no brain er, I try to mass email everything on the Fair Tax I can get my hands on. I encourage everyone else who believes to do the same. Be prepared to argue your points, though. But do it nicely.

  252. Jeremiah
    January 25th, 2011 at 21:21 | #252

    Well some key points for a more liberal perspective is the fair tax completely stops and better regulates the loopholes that the rich seem to find. Furthermore if the fair tax was passed you would see an emergence of the middle class as manufacturing jobs would be able to compete at higher wages in a world market. Tax judgments with bi-est outcomes based off of religion, race, sexual orientation would be almost completely eliminated. (you are effectively taxed anonymously. Lobbiest for big oil and other unfavorable companies would be seriously hampered due to the no exception rule of the fairtax. We would be one step closer to amnesty as the next logical step between being an illegal immigrant and s legal citizen would be taxation (i.e. they are already being taxed why can’t we just make them citizens?) As manufacturing shifts from environmentally unregulated like china, to areas that actually care about the environment we will see a decrease in global pollution. These are just some ideas that someone with a more liberal mindset might latch on to as reasons to support the fairtax.

  253. Emily
    January 27th, 2011 at 14:26 | #253

    @Robert Heiney

    I just checked and was very upset to see that the AL senators and representative for my district withdrew from supporting the Fair Tax Act of 2011. If I am not mistaken, the total cosponsor count declined from 65 in the House to 56. You can bet I will be contacting them letting them know that unless they change their tune, they have lost my support and that I will be spreading the word among other advocates for the FairTax who will likely do the same.
    I just began reading The FairTax Book so I will be more well-versed when asked questions or challenged by opponents and those who simply want to know more about the subject before they decide whether they support or oppose.
    Thanks for your suggestions.
    I have a full-time job in an unrelated field but will soon be doing some free agent work for radio/voice-over ads/narration. My full-time position is 7on/7off, leaving plenty of time for my part-time work. I will happily do any ads for a FairTax group at a very discounted rate just to get the word out. We will just have to find radio and television stations (both left- and right- leaning) for the spots! Here in AL, most are Conservative, and our Senators and Representatives are Republicans, so educating the right-wingers of the benefits they would realize if the FairTax was enacted should especially inspire them to support the FairTax Acts, and the Senators and Representatives will listen to their threats of lost votes!

    Thank you so much for your response. You raise some issues that would resonate loudly with many liberals and Democrats.
    Many on the left (and some on the right) acknowledge that immigration is an issue that has a seriously overdue need for reform and those that are opposed to the lax laws we currently have on those here illegally would jump at the chance for them to pay their fair share since it is a step we can take in holding them financially accountable for being here and as a result, taking some of the burden from taxpayers currently subsidizing their livelihood in the US. You are right…if they are here and paying their part, they are not harming any citizens or unfairly benefitting financially unless they are committing some type of crime against a citizen. Of course, that is not the case most of the time. If they are not committing crimes and are here, they are paying their fair share through buying food, clothes, etc., so it does not matter whether they are a citizen or not. So why not make them citizens? I say make them citizens, but the moment they are proven to have some role in the perpetration of any crime on US soil, deport them and do not allow them to return.
    Environmentally conscious businesses - another great point! Most on the left, and a growing number on the right are mindful of their impact and the businesses they patronize impact on the environment. Bringing more manufacturing jobs home, where many demand that these businesses act responsibly when it comes to the environment as well as working conditions, would be a welcome change.

  254. Emily
    January 27th, 2011 at 15:29 | #254

    Someone in this long thread of comments (sorry not sure where and who) mentioned that the FairTax could be lowered over time as federal government freezes, then lowers, and hopefully eventually eliminates spending on entitlement and other unnecessary programs that should be voted on and handled by the states.
    John Stossel made some great proposals in his “My State of the Union Address.” (http://townhall.com/columnists/JohnStossel/2011/01/26/my_state_of_the_union_address) His proposals are all aligned with the Libertarian platform, but one thing he said that directly applies to some problems raised during this discussion, which I have also thought of, would begin to take care of the lack of solvency of both SS and the extreme cost of Medicare, “…privatize Social Security and slowly replace Medicare with vouchers.”
    I agree that the main concern for those that receive SS as far as supporting the FairTax is that they have paid the taxes on their SS, so why should they have to essentially do so again? I really wish I had a good solution for that. If I had worked and paid taxes and had SS taxes removed from my paychecks all my life and now received SS, I would have the same concern.

    I received my 2010 W-2 earlier this week and was thinking about the following:

    1. The FairTax proposes that we eliminate the federal income tax. Great. We all want that because it would return the most money to everyone’s pockets.
    Everyone wins on this one.

    2. Like John S. said, privatize SS. Instead of SS taking $ from your paycheck, allow the 403bs, 401ks, etc., offered by employers, banks, etc. to compete for you. They offer competitive interest rates, and you have the peace of mind knowing that you will not pay income taxes on it when you retire and these plans pay out to you. You should also be able to pay as much as you want to into these 401ks, etc., regardless of income. It could be decided by the provider. When your employer does not have to contribute to SS for you, I bet you would see employer match programs grow, benefitting you more than SS ever could.
    Everyone wins this way as well.

    3. Let Medicare be replaced by vouchers for current recipients, and let insurance companies compete for individuals, much like 401k, 403b providers and the like will do to replace SS. And I say a company may bid for a contract with your employer. If an employer gets a contract for one for you to pay into, then great. But paying into this plan should be an option, not a requirement. And if you want to contribute income to another one because you do not want to use the one your employer entered a contract with, then there should be no penalty for doing so. You could use your current health insurance plan through your employer during your time with them, then have money saved in an insurance plan that is set up for when you retire; one that was of your choosing. Your employer could contribute a set amount to the insurance you choose to have during your retirement, regardless of whether they entered a contract with them.
    Again…would anyone be losing here? I do not think so.

    If you see holes in my logic, I want to hear them, because this is coming from someone who has limited knowledge of how all that could work. They are simply ideas.

  255. Robert Heiney
    January 30th, 2011 at 01:19 | #255

    You tell those Senators, that if they don’t jump back on the bandwagon for Fair Tax, they’re fired! To answer one of the statements made about SS. I believe the Fair Tax info said that SS would still be taken out of our checks.That’s only 6%. Your employer pays the other 6%. That’s cool with me. I don’t mind that at all. The Fair Tax FULLY funds SS, so that we don’t have to steal from that account anymore. That’s what I thought I had read several years ago. I could be wrong.

  256. Emily
    January 31st, 2011 at 09:45 | #256

    @Robert Heiney
    I wrote my senators and district guy and said something to the effect of, “I must respectfully say if you do not support the FairTax, you do not have my vote at the polls. I will make every FairTax advocate I know aware of this and encourage them to do the same.” I will continue to contact them and make myself a pest.
    I believe you are right about FairTax continuing to fund SS. However, I believe that should be privatized as well and that we would all enjoy greater benefits from this, but first things first. Breaking this process into small steps makes it much more likely to pass. Getting FairTax passed is certainly top priority. We can work on reforming SS and Medicare after that :)
    My employer matches up to 5% of my salary in a 403b. If my employer no longer had to contribute 6% to SS, I bet that % match would increase and I would expect to see that with all employer-match programs. I do not have confidence that SS will survive long-term, so it seems logical to me that it be addressed next. A Medicare overhaul will be more complex, so I propose that be last priority. I would love to eventually see all federal payroll taxes eliminated!

  257. Robert Heiney
    January 31st, 2011 at 14:15 | #257

    Cool! When I say to make a pest out yourself, though, I hope you understand I mean a “Polite”Pest. The fastest way to get ignored, when communicating with your elected officials, is to be an angry pest.
    I agree with you about SS being privatized “eventually”. The problem I have with entitlement privatization, is what we saw in the Banking mess 2 years ago. After the banks were deregulated and privatized, they kind of forgot their depositors and their money. All they saw was their profit margins and bonus’. SS privatization would have to come with “some” rules. I believe in SS. It’s only fair that since we worked our buns off and supported our government, that they should at the very least, give us some support when we get older. I don’t think it should be a lot, since that would discourage us to save our own money.
    I too am blessed with a company that contributes nicely to my 401k, and I maxed that out, since it’s taken pre-tax. I don’t miss the extra money. And with the Fair Tax in place, I would hope that companies would be encouraged to expand their percentage of contributions. Plus if you also take advantage of an Employee Stock Purchase Plan, you won’t get hit with taxes when you cash in.
    Fair Tax has many advantages. We just need to educate those who still think the current system is not broken, and that they get more from deductions.

  258. richard
    February 3rd, 2011 at 15:38 | #258

    Bottom line is very simple. It will kill consumer sales in the US. If the middle class is the biggest consumer in the US, they will spend less because no matter how you look at it, it is at least 23% added, plus state sales tax. So, even if I desperately need a new car and can something nice and decent for say $25,000 adding another $7500 to the cost simply eats away at my total income. Consumer sales will plumment. The biggest benefit is still with the wealthy because when you have the money, you really don’t care what the rate is or if it is sales or income, you can afford it and that is what separates the wealthu from everyone else.

  259. February 4th, 2011 at 20:31 | #259

    Richard, you’re missing some critical pieces. First, in real income terms, one is not spending 23% more because one is spending what would currently be considered pretax income, so one has more available to spend. Also, you’re overlooking how much of the price of that car is attributed to the manufacturer’s tax burden. The real cost of goods will decrease dramatically under the Fair Tax. Add to that the prebate on one’s first $30,000 of income and everyone’s a winner, including the federal budget.

  260. February 8th, 2011 at 09:40 | #260

    wow reading all these comments are interesting however i think everyone should look at it this way. We all know the government has WAY to much power i mean really come on they are currently control how we buy our cars. How we build our houses i mean this is the USA is it not supposed to be a FREE country one to make THE PEOPLES descion not have some idiot in congress make descions for us here in ft payne al all the sock mills left due to lower taxes overseas so in my opinion this fairtax would HELP lower economys not destroy them like osama i mean obama is doing heck they dont even know if he is a us citizen or not What happened to our rights as the people im sure if our founding fathers were still alive they would turn their backs on us becuase this country is not based on the constitution like it SHOULD BE!!
    Thank you.

  261. Andy
    February 8th, 2011 at 21:03 | #261

    I also like the idea that the 20 million illegal immigrants sucking our system dry will pay their fair share with the fair tax system.

  262. ccaze
    February 13th, 2011 at 09:31 | #262


    @Jimmy. You are saying you got screwed by the income tax system so everyone else should too. Nice. Maybe you should have spent some time and effort getting the system changed. Your generation is the one that is primarily responsible for bankrupting our country. You have assuredly benefitted far more than you ever paid into the system.

  263. Henry
    February 16th, 2011 at 15:56 | #263

    On the Fair Tax, they say I will get 100% of my income if Fair Tax is enacted. That is wrong. I live in Ct. My state has a state income tax. The Fair Tax does not eliminate any state income tax. I would still have to file. Fair Tax does not eliminate any state sales tax, it will be added on. Fair Tax does not eliminate the gas tax. Gas will be taxed 3 times (Fair Tax, Fed. gas tax & state gas tax). On illegal drug dealers, drug dealers are very elusive. Look at Al Capone on tax evasion. They don’t want their drug money sent to the government for sales taxes. Fair Tax people have a dream on this one. Imagine if I pick up a prostitute and I paid her $20 for her services but I got to pay $6 Fair Tax to her. Another Dream.

  264. Henry
    February 16th, 2011 at 16:54 | #264

    @Robert Heiney
    That is one reason when you Fair Tax people use the word “educate”. What are the people who don’t support the Fair Tax, a bunch of unintelligent people? Using the word “educate is insulting and sarcastic. You should use the word famillarize which is not insulting. STOP USING THE WORD EDUCATE.

  265. Robert Heiney
    February 16th, 2011 at 17:02 | #265

    First of all, you’re lumping two completely different entities into one proposal. You home state, and it’s taxing structure, are not part of, in any way, the Fair Tax. That’s between “you” and “Your State”.

    The Fair Tax is for Federal taxes ONLY. It let’s you keep 100% of what ever the Fed takes out of your check. As far as the Gas Tax is concerned. That tax is supposed to go towards construction and repair of federal roadways, which is not covered under the income tax. Your state, and in some areas, your local government may also add onto the gas tax to repair the local thoroughfares. The Gas Tax is not deducted from your paycheck, as you pay it as you pump your gas.
    Fair Tax isn’t physically taxing the criminal element, as much as it’s taxing the items they buy to produce and distribute their junk. They still have to eat and drive, right?
    Any way you slice and dice this bill into pieces, it’s still far better than what we have now. Nobody likes this yearly song and dance of filing your taxes, so that the fed can control everything you do. Fair Tax lets me keep all of my FEDERAL wages (28% more) so that I can decide what to do with it.

  266. Henry
    February 16th, 2011 at 17:39 | #266

    @Robert Heiney
    Of course the gas tax is NOT deduct from my pay check. What do you think I am uneducated? I STILL have to pay at the pump, Fair Tax, Fed. gas tax & state gas tax. That is the problem with you Fair Tax people. You think the people who don’t support the Fair Tax are a bunch of uneducated idiots. You gave a very sarcastic answer.

  267. Henry
    February 16th, 2011 at 18:04 | #267

    @Robert Heiney
    You said the Fed. government takes out 28% or more of your wages in income tax. I just did the figuring on mine. The Fed. government takes out 16.8% of my wages. Fair Tax is a 23% or 30%. Your answer is still sarcastic.

  268. Henry
    February 16th, 2011 at 20:14 | #268

    The reasons I don’t like the Fair Tax are I don’t want a tax system set up by the ultra-rich. Texas billionaire, Leo Linbeck is the founder and head of Fair Tax.org. I didn’t like it when Linbeck went before Congress demanding for the Fair Tax. I think Linbeck does it for his own benefit. Another thing Fair Tax taxes food, clothing, shelter, rent, utilities, buying a new car, buying a house, medical procedures, hospital stays, doctor visits, prescriptions and so on. I would back it if they put excemptions on items. My state sales taxes doesn’t tax food, rent and housing. It taxes clothing over $50. It might change. I also don’t like the attitude of the Fair Tax people. Fair Tax has problems and they don’t address it. Fair Tax will hurt seniors and retirees. All the time they paid taxes toward their retirement. Prebates only cover toward poverty level. Under Fair Tax, they will have to pay taxes toward their necessities. One thing I find out about sales taxes, individuals pay sales taxes toward purchases but firms don’t. Wealthy people like Linbeck own firms. Some tax system.

  269. Robert Heiney
    February 16th, 2011 at 23:57 | #269

    WOW! I was just just hoping to fill you in on some of the high points to the Fair Tax. Not once did I refer or infer to you as an idiot. But, since you’re going take my information as sarcasm, and run a tirade. I’ll save all my knowledge of the Fair Tax to someone who truly wants to learn a new trick.
    I’m not a rich person. I live check to check. Just like the rest of the working class slobs in this country. I, for one, am tired of this government stealing my hard earned hourly wage, just so they can waste it on some whoopty Doo high priced government do nothing project. So I feel I should get to keep all my money and give it to them when I want to. Your math is flawed. You’re not taking into account the Social Security tax, Welfare Tax, and Medicare taxes. All totaled- 28%. They all go away with Fair Tax.
    And I live in Texas Too. Hey! We don’t have a state income tax. Maybe you should move south.

  270. Henry
    February 17th, 2011 at 06:54 | #270

    @Robert Heiney
    I lived in the state that didn’t have a state income tax. It didn’t work there. My state was planing to raise the sales tax to 13% so there would be no income tax. I didn’t like your answer about buying gas from the pump. I know I pay taxes through the pump. You didn’t have to tell me that. I also didn’t like when you said you have to EDUCATE people on the Fair Tax. To me, the word EDUCATE is an insult and sarcastic. We are not kids anymore. You should have said FAMILIARIZE people on the Fair Tax. I am retired. I don’t pay Social Security tax, Welfare tax and Medicare tax. I only pay Fed. tax. The Fair Tax wouldn’t work for me. I did some figuring using MY calculator instead of THEIRS. I would back the Fair Tax if they have exemptions on items such as food, clothing, rent, housing, anything medical and gas (just Fed. and state, no Fair Tax). It doesn’t pay to have 2 Fed. taxes on gas. One would do. But Fair Tax proposal says NO EXEMPTIONS. Therefore NO EXEMPTIONS means NO BACKING of Fair Tax. Businesses get exemptions, why not individuals. I know. A long time ago, I had a business and they told me I could do it.

  271. Henry
    February 17th, 2011 at 18:53 | #271

    @Robert Heiney
    I been doing some thinking on the Fair Tax. I will support the Fair Tax but with conditions. The conditions are: Food, clothing, rent, housing, everything medical which are basic necessities EXEMPTED from Fair Tax.In my state (Ct.), food, certain clothing, rent and medical are exempted from state sales tax. Gas should also be exempted. Gas at the pumps are taxed with Fed. and state gas tax. There is no need to have 2 Fed. gas taxes. One is sufficient. I would also like to see the prebates eliminated. With exemptions, who needs prebates. The one thing I don’t like prebates is there are people who don’t need it. People on welfare all the way to Donald Trump and Bill Gates. When John Linder and his people who wrote the Fair Tax Act, their minds have to be in the Twilight Zone when they put it together. Robert, that is the only way I will accept the Fair Tax. I will be saying this in the future.

  272. Henry
    February 18th, 2011 at 08:09 | #272

    @Robert Heiney
    I will support the Fair Tax with the conditions I wrote down. Food, clothing, rent, housing, everything medical which are basic necessities EXEMPTED from Fair Tax. With exemptions, there are no need for prebates. Imagine the money WASTED processing the prebates and senting them out. Anyone with an ounce of brains could figure this out. John Linder and the people involved writing the Fair Tax Act must have been on drugs when they wrote it. I’ve seen bills go through Congress and State Houses with faults, passed and then they are right back to correct the faults. Even state sales taxes in some states have exemptions on food, clothing, rent, housing which are basic necessities. Everyone will get prebates, poor and rich alike. Robert, I like to hear your conclusion on this. Take care.

    John Linder and the people involved writing the Fair Tax Act, must have been on drugs when

  273. Jeremiah Tremble
    February 18th, 2011 at 13:32 | #273


    The reason behind the no exemption policy and the prebates is that they were trying to design a system that was fair to people with lower income otherwise it would be a very regressive tax hitting those who were poorest the hardest. The no exemption policy is pretty simple, rich people spend more on healthcare,food,clothing,and housing. If you don’t want to spend so much on taxes the theory behind it is that you don’t by the expensive things. If you start adding exemptions on the other hand you open the door to allow loopholes that would give a company who could lobby their way into a position with a huge competitive advantage. I don’t like the prebates it feels almost like wellfair to me, but i can’t conceive a way that removes the burden to the poor better, though i’m open to suggestions.

  274. Henry
    February 18th, 2011 at 14:51 | #274

    @Jeremiah Tremble
    I agree but I am still for the exemptions. It was the rich who design the Fair Tax. I found this out. Sales taxes are charged to individuals who make purchases but not to firms. Rich people own firms. Many years ago I owned a firm. The rich will find a way around Fair Tax. A year ago, I was at a car dealership. My girlfriend bought a 2010 Kia Rio. The dealership used the car as a rental for a couple months. When all the paper work was done, I look at the bill of sale. Instead of saying new, it said used. The Fair Tax proposal said only new items, not used items will be taxed. With that the dealerships will get new cars, use them as rentals for a couple months, put them out in a lot and sell them as new but will mark them as used, no Fair Tax. They will do the same with trucks. I prefer the exemptions for the middle class and the poor. Processing the prebates will be very costly and open to fraud. Prebates will be sent to poor and rich alike. Even Bill Gates will get a prebate. To him, that prebate is just nickels and dimes. Even criminals such as drug dealers will get prebates. That is my suggestion.

  275. Jeremiah Tremble
    February 18th, 2011 at 16:32 | #275

    You do raise a valid point about tax evasion i’m not entirely sure of what qualifies from a new and used vehicle though i know a new vehicle can have some miles on it. One thing to note is even if they do transfer a car from new to leaseable tax will be paid on all leasing transactions likely in perportion to the value lost when driving those first 4000 or 10k miles. This doesn’t mean someone with more experience in the auto industry wouldn’t need to define the difference between new and used with more clarity. Maybe in this case in order to convert it from new to leasable the auto company must pay the taxes on the value of the new car.
    Taxing corporations is a silly thing to do and here’s why. A corporation is designed to make money for its shareholders the shareholder is then taxed on the purchases he makes with the money he got from the corporation. When you tax shareholders and corporations you put unfair taxes on that person. Hear is the key part because corporation is not a real entity but in fact just a group of people when you tax that corporation much of that taxes is just passed on the the consumer in the form of prices. Furthermore that tax cost causes corporations to be able to hire less people. I do however believe that rich people should not be given any loop holes which is why under the fairtax the IRS or its new eqivlant would be focused solely on businesses hopefully stopping most of the tax evasion.. With regards to the prebates yes Bill Gates will receive his 2.5k, so will you and I but whats more important is that Bill Gates in the course of the year will spend 2.0mil in taxes buying food and cars and whatever Bill Gates buys I will likely spend only 3.0k of which the prebate pays back 2.5K. Yes drug dealers will receive prebates but whats more important is they will be taxed when they buy their new cars and groceries and what not where today they don’t pay any taxes. My two cents

  276. Henry
    February 18th, 2011 at 17:42 | #276

    @Jeremiah Tremble
    You raise a good point but when it comes to drug dealers, they very seldom buy new cars. Case in point, over 10 years ago, I had a 1983 Honda Accord for sale. I put the ad in the paper and I got a call. It was from a drug dealer from the city. He saw the car and he like it. I was asking for $800 and he didn’t complain. He took out a roll of cash and he paid me $800 in cash. I gave him the paper work and it was done. Drug dealers never use new cars when they are doing their business. If they get caught and they lose the car, that is nothing. Drug dealers prefer older or slightly newer cars. Less suspicion. I never dealt drugs but I knew some of them. They never force me to take their poison. Jeremiah, I am going on record, I still back the exemptions for basic necessities for the middle class, poor and seniors. To me, the prebates are gimmicks and costly. Exemptions or no support.

  277. Robert Heiney
    February 18th, 2011 at 19:13 | #277

    I have to agree with Jeremiah on the exemptions issue. When you really look at the way the bill is written, Fair Tax is only added to New Items. A new house would get taxed, when you resell it, it won’t, because the tax burden has already been paid. There are parts of this measure that I still don’t understand either. Because houses, very seldom go down in price. So what do you do then? Do we pay tax on the amount over and above what we bought the property for? Cars are different. They depreciate quite rapidly, so the tax is only paid on the new purchase, not the old. The way it can be administered is that the Fair Tax amount is charged on all “First Titles” to the consumer. All subsequent titles are not taxed. I’m almost 100% sure that prescription medications will not be taxed.
    Look, I’m not trying to say that the Fair Tax is the ultimate cure to our idiotic tax structure. It’s just better than what we’re doing now, buy penalizing the working man, by taking his hard earned money out of our paychecks. Every time I post anything here, I end up going back to the bill, to see if I missed something in the translation. I can appreciate your views, as well. They are all valid points. It’s scary to dump something we’ve lived with and done for so many years, for something new, and unchecked. It’s like buying your first home. I’d be scared too, and I am. But I want to control how I pay for my government services. The Fair Tax is transparent. It puts you in control, not Washington.
    Your absolutely right about the drug dealers. They, more than likely, would not buy a new car, but they do buy groceries to eat and plastic bags to sell their crap.

  278. Henry
    February 19th, 2011 at 06:15 | #278

    @Robert Heiney
    I AM still for exemptions especially for seniors. A lot of seniors pay rent. Rent will be taxed under Fair Tax plus senior use more medical than others. Fair Tax will be added to medical procedures and medical cost. The prebates: It will cost the government more handling the prebates. They will have to set up a new bureaucracy, hire more people to process and send the prebates out. The prebates are to pay for the Fair Tax on necessities. It will be less expensive to exempt the necessities and no prebates. Prebates will be sent to people who don’t deserve it. Groceries: Farmers markets will be set up. These markets don’t last long. They are mostly in the weekends. They sell food a lot cheaper than super markets. People will have VICTORY GARDENS like they had in WWII time. Cigarettes: Fair Tax will be added on cigarettes driving the costs over $10 a pack. Cigarettes will be smuggled in and they will be selling them from car trunks. That will be the same with alcohol. Clothes: The one business that will increase will be Salvation Army Thrift Stores. What makes you think they will be selling clothes from car trunks and flea markets will be in. I was in one flea market and they were selling new stuff. Border States especially near Canada and Mexico: With Fair Tax, Canada will have lower sales taxes than the U.S. What makes you think Walmart will build a fleet of stores on the Canadian side to handle customers from the U.S. My father lives in Maine near the Canadian border. When I was there, I saw a lot of Canadian cars on the parking lot of Walmart. Canada has higher sales taxes than the U.S. With Fair Tax, it will be the reverse. With that, there will be a new harassment coming in. Robert, I disagree with you on the exemptions. I am still for the exemptions. You are right, it will put us in control but it will make Washington out of control.

  279. Henry
    February 19th, 2011 at 07:28 | #279

    @Robert Heiney
    When it comes to flea markets, flea markets operate in the weekends especially on Sundays. No tax agents checking them out. On drug dealers with their little bags, they will mostly buy them in flea markets. Some things objectable about Fair Tax, it will destroy the real estate market especially home builders building new homes. Another thing is new car sales unless the car dealers do what I stated before. Another thing that is going to increase. Passport applications. People will be traveling especially to Canada and elsewhere to look for sales. Robert. Pescription medications will be taxed as well as medical procedures. Under Fair Tax, health care costs are going to go up. Sure, we are in control when we buy stuff but the government is in control when they put the high sales taxes onto the stuff. There are faults when it comes to Fair Tax. It will create a new criminal element out there. Take care.

  280. Jeremiah
    February 19th, 2011 at 15:05 | #280

    You bring up a few good points Henry and I have thought the same thing why don’t they just exempt medical rent housing and food and clothing as tax free and then tax everything else. The short of it is why should rich people be given tax breaks on things they don’t need. For example a poor senior citizen spends $250 dollars on groceries we will say per month and they buy nececity food so hamburger instead of steak and canned beans instead of caviar. Now Bill Gates spends $10k per month on food getting the best meats and drinks. The poor senior pays $75 in taxes on her months food under the fair tax, of which all is paid for with her 200 per month prebate. Bill gates on the other hand pays 3k in taxes of which the prebate doesn’t put a dent in. Now Bill only needed (nesseciety) to spend $250 on foods to survive but he had the money and so he splurged and bought 10k worth. Why should Bill Gates get a free pass on the other 9.7k he spends on food that wasn’t a nesseciety. Housing is the same way the rich spend more on it then the poor. Now as for Medical and Education i believe these two items should be looked at as investments and therefore tax free. Medical in the sense that “Ahh crap i ran my foot over with a lawnmower and now need to get it fix” Is a short term investment to returning you to a contributing factor of society. Now elective surgical procedures like breast jobs and tummy tucks should be taxed. Education is a longer term investment where you train to be able to contribute more to society. As for cigarettes 30% wouldn’t be bad if they didn’t already tax them 300% in some states may i suggest to roll your own its much cheaper. As for the black market (people selling stuff out of trunks and flea markets) Between customs and the new focus of monitoring vendors and retail locations for tax evasion (I.E if someone buys wholesale from a vender they need a tax ID) It shouldn’t be a problem regulating it. Two things i do want to point out prices should be less on products do to the taxes relief for businesses you will have quite a bit more money to spend coming from your paycheck so although prices will appear a bit higher it won’t really affect you. My biggest single complaint about the fairtax is the the 30% rate that goes along with it. It’s actually no fault of the fairtax idea but rather overspending. If you could give me a national sales tax of 20% today I’m sure it would be passed in both house and senate tomorrow.

  281. Henry
    February 19th, 2011 at 17:36 | #281

    Jeremiah: That is why Fair Tax will never go through. To me the no exemptions and the prebates are nothing but DOUBLE STANDARDS. I don’t like it with prebates are given to people that don’t need it such as criminals, drug dealers, people on welfare, illegals, drug addicts and so on. Also people like Bill Gates and Donald Trump. I have nothing against these men. I admired them what they have accomplished in their lives but they don’t need prebates. Anyone with S.S. numbers will be entitled to a prebate. Imagine a drug addict use his or her prebate to buy drugs. The cost of processing and senting out the prebates will be tremendous. They will need a new bureaucracy to handle it. It will be less expensive if they have exemptions on necessities and no prebates. The people who authored the Fair Tax Act didn’t even think about this. Their heads must have been in the clouds when they wrote it. You are right about the overspending. Many times Cong. Ron Paul has said about overspending. Ron Paul has been a friend of taxpayers and he does NOT support the Fair Tax. Ron Paul must see something he doesn’t like. Fair Tax does NOT address spending. Something we should look upon. Take care.

  282. Henry
    February 19th, 2011 at 19:16 | #282

    I wrote a mistake on my last comment. I wrote down illegals. A lot of illegals have phony S.S. cards and some have no cards. Anyone with legal S.S. cards will get it. Take care.

  283. Charlnn
    February 23rd, 2011 at 23:05 | #283

    @Robert Heiney
    As it stands now,for most, in what we pay in taxes, all the money we make january through May goes to tax so we don’t star”making money” until June.

  284. Robert Heiney
    February 23rd, 2011 at 23:38 | #284

    I’m confused. Are you saying that’s OK with you? Because it’s only going to keep going up and up, until we’re working to September to pay our taxes.
    Let me keep all my money and then I can decide how much to pay the government when I buy stuff.

  285. Henry
    February 24th, 2011 at 07:01 | #285

    @Robert Heiney
    Robert: It’s been a while since I heard from you. I have been doing some research on the prebates. According to them, the prebates are adjusted to inflation. Look what happen to Social Security. S.S. is adjusted to inflation and they have not receive a raise in 3 years. It could happen the same thing on these prebates. If the government raises the tax rate, will the prebates go up? Can you trust the government giving out prebates? The prebates could go to the wrong people. I also found out illegals will not be able to get prebates. It has to be people with S.S. numbers and pay into the system. I met and knew drug dealers (Robert, I don’t care about these people, my brother was one of them,he is deceased) and they have legal jobs, pay taxes and they have that business. It is what you call supplement the income. Drug addicts also as well as millionaires and billionaires will get prebates. That is the one reason I don’t like prebates and the one reason I will not support the Fair Tax. I still say it is better to EXEMPT basic necessities from Fair Tax and NO PREBATES.

  286. Robert Heiney
    February 24th, 2011 at 08:28 | #286

    Hello Henry,
    You are absolutely right. Everyone gets a prebate, and here is where it gets confusing. According to all the literature I’ve read, the poor get the lion’s share of the prebates, the rich get less. I don’t know how they intend to determine who is rich and who is poor. I can only guess it will be determined by how much money you pay into Medicare/Medicaid or whether or not, we’re going to still contribute to SS. The rich don’t pay into SS, since the government deems that they make enough money to sock some away for retirement.

    The Prebates, as I understand it, were put in place to quell the uproar from those who wonder about the current deduction system we have now, and to ease the pain on taxes on just about everything. I still think that congress, if they ever pass this, will put in place exemptions for unprocessed foods and prescription meds. The backlash from senior citizens on fixed incomes will be astronomical if they don’t.

    I’m not saying the Fair Tax is the perfect plan to get us out our hole, but with the deficit climbing at an ever faster rate, the current system will only get more and more grabby of our hard earned money. And I don’t want to work through October, just to meet my tax burden. I haven’t even gotten a COLA increase the last two years. Right now, I have to dip into my savings to pay what I owe by the end of the year.

    Henry,I don’t give a rat’s rear end about drug dealers either. But as long as there are people who use these drugs, we might as well make some money off the manufacturing process alone.

    As for the illegals, you’ll have to further explain your position. I’m not sure I understand what you’re saying. All I know, is that most illegals, RIGHT NOW, don’t pay a dime in taxes, yet clog our hospitals ER’s waiting to get treated for a cold or the flu. You and I pay for that service to them, while we get to wait for hours to see a doctor for the more serious hospital visits. Illegals, under the FairTax, will pay their fair share, when they purchase their foods and other goods. My major gripe about illegals, is that they get paid under the table in cash, then flood the supermarket customer counter to send their money back home to Mexico or other Central American country, all tax free. We should, at the very least, put a 28% tax on all money faxed out of our country to anywhere, unless you can provide proof that you paid taxes on it already.

  287. Nadine
    February 24th, 2011 at 13:14 | #287

    Good discussion, everyone. I’m still on the fence between flat & fair tax - a lot to think about. One thing I do know is Congress is not going to pass ANYTHING they do not benefit from. For instance, how does Fair Tax effect campaign financing? What about all those ridiculous telephone use taxes? Towns, cities and states benefit from sales, occupancy and other layered and municipal use taxes (911, parks, meter upgrades, waste management, etc.) - do those go away by law? I know I chose to live where I do, outside town limits, to avoid extra township taxes. I sure don’t want to support fair tax if it just going on top of non-sales taxes for services I’m already paying for.
    Again - good discussion, thanks for all the various opinions and perspectives.

  288. Henry
    February 24th, 2011 at 15:58 | #288

    @Robert Heiney
    Robert: What I found out about the prebates, the illegals will NOT get it. The only ones who will get it are people who have paid into the system in taxes and have legal S.S. numbers. A lot of illegals don’t have them. Some of them have phony S.S. numbers. About drug dealers, I don’t want them to get it even though they have legal jobs and pay taxes. I don’t want wealthy people to get it, they don’t need it. The way they have it set up, anyone who has paid into the system regardless of their wealth , have legal S.S. numbers and what they do, will get prebates. I am for exemptions for basic necessities and NO PREBATES. Prebates are like welfare. There are people who don’t deserve it. You are right what the illegals do in the hospitals. Robert, in 1940, my father came into this country from Finland, illegally. He took care of his status in one year. He join the carpenters union and he work construction and he paid his taxes. In 1942, he was drafted in the U.S. Army. While in the Army, he became a U.S. Citizen. He never used welfare. I joined the carpenters union in 1966, retired in 2009. Construction has taken a toll on my body. I don’t know if Fair Tax is the answer. Fair Tax does have problems. It doesn’t address the retirees and seniors on fix incomes. Prebates go by how many people in a family. If it is one person, $208 a month, couple $415 a month, regardless of wealth. Children, it will be extra. Robert, it was in Fair Tax- Wikipedia on prebates. It shows the scale and who will get what. I don’t know if Fair Tax will ever get passed. When it first came out, they had 72 cosponsors in Congress. Then it was 65, now they have 54. They only have 5 cosponsors in the Senate. They lost a couple already. I hope they have a better tax system that really addresses everybody. Take care.

  289. Robert Heiney
    February 25th, 2011 at 00:13 | #289

    The Fair Tax is designed to do one thing. Create an (in their words) equitable way of funding ONLY the federal government, by eliminating the federal payroll / income tax, and replacing it with a consumption tax on all NEW taxable goods and services. This will not effect your states income tax (if your state has one)Property tax, local sales tax or any utility tax. Go to Fair Tax.org and read the bill as it’s written now. There are many valid arguments, both for and against the change, and in my humble opinion, the good outweigh the bad. Most workers end up paying about 23-28% of their wages toward funding the fed. The Fair Tax abolishes the income/payroll tax, along with the IRS. This lets you “take home” 23-28% more of your money. It also puts in place a 21% federal sales tax on all new goods and services. It sounds like it’s more, but to me it’s less. FairTax also eliminates all taxes on Estates, Corporate, Capital gains and winnings. With all those other taxes gone, prices should go down. Everyone who buys anything, pays into the system. It averages out to be the same, or just a little less. Some sticking points though are retirees and seniors, who’ve already paid their dues and their taxes. Why should they have to keep paying.

  290. Henry
    February 25th, 2011 at 05:49 | #290

    @Robert Heiney
    Robert: I just had my taxes done (Fed. & state) and I found out one thing. Fair Tax will not work out for me. I am retired and for seniors on fixed income, it will destroy them. One comment said Fair Tax will be good for seniors. I would bet my bottom dollar, that comment writer wasn’t retired and on a fixed income. There is one man living not far from me. He is retired and his wife is in a nursing home. She is on medical care and doctor visits. He also rents an apartment. Fair Tax will destroy this man completely. They will tax his apartment rent, his wife’s nursing home care and doctor visits. The prebates won’t even cover over 2/3 of it. There is another problem. A lot of people especially ones who make between $30,000 to $50,000, save their money to buy a brand new, descent car. Under the present system, the Fed. government rewards people who buy a brand new environmentally clean car that saves gas. Under Fair Tax, these people will be penalized. According to their proposal, only new items will be taxed, not used items. These people will buy used, old cars and there goes the environment and there goes the auto industry and new car sales. 3 years ago, I bought a 2004 Ford Ranger. I was lucky, the previous owner really took care of the vehicle. I went underneath the vehicle and I saw the work he done on it. There are some good used vehicles and there are vehicles that people never took care of. Fair Tax will only work for people making over $200,000 a year. People with low and fixed income especially seniors, NO WAY.

  291. Mikeyso23
    February 26th, 2011 at 16:03 | #291

    You need to take into account that under the Fair Tax system you will NOT continue to pay income tax. So the rebates don’t completely cover your new sales tax burden, but after you factor in the absence of income tax I am betting that your net position has improved. While this tax is the most fair system I have heard of to date, it will obviously have a very tough battle ever getting passed. The progressives on both sides of the aisle have don’t believe in proven and sound principles like incentive, saving, and individual responsibility. They sincerely believe that ’social justice’ can only be achieved through government planning, restrictions & regulations - even though history has proven over and over and over again that collectivism (socialism) and true freedom cannot coexist.

  292. Mikeyso23
    February 26th, 2011 at 16:05 | #292

    You need to take into account that under the Fair Tax system you will NOT continue to pay income tax. So the rebates don’t completely cover your new sales tax burden, but after you factor in the absence of income tax I am betting that your net position has improved. While this tax is the most fair system I have heard of to date, it will obviously have a very tough battle ever getting passed. The progressives on both sides of the aisle don’t believe in proven and sound principles like incentive, saving, and individual responsibility. They sincerely believe that ’social justice’ can only be achieved through government planning, restrictions & regulations - even though history has proven over and over and over again that collectivism (socialism) and true freedom cannot coexist.

  293. Henry
    February 27th, 2011 at 08:21 | #293

    I read your comment. I don’t know if you are retired. I don’t think my net position will improve under Fair Tax. There is still the high sales taxes you have to content with. As you know, gasoline is going up. With Fair Tax, gas will be taxed 3 times, Fair Tax, Fed. gas tax & state gas tax. With Fair Tax, add a dollar more on top of rising prices. By being retired, I pay little Fed. Tax and hardly any state tax. No. The Fair Tax will not work on my behalf. There are STILL the high sales taxes even if you get the rebates. Plus also state sales taxes added on and any state income tax deducted from the wages. I don’t think Fair Tax will not go through. What I heard they are leaning more toward the Flat Tax.

  294. Robert Heiney
    February 27th, 2011 at 09:48 | #294

    I agree with on the retiree issues. I am 59 and nearing the point where I want to stop doing what has been my lifelong career, I’ll keep working part time, but I definitely want to slow down just a bit. I don’t think permanent retirement will ever be in my future, thanks to our government goons robbing Peter to pay Paul with my SS money I’ve already paid into. I understand your position, and I truly respect it. But I still want ALL taxes, that hinder the growth and employment of this great nation. The Flat Tax still keeps in place the “punitive” taxes that have caused manufacturing jobs to be out sourced overseas to third world, cheap labor countries. There’s no incentive on the company’s part change that. This is why I’m sticking with the Fair Tax. Yes I’ll still end up paying when I’m retired, but as long as I’m living in this great country of ours, It’s the least I can do to keep it great. I’ll just have to adjust, I guess.

    Thanks, Henry

  295. Henry
    February 27th, 2011 at 15:07 | #295

    @Robert Heiney
    Robert: I will still keep on retirement issues. I am also a member of AARP. I’m 63 and I could have kept going on construction but the contractors consider anyone in their late 50’s and 60’s as HEALTH RISKS. I have been the carpenters union for 44 years. I got a good retirement out of it. There are some retirees who never planned on retirement and they rely so much on S.S. S.S. is part of retirement. I found out in the internet that the TEA Party had a conference and they had the Fair Tax people and the Flat Tax people there. They were talking about tax reform. I was surprised the former Cong. John Linder (one of the authors of the Fair Tax Act) spoke and I could see he was having doubts about it. The Flat Tax people spoke. The conclusion of it, they think the Flat Tax would have a better chance to go through Congress than the Fair Tax. The 16th amendment could be one. It is not easy to repeal a Constitutional Amendment. One Fair Tax person said the proposal would repeal the 16th amendment. No. It is a separate act of Congress that does it, 2/3 vote of each House of Congress and 3/4 ratification of the States. The last time an amendment was repealed, it was Prohibition, it took 14 years. People love their sauce. One person said we got an amendment against slavery. That took over 100 years and a Civil War to get that amendment. The person said what about the amendment for women to vote. That took 100 years for that to come. Any kind of tax system that comes, there will be problems. The best system is what Cong. Ron Paul said is to cut spending. Congress has to cut spending. Ron Paul does not back the Fair Tax. Cong. Ron Paul is from your state, Texas. 14th District. Take care, Robert.

  296. John D. Beck
    March 7th, 2011 at 10:18 | #296

    I am a confirmed Liberal who will nearly always vote for the Democrat candidate. John Linder is probably one of the most right-wing politicians who ever lived. Having said this, I cannot find anything to dislike about the proposed Fair Tax. The “Cons” did not come across to me as “Cons”, but rather as “Pros”.

  297. Robert Heiney
    March 7th, 2011 at 15:11 | #297

    @John D. Beck
    Great! The Fair Tax bill, though written by John Linder, a Republican, is purely nonpartisan. It tries to be as fair to everyone as it can. I do think, however, that retirees should be given either special senior citizen rates or a pass on food, clothing, rent, medicines and utility bills. These are the basics that one needs to survive, and seniors on fixed incomes, who have paid their income taxes all their lives, should be exempt from those basics.

    Other than that, I’m 100% for the Fair Tax. If for no other reason than to boot every single employee of the IRS to the curb.

  298. Nadine
    March 7th, 2011 at 16:32 | #298

    Food, medicines and utilities should not be taxed for anyone; rich, poor, young or old.

  299. Peter
    March 7th, 2011 at 17:13 | #299

    Everything has to be taxed fairly and equally. The neccesities to survive that you pay tax on are given back in the prebate. Otherwise specialty food shops and expensive cuts of meat which are clearly not neccesities are untaxed as well. The prebate will pay families and people back for the minimum amount of goods needed to survive. If people want to try a very expensive experimental then the burden is on them.

  300. Burgener
    March 7th, 2011 at 20:57 | #300

    No, the FairTax won’t add 30 percent or even 10 percent to prices. Let me explain. Consumers pay all taxes. The taxes that are “paid” by corporations are really simply passed to consumers. Employees income taxes are also embedded into retail prices. When you have three or more competitors, there’s competition. Competition keeps profit margins constant (5 to 10 percent for most industries). When you remove the need to pay incomes taxes, competition will drive retail prices down. The FairTax will simply return the retail prices back to where they were. Granted, there might be some slight inflation, since there will be more money to spend (you’ll be able to spend more of your gross salary), but your purchasing power will increase.

  301. Burgener
    March 7th, 2011 at 20:59 | #301

    Why? Shouldn’t all industries be treated the same?

  302. JustSayin…
    March 11th, 2011 at 15:58 | #302

    @Charlie Reed
    Have you ever visited another country? You pay taxes there. Either built into the cost of goods or added as a sales tax. It should have a negligible impact.

    It will definitely impact various things. But I think it would be easier to manage and adjust than the current system.

    Some complain that it has flaws. Well, perfect is the enemy of good. And good (fair tax) is much better than bad (current system).

  303. Roger Biggs
    March 12th, 2011 at 03:41 | #303

    Haven’t posted here in a while, but have been reading the comments and again and again I see people saying that goods will see a drop in price given the passage of the fair tax, completely neglecting the processes which determine the way retailers and manufacturer’s price things. Rather they’d assume instead that prices will remain the same save the companies being good sports and lopping off the cost of their own taxes from your products. WISHFUL THINKING.

    There is nothing compelling them to do so, and in fact there are plenty of reasons not to. Anecdotally, refer to your local gas station. Over night, one might change it’s price + 10 cents while the other neglects to, is happy to sell you fuel all night long at a 10 cent discount and come morning, they’ll rise their price too. so long as the market moves all together, no one has to drop their prices a single cent, even if it is entirely possible to drop prices drastically. Again anecdotally, look at the many EU countries that adopted the Euro. Slovenia, which entered the EU in 2k4 saw prices nearly double when moving from the tolar to the euro. while some of this was transitional cost, a lot of it was sellers moving their price points up as a group, a move defendable by pointing the finger at politics and government. This, in a country that the government regulates prices WAY harder than USA. Be warned, radically changing the tax structure will cause a increase in the price of everything. It is my opinion that to believe otherwise is woefully naive. If you’ve read my previous comments, you’d all know that I am a progressive liberal in SUPPORT of consumption based taxation, however not necessarily HR 25. So in all fairness it is incumbent on me to mention that while I’m certain that prices would increase, I also believe those same market forces will restore a certain amount of normalcy over time.

    Can the spin fellas, realism will get our issues way farther than boiler plate stump speeches. The only people ever convinced by a spun statement are those who have no grasp on the issue being spun at them, I.E. the ones who don’t care about the issues. I like to call them “independents” ;)

  304. Roger Biggs
    March 12th, 2011 at 03:47 | #304

    To clarify, to this day prices of good in Slovenia remain nearly double what they were priced at in 2k3.

    Save for certain things that, surprise surprise, are heavily regulated. A perfect example is petrol which in Slovenia has seen prices rise in accordance to the cost of oil, natural gas, and certain relations with energy producing countries regionally. In other words, if you graphed it out over the years, you’d not be able to tell the currency changed from the indigenous tolar to the Euro currency.

  305. Robert Heiney
    March 13th, 2011 at 10:38 | #305

    @Roger Biggs
    Oh, you are so wrong about us “Independents”! We are the ones that bring intelligent, extensive research and well thought out discussions of both sides of any issue. We’re not the party lackey’s, following our party doctrine off a cliff with loyalty. We’re free thinkers. We don’t pay attention to spin. You should try it. It’ll open up a whole you.

    Ok, look. I am all for changing the way this government funds itself. The current system is overwhelmed by corruption and cheating. It’s time for a change, and that change needs grass roots constituent uproar, almost to the point of another American Revolution. When We, The People, get our fur up to the point where our elected officials fear losing their precious silver spoon jobs, is when, maybe, this will pass. I’ve been a passionate supporter of Fair Tax since it’s inception, and will continue, until I die (because I don’t see Washington ever giving up it’s total control of the electorate through the income tax).

    On the Fair Tax, I think you may be right. Prices may increase. Corporate greed is one thing that will never go away. However, when the consumer starts shopping around for the lesser prices, they will have to succumb, or go out of business. That’s how it works in America.

  306. gerald henderson
    March 17th, 2011 at 12:34 | #306

    for more accurate information read THE FAIR TAX BOOK author Boortz/Linder. you owe it to yourself and your country. our current system is broken. it is in dire need of repair.

  307. Henry
    April 6th, 2011 at 08:02 | #307

    I decided to come back. I done more research on Fair Tax. On the Fair Tax book by Neal Boortz. His radio talk show showed it. Neal Boortz is a racist and I don’t read any books written by racists. There are other books and literature on Fair Tax written by others. On Neal Boortz, NO WAY. I was watching a news conference and Sen. Saxby Chambliss was interviewed by newsmen. Sen. Chambliss is the head sponsor of Fair Tax in the Senate. He said the income tax system should be made better for the people. He said the same for the corporate tax. Not once did he said anything about the Fair Tax. Not one word. That news conference was the best time to say something. I don’t know if these people are into it. Also look up http//fairtaxfineprint.blogspot.com. It can also be found under fair tax fineprint.blogspot. As I said before Fair Tax is unfair for seniors and retirees under fixed income. The rebates only go by household regardless of income. $208 a month single, $416 a month married. Fair Tax taxes food, clothing, rent, housing, everything medical, doctor visits, hospital stays, prescriptions. These items should be exempted. Fair Tax’s attitude: NO EXEMPTIONS. I noticed they will have exemptions concerning corporations. I saw in Fair Tax Act-2011.

  308. Robert Heiney
    April 7th, 2011 at 08:44 | #308

    I read the FairTax Fine Print Blog, Henry, and I got the impression, it was a blindsided attack. All of the questions were asked and answered more than several times. They kept hammering away at the so called Second Tier. Why shouldn’t local, county, state and Federal agencies pay for what they consume as well. They have to buy stuff, just like us. I’m still all for FairTax 100%. I’m tired of the yearly dance of paperwork just to prove I paid my full share of taxes. Sorry!

  309. Jeremiah
    April 7th, 2011 at 10:40 | #309

    I like the fairtax it being more fair in taxing people fairly and without undue burden. Their are a few things that make the fairtax unattainable unless something drastic happens. The first is the prebates appear to much like some sort of socialize welfare to the true conservatives without perspective. The biggest challenge of the fairtax bill passing is the abolishment of the income tax and the IRS. Setting the tax rate is a congressional act and would need only a majority vote. (assuming someone didn’t try to filibuster it) So i see it as feasable to lowering the income tax rate to 0% and instituting the fairtax as a basic bill in congress. Unfortunately and perhaps with good reason the fairtax bill as it stands requires the repeal of the 16th amendment if my memory serves me correct. This requires 2/3rds in the house and senate and 3/4ths of the state legislator (if my memory serves me correct) to ratify the act. We had a tough time getting the majority vote for the healthcare bill rather you like it or not that alone says something about our ability pass larger more controversial bills. The simple solution would be to remove the repeal portion of the bill and use the IRS to manage the new sales tax, thoughts?

  310. Henry
    April 10th, 2011 at 12:08 | #310

    @Robert Heiney
    Maybe it was a blindsided attack but somebody brought it up. You said why shouldn’t local, county and state pay a tax for what they consume. Guess whose taxes are going to go up to pay for local, state and county consumption? I will NOT be for the Fair Tax until they start to address for seniors and retirees and anyone with a fixed income. The rebates are a joke. Like Jeremiah said, it is socialized welfare. As I said before, Sorry, I will not back it.

  311. Henry
    April 10th, 2011 at 12:35 | #311

    @Robert Heiney I forgot to mention this, if you want to see how the Fair Tax is doing, look up House Ways & Means Committee in the internet. This is where the Fair Tax bill is. Look at their schedules and what is on there. The Fair Tax bill isn’t on there. It is exactly Sen. Chambliss said. They are trying to reform the income tax system. Look at Missouri. They want to put a Fair Tax system over there. I saw Missouri’s tax system. I don’t know if it is going to work. Too many border states. If you look in the news, a lot of states are raising their taxes because of deficits. They are raising their sales taxes. Don’t forget, Fair Tax doesn’t eliminate any state sales taxes, it will be added on. Fair Tax doesn’t eliminate any state income taxes, still have to file. As I said before I will NOT back the Fair Tax until they start addressing retirees and seniors under fixed incomes. SORRY, NO BACKING.

  312. Henry
    April 11th, 2011 at 10:40 | #312

    @Robert Heiney
    Also look up Blemishes in the Fair Tax by Richard Rubin. The website is in Bloomberg Government- BGOV.com. That is in Business Week. Very interesting article. On Fair Tax: SORRY, NO BACKING. Another reason? Neal Boortz, John Linder, Mike Huckabee and Leo Linbeck. Neal Boortz: Failed lawyer, graduated of UNCREDITED law school, how he passed bar exam is beyond me, radio talk show host using racist rant on show, John Linder: Congressman, they used gerrymandering to get him elected, Mike Huckabee: While as governor, he pardons criminal who would later kill 3 police officers. Leo Linbeck: Founder and head of Fair Tax.org. Leo reminds me of J.R. Ewing of t.v. show Dallas. Why would he go to Congress and demand the Fair Tax. This guy is a billionaire and he has more money than you and I put together. Who is he there for? The taxpayers or is he there for Leo Linbeck? You figure.

  313. James Buchanan
    April 16th, 2011 at 14:58 | #313

    I want businesses to look for profits by providing me with something I wish to buy, and not by mining the tax code. I am for the Fair tax without a single exemption for food, utilities, medicine, etc.

    One of the greatest problems with our current tax code are the numerous exemptions, exclusions, and special provisions. These loopholes encourage companies to use the tax code as a way to maximize revenue instead of producing a good or service we want to buy. Once ANY loophole exists to the base of a “fair tax” there will be a mad rush to stuff it with exemptions. The result would have the fair tax look much like our current tax code.

    The human and material “capital” loosed from the tax industry can be used to raise our standard of living.

  314. Henry
    April 18th, 2011 at 04:51 | #314

    @James Buchanan
    You said you are for Fair Fax with no exemption for food, utilities, medicine, etc? That would hurt retirees and seniors with fixed incomes. Fair Tax also taxes rent, housing, hospital stays, doctor visits, etc. Fair Tax does NOT address retirees and seniors. SORRY. NO BACKING.

  315. keith
    April 18th, 2011 at 10:17 | #315

    I am not convinced that our govt cannot operate on less than 10% Flat Tax from everyone. And I am referring to everyone: politicians, govt employees, corporations, churches, welfare recipients, poor/middle/wealthy income earners. If I left someone out, add them to the list.

    If our govt cannot operate on <10% of our GNP then we should sub-contract out the government agencies and hold them accountable.

    I am a middle income citizen and lose years of my life every year due to the IRS regulations and filings. I agree with all the previous posts concerning the IRS being broken. Let’s add the entire government to the ranks of the “broken”.

  316. Tom
    April 19th, 2011 at 13:12 | #316

    Con #4 is incorrect. Going to a fair tax would lift a burden off of the people who pay their taxes by forcing the people who avoid the IRS and or just don’t pay taxes to have to pay taxes or go without. The fact is that the national sales tax wouldn’t have to be that high for the Government to not only receive as much as they are making now but with everyone doing legal sales transactions they would be able to make more then what they have. Don’t get me started with how much you’ll save with getting rid of that archaic tax code and all the people you employ to enforce it. It’s sickening how dumb and wasteful our country is.

  317. Buzzy
    April 19th, 2011 at 19:47 | #317

    Most of the “cons” simply don’t have a full understanding of the Fair Tax. If they would study the proposal in its entirety, and follow the dollars, they will find it is a highly workable plan and good for the country. No plan is EVER 100% good for 100% of the population - but the FT certainly beats the alternative - keeping our present tax structure.
    Re #8 above: There is always need for the “essentials” of living -food, shelter, clothing, etc. Plus, the FCA amount is based on the # of family members, including children!
    Re #10 above: There are cheats in every walk of life. Taxes, or lack thereof, or however tax is calculated won’t make people more or less honest. The FT offers LESS opportunity to cheat! PLUS, there is no “compliance cost”, no “April 15″!!!
    The Fair Tax is the best compromise out there! Perhaps not perfect, but a whale of a lot better than what we have.

  318. Peter
    April 19th, 2011 at 21:11 | #318

    To be clear there are still some compliance costs for retail sellers because they need to comply with reporting etc. But it is nothing they arent already doing for any sales tax. Point it B2B compliance costs go down and complying with the FT is much easier then what we have now! Full support from me.

  319. Sam
    April 20th, 2011 at 15:33 | #319

    You are correct that tax revenues, as a percentage of GDP, went down under Reagan. I believe that’s because GDP went up when Reagan cut tax rates and closed loopholes. Dollars of tax revenue also went up, but not as much, percentage-wise, as GDP went up. Check me out on those facts, as I am quoting from a foggy memory.

  320. Henry
    April 20th, 2011 at 18:43 | #320

    When I read what you said the Fair Tax is the best compromise out there. Perhaps not perfect. When I was going to technicl high school, one of my teacher said these words:” Good enough is no good “. That’s what I think of the Fair Tax. “Good enough is no good”.

  321. Mickel
    April 22nd, 2011 at 10:41 | #321

    You are right “Good enough is no good” in this case however “Good enough is an eff load better than what we have” Like eating a sandwich from a garbage can or from a fast food joint. Fast food joint is “no good” but at least it isn’t from the bottom of a garbage can.

    How are used goods taxed? Would there be a rise of owner to owner sales or will eBay be forced to write in sales tax between users.

  322. Robert Heiney
    April 23rd, 2011 at 00:23 | #322

    Used goods are not taxed. They’re assumed to have been taxed when new. Only “New Item” purchases are taxed. So if you’re really clever you could buy everything used, and not pay any taxes at all. Of coarse you’ll pay it on all services though. Dr., Food, Hospital, Repairs etc. Still alright with me. Better than what we got now.

  323. Henry
    April 25th, 2011 at 05:07 | #323

    @Robert Heiney
    You said dr., food, hospital, repairs are alright with you. To me TOTALLY UNACCEPTABLE. In your opinion, Fair Tax is good enough. “Good enough is no good”. SORRY, NO BACKING.

  324. Peter
    April 25th, 2011 at 08:16 | #324

    Well Henry…good enough may not be ok with you but its a much better setup then what we have now. And all things must be taxed evenly so that no industry is given a benefit over another. For instance medical, if medical visits or procedures were untaxed where does that line fall. Is acupuncture a medical procedure? What about massages or new procedures that may not be clear medical or not? By expempting certain things you start playing the game rgding deciding who and what makes it. Same thing with food, some fancy expenive cheese shouldnt be tax free but by exempting food anything in that catagory is given a pass. It is the only way that makes logical sense.

  325. Robert Heiney
    April 25th, 2011 at 09:14 | #325

    Henry is a retiree, who has paid his taxes throughout his career, and is on a fixed income. I can understand his, as well as other people in his predicaments, feelings. I’ll be there soon, myself. I am for the Fair Tax, though, and am willing to bite this bullet in order to fix the wrong that’s in place now. We have to start someplace, and someone is going to get hit, one way or another. The longer we wait, the worse our current system is going to get.

  326. Peter
    April 25th, 2011 at 09:51 | #326

    @Robert Heiney
    I can understand the worry but for a retiree isnt SS taxed as income now and so is savings. Those are two things in his favor and as the fairtax states the end price of goods should not be effected but it could take sometime for that to settle in.

  327. Mirror
    April 25th, 2011 at 10:21 | #327

    Fancy expensive cheese…srsly?

  328. Peter
    April 25th, 2011 at 10:25 | #328

    First thing that came to me when thinking of something that is food but has a wide range in price. Works for prime rib, lobster, any food item that is significantly higher in price but also has less expensive alternatives.

  329. Mirror
    April 25th, 2011 at 10:53 | #329

    The problem I have with the Fair tax is it opens at 23% (effectively 30%) and that is on top of current state, local and other bizarre utility taxes. Those taxes and their hikes are not going away.

    At a time in our nation when middle class asset values and salaries are dropping, this just sounds ludicrous. Adding this expense to current healthcare cost which is already the primary reason for bankruptcy is lunacy.

    Want to get FAIR? Cut Gov’t subsidies to big oil, agri-industry and other income rich industries. Quit lending money to other countries for education at the expense of American public education. Erase the term “career politician” from our vocabulary - set term limits w/no special retirement, healthcare, student loan repayment and other ridiculous bennies. If Federal leaders had to rely on SS & Medicare, those programs would be strong and stable!

  330. Robert Heiney
    April 25th, 2011 at 11:35 | #330

    Yes it opens at 23%, and I’ll take your word on the 30% number. I’ll be honest, I didn’t do the math. But the math I did do is that at the current 28% that’s taken out of your paycheck, will be yours to take home. Just that alone, is a savings of 5%. Then, you can control how much you send the government, by how much you buy, over and above, necessities. I think it’s still a better deal. You’re already paying State, local and other bizarre utility taxes with the government taking 28% away from you at the check. Plus you still get the monthly prebate, that’s supposed to offset the extra costs inherited by taxing all NEW purchases.
    I agree with you about getting really FAIR, and stopping government from spending on things we don’t need, but do you really think that’s stoppable? And you can forget about career politicians ending “Career Politicians” along with their bennies too!

  331. Robert Heiney
    April 25th, 2011 at 11:40 | #331

    Yes, SS and savings are taxed as income, but they get most of it back, as I understand it. I could be wrong. I do know my mother gets money back every year. How much, I don’t know.

  332. Mirror
    April 25th, 2011 at 14:27 | #332

    @Robert - I don’t know where you get your numbers, but a single person making $100k per year taxable-after-deductions, paid less than 22% income tax (per 2010 tax table.)

    With the extra prepared food sales taxes of 10% in some states like TN & CA or up to 10.5% in SC, that makes a one happy meal a dollar more for the single mom who’s hours are being cut back so her employer doesn’t have to pay insurance benefits and of course when she or her child gets sick, the nat’l average doctor’s office visit is $60, so now that’s going to cost her $80.10. The prescription is going to cost more, too. Not to mention the price of gas which if we go by what it is now (and it is going up by all analysts’ accounts) that’s going to cost her $5.34 per gallon to get to her job and the doctor and the kid to school. Her monthly $150 heating bill just went up to over $200, water from $45 to over $60, her $1600 annual car insurance would be $1970. She hasn’t even bought groceries, paid for school supplies, clothing or phone - her monthly $239 FCA isn’t going to help much… the FCS is just smoke & mirrors. 23% is not FAIR.

    And speaking of education, as I understand the Fair Tax, education, in general, is not taxed. Other things are not going to be tax exempt, too - therefore, some Gov’t bureaucracy has to administer and manage that - it won’t take Congress long to make it as convoluted and corrupted as the IRS.

  333. Mirror
    April 25th, 2011 at 14:40 | #333

    (yikes all, sorry ’bout all the typos in my comment above - guess I get a little passionate about such topics…)

  334. Mickel
    April 25th, 2011 at 14:46 | #334

    Dr., Food, Hospital, Repairs etc. are taxed right now but the consumer doesn’t directly see it. You don’t think that businesses don’t set their prices without adjusting for taxes they have to pay? In a true capitalist economy prices will coincide with what goes into them. Take out the taxes and tax expenses that business have to pay before they deliver their goods and services, prices will have to conform to stay competitive. McDees has to put the expense of payroll taxes and the like in every burger you buy. If all of a sudden they didn’t have these expenses and they don’t lower their price of burgers to conform, then BK Lounge will have lowered theirs and get that business. We need a better basis for an argument than “good enough is no good”. What is good then, maintaining a failing status quo? Why would the Fair Tax fail? So far I haven’t seen a legit argument against the Fair Tax. Any argument against the Fair Tax has been made by those who don’t seem to understand it enough to make a good case against it. How do people that have been paying income tax their whole life get the short end of the stick by implementing the Fair Tax? How is fixing something late not worth fixing? I’m not trying to attack here I honestly want to hear something wrong with the Fair Tax.

  335. Henry
    April 25th, 2011 at 15:02 | #335

    Everybody, on the Fair Tax: STILL NO BACKING. Unless the Fair Tax addresses toward retirees and seniors under fixed incomes. By looking at it, It isn’t there. For medical procedures, hospital stays, doctor visits, seniors and retirees use them more. I have been studying the Fair Tax and this plan is a total disregard toward them. There is one thing is when people who are for the Fair Tax say this plan is good for seniors. These are the same people who are not retired and have never experienced what it is like. I have a very good retirement plan that was set up before I retired. S.S. is only part of it. I have met retirees and seniors who only rely on S.S. No retirement plan. A lot of these people have medical problems. These people, The Fair Tax is going to hurt. SORRY NO BACKING.

  336. Robert Heiney
    April 25th, 2011 at 17:42 | #336

    You answered your own question. You said “After Deductions” you pay about 22%. Without deductions, I’ll bet you’d pay close to 30%.

    The Fair Tax has no deductions, no yearly filings, no more saving paperwork to prove your deductions, no more IRS to demand an audit. You keep every penny you earn. Spend what you want and pay taxes on what you spend on “New Purchases” (anything used is not taxed), and get a monthly prebate to offset items that normally would be deductable.

    I know this is a big jump for some, who are a little skeptical of change. But I’m willing to TRY it, in order to get congress and the IRS out of my life and pocketbook. If we keep on going the way we are, we are destined to be a nation subservient to who ever holds the purse strings on our debt.

    Prices should go down with Fair Tax in place. If they don’t, then those greedy companies and CEO’s will risk loosing business to other companies willing to lower their prices. Lower prices, mean lower taxes. I’m still in favor of Fair Tax. We must start somewhere and soon.

  337. Henry
    April 26th, 2011 at 04:32 | #337

    @Robert Heiney
    The prebates go by how many people in a family on consumption and not by income. They figure out the consumption. Everybody’s consumption is different. $208 a month, single, $416 a month, couple. Children, $16 per child. The prebates are nothing but a gimmick. On new purchases, they’ll find ways to get around that. New cars: the car dealers will use new cars as rentals for a few months and then they will sell the new cars as used, no Fair Tax. Food: farmers markets will set up. They only last a few days especially weekends and they’re gone. Clothes: Salvation Army Thrift Stores and other ways. Cigarettes and liquer: out of car trunks. IRS: IRS will still be here but under another name, Sales Tax Bureau. This agency won’t be hunting for income tax returns. They will be hunting for sales receipts. On the Fair Tax: SORRY NO BACKING. Same words: ” Good enough is no good”.

  338. Robert Heiney
    April 26th, 2011 at 08:20 | #338

    Henry, I get what you’re saying. You don’t like it, and that’s fine with me. I think, anything other than what we have now, would be a better start on the road to recovery.

  339. Peter
    April 26th, 2011 at 08:41 | #339

    The prebate covers the amount of tax paid for neccessary goods for a family size. Yes consumption is different but there is a minimum amount that would be calculated. They are not a gimmick, if someone does not make that much money this is not changing the welfare system which is another whole issue but they could still apply for more assistence. New purchases: a car used for a bit at a dealership doesnt qualify it as “used” its easy to to track which cars were “sold” and when. First time it is sold weather from a dealer to a person or company to a rental company it can be tax accordingly. If to a rental company then it wont be taxed but the services from that company are. For the most part people will not change their habits drastically to go show at the Salvation Army though if some people do it is a good thing to resuse clothes. The used mkt will rise accordingly with increased demand but some people like their new things. Also cigarettes and liquor are already controlled thru state licenses, the enforcement of those laws arent changing. Besides taxes on cigarettes are already very very very high and you dont see a bunch of people selling them from the back of their trunk. Besides when someone buys them to sell from their trunk didnt they already pay the tax? As for the IRS, yes they will be there to collect sales tax on NEW items but they already look at the same companies currently for sales tax or income tax on small businesses. By reducing the number of entities the IRS must watch, by that I mean they get rid of watching all individuals, they can stream line and be more efficient. Good enough is great in this world where you will not find a perfect system because there will always be people getting around it etc. The point is to get the most effective system and efficient system. I believe that is this, I have yet to see a better plan. If there needs to be some amdments or slight changes to it for people who have retired then we need to suggest some. The authors of the plan are happy to hear them. Send them in at http://www.fairtax.org Maybe extra money is sent out to all people recieving SS or over a certain age that will recieve SS.

  340. Robert Heiney
    April 26th, 2011 at 09:43 | #340

    Excellent points made. I think the main problem here is that everyone has been so brainwashed by the current system, that all they see are the words, “Deductions”, “Fixed Incomes”, etc. Congress, in their convoluted wisdom, has made it that way in order keep the citizenry in line and under their thumb. This is change for the people, not the politicians.

    Fair Tax NEEDS to do a better job at showing the advantages to moving in it’s direction.

  341. Henry
    April 26th, 2011 at 11:31 | #341

    Peter and Robert: I wrote to fairtax.org and they are pretty much stuck with their plan. The prebates are a gimmick if you look at it. They figure out the amount of consumption. Until the Fair Tax starts looking toward seniors and retirees, I will NOT back it. The people who wrote this plan didn’t look at what seniors and retirees go through. The Fair Tax plan was proposed by 3 VERY RICH BUSINESSMEN. Also look at House Ways & Means Committee in the internet. That’s where the Fair Tax bill is sitting. It’s not even scheduled. Sen. Saxby Chambliss (sponsor of Fair Tax in the Senate) said in a interview by newsmen, he is moving toward reform in the income tax system. They are not even pushing it. Same statement: SORRY, NO BACKING until they address toward seniors, retirees and people on fixed incomes.

  342. Mirror
    April 26th, 2011 at 11:52 | #342

    @ Peter & Robert
    In my opinion, you are both being quite naive. This Fair Tax will take as much bureaucracy to administer as the current Income Tax.

    I am not adverse to change. I want change mightily in term limits and rescinding the elite privileges Congress & the Senate have afforded themselves, in campaign reform and corporations’ donation-as-person status. Our tax system needs overhaul.

    This Fair Tax is NOT the answer and change for change sake is smoke & mirrors distracting the people from the real problems of over spending, over lending and utter mismanagement by our leaders.

  343. Robert Heiney
    April 26th, 2011 at 12:00 | #343

    Alright, Henry. Let me ask a few questions, here, and please tell me, it’s none of my business, where appropriate.
    1. Do you, as a retiree on a fixed income, fill out a 1040 form every April?
    2. Do you get to keep all of the money your fixed income provides? Or do still have pay tax on that amount?
    3. Just an average, please, how much do end up sending the government in income taxes every year?

    The amount you send them in question 3, will be yours to keep. In addition you get the prebate amount allotted to you.

    You’re telling me, that that amount is NOT enough to cover the extra expense of New Purchase tax or services tax. Correct? We’re talking 23%. That’s $2.30 on every $10 dollars spent at the doctors office for the co-pay. 10 visits a year total $23.00. I’m betting you don’t spend $100 at the grocery store, or more than $10 for prescriptions.

    This is not going to that much of a hardship, in my humble opinion. Sorry.

  344. Robert Heiney
    April 26th, 2011 at 12:41 | #344

    I don’t think I’m naive at all. You’re asking congress to police itself. That’s NOT going to happen. The good ol boy network that exists in Washington is well entrenched to protect itself from dissolution. You can elect all the young rambo politicians you want. Once they arrive, they catch on real quick, on how things get done. Once that happens, forget about it.

    Fair Tax may NOT be the answer. I don’t really know what the answer is, short of an all out public revolutionary outcry. But at least with Fair Tax, or some semblance of a Fed sales tax, the tax payer holds all the power. You decide what Washington has to spend, by what you buy. The constitution has to be changed too. To allow for a balanced budget amendment, along with presidential line item veto. Term limits, I agree with. Subsidies must end, along with foreign aide. No more earmarks, lobbyists or PAC money either. Start a movement, I’ll be the first one to stand by your side!

  345. Henry
    April 26th, 2011 at 18:04 | #345

    @Robert Heiney
    Robert: I am going to be straight with you. Yes, I fill out a 1040 Form toward April. But that is one date. With Fair Tax, every time and day you shop, that is tax day and every day is tax day. I am say again: SORRY, NO BACKING. I will NOT BACK ANY TAX PLAN SET UP BY THE UTRA RICH AND THE GOP. You said it is 23%. It is really 30%. As you see in the news, food and gas is going up. Fair Tax will be added on both these items. With Fair Tax, add a dollar or more on a gallon on top of the present. With Fair Tax, when you buy gas, you are paying 2 Fed. gas taxes plus state gas tax. What you should do is add up total what you buy a month and add 30% on top of that plus multiple that by 12. With Fair Tax, every day is tax day including April 15th. People who are retired pay very little Fed. income tax and little state income tax. Only 6 states tax S.S. on state income tax. My state doesn’t tax. With Fair Tax in and if it doesn’t work and the government puts the income tax back in, we’ll have 2 taxes. I’m sorry, Robert but I cannot back the Fair Tax. It is not the point of hardship but I don’t back any tax plan offered by the GOP. The GOP only caters to the rich. I don’t Democrats either. I don’t mind filling out 1040 Forms because the Fed. tax I pay is so small. The prebates are nothing but a GOP gimmick. $208 a month, what’s that? There are other reasons I don’t the Fair Tax. I don’t like any of the people involved with it. Neal Boortz, John Linder, Mike Huckabee and Leo linbeck. Neal Boortz: author of 2 Fair Tax books. One thing, I don’t read any books written by racists. I saw photos of him at Fair Tax rallies. It reminds me of another racist who held rallies in Germany in the 1930’s. John Linder: Congressman who wrote the Fair Tax to Congress. They used gerrymandering to get him elected. Mike Huckabee: while as governor, he pardons a criminal who would later kill 3 police officers. Leo Linbeck: head and founder of Fair Tax.org. Leo is a Texas billionaire. It is also the point in not backing it but it is the principle in not backing it. The people involved with it is one of them. I figure using MY CALCULATOR instead of their so-call calculator in figuring my consumption. I would lose or just about break even. NO WINNER. Same words: SORRY, NO BACKING.

  346. Henry
    April 26th, 2011 at 18:26 | #346

    @Robert Heiney
    Robert: I left out one word. I wrote that I don’t like the GOP. I also don’t like Democrats, either. If Fair Tax addresses toward retirees and seniors and people on fixed income, I would back it. I don’t see it. SORRY, NO BACKING.

  347. Robert Heiney
    April 26th, 2011 at 22:26 | #347

    It’s been a pleasure having this heavy discussion with you. We’ll just have to agree to disagree on the subject. Enjoy your retirement.

  348. Henry
    April 27th, 2011 at 04:03 | #348

    @Robert Heiney
    Robert: Another reason, I don’t agree with the Fair Tax, it is the prebates. First they tax the basic necessities such as food, clothes, rent, housing, everything medical and then they send a prebate to cover the taxes for it. Whoever thought this up has to be on drugs. A laugh a minute. To me this is a double standard. Would it be better to exempt the basic necessities from Fair Tax and no prebate? Money going in and money coming back. The cost of this process is a joke. A laugh a minute. Have a nice day, Robert

  349. Peter
    April 27th, 2011 at 11:16 | #349

    Rgding the prebates: First they cover neccessities up to the poverty level as a opposed to your idea of expempting all neccessities which are very hard to define, like expsensive food or elective medical operations. Also its much better then the way they do things now where every single persons legal paycheck the govt takes money out then makes us fill out a form to get it or some back. At least they cut down the number of entities they must track and check.

  350. Mirror
    April 27th, 2011 at 14:18 | #350

    @Robert Heiney
    ” But at least with Fair Tax, or some semblance of a Fed sales tax, the tax payer holds all the power. You decide what Washington has to spend, by what you buy. ”

    This is another point on which you are naive - Washington is already spending more than they have coming in. Fair tax imposes no restrictions on Congressional spending.

    FCA is not a simple figuring and will morph as out of control under Congress as the current untenable system. In order to administer FCA THEY HAVE TO KNOW YOUR INCOME.

    How about a 10% flat tax; no rebate/prebate, nothing to finagle or figure, no reporting, no special treatment for anyone. Period.

  351. Robert Heiney
    April 27th, 2011 at 17:56 | #351

    Sure! I’ll buy a flat tax of 10%. As long as congress doesn’t have any access to any of my bank accounts to monitor my money flow. How are we going to make sure everyone pays, without taking it out of paychecks. And how about those who don’t get paychecks and live off their interest income riches. I’m all for anything that lets me keep all the money I work hard for. I’m not saying that the Fair Tax is THE answer. It probably isn’t. But how can anyone say they love the system in place right now. If it’s a flat tax? Great! But 10% is going to be too low.

    Naive? Nope! Free thinker, Yes!

  352. Mirror
    April 27th, 2011 at 18:40 | #352

    ?? I think you misunderstood - I’m talking about a flat 10% fed sales tax. No monitoring income, rich or poor. 10% is not too low, 23% is waaaay too high. Remember, its only going to go UP from here.

  353. Robert Heiney
    April 27th, 2011 at 19:56 | #353

    You’re right, I did misunderstand. Sorry about that. YES! I’m all for that, if the numbers crunch right. The way I understood the original concept of Fair Tax was that it was going to start high (23%) in order to meld into the budgeting process, then slowly go down from there once it fully replaces the income tax. I could very well be wrong on that point though.

    I think any tax hikes should get the peoples vote, not congress’

  354. Henry
    April 28th, 2011 at 04:42 | #354

    Peter: the prebates are still a laugh a minute. Going to expensive resturants, you still have to pay a state sales tax and processed foods are stilled taxed by any state sales tax. The reason the Fair Tax will not go through is because of the prebates and the necessities that are taxed and certain other thing. What they should do is scrap the whole proposal and start over again. Robert: The Fair Tax people say it is 23% when it is actually 30%. In order for the Fair Tax to be in and the taxes it eliminates, it would be 60%. I saw this by finiancial people studying the Fair Tax proposal. Don’t any state sales tax will be added on to it. Fair Tax does not eliminate any state sales tax. Congress decides about tax rates, not people. 23% is their theory. If it ever gets in, they might put it at 40%. Look at House Ways & Means Committee in the internet. That’s where the Fair Tax bill is sitting. It’s not even in the agenda. The whole Fair Tax bill started with 72 sponsors. They now have about 50. We should look at reality instead of something that looks good on paper. The prebates are still a laugh a minute. It is like welfare.

  355. Robert Heiney
    April 28th, 2011 at 09:18 | #355

    You’re equating the Fair Tax with state and local taxes. Fair Tax is nothing more than a replacement for the “Federal” income tax. If you don’t want to pay state and local sales taxes, you need to get on your state’s case.

  356. Mickel
    April 28th, 2011 at 10:21 | #356


    It sounds to me that you are saying there will be a 23% (but really a 30%) increase on goods and services on the prices we are paying today. That simply isn’t the case with the Fair Tax. The prices will be lower because the embedded taxes that businesses have to pay will be removed from our current prices.

    You feel that it doesn’t address seniors, retirees, and those on fixed incomes because people who have paid into the Social Security system and/or private savings accounts for retirement will be effectively double taxed when they begin withdrawing their money and spending it. Guess what?! You are already doubled taxed on these goods and services! If you are paying the same amount for a product whether it is with or currently embedded taxes or the Fair Tax it negates the argument that your cost of living would be more.

    I was hoping someone would come up with a better reason why the Fair Tax is detrimental to those of us on fixed incomes and I still don’t see it. Looking through the comments, especially yours, it seems you are against it for two reasons:

    1. The Prebate doesn’t give retirees, seniors, impoverished, and those on a fixed incomes what you want, which is the government providing YOU special entitlements which is not what the Fair Tax is about. Maybe the Prebate is a gimmick if it you think its intention is to give you entitlements but it is not a gimmick if you see it as a most basic safety net that it is.
    2. You attack the Fair Tax creators and supporters because you hate rich people, hate certain politicians, and hate celebrity personalities and don’t want to be associated with them.

    For number 2. Look at the Fair Tax on its own, not by its creators or supporters. Who cares if it was a rich business man or if a bartender created it (no offense to bartenders out there I could have typed anything here like plumber but that would invoke memories of Joe right). I don’t have an opinion of Neil Boortz or whoever but just because they like chocolate ice cream isn’t going to stop me from liking chocolate ice cream. Letting your opinions of people get in the way of the merit of the Fair Tax by itself is not an argument I could get behind.

  357. Henry
    April 28th, 2011 at 12:16 | #357

    Mickel: I DON”T hate rich people, I admired them for their accomplishments. People like Bill Gates and Donald Trump have done a lot but they don’t write tax systems. They work with them. I NEVER USE THE WORD HATE, YOU BROUGHT IT UP. STOP USING THE WORD HATE. The prebate IS a gimmick and you know it. The problem with the Fair Tax people is they use the word HATE. They call people who are against the Fair Tax as uneducated morons. Robert: I didn’t say anything that I didn’t want to pay state and local taxes. Fair Tax does not eliminate them. Any state sales taxes will be added on. Michel: Can you guarantee that prices will be lowered if Fair Tax is implementd? So MIchel: STOP THE HATE

  358. Mickel
    April 28th, 2011 at 13:49 | #358

    Yes I guarantee that prices of services and goods would fall when embedded taxes are remove by the Fair Tax.

    I think the prebate is a gimmick by your definition as an entitlement offered to you that isn’t sufficient enough for you. You laugh that it doesn’t give you or the recipents enough money from the government. It isn’t a gimmick because it isn’t an entitlement, it is a safety net. Like unemployment is a gimmick if you say, “only $330 to live on?!” It would be a gimmick if are expected to live on that but you are not, it is given for survival, it is up to you to live. Please spell out how the prebate is a gimmick without expecting it to be an entitlement because so far you haven’t.
    “The problem with Fair Tax people is that they use the word HATE” to say you used the word five times in the last comment would be splitting hairs. It still ignores the fact you made comments that you “don’t like” the Fair Tax because of creators and supporters. Whether you hate, dislike, or think Fair Tax “people” are stinky it isn’t a basis to argue against the Fair Tax. That in its self IS prejudice. “Those people” like it so bleah on them.

    Trying to debate the use of a word also takes away what we are trying to accomplish here and that is the Fair Tax Pros and Cons.

    I’m not a Fair Tax person but so far I’m not sure why I’m not. Please give me a good reason.

  359. Mirror
    April 28th, 2011 at 14:29 | #359

    well, silly me, I just noticed this article is dated Jan 2009… is Fair Tax even on the table?

    @ Henry - I’m with you, it’s bothersome when some people you do not agree with just assume you do not (or can not) understand and lump you into a whole category over that one opinion.

  360. Robert Heiney
    April 28th, 2011 at 15:04 | #360

    The Fair Tax is not, nor has it ever been, designed to eliminate State and Local sales taxes. That would be a fight between the states legislature and the citizens living in that state. Fair Tax is designed to eliminate the 16th amendment where as congress shall have the power to tax workers income, along with the elimination of the IRS. Fair Tax, just as your local sales tax is designed, will tax the sub-total (before tax) amount, then each entity will tax that amount separately. Each state will collect both taxes and send the Federal amount directly to the US Treasury.

    Second, Henry, I was brought up to respect everyone’s opinion in a peaceful and cordial manner by my father. If, by my correspondence with you, that I physically called you by any derogatory nature, i.e. moron or stupid, then I will apologize. If you say Neal Boortz is a “bigot” then I have to take your word on that. I don’t try to rate ideas by the people who create them. John Linder, and how he obtained his congressional seat, is of no consequence to the validity of the bill he introduced. I commend him on trying to take this country out of it’s taxation doldrums, and helping working Americans take home more money. Whether I want to spend that extra money, is totally up to me.

    The Fair Tax may NOT lower consumer prices. You may be correct. But I HOPE that corporate America would pass along their tax savings on to me, so that I would buy more of their products. If they don’t, well then I guess they’ll lose my business, and I’d bet a lot more people’s business too.

    You’re not for the Fair Tax. I understand that. I also understand why. I wish we could meet in person to discuss it face to face. I’d bet we could both come away from it with at least a compromise.

  361. Henry
    April 28th, 2011 at 15:27 | #361

    Mickel: Hate and don’t like are two different words. I don’t like the people but I don’t hate them. On Neal Boortz: he is the one who wrote the two Fair Tax books. On his radio talk show he spreads hatred when he does that racist rant. On Boortz, I don’t like him but I don’t hate him. I don’t like it when he spreads that stuff. If you want to get more people of different races and religions on the side of the Fair Tax, this guy is the negative. As you see in the Fair Tax rallies, it is all whites. I’m white but I’m not a racist. On prebates: It’s like money going in and then money coming back. A gimmick. On state sales taxes, food is exempt. Some states, clothing is exempt up to a limit. I would like to see exemptions on basic necessities and no prebates. You said you guarantee prices will fall if Fair Tax is implimented. What happens if it doesn’t fall? I want to see the government guarantee that. Guarantees by Fair Tax people or others is insufficient. We don’t know if they are going to fall or not. They may even go up. One thing, gas will go up under Fair Tax. There will be 2 gas taxes plus Fair Tax. The 2 are Fed. Gas tax and state gas tax. Add a dollar or more on top of rising prices. It is in their proposal. On you not being a Fair Tax person. You have doubts about it. Look up House Ways & Means Committee in the internet. That is where the Fair Tax bill is sitting. Look up hearings that are coming up. Do you see Fair Tax in their agenda? I always look at this. Sen. Saxby Chambliss (sponsor of Fair Tax in the Senate) was interviewed by newsmen, said he is moving toward income tax reform. Not once did he said anything about the Fair Tax. He had a chance. Not one word. Maybe he has doubts. Take care.

  362. Mickel
    April 28th, 2011 at 15:29 | #362


    HR 25 is on the table this year. Ways and Means have it. It will have to take the American people to get it. Lumping Tax Accountants, Lobbyist, IRS, and Congress in with basic “dislikers” of the Fair Tax might be inaccurate but they are the ones that benefit with the current system that is changed and manipulated every year on the backs of those who pay taxes on their successes. It isn’t positive reinforcement for tax paying Americans.

  363. Henry
    April 29th, 2011 at 04:16 | #363

    Yes but how many times. It looks like 13 years maybe more. Every time it is brought up, it sits. Other bills go through but not this one. They are looking at income tax reform. The Fair Tax bill has about 50 sponsors with 5 in the Senate. Sen. Saxby Chambliss is one of them. While interviewed, He didn’t say one word about the Fair Tax. He said he was looking at income tax reform. I look at House Ways & Means Committee all the time in the internet. It shows when the hearings are. Look it up. It shows what is coming up. Take care.

  364. Mickel
    April 29th, 2011 at 10:09 | #364

    You said that Prebates are a gimmick because “ It’s like money going in and then money coming back.”
    I define gimmick as a attention grabber or trick without substance, how I is giving money to those most in need to be helped a ploy? It is a safety net and that is all. I understand why you would say throw it out and remove the tax for basic necessities like some states do. I also thought this would be better at first. The Fair Tax needs to go as written. No bickering of what is a necessity or give special considerations to certain manufacturers, states, or individuals (that wouldn’t be “Fair” right?), let those problems go away with the Income Tax. The Prebate is a safety net to catch those that may fall it is not a platform to stand on.

    You asked me if I would guarantee that prices of goods and services would lower and I said I would. Intelligently you stated you would rather rely on a government guarantee that on an individual’s. I feel a lot better about myself when I don’t have to rely on the government. Of course that isn’t unavoidable you have to rely on the government everyday of your life but it is nice when you don’t have to. How about instead of me or the government guaranteeing prices of goods and services we could have the law of supply and demand and basic free enterprise guarantee it? In a competitive market the market price is set by both the consumers (demand) and the manufacturers (supply). Sure companies will always try to maximize profit in perfect competition but only if marginal costs are at or below the market price, a price the manufacturers only have part say in. Consumers are not forced to buy anything but are more attracted to reasonable prices. Another reason that the Fair Tax is great, you are not forced to give what Congress deems appropriate and puts you in jail if you don’t agree with that sum.

    You infer that the Fair Tax will never get through Washington. The current system needs to go away and the American people will have to change it by influencing a Congress that rather have control of what they pull out of whose pockets. Nobody said it would be easy. To give up because it seems too hard and allow it to go on sets up a gloomy future for America. That being said, whether or not the Fair Tax has backers or not, or who those backers are, or who created the Fair Tax still doesn’t present a Pro or Con for what it would do for this country.

  365. Jeremiah Tremble
    April 29th, 2011 at 11:51 | #365

    So a question for the group, if congress was willing to pass the fairtax tomorrow but they wanted to remove the clause that repeals the income tax, instead just changing the income tax to 0% would you still be in support of the fairtax?

  366. Henry
    April 29th, 2011 at 12:32 | #366

    Michel: Guarantees mean nothing. It is a big if. It doesn’t matter if you guarantee it, I guarantee it, the government guarantee it or companies guarantee it. As I said before gas will up with Fair Tax. Add a dollar or more with rising gas prices. Gas will be tax 3 times. Fair Tax, Fed. gas tax & state gas tax. With fuel prices going up, food prices will be going up. The trucking companies that deliver the products, are going to demand more with rising fuel prices. The Fair Tax on fuel and gas is in their proposal. Another thing is state sales taxes. State sales taxes have nothing to do with Fair Tax. Fair Tax is a national sales tax. Any state sales taxes will be added on top of Fair Tax. State sales taxes vary from 3% to 9.95%. Some states don’t have any sales tax. With total sales tax, some places will go up to 40% to 45%. State budgets are going up. You and I disagree on the prebate. You say it is a safety net. I still say it is a gimmick. We might as well leave it at that. Even if Fair Tax does get in there, they are going to tear it up, put exemptions in there, add clauses to it, the prebates are questionable. It might not be the same bill as written. Congress is an unusual part of government. With any tax bills coming in, the buck stops at Congress. Take care.

  367. Peter
    April 29th, 2011 at 12:51 | #367

    What is the difference between the govt taking 20% of your income up front then paying the 2 gas taxs and being given all of your money then paying the 2 taxes at the pump? It roughly comes to the same amount in the end unless you choose or dont happen to drive as much or buy a fuel efficient car which then you would be saving and that comes down to your choice. Also all those companies including oil companies and trucking companies pay taxes and compliance costs, if they have lower costs then that should even out the tax on the gas. Your only looking at this as additive it seems. Finally especially with the gas issue, currently many people in the underground economy, cash/illegal economy, dont have a paycheck to tax but they do buy food, goods, and gas like anyone else. You have to admit you broden the tax base by capturing those people’s incomes thru there spending where you don’t currently do that now. That in it self seems to make the system more fair by taxing everyone in the country as opposed to just the legal working people.

  368. Henry
    April 29th, 2011 at 13:37 | #368

    Peter: Under Fair Tax, we’ll be paying 3 taxes at the pump, not 2. We are already paying 2 taxes at the pump. Fed. gas tax and state gas tax. One thing, Fair Tax does not address retirees,seniors under fixed income. If they have a better addressing toward these people, I would back it. I don’t see it. Exempt basic necessities from Fair Tax and no prebates.

  369. Mickel
    April 29th, 2011 at 23:34 | #369

    @Jeremiah Tremble

    No the Far Tax won’t work that way. Are you thinking of the Value Added Tax that was floating around last year where they tax consumption every time there is a value added in manufacturing and to the final sale? It is sad that anyone would be willing to get behind that.

  370. Mickel
    April 30th, 2011 at 00:12 | #370


    OK, OK, OK you brought up the question of guarantees. You are reluctant to have any faith in guarantees from anyone, generally we can agree on that. It still remains that some things are guaranteed such as laws (until they are repealed or altered in some way but as laws). The law of supply and demand in a free competitive economy would guarantee that when costs to produce go down the market price will follow, it is a law. If you can’t except that a firm wouldn’t jump to alter prices to stay competitive then you can’t argue that the black market would rise because you pretty much have the same argument there (except the black market wouldn’t rise because current regulations that keep it in check now would continue to be enforced). To add to what Peter commented on, gas will still only have one federal tax imposed. In the bill it says that a good or service could only be taxed once. Right now we are being taxed when we file and, whether we like it or not, by embedded taxes when we buy goods and services. I would rather not be taxed on my accomplishments and only be taxed on my consumption knowing that everyone consuming inside America is pulling their fair share with this. If Congress has the prudence move on with the Fair Tax then that same foresight would allow them to see that they can’t tear it up (glass half full on that one). I would still like to hear your, or anybody’s, opinion on what you, or they, would like to see addressed for seniors and fixed incomes in the Fair Tax (leaving the Prebate out as not to start another exhausting debate on that again).

  371. Henry
    April 30th, 2011 at 05:22 | #371

    Nickel: On black markets: they will still be there. Any kind of regulations will not stop them. Seniors: These people have been paying taxes all their lives and with Fair Tax, they will be taxed again when they buy basic necessities, A lot of seniors sell their homes because they can’t afford the upkeep. They go to places such as seniors housing and they rent an apartment. The rents are set according to their incomes. Fair Tax taxes rent and housing. Seniors use more medical, hospital stays, pescription medicines, medical procedures and so on. Fair Tax taxes everything medical. Gas: gas will still have the Fed. gas tax and any state gas tax. Fair Tax will be added onto the price per gallon. Add a dollar or more on top of rising prices. Gas goes up, Fair tax goes up. The Fair Tax people said it themselves. Another reason I am against the Fair Tax is it has nothing to do with the Fair Tax. Maybe the Fair Tax is the best thing but we don’t know. It has to do with one of the people behind it. Neal Boortz. As you know Neal Boortz wrote 2 books on Fair Tax. One thing I do deplore is racism. He does spewed that racist rant on his radio talk show. His radio show is in Georgia. 2 radio stations banned his talk show. I saw photos of Fair Tax rallies in where he spoke. By looking at the people, they are all white. In order to get more people of different races and religions onto the Fair Tax, this guy is the negative. It is not of backing the Fair Tax but it is a prinicple of not backing it. It is what you say one rotten apple can ruin the batch. Take care.

  372. Mickel
    April 30th, 2011 at 07:22 | #372


    “On black markets: they will still be there. Any kind of regulations will not stop them.”
    I never said regulations will stop the black market, I did say the black market exists now and are contained by regulations already in place. If the government isn’t getting their money they will come after it, wouldn’t you rather they go after the guy selling cigarettes from his car trying to get around the Fair Tax (which is hard to see how he was doing it unless he stole them from someone who had pad full price with the Fair Tax). I would rather the government go after the criminal types and tax dodgers than legal tax paying citizens.

    “Seniors: These people have been paying taxes all their lives and with Fair Tax, they will be taxed again when they buy basic necessities, A lot of seniors sell their homes because they can’t afford the upkeep.”
    Hanry, You keep coming back to this “taxation on necessities” thing. You are already taxed on that. Under the current system we pay taxes embedded in necessities, medical services, rent, and housing. Anything you buy right now has been priced with costs of payroll taxes and preparation in it. With the current system Seniors are taxed on their SS and Taxed deferred retirement funds. Seniors are taxed twice in the current system, Fair Tax does not. If Seniors sell their homes, they pay a capital gains tax. No capital gains tax with the Fair Tax.

    “Gas: gas will still have the Fed. gas tax and any state gas tax. The Fair Tax people said it themselves.” I couldn’t find where it says in HR25 that, “gas will go up”. I agree if gas goes up that will affect market prices. That is what is going on now but you need to understand consumers pay the Fair Tax and it is not a Value Added Tax.

    “ It is what you say one rotten apple can ruin the batch.”
    Going back to creators and supporters again. Neal Boortz is a racist (take your word for it) and supports the Fair Tax. I support the Fair Tax (still making up my mind but almost there). Because a racists supports the Fair Tax and I support the Fair Tax I then am racist. Not valid. I will agree with you that perceptions are reality and it seems there is a lot of work to be done to dispel misperceptions.

  373. Henry
    April 30th, 2011 at 10:50 | #373

    Mickel: I NEVER said you are a racist and I NEVER accuse you of being a racist. Neal Boortz bought this upon himself with his rant on his radio talk show. That is why people of different races and different religions will never support Fair Tax. As I said before it is not a matter if I support Fair Tax or not, it is a matter of prinicple of not supporting it. Neal Boortz’s name is on both Fair Tax books and he is the primary speaker at the Fair Tax rallies and giving speeches on the Fair Tax. I will not support the Fair Tax because of Neal Boortz and certain other things. I do give credit on your knowledge on tax issues. Take care, Mickel. I hope there is a better tax system. While you’re at it, look up: There is no such thing as a Fair Tax- Laurence Vance- mises.org/daily/1975. Read this person’s article and see what you think of it? Take care.

  374. Mickel
    April 30th, 2011 at 13:27 | #374


    You never SAID I was racist but by the comment that one bad apple can ruin the batch you allow the perception that supporters of the Fair Tax individualy may not be racist but together are. Why don’t we just leave it that we can take our own words that neither of us are racist. You go further and say that by that principle you cannot back something so heavily supported by Boortz (because he is racist and, probably, among other things). It has come to light that it is possible that our founding fathers did some questionable things (sleeping with slaves, forced orgies, pot smoking, alcoholics, atheist, bastard children) whether any of this is true or not I haven’t really researched and don’t have much of a stomach to do so but the fact remains they did create a pretty darn good country. If it were uncovered that Karl Benz was a racist, murderer, or some other horrible person would you stop riding in cars out of principle? It is your choice and I will respect your choice and leave it alone. I read Laurence Vance. He was systematic at laying out what he thinks are problems with the Fair Tax and goes as far as to claim it is a fraud. Although many of his criticisms are about the 2005 bill that are changed in the current bill (notably about the gas excise tax that has been debated here) it seems he doesn’t think his criticisms through. Maybe he should have credit for the “baby sitter stance”. Will a baby sitter have to charge taxes and if she doesn’t will she be reprimanded? Mr. Vance lives in Florida. A wonderful state that already doesn’t collect income taxes. They collect sales and use taxes and have a low corporate tax rate. Do baby sitters there collect state taxes now? No. I appreciate you leading me to read Mr. Vance because even for some invalid criticisms he is thorough.

  375. Henry
    April 30th, 2011 at 17:51 | #375

    Mickel: Alright, we are both not racist. What Boortz did was his own doing. On Karl Benz, let’s not forget Wernher Von Braun, the man who made the V-2 rockets for Germany in WWII. Without him, we would never got a man on the moon. I’m glad you read Laurence Vance’s statement. One thing I like what he wrote is that he puts pros and cons on all 3 tax systems, Fair Tax, Flat Tax and the present tax system. It is true, no tax system is fair regardless what it is. This is a good country but it did make numerous mistakes throughout its over 200 years. This country learn from their mistakes. There is something in the Bible that said: “He who does not remember the past, is condemned to repeat it”. Take care, Mickel.

  376. Don Maloney
    May 9th, 2011 at 15:20 | #376

    I’m trying to support thr Fair Tax, helping get people involved, etc. But my sense tells me it doesn’t have much chance of ever hasppening. Even tho there are 60K pages involved in the present system, if no one reads them, then thee are none. Taxes of many are taken from their pay checks, people don’t miss them and they are anxious to get refunds likethey really earned some money or got a present. Present system is so ingrained, it would be hard to make a change, and if there was a change it would be minor, it would take forever, if then.
    THe accountants jobs would go to figuring the prebate. Now that would be complicated. Many people would stop buying things or buy less costly. And how do we know there would be nough to run the government. They would have to cut spending as well. I would like to see a system where the government would send us a proposal for spending and if we agreed we would send the money and they would keep us up to date until they got the proper amount. If they didn’t it would be returned to the payer. But the payer would have some control.

  377. Robert Heiney
    May 9th, 2011 at 15:47 | #377

    @Don Maloney
    I hear you. I’ve been supporting and sending more and more people info on Fair Tax in hopes of getting support. Since 2006, I’ve changed, maybe, 10 people in that direction.
    You’re right. I think most people are so indoctrinated with the Income Tax, that the fear factor to change is way too great. Congress, probably, won’t change what they think isn’t broken. The Income Tax is their weapon of choice when it comes to keeping citizens under their thumb, and Presidential nominees on the hot seat. If they elect to do away with the income tax, they give up a lot of power over the people. Americans have long since given up trying to make any positive changes to our way of life. They’re more like lambs, being led to the slaughter.
    I’m ready to bite the bullet, and get on with it. In the words of Larry The Cable Guy, “GIT ‘R DONE!”

  378. Stephen
    May 10th, 2011 at 11:52 | #378

    Those who live within thier means now will feel rich. Those who spend to much will have little change. More in thier check the more they will spend. So I support it. I buy quality used at a fraction of the new cost. So I will pay less tax. More for me to save. The illigals who some try to protect are breaking our country and state laws just for that reason alone and don’t pay taxes but some how get some of mine. Figure that one out. They have to buy things so they will have to pay taxes. Now selling illigaly will be easier to prove. You make $$ at your job but you have $$$$$$$$$ in the bank. Where did you get it. No proof Jail Jail Jail. Now all that $$$$$$$$ goes for the poor. Not perfect but getting closer.

  379. Mickel
    May 10th, 2011 at 13:34 | #379

    Perception is reality. That perception can be grounded on misinformation, lies, or indisputable facts. Fact, the FairTax merely shifts the government’s revenue stream from citizens’ income to a more logical and fair national sales tax. People have been socialized to believe in the same sources that give out misinformation and lies about the FairTax. People have to believe in the “why” to make the paradigm shift. They have to have to be a part of the belief.

    In 2006 there were way more believers that Obama didn’t stand a chance of becoming the President. With grassroots effort the base started to ‘believe’ in “Hope” and “Change” because that belief became personal to them. They became a part of the belief. People will start to believe in the FairTax once the belief of a better tax system for the needs of the entire country and the country’s future becomes personal. Whenever I hear that the FairTax doesn’t stand a chance their belief in why has always been flawed.

  380. Matt
    May 10th, 2011 at 18:34 | #380

    I would love for the fair tax to become a reality. Unfortuanely, it will take a major act of God in order to happen.
    Let’s face it… neither political party would benefit from it. In fact, they both would be hurt by it.
    Gone would be the ongoing tax debate of taxing the rich more money or taxing the middle class more money.
    Lower income families would find their dollrs stretched a bit more. Therefore, the Democrats can’t support.
    The upper class would be paying more for their boats and planes. Therefore, the Republicans can’t support.
    This may be the only time in history where the 2 parties oppose something together.
    It’s sad to think that something that would benenfit the majority would be torn down by the minority, but that is exactly what will happen. Politicians would lose one thing that makes their party different from the other, and none of them will support it in the end.

  381. Mickel
    May 10th, 2011 at 19:03 | #381


    Your perception is that people, rich and lower income would be paying more, and that is why neither party can support it. I hate (sorry Henry there’s that word again) to pick you apart because it sounds like you are a FairTax supporter or potential one, but… where do you come up with people paying more? The only people that would pay more in taxes are those who are not paying taxes. Why wouldn’t either party support that? I might be putting words in your mouth but, “If neither party will support it I won’t because there is no chance of it happening” is one of the strangest arguments people have made not to support the FairTax. Elected officials better support whatever the people ( us, you and me, and those that suck it up to exercise their right to vote) want. Heck if I will get behind whatever my local politician wants, he/she better get behind me. We fall into the trap by expecting this status quo. It reeks of an abused spouse that keeps coming back home just to get yet another beating. People on the outside just can’t believe it and sometimes even blame the victim. It’s time to get Americans the heck out of that House and stop the poundings.

  382. Mark Fishman
    May 11th, 2011 at 16:01 | #382


    Los Angeles, CA – The publication of Fishman’s Framework for Tax Reform heralds the introduction of the tax reform plan that will save our middle class. It lowers taxes for individuals and corporations yet raises a $1 trillion dollars more revenue than our current tax system.

    The additional revenue solves Social Security’s long term funding problem, creates and fully funds National Health Care and expands public education to include college free of charge. It also solves each states fiscal crisis.

    Fishman’s Framework for Tax Reform is only 18 pages long and comes with commentary, tax revenue estimates and five year budget projections. Additionally, there are seven appendices that prove that this tax reform plan lowers taxes for everyone and funds all government programs while running a budget surplus.

    Fishman’s Framework for Tax Reform is available to read free of charge at: http://www.serioustaxreform.com

    contact: mark@serioustaxreform.com
    Fishman’s Framework for Tax Reform, Video Lectures

  383. Chuck
    May 11th, 2011 at 18:34 | #383

    Henry and I have talked substantially on this issue. I agree that his take is interesting as all of the opinions expressed in this venue. I simply state that we do have a choice. First get the word out and soon. In 2012 elect only those that support the Fair Tax or a version thereof. It really is that simple. We have discussed this now nearly 2 years in this forum,and have accomplished nothing. It is time that our elected officials do what they are told. Or simply move aside for those who will do exactly that. It is time to act.

  384. Robert Heiney
    May 11th, 2011 at 21:48 | #384

    Hello Henry,
    Just found this on the net tonight, as well as a later post to this site. http://www.serioustaxreform.com
    I’d be good with this plan, as long as I don’t have to file every year.

  385. Henry
    May 12th, 2011 at 07:05 | #385

    @Robert Heiney
    Robert: I read the serioustaxreform. It sounds interesting and I would back it,too. As I told Mickel, I would not back the Fair Tax because of one person, Neal Boortz. Neal Boortz is a racist and I don’t like racism. That is why you don’t see people of other races backing Fair Tax. It is not the point of backing Fair Tax, it is the principle of not backing it. I would back the Fishman’s Framework for Tax Reform. It sounds like something that we should look into. Robert, thanks for the information.

  386. Robert Heiney
    May 12th, 2011 at 10:50 | #386

    Alright, everyone. Since this bill, HR25, has a rat’s chance of getting forwarded for a full vote, and having read Fishman’s Framework on True Tax Reform, I am pestering my congressman to look into the Fishman plan. It would have a better chance at passage.


  387. Mike
    May 14th, 2011 at 14:53 | #387

    This article is wrong. The Fairtax does not ADD to the cost of a good. It replaces taxes already imbedded in the process ie. payroll tax in the manufacture of a good and simplifies the cost and taxation. That $20,000 car from your example will cost $20,000 under the Fairtax, it’ll just be taxed only once, when it’s sold.

  388. Tina
    June 2nd, 2011 at 15:56 | #388


  389. AL
    June 27th, 2011 at 09:42 | #389

    So just to clarify this would be taxed onto rent? Also would this included services or things like car rental or hotels? O feel like I would support this even as a more liberal person since my grocery budget is at $40 a month or so anyway, therefore since I don’t spend much I don’t pay much and I have a new car so no worries in that sector but I’m curious which industries this would effect the most. I feel housing would suffer but I’m not expertly researched in the subject so someone who knows more might be able to help me out

  390. David
    June 27th, 2011 at 13:41 | #390

    Why would anyone think that a national sales tax would be simple and transparent? The lobbyists and politicians will be at work carving out exemptions for special interests and trying to accomplish their social engineering goals. Look at any state’s sales tax code for proof of this. What are you going to do about earned income tax credit, energy rebates, etc. etc.?

  391. Mickel
    June 28th, 2011 at 10:07 | #391


    Yes the tax is on goods and services. No it isn’t on top off what you are already paying. It isn’t a Value Added Tax so for a house the tax would be on the finished product (or service) not on the materials and labor to create it.


    If the bill is passed as-is then lobbyists and politicians wouldn’t be able to use their cleavers. They have looked at states sales taxes among other things to assure this. Earned income tax credit is gone, energy rebates are gone, etc. etc. everything that makes a mess off the current tax on accomplishments, gone. It is merely a consumption tax with a Prebate for necessities.

  392. Henry
    June 28th, 2011 at 11:36 | #392

    I saw this in http://www.patriotaction network.com/forum/topics/hermancainignores and this is what was written: When will those who panhandle the alleged fair tax make it known that although it is sold as closing down the IRS, the alleged fair tax would create two new tax collecting agenies, the Excise Tax Bureau and the Sales Tax Bureau, not to mention keeping the Bureau of Alcohol, Tobacco and Firearms collection agencies alive so we wind up with three tax collecting agencies to harass the people in the collection of taxes. There will be tax courts also. Another thing the rich will gain the Fair Tax. When the rich wants to purchase corporate jets, yachts, limos and other luxury items, they will not buy them. Their corporations will purchase them as business expenses meaning no Fair Tax. I saw it in Fair Tax.org. The rich did their homework on this one.

  393. David
    July 6th, 2011 at 22:06 | #393

    There are several GOOD things about the Fair Tax. While it does not eliminate the IRS as promoted, it drastically reduces the size of the agency PLUS eliminates a lot of the rules and regulations as related to taxes while only implementing very few new rules. Another good thing is that it eliminates Corporate income taxes. Since Corporations simply collect taxes and then pass them along as a cost of goods, this makes the whole system more transparent. And initially it would severely reduce lobbying for changes in the tax code. However, so many of the supporters of this plan are promoting things that are simply not true. For example, Mike earlier posted that there are 23% embedded taxes that will simply get replaced with a 23% sales tax on the finished product. The current tax revenues of the combination of death taxes, income taxes, employers payroll taxes, etc. is about 23% of the GDP. The reality is that the “Embedded” taxes only amount to about 4% of the 23% total revenue. In the end, the consumer will take home a significantly larger paycheck because they will not have SS/HI or income taxes deducted from their checks. But they will be paying those same taxes to the government in the form of significantly higher prices at the cash register. A new car that was $20,000.00 will now cost about $25,000.00. You can also expect to pay significantly higher prices for all your insurance needs. This price increase would be detrimental to an economy that exists primarily on consumers. One other thing that is very apparent is that the more income you make, the bigger the tax break you get. This shifts more of the tax burden off onto an already shrinking Middle Income class. The end result will be increases in the tax rate as well as more items falling into the taxable category.

  394. paige
    July 11th, 2011 at 11:05 | #394

    If we had a REAL flat tax with NO deductions at all-personal or business-we could finally have a FAIR tax for everyone!
    Businesses could not deduct bonuses, so-called business trips to Hawaii, etc, political “donations,” $2000 bar tabs, etc. They would spend their money when really had to, just like individuals running household accounts. If an ad man wants to place a ad somewhere, he calls up and places it. This country can’t afford the perks of trips, gifts, etc., anymore.
    The middle class is paying for these luxuries. The wealthy hide all their cars, vacation homes, trips, etc., under the umbrella of “corporate expenses,” while the middle class can barely afford to take a day trip to a park, or have lunch at Hardy’s. But if we were paying 15% instead of 35% taxes, we might even be able to afford a vacation!
    But no politician has the guts to promote this, since it’s big business that runs them. The several sincere politicians that have tried have been squashed and sent back home with their tails between their legs! And they don’t have their nice, cushy CEO job to go back to, as many politicos do when they retire.

  395. Mickel
    July 11th, 2011 at 12:54 | #395


    FairTax is not a flat tax. A flat tax will still tax our accomplishments. I think it is un-American to be taxed on how much you achieve or on your successes. I don’t mean to use the term un-American loosely like many people seem to do when they disagree with a viewpoint. To take more from someone because they are more successful doesn’t seem American to me, but then again it has been going on for several decades so it makes it that much harder to say it isn’t American for some people.

  396. July 20th, 2011 at 22:51 | #396

    Don’t you think it is a good time to summarize all these comments and put your analysis into another insightful post? I think the subject of the FairTax is important enough to have its’ own category.
    Will Rogers said, “The income tax has created more liars than golf.”
    After nearly a hundred years fighting the Infernal Revenue Serpents, the number of liars and cheats seem to outnumber the honest folks. Maybe the FairTax would let people put more of their energy into living their life instead of spending their time chasin’ snakes.

  397. July 26th, 2011 at 12:00 | #397

    @Andrew Riley
    I agree.

  398. Joel Rodriguez
    July 29th, 2011 at 07:17 | #398

    You are wrong on #4. the percent will not be added to the price, but rather taken off the price. i.e. If you were to buy a $20000 vehicle, 21% (not 30 as you claim) would be going to the gov’t. But I’ll use your example of 30%. Vehicle = $20000 - 30% for taxes. Vehicle actual cost is $14000. Right now there’s over 21% of embedded gov’t taxes on new goods you buy and passed to the consumer. With the Fair Tax, those embedded taxes will go away. Another PRO is that with this Fair Tax, businesses would come back to the US to take advantage of the Fair Tax. We have about 3 Trillion Dollars hiding overseas because of the system we have today. The Fair Tax, would bring that money back to the US. Also, drug dealers, prostitutes, illegal aliens, foreign visitors, and any one else who are not participating in the current system (about 50% of americans) will now contribute to the new and approved taxe system - the Fair Tax Act. With that said, everyone with a social security number will receive a monthly check as you stated, all except for illegals. Illegals will now part take in the Fair Tax, and not get a monthly check.

  399. Robert Heiney
    July 29th, 2011 at 08:59 | #399

    @Joel Rodriguez
    Problem is, the people who are either not sure of, or afraid of, the Fair Tax, can’t seem to get over the fear of change. They still think it’s going to cost them a lot more than they pay now. “23%? On top of the price I pay for everything new? That’s way too expensive.” That’s always the answer I get. Even after I explain how the price of goods and services would go down after the hidden income taxes and corporate taxes go away, they still call the plan “Corporate Welfare”. Fair Tax needs to do a better job of selling this. Word of mouth is NOT getting their message across.

  400. Jeremiah T
    July 29th, 2011 at 10:31 | #400

    The problem is the Fairtax requires a complete overhaul of the tax system which is a good thing to those that see the problem but a bad thing to those that don’t understand. Ultimately if your trying to sell an idea you need to position it to solve the current problems that are most prevalent at the moment, in this case Unemployment, The Debt ceiling,Health Care and the housing crisis. Next get congress to pass a bill for a pilot for one state program essentially a 2-3 year exemption from income SS and corporate tax. Couple that with a 2-3 year 23% sales tax . If after 2-3 years you see significant growth work toward a more national solution. It may be just my opinion but your going to have the hardest time repealing the ability for the national income tax, not only does it require a majority vote in the senate but it also requires a 3/4 ratification by the state. This hurdle is likely why you don’t see more senator/Governor support for the fairtax bill.

    My 2 cents

  401. August 3rd, 2011 at 11:54 | #401

    @Charlie Reed
    To Europeans and many from parts of Asia, our economy seems very inexpensive currently…. people can travel from EU to NY and shop at a discount price, and return to EU having actually spent less oney than if they’d purchased in their home country. EU tends to have Value Added Taxes which make for high pricing and complex taxation, and lots of people trying to evade taxes.

  402. August 3rd, 2011 at 11:55 | #402

    @Charlie Reed
    To Europeans and many from parts of Asia, our economy seems very inexpensive currently…. people can travel from EU to NY and shop at a discount price for some products, and return to EU having actually spent less money than if they’d purchased in their home country. EU tends to have Value Added Taxes which make for high pricing and complex taxation, and lots of people trying to evade taxes.

  403. Robert Heiney
    August 3rd, 2011 at 12:21 | #403

    @John D
    The Fair Tax is not a Value Added Tax. A VAT is just what it means. An extra tax on the value of goods added to other taxes already in place. The Fair Tax eliminates those “other” taxes, and just taxes a percentage of the retail cost of any “new” good or service. Did I mention that you get to keep every penny of your wages (except what you pay for benefits, of coarse)

  404. Daniel
    August 14th, 2011 at 20:43 | #404

    What about drug, stolen, counterfeit, hooker, stripper, pimp, and any other money that’s not taxed now not just rich people. I’m a working person just think it would bring in more taxes than anyone beleaves after a year they may be able to reduce the tax rate. I’ve not even covered the government jobs that should be cut but that wouldn’t happen. I’ll just keep working so the people that don’t want to work can stay home at my expense just like the other working stiffs. Maybe the man that told me a long time ago was right I (we) the working people just want to much. I do think if you do work you don’t eat. But if that were the case ther would be a lot less people in the USA but the some people would still be paying the taxes.


  405. John
    August 15th, 2011 at 11:42 | #405


    @Robert Heiney
    50% of the country doesn’t pay taxes. Plus the big Corporations like GE got a tax refund! The fair Tax will do away with the corporations going scott free and it will do away with a portion of the tax less because it will open up new opportunities for businesses to grow and develop jobs.

  406. Robert Heiney
    August 16th, 2011 at 21:34 | #406

    You’re absolutely right! 50% of the country DON’T pay. And yes big corporations get off easy through tax breaks and government subsidized hand outs. Hand outs they don’t need because they make billions in profits. Fair tax does away with all that, and they pay their fair share when they buy the materials needed to make their products. Fair tax will work, if we as tax payers, demand our elected officials change the system in our favor, not theirs.

  407. Roger Biggs
    August 17th, 2011 at 02:59 | #407

    I’m calling bull. I don’t make very much money at all and I’m in that 50%. There’s a ton of us working down near that poverty line and you’ll be happy to know we pay a TON of taxes. Maybe Robert and John think we’d like to help them keep a little more of their money, but chances are if you are in that 50%, you pay as much tax as a percentage of your income as anyone.

    We pay SS tax. We pay medicare. We pay sales taxes. We pay state taxes. We pay taxes to drive on the roads and buy our gas. We pay excise taxes of all varieties and fees on a wide range of things from registering your car to whatever the heck the FCC does with the 3 dollars I send them with my cable bill.

    I’m offended, seriously offended, that RICH PEOPLE have the balls to tell me I’m not paying my fair share. No taxes? That’s so utterly disingenuous and completely out of touch.

    But don’t think for a second I think I ought to pay less. I pay my taxes and I do it HAPPILY. Grin and bare it, fellas. Cause as much as I could use that money, I know I’m getting more for it giving it back to my government than I would be giving it to the profit-motive “free market”.

  408. Mickel
    August 17th, 2011 at 10:10 | #408

    @Robert Heiney

    You Are looking at the 50% that file and don’t pay income taxes. Most of these people, if not more, would still “not pay” because of the FairTax Prebate. I think most people should be fine with that. Also remember that corporations would not pay the sales taxes on goods they buy to make their product. Just like some states, a company can buy steel poles, wiring, and bulbs without paying the sales tax. Then the company can construct a product that would have the sales tax. This is to assure no cascading or double taxing which is the one of the things the FairTax wants to get rid of that is so flagrant know and what Roger is talking about. Companies would still pay taxes on other things like the company jet because it doesn’t go into what they are selling.

    @Roger Biggs

    I don’t think anyone is saying you don’t pay a share in taxes under the current code. It is odd that you say you don’t think you should pay less in taxes and that you like giving it to the government yet it seems you don’t support the FairTax mostly because you don’t think it takes enough away from other people. The FairTax is a great vehicle to give more taxes to the government if you are so inclined. Not only are you giving more money to the government but you are also supporting businesses and workers with your consumption. Instead of April 15th being a happy day for you whenever you buy something will be a happy day for you. The Fair Tax is Fair. It doesn’t lend entitlements to anyone. I don’t see why opponents say it benefits the rich guy. Rich people will always out spend poor people. I buy a Ford Fusion and they buy a Bentley… or two. I fly coach and they fly the company jet. If Warren Buffet wants to live in a studio apartment cooking white bread over a hot plate to show that the FairTax doesn’t tax the Rich/Wealthy I think I would laugh.

  409. Roger Biggs
    August 17th, 2011 at 13:36 | #409

    I actually do support a national consumption tax to replace many federal level taxes and I would support the Fairtax legislation for that reason.
    I’m a progressive, that much is true, but I support enough of HR25 to feel comfortable to see it passed without even a single amendment from democrats.
    But I disagree, when someone says 50% of people don’t pay any taxes (falsely) and cite the need for tax reform, to me that’s someone saying I don’t pay a share. I don’t know how that sounds to you, but it’s quite clear to me.

  410. Eric Isenhour
    August 17th, 2011 at 15:34 | #410

    @Derek Clark
    I don’t know where you’re getting your numbers, but they are highly inaccurate. Bush’s deficit numbers did not count the costs of his military adventures in Iraq and Afghanistan. Obama corrected that and started counting those war costs in the general budget where they belong. He’s paying a political price for being honest and above-board with the numbers. The conservative Heritage Foundation website has some great economic graphs and you can clearly see a downturn in federal revenues when the Bush tax cuts were eneacted. You are entitled to your own opinions, but not your own facts.

  411. Henry
    August 18th, 2011 at 16:22 | #411

    I am coming back and I have been studying the monthly prebates of the Fair Tax. As you know the Republican Party has been behind the Fair Tax. According to the Fair Tax proposal, the Social Security Administration is suppose to handle and process the prebates. The Social Security Administration handles and processes S.S. benefits for retirees, seniors, disability, Medicare and Medicaid. The Republican Party has been against this administration because they call these benefits entitlements but yet use this administration to handle and process these so call prebates. They can’t have it both ways, for or against. The retirees have paid into S.S. when they were working. The Republican Party says S.S. is broke but yet if Fair Tax is enacted, they want to sent out these so call monthly prebates to anyone with legal S.S. numbers. It will cost the Fed. government billions of dollars to sent out prebates but yet they don’t want send grandpa and grandma their monthly S.S.checks. The Republican Party is nothing but a two-headed snake. What a scam. Is Fair Tax what we really want? I am now looking at other tax reform systems.

  412. Robert Heiney
    August 18th, 2011 at 21:09 | #412

    @Roger Biggs
    If you’re down by the poverty level, then my comments were not directed at you, but at those 50% way above the poverty level, who can, and should pay their fair share of taxes. I’m lower middle class, with a decent job that pays well, but still living paycheck to paycheck because nearly one third of the money I make working get taken out of my paycheck. I want all the money I work for. That’s why I work. Those 50% way above us, don’t all work as hard as we do, yet are able to cleverly manipulate the current tax code so that they get to keep more. I think you’re mis-reading the Fair Tax plan. Rich people have the balls, to hide their money FROM taxes, so that you and I have to pay more. Fair tax does NOT let them hide it anymore. Yes they will get a prebate. But trust that you and I will get more of a prebate than they will. I’m on your side buddy!

  413. Thos Weatherby
    August 22nd, 2011 at 11:48 | #413

    @It’s a tax increase for me
    First I would say the 30% is much too high. This is a physiological number. I would think the percentage should be between 10% and 20%. Keeping this number lower will also mitigate the underground economy which is my main and only concern. Other things that could be done would include not paying the credit back to all people. It should be a sliding scale. Also a possible sliding scale on the tax per unit cost. If you’re spending less than $100, keep the tax low. Most poor people will spend under this amount. If you are spending $100,000 have the percent increase. Over $1M and it goes up a bit. Maybe the maximum could be under 25% with the minimum being 10%. Bottom line is, industry would explode. Jobs for everyone. Wages would go up. Loans would naturally remain low. Prosperity would be for all. Or we can continue down this one way road.

  414. Roger Biggs
    August 22nd, 2011 at 16:55 | #414

    @Thos Weatherby

    I like your ideas for keeping it small p progressive. However, structures like this will dictate that the IRS not die at all, merely change responsibility. Another idea I think would be good addition to a fairtax would be taxing dividends and capital gains and then crediting that tax toward the tax on new goods. In this way you can’t make 5 million dollars in market movement without contributing a good share of that towards the coffers. At the same time, allowing that tax to mitigate the tax on new goods, it will encourage investors to spend their capital instead of recapitalizing it indefinitely into the future. keeping money moving, that’s the key to a powerful economy.

  415. Robert Heiney
    August 22nd, 2011 at 18:02 | #415

    @Thos Weatherby

    @Roger Biggs
    I agree, 30% is too high. Even though they say it only amounts to 23% when you factor in the prebate, you’re actually going to pay the higher. Why not lower it to 20% and do away with the prebates all together. As for those at the poverty level, issue a tax savings debit card to those who can prove they live at that level. It opens up an avenue to cheat with, but I don’t know any other way to make sure the poor don’t pay more than they can afford.

    As for the investment taxing. Why do we punish those who were smart with their investments and their money. They will pay more when buying those yachts and expensive cars.

  416. Henry
    August 23rd, 2011 at 04:31 | #416

    @Robert Heiney
    I read your comment on yachts and expensive cars. The rich are the ones who put Fair Tax together and they are the ones who will benefit from it. If the rich wants to buy yachts and expensive cars, they will not buy them. Their corporations will buy them as business expenses meaning no Fair Tax. It’s right in Fair Tax’s proposal. As for prebates, read my comment on Aug.18th. As I said before I am looking at other tax reform systems.

  417. Mickel
    August 23rd, 2011 at 09:30 | #417


    @Robert Heiney

    @Roger Biggs

    @Thos Weatherby

    It is not 30% on top of today’s current price. It is 30% percent of a good or service with embedded taxes removed. You are taxed at the 23% rate like the IRS does. If 5th grade math is too hard for you, skip the next couple lines.

    $30K car you would buy today would be $25K at the base without embedded taxes (but to keep it honest and not argue what the price MIGHT be let’s take that out). Tax $30Kat 30% the purchase price is $39000. I know what you are thinking, “Holy crap that is 9K dollars more than what I would pay today”! With the receipt of sale that is what it shows.

    Let’s say you make a 100K (to make the math easier).
    Current system: You have 100K but 23% goes to the IRS so you have $77k after that. You buy the car and you have $38000K left.
    FairTax: You have $100K. You buy the car and have $61000 left. I don’t know about you but I rather spend $9000 to keep $23K.

    Let’s say you spend everything you would be able to spend after the IRS took their share, all $77K. You would still have $23K left and $77K at 30% is $23K which is the same as what the IRS is taking from you now.

    Is 30% still too high to pay at the register when you are already paying that and more now? Scary thing is politicians might think it is too low because the household keeps more.
    (Henry I know you will say, “what about people who don’t pay 23% of their income to Income taxes and the Prebate is a scam” but that would be my answer: the Prebate will compensate for those not figuring they already pay 23% of an income and prices will be lower after current inventory is adjusted to the FairTax schedule.)


    You absolutely should not scale the consumption tax in relation to the people’s income. Beside it not being true to the name FairTax, you would then have to track the people’s income and have a whole bureaucracy issuing different colored cards to adjust their tax rate, pretty much what we already have, that sucks. Even Robert’s suggestion of just the poor having cards sounds good at first but other than a mechanism to cheat how would you like to be carrying around that card? I think it would ostracize people and instill resentment and bitterness between the classes actually hurting more than it would help. A sliding scale to what a person spends sounds a lot better but it would still take away the Fair in FairTax. Keep it simple, why does everybody want to be Robin Hood and take from the rich anyway? I’m also not down with investment taxing unless you can go both ways. I risk $X on a stock and get a 100% return and get a 15% tax on the profit (kind of like you do now) then why not get a 15% refund on your losses? Ridiculous, I know, but I was making a point. Henry, if corporations buy the planes and cars for their employees they can’t write them off with the FairTax. They will still pay the tax. The rich bastards might not pay that tax, those scum, but the companies will if that is what goes down. See it as a part of income… which isn’t taxed with the FairTax.

  418. Henry
    August 23rd, 2011 at 10:06 | #418

    I am going to say that the prebates are still a scam. As I said in the Aug. 18th comment, according to the Fair Tax plan, the Social Security Administration is going to process and handle the prebates. The Republican Party has been against this administration but yet use this agency to handle the prebates. They can’t have it both ways, for or against. I still say EXEMPT basic necessities from Fair Tax and NO PREBATES. They are willing to send these so-call monthly prebates to anyone with legal S.S. number but they don’t want send the retirees or seniors their monthly S.S. checks. The Republican Party is a snake. Mickel, I am looking at other tax reform systems.

  419. Robert Heiney
    August 23rd, 2011 at 10:43 | #419

    I appreciate the explanation, and I am for the Fair Tax 100% as written now.
    I’m a little disappointed at the swipe at everyone’s math skills though. Intelligent, thought provoking banter could use less insult and more friendly discussion.
    I don’t care if it’s 23 or 30%, I’m for this bill making it to the president’s desk to be signed into law. I don’t want the government’s hand in my paycheck.

  420. Roger Biggs
    August 23rd, 2011 at 10:59 | #420

    You can set the cost of your items to whatever you want. Prices aren’t determined by taxes, you really think anyoner believes that? heck, prices often aren’t even determined by manufacturing cost! It’s primarily a strategic decision based on supply and demand. you wanna talk 5th grade math? you don’t need a 5th grade education to understand if no one wants what you’re selling, you can’t sell it for much.

    My point is this: Sure there is a certain aspect of the price of goods that reflect the cost to produce those goods. And yes, part of that cost is various taxes paid by the corporation. BUT THERE IS ABSOLUTELY NO REASON for them to slice the tax rate they pay right now straight out of the price of goods if the market can consistently demand the same sticker price and leave the taxes to the government. It’s the BIGGEST DECEPTION I keep hearing over and over and over in this thread. It’s absolutely nonsense

  421. Henry
    August 23rd, 2011 at 16:02 | #421

    @Robert Heiney
    I doubt it if it is going to make it the president’s desk to be signed into law. There are not too many sponsors for it. I am not for the Fair Tax as it is written now. The prebates are the problem. Exempt basic necessities from Fair Tax and no prebates. That is the only way I will back it. Another thing about the Fair Tax, the Republican Party has been behind it. I have no love for the Republican Party. It is not the same party as it was before. The Republicans have always been for the rich and not the working class. I know, I used to have been a Republican but finding out what they really are, I resigned. The last good Republican we had was Dwight D. Eisenhower.

  422. Henry
    August 24th, 2011 at 05:49 | #422

    @Robert Heiney
    Also I have no love for the Democratic Party either. To me, they’re both the same.

  423. Henry
    August 24th, 2011 at 05:55 | #423

    @Robert Heiney
    I forgot, the last good Democrat, Harry S.Truman. His words: The buck stops here.

  424. KHG
    August 24th, 2011 at 18:27 | #424

    The tax will not be 30 percent it would be 23 percent. If this tax would boost our economy. Those who worked in the tax industry would find other careers. The current tax system is nothing but a tool the politcians use to remain in power. Politicians hate this tax idea because Americans would know exactly what they pay in federal tax. Those evil rich people would pay more in taxes since they buy products that cost more than the average American. But the problem is this tax would never pass because we have a large percentage of Americans who think They should not pay anything ! THey believe anyone who is succesful ripped somebody off or inherited the money. I am so sick of hearing the words: “pay your fair share” or “shared sacrifice.” What a CROCK !!

  425. Mickel
    August 25th, 2011 at 10:22 | #425


    I’m not in love with either party either and most of America isn’t really anymore it seems. The reason we can’t exclude basic necessities is because we don’t want politicians and lobbyists deciding what these will be. Other quotes attributed to Truman I like is when he refers to the White House as, “the crown jewel of the federal prison system” and “the Taxpayers’ House”. Hypothetical, if tides change and it seemed that the FairTax was being adopted would you go out to the streets for or against it or just let things take their course?

    @Robert Heiney

    After reading my earlier post the 5th grade thing was totally a swipe although unintentional it was unnecessary. It was also misleading. Besides I think it might be more 7th grade math but then again kids have homework in kindergarten these days.

    @Roger Biggs

    Apologizing for the 5th grade comment, I was pointing out even if you keep the cost of goods and services what they are today, add the 30% at the register, and you used the same amount of buying power as you would if income taxes were taken from you, that you would end up giving the government about the same as you are now while keeping some cash. The Prebate is supposed to offset those who currently don’t pay income taxes where the FairTax would be a tax increase without it. I did not specify that you would be purchasing the same products just spending the money you have available in either case which is a little misleading. If we accept your declaration that “there is absolutely no reason” they would adjust current price even when lowering their cost basis, you would still be paying the same rate with the FairTax as the Income Tax but you would have control over how much actually goes. That being said, there are reasons in some cases removing embedded taxes would lower costs for the company and you but I agree in some cases it won’t. When I worked construction and had to bid work we based our price on what margin we could afford based on our costs. We would rip out our fingernails finding whatever way we could scratch away costs so we could out bid the other guy. If you take away the tax related costs that would be figured in as a cost reduction no matter how you want to look at it. I don’t disagree that with products on the shelves there is a heap of complicated marketing strategies and handshakes that go into pricing them, but like you said it is supply and demand and when you get down to the gritty they are bidding for our purchases. It wouldn’t be across the board but it isn’t nonsense.


    The tax at the register is 30% on the cost of the goods but 23% of your total purchase. You spend $100 at the store. The store sends $23 to your cookey Uncle Sam. The true cost of the good without tax is $77, $23 dollars is about 30% of $77.

    So to you personally it is 23% of what you can spend and 30% on the cost of goods.

    You make 125, 23 goes to IRS, you have 102 left. You purchase something 77, you have 25 left.
    You make 125 you purchase something that that costs 77 but after FairTax is 100. You have 25 left.
    (this is if the true cost of the good does not go down)

  426. Henry
    August 25th, 2011 at 13:35 | #426

    The same answer as was on my Aug. 18th comment. I am against the Fair Tax because of the prebates. Exempt basic necessities from Fair Tax and no prebates. Just like they do with state sales tax. These people want to use the Social Security Administration to process and handle the prebates but yet they are against the same administration when it comes to retirees getting their S.S. benefits. Can’t have it both ways. I was just reading a column, “The Trouble with the Fair Tax” by Ezra Klein. It was in the Washington Post with Bloonberg (Washington Post [blog]. It just came on 23 hrs. ago. Worth reading.

  427. Mickel
    August 26th, 2011 at 11:19 | #427


    Thanks Henry. I was hoping to find out what you would do if the FairTax did gain traction and look like it was going to happen. Thanks for the article in Ezra Klien’s section by Dylan Matthews. I think you are correct in saying that the FairTax has been adopted by “the right” with Herman Cain and Perry and Huckabee bringing it to their supporters.

    Maybe because it goes along with an ideology that people’s accomplishments should not be taxed in order to provide for those unable to accomplish for whatever reasons. I think that is an unfortunate thing because the Prebate will put a reign on this ideology so that those who are unable to be successful in this country will not be completely left on a rock in the desert.

    I agree with you that privatizing SS and then having them administer the Prebate would be interesting in a bad way but if the FairTax goes through, the argument to privatize SS would be mute. Also seeing that the FairTax has more conservative supporters it seems to be under attack from mostly “the left”. Since there isn’t much traction on the whole po”tay”to/po”tot”o thing (23%/30%) they usually say not enough revenue could be generated by these numbers. Then they usually quote somebody that was once from the IRS but has a nice gig at a left leaning think tank using data from an organization that also leans left all so they can “debunk” the FairTax because it will discredit the GOP. I wish the FairTax could be kept nonpartisan. One thing they state is that it would require a jump from 30% to a 53% sales tax which would be a $3200 tax increase for the average American. This isn’t right. If the rate is adjusted then the Prebate would be adjust and the whole reason supporters of the FairTax or so stuck on 23% is because that is the percentage that you pay the government which is the same as what the average American pays to the government now. One of many misleading reasons for their hike from 30% to a 45%-53% range is because the Institute they use to get their figure claims that illegal immigrants actually do pay taxes but they don’t exactly know how much and that range is left out of their FairTax model.

  428. Roger Biggs
    August 26th, 2011 at 12:28 | #428

    Okay, enough rebuttal from me I’d like to put forth instead a consumption tax outline that a liberal could consider.

    1: The reform would be in place only for the Federal Income Tax. This keeps the rate very low to discourage evasion.

    2: Tax is progressive based on item cost. Brackets in effect excise some of our more luxurious purchases and subsidize our most basic ones.

    3: Elimination of the prebate. Not because people don’t deserve more money, but because, as I’m sure republicans would agree, if you’re getting a refund, you’re paying too much taxes to begin with.

    4: Instituting a national ID. This helps out in so many many ways, and not only for the purposes of taxes. That’s a discussion for another thread though. For the purposes of taxes, a national ID is a perfect way to dynamical track the amount of tax you’ve been levied and make sure both you and the retailers are keeping honest. Sound big brothery? That’s why I support putting it all on the internet. We’ll be watching ourselves.

    5: Measures to encourage economic growth. Establishing national ID’s would allow us to incentive’s people’s investing habits on an extremely personal level. Reinvesting in your business instead of taking out income, that get’s you credit on purchases. Pre-taxing capital gains and dividends for credit towards purchases, that encourages putting your money back in the flow instead of holing it away indefinitely. All that does is encourage stagflation.

    If you believe in Keynesian economics, this is a kind of IRS shrinking consumption tax you’d probably like.. But I’m not tax pro. I’m sure there is probably something glaringly wrong with it, but hey.. I’m a progressive and I’m for the fair tax because what I’ve just outlined, even though it’s definitely not HR 25, definitely does possess it’s positive motivations.

  429. Henry
    August 27th, 2011 at 06:22 | #429

    That is why I have been trying to stress forward about the Fair Tax. The Fair is nothing but lies. The first lie, they said they 22 million dollars on research on the tax. Some people started saying where was the research done, people involved and the final analysis. They won’t say. There was no research done. They just show some papers from financial experts. You notice they don’t say anything about the research. Lie number 2: They say Fair Tax will eliminate the institution IRS and it will create savings but yet it will create another institution Sales Tax Bureau plus 2 more offices. There goes the savings. Lie number 3, the 16th Amendment. They said the Fair Tax will repeal the 16th Amendment. It takes a separate act of Congress to do that plus the prebates and the Social Security Administration as I stated before. There is more. In the internet, under Fair Tax Fraud, there is a section called: The Book, The Crook and the Followers. Read that section, it explains more. The reason the Republican Party got involved with the Fair Tax, they needed something to get people to look at them favorably. It said the magic words: no income tax and no IRS. Some people fell for it. Herman Cain and Richard Lugar back the Fair Tax for political reasons. If they want to start a tax system, it should be everybody involved. Government, corporations, Democrats, Republicans, rich, middle class, everybody set up a tax system that is favorable to everybody and not a chosen few and with gimmicks like the Fair Tax has. Robert Heiney said he is for the Fair Tax bill making it to the president desk and signed into law. Any president with an ounce of intelligence will not sign this travesty into law. I was talking to a financial consultant and he said the Fair tax will work for people making over $200,000 a year. For people under that, no way. I live in Connecticut and Hurricane Irene will be knocking in my area. We may have power out. After everything is settled, we’ll resume.

  430. Robert Heiney
    August 27th, 2011 at 17:28 | #430

    @Roger Biggs
    OK! I like your idea. National ID and all. I love the Fair Tax. Or any consumption tax that does away with the fed taking my hard earned money right out of my paycheck.

    I could do away with the prebates all together. If I need money back, then why not lower the percentage goods are taxed to begin with. The ID card makes it simple and cheat resistant. BUT, as you well know, it’ll only be a matter of time before someone cracks that code and starts creating fake cards. How do we prevent that from happening?

    But really! Who are we kidding. None of these ideas will ever come to pass, as long as all those idiots in Washington DC think that what we have now, IS the perfect way to go.

  431. Tixximmi
    August 28th, 2011 at 09:11 | #431

    @Roger Biggs
    First, no need for any National ID. As for the fake cards, just look at business and and you’ll see that the least amount of fake cards come from the credit card companies. Turn the cards over to them and let them run it.
    Go to


    and see how tough it would be to fake a card. The thieves usually steal existing numbers, they don’t make up other numbers. Government won’t do the same. Just look at all the fake Social Security cards out there.

  432. Roger Biggs
    August 28th, 2011 at 10:12 | #432

    In the old way-back-when when SS was enacted, They didn’t have quite the same idea of card security that credit card companys have at their ready now. I’d love to see congress enact a law to update the way we register and use our SSN, but there is a certain group in congress now that would immediately call it a big brother conspiracy. Their initials are Tea Party.. Oh wait, I think I did that wrong! =)

  433. Mickel
    August 28th, 2011 at 13:56 | #433


    @Roger Biggs

    Smart cards are coming. Credit cards in Europe have been using them since the early 90’s and I think Visa just recently said they will start using them exclusively in the US which is going to force businesses to have to switch to a platform that accepts them. Currently government employees all have the chips on their IDs and anyone in the DOD has to use their Smart Card IDs to even be able to login to any of their systems. With a Public Key Infrastructure and over a 1000 bit encryption it would take decades maybe centuries to crack a single chip. I haven’t attended any Tea Parties of late but it is actually the Republicans that have been pushing for a National ID for “security” reasons. Like Roger said this is for another thread but I see how its implementation might go with any tax reform since SS numbers were first created for taxation purposes.

    Roger with your points 1. Are you saying here to reduce the rate of Income Tax and have consumption tax added on or are you saying just introduce a lower rate tax on consumption and reform the Federal Income tax? 2. Though I like the theory since I think the rich will be paying a bigger share, I think you need to keep it simple. Taxing items at different rates will give lobbyists and politicians room to push their agendas at the taxpayers’ expense. 3. I am hearing the opponents to the Prebate more clearly now. I can see how it could become a welfare check that people might end up waiting on but I think this would be a small minority reducing the gross welfare systems we have in place. It might be the biggest welfare initiative ever but could replace other welfare systems out there.


    Henry, I hope you faired well with the storm. The first lie, papers from the financial experts (over eighty with Nobel Laureate Vernon L. Smith as an endorser) is the research. Lie number 2: It would eliminate the IRS replacing it with smaller departments that do not come after its citizens and reduce the costs of collection. Lie number 3, the 16th Amendment. I am not sure where the lie is here it says in HR 25 it needs companion legislation for this.

  434. Mel
    August 28th, 2011 at 19:52 | #434

    Entitlements, I agree with your cons on this. Logically it would seem more straight forward not to include this part of the bill. If there is a financle need, let the welfare system address the issue independent of the Fair Tax Bill. Keep it simple to avoid fraud.

  435. Robert Heiney
    August 28th, 2011 at 19:55 | #435

    In your note to Henry, Lie number 3, would require a constitutional convention to put the elimination of the 16th amendment up for a vote by congress, followed by a 3/4 ratification by the individual states legislatures. That’s the companion legislation. Our founding fathers made sure that changing the constitution would take a mountain to get over.

  436. Henry
    August 29th, 2011 at 06:09 | #436

    I live in eastern part of Ct. Everything went well, some power loses and some damage. Yes, that research was from Nobel Laureate Vernon L. Smith but the lie was the 22 million dollars of research that didn’t exist. You know they don’t say anything about it. The IRS: if Fair Tax is enacted, the Sales Tax Bureau will replaced the IRS but how big it is going to be? I got this from http://www.patriotactionnetwork.com/forum/topics/hermancain-ignores. When will those who panhandle the alleged fair tax make it known that although it is sold as closing down the IRS, the alleged fair tax would create two new tax collecting agencies, the Excise Tax Bureau and a Sales Tax Bureau, not to mention keeping the Bureau of Alcohol, Tobacco and Firearms collecting agencies alive so we wind up with three tax collecting agencies to harass the people in the collection of taxes. There will be tax courts also. 16th Amendment: it is true HR 25 says it needs companion legislation but it is the Fair Tax people themselves who are saying it. One person said this that Fair Tax will eliminate all Fed. and state income taxes. That is a lie. HR 25 says it eliminates Fed. income taxes but it doesn’t say anything about any state income taxes. Still have to file Apr. 15th. Robert Heiney, you are right about eliminating the 16th Amendment. It will reguire a Constitutional Convention and a vote in Congress with 2/3 vote of each House of Congress and 3/4 ratification of the States. The only time they did this was to repeal Prohibition and it took 17 years. People like to drink.

  437. Henry
    August 29th, 2011 at 06:43 | #437
  438. Christopher Nunn
    August 29th, 2011 at 10:21 | #438

    My only qualm with the Fair Tax Act is that it has been proven that the poor and middle class spend a greater percentage of their income on goods then the higher earners. If that is true (note that I said if) that would make this extremely regressive with the bulk of the tax burden on the poor and middle class (what’s left of the middle class) while significantly reducing the burden on higher earners. I would need to see a lot more study before I’d be comfortable with this kind of system. I do believe that our old system is broken and needs to be reformed. But I just feel that we could probably rewrite what we have and offer a code that is a lot more simple to understand.

  439. Tixximmi
    August 29th, 2011 at 10:41 | #439

    @Christopher Nunn
    There is a provision that takes care of this imbalance of the poor and the middle class that spend a greater portion on there income than the rich. That is the rebate that is given out to everyone. The poor and middle class would get a higher percentage of it back. I would like to see them add to the Fair Tax that income earners the make over a set amount wouldn’t get anything back. And the poorest of the poor could get more back. I would also like to see a sliding tax rate on consumption. Anything up to $100 (which would include most poor purchases) would pay a lower rate. There could be other increases at $1000, $100k and $1M. Let’s say up to 25%. This would satisfy those who think the rich (who make these more expensive purchases) would pay more.

  440. Henry
    August 29th, 2011 at 11:54 | #440

    You said the prebate that is given out to everybody with legai S.S.#. That is the problem, the prebates. According to the Fair Tax proposal, the Social Security Administration processes and handles the prebates. The Republican Party has been behind the Fair Tax. The Social Security Administration processes S.S. benefits for retirees. The Republican Party wants to use this administration to process the prebates but is against this administration when it comes to processing S.S. benefits for retirees. They can’t have it both for or against. One Republican Presidential candidate called the Social Security Administration a Ponzi Scheme. According to the Fair Tax proposal prebates- Wikipedia, The prebates go by how many people in the family regardless of wealth. That is why I am against the Fair Tax. The lies and the people involved with it and the double standard on the prebates.

  441. Christopher Nunn
    August 29th, 2011 at 14:33 | #441

    Ok so I get the prebate thing, but what happens if we have another recession when consumers stop spending? This system would rely heavily on consumer spending, so if consumers slow down spending on items that aren’t required to live, then wouldn’t that cause the tax rate to jump which would make necessary items extremely expensive. I am only concerned about this because when I googled fair tax and read the results it mentioned something about how the tax rate would adjust automatically based on the previous years reciepts. If this is the case then let’s say hypothetically that there is a recession in FY2015, and consumer spending drops dramatically just like in 2008. When the formula would be applied to adjust the rate for FY2016, then wouldn’t the rate jump because of the fact that the receipts were lower in FY2015? If I am wrong please let me know, but it doesn’t seem to me that this system would provide any kind of protection for economic downturns. Also this plan only seems to be progressive either way only if high earners spend all or the majority of what they make. That seems to still be regressive to me. Say I make $100,000 a year but only spend $20,000 a year. I only pay tax on that $20,000. I understand that this would also apply to lower incomes as well, but since a poor or middle class person has to spend a larger percentage of their income on necessary purchases the effective tax rate is larger the less you make.

  442. Roger Biggs
    August 29th, 2011 at 15:25 | #442

    @Christopher Nunn
    With a more progressive perspective on hte plan, this is a big reason why a consumption taxes simply cannot replace all forms of federal level taxation. My own personal way around it is to tax capital gains (a primary source of income for people making over 150k as opposed to wages, the primary form of income for the lower and middle classes) and to credit some to all of that money towards that income-earner’s taxes paid on consumption. This basically says “you’ve already paid the taxes. you might as well spend”.

    Our tax code today promotes just the kind of saving you’re talking about. Practically money hoarding, not just by individuals, but by banks and corporations. In the past it used to be more rewarding to expand your business than to take the profit out and sit on it. Some might say this is a product of a corporate tax being too high, but I’d say it’s due to an income tax being too low. Legacy capital is growing out of control and the fear is that the only legal, easy, and “fair” thing to do is print more money, an enormous amount of which will just gravitate back into the endless pits of legacy capital.

    But I’m no expert or law maker.. I just think progressives need to talk tax reform in a way that is more about reform and less about rates.

  443. Christopher Nunn
    August 29th, 2011 at 15:53 | #443

    I do see some good benefits in this fair tax plan. I guess that I’ll just have to do more research on it. I do like the idea of not having the government take a large part of my check without any recourse on my part. Maybe it’s a fear of the unknown on my part, but I’m still wary of this kind of system. Like I stated before maybe I just need more info. Fairtax.org makes it sound pretty good, but a lot of bad things can be made to sound good, so I’ll keep researching. Thanks to everyone that posted here, and I look forward to reading more replies.

  444. Don - manufacturing
    August 29th, 2011 at 21:25 | #444

    I came here to learn and learned a lot. Thank you all. While i could only afford to read an hour worth of comments, I was surprised in all them the capitalistic nature flaw to this tax system (a ‘Con’ and a pun intended) was not elaborated on. Given capitalisms brings out greed for the most part, manufacturers and retailers will not pass on savings to the price at the register, they will pocket it. So if there was no greed in our system, prices would stay the same, maybe. But what will happen in reality is price increases by 30% just because they have an excuse, manufactures will purchase parts in other countries, vacationers will go to other countries. Our current system relies on honesty and fairness, and what do we see, the rich sitting on their money, even though they should be hiring and spending to help their fellow countrymen. If those who have could be trusted to do the right thing, we wouldn’t even need a Government. But our system is driven on short term profits and greed. I am just saying, people considering a new system, better weigh this factor in, not assume just because a company is saving, they will pass it on to the consumer instead of on to their stockholders. Just because a rich person has less taxes, doesn’t mean they will start investing in the USA instead of hording and investing in other countries. I wish my fellow man was better, but it is what it is. Once again, the rich will get richer, the poor will get poorer. But I applaud all for the idea, and trying. a whole lot better than doing nothing at all. Especially since you all seem to be having a civil discussion. Congress could take a lesson from you all. :>)

  445. Roger Biggs
    August 30th, 2011 at 02:45 | #445

    @Don - manufacturing
    Hey Don. I agree with you about companies purchasing goods outside of USA and about retailers having no motive to reduce the cost of their products when they can keep prices the same and pocket the extra money. They already know costumers will buy it at that price, the new cost of taxes will be seen as the government’s fault, not theirs.

    More reason why a consumption tax can’t replace all federal taxes. To some degree, USA is behind the curve when it comes to tariff taxation. Most stable and emerging economies enforce some degree, often times an extreme degree, of protectionism. So should the USA. In Germany, they tax foreign goods and credit you VAT on German goods. Imagine what it would do for manufacturing in the USA if a the fruit of slave labour just wasn’t profitable for the slave owners anymore. Sure the east won’t like it, but are they really gonna stop selling to the worlds largest purchasing power? Especially when China does it themselves. Fair trade before free trade. And our tax code can fix these problem, keeping this a strictly American discussion.

  446. Chuck
    August 30th, 2011 at 08:28 | #446

    I don’t see that happening. An excellent part of capitalism is competition. Those who do not pass on the 30% on to consumers will be looking for consumers. The true problem in a capitalistic society recessions do not truly ho away. They get massacred under federal policy. So this law does have s few flaws. On the grand scheme of things it is a great way to jump start the economic rebound. But see that is another problem, federal policy does not evaluate the grand scheme they only help a select few. If we as voters want to be a true voter let’s elect people who have they agenda that works. This works. Pay attention to all of the candidates none of them have answers they only sat what we ate doing ain’t working. Elect the candidates that will get this bill passed.

  447. Christopher Nunn
    August 30th, 2011 at 12:04 | #447

    @ Roger Biggs
    It’s interesting that you bring up Germany. I’ve felt for a little while that the US could take a lesson or two from Germany, considering that they found their economy heading in the same direction as ours and acted. Now their economy is much stronger than ours and they have even expanded it to become a superpower in green energy. They put their people back to work by focusing on the future. If our government can’t get past these petty disputes, we’ll never return to the superpower that we once were. We’ll simply become a has been much like Great Britain.

  448. Mickel
    August 31st, 2011 at 09:39 | #448

    @Roger Biggs

    @Don - manufacturing

    @Christopher Nunn


    The thing that makes the FairTax “Fair” is that people are taxed on what they consume. It doesn’t base itself on what you earn. It doesn’t judge you whether you are able or unable to achieve and doesn’t tax those achievements. Everyone gets the Prebate because that is fair. To start judging who gets them and who doesn’t will recreate problems of having to find out incomes again which will set up another vehicle that will perpetuate what we already have with politicians and lobbyists. There aren’t special lanes on the highway for the rich and ones for the poor with the middle class stuck in the middle unable to get on and off (wait a minute actually they are doing those lanes now, hmmm maybe there shouldn’t be then).

    By definition the SS is a Ponzi scheme, I don’t know or care about the republican candidate that said it nor would I probably agree on what they want to do to fix it but when you have an investment where it relies on new investors to pay out to the old ones by definition that is a Ponzi scheme which the FairTax is not. The SS might have investment problems but its infrastructure for payouts is already there and is sound. The FairTax is not a Ponzi scheme, you pay a tax when you consume and the government spends that money.

    Manufacturing will not go to other countries for parts any more than they do now and most likely even less. The FairTax is not a Value Added Tax (VAT). Manufacturers will not pay the FairTax on each part they purchase to manufacture their product. There is not a tax advantage to go overseas, it costs more to ship it here. Even so taxing foreign goods should be looked at again since are manufacturing is almost nonexistent compared to what it was. Sure we have the basic manufacturing here, but we not only import or memorials (MLK) now but even our bridges (SanFran/NYC). That is the only problem I have with FairTax supporters saying there would be this huge shot in the arm in American manufacturing, even with the will is our ability there anymore?

    People are not going to stop consuming. Sure spending levels fluctuate so if there is a huge up swing should we have measures to reduce taxes because of this? Some might think so but that isn’t going to happen. Currently we have seen tax cuts at these times but with the current downward turn we are heading into it looks like those tax cuts are going away and we are actually facing tax increases. The FairTax will not do this. It seems on this thread there is a constant question of whether companies will pass any take savings on to the consumers. One side greedy companies won’t. Another side says that because of their greed they will have to. I lean more to the former but in the end that argument doesn’t matter. If prices stay the same with the 30% tacked on top you will still have the buying power to pay your full 23% to the government which you are pretty much doing now (and that is without the Prebate factored in). Rich people will buy BMWs and not Corollas and will be paying a higher percentage than the middle class or poor. It is truly comical. The misinformed poor and middle class don’t like the FairTax because they think the rich will just get richer and not pay a proportionate share and the rich hate the FairTax because they will no longer be able to hire a tax accountant to find all the loopholes to get around paying a proportionate share. There will always be a group of people that believe that the rich should just hand over money merely because they have it and there will always be a group of people that believe you should actually be free to keep what you have. The FairTax might not be so popular because, well, fair might hurt those who haven’t been living fairly. This is not meant to be a swipe to those who don’t support the FairTax it just seems to me there is a pattern I’m starting to see.

  449. Roger Biggs
    August 31st, 2011 at 12:47 | #449

    There’s a big problem with taxing on what we consume alone. There is a dire shortage of consumer spending in this country. On top of that, there is near complete paralysis of lending. It’s unmistakeable that money is piled sky high in a very short list of accounts and we’ve gotten to the point that printing more will just cause further inflation, and most of it will just end up back in those accounts. No amount of printing will bring us out of that hole. Can taxing on spending really encourage those account holders to open up their checkbooks? It’s been considered a “feature” of the fairtax that it will encourage saving. Saving, that’s a bright idea..

    And if you’re gonna abbreviate social security as SS, you’d do good not to call it “THE SS”. hopefully that was just typos.. Cause it’s a thinly veiled dog whistle otherwise.

  450. Henry
    August 31st, 2011 at 14:57 | #450

    I read your comment and I still say the prebates are the problem. It is the same comment what I said Aug. 18th. I am against the prebates. The Republican Party has been against the Social Security Administration especially when it comes to S.S. benefits for retirees. They call these benefits, entitlements but they want to use the same agency to handle the prebates. They have been talking about privatizing S.S. You mention something like that. I always say exempt basic necessities from Fair Tax and no prebates. They do that with any state sales tax. If the rich wants to buy a luxury car, he will not buy it but his corporation will buy it as a business expense, no fair tax. There is another way in buying a new car, my girlfriend did it. In 2010, my girlfriend bought a 2010 Kia. The dealership bought the car and used as a rental for 1 month and then they put it out in the lot. When she bought it, I look at the bill of sale. Instead of saying new, it said used. If Fair Tax was in place, she would not pay any Fair Tax but just the state sales tax. The rich will find ways to get around Fair Tax. They are the authors of it. I notice one thing when a person buys a new car, under Fair Tax, that person will pay more Fed. taxes than a person buying a new car under the present system. I am looking at people who are middle class and working people. Under the present system, the person can take a deduction when buying a new car. My accountant told me this. He said it won’t work for used cars. Under Fair Tax, no deduction. I am against the Fair Tax and you know the reason.

  451. Henry
    September 1st, 2011 at 05:29 | #451

    I forgot to say this. The Republican candidate who said that S.S. is a Ponzi scheme is Gov. Rick Perry (Texas). He is one Republican who said it. How many other Republicans have the same thoughts? I will not back the Fair Tax because of the lies involved with it, the people involved with it and the double standard on the prebates.

  452. Addy
    September 9th, 2011 at 12:04 | #452
  453. Addy
    September 9th, 2011 at 12:21 | #453

    This is not hard to figure out….everyone who MISTAKENLY believes that drug dealers will collect taxes are truly idiots. What people mean is this…when the drug dealer buys a new cell phone, he pays taxes. When the drug dealer buys new kicks…he pays taxes. 22% of $100 is way more than the 0% he pays now… it amazes me that people have the innate desire to make things more complicated than it is. Fair Tax on consumption is not the end all to our country’s financial woes…BUT it is 10 steps in the right direction. I personally disagree with the stated level required to sustain current collection levels. A moderate tax would generate more for the coffers than trying to replace dollar for dollar with highly variable and subject to opinion equations of revenue to be collected. Expecting everyone to pay a moderate amount only based on what they consume is a great ‘Equalizer’ and that is mainly what people seem to be afraid of. Like others here, and some respected economists have said…you can’t spend what you don’t have. The government cannot continue to pay out without collecting…and there is no more left to collect from the shrinking middle class. People need to acknowledge the fact that we are ALL in this together, and stop looking for special treatment and concessions.

    I also believe that it doesn’t matter if an item is New or Used. State and Municipality Sales taxes are currently collected on used items…The state collects taxes based on vehicle value when registered…There is no reason to stop this practice. The Tax is on consumption…tax it accordingly…seriously, it doesn’t take a genius to figure it out. If you do not want people to take advantage of loopholes…don’t create them.

    Don’t support the Fair Tax as it is - let’s find ways to fix them…that benefit everyone. Not just certain interest groups. There will always be dishonest people who will try to circumvent the system…that doesn’t make the system invalid. Up the penalties for those people. Let’s start rewarding the behavior we want, and punishing the behavior we don’t.

  454. Christopher Nunn
    September 9th, 2011 at 13:29 | #454

    I still think that this plan doesn’t really make a lot of sense. Like I stated before this plan doesn’t protect us from a downturn in consumer spending. Since the rate would automatically adjust according to previous years numbers, then a dip in spending would cause the rate to jump extremely high. Then if that happens the prebate would have to increase for everyone. So we end up right back where we are now, the government sending out huge “entitlement” checks to everyone. Also, I’ve noticed that a lot of people have stated that this fairly taxes the extremely rich, but it really doesn’t. Since this gets rid of any capital gains taxes, that money can accumulate exponentially until he or she decides to spend it. I understand that the rich spend more than the poor, but just because a person earns a million dollars a year doesn’t mean that he’ll spend a million dollars a year. Maybe I’m wrong but this appears to be just a new form of Reagan or Bush style trickle down economics. It’ll definitely benefit the wealthy, but it will only benefit the poor if the rich decide to spend their money. If they don’t then the weight still sits on the shoulders of the poor and middle class. Now if I’m wrong please, please let me know so that I can more completely understand this. But right now, I just don’t like this plan.

  455. Jeremiah T
    September 19th, 2011 at 13:52 | #455

    For those that feel that a fair or flat tax is the right way to go an interesting observation i found while reading some articles about the proposed tax hike. Article 1 Section 8 of the us constitution states “The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States”. My interest is in the last 6 words of the excerpt “uniform throughout the united states” to define uniform “constant; unvarying; undeviating” (Dictionary.com) It seems to me that under these definitions the current tiered taxes system is in fact unconstitutional, or at least contestable. The reason why this is so important is because an equal tax across the board without regard to race wealth or industry (in the case of businesses) allows for the people to have more control in your life. The federal government doesn’t need to be telling people indirectly what type of fuel to put in their cars (with ethanol subsides) or if you smoke ($0.66 federal tax on cigarettes). Ultimately the current tiered system could be replaced by either the flat tax or the fair tax but it would take a brave congress person to try to win that fight.

  456. Thos Weatherby
    September 19th, 2011 at 14:16 | #456

    @Charlie Prochaska
    I don’t agree with the 23% part. I really think that could easily be 19% or less. We don’t have to finance all of the existing programs. However I think there should also be a very reduced income tax. At 19%, 23% or 30% there is going to be an underground market. BUT, both the income tax and the Fair tax should require 67% of Congress to increase either taxes. I really like Herman Cains 9-9-9 plan. Nine percent income tax, 9% business tax and 9% consumption tax. They eliminate the other taxes. (capital gains, payroll etc.)

  457. kevin
    September 29th, 2011 at 16:05 | #457

    u guys are all stupid, dorks and geeks

  458. T Ganski
    September 30th, 2011 at 12:52 | #458

    Your bias for the Fair Tax is obvious in that in your supposed “balanced view” you state the Cons as if they are not really issues or that they can be looked at as Pros’ depending on your perspective.

    Assuming your intentions were true, to present a balanced view, please explain this quote from your post: “a large sales tax would probably make some people spend less on things, save more, and pay off debt.” Probably? What product are you willing to pay 30% more for tomorrow? You even used a great example of a $20,000 car costing $26,000 under Fair Tax.

    Given you are writing on something as complex as tax policy, I assume you have some acquaintance with the reality of economics. If prices go up, demand will go down. Lets take one of the biggest companies in the country, WalMart. Walmart serves every economic level in the market. Since 47% of citizens do not pay taxes, we can assume the bulk of their business, just as the bulk of all our consumer business, comes from people derided as “non-tax” payers. If we increased the prices to them of all goods in WalMart by 30%+ with taxes, and none of that increased cost to the consumer serves as profits for WalMart, what do you think happens to WalMart’s business? WalMart probably ends up closing stores, and put already low paid (probably non-tax paying) employees on the street. This is just the most obvious example of what tidal wave of reduced consumer demand would do to the economy writ large.

    I hear a lot of you Fair Tax proponents making the argument that such a scheme will “broaden the tax base” without ever addressing the other aspects of the economic impact “Broadening the tax base” would likely have on the overall economy. In fact, in the same area you present this as a Con, you take the make this statement: “Our economy is very heavily dependent on consumers, and a large sales tax would probably make some people spend less on things, save more, and pay off debt. Now, personally I would take almost all of that as a pro. In the long term it would be a benefit, with more people out of debt they could really stimulate the economy as opposed to spending money they don’t have which got us into the current mess.” Really, you think people living below the Earned Income tax Credit line have disposable income that currently goes to food, clothes, shelter, and utilities to save so as to avoid taxes? What world do you live in?

    I would love to have a Fair Tax proponent address this issue. Some day, i hope to go up to a person in a parking lot who is driving a barely street legal junker, but sporting a Fair Tax bumper sticker, (probably a non-tax payer today) and ask them this same question.

  459. T Ganski
    September 30th, 2011 at 12:55 | #459

    @Jeremiah T
    I do not think you would get very far in any court taking your self-serving reading of the dictionary definition of “uniform” as a basis to claim the current tax system is not uniform, and therefore, not constitutional. Uniform can also be taken to mean a system applied in the same or similar manner to all situations that are the same or similar in nature.

  460. Carrie C
    October 1st, 2011 at 17:39 | #460

    Wouldn’t fair tax hurt families who have non-taxable income? If that money is not currently taxed and the family is living paycheck to paycheck, having to pay taxes on services suddenly (assuming that the embedded taxes are equal to the fair tax rate on goods)that would be a large hit, even with the prebate.

  461. John
    October 11th, 2011 at 23:32 | #461

    Any attempt to impose a national sales tax would first be met with clear defiance and a call of it being unconstitutional from municipal, to county to state legislators and administrators. The fight for revenue would give new meaning to trial lawyers. You have no idea……….., whew.

    It ultimately is aimed at affecting total federal control, therefore violating Amendment 10 of the Bill of Rights with “The People” finally awakening to the beyond totalitarian measure which they ostensibly allowed to come into play on these Cain stealth feet if ever enacted.

    The so-called ‘9-9-9 plan’ ends the Payroll Tax completely - Business Flat Tax – 9% - Gross income less all investments, all purchases from other businesses and all dividends paid to shareholders - Empowerment Zones will offer additional deductions for payroll employed in the zone - Individual Flat Tax – 9% - Gross income less charitable deductions - Empowerment Zones will offer additional deductions for those living and/or working in the zone - National Sales Tax – 9%

    Wake up to this Federal Reserve nightmare as petitioned by this fraud Cain! This puts into effect BOTH an income tax AND a federal sales tax, the latter being patently illegal. Pure TOTALITARIANISM. Anyone doubt both those will be eventually be raised? Not me, for starters. After all, the government never met a tax it didn’t adore.

    Under ebonics-ridden hustler Federal Reserve inside plant Cain’s plan your income will be taxed BEFORE you spend it and you’ll pay a NEW and ILLEGAL federal sales tax when you spend your money. Plus, you’ll be paying that 9% business tax too when you make a purchase because businesses will build their tax into the price you pay.

    Apparently that is just Phase 1 but all that Cain conveniently mentions to his legion of myopic supporters in the debates. Phase 2 undoubtedly is where the real fun would come and you know what that means. Hola!

    BTW, for the record, I’m ultra conservative and my feelings toward liberals and Obama…….., well, take a wild guess.

  462. Roger Biggs
    October 12th, 2011 at 00:21 | #462

    Johnnyboy here sure hates the naggers. Seriously, who let you out of the jim crow era and onto the internet? go back to your swamp hut, you welfare queen.

  463. Christopher Nunn
    October 13th, 2011 at 09:19 | #463

    Another question that I have about the fair tax, is would this tax be in addition to state and local sales taxes? Since the government can’t stop state and local governments from levying their own taxes, it would be an additional tax, right? If that’s the case then this would be cripling for the poor who live in high tax areas. I, for one, live in Chicago where we already have a 10% sales tax, and it gets as high as 11.5% in other areas of Cook County. Even if the fair tax isn’t the 23% or 30% that critics say it will be but is more like 19% like I’ve read, the sales tax would still be between 29%-40% on every purchase once state andlocal taxes are added. That seems pretty extreme to me, especially when you look at people already just barely getting by on low incomes.

  464. Robert Heiney
    October 13th, 2011 at 09:48 | #464

    @Christopher Nunn
    Yes. Your local taxes will still be there, unless you mount a campaign to lower or eliminate them too.

    All the Fair Tax replaces is the Federal Income and Payroll taxes, Estate Taxes, Capital Gains taxes and Corporate Taxes.

    You will get that amount, taken from your paycheck by Federal taxes, back as income. So you will bring home more money (unless Illinois and Cook County find another way to screw you)plus your monthly pre-bate check to make up the difference (up to the poverty level)of the items that are now tax deductible.

  465. Carrie C
    October 13th, 2011 at 11:54 | #465

    @Robert Heiney
    Actually, if you read both of Boortz’s fair tax books, he says you won’t actually see an increase in take-home pay unless your employer decides to give you an essential raise. If you bring home $1,800 a month under the current tax system, you will still bring home $1,800 a month under fair tax.

  466. Robert Heiney
    October 13th, 2011 at 17:54 | #466

    @Carrie C
    Sorry, I’m not a huge Neal Boortz fan, so I haven’t read his books. I’ve done all my Fair Tax research on line. How does Neal support that statement. Without the Fed taking any money out of our pay, how can we NOT take home more money?
    The Fair Tax, being so transparent, allows us to have as much control as possible, on how much tax we pay through consumption of goods and services. Now if he’s saying we’ll pay more for those goods and services, thus making our income, essentially the same, then, yes he may be right. But it still gives me the final say as to when to pay for those goods and services. I understand that scenario. I accept that, as well. It’s still a better and more fair system than what’s being done to us now. I won’t have to pay taxes for some undocumented family to use the ER as a family doctor. That family will pay taxes as well when they buy their food and drugs, as will all the tourists. I think it’s way better than now. I’m willing to bite the bullet for a while.

  467. Carrie C
    October 13th, 2011 at 19:05 | #467

    @Robert Heiney
    I’m not a Boortz fan at all, myself. He is the one I was referred to when asking questions about Fair Tax so I read his books to be more informed. The basic logic behind the income change, or lack thereof, is that businesses pay the difference between your pre-tax pay and your actual take-home pay. If you make $50,000 a year and bring home $35,000 after taxes (the employer is paying that $15,000), in order for your company to continue making what they’re making, they cannot both get rid of the “embedded taxes” and pay you the full $50,000 or they will be losing on both sides. That leaves businesses with the choice of keeping the costs of their products the same or paying your full paycheck. It would be completely up to business which road they would take.

    As far as being able to choose when to pay taxes, that’s great for people with a nest-egg or who have extra money at the end of every month. People who live paycheck-to-paycheck, don’t have the option of when they can buy food or pay their bills. My husband is a disabled combat vet, we get VA benefits and GI Bill from his service. Currently we don’t pay taxes on either of those sources of income, with fair tax we would. That would be a large cut in our pay that we couldn’t afford. Our choices would be to feed our children or keep the power on as we use every dollar of income for basic necessities. Fair tax doesn’t cover all taxes currently in place either, excise tax would still be charged for gasoline, guns, ammo, telephone calls, tires,etc. so the prices on those products would definitely go up.

  468. Robert Heiney
    October 14th, 2011 at 08:06 | #468

    @Carrie C
    I would love to think that those who served and fought for our country would be thought of when designing a new tax system. I can’t see where they’d take away any of the Veteran services. But then, I’m sure some veterans are getting the shaft, even with the current tax system.

    Needless to say, a lot of free thinking needs to go into what ever we do to make paying taxes fair on everyone’s front.

    Tell your husband, I said thank you very much from the bottom of my heart for his duty to his country and to its citizens.

  469. dharlan
    October 15th, 2011 at 18:53 | #469

    Mention of a drug dealer collecting a sales tax. Do you really think these things would be reported? How would these taxes be paid into the state or federal government without forms and paperwork? How would this be found or enforced?

  470. Carrie C
    October 15th, 2011 at 19:25 | #470

    They mean drug dealers will pay by buying products and services with the money they received through drug deals.

  471. Marc
    November 8th, 2011 at 11:36 | #471

    The FT contemplates a federal tax administered by 50 states. That’s what makes it laughable. Simply call any two district offices in the same state and ask them a halfway complex question about their own state tax, whether income, sales, property, etc. You will often get two different answers. Nice try, no donut.

  472. Henry
    November 12th, 2011 at 13:43 | #472

    @Robert Heiney
    You haven’t heard from me for quite awhile. I saw something in the internet you should check up on. It is: Letter: The Pros of a Federal Sales Tax by Joel Prudhomme. It was on Grand Junction Free Press. This is the type of tax system, I would like and may be you would. As you read it, there would be no so call prebates. This would save the Fed. government over $600 million processing and sending out these so call prebates. Check it out and see what you think. It doesn’t say percentages of the tax but I think it will be reasonable. I hope this catches somebody’s eye.

  473. November 14th, 2011 at 20:07 | #473

    I am a student at Ivy Tech Community College doing some research on FairTax. I think that some of the Pro’s of the FairTax Act are the elimination of the annual income tax headache and the cost of tax preparers, Government spending would be reduced by eliminating the IRS, and the workers would keep 100% of their wages. Also the increased consumer spending would lead to an increase in GDP, jobs, productivity, and wages. Some Con’s are that it would be unfair to those not earning an income, such as seniors and although the IRS would no longer be needed, an agency would still needed to send out the rebate checks, settle disputes, and collect taxes from the states.It would also be needed to enforce the tax, and go after cheaters. For example, business expenses that are used to create the final product would not be taxed. Small business owners could declare a purchase a business expense to avoid the sales tax, and compliance could become very expensive to monitor and enforce.

  474. Roger Biggs
    November 15th, 2011 at 11:59 | #474

    @FairTax Guy 1
    Two problems with your research as of this point, it is generally considered consumption taxation will encourage saving, not spending. The increased cost of new goods will make used good wildly popular if not inflated in price.

    Secondly, workers will not receive 100% of their wages. States also collect income taxes and are expected to continue doing so with passage of any federal level tax law. I can be expected that if peoples pay checks increase, states may choose to rebalance their income tax to sales tax/other tax ratio.

  475. Henry
    November 16th, 2011 at 06:18 | #475

    @Roger Biggs
    According to the Fair Tax plan, the IRS will become the Sales Tax Bureau. This plan does not eliminate the IRS, only changes its name.

  476. Peter
    November 16th, 2011 at 09:18 | #476

    Very true but the Sales Tax Bureau would be far smaller then the current IRS as they would have far fewer entities to oversea and the tax implementation would be far less complicated and more straight forward. So you would need a much smaller IRS which would be cheaper for the govt and also their % of taxes owed and collected would be higher.

  477. Henry
    November 17th, 2011 at 16:24 | #477

    One thing I did found out, the Fair Tax will be very unfair to senior citizens and retirees. Look at the Fair Tax.org Calculator. This calculator has been set working people and upper class. Put your set of numbers in there like wages and take out state and local taxes and see what you get. It shows the total withholdings, FICA and Medicare deductions but there is one problem. It will not work for retirees, disabled people and seniors. Do you know what the problem is? Retirees who are on retirement plans and S.S. do not have deductions for FICA and Medicare. Medicare is deducted from S.S. checks if the person is on the Medicare plan. As you note, the Fair Tax.org Calculator for these people is a FARCE. Look at Letter: The Pros of a Federal Sales Tax by Joel Prudhomme. It is in the Grand Junction Free Press. He gives his version what the Federal Sales Tax should be. There are no numbers there but one thing I like about it: No tax on basic necessities and no prebates. The prebates are a gimmick. It will cost the Federal government over $600 billion to process and send out the prebates. To me, that is a waste.

  478. Peter
    November 17th, 2011 at 16:56 | #478

    Wouldn’t the cost to send out prebates be the same or less then processing everyones taxes and sending out returns or following up with people who owe taxes???

  479. Henry
    November 18th, 2011 at 06:16 | #479

    Taxing basic necessities and sending out prebates is nothing but a Double Standard. Money going in, money coming back. Exempt basic necessities from Fair Tax and no prebates, problem solved. Read: Letter: The Pros of a Federal Sales Tax by Joel Prudhomme. It is in the Grand Junction Free Press. Joel gives his version what the Federal Sales Tax should look like. There are no numbers, just a version.

  480. Peter
    November 18th, 2011 at 09:11 | #480

    I understand your thinking Henry but when you expempt basic necessities that opens up the ability for abuse. Who determines what is a necessity? If you say all food…then you have specialty food that is clearly not a necessity untaxed etc. If you then go define what types of foods are untaxed then you just create another needless buracracy and loop holes for abuse. Also our current system takes in takes from everyone and every business as it is then has to check them and follow up with ones that are “wrong” or fraudulant. They also then have to give back tax returns to businesses and people. So my point is your “double standard” is already occuring so any streamlining of that is savings.

  481. Robert Heiney
    November 18th, 2011 at 13:02 | #481

    There is going to always be some people who will not be convinced that the Fair Tax is better than what we have now. Usually those who are retired, living on fixed incomes, and have already paid their taxes through a lifetime of hard work. I understand where Henry and all the rest stand. It’s not fair to make them start paying taxes again, specially such a high rate. Why not scrap the prebates and lower the percentage?
    I’m onboard with the Fair Tax. I think it’s way better than what we have now. It’s just scary to others, because it’s drastic change that’s going to hit their pocketbooks.

  482. Henry
    November 18th, 2011 at 15:23 | #482

    Peter, look at any state sales taxes. Super market food are sales tax exempt while food bought at McDonalds is not.Very simple. Peter, Robert, please read Letter: The Pros of a Federal Sales Tax by Joel Prudhomme. It is in the Grand Junction Free Press. It is in the internet. Don’t forget Fair Tax taxes food, clothing, rent, housing, utilities, everything medical, doctor visits, auto repairs, gas, hospital stays and so on. Seniors, I met, rent apartments at elderly sections. Their rents are set according to their incomes. For example, a senior’s set rent $300 a month. That person has to cough up an additional $69 to cover the Fair Tax. You call that fair? Now you see my point?

  483. Jeremiah
    November 18th, 2011 at 16:32 | #483

    The problem with the fair tax in its current form is it requires a massive overhaul of not just income tax but the entire tax system in general. The fair tax is feasibly possible but because of special interest groups it makes it improbable (especially with the abolishment of income tax requiring 2/3 majority vote and ratification by the various states)at least in its current form. I have consigned myself to hoping for a flat tax and a low capital gains/corporate tax as an achievable goal for our country. We have all heard about the people running this coming election doing a little research on Cain and his 999 or 909 plan I came across Newt’s optional flat tax plan at http://www.newt.org/contract/legislative-proposals its essentially a 15% flat tax that you can opt into or go with the current system no capital gains tax, no death tax, and only a 12.5% corp tax. Ultimately to use my mothers old saying “the proof is in the pudding” but it shows promise and lets be honest any change right now is better than what we currently have.

  484. Robert Heiney
    November 19th, 2011 at 01:13 | #484

    I understand what’s going to be taxed under Fair Tax. It doesn’t bother me! I understand your refusal to except it. That doesn’t bother me either. This is what makes America what it is, a free democracy. Your points are well taken, and I understand where you’re coming from. I’m not quite where your at, but I will be sooner than I would like to think. At some point, any change of the Federal tax system, is going to be painful for someone or another. I’m “willing” to bite that bullet now, so that my kids aren’t saddled with having to pay for our current mistakes. I’ve said my peace. I’m for it, and you’re not.

  485. Henry
    November 19th, 2011 at 06:18 | #485

    @Robert Heiney
    Unless they change the Fair Tax plan to the version that Joel Prudhomme pointed out in the Letter: The Pros of a Federal Sales Tax. It is in the Grand Junction Free Press. Please read it. It is in the internet. It doesn’t show numbers or figures, it is just a version what a Federal Sales Tax should look like. I don’t want to see a tax system passed and then they find mistakes in it and it has to go back and re-corrected it. Passing the Fair Tax and just say it’s good enough. When I was going to high school, one of my teachers said this, “Good Enough is No Good”. Another thing about the Fair Tax is the people of Fair Tax.org. These people are very arrogant and they have a “I Don’t Make Any Mistakes” attitude. I wrote a couple of e-mails to them and I felt that attitude. Everybody makes mistakes. If a person says “I don’t make any mistakes”. That person hasn’t accomplished anything. I hope Fair Tax is what you want but if comes out to something worse than what we have, it is your doing.

  486. December 9th, 2011 at 02:12 | #486

    Your site is pretty cool to me and your topics are very relevant. I was browsing around and came across something you might find interesting. I was guilty of 3 of them with my sites. “99% of website owners are guilty of these five errors”. http://bit.ly/uw1s4S You will be suprised how fast they are to fix.

  487. Henry
    December 12th, 2011 at 12:28 | #487

    I just got this from Political Correction Website: This is according to Bruce Bartlett, Tax Analyst Report: Under the Fair Tax, every time you purchase a service, you would probably get 2 prices_ one you can pay with a check or credit card that includes the Fair Tax and one you can pay in cash and save 23%. Because there would no longer be any audits of income, since the IRS would have been abolished, tracing such tax evasion would be extremely difficult. This is what you would call, cash under the table. This is what underground economies and drug activities are going to be. No paper trace. No money trail. Under ground economies on paper, don’t exist.

  488. Bobby
    December 18th, 2011 at 00:04 | #488

    If you don’t think under the table cash payments occur now you are sadly mistaken. At least with the fair tax that money will eventually get spent sometime and be taxed at that time. Now if you get a cash payment paper work is easy to lose and if the money doesn’t go in the bank the IRS has no way to trace it. To take it a step further you can pay employees cash to avoid payroll taxes. So the problem wouldn’t be any worse than it is now and in my opinion would just get better under a fair tax system.

  489. Henry
    December 20th, 2011 at 16:48 | #489

    Even with Fair Tax, employers still have to report incomes to the Fed. government because of one thing: Social Security. In order for a retirees to get Social Security, they go by incomes. Employers still have to file. For employers who still pay cash to avoid payroll taxes, is illegal. When Fair Tax.org says they will go after the underground economies and illegal drug activities, then they are lying. They don’t even say how will they do it. A tax system with lies.

  490. Bobby
    December 20th, 2011 at 18:28 | #490

    It’s obvious your just a troll and a very poor one at that.

  491. Henry
    December 21st, 2011 at 06:21 | #491

    And so are you. Fair Tax is very unfair for retirees and seniors. Fair Tax taxes food, clothing, rent, housing, utilities, medical, hospital stays, doctor visits, prescriptions, gas, auto repairs and so on. Does the so call prebate cover all that? I do not want to hear that Fair Tax is good for retirees unless the person is retired and has experience being retired and living under a fixed income. You noticed that people who support Fair Tax don’t say anything about retirees. Fair Tax.org does have some comment on it but it is totally unacceptable.

  492. Collin
    January 12th, 2012 at 02:54 | #492

    Who can tell me which group of our society consumes the most out of their annual income? Thats right, the poor and people living on a fixed income. By switching from a progressive tax system to a national sales tax, our government officials would pretty much be saying, ” we believe cutting taxes and extending financial prosperity to all Americans - except for those that need it.” One cannot reasonably deny that a national sales tax favors wealthier Americans over the poor and working class. To force those of us who do not have the luxury of only needing to consume 50% of our income in order to get by would be an outrage. I understand in the world of economics one needs to find a level of efficiency and equity that they deem acceptable, and I also understand that some people’s definition of acceptable will be different. But what I do not understand is how somebody can call for a Fair Tax, knowing that taxes would go substantially up on the lowest 30% of wage earners (due to their propensity to purchase nondurable goods at a higher rate than wealthier people) while the top 5% virtually get an across the board tax cut (income, dividends, capital gains, etc.)

    Equity vs Efficiency: where do you draw the line

  493. Jeremiah
    January 12th, 2012 at 11:52 | #493

    1) Prebate basically removes the tax on cost of living goods for low income familes.

    2) Fair tax allows for no exemptions meaning the rich cant shelter purchases for lower tax rates I.E. you buy something its taxed.

    3)most peoples retirements are tied to the stock market somewhere along the line and in fact a large portion of the stock market is made up of the 95%ers no capital gains tax is huge for everybody.

    4) The loss of capital gains and income tax for businesses will create a huge investment boom building structures new plants new equipment etc which will lead to more hires. This in turn leads in an increased demand on the labor market which in turn increases wages for the labor market. High wages means more money for everybody which means less people in that low income position. Less people that are in the low income position means more big screen TVs produced etc..

  494. Mickel
    January 12th, 2012 at 12:04 | #494


    What definitiThe taxes will not go up

    What definition of equity are you using here? The taxes will not go up on the lower wage earners when you factor in the prebate. Wealthier Americans out-consume lower wage earns by leaps and bounds and will still being paying more in taxes. It seems you have issues with how much someone should pay proportional to what someone has rather than to what they use. That is not the Fairtax because, well, that isn’t fair. You can’t create prosperity for those without by taking away from the prosperous.

  495. RobertH
    January 12th, 2012 at 13:12 | #495

    I think the math used to determine who pays more per income might be a little flawed.
    It may be true, that based on annual income and annual expenditure, the lower income (I hate the term “Poor”) consumers do spend more of that money on necessities. But that’s all they spend it on. There’s very little luxury bought there. Plus, where they buy those necessities is budget as well. Most Higher income families don’t shop the Dollar store or even Wal-Mart. They also don’t use public transportation to get to and from their minimum wage jobs.
    Higher income families buy those Lexus’ and Land Rovers. They shop for expensive items to fill their palaces, and even hire the lower income people to clean up for them.
    We’re never going to come to a consensus on Fair Tax, as long as our great capitalistic, consumer based society insists on labeling segments of society as rich and poor. The rich will always say, “I earned all of my money, why can’t they.” And there’s nothing wrong with that statement. The lower income, will always feel slighted because it seems they can never have the opportunity to say the same. Although, everyone starts out life with same chances. It’s what you make of those chances, that count.
    I like the Fair Tax, because it taxes everyone, including the drug dealers who have to buy supplies, and the illegals who buy essentials to live. I’d settle for a Flat Tax, as long as there are no simple deductions.

  496. Carrie C
    January 12th, 2012 at 14:24 | #496

    RobertH- Although I don’t disagree with everything you’re saying. It’s not true that everyone is born with the same chances. Most people, yes, everybody, no.

  497. Robert Heiney
    January 12th, 2012 at 22:04 | #497

    @Carrie C
    Everybody does have the same “Chance”. It’s the hand you’re dealt from the deck of parents, that determines what you do with that chance. Some do well with extra hard work, other just slide by expecting hand outs, and everything to drop into their laps.

  498. Carrie C
    January 13th, 2012 at 15:47 | #498

    @Robert Heiney
    Some people are born with enough money that whether they decide to work hard or get handouts from their parents, it doesn’t make a negative impact on their financial standing. They might not become more rich on their own, but they won’t have to worry about making ends meet if they decide to live off mommy and daddy.

  499. Magie
    January 19th, 2012 at 14:55 | #499


    The only fair tax is a simple 10% flat tax on ALL income! If you make a buck you owe the IRS a dime. This applies to everyone, the poor, the middle class, and the rich. No tax shelters, no loopholes. The one and only deduction should be, salaries and benefits paid to others. Thank of the savings, Warren Buffett, the President of the United Sates, and a Wal-Mart minimum wage earner all receive a W-2 from the IRS. They all owe 10% Income Tax on ALL INCOME. Their ONLY deductions are salaries and benefits paid to others. This should result in a minuscule income tax increase for everyone and eliminate the complaint that 20 or 30 % pay no income tax.

  500. Paul F
    February 7th, 2012 at 20:27 | #500

    With regard to your 4th point above, as i read in both books on the Fair Tax, there would be no perceivable increase in the register price of an item as all the current embedded taxes would be removed from within and placed at the register thus making a $20,000.00 car still a $20,000.00 car but now I though I pay what appears to be a little more, I am really getting the same care for the same price. Now here is the benefit as i see it…I will never buy another new car, changes in the tax laws wont stop the wild depreciation of a new car seconds after you drive it off the lot,when I buy my USED car i wont pay the taxes on it again…they were paid for once. Same applies to homes, boats, etc. the secondary, tertiary buyers are subject to additional taxation thus the amount of used merchandise is moving again. Those that want the new will continue to buy the new, that wont change. I am 100% for MAJOR tax reform and i see the Fair Tax as the answer.

  501. Steve
    March 5th, 2012 at 08:54 | #501

    To your concerns that the collection of the sales tax would cause a financial burden on the businesses collecting it: if I’m not mistaken, the bill provides for a fee to be paid by the government to these companies to cover the cost. That fee may be in the form of a tax credit of some sort, I’m not certain.

  502. March 25th, 2012 at 05:44 | #502

    Regardless if people understand an exclusive sales tax better, but illustrating the inclusive tax as exclusive, you are misrepresenting a key portion of the fair tax and thereby alienating people from based on an issue that is patently false.

  503. Savannah dent
    April 21st, 2012 at 17:19 | #503

    Hi, I wanted to use some of your pros and cons for a fair tax research paper I am writing (with citations and a works cited page, of course) and I really need to know your name. I could not find it anywhere. If you can do that, it would be very helpful! Thanks!

  504. Chuck
    April 21st, 2012 at 18:45 | #504

    @Savannah dent
    Whose comments do you refer

  505. Henry
    May 27th, 2012 at 17:07 | #505

    There is one problem with this so called Fair Tax. It is the collection of it. According to their plan, the states have an option to collect the tax which they will get a percentage. This option is voluntary. According to Article I, section 8, U.S.Constitution: The Congress Shall Have The Power To Lay And Collect Taxes. It doesn’t say anything of the states being tax collectors for the Federal government whether voluntary or not. This collection plan is in violation of the U.S. Constitution. It could violate any state constitutions. Even Neal Boortz wrote in the “Fair Tax Book”of a Federal agency “Sales Tax Bureau” to handle the Federal tax. Even under the present tax system, the Federal government has the IRS handle their taxes. The Federal government has agencies handling their taxes and the states have agencies handling their taxes plus local governments have theirs. Look at the gasolines taxes. Same thing. Nobody interferes with each other. As for the so called prebates: There is no income or consumption test for the prebate. It would go equally to those with zero income and those who who buy nothing in the course of a month, as well as to billionaires like Warren Buffet and Bill Gates, in effect, it would constitute a National Welfare Program with a flat payment for every American, regardless of need. I have been studying the Fair Tax’s collection plan. Whoever thought of this plan and put it in the Fair Tax plan, has to be either high on drugs or not studying the tax systems and collection systems this country has.

  506. Geheimish Verbotten
    June 22nd, 2012 at 12:47 | #506

    @It’s a tax increase for me
    I’m sorry, I can’t understand your logic as being a tax increase for you. Apparently, you don’t pay any or very little taxes. I don’t really think you understand the way FAIR TAX works. OR you might be in a position that by enacting FAIR TAX you’ll lose your income or a portion of it. The only people I know that have a problem with FAIR TAX are the following: IRS agents - Tax attorneys - CPAs - H & R Block - Federal Govnmt Employee and others. People that work in the income tax business are like drug dealers, they feed of the misery of others.

  507. Vanderslice G. McGillicuddy
    September 20th, 2012 at 15:58 | #507

    Я люблю налогов так много

  508. John Weymouth
    October 2nd, 2012 at 09:54 | #508

    @Mark They get money to do the collections. No burden on them. They collect and submit the taxes now.

  509. Bruce Edward Davis Jr.
    October 19th, 2012 at 14:45 | #509

    I strongly favor the fair tax. I am far from familiar with the different tax propositions but I don’t need to be an expert to know this can work. Is it the best? I don’t know, but I do know it is simple and the pros do out weigh the cons. Pro #3: who doesn’t like transparency in government? I know this factor alone gives great incentive to our nations people all across the board to comply/conform for the sake of our economy and not partake in the cons mentioned in #s 6 and 10. Overall from a scale of 0 to 10 ( with zero being illogical and ten being economically rational ) I give the fair tax an 8.

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  512. March 8th, 2013 at 00:15 | #512

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  513. Chuck
    March 30th, 2013 at 21:52 | #513

    I agree with you 100%. Nobody seems to care about anyone who spent their life savings vs. those who spent their lives spending all their earnings and not saving anything. If there is nothing to protect the seniors savings this will NEVER pass into law

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