The Fair Tax plan was created by and is supported by American citizens, not by the lobbyists who run Congress. So, inherently, it garners trust because it was created outside Washington DC.
It repeals the income tax, corporate tax, payroll taxes (FICA and MEDI), gift tax, and estate tax and repl... more
The Fair Tax plan was created by and is supported by American citizens, not by the lobbyists who run Congress. So, inherently, it garners trust because it was created outside Washington DC.
It repeals the income tax, corporate tax, payroll taxes (FICA and MEDI), gift tax, and estate tax and replaces the current revenue stream with a national retail sales tax.
It lessens or solves so many problems that Congress has created by currying favor with special interests over so many years, including many of the problems that have led to the current economic crisis.
For example, eliminating the corporate tax and income tax will flood this country with investment from overseas. And with investment, jobs that we have been off-shoring for years will come back. Everyone wins except the lobbyists.
By taxing consumption and rebating life's necessities, it's effective rate (tax paid minus rebate) starts at zero and approaches the maximum rate the more you spend. So, the wealthy, who spend more, pay more.
It encourages savings and investment because investment gains not taxed. (What an idea!)
There are no loopholes.
Federal taxes are no longer withheld from wage earners and Joe-The-Taxpayer doesn't have to file anything with the Federal Government.
In fact, only businesses that sell at retail have to file and its a simple percentage of their sales AND the business is compensated with a small percentage of the tax remitted to offset its own compliance costs.
By eliminating the ability of Congress to manipulate the Byzantine Internal Revenue Code, the power of lobbyists over the Federal government is greatly diminished. And Congress won't be spending time on its interminable tweaking of the I.R.C.
If the GOP can't get behind an idea that benefits every single American then it deserves to disappear as a political party.
Kurtosis
Additionally, if previously withheld income tax is reallocated to paychecks, price levels *will* rise. FT removes the 22% embedded taxes and replaces them with a 23% consumption tax (both calculated inclusively), for an ostensible, marginal 1% price rise. However that assumes that all of those embedded taxes - income, payroll, ss taxes, etc. are reallocated to production cost decrease.
Kurtosis
Additionally, if previously withheld income tax is reallocated to paychecks, price levels *will* rise. FT removes the 22% embedded taxes and replaces them with a 23% consumption tax (both calculated inclusively), for an ostensible, marginal 1% price rise. However that assumes that all of those embedded taxes - income, payroll, ss taxes, etc. are reallocated to production cost decrease.
Kurtosis
I think it's more likely companies are going to keep the payroll tax themselves, while reallocating workers' income tax to their paychecks. Same with compliance cost reduction, companies will keep that themselves rather give it to their workers (unless they're in a bidding war for talent in the labor market, but that's only at the high end).
Kurtosis
Also, I don't entirely buy the 'it will make paychecks 30% larger', there are too many complexities involved to make that blanket statement. For example, for people in the lower income brackets who pay a ~15% income tax to see a 30% paycheck increase, not only would their company have to reallocate that 15% to their salary, it would also have to reallocate the unseen payroll tax to their salary.
Kurtosis
So instead of exemptions, FT calculates the standard cost of necessities for a person, assumes everyone purchases those necessities (both rich and poor), and prebates 23% of that back to everyone. Much cleaner that way, though it's certainly easy to see how some would perceive it as socialism at first glance.
Kurtosis
I didn't mean to imply the Fair Tax is an overcharge on everything. Only that it overtaxes spending on necessities. FT requires that necessities be exempt, but how do you decide exactly which products are exempt and which aren't? Doing so would invite the army of lawyers and lobbyists back to get their clients' products exempted, defeating one of the main points of the FT.
pete60174
The Fair Tax WILL "fix" the economy! By making paychecks 30% larger, it will enable those who now can't make their mortgage payments to make them, and will enable those who now can't qualify for mortgages and loans to qualify. Economists say it will TRIPLE the growth rate of the economy and reverse our $1.5 trillion trade deficit. It will make the U.S. the most attractive place to invest again.
pete60174
Kurtosis is right, the prebate is NOT "welfare," since it is paid to EVERY household of record. "Welfare" is paid only to a select group or class. But instead of calling the 23% Fair Tax an "overcharge," it would be better to call it a "REDUCTION in federal tax," since we are paying an average of 26% in federal taxes hidden in prices we pay today.
Brian Simpson
Obama is talking about a One Trillion Dollar stimulus package. How about a 13 TRILLION DOLLAR stimulus package!!!! That is the amount of off shore investments that would be attracted back to the US in a very short period of time. Also, How is it that our elected officials can't seem to see the value in a bill that is soo simple that a fith grader can understand it?......Don't answer that.....
Kurtosis
"There is no way to dispute that. Seriously how is it that republicans are supporting this garbage?"
It's easy to dispute if you actually understand it. I know Conservatives are touchy about socialism now that the Dems are fully in control, but Ayn Randian knee-jerk reactions to great reform ideas without fully understanding them are self-defeating.
Kurtosis
Every person spends the same on bare necessities, hence everyone is equally overtaxed on those necessities under the Fair Tax, hence everyone receives the exact same amount in overpayment rebate (prebate). It is NOT wealth redistribution.
Kurtosis
Listen people, the prebate is NOT wealth redistribution. One of the flaws of the Fair Tax (nothing's perfect, at least they're honest and upfront about it) is that it overcharges people for necessities (food, shelter, clothes, etc.). However, since that spending is fairly constant and predictable it can be rebated *in advance*. Hence, the prebate is just an advance rebate for tax overpayment.
Kurtosis
@bandito: those 40 cents on the dollar are what the Fair Tax calls 'embedded taxes', and all are eliminated under the Fair Tax, and replaced by a roughly equivalent Consumption Tax. The net result is same or slightly higher price levels (depending on factors like whether previously withheld income tax is reallocated to salaries or to reducing production costs), and no taxes on business or labor
steve50fla
Build your platform around the fairtax I am tired of the way government is spending like crazy. Stop this madness
bwm434
Another misconception that I am seeing is that people think that the fairtax will be put on in addition to the current income tax system. Another falsehood, The fairtax would eliminate ALL current taxes on the books presently being used by the federal government and repeal the 16th amendment. The Fair tax would turn a 22% embedded cost +withholding into one 23% federal retail sales tax.
bwm434
Ok, after reading over some of the comments that have been posted I would strongly recommend reading the FairTax Book. To say that the fairTax is wealth redistribution is flat out false, everyone benefits from the prebate regardless of income level or consumption level. Free ride at the federal level up to the poverty level. Where people pocket the money is when they spend LESS than that
FairTaxNow09
The GOP would do well to get behind this well studied proposal. I recommend you review the beacon hill study at www.fairtax.org. Mike huckabee has a whole chapter explaining it in his new book "do The Right Thing". The FT army is growing every day and will be an even larger voice in 2012 than it was in 2008!
mhalavo
Income redistribution??? Everyone gets it... Everyone pays into the fund that pays it...
chancehaywood
First of all there is nothing fair about a tax that has income redistribution written into it. The Family Consumption Allowance is nothing more than income redistribution. There is no way to dispute that. Seriously how is it that republicans are supporting this garbage?
gunsandbutter
Totally agree with andyh below- if the GOP doesn't listen to what it's members are saying, what is the point? The party will be condemning itself to irrelevance- this is not rocket science to understand this. It is what happened with the election, and will continue to happen so long as the GOP ignores it's grassroots. Mark these words. Don't say we didn't call it.