Do you support the Fair Tax?

Question

I just think it makes more sense. People should be able to keep 100% of their pay check. We should replace the IRS with the Fair Tax.

http://www.fairtax.org/site/PageServer

Answer 1

Do you enjoy having 7.65% SS and 2% Medicare and min 10% FICA stolen from your gross income out of your paycheck before you even receive it? (that is about 19% of your money).

Then you go to the store and buy a new item (clothes, food, electronic equipment or any other merchandise) at the shelf price. How much federal tax did you pay for that item? "None" you think! Businesses DO NOT PAY ANY INCOME TAXES! They are tax collection points for the federal government and they do not get paid for doing it. All the taxes are a COST OF DOING BUSINESS. The business must also use accountants and bookkeepers to determine how much taxes are due, when they are paid, how much to steal from employees and forward to the feds on a regular basis. They must also prepare and file these reports. All these operations create an additional COST OF DOING BUSINESS. I will let you figure out who ends up paying all these COSTS OF DOING BUSINESS.

There is hidden federal income taxes and tax compliance costs in that price. Economists have researched a large number of industries. The average amount of hidden taxes and costs is between 22-23% at the retail level. (mfg industries is 18-20 % and services accounts for 24-26%). When you add these two percentages, you are currently paying well over 40% of your gross income in taxes and compliance costs under the current income tax system.

Having considered this, how could anyone not want to pay the Fair Tax 23% one time. The Fair Tax only applies to NEW GOODS and SERVICES at the retail level. There is no tax on used goods. The feds have already taxed the item once, they do not get any taxes on it a second time. Under the current income tax system, the feds continue to collect taxes (employer part of SS & Medicare and corporate income taxes) and the employer has their tax compliance costs which are COSTS OF DOING BUSINESS that you pay on the used item.

Secondly, the prebate will totally replace all the federal Fair Tax up to the poverty level for all LEGAL RESIDENT HOUSEHOLDS in the United States. Each household will file a simple form to provide the names and SS# for each member, where their residence is and where the money is to be sent. The feds only need to verify the SS# with the name of the family member. IF someone tries to use a SS# that was issued to someone else, it will be caught. This eliminates the fraud and abuse in the prebate. It is the responsibility of the SS Administration to oversee this function. Several private enterprise companies have offered to work as an "outsourced" entity to disburse the prebate. There would be a bidding war to receive the contract. The outsourcing company would PAY THE FEDS for allowing them to handle the program. This would eliminate any cost to the government to disburse the prebates!

The current prices of new items (homes, cars, electronic equipment etc) currently have the embedded business taxes and compliance costs. These will be eliminated and prices will go down. When the Fair Tax is added back into the price of the item, the new retail price (again including fed tax) will be close to the prior retail price. You will pay the retail price and not have to worry about the federal taxes. The cash register receipt will show the product amount and federal tax amount separately to arrive at the RETAIL price. The NEW house or automobile will have approximately the same price as under the income tax system. The buyer will have their gross paycheck (no federal taxes deducted), the additional amount of the prebate AND mortgage interest rates will have dropped approx 25% as the service company handling the loans will have reduced tax costs. More money, lower interest rates means the buyer can qualify for a larger loan, better home or automobile.

There are no taxes on businesses. (They do not pay them anyway) This also eliminates the tax compliance costs, further reducing the price of the product. There are no taxes on business to business sales.

There will be much less fraud and abuse under the Fair Tax. The current income tax code requires one person to cheat and not report to the feds. Under the Fair Tax, it will require two parties (buyer and seller) to cheat. When you consider that under the state sales taxes (45 states), well over 85% of all sales taxes are collected by less than 5% of the businesses (major box stores). Yes, there will be those that will commit fraud and abuse, but it will be greatly reduced from the current tax system.

Any household with income at or below the poverty level will have an effective Fair Tax rate of 0.0%. A household with income at twice the poverty level will have an effective tax rate of 11.5% The wealthy will be paying a much higher effective tax rate and a lot more tax than they do now! Recently it was reported Brittney Spears spends about $750,000 every month. She would be paying 23% on her spending! (My guess is that she does not shop at Goodwill for used clothes or Walmart!) Her clothing would come from high priced designer stores or are custom made.

Answer 2

You keep 100% of your paycheck until you go to buy anything, then you pay a whole lot more than you are paying now for the same item. And yes I've looked at the website and read N. Boortz's Fair Tax book - the "plan" has huge holes in it as far as potential implementation. High income people would benefit a lot - the poor would get hosed.

The one big positive I see is that it would tax the underground economy. That might be very small consolation to the parents of 2 kids, making $13,000 a year, when you explain to them they'll lose their $4500+ EIC, but hey, no pain no gain, right?

Answer 3

There's NOTHING fair about the grossly misnamed "Fair Tax."

Why in the world would I want to pay a 30% sales tax (on top of an already high 8.75% state sales tax) in exchange for a modestly larger paycheck? I'd pay far MORE in total taxes under the "Fair" tax. Hardly fair in my book.

And yes, I've studied it extensively. The so-called "prebate" would attract fraud on a massive scale as it is not paid at a flat rate for all citizens. The IRS would have to come up with some means of tracking family units in real time to prevent fraud. They can't track income in real time yet and would need a massive infrastructure upgrade to do so.

Black marketing would be rampant as people, especially the middle class and those at the bottom of the economic scale tried to avoid the taxes and stay solvent. And we all know who runs black marketing operations: Organized crime and criminal gangs. It's one thing going to them for bootleg booze and 'baccy. It's another entirely going there for your Fruit Loops and a DVD player.

The housing industry would collapse overnight since the tax would only apply to new construction. Imagine having a $60,000 tax bill on a new $200,000 home! Would YOU buy a new home? Didn't think so! And how about paying $6,000 in taxes on top of whatever you pay just to put tags on a new $20,000 car? Good idea? Fair? NOT!

The IRS would continue to exist pretty much as it does now. Maybe the name would change but the faces at the counter would be the same. Eventually Congress would give them broad new powers to combat fraud and black marketing activities. Imagine a tax audit at your home where the revenue agent digs through your dresser looking for tax stamps on all of your gruns. Or teams of IRS agents sweeping through the neighborhood on trash pickup day and collecting your garbage looking for evidence of non-taxed goods. The IRS is scary enough with their power as it is. Do we really want that sort of unchecked power unleashed upon the citizenry? I damn sure don't!

The bill has languished in committee for over 8 years for very good reason. It's a political football, nothing more. Its sponsors go back to their home districts and say to their constituents, "Hey look, I'm trying to do something about it, but nobody will let us move forward with it." And they get re-elected. Humph! It will never make it out of committee as the committee members know that it has zero chance of ever being passed into law. It would crush the poor and the middle class would buckle at the knees. Only the wealthy would see any benefit as they tend to amass wealth, not spend every penny on basic necessities.

The current tax code does need to be cleaned up and the AMT needs a major overhaul. But replacing it with one that throws the entire economy into a tailspin is hardly the answer.

Answer 4

Absolutely not! Do you honestly think it is fair to the lower to middle class? NO!

Bottom line is, under the fair tax the l lower class will be paying a higher percentage compared to their disposable income earned than the wealthy.

Easily, the disparity would be revealed, exceptions made leading us right back to the present.

Answer 5

It is worth the time to explore. Our present tax system is far too complex, but I don't know if the Fair Tax would really make a difference in the long run.

Answer 6

ABSOLUTLEY !
Instead of having an average of 23% stolen from what I earn for Fed, SS and Medicare, and paying corporations’ taxes that are passed on in the price of a product?

You bet I would rather pay 23% inclusive, 30% exclusive on new items only as the bill H.R. 25 states. The FairTax Act is the best proposal to simplify the rules, boost the economy and help low $ earners save and build security quicker.

Some negative nabobs harp on the 30% exclusive tax and forget the savings on the NO INCOME TAX and NO COMPLIANCE COSTS.

Answer 7

Great?!?!?!

Instead of paying 6% of my income on income tax I can pay 23-30% more for anything I buy.

Yeah, that's fair.

No thanks.

Answer 8

No.....My IQ is higher than my shoesize.