Taxes

Fair Tax Fouls

What's good and bad in Huckabee and Cain's favorite proposal

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I think anybody would feel stupid after trying to make sense of H.R. 25.

The last time we heard about a national sales tax was 13 months ago, when former Federal Reserve Chairman and current Obama Administration advisor Paul Volcker proposed augmenting the federal revenue armory with a value-added tax.

That idea failed to capture the nation's imagination, but at the first Republican Party presidential debate, the national sales tax returned, under the flag of Luntz-focus-group-winner Herman Cain. Cain, former CEO of Godfather's Pizza and 2008 TARP supporter, calls the national sales tax the Fair Tax.

So does Mike Huckabee in his own stumping for the national sales tax. And so does Rep. Robert Woodall (R-Georgia), sponsor of the Fair Tax, H.R. 25, "To promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national sales tax to be administered primarily by the States." According to Woodall, who has been joined by more than 60 co-sponsors in the U.S. House of Representatives, the Fair Tax will change the structure of the American economy. From Woodall's site

Fair Tax isn't about simply taxes; it is about freedom, jobs, smaller government and the economy. It is about returning power to the people and finally finding a way to ensure America's economic growth. It is about completely abolishing the IRS and stripping the Federal government of the opportunity to dig deeper and deeper in the American people's personal pocketbooks.

The Fair Tax laid out in H.R. 25 [pdf] would surely change the structure of wealth formation, dollar savings, and consumption in U.S. tax jurisdictions. If it were coupled with an actual repeal of the 16th Amendment (an extremely long shot, as H.R. 25's escape clause in Section 401 acknowledges), the Fair Tax in its current form would discourage retail consumption and potentially bring personal savings rates (which are currently a little above five percent) back to much higher historic levels. The St. Louis Fed only has data going back about 50 years, when the savings rate averaged around eight percent—but eliminating the income tax could encourage an approach to savings not seen since 1913, when the 16th Amendment (which enshrines Congress' power to seize income, but did not originate it) was adopted. 

Fair Tax supporters insist it is a different animal than the VAT, which behaves more or less the way you would expect a national sales tax to behave. The VAT taxes sales at every level of production. In the language of "I, Pencil," it taxes the sale of the tree to the miller, then taxes the sale of wood chips to the manufacturer, the sale of brass to the maker of the ferrule, and so on—resulting in a radically more expensive retail product that ultimately goes on sale (with tax) at Rite-Aid. 

The Fair Tax is meticulously constructed to avoid doing that. This is why H.R. 25 comes in at a length of 131 pages and takes terrible pains to describe how the sales tax would be recorded and collected. There are provisions for cases wherein a sale is made to a producer, but the producer within a designated time period changes his or her mind about how to use the asset, and whether the sale should then be taxed (it should) and whether penalties should be applied (under certain circumstances). The Fair Tax tells us whether taxable property or services purchased by an insurer on behalf of an insured shall be treated as used to produce, provide, render, or sell taxable property or services. (They shall, but only if the premium for the insurance contract giving rise to the insurer's obligation was subject to tax pursuant to financial intermediation services.) The bill decides whether incarcerated prisoners are eligible for the family consumption allowance (they're not) and what will happen as the circumstances of family members change. (A revised registration is permissible, subject to certain restrictions.) 

The Fair Tax goes on to specify what interest rate state tax collectors must pay on collections remitted to the federal government after a five-day deadline has passed (payment of interest at 150 percent of the Fed short-term rate). It specifies the destination on rental and lease payments for land vehicles, aircraft, and water craft. It specifies fines for individuals who file late ($50 or 0.5 percent of gross payments). It specifies the language to be used in a document describing the administrative appeals process and the authority of the Problem Resolution Office (plain English). The Fair Tax tells us how to determine principal and interest components of a financing lease for tax purposes. (Just examine the contemporaneous sales price or prices of property the same or similar as the leased property.) 

I am not going to say no to the Fair Tax outright, because there are things in it to like. Putting federal taxing authority into the hands of the states creates some interesting prospects for federalism and interstate competition. I suspect an item on page 21 may create a loophole that would make all secondary market sales tax-free. Taxing consumption instead of income has the potential to end federal efforts at behavior modification via the tax code and raise revenues for the legitimate functions of the state in ways that are less morally corrosive than the current tax system. 

But laws and novels get worse as they get wordier. The Fair Tax proposal, at least as documented in H.R. 25, doesn't even have the admirable pith and brevity of Amendment XVI: 

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.

Leave aside the very low probability that the 16th Amendment could be repealed and the IRS abolished. The point is to get rid of the income tax and replace it with nothing. Fair Tax proponents would get rid of the income tax and replace it with another tax that rings in at 23 percent of retail value, creates complicated new bureaucracies, and gives people money for staying in poverty. That last part is the family consumption allowance, or "prebate." Cain explains the principle of the prebate: 

Always be concerned when somebody is proposing not just a new law but new language to describe it. My 10-pound dictionary has no entry for "prebate." It does have "prebasic molt," the process by which birds replace 100 percent of their feathers within a period of time, and "prebend," an allowance for church officials. I'm pretty sure that prebends would cause less damage to the U.S. economy than prebates, and that our fiscal system needs a prebasic molt a lot more than it needs a Fair Tax.

In Reason's new opinion poll, two-thirds of Americans turn thumbs down on the idea of a national sales tax. They're right to oppose it, and adopting the progressive language of "fairness" does not change that. 

Tim Cavanaugh is a senior editor at Reason magazine.

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

183 responses to “Fair Tax Fouls

  1. Even with the sales tax the government will find ways to engage in behavior modification via the tax code; Higher sales taxes on gas and cigarettes, no sales taxes on Hybrids etc.

    1. But of course.

  2. The Herminator buys into a national sales tax and supported TARP. Damn. Why does every politician have to suck?

    1. The National Sales tax is good, if that’s the only federal tax there is (ie, remove any and all income taxes). TARP, obviously bad.

      1. The National Sales tax is an inferior idea to a simple, deductionless income tax because it taxes things based on how many times their components were sold.

        This has several negative effects. First it makes it more difficult for smaller, more specialized companies to compete with large vertically integrated companies since a multi-sale supply chain is taxed and re-taxed. At 23% this would compound VERY Rapidly.

        Second a sales tax–even with “probates”–would disproportionately effect the poor. Why? Assuming “probate” is an allowance of spending that is untaxed during the year, any person with a usually small income who saved for several years to purchase a large item would be taxed, where with an income tax they would not have been. This would happen because for that one year they would suddenly be over the allowance even though their average was below it because of previous years being significantly lower.

        Third, without the impossible-to-administer probates (How could they really do it??) the sales tax would apply to everyone no matter how poor. This would effectively be an across the board increase in the cost of anything by at LEAST 23% (more for anything with a supply chain). There would be a potentially matching increase in income for some people, but definitely not for anyone not currently paying taxes on their income–including the elderly on small fixed incomes.

        1. It would only tax final sales to consumers of the product, not the sale of components, etc, to the manufacturer, just like current state sales tax. You are confusing it with the VAT.

          1. Exactly.

            Also, make no mistake that like the income tax, there’s no limit to what engineering and tweaking that can be done to make it less regressive.

            Will it be more regressive than an income tax? Maybe.

            The problem that even a simple, deductionless income tax still carries– even if you really believe it would forever remain deductionless, is the inherent immorality of taxing the income, ie ‘incoming’ wealth of an individual.

            The government has no business whatsoever knowing how, how much, where, and from whom I earn my income.

            None. Zip. Zilch. Nada.

            The government knowing these things as it does now, not only has far more insight into my life than it deserves, it also must define non-monetary gains as monetary gains by placing arbitrary values on wealth that I acquire. A bottomless pit of IRS agents chasing around every relationship I have, to be sure.

            There’s nothing more immoral than the government forcing a poor person to sell off family treasures simply because they can’t afford the income tax (payable only in cash) because they had the misfortune of inheriting a valuable painting or piece of property. Either way, the government deserves no ‘percentage’ of that painting or property. Talk about multiple taxation.

          2. He is not confusing it with a VAT, he is confusing it with a gross receipts tax. A Value Added Tax is a tax on value added to a product, which is to say sales price minus component prices. The VAT is identical to a sales tax but for the enforcement mechanism (taxes are collected as value is added to a product instead of all at final sale, this to avoid fraud when shops are liable for taxes worth decades of legitimate profit).

        2. No, the tax is not applied to wholesale items. As far as items increasing in cost, the 23% was determined because that’s already the imbedded cost of taxes in the cost of a product at the retail level right now, so it would merely make that tax visible to the consumer. When you purchase a product right now that price contains the SSI, FICA, income tax, federal fees and corporate taxes that have to be paid out of that price, you just don’t see them.

      2. How about you just stop stealing other peoples shit.

    2. I like Herman, but he is really fucked on this.
      A much better idea is a flat tax at not more than 10%…everyone pays. It is to never be raised above 10% under penalty of death.

      1. For someone who calls himself a realist, you are dreaming if you think a politician will ever support lowering rich people’s taxes while raising taxes on the poor.

        1. Class warfare runs deep in this one.

        2. But it is still a good idea.

      2. How about you just stop stealing other people’s shit.

  3. Like you, I have mixed feelings about the Fair Tax. The thing I like most about it is that it gets the Federal gov’t out of monitoring income. I also like the fact that it gets everyone paying taxes, not just “those evil rich people”.

    The thing I like least is the fact that any savings a person now has would instantly lose ~30% of its value were the Fair Tax to become law. (Although they claim 23%, that’s an inclusive number, meaning if the cost of an item is $100 including tax, $23 was the tax. Most people look at from an exclusive viewpoint, i.e. the cost was $77 and $23 was added in tax…23/77 ~ 0.30)

    1. To be “fair” the government could seize all deferred taxes from assets just prior to implementation. They’d love that, and it would be “fair”.

      Fortunately we won’t be getting the “FairTax” ever. It is nothing but a stalking horse for a VAT.

    2. The Fair Tax is calculated as an inclusive sales tax because that is how it can be best compared to our existing, inclusive income tax structure. Keep in mind that although it will be added to the cost of goods and services, implementation of the Fair Tax, as written, will also eliminate the embedded taxes within those products and services. Those embedded taxes (clocking in at about 22% on average) will go by the wayside when all corporate and excise taxes are done away with.

      1. Sales taxes are already widely known in most of the 50 states, and calculated on an exclusive basis (a $100 item with 6 percent sales tax cost $106). Fair Tax proponents use the inclusive rate to fool people and make it sound more palatable.

        1. But what if that is the rate to replace the current taxes?(and it is)…Does that mean the Federal government costs too much?

    3. Is that really how the fair tax would be applied? Seems counter-intuitive and with the only purpose of obscuring exactly how much taxes the consumer is paying (yes, people in general suck at math and even if you don’t who wants to do it every time you make a purchase?) Why wouldn’t be that if you buy something for $100 it would cost $123 including tax?

      1. The inclusive/exclusive thing I think is pretty much more of a nitpicking/marketing detail than anything else, I think. The issue is that sales taxes are usually calculated exclusively – as you point out, but the income tax that the FairTax is basically running against is listed as inclusive, at around 30%, when exclusively it would be more like 50%.

        Basically, are you quoting the price before or after the tax is applied? The way the Fairtax is written, the tag of an item that was listed at $100 would already have the tax applied, and would cost $100, because it’s supposed to be inclusive. If it was exclusive, than the tag would say $77, and when it rang up you would see it be $100.

        1. I guess I’m extra confused because when I lived in Singapore the price was always already included but not here. Still what the tag says is irrelevant. The tag could say $123 or $100 and then add $23 at the register and it would be the same tax.

          I guess you are right that it is just marketing but that only further proves that it serves to add confusion rather than simplicity.

          1. Just to be clear, though. In your example if something is tagged at $100, the price at the register would be $130, not $123 (i.e. $30 is ~23% of $130).

      2. To Law Student: To simplify, FairTax works like this: $100 retail sale (under current tax code) – 23% currently hidden embedded taxes = $77 retail sale(under a FairTax code) + 23% transparent sales tax = $100 Total Cost to Consumer.

        1. CORRECTION: $77 X 23% = $94.71

    4. Well, except that corporate taxes are already embedded in the price of goods, raising them about 20. So the price of goods should actually stay about the same – we’ll just be much much more efficient with how we collect the taxes.

      1. Well, if that’s really the case then it’s a better deal than I was thinking. Regardless of its negatives, it is still far and away better than our current system which discourages having an income (particularly for potential second-income households) and is used as a virtual slush fund to hand out favors.

        Plus the current system requires the IRS to monitor everyone’s bank accounts, investments, etc. It’s the biggest of big brothers.

      2. That’s only true when all participants in the supply chain are corporations…

      3. That is a poor supporting example because there is no uniform tax at the corporate level. Some pay a lot, some pay next to nothing. If I buy products from low tax producers then I pay little ‘inclusive’ corp. tax.

        1. But remember the pencil analagy. Most goods and services that are purchased are actually the compilation of many corporations, each paying a different level of corporate taxes (between 15-35%), and unlike the fair tax, these taxes ARE similar to a VAT, which compounds the taxes collected at each level. So the steel company pays taxes that go into the price of the saw, the lumber company pays taxes that goes into the price of the wood, the graphite company pays taxes that goes into the price of the graphite, the paint company pays taxes, the pencil company pays taxes. At the time you purchase the pencil, you’re covering those tax costs for every step in the process.

    5. “The thing I like most about it is that it gets the Federal gov’t out of monitoring income.”
      Sure thing! What would happen is the federal government would monitor both income and purchases.

  4. Cain is proposing changes to the existing tax code as part of his “platform” that do not assume a National sales tax. I think he is fully aware the “FairTax” has no chance in Hell of ever passing (thank God). There is a rabid constituency for the FairTax and signaling support leads to campaign contributions and votes. Huck benefited from this last cycle.

  5. I think a real flat income tax would be preferable – say 10% with a $5k per person deductible.

    But the Fair Tax – if implemented correctly with a total repeal of all income, capital gains, and taxes on savings – is better than the current crap we deal with.

    I’ll believe it when I see it.

    1. About the only reason I’m for the FairTax over the flat tax is that I would like to see government stop keeping tabs on every dollar everyone spends. Simple consumption taxes end up not only being less intrusive, but easier (cheaper and more efficient) to enforce, since government only has to monitor the sales of businesses – which are relatively sparse compared to the number of individuals with incomes. In addition, so much retail happens at the big chains, that if we only had compliance from the biggest 10% of retailers, we’d still have some huge majority of the tax enforced properly.

      1. Taoist said:
        In addition, so much retail happens at the big chains, that if we only had compliance from the biggest 10% of retailers, we’d still have some huge majority of the tax enforced properly.

        Of course, if only the biggest 10% of retailers complied, I don’t think that we would continue to see a huge majority of retail at the big chains – will Walmart continue to be competitive with the little guys if they have a 23% tax burden that the smaller retailers do not?

      2. The only good government, is a damn near dead government!

    2. I think a real flat income tax would be preferable – say 10% with a $5k per person deductible.

      I prefer a flat rate of zero percent, with no deductibles and no exemptions.

      1. Isn’t that what about half the adult population currently pays? The parasitic half.

    3. Old Soldier is so right!

  6. If everyone has to pay the tax, the impact on 2 income families who tend to eat out more and use services more would be greater than on a 1 income family. The impact on the poor would be greater, but these proposals always claim a certain refund rate (but not until next year) and never discuss the step function these programs cause.

    For example, say the cutoff is 30K/yr. Say a guy makes 28K per year. Right now, he would get all the Fair Tax back, but say his boss offered him some overtime that jumped his annual pay to 30,500. Suddenly no refund. And every thing he buys is 23% more. So does he do the OT?

    Better to tax income with a straight forward line function type tax calculation. If you cut all taxes on wage earners under 30K/yr and taxed the rest of the income at 25%, then the man in the metaphor would find that instead of an instant 23% bump in everything he buys, that he would owe 25% of the 500 bucks he earned over 30K. So he experiences OT that pays him $2000 tax free and an additional $375 after taxes. A much better deal.

    1. I put a reply to this issue further down.

    2. “Print|Email
      Fair Tax Fouls
      What’s good and bad in Huckabee and Cain’s favorite proposal
      Tim Cavanaugh | May 16, 2011

      The last time we heard about a national sales tax was 13 months ago, when former Federal Reserve Chairman and current Obama Administration advisor Paul Volcker proposed augmenting the federal revenue armory with a value-added tax.

      That idea failed to capture the nation’s imagination, but at the first Republican Party presidential debate, the national sales tax returned, under the flag of Luntz-focus-group-winner Herman Cain. Cain, former CEO of Godfather’s Pizza and 2008 TARP supporter, calls the national sales tax the Fair Tax.

      So does Mike Huckabee in his own stumping for the national sales tax. And so does Rep. Robert Woodall (R-Georgia), sponsor of the Fair Tax, H.R. 25, “To promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national sales tax to be administered primarily by the States.” According to Woodall, who has been joined by more than 60 co-sponsors in the U.S. House of Representatives, the Fair Tax will change the structure of the American economy. From Woodall’s site:

      Fair Tax isn’t about simply taxes; it is about freedom, jobs, smaller government and the economy. It is about returning power to the people and finally finding a way to ensure America’s economic growth. It is about completely abolishing the IRS and stripping the Federal government of the opportunity to dig deeper and deeper in the American people’s personal pocketbooks.

      The Fair Tax laid out in H.R. 25 [pdf] would surely change the structure of wealth formation, dollar savings, and consumption in U.S. tax jurisdictions. If it were coupled with an actual repeal of the 16th Amendment (an extremely long shot, as H.R. 25’s escape clause in Section 401 acknowledges), the Fair Tax in its current form would discourage retail consumption and potentially bring personal savings rates (which are currently a little above five percent) back to much higher historic levels. The St. Louis Fed only has data going back about 50 years, when the savings rate averaged around eight percent?but eliminating the income tax could encourage an approach to savings not seen since 1913, when the 16th Amendment (which enshrines Congress’ power to seize income, but did not originate it) was adopted.

      Fair Tax supporters insist it is a different animal than the VAT, which behaves more or less the way you would expect a national sales tax to behave. The VAT taxes sales at every level of production. In the language of “I, Pencil,” it taxes the sale of the tree to the miller, then taxes the sale of wood chips to the manufacturer, the sale of brass to the maker of the ferrule, and so on?resulting in a radically more expensive retail product that ultimately goes on sale (with tax) at Rite-Aid.

      The Fair Tax is meticulously constructed to avoid doing that. This is why H.R. 25 comes in at a length of 131 pages and takes terrible pains to describe how the sales tax would be recorded and collected. There are provisions for cases wherein a sale is made to a producer, but the producer within a designated time period changes his or her mind about how to use the asset, and whether the sale should then be taxed (it should) and whether penalties should be applied (under certain circumstances). The Fair Tax tells us whether taxable property or services purchased by an insurer on behalf of an insured shall be treated as used to produce, provide, render, or sell taxable property or services. (They shall, but only if the premium for the insurance contract giving rise to the insurer’s obligation was subject to tax pursuant to financial intermediation services.) The bill decides whether incarcerated prisoners are eligible for the family consumption allowance (they’re not) and what will happen as the circumstances of family members change. (A revised registration is permissible, subject to certain restrictions.)

      The Fair Tax goes on to specify what interest rate state tax collectors must pay on collections remitted to the federal government after a five-day deadline has passed (payment of interest at 150 percent of the Fed short-term rate). It specifies the destination on rental and lease payments for land vehicles, aircraft, and water craft. It specifies fines for individuals who file late ($50 or 0.5 percent of gross payments). It specifies the language to be used in a document describing the administrative appeals process and the authority of the Problem Resolution Office (plain English). The Fair Tax tells us how to determine principal and interest components of a financing lease for tax purposes. (Just examine the contemporaneous sales price or prices of property the same or similar as the leased property.)

      I am not going to say no to the Fair Tax outright, because there are things in it to like. Putting federal taxing authority into the hands of the states creates some interesting prospects for federalism and interstate competition. I suspect an item on page 21 may create a loophole that would make all secondary market sales tax-free. Taxing consumption instead of income has the potential to end federal efforts at behavior modification via the tax code and raise revenues for the legitimate functions of the state in ways that are less morally corrosive than the current tax system.

      But laws and novels get worse as they get wordier. The Fair Tax proposal, at least as documented in H.R. 25, doesn’t even have the admirable pith and brevity of Amendment XVI:

      The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.

      Leave aside the very low probability that the 16th Amendment could be repealed and the IRS abolished. The point is to get rid of the income tax and replace it with nothing. Fair Tax proponents would get rid of the income tax and replace it with another tax that rings in at 23 percent of retail value, creates complicated new bureaucracies, and gives people money for staying in poverty. That last part is the family consumption allowance, or “prebate.” Cain explains the principle of the prebate:

      Always be concerned when somebody is proposing not just a new law but new language to describe it. My 10-pound dictionary has no entry for “prebate.” It does have “prebasic molt,” the process by which birds replace 100 percent of their feathers within a period of time, and “prebend,” an allowance for church officials. I’m pretty sure that prebends would cause less damage to the U.S. economy than prebates, and that our fiscal system needs a prebasic molt a lot more than it needs a Fair Tax.

      In Reason’s new opinion poll, two-thirds of Americans turn thumbs down on the idea of a national sales tax. They’re right to oppose it, and adopting the progressive language of “fairness” does not change that.

      Tim Cavanaugh is a senior editor at Reason magazine.

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      See all 72 comments | Leave a comment
      Editor’s Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time.

      He |5.16.11 @ 12:11PM|#
      lost

      reply to this
      H man|5.16.11 @ 12:17PM|#
      Even with the sales tax the government will find ways to engage in behavior modification via the tax code; Higher sales taxes on gas and cigarettes, no sales taxes on Hybrids etc.

      reply to this
      Realist|5.16.11 @ 3:47PM|#
      But of course.

      reply to this
      John|5.16.11 @ 12:18PM|#
      The Herminator buys into a national sales tax and supported TARP. Damn. Why does every politician have to suck?

      reply to this
      Paul|5.16.11 @ 1:17PM|#
      The National Sales tax is good, if that’s the only federal tax there is (ie, remove any and all income taxes). TARP, obviously bad.

      reply to this
      slutmonkey|5.16.11 @ 3:26PM|#
      The National Sales tax is an inferior idea to a simple, deductionless income tax because it taxes things based on how many times their components were sold.

      This has several negative effects. First it makes it more difficult for smaller, more specialized companies to compete with large vertically integrated companies since a multi-sale supply chain is taxed and re-taxed. At 23% this would compound VERY Rapidly.

      Second a sales tax–even with “probates”–would disproportionately effect the poor. Why? Assuming “probate” is an allowance of spending that is untaxed during the year, any person with a usually small income who saved for several years to purchase a large item would be taxed, where with an income tax they would not have been. This would happen because for that one year they would suddenly be over the allowance even though their average was below it because of previous years being significantly lower.

      Third, without the impossible-to-administer probates (How could they really do it??) the sales tax would apply to everyone no matter how poor. This would effectively be an across the board increase in the cost of anything by at LEAST 23% (more for anything with a supply chain). There would be a potentially matching increase in income for some people, but definitely not for anyone not currently paying taxes on their income–including the elderly on small fixed incomes.

      reply to this
      Realist|5.16.11 @ 3:52PM|#
      I like Herman, but he is really fucked on this.
      A much better idea is a flat tax at not more than 10%…everyone pays. It is to never be raised above 10% under penalty of death.

      reply to this
      NAL|5.16.11 @ 12:18PM|#
      Like you, I have mixed feelings about the Fair Tax. The thing I like most about it is that it gets the Federal gov’t out of monitoring income. I also like the fact that it gets everyone paying taxes, not just “those evil rich people”.

      The thing I like least is the fact that any savings a person now has would instantly lose ~30% of its value were the Fair Tax to become law. (Although they claim 23%, that’s an inclusive number, meaning if the cost of an item is $100 including tax, $23 was the tax. Most people look at from an exclusive viewpoint, i.e. the cost was $77 and $23 was added in tax…23/77 ~ 0.30)

      reply to this
      SIV|5.16.11 @ 12:29PM|#
      To be “fair” the government could seize all deferred taxes from assets just prior to implementation. They’d love that, and it would be “fair”.

      Fortunately we won’t be getting the “FairTax” ever. It is nothing but a stalking horse for a VAT.

      reply to this
      Jose Chung|5.16.11 @ 1:40PM|#
      The Fair Tax is calculated as an inclusive sales tax because that is how it can be best compared to our existing, inclusive income tax structure. Keep in mind that although it will be added to the cost of goods and services, implementation of the Fair Tax, as written, will also eliminate the embedded taxes within those products and services. Those embedded taxes (clocking in at about 22% on average) will go by the wayside when all corporate and excise taxes are done away with.

      reply to this
      CE|5.16.11 @ 3:52PM|#
      Sales taxes are already widely known in most of the 50 states, and calculated on an exclusive basis (a $100 item with 6 percent sales tax cost $106). Fair Tax proponents use the inclusive rate to fool people and make it sound more palatable.

      reply to this
      Law Student|5.16.11 @ 1:41PM|#
      Is that really how the fair tax would be applied? Seems counter-intuitive and with the only purpose of obscuring exactly how much taxes the consumer is paying (yes, people in general suck at math and even if you don’t who wants to do it every time you make a purchase?) Why wouldn’t be that if you buy something for $100 it would cost $123 including tax?

      reply to this
      Taoist|5.16.11 @ 1:47PM|#
      The inclusive/exclusive thing I think is pretty much more of a nitpicking/marketing detail than anything else, I think. The issue is that sales taxes are usually calculated exclusively – as you point out, but the income tax that the FairTax is basically running against is listed as inclusive, at around 30%, when exclusively it would be more like 50%.

      Basically, are you quoting the price before or after the tax is applied? The way the Fairtax is written, the tag of an item that was listed at $100 would already have the tax applied, and would cost $100, because it’s supposed to be inclusive. If it was exclusive, than the tag would say $77, and when it rang up you would see it be $100.

      reply to this
      Law Student|5.16.11 @ 2:17PM|#
      I guess I’m extra confused because when I lived in Singapore the price was always already included but not here. Still what the tag says is irrelevant. The tag could say $123 or $100 and then add $23 at the register and it would be the same tax.

      I guess you are right that it is just marketing but that only further proves that it serves to add confusion rather than simplicity.

      reply to this
      NAL|5.16.11 @ 3:14PM|#
      Just to be clear, though. In your example if something is tagged at $100, the price at the register would be $130, not $123 (i.e. $30 is ~23% of $130).

      reply to this
      Taoist|5.16.11 @ 1:49PM|#
      Well, except that corporate taxes are already embedded in the price of goods, raising them about 20. So the price of goods should actually stay about the same – we’ll just be much much more efficient with how we collect the taxes.

      reply to this
      NAL|5.16.11 @ 3:21PM|#
      Well, if that’s really the case then it’s a better deal than I was thinking. Regardless of its negatives, it is still far and away better than our current system which discourages having an income (particularly for potential second-income households) and is used as a virtual slush fund to hand out favors.

      Plus the current system requires the IRS to monitor everyone’s bank accounts, investments, etc. It’s the biggest of big brothers.

      reply to this
      slutmonkey|5.16.11 @ 3:30PM|#
      That’s only true when all participants in the supply chain are corporations…

      reply to this
      Realist|5.16.11 @ 3:56PM|#
      “The thing I like most about it is that it gets the Federal gov’t out of monitoring income.”
      Sure thing! What would happen is the federal government would monitor both income and purchases.

      reply to this
      SIV|5.16.11 @ 12:23PM|#
      Cain is proposing changes to the existing tax code as part of his “platform” that do not assume a National sales tax. I think he is fully aware the “FairTax” has no chance in Hell of ever passing (thank God). There is a rabid constituency for the FairTax and signaling support leads to campaign contributions and votes. Huck benefited from this last cycle.

      reply to this
      Old Soldier|5.16.11 @ 12:24PM|#
      I think a real flat income tax would be preferable – say 10% with a $5k per person deductible.

      But the Fair Tax – if implemented correctly with a total repeal of all income, capital gains, and taxes on savings – is better than the current crap we deal with.

      I’ll believe it when I see it.

      reply to this
      Taoist|5.16.11 @ 1:42PM|#
      About the only reason I’m for the FairTax over the flat tax is that I would like to see government stop keeping tabs on every dollar everyone spends. Simple consumption taxes end up not only being less intrusive, but easier (cheaper and more efficient) to enforce, since government only has to monitor the sales of businesses – which are relatively sparse compared to the number of individuals with incomes. In addition, so much retail happens at the big chains, that if we only had compliance from the biggest 10% of retailers, we’d still have some huge majority of the tax enforced properly.

      reply to this
      lurker|5.16.11 @ 2:38PM|#
      Taoist said:
      In addition, so much retail happens at the big chains, that if we only had compliance from the biggest 10% of retailers, we’d still have some huge majority of the tax enforced properly.

      Of course, if only the biggest 10% of retailers complied, I don’t think that we would continue to see a huge majority of retail at the big chains – will Walmart continue to be competitive with the little guys if they have a 23% tax burden that the smaller retailers do not?

      reply to this
      Realist|5.16.11 @ 4:00PM|#
      The only good government, is a damn near dead government!

      reply to this CE|5.16.11 @ 3:54PM|#
      I think a real flat income tax would be preferable – say 10% with a $5k per person deductible.

      I prefer a flat rate of zero percent, with no deductibles and no exemptions.

      reply to this
      Realist|5.16.11 @ 3:59PM|#
      Old Soldier is so right!

      reply to this
      BRM|5.16.11 @ 12:28PM|#
      If everyone has to pay the tax, the impact on 2 income families who tend to eat out more and use services more would be greater than on a 1 income family.
      That’s easy don’t eat out more.

      1. What the hell is that???

        1. Realist is IT challenged

      2. many of your examples, especially around the math, are incorrect. The 23% is an embedded tax. So yes, would be 123, not 130. additionally, what is missing from this article are 2 VERY important points.
        1) you don’t pay income tax from payroll – so bigger paycheck
        2) you already have embedded taxes (like the VAT) which at every level of industry taxes – hence even before you purchase with your taxes paycheck dollars you are purchasing and paying for 3 costs: IRS overhead, compliance costs, and multiple levels of taxes. All of which would be absent. The system would be more efficient with the same amount of revenue coming in but with a sheerness of transparency missing in current tax code which there is actually not a single person who has read it all (since it is 10s of thousands of pages now).

  7. family consumption allowance

    This makes the “Fair Tax” a nightmare, IMO. The national government is going to mail every single adult in the US a check each month/year? Yeah, THAT will decrease the power concentrated in DC.

    1. I suppose, but the fact is that we’re almost to that point already.

    2. Everyone with a Social security number….think about that for a bit and the impact on illegal immigration.

  8. I’m afraid you drastically misunderstand at least two very key points about the Fairtax, which seem to greatly color your entire opinion of it.

    1: Embedded corporate taxes already raise the price of goods in America by close to 23%. One of the main points of economic analysis of the FairTax has been to determine what would happen to the price of goods – and analysis has consistently shown that they would remain the same. Greatly inefficient corporate taxes would disappear, but a new sales tax would come in, so prices are roughly a wash. That means no greatly discouraged retail consumption, as you fear.

    2. There’s no “loophole” making secondary markets tax free. Secondary markets are deliberately tax free, because it’s wrong to tax something twice. Only new goods and services are taxed, and only at the retail level – deliberately. If that makes Americans better at recycling and reuse, what’s wrong with that?

    1. My issue with the Fair Tax, even as you’ve correctly noted Taoist is that it creates a large incentive for an underground economy. Even now people can skirt paying the sales tax when they deal with small businesses, and that tax is relatively small (5-10%). You put in a national sales tax of 23% and that’s a huge incentive to run underground. The only retail companies that would be consistently paying it are going to be the large retailers who don’t have that disincentive, and I don’t know they make up enough of the sales in the country to hide the impact.

      1. So, secondary markets are deliberately untaxed: It’s wrong to apply a tax to something more than once, so everything only gets taxed at the retail level, only when it’s new. So the only “black” market would be for retailers of new goods, who want to cook their books.

        But here’s the thing: So many of our goods are sold by the big chains – and they would want to stay compliant, as they would have the most scrutiny – that the majority of our economy would be compliant with the tax code with government only having to audit a relative few bodies. Rather than trying to monitor the income of every single individual – for a relatively small amount of tax collected – government would only have to monitor a relative few corporations, for quite a huge amount of tax collected.

        Heck, you could probably list the top 100 retailers in the country, and if you kept them honest you’d have higher compliance for the total economy than our current tax code.

      2. You say that as if it were a bad thing.

      3. Here’s the difference though, which is easier, to police only the retailers, or to police EVERY PERSON IN AMERICA who made an income. Fraud is already rampant, and we are trying to combat it with an IRS budget of $10 Billion/year. The underground market is a non-issue. It is so much easier to police sales tax fraud than income tax fraud. Now think of all the people who have been cheating on the taxes for years who are going to actually pay into the system because they need milk and groceries.

  9. I’m no friend of VATs, but your description of how they work leaves out the important fact that each step in the chain of production pays tax only on the value they add. E.g., the miller pays only 10% (or whatever) on the price they sell minus the price they paid.

    The concern with VATs is not so much that they make prices higher than sales taxes, but that they involve more compliance work and can be raised to higher rates.

    What you describe (taxes upon taxes at each level of production, known as “pyramiding”) is a gross receipts tax, which exist in a few states and had been adopted by some European countries before they switched to the less distortive VAT.

    1. Looks like you bought the bait of calling the Fairtax a VAT. It aint

      1. Looks like you think a VAT (Value Added Tax) is a Gross Receipts Tax, it isn’t.

  10. Hmm, I seem to have lost my precious attempt at a comment. Here goes again:

    Unfortunately, you seem to misunderstand at least two key issues of the FairTax, and that seems to color your analysis of it by quite a bit:

    1. The FairTax replaces all other forms of taxation at the National level – which includes a great deal of corporate taxes, which are monstrously inefficient. These taxes represent about 20-30% of the cost of goods that you buy. Since the FairTax is eliminating those, but imposing a straight, retail level sales tax, prices of goods should remain roughly the same – hence no greatly discouraged retail consumption as you fear. Quite a few economic studies have been done to prove this point as best as possible.

    2. There’s no “loophole” on page 21 that would stop taxation on secondary markets. Secondary markets are deliberately excluded from the FairTax – because it’s wrong to tax something twice. Only new goods and services, only sold at the retail level, are taxed. If you think this would greatly encourage Americans to be more efficient with reuse and recycling, what’s wrong with that. If it brings about an economic resurgence in flea markets and thrift stores, again, wouldn’t that be a good thing?

  11. Probably the main two issues with the FairTax are valid points which you address:

    1. It’s very politically difficult to pass.

    2. If we pass it but don’t repeal the 16th Amendment, we could get stuck with both forms of taxation.

    1. #2 is my major problem with this.

    2. #1 is true because #2 is true.

      1. I should have said #1 is true because #2 is likely.

        1. Well, one of the ideas is to have a sunset provision: Pass the FairTax without repealing the 16th amendment (only repeal all other existing tax laws), but have an “expiration date”. If new forms of taxation pop up or the 16th amendment isn’t repealed X years down the road, revert to the previous tax laws.

          I don’t know, when it gets down to this level, any tax bill is only as good as the politicians enacting and upholding it…

          1. Right, because bills that sunset never get renewed (see PATRIOT Act)

            1. I’m not in disagreement with you. As I said, when you get down to this level of the debate, it comes down to keeping the politicians honest. But that’s going to be an unfortunate truth to pretty much everything.

              There may be more risk in this area than other tax propositions. There’s also more reward.

    3. The author referenced the “escape” clause as if it was a submission to defeat. The “escape” clause insures there is no double taxation.

  12. @BRM: You’re greatly misunderstanding the Prebate. It’s not a situation where you only get it if you have income under a certain level. Half the point of the FairTax is to get government out of the business of monitoring people’s income. Everyone gets the prebate: The poor guy earning subsistence wages, all the way to his millionaire boss. Everyone gets a check which provides their household, based solely on the number of people, an amount of money such that if they’re living at a poverty level they’ll be refunded the amount of money that they would be spending on food, clothing, and shelter. If they spend more money than that – well, that’s not pre-refunded, and that’s what’s actually being collected for the FairTax

    1. Why not just exclude food, clothing and shelter in the first place and not waste a bunch of money mailing everybody checks?

      1. Mainly to keep the tax simple. If they started writing exceptions for this good, that good, and all the rest, the FairTax would look like the current tax code. The idea is: All goods and services get taxed exactly once (when they meet the end consumer), and all U.S. Citizens receive a prebate. No special exceptions, no special cases, no loopholes for this, that, or Murtha’s Airport.

      2. Higher enforcement costs. More oversight. Does it cost more to mail checks or hire people to decide whether jelly bracelets are tax-free clothing or taxable accessories. This is how the tax code got so arcane in the first place.

        1. It doesn’t need to be complicated, just write the law liberally so that everything that could possibly be considered food or clothing is exempt. It means less taxes for everybody. We have sales tax holidays here in Texas, it would just be one for all the time. Wouldn’t need enforcement if the scope was broad and if people found ways around it then more power to them, I’m not going to begrudge someone for avoiding paying taxes.

          1. Why not just tax income straight up as I suggested in my original post? Everyone gets a clear idea of what they owe and since everyone who makes enough to pay taxes, pays the same rate, the rich will pay more than the poor (sop for the liberals) and the 49% of the population that currently pays no taxes will have to step up in a way that is counted by the rest of us. FICA doesn’t seem to count like income tax (though it should).

          2. I am, it means they have to hike the rate on the rest of us to make up the difference. Anyway, it is better for people to prioritize their expenses using prises which don’t favor certain kinds of expenses. Distorting these priorities leads to people making purchases that aren’t the best value for money in terms of actual cost of production.

      3. You may self exclude by buying used items and growing your own food. Then you would have the benefit of the “prebate” to spend as you wish.

  13. Cavanaugh writes:

    “Fair Tax proponents would get rid of the income tax and replace it with another tax that rings in at 23 percent of retail value”

    That’s not correct. They would replace the income tax with another tax that rings in at 30% of retail value.

    The 23% figure is a piece of legerdemain — it’s the tax as a percentage of retail value PLUS the tax. One of many lies the Fair Taxers have come up with to make their turkey of an idea look not quite as stupid and evil as it is.

    Speaking of legerdemain, the “prebate” is even worse in that regard. A “rebate” is a refund of monies paid. The “prebate” is sold as an “advance rebate” of monies to be paid — but it isn’t.

    You get it if you paid more in taxes than it’s purportedly a “rebate” for. You get it if you paid less in taxes that int’s purportedly a rebate for. You get it if you pay no taxes at all.

    To put it a different way, the “prebate” is simply a new federal welfare program under which every man, woman and child in the US gets a monthly check from Uncle Sugar.

    And of course, once those checks start coming, most recipients will acquiesce in anything advertised as necessary to keep them coming.

    1. The 23-30% is such an old, tired argument by FairTax opponents, who are nearly always just seeking to sink the idea outright, without really discussing it. Do I have to rehash it again? It’s 23% if you compare it to the income tax it’s primarily replacing – which is ~30% as an inclusively measured percentage. If you compare it using an exclusive measurement, admittedly more typical of sales taxes, it’s 30% – but then we should be quoting the income tax as 50%. So go ahead and call it 30%, but then point out the income tax as 50%, or you’re just being a hack.

      And yes, the prebate is given regardless of your income situation or how much you actually spend. Americans want a tax code that’s progressive. Well, try and find some other way to make things progressive while 1. Keeping the tax code relatively simple (i.e. no exceptions for this, exceptions for that) 2. Stop the intrusive monitoring and auditing of Americans’ income day by day 3. Keeping your tax code fair. ALL U.S. Citizens would get the prebate – every single one. If they manage to be thrifty and not spend as much on basic living expenses, and so they get to pocket some of the money, then fine. Why don’t you try and do the same? If they spend more, as most Americans will, then they’ve paid into the tax system more than they got back for the month. It’s fair, it’s non-intrusive, and it’s progressive. Maybe it shouldn’t be progressive and the entire idea should be kicked out the door – but try selling that to the voters.

      1. Taoist,

        I trust the readers to decide calling a tax that makes a $1 item into a $1.30 item a “23% tax” or a “30% tax” is more honest.

        You write: “yes, the prebate is given regardless of your income situation or how much you actually spend.”

        In other words it is not a rebate, advance or otherwise. If you want to argue that a universal federal welfare program is good, that’s fine — but call it what it is instead of disguising it as a “[p]rebate.”

        Let’s look at the other arguments you present:

        1) “Keeping the tax code relatively simple (i.e. no exceptions for this, exceptions for that)”

        Yeah. Right. It already includes an exception for used goods. How long before it includes every other exception already in in the income tax code, and some to boot?

        2) “Stop the intrusive monitoring and auditing of Americans’ income day by day”

        Let’s see: The first thing the Fair Tax does in bring 50 new IRSes into existence to collect the tax at the state level. And no, the original IRS won’t go away — who’s going to administer the “prebate?” Who’s going to investigate “prebate” fraud and interstate evasion of the tax?

        By the time it’s over, the new IRS(es) will be further up your ass than the old one was. They won’t just be looking at your paycheck once a week, they’ll be monitoring every transaction they can detect.

        3) “Keeping your tax code fair.”

        How is it “fair” to force someone who has no desire to own a navy, a fence along the Rio Grande, or a wool and mohair subsidy to pay for those things?

        1. First off, I’m sorry that you don’t understand basic accounting principles that would help you make comparative analysis, maybe if more people did, we wouldn’t be in the financial mess that we are in as a country.

          1) Because used goods aren’t taxed, you are now equating that there will be many exemptions. If the principle of the fair tax is to only tax goods once (when it originally arrives to the consumer), not taxing used goods isn’t an exemption, it is the driving principle behind the fair tax.

          2) Almost every state already has a state sales tax that gather taxes collected by retailers. Tax collection efforts would fall to these existing state tax agencies. The prebate would require an organization to send out the checks, but saying this would require an organization larger than the current IRS is beyond laughable.

          3) So you are essentially saying that any tax is not fair. Okay, I’ll let you run off with your anarchist friends now.

        2. You muddy the water because you want to keep the current system. I’ll bet you are a tax compliance industry leech.

          1. Charlie,

            You write:

            “You muddy the water because you want to keep the current system. I’ll bet you are a tax compliance industry leech.”

            How much money do you want to lose? Each and every claim you make above is 180 degrees ass-backward.

            I do not muddy the water — I simply state the facts.

            I do not want to keep the current system.

            I do not work in the tax compliance industry, nor offhand can I think of any close friends or relatives who work in that industry.

    2. Yeah this isn’t a lie. Its just a spin because most people are really bad at math. They’d assume that the 32 percent (actually) would be tacked on to the end of current prices.

      People would also assume their take home is the same (when it would actually go up because no income tax).

      These poor assumptions make it very difficult to kill off any government program and enact reform. It is also the reason why the Fair Tax supporters say 23 percent which is the estimate of the tax as a portion of the total price you’d pay.

  14. I’m 100% for the Fair Tax in most limpwrisred milqetoast way possible. If you gave me a magic button to press that implemented the Fair Tax the right way*, I’d press it in a second. And I predict both a net personal gain and net Social Gain(TM). But we can’t even get rid of the fucking designated hitter or the Deparment of fucking Education, or the regressive income tax(FICA). Who are we kidding?

    *right way :repeal the 16th ammendment. Have “prebates”. all that jazz. your mileage may vary.

  15. The fact of the matter is that we need the current IRS, and need to add a FairTax AND a VAT on top of it. Polls show that everybody wants UNLIMITED government, and they are willing to pay for it. Now, if you’ll excuse me, Tony and I have are off to blow the entire DNC leadership!

  16. A national sales tax and a VAT are not the same thing.

    1. This….it disappoints me that Cavanaugh can’t be bothered to discover the difference.

    2. They are different only in terms of the enforcement mechanism, it is a gross receipts tax that is truly different and I am disappointed that people don’t get that.

  17. Second hand black market would explode under Fair tax. Why would I EVER buy something new when I can get it used from an individual under the table? I would be scared about ways they would try to fix that. I don’t know enough about the Fair Tax.

    Flat seems much simpler. Like others above mentioned, the Fair would wind up being a VAT.

    1. There wouldn’t be a “black” second hand market. There’s no taxation on secondary consumption, because the item has already been taxed once. No double taxation! If Americans become a thrifty, more efficient society for many types of goods, or if second hand trading becomes a great economic engine, what’s wrong with that?

      1. Because if those things happen, and gov’t starts taking in less and less of the fair tax, then they’ll start bitching about not having enough money again, and find some new way to tax us.

        It’s like the gas tax and hybrid problem; they’re now trying to find ways to tax hybrids, because after encouraging everyone to become “fuel efficient” and raising fuel economy standards on vehicle fleets, suddenly they’re not taking in as much money for road maint. as they were before. If a robust thrift / secondary market comes into being, and Americans before more proficient at reducing / reusing in order to avoid the tax, then I can see the same thing happening.

      2. “There wouldn’t be a ‘black’ second hand market. There’s no taxation on secondary consumption”

        Which is precisely why there WOULD be a “black” second hand market.

        I buy new computers wholesale in Tennessee [wholesale = no tax].

        I pull out my stack of “make this computer look used” CDs and turn them into “used” computers.

        I ship them to Missouri, where I sell them “used” for 30% less than Best Buy can afford to.

        Jeans? Buy in bulk new wholesale, pull the plastic wrap off, run them through industrial washers 100 pairs at a time, ship them across the state line, sell them “used” for 30% cheaper than “new,” because they’re “used.” Wink, wink, nudge, nudge.

        The only stuff this wouldn’t apply to would be heavily monitored stuff like automobiles. Not that that would matter, since the 30% price differential would finally put Detroit in the grave, never to return, within a few months.

        1. To get those computers wholesale you would need a resale license. Then the state sales tax commision in Missouri would send your state a notice showing that a registered wholesaler sold you a ton of computers with no sales tax. Your sales tax commission would then see that you haven’t filed any sales taxes for the year. They would show up at your door and ask to see all those computers in your warehouse waiting to be sold. You don’t have them anymore, and then you go to jail.

        2. The penalty for no compliance would fall on the seller. How many sellers are going to risk a 30% haircut? Certainly not one of your former clients when you have to close up your tax compliance shop.

      3. There wouldn’t be a “black” second hand market. There’s no taxation on secondary consumption, because the item has already been taxed once

        Sounds good but ultimately meaningless.

        What’s to stop a “mass consumer” let’s call him beast buy from buying at a discounted wholesale price, paying the sales tax at that discounted price and then reselling with the normal markup sans fair tax?

        You’ve just cut your tax receipts in half, or even less.

        Oh, but will make rules to prevent that…

        Which ultimately gets you right back where we are today, with revenue agents sticking their nose in places it don’t belong.

    2. Why is a VAT necessarily worse than a retail sales tax? It’s easier to implement because there’s no need to come up with complex definitions for the word “retail.”

      1. It isn’t, people are confusing it with a gross receipts tax, which is worse because it distorts the market.

        Basically a gross receipts tax favors vertical integration because it is charged on every business to business transaction. It also favors some industries over others for the same reason, leading to a mis-allocation of resources.

        1. It isn’t, people are confusing it with a gross receipts tax, which is worse because it distorts the market.

          I’ve see both of these criticisms wrt gross receipts taxes but neither withstands scrutiny.

          Basically a gross receipts tax favors vertical integration because it is charged on every business to business transaction.

          Vertical integration is not in and of itself a market distortion. It may be a socially undesirable result, which if true, could be dealt with by exempting the first x amount of income. This would advantage small businesses below whatever threshold was established, vis a vis large vertically integrated businesses.

          It also favors some industries over others for the same reason, leading to a mis-allocation of resources.

          This statement is trued but meaningless, because it applies to every form of taxation.

        2. It isn’t, people are confusing it with a gross receipts tax, which is worse because it distorts the market.

          I’ve see both of these criticisms wrt gross receipts taxes but neither withstands scrutiny.

          Basically a gross receipts tax favors vertical integration because it is charged on every business to business transaction.

          Vertical integration is not in and of itself a market distortion. It may be a socially undesirable result, which if true, could be dealt with by exempting the first x amount of income. This would advantage small businesses below whatever threshold was established, vis a vis large vertically integrated businesses.

          It also favors some industries over others for the same reason, leading to a mis-allocation of resources.

          This statement is trued but meaningless, because it applies to every form of taxation.

  18. What is politically easier to do:

    Repeal the 16th and replace it with a sales tax law (FairTax Law).
    OR
    Repeal the 16th and replace it with nothing (TimCav Law).

    The biggest benefit is that it repeals the 16th amendment. Once that is done, the law can be tweaked (to eventual removal, if need be). Baby steps.

    1. When it comes to taxes, the baby steps may be in the right direction, but the big steps are always in the wrong direction. Go look up where the personal income tax and FICA tax rates started at.

  19. After reading this article about the Fair Tax, I can’t even recognize what has been explained at length in the several books written about it. Then to completely leave out the Fair Taxes ability to tax the criminal market (think drug dealers, etc.) wasn’t even mentioned. Then to state that the Fair Tax would create a huge, complicated bureaucracy with the prebate ignores that not so little agency called the IRS. I would gladly take a 131 page bill over the 76,000+ pages of the current federal tax code that no one understands.

    And to NAL, since the tax is inclusive, 23/77 is the wrong way to do the math, that would be figuring the tax after the fact. Inclusive means 23% of $100 is in fact $23, very easy, my home schooled second grader can figure it out.

    1. I agree Mike. Sad to say, but this article proposes a lot of hypotheticals that wouldn’t be hypotheticals if one understood the bill. It’s a pretty simple system to understand.

      As far as the Flat Tax goes, that’s what we have now essentially. We were given a flat tax int he 80’s and since then it has been modified an average of 2 times for every time Congress has met since then.

      The VAT would be the worst thing we could pass.

      Also, the bill requires the repeal of the 16th Amendment. If the Amendment is not repealed within a 7 year period, the FairTax legislation is taken off the board and sent back to square one.

    2. It doesn’t tax the criminal market, a drug-dealer who doesn’t report his income under the income tax will not be reporting sales under the fair-tax either. And pointing out that the dealer is taxed when he spends the money on legitimate goods is akin to pointing out that the druggie paid tax when he legitimately earned the money he spent on drugs. Neither involves the illegal transaction, which remains untaxed either way.

  20. Tim disappoints me yet again. The beauty of the sales tax is it’s visibility. Until all Americans start understanding the true cost of government, we’ll never reign it in. And the difference in collection costs is so significant that it shouldn’t be mentioned as just an aside.

    1. Exactly.

      But a flat income tax with no deductions, no withholding would be best.

      Corporate taxes should be 1% of gross receipts, no exceptions.

      Put all the laid off lawyers and accountants to work in real jobs.

  21. the FairTax would be one hell of a load off of Amercans’ backs, but on the other hand it would be regressive in terms of actual lifestyle burden placed, and more money can indeed be gotten from an income tax

    Even if my preference of much lower federal expenditures were in place, maybe no social security, no medicare (some sort of voucher program instead), there’s still plenty of legitimate things that cost plenty of money; various forms of public works, even a gutted military, etc. All things that could be much more easily paid for with an income tax

  22. The beauty of the sales tax is it’s visibility. Until all Americans start understanding the true cost of government, we’ll never reign it in.

    This is my major beef with the VAT – it accumulates at levels that are invisible to voters and gets built into the price they pay.

    Taxes should be visible and broadly based, or we’ll never have a consituency for smaller government. People can see what they get from Big Gov, but they almost never see what it costs them.

    1. How is a value added tax not visible? A VAT of X% adds X% to the price of all goods and services, simple really. In Norway the VAT component of purchases are listed on the receipt. Payroll taxes and corporate income taxes are far less visible.

      1. From the article: “The VAT taxes sales at every level of production. In the language of “I, Pencil,” it taxes the sale of the tree to the miller, then taxes the sale of wood chips to the manufacturer, the sale of brass to the maker of the ferrule, and so on?resulting in a radically more expensive retail product that ultimately goes on sale (with tax) at Rite-Aid.”

        you only see the VAT that Rite-Aid adds, not all the other add-ons.

        And under the FairTax corporate income taxes and payroll taxes are included in that 23(30)%.

        1. The article is wrong on this, it explains a gross receipts tax not a value added tax.

          Take a 10% VAT for example:

          A value added tax taxes the sale of the three to the miller for $100 at 10% = $10. The miller pays $110 for the tree.

          Then it taxes the value added by the miller ($210 – $110 = $100) at 10% = $10 as the miller sells the wood chips. The miller charges $220 for the chips $20 of which is tax. That is still 10% $200 and is what is printed on my receipt.

          No matter how convulted the supply chain gets, a 10% VAT will always have built in 10% tax total at any given transaction, and that remains true at retail.

          1) It taxes each step at X% for the value it adds

          2) In total the value added is equal to the value of the final product.

          therefore

          3) In total it taxes for X% * the value of the final product.

          1. That’s not actually true because:

            1) Only items that are resold would have the previous stage VAT subtracted

            COGS: VAT exempt, but they are also not subject to income taxes

            Consumables used for production:
            Subject to VAT but exempt for income tax

            Capital goods: Subject to VAT but exempt from income tax

            The net result actually benefits retail and other consumer oriented businesses.

            If you try to exempt consumables and capital goods, you wind up with a modified income tax.

  23. This is like asking if I want a broom handle shoved up my ass or a fungo bat.

    Either way I’m getting violated with a long piece of wood.

    My only concern is which administration would cost less – the income tax police or the sales tax police. My gut tells me the income tax police will cost us less: if you install sales tax police you are going to see lots of business ratting out other businesses, something we have very little of with the income tax police.

    I expect I’ll see both in this country if I live another 35 years.

  24. The way I look at it is this: Do you want to be taxed on what you earn, or would you rather be taxed on what you spend (over the poverty limit)?

    If you want to reduce something tax it..so then why do we tax production? Do we not want to produce more, do we not want capital investments to be made and have returns on that capital?

    Also not only does the FairTax replace the income tax, it replaces all SSI and medicare (which if you factot in you cannot call our current tax system progressive).

    Now there are things that need to be tweaked (internet sales, locking the definition of the poverty line), but the cost of changeover is dwarfed by the current costs of compliance. (50 hours average for each individual tax return….)

    1. Why IS productivity taxed? Even with a flat tax, is that really “Fair”? Should I be required to contribute a PENNY more to “society” than someone who works 15 hours a week for minimum wage? I don’t know that taxing consumption is any better, but opponents who say they’d rather the current income tax code be simplified don’t address the question of why it is appropriate to tax productivity in the first place.

  25. The 23 percent rate for the “fair” tax was the number four years ago. Federal spending has gone up so much since then, the rate would now have to be 30 percent.

    Fortunately, the “fair” tax idea is going nowhere.

  26. Tim, I am deeply dissapointed in the shallow way you “examined” Fairtax.

    Fairtax is profoundly bogus, it is very much a literal farce. Someone of your “critical thinking skills” should have spotted this long ago.

    Fairtax is based not just on one absurdity, but layers of absurdity.

    All their absurdities are about math. For example, they have a massive tax on every city government in the US — every city. This bogus “revenue stream” is about 800 billion dollars. New York City government would owe 2.1 billion dollars, 1.1 billion of that, in ADVANCE.

    The numbers are staggering. All together, cities, counties and states would have to pay 800 billion dollars, 300 billion of that in ADVANCE.

    Why didn’t you know about this? Because it’s in their fine print and footnotes.

    Fairtax has been exposed over and over and over. I am not the first one to notice the BS.

    A 23% personal consumption tax, as Fairtax pretends to be, would not even collect 1 trillion dollars. To actually get enough money to be “revenue neutral” via a personal consumption tax,the Joint Committee on Taxation showed the rate would need to be a stunning 89%, not 23%.

    We are all accustomed to goofy numbers and claims re taxes. But this Fairtax farce is in a league of its own.

    1. No Mark, you are incorrect.

      You speak of “layers of absurdity” about the FairTax, yet our current tax code is what is absurd.

      Governments are not exempt for the tax. That is also “fair”, but you pretend that the governments would be taxed on all they spend. Wrong. Only when they purchase FairTax affected products. All pay to employees, all rent, all board meetings, all of it is not taxed. You act like the entire budget would be taxed – that is actually like the current income tax would be if applied to governments.

      Using info from the JCT is rather strange, considering their poor record for calculations over decades. Perhaps you should read some actual economists and think-tanks that are not politicizing this issue.

      I am very pleased with Taoist trying to educate the people about the FairTax. It has some problems (back in the beginning of this thread someone mentioned savings of some sort), but compared to our current code this is a great leap forward.

      And a final word to the detractors. You info comes from either corporate lobbyists (who won’t be needed to tinker with the tax code for their bosses anymore), professional tax experts (not accountants, many accountants don’t see the disappearance of the IRS a bad thing at all), or most importantly, POLITICIANS THEMSELVES.

      Yes, the FairTax would return SO very much power to the people as a whole. No long could congressmen and congresswomen tinker with the tax code for their local “donors”, so many politicians do not like this.

      The flood of new business to this country, our oversees competitive increase, the return of off-shore money, the taxation of the “black market” (drug dealers, prostitutes, etc.), I could go on and on. FairTax is a glorious replacement for the current system.

      Fewer than 200pages, or 30,000+? Chose.

      After saying all that – I think it will never happen. People don’t want to learn, they want to watch tv, relax, be with their families – Big government will probably win. Bon voyage American experiment!

      1. “Yes, the FairTax would return SO very much power to the people as a whole. No long could congressmen and congresswomen tinker with the tax code for their local “donors”, so many politicians do not like this.”

        The power would go to whoever decides what is taxed, and corporations would try every gyration to manipulate the rules. The corruption would not change. Only a flat tax removes the chance for chicanery.

  27. While I like the concept of the FairTax, I would not support it without at least three things:

    1) The IRS and income taxes are abolished, and that this is a legal certainty at or before the FairTax is approved.

    2) There are definitive limits on future increases in the FairTax Rate.

    and 3) That excise taxes (other than perhaps gasoline, which is actually used for road maintenance) are abolished as part of the plan – because there isn’t a damn thing fair about using excise taxes to punish behavior.

  28. Ron Paul and Gary Johnson are for the FairTax too (in Paul’s case he qualified his support with the caveat that all other federal taxes be repealed with it, which is part of the law). The problem the author of this article faces is that the federal gov’t has to raise revenue to pay for the wages and infrastructure of people who protect our rights. Dropping all federal taxes and replacing them with nothing is not an option that a rational person should argue. Mr. Cavnaough if you’re against the FairTax, then what alternative do you propose for collecting revenue? If your solution is anarchy, then you need to say that and then take the monumental task of trying to take down the argument for the minimal state as argued by Robert Nozick in Anarchy, State, and Utopia. Good luck in either coming up with a better revenue collection mechanism or taking on the father of modern philosophical Libertarianism. You’re going to need it…

  29. VAT and “Fair Tax” are both bad solutions, even if all other taxes are repealed. Beyond hiding the real rate behind ‘inclusive vs exclusive’ babble, look at the serious problems: 1) There is nothinh to prevent consumption manipulation by the government by simply passing a different rate for different products. This is more egregious than the current system which just gives the tax break to producers. 2) Encourages black markets between producers and consumers. 3) Does nothing to eliminate the scourge of tax accountants, attorneys, and IRS (now renamed) agents.

    I would far prefer a single income tax rate with no deductions from income except FICA and which began at a certain reasonable rate, say 20K which is just over minimum wage. I favor FICA as the sole deduction as collecting the tax on the back end w(ie, when getting Soc. Sec. benefits) is more favorable to the young and also eliminates the double taxation.

    1. Mike,

      Your argument is easily toppled. 1) The FairTax mandates that all new products and services are taxed at the same rate. Your preferred system taxes people at different rates with a salary base start point. They start the manipulation of people at the startup to that program of taxation. 2) Countless people are already on the black market from the income tax. How much income tax do people who get paid under the table pay? Odds are you at least know of a dozen people who get paid under the table. They’re in the black market from the income tax right now. 3) Of course it does. Those guys are employed by businesses now to pass business taxes down to the consumer. Without business taxes after the FairTax is passed, they get dumped. And as for IRS agents, how many people are there in the country who are supposed to pay income taxes? How many businesses who sell new products or services? Take the prop of the latter over the prop of the former, multiply that fraction by the current number of IRS agents and you get a huge (probably 80-90% reduction) in the number of agents. It’s nice and all to make up stuff off the top of your head to tear down a system, but how about we stick to reality instead?

    2. : 1) There is nothinh to prevent consumption manipulation by the government by simply passing a different rate for different products.

      This is already the case now with state and local sales taxes.

      In addition, this is a method that can be employed to make a sales tax less regressive, and therefore more attractive to those inclined to argue against it.

      Which is really, really strange because almost every jurisdiction in the country already has a sales tax, and I hear very little from our progressive friends demanding repealing them because of their regressiveness.

    3. 2) Encourages black markets between producers and consumers. 3) Does nothing to eliminate the scourge of tax accountants, attorneys, and IRS (now renamed) agents.

      2: It’s not as if a concept of a sales tax is a completely untried concept. Sales taxes exist almost everywhere now. There’s hardly a vibrant black market avoiding sales taxes. What, Safeway is going to start selling goods on the sly to avoid passing a sales tax to the consumer?

      3: it does greatly mitigate the scourge of tax accountants and IRS agents, because the tax collection is largely done by the retailer. There aren’t masses of IRS agents to deal with existing sales taxes now.
      The existing structures would remain in place, and we could eliminate the entire immoral income tax structure which has IRS agents digging into every American’s personal life and relationships.

  30. Here is one reason why the Fair Tax will probably never be adopted…Not one person in this thread that has criticized it actually understands it. Stop parroting what the ignorant demagogues are saying about it and read up on it, THEN try to shoot holes in it. I’ve been trying to for a year now and haven’t come up with any major problems. It isn’t perfect, but so far looks vastly superior to what we have now.

    1. I’ve read the FAQs at fairtax.org multiple times.

      I’ve read the book by Boortz and Linder once.

      No amount of window-dressing will make the Fair Tax into anything but what it actually is: An economy-killing welfare-state nightmare that makes the New Deal look like small beans.

      1. “Welfare state”? Are you serious? “Economy killing”? Thanks for proving his point. Your other posts in this thread are laughable as well, especially your black market boogeyman. You don’t understand it OR you’re just lying.

        1. “‘Welfare state’? Are you serious?”

          Do you have a better term to describe a monthly government check, unconditioned upon past or future payment of tax, to every man, woman and child in the United States?

          “‘Economy killing’?”

          Absolutely. Even if the tax works as advertised — highly unlikely — there will be a “washout period” during which virtually no new high-ticket goods will be produced because there are plenty of used ones.

          You’re also missing the fact that every retiree who paid taxes on his Roth IRA funds, etc., will now be taxed an ADDITIONAL 30% as soon as he decides to actually spend the money.

          The FairTaxers make Stalin and Mao look like sound economists.

          1. This is way over the top.

            We have SALES TAXES NOW. While no system of taxation is perfect or immune to social engineering, it’s certainly much more preferable to an IRS agent knowing where I work, how much I make, and what gifts my parents might have given me this year. Something that’s none of the government’s business.

          2. Thomas, you are missing a few things here:

            1. The prebate goes to each household, not individual (and not children). And the IRS is already returning money to 74% of taxpayers – It can be done. And most will choose direct electronic deposit. Considering it applies only to earnings below the poverty line, it isn’t near enough to be considered “welfare state”. And the poor will CERTAINLY be spending money on food, shelter, clothing.

            2. You forget that the price of retail goods should come down, because of embedded taxes and market pressure, and the price of used goods will go up, as there will be some increase in demand. Also, people LIKE new stuff – and will have more in their pockets to spend with no income & payroll tax. I know a home-builder with an economics degree who would love to have the Fair Tax. Says it will be good for him – immediately – as used home prices will rise to meet him.

            3. This is a straw man. Again, the retail prices will not be much higher at all.

            I have some questions about the Fair Tax but I’m past the ones you present. I wonder about implementation and costs. Who pays collection costs? The states? They won’t like that.

            1. Marko,

              You write:

              “The prebate goes to each household, not individual (and not children). And the IRS is already returning money to 74% of taxpayers – It can be done.”

              But the “prebate” isn’t “returning money to taxpayers.” It is not conditioned upon either prior or future payment of tax. It’s just a check from the government. If you have a pulse, your household gets it. That’s not a tax rebate, that’s a welfare program.

              “You forget that the price of retail goods should come down”

              No, I don’t — but “coming down” is a process.

              There will be a time period during which goods that were produced under the old tax regime are trying to clear the market under the new tax regime.

              The price of those new goods will immediately jump by 30%, before crawling down. The price of used goods will climb as well, but not instantly by 30%.

              New homes and cars are going to get a lot less popular and used homes and cars a lot more popular, for awhile. Businesses that are marginal right now are going to go under. Workers in those businesses are going to be sent home.

              On #3, you’re missing the point. No, it’s not a strawman. Here’s the simple fact:

              I earn $1000. After paying 28% income tax on it (assuming my earnings are in that bracket), I put it in a Roth IRA, which is supposed to be non-taxable upon withdrawal. I’ve got $720 drawing interest or earning in a fund or whatever.

              Income tax goes away. Fair Tax comes in. I withdraw my $720 + interest, which is supposed to non-taxable now. Except that the income tax that I paid has now been replaced by a 30% sales tax that I have to pay if I actually use the money.

              I suppose this could be remediated by the issuance of a non-Fair-Taxable currency — Rothbucks or whatever — but that gets us right back into the complications that the Fair Tax (falsely) claims to get rid of.

    2. This is doubly true of the VAT, which contrary to popular belief is not a gross receipts tax.

  31. this piece disappoints me. it’s hard to give the writer’s opinion any credibility if he can’t even grasp the prebate concept.

    1. I absolutely agree. The prebate is not welfare or anything like it. Given that people pay FairTax on things they have to buy, like food, shelter, and clothing, they should get that back. The prebate is meant to refund what must be bought to maintain our right to live that we would have paid to the government. How is this difficult to understand?

      1. The worry is that leftists will find it hard to understand, start complaining that a government check worth 23% of poverty line income is too little to live on, and raise the ‘prebate’ to ‘a living wage’.

  32. Every means of raising revenue is wrong on the simple grounds that government has no authority to coerce anyone.

    That being said, if the government wants to spend money then the best way to do it is to abolish all taxes and simply print cash. Would that cause inflation? In practice, yes. But in principle it doesn’t have to. If the government prints money and gives it to someone for doing something useful (definitions of useful will obviously vary), then the resulting devaluation of the dollar due to inflation would be precisely equal to the population’s loss of buying power due to an equivalent tax.

    Inflation would arise if the government spent printed money on insufficiently valuable services. Government has proven time and again that it will do this, but the resulting inflation would be no worse than the problems caused by our existing system of government financing.

    Printing money has the advantage of requiring absolutely no enforcement. One could argue that the use of dollars would need to be required, but I think it’s unlikely that many people would switch to an alternate currency. And the pressure caused by such a threat would encourage government to keep printing to a minimum.

    1. Very interesting proposal, but a colossally bad idea.

      You are right that taxes would be in the form of inflation, and inflation would occur whether or not what was purchased was of sufficient utility or value. That is because of the multiplier effect. When $1 is put into the economy it enters the banking system where it is loaned out to others who spend it after which it goes back in the bank to be loaned again, etc, etc. All these people still have $1 in the bank, but its the same $1, loaned and loaned again. In the end it actually increases the money supply by more like $10.

      So the resulting inflation is actually in effect a tax on savings and investment. It would have the same effect as eliminating all taxes and establishing an annual wealth tax, which would be devastating on savings and investment and destroy the economy.

      1. You’re right that it would be an effective tax on wealth. I’ll have to think a little longer before I can remark on whether it would be “devastating.”

        However, if no one is forced to use the dollar then it can’t possibly be a bad thing. It would be essentially a free market where the use of the dollar is dependent upon the government providing services of value. If too much money was being printed then people would abandon the dollar in favor of a less inflationary currency, and the government would be forced to print fewer dollars.

        I’m not saying it will work. People might decide to flee the dollar well before the government starts printing what it thinks is sufficient cash. But a simple analysis leads me to believe that it introduces no problems that are absent in any system of taxation.

        1. It would first be a wealth tax, but only on solid currency, and on bank-account balances at the ratio of currency reserves of the bank in question. Equities would be exempt, and bonds would adjust for inflation to return the same real interest as before.

          People would simply avoid holding cash/bank account balances. They would sell off the dollars they did hold at ever lower prices to get rid of them, and the dollar would collapse through hyperinflation as people abandoned it.

          This has been tried before, it is the last resort of tinpot dictators, and it always results in the inflationary collapse of the currency in question. See Zimbabwe for the latest example.

  33. The people criticizing the Fair Tax are making the good the enemy of the perfect. Sure I would like the federal government shrunk back to the point where it could be funded entirely with excise taxes on beer and cigarettes, but that ain’t gonna happen. Hopefully over time we can get closer, but it will take generations. In the meantime, we need to collect a large amount of taxes to fund the federal government and the question is: What is the best way to do so that would have the smallest negative effects on the economy?

    A national sales tax is clearly a better answer than income tax.

    But in order to implement it, there must be a Constitutional Amendment that would phase in the sales tax and phase out the income tax over the course of say 5 years and then prohibit income tax thereafter. There could be a provision within the amendment that allowed it to be repealed by like a 3/4 vote of Congress withing the first 10 years in case somehow the plan blows up and turns out not to work.

    Anything short of this and we will end up paying both.

    Why is a sales tax better? Let me count the ways.
    1) Taxes are semi-voluntary.
    You get a prebate on $30,000 worth of consumption which is basically the minimum needed to live. Anything you consume over and above that is your choice, so if you choose to live like a pauper, you can pay no tax.

    2) The prebate is no worse from a redistribution perspective than the current Earned Income Credit.
    Almost everyone, even the unemployed and poor, will consume this amount every year, whether it is from earnings, savings, borrowings, foodstamps, unemployment or a rich uncle. But lets take an extreme example of a homeless guy that gets by on begging revenue. Even he will probably spend $15k per year of begging money, food stamps, etc on food and liquor. So the subsidy he is receiving is only 23% of $15k (prebate on $30k minus the $15k he actually spent) or about $3k per year.

    3) Eliminate the IRS. Who doesn’t love that?

    4) Eliminate tax on productive wealth.
    Only what you spend is taxed.

    5) Its more fair.
    Think about it. Everyone earns, borrows, spends and saves or some combination of the above. When should we take a tax? Currently it is on earning. But when do we actually benefit from our money? Only when we spend it. I could have $1B in the bank, or earn $1M at my job but I derive no benefit from it until I spend it. If I am a billionaire but live frugally I am not deriving any benefit from my billions. I am not taking anything out of the economy for my own pleasure. Why should I be taxed on those billions? Those billions are being invested to create jobs for thousands and thousands of people, why would we want to diminish that? If I later sell my investments and decide to live lavishly with yachts, planes and mansions, tax me then, I am consuming.

    Conversely I could be a beneficiary of a large estate left by my parents, but I don’t work. My assets are invested in tax shelters and tax exempt investments. I live the life of a playboy, consuming to my hearts content. Under the current system, I am not taxed federally.

    Who should pay more taxes, the trust fund playboy or the frugal billionaire producer?

    1. +100

    2. What if I run across to Canada to shop? The sales tax will re-populate Detroit and Buffalo.

      1. Then you would be paying the Canadian VAT and all of the corporate taxes and employee taxes that are included in the price of the purchase.

      2. True

  34. Tim, I think you’re being a little more harsh on this law than needs to be.

    First, the prebate is simply to add a bit of “progressive taxation” to the plan. Honestly, this is the only way to get anyone left-of-center on board (you can point this out then point out that people left-of-center aren’t on board, that would be fair). Would it be better to not have this? I think yeah but this is still better than a progressive income tax.

    Next, I don’t think the Fair Tax prebate can be described as promoting poverty. That achievement already goes to our current welfare system. In fact, this prebage concept should be the method of welfare if we’re going run any sort of welfare program.

    Finally, the 23 percent rate is high but only because our taxes are already very high.

  35. FairTaxers are fucking FAGS !

    1. Wow. This whole thread did so well arguing differing sides of this issue and you finally remind us we live in the land where political commentary just HAS to be taken from a realm of rationality, to a realm of a drunken sports fan.

      Great job!! You should work for FNC or MSNBC!!

  36. I am very pleased with Taoist trying to educate the people about the FairTax. It has some problems (back in the beginning of this thread someone mentioned savings of some sort), but compared to our current code this is a great leap forward.

    And a final word to the detractors. You info comes from either corporate lobbyists (who won’t be needed to tinker with the tax code for their bosses anymore), professional tax experts (not accountants, many accountants don’t see the disappearance of the IRS a bad thing at all), or most importantly, POLITICIANS THEMSELVES.

    Yes, the FairTax would return SO very much power to the people as a whole. No long could congressmen and congresswomen tinker with the tax code for their local “donors”, so many politicians do not like this.

    The flood of new business to this country, our oversees competitive increase, the return of off-shore money, the taxation of the “black market” (drug dealers, prostitutes, etc.), I could go on and on. FairTax is a glorious replacement for the current system.

    Fewer than 200pages, or 30,000+? Chose.

    After saying all that – I think it will never happen. People don’t want to learn, they want to watch tv, relax, be with their families – Big government will probably win. Bon voyage American experiment!

    1. +1

      But we have 60,000+ pages of tax code now, not 30,000

    2. “And a final word to the detractors. You info comes from …”

      My info comes from the Boortz/Linder book and FairTax.org.

      If you think the lobbyists wouldn’t ask for — and get — exemptions from the Fair Tax, you need to put down the crack pipe. It already includes one major exemption, why do you think others wouldn’t be gamed quickly?

      1. I assume the exemption you are referring to is the sale of used goods? Ofcourse, if the principle of the fair tax is to only tax goods once (when they are retailed to consumers), then this isn’t an exemption is it? This is the rule.

  37. The conceptual problem with taking the pound of flesh is not deciding which part of the body you take it from.

  38. What tax system do you guys ideally want?

  39. Speaking both as an economist, and a CPA, I think the Fair Tax is one of the single best things we could do as a country.

    It would drastically reduce tax compliance costs, and also encourage many firms to bring capital back home.

    Of course it would reduce my future income some, but I’m willing to make that sacrifice.

    And IMO, the Fair Tax is much better than a flat tax because you no longer have the government poking it’s head into what you earn. Plus it encourages savings and investment that an income tax does not.

    1. Who decides what is ‘new’? I put an old set of tires on a new car – taxed or not? Who keeps track? This would be infinitely more intrusive and complex than a flat tax.

      1. Defining what is new is not a big deal and is already in place in every state that I’m aware of. To purchase goods without paying sales tax, you either need a resale tax ID or a wholesaler ID. The wholesaler submits to the state which resellers they sold to, and the resellers submits the tax collected. If you don’t have a resale Tax ID, you pay sales tax on it. If you have a resale tax id, and buy a new car and put old tires on it and then sell it, you would collect sales tax the purchase.

    2. And IMO, the Fair Tax is much better than a flat tax because you no longer have the government poking it’s head into what you earn. Plus it encourages savings and investment that an income tax does not

      Whatever flaws come with whatever national sales tax concept a nation could adopt, there are very few that overshadow this glaring immorality of any tax on incoming wealth.

      The IRS has no business knowing what I do during my daytime hours.

      The IRS has no business knowing how much I earn.

      They have no business knowing what I carried home from my mothers garage.

      1. Do they have any business knowing what you make or who carries it home from your garage? Purchase and sale are but two sides of the same transaction.

        I would prefer a consumption tax to income cap-gains and corporate taxes, but I still think this argument is bogus.

  40. I do fear the failure to repeal the 16th Amendment following the passage of the Fairtax, but wouldn’t you love it if everyone saw exactly how much they are paying to keep the federal government running every time they made a purchase? It would create huge pressure to reduce the size and cost of the government.

    Also, the current language of the Fairtax (although I admit, it could be changed) would not allow any meddling with behaviors via the tax code.

  41. Ok, so many comments from individuals who have not read the Fair Tax.

    1) the prebate covers the cost of what an overarching consumption tax would take up to the level of poverty. It goes out to everyone – so no need for compliance or IRS. Everyone gets it.
    2) it is definitely NOT the VAT. Specifically since it replaces the income tax.
    3) Truism: Great should never be the enemy of good. Many “fair tax” proponents would come on board with the “flat tax”. Realize that the fair tax does NOT require one to file with the IRS, and realize that those individuals who are not documenting their income will not be impacted by the Flat tax, but would be paying taxes through consumption through the fair tax. This leads me to
    4) identity theft costs would decrease since the use of SSN for employment would not be required as it pertains to payroll taxes.

    please read the Fair tax book – and give Cain a shot. He is a business man who has done turn-arounds.
    And in his words:

    “if the concern is I don’t have political experience, let me ask you this – this is what you have had in Washington, and how is that working out for you?”

  42. I seriously suggest that instead of cherry picking a few lines of the proposed legislation out of context that you do some research on it. How is ~130 pages worse than 70,000 pages? How do you propose society functions without any federal taxation?

  43. “…adopting the progressive language of “fairness”…”

    Oh, you mean like, when somebody adopts a term like “flat”?

    If your flat tax were flat, then we would not pay the same “percentage of income” – we would pay the same dollar amount.

    Also, your flat tax still promotes wealth-envy, still allows the government to stick its nose into my finances.

    Really, the only criticisms you can come up with are that administering the FairTax would require, um, administering it, (somehow states like Florida and Tennessee are able to administer sales tax systems quite well for some reason – without any need for an income tax), and that the word “prebate” is not in your dictionary.

    You’re as stupid on economics as that Indian guy is on defense. Is today short-bus day at Reason or something?

    To me, your flat tax is flat-lined.

    Not no, but hell no.

    I’d take the FairTax over the flat tax any day of the week.

  44. We’re already paying embedded taxes on everything we buy. Prices won’t go up with the FairTax.

    Would you rather be taxed on 25% of what you earn or 23% of what you spend?

    1. “Would you rather be taxed on 25% of what you earn or 23% of what you spend?

      Awesome quote

  45. The original income tax was, essentially a flat tax (1% on income after the 1st $3000 and 6% on every dollar past $500,000)– that’s why we know a flat tax wouldn’t work without first amending the 16th Amenedment to include an “everybody pays the same rate” rider.

  46. Wow. So much misinformation about the Fair Tax. I would like to try and take a different approach on the prebate issue, after reading through all (regrettably, as some of you don’t know what civility is) of the posts. This will also show that no one (unless you don’t take the prebate) will pay the maximum rate.

    Let’s say, for the sake of argument, that the poverty rate for a family of four is $20K. The prebate for that family would be $4,615.38 (30% of their total income, or what they would pay under the Fair Tax if they spent every penny on new products and services). This makes their effective tax rate 0%. They could live frugally, buy used clothing, grow some of their own food if they have access to land, etc., and make their effective tax rate a negative number, but in doing so, they would more-than-likely work their way out of poverty and eventually contribute in taxes, but I digress.

    Now let’s say that their situation improves, and now that same family is bringing home $25K a year. They still get the same prebate amount (it does not change), and if they spent every penny on new products and services their effective tax rate is now 4.6154%, not 30% or even 23% (their total taxes on $25K is $5,769.23 minus the $4,615.38 prebate, or $1,153.85).

    You see, the prebate makes the Fair Tax progressive, in that your effective tax rate, with the prebate factored in, starts at or below zero if you live in poverty, and goes up incrementally as you begin to prosper, with a top rate of 29.99% if you take the prebate, 30% without it. That is both fair and equatable, as a person starts contributing to the cost of government as soon as they are financially able, at a rate that rises with their income. For those of you who think the rich don’t pay enough, they’ll be the ones paying the top rate, while the middle class will still contribute to the needs of government and the poor being effectively exempt. The different between our current system and the Fair Tax is that our current system encourages people to stay in poverty, as they start paying taxes at an astounding rate (compared to what they pay staying unemployed) the minute they get a job.

    The reason that it’s a prebate, by the way, and not a rebate, is to put no financial hardship on the citizenry in making them wait for the government to return to them what was theirs to begin with. Yes, I know the argument about it being welfare if the person doesn’t spend up to the poverty level in taxes, but seriously, how many people do you really think that is? It would cost far more money to have people account for spending up to the prebate amount in man-hours tracking it by the government than will be “lost” in just giving the prebate in advance. Also, there is no incentive to remain in poverty, as you still get the prebate regardless of whether you’re poor or not. And finally, that money will be spent eventually, and when it is, it will be taxed. I’m sure that will elicit some responses, but I’ll leave it to others to have that discussion.

    There are other positive aspects that can be extrapolated from this example, but I’ve already spent too much time reading through the responses, and I can see, happily, that there are already many other well-educated people who know the facts about the Fair Tax that will cheerfully post comments to that effect.

    1. You clearly have a good understanding of how the Fairtax works, but I will take issue with your comment that the prebate money will eventually be spent and therefore taxed, but that is not necessarily a redeeming factor; do a search online for the broken window fallacy. Not saying that’s a reason not to pass the Fairtax, but as an argument it doesn’t hold water.

  47. You have missed the obvious. Those federal taxes out of employees property, wages, it is part of the wage to which the employer puts into the price of Domestic made goods, making a handicap of 22% on US Made Manufacturing, thus steel mills close, many jobs went overseas after free trade under Reagan. It was manufacturing distribution and it is time to end it by taxing imports equally with domestic products. The middle income worker will see a raise in wage purchase value due to the fair distribution of tax collection to criminals, illegals, under table workers, rich with high paid lobbyist or offshore funds hidden. We need jobs, we need fairtax.

  48. Taoist: Very good efforts, hopefully those paying attention will benefit. Overall a much better discussion thread than you’ll find at most any other site. I’m for the Fair Tax over what we have now. When someone comes up w/ the perfect system, I’ll drop the fair tax.

  49. We surely can’t continue with the tax code as it has evolved. What are the ads and disads of a flat tax? Like a tithe for having the privilege to live in this country.

  50. I support the fairtax.

    135 pages of tax code better than 60,000? Check.

    Taxing forgin and domestic goods the same, Eliminating the incentives to produce elsewhere and creating good reasons to bring your factories here? Check.

    Making the US the best place to keep and invest your money? Check. (trillions of dollars worldwide)

    Is it perfect? No. But it is so much better than any other system that I’ve hears of, that it’s got me excited enough to shout!

  51. Since when is language of a House bill compared to language of a Constitutional amendment? This FaiRtax critique endorses the Marxist tax system that makes Servants of the Citizens who produce the wealth, and sustains Politicians as “DC Royalty” to be Served by letting them “take theIRS first”from our paychecks -EVERY WORKING HOUR- through tax withholding. FAIRTAX ENDS THE MARXIST INCOME TAX. It pays for government ONLY as we benefit from the fruits of our labor with a purchase. WAKE UP SLAVES!

  52. Many people prefer the security of slavery to the government rather than the risks of liberty.

    The FairTax is a luxury tax. It does not tax the poor. It is a progressive tax that only taxes people in relative proportion to their resources at the point of sale. It taxes both income and wealth as they are consumed rather than when earned or as a death tax. Combined with the largest tax base of any tax regime, this enables the FairTax to have the lowest marginal tax rates of any tax regime for the vast majority of people.

    The FairTax repeals the income tax, the capital gains tax, the alternative minimum tax, the estate tax, the gift tax, wage taxes, and employment tax.

    Business taxes such as the corporate income tax and employer FICA (an employment tax) destroy jobs and lead to higher consumer prices. If a business can shift the cost of any tax it is required to remit to the government, then the cost of that tax (both the tax and the cost associated with compliance) will be shifted to its customers. A customer is either a consumer or another business. The next business, confronted with higher costs will attempt to find a lower cost supplier, or will pass along the higher cost to its business customers or consumers. Further downstream business customers attempt to recover any increased costs by the same methods, until either the consumer pays the full cost of any business tax or a business cannot find any other way to shift the cost of the tax to another party.

    The first alternative noted was that businesses could attempt to locate lower cost suppliers. When that happens, the business will consider all sources, including foreign goods and services. Business taxes thus make foreign goods and services more competitive (and perhaps lower cost alternatives) than domestic goods and services. In this way, the American government exports jobs to foreign economies.

    Who in America would support such a destructive result for America jobs? Why the same folks who believe (as a matter of religion, not economics) that anyone but a natural person pays taxes!

    The other alternative is that the consumer pays the full cost of any taxes imposed upon business, or in the provision of goods and services in the final price paid. So, when all the yokels on the left clamor for higher business taxes, that tax comes right back and bites them in their own wallets. Then they complain about the greedy businesses and higher prices (for fuel, food, and medicine) which simply bear the increased costs they demanded be imposed!

    Now, if competitive factors prevent the location of a lower cost supplier, or passing along the higher costs of taxes to customers and ultimately to consumers, then the business must try to remain competitive and try to reduce its own internal costs by operating more efficiently. Since the largest cost of most businesses is payroll, the next most likely place to “pay” for the tax is either by (1) laying off employees, or (2) avoiding the tax be relocating operations outside the country and beyond the rapacious grasp of a greedy government. Either way, American workers are likely to suffer for any taxes the cost of which cannot be passed along to customers. Employment and business taxes, like minimum wage laws destroy American jobs. That’s the economic reality.

    The last alternative, assuming all others fail in terms of shifting tax burdens to others, is to have the owners of the business remit the additional taxes. This is the last alternative because all the other alternatives are preferable to the owners than having the owners remit the taxes–and they ultimately get to decide who will remit the taxes. If you were the owner, would your first choice be that you bear the cost of the tax? If the owners must bear the cost, and the cost of the tax cannot be shifted, then the viability of the business is in serious doubt. Either all the profits from the business are inadequate to pay the tax, or what remains of them is so small that better businesses to be in exist, or operations in the USA are no longer viable. So, again, this looks like a choice between accepting lower returns on investment or shutting down the business (existing the market) in favor of a better investment. Obviously, exiting means that employees will bear the cost of the taxes through lost jobs. An example may help. Say you are an owner / investor with $1 million invested that pays a 10% return each year or $100,000. The government comes along and imposes a tax on that business, that reduces the return to $0 per year. Why would you as the owner / investor stay in that line of business? Or, say, the return is reduced to 2.5%–do you settle for $25,000 or do you seek a better investment / line of business? Only if no better alternative exists will you as the owner / investor bear the cost of the taxes imposed on the business.

    The bottom line is that only natural people pay taxes, regardless of who is responsible for remitting those taxes.

    A VAT taxes each business in the supply chain for the value it adds and it works in effect just like our present business tax system except that the VAT is simpler (far less complex). Is there any doubt at all that the VAT is a consumption tax that would be paid by primarily the consumer? If not, then why is there any doubt that corporate income taxes, personal income taxes, and employment taxes are taxes paid by the consumer, regardless of who is responsible for collecting and remitting them?

    The FairTax starts with the premise that the consumer pays all taxes today–and that all the tax costs imposed today are reflected in the prices of all goods and services–including necessities such as food, clothing and medicine. The consumer pays and all the businesses involved, and all their employees, collect these taxes and remit them to the government because the consumer is the source of the funds used to pay for profits and costs including all incomes. The FairTax takes ALL of the taxes paid today, strips the taxes collected from the people who currently remit them and makes the retailer remit them instead. Since the consumer pays all taxes, when they are paid to the retailer, the retailer has collected all the money that will pay all the taxes to be remitted by all others involved in the supply chain for that product or service. So, why not just have the retailer remit them and eliminate all the complications of the current tax regime?

    You need to answer that question. The consumer pays all the taxes. Why make everyone with an income and every business involved in supplying that product or service go through complex calculations to determine how much to remit–rather than just have the retailer remit the taxes due in one simple calculation arising from the point of sale?

    Fairness? The current tax system taxes the poor and everyone else for their necessities. The FairTax does not. The FairTax monthly consumption allowance is enough to make certain that no permanent resident of the United States pays any tax upon necessity spending.

    So, the very poor are completely untaxed. The effective tax rate under the FairTax is negative until poverty-level spending corresponding to poverty-level income is attained, at which point the effective tax rate is 0%. From that level of spending and above, the FairTax is a luxury-only tax. The effective tax rate rises progressively along with consumption spending. The more one takes of the product of their fellow human beings, then the more one is taxed and at a progressively higher tax rate, but never exceeding the nominal tax rate collected at the point of sale by the retailer.

    The underground economy is taxed when goods or services are purchased. Everyone gets to take home 100% of their wages and salaries. Everyone participates in the tax system of their government and pays is relative proportion to their resources. Administration of the tax system is greatly simplified and economized. There’s no need for an IRS, and no reason for millions of individuals and businesses to file complicated tax returns filled with complex calculations.

    The FairTax avoids redundant and cascading taxation of the same goods and services. The FairTax does not tax necessities because of the consumption allowance. The FairTax is a progressive tax with a simple method of calculation and administration that involves a minimal number of points of contact for the taxing authorities to monitor for compliance. Once an item has been taxed under the FairTax it is no longer taxable under the FairTax. Existing property that is held for personal use will be exempt from the FairTax. So, used property is not taxable upon sale. If used property is purchased, then the buyer is reimbursing the seller for part of the taxes paid, for that period of time they enjoy the use of that property. No forms to file, no additional taxes to remit.

    Education spending is not taxed.

    You will be hard pressed to come up with a fairer, simpler or more economical tax system which taxes the true taxpayers–consumers–in relative proportion to their resources while involving everyone as taxpayers in paying for their government.

    Can it be improved? Of course, but it is still an excellent start, and one that will lead to greater prosperity and jobs in the USA.

    Why people want to redistribute wealth when that means redistributing poverty is beyond me. I must suppose that some like the security of the chains of their masters to the risks of liberty.

  53. The FairTax rate of 23 percent on a total taxable consumption base of $11.244 trillion will generate $2.586 trillion dollars ? $358 billion more than the taxes it replaces [BHKPT] (snipurl.com/whatratewks).

    The FairTax has the broadest base and the lowest rate of any single-rate tax reform plan [THBP] (snipurl.com/baserate).

    Real wages are 10.3 percent, 9.5 percent, and 9.2 percent higher in years 1, 10, and 25, respectively than would otherwise be the case [THBNP] (snipurl.com/realwages).

    The economy as measured by GDP is 2.4 percent higher in the first year and 11.3 percent higher by the 10th year than it would otherwise be [ALM] (snipurl.com/econbenes).

    Consumption benefits [ALM] (snipurl.com/econbenes):

    ? Disposable personal income is higher than if the current tax system remains in place: 1.7 percent in year 1, 8.7 percent in year 5, and 11.8 percent in year 10.

    ? Consumption increases by 2.4 percent more in the first year, which grows to 11.7 percent more by the tenth year than it would be if the current system were to remain in place.

    ? The increase in consumption is fueled by the 1.7 percent increase in disposable (after-tax) personal income that accompanies the rise in incomes from capital and labor once the FairTax is enacted.

    ? By the 10th year, consumption increases by 11.7 percent over what it would be if the current tax system remained in place, and disposable income is up by 11.8 percent.

    Over time, the FairTax benefits all income groups. Of 42 household types (classified by income, marital status, age), all have lower average remaining lifetime tax rates under the FairTax than they would experience under the current tax system [KR] (snipurl.com/kotcomparetaxrates).

    Implementing the FairTax at a 23 percent rate gives the poorest members of the generation born in 1990 a 13.5 percent improvement in economic well-being; their middle class and rich contemporaries experience a 5 percent and 2 percent improvement, respectively [JK] (snipurl.com/kotftmacromicro).

    Based on standard measures of tax burden, the FairTax is more progressive than the individual income tax, payroll tax, and the corporate income tax [THBPN] (snipurl.com/lessregress).

    Charitable giving increases by $2.1 billion (about 1 percent) in the first year over what it would be if the current system remained in place, by 2.4 percent in year 10, and by 5 percent in year 20 [THPDB] (snipurl.com/moregiving).

    On average, states could cut their sales tax rates by more than half, or 3.2 percentage points from 5.4 to 2.2 percent, if they conformed their state sales tax bases to the FairTax base [TBJ] (snipurl.com/staterates).

    The FairTax provides the equivalent of a supercharged mortgage interest deduction, reducing the true cost of buying a home by 19 percent [WM] (snipurl.com/homebenes).

    ALERT: Kotlikoff refutes Bruce Bartlett’s shabby critiques of the FairTax (snipurl.com/bbrebuke).

    References:

    [ALM] Arduin, Laffer & Moore Econometrics, “A Macroeconomic Analysis of the FairTax Proposal,” July 2006.

    [BHKPT] Bachman, Paul, Jonathan Haughton, Laurence J. Kotlikoff, Alfonso Sanchez-Penalver, and David G. Tuerck, “Taxing Sales under the FairTax: What Rate Works?” published in Tax Notes, November 13, 2006.

    [JK] Jokisch, Sabine and Laurence J. Kotlikoff, “Simulating the Dynamic Macroeconomic and Microeconomic Effects of the FairTax,” National Tax Journal, June 2007.

    [KR] Kotlikoff, Laurence J. and David Rapson, “Comparing Average and Marginal Tax Rates under the FairTax and the Current System of Federal Taxation,” NBER Working Paper No. 12533, revised October 2006.

    [THBNP] Tuerck, David G., Jonathan Haughton, Keshab Bhattarai, Phuong Viet Ngo, and Alfonso Sanchez-Penalver, “The Economic Effects of the FairTax: Results from the Beacon Hill Institute CGE Model,” The Beacon Hill Institute at Suffolk University, February 2007.

    [THBP] Tuerck, David G., Jonathan Haughton, Paul Bachman, and Alfonso Sanchez-Penalver, “A Comparison of the FairTax Base and Rate with Other National Tax Reform Proposals,” The Beacon Hill Institute at Suffolk University, February 2007.

    [THBPN] Tuerck, David G., Jonathan Haughton, Paul Bachman, Alfonso Sanchez-Penalver, and Phuong Viet Ngo, “A Distributional Analysis of Adopting the FairTax: A Comparison of the Current Tax System and the FairTax Plan,” The Beacon Hill Institute at Suffolk University, February 2007.

    [THPDB] Tuerck, David G., Jonathan Haughton, Alfonso Sanchez-Penalver, Sara Dinwoodie, and Paul Bachman, “The FairTax and Charitable Giving,” The Beacon Hill Institute at Suffolk University, February 2007.

    [TBJ] Tuerck, David G., Paul Bachman, and Sylvia Jacob, “Fiscal Federalism: The National FairTax and the States,” The Beacon Hill Institute at Suffolk University, June 2007.

    [WM] Walby, Karen, and Dan Mastromarco, “Promoting home ownership: How the FairTax’s benefits for homeowners exceed the mortgage interest deduction,” Americans For Fair Taxation White Paper, August 2006.

  54. The FairTax is the permanent solution – a permanent “payroll tax holiday”! No more tax on income, a progressive Consumption tax, instead. What You Will Actually Pay Under the FairTax http://whatyoupayunderfairtax.blogspot.com/

  55. I believe this beats the fair tax. Do you? write tbeebe6535 (at) yahoo (dot) com
    1. All persons residing in the U.S. shall come together in “tax units”. Members need not be related, need not reside together, and a tax unit may consist of as few as one person.
    2. Each year congress shall set a “minimum wage” and a “tax rate”.
    3. The following shall not be subject to taxation:
    ? An amount equal to a year’s earnings (2000 hours) at the minimum wage, for each adult (age 20-65), decreasing 10% per year to 50% at age 15, and increasing 10% per year to 150% at age 70.
    ? All payments for necessary health care including medical care, pharmaceuticals prescribed by a health care professional, vision and hearing aids, and fees for health-enhancing entities such as gyms. Health care insurance premiums may be deducted but not health care expense paid for by such insurance.
    ? All educational expenses including day care for children or legally incompetent persons, the portion of state and local taxes used for education, and tuition, fees and educational materials for private school education, including that portion of parochial school tuition and other expenses going for non-sectarian education.
    ? All income saved into an account for investments; withdrawals from this account for the benefit of any member of the tax unit shall be reported as income.
    4. The “tax rate” shall be applied to any income greater than the deductions listed above, regardless of amount.
    5. Any municipality having greater than 100,000 inhabitants or any state may impose on their citizens a surtax which shall be applied the same as the Federal tax.
    6. Tax units whose deductions exceed income, shall be paid a sum equal to the tax rate multiplied by the shortfall in income.
    7. There shall be no federal tax on corporations or other business entities.
    8. The Office of Management and Budget shall compute revenues to be expected using the newly set tax rate and minimum wage, applied to the previous year’s reported incomes. No expenses in excess of that amount may be made without approval by 75% of each house of Congress. This tax shall be the only source of revenue for the federal government.

  56. I offer 50,000 cash to anyone who can prove Fairtax is a 23% retail sales tax to replace all other fed taxes.

    The editors of Reason should have the brains to read the fine print in Fairtax legislation, tax tables, and “supporting documents”

    If they did, they would see astonishingly goofy things, like a trillion dollars, nearly, in taxes on the OPERATIONAL cost of city and states. Fairtax tax tables and fine print has massive, truly massive, taxes on city and states.

    See where they tax all wages, pensions, and “fair market value” of all military and government benefits.

    That’s not retail tax folks, and Reason has reason enough to actually read the fine print.

    See how Fairtax defines any government as a person, not only a person, but also as a person who must pay far higher taxes than human beings.

    Fairtax has the government not only paying taxes on their retail purchases, which are minimal. But also all city, county and states must pay taxes on all operational costs, all investments in roads, sewer systems, airports, whatever, other than schools.

    See why National Review write Bruce Bartlett said Fairtax was so goofy that if it somehow passed, there would be “rioting in the streets” even by it’s own supporters.

    It’s in the fine print, footnotes, and tax tables folks. It’s all there. Read it.

    Another astonishingly goofy thing, Fairtax taxes all cancer surgery, nursing home care, all medical consumption, without exception. Even in the cancer victim is covered by insurance, or on medicare, it makes no difference. THey are personally responsible for 23% tax on the goods or service, again, without exception.

    If this support of Fairtax is the best your magazine can do, I suggest a change in your name to dufus.

  57. own stumping for the national sales tax. And so does Rep

  58. Complete guide to sell your crafts at craft fairs and make more money

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