Thread: The FairTax    

So as not to derail the previous thread (viewtopic.php?f=1&t=21570&p=671903#p671903) any worse I have started this one.

It seems to me a lot of you comment on the fairtax without understanding it. So let me take a moment to outline what the fairtax is.

The fairtax is: (http://www.FairTax.org)
-a flat consumption based tax on all retail goods and services. The proposed amount is an inclusive tax rate of 23%. This means that if you buy something that costs $100, it will be broken down into $23 fairtax and $77 retail price.
-The fairtax also removes income tax, medicare tax, social security tax, capital gains tax, death tax, gift tax, and repeals the 16th amendment in the process.
-Each household will receive a monthly prebate based on the amount of money that particular household will spend in tax on their monthly essentials. For a family of 1 person this was something around $180 a month because under the fairtax a household will not be taxed on the essentials it needs to live.

The effects the fairtax would cause:
-Rich investors who keep their money overseas do so to avoid US taxes. Once we stop taxing invesments they will more than likely bring their money back to the US and fuel our economy. The same also applies to corporations with overseas offices. They make these offices in order to avoid our harsh tax system. Under the fairtax they will have no reason not to make their offices on US soil.
-Other nations will start investing their money in the US because of this system. This will further fuel the US economy.
-You probably do not realize it, but retail goods already have an intrinsic hidden tax on about 20%-30%. This tax comes from the manufacturing process of the good before they even reach the store shelves. Under the fairtax these goods will no longer have this tax and therefore, with some healthy competition among companies, prices on retail products will fall greatly. The amount prices will fall is almost equivalent to the 23% fairtax, so overall products will seem to cost the same, but we will be bringing home 100% of our paycheck... not 60%.
-Also, I forget the exact number. But the US spends more money on preparing tax returns and making tax related decisions that the amount of tax it generates. That is an enormous waste.

For more information, this is also a nice summary of the FairTax. http://www.fairtax.org/PDF/FairTax-Fund ... 070122.pdf

If anyone finds this as interesting as I do, there is a fantastic book out there: The Fair Tax Book, by Neal Boortz and John Linder.

From what I have found researching the FairTax proposal, it seems that anyone who understands it supports it. And anyone who is against it has misinterpreted it or has not studied it in depth. I believe that in the future it will be passed into a law, the following behind it is continually growing.

In regards to some of the comments posted, I fail to see any negative consequences associated with the FairTax. If you do please enlighten me about it with proper reasoning.

Income tax only makes up about 30% of the government revenue. What you could do is cut the income tax, replace it with nothing and cut spending. Spending such as giving billions of dollars to foreign countries, ie. giving 30 billion dollars to Israel.

What you also need to do is make our currency asset backed so the government can't print money like it is doing now and screwing everyone that saves money.

I agree that government spending is out of control, but if the FairTax bill tried to change this as well as the already radical tax system change, then it would have no chance of passing.

The problem with our currency is also that the government is printing more money than our economy can back. Economists have outlined what our economy would look like if the FairTax was implemented, and basically it would explode. I think the figure was that the economy of the US would double within around 3 years.

The rate of 23% fairtax was calculated by economists to implement a system where the government will get the same amount of money that it does now in a far more efficient way.

Thanks, I fixed my original post. It's the 16th amendment.

Originally Posted by simozene

I agree that government spending is out of control, but if the FairTax bill tried to change this as well as the already radical tax system change, then it would have no chance of passing.

The problem with our currency is also that the government is printing more money than our economy can back. Economists have outlined what our economy would look like if the FairTax was implemented, and basically it would explode. I think the figure was that the economy of the US would double within around 3 years.

The rate of 23% fairtax was calculated by economists to implement a system where the government will get the same amount of money that it does now in a far more efficient way.

I'm just saying there is a better. Out of all the presidential candidates, there's only one that understand economics and that's Ron Paul. He's the only one that has even been talking about monetary system.

http://youtube.com/watch?v=ji_G0MqAqq8

^ He talks about our system

Originally Posted by Eaglestrike

Ron Paul is the man.

Indeed, Ron Paul also supports the FairTax.

Originally Posted by simozene

Originally Posted by Eaglestrike

Ron Paul is the man.

Indeed, Ron Paul also supports the FairTax.

He said he would sign it if it came to his desk, but he supports:

What you could do is cut the income tax, replace it with nothing and cut spending. Spending such as giving billions of dollars to foreign countries, ie. giving 30 billion dollars to Israel.

Which I think is better than the FairTax

Originally Posted by Fyrie

Originally Posted by simozene

Originally Posted by Eaglestrike

Ron Paul is the man.

Indeed, Ron Paul also supports the FairTax.

He said he would sign it if it came to his desk, but he supports:

What you could do is cut the income tax, replace it with nothing and cut spending. Spending such as giving billions of dollars to foreign countries, ie. giving 30 billion dollars to Israel.

Which I think is better than the FairTax

Well, if we could have our cake and eat it too I would like to see the FairTax passed at a rate below 23% and spending cut to get the best of both worlds. But the FairTax is designed a complete overhaul of the way our country taxes its citizens. I would much rather pay my tax voluntarily when I buy something rather than have it taken from my paycheck before ever getting the option.

Not to get this topic off track about governmental reforms I posted this topic to ask what people thought about the fairtax and reasoning against it that I might be unaware of.

the fairtax eliminates too many jobs,its too efficient to be put into effect,which is why it won't be.

i agree that it should,but it wont

Originally Posted by Priran

Originally Posted by simozene

Originally Posted by Eaglestrike

Ron Paul is the man.

Indeed, Ron Paul also supports the FairTax.

You're suggesting that because he likes Ron Paul, and Ron Paul supports Fair Tax, that he should too?

Congratulations, your logic is disgusting.

What your saying makes no sense. My statement implies that I support Ron Paul because he supports the FairTax. Nowhere do I say that Eaglestrike should support the FairTax.

Originally Posted by ozz

the fairtax eliminates too many jobs,its too efficient to be put into effect,which is why it won't be.

i agree that it should,but it wont

How does it eliminate jobs? Elaborate on this please.

Originally Posted by Eaglestrike

It eliminates all the government jobs we have to collect the taxes it replaces.

Not all, there will still be some sort of organization that keeps track of things and creates the monthly prebates. But yes, it does eliminate most of said jobs. In return though as corporations build more offices on US soil it will create far more jobs than will be eliminated.

Rich investors who keep their money overseas do so to avoid US taxes. Once we stop taxing invesments they will more than likely bring their money back to the US and fuel our economy.

"Trust rich people!"

Originally Posted by simozene

Originally Posted by Eaglestrike

It eliminates all the government jobs we have to collect the taxes it replaces.

Not all, there will still be some sort of organization that keeps track of things and creates the monthly prebates. But yes, it does eliminate most of said jobs. In return though as corporations build more offices on US soil it will create far more jobs than will be eliminated.

A little add on to that, anyone who can understand our current tax code has to be pretty darn smart. I doubt those people who would lose their jobs over the Fairtax would have trouble finding a new one.

i'm just telling you why it's not gonna get put into practice,its the same reason marijuana isnt legal...all those "enforcement costs" in the governator post keep people employed

Originally Posted by Charla

I'm not so sure the term "harsh tax system" is appropriate, as most of the west taxes at higher rates than the US. However, tax havens still exist because of the tiny backwater countries that are popular for that sort of thing.

The cynic in me is focused on the difficulty of properly implementing the premise outlined here, the inevitable complexity that would be piled atop it as politicians manipulate the system to benifit whoever they owe, and the corruption that would develop to take advantage of people via the inevitably confusing "pre-bate" system. In other words, it might just end up being a whole lot like the current system with a new name and less people working for the IRS.

I agree with you in part. Implementing the system will be a huge change, but the FairTax plan outlines how to change over. It's described in one of the chapters of the book and is actually simpler than one might think, but it's still a huge change.

I disagree with your adjective describing the prebate system as confusing. It was designed to be a very simple system. The government already calculates a poverty level that is adjusted every year. It uses this value to calculate how much a family of x people will spend to reach the poverty level and then refunds to said family the amount it would pay in FairTax on that spending. It is designed with no exceptions to this. And there are no goods excluded from being taxed. This was outlined to keep the system simple and to avoid possible corruption.

Edit: Forgot to add... but when a country is a 'tax haven' it creates wealth through other countries investing in it. So if the US were to become a 'tax haven' itself it would have a tremendous boom on the economy.