I think the answer you are going to get here is that the "fair tax" is anything but. It's a sales tax in disguise, plain and simple, and it's regressive.

They use smoke and mirrors to claim it is "progressive" because it exempts purchases up to a point, but it's flat beyond that.

Tax code already exempts income up to a point, but has a progressively increasing rate beyond that to weight the pain more towards people who won't feel it as bad.

The "prebate" is just goofy and an administrative nightmare, and a gimmick to make it look "progressive".

There are other ways to simplify the tax code without such a major overhaul.

Besides, I believe they use this in Europe (except they call it VAT instead of sales tax) and it's an accounting nightmare. We don't want to be like Europe do we? :)

It is very much different than VAT. VAT taxes goods at each stop where the Fair Tax only taxes the end good. The prebate is much less an administrative nightmare than our current collection. I think it would be fairly simple to send this out to those registered legally to be in the country (of course we know how the gov't can mess up even the simplest of things). The IRS spends 25-30% (I will try to find the exact number) just to collect the taxes today. Not to mention all the money spent to pay accountants, etc.

Also, yes the rate is flat, but those that make more will almost always spend more. Thus their percentage of tax paid goes up. Also, no longer would anyone pay taxes on used goods - only on new things.

It would also prevent people from cheating on their taxes. You take the responsibility out of the individuals' hands and put it in the businesses' hands.

Craig Thomas
(link...)

You take the responsibility out of the individuals' hands and put it in the businesses' hands.

Where responsibility has absolutely no meaning.

With these types of proposals, the smell test is to ask who loses and who wins. I don't think you have to dig far to see this is being promoted by modern Enron Republicans for modern Enron Republicans. Watch your wallet.

... doesn't make it so. Ditto progressive. From knocking around the site only a little, I can see that they lead with propaganda, not with what their actual proposal is. I conclude it's a pig in a poke that's basically a soak-the-middle-class plan.

That's the trend in American taxation already. A system that once was boldly progressive is now barely so, leaving the wealthy significantly better off than they were 40 years ago - ironically at a time when their slice of the total pie has been growing rampantly.

The first step in reforming our federal tax system is to reinstitute the Paris Hilton tax with a reasonable increase in the level it starts, say, $5 million estates, indexed to inflation or something like that. I'd love it if this were to hit the Bush family fortune hard, but I doubt it would.

Then, how about a simple, progressive income tax! There are revenue-neutral proposals knocking around among Democrats. Usually, they have three brackets and no deductions except for the mortgage deduction.

I prefer an additional higher bracket to pay for a reimbursement of the borrowings that the general fund has made over the years from Social Security. (I still would limit the marginal tax rate to 50% and not return to the 70% rates of the 50s and 60s.) I might have to keep the mortgage deduction, but I'd want to limit it - no damn vacation homes are eligible, and there'd be a deductibility limit, maybe market interest on $300,000.

Investment income would probably have to be treated differently, even though that burns me - the sweat of a man's brow ought not be taxed more heavily than the the dividends of a man's money. But I don't want to kill off the capital markets, that's for sure.

Liberty and justice for all.

Since I will be living on dog food and watching the Weather Channel as a retiree in a few years I will spend about all of my income and be taxed on 100% of it. My money grubbing Republican son who already owns every toy in the world will be putting half his income in the bank and be taxed on 50 %. Right...or am I missing something? (I come here to learn)

Terry:

There obviously will be a transition period. However, you would continue to receive the "prebate" check to cover the tax on essentials. In addition, the price of goods will be driven down because business taxes are nonexistant and no longer have to to be factored into the goods.

Also, you have to remember when your son takes that money out of the bank to use it he is going to be taxed on it then. Or if he doesn't use it and passes it on to his kids, they will be taxed when they use it, etc.

While some of the FairTax site is not very good, there is actually some good information on the FAQs at (link...). Also, I recommend at least reading the book. It does a much better job explaining it than the website or myself.

Craig Thomas
(link...)

Investment income would probably have to be treated differently, even though that burns me - the sweat of a man's brow ought not be taxed more heavily than the the dividends of a man's money. But I don't want to kill off the capital markets, that's for sure.

If you make money in our system, be it through labor, skills, knowledge or investments, you should be taxed equally.

Why does a man who invests 6 figures getting an education pay taxes on the return for his investment while a man who just invests the same 6 figures gets to pay less, or nothing, on the return on his investment. Tax it all equally!

If you make money in any manner in our country, you should be taxed equally. You are using the infrastructure to make money, so support it. If the capital markets cannot survive, TFB. Free market and all.

It is revenue neutral because of the extra tax that would be paid. Everyone that buys something here would pay the tax - whether they are here legally, illegally, or visiting. Plus there would be no cap on any of the money.

The calculations were done HERE (PDF).

Craig Thomas
(link...)

So CDT and his upper income buddies can keep more money under a revenue neutral tax scheme by sticking it to foreigners and interlopers. And people not savvy enough to read his flat, er--fairtax website and who are not influential with Congress.

You know, CDT, you can keep saying the same things over and over and it's not going to change the facts. You asked why a consumption tax wouldn't be better than an income tax. Asked and answered. The rest is just your rhetoric.

There's an extensive and mostly objective discussion of it at Wikipedia:

(link...)

One thing I didn't get from the Fair Tax website is that the proposed sales tax is actually 30%. They state it as 23% of every dollar, which means $1 = .77 for the product plus .23 tax, which is actually 30%. This seems a little misleading. So in Tennessee, you could be paying nearly 40% in sales tax.

"Bust out" is a great choice of words.

To wit: A "bust out" is a common tactic in the organized crime world where a business's assets and lines of credit are exploited and exhausted to the point of bankruptcy.

That's the Republican macroeconomic model, innit? Bush's monetary policy in a nutshell.

____________________________

"If people think nature is their friend, then they sure don't need an enemy." K. Vonnegut, 1922-2007

Senator Huey Long tells us why we have a "Progressive" tax in the first place. Screw flat tax and "fair tax"

You guys never cease to amaze me.

Screw flat tax and "fair tax"

Yeah. Keep penalizing people for doing better and making money, evil the "poor little bad luck people." Those evil do-gooders. Screw 'em. Dang the sales tax for encouraging INCREASED INCOME and SAVINGS. They don't deserve what they make. Even though the fact that they WILL pay a higher rate when they spend. Keep the status quo, even though the Fair Tax benefits everyone; the facts speak for that. Socialism doesn't work.

It is less tax for EVERYONE.

Craig Thomas
(link...)

That's right. You should penalize people for being poorer than you.

This is the rhetoric I was talking about. You act as if the rich are penalized for paying more tax, instead of acknowledging that they pay more because they can.

And I'm sure even today they pay less compared to their income than the poor do.

VIC: Jesus christ, David, where the hell have you been?

DAVID: Thanks for coming, thanks for coming.

VIC: I'm glad you called me. My sister's been worried sick about you.

DAVID: I know. I'm sorry, I should've called her. How about I say I'm sorry to the whole fucking world? Rent the fuji blimp or something?

VIC: Christine knows you're gambling again, she told me.

DAVID: Not gambling anymore, I'm broke.

VIC: Jesus Christ.

DAVID: I screwed up, Vic. I screwed up really bad this time.

VIC: Look, it's gonna be okay, it's gonna be alright. You're gonna go back to Gamblers Anonymous, we'll figure out a payment plan and we'll get you back on your feet.

DAVID: Gamblers Anonymous.

VIC: You think it's a big joke, but you're going back there.

DAVID: Is that right? Where the fuck were you when I dropped out in first place? I was just twisting in the fucking wind out there.

VIC: What?!

DAVID: Both of you! With your fucking broom up your asses. You didn't give a fuck. You just fucking looked the other way!

VIC: Now it's our fault now? Don't you ever talk about christine like that, ever.

DAVID: Fuck her! Fuck you!

VIC: How much did you lose? How much? How much did you fucking lose?

DAVID: Everything.

VIC: What do you mean everything?

DAVID: Everything, everything! For chrissakes, Vic, everything, the savings, the business, everything.

VIC: You disgust me.

DAVID: I have to go Chapter 11. And then the liquidators will come in and they'll pick through the bones.

VIC: This is it, David. I fucking had it, this is it. As soon as Eric goes off to college, by the way, he got into Georgetown today, you probably didn't know about that. But as soon as that kid's out of the house, you're packing your bags and you're keeping the fuck away from my sister. David, don't tell me you blew Eric's college fund. Jesus Christ. Jesus. You fucking asshole. How could you do that? Jesus. Well... I'm paying for that kid's education.

DAVID: Thank you. Thank you. You're a great man, Vic.

VIC: Wait a minute. How could you gamble the business away? It's in my sister's name, isn't it?

DAVID: I didn't gamble it away exactly.

VIC: What happened?

DAVID: I got involved with some bad people. And I got in debt to 'em, and... Fucking Tony Soprano, alright? Yeah, Tony fucking Soprano. It's a bust out. You get in debt to 'em where you can't pay 'em, they become your partners and then they fucking eat through everything like fucking termites.

VIC: What about the cops?

DAVID: They're animals, Vic. They started a fire in my dumpster. These two guys came to see me one night. You got no idea what dead eyes means until you face these people, in your fucking bathrobe and flip-flops.

____________________________

"If people think nature is their friend, then they sure don't need an enemy." K. Vonnegut, 1922-2007

It is less tax for EVERYONE.

Well, no...How can it be revenue neutral and reduce taxes for everyone? You are either an arithmetic idiot or intentionally deceptive. You pick, CDT.

Of course the class could pick for you...If so, I would offer a third choice, "All of the above"

And I would guess that you didn't follow the link, did you?

How can it be revenue neutral and reduce taxes for everyone?

The distributive rule? The associative property? The, um, uh, er, uh... pixies and fairy dust and unicorns of GOP tax policy?

____________________________

"If people think nature is their friend, then they sure don't need an enemy." K. Vonnegut, 1922-2007

From the site:

"With the FairTax you are only taxed once on any good or service. If you choose to buy used goods - used car, used home, used appliances - you do not pay the FairTax. If, as a business owner or farmer, you buy something for strictly business purposes (not for personal consumption), you pay no consumption tax. When you decide what to buy and how much to spend, you see exactly how much you are contributing to the government with each purchase."

I'm all for overhauling the tax system, but it seems that there are huge potential loopholes just in this here part. Like "I use my Humvee for work!" and so forth.

On a completely different topic, I'd like to push for changing baseball's naming of the Foul Pole to "Fair Pole."

Yeah. Keep penalizing people for doing better and making money...

Thanks for admitting that you're really trying to reward people for doing better and making money, the economically elite. Which means by comparison, you're screwing those who make less money. We all live together and it's all relative. So relative to those getting the new rewards, the less fortunate are "rewarded" less. Farther to the bottom for them. Tain't fair.

Keep the status quo, even though the Fair Tax benefits everyone; the facts speak for that. Socialism doesn't work.

Wow! Our tax system is socialism! No wonder you're unhappy. Why do you hate America? Have you thought about moving to UAE, the Bahamas, or some place similar with a tax system that will make you happy? Or must you just keep screwing this country, like your buddies Abramoff, DeLay, (the late) Ken Lay, Cheney, Grover Norquist, Doug Feith, and on and on? It just never ends.