The FairTax Thread: Discussion Only

[Carcharodon]

It most certainly is. I was gonna say something but the effect is lost. I'm gonna go drown my sorrow in chocolate syrup, excuse me.

 

[SuBe]

It most certainly is. I was gonna say something but the effect is lost. I'm gonna go drown my sorrow in chocolate syrup, excuse me.

Did you have a statement or question about the FairTax that I can answer?

I'm willing to take questions about anything concerning the FairTax. I hope you weren't going to go on a rant that has nothing to do with the FairTax.

 

[Carcharodon]

I hope you weren't going to go on a rant that has nothing to do with the FairTax.

Too late.

Yeah, I didn't mean to derail your thread lol, it was meant to be a sort of one-post thing that turned into about 5. My bad.

 

[SuBe]

Too late.

Yeah, I didn't mean to derail your thread lol, it was meant to be a sort of one-post thing that turned into about 5. My bad.

Seriously, I'll answer any question you have about this tax plan. I don't mind.

 

[The Incredible Hulk]

well not really Fair Tax related but this is the closest thread and it's interesting none the less.

GOP'S PENCE BACKS BREAK IN INCOME TAX COLLECTION

Rep. Mike Pence (R-Ind.), the incoming House GOP conference chairman, expressed support Dec. 2 for a plan to use the remaining available funds from the financial markets bailout law to pay for a tax holiday in early 2009.

Under a plan to be proposed by Rep. Louie Gohmert (R-Texas), the remaining $350 billion of the $700 billion made available in the bailout law would be put toward a tax holiday from personal income tax and Social Security payroll taxes in January and February 2009. Gohmert is scheduled to introduce the legislation the week of Dec. 8, when Congress is next expected to be called into session, a spokeswoman said.

www.bna.com

 

[SuBe]

We call it the Fair Tax -- not the Perfect Tax
Monday, December 8, 2008
By: Adam Graham
From RenewAmerica.us
Recently on his radio program, Hugh Hewitt raised two objections to the National Retail Sales Tax (i.e. the Fair Tax.) That it would eliminate the charitable giving tax deduction and would eliminate the tax deduction on home mortgage interest.
Taking the first objection, as the Fair Tax only taxes retail sales, there would be no tax on charitable contributions. In neither case are you being taxed on the money you give to charity. And for the 70% of us who don't itemize our taxes, the Fair Tax would actually be an improvement.
What about Home Mortgage Interest? This is a thornier topic. Under current law, only those who actually itemize get a deduction on Home Mortgage Interest, everyone else is taxed on this income. Again, only 30% are actually taking this deduction.
Under the Fair Tax, the Principal Payments on your mortgage are not taxed. In addition, what we must understand about mortgage interest rates is that, like all other goods and services in the economy, tax is embedded into the Interest rate because banks must pay taxes on the interest income they receive. Without banks having to pay taxes on their interest income, interest rates will drop by 1/4th. Yes, some mortgage interest payments may be taxed as financial mediation service. However, in consideration of a lower interest rate, that payments will be made with 100% of a person's paycheck, I think taxpayers come out with a pretty good deal.
However, this leads me to a larger point about the way Fair Tax opponents attack the proposal. The argument against the Fair Tax is not that, when all options are weighed, we are better off with the current tax code than with the Fair Tax, but that certain features of the Fair Tax will not benefit people engaged in certain behaviors, or that the plan's delivery system is flawed. One such objection is the idea of giving every household in the United States a prebate equivalent to the taxes on spending up to the poverty level to ensure that no one is taxed for the basic necessities of life.
Some folks on the right decry the prebate as welfare. I wonder what they would call the Earned Income Tax Credit? Do they prefer a system in which illegal aliens are able to live in the country, take government services, and pay no taxes for it because they and their employers dodge the income tax?
The genius of our leviathan tax code is not its efficiency, or the way it encourages growth while collecting necessary revenue, but how it grants favors to certain groups and individuals in order to curry political favor. Fear that somehow these government bobbles might be taken away causes otherwise sensible people to rally around a cumbersome system that is a dead weight on our economy,
The tax code has become a motherly creature, rewarding us for doing what mother thinks is good (giving to charity, taking out student loans, paying mortgages, going to college) while punishing us for doing what she thinks is bad (investing in stocks and earning dividends, selling stocks and earning a Capital Gains, saving money and earning interest.) The tax code is a cavalcade of special interest breaks meant to control economic behavior according to the dictates of those who pay enough money to lobby Washington.
Lost in this is the ultimate purpose of taxes: To raise revenue in the way that is least harmful to the overall health and growth of the economy. If we are using the tax code as a way to make people buy homes, to social engineer, or benefit some industry over another, we've ultimately misused the tax code.
The fundamental question that must be asked is not, is the Fair Tax perfect or if there's anyone out there who might have to pay more under the Fair Tax than they do under the current code. The question that must be asked: Is the Fair Tax a better system for raising revenue while maintaining a strong economy?
Consider the current flaws of the Income Tax Code:

• Compliance costs of $350 billion per year.
• An untaxed underground economy of illegal aliens, drug dealers, prostitutes, and organized crime.
• Hidden taxes that hide true cost of government from the average American.
• Hidden taxes also weaken U.S. products overseas. American companies imbed the cost of taxes into the price of every product sold. Foreign companies do not.
• Our tax code encourages companies to move their business offshore. Trillions of dollars is put in the Cayman Islands and other tax havens to avoid the U.S. Income Tax.
• The corruption of our government in Washington, DC, which has been besieged by lobbyists who have turned the Internal Revenue code into their personal playground.
• The invasion of privacy by government, as well as the threat of identity theft from hundreds of millions of pieces of paper (W2s, 1098s, 1099s, etc.) floating around in the mail with the name, address, and social security number of taxpayers.

It's time for opponents of the Fair Tax to explain how to fix the problems with our current tax code without fundamental change rather than trying to find some group of people that may not do as well under a Fair Tax. Consider this, the government pays out $64 billion in Home Mortgage Deductions. Without taking anything else on my list into consideration, is $64 billion in Mortgage Deductions worth $350 billion in tax compliance costs? If not, then this piecemeal selective attack on the Fair Tax is irrelevant. And it's time to have a serious debate.

Originally posted here by Adam Graham.


The Hard and Worthwhile Road to the FairTax

more ...

 

[SoulManX]

We call it the Fair Tax -- not the Perfect Tax
Monday, December 8, 2008
By: Adam Graham
From RenewAmerica.us
Recently on his radio program, Hugh Hewitt raised two objections to the National Retail Sales Tax (i.e. the Fair Tax.) That it would eliminate the charitable giving tax deduction and would eliminate the tax deduction on home mortgage interest.
Taking the first objection, as the Fair Tax only taxes retail sales, there would be no tax on charitable contributions. In neither case are you being taxed on the money you give to charity. And for the 70% of us who don't itemize our taxes, the Fair Tax would actually be an improvement.
What about Home Mortgage Interest? This is a thornier topic. Under current law, only those who actually itemize get a deduction on Home Mortgage Interest, everyone else is taxed on this income. Again, only 30% are actually taking this deduction.
Under the Fair Tax, the Principal Payments on your mortgage are not taxed. In addition, what we must understand about mortgage interest rates is that, like all other goods and services in the economy, tax is embedded into the Interest rate because banks must pay taxes on the interest income they receive. Without banks having to pay taxes on their interest income, interest rates will drop by 1/4th. Yes, some mortgage interest payments may be taxed as financial mediation service. However, in consideration of a lower interest rate, that payments will be made with 100% of a person's paycheck, I think taxpayers come out with a pretty good deal.
However, this leads me to a larger point about the way Fair Tax opponents attack the proposal. The argument against the Fair Tax is not that, when all options are weighed, we are better off with the current tax code than with the Fair Tax, but that certain features of the Fair Tax will not benefit people engaged in certain behaviors, or that the plan's delivery system is flawed. One such objection is the idea of giving every household in the United States a prebate equivalent to the taxes on spending up to the poverty level to ensure that no one is taxed for the basic necessities of life.
Some folks on the right decry the prebate as welfare. I wonder what they would call the Earned Income Tax Credit? Do they prefer a system in which illegal aliens are able to live in the country, take government services, and pay no taxes for it because they and their employers dodge the income tax?
The genius of our leviathan tax code is not its efficiency, or the way it encourages growth while collecting necessary revenue, but how it grants favors to certain groups and individuals in order to curry political favor. Fear that somehow these government bobbles might be taken away causes otherwise sensible people to rally around a cumbersome system that is a dead weight on our economy,
The tax code has become a motherly creature, rewarding us for doing what mother thinks is good (giving to charity, taking out student loans, paying mortgages, going to college) while punishing us for doing what she thinks is bad (investing in stocks and earning dividends, selling stocks and earning a Capital Gains, saving money and earning interest.) The tax code is a cavalcade of special interest breaks meant to control economic behavior according to the dictates of those who pay enough money to lobby Washington.
Lost in this is the ultimate purpose of taxes: To raise revenue in the way that is least harmful to the overall health and growth of the economy. If we are using the tax code as a way to make people buy homes, to social engineer, or benefit some industry over another, we've ultimately misused the tax code.
The fundamental question that must be asked is not, is the Fair Tax perfect or if there's anyone out there who might have to pay more under the Fair Tax than they do under the current code. The question that must be asked: Is the Fair Tax a better system for raising revenue while maintaining a strong economy?
Consider the current flaws of the Income Tax Code:

• Compliance costs of $350 billion per year.
• An untaxed underground economy of illegal aliens, drug dealers, prostitutes, and organized crime.
• Hidden taxes that hide true cost of government from the average American.
• Hidden taxes also weaken U.S. products overseas. American companies imbed the cost of taxes into the price of every product sold. Foreign companies do not.
• Our tax code encourages companies to move their business offshore. Trillions of dollars is put in the Cayman Islands and other tax havens to avoid the U.S. Income Tax.
• The corruption of our government in Washington, DC, which has been besieged by lobbyists who have turned the Internal Revenue code into their personal playground.
• The invasion of privacy by government, as well as the threat of identity theft from hundreds of millions of pieces of paper (W2s, 1098s, 1099s, etc.) floating around in the mail with the name, address, and social security number of taxpayers.

It's time for opponents of the Fair Tax to explain how to fix the problems with our current tax code without fundamental change rather than trying to find some group of people that may not do as well under a Fair Tax. Consider this, the government pays out $64 billion in Home Mortgage Deductions. Without taking anything else on my list into consideration, is $64 billion in Mortgage Deductions worth $350 billion in tax compliance costs? If not, then this piecemeal selective attack on the Fair Tax is irrelevant. And it's time to have a serious debate.

Originally posted here by Adam Graham.


The Hard and Worthwhile Road to the FairTax

more ...

 

[SuBe]

The Hard and Worthwhile Road to the FairTax
Friday, December 5, 2008
By: Ken Hoagland

The FairTax will not be enacted without overwhelming citizen pressure.

The answer to the strategy question of “How can the FairTax be enacted?” is both simple and hard: one Congressional district at a time with each step forward reinforcing the grassroots works of others. The larger answer is that only the full participation of the American body politic has the power to overcome the entrenched interests in Washington, D.C. that surround the income tax system. The good news–and bad news– is that the benefits of the income tax system are largely confined to those in and around Congress while the disadvantages and destructive effects of direct taxation affect the entire nation. Implicit in such strategy questions are two more fundamental questions: can the many overcome the politically powerful few and, most significantly in my view, does our form of democracy still work when the majorities’ interest requires change by the political elite? The FairTax is, seen in this light, is nothing less than a test of the fundamental promise of the Framer’s vision of a representative democracy.

We, the people, essentially have to run over the tax lobby and all their friends in Washington, D.C. for the FairTax to see enactment. This is no small task and one that the political class largley dismisses as unrealistic. True; one cannot ever underestimate the clout this crowd will bring to bear in defense of the lucrative federal system that allows favor trading, huge profits, loophole buying/selling and the understandable social networking that this significant Washington, D.C. industry produces. Pundits, academicians, legislators, lobbyists and even tax-reform groups and think-tanks all feed off the income tax system’s workings in Washington and have –and will–resist this needed and sensible reform. The merits of a tax system that unleashes our potential for invention, competition, productivity and investment are not, alone, sufficient to win Members of Congress away from their self-interest in power and profit–and the very human element of resistance to change. Even the potential of the FairTax to solve the current economic crisis by restoring consumer confidence, allowing distressed home owners the increased take home pay to satisfy mortgage obligations and attract a predicted $10-$15 trillion of foreign investment into our economy does not trump the power and profit motives of income tax system defenders. The FairTax has already suffered attacks from this group that distort the issue for political advantage (in races from Arizona to Texas to Georgia), ignore the considerable research that has been accomplished (the President’s Advisory Panel on Tax Reform), and even, by a well-known income tax lobbyist, falsely assign the genesis of the FairTax to a religious group.

But opponents have made the mistake of underestimating the growing grassroots strength of the FairTax movement. In essence, this issue is a case in point on the distance (and disconnect) between the political class of “elites” and the citizen–because the income tax system is very “positive” for those who work it in Washington, D.C. and very “negative” for almost everyone else. In this, the political class can only continue profiting from a clearly destructive system through denial of the most fundamental tenant of our form of government–-self-rule by our citizens. To achieve the red hot “heat” necessary to overturn such self-interest, a far greater number of the public must become aware of their immediate self-interest and the harm that this system produces for them today and in the future. Only when Members of Congress face daily hectoring, the loss of voter support and imminent defeat will the FairTax go to the floor of the House. That kind of intense citizen pressure has not yet been achieved but grassroots strength is steadily growing toward that day and, in pockets of the nation, this intensity of citizen demand is being produced today. When we finally see the FairTax campaign reach the “tipping point” of such intense citizen pressure, inevitable calls from the status quo crowd–this will include both Democrats and Republicans– for a modification of the FairTax will occur. These calls will include resistance to repeal of the 16th amendment and, upon introduction, a floor amendment to allow some item–probably a food, medicine or service–to be exempted from the FairTax. It will sound eminently reasonable but through this one amendment, the door will be left open to continued Congressional mischief to pick winners and losers (to punish and reward) and lobbyist’s continued role as purveyors of influence and money.

In the case of the FairTax floor debate, supporters will have a matter of hours to raise constituent pressure to the boiling point and shut down the Congressional attempt to retain power over the tax system and the ability for self-dealing that so corrupts the system today. The mechanics of this require a large presence in Washington during debate, an e-mail network that can be quickly alerted in a call to action, and a phone and fax response that will overwhelm Congressional offices both In Washington and in home districts. The same fight will occur in the Senate.

For the Constitutional Amendment fight, the timing will be easier but the goal of winning two-thirds of the entire Congress supporting the legislation will be more difficult. Without any doubt, both Democrats and Republicans will be needed so those who want to fashion the FairTax as a Republican-only issue should really reconsider that position. The FairTax is, in my view, a citizen initiative that transcends political affiliation because to succeed, all are required and upon enactment–all benefit. In this, the same intense pressure from constituents will be needed in order to secure overwhelming bi-partisan support for passage.

Once out of the Congress, FairTaxers have little doubt that the same pressure on state legislators from a newly empowered citizenry enjoying the immediate benefits of the FairTax will produce quick results in state-by-state ratification of the Constitutional Amendment. State legislators, after all, have no stake in the profits and power surrounding the income tax system.

I often hear the question, “what guarantee is there that… (fill in the bad outcome caused by Congressional self interest)?”. Simply put, there is no guarantee that the Congress and those dependent on the profits from the buying/selling of the tax code will not work mischief. In our Republic, there has never been such a guarantee on any public policy except our Constitutionally guaranteed rights–and that is precisely why we now have a government on an unsustainable path of debt–and other failures of public policy.

The FairTax requires, as does our form of government, advanced citizenship. It is seen too rarely but through the FairTax that ethic must be restored both for the FairTax to advance–and for the promise of the Founding Fathers to be both renewed and fulfilled. The problem–and the beauty–of self-government is that if we want it–we must acheive it. Those who have come to expect that our “leaders”– or someone else–will make this happen or guarantee the policy outcome don’t truly understand the nature of a representative democracy. It’s understandable–we, as citizens, are increasingly conditioned to rely upon the statefor comfort and security, leaving us free to pursue happiness. From Hurricane Katrina’s lesson that overreliance on government is unsound to the almost daily stories of government agency waste and fraud to the sad state of our economy, life teaches us something quite different. We get the government we deserve and we’ll only get the tax system we work to produce.

Those in Washington have worked to produce something that works quite nicely–and lucratively– for them, even if destructive to the economy and our citizens. It is high time that this public policy was made to actually serve the larger public and it will require reminding the citizenry of their power and perogatives under the Constitution to acheive that goal. Hard? Yes. Worth it for far more than even a far better tax system? Yes

 

[SuBe]

well not really Fair Tax related but this is the closest thread and it's interesting none the less.



www.bna.com

Thanks for Sharing IH, I've been trying to keep my eyes open for news on this.

 

[SuBe]

Today's FairTax Fact:

Did you know, according to the Internal Revenue Service (IRS), more than $3.5 billion in taxes is owed by almost half a million Federal employees and retirees? Of the nearly half-million Federal employees, 1,000 work on Capitol Hill. How can we expect Americans throughout the country to decipher our complex tax code when those who are helping to legislate the tax code are themselves confused?

 

[SuBe]

Today's FairTax Fact:

The Department of Commerce reports in its most recent Economic Census that just 688 retailers (0.03%) in the U.S. make 48.6% of all the sales. Just 3.6% of retailers collectively make 85.7% of all U.S. sales. Fewer points of collection will mean higher compliance with the FairTax than with today's complex system.

 

[SuBe]

Today's FairTax Fact:

If we deivde the 2001 net tax gap estimate of $255 Billion by 120 million individual taxpayers, we can see that each of those taxpayers in 2001 paid, on average, an extra $2000 to subsidize the unwillingness or inability of some taxpayers to pay their fair share.

 

[SuBe]

Today's FairTax Fact:

According to the Tax Foundation, in a 2005 Special Report entitled, The Rising Cost of Complying with the Federal Income Tax, Americans spent approximately $265 billion to comply with the Internal Revenue Code. The Tax Foundation estimates that this number will reach $483 billion by 2015. This Special Report can be found at http://www.taxfoundation.org/publications/show/1281.html.



The Government Accountability Office (GAO) estimated that Americans spent 6.4 billion hours completing paperwork for the Internal Revenue Service (IRS).



If we spend over $200 billion a year to bring in $2 trillion to the Federal government, this is not only inefficient; it is just plain stupid. The FairTax will save Americans hundreds of billions of dollars in compliance costs each year, and April 15 will be just another day in the lives of all Americans.

 

[Handsome Rob]

The Cost of Withholding (Note: these figures refer to the income tax only and do not include employment taxes):

According to the IRS website, the 2007 gross collections from the IRS totaled $1,366,241,437,000.00 (or 1.37 trillion dollars) for individual taxpayers (single, married, etc.). Refunds for 2007 totaled $248,641,454,000.00 (or 249 billion dollars).

This means that, over the course of 2007, American taxpayers had removed from their pockets 249 billion dollars more than the government actually was due. There were 133,917,000 individual tax returns filed. This works out to an average of $1,856.68 per household.

Taken in 12 equal installments, this means that the average household lost $154.72 to the government each month that they never really owed. This is money that they didn't have to buy groceries, pay bills, put in savings, or invest to get any sort of return. Had they chosen to invest it each month in a relatively stable source and manage a 5% annual return, they would have an additional $46.42 in interest (that's not a lot, but it's better than $0) to spend or save.

Your tax refund that the government "gives" you isn't the government giving you money. It's the government giving you back your money--money they never should have had in the first place. And, they get to keep it for a whole year while it does nothing for you.

Under the FairTax, a monthly prebate would cover the taxes you pay up to the poverty line each month. This would ensure that at the beginning, you are already covered for taxes you don't owe. So, you keep all the money you are due all month (and all year) long. The government only gets what it is owed, and your money can work for you all year long.

That's worth giving up an annual "refund" for, don't you think?

 

[SuBe]

Today's FairTax Fact:

Isn’t it a big deal to tax services for the first time? It has never been done before.

A: It is a big deal, but not for the reasons that you are thinking. The National Governor’s Association has long said that our nation’s sales tax system needs to be revised. Our economy is becoming more and more service oriented, and thus our current “goods-focused” sales taxes no longer make sense. Passing the FairTax will help to move the states’ sales tax systems into the 21st century.

But not all states are waiting for the FairTax. Many states are already moving forward. A recent survey by the Federation of Tax Administrators found 168 categories of services in the American economy, and every one was being taxed by at least one state. In fact, the survey found that five states already have sales taxes that tax 85% or more of those service categories.

Are you wondering how to put a sales tax on dentistry? Ask Delaware . It already does. Do you think that a sales tax on doctors is difficult to collect? Ask Hawaii . It has been charging the sales tax for years. Are you wondering how to collect a sales tax on barber shops? South Dakota can help with that answer. When someone tells you that we’re doing this for “the first time,” remember this: of the 168 categories of services in the American economy, somewhere in the United States we are already collecting a sales tax on every one of those services.

 

[SuBe]

Today's FairTax Fact:

Q: How can we be sure that the costs associated with the embedded taxes will disappear?

A: Two words: simple economics. The FairTax will bring absolutely no new economic forces to bear on the marketplace. The markets will operate exactly the same way tomorrow as they do today. So the question is, “Why is a 19” television cheaper today than it was 10 years ago?” Why is a VCR cheaper today than it was 10 years ago? Why are computers cheaper today than they were 1 year ago…and 3 years ago…and so on? The answer again is simple economics. Do businesses want to keep prices high and maximize their profits? Of course…but they can’t in a competitive economy. That is why all of the prices of all of the goods above have continued to decline in price as the business inputs for those products have declined in price.

This question is always a fun one because I generally reply with the opposite question: If we raise embedded taxes by 20%, will the price go up? “Of course,” everyone says. “If you raise taxes, it will raise prices.” And we believe that. Every time the cigarette tax goes up, the price of cigarettes goes up. Every time the price of oil goes up, the price of gasoline goes up too.

So why do we believe that raising taxes will raise prices…that raising the cost of business inputs will raise prices…and yet we don’t believe that lowering taxes and lowering the cost of business inputs will lower prices? We’re just cynics, I suppose. Thankfully, we have centuries of economics and a host of real-life examples to prove that prices really will decline.

Have you ever noticed that all of the gas stations on the same corner tend to have the same prices? That is competition. And, if you don’t believe in competition…if you really think that companies can raise prices and keep them high…look at the recent rise in gas prices. We all talk about how high prices rise, but have you ever seen the price fall? Of course you have. If greedy business men can really keep prices high when the cost of business inputs don’t demand it, why does the price of gas ever decline…even by one penny? The answer is that competition overwhelms that greed…and the best way to make money is to lower your price and gain more volume.

Do you think that the price of taxes hidden in goods is any different than the price of business inputs, like oil, hidden in goods? It’s not. Changing the tax burden for the whole economy is just like changing the price of oil for gasoline.

So next time you wonder how we can be sure that when the FairTax eliminates embedded taxes price will decline, look at that local gas station and be confident.

 

[SuBe]

Today's FairTax Email:

Dear FairTax supporters,

These are the times that try men's souls. Thomas Payne penned those words back in 1776, yet they seem altogether fitting and proper now as 2008 draws to close while one of the darker chapters in American economic history continues to unfold.

In his day, Payne, a Founding Father, knew nothing of mortgage-backed securities, credit default swaps and other financial mismanagement practices poised to sink the American economy, but he understood fundamental threats to freedom and security, and recognized when action was required from all of us regardless of our political leanings. Perhaps that's why now, some two and a half centuries later, we don't describe leaders like Payne by their political party. Instead, we call them idealists. We call them visionaries. Or we simply call them "Americans." And it's in that vain now, in the midst of the most dire economic situation in generations, that we must rise up again, not as Democrats or Republicans, Libertarians or Independents, but as Americans and fight for the FairTax, an answer to save the U.S. economy.

The time to be heard for the FairTax is now. As this year winds down (and I suspect for many of you, 2008 and the financial carnage it wrought, won't end soon enough) we cannot turn our eyes away from the huge challenges ahead. For the FairTax cause, we have two core missions as we move into 2009:

a) Educate our fellow citizens that the FairTax is the solution we need to save the American economy

b) Cross the political aisle and build a strong coalition of Democrat, Republican and Independent supporters for the fight ahead

On both of these fronts, we have made great gains but there is still much work to be done, and the new phase must begin now. As a first step to promote the FairTax to both the new Obama administration and Democratic Congress, as well as a Republican party looking to rebuild its standing, here are three things you can do now:

1. Tell Democrat President-Elect Obama why he should support the FairTax
President-elect Obama is asking citizens to, "Share your vision for what America can be." That vision should include the FairTax. Go to [/COLOR]www.fairtax.org/obamaand tell the President-elect why his administration should back the FairTax. And remember, regardless of whomever you voted for in the general election, we all need to make Mr. Obama into a FairTax supporter, so please be courteous in your message about the FairTax.

2. Tell Republicans to rebuild their party around the FairTax
Members of the GOP leadership are collecting ideas to revamp the Republican platform. Let's make sure the FairTax is part of that mix. You can endorse the FairTax plan (currently ranked 4th) directly on their site.

3. Tell everyone that the FairTax is the bold new idea this country needs
The non-partisan site "White House 2" is collecting new ideas for the Obama administration. The FairTax is currently ranked number 2, but should be leading the pack on bold new plans for the future of this country.

These are indeed times that try men's (and women's) souls. And these times demand new ideas, new leadership and new thinking. They demand the FairTax. Help us make sure that point is heard in Washington, on both sides of the aisle, as we move into 2009 and the days ahead.

Sincerely,

Ken Hoagland
National Communications

 

[The Incredible Hulk]

Thanks for Sharing IH, I've been trying to keep my eyes open for news on this.

some updates:

http://www.boston.com/bostonglobe/editorial_opinion/oped/articles/2008/12/14/better_than_a_bailout/

and you'll like this next one as the one proposal has the tax burden being taken off income for those 2 months and put on gasoline as a form of a consumption tax:

http://economy.nationaljournal.com/2008/12/a-payroll-tax-holiday.php?rss=1

http://www.worldnetdaily.com/index.php?fa=PAGE.view&pageId=83682

 

[SuBe]

some updates:

http://www.boston.com/bostonglobe/editorial_opinion/oped/articles/2008/12/14/better_than_a_bailout/

and you'll like this next one as the one proposal has the tax burden being taken off income for those 2 months and put on gasoline as a form of a consumption tax:

http://economy.nationaljournal.com/2008/12/a-payroll-tax-holiday.php?rss=1

http://www.worldnetdaily.com/index.php?fa=PAGE.view&pageId=83682

Thanks IH, we have a new Thread for this, I'll Post this for you.

It's the Gohmert Plan Thread.

 

[SuBe]

Todays' FairTax Facts:

The FairTax untaxes education. The FairTax rewards education and upward mobility in the simplest and most powerful way: It eliminates tuition from all federal taxation.

FairTax effectively untaxes the poor making college and education opportunities more available to everyone.

 

[SuBe]

Stevens Point Journal
Fight "hidden" business tax

December 8, 2008 - http://www.stevenspointjournal.com/ -

Wisconsin's Democrat Senate majority leader was on (Wausau, Wis.) WSAU 550 AM recently. His name is Russ Decker. I called and asked him, "In a small business where does the money come from to pay business taxes?" I said, "I'll hang up and listen to your answer on the radio." Senator Russ Decker said, "I imagine it comes from the product they sell." Pat Snyder said, "Well, that was short, sweet, and simple." Tom King added, "I think the point he was trying to make was that businesses don't pay taxes, consumers do." At that point I could hear Senator Decker laughing a guilty laugh like he was just caught red-handed.

Who is it that Sen. Decker thinks he's fooling? We all know that businesses don't print money and that their only sources of funds are consumers. The business tax is a hidden tax on buyers, which harm the poor most of all.

"Tax Foundation President Scott Hodge says the "federal corporate income tax quietly taps family pocketbooks for nearly $370 billion a year in the form of higher prices, lower wages and poorer return on investment." "In 2006 this was $3,900 per household."

What could taxpayers do with an extra $370 billion per year? What could your family do with an extra $3,900 per year? Why do we put up with this costly paper chase every year? To help combat this nonsense visit www.zaptheirs.ning.com. Join millions of Americans who have made the FairTax the No. 2 issue at an Obama issues Web site http://feedback.whitehouse2.org/.

Al Ose

Regional Director WI, Americans for Fair Taxation

 

[SuBe]

Today's FairTax Fact:

The FairTax plan reduces the cost of American manufacturing considerably. Under the FairTax, American manufactured goods and services no longer enter the marketplace burdened with hidden corporate taxes, the cost of compliance with such taxes, and Social Security employee matching. This amounts to an average cost reduction from 12 percent to in some cases more than 25 percent. Said another way, American goods become 12 to 25 percent more competitive.

 

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Today's FairTax Fact:

Q: The 23% tax rate seems too high. I just did my taxes, and after all of my deductions and exemptions, I only paid 14% of my income in taxes. Why is the FairTax a good deal for me?

A: We get this question all of the time…and it is a good one. Sadly, it is also proof of the problem with our tax code today. The problem is that you believe that you are only paying 14% in taxes…and you have forgotten about the payroll taxes that you pay and the corporate income taxes built into the price of everything that you buy.

Remember, the FairTax is revenue neutral, which means that it is not a tax cut. The FairTax expects that as Americans we will pay just as much in taxes tomorrow as we do today. The only differences will be that (a) we’ll know how much we are paying because it will be visible and (b) we’ll free the economy from the constraints of the income tax so that a rising economic tide can lift all boats.

Let’s imagine that you earn $100,000 (the round number, while high, will make the math easier)…and imagine that after all of your deductions, exemptions and credits, your income tax bill was $14,000, or 14% of your total income. Now, remember that you also must pay 7.65% for payroll taxes, which is another $7,650. Also, remember that your employer must pay another 7.65% of your salary in payroll taxes (or, if you’re self-employed, you must pay this amount directly). That is another $7,650. Adding these amounts together, you will have paid $15,300 in payroll taxes.

Suddenly, even though you thought that you were only paying $14,000, or 14%, we now see that you’re paying $29,300, or 29%, and we haven’t even calculated the hidden taxes in the price of everything that you buy.

This is why the FairTax is a better deal for you. Today, taxes are hidden so you don’t really know how much you’re paying. Plus, today, for every dollar handed out to someone in a special tax break, tax credit, or tax exemption, the tax bill of everyone else must rise by that dollar. The FairTax will eliminate all of these special preferences, and when those who today receive those preferences start to pay more, you can begin to pay less.

 

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May 9, 2002Testimony Before the Subcommittee on Select Revenue Measures
of the House Committee on Ways and Means
Hearing on the Extraterritorial Income Regime


Thank you Mr. Chairman and members of the committee. I am Herman Cain, Chairman of Godfather’s Pizza, Inc., a chain of 600 small businesses, Chief Executive Officer of T.H.E., Inc., a leadership consulting company, and, I am a member of and speaking on behalf of Americans For Fair Taxation. I appreciate the opportunity to testify before your committee on “promoting the global competitiveness of US businesses in the global market place.”
There are two basic issues for multinational corporations in the global market place. First, they are at a competitive disadvantage due to the imbedded costs of taxes on corporate profits, and taxes on payroll for domestically produced products. Secondly, the variations in tax law from country to country create many complex and costly inconsistencies. In fact, the extremely high cost of compliance may actually exceed the amount of taxes paid. The net result is that billions of dollars of foreign profits by US businesses are stranded overseas, which cannot be economically repatriated to benefit our domestic economy. The solution is not more laws, more regulations, or even more tax treaties with more countries. The solution is a new tax system, which would eliminate these issues.
The current income tax system cannot be reformed. It creates disadvantages for multinational businesses, domestic businesses, individuals, and our government. No amount of tinkering with a portion of the tax code is going to fix it. It is too complicated. It inflates the costs of US goods and services to other nations. It is too unfair and inefficient. It discourages people from working harder to achieve upward economic mobility, which destroys hope and opportunity. The current tax system needs to be replaced. It can be replaced with The FairTax (H.R. 2525), which was reintroduced in the House in 2001 by Congressmen John Linder of Georgia, and Colin Peterson of Minnesota.
Several commissions over the last 20 years, including the one I served on in 1995 (The National Commission on Economic Growth and Tax Reform), have all concluded that a replacement tax system should satisfy six principles. First, it should promote economic growth by reducing marginal tax rates and eliminating the tax bias against savings and investments. Second, it should promote fairness by having one tax rate and eliminating all loopholes, preferences and special deductions, credits and exclusions. Third, it should be simple and understandable. Simplicity would dramatically reduce compliance costs and allow people to truly comprehend their actual tax burden. Fourth, it should be neutral rather than allowing misguided officials to manipulate and micromanage our economy by favoring some at the expense of others. Fifth, it should be visible so it clearly conveys the true cost of government and so people would not be subjected to hidden changes in the tax law. Sixth, it should be stable rather than changing every year or two so people can better plan their businesses and their lives. Before expanding on each principle, consider the compelling advantages of replacing the current income tax code with The FairTax.

• Gross Domestic Product (GDP) would increase 10.5% in the first year and level off in succeeding years at approximately 5% annually. (Dr. Dale Jorgenson of Harvard University)

• Consumer prices would decrease 20 to 30 percent by eliminating the nearly 250 billion dollars in annual compliance costs, and eliminating the taxes on corporate profits and labor (payroll taxes), which are imbedded in what we pay for goods and services. (Dr. Dale Jorgenson and other economists)

• A single national sales tax rate on all new goods and services of approximately 24% (to be revenue-neutral) would replace the 1.7 trillion dollars of taxes on income.
• Annual uncollected taxes of 210 billion dollars (IRS estimates) would not escape The FairTax. This amount grows by 12 billion dollars each year.

• Taxes of 35 billion dollars on expenditures by non-residents would be collected.

• Taxes from the “underground” economy would be a bonus to the federal treasury.

• Imported goods would be treated the same as domestically produced goods. This means US businesses would be much less likely to locate their plants overseas.

• All taxpayers would have an equal voice, not just people who can afford tax lobbyists and skilled tax accountants.

• No taxes on the “poor” because basic necessities, as defined by the Department of Health and Human Services, would not be taxed by utilizing a rebate.
• No taxes on earnings from a second job for someone who is trying to “get ahead.”

• No taxes on education.

• More time for Government to focus on national and international issues.

These advantages of a national sales tax on consumption have been well researched, analyzed and documented by some of the most respected business people, economists, and academicians in the country. Hundreds of thousands of citizens are now actively supporting a change from an income tax to a national sales tax on consumption. We are now seeking the political leadership and courage to make the greatest country in the world even greater.
The FairTax (NST) would encourage Economic Growth
The FairTax would significantly enhance economic performance by improving the incentives for work and entrepreneurial activity and by raising the marginal return on savings and investments. Entrepreneurs and small business owners would be given greater access to capital, the life-blood of a free economy. Investments would rise, the capital stock would grow, productivity would increase and the output of goods and services would expand. The economy would create more and better paying jobs for American workers and take-home pay would increase considerably.
Although the magnitude of the economic growth generated by a single rate, neutral tax system causes lively debate among economists, virtually all agree that the large marginal tax rate reductions with a national sales tax combined with neutral taxation of savings and investments, would have a powerful positive effect on the economy.
For example, Dr. Dale Jorgenson of Harvard University conducted a research analysis (1997), which showed that a national sales tax would produce a 10.5% increase in Gross Domestic Product, a 76% increase in real investments, and a 26% increase in exports in the first year of a national sales tax enactment. Those increases would level off at 5%, 15%, and 13% respectively over the succeeding twenty-five years. Nothing promotes the competitiveness of US businesses more than growth in our national economy, more dollars to grow our businesses, and a level playing field for selling our products and services to other nations.
The FairTax would be Fair, untax the “Poor,” and untax Education
The FairTax would provide every household in America with a rebate of sales tax paid on necessities. Thus, The FairTax is progressive and every family is protected from tax on essential goods and services. Because of the planned rebate, those below the poverty line would have a negative effective tax rate and lower middle-income families would enjoy low effective tax rates.
The responsibility of paying taxes to fund our way of life would be fairly distributed. It would, in fact, be much more fairly distributed than the income tax. Wealthy people spend more money than other individuals. The FairTax will tax them on their purchases and as a result, the wealthy pay more in taxes. If, however, they use their money to invest in job creating businesses, or to finance research and development to create new products, (all of which help improve the standard of living of others), those activities would not be taxed. The FairTax is premised on the notion that it is fairer to tax individuals when they consume for themselves above the essentials of life, rather than when they invest in others or contribute to society.
The FairTax would in effect give a supercharged charitable contribution deduction because people would be able to give to their favorite charity free of any income tax, payroll tax or sales tax. The charitable deduction today allows people to make their contributions with pre income tax dollars, but after payroll tax dollars. For the three-quarters of Americans who do not itemize, most must today earn $155 to give $100 to their favorite charity or to their place of worship. [1] Under The FairTax, they must earn only $100 to give $100, since under The FairTax what you earn is what you keep and charitable contributions are not taxed.
Education is one of the keys (along with savings and hard work) to an improved standard of living. That certainly was true in my case. I was the first person in my family to attend and graduate from college. It took a lot of hard work, and a lot of sacrifice by my parents. The FairTax is education friendly and is dramatically more supportive of education than current law. The FairTax embodies the principle that investments in people (human capital) and investments in things (physical capital) should be treated comparably. The current tax system, in stark contrast, treats educational expenditures very unfavorably.
Education is the best means for the vast majority of people to improve their economic position. It is the most reliable means people have to invest in themselves and improve their earning potential. Yet the tax system today punishes people who invest in education, virtually doubling its cost. Only a national sales tax on consumption would remove this impediment to upward mobility. No other tax plan would do so.[2]
Today, to pay $10,000 in college or private school tuition, a typical middle-class American must earn $15,540 based only on federal income taxes and the employee payroll tax.[3] The amount one must earn to pay the $10,000 is really more like $20,120 once employer and state income taxes are taken into account.[4]
The FairTax would not tax education expenditures. Education would be paid for with pre-tax dollars. This is the equivalent of making educational expenses deductible against both the income tax and payroll taxes today. Thus, a family would need to earn $10,000 to pay $10,000 in tuition, making education much more affordable (not considering state income taxes on education). The FairTax would make education about half as expensive to American families compared to today.
The FairTax would improve upward mobility but no longer punish work, savings, investments or education. It would better enable people to improve their lives. It would no longer hold people back.
The FairTax would be Simple
The FairTax is a simple tax. Individuals who are not in business would have absolutely no compliance burden, nor would they be subject to the discretionary interpretation of the current convoluted tax code. As for businesses, it puts many fewer administrative burdens on businesses. In fact, filling out The FairTax tax return is comparable to filling out line one (gross revenue) of an income tax return. There would be no more alternative minimum tax, no more depreciation schedules, no more complex employee benefit rules, no more complex qualified account and pension rules, no more complex income sourcing and expense allocation rules, no more foreign tax credit, no more complex rules governing corporate acquisitions, divisions and other reorganizations, no more uniform capitalization requirements, no more complex tax inventory accounting rules, no more income and payroll tax withholding and the list goes on. Businesses would simply need to keep track of how much they sold to consumers.
Compliance costs would, therefore, fall under The FairTax. Today, according to the Tax Foundation, we spend about $250 billion each year filling out forms, hiring tax lawyers, accountants, benefits consultants, collecting information needed only for tax purposes and the like. These unnecessary costs amount to about $850 for every man, woman and child in America. To the extent these costs are incurred by businesses, they must be recovered and consequentlyare embedded in the cost of everything we buy. The money we spend on unnecessary compliance costs is money we might as well burn for all of the good it does us. The Tax Foundation has estimated that compliance costs would drop by about 90 percent under a national sales tax.
The FairTax would be Neutral
Under The FairTax, all consumption would be treated equally. The tax code punishes those who save and rewards consumption. Under The FairTax, no longer would the tax system be in the business of picking winners and losers. The tax code would be neutral in the choice between savings and consumption, neutral between types of savings and investments and neutral between types of consumption.
The FairTax would be Visible
The FairTax is highly visible, because there would be only one tax rate Congress could modify on all taxpayers at the same time. Moreover, all citizens would be subject to any tax increases, not just a targeted few. It would be much harder for Congress to adopt the typical divide-and-conquer, hide-and-disguise tax increase strategy it uses today. The FairTax would explicitly state the contribution to the Federal government each and every time a good or service is purchased.
The FairTax would be Stable
The FairTax would be more stable than the present system for two reasons. First, because it is so simple and transparent, it would not invite tinkering in the way that the current system with its thousands of pages of code and regulations does. People would resist attempts to make it more complex and attempts to favor special interests because they would understand what is going on. Second, taxing consumption is a more stable source of revenue than taxing income. There are fewer fluctuations in the consumption base than in the income base.
A recent study showed that for the years 1959 to 1995, a national sales tax base was less variable than the income tax base. Why? When times are unusually good, people will usually save a little more. People tend to smooth out their consumption over their lifetime. They borrow when young, save in middle age and spend more than their income in retirement.
Impact on Businesses
Businesses would utilize a zero corporate tax rate to create new jobs, grow their businesses, and be more competitive in the global market place. Their shareholders would not be taxed on dividends received from the corporation, or taxed on capital gains made on their investment in the business. This would stimulate business investments, creating more opportunities for working Americans. Compliance costs would be lower. Moreover, over time, most states would make their sales taxes conform to the federal sales tax, reducing the costs of complying with multiple rules in each state and political subdivisions.
If people were willing and able to purchase more goods and services in a healthy economy, they would spend more money at retailers. Spending and shopping is no longer a luxury activity, it is a part of our way of life. There is nothing that hurts businesses more than a slow economy and nothing that helps them more than a good economy. In this sense, The FairTax would help all businesses.
Currently, consumption purchases must be made with after-income-tax and after-payroll-tax dollars. The primary difference between a sales tax and an income tax is that the income tax doubles, triples or sometimes quadruples taxes on savings. Consumers would see their paychecks increase by nearly two trillion dollars. Since The FairTax is not a tax increase but is revenue neutral, the repeal of the income and payroll taxes, plus the decrease in consumer prices would provide consumers with the money necessary to pay for The FairTax.
Instead of having to comply with the complexities of the income tax, payroll tax, and various excise taxes, there would be one sales tax on all goods and services. Period. Retail businesses would simply need to calculate on a monthly basis its total retail sales. Retailers would receive an administrative fee (1/4 of one percent) for collecting the sales tax.
In summary, The FairTax would be a “win, win, win” for businesses, citizens, and government. Just consider the compelling nature of the advantages discussed earlier.
I realize that there are political and public hurdles to making such a change to how we fund our government. In fact, many people simply don’t believe that it can happen. They have given up on our government’s ability to do what is in the best interest of its people and our nation. To those people I ask, where would we be today if George Washington and the founding fathers had given up the fight to become an independent nation? We owe it to them, to ourselves, and most importantly to our children to correct a system that has gotten out of control.
Conclusion
People want to be able to dream and to pursue their dreams. People want the liberties for which our founding fathers fought and DIED. People want to pay their fair share to keep this Country safe and great. As Dr. Benjamin E. Mays, late President Emeritus of Morehouse College said, “It isn’t a calamity to die with dreams unfulfilled, but it is a calamity to have no dreams.” The current tax system not only destroys the ability of people to dream and make their dreams real, it causes too many people to just give up.
We need The FairTax -- a tax system more appropriate for a free society. The current tax code CANNOT BE REFORMED to achieve the stated objectives. It MUST BE REPLACED. Please use the power of the Congress to replace our current income tax code.

Please read if you are interested.

 

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Just What This Downturn Demands: A Consumption Tax
Friday, December 26, 2008
By: Robert Frank

From the New York Times, November 9, 2008
The country is now in the midst of the deepest economic crisis since the Great Depression. But as a new administration prepares to enter the White House, the crisis could end up being a potent ally for change. Without it, political resistance to the steps needed to address our most acute and longstanding economic problems would be almost insurmountable.

Despite broad agreement that the nation needs to increase spending in many domains — including infrastructure, health care, scientific research and clean energy development — no one has forged a legislative coalition capable of raising the necessary tax revenue. But with the country sliding into what promises to be a sharp and protracted economic downturn, it is imperative to increase spending over the short run, regardless of how we pay for it.

Even stalwart conservatives concede the point. For example, Martin Feldstein, the Harvard economist who was an adviser to the campaign of Senator John McCain, recently wrote in The Washington Post, “The only way to prevent a deepening recession will be a temporary program of increased government spending.” Mr. Feldstein suggested that government might need to offset a shortfall of some $300 billion in household spending.
In the long run, though, it will be necessary to raise enough tax revenue to balance the budget. One of the most effective ways to do that is by changing what we tax. Most federal revenue now comes from the income tax. Because a family's annual income equals the amount it spends each year plus the amount it saves, we are effectively taxing savings. And savings rates have fallen precipitously, often dipping into negative territory as families have used home equity loans and credit card debt to spend more than they earned. Because the country needs to save more, taxing savings makes no sense.
The first reform that Barack Obama should consider is replacing the progressive income tax with a progressive tax on consumption. A family would report its income to the Internal Revenue Service as it does now, and also its savings, as it now reports contributions to retirement accounts. Annual consumption would then be calculated as the family's income minus its savings. Its taxable consumption would be that amount minus a large standard deduction — say, $30,000 for a family of four.

A family that earned $60,000 and saved $10,000, for example, would have taxable consumption of $20,000. Initial tax rates on consumption would be low, and would then rise steadily with consumption, topping out at higher levels than the current top rates on income.

Such a tax could raise more revenue than the current system, yet would be far less burdensome for families at nearly all income levels. Because of the large standard deduction, middle-income families would pay less than they did before, and high-income consumers could limit their tax increases by saving more.

How painful would that be? Some wealthy families now spend millions of dollars on coming-of-age parties for their children. A steeply progressive consumption tax would encourage them to spend less, which would not be much of a sacrifice, since the main effect would be to lower the bar that defines an acceptable coming-of-age party for people in their tax bracket.

Other changes in what we tax could further reduce the revenue shortfall while producing positive side effects. Energy and climate specialists, for example, have long advocated taxes on carbon. The burden of these levies would be lessened by the resulting reductions in pollution and congestion.

Imposing new taxes is never easy. But recent research suggests innovative ways of making it more palatable. Behavioral economists have shown that the pain caused by a loss is far greater than the pleasure caused by a gain of the same magnitude. This asymmetry, called loss aversion, helps explain why it is so hard to pay higher taxes. Doing so means reducing consumption now — a loss that is immediately painful.

To overcome this hurdle, Congress could vote to increase future taxes — a strategy that happily coincides with current fiscal imperatives. Tax increases are never a good idea when the economy is in the doldrums, but the current downturn will not be permanent. Higher taxes could be phased in gradually, after income growth resumes. As long as each year's tax increase is smaller than the corresponding growth in income, painful reductions in consumption will not be necessary.

Evidence supporting this strategy comes from “Save More Tomorrow,” a payroll savings program designed by the economists Richard H. Thaler and Shlomo Benartzi. Under this program, workers can allocate a portion of future salary increases to retirement savings accounts. Hundreds of corporations report that their employees began saving at sharply higher rates after the introduction of this program.

It would be quixotic to imagine that losses from the current economic meltdown won't be painful. But the crisis also opens new doors to policymakers — providing them with options that would have seemed unthinkable just a few months ago.


We call it the Fair Tax -- not the Perfect Tax

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