Is the Fair Tax Fair?

In this political season there are many ideas being debated to jump start our economy. Reform of the tax system is a high priority with many alternatives competing for attention. The “Fair Tax” is a proposal to replace the existing income tax system in favor of a nationwide sales tax. Advocates tout the efficiency of the system, the economic benefit of not taxing investment, and abolition of the IRS. It may very well be a better system if you are starting a new country, and don’t have another system in place. Conversion to a sales tax from our current income tax based system seems be fraught with difficulties and calls into question the term “Fair”.

Supporters of the fair tax point to tout the fact that you will be able to withdraw funds from your IRA tax free. While that is true, what are the ramifications on the dollars currently in after-tax savings or Roth IRA’s? These savings have been built up over these people’s lifetimes, and have been saved after paying income taxes when earned. Institution of a sales tax will in effect cause all of these dollars to be double taxed, since they will now be taxed again when spent.

Another selling point of the “Fair Tax” is the abolition of the IRS. The thought that the government is out of our lives by eliminating the IRS is wishful thinking. Most European countries have instituted a similar tax, and have created large government bureaucracies to enforce these taxes. Politicians have also responded by handing out political favors in terms of exemptions much like our income tax deductions. Those who think this will not happen in the US are being naïve.

Replacing the income tax with a sales tax would require repeal of the 16th Amendment to avoid the problem of getting both an income and sales tax. In fact the replacement amendment would have to strictly prohibit an income tax. This would be required to eliminate some “enlightened” Supreme Court from discovering the power to levy an income tax in the pages of the constitution. Even with this necessary solution the process of debating and passing a Constitutional amendment is a long and difficult one. This can jeopardize the opportunity for change that is available now.

There needs to be serious debate on taxes, starting with how large a government we want. Advocating a wholesale replacement of our system with a plan that has unresolved issues seems to be a waste of time and resources. Those who advocate smaller government and a tax system that promotes growth, need to rally behind a simpler flatter version of our current system. A system that treats after-tax savings properly and is likely to pass seems to be the best alternative. These points make the “fair tax” an unrealistic and perhaps “unfair” idea. 

Author Bio:

Michael has been an editor and contributor at the website www.freemarketsfreepeople.net for over 2 years. He has over 20+ years of diverse business experience, from running complex operations where he managed hundreds of people, to starting and running small businesses such as www.realinterestfund.com. He is blessed, or perhaps cursed, with a logical mind which he uses to analyze government, media, politics, and culture. He believes that his life experiences help him bring a unique perspective to the issues of the day.
  • Rogcam

    BERNARD! if you retire and live off your IRA you will pay state and local taxes on goods you buy. but because you pay the hidden taxes charged at of every stage of manufacturing and distribution (reflected in the bloated costs of good these days, the fair taxes would eliminate those hidden taxes,  rid us of the expenses of keeping records for the government, rid us of expensive tax processing, and get rid of the ever growing amoeba that is engulfing our wealth! GET REAL!

    • Wally

      I agree.  I live off my IRA plus SS and a small pension None of these are very large so it seems some what unfair that I should pay taxes on my SS income  at tax time. What really gets me is that I took out $5ooo extra from my IRA to finance a vacation for my wife and I. I didn’t mind paying taxes on my withdrawn IRA because this money originally was not taxed when it was invested in my 401k plan. At tax time, the extra $5000 equates to an increase in total of $10000 that became taxable as far as SS taxable. Oh well, go figure.
         One of the things that Michael”s column seems to over look is that the cost of any product includes all the different taxes paid by the manufacturer. This means that all consumers now pay that cost. This also means that the poor pay these taxes and that in effect pay federal income taxes. The important point is that corporate taxes become a burden to the manufacturer since they are part of their manufacturing costs and makes the product more expensive as compared to foreign products. Since the major problem the US has is the outsourcing of jobs, it would be beneficial to eliminate the corporate income taxes and replace them with a consumer tax. This wouldn’t become an additional tax since the consumer now pays this tax in terms of a hidden tax in the cost of the product. The democrats do not want this to be done since a consumer tax would be visible to the consumer. They prefer to keep the tax hidden so they can harp about corporations not paying enough taxes and thereby hide the fact that the consumer”s total taxes has increased.

    • ndacboss

      And get rid of the IRS!!!!!!

    • username144

      Those “hidden taxes” don’t disappear. If they did, the proposal would no longer be revenue neutral. They’ll just get added to the overall sales tax number.

  • Bruce A.

    Despite the additional headaches the administration of a fair tax would cause my business I like it, only if it relpaces all income tax.   Taxes are everyones burden, let everyone pay.

  • Chuck Bailey

    If
    I may, here is a statement by statement clarification of the writer’s article.

    Statement 1: It may very well be a better system if you are
    starting a new country, and don’t have another system in place.

     

    Discussion. We FairTaxers are glad the writer was not around
    when the automobile came on the scene. We’d probably still be using horse drawn
    carriages and buggy whips.

     

    Of course it is a different way of collecting taxes. Tinkering
    around the edges of the present income tax system has resulted in the most
    convoluted mess that could ever be devised by mankind. It began 99 years ago
    with 413 pages and a single form, only to grow without bounds to over 72,600
    pages and 2,072 files of publications
    listed on the IRS website today. Further, tax compliance costs paid by all
    income tax filers was found to be over $431 Billion dollars for 2010. The
    income tax system has generated a wholly non value added industry that saps
    from the economy money which could be used for things like manufacturing plants
    with the associated jobs and good salaries needed to grow the economy. Do we
    really want to argue about replacing this obsolete income tax system?

     

    Statement 2: Conversion to a sales tax from our current income
    tax based system seems be fraught with difficulties and calls into question the
    term “Fair”.

     

    Discussion. How difficult will it be to close down the income
    tax system and start charging a single rate retail sales tax at the point of
    sale (individual purchases) on new goods or services? Secondly, how hard will
    it be for the retailer to fill out a single page receipt containing the net
    sales for the reporting period times the single rate, then forwarding that
    amount to the tax man? The retailer is paid one quarter of one percent to
    collect the tax. The only tax reporting form required by the FairTax was just
    described. Compare that to the previous Discussion.

     

    Statement 3: Supporters of the fair tax point to tout the fact
    that you will be able to withdraw funds from your IRA tax free. While that is
    true, what are the ramifications on the dollars currently in after-tax savings
    or Roth IRA’s? These savings have been built up over these people’s lifetimes,
    and have been saved after paying income taxes when earned. Institution of a
    sales tax will in effect cause all of these dollars to be double taxed, since
    they will now be taxed again when spent.

     

    Discussion. This paragraph is about 1/4thcorrect:
    “you will be able to withdraw funds from your IRA tax free.” The Roth IRA is
    the only area where savings appear to
    be taxed twice. But, the prebate and removal of business-to-business taxes were
    not taken into consideration when this article was written. Let’s step through
    the process. The FairTax replaces the
    income tax system. No more collecting of federal personal and
    corporate income taxes, gift, estate, capital gains, alternative
    minimum, Social Security, Medicare or self-employment taxes. Thus, there are no
    taxes on anything until the product or service is purchased by an individual at
    the retail sales level. This step in the process removes all taxes hidden in
    everything presently purchased at retail. The cumulative effect of compiling
    and paying “corporate taxes”, which include Social Security, Medicare and tax
    compliance, adds up to an average hidden tax of about 22% in the price of every
    product or service sold. Depending on how corporations and businesses in
    general handle the removal of these hidden taxes, prices stay about the same or
    rise slightly after enactment of the FairTax. It will not be double taxation on
    Roth IRA dispersals as claimed in the article. Further, like everyone else,
    seniors will receive a monthly prebate, in advance of purchases for taxes paid
    on the cost of necessities, which more than pays for all of the taxes they would
    pay if they just received the average Social Security benefit amount and spent it
    all. If seniors choose to work, they are freed from regressive payroll taxes,
    the federal income tax on wages, and the compliance burdens associated with
    each. They pay no more hidden taxes on goods or services, and used goods are
    tax free. Remember, there is no income tax after the FairTax is enacted,
    resulting in no more income taxes on Social Security benefits or IRA’s.

     

    Statement 4: Another selling point of the “Fair Tax” is the
    abolition of the IRS. The thought that the government is out of our lives by
    eliminating the IRS is wishful thinking. Most European countries have
    instituted a similar tax, and have created large government bureaucracies to
    enforce these taxes.

     

    Discussion. The FairTax is in no way similar to “Most European
    countries tax systems.” The so-called corporate tax paid in the U.S. is more
    closely aligned with European VAT’s (which was alluded to as a “similar tax”
    above).  Each level of production in the
    U.S. is assessed through business-to-business taxes required by the IRS. The only
    thing missing is the level of formal VAT reporting required between businesses.
    The amount is hidden, just like the corporate tax in the U.S., but requires a
    much larger bureaucracy to shuffle the added reports. The truth is that “Most
    European countries tax systems” are a VAT, plus wage earners pay an income tax.  Not a good model for our new tax collection
    system. Further, the IRS is defunded and replaced by existing state sales tax
    organizations when authorized by their legislatures and the
    much smaller Sales Tax Bureau established in the Treasury Department to count
    the money forwarded from the states.  The
    100,000 plus strong IRS goes away and is replaced with additional personnel as
    required at the state level to collect the tax, refuting the idea
    that “large
    government bureaucracies” will be created.

     

    Statement 5: Politicians have also responded by handing out
    political favors in terms of exemptions much like our income tax deductions.

     

    Discussion. This particular statement reveals that the writer is
    not familiar with The Fair Tax Act of 2011, HR 25/ S 13. One of the hallmarks
    of these identical House and Senate bills is that exemptions, loopholes and all
    the other escape routes for dodging taxes are not allowed. Under the
    FairTax, all Americans consume what
    they see as their necessities of life free of tax. While permitting no
    exemptions, the FairTax provides a monthly, universal prebate to ensure that
    each family unit can consume tax-free at or beyond the poverty level, with the
    overall effect of making the FairTax progressive in application. This is not an
    entitlement, but a rebate (in advance) of taxes paid – thus the term prebate.
    Everyone pays taxes at the cash register and receives the prebate to cover taxes
    to be paid on necessities. The need for exemptions goes away, removing the
    politician’s ability to select winners and losers or pit one group against
    another using the income tax code.

     

    Statement 6: Replacing the income tax with a sales tax would
    require repeal of the 16thAmendment to avoid the problem of getting
    both an income and sales tax. In fact the replacement amendment would have to
    strictly prohibit an income tax. This would be required to eliminate some
    “enlightened” Supreme Court from discovering the power to levy an income tax in
    the pages of the constitution. Even with this necessary solution the process of
    debating and passing a Constitutional amendment is a long and difficult one.
    This can jeopardize the opportunity for change that is available now.

     

    Discussion. Again, “opportunity for change that is available
    now” is just tinkering around the edges of the highly convoluted income tax
    system. But, the writer is mostly correct about the 16th Amendment.
    The FairTax is constitutional, even with the 16th Amendment in
    force. It is correct that the amendment would need to be repealed to avoid the
    FairTax being applied on top of the income tax. It is also a good idea to state
    that the 16th is repealed and that an income tax can never again be collected from hard
    working Americans. To insure against an income tax topped by the FairTax,
    enactment of the bill as written
    requires the following:

     

    1.      Repealing
    all income tax related sections of the IRS Code,

    2.      Reconciling
    the last year of income tax collections and destroying all income tax records,
    except for Social Security and Medicare (for obvious reasons), within the
    following three years by the IRS,

    3.      Defunding
    the IRS when the Item 2. period is complete

    4.      Rescinding
    the FairTax at the end of seven years if the 16th Amendment has not
    been repealed, and

    5.      Re-establishing
    the income tax at seven years, six months, as the tax collection system.

     

    Statement 7: There needs to be serious debate on taxes, starting
    with how large a government we want. Advocating a wholesale replacement of our
    system with a plan that has unresolved issues seems to be a waste of time and
    resources.

     

    Discussion. There has been
    serious debate regarding how to collect taxes in the U.S.  The FairTax Bill is the most analyzed,
    criticized, and vetted tax system ever known to man. Over $22 Million of
    private funding has been spent to conduct studies, the goal being to find out
    what the American people wanted in a tax system, what they felt was the best
    way for the government to collect revenue, and how taxation could be achieved
    in a way that most benefited the economy and the taxpayers. Many diverse groups
    of Americans participated in the extensive polling and focus group studies, and
    then a nonpartisan team of economists was commissioned to develop the FairTax
    plan. The result is The Fair Tax Act, HR 25/S 13. What needs to happen is
    passing the bill through the House and Senate as written so the president can sign it into law. The time for
    debate is over!

     

    Statement 8: Those who advocate smaller government and a tax
    system that promotes growth, need to rally behind a simpler flatter version of
    our current system. A system that treats after-tax savings properly and is
    likely to pass seems to be the best alternative.

     

    Discussion. We had the “simpler, flatter” version of the income
    tax in 1913. Please re-read the Statement 1. discussion above.

     

    Statement 8: These points make the “fair tax” an unrealistic and
    perhaps “unfair” idea.

     

    Discussion. What can be fairer than having the freedom to
    determine when and if you are going to pay a federal tax.  Under the FairTax, it boils down to determining
    to buy a new or used product, or purchase a service you want or need?  No more IRS, backed by the power of the
    government, looking over your income records to take from you if you misread
    one of the 72,600 plus pages of publications. 
    Also, please re-read the discussions for Statement 1. through Statement
    8.

     

    Visit
    http://www.fairtax.org to find the facts about
    the FairTax. Read HR 25 and S 13 at http://www.thomas.gov
    by selecting the bills by number, then clicking on “Search.”

    • Hank Van Gieson

       Chuck,

      Many good points but you made a few serious mistakes which need discussion.

      (1)  In response #1, you repeat a false claim that compliance costs in 2010 were $431 billion.  This just isn’t true.  Ever since 2006 when the IRS scrapped the  idiotic compliance cost estimating model in favor of a new IBMK model, AFFt has refused to correct their data on compliance costs.  To check out the new model, just turn to page 95 of the 2011 IRS Instruction booklet.  You will learn that individual compliance costs were around $37 billion rather than the $110 billion found in the old model.  Similar results for business compliance costs can be estimated.  Compliance costs have been grossly overestimated for the last six years.  Shame on AFFT!

      (2)  In response #3, you continue to repeat the Fairtax “free lunch” myth.  You are correct that DR Jorgenson’s 1997 study did conclude that business compliance costs averaged 22% across 35 industry segments.  But what you don’t seem to grasp,is that 2/3rd’s of those costs belong to the employee.  That is, Jorgenson assumed that employee tax withholding amounts would go to the employer for maximum cost reduction.  That isn’t going to happen for contractual, legal, and fairness reasons.  Unless you believe that we will receive just our current net pay after tax withholding, then the best businesses can do is reduce costs by 10% on average, and retail prices will rise by 17% after adding the 30% sales tax.  There is no free lunch!

      (3)  In response #5, you mistakenly claim that there are no exclusions under the Fairtax.  Wrong!  Education tuition is excluded, and now the came;’s nose is under the tent flap!  There is nothing to stop some Senator from proposing to exempt housing, medical care or any other thing he might believe is as important as education.

      (4)  Finally, in response #4, you seem to believe that the States will willingly act as the federal tax collector.  Not necessarily so, my friend.  First of all, federal taxation of State and Local government consumption is certainly unconstitutional, and because all 50 Governors are opposed to any kind of a national sales tax, I think the federal government will find little enthusiasm from the States to collect federal taxes.  Stay tuned!

  • Hank Van Gieson

     Michael,

    Good piece as far as you went, but you only scratched the surface of what is wrong with the Fairtax and HR25.  Yes, after tax savings will be double taxed, and yes, repealing the 16th Amendment would be tough, and yes, the IRS will still be around, but with a different name.  But here are some more issues to chew on.

    (1)  How is it fair to force current retirees to resume paying for their government retirement benefits with their sales tax dollars?
    (2)  Where in the Constitutionof our Republic does it give the federal government the power to tax the consumption of the other sovereign powers (States)?
    (3)  How is it fair for the Fairtax to create a group of millions of lower income workers that would pay no net federal tax due to the prebate, yet all would receive full government retirement benefits?
    (4)  Does everyone understand the Fairtax impact on the new housing market?  A federal sales tax has absolutely no collateral value, so potential buyers might have to come up with not only a 20% down payment but also the 30% sales tax at closing.
    (5)  Repeal of the 16th might prove impossible due to the clear fact that all 50 State Governors, through the National Governors Association, are opposed to any type of national sales tax.
    (6)  The Fairtax proposes to implement the sales tax “cold turkey” although no other nation has ever successfully funded their central government with such a broad based national sales tax.  (Six nations have tried, failed, and quickly switched to a VAT!)

    There is lots more, but basically the Fairtax isn’t fair!

    • http://www.facebook.com/people/Henry-Salo/1394713777 Henry Salo

      Hank: I have been saying many times that it is unconstitutional for the states being tax collectors for the Federal government collecting Federal taxes, voluntary or not. Article I, section 8, U.S. Constitution; The Congress Shall Have the Power To Lay And “Collect” Taxes. It goes on from there. There was not one article or amendment for states being tax collectors for the Federal government collecting Federal taxes. Even under the present system, the Federal government uses the IRS to collect Federal taxes. I said that to some Fair Tax people, some of them agreed with me, one started arguing. On the IRS, According to HR-25, the IRS will be eliminated and the states will be collecting the tax but on Neal Boortz’s book, “Fair Tax Book”, Neal wrote down that there will be a Federal agency, “Sales Tax Bureau” plus two other agencies under the “Sales Tax Bureau”. Who’s right? Boortz’s book or HR-25? Even some of the Fair Tax people are having doubts. One Fair Tax person, Fair Tax-Oklahoma which I had a discussion on the subject Fair Tax taxing rent. Many senior citizens are selling their houses because they cannot afford the upkeep and moving to apartments where their rent is set according to their income. Imagine their rent set and add a 30% tax on top of it? That Fair Tax person said that is the problem with the tax. Another thing that Fair Tax people argue on this one: gas and fuel tax. Under the present system, gas is taxed 2 ways, Federal and state gas tax. Under the Fair Tax, gas will be be taxed 3 ways. Fair Tax, Federal gas tax and state gas tax. Gas will go up a dollar more a gallon. Some people think Fair Tax will eliminate the Federal gas tax. It shows the taxes that are eliminated, Federal gas tax is not one of them, Gas is considered consumption.  Other taxes will be going up, cigarettes, alcohol , utities and so on. On the so called prebates, anyone with legal S.S. numbers will get a prebate, from Bill Gates to the poorest person, even criminals who are not locked up, drug dealers and gang members. Prebates go by family size, imagine a welfare mother getting a prebate and a welfare check.  Look up Webster’s Dictionary, there is no such word as prebate. Typical Fair Tax word. There will still be any state incomes . Some people think it will get rid of any state income taxes. That is not in their plans. There are other things, too numerous to put down. There’s more. I agree with you, Hank.

      • James

        The FairTax DOES NOT REQUIRE states to act as agents. It has the government pay them to. If states do not want to participate, the federal government steps in and administers the tax directly. Thus, constitutional issue solved.

        • Hank Van Gieson

           James,

          Henry Salo was mistaken that having the States act as the federal tax collector was unconstitutional.  That isn’t the constitutional issue we ought to be concerned about.  Federal taxation of State and Local government consumption is clesrly unconstitutional.  One sovereign power (federal) can’t tax the other sovereign power (States). The Supreme Court has based it’s decisions on the long standing doctrine of “intergovernmental tax immunity”.  The provisions in HR25 should be thrown out, and that means the sales tax base will shrink by over $2 trillion, and the rate will have to go up by a significant amount.  Stay tuned.

          • Jim Bennett

            Given Justice Roberts’ penchant for bending over backwards to hold statutes constitutional, I think the FairTax will survive the assault.

          • http://www.facebook.com/people/Henry-Salo/1394713777 Henry Salo

            Hank, you said I am mistaken that having the states act as Federal tax collectors was unconstitutional? In the Constitution, it says the Congress shall have the Power to lay and collect taxes. In the articles and amendments, it doesn’t say anything of states being tax collectors for collecting Federal taxes, whether voluntary or not. What the article says the Federal government has to do the collecting, not the states.  That is why Boortz wrote in his book of a Federal agency,”Sales Tax Bureau” plus 2 other agencies. HR25 doesn’t say anything of a Federal agency. I agree with you that Federal taxation of State and Local government consumption is unconstitutional but so is their version of the collection process. The U.S. Constitution is the Law of the Land. It cannot be changed, amended or added on. Some people said, “Go ahead and pass HR25, it’s good enough, at least we’ll have it in there”. My high school teacher said these words which has been with me ever since. “GOOD ENOUGH IS NO GOOD”.  HR25  should be scrapped.

          • Hank Van Gieson

             Henry,

            I don’t know if the Constitution speaks to the States acting as the Federal tax collector, but I do know if HR25 mandated that the States do the job, it would have been unconstitutional for sure.  That is why HR25 gives the States the option to act as the federal tax collector, including a bribe if they do.  It is kind of like when Social Security was implemented, State and Local governments were given the option to set up their own retirement security system, rather than joining the federal system.  Many S/L government employees are not part of the federal system today–and are probably on sounder financial footings? 

            I admire your high school teacher!!!!  And, HR25 has in effect been scrapped.  The Fairtax advocates just don’t recognize that fact. 

          • http://www.facebook.com/people/Henry-Salo/1394713777 Henry Salo

            Yes, he was a good high school teacher. I graduated from a vocational high school and he taught vocational shop (electrical) and he said those words to all new students. “Good enough is no good”.  On Social Security, The Railroad Workers Union don’t have Social Security. They have their own retirement security system. My uncle belonged to that union and when he retired, he had a very good retirement plan plus he got free fare to travel anywhere in the U.S. by rail. This spring, I met a railroad union member. He was 61 and he had been doing this about 40 years. He told me he has about 2 more months and then he can retire after that. He must be retired now.  We just have to see where this so called Fair Tax is going. Congress is more concern about Health Care and Bush Tax Cuts now.  Plus who is going to get in. Still on Social Security, Social Security tax is collected by the Federal government, not the states. It’s the same thing with the gas tax. The gas tax is like a sales tax but it is only on gas. The Federal government collects their tax and the states, their tax. We’ll see what happens like you say,” Stay Tuned”

          • Hank Van Gieson

             Henry,

            I’ve read and reread HR25 and in my opinion, the Fairtax does not replace the federal gas excise tax.  HR25 does state that there will be an excise tax bureau to collect the current gas excise tax.  I am beginning to believe that the Fairtax will not be added to the current gas excise tax?  I plan to ask some experts?

            Cheers!

          • http://www.facebook.com/people/Henry-Salo/1394713777 Henry Salo

            Hank: check it out on the Federal gas tax. It was Laurence Vance who brought it up that Fair Tax will be added unto the current gas taxes. Vance is pretty much into the basis of the Fair Tax. He has a few websites under Fair Tax Fraud and There Is No Such Thing As A Fair Tax. Fair Tax people don’t like him, saying that Vance doesn’t know anything of the tax. The Fair Tax people don’t like anyone who is against the Fair Tax, anyone who questions it, saying they haven’t read the book, haven’t read the plan. The plan is different from the book especially on the collection part. The Fair Tax people call people who are against the so called Fair Tax as uneducated. Take care, Hank. Hope to hear from you on the Fair Tax in question of the gas tax.

  • Markabaird


    There needs to be serious debate on taxes, starting with how large a government we want. ”

    Well then let’s have a serious debate rather then is it a penalty or a tax. I wait everyday to see if both the media from the left and right will have a serious debate but it never happens. No they have to intoxicate their bees. It is easier to whine and complain and message your ego and ideology then to really have a serious debate and solve our problems.

    • Jeffrey Liakos

       Our current tax structure is outdated and illegitimate. It violates the right of American people to personal privacy. Some people say that our government has the right to tax income, which it does not. Our government can fund its necessary functions through a sales tax rather than by imposing excessive taxes on income.

      Under our current tax system, the more you earn, the more tax you pay. Under the Fair Tax, you only pay taxes when you elect to spend your money. You have no payroll tax, so you can create more jobs. There is no capital gains tax, so money can be invested in profitable business ventures.

      • James

         We can’t have tomorrow’s jobs if we keep today’s income tax!

        • Jeffrey Liakos

           If you’d like, you can contact me at jeffreyliakos@yahoo.com to discuss this further. Why liberals object to the Fair Tax makes no sense to me. By doing so, they are perpetuating a self-defeating argument against their desire for a progressive tax structure.

  • amerigom

    P. S. 
    The Fair Tax would put an end to the Demographics.
    The Fair Tax is color blind!
    AND; etc.

  • amerigom

    “Is the Fair Tax Fair?”
    You bet it is!
    Everyone is treated the same.
    It puts an end to Nepotism.
    It puts an end to lobbyists.
    It gets rid of the indecipherable tax code; (Some 60,000 pages).
    No more withholding, SS, medicare, taken out of workers checks.
    ALL service people will have to get a license , and pay taxes on their transactions, the individual, will not have to keep records; (How good is that)?
    Our politicians have proven; They always want more money! 
    Remember the Stimulus?  (And still no accounting)!
    The Fair Tax would open up our country to all companies and Corporations!
    No need to go overseas to produce!
    The Fair Tax would be the greatest boon, that our economy has ever seen!
    GO FOR IT!!!

  • Jjacksonjc

    Have you ever read the Fair Tax Book or any of it’s follow ups? I’ m going to suggest that you do. Every problem that you suggest is addressed. The Fair Tax would solve an enormous number of the problems that exist with our current tax system ; not mention our economy . Yes, it would be difficult to install and the I.R.S. would have to stay around for a while to get the job done, but wouldn’t it be nice to take the power away that politicians have from selling their votes to lobbyists. Also, think about the revenue that will come from drug dealers, organized criminals, and illegal aliens; all of whom pay no income tax under the current system.

    • http://www.facebook.com/people/Henry-Salo/1394713777 Henry Salo

      With the so called Fair Tax, that revenue will come from drug dealers, organized criminals and illegal aliens. You think that drug dealers are going to put a tax on evey drug transaction they do? That is a laugh. All drug transactions and criminal transactions are on CASH BASIS. No money trail. You are going to say criminals and drug dealers are going to pay Fair Tax when they buy brand new cars. I knew some drug dealers ( I am against what they do) and they don’t buy brand new cars. They buy junks (old cars). If there is a drug bust and the cars are involved, that loss is nothing to them. Criminals and drug dealers will go around your so called Fair Tax plus they will get the so called prebates. What a laugh.

      • Jim

        You missed the point. Of course drug dealers do not pay tax on their drug sales. But they pay tax when they purchase speedboats to smuggle the drugs in, or when they go to the mall to spend their drug money. That is where drug dealers pay tax under the FairTax, although they do not pay tax today.

        • http://www.facebook.com/people/Henry-Salo/1394713777 Henry Salo

          Providing the speedboat isn’t new. Don’t forget, your so called Fair Tax taxes new items, not used ones. The drug dealers will get around your so called Fair Tax. 

          • Jim

             What self-respecting drug dealer wouldn’t buy a new speedboat? What self-respecting wife or girl friend of a drug dealer wouldn’t go to the mall to buy herself Gucci’s, Piagets and Christian Diors? Or if the drug dealer wants to get himself a girl friend, he’ll buy that stuff at the mall for her.

  • Kicker

    As many critiques of the FairTax do, Michael has changed the FairTax from what is proposed, and then proceeds to offer thoughts on why the changed proposal won’t work.

    For instance, Michael accepts that the IRS will be eliminated, but then uses the European VAT system as his model (which the FairTax decidedly is NOT), and maintains a vast new bureaucracy will be created to administer sales tax collection.  He totally ignores the current state sales tax agencies that already exist, and will do just fine in collecting the additional monies owed under the FairTax.
    Michael also ignores offsetting benefits of the FairTax as he creates “problems”.  For instance, it is true that retirees withdrawing money from their IRAs will pay taxes when they make their purchases.  But only on new goods and services, and only after the embedded taxes currently contained in such goods and services have been removed.  While those embedded taxes vary between 15% and 25%, it is estimated that the final cost of new goods and services will only increase about 7% under the FairTax, and the prebate will offset most of even that small increase in prices.  (And he totally ignores the fact that if we fail to reform out tax system, inflation is going to kick in soon, and a 7% price increase will be small compared to what inflation will do.)Michael also forgets to mention that those who saved for retirement using tax deferred accounts will be able to withdraw their monies without paying any income tax at all on either the principle or the earned interest income.  In other words, folks using this method for retirement will escape all income taxes if the FairTax is passed.  

    And Michael seems to forget that it requires exactly as many votes to pass the FairTax as will be required for any other tax reform proposal.   In fact, the FairTax, HR-25, has more co-sponsors already than all the other tax reform proposals combined!!  But Michael does bring up an important point.  The reason other tax reform proposals are seen as easier to pass is because they don’t really provide any substantive reform.  They are still income taxes.  They still leave the IRS in place or, in some cases, actually increase its size and power.  And they still leave Congress with the power to manipulate the tax code in exchange for campaign contributions!!

    To be blunt, there is no reform proposal of the income tax system that helps the American people.  They are all designed to reward lobbyists and continue a corrupt, inefficient, and unfair system of income taxation that benefits only the members of Congress.  The FairTax is the only proposal in existence that truly benefits the American people.  And if Michael, and other critics, took the time to learn the FairTax, they’d be the first to demand it of Congress.

    The FairTax:  Once you understand it, you’ll demand it!!!

  • Bill E. Payne

    You just don’t get it, do you? The FairTax has been cussed and discussed for 13 years now, and everybody who understands it knows that, even though it is not perfect, no tax system is. But no tax system but the FairTax will help to solve so many big problems, like illegal migration, expatriated businesses and unemployment. No tax system but the FairTax will produce 70 million new taxpayers (illegals, visitors to the country and the shadow economy).

    We could have already had several years of tax freedom and be well on the way to repealing the 16th Amendment (sister legislation to HR25/S13), but some people – namely, politicians – want to continue tweaking the present hopeless system.

    And another thing: we need ALL Americans to support this effort, liberals included. If you think we can do it without them, you are sadly mistaken. The FairTax does not discriminate due to party affiliation – it benefits all, regardless.

    I’m guessing we have until 2014 to get this done. After that, the FairTax train leaves the station, most likely never to return.

  • CCNV

    The thing I find amazing is the liberals who are fleeing the country (renouncing citizenship) to avoid paying taxes. Latest case in point: Marc Rich’s ex-wife. I guess taxes are good for everyone but not when they land on the doorstep of a liberal. Sometimes you get what you wish for…

  • Ndacboss

    H.R.25 and S.13 as written are fair to me. I like two main parts of the legislation: gets rid of IRS and allows me to opt out by not buying new stuff.

  • Archangel157

    Bravo Gentlemen (assumed).   It appears that Mr. Porfido has not read H. R. 25, is in the tank for bigger government or just “writing” to make a name for himself.
    The 16th amendment is the key.  Makes me sick to hear “tax reform” etc., and increased irritation listening to the news (to include FOX Live) noting all the times “TAX” issues are mentioned.  Tax break offers running rampant for votes or campaign contributions.  We won’t tax you and me but we will tax them over under that tree.  Tax breaks here; “tax slack” has to be picked up by someone (or the IRS will come knocking).
     H. R. 25 is right in front of your face and it is either not being looked at or deliberately held in reserve while stiring the mud creating more controversy.  Sean Hannity, Mike Huckabee, Rush Limbaugh and Neil Cavuto know well what the Fair Tax can and will do for out economy; Fair Tax supporters plus many of their collegues also know what the Fair Tax is about.
    Obamacare is a dictatorial exercise in “CONTROLING” the masses.  Why do you think BHO just hired 16,000+ more IRS agents?
    The FAIR TAX may not be perfect but the 100 year old income tax/16th amendment has proven itself to be abusive, punative, counterproductive and is blatently “BROKEN”. 
    Read the bill and decide for yourself how long we need to stay on the “PLANTATION”, IN CHAINS.
    http://www.thomas.gov Put in the Bill number H.R.25 and read it!  Only 135 (ish) pages.

  • Dave Kahn

    The idea that advocates cannot prove the FairTax is perfect is absurd.  No one can prove any policy to be perfect in advance.  Bottom line: the current system is the most unfair system possible to devise: no one knows all the rules, so no one can follow the rules, and it is enforced by a government agency that is almost entirely unsupervised by Congress; this leaves out the market manipulation via tax exemptions and subsidies. 

    The current system was originally flatter and simplier.  We have no reason to think that a “reset button” will cure the ills.  The only solution is to change the system.  No more income tax.  No more IRS. There is no other proposal out there that is as straight-forward and effective as the FairTax.

  • Steve Hall, Idaho

    Repeal of the 16th Amendment requires another amendment to the Constitution.  Taxes on income were prohibited by the Founders originally, and until that fateful year 1913 when the 16th Amendment passed.   The FairTax Bills (HR25 in the House with 70 co-sponsors and S13 in the Senate with 9) have language built into them, that if repeal of the 16th is not accomplished within a certain time frame, then the National Sales Tax would be eliminated.  The main goal of the FairTax is to eliminate the Income Tax, the 70,000 pages of unfair, convoluted code, and the IRS.  But we need a viable replacement first.

    Perhaps you have not read or understood the ingenious device called the prebate, a key component of the FairTax.  The result is that anyone at or below the poverty level pays no taxes; most middle income families pay an effective rate of about 11%; and it makes the FairTax very progressive.  Because many of the taxes that are built-in to the cost of every single product and service would be eliminated, the prices of products would go up very little, even with the new tax included.  Plus, used items are not taxed.  And Social Security is funded, which is not the case now.  Net, net Seniors are better off, as is most everyone.  

    People need to read about and understand these Bills, as the would be a huge and immediate boost to our economy and jobs.   go to   http://www.fairtax.org  Do not listen to the shallow and half-informned opinions, especially from the politicians, who love our current broken tax system as a way to offer tax breaks and buy votes.

  • Conchkey83

    so michael, you like what we have now I take it. Your argument about IRA’s are shallow as believe me, I have one and would be more than happy to still get rid of the IRS and the insane tax code of the federal bloodsuckers. As many have said, what about the children who will continue to be sucked dry of blood by vampires of programs and bureaucrats at the IRS, the FDA, the FCC, Public radio and TV, the EPA, the Dept. of (re) education, the USDA, etc. these are so bloated and entwined into our lives with regulations that are choking us to death. So, Fair Tax is not perfect, but and this is a huge BUT, the alternative is horrendous!!!!

  • Jim Bennett

    Let’s talk about what’s fair. It’s eminently unfair that the country is borrowing beyond its means and putting the burden on future generations. In fact, that’s inter-generational child abuse. The FairTax is a start toward’s disabusing future generations. If you want Social Security to be there, support the FairTax, which switches the tax base for Social Security to a larger and growing tax base.
    ~Jim Bennett
    Summit, NJ