the Fair Tax

**Seamus Fermanagh** · 11-07-2008, 21:19

Folks, the Fair Tax has a couple of key components that address most of your concerns.

1. Federal revenues should not be decreased as a result of this shift in taxation format.

2. NO OTHER FEDERAL TAX IS LEVIED -- no FICA, no Medicare, no whatever. One source of taxation revenue.

3. There is an individual "prebate" due each citizen at the beginning of the month. This prebate is a direct payment by the government, in advance, for the tax to be paid for spending on basic shelter & sustenance. Yes, the "little guy" would be paying 25% on his rent, but would have already received a check for $X to offset the expected taxation cost of her housing and food. This "prebate" would be the same for every citizen or legal resident.

4. Much of the underground economy would be taxed. Even if the industry in question was illegal, sooner or later the proceeds thereof will be used to purchase legitimate goods and then they'll be taxed.

The Fair Tax goal is NOT to change federal revenue, nor to put a burden on the "little gal." The goal is to avoid a scenario that is confiscatory to ANY segment of society will simplifying the process. This would allow us to downsize the IRS and focus government spending on those programs deemed most necessary by the leadership and the people.

**Ice** · 11-07-2008, 21:29

Originally Posted by Seamus Fermanagh

Folks, the Fair Tax has a couple of key components that address most of your concerns.

1. Federal revenues should not be decreased as a result of this shift in taxation format.

2. NO OTHER FEDERAL TAX IS LEVIED -- no FICA, no Medicare, no whatever. One source of taxation revenue.

3. There is an individual "prebate" due each citizen at the beginning of the month. This prebate is a direct payment by the government, in advance, for the tax to be paid for spending on basic shelter & sustenance. Yes, the "little guy" would be paying 25% on his rent, but would have already received a check for $X to offset the expected taxation cost of her housing and food. This "prebate" would be the same for every citizen or legal resident.

4. Much of the underground economy would be taxed. Even if the industry in question was illegal, sooner or later the proceeds thereof will be used to purchase legitimate goods and then they'll be taxed.

The Fair Tax goal is NOT to change federal revenue, nor to put a burden on the "little gal." The goal is to avoid a scenario that is confiscatory to ANY segment of society will simplifying the process. This would allow us to downsize the IRS and focus government spending on those programs deemed most necessary by the leadership and the people.

Good post, Seamus.

It does amuse me when people pretend to know what they are talking about in these threads, which is not to say I'm immune from such action.

**Seamus Fermanagh** · 11-07-2008, 22:10

Originally Posted by Kush

Good post, Seamus.

It does amuse me when people pretend to know what they are talking about in these threads, which is not to say I'm immune from such action.

To be fair to them, there is a "regressive" character to most sales taxes, since the tax levied represents a larger proportion of total wealth for someone who does not have a lot of money or income than it does to someone making megabucks.

**m52nickerson** · 11-07-2008, 22:16

The problem I see with a sales tax based system is when you have a economic slow down you will instantly cut federal revenue, more so then if you tax income.

**Koga No Goshi** · 11-07-2008, 22:19

Originally Posted by m52nickerson

The problem I see with a sales tax based system is when you have a economic slow down you will instantly cut federal revenue, more so then if you tax income.

I oppose it on its regressive nature, I consider that sufficient reason to be against it, especially since a "simple tax system", while psychologically appealing, is equally simple to evade. However you are correct-- this system would, IMHO, only work well when the economy is doing well. Every 20 or 50 years you'd be gutting the government or going into steep deficit everytime an economic downturn hit.

**Seamus Fermanagh** · 11-07-2008, 23:15

Originally Posted by Koga No Goshi

I oppose it on its regressive nature, I consider that sufficient reason to be against it, especially since a "simple tax system", while psychologically appealing, is equally simple to evade. However you are correct-- this system would, IMHO, only work well when the economy is doing well. Every 20 or 50 years you'd be gutting the government or going into steep deficit everytime an economic downturn hit.

Complex systems are even easier to "game" and the wealthy ALWAYS leverage the government for breaks and advantages in such byzantine systems. The current "progressive" system is riddled with wealth-preservation exceptions, in part because it is so complex that virtually no one can read and understand the entire tax code unless it is their full time job.

As to "regressive" taxation, the point about the prebate is to create a scenario where the truly "strapped" or indigent are not paying tax on basic subsistence items and may be, in some instances, being prebated more than they pay in taxes. If there is any "regressive" component, it would be on those above the poverty line and below the median income. Even though their overall taxes might decrease, they would still experience those taxes as a somewhat higher percentage of wealth than would those immediately above or below them. As usual, the middle class would find little actual change in their tax burden. By tapping into the purchases of the upper middle and upper classes, it is likely that we would see a small increase in their revenue contribution -- with no way for their accountants to hide it.

BTW, I philosophically disagree with you. To me, government is not about redressing inequity, but providing certain needed services that cannot be provided by the individual. Since all benefit from such services equally, it has always seemed inappropriate to me that high income earners have to pay more for the same services.

**CountArach** · 11-07-2008, 23:34

Originally Posted by Seamus Fermanagh

BTW, I philosophically disagree with you. To me, government is not about redressing inequity, but providing certain needed services that cannot be provided by the individual. Since all benefit from such services equally, it has always seemed inappropriate to me that high income earners have to pay more for the same services.

On the other hand the people who need these services most (eg - public transportation) are the very same people who can't afford them. A Fair Tax IMO defeats its own purpose because it forces those who can't afford something to pay for it anyway.

**Koga No Goshi** · 11-08-2008, 00:03

Originally Posted by Seamus Fermanagh

BTW, I philosophically disagree with you. To me, government is not about redressing inequity, but providing certain needed services that cannot be provided by the individual. Since all benefit from such services equally, it has always seemed inappropriate to me that high income earners have to pay more for the same services.

Well, what can I say ... you're wrong? :)

A big employer, a very wealthy individual with multiple corporations and such, is pulling from a literate potential workforce with at least a modicum of education, people who, perhaps, are alive because there were police and fire services available, etc. etc. I philosophically disagree with the increasingly dominant notion in the corporate and ownership classes in America that employers are doing the country a "favor", which is ungratefully repaid by the public with forcing them to pay "unfair taxes." Corporations which do business in the U.S., BENEFIT from the American public-- either via having them as an available workforce, or cashing in on the fact that commodities can be sold at a high price in the U.S. because of the relatively high per capita income and quality of life. Even if the goods they are selling were produced in China at 1/500th the price for which they are sold in the U.S.

I also think particularly with regard to police and education as well, the idea that the rich do not receive substantially better services than people in low-income areas is a very weak assertion.

I also have not heard for any windfall profits taxes on all the private corporate contractors who benefitted from the use of our military in the Middle East-- perhaps the only true beneficiaries, in fact. Despite the fact that everyone's grandkids will be paying the debt on the war.

The idea that the government sucks money from the rich and only turns around and provides any sort of service, or disproportionate service, to the interests of the poor, is very selective analysis IMHO.

**Seamus Fermanagh** · 11-07-2008, 22:34

Originally Posted by m52nickerson

The problem I see with a sales tax based system is when you have a economic slow down you will instantly cut federal revenue, more so then if you tax income.

I don't think a slow down would have such a grave impact. However, an out-and-out recession might. THAT is an issue worth considering.

**LittleGrizzly** · 11-07-2008, 22:38

How about people simply working in the US and then spending thier money elsewhere ?

A billionaire could simply work in the US (though to be honest he doesn't actually need to be on US soil) and live in monaco or canada or anywhere, he would earn untaxed money in america and spend it somewhere else...

And then secondly someone could just goto the US work for a few years, save like crazy and take his money home... there are ways around the system...

Also the black market could simply send its money abroad, so that money isn't nessecarily going to stay in the US to be taxed, to be honest this isn't my biggest problem with the fair tax, just the more obvious one...

**m52nickerson** · 11-07-2008, 23:05