http://www.fairtax.org/PDF/IsTheUSBankrupt-03-13-07.pdf

The problem is that our current system, like it or not, is unsustainable. We simply cannot keep moving on our current trajectory of massive long-term entitlements that cannot be met, and a tax code whose compliance costs are estimated at $250 to $450 billion dollars per year, and falls most severely on the small- and medium-sized businesses that we need the most:

http://www.fairtax.org/PDF/WhatTheFederalTaxSystemIsCostingYou.pdf
http://www.fairtax.org/PDF/TaxAdminCollectionCosts071025.pdf

The compliance costs are embedded in the costs of the goods and services you buy today. As businesses’ cost of compliance go down, so will the prices they need to charge to maintain consistent profitability. The cost of the existing income tax system is simply waste — just like heat thrown off by an engine. Our current tax system with over 67,000 pages of regulation is pure inefficiency that must be eliminated if we want to survive economically.

Your points about taxation of new homes, new cars, and so forth ignore this simple fact. The actual price increase seen with a uniform (and thus simple) consumption tax will be less than the rate of taxation since the embedded costs of compliance with the current tax code will be eliminated.

With respect to the housing market, the current tax system introduces a number of other distortions that will be eliminated:

http://www.fairtax.org/PDF/PromotingHomeOwnership.pdf

With respect to insurance premiums and other services like healthcare, the embedded inefficiency argument also applies. Finally, you’re keeping your entire paycheck — so you have more money to spend. In the final analysis, would you rather pay 30% tax on all your income, or just that percentage of your income that you choose to spend?

Finally, please don’t rest your objections on healthcare. Healthcare is a special case, since the market for healthcare is already ridiculously distorted. Eliminating those 67,000 pages of income tax code and regulations would simplify the healthcare market significantly, and move towards a more transparent and rational system:

http://www.fairtax.org/PDF/TheImpactOfTheFairTaxOnHealthCare.pdf

Misinformation about the FairTax abounds, and I’d advise you to check out this section of the FairTax Web site for some rebuttals:

http://www.fairtax.org/site/PageServer?pagename=news_myths

As I state above, the FairTax (or a consumption tax in general) is not a panacea. We desperately need to address spending, and long-term entitlements. I also think the proposed tax rate is too high, and that black market/tax avoidance with a tax rate of 30% will be an issue. That challenge simply reflects the obscene size of our federal government.

Right now, the government is taxing your wages, savings, capital gains, and estate. Even that’s not enough, so we’re printing and borrowing money at a rate of $1-3 billion per day — thus further confiscating your wealth through inflation. What has your grocery bill done over the past five years, and has your salary kept up? Compliance costs render our economy defenseless in a competitive global economy.

Are you really satisfied with the status quo?

Thats right — Mr Lawson. And if you tax new homes, sir, with a high sales tax, you will get a decimated new home industry.

If you tax new cars with a high sales tax — you will get a decimated new car industry.

Better look real close at the fairtax. Its more like those magic beans they told everyone would let you use water in your gas tank.

Not if you had a stroke and live in a nursing home

Not if your child has leukemia.

Not if you need a back operation, or have a brain tumor.

Fairtax would (supposedly) have a huge tax on all medical cost.

Its also a tax on all rent.

And all insurance premiums.

Yes –

Fairtax depends on taxing the federal government 500 billion dollars, to pay the federal government.

Neal Boorz wrote “(Under the fairtax)…. the federal government ITSELF would become a MAJOR taxpayer” (Page 148).

Oh really? Well the federal government can write all the checks to itself that it wants, but it can’t get any revenue from itself, its just an absurdity, a farce.

Fairtax also depends on nursing home patients, cancer patients, Alzehimers patients — all patients - paying 460 billion in sales taxes. Thats a sales tax on cancer surgery, sales tax on nursing home care, sales tax on the parents of a leukemia patient. Many of those people simply wont have the 20,000– 70,000 dollars such a “sales tax” would levy.

There would be a lot of very surprised people if fairtax passed. SOme would pay far less taxes — some would pay 100, even 1000 times more. Cancer patients would probably be taxed 1000 times more, as would heart patients, and nursing home patients.

Renters would have huge taxes to pay — and probably have no idea that fairtaxers are working very hard to put a tax on their rent.

People who pay insurance premiums — health insurance, car insurance, homeowners insurance — would be taxed on all premiums.

A person could wake up one morning, a month after fairtax passes, and get 50,000 bill for sales tax - on their knee operation, their surgery, their rent, their utilties, their insurance premiums.

Fairtax would be far different for many people than the theory would let us believe.

You have less money to spend today, not because you’re paying sales tax, but because capital gains and income taxes are taking a bite out of your savings. So while you might be at a relative disadvantage if you spend your savings, you will be at a distinct advantage when you invest your savings.

Unless we stop the insane level of federal spending, the federal budget will remain a pig.

The FairTax is legislation, not a Constitutional amendment. Until we repeal the 16th Amendment, it would be very dangerous to create a new federal tax. Even if the income tax were stopped with passage of the FairTax, Congress would still have the Constitutional authority to impose a new income tax. Just a “temporary” income tax, for an “emergency”, perhaps only on the “richest 1% of Americans”… sound familiar?

Every state that has passed a “temporary” additional tax (sales, income, or property) has soon found that tax has become permanent. Not just permanent, but continually expanding and growing right alongside the other statewide taxes.

The total federal take from income taxes is less than the amount the budget has grown over the last 10 years. Roll the budget back to just 10 years ago –never mind all the way back to its Constitutional limits– and we can eliminate the income tax while replacing it with nothing.

That’s my idea of real reform!

I would submit that the current system of tax witholding is far worse than an inclusive sales tax from the standpoint of people’s awareness of what they’re paying. How many people do you know that celebrate when they get a tax refund, without considering that what they’re getting back is money they earned that the they lent to the government without interest?

-jcr

I think the Fair Tax is a step in the right direction because it would encourage savings, which we need a lot more of in this country. But we don’t need the Fair Tax or the Income Tax. We need to stop spending so much money.

But if you’re going to implement an inclusive Fair Tax, my main concern is that we would lose transparency in the taxing process. This might seem silly at first, especially compared to the current tax structure (yikes!) but at least with the current system we see an actual number of how much we’re giving up to the government in taxes. Since the Fair Tax will be included in everything we buy, as opposed to being taken out of every paycheck, or paid at the end of the year, it will be tough to keep track of how much we’re paying in taxes. An inclusive sales tax makes it too easy and tempting for the government to raise taxes because even though people may hear about a tax raise in the news and know it’s happening, they won’t really see how much more money they’re giving the government in their day-to-day lives (unless they’re like me and track expenditures religiously) and there will be that much less resistance to tax increases. This is a bad thing.

A similar effect occurs when people pay for everything with credit cards instead of cash. They may “know” how much they’re spending when they use credit cards, but when people make all their transactions in cold, hard cash, they usually spend less because it’s easier for them to see how much they’re really spending. The Fair Tax is like a credit card — it makes it too easy to ignore how much money you’re actually giving to the Federal Government, because it’s already baked-in to everything you buy. On the other hand, the Income Tax isn’t good either because its progressive nature discourages people from earning more money. The solution: decrease government spending by 40% to 50% and stop directly taxing the citizens.