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Anyone heard of the FairTax Act?

Discussion in 'Legal' started by NyeKass, Jan 16, 2006.

  1. NyeKass

    NyeKass New Member

    Oct 11, 2005
    Compare the FairTax, the Flat Tax and the Income Tax

    16th Amendment

    Current Income Tax: No Change.
    Flat Tax: No Change.
    FairTax: Proposes repeal.


    Current Income Tax: Very complex. 20,000 pages of regulations. IRS incorrect over half of the time.
    Flat Tax: Witholding continues. Individuals and businesses must still track income and file income tax forms.
    FairTax: Individuals do not file. Businesses need only to deal with sales tax returns.

    Congressional Action

    Current Income Tax: Used by lobbyists and the wealthy for tax breaks and loopholes. Used by bureaucrats for social engineering.
    Flat Tax: Has some problems, but is far superior to current law.
    FairTax: 23% Linder/Peterson FairTax Act (H.R. 25). Employees receive 100% of pay. Social Security and Medicare funded from consumption tax revenue, not your paycheck.

    Cost of Filing

    Current Income Tax: $225 billion in annual compliance costs.
    Flat Tax: Significant simplification costs are somewhat reduced.
    FairTax: No personal forms are filed. Significant cost savings.


    Current Income Tax: Taxes savings, labor, investment, and productivity multiple times.
    Flat Tax: Imposes a tax burden some of which is still hidden in the price of goods and services.
    FairTax: Un-taxes wages, savings, and investment. Increases productivity. Produces significant economic growth.


    Current Income Tax: The current tax code violates the principle of equality. Special rates for special circumstances violate the original Constitution and are unfair.
    Flat Tax: A flat tax is an improvement of the current income tax, but it is still open to manipulation by special interests.
    FairTax: Taxpayers pay the same rate and control their liability. Tax paid depends on life style. All taxes are rebated on spending up to the poverty level.

    Foreign Companies

    Current Income Tax: Current tax code places unfair tax burden on U.S. exports and fails to neutralize tax advantages for imports.
    Flat Tax: A flat tax taxes exported goods and does not tax foreign imports to the U.S., creating unfair competition for U.S. manufacturers and businesses.
    FairTax: Foreign companies are forced to compete on even terms with U.S. companies for the first time in over 80 years.

    Government Intrusion

    Current Income Tax: Current tax code requires massive files, dossiers, audits, and collection activities.
    Flat Tax: A flat tax still requires personal files, dossiers, audits, and collection activities.
    FairTax: As the Founding Fathers intended, the FairTax does not directly tax individuals.


    Current Income Tax: The 1913 income tax has evolved into an antiquated, unenforceable morass, with annual tax returns long enough to circle Earth 28 times.
    Flat Tax: A flat tax just won’t stay flat. Starting out nearly flat in 1913, the income tax grew out of control with top rates over 90% until the Kennedy administration.
    FairTax: 45 states now use a retail sales tax.

    Interest Rates

    Current Income Tax: Pushes rates up. Biased against savings and investment.
    Flat Tax: Reduces rates 25-35 percent. Neutral toward savings and investment.
    FairTax: Reduces rates by an estimated 25-35 percent. Savings and investment increase.


    Current Income Tax: Biased against savings and investment.
    Flat Tax: Neutral toward savings and investment.
    FairTax: Increases investment by U.S. citizens, attracts foreign investment.


    Current Income Tax: Retained.
    Flat Tax: Retained with reduced role.
    FairTax: Abolished.


    Current Income Tax: Hurts U.S. companies and decreases available jobs. Payroll tax a direct tax on labor.
    Flat Tax: Positive impact on jobs. Does not repeal payroll tax on jobs.
    FairTax: Makes U.S. manufacturers more competitive against overseas companies. Escalates creation of jobs by attracting foreign investment and reducing tax bias against savings and investment.

    Man-hours Required for Compliance

    Current Income Tax: Over 5.4 billion hours per year.
    Flat Tax: Reduced.
    FairTax: Zero hours for individuals. Greatly reduced hours for businesses.


    Current Income Tax: High tax rates, unfairness and high complexity harm compliance
    Flat Tax: Reduced tax rates and improved simplicity will improve compliance.
    FairTax: Reduced tax rates and fewer filers will increase compliance.
    Personal and Corporate Income Taxes

    Current Income Tax: Retained.
    Flat Tax: Retained in a different form.
    FairTax: Both are abolished.


    Current Income Tax: Inhibits productivity.
    Flat Tax: Increases.
    FairTax: Increases.


    Current Income Tax: Decreases savings.
    Flat Tax: Increases savings.
    FairTax: Increases savings.


    Current Income Tax: The current tax code is hidden, embedded in prices, complex, and incomprehensible. Taxes are withheld from paychecks.
    Flat Tax: The business component of the flat tax and payroll taxes are hidden and would be embedded in prices. Taxes are withheld from paychecks.
    FairTax: The FairTax is highly visible and easy to understand. No tax is withheld from paychecks.

    This is something being pushed by Rep. John Linder. What does everyone think?
  2. HankB

    HankB Mentor

    Mar 29, 2003
    Central Texas
    It means unemployment for a lot of government (IRS) bureaucrats and employees of companies like H&R Block. It's a bitter pill to swallow, but I could live with that. :neener:

    The only real problem with the FAIR tax - which is basically a consumption tax - is that if .gov DID decide to adopt it, it's likely to be in addition to the income tax, rather than in place of it.

    In other words they'd muck it up in the implementation . . as they do most good ideas.
  3. Car Knocker

    Car Knocker Senior Member

    Dec 28, 2002
    Salt Lake City, UT

    Source for this document? Link?
  4. Bruce333

    Bruce333 Participating Member

    Aug 22, 2005
    Smithfield NC
  5. Rem700SD

    Rem700SD Active Member

    Dec 8, 2005
    South of Houston, TX
    Read Steve Forbes' book on his tax proposals. He makes a very good argument against consumption tax, and for a flat tax.
  6. fourays2

    fourays2 Member

    Jun 22, 2005
    Phoenix, AZ
    this makes far too much sense to have any hope of ever passing.
  7. Firethorn

    Firethorn Participating Member

    Feb 27, 2004
    It's been posted before, and most of this boards members seem to like it including me, but don't have much hope of it passing. It'd cost the politicians both their loopholes and ability to 'social engineer' by mucking with the tax rates.

    Note: Even though I support it, I know that I'd come out on average behind on it. I'm military and because of our deployment schedule, I don't pay much in income taxes. Of course, this'd make the BX/PX's(no sales tax) competitive again against walmart and their ilk. Then again, Minot's BX is so lousy that most of my shopping would have to be catalog/online. Of course, you try being a walmart/sears/kmart type store with a fifth of the floorspace.
    Last edited: Jan 16, 2006
  8. CAnnoneer

    CAnnoneer Participating Member

    Jul 17, 2005
    Los Angeles County, CA
    FairTax sounds great on paper, but in reality is only implementable as an addition to the current system, not a replacement of it.

    For starters consider the fact that about a third of tax revenue comes from the wealthiest 1 percent of individuals. These guys have to increase their spending several times to pay the same amount under FairTax. Thus if ever adopted as replacement, FT would drastically decrease tax revenue and bankrupt the government. The bureaucracy and social programmers would never allow it.

    Also, consider the paperwork that businesses have to do in addition to what they do now. That would mean extra equipment and labor, therefore increasing operational expenses.
  9. Bruce333

    Bruce333 Participating Member

    Aug 22, 2005
    Smithfield NC
    If the fairtax is implemented as suggested (a replacement for the income tax) the IRS as we know it would be virtually eliminated. They would only have 50 customers instead of millions. The IRS FY 2005 budget was $10.674 billion. That's a lot of money that wouldn't be needed.

    ?? What equipment and extra labor? It would increase the tax collected and the amount paid to the State. There are only 5 States that don't have a State sales tax, so yes it would be an increase for businesses in those States. But, you are also removing the recording and payment of employee income taxes, which reduces the cost of doing business.
    Last edited: Jan 16, 2006
  10. scout26

    scout26 Senior Member

    Jul 21, 2003
    Illinois - The Deadbeat State
    "I can get it for you wholesale."
  11. grampster
    • Contributing Member

    grampster Elder

    Dec 26, 2002
    Wilderness of West Michigan
    The Fair Tax will never happen until the Legislature and Executive branches of .gov are filled with patriots rather than primping and preening egotistical bloviators.
  12. bogie

    bogie Mentor

    Jan 2, 2003
    St. Louis, in the Don't Show Me state
    Plus think about all the private accountants and lawyers... And the businesses who don't make a move without considering the tax implications... I think that a national sales tax, coupled with the removal of the income tax (which only dates back, what, 60 or so years?), with the "necessities of living" rebate to take care of the poor folks, would be the best thing to hit this country's economy since the fifties...
  13. 1911 guy

    1911 guy Mentor

    May 5, 2005
    Garrettsville, Oh.
    I've always been in favor of a use tax.

    Under our current tax system, the wealthy pay the largest dollar amount of tax, but a smaller percentage than the middle class. The poor get refunds larger than their annual incomes. This leaves the middle class stuck with a higher percentage burden than the wealthy, also paying the poor for EIC, which is either a joke or a travesty, I'm not sure which.

    A use use tax would distribute the burden equally, depending on amount of income spent, rather than total or what cannot be hidden in tax shelters. Also eliminates collecting money from someone else for doing nothing. That smacks of communism. The use tax would also tax non-legitimate wage earners such as drug dealers and such, further lightening the load on Americans who have been picking up that slack our entire lifetimes.
  14. White Horseradish

    White Horseradish Participating Member

    Jun 28, 2004
    The one problem I see here is the assumption that the wealthy would shop in US. One could buy, say, a yacht in the Caribbean.
  15. Matthew748

    Matthew748 Active Member

    Mar 26, 2005
    I have read a few publications on this topic and think that it is just a back door attempt to get a general federal sales tax in place. If passed, the .gov would announce that it would be phased in over the next 10 years or so, but would stop at year 2.

    It’s just like Social Security. According to the original legislation, Social Security funds are supposed to be kept totally separate and only disbursed for qualified Social Security expenses. No lending, no borrowing, no nothing. In reality this does not happen. They are not even shy about it. Heck, payroll tax payments are composed of federal withholding, Social Security withholding, and Medicare withholding all lumped into one and paid to the Treasury Dept. They do not even have the decency to loot the Social Security fund the old fashioned way, now they get the payments directly.

    Given this, who really thinks that the .gov would give up personal income tax income in favor of consumption/sales tax? They want both, not one or the other.
  16. Optical Serenity

    Optical Serenity Active Member

    Jun 23, 2005
    Atlanta, GA
    I'm fortunate enough to live in atlanta, and hear Neal Boortz' radio show everyday. His book on Fairtax is awesome.
  17. Herself

    Herself member

    May 14, 2004
    Let the Feds add a new tax? When have they ever repealed an old one?

    There's a Federal tax on your phone bill. Know why it is there? Simple; a telephone tax was added to help defray the costs of the Spanish-American War! T. R. and the Rough Riders are all long dead, and we're still paying. Come to think of it, Cuba is long lost and we're still paying!

    Those who want the "fair tax" may get it -- but we will never be rid of the income tax by adding another, no matter what promises are made.

    No new taxes. None! We need to whittle away at the existing ones, not add to them!

  18. The Drew

    The Drew Active Member

    May 9, 2005
    Central Pennsylvania
    The only right way to implement this is by constitutional amendment. That amendment MUST outlaw federal income taxes and the IRS.

    Otherwise as others have said that this tax would just be in addition to income tax, or the income tax would just come back in a few years.
  19. DunedinDragon

    DunedinDragon Member

    Nov 21, 2005
    What a lot of people don't realize when it comes to taxes is that's about the only REAL leverage government has for trying the influence economic trends such as hiring, capital investments, savings, college attendance, etc. The fair tax or a flat tax sounds fine until you try to figure out how you're going to entice companies to possibly go into debt in order to make capital investments to bring around a soft economy. The only other leverage the government has, and they really don't have it, is trying to influence the Fed to restrict or open up the money supply, but that only affects lenders and takes a long time to filter down through the economy. You may not like that idea, but I'd rather the government have some economic leverage point than being solely subject to "feel good about the economy" or "feel bad about the economy" as the only way that economic trends get changed.

    I'm not saying that's necessarily how the government USES the current tax system all the time, but theoretically that's what it's really intended to do. I suppose a "consumption tax" could ideally be used to influence spending by raising or lowering taxes on categories of items, but that gets almost as complicated as the current system and just as open to misuse and special interests.

    To me, the tax system in place is like our justice system...it ain't all that good, but it's better than any alternatives I've seen.
  20. Don of Kalifornia

    Don of Kalifornia New Member

    Jan 26, 2003
    I've read Neil Bortz (sp) book on the Fairtax..if it works as in the book it seems like a great idea, no income tax and removes the hidden tax from items.

    I'd say read the book before deciding..

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