Or am I missing something? Please enlighten if you believe that to be the case …

I haven’t seen a part of your argument before.

Regarding the implementation, the current version calls for suspension of the 16th Amendment for a period of 7 years upon adoption of the FairTax. If, at the end of the 7 years, it has failed to live up to the promise, it goes away and we return to the current tax system.

That’s pretty gutsy “putting your money where your mouth is” strategery and is in line with the Right’s general approval of one aspect of strong state sovereignty – that of providing an opportunity for any one of a number of options to be tried and evaluated.

I’m trying to wrap my head around your argument on it not being Fair, however. You seem to be saying that since the current system is REALLY bad but we’ve had a long time under it we shouldn’t fix it because the future would be better than the past. While that is, indeed, not fair … it is also sort of not sensible.

It’s sort of like saying that we cannot improve the Justice system because current inmates experienced Justice in one manner and improving the system is unjust because future inmates won’t be treated as bad as the old ones.

Or am I just misunderstanding the gist of your point?

Your parents, uncles and aunts would have roughly* the same purchase power after the FairTax that they had before. True, people earning money post-FairTax would get more, but then again the interest your parents/uncles/aunts are getting on their savings wouldn’t be taxed any more either.

* – Some goods have more built-in taxes that would be repealed via the FairTax than others. I don’t have my FairTax book handy right now to go through that, but one example is that leather goods have some of the least embedded taxes currently, so they would in fact be hurt somewhat by the FairTax. But unless your elders have been saving up to buy a whole wardrobe of leather clothing, and they just happen to buy that wardrobe post-FairTax, then yes the FairTax would be unfair to them.

I take it you will not be coming to the Columbia MO rally on the 13th of June?

But that is not what is going on with the fair tax advocates. You guys are steaming along at full speed like you actually had a whisp of a ghost of a half of a chance to get this scheme enacted. But you don’t.

Go ahead and tilt at windmills if you want, But right now I would settle for just not letting the previous tax cuts expire, and guess what? that’s not going to happen either.

Just seems like such a waste of time effort and money right now.

And I hadn’t considered that. I’ll ask and get back to you … stay tuned to here …

What do you propose we do instead? Do we hand this current mess off to our children because our parents failed to act 40 years ago?

If someone out there has a better idea that actually has support outside of Washington, I’d like to hear it. We cannot let this continue as it is going now.

This comes directly from a friend of mine, Ken Hoagland. Ken is special consultant to and the National Spokesperson for the FairTax.

He writes:

Sarge,

Your point is valid, of course. But also remember that the prebate will cover the taxes spent on the necessities of life and remember that most seniors have already made their major purchases. Add to that the fact that all investments will now be free of capital gains taxes and there will no longer be penalties or tax consequences for withdrawal of retirement funds. For those who continue to work, Social Security benefits will no longer suffer a 50% tax. Finally, you can’t discount the effect on fixed incomes of eliminating taxes now paid by all that are embedded in cost of retail goods–that will be eliminated under the FairTax. Embedded taxes? It’s the employer’s share of FICA taxes, corporate taxes and the cost of filing taxes ($300 billion this year). They all get added into the price of everything we buy today. Those costs will be eliminated under the FairTax. Embedded taxes are one more way that federal taxes are hidden from us today but represent up to 20% of the cost of retail goods and services.

Perhaps most importantly about the FairTax–although not directly related to your point–is the healthy improvement achieved when the cost of the federal government is finally revealed to American consumers (taxpayers). Right now government plans and promises for spending trillions and trillions see little resistance by a public that perceives such spending as “free money”. Even conservative politicians can resist spending our earnings to gain political favor. The FairTax makes visible with every purchase the cost of such promises. That will likely finally lead to widespread public pressure to restrain spending. Why? Because it will finally be clear that it is our (and unborn generation’s) money that is being spent. When that becomes clear with every retail purchase, the days of buying our votes with our own money (and our children’s future earnings) will be over. Is it any wonder that Washington fears the FairTax?

Lastly, right now what we earn belongs first to the federal government and it is taken (and the taking hidden from us) in payroll taxes and withholding. Our earnings become our sfirst under the FairTax with spending for the common good a function of individual consumption decisions and only after we have received 100% of what we have earned. This may seem a small point but is really a central idea of the FairTax. The fruits of our labors should not and cannot first belong to the federal government with only the remainder belonging to us. That is the definition of a “serf” who labors for a fraction of his his own earnings. In this, the FairTax restores the correct relationship between citizen and government–and helps “de-throne” our modern day aristocracy in Washington who spend our earnings so freely. We threw off kings and tyrants when we created the United States and rightly reserved such power to the people. Now, we have to do it all over again with the FairTax because our new royalty–from both parties–can only exist under a system that hides taxes from plain sight and which only returns a portion to us after the federal government first takes “its” part.

The FairTax shifts federal taxes from coming out of what goes into the economy (and what makes the economy strong)–work, savings and investments–to what comes out of the economy–consumption. By doing this all pay their fair share–including 12-20 million illegal immigrants (who become taxpayers overnight as consumers), the ability to corrupt the tax system is taken away from Congress (which is why they generally hate it), and restores our original concept of the the relationship between citizen and government.

All to say, that while not perfect–it is worth the effort to roll Congress and its corrupt self-interest in perpetuating manipulation of the income tax system. Their narrow self-interest in the power and profit selling off pieces of the tax code damages the economy, slows growth and bedevils every taxpayer. The only way to overturn that self-interest–interestingly– is to embrace with a vengeance the power of the body politic to throw the rascals out on their ears. In other words, the people will have to force this on Congress–. more than a fitting way to restore the proper role of the citizen and the proper role of our government.

as well as your other points. Those are some of the strengths of the Fair Tax.

There is no tax code for your 6th grader to read with the Fair Tax. It goes away. It’s a simple sales tax just like has been collected and transmitted successfully for decades by retailers.

If there is fraud found, it is the retailer who would be punished and under laws that at least make sense. As it is now, even scrupulous and honest taxpayers who make honest mistakes while trying to comply with 75,000 pages of law are automatically made criminals by the IRS and it’s then up to the taxpayer to prove the IRS is wrong and not the other way around.

Finally, private sellers of used goods aren’t included in the FairTax plan. If you buy your grill from Home Depot, you’ll pay the tax. If you buy it from your neighbor, you don’t. And business to business sales are not taxed.

The robbing of taxpayers by Government currently takes place in the amount of taxes taken and the lack of restraint in spending. The FairTax doesn’t address how much should be collected or how it is spent after it is collected. It only changes the manner in which the money is collected.

But that change does make it easier for citizens to see just how much is being collected and be aware of it. Under the current withholding process, we’ve been conditioned to think of our paycheck as divided into two parts, ours and the Government’s. In reality, it’s all ours and the Government takes the taxes out first – right off the top – regardless of whether or not you really need your money this week or not. Later, if you’ve overpaid, there’s no “refund” since you are not returning anything you bought. They simply give you your own money back without an apology for taking too much and with no interest for having used your money for months while we brace ourselves to have it happen again this year. But be 3 days late with the tax debt you “owe” and see what happens.

The Fair Tax isn’t perfect. But it’s a darn sight better than what we have currently.

What’s to keep the Gov from jerking around the tax rates to get what they want? After all isn’t that what the are doing now?

Except there is little transparency now. Taxes get raised and the next thing we see is our Quarter Pounders cost a little more or there’s a little less in our paycheck than there used to be. When we as at HR, they just shrug and go “Taxes” and we nod our understanding and leave. Then we promptly forget about it. We’re used to the idea of withholding and the Gov with it’s hands in our pockets. And it’s SO hard to change it after Gov does their thing. We don’t even catch most of the tax increases we are subject to.

A strength of the FairTax is that any tax increase is going to be seen by every American who buys a Coke, a beer, a gift, a car or whatever from the store. Almost daily we’ll be reminded that we’re being taxed more. The consensus is this process will also cause far more of us (certainly not all of us – but more) to look at where that money is going and for what.

If we do not then approve of the spending which results in our increased taxes, we’ll likely be more inclined to do something about it. Sure the Gov could come back and raise the rate 3% or 10% or whatever. And? They can do the same thing now and are doing so even as we speak.

But because it’s an income tax they can say – “It’s only on the rich” and the Middle Class goes to sleep again. They can say, “It’s only on the evil corps!” and the people don’t bother to consider that no corporation truly pays taxes, they just get passed on to consumers in the form of higher prices.

I agree 100% that the people should be in control of both taxes and spending via watchdog attitudes. I think the FairTax makes that more possible than our current system and than any other alternatives.

You’re welcome. But I think you still have some misconceptions about the FairTax.

For instance, there will be little to no increase in the actual price of items under the FairTax. That may be the answer to your objection that will overcome it.

From your comment about the price of a car, it seems that you believe adding a national sales tax to the price of an item as proposed under the FairTax would increase the cost of the item for you. It would not. The car with a cost of $30K today would not cost $50K under the FairTax. It would still cost about $30K, FairTax included.

Here’s how.

Currently built into the retail price of all goods and services sold to consumers is the cost of the taxes and tax compliance costs paid by the business offering those goods and services. We all understand that businesses, to make a profit, pass on all their costs to customers. Those costs are calculated to be about 23-25% of the retail price of goods and services (some more, some less). Those costs would go away under the FairTax and so would the need to pass those now non-existent costs to consumers. This would reduce the price of a $100 item to $75.

Competition would ensure the price reduction happened. Consider that for it not to happen, all competitors would have to conspire to keep the price high. They would all thus keep a higher profit but no one would be allowed to gain more market share outside the usual means businesses do so and that can be a long time coming. Another way to make profit and gain market share, however, is to take less profit per item but sell more of them. As soon as one competitor realizes this and lowers his price even slightly, thinking he can cut it by 10% and still be making 15% more than before, everyone will cut prices to the floor set at the 25% off level. They will all still make the same profit as before since that cut only came from now non-existent costs added to the price.

So, our $100 item is now priced at $75 and now the 23% rate of the FairTax is applied. The item now costs $92.94. You have even saved some money.

What this means in your situation is, even though you will be paying the tax a second time, it will not cost you more to do. Your plans and savings and budget for retirement on savings income will not be affected negatively by implementation of the FairTax. In fact, it just may be that you’ll save a bit.

The situation still exists that you are paying tax twice. But it is not the destructive situation you envision. Depending on the income level you choose for yourself, the prebate will serve to offset some of that second taxing. Finally, as I understand it, under the current system, some of your retirement income would be subject to taxation anyway so you would not be void of taxes after retirement in any scenario. Under the FairTax, however, assuming the estimates of Economic growth are valid, savings will be a huge money maker for people. If the Economy jumps to 5% growth or more and you have saved money, the growth on that savings will be incredible. And none of that growth will be taxed then as it is currently.

It is equally legitimate to indicate people without savings might claim the FairTax is unfair to them as well but for the opposite reason. Why should you be able to see such profits? They are younger and had to pay taxes on their income. They couldn’t save as much or for as long as you did so they don’t have the chance to make lots of tax-free investment profits under the FairTax.

I’m not ready yet to call it the “Not Totally Fair Tax”. It’s still a darn sighte better than what we have now. And, while I recognize and concede your point on the second taxation, I believe my response above mitigates your concerns sufficiently that I am willing to continue to work for the FairTax. At 52, I am approaching retirement age and am personally willing to live in and with the situation we both have described. Perfect? No. Unfair? No? Fair? As fair as is humanly possible. I can live with getting 90% of the 100% I’m looking for. I don’t think it wise or desirable to sacrifice the 90% in order to get the full 100% in this matter.

I’m curious as to your thoughts on this.