Home > Debunking, Fair Tax, Politics, Social Engineering, Washington Politics > To Be or Not To Be: Answers for the Fair Tax

To Be or Not To Be: Answers for the Fair Tax

September 20, 2011 Leave a comment Go to comments

A person with the facts is never at the mercy of someone with just an opinion.” – Unknown

Feature Article: Winning the Debate

Americans have a lot of questions about how the FairTax will transformation our nation.

Objections vary from person to person but here are some short answers with links to more detailed research.

Also, here is a link for a very thorough paper, “The FairTax: Fundamentals and Facts” with answers to more technical questions.

“My FairTax rate would be too high.”

Under the FairTax you can control your tax rate! The prebate makes basic necessities tax free and used good never are taxed. You only pay taxes when you choose to purchase new goods and services. If you spend double the poverty line, your FairTax rate is only half of 23%! See more examples here.

Most Americans are in a 15% tax bracket and pay another 7.65% in payroll taxes which is about 23% already. But we spend about $400 billion dollars more every year just figuring out how much to send to Washington!

Compare your rate at FairTax.org/Calculator

“The IRS still has to exist under the FairTax”

Under the FairTax, unlike a flat income tax, the IRS is eliminated both symbolically and literally. The FairTax defunds the IRS and orders records to be destroyed.

The states, most of which have had more than 60 years of experience in the administration of the sales tax, will collect and enforce the FairTax. Today, 98% of the population is covered by state or local sales taxes.

Details in Title III, Section 301 of the FairTax, HR 25

“The FairTax can’t fully fund our government”

The FairTax has been very thoroughly researched to provide all the revenues collected by the taxes it eliminates. It also funds the prebate, collection fees for retailers and state sales tax organizations.

Other reports are largely based on the 2005 Panel on Tax Reform and subsequent FactCheck.org misanalysis which declared the rate would have to be much higher. The catch is, they quietly devised their own national consumption tax which they loaded with the exemptions and deductions they felt were politically realistic.

Finally, it’s important to note that the FairTax is “revenue neutral.” Like our current tax code, it’s not calculated to be ‘spending neutral.’

See published, detailed research at FairTax.org/Rate

“The FairTax is not politically possible”

It’s true that great public policy changes do not happen easily. We believe, however, in the promise of the Founding Fathers that this is a nation, “of, by and for the people”. But we have seen Congressional co-sponsors come on board faster than ever before; as more and more Americans have come to understand the powerful benefits the FairTax offers the nation. We’re closer to victory every time Americans from the left, right and center force another Congressman to co-sponsor the FairTax legislation.

As our ranks grow, such pressure will increase on members of Congress and at some point, the voice of the people will eclipse the voices of the relatively small number of Washingtonians who profit from the income tax system at great cost to our nation.

“Low and middle income people will pay more”

The FairTax actually eliminates and reimburses all federal taxes up to the poverty line for all Americans. This is accomplished through the prebate and by eliminating the highly regressive FICA payroll tax. Today, low and moderate income Americans pay far more in payroll taxes than income taxes. Those spending at twice the poverty level pay a FairTax of only 11.5 percent – a rate much lower than the income and payroll tax burden they bear today.

Also, under the federal income tax, slow economic growth and recessions have a disproportionately adverse impact on lower-income families. Breadwinners in these families are more likely to lose their jobs, are less likely to have the resources to weather bad economic times, and are more in need of the initial employment opportunities that a dynamic, growing economy provides.

In a nutshell, research thoroughly documents that the rich who spend the most will pay more but low, moderate and middle income taxpayers will benefit from the greatest gains in reduced tax liabilities.

See specifics at FairTax.org/Distribution

“Politicians can raise the FairTax rate”

Yes, Congress can raise the FairTax rate just as it can and does raise the income tax rate. However, the FairTax is highly visible. And because there is only one tax rate, it will be very hard for Congress to adopt the typical divide-and-conquer, hide-and-disguise strategy employed today to manipulate the income tax code.

“The 23% rate is misleading. It’s actually 30%”

We choose to compare the FairTax to income and payroll taxes, quoting the rate the same way, because the FairTax replaces such taxes. That rate is 23 percent.

Sales taxes, on the other hand, are generally quoted tax exclusive: “I bought a $77 shirt and had to pay that same $23 in sales tax.” This is a 30% sales tax. Or, “I spent a dollar, 77¢ for the product and 23¢ in tax.” This rate, when programmed into a point-of-purchase terminal, is 30%.

Note that no matter which way it is quoted, the amount of tax is the same. Under an income tax rate of 23 percent, you have to earn $130 to spend $100.

Read more: A 23% tomato or a 30% tomato?

“It’s not enforceable and there will be evasion”

There always will be evasion and today’s incomprehensible system does nurture our underground economy. But the FairTax minimizes confusion and reduces compliance points by eliminating over 80% of tax returns – every individual filing today.

Also, 80% of all retail sales now occur at large retail chains that won’t aid tax cheats. This leaves state sales tax organizations – with decades of experience – an even smaller area to focus on.

See detailed research at FairTax.org/Compliance

FairTax In the News

Republican 2012 Hopefuls Roll Out Economic Proposals From Taxes to TradeBloomberg

…Perry also favors sweeping tax changes. He said in his book that one option would be to replace the current code in favor of a flat tax on income. Another option would be to put in place “an alternative model such as a national sales tax or the Fair Tax.”

Cain and Texas Congressman Ron Paul, 76, have also spoken approvingly of the Fair Tax — a retail sales tax that would shield Americans below the poverty line from its impact.

Romney was more guarded when asked about the proposal in a Sept. 12 candidates’ debate. The tax “lowers the burden on the very highest income folks and the very lowest income folks, and raises it on middle-income people,” he said…

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