The Fair Tax, Economic Recovery

The FairTax plan is a comprehensive proposal that replaces all federal income and payroll based taxes with an integrated approach including a progressive national retail sales tax, a prebate to ensure no American pays federal taxes on spending up to the poverty level, dollar-for-dollar federal revenue neutrality, and, through companion legislation, the repeal of the 16th Amendment.

Do yourself a favor and get educated on The Fair Tax. The Fair Tax is the result of $22 million worth of research by credible economists from around the country whose task was to come up with another way to fund the operations of the country. The task was qualified to the extent that the result would be ‘revenue neutral.’ That is to say the system must be able to generate as much money as the government is currently generating with the current system through federal withholding and payroll taxes, self-employment taxes, alternative minimum tax, estate and gift tax, and capital gains tax, all of which would be replaced by the Fair Tax. And from that point as the economy grows, so grows the treasury. It is a pro-growth, as opposed to punitive growth, taxing system.

Consequences paramount to converting to the Fair Tax system are three-fold.

First, your individual take-home pay increases dramatically. Without the federal withholding and payroll taxes being deducted from your pay, you get all your pay in every paycheck. This alone is the biggest stimulus to your personal economy as well as our national economy. And it doesn’t put the nation further into debt in the process. Because the taxing revenue is generated by consumption, the tax base includes everyone who buys anything new, not just the working people in America. ‘Everyone’ includes citizens and non-citizens including illegals, foreign diplomats and tourists. And because it is a sales tax, the so-called underground economies are no longer exempt from contributing. Everyone will contribute to funding the government and our Social Security, Medicare and other entitlement programs.

Secondly, it takes the ‘tax hammer’ away from politicians who use it to control every aspect of our lives and business and industry in the United States. It transfers the power from Washington politicians directly back to you. It is this stripping of power from the political class that generates the most objection from the political class, and the most outrageous criticism and unfair demagoguery, of the Fair Tax. Under the Fair Tax, our politicians will be left with nothing to do except their job of governing and living within their means, just like you and I have to do. And since filing of your personal income taxes will cease, April 15th becomes just another day to enjoy life, liberty, and the pursuit of happiness.

While it is still fresh in your memory, take a look back at the presidential campaign and the amount of press and attention that was given to taxation by both candidates. Besides energy, the other topic was ‘my tax plan is better than your tax plan.’ And polarizing political tactics like class envy and class warfare became all too prominent. Absent tax laws to talk about, the voters would have learned more about the candidates and ‘the real issues.’

Third, but certainly not last, the change to the Fair Tax alone would bring back foreign-held capital, estimated at between $10 to $15 trillion, that economists predict will flow into the US economy with enactment of the FairTax. That is trillions of dollars of business that has fled this country because of its taxing system, the second highest in the world. As an added bonus, companies looking to do business in the United States that have not yet come here, would have the incentive to come here. The job creation and wealth creation associated with it will spur the economy more than any tax-and-spending Democrat or Republican in Washington could dream of.

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7 thoughts on “The Fair Tax, Economic Recovery”

  1. No no. Taxes are high enough, but the proportion is wrong. My opinion is the burden should be dramatically shifted to the wealthier side of the spectrum. And the loopholes, of which there are a gazillion gaping examples, should be closed.

    How much? 150-200% of what they pay now.

    The poor ARE poor because the rich are ripping them off. That is what capitalism is. Capitalism is an inequal system; the wealthy accumulate wealth at the expense of others. For one to gain, another must lose. I feel like you believe that all Americans could be wealthy if they just worked hard enough — which isn’t the case. In capitalism, someone has to be at the bottom.

    And I’m okay with that. I’m no socialist. Inequality equals diversity — diversity in thought, ability, creativity, etc.

    Believe it or not, I don’t consider poverty to be something that can be eliminated. People talk about “ending poverty” — that’s just not possible in a capitalist system. There will always be poverty. What we can do is reduce the numbers as much as we can, and reduce the severity of their poverty, through various efforts — everything from charitable programs to publicly-funded assistance programs (you might call those welfare programs).

    I do however believe that the wealth disparity in the US, the gap between the poor and the rich, is growing; and as the wealth of the people on the lower end of the spectrum decreases, so too do their opportunities. So let’s fix that by using more tax revenue, provided by the very wealthy, to provide the poor with those opportunities, like education and transportation. I don’t want to make everyone equal, but I do want to level the playing field a little bit.

    You may call that class warfare. Maybe it is. But I’m not looking for a free ride. I enjoy working for what I have — but I’d like it to be a little easier to save up money to buy a home, or to afford college.

    Hopefully I kept on topic… Trying to avoid devolving into a debate about capitalism vs. socialism etc.


  2. Well all right. Thanks for being honest about your point of view, that taxes are not high enough. Especially for those with the ability to pay. It sounds much like this ‘From each according to his ability, to each according to his needs!’

    How much taxes should ‘the rich’ be paying?

    I understand that Democrats, at least the ones running for office, by and large feel that way, and that is unfortunate. It represents the beginning of the end of individualism, capitalism, freedom, and liberty. And the Fair Tax would be an enormous obstacle to the advancement of socialism in this country, and also an enormous stimulus for the advancement of honest government and prosperity for people at ALL socioeconomic levels. This explains why there happens to be zero Democrats sponsoring The Fair Tax bill. It seems to be antithetical to their core beliefs. Among them is the belief that the poor are poor because the rich are ripping them off in some way. I don’t happen to believe that.

    The ‘poor’ in this country would be considered pretty well off in most other parts of the world, and it is only because of freedom and capitalism that this is so. But that’s another subject.

  3. No amount of discussion will be fruitful — I just wanted to chime in with my P.O.V.

    I’m a Democrat. I believe the rich are vastly undertaxed.

    You and other FairTax folks disagree. Luckily for me, It’s going to be a good while before you guys can get it passed — if ever.

  4. The prebate is not a smokescreen. That’s Papantoniospeak. The prebate is an integral and necessary part of the plan. It is in the bill (H.R.25), in the part called ‘CHAPTER 3–FAMILY CONSUMPTION ALLOWANCE’ if you wish to read it. If you won’t believe that, then no amount of discussion will be fruitful.

    To look at taxes paid as a percentage of income comes from the socialistic need to achieve ‘equality,’ even though there is nothing equal about the dollar amount of taxes paid. That, and to incite class envy, another favorite theme of socialist dogma.

    Don’t misunderstand what I’m saying. I’m not calling you a socialist, I’m describing the phenomena of using percentages instead of real dollars to distort or otherwise mis-characterize how the fair tax raises revenue. The fact that everyone (not just people that have jobs) pays the same percentage is the fairness factor. The fact that working poor people will get to keep all they earn, and use it how they see fit, is a huge benefit that somehow gets overlooked.

    Rich people will pay way more in taxes than poor people. Why? Because they will consume more. That concept is what makes the fair tax fair. Percentages don’t pay the bills, the dollars pay the bills.

  5. It is absolutely regressive.

    The end effect of the “FairTax” is that the tax burden on the wealthy decreases and shifts to the middle class. As income increases, the percentage of income spent on consumption (and thus contributed in taxes) DECREASES.

    Overall, under the “FairTax”, the tax base widens, and the tax burden is more evenly distributed — meaning the wealthy pay less and the difference is made up by the middle class. The prebate, everything else, it’s all smoke and mirrors designed to obscure that.

  6. The Fair Tax is a consumption tax. That is true. And consumption taxes generally are regressive. But the Fair Tax is not a regressive tax. This is the most common mis-characterization of The Fair Tax, and it is only because people who think that, don’t know how the Fair Tax works. That’s why it is so easily demagogued.

    The Fair Tax is unlike any other consumption tax that has come down the pike. And what makes it different, is the ‘pre-bate.’ The prebate makes it progressive and not regressive.

    In fact, if you want to talk about ‘poor people’, poor people have the most to gain under the fair tax. First because of the pre-bate, they’ll pay no taxes on the necessities they have to buy each month. The pre-bate will amount to about $375 per month, and that will be distributed on a monthly basis. It’s not a reimbursement plan like current ‘tax returns’ are. Then, they’ll benefit by getting all of their pay, no withholding and payroll deductions.

    If you want to talk about ‘change,’ The Fair Tax represents the biggest and boldest of change since the Declaration of Independence. It empowers the people instead of Washington with their own money. If you don’t want to pay taxes, you don’t have to. Don’t buy anything. But if you want to by a 100 foot yacht, like Fred or Mike, you’ll be paying ‘your fair share’ of taxes.

    The Fair Tax is not only fair, it is progressive.

    Check out this video that explains how the fair tax is not regressive.

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