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Discussion: H.R. 25, The Fair Tax Act of 2007 (35 comments ↓)
- This item is from the 110th Congress (2007-2008) and is no longer current. Comments, voting, and wiki editing have been disabled, and the cost/savings estimate has been frozen.
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Dan
April 12, 2007, 3:04am (report abuse)What about state sales tax in addition to this new tax law? are you telling me that I would have a flat tax of 23% in addition to state sales tax. For instance I live in Ca. I would have to pay 23% plus 7.75% for a total of 30.75% for all goods that I buy? How is this better?
Mark
April 19, 2007, 11:16am (report abuse)It's better because you wouldn't have to pay Federal taxes any longer via the anual income tax. It's better because a consumption tax, essentially, would tax the drug dealers, the pimps and the prostitutes (the cash economy) and they would have to pay their fair share. Since only 1 out of about 3.4 people work (and even less pay income tax) this would distribute the burden on all who consume. Beyond the obvious benefits to the environment (people would look for lasting value instead of disposability, the Feds would actually need to collect much less than 23%.
Beyond that, if you study Friedman or Hayek, I think you'll find any sort of flat tax will be a boon to the economy.
Jim
April 23, 2007, 8:33pm (report abuse)You're already paying that 30% plus some in your taxes (try 45-50%). The FairTax is determined from what already exists as taxes passed along to the consumer. All this does is shift where the money is collected - to the point of purchase for new items only (plus many other benefits see: fairtax.org). You'll still have to pay the state taxes, if your state has them.
Nathan
May 8, 2007, 9:06am (report abuse)Dan: First look at your pay stub and do the math. As others have stated, you're already pay *at least* that much. Also realize that businesses never have and never will pay taxes. All of the 'business' taxes that Congress passes simply get pushed into the price of the goods and services you buy every day. What the Fair Tax does is bring all of the hidden taxes into the light of day. It also forces the rich (no more tax shelters!) and the criminals (they purchase stuff too) to pay their fair share. Do some research! The truth will set you free!
http://en.wikipedia.org/wiki/FairTax
Steve
May 12, 2007, 2:38pm (report abuse)All the fair taxers are ignorant. Fair tax is regressive. People who live pay check to pay check will pay taxes on 100% of their income. Rich people don't spend 100% of their income. At least the current tax system allows deductions. How stupid are you that you cant figure out a schedule A?
Larry
May 22, 2007, 10:11am (report abuse)"We hold these truths to be self-evident, that all men are created equal" - but we won't tax them that way? That doesn't make sense. The Fair Tax is the only way to go.
Don
June 26, 2007, 2:07pm (report abuse)Steve - the fair tax is not regressive. It includes a prebate based on the poverty level of spending, so spending up to the poverty level is free of taxes.
The fair tax is based on a study originally commissioned by Cato for the least harmful and least intrusive way to collect revenue for the federal government.
Ever filed a schedule C or tried to figure the cost basis in a stock? With discount brokers lots of small guys have to figure this stuff out. How about 66 pages of Federal/State tax forms and worksheets and I live in an area where I can't even afford to buy a house with the market runup?
Mark
August 16, 2007, 1:52pm (report abuse)Steve - People who live paycheck to paycheck are currently taxed before they even see their hard earned money. The FairTax would eliminate tax withholding so all workers would receive the full amount they earned (bigger paychecks). All workers would be able to save or invest the extra money to save for a house or invest it. The rich, on the other hand, will not have the thousands of loopholes available only to those who can afford lawyers and offshore accounts - they will have to pay their fair share whenever they buy a Rolls or Jet or whatever (no write-offs!). The system is out in the open, simple, honest, benefits everyone (poor included), and just makes sense. I sincerely hope people will research this before discounting it (Neal Boortz's book "The FairTax Book) is how I discovered the merit of this idea - a good complement to reading the bill itself of course.
Parker
October 6, 2007, 10:37pm (report abuse)I'm only 19, but I discovered the fair tax via a poli sci research paper. I think the fair tax is the way to go for many reasons, one being that it can help save social security (something that is important to me), social security will get a little piece of action on every item bought, currently the top income bracket for SS is around 90k, with the fair tax, there are no brackets so there will be more money going into SS. And for someone who joined the work force a few years ago, SS is a big concern. By 2018 there will be more going out than coming in.
My 2 cents
Tucker
November 1, 2007, 2:33pm (report abuse)There will be no tax shelter for the rich, all income including unearned income and passive income are now free of taxation. How is this better? Instead of taxing all the income of the rich now we will tax only what they spend. So what happens when someone makes five million of income and the tax payer only spends $250,000 in a year. Only 23% tax on the 250,000 assuming everything was purchased new?
Also, we will be collecting taxes on the drug dealer and prostitutes. So my childs school funding is dependant upon how much a pusher can sell and how many John's a prostitute can pick up. Makes since to me.
Currently 50% of tax payers pay only 3% of the overall bill where the top 1% pay nearly 43% of the overall tax bill. Will 50% of the people get probates up to the point where they don't pay, or will the lower income earners not be paying a larger percentage of their tax bill than they currently are.
Vince
November 26, 2007, 9:35am (report abuse)01_ People don't be fooled, the "Fair Tax" is not as fair as it seems, it only looks that way. Homes: the rich already own them and if "fair tax" eliminates property tax, now they have them tax free. At this point there are very few loopholes for property tax or school district tax. Their rich kids would inherit their homes because the richest people have more than one in a form of real estate investments. I am sure "Fair Tax" would not apply to investments (stocks, mutual funds, real estate, business, etc...)or that would curb market growth exponentially. People who are buying homes for the first time, mostly middle class and lower will be stuck with most of the burden on this "fair tax". …
Vince
November 26, 2007, 9:36am (report abuse)02_ Car and high end goods: From a jet to the best DVD player, all can be purchased outside of the country. For the rich and for criminal who make a lot of money it will be nothing to buy in Mexico or Canada and ship it here. Why buy there? The "Fair Tax" does not eliminate NAFTA, even if it will US will not enforce a tariff on their goods 23% or more to get them in the country and then tax them again for us to pay 23%. This will only make harder for US to export to Mexico and Canada as they would tax our goods equally. The same would apply with many other countries who are not yet taxing our exports. It does not make sense. So again for all the nice things the middle class wants to have but does not have the resources to buy outside the country it has the burden of the "fair tax". …
Vince
November 26, 2007, 9:37am (report abuse)03_ The rest of it.: A family of four needs (in general) the same amount of food no matter if they are rich, middle class, or poor. The minor difference in diet is insignificant tax wise, but financial effect on the poor and lower middle class is significant. A middle class person would feel addition of 23% to their grocery bill, but it's a drop in the bucket for the rich. However, in many US cities food is not taxed, so that would not matter. I can go on about travel, where rich can easily accumulate enough airline miles through purchases or previous travel to fly for free, how a lot of cool and expensive gadgets are given to celebrities for free or to top management supplied by their companies. "Fair tax" is a tax on the "don't haves" who are trying and working hard to have….
Vince
November 26, 2007, 9:37am (report abuse)04_ Lastly, all of you must be joking talking about small time criminals and prostitutes, how much do they consume? Buying contraceptives (if any), the little food they eat or the stolen or donated clothes they wear? The cars they steal? or the "section 8" projects the live in? or now we will make their jobs or drugs legal so we can tax 23% on the purchase of drugs and prostitutes' services. Get real and let’s get the middle class economics university professors not rich politicians and corporations to come up with something that works.
Vince
November 26, 2007, 9:45am (report abuse)05_ I almost forgot to mention that with this "Fair Tax" we can say good buy to foreign visitors who contribute to the stabilty of jobs in travel and hospitality sector in US.
MJ
December 2, 2007, 9:48pm (report abuse)Typical. Everyone against FairTax complains about the rich. Since when is it wrong to succeed financially. What is this vitriolic hatred for the rich??? If someone succeeds or is lucky or is a beneficiary of cash, that somehow makes them evil? THE RICH....TAX THE RICH!!! I'm sick of it.
And no...I'm not rich. I'm a blue-collar working stiff (cop) and I completely support the FairTax. Let me get my whole paycheck.
Besides. Half the money the government spends right now could be saved if it weren't for the worthless, non-willing to contribute or working, sucking on the government *** type people. It's not the rich we need to worry about. It's the masses of people who surrender personal responsibility to the government in excahnge for craddle to the grave services!
Steven
December 5, 2007, 5:18pm (report abuse)Vince, you have to be one of the dumbest people on the internet. This is the absolute way to go, quit pushing garbage rhetoric. You're first sentence says it all, "don't be fooled"... by you. Fair Tax bring it!
Steven
December 5, 2007, 5:20pm (report abuse)You are ignorant. Paycheck is one word. Correct spelling will add credibility to your argument...
Vince
December 10, 2007, 8:23pm (report abuse)Steven, if your argument is only about my spelling, how it relates to credibility and calling me dumb all in 3 lines then you are simply ignored by my few lines. I've seen your kind all over the internet.
Vince
December 10, 2007, 8:47pm (report abuse)MJ, I agree with you, it not about the rich, it's about fairness. The fact is that there will always be unemployment, there is no country that has 100% employment. The argument here is about Fair Tax, and it will not solve unemployment it will only make the unemployed have less money and include more people below poverty level. Hence many more people will be allowed to be on welfare. The worst part is that middle class will be the biggest group supporting this. Another fact is that government does not spend even close to half of it's money on welfare, in 06 less than 10%.
Brian
December 12, 2007, 7:34pm (report abuse)The Democrats will never go for this! It will force them to be responsible! Here's a fine example of their irresponsibility: I just heard today that Speaker of the House Nancy Pelosi has so far spent $16,000+ on FLOWERS (I guess to "beautify" the House floor)!!! This is almost as much as I make in a year busting my @$$ in a mill! That's my (and your) tax dollars being spent needlessly. You can bet it didn't come out of her pocket! Items like this could not as easily be funded under a fair tax system like the one proposed in this bill. The Democrats would be forced to restrain themselves financially and spend our tax dollars only on necessary government programs.
Jinx
December 18, 2007, 3:39am (report abuse)I don't know how much my comments here will matter but I will say this:
I have decided that the fair tax isn't fair, that the majority of people will pay more 'real tax' to make up for the reduction in 'unfair taxes' revenue that will be eliminated. I won't bother getting into the details here because that is irrelevant when the real question should be: how do we fix this? How do we make it truly fair?
Answer: Exempt 'necessity goods' from the tax and add an import tax to the bill. Food, water and shelter are base necessity, just simply write that these are exempt from being taxed period! This ensures you don't have to worry about rebates and the paperwork within there either. Repaying loans for homes, money spent on groceries and in todays life fuel and vehicle payments are all tax free, period.
Jinx
December 18, 2007, 3:40am (report abuse)As for imported goods, no reason you can't tax them coming into the country. Maybe even higher to punish those who would by non-American goods or try to get around paying the tax through such methods.
Problem: How long till the government is out of money? Taxes are all nothing more then a scam, someone has to be scammed out of their money for the government to run. This tax eliminates a lot of the burden from the shoulders of the upper class yet that money must come somewhere. All this talk about the tax reducing the amount everyone pays is designed to scam just a different group of people. We all can't save without the government failing because of a lack of funds.
Jinx
December 18, 2007, 3:48am (report abuse)My modifications would ensure that everyone does save money by a reduction of taxes but at the same time means the vast majority of expected income will vanish with nothing to replace it.
There is never a fair tax.... It is because of this that the 'fair tax' will never include anything that truly benefits the masses over a small group getting their back scratched.
PS: saying it isn't 'fair' to exempt necessarily goods as the pushers of this bill do is the second most ridiculous thing I have read. By saying it would benefit the rich the most was the most ridiculous thing I have read!
Lavon
December 22, 2007, 10:15am (report abuse)Comments suggest that some of the responders haven't read the bill or the Fair Tax book by Boortz and Linder! There must be a way to set this up without the messy monthly prebate--lots of check writing--potential for too many "ratholes"!How would it work to simply exempt all food purchases and leases on residences?
John Q. Dallas
February 4, 2008, 10:42pm (report abuse)If anyone thinks that drug dealers are going to pay any more with this system, they must be a customer. You would be paying even more taxes on the charges on your credit card. Money you have not even earned yet. The only fair way to enforce it would be to compare what you paid to how much you earned to tell if you are cheating. That brings us back to an income tax.
Mark
March 1, 2008, 7:57am (report abuse)After reading some of the comments, it is clear to me that the people who are against the 'Fair Tax' have not read the book or the bill! They must be getting their information from the media or some other non-informed source. Please read the bill and/or the book before making your decision on whether to support or not!!!
Ron Ross
April 18, 2008, 4:26pm (report abuse)Your ALREADY Paying a 22%+ tax that is imbedded in everything you buy. The 23% is no different. Once the bill passes, prices will go down(another long explanation) then the 23% added back on makes it just barely more than it was. Only NOW you take home ALL of your paycheck. You work until April 30 to pay your taxes, did you know that? Figure it out.
Andy
June 16, 2008, 1:04pm (report abuse)Jinx, you can't simply tax imports. All that will do is dicourage trade at best or more likely cause other countries to raise tariffs on our exports, causing everything to become more expensive.
Keith
July 17, 2008, 6:43pm (report abuse)Won't the FairTax lead to those with sufficient the financial / connected means to make purchases outside the country to avoid the domestic tax? You'll see the same phenomenon of states in the U.S. occurring on a global scale as corporations and the wealthy do their shopping in the country with the lowest NST -- presumably not the U.S.
Keith
July 17, 2008, 6:45pm (report abuse)Also, won't this put downward pressure on state taxes? With a national sales tax, states will have a harder time raising their own sales taxes to pay for their own internal services and projects. When national sales tax is 23 plus state tax of 5-12 for a total of 23%-35% sales tax, no one will want to raise that any higher by approving a state sales tax increase. Public works projects and social services will suffer.
Martin
July 28, 2008, 8:25pm (report abuse)If you haven't read the FairTax book then you shouldn't criticize it. Almost every apprehension is put to rest in the book.
While I do believe our government could function without income or sales taxes, this system would be infinitely better than the current one. Productivity and savings are not penalized under the FairTax system. There is virtually no way for the rich to avoid paying "their fair share" through tax loopholes under the FairTax. Individuals and businesses combined will save billions in tax preparation costs under the FairTax. The best part is that people will see right on their receipt how much the government is costing them.
MadHatter
August 25, 2008, 1:07pm (report abuse)A FAIR or FLAT tax is always abusive to the poor. ALWAYS. Steve was right, but didn't take the analogy far enough. When talking about a fair tax, you need to include the % of income that is affected by that tax. Those who are poor see 100% of their income taxed. Those who are well off see a far lesser % of their income taxed.
Fair or Flat taxes are always a loser for poor people.
John
November 26, 2008, 4:02pm (report abuse)It is clear that many of the people making comments have not read the book. Regarding the "Poor" the government now calculates the poverty point at which all income is spent on the necessities of life and this, of course, varies for one single person, one single person with one child, a married couple with four children, etc. This is the poverty level. The Fairtax would take these numbers, multiply them by 23% and each month send a check for that amount to each individual, group, family, or whatever. Thus no one would pay any tax on the necessities of life costing up to the poverty level for their situation. A second major point is that everything you are buying now has about 22% of embedded taxes in the price and thus when the Fairtax is in place, the price should drop by 22%. Then the Fairtax is added and the price goes back up to about what you are paying now. But you get to take home all your pay included all the payroll taxes, withholding taxes, etc.
Andrew Washburn
December 30, 2008, 1:01pm (report abuse)This seems like a decent idea although the concept of people purchasing things outside the country wasn't covered. The government before making this bill a law would also need to consider cutting welfare programs since this would replace it. Plus it does not cover the non working upperclass who could still get a monthly check by not making the poverty line. If that's the case then we will only increase unemployment. Who wants to work for a paycheck if you get one from the government and you can buy things tax-free. Seems a bit flawed to me. Also the whole only taxing new purchases, is it based on interpretation; because a house is only new once then it is used, making it untaxable. And what about things that are rented? I laughed at the drug dealers and prostitutes comments they don't pay taxes now or if they do I'd love to see their W-2's the only way to tax a purchase is if it is legalized and regulated, making both of those services tax free still.