Originally posted by NY Madman:
The Fair Tax System has been talked about for many years. When someone just takes a quick glimpse at the premise, it sounds like a great system and method of taxation. It seems designed as an emotional impulse issue. On the surface it sounds "fair". When you step back and take a real good look at it, you will see that it is wrought with so many numerous problems and if instituted will create many more problems.

Let's look at some of what it would do.....

Some say the Fair Tax will eliminate a need for the the IRS (Which really cannot and won't be done without a constitutional amendment to repeal the 16th amendment - which will not happen). If that were true, then the benefits in the tax code will also disappear entirely.

-- A consumption tax will eliminate filing tax returns. At least for much of the population. That means there will be no more deductions. No deductions for having more children. No homeowners deductions. No charitable deductions.

Many people would not be able to afford a home if it were not for the benefits of the tax deductions. The Fair Tax would have a negative affect on homeownership and the housing market which is a big chunk of GDP.
So only the very rich owned a house before 1913? Hmmm...no, I don't think so. Well, I don't really consider my family to be rich - most people don't consider farmers to be rich - not in the midwest anyway. I paid about $6500 in taxes last year. I got about $5000 in tax deductions for the house - and remember, those deductions stop when you pay off the house - it's only on the interest.

Many people are helped by the tax deduction for dependent children. Under Fair Tax, those people would be hurt a little more because more children means more consumption taxes.
So what you are saying is the current system is good because it encourages irresponsibility. Seriously, why should you have more kids than you can afford? I disagree with the child tax credit anyway. The only credits you should get are for education - if your helping your child better themselves, fine. Getting paid to pump out kids is bullshit.

Much charitable giving in this country would largely dry up if it were not tax deductible.
I doubt it. Number one, most people have some sort of American spirit in them. For me, if someone can use something I don't need, I take it to a charity. I sorted through 2 duffle bags worth of clothes when I moved into my house. The bulk of them went to a local charity. My neighbors had a garage sale. The left over went to charity. Charity should be just that - giving freely, not so you can get a tax deduction.

-- The Fair Tax is being talked about as anywhere between a 23% to 30% tax on all consumer goods in this country. It's proponents claim it would be a "revenue neutral" system. That means it would bring in the same or more taxation to the government. That claim is highly specious and doesn't seem very well thought out.

The whole concept is based largely on a pile of assumptions. You know what happens when you assume.

The concept assumes that the price of goods will decrease by a relative factor in relation to the increase of the consumption tax. That is a dangerous assumption. Since personal income taxes are the largest source of revenue for the federal government, it is false to assume that the price of goods manufactured by corporations (who are not the largest source of tax revenue) ... would be decreased very much. Certainly no where near a 23% to 30% decrease in the price of goods.
What kind of idiot would expect the price of an item to decrease to compensate for the additional tax? A meal at McDonald's is the same price everywhere in the country - except Alaska, Hawaii, and some places on the East Coast. I pay $3.99 + tax in Indianapolis, I pay $3.99 + tax in St. Louis, I pay $3.99 at Ft. Bragg, NC (no tax). They didn't decrease the price in TN where the sales tax is 9.75%. This is where the whole "need" thing comes in. No one needs to go to McDonald's.

Fair Tax proponents make the claim that the tax increase on consumption would replace already embedded taxes in the price of goods. An extremely specious assumption that none of them have explained to any satisfaction. They explain just enough for an emotional response in some people.
Ok, so you are talking about some other plan that is full of stupidity rather than actually addressing the real issue.

-- What happens to poor people? They currently do not pay any federal income taxes. Under the Fair Tax they would be required to pay this large increase in the cost of whatever they consume.
Actually, they pay a large increase on things they don't need. Food is tax free. Housing doesn't have a sales tax anyway - never paid tax on my rent before. Medical care is tax free. Clothing is tax free one weekend a year. So no, they can't afford to go out and buy a Super Nintendo. But they can afford everything they need to survive. Perhaps the sales tax would encourage them to work harder and get a better paying job. Hell, it might encourage them to actually save money or invest it. My grandparents never had a car payment. In 1981, I watched my grand father hand the full price in cash to a car salesman and drive off with a new car. My goal is to be able to do the same. Sometimes you have to suffer to get what you really want. For me, it means spending 15 months away from my family in a desert. Learn to suck it up.

-- This Fair Tax concept would require every single retail and wholesale business to be agents of the government. They would be turned into tax collectors. Retailers are currently tax collectors for state and local governments. This will require a federal bureaucracy to oversee and collect this "national sales tax". The Fair Tax people don't talk about who or what bureaucracy will be doing this massive oversight into local and state retail business.
Ok, so sentence one is negated by sentence three. I think there is an agency that has the job of collecting taxes for the federal government. It's called the Internal Revenue Service. They are pretty good at it too. Businesses already report their sales figures. So, if they bring in $100 billion, they owe the government $30 billion in taxes, at 30%. Not too tough.

[QB}The Fair Tax sounds like an increase of the federal government and federal power. Something of which we do not need, nor never need.[/QB]
Sounds more like removing the federal hand from the front end and putting it on the back end.

-- The Fair tax does not eliminate any local taxes. All property taxes will still be there. All state income taxes will still be there. All local sales taxes will still be there.

-- The Fair Tax will be a sales tax on top of what is paid for local sales taxes. Possibly bringing the consumption tax up to 35% or much higher in some areas of the country depending on the Fair Tax rate and local sales tax rates.
So, what's your point? The income tax as it stands is still on top of local sales taxes. It's based on what you spend your money on, not the fact that you make money. In other words, it's a penalty for consuming, rather than for producing.

{QB]The Fair Tax makes no consideration based on what you pay the local and state governments in any form of taxation. Therefore it cannot be "fair" to many citizens across many states with various and differing levels and forms of taxation.[/QB]
How is it not fair? The citizens of a state can change the tax rate for their state far more easily than they can change the federal tax rate. Everyone is fairly taxed at the federal level. What each state has to do to it's citizens is of little consequence. Some states have no income tax and get by on sales tax. We already have the same thing with gasoline. Seems to be working. There was a lot of traffic on the roads when I left.

-- Is this Fair Tax proposal constitutional?
Income tax wasn't Constitutional until 1913.

-- The Fair Tax would likely create a large "black market" for almost every possible retail good that is sold. That means government would have to increase law enforcement capacity to fight that emerging black market that is created to avoid government consumption taxes.
This doesn't happen at all today, right? Yes, I can totally foresee and underground Lowes, or Target. Going to be hard to register a vehicle without the proper tax documents. Think about what you buy on a daily basis. Are you really going to run to the seedy part of town to get a Coke just so you can avoid paying Uncle Sam and the state $.38? Remember, businesses have to report their sales figures. Do you issue the neighborhood kid that mows the grass a W-2? Black market already exists.

-- The Fair Tax still keeps in place 'withholding taxes' such as those for FICA and Medicare. That's still a good chunk of a paycheck.
Again, not on the topic. The topic was income tax. SS and Medicare are other topics.

Without the complete repeal of the 16th Amendment prior to any enaction of a "Fair Tax" national sales tax..... Is there anyone who is so naive to think that the government wouldn't enact a Fair Tax consumption based taxation system and then add on top of that income taxes.
That's the whole point of this exercise. You seem to have a fixation with someone else's plan, not mine. My plan is remove the income tax and replace it with sales tax. So, by the very nature of my plan, the two can't co-exist.

I think too many people trust the government too much with their wallets.
Yes, but at least with a Federal Sales Tax, I can control when my wallet gets opened. No one is taking money away before it gets there.

We have current presidential candidates talking about trillions of dollars in new federal government entitlement systems and very few idiots in the public are asking about the cost. They are are just smiling and thinking it sounds nice.

-- It is naive and childish for anyone to think that politicians and the government are ever going to completely remove their ability to raise taxes in their various forms and the power that holds over the American public by radically removing the current federal tax code.

Taxation means power over the people. It means government power and control. The politicians are not going to abandon that power. Especially not when many politicians are talking pure socialism and socialistic government programs these days. It's just not going to happen.

These Fair Tax people are going to wind up burdening the public with nothing but more taxation and a new national sales tax on top of every other tax we currently have.

There are many problems with the current US Tax Code. There is no doubt it needs reform. This Fair Tax issue is complete bullshit unless the 16th Amendment is repealed first. Without it, the Fair Tax does nothing but give government vastly increased control and a far greater ability to take your money.

It's a bullshit pipe dream.