I support FairTax

What if…

» You were able to receive 100% of your paycheck?

» Your investments were never again subject to Capital Gains Tax?

» Your business was never taxed?

» You never had to pay federal taxes on spending up to the poverty level?

» Never had to file another tax return to the IRS?

HR 25, The Fair Tax Act of 2007, would make all this possible. And the bill does even more for our economy and our businesses. It:

» Allows American products and companies to compete fairly in the international marketplace.

» Gets rid of the current tax code failure and replaces it with transparency and accountability.

» Ensures Social Security and Medicare funding.

» Is revenue neutral.

» Closes all loopholes and brings fairness to taxation.

» Abolishes the IRS.

And more…

So what is the Fair Tax?

The Fair Tax is a non-partisan bill that establishes a national retail sales tax in place of the current income tax system. The revenue neutral rate is 23% inclusive, 30% exclusive (we’ll discuss this later). Instead of paying tax when you earn money, you pay tax when you spend money. And everyone pays the same rate (similar to a flat tax, but the two should not be confused).

The taxes it replaces (and therefore gets rid of) are:

» The Federal Income Tax.

» Social Security Tax

» Medicare Tax

» Payroll Tax

» Estate Tax

» Gift Tax

» Alternative Minimum Tax

» Corporate Tax

So What is Taxed?

All new goods and services. Used goods are not taxed.

Business to business transactions are not taxed.

Do I Have to Pay Taxes On Necessities?

Yes, however, each household will receive a “prebate” from the government each month equal to that families poverty level to help you pay for necessities tax free.

Explain This Rate To Me

There is a big debate about the rate. Harvard economists (and others across the country) have proven that the Fair Tax is revenue neutral at 23% inclusive, 30% exclusive.

Generally, sales taxes are quoted as exclusive because they are added on top of the price. However, even though the Fair Tax is a sales tax, it is quoted as inclusive for two reasons.

1. It replaces an inclusive Income Tax and therefore should be quoted the same.
2. It works like an inclusive tax, with the tax being embedded in the price of the product rather than added on at the register.

Many people will quote the exclusive rate to try and persuade people not to support the Fair Tax. This is not an honest representation, however. To compare apples to apples you MUST quote the inclusive rate for the two reasons I’ve already listed.

The Fair Tax is not an exclusive tax (even though all other sales taxes are). When you take a $100 item to the register, it will ring up $100, not $130. Your receipt will show you how much tax you paid ($23 dollars on a $100 total = 23%).

Unfortunately, the Fair Tax is misrepresented in this way, along with numerous others. It is important to be educated on the bill so you know the truth about the talk. Most people I’ve come across who don’t support the Fair Tax either:

1. Haven’t read it.
2. Don’t understand it.
3. Game the current system and don’t want to see it change.
4. Are politicians who don’t want to relinquish power over you.

It is true that the Fair Tax takes power out of the hands of politicians and puts it back in the hands of the people.

So Everything Will Be More Expensive?

No, not necessarily.

There is a little known aspect of product pricing that affects how much you pay for each product you purchase. It’s called “embedded tax”.

Under the current system, Corporations pass all of their tax costs and compliance costs to the consumer in the form of higher prices. Each time a product is touched by another company, more tax costs get embedded into the price. By the time the product reaches the consumer, 22% of the price, on average, is made up of embedded taxes.

Under the Fair Tax, embedded taxes disappear, meaning prices will deflate. If prices deflate by 22%, and you add in a 23% Fair Tax, you’re basically back to the price you started at (the only difference is that you have 100% of your paycheck).

People who claim our tax burdens and product prices will be too high have not accounted for embedded taxes.

It’s important to note that some people say prices will not deflate because businesses are greedy will want to keep the 22% as windfall profit. Of course, these people don’t understand basic economic behavior. Competition will force businesses to deflate the prices, or they will lose customers.

Either way, it puts the power in your hands.

What Other Arguments Are Made, And What’s The Truth?

Here are the top five arguments and the truth to go along with them:

1. The 23% rate is misleading, the actual rate is 30%.

We already went over this one.

2. It’s not enforceable and evasion will be rampant.

The Fair Tax is not perfect, but this argument is more about emotion rather than logic. Under the Fair Tax, all personal tax returns are abolished. The only people reporting are businesses who are collecting the tax. This reduces the need to trace evasion by 80% and allows those resources to be directed elsewhere.
The Fair Tax also taxes people who are not currently paying taxes, such as: illegal aliens, tourists, current income tax evaders, and criminals (prostitutes, drug dealers, etc.).

Because you are paying taxes every time you spend money on new products, it’s very difficult to evade the tax. Some have suggested that major black markets will open up. The good thing is that the collection agency overseeing the Fair Tax will have an exponentially smaller workload on the back end and will be able to put more resources to stopping and preventing black markets and other ways of evasion.

Not to mention that black markets are easier to identify, prevent, and stop. With a black market, goods are being sold under the radar. As the market grows and expands, it’s risk of getting caught becomes larger and larger. Compared to someone cheating on their tax return, it’s far easier to identify a black market than it is a cheater.
On top of that, the Fair Tax evasion rates have been studied and are not predicted to exceed the current evasion rates of today’s income tax system.

3. The Fair Tax will not be revenue neutral at 23%.

The people who believe that are not using the actual Fair Tax bill as their model, or they are simply lying. Millions of dollars in economic research has confirmed that a rate of 23% will be revenue neutral.

Even the President’s Advisory Panel on Tax Reform claimed to have looked at the Fair Tax and determined that the rate would have to be much higher. This is where many people get this argument from. However, if you look at the facts, you will find:

What the Panel failed to make clear in an amazingly shameless sleight-of-hand is that they never studied the FairTax legislation as it exists in pending legislation. They ignored $22 million of FairTax research and, instead, quietly devised their own national consumption tax which they loaded with the exemptions and deductions they felt were “politically realistic”. They also failed to calculate the effects of elimination of the FICA tax on annual taxpayer burdens or on the distributional effects of the FairTax across the income spectrum. Upon completion–and after declaring a national consumption tax flawed–they then refused to publish their underlying assumptions.

Revenue neutrality at 23% is proven and supported by the following:

» Taxing Sales Under the FairTax – What Rate Works?

» A Comparison of the FairTax Base and Rate

» Comparing Average and Marginal Tax Rates under the FairTax and the Current System of Federal Taxation

4. The Fair Tax Is Not Politically Viable

If people who think this way were around when this country was being built, we wouldn’t be the best country in the world today. We wouldn’t even be close.

We the people have the power to pass this bill and it has more support in Washington than you think it does.

But we can’t rely on the politicians to pass this for us. They won’t do it. It takes too much power away from them. Instead, we the people need to make it clear that we want it, we must get it, or they won’t have a job any longer.

Right now there are many congressman who support, many who are against, and many who won’t say they are for it or against it. I suggest you check to see where yours stand and get on the ball if they are against or not sure.

» Congressional Scorecard

5. The Fair Tax Is Regressive And Shifts The Tax Burden Onto The Lower And Middle Income Class

If you hear someone using this argument, understand immediately that they don’t understand the bill.

The Fair Tax is actually the most low-income friendly tax bill ever introduced. People earning at or below the poverty level have zero tax liability due to the prebate.

Consequently, the current income tax causes slower economic growth and recessions that burden the poor and middle class far more than any direct tax does.

Check out this link for more information: Why The Fair Tax WILL Work.

Where Do I Get More Information And What Do You Suggest I Read and Do?

Here is a list of great Fair Tax resources:

» Americans for Fair Taxation

» Frequently Asked Questions

» Research Papers

» The Fair Tax Book

» FairTax: The Truth: Answering the Critics

I suggest you participate by doing the following:

» Contact Your Congressman

» Tell Your Friends About The Fair Tax

The Fair Tax is one of the best bills ever introduced in the United States. The economic benefits this bill will bring America are astonishing. It is our responsibility to stand up, educate ourselves, and voice our support. If this bill is going to be passed, it’s going to be because of what we say and do, not what our representatives say and do.

Please read everything you can find about the Fair Tax and beware of those trying to misrepresent it. There are far more benefits than what I have listed here. This is simply meant as an introduction to a truly amazing possibility.

Do you support the Fair Tax? Why or why not?