The FairTax does repeal the 16th amendment and eliminates the criminal IRS. Yes, I can imagine the FREEDOM we would all experience if the many thousands of pages of tax code were eliminated and once April 15th just becomes another day! It would be heaven!

The costs of production will go down. The costs of consumption will go up. This will reduce consumption, which will feed back into the system to reduce production. And I doubt that the price of a new house will go down 30% with the "fair tax", especially when the value of the land is taken into account. (Or would the land be considered "used" and not taxable? The lawyers and accountants that the "fair tax" supposedly eliminates will have a field day with issues such as this one.)

The FairTax on rents has been discussed widely. Here's a good illustration of what that would look like....

http://bobbiesfairtaxblog.blogspot.co...

It does matter, big time, HOW the corporation is taxed. It matters because a 2% tax on the corporation's gross income is way different than a 23% tax on the corporation's gross income. And "try it and find out" is a recipe for economic chaos, especially considering the flaws in the "fair tax" that have already been pointed out on this thread.

This explanation raises some additional questions:

1. “If you are in a withholding bracket of 20% and a 7.65% FICA tax is taken from your wages too, your total Income tax (inclusive) rate would be 27.65% as compared to the 23% inclusive rate under the FairTax.” Isn’t that your marginal income tax rate rather than your total income tax rate? Your total income tax (including FICA), after personal exemption, standard or itemized deductions and taxes paid in lower brackets, would be substantially less.

2. “Save your money, pay your current mortgage, pay tuition bills, buy used goods such as a used car or home, and you pay no tax levy against those dollars spent.” Now I’m really confused. Is tuition not payment for a “service” that will be taxed at the full “fair tax” rate? Your “current mortgage” is exempt, but if you are a renter rather than a homeowner, won’t you be paying an additional 30% on your rent as a “service”?

3. “In order to fund the $3.7 trillion Federal budget, a 23% inclusive consumption levy will be placed on every dollar we spend in the consumer retail market on ALL "end use" NEW goods and services with no exceptions (keeps Government out of the system).” Since “every dollar we spend in the consumer retail market” includes existing state sales taxes, will the “fair tax” include a tax of 30% on the state sales tax itself as well as on the declared retail price of the item or service? If so, I think this should be clearly disclosed. If not, I think the explanation should be more clear regarding this issue.

4. “ . . . you will instead keep 100% of your income and then be asked to give a tax share of it to the Government just a little at a time, . . . “ What does “asked” mean in this context? The word “asked” implies that you have a choice of whether or not to give your “tax share” of the bill to the government. The Democrats often use “asked” in the same manner, as in “The rich will be asked to pay more.” Is this an appropriate use of the word “asked”?

I think the explanation you linked to needs further clarification on these points.

All activity has a reaction. Whatever you do causes a reaction somewhere. You may not see it, but it happens.

You get less of something if you tax it. Undeniable TRUTH. So, there IS a morality component to how money is taken "for the greater good". If by spending less, people save more, that is to their benefit and a good thing. If you tax economic activity, you also get less of it BY DESIGN by the Marxists in government. This has also been proven. It's in the Communist Manifesto, by the way. I would think ANYTHING that gets us away from adhering to Marx, everyone who frequents this site would agree with!

We already have around 35% plugged in at the gas pump, about 50% on cigarettes, and at least as much on alcohol and no one notices. Gas would be $1 without the excise taxes.

Would certainly help the real estate market, you woulopay tax on debt repayment.

Your net taxable income is true, however a lot (A LOT) is wasted on complex schemes to avoid income tax - 401k plans, exhorbitant health plans to supplement income, etc. none of that would be necessary.

I only buy from 3 places anymore, Bass Pro, Amazon, and the local grocery store (plus a lot of dining out), I'm happy to give it a try.

LOL, you completely skip over the costs companies pay in time, money, personnel (accountants) to deduct and administer the employee's tax payments, not to mention their own costs in time, money, and personnel (accountants) to pay their own taxes! All up and down this discussion, you completely ignore that and it's a HUGE part of the equation a lot of which CANNOT be quantified until we try it. Your numbers are bogus.

No, that is not true entirely, social security and Medicare are only paid 50% by the employee, the other half is paid by the employer. Adding workers comp and UI, and depending on the state, is close to the income tax burden. On our professional staff (we don't have wage stuff), with 401k matching, health, etc, we are at a 44% burden on the salary with a base of $100k in California.

I believe you are in a tautology. On an empirical level, the Fair Tax — by reducing the costs of production — will keep price levels about the same. This is all explained on the website and need not be discussed here. To me, however, the overriding feature is to abolish the income tax and with it the IRS.

For a short adjustment period, that might be true. However, once people see their whole paycheck, and don't have to worry about April 15th anymore (A HUGE relief in terms of ATTITUDE, TIME, and MONEY, by the way), economic activity will skyrocket. I can almost guarantee you that!

By the way, you and ewv are so adamantly against this, are you both accountants? :-)

It doesn't matter HOW the corporation is taxed. It matters that THEY have to PAY it and, thus pass it along to their customers. Then the customers PAY it along with all the other taxes they pay that are deduction from their pays checks. So, you think prices will come down ONLY 2% if the corporation doesn't have to raise their prices to cover those taxes AND THEIR COMPLIANCE COSTS and the consumer keeps their WHOLE paycheck each week. I guess you can continue to think that if you like. I'm thinking you would be wrong.

Let's try it and FIND OUT, shall we??? LOL.

I think we'd do better with a flat tax, personally, and even better than that by a repeal of the 16th Amendment entirely. Can you imagine how business would take off if they didn't have 30%-45% confiscated every quarter to feed the beast of government? Can you imagine what would happen if there wasn't enough money to pay for all the government oversight and rules we have heaped upon us and which cost our economy $1.6 Trillion per year?

It may be confusing to some that 23% and 30% keeps gets arguing about. Here's an explanation:

http://pafairtax.org/resrcs/inclusive...

It's the same amount of dollars, the difference are the words, "inclusive" and "exclusive".

I'm not sure which point of yours I'm proving. What is the main point you are making?

You prove my point, taxes are only fair if everyone chips in (at least something). When half don't pay a dime, its very easy to keep voting for people that keep offering more free stuff.

Re: “A person could actually choose to not pay ANY federal tax by living off of the fruits of their land and buying only pre-owned merchandise.” A person can do that now.

Re: “It is only taxed at the consumer level, so even business owners could not have to pay any federal tax if they so choose.” How? You can’t eat used food or buy used gasoline at the pump. And the taxation of services makes it nearly impossible to avoid paying federal tax. For business owners and consumers, residential and office rents as well as car and equipment leases would likely be subject to the 30% tax as “services”. You could easily wind up paying more than you were paying in federal income tax. Somebody has to – the “fair tax” proponents claim that their proposal is “revenue neutral”, and the money has to come from somewhere.

Re: "I would suggest a STRICT clause that restricts the tax to NEW GOODS for CONSUMPTION and nothing else." Sure, if you want the "fair tax" rate to go up to 75% from the currently proposed 30%. Read the FAQ on their website. "Services now account for well over one-half of the gross domestic product (GDP). Neither consumption of services nor consumption of goods should be tax preferred."

By the way, the current fair tax proposal apparently includes rent. A lot of poor families who are currently paying little or no income tax will become homeless because they can't afford a 30% increase in their rent.

You might want to do the math again.

Re: "Right now, it all goes to support 25% on MediCaid and 33% getting food stamps and Medicare and Social Security that will be long-bankrupt before I ever make a claim." And after the "fair tax" is implemented, the money raised will all go to support exactly the same government programs.

And if you decide to help out a family member financially, be sure to add enough to cover the "fair tax" that the family member will have to pay.

Re: "So, is it more moral to tax production or consumption?" Morally and practically, it's a meaningless distinction. A heavy consumption tax will reduce demand (or shift it to "used" products) and as demand falls, so will production. It's fantasy to think that shifting a confiscatory tax burden from "production" to "consumption" will generate meaningful economic growth.

Re: ‘ . . . the cost of income tax for the employees and the companies is simply added to the cost of the products. This cost will be eliminated resulting in a reduction of 25-30% in the cost of US manufactured goods.” Not even close. The cost of income tax for the employees is paid by the employees, and elimination of the employees’ income taxes will not benefit the companies unless they reduce salaries by an equivalent amount. In which case the employees will not be any better off than before, and they will be stuck with a new 30% sales tax on any new items they purchase. And the cost of manufactured goods will not come down 25-30% due to elimination of the corporate income tax. Corporations are taxed on net profits after expenses, not on gross income or the retail prices of the goods and services they provide. Such profits are typically less than 10% of the final retail price, so the tax savings and price reductions will be more like 2%, not 22%.

When one taxes consumption, one gets less of it. Reduced demand means reduced production.