A national sales tax is coming. It is time to choose. Which one will you prefer?

 by Danny N Diana Higgins on Thursday, July 14, 2011 at 9:42pm

It is inevitable. You may want to share this bit of information with your friends and family because unless they have been following every second of whats been happening inside the beltway for the last few years they probably do not know this but, one way or the other, we are going to end up with a national sales tax in the very near future.

The question is: Do you want to end up with a national sales tax on top of your income tax which will be enforced by the IRS (like the European style VAT that is being pushed by the beltway insiders and pundits among others)? OR

A national sales tax that gets rid of the IRS and completely replaces the income tax? (The FairTax)

Time to Choose

The irony of this question is that there are so many politicians that say they “Like” the FairTax, but they are afraid that congress will enact the FairTax and bring back an income tax and we will be stuck with both.

This just in…  That fear is disingenuous.  The FairTax legislation is the only legislation that specifically prevents that scenario from happening.  So if you ever hear your politician say this cop out excuse,  know that they are simply just copping out.  There is language in the FairTax Bill that will not allow the FairTax to co-exist with an income tax and they know it.

However, under the current system, there is absolutely nothing that will prevent that scenario from happening right now.

In fact, there are plenty of people, mainly tax lobbyists who stand to benefit tremendously from a windfall of new income streams, who are actively seeking to bring in a “small” VAT and couple it with a “flat” income tax under the guise of “major tax reform”.

Here is a prediction from me: The VERY same politicians that say,  “I like the FairTax but…” will be the same exact politicians who will vote FOR this flat tax plus VAT idea that will be pushed through as part of a compromise that will come from these negotiations to help solve this deficit problem.  They will vote for this legislation because they want to pass this off as “major tax reform” to their constituents and claim it is an effort to help fund Social Security and pay down the deficit.

All of which could be achieved with budget discipline in addition to the passage of the FairTax.  Hmmm, let me see…. Get rid of the IRS, never file another income tax form again, and keep 100% of my paycheck(The FairTax) or I still have to keep income and expense records to file every single year for the rest of my life, plus pay a national sales tax on top of that?(VAT plus Flat)

I think I will go with the FairTax, hands down.

Remember you heard it here first. A national sales tax is indeed coming.  Which one do you prefer?

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I'm the grandson of an Underwood and have been mapping my Underwood Family Tree for a couple years now.

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Posted in FairTax, FairTax Act of 2011, FairTax vs. flat tax, Tax Reform
9 comments on “A national sales tax is coming. It is time to choose. Which one will you prefer?
  1. kicker51 says:

    If we fail to stem the Progressive tide of ever higher taxes, we will soon be little more than servants indentured to the imperial federal government. Once it becomes established that we, as individuals, have no claim on the fruits of our labors, we are no longer a free people.

  2. Blu says:

    We are only going to get one shot at getting the FairTax passed into law. Once the current politicians can claim to have passed significant tax reform or another “simplification” of the tax code, it will be next to impossible to move the voters interest back to passing the FairTax.

    We need to push hard, and question the new presidential candidates about support for the FairTax. We need to get behind a candidate and be vocal about it. If we do not, we will not get the FairTax off the ground again.

  3. Robert Anderson says:

    I wrote this in feb 2010 in response to a story in Forbes. I think it applies here and I hope that will help show the differences between the two tax plans.

    Most of my friends know that I am a Fair Tax supporter but I had to write something about this. My hope is that they will pass this rant on to others in order to spread the word. Forbes had an opinion piece today that make the claim that a value-added tax, or VAT, is inevitable and the only viable solution to our expanding debt and deficits. They also said Mike Huckabee was pushing a VAT. They are wrong on both counts, there is a better solution should politicians in Washington have the courage to pass the bill. The bill that Mike Huckabee supports is the Fair Tax bill. Both are in effect a national sales tax, but what is the difference?

    A VAT is not transparent to the consumer as it is levied at every stage of production. The consumer would see an increase in the price of all goods without really understanding why. This lack of transparency also makes it real easy for politicians to increase the VAT rate without opposition from the voters. The Fair Tax is completely transparent. Currently, the price of everything you buy has tax components hidden within the price. Taxes paid by businesses are simply a cost of doing business and is passed on to the consumer. Under the Fair Tax, all of the income taxes, business taxes, social security and medicare taxes disappear. Competition would cause these tax components to be removed from the prices of the goods or service they produce. This is about a 20-25% reduction in the price depending on the product. Add the 23% Fair Tax, and the price of that good or service remains roughly the same as it is now. On your receipt, you will see an additional line item that shows how much tax you paid on your purchase. If politicians attempt to increase this rate, it will do so on everyone equally. This eliminates class warfare from the tax system.

    A VAT would be levied along with the income tax, social security tax, medicare tax, and other taxes paid by businesses. The consumer still pays the taxes he/she pays now, but the price of everything they buy goes up by the total amount of VAT collected by the government. The Fair Tax replaces the income tax and all regressive payroll taxes. In other words, you get to bring your entire paycheck home (minus state and local taxes) while prices remain the roughly the same.

    A VAT may or may not be levied against the necessities of life like food and clothing as there is no current bill to look at. The Fair Tax is initially levied against these items, however the Fair Tax offers a “prebate” check from the government to every taxpayer for reimbursement of the taxes paid on the necessities of life up to the poverty level. This would be about $460 for a family of four. This completely untaxes the poor yet allows for taxes to be levied on these items for luxury expenses. If $500.00 worth of food was purchased for a party, this would not fall into the “necessities of life” category and the Fair Tax would apply.

    A VAT would hinder economic growth and drive more jobs oversees. Since the already confiscatory taxes we now have are not repealed by a VAT, the addition of a VAT would increase the cost of doing business making it increasingly difficult to compete globally. This would drive businesses to relocate to more tax-friendly countries. This is already occurring without a VAT. The Fair Tax is not levied on businesses, only individuals. Businesses do not pay taxes. Sure, they pay large sums of money to have an accountant fill out their 1040 forms and then send the check, but that cost gets passed to the consumer. Therefore, since the Fair Tax only applies to individuals, the good ole U.S.A. would become the worlds business tax haven. This would bring jobs back home. A poll was taken of 100 foreign manufacturing companies asking them if the Fair Tax was passed, what would their business plan look like. 80% said they would build their next factory in the U.S. The remaining 20% said they would move their operation entirely to the U.S. We would need a guest worker bill to be able to fill the jobs that would flood this country.

    There is between $12-$15 trillion sitting in overseas bank accounts hiding from our tax system. Since a VAT does not repeal the income tax, those dollars will have to remain hidden. The Fair Tax does replace the current tax system with no taxes levied against business and investment. That means those dollars can come back to the U.S. to work for our economy.

    A benefit of a national sales tax is that the underground economy will finally be taxed. Money generated by illicit means (drugs, prostitution, etc…) will be taxed because Huggie Bear will pay the Fair Tax whenever he purchases that new fur coat or gold tooth. Any foreign tourists and illegal immigrants that buy our goods while here will also contribute. However, these people do not get the prebate offered by the Fair Tax. The VAT has no prebate option.

    Americans pay a whopping $50 billion annually just to comply with the tax code. In other words, they pay accountants a lot of money to file their taxes, probably with mistakes since no one, even the IRS, completely understands the code. Under the Fair Tax, the 16th amendment is repealed (income tax) and all these costs disappear. Under the VAT, these costs remain.

    Under the Fair Tax, since all taxes on business and investment disappear, business decisions can be based on what is good for the company, employees, and share holders, rather than basing a decision on the tax consequences. A VAT would just add another level of taxation to be considered when making that business decision.

    One of the criticisms of the Fair Tax is that it does nothing to curb spending. No tax bill will. That is the job of the voter to hold their representative’s feet to the fire. Unfortunately with the entitlement mentality of our citizens that seems unlikely. The Fair Tax is designed to be revenue neutral meaning that it will bring in as much money as is currently collected. The VAT would bring tax revenue in addition to what is already collected. This usually leads to growth in government as it had in Europe. As President Reagan once said, “The government never seems to get what it needs, but always needs what it gets.” In other words the government will find a way to need these additional funds, probably for more vote buying programs like healthcare rather than bringing down the debt.

    Under the fair tax, all monies generated through investment are not taxed. Under the VAT, those taxes remain. Education is considered an investment under the Fair Tax and is not taxed.

    There are many more benefits to moving to the Fair Tax. Go to http://www.fairtax.org for more information.

    Forbes is right that something drastic will need to be done to get out of our fiscal mess. But given what was just explained, which sounds better to you? The VAT? or the FAIR TAX?

  4. Larry says:

    What will happen to the poor people that pay no income tax now, because they do no make enough money?

    • fairtaxer says:

      Larry, the FairTax Prebate will untax their necessities up to a certain point.

      Learn more about the prebate here: The Prebate

    • Larry,

      Also keep in mind that even poor people pay taxes. If they have a job, they pay Income Taxes and they pay FICA taxes (AND their employer pays their share of FICA taxes). On top of that, whenever they buy any goods or services right now they pay taxes that are embedded in the system. The FairTax will replace all those AND send them a check every month to offset the taxes they spend on their necessities. (“The Prebate”)

  5. tj says:

    I will be voting on the national Sales tax with no income taxes or returns!!

  6. Jerry says:

    !!!ON JULY 26 MIKE HUCKABEE WILL BE TESTIFYING BEFORE CONGRESS IN FAVOR OF ENACTING THE FAIRTAX! IT IS IMPORTANT THAT HE TAKE WITH HIM AS MANY SIGNATURES AS POSSIBLE. PLEASE SIGN THE FAIRTAX PETITION NOW!!!http://www.huckpac.com/?Fuseac​tion=Petitions.View&Petition_i​d=16

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