RE: 120711: Fair Tax

UPDATE: This was my response to an article written by Peter Konetchy and posted on his (now deactivated) website. The important quotes have been highlighted below.
Here is my 1st response to: http://www.peterkonetchy.com/?page_id=871

“Proponents of the Federal Fair Tax want to replace all federal taxes with a supposedly revenue neutral 23% national sales tax”

Not “supposedly”, it truly is Revenue Neutral. Please read this study from BHI: http://FairTax.org/23

” – theoretically eliminating the IRS in the process.”

Not “theoretically”, it ACTUALLY Abolishes the IRS. It even takes the tax code a step further by removing the NEED for an IRS like agency. Federal Sales Taxes will be collected by the States. And the States will collect taxes from businesses within their state. Just like they do now with State Sales Taxes. AND, each collection point will be compensated for doing so.

Are you aware that the cost to comply with the IRS contributes to a $1 Billion annual drag on our economy; and growing every year?

The annual tax gap is estimated at roughly $430 Billion (and growing) because the Income Tax Code fails to collect taxes from anyone who fails to report income. Groups like Illegal Immigrants, Tourists, Corrupt Politicians, and the Underground Economy all escape Income Taxes – but CANNOT escape paying the Fair Tax.

“The problem is that it addresses the wrong problem with the wrong solution. The problem is not revenue collection – its spending.”

That, sir, is a matter of opinion. The Fair Tax addresses the problem of inefficient revenue collection. As mentioned above, the IRS is a $1B drag on our economy. Eliminate them and collect taxes more efficiently, and you have a system that will make up for the shortcomings of the current system.

The “Revenue Neutral” label was simply added to the Fair Tax to appease those in Congress who felt that raising more or fewer taxes was inappropriate. Once the Fair Tax is enacted, it will collect taxes from a broader tax base allowing legal US citizens the comfort of paying fewer taxes.

By the way, if you understand what the Fair Tax CAN do, you will understand that it will also address spending. It does so by eliminating 50% of lobbyists in DC; a major point of “tax breaks” for corporations.

“The solution is not to “fairly” fund our bloated government, but shrink it.”

You don’t see the elimination of the IRS as “shrinking our Government”? Again, $1B drag on our economy gone!

“Assume its proponents work diligently for the next 5- 7 years to replace all federal taxes with a revenue neutral consumption tax. What will be the state of the nation?”

Well, let’s see, in the 1st 2 years there will be an influx of corporations because the Corporate Income Tax would be ZERO PERCENT. That would bring in roughly 10 MILLION JOBS and 97% of Americans would be working again. Statistically that is FULL EMPLOYMENT. America has never seen that.

WHAT DO YOU THINK THE STATE OF THE NATION WOULD BE??

More later…

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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 Article, FairTax
6 comments on “RE: 120711: Fair Tax
  1. Bill E. Payne says:

    “WHAT DO YOU THINK THE STATE OF THE NATION WOULD BE??” Well, I think I could breathe easier, knowing that my efforts over the last decade finally helped produce something that benefits everyone. But, I digress. I think this country would be busy again, producing enviable products desired the world over. I think many illegals would give up and go home, leaving us to support ourselves instead of them. I think many of our impoverished citizens would have worked their way out of their fiscal rut, becoming productive members of a thriving society.

    How’s that for starters?

  2. I left my $0.02 on there as well but I don’t see it up there yet … hopefully it shows soon :-).

  3. FairTaxer says:

    Here is another response of mine to his reply to someone else:

    Peter,

    After your response to what John (NOT Joan) wrote, I’m left wondering if you’re interested in anything other than your own agenda.

    I understand your position and commend you for standing your ground, but when this many people have clearly stated that you need to give the FairTax a chance. Wouldn’t it behoove you to open up a little more and give the FairTax a serious look?

    Here are my answers to your concerns, I hope they are acceptable:

    1. Do you think there won’t be any federal tax collection agency?

    Not like the IRS there won’t be. As John mentioned, the “tax collection agency” will collect taxes ONLY from the 50 States. Section 401 of HR-25 Authorizes States to Collect the Tax. They remit those taxes to the United States Treasury and are reimbursed 0.25% of the tax remitted.

    2. Who will send out the prebates?

    That will be the Social Security Administration. This, I believe, is for a couple reasons. First, the FairTax ensures SS/MC are fully funded. Second, the SS# of every individual who qualifies for the Prebate will be verified. An unintended consequence of the FairTax is that SS Fraud will also be reduced.

    3. Who will collect the money from the states or retailers?

    As mentioned in #1, the United States Treasury will collect from the States. States will collect from Retailers (as they do now in 45/50 States).

    4. Do you not think that the benefits will increase for the needy to cover the increased cost of living?

    The FairTax helps “the needy” more than any other group. Here are just a few reasons how:
    A. The FairTax untaxes ALL spending up to $2,500/mo. (depending on family size)
    B. The FairTax puts federal income taxes back in their paycheck.
    C. The FairTax puts SS/MC (FICA) taxes back in their paycheck.
    D. The FairTax removes embedded taxes from all goods and services.
    E. The FairTax untaxes ALL used goods, which the poor use more than anyone else.
    F. The FairTax ends the practice of taking more from the poor as they work harder and earn more.
    G. The FairTax will return many jobs the poor used to have, but which got shipped overseas.
    H. The FairTax increases the number of new jobs, which allows the poor to work their way out of poverty.
    I. The FairTax effectively ends the IRS, which have used their power to terrorize and intimidate the poor.
    J The FairTax dismantles a tax code that is so complex and convoluted the poor, and no one else, can understand it, and replaces it with a very simple tax system.
    K. The FairTax replaces a tax system that requires expert help, which the poor can’t afford, with one that doesn’t require any help to understand.

    5. Do you not think bartering will increase?

    It may. But if it does, is that not OUR choice? America is not run by politicians, it is run by the people, for the people. I understand your concerns, but let’s not forget who you are campaigning for.

    My question to you is this: Has bartering increased in the 45/50 states which collect sales taxes now? If it has, then it is insignificant. Otherwise, the Liberal Media would be all over it.

    What is more likely is that, in the beginning, people will hold on to their money. (The FairTax does promote savings and investment). But then after people start to realize that what we have is permanent (not like the temporary Bush tax cuts), they will then start to spend more of their money because they have more to spend. If we are one thing, it is that we are a Nation of Spenders. Furthermore, donating to charities is also estimated to increase under the FairTax. The more money people have, the more they want to contribute to the needy.

    6. Do you not think people will devise innovative ways to become self sufficient to beat the tax?

    Let’s hope so. This Nation was founded by innovative people who devised ways to build and create the America that we live in today.

    That doesn’t mean that people will stop spending money on frivolous products that make their lives easier. Would I grow a tomato to top my salad? Absolutely! Would I build a bicycle to get to work? Not likely.

    7. Half the population does not pay taxes now. Do you think they will simply pay the consumption tax without complaint, or do you think they will try to figure out how to get around the tax?

    Half the population not paying taxes now is due solely to our Income Tax system. That 1/2 which you speak of includes Illegal Immigrants, Tourists, and the Underground/Shadow economy. The FairTax is the only tax system that can (and will) effectively and efficiently collect taxes from them just as it does the hard working, legal citizens of the USA.

    Once again, I URGE you to give the FairTax a more serious look. I do thank you for asking questions. That does say a lot about your character.

    Thank you

    Robert Williams
    @TXFairTaxer (Twitter)

  4. FairTaxer says:

    I just added another response. Hope he is starting to “get it”

    Peter, if you don’t mind, I would like to address comments from the 2nd two paragraphs of your original post.

    “Is it possible retail sales could drop significantly with the imposition of a consumption tax? My neighbors have decided to take responsibility for their own destiny. They have a large garden, chickens, a cow, as well as a portable sawmill. They produce as much of their own food as possible, they have a wood burning furnace [using wood collected from their own property] so they don’t buy taxable heating fuel; and with their own saw mill they produce their own lumber for their building needs. Working towards self sufficiency, their retail purchases along with the associated consumption tax paid would drop significantly. What happens if a “significant” portion of Middle America does the same? Will the federal government start punishing people for becoming self sufficient?”

    I’m sure many people have this preconceived notion that “oh, well, I’ll just become self-sufficient and not pay the tax”, but come on, we have to look at this realistically. Most people nowadays are WAY too busy to go chopping down trees to make firewood, or chasing chickens for dinner. That’s why we have these new fancy things called -SERVICES- where we pay people to do that for us.

    Sure, that’s good for some people, but “a “significant” portion of Middle America”? Highly unlikely!

    AFFT, has poured over $25,000,000 into researching the FairTax and its effects on America. I recommend taking the time to read some of that research. It is actually very informative. http://www.fairtax.org/research

    “Will I be committing a federal crime if I have my neighbor process some of my trees into lumber, allowing me to build a barn, if in exchange I help them install a fence around their pasture?”

    Absolutely NOT! In fact, isn’t THAT what America is about? The FREEDOM to choose to do that if you wish. Under our current tax system, however, you probably ARE in violation of some tax code. Have you looked it up? Try finding that in the (now) 83,000+ pages of IRC tax code.

    Want to read the FairTax Bill? Here it is, in its entirety, on a 34 Page PDF: https://fairtaxer.files.wordpress.com/2011/08/hr25-112th-congress.pdf

    “This is barter, and neither of us would pay a consumption tax on product or labor. In the USSR battering increased from around 5% to over 50% once a similar consumption tax was implemented.”

    The “similar consumption tax” you speak of is the VAT. The Value Added Tax. The VAT is a tax on each level of production of every product produced. In essence, our current income tax code already has a VAT, because our current income tax code taxes the employers, employees, and products within each company within the US.

    “Why do the fair tax proponents discount the real possibility of retail sales dropping significantly with the imposition of a new consumption tax?”

    Because we strongly believe in the research that has been paid for by the Americans For Fair Taxation (AFFT). Over $25,000,000 and 16+ years has been put into the FairTax. Wouldn’t you trust that over the word of some third-rate politician who stands to lose money because of the FairTax? I certainly do.

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