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??