FairTaxFraud(dot)com took a long list of researched and published facts about the FairTax and removed, ignored, or completely twisted parts of them to make the plan sound as if it isn’t what America needs. If you reinsert and untwist those parts, as we’ve tried to do here, you will see that the FairTax is the best tax plan on the table and that no other tax plan has ever or probably will ever come remotely close to proposing what the FairTax does.
Table of Contents
- Americans take home their whole paychecks.
- No federal sales tax up to the poverty level means progressivity like today’s tax system.
- No tax on used goods. The amount you pay to fund the government is totally visible.
- Retail prices no longer hide corporate taxes or their compliance costs, which drive up costs for those who can least, afford to pay.
- The income tax exports our jobs, rather than our products. The FairTax brings jobs home.
- The FairTax strategy is revenue neutrality: Neither raise nor lower taxes so consumer costs remain stable.
- Tax criminals – don’t make criminals out of honest taxpayers.
- Eliminates Social Security withholding.
- Dramatically lowers effective tax rates for lower and middle income persons and families; a rebate completely eliminates taxes for people at or below the poverty level.
- Eliminates taxes on education.
- Allows families to save more money faster for home ownership, education, and retirement.
- Allows homeowners to pay their entire house payments with pre-tax dollars.
- Frees up a great deal of valuable time wasted on filling out cumbersome and inscrutable IRS forms throughout the economy.
- Raises the same amount of money to finance the federal government as the current income tax system.
- Taxes the Trillion Dollar underground, criminal, and drug economy.
- Makes future taxation of income unconstitutional by supporting the repeal of the 16th Amendment.
- The FairTax Abolishes the IRS.
- Closes all tax loopholes and brings fairness to taxation.
- Maintains our current Social Security and Medicare benefits.
- Brings transparency and accountability to tax policy.
- Reimburses the tax on purchases of basic necessities.
- Enables retirees to keep their entire pension.
- What You Lose Under the FairTax
- What You Gain Under the FairTax
FairTax FACT: Americans take home their whole paychecks.
FairTaxFraud: There’s no miracle that occurs and wipes out all other taxes as is implied by that statement. State and local taxes and deductions will still be taken out the same as the existing tax plan. Deductions for health insurance, IRAs, 401K’s, union dues, etc. will still be taken out as always. You just get to see a little more of it before you purchase your $5 Big Mac (with 30% FairTax tax added). The real alternative to the FairTax called the No-Tax Plan will allow you to not only take home your entire paycheck, it will let you consume as much as you want and buy anything you want tax free.
FAIRTAXER: The first thing to note here is that the document FairTaxFraud used to gather their information clearly states:
Not only do more Americans have jobs, but they also take home 100 percent of their paychecks (except where state income taxes apply). No federal income taxes or payroll taxes are withheld from paychecks, pensions, or Social Security checks.
That tells me FairTaxFraud is merely trying to discredit a well researched plan with trickery and deceit. Regardless, FairTaxFraud is partially correct there. I mean, there really isn’t any “miracle”, and yes, state and local taxes will still be taken from your paycheck, BUT, you will no longer be taxed on FEDERAL income that you haven’t seen yet; and you will no longer be paying those horrendous FICA taxes. Besides, most of those other deductions are voluntary and have nothing to do with Federal Taxes anyways. In most states, you don’t even “have” to have withholding for state income taxes, and those states, after passage of the FairTax, may shift to a sales tax basis anyway. For those of us “lucky enough” to work for a company, we only pay 7.65% each month to our FICA taxes alone. Our EMPLOYERS ALSO PAY 7.65% to match what we put into FICA. That is a total of 15.3%; which is also paid by those of you who are unlucky enough to be Self-Employed.
So, in answering: Does the FairTax give you your WHOLE paycheck back? Yes it does, with the exception of any voluntary deductions and state/local taxes – giving you 22.65% to 43.3% more than you’re getting now, depending on your tax bracket and whether or not you’re self-employed. You do the math! It looks pretty cut & dry to me.
I feel it is also worth noting that the National Small Business Association Endorses FairTax. So if you own or work for a Small Business (I believe most of us do nowadays) it would be in your best interest to get your employers or employees on track with the FairTax.
FairTax FACT: No federal sales tax up to the poverty level means progressivity like today’s tax system.
FairTaxFraud: Two things. First, since everybody (rich and poor) get the $187 poverty prebate it’s not progressive. Second, since the FairTax taxes consumption (heat, rent, gas, healthcare) and makes investments (stocks, bonds) tax free then it’s clearly not progressive. The fact is that the FairTax is an extreme burden for the working poor – those who are much above the poverty level but living paycheck to paycheck. Because they typically spend 100 percent of what they make to survive, then they are literally in the 100% tax bracket because all of their earnings are taxed. The FairTax is a penalty for the middle-class because they spend 80 percent of what they make in consumption, they are taxed on 80 percent of their income so they are literally in the 80 percent tax bracket. The FairTax is merely a nuisance for the rich. Since they can save and invest most of what they get, and can invest tax-free, and transfer wealth tax-free they are taxed very little. They only spend 5 percent on consumption so they are taxed on only 5 percent of their income and are literally in the 5% tax bracket. This is by no means progressive or fair. In fact, it is just the opposite. Why should a person at the poverty level have all his money taxed while a billionaire is only taxed on 5 percent? Why is this simple concept so hard for the FairTax idiots to grasp? The alternative No-Tax Plan would make all money that was earned with your muscles or your brain completely tax free. It would only tax money that wasn’t worked for and wasn’t earned.
FAIRTAXER: The logic that the FairTaxFraudsters are using is completely bass-ackwards. In order for you to see that they are wrong, it would help to understand that little fact. I’ll try to explain.
First, the prebate isn’t a flat “$187” as FairTaxFraud would like you to think. The amount of your prebate is determined by the size of your family. Second, progressivity in the FairTax does come from the prebate, but these guys aren’t explaining it to you correctly – which, of course, will make it appear fraudulent. Since the prebate isn’t based on what you earn (it is based on what the average family of your size should spend on necessities) it is considered progressive – as opposed to our currently regressive tax system (yes, FICA taxes are extremely regressive).
The real truth is that the progressivity is a comparative value between what the low income earners spend versus what the upper income earners spend. As a low income earner you may spend 100% of your monthly earnings on necessities, but as an upper income earner you may only spend 5% on necessities. But that doesn’t mean that is how much you ARE taxed, that value is how much you ARE NOT taxed. Here is a table to show you exactly what I’m talking about (NOTE THE “Purchasing Power After Prebate” and the “ACTUAL FairTax Rate After Prebate” columns):
Here is another great resource for understanding the FairTax Prebate that FairTaxFraud doesn’t want you to understand:
The FairTax untaxes income. That should be a given, right? Apparently not to FairTaxFraud. Here’s how it really works: For those of us who “work for a living”, the current system taxes our direct income. For the “rich”, their income generally consists of Stocks and Bonds – they invest, that’s where they put their money. So untaxing ALL income seems the fair thing to do, right? Anyways, the claim made by FairTaxFraud that “the FairTax is an extreme burden for the working poor” is unfounded and ridiculous. What the FairTax does is helps the “working poor” by untaxing their necessities up to the (HHS) National Poverty Guideline (NPG) and by giving back their Federal Income Taxes (almost 1/4 of their paycheck each month) – see the table above for those of us spending $30K and below. This not only increases their spending power each month, it increases their saving power. What FairTaxFraud doesn’t understand is that if the “working poor” spend 100% of their earnings on necessities, then as long as that 100% of spending is below the NPG, 0% (ZERO PERCENT) is taxed – putting them where? In the 0% tax bracket. And as you can see from the table above, it even gives the extreme low income earners (those living in abject poverty) an instant refund for them to spend – and thus stimulate the economy – or save.
It is also important to note the lie purported by FairTaxFraud that “The FairTax is a penalty for the middle-class because they spend 80 percent of what they make in consumption, they are taxed on 80 percent of their income so they are literally in the 80 percent tax bracket“. As you can clearly see from the chart above, middle income earners (those spending between $30K and $100K annually) are effectively taxed between 0% and 16%, respectively. So you can see how the ‘prebate’ makes the FairTax a progressive tax.
If you want to know how the ‘prebate’ works, here are a few other great resources that you should take the time to read. The FairTax really does work to your benefit. Understand it and you will demand it!
FairTax FACT: No tax on used goods. The amount you pay to fund the government is totally visible.
FairTaxFraud: This is just replacing one tax with another. It makes things things like used land, used acreage, used mansions, used yachts, used rolls royce’s (long lived property) all tax free while things like food, healthcare, surgery, legal services, clothing, rent, mortgage, (consumable property) etc. all taxable. Now that all the best property – huge farms, ocean-side beach homes, private wooded acres etc. is owned by the rich, according to the FairTax it should now be tax-free forever and can be transferred to all succeeding generations of spoiled rich kids completely tax free. The visibility myth is complete nonsense. Things like food, rent, clothes are the visible items the FairTax wants to track. Unfortunately tracking who ate what and how much heat you used is almost impossible on a large scale. The things that are tracked by banks like property, stocks, and bonds are the things that should be visible because they are so easy to track. The FairTax makes these property transactions tax free and thus invisible to the government. The alternative No-Tax Plan is just the opposite – it doesn’t track and tax your Big Mac, or your new clothes, but it does tax and track estates, yachts, and investment property. The alternative No-Tax Plan would make new and used goods completely tax free.
“This is just replacing one tax with another.” ~FairTaxFraud
FAIRTAXER: Why yes, yes it is! It’s replacing a corrupt, cascading, cumulative, invasive income tax with a single-rate tax that is 100% visible, transparent, and fair to EVERY U. S. citizen – the FairTax.
“It makes things things like used land, used acreage, used mansions, used yachts, used rolls royce’s (long lived property) all tax free while things like food, healthcare, surgery, legal services, clothing, rent, mortgage, (consumable property) etc. all taxable.” ~FairTaxFraud
FAIRTAXER: I find it interesting how FairTaxFraud goes straight for the class warfare card when the premise of the FairTax is to stop such class warfare. The fact is that the FairTax also makes things like that cute little 2bd/1bt/1cg that you’ve been looking at retiring in completely tax free. And that used jon-boat you’ve been wanting to take out on the lake? Tax free. Or how about that used Ford Mustang that your daughter has wanted for her graduation present? Again, tax free. The people at FairTaxFraud want you to look at the FairTax as if it’s an evil class warfare tool, when in fact it is they who are the tools for making it into something it isn’t.
“Now that all the best property – huge farms, ocean-side beach homes, private wooded acres etc. is owned by the rich, according to the FairTax it should now be tax-free forever and can be transferred to all succeeding generations of spoiled rich kids completely tax free.” ~FairTaxFraud
FAIRTAXER: Again, they reach for the class warfare card, like the “rich” are the only people with children. Let’s focus on ourselves before we start worrying about what other people are doing. You and I both know that you don’t have to be “rich” to own land. In most cases, when you buy the house you’re living in, you also get the land beneath it; and in other cases, you can buy the land and build on it later. Regardless, under the FairTax that land will also be tax free when you pass it on to your children and when they pass it on to their children. The best thing is, they don’t even have to be “spoiled”.
“The visibility myth is complete nonsense.” ~FairTaxFraud
FAIRTAXER: Visibility Myth? The authors at FairTaxFraud completely missed the point on this one. The “visibility” claimed by FairTax is all about the placement of taxes and the tax burden. What the FairTax does is takes the multitude of Income Taxes – and their immeasurable hidden taxes – and places them all in ONE single-rate tax on consumption. The claim of FairTax being visible (or transparent) means EVERYONE sees it when they purchase new goods and services – EVERY-ONE. And yes, everyone includes POLITICIANS. So if you think politicians will just raise taxes on a whim, you need to understand that even they will be affected. It is much more likely for our law-makers to raise taxes on a small group of people than it is to raise taxes on EVERYONE (including themselves).
“Things like food, rent, clothes are the visible items the FairTax wants to track. Unfortunately tracking who ate what and how much heat you used is almost impossible on a large scale.” ~FairTaxFraud
FAIRTAXER: What is this tracking nonsense about? Looks like another red-herring they’re throwing in the pot in an effort to derail the FairTax. As far as I know, the FairTax is about reducing government, not increasing it. Nobody (in the FairTax organization) cares what you eat, or how much you pay rent, nor do they care what clothes you buy. What is important is that you CAN afford those necessities, untaxed, up to the National Poverty Level as set by the Dept. of Health & Human Services (HHS) annually. And they (FairTax.org) have gone to great lengths to ensure that every Red-Blooded American can provide for themselves and for their families.
“The things that are tracked by banks like property, stocks, and bonds are the things that should be visible because they are so easy to track. The FairTax makes these property transactions tax free and thus invisible to the government.” ~FairTaxFraud
FAIRTAXER: Did that confuse you as much as it confused us? Could the banks not continue to track these items (through mortgages, loans, bond sales, etc)? Do the banks no longer have to report transactions over $10,000 to the government? Why is a tax-free transaction invisible to the government or banks when those very transactions still involve deeds? Does FairTaxFraud want the government to continue to be involved in their personal business?
Their statement almost seems like they’re trying to throw another red-herring in the pot. I have to wonder if FairTaxFraud is just double-talking to confuse the reader. Do they want these things to be visible to the banks? Or to the government? Or both. My guess is, if it’s visible to one, it’s visible to the other. But I think they are still just playing upon the uninformed reader’s emotions and/or sense of right and wrong.
“The alternative No-Tax Plan is just the opposite – it doesn’t track and tax your Big Mac, or your new clothes, but it does tax and track estates, yachts, and investment property. The alternative No-Tax Plan would make new and used goods completely tax free.” ~FairTaxFraud
FAIRTAXER: Wait! Let’s back up. They bitch, moan, gripe, and complain about the FairTax not taxing “things like used land, used acreage, used mansions, used yachts, used rolls royce’s (long lived property)”, but they want their own no-tax plan to not tax those same items. Sounds to me like their entire agenda is all about promoting their own plan. Ok, hit the play button again: The last part of their paragraph says “it doesn’t track and tax your Big Mac, or your new clothes, but it does tax and track estates, yachts, and investment property”. What it doesn’t say is that it (the income tax) doesn’t track those $400 dinners with mistresses nor the $3,000 Hickey Freeman suits, but it does track the retirement home, the fishing boat, and the Mustang you want to leave your heirs when you die. What’s fair about that?
FairTax FACT: Retail prices no longer hide corporate taxes or their compliance costs, which drive up costs for those who can least, afford to pay.
FairTaxFraud: Corporations will still pay taxes, will still buy raw materials, will still hire labor, and will still pass on costs to the consumer. Nothing has changed there. The FairTax only deals with federal taxes. Again, the federal taxes lost will need to be made up by someone. However, under the FairTax the working poor and middle class will now be paying a huge 30 percent tax on new homes, a 30 percent tax on health care, surgery, prescription drugs, day care, legal services, etc. The FairTax Plan drives up the cost of good for the working poor and middle class to astronomical levels. Corporations and the rich make out like bandits. Why would anyone endorse a plan that treats businesses better than people? The alternative No-Tax Plan would allow the anybody (including corporations) to pay no taxes if all their income was earned at a job or manufactured in America with American workers.
FAIRTAXER: First, corporations do not “pay” taxes. They never have and they never will. What they do is pass their “tax burden” on to (in this order), their consumers (in the form of higher prices), their employees (in the form of lost or reduced pay raises), and their share holders (in the form of reduced dividends). Remove the “tax burden” and you have removed a cost – a cost that no longer needs to be passed on to you, the consumer. Second, the “raw materials” that corporations pay will be non-taxable, as ALL business to business taxes will be eliminated; the labor they hire will no longer be taxed on their income, and the employer will NO LONGER be required to pay their portion of FICA taxes. Those are all additional cost reductions that can (and most likely WILL) be passed on to consumers.
“the federal taxes lost will need to be made up by someone” ~ FairTaxFraud
FAIRTAXER: As the FairTax is a revenue-neutral replacement tax, there is no loss. The FairTax is designed to replace the taxes currently embedded in the goods and services we buy now. Over $25Million Dollars in research performed by 80 world renowned economists (including a Nobel Prize recipient) has shown that to be fact, not opinion.
“However, under the FairTax the working poor and middle class will now be paying a huge 30 percent tax on new homes, a 30 percent tax on health care, surgery, prescription drugs, day care, legal services, etc.“~ FairTaxFraud
FAIRTAXER: Let’s look at this from two different angles; the business angle, and the home buyer angle. First, the business angle: The FairTax untaxes all business to business transactions, it removes your employer’s share of payroll taxes (FICA, and eliminates all SECA taxes too), and it completely removes the federal tax burden from all US businesses; meaning that businesses no longer have to spend millions of dollars on tax compliance costs annually. That means HUGE savings on the business side from lumber and nails to the purchasing of hammers, specialty tools, and the hiring of labored workers. As costs drop in one area, the savings are passed on to others down the line.
Now, the home-buyer angle. You’re a hard-working American with a spouse and two wonderful children. You not only qualify for the prebate, you’ve registered for it and are now being reimbursed $564 per month ($6,767 annually). On top of the monthly prebate check, you have been relieved of paying federal income taxes, and you’re no longer paying that regressive FICA tax that has been stealing 7.65% of your pay. So, if you and your spouse earn a meager $40,000 between the two of you, instead of bringing home ~$31,000 annually, you are bringing home $46,767. That is an added $15,767 that can be used to help you buy that home you’ve dreamt of.
“The FairTax Plan drives up the cost of good for the working poor and middle class to astronomical levels. Corporations and the rich make out like bandits. Why would anyone endorse a plan that treats businesses better than people?“~ FairTaxFraud
FAIRTAXER: Incorrect. I don’t know where FTF get’s their “astronomical numbers”, but they are dead wrong. The FairTax Plan is a replacement tax, NOT an added tax. When Corporations get hit with taxes, what do they do? They increase their prices to cover those additional costs. Wouldn’t you agree? So wouldn’t it make sense that when taxes are cut, corporations would drop their prices because they no longer have those additional costs? And wouldn’t dropping their costs make them more competitive on the market? It sure makes sense to FairTaxers. Of course you may have the occasional outlier who doesn’t want to drop their prices, but they are only hurting themselves by doing so.
As for “the rich”, they will continue to pay the majority of taxes paid in the USA. How? By buying bigger, more expensive goods and by paying for more services. Look at is this way: Would you (I’m assuming you’re a regular “Joe” like me) ever buy a new Yacht to impress your friends? Me neither. Would you hire a professional Landscaping Company to maintain your 4 Acre land on a monthly basis? Me neither. Would you pay a professional Air Conditioning & Heating company to come in and clean your ducts semi-annually, or replace your filters quarterly? Me neither. Would you pay to keep an expensive Attorney on retainer throughout the entire year? Me neither. And would you pay some expensive tax attorney tens of thousands of dollars annually to find and exploit loopholes to save you money? Okay, well this last one won’t be an option under the FairTax because there won’t be any loopholes, but you see where I’m going with this right? They WILL continue to pay more taxes than we ever will. Just because you don’t know where their money goes, doesn’t mean they don’t spend it. These guys from FTF want you to believe that “the rich” are going to hoard all their money and switch to completely buying used – but they can’t, and they won’t.
FairTax FACT: The income tax exports our jobs, rather than our products. The FairTax brings jobs home.
FairTaxFraud: By giving the rich $700 billion in free money from estate and gift taxes they will do exactly what they did when Bush and Reagan gave the rich huge tax cuts. Did they invest the money in building American jobs for a better tomorrow? Did they make America a better place to live? Did they modernize existing factories to compete with foreigners? NOPE! Even though America has one of the least repressive tax systems in the entire civilized world, they did exactly what Ross Perot said they would do. The took the money and ran. They used the money to move the factories and jobs to Mexico, China, and India where they could get prison labor and third-world wages totaling mere cents per hour for hard work which no American could work for. Ross Perot was dead-on about the “great sucking sound.” Wealth knows no loyalty or patriotism in America. The FairTax will result in more outsourcing and un-American behavior. The bottom line is the FairTax is a job killer. The alternative No-Tax Plan would tax all products that were NOT manufactured with American labor. It would tax money and property of those who outsource jobs and businesses. They can’t escape the tax as long as they own property in America. It provides extremely strong financial incentives for bringing jobs back to America and would save millions of jobs.
FAIRTAXER: First, our current – regressive – income tax system taxes productivity which has been pushing U.S corporations offshore for decades now. Ever heard of Daimler-Chrysler? The reason they were Daimler-Chrysler and not Chrysler-Daimler is because the corporate executives weighed the option of bringing the merger of Daimler (a German-born corporation) and Chrysler (an American-born corporation) to the U.S. versus taking it to Germany. It’s pretty obvious the weight of the U.S. tax system out weighed other options to bring the merger to U.S. soil.
By untaxing corporations, the FairTax will turn the United States into a tax haven for businesses. Under the FairTax, the United States stands alone as the only advanced nation in the world with a zero rate of federal tax on productive income, whether from returns on capital or personal earnings. The U.S. becomes the most attractive, tax-haven venue in the world for investment, manufacturing and exports. Investment lost to foreign outsourcing repatriates to our shores as the U.S. becomes the global seat of production, management, research and export activity. Capital trapped offshore by our tax morass repatriates as well. Eventually, other nations will be forced to follow suit and reduce marginal tax rates or lose their investment to the U.S.; this global reform stimulates worldwide economic growth to the benefit of the global community, thus providing U.S. producers with larger markets.
Second, with the exception of countries that employ a VAT (Value Added Tax), America has one of the MOST regressive tax systems. (See Definition of regressive tax). The CBO may disagree with that statement, but when you realize that the richer you get, the more resources you have to avoiding taxes, you’ll understand where we’re coming from. The FairTax does not tax productivity, the FairTax does not redistribute wealth, and the FairTax does not have loopholes the rich can play with.
Third, if you had a choice of moving into either of two houses where the only real difference was that House A paid your utilities (inclusive in the price) and House B did not (for the same price) which house would you choose to live in? Isn’t the choice obvious? So, if the FairTax lowers costs in the U.S. and taxes imports (which it DOES propose), then isn’t it obvious that with the FairTax more people and more businesses would want to move here and thus bring more jobs to U.S. soil? It would be cheaper for companies to open their doors on U.S. soil and sell to the rest of the world than it would be from any other country.
Let’s look at the scenario of corporations moving their business to Mexico, China, and India. Under our current system that is exactly what has happened since the Internet bubble burst in 1998 and it continues to happen today. Why is that? Because we’re not taxing imports and making it easier for companies to stay here in the U.S. The FairTax, on the other hand, removes the corporate tax burden, does not tax exports on goods, and does tax imports. So, moving a company to any other country would alienate their goods, cost more money to import to the U.S. and reduce their profits. Again, I don’t know what these guys at FTF are thinking, but it’s backwards and it doesn’t smell right.
FairTax FACT: The FairTax strategy is revenue neutrality: Neither raise nor lower taxes so consumer costs remain stable.
FairTaxFraud: The fair tax does not cut the overall revenue but it shifts taxes so the working poor and middle class pay the majority share. It makes money that wasn’t worked for or earned tax-free while it taxes hard earned income. None of the studies that this FairTax plan are based on have been published or offered for scrutiny of critics. Many experts dispute the validity of the tax rate claimed. It’s simple logic – when you take away $700 billion dollars from the treasury, you have to make it up somewhere. Also, the level of revenue this plan generates is still smaller than required as it was based on current funding without including current debt spending. The alternative No-Tax Plan would cut tax rates to zero for working poor, middle class, and rich who work for and earn their money in America. It’s extremely fair. It would heavily tax money that wasn’t worked for or earned like estates, gifts, lottery winnings, gambling winnings, and capital gains. Unlike the FairTax, the No-Tax plan would provide more than enough money to fund all government needs and pay off the national debt.
“The fair tax does not cut the overall revenue but it shifts taxes so the working poor and middle class pay the majority share” ~FairTaxFraud
FAIRTAXER: That is an outright lie fabricated by opponents of the FairTax. The FairTax helps EVERY legal US Citizen and all legally documented workers in the United States. The only “working poor” that the FairTax does discriminate against are those who are here Illegally; in which case it ensures that they pay the full 23% FairTax rate upon purchase of any new goods or services.
“[FairTax] makes money that wasn’t worked for or earned tax-free while it taxes hard earned income”~FairTaxFraud
FAIRTAXER: WHAT?? Come on! If you know ANYTHING about the FairTax, you know that it ELIMINATES all income taxes. What the FairTax actually does is “makes the money that wasn’t worked for or earned tax-free (i.e. no income taxes were paid previously on it) and taxes it upon consumption. But if you decide to SAVE or INVEST that hard-earned income, you are (tax) free to do so.
“None of the studies that this FairTax plan are based on have been published or offered for scrutiny of critics.”~FairTaxFraud
FAIRTAXER: On the contrary, EVERY study ever produced by FairTax.org, the Beacon Hill Institute, and/or economists associated with FairTax.org can be found at FairTax.org/research
“Many experts dispute the validity of the tax rate claimed”~FairTaxFraud
FAIRTAXER: And probably for good reason; like: They didn’t get to have their name published on the greatest tax plan in history. Or, because they are Marxist in nature and only support “a heavy progressive or graduated income tax” (the 2nd Plank of the Communist Manifesto). Believe it or not, there are people in the US who are paid to turn us into a Socialist country; The Clinton’s, Mr. President himself, Saul Alinsky, and George Soros to name just a few.
“when you take away $700 billion dollars from the treasury, you have to make it up somewhere.”~FairTaxFraud
FAIRTAXER: Well, they may have finally gotten something right; but I don’t think they know where the FairTax plans on making it up from. The FairTax will not only tax Illegal Immigrants, Tourists, and the Underground Economy when they all buy legal items, it will not provide those illegal immigrants and tourists with the prebate that all legal US citizens will receive. By taxing consumption, the FairTax will include an additional ~70,000,000 people who currently live here but don’t pay federal taxes.
“The alternative No-Tax Plan would…”~FairTaxFraud
FAIRTAXER: STOP!! What?? There it is!! There is the entire reason this group is against the FairTax. They have their own agenda and have to try to discredit their competitors before they can feel like they’re making any progress.
“[No-Tax Plan] would heavily tax money that wasn’t worked for or earned like estates, gifts, lottery winnings, gambling winnings, and capital gains.”~FairTaxFraud
FAIRTAXER: Funny though how the “No-Tax Plan” actually has exactly what it says it doesn’t – A TAX. And not just any tax, an INCOME tax. So now we have to keep the IRS, AND we have to continue to comply with the existing tax code. I’ll bet these guys seriously think that nobody sees what they’re up to.
“Unlike the FairTax, the No-Tax plan would provide more than enough money to fund all government needs and pay off the national debt.”~FairTaxFraud
FAIRTAXER: And they know this, how?? Truth is, that they don’t know. So, how about making the following statement: Unlike the FairTax, the No-Tax Plan was written in a week by some old guy who thinks he knows what is best for America but has absolutely know credibility or monetary backing whatsoever. (Just trying to inject a little humor; I don’t know for sure who wrote their No-tax plan.)
FairTax FACT: Tax criminals – don’t make criminals out of honest taxpayers.
FairTaxFraud: The FairTax makes everyone a tax collector – from a simple EBay business to kids mowing lawns (no lower limit like the current tax system). The temptation to cheat will be enormous. That’s why it’s safer to make deductions out of the paycheck first. Existing businesses will use business purchases for personal use. People will start small businesses to avoid the taxes. This will make criminals out of honest taxpayers. Even the small E-Bayer or lawn mower will have to get a sales tax license or be forced to “eat” the 30 percent sales tax himself — which almost no one will do. The alternative No-Tax Plan would tax unearned income directly from the government…no intermediate tax collectors required – and thus no cheating. Land and mansions can’t simply be lifted up and taken overseas – and ownership records are carefully recorded. Huge cash transactions and account balances are already carefully monitored by banks.
“The FairTax makes everyone a tax collector – from a simple EBay business to kids mowing lawns (no lower limit like the current tax system).” ~FairTaxFraud
FAIRTAXER: Under our current tax system, every adult (~165,000,000) and every business (~22,000,000) is a tax collector. This “honor system” we have now criminalizes ~187,000,000 Americans. By it’s very nature, FairTax eliminates ~165M tax collectors; leaving only ~10% (the businesses) to collect the FairTax. Let me also point out that most eBay’ers sell USED goods; which are not taxed under the FairTax.
Their statement further shows their own ignorance of the FairTax. DeMinimis Payments and DeMinimis Sales are outlined in `SEC 901 (a) and (b), respectively. However, should a select few escape taxation because they fall within the parameters of `SEC 901 (a) or (b) but fail to report their earnings, they will still pay the FairTax if those earnings are spent on new goods/services.
“Existing businesses will use business purchases for personal use.”~FairTaxFraud
FAIRTAXER: And if they are caught for cheating, they risk being heavily fined and they risk losing their business license. `SEC 504 of the Fair Tax Act details the very stringent CIVIL and CRIMINAL Penalties for “Failure to Register”, “Reckless or Willful Failure To Collect Tax”, “Reckless or Willful Assertion of Invalid Exemption”, “Reckless or Willful Failure To Remit Tax Collected”, “Reckless or Willful Failure To Pay Tax”, “Penalty for Willfully or Recklessly Accepting a False Intermediate or Export Sales Certificate”, and “Penalty for Filing False Rebate Claim”.
“People will start small businesses to avoid the taxes.”~FairTaxFraud
FAIRTAXER: That statement is laughable. Anyone who has started a business knows better. You can’t just walk down to the courthouse and ask for a business license. There are regulations to be adhered to, and paperwork that must be filled out (TONS of paperwork), and fees that must be paid. It may be easier in some States to start a business, but it is not something just anyone can do. And even if they did, they would have to maintain the “business” indefinitely if they want to continue to reap the benefits.
FairTax FACT: Eliminates Social Security withholding.
FairTaxFraud: This sounds like a good idea on the surface – make everyone pay for social security without a maximum limit. If the estate, gift, and capital gains taxes were not repealed then this might work. However, by eliminating taxes on estates, gifts, and capital gains, there will be a $700 billion shortfall. This must be made up somewhere. There is also a $400 billion deficit not covered by the FairTax with interest to pay. As written, the FairTax will simply shift the burden to the middle class and cut benefits or raise retirement ages. The alternative No-Tax Plan would pay off the national debt, make education and health care tax-free, and fully fund the social security system.
FAIRTAXER: I’m not sure how FairTaxFraud came to their conclusions, because they don’t show any of their work, but according to “Taxing Sales Under the FairTax: What Rate Works?” there is no shortfall or deficit. In fact, the FairTax completely closes the $430 BILLION annual tax gap, collects taxes from as little as 98% of people in the USA, and attracts international businesses that will bring 10,000,000 jobs to the USA. With 10M new jobs there will be no shortfalls or deficits, as the American economy will explode and allow EVERY US citizen to buy, save, or invest the money they have earned; without having a Government that over-steps boundaries or steals from its citizens.
Back on the subject of Social Security withholding. The FairTax eliminates the highly regressive payroll taxes being taken from both you and your employer; without eliminating the Social Security and Medicare programs. What the FairTax has done is included the Social Security Rate and the Medicare Rate in the calculation of the FairTax Rate. So now, instead of a small group of citizens (Income Earners below $110,000) paying into the SS/MC programs for EVERYONE, every person in the US who purchases new goods or services will be paying into the programs. In case you haven’t figured it out, with more people paying into the SS/MC systems, less money will be required to ensure they are funded. As less money is required to fund them, the rates will decrease. As the rates decrease, so will the FairTax rate. Understand how that works now?
“The alternative No-Tax Plan would pay off the national debt, make education and health care tax-free, and fully fund the social security system. ~FairTaxFraud”
Let’s give them the benefit of the doubt and agree that their plan will do what they say it will. Knowing what we know about the inefficiencies of ANY income tax system, ask yourself this question: How efficient would this no-tax plan be? Not nearly as efficient as the FairTax would be.
FairTax FACT: Dramatically lowers effective tax rates for lower and middle income persons and families; a rebate completely eliminates taxes for people at or below the poverty level.
FairTaxFraud: The rebate is $187 per month per person. It doesn’t sound that dramatic to me. That won’t buy gas for a week. This prebate thing is all based on some unimaginable impoverished creature living in a car, not eating regularly, and making $9800 a year and that glorious $187 a month is the tax returned to him for his meager purchases. Now if that sounds like “completely eliminating taxes for poor people” to you then you are out of your mind. Most at that level of poverty won’t have an address to mail the check to – let alone be able to afford a minimum bank account balance to cash it. The fact is that the FairTax is an extreme burden for the working poor — those who are much above the poverty level but living paycheck to paycheck. Because they typically have to spend 100 percent of what they make to survive, then they are literally in the 100% tax bracket because all of their earnings are taxed. The FairTax is a penalty for the middle-class because they spend 80 percent of what they make in consumption, they are taxed on 80 percent of their income so they are literally in the 80 percent tax bracket. The FairTax is a nuisance for the rich. Since they save and invest most of what they get, and can invest tax-free, and transfer wealth tax-free. They only spend 5 percent on consumption so they are taxed on only 5 percent of their income and are literally in the 5% tax bracket. The alternative No-Tax Plan would lift people out of poverty by making everything tax free. Eventually the working poor will become well off and will pay taxes by investing.
FAIRTAXER: For blog info see: http://whatyoupayunderfairtax.blogspot.com/2011/06/following-discussion-is-geared-toward.html
FairTax FACT: Eliminates taxes on education.
FairTaxFraud: There are no taxes on education in the current tax system. If fact, there are many deductions. The alternative No-Tax Plan would bring in so much money that college could be made tax free.
FAIRTAXER: There are no taxes on education, but there are deductions? That makes absolutely no sense whatsoever. If there are no taxes, then what are the deductions from? The truth is that students (or their parents) pay taxes on things like Tuition, Student Loans, and Books. Most public school funding also comes from – wait for it – TAXPAYER dollars.
Tuition. Only under the FairTax (and not current law), education is treated as an investment in human capital and is not taxed. Under the current system, most taxpayers today have to pay their tuition with after-tax dollars. Only a very few can take advantage of complex rules to limit the income tax they must pay with respect to income used to pay tuition. Thus, under the FairTax there is no sales tax imposed on primary, secondary, or university tuition, and all taxpayers may pay tuition entirely free of any tax. If the current system were to be made to encourage education as the FairTax does, then an amendment would be required to allow a much broader deduction against income and
For more information, read: How the FairTax Impacts Education
FairTax FACT: Allows families to save more money faster for home ownership, education, and retirement.
FairTaxFraud: Since new homes are taxed at 30% and the home mortgage deduction is eliminated they must be talking only about used homes. Since the majority of taxes are effectively shifted to the working poor and middle classes, that means it is more difficult to save. Since it double-taxes the retirement nest egg you already have in the bank and taxes your heath care it actually forces you back to work to make up for the shortfall. The alternative No-Tax Plan would not tax anything that was earned at a job or in a business as long as it was done by American labor. It would allow people to buy homes tax free. Only estates, gifts, capital gains, and other money that was not worked for would be taxed.
FairTax FACT: Allows homeowners to pay their entire house payments with pre-tax dollars.
FairTaxFraud: New houses under the old system didn’t have the FairTax 30 percent sales tax on houses and even used homes had the home mortgage deduction. The pretax benefit created by the FairTax plan is so minimal it isn’t significant. Since all goods and services bear the tax, every day is tax day.
FairTax FACT: Frees up a great deal of valuable time wasted on filling out cumbersome and inscrutable IRS forms throughout the economy
FairTaxFraud: Anyone who has a business is turned into a tax collector who must report to the IRS or other revenue collection agency. This applies to businesses on eBay and babysitting jobs. If you don’t become a tax collector you have to eat the tax yourself. The alternative No-Tax Plan would require the least reporting of any tax system ever proposed. The government merely monitors property, bank, and investment, and production records (collected by banks) and sends out the bills. It’s that simple. No forms required.
FAIRTAXER: First, the FairTaxFraud definition of “business” is skewed. What the FairTax purports is that it will tax all “NEW GOODS and SERVICES AT THE RETAIL LEVEL”. That means that babysitters – unless they own their own babysitting service and they are registered with the state and federal governments – WILL NOT BE PAYING TAXES.
Second, any business in a state where there are currently State and/or Local taxes IS ALREADY A TAX COLLECTOR. Currently there are 45 States who have state sales and use taxes. If you don’t believe me, you can view the list here (Wikipedia – Sales taxes in the United States). So 90% of states are already set up to accept the FairTax. The other 10% (Alaska, Delaware, Montana, New Hampshire, and Oregon) will soon follow suit once they realize how simple it is to collect at the register.
FairTax FACT: Raises the same amount of money to finance the federal government as the current income tax system.
FairTaxFraud: This is disputed by many. The 30 percent written into the bill may need to be as high as 50 percent. The FairTax doesn’t take into account the huge debt spending our government has been doing and doesn’t account for some $700 billion in lost revenue due to the repeal of estate, gift, and capital gains taxes. The alternative No-Tax Plan would raise much more than the current system. The No-Tax plan could pay off the federal debt in the first year. After that, it could provide free health care, free education, and raises for social security retirees.
FairTax FACT: Taxes the Trillion Dollar underground, criminal, and drug economy.
FairTaxFraud: This is also disputed. One one hand, criminals already pay sales taxes on clothes, cars, houses, jewelry, etc. They just don’t collect taxes on drugs, prostitution, etc. The FairTax will not change any of this. Criminals will not suddenly decide to start collecting taxes after the FairTax goes into effect. On the other hand, US banks are the major cause of money laundering in the United States and are responsible for hiding money from taxes. The FairTax would have no effect. The alternative No-Tax Plan would examine bank records to make assessments on taxes. If the money wasn’t earned from a job then it is taxable. If the taxes are not paid the accounts are frozen and property is seized. This puts a tight lid on money laundering and underground economies.
FairTax FACT: Makes future taxation of income unconstitutional by supporting the repeal of the 16th amendment
FairTaxFraud: The passage of the bill does not repeal the 16th amendment, it only suggests it. Politicians are still free to tax as they please on top of the FairTax. The alternative No-Tax Plan would not require repeal of the 16th amendment because there would be no need to.
FairTax FACT: The FairTax Abolishes the IRS
FairTaxFraud: There will still be an organization collecting taxes and enforcing tax law. The most that will happen is the IRS will be renamed and the government employees will be moved to that organization on paper. The alternative No-Tax Plan would drastically shrink the size of the IRS because only money that was not earned or worked for would be taxed. This new IRS would only have almost nothing to do. The job would be easier too because taxing wealth is more accurate than taxing income and can be traced via ownership documents.
FairTax FACT: Closes all tax loopholes and brings fairness to taxation
FairTaxFraud: It opens a huge tax loophole over the definition of what is new and what is used. Since used items are not taxed, everyone will be doing everything they can (legal and illegal) to acquire barely touched, “used” merchandise. Since even the smallest businessman will be required to collect the FairTax tax, there will be cheating. The biggest loopholes created by the FairTax are making money that was not earned or worked for tax free. And there is nothing fair about that. The alternative No-Tax Plan would close all existing loopholes and bring universal fairness to all Americans.
FairTax FACT: Maintains our current Social Security and Medicare benefits
FairTaxFraud: By removing the estate tax, the gift tax, and capital gains tax, there will be a $700 billion dollar shortfall in revenue. By eliminating the social security tax the only place the money can come from is the general fund. With current spending, there will have to be cuts to social security to keep it solvent under the FairTax. Since healthcare and surgery is taxed at 30% under the FairTax, there will be 30 percent extra tacked on to every medical procedure and existing Medicare dollars will evaporate rapidly. The alternative No-Tax Plan would provide enough money to raise social security benefits to all time records. It would provide enough money for free healthcare for all Americans.
FairTax FACT: Brings transparency and accountability to tax policy
FairTaxFraud: Only by taxing wealth, not income or consumption, can you have true accountability. All forms of wealth from real estate to stocks and bonds are very well documented and could not slip past the tax man. The FairTax makes every day tax day for the working poor and middle classes. The alternative No-Tax Plan would allow taxes to be collected fairly, without loopholes, without subjectivity, and without error.
FairTax FACT: Reimburses the tax on purchases of basic necessities
FairTaxFraud: The FairTax refunds a tiny pittance ($187) that is supposed to represent the tax a person at the poverty level might spend on necessities and not a cent more. In reality, basic necessities for an average person cost four to five times what the FairTax predicts. It’s a bald-faced lie and a slap in the face to the working poor. The alternative No-Tax Plan promises no tax on income, no tax on consumption, no tax on goods, no tax on services, and no business tax. To take advantage of it you just have to work for your money, or if you are a business, all you have to is set up shop in America and hire American workers to take advantage of all these huge benefits.
FairTax FACT: Enables retirees to keep their entire pension
FairTaxFraud: The FairTax taxes a persons retirement savings twice. If the FairTax were a law today, any money that you had saved (and already paid taxes on) will be taxed again when you buy a new item or service. You will now be taxed 30 percent on all healthcare, and legal services. The alternative No-Tax Plan would provide enough money for free health care and a comfortable retirement without worry. You keep all your pension and savings tax free. You only pay taxes on capital gains.
1. The Home Mortgage tax deduction – no more deduction your mortgage interest – no incentive to buy a house.
FAIRTAXER: TAX DEDUCTIONS ARE FOR INCOME TAXES. WITHOUT INCOME TAXES, DEDUCTIONS BECOME OBSOLETE. “Under the FairTax home purchases are more tax advantaged than they are today. For working Americans, the “true cost” of buying a home goes down. In a nutshell, homes are more affordable because the majority of homes are used and are not taxed, the interest paid on new homes at a lower rate is untaxed, new home prices do not bear taxes imposed upstream, and the saving and investment needed to buy homes is not taxed multiple times.”
2. The Per-Child tax deduction for dependents – no more help for large families.
FAIRTAXER: FAIRTAX PROVIDES YOU WITH $220/MO FOR EACH ADULT AND $74/MO FOR EACH CHILD IN YOUR HOUSEHOLD.
3. The deduction for State and Local taxes – tack on the taxes.
FAIRTAXER: S&L TAXES ARE THERE REGARDLESS. AGAIN, DEDUCTIONS ARE FOR INCOME TAXES. THE FAIRTAX ELIMINATES YOUR FEDERAL INCOME TAXES. IN ADDITION, “On average, states could cut their sales tax rates by more than half, or 3.2 percentage points from 5.4 to 2.2 percent, if they conformed their state sales tax bases to the FairTax base.”
4. The College Tuition tax deduction – sorry kids.
FAIRTAXER: BUT, DIDN’T THEY CLAIM ABOVE THAT THERE WERE NO TAXES ON EDUCATION? AGAIN, NO INCOME TAXES, NO NEED FOR TAX DEDUCTIONS.
5. Roth IRA – will be taxed twice because your money is taxed again when you spend it.
6. Charitable Contributions deductions – no help for the faithful.
7. Child Care Credits – no more help for single moms and poor families with kids.
FAIRTAXER: What do they think the prebate is for? They’ve completely missed the point of that one, haven’t they? First, credits and deductions are only good for INCOME TAXES. Without income taxes, the credits and deductions become obsoleted.
8. Refinancing Points deduction – no more incentive to refinance.
9. Health Insurance Premiums deduction – no more help for the sick.
1. New 30 percent tax on every New House or property you buy.
FAIRTAXER: WRONG! The FairTax is a replacement tax, not an added tax. The actual FairTax percentage (23%) was added only AFTER the 23% of embedded taxes were removed. Look at this from a different angle though: If you buy a USED home, you get it for 23% cheaper because the FairTax and embedded taxes have been removed. Now THAT’S a bonus!!
2. New 30 percent tax on Cars, Boats, Campers, Home Appliances, TV’s
FAIRTAXER: Again, WRONG! See #1 and apply that same logic to #2
3. New 30 percent tax on Food, Clothing, Shelter, Rent, Electricity, Gas, Phone Service
FAIRTAXER: Again, WRONG! See #1 and apply that same logic to #3
4. New 30 percent tax on Medicine, Surgical procedures, Hospital stays, Dental Services
5. New 30 percent tax on Legal Services, Trial Services, Legal Advice, Legal Winnings and losses.
6. Double Taxation on Roth IRA’s or retirement money you took as a lump sum.
7. Your consumption is now directly linked to inflation – prices go up – your taxes go up.
8. Interest on Credit Cards, Loans, and Mortgages now taxed at 30 percent on top of what you owe.
9. You now have to pay the government for permission to live in America by paying taxes on all you consume.
FAIRTAXER: First, that is incorrect. But second, aren’t you doing that right now by getting their permission to work? And on top of that they are stealing a good portion of your income. I’m not going to refute whether we are or are not doing so, but IF – that is a HUGE IF – you were “paying the government for permission to live in America”, you would at least get your entire (federal) paycheck to spend on whatever you want. Under the current system you’re paying them without your consent.