National Retail Sales Tax

• gut

  BGFalcons82;674691 wrote:This is actually the brilliance of the fairtax.org argument. Sales tax is ALREADY collected.

  
  Believe me, there is absolutely nothing brilliant about Fair Tax. You need to pick-up an economics book instead of the schill propaganda Fair Tax.org targets at rednecks. Nothing remotely "brilliant", beyond a consumption tax is more efficient and most economists believe it to be superior to taxes on productivity (while recognizing a single form of taxation is likely neither optimal nor practical).
• gut

  Manhattan Buckeye;674533 wrote:"And I 100% guarantee you will see an increase in cash sales, especially for services, that will be kept off the books."
  
  Most services aren't taxed anyway.

  
  Ding ding ding! But part of the national sales tax argument is that they would have to be. 75-80% of the economy is service based, so think of the lost income tax revenues from those people that a sales tax has to replace and you start to get a feel for the many holes in the Fair Tax argument, it's why a revenue neutral rate is aggressively claimed as 23% inclusive, which is really 30% in the way most people think of a sales tax and when you factor in avoidance/evasion many actual, like good, economists think that rate goes north of 40%.
  
  Again, just one more example of why the IRS only gets bigger, not smaller. It's a fact that evasion and avoidance increases with the tax rates, not matter what form. The idea that you will more than triple existing sales tax (once a 15%+ fed sales tax is added) and you won't have huge evasion/avoidance is simply ignorant. Say I run a 7/11, I have a significantly increased incentive to fudge theft and obsolescence/spoilage to keep sales off my books and cash in my pocket. It's naive to think because sales tax is already collected that the need to monitor doesn't increase substantially, not to mention the plumber who now has to charge a sales tax on his services. All this clearly points to a significant expansion in IRS headcount.
• Footwedge

  gut;675839 wrote:Ding ding ding! But part of the national sales tax argument is that they would have to be. 75-80% of the economy is service based, so think of the lost income tax revenues from those people that a sales tax has to replace and you start to get a feel for the many holes in the Fair Tax argument, it's why a revenue neutral rate is aggressively claimed as 23% inclusive, which is really 30% in the way most people think of a sales tax and when you factor in avoidance/evasion many actual, like good, economists think that rate goes north of 40%.
  
  Again, just one more example of why the IRS only gets bigger, not smaller. It's a fact that evasion and avoidance increases with the tax rates, not matter what form. The idea that you will more than triple existing sales tax (once a 15%+ fed sales tax is added) and you won't have huge evasion/avoidance is simply ignorant. Say I run a 7/11, I have a significantly increased incentive to fudge theft and obsolescence/spoilage to keep sales off my books and cash in my pocket. It's naive to think because sales tax is already collected that the need to monitor doesn't increase substantially, not to mention the plumber who now has to charge a sales tax on his services. All this clearly points to a significant expansion in IRS headcount.

  
  There is no fuckin way that there would be anywhere near the illegal tax evasion with a VAT. Especially with whistle blower laws in force.
• O-Trap

  

  Footwedge;676386 wrote:There is no fuckin way that there would be anywhere near the illegal tax evasion with a VAT. Especially with whistle blower laws in force.

  
  Agreed. Right now, taxes can essentially be done on the "honor system." Sorry. I just don't see a retail sales tax replacement setting up a structure that is nearly as able to be exploited as an income tax.
• gut

  Footwedge;676386 wrote:There is no fuckin way that there would be anywhere near the illegal tax evasion with a VAT. Especially with whistle blower laws in force.

  
  With a VAT, true. However that's not the form of national sales tax people are talking about in this thread, and it brings a host of other structural changes as you are now not talking about POS sales tax but new points of origin. Also, it's been shown that anything much over a 15% VAT becomes sub-optimal. Games can always be played, too - as tax rates get higher, evasion and [legal] avoidance ALWAYS increases, this is a fact. Note also that almost all countries in Europe with a VAT still have an income tax. The income tax is not going away and neither is the IRS. Foolish to believe otherwise. It's not practical given how much the govt spends and how the tax code has been used for both social and economic engineering.
• BGFalcons82

  

  gut;676846 wrote:With a VAT, true. However that's not the form of national sales tax people are talking about in this thread, and it brings a host of other structural changes as you are now not talking about POS sales tax but new points of origin. Also, it's been shown that anything much over a 15% VAT becomes sub-optimal. Games can always be played, too - as tax rates get higher, evasion and [legal] avoidance ALWAYS increases, this is a fact. Note also that almost all countries in Europe with a VAT still have an income tax. The income tax is not going away and neither is the IRS. Foolish to believe otherwise. It's not practical given how much the govt spends and how the tax code has been used for both social and economic engineering.

  
  Well gut....can you tell us grandiose scheme of taxation your prefer? You like what we've got right now? If you do, why?
• gut

  BGFalcons82;676898 wrote:Well gut....can you tell us grandiose scheme of taxation your prefer? You like what we've got right now? If you do, why?

  
  The current system has flaws, but this is because it's neither fair or impartial, it's designed to pull various social and economic levers. If not for that - and I'm not saying it's a bad thing - you could have a very simple flat tax. It is, otherwise, mostly a shell game moving taxes from one bucket to another and from one taxpayer to another. The idea that there's an overly simple of effective singular form of taxation is naive at best. Complex economies are going to have complex systems of taxation. You can start over, probably with disastrous results, but since the underlying motivations behind that complexity aren't going away it's only a matter of time until the new system becomes equally cumbersome.
  
  But tax is a drag on the productivity, again not debateable. I've already said most economists recognize optimal and practical is a mix of different forms of taxes. Consumption based taxes are missing from the US system and might be an alternative to personal income tax, but I still don't believe it can be high enough to effectively replace personal income taxes, maybe leave the FICA and scrap the AGI tax.
• BGFalcons82

  

  So gut, if I can paraphrase your response: You are in overall agreement with the current system, yet it has some flaws that can be fixed with various tweaks and revisions. Nothing too serious, though. You even espouse another new tax, one that doesn't have a high rate, but would just be another way to raise money. You also believe that those that desire a fairer, more easily understood and controlled system are horribly naive. Complex economic systems must, by definition, have complex tax structures, hence no one is able to flaunt or escape any and all forms of taxes. In a nutshell, what we have is OK, just add another type of tax and we'll all be better off...those that desire simplicity are tools.
  
  We are just going to disagree about the current tax system. It is irretrievably flawed, it is not understood by anyone of it's 308,000,000 contributors, and it is already under constant tweaking and revising to the point that only lawyers and accountants have any clue about who/what/why/when/how taxes are completed. For these reasons, it has turned into a disaster and must be tossed on its ear. Pretty soon, only PhD's will be able to interpret and administer the tax code...and isn't that a "Progressive" idea?
  
  By the way, desiring simplicity and an understandable system is not naive. Unless, of course, you like to create monumental contraptions that no one knows how to operate except the contraption-creators.
• O-Trap

  

  BGFalcons82;677125 wrote:... except the contraption-creators.

  
  I think you're giving many of the creators too much credit.
  
  I'm now off to find all the loopholes and ways to legally evade paying any taxes this year ... because the current system lets me, and there is nothing and nobody to keep me from doing so. Plus, I'm just one of millions who do so every year, so it's not like my little contribution would make a difference, anyway.
  
  (The previous comment was written entirely as sarcasm, and is not to be taken literally.)
• gut

  BGFalcons82;677125 wrote:So gut, if I can paraphrase your response: You are in overall agreement with the current system, yet it has some flaws that can be fixed with various tweaks and revisions

  Mainly. I'm practical and a realist. I understand economics. There's a limit to what can be fixed, a reality most seem to be grossly out of touch with.
  

  BGFalcons82;677125 wrote:nYou even espouse another new tax, one that doesn't have a high rate, but would just be another way to raise money.

  Higher taxes are part of the solution, like it or not. A consumption tax is generally considered to be the most efficient form of taxation, it's also "fair" while being inherently progressive. Somewhere I already stated I oppose such a new tax until the govt shows some degree of fiscal responsibility. I also stated such a consumption tax should be met by cuts in income taxes. Perhaps in a perfect world you could replace personal income taxes with a sales tax, but we don't live in a perfect world.
  

  BGFalcons82;677125 wrote:You also believe that those that desire a fairer, more easily understood and controlled system are horribly naive.

  Pretty much. The code can be cleaned-up and simplified, but those thinking a singular tax is either optimal or practical don't understand the underlying factors that have created this mess to begin with.
  

  BGFalcons82;677125 wrote:Complex economic systems must, by definition, have complex tax structures, hence no one is able to flaunt or escape any and all forms of taxes. In a nutshell, what we have is OK, just add another type of tax and we'll all be better off...those that desire simplicity are tools.

  
  Again, our entire financial system is built around the tax code (or more accurately I'd say the tax code has evolved to keep pace with an evolving finance/business world). I've never said what we have is "ok", but it's far more necessary than people realize. To quote Einstein, it should be "as simple as can be, but not too simple". A simple tax code in a complicated business world is never going to exist, especially when you add social and other cultural goals as a foundation, which drives most of the complexity. It's not like people sit around in a room asking "how can we make things unnecessarily more complicated". I don't know how it isn't obvious that what's created this mess is using the tax code for corporate and individual welfare. If you ask me can the system be simpler, my answer will be "not until you stop using the tax code for socialism". Tax however you want, it's nothing more than a socialistic shell game.
  

  BGFalcons82;677125 wrote:By the way, desiring simplicity and an understandable system is not naive.

  It is if you don't understand why things are the way they are. Most people's concept of simplicity in regards to the tax system is grossly naive and uneducated. Take a look at commercial law. Heck, take a look at safety laws and standards. A complex business world is going to have complex rules. You can't go back to the stone age with regard to rules and not expect business (or the consumer) to suffer as a result.
  
  I mean, simple question: You understand why we don't have a flat income tax, correct?
• Cleveland Buck

  

  I agree that a national sales tax will never replace the income tax because of how the federal government uses the tax code to manipulate the economy and their own social agenda. Of course, federal manipulation of markets is really the base problem for all of our problems today, so they really should replace the income tax with a sales tax, even though they never will.
• Footwedge

  gut;676846 wrote:With a VAT, true. However that's not the form of national sales tax people are talking about in this thread, and it brings a host of other structural changes as you are now not talking about POS sales tax but new points of origin. Also, it's been shown that anything much over a 15% VAT becomes sub-optimal. Games can always be played, too - as tax rates get higher, evasion and [legal] avoidance ALWAYS increases, this is a fact. Note also that almost all countries in Europe with a VAT still have an income tax. The income tax is not going away and neither is the IRS. Foolish to believe otherwise. It's not practical given how much the govt spends and how the tax code has been used for both social and economic engineering.

  The part of your quote that I have bold printed is the contention of my argument. Whereby your statement is true regarding income tax as we presently know it.......however, if the means of collecting income tax is switched to a consumptive tax, then your statement is patently false. That is one of the major pros....along with others....that would make consumption income tax much more effective. To suggest that people would "cheat" on their taxes....doesn't hold water if a national sales tax were implemented.
• O-Trap

  

  Footwedge;678001 wrote:The part of your quote that I have bold printed is the contention of my argument. Whereby your statement is true regarding income tax as we presently know it.......however, if the means of collecting income tax is switched to a consumptive tax, then your statement is patently false. That is one of the major pros....along with others....that would make consumption income tax much more effective. To suggest that people would "cheat" on their taxes....doesn't hold water if a national sales tax were implemented.

  
  Eh, it would still happen. There would still be under-the-table purchases that are off the books. Technically, both parties DO win in that scenario. Buyer doesn't pay taxes, and the seller has a strong selling point. However, there are also downsides. Sellers will have to worry about sting operations (not just by authorities ... but by citizens willing to turn them in for a quick buck). Buyers will have no buyer protection, and will run a higher risk of not getting what they paid for. Thus, it will still make more sense for people to buy from legitimate businesses.
  
  However, the income tax system we currently have is even easier to cheat on. It involves one person (you), thereby removing all accountability and threat of being exposed by a mole. I can screw Uncle Sam out of thousands by reporting false donations (of small enough amounts, which won't require any proof) and unfounded business expenses. On the off chance I get audited, the Federal government will still have to scour piles and piles of receipts ... something they won't do for free, and good luck finding that one receipt for an XBox 360 that I wrote off among the other 2,500 receipts that are legitimate.
  
  Yay!
• BoatShoes

  Personally I share many views with Gut on this issue and am glad he's taken up the battle in this thread as conservatives might be more likely to listen to him than me as he is generally a conservative poster whereas I am a dirty liberal commie pinko, etc and people might say I have a vested interest in keeping the tax code complex as it makes my services more valuable.
  
  As far as our current tax code being "too complex" this is because it is riddled with tax expenditures making the code inconsistent in regards to tax neutrality or tax fairness norms. I'm being facetious but to me it's because you won't find a democrat that's found a social program he doesn't like and you won't find a republican who won't find a tax cut he doesn't like.
  
  But, as it were, most of my clients would gladly sacrifice simplicity for complexity if it means lower taxes.
• O-Trap

  

  BoatShoes;678432 wrote:Personally I share many views with Gut on this issue and am glad he's taken up the battle in this thread as conservatives might be more likely to listen to him than me as he is generally a conservative poster whereas I am a dirty liberal commie pinko, etc and people might say I have a vested interest in keeping the tax code complex as it makes my services more valuable.
  
  As far as our current tax code being "too complex" this is because it is riddled with tax expenditures making the code inconsistent in regards to tax neutrality or tax fairness norms. I'm being facetious but to me it's because you won't find a democrat that's found a social program he doesn't like and you won't find a republican who won't find a tax cut he doesn't like.
  
  But, as it were, most of my clients would gladly sacrifice simplicity for complexity if it means lower taxes.

  
  See, the problem with complexity is that, at some point, you can no longer know if your taxes are truly lower (unless, again, you're cheating).
  
  I've been called a liberal bleeding heart and/or conservative fascist (or the equivalent in either case) plenty of times between this site and TOS, but I will always have a beef with laws that the public at large cannot understand, but are still expected to be subjected to. I find it ESPECIALLY alarming when no person can understand the tax structure, regardless of occupation or level of experience.
• Footwedge

  O-Trap;678050 wrote:Eh, it would still happen. There would still be under-the-table purchases that are off the books. Technically, both parties DO win in that scenario. Buyer doesn't pay taxes, and the seller has a strong selling point. However, there are also downsides. Sellers will have to worry about sting operations (not just by authorities ... but by citizens willing to turn them in for a quick buck). Buyers will have no buyer protection, and will run a higher risk of not getting what they paid for. Thus, it will still make more sense for people to buy from legitimate businesses.
  
  However, the income tax system we currently have is even easier to cheat on. It involves one person (you), thereby removing all accountability and threat of being exposed by a mole. I can screw Uncle Sam out of thousands by reporting false donations (of small enough amounts, which won't require any proof) and unfounded business expenses. On the off chance I get audited, the Federal government will still have to scour piles and piles of receipts ... something they won't do for free, and good luck finding that one receipt for an XBox 360 that I wrote off among the other 2,500 receipts that are legitimate.
  
  Yay!

  Not saying it would never happen. But the ratio of happening under this scenario would be 100 to 1 less...if not 1000 to 1 less. Do you think any retail store would pull crap? Moreover, in the day of high technology, it could be mandated that every business be required to register sales in a bullet proof format. Throw in the expansion of whistle blower laws...and.....the tax cheat tab that hurts the revenue side of our national debtl would be decreased by billions.
• gut

  Footwedge;678001 wrote:The part of your quote that I have bold printed is the contention of my argument. Whereby your statement is true regarding income tax as we presently know it.......however, if the means of collecting income tax is switched to a consumptive tax, then your statement is patently false.

  It is? Show me research proving it. You're looking at it wrong - the issue of evasion and avoidance comes with the businesses collecting and remitting it. However, people will switch consumption to comparatively cheaper used goods, and you will see black markets develop and an increase in bartering (mainly services). It's pretty much an an economic axiom that when taxes increase, so does avoidance and evasion. While some forms of tax will see less evasion and avoidance than others, it is indisputable fact that it increases when taxes increase. Note in the article below how offshore/foreign subs are used to avoid VAT. Business and Wall Street will adapt, they always do. No matter how you tax, the more you tax the more people and corporations will seek out ways, legal and otherwise, to avoid it. This is not remotely debateable.
  
  http://www.taxresearch.org.uk/Blog/2011/01/03/vat-increases-and-a-whole-new-host-of-problems-will-result/
  
  I will agree a VAT could reduce the IRS because, in theory, you are reducing the number of entities to track and monitor, and with VAT you can piggyback off existing securities laws that make it less likely to cook the books. However, where services are involved you have a large potential for abuse, and you will need the IRS to monitor and audit those transactions. When you start talking sales tax and the many different points of transaction, you're not gaining nearly as much of an efficiency in terms of monitoring and enforcement. And keep in mind, only 1% of personal returns are audited to begin with, so I'm not sure where this idea of a ginormously bloated IRS comes from. Not to mention, the general point I keep making is what starts out as a simple VAT quickly becomes complicated with all sorts of offsets and deductions (read: not that different from corporate income tax now, which is where the IRS spends 99% of its resources).
  
  All the major OECD countries that have gone to VAT still have income taxes. Most VATs hover somewhere between 15-19% and it appears efficiency and effectiveness much beyond that is very challenged. 15-19% will not raise enough revenues for the govt. Personal income taxes (not corporate) can perhaps be eliminated, but the IRS going away is a pipe dream. If no one comes to check your books, if there is no threat of penalty from failing to remit all sales tax receipts, you think people are going to pay everything voluntarily? Ridiculous, cheating and evasion would be rampant, especailly among small businesses.
• gut

  BoatShoes;678432 wrote: As far as our current tax code being "too complex" this is because it is riddled with tax expenditures making the code inconsistent in regards to tax neutrality or tax fairness norms.

  
  This is what people don't get. Income tax could be a very simple system, it's not inherently complicated. The tax code is complicated because of decades of social and economic engineering, a tax break here for children, a tax break there for college expenses, a tax break to help this fledgling company/industry get off the ground. Until that cultural mindset changes (and I don't see it changing, probably ever), no matter how you collect taxes it's going to become complicated and messy.
  
  Just look at the Fair Tax plan with prebates for people below a certain income - Who determines the cut-off? Who decides how much? Who determines your eligibility? Who cuts the check? Who makes sure you're not just gaming the system, and who penalizes you if you don? IRS going away? Ha, that's funny.
• BGFalcons82

  

  gut;678603 wrote:Just look at the Fair Tax plan with prebates for people below a certain income - Who determines the cut-off? Who decides how much? Who determines your eligibility? Who cuts the check? Who makes sure you're not just gaming the system, and who penalizes you if you don? IRS going away? Ha, that's funny.

  
  Regarding the bolded portion above, I wish you would just look at it. Clearly, you haven't, because if you had, your questions would have been answered. Which makes me wonder...why you are so against it, when you don't know much about it? I'm not going to recite the answers here because that won't help you learn. You should go to their website and look 'em up yourself - www.fairtax.org. Try the FAQ section...you'll find knowledge.
• BoatShoes

  BGFalcons82;679080 wrote:Regarding the bolded portion above, I wish you would just look at it. Clearly, you haven't, because if you had, your questions would have been answered. Which makes me wonder...why you are so against it, when you don't know much about it? I'm not going to recite the answers here because that won't help you learn. You should go to their website and look 'em up yourself - www.fairtax.org. Try the FAQ section...you'll find knowledge.

  
  Gut clearly has an understanding of the topic evidenced by his statements regarding tax inclusive vs. tax exclusive rates hence why 23% really is equal to 30% and other statements. But anyway, you're linking to the fairtax website which is why I started this thread. I linked the tax policy center's briefing book which Manhattan Buckeye accurately points out is slim on citations but it does cite more intensive literature that is available.
  
  For example:
  
  Paull, Lindy L., "Budget Neutral Tax Rate for H.R. 2525," reprinted in Martin A. Sullivan, "The Rise and Fall of the National Sales Tax," Tax Notes 105, no. 8 (2004): 916-21.
  
  Gale, William G., "The National Retail Sales Tax; What Would the Rate Have to Be?" Tax Notes 107, no. 7 (2005): 889-991. Can be read online at: http://http://www.taxpolicycenter.org/publications/url.cfm?ID=1000785
  
  Gale, William G., and Janet Holtzblatt, "The Role of Administrative Issues in Tax Reform: Simplicity, Compliance, and Administration," in United States Tax Reform in the 21st Century, edited by George Zodrow and Peter Mieszkowski (Cambridge, U.K: Cambridge University Press, 2000). Can be read online at: http://http://www.brookings.edu/papers/2000/12taxes_gale02.aspx
  
  Feenberg, Daniel R., Andrew W. Mitrusi, and James M. Poterba, "Distributional Effects of Adopting a National Retail Sales Tax," in Tax Policy and the Economy, vol. 11 (Cambridge, Mass.: MIT Press, 1997).
  
  
  Much more knowledge will be found reading the literature available at those links than www.fairtax.org. IMO.
• BGFalcons82

  

  Boat - I'm sure he is learned on the subject...from other's perspectives. By asking questions that can easily be answered, he hasn't looked at the proposal from the creators of the idea. That's my point.
  
  I have some questions about it as well. Like:
  
  1. Who gets to set the rate and how often is it "tweaked"? Can there be an ultimate cap set?
  2. Who gets to determine "fairness"?
  3. How does this tax relieve the Congress from outrageous spending sprees? In other words, what are the checks and balances?
  
  No system is completely and 100% fair. No system of taxation can be. There are flaws with any system we devise. If we wait until the perfect solution is in front of us, we'll all be dead from waiting. The fairtax does some wonderful things - it's progressive, it collects tax money from those currently skirting the system (foreigners, illegal aliens, drug lords/distributers), it's easy to enact as the Sales Tax system is already in place, it abolishes the IRS and all of its government-tit clingers, and the evil scum rich can't get around it anymore. While I also have concerns as listed above, the fairtax has far more advantages than the overgrown, bloated, wasteful, corrupt, incomprehensible income tax system we currently employ.
  
  Why do we want to have a complex system of taxation that can't be understood by the average American? Why not make is simple and get gubmint out of controlling our lives? Nevermind....I know the answer.
• Footwedge

  gut;678594 wrote:It is? Show me research proving it. You're looking at it wrong - the issue of evasion and avoidance comes with the businesses collecting and remitting it. However, people will switch consumption to comparatively cheaper used goods, and you will see black markets develop and an increase in bartering (mainly services). It's pretty much an an economic axiom that when taxes increase, so does avoidance and evasion.

  How can I show research on something that has never been put into practice (Across the board national sales tax)?? Similarly, you cannot disprove my assertion either....for the exact same reason.
  
  Your take is that a consumptive tax would offer no benefit over the present day system as it relates to collecting tax. I strongly disagree....and it's not even close.
• Footwedge

  Link doesn't work.
  

  BoatShoes;679292 wrote:Gut clearly has an understanding of the topic evidenced by his statements regarding tax inclusive vs. tax exclusive rates hence why 23% really is equal to 30% and other statements. But anyway, you're linking to the fairtax website which is why I started this thread. I linked the tax policy center's briefing book which Manhattan Buckeye accurately points out is slim on citations but it does cite more intensive literature that is available.
  
  For example:
  
  Paull, Lindy L., "Budget Neutral Tax Rate for H.R. 2525," reprinted in Martin A. Sullivan, "The Rise and Fall of the National Sales Tax," Tax Notes 105, no. 8 (2004): 916-21.
  
  Gale, William G., "The National Retail Sales Tax; What Would the Rate Have to Be?" Tax Notes 107, no. 7 (2005): 889-991. Can be read online at: http://http://www.taxpolicycenter.org/publications/url.cfm?ID=1000785
  
  Gale, William G., and Janet Holtzblatt, "The Role of Administrative Issues in Tax Reform: Simplicity, Compliance, and Administration," in United States Tax Reform in the 21st Century, edited by George Zodrow and Peter Mieszkowski (Cambridge, U.K: Cambridge University Press, 2000). Can be read online at: http://http://www.brookings.edu/papers/2000/12taxes_gale02.aspx
  
  Feenberg, Daniel R., Andrew W. Mitrusi, and James M. Poterba, "Distributional Effects of Adopting a National Retail Sales Tax," in Tax Policy and the Economy, vol. 11 (Cambridge, Mass.: MIT Press, 1997).
  
  
  Much more knowledge will be found reading the literature available at those links than www.fairtax.org. IMO.

• gut

  BGFalcons82;679080 wrote:Regarding the bolded portion above, I wish you would just look at it. Clearly, you haven't, because if you had, your questions would have been answered. Which makes me wonder...why you are so against it, when you don't know much about it? I'm not going to recite the answers here because that won't help you learn. You should go to their website and look 'em up yourself - www.fairtax.org. Try the FAQ section...you'll find knowledge.

  I have looked at it, extensively, and it's complete crap. It's a bill of goods sold to ignorant rednecks who don't know any better. Many of their "explanations" and "justifications" are inaccurate at best, if not outright deceptive. Few, if any, noteable economists will even give it the time of day because a revenue neutral 23% is a complete non-starter. The ones I have seen comment say the real revenue neutral rate is 40%+. The first book was so riddled with errors, half-truths and inaccuracies they had to print a revised edition. FairTax.org, in a nutshell, claims one potential outcome as 100% rosy, no matter how small the real probability of such, and completely ignoring less positive and, in many cases, negative outcomes.
  
  I've actually debated for pages and pages on this before on another board, and it might be the one time I've actually seen opinions change on a message board. Fair Tax is a complete joke. It's all "grass roots" support, which is code for "favored by people who don't know better". Most of the economists who do support it line up in one of two camps: a solution to the pending SS/Medicare crisis (by effectively taxing savings a second time) or simply a political view in favor of increased transparency or displeasure with the complexity of the tax code. Their support is more a vote for change than anything to do with the plan being a good one.
• gut

  BGFalcons82;679403 wrote:Boat - I'm sure he is learned on the subject...from other's perspectives. By asking questions that can easily be answered, he hasn't looked at the proposal from the creators of the idea. That's my point.
  
  I have some questions about it as well. Like:
  
  1. Who gets to set the rate and how often is it "tweaked"? Can there be an ultimate cap set?
  2. Who gets to determine "fairness"?
  3. How does this tax relieve the Congress from outrageous spending sprees? In other words, what are the checks and balances?
  
  No system is completely and 100% fair. No system of taxation can be. There are flaws with any system we devise. If we wait until the perfect solution is in front of us, we'll all be dead from waiting. The fairtax does some wonderful things - it's progressive, it collects tax money from those currently skirting the system (foreigners, illegal aliens, drug lords/distributers), it's easy to enact as the Sales Tax system is already in place, it abolishes the IRS and all of its government-tit clingers, and the evil scum rich can't get around it anymore. While I also have concerns as listed above, the fairtax has far more advantages than the overgrown, bloated, wasteful, corrupt, incomprehensible income tax system we currently employ.
  
  Why do we want to have a complex system of taxation that can't be understood by the average American? Why not make is simple and get gubmint out of controlling our lives? Nevermind....I know the answer.

  
  I know FairTax claims the IRS could be eliminated, but the IRS would morph into some sort of sales tax watchdog/collection agency. I know what FairTax claims, and they make many very dubious if not outright deceptive claims. You're naive to believe the IRS in some shape or form would be eliminated, which makes such a claim from FairTax complete bullshit, at best. Look no further than the SEC, which despite all the watchdog investors and capital markets we STILL need corporate watchdogs.