Comments on: Fair tax?

By: Tom Kropewnicki

Tom Kropewnicki — Tue, 15 Jan 2008 17:46:55 +0000

Prior to getting on board with the FairTax 6 years ago I did my own research, just as I’ve done with the current system over the past 20 years.

I read the FairTax bill, all 133 pages of it. Yes, far shorter than the current 60,000 + pages of the current code. Since I do my own taxes I “ve made a comparison each year. My wife and I are, by anyone’ s definition, middle class. The result of my comparisons is a net gain of about $15,000 per year in spendable income. When taking our overall spending into consideration with the FairTax in place, I assure you, had the FairTax been in place for the last 30 or 40 years we would have risen from the middle class long ago. We may even have reached the same financial status as some of the country’s drug dealers.

The number one reason the FairTax may never become law, A TOTAL LACK OF SELF INDUCED KNOWLEDGE ABOUT IT BY THE GENERAL PUBLIC . The number two reason, THE APATHIC ATTITUDE OF THE GENERAL PUBLIC. It is up to We The People . For those among us who have avested interest in the current sytem, since your above average intelligence, why not go into the investment field and embrace the FairTax.

A closing word about the FairTax Prebate . It is much fairer than the current welfare benefit so called the” earned income credit.”

By: eerac

eerac — Tue, 15 Jan 2008 04:06:45 +0000

I’ll concede that the “logistical challenge” is not my main objection. I would be more worried of that aspect of the tax if rebates were tied to income level, or spending, but clearly that’s something the FairTax is trying hard to avoid.

I’ll also agree that encouraging people to save is a selling point of any consumption tax, but even so, many people will fail to do so. I remain concerned that the FairTax will widen the gap between the rich and poor, much like today’s low capital gain’s tax. It’d definitely be interesting to look at how various income levels accumulate wealth over time under both systems. I’ll try to do this for a follow up post.

Finally, I was aware that the “Super Wealthy” person’s investments could continue to accumulate. In some sense, this would be “a boon to the rest of the economy”, but that argument also sounds like trickle-down economics. I’m curious to see what other’s have to say.

By: Dennis

Dennis — Tue, 15 Jan 2008 01:23:46 +0000

Ok, here’s a couple of points to ponder. The Fair Tax “pre-bate” will not be much more of a “logistical challenge” than distributing the current Social Security checks that go out monthly to millions of people. This a a great article and I can tell that you would give reasonable consideration to the Fair Tax rather than some of the typical, Un-intelligent banter that typically comes out of skeptic opponents. So, I hope that you WILL consider looking further into the details of the plan. There are FULLY drawn out Calculations on the progressivity of the Fair Tax and how it effects different levels of income, etc. These calculations aren’t simply a couple of guys pounding out numbers on a calculator, they were well renown economists from across the country who helped develop the Fair Tax plan.
Even aside from all that you might learn additionally through further research I found it interesting that you didn’t follow even your own theory through on what would happen with the Savings or Extra income from the “Super Wealthy”. So, if they are not able to spend the money as fast as they make it….what happens? Their Savings account balance and …(Key) Investments ..INCREASE. So even if they are not being taxed on the Multi-Millions of dollars they’ve managed to save, those sizeable bank accounts and investment funds, etc. sure will be a Boon to the rest of the Economy! Also, to follow your point, but to disagree slightly….a Very Frugal person earning $50,000 yr. or so, living on $30,000, and saving and investing the rest …TAX FREE, absolutely WILL be FAR better off under the Fair Tax, and may in fact end up a Multi-Millionaire …without having to win the Lottery.

By: eerac

eerac — Mon, 14 Jan 2008 22:08:38 +0000

That is a very reasonable point, but under today’s system the person in question would have already paid taxes on the millions they initially invest. How much they’ve already paid is another question. I am certainly not happy with today’s 15% capital gains rate, but changing that hardly requires the FairTax.

By: DavidFL10

DavidFL10 — Mon, 14 Jan 2008 21:44:22 +0000

It is funny that you say “If you live modestly (spending say, a few hundred thousand dollars a year), your investment will continue to grow tax free. ”

You should realize that if a person spends $200K a year under that FairTax he will pay almost the full 23% or $46,000 in taxes. Under today’s system, if he is smart, he has his millions invested either in tax-free municipal bonds where he pays no tax at all, or an investment account where he is currently taxed at only 15% capital gains rate.

Also under the FairTax, the term “used” means that the tax has already been paid on it. Therefore, even if a sewing machine is used by a business for a decade, if it transfers to private ownership it is considered new (not yet taxed), the tax due is 30% of the fair market value .

I can’t wait to see what Ezra comes up with after he studies it some.

DavidFlorida@gravel2008.us