Rejecting FairTax Part One: Why Not Tax Consumption?

By | November 29, 2011

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0 thoughts on “Rejecting FairTax Part One: Why Not Tax Consumption?

  1. Robert Williams

    My rebuttal, Part 1:

    Alex claims: // “In a “pure”, or “flat”, consumption tax system, all transactions are taxed. Stated another way, every bill you recieve- your phone bill, your car insurance bill, your cable bill, your garbage removal bill, etc.- would include a consumption tax. Your grocery, fuel, medication, and clothing purchases would include a consumption tax. When you make a major purchase- such as a home or a car- the purchase price would include a consumption tax. If your washing machine or central air conditioning breaks down, the cost of parts and the bill for labor from the appliance repair service would include a consumption tax. If you hire a home health aide, consult an attorney, or visit a doctor, the bill for their services would include a consumption tax. If you own a business, all of the purchases made for your business- “business expenses”- would be subject to consumption tax. Making a deposit at the bank would include consumption tax, since the banking institution is offering a service by accepting your money.”//

    At this point, it seems Alex has conveniently forgotten to mention that along with all of those services and goods purchased, no business will EVER have to pay their share (7.65%) of each employee’s FICA taxes; and if the business happens to be someone who is self-employed (such as a Doctor, Attorney, lawn-care, maintenance, etc) then they will NEVER have to pay the full 15.3% for their SECA taxes on top of the 7.65% of any employees they may also have.

    Alex, has also intentionally omitted another small fact that all Business to Business taxes under the FairTax are eliminated. So those “business expenses” are now tax-free. But under the income tax system they would remain taxed. And, of course, he would never tell you that, you have just received your share of FICA taxes and you’re no longer loaning the Federal Government anywhere from 10% to 35% of each paycheck. So now that you have all that money back in your pocket and businesses have less overhead, you actually have more spending power.

    But don’t listen to me, or to Alex. Go learn for yourself how you would fair under the FairTax at

    You can expect to read more from me soon…

    1. Alex Kauffman Post author

      Robert, to address your points:

      1) Instead of 7.65% payroll tax, wages and salaries will now be taxed at the FairTax rate (see Part Two);

      2) Business expenses will not be tax-free- only those items which are resold. if the business is the “final consumer”, the business must pay the tax. To use an analogy: A pizza shop will not have to pay tax on pizza sauce or dough, but will have to pay tax on a delivery vehicle, oven, or other such major purchases.

      1. Cary Henderson

        Alex, in regards to your reply to Robert, points 1) and 2), wrong and wrong. There is no time that the FairTax taxes wages or salaries except in the case of government providing goods or services that would be normally provided through the private sector, thus the term taxable employee. Business expences, none of the cost of doing business is taxed under the FairTax, period! If a business buys a delivery truck, it is not taxed, likewise an oven, nor is the building that the business uses. Business is untaxed, so is investment, so is education.

  2. Mark Curran

    Sorry, but Fairtax is a goofy hustle. Read the fine print. Over 3/4 of Fairtax has nothing to do with retail sales.

    When you realize that, let me know.