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The FairTax Series: America's Road To Prosperity, Part 1

This is the first of a 5 part series I am writing based on the book “The FAIRTAX: The Truth”. In the series I take a 300+ page book and condense it down to a virtual “cliff notes” version designed for the novice political reader. I designed the series for those who are not very knowledgeable about politics or the tax structure and how it affects all Americans. I encourage eveyone reading the series to buy the book and get the full effect of the policies in place today and see how the FAIRTAX will change the dynamics of government financing.

A couple of years ago I began hearing about a new concept in taxation. This new concept is called The FairTax. I didn’t pay much attention because I thought “how is any tax fair?”, when some pay and  some don’t. At first I dismissed it as another scam to throw me off the track of an out of control government looking for another way to hoodwink me into paying more of my hard earned money into their grand spending plans.

I have long since grown tired of paying so much of my money into ever growing but useless government programs that pay people to sit on their butts and spend my money. Welfare expenses keep going up as more and more people find ways to game the system by having babies, faking injuries, working for cash under the table, etc. The ultra-rich hide their money in “foundations” or overseas to avoid the taxes I have been paying for 45 years. All of them, rich and poor are getting over on the other working stiffs who are too stupid, too honest, or unwilling, to do these things. These money pits keep growing as the amount of available income to tax drops.

One of my pet peeves with income tax is those who don’t pay any. While I was paying 32% in my working years the local drug dealer was paying nothing. The local prostitutes who hang out on street corners in the bigger cities or work out of high priced hotels were paying nothing. The welfare cheats who sit around finding ways to game the system for their own benefit have no intention of doing anything to benefit society, or themselves for that matter. The illegal aliens who were working for cash were paying nothing. I had noticed the illegal aliens especially. They were everywhere and driving much nicer vehicles than I was, or am now driving (I don’t hang out where the hookers hang out). I was paying a 25% income tax, a 7.5% social security/Medicare tax, plus state taxes, and being told the government couldn’t afford for me to retire while those not paying taxes lived the good life. I struggled, they flourished. That is when The FairTax began to make sense to me.

I heard Neal Boortz one day talking about this new plan on his radio show. I listened with interest and thought it sounded good but never really did any more to learn about The FairTax. In the last election cycle, the 2010 mid-terms, I kept bumping into Carol Chouinard and she kept handing me literature about The Fair Tax. I took the information and looked it over without really spending a lot of time educating myself on this new concept. Interesting but, ehhhh!!!!

One day I was going through a stack of papers that had accumulated over a few months, actually several months, and found the literature Carol had given me. As I read through the brochures and leaflets I began to realize that this was not the run of the mill scam to get more of my money. This was an idea that made sense to me once I really looked at it.

Carol is the local guru on The FairTax. She lives in Rogers County, 2nd Congressional District, State of Oklahoma. She travels throughout Eastern Oklahoma, or anywhere else for that matter, presenting The FairTax to any group or person who will give her a chance to enlighten them. I ran into her again the other night and we got to talking about political issues and The FairTax came up. Well, I was complaining about the current debt ceiling debacle and how to deal with it. Carol began to explain some more about how The FairTax was the answer to much of the problem.

As I listened to her a light bulb came on in my head, and the squirrel began to spin the cylinder. The things I had read came back to me and began to make sense. I began to remember about the way our tax system keeps hard working honest people in bondage while those who don’t mind cheating skate by without paying anything, only taking from those of us who do things the right way. Carol gave me a book about The FairTax. It is the second book called FairTax: The Truth. The first book, The FairTax, came out in 2005. This book was published in 2008 so is 3 years old as I start this article. Much of the information I will include in future articles about The FairTax will come from updates from the FairTax web site as I want to give you the most up-to-date information and statistics available.

One solution I see to our fiscal problems in this plan is the title, The FairTax. From everything I have read and the research I am doing, this plan solves many of the financial problems we face as a nation, the issue of money paid in taxes. I find that this plan is aptly named. I often hear Democrat and sometimes Republican politicians, especially those in Washington, cry about how “the rich” get over by not paying enough taxes. Yeah, like the politicians pay “their fair share”. Remember the hullaballoo a few months ago about Senator John Kerry, the one who parked his multi-million dollar yacht, $7 million yacht to be exact, on the far side of the bay because the state taxes on that yacht were cheaper there than on his side of the inlet? $500,000 per year cheaper to be exact. So much for Washington’s multi-millionaire insiders being concerned about paying their fair share of taxes. Hmm, I wonder where I am going to park my $7 million yacht. Oh, never mind, I don’t have one.

I also hear many “poor” people make the same statements, “the rich need to pay more taxes”. The problem with the “poor” complainers is that most of the ones I know don’t pay any taxes at all either. Most of the “the rich need to pay more taxes” crowd, at least the ones I know personally, are on the dole. They are drawing welfare, food stamps, social security disability, state aid, etc. Many of them either don’t work at all or work part time. They pay nothing and spend much of their time complaining that they don’t “get enough help from the government”. They have cell phones for themselves and their children, several have big flat screen HD televisions, complete with the latest game consoles, cable TV service, cigarettes, and are usually well stocked with beer in the fridge. Actually, I need the “rich” people to continue to be “rich”. They are the ones who will hire me, hopefully, so I can make a little money. Poor people never seem to hire me for anything.

In the spirit of “transparency”, my wife and I both have cell phones, we have cable TV service, and one 37 inch flat screen HD television set. Before you say “AHAH!!!” let me offer a caveat to this. We don’t get any help from the government and are not exactly in the “rich folks” category. I am retired but not old enough to draw social security, my wife works a full time job, and we have a small Mom & Pop business that gives me a little work and usually provides us very little in the way of profit. As a matter of fact, if the business doesn’t make a profit in 2011 we are going to have to shut it down. I work part time for a friend when he needs help on a project but the rest of the time I spend working on and around the house. We have a 1976 Chevy pickup that my father-in-law gave to us when he became unable to drive. We have a 1995 Ford Escort that my mother-in-law gave to us when she became unable to drive. We also have a 2004 Dodge PT Cruiser with over 100,000 miles on it (it was a demonstrator model). We don’t owe any money on our cars, and live in a 101 year old house with a $60,000 mortgage. Not exactly Beverly Hills here, closer to Green Acres, but we don’t get any government assistance either.

To get back to the point of this article, our nation cannot keep going the way it is financially. We cannot continue to borrow and spend, drive businesses out of the country, and raise taxes on the “rich”, those making $250,000 per year or so, the small to medium businessman/family who provide the bulk of the jobs in this nation. We have to do something to bring the jobs back to the United States. We need to make it feasible for those who hide their money to use that money to provide jobs so those who desire to work but can’t find a decent job can get back to work. Giving people unlimited unemployment pay is not the answer to prosperity, it is a handout not a hand up. Many of those drawing that unemployment would work if they could find a job. Some of them are lazy bums that are looking for a handout but most, and I do mean MOST, are honest hard working people who just want to provide for their families.

The FairTax is a method to accomplish this task of financial recovery and prosperity. In the next installment of this series I intend to delve into how our current tax structure is designed to inhibit rather than enhance prosperity. I will cover the costs of enforcing and complying with the current tax code and how it affects every person in America, tax payer and non-taxpayer. The FairTax books are a treasure trove of information about how our financial system works, or doesn’t work, and what We the People can do if we will stand up and demand that the politicians change the way they do things. Other installments will cover more aspects of The FairTax plan and how we go about getting it implemented by politicians that are more concerned about themselves than We the People. Elections are only 11 months away, so let’s get to work changing our future. God Bless America!

I submit this in the name of the Most Holy Trinity, in faith, with the responsibility given to me by Almighty God to honor His work and not let it die from neglect.

Bob Russell
Claremore, Oklahoma
November 25, 2011

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  1. Hank Van Gieson says:

    Robert,

    O.K., good post. And I tend to agree with you that we need to consider the whole picture before offering our support for the Fairtax. But in the meanwhile, don’t you agree that HR25 could be improved on? That legislation has been introduced six or seven times without any substantial change. Here are my suggestions for making it less objectionable.

    (1) The Fairtax proposes to force all retirees to resume paying for their SS benefits with their sales tax dollars. 8% of the 23% goes to the Trust Funds. Retirees have paid in to the Trust Funds for 45 years or so, and counted on getting those benefits without making any more premium payments. Wouldn’t it be more fair to simply go to a two tier tax system–15% for retirees and 23% for everyone else. Easily administered and much fairer!

    (2) The “cold turkey”, overnight implementation of the Fairtax is a very risky plan. No other country has ever successfully used such a broad based national sales tax to fund the central government. Six countries have tried and all failed. Why not introduce the Fairtax over a period of five years or so. That way, the risk of trashing our whole economy is reduced.

    (3) Due to the prebate, millions of workers may pay no net federal tax, yet all would receive their SS retirement benefits. That isn’t the kind of “nanny state” I would want to be part of. I would strongly urge that the payroll taxes remain in place so that at least everyone is paying for their retirement benefits.

    (4) As I have discussed, taxing governments is not only unconstitutional but unnecessary. The reason used by AFFT for proposing federal taxation of State and Local government consumption was to head off any government competition with the private sector. But HR25 already addresses that issue in Section 704. That section says that any government agency that sells goods or services on the private market of $2500 or more per quarter would be classified as a government enterprise, and would have to collect and remit the sales tax. The playing field was already level!

    (5) Provided that the Fairtax is introduced over a five year period, then the inventory tax credit should be eliminated. This will save approximately $350 billion in the federal budget.

    (6) The Family Consumption Allowance (FCA) will cost $600 billion annually, and will be scored by CBO as an entitlement. One thing we don’t need is more entitlement spending in the federal budget. Where is it written that no one should pay tax on spending on necessities? The prebate should be targeted at the really needy at a cost of only 10% of the Fairtax prebate.

    There are undoubtedly more changes we could discuss, but these six are a start. Don’t hesitate to disagree, and I’m sure you won’t.

    • I know it probably didn’t help my case any that I couldn’t perform a simple subtraction problem (400-160=240; not 340).

      // And I tend to agree with you that we need to consider the whole picture before offering our support for the Fairtax.// So, let me get this straight, Guilty before proven innocent, it is. Sorry, that’s not how I work. Because the FairTax is so much more than the current income tax system could ever aspire to be, I would prefer to have the FairTax in place now, then worry about any possible shortcomings later.

      // But in the meanwhile, don’t you agree that HR25 could be improved on? // Of course I do, nobody has ever claimed the FairTax to be perfect. But wouldn’t you agree that any possible shortcomings HR-25 has don’t even come close to stacking up against the oversights in the current XX,000 pages of the IRC?

      I have two points to make about your (1) & (3) then I will leave it at that for now. I feel this is taking up too much of this man’s article and I don’t think that is what he intended it for.

      // (1) The Fairtax proposes to force all retirees to resume paying for their SS benefits with their sales tax dollars. 8% of the 23% goes to the Trust Funds. Retirees have paid in to the Trust Funds for 45 years or so, and counted on getting those benefits without making any more premium payments. Wouldn’t it be more fair to simply go to a two tier tax system–15% for retirees and 23% for everyone else. Easily administered and much fairer!//

      The FairTax rate is partially based on the Social Security rate. What that means is that the FairTax ensures Social Security will continue to get funded for the life of the program. If the SS rate goes up, so does the FairTax. Conversely, should the SS rate drop, so will the FairTax rate. As it stands under our current tax system, SS will be completely bankrupt by 2037. So without the FairTax, those of us who have paid into SS for the past 10, 20, 30+ years will not get a single penny of what we put into it. I feel that if you were to help pay a little more into it, you would continue to get something out of it; primarily future generations of retirees who aren’t sucking the file out of welfare because you didn’t want to pay into a system that you felt you were done with. If you’re going to keep using a system, should you not continue to contribute to that system? And I’m sorry to say this, but there are things I count on every day that I don’t get. Suck it up and deal with it. You were in the Army, adapt and overcome – oh wait, that was the Marines, but you get my point. ;-)

      // (3) Due to the prebate, millions of workers may pay no net federal tax, yet all would receive their SS retirement benefits. That isn’t the kind of “nanny state” I would want to be part of. I would strongly urge that the payroll taxes remain in place so that at least everyone is paying for their retirement benefits. //

      It sounds to me like you’re making a gross assumption that anyone who has not paid into SS will all of the sudden be able to collect it. Every quarter, I get my Social Security statement in the mail that clearly shows “My Earnings Record” (ie how much I have Paid into the SS program) and my benefits if I retire at various ages. The FairTax will not change who gets paid or how much. The FairTax will not change that. What the FairTax will change, as previously noted, is how SS if funded. Under the FairTax 160,000,000 more people will be paying into the SS program. And at least 20 Million of them will never be able to collect benefits because of their illegal status here.

      Besides that, the payroll taxes are the most regressive part of the Income Tax system. Wasn’t one of your complaints about the FairTax that sales taxes are regressive? Let’s get rid of the regressiveness altogether and do this right the first time. :-)

      • Hank Van Gieson says:

        Robert,

        You wrote: “As it stands under our current tax system, SS will be completely bankrupt by 2037. So without the FairTax, those of us who have paid into SS for the past 10, 20, 30+ years will not get a single penny of what we put into it.”

        Robert, I certainly hope you don’t believe all that nonsense about Social Security. If Congress does absolutely nothing, Social Security will still be able to pay you 80% of your expected benefits. And, it can be fixed by simply changing the retirement age, removing the cap on earnings, using the chained method of calculating COLA’s, or raising the rate 1%. What on earth is your purpose in bashing SS with all those misstatements? You are needlessly scaring the hell out of any younger readers of this blog.

        “If you’re going to keep using a system, should you not continue to contribute to that system? ”

        Are you kidding me? If you had a life insurance policy that you paid premiums on for 45 years or so, and you died, what do you think your wife would say if the insurance agent came around and told her the following: “Sorry about your loss, Mrs Williams. We will pay the benefits, but you will have to keep on paying those monthly premiums.” Her next call better be to her lawyer. There is no difference between what was heaped on Mrs Williams and what the Fairtax proposes to do to all retirees. You want to improve HR25, you better start thinking seriously about a two tier tax system. There are 50 million seniors and they tend to vote!

        “It sounds to me like you’re making a gross assumption that anyone who has not paid into SS will all of the sudden be able to collect it.”

        I think you have missed the point. Due to the prebate, millions of workers would pay no net federal tax, yet would still collect SS benefits. The question isn’t whether or not low income workers paid into the Trust Funds with their sales tax dollars, but if someone pays no net federal tax, should they still receive retirement benefits. We complain today that 47% of Americans pay no income tax. But, all workers pay FICA. And, Fairtaxers are quick to point out that under the Fairtax, everyone will pay the tax. But if the government returns all of those tax payments and the worker effectively pays no net federal tax, is that a good thing? I just don’t think so! Everyone should pay something towards the cost of the federal government! No moochers allowed!

        And, by the way, I’ll wait for Mr Russell to call a halt to these discussions. As he writes his paper, he might want to hear a dissenting view or two?

        • Misstatements? You’re joking, right? All the facts are on my blog and have been for over 3 months now, with complete citations of where I got the information. Don’t try to derail the conversation by claiming otherwise. The FairTax can fix it more effectively, more efficiently and permanently. None of those other ways you mentioned can guarantee that. http://fairtaxer.wordpress.com/fairtax/fairtax-social-security/

          If I died, -I- would no longer be using the system and all of my benefits would have been paid out. It is a completely different scenario when you have someone else collecting your money. Do you currently collect your wife’s SS benefits?

          “I think you have missed the point. Due to the prebate, millions of workers would pay no net federal tax, yet would still collect SS benefits.”

          I think -you- have missed the point, Hank. Because if you do not make the earnings to pay into the system, then you do not reap the benefits. Simple as that. Your gross earnings at the end of each period are still reported. The only difference is now, more than 160 million other (currently untaxed) people living in America will pay into a system that they will not be able to benefit from.

          “No moochers allowed!” – Except the 20 Million Illegal Immigrants, 58 Million Tourists, and 88 Million people in the underground economy, right, Hank? That -is- what you mean, right? You don’t want a few hard working LEGAL American Citizens to possibly skate by and get a few benefits that they may or may not have paid for. But it’s certainly OK for 160,000,000 people (and growing) to rape and steal everything we have. That IS what you’re saying, right, Hank? Again, I think you need to re-evaluate. Look at what you’re trying to derail, Hank.

          -You- are that one who is promoting a “nanny state”, Hank. By allowing this current tax system to continually punish productivity, promote illegal immigration, allow 47% of American’s to not pay taxes, and prevent the poor/lower-class from getting out of poverty, it is you who are at fault here. Go ahead, refute it. Say I’m wrong. But you know deep down, that I’m right. And regardless of whether or not Mr Russell actually does put a halt to the conversation, I think it’s he deserves a little more respect than to have a couple of old guys bickering on his blog. Later, Hank! :)

          • Hank Van Gieson says:

            Robert,

            “As it stands under our current tax system, SS will be completely bankrupt by 2037. So without the FairTax, those of us who have paid into SS for the past 10, 20, 30+ years will not get a single penny of what we put into it.”

            Robert, if that isn’t a misstatement, I don’t know one when it comes along. In 2037, SS will still be taking in somewhere around $1 trillion annually, and will only be able to pay 80% of benefits. There are many ways to make up that shortfall as I have described. The writings on your blog, which I am prevented from commenting on, make the same mistakes. It is irresponsible to claim that SS will be bankrupt. Just not true, and the shortfall will be easily corrected. You will get yours, my friend and all the weeping and wailing to the contrary does you no credit!

          • // Robert, if that isn’t a misstatement, I don’t know one when it comes along. //

            Hank, let me be the first to break the news to *you don’t know one when it comes along* :)

            Directly from the horse’s mouth (ssa.gov): Footnote b says “Estimates for later years are not shown because the combined OASI and DI Trust Funds are estimated to become exhausted in 2037 under the intermediate assumptions and in 2029 under the high cost assumptions.” ~ United States Social Security Administration, Office of the Chief Actuary. Last reviewed or modified August 5, 2010. http://www.ssa.gov/OACT/TR/2010/lr6f7.html

            Also from JustFacts.com: “* The assets of the Social Security program include all of the money it has loaned to the federal government.[103] [104] Even if this money is repaid with interest, it is projected that the Social Security Trust Fund will become exhausted in 2037,[105] and the program will have deficits every year thereafter into the foreseeable future.[106]”

            Again I say: The FairTax will be the most efficient way of ensuring SS is fully funded for the remainder of its program lifetime.

        • Hank Van Gieson says:

          Robert,

          I don’t know why you are having such a problem understanding that the Trustees report is talking about the current $2.5 trillion surplus that has built up over the years due to the baby boomer wave. When the Trust Fund surplus is gone in 2037 or whenever, SS will still be getting over $1 trillion annually in FICA payments. That amount will fund 80% of the benefits owed, and there are numerous ways to make up that shortfall. Implementing the Fairtax isn’t one of them! Have you forgotten that the Fairtax is revenue neutral and would do nothing to make up the 20% shortfall in Social Security?

  2. Max says:

    Our Constitution has been hijacked by socialists, who up until obamacare made it to the federal courts, had the President calling the obamacare mandate a “tax.”

    If liberals can use Art I, Section 8 as a shield to tax anything, then conservatives could use same to limit taxation to ONLY what is needed for National Defense and the general welfare. Thus making all other federal taxation expenditures illegal. That won’t ever happen though, since both parties have subverted the citizen for so long.

  3. Hank Van Gieson says:

    Well written piece, Bob, but I would hope you would read more than the one sided marketing stuff in the two Boortz/inder books? While there may be some merit in a national consumption tax, there is much wrong with the Fairtax scheme. And, while I don’t approve of profanity, Mark Curran makes some legitimate points. It would be absolutely unconstitutional for the federal government to tax State and Local government consumption under our republican form of government. Sovereign government powers do not tax each other. Period!!

    As you add to your education, please check the justification for forcing retirees, who have paid in to the Trust Funds for 45 years or so, to resume paying for their retirement benefits with their sales tax dollars. 8% of the 23% inclusive sales tax goes to the Trust Funds according to HR25. Would it not be more fair to have a two tier tax system–15% for retirees and 23% for everyone else?

    The biggest stumbling block to ever getting the Fairtax approved, and the issue getting the least attention, is the fact that all 50 State Governors are opposed to any kind of a national consumption tax such as the Fairtax. Yet, no one from AFFT has even approached the National Governors Association in an effort to find a compromise. Until they do, HR25 will remain dead in the water.

    Bob, you seem to believe that everyone contributes under the Fairtax. Just not true, my friend. Due to the prebate, millions of lower income workers would pay no net federal tax, yet all would receive their SS benefits when eligible. Is that fair?

    One of the largest errors in those books is the long discredited Fairtax myth that we will get all of our pay/pensions, and retail prices won’t change very much. Wrong, wrong, wrong! Assuming we do get all of our pay, then the most retail businesses can reduce their costs is 10%, and after adding the 30% sales tax, retail prices will rise 17% on average. There is n o free lunch!

    There is lots more to discuss, but you get the idea. Do your homework and come to your own conclusions. The Fairtax really isn’t fair.

    • MJ Price says:

      Hank,
      Thank you for responding. Would you be so kind as to cite your reference to where it is unconstitutional for the Fed to “Tax” State or local units of Government?
      One also has to remember the embedded taxes already in the products purchased by those very same entities now will be removed, so in essence the costs will remain the same.

      • Hank Van Gieson says:

        MJPrice,

        Thanks for your interest in some key issues with the Fairtax. I can only cite two hundred years of SC decisions in their effort to keep State and Federal governments from tromping all over each other. The SC uses the long standing doctrine of “intergovernmental tax immunity” on which to base their decisions. Perhaps this quote from former Justice O’Connor will help explain:

        “Federal taxation of state activities is inherently a threat to state sovereignty. As Chief Justice Marshall observed long ago, “the power to tax involves the power to destroy.” McCulloch v. Maryland, 4 Wheat. 316, 431 (1819). Justice Holmes later qualified this principle, observing that “[t]he power to tax is not the power to destroy while this Court sits.” Panhandle Oil Co. v. Mississippi ex rel. Knox, 277 U.S. 218, 223 (1928) (Holmes, J., joined by Brandeis and Stone, JJ., dissenting). If this Court is the States’ sole protector against the threat of crushing taxation, it must take seriously its responsibility to sit in judgment of federal tax initiatives. I do not think that the Court has lived up to its constitutional role in this case. The Court has failed to enforce the constitutional safeguards of state autonomy and [485 U.S. 505, 534] self-sufficiency that may be found in the Tenth Amendment and the Guarantee Clause, as well as in the principles of federalism implicit in the Constitution.”

        Notice that O’Connor wrote that the tax immunity was “implicit” in the Constitution. I can’t imagine that our founders ever envisioned their creation taxing the creators, can you?

        The costs of purchases by the state and Local governments will not remain the same. The 1997 embedded tax study done for AFFT by Dr Dale Jorgenson did conclude that embedded taxes made up an average of 22% of all costs. But, Jorgenson assumed that we would accept our current net pay so that businesses could get the maximum cost reduction. That isn’t going to happen for legal, contractual and fairness reasons. If we get 100% of our pay/pensions, the most businesses can reduce their costs is 10%, based on 2007 actual data. Remove 10% in tax related costs and add the 30% sales tax and retail costs will rise by an average of 17%.

        By taxing governments, AFFT missed an opportunity to reduce the cost of government by 10%, and set up a constitutional confrontation which should result in the Court throwing out this part of HR25. The immediate result of reducing the Fairtax base would be to raise the inclusive tax rate from 23% to 28%.

        • MJ Price says:

          Soooo. The FICA matching tax that my employer pays ( I work for a local unit of Government) is unconstitutional?
          Or would the SC revisit it as it is applied evenly to all, even though FICA currently is not?
          I can also recall buying products from another State, and having to pay that State’s sales tax….. Apparently we should not have had to.

          • Hank Van Gieson says:

            MJ Price,

            Don’t get confused. If you and your employer (a local government entity) pay FICA, it simply means your local government opted to join the federal payroll tax system. Many local governments did not, and set up their own social insurance plan. Show me where the Fairtax is optional for governments?

            Your paying another State sales tax on a purchase is perfectly O.K. Nothing unconstitutional about that.

    • I can assure you that Hank will not provide any citations to his claims. He has been making these same claims for over 6 years now, regardless of how many times he has been proven wrong.

      // “As you add to your education, please check the justification for forcing retirees, who have paid in to the Trust Funds for 45 years or so, to resume paying for their retirement benefits with their sales tax dollars.” // – Hank is well aware that retirees (as well as everyone else) are paying the embedded taxes on new and used goods as well as the services they employ. He continually refuses to acknowledge this fact because he knows that it is one point many people don’t fully comprehend. If you want to truly “add to your education” check out http://www.federalbudget.com/corpwelfare.html

      • Hank Van Gieson says:

        Robert,

        No one has ever proved any of my claims wrong, including you. And, it must be frustrating for you not to be able to ban me from this link. At some point you might understand that critics of HR25 could provide some useful suggestions on how to improve the existing legislation. Your propensity for censorship, while certainly your right on your blog, does you no credit. If the Fairtax can’t stand up to criticism, then it ought to be changed for the better.

        • // “No one has ever proved any of my claims wrong, including you.” // – You just keep telling yourself that, Hank. I know many instances where Steve Curtis has proven you wrong and you refuse to ignore it. Problem is that others don’t ignore it.

          • Hank Van Gieson says:

            Robert,

            Name one such instance and we can discuss it. Both you and Steve just don’t get it and you banned me from your blog as a result. Put an issue on the table and we can let others see who is correct. To do otherwise is just plain wimpy!

    • // “One of the largest errors in those books is the long discredited Fairtax myth that we will get all of our pay/pensions, and retail prices won’t change very much. Wrong, wrong, wrong! Assuming we do get all of our pay, then the most retail businesses can reduce their costs is 10%, and after adding the 30% sales tax, retail prices will rise 17% on average. There is n o free lunch!” //

      Hank just loves this “No free lunch” argument. Even though we are all well aware that there is no free lunch, he still strongly believes that that is what everyone thinks. Hank is ignoring (or intentionally omitting) a few simple facts.
      1. Employees will get an immediate raise of 7.65% (payroll taxes) + 10%-35% (income taxes)
      2. Employers will get an immediate raise of 7.65% for their share of FICA taxes (15.3% if you’re self-employed)
      3. Businesses will no longer be taxed on Business to Business transactions. So, everything from coffee to heavy machinery is untaxed as long as it is for your business.
      4. ALL (legal) registered US citizens will get a prebate based on the size of your family. Hank will call this an entitlement, but we all know what it really is; it is a means of putting hardworking documented and legal American citizens on the same playing field as those undocumented workers who don’t pay income taxes.

      So now, even if prices did increase by 7% (-10% + 17%) and you include the FairTax rate of 23% (30% if you want to compare apples to oranges, as Hank likes to do), you’re still paying relatively less after The FairTax than you were under our current Income Tax system. AND, -you- have the power to control how much taxes you pay.

      If you don’t believe me, let the FairTax calculator show you what you would pay. http://fairtax.org/calculator

      • Hank Van Gieson says:

        Robert,

        Your “facts” are correct, but your math still sucks! You still don’t seem to understand that retail merchants have to add 30% to their costs in order to arrive at a 23% tax inclusive price. That isn’t apples and oranges, but simple math.

        My estimate for retail price increases is based on the clear understanding that business can’t reduce costs any more than they paid in tax related costs. In 2007, businesses paid $290 billion in income taxes against $9 trillion in retail sales, or 3.2% of sales. Businesses paid $435 billion in payroll contributions or 4.8% of sales. And businesses paid $160 billion in compliance costs or 1.8% of sales. Add them up and business tax related costs came to just under 10% in 2007. Add the 30% sales tax and retail prices have to rise by 17%. (1.00 x .9 x 1.30 = 1.17)

        If you are retired, the Fairtax calculator doesn’t work for you. I’ve told AFFT repeatedly that there is a problem, but they either aren’t interested in accuracy or they are too broke to fix it?

        • Oh Hank, you just think we’re all fools, don’t you? My math is just fine. I actually work with numbers on a daily basis and have done so for the past 20 years. I also have a computer science degree and have high marks in Trigonometry, Calculus I, II, III, and Physics. Your calculator is no match. :-) Believe me when I say that your numbers are off, you’re missing key ingredients to your calculations, and you need to re-evaluate your equation. One hint: you’ve excluded (intentionally, perhaps?) $400 Billion in annual compliance costs.

          • Hank Van Gieson says:

            Robert,

            No, I don’t think everyone on this blog is a fool, but I’m not too sure about you? The only equation I offered was 1.00 x .9 x 1.30 = 1.17. For anyone that still doesn’t get it, that equation simply says that if something costs a dollar today, then under the Fairtax, costs can be reduced by 10% and after adding the 30% sales tax that one dollar good would cost one dollar and seventeen cents.
            And, if you had read my post, you would understand that I did include business compliance costs in my 10%. According to the Tax Foundation, the business compliance costs were actually $147 billion, not $160 billion in 2007. That is an insignificant change in my overall message that costs can be reduced almost 10%. If you want to quibble, go ahead.

            What I’d really like you to do is explain to this MIT alumnus just what I have overlooked in my retail price estimate. What key ingredients are missing? With all your qualifications, it should be a no brainer. I eagerly await your input.

          • Ok Hank, ya got me. What threw me off was that you under estimated your “compliance costs” by $340 Billion. I’m used to seeing them estimated at $400 Billion (not the $160 that you estimated). Because I was looking for $400, I inadvertently skipped over the part after $160 that said “compliance costs”. Way to hide that value Hank, bravo! :-)

            By my calculations (using $400 Billion), that would have actually been a 14¢ increase (1.00 x .876 x 1.30 = 1.14) but that is still only from the business end. As far as personal taxes go, most of us would also get anywhere from 17.65% to 42.65% of our pay back in income taxes. So if prices increase by 14¢ and I get an extra 22.65% (15% tax bracket + 7.65% payroll taxes), then I have 8.65% more purchasing power. And that is without calculating in the prebate.

            Look, even if your numbers are (presumably) correct, you’re still ignoring the many other factors that nearly level everything out; like legal US citizens no longer having the federal government in their pockets; paying taxes when we truly want to pay taxes; illegal immigrants, tourists, and the underground economy finally paying their fair share of taxes around here; and the fact that our Social Security program will be fully funded by the time I’m ready to retire; and well past.

            Fairness, a smaller more efficient government, and equality amongst citizens. Those are the true reasons I’m fighting for the FairTax, Hank. Not because it is “23% or 30%”. Not because taxing the government may or may not be constitutional. But because the FairTax stands for something that you and I both spend many years of our lives fighting for, Hank – FREEDOM! That is something our current tax system will never give us and will never give our kids and grand-kids. I’m sorry Hank, but possibly “paying a little more now” is not a deal breaker. I will gladly pay a little more, knowing that every illegal immigrant and every income tax evader in this country is also paying what I’m paying.

  4. Mark Curran says:

    deleted due to profanity

  5. Bill E. Payne says:

    Excellent article! I’m looking forward to subsequent parts. I hope you will deal with the aspect of expanding the tax base under the FairTax, as it will help the US economy to the tune of over $400 billion a year. Here is a good place to start: http://fairtaxer.wordpress.com/2011/07/28/fairtax-expanding-the-tax-base/

    • Bob Russell says:

      Bill, I will get to that part eventually. I am trying to follow the flow of the book and will get into how it will improve the economy, as well as acknowledge that taxes aren’t the only issue in our economy. I am trying to be as thorough as possible without rewriting the book. Part 3 will be where I write about the positive effects on the economy. Thank you very much for your interest.

  6. Excellent Piece, Bob. Looking forward to the 4 remaining parts. The FairTax is an amazing tax plan that needs more recognition. I’m glad you finally saw it for what it is worth.

  7. Tony L says:

    Carol is truly awesome. We’re both on the board of Oklahoma FairTax and she is just a juggernaut of FairTax’ing. Great article, thank you for posting and I hope more people reading this will get ‘their squirrel’ moving in their head.
    Understand people that this is not a ‘solution from Washington’, this is a solution from America. Politicians hate it but love it at the same time. Republicans support it in co-sponsorship and Democrats have asked for it in the past…but neither party is pushing for its passage. This should tell you something.