As for money that was already taxed before it was saved/invested under the current system and how that will be affected in a change to the Fair Tax system, that’s a good question. Anybody care to comment on that?

It is also predicated upon a Federal sales tax of 30% being imposed on all consumers, Federal, State, and Local governments, and non-profit organizations on the purchase of services (including medical, legal, and insurance) and new products (including houses, food, and prescription drugs).

Business entities and investors will be exempted from paying the Federal Sales Tax on any new products or services constituting part of the business activity.

The Fair Tax proposal is defined as being “revenue neutral” in that it will take in the same approximate amount of Federal sales tax revenues as comes in from the existing business income taxes, payroll taxes and personal income taxes.

Shortcomings to the average working American appear to be that:

(1) NO GUARANTY OF PRICE REDUCTIONS: It appears to be intuitively obvious to the casual observer that most of tax savings, reduced costs and increased profits resulting from the elimination of the estimated 23% embedded cost will flow to the bottom line and be passed onto executives and investors, not the customers or employees.

There is no legal requirement for businesses to reduce prices by the amount of any embedded cost elimination savings and no way to measure what they actually do.

Examples of windfall profits by US corporations in the past have a dismal track record. Look at the deregulation of the electric power generation and distribution industry that generated record profits and obscene long-term price increases to consumers; and Healthcare industry advocates stating that the “free market” healthcare HMOs were more efficient but required a 12% bonus to offer Medicare Part C over and above what Medicare was already obtaining from the healthcare industry for beneficiaries using Medicare Parts A and B.

The US pharmaceutical industry manufactures prescription medications around the globe, is given Federal government protection from allowing people to purchase prescription drugs outside the US, and gives Americans the highest prescription drug prices in the world.

It appears that the preponderance of profits resulting from savings for any purpose (elimination of “embedded costs”, moving jobs off shore, reducing employee wages and benefits, and importing manufactured products) went straight to executive perks (bonuses and salaries, stock option plans, and executive retirement programs) and investors with very little to none to employee salaries or reduced customer prices for products or services.

Anyone who seriously thinks a 23% reduction in costs will not disappear long before it hits the consumer prices doesn’t understand the current implementation of capitalism, business organization and tax regulations, and corporate protectionism existing in the US.

(2) IMPACT ON MOST WORKING AND RETIRED AMERICANS: The Fair Tax program is a reverse “Robin Hood scheme” that shifts the raising of tax revenues to finance the US Government operations from the business community (reduced to zero) and higher income Americans to the Middle Class, retirees, and children.

(3) If the average cost of ALL new products and services does not decline by 23%, then the 30% Federal sales tax on the allegedly reduced prices from elimination of embedded taxes will increase the costs/prices of new goods and services over and above the current costs/prices for new goods and services.

(4) The Fair Tax proponents allege that it will raise the same amount of Federal Revenue as the current tax code. This means that the revenue from Federal business income and payroll taxes currently paid by businesses will be paid by individuals and State and Local governments under the Fair Tax. By default, individuals will pay more in taxes over their lifetime under the Fair Tax, not less.

Also, the Fair Tax will probably result in everyone (children, working persons, and retirees) not in the top 5% of income brackets to pay the 30% Federal sales tax on every service and new product they buy from “cradle to grave”. Since this group spends just about all their available lifetime income on goods and services subject to the Fair Tax, their effective tax rate will be close to 30%.

CONCLUSION: Great for business (taxes go to zero), great for high income earners (top 5%) who do not spend the bulk of their income and disastrous for the remaining 95% of Americans. It is also disastrous to Federal, State, and Local Governments; and non-profit entities (now exempt from all sales taxes).

In addition, State and Local governments will have to increase taxes to offset the Federal Sales taxes they pay, and non-profit entities will have less income available to provide services.

In closing, I have grave reservations that any savings achieved by corporations from not paying the business portion of the Federal payroll taxes and business Federal income taxes will result in wage increases or reduced prices for the products and services they sell.

Personally, a democrat would never go for the ‘Fair Tax.’ Things have to be unequal for them to champion, and this tax goes against the liberal grain.

Don’t be afraid to name names (which country, which tax receipts, in what context?)

Bob, Huckabee may not be my first or second choice. In fact, I am disappointed that on my first presidential opportunity to vote I can’t find a candidate that resonate with my values and beliefs completely.
Both Romney and Giuliani are out of the question. Thompson is ok, but he is way behind to get the nomination. Huckabee? That will do. I surelly don’t want any of the democrats for the next 4 years.

Every single consumer becomes a tax-payer instead of the current system where income taxes are paid only by those that are employed. That gives us a much bigger tax base as it includes ALL consumers, residents, tourists, illegal aliens and anyone else who spends money here in the good ol’ USA.

We currently have Federal and State (some states) income taxes, SS taxes, Medicare taxes, FICA, etc. deducted from our paycheck. We also pay taxes on everything we buy, we pay taxes on our investments when we cash in.

So, to recap, we currently pay taxes on what we EARN, we pay taxes on what we BUY, we pay taxes on what we CASH IN. Add up all that and I guarantee you it’s a lot more than 23 percent! It’s triple taxation! A tax on tea was all it took to kick off the Boston Tea Party! Where’s the outrage now?

Under the Fair Tax, there will be no more income taxes and we take home almost our entire paycheck. More money to invest ( no capital gains taxes, investment taxes, inheritance taxes, etc.) or spend as we see fit. Can someone tell me how this is bad for us?

No more payroll, Medicare or Social Security taxes will mean less paperwork for businesses and labor costs will be lower. Business -to- business purchases are not taxed, taxes are paid by the final user- the consumer. Businesses will be able to flourish without the crushing taxation and needless paperwork. A simple end of month report stating how much they collected in sales tax is all that will be needed.

The Treasury Dept can take over the function of the soon- to-be defunct IRS. There are too many government agencies whose functions overlap. I look forward to the day when the Fair Tax Act is signed into law and we can celebrate the demise of the 16th Amendment.

Sara, please explain that one. I think you are being economical with the truth.

With each passing year our taxes get more and more obscure. It seems to me the ones that complain about removing this unbearable yoke (IRS) are – somehow – benefitting from out-of control taxation or they are ‘bleeding liberals.’

Let the people (us) keep what they work so hard for.