The Fairtax plan will benefit the economy and the majority of Americans

Prebate If it's in the best interest of the public and if there is enough support for it, there's no reason why the fairtax couldn't be modified to lower the tax on certain items and raise it on others. However, the fairtax is fair because there are no exemptions - every business is taxed equally and there's no special favors from the government. Supporters of the fairtax generally like the idea of letting citizens decide what is best for themselves on their own and not allow the government to sway our decisions by controlling prices and favoring certain industries. After all, history has shown that the government doesn't always use its influence to benefit the majority of its citizens, but often a select few. I like to think that the practical implications of not having any exemptions would greatly diminish the influence of special interests in politics because it is suddenly much more difficult to attain special favors from the government. 1) 23 Percent Math The 23% rate is not disingenous, like I said before, "I'll agree that the actual at the counter rate should also be disclosed in any discussion of the tax, but I don't agree that fairtax promoters are being disingenuous when they are comparing the fairtax to the income tax and use the 23% number." How can you compare the fairtax quoted on an exclusive basis to the income tax that is quoted on an inclusive basis? It would be more disingenuous to quote the fairtax as <30%(depending on prebate amount and total spending) and compare that number to the way income tax is normally reported, because the fairtax would come out looking much higher, even though an accurate comparison would show the fairtax to be less. Virtually every economist agrees that if you remove a tax on income and place it on consumption, than consumption will decrease and savings will increase, and savings is synonymous with investment. The average person does not have that much debt, but regardless, it will be much easier to pay off debt using pre-tax dollars as in the absence of the income tax. So you think that pot-deelers spend all of their money on pot? You don't think they buy cars? Or pay rent? You don't think they spend their fair share of money on food other than dorritos? There is over a trillion dollars circulating through the black market, and the people profiting from it and using that money to buy legitimate goods are currently not taxed at all, but under the fairtax they would be. I think it's a safe bet to say that most of the money that circulates in the black market is not subject to income tax, whereas a lot of it may be subject to sales tax. 2) Regressive First off, why is the middle class declining? Because all of the good jobs are being outsourced to other countries, right? They're being outsourced to places like India and Dubai because they have favorable tax systems. But if all of those taxes that make our system unfavorable are eliminated, companies are going to want to operate here because this is where their final product is going anyway. Well, if you're behind any tax proposal that increases taxes for corporations, but you're worried that they will move offshore to avoid the taxes, than you should be supporting the fairtax. Not only will their products be subject to taxation without the possibility of squeezing through any loopholes or bribing someone for a tax-break, but they'll have no reason to move to another country because as long as they're selling in America, their goods will be subject to the tax, and America will surely remain the world's top consumer even after the fairtax is passed. "You're exactly right that the feasibility of the Fair Tax is challenged the most by its increasing the taxes of the wealthy corporations that have so much undue influence in our political systems." Well Seth, this debate is over how the fairtax will benefit the economy and the majority of Americans, not how likely it is to be passed into law because several special interests are against it. 3) Enforcement Collection Problem No, the numbers really aren't that significant. First of all, most of the products on those websites are used goods. More importantly, in order for anyone to sell new goods tax-free, they need to be a licensed retailer. Under the fairtax, any wholesaler is obliged to verify that the person they are selling to is a licensed retailer and is subject to auditing just as the retailer is. Perhaps there will be 20 million established businesses and another 20 million online stores, the simplicity of enforcing the tax will still be exponentially greater than the current headache of deciphering all our current taxes. As far as online purchases from foreign countries, there is always an intermediary bank to process the transaction. I gave the example of paypal, but I'm sure there are others. This is likely where the tax would be enforced. Taxing Undocumented ("Illegal") Immigrants Myth When we talk about real wages in terms of economics, we include every benefit the employee receives at the expense of the employer. Therefore, businesses will always pay undocumented workers a lower real wage than a legal employee because that's the only incentive for them to break the law. If payroll and income taxes are removed, the incentive to evade the law is decreased, so employers will have less reason to hire undocumented workers. That is not to say that there would be absolutely no incentive and no business would bother hiring undocumented laborers, but it would be less. That coupled with more expensive retail goods and no prebate might be enough to discourage illegal immigrants from coming here and there total number may be expected to decrease under the fairtax. If a business were to provide food and lodging to their undocumented employees, it would have to carry the burden of the fairtax for them. Credit Card Debt You do realize that there is a big difference between "per US household" and "low- and middle-income indebted household", right? However, I won't argue that credit card debt isn't an issue to consider, but are low-income families really increasing their annual consumption expenditure by a significant amount by using credit cards? Even if the average outstanding debt is $8000, that doesn't mean that anybody is actually spending $8000 more than their income every year. It's more likely that they accumulated that debt over several years. If a family earning $30k/year spends $500 more than $30k each year, their tax rate will still be better under the fairtax than it currently is. Furthermore, in the short term after the fairtax is enacted, it would be easier to pay off current outstanding debts now that a person is accumulating pre-tax dollars to pay off items that were purchased with post-tax dollars that also had no fairtax applied. Thank you for an excellent debate Seth, I hope that this discussion has positively influenced your opinion of the fairtax.