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

Thank you for correcting me. Question: if the prebate goes to every household regardless of income, what's the point? It seems like an waste of time to disbursing about 120+ million checks every month (plus, doesn't the prebate also go back to businesses as well, adding another 20 million businesses to that number?) instead of just exempting those essentials from taxes. I don't buy the argument that we should tax them because the wealthy buy more of them and are thusly taxed less (they're still a vastly smaller proportion of the wealthy's income than that of the poor). Also - I'm curious; would that prebate disbursement be considered taxable income by states and municipalities that have income taxes? 1) The 23 Percent Math It's troubling Kotlikoff (one of the chief backers of the Fair Tax) conceded that the actual rate isn't the 23 percent as advertised. Even if the math does work out – does anyone have confidence that a Fair Tax proposal could actually get through congress without any exemptions being added to it? (Or that it could continue to sustain itself without special interests changing their lobbying strategy to one of seeking exemptions in the application of the Fair Tax?) Sidebar: Given how the Bush Administration has been cooking the books to fund its pet projects outside of the budget process – I don't have much confidence in the deficit projections. 2) Regressive Tax My misunderstanding of the universal applicability of the prebate unfortunately doesn't change the reality of how the tax burden ends up shaking out against the middle class. That's the finding of the US government, the Brookings Institution, and FactCheck.org: http://en.wikipedia.org... http://www.brookings.edu... http://www.factcheck.org... The wealthy would undoubtedly have their tax burdens lowered – the only way that wouldn't be the case is if they drastically changed their spending habits. The claim that the wealth of "little girls" isn't taxed doesn't make any sense at all. If they're still dependants, are taxed in the form taxes on their parents. They're also taxed in the form of the Estate Tax. 3) Enforcement/Collection Problem In the same way residents skip across state lines to avoid paying taxes on cigarettes, there will be an underground market for goods. The higher the tax is, the greater the incentive is to skip out and cheat on the sales tax. A great example is what is going on right now in Michigan on the Canadian border; in spite of long lines at the borders (because of all of the new terrorism-related requirements for entry) Canadians are shopping in US stores because the US$ has finally dropped well below the Canadian$ in value. In reverse, the same is happening for pharmaceuticals. On eBay many people do re-sell goods that they've already purchased, so there's a way to collect the taxes. The problem, though, is that eBay is also loaded with small businesses that sell goods and services right out of people's basements. For example – on eBay I recently purchased a ‘service' from a guy who put my photo on a novelty "McLovin'" fake ID (from the movie "Superbad"). Most of the cost that I paid is just for his time to put it together (because the cost of materials is very minimal). What incentives/penalties does the Fair Tax have to entice him to honestly report his tax receipts? Another result of the Fair Tax would be that if all of those eBay entrepreneurs had to get licensed as retailers, that significantly changes the equation – instead of the new Fair Tax replacement for the IRS having to handle the policing/processing of 20 million businesses – what does it now balloon up to? I've heard estimates that if you only count established businesses, it's around 48 million. The statistic that the number of taxable entities is reduced 80 percent is very flimsy. Furthermore, though they'll be focusing on a smaller pool of taxable entities – the data they'll have to pour through will be much more concentrated. Given that the Fair Tax doesn't apply to used goods, would a used car lot pay zero federal taxes? How can companies lower the pay for employees under the current system? The federal tax burden for the middle class is going to increase and the state and municipal tax burdens are going to remain the same. Even if we assume that it's feasible for companies to lower employee wages – that's going to require a whole lot of contract re-negotiations. That's to say nothing of the fact that lowering employee wages has no bearing on the conflicting claims that the cost of retail goods and services will stay the same while claiming that it will provide increased competitiveness for American goods in foreign markets. That dog still won't hunt. Unless the Fair Tax is applied to overseas purchases of US goods in foreign markets, the federal government will lose out on revenue that it is now otherwise collecting in the form of corporate taxes. This also, again, assumes that other countries won't react to this protectionist measure by passing protectionist measures of their own to compete with our goods (which they most certainly will). How would imported goods be subject to the Fair Tax? I could understand if there was an importing entity here in the US that was registered in the US as taxable entity, but what if I order a book through the mail from a distribution house in the UK, how does that get taxed? 4) Massive New Bureaucracies I don't believe that there will be a significant savings in replacing the IRS with the Fair Tax oversight agency because, as I mentioned earlier, the density of the records they're going to have to analyze will be substantially higher. Plus, you'll be pushing on to the Social Security Administration a new burden of calculating, policing and disbursing tens of millions more checks (plus all of the administrative costs that go along with that, like customer service, etc.). Domestic Goods vs. Imports I'll try to explain my thinking on Domestics vs. Imports. My reading is that if a US company ships something overseas, the argument for the Fair Tax is that the good will be cheaper in that overseas market because the Fair Tax won't be applied to it. Is that accurate? Taxing Undocumented ("Illegal") Immigrants Myth My comments were contradictory in one sense – but it works out like this; absent using the income tax/social security tax process, it will be easier to pay undocumented workers under the table. However, without the prebate – the new service tax rate will make living here even more difficult because workers will be unable to afford the cost of living (unless employers raise their wages to compensate for the service tax – which they may do, because it's vastly cheaper to pay undocumented workers than to pay benefits and workers compensation). Given all of that – I'm not sure how things would shake out. The bottom line is that it can't be said with any degree of certainty that the Fair Tax would discourage undocumented laborers from coming here – it may not. Capital Gains Tax Rate It does sound like the Fair Tax has benefits as far as Capital Gains go – so that appears to be a plus. Paycheck-to-Paycheck Rate The calculations for the paycheck-to-paycheck group are flawed because a great many people spend more than 100 percent of their paycheck (the average amount of revolving debt on credit cards per household in the US is $26,317).