FairTax and the Cost of Freedom
by BEVERLY MARTIN
Mar 24, 2014 | 1362 views | 23 23 comments | 6 6 recommendations | email to a friend | print
Doing taxes costs time, money, and most importantly, freedom.

In 2011, Americans spent 6.1 billion hours complying with the tax code - a cost of $265B. (Tax Advocate Service) In 2013 the hours jumped to 9.14 billion (New York Times 4/13/13) The Tax Foundation estimates by 2015, Americans will pay $482.7billion in compliance costs to "do their taxes" The National Commission on Economic Growth and Tax Reform reports that small firms pay $3 to $4 in compliance cost for every dollar paid in taxes.

Private and business financial information is disseminated to the IRS - an agency not to be trusted. Business and investment decisions are shaped not by what is profitable, but by ever-changing incomprehensible tax laws.In churches pastors may be silenced by fear of the IRS regulations. Even the decision to oin a TeaParty or other activist group is influenced by fear of attracting the attention of the IRS with its ability to audit or withhold proper registration for organizations.

The IRS always will be the tool of politicians to reward, punish, gain prestige,and personal wealth via granting or closing loopholes. Support HJR104 Repeal 16th and FairTaxHR25 which ends income tax and the IRS.Call 202-224-3121 and tell your Congressman to support both.

fairtaxbev@gmail.com
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Hank Van Gieson
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March 26, 2014
Bev,

Your cost of compliance numbers are nonsense. Do you really believe that the evening hours you spend preparing your tax returns are worth $44/hour? The latest government estimates for out of pocket expenses to do our taxes is around $210 per family, and that number has been dropping routinely as more free services come online, and the tax software gets cheaper. Check it out before spreading any more of this baloney!
Bev Martin
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March 26, 2014
Cost of compliance include not only the hours spent collecting the data but also the cost of professional tax services for private citizens as well as for businesses. A private citizen pays for his or her taxes out of their personal wealth. A business passes the cost of compliance on to the customer. Using derogatory words such as 'baloney' do not negate the importance of the issue. And, while detractors like to focus on name calling and belittlement, they rarely address the issue of freedom and how the IRS is a tool used by politicians to gain wealth and prestige and to intimidate opposition into silence. In my letters to the editor, I generally state where I obtained my figures. And it is reassuring to think I can trust government figures! I would urge readers of your comment and those of others to read Peter Schweizer's book, Extortion: How Politicians Extract Your Money, Buy Votes, and Line Their Own Pockets. Although a sobering read, it will underscore the power of the income tax code and how it is misused. I also urge readers to read Dr. Karen Walby's testimony before the House Ways and Means Committee http://www.fairtax.org/PDF/TestimonyofKarenWalby1-20-11.pdf The complexity of the issue of compliance is carefully explained and documented. As to those who think a letter to the editor concerning the national issue of taxation should not be included in a local paper, I contend that one issue that effects every citizen of this country is that of the nation's tax code. The Gilmore Mirror is to be appreciated for continuing to bring the issue to the awareness of its readers.
Hank V an Gieson
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March 27, 2014
That's terrific, Bev, and I agree with much you wrote. But, how about answering my question! Do you really believe our time doing tax returns is worth $44/hour (your numbers)? That is where the baloney resides, imho

Stephen Eldridge
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March 27, 2014
Reply to Bev Martin's reply to Dutchman,

We detractors do NOT rely on name calling or belittling (it is the FT'ers who do exactly that to us) - we rely upon the substance of the matter.

All you have said here is that the current system is expensive and burdensome (we agree and want to change it to make it infinitely less so), but you use thse ills to insist that the ONLY answer is the FT (which we think is a TERRIBLE alternative).

AND you still have not answered Dutchman's SUBTANTIVE challenge. People's time at $44/hr is NOT cash. The hours it takes to complete current tax returns has come down dramatically, but AFFT continues to use outdated measurement tools that even IRS gave up on years ago. AFFT does this in an effort to suppport its un-supportable dollar savings thar the FT supposedly would bring. The FT saves NOTHING itself, changing the current system to greatly simplefy it with a very Flat IT, would ALSO save current costs.

Lastly, AFFT deceives the public, because what is emminently predictable is the repeal of FT's Sunset Clause, and (when the 16th AMEND IS not repealed) the enactment of a NEW Income Tax (in addition to the FT).

Jim Bennett
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March 25, 2014
Good letter, Bev.

The FairTax(R) is the only tax, existing or proposed, that checks all four boxes of sound tax policy: transparency, efficiency, conduciveness to economic growth, and fairness.
Stephen Eldridge
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March 25, 2014
Perfect superficial FT propaganda - not an ounce of substance, only sales hype frm yet another senior FT peddler.
Hank Van Gieson
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March 26, 2014
Jim,

(1) How transparent is the Fairtax when 20% of the revenue raised is hidden away in higher government taxes at all levels?

(2) How efficient is the FT scheme when the 23% inclusive sales tax doesn't raise even half of the revenue neutral amount claimed?

(3) How much economic growth will there really be when your only support for such a claim is a computer model that can forecast nothing?

(4) How fair is the Fairtax to seniors when it (a)forces them to resume paying for their hard earned SS benefits;(b) double taxes their after tax savings when spent; and (c) significantly increases the federal tax burden of all middle class seniors. In addition, how fair is it when the prebate creates a group of millions of lower class workers who may never pay any net federal tax, yet will still receive full SS retirement benefits? Is that the kind of "nanny state" your Fairtax organization supports?

The Fairtax scheme is a lousy tax reform proposal with a nice sounding name. Get serious!
Amerigo M Cimino
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March 25, 2014
Consider; The only business where our Government is diligent, is the levy of Taxes! "The Rich don't pay enough",is a common cry! The income Tax Code; is a 60,000 pages of conflicting tax laws, that can only benefit the Rich! The "Poor"; do not have enough money to manipulate, so the laws are made to "protect" those who HAVE the money! Pretty simple; right? "Simple", taxing, would benefit the wage-earner! The Fair Tax is a "simple" tax; VERY transparent, and favors NO single person or business! As a matter of fact; there are "hidden" taxes; (embedded), that add 22% to the cost of EVERYTHING; NO MATTER WHAT PRODUCT OR SERVICE WE BUY! This 22% tax, is only Federal

taxes! With the Fair Tax; ALL of these embedded Federal taxes, would disappear! MANY Government tax "collectors"; will lose their jobs! By the way; imagine the number of Government jobs "created", with the ObamaCare, debacle! And also remember; ObamaCare is a TAX! THAT was a Supreme Court decision! ALSO; keep in mind; ALL Supreme Court Members, are Politically appointed! The Fair Tax, would be a taxpayer appointed Law! Another item, NOT addressed in the tax code; the "Debt limit"; This is where Politicians; NOT satified with the "colleted" taxes, Borrow money from the treasury; and put us deeper in debt! (Our National Debt, is in the TRILLIONS OF DOLLARS)! "WE" can NEVRER repay this debt! The present system of collecting taxes, is the culprit! Politicians, becomming Millionaires, "working" for the Government! Taxing; in general, have caused the price of an automobile, from $600,00, in the 1940's; to $60,000.00, in the present market! While it is true, many new "accessories" have been added; These accessories are being taxed! AND; THE BEAT GOES ON". THE FAIR TAX IS THE ANSWER TO ALL OF THESE MANIPULATIONS! THE FAIR TAX IS TRANSPARENT!

and; DON'T FORGET THE "BENGHAZI AFFAIR"!

GOD; Bless America! In GOD We trust!
StephenC.
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March 25, 2014
yet another FT rant. Cimino implies that the FT will get us to the bottom of the Benghazi scandal, WOW!

Cimino continues the FT raud. Even AFFT gave up on prices coming down by 22% (before adding 30% FT).

AFFT now claims ONLY 12.5% (which I and their paid economist Jorgenson say is only 7% MAXIMUM).

Next,AFFT assumes that 100% of that MAX will reduce prices - tha is unrealistic and I say maybe 1/2 and so prices will cme down (before adding 30% FT) by maybe 3.5%.

Sorry, Cimino, but the T does not control federal spending, nor wil it fix corrupt politicians.

All in all, Cimino simply rants abut all of our ills that the FT alone will supposedly fix.
Mark Curran
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March 25, 2014
Sorry, writing VERY TRANSPARENT doesnt make it less a con job. If you think it's transparent, show me in any Fairtax book, video or speech, where they mention the 2 trillion dollars in taxes on top of, in addition to, and paid separately from, the retail sales tax.

I can show you where those other taxes are -- in Fairtax own documents. And I have showed them for five years! President Bush Tax Advisory Panel showed them. YOu can find them yourself, if you read every footnote in every Fairtax document, like footnote 19 about the tax on capital investments city county and states would owe - IN ADVANCE.

I have shown the taxes on wages and pension "expenditures" in Fairtax own documents. YOu have to read it closely.

Massive OTHER taxes that no Fairtax sucker has any clue exists -- because they are ONLY mentioned in Fairtax documents and their OWN "explanation" of their "tax base". Do you even know what a tax base is?

I keep offering 50,000 dollars for one page -- just ONE PAGE -- of the 22 million in "research" they claim, about this "very simple transparent" tax. What a laugh, there is no research whatsoever, and certainly not 22 million worth, into the "very simple retails sales tax". It's not a simple retail sales tax, and there is no research, because if there were, they would show it.

What they show is the double talk by their own public relations firm, and that double talk not only is NOT research, that's where the fine print trick are. I have shown them, cut and paste them, showm pictures of them, shown the math, for years.

But Fairtax cult members are impervious to facts. They just don't get it.

It's going no where, because Fairtax is designed to fool, to razzle dazzle. They know they can't tax Texas state government 14 billion dollars, as a tax on wage pension and capital investments. ANd they know most of their revenue is preposterous. They know they told suckers its a simple retail sales tax, but they also know they hid double talk nonsense in their own public relations document.

They also know there is no research. You don't make up double tax and pretend it's research, unless you have an agenda. YOu don't claim 22 million in research, where there is none, without an agenda.

Quit being fooled by hustlers. We need a new tax code, and we wont get one as long as people are suckers for nonsense

Kenneth Smith
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March 25, 2014
Great job, Beverly, on an awesome letter! And, thank you, Gilmer Mirror for publishing it.
StephenC.
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March 25, 2014
Exactly WHAT is so awesome about pointing out the IRS horrors that we all already know abut and all agree upon?

What is so awesome about whipping up anti-IRS hatred onto a frenzied Kool-Aid jump to the FT?

You are to easily impressed with Ft propaganda.You need to detox from the Kool-Aid.
Kenneth Smith
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March 25, 2014
Congratulations, Mr. Ashworth on challenging Speaker Boehner. The go along to get along crowd must be ousted from our congress and we need to return to the Constitution of this great republic. You can ignore the propaganda from Mr. Eldridge and his sycophants.

Wishing you best of success in your campaign!
StephenC.
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March 25, 2014
YOU ALONE, Mr. Smith, spout FT propaganda - you did not say a single thing of SUBSTANCE, only FT rhetoric.
StephenC.
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March 24, 2014
Ms martin continues to spew suerficial FT propaganda and seems to taget Gilmer over and over again.

We all agree the current IRS and tax code must be reigned in - that's NOT the problem. And because that's not the problem the AFFT's answwer i.e., that whe must jump to the FT is NOT the only nor the right answer. The FT is TERRIBLE - a very Flat tax is a great next step.

The “Fair Tax” is a Fraud – we need a 10% “Tithe” Tax!

I am a retired lifetime tax consulting professional (JD, LLM in Taxation, CPA, co-author of a 3 volume tax treatise, lecturer), with no financial stake in ANY tax system. This only a brief summary - for supporting details of all comments, call Stephen C. Eldridge tel. 423-532-7337.

The so-called “Fair Tax” (“FT”) is a fraud – it is MORE WEALTH REDISTRIBUTION, AND a financial SCAM.



In their own words, FT proudly advertises that it is MORE PROGRESSIVE (yes, it is MORE WELFARE).

Of prime importance, the Prebate is NOT a real refund of FT paid as it appears to be. It is a new $600B ENTITLEMENT, which would have ALL Americans receiving a substantial monthly check from the federal govt – a very bad idea for those of us who are not Socialists. We simply cannot afford yet another huge entitlement that will only be increased in the future.

The FT and the Prebate would leave the working poor making no contribution at all to funding the federal budget and paying nothing even for their personal SS/Medi benefits. The FT and the Prebate FT then extend tax welfare to the non-working poor –and also take the next Progressive Cloward-Piven step towards giving SS/Medi to all regardless of work, by removing the tax “penalty” for reporting SS Wages, thereby “inviting” the fraudulent reporting of SS Wages.

The Prebate is apparently calculated to merely repay the poor for any FT they pay, but actually would pay them far MORE than any FT they might pay (by “assuming” the poor spend MORE than the underlying HHS Poverty Guidelines and also by “assuming” they will pay FT on ALL of their purchases, but they WON’T) - and FT also provides free SS/Medi to the working (and some non-working) poor.

The FT produces a 40-70% in-your-face retail sales tax that would spark a taxpayer rebellion that would destroy our retail-sales-sensitive economy. 40% = 30% (not 23%) FT e.g., 10% S/L sales tax and 70% is the rate needed at a sample 30% FT evasion rate (the FT incredibly assumes ZERO evasion and ZERO intentional reduction in spending and ZERO migration from new to used goods).

IN ADDITION to that 40-70% tax, the FT contains several HIDDEN TAXES. 1) FT’s 30% rate is really 42 %; the 12 % is hidden by having fed S/L govts paying FT – ultimately, they must get that money from you. 2) The initial 30% rate is 1-5% short and that plus any other revenue shortfall will have to be made up by raising more FT (or a NEW Income Tax), 3) The fed budget will rise for a) higher SS benefits and higher COLA’s payable to all federal retirees, both induced by FT’s price increase of nearly 30%, and for b) fraudulent new SS benefits invited by FT’s removal of the “tax penalty” for reporting SS Wages, – more FT (or a NEW Income Tax) we be required to fund these.

The NEW IRS (i.e., the STAA) may well be far worse, far more invasive than today’s IRS (the buyer is liable to pay FT and get/show a receipt – The STAA may audit consumers) – also we may well have to file an “Annual FT Summary”.

We may well wind up with BOTH a NEW Income Tax AND the FT, when Congress repeals the FT’s Sunset Clause and enact a NEW Income Tax .

Seniors will start to pay for SS/Medi again and some will pay a 2nd-3rd tax on their earnings. Many middle class seniors will pay more FT than they would have paid in Income Tax and many will lose purchasing power because of 1) the nearly 30% price increases and 2) the higher S/L & federal taxes required because they must pay FT and can only get the funds from us, and 3) higher federal taxes due to higher SS & pension COLA’s and fraudulent SS benefits.

The FT promises grand economic benefits which are all UNPREDICTABLE - mere Hype & Change.

What we need is a Flat Income Tax with No Deductions, No Exemptions, No Credits and a 10% rate, with business income taxed to shareholders on a very simple basis (i.e., no corporate income tax) - See H.R. 1040, but with changes as noted here (IRS is neutered, 1 page tax filing, everyone pays - more evolutionary). Call your representatives in Congress and let them know that this is what you want.

Hank Van Gieson
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March 26, 2014
StephenC continues to include the following strange para in his otherwise excellent Fairtax criticism posted here:

"The NEW IRS (i.e., the STAA) may well be far worse, far more invasive than today’s IRS (the buyer is liable to pay FT and get/show a receipt – The STAA may audit consumers) – also we may well have to file an “Annual FT Summary”.

Buyers are not required to show their receipts to anyone contrary to his claim. And, auditing consumers has never been done by the States, each of which are being looked to for sales tax expertise.

Is there going to be evasion at the very high sales tax rates? Yes, but the single most important way for consumers to evade would be to get a business license and purchase goods and services tax free.

The focus of the STAA and the States (if they decide to become the federal tax collector??) will be to audit the jillions of new businesses that will be created overnight, as well as auditing all businesses to assure that the tax revenue collected is being forwarded to the proper federal agency. It only takes one to cheat--the retailer! Auditing consumers makes no sense!

StephenC not only proposes consumer audits, but has created a form listing just what the 150 million American families would have to submit to his "new IRS" on an annual basis. Not only is the data required very detailed, it is far worse than that provided to the IRS today. Such a report on all the details of a families finances and buying habits is far too intrusive and possibly unconstitutional to be accepted in a free society. And, it is beyond the capabilities of the average family without professional assistance.

The proposal to potentially audit all consumers has zero support from qualified experts, and simply detracts from other far more important Fairtax criticisms. StephenC seems not to understand the damage he does to his credibility, and one can only conclude that he actually is trying to create jobs for future CPA's, a charge he vehemently denies.

Any comments appreciated.

STEPHEN C.
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March 27, 2014
Repoley to HVG,

My friend continues his bizzare (IMHO)claims against my commments about thr SA auditing consumers.

H writes "Buyers are not required to show their receipts to anyone contrary to his claim". HVG has admitted to me that Sc 101(d) of the FT does make the consumer liable to pay the FT and receive a receipt. The FT does nor specifically say that the consuer must show that reciept, but that i what I am saying is a prectical reality should STAA decide to audit consumers, which IMHO they will have to do.

Thr fact that States have not audied consumers is irrelevant! the revenues are are as important to the States and the rates of sales tax are relativel low. The FT is high and is virually the ony source of fed govt revenue and will have to audit consumers to hold down evasion.

While HVG offers other auditing tecniques, that's finee, but it does not revent STAA from conducting the audits that I suggest and believe would be far more effective than those that HVG sugests (note; I was a lifelong tax practitioner, HVG was a trained economist and non-tax corporate executive).

The Pre-audit form (to be later converted to a required annual filing) is a very simple form that is very easy for most people to fil out.I am not selling this as something attractive to taxpayers - I am merely earning them of what is likely to happen to them under the FT. It is no more intrusive than IRS audits.

I am not proposing such audits - I am warning the public against what could well happen. The only other tax expert that HVG & I have discussed this with sees the possibilty of such audits as RELTIVELY low (but not zero), I see them as RELATIVELY higher than low. I do not knw who HVG is calling "qualified experts" - certainly not FT'ers.

HVG does not appear to me to understand that his suggestions of how STAA should conduct audits is no more than his suggestion and that the STAA might well conduct them as I have warned.

HVG lastly makes a bizzare (IMHO) claim "one can only conclude that he actually is trying to create jobs for future CPA's, a charge he vehemently denies." Again, I am not "proposing" anything, I am not trying to produce work for future CPA's - I am merely warning of what may well happen. It is irrational and mystefying to me that anyone suggests that I am trying to CREATE work for CPA's when I proposes/advocate no such thing - I merly warn.
Hank Van Gieson
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March 28, 2014
StephenC,

What a relief to know that you are not proposing the detailed plan you presented, just warning everyone that it may happen. And just what are your qualifications for adopting that role? Your intro to your "cut and paste" Fairtax criticisms states that you are a lifelong tax consulting professional (JD, LLM, CPA, author of a tax treatise, lecturer), impressive, but nowhere do you claim to have any practical experience with a national sales tax? Could that be because the US has never tried such a tax scheme? You are no more qualified to comment on the Fairtax than anyone else around here. Perhaps less qualified than this trained economics senior? As a trained economist, I did a little research and discovered that six other nations have tried to implement a broad based, high rate sales tax similar to the Fairtax plan. All failed and switched to a VAT similar to that in use in 135 nations worldwide. How is that relevant to our discussion about Fairtax evasion? The reason for the failures was that there was too much slippage from, not consumers, but from retailers. The solution was not to audit consumers as you warn about, but to adopt the VAT which has markedly lower evasion at the higher rates due to the self policing nature of the collection process.

Based on this practical experience as well as the fact that auditing consumers has never been tried, I firmly believe that if the STAA and the States audit retail businesses to ensure that the revenue is being handled properly and that there are few "fake" businesses, illegal evasion may reach an acceptable level. If we fail, then adopting the VAT may happen, but auditing consumers will not happen. Perhaps you would better serve everyone if you warned about the penalties for setting up a fake business to avoid the sales taxes. That I would wholeheartedly support!
StephenC.
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March 28, 2014
Reply to HVG's comment of 13 hours ago.

My friend, your sensitivities are showing.

Those current nations using the VAT still exerience high evasion rates EVEN THOUGH the VAT is supposed to produce less evasion than a pure retail sales tax.

I have no idea why those 6 nations chose to convert to a VAT and why they did not consider auditing. From the research you have shared with me, it appears that business VAT's produce their own unique forms of evasion schemes IN ADDITION to retail evasion.

Also, most VATs today are about 1/2 the combined FT S/L rate of 35-40% and MORE would need to be done to limit evasion at those rates.

No I have no experience with an NRST but there is such limited experience in the world so that no-one has much experience (what were the rates charged by those 6 nations that tried solely an NRST?)

I am qualified to talk about tax systems in general and more to the point, about the potential auditing techniques necessary to limit evasion.
Matthew Ashworth
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March 24, 2014
The FairTax is the greatest weapon we have against a stagnant economy and massive unemployment.

The FairTax is a single-rate, federal retail sales tax collected only once, at the final point of purchase of new goods and services for personal consumption. Used items are not taxed. Business-to-business purchases for the production of goods and services are not taxed. A prebate makes the effective rate progressive.

Additionally it looks like inflation is rearing it's head in the form of higher food prices and energy costs. We need to change the system of taxation quickly to the FairTax or we may be in for even more job loss and an economy that does nothing for American worker for years to come.

Matthew Ashworth - Congressional Candidate challenging Speaker Boehner in the primary on May 6th.
OldManKeith
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March 24, 2014
Egad that's silly.

How high would we have to raise the sales tax? And what's to stop people from selling new products to their friends for really low prices (e.g. a new car for $1) and then their friend turns around and sells it full price - no tax!

And the article is silly too. Investors want public companies to show that they are not up to shenanigan's. It would be nice to think that all corporations are run by people with integrity who would never violate your trust with your money...but not very realistic.

Mark Curran
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March 24, 2014
As a former Fairtax "cult member" I know how great it sounds.

But as someone who read the fine print, I know it's not even a tax plan.

For example, they claim 22 million dollars in research. I've read that "research" and it's not research at all, furthermore it's silly double talk by their own public relations firm.

In that double talk are massive OTHER taxes, which they cleverly "assume" will be collected. Like 2.1 Trillion dollars of "other taxes" on top of, and in addition to, their retail sales tax, they have massive wage and pension expenditure taxes.

Massive capital investment taxes, too. For example, the city of Dallas would owe over 100 million as a wage and pension tax!! How is that a personal retail sales tax. Yet these wage and pensions taxes are in the clever fine print.

There is no research, because research is quite the opposite of hiding goofy double talk of other massive taxes, while telling folks you are a "very very simple" personal retail tax.

Yes, the do have a retail sales tax -- but thats only a SMALL part of it. They don't tell you about these massive other taxes, not in the books, not in the videos, and not in the speeches.

Yet those other massive taxes make up the lions share of Fairtax revenue!!!

This was exposed from the start, of course, as President Bush Tax Panel studied the fine print, and politely exposed it in academic terms. Essentially, they reported that without these fine print tricks (my term) the rate would need to be 89%. Not 23%.

So what Fairtax did is razzle dazzle folks on this "retail sales tax" but that' only a tiny part of it. And they deliberately hid the massive taxes on wages, pensions, capital investments, and other things that would take more time to tell.

We need a new tax code -- we don't need hustlers or people they can fool, pushing razzle dazzle.
StephenC.
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March 24, 2014
Mr. Ashworth,

First you admit to being a Progressive (Socialist) - not good.

Are you simply pandering for votes the way many FT Co-Sponsors in Congress are doing, but would never really vote for it? I can accept that, reluctantly.

You mentioned inflation. The FT will add 25-30% to the cost of goods (AFFT admits to AT LEAST a 14% increase but their supporting numbers are wrong).

The FT will destroy our retail sales sensitive economy.

You display a lack of understanding of the FT. Please read the full post I made here moments ago and feel free to call me with any questions.