Everyone hates the IRS, except the tax accountants. Nobody can understand the IRS tax code - even the tax accountants. I say it's time to get rid of the IRS - and the tax accountants. Let them get re-trained for another type of work like the loggers in small towns all over the Northwest did after the environmentalists shut down their business.

Below is a quote from a FairTax volunteer and a link to an article about the IRS increasing their audits against taxpayers making over $100,000. Big Brother is watching you! With the FairTax, you wouldn't have to be under constant scrutiny. You would simply pay the sales tax as part of your purchases and thumb your nose at the IRS on your way out the door. Here is the quote:

"You can bet your tax return is wrong, no matter how hard you try to get it right, because NO one can properly understand the complex code. Won't it be nice when the IRS is gone?"

http://online.wsj.com/article/SB120165118416126911.html?mod=djemtct

MORE ON FAIRTAX BENEFITS FOR SENIORS

I have received a number of comments on my past blogs recently. I am happy to see people going back and reading the earlier ones. I hate to keep saying the same things over and over, but sometimes I bring one up out of the past instead of writing a whole new one on the same subject.

Recent comments from readers have been noted on “Some Comments Answered”, “Senior Impact”, and “Does the FairTax Tax Rentals?”. Please go back and read those blogs together with their comments. “Ellen” especially, has made some very intelligent observations and seems to approve of the FairTax in spite of some downers for Seniors on Social Security.

Seniors have had to pay into Social Security all their working years and then, under the FairTax, would be taxed when they spend it, Ellen says. Well, that’s true, and the prebate will make up for a lot of that. There are some good points:

1. The FairTax protects future SS benefits by paying it out of the general fund, generated by
a national sales tax.

2. The Prebate.

3. The FairTax repeals the taxation of SS benefits and adjusts SS indexing to protect Seniors.

4. No more compliance costs for those Seniors who use tax preparers.

5. The FairTax does not tax used goods, which a lot of low-income Seniors take advantage of:
used cars, used clothing, garage sales, etc.

6. The FairTax will eliminate embedded taxes in manufacturers’, services’ and retailers’
costs, allowing them to lower retail prices.

7. No more taxes on IRA’s and other tax-deferred plans. (Most Seniors do not have Roth
IRA’s where “after tax” money was used)

8. The FairTax will end gift taxes, estate taxes and capital gains taxes.

9. The FairTax generates an economic boom, easing future budget pressure on Seniors’
entitlements.

10. The FairTax ensures your grandchildren have the same opportunity you did.

I think number 10 is the best reason of all and the reason I am writing this blog. I don’t want my children and grandchildren to have to worry about taxes all their lives. I don’t want to see SS benefits dry up just when my children get to the age when they can receive them.

Paying as you go is the way to go. So what if you have to pay a sales tax with your SS benefits that have already been taxed? It will still be better than being taxed with hidden taxes you don’t even know about because they are invisible.

The benefits to Seniors far outweigh the shortfalls for Seniors.

Best Comparison of 23% vs. 30%

This letter was written to Ms. Strassel (check out the link below) by a FairTax Volunteer. It gives the best comparison of the income tax vs. the FairTax inclusive and exclusive rates. It really puts things into perspective:

Ms. Strassel,

While you are correct about Mr. "Bush's Economic Surrender" (1/25/'08) your discussion of the proposed tinkering with the federal tax code by three of the four prominent Republican candidates for President leaves a lot to be desired.
http://online.wsj.com/article/SB120122065042715307.html?mod=opinion_main_commentaries

You left out the only sensible total replacement of the tax code, the FairTax, proposed by Governor Huckabee. It will end the very tilted playing field of world trade which favors our trading partners and results in our industries relocating to better tax platforms. It will also end the waste of over $265 billion every year to wasteful compliance costs.

If the Journal insists on calling the FairTax inclusive rate of 23% an actual rate of 30% (exclusive), then be fair by saying that the present tax code's 35% (inclusive) rate is an actual 54% (exclusive). And, oh yes, add to that 54% the payroll tax of 15.3% (inclusive) or an actual rate of 18% (exclusive). Let's see, 54% plus 18% equals 62%; and you complain about 30%?

Bill SpillaneCalifornia State Director
(volunteer)fairtax.org
Manhattan Beach, CA

CAN YOU SAY "QUADRUPLE TAXATION"?

The following letter was sent by one of our FairTax volunteers to Mr. Adler regarding his article on the FairTax. It is a very good eye-opener on our present income taxes. I linked to the article by Mr. Adler at the bottom of this letter:

How convenient that Mr. Adler has chosen to overlook the many instances of "double taxation" in the present income tax code and all the savings that will accrue to his"seniors" under the FairTax. Just for starters: the earnings that one accrues that are subject to the payroll tax are taxed FOUR TIMES today.

1) The 15.3% of earnings up to about $100,000 is taken as a tax (by the way, that's an "inclusive" 15.3%; it would be 18% if calculated as an "exclusive" sales tax.)

2) That same money already sent to the government, is now income taxed (FICA taxes are not deductible).

3) When the now "after tax" income is used to buy a US made good or service: the buyer will be paying the embedded taxes (profits and payroll taxes) in the product.

4) After retirement, up to 85% of the "earned" social security income will be taxed. In addition, today, any taxpayer paying the embedded taxes in a US product or service is not only paying with previously income taxed money, but he or she is paying state and local sales taxes on embedded taxes.

Is that double taxation enough? Furthermore, if the retiree has any money in savings that are here complained about, after FairTax enactment, there will be no more taxes on those earnings whether interest,dividends, capital gains, or death. This critique of Mr. Adlers critique is not all inclusive.

People like Mr. Adler must have another agenda; anyone who researches the FairTax with an open mind and wants the best for the US economy, and each of us, is bound to support the FairTax. http://www.townhall.com/columnists/HankAdler/2008/01/23/fairtax_double_taxation,_an_admission?voted=1

A GREAT SUPPORTER OF THE FAIRTAX

Below is a link to an article by Kevin Geary, a business man and coach of the Karate USA competition team. The link is to his web site where he explains the FairTax in short, easily understandable terms and with great accuracy.

Instead of my usual diatribe, please use this link and enjoy:

http://changeyourtree.com/blog/2008/01/21/i-support-the-fair-tax-and-why-you-should-too/

SOME COMMENTS ANSWERED

I can see by the comments I have been receiving that a lot of you out there do not understand, or do not want to accept, the concept of embedded taxes. The non-accepting will not accept the fact that prices will go down (experts say as much as 22%) when the FairTax is enacted. You do not trust business to lower their prices when their costs of doing business go down. You do not trust the consumers to insist on it. You do not trust free enterprise to enact price wars until the cost of goods goes down to acceptable prices.

My questions = Do you trust the IRS and Government to continue to manipulate your income? Do you think prices will remain the same under the present system? Do you think your taxes will remain the same?

No! Your Government gets more intrusive every day and you just sit back and take it. Prices keep going up, jobs keep leaving the country and you just sit back and say “I can’t do anything about it”. Taxes keep going up, government hand-outs keep increasing and you just sit back and say “Let the Government take care of me”.

This is just sick. Get a grip. And take control of your own lives and spend your money when and where you want to. The FairTax will allow this to happen.

When we say you will be able to take home 100% of your income, we don’t mean that you will not have to pay taxes like you did with the 15% payroll and SS taxes plus however much is withheld every month to pay your income taxes. We just mean you will have control of where and when you spend that money and it will be your choice of saving it (non-taxable, mind you) or spending it and being taxed.

You think about that amount. You pay 15% in payroll taxes & Social Security payments. Then on top of that, you pay 15% to 35% (whatever tax bracket you are in) as income taxes. So if you gross $50,000 per year, 15% payroll & SS amounts to $7,500. Then you are probably in the 15% tax bracket (purely an estimate – I’m not a CPA), that will take another $7,500 out of your paycheck. You will have $15,000 to spend in taxes or to save for your own enjoyment. Now if my figures are right, you will have to spend $65,217 in order to be taxed $15,000. How can that be? Well, it can’t. You’re just going to have to save some of that tax money the Government has been taking out of your pocket, because there is no way you can spend this amount in order to spend all you have saved. And don’t come back on me and nitpick my figures. I know I didn’t allow for deductions, but I am merely giving you an example. Apply it to your own paycheck and tax figures.

And quit worrying about nursing home patients who are on Medicaid. When they go through their income, nursing home patients can apply for and receive Medicaid. That means they spend the rest of their lives on the Government dole. In other words, they don’t have to pay any money; therefore no taxes. It’s the Government who pays the nursing home and with the FairTax, the sales tax. Now I am sure the Government is not going to allow the nursing homes to keep their high prices when all other business are removing the embedded taxes from their pricing.

And quit worrying about the Government. They seem to be able to take care of themselves quite nicely. They may even encourage the removal of embedded taxes in goods and services to keep their prices down. It’s time the Government started working for us and with us.

FAIR TAX VS. FLAT TAX

The following is a commentary from a FairTax Volunteer on an article in the Business & Media Institute . It gives a really good comparison of the FairTax and the Flat Tax.


Excerpts:
Mitchell: "One of the problems is that advocates of tax reform are divided. This split is particularly frustrating since the flat tax and sales tax are virtually identical. Both would junk the current system. Both would restore fairness by taxing at one low rate. Both would eliminate all forms of double taxation, and both would wipe out special-interest loopholes."

FairTaxer: Identical? Ridiculous; one is an income tax similar to the Reagan 1986 reform and ripe for Congressional meddling to the max. The flat(income)tax continues the payroll tax and taxing corporations, which only pass those costs to people, usually the customer in the form of higher prices. It will NOT get rid of the IRS primarily because figuring out what "income" is happens to be at the heart of the IRS problem. More could be said about "identical".

Mitchell: "Yet this would require repeal of the 16th Amendment. Would it be possible to obtain the required two-thirds vote in both houses of Congress and ratification from 38 state legislatures? Unlikely."

FairTaxer: Yes, indeed, "unlikely". Just like the last 27 Amendments to the Constitution. Indeed, it's unlikely that we'll ever get women the right to vote! Oh! We did that! Well, we'll never prohibit alcohol sales in the US! Oh, we did that?! Well if we prohibit alcohol, we'll never go back to allowing it again! Oh! We did that, too?! He has a low opinion of the American people.

FairTaxer contd.: Both wipe out double taxation? Ridiculous again; the corporate tax of the flat(income)tax, along with the employer's portion of the payroll tax, will be folded into prices and the person with after tax income will be paying the "embedded" taxes on those products when making a purchase of US made products and services (double taxation). In addition, the latter flaws make the flat (income) tax identical to the present incometax in making US products and services more expensive than countries with no embedded taxes and who use a VAT.

Fairtaxer contd.: "Both wipe out special interest loopholes"? Perhaps on day one of the flat(income)tax, but on day two, the tax lobbyists in Washington D.C. will be out in droves to manipulate the corporate portion of the code, just like they do now while spraying campaign contributions to the four winds.

Mitchell: "Not so much for policy reasons, but rather because of practical concerns. Simply stated, the flat tax and sales tax are both theoretically attractive, but only the flat tax seems to be politically feasible."

FairTaxer: True only if you concede that the inferior flat (income) tax is more amenable to Congress people who see the opportunity for manipulating the corporate portion of the code in order to raise campaign funds. False if you believe that a proper airing of the features of both tax proposals will result in the American people demanding the FairTax.

Mitchell: "Moreover, advocates of the sales tax correctly insist that it must be accompanied by complete, irreversible abolition of the income tax in order to prevent politicians from pulling a bait-and-switch and trying to impose both a sales tax and an income tax."

FairTaxer: He's right that some misguided FairTax advocates have mistakenly said that repeal of the 16th Amendment must accompany, precede, or closely follow enactment of the FairTax in order to avoid having both a sales tax and an income tax. But he's totally in error in many ways here: TODAY, we have both an income tax AND a national sales tax in effect!

The income tax is obvious, but the sales tax is the "embedded" taxes in the prices of all US made goods and services (but not foreign made). We want to get rid of one of them. Furthermore, enactment of the FairTax, by law, eliminates the income tax and the IRS. The 16th Amendment merely ALLOWS an income tax, not requires it. Once the FairTax is enacted, we will proceed with steps to repeal the 16th. If it is not repealed, the Congress would have to start all over from scratch to enact an additional income tax.

If they try it, they will all get thrown out of office. If Congress succeeds in that diabolical endeavor, we will be back to today with an income tax and a sales tax. If they pass a flat(income)tax, we will have both an income tax and, with the embedded taxes, a sales tax, as well. Furthermore, the FaiTax has about 72 co-sponsors in the House and five in Senate. The flat(income) tax isn't even up to bat yet.

Go FairTax; get it right the first time.

SENIOR IMPACT

I am re-running an earlier posting to put some perspective on the plight of Senior Citizens when the FairTax is enacted. Some think they will be paying more in sales taxes than they should have to, since they had to pay taxes on all that money they earned all these years previously.

I am getting tired of the distorted views on the 23% vs. 30%, the poor Seniors being double taxed, uncorroborated statistics, etc. without looking at the whole picture. Prices will go down.

For those of you who prefer the present income tax situation, know that you are being taxed over and over and over (embedded taxes are a fact). Compliance costs are astronomical, no matter what the figure.

Following is a copy of my earlier blog:

I am going to begin today with “The impact of the FairTax on Seniors”, a “white paper” from www.fairtax.org. I will just give you a feeling for what is in this document and if you wish to learn more, go into their website and poke on the “research button” to find the various “white papers”.

The FairTax will ensure that the Social Security and Medicare programs that are so important to Seniors become stable again, no longer a threat to “go broke” in a few years if taxes are not raised.

The FairTax rebate zeros the retail taxation of necessities, up to the poverty-level, for Seniors. Some Seniors don’t even spend over the poverty level, since they have accumulated “things” over a lifetime. Other Seniors will welcome the extra money that a prebate would bring them.

The FairTax does not tax used goods, which gives Seniors a choice of whether they wish to buy new goods and be taxed or used goods with no tax added. (We all will have this choice)

The FairTax ends all record keeping and income tax filings, which means no more large bills from Tax Preparers or Accountants. (These people will be happy to find other jobs helping you invest and grow your extra dollars saved by the FairTax)

The FairTax will reduce manufacturers’, services’, and retailers’ costs, (remember the embedded taxes?) allowing them to lower costs to seniors (and the rest of us).

Seniors will pay no more taxes on IRAs and other tax-deferred plans.

The FairTax ends gift and estate taxes so Seniors will have the satisfaction of knowing their hard-earned money will go to their heirs instead of the IRS. Wheeee!

With the FairTax, Seniors can sell their homes and pay no capital gains taxes.

The FairTax will generate an economic boom, easing future budget pressure on Seniors’ entitlements.

The FairTax ensures your grandchildren will be able to keep 100% of their income and they can decide when to spend it and what to spend it on. They will not have the IRS looking over their shoulder at every step of their careers, taking money here and grabbing money there.

HOCUS-POCUS FAIRTAX? NOT HARDLY!

Boy, the FairTax is sure getting a chewing-up and spitting-out by the media, the talk show hosts and the Pundits (whatever they are). They are not giving it a fair shake. They need to learn what it is about before they start ripping it apart.

Following is a letter written by one of our FairTax Volunteers in reply to one of these so-called know-it-alls. It is long, but a good read. I high-lighted my favorite paragraph in red - at least read that:


Hocus-pocus FairTax?? Not Hardly

FairTax Act is one of the most researched public policy issues in History, is cosponsored by 72 members of Congress and endorsed by 5 presidential candidates.

In a commentary in Friday, January 11th’s newspaper, Brian J. O’Connor appeared to come to conclusions about the FairTax that often befall individuals that have a less than full understanding of the FairTax. This is easily overcome by reading the proposed legislation and looking at the research that has been done on the FairTax.

With over $22 million spent on research, the FairTax is likely the most researched public policy issue in history. This research was done by some of America’s best economists at premier universities and think tanks by individuals from the political left and right. This research is readily available at the FairTax website: http://www.fairtax.org/. I’ll refer to some of that research in responding to Mr. O’Connor’s comments.

He states that the FairTax rate is 30%, which is true, but to compare it to the income tax it is replacing then we would have to say a person at a 20% income tax rate would really be at a 26% rate, because he is buying things with after tax dollars. Under the FairTax we would be buying things with pretax dollars as we’d be receiving all of our earnings (no income and payroll taxes). To compare the FairTax to the income tax the FairTax rate should be presented as a 23% rate.

The important issue is whether we will be at a higher or lower tax rate. A 2006 study by Boston University economists Dr. Laurence J. Kotlikoff and Dr. David Rapson concluded that the FairTax benefits all income groups. Of 42 household types (classified by income, marital status and age), all have lower average remaining lifetime tax rates under the FairTax than they would experience under the current tax system, and those with lower spending levels benefiting most.

Mr. O’Connor states that economists like this kind of consumption tax but “almost anyone who can do math hates the FairTax”. Like most economists, most CPA’s know only too well that our current tax system is broken and impossible to comply with. I would guess that most mathematicians would like the FairTax after reading the bill.

He quotes a former Treasury official, Bruce Bartlett who said, ”It took me almost a month to understand this crackpot proposal.” Bruce Bartlett’s statements about the FairTax have been thoroughly discredited. His efforts to misrepresent the FairTax are not taken seriously by most economists due to their lack of scholarly content and truth. Economists will have different opinions, but almost all agree that income taxes depress the economy and consumption (sales) taxes grow the economy. It is not rocket science. When you penalize productive behavior you get less of it.

Claims are made by some that the FairTax will create an underground economy. Isn't this what we have today with all the under the table and illegal transactions, and hidden economy of illegal aliens. Under the FairTax the drug dealer on the corner will be paying his taxes when he spends his money. Illegal aliens will also pay taxes as they consume, however, only legal households will receive the monthly “prebate” check each month to offset expenditures up to the poverty level.

The FairTax is so simple that some fear the public will understand it. It is so visible to the public that some fear the public will learn their true tax burden. It taxes us so directly that it eliminates the ability to buy and sell tax favors, so some that benefit from this practice hate it.

Numerous studies confirm that on average ~22% of the retail price of all US produced goods and services are “business taxes” imbedded in the prices. As Dr. Alan Greenspan lectured Congress, "only people pay taxes." Taxes, like any other cost of doing business, are added to the cost of products and are passed on to consumers. This deceptive practice of hiding our taxes in prices is resulting in the exportation of our companies and jobs rather than our products, as it places American business and labor at a ~20% competitive disadvantage.

By eliminating personal and business income taxes the FairTax removes taxes (and $500 billion in tax compliance costs) from the prices of American produced goods and services and allows American labor and business to compete with foreign competitors on a level playing field.

The FairTax would do more than any other legislation contemplated or possible to revive our economy, reverse our balance of trade, stop the fall in the value of the US dollar, save our industrial base (that is necessary for our national defense) and return to us the freedoms we have lost due to the income tax.

By eliminating the ruse of “business” taxes people will see, on every sales receipt, their true tax burden for the first time in generations. This visibility of taxes is the self-limiting factor on taxation and size and reach of government that was intended by our Founding Fathers.

The FairTax eliminates the buying and selling of tax favors by public officials and lobbyists that today corrupts our political system. By this means it transfers power from Washington back to citizens where our Founders intended it to reside.

Roger Buchholtz

WELL THANK GOODNESS, THAT'S OVER WITH

What a drag, this political process. But necessary. Another primary over with. The media thinks it's a circus and treats it as such. Every candidate has been raked over the coals and stomped on by the media and the talk show hosts.

I want to emphasize today that the FairTax does not belong to any one party - it belongs to each and every one of us Americans. It will be the American people who succeed in getting the FairTax passed, with no help from either the media or the talk show hosts.

Only one political candidate who favors the FairTax is still standing: Mike Huckabee. He talks about the FairTax whenever the opportunity arises and the media and the talk show hosts treat it like it was his idea, therefore a stupid idea.

For your information, there is a bill before congress now (HR25 & S1025) just waiting to come out of committee. Will it ever happen? Well, it's up to us to start ragging on our Senators and Representatives to get it passed NOW, before our country implodes.

Any candidate who stands up FOR the FairTax has my vote, and that includes Mike Huckabee. For those who want to put their money where their mouth is, go to http://huckabeemomentum.com and pledge a $25 donation ONLY if 10,000 people do the same.

I don't approve of everything Mike Huckabee stands for, but I have never approved of everything any candidate stands for. I have learned after many years that you can't have everything, so pick what is important to you and work towards that end.

IS RUSH LOSING HIS "GROOVE"?

The following is from a FairTax volunteer, concerned about Rush's' brush-off on the FairTax and Mike Huckabee:


I've been increasingly disappointed in Rush Limbaugh lately. I tried calling the show last week, but couldn't get through. So I sent the following...
From: Greg Dutton, AZ Volunteer State Director, FairTax
'ElRushbo@eibnet.com'Subject: Your "eternal optimism"... compromised
Dear Rush, the "eternal optimist",

I've been listening to you almost daily for the past 7 years. In that time you have helped transform me into a solid and well-informed conservative, a critical thinker, and you've inspired me to get involved in my community and politics. I don't know how many times I've heard you say that we should reach high for our goals and we can accomplish great things. I have always taken it to heart.

Which is why I have to ask you to PLEASE stop saying, "The FairTax will never happen."

For you to shoot down the FairTax this way goes against every grain of your "eternal optimism."

I'm 43 years old, I work full-time and my wife and I own two businesses. I barely have time to volunteer for anything, let alone a transformational national bill. In spite of that, I became a volunteer for the FairTax, and I am now the VOLUNTEER State Director for Arizona. I and the team of grassroots volunteers that we've developed here in Arizona all work to gain ground for the FairTax. We suffer the naysayers and tredge on in spite of them. We speak in front of audiences and debate the merits of the FairTax vs. the flat tax with marked determination and perseverence. We are gaining ground, maybe slowly, but surely.

We now have 72 co-sponsors in Congress (two from Arizona), which is at least 7 times the support that the flat tax has, and hundreds of thousands of volunteer supporters around the country. Each day, we add a new brick to our foundation of support.

While it's one thing for us to win a supporter, it's a-whole-'nother thing for us to get someone on board to actually DO something. When volunteers hear you say, "It will never happen," it cuts like a knife. It kills enthusiasm and willingness to devote time. It tells us that you think we're wasting our energy and our time, and that we should just pack up and go home. Instead of doing or saying anything positive, you're tearing down. You've adopted a defeatist attitude. You have the opposite affect of the "Midas touch" by turning some of our bricks into sand. You undermine our efforts to build something that we know is right for our country and right for Conservatism.

Perhaps worse yet, you contradict so many things you stand for as an Reagan conservative and "eternal optimist."

We're not asking for your endorsement of the FairTax. We're not asking you to recant anything you've said. We're not asking you to debate the merits of the FairTax. We're only asking you to stop saying that something good and positive for our country will never happen, and start saying what CAN happen, if.... We ask you to get back to "possibility thinking."

Rush, we value your insight and analysis. We and our supporters listen to you and look up to you. We do love you, Rush. Which is why we feel so strongly about this.

Sincerely,Greg Dutton


Let's hope Rush gets a good rest and a new start in the New Year. In fact, let's hope this for all of us! It's going to be a long year, but by the time it is over with, I hope every voter out there knows and understands the FairTax. It is up to us to educate the candidates and vote for the ones who "get it".

CPA'S: TWO DIFFERENT OPINIONS PLUS: "DID I HEAR WHAT I THOUGHT I HEARD?

I received a comment on one of my older blogs and also read a letter from an enthusiastic new FairTax Volunteer. I would like to share both of these letters with you. They are both CPA's with totally different views. I was afraid the comment from Anonymous would not be seen and I do appreciate him reading my past blogs. Here it is:

Anonymous has left a new comment on my post "QUESTIONS ABOUT LAWYERS AND ACCOUNTANTS":

"Happy to give up" the work going through the 60000+ tax code? Please, it's because of our speicialization in being able to do that, that we have careers in the first place. Secondly - helping our clients invest wisely is the work of their financial planners not their accountants. You've got to be kidding me, the fair tax will cripple the accounting world overnight and put literally 10's of thousands of people on the unemployment roles - it's not a good idea if you want to have an economy that maintains a low unemployment.


And below is the letter from the new FairTax Volunteer to the FairTax organization:

Ms. Colburn,
I got your contact information from FairTax.org. I am interested in supporting the FairTax initiative with my time and energy. I am a CPA with a young family, living in Richmond.
I am comfortable speaking with groups of individuals, and am generally persuasive and effective in hostile political company. I don't do anger or rhetorical flame. I will be contacting my representatives soon to state my support for the Fairtax, and may seek an opportunity to meet with them. I've got a letter to the editor of the Times-Dispatch waiting to go.
Please let me know what local organization exists which I may participate in.
Thanks,
Tim Fite

One other thing, totally off the subject: I have been watching the presidential candidates' debates and the forums and such afterwards. I heard Fred Thompson talking about his tax plan: He says he favors a flat tax. Everybody making under $100,000 would be in the 10% bracket and everybody over the $100,000 would be in the 25% tax bracket. Now how cruel is that?.........................................

THE FAIRTAX WON!

Mike Huckabee ran on the FairTax and won on the FairTax. When is the News Media (both liberal and conservative) going to recognize this phenomena for what it is? Neither side has had a whole lot of good to say about Huckabee, which means the general public (people like you and I) are allowed to form our own opinions about him.

According to the Media, the younger people are going to have a bigger say in who we elect as our next president. And the younger people like the FairTax. They see the logic in it and the opportunities for themselves when they are freed up to spend, invest or save their own money.

I don't agree with everything Huckabee stands for (I should say, everything the Media says he stands for), but I do believe he is a great spokesman for the FairTax and if he gets elected President, it won't be because he is a "Fundamental Christian", whatever that is. It will be because he saw the FairTax as a way to help the people as well as his country, and ran with it.

Congratulations, Mike Huckabee!

SENIOR MOMENTS

This FairTax volunteer clarifies a lot for us:

There are some responses to the criticism that the Fair Tax taxes consumption of income that has already paid tax. Most retirement savings, $16 trillion, are in "qualified plans" such as IRA's and 401K's. These tax-advantaged plans deferred taxes going in, as well as the income accumulating on the contributions.

Seniors withdrawing from these plans pay tax when the money comes out, and presumably when the seniors are in a lower tax bracket. Under the Fair Tax, money comes out of qualified plans income-tax-free, thus rewarding those seniors who had the forsight and discipline to save. Those seniors will enjoy a double benefit offset only by slightly higher prices.

Second, money coming out of tax-advantaged funds can push your social security benefits into a taxable status today. Your social security contributions were double-taxed going in, yes, payroll-taxed and income-taxed, each on 1005 of the same income. Under the Fair Tax there is no payroll or income tax on the money going in, nor is there income tax on the money coming out.

Pension income is untaxed under the Fair Tax. True, people who go into the corpus of savings or trust funds will be slightly disadvantaged. In that sense, the Fair Tax is a wealth tax. Many seniors think it is important that they can sell homes without paying capital gains tax and pass their estates on to their offspring without paying gift tax, estate tax and generation-skipping tax. The Fair Tax has an appeal to those groups.

People who are working and have not yet become seniors can save more rapidly for retirement under the Fair Tax without resort to IRA's and 401k's and other qualified plans.

I hope this has given you some ammunition. Best regards and Happy New Year,~Jim

STATISTICS ARE WHAT YOU WANT THEM TO BE

The following was submitted by a FairTax volunteer. Just goes to prove that statistics can be manipulated for your own means:

During the American Enterprise Institute's February28, 2007 program on "Taxing Sales Under the Fair Tax: What Rate Works?" one development demonstrated that the conclusion of the Beacon Hill Institute and Kotlikoff is to be adopted to the exclusion of Gale's.

The background is as follows. William Gale had published a paper in Tax Notes on May16, 2005 contending that the replacement rate necessary for a national sales tax along the lines of a Fair Tax would be 31% tax-inclusive, 44%tax-exclusive. Before coming to the seminar, Gale had reduced his rate requirement to 28.2% tax-inclusive,39.3% tax-exclusive.

The Beacon Hill Institute of Suffolk University Team, in collaboration with Boston University's Laurence J.Kotlikoff, using Gale's methodology, published its own paper in Tax Notes over one year following the Gale paper on November 13, 2006. In their paper Beacon Hill concluded that the Fair Tax revenue replacement rate would be 23.82% tax-inclusive, 31.27% tax-exclusive.

With minimal spending reductions on the non-Social Security side of the government spending ledger, the 23% tax-inclusive rate would put the government in the same surplus-deficit position as it is today. Kotlikoff, who with David G. Tuerck argued his and Beacon Hill's position at the seminar, presented a detailed reconciliation of how their analysis resulted in a lower rate than Gale's, using the same methodology. The presentation showed, item-by-item, where Gale's revenue base was understated, and where Gale's required revenue was overstated.

In the discourse that followed, Gale admitted that he could not account for the difference between his rate and Beacon Hill's. After some perfunctory remarks rejecting certain possibilities, Gale dismissed the problem with the statement that the "difference must be in the weeds. "Gale should have combed through the Kotlikoff-Beacon Hill "weeds" before coming to the seminar. Gale had at least three months before the seminar to do so, and he knew that his own thesis had been challenged and would be challenged further.

The analysis that would have been required from an economist such as Gale would not have been difficult because the Kotlikoff paper used Gale's methodology. The data was government data, to which Gale had ready access. As of today, Gale still has not explained why his figures differ from Kotlikoff's and Beacon Hill's. I submit that he has not done so because he cannot.