The FairTax

Has anyone heard of the FairTax. Its a bill in congress that would get rid of the income tax (and the IRS) and replace it with a 23% sales tax. I went to their website fairtax.org and looked it over, seems reasonable.

Have you heard of it, what do you think?

I heard about a flat tax initiative a while back. I think they were proposing a 10% tax on everything you buy instead of paying state and federal income tax.

I hadn't heard of this.  Going to have to look into it more.
I can already see some bad things to it.
It looks good on paper but I don't know......communism looks good on paper but doesn't play out to well in the real world.

The first thing I noticed is they say 23% sales tax.  But the tax is paid by seller, tax is included in item.
Their math is: $100 item, business hands over 23%.  That's not really a sales tax but a business tax. They are trying to say the item is $77 and you paid $23 in "sales tax".  But 23% tax on $77 is like $17-ish.
It would have to be set up just like sales tax now.  You buy $100, business collects $23 for government.
But then the business pays no tax on earnings, major tax lose.
Set up like they want it and a business just pays 23% of sales.  But the government takes doesn't take into account the cost of item.  I buy "x" for $90, sell for $100, turn over $23 to gov.....net lose of $13.   (This is eBays model, right?)
If they tax just profit, I as an owner, can just draw any profit as pay (not taxed) and business pays no tax.....

Help me out here guys.   How does this plan work?

The Fair Tax is an imbedded tax.  If you purchase a new item for $100 with an imbedded tax of 23% then the initial cost of the item is $100/1.23 = $81.30.

You only pay tax only on what you spend, not what you earn.  There are exemptions for food and medications.

Most importantly as the Fair Tax pertains to storage auctions there is NO sales tax on used items.

This would only replace the federal income tax, not state, county or municipal taxes.

Read Neal Boortz's book on the Fair Tax and his follow-up clarifications.  Do away with the IRS and much of the corruption in Congress. 

Tax needs to be separated out..

It should just be a flat 10% of income, no deductions..

Ronald Regan got a flat tax implemented (not 10%).  Over time Congress just changed it to a graduated tax again with exemptions for their cronies.  The Fair Tax repeals the 16th Amendment doing away with the income tax and therefore the IRS.  Let those tax bureaucrats find a job with only their knowledge of a nonexistent income tax code!

With a flat tax on income, people can still be dishonest and not pay their fair share. There would be no escaping a flat tax on spending.

There would be no escaping a flat tax on spending.

Buy from overseas suppliers, or the black market, or Craigslist, or eBay, or...

So someone that makes $10 million a years only has to live like any Joe 6-pack to get all of his money for free?

Then why have the money?   

So someone that makes $10 million a years only has to live like any Joe 6-pack to get all of his money for free?

Well, our current system would require this same individual to pay about 40% in income taxes on top of their property taxes, sales taxes, regulatory taxes, etc. Most people don't realize that they're getting taxed at a rate of 40-50% of their income. That's insane! Taxes are hidden everywhere. Put 20 gallons of gas in your car, you just paid the government $8.  Seems like every utility bill you pay has 10-25% in government fees. If you're a smoker or drinker, you're paying the government thousands in taxes every year. You like driving your car? There are annual taxes in the form of vehicle registration on top of the sales tax you paid when you purchased the vehicle. Want to go to work in a certain field? You'll have to pay the government occupational license fees. The list goes on and on. It's just out of control.