That's a VERY interesting point, abcd. The cost of living in CA is way higher than the cost of living in say, Arkansas. And that's just state vs. state. Try Seattle versus Yakima--both in Washington, but the cost of living in Seattle is a joke compared to Yakima. How or would the FairTax compensate for cost of living (COL) variations?

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The only thing I've seen specifically related to this is that the poverty levels are adjusted for Alaska and Hawaii. I'm not sure if that's the only variance in the prebates or not.

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Christian apparently addressed my question earlier in the same thread...



But, according to the DHHS's FAQ about its poverty guideline:



This means that the FairTax's prebate--which is tied to the poverty guideline--doesn't adjust for the variability of cost of living. It doesn't matter if you live in Seattle or Yakima. The punchline is that the tax may be regressive for lower income folks in areas with high cost of living. So, I think it's a little too simplistic to say that the prebates completely fixes the regressiveness of a traditional sales tax. It also has a weird side-effect for people in areas with lower cost of living. For them, the prebate will cover the FairTax on essentials and then some. The prebate becomes an entitlement program of sorts.

It may not be a make-or-break-it sort of issue, but I think this deserves more analysis. All the numbers I've seen are given as averages and glosses over things like this. Are there more region/industry-sensitive analyses available?

All this talk of COLA adjustments is a red herring non issue.
We all pay the same income tax rates, it doesn't matter where you live. The more you make, the more you pay. There is no adjustment to the income tax rate you pay just because you happen to live in an area where the cost of living is higher. The same is true with the FairTax, with the exception of Alaska and Hawaii as I have already pointed out.
The prebate is an across the board, equal, treat everyone the same way to effectively provide a floor on spending below which no effective tax is collected. If things in your area cost more, chances are you are also making a higher wage and bringing home more money. When your payroll taxes go away, you will also be getting a "larger raise" than someone who earns less than you.
The market already takes care of this disparity, it is not the governments role.
McDonalds in Charlotte pays more than McDonalds in Chester.
And again, to argue that this is an issue you would also have to be in favor of manipulating the current payroll tax rate depending on where a person lives. That aint gonna happen and isn't even being discussed.
Non issue here.

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That is not quite true. First only legal residents can apply. And of those only those who apply receive the prebate.

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It would be harder to do this, since the income tax code will have been gutted, and during the transition year after the FairTax kicks in, the IRS will only be around for two or three quarters to deal with the previous year's business.

There'll be a bill that instantly is brought up in the Congress, called HJR 16.

Quoting from the FairTax FAQ:

HJR 16 has to be passed by a two-thirds vote of members of both the House and the Senate and be approved (or ratified) by three-fourths of state legislatures (38). We are currently laying the organizational groundwork for this push and have already started the educational process at the state level.

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It would be way too complicated to have a different level for every neighborhood, which is what it would amount to. It would vary from one town to another, and from one part of a city to another. Bottom line, it is much better than the income tax.

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Brian,
So, we're in agreement. Sorta sounds like you're quoting to disagree with me!
I'm tired....

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In my experience, there are some who I have a hard time convincing because they are in the Marxist paradigm and don't even realize it. If you ever do convince someone stubborn like that, they'd sure be stubborn -- kind of like a dog that won't let go of a bone.

But I had heard someone say it's better to let go at some point and to concentrate on the ones that are easier to win over. The only problem with that is that many of them are just as easy to persuade to the "dark side," once they've seen so-called "evidence" to the contrary.

I'm not sure there is one best strategy, except to just keep plugging away.

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Ok, so someone brought up a point that either wasn't answered or didn't satisfy me. I've read through all the threads, and heres my thoughts... I like the fair tax for sure, but how can you avoid a new "underground economy" where businesses that offer SERVICES (like a masseuse or a taxi) don't offer two prices? One credit card price with a 23% tax, and a cash price without?

It won't really satisfy me to say " they'll be prosecuted". I guess I want to hear if Huckabee, or anyone here knows how it would be curbed or avoided.

Also, on another note, now that everyone has their W2's it would be a good time to send people the fairtax calculator link, don't you think?

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There will always be those that do anything they can to avoid paying the proper taxes. It does not matter which system the taxes are calculated under.
This will be much less under the Fair Tax than under the IRS.

Since you have established one fact in your statement (they accept credit card payments) we can consider that each case (like a masseuse or a taxi) you submitted are in fact a business. Every business providing services will report on regular basis (monthly) their gross income. Then they would have to document the B2B transactions and report the Fair Tax on the Balance.

The taxi cab business will be easier to track as his expenses, mileage logs etc will determine what his gross income should be. (per mile rate times miles driven) If he falls way below this on a regular basis, this is where he gets
caught.

The masseuse could be a different operation.
A:) If a masuese were to operate on a strictly cash basis and did not register as a business, he would pay Fair Tax on all his supplies and materials he buys. He would also pay Fair Tax on all his personal purchases. How he derives his income does not matter. He is effectively the same as an employee for a company. He may be required to have a special license or certification, but this is not a business license. (A realestate salesperson is not a business but must be associated with a realestate broker; the realestate broker is the business) There is no problem with this example.
B:) If the masseuse acquires a business license, he would be subject to report his sales. (Depending upon the state taxing mechanism after the Fair Tax at the federal level eliminates the "adjusted gross income" many states [36 currently have income taxes] may adopt the Fair Tax model and include services for sales tax.) Then the state authorities would be monitering this more closely.

Hope this gives you a better understanding of " they'll be prosecuted".

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Thanks! that was very helpful.

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There has formed a Meetup Organization to the support the Fair Tax using the pattern set up by the Huckabee Campaign. Some of those that supported Mike have already joined the new Meetup.

Here is the link to the National Organization.

http://fairtax.meetup.com/77/

If you visit this site, you may remember many of the names.

If you are an organizer of a local Meetup and are interested in joining the new Fair Tax Meetup group, please register with us.

We can get the Fair Tax moving with a lot of supporters.

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PLEASE sign the FairTax petition that will be delivered to congress on April 15!

http://www.fairtax.org/site/PageServer?pagename=changedc

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I just signed it!

Good!

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Yep, some will evade business taxes, but for the first, time, they'll be paying taxes whenever they go to a store or get a haircut. Not only that, but people who are here illegally won't be able to apply for a prebate, which makes their tax regressive.

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I just read the first Fair Tax book and am starting on the 2008 redo. I'm so excited about this stuff. I gave two Fair Tax books this week as birthday gifts!

My take on the Fair Tax creating a new underground illegal economy: one of the points made in the book was that current tax evasion can be done in private, i.e., the individual tax payer decides not to report income, etc. Tax evastion under the Fair Tax would mean that the tax payer would have to conspire with another person, making that tax evasion more conspicuous and harder to get away with.

Also, the 80% of the tax collected under the Fair Tax would take place at places like Wal-Mart, K-Mart, grocery stores, doctors, hospitals, car dealerships, etc. These place are not going to risk being criminally prosecuted for not collecting.

As far as businesses offering special deals to avoid the sales tax, they would have to advertise it and would probably be caught quickly. Their competitors would rat them out!

Unfortunately there are always going to be those who try to get away with paying their fair share, but the Fair Tax is absolutely the most fair way us to fund the federal government.

I heard that there always will be underground economy.
With FairTax, I think it's a lot better.

http://www.fairtax.org/site/News2?news_ ... le&id=9317
(I didn't finish reading this, but it seems informative...)

Yep, there's no way to make it perfect, but it's close enough. Plus it's far better than the current system.

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