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Thursday, June 01, 2006


I have been a supporter of the issue for some time. However I am not confident that Washington will ever give it a fair hearing. To many people making way to much off the current system, but you never know if enough folks get educated regarding the benifits the grass roots may rise up and change things. We see that now with many current issues faceing the nation.

Howard, as I understand the prebate issue, every household in the USA will receive a check to cover their necessities (food, utilities, etc). I think this proposal is a great idea.

Oh my, what would all of the accounting firms do? You can bet on one thing, if it will be good for the general population, our congressmen will be against it. Thanks for the post and the web site, I am going to check it out further.

Thanks for the late post. It forced me to wallpaper my bathroom while I was waiting........

Howard, you need to lobby in Washington for the fair tax. If everyone lobbyed their congressional representative, we could have the fair tax. You could head up a grassroots campaign. You definitely have the energy for the job.

Wow, Howard, that Linda is not only brilliant....but a domestic goddess too!:)

Just wondering if you fix dinner when she writes articles in the journal :)

Actually I really enjoy your journal and look forward to telling my husband, "Howard sez" which he's resigned to hearing on an almost daily basis!


I understand your post is just a summary of a very complex issue, but at first blush, it does not sound advantageous to those of us who are no longer working and paying income taxes. One of the reasons we were not overly concerned about choosing a "home base" in a state with no income tax is that living on Social Security, pension payments, and small withdrawals from IRA money, we don't owe a lot of income tax. If the Fair Tax system builds in the percentages you are quoting in this post, we will end up paying a lot more, don't you think? Am I missing something?

The only problem I can see with it, and that was not answered on the web site's FAQ, that I could find,is what about all our disabled servicemen, firemen, and police officers, or those on SS disability who now receive a tax free pension? It appears this will screw them BIG time.

Jo, Michael, & Others,
Here is the theory as I understand it.

Whenever we pay for a product or service now, the price we pay covers the cost of production. Included in that cost of production is each company/supplier's cost of matching social security and medicare taxes, AND their costs to comply with the withholding rules/reporting, AND their costs to make sure each and every one of their business decisions does not have a negative income tax effect.

So with the income tax gone, all employee withholdings and matching gone, and no longer a need to spend time and money on "income tax effects" before making a business decision, the overhead drops significantly.

Again, in theory, it is estimated that all prices will therefore drop so that the price of products and services with the retail sales tax included will be about the same as the prices we pay today. The income tax is gone AND we pay the same prices as we are paying now, so there is no negative.

But won't the corporations just keep charging the same prices AND add the tax so that they are making up the reduced overhead in profits? That's a concern of mine. But, it just takes one company in each industry to lower the prices for a competitive advantage to make the others follow. Collusion, which does happen, is then the concern.

However, I can tell you that this theory would have worked in my former business. Without that extra income tax related overhead, we all would have been dropping base prices to stay competitive.

So, the theory is that the prices with the national sales tax included will ultimately be the same and there will be no extra burden on anyone paying low or no income tax now.

But the proposal goes further with what they call the "prebate." The drafters knew that opponents would ignore the theorized "lower price effects" and hammer them on higher costs of necessities for the poor, elderly, and non-taxed.

So the "prebate" was developed to give every American money to cover the sales tax on basic needs. Each household will get a monthly check: $188 for single adults & $376 for married couples. An additional $65 per month is added for each additional family member/dependent.

Every household would get a monthly prebate check. If the national sales tax causes prices to go up, everyone is given money to cover that increase on basic needs. If, however, prices ultimately stay the same as predicted, everyone gets a little windfall.

That's my understanding of the theories. The free competitive market is being counted on to keep prices including the sales tax substantially the same as they are now without the sales tax.

Why not just a {Forbs}flat tax for everybody: simple,fair,government gets more and us enterpreners keep more of what we earn.

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