FairTax – is Progressive

Below is proof of progressive nature of the Fair Tax. With prebates a family of with income of $34,110 will not pay any more to the government as it spends its $34,110. Even at $51,165, with the family receiving partial prebate, the amount they would be paying to the federal government would be only 7.7%

A not well known but very interesting part of the proposed Fair Tax is that it will tax state and local services. Why is this a positive for the economy? The government should not have special advantages over the private economy. There will be incentive therefore for state and local governments to reduce costs by outsourcing core services to private companies. This has been proven to lower costs and improve service (if only we mandated that TSA be private!). CNBC reported on November 7 that more states are using contractors to cut costs. The Fair Tax will accelerate this.

All other criteria are succinctly met. Zero personal and corporate tax rates will increase entrepreneurial activity tremendously. Revenue neutral, eliminating all deductions and the IRS are by design and core to the Fair Tax. Once the private sector starts again generating new jobs that are self sustaining a momentum will build to keep the Fair Tax long term if not indefinitely. It has been proven by many that it is the private sector that creates new industries, products, jobs, ancillary jobs, and sub industries.

Once passed the Fair Tax will be predictable and stable and increase opportunity for all.

Now is the time to eliminate a major albatross around the US Economy’s neck – our archaic tax system. By our 6 criteria, the Fair Tax is the only one that meets all. Visit http://www.fartax.org, http://www.returntoexcellence.net for more information about the Fair Tax. Contact your Senator and Congressman and advise them of your support. Visit my site Economics501.wordpress.com for a gamut of articles and economic analyses in support of free market capitalism.

About economics501

1 - free market Capitalist; 2 - Fitness Entrepreneur; 56 years old, VP at an Investment Bank in NYC, ex Venture Capitalist, happily married with 2 girls. Education: Rutgers and NYU. I allow Ted Hruzd, my friend to blog at will here. He has many posts here. I have known Ted since we were both students at NYU. Ted also works for an Investment Bank as a VP in Equity Global Markets. ------------------------- I was very very Socialist leaning as a 22 year old. I then strongly believed in Gov role in helping the poor. However, as a USDA Child Nutrition Programs, I personally accounted for millions of fraud, abuse, and waste of tax payer money. I came to believe that the poor would be best served with less Gov programs and more with direct aid via tax system. Then after 5 years I became a free market capitalist, was a venture capitalist in 2007 and helped start 2 high tech companies. I dedicate this site to champion free market capitalism as the best road to Prosperity. Please join in. If you disagree, fine, but please post with dignity and class and be civil. Argue with facts always.
This entry was posted in Tax Reform. Bookmark the permalink.

4 Responses to FairTax – is Progressive

  1. Linda Little says:

    But do you understand that federal taxation of State and Local government operations is clearly unconstitutional. We are a constitutional republic consisting of two sovereign government powers–Federal and state. Sovereign powers do not tax each other–period! And, if you had read HR25, Sec.704, you would realize that any unfair government competition with the private sector was taken care of. That section simply says that any government agency that sells $2500 or more of goods and services per quarter on the private market is classified as a government enterprise and has to collect and remit the sales tax. The playing field was already level. Federal taxation of S/L government operations was not only unconstitutional but unnecessary.

  2. Linda Little says:


    I’m not clear on your family example, and don’t know what a “partial prebate” is all about? But, as a long time AARP Volunteer tax preparer, I can tell you that middle class income retirees will always pay more federal tax under the Fairtax when compared to current tax law.

    For example, a retired couple living comfortably on two SS checks for $30,000 plus $20,000 from investment income/savings, pay virtually no income tax today. Under the Fairtax, their gross income would rise to $55,000 due to the prebate, and they could pay up to $12,650 in sales taxes, less the $5,000 prebate for a net increase in federal tax burden of $7650. Even if they could reduce their taxable consumption to 75% of gross, they would still pay almost $4500 more in federal taxes. Why would you expect retirees to get on board the Fairtax train?

    In addition, how is it fair to force retirees to resume paying for their SS pension with their sales tax dollars? Haven’t they already contributed for 45 years or so, and now expect to get the benefits without further taxation?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s