Fair Tax Nation

Replace All Federal Taxes on Income with the Fair Tax Act , HR 25

The Following is the response I recieved from Eric Wargotz who is running for the MD US senate seat. He is stating that the tax is really 30%. I know there is a good response on the Fairtax.org site but can not find it. Can some point me in the right direction.


Forgive me but I thought I wrote you regarding this? I respond to all emails received. I would have to go back through hundreds to find the one i generated. I am very good about getting back to folks. Again, my apologies if something got lost along the way...I just don't know.

In any case, I have been advocating for a shift from tax on production to tax approach based on consumption, of which the "Fair tax" is one approach.

I do thank you for your links provided earlier and the information you provided. It was very helpful in getting up to speed on the "FairTax" movement.

I always research both sides of an issue (or all sides, as some would say) I also found this information provocative:

from: http://moorethoughts.com/2007/12/30/more-problems-with-the-fair-tax/

"1. Prices and wages can be sticky. The implementation of the 22% (or 23%, or 30% – see below) sales tax will be immediately felt in an inflationary way, even though, from a balance sheet perspective, the elimination of the income tax should result in an eventual wash. In the meantime, until wages fall and reach the new equalibrium of the post-income tax world, we have a significant problem.

2. There’s no guarantee the federal reserve can manage the money supply sufficiently to ward off the deleterious effects noted above.

3. The actual Fair Tax rate is more like 30%, not 23%. Bartlett notes the discrepancy in salesmanship this way

Unfortunately, the Fair Tax rate is not really 23%. It’s actually 30% when thought about the same way we think of state sales taxes. The 23% figure is what is known as the tax-inclusive rate; the 30% rate is called the tax-exclusive rate. Think of the difference this way: You go to the store now and buy something for $1.00. The FairTax adds 30 percent for a total price of $1.30. Since the 30-cent tax is 23% of $1.30, this is where the 23 percent figure comes from.

It’s in the details, but you never hear about. The new, revised sales tax rate is now at 31.27%.

4. The inclusion of state and local governments as part of the tax base is deceptive. Any increase in the costs to local governments will necessarily be borne by the tax base under their respective jurisdictions. This means, on average an average increase in local sales taxes by 80%. If you take the governments out of the tax base, the actual rate of the national Fair Tax increases to absurd levels. Further, the rebate portion of the plan is accounted for as an expansion of the tax base, not government spending, which it is."

There are so many articles and research pro and con the FairTax that I know you might agree the matter can be quite confusing unless viewed in a vacuum.

Please note that i do absolutely commit to a revision of our taxing structure to shift it from one of production taxing to consumption taxing.

I believe we both can agree on that basic underpinning of tax reform.



--- On Tue, 11/3/09, Mark wrote:

From: Mark
Subject: Fwd: Frederick GOP Club Meeting The FairTAX (HR25/S 296)
To: eric@wargotzforussenate.org
Date: Tuesday, November 3, 2009, 9:41 PM

Mr. Wargotz,

I have become very disappointed with the lack of response from you. I had taken you at your word that you would look into the FairTax and get back to me with you thoughts. I had even provided basic research for you to review.

I understand that you are inundated with email and work to do for your election. I do expect some response as you stated at the GOP meeting. This is a major issue to be brought forward and we need to get The FairTax passed to get this country growing again and getting jobs and companies back to the US .

Enclosed please find the the Bill and material expaining the FairTAX.(HR25/S 296)

Here is a URL with Mr Mike Huckabee explaining the FairTAX


Thank you for you consideration,

Mark Schaff

Support the Fairtax H.R 25 and S. 296


9455 Dunraven St

Frederick MD 21704

301 874 8156

----- Forwarded Message -----
From: "Mark"
To: eric@wargotzforussenate.or g
Sent: Sunday, October 11, 2009 5:34:01 PM GMT -05:00 US/Canada Eastern
Subject: Frederick GOP Club Meeting


I would like thank you for coming to the Frederick GOP Club Meeting on Wedensday night and meeting with us.

It was a pleasure chatting with you after the meeting.

I just wanted to follow up and let you know how much the The FairTax (S.296 & HR 25) would benifit the UNited States and

its citizens.

S.296 FairTax is a 23 percent consumption tax on new purchases and service. Unlike the current system The Fair Tax moves the tax burden from the workforce (productivity) to the consumer—giving them control over how much they are taxed.

The Fair Tax system would eliminate the IRS and replace every current federal tax—personal income tax, business income tax, the death tax, the investment tax and Social Security/FICA taxes included with a simple, Fair Tax. In other words, you would keep 100 percent of your paycheck and then pay ONE tax, the Fair Tax. Your income, savings and investments would never be taxed. And Congress would never again be able to hide tax increases in a convoluted system and manipulate the tax code for political gain.

The Fair Tax would completely fund the federal government, Social Security and Medicare

H..R.25 Fairtax will repeal all payroll taxes, including income tax, individual income taxes as well self-employment taxes, corporate income taxes, and Estate and gift taxes. Under the FairTax, goods and services purchased for business purposes, or in business-to business transactions, would not be taxed.

The FairTax also establishes a rebate for families to offset any taxes on spending up to the federal poverty level, as determined by the U.S. Health and Human Services Department. This rebate - mailed monthly in advance to every household - ensures that no American is taxed on the purchase of essential goods and services.

Because the FairTax is collected at the retail check-out when consumers purchase goods services, it treats domestically-produced goods and foreign-produced equally. Yet, because it will use free market forces to drive out the embedded cost of the income tax system and compliance costs, U.S. exports will become fiercely competitive in the global economy. In addition, because both domestic and foreign businesses could invest in the United States without any taxes on capital or labor, the American economy would be the biggest magnet for investment monies in the world.

Also with the Billions of dollars ( 13to 20 Billion Dollars) housed in banks outside this country for tax reasons taking resources and productivity. If the FairTax was passed today there be 2 to 6 trillion brought back into the country and put to work creating new businesses and jobs.

The best part of the bill is that the American citizen will not have to worry about IRS coming after them for taxes and on April 15th they can just go about enjoying a nice spring day!

Both my wife and I are FairTax Supporters and would like to express that to you should support The FairTax for the benefit of every American Citizen. The FairTax bill rid us of the existing regressive tax system and replaces it with non-regressive tax system with a National consumption tax of 23%. This tax will benefit all American citizens by allowing them to receive 100% percent of their paycheck.

I have included serveral easy to read documents to better understand what The FairTax would do for this coutry.

Also here is a URL for short video from You Tube where Mike Huckabee explains the FairTax and why it should be supported

More information about the FairTax can be found thriugh Americans for Fair Taxation at www.fairtax.org or at 1-800-FAIRTAX (800-324-7829).

Thanks again for meeting with us. Feel free to contact me with any questions..

Mark and Cyndi Schaff

Support the Fairtax H.R 25 and S. 296


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The info you're looking for is on the left side near the bottom of the main page for FairTax.org (look for the picture of tomato. It is labeled "...a 23% tomato or a 30% tomato?"

Meanwhile, here's my rather simplistic way of explaining it...
...you buy a "widget" for a $1.00. Built into the price of that widget is the 23% FairTax, so the actual retail price of that widget is $0.77 ($1.00 - 23%). That 23 cents is the FairTax and gets sent to the government. But here's the little math trick they use to argue the 30% rate - in order to get the retail price of $0.77 back up to the $1.00 sales price you have to add 29.87%. I'm not sure, but I guess this might be call the "effective" tax rate. So who really cares about this rate? What does it matter anyway if you're paying taxes at the "effective" rate as long as you're still paying the same sales price for that widget?
that's right Sean, it really does not matter which way it is calculated. The result is still the same. A smoke screen that they like to use, but they fail to mention all the hidden taxes today and that the Fair Tax is just a tax reform that changes HOW the taxes are collected, not how much.
The 30% is known as the tax exclusive rate. The effective rate is the tax rate after the prebate.

Thanks for the clarification.

The FairTax site explains the 30% vs the 23% very well. Look for the tomato analogy. I suggest that this candidate is missing the big picture. Who cares if it's 23% or 1 million % if it grows the GDP at over 10%, etc. Challenge him to name a better way to grow the economy. I guarantee he will not find anything. It is disappointing that our 'leaders' and wanna be 'leaders' get mired in the weeds, miss the big picture and offer no better alternatives.

My personal take on the matter of 23% vs 30% is that it just doesn't matter. If that widget you are thinking of purchasing is worth more to you than the $1.00 that it is going to cost, then you make the purchase.

6 months after the FairTax goes into effect, how many people are going to make purchases based on how much tax is going to be sent to the government? That will be the least of peoples concerns. They are going to buy things they "need" or they think is worth the cost, regardless of the tax burden.

Just my 23 or 30 cents worth.
Bingo! 6 months after the FairTax takes effect, I'm still going to buy the things that I need at my local grocery and hardware stores without much regard to the tax rate. As long as I'm still paying about the same price, I won't give a damn about what the actual tax rate is - and neither will most other Americans. In fact, I will leave the store smiling - knowing that I just paid my fair share of taxes without having to put my pen/pencil to an IRS form. It just doesn't get any better than that!
I won't give a damn about what the actual tax rate is - and neither will most other Americans.

Does no one care what the lobbyists and policitians think? Won't they care?
They have feelings to you know!!

In all honesty though.....if we could poll everyone in the country and ask them if they'd like to pay taxes out of their pay check before they see it or when they spend and see little to no increase in prices plus the prebate.....how do you think the majority of people would vote?

I know what the media and politicians would say...but seriously....does anyone really care what they think?
I care about as much for the lobbyist and career politicians as they do for us American citizens!

Sorry, just had to add that
Here, here! Ditto!!
Thanks for the help
Here is the response from Eric Wargotz

Dear Mark,

I was referred to the FairTax website where two threads concerning my emails to you have stimulated a bit of discussion. I appreciate you posting my views but obviously something got lost in the "translation". The example of the opposing arguments were just that, as I had explained in my recent email to you a day or two ago (as below). To reiterate, I did not state that I believe the 23 versus 30% arguement but merely cited that point as part of the debate in the literature on the FairTax topic.

The following is my response to another constituent who wrote me regarding the FairTax:

"Thanks for your comments and questions. The FairTax legislation is bold and progressive. I understand the argument to move to a tax on consumption rather than production and I have stated many time that I do support such a change. As a candidate for US Senate 2010 that is my position, pure and simple. I respect the FairTax movement and encourage all members to research my positions as a whole. I realize some among the FairTaxers are using this issue as a "ltmus test" for Federal candidates.. As you know, Fair Tax legislation has bounced around for some time and frankly I do support a more simplistic approach such as sales tax shift without all the other complexities in the bills. I like to keep things simple when possible and it seems to me that the simple approach in shifting what or how we are taxed makes most sense. As they say, "the devil is in the details". When we keep things very simple, then the details take care of themselves. "

I hope this helps explain my very supportive position on shifting our tax methodology from one based on production to one based on consumption. Eric


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