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

I have a few questions?

I understand the value of taxing consumption instead of production and belief it to be an admirable goal if not esential in the long term. The Fair Tax does that ! Which is very good.

Two points that I need to understand better are:

First: Don't we need to first pass a Constitutional Amendment against income tax before authorizing a national sales tax. History tells us that if we do not close the door Washington will utilize all revenue sources.

Second: Should we not leave in place the payroll deduction for Social Security retirement. I fully realize that SS is a ponzi scheme and the money that I put in was spent on my parents and that my children's money will support me. Having said that SS has been self sustaining and can be in the future and there does exist a rationale between how much each citizen puts in and the benefits they recieve. If we fund SS with a sales tax how will we even determine each individuals benefits? Won't SS become simply a welfare system with no fairness at all?

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Comment by Douglas Fowler on June 19, 2011 at 9:39pm: First Point: You make a very strong point that has been brought up before, but at least for me, I personally am willing to take the risk.

Second Point: Someone else will have to come in and answer the SS point better than I do, but I can quickly respond by stating that there is definitely a better way of determining individual benefits rather than the Payroll tax. Even if we just based it off of their income, there is no need to still jack a portion of your paycheck. I'm pretty sure the Fair Tax deals with this issue, but I unfortunately don't know the answer off the top of my head. Anyone else please help?

Comment by Marilyn Rickert on June 19, 2011 at 3:31pm: First Question: Don't we need to first pass a Constitutional Amendment against income tax before authorizing a national sales tax. History tells us that if we do not close the door Washington will utilize all revenue sources.

If we pass a Constitutional Amendment first, it could leave the US without a tax system for some period of time. The markets like to know for certain what tax policy is going to be so this could add much turmoil to US and world markes. The FairTax has some safeguards built into the bill.
1) It defunds the IRS so the IRS could no longer collect or process taxes
2) Sunset provision - If the repeal to the 16th amendment is not ratified within 7 years of the passage of the FairTax, the FairTax will go away and the Income tax would be reinstated where it was when the FairTax came into place.

We feel the people would be so happy with the income tax gone that they will demand the 16th Amendment be repealed to keep the FairTax.

Second: Should we not leave in place the payroll deduction for Social Security retirement. I fully realize that SS is a ponzi scheme and the money that I put in was spent on my parents and that my children's money will support me. Having said that SS has been self sustaining and can be in the future and there does exist a rationale between how much each citizen puts in and the benefits they receive. If we fund SS with a sales tax how will we even determine each individuals benefits? Won't SS become simply a welfare system with no fairness at all?

The Social Security tax is an income tax, so if we keep it we will have both an income tax and a consumption tax -- exactly the problem we want to avoid. With the repeal of the 16th amendment collecting the Social Security tax would once again become unconstitutional.

Under the FairTax, employers will report to the Social Security Administration how much the employee makes so future benefits can be determined. FairTax does not change the Social Security program only how funds are collected. Under the FairTax, more people will be paying into Social Security for example: the cash labor economy, the illegal economy and foreign visitors. I doubt drug dealers will be reporting their income to the Social Security Administration to receive benefits but they will be paying the FairTax on the new goods and services they purchase.