The FairTax and common sense

No discussion should be without facts, so before discussing the FairTax, let's get some facts from the Internal Revenue Service Tax Stats available online at www.irs.gov.

Total personal income in the United States in 2004, $6.8 trillion dollars.
Total Federal Government budget, $2.8 trillion dollars.
Total of Personal Income Tax collections, $831 billion.
Average Personal Income Tax rate, 12.10%.
Short fall of Income taxes to budget, roughly $2 trillion dollars.

There are real world numbers from the best source. No one invented these numbers to sell a book.

If the FairTax is imposed and every taxpayers spends every dollar of their personal income on new items taxes at the “quoted” rate of 23 percent inclusive, the federal government debt would increase at least $1.6 trillion dollars before the Federal Government pays the prebate. After the prebate, which on page 85 is $6,072 per household times 130 million households, the Federal Debt would increase by $2.3 trillion dollars.

The FairTax, going by real world examples, will not fund the Federal Government and would increase the Federal Debt by $2.3 trillion dollars each year.

The FairTax is a sales tax on new items only. Can you spend more than your income? Sure. And, under the FairTax, you would be taxed for that borrowing. At least 23 percent. And, even with all possible borrowing included, the FairTax will not collect enough revenue to fund the Federal Government.

Assuming every taxpayer increases personal debt by 30 percent, far more than any bank would loan in one year, the FairTax would only collect $2 trillion dollars in revenue at the quoted rate of 23 percent inclusive.

Let’s make it simple, because it is really simple.

The present budget is $2.8 trillion dollars. Add the "prebate" of over $789 billion dollars. The new budget will be over $3.5 trillion dollars. Unless Americans borrow huge amounts of money to buy new things, the real tax rate will have to be 51.4 percent on all sales.

Maybe the Federal Income Tax average rate of 12 percent seems high. But, why beg to be taxed at 51 percent as a tax protest?

The FairTax is not only a fraud, it's the biggest tax lie in North Georgia History.