Sorry for the late reply, I have been out of town.
I appreciate your concerns and are seeking answers to them. My experience is that someone that thinks critically about this issue, seeks answers, and studies the available material with an open mind eventually becomes a strong supporter of FairTax.

The concern about calculating the prebate being a complex task is a non issue. These numbers have been calculated for years and will continue on an independent basis. The bill itself explains who will be eligible and how the claim process will be handled. As far as handling the checks themselves, someone has already pointed out the Social Security already does this very well. Also, contractors for the online banking systems send millions of checks a week. I’m sure that they have problems, as you would expect, but nothing that can’t be overcome. That would be minimal as compared to the paperwork, records, and forms required for the income tax code. You have to remember that we are looking for a simpler, less oppressive method to fund the Federal Government.

You are not alone with your concerns about the prebate being a handout. On the other end of the spectrum, there are just as many that believe that the bill is not progressive enough. There has to be a happy medium and that is defined very well in HR/S 25. The basic premise is that no one would have to pay taxes on their basic needs. Your concerns seem to be that some would not spend their money properly. In my opinion, many do not prioritize their spending now and that they are causing their own problems. Freedom means that they have the right to do that. The bottom line is that they would have more to spend untaxed and if the money is gone before their basic needs are met, other problems exist. The FairTax will not make their present condition worse. The vast majority of Americans should not be subjected to the abuses of the income tax system simply because of perceived concerns of a few.

I encourage you to continue to study this issue and seek the answers at www.FairTax.org. You are thinking through these issues as I and many others have in the past. I ask that you frame your thoughts in comparison to your obligation under the income tax code. I hope that you will eventually come to the same conclusion as I have and help support the FairTax.

It's not much of a jump to send out direct deposits for this prebate to work very easily. Do you hear of thousands of complaints about Social Security checks etc now? Oh yeah, forget "checks", money will be direct deposited, thus no paper checks. My Grandmother never thought this would work, now she wouldn't get her Social Security any other way.

It would also get the illegals off the dole, as they wouldn't get the monthly prebate.

Point made and taken...(assume you meant "it's NOT much of a jump.")

Still, I wonder how the number of social security recipients compares to the total US households. I'm guessing this would be a major expansion. Also strikes me that SS payments go to individuals rather than households, making administration simpler. Defining a household in this day and age and then tracking it accurately seems far trickier than tracking a person through their life and then responding to their application for benefits.

And I just have trouble with any plan basically makes everyone dependent on a monthly federal check from cradle to grave. Right now I have only one major transaction a year with the feds (other than what they take out of my check) and that's how I like it.

It would also require everyone to be pretty disciplined and diligent about their spending in order for the offset to work as intended, no? In other words, get your check on the first of the month and use it wisely -- especially if you're poor. That's a big stretch for a nation with a poor savings rate, seems to me.

Because I am self-employed I have 9 personal income tax exchanges with the Feds and 9 with the State each year. Then business income wise I have 9 more.

You actually have more than one exchance. Every paycheck you have an exachange where you pay upfront and then work it out at the end.

Your employer has an exchange as well.

Those exchanges occur throughout the nation and have a high cost to them on State and Federal levels in terms of paperwork, manhours and so on.

Then on top of that each company has an exchange with the Sales Tax Division monthly.

Think how much overhead money is saved if the money collections and distributions were simplified?

The State and Federal income forms are pages and pages. Especially on the business level.

Sales Tax is far more simple. Mine is about a quarter of one page.

There would be tremendous governmental cost reductions and less beauracracy.

And loop holes would be closed since they would be gone.

There are so many glaring ways rich folk escape paying taxes because it is in politicians interests to keep them happy.

I am not saying it may not need refinement and and tweaking. But what we have now is broken beyond broken. And allows illegals and such to kill us financially.

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Keeping it real and to the core of the issue, not the peripherals.

That's for sure. I can see pro's and con's to most any system. It's far from over, and I'm glad to see the debate, pro and con.

That's just the point. It is as complicated as the IRS (Boortz-Linder mess). All those two want is a reduction in their taxes, they don't give a----about the fact it won't work either. Socialism is all that works, the government makes money off owning oil, coal, transportation, etc., and we pay no taxes. Tax what comes in and out of the country. I know that hurts corporate crooks, but who gives a ----.

Socialism is the well test and totally failed system.

Welfare states are not much better. Fewer medical services available, absurdly long, if not fatal, waiting times. Restricted services even offered.

Don't be 65 or older in countries such as England and need the more expensive surgeries. You won't get them.

I an not an expert on the new system. But the idea is that employers report your wage structure to the government. Pre-bates are paid on based on normal spending, meaning you are predetermined to spend x amount of dollars in y amount of time, which would include z amount of sales tax. That amount is prebated to you to refund the sales tax spent.

Spend more and it is on your head. Spend less and you are rewarded for saving.

But, I do not know if that is the model used here.

So, if you are thinking you have to save and file sales tax receipts, I don't believe that is part of any such tax plan.

Bottom line is the concept that up to X wages per year pay no sales tax. And Social Security and so on are calculated into the forula.

If executed propery you have a true progressive tax structure. Them more you spend the more taxes you pay.

And it eliminate such stupidity as limiting gifts family can give to family and so on.

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Keeping it real and to the core of the issue, not the peripherals.

It seems that you are looking for a reason to not like the Fair Tax. You try to make it appear that prices will rise dramatically with the tax included. The studies show that while the imbedded tax on new goods is 22%, the average imbedded tax on services is 25%. If you go back and factor this into your examples, you will find that your costs, with tax included, will rise little if any.

I sincerely doubt you will see anything close to a "22% imbedded tax" on pharmaceuticals. In fact, I suspect that there is virtually no tax whatsoever on pharmaceuticals due to massive research and development tax credits. Research and Development tax credits provide a powerful disincentive to lower prices for big pharma, if indeed there are any imbedded taxes at all within the pharmeceutical industry. I'm not willing to accept a generic one-size-fits-all bromide of "studies" as a panacea. In fact, if R&D credits were repealed as a result of the so-called FairTax, I suspect you'd see an INCREASE in the price regardless of the tax.

Ditto the doctor scenario. The cost of entry into the medical profession is very high. There is virtually no price elasticity within the medical profession (honestly...when was the last time you price-shopped a doctor? Would you WANT the "low cost provider"?). To take as an article of faith that prices for medical services will drop with the adoption of this so-called FairTax is essentially wishful thinking. Simply stated: there is NO incentive for medical professionals to lower prices.

There are many reasons I dislike your so-called FairTax.

First and foremost, I believe it is a intellectual fraud perpetuated on the American public.

I cannot see Americans voting themselves $4 a gallon gas and an extra $60 or so a week on groceries and giving up the home mortgage deduction simply because they hate the IRS.

The IRS is bad enough.
The so-called FairTax is worse.

I own a service company for an industrial sector.

No. I do not charge taxes on services rendered. But yes, I do pay many taxes on the components I need to provide those services.

And I pass those taxes onto my customers. As all service industries do.

Businesses calculate taxes, minus personal income and such, into their pricing as a cost of doing business. Realize and understand that.

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Keeping it real and to the core of the issue, not the peripherals.

I'm sure there are costs involved in your envelope-stuffing enterprise, PTC Guy. The cost of entry is not in the same league as medical professionals.

When the cost of entry is high (i.e. medical school degree, eight years of college) the result is much less price elasticity, something that people who attended accredited colleges learned in Economics 101.

I stand by my contention that prices for medical services will not drop with the enactment of the so-called FairTax. There literally is no incentive to do so!

Tell my high precision machinery and working in tolerances within a thousandth of an inch how cheap it is to get into.

I took more than Econ 101, so get off the ego trip.

I am fully aware of what goes into the medical field.

I am also aware MANY businesses require MORE monies to get on line than the medical field. Something of which you are obviously not aware.

Law says ANY business that buys a product to consume into producing a new product must pay taxes on those products.

Those taxes would be gone under Fair Tax.

I am not an expert of Fair Tax, but I do understand the implications of only the end user being taxed. It will bring the price of many things, including medical equipment, drugs and such thing down dramatically.

The more intervening levels of production, the more the high end product prices are driven up by intervening taxes.

How about learning something on these issues before speaking?

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Keeping it real and to the core of the issue, not the peripherals.

Let's break down the costs.

You go see kindly old Doctor Young for your ailments.

The nurse takes your temperature.
She's been with Dr. Young for years.
Is Dr. Young going to cut her salary now that he doesn't have to withold taxes?
No.

He has you sit in the examination room, on a sheet of disposable paper.
He sticks a tongue depressor in your mouth.
He looks in your ear and then discards the disposable cover.

Total cost of consumables: maybe a dollar.

Yep, you still have the same diagnosis of tertiary syphillis, which you contracted "from a toilet seat" when you were stationed in Korea.

He gives you a prescription and you make a followup appt with the receptionist.

I'll grant you his receptionist's taxes will disappear. Let's say the net benefit to you is $5 or so (factoring in you are not his only patient).
All the rest of the kindly ole Doc's equipment is bought and paid for in the pre-FairTax era.

Now then, where are the embedded costs?

Rent going down? No.
Equipment cost? None. All paid for years ago.
Consumables? $1
Nursing help? $5
Office help? $5
Utilities? no change.

Is old Doctor Young going to say, gee, my costs are now 6-10% less! I can pass the savings along to that syphillatic old geezer patient of mine! Better yet, I'll cut my fee and cut my nurse's salary 22% since we're not paying income taxes anymore so that the geezer won't have to spend so much!!

Not.
Gonna.
Happen.

You'll get socked with the usual $100 fee, plus the 30% sales tax, and pay $130 for the office visit that cost you $100 total last year.

If you feel there's a net benefit here to you, please ask Dr. Young to up your medication dosages the next time you see him.

The "FairTax" is a FoolsTax.

Is doctor Young going to cut her wages? No why would he cut her pay if he no longer has to pay "his share" of taxes.
Total cost of consumables 1.00$ OK have it your way,one dollar per person. How many people will he see in one day? 10. so thats 10 dollars a day x 5 days= $50 per week x48 weeks= $2400 per year. How long will he work? lets say 10 years. $24,000,thats alot of money to spend on $1.00 consumables.
The equipment is paid for,fine. In the next 5 years will he replace or update his computers,fax machine,telephone system,light bulbs,magizines,lab coat,reams of paper and forms,insurance,both home owners and malpratice. What about the newest tech.advances? Will just not use them? or will he have to buy them? The embedded tax is in each and every thing above and 100 more that he has to pay and then pass it on.
removing the embedded taxes and replacing them with the sales tax changes nothing other than the way in which they are collected. Every thing stays the same.
Open your eyes, and quit whinning about it.Just because it is mostly a Republican ideal( something the Dems have very few of) does'nt make it a bad plan.

Nothing you said applies only to the physcians.

But it sure impacts FUTURE purchases.

You are wrong on consumables. Consumables include office supplies. A ton of paper is consumed. And they contain embedded taxes.

And you are wrong on Utilities. They have embedded taxes from purchasing consumable that are part of the the doctors overhead.

And there is greatly reduced payroll expenses. Not filing income tax and so on.

And reductions in medicine overhead. They have embedded taxes since supplies the manufactures use consumables and so on.

The nurses salary has nothing to do with what taxes are paid. She is paid for skill and work.

You are refusing to see the whole picture. And creating false arguments.

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Keeping it real and to the core of the issue, not the peripherals.

The employer of a Nurse has to pay social security taxes for his nurses in the same amount she pays. If she doesn't have to pay her share of those social security taxes, which he deducts and forwards, and the doctor does not reduce her salary, she will immediately make more money. And of course that is in addition to the 30% more she will get to pay retail taxes on what she buys with her salary. There are much more faulty situations in the "fair tax" than can be enumerated in one writing. So the Nurse will immediately get 30%, plus, 7%, with no reduction in pay. If she chooses to buy little for awhile, she can get rich. Poor old doctor suddenly finds himself paying everyone 37% more, so he RAISES his charges to his customers, or his cash flow will kill him before everything catches up---if it ever does.
All this is a big farce. More complicated than income taxes. Just give the bookwriter and the congressman a reduction in taxes and let us proceed as we are. That is all they want.

http://en.wikipedia.org/wiki/FairTax

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Keeping it real and to the core of the issue, not the peripherals.

Excellent link, PTC Guy. I particularly enjoyed the spin of Congressman John Linder in that article. He is quoted saying President Bush's bipartisan commission on tax reform saying that FairTax "completely untaxes the poor". What Linder leaves out of his testimony , it does so by RAISING the effective tax rate on people who make between 15,000 and 200,000 dollars a year (arguably the vast majority of Peachtree City citizens). The dirt poor (less than 15K a year) and the well-off (more than 200K per year) get a huge tax break.

The panel has MANY reservations about the so-called "FairTax" system
Click here to see the report (PDF - Adobe Acrobat Reader required

FairTax is dissected beginning page 213.

I took a screen shot from the panel's final report, hopefully this will work:

[IMG]http://i59.photobucket.com/albums/g295/basmati_2006/governmentreport.jpg[/IMG]

If this doesn't work, I've hosted the screen shot at
http://i59.photobucket.com/albums/g295/basmati_2006/governmentreport.jpg

Bottom Line: If you want to pay up to 20 to 25% MORE in taxes, and think Paris Hilton and Delta Pilots need to pay less in taxes, by all means support your "FairTax".

It isn’t, wasn’t and never will be my inference to the All Mighty to represent any particular regions belief.

What ever form your spiritual leader takes for you is good enough for me.

It's good to hear that the Fayette County Republican Party has placed a question on its ballot about the so-called Fair Tax. The following thoughts might help the reader prepare for this test.

What about Social Security?

Social Security retirement benefits are calculated as a percentage of a person’s lifetime earnings. Social Security disability benefits are calculated as a percentage of a person’s lifetime earnings until the time of disablement. Social Security survivorship benefits (for orphaned children) are also calculated as a percentage of a person’s lifetime earnings until the time of death.

If earnings are no longer reported to Social Security, how will Social Security benefits be calculated? (If they are reported but there’s no tax involved, what’s to prevent some people from reporting much more than they really made so they’ll qualify for higher benefits? And how would that relieve people from having to keep track of their earnings and report them?)

What about the State of Georgia’s income tax?

Georgia (like many other states) piggybacks on the federal system for the reporting of income and much of the auditing that supports the enforcement of the tax. Where or how will Georgia get the money it now gets from income taxes?

If AirTran couldn’t implement a simple change of computer software without causing major chaos, how in the world could we expect our governments to implement major changes to our federal income tax system, our state income tax systems, and our Social Security system all at once?

Thinking people have no problem making up their mind about the so-called Fair Tax. The vote about it will be like an IQ test, and Georgia’s SAT scores may give us an idea of what to expect.

And how much money does this cost the US? I've even heard some folks say that this would hurt folks like that, because they would actually be paying federal taxes etc.

I agree, time to get this issue moving even more.

That's right, who thinks that drug dealers report their income and pay taxes?

The Fair tax collects 23% of every Escalade, Hummer, Mercedes, BMW, etc that criminals make when they SPEND it.

Awfully hard to cheat at the register!

Support the Fair Tax NOW.

Put the IRS out of business.

Forty-five percent of our citizens make under $30,000 a year and now pay little tax for that reason. How are they going to be able to buy all this stuff that costs up to 25% more with such a plan. It is "fair" only for the big earners and you all know it.

High, your concern is laudable, but misplaced. The FairTax doesn't tax those who don't spend above a certain threshold. Every household gets a prebate, which works in exactly the same way tax deductions work under the income tax- it un-taxes basic necessities. In fact, the FairTax replaces the payroll/medicare/SS tax, which is a regressive 16% tax that everybody pays.

the FairTax legislation mandates taxation that is progressive against consumption, and in order to pay a high tax rate, you must spend a lot. ...in other words, the folks who don't have the money to spend won't be in any trouble of being gouged. Given the prebate, a family of 3 who earns $30k/yr and spends every penny they make will have an effective tax rate of 5.37%. This is better than the current system.

Interestingly, you should expect the everyday cost of goods to go down when the FairTax is implemented, because the FairTax also replaces corporate income tax. It's estimated that between 22% and 29% of the cost of everything you buy is tax or tax-compliance expense, passed along to you the customer. You can probably expect prices to go down by 15%, and remember: you yourself won't have any paycheck withholding: you'll be shopping with your whole paycheck, because the FairTax replaces the income tax.

What effect would the FairTax method have on the special tax catigories such as the gasoline, cigarette, alcohol and luxury taxes?

None the fairtax only replaces those taxes as related to income.ie;ss.,death tax,capital gains ect.

You obviously do not understand the fact that you (and the rest of us as well) already pay the tax in the form of embedded taxes that are passed along throughout the production chain. Once that embedded cost is removed the prices will be almost exactly the same. Not to mention that everyone gets the prebate and 100% of their paycheck..

Next time you try to think this one through try to get all the information not just one little piece of it. Better yet, read the book. It will be an eye opener for you.