It is reasonable to expect that "the wealthy" - those who currently pay most of the current taxes - would also reap greater rewards under a fairer, more equitable, tax system. The assumption behind such complainers is that those, who do very well, should not be entitled to enjoy the fruits of their labor; they should be paying for others who aren't interested in taking the risks, or putting forth the effort, or who haven't had the luck (yes, realistically "luck" IS a part of the equation, however, those putting forth effort may position themselves better to become recipients of same).

With the present confiscatory income (and payroll tax withholding) system, our wonderful "politician benefactors" assure the majority (those of us who are not wealthy) that they'll see to it that "the place is run" on the backs of the wealthy; what we, the "non-wealthy," don't appreciate is that our complicity with this scheme creates barriers to achieve the wealth we seek because the scheme requires greater numbers of debtors (let's call them for what they are, "tax slaves"); our elected "benefactors" slowly distort and dilute their "promise," and the "curve bends" such that more and more is paid by more and more of us who are less and less "wealthy."

Just look at history. The story has been told.

We're poorer off because of the income tax system; our families do not have the use of the fruits of their labor - it is "da gubment" who tells us what we can keep, as ours. What's more, they take MORE than is rightfully theirs, and force us to spend (on average) 50 hours to prepare and file tax returns to get back the excess (without interest - and, oh by the way, if you wait longer than 3 years, they can just keep it because they're decided it's not ours anymore).

And, by taxing income from businesses also, they set up another "straw man." Like the "wealthy," now they'll also make the businesses support the "enterprise." And we clap, while we pay more for goods and services with an average 22% hidden tax.

And, oh, let's not forget the overhead of the income tax system - calculated at something like $350-$500 bil per year (depending on the extent to which preventive "tax planning" costs are included). By reducing those who are "liable" to file a tax return by 90% (such as would occur under enactment of the FairTax), the opportunity for government coercement, and truly punitive interest and penalty additions to continue to do the damage to America's families businesses, would greatly diminish - and their need to further indenture themselves to moneylenders to pay the added burden.

If one wishes to go deeper to explore the manner in which why such an income withholding scheme is necessary to enforce fractional reserve banking, check out Aaron Russo's courageous film - in its entirety - at either Google video or YouTube (look up the title - make an effort on your own behalf; you'll be glad you did). Having read many accounts of Mr. Russo's subject matter over the years - and having seen the effects of those who "partner with power" at the expense of the working man and woman - without a doubt, Mr. Russo has truly rendered valuable service to every American who wants to understand more clearly why/how the "deck is stacked" against our financial success.

It really doesn't take a Ph.D. to figure out the better - and, btw, truly simpler - way. Scrap the code, the IRS, and remove the hands of the politicians and moneylenders from our purses.

ih

Mr Rice - Would you please point me to the site with that study by the US Treasury on the FairTax vs Income Tax. I haven't been able to find it. Thanks.

I believe Basmati's figures come from the final report by the President's Advisory Panel on Tax Reform (commissioned by our hero W). You can view it all -- including a chapter on the national sales tax idea -- at taxreformpanel.gov.
Here's the relevant section on the proportional tax burden, which it says would fall only for those making less than 30k or more than 200k while rising for everybody in between:

"Figures 9.3 and 9.4 show that low-income and high-income Americans would benefit from the retail sales tax with a Prebate, while middle-income Americans would pay a larger share of the federal tax burden. . . . American families with the lowest 20 percent of cash incomes currently pay negative 0.5 percent of total federal income taxes because the tax credits they claim exceed their total positive tax liability. Under the retail sales tax with a Prebate, this group would pay negative 5.6 percent of the federal sales tax burden because the amount they would receive in monthly checks from the government would exceed what they would pay in retail sales tax at the cash register. In total, the bottom quintile would bear 5.1 percentage points less of the tax burden. Families with the top 10 percent of cash incomes would also benefit substantially from the retail sales tax. Their share of the tax burden would fall by 5.3 percentage points - from 70.8 percent to 65.5 percent. Middle-income Americans, however, would bear more of the federal tax burden under the retail sales tax with a Prebate.
The Treasury Department's analysis of hypothetical taxpayers shows that married couples at the bottom 25th percentile, 50th percentile, and 75th percentile of the income distribution for married taxpayers would see substantial tax increases under a full replacement retail sales tax. A typical married couple at the bottom 25th percentile of the income distribution earns $39,300 per year and would pay $5,625 dollars in federal taxes in 2006. Under the retail sales tax with a Prebate, the same family would pay $7,997 in net federal taxes after subtracting the Prebate of $6,694, resulting in a tax increase of $2,372, or 42 percent. A typical married couple at the 50th percentile of the income distribution making $66,200 would pay an additional $4,791, a tax increase of 36 percent, and a typical married couple in the 75th percentile, making $99,600 would pay an additional $6,789, a 29 percent tax increase. A typical single mother at the bottom 25th percentile of the income distribution for head of household taxpayers has $23,100 of income per year and, compared to current law, would pay $5,866 more under the retail sales tax with a Prebate..."

I can't tell if this analysis takes into account the current payroll tax, although at these numbers I'm not sure that would change the basic point.

The report also raises a number of other concerns, including that the Prebate would create a gargantuan federal entitlement program with all the attendant costs and complications -- and more as it is inevitably expanded, adjusted, shaped, molded, scattered and smothered to the benefit of certain groups, driving up costs and requiring higher tax rates. The only way to prevent that is to throw out representative democracy along with the IRS.

Several other points but you can read for yourself if you care to. Cheers...

I'm confused. I currently pay 28% of my total income for taxes. Yet if I am taxed 23-30% on the money I choose to spend I'll spend 20% more ? Dang this new math !!!!

If you are in the 28% tax bracket that doesn't mean that you actually pay 28% on your entire income. I am in the 25% bracket and just figured what my actual percent is and it is 17.5% - I then added in the employer share of payroll taxes considering that i really pay them and i am still under 25% - i'm at 22%. Remember that there are tax brackets and your first so much is taxed at 10% then some at 15%, 25%, 28% etc. It is only on your top dollars that you pay 28%. Also, I take advantage of every tax incentive i can like max out 401K contributions, put money in IRAs, I've got capital gains losses that i subtract off, business losses from a small business we own etc. All of those reduce your total income that you pay taxes on. But, also remember that you won't be paying sales tax on your entire income stream (unless you are my daughter who spends all her money on shoes and purses . It's not an easy analysis make. I've tried to find the US Treasury info and haven't been able to find it so if you, Mr Rice, could point me to the site I would appreciate it.
One more thing, the rate is 30% (no sliding scale there - 30% on the first dollar spent and 30% on the last dollar spent). Note that 30% is the equivalent of a 23% sales tax. $100 taxed at 23% leaves you $77 to spend. Spend $77 dollars and pay 30% sales tax ($23) and you have spent $100.