according to Fairtax.org necessities would be taxed.

Ya I said they would. They are effectively untaxed with the prebate. Thus allowing untaxed necessities while staying away from exemptions.

How often have you seen companies lower prices instead of pocketing the difference and calling it profit?

Additionally, you eliminate a HUGE tax deduction for homeowners, the ability to deduct mortgage payments from their taxes.

Addtionally the "prebate" would be what the government decides is the cost of necessities. If you are someone who needs a lot of medicines, etc you get screwed. Also, since the government can and will decide what the "Cost of necessities " is chances are that it will not reflect the true costs.


Furthermore as I said, my rent would be subject to tax according to fairtax.org.

Any savings I get from no federal income tax is eaten up by the new tax on my rent. And with the "prebate" that becomes a wash. So any food, clothing etc that I buy each month will be a further drain on my wallet.


Finally at my income level, my effective tax paid to the federal government last year was about 11%. Now you are suggesting it be 23%. I have done the math, even with "prebates" I come out on the short end of the stick. I am sure that most below my income would get screwed similarly.

I have a better solution: repeal the 16th Amendment and return to the forms and methods of taxation stated in Article I of the Constitution. The portion in blue was changed by the 16th Amendment.

The Congress shall have power to lay and collect taxes, duties, imposts and excises...No capitation, or other direct, tax shall be laid, unless in proportion to the census or enumeration herein before directed to be taken. No tax or duty shall be laid on articles exported from any state.

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A panda walks into a cafe. He orders a sandwich, eats it, then draws a gun and fires two shots in the air.

"Why?" asks the confused waiter, as the panda makes toward the exit. The panda produces a badly punctuated wildlife manual and tosses it over his shoulder.

"I'm a panda," he says at the door. "Look it up."

The waiter turns to the relevant entry and, sure enough, finds an explanation.

"Panda. Large black-and-white bear-like mammal, native to China. Eats, shoots and leaves."

Competition will force a drop in either prices or an increase in pay. Simple economics.

Ok first off what value is the home mortgage interest deduction if you did not owe any income taxes?
That deduction is meaningless because no one will be paying income taxes.
70% of households do not use that deduction anyway.
Of that 69.4 billion dollar deduction 10% benefits those who make under 30000. 25% for those under 50000. This is not a big benefit for the middle class or the poor.
Nearly 3/4 of home sales involve existing homes, none of which would be taxed. Used goods are not taxed. Homes would be more affordable to the middle class and poor. They would have increased real wages and if they went for a used home no tax.
All I see here are improvements.

They will reflect the average cost, which is good enough and is worth it for getting rid of exemptions. Some people will also get more from the prebate than they spend on necessities.

Edit:
I missed some of your post.

The prebate is just to cover tax costs. I asked before you have a job right? You should also be getting an increase in pay.

Well I can not go over your calculations, but you should be seeing an increase in pay. The economy will improve. All the other benefits that I have already explained. Also if we keep the tax system we have now you should expect a large increase in the tax you will be getting because of SS dependents. Your real wages will increase.

Your assumptions would be wrong. The poor make out the best from this system.

According to the SCOTUS the federal government has a right to tax income with our without the 16th amendment.

Without income tax how do you expect to pay for current and future government expenditures.

You have no guarantees that I will see an increase in pay (and given most companies histories of pay raises I cannot see them dolling them out) nor can you guarantee that companies will lower prices. Why should they? They have no incentive. You MIGHT see a slight decrease in prices, but certainly not enough to make up the difference.

You have a lot of faith in businesses do to "the right thing" when history shows that they generally do what is going to increase their bottom line.

Competition guarantees that. We can say is very very probable.
The incentive is competition. One lowers prices to get more people. It is a very basic economic principal. I do not need faith of them doing the right thing, if they want to stay in business competition will force them to.

The problem with a return to pre-16th amendment ways, the US would have to pretty much cancel several treaties that effect the global economy. The GATT '94 (which put the WTO into place) laid out how large a tariff can be. President Bush tried passing a 20% tariff on steel so that steel at home would be stronger, however the WTO found us in violation of the treaty and allowed the EU and other nations to pass tariffs against us (which they almost did til we lowered our tariff)(they almost passed a 30-40% tax on US oranges, and other products that we sell in Europe). The income tax keeps us attached to the world, which although I am against the new WTO, I can see no way in the upcoming future we can do without it. The prices we have now is due to low tariffs, I don't want to see prices on products after tariffs rise. The US no longer manufacturs goods at a rate to keep the country going. So in order to repeal the sixteenth amendment you would first have to return jobs home (so bring manufacturing back) then slowly work us out of the WTO (which will hurt our pocketbooks as the price of everything imported rises), then finally pass all the taxes necessary to keep the government going.

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Non concupisces domum proximi tui; nec desiderabis uxorem eius, non servum, non ancillam, non bowem, non asinum, nec omnia quae illius sunt.

The fairtax would bring jobs here.