In your example, you are paying a 10% tax rate. The person making $5000 would then pay $500–TEN TIMES what you paid.

The current tax system is not based on facts but rather on emotion and jealousy (against those who took risks, worked hard, and sacrificed to succeed).

This guy is definitely the best I’ve read on FairTax. He actually has some faulty reasoning, too, but his paper is definitely the best proof against the FairTax.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=893888

Next time, don’t diss something without doing your homework.

Regarding the flat tax that some people throw up as a dodge. We had a flaat tax three times, 1913, 1961 and 1986. Since ‘86 there have been over 14,000 changes to the tax code all done because of special interests lobbying efforts.
There are those who demand doing away with special interests. It is true that 56% of all lobbyists visits with congressmen and senators is tax related.

And Kudos, Danny, for pointing out the inclusive/exclusive %s for the income tax! I love that fact!

Congress is a lot like a mogwai. It also has three rules for proper care:
1) Do not expose it to direct lobbying.
2) Do not allow it to create public debt.
3) No matter how much it begs or cries, never ever fund it with income taxes.

The consequences of breaking the rules for Congress are similar to the consequences of breaking the rules for mogwai. Brake rule #1, justice gets fried. Brake rule #2, the bureaucracy multiplies. Break rule #3, government transforms from a small passive entity into an ugly tyrannical Gremlin.

The only way to deal with Gremlins is to kill them. Fortunately, we can transform Congress back into the passive pet of the people it once was by passing the Fair tax and repealing the 16th Amendment.

Also, keep in mind that there is a 22% embedded tax on items (companies have to raise the costs of products in order to pay for corporate taxes and payroll taxes)

Also, nobody claims the 16th amendment is unconstitutional, it’s just a bad way of collecting money.

Lastly, this writer is completely wrong about the poor and the Fairtax. Poor people spend LESS MONEY than rich people. It’s the rich who buy fancy cars, boats, etc… Poor people pay barely any tax as it is.

The most important thing to keep in mind is that under the fairtax you keep 100% of your paycheck, you get the amount of sales tax of the necessities of life each month, and prices of goods do not significantly go up.

This writer clearly hasn’t read the Fairtax book.

Wikipedia has all of the documents you would want to look at (too many to post here, plus I don’t have the time). Not to mention you will actually learn what the FairTax is instead of what you think it is.

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

4) Services are taxed under the FairTax. And since eBay is providing a service and is receiving revenue from it, that revenue is taxed.

5) Paying a 10% tax affects both the poor and the rich equally. They now have only 9/10th of their income they can spend. Rich people tend to have higher costs (dollar amount) than poor people. Rich people and poor people do not buy the same things. I seriously do not know how you can’t understand this (then I looked at some of your previous posts). A loss of 10% of anyone’s income is still a loss of 10% of their income, regardless of how much they make.

A poor person earns $10,000 and a rich person earns $100,000. If a 10% flat tax is imposed upon them, they now have only 90% of their income left. The burden is the same.

1) I with draw my point

2) See above

3) From what I understand only the income tax is removed (and any related taxes). Based on that, the 23% already there would still be there. Also, I would like to see data on the percentage you think is inherent.

4)Services are not taxed under the plan, and, because I would not be buying a service, ebay would not be taxed.

5) The burden is not how much you have to pay or the percentage, it is how it would affect you. Paying 10% effects a poor person more than a rich person based on supplemental income

Key word here is “usually”. I am not arguing that sales taxes are usually exclusive. But they don’t have to be.

And come on, your using a online dictionary to talk about taxes. Why don’t you use a real source, such as the Brooking Institution (http://www.taxpolicycenter.org/briefing-book/improve/retail/exclusive-inclusive.cfm)

Here is what they said :Although there is no single correct way to report a sales tax rate, it is crucial to understand which approach is being used.

2) See above

3) ??? Where did you get 7%? When you take the base amount ($100) and add on the tax (total $130) you would then subtract the embedded taxes (they are more like costs associated with the current system) leaving you with a final value of $101, price neutral.

If that 7% is a current state sales tax, then your argument is negligible because 1) it is a state and not a federal tax so therefore the FairTax doesn’t even mess with it, 2) it already exists today and will continue to exist tomorrow, and 3) only the federal tax and federal costs of the current system are affected.

4)eBay provides a service, which is taxed. They can rent space on their webpage to businesses who want to advertise on the site. When a seller sells a good, they must pay transaction fees, which are taxed. Also fees charged to users to connect Skype’s VoIP product to traditional telecommunication network are taxed.

http://investor.ebay.com/faq.cfm

5) %=/=burden

What does that mean? Say we have a 10% flat tax with 2 earners:$10,000 and $100,000. Even though the 2nd earner will pay $9000 more than the 1st earner, they will still have the same burden of 10%.

6) What sales tax does the FairTax get rid of? It only eliminates the income tax, corporate and business tax, capital gains tax, payroll taxes, gift tax, death tax, alternative minimum tax, and the estate tax.

Here is the breakdown of the embedded costs of the current system (inclusive rates): 22% embedded cost = 10.45% payroll taxes + 11.55% corporate taxes, compliance costs, and the employer share of payroll taxes.

Current sales taxes that businesses pay have nothing to do with this equation and is in fact negligible because we are referring to the elimination of the embedded taxes offsetting the sales tax. The state sales tax has nothing to do with price neutrality because it does not affect what is being dealt with. Not to mention that since it is here today and it still will be here tomorrow, what you actually pay won’t change.

to address #3 – we’re not saying that we are replacing the 7% sales tax with a 23% sales tax. The 7% will remain (it is a state or county tax). what will happen is that the 22% (on average) that a company pays in taxes and tax preparation to bring a product to their shelves disappears. then you add 23% (the inclusive consumption tax) back to the price before putting it on the shelf.

So take $100 and subtract the 22% of imbedded taxes.

You know have a product that costs us $78

Then put back in the 23% inclusive or 30% exclusive tax (which ever way you want to do it) and you’ve got a product that costs $101.4

So now you’re paying 1.4% more for a product but your paycheck is 30%(or so) bigger because you’re not paying income taxes or payroll taxes! …if you have a job, that is…

——-2) The FairTax explicitly says that the tax will be inclusive. Saying otherwise will be misrepresenting the FairTax and in fact we wouldn’t even be referring to the FairTax anymore but a new type of tax system.——-
Correct, it says that it is inclusive, which is illogical. Sales tax by definition is exclusive. Furthermore, by making it inclusive they are charging Americans more.

———–3) Do you understand what it means to be price neutral? Something that costs $100 today will cost $100 (or close to it)under a new system.

Let’s look at this problem: Something cost $100 today. The FairTax becomes law. The FairTax is applied at its inclusive rate of 23% causing the price of the good to be $130. Now the embedded costs of the current system go away, 22% inclusive rate, leaving prices at $101. Price neutral.

Note: The embedded costs of 22% is an average.———–
I pay 7% sales tax, so lets look at this. The item costs the same base (we both agree on that) and then I pay 7% whereas you pay 23%. I do not see how that is neutral

———–3) Even though you buy goods from eBay, all of there new goods will have taxes collected off of them. Say eBay sells $100 million worth of new goods. When they report that to the state government, the state government will tell them to send in a check for $23 million. There is no incentive for eBay to not tax new goods. ————-
Ebay does not sell or buy, they are an auction site. Because the FT is only on new items what is sold used is not taxed, bigger market

————4) “The concept is that if you can afford more you should pay more, simply because it allows both to maintain a life style and is not that much more of a burden on you.”

So what you are saying is that if a rich person goes to McDonald’s, they should pay more because they can afford it? That is some crazy socialist thought process you have there. Who cares if Bill Gates can afford something more than we can, the fact of the matter is he is living in the same country with the same benefits as the rest of us.———–
I am simply explaining the definition of a burden

————-5) “Technically, even with a flat tax (which means all people pay X%) you still have more taken”

You may have more $$$ taken, but the burden (% of income) is equal throughout.——–
%=/=burden

2) The FairTax explicitly says that the tax will be inclusive. Saying otherwise will be misrepresenting the FairTax and in fact we wouldn’t even be referring to the FairTax anymore but a new type of tax system.

3) Do you understand what it means to be price neutral? Something that costs $100 today will cost $100 (or close to it)under a new system.

Let’s look at this problem: Something cost $100 today. The FairTax becomes law. The FairTax is applied at its inclusive rate of 23% causing the price of the good to be $130. Now the embedded costs of the current system go away, 22% inclusive rate, leaving prices at $101. Price neutral.

Note: The embedded costs of 22% is an average.

3) Even though you buy goods from eBay, all of there new goods will have taxes collected off of them. Say eBay sells $100 million worth of new goods. When they report that to the state government, the state government will tell them to send in a check for $23 million. There is no incentive for eBay to not tax new goods.

4) “The concept is that if you can afford more you should pay more, simply because it allows both to maintain a life style and is not that much more of a burden on you.”

So what you are saying is that if a rich person goes to McDonald’s, they should pay more because they can afford it? That is some crazy socialist thought process you have there. Who cares if Bill Gates can afford something more than we can, the fact of the matter is he is living in the same country with the same benefits as the rest of us.

5) “Technically, even with a flat tax (which means all people pay X%) you still have more taken”

You may have more $$$ taken, but the burden (% of income) is equal throughout.