Another FairTax Supporter Speaks Out - 1

(3) Will prices go up, or down? Yes, to both. Obviously there is not a simple answer. Some things will increase in cost and others will decrease. But the net effect will be very neutral. There are some supporters of Fair Tax that incorrectly argue that everything will be cheaper or cost about the same. If you own a business importing widgets from China and your products are drop-shipped directly to the end consumer, then your prices would most likely rise. However, if your business is creating wooden pallets in a small production facility in Butte, Montana using domestic labor and lumber, then your product prices would probably fall. That is because your raw materials would cost less, your accounting costs would fall, and the cheaper cost of pallets would reduce the cost of transportation of products, resulting in lower cost of the final products delivered on those products. Would the savings really be passed along, or would the greedy companies want to keep the extra profit? Don't be silly - of course the business wants to keep the extra profit, but in truth, they cannot. Highly profitable business creates a vacuum in the business environment and other business move in to take advantage of high profits until a balance is achieved between profitability and prices. One other effect of the Fair Tax system on maintaining price controls is that it would provide a fertile environment for small business investment which would create an abundance of new competition and competition for labor. Contrary to common belief, it is the complexity of the tax code that discourages startup business or encourages failure. Without the burden of the federal tax system, other countries would invest heavily in the U.S. resulting in competition for human resources and increased market competion (providing offsetting inflationary forces) - that means lower unemployment and higher wages while prices are held in check through competition. Okay, back to reality. Under FairTax, my personal income would rise, because all federal withholding would cease. Thus, I would bring home about 24% more money without the federal taxes which are withheld from my wages. Assuming that most, if not all of my tax savings would be spent on the federal sales tax, then where is my personal gain? Well, the trauma of April 15th would go away and that would be worth a lot of money to me. I wouldn't have to account for every dime I donate, or worry about the value of the television I gave to Goodwill. I wouldn't have to pay an accountant to help me figure out how to settle up with Uncle Sam and I wouldn't have to make decisions about claiming legitimate deductions and risking an audit or letting the government take it because I don't want to deal with the trauma of being treated like a criminal during an audit. What is the real reason for income tax code? Okay, this isn't one of the primary concerns I listed, but I'll mention it anyway. If the amount of taxes collected is about the same, then why would it matter to the government which system is used? Ideally, it shouldn't, but you should ask who benefits from the current tax system. There is a complete power infrastructure built around the income tax system. Those who benefit and those who depend on the system for their jobs and influence would not like to see it go away. But - it MUST go away because in the final analysis, it is corrupt, wasteful and doesn't serve the citizens of this country. Through the simplification of the tax code, some of the power would be returned to where it was intended to be - in the hands of the people.