That is exactly the concept involved. By prebating(a rebate before instead of after) you are actually "exempting" the first portion of the taxes due to be paid.
Actually it has been my experience that I get by much less expensively than the government "allows" for in the tax codes. If I itemized I wouldn't even get close to the standard deduction.

The wealth penalty someone mentioned. You only will pay taxes on what you buy if your money stays in accounts and draws interest or if you make money by investing you will not be paying taxes on it. There will also be a lag period while instituting the plan.

Graduated tax system: The rich spend more and thus they WILL pay more in taxes.

__________________
"Most people can't think, most of the remainder won't think, the small fraction who do think mostly can't do it very well. The extremely tiny fraction who think regularly, accurately, creatively and without self delusion---In the long run these are the only people that count."Robert Heinlein

Yes..BUT..many of us see the fair tax as double taxation and not as the answer to our prayers. We already paid taxes on much of the money we acquired over a lifetime. Now they want to tax us when we spend it...

I'm certainly no "expert" in this field but one would think the so called Fair Tax would encourage a barter system! People may well just trade goods and services,no money changes hands..they could avoid paying "any" consumption tax

In addition..The FairTax proposal assumes a 100 percent tax base on consumption. By way of contrast, most states that have sales taxes have roughly a 50 percent tax base. With the FairTax’s 100 percent base, consumers would pay taxes on a great many things that may not intuitively seem like consumption.

The list would include:

Purchases of new homes
Rent
Interest on credit cards, mortgages and car loans
Doctor bills
Utilities
Gasoline (30 percent in addition to current taxes, which would not be repealed)
Legal fees


The Fair Tax needs work..I have not made up my mind on this plan. It has potential but it may also create new and creative ways for us to avoid paying any tax at all. In that...there is some merit...

-0-

__________________
"Destiny must be shaped and not left to mere chance."..Spencer Collins

Hey..does this sound too good to be true? What about inflation and the temptation to cheat on large ticket items? Also..we may see more and more people trying to avoid paying the new consumption tax by going back to the Barter System where no money is exchanged..

Hey..no income or consumption tax and the IRS won't be minding the store anymore...

__________________
"Destiny must be shaped and not left to mere chance."..Spencer Collins

I'm with Newt..I have some concerns and I'm not sure this is doable!

__________________
"Destiny must be shaped and not left to mere chance."..Spencer Collins

It's times like this that I wish I had speakers for my computer. lol

A personal taxation on consumption is bad because it limits the desire for the person to spend. A corporate taxation on consumption is better as it is a full realization of a 'total project cost'.

__________________

I'm not an economist but this sounds like a tax shift that could be inflationary. When people have more disposable income,would prices rise in order to capitalize on more available income? Would the temptation to barter become even more tempting to skilled tradesmen than it already is today? I believe it's only natural to find ways out of paying a tax be it based on income or consumption.On the surface,the Fair Tax looks GREAT! but when things are too good to be true,they probably are..

__________________
"Destiny must be shaped and not left to mere chance."..Spencer Collins

Exactly. Spot on as usual.

__________________

Thank you but I still have not decided one way or the other. I'm glad you brought this debate to the forum and I look forward to reading the comments of other forum members. As usual,the devil is in the details,it's possible that with a lot of "tweaking" the Fair Tax could be a viable alternative to the Income Tax. I have heard great points on both sides via the links you have provided! At this point,we are just discussing the issue,this may turn into a true debate next month..

__________________
"Destiny must be shaped and not left to mere chance."..Spencer Collins

I'm trying to be as impartial as possible in setting up the debate. I also have a plan to change the scope of the debate as we go... just waiting for the right moments. lol

__________________

As for it being inflationary I would remind you about competition. Make it cost to much and someone else will beat your prices and in turn put you out of business.

Perhaps the best indicator of how well the Fair Tax will work is the way the economies of the few countries that have already gone this route have been literately EXPLODING. The recently freed soviet block countries and one country in South America are good examples. Businesses have been freed and purchasing power has skyrocketed.

__________________
"Most people can't think, most of the remainder won't think, the small fraction who do think mostly can't do it very well. The extremely tiny fraction who think regularly, accurately, creatively and without self delusion---In the long run these are the only people that count."Robert Heinlein