I thought that was just local revenue collection, not state or Federal. Perhaps Steveox would have some input on this?

It would be the best thing to ever happen to this country, and will never get passed.

If a national sales tax is put into place, will I be able to avoid paying through internet purchases? Or will there be a form that needs to be filled out at the end of the year, where a person can claim the value of thier untaxed purchases? This is how the states recover lost sales taxes, I'm sure everyone here is dilegent and honest when filling out this line item on tier state tax forms.

Probably not, as that was a tactic used to avoid state sales taxes. With a national sales tax most purchases will still be intra-US, so will be taxed 'normally'. International sales might theoretically be a loophole, but they would tend to get caught/taxed at customs, since they presumably need to be shipped to you.

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Today's forecast: Government corruption.

Tomorrow's forecast: 100% chance of more 'politics as usual'

Maybe it's finally time to vote Libertarian

The idea isn't horrible, but 23% is way too much for a student such as myself. I don't make enough to file a 1040, and I'd be hit hard by the fair tax. If it were say, another 10% added, I could deal with that.

Actually, you need not be hit at all. As stated, everything you "need" (food, shelter, medicine, etc., as determined by the poverty level) will be effectively tax-free since you'll be getting a check at the beginning of the month to cover the taxes on these items. After that, anything you "want" could either be purchased used (and therefore tax-free), or eliminated.

The frugal person could effectively reduce his tax burden to nothing.

Problem is, you already pay that 23% through the many federal income taxes besides the one your familiar with. PLUS, all the corporate taxes are passed down to you as well as cost of compliance. We call these embedded taxes, and they make up about 30% of the cost of an item. So, were the fair tax passed, these costs would be eliminated causing prices to fall. PLUS, you get your entire paycheck, no taxes taken out. WHich returns to you an immediate 10-30% more income.

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http://www.fairtax.org

Elminate all taxes on income and replace with a national sales tax.

Okay then, I stand corrected.

But... how would fraud be avoided?

I'm not sure how you don't make enough to file a 1040 .. Do you have a job? Did you fill out a W4? Did you get a W2?

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"I miss the days when they made toys that could kill a kid."
- Jerry Seinfeld

You cant avoid all fraud, but the system wont change in how it works in regards to audits, only the state does it now. Business still have to report sales, and forward a portion of those sales to the state. THey are PAID for doing this under the Fair Tax. So is the state for collecting for the treasury. This means it takes two people to committ fraud, a business and a customer.

Fraud wont be eliminated, but research shows it will be less, and tax collections will rise, as we move from hard to enforce income taxes, to hard to avoid sales taxes. Even a drug dealer will eat at McDonalds, and I dount that they will work together to avoid sales tax. Same goes for most businesses.

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http://www.fairtax.org

Elminate all taxes on income and replace with a national sales tax.

Establish a single federal tax source dependent on state collection and you'll soon learn how creative accounting can get. At 23% you're begging for people to construct an underground economy.

Eh... I don't have to file a 1040 yet. Although I am employed...

The research shows otherwise. Furthermore, we already have an underground economy because of the current system. At the least, we'll be no worse off.

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http://www.fairtax.org

Elminate all taxes on income and replace with a national sales tax.

What I still don't understand is how everybody pays less tax, and the government ends up with the same amount of revenue.
There are huge savings in this plan, especially for the wealthy, you can't expect that to be made up for by the tax collected from illegal immigrants and drug dealers.

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“ The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state.”

Adam Smith , The Wealth of Nations 1776

"We have always known that heedless self-interest was bad morals; we know now that it is bad economics"
FDR's second Inaugural Address

Consider why illegal drugs and other underground commodities are so profitable (which won't be affected by the fair tax proposal) and then think about a 23% savings factor for any new product purchased illegally in the US. 23% is a far higher pre-tax margin than most legal businesses currently enjoy. Hijacking trucks with new merchandise will make sale of alcohol during prohibition look like amateur hour and struggling consumers will abandon Wal-Mart to save 23%. Maybe federal guards on all trucks for expansion of the Department of transportation who also does airport security?