I was reading an old thread on "what makes the fairtax fair".. and thought I'd reply in a new thread. I really like the idea of the fairtax.. here's why: I noticed only one person brought up the concept of "prebates". This is supposed to equalize the tax system. Every American household would recieve a monthly check that would alleviate the taxation of necessities (using the poverty level of income as the "necessity" threshold). So, people who spend at or below the poverty level will not have to pay a dime of tax. Above this level, the more one spends, the more taxes they must pay. Personally, my household has an "average" income. When I compared the taxes we now pay vs. the fairtax.. we would pay in almost exactly the same amount (if I've erred, the fairtax would collect less tax than the present system). But, on a national scale, I believe the fairtax would give a much greater incentive to SAVE. These increased savings are essential for a healthy economy. (About here should be inserted a book about the banks' current lending practices that are NOT based on real savings). I agree that the 23% sounds like a low figure (35% is more like what the nation is currently paying), but if the American people can SEE how much tax they're paying, perhaps they wouldn't clamor so loudly for so many services (and therefore the government could shrink to a more efficient size). The concern about black markets and tax evasion are of small importance. These issues are already alive and well, and an individual retailer would have very little incentive to not collect the tax (the bigger problem would be that they would collect it, then not pay.. but a little policing would take care of the bulk of the problem). On one hand I hear y'all saying ours is a consumption based economy, and so why penalize the consumers.. then on the other hand some are saying that our economy is poorly structured and changes need to be made. I believe the method by which taxes are collected would be the simplest change our society could make to force these changes. During the restructuring process there probably would be a recession, but considering all of these "bubbles", recessions happen anyway. Oh yes, and for those talking about payroll taxes (I'm assuming you're talking about Social Security and Medicare taxation).. these taxes FROM THE BEGINNING have funded the current elderly population, not the paying generation. The first generation to benefit had paid $0 into the system. The hope was that any extra being paid into the system could be saved in an interest-bearing account and grow so there would be enough, but this would only work with an exceptionally high interest rate and low inflation on medical care costs. The reality has been quite the opposite. If the Social Security program had required the first generation to pay in prior to receiving benefits, we wouldn't be in the fix that we're in right now. So, we have 2 choices: 2 generations of elderly should have their benefits cut in half, or 1 generation should have benefits cut completely. This way, in 1 or 2 generations, we'll have "caught up" to where we were supposed to be to begin with. And yes, it is political suicide to tell the baby boomers.. oops, no more benefits.. but what other choice is there? The annual budget deficit is almost EXACTLY the amount that's being paid into SS and Medicare. Our government needs to choose.. we can afford to keep up infrastructure, research and development, and defense spending, or we can pay for the food, shelter, and medicine of our elderly.