I have no special knowledge about this area, but when I talk with someone who favors a flat tax as being more fair, I sometimes ask, "If asking everyone to give up the same percentage of their income is fair, wouldn't asking everyone to give up the same dollar amount be even more fair?" There'll usually be some objection, except from libertarians who think that all taxes are theft, and it sometimes leads to two things. First is the idea that poor people are less able to afford taxes; if we offer to exempt very poor people from a head or flat tax, we are buying into a progressive scheme--we just add more levels, based on how much income people make. Second is the idea that fairness is in the eye of the beholder. Progressive taxation isn't necessarily less fair than any other kind of taxation--what counts as fairness?

So are you going to post any of these responses, that others may benefit from the wisdom of your peers?

Also, "typically they depend on me to yell at them for being gullible when they read me slanderous news accounts from e-mail forwarded by [family members]" is so so so true.

Here's how you explain things to your mom.

Government--even limited government--costs lots of money. The citizens have to pay for this government. But since government serves everybody equally--we drive on the same roads, enjoy the same bacteria-free food, rely on the same military, etc.--the burden of paying for government ought to be as equal as possible.

The problem with flat taxes is that they are disproportionately burdensome on the middle and lower classes. Suppose the flat rate is 20%. Paris Hilton has a ton of money left over after giving up 20% of her income; Joe Six Pack not so much. But Paris and Joe both have to eat, both have to buy clothes, and both have to put a roof over their heads. So a flat tax hits Joe harder than it hits Paris.

With a progressive tax, Paris could pay a higher percentage of her income in taxes (still, by the way, leaving her with plenty), allowing Joe to pay a lower percentage of his. (The same total amount is still raised in taxes, so the government gets paid for.) This leaves Joe with more of his money after taxes, thus easing the tax burden on him.

This is why flat taxes are unjust: they result in unfair distribution of the burden of paying for government. Exercise for the reader: demonstrate that the same holds for consumption taxes.

The Fair Tax applies to rent and home mortgage interest. So don't forget to add in 30% of your mortgage interest, or 30% of your rent, when you figure out how fair you think the Fair Tax is. Oh yeah: homeowners, remember to add the deduction you're about to lose. 30% on a new car, too.

Flip it around. Don't make it about what you give, but what you get.

It's simple: just ask your mom and dad what percent % of their income is spent on some regular purchase, say transportation: car payments, maintenance and fuel. With two car payments this could easily approach 30% for (I'm assuming) middle class folks. Then ask them how far that gets them (do they commute? Do they vacation by car? Visits to your aunt?) Ask if they feel the pinch of high gas prices? Do they have to pinch pennies when the car(s) have unplanned and expensive maintenance?

Then ask them to imagine if A) Bill Gates spends that same % of his income on transportation and B) if he did, how much transportation would that be? (Hint, if Bill Gates spent just 10% of his income on transportation, he'd buy enough gas in one day to drive a car around the world. Twice. Stopping every other mile or so to buy a new car. (http://www.forbes.com/2006/02/02/gates-irs-microsoft-cx_po_0202autofacescan03.html)

Then ask them if that's 'fair'.

Then, flip it again. Tell them that the government is going to start taking taxes directly out of the gas tank: ask them if they could live with 30% less gas than they now use. Bill Gates could, could they? Give them this scenario: the government lands in your city and automagically siphons 30% of the gas in every tank in the city. Now, care to chance an ambulance ride? Care to trust to the police patrolling round the clock? The driving habits of the rich wouldn't change one wit. The rest of us would be walking a lot more.

Is that fair?

See http://www.tcsdaily.com/article.aspx?id=010808A

There is a table in the essay that helps answer your question.

Economist Dale Jorgensen, Harvard University, was commissioned to find out what portion of current prices were represented by costs for complying with the federal income tax code (i.e., embedded tax costs). He concluded that 22% (average) of every retail dollar, spent by consumers, constituted a price-embedded tax. Thus, in addition to individual income tax and FICA withholding, individuals are unwittingly paying these unseen, embedded business tax costs with every purchase of a new product, or service.

Under FairTax, prices would fall, due to removal of embedded business tax-related costs. Concurrently, wages may rise due to a mix of factors, including reversion of withheld pay (or some portion thereof) to employees, advancement opportunities due to business expansion resulting from retained earnings, and/or increased demand for labor accompanying increased competition (from that expansion). Where profits (or wages) appear lucrative, competition will move into the market space, driving out excesses (immediately present after FairTax is enacted), arriving at new "market-adjusted" prices.

For FairTax to constitute 23% of new transaction cost (i.e., "market-adjusted" price plus FairTax), a mark-up of 29.9% (tax exclusive rate) on the new "market-adjusted" price is necessary. (Before balking, consider what we're paying now if income tax rates are converted to tax-exclusive sales tax rates on net income instead of percentage of gross income. The following figures can be compared to the 29.9% FairTax mark-up: Fifteen pct bracket = 17.6%, twenty-five pct bracket = 33.3%, twenty-eight pct bracket = 38.9% (! really), and thirty-five pct bracket = 53.8% (! that's how bad it is).

In order to make FairTax a progressive consumption tax (such as that recently called for by Warren Buffett), all citizen-families are simply sent a monthly consumption [tax] allowance, called a "prebate." This prebate is intended to reimburse taxes on necessities for every citizen family without need for record-keeping or reporting. Moreover, the direct payment bypasses the creation of a tax code specifying exempted products and services around which a lobbyist industry could grow. The amount is variable, based on family size, and is equal to the FairTax rate on poverty-level spending, as defined by the Dept. of Commerce. At present, a family of one would receive ~$200/month, a family of four, ~$500/month. Thus, the "effective" FairTax rate paid by citizens, will *never* equal the full 23%. Of course, U.S. visitors (legal, and illegal) will pay the full FairTax when they purchase anything new, at retail (used are not taxed again). Under FairTax, working families will have their whole paychecks (minus any state or local income tax withholding) plus their monthly family prebate.

Additionally, citizens will no longer have to spend the average 50 hours per year preparing their federal tax returns. Having more monthly income may result in using credit less, and saving more. Larger savings will make it easier to purchase a home, at a lower interest rate and monthly payment. (Thus, mortgage deductions are no longer applicable when income is not the basis for taxation).

But is FairTax actually fairer? To provide substantive answers, Prof.'s Kotlikoff and Rapson (10/06) have concluded,

"...the FairTax imposes much lower average taxes on working-age households than does the current system. The FairTax broadens the tax base from what is now primarily a system of labor income taxation to a system that taxes, albeit indirectly, both labor income and existing wealth. By including existing wealth in the effective tax base, much of which is owned by rich and middle-class elderly households, the FairTax is able to tax labor income at a lower effective rate and, thereby, lower the average lifetime tax rates facing working-age Americans.

"Consider, as an example, a single household age 30 earning $50,000. The household?s average tax rate under the current system is 21.1 percent. It?s 13.5 percent under the FairTax. Since the FairTax would preserve the purchasing power of Social Security benefits and also provide a tax rebate, older low-income workers who will live primarily or exclusively on Social Security would be better off. As an example, the average remaining lifetime tax rate for an age 60 married couple with $20,000 of earnings falls from its current value of 7.2 percent to -11.0 percent under the FairTax. As another example, compare the current 24.0 percent remaining lifetime average tax rate of a married age 45 couple with $100,000 in earnings to the 14.7 percent rate that arises under the FairTax."

Further, per Jokischa and Kotlikoff (2005) ...

"...once one moves to generations postdating the baby boomers there are positive welfare gains for all income groups in each cohort. Under a 23 percent FairTax policy, the poorest members of the generation born in 1990 enjoy a 13.5 percent welfare gain. Their middle-class and rich contemporaries experience 5 and 2 percent welfare gains, respectively. The welfare gains are largest for future generations. Take the cohort born in 2030. The poorest members of this cohort enjoy a huge 26 percent improvement in their well-being. For middle class members of this birth group, there's a 12 percent welfare gain. And for the richest members of the group, the gain is 5 percent."

The current income-based tax system is also more expensive to run, because of the manner in which the tax code is gamed by politicians and lobbyists. Politicians realize great power, and attract constituencies for support, by granting tax favors (i.e., credits, deductions, exemptions) through lobbyists. Fully, fifty-three percent of Washington lobbyists are there because of the tax code! The tax code is continually changing, making it more complex - more difficult to understand. And, the salaries and costs of tax lawyers and lobbyists end up in higher prices of the products and services we buy. Additionally, the time and money required to keep records, file returns, report for audits, retain accounting and legal help, pay IRS penalties and interest, is time and money lost for other productive, or recreational, activities. Depriving us of the use of withheld wages increases our expenses through zero-interest withholding, inflation, return preparation time, and interest paid on credit cards and loans that otherwise may not have been necessary. Summed up, the cost of tax compliance, nationally, has been estimated to range anywhere from $265 billion to twice that amount, depending on the extent to which tax-avoidance consultation is sought and utilized. These expenses constitute a substantial hidden tax which is incomprehensible to the average working American. And the FairTax gets rid of all of it for most Americans, and most of it for business owners.

We, as FairTax advocates, believe that government should serve We, the People, with a fair tax system that will not enable politicians to pit poor against rich (creating barriers to achieve wealth, adding tax penalty to the sacrifices made for personal success). Nor do we want politicians to continue using business as a tool to hide taxes from consumers, often villifying business, which discourages entrepreneuship, personal achievement, economic growth. Liberty and happiness depends on restoring the fruits of labor to those who produce them. We believe that the tax function should align with economic growth, not against it, that government should be paid for in the same manner as working Americans - when, and because, something is sold!

As things stand at present, the system primarily benefits politicans who cater to special interests through lobbyists who game the tax code. The politician seeks to capture them as constituent voting blocks, dependent on continued syphoning of taxpayer dollars to their members' benefit. This is increasingly repugnant to the average working American who often finds it difficult to meet the needs of his, or her, own family in an environment where federal and state business income taxes substantially contribute to trade inequities resulting in the loss of American jobs! Thus, the Sovereign are continually degraded by features of Congress's income tax policy. The most rapidly-growing needs-based "special interest" group has become the Citizens! You see? Congress has nearly all the power; and We, the People, have become We, the Serfs, robbed and enslaved. Getting the federal government's hands out of our family paychecks is the single most important reason to replace the income tax with a consumption tax, the FairTax.

Many of us have joined FairTax.org in order to build a national movement to free ourselves, our family pocketbooks, and our businesses from confiscation of income, and punishment of productivity. And this we say to our federal representatives,

"Either scrap the code and enact the FairTax, or we intend on replacing you with someone who will."

(May reproduce in whole or part. - Ian)

A consumption tax could garner more support if services/labor were taxed at a lower rate than new products. More US dollars would remain in domestic circulation putting Americans to work in service and repair, and less would be sent overseas to purchase cheap consumer goods. Such a plan would appeal to the labor unions, the environmentalists and the economists.

Ian, when you copied and pasted Jokisch's name from that PDF, you included the superscript footnote, which is how it came out "Jokischa".

I'll see your Jokisch and Kotlikoff and raise you a Bartlett: "Unfortunately, the administrative problems inherent in this proposal make it impossible to take seriously."