I read all your passionate comments about the Fair Tax Plan. And I really appreciate all your input.
But the truth is I spent quite some time reading the fairtax.org website before posting my first post. And despite all their utterly convincing propaganda, their national sales tax is still a regressive tax, that puts the tax burden in on the people in the lower middle of the income pyramid. No one who responded to my post addressed responded to my example of rich vs. poor household spending habits, which demonstrates how the rich will continue to grow richer because a much lower percentage of their income will be taxed.
If, as faixtax.org claims, those living above the poverty line will pays almost no taxes because of the necessity rebates, and the used goods clause, who will pay taxes? The middle class will have the largest tax burden, because the middle class will buy more than just the necessities and not resort to used goods, except mabye cars, and doesn't have considerable amount of money to put away to save.
As unlikely as it is, if everyone in the country focused on buying used goods and necessities, why would the home economy grow? We wouldn't be encouraged to buy more if our only taxes came from buying things.
I'm not defending our current tax system, because its undeniably messed up. We should have a system that doesn't penalize the middle class, and that's what I see with the "Fair" Tax Plan
I just read both your fair tax posts, and I agree. Raising income taxes would spur the economy, but what about the people who don't have a taxed income because they are poor and are on welfare and SSI? This is going to make the poor people spend even less, making their and our lives worse.
You said:
Raising income taxes would spur the economy
...but conventional economic wisdom holds otherwise:
Dale Jorgenson, the chairman of the Economics Department at Harvard University, found that each extra dollar the government raises through the current system costs the economy $1.39. This is because money that is paid in tax can't be invested in productive or profitable activity.
but what about the people who don't have a taxed income because they are poor and are on welfare and SSI? This is going to make the poor people spend even less, making their and our lives worse.
With due respect, folks on welfare and SSI are taxed- not FICA, but they do pay payroll tax, which is regressive- and if they buy anything made in the USA, they're paying the producer's tax and tax compliance costs, which are estimated to be 22-29% of the price.
The FairTax (as proposed) is the only tax legislation being considered that actually un-taxes the poor completely, because it's the only proposal that repeals these regressive taxes. It also puts cash in their pockets by virtue of the prebate.
The prebate is a check sent to registered households for the value of the tax you'd pay if you consumed up to the poverty level. This means that your first $n in consumption is completely, 100% tax free, and if you don't consume at that level, your effective tax rate is negative.
It's clear that you care about poor people, which is laudable- and it's also a good reason for you to find out more about how the FairTax is actually better for them than what we have now.
For the shocking truth about the FairTax see FairTaxFraud.com
Shocking? Yes.
Truth? Not much.
This site points out that with the FairTax as written, we'd still have the Income Tax, since the FairTax does not repeal the 16th Amendment. That is true for a very short time. The fact is that to repeal an amendment, it has to be on its own ballot, and requires a different majority than other bills. If the Sixteenth Amendment was not repealed shortly after the FairTax becomes law, that still doesn't mean that the government would still collect an Income tax, they would just still be AUTHORIZED to, and if they did, then the government's tax income would literally double overnight. Nobody would stand for that and you know it.
Also, with the evidence and (mathematically incorrect) "calculations" that it uses saying that the poor will suffer more, the authors of the site even admit that they did not figure in the prebate, because they're talking about "percentage of income rather than dollar amounts." Well, then your calculations look like it would hurt the poor, since without the prebate the poor pay taxes on 100% of their income, since that's what they spend. How misleading. The fact is that there will be a prebate, so the poor will pay NO TAXES. That's zero percent, just in case you needed some help with that calculation.
Need us to keep going? The arguments on fairtaxfraud.com are all very trite and have been proven wrong so many times by economists and college students, etc. that we're all getting very tired of it. If you want the truth, don't go to some crazy wacked-out site that wants you to hate rich people.
I want to be a rich person. That way I can retire and do what I want to do in my later years. Apparently, the folks at fairtaxfraud.com want me to be dependent on the government for the rest of my life.
You want a FairTax discussion? Bring it.
The main, and the only fully-explained, alternative that the website offers to the FairTax is....
Wait for it.....
No Taxes! That's right, no taxes on any earned income. But any income that you get while not actually working for it: you only get half. The government swipes the other half. (And you think people will be against the FairTax?)
The leftists on the site like that one because of the new tax that it would impose on investments (you know, because anyone who invests their money should be severely punished).
Of course, they fail to mention that that includes anyone on any kind of government assistance. So you poor folks out there on disability and welfare, since you cannot work to make a living, you get to shoulder the tax bill for the guy down the street spending all he wants on the good things that life has to offer, just because his income is from the job that he happens to have.
The FairTax is fair. The more you spend frivolously (above the poverty level), the more tax you pay. Spend up to the poverty level, pay no tax. It really is that simple.
I do like the idea of the Representative Tax Plan at the bottome of the "alternatives" page at fairtaxfraud.com, but there is much more explaining to do on that one. It just touches the tip of it.
Have you ever noticed how an idea which differs from your's is "propaganda"?
In your first post your concern was the poor, now it's the middle class, yet you say you're not defending the current system. What is a better system? If you don't defend the current system or the FairTax and the Flat Tax is what we started with during the Reagan administration and has grown into today's system.
It's time for you to step up and propose something better. Since you're so good at criticizing other plans, let us hear a constructive proposal from you.
Sorry, but I'm not an economist and I'm not equipped to create a new, fair tax system. It's easy to see holes in a proposed system, but not easy to create one from scratch. If I had to try, I'd probably say that we should just simplify the system we already have. Simplifying our current tax system and cutting government spending would be a great start.
Common sense is as rare as genius. ~Emerson
First can we all agree that the poor and even lower-middle class in some cases pay no income taxes at all, and in fact in many cases get back more than what they put into the system, in the form of the Earned Income Credit. Secondly there is always going to be a limited supply of "used" goods and if your theory about people buying only "used" goods were to pan out, that would only invite greater incentives from manufactures to entice us to buy new products. Supply and demand will win. As more people decide to buy used products to save on taxes, the perceived value will rise, because the seller knows the potential tax saving to the buyer. So with sellers of used goods raising their prices, and companies lower their prices to give incentive to buy new, the cost savings between used and new would be directly related to the quality of the product, and it would be easy for the consumer to make a purchasing decision.
Additionally, we have all the heard the saying "they don't make things like the used to", bottom line, in many cases products don't last as long as they used to, but even more importantly, if I am in the market for a new notebook, or HDTV, do I really want technology that is 2 or more years old? Probably not, especially when the saving would be minimal.
As is stands right now, the wealthy pay a large majority of the taxes. While, in my mind I am far from wealthy, I am certainly not poor, but I was at one time. If anyone gets to see the picture from both sides, and actually worked their butt off only to be placed in a higher tax bracket, and it wasn't given to them, perhaps they would be qualified to tell me that I deserve to pay higher tax rates than the guy next to me.
So what is wrong with the Rich growing richer? Isn't that a persons right to do so? To have the ability to invest and use their money as he or she seems fit. Anyone who believes that should not be the case, I would say probably favors socialism or communism, and would never understand the benefits of the FairTax or any other alternative system for collecting taxes.
Personally I don't know of any poor people that ever gave anyone a job, built a company, a university, or any other industry for that matter. People that support the current system or find fault in new ideas, generally believe that the Rich should not only pay more, but even pay a higher rate. Last time I checked 15% of $100,000 is more than 15% of $50,000.
Furthermore, I don't know of any government agency that can create jobs or wealth without first taking capital from someone or some business in the form of taxes. It is simply not governments role to do so. For anyone who thinks it is, I challenge them to give just a handful of examples.
And even if the tax revenues were to fall, which I don't believe for a second they will, guess what, maybe the government will have to learn how to do more with less. Just like every business, middle-class, and poor person in this country has had to do at some point in time. Perhaps we should lower our expectation of what government is supposed to do for us. Personally I just want them to protect my freedoms, and preserve the infrastructure that keeps this country moving forward.
Gosh, this is like, the second time today its been implied that I'm a communist or socialist.
Don't worry, you don't have to refer to me as "someone" or "people" or "them", I know your talking about me, because I wrote the post.
I don't understand the majority of the points your making in your comment. Do you think we should use the Fair Tax Plan system as a means to increase business profits? I never said that rich people weren't paying more money in taxes, I said that under the Fair Tax Plan a lower PERCENTAGE of their income would be taxed.
I don't think the rich should become richer at the expense of the poor, or lower middle class.
Common sense is as rare as genius. ~Emerson
Anyone who says the FairTax makes the rich richer at the expense of the poor and lower middle class, just hasn’t taken the time to do some real tax comparisons.
Let’s use some actual figures to compare the tax liability for a middle income family.
Below is a comparison of the actual taxes incurred under our current tax system verses the Fair Tax for a middle income family of four with a gross annual income of $60,000. This comparison is based on current 2006 taxes and the proposed 2006 version of the FairTax.
Amount of tax under current system assuming standard deduction. $60,000 minus standard deduction ($10,300) minus 4-exemptions ($13,400) equals taxable income of $36,500
Total tax liability $4724 plus 7.65% of $60,000 for S.S. and Medicare for a total of $9314.
Amount of tax under current system assuming $15,000 of itemized deductions. $8609
Amount of tax under the FairTax assuming they spend their entire $60,000.
Remember these figure will be less if they were to spend part of this income on used products or if they were to save part of their income.
$60,000 x 23% or $13,800 minus $7636 in rebates or $6164. (Rebate is based on established poverty level figures for 2006) See chart on Fairtax.org’s website.
This family would need $31,100 in itemized deduction to bring their income tax liability down to the FairTax liability.
One other point to remember; under our current system this family is also paying all the embedded taxes that are passed on in everything they buy. After 10-years of research, top economists have determined this to be between 22% and 30% depending on the goods or service. Even if this figure were only 10%, this is an additional $6000.
Anyone who says the FairTax places a grater tax burden for the middle class hasn’t bothered to do any real comparisons. No matter if you consider middle class income to be $40,000 or $100,000, if you do some actual comparisons; the FairTax will result in a lower tax burden 99% of the time.
The question is; who is picking up the difference in order for the FairTax to be revenue neutral. It is very simple. The tax burden will be spread among many more people. All the tourists, illegal aliens, criminals and all those who qualify for the rich only loopholes.
with the rich getting richer? Particularly if, in so doing, the poor are also doing better.
If you look at the conditions under which the poor in this country live, all but a very few are comparable to middle class in most other countries. In no small part, this is due to the incentives provided by a capitalistic society in which anyone can become rich by providing others with goods or services they want.
Your fixation on what the rich do is blinding you to what the system by which they have become rich has done for the poor.
And your, not doubt heartfelt, sympathy for the poor is leading you to kill the "golden goose" which has provided those same poor with a standard of living that is, meager as it might be, the envy of much of the world.
The poor and lower middle class (which I am fighting to get out of) should get off their butts like the rest of us and improve their situation instead of waiting for the govt. to do it for them.
A liberal with common sense isn't rare, they don't exist. ~ Me
Gosh, this is like, the second time today its been implied that I'm a communist or socialist.
don't take it personally. We mean well, just some of us are less diplomatic than others. We tend to lose our diplomacy skills as we mount our soapboxes. (apologies in advance for any offenses rendered. :-) I also apologize for the overly long post.
I don't understand the majority of the points your making in your comment.
Let me try to address some of your questions then.
Do you think we should use the Fair Tax Plan system as a means to increase business profits?
No tax system can do that directly, but the FairTax will free up resources currently being devoted to tax compliance today. The repeal of income taxes (which is part of the legislation) will relieve a major cost borne by businesses- income tax compliance expenses are often greater than the taxes themselves- the likely result will be that businesses will re-task resources previously devoted to tax compliance toward more productive uses.
As a note: we pay a LOT of money- estimates vary from $250B to $600B/yr- to comply with our current system. That's _in addition_ to the tax we pay.
I never said that rich people weren't paying more money in taxes, I said that under the Fair Tax Plan a lower PERCENTAGE of their income would be taxed.
There's a few relevant points to raise here:
First, this is not actually true in all cases under the status quo. There are plenty of instances where wealthy individuals pay lower tax rates on their income than you or I do, despite our vaunted progressive tax system. Also, as you note, income and consumption don't correlate in a linear way- they are individual -not uniform- patterns that don't conveniently correlate to income bracket for easy comparison, and have pesky exceptions. Some wealthy individuals consume lavishly, some don't- yet despite this, the wealthy always consume the bulk of what is consumed in this country.
Second, income and what percentage one pays of it in tax is not the point- the point is to protect the poor and middle class from unfair burdens while raising sufficient revenue to run the government, right? The FairTax does this, with fewer harmful side effects than the current tax system.
It does so without creating artificial categories and forcing people uniformly into them; it relies upon the statistical behavior of the market and the economy, and the exercise of the free will of the people operating therein, buying, selling, and investing in accord with its rules and their own self-interest.
I understand- without forcing the wealthy to pay more by making sure that everybody in each income bracket conforms to a progressive tax rate schedule without exception, (which, incidentally, they don't under the current system anyhow) how can we measure for sure that they're paying their fair share?
To be brutally honest, we can't if we are to rely only upon the progressivity of the tax rate as our guide in a thought experiment- not with the current one, not with the FairTax either.
We can, however, assert that the FairTax will further this end because we know:
a) that consumption correlates more accurately to wealth than income does,
b) we know that those who elect to buy taxable stuff have wealth _they_ consider 'to spare',
c) we know that those who don't have enough to spend above the poverty line aren't paying any tax whatsoever because it's mathematically impossible for them to do so, and
d) we know that consumption is a more steady, constant index than income is.
I don't think the rich should become richer at the expense of the poor, or lower middle class.
I also don't think anybody should become richer at anybody else's expense- or poorer, to someone else's benefit, for that matter. This is why I oppose the current system and support the proposed legislation- it sensibly taxes above-the-line consumption, which targets those with wealth, while leaving them the option to save, invest, or spend their wealth in the manner they see fit. I believe that we all should have this option, ESPECIALLY the poor.
I think that greater freedom is worth the change, and I think that if all we've got to lose is our existing tax code (and all of its problems), then we have nothing to lose we wouldn't be better off without.
If you don't mind, I'm going to be a bit lazy and cut and paste a response I recently had to the same question of the middle class bearing the tax burden. First I would like to add that as a member of the middle class - lower middle now, but not for long (I hope!) - I come out a few bucks better under the FairTax than under the income tax. And that is without factoring in the time and risk savings I will enjoy. (Note: I define risk as inadvertantly making an error on a 1040 and then getting hammered by the IRS)
You rightly assert that percentage of income spent on "things" (necessary and elective) typically decreases with increasing income. But you should keep in mind that money only really has value when you trade it for a good or service. If I had a million dollars under my mattress it won't do me any good until I spend it. If someone is able to actually spend less than they earn (a situation that is not the exclusive domain of the rich) then what is wrong with not taxing that money when they earn it considering it will be taxed whenever they spend it?
Excluding the time value of money, here is a simple scenario. Let's say you earn $50,000 a year for 20 years and you spend your entire income in the same year you earn it. After 20 years you have earned $1 million and paid taxes on $1 million. If the CEO down the road earns $1 million in the first year you start working, but he only spends $50,000 (he's a frugal CEO) then he only pays taxes on that $50,000. Doesn't seem fair, right? The frugal CEO retires after that year and proceeds to spend the balance of his money over the next 19 years at $50,000 a year. After 20 years he has paid taxes on $1 million dollars (and earned $1 million) just like Joe Middle Class. In the end the government always gets their pound of flesh from everyone, the difference is that a consumption based tax allows people to actually put their money to work before they choose to spend it and pay those taxes.
Brian LeCompte
www.flashpointblog.com
The Frugal CEO in your example will not store his excess capital under his mattress, he will invest it, bringing in more income he will spend in his retirement (or will be spent by his heirs), on which he will also pay taxes as it is spent. The result is that by taxing consumption instead of income, the government, in time, enjoys additional revenue as a result of those investments. And, while the capital is invested, it will be creating jobs and opportunity for others who will also have more money to spend and be taxed.
Taxation of income was rejected as inefficient and destructive more than 200 years ago and was only resurected in 1848 by Karl Marx as a political tool for the advancement of socialism. Even he knew it was a poor way to fund government.
No one is going to give donations to the government (unless of course this is to promote their interests, and this is a small number of individuals) so a tax system is a necessary evil.
Two holes in the arguments for the fair tax plan:
A: People don't spend all the money they earn. Sales tax does not account for the money unspent, and thus the government gets less money, once again falling short of funding essential programs.
B: This would affect the poor quite heftily. A person on welfare, disability, or any kind of SSI does not pay taxes off the check they receive. A sales tax will discourage spending from this large group of people.
Maybe I'm just Delaware-biased. We don't have a sales tax, and we're doing just fine.
For those who don't spend all they earn, they are saving. Which is not a bad thing since this country has a near negative savings rate right now.
People on welfare, disability, or any kind of SSI see an immediate benefit through the prebate. Right away, they see an increase in their income.
The effect of the sales tax on the true cost of goods and services is expected to be minor since the taxes already embedded in those prices will be removed. While it varies from item to item, most are around 22% to 24% right now. When the Fair Tax goes into effect, those taxes drop out, and the price of goods will drop as well due to competition (one of the best reasons not to let government control prices!!)
People will find that, with the Fair Tax added back in, the cost of goods and services is approximately what it was before the enactment, but they have more money (their whole paycheck plus prebate) with which to buy them.
It works as long as we have a free market situation. If the government is allowed to meddle, by setting prices or fixing wages, then goods and services will be shielded from market forces and prices will remain high.
The savings rate in this country IS negative. Not NEAR negative. Those figures came out a couple weeks ago.
You are not taking into consideration the check they will get monthly on the basic neccesities of life. Also I once saw a picture of a woman complaining her and her son were going to be evicted from their apartment because they were poor. It was the front page of the paper. There was a big flat screen tv on in the background and her son was decked out in Hilfiger and nike basketball shoes I can't afford for my kids. She also had a cell phone. Sure is tough being poor in America. I also spent 8 years as a Marine and traveled quite a bit. Let me tell you the poor in this country have it made. The poor don't pay taxes now and wouldn't under the Fair Tax.
A: People don't spend all the money they earn. Sales tax does not account for the money unspent, and thus the government gets less money, once again falling short of funding essential programs.
Actually, the FairTax plan was designed to be revenue-neutral and takes this into account. People don't have to spend everything they earn for the plan to be revenue-neutral. In fact, if they did spend everything they earned, the plan would raise more tax revenue than the current system, at the cost of future growth.
The folks who don't spend some of their money will save or invest that part. Anywhere they put it, provided it's not in a shoebox or under the mattress (losing value to inflation), it's in circulation- if it's in a bank account, the bank invests that money in something profitable. If it's in the market, it's being invested in goods, services, opportunities, being paid to other people who will then be running around with dollars burning holes in their pockets.
Dale Jorgenson, the chairman of the Economics Department at Harvard University, found that each extra dollar the government raises through the current system costs the economy $1.39. Leaving some dollars in the economy means good things for the economy, and some of that money will for sure end up burning holes in someone's pockets. Don't worry about the government having enough- consumption is a more reliable index of the economy than income is.
B: This would affect the poor quite heftily. A person on welfare, disability, or any kind of SSI does not pay taxes off the check they receive. A sales tax will discourage spending from this large group of people.
Actually, the FairTax proposal will actually un-tax the poor completely, something the current system does not do. The current payroll tax takes 7.65% of every dollar you earn up to $90k, and your employer pays an added 7.65%- a figure most economists agree is borne by the employee in the form of lower wages. That's over 15% right there. It doesn't show up on the SSI check, but that's how the costs break down. By contrast, the FairTax will issue a prebate to households for the amount of tax liability they would have if they just consumed up to the poverty line. This amounts to un-taxing necessity-level spending, and it does so by putting cash into the hands of the people you're concerned about.
We don't have a sales tax, and we're doing just fine.
Oh, but you do have a sales tax, in a sense- because you have corporate income taxes. Businesses pass along tax expenses to consumers, to employees, and to owners in the form of higher prices, lower pay, and reduced profit.
It's estimated that between 22 and 29% of the cost of everything you buy is tax or tax-compliance related. Repeal the income tax, you repeal the need for companies to collect and comply with that tax- meaning that prices will come down. Remember, we're not adding a new tax without repealing the old one- it's just that instead of being baked into the prices of goods and services you buy, you'll pay your tax as a line item on the receipt of stuff you buy.
The simple answer to your question “Who will pay the taxes?” is that everyone will pay, according to how they live.
If you think about it, how much we make isn’t really the standard by which quality of life should be measured, but by how much we spend. For instance, someone making little income, but with a large savings account, may be living much better then someone with more income, but who really has less to spend.
The Fair Tax addresses this issue squarely by taxing what people spend, not what they earn, or have as savings.
Using this logical approach, those who spend the most will pay the most in taxes. And, without a doubt, it will be the rich who do so.
The poor, who have little to spend now, will have substantially more under the Fair Tax. Not only will they have their whole paycheck upfront, they will have their prebate. By getting their whole check, without any taxes being withheld, they get an automatic raise of at least 7.5%, plus whatever their withholding rate was under the current system. Add in the prebate, which, for someone spending at the poverty level, amounts to 23%, and you have the truly poor seeing an immediate 30% increase in their standard of living.
The middle class benefits in much the same way. The prebate, while not as significant a percentage of their income, comes to them each month. But more important, the middle class wage earner suddenly sees his whole paycheck. No FICA taxes, and no withholding. This could, for some, amount to a 30% raise, or more, in the very first paycheck. This will give the middle class a real chance to start saving in a meaningful way for the first time since income taxes became punitive to savings.
Who, you might ask, will be hurt by the Fair Tax. The simple answer is those who are evading their fair share right now. Drug dealers, prostitutes, organized crime, and anyone who participates in the underground economy, and currently pays no taxes on their income, will suddenly start paying as they purchase. And by most estimates, this amounts to as much as 30% of the taxed economy.
So, unless you happen to be part of that underground economy, you need to get off the dime, start helping the poor and middle class, and support the Fair Tax.
Firstly, if you think FairTax.org is propaganda, you can read the text of the legislation itself, you can find it online at the Library of Congress: http://thomas.loc.gov/ - search for HR-25. But honestly, the FairTax.org website does a very good job of presenting it in a more easily accessible format.
Secondly, let me explain why the FairTax would be so much better for the middle-class person that you are describing:
1) Prebates: This is directly out of any Progressive's playbook. Everyone gets the same amount (with adjustments for # of people in the household obviously), so the less money you make, the higher percentage of income your monthly prebate will represent. You get this even if you don't make a single penny. How much more progressive can you get? These prebates ensure that people who are struggling to get by don't have to pay taxes on the necessities of life.
2) Embedded Taxes: These taxes are the nasty secret that the federal government doesn't want you to think about, and it's why our middle class pays even more tax than they realize. Both corporate taxes and employment taxes wind up coming out of the pocket of the consumer in the way of higher prices. So while you think the middle class has a lower tax rate than someone who is fabulously wealthy, the reality is they are paying the same embedded taxes in the price of goods that Bill Gates is. The result is that the middle class, which generally gets W-2 income and doesn't have the resources to hire tax accountants to create loopholes, pays their income tax with few deductions before they ever see a penny, and then pay taxes again whenever they buy anything. Meanwhile, it's the fabulously wealthy folk who can play all sorts of games with tax dodging and creative ways of showing less income than what they made - or even more egregious are those who are wealthy but show no income at all because they generate it off-shore or through a cash economy. So really, our current system is about the worse possible scenario for honest taxpayers of the middle class, because they don't have the means to shield their income from taxation, and they don't realize the embedded taxes they pay with every purchase they make. MEANWHILE, under the FairTax, these middle class families would get their entire paycheck plus their prebate each month, and then get to CHOOSE what to buy and thus what to pay tax on. It allows these families to stretch their dollars and prioritize their spending. This would be a huge boon for this segment of the population, because many times lower middle class folks are living paycheck to paycheck. Giving them their entire paycheck (plus prebate) and letting them choose where it goes would be a huge advantage instead of having taxes taken out up front. And keep in mind, under the FairTax all those embedded taxes from corporate taxes and payroll taxes are eliminated, which will naturally bring down prices. In the end, the price of goods won't be much different than they are now even with the FairTax included, yet these families suddenly have their entire paychecks to spend on themselves and their families (or even save some too! But that's the next bullet point).
3) Savings! You probably know as well as I that we have a negative savings rate in this country, which is not a positive thing in the long run. Giving the middle class a chance to avoid taxation by saving their money for their children's education or for retirement would be a huge benefit to several of the societal crises we are facing.
4) Spending Patterns of the Wealthy: I don't know if you've spent much time around wealthy folks, but they consume a lot. I don't mean just volume, but dollar value. While most of us buy normal stuff for dinner, the wealthy tend to buy nice dinners, expensive cuts of meat, etc. So while the prebate would mean a normal middle class individual could go through the month paying next to no tax on their food and such, the wealthy would quickly exceed that and be paying tax on all their fancy meals and bottles of wine. You know as well as I they aren't going to start eating T.V. dinners to pay a lower amount of tax. And that's just food, the lifestyle of the truly wealthy is always involving consumption of some sort. And this tax is levied on what they actually SPEND, not what their creative tax accountants show as income. The result is that many wealthy people are likely to pay MORE in taxes than they ever will under the income tax.
5) Broadening the Tax Base: This is a biggie - the best way to take tax pressure off of the middle class is the broaden the tax base to ensure that everyone is paying taxes, including those who are currently dodging them under the income tax system. This could be the wealthy as we discussed above, or it could be people who do business in an underground or cash economy who don't show any income, or it could be illegal immigrants who don't file taxes here, many of which do quite well. Broadening the tax base to make sure everyone pays their fair share is a great way to reduce the tax burden on the middle class.
6) Protecting Social Security and Medicare: The lower and middle class relies on these programs more than anyone, and currently we are facing the grim reality that benefits are going to have to be reduced at some point, and the qualifying age raised because our politicians seem incapable of coming up with any other solution. While the FairTax does not try to fix the systematic issues with these programs, it does supply a more stable funding source and a broader tax base, which any progressive should be in favor of. As a result, these programs will be better protected and better funded to ensure those who need it most (lower and middle class) will have it available when they get older.
These are just a few of the ways the FairTax would be of enormous benefit to the middle class over our current income tax system. Between prebates, getting their entire paycheck, removing embedded taxes, encouraging savings, giving middle class individuals and families a chance to prioritize their spending, broadening the tax base, and protecting social security and medicare, it could not possibly be said that the FairTax would be more regressive than our current nightmare of an income tax system. On top of all this, the FairTax will bring middle-class and lower middle-class jobs back to the US, such as manufacturing.
In closing, I must object to your mischaracterization of the FairTax as a burden falling primarily on the middle class as it is simply not the case, especially compared to our current income tax system. You admit to not being an economist and unable to formulate a tax system on your own, yet this same attribute does not prevent you from assailing the FairTax plan, which frankly I do not think you have a full understanding of. Many economists HAVE studied the FairTax, it's one of the most (if not THE most) researched pieces of tax reform legislation our country has ever seen. The benefits are real, and it is the honest taxpaying members of the middle and lower classes who stand to gain much of those benefits.
I would humbly urge you put your prejudices aside and give this legislation a second look. Instead of trying to invent flaws because you don't like some of those who support it, consider the fact that this legislation really does have bi-partisan appeal, and any truly bi-partisan legislation is going to have supporters that you don't agree with on other issues. That's a GOOD thing, that means it's a unifying piece of legislation that we can all agree is true progress.
Hello,
I apologize for this post being so long, but there is a true misunderstanding among FairTax opponents of who would shoulder the national tax burden.
I respect what you have said regarding the tax system in place and the proposed FairTax, and I disagree with you.
The way the system is right now, middle-income wage-earners pay almost the ENTIRE tax burden in this country. There are so many cuts and dodges for low-income workers, and the rich get richer because they have found ways to shelter their wealth and income from taxes. And, if a middle-income worker works a little harder, and works some overtime and makes a little more money, they are literally punished by the federal government by paying not only more taxes, but a larger TAX RATE! As you know, that is a "progressive" tax system, where the more income you work for and earn, the higher your tax rate is. Does that really sound to be the definition of "fair?" A progressive system, or a tax system based on income at all is absolutely not fair, and goes against what this country is all about.
So there's that.
But with the FairTax, they knew that not many people would still not be ready for a regressive system, so they put in place the rebate to make sure that low-income workers will continue to pay no taxes. So that leaves us with middle-income workers and those that you like to call "rich" people. It is true that with the FairTax, extremely rich people will pay a smaller percentage of THEIR INCOME toward taxes. Let's look at your example of the $2mil income of which this evil fat-cat will spend only $1 mil. Of that spent million, the tax bill will be $230,000. After this rich person factors in the prebate checks receive throughout the year, the tax bill will be about $225,300 (assuming a family of four, poverty level of $20,444 [23% = approx. $4,700]). That householder’s tax bill turns out to be about 11.3% of his income. But I’ve already established that punishing people for having higher incomes is extremely unfair and disheartening. So the percentage of each person’s income that he or she pays in to taxes does not matter.
Now, let’s say that I make $35,000, but spend only $25,000 and save $10,000 during the year. This is more in tune with most middle-income workers, no? My tax bill would be [25,000-20,444] x .23 = $1,048. It is about 3% of my total income.
So, to review, assuming a family of four, I earn $35,000 and spend most of that during the year, I could pay a tax bill equal to about 3% of my income. If you make $2mil, and “only” spend half of it, your tax bill will be equal to about 11% of your income.
But let’s look at the total tax burden, too. Let’s say that between the two of us, the total tax burden is, say $5,748. My share of that is $1,048 (18% of total) and your share of that is $4,700 (82% of total).
So the “rich” person not only pays a larger portion of their income, but he pays a much larger portion of the entire tax burden! Tell me, how is this not progressive?
Mark McGovern
Jamesdean66@hotmail.com
Its not progressive because there isn't a one to one ratio of "rich" to "much less rich" people.
Common sense is as rare as genius. ~Emerson
I see the problem. You think that in order for the FairTax to be considered progressive, there is a requirement for a large number of rich people, or maybe a ratio of 1/1.
Maybe you can take more than two lines and tell us why that has anything at all to do with the meaning of the tax term "progressive?"
Progressive taxes simply mean that a person with a higher income will shoulder more of the tax burden than a person with a lower income. It has nothing at all to do with the rich-to-poor ratio in the nation.
For instance, is the current tax system progressive? Why or why not?
Please think it through very carefully and look at the actual numbers prior to formulating a response.
- Mark McGovern
When talking taxes, progressivity refers to the rate of the tax, not its perceived outcome.
Tax rate is the percentage of the tax basis (in this case, the basis is your income) that is taxed. Thus, (rate = tax bill / your income).
Progressivity, when used to describe a tax rate, refers to whether the rate itself increases as the tax basis increases. If it increases as your income goes up, the rate is deemed to 'progress'- if the rate decreases as income goes up, the rate is deemed to 'regress'.
Don't mistake tax progressivity for social or moral progress- they're not the same thing, although I'd be very surprised if the term was not chosen at least in part to suggest that the two phenomena correlate, or that one causes the other.
You've expressed a concern that the FairTax won't be progressive against income, which I'm guessing means you're really interested in making sure that we a) don't burden the poor or middle class too heavily and b) we raise enough tax revenue to meet the needs of the government. (unless I'm wrong and c) you're really just interested in gouging high-income earners?)
This is the point of the FairTax- it taxes only above-the-line consumption, which correlates much more strongly to wealth than does income. In other words, it targets the wealthy, but does so in a way that isn't invasive or punitive, and doesn't prevent the formation of capital or wealth in the first place.
You've also noted that there's no compulsion involved- meaning that those high-income earners might save or invest their money, depriving the government of needed revenue. Will it all work if there's no compulsion? How can the rest of us 'win' if they aren't compelled to 'lose'? (unfortunately, this is the context into which the tax dialog seems to have slipped- which is unfortunate.)
Fortunately, consumption is a rock-solid index. As individuals, we vary, but as a population, we consume reliably. People consume more reliably than they earn the money with which to do it. We will do just about anything to live within our comfort zone, consumption-wise. We will borrow equity from our homes, from our families, we will work extra jobs to consume in accord with our wishes.
Who will the Fair Tax "penalize" the most?
Those who are currently living from sources of tax free income:
1. The heiress who lives from tax-free municipal bond income.
2. The drug dealer.
3. Anyone else who currently understates his/her legitimate or illegitimate (earnings from illegal activity) income.
The Fair Tax is actually MORE PROGRESSIVE than the current system because: 1. It repeals the most regressive taxes we currently inflict, the FICA and Medicare Tax, and 2. It provides a prebate to ALL.
When considered in combination, the repeal of FICA/Medicare taxes and the prebate make the Fair Tax more progressive and more fair than the current system.
Income taxation, by its very nature, penalizes work and rewards sloth. Consumption taxation, by comparison, taxes that which we consume from society, not that which we contribute to it. That strikes me as far more fair than any system which penalizes productive work.
And if income taxation spurred the economy, as one poster suggested, why don't we just confiscate all earnings and live happily ever after in a WONDERFUL economy????? LOLOLOLOLOL!!!
Ow, you hurt my ears there a little with the loud laughter. If income taxation discourages work, consumption taxation discourages spending, which isn't too hot for the economy either. I know, we all have to spend money, but if we enacted the "Fair" Tax System, I'd buy only existing homes, used cars, vintage clothes, and gifts off of EBay. I'd keep my money away from government hands like there's no tomorrow. I'm sure if I would do it, other people would too. Then where will the government get their revenue?
Common sense is as rare as genius. ~Emerson
Maybe the govt. would learn to stick to a budget like we have to do. If you spend all of your money and can't pay your bills I dare you to go to your boss and tell him/her they have to pay you more because you squandered your pay. The govt. does it every day only we are the boss and they don't ask.
If the government doesn't have enough money, they'll borrow it. Cutting tax revenue has never stopped the government from spending. Just take a look at the Reagan Administration.
Common sense is as rare as genius. ~Emerson
People want what they want, when they want it, and often that just isn't available used or cheap. This is why you see mattresses for sale for thousands of dollars at retail when you can get a perfectly good one for a fraction of the price (new or used). Same thing with bicycles- you can get one that works for pretty cheap, but if it's worth it to you, you can get the $3k+ ride with cush suspension and beefy parts- and there are companies that stay in business because what they provide, people want enough to pay their price. People will buy the quality and quantity of goods they want, depending upon the resources they have available, just like they do today. People always shop for what they want, and shop with the money they have. This won't change under a consumption tax- people will simply respond to price, just like they do today.
The scenario you point to (that people would demand used goods) will increase demand for used goods and drive up their prices. In addition, the repeal of income taxation on businesses will reduce cost overhead on new goods. Businesses will compete for your dollar, just like they do today- meaning they'll produce what people want at prices acceptable to them, or they'll fail (just like they do today).
What this means is that people will buy new stuff (and pay taxes) because they want the new stuff and they'll pay the price to get it.
Of course, they might not shop- they might invest their money, put it in the market- in which case, the government will be even better off: it'll be used to fund companies, buy equipment, create wealth, and pay people (including the stockholder)- meaning more people walking around with more money burning holes in their pockets.
Remember, you'll be shopping with your whole paycheck, instead of having a portion of your pay withheld if we switch to a consumption tax. If you're like me, you budget within your resources and shop for the best value you can get.
Don't worry about the government getting its revenue. Taxing income didn't cause prices to go too high for consumers (even though that cost is figured into the prices of goods), and shifting that same tax over on to consumption won't either.
Finally, to reiterate the title of this post, consumption fluctuates less than income. People buy what they want even more reliably than they earn the money with which to buy it. They'll borrow in order to consume at their comfort level. Retail consumption will not go away, don't worry about that.
Thank you for being so calm and gracious in your comment. You bring up a really good point and you actually make sense while doing it. I really appreciate it.
Common sense is as rare as genius. ~Emerson
...and thanks for the compliment.
esuffern,
22% of the price of all that you buy is tax/tax compliance cost. When that expense goes away, your $1.00 item purchased at WAL-MART will drop in price to 78 cents.
1.23 X 78 cents = 96 cents.
seeeeeeeeeee there!! Even with the 23% Fair Tax added on, that originally $1.00 item is now 4 cents cheaper, than it was under the income tax.
Your out-of-pocket cost of living will be no more than it is now; in fact, it will be 4% less.
That means (assuming you spend $40,000 on retail for the year) you now have an extra $1,600 to "squirl away" in your retirement plan. Being frugal, you will save a lot more than that.
You are not taking this into consideration when you claim the Fair Tax will hurt the middle class, or hurt ANYONE ELSE!!!! for that matter.
The Fair Tax is for WINNERS!!!! There are no losers.
Besr regards,
John Paul McDaniel
Mr. McDaniel,
the $1.00 item at Wal-Mart will still be $1.00, but will have the FairTax of $.23 included. The inclusive-tax way to talk about your example would be: "the price of the item is still $1.00, of which 23% replaces the embedded tax cost that once was there."
If you want to look at it as an exlusive tax rate (item price x tax rate = cost), then the math works out to about a 30% tax rate. FairTax.org covers this in detail.
The FairTax (and economists') expectation is (after a short transition period), the shelf prices of items will return to their original prices, not 4% less.
Mark McGovern
jamesdean66@hotmail.com
HR 25, the Fair Tax Act, is in the House Ways and Means Committee of congress, waiting to be passed into law.
Go to: www.congress.org and tell your congressmen that you want HR 25 passed into law ASAP!!!! If we all "push together", we can make it happen. There's nothing to it, BUT TO DO IT!!!!!!
Read and Enjoy.
The FINAL SOLUTION!! for the IRS & Income Tax Problem
50 Reasons I Support the FairTax
(How many reasons can you give for supporting the present obsolete IRS & income tax system?)
Those Who Know the Facts Love the Fair Tax
"Family Friendly Tax Reform"
Tax Reform with far less pain and much more gain!
Out with the Old Code and in with the New (national RETAIL ONLY sales tax).
www.fairtax.org
1. It allows you to keep 100% of your paycheck, with nothing withheld for Social Security and Medicare payments.
2. It eliminates the regressive payroll tax that hurts the poor. Currently, every one of us is taxed a minimum of 7.65% on our first-dollar of wages up to $90,000, if we earn that much.
3. It assures that the wealthiest Americans will be voluntarily helping to fund social security with every last dollar they spend above the poverty level. Today, earnings are subject to payroll taxes only up to $90,000. The wealthiest Americans therefore do not pay into the system above that amount. If their earnings are from investments, no earnings fund the Social Security system. Under the FairTax, a single purchase (regardless of the source of the earnings) can result in greater contributions to the Social Security system than would be paid by an individual under the payroll tax of today.
4. It provides funding for Social Security and Medicare at a level equal to or greater than at present, with a stronger and broader tax base.
5. It secures the future of Social Security and Medicare because all spenders fund it and not just the workers.
6. It eliminates all personal income taxes, payroll taxes, corporate income taxes, gift taxes, death taxes, and capital gains taxes.
7. It eliminates the income tax and the IRS. Members of Congress and the public overwhelmingly agree that the current internal revenue code is cumbersome, intrusive, coercive, and inefficient.
8. It is revenue neutral with the present income tax system, funding the federal budget at current levels.
9. It will remove an average of 22% of the cost of American made goods by removing the built-in payroll tax (the other 7.65% of earnings that employers pay) and other business taxes that are now passed to consumers as an "embedded" tax of approximately 22% due to the cascading of income and payroll taxes paid by U.S. employers, at every step of production, to the U.S. Treasury.
10. It doesn't tax used items ? clothes, cars, homes. Only new items are taxed when sold by a business to an individual.
11. It is progressive, a "prebate" of the tax amount up to the poverty level is given to everyone. This means that those spending below the poverty level have a net gain because the "prebate" exceeds the amount paid in taxes. (Under the present system they pay the payroll tax even if they get a full refund of income tax withheld.)
12. It eliminates 90% of the cost of compliance. American families and American businesses waste an estimated $250 ? $600 billion per year doing the paperwork necessary to comply with the tax code. That is roughly $1,000 ? $2,000 annually for every man, woman and child in the U.S.
13. It creates an opportunity for our products to leave this country costing an average of 25% less, thus increasing our exports, lower our deficit balance of trade, and increasing employment at home.
14. It encourages investment in companies located in the U.S., thus providing a home for money already in the US and attracting more. The U.S. will be the most attractive tax-free haven in the world for doing business. American companies will return from offshore and overseas.
15. It encourages repatriation to the U.S. of money held by U.S. individuals and companies now in foreign countries, with no tax consequence.
16. All 290 million Americans and 51 million visiting tourists fund Social Security and Medicare with their purchases. Today only 110 million workers fund these programs via deductions from their paychecks.
17. The broader tax base includes the ten percent of our economy, an estimated $1 trillion, that today is underground or under the table. Under the FairTax, the illegal drug dealer will pay his tax just like the rest of us when he buys his sunglasses, BMW, and other items, as will those who do business for cash.
18. It allows families to save more for home ownership, education, and retirement. An average family making $50,000 will have $7,500 more spendable income.
19. It makes educational tuition a tax-free expenditure of tax-free income.
20. It makes American products more competitive overseas by removing the embedded tax from them, thus lowering their prices, which compensates for low foreign wages.
21. It makes American products more competitive at home by removing the embedded tax from them, compensating for the low cost of imported products not burdened by taxes imposed by exporting countries.
22. It removes the need for formal 401-K's, IRAs, HSA, etc. Anyone will be able to set up any kind of savings or investment account without regard to taxes or the government.
23. It frees churches and other non-profit organizations from the expense of filing tax returns and paying their half of Social Security and Medicare payments for employees. There will no longer be any 501.c.3 or 501.c.4 non-profit tax status, because there will be no more tax to be exempt from.
24. It restores to churches and non-profit organizations the 1st Amendment right to engage in free speech, without fear of losing their tax-free status.
25. It gives individuals and businesses the right to donate as much as they want to in a given year to charitable causes.
26. It restores the 4th Amendment, protecting against unreasonable searches and seizures, from which the IRS presently is exempt.
27. It restores the 5th Amendment, which guarantees the right to due process. Under current systems the IRS has their own courts with their own set of rules not included in the 5th.
28. It cleans up a major flaw in campaign financing, eliminating campaign donations for "tax favors".
29. It eliminates wrangling in Congress over tax cuts, the tax code, and who is or is not paying a fair share of the tax bill.
30. It encourages work by letting workers keep 100% of their earnings and giving a rebate, to boot, making the notion that the more you work, the more money you have, a reality, unlike the current system where welfare is lost when you go to work, so your first dollars earned after taxes just offset what you were currently getting in welfare, making you no better off.
31. It allows more of the lower income families to become home owners by allowing a second job income above their current income (all tax free) to be applied to a mortgage. Money for down payments for homes is also saved totally tax free so that it will accumulate faster.
32. It allows families to retain farms and businesses in the hands of those who built them through the elimination of the death tax.
33. It allows families to help each other out tax-free, by eliminating the gift tax.
34. It encourages individuals to self-insure, making the health system more direct pay (no 3rd party pay), thus bringing costs down.
35. Without FICA to pay, most states, counties, municipalities, and school districts will see a large increase in their state budget revenues, additionally lowering the overall tax burden (State & Federal) for most Americans.
36. It assures that no American will find, at the end of the year, a need to get a loan to pay taxes as an alternative to penalties, interest, or cheating.
37. It restores individual privacy. The government no longer needs to know where you work, what you are earning, and what you are doing with it.
38. It eliminates the need to have a "marriage" clarification declaring who you live with, as that has no bearing at all on a state or federal sales tax.
39. It eliminates the need for courts to decide which divorced parent gets to take the tax deduction for children.
40. It reduces production costs for farmers and other subsidized businesses, leading to a reduction in subsidies, thus reducing the federal budget.
41. It eliminates the administrative costs incurred by states in collection of state sales taxes because states will piggyback the state tax collection onto the national tax collection, for which they are compensated by the FairTax ?% administrative cost give-back. [Doesn't this go to the retailers?]
42. It results in a windfall profit for many of those holding taxable corporate high interest bonds at the time of passage of FairTax, since they will not be taxed under FairTax. (A higher interest rate is usually paid to entice investors to buy the corporate bonds rather than go with the lower interest, but tax free, municipal bonds, now.)
43. It shifts the tax to consumption, which consumption tables over time show is more stable than income, therefore the tax revenue stream is likely to be a more stable and predictable amount.
44. It results in Federal Reserve rates being based on current consumption, which is rather stable, instead of future earnings, which are less predictable, resulting in surer inflation prevention.
45. It allows for better planning by businesses, because they no longer have to consider tax implications for everything they do.
46. It makes higher employment or better compensation possible in the small business sector where today it costs approximately three dollars in compliance costs to pay one dollar in payroll and income taxes.
47. It moves many now providing tax preparation, advice, accounting, planning, and records maintenance into an expansive economy where they will be producing goods and services. There they can add to the standard of living of all Americans and likely earn more than they do currently, instead of shuffling paper for the government (and not contributing anything economically to society).
48. It relieves citizens of the risk of facing the shift in burden of proof that is so common with the current system, i.e., the taxpayer is guilty unless innocence can be proved, when even IRS staff sometimes give conflicting interpretations.
49. It's simple, unambiguous, and certain, the opposite of the current tax code.
50. It's good for the environment. It reportedly would save about 300,000 trees a year that are needed to produce the paper for the IRS compliance and tax forms, enough to reach around the equator placed end to end 28 times. Also, since it taxes only new items, it would encourage buying tax-free pre-owned cars, clothes, furniture, houses, etc. Reuse is good for the environment, too.
Best Regards,
John Paul McDaniel
Go to: www.fairtax.org
John Paul McDaniel
What the hell is wrong with the rich getting richer? We should all be trying to get richer. Your comments are absurd. It is extremely difficult to even listen to any of your statements after class warfare like that. You have a lot to learn as a student. The only thing that is holding any of us back (rich or poor) are taxes and other statist fees.
Mark McGovern...........and all,
Under the Fair Tax, the following kind of horror stories would never happen again. For this reason ALONE!! wouldn't the Fair Tax be worth a try?????????????????
Listen to this poor woman's account:
"Several years ago we owed taxes we couldn't pay at the moment. The reason being that my husband's business was in a stagnation phase caused by the oil downturn during the 1980's. Instead of contacting us, the IRS drained our bank accounts. We had no clue they did this until our utility bills, etc, started bouncing. Our choice was to pay the IRS or the electric company. With small children involved, it seemed a no-brainer. The IRS went after our children's accounts also, even though the money in their accounts was put there by their grandparents for their education and had nothing whatsoever to do with us. When I contacted the IRS about what they were doing, they said basically, oops!, we shouldn't have done that. When I asked what they were going to do about it, they said nada. What's done is done. We'll just apply it to what you owe. In the meantime we came way too close to having our lights cut off, our insurances cancelled, etc. The current tax system blindsides people and doesn't give a hoot about doing it. Somehow this strikes me as incongruous in a free country."
Best Regards,
John Paul McDaniel
Why was that directed toward me? Do you think that I don't support the FairTax? Scroll up a bit and read my first response to esuffern's post.
I wasn't correcting your math to show you that I don't support the FairTax, I was correcting your math because it was incorrect.
I am an avid supporter of the FairTax. But when people misrepresent it, whether they realize it or not, it harms our cause.
Mark McGovern
Erika,
Your assumptions about the FairTax plan are flawed. Your dislike is similar to cutting off the nose to spite the face. You don't like the income tax system (I assume), but you want to damn the FairTax because it is not perfect. No plan can ever be perfect. That is especially true if our entire society is bent on Collectivism, instead of Capitalism.
The most important thing that you are not getting is the base of what will be taxed under the FairTax. Our current system of taxation only taxes the income that American citizens report to the government. The FairTax system will tax all consumption, which is much larger. All consumption in the United States includes consumption by people that don't report their income, illegal aliens, tourists, and illegal activities such as prostitution and drug dealing. With the FairTax, it is possible to have a win-win situation for all people in all classes. There will be no reason to pit one group against another any longer.
By the way, the Fairtax.org website should not be the only source that anyone feeds from. There are many accurate blogs about the FairTax that are an excellent read about facts.
Thanks,
James
Mark McGovern...........and all,
I merely intended to point out that even if it weren't for all our other good reasons (that we've explained already) for wanting the Fair Tax, protection of "life & limb" from litigation and confiscation by the IRS would be, in and of itself, enough reason to want the Fair Tax.
Best Regards,
Overview of FairTax Benefits - Individual, Business, Country
By taxing consumption, rather than income:
FOR INDIVIDUALS:
* No more tax on income - make as much as you wish.
* You receive your full paycheck - no more deductions.
* You pay the tax when you buy "at retail" - not "used."
* No more double taxation (e.g. like on current Capital Gains).
* Reduction of "pre-FairTaxed" retail prices by 20%-30%.
* Adding back 29.9% FairTax maintains current price levels.
* FairTax would constitute 23% portion of new prices.
* Every household receives a monthly check, or "pre-bate."
* Pre-bate equals payback for taxes on spending to poverty level.
* FairTax's pre-bate ensures progressivity, poverty protection.
* Finally, citizens are knowledgeable of what their tax IS.
* Elimination of "parasitic" Income Tax industry.
* NO MORE IRS. NO MORE FILING OF TAX RETURNS by individuals.
* Those possessing illicit forms of income will ALSO pay the FairTax.
* Households have more disposable income to purchase goods.
* Savings is bolstered with reduction of interest rates.
FOR BUSINESSES:
* Corporate income and payroll taxes revoked under FairTax.
* Business compensated for collecting tax at "cash register."
* No more tax-related lawyers, lobbyists on company payrolls.
* No more embedded (hidden) income/payroll taxes in prices.
* Reduced costs. Competition - not tax policy - drives prices.
* Off-shore "tax haven" headquarters can now return to U.S.
* No more "favors" from politicians at expense of taxpayers.
* Resources go to R&D and study of competition - not taxes.
* Marketplace distortions eliminated for fair competition.
* US exports increase their share of foreign markets.
FOR THE COUNTRY:
* 7% - 13% economic growth projected in the first year of the FairTax.
* Jobs return to the U.S.
* Foreign corporations "set up shop" in the U.S.
* Tax system trends are corrected to "enlarge the pie."
* Larger economic "pie," means thinner tax rate "slices."
* Initial 23% portion of price is pressured downward as "pie" increases.
* No more "closed door" tax deals by politicians and business.
* FairTax sets new global standard. Other countries will follow.
View C-SPAN and other FairTax VIDEO's at
http://tinyurl.com/7lssy
Ian
preview before you post, and format accordingly. :-)
It is always interesting to watch “progressives” work to preserve the status quos. Unless of course they are taking an extremely complex issue like global warming, which has dozens of variables, and using the issue to afford government more power over our semi-free economy. Now we have Hillary saying she wants to confiscate oil profits to pursue government’s goals and conservatives are the “fascist”. We have a political party that claims to be most intelligent, but; wouldn’t even discuss solutions to the government created problem of social security solvency as long as individual liberty accounts were an option for their subjects. Right, conservatives are the “fascists”. The "fascists" that allow the private individual to purchase assault weapons, don’t cage protestors at their conventions and generally work to get government out of the way of private business. The FairTax would expand the tax base exponentially, would force rich people to pay tax when they purchased their lavish goods, no matter what country their tax sheltered money was in.
Sorry to generalize progressives, but I used to be in college and knew it all. So, I was once progressive too and I still hang out with progressives.
Remember Corporations don't pay taxes...they collect them.
The FairTax is nothing new it's going back to the basics, the way taxes were first collected.
Sometime next week I'll update Turbo Tax and do my taxes (I will be working for the Government FREE. Whats wrong with this picture?????)
If you want to by used items under the FairTax that will be your choice but, right now there are a lot of people who avoid taxes and we are picking up their slack.
Thanks.
Mason