To claim major cost savings by eliminating corporate income tax when 61% of US corporations pay no income tax now is pure fantasy.
Likewise, to figure that the employee will receive their gross pay after the FairTax, particularly when employers are treated differently under the FairTax is also wishful thinking. For instance, if government pays the 30% FairTax on certain employee wages, and the employee gets his gross pay, the cost of those employees has just increased by 30%. Either the employee gets a pay cut, the cost of government goes up, or government employees get laid off.
And, of course, X is adjusted periodically, as is any index related to the cost of living. And the adjustment lags behind any change in prices. So how does this make the FairTax refund adjustment inferior to any other cost of living adjustment?
The point is that as food and energy prices increase, so does the FairTax. We're paying close to $4 a gallon for gas where I live now, the FairTax would add another $1.20 to the current price without a concomitant increase in the prebate. Do you think that gas at $5.20 a gallon would increase economic activity, or slow it further?
Wrong. First, my congratulations to the tax accountants for the 61%. I'll bet the compliance costs for the 61% were significant. The 61% number is for the years 1996-2000, under Clinton taxes. Second, a corporation doesn't need to pay income tax to have embedded taxes or compliance costs. If they withhold social security from employees, their share of social security is an embedded tax. If their suppliers pay any federal tax, there is an embedded tax. The "large" corporations, those with over $50 million gross income, had no where near 61% not paying income tax. And, using 2006 numbers, corporate income taxes were 15.7% of net collections of all taxes.
To deny the effect of embedded business taxes is purely delusional.
Likewise, to figure that the employee will receive their gross pay after the FairTax, particularly when employers are treated differently under the FairTax is also wishful thinking.
Net pay is gross pay minus deductions. If the deductions go to zero, net pay becomes gross pay. Would the FairTax negate every employment contract? I'll bet the unions would agree to that. (/s)
The point is that as food and energy prices increase, so does the FairTax.
And when my income goes up, of course my income tax will stay the same. And that is the reason the income tax is better.(/s) Where do you get logic like that?
I am not one that is looking for my federal tax bill to go down, at least not initially. I expect it to be very close to the same, since the FairTax is designed to be revenue neutral. If the same amount of revenue is raised from the same number of individuals, the average per individual will be the same. The average tax goes down if the number of individuals goes up or if the visibility of the tax creates pressure to cut spending.
I am looking to getting rid of the April 15 deadline and all of the aggravation associated with it. I expect my FairTax to be paid with the income tax I don't pay plus price reductions from elimination of embedded tax and tax compliance costs. I am looking forward to the economic activity generated when embedded taxes are removed from our exports and when corporations world-wide see a tax-free environment for their corporations.