Posted on 08/18/2011 11:21:36 AM PDT by bthockey
For the past couple of weeks, I've been looking into the Fair Tax, a tax law that is picking up a lot of momentum since many GOP candidates, including Herman Cain, support it. For those who don't know what the Fair Tax is, it is essentially a national sales tax of 23%. Even though that might not sound too pleasing, what makes the fair tax so great is that it abolishes all other federal taxes. Income, capital gains, and payroll taxes would all cease to exist.
To bring support to the Fair Tax, which I believe is much better than our current system, I created a list of 4 reasons why you should support the Fair Tax.
(Excerpt) Read more at thebandofpatriots.com ...
These points miss the single greatest benefit of the fair tax. Under our current system approxomately 20% of the final sale product of a good or service is the embedded tax burden of the people and businesses that produced it. However, when a product is imported and sold, that 20% goes back to the originating country. Foreign suppliers have a built in 20% price advantage over domestic suppliers. Under the Fair tax, that 20% would be captured at sale and retained in the US.Besides all of that being totally unfounded BS, why would I want to increase the revenue to the treasury?...If they have a $100 billion dollar windfall, we've paid too much and I want some back.The US trade balance is roughly $600 Billion per year. The Fair tax would increase tax revenue to the US treasurey by over $100 Billion without increasing the US citizens tax bill one cent.
The general premise of the Fair Tax is that since Companies currently embed about 22% into their product prices to cover taxes they will through competition lower the prices of products about that much shortly after the Fair Tax goes into effect so in the end prices will come down and with the tax you will end up not paying much more than you do right now.More unfounded Fairtax BS parroted.
they will through competition lower the prices of products about that much shortly after the Fair Tax goes into effect so in the end prices will come down and with the tax you will end up not paying much more than you do right now
Even if that was true, it explains replacing the 22% business taxes. However, it doesn't explain how the personal income, social security, medicare, self-employment, gift, all the other taxes AND the pre-bates are paid for with a 23% rate... on reduced prices.
Do you think all the talk of 22% embedded taxes is a Fairtax lie, or do you think the rate to replace all the taxes is the lie...or maybe the reduced prices.
If there's anything "embedded", its lies in selling the plan.
[You say that like it’s a good thing. Progressives and Socialists love that idea. Creating an untaxed, dependent class which survives on their monthly fix of “gubmint checks.” The FairTax will add to that. ]
Strange to see “conservatives” advocating removing people from the tax rolls and the responsibility of paying for so-called “necessary” government, isn’t it.
There are several reasons why the FairTax rate needs to be so high. One is the ‘prebate’. Another is the attempt to include SS/M funding. Another is the social engineering in excluding education spending. If it was simply a sales tax (applied to all retail goods and services) to replace the Individual and Corporate income taxes, with no ‘prebate’ the rate would only need to be 10% instead of 23%. Leave SS/M to be funded as existing — FICA taxes on wages only.
1) The ‘poor’ would NOT be untaxed.
2) Evasion would be MUCH less.
3) Legal Avoidance would be MUCH less.
4) It wouldn’t attempt to foist the unsustainable costs of SS/M onto the backs of the wealthy. I could write pages on how wrong this is.
5) It would still have all of the best features of the FairTax without its many problems.
“Your social security wages will continue to be reported to the social security administration just as they are now.”
But that has little connection to how much FairTaxable spending you do. It is especially bad for people whose income is mainly from tips like waiters, bartenders, etc. HR25 has a specific limit of $5,000 of tip income that can “count” towards social security benefit calculations. So bartenders I know who make $40K/yr in tips and spend $40K/yr and pay the FairTax on that amount will only get SS benefits as if they earned $5K/yr. On the other side, you have people who earn and FairTaxable-spend barely at the poverty level, so the ‘prebate’ completely refunds their FairTaxes paid — yet they still get SS credit as though they paid into it. A family of four could have an income of $50K/yr, use half for used vehicles/houses/education/savings, and pay NOTHING into SS/M because their FairTax was all refunded via ‘prebate’ for the $25K they actually spent on taxable purchases. Under the current system, the SS/M program would have received $7,650 from them and under the FairTax SS/M gets nothing from that family. This imbalance must be made up somewhere else, namely by collecting FairTax on all the spending of high earners who would today stop contributing after $106K/yr wages.
“Ensuring Funding for Social Security and Medicare” is a euphemism for “Foisting the Costs of Social Security and Medicare Entirely onto the Wealthy While Turning Lower Income Workers into SS/M Freeloaders”.
Based on past experience, they would publicly moan and talk about the “little people”, and then screw them.
Thanks! Finally someone who “gets it.”
We are not all fools.
I am arguing for equal treatment under the law.
But some animals are more equal than others, as George Orwell famously stated.
Besides all of that being totally unfounded BS, why would I want to increase the revenue to the treasury?...If they have a $100 billion dollar windfall, we've paid too much and I want some back.
Not BS, BE otherwise known as basic economics. When you purchase something, the price includse cost plus profit. The taxes paid by all of the people and businesses producing the item are part of the cost. So they are embedded in the final price of the product. I challenge you to provide me a single example where that is not true. Then you can can call BS. Until then you ought to get an econmics book and learn a little.
You should want that $100 billion to go to the treasury because you've already paid it. Right now it is going overseas to China, Korea or Taiwan. Wouldn't you rather it stay in the US? Or is it better to you that it go overseas just so the damn government doesn't get it? Stop and think about that for a minute.
Under the current tax laws, 20% of the price of a Chevy or Ford is the embedded cost of the taxes the workers, Ford and GM pay. A Honda comes in and sells at a price competitive to Ford and GM, only they don't have 20% embedded US taxes. They get a 20% windfall profit right away.
Now change to the fair tax and the price of the Chevy or Ford falls 20%, the tax is added and the price is back up to the original cost with 20% going to Uncle Sam. To compete, the Honda has to lower its price by 20%, the tax is then added on at sale so the overall cost hasn't changed, but 20% is going to Uncle Sam. We the people of the Unites States just got 20% of our money back that before was going overseas. If that isn't a good thing, I don't know what is.
The tax is the exact same either way Louie!
Just as I said!
If I figure the income tax example I supplied above by your method the income tax rate is 25% not 20%.
Let’s compare apples to apples shall we?
I don’t think any of it is a lie. The Fair Tax would be a far better way to collect the necessary revenue to run our county than the income tax. That is my belief.
Your little treatise fails to mention the fact that we will also be collecting taxes from pimps, whores, drug dealers, numbers runners, and all manner of other criminals, as well as the truly rich who take in all kinds of money that does not meet the definition of “income” in the current tax code when they spend their money doesn’t it?
The money criminals pay in FairTax on purchases is the same money their customers used to pay in income tax and FICA taxes. There is no new money to be had. It is — at best — simply collected later in the cycle. And what makes you think a class of people who already earn their living illegally won’t also seek out illegal vendors to purchase products where the FairTax is not collected ?
On the contrary, all those pimps, whores, and drug dealers who never reported income and therefor were not recipients of EITC and refundable child tax credits will not hesitate to collect their ‘prebate’ check. They will be a net loss in tax revenue while they collect $2500/yr in ‘prebate’ for each adult and $900/yr for each child.
The same crack-whore moms with 10 kids who are draining the welfare system will suddenly be eligible for another $1,000/month benefit check.
As far as the “rich” go who receive income not subject to income tax goes; what makes you think they will spend their income here in the USA ? These people only spend their money here now because they’ve already paid income taxes on it and they don’t want to pay a VAT on top of it all by spending in another country. But the FairTax rate is higher than the VAT rates of all but FIVE countries in the whole world, so it would suddenly make more sense to spend abroad. Keep in mind these are not people punching a clock at a job, but business owners and investors who can manage their affairs from anywhere in the world. I would expect an exodus of this group of people to Europe and the Caribbean once the IRS no longer requires income taxes from them no matter where they live. The income tax and estate tax hold them hostage, which is terrible, and the FairTax would set them free, which is good; but they won’t stay here and meekly pay 30% extra for everything.
The FairTax EXPECTS the top 1% of income earners to meekly pay $500B in FairTax each year as they spend their $2.5T income. Any logical person would expect them to simply go expat while their investments and remotely operated businesses still earn $2.5T tax free here, spend their money elsewhere, and leave a $500B/yr hole in the expected FairTax revenues. Losing the revenue from this 1%, the FairTax rate would need to go up from 23% to 29% to raise the same revenue.
Excuse me but what in the HELL are you talking about?
People who visit ladies of the evening don't pay with green dollars? Green dollars that have already been taxed in many cases? Does that lady of the evening go and find an IRS agent on April 15th and say something like "I made $200,000 last year working the street so how much do I owe you?"
Heck no she doesn't but when she SPENDS that money with the fairtax in place she WILL pay just like everyone else!
The FairTax EXPECTS the top 1% of income earners to meekly pay $500B in FairTax each year as they spend their $2.5T income. Any logical person would expect them to simply go expat while their investments and remotely operated businesses still earn $2.5T tax free here, spend their money elsewhere, and leave a $500B/yr hole in the expected FairTax revenues. Losing the revenue from this 1%, the FairTax rate would need to go up from 23% to 29% to raise the same revenue.
I expect that when the "rich" are able to start businesses in the United States of America, and make as much money as they want, without having to even THINK about any tax implications that the economy here will grow like no one alive today has ever seen! I also expect that those same people will consume like crazy and happily pay the taxes on that personal retail consumption because their privacy will once again be in tact and their money will ONLY be taxed ONE TIME when THEY choose to spend it!
If I figure the income tax example I supplied above by your method the income tax rate is 25% not 20%.It's not my method because it's mathematically impossible.
So it's no surprise that would be yours and the Fairtax method...Method being misinformation.
As many have observed before me, nearly everything is mathematically impossible for you Lewis!
Can’t do it? Or were you lying?
$20,000 is 25% of $80,000 Lewis as most anyone can easily see!
Please note that I said MOST anyone!
$20,000 is 25% of $80,000 Lewis as most anyone can easily see!So? You had $100,000.
Is that Bigun/Fairtax math? Anyone with a grade school education can easily see you have $20,000 unaccounted for.
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