50 Reasons I Support the FairTax

President's Tax Panel - Comments | Spring 2005 | Kenneth J. Van Dellen

[woodbeez]

Once the fair tax is adopted, people will report higher wages which will cause the fair tax rate to go up automatically. This will also lead to having the SS being on the hook for paying more out in benefits.

You forget that people who have income from capital gains and investment income (which includes a large majority of "rich" taxpayers) will also pay into SS under a NST. Also, the current "income cap" which stops the withholding of Social Security taxes over a certain income level would disappear. It doesn't matter if you have wages or not or if you made $20,000 or $200,000, you still pay for SS through a NST.

[sitetest]

Dear woodbeez,

Under the NRST, how will any taxpayer know even half of what it is costing him, precisely?

The current system, flawed as it is, gives each worker a concrete number, a dollar amount, that is being taken from them. Someone making $60,000 sees very clearly that $4,590 each year is going up in smoke for Social Security and Medicare.

However, under the NRST, the cost is entirely hidden because individuals will be unaware of how much they spent in the NRST in a year's time, and thus, will have no way of calculating the amount that went to Social Security.

THAT's hidden.


sitetest

[woodbeez]

The current system, flawed as it is, gives each worker a concrete number, a dollar amount, that is being taken from them

What about the fact that the money they are paying now can't possibly be paid back to them without either a huge increase in the payroll or income tax? They might clearly see that the money is taken from them now but they don't understand how that money will be repaid to them. Those "concrete" dollars mean nothing.

[sitetest]

Dear woodbeez,

"What about the fact that the money they are paying now can't possibly be paid back to them without either a huge increase in the payroll or income tax?"

Non sequitur - doesn't relate to which system better hides the tax, itself.

"They might clearly see that the money is taken from them now but they don't understand how that money will be repaid to them."

And under the new system, they don't see it at all. You don't think people pay attention to the documentation and information that's annually put in their hand, now. Do you think they'll pay attention more when they're provided with less information? That's an improvement?

"Those 'concrete' dollars mean nothing."

Well, then you're discounting to zero the effect of information on the average worker. You're saying that getting some information - a consolidated annual report of the cost of the employee side of Social Security and Medicare tax - has as much effect (or less effect??) than receiving no consolidated report of information at all.

If that's your position, well, all I can say is that it you're ultimately arguing that information has no effect on behavior or attitudes. I think such a position is entirely unsupportable.


sitetest

[pigdog]

Under the FairTax, the S/S & M/C amounts are not hidden at all but plainly apparent. Right now in the bill they are identified as S/S at 27.43% and M/C at 7.74%.

That means that that portion of his taxable purchases 0.2743 x 0.23 = 6.31% and 0.0774 x 0.23 = 1.78% respectively for S/S and M/C (or a bit over 8.09/23 total) go for the two major entitlements. That makes up a little more than 35% of the total FairTax rate.

This means that of every dollar you spend while 23 cents goes for "tax", actually about 8 cents of that is for entitlements. That's a lot and it's hardly hidden since you can look at your receipt and divide the tax paid by 3 for a very quick (and close) approximation of entitlement tax costs.

In addition it is certainly possible that that rate may actually decline in future years if the economy booms as mosts economists believe it will since increased economic activity would bring increased consumption. It does not only automatically increase .

[woodbeez]

"What about the fact that the money they are paying now can't possibly be paid back to them without either a huge increase in the payroll or income tax?"

Non sequitur - doesn't relate to which system better hides the tax, itself.

Isn't that the ultimate deception of Social Security as it is paid now. It hides half of the taxes paid now and hides the taxes that future workers will pay. That is very relative to an argument over which system hides what.

You don't think people pay attention to the documentation and information that's annually put in their hand, now...

Well, then you're discounting to zero the effect of information on the average worker...

If that's your position, well, all I can say is that it you're ultimately arguing that information has no effect on behavior or attitudes.

Information does has a positive effect on behavior and attitudes if that information is accurate. Making people believe there is money set aside for them when it isn't is deceptive. You are arguing that this information, which has little basis in reality and hides the true costs to future generations of taxpayers, is better.