Posted on 10/19/2006 5:11:50 PM PDT by pigdog
As specified in Congressional bill H.R. 25/S. 25, the FairTax is a proposal to replace the federal personal income tax, corporate income tax, payroll (FICA) tax, capital gains, alternative minimum, self-employment, and estate and gifts taxes with a single-rate federal retail sales tax. The FairTax also provides a prebate to each household based on its demographic composition. The prebate is set to ensure that households pay no taxes net on spending up to the poverty level.
Bill Gale (2005) and the President’s Advisory Panel on Federal Tax Reform (2005) suggest that the effective (tax inclusive) tax rate needed to implement H.R. 25 is far higher than the proposed 23% rate. This study, which builds on Gale’s (2005) analysis, shows that a 23% rate is eminently feasible and suggests why Gale and the Tax Panel reached the opposite conclusion.
This paper begins by projecting the FairTax’s 2007 tax base net of its rebate. Next it calculates the tax rate needed to maintain the real levels of federal and state spending under the FairTax. It then determines if an effective rate of 23% would be sufficient to fund 2007 estimated spending or if not, the amount by which non-Social Security federal expenditures would need to be reduced. Finally, it shows that the FairTax imposes no additional real fiscal burdens on state and local government, notwithstanding the requirement that such governments pay the FairTax when they purchase goods and services.
(Excerpt) Read more at people.bu.edu ...
Unless the church engages in some business enterprise, all church expenses are taxed, unlike the current system. Compare the two:
Income tax: Church donations exempt from tax individual income tax and church income tax.
Fairtax: Church donations are not charged sales tax, but churches expenditures are taxed.
The fairtax makes churches a taxed entity, unlike the income tax which exempts churches.
It also means that all of the money that you have already saved after paying Federal income taxes on it will be taxed yet again with a 23% Federal tax once you decide to spend it. ""
A misstatement of fact intended to play to the FUD (Fear, Uncertainty, and Doubt) element. The correct statement is that any funds spent for taxable things would be taxed at the effective FairTax rate which is different for each taxpayer and depends on his own frugality - or lack thereof. The savings themselves (nor the income from them) are not taxed until spent for consumption.
The effective FairTax rate for most taxpayers will be a lot less than their effective income tax rate under the income tax and can be determined by your using the FairTax Rate Calculator.
Note that the oft-quoted 23% rate (or, more frequently the "30%" rate - that doesn't exist - which sounds even higher though it refers to the same dollar amount) will never be the cost to any taxpayer. It is the marginal rate paid at the cash register but reduced to your effective rate by the prebate so that the cost to you is the item cost plus your effective tax rate). It's much like paying income tax at your marginal rate and receiving a refund so that the rate you've actually been taxed is your effective tax rate.
"... all church expenses are taxed, unlike the current system ..."
Totally untrue!!! Church expenses in their "normal course of business" are tax free by use of the tax free cerificate the church would have. The statement is patently and absolutely incorrect.
And under the income tax the churches pay the embedded tax costs (9% per the FairTax opponents) on everything they buy.
It is a function of the particular Moderator and how much he favors the status quo.
"If wishes were horses, then beggars would ride".
Absolutely not. the old Boss is the IRS we know and love and it now interacts with the direct tax by government directly on the taxpayer.
As when an employer either witholds a worker's Federal income taxes or illegally pays a worker under the table?
The FairTax on the other hand is an indirect tax with the government having no direct "hook" to go after the taxpayer. Under the FairTax, the taxpayer automatically complies with the law when he buys an item and receives a receipt.
As when you go to the Black Market and illegally buy something tax-free under the table?
The Black Market and Revenuers have been around since before the time of Christ.
`(a) Not-for-Profit Organizations- Dues, contributions, and similar payments to qualified not-for-profit organizations shall not be considered gross payments for taxable property or services for purposes of this subtitle.
(OK, so contributions are not taxed, we both agree)
`(b) Definition- For purposes of this section, the term `qualified not-for-profit organization' means a not-for-profit organization organized and operated exclusively--
`(1) for religious, charitable, scientific, testing for public safety, literary, or educational purposes;
`(2) as civic leagues or social welfare organizations;
`(3) as labor, agricultural, or horticultural organizations;
`(4) as chambers of commerce, business leagues, or trade associations; or
`(5) as fraternal beneficiary societies, orders, or associations;
no part of the net earnings of which inures to the benefit of any private shareholder or individual.
(Definition, nothing controversial here)
`(c) Qualification Certificates- Upon application in a form prescribed by the Secretary, the sales tax administering authority shall provide qualification certificates to qualified not-for-profit organizations.
(Not really explained here what these certificates are for. They should reference some paragraph to explain. I assume they are used for paragraph (e) purchases below. Poorly written law.)
`(d) Taxable Transactions- If a qualified not-for-profit organization provides taxable property or services in connection with contributions, dues, or similar payments to the organization, then it shall be required to treat the provision of said taxable property or services as a purchase taxable pursuant to this subtitle at the fair market value of said taxable property or services.
(If church provides a good or service for contribution, then must charge fairtax on fair market value. That makes some sense.)
`(e) Exemptions- Taxable property and services purchased by a qualified not-for-profit organization shall be eligible for the exemptions provided in section 102.
(OK, here is the part that will take pigdog a long time to understand. This exemption is not for "normal course of business" exemptions, despite what pigdog claims. The exemption is for section 102 purchases. What is Section 102 you ask:
`(a) In General- For purposes of this subtitle--
`(1) BUSINESS AND EXPORT PURPOSES- No tax shall be imposed under section 101 on any taxable property or service purchased for--
`(A) a business purpose in a trade or business, or
`(B) export from the United States for use or consumption outside the United States, if, the purchaser provided the seller with a registration certificate, and the seller was a wholesale seller.
(So Churches are exempt only for items they purchase for intermediate or export sales. Not for their normal course of business. Pigdog is wrong as usual and will not admit it for years. He will act ignorant and tell everyone else they are dumb. None of his fairtax buddies will correct him because they don't care that lies are spread to promote it. This is the same old song and dance that has been going on forever on these threads. Fairtaxers make false claims and never correct them. Or in the rare instances they do, it takes literally years.)
As long as it exists only as a bill, no harm done.
Please define and quantify it and provide some links to some definitive studies that characterize it. Just claiming there is one isn't sufficient.
Governments have been around for something like 6,000 years - since the time of the ancient Sumerians and all governments tax in some manner since they themselves intrinsically have no money ... so what???
Hmmm, I think its the same black market you claim evades billions in taxes every year.
I am talking about when they reinstitute the income tax on top of the sales tax due to massive revenue shortfalls with the FairTax plan. This is not a new concern of mine and it is contained in many posts that you have responded to. See, I pay a lot of income and payroll tax, and I think that under the FairTax it is likely that I would again end up paying a lot of income tax after it fails. Get it?
You couldn't be more wrong about my financial situation or my tax burden. And my supposedly admitted habits are another figment of your imagination. Which isn't a surprise.
See post 748. What do you think the over-under is in years befor pigdog realizes any end-item purchacees of goods and services by 'tax-exempt' is actually taxed by the fairtax?
`(a) Not-for-Profit Organizations- Dues, contributions, and similar payments to qualified not-for-profit organizations shall not be considered gross payments for taxable property or services for purposes of this subtitle.
(OK, so contributions are not taxed, we both agree)
`(b) Definition- For purposes of this section, the term `qualified not-for-profit organization' means a not-for-profit organization organized and operated exclusively--
`(1) for religious, charitable, scientific, testing for public safety, literary, or educational purposes;
`(2) as civic leagues or social welfare organizations;
`(3) as labor, agricultural, or horticultural organizations;
`(4) as chambers of commerce, business leagues, or trade associations; or
`(5) as fraternal beneficiary societies, orders, or associations;
no part of the net earnings of which inures to the benefit of any private shareholder or individual.
(Definition, nothing controversial here)
`(c) Qualification Certificates- Upon application in a form prescribed by the Secretary, the sales tax administering authority shall provide qualification certificates to qualified not-for-profit organizations.
(Not really explained here what these certificates are for. They should reference some paragraph to explain. I assume they are used for paragraph (e) purchases below. Poorly written law.)
`(d) Taxable Transactions- If a qualified not-for-profit organization provides taxable property or services in connection with contributions, dues, or similar payments to the organization, then it shall be required to treat the provision of said taxable property or services as a purchase taxable pursuant to this subtitle at the fair market value of said taxable property or services.
(If church provides a good or service for contribution, then must charge fairtax on fair market value. That makes some sense.)
`(e) Exemptions- Taxable property and services purchased by a qualified not-for-profit organization shall be eligible for the exemptions provided in section 102.
(OK, here is the part that will take pigdog a long time to understand. This exemption is not for "normal course of business" exemptions, despite what pigdog claims. The exemption is for section 102 purchases. What is Section 102 you ask:
`(a) In General- For purposes of this subtitle--
`(1) BUSINESS AND EXPORT PURPOSES- No tax shall be imposed under section 101 on any taxable property or service purchased for--
`(A) a business purpose in a trade or business, or
`(B) export from the United States for use or consumption outside the United States, if, the purchaser provided the seller with a registration certificate, and the seller was a wholesale seller.
(So Churches are exempt only for items they purchase for intermediate or export sales. Not for their normal course of business. Pigdog is wrong as usual and will not admit it for years. He will act ignorant and tell everyone else they are dumb. None of his fairtax buddies will correct him because they don't care that lies are spread to promote it. This is the same old song and dance that has been going on forever on these threads. Fairtaxers make false claims and never correct them. Or in the rare instances they do, it takes literally years.)
And if these non-profit expenses are not taxed under the fairtax, then why doesn't Kotlikoff account for these expenditures and subtract them from the tax base. Kotlikoff keeps those expenditures as part of the fairtax base as TAXABLE, he never removes them.
"So Churches are exempt only for items they purchase for intermediate or export sales. Not for their normal course of business."
I'll ignore your childish personal attacks and say that you are totally incorrect and that this link clearly shows it.
To save you some reading the paper notes:
"There is no definition of church in the FairTax legislation. Churches or houses of worship come under the definition of not-for-profit organizations. "
It also says:
The FairTax does not treat tithes, dues, contributions, and similar payments to religious organizations or qualified not-for-profit organizations as payments for taxable property or services subject to tax. Individuals make such payments or contributions to religious or other not-for-profit organizations tax free. If churches or non-profits provide taxable services at no charge (they run a soup kitchen for the poor, for example), these services are not subject to tax. Taxable property and services purchased by a qualified not-for-profit organization “for business purposes” are not taxable. The organization must present its qualification certificate to the seller when making a purchase in order for the sale to be tax exempt. If a religious organization or qualified not-for-profit provides taxable property or services in connection with contributions, dues or other payments to the organization, then it is required to treat the provision of the taxable property or services as a taxable purchase at the fair market value of the taxable property or services. In other words, purchases for business purposes are tax exempt and sales to consumers are taxable, e.g., a church selling Bibles. The church pays no tax when it purchases the Bibles but it must collect sales tax when it sells the Bibles. The church is likewise responsible for remitting the tax to the state sales tax authority. As the FairTax exempts savings and investment, there is no tax on interest earnings on endowments – assets, funds, or property donated to a not-for-profit organization as a source of income. ""Religious organizations that meet the above criteria are issued a “qualification certificate” upon application to the state sales tax administering authority (on a form prescribed by the U.S. Secretary of the Treasury).
Despite your quaint tirade in living color the situation seems clear enough and I believe most prople will understand even if you do not. Another clunker from you!!
Sorry - not true ... merely more of your misinformation and lack of comprehension.
Really??? Show us the definitive studies that quantify this "evades billions in taxes" ... and wouldn't that be income taxes in any event???
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LOL, in other words, you can't dispute it!!! I thought you might be good for some long-winded babble filled with spin, lies and ignorance. Oh well.
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Wow, such a retort! I knew you would fall back to that good ole standby. It works every time you lose an argument.
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