[konaice]

Well he was doing fairly well until he got to the "You earn $80,000 cause your boss keeps $20,000 in taxes" part.

Actually you boss has no claim to that 20k, because you will still have to pay taxes on what you buy. He never got to keep it before, and he doesn't get to keep it under fairtax.

The writer's argument centers on a mistaken assumption about what percentage of a product's cost is labor and what percentage is fixed costs of production. He seems to feel 100% of the cost of an item is labor, yet we know that is not true.

If you produce widgets, you buy raw materials, and machines, and buy a building and power, with which to make them. Then you hire people to run the machines.

Every one of those items is taxed today. You pay tax on the machines (because they are embedded) you pay tax on the raw materials (because those taxes are embedded in the price) Same for the building, electricity, etc.

You also pay the employers half of fica for your employees. When you look at how this is done, its THIS portion, and ONLY this portion, of tax that is taken from the employers pocketbook. The rest is all taken from YOU (the employee).

Therefore, under FairTax, all the payroll withholding taxes, employee's half of fica are all passed thru to the employee.

And the employer's half of fica is pocketed by the employer and thereby reduces costs of the widgets sold. This half of fica is added to the other savings in raw material costs, reduced machinery costs, cheaper energy, etc, all the way up the line.

So you see the writer does not put forth a trutefull example, and clearly does not know much about the way business works.

Remember this: Busniess pays no taxes. All taxes that a company might owe are paid by the consumers. The corporate income taxes, the taxes on business property, the employer's half of fica, ALL OF IT is cranked into the price of that widget AND HIDDEN FROM YOU IN THE PRICE.

Under Fair tax, that's all gone, and you pay 23%.

[SolarisRocks]

Why do fairtax supporters say it is like a sales tax while also saying it will be a 23% tax rate? It isn't computed the say way sales tax is (if it was it would be 29.xx%) so why plant the false idea in peoples head it is like a 23% sales tax?

[Always Right]

Actually you boss has no claim to that 20k, because you will still have to pay taxes on what you buy. He never got to keep it before, and he doesn't get to keep it under fairtax.

The point the article was making is not that the boss has claims to the $20K, it is the boss would have to keep the $20K to reduce prices like the fair taxers claim. The article points out the deception the fair taxers use in promoting their tax plan.

[PeteB570]

That was what I tried to point out. As I'm self employed I get to pay everything.

For the hourly worker it's soooo hard to bring them from take home pay to net worth to the company for that pay period.

Start with take home, add in Federal, state and SS tax. Are we done? Not yet, still have to add in the "employer's half" of SS, medical insurance and workman's comp to the state.

If the big employers started with net worth to the company this pay period and worked through all of the above down to take home pay there would be a revolt in this country.

The little guy would be seeing just how much he was shafted each pay period.

[Modok]

THIS portion, and ONLY this portion, of tax that is taken from the employers pocketbook. The rest is all taken from YOU (the employee).

---

Wrong! The cost to the employer is the same under the fair tax or the current system. You need a basic math course.