Posted on 02/11/2006 8:54:52 AM PST by Eaglewatcher
Recent letters have expressed concern that the poor or middle class might be harmed by adoption of the FairTax (www.FairTax.org) based on a deep misunderstanding of both the FairTax and the current system. We cannot assess the effects of the FairTax without comparing it to the reality of our current income and payroll tax system.
One cannot buy a loaf of bread without paying the income taxes of the baker. The price of that loaf of bread contains the cost of the flour, and the income of the baker, but it also contains the taxes the baker pays. After all, the baker does not have a money tree from which to pluck dollars to pay his taxes, he must get those funds from his customers, like any other business.
Further, the price of that loaf of bread contains the taxes of the miller, the farmer, the trucker and the grocer and those of all their employees. Those income and payroll taxes cascade through the production process and eventually make up more of the cost of that loaf of bread than the profits of any of those who worked to produce that bread.
Those many layers of taxes on productive work make up the embedded tax component of the price of bread or any other goods or services we buy. On average, that embedded tax component is 22.4 percent of the price of everything we buy, from a loaf of bread to brain surgery. So, the true tax burden on the working poor is 28.4 percent, (their FICA tax of 7.65 plus plus 22.4 percent of their remaining take-home pay, which goes to pay the embedded taxes hidden in the price of everything they buy).
Even if the poor paid the entire 23 percent FairTax, they would be better off than now, but they don't. The FairTax provides a rebate of all tax paid on spending up to the federal poverty line to everybody. This cancels out all taxes for those living at or below the poverty line, $25,660 a year for a married couple and two children.
For the same family earning twice the poverty line ($51,320), half their taxes are rebated, yielding an effective rate of 11.5 percent. And even at triple the poverty level, $76,980, their effective rate is only 15.3 percent, still far better than the 28.4 percent the poorest of the poor pay now.
So, who loses? The idle rich, illegal aliens, criminals, "off-book" workers and others who escape the current system through evasion or legal loopholes. Tax lawyers and lobbyists who make their livings from the complexity of the current system will also come up short. Foreign goods sold in the U.S. will no longer get a free ride while production of American-made goods and services bear the whole tax burden.
But those of us who work for a living, or who get by on a fixed income, will be far better off.
Tabor, of Chesapeake, is co-state director for FairTax.org in Virginia.
America could once again create wealth like we did before the income tax.So there was no poverty before the income tax and no wealth created since...got it. This from someone who sells investments?As Nelson DeMille commented in one of his books: the size of the estates on Long Island, New York is typical of the amount of wealth that was created before the income tax.
If we can create that amount of wealth again then we could easily eliminate poverty
No, he isn't a Cindy Sheehan and Michael Moore. He is a trouper. He understands the stakes. He may tweak a bit here and there but how many tweaks have we had on these threads? No poster on this board has a more focused agenda than pigdogSpeaking of what someone else said. Someone once said you can judge a man's character by his friends and the company he keeps. I'd like to think RobfromGa, Always Right, to name a few are my friends, you like pigdog...so be it.
As I have repeatedly stated, my position is that a combination of price changes and wage changes dictated by the market will create no changes in purchasing power.
Don't blame me for boortz. I think he's an entertainer. I don't listen to him.
Separately, I find it odd that you would reject a tax reform proposal based on what someone unaffiliated says about the reform- anonymous too - as a reason to reject the proposal. Is that your only reason for rejection? that some people in your view are not fully informed?
I would take the nrst even if I thought we'd have 30% price increase. That isn't important to me. THe other benefits far outweigh a price increase to me - but I believe my purchasing power will remain constant.
Wrong again, "Always Right". The information collected for SS with the FairTax is wage information, not income.
WHo said this? Not groanup. I think it's just you. Are you unable to interpet Groanup's comment or are you using a strawman - again?
There is no reason to report income. It doesn't matter anymore how much you make. Surely this was just an error that he'll correct.
Don't break your arm patting yourself on the back by spouting that "you" got Boortz to change anything. Your vanity posts were nonsense to begin with and you're still mischaracterizing what was said.
As for "presenting the plan honestly" that's certainly not something you do - quite the opposite in fact.
And you are an admitted preferrer of the present system so stop trying to pretend otherwise. Getting Jorgenson to respond to an email is no big deal - I've done it more than once - so don't think you have any special touch; you don'.
Wages are in fact a subset of income. So yes, wage information is most definitely inomce information, just not all of it. But thanks, that is about the 5th time on this thread you have called me a liar or wrong, and each time it has been a very simple task of showing the stupidity of your attacks.
You just don't like the FairTax because it isn't the income tax which you have admited you prefer - and it has nothing to do with "the way it is being sold" either.
the FairTax website has a huge amount of detailed and very helpful information while all we get from you and your kind is nonsense and "lookie at my great vanity posts - ain't I wonderful and brillant?" You seem to think that's a great way to "sell" your preferred income tax.
More correctly described, it is merely the dishonesty that you continually accuse any FairTax supporter of.
The millions of self-employed people will have to report their income if they wish to recieve SS benefits for it. Of course now there is no reason to take deductions to lower your income, so reporting of wages will increase. That means there will be a much bigger SS liability to the government when those people retire.
There you go with more of your misinformation campaign!
The increase in purchasing is clearly real as has been shown several times to any reasonable person not afflicted with the "love my income tax" BS.
In addition, the FairTax eliminates the income tax, your friendly IRS and the income tax records. How is it you plan to bring it right back, emergency or not???
Do you think they'll report their wages in exchange for social security benefits?
So, what? Are you arrranging a play date? LOL.
Gee, I'm glad you're not doing any namecalling.
You have no idea of how deep my understanding might be of the FairTax so making such childish statements is - well - childish in itself.
And you're in no position to lecture anyone about "intellectual honesty" when you came on these tax Reform threads initially pretending to be in favor of the FairTax and "really liking it" (or some such lie) if someone could only explain "one more thing" to you.
All of that was soon seen as your dishonest ploy to merely attack both the FairTax and any of its supporters and you have since now admited you preferred the present system all along yet you still try the "honesty" pretext.
That's nonsense.
Well, Looey, you've used three "phoney" names as I recall on these threads over the years so it looks like a case of he pot calling the kettle black.
Sorry, Looey, the FairTax does not make the illegal economy legal, it merely obtains much more in tax revenue from it that at present.
But quite possible that's what a lot of you Squirrels are afraid of ...
Anyone operating legally would be stupid not to report wages to qualify for SS benefits. Most sole proprietors operate legally and pay taxes. Under the fairtax, those who supply their services to business will have no sales tax liability, so it would be wise for them to report as much income as possible and not take any deductions.
Even if someone had misunderstood the reporting requirements and given inaccurate information to said self employed individual? It would still be wise then too?
So the decision made should ignore inaccuracies and focus on reality?
Actually thee will be some increase in purchasing power with the FairTax since prices before tax will decrease AND the taxpayer will have the prebate also.
I doubt there is any inherent inflationary effect, but the operation of the FairTax will enlarge the economy a good bit which should help provide more opportunity for most people.
In addition, saving and investment will no longer be penalized/controlled so that we'll see a lot more of a free economy. The border adjustability of the taxes will help our exporters also.
It undoubtedly will surprise you to know that the figures do not show embedded taxes at all.
You really don't understand what is involved and your post shows this very clearly. You should stop blabbering such nonsense about something you do not understand.
Not sure what you are saying. If I am self-employed, why would I not report my earnings so that they would be applied to the calculation of my SS benefit?
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