Posted on 04/04/2006 2:17:28 PM PDT by Eaglewatcher
The FairTax (HR 25 in the US House and S 25 in the US Senate) is a federal retail sales tax that replaces the entire federal income and Social Security tax systems, including personal, gift, estate, capital gains, alternative minimum, Social Security/Medicare, self-employment, and corporate taxes. The FairTax allows Americans to keep 100 percent of their paychecks (minus any state income taxes), ends corporate taxes and compliance costs hidden in the retail cost of goods and services, and fully funds the federal government while fulfilling the promise of Social Security and Medicare.
More FairTax benefits:
No tax on used goods. No tax on business inputs. With the FairTax, if you choose to buy any new good or service, the sales tax is charged just as state sales taxes are computed today. If you choose to buy used goods - used car, used home, used appliances - you do not pay the FairTax. If, as a business owner or farmer, you buy something for strictly business purposes (not for personal consumption), you pay no FairTax. So, in deciding what to buy, you get to choose whether or not you pay the FairTax.
No federal sales tax up to the poverty level means progressivity like today's tax system. Furthermore, to ensure that no American pays tax on necessities, the FairTax plan provides a prepaid, monthly rebate for every registered household to cover the consumption tax spent on necessities up to the federal poverty level. This, along with several other features, is how the FairTax completely untaxes the poor, lowers the tax burden on most, while making the overall rate progressive. However, the FairTax is progressive based on lifestyle/spending choices, rather than simply punishing those taxpayers who are successful. Do you see how much freer life is with the FairTax instead of the income tax?
All Americans take home their whole paychecks. Not only do more Americans have jobs, but they also take home 100 percent of their paychecks (except where state income taxes apply). No federal income taxes or payroll taxes are withheld from paychecks, pensions, or Social Security checks. Retail prices no longer hide corporate taxes or their compliance costs, which drive up costs for those who can least afford to pay. Did you know that hidden income taxes and the cost of complying with them currently make up 20 to 30 percent of all retail prices? It's true. According to Dr. Dale Jorgenson of Harvard University, hidden income taxes are passed on to the consumer in the form of higher prices - from 20 to 30 percent higher than they would otherwise be - for everything you buy.
Tax criminals - don't make criminals out of honest taxpayers. Today, the IRS admits to 25 percent non-compliance with the code. However, this does not take into account the criminal/drug/porn economy, which conservative estimates put at one trillion dollars of untaxed activity. The FairTax taxes those engaged in the underground economy capturing their income at the cash register. The substantial decrease in points of compliance - from every wage earner, investor, and retiree, down to only retailers - also allows enforcement to concentrate on following the money to criminal activity, rather than making potential criminals out of every taxpayer struggling to decipher the code.
The income tax exports our jobs, rather than our products. The FairTax brings jobs home. Most importantly, U.S. exports are not burdened by the FairTax, as they are with the current income tax. So the FairTax allows U.S. exports to sell overseas for prices 22 percent lower, on average, than they do now, with similar profit margins. Lower prices sharply increase demand for U.S. exports, thereby increasing job creation in U.S. manufacturing sectors. At home, foreign imports are subject to the same FairTax rate as domestically produced goods. Not only does the FairTax put U.S. products sold here on the same tax footing as foreign imports, but the dramatic lowering of compliance costs in comparison to other countries' value-added taxes also gives U.S. products a definitive pricing advantage which foreign tax systems cannot match.
YOU are in charge! The FairTax moves us from a system that taxes what we earn to a system that taxes what we spend. Under the FairTax, you control your tax liability, not the government. The FairTax puts "we the people" in charge of our money, and puts us all on the path to economic freedom!
To enact the FairTax and unleash the full economic potential of the U.S., we must apply Vocal and Persistent pressure on Congress each week.
Email, call or fax your members of Congress today. Send them this simple message: "Please support replacing the federal income tax code and become a co-sponsor of HR 25 or S 25, the FairTax."
I am glad you are backing off your claim that pigdog's posts contained substance. Shalom was punished for earlier sins. I thought his latests posts were funny and appropriate in light of the bs pigdog was posting.
We will probably end up with a consumption based tax at a more realistic level, perhaps a straight 8-10% without all the inclusive rate bs and prebates, probably excluding only neccessities like food and housing. Coporate income tax, capitol gains tax, and taxes on those earning under 40K could be eliminated. We could then go to a flat income tax of somewhere in the neighborhood of 20% for those earning more than $40K, and reduce the SS tax down to something like 5%.
Having read and reread it appears that government employer will pay the sales tax on employeesAfter all this time of touting the Fairtax you're just now admitting to never before reading and rereading the bill?
That, like "tax base is people" (LOL!) is only more proof you really don't know what you're talking about. I wonder if that is akin to the sales tax applied to a domestic servant that provides a service.
Who cares? The tax on "domestic servant's" wages won't be coming out of our pockets like the tax on the wages, salaries and benefits of "any (all) government employee's would.
I am glad you are backing off your claim that pigdog's posts contained substance.
Though it is irrelevant to the point of posts being off topic or on topic, pigdogs posts were substantively relevant much more so than SI's posts about food.
I thought his latests [sic] posts were funny and appropriate in light of the bs pigdog was posting.
So when you think a person is acting like a jerk you think it's appropriate for you to act like a jerk too. Interesting -- NOT!
?...Read it yourself. Your ommissions and deceptions of what the Fairtax does tax is bastardizing your own tag line.
I have read it and reread it. It appears that government employer may pay the sales tax on employees. I wonder if that is akin to the sales tax applied to a domestic servant that provides a service. If so I stand corrected and it's an honest mistake born of ignorance.
ancient_geezer, Principled, you two understand legalese better than I. It would be unwise for me to take just YN or ll's word on it. I'd like to here from the pro side not just the antis.
This is the breakdown of earnings, savings, and spending:The income tax + payroll on $125,000 with $15,000 put into a 401(k) would be ~$31,000, not $35,000. And that's assuming a couple both working so the payroll tax is applied to the full amount and nothing but the standard deductions.
ancient_geezer, Principled, you two understand legalese better than I. It would be unwise for me to take just YN or ll's word on it. I'd like to here from the pro side not just the antis.Who do you think explained it to them?
I see it another way. There are a half dozen here who are huckstering a tax scheme that many I know believe will do more harm than good for some of the reasons discussed in this thread.
I realize it is your job to sell this scheme but no one is going to believe that there is only 6 lowly old American citizens out there who have serious concerns. No, you know some serious problems exist. Those problems must be very serious indeed if you are going to such extremes to stifle debate on them.
I have an idea! Why don’t you share with us the reasons given by legislators for not being able to get this tax scheme out of committee for the past 8 years and let’s have an honest and open national debate.
Rubbish. Since the government take from the economy [sum total of all the taxes] would remain more or less the same, about 70%-80% of this new "fair tax" would represent what used to be the income tax [the same proportion of government revenue as it is now]. Spending one's already taxed money now, one might be subject to paying sundry other taxes, which, however, are minuscule [3 times smaller] in comparison with this additional "income tax equivalent" part of the proposed burden. And the prices would not change much, for neither the amount of goods on the market nor amount of money available would change much either.
Stopped counting how many times I have heard that concerning this subject. Another concern, given the seemingly careless quantifying, is that perhaps the same care was taken when predicting the effects on our society and our republic.
Wow!
I am impressed. In mere seconds you posted the entire -- and might I add, perfect -- solution to the tax problem and you were able to do it in one paragraph. /sarcasm
No research. No studies. Just conjecture and guesswork based on nothing.
The entire paid staff of FT employees could have their meetings in a room little bigger than a phone booth. Just about all of us are volunteers. No job. No pay. Just a desire to rid this country of it's oppressive tax system and its Gestapo like IRS.
It isn't getting through Congress because those SOBs don't want to relinquish their power. If this was something that the pols wanted, it would have passed thru in a heartbeat 8 years ago.
That ought to be a clue to you that the plan is pretty damn good.
Most of the concerns about the program are borne of ignorance and misinformation about the plan.
Your claim that this is 'our' job . . . is this a willful falsehood on your part or just more ignorance?
It is not my practice to converse with anti-FairTax posters via Private Mail to carry on discussions out of sight of the threads.
Since that's the case, I'd ask you to repost your Private Mail to me on this thread if you wish a response.
#469. And since I am dead set against this "fair tax" fraud, I am not interested in response. If this pig ever flies, I would be contributing to tying it down in courts.
Better than faulty research with biased studies. Mine makes more sense and would actually have a chance of passing.
I have read it and reread it. It appears that government employer may pay the sales tax on employees.
It it is required to where that employee provides what is tatamount to an end (i.e consumed) service to government rather than a component of a service for fee to an end user as the case of a government enterprise where the FairTax is collected from the purchaser.
I wonder if that is akin to the sales tax applied to a domestic servant that provides a service. If so I stand corrected and it's an honest mistake born of ignorance.
The essential crux is that in most activities, government is a consumer not a producer and is tax the same as an individual would be in aquiring services for personal use as opposed to business use which ultimately provides a service from which the tax is collected from the end user.
A fairly comprehensive discussion of the issues involved in the NRST levy on government consumption (as an issue raised by the JCT that income taxes, flat taxes proposals & VATs tax government consumption but sales taxes without special provision to cover them do not.) can be found in this PDF:
|
==>Prepared for Americans For Fair Taxation This report responds to Ken Kies’ letter to Chairman Archer of January 12, 1998. In his letter Mr. Kies propounds several objections to the Americans for Fair Taxation (AFFT) FairTax plan (FairTax) as raised by the Joint Committee on Taxation (JCT) staff. This memorandum addresses those objections with respect to three basic issue areas. They are:
Page 14-16
C. Government Value Added Should be in the Tax Base The Same As It Is In the base of the Income and Flat Tax Schemes
We anticipate that one possible source of confusion on the part of the JCT is the tax treatment of government output. How should such output be taxed, if at all? The GDP includes, of course, both government value added and private value added. Government value added is included at “cost”, which is primarily the wages paid to its employees. The income tax taxes income whether the source is government or the private sector, and by doing so, taxes government output. While the government pays its employees a gross amount and then withholds the income tax from their paychecks, we could, of course, just pay government workers a lower tax-free wage. This would accomplish the same objective. However, we choose not to do this: with the result that we have higher spending (from paying pre-tax wages) and higher tax revenue (from the income tax on those wages). And it is important to note that the flat tax does tax government (and non-profit) output because government (and non-profit) wages are included in the tax base. To be consistent, the AFFT FairTax does so as well. A pure subtraction method VAT (aka a business transfer taxes) would not typically tax government value added. The Hall-Rabushka flat tax variant is an exception, however. Unlike a normal subtraction method VAT, the flat tax allows a deduction for wages and then taxes wages at the individual level. In doing so, it also provides the mechanism for taxing government wages (while a normal BTT only taxes business wages by taxing receipts and denying the deduction for wages). Thus, the flat tax base is much larger than the base of a normal BTT (i.e. larger by the size of the government wages).62 So today, both the income tax and the flat tax tax government output. However, a sales tax, in the absence of a special rule, would, like a pure BTT, not tax government value added by employee wages. In the absence of a tax on government payroll, therefore, the tax base would be much smaller than under either the income tax or the flat tax schemes. Assuming spending was held constant, this would effectively increase the relative size of government by the proportion of revenues relative to wages and government purchases that are foregone. The FairTax taxes government value added in order to maintain the relative size of the government to the private sector, rather than increasing the size of the government. Another way of looking at this problem is to examine it from two different perspectives: incidence forwards and backwards. If we assume that consumption taxes are fully incident on the factors of production, then the return to capital and the return to labor will decline by the amount of the tax. As noted earlier, under this incidence assumption, tax-inclusive prices would not be higher but the return to workers and capital would decline. Thus, in the absence of a special rule, government workers would experience a windfall. Their consumption prices would not go up and their wages would go up by the amount of the repealed income tax but, since government value added is not taxed, their wages would not appear to be subject to downward pressure.63 Taking the alternate incidence assumption, namely that the FairTax would be fully passed forward and borne by consumers, government employees would pay the tax just like private sector workers, since tax-inclusive prices would be higher by the amount of the FairTax. Government workers would, of course, have higher pre-tax wages, but the costs of purchasing goods and services would be higher by the amount of the FairTax. However, the inequity in our alternative incidence assumption redounds to the beneficiaries of government who would now be consuming a level of government services that is enlarged by the removal of the wage taxes formally imposed. We collectively would be getting the benefit of government (the Armed Forces, the Consumer Product Safety Commission, National Public Radio, or the JCT on Taxation) free of tax. Those who disproportionately benefit from government would disproportionately benefit from this effective increase in government spending. Or, put another way, we would have legislated a huge increase in the size of the government that is paid for by the private sector. Another way of addressing this problem is to simply take the National Income Product Accounts and start calculating the tax base under the various consumption taxes. If one goes through this exercise to demonstrate the oft-repeated equivalence of the various consumption tax plans, it becomes clear that in the absence of a special FairTax rule regarding government, the flat tax has a broader base because it taxes government wages. Similarly, a pure income tax is broader not only by the amount of unconsumed capital income but also by the government wages amount.64 In the context of a sales tax, then, an employer payroll tax on government wages simply achieves parity with the income tax and the flat tax. Failure to impose this tax would exempt government value added from tax for the first time and constitute a dramatic incentive to consume through the medium of government. The JCT seemingly recognized this in their pamphlet “Impact on State and Local Governments and Tax-Exempt Organizations of Replacing the Federal Income Tax,” p. 57-58, May 1, 1996. A sales tax should also be imposed on government purchases from the private sector to fully reflect the opportunity cost of that purchase. Government enterprises (e.g. Amtrak, the Post Office) are a separate case. They can easily be put on equal footing by taxing their sales and exempting their inputs as if they were a private enterprise. If government (and non-profit) enterprises are not subject to tax, they will have a huge relative price advantage over private companies through cross-subsidization.
62. Even a normal BTT, however, taxes government purchases of goods and services from the private sector since the private revenues from those sales are includible in the taxable base. 63. Eventually, with free market forces, private sector workers and perhaps political pressure would bid the government salaries down. However, given the rigidity of government pay scales and rules against exchange this may take many years (i.e. government wages may be “sticky”). In the interim, the relative size of government will have increased. 64. Since the sales tax does not tax the “return” to government investment (i.e. later government consumption scored as government capital consumption in NIPA), using a tax prepayment approach that is equivalent in present value terms to taxing the returns is appropriate. |
It is a duty you assumed whether paid or not.
It isn't getting through Congress because those SOBs don't want to relinquish their power.
You need to understand why that is difficult to believe. The politicians would have cover for creating more government by proclaiming tax enforcement is required that has the potential to be far worse than the present IRS, every American who does not desire to be taxed excessively will be forced to beg an offsetting sum of money from government, they could simply manipulate prices when they wanted more money, etc.
Very clear ... thank, Geez! Didn't we once discuss this in the ancient past when the anti-FairTax crowd was trying to say that government should not be taxed? Now, seemingly, they agree that it IS rightfully taxed.
Nothing like changing horses, I guess.
Add me to the fair tax lists.... I am 100% with it !!
Welcome aboard. U'r on the pinger now ;O)
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.