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."
So today, both the income tax and the flat tax tax government output.It's irrelevant. We don't have a flat tax to confirm that do we.Did you read this part?
What does a NEW tax on wages have to do with "government output" (if there is such a thing)?
I suppose a brain-dead moron could come to that conclusion. But if that was my comment I would be agreeing with him, not disagreeing. You are just acting ignorant to avoid admitting you are a liar. What else is new.
If government ... enterprises are not subject to tax, they will have a huge relative price advantage over private companies...Once again irrelevant. Who said anything about "government enterprises? A government enterprise would be the Postal Service or AMTRAK, that's not what we were discussing before you came along.
In a way, yes that is correct. Any major change in the tax law will be seen by those who own and operate political processes as an oportunity to not only devise a method of easily increasing taxes but also a way to make compliance more absolute.
I'm not sure what you're saying here. Can you clarify?
I'm saying I do not understand why some tax scheme transfers money, accumulated by government, back to Americans to pay their tax. I'm saying that any tax scheme that gives government an opportunity to manipulate the price (which we all know thay can do) of such things as food, energy and medicines and get $.30 cents for each dollar increase to purchase more socialist type political capital is certain to be exploited.
While the government pays its employees a gross amount and then withholds the income tax from their paychecks,...Obviously not if you think the new tax wouldn't be additional.Seems pretty straight forward to me.
How would it not be additional? If a government employee makes $50K today, it will cost the government $50K plus $15K under the fairtax. Well unless government employees take a pay cut. But why would they when cost of goods are going up?
I figured ZERO income tax on the ROI after retirement at age 65. That's less than your 5%, right ?
I alloted the full employee+employer side 15.3% of SS/M tax as the tax paid under the income tax -- since I was allowing for ZERO price drop, and hence ZERO embedded taxes in prices, I counted the entire SS/M tax as falling on the individual. My calculation was based on unmarried filing single, with a current $12K mortgage and $2K property tax deduction.
I know the $35K is right because THESE ARE MY OWN PERSONAL NUMBERS for 2005. The only part that doesn't match my life is the age. Other than that, this IS my FACTUAL situation, not a guess, and not a hypothetical at all.
Eskimo's argument was only on the already-taxed savings, so I didn't address the pre-taxed savings at all. If you'd like to look at the pre-taxed savings, then we can do that, but it would be a different argument. I assumed Eskimo would reject my mixing pre- and already- taxed accounts when his complaint was only about already-taxed savings.
On the already-taxed savings, $2,800 per month could be withdrawn for 25 years, ZERO income tax paid, and the ENTIRE $2,800 spent. That is compared to the much larger savings built up and showing that it lasts 25 years at a withdrawal rate of $4,800 per month. That $4,800 MORE than covers the $2,800 purchases PLUS FairTax.
What example were you looking at ? I skewed my example COMPLETELY in favor of the income tax, but the extra savings prior to retirement completely swamped the higher FairTax when spent. Ten years happens to be a long run of increased savings. If I were within 4 years of retirement, the FairTax would come out worse.
I was simply showing that Eskimo's statement about "anyone over 50 with savings" was based on a bad assumption. Get to over 60 years old, and the "already-taxed savings" argument begins to hold water. My goal with the FairTax is to dispell the myths and identify the REAL problems so solutions can be considered. By my calculations, "over 50" is not a problem, while "over 60" might be.
[If a government employee makes $50K today, it will cost the government $50K plus $15K under the fairtax.]
This would still not add 30% to the current cost of government employees, however, as LL implies.
Currently, a $50K salary costs $50K * 1.0765 to include the SS/M on the employer side. So $53,825 is the current cost of the $50K employee.
So $65,000 minus $53,825 = $11,175 which is 21% increase in cost to government.
So if government salaries now total $150 billion, then they would jump up a whopping $30 billion ? Or if they were currenly $300 billion, it would add $60 billion ?
How much exactly are we talking about in additional spending ? Anybody have a figure handy for the total current Federal spending on salaries ?
This would still not add 30% to the current cost of government employees, however, as LL implies.`(17) WAGES AND SALARY-Currently, a $50K salary costs $50K * 1.0765 to include the SS/M on the employer side. So $53,825 is the current cost of the $50K employee
The terms `wage' and `salary' mean all compensation paid for employment service including cash compensation, employee benefits, disability insurance, or wage replacement insurance payments, unemployment compensation insurance, workers' compensation insurance, and the fair market value of any other consideration paid by an employer to an employee in consideration for employment services rendered.You want to include the employer half into the wage? Then the tax is $53,825 plus 30% or $69,954 not 65,000. Thanks for the clarification.
Employee benefits, disability insurance, or wage replacement insurance payments, unemployment compensation insurance, workers' compensation insurance, and the fair market value of any other consideration paid...Once again, thanks for pointing that HUGE extra cost out.
Lewis,
I refuse to believe you aren't smart enough to have seen the correct point, but you are either very confused or your sarcasm is very subtle.
The Federal government is ALREADY paying a 7.65% tax on their employees' salaries. So the ADDITIONAL cost of the FairTax is not 30%, but only 21%. Because it REPLACES the SS/M tax the government was paying before.
Whatever the total current COMPENSATION is, it is still less than the total COST of the employee -- it is less because there is the SS/M tax currently being paid.
Therefor, it is MATHEMATICALLY IMPOSSIBLE for the cost under the FairTax to be 30% higher than the current total cost. (1.3 * (a - b)) < (1.3 * a)
Don't forget that the FairTax doesn't apply to ALL government employees. Only those not engaged in a government enterprise and not involved in education. Which means, for example, that Postal workers' and schoolteachers' salaries are not subject to FairTax. Yet, the government DOES save the SS/M tax they used to have to pay on them. So the government saves 7.65% on ALL its employees and has to pay 30% on SOME employees. At the State level, what they save in SS/M tax on teachers will more than pay the FairTax on the other employees. So, really, we are only talking about Federal employees that will cost 21% more on average.
And if we are going to discuss the effect on government costs, how about the savings on the national debt as interest rates fall to the current tax-free interest rate ? Or did you want to ignore that $75 billion per year savings ? Or how about the extra $230 billion in revenue from the expected 10% growth in the economy the first year of FairTax ? Do you really imagine this $305 billion net change in revenue/debt-service won't cover the FairTax the government will have to pay on its employees ?
The Federal government is ALREADY paying a 7.65% tax on their employees' salaries. So the ADDITIONAL cost of the FairTax is not 30%, but only 21%. Because it REPLACES the SS/M tax the government was paying before.You are the one who added it into the wage. The employer half is no different than that other laundry list of (employer paid) employee benefits subject to the 30% tax. Where is it written the employee won't also receive his other half of FICA after a Fairtax?
Section 904 paragraphs (d) and (e) require that the equivalent of 15.3% (not 7.65%) of the SS wage base and self employment income be confiscated through the sales tax by determining the sales tax rates every year...Are you saying employers should retain the 7.65% and that consumers should take an additional hit through higher rates and not include the 7.65% in their promised 100% paycheck? You call that a fair tax? I think you'll lose that battle.
So using the same fictitious government employee do you think the wage base for SS/m calculations would be $50,000 minus 15.3% or $53,825 minus 15.3%? I refuse to believe you aren't smart enough to have seen the correct point, but you are either very confused or your sarcasm is very subtle.
I beleive YOU are the one who doesn't see the point and my sarcasm is seldom subtle.
Then get someone in Congress to introduce it for you. And when you wake up from your dream . . . .
Check your meds. Something's not right with you. That was quite a combination of delusion, hysteria, and paranoia.
With few exceptions, all government purchases are taxed. So it is just not government salaries that get tax added on to them. There could be as much as $300 billion added to federal government spending alone because of the fair tax. Of course it is all just an silly trick to try to keep the fair tax rate artificially low. It is only a fool who thinks government paying itself actually raises money. Its like me paying myself $1 million dollars and then claiming I am $1 million richer. Totally fraudulant.
First, a tax on an individual's income is not a tax on the source of that income. Taxing the government employee's income in not taxing the government. This is both legal, and logical.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,...Seems pretty straight forward to me.
As I said before, you farttaxers will use anything, even searching old and tired threads, waiting a week or more, to make attempts to get your loser for a tax back on the topic list.
Notwithstanding this reply, you lost.
I figured ZERO income tax on the ROI after retirement at age 65. That's less than your 5%, right?0% on a number lower that it would be. Golly, how fair of you.
I alloted the full employee+employer side 15.3% of SS/M tax as the tax paid under the income taxWhy would you do that? If you don't increase the person's income by the amount of the employer side of SS/M you are overstating the impact of the payroll tax. (Oh, that's why you did it.) And if you do increase the income by this amount, the total SS/M paid isn't 15.3%. The employee's 7.65% is an inclusive rate, the employer's 7.65% is an exclusive rate. You can't just add them together.
since I was allowing for ZERO price drop, and hence ZERO embedded taxes in prices, I counted the entire SS/M tax as falling on the individual.You are making assumptions without support. You are assuming that if prices drop (yet another unsupported assumption) that they would be equal to the employer portion of SS/M.
My calculation was based on unmarried filing single, with a current $12K mortgage and $2K property tax deduction.Your's is not what I would call a typical scenario for people approaching retirement.
I know the $35K is right because THESE ARE MY OWN PERSONAL NUMBERS for 2005. The only part that doesn't match my life is the age. Other than that, this IS my FACTUAL situation, not a guess, and not a hypothetical at all.You may want to take your taxes to HR Block next time. A person with $125,000 salary putting $15,000 into a 401(k) would have an AGI of $110,000. Minus the $14,000 in itemized deductions and $3,200 in personal exemptions, their taxable income would be $92,800. The income tax on this amount would be $20,490. That's 16.4% of $125,000. The SS/M on $125,000 would be $7,206. Together with the PIT, that's $27,696 - or 22.2% of $125,000.
Eskimo's argument was only on the already-taxed savings, so I didn't address the pre-taxed savings at all.Your example puts $15,000 a year in pre-tax savings - how can you say you didn't address pretax savings.
You FairTax people are trying to have us believe that there will be no one paying more taxes under the FairTax. That's just a pipe dream.
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