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."
How much exactly are we talking about in additional spending ? Anybody have a figure handy for the total current Federal spending on salaries ?What makes you think the words "any government" refers to only federal spending on salaries? And what makes you think it's only salaries? The way I read the definition from the bill the tax also taxes retirement pay/benefits for "any (all) government" employees.
You claim it's 21% increase and then poo poo that as if it's miniscule because it's not 30%...guess what, a 21% increase in ALL, as in local, state and federal (that's what "any government" means) government payroll alone, not counting the tax on all of the other benefits and employer costs, would be devastating.
My opinion is the phoney (gag!) "prebate", the Taxable Employer, the Trust Fund Revenue and the Sales Tax Inclusive SS Indexation clauses (clauses that you all purposely overlook) negate by 10 everything else that could be good .
Bo point in coughing Nightie. The good Dr's veracity is much better than yours and you frequently remind us by your words.
You need to read the paper on the subject of "taxing government" that ancient_geezer posted earlier explaining that very clearly since the equivalent thing is done presently.
You're merely misrepresenting something you don't understand.
Eskie loves to speak and roll around in gibberish as you'll notice.
So, Nightie, "*cough* jorgenson *cough*" from your #506
doesn't really mean "*cough* jorgenson *cough*"?
It was only a meaningless throwaway? You seem to be replete with those.
Guess you didn't really read the paper after all ...
Your first observation about not being smart enough is the operative one with this poster ...
Well, Finial, actually it is YOU who has lost by not helping put the FairTax into action as our tax law to rid us of the income tax and the IRS.
And the prebate STILL is a refund of tax paid, not a "guarantee".
Sorry, Nightie, the "pipe dream" is the one that billows out of the pipes of you and the rest of the SQL Squadron.
Guess you didn't really read the paper after all ...I read it. Maybe instead of just making baseless claims, you would like to explain how the Flat Tax (or the current system, for that matter) taxes government output.
Sorry, Nightie, the "pipe dream" is the one that billows out of the pipes of you and the rest of the SQL Squadron.Do you think you might want to make a post that actually added something to the discussion. I seem to remember somebody being banned for spamming this very thread. How are your posts any different?
What's the matter, too outlandish for you. I know some folks who said that 40 years ago about the things that are happening right now. They were wrong. The minutiae they discussed then has been long forgotten but the outlandish is now political reality. Now I've made my point. You don't have to like it, you can ignore it as too difficult to fit into your agenda, but while you are perfectly content to argue fractions of percentages there are those making outlandish plans for the next 40 years. Try not to make it easier for them.
... et tu, Nightie. And in case you're not aware of it the paper posted by a_g covers that matter - and we've discussed it in the past (and you lost then, too).
Go study the paper more thoroughly.
Please spell out for us in 20 words or less just what your point really is - it's hidden in all the gibberish that says nothing. Or maybe it's as nonexistent as it seems to be.
And maintaining one of the tenets (that's the income tax, in case you didn't know) of a communist takeover of society helps to thwart them, how?
How does allowing the govenment to take your money before you get it help to engender freedom or slow the spending by the government?
And while we are on the subject, grassroots movements have had a tremendous history of success for those who stand by them. The FairTax will be added to that list soon, despite the naysayers and fearmongerers like you.
For the self-employed, the $125K gross DOES include a 15.3% SS/M tax. Sorry if that wasn't clear. I figured no price drop because I wouldn't be passing along the employer-side 7.65% tax as a savings to my customers in lower prices. I didn't want to bring any assumptions about price drops into the example. That means retaining all the taxes I currently pay -- including both the full 15.3% SS/M tax on the first $90K and the 2.9% on the remaining $35K.
I was trying to keep it a simple example. If you want to get more detailed, I'd have to exclude my mortgage and property taxes from the spending subject to FairTax -- so only $53K of the spending is subject to FairTax instead of the full $70K. Which would allow me to save $25K per year under FairTax rather than the $20K in the example. And I should include the FCA and put that $2K per year into the savings as well. So I'd have $27K going into that savings account each year, and it would be worth $766K after ten years rather than the $670K in the original example. My monthly withdrawals can be $5,400 under the FairTax rather than the $2,800 under the PIT.
My example may not be typical but there are plenty of people like me. Eskimo's statement was "anybody over 50 with savings" should fear the double-taxation effect of the FairTax. Clearly, there are lots of people that don't need to fear the double-taxation effect at all.
[0% on a number lower that it would be. Golly, how fair of you.]
What does this mean ? What number should be higher than I used ? Are you suggesting the interest income from the savings should be higher ? I used the same 7% rate of return for both Income Tax and FairTax systems.
Here are the calculators I used. I encourage everybody to use them so they can understand the compounding effect of saving tax-free. Plug the result from the first calculator into the second so you can see how long that savings will last you through your retirement.
Savings build up:
http://ww2.abc13.com/Global/story.asp?S=1122978
How long will savings last: http://www.fincalc.com/ret_06.asp?id=12221
$300 billion ? Do you really think so ?
If we start with the $2.5 trillion the Federal government is currently spending, and we take away
1) entitlement payments ($800B)
2) Federal and military pensions ($300B ?)
3) block grants to State and local government ($600B)
4) educational and research grants ($100B)
5) probably other stuff that is not a "purchase" and is not an "employee compensation"
We get down to maybe $600B - $700B of Federal spending that would be subject to FairTax. So you might reach $200B added to Federal government spending.
Yes, the myth of government paying itself is a long-standing tradition. They could just not withhold income and payroll taxes from government employees, too. But then they'd need a different set of rules for any non-compensation income those employees have.
It seems silly to pretend those people are paying taxes, rather than just paying them less in tax-free wages. But it is simpler to pretend than to have a whole different set of rules for them. I don't think having an additional 60,000 pages of tax code would be doing anyone any favors. Better to pretend there is an extra $50B of revenue and an extra $50B of spending on those employees.
Always Right only mentioned employee compensation, so that is all that I responded to.
I'm glad you finally see why the 30% figure is incorrect for government employees.
At the State and local government levels, 3/4 the wages paid are to educators -- and not subject to FairTax. So those employees will cost 7.65% LESS than they do today. That roughly balances the 21% increase in costs for the non-education employees.
With the employee costs question out of the way, we need to ask just how much "purchasing" the State and local governments do. Grants, entitlement payments, pensions, school facilities, bond payments, etc. are all excluded from the FairTax, so how much spending is left subject to FairTax ?
For the self-employed, the $125K gross DOES include a 15.3% SS/M tax. Sorry if that wasn't clear.So now this is a self-employeed, single, 55-year-old making $125,000. This example is getting less and less typical with each reply.
If you want to get more detailed, I'd have to exclude my mortgage and property taxes from the spending subject to FairTax -- so only $53K of the spending is subject to FairTax instead of the full $70K.The portion of mortgage interest representing the cost of financial intermediation services is taxable under the FairTax. (As is your "free" checking account and other financial services.)
My example may not be typical but there are plenty of people like me. Eskimo's statement was "anybody over 50 with savings" should fear the double-taxation effect of the FairTax. Clearly, there are lots of people that don't need to fear the double-taxation effect at all.In your post with the example you quoted eskimo as saying "damned near everyone over 50 who has saved anything will get screwed." You showed an example where someone at the extreme margin would show limited gains under certain circumstances (factor in a reasonable amount pre-tax savings and even your extreme example shows the person worse off under the FairTax) with the FairTax. You have failed to show that "damned near everyone over 50 who has saved anything [wouldn't] get screwed."
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