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To: Always Right

$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.


557 posted on 04/10/2006 11:08:01 AM PDT by Kellis91789 (Don't go around saying the world owes you a living. The world owes you nothing. It was here first. ~)
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To: Kellis91789
entitlement payments ($800B)
The FairTax bill requires Social Security payments to be increased by the amount of the FairTax.


Federal and military pensions ($300B ?)
Pensions would be an "employee benefit" and would be taxable.


block grants to State and local government ($600B)
I'm assuming the state and local governments are actually going to spend the money. If the amount doesn't increase, the "real" value of these grants are reduced. That might be a good idea, but it's kinda hard to compare two systems when one is cutting the amount of government.


educational and research grants ($100B)
Again, the money spent for research grants (research is not "tuition for primary, secondary, or postsecondary level education; or job-related training") would be taxable. If the government doesn't increase the amount of these grants, the "real" value of them declines.


probably other stuff that is not a "purchase" and is not an "employee compensation"
Like what?
562 posted on 04/10/2006 11:55:23 AM PDT by Your Nightmare
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