First, lets start with ANYONE who derives a substantial portions of their income from non-wage income. For low to middle income earners, payroll tax is the larges component of Federal taxation. People who do not receive wage income do not pay payroll tax. Elimination of payroll tax puts exactly ZERO extra dollars into their hands under the FairTax to pay for increased prices.
Who are these people?
-- People who derive their income from investment activity or assets (retirees, for example)
-- People who derive their income from Government Transfer payments (SSI, for instance) Note that for a single retiree, as long as 1/2 their SSI plus their modified AGI is under $25K, their SSI is untaxed ($32K for married.)
-- low income wage earners receiving EITC (essentially a refund of payroll tax.)
Note that almost 17% of all tax returns filed had EITC income ... and that this 17% is a DIFFERENT set of tax filers than the 15% above who had NO wage income. We're now talking about 32% of all tax filers (over 42 million filers.)These people receive little to NO income benefit from the repeal of the payroll tax and, therefore will have little to NO additional "money to start with" in their pockets from payroll tax repeal to pay for inflated FairTax prices.
While I don't have exact figures, of the 15 million tax returns with SSI benefits, roughly half fall into the AGI range that would render their SSI as non-taxable.
As for the Income Tax component, roughly 32% of all tax filers paid no tax ... primarily owing to losses from investment or business activity. Roughly 60% of all tax filers had AGI under $25K and therefore paid little to NO income tax. So, somewhere from 40 million to 80 million tax filers will have little to NO additional "money to start with" in their pockets from income tax repeal to pay for inflated FairTax prices.
Now having said all that, I am NOT suggesting the status quo is either fair, or proper. What a AM saying is that a change to the FairTax has a FAR DIFFERENT impact on a FAR LARGER portion of the population than you and other FairTax advocates suggest. Far more people will experience a significant DROP IN PURCHASING POWER from the FairTax than you let on: they will see little to NO increase in disposable income yet be faced with substantially higher prices. MOST of these people are low income.
Enough numbers?
Business profits are taxed.
People who derive their income from investment activity or assets (retirees, for example)
Investment income is taxed.
People who derive their income from Government Transfer payments (SSI, for instance) Note that for a single retiree, as long as 1/2 their SSI plus their modified AGI is under $25K, their SSI is untaxed ($32K for married.)... low income wage earners receiving EITC (essentially a refund of payroll tax.
These folks have incomes so low, their effective NRST rate is well under 10%.