Posted on 10/19/2006 5:11:50 PM PDT by pigdog
As specified in Congressional bill H.R. 25/S. 25, the FairTax is a proposal to replace the federal personal income tax, corporate income tax, payroll (FICA) tax, capital gains, alternative minimum, self-employment, and estate and gifts taxes with a single-rate federal retail sales tax. The FairTax also provides a prebate to each household based on its demographic composition. The prebate is set to ensure that households pay no taxes net on spending up to the poverty level.
Bill Gale (2005) and the President’s Advisory Panel on Federal Tax Reform (2005) suggest that the effective (tax inclusive) tax rate needed to implement H.R. 25 is far higher than the proposed 23% rate. This study, which builds on Gale’s (2005) analysis, shows that a 23% rate is eminently feasible and suggests why Gale and the Tax Panel reached the opposite conclusion.
This paper begins by projecting the FairTax’s 2007 tax base net of its rebate. Next it calculates the tax rate needed to maintain the real levels of federal and state spending under the FairTax. It then determines if an effective rate of 23% would be sufficient to fund 2007 estimated spending or if not, the amount by which non-Social Security federal expenditures would need to be reduced. Finally, it shows that the FairTax imposes no additional real fiscal burdens on state and local government, notwithstanding the requirement that such governments pay the FairTax when they purchase goods and services.
(Excerpt) Read more at people.bu.edu ...
I do not expect that I'm particularly unusual in my position. I'm 58 years old, have worked in a middle class job most of my life, have accumulated what I expected to be, savings that will allow me a comfortable 20-30 years of non-income earning (retirement) life, should I be able to buy things at only inflation adjusted prices through those years. Get it stupid! A whole life, you narrow minded retard. A whole life. And there are plenty of like persons situated. You take 30% of my savings and commit me to poverty! Do you get it, stupid! I will strenuously fight against this gross robbery. And should such a travesty be enacted, will leave this country for better climes.
#1) "... says principle [sic] on your home is tax free ...". It says no such thing as it speaks of the total annual amount paid out for loan payments including principal and interest (existing mortgage, auto, etc.).
#2) "... interest is tax free ...". Absolutely correct since interest is not taxed. It is income. If financial intermediation services are removed from what had previously been interest, the payment for those services would be taxed, but they are not interest but payment for services.
3) Every single charge made in this entry is untrue. The claim is that churches/non-profits are taxed by the FairTax when, in fact, the "normal business" (which for a church is religious work) is untaxed and the entity may obtain and use a tax-free certificate for those purchases. Obviously it the entity is reselling items it purchases, those items will be taxed but for most churches/non-profits that would be rare. There is no $9,000 tax on the minister's salary as claimed. The FairTax does not tax your donation to the entity nor does the entity pay tax on the things purchased to further its normal course of "business" as it would use the tax free certificate for those purposes. This not only means that the church/entity has more funds to use ... and lower prices ... but that any donations will be from tax free funds from the taxpayer.
#4) Interest is not taxed and student loans which are for educational tuition are therefore not taxed either.
#5) "... Even the latest paper by the fairytaxers [sic] agree that state taxes will be higher to compensate for these new taxes on the states ..." Not at all what the paper says as an even-handed reading will show. In fact the paper states clearly that "Finally, it shows that the FairTax imposes no additional real fiscal burdens on state and local government, notwithstanding the requirement that such governments pay the FairTax when they purchase goods and services." The money used to PAY state an local taxes (which is what the calculator refers to) is, indeed untaxed.
6) "... If you buy a new pretax $20,000 car, there is a $6000" ..." tax on it. In fact, the PRICE for a $20,000 car would be that amount plus the marginal FairTax rate of $5,974 BUT the actual COST of the purchase would be the $20,000 plus the taxpayer's effective tax rate which in this case would probably be no more than 5 or 6% if that (otherwise he'd probably be buying a higher-priced car). In fact, the "20,000 car" under the income tax would have had a sticker price of almost $22,000 and would have required the taxpayer at the 25% marginal income tax rate to earn over $29,000.
In short the entire post is full of errors.
OOPS - plus one:
"The whole damn calculator is full of errors."
But you continue to fail to recognize that losses in one are are compensated in other areas such that your net position will be positive.
It is like piggy-poo assumes that anybody who has navigated the shoals of this economy and come out with something will accept his "tough sh*t, games to change" attitude.
How would you know that?
What picture? I was referring to a post that has since been deleted.
I rarely rely on or care what these economists say. Gale makes some points that I made long before he did, but he also exagerates his case on many points. He's no better than the fairtax paid for whores.
I have not seen any exclusions for mortgage interest in the fairtax bill. The chapter FINANCIAL INTERMEDIATION SERVICES does not distinguish.
"They also advertise it is better for everyone except those that work illegally now. Using their calculations the average middle income taxpayer would see his tax burden more than cut in half, and this is the middle income guy. And they don't see that as a red flag that there is something terribly wrong with their assumptions. "There is no "red flag" nor is the greatly reduced effective tax rate a sign of anything "terribly wrong" except for the terribly wrong income tax laws which impose the very much higher effective tax rates under which we live. If you had done as many comparative purchasing price studies as had the FairTax supporters you would not be surprised at all by the results. They are quite realistic and for you to believe that a middle class taxpayer can not or should not have his tax burden greatly reduced shows your clear bias toward the income tax system which you have admitted you prefer.
"The main problem with their math is that they are assuming the 29.87% sales tax is revenue neutral."
As the present paper definitively shows the 23% tax inclusive rate is quite realistic. The "main problem" (as you phrase it) is that you prefer the income tax system since obviously you think you benefit from it in some fashion.
And the 23% rate is carefully derived as shown in the paper and includes the government non-educational gross wages which are taxed at the 23% rate used in the paper. In contrast to your claim of this alone boosting the rate to "40%+", it does not boost the rate at all but in included within the 23% rate derivation. In short your analysis is gravely flawed; in fact, completely untrue.
The remainder of your post attempting to hike the rate even beyond the already-shown-to-be-lfalse "$40%+" is equally and completely unfounded nor have you and definitive data to support it.
The price decline with the removal of income tax has been stipulated to as 9% by your compatriots. If you wish to claim 8%, that's fine since it makes little difference in the comparative purchasing price comparisons that we have done. We continue to use the 9% figure since many FairTax supporters believe it will actually be greater.
In any event, though
In what form are your retirement savings? Interest accounts at banks? Your interest becomes tax free.
Mutual funds? All of the appreciation becomes tax free.
Stocks? If they are long term apprectiated you no longer owe capital gains taxes.
Real estate? No more capital gains, even on rental property.
Untaxed retirement accounts? They all become tax free.
Corporate bonds? Interest becomes tax free.
Muni bonds? Since the yield on muni's will float up to the corporate level you will lose pricipal value if you sell them before maturity. In that scenario you could be worse off. In most other scenarios you would benefit.
My error - I thought you were referring to a different post.
Glad you don't launch personal attacks.
"Just bitching about one aspect of something isn't sufficient. You have a few of those who presently profit in some manner by the present system, but none have been able to offer any valid improvements for most taxpayers as does the FairTax and I doubt you'll do so either but merely - like those others - descend into the attack only mode in your efforts to defeat the FairTax. "
And now we see from this poster exacly what the above excerpt was talking about:
"... Get it stupid! A whole life, you narrow minded retard ... Do you get it, stupid!"
It will be interesting to see if the Mods continue to allow this.
For the record - more personal attacks!!
"And now these scumbags want to come along and confiscate what I've put aside so that they may enjoy more current $."
As has been noted, there's no "confiscation" at all. there is only the spending the taxpayer decides to do for taxable items. Any new income under the FairTax is not taxed at all. It is the consumption that is taxed ... and as shown in the Calculator, many things are not taxed.
Have you done as suggested and used the FairTax Calculator to determine your effective tax rate under the FairTax??? If not, you're merely falling for the balderdash put out by the anti-FairTax lobby and not determining your own position.
Even more personal attacks.
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