The FAIRTAX: A TROJAN HORSE FOR AMERICA?

Jews for the Preservation of Firearms Ownership ^ | October 14, 2004 | Claire Wolfe & Aaron Zelman

[Frumious Bandersnatch]

I'm saying that a better solution to the current trend of the national sales tax as it is currently going is to force people to see just how much they are paying each year in taxes.

When people are forced to write checks to the IRS at the end of the year for thousands of dollars, they won't be happy about it.

The probable cause I see in this, is that people would look with a more jaundiced eye on government spending, so that legislators would have a much more difficult time in adding social welfare to the agenda. The odds are much better that a lot of the social agenda currently run amok would be cut back.

[ancient_geezer]

When people are forced to write checks to the IRS at the end of the year for thousands of dollars, they won't be happy about it.

Problem is those that would be "forced to write checks" are still in the minority and already know they are paying.

From, Effective Federal Tax Rates 1979-2001

Effective Individual Federal Income Tax Rate (Percent of gross family income)
Income Category	1979	1981	1983	1985	1987	1989	1991	1993	1995	1997	1999	2001
Lowest Quintile	0.0	0.5	0.4	0.5	-0.6	-1.6	-1.6	-2.3	-4.4	-5.2	-5.2	-5.6
Second Quintile	4.1	4.8	3.8	4.0	3.2	2.9	2.9	2.3	2.0	1.8	1.7	0.3
Middle Quintile	7.5	8.3	6.7	6.6	5.8	6.0	5.8	5.4	5.3	5.6	5.0	3.8
Fourth Quintile	21.2	22.1	20.1	20.4	20.2	20.5	20.5	20.2	20.5	20.5	20.5	19.3
Highest Quintile	27.5	26.9	23.9	24.0	25.8	25.2	25.3	26.8	27.8	28.0	28.0	26.8

 

 

The Honorable James DeMint (R-SC)
United States House of Representatives
APRIL 5, 2001

• "There has been a shift in the relationship between individuals and government, he argues, such that fewer and fewer are paying taxes at the same time that more and more are receiving increasingly generous benefits. If it becomes the case that most voters do not bear a financial burden for this largess, then there will be little to restrain--and significant political incentives to encourage--the continued growth of government.

I submitt from a perceptual basis and for all practical purposes we are now there.

Your scenarion of paying tax in one lump at the end of the year will only affect those that are already aware of the problem and leads to no change in how the rest preceive the free lunch.

 

Walter Williams, World Net Daily, 10-25-2000

If you're among those who pay little or no federal income taxes, what do you care about tax cuts? *** So many Americans paying little or no federal taxes makes for a natural spending constituency. It's like me in the restaurant: What do I care about extravagance if you're footing the bill?

Until all perceive paying taxes proportionately, as is the case with an universal single rate retail sales tax, we will continue with the same old problem.

 

"As a matter of fact, what the income tax does — and this is the debate that I think we always try to get into in order to let you and him fight, see — and the people of this country are led down a path where the actual control of their resources, which in the end is the control over their will, is handed off to the government."

. . .

"The government then manipulates that will in order to destroy the freedom of our electoral system through the income tax structure, and we call the resulting slavery a free system."

"In point of fact, it is not as the founders understood, and the only way to restore real freedom is to give people back control over the income that they earn so that they won‘t, at the voting booth and in other phony issues, be subject to that manipulation."

- KEYES TRANSCRIPT (01/28/02)

[Frumious Bandersnatch]

Even according to your figures, 4/5ths of the U.S. would have to write checks to the IRS.

[Your Nightmare]

Even according to your figures, 4/5ths of the U.S. would have to write checks to the IRS.

Actually they all would. AG's not including FICA taxes.

[ancient_geezer]

Even according to your figures, 4/5ths of the U.S. would have to write checks to the IRS.

At least until, Congress raises the personal exemption to the median income level and expanding tax credits, as the current trend on both sides of the congressional aisle seems to be heading for.

The point being as long as the bottom half perceive little or no cost to themselves yet continue to receive largess we will continue down that socialist spiral. Liberty and freedom have a price, responsibility. If that price is avoided or not perceived by large segments of the country there are no brakes on the growth of government, the ultimate result is the end of freedom through creeping socialism.

Right now the bottom 60% perceive little to no "Individual Income Tax" burden,(and as clearly seen in many cases even a handout) and as a consequence 70% of the voting public clamor for more from government looking for the top 40% of income earners/producers to foot the bill. That perception continues to grow ever stronger by eliminating even more participants from the Federal Individual Income Tax rolls as proposed in the tax reduction proposals through changes in personal exemption limits and other mechanisms such as the EITC. Republican or Democrat, as long as a graduated income tax exists the political pressure and temptation to remove the bottom half of the electorate from the tax rolls can only re-enforce the current path towards every growing government.

[Frumious Bandersnatch]

My entire point, is that the national sales tax, as currently conceived by congress and the prez is ill-advised. As such a much better position would be the one I advocate of outlawing withholding. There are better schemes, admittedly. But the VAT being looked at now is, I feel, a possible recipe for disaster.

Tis far far better for us to rely on Joe Citizen to do the right thing by confronting him directly with all the costs upfront than to nickel and dime him to death.

[ancient_geezer]

But the VAT being looked at now is, I feel, a possible recipe for disaster.

I agree that a "VAT" would be a disaster, however the NRST is not a VAT.

If someone is telling you the NRST is a VAT you are buying into a line of bull.

Definition [ http://www.encyclopedia.com/articles/13330.html ]:

value-added tax
levy imposed on businesses at all levels of production of a good or service, and based on the increase in price, or value, added to the good or service by each level. Because all stages of a value-added tax are ultimately passed on to the consumer in the form of higher prices, it has been described as a hidden sales tax. Originally introduced in France (1954), it is now used by most W European countries.

The NRST is a single stage(Retail), single rate(23%), visible to the consumer tax, on the "retail" sale of new(untaxed) goods and service. It is not a VAT and is expressly paid by the consumer not the business and is completely visible to the consumer by a receipt mandated by the law. The NRST does not tax purchases made for investment or business purposes.

Purpose of the NRST is to replace all Federal income/payroll taxes and gift/estate taxes with a single tax levied on all new goods and service once and only once at the retail level paid by the final consumer(the purchaser) of those goods or services. Goods that have been previously taxed under the NRST (i.e. used) are not taxed on resale.

The NRST is a specific remedy and replacement for the current VAT we now pay in the form of inflation and lower income(i.e. the corporate income/payroll tax). The NRST repeals over 95% of all Federal taxes currently in place and replaces them with one simple, easy to administer and understand, Retail Sales Tax.

[Tolerance Sucks Rocks]

I gotta say this: It would be nice if, sometime in the future, we could go back to a system of federal government based mainly or completely on tariffs. I would personally add to that duties and an excise tax on purchases of American real estate by foreign interests or Americans acting for foreign interests. The idea is that Americans buying American goods in America would not be taxed.

[Tolerance Sucks Rocks]

Correct me if I'm wrong, but aren't acccountants and IRS workers constantly getting tax questions wrong?

[Tolerance Sucks Rocks]

The "prebate" concept is a means to keep the necessities of life untaxed and instill a measure of progressivity into the Fair Tax in an effort to keep the demagogues at bay.

I think the FairTax advocates should lose the "prebate" welfare concept. If protecting the poor is the design of this "prebate" concept, perhaps the government should simply avoid taxing certain categories of items, like food, clothing, and medical supplies. The last thing we need is a massive government-dependency program, which is what this "prebate" could become.

[Tolerance Sucks Rocks]

That's 23% inclusive. However, I'm sure most people will think that the 23% is what they'll pay on top of the good's price, when they'll actually get dunned at a 30% rate. I suspect it would be more honest and fair to the general public to use the 30% exclusive rate when describing the FairTax.

[Tolerance Sucks Rocks]

I'm talking about ones that were surveyed and tested by people interested in the complexity of the code.

[Sofa King]

"Your “FairTax” on that home will already be a whopping $78,000, for a total purchase price of $338,000. Then government printing presses go into high gear. While you're still saving up for your down-payment, double-digit inflation takes over and the price of your house zooms 20 percent in one year. The house now costs $312,000."

That's incredibly misleading. In reality, inflation would help you out. Once you buy the house, your payments will remain set. As inflation occurs, you will be making more money, and the value of your house will go up. But your payments will not.

[Tolerance Sucks Rocks]

That's incredibly misleading. In reality, inflation would help you out. Once you buy the house, your payments will remain set. As inflation occurs, you will be making more money, and the value of your house will go up. But your payments will not.

But how soon are you going to be able to buy that house in the first place if the Wolfe/Zelman inflation scenario plays out?

[Sofa King]

Depends on how good your credit is, but interest payments on your current debt tend to exceed the actual costs of the home. The down payment isn't the biggest factor here.

[ancient_geezer]

That's 23% inclusive. However, I'm sure most people will think that the 23% is what they'll pay on top of the good's price, when they'll actually get dunned at a 30% rate.

Hmmm, perhaps it would be best to describe all income/payroll tax rates in tax exclusive terms as well, for a proper comparison with the system that is being replaced. Essentially the tax exclusive rate is the ratio expressing how much more you must earn in order to take home a specific amount in your pay check.

The conversion equation:

Rate_(excl) = Rate_(incl)/(1-Rate_(incl))

 

Comparison of tax-inclusive and tax-exclusive rates

Inclusive Rate	Description	Exclusive Rate
4.76%	Sample State Sales Tax -->	5.00%
10.00%	<-- Penalty for IRA/401k Early Withdrawal	11.11%
15.00%	<-- Marginal Income Tax	17.65%
15.00%	<-- NRST (not including SS/Medicare)	17.65%
15.30%	<-- Social Security/Medicare Payroll Tax	18.06%
17.00%	<-- Flat Tax (not including SS/Medicare)	20.48%
20.00%	<-- Capital Gains Tax	25.00%
23.00%	<-- NRST (including SS/Medicare)	29.87%
28.00%	<-- Marginal Income Tax	38.89%
32.30%	<-- Flat Tax (including SS/Medicare)	47.71%
39.00%	<-- Marginal Income Tax	63.93%

Note that any tax-inclusive rate larger than 50% would have a tax-exclusive rate of over 100%.

 

I suspect it would be more honest and fair to the general public to use the 30% exclusive rate when describing the FairTax.

Depends upon what you are trying to describe. If you are looking to describe the tax burden in relationship to total resource available, then the tax inclusive form provides the best measure. If you wish to compare federal tax rates between the proposed NRST and the system of taxes it replaces, it seems to me the appropriate measure is the tax inclusive form.

The tax exclusive form primary function is for ease of calculation of how much own must add to a price in a grocery store, but actully distorts the sense of how much the tax weighs on household resources.

The form you use to express the tax rate, does not change the amount of tax you will be paying, it does however make a difference when comparing tax systems using different measures. To use tax exclusive terms for the NRST while trying to compare with the income/payroll tax system grossly overstates the burden if you are comparing against income tax rates, the system being replaced.

Fairness demands that the measures be consistant, and the apples are compared with apples, oranges with oranges.

[taxtruth]

AG,
If you are part of the US Government,we will charge you with FRAUD on behalf of the PEOPLES lawsuit.