In short, for every dollar they pay in a store today, that family has to bring in an additional 25 cents in wages to pay that dollar, (based on current individual income tax schedules plus employees half of Social Security & Medicare.)Man, you have the goofiest logic. It's really hard to follow.
You are also wrong in you numbers. The median total effective tax rate for the taxes replaced by the FairTax is 14%, so it would require 16 cents, not 25.
The median total effective tax rate for the taxes replaced by the FairTax is 14%
Read again my friend, I am not talking average of all families at all. Which is what your effective tax rate figure pertains to, which happens to include non filers, welfare recipients ... etc. Who do not file/pay the individual income tax.
Perhaps you can tell us the characteristics and source of income your average effective taxrate 14% applies to, how much is wages, how much comes from non taxable sources not applied in the 1040.
As far as I can tell that 14% has little to do with the specifics of the individual federal income tax of the 1040 applied to a typical family scenario paying federal income and SS/Medicare taxes on their wages.
As clearly stated in #33:
| Today, you are required to pay Uncle both income and payroll taxes in order to have enough to buy those same goods and services. For a family of four at median income that amounts to having to earn roughly 25%+ more than your takehome pay just to be able to buy anything now, and that is on top of the embedded business taxes in the price of everything we buy spoken of above. |
(based on current individual income tax schedules plus employees half of Social Security & Medicare.) By the way the calculation incorporates pesonal expemptions, standard deduction, 2 child credits and EITC in figuring the percentage of total wages.
Only the individual wage earning family filing individual taxes and paying the current individual income tax that are being hit by the current income/payroll tax system is considered in the calculation for a reason. Those are people actually paying freight now, and represent many of those reading these threads.
Now if you want to look at other families having large portions of income from non taxable sources you may, under the income/payroll tax system for those folks are likely to end up paying something somewhat closer today to that $1.05 under the NRST.
So lets assume your statistical effective tax rate of 14% reflects the typical 4 person family with 2 childeren reading this thread and paying that rate as individual income and FICA/MC taxes with respect to his gross family income redo the calculation.
Under the 14% effective rate tax system, the cost to a median family today to buy that 78 cent widget is
- 17 cents for federal individual taxes (income + SS/Medicare)
- 5 cents for state sales tax on the embedded tax price
- 22 cents for federal business tax costs
- 78 cents for the base (taxfree) product.
=========================
- $1.22 total
Under the NRST the cost to buy that 78 cent widget is
- 23 cents NRST
- 4 cents state tax on the base product price
- 78 cents for the base (taxfree) product.
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- $1.05 total
I still know which I prefer. Even paying your 14% federal tax rate on gross income.
But you always overstate the negatives of the current system and the positives of the FairTax.
No I state typical cases when I am addressing someone who probably would like an estimate close to their own case.
I state average situations when speaking generally.
What I don't do is make up every negative I can dream up for the HR25 legislation as you tend to do.
What's the truth among friends?
Indeed, what 4 person family do you know who earns median income as wages pays 14% individual income tax with SS/Medicare?