Posted on 12/17/2004 4:38:48 AM PST by JOHN W K
ANSWERING A FAIR TAX QUESTION
During yesterday's show a caller asked what would happen to her 401K funds if the Fair Tax bill became law. No income taxes had ever been paid on that money residing in her 401K. If, by the time she starts drawing that money out, the income tax is history, will she have to pay some sort of penalty? One month ago I would have rattled off the answer. No. No penalty. No taxes. You take the money and run. Yesterday, however, I was a bit more cautious. I've spent many hours over the past weeks studying the history of the income tax, the history of withholding, and various schemes for tax reform including, of course, the Fair Tax. I wanted my answer to be dead-on accurate, so I deferred until I could dive into the bill.
(Excerpt) Read more at boortz.com ...
"And a NST is voluntary? Hardly. The fairest tax of all would be:
budget / # residents = individual's tax bill."
You call that VOLUNTARY? Where everyone gets assessed a fixed amount? You have to be joking.
"That seems to ignore the fact that a large portion of our economy is based on imports; compared to a roughly $11 trillion GDP in 2003, our imports of goods were at around $1.2 trillion. Those goods' production costs are not dictated by our tax structure (although their final cost to us is subject to import duties.)"
The trade deficit is due in no small measure to the bias that is incorporated into our tax system against domestic producers in favor of foreign producers. If we put them both on a level playing field and tax both identically, we will be amazed at how resilient our manufacturers and ag producers are.
Secondly, how much more money are they taking home each month?It depends, if pre-tax prices drop, none. If pre-tax prices stay the same, what was previously withheld.
The FairTax will most likely have a provision that the NRST on a primary home can be paid over the life of the mortgage, similar to how property taxes are paid.Where is that in the bill?
Mark, You are correct....If we DON'T stand on our representatives desks......we'll never see it. My representative pays it lip service, nothing more.
The day the bill is reintroduced into the House, I plan to call, fax, and e-mail my representative. The day that it is reintroduced in the Senate, my Senators will likewise hear from me.
They will hear from me, once a week, UNTIL THIS BECOMES THE LAW OF THE LAND.
>
> The HHS poverty llevel is a well-accepted, long-used
> poverty-level calculation that includes food, clothing,
> shelter, transportation, medical care, etc
>
If this is supposed to be voluntary then:
clothing: buy used
shelter: buy used
transportation: walk, buy used vehicals, bum rides
medical care: use free clinics
food: oops, you're taxed! (i know, grow you're own -- but i'm trying to be reasonable)
(i'll drop my argument on housing). skip the tax on unprocessed foods and drop the prebate. it becomes truly voluntary and includes no social planning.
show me a plan where you can lead a simple lifestyle and neither pay nor receive $ to/from the government and i'll support it.
clothing: buy used
shelter: buy used
transportation: walk, buy used vehicals, bum rides
I thought about this. Actually it was the only flaw I could find in NRST. Well as my daughter pointed out. Some of the people can buy used some of the time but all of the people can't buy used all of the time. We'll run out.
show me a plan where you can lead a simple lifestyle and neither pay nor receive $ to/from the government and i'll support it.
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?
--Walter Williams
Go buy a pacific island, and roll your own.
To remove perception of the tax burdens of the individual, is to remove the goad which assures accountability of government to the electorate. Federal tax rates are high and government grows ever larger because a majority of the electorate do not perceive proportionately the burden their demand for largesse imposes on the minority of citizens.
The siren call for representation without taxation is the formula that got us where we are at today. The ability to hide or disguise taxation from the view of large sectors of the electorate allows the Congress to get away with the creation of the evergrowing monster that it fosters.
Liberty and freedom have a price, responsibility. If that the perception of that price is avoided there are no brakes on the growth of government, the ultimate result is the end of freedom through rampant socialism.
What BS.
"Not true. If you bought a house jus before the FairTax and paid $250K for it, and your friend bought one across the street after the FairTax was implemented, he woul pay about $250K after tax. EIther house would sell for about the same several years later, probably $250K + appreciation."
You're missing the point.
If I buy a house today for $250,000. And someone buys an Identical house after the fair tax he will pay $250,000 including the tax.
Then I have to move, so I sell my house. I receive $250,000 minus the federal tax for a net amount of $192,500 and not only lose all my equity, I can't even pay off my mortgage.
Or will the federal government only tax new construction, and real estate won't be taxed again when sold after the first time?
my only point was that if basic food products were untaxed the poor would not have to be compensated and you would not need to set up this whole welfare-like social engineering prebate structure that down the road will be manipulated buy congress.
The major upheval comes from switching from one tax system to the other.
The fair tax will eventually make items cost less to make, and the prices for items will go down. However, companies with inventory get screwed. They paid higher prices to purchase or make those items, and they're suddenly worth considerably less.
Let's go back to real estate. A developer invest many millions of dollars into building a housing development. The fair tax goes into effect and the houses can now be built for 20+ percent less. The developer doesn't even make 20% on the deal if things would have went right to begin with, so they go bankrupt.
Or will the federal government only tax new construction, and real estate won't be taxed again when sold after the first time?
Tax once but only once is the explicit rule in the legislation.
Used = Tax already paid or property grandfathered as already held for otherthan business purpose, by explicit definition of the term used property in the bill.
Read it. It is enlightening, then ask the questions.
mash yer clicker here ==> H.R.25, S.1493
A bill to promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national retail sales tax to be administered primarily by the States.
For additional information: http://www.fairtax.org, http://www.salestax.org & http://www.geocities.com/cmcofer/ftax.html
Let's go back to real estate. A developer invest many millions of dollars into building a housing development. The fair tax goes into effect and the houses can now be built for 20+ percent less. The developer doesn't even make 20% on the deal if things would have went right to begin with, so they go bankrupt.
Wrong transition business credit covering the embedded income/payroll taxes in that inventory is provided to the business on sale of the property to cover that condition.
Again, Read it. It is enlightening, then ask the questions.
mash yer clicker here ==> H.R.25, S.1493
A bill to promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national retail sales tax to be administered primarily by the States.
For additional information: http://www.fairtax.org, http://www.salestax.org & http://www.geocities.com/cmcofer/ftax.html
However, companies with inventory get screwed. They paid higher prices to purchase or make those items, and they're suddenly worth considerably less.
H.R.25Fair Tax Act of 2003 (Introduced in House)
`SEC. 902. TRANSITION MATTERS.`(a) Inventory-
`(b) WORK-IN-PROCESS- For purposes of this section, inventory shall include work-in-process. `(c) Qualified Inventory Held by Businesses Not Selling Said Qualified Inventory at Retail-
|
Read it all, its enlightening, and you won't have to make wild 'ss guesses.
Wrong transition business credit covering the embedded income/payroll taxes in that inventory is provided to the business on sale of the property to cover that condition.And whose going to pay for the credit? We are. This credit is not accounted for in their "revenue neutral" rate. We are talking several hundred billion dollars. The 23% (actually 29.87%) rate is not realistic and is the result of a lot of accounting gimmickry. It just a marketing tool to get the suckers on board, and it's worked well on FR.
my only point was that if basic food products were untaxed the poor would not have to be compensated
What's a basic food product, who make that determination for you? Open the door for one exception, the door is open for anything Congress Critters and their favorite special interests can dream up.
Why should anyone be telling you what basic food is and isn't so they can give it favored status by not taxing it?
Better to have no exception or pre-bates or refunding to anyone at all than to go that route.
Exception and favored status is the route of social engineering you claim you want to avoid.
>
> The 23% (actually 29.87%) rate is not realistic and is the
> result of a lot of accounting gimmickry. It just a marketing
> tool to get the suckers on board, and it's worked well
> on FR.
>
i'll buy that.
it is something all states that have a sales tax but not on most foods already deal with. let each state follow its own model and it stays out of the hands of congress.
i would even be happy making it more strict than current state standards and just leave unprocessed foods untaxed (flour, sugar, vegetables, water, milk, etc.).
"The government is making me buy used crap I don't want and I'm free?"
There you go again, YN, getting hysterical. The governemnt isn't making you do anything under the FairTax. Up to the poverty level, you are untaxed. If you choose to consume above that level, you will pay taxes.
That's pretty simple.
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