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To: Your Nightmare

The NRST will never happen for one very simple reason. Anyone who has significant after-tax investments (and there are many) won't be supportive of it. And most of the movers and shakers in this country have significant after-tax investments. This includes most non-retirement investments and Roth IRA's.

If I have $200,000 in such an investment and have already paid 25-30% in income tax on that money, there is no way I'll support a "voluntary" tax at the same level when I spend it. There is no easy way to switch from taxing my inflow to taxing my outflow without screwing me over bigtime. Essentially I'm put into a position where I'm paying over 50% in taxes on my earnings in my lifetime. This of course assumes that I would like to enjoy the fruit of my labor by spending it versus leaving it locked in a vault so I can "voluntarily" avoid paying taxes on it.

Add all the baby boomers and busters together who've already made these investments and you won't get the votes. Our energy is better spent on the flat tax.


910 posted on 02/01/2005 7:24:15 AM PST by mongrel
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To: mongrel

You have a common misunderstanding of the dynamics involved with the FairTax, and it has been addressed already on this thread:

You percieve that the FairTax switches from the system where you already paid taxes and replaces it with a sales tax which would essentially tax your already taxed savings. What you miss is that the existing system ALREADY is going to tax your savings again, in the form of all of the corporate, income, ss, etc taxes embedded into the price of goods you buy.

The FiarTax does not swap what you've already paid for a sales tax, it swaps the system that embeds those prices with a more visible sales tax.

So even though it appears it has ADDED a very visible tax, it has also REMOVED a very invisible tax. The FairTax does NOT reduce the value of your savings by 23% as is commonly asserted on these threads.

There will certainly be some products, especially in the short term, whose prices will not correct immediately. However in the long run there should be no significant difference in the value of your savings. Considering the positive effects on American industry, the ability to purchase used items tax-free, and the visible nature of the tax likely resulting in popular demand to reduce the tax rate, I expect the value of your savings will go up significantly under the FiarTax.

Further, there are many other benefits to the FairTax, such as the elimination of inheritance taxes, no tax on additional savings or investments, no caps on how much you can save tax free, no tax on income from investments...

I believe as you become more familiar with the FairTax, you will begin to realize how you will benefit greatly from the FairTax, and that the concept that you are going to get slammed with an additional tax that wasn't there before, is misleading.


922 posted on 02/01/2005 7:54:38 AM PST by OHelix
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