PRICES UNDER FAIRTAX WILL NOT GO UP - JUST THE OPPOSITE

witchypooy ^ | 3/05/05 | witchypooy-self

[smokeyb]

PRICES UNDER FAIRTAX WILL NOT GO UP - JUST THE OPPOSITE
Within months of the start of FairTax you will see your cost at the register WITH your tax the same or lower than the cost today without the tax...here's how....

EXAMPLE: ACME TIE MANUFACTURING CO.- $20 tie - $5 profit margin

Today's Economy -$20 price of tie at purchase - no "visible" federal tax

Acme's price formula for a $5 profit margin on the sale (today under income tax):
$2 material
$8 labor
$5 IRS tax compliance costs of 25% Acme pays and passes on to consumer
$5 profit margin for Acme

$20 retail cost for the tie to YOU the consumer ( no visible Natl Tax to you but clearly you the consumer are paying Acme's $5 IRS tax costs for them and Acme makes $5 in the transaction)

NOW THE FAIR TAX:
Acme Tie Manufacturing under FairTax - SAME $5 PROFIT MARGIN
$2. material
$8 labor
0 IRS tax compliance costs to Acme
$5 profit margin for Acme

$15 cost of tie at retail - Acme receives the same $5 profit and is happy and they have NO taxes to pay to the IRS

BUT the consumer also pays the same $20 for the tie as before...the price does not go up.....see here's what your sales receipt would say under FairTax

Consumer costs under FairTax:
$15 tie at retail
+$5 - 30% natl retail sales tax (FairTax on new goods and services)

$20 cost to consumer for the tie (exactly the same as before but is it really?

As you can see under the current system or the FairTax, in this example Acme gets the same $5 profit, and the consumer pays the same $20 for the tie..but what has really been gained, what is different?

1. The consumer sees the cost of big government on his sales receipt, namely the $5 FairTax, a tax which he paid in the first example but was not aware of since it was hidden in the price - it's called honesty and 100% visibility in the cost of Big Government!

2. Acme can now broaden their base of sales at $15 to compete with the tax free Singapore Tie Company who has been selling their ties in the USA for $15 all along. FairTax now creates a better balance of trade and the ability for the American firm Acme to also go abroad with their ties and export them at $15. This will create Acme expansion including creating more American jobs available. Factory expansion means Labor becomes a commodity to compete for so salaries and benefits go up for everyone.

3. The ability for Mr NeckTie to open a factory and sell ties for $15 if Acme refuses to lower their price to $15 after IRS costs are removed from them. Or perhaps Mr NeckTie will be happy with a $4 profit margin and sell his ties for $14 creating a little price war that the consumer benefits from..Don't worry Acme & Mr NeckTie won't be working together to bring the price up to $17, cause there is always another American with the willingness to work hard and step into the market at $14 a tie, its called American ingenuity and the free market system. A little competition goes a long way.

4. Don't forget! The consumer can go to the flee market and buy a used tie and pay NO tax at all, lowering their costs to live and lowering their overall net effective tax rate under FairTax. You can't do that in today's tax system, since everything you purchase today is done with "after tax dollars".

All's right with the world, everything is honest, above board, fair, and you can now buy Dad that tie on Father's day for less money than you did before.

That's what's called personal liberty and free enterprise

go to www.pafairtax.org/calc.php and see what FairTax will do to your current tax rate. The new HHS rebate numbers are now included in the calculation.

[smokeyb]

fairtax ping

[Focault's Pendulum]

Does Acme Ties have good designs....just curious.

[Raffus]

I agree 100% with the Fair Tax. It's the fairest way for ALL to pay for the cost of security (and the cost of BIG gov't being on the receipt is sweet too)! There are so many good things about the bill I could go on and on.

[GoLightly]

Are business to business transactions exempt under fair tax? If not, the numbers are wrong.

[Founding Father]

Tax compliance costs are nowhere near this high (33.33% of costs--$5 of $15----in your example). It's very doubtful that actual taxes plus compliance would be this high.

[GoLightly]

2. Acme can now broaden their base of sales at $15 to compete with the tax free Singapore Tie Company who has been selling their ties in the USA for $15 all along. FairTax now creates a better balance of trade and the ability for the American firm Acme to also go abroad with their ties and export them at $15. This will create Acme expansion including creating more American jobs available. Factory expansion means Labor becomes a commodity to compete for so salaries and benefits go up for everyone.

If true, there needs to be a "cost of labor" adjustment in the after fair tax formula.

[skip_intro]

More and more the Fairtax reminds me of a pyramid marketing scheme. Everybody gets richer, everybody wins.

I guess I'm cynical, but I'm not buying it.

[Petronski]

Implementing a "fairtax" without repealing the 16th amendment will leave us with federal income taxes PLUS the "fairtax."

[GoLightly]

Yeah, that sounds about right.

[stylin19a]

ACME ? I thought they made bombs & anvils and rocket roller skates and stuff....

[witchypooy]

Post on #5...

All business to business taxes ARE eliminated completely under FairTax. This is not a VAT tax. It is on new goods and services only, and ONLY at the end use retail level. Every business will receive a tax-exempt number to purchase business needs, declare their tax exempt number at the time of purchases, and honesty and a little inventory tracking, like today, will insure those items purchased tax free are actually going into the business. Just like 45 States already do. Only end use retailers will charge the 30% and remit it to the State with their State Sales tax, using the same income figures for both. It's as simple as that.

ALL Corporate, Business, and Self employment taxes are gone, All AMT taxes are gone, ALL FICA matching payments are gone to employers.

ALL FICA and withholding is gone for individuals too. And finally the death and gift tax is gone.

All's right with the world under FairTax.
witchypooy@aol.com

[Conservative Infidel]

First the talk was 7%, then 15%, then 23%, now 30%. The cost of Government is rising fast. Pretty soon it will be like the 1040 Short Form,,,,,how much did you make?-----send it in.

Back when the talk was 7% to 10%, I might have been able to get on board with it. Now the price is around 30%. The people who designed this look at it as a way to soak the uber-rich. They seem to think that they will be able to stick it to the Kennedys and Kerrys of the world by tacking an extra 30% on to all the luxury crap they currently buy. Warren Buffet wants to buy a 1 million dollar yacht? Great, Uncle Sam's cut is $300,000!

In reality, the rich will find a way not to pay these taxes too. John Kerry will form some sort of corporation and have the corp. buy all of his luxury toys for him - tax free.

What about bonds? When we need to build a new school or the local fire department needs new equipment, we currently finance that stuff with "tax free" municipal bonds. There will be no incentive for anyone to buy those type of bonds any longer--unless they have a payout similar to 'junk bonds.'

I don't like the current tax system any more than anyone else. However, I am afraid that we are going to have to go back to some sort of flat income tax without any deductions. Something like what Dick Armey or Steve Forbes were proposing several years ago.

[Buckeye Battle Cry]

It's the tax that France invented. A VAT is the same no matter what you call it. It's insidious and creeping and easy to crank up and up and up.

I prefer the flat tax with exemptions for necessities (so as to not make it too onerous on the poor) and continued tax deferal status for IRAs and 401(k)'s (to continue inducements to save for retirement).

[CaptRon]

Hope they're better than the stuff Wile E. Coyote gets from them.

[Modok]

Bull crap!

[witchypooy]

reply to #6 on the rates

First I have never heard of any 6 or 7% rate those are quotes of State sales taxes not the Federal Sales Tax or FairTax rate.

As to the 23% vs 30% The rate has never been anything but 23% inclusive, which translates to 30% exclusive (sales tax) i you know anything about math and economics, and has been done that way by the Federal government to quote your current income tax. Everyone knows you must compare apples to apples. Income Tax, FICA tax and Flat Tax rates are all "inclusive" or including the whole outlay. Simply put a 17% Flat Tax means of every dollar you earn 17% goes to the tax man and 83% is yours to keep ..for $100 that means under 17% Flat Tax $17 goes to the tax man and $83 is yours to keep. FICA is the same 7.65% of $100 $7.65 goes to the tax man and $92.35 is yours to keep... So under a Flat Tax system figuring both flat tax and FICA you would pay approximately 24.65% or for every $100 you earn $24.65 will go to the tax man and $75.35 will be yours to keep.

In the same terms, FairTax is 23% inclusive and includes social security in that number so this means that inclusively using the same "base" as Flat Tax, under FairTax for every $100 that leaves your pocket in the market place $23 will go to the tax man and $77 will be yours to spend. As you can see, clearly having $77 to spend under FairTax is better for everyone than having $75.35 under Flat Tax proposals, and for most, the current income tax is even worse.

Sales taxes however are almost NEVER quoted in inclusive numbers, they are considered "exclusive" or the tax as a % of the dollar you are spending. This means that in exclusive terms FairTax is 30% but converted to exclusive Flat tax is closer to 35%

Exclusive : if you purchase an item for $77 you will pay 30% sales tax or strangely enough $23 in taxes, for a total of $100 spent.

As you can see 23% inclusive and 30% exclusive yield the same dollar of tax, and the same dollar in your pocket to spend.

It is the same as saying 1 foot = 12 inches If we only compared the numbers it would never work, we have to use the "units" also to make the equation work.

Another cheap trick of the ANTI FairTaxers ( usually the Flat Taxers) who think that most are too ignorant of math to understand it all, so they will just pretend that we don't know our rates. Except the bill has always said 23% inclusive and the sales tax has always said 30% "exclusive" as the conversion and as you can see above they are in fact equal when it comes to the amount of tax you will pay and the amount of money you will have left..... Just don't try to compare the 17% "inclusive" Flat Tax rate which really has to have the 7.65% FICA added to it to cover the same expenses as FairTax, to the FairTax "exclusive" rate which is a fraction of a whole , and what State Sale taxes are written in. Apples to Apples, FairTax wins all the time. Tricking folks is the only way they can make the Flat or Income taxes fly. All you have to do is decide are you gullible or not?

witchypooy@aol.com

[GoLightly]

Just like 45 States already do.

I'm in one of the states that allows some exemptions. Some transactions are taxable, while some are not. For example, you can't get an exemption when you upgrade your office with fancy furniture & the like. Record keeping to do this can get complicated & that has a cost.

Then there's the reeducation of the population that would be needed, cuz most people still think that businesses pay taxes. There is no way you'd be able to get the exempt status without people screaming about tax loopholes being given to those big, greedy corporations.

[FreeKeys]

ACME Neckties