Posted on 03/06/2005 3:07:44 PM PST by 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.
Post # 10 the old 16th amendment argument again...
This is one of the flakiest arguments yet on not passing the FairTax. There is absolutely nothing in the Constitution that prohibits us from having both an income tax and a sales tax now. We are only a vote away from it, and the Congress, particularly the socialist spend masters, are gearing up for it even as we speak.
The ONLY THING that will save us from having both is to immediately cut off the head of the snake before the 16th and be repealed. That means, disbanding the IRS, its staff, its budget, its office space, every freaking withholding department within every business all across America, and doing it ASAP with one fell swoop!
The FairTax does that! Demolition of the IRS infrastructure for collecting an income tax is immediate within the FairTax, while House Res. #16 already in Congress which will repeal the 16th is voted on as a companion bill to HR 25. Try collecting an income tax when there is NO infrastructure in place to do so. It's what make FairTax imperative we act on it now.
If we don't congress will surely impliment a sales tax TOO, and with the IRS overseeing it, they will be in charge of the whole shebang and do what they want. A sales tax implimentation is so easy, as every retail register in America can simply use a computer mouse and change the tax rate in an instant and voila! There you have it.
Which would you rather have hanging over your head? The simple to implement sales tax on top of the income tax, or a sales tax with a threat of an income tax reactivation that would not only cause the wrath of GOD to come down on Congress but would cost them tons of money to rebuild to collect the damn thing. Remember it wouldn't just be congress and DC, it would be asking every freakin business in America to go back to payroll withholding departments, expenses, headaches, etc etc, and it would be asking all Americans to give up 100% of their paycheck in favor of the IRS taking a hunk of your hard earned dough yet again before you get it.
Do you really think that would happen, could happen, in America once the IRS and income taxes are gone? I don't think so!
Wake up people and smell the coffee. $23million has been spent over 10 years on FairTax to develop it into the most perfect piece of legislation, 110 pages of pure gold. Do you really think you can come up with a question or statement that their researchers over 10 years haven't already thought of and covered?
witchypooy@aol.com
Returning the federal gov't to a tax based on commerce and not in individual income is urgently important for two reasons:
The individual income tax has destroyed financial privacy, which used to be as an important a right as reproductive privacy. Having even a single dollar in your pocket gives the gov't the nexus to force you to testify against yourself if you came by that dollar legally, and if you properly reported and paid the tax on the "income" of that dollar. It even leads government to absurdly define "income" to include gifts and (government) lottery winnings, while excluding expenses like the cost of driving to work each day.
The individual income tax also justifies the ongoing and surveillence of every bank and credit card transaction, even to mandating the reporting of cash transactions.
Needless to say, those who live in the underground economy (illegal alien day workers, drug dealers, prostitutes, etc.) are not paying income tax today, and this may be more than 10% of the economy.
The second reason that the Fair Tax plan is important is the very reason that Chrysler was sold to a German firm rather than buying it.
When a US corporation bids on selling their product to a non-US buyer, their entire cost structure includes all the income taxes levied on all the supplier's components along with their own tax burden. When a European corporation bids on the same sale, they know that the Value Added Taxes they paid will be refunded when the product is exported.
Additionally, the Europeans have "socialized" health care costs. The cost of the health care of Chrysler workers is included in the price of their cars. The cost of the health care of Fiat's workers is paid for by government, so Fiat can sell a car for less as a result.
This means that US prices must be higher to naturally reflect the tax burden that European (and Asian) suppliers do not share. This may be upwards of a 10% difference in price advantage.
For these two reasons alone, the income tax code must be destroyed and the Republic returned to the tax system that the founders designed as being the most fair and most likely to uphold and not destroy liberty.
to post #7 on tax compliance costs
Just do a google search. You will find tons of recent reports on tax compliance costs, just make sure you are looking at recent figures. 6 Billion hours of labor and $250 billion in compliance costs. This is 20-35% per industry depending. 7.65% of it is their FICA employer matching costs alone, or did you forget that?
How much do you think it costs for a good tax attorney these days? Loopholes don' come cheap. And by the way, my example was given in easy math terms to make the point.
witchypooy@aol.com
In the first example, manufacturers' profit is 33% of sales under the present tax system. DOESN'T HAPPEN! So, the illustration gets off to a really bad start. I didn't read any further.
Post 14....
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%.
See the http://pafairtax.org/calc.php to undestand what your REAL FairTax bill will be compared to your current income tax plus FICA 7.65% tax, then do the 24.65% composite Flat tax on your income. I guarantee you will see a lower bill on FairTax.
I hate to remind you but this bill is revenue neutral, that means that every penny it takes in matches exactly what your government is spending already. The only difference is your taxes are visible.
Businesses don't pay taxes they collect them for the IRS from smucks who think the price of goods doesn't include the business's tax expenses. As far as a 17% inclusive Flat tax, when you add the 7.65% inclusive FICA you have to pay, I'd say the 24.65% Flat is bigger than the 23% inclusive FairTax, or did I miss that fuzzy math lesson?
Go to the calculator for FairTax and when you include your tax free spending you will see that your tax bill will be way lower under FairTax than any 24.65% Flat Tax that is taxed on everything.
Remember everything you buy today has a tax on it, it's called the income tax. It's just that the government doesn't trust you so they take the tax out FIRST before you go to the store. Nonetheless, the tax taken out of your paycheck IS your tax on everything you buy. Why not take 100% of your check home, and pay your tax on ONLY NEW GOODS AND SERVICES, not on everything you buy like today, and do it in your own time.
Oh and did I forget under Flat or Income taxes your boss pays 7.65% into FICA for you also, money of YOURS he is forced to pay to the government rather than give to you in a raise. Won't that be nice to get 100% of your check under FairTax, and walk in and ask for part of that 7.65% savings of his in a raise for you? Or don't you need any extra cash?
witchypooy@aol.com
Who wears ties anymore?
post 15 IT'S NOT A VAT TAX, PLAIN AND SIMPLE
A VAT tax or Value Added Tax is a tax on businesses all the way up the manufacturing process, so when you get to the end retail you have absolutely no idea how much of the price is tax and how much is the cost of the good. Every business pays tax on the items going into production, but every business adds that tax expense to the price on the way up to the next level.
The VAT was invented in Europe to keep the citizens in the dark about how much they are paying in taxes really. It's a dishonest system, that says government doesn't trust its citizens, and citizens don't have the right to rule their own lives.
FairTax has NO tax during the manufacturing process. It can't possibly be any different than a VAT tax than it is. There is NO Country in the world that has trusted it's citizens enough to be honest about what their government is costing them. America will be the first if HR 25 FairTax is passed. Then Europe and all the other countries will have to watch out!
Of course only in America do we have a constitution that will let us throw the bums out if they don't stop the spending after we get tax collection under control, 100% visible and 100% honest. All we need is the will to do it, and 100% of the citizens in the same FairTax boat rowing up stream toward the DC Capital.
witchypooy
p.s. check any high school text book to see what a VAT tax is
>> 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...
Are you a leftist?
Better the devil we know...
post #19 Just like 45 States already do.
I'm in one of the states that allows some exemptions.
EXEMPTIONS: Why on earth would you want exemptions. Do you want DC and the politicians involved with what is exempt and what is not? Do you want them to use your new "pure" tax code as a means to pay off favors for campaign money?
Your exemptions as you call it comes in the form of a tax refund every month on the cost of necessities up to the poverty level. The rates are based on the long standing HHS poverty level tables, and it essentially gives EVERY AMERICAN with a social security number, a rebate or tax free spending up to the poverty level for his household.
Did you get the catch? EVERY AMERICAN WITH A SOCIAL SECURITY NUMBER....WHEEEEEE That means foreign tourists (45million), and illegal aliens (24million and climbing) will NOT be getting their little "rebate" on taxes paid each month, as they have no legal social security number. Its the main reason that a rebate system rather than "exemptions" that would go to everyone at the register, illegal or not, was used to make the tax the most progressive tax in the history of the world.
Under FairTax and its rebate system, those living at or below the poverty level, at any age, for any reason, will be living totally tax free. Try living totally tax free today with a 7.65% FICA eating at your paycheck. The net effective tax rate will go from 0 - 23% depending on how "large" you choose to live, and I do think that the rich having more to spend, will spend more than those with less to spend. Of course they will, how can you spend what you don't have. Make $25000 as a family of 4 and you will pay 0 % tax, make $50,000 family of 4 and you will pay a total of about 8% , make $30000 as 2 seniors and you will pay about 6% after all your tax free "deductions" come into play.
So now let's review....instead of exemptions, we will give you the taxes back on your major necessities, so you don't pay taxes on food and clothing, while the DC politicians are left with nothing to bargain with for favors in the Capital, and while the illegals pay tax at the register contributing to our government costs and our social security system that they will NOT be collecting on, while they don't get a refund of their taxes....all's right with the world, the FairTax HR 25 wins hands down again...
Next question!!!!!!!!!
ps visit http://www.pafairtax.org/calc.php to see what your tax rate will be after all FairTax deductions and see what your tax free spending refund will be for your household.
witchypooy@aol.com
Screw this 'FairTax' smoke and mirrors routine, let me tell you one thing folks:
You do NOT want what is still a VAT (Value Added Tax), aka a 'National Sales Tax', and here's why:
The VAT penalizes consumers who have the least amount of money, it inflates prices unrealistically, and in case anyone is interested, CANADA has had such a taxing mechanism in place for years (they call it GST, HST, or some similar alphabet combination), and for example, the tax is 15 percent on the purchase price, which means that if you intend to spend $100, you better bring $115. And if you're buying gasoline, in some provinces you'll be taxed on the tax, i.e., the province will levy it's OWN sales tax based upon the total of the gasoline price PLUS the national tax. Oh it's a real sweetheart deal if you're a government bureaucrat looking to milk the economy from top to bottom, all at the expense of the consumers.
Big ticket items will cost MUCH more, and remember that when you're looking at that motor vehicle purchase for 20, 30 or 40 grand, better calculate in an extra chunk o' change for the tax man, because you can bet the rent that you'll be taxed on the purchase of your new wheels.
And while we're speaking of the Canadian Peoples Republic, here's another lovely little tax grab: when you buy a HOUSE (that's right, a house!) your purchase will be taxed at 15 percent, which is traditionally worked into your mortgage payments, but that means that the price you pay for real estate is *likewise* artificially inflated for this boondoggle concept.
The VAT tax-scam is something that will never be abolished, if it is allowed to to be enacted.
Katie, bar the door!
I no longer get a pay check, so that 7.65% tax rate (to be correct, you need to add in the portion paid "by the employer") anymore. I live on my former earnings, money that has already been taxed, much of it at the highest rate at the time it was earned.
The exemptions I was talking about were sales tax exemptions allowed in my state. You know, those business to business transactions we talked about earlier.
My state does not tax some business to business transactions. For example, the manufacturing exemption includes materials which are consumed in the manufacturing process. Machinery & equipment which is used in the manufacturing process are also exempt. Oils, lubricants, welding supplies or gases & similar substances which are used up during the manufacturing process are also exempt. There are more, but it's been awhile since I delt with all of the particulars.
Meanwhile, oil & fuel used for the company fleet are not exempt. Sales tax is collected for those expenses, as are the transactions for furniture & fixtures used to support a manufacturing operation.
Sales for resale are another *exemption*.
BWAAAAAAAAAAAAAAAAAAAAAHAHAHAHA!
You doin' a class report for the third grade here or what?
Wow! Just how ignorant are you? Have you ever even had a real job?
bump for tuesday update.
Are business to business transactions exempt under fair tax? If not, the numbers are wrong.
Business to business purchases are exempt. The NRST is levied only once on sales for final consumption of new goods and services, and not on purchases for business or investment purposes.
To make tax exempt business purchases, you would need a tax exempt certificate. If you are buying from a business wholesaler (who only sells to other businesses), the purchase will be tax exempt; if you are buying items for business from a retailer, you will have to pay the tax and apply for a credit. It is a simple matter to track business purchases and match them to inventory, sales records, checking accounts, etc. Instead of audits being spread over 130 million points of collection, there will be less than 20 million. The FairTax contains penalties and sanctions for those who practice tax evasion.
Regarding bonds, the FairTax will not tax investments, whether stocks or bonds. That includes muni bonds. The change will be in the fact that competing corporate bonds will not be taxed either. According to a study by economists from the St Louis Federal Reserve a few years ago, moving to a consumption tax such as the FairTax would lower the interest rate on such corporate bonds by 25%. That means a one time capital gain for current bond holders (other than muni bonds).
Corporate bonds and munis will then compete on equal terms of duration and quality. Keep in mind, under those terms revenue bonds (munis) will still have an advantage because they are backed by the taxing power of the municipality.
If you would like to be added to this ping list let me know.
John Linder in the House(HR25) & Saxby Chambliss Senate(S25), offer a comprehensive bill to kill all income and SS/Medicare payroll taxes outright, and provide a IRS free replacement in the form of a retail sales tax:
H.R.25,S.25
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.Refer for additional information:
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