Posted on 08/03/2005 4:51:43 PM PDT by RobFromGa
A simple question...
So, under the FairTaxI get to keep my whole paycheck, prices for everything I will buy will stay the same even with the taxes included, and I get a prebate check from the govt every month. And businesses pay no taxes.
Where is the extra money coming from...
What is wrong with this reasoning below?
1. Right now the government collects $X in the form of all taxes.
2. All taxes are really paid for by consumers in the end result, either directly, or in the cost of their purchases which allow businesses to collect money in order to pay taxes. Companies do not really pay taxes they jsut collect them and pass them on.
3. The FairTax will collect the same $X per year in the form of taxes but using a different method.
4. Under the FairTax, the price paid for goods will not rise because getting rid of all the taxes built into goods will cause the prices to drop, then the FairTax will add onto the new lower price, resulting in the same price paid by consumers.
5. So, for a given taxpayer, shopping (consumption) will be revenue neutral. Ie. Prices are the same as before.
6. And each given taxpayer will get a "prebate" check every month that they are not getting now.
7. And each taxpayer will pay no taxes on capital gains, or on savings.
8. And, each taxpayer will no longer pay any taxes on income, or payroll taxes.
9. And, there will be no Fair Taxes on any purchases made for a business.
Are these all true so far?
Again, I get to keep my whole paycheck, prices for everything I will buy will stay the same even with the taxes included, and I get a prebate check from the govt every month.
Where is the extra money coming from???
Sales Tax Treatment Under the FairTax plan, purchases of health care services made directly by an individual will be subject to sales tax just as they generally must be paid from after-income tax dollars today. Health insurance premiums would be subject to tax.11 Reimbursements to the insured person would be eligible for a tax credit (in effect refunding the tax paid when the individual paid for the medical services directly).12 If the insurance company paid a doctor or hospital directly, the transaction would not be subject to tax (since the tax on those medical services would have been paid by taxing the entire insurance premium that funded the purchase of the services).13 Of course, the most fundamental change would be that all participants in the health care industry whether hospitals, pharmaceutical companies, insurance companies, doctors, nurses or other workers would pay neither individual, corporate income taxes nor payroll taxes (including Social Security and Medicare payroll taxes).
Probably about the way they do it now, which for small business is not very good.
The fundamental criteria is if the purchase is for final consumption, or if the expense is for purchase/resale.
Example: Coffee for your mess at Rob's Software vs. coffee for Joe's Restaurant.
Of course, right now, you could buy an extra can every week and take it home while not declaring it's value as compensation. Right now, Joe can do the same while still claiming it as a business expense.
The Fair Tax will not change that kind of thing. Big time abusers will be just as likely to raise red flags during an audit under either system.
"I have been assured by every single FairTax person before that goods and services purchased for business use would not incur this tax. Including by ancient_geezer.
If this is the case, then this could be a huge additional expense on businesses."
Eliminating taxes on business equates to a huge additional expense on businesses? How do you figure that?
Then wise up.
Tell me, why would they be lying?
To kill the IRS. Do they actually have any other argument that holds water?
They have nothing to gain personally from the Fair Tax,
You want us to trust you after you spout the lie about 20% embedded taxes? Or the lie about killing the personal income tax without repealing the 16th Amendment?
versus you guys who apparently think you have everything to lose. Who is more likely to lie?
If the economy collapses because of a 40% sales tax rate, or both a sales tax and an income tax, we all lose. Some of really us do think about the future of this nation.
You would file a monthly sales tax return with the state. You would only collect taxes when an individual paid you directly. Otherwise, the health insurance companies are going to be collecting taxes on the insurance premiums.
Thinkin' Gal needs to think some more. The bill repeals all of the sections of the tax code dealing with income, estate, and payroll taxes.
Small businesses like S-corps and proprietorships don't pay any taxes now. THey collect income, write off salaries and business expenses and the owners pay income taxes on what is left over.
Business expenses are not taxed under HR25, see post 316. So this is a moot point except for the question of whether or not all the compliance costs will still remain in place to ensure that businesses are now complying with the FairTax code. We get rid of the IRS and replace it with 50 State revenue collectors each with the power to audit?
Whoa!! YN got body slammed. No wonder he wants you off the threads.
If I end up supporting it, I will want a repeal of the 16th Amendment to make sure.
If I'm understanding your numbers correctly, you are saying that all of these taxes add up to x dollars, so that is all that can come out of the costs. The thing you fail to realize (or do but won't ever admit it) is that when materials and labor come up through the supply chain each companies tax costs get added on to the costs of the previous company. It comes up in multiples, not just one static number. BWAAAAAHHAHAHAHAHAHAH
No, because the general public hasn't already made up its mind like you did before you even started this post.
I'll go you one better. I would want an amendment repealing the 16th and explicitly making income taxes unconstitutional. It must be a bright light to make sure no penumbral emanations of an income tax sneak back in.
You have to have a valid Social Security number in order to get the rebate. No illegals.
It took me about one hour of research after I heard about the fair tax to decide it was a good idea.
To go back to your original post (and I know your read the Linder/Boortz book), here is a link I think you might find very helpful in showing you "where the money is coming from" as well as the methodology involved:
http://www.cato.org/pubs/pas/pa-272.html
Also, for more recent numbers, see post #39 on this thread, using the same methodology. It's worth noting that currrently the revenue neutral rate is something a bit over 19% due to the bush tax cuts. If they hold that'd be great.
The argument about "the government taxing itself" is partially covered in the link above but can be further understood by realizing that NOT taxing the government (which taxes itself now) would be creating a tax-advantaged monster to compete with any business should the goveernment choose to do so. I doubt we need that Chinese type of government-owned businesses.
You are looking for the exception instead of the rule.
It's only money, right? My company paid at least $200,000 when the owner of our company died just for attorney, CPA and appraisal fees for the estate tax return.
If you think prices won't rise under the Fair Tax, I've got a nice red bridge in California I want to sell you.
Also, if you make $ 40,000 per year, do you think:
A. Your employer is going to just stop deducting the taxes withheld from your paycheck,
OR
B. Your employer is going to not only stop deducting the taxes from your paycheck PLUS give you the amount of employer matching tax payments?
If you answered "b", for an extra few dollars I'll throw in some nice beachfront property in Kansas to go with that bridge....
Repeal of the 16th is one of the things called for by the FairTax. It isn't required to initiate the FairTax, but the FairTax folk certainly agree with your concerns and very much want IT gonzo for good.
The FairTax bill itself cannot be a constitutional amendment bill since the mechanics and requirement of such bills are quite different, but it DOES eliminate the income tax, payroll tax, etc. and also eliminates the IRS (and defunds it for good measure) and requires the destruction of income tax records. That's a good start toward waving it bye-bye.
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