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???
Because the tax is now collected from the sales tax.
Are you afraid of criticism?
From The FairTax Book (p2)
Let's agree up front that this is a book about honesty...
From The FairTax Book (p3)
Before you embrace it enthusiastically-- and we believe you will-- we encourage you to read it critically... and ponder how together we can make the idea even better.
I have NOT made up my mind, are you saying that anyone who questions the plan is an enemy plant? This is serious business and needs to be examined from all relevant angles.
Stop being so snide, it doesn't help your cause.
Sounds as though you haven't read any of the many economic studies on the FairTax nor the letter that 75 economists sent to the President and Congres endorsing it as beneficial.
Please do that and then return with any questions you might have.
That is not the bill as written. They won't have support from us Fair Taxers for that. I hated the idea of a NRST until I learned that the Fair Tax would repeal all the other taxes. I wouldn't support it otherwise.
Compliance under the sales tax will actually be greater than under the income tax. Less points of collection, and not paying the tax involves collusion between two parties, not just one.
Why an additional expense? Do a simple example. Let's say that you pay $1000/year in hotel expenses, and the IRS allows you to deduct $1000 from gross revenues to cover that expense. At say a 30% tax rate, that $1000 deduction saves you $300 in taxes. Let's assume it were your company's only deduction on revenue of $11,000 so you would be taxed 30% on profits of $10,000 or $3000.
Under the Fair Tax, you pay $230 Federal sales tax for your hotel room vs. $3000 under the current income tax system.
The whole deduction shell game of the current system is corrupt and cons people into thinking they are saving something. It's like the home mortgage interest rate scam. Trust me. I would much rather pay and extra grand in taxes than an extra $3000 in mortgage interest and if anyone tells you to take out a big mortgage to "save on your taxes", run away fast.
You are either much smarter, much more trusting, or much sloppier than most. I can't tell which.
From a completely selfish point of view, I'm sold. Since direct patient contributions account for ~10-15% of my businesses income, my tax liability would be much less than what I am paying now (if you include the taxes that would be embedded into the goods that I purchased).
I don't want to discuss this anymore, I am going with the assumption that there will be no taxes withheld on these business expenses. These business expenses, esp. for sales and marketing side of businesses is 99% of our cost structure. It is significant.
I have to say it took me one quickie explanation to understand it. But the concept of imbedded taxes was one I was already aware of. Once I understood it I looked for reasons why it didn't work. I couldn't find any right off the bat. I also spent many years of listening to pros and cons which solidified my support even more.
You're certainly right - that's the border-adjustable ability of the FairTax and it is perfectly within he WTO (and other) regulations we operate under.
And yet, many of he union members are not aware of this and/or are not being informed. It would be a huge boost to the US economy. Tell all the union members you know.
It also makes imported goods taxed at retail (which works to the benefit of US goods overall).
Wow! What about salary, rents and utilities?
I rather doubt it unless the wholesaler is actually a wholesaler and retailer both - in which case he probably WOULD need to do so for his own possible protection, but keep in mind that he would be making monthly simple reports and payments to the state sales tax agency and they might want to spot check some of the tax-free sales to satisy themselves. Many states do so presently - that's not new.
utilities are business expenses, we have home offices so no rent, yes we have our own salaries. I don't make a product I sell a product that others make and get a commission when I sell something. So I have no real cost of goods sold.
Excellent points, Ditto, and the ER portion of payroll taxes is also just an artifice dreamed up years ago to make payroll taxes seem lower than they really are. If the employee actually received this money, and paid payroll taxes as the current regs require (the EE portion must be matched by the ER portion), you'd find that payroll taxes would amount to more than the 15.3% that many think they are.
Because of the ER portion artifice, they're actually something like 18% or so. Keeps the people happy to think they're "lower" and the government happy, it seems, to fool people in this manner.
Depending on the product - or mainly who you sell it to - you may not have to collect the FairTax (which is too bad since you get well paid for doing it and the report is something a two line thing). Check the bill for details - about sec. 510 or so AIR.
"BWAAAAAHHAHAHAHAHAHAH"
Oh, nooooooo.
Not another poster who thinks that phrase constitutes intelligent discourse! It must be contagious.
LOL
Got link?http://www.taxreformpanel.gov/meetings/meeting-0705.shtml
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