A Fair Question about Fair Tax

First of all it isn't 30 cents on the dollar but 23 cents.

Secondly, no one has ever said that ALL taxes are already in the price but only those taxes, and costs associated with those taxes, paid by every supplier of every part that goes into that automobile plus those paid by the assembler.

Thirdly, with such things a automobiles, which have a long supply chain, I may well be able to buy the new vehicle and pay the tax on it for less than I could buy the same model built before the change over.

No, it doesn't clarify things at all.

The problem here that you either can not (or will not) recognize, is that under the old system, my saved money was taxed already and will be taxed again when I purchase a taxable item in the present.

New money earned under the new system won't have that handicap. That's very easy to see, though you seem unable (or unwilling) to do so.

I don't want that 35 cents per dollar back. I just don't want that money taxed again under a system that will ostensibly replace the income tax, especially since it was subject to the income tax that the Fair Tax is presented to replace.

I also didn't assume that prices would be increased under the new system at all - no idea where you got that from, sorry.

As far as the loan to my brother goes, I lent him post-tax $100, and I get back a pre-taxed $100. When I try to spend that $100 (which isn't income, it's money I already paid income tax on), it will get taxed again - it's buying power is diminished.

When I take my $100 out of the bank, it isn't income and not taxed as such. When the system changes, it's subject to the same consumption tax as newly earned dollars - that's fundamentally unfair, since money earned under the new system isn't handicapped by having been taxed at an earlier time like my money in the bank.

Basically, it's very clear to me that money I have paid taxes on and saved has a handicap that new money I earn doesn't - that takes a 2nd bite out of my saved money and makes it worth less than it is, and less than new dollars I earn.

I was excited about the Fair Tax when I first heard about it and a lot about it appeals to me, but you actually have made me more uneasy about it in trying to explain it. I have less faith in it now than I did before. Thanks!

Indeed it was an emotional outburts - and off target also as is this one.

Trying to pretend somehow that any present day FairTax bill must be patterned after YOUR INTERPRETATION of what Hamilton said is clearly out of bounds. I see no reason why you - or anyone - should expect that.

Your claim about the FairTax not helping - but rather hindering - US exports flies in the face of reality. With the FairTax, prices of goods (and thereby costs of end products) will drop and the FairTax need not - indeed cannot - be placed upon the exported goods. It's called border-adjustability and is quite within the WTO (and other) trade regulations we function under.

You speak of my responses being "glib"??? Yours are typically full of overblown hyperbole ("... unnecessarily burdening our nation’s labor force ..." when the FairTax does nothing of the sort).

Nor am I (or any other of the FairTax supporters) "... pretending to others ..." what the plan is about. No pretense at all. The data is freely available to anyone caring to inform themselves in the form of the FairTax website and the bill itself. Obviously you prefer to remain ignorant of the provisions.

That's fine - it's your choice.

Perhaps you would express the current income/payroll tax system rates in the same manner that leads the non-legalistic cistizen to believe he is paying up less than what he really does in your manner of measurement.

You must have me confused with someone who supports retaining the IRS and the current income tax, I don't. I just don't think this alleged fairtax is the proper way to go about bringing control to taxes or lowering them.

But, since you brought it up, isn't this taxation supposed to be a lower tax on us all? If so, how is it "revenue neutral?" That means the same exact amount of taxes will be paid into the government coffers, giving relief to the taxpaying minority, which obviously is the top one percent of wage earners today. Selling this alleged fairtax as a 23% sales tax and mentioning 'inclusive' in the same breath is legalese, designed to mislead the population that they will be paying less money than before. Obviously, that isn't so, else wise the fairtax.org site would prominently mention it is actually 30 cents on the dollar, not hide the truth that it is actually 30 cents on the dollar near the bottom of their FAQs.

I thought this was supposed to be a "simple" method of taxation? Why not just simply mention to potential supporters it is actually 30 cents on the dollar?

First of all it isn't 30 cents on the dollar but 23 cents.

Then, I suggest you go to fairtax.org, click on the FAQs and scroll all the way down to question number 47 (next to last one) where it is stated the retail cost at the counter will be 30 cents on dollar.

Their claim, my friend, not mine.

I may well be able to buy the new vehicle and pay the tax on it for less than I could buy the same model built before the change over.

The $38,000 general figure I used was just a figure of what the sticker price could be. Regardless, a used vehicle will always be less and not taxed under this program. Both figures were just general figures, not actual cost of any vehicle.

Then, I suggest you go to fairtax.org, click on the FAQs and scroll all the way down to question number 47 (next to last one) where it is stated the retail cost at the counter will be 30 cents on dollar.

I am VERY familiar with what is on that website but that does not alter the fact that under the fairtax if one spends $100 $23 will be tax! Exactly the same as you earning $100 dollars under the income tax and having $25 taken out for income tax.

Fairtax Volunteer FAQ #47

I know the FairTax rate is 23 percent when compared to current income taxes. What will the rate of the sales tax be at the retail counter? 30 percent. This issue is often confusing, so we explain more here.

When income tax rates are quoted, economists call that a tax-inclusive quote: “I paid 23 percent last year.” If that were the case, for $100 one earned, $23 went to Uncle Sam. Or, “I had to make $130 to have $100 to spend.” That’s a 23-percent tax-inclusive rate.

We choose to compare the FairTax to income taxes, quoting the rate the same way, because the FairTax replaces such taxes. That rate is 23 percent.

Sales taxes, on the other hand, are generally quoted tax-exclusive: “I bought a $77 shirt and had to pay that same $23 in sales tax. This is a 30-percent sales tax.” Or, “I spent a dollar, 77¢ for the product and 23¢ in tax.” This rate, when programmed into a point-of-purchase terminal, is 30 percent.

Note that no matter which way it is quoted, the amount of tax is the same. Under an income tax rate of 23 percent, you have to earn $130 to spend $100.

Spend that same $100 under a sales tax, you pay that same $30, and the rate is quoted as 30 percent.

Perhaps the biggest difference between the two is under the income tax, controlling the amount of tax you pay is a complex nightmare. Under the FairTax, you may simply choose not to spend, or to spend less.

http://www.fairtaxvolunteer.org/smart/faq-main.html#47

Looks like you've got it down fairly well. Now what tax are we proposing to replace here? It's the income tax so lets compare apples to apples rather than apples to oranges.

pigdog wrote:

More stuff and nonsense. Actually Teddy boy will oppose the FairTax once it gets going in the Senate. The Democrats are not dumb despite the fact they are sneaky. Several Dem Senators have already stated this opposition (I have a letter in front of me now from one to that effect) and they certainly intend to make a partisan battle out of it. The prebate is not subsistence despite what you think.

pigdog,

No one on this end would disagree with you that socialists like Kennedy would oppose your tax plan. We agree on this point in full! And why? Because existing income taxation is the brainchild of socialists and Marxists and greeted with open arms by them, and is the cornerstone from which they operate___ from each according to their ability to each according to their needs ___which is carried out via income taxation___ the redistribution of wealth!

And so, Sen. Ted Socialist Kennedy and his underlings will fight tooth and nail against the repeal of the 16th Amendment and the loss of the power to calculate a tax from profits, gains and income used to redistribute wealth to remain in power. But if income taxation should be abolished, as your plan gives lip service to, I can assure you our socialists domestic enemies in Congress will greet your family consumption allowance with open arms, which will be used to keep themselves in power by promising to increase that allowance when election time nears, just as is now done with social security, aid to families with dependent children, Pell Grants, Kiddy Care, and you name the item from the available shopping list created by our socialist domestic enemies in Congress. Are you still in self denial?

If you are sincere in your efforts, then remove defects in you plan when they are pointed out to you, and don‘t pretend such defects are not as glaring as they really are!

And, as to your assertion that the family consumption allowance is not a form of subsistence, I suggest you attempt to look in the mirror tonight and make that statement to yourself, out loud, and without frowning at yourself.

Sincerely,
JWK

___ with all these blessings, what more is necessary to make us a happy and a prosperous people? Still one thing more, fellow-citizens—a wise and frugal Government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government, and this is necessary to close the circle of our felicities__ Thomas Jefferson, First Inaugural Address.

NO, to end the income tax while 16th repeal goes forwqard does not require a constitutional amentment at all. The FairTax will do that nicely. Read the FairTax bill and you'll see that's true.

You cannot end the income tax by a constitutional amentment while the income tax is the tax law. Been tried but could never progress for good reason - it makes no sense.

But, since you brought it up, isn't this taxation supposed to be a lower tax on us all?

No, , for it taxes those who now escape the income tax obviously, (e.g. underground cash economy, foreign "visitors" to the U.S., even hi wealth/low income types such as those living off taxfree interest that otherwise escape the income tax net.

The FairTax does however, provide lower effective rates to those who now pay income & payroll taxes certainly.

A lower rate of taxation for those now paying taxes is accomplished by broadening the the tax base.

The broader the tax base, more persons directly participate in the tax system assuring that all segments of the electorate are knowledgible of the burdens that excessive government impose upon all.

If so, how is it "revenue neutral?"

A broader tax base, coupled with a more efficient and growing economy assures the same revenue amounts to government at lower rates overall as the current very economically inefficient income/payroll tax system does with much higher impositions on a much smaller base.

Selling this alleged fairtax as a 23% sales tax and mentioning 'inclusive' in the same breath is legalese, designed to mislead the population that they will be paying less money than before.

Sorry, but most who now actually participate in the current tax system will indeed benefit from the FairTax system with its overall lower effective tax rate with regard to gross incomes as a result of the use of the FCA sales tax rebate mechanism:

To illustrate, compare the tax burden that a family of four with two wage earners, paying Fair Tax & receiving the FCA sales tax rebate would experience at various annual expenditure levels (assuming no savings or investment) compared to that same family paying income and SS/Medicare taxes under 2004 federal tax law & recieving standard deduction, personal exemptions,child credits, and EITC). Where gross expenditure is presumed to equal gross income under the Fair Tax system. When gross expenditure for consumption is actually less than gross incomes due to savings and investment out of income, the FairTax rate will actually be lower than that shown:

H.R.25 "The FairTax Act

I thought this was supposed to be a "simple" method of taxation? Why not just simply mention to potential supporters it is actually 30 cents on the dollar?

Because it "actually" is NOT as is demonstrated above. 23% of gross expenditure is actually the maximum marginal rate that anyone will pay. Their effective and real tax rate taking FCA sales tax rebate into account is "actually" much much lower for over 90% of todays taxpayers.

Why try to convolute what I said. I said the rate in the bill was 23%. Aare you trying to deny that or just make believe that the bill reeally says 30%?? (It doesn't).

I also went on to say what you pointed out from the AFFT website which has always been true also. You post shows no new information so why bother with it? What is it you think you are showing???

Such tripe!! Don't start tring to drag in the Communist Manifesto and the writings of K. Marx as some sort of argument.

You should surely believe that I and many other FairTax supporters on these threads are sincere in our efforts - and also that what you perceive as "defects" we certainly see as nothing of the sort. Nor have you been able to show them to be no matter how overheated a batch of rhetoric you use.

The prebate is certainly not a subsistence handout since it goes to each family and is only a way to pay the FairTax for low income families up to a certain point - but all families that qualify and apply get it. I doubt that Bill Gates needs it or quite a few of us, but it does prevent having the sales tax be terribly regressive on low income families. You can like that or not, but it does serve a very good purpose in the bill. I certainly do not "frown" when I talk to anyone (including myself in the mirror) when mentioning the prebate because of its benefits.

A.G.

And what is the point of your long winded post and citations? You failed to explain to us what you would have us learn from the quotes you posted.

As to the authorized direct tax contained in our Constitution, sorry you object to the emergency direct tax upon the states intended to be used in case of emergencies, such as an annual deficit created by Congress.

But forcing members of Congress to return to their state with a bill for their state’s apportioned share of an annual deficit created by Congress establishes a moment of accountability my friend___ especially when the raising of a state’s share is dumped into the laps of a state’s Legislature and Governor! Sorry you don’t like accountability

“Picture, for a moment, the expression on the faces of the Governor of New York and the New York State Legislature, if New York should receive a bill for its apportioned share [31/435] of the 1995 federal deficit. This threat would create a compelling incentive for the Governor of each state, and the various state legislatures, to keep a jealous eye on the spending habits of their Congressional Delegation . . . it would require the fiscal accountability which the state governments once demanded from their Senate and House Members!”

For those interested in the direct tax allowed by our Constitution, and how our Founding Fathers intended it to work, CLICK HERE and scroll down to :

American Constitutional Research Service Before the
Committee on Ways and Means
United States House of Representatives
June 1995

Mr. Chairman and Members of this Committee:

For those who are interested to learn how and when the direct tax was used see:

APPORTIONMENT OF A DIRECT TAX TO RAISE A TOTAL OF $ 2 MILLION TREASURY DEPARTMENT MAY 25TH 1798

An Act to lay and collect a direct tax within the united states [1st direct tax July 14, 1789 for $2 million and each state’s share of the $2million being raised.]

An Act to repeal the internal taxes April 3rd, 1802

And Act for the assessment and collection of direct taxes, July 22, 1813

Act laying a direct tax for $3 million August 2, 1813, and each state’s share of the tax

Section 7 of direct tax of 1813 allowing states to pay their respective quotas and be entitled to certain deductions.

And., as I have previously documented for you, For a $20 million direct tax being imposed upon the states in 1861, and the amounts required to be paid by each of the various states, see HERE and use the buttons at the bottom of the page to go forward and backward to read the legislation.

Regards,
JWK

I can see why you might be confused. I looked back at some earlier posts I made and there was one which I intended to send to you and others which I apparently did not send.

Certainly the old money we talk about will also be taxed under the new tax system (but only assuming you spend it for taxable, new items - not everything is taxed under the FairTax) just as will the new money. The same on taxable things, no question.

My not-sent post related to the comment you just made:

"I don't want that 35 cents per dollar back. I just don't want that money taxed again ..." and since I had (in my mind) explained that, I was responding to your example which illustrated, as I said, restoring the tax to the old money.

Using the old money (the remaining 65 cents) to spend under the current (old) tax system you will be taxed at just about as much as under the new (FairTax) tax system since included in the price of all that you buy in the old system is an amount often call "embedded taxes" or "hidden taxes" which is actually not just taxes but also compliance costs, etc. that cause the price of everything to go up higher than it would otherwise be. Since this is neither identified as a tax on a tax form or even readily apparent to most (which is why hidden taxes may be a good term), it is there and costs you just as would any other tax. Overall the tax on the 65 cents under the old tax and new tax would end up being just about the same as would the prices you would pay due to the removal of the hidden taxes.

That may not be an understandable explanation, but I think if you'd check this link it would be clearer:

http://fairtaxvolunteer.org/materials/index.html

If you'd check the FAQs #16 & 17 and possibly read the "Thumbnail Sketch ..." also I think it would explain things better than I.

pigdog wrote:

NO, to end the income tax while 16th repeal goes forwqard does not require a constitutional amentment at all. The FairTax will do that nicely. Read the FairTax bill and you'll see that's true. You cannot end the income tax by a constitutional amentment while the income tax is the tax law. Been tried but could never progress for good reason - it makes no sense.

Sorry my little grasshopper friend, but the proposed Fair Tax cannot guarantee even one of its stated attractions because the proposed legislation, even if adopted by a current Congress, and signed into law by the President, is nothing more that a list of suggestions to all future Congresses, and would not bind any future Congress. Future Congresses would be free to tinker with the original proposal and manipulate it to accommodate the politically influential just as is now done with the current system!

In order to accomplish what you are selling, the words must be put into the constitution! As Thomas Jefferson has warned us "In matters of Power, let no more be heard of confidence in men, but bind him down from mischief by the chains of the Constitution"

In addition little grasshopper, repealing the 16th Amendment in the prescribed manner which is via Article V of the Constitution and the only enforceable method to repeal the 16th Amendment, will bring us back to our Founding Father’s original tax plan___ a plan having more than sufficient taxing authority to raise a necessary federal revenue. So, contrary to your insinuation, Congress would have more than sufficient taxing authority to raise a federal revenue.

End of class little one.

JWK

And what is the point of your long winded post and citations?

You realize of course the individual who reads the commentary on this website is presumed to have sufficient education to discern for themselves what the read in going to a reviewing the material linked to for each citation.

It certainly is not my nor anyone's place to do their interpretations for them. Or would you rather play the propagandist that tells everyone what they should believe.

You failed to explain to us what you would have us learn from the quotes you posted.

Do you have a mouse in your pocket?

As to the authorized direct tax contained in our Constitution, sorry you object to the emergency direct tax upon the states intended to be used in case of emergencies, such as an annual deficit created by Congress.

Ones mans normal course of fiat money banking, is another's emergency I guess.

But forcing members of Congress to return to their state with a bill for their state’s apportioned share of an annual deficit created by Congress establishes a moment of accountability my friend

Only if you can convince Congress Critters to sponsor, introduce and vote for a direct tax that even the founders found short on the revenue side for even the miniscule federal budgets of that era.

Federalist #12:

"A nation cannot long exist without revenues. Destitute of this essential support, it must resign its independence, and sink into the degraded condition of a province. This is an extremity to which no government will of choice accede. Revenue, therefore, must be had at all events. In this country, if the principal part be not drawn from commerce, it must fall with oppressive weight upon land."

"It is evident from the state of the country, from the habits of the people, from the experience we have had on the point itself, that it is impracticable to raise any very considerable sums by direct taxation."

"The ability of a country to pay taxes must always be proportioned, in a great degree, to the quantity of money in circulation, and to the celerity with which it circulates. Commerce, contributing to both these objects, must of necessity render the payment of taxes easier, and facilitate the requisite supplies to the treasury."

Federalist #45:

"The change relating to taxation may be regarded as the most important; and yet the present [Continental] sic Congress have as complete authority to REQUIRE of the States indefinite supplies of money for the common defense and general welfare, as the future [Constitutional] Congress will have to require them of individual citizens;

James Madison, Elliots Debates Vol 3 p128:

Mr. Chairman, in considering this great subject, I trust we shall find that part which gives the general government the power of laying and collecting taxes indispensable, and essential to the existence of any efficient or well-organized system of government: if we consult reason, and be ruled by its dictates, we shall find its justification there: if we review the experience we have had or contemplate the history of nations, here we find ample reasons to prove its expediency. There is little reason to depend for necessary supplies on a body which is fully possed of the power of witholding them. If a government depends on other governments for its revenues -- if it must depend on the voluntary contributions of its members -- its [*129] existence must be precarious."

"If the general government is to depend on the voluntary contribution of the states for its support, dismemberment of the United States may be the consequence."

You do have at least one sponsor and a bill introduced into the House or Senate don't you? Please let us know what it's bill number is.

I can't seem to find such a document in any legislative session of Congress since your statements and conjectures of the:

"American Constitutional Research Service Before the
Committee on Ways and Means
United States House of Representatives
June 1995"
by founder "John William Kurowski" (John W K).

submitted on your own to the House Ways & Means Committee for their perusal and appropriate action.

Where is the legislation you have convinced at least one member of Congress to support?

As far as I can see, said committe may have filed it in the nearest trash can. Certainly doesn't seem to have generated any interest or comment where it means something, among the representitives of Congress who are charged with enactment of legislation and proposing Constitutional amendments for the states to ratify.

So far you have provided not answer to this fundamental question.

What are the introduced bill numbers or number, so we can provide appropriate support to this legislation of yours?

A.G. wrote: You do have at least one sponsor and a bill introduced into the House or Senate don't you?

Can’t seem to find anyone. Sorry, they all seem to be signing on to your plan which they see as a means to rape the American People in a more efficient manner than they now do!

But I though you would enjoy this:.

AmericanHero1792 wrote the following in POST 92at Hannity.com in a thread titled So, Boortz does support the socialist friendly Fair Tax proposal:

"So.....what is actually Fair about the FairTax?

1. It increases the revenue to the Federal Government. 2. It increases the scope of the Tax and broadens its taxing power 3. It increases the ability for invasion of private property of individuals who purchase anything. 4. It eliminates the pitfalls of income tax Fraud by the Federal Government against the defense of private citizens under due process in courts of law. 5. It eliminates all tax exemptions of businesses in America while shifting the burden of taxation onto individuals. 6. It puts every citizen onto the socialist payroll 7. (Since it doesn't mandate the repeal of 16th Amdendemnt) it legalizes a direct tax on people's property without provisions of apportionment.

The FairTax Act (HR25) is the fairest legislation ever written by legislators in favor of the Federal Government.

Case Dismissed.…"

Have a nice evening old man. Too bad we do not see eye to eye on this issue as together we could have made for a very moving force.