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Dear Mind-numbed Robot,

Who gets socked now? Predominantly the upper middle class, with the rich contributing a very significant amount.

If the share of taxes paid by the rich declines significantly (and it will under the NRST), and the poor continue to pay, effectively, no tax (that IS the point of the prebate, right? to give back everyone the taxes they would pay at something around poverty level income), then, to stay revenue neutral, the middle class, especially the upper middle class, will pay more of the tax burden.

From Rush Limbaugh's website, I see a set of graphs that relate some interesting information. In 2001, the top 1% of households, by income, paid about 34% of the federal income tax collected. They paid 34% of the federal personal income taxes on about 17.5% of all personal income that year. The average tax rate on the top 1% of households was, in 2001, 27.5% in personal federal income taxes. Yup, 27.5% of income paid, on average, by the top 1% of households, in federal income taxes.

Yep. They paid about twice as much in federal income taxes, on a percentage basis, as the other 99% of the population, on their income. That's the rich.

However, whether you think they're paying ENOUGH or not isn't the point.

Whether some rich people manage to pay nearly no taxes at all or not, that isn't the point, either.

The point is, these folks pay a huge chunk of the taxes being paid. If they wind up paying less (and they will), then someone else will be paying it.

Interestingly, even if these folks spent 100% of their incomes on 100% NRST taxable purchases, their overall level of federal taxation would fall. They currently average, as a group, 27.5% of their income in federal income tax, and if they spent 100% of everything they earn on completely taxable purchases, they'd pay 23% of their income in the national retail sales tax. LOL.

However, it's much more likely that these folks will spend half or less of their income on taxable stuff. Meaning, the amount of their income that winds up in the hands of the US Treasury will fall from 27.5% of their income to around 12% of their income. That turns out to be an overall tax reduction for the rich of several hundred billion dollars per year.

Now, who will pay those extra hundreds of billions of dollars?

We know it won't be the bottom 50% of folks (these folks already pay nearly no income taxes, and under the NRST, with the prebate, will continue to pay no net taxes). I guess it's that 49% that goes from just above the median household income, up to folks that don't quite crack the top 1%.

I suspect, more precisely, it will be folks from about the 60th or 70th percentile to around the 98% percentile.

I don't have a MORAL problem with that result. But the rest of folks (especially the folks who wind up paying more) may have a PRACTICAL problem with it.

sitetest

I see a lot in your post that makes our points.

If the share of taxes paid by the rich declines significantly (and it will under the NRST),

This not necessarily true at all. If I were "rich" as opposed to just having a high income, my options differ. If I won the 100 million dollar lottery tomorrow I would put all of it into Georgia municipal bonds and live off of the income and pay no state or federal income taxes. If I did the same thing under the fair tax I would pay taxes every time I bought something new.

From Rush Limbaugh's website

Exactly. The top 50% of wage earners pay 96% of all taxes yet the bottome 50% who pay merely 4% have just as much voting power as those paying their way. Under a NRST the non-productives would not be in such a privileged position of voting themselves largesse from the producers. The NRST is the ONLY way I see to avoid what is becoming invevitable - the loss of our republic because voters can vote themselves a free ride.

The rest of your post makes assumptions about tax brackets that I don't think you can make without citing sources. It also makes assumptions about the behavior of high income earners under a fair tax.

Those statistics don't mean all that much s-test if you'd but stop to think about it. They are based upon reported income which can be quite different than actual income. Someone with $1 million in actual income that manages to get his taxable income down to, say $100,000 (or even less perhaps) might pay 27.5% of that ... but so what?

He would then be paying 2.75% of his actual income. You're mixing apples and oranges and coming up with banannas when it is really fruit salad.

I happen to know some in that "top 1%" and I can tell you for sure that their reported income is much, much less than actual. You're trying to use numbers where they really do not apply as you think.

AFAIC, it is far, far better (and more fair) to tax the consumption rather than the income. (Most of the "top 1%" I'm aware of will pay more under the FairTax than the income tax). I doubt seriously if ANY of them come even close to reporting their actual income ... why should they when "milk's so cheap" as it were.

Our basic disagreement is over the level of taxes paid by the rich and by the middle class at present and then projecting that into the changed tax system with the NRST.

The figures you quoted from Limbaugh's site are the accepted wisdom of the day. I don't argue with them. What is not said in those figures, and what will make the difference in the transition, is that only about 50% of all of us pay taxes at all. That certainly includes me, I get an undeserved earned income credit, and possibly you.

There are many, and not just the rich, and again even you, who use legal means to avoid taxes. That includes a fair chunk of the middle class, especially the entrepreneurial middle class. So, when we look at the percentage of total taxes paid by the rich we are not looking at them as a percentage of taxpayers but of taxes paid. That may seem a non difference but it is not when we consider the transition. Those non payers will become payers and that is a lot of folks, 50% more in fact. With a 50% increase in the tax base, not even including the underground and the cheats, the ability to reach revenue neutral is easily understood.

When we mention the poor, the poverty level, and fairness, we must include the other benefits the poor get. In addition to their income (often unknown and unreported), many get food stamps, welfare checks, and subsidized, or free, housing. Those government programs take care of their basic needs which the prebate supposedly covers. Because of that, those prebates in many cases will become discretionary income and will be spent on taxable items. That broadens the tax base.

In addition, many people like you will become larger contributors to the tax base. Even if your business is tax exempt by it nature, you aren't. There are millions like you. (That is probably your true objection to the change.)

The tax shelters for the rich will be gone, the business decisions now being made for tax purposes will be unnecessary and counter productive, as many are anyway except for the tax angle, the poor will be better off but also contributing to the tax base, more of the middle class will be participating in the tax base but will be better off, and on and on.

In your case and of those like you, you ignore the costs that are now part of everything you buy. You think, erroneously in my opinion, that you will suffer if the system is changed. I think you are wrong, you will be better off. Ask yourself whether you would even be in the business you are if it weren't for its tax niche? If you would that is great. The transition will be even easier.

The point is, these folks pay a huge chunk of the taxes being paid. If they wind up paying less (and they will), then someone else will be paying it.

If the share of taxes paid by the rich declines significantly (and it will under the NRST), and the poor continue to pay, effectively, no tax,....to stay revenue neutral, the middle class, especially the upper middle class, will pay more of the tax burden.

You never mention the burden of FICA taxes that the middle and lower classes have. Working poor people may not pay income tax but they do pay FICA, no matter what. As a percentage of income, middle and lower classes pay a much smaller percentage of income tax but they do pay a flat 15% (or 7.65% if you believe the employer match is a cost to the employer) of their income for FICA taxes up to the income cap. FICA taxes as a percentage of income for the top 1%(or even 10%) are miniscule.

A single taxpayer making $90,000 (gross pay not including employer matching) would pay almost $18,000 in income tax and nearly $7, 000 in FICA. That is 27% of his gross pay. A 23% NST rate would lower his burden not even figuring the pre-bate. This also assumes that this taxpayer spends 100% of income. How is that shifting the tax burden to the middle class?