Posted on 11/06/2005 10:58:26 AM PST by Eaglewatcher
The Fair Tax Act of 2005 – HR 25/S 25 plain English summary
The Act is called the “Fair Tax Act of 2005.”
As of Dec. 31, 2006, it repeals all income taxes and payroll taxes, specifically:
*The individual income tax (including capital gains taxes and the alternative minimum tax)
*The corporate income tax
*All individual and employer payroll taxes including Social Security, Medicare and federal unemployment taxes
*The self-employment tax (a self employed person pays both the individual and the employer portions of Social Security and Medicare taxes)
*The estate and gift tax
Effective January 1, 2007 it replaces the above taxes with a national retail sales tax on all goods and services sold at retail, except that used goods are not taxed. The tax rate is set to be revenue neutral – at the level necessary to replace the revenues generated by the repealed taxes.
A 23-percent (of the tax-inclusive sales price) sales tax is imposed on all retail sales for personal consumption of new goods and services. Exports and the purchase of inputs by businesses (i.e., intermediate sales) are not taxed. The sales tax must be separately stated and charged on the sales receipt. This makes it clear to the consumer what the amount of the tax is and that he or she is paying it.
The FairTaxSM provides every family with a rebate of the sales tax on spending up to the federal poverty level (plus an extra amount to prevent any marriage penalty). The rebate is paid monthly in advance. It allows a family of four to spend $25,660 tax free each year. The rebate for a married couple with two children is $492 per month ($5,902 annually). Therefore, no family pays federal sales tax on essential goods and services and middle-class families are effectively exempted on a big part of their annual spending.
Funding for Social Security and Medicare benefits remains the same. The Social Security and Medicare trust funds receive the same amount of money as they do under current law. The source of the trust fund revenue is a dedicated portion of sales tax revenue instead of payroll tax revenue.
States can elect to collect the federal sales tax on behalf of the federal government in exchange for a fee of one-quarter of one percent of gross collections. Retail businesses collecting the tax also get the same administrative fee.
Strong taxpayer rights provisions are incorporated into the Act. The burden of persuasion in disputes is on the government. A strong, independent problem resolution office is created. Taxpayers are entitled to professional fees in disputes unless the government establishes that its position was substantially justified.
Bingo. The tax rate had to be raise 3-4 percent to raise the extra money needed to pay for the prebate. It is revenue neutral, but only after the costs of the prebate are figured in. Therefore several hundred Billion EXTRA will have to be raised to payout the prebate so the fair tax ends up being revenue neutral. I know this will take at least 1000 posts to you before you actually get it. Otherwise you would be a few hundred billion dollars short of being revenue neutral. You have to pay for this entitlement somewhere.
`(a) In General- For each purchase of taxable property or services for which a tax is imposed by section 101, the seller shall charge the tax imposed by section 101 separately from the purchase. For purchase of taxable property or services for which a tax is imposed by section 101, the seller shall provide to the purchaser a receipt for each transaction that includes-- `(1) the property or services price exclusive of tax; `(2) the amount of tax paid; `(3) the property or service price inclusive of tax; `(4) the tax rate (the amount of tax paid (per paragraph (2)) divided by the property or service price inclusive of tax (per paragraph (3)); `(5) the date that the good or service was sold; `(6) the name of the vendor; and `(7) the vendor registration number.""`SEC. 510. TAX TO BE SEPARATELY STATED AND CHARGED.
Since this a federal tax bill and the federal government does not control, legislate, or impose state taxes on states (and each state differs in what it does on that regard), there is no mention of state sales tax. Rightfully so. That would merely become another line on the report (if the state so decided) but it would not be taxed by the FairTax.
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Bingo. The tax rate had to be raise 3-4 percent to raise the extra money needed to pay for the prebate.The rate had to be raised 3-4 percentage points, which is a 15 to 21 percent TAX INCREASE over what the fairtax claims would be needed for "revenue neutral".
Yep, if you consider the prebate to be an entitlement program that it is, then your only conclusion would be that this is a tax increase. Of course they will spin differently.
Having more to spend than you earn better describes an entitlement than it does a rebate.
Hardly an "entitlement" which is "... a government program providing benefits to members of a specified group ..." unless you'd like to designate all taxpayers as that group.
But the FairTax is revenue neutral (including the prebate) at 23%. In fact if the bill passed right now it would be revenue neutral at something like 19-20% rather than 23%. A plan that will so strongly boost the US economy far beyond where it now is can hardly be considered a "tax increase" even in your warped terminology.
Looey, there are lots of ways to have more spending than income - even under the present system. You're pretty dim-witted if you can't think of several. And none having to do with the prebate.
After your huge entitlement it is revenue neutral. Certainly it will probably give the government the $2 Trillion that it currently spends, but it will have to raise about $2.3 Trillion so it nets $2 Trillion. Social Security is an entitlement eventhough all taxpayers who have paid into over their lives are qualified. Everyone with a Social Security number is entitled to the fairtax prebate. It is certainly not a refund because there is no requirement that they pay a dime in taxes.
That has been a fairytax arguement used on many occassions. Fairytaxers often claim that people paying sales taxes would be a choice.
Actually it IS a choice. Perhaps not for you but for mos people. Check with your wife to see if she chooses things when she shops ...
I cannot, at this point contribute anything intelligent to this thread, but I would like to stay informed.
{I have both The Fair Tax book and The Flat Tax book, and a coin toss has determined that I'm reading the "Flat" book first. I might have something intelligent to offer by Christmas! :)}
Thank you,
Alice
You are now on the FairTax taxreform pinger. Welcome aboard.
Thank you!
Can't they come up with anything new? It's always the same stuff over and over again. The same debate on thread after thread. Their same mischaracterizations of the NRST followed by the exact same rebuttals. Bunch of trolls IMO.
THe NRST isn't perfect. Yes, it still funds the same Federal leviathan. But it is a HELL of a lot better than the current system and it WILL stimulate more domestic investment and industry.
There's lots of helpful information there on many, many different topics. Check the FAqs and rebuttals for example.
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