Posted on 01/28/2006 1:15:41 PM PST by Eaglewatcher
Supporters of a Legislative package commonly called the FairTax, point out that no other tax reform and replacement idea comes close to providing the economic benefits for American working families and the growth of American Manufacturing like the Fair Tax HR 25/ S25. Major U.S. Manufacturers like Ford Motor and Delphi Corporation are facing difficult challenges and are planning or proposing major changes in order to compete in the global marketplace and to compete within the American marketplace.
Talk Radio has been a buzz on the plan by Ford to cut 30,000 jobs and close several facilities. For months, cities with Delphi Parts plants have be stewing over negotiations and plans that want to cut wages and possibly close facilities. Though part of the solution is to be more efficient and certainly to produce what the customer wants to buy, the other part of the debate is unfair trade practices and unfair labor wages in these competing countries.
Radio Talk Show host Neal Boortz is one talk show host that has discussed the solution for American Manufacturing repeatedly. He has also written a New York Times best selling book, “The FairTax Book” in conjunction with Congressman John Linder of Georgia. The book lays out the problems with our archaic income and payroll tax system and than reviews the benefits of the Legislative Replacement package sponsored by Congressman Linder and based on the 10 years of work and research conducted by Americans for Fair Taxation.
On Television, CNN's Lou Dobbs and Bill O'Reilly show their outrage on how American Manufacturing Jobs are leaving American Shores but provide no comprehensive solutions in their form of “sound bite journalism”. They and many other Americans misunderstand and dismiss the serious grassroots support and supporting research for a solution that will truly help the "little guy" and restore good paying American Jobs. (The Fair Tax HR 25/ S25. www.fairtax.org)
The solution for Ford, Delphi and American Manufacturing in general is not trade barriers or tariffs but is fair trade. But how do you get Fair Trade when competing countries do not pay a Fair Wage. American Workers do not need to compete globally by lowering their wages to such Draconian levels. Fair Tax supporters point out that the solution for better paying American manufacturing jobs at home is to have the lowest taxes on American Manufacturing companies.
American Manufacturing goes where it costs them the least to do business. Even with the higher costs of fuel to ship those goods from overseas, the low wage is what helps some countries compete and it is the Lower business taxes that helps other countries compete.
In Europe, Ireland has had the strongest economic growth and best employment numbers because they have the lowest taxes on business (Corporate tax 12 %). The Solution for America is Lower Taxes on American Manufacturing not Lower Wages on American Workers. The incentive for business to stay in America and not outsource is lower taxes on Corporate earnings with less tax compliance costs.
Ultimately, It is the consumer that pays the business tax in the end on all products and services. Business taxes like business costs for manufacturing are just worked into the price. The Consumer pays the tax not the business.
What if the United States had the lowest Corporate tax in the World? Would not business flock here to manufacture? What if instead of the Bahamas being the Offshore tax haven for business or Corporate headquarters that for Tax purposes those businesses made New York, or California, or Chicago their Corporate home and their preferred place to manufacture from and ship around the World?
There is such a tax plan in Congress waiting in the wings to rev up our Economy, by providing the right incentive for American Manufacturing to stay in America, for Good paying manufacturing jobs not to be outsourced, for American Families to have more take home pay, to make U.S. Soil a Tax free zone for business that can export products around the world Tax-Free. This is how we save American jobs and this is how we compete against substandard wages paid by our global competitors.
The Legislative Package in Congress has been around for several years; it is well researched and has sound economic data to back it up. It is commonly called the FairTax and has over 45 Co-Sponsors in the House and Senate. The bills are HR25 and S25. According to the Fair Tax Scorecard 155 Legislators are leaning in favor. Last Spring 75 Economists sent an open letter to Congress and the President in favor of the Fair Tax. They were joined by Alan Greenspan’s testimony in favor of a consumption tax as a replacement for an Income tax.
From an American worker stand point, the key point is that the Fair Tax helps save American jobs and promotes American Manufacturing that stays on U.S. Soil. It allows American workers to take home an average 30% larger paycheck each and every week by eliminating any federal withholding for income tax or payroll tax from an American workers paycheck. American workers take home 100% of their paycheck!!
American Manufacturers have the incentive to stay in the US and not outsource because they pay no Corporate tax. New American Manufacturing is created because Capital investment in the US is tax-free. Building new plants in the US will cost them less because of lower taxes. The Exports they send overseas pay no tax and are cheaper for sale in the global marketplace. This allows American Manufacturing to compete globally because of lower taxes and not lower wages like Delphi is trying to accomplish.
The Fair Tax is a revenue neutral replacement of the individual and corporate Income tax; payroll tax, capital gains tax, the Alternative Minimum Tax (AMT) and the Death Tax (Estate Tax). It is replaced with a National Sales Tax on retail purchases of all new products and services and supports the funding of the National Budget including Social Security and Medicare.
According to the Legislation, the national sales tax will be included in the price tag you see on a product and will be broken out as a separate line item on your receipt so that Americans know how much they are being taxed and how much they are sending to Uncle Sam with every purchase.
American Families do not have to wait until April 15th to get a refund of their own money. Middle Income Families will take home an average 15% more because of no Income tax withholding and an additional 7.65% because of no payroll tax withholding. Under the Fair Tax, the tax collected replaces the income that funds the national budget and replaces the payroll taxes that fund Social Security and Medicare.
The Fair Tax Legislative package is much more than just a national sales tax it is a package that also has a Prebate (rebate) system that truly untaxes the poor and treats everyone equally and fairly. No forms to keep, no receipts to log in or file. Everyone gets the same prebate check based on family size and valid Social Security cards for each family member.
Maid or Millionaire; the simple way to be sure no one pays a national sales tax on the essentials is not complicated exemptions but to simply send each household a monthly check (debit card) to cover the national sales tax on all spending up to the poverty line for that Family size.
Health and Human Services calculates the poverty line for a married couple with 2 children at $25,660 for the year 2005. The Fair Tax assumes every family of 4 will spend at least that much and sends them a prebate to cover the national sales tax on every dollar up to $25,660. The Inclusive tax rate is 23% or $5,902. The Fair Tax sends each month $492 (5902/12). If that family makes less than $25,660, they still receive the monthly check for $492.
It is a fact, if you make more you spend more. Under the Fair Tax if you spend more you pay more. With the Prebate, the Fair Tax is progressive in that the net tax rate for those American families at the poverty line is a true ZERO; for those at twice the poverty line the net rate is about 11.5%; at 4 times poverty that family is about 17.2%; and the wealthy at 10 times the poverty line and higher, average between a 20 to 23% net federal tax rate.
The Fair Tax truly untaxes the working poor by eliminating the payroll tax of 7.65% and allowing the working poor to take home 100% of their paycheck and receive an additional $5,902/ year to cover the National Sales tax on essentials like clothing, food, housing, or daycare. (Family of 4)
Trillions of Offshore dollars that wealthy individuals and wealthy Corporations hold offshore because of America's current tax laws will return to US shores under the Fair Tax. This capital will find a tax free zone in America and want to invest in American Manufacturing and business that will not only sell to Americans at home but to the entire world. American Exports will not have the 23% national sales tax on them for export. These exportable products will also drop in price because we have removed a major cost element from the supply chain. With no business income or payroll taxes, the cost of those products will go down. With no IRS you reduce the compliance costs dramatically for complying with the IRS rules and regulations. This savings throughout the supply chain will also be reflected in a lower price at home and for export.
It depends on the economist and it depends on the economic model but the estimated price drop on products and services is between 10 and 25% on average. Something you bought for $100 under the income tax will drop to somewhere between $75 and $90 dollars. When you add in the National Sales Tax the final price will be between $97.50 and $117.00. (30% exclusive tax rate equals 23% inclusive or income tax equivalent rate)
Under the Income tax a lower middle income tax family had to earn $129 in order to take home $100. This is based on a 15% income tax withholding and a 7.65% payroll tax withholding.
Under the Fair Tax you take home more money and you have more money to spend even after buying the same items and paying the Fair Tax. You take home $129 and spend $117 with the Fair Tax to buy the same $100 worth of goods you bought with $100 in take home pay under the archaic Income and payroll tax system. You are $12 ahead and on top of that will receive the monthly Prebate check.
Under the Fair Tax Legislative package you lower taxes on business; you give them the incentive to produce and manufacture here within the US and not in China or India, or Mexico.
The way to compete in the 21st Century is not to cut our wages in half. The way to compete in the world is to provide the incentive for business to do business inside the US.
The Fair Tax Legislative package does so much in so many ways. Our American Economy will boom when American manufacturing is growing in the US. The Fair Tax is the best vehicle to do that.
When the Lobbyists and their paid economists come out against it beware. With out the convoluted tax code, Lobbyists, Congressmen, congressional aides and "K" Street will lose a lot of their power and influence. If they come out against it than it must be good for average American families.
Every Politician that came out in support of this idea last election cycle won. This is a winning issue for politicians and when average American people are presented all the facts of the Fair Tax 80 to 90% love it. Get the Facts at www.fairtax.org
If Average American workers can get people like Lou Dobbs and Bill O'Reilly to truly study all the facts that support the Fair Tax, perhaps we can get them to join the over 75 economists that wrote a letter to Congress last Spring in support of the idea. The Fair Tax is the most comprehensive solution to aid American Workers, American Families, American Manufacturing and the American Economy.
LMAO @ #153 !
Instinctively I agree with you. However, who knows the pressure that would be placed on the few groundbreakers.
And your point is????
Do you agree with Nightie that costs and prices are unrelated (or meaningles) or not. Ruminating about hypothetical situations doesn't answer the question.
The price I can charge for an item has no relation to what it costs me to produce it.
But, of course, if the value is not larger than my costs the I will not be in business for too long as I will not make money. This can happen because you are very efficiently making products that are not valued, or inefficiently making products that are valued. In either case, the market cares nothing about your costs.
Another self proclaimed economist.Your posts are always about me. I noticed you couldn't dispute the fact of the hidden tax increase built into your scam...Errrr, I mean scheme.
My economic model showing proving a hidden tax increase is more accurate than merrillbender's new, improved, updated (to cover the previous lies) 10% price reduction ...
By way of follow-up, isn't it a hell of a coincidence that as crude oil prices have gone up for the past few years, so has the per gallon price at the pump?As well as record profits...Your point is?
Thanx for the link ... and a GREAT gravestone for the Income Tax (and its many lovers).
Your appearance on these threads is greatly appreciated by non-Squirrels.
Unlike you, I'm not so concerned about those in the illegal economy (drug dealers, etc.) or the poor receiving the prebate since the prebate is legally available to any who qualify under the FaiTax bill (which basically are those with a bona fide S/S # who are lawful residents of the US).
These people will all be paying taxes at the same rate so the prebate represents the taxpayers geting back some portion of their taxes as a refund.
Another straw man Robbie. that's not even the issue re taxation. We aren't discussing pricing strategy here, but taxation and its effect on helping to lower prices.
Or perhaps you believe that tax costs are not part of final prices of things???
What "hidden tax increase" are you referring to Looey.
And what "scam" for that matter. I see neither.
Louie has espoused that bizarre economic notion in the past, also. He may have taken such a battering that he has abandoned it by now, however.If you're going refernce me with your wanton idiocy you can at least shed your cowardice and put my name in the "To" box. I know HTML is too much for you to comprehend but certainly you know how to follow the instructions printed right above the "To:" box.
There is no absolute for cost VS price. Costs, taxes and wants don't dictate prices moron. If they did we wouldn't be talking about corporate losses.
Having auto dealers pay 23% of their gross income in taxes from every sale isn't going to help the auto companies lagging sales.
The dollars already held are mostly in tax deferred investments like IRA and 401K plans. All of which are dollars that would be taxed under the income tax system.
Only dollars your statement applies too is a passbook savings account or an investment portfolio outside your IRA.
NET NET most Seniors with such invstments or savings are ahead with the Fair Tax.
A conservative price drop of 10% means only a net increae of final price with tax of 17% which is certainly offset by the elimination of the income tax on those IRA and 401K investments.
Any capital gains from investment in property including ones primary home will be an additional offset.(depending if you have used the one time housing exemption).
Their value has just jumped and allows for purchase of used items with no tax consequence. Allows the withdrawal and investment with no consequence; allows the gifting with no tax consequence.
Most improtantly, the retired generation can leave a better tax system that will sutain America for their Children and Grandchildren. Our current tax system of income and payroll tax cannot sustain Medicare, Medicaid and Social Security at our current rates of taxation. The going into the red year I belieeve is 2042 for SSI and much earlier for Medicare and Medicaid. I believe 2025 ot 26?
Either Payroll taxes alone will have to double or the programs they pay for will have to be cut drastically. Is that what you want to leave yur Grandchildren.
The Fair Tax provides a foundation for the kind of economic growth that could grow our economy out of some of that problem.
The Fair Tax provides a broader tax base where everyone contributes to Social Security and Medicare everytime they buy a product or service. It is not Fair to Saddle every 2 working Grandkids with the heavy burden of supporting just one retired Grandparent.
To many people are ME-ME and my retirement savings, instead of looking at other beneftis of the Fair Tax for America's Future.
The fact is that most Seniors will use up what they put into Social Security within a few short years. The payroll taxes were much lower in the 1950s and 1960s. So to were the wages. The payroll tax money paid in 1965 paid for a retiree in 1965. It was not put into a savings account getting interest. Even as Social Insurance, it would be a failing and bankrupt system under Insurance and banking Laws.
After a few short years a retiree is living off someone else's hard earned income. I don't think that is a fair system at all.
The Fair Tax makes social security and Medicare everyone's responsibility. Whether it is investment income or wage income. Capital Gains or rental income. When any dollar no matter how earned or recieved is spent it helps to support SSI and Medicare.
That is better for future Seniors, better for our Grandchildren and better for America.
"I admit that it seems to contain an element of socialism in that the tax rebate would apparently go to families who have little or no visible income, this could mean that drug dealers and others who operate on a strictly cash basis might be collecting a monthly stipend from the taxpayers."
Some Americans may have little or no visible income, but there are no Americans (above ground) who don't consume. Remember that consumption is the base for the sales tax. Are there some who may consume less than the poverty level? Sure, but that seems a small compromise to make to greatly streamline our system of tax collection, remove an enormous economic anchor, make us more competitive in an increasingly global economy, and realign our tax system with our constitutional principles. I would hazard a guess that there are few Americans who consume less than 50% of the poverty level compared to many, many who consume far more.
As far as drug dealers are concerned, they will still be paying the tax on consummable items they buy at the store. I dare say that most of them will be consuming well above the poverty level, so on a net basis they become direct taxpayers for the first time. From that perspective, the FairTax is an improvement over the current system.
In addition, illegal immigrants move from a tax preferenced position to a tax disadvantaged one (because they would not get the rebate).
There is nothing wrong with healthy skepticism about anything as new and as clean a break from the past as the FairTax. Every FairTax supporter that I know started out as a skeptic. However, none of us started out as SQLs (Status Quo Lovers) and that is the big difference. The FairTax may not be perfect, but it is a huge improvement over the current system and significantly better than alternative reform proposals. For many of us, that is good enough to get our support.
By way of follow-up, isn't it a hell of a coincidence that as crude oil prices have gone up for the past few years, so has the per gallon price at the pump?And isn't it a coincidence that today Exxon reported record profits. $36.13 billion for the year! So, obviously, the market price they were able to get for their products was way above their costs.
The dollars already held are mostly in tax deferred investments like IRA and 401K plans. All of which are dollars that would be taxed under the income tax system.
Only dollars your statement applies too is a passbook savings account or an investment portfolio outside your IRA.
NET NET most Seniors with such invstments or savings are ahead with the Fair Tax."
Not to mention that several investment managers have indicated that they expect the DJI to double within 24 months of passage of the FairTax. That may not occur; the increase may only be 50%. However, even that gain would substantially change the financial picture for most seniors with significant retirement assets. This would certainly dwarf any additional post tax price increases of their toilet paper and Metamucil, especially since the rebate offsets that up to the poverty level.
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