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Fair Tax Solution for Ford, Delphi & American Manufacturing
The New Media Journal.US ^ | January 28, 2006 | Merrill Bender

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.


TOPICS: Business/Economy; Constitution/Conservatism; Government
KEYWORDS: amoronlooey; economy; fair; fairtax; fraud; fraudtax; ignoranceisstrength; scamtax; tax
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A real life example of the benefits of the FairTax. Not intended to take management the unions or the government off the hook for the current mess. Just looking at a solution that is available.
1 posted on 01/28/2006 1:15:45 PM PST by Eaglewatcher
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To: Eaglewatcher

A crock.

How much tax do you think GM and Ford are going to pay with the losses they are running.

They aren't getting bankrupted by taxes, but by pension liabilities. (And to a lesser extent, health care liabilites).

If this is the way fair taxers think, you have to question everything they say.


2 posted on 01/28/2006 1:30:41 PM PST by PAR35
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To: PAR35

You made a good point, and didn't even know it.
How much are Ford and GM going to pay in taxes while running huge losses?
Zero.
How much FICA and income tax will be paid by the laid-off workers?
Zero.
How much will we spend on unemployment, health care and welfare benefits for these workers and their families?
Megabucks.

This is good for our country as a whole exactly how?

Wiser tax and trade laws would encourage manufacturers to locate here. Of course, efficient non-union businesses would still crush the union dinosaurs- but the jobs would stay in this country.
If Ford shuts down a plant, and Honda reopens it the next day with a fairly compensated non-union workforce, that's good for the country. And Honda will be forced to pay fair wages, or the best machinists and assemblers will go work for Toyota or Subaru.
If Ford shuts down a plant, the workers end up on welfare or in dead-end service jobs, and the plant is razed and the high-tech machinery sold to China, that is bad for the country as a whole.


3 posted on 01/28/2006 1:47:58 PM PST by Ostlandr ("In a mature society, the terms 'civil servant' and 'civil master' are semantically equal." -RAH)
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To: Eaglewatcher

Suggest taxing the oil companies for their gluttony of profits to help out the auto industry since they're intertwined with each other.


4 posted on 01/28/2006 2:14:54 PM PST by lilylangtree
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To: Ostlandr
And Honda will be forced to pay fair wages, or the best machinists and assemblers will go work for Toyota or Subaru.

Honda won't be forced to do anything. If the unemployed machinists don't want a job, they can just sit on their fat butts drawing those wonderful union benefits. The glut of available labor is going to depress wages. Thousands of applicants for tens of jobs puts the employer in control of compensation.

5 posted on 01/28/2006 2:19:53 PM PST by Myrddin
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To: Myrddin

Last I knew we had a shortage of machinists, and a critical shortage of skilled, experienced machinists.

Gee, wouldn't it be terrible if the free market started determining wages, with the best employees getting the highest wages, and miserable, back-breaking jobs paying more than cushy ones?


6 posted on 01/28/2006 2:28:02 PM PST by Ostlandr ("In a mature society, the terms 'civil servant' and 'civil master' are semantically equal." -RAH)
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To: 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

What are you, smoking dope? American manufacturing LOSES MONEY. It doesn't pay income tax, BECAUSE IT DOESN'T HAVE INCOME.

And since the Scam Tax, sorry - FairTax(tm) taxes consumption, manufacturers of consumer goods will bear a disproportionate burden of the ScamTax(tm).

But then again, logic is not a strong point for you guys.

7 posted on 01/28/2006 2:33:17 PM PST by Fido969 ("Everybody out of the pool!")
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To: PAR35
They aren't getting bankrupted by taxes, but by pension liabilities. (And to a lesser extent, health care liabilites).

Does anyone know any particulars about the pension/healthcare plan. I have heard that workers are able to retire at fairly early ages. Are they eligible for full pension at that time? Is their healthcare plan fully or nearly fully paid? Do they HAVE to go on Medicare at age 65, or do they have the option of staying on the company plan? I have a felling I know the answer to a lot of these questions and it is no wonder the companies are broke.

8 posted on 01/28/2006 2:44:39 PM PST by REPANDPROUDOFIT
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To: Eaglewatcher; ancient_geezer; pigdog
Mr. Bender is spot on target across the board with this one!

Our current communist inspired tax system is monster killing our manufacturing base and far to few realize it. Mr. bender isn't amoung them obviously!

Great post!

9 posted on 01/28/2006 2:45:08 PM PST by Bigun (IRS sucks @getridof it.com)
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To: Eaglewatcher
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!!

This is not true. The economic simulations of the FairTax plan assumed that workers would not keep all of their current pay, they would keep 100% of their new smaller pay. By far the largest tax revenues come from income and payroll taxes and only by eliminating these costs from businesses can manufacturers become more competitive.

See the thread below for more details rather than rehashing the whole misrepresentation which Boortz has admitted should have been written differently. There is no "Keep 100% of your current paycheck" with the FairTax unless prices go up about 18-20%.

See this thread:

JORGENSON EXPLODES FAIRTAX MYTH (FR Exclusive)
  Posted by RobFromGa
On News/Activism 08/25/2005 12:40:44 AM EDT · 702 replies · 9,117+ views


10 posted on 01/28/2006 2:51:59 PM PST by RobFromGa (Polls are for people who can't think for themselves.)
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To: Ostlandr

Toyota and Nissan aren't about to re-open closed Ford or GM plants, nor will they be willing to hire the ex Ford or GM employees no matter what the tax policies are. (Honda, for some reason, is willing to build in unionized areas). So Nissan locates in Tennessee or Mississippi, and Toyota goes to Texas or Tennessee, the Koreans go to Alabama, but no one is going to want the Ford or GM plant in Atlanta, or any of the other factories that the dying companies are shutting down.

At this point, even protectionist duties aren't going to help the Americans.


11 posted on 01/28/2006 2:55:58 PM PST by PAR35
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To: Fido969

Look who's talking about logic not being a strong point ... manufacturers are not taxed under the FairTax.


12 posted on 01/28/2006 3:23:47 PM PST by pigdog
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To: pigdog
Look who's talking about logic not being a strong point ... manufacturers are not taxed under the FairTax.

They're not taxed under the "income tax" either, Einstein - BECAUSE THEY DON'T HAVE ANY INCOME.

13 posted on 01/28/2006 3:27:30 PM PST by Fido969 ("Everybody out of the pool!")
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To: RobFromGa

Youf're still posting the link to your misleading vanity site which does not show what you claim it does. Workers pay will certainly go up greatly with the elimination of payroll taxes.

It's not The FairTax Book that has the misrepresentations - it's your vanity posts! You keep spewing your nonsense in your posts and that "stuff" has been repeatedly rebuffed by several FairTax supporters.


14 posted on 01/28/2006 3:30:15 PM PST by pigdog
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To: PAR35; Taxman; ancient_geezer; Principled; EternalVigilance; rwrcpa1; phil_will1; kevkrom; ...

One of the reason that the companies that export are running at a loss is that their export prices are higner than they need to be bec ause of the income tax component that is embedded in the prices of things going to other countries.

This is one of the things the FairTax helps to correct.


15 posted on 01/28/2006 3:34:30 PM PST by pigdog
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To: pigdog

I want to be on record - I strongly support this legislation. I need to start writing some letters on this. I'm right in the middle of a move, but when I get done - I need to get on it!


16 posted on 01/28/2006 3:45:41 PM PST by Raffus
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To: Fido969

Companies that don't have any income have a problem that the fair tax can't solve. They should go out of business and be replaced by companies that do have income. The fair tax wouldn't be a hindrance on viable companies like the income tax is.


17 posted on 01/28/2006 3:48:39 PM PST by groanup (Shred for Ian)
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To: pigdog

You have proven repeatedly that you are not mentally equipped to understand this legislation and I have no intention of rehashing the same old discussion with you. The record is already there on the previous threads.

I happen to be one of those people who knows that this FairTax has no chance of getting passed since it is a big lie, so I am not spending any time worrying about discussing it again. I'm just pointing out to any new people thinking about jumping on the FairTax band wagon that there are major flaws in the way it is being sold, including in this article which perpetuates the "Keep 100% of your paycheck" Free Lunch myth which has been totally exposed as wrong even by Boortz himself.


18 posted on 01/28/2006 3:51:12 PM PST by RobFromGa (Polls are for people who can't think for themselves.)
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To: Raffus

That'd be great ... please do so. And encourage others to do that, too! Every single bit of input helps.


19 posted on 01/28/2006 3:51:17 PM PST by pigdog
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To: pigdog
I need to get more involved in politics in Maine where I'm moving. A blue state, but there are some patriots there. I absolutely abhor Vermont. I'm sooooooooooooo out of Vermont. Good riddance!

I'll have to start by writing the RINO senators of ME.
20 posted on 01/28/2006 3:55:26 PM PST by Raffus
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