Replies

tpaine,

By the logic Always Right uses, the current Income Tax refund must also be called 'welfare'. In fact, the income taxes that would otherwise be owed if not for the Personal and Child exemptions would also need to be called 'welfare'. Obviously, nobody looks at it that way.

The FCA under the FairTax is nothing more than a monthly tax refund check based on an assumption that everyone spends at least up to the poverty-level. That is not necessarily true for some very low-income persons, but it is quite small and doesn't justify somebody calling the FCA a $500B 'welfare' program.

Only 12% of the population lives below the poverty-line, and many of those counted are in the illegal alien category that won't receive any FCA. However, even if ALL 12% purchased NOTHING and ALL of them received FCA, it would only be a $60B welfare program. Obviously, if you remove the illegal aliens portion of FCA payments and admit that EVERYBODY will be buying SOMETHING and therefor entitled to SOME FCA, the magnitude of the 'welfare' aspect drops dramatically. The term 'welfare' should be limited to money received from the government that exceeds the taxed paid to the government. The portion of the FCA that could be properly called 'welfare' is more like $15B. This is actually LESS than the EITC overpayments under the Income Tax system.

Always Right also likes to twist the 'embedded tax' figures vs. illegal aliens argument to his benefit. He says illegals are already paying taxes because of the embedded tax -- which is true -- but he implies there will be little additional tax revenue from them under the FairTax -- which is false. He has used a price drop figure of 10%, which means the illegal alien is theoretically paying 10% of their purchases in embedded taxes. Under the FairTax they would be paying 23% of all purchases in taxes. So their taxes will more than DOUBLE.

On top of that, the 'embedded tax' costs are not all money remitted to the government. Some of it is just compliance cost that is spent by businesses on tax accounting, planning, etc. so it is built into the prices, but the government doesn't receive any revenue from it. Except third-hand as income-tax revenue on the profits of the vendors providing those services. This is why the government has only received 8%-10% of Retail Sales as taxes from businesses, but the embedded costs cause prices to rise by an additional 3%-4% above and beyond that.