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To: Kellis91789
With respect to your F4 (Family of Four) example:
My example of a family of four earning $100K was to illustrate the absurdity of how the FairTax can be gamed into a clearly middle-class family paying a low effective tax rate. A family of four has a prebate that cancels out the first $26K in retail purchases. So $100K - $10K - $10K - $20K - $26K = $34K FairTaxable spending, and a FairTax collected of $7,800 at 23%. At 25% it jumps to $8,500 on the same $34K FairTaxable spending.
Your figures aren't quite current but close enough for example purposes so let's take them as presented. Actually this is not an example of "gaming the system" at all but an example of how the FairTax is intended to work.

If the F4 family has a low effective tax rate under the FairTax - and as you presented the data - that seems quite likely, think about what happens with the money not spent but saved/invested. This means that they are contributing to the build up of capital and therefore helping bump up the economic activity by such capital investment. So even though some of their income is not taxed for consumption it does help our economy. At present that income would be lessened by income taxes and not be so available for investment.

One of the concepts behind the FairTax is that the consumption tax has a broader base than the income tax and therefore the individual effective tax rate will drop compared to the income tax rates. This helps drive capital investment assuming the sort of situation your example describes. So I genuinely don't see your example as gaming the system but as a reasonable operation of the consumption tax as spelled out in HR25.

Also, I don't know that keeping all things (spending, savings, etc.) the same but increasing the tax rate is any more realistic that doing the opposite - keeping all things steady but decreasing the tax rate. I don't see that modifying the example either was contributes much to the understanding of the FairTax. And I don't consider the normal operation of the consumption tax as "gaming" anything - unlike many situations under the income tax.

745 posted on 01/06/2008 4:20:49 PM PST by baybabe
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To: baybabe

[And I don’t consider the normal operation of the consumption tax as “gaming” anything - unlike many situations under the income tax.]

The entire FairTax is “gaming” the system of fair and equitable taxation to fund necessary government spending. In my example, the family earning $100K ends up paying barely half as much in taxes as the $15K they currently would pay on SS/M alone. Yet they still get full credit and future benefits equal to what would require a $15K contribution today. Which means their actual tax contribution for necessary government spending — like national defense, judiciary, etc. to protect their lives, liberties, and pursuit of happiness — is ZERO. People should not get something for nothing.

If I had to list the single most dangerous idea to the continued prosperity of America, it is the notion that it is OK to pay nothing for necessary government. There are millions of people out there that think they “don’t make enough money to have to pay taxes”. Yet government costs money, and if it doesn’t come from that person, it must come from their neighbor. People are either willfully ignorant of this fact, or knowingly approve of the government robbing their neighbor rather than shouldering their own tax burden. These people have conspired to steal from their neighbors and should be despised just like any other armed robber.


757 posted on 01/07/2008 10:53:09 AM PST by Kellis91789 (Liberals aren't atheists. They worship government -- including human sacrifices.)
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