Gross personal income will decline. Net personal income will remain flat, disregarding any affect the policy has on the growth of GDP and personal prosperity.
For instance, if your annual income is $60,000 and you are paying $9000 in federal income tax, an income of $56,000 and federal tax bill of $5000 will net the same disposable income of $51,000.
The adjustment would not be instantaneous upon implimentation of the policy. It will take some time. The The transition period will be eased by the stimulation of business provided by the flat 9% business tax. GDP will grow rapidly. The income advances that would normally accompany such growth will be moderated by the adjustment necessary to gross income. Most Fair tax proposals to date have include a prebate, which is a suitable mechanism to moderate the effect of price and income adjustments during the early stages.
Whether it is Cain’s 9-9-9, or a jump to a full Fair Tax, mechanisms need to be in place to moderate the effect of prices and incomes adjusting to the new system. Remember at the time of implementation, all existing inventory will already have a full tax burden embedded. You would not be able to literally flip the switch without blowing a fuse.
Gross personal income will decline.I'm self-employed. Why would my personal income decline?
Remember at the time of implementation, all existing inventory will already have a full tax burden embedded. You would not be able to literally flip the switch without blowing a fuse.You might want to read the Fairtax legislation, it's already taken care of there.
Sorry, but just throwing out numbers that magically compute doesn't impress me...it makes me even more of a skeptic...hence my tagline