Posted on 02/06/2023 1:27:31 PM PST by Taxman
In my over 30 years of working with volunteers who advocate replacing the income/payroll tax system with a national retail sales tax, one thing that I have noticed is that our volunteers have always been driven by the desire to help our great nation and future generations. None of these advocates are looking to make money or obtain other types of gain for themselves. In fact, most of us have paid our own expenses associated with the effort with no expectation of being reimbursed.
Advocates for the national sales tax come from every religion, every line of work, every economic level. They all recognize that the FAIRtax is vastly superior to the income tax in every measurable way and can’t understand why the people in DC don’t embrace it. After all, they’re supposed to be doing what’s best for us as individuals and for the country as a whole.
Retired Senator Russell Long, who was the head of the Senate Finance Committee for many years, told me that he understood the arguments for the FAIRtax and agreed that it had many advantages over the current income tax. Then with a twinkle in his eye, he said, “Coming to D.C. and telling us that we should replace the current tax system with the FAIRtax just because it is logical and good for the American people and thinking that we will immediately grasp this and do it, well that makes as much sense as going to a monastery to meet girls.”
THE 30% LIE
Now that the FAIRtax is going to be voted on in the House, the establishment is really scared. They are screaming about how bad the FAIRtax is for the American people, and the media is making sure that those screams are being heard throughout the country. They’re focusing on one tiny sliver of the whole story—that everyone is going to have to pay a massive 30% sales tax on everything they buy.
None of these hit pieces include any of the following facts about the FAIRtax:
• We get to keep our whole paycheck and pay taxes only when we make retail purchases of new goods and services.
• We don’t pay taxes on our retirement income because the FAIRtax is only paid when retail goods and services are consumed.
• We can save and invest completely tax free—an unlimited IRA.
• If they mention the prebate at all, it’s portrayed as a massive new entitlement or even a Universal Basic Income plan. They don’t point out that it’s actually a tax refund that makes spending up to the poverty level totally tax free. This means that lower and middle-class taxpayers won’t pay anywhere near 30% of their income in taxes.
• The FAIRtax rate is a 23% tax inclusive rate and at 30% tax exclusive rate because that is the rate needed to replace the revenue generated by the income, estate, gift and payroll taxes it replaces and provide the prebate.
• Tax inclusive means that the amount you pay includes the tax. For example, $100 would be $77 for the product and $23 for the tax.
• Tax exclusive means that the amount is additional to the amount. If you pay $100 then the tax is $30 which is 23% of $130.
• The FAIRtax shows everyone the true cost of government on every retail receipt.
• We are already paying a disguised consumption tax. The only money we can use to purchase goods and services is from our net paycheck—the amount left over after federal taxes are taken out. This means that almost all of us have to earn $1.20 to $1.80 to net $1.00 that we can spend.
• The FAIRtax will bring financial stability to Social Security and Medicare by extending the tax base from just those working for a paycheck to everyone whose spending exceeds the poverty level.
• Even if we pay the same amount of federal taxes because of our spending habits, isn’t it better that we are in control?
• We have no forms to file and no IRS!
THE IMPACT ON LOWER INCOME FAMILIES
Another common myth is that the FAIRtax harms lower income people.
This is easy to disprove.
Present Income Tax
Today, if a family of four earns $3,333 per month or $40,000 annually, each check they receive is reduced by federal taxes. The payroll tax rate is 7.65% or $255 per month ($3,060 annually). In addition, according to the Nerdwallet.com calculator, they will owe an estimated $1,410 in income taxes and this reduces their paycheck by $117 each month. This means that they will owe a total of $4,470 or $372 in federal taxes withheld from their paycheck each month giving them a net check of $2,961.
However, this family, if they file complicated forms, will receive the earned income tax credit. According to the IRS EITC Assistant, this family will be eligible to receive $3,274 in the earned income tax credit which reduces their federal taxes to $1,196 or $99 per month and this increases their paycheck from $2,961 to $3,232 dollars per month.
This means that the family has $37,784. Their effective tax rate is 3%.
Of course, obtaining the earned income tax credit is not simple and often requires low-income people to use a paid tax preparer, like H&R Block.
FAIRtax
Under the FAIRtax, there is no withholding. There are no forms to file and no tax preparers to pay. The family receives the entire $40,000 or $3,333 per month.
A fundamental principle of the FAIRtax is that the family is not taxed on the amount of spending up to the poverty level published by the U.S. Department of Health and Human Services each year. The 2023 poverty level for a family of four is $39,440 per year which is $3,287 per month. When the family makes purchases of new retail goods and services, they will be charged the FAIRtax. The FAIRtax provides the money to pay the FAIRtax, for up to $3,287 per month, by transferring to the family’s bank account a $756 prebate on the first of each month.
$756 is the amount of FAIRtax the family will pay on $3,287 per month of spending on new retail goods and services.
So, at the first of the month, the family has $756 plus their monthly income of $3,333 or $4,089 in their bank account. When the family purchases new goods and services each month, the $756 of FAIRtax that is owed on $3,287 per month of purchases is paid from the family’s bank account. The family has not paid any FAIRtax with their own money but uses the $756 prebate they received in their bank account.
However, if the family spends more than $3,287 per month on new goods and services, they, they will have to pay the 30% tax exclusive rate on the excess amount. If the family spends their entire income of $3,333 per month, they will pay the FAIRtax on only $46 per month, $3,333 minus $3,287. That means they will pay just $13.80 per month or $165 a year out of their own pocket.
The family has $39,835 of net spendable income contrasted with $37,784 under the present system.
This is not a 30% tax rate but a .0041% tax rate on their $40,000 of income contrasted with the 3% tax rate they pay now.
So which is better, paying $1,196 in federal taxes under the income tax, or paying $165 a year under the FAIRtax? Since the FAIRtax is only charged on new retail goods and services, if the family spent $5,000 per year on payments for a used car, they would not pay the FAIRtax on that amount and not have to spend $94.50 per month, or $1,134 (one-eight of the $9,071 prebate). The prebate is their money and they can use it however they choose.
In that case, under the FAIRtax the family making $40,000 has an additional $2,164 ($1,030 less in taxes that would have been paid under the present system plus $1,134 of unused prebate) to spend for their family each year than under the present income tax. Here is a comparison.
CONCLUSION
We now have the opportunity to force all Members of the House to either vote for the present income/payroll tax system or the FAIRtax.
They either support the corrupt income tax and the IRS or they want to get rid of it. It can’t be any simpler than that.
They either believe in being transparent and showing Americans the true cost of their government or they don’t. They either support the largest transfer of power from government to the people, the FAIRtax, or they don’t. If they think that the FAIRtax needs to be changed, then they can propose the change. Don’t condemn the entire bill because it has a “flaw” that can be easily addressed. And don’t think for a minute that there aren’t any flaws in the income tax.
As Martin Luther King, Jr. said, In the End, we will remember not the words of our enemies, but the silence of our friends.
Please stand with us and demand that your representative support a much fairer, much simpler and much more efficient way to fund the government—the FAIRtax! The FAIRtax doesn’t pick winners and losers. Because it taxes spending, not earnings, the FAIRtax lets everyone save for their retirement tax free.
The FAIRtax collects the revenue that the federal government needs to operate but does it in a way that has the least impact on our individual freedom and the least impact on our economic prosperity.
There are no tax returns to file and no records to keep. We pay our federal taxes when we make retail purchases of new goods and services, and there is no need for the IRS. If you sell a used couch or used jet ski online, there is no FAIRtax due on that transaction.
The FAIRtax will allow us to TAKE BACK CONTROL. The income/payroll tax system is broken and no longer working—we can’t repair it but we can replace it with the FAIRTAX!
Join us and TAKE BACK CONTROL OF OUR COUNTRY AND OUR LIVES—NOT WITH BULLETS BUT WITH THE ELIMINATION OF ONE OF THE BIGGEST THREATS TO OUR LIBERTY AND ECONOMIC PROSPERITY—THE INCOME/PAYROLL TAX.
We all should remember Edmund Burke’s warning that applies to our efforts to TAKE BACK CONTROL, “Nobody made a greater mistake than he who did nothing because he could do only a little.”
We should also remember this quote from George Orwell's 1984, which, if we do nothing, may foretell your and your children's future:
“If you want a picture of the future, imagine a boot stamping on a human face—forever.”
WHAT CAN EACH OF US DO?
We can write letters and make calls to our elected representatives and attend Zoom town hall meetings demanding that if they really want to allow Americans to “TAKE BACK CONTROL”, the first step is to eliminate the income/payroll tax system and enact the FAIRTAX! TAKE BACK CONTROL! Help us PASS THE FAIRTAX!
The IRS will be gone and we will pay our taxes when we make purchases.
WE and not the Ruling Class and their minions in D.C. will decide how much federal tax we pay!
WE will know how much tax we and everyone else are really paying because taxes will no longer be hidden from us. It will be clearly shown on every retail receipt.
If you have friends who don’t know about the FAIRtax, send them to FAIRtax.org. Have them watch the white boards under “How It Works” and, if they agree, ask them to please join us.
Then contact your Members of Congress and the President and demand that Congress pass -the FAIRtax—the only fair tax.
Is it hopeless? When confronted with a seemingly impossible problem, remember the statement attributed to the author George Bernard Shaw who wrote, You see things; and you say “Why?” But I dream things that never were; and I say “Why not?”
Isn’t it time for us to ask, “Why not?” HELP BRING ABOUT REAL TAX REFORM AND STOP FUTURE IRS ABUSES
By contributing (investing) $10.40 per month, you help provide a financial base to AFFT. If you can make larger contributions (investments), these will be used not for salaries, as we are all volunteers, but for the needed updates to our economic studies which will be vital for all future years.
Please go to https://fairtax.org/1040 to invest in AFFT and in your and your family’s future.
OK, FAIRtaxers, have at it!
Let us work together to push the FAIRtax issue in 2023!
Go to https://www/fairtax.org to get involved, please!
The national sales tax is a perfect, simple, tax which is why the bureaucrats in Washington, who make the tax code complex and difficult in order to keep their jobs, absolutely hate the idea.
A national sales tax means if you can afford lobster, you pay a higher tax than the guy buying bologna. If you can buy a top-of-the-line vehicle, you’re going to be paying a higher tax than the guy picking himself up a cheap used Ford Focus. It’s the only real, fair tax.
But MOST importantly, it makes sure the government is promoting prosperity (unlike, for example, right now). If the economy is good and people are buying things, government makes more money. If the economy stinks, government has to do with less.
Under those circumstances, you bet government is going to do its best to keep people buying and the money rolling in.
Implementation of this means the gubment tracks where you spend your money. No thank you. There's a reason lots of people like to pay in cash.
Older retired people have very little income,
live off of their savings and social security,
pay very little in the way of income taxes,
and do not want to pay a national sales tax.
While the FAIRtax is a potentially good idea, I prefer a flat tax of 15%. First $35,000 is tax free and then you pay 15% on everything after.
That amount is based on a model of average family spending at that income level. No tracking is involved or needed.
Flat tax is still on income and that is my problem with it ... complex interaction with the IRS.
I would only favor the Fair Tax if it involves a constitutional amendment forbidding congress from ever passing any form of income tax ever again.
A flat tax would last one, maybe two congressional terms and then the asshats would start tinkering with it all over again.
Their power to grift lays in their power to tinker with the tax system and they know it.
The present progressive income tax system has been a massive transfer of wealth for a long time. They will not let go of that easily.
Very wealthy people save and invest. Mostly that is why they have a bigger chunk of Cash. If you will notice as we lowered the taxes of very upper class and even moderately wealthy persons they become more and more Democrat. So unless they really spend massive amounts of their money they end up the winners. It’s just like the poor. The less they pay in taxes and the more they receive from welfare state the less they care about spending. The rich can have their lower taxes and get their government contracts, subsidies and spend government money on their pet projects (especially since they run both parties). The flat tax is clearly self defeating.
100% for the FairTax.
Have been for years!
Old people will get the prebate, and only pay tax on new items...
As a retired CPA living off my retirement income, I am frequently told a myriad of reasons why I should oppose the FairTax. Those reasons are BS. I am 100% behind the FairTax. Thank you for your post.
You would think this would be something the people would want?
Yup. Most Americans have no clue what they pay in Federal taxes. They do see the state and local retail sales taxes on retail receipts though. If they saw the tax on a retail receipt they might catch a clue.
Particularly when I’ve already paid the taxes on the money in my savings accounts.
Not to mention the money tucked in my mattress. And the money I used to buy untraceable gold.
Preach!
The “fair” tax is simply to large for me to support this particular incarnation of it.
No more than 10%. When you consider all the massive taxes collected on everything they can live on 10%. They just would have to stop the unchecked spending sprees they will not stop themselves from doing.
No more than 10%, and I am on board. IRS can then go bye bye which would help cut expenses.
This will never happen, however. DON’T HOLD YOUR BREATH.
Taxes in this country have zero to do with covering debt. Taxes are all about control and punitive penalties over regular people. Even former fed chairs have admitted this truth.
It started out at 10%.
Then went to 17%.
Now it’s at 23%.
And that’s by the proponents.
Once it actually got through, it’ll be up around 40%.
I know. I’m an optimist.
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