Posted on 04/13/2003 12:23:25 PM PDT by Remedy
FAIRTAX BUILDS MOMENTUM The FairTax
House Majority Leader Signs On To Linder’s Bill Abolishing the IRS Washington, D.C. - Congressman John Linder (R-Georgia) is pleased to announce that he has added more than 20 co-sponsors – including House Majority Leader Tom DeLay (R-Texas) – to his innovative tax reform legislation, the FairTax. Linder’s bill, H.R. 25, would abolish all federal income taxes, death taxes, capital gains taxes, and payroll taxes, and replace them with a national retail sales tax.
"The momentum behind the FairTax continues to build, and Majority Leader DeLay’s co-sponsorship is just the latest signal that support for the FairTax is growing," said Linder. "The bill now has 21 co-sponsors – more than any other fundamental tax reform legislation in the House – and they represent a bipartisan coalition of members from across the nation. Not only do my colleagues recognize the harm done to the American people by the overly intrusive and burdensome income tax code, their constituents recognize it every April 15th," continued Linder.
The addition of DeLay and 14 other co-sponsors in the last month alone is just the latest positive news regarding the FairTax. In February, the annual report of the White House Council of Economic Advisers stated for the first time that elimination and replacement of the complex and arcane federal income tax code with a consumption tax would increase efficiency in the tax system and promote investment and growth. The report stated that a consumption tax, like the FairTax, could very well be the most suitable replacement for the income tax system.
I am the primary sponsor of The FairTax. The FairTax is one of the most exciting proposals to ever reach the American people. It offers long-needed tax relief – in the form of lower prices, nearly nonexistent compliance costs, and the ability to choose how much to spend in taxes – to all Americans, while eliminating the income tax and allowing Americans to keep 100 percent of their paycheck. The FairTax will dramatically reduce prices, protect and ensure funding of Social Security and Medicare, empower the low-income earners, and put choice and control back into the hands of every American. All the crucial elements are in place: a public that is eager and ready for a fairer tax system, and a Congress willing to seriously consider genuine tax reform. To be competitive in the next century and to renew the American dream, we must change the way we fund our national government. The FairTax Act:
• Repeals the all corporate and individual income taxes, payroll taxes, self-employment taxes, capital gains taxes, estate taxes and gift taxes.
• Imposes a revenue-neutral national sales tax on all new goods and services at the point of final purchase for consumption. Business-to-business transactions and used products (which have already been taxed) are not subject to the sales tax.
• Rebates the sales tax on all spending up to the poverty level. Results of the FairTax:
• Dramatically reduce the costs of goods and services by 20 to 30 percent.
• Allow you to keep 100 percent of your paycheck, pension, and Social Security payments.
• Gross Domestic Product will increase by almost 10.5 percent in the first year after enactment.
• Compliance costs would decrease by 90 percent.
• Real investment would initially increase by 76 percent relative to the investment that would be made under present law. While this increase would gradually decline, it remains 15 percent higher than under the existing tax structure.
• Exports would increase by 26 percent initially and would remain more than 13 percent above the level under the current tax system.
• Real wages will increase.
• Increases incentives to work by as much as 20 percent in many households, leading to higher economic growth and efficiency.
• Interest rates will fall 25 to 35 percent.
If you would like view the new FairTax PowerPoint slide presentation or consider the significant benefits of the FairTax in greater detail, please take some time to visit the "FairTax" section of my website located in the "Resource Headquarters." Which of the following tax systems do you prefer?
Current system is fine.:4%
IRS and a flat income tax:13%
A national sales tax.: 78%
None of the above.: 4%
760 total votes
What a fantastic proposal!
As far as I'm concerned, anybody who calls "income" a "fictitious entity" isn't worth having a discussion with anyway!
Now don't forget your promise!
Just keep your "thoughts" to yourself and it'll make me a very happy man!!!
Everyone seems to parrot your line but where's the proof or even an example?...Will there be price controls?
Like I said, try doing a little reading, my answer to your question was already in my post...services currently include all costs & taxes used to produce the service, labor supplies, expenses, all taxes the provider already has to pay, payroll taxes, income taxes etc. They are hidden in the cost of the service and with the NRST they will be out in the open. Do you really think when you pay for a service or good the taxes paid by the provider are not included? Does a for profit business/service pay the taxes for you out of the goodness of their heart & out of their own pocket? How would you price your product or service? To make a profit you would have to include all expenses and costs, otherwise you would be losing money and soon out of business (of course then you wouldn't have to worry much about taxes, either income or consumption)
You are already paying more than 23% tax in the cost of goods & services, but it is hidden. No price controls are necessary in a free market, competition will do the trick, if production of goods & services becomes more efficient and costs less to produce prices will drop. Conversely if production of goods or services becomes less efficient costs prices will go up. Competition, supply & demand is what determines prices, whether there is an income tax or consumption tax or no tax.
http://www.digitaleconomist.com/equilibrium.html
Q: Why don't businesses have to pay taxes and pay their fair share?
A: Under any tax system -- income or consumption -- businesses do not pay taxes. Businesses only collect taxes for the government in the form of higher prices or lower wages. Business taxes and compliance costs are simply costs of doing business that are reflected in their bottom line.
Under any tax system, only consumers pay taxes. (Only consumers have no one else to whom they can pass the cost of the tax along.)
If businesses only collect taxes, and only consumers pay them, we should set up our tax system to reflect that economic reality.
By eliminating the business taxes and compliance costs hidden in the price of every good or service and exposing those burdens in a single, flat sales tax rate that consumers pay, the NRST creates the simplest and most economically efficient system yet proposed.
It should, but none of the proposed changes to the tax code have addressed these issues
It's like our elected representatives don't even understand how running a business or working with the tax system works - oops, my bad, i forgot
THEY DON'T
Well since I already have a service business I can tell you matter of fact.
If my current service rate is $100.00 an hour, after the new "gross payment tax" my rate would have to be $130.00 an hour.
Why?... Because I would be required to collect and remit 23% of my gross income and because the employee is expecting to get 100% of his/her wage with no deductions...no price cut there...Also, though I would no longer have an income tax, I still would have to pay the exorbitant sales tax when I choose to spend my money...Again, no price cut.
C'mon, not even the Republicans would give up that power/control.
Here's an excerpt from (the fairtax) HR25:
That doesn't even address the banking laws requiring banks to report (I think $3,000) cash or other suspicious deposits made by you.
Well since I already have a service business I can tell you matter of fact.
If my current service rate is $100.00 an hour, after the new "gross payment tax" my rate would have to be $130.00 an hour.
Why?... Because I would be required to collect and remit 23% of my gross income and because the employee is expecting to get 100% of his/her wage with no deductions...no price cut there...Also, though I would no longer have an income tax, I still would have to pay the exorbitant sales tax when I choose to spend my money...Again, no price cut.
I suppose to begin with in the transition period, you may price your product accordingly, but with price cutting by competitors I doubt you would be able to maintain the higher price based only on the tax. Like the war in Iraq when one system/regime changes there are some pains.Competition will equalize the market in short order and prices will come down whether you lower yours or not is up to you, but to be competitive you will have to meet the market.
Your employees may expect the same net pay, but certainly you can chop off social security taxes & medicare taxes from your overhead and theirs, thus their gross may decrease but net remain the same. Your costs of compliance & payroll costs will go down allowing you to charge a lower price and make the same profit margin. How much of the $100 per hour is payroll costs? over 15% of the employees rate, maybe $ 3-9 dollars an hour, 3-9%? Eliminate that and what do you get? How many hours and how much money do you spend per year complying on a business and personal level with current tax laws and how much would you spend under a NRST? What does that cost you per hour of services you provide, another 5%? Is your time a freedom worth anything?
As for payng the exorbitant sales tax, it would be on products or services that are reduced in price by competition and lower costs.....not so exhorbitant after all IMO if prices dropped only 15-20%....
Will you spend all your money or save some of it? You will only pay consumption tax on that portion you spend. Will your effective tax rate be higher or lower, considering the rebate and the loss of all payroll taxes including SS? If you save money the interest on that money will not be taxed until you spend it on consumption.
Are you happy with the present system?
To me it is very inefficient and does not make economic sense. The only loosers under the NRST as I see it are those in the accounting or legal tax field and the IRS.....
Let me guess your service business will be one of a few negatively impacted by the NRST?
http://www.salestax.org/library/cain_5-9-02.html
some excerpts
Consumer prices would decrease 20 to 30 percent by eliminating the nearly 250 billion dollars in annual compliance costs, and eliminating the taxes on corporate profits and labor (payroll taxes), which are imbedded in what we pay for goods and services. (Dr. Dale Jorgenson and other economists)
For example, Dr. Dale Jorgenson of Harvard University conducted a research analysis (1997), which showed that a national sales tax would produce a 10.5% increase in Gross Domestic Product, a 76% increase in real investments, and a 26% increase in exports in the first year of a national sales tax enactment. Those increases would level off at 5%, 15%, and 13% respectively over the succeeding twenty-five years. Nothing promotes the competitiveness of US businesses more than growth in our national economy, more dollars to grow our businesses, and a level playing field for selling our products and services to other nations.
Compliance costs would, therefore, fall under The FairTax. Today, according to the Tax Foundation, we spend about $250 billion each year filling out forms, hiring tax lawyers, accountants, benefits consultants, collecting information needed only for tax purposes and the like. These unnecessary costs amount to about $850 for every man, woman and child in America. To the extent these costs are incurred by businesses, they must be recovered and consequently are embedded in the cost of everything we buy. The money we spend on unnecessary compliance costs is money we might as well burn for all of the good it does us. The Tax Foundation has estimated that compliance costs would drop by about 90 percent under a national sales tax.
No social security tax - no social security number, no withholding, no information about employees going to the government. Same with medicare. The government does not have the constitutional authority to operate an insurance business anyway, especially a forced insurance program. Social security and medicare should be privatized. No one should be forced into the programs.
The most direct way to make it happen, IMHO, is to continue voting out the worst of the liberals and progressives each election cycle. However, ensuring that the Democrats do not regain control of the White house, the Senate or the Congress, at least not for a generation or two and or until we accomplish a clean sweep of liberal programs. Continue replacing the liberal judiciary with conservatives until we get to the point that the Constitution is actually respected as the Supreme Law of the Land rather than being used as a doormat for the socialists in congress.
Continue cutting government programs and taxes until it's back in line with the Framers intentions. Continue expanding conservative principle and thought into the media and education programs. Make a concerted effort to educate the masses that liberalism/socialism/marxism are complete failures and that American Liberty and freedom is founded on the concept of unalienable individual rights, limited government, equal treatment under the law, etc., etc., etc. Obviously, all of the above is required at all levels of government.
Jim Robinson 01/27/2003
This could be THE Bush legacy.
It could be - but at the rate he is getting anything passed - except a war - he would have to have at least 6 terms.
And what abour property tax ? Is that going to go away ?
20, 30, 40 percent of any product is NOT taxable income. If it was that would mean they are making HUGE 100+% profits...If you know of any companies working at that profitability let me know.
If you can accurately predict what the competitive market will do, you are a super rich man...or should be.
Pricing is a struggle not for lower prices but for the highest prices(profit) possible. If it wasn't they would never go up...
There are more ways than you and I could discuss here to make that happen...price only appears to be the simplest way.
In theory, if you had $100,000 in gross sales including 10% profit, you would have $9091 taxable profit. Assuming a 38% tax rate, your tax bill would be $3455.00 leaving a net profit of $5636.00...Assuming you'd want to maintain the same after tax profit once your income tax burden is removed, the best you could lower your price would be about 4%...not 20%...do the math, and while you're at it don't forget to factor in the new sales tax would raise the price 30%.
As to "compliance costs" accounting will always be done and wages along with self-employment income is still required to be reported to the government.
BTW, Jorgenson, the one (and only) economist you nst folks like to trot out as your expert is a WTO, Kyoto accord, BTU/carbon tax socialist.
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