A sales tax would harm young couples with growing children.
Not at all, in the manner HR2525 is constructed, each legitimate household receives a prebated monthly cash payment to cover taxes up to the HSS povertyline.
In that manner, no person is burdened by tax on the necessity level of expenditure, yet all are made aware of the cost of government by virtue of having actually pay the tax at the retail register.
How will the Family Consumption Allowance [FCA] work?
All legal residents will receive a FCA equivalent to the FairTax paid on essential goods and services. The FCA will be paid in advance, in equal installments each month. The size of the monthly FCA will be determined by the government's Poverty Level for a particular family size, multiplied by the tax rate.
Every year, the Department of Health and Human Services [HHS] determines the "poverty level" for each family size.
|
The 2001 "FairTax" Family Consumption Allowance Figures |
|||
|
Family Size |
HHS Poverty Level |
Annual FCA |
Monthly FCA |
|
One |
$8,590 |
$1,976 |
$165 |
|
Two |
$17,180 |
$3,951 |
$329 |
|
Three |
$20,200 |
$4,646 |
$387 |
|
Four |
$23,220 |
$5,341 |
$445 |
|
Five |
$26,240 |
$6,035 |
$503 |
|
Six |
$29,260 |
$6,730 |
$561 |
|
Seven |
$32,280 |
$7,424 |
$619 |
|
Eight |
$35,300 |
$8,119 |
$677 |
1) Federal Register: February 16, 2001, Pages 10695-10697).
[ The monthly FCA for each adult is .23 * (HSS poverty level for a single person)/12 to assure no marriage penalty due to the manner in which the poverty level is dependant on family size. The monthly FCA for each child is .23 * (the incremental increase of HSS poverty level for a family with one child over no child) ] A. Geezer
A family of four, for example, could spend $23,220 per year free of tax because they will have received over the course of the year rebates totaling $5,341. $5,341 is the amount of sales tax paid on $23,220 in expenditures. A family spending double the "poverty level" or $46,440 per year will effectively pay tax on only half of their spending and, therefore, have an effective tax rate of 11 ½ percent or half the FairTax rate.
The beauty of the FairTax is that you have some control over how much you pay in taxes. If you happen to save, invest or spend a portion on used [previously taxed] items, you can get your effective tax rate below 9%.
In fact, due to the structure of the NRST in that it only taxes once, at the retail level, the base price of goods and service can be expected to fall by 20 to 30%. One study of producer prices suggests 22.5% as a average value for the drop in producer prices. After list prices have settled, the NRST plus the new price level of goods and services would be nearly the same as expenditures now, with the advantage that one would receive their full gross paycheck instead of the after tax check we receive now, plus the FCA paid out for every person in a household each month.
People just starting out, buying a home, or moving to a larger apartment would be severely punished by a sales tax.
Goods are taxed once but only once, thus the NRST would not be charged in resale markets such a first time buyers of older homes. That coupled with the increase in disposable income available to families, earnings and investment not being taxed, make the potential for home buyers and people just starting out substantially better.
I am for a flat tax.
Problem with a flat tax, is that it does nothing to control taxation behind the scenes and out of sight of the voter. It becomes essentially an income tax for high wage and salaried persons, coupled with a subtractionb method VAT on business, with government still calling the tune.
To remove taxation of the individual voter, is to remove the goad which assures accountability of government to the electorate. Federal taxes are high because a majority of the electorate do not share proportionately in the burden their demand for largesse imposes on the minority of citizens.
The call for representation without taxation is the formula that got us where we are at today. The ability to hide or disguise taxation from the view of large sectors of the electorate allows the Congress to get away with the creation of the evergrowing monster that it fosters.
A government which robs Peter to pay Paul can always depend on the support of Paul.
-George Bernard Shaw
Liberty and freedom have a price, responsibility. If that price is avoided there are no brakes on the growth of government, the ultimate result is the end of freedom through creeping socialism.
Right now the bottom 60% perceive little to no "Individual Income Tax" burden,(in many cases even a handout) and 70% continue to clamor for more from government looking for the top 40% to pay for it, corroborated by many recent polls on the subject of people attitudes about tax reduction. That perception continues to grow ever stronger by eliminating even more participants from the Individual Income Tax rolls as proposed in the current tax reduction proposals currently on board through changes in personal exemption limits and other mechanisms such as the EITC.
The largest problem with the growth of government is the lack of visibility of the cost of government as regards the lower end of the economic spectrum.
The Coming Crisis in our Democracy
The Honorable James DeMint (R-SC)
United States House of RepresentativesTHURSDAY, APRIL 5, 2001
12:00 noon"In 1996, Congress passed a historic welfare reform law that has dramatically reduced the number of Americans who depend on welfare. In spite of this positive development, Representative DeMint is concerned about the steady growth of a welfare/entitlement state that extends well beyond the poor and is forcing millions of middle income Americans into dependency.
There has been a shift in the relationship between individuals and government, he argues, such that fewer and fewer are paying taxes at the same time that more and more are receiving increasingly generous benefits. If it becomes the case that most voters do not bear a financial burden for this largess, then there will be little to restrain--and significant political incentives to encourage--the continued growth of government. And at that point, DeMint warns, we have reached a major crisis in our democracy."
Milton Friedman as quoted by Northwest Florida Daily News, 10-16-2000:
Walter Williams, World Net Daily, 10-25-2000
According to the most recent U.S. Treasury Department figures, in 1997 the top 1 percent of income-earners (those with income of $250,000 and higher) paid 33 percent of all federal income taxes. The top 5 percent of income-earners ($108,000 and over) paid 52 percent, and the top 50 percent ($36,000 and over) paid 96 percent of income taxes. Guess what the bottom 50 percent of income earners paid?
If you're among those who pay little or no federal income taxes, what do you care about tax cuts? Moreover, if you think tax cuts pose a threat to government handout programs, you might be openly hostile and support Al Gore's silly "risky scheme" talk. So many Americans paying little or no federal taxes makes for a natural spending constituency. It's like me in the restaurant: What do I care about extravagance if you're footing the bill?
With a drop in accountability of government which is accomodated by the Flat Tax systems currently proposed, just how are were to regain control over the excesses of government?
Why don't you name the "Flat Tax" for what it is A Flat Individual Income Tax, + 15.3% Payroll Tax with Corporate Profits Tax.
It isn't the size of the report card that makes the complexity. Its the Internal Revenue Code that describes the allowed deductions and exemptions for determining taxable income on which the rate is to be applied that is the problem.
The Flat Income Tax fails to remove the legal jeopardy that every individual is placed under to prove what their taxable income is.
The Flat Income Tax fails to remove the complexity of the corporate and business income and payroll taxes requiring endless droves of tax accountants working more expending $200Billion trying to comply with an incomprehensible income tax code, an army of lawyers litigating with the IRS to the tune of another $200 billion, as well as the fines, penalties levied on the losers of such battles for even more. The Armey Flat Income Tax actually perpetuates that complexity, legal jeopardy and attendant cost of compliance for generations to come.
That is the reality of the Flat tax. the 1st $80k hit with the 15.3% payroll tax, with 19+% individual Flat Tax kicking in at $13K, and Increased Corporate taxation on all goods and services including the internet with the reduction of business deductionsincreasing the take. through that mechanism. That latter by the way is still collected from the individual through his purchases with after tax dollars no less.
The so called Flat Tax is less flat than even Reagan's 3 bracket tax, and the "Flat Tax" falls heaviest on middle income wage earners. You have a real winner here. Whats worse and Flat Tax proponents fail to tell you is that the supposed 17% Flat Tax starts in excess of 19% and "may" be decreased to 17% overtime at the pleasure of Congress as well as redefining income in a manner that everyone's income appears to be greater than present by removal of exemptions and deductions. Oh! instant make believe tax reductio/simplification n and you are buying into it just like they want of you.
H.R.1040 Sponsor: (introduced 3/9/1999).
Freedom and Fairness Restoration Act of 1999 - Title I: Tax Reduction and Simplification - Amends the Internal Revenue Code to impose a 19 percent tax (17 percent after December 31, 2000) on the taxable income of every individual.
Redefines "taxable income" to mean the amount by which wages, retirement distributions, and unemployment compensation exceed the standard deduction. Increases the basic standard deduction and includes an additional standard deduction for dependents. Includes in taxable income the taxable income of each dependent child under the age of 14. Provides for inflation adjustments.
(Sec. 102) with a Replaces the current tax on corporationstax on every person engaged in a business activity equal to 19 percent (17 percent after December 31, 2000) of the business taxable income of such person. Makes the person engaged in the business activity liable for the tax. (not the business as a separate entity as today, this seems to be a rather curious change with broad interpretations as earning a wage is a commercial[business activity])
Imposes a tax of 19 percent (17 percent after December 31, 2000) on the value of excludable compensation provided during the year by an employer for the benefit of employees. Makes the employer liable for the tax. (increases effective tax on employee wage by 50-100% or more depending on the mix of employee benefits and what is counted into the cost of them.}
(Sec. 103) Repeals: (1) numerous provisions relating to pension plans; and (2) provisions imposing a tax on any employer reversion from a qualified plan.
Revises requirements regarding transfers of excess pension assets.
(Sec. 104) Repeals from the Internal Revenue Code: (1) the part relating to alternative minimum tax; (2) the part relating to credits against tax; (3) the subtitle relating to estate and gift taxes; and (4) subject to exception, the chapter relating to normal taxes and surtaxes.
In fact the budget scoring required by law to assure revenue neutrality and phase in for all tax reform bills, for the "Flat Tax" gives a rather grim picture of Armey's plan especially since it does not do away with withholding nor the 15.3% payroll tax. Taking that into account it is actually much worse in the burden placed on the middle class than even the current income tax.
Flat Tax Valuations:
| Revenue Neutral Tax Rates for Alternative Allowances and Exemptions Under a Flat Tax | |||||
| Standard Allowances | Option 1 | Option 2 | Option 3 | Option 4 | Option 5 |
| Single | $13,100 | $13,100 | $ 6,550 | $ 6,550 | $0 |
| Joint | $26,200 | $26,200 | $13,100 | $13,100 | $0 |
| Head of Household | $17,200 | $17,200 | $ 8,600 | $ 8,600 | $0 |
| Dependent Exemption | $ 5,300 | $ 2,650 | $ 5,300 | $ 2,650 | $0 |
| Revenue Neutral Tax Rate | 19.9% | 19.4% | 16.8% | 16.3% | 13.1% |
Source: Congressional Budget Office, 1995.
Yah, a real winner! Not only does it fail to actually lower taxes as claimed. The complexity does not go away for business as the very definition of income changes for them while leaving the code entirely open to future tinkering to increase taxation behind the veil of price inflation.
Course, need I also point out the IRS and income tax remains alive and well under the ey Flat Income Tax. Not even a possibility of repeal of the 16th amendment or prohibition of the income tax is even considered under the Flat Tax proposal.
You are aware of course that the primary function of the income tax is for political control, not collection of Revenue. That is why it comes to us so highly recomended by Karl Marx and the pack of socialists and communists ever since.
You may keep yout Flat Income Tax, but take it elsewhere PLEASE!