Herman Cain Promotes FairTax

THE FREEDOM POST ^ | April 18, 2011 | Matthew Burke

[Froggie]

I certainly agree the prebate concept is not ideal, but is borne from arguement the libs would launch about the unfair burden that would be placed on lower income people who are buying necessities of life. The bureacracy would be much less that the current IRS bureacracy as every legitimate social security holder would get a check equal to the estimated tax on “essential goods” however that would be defined.
You will never be able to find a tax plan that does away with bureaucracy - but the Fair Tax would most certainly do away with punitive IRS actions. Honest tax payers would not deal with fear of prosecution for overzealous audits or not following the insanely voluminous IRS rules/laws/regulations that no one could possibly know.

[Froggie]

I certainly agree the prebate concept is not ideal, but is borne from arguement the libs would launch about the unfair burden that would be placed on lower income people who are buying necessities of life. The bureacracy would be much less that the current IRS bureacracy as every legitimate social security holder would get a check equal to the estimated tax on “essential goods” however that would be defined.
You will never be able to find a tax plan that does away with bureaucracy - but the Fair Tax would most certainly do away with punitive IRS actions. Honest tax payers would not deal with fear of prosecution for overzealous audits or not following the insanely voluminous IRS rules/laws/regulations that no one could possibly know.

[longtermmemmory]

fairtax is 100% a scam. It just replaces oldIRS with NuIRS and lobbyists switch to exemptions.

also the fairtax scam is an entitlement program with the absurd prebate. You will have democrats screaming for a “living prebate” with lobbyists demanding their goods or services be declared necessities.

a flat tax or flatter tax is far better.

fairtax=scam.

[longtermmemmory]

not to mention it utterly shifts all internet sales OUTSIDE the usa.

[Defend Liberty]

In 2009, the top 1% of taxpayers paid 17% effective income tax rate. The prebate is insignificant at that level of income, so the FairTax is equivalent to a 23% income tax rate for them, since all income is eventually spent.

You're right. The prebate, as a percentage of income, decreases as income rises as is by design since people with higher incomes will be able to afford purchases more than those who have lower incomes. However people of all income levels will experience an increase in purchasing power since no federal taxes will be deducted from their paychecks, applied to their dividend checks or interest on savings etc...

On the other hand, if the FairTax rate was just 10%, all those high income people really would come back to the country the way you thought.

They will return for the reason stated above. The Fair Tax rate is set to collect as much tax as is currently collected. Ten percent will not fall short compared to what is currently collected.

[Kellis91789]

“They will return for the reason stated above.”
So somebody earning $6M/yr currently takes home $5M after Federal Income taxes. He then can buy $5M of goods and services tax-free. Under the FT he takes home $6M, but can only buy $4.6M of goods and services and pay $1.4M of tax. Sounds like incentive to spend outside the country, to me.

“The Fair Tax rate is set to collect as much tax as is currently collected.”

No, it is not. It is designed to replace not just the Income Tax but also the Payroll Tax that pays for Social Security and Medicare. Without a Prebate or exempting education spending, the FairTax would have a base of $12T of spending. A 10% FairTax would therefor collect $1.2T — which is virtually identical to the total amount of income tax presently collected from both Individuals and Corporations.

The Prebate essentially excludes the first dollars spent for everybody — up to the HHS poverty level — which means excluding $2.5T from the taxable base. This means the FairTax rate has to go up from 10% to 13%. Excluding education spending bumps the rate up to 15%. Trying to pay for SS/M pushes the rate up to 23%.

All of the economic benefits of the FairTax come from elimination of the income tax, and especially the corporate income tax with its overhead costs. 10% accomplishes those goals. The Prebate, education exemption, and FICA replacement are just attempts at social(ist) engineering.

[Defend Liberty]

He then can buy $5M of goods and services tax-free. Under the FT he takes home $6M, but can only buy $4.6M of goods and services and pay $1.4M of tax. Sounds like incentive to spend outside the country, to me.

Therein lies the deception of the federal income tax code. He doesn't buy anything tax free. You, like millions of Americans, have been duped into not realizing there are embedded taxes in the price of all goods and services at each stage of production because you don't see the hidden taxes. Out of sight, out of mind. Congress likes it that way so no one complain when corporate taxes are raised.

Corporations have taxes imposed on their income. They consider those taxes a cost of doing business, along with the cost of complying with the federal income tax code. They past those costs onto the consumer at each stage of production by including them in the price of everything we buy. The total of those costs amounts to nearly 23% of the price. The Fair Tax will remove those embedded costs by eliminating corporate income taxes and applying a 23% as a separate entry on the receipt. Prices on domestic goods will increase slightly depending the industry. Prices on imported goods will increase the most since they do not have embedded taxes. Regardless, the increase in purchasing power will more than offset any price increase on any domestic products.

No, it is not. It is designed to replace not just the Income Tax but also the Payroll Tax that pays for Social Security and Medicare.

You better tell that to 80 economists who endorsed The Fair Tax, including it being revenue neutral. An Open Letter to the President, the Congress, and the American people Concerning Reform of the Federal Tax Code
Excerpt:"If passed and signed into law, the FairTax Plan would:Set a federal sales tax rate that is revenue neutral, thereby raising the same amount of tax revenue as now raised by federal income taxes plus payroll withholding taxes"

Without a Prebate or exempting education spending, the FairTax would have a base of $12T of spending. A 10% FairTax would therefor collect $1.2T

Where did you get these figures?

The Prebate essentially excludes the first dollars spent for everybody — up to the HHS poverty level — which means excluding $2.5T from the taxable base. This means the FairTax rate has to go up from 10% to 13%. Excluding education spending bumps the rate up to 15%. Trying to pay for SS/M pushes the rate up to 23%

Again, how did you arrive at these figures?

All of the economic benefits of the FairTax come from elimination of the income tax, and especially the corporate income tax with its overhead costs. 10% accomplishes those goals.

Not even close. Twenty two million dollars of research by some of the leading economists in the country say otherwise.

The Prebate, education exemption, and FICA replacement are just attempts at social(ist) engineering.

The federal income tax code is social engineering. There is a reason Karl Marx included a heavy progressive tax on income as one of the planks in his Communist Manifesto. He understood such a tax discourages people from being productive and will then become dependent on the state for their existence. The Fair Tax stops that socialist engineering in its tracks.

[Kellis91789]

I have not been “duped” about businesses passing along their tax burden in prices. I just don’t believe they are going to automatically reduce their prices under the FT. More likely, they will hold prices steady and delay price increases that would otherwise occur. Market forces won’t bring down prices immediately.

[Excerpt:”If passed and signed into law, the FairTax Plan would:Set a federal sales tax rate that is revenue neutral, thereby raising the same amount of tax revenue as now raised by federal income taxes plus payroll withholding taxes”]

So, they’ve said exactly what I said. Revenue neutral only if it also includes replacing payroll taxes.

[Without a Prebate or exempting education spending, the FairTax would have a base of $12T of spending. A 10% FairTax would therefor collect $1.2T

Where did you get these figures? ]

In 2003 FairTax.org published a paper by Karen Walby, the Chief Economist of FairTax.org. Title was
“The FairTax:
Opportunities to replace or reform state and local government tax systems
Karen Walby, Ph.D., chief economist and director of research
FairTax.org”

In that paper, (Table Two) she shows the FairTax base as $8.7T after subtracting $566B of education spending, meaning an education-taxable total of $9.27T out of a GDP of $10.4T. Taxable base is roughly 88% of GDP, then. Estimated GDP for 2010 is $14T, and 88% of that is $12.3T.

[The Prebate essentially excludes the first dollars spent for everybody — up to the HHS poverty level — which means excluding $2.5T from the taxable base. This means the FairTax rate has to go up from 10% to 13%. Excluding education spending bumps the rate up to 15%. Trying to pay for SS/M pushes the rate up to 23%

Again, how did you arrive at these figures?]

Again, from the paper above, where it used $1.746T base reduction for the Prebate in 2003. Extrapolating to 2011, it comes out to $2.46T base reduction. Education spending was ~6% of GDP according to that table, or $830B for 2011. Except under the FT you could expect the tax-free status to increase that figure, so I use $1T. Reducing the $12T by $2.46T for prebate and $1T by exempting education means the tax base is only $8.5T and to get $1.2T revenue you need a 15% FT rate. Since HR25 is written as 23%, the rest must go to SS/M, right ?

“Twenty two million dollars of research by some of the leading economists in the country say otherwise. “

Really ? LOL. Where did those economists ever say the FairTax contains no social engineering ? Where did they ever say the prebate and education exemption are not social engineering ? Where did they say including SS/M funding and prebate are not vehicles to make the FairTax progressive, ie. Socialist ?

The $22M research started out with the goal of creating a single tax large enough to be objectionable and spur a revolt against government spending. You would know this if you ever read their own history they’ve got on their websites or been a supporter of Congressman Linder as I once was. The prebate and SS/M replacement served their purpose by increasing the rate needed while also attempting to buy support among progressives. The problem is that they grossly underestimate the incentive for evasion and avoidance of a tax that is 23%. A 10% rate FT would actually be workable, where a 23% never will.

[RockinRight]

Love Herman...love the fair tax.

Have lots of reservations about how the fair tax would work, especially regarding things like financing on new homes and cars (what becomes of the extra 23% over purchase price people have to pay), double taxation of post-tax savings, etc.

That said, I’d love to see Herman gain real traction. I’ve been watching Trump lately, and I know the guy’s (Trump) not as much a conservative as we’d like, but Cain just doesn’t have the name recognition.

What can we do though?

[RockinRight]

Why not just exempt food and such instead?

[RockinRight]

The existing plan also makes a phased in SS/M privatization MUCH harder.

[Kellis91789]

Yes, it does. Putting SS/M into a “consolidated budget” was a mistake because it had its own separate funding. (The same could be argued with the fuel taxes and Department of Transportation.) Eliminating the separate funding makes SS/M even more of a mess.

The FairTax breaks the relationship between contributions to SS/M and the benefits paid out to an individual. It effectively removes the cap on SS taxes so high earners get taxed on all their spending/income, but their benefits are still cut off as though they had mediocre earnings.

Ironically, it also cheats people whose income is mainly from tips — waitresses, doormen, haircutters, etc. — because it allows a maximum of $5,000/yr of tip income to be counted for SS benefits calculations.

[lewislynn]

They past [sic] those costs onto the consumer at each stage of production by including them in the price of everything we buy. The total of those costs amounts to nearly 23% of the price. The Fair Tax will remove those embedded costs by eliminating corporate income taxes and applying a 23% as a separate entry on the receipt.

The tax they would have to "apply" would be 30%, not 23%.

But that 23% you describe only replaces the business income taxes (all businesses aren't corporations). So how much more will the rate have to be to "replace" personal income, FICA, self-employment, death, gift and any other taxes the Fairtax claims to replace?

Or maybe there really aren't all those 23% "embedded taxes" they claim.

Which one is the lie?

[redinIllinois]

” Why not just exempt food and such instead? “

Because the people eating beans and hamburger will pay a little bit of tax, and get a little bit of refund, and the people having champagne and caviar will pay more, just as they do now.

Think of the prebate as being like the personal exemption in the current system, $9,350 for everybody ($18,700 for a married couple) for 2010.

[redinIllinois]

“too bad it wasn’t the flat tax. “

The flat tax is where we started - they were only going to tax the rich - then it got worse and worse like a cancer, and it will keep getting worse and worse until it is completely removed, just like a cancer.

Anybody with pets or kids or common sense knows that you punish what you don’t want, and reward what you do want.

The present system punishes work, investment, savings, and takes away our freedom, liberty, and privacy.

This is a link for a call to Rush where he agrees with a caller that Cain is a fighter and a leader, and there is a discussion about the tax code.
He tells her that “In a better world Herman Cain would be seen as one of our foremost candidates. He’s a guy who’s got it all.”
Let’s make it a better world.
http://citizens4cain.com/site/blog/2011/04/27/rush-talks-herman-cain-with-caller/

We need the Fair tax, to take power away from the politicians and lobbyists, and even if Herman isn’t the nominee, if he is in the primaries, more people will realize how horrible, and intrusive, and stifling our present system of INCOME TAX is.

The flat tax sounds good, but leaves in place the IRS, the lobbyists, the politicians - any kind of flat tax won’t stay flat for very long.

It’s like picking a scab off of a leper, and saying, “there, fixed it.”

Right now when a company buys anything, they have to take into account how it will affect their tax bill, and the more uncertainty their is about taxes, the less likely they are to do anything.

There would be a lot more hiring right now if people had any kind of assurance the roller coaster would stop.

[lewislynn]

redinIllinois:

the people having champagne and caviar will pay more, just as they do now.

_____

Anybody with pets or kids or common sense knows that you punish what you don’t want, and reward what you do want.

Very telling.

[redinIllinois]

‘’ The tax they would have to “apply” would be 30%, not 23%.
‘’

Very telling.

[lewislynn]

The Fairtax is "23% of the gross payments". That is what the business collecting the tax pays, not what the consumer pays.

If the business has to remit 23% of their gross (including the tax) the tax "applied" to the sale would have to be 30%.

Here I thought even accountants would know you can't "apply" 23% then subtract 23% from that total and come up with the same result...I guess I was wrong.

[redinIllinois]

“” Love Herman...love the fair tax.

Have lots of reservations about how the fair tax would work, especially regarding things like financing on new homes and cars (what becomes of the extra 23% over purchase price people have to pay), double taxation of post-tax savings, etc.

That said, I’d love to see Herman gain real traction. I’ve been watching Trump lately, and I know the guy’s (Trump) not as much a conservative as we’d like, but Cain just doesn’t have the name recognition.

What can we do though? “

What can we do?

Just keep plodding along, waiting for more people to see Herman Cain. Once they see him, they remember him :)

Once more people get a chance to see Herman Cain, he will be able to beat anyone.

He is like Trump, with gravitas :) :)

Trump is a flip flopper who is out for Trump, Herman Cain is a conservative who wants to save the country he loves.

He supports the Fair tax, which = freedom and liberty and prosperity, and he can do it all without a teleprompter.

Maybe someone worse than Carter will give us someone better than Reagan, because the Fair tax wasn’t around for Reagan to embrace, but I believe he would have.

We need the Fair tax!!!!!!!!!!!!!!

Run, Herman, run!!!!!!!!!!!!

I’ve already donated to Herman’s campaign, have you?

They sent an email to us supporters, asking for a $5 donation to gauge support, so I sent $50, hoping that 10 times as may people sent 10 times as much money and told 10 times as many friends, as they were asking for, because I believe Herman is the man for 2012.

If our country can hold on a little longer, we may be able to pull it back from the cliff it is about to go over.

[lewislynn]

Have lots of reservations about how the fair tax would work, especially regarding things like financing on new homes and cars

Well for one there is a 30% (not 23%) tax on a part of the interest you pay on your financing as well as a 30% (not 23%) tax on any fees. It's all in the bill under financial mediation services.

(what becomes of the extra 23% over purchase price people have to pay)

It's not 23% over it's 30% (actually 29.87%) "over purchase price"

It's a tax. What do you think becomes of it?

Before tax sale price:
$200,000

29.87% Fairtax = $59,740 (that'll be good for the housing market)

Total cost to home buyer: $259,740 (gross payment)

Total tax owed to FEDS by home seller: (23% OF the gross payment) $259,740 X .23 = $59,740.20

Net to home seller after tax: $ 200,000

My tagline is correct.