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PRICES UNDER FAIRTAX WILL NOT GO UP - JUST THE OPPOSITE
witchypooy ^ | 3/05/05 | witchypooy-self

Posted on 03/06/2005 3:07:44 PM PST by smokeyb

PRICES UNDER FAIRTAX WILL NOT GO UP - JUST THE OPPOSITE
Within months of the start of FairTax you will see your cost at the register WITH your tax the same or lower than the cost today without the tax...here's how....

EXAMPLE: ACME TIE MANUFACTURING CO.- $20 tie - $5 profit margin

Today's Economy -$20 price of tie at purchase - no "visible" federal tax

Acme's price formula for a $5 profit margin on the sale (today under income tax):
$2 material
$8 labor
$5 IRS tax compliance costs of 25% Acme pays and passes on to consumer
$5 profit margin for Acme

$20 retail cost for the tie to YOU the consumer ( no visible Natl Tax to you but clearly you the consumer are paying Acme's $5 IRS tax costs for them and Acme makes $5 in the transaction)

NOW THE FAIR TAX:
Acme Tie Manufacturing under FairTax - SAME $5 PROFIT MARGIN
$2. material
$8 labor
0 IRS tax compliance costs to Acme
$5 profit margin for Acme

$15 cost of tie at retail - Acme receives the same $5 profit and is happy and they have NO taxes to pay to the IRS

BUT the consumer also pays the same $20 for the tie as before...the price does not go up.....see here's what your sales receipt would say under FairTax

Consumer costs under FairTax:
$15 tie at retail
+$5 - 30% natl retail sales tax (FairTax on new goods and services)

$20 cost to consumer for the tie (exactly the same as before but is it really?

As you can see under the current system or the FairTax, in this example Acme gets the same $5 profit, and the consumer pays the same $20 for the tie..but what has really been gained, what is different?

1. The consumer sees the cost of big government on his sales receipt, namely the $5 FairTax, a tax which he paid in the first example but was not aware of since it was hidden in the price - it's called honesty and 100% visibility in the cost of Big Government!

2. Acme can now broaden their base of sales at $15 to compete with the tax free Singapore Tie Company who has been selling their ties in the USA for $15 all along. FairTax now creates a better balance of trade and the ability for the American firm Acme to also go abroad with their ties and export them at $15. This will create Acme expansion including creating more American jobs available. Factory expansion means Labor becomes a commodity to compete for so salaries and benefits go up for everyone.

3. The ability for Mr NeckTie to open a factory and sell ties for $15 if Acme refuses to lower their price to $15 after IRS costs are removed from them. Or perhaps Mr NeckTie will be happy with a $4 profit margin and sell his ties for $14 creating a little price war that the consumer benefits from..Don't worry Acme & Mr NeckTie won't be working together to bring the price up to $17, cause there is always another American with the willingness to work hard and step into the market at $14 a tie, its called American ingenuity and the free market system. A little competition goes a long way.

4. Don't forget! The consumer can go to the flee market and buy a used tie and pay NO tax at all, lowering their costs to live and lowering their overall net effective tax rate under FairTax. You can't do that in today's tax system, since everything you purchase today is done with "after tax dollars".

All's right with the world, everything is honest, above board, fair, and you can now buy Dad that tie on Father's day for less money than you did before.

That's what's called personal liberty and free enterprise

go to www.pafairtax.org/calc.php and see what FairTax will do to your current tax rate. The new HHS rebate numbers are now included in the calculation.


TOPICS: Business/Economy
KEYWORDS: fairtax; hr25; taxes; taxreform
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To: Buckeye Battle Cry
I'm a tax lawyer with seventeen years of experience both in and out of the government and I've published three textbooks utilized by colleges and law schools across the country. I know a VAT when I see one. You call it what you want. I call it an open invitation to taxes run amock.

Perhaps that explains the sorry state of tax law in the country.

A CAT is an animal. Some animals are CATS. Not all animals are CATS.

A VAT is a tax. Some taxes are VATs. Not all taxes are VATs.

An end use, one time, retail sales tax IS NOT a VAT.

141 posted on 03/07/2005 4:11:06 PM PST by Badray (Quinn's First Law -- Liberalism ALWAYS generates the exact opposite of its stated intent.)
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To: rwfromkansas
There is a dispute on this thread about the compliance costs.

What are they in reality?

If not 30 percent, then the original post would not be accurate.

The compliance cost isn't 30%, the cost of taxes and complying with the tax code is 30%. Plus or minus a little.

142 posted on 03/07/2005 4:40:19 PM PST by Phantom Lord (Advantages are taken, not handed out)
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To: balrog666
In particular, they will still track and report wages to the SSA.

With the fair tax the SS and medicare/medicaid taxes are eliminated.

143 posted on 03/07/2005 4:41:52 PM PST by Phantom Lord (Advantages are taken, not handed out)
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To: justshutupandtakeit
Income taxes simply are NOT included in product prices. Federal corporate income tax collections are a tiny portion of total taxes and many of our largest companies rarely pay them.

So, if corporate income tax rate went from what it is today to 75%, prices wouldn't go up?

And you should know that business pay NO TAXES in reality. Customers pay them in the price of the products and services. Period.

144 posted on 03/07/2005 4:44:29 PM PST by Phantom Lord (Advantages are taken, not handed out)
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To: Buckeye Battle Cry
This is easy, and I question your stated credentials if you can't see it. The FairTax and a VAT are two wholly different animals.

Or are you contending that when I pay a sales tax on a purchase of a pack of gum I am paying a VAT?

145 posted on 03/07/2005 4:46:05 PM PST by Phantom Lord (Advantages are taken, not handed out)
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To: Buckeye Battle Cry
Do you honestly in your heart believe that this tax, as proposed, would stay the way it reads? Honestly?

That statement can be said about 100% of any government legislation. Period.

146 posted on 03/07/2005 4:46:42 PM PST by Phantom Lord (Advantages are taken, not handed out)
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To: Phantom Lord
With the fair tax the SS and medicare/medicaid taxes are eliminated.

Absolutely wrong! I see you have yet to read the bill.

The SS and medicare/medicaid taxes are subsumed by the NRST and ALL EMPLOYERS must report all wages to the SSA every year.

147 posted on 03/07/2005 5:24:12 PM PST by balrog666 (A myth by any other name is still inane.)
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To: balrog666
Me: With the fair tax the SS and medicare/medicaid taxes are eliminated.

You: Absolutely wrong! I see you have yet to read the bill.

From FairTax.org...

Exactly what taxes are abolished? The FairTax is replacement, not reform. It replaces federal income taxes including, personal, estate, gift, capital gains, alternative minimum, Social Security, Medicare, self-employment, and corporate taxes.

You sir are the one who is wrong.

148 posted on 03/07/2005 5:35:38 PM PST by Phantom Lord (Advantages are taken, not handed out)
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To: Phantom Lord
The fairtax changes how taxes are paid (including SS & Medicare/Medicaid), but does not change SS & Medicare/Medicaid itself.

Employers will still report wages for SS et al, as required by law. Only reform to the SS et al laws can change that.

Balrog loves to point out that replacing the income tax with a NRST will not fix social security, Medicare/Medicaid, prescription drugs costs, frivolous lawsuits, and whatever he can conjure up.
149 posted on 03/07/2005 6:00:03 PM PST by TheMightyQuinn
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To: Phantom Lord
You sir are the one who is wrong.

Read the bill - only the funding mechanism will change. All reporting requirements will stay the same.

150 posted on 03/07/2005 6:10:29 PM PST by balrog666 (A myth by any other name is still inane.)
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To: Buckeye Battle Cry
I'm a tax lawyer with seventeen years of experience both in and out of the government and I've published three textbooks utilized by colleges and law schools across the country. I know a VAT when I see one.

Oh learned Oracle of all knowledge this lowly and unworthy seeker would be forever in your debt if you would PLEASE be kind enough to explain just how a single stage, point of RETAIL sale only, sales tax can, in any way, be construed as a VAT given the generally accepted meaning of that term amongst economists?

151 posted on 03/07/2005 6:22:23 PM PST by Bigun
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To: Bigun
Ummm, I'm not a man. So I suppose it will be easier for me to stealthily "stay on their a**es".
152 posted on 03/07/2005 6:32:04 PM PST by teenyelliott (Soylent green is made of liberals...)
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To: teenyelliott
Ummm, I'm not a man.

I am truly sorry for incorrectly guessing your gender and humbly beg your forgiveness!

153 posted on 03/07/2005 6:39:54 PM PST by Bigun
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To: balrog666

And as I said, SS and Medicare taxes are eliminated. You called me a liar. I have proven my statement to be true.


154 posted on 03/07/2005 7:40:02 PM PST by Phantom Lord (Advantages are taken, not handed out)
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To: Phantom Lord
And as I said, SS and Medicare taxes are eliminated. You called me a liar. I have proven my statement to be true.

You are a liar.

The taxes still exist, the reporting requirements still exist, only the funding mechanism changes.

Are you too stupid to understand your own mistake? Or just too prideful to admit to it?

155 posted on 03/07/2005 7:44:54 PM PST by balrog666 (A myth by any other name is still inane.)
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To: balrog666
You sir are the one playing semantics and unable to admit mistakes.

If the fairtax passes, will I have SS and Medicaid/Medicare taxes taken out of my paycheck?

Yes or no?

156 posted on 03/07/2005 7:58:51 PM PST by Phantom Lord (Advantages are taken, not handed out)
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To: LeGrande

It sure sounds like you agree with me. Cutting spending is a far greater task right now that changing how we are taxed. The FairTax makes the cost of government visible and spreads the burden to everyone. THAT is what will force government spending down. Cuz til you know that you're footing the bill, you don't care what it costs.

Welcome aboard. Did you call your representative yet? You can call your senators tomorrow. ;-)


157 posted on 03/07/2005 8:47:11 PM PST by Badray (Quinn's First Law -- Liberalism ALWAYS generates the exact opposite of its stated intent.)
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To: Bigun
Fuggeddabaddit.

By the way, what made you think I was a man? That bit of information might be useful in the future. ;)
158 posted on 03/07/2005 8:53:51 PM PST by teenyelliott (Soylent green is made of liberals...)
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To: GoLightly

You said yesterday:

"I'm not convinced that this plan works as presented, so am not ready to sell it to others. I'm telling you though, you have a huge hurdle to overcome in trying to convince most people that exempting business from taxes is smart economics."

Let's take this step by step. I believe that the explanation of the benefits as explained here will show enough people the error in their thinking that business pays taxes now, rather than really just collecting what consumers pay. Maybe I am overly optimistic, but remember, we do not have to convince everyone to win this battle. We just need to convince enough to convince enough congresscritters that they'll lose their jobs if they don't do this.

Okay, here goes:

If, on January 1, 2006, the FairTax is law the following will happen: John and Mary Taxpayer-Consumer will take home their entire paychecks minus state and voluntary deductions -- no more FICA and no more withholding PLUS they get a rebate. They have more money to spend and/or save.

That same day, for all businesses, their tax liabilty just went away resulting in lower costs. The same is true for their suppliers, so there is potential for yet further cost savings. How much IS in dispute, but there is going to be savings.

These business owners will make a decision whether to hold their price or drop it, but it will not be made in a vacuum because every competitor will be making those same decisions. The likely result will be lower consumer prices. Even if every producer/provider tried to hold the line on prices, new competition would spring up as the barriers to entry just got lower. Some prices will drop dramatically and overnight. Some will drift lower over time, but prices will drop. Higher profits are what drive businessmen, not higher prices.

What happens next is where it gets exciting. With tax liability for business gone, the price of our goods going overseas will become more competitive. For that same reason, companies will be bringing their plants to this country. Why pay a high corporate rate in Europe or Asia when you can pay Zero in America? New plants = more workers with more take home pay. More take home pay will mean increased consumption which means more output and higher take home pay because of OT.

Let me stop here. I first tried to get high falutin and fancy with my explanation, but I'm not a high falutin and fancy kind of guy so this was just the basics -- backed by my common sense and experience. More money. Lower costs. More business. More competition. Lower prices. More spending. More production. Etc, etc, etc.

That's just the money part of the benefits.

If you disagree with what I see or what the learned economist's studies show, let's talk more. I see nothing but good coming from this plan. Yeah, a few sacred cows might get sacrificed and a few special interest oxen may get gored, but the country would be free of the chains of the income tax.

That's been a dream of mine for over 30 years. The income tax is an abomination and as unamerican as you can get. It punishes success and rewards sloth. It invades your privacy and sets our legal system on its ear by making you guilty until you prove yourself innocent.

They tax you when you make it. They tax you when you save it. You are (rightly) concerned about double taxation. It happens now, but is hidden in the costs of every product that you buy PLUS either you or your heirs will likely pay taxes on it just because you die. (I understand that we all will, but I'm not sure of that yet personally.)

The income tax is a slave tax because government has the first claim on your paycheck. Slavery was supposed to be outlawed by the 13th Amendment.

For most people their taxes will be lower. For a few, it will go up. If it went up for everyone, but the IRS is gone, it should be worth it to any American who values the freedom that our Creator endowed us with.

I don't want my children and grandchildren growing up with same monster that we did and living under the fear that many have for the IRS. Some of the fear would simply seem like paranoia if there weren't so much evidence that their fears are real and justified.

Do you remember that IRS employees had to testify behind shields with their faces covered and their voices electronically masked to protect them during their Congressional testimony a few year ago? We do that for witnesses against the mob. We shouldn't have to do that for employees of a government agency in a free country.

This plan may not be perfect. What plan is? But lets look at the whole picture and work on the rough edges and get it enacted. Let's not make 'perfect' the enemy of 'pretty damn good and a hell of a lot better than we have now or has been proposed by anyone else.'

Then our next task is to cut spending. Think of the howls of protest you'll hear when we start goring those oxen. LOL


159 posted on 03/07/2005 10:59:36 PM PST by Badray (Quinn's First Law -- Liberalism ALWAYS generates the exact opposite of its stated intent.)
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To: teenyelliott
By the way, what made you think I was a man? That bit of information might be useful in the future. ;)

I really cannot point to anything. Perhaps it was just the fact that I was taught in school to use the male gender in certian cases. Writing to your city councilMAN, Congressman, ect.

160 posted on 03/08/2005 5:12:47 AM PST by Bigun
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