PRICES UNDER FAIRTAX WILL NOT GO UP - JUST THE OPPOSITE

witchypooy ^ | 3/05/05 | witchypooy-self

[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.

[ancient_geezer]

It's the tax that France invented. A VAT is the same no matter what you call it. It's insidious and creeping and easy to crank up and up and up.

Not at all, HR25 implements a pure retail sales tax, and does not tax upstream business inputs at all.

Only time the NRST is collected from the customer is on retail purchase of new goods and services.

Retail businesses merely remit the NRST collections the same as their state retail sales taxes, to their state tax agency. State tax agencies then separate out and remit the federal portion of the retail sales tax to the U.S. Treasury. The NRST itself is administered by the states.

All federal income, payroll and gift/estate taxes are repealed and there is no NRST on purchases for business or investment purpose.

[ancient_geezer]

You do NOT want what is still a VAT (Value Added Tax), aka a 'National Sales Tax', and here's why:

It fortunate then that the Fair Tax is a National Retail Sales Tax ("NRST") isn't it, and not a VAT at all, as it is not imposed on purchases for business purpose. And even when levied can only be collected for new goods and services alone. Multiply levying the NRST on the same goods or is expressly forbidden in the language of the bill.

As far as collecting the tax it is done in the same manner as a state or local retail sales tax, in fact it is to be administered by the same tax agencies.

The VAT tax-scam is something that will never be abolished, if it is allowed to to be enacted.

It is of interest to not the the Russians look like they are figuring on repealing their 17% VAT by 2007 and replacing it with a 15% retail sales tax.

===> The Russia Journal DailyEconomy - VAT may be scrapped in 2007 – Kremlin adviser

[GoLightly]

I buy a top of the line luxury boat & charter it out one week of the year, because I need exactly that much income to make ends meet, would my purchase qualify for the business exemption?

[Founding Father]

The 7.65% stays in under any fair tax proposal I've seen, so I didn't count that and most small companies, which is the vast majority of companies, don't use tax attorneys because they can't afford them. Likewise, I didn't eliminate FICA/Medicare filing compliance costs since that would remain too.

[Bigun]

Check it out!

http://www.fairtax.org

[GoLightly]

I like the idea of the funds getting filtered through the states' coffers first. I'm just not sold on the whole mess getting the full overhaul, specially since there's that need for massive reeducation, that I mentioned in a previous post.

Anyway, just by changing the way funds are sent to the Fed, even if you're leaving the rest of the income tax codes we have now, some important dynamics could change.

Once the states have their hands on that money, they will begin to plot & plan ways to keep more & start talking about "block granting" funds to the Federal government. Let the Fed's apply for the funds, filling out lengthy forms about why they need the funds. What, you wanna put a big dig in some other state?

[ancient_geezer]

blockquote>

I like the idea of the funds getting filtered through the states' coffers first. I'm just not sold on the whole mess getting the full overhaul, specially since there's that need for massive reeducation, that I mentioned in a previous post.

Reeducation is happening now, just the effort of explaining how a retail sales tax would work on a national level and explaining how the benefits associated with a conversion to a consumption only tax system accomplishes that.

In order to get from where we are to actual enactment and implementation that effort has to go forward. The massive reeducation either takes and the result is the enactment of the legislation proposed,

H.R.25,S.25
A bill to promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national retail sales tax to be administered primarily by the States.

or the reeducation fails and the bill is withdrawn if attempts are made to amend it in ways counter to the essential intent of the legislation as it is currently proposed.

HR25 has been created from scatch in the private sector it is not the product of politicos in back rooms, support for it is contingent upon the express objectives laid out in the language of the bill as it now exists being met.

[4edm 4ever]

You'd get a proportional exemption equal to your business usage. In this case, it sounds like the exemption would be 1/52nd of the total.

You would collect the FairTax on your charge for the charter, retain 1/4 of 1% for yourself (your fee for collecting the tax) and forward the balance to the State Taxing authority.

[teenyelliott]

Dang, yew got good lernin'.

I love the Fair Tax Act. Already signed up on the website, and I send out as much info as I can. I'm worried that too many people are conditioned to think our sucky tax system is acceptable. I'm not sure we can get enough people to scream so that our esteemed congress will listen.

I might chain myself to a tree until they pass it. You know, a smart protest like the libs do.

[GoLightly]

Let's say it is my intent to make more profit. I make my boat available for 3 months out of the year. Unfortunately, the boat only gets booked for a single week.

Would my tax liability change?

[witchypooy]

Post to 44 on S. Security.

You obviously have not studied HR 25. HR25 the FairTax eliminates the entire tax code including all withholding, all payroll (FICA) taxes, all medicare deduction, all AMT, all business, corporate, and self emp. taxes, the earned income tax credit, and all estate and gift taxes.

FICA social security both the employer and employee parts are eliminated completely and the FairTax funds social security as part of the revenue neutral 23% inclusive tax. Within the FairTax bill, not only does it very clearly state that social security will be funded by the sales tax, but it actually designates into a lock box 1`/3 of every dollar of tax collected to go to social security while 2/3 of every dollar collected goes to the general fund budget. This means finally the lock box into social security everyone wants.

What's more all savings and investment is totally tax free under FairTax, making it the ultimate in privatization of Social Security, without a single rule from the big government bureaucrats in DC telling you how much you can save, what you can invest in, how long you have to keep it, and when you can take it out. Under FairTax you decide these questions on your own.

As to the use of attorneys. YOu obviously have never run a business. Most businesses big and small use at least one attorney and one accountant.Hell almost all individuals need an accountant to do their taxes for them.

By the way the bill is only 110 pages long compared to the 40,000 pages we currently have. Anyone who has not actually read the bill but thinks they know what it says, is a baffoon, one of the lazy, stupid or immoral crowd all the liberals count on.

Next Question!
witchypooy@aol.com

[ancient_geezer]

I might chain myself to a tree until they pass it. You know, a smart protest like the libs do.

Could consider chaining yourself to a politician's leg till he votes for it ;O)

[teenyelliott]

Better the devil we know

You must be joking.

Even if the actual dollar layout was the same, there would be no April fifteenth anymore. No more man hours spent trying to comply with our thousands of pages in tax law. No more millions (probably billions) of dollars paid to CPAs because no one can keep track of all the bullsh*t. No more tax attorneys, IRS property seizures, quarterly estimates, self employment tax, late fees, penalties, and on and on and on.

You buy something, the tax is paid. That's it. You wanna lower your taxes? Stop buying so much crap. It's beautiful, and it's easy.

[n-tres-ted]

The piece is informative and useful, and much appreciated. However, it fails to mention the additional very significant benefit to the citizen fro the Fair Tax reflected in the fact that the tie will be purchased with dollars that are "before taxes" meaning no income taxes have been deducted from the paycheck. Right now, that same person has to pay $20 for the tie, and those dollars have already been reduced by withholding of income taxes and payroll taxes. With the Fair Tax, that will no longer be the case.

[teenyelliott]

Yes, but how is that any different from writing checks for thousands of dollars every three months?

If you can't afford it, don't buy it. In your example, I can simply CHOOSE not to buy the car, therefore I don't pay the tax. As it is, I get screwed ever three months no matter what I do.

[Badray]

I prefer the flat tax with exemptions for necessities (so as to not make it too onerous on the poor) and continued tax deferal status for IRAs and 401(k)'s (to continue inducements to save for retirement).

Allow me to parse that:

I prefer to remain a slave to the government and report all my income and it's sources. I want the government to tell me how much of my money it wants, how much I am allowed to keep for myself and my family. Finally, I prefer that the government decide what happens to my estate when I die. The last thing that I want is for my widow and kids to get it.

A little harsh? Perhaps, but that is precisely what you are asking for when you say you want to keep an income tax in place. The first income tax was flat. Look at it now. There are 50,000 pages of convoluted, contradictory mess loaded with special favors and an armed army to make sure that you didn't cheat the government.

Is that what you really want? If so, trade in your battle cry for a white flag of surrender.

[LeGrande]

Just do a google search. You will find tons of recent reports on tax compliance costs, just make sure you are looking at recent figures. 6 Billion hours of labor and $250 billion in compliance costs. This is 20-35% per industry depending. 7.65% of it is their FICA employer matching costs alone, or did you forget that?

If our GDP is over 10 trillion then 250 tax compliance costs is closer to 2% than 20-35%. Using bad math and bad examples doesn't help your cause : (

The solution is to cut the size of government. Then there are multiple great ways to support it.

[GoLightly]

The idea of businesses paying taxes is so ingrained into the general public's mind, good luck with that reeducation.

Around 50% of our population thinks it doesn't pay any Federal taxes, beyond SSI.

[Badray]

"Bull crap."

Brilliant.

I never thought of that argument before.

I was undecided, but now I'm convinced.

[teenyelliott]

Could consider chaining yourself to a politician's leg till he votes for it

But then I'd feel dirty.