Posted on 08/12/2005 4:59:19 AM PDT by Man50D
Please do this experiment with me. Take a look at your last week's pay stub. See that nice big figure on top? O.K. I know it's customary to complain about salaries. See that relatively nice big figure on top?
Now look at all the figures below that start eating away at your pay, leaving you with the hungry little number at the bottom.
Draw a line through all those pay-stealing numbers and circle your gross pay in red. That's the amount you would receive under the Fair Tax.
That's right. No deductions for Social Security, no income tax, no payroll tax. No federal tax of any kind. Of course, if you have deductions for health insurance, IRA or any other saving plan, they would remain, as well as any state tax.
It's your money. Why should you have to hand it over to Uncle Sam? O.K. We do need government for some things -- like defense.
But that's not even the point. Under the Fair Tax, government would still receive the same amount of revenue that it receives now -- from a national consumption tax.
Imagine -- no more Big Brother IRS looking over your shoulder, harassing you for every clerical error. No more politicians micromanaging your life by giving you tax breaks if you live your life according to their whims, or punishing you if you don't.
You get to choose when and for what you pay tax. Only new goods and services would be taxed, not income, and not used goods.
The poor would still get a break -- in fact, they would be better off, along with most taxpayers and the entire U.S. economy. Every household would receive a monthly pre-bate equal to the taxes on necessities up to the poverty level.
Not only that -- every item would be cheaper, because built-in federal taxes would be eliminated -- so the poor would have more money to pay for cheaper goods.
Of course there's no free lunch -- the sales tax would be hefty -- about 23-30 percent. But the benefits would be substantial.
For instance: With the elimination of the enormous, bulky IRS monster, the cost of tax compliance would be drastically reduced. Today, hidden income taxes and the cost of complying with the federal income tax represents 20 percent of all retail prices. Built-in taxes raise the price of everything you buy. Corporations simply pass the cost along to the consumer. With those built-in taxes eliminated, prices will fall.
And that creates another bonus -- increased exports of U.S. products, not U.S. jobs. When products become cheaper due to the absence of built-in taxes, they will be more attractive in overseas markets. That benefits the domestic work force. At the same time, foreign goods would become more expensive, because the Fair Tax would be applied to them. That would further increase U.S. exports.
The Fair Tax would also tap a new, unexpected revenue source -- criminal activity. Criminal wealth is currently not taxed, because criminal income, of course, is not reported. But when criminals spend their ill-gotten gain for new goods and services, that money would be taxed. This untapped criminal revenue is conservatively estimated at one trillion dollars.
Finally, the IRS estimates that 25 percent of taxpayers avoid paying their fair share. The Fair Tax would be significantly more difficult to avoid, less cumbersome, less onerous, and would no doubt encourage more compliance.
Because the Fair Tax would be, well, fair.
Ping
The Flat Tax ninnies are on the way..
Opponents of Fair Tax may be among the most intellectually bankrupt people on this forum.
Nobody.
What they're doing is trying to prevent any real tax reform by rejecting the only reform that may ever happen. There is no support for the flat income tax - except from Forbes...
They are entitled to their opinion as much as we disagree with them. One thing I have noticed is many of their posts are derogatory. We don't need to lower ourselves to that level to spread the word about the Fair Tax.
They are entitled to their opinion, but when they reject facts and post outright lies in their responses, you can't even have an argument/discussion with them.
"The Flat Tax ninnies are on the way.. "
May I respectfully ask you to delineate your objections to the Flat Tax? I thought I was in favor of it - what am I missing?
Re: Fair Tax. My fear is that it will increase the already sizeable number of sales tax cheats - especially when your talking about 23%!
In my city, the combination of city and state tax amounts to just above 8.5% on sales, and even that small(!?) percentage occasions huge amount of tax evasion. I daresay the majority of mom-and-pop businesses engage in underreporting sales and pocket some portion of the tax - in some cases, just to keep their businesses alive.
While we may do away with the hydra-headed monster of an IRS, we would need plenty of people to ensure compliance with a sales tax.
If you wanted to go that route, maybe you'd be better off with a value-added tax, on the theory that large manufacturing companies would be more likely to accurately comply than a small mom-and-pop.
Now I admit these thoughts are off the top of my head, so I would appreciate being schooled a little bit more about the pros and cons of the various systems being proposed. Of course, we all can agree that the present system is an abomination.
I have taken the liberty of being derogatory in return to at least one of them. Sorry, I just couldn't take the lying any more. Maybe I'll go over to the pro-illegal immigration crowd and be derogatory to them for awhile, and leave the sane rebuttals to you more intellectual folks.
But since it would take the power of the armed IRS agent away from the government, thus the power of fear the feds have over their tax slaves, they will never willingly give that up. "In a free country, the government should fear the people; the people should not fear the government."
This is a recurring topic, yet I've not seen any of these fair tax articles address how the transition would occur. All the people who have managed to save money in an uphill battle against an income tax, will now face a consumption tax on that savings as they spend it down. Have there been any proposals to exempt people from taxes on their assets at time of transition?
I agree that we need to change the tax code, however - The main problem is government spending. As long the government keeps spending like it is, our taxes are going to remain high no matter what system is used to collect them.
Signed
IB
My husband and I have frequently commented on this exact scenario; however, let me take it one step further. Many mom and pops (i.e. hairdressers, family owned restaurants, auto detailers) take in considerable amounts of cash. I suspect that the selling price AND the sales tax from these small ticket items are not reported as income. Actually, we know of several business owners who have admitted to doing just that. They report just enough cash sales when traceable sales do not exceed expenses. By cheating in this manner, their income taxes are greatly reduced as well. They'll make a killing should we move to the fair tax.
I've long been suspicious of such tax evasion, as well as businesses using their cash for paying employees under the table. I try to use credit cards whereever possible, and avoid being a customer at places that only allow cash payment.
When they spend it, however, they will pay it. Any scheme to lessen my Govts Power To Destroy over her citizens is a great idea worth persuing.
Retail Sales tax cheats would be a drop in the bucket compared to what is going uncollected currently from illegal drug and gambling incomes.
The added advantage is the spotlight would be turned on the small stores that are cheating the system.State authorities ignore them because of the effort required to make a small bust.Let the combined retail sales tax (state & fed.)of over 30% kick in and they will be watched musch more closely.
Excellent point.
Any scheme to lessen my Govts Power To Destroy over her citizens is a great idea worth persuing.
I couldn't agree more.
Another good one. People get it. See - it's really not as hard to understand and explain as the big city press makes it seem.
Lets say you got to circut city and buy a new TV for $1,000 and pay cash. $534 of that was in your bank prior to the transition, the rest is recent money. By what logical method could it be determined that the $534 in your pocket is "old" money and thus you would only pay sales tax on the $467 difference? It is an impossible situation.
I do believe it is addressed in the FAQ section at fairtax.org though.
How many people make a living gambling? How much income tax is being lost by their not reporting it?
And did you know that casino's are required by law to report your winnings to the IRS if they exceed a certain amount? Also, if you have a gambling gain that is reported you are allowed to deduct gambling loses.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.