Skip to comments.The Fair Tax Act of 2005 – HR 25/S 25 plain English summary
Posted on 11/06/2005 10:58:26 AM PST by Eaglewatcher
The Fair Tax Act of 2005 HR 25/S 25 plain English summary
The Act is called the Fair Tax Act of 2005.
As of Dec. 31, 2006, it repeals all income taxes and payroll taxes, specifically:
*The individual income tax (including capital gains taxes and the alternative minimum tax)
*The corporate income tax
*All individual and employer payroll taxes including Social Security, Medicare and federal unemployment taxes
*The self-employment tax (a self employed person pays both the individual and the employer portions of Social Security and Medicare taxes)
*The estate and gift tax
Effective January 1, 2007 it replaces the above taxes with a national retail sales tax on all goods and services sold at retail, except that used goods are not taxed. The tax rate is set to be revenue neutral at the level necessary to replace the revenues generated by the repealed taxes.
A 23-percent (of the tax-inclusive sales price) sales tax is imposed on all retail sales for personal consumption of new goods and services. Exports and the purchase of inputs by businesses (i.e., intermediate sales) are not taxed. The sales tax must be separately stated and charged on the sales receipt. This makes it clear to the consumer what the amount of the tax is and that he or she is paying it.
The FairTaxSM provides every family with a rebate of the sales tax on spending up to the federal poverty level (plus an extra amount to prevent any marriage penalty). The rebate is paid monthly in advance. It allows a family of four to spend $25,660 tax free each year. The rebate for a married couple with two children is $492 per month ($5,902 annually). Therefore, no family pays federal sales tax on essential goods and services and middle-class families are effectively exempted on a big part of their annual spending.
Funding for Social Security and Medicare benefits remains the same. The Social Security and Medicare trust funds receive the same amount of money as they do under current law. The source of the trust fund revenue is a dedicated portion of sales tax revenue instead of payroll tax revenue.
States can elect to collect the federal sales tax on behalf of the federal government in exchange for a fee of one-quarter of one percent of gross collections. Retail businesses collecting the tax also get the same administrative fee.
Strong taxpayer rights provisions are incorporated into the Act. The burden of persuasion in disputes is on the government. A strong, independent problem resolution office is created. Taxpayers are entitled to professional fees in disputes unless the government establishes that its position was substantially justified.
It appears that there is some confusion on exactly what the FairTax is.
Only among its opponents as far as I have seen.
The FairTax legislation has been on the scene and before Congress since 1998 when it was first introduced as a retail sales tax replacing all federal income/payroll and gift estate taxes as clearly laid out in the text of its introduced bill, H.R.25.
If anyone would like to be added to this ping list let me know.
John Linder in the House(HR25) & Saxby Chambliss Senate(S25) offer a comprehensive bill to kill all income and SS/Medicare payroll taxes outright and replace them with with a national retail sales tax administered by the states.
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.
Refer for additional information:
confusion by the lawyers and judges -- who else cannot understand what the meaning of the word *IS* is?
When the scum suckers are gone, the world will be a much nicer place to live.
Most lawyers and judges are afflicted with "patriophobia" --- a deathly fear of freedom loving Americans.
What has happened on this since it went to the House Ways and Means Committee back in January. Is there new activity?
please add me to your list
Let me give a very plain simple explanation to all of this;
All of your monies,land,childern,ect... belong to the federal goverment and we own you all & there is nothing you can do about it either!
Welcome aboard! you are now on the pinger.
Please put this pig eating infidel on the ping list as well TIA - Give us the fair tax or get out of our country.
All of your monies,land,childern,ect... belong to the federal goverment and we own you all & there is nothing you can do about it either!
And thus we should all just go in the corner and cry like good little slaves.
|I discussed the importance of abolishing the income tax because of its tendency to form a habit of servility in the souls of a people that accepts it.
Servility of soul is bad not only in itself, it is also an open door through which will soon walk the abuses of ambitious government power.
Leaders who find themselves with governmental power over a servile people will be quick to conclude that such a people exist to serve them.
Got yah covered! welcome aboard.
Past time to chuck the IRS yoke. The Fair Tax is the only game in town. It's the ONLY way to tap the underground economy, which if anyone in DC operated with any logic whatsoever, one would think they'd be all over this. Of course, if you profit from the underground (ILLEGAL's, Drug War, etc...,) one would fight this tooth and nail. Heck, one might even come onto a Conservative forum and champion the IRS remaining intact with some bull about a Flat Tax, wouldn't one!? Blackbird.
Another reason to support Fair Tax is that by abolishing the IRS, we remove a resource used by Hillary and her ilk who use it to intimidate, punish and coerce.
I'm not for protecting specific industries, but one has to remember that much of the economy is based on the whim of consumers. Are there any other countries that have instituted such a tax where we could look at the results.
You do have a great point about tapping into the "off the books" economy. I would like to see those people have to pay tax as well.
I doubt it, but who know's? Maybe short term. Don't forget, all retail items already have an enourmous Tax burden built into the price. Think about taking your FULL paycheck home every week. Most of US are born Consumer's, so I do doubt there will be any long term impact on any retailer. Just my opinion of course. ancient_geezer could probably shed a little more light on the specifics of that. Blackbird.
They are an oppressive bunch. Maybe shutting them down would have an impact on some of the other ABC goon squads and their political attitudes? Blackbird.
Good point about the tax burden on prices. I did not think about what might happen to retail prices when the companies providing the products don't pay payroll tax.
Stick a fork in it; it's dead.
You do have a great point about tapping into the "off the books" economy. I would like to see those people have to pay tax as wellBlackbirdsst:
"Don't forget, all retail items already have an enourmous Tax burden built into the price"And you thought the "off the books economy" didn't pay taxes. As it turns out it's "an enourmous tax burden "....
This is making my head hurt.
As you well know I'm sure, the bulk of ILLEGAL's income goes back to Mexico, next to Oil it's Mexico's biggest revenue source. So NO TAX ASSESSED on literally BILLIONS of US Dollars every year. No income Tax, State or Federal being assessed on those wages. So it really only amounts to a mere pittance on the goods they buy to live and survive here.
The WOsD's has seen to it that the big bucks aren't spent on purchase's, without being reported to the IRS and other ABC agency's for investigation. The bulk of that money leaves our shores, where it can be spent freely, except for the small time user of the product. Nice attempt at throwing the straw man out there though, credit where credit is due and all that. Blackbird.
As you well know I'm sure, the bulk of ILLEGAL's income goes back to Mexico, next to Oil it's Mexico's biggest revenue source. So NO TAX ASSESSED on literally BILLIONS of US Dollars every year. No income Tax, State or Federal being assessed on those wages. So it really only amounts to a mere pittance on the goods they buy to live and survive here.So they won't pay tax under a sales tax either...
Other than you're the only one to mention illegals, what's your point?
I wonder if this would put a damper on the retail economy, especially big ticket items like new automobiles. It would seem to promote investment, but drive down discretionary retail expenditures.
The studies done in the past on this indicate an initial drop on the order of 5-10% in individual consumption as people tend to move toward more investment and savings over spending. That rapidly reverses as real household income grows with the economy as a consequence of enhanced technological productivity and yields from investment returns.
Not a negative from my view of things as we are far too dependant on government for our retirements and becoming more so as were spend ever more of our current family income to the neglect of our futures.
Rate of Personal Saving Plunges 100% - to new record low - $985 Billion missing
If families have less inflation-adjusted income, despite mother working, then family personal savings must suffer as a consequence - unless, of course, families reduce their consumption. But, families increased consumption spending and, to cover this, they reduced savings to historic lows and increased household debt to historic highs. Dangerous Trend !!!
The chart at the left shows a 45 year trend of that part of disposable income that has been saved - - called 'personal savings rate'.
Note: prior to 1970 the rate of personal savings was rising smartly - - as were family incomes per the first chart above - despite most families then having but one wage earner while also living without increasing debt ratios (chart below).
Then, family incomes stagnated - - and the saving ratio stopped rising as seen in the left chart - - then started falling rapidly - - plummeting since 1992. As of June 2005, savings were at an all-time record low of zero percent !! $985 Billion in savings missing in 2004 compared to savings ratio of 2 decades ago. (realized capital gains, not calculated in the savings rate, mitigate this chart somewhat if one wishes to call such savings - - but the trend with and without is at all-time record lows).
It is overtime for a encourage an earlier ethic on self reliance and thrift rather than a the socialist deadend ethic fostered under the income tax regime that will ultimately destroy our economy.
As I recall, all the taxes levied against the production of the materials to build the automobile would be eliminated, and the retail price with the National Sales Tax would be about the same as before. Hence, no negative effect due to the retail price. The cumlulative taxes would equate to National Sales Tax.
It is very refreshing to have somebody offer an answer to a question instead of just flaming away. Thanks.
Because more and more and more and more and more and more of them come in every day, but everyone here knows that doesn't concern you. My point is, it would no longer benefit people like you who hire them. The incentive for people like you to dodge Taxes would no longer exist. It would be out of your hands. HA! They might even expect you to pay them the same as an American would. Hell, you might as well hire an American. I know that sends chills up your (noodle) spine. Other than you attempting to argue in favor of them, what's your point? Would you be willing to put forth the argument that they are not part of the underground economy? Surely you're not that foolish? Blackbird.
What? You mean people aren't passively allowing inflation to eat up their savings? Who'd a thunk it?
Also check out: John Linder's FairTax updates,
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You mean people aren't passively allowing inflation to eat up their savings? Who'd a thunk it?
Who'd a thunk it Indeed. Tax labor and you get less production and more inflation. Tax consumption reducing the propensity to spend; promote savings and investment to reverse the trend.
"[T]he Equity of Imposition, consisteth rather in the Equality of that which is consumed, than of the riches of the persons that consume the same. For what reason is there, that he which laboureth much, and sparing the fruits of his labor, consumeth little, should be more charged, than he that living idlely, getteth little, and spendeth all he gets; seeing the one hath no more protection from the Common-wealth, than the other? "
--- Thomas Hobbes
"Imposts, excises, and, in general, all duties upon articles of consumption, may be compared to a fluid, which will, in time, find its level with the means of paying them. The amount to be contributed by each citizen will in a degree be at his own option, and can be regulated by an attention to his resources. The rich may be extravagant, the poor can be frugal; and private oppression may always be avoided by a judicious selection of objects proper for such impositions. "
"It is a signal advantage of taxes on articles of consumption that they contain in their own nature a security against excess.
They prescribe their own limit, which cannot be exceeded without defeating the end proposed - that is, an extension of the revenue."
Not me! I am getting ready for civilazation to fall again.
As a amature student of history all the great civilations last aprox. 200-500 years or so. We are right in the middle of this time frame. No matter how you slice it we are rotting from the inside out & getting ready to taken over by a external force.
So what can we do about this;
gather food at least a 1 year supply, get a good water source, farming supplies to grow your own in lean times, gold,silver,LEAD,whisky,beer, parts for ANY and ALL equipment that you may have.
"A 23-percent (of the tax-inclusive sales price) sales tax"So much for the "plain English."
The $5900 prebate will be about a $500,000,000,000 entitlement that costs taxpayers every year. That means the fairtax not only replaces the current system, but is actually a tax increase that has to cover this new entitlement. It is not revenue neutral, it is actually a big tax increase.
Thanks for the thread.
Vote only for candidates supporting this bill!
"A 23-percent (of the tax-inclusive sales price) sales tax"Not only that, they were careful to not quote the language of the bill..."23% of the gross payment"... The word "price" isn't mentioned in the bill regarding what is taxed.
So much for the "plain English."
"Stick a fork in it; it's dead."
LOL I think the expression is "Stick a fork in it; it's done."
For the benefit of those new to these threads, we FairTaxers are used to seeing these wishful assertions by the SQLs that even they don't believe. You can tell they don't believe them, because they continue to attack and distort the FairTax on these threads. If they really believed the FairTax was dead, they would have moved on by now. On this brief thread alone, you can see Your Nightmare, Always Right, LewisLynn, balrog666 and the other SQL standard bearers pounding away, searching for the ever elusive "achilles heel" of the FairTax.
Thanks, but there's no confusion on my part.
The misnamed "FairTax" is a cynical fraud...
A red-herring "reform" proposal intended to sidetrack and derail legitimate tax reform initiatives.
Sorry you can't understand plain English Nightie - but not surprised.
Bingo. The tax rate had to be raise 3-4 percent to raise the extra money needed to pay for the prebate. It is revenue neutral, but only after the costs of the prebate are figured in. Therefore several hundred Billion EXTRA will have to be raised to payout the prebate so the fair tax ends up being revenue neutral. I know this will take at least 1000 posts to you before you actually get it. Otherwise you would be a few hundred billion dollars short of being revenue neutral. You have to pay for this entitlement somewhere.
`(a) In General- For each purchase of taxable property or services for which a tax is imposed by section 101, the seller shall charge the tax imposed by section 101 separately from the purchase. For purchase of taxable property or services for which a tax is imposed by section 101, the seller shall provide to the purchaser a receipt for each transaction that includes-- `(1) the property or services price exclusive of tax; `(2) the amount of tax paid; `(3) the property or service price inclusive of tax; `(4) the tax rate (the amount of tax paid (per paragraph (2)) divided by the property or service price inclusive of tax (per paragraph (3)); `(5) the date that the good or service was sold; `(6) the name of the vendor; and `(7) the vendor registration number."
"`SEC. 510. TAX TO BE SEPARATELY STATED AND CHARGED.
`(a) In General- For each purchase of taxable property or services for which a tax is imposed by section 101, the seller shall charge the tax imposed by section 101 separately from the purchase. For purchase of taxable property or services for which a tax is imposed by section 101, the seller shall provide to the purchaser a receipt for each transaction that includes--
`(1) the property or services price exclusive of tax;
`(2) the amount of tax paid;
`(3) the property or service price inclusive of tax;
`(4) the tax rate (the amount of tax paid (per paragraph (2)) divided by the property or service price inclusive of tax (per paragraph (3));
`(5) the date that the good or service was sold;
`(6) the name of the vendor; and
`(7) the vendor registration number."
Since this a federal tax bill and the federal government does not control, legislate, or impose state taxes on states (and each state differs in what it does on that regard), there is no mention of state sales tax. Rightfully so. That would merely become another line on the report (if the state so decided) but it would not be taxed by the FairTax.
Bingo. The tax rate had to be raise 3-4 percent to raise the extra money needed to pay for the prebate.The rate had to be raised 3-4 percentage points, which is a 15 to 21 percent TAX INCREASE over what the fairtax claims would be needed for "revenue neutral".
Yep, if you consider the prebate to be an entitlement program that it is, then your only conclusion would be that this is a tax increase. Of course they will spin differently.
Having more to spend than you earn better describes an entitlement than it does a rebate.
Hardly an "entitlement" which is "... a government program providing benefits to members of a specified group ..." unless you'd like to designate all taxpayers as that group.
But the FairTax is revenue neutral (including the prebate) at 23%. In fact if the bill passed right now it would be revenue neutral at something like 19-20% rather than 23%. A plan that will so strongly boost the US economy far beyond where it now is can hardly be considered a "tax increase" even in your warped terminology.
Looey, there are lots of ways to have more spending than income - even under the present system. You're pretty dim-witted if you can't think of several. And none having to do with the prebate.
After your huge entitlement it is revenue neutral. Certainly it will probably give the government the $2 Trillion that it currently spends, but it will have to raise about $2.3 Trillion so it nets $2 Trillion. Social Security is an entitlement eventhough all taxpayers who have paid into over their lives are qualified. Everyone with a Social Security number is entitled to the fairtax prebate. It is certainly not a refund because there is no requirement that they pay a dime in taxes.