IRS Threatens Political Speech

As an old fart on SSI, I'd be more comfortable with the flat tax solution. Sales taxes raise prices and my income is rapidly approaching starvation levels as prices soar.

However I will vote for any solution that banishes the IRS and damn their torpedos.

What really hurts is the disparity in COLAs the swine pass.

Actually, you might not be more comfortable at all under the flat tax. Keep in mind that it's still an income tax (along with a payroll tax if you work) and has the problems shown in this post.

But let's look again at the FairTax and see how that actually looks from the standpoint of purchasing power.

Using the current CBO numbers of household effective income tax rates and the current FairTax prebates, let's say you are in the first quintile of taxpayers with income of $14,800 and are M0K (married, no kids).

If we look at a $100 slice of income or earnings under both the income tax and the FairTax, we find that under the income tax your effective income tax rate is 2.5% and your $100 has a purchasing power of $97.50 while under the FairTax hat $100 rises to a purchasing power of $118.09 because the prebate helps you greatly (a -7.46% - money into your pocket). And this look at purchasing power makes all assumptions that are unfavorable to the FairTax.

For the income tax, no allowance has been made for the reduced value of the things you buy with the $97.50 due to the costs of embedded income tax costs hidden in the prices of all that you buy. For the FairTax, it makes the impossible assumption that everything you buy will be a taxable thing. In fact, many things reduce your effective tax rate under the FairTax even further such as mortgage and other loan payments, church and charity donations, state and local taxes, family gifts, educational expenses, etc. All these are paid with untaxed money as are any savings or investments so in fact your effective tax rate under the FairTax should be even better.

So mull it over some more and don't buy into all of the anti-FairTax hype you see from some opponents on these threads.