Posted on 08/07/2006 5:51:23 PM PDT by pigdog
A couple of points:
The GAO (Congress's auditing branch) found that all of the exemptions, exclusions, and special favors in the current tax code drain federal receipts by $728 billion each year. That is almost as much as the nation spends on Medicare and Social Security combined and 60% more than the nation spends on national defense. The FairTax eliminates all deductions, credits, and carve-outs to ensure that everyone pays his or her fair share.
and:
The Department of Commerce reports in its most recent Economic Census that just 688 retailers (0.03%) in the U.S. make 48.6% of all the sales. Just 3.6% of retailers collectively make 85.7% of all U.S. sales. Fewer points of collection will mean higher compliance with the FairTax than with today's complex system.
(Excerpt) Read more at linderfairtax.house.gov ...
I mean, let's at least call it a tax increase.
Considering the rate is lower and is to be set to recover the same amount of revenue to government as the current system, it is certainly not a tax increase.
It is however a change in how taxes are collected and spread over a much larger taxbase, assuring that every person rich and poor nominally participates in the payment of those taxes. Every citizen should participate and be nominally aware of the burden that larger govenment imposes upon every one in the nation.
In reguards comments of James DeMint (R-SC)
United States House of Representatives
APRIL 5, 2001
Walter Williams hits the head of nail to the real problem with current tax system:
"It's like me in the restaurant: What do I care about extravagance if you're footing the bill?"
- Walter Williams
The rate of tax for HR 25 is 30% added onto a pre-tax price, which is 23% of the total incuding the tax paid. BTW, the latter method (23%) is how income taxes are figured.
THe plan is indeed revenue neutral, but you are wrong to conclude as you do. The tax base for the nrst is much, much larger than the base for taxable incomes. Hence, the rate can be lower.
Plus since its an inclusive tax it won't appear on the receipt.
EH? That one may choose to express the rate inclusive of tax is not related to whether it will appear on the receipt. Indeed, the bill requires the amount of federal tax to be explicitly stated in $ and %.
And since all workers get back a tiny portion of their taxes each month ...
This is also wrong.
All legal residents with a valid SSN may choose to receive the prebate - paid in advance... not just "all workers". And it is surely subjective whether you see it as "tiny". The amount, to be objective, is 23% of the poverty level for each family size. The prebate amounts can be seen here. Note that an increase in prebate means a tax cut for us and less $ to the gov't. Should the gov't increase the rate too far, their tax receipts will fall. Ask anyone. Read the federalist papers. Under the nrst, people may choose ways to legally avoid tax if it is higher than they want to pay.
In a few years we could have a 150% hidden sales tax, the poor will get higher prebates than everyone else ...
No. The law is to explicitly show the amount of tax on each receipt, it is today's tax burden that is hidden in higher prices, lower wages, or reduced ROI. The nrst takes existing federal taxes out of prices, out of wages, out of ROI and puts all of them into RETAIL prices, listed on the receipt. Years ago and still today, everyone says watch out for people making assertions when they are quite obviously ignorant of the facts. You have no idea what the plan is.
The sort of misinformation that you and others have been putting forth repeatedly is, simply, wrong and you do a disservice to both yourself and someone genuinely trying to learn about the FairTax benefits.
Let's take a normal "not rich" family that is M2K (married. 2 kids) with a comprehensive household income of $51,900. For this analysis we'll use the 9% figure for price reduction that many of the FairTax opponents have stipulated will occur, rather than the 12 to 15% (or higher) price reduction that many Fairtax supporters believe will actually occur. We'll also assume that everything purchased under the income tax yields full value for each dollar spent (e.g., there is no reduced value of the things purchased due to embedded income tax costs).
We find that under the income tax the purchasing power of the family drops to $45,413 (an effective tax rate of 12.5%), Using this same $51,900 of income under the FairTax, we find the purchasing power is $50,588 (an effective tax rate of 11.3%) or an improvement under the FairTax of more than 11% in purchasing power. There are several things to take note of here that even show that this analysis is greatly biased AGAINST the FairTax (which we'll mention just below), but the point is that even with all the pro-income tax assumptions, the FairTax nets a lower tax rate while still paying the S/S & M/C amounts and the prebate amounts (as well as the payments to the retailers and the states involved in collecting the tax - which, it should be noted, the income tax does not pay for). Rather than "hurting" the "not rich", those very folks are greatly helped by the FairTax - as are most other taxpayers.
Some of the obvious bias against the FairTax is that we've assumed that every single cent of the $51,900 of income is spent on FairTaxable items - something that is virtually impossible in real life. For example, debt repayments (credit cards, mortgages), church and charity donations, education tuition, state and local taxes, gifts to others, political contributions, etc. ... all these things go to reduce the amount taxed and thereby - if we assume $8,800 is spent in that manner - lower the effective tax rate down to 8.91% - a substantial drop.
That's why the claim that "everything will be taxed at 30% or 23%" (depending on whether you use tax exclusive or tax inclusive rates are used) is so hollow, untrue, and misleading since it is the effective tax rate that is the true measure of your taxes paid (and not the 23/30% marginal rate). Pretending otherwise is merely a case of misstating the facts perhaps with the inenion to mislead. The example uses t.i. so that the results are directly comparable to each other and comparable to the income tax.
It will be a tax increase on people who are not a legal part of our income/payroll tax system.
It will be a tax increase on illegal immigrants
It will be a tax increase on those who fail to report or underreport income
Again, LEGAL participants in today's income/payroll tax system will experience a significant gain in purchasing power- because the tax base is much larger to include those who are currently evading taxes.
I agree with everything you say, but I'd like to change one thing...
a tax on CONSUMPTION would be a good way to get a little more acurate share of what he ACTUALLY SPENDS...
Study #24 for a better understanding.
The tax inclusive rate DOES appear on the receipt BTW along wih other specified information. It's called out in the bill.
Sorry guys I gotta go right now. Forgive me if I don't respond until much later. Stuff to do . . .
I haven't seen something so fubar-ed in a looooooong time!
Since the FairTax won't be 30%(e) [23%(i)] but much higher, your numbers are meaningless fantasies.
FT Rate = Revenue Required divided by Taxable Base
If you get 23% with your calculation, using the current government revenue as sufficient, and using the current revenue base as rock-solid.
Using conservative estimates, if the Revenue Required is understated by 15% (due to the higher cost of government having to pay FairTax on purchases and salaries) and the Taxable Base is overstated by 20% (by evasion and changes in bahavior that would occur under a huge sales tax), then the real FairTax number when calculated properly is 1.15/0.8 times 23% = 33%.
This makes the actual FairTax Rate 33%(i) which is 50%(e) when expressed as a normal sales tax. Do your purchasing power numbers with a 50% FairTax rate, and see where it takes your numbers...
You buy a loaf of bread at the store, the shelf price is $1.00, plus $0.50 FairTax plus state and local taxes makes the price...
Who among us has never checked the "already previewed" box out of false confidence or simple impulsiveness? Everybody raise your hand if you've fat fingered the keyes a few times......I'll wait.....everybody bow your heads, no looking around....now raise your hands.....it's just me and God looking now and he already knows.....good, thank you ....alright, you in the back, thank you.....Whoa....Emma, Honey you should have told me.....aw crap Amen you can all go home now.....
Sorry, I'm in one of those moods tonight....I really do respect all y'alls' opinions. I just seem to be suffering from a seriousness deficit .
Nothing you say there makes any sense at all but is only a salesman's daydream. With your track record, why should anyone choose to buy into your spin?
There have been a number of reputable economists (of which you're not in that category) who have ALL found the revenue neutral rate to be from 22 to 24% tax inclusive so go peddle your trash elsewhere.
Since the consumption tax base is about twice the income tax base, your rate nightmares are the ones that are meaningless - as were your former vanity posts trying to show all FairTax supporters as liars ... when it was YOU doing the lying just as at present.
"... we are better off with the devil we know ..."
I would hope you're kidding!!! The devil we know my arse. NO ONE KNOWS the income tax and if you think that you're truly batty.
You seem to be of the "let's rewrite the FairTax bill so it's not recognizable, not workable, and won't pass" boys. Sorry, but it's not going down that way. As the grassroots support continues to build for the FairTax there will be ever more pressure to pass it as written - and that's exactly what the intent of the supporters is. Adding in all of the wonderful exemptions and exceptions and little bits and pieces of he income tax --- won't happen.
It's interesting to see all of the fanciful notions the opponents of the FairTax bill dream up to "defeat" it (in their minds) but more and more people out there realize the bill benefits them greatly as post #24 shows by giving them more disposable personal income (purchasing power) and kicks up the economy a notch or two as well.
You're just whistling past the graveyard like so many others who wish it ill. This bill is going to become our tax law - very likely in his next legislative session.
Sure, you keep everything you've earned...until you spend it, then federal government takes a whopping 30%. I don't know how many people you know that can get by without spending money.
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