What if's are fun aren't they...The Fairtax is full of them.
But don’t you think that under the FairTax, SS would become essentially a voluntary system, since there are no longer taxes supposedly collected specifically for SS?
Fair Tax Act of 2005 (Introduced in House)
`SEC. 101. IMPOSITION OF SALES TAX.
`(a) In General- There is hereby imposed a tax on the use or consumption in the United States of taxable property or services.
`(1) FOR 2007- In the calendar year 2007, the rate of tax is 23 percent of the gross payments for the taxable property or service.
`(2) FOR YEARS AFTER 2007- For years after the calendar year 2007, the rate of tax is the combined Federal tax rate percentage (as defined in paragraph (3)) of the gross payments for the taxable property or service.
`(3) COMBINED FEDERAL TAX RATE PERCENTAGE- The combined Federal tax rate percentage is the sum of--
`(A) the general revenue rate (as defined in paragraph (4), and
`(B) the old-age, survivors and disability insurance rate, and
`(C) the hospital insurance rate.
`(4) GENERAL REVENUE RATE- The general revenue rate shall be 14.91 percent.
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`(d) Old-Age, Survivors and Disability Insurance Rate- The old-age, survivors and disability insurance rate shall be determined by the Social Security Administration. The old-age, survivors and disability insurance rate shall be that sales tax rate which is necessary to raise the same amount of revenue that would have been raised by imposing a 12.4 percent tax on the Social Security wage base (including self-employment income) as determined in accordance with chapter 21 of the Internal Revenue Code most recently in effect prior to the enactment of this Act. The rate shall be determined using actuarially sound methodology and announced at least 6 months prior to the beginning of the Calendar year for which it applies.
`(e) Hospital Insurance Rate- The hospital insurance rate shall be determined by the Social Security Administration. The hospital insurance rate shall be that sales tax rate which is necessary to raise the same amount of revenue that would have been raised by imposing a 2.9 percent tax on the Medicare wage base (including self-employment income) as determined in accordance with chapter 21 of the Internal Revenue Code most recently in effect prior to the enactment of this Act. The rate shall be determined using actuarially sound methodology and announced at least 6 months prior to the beginning of the calendar year for which it applies.
`(f) Assistance- The Secretary shall provide such technical assistance as the Social Security Administration shall require to determine the old-age, survivors and disability insurance rate and the hospital insurance rate.
Dream on...That's the real reason your earnings have to be reported.
Interesting. So the total tax rate collected is based on what would formerly be wages subject to SS tax? I can see that being something that could (and should) be modified in the future.
That being said, any individual who failed to report wages for purposes of SS calculations would only be forfeiting their own “benefits” and I doubt that the government would come down on anyone just for the purpose of adding that individual’s income to the aggregate of the millions of people whose wages determine the “SS portion” of the FairTax, especially considering that the nonreporters would be ineligible to collect any SS payments.
Having said that, I acknowledge the possibility that you have found an issue with the FairTax that could use some adjustment. But it seems to me that rather than recommending a tweak to make the FairTax even fairer, you want to throw out the entire idea and stick with a system that right now, every day, punishes people for earning money, or even attempting to do so. Playing with the various income tax rates in the current system is rearranging the deck chairs on the Titanic. Why are you so opposed to fundamental reform just because there are a few issues that could possibly be adjusted to better serve the people?
On a side note, I don’t want to look like I didn’t respond to your second post. I hate it when people post multiple responses to a single post, because it makes it difficult to respond to each of their points and without doing so it looks like one has no response to subsequent posts. But when you say that you are not opposed to reform, I think you have an obligation to state just which reforms you support, and why those reforms are superior to the reforms already out on the table.