Posted on 06/25/2014 3:31:33 PM PDT by PoloSec
“has we have done for decades?” s/b “as we have done for decades?”
If you had read the FairTax legislation which comprises only about 140 pages you would have your answer.
The legislative architects of the FairTax were the beneficiaries of some incredible economic insight and brilliance.
The idea is the FairTax replaces all federal income taxes. Now think for a moment, all business taxes find their way into the retail price of a product or a service. In other words, consumers pay embedded taxes in every product or service bought at the retail level (not garage sales, used items, etc.). GDP is made up of more than 80% ccnsumption and consumption is where the retail buyer (the consumer) spends for consuming a product or service.
To answer your question we need to understand what it is that makes the FairTax ***transparent*** because that is key to holding back tax increases and thereby growth of government.
Take the example of a 2X4 piece of lumber sitting on the shelf of Home Depot at a price of $2. How much of that $2 is the result of federal taxes and compliance costs with federal tax filing? The answer is about 23%. The actual cost less all of the taxation up and down the supply chain for the 2X4 on the shelf is $1.54.
Now what the FairTax does is to ‘shunt’ all federal incomes taxes up and down the supply and production chains to the endpoint which is the consumer. The FairTax will charge a tax on that $1.54 2X4 equal to 46 cents and bring the out the door price back to $2. Now inclusive of the $2 the 46 cents accounts for 23% of the purchase. Exclusive of the $1.54 shelf price the 46 cents amounts to a 30 cents sales tax added. That’s a huge amount but that is what the government has brought into our pricing mechanism.
Now all of a sudden people can see what federal taxation has done to their ordinary daily puschases. A 30% sales tax is necessary to fund this bloated government at its current level of funding. This lifts the veil off the effects of the income tax in the prices of every day purchases.
This is a huge wake-up call and of course it is expected that the American consumer will be out for blood. This is a good thing.
And that’s by design. Because the FairTax legislation writes that Congress will vote on the Sales Tax rate once every year (National Retail Sales Tax = NRST).
So we can expect with near certainty that the American consumer will be pressuring their representatives to lower the NRST rate for the annual rate vote and that translates to less revenue for federal government and that means less government and less spending.
The other side of taking revenue away from the feds is to increase our exemption from federal taxation by increasing our rebates.
The two actions: 1) lower the NRST and 2) raise the rebate, both act as a pincer vise on federal government, like a lobster claw the federal government is held in a vise by the American people who can now see the whole picture; no more smoke and mirros, no more shell games.
Transparency is key and yearly votes will reveal who owns the representative in Congress. I will bet that member of Congress will vote to escape the wrath of the people.
I expect members of Congress to pass legislation to pull the veil again over the eyes of the consumer but I don’t think they will be successful once the American people have woken up to the con game that federal government plays with taxation.
The Income Tax must die. And that goes for the cancerous income tax called a ‘Flat Tax’.
“FLAT TAX for all.”
Flat Tax still leaves the monster in charge - the IRS.
they would only morph once again into the monster they are now - as they have from when it was first started.
You don’t successfully play with the devil a little - They must be totally and forever abolished.
and put in the FAIR TAX.
That would take all the power out of their hands - more people would start businesses, more jobs, FREEDOM - no reporting how much you make or even where you work. All they have to know is how many people in the house and S.S.no. that’s IT
You pay a fed sales tax at point of purchase, right along with sales tax. You decide how much tax you pay by what you purchase - and remember, second hand goods are not taxed. Buy a next to new car - no tax...
Every cent of your pay check goes into YOU pocket - not one cent taken out.
http://www.fairtax.org/site/PageServer
Yes.
Don’t presume I haven’t read it. Here are a few points I can think of right now.
I’m not so certain that “the American consumer will be out for blood”. Certainly the tax for that stick of lumber will be noticeable, but so will the “extra” cash in the wallet be noticeable.
Under this Bill the combined federal tax rate percentage is the sum of—
(A) the general revenue rate, 14.91 percent
(B) the old-age, survivors and disability insurance rate, and
(C) the hospital insurance rate.
As you point out, the tax rate is open to adjustment every year. The original income tax rate was low, look at it now. I would like to be optimistic that the rate would remain at this level or decrease, but that has never happened. It hasn’t happened because the fundamental cause has not been addressed: spending, specifically social spending. This Bill does nothing to address spending levels, but instead depends on “outrage” to restrict spending. I think Americans love their social programs, more than they hate taxation.
Moreover, with the exploding nanny state & the exploding importation of foreigners demanding government services which they perceive as a “right” - the pressure to restrain tax increases will be outweighed by demand for these social services. These foreigners are accustomed to high taxes and have socialist mindsets.
The “family consumption allowance” portion of the prebate calculation incorporates the poverty level as determined by Department of Health and Human Services. This is another opportunity for the overall “hit” to change. And the change will be by bureaucracy, not by legislators.
This Bill does not rid us of the 16th Amendment, an Amendment is required to repeal the 16th. There is nothing in this Bill which requires such an Amendment be first passed.
This Bill’s “prebate” continues the “progressive” ideas of the income tax. Indeed, if a person spends little (they barter/grow/make their own) their “prebate” will be more than the tax they’ve paid, they will pay less than 0% tax, which is a wealth transfer.
“The Income Tax must die.” I agree. It is an abomination in practice and immoral in principle. “And that goes for the cancerous income tax called a ‘Flat Tax’.” I agree. But a national sales tax - with or without a “prebate” gimmick - isn’t a solution either.
But most importantly, this Bill does not slay the leviathan.
Leviathan feeds at a trough.
“Fair Tax” changes how the trough is filled. It is hoped that when people see how much is in the trough their outrage will result in less being put into the trough.
I say, remove the trough.
There is no time to nibble around the edges. Slay leviathan. Put it back in it’s Constitutional box.
> “I think Americans love their social programs, more than they hate taxation.”
You’ve just made the case for the FairTax.
Americans will do whatever it takes to put money in their pocketbooks.
That means they will vote to lower the 30% sales tax rate because they will benefit immediately in their wallets.
That means they will vote to raise the rebate because that means more funds are in their wallets and under their control.
The social programs continue under the FairTax. The FairTax was designed to specifically avoid becoming embroiled in spending arguments because nothing is ever done in the arenas of those arguments.
But when the revenue falls because Americans vote for an increase in rebates or a decrease in the NRST, then spending cuts are a must unless Congress votes to raise the debt ceiling. But that’s another discussion.
> “This Bill’s “prebate” continues the “progressive” ideas of the income tax.”
You couldn’t be more wrong. Income at the poverty line is spent 100%. Statistics are that less than 0.0003% of rebate recipients will receive more rebate than they ever pay in taxes.
The poverty line is conveniently viewed as that level of spending and income where adding one more dollar to the mix allows for one dollar of savings. Poverty stricken means there are no dollars for saving, everything is spent.
The current poverty level of spending is about $10,295 per year of which 23% on a monthly basis is about $196 per month. That’s it, a rebate of only $196 per month. The monthly spending is $858. You tell me the statistics of how many people with only $858 per month will save and not spend it all. The statistics show very small percentages. This is near undetectable leakage and is not worth keeping the income tax in place just because some dead beat is getting $196 per month of which he/she has spent little to receive.
The reason you are off is because you are thinking ‘income’ and you need to stop thinking of it in order to grasp the FairTax. People will always need to spend on the necessities of living; food, water, shelter, heat and so on. These things are not free and if they are, then the recipients are fortunate indeed. The people that steal or deal in drugs or sell their bodies must all spend on necessities or someone must spend on their behalf and that means everyone pays under the FairTax. There is no escaping it. This is not true under the income tax or flat tax.
People will always come up with dollars to spend, they must spend on essentials such as food, water, clothing, medicine, shelter, etc. People will sell old belongings, borrow from friends and family, sell their bodies to come up with survival funds and they will spend all. Not many can live on less that $858 per month much less save anything from it. Those that do manage are a very small statistic.
You’ve made a big bogeyman out of the FairTax Rebate. You have done nothing but hand waving saying it smacks of socialism etc, What BS, the Rebate is not socialism, it is exactly what it is called, a rebate on taxes spent up to spending at the poverty line, the line of spending for essentials of living. You have not done statistics, you have not analyzed the demographics of abusers and you have no argument other than it seems like a handout and it’s not.
It would be a mistake to put in place a consumption tax without first making income and wealth taxation at all levels (local, state, federal, international) unconstitutional!
Because, otherwise, we'd sooner or later end up with both kinds of tax.
>> “I think Americans love their social programs, more than they hate taxation.”
> You’ve just made the case for the FairTax.
> Americans will do whatever it takes to put money in their pocketbooks
Perhaps I have not been clear, your comment is a non sequitor. What I am saying is that Americans will suffer nearly any amount of taxation because they love their social programs. In no way does that “put money in their pocketbooks”
The “prebate” is determined by family size and poverty level. How is that not progressive?
I would propose an even more radical reformation -
no federal tax will be collected from any individual citizen.
States will be taxed as entities, proportionally based on population.
How the states collect the money to do so is up to them.
You need to get out more often.
The average recipient of EBT, housing assistance, Medicaid are not people that ‘love’ their social programs. They have one driving thought in mind, survival.
FairTax policies hit them right square in their spending. Naturally, they will want the rebate to be higher and the NRST to be lower.
How about Medicare? Social Security? etc.
What are you talking about? The rebate is the same for everyone that is a US citizen or a permanent resident.
The rebate is simply a means of prohibiting federal taxation on spending for life essentials FOR EVERY AMERICAN. How is prohibiting federal taxation a bad thing?
What about Medicare or SS? What’s the question?
Why don’t you read this and get the answers for yourself?
http://www.fairtax.org/site/PageServer?pagename=FAQs
M’care and SS are social programs. Programs that people love. Just try to cut these programs. Go ahead. See what happens.
Read Chapter 3 of HR 25.
The “prebate” is determined by family size and poverty level.
>> How is prohibiting federal taxation a bad thing?
This Bill prohibits federal taxation?
What’s that got to do with abolishing the IRS and replacing our tax code with the FairTax?
Are you that dense? Were we not discussing the Rebate provision of the FairTax?
The Rebate prohibits federal taxation for EVERY AMERICAN up to the spending level of life essentials by rebating or prebating such taxes or by simply issuing a credit to a card so that the NRST is prohibited from applying until the credit level is reached.
All of these things are discussed here:
http://www.fairtax.org/site/PageServer?pagename=FAQs
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