Posted on 02/06/2023 1:27:31 PM PST by Taxman
In my over 30 years of working with volunteers who advocate replacing the income/payroll tax system with a national retail sales tax, one thing that I have noticed is that our volunteers have always been driven by the desire to help our great nation and future generations. None of these advocates are looking to make money or obtain other types of gain for themselves. In fact, most of us have paid our own expenses associated with the effort with no expectation of being reimbursed.
Advocates for the national sales tax come from every religion, every line of work, every economic level. They all recognize that the FAIRtax is vastly superior to the income tax in every measurable way and can’t understand why the people in DC don’t embrace it. After all, they’re supposed to be doing what’s best for us as individuals and for the country as a whole.
Retired Senator Russell Long, who was the head of the Senate Finance Committee for many years, told me that he understood the arguments for the FAIRtax and agreed that it had many advantages over the current income tax. Then with a twinkle in his eye, he said, “Coming to D.C. and telling us that we should replace the current tax system with the FAIRtax just because it is logical and good for the American people and thinking that we will immediately grasp this and do it, well that makes as much sense as going to a monastery to meet girls.”
THE 30% LIE
Now that the FAIRtax is going to be voted on in the House, the establishment is really scared. They are screaming about how bad the FAIRtax is for the American people, and the media is making sure that those screams are being heard throughout the country. They’re focusing on one tiny sliver of the whole story—that everyone is going to have to pay a massive 30% sales tax on everything they buy.
None of these hit pieces include any of the following facts about the FAIRtax:
• We get to keep our whole paycheck and pay taxes only when we make retail purchases of new goods and services.
• We don’t pay taxes on our retirement income because the FAIRtax is only paid when retail goods and services are consumed.
• We can save and invest completely tax free—an unlimited IRA.
• If they mention the prebate at all, it’s portrayed as a massive new entitlement or even a Universal Basic Income plan. They don’t point out that it’s actually a tax refund that makes spending up to the poverty level totally tax free. This means that lower and middle-class taxpayers won’t pay anywhere near 30% of their income in taxes.
• The FAIRtax rate is a 23% tax inclusive rate and at 30% tax exclusive rate because that is the rate needed to replace the revenue generated by the income, estate, gift and payroll taxes it replaces and provide the prebate.
• Tax inclusive means that the amount you pay includes the tax. For example, $100 would be $77 for the product and $23 for the tax.
• Tax exclusive means that the amount is additional to the amount. If you pay $100 then the tax is $30 which is 23% of $130.
• The FAIRtax shows everyone the true cost of government on every retail receipt.
• We are already paying a disguised consumption tax. The only money we can use to purchase goods and services is from our net paycheck—the amount left over after federal taxes are taken out. This means that almost all of us have to earn $1.20 to $1.80 to net $1.00 that we can spend.
• The FAIRtax will bring financial stability to Social Security and Medicare by extending the tax base from just those working for a paycheck to everyone whose spending exceeds the poverty level.
• Even if we pay the same amount of federal taxes because of our spending habits, isn’t it better that we are in control?
• We have no forms to file and no IRS!
THE IMPACT ON LOWER INCOME FAMILIES
Another common myth is that the FAIRtax harms lower income people.
This is easy to disprove.
Present Income Tax
Today, if a family of four earns $3,333 per month or $40,000 annually, each check they receive is reduced by federal taxes. The payroll tax rate is 7.65% or $255 per month ($3,060 annually). In addition, according to the Nerdwallet.com calculator, they will owe an estimated $1,410 in income taxes and this reduces their paycheck by $117 each month. This means that they will owe a total of $4,470 or $372 in federal taxes withheld from their paycheck each month giving them a net check of $2,961.
However, this family, if they file complicated forms, will receive the earned income tax credit. According to the IRS EITC Assistant, this family will be eligible to receive $3,274 in the earned income tax credit which reduces their federal taxes to $1,196 or $99 per month and this increases their paycheck from $2,961 to $3,232 dollars per month.
This means that the family has $37,784. Their effective tax rate is 3%.
Of course, obtaining the earned income tax credit is not simple and often requires low-income people to use a paid tax preparer, like H&R Block.
FAIRtax
Under the FAIRtax, there is no withholding. There are no forms to file and no tax preparers to pay. The family receives the entire $40,000 or $3,333 per month.
A fundamental principle of the FAIRtax is that the family is not taxed on the amount of spending up to the poverty level published by the U.S. Department of Health and Human Services each year. The 2023 poverty level for a family of four is $39,440 per year which is $3,287 per month. When the family makes purchases of new retail goods and services, they will be charged the FAIRtax. The FAIRtax provides the money to pay the FAIRtax, for up to $3,287 per month, by transferring to the family’s bank account a $756 prebate on the first of each month.
$756 is the amount of FAIRtax the family will pay on $3,287 per month of spending on new retail goods and services.
So, at the first of the month, the family has $756 plus their monthly income of $3,333 or $4,089 in their bank account. When the family purchases new goods and services each month, the $756 of FAIRtax that is owed on $3,287 per month of purchases is paid from the family’s bank account. The family has not paid any FAIRtax with their own money but uses the $756 prebate they received in their bank account.
However, if the family spends more than $3,287 per month on new goods and services, they, they will have to pay the 30% tax exclusive rate on the excess amount. If the family spends their entire income of $3,333 per month, they will pay the FAIRtax on only $46 per month, $3,333 minus $3,287. That means they will pay just $13.80 per month or $165 a year out of their own pocket.
The family has $39,835 of net spendable income contrasted with $37,784 under the present system.
This is not a 30% tax rate but a .0041% tax rate on their $40,000 of income contrasted with the 3% tax rate they pay now.
So which is better, paying $1,196 in federal taxes under the income tax, or paying $165 a year under the FAIRtax? Since the FAIRtax is only charged on new retail goods and services, if the family spent $5,000 per year on payments for a used car, they would not pay the FAIRtax on that amount and not have to spend $94.50 per month, or $1,134 (one-eight of the $9,071 prebate). The prebate is their money and they can use it however they choose.
In that case, under the FAIRtax the family making $40,000 has an additional $2,164 ($1,030 less in taxes that would have been paid under the present system plus $1,134 of unused prebate) to spend for their family each year than under the present income tax. Here is a comparison.
CONCLUSION
We now have the opportunity to force all Members of the House to either vote for the present income/payroll tax system or the FAIRtax.
They either support the corrupt income tax and the IRS or they want to get rid of it. It can’t be any simpler than that.
They either believe in being transparent and showing Americans the true cost of their government or they don’t. They either support the largest transfer of power from government to the people, the FAIRtax, or they don’t. If they think that the FAIRtax needs to be changed, then they can propose the change. Don’t condemn the entire bill because it has a “flaw” that can be easily addressed. And don’t think for a minute that there aren’t any flaws in the income tax.
As Martin Luther King, Jr. said, In the End, we will remember not the words of our enemies, but the silence of our friends.
Please stand with us and demand that your representative support a much fairer, much simpler and much more efficient way to fund the government—the FAIRtax! The FAIRtax doesn’t pick winners and losers. Because it taxes spending, not earnings, the FAIRtax lets everyone save for their retirement tax free.
The FAIRtax collects the revenue that the federal government needs to operate but does it in a way that has the least impact on our individual freedom and the least impact on our economic prosperity.
There are no tax returns to file and no records to keep. We pay our federal taxes when we make retail purchases of new goods and services, and there is no need for the IRS. If you sell a used couch or used jet ski online, there is no FAIRtax due on that transaction.
The FAIRtax will allow us to TAKE BACK CONTROL. The income/payroll tax system is broken and no longer working—we can’t repair it but we can replace it with the FAIRTAX!
Join us and TAKE BACK CONTROL OF OUR COUNTRY AND OUR LIVES—NOT WITH BULLETS BUT WITH THE ELIMINATION OF ONE OF THE BIGGEST THREATS TO OUR LIBERTY AND ECONOMIC PROSPERITY—THE INCOME/PAYROLL TAX.
We all should remember Edmund Burke’s warning that applies to our efforts to TAKE BACK CONTROL, “Nobody made a greater mistake than he who did nothing because he could do only a little.”
We should also remember this quote from George Orwell's 1984, which, if we do nothing, may foretell your and your children's future:
“If you want a picture of the future, imagine a boot stamping on a human face—forever.”
WHAT CAN EACH OF US DO?
We can write letters and make calls to our elected representatives and attend Zoom town hall meetings demanding that if they really want to allow Americans to “TAKE BACK CONTROL”, the first step is to eliminate the income/payroll tax system and enact the FAIRTAX! TAKE BACK CONTROL! Help us PASS THE FAIRTAX!
The IRS will be gone and we will pay our taxes when we make purchases.
WE and not the Ruling Class and their minions in D.C. will decide how much federal tax we pay!
WE will know how much tax we and everyone else are really paying because taxes will no longer be hidden from us. It will be clearly shown on every retail receipt.
If you have friends who don’t know about the FAIRtax, send them to FAIRtax.org. Have them watch the white boards under “How It Works” and, if they agree, ask them to please join us.
Then contact your Members of Congress and the President and demand that Congress pass -the FAIRtax—the only fair tax.
Is it hopeless? When confronted with a seemingly impossible problem, remember the statement attributed to the author George Bernard Shaw who wrote, You see things; and you say “Why?” But I dream things that never were; and I say “Why not?”
Isn’t it time for us to ask, “Why not?” HELP BRING ABOUT REAL TAX REFORM AND STOP FUTURE IRS ABUSES
By contributing (investing) $10.40 per month, you help provide a financial base to AFFT. If you can make larger contributions (investments), these will be used not for salaries, as we are all volunteers, but for the needed updates to our economic studies which will be vital for all future years.
Please go to https://fairtax.org/1040 to invest in AFFT and in your and your family’s future.
First, please note that the prebate is voluntary - to get it, one has to apply for it. SSNs will be required.
If, (and this is my opinion) in your scenario, each of the 3 guys tried to clain the other two as dependents in order to claim a 3 person family prebate, they would eventually get caught and prosecuted for FRaud. There will be a mechanism to cross-check for this kind of FRaud.
IMHO, under the FAIRtax, cheaters would be caught and prosecuted far more FRequently than under the current system.
“not with the fair tax ... which is a national sales tax ...”
I am well aware that the FairTax is a national sales tax. And yes, these questions are asked and answered frequently. I have seen them answered on many forums and have answered them many times myself.
I have seen them answered on many forums and have answered them many times myself.IOW there is no answer.
The long list of deceit, lies, half-truths and what should be simple questions that can't or won't be answered are all reasons the scam should never or will never be passed.
It looks like they all went to the Pelosi "we have to pass it to know what's in it" school of information.
All you're required to know is the tax rate is 23%...Oh! Wait! it's 30%
BTW, the 23/30% rate is for the first year only. After the first year the rate will be determined by the Social Security Administration (what can go wrong there?).
The more you look into it, the uglier it gets.
Name calling will start in_ _ _.
Not so!
The projections are that the economy will be vibrant in the immediate aftermath of FAIRtax implementation, no politician will be able to get elected on an income tax/IRS scheme!
We the People outnumber them and We the People will have to force their hand!
I agree with you: the Flat tax is clearly self-defeating!
The FAIRtax, on the other hand, is a winner!
Thank you!
We need to redouble our effort to replace the Marxist inspired “progressive” income tax with the FAIRtax and abolish the IRS!
Not so!
Read about the FAIRtax here, and scroll down to read about the prebate: https://fairtax.org/about/how-fairtax-works
And then watch this video: https://www.youtube.com/watch?v=HTOOw7u_lsI
You are most welcome!
Keep working with us to get the FAIRtax implemented!
FER SHURE! FER SHURE!
Thanks, Cobra64.
See how you can help us get the FAIRtax enacted at https://fairtax.org/about/how-fairtax-works
There ARE NO tax “brackets!”
Straight sales tax collected at the point of retail sale!
I see your panties are in a wad yet again, LurkeyLiarLooneyLou, about the FAIRtax rate.
Sit down with your calculator and figure out how much your total tax burden is now and then recalculate it under the FAIRtax.
You will come out ahead!
Thanks Dementon for your reasoned reply. I agree that this is a reasonable interpretation of the bill. However, it requires that the prebate be sent to qualified families. If a household could pick and choose, they would all choose to register as individuals as that would yield the greatest aggregate prebate.
Scenario 2...
A single woman her daughter and the daughter’s husband rent a house together. In this instance they are required to register as one qualified family. The resulting yearly prebate payments for this household is $2630 for each person. The guys in the first scenario are getting $3353 each. All else equal, the folks (sorry) in the second are paying a higher tax rate. Why?
It seems to me the prebate should be factoring in dependents rather than familial relationships.
With regard to fraud, my post was not about fraud, but to question the reasonableness of the prebate scheme. And re voluntary registration, I think this is important for those who value maximum privacy or that prefers a 23% flat tax equivalent. Almost everyone is going to register.
with the fair tax nobody has to reveal how much they earn ... it is not based on income ... it is a retail sales tax ... who told you that crap?
Oh please, politicians run on one thing and then do another. When the economy is great, people hardly pay attention to DC. They aren’t giving up their grift.
with the fair tax nobody has to reveal how much they earnSpreading this knd of ignorance, fake news, misinformation is why this will never pass...Again. For maybe a 3rd or 4th attempt.
SEC. 903. Wages to be reported to Social Security Administration.Why will your wages etc. have to be reported to SS?“(a) In General.—Employers shall submit such information to the Social Security Administration as is required by the Social Security Administration to calculate Social Security benefits under title II of the Social Security Act, including wages paid, in a form prescribed by the Secretary. A copy of the employer submission to the Social Security Administration relating to each employee shall be provided to each employee by the employer.
“(b) Wages.—For purposes of this section, the term ‘wages’ means all cash remuneration for employment (including tips to an employee by third parties provided that the employer or employee maintains records documenting such tips) including self-employment income; ....
“(c) Self-Employment Income.—For purposes of subsection (b), the term ‘self-employment income’ means gross payments received for taxable property or services
Because if passed (never happen) after the first year the SSA determines the sales tax rate (what could go wrong there?)
I believe you. I am all in on the fairtax
I'm with you, at least with my understanding of the fair tax as I support it. But that's not the way the article presents a fair tax. Here's the quote from the article (which I quoted in comment 4):
However, if the family spends more than $3,287 per month on new goods and services, they, they will have to pay the 30% tax exclusive rate on the excess amount. If the family spends their entire income of $3,333 per month, they will pay the FAIRtax on only $46 per month, $3,333 minus $3,287. That means they will pay just $13.80 per month or $165 a year out of their own pocket
That to me looks an awful lot like tax brackets. So my first thought (as I typed in #4), was that this proposed version of a fair tax was for the government to track our spending. When we spend up to a certain point we're taxed at a higher rate. I didn't like that idea.
Eventually in the replies to me (such as post #7 from Valpal1 and post #30 from Dementon) there came the notion that the government won't track our spending to determine our sales tax rate. Instead they'll determine our sales tax rate based on income -- which sounds a lot like tax brackets based on reported income to me. Even if the tax is applies at point of sale instead of at point of income, it would still be based on an income tax bracket. One of them said the way it would work is we're all charged a flat sales tax rate, that the different brackets would be implemented as a kind of prebate from the government for low income people.
So what is it? If it's a flat tax rate with no adjustable rates then I'm for it. But if, as the article proposes, the flat tax would have different rates based on how much we spend, how would that be tracked and implemented so they'd know when to charge the higher rate? That's the part that's throwing me. I don't want the government tracking my spending to know when to charge me a higher rate.
“A single woman her daughter and the daughter’s husband rent a house together. In this instance they are required to register as one qualified family. The resulting yearly prebate payments for this household is $2630 for each person. The guys in the first scenario are getting $3353 each. All else equal, the folks (sorry) in the second are paying a higher tax rate. Why?”
I’m not sure where you are getting your numbers from. The most recent info that I can find from a quick search show that each adult (as of 2021) is eligible for $2962 annually and each dependent $1044 (my numbers may be a bit off but the principle is accurate). In your example there is no requirement for all three to register as on family unit with two being dependents of the third. They could each register individually or the woman and her husband as a married couple. The result would be the same.
“With regard to fraud, my post was not about fraud, but to question the reasonableness of the prebate scheme. And re voluntary registration, I think this is important for those who value maximum privacy or that prefers a 23% flat tax equivalent. Almost everyone is going to register.”
To be honest, I’m kind of with you on that. However, I think the legislation would have an even slimmer chance of being passed if there was not some way to untax the poor. The prebate mechanism was selected as the simplest and least intrusive way to accomplish that.
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