This was sent to me in YR 2000 by the late Herb Meadows (CHIEF negotiator) CyberWarrior extraordinaire. I added Year 2001 and 2002 info where indicated. A staunch supporter of The FairTax Act, Herb was highly knowledgeable about it.
To: All Americans
Subj: National Retail Sales Tax (NRST) vs Income Tax
From: CHIEF negotiator
Whenever anyone talks about federal taxes, they compare them "AS A PERCENT OF INCOME".
The top percent of 39.6%, of our existing "graduated" income tax is "a percent of income".
The Forbes/Armey flat tax of 17% is "a percent of income".
The FairTax of 23% is "a percent of income".
They are all figured as "tax inclusive", not "tax exclusive". So to compare the FairTax rate to a state sales tax rate is incorrect. It's inaccurate, coz state sales taxes are paid with AFTER INCOME TAX DOLLARS AND AFTER PAYROLL TAX DOLLARS!
What people want to know, is what their effective tax rate would be. Something I notice is rarely mentioned is how the Family Consumption Allowance (FCA) -- which is an integral part of HR 2525, The FairTax Act -- reduces that percentage.
Compared to the income tax, what would the effective tax rate be with the YR2000 Family Consumption Allowance figured in?
Income
for
Family
of
FourCurrent Income Tax
Rate w/Payroll Tax
(Assumes Employer
& Employee payroll
tax portions)FairTax Rate
(Assumes all
income is
spent-includes
rebate)FairTax Rate
(Assumes family
saves, invests
and/or spends
25% on used goods)$15,600 18.1% 0.0% 0.0% $31,200 23.3% 6.4% 0.7% $46,800 25.6% 11.9% 6.2% $62,400 27.5% 14.7% 9.0%
"As a percent of income", the family of four that earns $62,400, and spends every penny for new goods and services, will have an effective tax rate of only 14.7%....and only 9% if they save, invest or spend 25% on used [previously taxed] items! Those are the facts, folks.
As you can see, your effective tax rate will be nowhere near 23%, because of the FCA that is paid to you in advance.
Note:
The above table is based on the Year 2000 Rebate. The Year 2001 Rebate is larger than the 2000 Rebate, so the 0.7% figure above, for example, would only be 0.58% for Year 2001. And it would be even lower with the Year 2002 Rebate.
Click here for Year 2001 Rebate Chart! Use "Back" button to return here.
Click here for Year 2002 Rebate Chart! Use "Back" button to return here.
Click here for Year 2003 Rebate Chart! Use "Back" button to return here.
Click here for Year 2004 Rebate Chart! Use "Back" button to return here.
SPECIAL NOTE by CHIEF negotiator:
To those who claim that Filing and Paying Federal Income Taxes are not mandatory:For all you Tax Protestors Non-Filers out there, you need to understand that you DO pay taxes, but you don't realize it. You have 15.3% payroll taxes taken out of your pay, plus you pay (on average) 22% in "hidden" taxes that are embedded into the price of all new goods and services.
Visit SURPRISE! for the eye-opening truth.
If you spend 100% of your income, your effective tax rate is 33.9%. If you save 25% of your income, your effective tax rate is 29.3%.
Let's see...what should you do? Should you continue with the "Don't File" attitude, that could land you in the clink, while paying about 30% of your income in taxes...or do you want to replace the income tax system with the FairTax, where you'll pay even less in taxes, never worry about the taxman, and make April 15th just another Spring day?
Decisions...decisions........
CHIEF negotiator - FairTax advocate & CyberWarrior
Comment from Cliff: As you can see from his Special Note: above, CHIEF had a way of making his point quite succinctly, yet in a droll sorta' way. Whenever he posted something, I always laughed and learned at the same time.
Our sincerest thanks, CHIEF, for all your great work for the cause of tax reform!
� Here's how to Join the fight for the FairTax: You can do so right online...
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Cliff Cofer - West Des Moines, Iowa
Email: [email protected]