- The 23% "FairTax" National Retail Sales Tax [NRST] is really 30% and both are too high. God didn't ask for more than 10%.
- The "revenue neutral" sales tax method of confiscation is not the answer. "Spending" is the problem.
- Unless you repeal the 16th Amendment first, we will end up with both an income tax and sales tax.
- Why have the bureaucracy of a rebate mechanism, when you can assist the poor by exempting certain necessities?
- The Forbes or Armey so-called "Flat Tax" is the way to go.
- The "Income Tax System" is our friend, because we're not required to file.
1. The 23% "FairTax" National Retail Sales Tax [NRST] is really 30%, and both are too high. God didn't ask for more than 10%.
The Flat Income Tax and our existing Progressive/Graduated Income Tax are figured as a "percent of income", and in order to compare apples to apples, a National Retail Sales Tax must also be figured as a "percent of income", called "Tax Inclusive".
It is incorrect to compare the FairTax NRST to state sales tax rates that tax money that has already been taxed through the income and payroll tax. State sales taxes are considered "Tax Exclusive". Anyway you figure it, the amount of the tax is the same.
Let's look at an income of $5,000 per month.
$5,000 x 23.00% = $1,150 (Tax Inclusive)
$5,000 - $1,150 = $3,850
$3,850 x 29.87% = $1,150 (Tax Exclusive)
Notice that the blue numbers are the same? Whether a man is measured as 6 feet tall or 72 inches tall, he is still the same height.
When considering a new tax system, everyone wants to know, "What percent of my income will it take?" The MAXIMUM that the FairTax could possibly take is 23%, IF there were no Family Consumption Allowance [FCA].
Every year, the Department of Health and Human Services determines the "poverty level" for each family size and this, in turn, establishes the FCA.
Click here for the 2003 Family Consumption Allowance & Rebate Chart '03 and here for the Chart '04.
The beauty of the FairTax is that you can control how much you pay in taxes. If you happen to save, invest [education is an investment] or spend a portion on used [previously taxed] items, you can get your effective tax rate below 9%.
Congress will probably decide on a direct deposit method to assure deposits will be made by the first of every month. Notice that a married couple within the same household will receive double the FCA? No marriage penalty!
The FCA increases the FairTax rate by 3.3%, but without it, the bill would be D.O.A.
"Americans For Fair Taxation!"
Not only will every family receive a FCA based on family size, but they will also receive 100% of their paycheck!
Fedup Smith makes $39K per year...once the FairTax is the law of the land he will receive an instant increase in pay of $200.00 per week. Since he has a family of four, he will receive a FCA of $445 per month, for a total of $1,305.00 additional income per month that he can do with as he sees fit. That's the 2003 calculation. It's even more favorable to him in the 2004 calculation.
God may not ask for more than 10%, but as shown earlier, with the FairTax in place, you can control how much you pay in federal taxes, which can be even less than 10%.
2. The "revenue neutral" sales tax method of confiscation is not the answer. "Spending" is the problem.
Any tax bill must be "revenue neutral", according to PAYGO RULES of the House. It CANNOT also be a spending reduction bill. In other words, PayGo rules require that an increase in spending, or a decrease in revenue must be offset by an equal amount of spending reductions, revenue increases, or a combination of the two so that the budgetary effect of new legislation is not projected to increase the deficit, or reduce the surplus, for any fiscal year through FY2006.
We could lower taxes for everyone by 50% IF spending on certain government programs were reduced first. Look at it in the business sense. What business would accept a 50% reduction in revenue before cutting overhead? If "businesses" will not voluntary reduce revenue, no government will either.
When half the voting public perceive they pay no taxes, they won't care how big government gets, because they are the only ones that benefit from higher taxes with more spending on socialistic "gimme" programs. In order to have downward pressure on government spending, every voter must be keenly aware of what his government costs him, and the FairTax fits the bill.
"Americans will pay more money per capita in 1999 on taxes ($10,298) than on food ($2,693), clothing ($1,404), and shelter ($5,833) combined," according to Patrick Fleenor, senior economist at the Tax Foundation and author of the new report titled "The Price of Civilized Society."..."From 1981 to 1999, [18 years] the federal government increased what it collects per person more than 45 percent," said Fleenor.
History tells us that reduced spending and lower taxes will never be realized under an income tax system. Even with the GOP in charge of the nations pursestrings spending has increased!
financial well-being of our offspring, does it?
TAXES
So unless there is some ~~~magic~~~ wand that will lower spending, in another 18 years, expect your children/grandchildren to pay over $20,000 per year, with income tax rates over 80% to feed the beast!
A national retail sales tax, if it replaced the income tax, would rid the nation of the evils our income tax has produced and the liberty it has trampled upon. It will also comply with the Constitutional command of uniformity as mandated in Article 1 Section 8.
Our descendants in centuries to come would look back upon us, as we look back upon our Founders, with admiration for delivering future generations from a tax that was oppressive, tyrannical, and corrupt.
3. Unless you repeal the 16th Amendment first, we will end up with both an income tax and sales tax.
There is no law on the books that would prohibit a NRST on top of an income tax now. However, once the FairTax is the law of the land, taxation of income, estates and gifts will be prohibited.
In June 2001, Congressman Ron Paul [R-TX] was on Hannity and Colmes discussing the bill he sponsored to repeal the 16th Amendment. [H.J.Res.45]
No congress in their right mind, would totally abolish the income tax system without a successful, proven, revenue generator in place. Once the success of the FairTax is realized...taxing "income" will be irrelevant and repeal of the 16th Amendment would fly through the states for ratification. Repealing the 16th will be easier, not harder since the amendment no longer has any real meaning - it is an anachronism.
4. Why have the bureaucracy of a rebate mechanism, when you can assist the poor by exempting certain necessities?
How large of a state "bureaucracy" would be needed to determine what to tax and what to exempt? What are "necessities", and who would track them? Do we tax Porterhouse Steaks, but not hamburger meat? Chocolate covered marshmallows should not be taxed because they have "nutritional value", but plain ones don't, so they should be?
For many years States have struggled over what to tax and what to exempt. Cheetos would be taxed because it is considered a snack food but Fritos are not. Clothing is a necessity. Would we exempt windbreakers, but not mink coats?
If exemptions, exclusions and loopholes were allowed, it would reopen the floodgates at the federal and state level for the lobbyists of every food and clothing group to pad the pockets of those in congress to garner favor for their clients through the tax code. That money has to come from somewhere. Invariably, it would come from higher retail prices on those very same items.
Exempting so called "necessities" would be a very ineffecient method to provide tax relief for the poor and elderly. A much better approach would be to provide everyone a Family Consumption Allowance (FCA) that will in essence provide funds to pay the tax on all purchases up to the poverty level.
The existing income tax has an EITC and all flat tax plans provide exemptions up to a certain income level, so in order to be politically viable, and have a chance of acceptance, some assistance to help the poor and elderly would be required.
The FCA mechanism would slam the door shut on tax code manipulation by the congress and lobbyists, and would be an excellent first step to true Campaign Finance Reform. It would be political suicide to tinker with the rates of the FCA or NRST because it would affect every voter!
If congress decides to forgo a FCA, the revenue neutral FairTax rate would be set at either 19% or 20%. There has been much talk of privatizing social security and medicare. If this were to be done, the FairTax rate would be 15%.
5. The Forbes or Armey "Flat Tax" is the way to go.
The flat tax would be slightly preferable to the current system, but it is still based on income. You would be required to continue to report your income to the IRS and be held liable for the accuracy of that information.
The closest we've ever come to a flat tax was under the Reagan administration. The two rates lasted less than five years.
Since "businesses" would also be liable for the flat tax, the taxes they pay would be embedded in product price, similar to a Value Added Tax (VAT). To be more accurate, the flat tax should be labeled a "Flat Income Vat Tax".
The Forbes flat tax "assumes" that social security and medicare would be privatized, but if it is not, the 17% figure quoted would be approximately 25%. The exemption of $36,000 for a married couple seems tempting, but let's delve a little deeper.
"If" social security and medicare would not be privatized, that couple would have 15.3% deducted from their paychecks, plus pay an additional 20% to 30% in "hidden" VAT type taxes with what's left over.
Even if a family would be considered "exempt" due to income level, to be more accurate, the flat tax should be labeled:
For further "Flat Tax" information, visit these websites:
| COMPARE TAX REFORM PROPOSALS |
Confused by proposed changes in the tax system? Compare features of the NRST, the Current Income Tax and the Flat Income Tax. Decide for yourself.
Click here for the complete CHART comparing the three systems, item by item.
Then use the Return button to come back here and continue to view the Six Misconceptions of the FairTax.
6. The "Income tax system" is our friend, because we are not required to file.
Most economists seem to believe that employees, not employers, bear the cost of payroll taxes as economist Dr. Walter Williams has said:
"According to the government, payroll taxes for Social Security and Medicare are paid equally by both employees and employers, with each paying 7.65%." While that may be true for accounting purposes, economist Walter Williams explains how it really works: "You probably already believe that your employer pays half your Social Security. This lie can be demonstrated by pretending that you're my boss. We agree to a wage of $7.00 an hour. You deduct 50 cents as the 'employer contribution,' making your cost to hire me $7.50 an hour. My question is: If it costs you $7.50 to hire me, what is my minimum hourly output for you to keep me on the job and stay in business? If you said $7.50 an hour, go to the head of the class, because you also know who pays all the Social Security tax. The worker does."Williams observes that the government maintains the myth that employers pay half of Social Security and Medicare taxes because Americans would "go ape" if they knew the true tax burden these programs impose.
According to Dr. Dale Jorgenson, Chairman of the Economics Department at Harvard University, businesses do not pay taxes, they collect taxes in the form of higher prices, lower wages and less return on investment to the stockholders.
All goods and services already contain the embedded costs of the current tax system in their prices. When these embedded taxes are removed, prices will come down. Dr. Jorgenson has projected a producer price reduction of 20 to 30 percent in just the first year after the adoption of the FairTax. In addition, the FairTax will lower compliance costs by more than 90% and the removal of these costs will force prices down even lower.
You can continue to put yourself and family in legal jeopardy, while paying over 40% of your income in taxes, or you can join in our effort to abolish the income tax and IRS.
With the FairTax as the law of the land, NO ONE will have to report income to the IRS because it would be abolished and all records destroyed. You will never face penalties, interest, audits, liens, searches, seizures, garnishment of wages, or prison!
It took a major email effort to defeat the banking scam "Know Your Customer" bill. It will take an even greater effort on our part, to convince congress they may not be reelected, unless they hear "The Voice of the People" and pass the FairTax Act.
Thanks & appreciation are extended by Cliff Cofer to the late 'CHIEF negotiator', CyberWarrior - extaordinaire, for supplying much of the data for this web page.