Replace All Federal Taxes on Income with the Fair Tax Act , HR 25

Eating Cake

I've got in front of me here a FairTax flier that says "Fedup Smith" currently can spend $557 with his pay check, but will be able to spend $756 after the FairTax, because his former with-holding money will now be in his paycheck. I figure that's 36 percent (exclusive) increase. How can this be, and yet we tell people prices won't rise? Having MORE money to spend and having prices remain constant, is having you cake and eating it too. Isn't Fedup's with-holding money part of the 23 percent that's embedded in the retail price? We can't have it both ways.

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Permalink Reply by Robert Williams on March 7, 2012 at 1:46pm

Burgener, do you work for a monthly (or semi-monthly) paycheck? If so, can you take out your latest pay stub? Look at your Federal Withholding Taxes (including your payroll taxes), those taxes will be added back into your paycheck, every paycheck for as long as you are gainfully employed. That is YOUR money the Gov't is taking now and it belongs to you. But remember not to include any child-support, alimony, health-care costs, or anything else that does not go straight to the federal govt.

You don't have to post it here, but you can easily figure out how much you will automatically receive from the lack of taxes being taken from you.

Next, if you qualify and register for the Family Consumption Allowance (FCA) you will also receive monthly $209 per adult + $73 per child registered and living in your household.

At this point, that is all you. Everything up to now has been about what the FairTax gives you. Would you agree?

Now, lets look at what the FairTax has to do to get the govt what they are no longer taking from you. First, the FairTax ADDS 23% (inclusive, 30% exclusive) to the price of all goods and services. But, because businesses are no longer taxed on business-to-business transactions, corporations no longer have income taxes, and employers are no longer required to pay FICA/SECA taxes, the cost of their goods/services can drop considerably.

Nobody here (at least none of the fully educated crowd) is claiming that the price of goods/services will remain the same as they are now. What we are claiming is that with the rise in costs associated with the FairTax, and the offset of the money you will receive from your Federal Income Taxes and the FCA, every legal US citizen will fair better than they are under the current Income Tax system.

The two reasons for this (I strongly believe) are due to the broader tax base and efficiency. Our current tax system is inefficient and forces our govt to double- and even triple-tax goods; it also ignores very large groups of individuals who do not pay income taxes (illegal immigrants, tourists, and the underground economy). The FairTax eliminates the incompetence and disorganization that we are forced to deal with now. Everyone living in or visiting the US purchase goods or services while they are here and the FairTax ensures they will pay taxes that they do not pay now.

I hope I was able to help.

Best Regards,

-Robert Williams

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Permalink Reply by Bill Rollyson on March 7, 2012 at 7:13pm

Paul,

That didn't have anything to do with embedded cost. It was simply a way to explain to someone they would be taking home more money without the income tax and payroll tax withholding.

In fact, they can spend more, but it didn't mean they could buy more after taxes. The piece I have at least doesn't talk about the final costs at all, just the fact you are taking home greater income. That flyer was meant to get people to think about their greater take home pay instead of just taxes on the end of basic prices.