Replace All Federal Taxes on Income with the Fair Tax Act , HR 25 and S 122

Ok folks, so what's it going to be?

I thought I would just throw this out to the general membership.

One of the basic tenants of the FairTax is that it will replace the already embedded taxes on the costs of goods and services, thereby having no or little impact on the pricing of the same goods and services after implementation of the FairTax. Everyone here should know this talking point - producers/manufacturers will lower their prices in such a way that the price of their goods while be about the same.

Yet, I have seen and heard arguments that these same producers and manufacturers could also offer pay raises to their employees, increase benefits to their employees, add more employees (jobs) and even increase the amount of dividends paid to their stockholders. This is what anyone would call "having your cake and eating it too". Seems to me that we've gotta be consistent - either drop prices or do all of these other goodies, I don't think there's enough room to do both.

0 members like this

▶ Reply to This

Replies to This Discussion

Permalink Reply by Dennis Wall on June 10, 2009 at 6:58pm

The 15% is also an incorrect assumption. Of all the revenue the government takes in, 15% of it is corporate taxes, I did not say a corporation pays a 15% tax rate.

▶ Reply

Permalink Reply by Sean Fagan on June 14, 2009 at 3:04pm

Dennis,

I certainly have to agree (in my rush to judgment) that I made an error based on your posting. However, I have to say that my error does us more good than it does harm. I have to believe that most readers of this forum would know that the corporate tax rate is actually much higher than the 15% rate that was quoted (I have to admit at this point that I don't really know what the actual rate is - I have heard numbers ranging from 25 to 35% - and our own experience has been at 25%).

If we "low-ball" the number at 15% then we are that much further ahead.

Thank you for your comments and pointing out my error in calculation.

▶ Reply

Permalink Reply by Sean Fagan on June 14, 2009 at 2:36pm

Randy,

You are 100% correct in your evaluation and I can't believe I've been so terrible in my own calculations (duh) when it comes to payroll taxes. Obviously, my enthusiasm for the FairTax clouded my deductive reasoning ability. Of course, this means that there is less room for businesses to cut their prices as well. This has the effect of negating my previous statement that there might be room for producers to provide additional benefits/cuts/services as a result of FairTax implementation.

I stand corrected and I thank you for your input. I will endeavor to do better on this in the future. Just as a matter of record/information, our own little company paid 3.01% of our gross profits (gross profits = Total revenues less Cost of Good Sold) in payroll taxes for 2008.

▶ Reply

Permalink Reply by Randy Stone on June 14, 2009 at 4:56pm

Sean,
I just know that many people use the 7.65% to get the 23%.
But we must remember that each business passes their small portion on to the next level. Therefore, we do not know how that snowballs into what percentage by the time it reaches the retail stage.

Thanks, hope all is well with you, been awhile since we chatted.

▶ Reply

Permalink Reply by micheleking on June 10, 2009 at 10:20pm

Thanks fellas. Nice to have ya weigh in. So much 2 study. Wish Miss FairTax would take a work break and give her take on it. Some other fella is missing too. It really means a lot to have you business folk take out time to drop pearls of wisdom.

▶ Reply

Permalink Reply by Randy Stone on June 12, 2009 at 4:29pm

We all know or should know the basics of the Fair Tax. It is simple and is not open for manipulation. It is the best tax bill I think has ever been proposed. The people promoting a flat tax just don't understand what the Fair Tax really is and how bad a flat tax would be in a few short years (elections anyway)