Replace All Federal Taxes on Income with the Fair Tax Act , HR 25
Transition to the FT
Does anyone have a good write-up or description of how best to transitions from what we have now to the FT? Please share.
Thanks
Steve
PS I believe it would take the American people about two weeks to adjust ;-). The exact same time it takes for most to receive their first FULL paycheck. But others have transistion concerns that I am trying to address.
Thanks
Steve
PS I believe it would take the American people about two weeks to adjust ;-). The exact same time it takes for most to receive their first FULL paycheck. But others have transistion concerns that I am trying to address.
Replies to This Discussion
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Permalink Reply by cary henderson on
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> The effects of transition have been considered. You could probably find the work on Professor Kotlikoff's page. In the FairTax book it says cold turkey. But there are allowances made for business inventory, etc.
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The Federal Government's Fiscal Year begins on October 1st. Do the taxes that are due and payable on April 15th figured into the budget from the prior year or the coming year?
This could make a big difference in the transition from the Income Tax to the proposed FairTax.
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Permalink Reply by Jamie Wheeler WA on
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It is amazing how HARD it is for people to wrap their minds around such an awesome concept!!! COLD TURKEY! That is the only way!! I agree Steve...give them that first paycheck or 2 and they won't be complaining about going cold turkey!!
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Permalink Reply by chiefcook on
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The transition for the individual/consumer will be immediate and very simple. On 12/31/XX the income tax code is eliminated and on 01/01/XX+! the Fair Tax is in place. The shelf price on display will be the amount of the product including the Fair Tax. Hand the cashier the amount (not counting any state or local sales tax). There will be no longer any income tax forms to file. They will receive their full paycheck. All the other benefits etc will be in place. The individual will have to file there paperwork for the prebate which will most likely be before the effective date.
The transition for the businesses has a few things that must be considered.
First; the pricing of the goods will need to be modified. This may be software changes in their computer systems to show the Fair Tax amount separate from the product price. (Since the Fair Tax act includes the inventory tax credit which will offset the embedded income tax costs the initial adjustment should zero out.) Refer to section 902 of HR=25 for the details of the transaction tax credit. If the business is going to change the shelf price of all the goods, they will need to update all the price tags, displays etc. But with all the scanning of bar codes, this will be eliminated for most products.
Second; the services industries will have a much easier task. They will need to show the Federal Fair Tax as a separate item as part of the price for the service. (a $500 fee for services will show $454 Services and $46 Fed FT)
Third; all businesses currently must come up with a year end inventory value in order to file their business tax return. This will still be required for the transition. Fast turnover of inventory businesses will have an easier time with the transition than a small business with a long turnover of inventory.
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If the service industry has to pay the same 23% as retail sales do, I think your figures are a little off.
The service bill for a $500 fee would be Fee $385 FairTax $115.
What you had stated was the FairTax charge for $154 service fee.
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