Wages

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Permalink Reply by chiefcook on March 11, 2009 at 7:43am

This comes from the original Fair Tax study by Dale J. When the embedded costs for the business taxes was calculated, the employee portion of SS & Medicare taxes was included by mistake. The naysayers concluded that the existing net payroll must be the new gross wages under the Fair Tax. The employer would therefore pay the employee a lower wage.

This has been corrected in later economic studies by Larry K and the calculations for embedded tax costs no longer include the employee part of SS & Medicare. The labor unions would never allow the employer to lower the gross wages to the workers. Non-union businesses would have to follow the same practices. The amount of the overall reduction in price of new goods may not drop 22%.

The employee should get an effective 29% exclusive (approx) increase in their paycheck. (Average 15% income tax plus 6.75% SS & Medicare inclusive is 21.75% amount that will no longer be deducted)

Hope this will give you a starting point to answer their question.

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Permalink Reply by shannon castleman on March 11, 2009 at 9:17am

Thanks for a quick response!!!! This may sound stupid, but could you possible give me a simple example with simple numbers (say, $100 a week paycheck the current way vs the Fiar Tax way?) Thanks for your time.

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Permalink Reply by shannon castleman on March 11, 2009 at 8:30pm

Thanks Hank. Hey, I am submitting a paper on Newt's website, American Solutions, explaining why the 0% Cap Gains tax would be better under the FTax than the current system. I am hoping some of you from this site could join-its free- and help the small numbers of us who defend the FT on that site's posts.

here is the attached article I am submitting in a few days. Does it appear to be a good argument in your eyes? Any facts I am leaving out?

thanks !!!!

SWhannon

Attachments:

• ~$ir Tax Paper.docx, 1 KB

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Permalink Reply by chiefcook on March 11, 2009 at 8:44pm

Can you save the attachment in Word 2000-2003 format and attach it.
Thanks.

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Permalink Reply by chiefcook on March 11, 2009 at 9:20pm

You are looking at the paycheck income compared to the Fair Tax. This is only one part of the whole picture. I prefer to look at the effects of the incom tax compared to the Fair Tax in a different manner.

Consider the effect if you want to SPEND a certain amount of money. ($100.00) How much do you need to have for Gross Payroll under income tax? How much do you pay in taxes? Are you an employee for a business or are you a self-employed individual.

I have used the information provided by economists that AFFT paid over $22 mil to do the research with my calculations. I am attaching a chart that I use with people to show them how the Fair Tax will reduce the taxes paid on the spending.

IMOO
I am sure Hank will disagree with the numbers, but I have yet to see any economists that have been able to concretely refute the findings of these economists. Hank uses a number of what if's or spending well above the individuals means to say the Fair Tax will hurt. You will notice Hank said the individual would have no income tax because they only earn $100 per week. No one can live on that amount. Your request may have provided an entirely different response from Hank if you asked about $1000 per week. (a more reasonable amount)

Attachments:

• Can we afford a party.doc, 54 KB

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Permalink Reply by shannon castleman on March 11, 2009 at 9:25pm

both of you have been helpful. thanks. i'll try and get that reformatted for you chief.

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