Replace All Federal Taxes on Income with the Fair Tax Act , HR 25
HEALTH CARE PROPOSALS and the FAIRTAX
While Congress is debating various health care reform proposals and the funding through the current Income Tax system, I started to think about what will happen when the Fair Tax is passed!
The current proposals are set up to “tax the wealthy” , tax the more expensive insurance plans (people who are wealthy can afford them) and charge a tax on the expensive (over $100) items and procedures. What Congress does not realize is that all these higher costs on the wealthy and higher income earners will be passed down to the customers of the wealthy (business owners) which means everything we buy will cost more money and the average American will pay these costs.
Once the Fair Tax passes, this will be eliminated. The vast majority of the taxes created to cover the health care costs are tied to income levels in one form or another. They are part of the Income Tax Code. It will all be eliminated! The Fair Tax percentage will be recalculated to reflect the higher cost of operations of the Federal Government. How much higher will this make the Fair Tax?
I am not an economist or even a math scholar, but let me suggest some basic facts that have been illustrated in many media discussions.
Before any reforms become effective the health care costs are about one twelve of the economy. Projections are that these costs will double and have the government in control of one sixth of the overall economy. The Fair Tax is designed to be revenue neutral and not change any of the spending side of the federal government. It does not matter (for this discussion) what is covered by the reform, who gets the coverage or if it is a private or governmental operation. This discussion is the revenue side of the equation.
The proposed Fair Tax rate is 23%. This also represents the Federal revenue under current day tax rate compared to the GNP. (Revenue Neutral) Therefore the health care would be approximately 2% of the total. Since the recommended changes would double the costs of health care, we should be able to say that the increased Fair Tax rate would go up to 25% or a little higher.
That is until the Congress wants to get their hands into the pot and want to reward their friend. However, since the Fair Tax will apply to everyone that spends money in the Country, there will be too many eyes on them and they still will want to get reelected.
If there are any others out there that have any ideas or thoughts about this, please post them. A few people have asked this question at some of our events and I would like to hear others opinions.
The current proposals are set up to “tax the wealthy” , tax the more expensive insurance plans (people who are wealthy can afford them) and charge a tax on the expensive (over $100) items and procedures. What Congress does not realize is that all these higher costs on the wealthy and higher income earners will be passed down to the customers of the wealthy (business owners) which means everything we buy will cost more money and the average American will pay these costs.
Once the Fair Tax passes, this will be eliminated. The vast majority of the taxes created to cover the health care costs are tied to income levels in one form or another. They are part of the Income Tax Code. It will all be eliminated! The Fair Tax percentage will be recalculated to reflect the higher cost of operations of the Federal Government. How much higher will this make the Fair Tax?
I am not an economist or even a math scholar, but let me suggest some basic facts that have been illustrated in many media discussions.
Before any reforms become effective the health care costs are about one twelve of the economy. Projections are that these costs will double and have the government in control of one sixth of the overall economy. The Fair Tax is designed to be revenue neutral and not change any of the spending side of the federal government. It does not matter (for this discussion) what is covered by the reform, who gets the coverage or if it is a private or governmental operation. This discussion is the revenue side of the equation.
The proposed Fair Tax rate is 23%. This also represents the Federal revenue under current day tax rate compared to the GNP. (Revenue Neutral) Therefore the health care would be approximately 2% of the total. Since the recommended changes would double the costs of health care, we should be able to say that the increased Fair Tax rate would go up to 25% or a little higher.
That is until the Congress wants to get their hands into the pot and want to reward their friend. However, since the Fair Tax will apply to everyone that spends money in the Country, there will be too many eyes on them and they still will want to get reelected.
If there are any others out there that have any ideas or thoughts about this, please post them. A few people have asked this question at some of our events and I would like to hear others opinions.
Replies to This Discussion
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Permalink Reply by Randy Stone on -
Under the Fair Tax, the IRS and all parts of the current tax code will be eliminated. The cost of the proposed health care will be categorized under Government spending which the Fair Tax is not written to have any effect on Gov'mt spending at all. The Fair Tax is just a different way the gov'mt will collect taxes NOT how they spend them.
Of course, the taxes collected will be transparent and so will any attempts to raise taxes. So, if they spend too much it will be harder for them to justify and increase in the Fair Tax. I do not think that the Fair Tax rate at this point should/will be adjusted. The collection of tax and the spending of tax dollars are 2 different topics. Let the parties continue to battle over the spending part, but leave the American people off of the "dump on" list.
We need Tax Reform and ASAP! HR 25 is my choice!
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Permalink Reply by Ron Mullins on
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It appears Congress is putting way too much dependency on the Federal Income Tax System for a lot of the legislation being voted on.
Just think what the actions / accountability of our Congressional leaders would be if they were working within a Fair Tax System.
If we had The Fair Tax we would not have the boondoggle that we have with the current Federal Income Tax System. If we had The Fair Tax, productivity would no longer be penalized.
Please spread the word about The Fair Tax H.R.25
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Permalink Reply by Sean Fagan on
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Without getting into a discussion about the merits of the Health Care legislation (I can't think of any), I fear that if it gets passed there will be a huge push to increase the 23% FairTax rate.
I think our best hope of getting the FairTax passed is to defeat this horrendous health care proposal. There is nothing that says amendments cannot be introduced to change HR25, and I think you can pretty much depend on that happening if health care gets passed.
I agree with all of the comments made thus far.
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Sean
Raising the Fair Tax rate would be fiscal suicide for Congress. Raising the rate would encourage people to reduce spending. A decrease in spending would lessen the tax collected. Less tax collected would force Congress to reduce spending, something Congress critters loathe. Congress can only maximize tax collection by keeping the rate within a reasonable boundary. This principle was addressed in Alexander Hamilton's Federalist paper #21. To quote:
"It is a signal advantage of taxes on articles of consumption, that they contain in their own nature a security against excess. They prescribe their own limit; which cannot be exceeded without defeating the end proposed, that is, an extension of the revenue. When applied to this object, the saying is as just as it is witty, that, "in political arithmetic, two and two do not always make four." If duties are too high, they lessen the consumption; the collection is eluded; and the product to the treasury is not so great as when they are confined within proper and moderate bounds. This forms a complete barrier against any material oppression of the citizens by taxes of this class, and is itself a natural limitation of the power of imposing them."
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Dan,
I pretty much agree with everything in your message, except for this - "Less tax collected would force Congress to reduce spending,...". I'm having a hard time reconciling this concept with the current state of affairs. Tax revenues are way down as a result of the recession, yet Congress has not reduced spending. On the contrary, they seem to be spending like there is no tomorrow - and if they continue this pattern then indeed there will be no tomorrow.
Randy is right, the collection of taxes and the spending of those taxes are two different beasts and passage of the FairTax will not automatically guarantee Congress will become fiscally responsible.
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Permalink Reply by Jamie Wheeler WA on
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FairTax and the healthcare...I've called my congress members and stated "if you voted AGAINST the Healthcare legislation why haven't you voted FOR the FairTax?" Afterall, the healthcare suicide bill will be policed by the IRS/Tax Code --- GONE under the FairTax --- They will increase the % of FICA & Medicare taken out of one's checks ---also GONE under the FairTax ---
Hmmmm they would have to think and make public how they would TRANSPARENTLY tax us for this healthcare. SO Fellow FairTax Supporters if your congress member has NOT cosponsored this legislation yet voted against the Healthcare, lets see what they have to say about this?
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The problem with doing away with the IRS and keeping the current health care plan is that Congress is going to use the IRS as a police force to enforce the mandatory purchase requirement. That measure should be enough to defeat this bill, but I doubt if it will. If the bill passes, it furthers the dependency the Congress has with the IRS.
Congress can always extend the debt ceiling. They have to do that pretty soon. I'm not sure if they will do that before or after this bill gets voted on. The foreign countries have started to slow down on their buying of US debt. That means the Fed is monetizing that debt by printing more dollars. Increasing debt has never stopped either political party from doing anything they wanted to do.
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