Replace All Federal Taxes on Income with the Fair Tax Act , HR 25
Discussing the Merit of the Fair Tax
Replies to This Discussion
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Permalink Reply by dennis rickard on
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In most areas the Fair Tax looks pretty good; However for renters that is a different story. Landlord rents a house for $950.00, for the landlord to make the same rent $950 he would multiply $950x 1.2987 = $1233.77 (new rental price), of this gross proceed he then sends in 23% which is $283.77. Rent of $1233.77 -$283.77= $950 The reason 1.2987 is used is because that is the exclusive tax rate, what the landlord sends in is the23% inclusive tax rate. Now if you are a single person the prebate does not even cover the rental increase for this rental. Hate to say it but Fair Tax does not look good for renters.
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Permalink Reply by Frank Gilbert on -
Dennis, Did you see my response even though I directed it towards the wrong party? I'm getting a little adlebrained these days (lol).
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Permalink Reply by Frank Gilbert on
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Hi Doug, That was a good question you asked about the rental end of the FairTax. And I'll be honest with you, I didn't feel qualified to answer the question. So I contacted our state director (Steve Curtis-Ohio) and he sent me a response and an attachment. Here is his response;
Don't forget, the property owner no longer has to pay taxes on their income,
or pay embedded taxes when they hire work done, purchase remodeling
materials, etc. In other words, the FairTax works here as well. The "950"
is no longer what the property owner needs to charge in order to maintain
their profit on the property.
I have attached a write-up I did a few weeks ago. Let me know if it helps.
Steve
I hope you find his explanation and the attachment useful.Regards,
Frank Gilbert
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Permalink Reply by Douglas Fowler on
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Good answer, but I wasn't the one asking it, lol.
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Permalink Reply by Frank Gilbert on
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OOPS!!! My bad. I better be a little more attentive (lol).
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Actually it was a poor answer. If you read my post below you will see why.
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Rental rates are determined by amount of the mortgage, property taxes, utilities if included, cost of repairs and a contingency fund. Presently I rent a house for $950 a month and as the owner I can not lower the rent. under fair tax I have to let my tenet absorbed the cost of fair tax. my mortgage rate on this house is already below 5%, I do my own repairs, and my contingency is only $50 per month.
you stated i no longer have to pay income taxes, Is that not supposed to be for me to have more of my income, for me to enjoy, not to subsidize the rent of someone else out of my own pocket.
you stated i no longer have to pay embedded taxes when I hire work done, purchase remodeling
materials, etc. correct I now have to pay the 23% inclusive embedded sales tax, thus NO SAVINGS HERE. The Fair tax people say prices will remain about the same.So please tell me exactly how am I supposed to lower the rent $283.77
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Permalink Reply by Frank Gilbert on
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So I guess you didn't like the answer? Well, we tried. Just one thing. As the owner of that property, its up to you how much you charge for rent. And as your costs go down, you can adjust your rents accordingly. Also, some things won't go down 23%. That's an estimated average.
Your usage of the words inclusive and imbedded is incorrect too. The FairTax is an not imbedded. That is why when you go to the store under the FairTax, you'll get a reciept that shows any taxes you are actualy paying and you won't have the imbedded (hidden) taxes to pay. Remember, the imbedded taxes are taken away (that's why its a wash).
Hope you'll research this some more and maybe have a little more back and forth discussion.
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I
used the word embedded because the price on the shelf includes the fair tax in it. the definition of embedded is not " hidden" it is " To cause to be an integral part of a surrounding whole:" the tax is integral part of the price. Yes it is inclusive and I know that. It wasn't that I did not like your answer. It was that I gave you the circumstances of my situation And for you to show me where I could lower the rent. Your first post was ambiguous and I showed you where that was. You on the other hand apparently didn't like my response so you start by assassinating my use of words when in reality you are wrong, in your usage. But the coupe de grace was you didn't even answer my question. Now if yo can not answer the question please just say I can't. You had already stated earlier that "You" did not feel qualified to answer. All Steve Curtis gave you was the overall outlay/ rhetoric, of the Fair Tax. There are cases where FT will hurt some people and this is one of them. If I am wrong have Steve Curtis use my previous post and show me where I can lower the rent.
http://www.thefreedictionary.com/embedded
http://www.synonym.com/synonyms/hidden/ note embedded is not a synonym of hidden
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Permalink Reply by Frank Gilbert on
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Hey Dennis, I really didn't mean to upset you. I simply added my thoughts after reflection. I will forward your thoughts onto Steve Curtis. The FairTax isn't perfect, but I challenge you to come with a better overall solution to the tax reform we so desperately need.
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There is no need to challenge me to come up with a better solution as I am for the fair tax. My point was to show that renters are going to take it in the shorts, for lack of a better term. Fair Tax may not be the perfect answer, but it is a better answer than all other proposals, and that includes the current system. The only way to lower rents on single family homes is to lower the interest rates yet they are about as low as they can go. If interest rates go lower then so do the rates on savings accounts and bonds etc..... I asked at the bank yesterday, what the present interest rate is for a basic savings account and was told .5%. Save $1000.00 for 1 year and only make $5.00 in interest, at least we won't have to pay tax on the$5.000.
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Permalink Reply by Frank Gilbert on
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Maybe they don't make out as well as a homeowner, but they still make out better under the FairTax. I'm glad your for the FairTax. I'm still going to forward your message onto our state director and see if he wants to respond. Perhaps I didn't convey the message in the right way. Your own words may bring the response you seek. By the way, I thought "assassinating" was a little strong, but I can live with it (lol).
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