FairTax: is it important to LGBT community?
Phil Lavoie contacted me recently about why Queercents hadn’t posted anything about the FairTax plan. He believes the plan has a side benefit that would equalize the tax code for same sex couples. I will let Phil explain his viewpoint on this topic, but bottom line: it changes where taxes come from. Below are his words’¦
FairTax and why it is important to the LGBT community
What does FairTax mean to you, your relationships, and your money?
Have you thought about what happens if your partner becomes ill? If you take care of them, could this be considered a taxable gift? If you own and live in a house together, but only one of you pays the mortgage, could this be a taxable gift? What about if one of you dies? Will you have to pay estate tax?
If you haven’t yet heard about the FairTax act, I encourage you to learn more.
FairTax equalizes the tax code for everyone, more importantly, for same sex couples. Today’s income tax requires same-sex couples to file as a single person, regardless of what they want to do. Same-sex couples are also unfairly taxed for situations that do not affect straight couples, as you can read below.
Mike Huckabee, running for president as a Republican, backs a same-sex marriage ban and supports the FairTax.
Mike Gravel, running for president as a Democrat, supports full marriage equality and supports the FairTax.
It is rare to find an issue where the liberal and conservative communities can equally see some benefits and rally around a common cause. As of the time of this writing, there are 67 bipartisan supporters of the FairTax act. I encourage you to become involved in the discussion and to urge your representative to join the list.
FairTax in General:
I need to begin by explaining a very important aspect of taxes. Corporations do not pay tax!
Corporations are a fictitious entity set up by people to have a common place to do business. The government may collect tax from corporations, but these corporations transfer the payment of these taxes to REAL individuals. Customers may pay a higher price for the produce. Employees may make a lower wage. Shareholders may make less of a return. Regardless, corporations do not pay taxes, people pay taxes. There is also a lost opportunity for beneficial goods and services; many do not make it to the public because companies can’t get past the tax implications of these decisions.
It is estimated that the embedded costs of taxes in what we buy today is approximately 22%. Some of the goals of the FairTax act are to eliminate these embedded taxes, as well as the income tax, the estate tax, the gift tax, etc’¦ and replace it with a national sales tax of approximately 23%. Changing the need of the IRS as a governing authority over the 300 million American taxpayers and reducing their authority to the 20 million American businesses. Fewer entities would result in lower Fraud and improved control.
Remember that many people think of ANY form of tax as being unfair, FairTax tries to be as fair as possible.
There are quite a few provisions that I will not go into, but there are plenty of resources out there that explain these.
Here are a few bullet points:
- FairTax would allow people to keep more of their money and choose when to make a taxable contribution. Today’s tax code penalizes someone for getting a second job. In a FairTax would it would penalize someone for spending above the poverty level.
- FairTax would reduce Washington lobbyists – Ask the average person how much tax they paid last year and they will exclaim, ‘œI didn’t pay any tax, I got a refund!’ The paycheck withdrawal hides the amount of taxes that people pay. A sales tax would make the amount of tax someone pays blatantly obvious. This would help control bad spending and provisional earmarks in Congress.
- FairTax is good for the environment – FairTax specifies that the sales tax is only on NEW goods. Used goods would be tax free; this would force things to have a longer use cycle. If a product still has useful life, it would remain in circulation, as a new good would have a 23% tax. The wealthy would pay more tax dollars, but the rate would be the same.
- FairTax would cause growth – Ever hear of an offshore bank account? Do you know why the wealthy ‘œhide’ their money in these accounts? They do so to avoid the taxes that the US government charges. It is estimated that between $8 – 15 Trillion are contained in these tax shelters. Reduce that tax and this money floods back to the US to be used by banks and lending institutions for local loans.
LGBT Issues:
- Filing Jointly – There would be no such thing as filing in FairTax, therefore equalizing this problem in our current tax code.
- Taxing Benefits – My partner receives his health benefits from my employer, but unlike my straight married colleagues, I must tax on his benefits. Does this sound fair? FairTax removes this inequality.
- Estate/Inheritance Tax – Today, if a same sex couple own assets together and one of the couple dies, the estate has to pay tax on these assets before it can be transferred to the other. Married couples do not have to pay as there is a right of transfer of their jointly owned assets. By removing the estate/inheritance tax, this situation goes away.
- Gift Tax – Many same sex couples own a house together. In a situation where one of the members of the household makes the house payment, the IRS can look at the other member as receiving a ‘œgift’ of equity and could be forced to pay tax on that gift should they be audited. Married couples do not face this challenge as assets are jointly owned. Gay couples are not legally allowed to pass money between them without resulting in gift tax that they should report to the IRS. Think about retirement age, or is one of them got ill and had large medical bills. FairTax eliminates this unfair taxation.
To join the discussion on FairTax and the LGBT community, please join the yahoo group LGBTFairTax or visit FairTax.org for more information about the FairTax movement.
More about Phil Lavoie
Phil Lavoie grew up just outside Boston Massachusetts and has been working since he was 12. He’s been a newspaper boy, the guy who puts rubber bands on lobster claws, a caddie, and an IT support guy.
Phil has been living in the Midwest for over 4 years. He and his partner moved to Indianapolis in 2006 to have their money go further and to be able to put aside some for retirement. He spends a vast amount of his spare time worrying about finances and preparing his taxes. Phil is an avid fan of the FairTax act and hopes to create more fans out of the gay community.
Fairtax is just another way for the right to further shift the tax burden from the ultra wealthy to the middle class.
Yes, we’d be equal. We’d be equally screwed.
Kathy, Thanks for your comment. Unfortunately, I can not tell from your comment why you believe the burden would be moved to the middle-class? Either you are not aware of the provisions of the FairTax act or you just did not submit your reason.
My goal with the post is for you to join the discussion, which I’m thankful that you did. A second goal is for me to understand why I shouldn’t be a fan of FairTax. I encourage further comments from you, because today I feel that FairTax is a no-brainer and I’d love to see reasons why I should hate it. Most of the rationale that I have seen, to date, seems to stem from libertarians that don’t want any tax.
FairTax is revenue neutral. It does not remove or decrease any of the social services that we provide today. All government programs that exist today would still be in existence if it ever passes.
The provision explaining the pre-bate removes the tax burden for anyone up to the poverty level. The provision of not taxing used goods, helps the environment and the poor. The removal of income tax would allow the middle-class to keep more of their money. It would give them an incentive to spend less and would not penalize them for getting a second job.
The ultra wealthy would pay more tax. They don’t buy used goods and they don’t buy cheap goods. Not to mention that most of them don’t make their money through income. The majority are storing their funds in tax shelters to avoid tax. The FairTax would make the US a tax shelter, but anytime they bought a new yacht, a new house, caviar, etc… they would be taxed.
It would also remove much of the advantage that big oil, big tobacco, and other lobbyist have with congress.
Anytime government takes money from its people it isn’t fair. FairTax is the fairest and easiest way of paying taxes that I’ve ever seen.
Again, I encourage your discussion because I’d love to know that FairTax isn’t a good thing the next time I spend hours doing my taxes. The ultra wealthy pay someone else to worry about theirs.
Kathy, would you care to back that up any substantial argument, rather than just regurgitating platitudes? A few points:
1. Taxing the living hell out of the ‘ultra wealthy’ is not a good thing. It doesn’t help the middle class or the poor. It just penalizes productive behavior, encourages money to flee the country, and prevents that money from being invested back into our economy. The Fair Tax would do a great deal to encourage investment in the US economy in a world where other countries are getting a lot more economically attractive. Since I would prefer to keep living in the US, I’d like to see the ultra rich investing here and growing the economy.
2. Everyone should understand the concept of economic incidence. Politicians like hidden taxes like the corporate income tax because they are easy to raise. People love the idea of sticking it to the big corporations – people who aren’t educated investors that is. The rest of us know that the corporate income tax just gets passed on to everyone involved in the corporation, in the form of decreased worker compensation, higher prices on goods, etc. The corporation has to turn a profit to stay in business, so taxes are built into the cost structure one way or another. To add insult to injury, after the corporation pays taxes on its profits and distributes those profits to investors, investors get taxed on those profits again! Way to encourage people to save and invest!
3. The whole regulatory burden of the current tax system almost acts like a subsidy to lobbyists and the financial services industry, and sucks money out of the economy. Lobbyists are well paid to fight for yet another special provision or loophole in the tax code for the special interest du jour. The financial services industry makes money off the fact that the tax code is so complex, because many people can’t do their own taxes. One could argue that the tax code complexity creates jobs, but this is the “broken window fallacy” – if you smash someone’s window, it’s good for the economy because you created economic activity that the replacement of the window required (buying a new piece of glass, having it installed, etc). This is a fallacy because it assumes that the money used to fix the window wouldn’t have been used for something else – to buy a new iPod, a nice dinner, etc. Breaking the window just destroys wealth that would have otherwise been circulated into the economy in some other way. Our ridiculously complex tax system does the same thing.
That said, I think a flat income tax might be a better solution. But the sales tax approach of the Fair Tax is still a huge improvement, and it seems to have more grass-roots support, so I will happily support the Fair Tax. For some discussion of flat income tax versus flat sales tax, check out this article: http://www.reason.com/news/show/30360.html.
“spending above the poverty level.” How does it limit tax to spending above the poverty level?
There is a provision of the FairTax called the Pre-bate. It gives everyone a check, at the beginning of the month, that would be equal to the tax they would pay at the poverty level. The poverty level is currently determined by the US Government and would continue to be under the FairTax. This means that to buy the necessities, individuals would not have the tax burden of these necessities. But… The cost of these necessities would be lower. (Remember, no embedded corporate taxes)
What will induce the corporations to lower their prices by the amount of the (unspecified) taxes with which they pad their current prices? What’s to stop them from taking the tax break as a profitable gift?
A nationwide sales tax (or any sales tax) has the feature
that it falls more heavily on those who spend a higher percentage of their income. This can include the poor and middle class, families with dependent children, the unemployed, and retired people living off their savings.
While it may have the virtue of simplicity, there is no guarantee. For example, the Canada has a nationwide sales tax. It exempts ‘necessities’. Food is a necessity, feminine sanitary products are not. I think the potential for abuse is obvious.
While ‘corporation may not pay taxes’ the net result of corporate taxes is can be lower capital gains and dividends for shareholders rather than higher prices for consumers. I think this is a good thing.
What will induce the corporations to lower their prices by the amount of the (unspecified) taxes with which they pad their current prices? What’s to stop them from taking the tax break as a profitable gift?
Although I don’t think transition costs are necessarily a deal breaker, I will point to Canada’s experience implementing a national sales tax (GST). James Nicoll noted in his livejournal Speaking of Canadian retailers, the Federal government gave out compensation to retailers to cover the sunk costs of goods purchased under the old system. Despite this, most retailers just pocketed the money and kept prices at the old levels, then added the GST.
Thanks for your post. Wow, you really engaged Queercents readers with this article. The current system of taxation is antiquated. It isn’t effective. There are many layers to the problem and the FairTax approach contains many promising and intriguing solutions. I applaud positive movements to change the system.
To paraphrase Scott had asked what would force or induce corporations to lower their prices?
My response is that the customer would force them. In a capital market, especially like the USA, competition drives a lot of behavior. If a company wants to gain a competitive advantage one way to do so is to lower their price. FairTax would give companies the added benefit to do so.
Again, Corporations do not pay taxes…nor do they make money. If you take away employment taxes, capital gain taxes, and other embedded taxes that a company may have to pay, it gives the company more money. With more money they can 1. Lower their prices. 2. Pay their employees higher rates. 3. Give their shareholders more of a return.
If a company chooses not to lower their taxes they risk losing their customers to another company. If a company gives employees or shareholders more money, then it gives them more opportunity to buy more….therefore increasing the revenues of the country.
I am what I consider middle-class. My partner and I each work very hard. We don’t have time to do a lot of our own things. If we had more money we could afford a housekeeper, a landscaper, etc… which all helps others. If we have more money to go out to eat, it helps the restaurant hire more cooks, waiters, etc…
So all in all, it is a good thing.
This is great discussion – Thanks!
Lower capital gains and dividends for shareholders is a good thing? Yeah, screw all those people saving for their retirement. Let’s make sure their retirement savings don’t generate any real returns.
Larry, Thanks for your comment. I’m not an economist, so I don’t know the differences between Canada and the USA especially as it relates to taxes and implementing a sales tax. I will defer that discussion to someone a bit more intellegent in the area. Please feel free to join the LGBTFairtax yahoo group. It would be great to debate this.
Your other comment regarding the extra burden that this would put on the poor: My feeling is that this would actually help more people get out a poverty level. We’ve all head the adage, you can give a man a fish and he will eat for a day…or you can teach a man to fish and he will eat for a lifetime. FairTax would give the poor a real positive incentive that if they spend less and work harder they will keep more of their money. The current system does the opposite. It encourages people to be poor.
I feel that FairTax would cause less poor people.
Remember, all of the services that exist today would not go away. There may be less people on welfare in a FairTax system, but welfare would still exist.
I feel that FairTax would cause less poor people.
Remember, all of the services that exist today would not go away. There may be less people on welfare in a FairTax system, but welfare would still exist.
In our present system, the amount of income tax paid by the poor and lower middle class is negligible. Social Security is different, but I don’t think the national sales tax is also supposed to fund SS as well as current expenditures. The tax you propose would almost certainly result in less disposable income for most poor/lower middle class people, not more. The IRS
tax rate schedule shows that single people have to make over $30,000 after deductions (and married people ove $60K) before reaching the 25% bracket.
Your sales tax proposal provides an exemption for the estimated expenses of someone just a the poverty line. The poverty line for single people in 2006 was $10K. For a family of 4 it was $20K. I don’t see how lower or even average income people wind up better off under your system.
Larry,
Unfortunately, I don’t have much time tonight to write the full comment that I would like to, but here are some bullets.
1. You should really read the book, or the act itself, it does a better job than me at eloquently explaining these provisions.
2. The FairTax is revenue neutral and would replace the current social security (income) tax.
3. I don’t see how it would result in less disposable income, so perhaps I’m missing something.
4. The prices of goods would remain roughly the same, with an after tax increase of approximately 1%. The difference is that you would not have to pay any taxes on your income, so your take home pay would be higher. Throw into the mix a second job or overtime. You would not be taxed any more and would benefit from more disposable income.
Again, Thanks for the input. Living in Indianapolis, this weekend may be a bit tough on my follow-up as we have a big football game this weekend. On top of that, I grew up in New England and I have family visiting me. I do promise to respond to every comment, but I can’t guarantee a speedy response. (If there was any question – GO Colts!)
My main question is would we still have to pay a state/local sales tax on top of this? That would mean in Texas, the average person would pay 31.25% sales tax for any item.
It seems to me, perhaps I’m missing something, that the cost of anything I buy, minus perhaps food, would increase in cost by 23% (the extra sales tax), and while I have more disposable income … as a college student I don’t make enough money to actually owe taxes. I make roughly $11,000/year, and according to the calculator available on Fairtax.org, They save me -4% and I pay almost $300 more in taxes (the threshold where you pay roughly equal amounts when comparing both systems is at $70,000).
This is with no mortgage and no state income tax, mind you. Every income up to 70,000 had more disposable income under the current tax system than it does under the Fair Tax Act proposal.
Admittedly my meager income isn’t used to completely support myself, but for many it is. Especially for many in the middle class who make anywhere from $25,000-$60,000.
I’m not sure I’m down for this, and it doesn’t seem like their calculator is a very effective PR tool if it adds up numbers like it does.
I just found an interesting post from a pure left-leaning blogger. Lots of great points that I thought I’d share.
Chris,
The first thing to mention is that you have the state/local sales tax regardless of a federal plan. That does not change anything. It is the just the federal portion of the income tax that would switch to a federal sales tax.
The prices of goods would not increase in cost by 23%. What you may be missing is that there are taxes built into the prices of what you buy today. For example, when you buy a book from the campus store, you are paying for the taxes that every company has had to embed into the price of that book. The company that manufactured the paper has corporate taxes, the company that printed the book, the company that created the content, the company that runs the campus store, etc… There are taxes built into each step of that process that would all go away in a FairTax system. The tax would only be paid at the final point of sale. There were a lot of economists involved in the plan and they estimate that these embedded taxes were approximately 22%. If you removed these embedded taxes, the price of the book would be reduced by that amount…then you would inject the 23% sales tax.
You may also be missing the concept of the pre-bate. By being a citizen you (or your guardian) would receive a monthly check to pay for the first round of taxes you would need on your necessities. I will be honest, I’m not sure how a college student, living on campus would be treated with regards to the pre-bate, but I would encourage you to figure that out. My guess is that if your guardian is still supporting you, than you would not get the pre-bate. I will try to research this a bit further. I’m not an expert, just a fan, so I don’t have all the answers. The good thing about the pre-bate is that you get it regardless of income, even the unemployed would receive the check.
One of the advantages for a college student is that these same economists believe the passing of the FlatTax would cause unprecedented growth in our economy. Meaning you would have more opportunity once you graduated and would possibly make a better income (and be able to keep it)
Phil,
The price of goods will not remain about the same, unless you believe that all of us will be willing to take a gross pay/pension cut down to our current take home pay level. And that won’t happen for fairness and contractual reasons. You need to understand that around 60% of the so called embedded costs of the income tax system are employee payroll and income tax withholding. So, the best we can hope for is a 10% pre tax cost reduction by removing business income taxes, the business share of payroll taxes, and business compliance costs.
The bottom line is that after tax prices on average will rise by 17% for all services, and will stabilize at 17% higher for all new goods once the inventory tax credit works through the system in the first year. The higher math(?) looks like this: 1.00 x .9 x 1.3 = 1.17.
Hank….our wonderful Anti-Fair Tax debater…I love your zeal in defending our Current 60,000 page, unfair, inefficient, Communistic, taxing system, that will absolutely NOT pay for Social Security and Medicare in 10 years or less, resulting in huge tax increases on every person living in the United States. Your throwing out your own un-researched and very debatable figures that I’m sure people who had more time would do a very good job de-bunking. The bottom line for people to consider is this, the current system is broken and is causing serious damage to our economy, unfairly taxing segments of our population based on which lobbyist you have favor with when they are manipulating the code changes they put in each year. You cannot fix this system by making even more changes…Period. And for me, putting a tax on a human beings right to earn an income and attaching the threat of imprisonment, etc. …at it’s core… is just plain wrong, it is a form of slavery! If you can come up with a better alternative (than the Fair Tax)that does not tax my wages or right to earn and keep my wages …I’ll be all for it!!
Just to put some icing on the cake, here’s what Kotlikoff et al say we can expect in a FairTax America:
Prices AFTER FairTax would look SIMILAR to prices BEFORE FairTax – NOT 30% HIGHER – as opponents contend; competition would see to it. The FairTax rate on new items would be 29.9% (on the new, reduced cost of items because business isn’t taxed under FairTax – thus lowering retail prices by 20% to 30%), or 23% of the “tax inclusive” price tag – this is the way INCOME TAX is figured (parts of the total dollar).
The effective tax rate percentages, that different income groups would pay under a FairTax consumption tax, are calculated by crediting the monthly “prebate” (rebate of tax on necessities) against all likely monthly spending of citizen families (1 member, and greater based on figures established by the Dept. of HHS – a single person receiving ~$200/mo. A family of four receiving ~$500, in addition to family earners receiving their WHOLE paycheck). Prof.’s Kotlikoff and Rapson (10/06) have concluded,
(From study: http://snipurl.com/kotcomparetaxrates ) “…the FairTax imposes much lower average taxes on working-age households than does the current system. The FairTax broadens the tax base from what is now primarily a system of labor income taxation to a system that taxes, albeit indirectly, both labor income and existing wealth. By including existing wealth in the effective tax base, much of which is owned by rich and middle-class elderly households, the FairTax is able to tax labor income at a lower effective rate and, thereby, lower the average lifetime tax rates facing working-age Americans.
“Consider, as an example, a single household age 30 earning $50,000. The household’s average tax rate under the current system is 21.1 percent. It’s 13.5 percent under the FairTax. Since the FairTax would preserve the purchasing power of Social Security benefits and also provide a tax rebate, older low-income workers who will live primarily or exclusively on Social Security would be better off. As an example, the average remaining lifetime tax rate for an age 60 married couple with $20,000 of earnings falls from its current value of 7.2 percent to -11.0 percent under the FairTax. As another example, compare the current 24.0 percent remaining lifetime average tax rate of a married age 45 couple with $100,000 in earnings to the 14.7 percent rate that arises under the FairTax.”
Further,
(From study: http://snipurl.com/kotftmacromicro ) “…once one moves to generations postdating the baby boomers there are positive welfare gains for all income groups in each cohort. Under a 23 percent FairTax policy, the poorest members of the generation born in 1990 enjoy a 13.5 percent welfare gain. Their middle-class and rich contemporaries experience 5 and 2 percent welfare gains, respectively. The welfare gains are largest for future generations. Take the cohort born in 2030. The poorest members of this cohort enjoy a huge 26 percent improvement in their well-being. For middle class members of this birth group, there’s a 12 percent welfare gain. And for the richest members of the group, the gain is 5 percent.”
At the end of the 18th Century, America proclaimed its independence from the tax slavery of Britain, and codified our soverignty, self-rule and liberty, as citizens, in the Constitution and Bill of Rights. In 1913, the wealthy elite conspired with politicians to persuade an elitist president (a former president of Princeton University) to buy into a scheme to again make us slaves by signing the Federal Reserve and the Income Tax acts. The Fed would print money, at interest, and the income tax would ultimately be the vehicle to ensure its payment. It would be the bankers who would pat themselves on the back.
President Wilson would later say, “I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is now controlled by a system of credit. We are no longer a government of free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men.”
The FairTax movement – and our individual participation in it – is the best hope of changing our “citizen-slave/victim psychology” and restoring our power as “We, The People,” freeholders engaged in free-enterprise. Our “slavemasters” will tell you, “The FairTax is going nowhere.” They do not believe we’re capable of removing the shackles they placed upon us from birth.
Well, we’re scrapping the tax code ( http://snipr.com/scrapthecode ) and intend to see to it that government is paid the way America’s working men and women are paid – when, and because, something is sold.
We’re accomplishing this, by:
• Becoming a recurring donor member of FairTax.org ( http://snipr.com/becomeamember )
• Setting up an automatic, recurring donation to Mike Huckabee’s organization ( http://snipurl.com/give2huckbymail ) through our Bill Pay services, and by
• Informing, and influencing, our family and friends, on and off the Web.
Together, we’re on the way to making April 15th just another pretty Spring day.
(Permission is granted to reproduce any of my posts, in whole or part. – Ian)
Dennis, I have never once defended the 60,000 page IRC. In fact, I agree that replacing the income tax with a national consumption tax would be a good idea. There are very compelling arguments for doing so. I just don’t agree that the Fairtax plan as described in HR25 is the way to go. My opinion is that the group that put HR25 together badly overreached. They taxed governments at all levels in order to avoid government competition with the private sector, (and also to reduce the sales tax rate by 5%), but incurred the strong possibility that that portion of the legislation will be found to be unconstitutional under the doctrine of intergovernmental tax immunity. They added payroll taxes to the mix of taxes to be eliminated and thereby created 30 million workers that would become Social Security trust fund non-contributers due to the effect of the prebate. All current retirees would be treated very unfairly by making them resume paying into the trust funds with their sales tax dollars. And completely untaxing businesses was a major political mistake. They added gift and death taxes to the mix, and left the plan open to political criticisms that they are untaxing the wealthy. They adopted a prebate, the largest cash grant entitlement in the history of the country at a time when entitlements are squeezing out discretionary spending, including critical Defense spending. They adopted an inventory tax credit which results in a very large federal budget deficit in the first year. They excluded education tuition, thus allowing the “camel’s nose under the tent flapâ€. That precedent would certainly encourage future politicians to try to exclude such things as medical expenses, home ownership or anything they might consider equally important to education. And finally, they chose a “cold turkey†implementation schedule. The Congress is basically conservative and far prefers evolutionary change to revolutions such as the Fairtax.
And by the way, Dennis, while I agree that Medicare needs an immediate fix, Social Security is far from broken. You might read Bill Bradley’s book “The New American Story” in which he claims that Social Security can be made solvent for the next 100 years by (1) gradually raising the retirement age to 70; (2) raising by a small percentage the current cap on taxable earnings; (3)folding all state and local government employees into the system; and (4) adopting a more realistic “chained” method of calculating the annual inflation increase. So, rest easy, Dennis, you will be taken care of!
Ian, I’m not aware that Larry Kotlikoff ever wrote that prices would remain about the same. In fact, in his study effort about the Fairtax base/rate published in September of 2006, he took a pass on the price issue by assuming price neutrality and mumbling a lot about monetary accomodation. Price increases seem to be the “third rail” of the Fairtax community. I’ll stick with my very simple analysis which shows that, best case, prices will rise 17%. And that assumes that businesses will use their income tax cost savings to lower prices, and not increase shareholder profits, expand the business, increase employee pay, or increase profit margins.““““““
Why don’t you and Dennis just go down town and ask any business owner to estimate what the elimination of the income tax would do as a percentage of his costs? Inquiring minds want to know!
Hank,
Your hijacking this blogpost to get into deep economic calculations to Muddy the Waters so that you may convince people not to support the Fair Tax. The Fair Tax is not that complicated, the figures have been researched and verified by SEVERAL economists, and unless they are manipulated and twisted to prove a different conclusion are very simple to follow. Alot of your statements are incorrect, such as your exception to the Pre-bate, a very large portion of our population are already recieving some sort of government “rebate” in the form of zero taxes paid and receiving a tax refund to boot, not to mention all the other tax giveaways…so to throw out statement like that are just disingenuous. I talk to business owners all day long, as a matter of fact …I am one, and every one that I talk to loves the Fair Tax not only for themselves, but for thier employees, and for the benefits to the American People. We are being trounced by foreign countries because of our current tax system, all of whom are discovering the fantastic benefits of going to a consumption type tax…which will only exacerbate the current situation the more they adopt them.
Also, in all your ranting I still have no alternative from you that removes the damaging, unfair, COMMUNISTIC, slavery of Taxation on Income.
Dennis, Glad you asked!! I call my alternative “Fairtax-Lite. Fairtax-Lite is a broad based 12% national sales tax with (1) no exclusions, (2) no prebate, (3) no government taxation, (4) leaves payroll taxes and gift/estate taxes alone, (5) no inventory tax credits, and (6) implements the plan over five to ten years. If you are really serious about getting rid of the income tax and the IRS, I suggest that Fairtax-Lite has a far better chance of gaining Congressional approval than HR25.
There is nothing disingenous about my views on the prebate. Yes, almost half of Americans pay no income tax, but all workers pay at least the 7.65% payroll tax. And anyone who gets a tax refund needs to rethink just why they are overpaying the government, effectively giving Uncle Sam a tax free loan. Bad decision! Some day you will figure out that the prebate is not really a sales tax refund in advance, but a huge cash grant entitlement which the country can’t afford to add to the federal budget. Ask your self, does it matter how much you consume and how much you pay in sales taxes in order to get the prebate? You know very well the answer is –NO!!
I’m glad to hear that all your friends and associates love the Fairtax. So, please answer my question. What percent of your business costs would be eliminated if the income tax went away. Simple question which deserves a simple answer. Even a rough estimate would be helpful.
Best Regards
Hank
Phil,
I was still concerned about the numbers the fair tax calculator gave me. On incomes up to $70,000, the current tax system, minus all its flaws, still gave a higher amount of disposable income. The calculator compares the current tax system and the proposed fair tax system and ends with a line “How much you can really spend.”
The amount on that line was higher, by as much as 15% according to the Fairtax.org’s own calculator! (TO my understanding, this includes the pre-bate, sales tax, etc.)
What would be the explanation for that? Download their excel calculator and experiment with the numbers. $70k is roughly the threshold where the percent difference is approximately 0, and above $70k is where the fair tax actually gives -MORE- money.
In this week’s Carnival of the Insanities.
Hank, you either do a clean “prebate,” or you get what we have now.
Phil, thanks so much for this post. I’ve been trying to convince some of my queer friends to research the Fair Tax, especially after seeing several video blogs about from Sept 27th American Solutions seminar:
http://www.webcastgroup.com/client/start.asp?wid=0840929073673
My fear is that the issue will get divied up as a “Right” or “Left” issue so that the people who will benefit most from it (actually I think *everybody* across the board will benefit as well as the country in general) will wind up fighting it simply because it’s not an issue on “Their Side.”
Let’s keep this issue going and up for debate and start holding politicans accountable. I’ve been calling up several of my state reps and badgering them about it.
Poco a poco! 😀
Jett, I couldn’t agree more. Thanks for joining the LGBTFairTax yahoo group. We can continue the discussion there! Pro or Con.
Chris,
I think the FairTax calculator is a bit complicated. Do you want to send me your copy and I’ll see if I see that you did something incorrect?
Ian, please explain just what you meant by “a clean prebate”?? I’m getting old and don’t quite get your point.
And, isn’t it about time you corrected that erroneous piece you are spreading all over the ether net. Prices aren’t going to remain about the same, and there isn’t one shred of data to prove otherwise. I’m still waiting for you to query some business people as to what they think eliminating the income tax would do to their costs?
Even AFFT has written that they no longer believe that prices won’t rise. Show me some data and I’ll believe you, but I hate drinking the Kool-Aide!
Everyone,
I appreciate all the debate.
My intent was to get the GLBT community talking about the FairTax and how there are some equalizing benefits to our community should the act pass.
Whether it benefits the nation is still being debated, but the conversation is healthy. I beleive that it will benefit me and I believe it is right for America.
Please continue to discuss the issue by joining the group: http://groups.yahoo.com/group/LGBTFairTax/
I am a moderator and can continue to respond to anyone over there.
Thanks again!
i find it refreshing to see that even in the queer community we like to put down other people by flashing labels around, like communist. thanks for sticking to the issues, hank, and not throwing personal barbs. it made the conversation a true debate of ideas.
i’m not convinced that fair tax is the answer, nor do i feel the need to justify my doubt by coming up with convincing alternative. i look fwd to learning more (great links, ian), and thanks for queercents for hosting!
PiggyBankBlues,
I have a feeling that we have had some comments, including that of Hank, that are not actually members of the LGBT community, but rather, national opponents or supporters of FairTax. If you search for “Hank Van Gieson” you will see that he is very popular on the FairTax blogs.
My goodness, Phil. You need to define “popular” for me, because over the last year, I have been banned from the Fairtaxblog, as well as the Fairtaxgroups site. It appears that those two otherwise excellent sources of information will not tolerate Fairtax opponents,–only fellow Kool-Aide drinkers are welcome.
Perhaps that’s how grass roots efforts should work, but I sort of think that lots of folks, including Mike Huckabee, are getting pretty far out on the limb over HR25. Remember, I support changing to a national consumption tax, but firmly believe that the authors of HR25 tried to do too much. Too many moving parts for their proposal to be taken seriously, especially by seniors such as myself.
To repeat, as a senior under the Fairtax: (1) My effective tax rate will go up; (2) My state/local taxes will rise by 30%; (3) My savings will be double taxed; (4)Prices at the cash register will rise by an average of 17%; (5) My investments will be charged an implicit tax every month; and (6)I will have to resume paying into the SS Trust funds with my sales tax dollars.
Not a pretty picture, and I’d be happy to discuss each and every criticism, along with many other non-personal ones, with anyone any time.
And no, I’m not a member of your community, but I believe everyone needs to fully understand the details of this Fairtax scheme, because the devil really is in the details/fine print.
Ask me anything on your other site and I will respond promptly.
Best regards,
Hank
Hank, You are always welcome to join in the dialogue. I’m sorry to hear that you were banned from the other FairTax blogs, especially if you were adding your insight. By “popular” I was only referencing the fact that you have a lot of FairTax dialogue in the Internet space.
I think the pre-bate needs to be well above the “Federal poverty level” before I would even start to consider fairtax. In most urban areas, even at the federal poverty level, you can’t afford to live reasonably, especially with kids.
I just got Neil Bortz latest book. I hope to review it sometime soon.
Hello,
I have begun to examine the pros and cons of the FairTax proposal. I would appreciate comments from all sides of the issue. Thanks! As I get further inot this, I’ll come back with more specific comments and questions.
Ken Spitze
politicalandeconomicnumbers.blogspot.com
Anyone who thinks Fairtax is rational, much less a real tax plan, just has no idea what the hello they are talking about.
Fairtax is a great sounding fraud. A hustle. And the people who are behind it, know it.
I offer 50,000 dollars — a legal, binding offer — if ANYONE can show even one page of Fairtax research that proves it’s even a retail sales tax of 23% to replace all other fed taxes.
What you suckers are clueless aboout is that OVER 3/4 of Fairtax has nothing to do with retail sales.Got that? Over 3/4 of Fairtax has NOTHING — TO – DO – WITH – RETAIL – SALES.
Let me repeat that.OVER — OVER – OVER 3/4 of Fairtax has nothing to do with retail sales.
That’s right, Fairtax tries to fool stupid people and their narrative is that their plan is a “simple transparent retail sales tax”
The hell it is. Read the fine print, read the tax tables.
GO to this web site. http://fairtaxgoofy.blogspot.com/
See why my 50,000 dollar offer is real, and that Fairtax leaders are lying bastards who know their own plan is not a personal retail sales tax to replace all other federal taxes.
And, after you find out these lying bastards spent a lot of money to lie to you, don’t be so easily fooled by the next batch of liars. Herman Cain, Mike Huckabee, Neal Boortz, and those con artist liars at Beacon Hill were paid to push this fraud down your throat.
http://fairtaxgoofy.blogspot.com/
Who is behind Fairtax fraud? Who put up the 30-40 million to push this crap? I don’t know. They sure as hello aren’t telling. But their intitials are most likely the Koch Brothers.