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View Full Version : Taxes - Fair Tax


charmed
12-02-2009, 11:31 PM
After our discussion on taxes I am curious what everyone thinks about "Fair Tax" or a national sales tax instead of income tax... a Replacement.

Here is a link so I don't have to post the entire thing.

Americans For Fair Taxation: Frequently Asked Questions Answers (http://www.fairtax.org/site/PageServer?pagename=about_faq_answers)

Personally I am all for this, although I will admit since I typically don't shop much as I am very frugal (most of the time) this would probably create a situation where I don't pay my fair share of taxes to support our government... but it seems "fair" like it suggests.

My husband is all for it.

What do you all think?


adbullock
12-03-2009, 05:23 AM
After our discussion on taxes I am curious what everyone thinks about "Fair Tax" or a national sales tax instead of income tax... a Replacement.

Here is a link so I don't have to post the entire thing.

Americans For Fair Taxation: Frequently Asked Questions Answers (http://www.fairtax.org/site/PageServer?pagename=about_faq_answers)

Personally I am all for this, although I will admit since I typically don't shop much as I am very frugal (most of the time) this would probably create a situation where I don't pay my fair share of taxes to support our government... but it seems "fair" like it suggests.

My husband is all for it.

What do you all think?

Actually that's the beauty of the Fair tax. It is fair. Those that consume more pay more in taxes. Of all the solutions presented I think that is the most equitable AND fair but ONLY if the law that allows the income tax is first repealed and we don't move to things like taxation through required health insurance.

I'm all for the fair tax. The trick lies in getting it introduced and preventing it from becoming a tax in addition to what we already have.

MrsCyrcus
12-03-2009, 06:32 AM
Actually that's the beauty of the Fair tax. It is fair. Those that consume more pay more in taxes. Of all the solutions presented I think that is the most equitable AND fair but ONLY if the law that allows the income tax is first repealed and we don't move to things like taxation through required health insurance.

I'm all for the fair tax. The trick lies in getting it introduced and preventing it from becoming a tax in addition to what we already have.

I'd say someone needs to read the Constitution. It states very clearly that we are NOT to be taxed on our labor!!! :)


jnmurra
12-03-2009, 06:41 AM
When Kamie first suggested this years and years ago (how long has it been? 7 or 8 years ago?) I have to admit, I didn't understand the Fair Tax; however, after having read up on it - as long as the income and self-employment taxes are nixed, I am all for it. And I consume...A LOT...ROFL! So I would definitely pay my fair share, but I would almost bet that a Fair Tax for my family would result in thousands of dollars being saved every year and I'm all for that. :D

adbullock
12-03-2009, 07:08 AM
I'd say someone needs to read the Constitution. It states very clearly that we are NOT to be taxed on our labor!!! :)

Someone needs to read the fair tax bill as well. The Fair Tax isn't a tax on our labor. It's a tax on our spending.

I know how you feel about taxes it's old hat. The problem is if you don't pay it, whether it's legal or not, they throw your behind in jail. I'm not willing to go there. You can feel free.

kamie3535
12-03-2009, 08:33 AM
Don't forget with The Fair Tax there is also the prebate for every family to cover the cost of the basic necessities at the poverty line, every month. So in essence it truly is a voluntary way of paying taxes, and that's what makes it a beautiful thing. You keep 100% of your paycheck on the federal level, and only pay taxes on NEW items purchased. The costs of things would not go up, because of embedded taxes that we pay know.

I've been advocating it for at least 6 years, but to tell the truth I don't think the political class would ever implement it, for it takes to much power away from the government.

charmed
12-03-2009, 09:17 AM
I'd say someone needs to read the Constitution. It states very clearly that we are NOT to be taxed on our labor!!! :)

Depends on who is reading it. From all my studies and reading of the constitution no where does it stay that our labor is not to be taxed. There have been many cases before the supreme court regarding this.

CammiB
12-03-2009, 10:03 AM
I would be for the fair tax. I like the idea of the flat tax better though. Less complicated and still fair.

adbullock
12-03-2009, 10:14 AM
I would be for the fair tax. I like the idea of the flat tax better though. Less complicated and still fair.
How on earth is it LESS complicated? With the fair tax we no longer need accountants to figure out our tax liabilities each year. We pay the taxes at the point of sale. It's a no hassle method for the average person for dealing with the taxes.

Don't forget to consider the amount of money that would be saved in accounting fees alone each year just TRYING to comply with a tax code that is too difficult to understand for the average citizen. More importantly, for me at least. those with power and influence won't get around the need to pay taxes altogether.

There are tons of benefits to the Fair Tax (rewards good spending, taxes rank consumption, encourages purchasing used rather than new items so it's a greener plan for taxation because it rewards the philosophy or "reduce, reuse, recycle".

kamie3535
12-03-2009, 10:24 AM
Yeah and don't forget with the flat tax, they'll just manipulate it like they always do.

MrsCyrcus
12-03-2009, 11:05 AM
Someone needs to read the fair tax bill as well. The Fair Tax isn't a tax on our labor. It's a tax on our spending.

I know how you feel about taxes it's old hat. The problem is if you don't pay it, whether it's legal or not, they throw your behind in jail. I'm not willing to go there. You can feel free.

I know what the fair tax is. I meant to reply and not quote your post. I never told you to not pay taxes either, did I? If a lot of us had more balls to live by the constitution, they surely couldn't put us all in jail now, could they? ;)

jnmurra
12-03-2009, 12:02 PM
I know what the fair tax is. I meant to reply and not quote your post. I never told you to not pay taxes either, did I? If a lot of us had more balls to live by the constitution, they surely couldn't put us all in jail now, could they? ;)

I think we've had this discussion before? but I agree with you - not constitutional; however, I am NOT going to be the revolutionary in going up against the IRS...LOL! And you would never be able to get enough people in this country to even try it.

I saw what the IRS did to my dad when his (unbeknownst to him) shady accountant did some funny business with his (and other people's) tax returns. The accountant ended up in the federal pen and my dad was really hammered - big time. It was awful, awful, awful. That was over 25 years ago and I remember it like it was yesterday, what our family went through. No way.

MrsCyrcus
12-03-2009, 12:40 PM
Yes Jenn, we have had this discussion before. :D

Why An Income Tax is NOT Necessary to Fund the U.S. Government (http://www.devvy.com/notax.html)

CammiB
12-03-2009, 04:59 PM
Yeah and don't forget with the flat tax, they'll just manipulate it like they always do.

And this would be my main concern.

Just out of curiosity, but do you (any of you that are for the fair tax) really see the IRS ever being abolished? If so, how would that be possible, with our national debt?

adbullock
12-03-2009, 05:09 PM
The IRS handles more than just income taxes BUT it will need to be greatly changed from its current way of running things. Any organization that will spend hundreds of dollars to chase down $10 or $15 is seriously flawed.

My take on this is that the national debt will be much MORE likely to be repaid (or at least paid down) with the Fair Tax because the economy as a whole will be much healthier when people have extra money to STIMULATE the economy in a manner that will last long after the cash for clunkers has been labeled a big misstep in economic history.

Of course certain people in office don't want to see genuine economic recovery so Fair Tax is a HUGE uphill battle.

MrsCyrcus
12-03-2009, 05:57 PM
And this would be my main concern.

Just out of curiosity, but do you (any of you that are for the fair tax) really see the IRS ever being abolished? If so, how would that be possible, with our national debt?

The Federal Reserve is the one that needs to be abolished. Their the reason we are in debt! Did you read the link I posted a few posts back?

kamie3535
12-03-2009, 09:04 PM
Just out of curiosity, but do you (any of you that are for the fair tax) really see the IRS ever being abolished? If so, how would that be possible, with our national debt?

Maybe it's my meds, but I'm not following what the IRS and the national debt have to do with each other, relating to The Fair Tax?

Yuliya Mironova
12-04-2009, 02:09 PM
In what sense(s) is it "fairer" to tax spending than incomes? :confused:

kamie3535
12-04-2009, 02:45 PM
In what sense(s) is it "fairer" to tax spending than incomes? :confused:

Well lets see.

1. The government isn't seizing money out of our paychecks before we even get it. In other words we keep what we earn, and decide when and if we want to pay a tax by buying NEW items.

2. Everyone pays taxes on new items. So the underground economy will finally be paying into the system.

3. The prices of items will virtually stay the same, due to the embedded taxes we already pay.

4. Since rich people obviously spend more they will be the ones paying more taxes on a voluntary basis.

5. This system would be much more transparent.

6. The government couldn't manipulate a tax code.

7. It would be much cheaper than the system we have know. There would be no tax forms to fill out, it currently costs us over 50 billion a year just to comply with the tax code.

8. Tourists would be paying into the system.

9. Illegals would be paying into it also.

10. No more tax withholding's, no quarterly taxes, no owing the IRS at the end of the year.

Need I go on?

adbullock
12-04-2009, 03:13 PM
In what sense(s) is it "fairer" to tax spending than incomes? :confused:

Because when you tax spending everyone actually pays taxes rather than just those who have legitimate jobs. Currently certain people don't pay taxes or pay their "fair share" of taxes like drug dealers (who don't actually claim their income), hookers, illegal aliens (regardless of what some people might claim), waitresses, maids, and countless other people around the country who make cash under the table or have no oversight that requires them to claim 100% of their tips and income 100% of the time.

It's fair because people aren't able to avoid it through loopholes or clever accounting practices.

adbullock
12-04-2009, 03:24 PM
In what sense(s) is it "fairer" to tax spending than incomes? :confused:
Oh and my personal favorite....there would be no penalties for people who fail to understand the complexities of our 9,471 page tax code and get mixed up or make errors in arithmetic, transpose numbers, or don't fill out the forms just so. Our current tax system is very anti "average" person who doesn't speak fluent legaleeze.

tenXmom
12-04-2009, 07:55 PM
In what sense(s) is it "fairer" to tax spending than incomes? :confused:

Seriously?

Why should I pay a higher percentage of my income in taxes than somebody who earns less?

What is not fair about taxing EVERYBODY the same percentage based on our purchases?

I'll still pay more in taxes because I'll still spend more - I'll also get to keep more of the money I earn.

MrsCyrcus
12-04-2009, 09:46 PM
Has anyone actually read this bill? They want to set the national sales tax rate to 23%??? :eek: :eek: I'd rather they raise my states sales tax, like they've done in the past. 23%?????????? It wouldn't affect me though...I don't shop for anything "new" hardly, as it is, my word...23% :eek:

tenXmom
12-04-2009, 10:01 PM
I think I'd rather pay 23% of each purchase over 30% (or more) of my income in income taxes AND 9% of each purchase (state sales tax)

kamie3535
12-04-2009, 10:06 PM
Has anyone actually read this bill? They want to set the national sales tax rate to 23%??? :eek: :eek: I'd rather they raise my states sales tax, like they've done in the past. 23%?????????? It wouldn't affect me though...I don't shop for anything "new" hardly, as it is, my word...23% :eek:

Wow 23% when the prices stay relatively the same, and we keep are entire paycheck, end the IRS as we know it, do away with tax forms etc...............

Maybe it's you who need to read the bill and the book. If you had :eek: wouldn't be your response.

MrsCyrcus
12-04-2009, 11:09 PM
Wow 23% when the prices stay relatively the same, and we keep are entire paycheck, end the IRS as we know it, do away with tax forms etc...............

Maybe it's you who need to read the bill and the book. If you had :eek: wouldn't be your response.

I'll admit, I haven't read the bill till just before I posted that and I didn't read too much farther after seeing that percentage. I'd just read some articles about it before. We don't have a sales tax as high as TXM does, but yes...I would like to see the IRS gone and be able to keep all that I earn, which isn't much really, but whatever. Math's not my thing so when I see a percentage like that...it just blows me away, even before realizing what we pay out in income tax. My bad I guess. :cool:

Ending the IRS would be just a start to all our problems though. As I stated before...it's the FED we need to get rid of all together.

Yuliya Mironova
12-05-2009, 03:54 AM
Seriously?

Why should I pay a higher percentage of my income in taxes than somebody who earns less?



No reason at all that I can think of, Laura. What does that have to do with what I asked? I asked in what sense(s) taxing spending is "fairer" than taxing incomes. That question has nothing to do with whether taxes are flat-rate or incremental at all, does it?! :eek: :confused:

Kim
12-05-2009, 07:55 AM
No reason at all that I can think of, Laura. What does that have to do with what I asked? I asked in what sense(s) taxing spending is "fairer" than taxing incomes. That question has nothing to do with whether taxes are flat-rate or incremental at all, does it?!

Can you explain in what sense it isn't? :eek::confused::rolleyes:;)

adbullock
12-05-2009, 08:04 AM
Has anyone actually read this bill? They want to set the national sales tax rate to 23%??? :eek: :eek: I'd rather they raise my states sales tax, like they've done in the past. 23%?????????? It wouldn't affect me though...I don't shop for anything "new" hardly, as it is, my word...23% :eek:

If you had continued on instead of stopping right there you would have realized that many of the production costs (that are the direct result of payroll, income, and capital gains types of taxes) will be diminished. This means that the prices of goods will actually be lower and the fair tax rate is expected to make them marginally higher than they are now rather than a massive increase of 23%.

You would also have read that there will be a "prebate" system that will give families a certain equal spending allowance each year. For couples without children it's something along the lines of $400 a month. A family of four will receive a little over $500 a month to put towards those taxable items. Can you imagine the difference in your wallet it will make if you're having nothing taken out of your paycheck (this includes SS taxes, capital gains taxes, medicare taxes, FICA, and all the rest NOT just federal income taxes) PLUS an extra $400 a month even if the prices on some goods rise marginally you'll still have more spending power which will stimulate the economy in a massive way (increasing demand and creating jobs and prosperity that is real and lasting rather than the bubble wealth booms and busts we've been going through for the last several decades).

Also if you want to cut your personal tax liability, buy used, grow your own food (you'll only be taxed on the seeds and supplies for gardening AND you'll have something to trade with others), or curb your spending. This tax plan above any and all others gives you the power to control your tax burden. If you want to pay fewer taxes you simply need to find ways to spend less or buy used whenever possible.

MrsCyrcus
12-05-2009, 12:54 PM
I think I'd rather pay 23% of each purchase over 30% (or more) of my income in income taxes AND 9% of each purchase (state sales tax)

From what I've been reading today, it will end up being more than 23% and the states with a sales tax already in place will still be paying that sales tax ON TOP OF this "fair" tax. This "fair" tax replaces Federal taxes only.

ETA: Oh, and having such a big family to feed & clothe will cost you a lot more under this "fair" tax too!

MrsCyrcus
12-05-2009, 01:19 PM
If you had continued on instead of stopping right there you would have realized that many of the production costs (that are the direct result of payroll, income, and capital gains types of taxes) will be diminished. This means that the prices of goods will actually be lower and the fair tax rate is expected to make them marginally higher than they are now rather than a massive increase of 23%.

You would also have read that there will be a "prebate" system that will give families a certain equal spending allowance each year. For couples without children it's something along the lines of $400 a month. A family of four will receive a little over $500 a month to put towards those taxable items. Can you imagine the difference in your wallet it will make if you're having nothing taken out of your paycheck (this includes SS taxes, capital gains taxes, medicare taxes, FICA, and all the rest NOT just federal income taxes) PLUS an extra $400 a month even if the prices on some goods rise marginally you'll still have more spending power which will stimulate the economy in a massive way (increasing demand and creating jobs and prosperity that is real and lasting rather than the bubble wealth booms and busts we've been going through for the last several decades).

Also if you want to cut your personal tax liability, buy used, grow your own food (you'll only be taxed on the seeds and supplies for gardening AND you'll have something to trade with others), or curb your spending. This tax plan above any and all others gives you the power to control your tax burden. If you want to pay fewer taxes you simply need to find ways to spend less or buy used whenever possible.

Trust me, we already spend less as it is. I can't even remember the last time I bought myself a new outfit! When you have very little to spend, after using it up on bills, there isn't much spending to curb.

In regards to SS taxes, I found that the Social Security and Medicare trust funds will receive the same amount of money as they do under current law and that the source of the trust fund revenue is a dedicated portion of sales tax revenue instead of payroll tax revenue. So, it sounds to me like we will still be paying for it.

Kim
12-05-2009, 02:52 PM
If I understand it correctly, and I may not, this puts a tax on everything - including groceries - which you then get a predetermined prebate from the government to cover the taxes of what they consider necessities. I have a bit of a problem with that because I don't pay taxes on groceries now. Certain things that aren't considered necessities yes - pop, chips, that kind of thing - but not on eggs, bread, milk. So now I will have to pay a tax on them but the government is going to reimburse me that tax AND the government gets to decide how much THEY think I should be spending on those things every month so they will only give me back so much. So basically the government gets to tell me how much they think I should feed my family.

Kim
12-05-2009, 03:34 PM
If you had continued on instead of stopping right there you would have realized that many of the production costs (that are the direct result of payroll, income, and capital gains types of taxes) will be diminished. This means that the prices of goods will actually be lower and the fair tax rate is expected to make them marginally higher than they are now rather than a massive increase of 23%.




Don't you think that is sort of wishful thinking Ad? Can you really imagine any company saying 'well now we don't have to pay all those taxes let's lower our prices or give the extra to our employees in pay raises.' Or would they just increase their profit margins and laugh?

adbullock
12-05-2009, 04:45 PM
Trust me, we already spend less as it is. I can't even remember the last time I bought myself a new outfit! When you have very little to spend, after using it up on bills, there isn't much spending to curb.

In regards to SS taxes, I found that the Social Security and Medicare trust funds will receive the same amount of money as they do under current law and that the source of the trust fund revenue is a dedicated portion of sales tax revenue instead of payroll tax revenue. So, it sounds to me like we will still be paying for it.
Yes it will come out of that 23% NOT out of your paycheck. You'll get the entire paycheck for the first time ever (minus any withholdings that you ask for like 401K and medical insurance). Other than that you'll get ALL the money you earn rather than good old Uncle Sam taking his cut first.

Read the entire thing before you make judgments. You're getting caught up on a detail that isn't nearly as grim as you anticipate.

Remember you'll also get the $400 prebate each month too. That is money that is designed to "even the playing field" even further.

adbullock
12-05-2009, 04:50 PM
Don't you think that is sort of wishful thinking Ad? Can you really imagine any company saying 'well now we don't have to pay all those taxes let's lower our prices or give the extra to our employees in pay raises.' Or would they just increase their profit margins and laugh?

I think there has been so much talk about how this SHOULD happen that they would be foolish not to. Some businesses are going to cut costs in hopes of getting new business and others are going to follow suit in order to compete. Healthy competition is what keeps prices honest. It's the way it has always been. Yes, businesses are in business to turn a profit but they still rely heavily on public perceptions and buyer confidence. If one business is viewed as being the bad guy and price gouging it won't bode well for the business. Make sense?

adbullock
12-05-2009, 04:55 PM
If I understand it correctly, and I may not, this puts a tax on everything - including groceries - which you then get a predetermined prebate from the government to cover the taxes of what they consider necessities. I have a bit of a problem with that because I don't pay taxes on groceries now. Certain things that aren't considered necessities yes - pop, chips, that kind of thing - but not on eggs, bread, milk. So now I will have to pay a tax on them but the government is going to reimburse me that tax AND the government gets to decide how much THEY think I should be spending on those things every month so they will only give me back so much. So basically the government gets to tell me how much they think I should feed my family.

I'm not sure I'm following your logic here Kim and we usually see things in a similar fashion.

What I understand, and I've studied this a good bit, is that the prebate is only meant to help boost all families to the poverty level and help pay for the taxes on basic necessities not cover the entire cost of them.

This tax provides MORE freedom because the government is no longer telling you how much of the money you earn you get to keep. It isn't attempting to tell you how much you can or even should spend.

MrsCyrcus
12-05-2009, 05:45 PM
Yes it will come out of that 23% NOT out of your paycheck. You'll get the entire paycheck for the first time ever (minus any withholdings that you ask for like 401K and medical insurance). Other than that you'll get ALL the money you earn rather than good old Uncle Sam taking his cut first.

Read the entire thing before you make judgments. You're getting caught up on a detail that isn't nearly as grim as you anticipate.

Remember you'll also get the $400 prebate each month too. That is money that is designed to "even the playing field" even further.

All that sounds like to me is that they are getting rid of the 30% income tax and replacing it with a 23% "fair" tax. As Kim pointed out, we too do not pay tax for groceries of any kind, but will have to have my bill go up 23 (supposed) percent, making my grocery bill higher. Then to top it off, I'll be paying 23% more on other stuff (retail, utilities, online purchases) that I was only paying 6 percent on. Speaking of online purchases, I received an email from a website where I buy online games at a great discount. It was informing me that they would have to start charging tax on my club membership. From what I read, everything except education will be taxed. With what we (DH & I) make now, we would still be broke.

As for this "prebate" Where is this money going to come from?

adbullock
12-05-2009, 06:19 PM
All that sounds like to me is that they are getting rid of the 30% income tax and replacing it with a 23% "fair" tax. As Kim pointed out, we too do not pay tax for groceries of any kind, but will have to have my bill go up 23 (supposed) percent, making my grocery bill higher. Then to top it off, I'll be paying 23% more on other stuff (retail, utilities, online purchases) that I was only paying 6 percent on. Speaking of online purchases, I received an email from a website where I buy online games at a great discount. It was informing me that they would have to start charging tax on my club membership. From what I read, everything except education will be taxed. With what we (DH & I) make now, we would still be broke.

As for this "prebate" Where is this money going to come from?


This is from the Fair Tax websites:

"Why not just exempt food and medicine from the tax? Wouldn’t that be fair and simple?

Exempting items by category is neither fair nor simple. Respected economists have shown that the wealthy spend much more on unprepared food, clothing, housing, and medical care than do the poor. Exempting these goods, as many state sales taxes do, actually gives the wealthy a disproportionate benefit. Also, today these purchases are not exempted from federal taxation. The purchase of food, clothing, and medical services is made from after-income-tax and after-payroll-tax dollars, while their purchase price hides the cost of corporate taxes and private sector compliance costs. "

You're already paying taxes on thees things. The difference is that it will be transparent with the Fair Tax.

adbullock
12-05-2009, 06:37 PM
As for this "prebate" Where is this money going to come from?


It's a rebate on your taxes that you're getting BEFORE you pay the taxes. So the prebate will come from tax dollars.

Incidentally, it's also only meant to help offset the taxes paid on goods and services and not the cost of the goods and services themselves. It's not saying that they think you'll only need $400 for food this month but to say they believe you'll pay at least $400 in taxes on food, clothing, and medical care this month and are refunding those taxes (before you've even paid them).

Anyway, I know it's a lengthy read but I really do encourage you to read it. I know I'm not going to change your mind if you've made it up but it would be much better for you if you were armed with all the facts on Fair Tax BEFORE you decide to write it off.

MrsCyrcus
12-05-2009, 06:40 PM
This is from the Fair Tax websites:

"Why not just exempt food and medicine from the tax? Wouldn’t that be fair and simple?

Exempting items by category is neither fair nor simple. Respected economists have shown that the wealthy spend much more on unprepared food, clothing, housing, and medical care than do the poor. Exempting these goods, as many state sales taxes do, actually gives the wealthy a disproportionate benefit. Also, today these purchases are not exempted from federal taxation. The purchase of food, clothing, and medical services is made from after-income-tax and after-payroll-tax dollars, while their purchase price hides the cost of corporate taxes and private sector compliance costs. "

You're already paying taxes on thees things. The difference is that it will be transparent with the Fair Tax.

The bigger difference is that I'll be paying 23 percent now for them. I'd still like to know where the prebate will be coming from though. Either way ya cut it, a tax is a tax is a tax. It's just under a different name. It still can't get rid of the IRS as we know it either. These businesses have to pay this "fair" tax to someone. Who is that?

adbullock
12-05-2009, 06:46 PM
It's a tax. It goes to the government. What's not to understand?

I'm really not sure what you're asking here.

MrsCyrcus
12-05-2009, 07:01 PM
The Government? Just like the IRS? Forms will still have to be filled out by the businesses that are taking this 23 percent so that the "government" gets these taxes.

There is No Such Thing as a Fair Tax - Laurence M. Vance - Mises Institute (http://mises.org/story/1975)

jnmurra
12-05-2009, 07:11 PM
It's a rebate on your taxes that you're getting BEFORE you pay the taxes. So the prebate will come from tax dollars.

Incidentally, it's also only meant to help offset the taxes paid on goods and services and not the cost of the goods and services themselves. It's not saying that they think you'll only need $400 for food this month but to say they believe you'll pay at least $400 in taxes on food, clothing, and medical care this month and are refunding those taxes (before you've even paid them).

Anyway, I know it's a lengthy read but I really do encourage you to read it. I know I'm not going to change your mind if you've made it up but it would be much better for you if you were armed with all the facts on Fair Tax BEFORE you decide to write it off.

I was running some numbers and I was wondering if this sounds correct to you.

The $400 prebate would cover the tax on $1740 worth of goods, correct? (1740 x .23 = appx. 400). Am I calculating that right?

kamie3535
12-05-2009, 07:34 PM
I was running some numbers and I was wondering if this sounds correct to you.

The $400 prebate would cover the tax on $1740 worth of goods, correct? (1740 x .23 = appx. 400). Am I calculating that right?

The prebate is determined at the poverty level. It will depend on that level for any given year. This PDF should explain it better.

http://www.fairtax.org/PDF/2009FairTaxPrebateSchedule.pdf

Ad, you are doing great, I'm to out of it to help much at the moment. Sorry.

meg27599
12-07-2009, 06:35 PM
I was running some numbers and I was wondering if this sounds correct to you.

The $400 prebate would cover the tax on $1740 worth of goods, correct? (1740 x .23 = appx. 400). Am I calculating that right?

Wow that's a lot of goods I have to admit. I don't spend that on the basics (Grocery store food, medical and clothing) each and every month.

Does this mean I would come out actually making money?

BTW, this is a serious question. I'm not being sarcastic.

jnmurra
12-07-2009, 07:18 PM
Wow that's a lot of goods I have to admit. I don't spend that on the basics (Grocery store food, medical and clothing) each and every month.

Does this mean I would come out actually making money?

BTW, this is a serious question. I'm not being sarcastic.

If you look at the chart that Kamie posted, it shows for a household size of 2 adults and 1 child, your consumption allowance is $25,400 for a year and your annual rebate would be $5,842 and your monthly rebate would be $487. So basically you would get a check for $487 every month to cover the TAX you pay on your consumption. So my thinking is you get $487 to cover the tax; that's covering appx. $2117 worth of "consumption" each month at 23% tax.

Also, go to fairtax.org. Link's at the bottom of the pdf. There is a calculator there that shows you how much you'd save (or not) between now and under the FT.

HighEnergyMom
12-07-2009, 08:10 PM
I need to go read things on the fair tax idea to understand it better, so I can't really comment for or against it now since I don't understand it.

Does the fair tax only cover all federal withholding taxes? That would still leave state and local, and we all know that can amount to quite a bit. Secondly, just what is considered "consumption"? Insurance policies like life, health and auto, education, food, rent, clothing, daycare, utilities, purchasing a home, etc. -- is there anything that will not be taxed? We pay a tremendous amount of money in taxes now, including hidden taxes that businesses charge us to cover their own...so even with a monthly exclusion, I am really not so certain we will be any better off.

Also, when you consider that a 1 or 2 person household will likely have a much smaller exclusion per month, keep in mind that home prices and all the rest of the expenses are still truly very high, so it might work out that many people could end up paying more than they were under the present broken system????????? I have so many questions about that whole proposal.

If a disaster would strike someone, like an auto accident, or a fire that gutted the whole house and destroyed all someone's belongings, would replacing everything be subject to this tax? Or the insurance settlement be taxed?

How will charities be handled? They still have to pay to consume things like utilities, etc., will this cause current tax exempt charities to be subject to taxation now and reduce their revenue?

I could really see the politicians trying to position their constituents for special treatment and we'd still end up with a mess of a system like we have now. Government always has loopholes for special contributors, er, people and businesses.

CammiB
12-07-2009, 11:57 PM
It's late, but I don't get the 23% vs. 30% tax inclusive/tax exclusive scenario. If I am paying 30% at the retail counter, then how am I paying 23%???

If you only pay taxes on new items, does that include big items such as a home? If so, what is that going to do to the new housing market? Or new automobiles? Who in their right mind would buy a new home and pay 23 or 30% tax on that home, when they could buy a used home tax free???

It also bothers me that we will have to charge 30% for our services. That just sounds crazy to me. I know it would have to be better than our current system, but just think if we didn't have so much national debt, and so many government programs that need "X" amount of money, how well this system would work at a much lower percent that might actually be "fair". There is nothing fair about 30%. It's just another way for the government to take our hard earned money and continue to fund their over spending.

It would still be better than the current joke of a system we have now.

MrsCyrcus
12-08-2009, 08:32 AM
It's late, but I don't get the 23% vs. 30% tax inclusive/tax exclusive scenario. If I am paying 30% at the retail counter, then how am I paying 23%???

If you only pay taxes on new items, does that include big items such as a home? If so, what is that going to do to the new housing market? Or new automobiles? Who in their right mind would buy a new home and pay 23 or 30% tax on that home, when they could buy a used home tax free???

It also bothers me that we will have to charge 30% for our services. That just sounds crazy to me. I know it would have to be better than our current system, but just think if we didn't have so much national debt, and so many government programs that need "X" amount of money, how well this system would work at a much lower percent that might actually be "fair". There is nothing fair about 30%. It's just another way for the government to take our hard earned money and continue to fund their over spending.

It would still be better than the current joke of a system we have now.

From what I have been reading, we will be paying taxes on everything except education. Yes, new homes would be subject to this tax. Oh, and I think fair taxes are about as good as civil war. ;)

jnmurra
12-08-2009, 12:20 PM
It's late, but I don't get the 23% vs. 30% tax inclusive/tax exclusive scenario. If I am paying 30% at the retail counter, then how am I paying 23%???

If you only pay taxes on new items, does that include big items such as a home? If so, what is that going to do to the new housing market? Or new automobiles? Who in their right mind would buy a new home and pay 23 or 30% tax on that home, when they could buy a used home tax free???

It also bothers me that we will have to charge 30% for our services. That just sounds crazy to me. I know it would have to be better than our current system, but just think if we didn't have so much national debt, and so many government programs that need "X" amount of money, how well this system would work at a much lower percent that might actually be "fair". There is nothing fair about 30%. It's just another way for the government to take our hard earned money and continue to fund their over spending.

It would still be better than the current joke of a system we have now.

I haven't read all of this yet, but wanted to pass it on:

http://www.fairtax.org/PDF/PromotingHomeOwnership.pdf

kamie3535
12-08-2009, 06:31 PM
I'm going to try my best to answer these questions, please keep in mind I just had minor surgery yesterday and am still a bit out of it.



Does the fair tax only cover all federal withholding taxes? That would still leave state and local, and we all know that can amount to quite a bit.
Yes for the time being, that doesn't mean states can't pass there own fair tax and due away with there payroll taxes in the future.

Secondly, just what is considered "consumption"?

Every new item at the point of retail sale.


We pay a tremendous amount of money in taxes now, including hidden taxes that businesses charge us to cover their own...so even with a monthly exclusion, I am really not so certain we will be any better off.

True but if you will study the fair tax you will quickly understand that prices will not go up, since we are already paying the embedded taxes know.

Also, when you consider that a 1 or 2 person household will likely have a much smaller exclusion per month, Well it makes since because they consume less.keep in mind that home prices and all the rest of the expenses are still truly very high, so it might work out that many people could end up paying more than they were under the present broken system????????? No true because of the prebate, and the fact that everyone has the option of buying used.

If a disaster would strike someone, like an auto accident, or a fire that gutted the whole house and destroyed all someone's belongings, would replacing everything be subject to this tax? Or the insurance settlement be taxed? Yes, but the price of the items would be about the same as they are today. It's the embedded tax thing again. Even insurance companies have embedded taxes they pass on to the consumer.
How will charities be handled? There would be no deductions at the federal level, but again you'd keep 100% of your paycheck at the federal level. They still have to pay to consume things like utilities, etc., will this cause current tax exempt charities to be subject to taxation now and reduce their revenue? They pay utility bills know, this would be no different. Again the embedded taxes would be gone.

I could really see the politicians trying to position their constituents for special treatment and we'd still end up with a mess of a system like we have now. Government always has loopholes for special contributors, er, people and businesses. I don't think it would be any worse than what we have know and if people are keeping 100% of their paychecks they at least have a say so, which we don't know.

CammiB
12-08-2009, 06:44 PM
I haven't read all of this yet, but wanted to pass it on:

http://www.fairtax.org/PDF/PromotingHomeOwnership.pdf

Thank you. :)

kamie3535
12-08-2009, 06:44 PM
It's late, but I don't get the 23% vs. 30% tax inclusive/tax exclusive scenario. If I am paying 30% at the retail counter, then how am I paying 23%???

They quote the Fair Tax the same way they quote the income tax. Inclusive. If you buy an item for $100.00 at the retail level, you are paying $23.00 of that $100.00 for the Fair Tax, you are not paying $123.00.

If you only pay taxes on new items, does that include big items such as a home? Yes If so, what is that going to do to the new housing market? Or new automobiles? Nothing, the prices will stay the same because of embedded taxes we pay know. Who in their right mind would buy a new home and pay 23 or 30% tax on that home, when they could buy a used home tax free??? Anyone would could afford it, since the price would not change.

It also bothers me that we will have to charge 30% for our services. I'm not following this??? That just sounds crazy to me. I know it would have to be better than our current system, but just think if we didn't have so much national debt, and so many government programs that need "X" amount of money, how well this system would work at a much lower percent that might actually be "fair". There is nothing fair about 30%. It's just another way for the government to take our hard earned money and continue to fund their over spending. Except it's voluntary to by new, and the Fair Tax is only 23% no matter how the critics try to spin it. I'd certainly rather keep all my paycheck, not have to fill out countless tax forms, and decide if and when I feel like paying taxes.

It would still be better than the current joke of a system we have now.

Same disclaimer, if I'm making no since. Just had surgery and am sorta out of it.

CammiB
12-08-2009, 06:55 PM
Thanks Kamie. Hope you feel better soon :)

My DH just started a side business of repairing cracks and chips in windshields. I'm assuming this would be considered a service. There is not really an option of buying used, but we would have to charge our customers 23% for our service. But I guess it would all even out in the end, and I do like the thought of having more control over my money and where it goes.

HighEnergyMom
12-08-2009, 08:13 PM
Feel better soon Kamie.