Right now the government tries to reward us for debt... interest write-offs, etc. And it penalizes us for savings by taxing our interest earned, capital gains etc. The FairTax would eliminate that.
Indaswamp wrote:Right now the government tries to reward us for debt... interest write-offs, etc. And it penalizes us for savings by taxing our interest earned, capital gains etc. The FairTax would eliminate that.
The reason the gov. does this is tied directly to our money system...money in our country is debt. In 1971 when nixon took us off the gold standard, our money became a currency..an instrument of debt. to increase the money supply, more debt has to be created....no debt= no money. (except the value reflected by the GDP...which is real).
Just Ed wrote:This is a very, very bad idea.
The national sales tax rate would be about 30%. I make over $75k per year and my current EFFECTIVE tax rate is only 13%. My profession is to represent a telephone company in front of tax auditors at state and local levels....I'm not talking out of my butt here.
Think about this....you currently pay on average 8% sales tax at the local level on purchases. In the case of regulated telephone service, you are also paying (in most instances) 911 tax to fund the telephone system...Federal Excise Tax....Universal Service Fund....Telephone Relay Service Charge....etc., etc.
The current tax rate for the average telephone user is 70% in Florida....add 30% to that just for phone calls!
Pass this and you will be going to the store...those $20 tennis shoes are going to actually cost you $30....and if you order them online you're going to be paying for shipping on top of that.
This is a bad move.....just ask our friends to the north that have to deal with QST, HST, PST, etc.
Just Ed wrote:
Your comments about the tax you take home on your paycheck is also a bit short sided....the government may withhold that money...but you get it back in the form of a refund on your tax return. Again, I hope you consider your EFFECTIVE tax rate. It doesn't matter if I pay 13% now....or 13% after I get my refund on or about April 15th. Bottom line is, I'm paying 13% in MY effective tax rate. That's a heck of a lot better than paying up to 50% in Federal, State, and Local taxes later when I need food or clothing.
actually the preparation involved will dwindle drastically for taxes. Not just for businesses, but also for the average tax payer. We will eliminate the need to pay H&R block to do our personal taxes. We will eliminate 67,000 pages of tax code which NO CPA could possibly understand fully, and replace it with 150 pages. Think i'm wrong? Look at almost every appointed member of Obama's cabinet. Everyone has tax issues!Just Ed wrote:If you want to talk about embedded costs....let me ask you this. In you and your Dad's business....how much time and money is allocated preparing state and local tax returns (for sales and use tax), researching if the stuff you buy and sell is taxable or not, fighting with tax auditors when they want to review your books and records, updating your accounting system to reflect changes that occur on a monthly basis. These are all embedded costs that will not change with a FairTax. They will still be there....in fact, those costs will go up. Keep in mind this will abolish FEDERAL income tax...this has nothing to do with State income tax. Even then, you will still be liable for sales tax, use tax, property tax, business and occupation tax, excise tax, franchise tax, etc., etc.
Just Ed wrote:...and you don't want to get me started on the illegal alien discussion. All I will say is this: If you, as an employer, pay wages, then you are required to withhold tax on your employees - it doesn't matter if they are legal or not. If employers aren't withholding taxes on those wages, then it isn't the "illegal aliens" that are the problem - it's the U.S. employer that is. Once those wages are withheld, then it is up to said "illegal alien" to file for a refund on those withheld wages. The issue becomes an issue of identity theft - not an issue about whether or not someone pays their taxes. Think about that.
That's fine, but you're not likely going to get 100% of your taxes back on April 15th. Especially not SS and Medi.
Just Ed wrote:Was just thinking about the last post and I don't think I made myself clear on the B & O Tax issue or how to look at it.
There are various jurisdictions throughout the country that tax based on Gross Receipts. Washington (and other jurisdictions like SEATAC) have a tax on gross receipts in one form or another. In Washington it's called the "Business and Occupation Tax". In New York it's outlined in §186c and §186e. A lot of folks are under the assumption that tax is not subject to tax. That is not true.
What's the net difference.....
The cost of the product (due to gross receipts taxes) stays about the same washing out that "22% benefit".
The cost to the consumer goes up....as in my instance my effective tax rate goes from 13% to 30%
The State of Washington gets an even bigger benefit increasing B & O tax revenue at the expense of the wholesaler
....another thing to think about....most retired folks are getting TAX FREE benefits already because they are receiving social security benefits that they've paid into their whole lives. Our population is getting older so you are going to have a majority of the population (at some point within the next 10 - 20 years) receiving a tax free income anyway. Suddenly, they are being taxed at 30% on their social security earnings....that they're SUPPOSED to be getting tax free.
The current system is complicated - true, it's not perfect. But a quick fix like the FairTax will increase production costs and put a lot of people into poverty - including senior citizens.
Say you have a $100 transaction and per Dustin's example 22% of that includes Federal Tax (embedded cost). Currently, that also includes an embedded cost to the business of .00471 % Washington B & O Tax.
When that item is sold currently, the consumer pays another 8% on sales tax ($8) for a total cost of $108 at retail and the business would owe an additional $.51 on the transaction for B & O Tax.
Under the FairTax plan, let's eliminate that Federal Income tax so the transaction is $88. In this case, $88 goes to the retailer, the consumer pays $7.04 in sales tax, $26.40 in Federal sales tax (FairTax) for a total cost to the consumer of $121.44. Since the B & O tax is based on gross receipts, the retailer will need to pay $.57 on that transaction....thus increasing the cost of that product by 11% with relation to the gross receipts tax. If that item is sold in a local jurisdiction that also has B & O (Burien, SeaTac, etc.) then that cost goes up there as well.
Indaswamp wrote:This ought to shed some light on this subject.
Former Comptroller General to the United States (head accountant),
Non-profit organization to educate Americans.....
Dustin07 wrote:Ed, what did you say you did for a living? are you a CPA?
Users browsing this forum: kahunna and 3 guests