Tax Rebates

[Army_of_One]

Originally Posted by old timer

As I was hearing the empowered George W last night, I was empowered with an empowering thought (ok, used empowered enough) --
A national sales tax of suggested 23 percent would do one thing needed -- cut back consumption. Now initially that would be a real blow to the economy, but since we will (George W. -- did he talk about it?) have to cut back over the next decade due to oil, water and energy issues, I guess that will be bonus.

Actually items would be less expensive. Right now there are tons of taxes inbedded in the items you buy.

[ksgrainman]

Just read this a bit ago, might give a little more insight into things. At least this persons anyway

Is the Fair Tax really fair? - MSN Money

[Bubba]

Originally Posted by old timer

As I was hearing the empowered George W last night, I was empowered with an empowering thought (ok, used empowered enough) --

A national sales tax of suggested 23 percent would do one thing needed -- cut back consumption. Now initially that would be a real blow to the economy, but since we will (George W. -- did he talk about it?) have to cut back over the next decade due to oil, water and energy issues, I guess that will be bonus.

You can suggest that it will put more money in people's (some) budgets, but if you fully know that each purchase is costing you 23% additional in taxes, I would suggest that putting the money in the bank will be a clear easy decision for many.

And with interest not being a purchase, will it be taxed ? If not, than holding on to capital would be my goal.

Now again, it will screw up our economy in many ways, but with the lower middle class spending more at WalMart, et al, it will certainly help China's.

And without federal deductions for investments in new businesses, I can only guess that fewer new businesses will start, etc. Again, a savings of energy and a good way to cut our GNP by a chunk.

Thoughts, Bubba ?

This kinda answers your question/statement...

Originally Posted by Army_of_One

Actually items would be less expensive. Right now there are tons of taxes inbedded in the items you buy.

My added thoughts are that with this fair tax system, when you make $8/hr. you take home $8/hour. You make $20/hr. you take home $20/hr. No more FICA, Medicare, etc., etc.

Also, business will get their breaks as well because business purchases are exempt from the tax. So, when you are spending money on and/or for your business there is no tax.

[Army_of_One]

Right now if you buy an item for 10 bucks a portion of that cost is taxes that are already imbedded in the item. So if you get rid of those taxes the price of the item drops THEn you would pay the 23% or whatever it would be "fair tax"..so although prices would go down on items or stay the same YOu as an wage earner would be making MORE money because of not paying the taxes out of your check.

[Army_of_One]

Our current tax system is SO complex that the average person can't do their own taxes or keep up with current tax law. (I know there is Turbo Tax) It shouldn't be that way. You shouldn't have to pay much if anything to get your taxes done. The fair tax would whittle it down to a 1 page tax form that anyone could do.

Also note...the people against the fair tax are usually those that have something to lose by it....it takes power away from the Dems (who like to tax and spend) and think what it would do to tax lawyers and such...

[Army_of_One]

What Happens to Poor and Middle Income Americans?

OK ... let's put on our sensitivity hats for a few minutes here and think of the consequences of the Fair Tax Act on our nation's poor, poor, pitiful poor. After all, they can hardly afford a 23% sales tax when they're living paycheck-to-paycheck in the first place, right?

Remember ... right now, for the most part, those whom we define as "poor" aren't paying any income tax anyway. In fact, many of them are getting checks from the government. The absurdly-named Earned Income Tax Credit, for example. So, how can these people survive if suddenly they're paying a 23% retail sales tax?

There's no doubt that any implementation of the Fair Tax would fail in short order if nothing were to change except that the poor would be paying today's prices for a gallon of milk or a loaf of bread, plus a 23% sales tax. But ... that would be far from the reality under the Fair Tax. Under the Fair Tax the poor won't only survive, they'll positively thrive! The Fair Tax could turn out to be the best poverty-fighting tool devised in this country since the concept of hard work.

Let's begin by considering two realities.

First, remember, please, that the poor, along with everybody else, will no longer have Social Security taxes or Medicare taxes withheld from their paychecks. Whatever they earn, they get on payday. For most of them this means an immediate 10 to 15% increase in their earnings.

Second. There's that 22% in imbedded taxes buried in the cost of all consumer goods. This isn't my figure; it comes from respected economists. That 22% is sitting there in virtually everything Americans have to buy.. and that includes poor Americans. As soon as the competitive forces of the free market work their magic, and they always do, consumers, including the poor, will be paying at least 20% less for virtually everything they buy, including the basics of food, clothing, shelter and transportation. Yes .. they'll have to pay the new national sales tax, but when you factor in the lower prices caused by the disappearance of the embedded taxes you'll see that the total price paid for consumer goods will remain very nearly the same.

So ... just considering these factors, the Fair Tax delivers a winning hand to people living in or near to what we call poverty. They get every penny they earn on payday, and when you factor in the Fair Tax and the lower prices, they're actually spending less of their money for a retail purchase than before.

A practical example: Let's pull out the calculators. Let's say that a single mother with two children spends $45 a week on groceries. The removal of the 22% embedded tax would bring the price of those groceries down to $35.10. The sales tax would be $8.07. This brings the total price to $43.17. That's less than our poor mother would have paid under today's tax system. This single mother, whom we'll consider "poor," has just received a 10% to 15% increase in her weekly paychecks, and she's paying less at the grocery story for her basic necessities! Does that sound like such a rotten deal to you?

At this point you should be thoroughly convinced that the Fair Tax would actually benefit, rather than harm the poor. But, then again, maybe not. Perhaps you were educated in government schools, or you're just hard to convince. Sit down. Here's where I close the sale.

The Rebate

The folks who wrote the Fair Tax plan knew that burdening the poor with a 23% retail sales tax would doom the plan from the outset. They decided to devise a way were nobody, rich or poor, would ever have to pay the sales tax on the basic necessities of life. So, under the Fair Tax plan every consumer will receive a credit to their checking account or to a debit card equal to the sales tax that person would be expected to pay on the purchase of the basic necessities of life for that month. The size of the monthly payment will be based on the government's published poverty levels for various sized households. Considering the number of checks and financial transactions of this type the feds undertake every single month, this is entirely "doable."

Here's an example of how the rebate payments would have worked in 2003.

You are now a married couple with two children. The Fair Tax Act sets forth a formula for computing the poverty level, based on government figures, which negates any marriage penalty. Under the Fair Tax Act in 2003 you would have been granted an annual consumption allowance of $24,240. This is what the government would assume you would have to spend during that one year to buy the basic necessities of life for your family. The sales tax on this amount would equal $5,575. The government will rebate this amount to you in 12 equal monthly installments of $465. It's clear .. you're better off, MUCH better off, under the fair tax plan.

But what about a single woman with one child? Her monthly rebate in 2003 would have been $232. The lowest rebate payment would be to a single person with no dependents. That person would receive $172 per month.

Now ... bear in mind, this rebate isn't only paid to the poor. It is paid to everyone, rich and poor alike. The purpose here is to make sure that no American has to pay the Fair Tax sales tax on the basic necessities of life. Unlike the present income tax system, the Fair Tax treats each and every person in this country exactly the same. This, of course, presents somewhat of a problem to politicians who like to use the tax code to foment class distrust or outright warfare.

OK ... let's add it up for America's lower income citizens:

1. They get their entire paycheck.
2. Even with the sales tax, and considering the drop in prices, they'll be paying essentially the same for everything they buy.
3. They get a check from the federal government every month to rebate any sales taxes they had to pay.

Though their tax returns aren't that complex, let's also include the time these the poor (all of us, really) will save by not having to keep tax records or file tax returns.

boortz.com: Nealz Nuze October 26, 2004

[Army_of_One]

After Pres Bush's State of the Union address I heard someone ask him how can people get back a rebate that didn't contribute any "bate"....lol.

I think we call that Welfare....the Dems call it buying a vote.