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PostPosted: Sun Dec 02, 2007 9:39 pm 
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I had a thought of another FT video.

First clip: Mike during the debate "get rid of IRS" clip.
Next clip: CNN post debate panel, Jeffery (one of the panelists) questioning others as to how Mike could get rid of IRS.
Third clip: Next morning on CNN approx 10:30 parts of Rep John Linder talking about FT;
Final clip: Mike making statement "largest transfer of power from Politicians to American people"

Closing Chuck Norris "POWER TO THE PEOPLE!"

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PostPosted: Mon Dec 03, 2007 8:02 am 
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George,
Not to pick on you, but several others have had a similar misunderstanding of the FairTax and this is for everyone's benefit.
Under the FairTax, spending power remains about the same. It doesn't increase. The 22% price drop doesn't happen along with everyone receiving their whole paycheck.
Two scenarios present themselves when the FairTax is passed, one or the other will happen. (Or some combination) In scenario one, as presented by Dale Jorgenson, prices will be able to drop by an average of 22% as the embedded taxes of the current system are removed. Since he included your current withholdings as part of what businesses use to drop prices, your new “gross” income will be the same as your current “net”. However, after the FairTax is applied to any new good (used goods aren’t taxed) the price of a good will be roughly equal to what it is now. Consumption as such shouldn’t be affected because there will be no noticeable increase in prices. Jorgenson failed to include compliance costs in his report, which could yield even further price drops.
In scenario two, as presented by Art Laffer, prices will only drop by roughly 12%, but your new net income will be your current gross. Businesses won’t apply your current withholdings to price drops. Therefore, the after FairTax price will be slightly higher than current, however, with a noticeable increase in take home pay, consumption isn’t likely to diminish.
A lot of people think that the FairTax is a virtual lottery win...prices stay the same AND you have "more money" to spend. This isn't accurate. Things are about a wash in general purchasing power, but then choosing to buy used and the ability to save untaxed is a value added.
I am a huge fan of the FairTax, we've just got to be careful when advocating it to people.
Cheers!

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PostPosted: Mon Dec 03, 2007 9:35 am 
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Along the same point that Christian is making, the removal of compliance costs from the mfg and distribution process would provide our nation with some serious macro-economic benefits.

Today, businesses spend far too much time, money and effort in making "tax based" management choices instead of making intrinsic profit based business decisions that are in the best interest of the company, the shareholders and its employees.

The concept of “tax based costs” aren’t limited to just the obvious documentation, data-storage and accountant expenses that all of us have to endure, but they also include the lost "opportunity costs"… i.e. those costs incurred when businesses make their operational choices based on the tax impact of a business decision or situation versus the intrinsic profit motivation that could better maximize that company’s market share, growth and/or employment needs for a given enterprise.

The FairTax removes all of these components from the cost of producing that good or service thereby lowering the cost to the end user and increasing the production efficiency of our economy as a whole.

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PostPosted: Mon Dec 03, 2007 11:42 am 
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Guys, I am 1,000% for the fair tax. I am seeing another benefit. I will be able to use my fprmer income tax stolen from my check to determine what product I wish to use to make my federal tax payment, thus increasing consumption rather then letting the feds just take it. Is there true logic here? Not to mention the 22% reduction in product cost. I calculated a formula and this is what I see as a 23% pay raise:

Here is the math formula for fair tax.

Fair tax will, on a fifty thousand dollar income :

15% raise increase a fifty thousand dollar income pay check
22% drop in cost of products/ removed hidden federal taxes
+37% raise in spending ability not to mention no savings tax, capital gains tax, phone tax, user tax on phones, etc.

-23% sales tax increase on product cost . This number is debated as not being accurate, however, the amount of sales in this country reflects this number correct and is probably due to the spending by the rich who have tax shelters on all their income and the underground economy.

+9% pre-bate on the first $20,000.00 for the $50,000 income. This % will be more on lower incomes.
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23% raise in the amount of net income . How can anyone disagree with that?

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If you are a Democrat and are confused about what is going on in your party, it is true. We are one election away from full blown communism.
"A heavy or progressive or graduated income tax is necessary for the proper development of Communism.", Karl Marx


What have we done?
It is time for the Fair Tax!
www.fairtax.org
Pass this e-mail on on to everyone you know!

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PostPosted: Tue Dec 04, 2007 7:59 am 
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Sorry George, it's the first part of your math that is based on a misconception of the FairTax shared by many supporters of it.

Quote:
15% raise increase a fifty thousand dollar income pay check
22% drop in cost of products/ removed hidden federal taxes


Both of these will not happen under the FairTax, only one or the other. The way the 22% price drop was calculated assumed that the business took the money out of your paycheck that they currently send to the government (your withholdings) and instead keep it themselves to lower their prices. Your paycheck will remain the same this way, but prices will be a wash after the FairTax is added. (roughly)

Quote:
+9% pre-bate on the first $20,000.00 for the $50,000 income. This % will be more on lower incomes.


The prebate is not a set percentage of income, it is a standard and set amount based on what 23% of the poverty rate is. For a married couple, the yearly prebate is $4697. If they earned $20,000 that is 23.5% of their income....if they earn $100,000, it is only 4.69%...thus making the FairTax progressive.

Thanks for sharing my enthusiasm for the FairTax, just trying to help clear up a couple things.
Cheers.

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PostPosted: Fri Dec 14, 2007 12:23 pm 
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Christian,

I was wondering if there is a way to baby step into the Fair Tax. For instance, Americans hate the IRS, but they are also scared of drastic reform. Is there a way to perhaps start with cutting corporate taxes (b to b sales tax) first.

I am just trying to think of a way that doesn't 'freak people out'. Is there a process that could be mapped out, while keeping the result the same?

Maybe it is not possible.

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PostPosted: Fri Dec 14, 2007 2:53 pm 
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good question, jason, and one that i've wondered about, too...so, what are the current ideas for the transition into the FairTax?

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PostPosted: Fri Dec 14, 2007 3:06 pm 
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The Fair Tax will be implemented:
"On January 1 the first year after the 16th Amendment to the US Constitution is repealed."

This is one amendment that will be included in HR-25.

When you go to bed on 12/31 (of whatever year) you will be under the Income Tax System. (That is if you are not partying too hard) When you wake up, you will be under the Fair Tax.

Businesses will receive software updates for their cash registers to implement the necessary info for the business. There are three major software providers for the cash registers and AFFT has discussed this with them. Their response was "NO PROBLEM" that is an easy change.

All businesses will receive a tax credit (23%) to offset the income taxes that are embedded in the costs of inventory. They will take the tax credit when the inventory is reduced. This can be taken for up to 18 months (if I remember correctly!) or until the inventory is exhausted. The vast majority of businesses have inventory for a few weeks or months at best.

The IRS will be funded on a limited basis in order to process the prior year tax returns and to handle any collection and audit issues. After 36 months, all the income tax data will be destroyed! You can burn all your income tax records.

I hope this gives you a good handle on the conversion.

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PostPosted: Fri Dec 14, 2007 3:35 pm 
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chiefcook wrote:
The Fair Tax will be implemented:
"On January 1 the first year after the 16th Amendment to the US Constitution is repealed."

This is one amendment that will be included in HR-25.

When you go to bed on 12/31 (of whatever year) you will be under the Income Tax System. (That is if you are not partying too hard) When you wake up, you will be under the Fair Tax.

Businesses will receive software updates for their cash registers to implement the necessary info for the business. There are three major software providers for the cash registers and AFFT has discussed this with them. Their response was "NO PROBLEM" that is an easy change.

All businesses will receive a tax credit (23%) to offset the income taxes that are embedded in the costs of inventory. They will take the tax credit when the inventory is reduced. This can be taken for up to 18 months (if I remember correctly!) or until the inventory is exhausted. The vast majority of businesses have inventory for a few weeks or months at best.

The IRS will be funded on a limited basis in order to process the prior year tax returns and to handle any collection and audit issues. After 36 months, all the income tax data will be destroyed! You can burn all your income tax records.

I hope this gives you a good handle on the conversion.


This is of course if there are not modifications to the bill. What I was asking is, are there any ways that the Fair Tax can be implemented on a basis that gives concessions to those who are weary of such a dramatic change?

We live in a country where bills are debated, and compromises are made. Is Fair Tax an ALL OR NONE deal?

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PostPosted: Fri Dec 14, 2007 10:24 pm 
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Actually , that is the beauty of the Fair TAx. It replaces all and the only way to implement it is at once. The change wil be in your first pay check.

My question is how is it that people think the Fair Tax is direct? I would think that being you have to do something to be paying the tax, i.e. purchase a new product, that would be indirect.

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PostPosted: Sat Dec 15, 2007 3:43 am 
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jnallen,
Thanks for the question.
Actually, as you have probably seen from reading these FairTax threads, the idea of "baby stepping" towards the FairTax would be opposed by most people. One of the biggest fears people have about the FairTax is that we would end up with both the sales tax and an income tax. That's why so many people demand that the 16th amendment be abolished before the FairTax is enacted.
I've handily answered that question elsewhere on this board.
The problem with the "baby stepping" is that then we would by definition have both a sales tax and income tax enacted at the same time. This would completely freak people out, including myself.
One concession I have seen is placing a "sunset clause" on the FairTax that says basically if it isn't working after X years, then we revert back to how it was. I could go along with this if it meant getting it passed. I honestly think it would work so well that people would be furious if Congress was going to allow it to expire.

Regarding transition, here is what actually happens:
Get ready for your head to swim. It really isn't that complicated and will be transparent to the vast majority of Americans. Remember, the FairTax is 123 pages long, unlike the current 60000. It may sound a bit "legaleese", but it has to be for what it is.
Many thanks to Aaron at fairtax.org for providing this answer. Credit given for work that isn't mine.

“… the dreaded ‘transition’ fear is a product of the insanely complex system we have now. You stop withholding from paychecks and start collecting a sales tax. Pretty simple.

“The only transition rule is the business credit that says any good made under the old system is not subject to the FairTax as it already has taxes embedded in it [see below]. The dates [below] are already in the legislation…

“The FairTax legislation states that businesses possessing inventory on the close of business December 31, 2008 qualify for a transitional FairTax credit if the inventory is sold subject to the FairTax and prior to December 31, 2010.

“Qualified inventory, like ‘new’ products in the ‘pipeline,’ shall have the cost that it had for federal income tax purposes for the active trade or business as of December 31, 2008. The transitional inventory credit is equal to the cost of the qualified inventory times the FairTax rate. The credit may be claimed on the month when the inventory is sold subject to the FairTax. The seller would claim that amount (value of inventory times FairTax rate) on his/her monthly sales tax return. It would be subtracted from the amount of the sales tax collected on his/her total sales in that month. Only the net amount of taxes would be paid. If net taxes were negative then the seller would get a refund.

“Businesses may sell the right to receive the credit, so the credit can follow the qualified inventory through the supply chain. Qualified inventory includes work-in-process.”

Further…

“There will not be any phase in for the FairTax. Income and payroll taxes end on December 31, 2008 and the FairTax goes into effect the next day, January 1, 2009. Of course, taxpayers will still be required to file their 2008 income tax returns which will be due on April 15, 2009. The IRS will remain in place until September 30, 2011 to carry out all tax processing and enforcement activities relating to tax returns for the 2008 tax year.

“Here is how it would work:

“Dec. 31, 2008 – taxes on income for all tax years beyond December 31, 2008 are repealed. All income tax withholding and payroll tax deduction for federal taxes ends.

“Jan. 1, 2009 – the national sales tax is imposed on all non-business purchases of goods and services.

“Jan. 15, 2009 – estimated tax payments (form ES) for the final quarter of tax year 2008 will be due.

“Apr. 15, 2009 – tax returns for the 2008 tax year will be due.

“Apr. 15 through Sept. 30, 2011 – the IRS will be processing 2007 annual tax returns for the individual income tax, corporate income tax, estate and gift tax, and the self-employment tax. It will conduct its normal collection and enforcement activities, including audits. The IRS can devote all of its attention to collecting the 2007 taxes since there will be no time devoted to getting ready for 2008.

“Sept. 30, 2011 – No funding of the IRS beyond this date as specified in Sec. 301 of HR 25 below.

“SEC. 301. PHASE-OUT OF ADMINISTRATION OF REPEALED FEDERAL TAXES.
(a) Appropriations- Appropriations for any expenses of the Internal Revenue Service including processing tax returns for years prior to the repeal of the taxes repealed by title I of this Act, revenue accounting, management, transfer of payroll and wage data to the Social Security Administration for years after fiscal year 2011 shall not be authorized.
(b) Records- Federal records related to the administration of taxes repealed by title I of this Act shall be destroyed by the end of fiscal year 2011, except that any records necessary to calculate Social Security benefits shall be retained by the Social Security Administration and any records necessary to support ongoing litigation with respect to taxes owed or refunds due shall be retained until final disposition of such litigation.”

Ok, that's it. You can breath again. Like I said, unless you own a business, that will be completely transparent to you. All you'll see is your full paycheck starting the first of the year.

Hope that answered the questions. If not, just ask again.
Cheers,
Christian

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PostPosted: Sat Dec 15, 2007 4:27 pm 
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I'll admit that I haven't read much into the FairTax. I read around their website last night and I really liked what I found. My research area is low-income children and families (developmental outcomes, access to child care etc). After reading about the FairTax I really think it has a lot to offer low-income families. Allowing them to keep all of their paycheck, in my opinion, will give them more money to save and more money to spend on good child care. I really see this as a solution to a lot of the problem's low-income families face and doesn't have them rely on more subsidies and government programs. Just my two cents!

Brinn


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PostPosted: Sun Dec 16, 2007 1:04 pm 
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Very true Brinn, and don't forget the prebate that everyone gets as well. This certainly is a bigger help to the lower income folks (as a percentage of income) than to the upper class. In many cases it actually raises their spending power over and above what they have now.

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PostPosted: Thu Dec 27, 2007 6:20 am 
I don't see where it is any better than we have now. It is illegal to tax food,clothing and shelter. From my readings these would be taxed now also. How about state and local taxes? These will still have to be paid? What about buying merchandise across the state line? It is not permitted to tax products across statelines. People will just start ordering their merchandise online and not be taxed.You would have to overhaul the constitution to legalize taxing across state lines. So actually this tax system we have now is better than the fair tax.We pay 23% now out of our checks about. Now that includes local state and federal taxes. No charge on clothing or food or shelter.We can just order everything across state lines and not pay taxes. The fair tax is not as fair as the system we got now if people would learn the laws and order across state lines. Anyone see this as I do?

Edit to say that food,shelter and clothing is our largest purchases.Nothing fair about the fair tax when you really think about it. We will be paying more taxes than less.


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PostPosted: Thu Dec 27, 2007 7:05 am 
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The prebate takes care of the taxes on food, clothing, and shelter up to the poverty level. That is fair.

The amount taxed including state and local taxes varies now as it is because some states don't have an income tax, like Florida, and sales taxes for state and local would continue, so no change there.

The issue of taxing across state lines is also a non-issue to the Fair Tax because that exists now and would not be different as a result of implementing the Fair Tax.

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PostPosted: Thu Dec 27, 2007 7:19 am 
keneikirk wrote:
The prebate takes care of the taxes on food, clothing, and shelter up to the poverty level. That is fair.

The amount taxed including state and local taxes varies now as it is because some states don't have an income tax, like Florida, and sales taxes for state and local would continue, so no change there.

The issue of taxing across state lines is also a non-issue to the Fair Tax because that exists now and would not be different as a result of implementing the Fair Tax.


So people would have to waite till the end of the year to get the prebate back and have to save all their reciepts? That is the craziest idea I ever heard of.


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PostPosted: Thu Dec 27, 2007 7:52 am 
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It is called a prebate because everyone gets it beforehand. Not a rebate, a prebate. That is money in hand before paying any sales tax that would offset the sales tax they would pay for food, clothing, and shelter.

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PostPosted: Thu Dec 27, 2007 7:57 am 
keneikirk wrote:
It is called a prebate because everyone gets it beforehand. Not a rebate, a prebate. That is money in hand before paying any sales tax that would offset the sales tax they would pay for food, clothing, and shelter.


Where do you get this money from before hand? Prices goes up and your income stays the same. Now what? This could go higher than what is taken out of our checks allready. It isn't fair any more is it? Gas increases and goods increase. More taxes paid why making the same amount of money. How is the taxes supposed to be divided then among all the projects going on in this country by the government?


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PostPosted: Thu Dec 27, 2007 8:36 am 
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The federal government would provide the prebates and the sales tax collected from businesses would cover that and all government spending.

Retail prices would go down because businesses would no longer pay taxes, so that is not a problem either.

It sounds like you need to read up on this more.

http://www.fairtax.org/PDF/FairTax-Fundamentals_and_facts-070122.pdf
http://www.fairtax.org/PDF/FairTaxFAQ.pdf

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PostPosted: Thu Dec 27, 2007 8:44 am 
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ShooshforHuck,
You definately have a lot of reading to do. You are voicing concerns that don't exist in the FairTax plan. I'm not sure where you have gathered your info, but nothing you have suggested is accurate.
Read my post here for the basic description, but also check out the basic FAQ at FairTax.org.

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