HR - 25 "Fair" tax bill

@speakeasy (4215)
United States
October 10, 2007 1:46pm CST
This morning I received an email from my Congressmen regarding the "Fair Tax" bill that he cosponsored HR - 25. While I do not like our current income tax system; this "Fair" tax bill does not seem to be much better. The only real benefit I see is no income tax filing would be required at the Federal level. I personally see a lot of problems with this proposal if it passes and I do not feel that it is really "fair". It benefits people who make little to no income and penalizes people who earn money and then spend that money. It promotes buying "used" which is good for the environment; but not good for jobs. It gives business ZERO taxes - anything purchased for business use is exempt; so only individuals are taxed. Here is the text of the email; so you can tell me what YOU think about this "fair tax" proposal. " Thank you for contacting me regarding our Nation's tax code. I sincerely appreciate the benefit of your views. Our Nation's tax system is fundamentally flawed. The onerous tax burden and the complicated tax code punish all self-sufficient Americans who work, save, travel, purchase, and invest-in fact practically every activity is taxed at some point-which leaves all of us frustrated and struggling to get ahead. Last year, 100% of the income the average American earned from January 1st to April 18th (108 days) went to pay taxes. That equates to 3 hours and 19 minutes of each working day just to pay our tax burden. Furthermore, each year Americans devote 6.4 billion hours complying with the tax code, which is more time than it takes to produce every car, truck and van made in the United States. I am a cosponsor of H.R. 25. I strongly believe Fair Tax reform will unlock individual wealth potential and fairly distribute the tax burden among all members of society. Essentially, the fair tax abolishes the federal income tax system, and replaces it with a consumption tax rate at 23%. The Fair Tax will allow you to keep the 43% of tax from your paycheck (15.3% in payroll taxes, plus an average of 28% for federal income tax) that you currently send to the federal government in Washington. Instead, you pay only a 23% consumption tax each time you purchase a new good or service for your own personal consumption above the federal poverty level. However, if you choose to purchase used goods, used car, used home, and used clothing you do not pay the Fair Tax. Additionally, if, as a business owner, you purchase something strictly for business purposes, you pay no consumption tax. Therefore, in deciding what to purchase, you get to choose whether or not you will pay the federal consumption tax. To ensure that no American will pay tax on necessities, the Fair Tax plan provides a prepaid, monthly rebate for every household to cover the 23% consumption tax spent on necessities up to the federal poverty level. This completely eliminates taxation of the poor, and lowers the tax burden on everyone else. At this 23% rate, the Fair Tax will pay for all current government operations, including Social Security and Medicare. Given that consumption is more constant than income, government revenues will be even more stable than they are now. "
1 person likes this
1 response
• Canada
11 Oct 07
I personally would much rather keep 43% of my income in exchange for a 23% sales tax. I would rather be taxed on my consumption, rather than by how hard and how long I work. If I'm rewarded at work (ie: a rasie) for taking on more responsibility and excelling at my job, I get dinged with more taxes - even though I choose not to increase my consumption by much. So for me it would be financially better to pay more on sales tax. Our government recently did the opposite, and I was so upset when the bill passed. Now, it wasn't a complete trade off between income tax and sales tax. It was a 1% decrease in sales tax in exchange for slightly higher income taxes. So now I'm giving more money to the government through income taxes, and not saving very much from their 1% tax cut. I don't necessarily believe that this tax structure would reward low income earners and penalize higher income earners. It's all about spending habbits. I know some poorer people that spend left and right, and some richer people who barely spend a cent of their money (and vice versa). This type of tax structure might keep our consumerism lifestyle in check. And for the odd time you purchase a big ticket item (like a new car), the 23% tax would still probably be less than the 43% income tax that you're charged year after year.
@speakeasy (4215)
• United States
11 Oct 07
I didn't say I would not personally like the decrease. What I said was - it is not a "FAIR TAX" like the title of the bill states. Reading over the details, it said that everyone would receive a prepaid monthly rebate of the tax amount equal to the federal "poverty level". This means that low income individulas will be getting a rebate each month even if they have not paid that much in "consumption" taxes. This means they may be getting additional INCOME from the government AND not paying any tax; but, they will be the recipient of more federal dollars and services than any other group. The big section that I do not consider "FAIR" is the fact that businesses will be "EXEMPT" - they will pay NO tax. So, you start a "business" and the business can purchase business vehicles - which as the business owner you can use. Business computers, phone, and internet service - which you can use; etc. And, NEVER pay any taxes. This proposal means that the poor will pay no taxes AND the business loophole means that the rich can get out of paying MOST of the taxes for the items and services they buy and use ; all they have to do is have a "business" to make the purchase for them. To make this "FAIR", we should NOT exempt business purchases made by businesses. Then, the "consumption tax" would be a LOT less than 23% and the poor would not need "rebates". This bill puts the tax-paying burden on the low and middle class working people; while the rest "skate" and still receive all of the benefits.
• United States
1 Feb 08
You're overlooking something important in regard to businesses not having to pay federal taxes. It isn't the business that pays the business's taxes, it's the consumer. Every manufacturer adds the cost of its taxes to the price of the end product that you and I purchase! By not having to pay the tax, businesses would be able to (and would) reduce the prices of the products that they sell. This would reduce the cost of the products that you purchase. The additional savings to the business would allow that business to perhaps expand and to hire more workers - both things excellent for the economy. I highly recommend that you read the book about the FairTax (which is one word, by the way - I wish they wouldn't have done that because it makes information harder to find, but I digress . . ) by Neal Boortz and John Linder. You can find it online. You can also find more information about the FairTax, including a comparison calculator to see how you would do with the FairTax compared to your current tax situation, at this site: http://www.squidoo.com/the-fairtax Please check it out thoroughly. I believe you'll be surprised when you get the entire picture.