Kevin Spence left a new comment on my post "FAIRTAX TOUTED AT MACHINIST UNION MEETING": What are the timelines of the fairtax movement regarding implementation? I've never seen any information about that.
I didn't know the answer to this one, but I knew where to get it. I contacted the FairTax Organization in Houston, TX and received the following reply:
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 with the current dates listed in HR 25:
Dec. 31, 2008 – taxes on income for all tax years beyond December 31, 2008 are repealed.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 PHASE-OUT OF ADMINISTRATION OF REPEALED FEDERAL TAXES.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expenses of the Internal Revenue Service including processing tax returns for years prior to the repeal of the taxes repealed by title I of this Act, revenue accounting, management, transfer of payroll and wage data to the Social Security Administration for years after fiscal year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(b) Records- Federal records related to the administration of taxes repealed by title I of this Act shall be destroyed by the end of fiscal year 2011, except that any records necessary to calculate Social Security benefits shall be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.
Aaron Schutte
Grassroots Special Projects Coordinator
713.963.9023 ext. 9612
Thank you Aaron, for helping me out with my blog. The people at http://www.fairtax.org/ are very helpful to all of us who are trying to make this FairTax a reality. They have been working at this for years and are seeing more positive activity this year than ever before. LET'S GET IT DONE!
Bobbie
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And the following is what we'd have to look forward to after enactment:
Prices after FairTax passage would look similar to prices before FairTax - not "30% higher" as opponents contend - competition would see to it. So, the FairTax rate (figured as an income-tax-rate-non-comparative, sales tax) on new items would be 29.85% (on the new, reduced cost of items because business isn't taxed under FairTax - thus lowering retail prices by 20% to 30%), or 23% of the "tax inclusive" price tag - this is the way INCOME TAX is figured (parts of the total dollar).
The effective percentages, that different income groups would pay under the FairTax, are calculated by crediting the monthly "prebate" (advance rebate of projected tax on necessities) against total monthly spending of citizen families (1 member and greater, Dept. of HHS poverty-level data). A single person would receive a prebate of ~$200/mo. A family of four, ~$500/mo. - in addition to working members no longer having tax withholding confiscated from the fruits of their labor every two weeks.) Prof.'s Kotlikoff and Rapson (10/06) concluded,
"...the FairTax imposes much lower average taxes on working-age households than does the current system. The FairTax broadens the tax base from what is now primarily a system of labor income taxation to a system that taxes, albeit indirectly, both labor income and existing wealth. By including existing wealth in the effective tax base, much of which is owned by rich and middle-class elderly households, the FairTax is able to tax labor income at a lower effective rate and, thereby, lower the average lifetime tax rates facing working-age Americans.
"Consider, as an example, a single household age 30 earning $50,000. The household’s average tax rate under the current system is 21.1 percent. It’s 13.5 percent under the FairTax. Since the FairTax would preserve the purchasing power of Social Security benefits and also provide a tax rebate, older low-income workers who will live primarily or exclusively on Social Security would be better off. As an example, the average remaining lifetime tax rate for an age 60 married couple with $20,000 of earnings falls from its current value of 7.2 percent to -11.0 percent under the FairTax. As another example, compare the current 24.0 percent remaining lifetime average tax rate of a married age 45 couple with $100,000 in earnings to the 14.7 percent rate that arises under the FairTax."
Further, per Jokischa and Kotlikoff (circa 2006?) ...
"...once one moves to generations postdating the baby boomers there are positive welfare gains for all income groups in each cohort. Under a 23 percent FairTax policy, the poorest members of the generation born in 1990 enjoy a 13.5 percent welfare gain. Their middle-class and rich contemporaries experience 5 and 2 percent welfare gains, respectively. The welfare gains are largest for future generations. Take the cohort born in 2030. The poorest members of this cohort enjoy a huge 26 percent improvement in their well-being. For middle class members of this birth group, there's a 12 percent welfare gain. And for the richest members of the group, the gain is 5 percent."
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