Monday, November 19, 2007

FAIRTAX FACTS REGARDING JOBS

I am going to be recycling some of my first blogs this week. Thanksgiving is a busy time for us, what with Doctor appointments, cooking, travel and such. Have a good week, give lots of thanks and enjoy reading my earlier blogs that you may have missed, or forgotten:

1. Creates jobs where the current system destroys jobs. Too many businesses are sending jobs overseas because the labor is cheaper AND the taxes are more favorable. If we enact the FairTax, these businesses will be happy to move back to the U.S. and I wouldn't be surprised if a number of other countries would rush to set up business in the U.S. because of the favorable tax system, thereby bringing more sales tax revenue that we didn't have before. Also, the individuals and corporations with off-shore banking accounts will bring their money back here. You will see a boom to our economy that you never would have dreamed possible. You won't have any trouble finding a job that suits you and pays well. 2. Gives you your whole paycheck. No federal withholding! You will receive 100% of your income. Look at your paycheck: How much is your employer holding out of your check for various payroll taxes? That money would come to you to spend, save or invest as you like. You would only pay taxes when you purchased new goods or services. In the meantime, that money could be sitting in YOUR bank account earning YOU interest. Or invest in stocks or bonds. Whatever YOU decide to do with YOUR money.

4 comments:

Dutchman3 said...

Bobbie,

While you may not be surprised to see foreign corporations rush to America for our favorable tax treatment of businesses, you also may not have read HR25, Section 905 which clearly states that gross income from US sources will be taxed at 23%. Imagine that, an income tax on foreign corporations buried in a piece of sales tax legislation?? Stay tuned!

Yes, you can buy used (sales tax previously paid) and avoid taxes, but the opportunity to buy used is very limited. No used services, no used groceries or restaurant meals, no used gas or heating oil, no used stuff in Wal Mart, etc. etc. Look at your annual budget and tell us just what goods you would have bought used to avoid sales taxes?

And, if you place those tax savings in an interest bearing account, watch out for the implicit taxes described in HR25, Section 801-806. There is a potentially big tax on both investment and debt instruments, depending on the Treasury rates at the time.

All that glitters is not gold!?!

Unknown said...

Bobbie,

The first comment is the reason why we always say: “Go to www.fairtax.org, if you have questions about the FairTax.” If the previous commenter had checked the FairTax Bill section of the website, he would have found the following White Paper:

http://www.fairtax.org/PDF/PlainEnglishSummary_TheFairTaxAct2007.pdf

It explains every part of the bill in “Plain English”. The actual bill, HR 25 can be viewed at:

http://www.fairtax.org/PDF/HR25_2007.pdf

And, as with most comments about the taxes going up with the enactment of the FairTax, folks fail to remember that all the present embedded taxes are removed and replaced by the FairTax, while all income and payroll taxes are dumped into the dust bin of history. Further, only new goods and services are taxed by the FairTax. It is designed to be revenue neutral, taxing everyone that consumes rather than only those who are wage earners.

Sections 801 – 806 address “Financial Intermediation Services” and explain how the service fees will be taxed under HR 25. The explanation for these sections is two pages+ long (see pp. 27 – 30) of the above Plain English Summary and even longer in the bill ( pp. 97 – 104), so will not be reprinted here.

Regarding Section 905, the title is: “Withholding of tax on nonresident aliens and foreign corporations.” It can be found on pages 32 and 33 of the Plain English Summary and page 116 of the bill. As stated in the “Plain English” White Paper:

“This provision acts as an incentive for foreign countries to remain interested in entering into treaties with the U.S. and to not penalize U.S. nationals and U.S. owned firms in their countries by imposing high withholding taxes on payments made from U.S. owned companies to their U.S. parents. Payments of dividends and interest made to foreigners are taxed at a rate of 23 percent (unless a treaty reduces the tax rate).

The current law rate is 30 percent; however, most U.S. tax treaties with foreign countries reduce this rate considerably (mutually) to 5 to 15 percent, and sometimes 0 percent. If the U.S. (or foreign countries) just withdrew from these treaties and had no replacement, U.S firms doing business abroad would be subject to very high foreign tax rates on funds repatriated from abroad to the United States.”

Thought of the day: On average, U.S. taxpayers hand over 33 percent of their earnings each year to the federal government. “Would you rather pay 33 percent of what you earn or 23 percent of what you spend?” Think about it.

Anonymous said...

Thought of the day: On average, U.S. taxpayers hand over 33 percent of their earnings each year to the federal government. “Would you rather pay 33 percent of what you earn or 23 percent of what you spend?” Think about it.

The NIPA tables shows personal income for 2006 was $10.9 trillion. If the federal government got 33% of this they would have had $3.6 trillion in revenue. Treasury shows receipts for 2006 were $2.4 trillion.

MARK said...

DUTCH is right. You can't buy used nursing home care. You can't buy used false teeth. You can't buy used cancer surgery.

Bobbie seems real sweet, but she bases everything on the Fairtax working as planned. Its not going to work as planned. It can not work as planned.

Thats like someone who believes magic sugar pills in your gas tank are going to give you 200 miles a gallon. You can believe that all you want. You can have a blog on how great it will be for your huge SUV to get 200 miles a gallon.

But you will get 12-20 miles a gallon. In fact, if you put sugar pills in your gas tank, you will be getting a new enginer before you can drive far, cause sugar ruins the engine.

And Fairtax is a fun exciting plan, but it can't work as planned. It can't be 23%, just cause of the fallacy of taxing the governmen purchases to pay for government purchases.