The following letter was sent by one of our FairTax volunteers to Mr. Adler regarding his article on the FairTax. It is a very good eye-opener on our present income taxes. I linked to the article by Mr. Adler at the bottom of this letter:
How convenient that Mr. Adler has chosen to overlook the many instances of "double taxation" in the present income tax code and all the savings that will accrue to his"seniors" under the FairTax. Just for starters: the earnings that one accrues that are subject to the payroll tax are taxed FOUR TIMES today.
1) The 15.3% of earnings up to about $100,000 is taken as a tax (by the way, that's an "inclusive" 15.3%; it would be 18% if calculated as an "exclusive" sales tax.)
2) That same money already sent to the government, is now income taxed (FICA taxes are not deductible).
3) When the now "after tax" income is used to buy a US made good or service: the buyer will be paying the embedded taxes (profits and payroll taxes) in the product.
4) After retirement, up to 85% of the "earned" social security income will be taxed. In addition, today, any taxpayer paying the embedded taxes in a US product or service is not only paying with previously income taxed money, but he or she is paying state and local sales taxes on embedded taxes.
Is that double taxation enough? Furthermore, if the retiree has any money in savings that are here complained about, after FairTax enactment, there will be no more taxes on those earnings whether interest,dividends, capital gains, or death. This critique of Mr. Adlers critique is not all inclusive.
People like Mr. Adler must have another agenda; anyone who researches the FairTax with an open mind and wants the best for the US economy, and each of us, is bound to support the FairTax. http://www.townhall.com/columnists/HankAdler/2008/01/23/fairtax_double_taxation,_an_admission?voted=1
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Naysayers railing against the FairTax become, ipso facto, defenders of the INCOME TAX system. Prof. Larry Kotlikoff believes that the current tax system IS bringing the country to nothing less than an "economic meltdown" by virtue of the invisibility of actual taxes paid. If Americans do not understand the true cost of their government, they're unlikely to hold Congress accountable - thus the enabling mechanism to continued profligate spending.
Even with the foregoing notwithstanding, do FairTax naysayers really believe:
• Workers love having their pay confiscated, hourly, through gov't withholding and don't mind getting their money back by involuntary servitude - to the tune of 50 hours/year (on average) - preparing an annual tax return?
• That certifying the number of persons in your family (annually, and, ancillarily, upon change in household) is an abrogation of our freedom - more intrusive and complex than filing a tax return every year subject to threats and intimidation by theIRS.
• It's better to have theIRS fishing through citizens' income transactions (complete with audits, interest, penalties, and threats against individuals, families, businesses as well as confiscation of their homes, property, and bank accounts) rather than - Gawd forbid - issuing a gov't check to an individual (while pretending that Social Security payments disbursement logistics really can't work for "prebates")?
• That an monthly advance tax rebate is the same thing as "being on the dole" ? (Only lobbyists, special interests, and business deserve "handouts" ? - the politician gets a payoff from a lobbyist, the lobbyist gets a payoff from its client, and the citizen gets higher taxes and/or prices that pay for it all.)
• "Hidden taxes" in higher prices are fine because they're not "taxes," per se? (Hey, forget that families are really paying business's costs for complying with a business income tax code - staff, consultants, submittals, etc.)
• It's far better to have a gargantuan tax collection "service" in Washington, than to have 50 decentralized, smaller, leaner state collection agencies collecting taxes from fewer sources?
• That the work by notable economists (paid tens of millions of $'s by Americans for Fair Taxation) doesn't carry weight because it was paid for by private funds instead of some gov't / quasi-gov't enterprise?
• That FairTax's backing by many economists doesn't carry any weight because (the Brookings') Wm Gale's testimony before the President's Commission on Tax Reform is - somehow - above all that?!
(NOTE: The Commission/Gale made up their own "consumption tax" requirements, as if that constituted a legitimate rebuke of the FairTax plan. Dr. Kotlikoff has requested - but never received - Gale's technical "modus operandi" which would definitively explain just how Gale's conclusions can be reconciled with Kotlikoff's well-documented technical work.
Let us work, together, to end the enslavement of the Tax Code and to restore Liberty to America's working families.
America's working families are paid because the companies they work for sell goods and services. Let's pay for government the way America's families are paid - when something is sold!
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