This letter was written to Ms. Strassel (check out the link below) by a FairTax Volunteer. It gives the best comparison of the income tax vs. the FairTax inclusive and exclusive rates. It really puts things into perspective:
Ms. Strassel,
While you are correct about Mr. "Bush's Economic Surrender" (1/25/'08) your discussion of the proposed tinkering with the federal tax code by three of the four prominent Republican candidates for President leaves a lot to be desired.
http://online.wsj.com/article/SB120122065042715307.html?mod=opinion_main_commentaries
You left out the only sensible total replacement of the tax code, the FairTax, proposed by Governor Huckabee. It will end the very tilted playing field of world trade which favors our trading partners and results in our industries relocating to better tax platforms. It will also end the waste of over $265 billion every year to wasteful compliance costs.
If the Journal insists on calling the FairTax inclusive rate of 23% an actual rate of 30% (exclusive), then be fair by saying that the present tax code's 35% (inclusive) rate is an actual 54% (exclusive). And, oh yes, add to that 54% the payroll tax of 15.3% (inclusive) or an actual rate of 18% (exclusive). Let's see, 54% plus 18% equals 62%; and you complain about 30%?
Bill SpillaneCalifornia State Director
(volunteer)fairtax.org
Manhattan Beach, CA
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it seems that most Americans have no clue as to the purpose and true mean ing of the 16th Amendment. I would suggest they invest a little bit of their intellect and time, check out ottoskinner.com for an eye opening revelation. Otto has compiled extesive documentation from the U.S. Supreme Court, other U.S. Courts and the U.S. Constitution that do a nice job of stating the facts. The 16th Amendment is not, never has been, a direct tax on income, but is in its nature an excise tax, entitled to be enforced as such. Since an excise tax is a tax levied on revenue taxable events or activities, what activity are you involved in that is taxable for revenue purposes? Where in the code does it impose a tax, on that particular activity? The House Congressional Record tells us that
"The income tax is, therefore, not a tax on income as such. It is an excise tax with respect to certain activities and privileges which is measured by reference to the income which they produce. The income is not the subject of the tax: it is the basis for determining the amount of the tax. House Congressional Record, March 27, 1943, page 2580.
Fair tax is sensible?
Which part?
The part that pretends the government can tax itself?
Or the part that taxes cancer patients for their surgery, chemo, and rehab.
Or the part that taxes rent, and pretend the rent will go DOWN?
Or the part that taxes insurance premiums.
Or that part that pretends to pay OUT 500 billion in prebates, and counts that as INCOME to itself.
Which part is sensible?
Mark:
The part that...
...restores citizens' constitutional right to be secure in the fruits of their labor, personal possessions - free from government intrusion into their private, financial affairs.
...properly pays for government as families decide to meet their needs - on their own time schedule - without audits, interest, penalties and intimidation - instead of the government helping itself to the paychecks of America's workers, withholding funds at zero interest, which encourages the use of costly credit by those whose income adequacy is harmed by this practice.
...eliminates a tax code that is used by, and for, benefit of politicians and lobbyists in the process of "selecting winners and losers."
...eliminates the manner in which the tax code is used to barter tax favors (social engineering) by politicians and those interests currying "favored status" at the expense of the remaining classes of business, citizens.
...aligns the tax collection function to economic growth rather than working against it by penalizing productivity.
And there is so much more.
Ian its hard to be more wrong than you, in more ways.
Even Jorgensen said prices would go up, for one thing.
So your OWN "expert" says you are wrong. Gesus.
And what you THINK you correct with this idiot plan, you don't fix AT ALL. Its like you believe in some magic beans that are going to let you turn water into gasoline.
And here is a little clue about your embedded taxes. REmember even Jorgensen says prices WILL GO UP.
Business can lower their prices ONLY BY THE REAL savings -- not your wishful thinking bullship savings. FICA is the one tax business WOULD save -- GREAT.
BUSINESS does NOT save employees income tax or FICA you wizard -- the business STILL has to pay that much to the employee. So the business can't lower their prices by things THEY STILL PAY.
The mistake you wizards are making ---are saying the employee can KEEP their whole paycheck -- but then giving those deductions to the employer -- AND to the customer too in lower prices.
Plus, a lot of companies DONT pay corp taxes, but you math wizards would raise their prices too, under the deluded idiot notion that they can LOWER their prices. GM just lost 39 billion dollars. Ford lost 12.9 Billion in one quarter. Yet you geniuses would raise their prices by 23%, when they would save LESS than 4%.
Ive shown how FORD would save LESS than 400 dollars per car on FICA (less than 200 really)from FICA. But you geniuses are oing to INCREASE the price of thier cars 22%. FORD and GM lose money on each car they sell, and you wizards are going to INCREASE the taxes on their product. The movie Dumb and Dumber comes to mind.
Plus, you want the small business owner to give HIS income tax savings to the customer. So you want the employees to give away their income tax and fica to the customer, and the business owner to give their savings back to the customer. You give the same savings to everyone, over and over.
I already went over this with our family business. We would save LESS than 2% of our total income by not having FICA. Yes, I know fica is 15% -- but OUR cost is 7.5 percent of payroll. Our payroll isn't our income -- incredibly, some of you geniuses figure 7.5 % savings on payroll is magically 22% savings on our total income.
And we aren't going to give the income tax back to the customer. The whole idea was to give workers more MONEY - and then you want us to give that income tax to the customer.
But as looney as THIS all is, if we ALL gave ALL our savings to the customer, if the employee gave their income and fica tax to the customer, and we gave our income tax to the customer -- here is a clue -- it STILL doesnt come close to 22%.
And to make this plan a total absurdity -- the sales tax would be 40-50%, not 23%. The 23% is based on the deceptive premise of taxing the government to pay itself.
Plus many OTHER things Fairtax pretends to tax -- it won't be able to. Like health care -- you won't be able to get blood out of a turnip. Many people just wont be ABLE to pay 40% sales tax on their nursing home care, their cancer surgery, etc.
And as absurd as all this is, fairtax does nothing about lobbyist, nothingow raising renters rent, by 23%, does anything to stop lobbyist.
Tell me how taxing cancer surgery, or nursing home patients, or heartby pass patients does anything to help anyone.
If anything -- these looney taxes on surgery, nursing home, and rent, will be like waving a red flag in front of a bull. Lobbyist SHOULD -- and the public will -- get rid of these idiot taxes on people who can't afford them.
Your tax plan isnt a little off -- its goofy as hello.
That's why I hope you get it passed. I would love to see it, I really would. We need a better tax code -- and as soon as the country sees how insane this fix is, maybe we can find a real one.
Sadly, the Congress is too smart to pass this nonsense. Sure some congressmen want it -- but thats to fool stupid people. Which they are doing. I guarantee you, these same politicians who claim they want this -- will never let it pass. They know it sounds good to stupid people -- and they want to keep fooling stupid people.
BUt they know if they passed this, nursing home patients, cancer patients, renters, ect would be pissed as hello. They know its goofy. But they know there is a sucker born every minute.
Go back and hire Jorgense again.
This time, have him tell you HOW MUCH the business could lower prices cause of these embedded taxes.
The business STILL has to pay the employee exactly the same amount, minus the 1/2 of FICA.
Jorgensen knows that. You folks dont want to admit it
The business STILL has to pay the employee the exact same amount relative to INCOME tax.
Jorgensen knows that. You folks dont want to admit it.
I suppose some companies with very high labor costs, and huge profits, COULD lower their prices 22%, IF they would NOT give the savings to the employees or themselves.
But that defeats the purpose, don't you see? No, of course you dont. You want to pretend the savings are 22%, and can be given in lower prices.
The "savings" can ONLY be given to the customer if -- now get this -- THE EMPLOYESS DON'T GET THEM.
You can't have the employees getting their full paycheck AND give lower prices.
Get real, people. Learn some math.
Even Jorgensen said prices would go up. SO quit twisting his crap around. And learn some math./
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