Beware of a National Sales Tax. It's not the panacea that many people make it out to be. The less you pay now in income taxes, the more you will pay under a NST or Value Added Tax, either in real dollars or as a percentage of income. Plus don't think the income tax will go away if they ever implement a NST or VAT. It will be a NST/VAT on top of an income tax.
As an example, let's look at how Italy taxes it's citizens:
There is a 10%-20% VAT AND an income tax http://www.icsoftware.it/Tabelle/scaglioni.php?Anno=2004&GO=Esegui
To help you decipher that chart, Italians use commas for periods and periods for commas.
Da=from, A=to
Valori Annuali = Annual Income
Valori Mensili = Monthly Income
As you can see, their tax rates are much higher than ours. Plus, they tax gas and diesel to death. Gasoline is over $6 a gallon.
The good thing is... we're not Italy.
Check out fairtax.org for the real facts.
I read some of the "real facts" on that website and the theme to the Wizard of Oz started playing in my head.Check out fairtax.org for the real facts.
I did and that's why I think it's a joke. These are the same nutty tax protesters that twist things around to get to the answer they want when it comes to why the federal government has no real Constitutional authority to collect an income tax and that want to opt out of paying taxes because taxes are "voluntary." I've met with these people and I've dealt with them and I've seen them pay penalties and/or go to jail. This is just a different twist on the same subject.I challenge you to read the complete list of FAQs
on www.fairtax.org before you reject the concept
out of hand. Don't let your preconceived biases
discard this idea before giving it a fair study.
Unfortunately, this administration has discovered that people really don't pay attention to the facts. As long as they keep repeating over and over that people will pay less taxes under this new system, the sheeple will believe it.These nuts start with a good premise, twist it around somewhere in the middle, then follow that false twist to a logical conclusion. Nice try, but smart people can see through that.
They might be able to blow smoke in the face of the average person that doesn't understand the tax system, but they can't get away with their tactics with people who have even a basic understanding of the tax system.
You may call it a cult if you like but there is a bill in congress with 50 co-sponsors to implement this concept.
You can't even answer the couple of questions I posed to you using the example on that website.You may call it a cult if you like but there is a bill
in congress with 50 co-sponsors to implement
this concept.
Read the website yourself, folks. Please don't be
lazy and take one biased opinion as your own
without reading the other side.
Cheers,
Charlie
So all of a sudden the payroll tax goes down to $765 ($10,000 - $9235)? The example on the website said payroll taxes for the employee were $1600. This is part of the false twist I was talking about that is then taken to a logical conclusion.Let's assume a single person making $10,000 per year only pays 7.65% FICA taxes. Thus his takehome pay is $9235.
So using this example, you show that the couple has $34K disposable income under the current tax system and that they would have $34K disposable income under the NST. This is contrary to the website that shows that everyone pays less taxes under the NST. So which is it?According to FairTax. a couple would receive $4283
rebate to help pay for essential goods and services.
If this couple earned $40,000 per year they would
pay about $6000 per year in income and FICA taxes.
This would leave about $34,000 net for living expenses
under current law. Under the new national sales tax
system they would have $44283 to spend on goods
and services. The proposed tax rate of 23% is
actually 30% when you look at it as a "sales tax" as
apposed to an income tax. Thus the couple would
actually be able to buy $34,000 at current prices.
As for myself, 2/3 of my stash is in tax sheltered accounts that pay income tax on withdrawal. As you
suggested, I don't pay much income tax currently,
but at age 70, I am in a RMD situation. ....
This is a good topic worthy of honest discussion and
I look forward to hearing what others have to say.
Charlie: My personal opinion, is the proposed changes would be a hard-sell for anyone currently retired.Wab, the FairTax proposal claims that there is a 20+%
cost built into new goods and services due to the
cost of corporate taxes, corporate payroll taxes and
the cost of corporate income tax compliance all passed
on to the consumer. I have no way of knowing if
that is accurate.
There is no tax on used goods that have already been
taxed once ...... like used cars and houses.
My assumption is that the market place would cause
the cost of new goods to seek the proper level compared to used goods. Thus you would expect
the cost of new goods to fall somewhat. It would
also make US manufacturers more competitive in the
world market and thus help spur new US jobs.
According to FairTax. a couple would receive $4283
rebate to help pay for essential goods and services.
If this couple earned $40,000 per year they would
pay about $6000 per year in income and FICA taxes.
This would leave about $34,000 net for living expenses
under current law. Under the new national sales tax
system they would have $44283 to spend on goods
and services. The proposed tax rate of 23% is
actually 30% when you look at it as a "sales tax" as
apposed to an income tax. Thus the couple would
actually be able to buy $34,000 at current prices.
Thus a couple would just about break even if they
only bought NEW stuff all the time. They would do
even better if prices fell somewhat.
Most of the cheap bastards on this forum would make
out like bandits.
People like John Galt who buy long term bonds would
have a windfall profit if there is no tax on interest.
The removal of capital gains and dividend taxes would
spur the stock market upward.
The one thing that still bothers me is I see no benefit for
those retirees who have most of their money in after
tax accounts like CDs. This may be the killer.
As for myself, 2/3 of my stash is in tax sheltered accounts that pay income tax on withdrawal. As you
suggested, I don't pay much income tax currently,
but at age 70, I am in a RMD situation. I would expect
the value of my holdings to increase due to the windfall
increase of stocks and bonds, but it is hard to judge
if this would offset the possibly "higher" cost of
consumption.
One thing for sure, frugal people who don't care about
buying NEW stuff can control their own tax rate!!
This is a good topic worthy of honest discussion and
I look forward to hearing what others have to say.
Cheers,
Charlie
Then lets close the case, here's the example they give on page 2. http://www.fairtax.org/pdfs/How the FairTax affects differing income levels.pdfretire@40,
I don't know where they got the payroll tax of $1600 .... and I could not find your example. In any case, I know
a single person making $10,000 is not likely to
pay anything more than 7.65% FICA tax. If the
FairTax upfront rebate is as stated, then he wins
under YOUR example. Case closed.