Regarding the skewed incentives of taxing new housing and not existing housing, let me ask a question: If the FairTax raises the aftertax cost of a new house and everyone starts buying existing houses, what will happen to the price of existing houses? You got it, they raise and balance is restored. In reality, both might rise on an aftertax basis, however affordability will go up for Americans.

How can prices rise and affordability go up? Because 1) Americans will take home ALL their income and 2) home purchases whether new or existing are taxed today (principal is paid with aftertax, non-deductible dollars) and interest is only partially deductible for the 27% of Americans who take the deduction. The FairTax only taxes the principal ONCE and makes base interest cost tax free for all Americans.

Read that again. Houses are taxed today by the FEDERAL government just as food, rent cars and everything else is. You buy those things with aftertax dollars and they are not deductible. Whether you tax my dollars earned before I purchase something or as I purchase something, the economic effort to me is the same. The difference is if you tax them as I earn the dollars, I must file income and deduction reports.

That continues under the flat tax. If you tax them as I consume, I file nothing. By the way, consider housing under the flat income tax you prefer. (By the way, every study I’ve seen concludes the flat income tax rate would be more in the line of 26%, not including payroll taxes instead of the 17% advertised). To buy a $200,000 house with cash under the flat income tax would require I earn $272,660 before taxes and if I’m self-employed I’d have to earn $304,400 before taxes to have $200,000 left to buy the house. That assumes the 19% rate in the flat income tax bill and that current payroll taxes continue at the current rate. Under the FairTax, a new $200,000 would cost $260,000 but you’d have your entire check to pay it with.

I didn’t include financing and the resulting interest costs, but once again as I stated above, the FairTax treats interest better than either the current system or the flat income tax proposals..

EVERY study that calculated a higher rate for the FairTax started by CHANGING THE BASE. That means what the concluded had a higher rate wasn’t the FairTax at all, but a plan of their own design. There is no mystery in shrinking a tax base and saying it would require a higher base. These “credible folks” include officials of the Treasury department, Joint Economic Committee, and other government entities who enjoy great power until the current system.

A good source for the rate might be James Poterba who was no the President’s tax commission. He also was once of the original researchers of the FairTax who concluded the rate WAS 23% inclusive. In a later “consumption tax” study” he found a higher rate and when questioned by AFFT, he wrote back that the 23% rate was correct. In his second study the base was changed.

The only study I have ever seen that I can’t say for sure changed the base was a study by the “research” arm of CTJ known as ITEP. Their “study” was just a list of average taxes by state with no methodology provided and was not signed by anyone! By the way, the Treasury Department won’t provide the methodology for their study either. Gee, that sure makes it credible!

In contrast, full studies of the rate calculation and methodology are provided on the FairTax website at http://www.fairtax.org

Thanks for the erudition, but a “flat” tax is generally more complicated than simply a single-rate income tax. Think more along the lines of the Hall-Rabushka proposal. While it hasn’t gained political traction over the years sufficient for passage, it certainly continues to have support of many of the most prominent conservative economists today.

As for the Fair Tax, I’m not necessarily against it in principle. However, the proposal before Congress is horribly drafted, and leads to some very complicated issues (not that anything could be worse than what we have now). For example, taxpayers will be required to pay the Fair Tax on the value of imputed interest income they receive in the form of a “free” checking account – not exactly as intuitive as supporters would have folks believe. Also, buyers will have to pay tax on a newly constructed house, but not an existing home – skewed incentives, anyone?

Further, some extremely credible folks have looked at the rates calculated by the Fair Tax proponents and concluded that the actual tax rate would have to be FAR higher than what Linder, et. al, have claimed it would be, since the (again, poorly drafted) proposal fails to take into account the series of transactions that will have to take place with regard to the governmental purchase of services.

THINK ABOUT IT MORE……………………………………………

Read and Enjoy…………………………………………..

APRIL 15TH????? Let’s make it just another Spring day.

HR 25, the Fair Tax Act, is in the House Ways and Means Committee of
congress, waiting to be passed into law. If passed, the Income Tax &
IRS would be abolished and replaced with a national (retail only) sales
tax.

Everyone shoud go to: http://www.congress.org and tell their congressmen that
they want HR 25 passed into law ASAP!!!! If we all “push together”, we
can make it happen. There’s nothing to it, BUT TO DO IT!!!!!!

Read and Enjoy.

The FINAL SOLUTION!! for the IRS & Income Tax Problem

50 Reasons I Support the FairTax
(How many reasons can you give for supporting the present obsolete IRS
& income tax system?)

Those Who Know the Facts Love the Fair Tax
“Family Friendly Tax Reform”
Tax Reform with far less pain and much more gain!
Out with the Old Code and in with the New (national RETAIL ONLY sales
tax).

http://www.fairtax.org

1. It allows you to keep 100% of your paycheck, with nothing withheld
for Social Security and Medicare payments.
2. It eliminates the regressive payroll tax that hurts the poor.
Currently, every one of us is taxed a minimum of 7.65% on our first-dollar of
wages up to $90,000, if we earn that much.
3. It assures that the wealthiest Americans will be voluntarily helping
to fund social security with every last dollar they spend above the
poverty level. Today, earnings are subject to payroll taxes only up to
$90,000. The wealthiest Americans therefore do not pay into the system
above that amount. If their earnings are from investments, no earnings
fund the Social Security system. Under the FairTax, a single purchase
(regardless of the source of the earnings) can result in greater
contributions to the Social Security system than would be paid by an individual
under the payroll tax of today.
4. It provides funding for Social Security and Medicare at a level
equal to or greater than at present, with a stronger and broader tax base.
5. It secures the future of Social Security and Medicare because all
spenders fund it and not just the workers.
6. It eliminates all personal income taxes, payroll taxes, corporate
income taxes, gift taxes, death taxes, and capital gains taxes.
7. It eliminates the income tax and the IRS. Members of Congress and
the public overwhelmingly agree that the current internal revenue code is
cumbersome, intrusive, coercive, and inefficient.
8. It is revenue neutral with the present income tax system, funding
the federal budget at current levels.
9. It will remove an average of 22% of the cost of American made goods
by removing the built-in payroll tax (the other 7.65% of earnings that
employers pay) and other business taxes that are now passed to
consumers as an “embedded” tax of approximately 22% due to the cascading of
income and payroll taxes paid by U.S. employers, at every step of
production, to the U.S. Treasury.
10. It doesn’t tax used items ? clothes, cars, homes. Only new items
are taxed when sold by a business to an individual.
11. It is progressive, a “prebate” of the tax amount up to the poverty
level is given to everyone. This means that those spending below the
poverty level have a net gain because the “prebate” exceeds the amount
paid in taxes. (Under the present system they pay the payroll tax even if
they get a full refund of income tax withheld.)

12. It eliminates 90% of the cost of compliance. American families and
American businesses waste an estimated $250 ? $600 billion per year
doing the paperwork necessary to comply with the tax code. That is roughly
$1,000 ? $2,000 annually for every man, woman and child in the U.S.
13. It creates an opportunity for our products to leave this country
costing an average of 25% less, thus increasing our exports, lower our
deficit balance of trade, and increasing employment at home.
14. It encourages investment in companies located in the U.S., thus
providing a home for money already in the US and attracting more. The U.S.
will be the most attractive tax-free haven in the world for doing
business. American companies will return from offshore and overseas.
15. It encourages repatriation to the U.S. of money held by U.S.
individuals and companies now in foreign countries, with no tax consequence.
16. All 290 million Americans and 51 million visiting tourists fund
Social Security and Medicare with their purchases. Today only 110 million
workers fund these programs via deductions from their paychecks.
17. The broader tax base includes the ten percent of our economy, an
estimated $1 trillion, that today is underground or under the table.
Under the FairTax, the illegal drug dealer will pay his tax just like the
rest of us when he buys his sunglasses, BMW, and other items, as will
those who do business for cash.
18. It allows families to save more for home ownership, education, and
retirement. An average family making $50,000 will have $7,500 more
spendable income.
19. It makes educational tuition a tax-free expenditure of tax-free
income.
20. It makes American products more competitive overseas by removing
the embedded tax from them, thus lowering their prices, which compensates
for low foreign wages.
21. It makes American products more competitive at home by removing the
embedded tax from them, compensating for the low cost of imported
products not burdened by taxes imposed by exporting countries.
22. It removes the need for formal 401-K’s, IRAs, HSA, etc. Anyone will
be able to set up any kind of savings or investment account without
regard to taxes or the government.
23. It frees churches and other non-profit organizations from the
expense of filing tax returns and paying their half of Social Security and
Medicare payments for employees. There will no longer be any 501.c.3 or
501.c.4 non-profit tax status, because there will be no more tax to be
exempt from.
24. It restores to churches and non-profit organizations the 1st
Amendment right to engage in free speech, without fear of losing their
tax-free status.
25. It gives individuals and businesses the right to donate as much as
they want to in a given year to charitable causes.
26. It restores the 4th Amendment, protecting against unreasonable
searches and seizures, from which the IRS presently is exempt.
27. It restores the 5th Amendment, which guarantees the right to due
process. Under current systems the IRS has their own courts with their
own set of rules not included in the 5th.
28. It cleans up a major flaw in campaign financing, eliminating
campaign donations for “tax favors”.
29. It eliminates wrangling in Congress over tax cuts, the tax code,
and who is or is not paying a fair share of the tax bill.
30. It encourages work by letting workers keep 100% of their earnings
and giving a rebate, to boot, making the notion that the more you work,
the more money you have, a reality, unlike the current system where
welfare is lost when you go to work, so your first dollars earned after
taxes just offset what you were currently getting in welfare, making you
no better off.
31. It allows more of the lower income families to become home owners
by allowing a second job income above their current income (all tax
free) to be applied to a mortgage. Money for down payments for homes is
also saved totally tax free so that it will accumulate faster.
32. It allows families to retain farms and businesses in the hands of
those who built them through the elimination of the death tax.
33. It allows families to help each other out tax-free, by eliminating
the gift tax.
34. It encourages individuals to self-insure, making the health system
more direct pay (no 3rd party pay), thus bringing costs down.
35. Without FICA to pay, most states, counties, municipalities, and
school districts will see a large increase in their state budget revenues,
additionally lowering the overall tax burden (State & Federal) for most
Americans.
36. It assures that no American will find, at the end of the year, a
need to get a loan to pay taxes as an alternative to penalties, interest,
or cheating.
37. It restores individual privacy. The government no longer needs to
know where you work, what you are earning, and what you are doing with
it.
38. It eliminates the need to have a “marriage” clarification declaring
who you live with, as that has no bearing at all on a state or federal
sales tax.
39. It eliminates the need for courts to decide which divorced parent
gets to take the tax deduction for children.
40. It reduces production costs for farmers and other subsidized
businesses, leading to a reduction in subsidies, thus reducing the federal
budget.
41. It eliminates the administrative costs incurred by states in
collection of state sales taxes because states will piggyback the state tax
collection onto the national tax collection, for which they are
compensated by the FairTax ?% administrative cost give-back. [Doesn't this go
to the retailers?]
42. It results in a windfall profit for many of those holding taxable
corporate high interest bonds at the time of passage of FairTax, since
they will not be taxed under FairTax. (A higher interest rate is usually
paid to entice investors to buy the corporate bonds rather than go with
the lower interest, but tax free, municipal bonds, now.)
43. It shifts the tax to consumption, which consumption tables over
time show is more stable than income, therefore the tax revenue stream is
likely to be a more stable and predictable amount.
44. It results in Federal Reserve rates being based on current
consumption, which is rather stable, instead of future earnings, which are less
predictable, resulting in surer inflation prevention.
45. It allows for better planning by businesses, because they no longer
have to consider tax implications for everything they do.
46. It makes higher employment or better compensation possible in the
small business sector where today it costs approximately three dollars
in compliance costs to pay one dollar in payroll and income taxes.
47. It moves many now providing tax preparation, advice, accounting,
planning, and records maintenance into an expansive economy where they
will be producing goods and services. There they can add to the standard
of living of all Americans and likely earn more than they do currently,
instead of shuffling paper for the government (and not contributing
anything economically to society).
48. It relieves citizens of the risk of facing the shift in burden of
proof that is so common with the current system, i.e., the taxpayer is
guilty unless innocence can be proved, when even IRS staff sometimes
give conflicting interpretations.
49. It’s simple, unambiguous, and certain, the opposite of the current
tax code.
50. It’s good for the environment. It reportedly would save about
300,000 trees a year that are needed to produce the paper for the IRS
compliance and tax forms, enough to reach around the equator placed end to
end 28 times. Also, since it taxes only new items, it would encourage
buying tax-free pre-owned cars, clothes, furniture, houses, etc. Reuse is
good for the environment, too.

PLEASE CONSIDER THIS ALSO:

22% of the price of all that you buy currently is tax / tax compliance cost. When that cost goes away (under the Fair Tax) the price of your $1.00 item (purchased at Wal-Mart, for example) drops in price to 78 cents (without damaging the profit margin).

1.23 X 78 cents = 96 cents.

Seeeeeeeeeeeeeeee!!!! Even with the 23% Fair Tax added on, your originally $1.00 item is now 4 cents cheaper.

The “out-of-pocket” cost of living , under the Fair Tax , will be no more than it is now.

Under the Fair Tax there are NO LOSERS, only winners, the difference being that some win BIGGER!!!! than others due to their increased FRUGALITY.

Best Regards,
John Paul McDaniel

Go to: http://www.fairtax.org

To stimulate consumer spending this year America will essentially borrow money from China and other lender nations to provide rebate checks to our taxpayers. Astoundingly, however, just obeying our almost indecipherable 67,500 pages of tax regulations will cost about $100 billion more in tax preparation costs than the cost of the rebates. Why? The income tax system bedevils American taxpayers and damages the national economy but the tax code also serves the political, profit and power motives of a small group of politicians, academicians and lobbyists.

The income tax is big business in Washington. More than half of all Washington lobby expenditures in any given year are devoted to winning tax code breaks. While Republicans and Democrats disagree on almost everything else, rewarding favored constituents, punishing political opponents and affecting citizen behavior through the tax code is pursued with equal vigor on both sides of the aisle in Congress. The process has created a complex and destructive mess.

Warren Buffet and other American millionaires and billionaires will pay a lower tax rate again this year than their secretaries. If you are married, you will pay higher taxes than two people living together. If you continue working while collecting Social Security, your benefits will be taxed. If you are an American business, “embedded” income and payroll tax costs will account for as much as 20 percent of the price of your goods and services. These costs and the highest corporate tax rate in the world make American products far less competitive both here and abroad. Our income tax system has actually helped drive more than $12 trillion of American wealth offshore in recent years.

But if you happen to find a job on the House Ways and Means Committee, the Senate Finance Committee or the Joint Committee on Taxation as either a staffer or, better yet, an elected representative, you have a bright future with the tax code. Seven figure signing bonuses are not unheard of when “K St” tax lobby firms are looking for talent and connections. Is it any wonder that taxpayers hear frequent promises that “something must be done” but that the tax code only gets more complex, unfair and dysfunctional? There is, however, a better way to collect taxes that takes both politics and lobbyist profits out of the tax code.

The most viable alternative to the current system remains the FairTax, a progressive national consumption tax with 70 Congressional co-sponsors and a growing citizen base clamoring for change. Unlike the current system, it taxes the $1.5 trillion underground economy, transforms twelve million illegal immigrants into taxpayers as consumers, and ends the marriage penalty, the corporate tax, the capital gains tax, the inheritance tax and all income and payroll taxes. It eliminates all federal taxes on the poor, gives the middle class a healthy tax break and taxes billionaire’s spending at an equal level. Every wage earner takes home their entire (federal withholding free) paycheck under the FairTax. It also provides a far broader base of revenues into the faltering Social Security and Medicare programs. Most experts concede that adoption of the FairTax would stimulate trillions of dollars of foreign investment into the US economy but despite its clear benefits to the nation and for predictably self-interested reasons, the tax lobby hates the FairTax. Without exemptions, it removes both lobbyists and Congressional mischief from the tax code.

Even without prominent FairTax advocate and Presidential candidate Mike Huckabee on the campaign trail and despite blatant distortions from Washington, the national FairTax campaign continues to grow at the grassroots level. It is building toward the day when enough taxpayers can finally overcome Congress’ self-interest in their favorite plaything– the cause of our annual tax torture and a millstone around the neck of our economy.

Ken Hoagland is the National Communications Director of FairTax.org, a nonpartisan national grassroots campaign to replace the income tax system with a progressive, transparent and simple national retail sales tax.

b) There ain’t no way in hizell that your tax bill was six-figures. Everybody knows you’re sittin’ there with an ant problem.