FAIR TAX PLAN

On another thread a member asked:

 

Hey Fair Tax guys, I read a question on the fair tax once and never read a good answer.

I person works all his life and pays income taxes, but he saves for his retirement. Now he is retired, so he spends saved money on which he has already paid full taxes to enjoy his life.  By your 'Fair Tax', he will be paying taxes a second time on his savings.  How fair is that ? 

 

It is a good questioin and I was not sure how to answer it so I asked a friend who is a state coordinator for FAIRTAX and got this reply.

 

---

I don't fully understand the fair tax either.  When Neal Boortz talks about it, some of it makes sense and sounds good.  But, then when he says, "A large poor family will get a check from the government each month for 500 something dollars to cover the tax on things they buy"...that's fine.  But what about a large better off family that has to watch every dime because they have huge medical expenses, or are caring for elderly parents and those parents are not considered "dependents" and therefore not part of "the family".  Will the "family" get nothing but the elderly parents get a check, or what?  And exactly who is going to determine how much is "average" to determine how large that family's rebate check is?  And will items of necessity be tax free such as groceries and clothing? 

---

First, when FAIRTAX goes into effect there will be no more federal withholding on your paychecks.  No Federal tax, no social security, no medicare will be with held.

We will no longer file a tax return by April 15th.  No one will care where we work or how much money we earned.

 

The way things are now, when we do file those tax returns we are allowed to take a standard deduction plus an exemption for each dependent.  Instead of this, when FAIRTAX goes into effect, each family will received a check from the government every month depending on their family size and the current poverty level.  It is called a 'prebate check' and will represent what a family of that size with a poverty level income will pay for goods and services in the new national retail sales tax.  As a single person, my check based on the 2005 poverty level will be $185.  My daughter, her husband and 2 children will receive $550.

 

Everyone will pay taxes on what they choose to spend, not what they earn.  Only new goods will be taxed.  Services will be taxed (like having your carpet cleaned, or your car serviced).  Used goods will not be taxed : Thrift shop purchases, used cars, homes, furniture, etc.

People who have depended on an off the books income, drug dealers, prostitutes etc will finally be paying their fair share and won't be happy.

The real downside I see is the fiscally irresponsible may not plan through the month and end up short of cash.  They will adjust.

My advice to people I talk to about FAIRTAX is: whatever is being witheld now from your check in ss should be put into a retirement savings account;  whatever is being withheld in medicare should be put into a medical savings account.  The part that is now being withheld in federal taxes will be yours to spend.  Do it responsibily.

. 

 

 

---

 

People!!!  I have suggested this more then once.

If you have questions about the FairTax, go to http://www.fairtax.org frequently asked questions. If you can't find a question similar to yours, send your question to Info@fairtax.org People much smarter then me on the topic will answer you.

I will add this about the original question. From the FairTax FAQs:

  The income tax imposed on investment income and pension benefits or IRA withdrawals is repealed. Pension funds, IRAs, and 401(k) plans had assets of $12 trillion in 2004. An income tax deduction was taken for contributions to most of these plans. All beneficiaries and owners of these plans expected to pay income tax on them upon withdrawal, but are not required to do so under the FairTax.

 

---

MsBobbie, but how will the government know what a person earns to know how much to give back to anyone as a "prebate" if we no longer file a tax return?  Can't go on previous years income on file because incomes change...up or down.  Family sizes change.  And you brought up another thing with the ss comment.....ss reform is going to have to go hand in hand or what would the treasury do?  Send people a bill?  For what amount? 

---

Patsy  you've seen the santa's with the bells and the collection pot.  Picture Uncle Sam with one on every other corner. 

---

Patsy said: MsBobbie, but how will the government know what a person earns to know how much to give back to anyone as a "prebate" if we no longer file a tax return?  Can't go on previous years income on file because incomes change...up or down.  Family sizes change.  And you brought up another thing with the ss comment.....ss reform is going to have to go hand in hand or what would the treasury do?  Send people a bill?  For what amount? 

 

It will not matter what they earn, Patsy.  Just as every family takes the same standard deduction and exemptions depending on their family size now, every family will receive the same "prebate check"  depending on their family size.  Income has nothing to do with it.

As for family sizes changing.  Well say my daughters family.  When they do their taxes they have to provide the ss numbers of the kids right along with her and her husband.  When the oldest leaves home, he will have to file a form to get his prebate check.  That means they will know to reduce my daughters prebate check because there are fewer peple living in her home.

SS has never been in a 'lockbox'.  Contributions taken from paychecks for SS goes right into the general fund with Federal Income Taxes and all of the other taxes the government collects.  Yes, the FAIR TAX will reform social security.  I do not know just how, and will not speculate. That is why I suggested people in the workforce when FAIRTAX goes into effect just roll those deductions into a retirement savings account of some kind before they get used to having that extra money in their pocket.

---

JUST CURIOUS: With around 28,000 members of FS registered, how come we hear from so few of us? From 100 to 300 of us are logged in at any one time. Where are the other 27,700 or so? Come on, people. Give us your insights--your opinions--your prejudices--your whatevers! Don't be "chat room wimps". We'd like to hear from you. NOW!!!!!

It will not matter what they earn, Patsy.  Just as every family takes the same standard deduction and exemptions depending on their family size now, every family will receive the same "prebate check"  depending on their family size.  Income has nothing to do with it.

Well, that's certainly different than how Neal Boortz explains it.  He says poor families, not ALL families, will get this check.  Anyway...thank you Rayj...will check that site out.  Thank you Bobbie too.

---

oldone70 said: JUST CURIOUS: With around 28,000 members of FS registered, how come we hear from so few of us? From 100 to 300 of us are logged in at any one time. Where are the other 27,700 or so? Come on, people. Give us your insights--your opinions--your prejudices--your whatevers! Don't be "chat room wimps". We'd like to hear from you. NOW!!!!!

I suspect a large number of those members are clones.  You know, people who register under several names and act like the majority supports their opinion.

 

Also, if you do not log off before you close your browser, it will still show that you are logged on to the board.  I have done this sometimes when I am in a hurry, then hours later open my browser (I use firesociety for my home page) and see that I am still logged on.

---

Patsy said:

It will not matter what they earn, Patsy.  Just as every family takes the same standard deduction and exemptions depending on their family size now, every family will receive the same "prebate check"  depending on their family size.  Income has nothing to do with it.

Well, that's certainly different than how Neal Boortz explains it.  He says poor families, not ALL families, will get this check.  Anyway...thank you Rayj...will check that site out.  Thank you Bobbie too.

 

I believe what Neal says is poor families will not pay the sales taxes.. because the prebate check covers them.  In fact no one will pay the taxes on purchases up to the poverty level.  Those who choose to spend more will pay 23% on those purchases.

Congressman Linder and Neal Boortz have written a book in common language that explains it very well.  They did not do this to make any money from it.  You can get it at just about any bookseller for under $15, or order it on line from the www.fairtax.org  website.

 

 

 

 

 

---

I guess that's where I'm lost on the issue, Bobbie.  If we don't file a tax return, how is anyone going to know (1) what the poverty level is, (2) who's at the poverty level, (3) how much anyone has spent up to any given point, etc.  I'm going to have to check out that site RayJ provided. 

---

The government tells us what the poverty level is.  I think this year for a single person it is just under $10k.  A family of 4 it is just under $20k.  They will not know who is at the poverty level.  All they will need to know is how many people live in your home.  You will have to provide social security numbers for everyone.  They will make sure those numbers do not return to someone else who has filed.  They do not need to know how much money you spend.

Retailers will be federal tax collectors, just as they are state sales tax collectors now.  All the government will know is how much busine$$ the retailer  has done.  They already have auditors who check inventory against sales.

You have to change the way you are conditioned to think.

  

 

---

 

I am also trying to post at least one FairTax Fact everyday on the Taxes/FiscalPolicy  forum.

Check it out! 

---

msbobbie said:

oldone70 said: JUST CURIOUS: With around 28,000 members of FS registered, how come we hear from so few of us? From 100 to 300 of us are logged in at any one time. Where are the other 27,700 or so? Come on, people. Give us your insights--your opinions--your prejudices--your whatevers! Don't be "chat room wimps". We'd like to hear from you. NOW!!!!!

I suspect a large number of those members are clones.  You know, people who register under several names and act like the majority supports their opinion.

 

Also, if you do not log off before you close your browser, it will still show that you are logged on to the board.  I have done this sometimes when I am in a hurry, then hours later open my browser (I use firesociety for my home page) and see that I am still logged on.

 

There are a few "clones" here and there I'm sure..but not enough I highly doubt to make that much of a significant difference to show a number of members equating in the thousands.  There are a lot of members here @ F.S., yet only 10% will probably ever feel like chiming in on an issue or setting up pass-word and acct. to post (etc.) I've been a member for a he|la long time, yet only recently decided to post.

(Give me *Ron Paul* or give me Bill,ery Clint....I mean..|)eath!)

You can forget fair tax as the politicians will never give up control over you. They control you by the amount of disposable income they let you have.

---

blaze77535:  We do have the power to make the politicians do what we want.  We all need to quit voting for someone because we shook his/her hand or they attended a meeting at your church, school or work or that they have seniority.    Dammit, politicians must realize that if they do not act in our best interest, their parade is over.  The longer they stay in Washington the more removed they are from what everyday life is all about.  We all must continue to be alert, when and if the Fair Tax is adopted as, most assuredly, due to the very nature of politicians, they'll try to find ways to manipulate any situation to secure favor or financial benefit for themselves and, therefore, destroy what the Fair Tax Plan will accomplish. 

 We ordinary American citizens that have worked all our lives, paid taxes (lots and lots of taxes) and have sacrificed to be able to ultimately enjoy the fruits of our labors cannot continue to be afraid someone is going to accuse us of being not politically correct, some kind of "phobic," "mean spirited" or "prejudice" just because we are prepared to DRAW A LINE IN THE SAND!!  Whether it's Mexico, Iran, France, Canada, Russia, the ACLU, Radical Islam, the Liberal media or just whimps, we must be a strong nation prepared to fight for the continuation of our way of life and for the opportunities to openly express our opinions, as here at Fire Society.  These rights will be nonexistent and we'll be bowing to some fanatical ruler and not our Lord Jesus Christ if we aren't.  I am a Christain conservative who is sick of seeing people not having the backbone to stand their ground and unless the politician acts in accordance to standards that I have established for myself, he/she will never get my vote. 

bigdawg, you are so right.

 

 

---

I received an email today from FAIRTAX.ORG with a link to a calculator that will show how FAIRTAX will affect you.

 

http://tinyurl.com/yu6pxf

 

 

---

Patsy said: I guess that's where I'm lost on the issue, Bobbie.  If we don't file a tax return, how is anyone going to know (1) what the poverty level is, (2) who's at the poverty level, (3) how much anyone has spent up to any given point, etc.  I'm going to have to check out that site RayJ provided. 

 

Patsy,

The premise of the prebate is that everybody, rich or poor buys some minimum level of basic necessities.  Some states with sales tax exempt certain necessities.  With the current system, poor pay no taxes and may even get something for nothing.  It is part of the progressive structure of income taxes.  The fair tax has kinda combined these things.  It assumes everybody will have to spend some minimum level for taxable necessities.  It is a somewhat arbitrary number.  If the magic number were $20,000, then the prebate would be 37% (assuming the tax rate is 37%) of 20,000 or $7,400.  Now I don't know the exact numbers, though they may be in the Boortz book.    The idea is that if the basis is 20K and you earn 20K or less, then your sales tax will be cancelled out by the prebate.  Since everything isn't taxable, you could actually earn well over 20K and pay less in sales tax than the prebate.  The prebate comes with no strings.  It is "welfare", but it is distributed equally among all citizens.  In an ideal world, illegals wouldn't receive it.  There is no concern or interest in how much you earn.  Only in how many "spenders" are in your family.  I believe Ms Bobbie explained what happens when a child moves out of the home.  In order for them to receive a check, they have to notify the govt to send it to them instead of their parents.

The fair tax does not discourage you from earning more.  It encourages you to earn more and actually encourages you to save and invest in the future vs buying stuff now, especially on credit.  Like when buying a car today, some lenders will finance tax and title, while others will not.  It also encourages you to re-use vs buying brand new.  Not necessarily good for producers, but certainly "green" for those who care.

---