Posted: 20 May 2008 08:24 pm
Post Subject: Re: Go to your website...Re: Here's why, Steve...Re: TAX MYOPIA - Re: FairTax good for real estate Read Article
Karen,
You stated:
"Haven't you even gone to your website to calculate your "prebate?" You need to provide consumer interest paid, mortgage interest, charitable donations, tuition costs...sound familiar? In other words, you need to do every month what we now do once a year."
The reason the fairtax calculator asks for those items is in order to simplifiy the math for you... THE PREBATE REMAINS THE SAME regardless of the information you provide. Try it... the prebate remains the same based on the number of household dependents... including yourself. That is why the fairtax is called the fairtax. A million dollar mortgage holder does not get a tax break on the interest of that mortgage. They pay the same amount of taxes based on their consumption... not earnings. I feel I haven't covered this enough but hope to have provided food for thought.
To keep the conversation going though consider this and answer this riddle for me:
I have a 11 year old son (which is true) and I would love to give him a gift of $20,000 (which is true but I can't... I made less than $30,000 in 2007 and don't have that money in savings). In order for me to donate that money too him I would have to earn $34,500 pretax. I am in a 15% tax bracket... I'm not going to go into deductions for this because every individuals situation is different. I got this tax bracket from wikipedia; feel free to google it. If I earn this $20,000, 58%, inclusive of my gross income of $34,500 or 67% exclusive. I then give my son $20,000 of my after tax earned income. The government then taxes this gift at 45% per the irs web site. http://www.irs.gov/formspubs/article/0,,id=112782,00.html My son's $20,000 gift is now $11,000 due to the 45% tax rate. I started with $34,500... I was then taxed 15% of that. So now I have $30000 dollars. I give $20000 of that to my son. That is taxes at 45% so now he has $11000 and I have $10000. That is $21,000. I EARNED $34,500. $13,500 went to taxes. Inclusively that is 39% and exclusivly that is 64%. I'm in a 15% tax bracket?!?!?! In this example I did not include any deductions, I am not an expert in tax regulation or law. I don't claim to understand the tax code and I don't want too. I have historically paid accountants. I did not take into account the accountant costs associated with the taxes listed. Feel free to add them in and the tax rates, both inclusive and exclusive, will be higher. As a country we waste too much time of trying to figure out the tax code and that is one of the things the fairtax will rid us of.
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