Posted: 27 May 2008 07:47 pm
Post Subject: Re: Go to your website...Re: Couple living on 18K Read Article
Karen,
I just read your response to my post. Wow! First of all you wrote: “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.”
Yes, you need all this information for a comparison only, but under the FairTax mortgage interest, donations, tuition cost are no longer an issue in determining your tax. It is simply a flat percent applied to everything you buy. If you can’t understand this, how can you understand anything else about the FairTax? The only form you need to receive a prebate is a once a year statement showing the names and SS#’s of everyone in your household. What purpose would there be for listing mortgage interest, or any other current taxable deduction?
Here is another good one. You state, “I went back to see what a married couple below the poverty line at, say, $18,000 a year get in your "prebate" check. It's about $391 a month. That is more than they pay in social security, which is about $135 or so. But, run through their budget for a month, rent, gas, water, power, food, phone, etc, and figure 30% more for all those things and see where they come out. The increase in prices far outstrips the check you're sending them, even after you subtract what SS and Medicare cost them.”
You should have applied figures to your statement above. You are assuming the price of everything will increase 30%. Once embedded taxes and compliance costs are removed, prices won’t increase that much, but let’s assume they will. Under our current system if the family earning $18,000 has no income tax liability, their net income for the year will be $16,623. ($18,000 minus 6.75% for SS and Medicare) If they spent their entire $16,623 and prices increased by 30%, they would need an income of $16,623 times 130% or $21,700 to have the same buying power. With the FairTax, their net income will be $18,000 plus a prebate of $4692 or $22692. Even if prices increased 30% their buying power under the FairTax would be $22692 - $21700 or $992 higher.
You go on to write “But frankly, this whole thing has become circular and pointless. You never answer the big questions about the country's financial needs and our debt load.”
Government spending is a very important issue, but it has nothing to do with the method of taxation. I will say it again; the FairTax is designed to be fair. It is designed to be revenue neutral. And it is designed to be transparent. If it takes a 40% or 50% consumption tax to achieve this, people will see exactly how much of our hard earned dollar ends up in the governments hands. With the FairTax, American people will be reminded every time a purchase is made that the government is taking 30%, 40% or 50%. The only way to increase revenue will be to vote for an increase in this one single consumption tax. Any congressman who does so will soon be out of a job. Under our current tax system, there is no way you or anyone else can tell how much of a $1.00 spent ends up in Uncle Sam’s hands. They like it like this. This is why many of them are against the FairTax. They know the system makes it easy to manipulate the code to create more revenue without making waves. Under what conditions would you take the necessary steps to lower your blood pressure? Seeing every day that it is 180/110 or never knowing what it is.
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