This is corporate welfare run amok, and a gross misuse of American citizens’ tax money—something the government must treat with respect.
Know why tax reform, real tax reform like the FairTax is a loooong shot? It’s a long shot because it removes the means for corporate welfare from the pinheads in Washington. Too many pols there have lobbyists up their arse and campaign contributions in their pocket.
Absent the ‘tax hammer’ the current IRS code provides, politicians would simply be left with managing affairs in their districts and spending priorities instead of trying to figure out how to be a millionaire on a public salary.
Gaetz’s bill does not introduce the FairTax, but it is a good start to ending corporate welfare that the current codes provides. The NFL brought this fight on. And Matt Gaetz has the proper response.
I’m afraid that the “tax reform” in the works is not going to be the game changer needed, the FairTax. The politicians are not willingly going to give up the Tax Hammer. It gives them too much power and lines their pockets with campaign cash. It is up to we the people to demand it.
Enactment of the FairTax would be the greatest transfer of power from the government back to the people since the Declaration of Independence. Instead of paying 39% of what you earn, you’ll pay 23% of what you spend, and keep all that you earn. Because your gross pay will be your “take-home” pay, the FairTax will be an economic generator and job creator for people, big and small business. All the while still generating the same amount of money to fund the government and its programs.
Just how can the FairTax be revenue neutral compared to the current income tax? Simple really, when you consider that the tax base expands from just those lucky ones who have jobs to everybody within our borders who purchases any new good or service.
Glad you asked. Actually, a FB buddy, John Ingraham Berry said, and asked:
Burdensome on those families and individuals who have very little… have a little trouble grasping and seeing the fairness of this concept.
It’s really very easy, especially on the poor. Once you understand what’s in the bill, it’s like a ‘slap yourself in the head’ brilliant concept. For lack of any media excitement or mediocre coverage of the FairTax, getting people to learn what’s in the bill, as opposed to what the establishment says about it, which is pure demagoguery, is the biggest challenge.
Under every circumstance EXCEPT the FairTax, a consumption tax is regressive. By percentage of income, it hurts the poor the worst. The FairTax doesn’t do that. It is progressive in a way that benefits the poor the most, as you will see below.
Here’s the short version.
1.) Everything everyone (poor included) buys today is paying all the income and corporate tax, capital gains, gift, estate, alternative minimum, SS and Unemployment tax, and self-employment tax of everyone involved in bringing that item to market, from raw materials, to manufacturing, to transportation, and all the costs of a wholesaler and retailer to bring the item to you, the final consumer. Call that the “embedded” tax. Everyone pays it, it’s in the cost of the item. It just isn’t itemized on your receipt. It’s hidden in that way, but it is there. Under the FairTax, the amount of federal tax you pay will be printed on your receipt. Totally transparent.
Now imagine what the same item would cost if there were no embedded taxes, if that product could be made with none of the above taxes. After over $22 million of research, the percentage amounts to about 22 % less.
The research included, of course, finding out what people buy at all income levels. No small task. That done, for the FairTax to be ‘revenue neutral,’ the FairTax percentage comes in at 23%.
That doesn’t mean an item automatically costs 23% more under the FairTax than it does today. When you remove the 22% embedded tax, and replace it with a 23% sales tax, you see a 1% increase in price on a widget. This is an average, not an absolute. One method is swapped with the other, having a negligible effect on cost to consumer.
2.) Here’s what the critics don’t tell you, or don’t know about. There is NO TAX on used items, including a car, motorcycle, boat, or house sold that was not bought by the ORIGINAL owner. The sales tax is ONLY for NEW items purchased for the FIRST TIME. Fair thing is, this applies the same to everyone, at all income levels. Including tourists, diplomats and other non-citizens.
3.) Because it is a consumption tax, assessed to new items sold, everyone pays it. The tax base instantly expands to 320,000,000 people instead of only legal citizens who have a job. What we have now is an income tax. No income = no tax revenue. And a tax base less than half of that. And because of that dynamic, the FairTax is a more stable revenue source. Fair thing is, this applies the same to everyone, at all income levels. Including foreign tourists, diplomats and other non-citizens, legal or illegal. And that tax never exceeds 23%.
4.) This is the part that makes this consumption tax progressive, instead of regressive. The Prebate. Designed to be the same, aka fair. Everyone gets this prebate based on the number of people in the household. And the prebate is for legal U.S. citizens only.
Now a new term to learn, effective tax rate. Based on the consumer spending research mentioned above, the amount of the prebate is figured to offset the sales taxes that would be paid for the basic necessities that everyone buys up to the poverty level as determined by HHS. It is paid to the household every month. Taking the prebate into account, lower income people pay less than 23%. In fact, the prebate at the lowest income levels make the effective tax rate a negative number. An income stream.
5.) Absent all the embedded taxes, at the federal level, the term ‘take home pay’ becomes obsolete. Your gross pay is also your net pay. THAT makes a big difference for all people, especially the poor. Currently, for every job, and many people do have 2 or more jobs, they pay those embedded taxes. Can’t get more regressive than that. Imagine the effect when they are not taxed every time they get another job. Purchasing power goes up for everyone, only greater for the poor. The rich pay the maximum 23%. But since “the rich” also buy more, they pay more taxes in dollars, obviously, than the poor, when they buy their yachts, cars, planes and other high-end toys. That’s how it affects families of all income levels, on the personal level.
6.) No more income taxes to file. And because of that, there is no compliance cost incurred to pay them. No tax preparers, accountants, or tax lawyers to pay. In total, a saving of over $400 billion. And, the IRS is effectively gone.
7.) On the national, macro level, absent the income tax, the $10-15 trillion that U.S. companies have sheltered overseas will come back to be invested here, since there will not be a tax obligation to shelter it from. Then, with the absence of an income tax, foreign business will come here and open up shop. The U.S. will become a global magnet for businesses. The U.S. will become the “offshore tax haven.” There will be a job for anyone who wants to work. Maybe more jobs than people. And competition between employers to get employees will do what? Increase wages. We will experience real economic growth on a personal and national level. And none of it government subsidized, adding to the national debt.
How the politicians spend that is another matter. The FairTax is only to be the replacement source for funding the government. It has nothing to do with how that money is spent or where it is allocated.
You can read the text of the bill HERE. It’s not 75,000 pages like the current IRS code. H.R. 25 is a whopping 132 pages long. And more information is available at the link at the upper right-hand corner of your screen.
What an opportune time to talk about tax reform, thanks to the Clinton campaign and their publicist, the New York Times. Accusing Trump for not paying “his fair share.” To chastise Trump for having to hire a team of accountants and lawyers just to file his taxes, shows what an abortion of tax code Americans are saddled with. For example . .
The top 1 percent of earners (incomes in excess of $615,000) are paying nearly half — 45.7 percent — of individual income taxes for tax year 2014.
The top 20 percent, with incomes above $134,300, pay nearly 84 percent of all federal income taxes for tax year 2014.
The growing complexity of the U.S. tax code has led to large compliance costs for households and businesses.
Americans will spend more than 8.9 billion hours complying with IRS tax filing requirements in 2016.
Put in dollar terms, the 8.9 billion hours needed to comply with the tax code computes to $409 billion each year in lost productivity, or greater than the gross product of 36 states.
That’s not how much taxes were paid. That’s how much it cost us, as a country, just to comply with the tax laws to file our taxes.
Under the FairTax plan, that’s $409 Billion per year that stays in our pocket, FOR FREE. Under the FairTax, you don’t “file” your taxes any more. There’s nothing to file under a consumption-based tax system. And April 15th is just another day.
So Hillary and her lemmings want to paint Trump as a tax cheat when he follows the tax law. Legally spreading a single loss in 1995 of $916 million dollars over 18 years. (Must be nice to have a loss like that to be just a bump in the road.) Unlike Al Sharpton, Trump did not break the tax law. They are great at name-calling on phony accusations.
Well guess what? Come to find out, the New York Times didn’t pay any taxes either, for 2014! And on top of that, got a “tax refund” of $3.5 million (of taxpayer money), even though they had a pre-tax profit of $29.9 million. How do you like the tax code now?
But when it comes to one of their own, like Rev. Al Sharpton, who in fact did not pay his income and payroll taxes, who has tax liens on him for over $3 million, well, he’s a frequent VIP in The White House. Go figure!
Nowadays, Bill Clinton and Al Sharpton will tell you the hot money seems to be made in Charities and Foundations. They don’t pay taxes, especially when you can donate to yourself. Two different worlds, two different standards.
Republican Kerry Bowers Says Senator Supports Contradictory Tax Plans
Henderson, NV, 23 March 2015 – The Kerry Bowers for President Committee released the following remarks in response to Senator Cruz’s recent actions and statements specific to federal taxation.
“On 19 March, I applauded Senator Cruz’s 10 March addition to the list of cosponsors for Senate bill S.155, the Fair Tax Act of 2015, which is a companion bill to HR 25 introduced in the House of Representatives. The Fair Tax is a national retail sales tax that abolishes all forms of income, payroll and corporate taxes and replaces them with a sales tax, one that includes a family consumption allowance to reduce or eliminate the regressive effects of a sales tax. The bill also abolishes the IRS and includes a ‘sunset’ title requiring repeal of the 16th Amendment to the U.S. Constitution within 7 years else the Fair Tax is repealed. The companion bills today have more combined congressional sponsorship than any other proposed tax reform or replacement measure introduced to both houses of the 114th Congress.
I then learned that the Senator on 17 March, in an appearance on the MSNBC show, ‘Morning Joe,’ stated the following: “The perfect, the ideal and what I intend to fight for is a simple flat tax, where every person can fill out his or her taxes on a post card, which would enable you to abolish the IRS.” The senator, when queried by host Joe Scarborough what the tax rate would be, offered; “we’re still working the numbers.”
In my opinion, the Senator revealed he has no detailed plan or serious commitment to effectively and permanently change one of the most obstructive, destructive and liberty-infringing mechanisms imposed upon the American people. He has taken a position, as reflected in his statements, indicative of yet another income and payroll tax system, one contrary to the Founder’s vision for appropriate federal taxation as evident in the original Constitution and addressed in great detail in the Federalist Papers. This stated position stands in stark contrast to his eloquent speeches in which he implies his intent to restore the ideals imparted by the Founders in the nation’s framing documents.
I also believe it is disingenuous for the Senator to say that the IRS would be abolished under a flat income tax since the tax will require continued oversight of the 165-plus million individual tax filers and 20-plus million businesses. The Fair Tax, on the other hand, will require only businesses to file reports and make remittances; the administration and collection of the sales tax will be reserved, principally, to the States and done so on a voluntary and reimbursement basis. That last point is advocated in the Federalist Papers as a measure to avoid unnecessary redundancies in tax agents for the collection of impositions on items taxed by both the federal and state governments.
Perhaps an even more important aspect of the Senator’s flat-tax proposal, but not addressed by him, is the preservation of every avenue through which Congress may, and again, change a simple income tax system into the same discriminatory, incomprehensible and tyrannically-imposed system the American people endure today. One of those avenues that should be addressed as ‘dangerous’ and eliminated is the 16th Amendment which, as the debt continues to grow, could be used to seize personal assets to cover the nation’s financial obligations. Such seizures could occur under numerous disguises, including additional taxes imposed on every American’s accumulated wealth and the seizure of retirement funds for subsequent replacement with a government-controlled annuity.
The American people need to be truthfully advised too by those who promote a flat income tax that the peoples’ idea of a simple, single-rate tax is not what Congress will likely impose upon them. It will be either a multiple-rate system, like that recently proposed in the Lee-Rubio plan, or a single-rate system replete with wage-determinant deductions and exemptions designed to achieve the same result as a multiple-rate tax system. The people should also be reminded that payroll taxes for Social Security and Medicare, which most workers pay double or more than what they pay in income taxes today, will remain in effect under a flat income tax.
Bottom line, the Senator’s conflicting positions are troubling and especially so in these extraordinary times. We are at a pivotal point in our nation’s history and one that will require extraordinary leadership with extraordinary plans to alter the course upon which we are embarked. The proposition of another income tax does not meet the requisites to effect a suitable and sustainable course correction.”
Charles Schumer (D-NY), No. 3 leader in the Senate’s Democratic majority, is working on a tax provision designed to discourage companies from moving their tax domiciles overseas, where the tax liability is lower than the U.S., that has the highest corporate tax rate in the world.
Which is exactly what is wrong with the current IRS tax code. It is used by politicians as a tax hammer to either reward or punish economic activity. In this case, Schumer is upgrading to a sledge-hammer, by attempting to grab business profits retroactive to 1994. It’s the Democrat’s version of an Occupy Wall Streeter’s wet dream. And would most certainly fire up the wealth-envy part of their party’s base.
The proposal would cut the amount of deductible interest for inverted companies to 25 percent of U.S. taxable income from 50 percent, according to a draft obtained by Bloomberg News.
There is only one tax code that is economically stimulative. Not just for business, but for the middle class and the poor. It’s called the FairTax. And it does not have tax hammers. If fact, the FairTax can not be manipulated by politicians to pick winners or losers. On the contrary, it couldn’t be more open and transparent, or fair. And instead of being an incentive to move out of the country, the FairTax would be the incentive for corporations to being their assets back home and be put to work here. And the only employment problem we would then have is finding enough people to fill the jobs that would be created by the economic recovery that would result in all sectors of the economy.
British Prime Minister Cameron says the ISIS threat is “a poisonous ideology of Islamic extremism”. Clueless Pres. Obama says it’s political.
Why would President Obama deny that ISIS, alQaeda, all those cowardice cave men clinging to their guns and religion, is political and therefore requires a political solution? That there is no military solution and, btw, we don’t have a plan on how to deal with (terrorism) them. If that isn’t music to the terrorists’ ears, I don’t know what is.
Great Britain is learning what an open door Politically Correct driven immigration policy is getting them. Suicide bombers, citizens being decapitated in broad daylight. Unfortunately, President Obama is likewise genuflecting to the Islamic goons by ignoring border security here. Which begs another question. Do you think Obama has weighed the benefit of millions of undocumented democrats against the terror threat that exists? To put it another way, do you think Obama thinks that the sacrificing of untold number of Americans to terrorist attacks is worth the price for the perpetual Democrat control of government?
From the frame of mind of someone who wrote the book “Dreams from my (Communist) father,” I have no doubt that he thinks it is worth it.
As an aside, and not totally unrelated to Obama and terrorism, let’s review his actions of late.
Illegally sends reinforcements to the Taliban, ostensibly after spending a year in Qatar, by trading five of their top generals for one deserter.
Gives further aide and comfort to the enemy (that’s also illegal) by announcing that the US has no plan to deal with them.
I don’t know about you, but I’m not feeling confident that this president knows what is best for America.
Somebody tell me, what happened to, “We are the ones we’ve been waiting for”? (h/t to Rush Limbaugh for that one)
This should make a difference to even the most staunch, deaf, dumb, and blind supporters of King President Obama, not to mention members of Congress.
So Obama has unilaterally legislated illegal conditions on the illegal waiver. To wit, employers will be required to certify to the IRS, under penalty of perjury, that the waiver was not a motivating factor in the company’s hiring and firing decisions. As Fox News’s Chris Stirewalt quips, “To avoid ObamaCare costs you must swear that you are not trying to avoid ObamaCare costs.”
Businesses are only businesses because they can manage to make a profit. When expenses increase on one end, like in taxes for example, they find ways to offset those added expenses where possible. Else they will eventually be forced out of business. And there is no better a motivator for a cost-cutting business decision than tax increases. Happens all the time, every day of the week. The tax code even drives businesses overseas. This isn’t a story about tax reform and the advantages of FairTax, but it could be.
Where Obamacare is concerned, every employee now has tax value attached to them. Employers have to decide if they can afford to keep the employee and pay for their insurance, cut their hours and let them get their own insurance, or terminate them. In addition to interfering with free-market business decisions and stifling free speech prior to the next two elections, this lawless President is now going after businesses by criminalizing normal business activity. As a matter of fact, the normalcy of these kind of decisions was specifically confirmed by the Supreme Court, who ruled that the Obamacare mandates were taxes, not penalties.
As if all his making up laws and breaking laws is not enough, his latest move should garner bi-partisan support for having blatantly crossed the line of being within the law and under constitutional authority. President Obama has become the most destructive force in this country to this country. He and his agenda must be stopped.
This latest move by the regime should be front page, above the fold in every newspaper, calling him out on this lawless action. Carrying the call for impeachment. But that’ll never happen.
Where President Clinton built wealth-spreading into the tax code, President Obama put it into overdrive by adding “social justice” to it with the addition of the non-affordable Affordable Care Act. A nationalized health care scheme that requires the young and healthy to pay for the old and infirm. The consequences are surprising, and getting worse.
In a random act of journalism, CNBC reporter Jane Wells gives the striking details of a CBO report released last week entitled The Distribution of Household Income and Federal Taxes, 2010. (Table 3, Page 13) In personal income taxes it boils down to this, the rich don’t pay most taxes, they pay ALL the taxes. The upper two quintiles, or 40% of taxpayers, pay 106% of all personal income taxes. For the lower 40%, their “taxes” are a revenue stream.
Politicians are pretty slick when it comes to manipulating the tax code. Which is why we must get rid of it and replace it with something that can’t be used as a tool for class warfare and social engineering. The FairTax is the best alternative, for everybody. But I digress.
Remember the Taxpayer Relief Act of 1997? The tax code becomes a vehicle for spending programs.
Wielding the tax hammer for social engineering increases public debt. Lesson not learned here is that money doesn’t grow on trees and, stop increasing the spending. But it’s OK if you can use the tax code to buy votes. What? This is where the class envy/class warfare tactic, as connected to the tax code, was taken to a higher level.
The Taxpayer Relief Act of 1997 made additional changes to the tax code providing a modest tax cut. The centerpiece of the 1997 Act was a significant new tax benefit to certain families with children through the Per Child Tax credit. The truly significant feature of this tax relief, however, was that the credit was refundable for many lower-income families. That is, in many cases the family paid a “negative” income tax, or received a credit in excess of their pre-credit tax liability. Though the tax system had provided for individual tax credits before, such as the Earned Income Tax credit, the Per Child Tax credit began a new trend in federal tax policy. Previously tax relief was generally given in the form of lower tax rates or increased deductions or exemptions. The 1997 Act really launched the modern proliferation of individual tax credits and especially refundable credits that are in essence spending programs operating through the tax system.
“There’s no difference at all in terms of the effects on the federal deficit,” says Roberton Williams of the Tax Policy Center. “It’s perfectly equivalent. It’s just easier to say, ‘I cut your taxes’ as opposed to ‘I created a new federal program to send money to people.’”