Tag Archives: Fair Tax

2010 Election, Economy, Fair Tax, Media, Politics

What Happens When Bush Tax Cuts Expire?

1 Comment

Income taxes punish work, stifle innovation (except in ways to avoid a tax liability) and risk-taking. Coming to a network news outlet near you, in addition to all the racial stirrings provoked by the ‘post-racial’ Obama administration, prepare yourself for the next chapter in the Obama administration’s (aka Saul Alinsky) handbook; class envy/warfare.

It comes around in election seasons, which seem to never end nowadays. And it comes around whenever tax reform is discussed in the form of ‘tax cuts for the rich.’

Barring any intervening legislation, these are the numbers by income tax bracket of how the tax rates will change when ‘the Bush tax cuts’ expire.

• Up to $16,750: Rises from 10 percent to 15 percent
• From $16,751 to $58,200: Stays same at 15 percent, but entire bracket pays 5 percent additional on the first $16,750
• From $58,201 to $68,000: Rises from 15 percent to 28 percent
• From $68,001 to $137,300: Rises from 25 percent to 28 percent
• From $137,301 to $209,250: Rises from 28 percent to 31 percent
• From $209,251 to $373,650: Rises from 33 percent to 36 percent
• $373,651 and up: Rises from 35 percent to 39.6 percent

The spreadsheet below shows how much more of your income (not counting all the income credits and re-distribution schemes contained in the 75,000+ page Internal Revenue Code) you will owe Uncle Sam on every dollar you earn beginning January 1, 2011. Note the gimmick in the second tax bracket, where the poor and not as poor ‘working people’ reside. You know, the one class that Obama claims to advocate for. These brackets capture the majority of the income earning population. The tax rate remains the same, but the entire bracket pays 5 percent additional on the first $16,750. The consequence of this magic trick is putting the largest tax burden, as a percentage of income, square on the backs of the poor. The rate of increase on the next bracket, those whose income falls between $58,201 and $68,000, goes up by a massive 86.67 percent. The so-called ‘working people.’ I add ‘so-called’ to the discussion because this administration would like the dumb masses to believe that rich people don’t work. ‘Working people’ is class envy for the poor aimed at the rich, by the ‘uniter’ himself. It is a necessary function of class envy, which this administration so effortlessly employs. And so far gets away with.

From $ To $ From % To % $ Increase % Increase Increase as % of Income
$0 $16,750 10.00% 15.00% $838 50.00% 5.00%
$16,751 $58,200 15.00% 15.00% $9,568 0.00% 16.44%
$58,201 $68,000 15.00% 28.00% $8,840 86.67% 13.00%
$68,001 $137,300 25.00% 28.00% $4,119 12.00% 3.00%
$137,301 $209,250 28.00% 31.00% $6,278 10.71% 3.00%
$209,251 $373,650 33.00% 36.00% $11,210 9.09% 3.00%
$373,651 $500,000 35.00% 39.60% $23,000 13.14% 4.60%

Obama’s Tax based on his 2009 income. $5,505,409 35.00% 39.60% $253,249 13.14% 4.60%

Don’t be fooled by the tax brackets or these numbers either. They give the illusion that everybody is actually paying taxes. Everyone is not paying taxes. The truth is, for 2005, the top 1% of income earners paid 39% of all tax revenue. That’s up 2% since President Bush took office in 2000. 86% of all federal income taxes were paid by the top 25% of income earners. And 97% of all taxes paid are paid by the top 50% of income earners.

The power to use the ‘tax hammer’ to micro-manage voting, social and economic behavior is the drug the politicians must be weaned from. The FairTax takes that tax hammer away by putting the economic power where it belongs, with the people. All the people. Not Washington politicians and lobbyists. Because the FairTax is transparent, the FUD factor goes away. The Fear, Uncertainty, and Doubt goes away, and citizens and entrepreneurs can make business decisions with some certainty of risk and tax consequences. 

The FairTax unleashes the potential for economic activity, innovation, job creation, personal wealth and financial security without the interference of Washington and without increasing the national debt. And as a not insignificant side effect, the class warfare game with taxation becomes a thing of the past. Allowing the elected officials to concentrate their efforts to serving their constituents instead of trying to rob them.

Economy, Fair Tax, Politics

Ways And Means Closed The Door On FairTax

I encourage the input from all Americans, from both sides of the aisle. If you have a better idea, I want to hear it. That is the talking point from this honest and open administration. That is what President Obama has said, over and over. It is his alleged open door policy.

But actions speak louder than words. What are the actions?

Leaders Fiddle While the Nation Burns

The United States hit a new record this month—more public debt piled up than any month before in the history of the nation. Unapologetic, Congress bought five luxury private jets for a brand new Congressional fleet because they didn’t feel that military jets were good enough for their junkets or their refined tastes.

Where did the money come from? The nation borrowed it from foreign creditors and secured the debt with our earnings and the future earnings of our children and grandchildren.

The FairTax ends the corruption practiced daily by tax writing committees who treat $2.5 trillion a year in tax receipts as their private property. It bars lobby deals and special favors and shifts power from the government to the citizen. It restores the role of the American people in deciding how much and when taxes are paid by their consumption decisions and it creates a new era of robust American economic growth.

But as good as the FairTax is for the nation, it is still ignored, at best, and distorted and despised, at worst, by those in the political elite who profit from corruption of the federal tax code. This week your FairTax organization delivered nearly 100,000 petitions to the House Ways and Means Committee–who could not be bothered to meet with national FairTax campaign chairman, Ken Hoagland.

“I am furious that the leading alternative to the income tax has again been ignored along with every American who petitioned their government for redress of grievances,” said Hoagland. “This betrayal of the voice of the American people adds fuel to the fire of our determination to break through the wholly unacceptable and un-American shell of disdain for the common man that we are seeing from Washington, D.C.”

Hoagland said that April 15th events planned including the “Storm the Hill” and “Operation FairTax” rallies as well as the on-line tax revolt march www.onlinetaxrevolt.com were needed efforts to “break through to our leaders”. “We will not give up, we will not stop and we will not rest until we have ripped this broken tax system and culture of political privilege out by the roots. That is a promise.”

Fair Tax

The FairTax Basics

5 Comments

The FairTax happens to be the most thoroughly researched tax reform plan in recent history. Below is a quick introduction to the FairTax and tax reform. Note also that the implementation of the FairTax and the subsequent increase in economic activity that ensues will all happen without increasing the debt or selling bonds to foreign countries. It is a pure economic stimulus all on its own.

Scholarly research tells us that . . .

  • The FairTax rate of 23 percent on a total taxable consumption base of $11.244 trillion will generate $2.586 trillion dollars $358 billion more than the taxes it replaces.  [1]
  • The FairTax has the broadest base and the lowest rate of any single-rate tax reform plan.  [2]
  • Real wages are 10.3 percent, 9.5 percent, and 9.2 percent higher in years 1, 10, and 25, respectively than would otherwise be the case.  [3]
  • Disposable personal income is higher than if the current tax system remains in place:  1.7 percent in year 1, 8.7 percent in year 5, and 11.8 percent in year 10.  [4]
  • The economy as measured by GDP is 2.4 percent higher in the first year and 11.3 percent higher by the 10th year than it would otherwise be.  [4]
  • Consumption increases by 2.4 percent more in the first year, which grows to 11.7 percent more by the tenth year than it would be if the current system were to remain in place.  [4]
  • The increase in consumption is fueled by the 1.7 percent increase in disposable (after-tax) personal income that accompanies the rise in incomes from capital and labor once the FairTax is enacted.  [4]
  • By the 10th year, consumption increases by 11.7 percent over what it would be if the current tax system remained in place, and disposable income is up by 11.8 percent. [4]
  • Over time, the FairTax benefits all income groups.  Of 42 household types (classified by income, marital status, age), all have lower average remaining lifetime tax rates under the FairTax than they would experience under the current tax system. [5]
  • Implementing the FairTax at a 23 percent rate gives the poorest members of the generation born in 1990 a 13.5 percent improvement in economic well-being; their middle class and rich contemporaries experience a 5 percent and 2 percent improvement, respectively.  [6]
  • Based on standard measures of tax burden, the FairTax is more progressive than the individual income tax, payroll tax, and the corporate income tax.  [7]
  • Charitable giving increases by $2.1 billion (about 1 percent) in the first year over what it would be if the current system remained in place, by 2.4 percent in year 10, and by 5 percent in year 20.  [8]
  • On average, states could cut their sales tax rates by more than half, or 3.2 percentage points from 5.4 to 2.2 percent, if they conformed their state sales tax bases to the FairTax base.  [9]
  • The FairTax provides the equivalent of a supercharged mortgage interest deduction, reducing the true cost of buying a home by 19 percent.  [10]

References

[1] Bachman, Paul, Jonathan Haughton, Laurence J. Kotlikoff, Alfonso Sanchez-Penalver, and David G. Tuerck, “Taxing Sales under the FairTax:  What Rate Works?” published in Tax Notes, November 13, 2006. Click here to read the full paper.

[2] Tuerck, David G., Jonathan Haughton, Paul Bachman, and Alfonso Sanchez-Penalver, “A Comparison of the FairTax Base and Rate with Other National Tax Reform Proposals,” The Beacon Hill Institute at Suffolk University, February 2007.  Click here to read the full paper.

[3] Tuerck, David G., Jonathan Haughton, Keshab Bhattarai, Phuong Viet Ngo, and Alfonso Sanchez-Penalver, “The Economic Effects of the FairTax: Results from the Beacon Hill Institute CGE Model,” The Beacon Hill Institute at Suffolk University, February 2007. Click here to read the full paper.

[4] Arduin, Laffer & Moore Econometrics, “A Macroeconomic Analysis of the FairTax Proposal,” July 2006.  Click here to read the full paper.

[5] Kotlikoff, Laurence J. and David Rapson, “Comparing Average and Marginal Tax Rates under the FairTax and the Current System of Federal Taxation,” NBER Working Paper No. 12533, revised October 2006.  Click here to read the full paper.

[6] Jokisch, Sabine and Laurence J. Kotlikoff, “Simulating the Dynamic Macroeconomic and Microeconomic Effects of the FairTax,” National Tax Journal, June 2007.  Click here to read the full paper.

[7] Tuerck, David G., Jonathan Haughton, Paul Bachman, Alfonso Sanchez-Penalver, and Phuong Viet Ngo, “A Distributional Analysis of Adopting the FairTax:  A Comparison of the Current Tax System and the FairTax Plan,” The Beacon Hill Institute at Suffolk University, February 2007.  Click here to read the full paper.

[8] Tuerck, David G., Jonathan Haughton, Alfonso Sanchez-Penalver, Sara Dinwoodie, and Paul Bachman, “The FairTax and Charitable Giving,” The Beacon Hill Institute at Suffolk University, February 2007.  Click here to read the full paper.

[9] Tuerck, David G., Paul Bachman, and Sylvia Jacob, “Fiscal Federalism:  The National FairTax and the States,” The Beacon Hill Institute at Suffolk University, June 2007.  Click here to read the full paper.

[10] Walby, Karen, and Dan Mastromarco, “Promoting home ownership:  How the FairTax’s benefits for homeowners exceed the mortgage interest deduction,” Americans For Fair Taxation White Paper, August 2006. Click here to read the full paper.

Karen Walby, Ph.D., Director of Research, Americans For Fair Taxation, Jan. 5, 2008.

Economy, Fair Tax, Politics

The Truth About The FairTax

For someone who writes an article like this ‘The Flat Tax Is Not Flat and the FairTax Is Not Fair,’ it would help if its author, Laurence M. Vance, had his facts straight.

Coming from his premise that the FairTax ‘has the most vocal and intolerant proponents,’ I’m detecting a certain aire of superiority from him. Intolerant? Really?

The FairTax turns the current taxing system and taxing power on its head. It represents the largest shift in power from the federal government back to the people since the Declaration of Independence separated us from Mother England.

The FairTax is the result of $22 million worth of research by credible economists from around the country whose task was to come up with another way to fund the operations of the government. The task was qualified to the extent that the result would be ‘revenue neutral.’ That is to say the system must be able to generate as much money as the government is currently generating with the current system through federal withholding and payroll taxes, self-employment taxes, alternative minimum tax, estate and gift tax, and capital gains tax, all of which would be replaced by the Fair Tax. And from that point as the economy grows, so grows the treasury. It is a pro-growth, as opposed to punitive growth, taxing system.

The prebate is NOT an income redistribution scheme

First, the current system is not progressive by any stretch of the imagination. All the payroll-related taxes are taxed on a poor person’s first dollar. When that person gets another job to help make ends meet, he is taxed again. It is the prebate of the FairTax that eliminates this phenomenon. It totally un-taxes not only the poor but EVERYONE up to the poverty level (fair), actually helping them to rise up the socioeconomic ladder and realize the American dream. And when their spending exceeds that of the poverty level, they pay the same taxes as everyone else. What makes the FairTax a truly progressive tax is that the more one spends, like on yachts and private jets, the more ‘taxes’ will be paid.

The tax base expands to everybody in the United States

Also, and this consequence is often overlooked, EVERYONE who is in this country enjoying what there is to enjoy about it, WILL CONTRIBUTE to funding the government when they buy anything new or purchase a service.  This includes foreign tourists, the foreign diplomats in the UN and elsewhere, and all who are in the country illegally. Including those in the underground economy. The tax base is greatly expanded and is not limited to just legal citizens that legitimately work. (fair) Conversely, if you don’t want to pay any tax, simply don’t buy anything new. Under the FairTax, the people have control over what, how, and when they will pay their taxes, not the social engineers in Washington. Transparency in taxation will return. The amount you pay will be on your receipt instead of being stuffed into ‘deductions’ on your paycheck as it is now.

A taxing system that rewards, not punishes, achievement

The question of the ethics of making people pay taxes is a philosophical one, but in reality, and as corrupt as it is, it does take money to fund the government to do what is necessary to keep us safe and sound.  It is up to us to keep Washington in check on how they spend that money. The FairTax does not have any bearing on how the tax revenue is spent. It is strictly a plan to fund the federal government. And instead of punishing success, it actually rewards it. The FairTax is fundamentally, economically, stimulative. The term ‘take-home pay,’ coined by the creation of the current taxing system, becomes history. Under the FairTax, your gross pay is your take-home pay. YOU get what YOU make, and YOU spend it as YOU see fit. (fair)

Promotes economic development, investments, savings, and jobs

Other consequences of the FairTax which are also overlooked, is the effect it would have on the estimated $13 trillion in business, each year, that has fled this country to escape the tax code. That business would come back. That would not happen under a flat tax.  By the elimination of all the taxes on business and employment that you accurately list above, the US would become a tax haven to the world. And foreign business that don’t have a business unit in this country would have a powerful incentive to come. And 90% of those surveyed on that proposition say they would setup a business unit in the US if the FairTax was in place. The job creation and economic development that would result would go a long way toward bringing the country back towards economic solvency, all without any borrowing from China or anyone else.

No double taxation, no FairTax & income tax

Also, the ‘two-headed hydra’ that you mention will not happen under the FairTax. That’s because it calls for the repeal of the 16th Amendment so the political class will not be allowed to double dip. Were that to be the case, the FairTax would expire and we would return to the same abortion of a tax code that we have now.

There are no exemptions for government under the FairTax. They operate the same as everyone else and the same as every other business. There are no taxes on business-to-business transactions. That applies to government business the same as it applies to normal capitalistic businesses. (fair)

The FairTax is not on TOP of, it is INSTEAD of

Lastly, and this is no small point, the research that went into the FairTax came up with a 23% tax that would be revenue neutral, not 30%, and it is inclusive, not exclusive like in your example. Here’s where it gets confusing and, easily demagogued. To be factually accurate, you have to know the difference. Otherwise you’ll be comparing apples to oranges.

The inclusive vs exclusive debate becomes easier to understand when you realize that companies do not pay taxes. The final consumer is the one that pays the taxes. We currently pay all the taxes that producers must pay in terms of all the taxes that would be eliminated under the FairTax that you correctly listed above. The over $20 million of research that went into developing an alternative federal revenue generating system determined that, on average, all of those above-mentioned taxes amount to 22% of the price of the goods and services we buy. Those are  embedded taxes, inclusive. Under the FairTax, those taxes go away. If nothing else happens, the prices would drop by (on average) 22%. Under the FairTax, those are replaced by a 23% tax, which would be inclusive to the price of the item. Not added to it as though the 22% embedded tax was still there, ie. exclusive. Competition in a free market would make sure that this would be the end result.

Economy, Fair Tax, Politics

aSide Order

A FairTax Teaching Moment

The recession is starving the government of tax revenue, just as the president and Congress are piling a major expansion of health care and other programs on the nation’s plate and struggling to find money to pay the tab.

The numbers could hardly be more stark: Tax receipts are on pace to drop 18 percent this year, the biggest single-year decline since the Great Depression, while the federal deficit balloons to a record $1.8 trillion.

Other figures in an Associated Press analysis underscore the recession’s impact: Individual income tax receipts are down 22 percent from a year ago. Corporate income taxes are down 57 percent. Social Security tax receipts could drop for only the second time since 1940, and Medicare taxes are on pace to drop for only the third time ever.

The last time the government’s revenues were this bleak, the year was 1932 in the midst of the Depression. Is raising taxes the answer to the problem? Of course not.

Which brings me to this FairTax teaching moment.  The tax base shrinks every time a job is lost. 6.7 million jobs have been lost since December 2007. Over 5 million of those have been lost since January 2009. And everyone is saying that its going to get worse before it gets better.

It doesn’t take a rocket scientist to see how taxing income and investment leads to federal revenue losses in a big way during a recession. Revenue flow under the FairTax plan is not near as volatile during a recession. Under the FairTax, the tax base remains the same, which is about 30% larger (and growing) than under the current income tax plan. More importantly, a consumption based taxing system is more stable, more predictable, and less reactive to political actions.

In fact, if Washington could get their spending under control, and barring another ‘man made disaster,’ under the FairTax recessions would become a thing of the past.

endofstory

Rush on Obamacare

Mobfather Rush Limbaugh comments on Obamacare and the organizations behind and in front of it.

endofstory

Smallest microwave oven?

Did you know you’re carrying a microwave oven in your pocket.

Economy, Fair Tax, Organized Labor, Politics

Cash For Clunkers, A Teachable Moment

It didn’t take more than a few days of the ‘cash for clunkers’ program to illustrate a few things.

  • When people have money in their hands, they will spend it. And consumers spending money is what drives the economy. In this case, it stimulated the auto industry.
  • The program has already had its meltdown in red tape for car dealers, and has run out of money. And Democrats are looking for TWO BILLION more dollars from our grand children’s future to hand out.
  • That the Obama administration believes that they have a right to choose the winners and losers in our economy, instead of the people. They do that by choosing who they want to bail out (with money that hasn’t been printed yet), and ‘everyone’ is not among those that they want to bail out.
  • This cash for clunkers program could have been done BEFORE the administration fired auto executives, put their own people (who’ve never run a business) on the boards of directors, gave a majority ownership stake of the company to the United Auto Workers ahead of secured creditors, thereby nationalizing the auto industry.
  • That this whole scheme was done more as payback to the UAW than it was to improve the auto industry’s bottom line.

Returning to the first point. Once you realize that the money you earn belongs to you and not the government to selectively dole out, what mechanism puts money in the economy without committing inter-generational theft? The answer is tax cuts.

An even better answer to cutting taxes would be to let the people (there’s that ‘everyone’ concept again) keep all the money they earn and finance the government with a consumption tax as proscribed by the Fair Tax.

Economy, Fair Tax, Florida, Pensacola, Politics

Fair Tax Advocates At Tea Party

1 Comment

Though not widely publicized, there was a ‘Tea Party’ at 9th Ave. & Creighton Road today. Lest there be any doubt, I am a supporter of the Fair Tax. It alone would begin a lasting economic recovery on into the future, without adding to or piling on the current national debt.

The crowd of somewhere between 300-400  people were all, at least the ones I saw and spoke to, well behaved and passionate about what they believe, that the country is going in the wrong direction, in so many ways. Trying to spend our way to prosperity and borrow our way out of debt, taking over private companies and industries all add up to economy killers. Markets pull back at the fear of being next on the hit list. Risk-taking and investment stop. Jobs end. Exactly what we are seeing happen right now.

That’s why most people were there, home-made signs and all. They sang patriotic songs along with a PA system that someone had set up. This is what grassroots looks like.

I, and a few other Fair Tax advocates were there to answer questions about the Fair Tax and to enlist Fair Tax supporters. I am happy to report that we picked up 41 new supporters in those two hours today.

Thanks to two of our newest members Mr. Brown and Mr. Doyel, and to Community Coordinator Jim Whatley, for their help and participation at our Fair Tax table. We handed out pamphlets and spoke to a lot of people. Everyone we spoke to that had questions or were just curious, liked the Fair Tax once they learned more about it.

Special thanks to Lee for the umbrella. We were offering FREE SHADE for people that signed up to join us.

Part of building our grassroots support includes recruiting Community Coordinators and County Coordinators. To learn more about the FFTEA and the above positions,  please check out our website.

I was interviewed by PNJ reporter Thyrie Bland for an article that will be in tomorrow’s paper.

Pictures will be posted here as well as on our FFTEA Panhandle website as soon as I get them.

Update 07/05/09: PNJ article, Protesters take aim at taxes, socialism

related links:

Fair Tax, Media, Pensacola

FairTax In Print And Online

Sunday’s opinion page of the Pensacola News Journal was like a page here explaining the Fair Tax. Then there’s this great video answering the question ‘What the FairTax would mean to you?’

Am hopeful the article will open some eyes and possibly attract more supporters locally. Must see, and share, this video.

They chose Paul Wizikowski and–wow!–does he know how to make a FairTax video. Paul’s an Oklahoma-based FairTax grassroots activist and his winning entry brilliantly answers our challenge question, “What the FairTax would mean to you.” As the top video in our contest, Paul’s work was shown to thousands at both “Save the Nation” FairTax rallies for Tax Day 2009.

My FairTax Story

related links:

Fair Tax, Pensacola, Politics

Pensacola Tea Party

3 Comments

The Tea Party in front of University Mall today was a ton of fun for me. And it was good to see 1000-1300 people of all ages, and of all political parties, come out to say WHOA! No Mas.

I saw a lot of enthusiasm on their faces and in their voices. It tells me this isn’t a one-day phenomenon. As for the FairTax, there were a lot of supporters out there that brought their own signs. And it was more than just Huckabee supporters.

 

Congressman Jeff Miller (R-FL) stopped by and thanked everyone there for doing what Americans can do. Exercising their freedom of speech to send a message to their government.

I’ve never seen 1000 people lining Davis Hwy in front of University Mall before for any cause. By comparison, the crowds at the courthouse for the Bush 2000 election were about 600 people, if my memory serves me. It ended up being a fun night because thanks to the chanting crowds outside and Joe Scarborough inside, they successfully stopped Gore’s lawyers from excluding the overseas military ballots which, you will recall, was what they were trying to do.

Seems to me there is more public activism, or pissed offism, now than in 2000. Of course the stakes are way higher now. Look at this event as the beginning of a peaceful transfer in power in 2010 and 2012.

Sean Dugas says it pretty well in his Pensacola News Journal article ‘Not a penny more.’

Economy, Fair Tax, Pensacola, Politics

Jacksonville FairTax Rally Video

The Florida Times-Union in Jacksonville has a report on the FairTax rally at The Landing in Jacksonville Saturday where about 3,000 people came out to support and to learn about the Fair Tax.

About 3,000 or so people filled The Jacksonville Landing courtyard to cheer talk radio guru Neal Boortz, members of Congress and others promoting a plan to replace America’s income and payroll taxes with a scaled national sales tax.

In Pensacola this week, members of the The Pensacola Fair Tax Advocates Meetup Group will be attending the April 15th Tea Party at University Mall from 3pm – 6pm. Showing our support for not trying to spend our way out of a recession and borrow our way out of debt. The consequences of which amount to  inter-generational theft.

shelton_moral_standards.jpg

We have no right to deprive future generations the freedom we have by

making them live under the burden of our debt. Their choices will be limited. When it comes to family values, doing this to future generations of our family is no ‘value’ I would subscribe to.

link: FairTax rally pushes plan to replace income, payroll taxes | PNJ: Patriots’ parties protest wasteful spending