You have to check out this great online tool at FairTax.org! Their new calculator allows you to find your tax savings under the FairTax system -- in just 5 minutes.
Imagine a tax system that rewards work and saving and does not punish investment. Well, we don't have to imagine any longer, the online calculator will show you exactly how much you can save under the FairTax.
Don't take my word for it -- run the numbers yourself. The calculator allows you to work all the variables (investments, savings, charitable giving, etc.) and get a direct comparison of the FairTax vs. the current federal income tax.
I'm sure that if you take just 5 minutes to try their online calculator, you will see your savings and join me in this effort.
www.fairtax.org/calculator
What is the FairTax plan?
The FairTax plan is a comprehensive proposal that replaces all federal income and payroll based taxes with an integrated approach including a progressive national retail sales tax, a prebate to ensure no American pays federal taxes on spending up to the poverty level, dollar-for-dollar federal revenue replacement, and, through companion legislation, the repeal of the 16th Amendment. This nonpartisan legislation (HR 25/S 1025) abolishes all federal personal and corporate income taxes, gift, estate, capital gains, alternative minimum, Social Security, Medicare, self-employment taxes and replaces them with one simple, visible, federal retail sales tax administered primarily by existing state sales tax authorities. The IRS is disbanded and defunded. The FairTax taxes us only on what we choose to spend on new goods or services, not on what we earn. The FairTax is a fair, efficient, transparent, and intelligent solution to the frustration and inequity of our current tax system.
Other Resources:
FairTax Thumbnail Sketch This is a concise overview of the main points of the FairTax.
FairTax Plain English Summary (PDF)This document is a summary of the Fair Tax Act of 2007 (HR 25/S 1025) written in plain language.
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12 comments:
You mean FARCE tax calculator.
Cause really, its a farce. And so is the calculator.
IN fact, you can see how much a farce the "calculator" is -- because it doesn't calculate your taxes under fairtax.
It just leaves really huge things out.
Fairtax calculator lacks a few things -- like reality.
Why doesn't the calculator ask you how much rent you pay? Cause rent is taxed 30-40% under fairtax.
Why doesnt the calculator ask how much medical bills you have? Cause medical costs are taxed 30-40% under the fairtax.
Why doesnt the calculator ask how much car, health, and life insurance you pay? Cause all insurance premiums are taxed under the fairtax.
You have to wonder about a "calculator" to show how much you will "save" when it avoids all questions about the things you will be taxed on the most.
Suppose you pay 1000 a month rent -- thats 300 -400 in tax, but the fairtax calculator left that out.
Suppose you have 500 dollars a month medical expense -- thats 200 dollars in tax. But fairtax calculator "forgot" to have you calculate that.
Suppose you have 200 a month life insurance, and 200 month car insurance. Thats about 150 dollars in tax. But the calculator "forgot" to have you list such things.
The entire fairtax plan is like that -- a farce, a sham, a complete bit of nonsense.
You think they didn't ask about your rent, medical bills, and insurance, because they didn't want you know its taxed?
You don't think people would do that on purpose, do ya?
Naaaa -- couldn't be.
Hi Mark,
Great comment but there is something to let you know about.
You pay taxes on all of those items already. They are called embedded taxes.
Do you know how much of the rent goes toward paying someone's income tax, social security taxes, Medicare? About 23%. When you take away the embedded you reduce your payment. Then you add the FairTax. When you do this the rent still remains the same.
How about the medical expenses? How much do you pay towards income taxes when you pay a medical bill? How about the doctor, nurse, staff? What about the taxes embedded in every instrument and every other item the office purchases down to the pinting material to print your bill. Every one of those items have embedded taxes in them that you never see because the income tax is embedded. Subtract those embedded taxes by getting rid of the income tax and you reduce your price by what MIT experts say wil be 23%. Turn around and add the FairTax back into your bill and it is revenue neutral - or same price you were already paying.
The life insurance is the same way. The FairTax is revenue neutral when and only when you eliminate the embedded taxes which is a must under the FairTax bill. You cannot have both.
The lie people are spreading is that the FairTax will be added on to certain prices. Not True. You have to remove the embedded taxes that are added in which include the income taxes. medicare taxes, the social security taxes of every single person that handles anything that ends up in your hands or makes up every service you are benefited by.
Do not let the anti-FairTax people lie to you. I hope this answer helps.
Go to FairTax.org and study the FairTax papers. I also was critical until I investigated for myself.
Be honest with yourself. Is the current system that is manipulated so easily by our government better? If not then we need a better system. I haven't heard anyone else suggest anything better than this.
Thanks for adding to this blog. Your comments are most welcome.
David
Yes I know about the embedded cost of other taxes.
And I know it would help business if they didn't have them.
Our family has a small business, less than 30 employees. We already looked over how much we would save under fairtax -- by getting rid of the three main embedded costs.
FICA -- compliance cost -- and income tax to owner.
The FICA cost is a pain in the arse, we would LOVE to save it. But its nothing near 22%. No business on earth has 22% of its expense from FICA -- because FICA is 7.5 percent of payroll.
To have FICA cost be 22% of your exepenses, you would have a payroll three times larger than your income, which is just silly as all heck.
Our FICA savings would be LESS than 2% of our gross receipts.
Then we have embedded cost of compliance.
Compliance is the book keeping. We would have a book keeper anyway, she is the busiest person in the building. Payroll is easy for her, its all done by software, and FICA is sent in electronically, she doesn't even address an envelop or lick a stamp.
FICA is just ONE part of her payroll, and it would actually cost us money to get new software and training. Compliance cost under Fairtax would actually be MORE -- not less. More.
Income tax is the last embedded cost. We would love to get rid of that too. But we don't pay a lot of income tax right now. and haven't for some time. We are paying off the business. When we get it paid off, our profit should go up nicely, and then we will have higher income tax.
Our total savings from this FICA is about 3% or so of our gross receipts. Far far less than 22%.
And very likely, thats not too far off for most business.
To save 22% of your gross from income tax - you would have to get profit margin of about 75%. That means if you made 4 million dollars of product, you would have to make 3 million profit. IN that case -- yes. You could pay 22% of your gross to income tax.
But I don't know any business that makes 3 million dollars profit on 4 million dollars in product, unless its drug dealers are hookers.
Fairtax is a nice theory -- but its lousy math, lousy economic, and frankly its a farce.
Ive read the Fairtax book several times now. I read it with a lot of hope when it first came out. But the more I read it, the more I see Boortz and others have used every con game trick in the book.
The government CAN NOT pay its own taxes -- thats silly.
The embedded cost they say is 22% -- is NOT 22% that can be passed on/
Yes, our employees save some money -- great. They keep their whole paycheck. But we still have to pay them the paycheck. We don't save their income tax, they do.
We still have to pay the bookkeeper and the delivery guy and the office staff, and the production staff. Those costs don't go down, except by the FICA we paid for them. That, as I said, is less that 2% of our gross receipts.
What fairtax has done is count ALL the supposed savings for everyone (and exaggerrated those). Then it assumes the business can lower its price by all that.
Well we can't. We can't lower our price by what our employee saves, unless our employee donates that back to us.
But even then, those savings would not come CLOSE to 22%
Hello again Mark,
Another great comment.
First, what's wrong with the federal government paying taxes? They pay them on employees anyway. They also consume products. Besides it may help them tighten their spending. :)
Second, I understand what you are saying and I see things just a bit different.
For example, you pay 7.65% of FICA that does not come out of your employees paycheck, as do all employers.
But you also pay the taxes on the employees of every good and service you purchase in order to create your product or perform your service.
When you begin adding up every tax amount that is passed on to you your tax expense and responsibility rises.
Besides the 22 or 25% difference will not be made up in just your business income tax compliance savings.
Under the FairTax you would no longer pay tax on any good you purchase that goes into a final product or service. That's a savings to you. Only goods in their final production or state of being will be taxed. So you may have to collect the tax if you sell your product to a consumer but not if your product ends up in a final product (again except for state and local taxes which you pay anyway).
You will no longer be paying the taxes passed on to you by corporations on products you purchase that end up in your final good our service. Again, a savings to you.
I cannot profess to understand every nuance of the math involved in how the mathematicians came up with how much embedded tax we pay for products, but I do understand that the more a product changes forms and is passed further along to its final state of being, then the more taxes that are embedded into that product (from employment taxes on those who produced the product to employment taxes on those who delivered the product).
The tax burden is consistently passed on. You do the same thing to your customers when you balance out your cost of production in order to create a profit margin. Every company exist to create profit or it will cease to exist.
Only those who use a final product will pay taxes. So your business will pay taxes in some areas such as office expenses. Again, in creating a profit, you will adjust your pricing to offset those costs. Just basic business math.
Will we see huge savings immediately. Maybe not, but when corporations begin to battle in competition, they will lower their prices.
As for computer software, all your expense calculations will still be done on computer. I can simply change the tax rate on my computer to reflect the amount I will have to charge. I can zero out (if I had employees) my other tax numbers without changing software.
Again, thank you for your great contribution to this blog. I appreciate your comments because they are forcing me to think and learn.
I hope I am able to do the same for you,
Thanks
David
Thanks David,
Whats wrong with the government paying itself you ask?
Its impossible is the main reason. I don't mean to be flip, but it just is absolutely impossible.
The government paying itself its own taxes is like me paying myself 10,000 a day for cutting my own grass. I can write myself a check, I can even deposit the check, but at the end of the month, I don't have 300,000 dollars. I just have short grass.
This isn't an opinion, this is simple math, simple reality. Either the government CAN pay its own taxes to itself, or it can't.
And if it can't -- then fairtax can not be 23%. It might work -- but it would have to be much higher -- about 40%
Yes, some people are confused, because the government pays money to its employees for FICA. And the government gets money back from its employees in income tax.
But its fundamentally and critically a differnnt thing. The government isn't paying ITSELF in those situations -- its paying its employee. Just like all employers have to pay their employees FICA, and wages.
So when the federal government pays an employee's half of FICA, the FICA money goes to a FICA account for the employee (supposedly).
If the federal government can pay itself a "major" part of its own taxes -- why not just have the government pay it all? Really. IF there is no logical reason the government can't pay half of its taxes, then what logical reason is there, for it to pay all its taxes?
Paying your employee's FICA is entirely differnt than creating a sales tax, paying yourself the sales tax, and calling it income.
If you could do that, why not just charge the government 50 or 100% sales tax. It would be like a self perpetuating economic machine. Just have the government pay its own taxes - part or all.
Sure -- you can write a law that says the US navy will pay 3 billion in sales tax on a 12 billion dollars air craft carrier. But since the treasury has to WRITE the check for 3 billion TO itself, it's not getting any money.
Its not costing any money either. Some fairtax people smugly thing -- wow -- it doesnt cost any money to pay yourself a tax!!
RIght. It doesnt COST you anything, but it doesnt GET you anything either. And thats what a tax to be real, has to do. GET, collect, money.
If thats not clear enough, its probably cuase its so absurd, its hard to explain. Its like trying to explain the concept of multiplication by zero./.
To show that the government gets no income from paying itself, look at this:
IF the government paid itself a sales tax or not, would make NO difference, since it has to pay it. It also recieves it. So functionally, its not a receipt. Functionally, it made no difference at all if it paid it, or not. Its just a book keeping farce.
The EFFECT is EXACTLY the same as if you gave the government an exemption.
So if the EFFECT is exactly the same as an exemption -- then its not really revenue coming in.
Thats just ONE of the several major fallacies fairtax has.
Thanks,
Take an irreverant look at fairtax, at my blog. Its kinda harsh. Frankly, once you realize that fairtax is largely based on fallacies, its hard to be polite and academic about it.
It really reminds me of those pills they once sold people to let them use water in their gas tanks.
They might someday HAVE such pills, who knows. But they will never have a tax that can make the government pay its own taxes, for the reasons I've shown above.
Thanks for your patient kind reply.
YOu seem like a good guy, its a shame you got fooled by the fairtax. Don't feel bad, its a very seductive theory.
And they claim its "the most researched economic plan ever".
I read as much of that "research" as I could.
Its not research at all. Its cheerleading from the first sentence. It STARTS with the assumption its going to work exactly as they say.
Thats not research. Its marketing.
A lot of economist are now saying the Fairtax plan is silly, ludicrous, and worse.
REmember, a bipartisan presidental commission looked into this. They said a national sales tax would have to be 57% to be revenue neutral.
How did that study come out SO different? Simple. They didn't pretend the government could pay its own taxes.
Thanks
You know, I just don't understand why people don't get this. The bill is easy to understand and what you don't get then the book explains it in detail. Are people really that dumb or do they just fear any change? Wake up Mark.
Where did you see the 30-40% in the Fair Tax?
FICA is 7.5% from employer but that is just for one employee. If you have 10 employees, the employers part is a much higher dollar amount.
I am a thrify person who happens to own a business. I can tell you that I know our family would save thousands every year.
Why do people tend to support a stimulus packagke from the federal gov., to give the citizens back some of their own money, but aren't willing to think how much the Fair Tax would give back to the citizens every month!
You dont understaqnd why we don't get fairtax?
We get it -- we know its nonsense.
For example -- I'm not stupid enough to think the government can possibly pay itself 500 billion dollars. If you are that stupid -- so be it.
Your idiot Fairtax book is a clue- - it says "the federal government will become a major taxpayer"
Major tax payer my ass. How the hell can any government pay its own taxes you idiot? That should have told you idiots it was a farce.
You said "Well, you have more than one employee, so you save more than 7.5%"
Are you mental you moron? Gesus how stupid can you get you idiot.
The percentage is for any number of employees you stupid jerk.
We can not cut our prices 22% you math moron, just cause we save 2%.
Try to grasp that you idiot. OUr business saves 2% - not 22%.
Yes we know we have more than one employee you idiot. And we know we would save less than 2% that we can pass on.
Our employees would keep their own paycheck -- we wouldnt save their savings you idiot. We save less than 2%. They save about 10%, but THEY save that.
We can't cut our prices by what they save you moron.
DUH.
You really seem too stupid to run a business -- what is your "business" some amway crap?
Im talking about a real business you idiot, with employees and payroll.
If your dumb ass thinks you cut your prices 22% because you save 2% -- you won't be in business very long. I'm surprised you can tie your shoes if you are that stupid.
And you come up with "oh, its more that 7.5% cause you have more than one employee".
Something tells me you are too stupid to have employees at all. No one could be that stupid to say its more than 7.5% cause there is more than one employee.
Percentages don't go up you moron when you have more than one employee. I won't even explain that part to you -- if you don't know that basic math fact, you are dumber than dog do.
Here is where I got 30-40% -- cause it would be a hell of a lot higher.
More like 70&.
But it would start out at 40 percent or more.
Because the government can't pay taxes to itself, thats the FIRST reason it can't be 23%
23% my ass. 23 percent works ONLY if you can get 500 billion from the federal government TO itseld - PLUS another 500 billion from state governments.
In otherwords -- make believe crap.
23% is make believe crap. The federal government CAN NOT POSSIBLY pay itself 500 billion you moron.
Thats just ONE of MANY things the fairtax fools you stupid suckers on.
There are lots more.
But really, if you are so stupid that you think the federal government can pay itself 500 billion, I can't help people that stupid.
You need more help than I can give.
Hello Mark,
I haven't been able to post a response because I have been taking care of a sick child.
Can the Federal Government pay taxes? The answer is yes they can.
I know this because I worked in local government as a bookkeeper.
The instance is different but the same principle applies.
In the office I worked in, I had a set budget to work with. I had certain areas to spend that money. Usually I had to spend it with other branches of that local government.
Same principle applies for the Fed Govt. When asked to pay the FairTax, they basically are reallocating funds. Money from the budget of one office is in turn transferred back into the general fund which reallocates the money for spending.
Instead of seeing this money as "revenue" or "income", we see it as reallocation of funds. That sounds better to me.
Look at it like dealing with your family budget. Each area has set amount you set aside (bills, savings, entertainment, etc). If you want to move money from your savings into your bills or entertainment you have to subtract that money and add it. It is the same principle of moving money from one account into another.
It will force government agencies to be more frugal in their spending.
It works.
Is the FairTax system perfect? No. Does it answer a problem we have in our current tax system. Yes.
Bold steps are hard to take and difficult to face. But America would not be America without boldness. Our current tax system is choking our economy.
It also harms free speech. As a minister (and this is a huge issue for me), I have to deliver from my studies a message I hear from God.
If the Federal Govt sees my message as too political, they can yank away my churches tax status, which harms my congregation and could force the congregation from meeting together anymore - taxation can kill church communities.
What right does the federal government have in telling me how God is to speak through me and too my congregation? None. Now I am getting into freedom of religion also.
Our current tax system has to do away with these areas that undermine our Constitution or we will continue down a slippery slope that we may not be able to recover from.
The FairTax forces government out of the speech and religious rights of people.
I cannot say how much I want to see this happen.
Any mean spirited or name calling posts will no longer get through.
This is a conversation that should hold everyone's views with respect.
I very much respect the views of Mark and am glad he is adding to this conversation.
It helps us all to think.
This is the type of discussion we need if our tax system is ever to be repaired. As we all know our government officials sure are not talking.
Thank you
The Moderator - David
As a two employee business, and haven spoken with many other business owner, to the person they believe that the FairTax will returns some semblance of control to the people. There is an undercurrent of paranoia in the country regarding our tax system and the IRS that permeates the core of our Capitalist system.
I would be willing to pay 40 cash register tax to get rid of the 16,845 pages of TAX CODE.
I want to know that every person in that checkout line is feeling the same tax pain with me.
If Bill Gates purchases a new aircraft he pays the same 40% as I do on my new musical instrument.
When that yoyo drug dealer down the street leave his new crib to by that Big Ride. He/She is going to put their tax in the till.
We no longer can stand by and watch our nation being run over by foreign trade.
I say secure the borders by making every person crossing the border pay in to our tax system with that first purchase.
There should be NO Free ride for anyone.
There is a trillion dollar underground economy that goes that will be brought into TAX COMPLIANCE.
Just ask some of the latest international national merger companies like Daimler/Chrysler why they moved their headquarter off shore.
Lets make America the place to come and do business.
When anyone comes for a visit or to stay, lets make sure they contribute to the services provide by our government. FairTax will do just that.
I would hire additional persons to work now, today, if we had the Fair Tax. I do not have the time or energy to keep up with tax records and payments on employees.
Let them pay theirs at the cash register.
The tax code is so entrenched because it has become a Political Instrument of Social Engineering and I want to see the lobbyist out of a job.
Legislation should become law on its merits not on what tax incentive or dis-insentive it creates.
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