This is as Interesting as Taxes Get
The fact that so few people understand the Fair Tax is sad. What’s even sadder is that people with agendas capitalize on this ignorance. Namely, they capitalize on the misconception that the Fair Tax will raise the price of everything you buy by 23%. As boring as it sounds, I understand how important tax reform is, so I’m typing this in hopes to educate random people on the subject.
How the Fair Tax Works
First, understand that businesses don’t pay taxes. Every single expense a company incurs increases the final price to the consumer. The $20 million of research that led to the creation of the Fair Tax has shown that 22% of the price of everything we buy covers embedded taxes. That being said, the first thing the Fair Tax does is eliminate the corporate and personal income tax. After that, the $100 you spent on groceries drops to $78. Then, the Fair Tax implements a 23% retail level sales tax. If you do the math, the new price jumps up to $97, but let’s just say it comes to $100. Finally, the Fair Tax implements a “prebate” check. Every household is reimbursed in advance for the taxes they will pay on life necessities (food, clothing, and shelter). Obviously, the “prebate” is adjusted by the size of the household and the cost of living at your location.
For instance, let’s say a household consists of one person living in Mudguppy, Texas. The “prebate” calculation determines that this household’s annual cost of food, shelter, and clothing is $10,000. At the beginning of every year, he would receive a check for $2,300 (.23 x $10,000) ensuring that he would not be taxed by paying for life necessities. Neither will you.
Benefits of the Fair Tax
1. You don’t have to maintain cumbersome records of your income, investments, alimony payments, or whatever for your tax return. April 15th becomes just another day.
2. You get to keep your entire paycheck.
3. Politicians won’t be able to exploit ignorance of the tax code to get votes.
4. The government won’t be able to use the tax code to write social policy and influence our lives.
5. Lobbyists won’t be able to make the tax code ever more complicated to serve their own interests.
6. Criminal organizations will have to pay the tax.
7. It completely eliminates taxes on poor people.
8. You get a stronger voice to the government. For instance, let’s say you don’t agree with the war. You could choose only to spend money on life necessities and not pay any taxes to support it.
9. It would make the U.S. the number one tax haven in the world. Of 400 international corporations interviewed in doing the research for the Fair Tax, 60% said they would transfer or begin new operations to the U.S. if we passed the Fair Tax. The other 40% said they would transfer their corporate office to the U.S.
10. The estimated 22% of embedded taxes does not include the $500 billion spend on tax compliance, so prices may drop even more than expected.
11. Becoming the number one tax haven would strengthen the U.S. dollar. For example, one of the reasons the price of gasoline shot up so drastically from 2001 to 2005 is because of the weakening of the U.S. dollar. Foreign countries started demanding more dollars for their oil. After the Fair Tax, our new economy could allow us to demand more oil for our dollars.
And most compellingly,
12. $13 TRILLION DOLLARS!!!. That’s how much American money is kept out of our country by our oppressive tax system. Think about how much money that is. That’s 13,000,000,000,000 dollars that American businesses keep in foreign economies because of favorable tax treatment there. If that $13 trillion were to come back into the U.S., our economy would be unstoppable. It costs about $100,000 to create a new job. Do the math and you’ll see that $13 trillion translates to 130 million new jobs! Instead of worrying about keeping our jobs right now, you’d have to hide under your bed not to find a good one.
I’ll close with this statement. If you’re still skeptical, just understand that we will see the Fair Tax. The question is where we will see it. While we wait, some nation in South America, Europe, or Asia may pass it. As soon as that happens, we forever lose the first mover advantage. Those 400 international corporations, they’ll move to wherever the Fair Tax is first enacted, and they’ll have no reason to relocate afterwards. That $13 trillion of American money will move to wherever the Fair Tax is enacted and will have no reason to relocate afterwards. We will forever be playing catch up, asking, “Why didn’t we do that? It was our idea after all.” Just something to think about when choosing the issues for the next election.
How the Fair Tax Works
First, understand that businesses don’t pay taxes. Every single expense a company incurs increases the final price to the consumer. The $20 million of research that led to the creation of the Fair Tax has shown that 22% of the price of everything we buy covers embedded taxes. That being said, the first thing the Fair Tax does is eliminate the corporate and personal income tax. After that, the $100 you spent on groceries drops to $78. Then, the Fair Tax implements a 23% retail level sales tax. If you do the math, the new price jumps up to $97, but let’s just say it comes to $100. Finally, the Fair Tax implements a “prebate” check. Every household is reimbursed in advance for the taxes they will pay on life necessities (food, clothing, and shelter). Obviously, the “prebate” is adjusted by the size of the household and the cost of living at your location.
For instance, let’s say a household consists of one person living in Mudguppy, Texas. The “prebate” calculation determines that this household’s annual cost of food, shelter, and clothing is $10,000. At the beginning of every year, he would receive a check for $2,300 (.23 x $10,000) ensuring that he would not be taxed by paying for life necessities. Neither will you.
Benefits of the Fair Tax
1. You don’t have to maintain cumbersome records of your income, investments, alimony payments, or whatever for your tax return. April 15th becomes just another day.
2. You get to keep your entire paycheck.
3. Politicians won’t be able to exploit ignorance of the tax code to get votes.
4. The government won’t be able to use the tax code to write social policy and influence our lives.
5. Lobbyists won’t be able to make the tax code ever more complicated to serve their own interests.
6. Criminal organizations will have to pay the tax.
7. It completely eliminates taxes on poor people.
8. You get a stronger voice to the government. For instance, let’s say you don’t agree with the war. You could choose only to spend money on life necessities and not pay any taxes to support it.
9. It would make the U.S. the number one tax haven in the world. Of 400 international corporations interviewed in doing the research for the Fair Tax, 60% said they would transfer or begin new operations to the U.S. if we passed the Fair Tax. The other 40% said they would transfer their corporate office to the U.S.
10. The estimated 22% of embedded taxes does not include the $500 billion spend on tax compliance, so prices may drop even more than expected.
11. Becoming the number one tax haven would strengthen the U.S. dollar. For example, one of the reasons the price of gasoline shot up so drastically from 2001 to 2005 is because of the weakening of the U.S. dollar. Foreign countries started demanding more dollars for their oil. After the Fair Tax, our new economy could allow us to demand more oil for our dollars.
And most compellingly,
12. $13 TRILLION DOLLARS!!!. That’s how much American money is kept out of our country by our oppressive tax system. Think about how much money that is. That’s 13,000,000,000,000 dollars that American businesses keep in foreign economies because of favorable tax treatment there. If that $13 trillion were to come back into the U.S., our economy would be unstoppable. It costs about $100,000 to create a new job. Do the math and you’ll see that $13 trillion translates to 130 million new jobs! Instead of worrying about keeping our jobs right now, you’d have to hide under your bed not to find a good one.
I’ll close with this statement. If you’re still skeptical, just understand that we will see the Fair Tax. The question is where we will see it. While we wait, some nation in South America, Europe, or Asia may pass it. As soon as that happens, we forever lose the first mover advantage. Those 400 international corporations, they’ll move to wherever the Fair Tax is first enacted, and they’ll have no reason to relocate afterwards. That $13 trillion of American money will move to wherever the Fair Tax is enacted and will have no reason to relocate afterwards. We will forever be playing catch up, asking, “Why didn’t we do that? It was our idea after all.” Just something to think about when choosing the issues for the next election.