FairTax explained - a 2 minute introduction

What is the FairTax? How does it work? Find out in just a couple minutes. It's much simpler than the IRS.

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Nonprofits & Activism

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• FairTax
• explained
• introduction
• intro

[RooferHoofer]

Fairtax is a fairy tale -- a farce. It's all lies, it's all bullshit. Sure, you can have a national sales tax, instead of all these other taxes. That part is true.

But it can't be anything close to 23%. Try 60-90%. That's right -- a 90% sales tax, and Fairtax leaders know it.

They know it, that is why they have avoided hearings under oath for 13 years. That's why it's all hush hush and secret. That's why there is no real "research" on it

[fairtax2010]

@RooferHoofer Well, I've seen the calculations and assumptions for the 23% rate, and they seem pretty solid. The Brookings Institute, which is a center-left thinktank (and not a proponent of the FairTax) says the number would be 31%. I'm not sure who you are citing with the 60%-90% number, so I can't give any credibility to that at all. The 23% number is right, but I'd be happier with a 31% sales tax than the mess we have now!

[FairTaxisaLie]

The math error of this video is evident in the graph at the :59 mark--if you get 100% of your current wages (nothing deducted),that is STILL an expense for the business.That money you are getting is part of the 22% of the left hand column. Therefore, the only savings to the business would be about 3-7% (no matching SS and no corpTax). ASsuming the best case (7%), upon adding the tax in prices would go up to .93*1.3, about or about 121% of now. These are rough estimates, but the concept is clear.

[FairTaxisaLie]

@masnick Now, think about the income taxes-- employees pay them in AT DIFFERENT RATES. Some pay 0% or less once they get a refund, some pay 30+%. Prices go up (estimates range from 10-25%) when the sales tax is added. Those paying 0% now lose. Those paying 30% win. This idea is shown in Fair Tax Org's own research, at tinyurl 593htl, page 30 on, esp. Table 13 years 7-8. They state clearly that those making from $15k to $150k a year "would lose" (would pay more in taxes on average than now).

[FairTaxisaLie]

@masnick Businesses CANNOT be exempt under the 23%i/30%e rate, the method used top calculate the rates included business, therefore if businesss are excluded, for the tax to be higher, the rate has to be higher (somewhere in the range of 28-35%).

"they charge you at the point of sale. You end up paying it." this is false-- the employee pays it from his wages, you pay his wages. the businesses charge you, the cust., for WAGES, they cannot know what the incometaxes are, that is included in wages.

[FairTaxisaLie]

@masnick If you get it, it is still a cost for the business.Prices go up. This shows the trick of the "Fair"Tax-- the middleclasses would get to keep the little bit they pay in income/SS (0~15%) and the wealthy would get to keep what they pay (17~35%), and prices would go up when the FT is added (because the business still has most of the tax costs-- it is in the money they give to you instead of collect and send in-- either way it costs them. When the sales tax is added on, the midclasses lose.

[masnick]

@FairTaxisaLie Re: your discussion about paychecks: If the employer doesn't have to withhold your money and give it to the Feds, then you get it. They company agreed when they hired you to pay you a certain amount per year; either you get it all and pay taxes when you buy something, or the Feds take a portion before you ever see it and it's up to you to do all the paperwork and file a return, hoping your math is right. Which is easier for you?

[masnick]

Sorry; perhaps you missed the part about where businesses are exempt. To answer your question ("WHERE IS THE MONEY NOW?"), you are already paying it. What that means is that businesses do not pay taxes now. They write the check, but they charge you at the point of sale. You end up paying it. Don't believe me? Check out Southwest Airlines' new statement on taxes and fees you're paying.

[FairTaxisaLie]

The math mistake in the video is evident at :57, and it is the same mistake many fans of the "Fair" Tax make-- counting the same monies twice in the left hand column. See that "cost of labor"? That either INCLUDES most of the 22% he adds on at the top of the column as "federal taxes embedded"-- or the other column should have a 45-50 cost of labor if your employer gives you your WHOLE paycheck. The way to understand this is to see taxes as coming from employees wages, NOT as a separate item.