Keep Your Entire Paycheck. Make April 15 Just Another Day

Tuesday, April 19, 2005

Flat Tax or Value Added Tax Is NOT the Same As Fairtax

Does the Flat Tax have a chance of passing during Bush's last years in the White House? mary>>

I hope not, Mary, because the flat tax isn't the FairTax. Some differences:

The flat tax does NOT repeal the income tax; Fair Tax. does.

The flat tax, because it is in addition to the income tax, has the same loopholes, breaks for the wealthy and for lobbyists. The Fair Tax has no loopholes; eveyone gets 100% of their paycheck.

With the flat tax. withholding continues since the income tax is still in force. With Fair Tax individuals don't file and businesses deal only with the sales tax, no employee taxes.
The flat tax imposes the same tax burden embedded in prices of goods and services that we have now. The Fair Tax un-taxes wages, savings, investments and increases productivity.

A flat tax would be an improvement over the current system but it would still be open to manipulation by special interests; with the Fair Tax everyone pays the same and can control their tax liability. All taxes are rebated on spending up to the poverty level.

The flat tax taxes exported goods and doesn't tax imports; the Fair Tax makes US the only country in the world with no tax at all on productivity. Jobs will return to the US and we will look great to foreign investors.

The flat tax should reduce interest rates 25 - 35 percent but is neutral toward savings and investment (better than the income tax which is biased against investment and savings). The Fair Tax reduces rates by 25 - 35 % and is favorable to investment and savings.

The flat tax retains the IRS and the annual tax return fiasco. The Fair Tax gets rid of it.

The flat tax would have a positive effect on jobs but does not repeal payroll taxes. The Flat Tax repeals FICA taxes, payroll taxes, social security taxes, medicare taxes and self-employment taxes. Because these costs are embedded in prices, prices are expected to go down from 22% to 30%. It escalates the creation of jobs by attracting foreign investments.

The flat tax lower rates and improved simplicity of returns should improve compliance but the Fair Tax, by taxing everyone, makes compliance mandatory therefore adding revenue from drug dealers, tax evaders, foreign tourists, illegal aliens etc. to the tax base. Government income will be at least the same it is now and possibly a good deal more, which could lower the rate of the Fair Tax in the second or third year.

In the flat tax, business components are hidden as they are with the income tax and could still be embedded in prices. With the FairTax everything is visible and easy to understand and no taxes are withheld.

And yes, we can pass this in the next year or two if everyone helps. A letter to your Congressman asking him or her to support the Fair Tax would make a HUGE difference. The grassroots effort has grown to 10,000 supporters signed up and on individual state email lists and it's growing every day.

Like anything worthwhile, it needs support. But, Mary, they really thought women would never vote, didn't they! The Fair Tax -- if everyone will help -- can pass, too. And its a win/win situation for all.


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