The FairTax will benifit the wealthy! Who Cares?

OK, the FairTax benefits the wealthy, but the average American will benefit far more. The rich and wealthy have to participate in certainactivities to maintain and grow their wealth, and it is these activities that CREATE JOBS and benefit the less fortunate!! Here is what happens when the rich folks have more to spend or save. The first thing they will do is save more money in banks which will increase money available for lending, which will due to the law of supply and demand decrease interest rates which will in tern make it easier for average Americas to get a loan. The next activity that the wealthy participate in to increase their wealth is investing in their own business or purchasing stock in others’ businesses, which will help the less fortunate in several ways. When the wealthy invest money in their own business, JOBS are created, when they invest in other people’s businesses, JOBS are created, and increased investing means the stock prices go up which benefits the average guy’s retirement account. Another activity that most wealthy individuals participate in is charitable donations which indirectly help the less fortunate through the creation of scholarships, new facilities at hospitals and schools, and charitable foundations. Throughthese activities the rich will become richer; however, the benefits to society as a whole will be far greater.

Just because the rich will have a greater benefit from the FairTax then the low and middle income earners is no reason to prevent everyone from  receiving the benefits of the FairTax. What most people that pose this argument fail to realize is that at lower income levels a small benefit has greater value to the individual then a larger benefit at higher income levels. For example, someone who earns $700 a week and currently takes home only $525 will benefit greatly from having that extra $175 every week, and the person who is making $7000 a week and taking home about $4000 will have a lot more to spend but to this individual it will not produce much of a change to their lifestyle. At higher income levels most needs and wants can easily be filled, where individuals at lower income levels are struggling to make ends meet, and any decent increase in income will make a big difference in their lives. The FairTax will benefit everyone and we shouldn’t pass up an opportunity to make a change that will make this country the financial powerhouse that it once was just because some people will benefit more than others. Did you ever think that the wealthy will benefit the most from the FairTax because they are the ones being treated the most unfairly under the current tax system?

I said this before and I’ll probably repeat it many more times, I am not rich by any means and I believe that lower income individuals will benefit greatly when the FairTax is implemented.

Income vs Consumption

The biggest problem people have with the FairTax is the fact that they try to compare the effects on poor and rich folks by using percentage of income affected by the tax. This is not relevant because the same is true with the income tax poor people are used to spending all their money and rich people having more money to save this will never change, a better comparison is how will the FairTax affect the poor person’s bottom line. I believe that this is the only comparison that matters. The example I gave in my Top 10 list comparing the average person and the rich person proves that the rich will still pay more so who cares if they have more to save.

Here is what the average worker is interested in:

If I earn $100 how much of that money will I see in my check? With the income tax about $70-$75. With the FairTax $100.

If I work overtime will I take home less because of taxes? With the income tax that is a possibility. With the FairTax you still keep every $ you earn.

Will I have to pay taxes on essentials like food and clothes? Yes everything will be taxed, you don’t want the rich guy to get all the lobster and designer clothes he wants tax free do you? Everyone including the rich guy will never pay taxes on all purchases up to the poverty level because of the FairTax Prebate, which means your Prebate covers the taxes on everything you spend up the the poverty level and how you spend it is up to you whether its on lobster, ground beef, or cigarettes it’s your choice.      

How will the FairTax affect a home purchase?  There are several differences the first is when saving for a down payment under the FairTax you will need to earn $100 to save $100, with the Income tax you need to earn $133 or more before you can save $100. The second difference is with the FairTax you will have a higher net income making it easier for you to qualify for a mortgage. The third change is that all mortgage payments are made with pretax money which means that you will never pay taxes on principle or interest payments. The only taxes paid on home purchases will be on new homes and any misc services that are used during the process like surveys, inspections, mortgage brokers, real estate agents etc.

What will a new $100,000 home cost me on each of the tax systems if I had to pay cash? With the FairTax A home that Currently costs you $100,000 will still cost you $100,000 and you will need to earn and save $100,000 to buy the new home. Under the Income tax you will still have to save $100,000 to buy the new home; however you will have to earn over $133,000 in order to be able to save $100,000 after taxes. For those people that think that prices will increase the amount of the FairTax(they won’t), you will still be better off with the FairTax because that would mean you would need to earn only $130,000 to purchase the home.      

Nothing is perfect; however, when viewed objectivly there are very few negitive things about the FairTax.

Top 10 reasons why I think the FairTax is better than the Income Tax!

OK, a bit about myself is needed to prevent many common misconceptions of FairTax supporters. I am a below average wage earner and I am currently unemployed and have been for quite a while. I am married with one child, I live in a small 2 bedroom townhouse, and drive a 12 year old mini-van. The reason I thought I should include this info is the many oponents to the FairTax believe that only the wealthy will benifit from and support the FairTax. I believe that everyone will benefit from the FairTax especially lower income earners such as myself. OK, now on to the Top 10 list:

10)Used items are NOT taxed! For me this would include My car, house, most clothes I get my daughter from a second hand store, and everything my wife buys at yard sales. Even though these may not be taxed now we pay for them with after tax dollars. 

9) Edicuationis NOT taxed! For me this would include classes I am currently taking to earn my bachelor’s degree, any classes that my wife takes to improve her auto-cad skills, and ANY school that my daughter attends including private schools if I can ever afford them.

8) Eliminates the IRS. This will save the government 10+billion dollars every year because the FairTax will not require a huge organization of tax collectors because the individual states will collect the FairTax at the register the same way the collect their own sales taxes. Another benifit is that tax collextion points will be decreased by 90% which will mean that it will not take an army of auditors to assure that all taxes are paid.

7) The FairTax is simple, taking up less than 200 pages compared to the 66,000+ pages of the current tax code that is so complicated that the secretary of the treasury can’t figure out how to file his taxes correctly. Seriously, I don’t blame the guy, I used tax software for several years and Ialso had several problems with my tax returns that cost me interest and penilities. None of this would be an issue with the FairTax you simply go to the store and pay your tax at the register, no filing, no audits, no confusion.

6) With the FairTax Everyone is treated the same!! Just because somebody makes more money than I do shouldn’t mean that they have a higher tax rate than Ido, with the FairTax everyone will pay the same rate but the wealthy will naturally pay more because they have more to spend. If this was how the Income Tax was set up we wouldn’t have so many problems with ”creative deductions” and millions of loopholes that allow the rich to actually pay a lower percentage than someone earning far less. Yes they have a larger income and therefore spend a smaller percentage of their income, but that doesn’t matter because they will SPEND more and therefore pay a greater percentage of total taxes collected. A perfect example of this is a rich business owner with a family of 4 that earns $400,000  and spends $300,000 will get $6440 a year for his perbate and would pay $69,000 in taxes on the 300,000 that he spent and would save $106,440 which puts his tax rate at 15.64% of his income. Now we’ll go to an average family of 4 that only earns $40,000 a year who will also get a $6,440 a year prebate and spends all that they have on New items(at this income level this almost never happens) which means he will pay $4,241 in taxes or  10.6% of his income. Now if they spend money on used items, a mortgage, or education the rates will be even lower. It would take 10 of my average family example to equal one of the rich family and the rich guy who didn’t spend all his money still paid $26,590 more in taxes than all 10 average families combined. How can this be bad?

5) American products will be able to compete with foreign products, it is estimated that products made in the U.S cost 20-30% more than products made elsewhere because of the cost of taxes, which is the main cause of outsourcing of jobs and our huge trade deficits. The FairTax will level the playing field imports and domestic products will all be taxed at the register not at every step of production. This will make imported products more expensive than they are now, which will be an incentive for companies to make more products in the U.S making more jobs for everyone.

4) I get to keep all of my paycheck and no longer have to worry about taking too much overtime and ending up in a higher tax bracket and getting a smaller paycheck. With the FairTax there will be no more taxes withheld from your paycheck. This will feel like a instant raise . Yep, you make $1000 a week your takehome pay will be $1000 minus any optional deductions like retirement plans or health insurance. At first there may be some state deductions; however, this will only be for a year or two until the states pass their own version of the FairTax.

3) The Prebate a monthly payment to cover taxes on essential purchases. With the FairTax you will no longer give Uncle Sam a Interest free loan by overpaying taxes and then getting a rebate, but you will get your Prebate at the begining of the month before you even pay a dime in taxes. Ok, some may say why not eliminate the prebate and untax essential item, the best answer to that question is another question what is an essential item. An example, if you exempt food I’ll be buying fish sticks and hamburger helper and rich folks will be buying lobster and Fillet Mignon all tax free. This is not fair or efficient and would lead to many exemptions and complicate the tax collection process and increase the tax rate. The Prebate lets you choose what essential items you purchase. 

2)The FairTax will be the BIGGEST stimulous package the world has ever seen and won’t cost taxpayers a dime. There is currently over $15 trillion hidden in offshore banks to avoiding U.S taxes. When the FairTax takes effect the U.S will become the world’s biggest tax haven which will bring all this money back to the U.S to be invested in building new businesses, expanding current businesses, building factories and creating jobs. This will all happen within the first year causing the biggest economic expansion in the history of the U.S.

and the number one reason I think that the FairTax is better than the Income Tax 

1)EVERYONE PAYS! There are several groups that are untouchable under the current tax system but they ALL spend  a lot of money. These groups include members of mob organizations, drug dealers, prostitutes, illegal immigrants, undocumented workers, and tourists. This is a BIG difference because these groups currently account for over $1 trillion in untaxed  funds; however, they all spend money which would be taxed under the FairTax.

Hello world!

Hello everyone and welcome to my FairTax Blog. I am doing this to help people learn the Truth about the FairTax and how it will benifit every citizen of the United States reguardless of social, political or financial status. I love a good conversation and I will not block and negitive comments; however, please refrain from the use of harsh language that may be offensive to others.