December 28, 2012

FairTax is on what you spend, not how much you earn

Under FairTax, the workers will keep their gross pay. The amount of embedded tax expense of 22% that could roll out of the price of product is more like 17%(my estimation). With the 35% corporate income tax and payroll taxes of 7.65% Social security and 1.9% medicare paid by employers can be removed by business out of the price. 

To point to remember, FairTax is not a reduction in taxation, but a neutral shift from production to sales. The real benefit comes from not having to pay those embedded taxes, the same tax we who work had paid with our wage being taken. The other great benefit is the ability to compete with imports and the removal of about 24% of the cost of services which have an average embedded tax of 29%, making services less, which is offset by the increase of those who pay taxes, the rich who don't have wage taxes but spend a lot more money.

The gross pay increase of a families cashflow will offset the slight imbalance of 5% embedded taxes not removed from the price of product but remaining as the workers pay.

Pensions gain as security of premiums is benefited by the explosion of prosperity within the economy, keeping the flow to pension funds making the pensions sustainable.

The poor will gain from the fact that product like a loaf of bread will not contain embedded federal tax and services will be cheaper even with middle income spending.

All Citizens will benefit from federal taxes not beginning until personal spending goes over the ceiling poverty wage level.

Americans for Fair Taxation 

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