Americans Take Home Their Whole Paychecks.

1 of 24: This post is the first of a long series of (at least 24) posts that refute what FairTaxFraud wants you to think about the FairTax. We hope to get you the remaining 23 posts within the next few weeks (or maybe months), so please keep watching.

FairTax FACT: Americans take home their whole paychecks.
FairTaxFraud:
There’s no miracle that occurs and wipes out all other taxes as is implied by that statement. State and local taxes and deductions will still be taken out the same as the existing tax plan. Deductions for health insurance, IRAs, 401K’s, union dues, etc. will still be taken out as always. You just get to see a little more of it before you purchase your $5 Big Mac (with 30% FairTax tax added). The real alternative to the FairTax called the No-Tax Plan will allow you to not only take home your entire paycheck, it will let you consume as much as you want and buy anything you want tax free.

FAIRTAXER: The first thing to note here is that the document FairTaxFraud used to gather their information clearly states:

Not only do more Americans have jobs, but they also take home 100 percent of their paychecks (except where state income taxes apply). No federal income taxes or payroll taxes are withheld from paychecks, pensions, or Social Security checks.

That tells me FairTaxFraud is merely trying to discredit a well researched plan with trickery and deceit. Regardless, FairTaxFraud is partially correct there. I mean, there really isn’t any “miracle”, and yes, state and local taxes will still be taken from your paycheck, BUT, you will no longer be taxed on FEDERAL income that you haven’t seen yet; and you will no longer be paying those horrendous FICA taxes. Besides, most of those other deductions are voluntary and have nothing to do with Federal Taxes anyways. In most states, you don’t even “have” to have withholding for state income taxes, and those states, after passage of the FairTax, may shift to a sales tax basis anyway. For those of us “lucky enough” to work for a company, we only pay 7.65% each month to our FICA taxes alone. Our EMPLOYERS ALSO PAY 7.65% to match what we put into FICA. That is a total of 15.3%; which is also paid by those of you who are unlucky enough to be Self-Employed.

So, in answering: Does the FairTax give you your WHOLE paycheck back? Yes it does, with the exception of any voluntary deductions and state/local taxes – giving you 22.65% to 43.3% more than you’re getting now, depending on your tax bracket and whether or not you’re self-employed. You do the math! It looks pretty cut & dry to me.

I feel it is also worth noting that the National Small Business Association Endorses FairTax. So if you own or work for a Small Business (I believe most of us do nowadays) it would be in your best interest to get your employers or employees on track with the FairTax.

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Posted in Fact, FairTaxFraud, FRAUD, Myth
6 comments on “Americans Take Home Their Whole Paychecks.
  1. The title is a bit miss leading As you only gain the loss of the federal taxes. Yes it is explained in the finer print. How is it presented in the fair tax pamphlets? I ask that because if you are presenting pamphlets, cards, banners or whatever and they do not have the explanation on it, then Fair Tax.org is giving the opponents the ammo they need, Also I would like to know the source for the these percentages. “giving you 23.65% to 43.3% more than you’re getting now, depending on your tax bracket and whether or not you’re self-employed.” My total federal with holdings are only 17.94% and I am single and make 35k per year

    • fairtaxer says:

      Thanks for your comments, Dennis. First, the title comes directly from the “Thumbnail Sketch of the FairTax”. I agree, it can be a bit misleading, that’s why it’s been criticized by others and why I’m refuting those criticisms here. We’re not presenting any pamphlets here, but FairTax.org does have this information in PDF format (here) if you’d like to read it.

      The percentages come from the Payroll Tax (FICA: 7.65%) (WIKILINK) and the Income tax (15%)(WIKILINK). If you are gainfully employed by a company, you will generally pay as little as 23.65% (7.65% + 15%). And if you are Self-Employed you will pay as much as 43.3% (15.3% +28%). I chose low to average numbers, because I felt those were probably going to be more accurate with the people I know. I hope my numbers are correct, if you find a discrepancy, please let me know and I will fix it.

  2. Linda Gayton says:

    Good idea! I was wishing the facebook FairTax 2012 group had a way to search topics.
    Off the subject: when I logged in using the facebook log in, WordPress asked for permission to access all my info, send emails, etc. I don’t use apps with FB because of that. If I log in using the blog’s WordPress, will it automatically access my info, or just what I give?

    • fairtaxer says:

      Thanks Linda. Yeah, I can understand that. I use the Facebook connect, but that doesn’t mean everyone should feel safe with it. I believe if you create a WordPress account, you can enter whatever information you like and only the information you designate will be public. There is a search feature in the Facebook groups, but it shows up intermittently for me and sometimes it doesn’t even work. I’m not sure what they are doing with it, but I assume it is still a new feature that they are working to improve. Thanks for your support Linda, it is greatly appreciated!

  3. Your low number of 23.65% is miss leading. For those that earn $8,375.00 or less after standard deduction.the low % would be 17.65% (10%+7.65%). For someone earning $35,000 per year after standard deduction, the rate would be 21.5% (13.85%+7.65%). For someone earning $50,000 per year after standard deduction, the rate would be 23.3% (15.68%+7.65%). Also your 15% is incorrect as the first $8.75.00 is taxed at 10% then everything up to $34,000 is taxed at 15%. 50k is the medium US household income, therefore the low rate should be 23.3%,to be more in keeping with the medium household income (the average household). Even this might still make the low rate a bit high as 50% of the population makes less than $33,048 (2008 stats. scroll down on the same wikilink you used for tax table). When I look at my payroll statement, my total federal with holdings are only 17.94% (federal income tax, FICA and medicare). I am sure my payroll situation is not unique. From outwards appearances, I seam to fall within a category of people that has the potential to be harmed by the fair tax. Yes I get the 17.94% of my check back in my pocket and yes I get a prebate. but the two combined will not cover the Fair Tax I will be paying. on everything I purchase and the increase in rent . (rent discussion on fair tax 2012 FB page) Conversations such as this are very stimulating. Personally I think I have learned more about economics and taxation in the 2 weeks that I have been posting on FT.org and FT2012 pages, than I have learned over my entire life. Thanks for the mental stimulation.

    • fairtaxer says:

      I understand, Dennis. I learn something new about it everyday too. I chose those numbers because they appeared to represent the majority of people I know, but you’re right, there may be groups of people who make far less that may not benefit. But from what I’ve seen and read, even they benefit, because the FairTax promotes savings – something the current tax system doesn’t do. Did you see the link that Walt posted in FairTax 2012 group? It’s got some great charts that show your spending power from as little as $15,000 up to $50,000,000. Check it out: What You Will Actually Pay Under the FairTax: http://whatyoupayunderfairtax.blogspot.com/

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