FairTax FACT: No federal sales tax up to the poverty level means progressivity like today’s tax system.
FairTaxFraud: Two things. First, since everybody (rich and poor) get the $187 poverty prebate it’s not progressive. Second, since the FairTax taxes consumption (heat, rent, gas, healthcare) and makes investments (stocks, bonds) tax free then it’s clearly not progressive. The fact is that the FairTax is an extreme burden for the working poor – those who are much above the poverty level but living paycheck to paycheck. Because they typically spend 100 percent of what they make to survive, then they are literally in the 100% tax bracket because all of their earnings are taxed. The FairTax is a penalty for the middle-class because they spend 80 percent of what they make in consumption, they are taxed on 80 percent of their income so they are literally in the 80 percent tax bracket. The FairTax is merely a nuisance for the rich. Since they can save and invest most of what they get, and can invest tax-free, and transfer wealth tax-free they are taxed very little. They only spend 5 percent on consumption so they are taxed on only 5 percent of their income and are literally in the 5% tax bracket. This is by no means progressive or fair. In fact, it is just the opposite. Why should a person at the poverty level have all his money taxed while a billionaire is only taxed on 5 percent? Why is this simple concept so hard for the FairTax idiots to grasp? The alternative No-Tax Plan would make all money that was earned with your muscles or your brain completely tax free. It would only tax money that wasn’t worked for and wasn’t earned.
FAIRTAXER: The logic that the FairTaxFraudsters are using is completely bass-ackwards. In order for you to see that they are wrong, it would help to understand that little fact. I’ll try to explain.
First, the prebate isn’t a flat “$187” as FairTaxFraud would like you to think. The amount of your prebate is determined by the size of your family. Second, progressivity in the FairTax does come from the prebate, but these guys aren’t explaining it to you correctly – which, of course, will make it appear fraudulent. Since the prebate isn’t based on what you earn (it is based on what the average family of your size should spend on necessities) it is considered progressive – as opposed to our currently regressive tax system (yes, FICA taxes are extremely regressive).
The real truth is that the progressivity is a comparative value between what the low income earners spend versus what the upper income earners spend. As a low income earner you may spend 100% of your monthly earnings on necessities, but as an upper income earner you may only spend 5% on necessities. But that doesn’t mean that is how much you ARE taxed, that value is how much you ARE NOT taxed. Here is a table to show you exactly what I’m talking about (NOTE THE “Purchasing Power After Prebate” and the “ACTUAL FairTax Rate After Prebate” columns):
Here is another great resource for understanding the FairTax Prebate that FairTaxFraud doesn’t want you to understand:
The FairTax untaxes income. That should be a given, right? Apparently not to FairTaxFraud. Here’s how it really works: For those of us who “work for a living”, the current system taxes our direct income. For the “rich”, their income generally consists of Stocks and Bonds – they invest, that’s where they put their money. So untaxing ALL income seems the fair thing to do, right? Anyways, the claim made by FairTaxFraud that “the FairTax is an extreme burden for the working poor” is unfounded and ridiculous. What the FairTax does is helps the “working poor” by untaxing their necessities up to the (HHS) National Poverty Guideline (NPG) and by giving back their Federal Income Taxes (almost 1/4 of their paycheck each month) – see the table above for those of us spending $30K and below. This not only increases their spending power each month, it increases their saving power. What FairTaxFraud doesn’t understand is that if the “working poor” spend 100% of their earnings on necessities, then as long as that 100% of spending is below the NPG, 0% (ZERO PERCENT) is taxed – putting them where? In the 0% tax bracket. And as you can see from the table above, it even gives the extreme low income earners (those living in abject poverty) an instant refund for them to spend – and thus stimulate the economy – or save.
It is also important to note the lie purported by FairTaxFraud that “The FairTax is a penalty for the middle-class because they spend 80 percent of what they make in consumption, they are taxed on 80 percent of their income so they are literally in the 80 percent tax bracket“. As you can clearly see from the chart above, middle income earners (those spending between $30K and $100K annually) are effectively taxed between 0% and 16%, respectively. So you can see how the ‘prebate’ makes the FairTax a progressive tax.
If you want to know how the ‘prebate’ works, here are a few other great resources that you should take the time to read. The FairTax really does work to your benefit. Understand it and you will demand it!