What Flat Taxers aren’t being told

There’s a fundamental issue I keep running into when talking with pro-flat taxers. It seems most people understand that “a flat tax with no deductions” is the most fair to everyone. The problem is that most pro-flat-taxers are referring to their own (or a friend’s) “flat tax” plan and know very little (if anything) about the actual Flat Tax Plan (S173) that is already in front of Congress.

The biggest problem is that when one person refers to “a flat tax” and another person refers to “a flat tax”, the two people *think* they’re talking about the same plan, when in fact they’re not. One person is often talking about their adaptation of what they think the flat tax is (or should be), while the other may be talking about a completely unrelated and different version of a flat tax.

Unless both people are on the same page, any references made are irrelevant to each other. So this post is to help put everyone on the same page. You can talk about YOUR VERSION of a flat tax all you want, but understand that unless you make that distinction, anyone who is even partially informed will think you’re referring to the ONE flat tax that is currently in front of Congress.

The ONLY flat tax that truly matters is the ONE flat tax in front of Congress

That flat tax (S173) calls for a 17% income tax. BUT!! What the drafters of the flat tax fail to tell you is that the flat tax rate DOES NOT INCLUDE PAYROLL TAXES (that’s another 7.65%; or 15.3% if you’re Self-Employed). That means the Gov’t will TAKE 24.65% of YOUR paycheck (32.3% if you’re Self-Employed). That is an ASTOUNDING 1/4 to 1/3 of YOUR MONEY!!!

There are a few problems with what PolitixGal said:

  1. The Flat Tax (S173) is actually 17%.
  2. The Flat Tax (S173) DOES NOT include SS/MC (FICA) Taxes. So, both you and your employer are still stuck paying Payroll Taxes.
  3. The Flat Tax (S173) already has numerous deductions built in; such as the “BASIC STANDARD DEDUCTION” which treats people differently and includes a hefty Marriage Penalty.

Oh, but there are plenty of excuses reasons, Daggy:

  1. The Flat Tax (S173) does NOTHING to remove the Corruption. It is still just an income tax. It leaves the corrupt IRS in place, does not Repeal the 16th Amendment, and does nothing to ensure Politicians, illegals, or the underground economy pay tax.
  2. Our Current Income Tax system started flat (See Revenue Act of 1861).
  3. Our Current Income Tax system was “re-flattened” by Reagan in 1986.
  4. The Flat Tax (S173) already includes loopholes AND it does nothing to prevent future loopholes.
  5. The Flat Tax (S173) treats the rich as if they are poor and the poor as if they are rich.
  6. The Flat Tax (S173) forces Employers to hide their portion of Payroll Taxes by reducing Employee Pay.

A Little about the FairTax

  1. The FairTax is a fresh new idea that has never been used in any other Country. It was designed, researched, and developed by U.S. Economists, to work specifically with the U.S. Economy.
  2. The FairTax is a single-rate (“flat”) tax on the Consumption of NEW goods/services. It DOES NOT TAX USED GOODS.
  3. The FairTax returns (on average) 22.65% in taxes back to you on top of providing you with additional money to ensure you do not pay tax on your necessities.
  4. The FairTax rate of 23% INCLUDES payroll taxes and there are NO exemptions, NO exceptions.
  5. The FairTax Prebate ensures that NO US Citizen pay taxes on their necessities.
  6. The FairTax will not only ensure the 47% pay their “fair share”, it will also ensure POLITICIANS pay their fair share.
  7. The FairTax Prebate ensures ALL products remain taxable; removing the ability for politicians to open future loopholes.
  8. The FairTax taxes everyone equally at the register; while ensuring nobody pay taxes below the poverty level.
  9. The FairTax allows the tax burden to be placed where it always ends up anyways: On the consumer.

There is more about the FairTax that Flat Taxers would love, they just need to understand. Here are some links to help:

fairtax.org/flatfaircompare – Comparison Chart of Flat Tax & FairTax

fairtax.org/flattax – The FairTax (real reform) vs. the flat tax (more of the same): A comparison
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I'm the grandson of an Underwood and have been mapping my Underwood Family Tree for a couple years now.

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Posted in FairTax, flat tax, HR-25, S173
One comment on “What Flat Taxers aren’t being told
  1. FairTaxer says:

    Here is some additional information on “The New Flat Tax” per The Heritage Foundation.

    “The New Flat Tax applies a single tax rate, about 28 percent, to wages and salaries and related benefits after subtracting all net saving.”

    28%?!?! WOW!!! The FairTax Rate is only 23%, and that is before you’re given the prebate.

    The existing tax system is manifestly indefensible, especially in its complexity and its drain on economic vitality. The tax system’s complexity is inflicted on taxpayers of all walks of life. Low-income citizens must navigate the enormously complex Earned Income Credit.

    The individual tax contains two non-refundable credits—a new credit for purchases of health insurance, and the existing Earned Income Credit for low-wage workers.

    Did they really just do that? In their intro, they tell you how “enormously complex” the EIC is, and in a following paragraph they tell you it is being kept in their New Flat Tax system.

    The New Flat Tax has only three deductions, which are necessary for maintaining economic neutrality—for charitable contributions, for higher-education expenses, and for home mortgage interest.

    Three Deductions = Three Million Deductions; because opening the door for one deduction opens the door for virtually EVERY deduction. The FairTax prevents deductions by ensuring Charitable Organizations, Education and ALL USED GOODS are untaxed, and by ensuring Home Ownership is more affordable. FairTax = 0 Deductions.

    After a brief transition period all business activity, including corporate, will be taxed at the same, low rate that applies to individuals.

    Ahhh… Hidden Taxes. That’s not very “transparent”, is it? It appears the Heritage Foundation hasn’t learned much about hidden taxes. Corporations don’t pay taxes and the FairTax understands how hidden taxes breed opacity in the tax system.

    A rate of 28 percent is comparable to or significantly below the typical rate facing an individual or family today. A working family today is subject to a 15.3 percent payroll tax rate, plus either a 15 percent or 25 percent individual income tax rate, for a combined rate of 30.3 percent or 35.3 percent.

    THAT is a flat out falsification. Their 15.3% is actually 7.65% for most individuals. Although there are many self-employed individuals who are subject to 15.3%, if you have an employer, you’re only paying 7.65% (your employer pays the other 7.65%). In such cases, you’re only being subjected to 22.65% or 32.65%. Being that the majority of the workforce is in the 15% tax bracket, the New Flat Tax is looking to increase the taxes on those lower income folks.

    Current law hits low-income workers with the full weight of the Federal Insurance Contributions Act (FICA) payroll taxes. The New Flat Tax folds FICA into the single tax system. It then eliminates all income tax on low-income workers through the health insurance tax credit described above (a $3,500 non-refundable tax credit for families, $2,000 for singles) and the current-law Earned Income Credit as part of the overall system of financial support for low-income Americans.

    This New Flat Tax System is chock full of bureaucracy and red tape. A “(a $3,500 non-refundable tax credit for families, $2,000 for singles)” means there is still a “Marriage Penalty”. FairTax offers a very simple prebate where every adult receives the same amount and every child receives the same amount.

    There is much more about the New Flat Tax System that goes against everything a tax system should be. Don’t let them fool you into believing their hype.

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