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They claim that 22% of the cost of everything we buy is "embedded taxes" paid by all those involved in the production process, which may be true. But the WHOPPER is that if we pass the "Fair Tax" and outlaw all the various other forms of taxes, everyone will magically cut the cost of their goods or services by that 22%, thus largely offsetting the amount of the new 25% sales tax.
:rofl: :rofl: :rofl: :rofl: :rofl: :rofl:
There is NO WAY that every business will cut prices by 22%. I doubt many of them would cut prices at all, just either feeling exceptional, or that they need to make up for all the money they lost in the past years. And, most companies pay very little tax, other than employer contributions to payroll taxes. And what about export goods? Will they suddenly be 22% cheaper for buyers from other countries, or will they be charged, even if they're purchasing wholesale goods or raw materials?
And I presume this will only be a retail sales tax, not on wholesale goods... otherwise, the 25% would quickly snowball to huge inflation. So yes, if you can claim your jet plane or yacht as some sort of business expense, then it will probably be free of sales tax.
What about local and state sales taxes? Those will remain in effect? How about state income taxes, property taxes, etc? If I buy a house, do I have to pay sales tax on it up front?
They ALSO say that the way it's not overly burdensome on the poor is that everyone will receive a "pre-bate" from the gummint of a few thousand dollars, intended to offset the taxes one would pay on maybe $15k or $20K of "essential" purchases, so that they're effectively "tax free." Not sure if they're talking annual payments or monthly, but they'll create some huge agency responsible for issuing a few hundred million checks or online payments. This of course presumes that everyone has a bank account to receive the funds, or a way of cashing checks that doesn't charge a 25% fee. It also assumes that people will be able to budget out that money over time as they make purchases -- if it's annual, I'd look for lots of folks to buy big screen TVs or cars, then try to support themselves paying more for everything than they did before. And who is "everyone"? Adults? Citizens? Wage earners? Heads of household?
While they say they'll eliminate the IRS, they'll have to create another huge agency to collect all the Federal Sales Taxes and enforce sale tax collection requirements. ("We need to audit all your sales and ensure that the proper tax was collected, and that it's all be remitted to us.") As it stands now, state sales tax audits are hugely burdensome... something tells me the Federal ones would be even worse.
This would also lead to a huge black market or grey market of "sales tax free" transactions. Would every eBay seller or roadside fruit stand be obligated to collect and pay the tax?
Even if these fantasy conditions came true, it still really only benefits those who "earn" more than they spend.
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