This is about the so-called 'FairTax' which I, more accurately, call the 'UnFairTax'.
I have written about this before
http://www.democraticunderground.com/discuss/duboard.ph... but since Huckabee is pushing it, and gaining in the polls by doing so, just to reiterate why it is a bad idea, in sum
1) The UnFairTax is not fair
2) the UnFairTax is not progressive
3) the UnFairTax increases taxes on the poor
4) the UnFairTax is a huge tax cut for the rich
5) the accuracy of the promoters at www.fairtax.org is not to be trusted
details
1) Proof follows, but the facts of #3 and #4 show that it is unfair. Hence, I call it the 'UnFairTax' rather than the 'FairTax' which is a lie in itself.
2) They show a table here -
http://www.fairtax.org/PDF/FairTaxPrebateExplained2007.... That table shows a 0% rate at $27,380, 11.5% at $54,760, 17.3% at $109,520, 20.1% at $219,040, 21.6% at $433,080, and 22.3% at $876,160. First, even by their own table, the progressivity from $219,040 to $876,160 is negligible. Before Reagan flattened it, the income tax rates went from zero to 70%. That was a truly progressive tax. Second, if the chart was extended to cover a CEO like Cheney, who made $25 million in one year, or Michael Eisner, who made over $200 million, then it would be just as flat. In fact, it would likely go down since richer people would be investing much of their income rather than spending it and paying tax. It seems that there would be no sales tax on the purchase of stocks and bonds, nor on real estate, other than new construction. So Ted Turner could buy 10,000 acres in Montana, tax free. One of the Walton's could buy CBSnews tax free, etc.
The following should demonstrate points #3-5, from their website
http://www.fairtax.org/PDF/FairTax-Fundamentals_and_fac... "Consider a middle-aged couple with two children earning $20,000 per year compared to that same couple earning $500,000 per year. In switching to the FairTax, the low-income couple’s FairTax rate is only 1.5 percent versus 11.0 percent under the current system. The high-income couple’s FairTax rate is 20.5 percent versus 35.6 percent under the current system. The low-income couple gets an 86 percent cut in their average remaining lifetime tax rate, whereas the high-income couple gets a 42 percent cut."
I have no idea where the 11% number comes from (it is possible that it is from an old study, before the child tax credit was jacked up to $1,000, but then, they oughta update their website instead of pushing misinformation.). It is wrong. It is light-years from the truth. Currently the $20,000 a year couple pays NO income taxes - zero. In fact they get an EIC (Earned Income Credit) of $3,641. They do pay $1530 in payroll taxes, assuming all of their income is wages (and above-board. Face it, many people have side jobs of cutting grass, or painting, or other contract work or a hobby (antiquing or arts or crafts) that they get paid in cash and never report or pay taxes on). Their employer also pays another $1530 in their name, and although that could goto them in wages, to a degree that tax is NOT coming out of their pocket. Even including that, their net tax is ($581) or -2.9%. I repeat, I have no idea where the 11% figure came from, but it is way off.
The figures for the $500,000 couple probably cannot be trusted either. They are also much harder to figure since that couple doubtless itemizes deductions. Taking their numbers though, that rich couple gets a tax cut of $75,500. They claim the poor couple gets a tax cut of $1900, and use the patented "Bush-lie" to try to make $1900 look like it's bigger than $75,500. See? $1900 is 86% :o and $75,500 is only 42% :cry: Oh, those poor, abused rich people, hurt by that progressive UnFairTax :eyes: :nopity:
The fact that the lower income couple actually would face a tax INCREASE of $881 means that fairtax.org is even more full of sh*t. Like Bush's tax cuts and Reagan's tax cuts and Forbes 'flat tax' plan, the UnFairTax is primarily just another way to reduce the taxes that rich people have to pay. Remember to call it what it is - an unfair tax.