TAXES VAT, FLAT, 9-9-9, and FAIR WHAT’S THE DIFFERENCE?

TAXES

VAT, FLAT, 9-9-9, and FAIR

WHAT’S THE DIFFERENCE?

CURRENT TAX STRUCTURE

Corporate tax rate - 10 % 15 % 25 % 28 % 33 % 35 % 38 %

Individual tax rate - 10 % 15 % 25 % 28% 33 % 35 %

Payroll taxes - 7 ½ % (employee paid) 7 ½ % (employer paid)

Capital Gains tax 10 % to 15%

Estate (death) tax 50 %

Alternative Minimum Tax - ????????

FEDERAL TAXES

The richest 5% ………. 53%

The next 20% ……… 30%

The next 25% …….… 13%

The bottom 50% ……. 4%

INDIVIDUAL INCOME TAX DISTRIBUTION

“….. apparently there are those in Washington who view politics as a means of getting rich, and who, while generally not dumb enough to accept bags of small bills, are perfectly prepared to take care of contributors and properly feather their beds until the time is finally ripe to jump into the lucrative practice of lobbying on behalf of those they once regulated.

LOBBYISTS

“….. apparently there are those in Washington who view politics as a means of getting rich, and who, while generally not dumb enough to accept bags of small bills, are perfectly prepared to take care of contributors and properly feather their beds until the time is finally ripe to jump into the lucrative practice of lobbying on behalf of those they once regulated.

More often, though, that's not the way that money influences politics. Few lobbyists proffer an explicit quid pro quo to elected officials. They don't have to. Their influence comes simply from having more access to those officials than the average voter, having better information than the average voter, and having more staying power when it comes to promoting an obscure provision in the tax code that means billions for their clients and that nobody else cares about."

LOBBYISTS

“….. apparently there are those in Washington who view politics as a means of getting rich, and who, while generally not dumb enough to accept bags of small bills, are perfectly prepared to take care of contributors and properly feather their beds until the time is finally ripe to jump into the lucrative practice of lobbying on behalf of those they once regulated.

More often, though, that's not the way that money influences politics. Few lobbyists proffer an explicit quid pro quo to elected officials. They don't have to. Their influence comes simply from having more access to those officials than the average voter, having better information than the average voter, and having more staying power when it comes to promoting an obscure provision in the tax code that means billions for their clients and that nobody else cares about."

The Audacity of HopeBarack Obama

LOBBYISTS

LOBBYISTS

Estimated 60 % to 70 % of lobbyists in Washington D.C. are there to get tax breaks for their organizations

Lobbyists manipulate Congress members by contributing to re-election campaigns in order to influence congressional voting.

Congress manipulates the tax code (now over 67,000 pages) to choose “winners” and “losers” – particularly based on lobbyists

VALUE ADDED TAX

No valid proposal has been presented or even voiced

Tax will be levied on products all along the production / distribution chain

Requires corporation to keep track of tax payments in order to get refunds

Will require companies (big and small) to add workers to comply with the reporting requirements without adding 1 penny’s worth of value to the product

Increases the end cost of goods to the consumer

Does nothing to change Income Tax or Payroll Tax. Congress can still manipulate the tax code for special interests.

Every part in any product you buy experiences a VAT burden.

And it's not just the VAT itself, it's also the cost of complying with the tax code, like extra employees to process it.

You pay the VAT levied on every company that makes a part in any product you buy.

No matter where you look, ALL taxes are paid ONLY by the common citizen.

Your income taxes may be small compared to the taxes you pay when you buy stuff.

And if you buy a lot of stuff... well, you get the picture.

Current VAT proposals ADD VAT on top of current business income taxes

VALUE ADDED TAX

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Final Point: VAT administration requires a new VAT Authority, probably more intense than the IRS. The point is, when a tax is levied against a corporation, that corporation just includes the cost of that tax (and the cost of complying with the tax laws) in the price of its product or service. So the customer pays the tax.

This applies at any level, and flows all the way to the private citizen who ultimately pays all the taxes.

Sometimes it's a long chain, but all the links are connected, and at the bottom of any product tax chain, is the private citizen.

So, corporations collect taxes for the government, they don't pay taxes. It's just another way the government gets your money! The embedded cost of VAT expands the more complex the product is.

VALUE ADDED TAX

FLAT TAXH.R. 1040 - 10 co-sponsors

Calls for a single income tax rate of 19% decreasing to 17 % in 2 years

Provides standard deductions based on marital status and family size

Does not address Corporate income

Wage earners still pay payroll taxes - 7 ½ % of income

Companies still pay payroll taxes – another 7 ½ % of wages

Leaves Internal Revenue Code intact – allows for manipulation and loopholes

What is INCOME?

Leaves 16th Amendment to the Constitution intact - allows Income Tax

Intended to be a post card-sized income tax return

1040 INCOME TAX RETURN

HOW MUCH DID YOU MAKE? _______________________

1040 INCOME TAX RETURN

HOW MUCH DID YOU MAKE? _______________________

SEND IT IN !

9-9-9 Plan proposed by Herman CainNo current legislation proposed

9 % Corporate Income Tax - Eliminates the payroll tax Minimal deductions / loopholes Encourages companies to “Buy American”

Internal Revenue Code remains and can continue to be manipulated by Congress for special interests

9 % Personal Income Tax - Eliminates the payroll tax Minimal deductions other than a standard deduction based on family size and marital status

What is INCOME?

9 % National Retail Sales Tax - minimal exclusions could be extremely regressive Hurts those who can least afford it

THE FAIRTAXH.R. 25 - 68 co-sponsorsS-13 - 9 co-sponsors 5-point plan

Personal Taxes

Corporate Taxes

Payroll Taxes

National Sales Tax

Prebate

PERSONAL INCOME TAXES

Deletes ALL personal Income Tax

Eliminates Income Tax filing

Eliminates burdensome record keeping

April 15 becomes “Just another Spring day”

CORPORATE INCOME TAXES

Removes income tax on Corporation profits

Off-shore companies will move their corporate headquarters to US for the tax advantages

Estimated 11 Trillion dollars in off-shore banks will come to the US for the tax advantages

Companies planning on moving off-shore will stay in the US due to the tax advantages

Companies will save on burdensome record keeping

Prices will necessarily drop due to competition

PAYROLL TAXES

Social Security withholding is eliminated - employers will still report wages but will no longer withhold the taxes.

Medicare withholding is eliminated

Saves Corporations 7.5 % of every employee’s wages

Saves Individuals 7.5 % of their wages

Saves self-employed 15% of their wages

Along with the Income Tax withholding, wage earners get an estimated 25 % increase in take-home pay

NATIONAL RETAIL SALES TAX

23 % IMBEDDED national sales tax on all NEW goods and services

15 % to cover FICA and 8% actual sales tax

The only exclusion is Education-related fees (i.e. tuition, fees, etc.)

Lets foreign visitors, illegals, drug dealers, and others in the “underground economy” help to pay for our country’s operation.

Reduces income tax reporting by 90 % - from 400 million to 40 million

Allows collection agent (states, corporations, etc.) to keep 0.25 % of all taxes collected. They become profit centers.

PREBATE

Every LEGAL American household will receive a monthly payment from the Government to cover the “necessities of life”.

Status will be renewed each year

Based on the Health and Human Services Poverty Guidelines

General rule of thumb: $200 for first person and $70 for each additional

Payments to be made at the start of the month via Direct Deposit, Debit Card, or paper check.

PREBATEFiscal Impact: The estimated number of households for 2007 is 113 million. Assuming 100 percent participation of all eligible households, the cost of the prebate would be $489 billion. For comparative purposes, this amount is about half of the amount of tax expenditures (standard deductions, personal exemptions, Earned Income Tax Credit, mortgage interest and charitable contribution deductions, and various other tax preferences) doled out under the current federal income tax system that are repealed when the FairTax is enacted. For 2006, the total of all of these tax breaks exceeded $945 billion (estimate by the Congressional Joint Committee on Taxation,

Family of 4 earning $48,000 per year

$4,000 per month

State/local taxes (6%) - $240Mortgage - 800 Cars (2) - 400Insurance - 400Cell phones - 200Savings - 200 $2,240 untaxed

Taxable purchases $1,760 @ 23% = $404.80 Federal Tax Burden

Prebate $559

$0 Total Federal Tax Burden $154.20 Additional Spendable Income

COMMON OBJECTIONS

Will spawn a huge underground market or black market

Tax will have to be at least 50 %

Never eliminate the Home Interest Deduction

Charities will suffer without the Charitable Deduction

You can’t lower taxes on everybody and still bring in the same revenue

Congress will have both a Sales Tax AND an Income Tax

Must repeal the 16th amendment first

It’s a Tax Break for the “Rich”

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COMMON OBJECTIONS

Will spawn a huge underground market or black market

85 % of all retail sales in the US are via “Big Box” stores (i.e.. Wal-Mart, Sears, etc.)

Computers at check-out control the activity – not individuals

IRS currently admits to at least 25 % non-compliance – unofficial estimates put it closer to 40 %.

States will monitor business license holders to insure compliance

Non-compliance will carry serious fines and penalties

COMMON OBJECTIONS

Tax will have to be at least 50 %

The only negative study to arrive at this conclusion was performed by the Brookings Institute and omitted Food and Medicines from the base due to political “realities”.

When you narrow the base, you necessarily must raise the rate

Independent studies by Harvard University, Boston College, Stanford University, the Heritage Foundation and the Cato Institute all came within + or – 3 % of the proposed 23 %

COMMON OBJECTIONS

Can never eliminate the Home Interest Deduction

By definition, a “deduction” is introduced to reduce the amount of income tax you owe. If you don’t owe ANY income tax, what are you deducting it from?

The majority of Americans do NOT itemize or make use of the Home Interest Deduction.

COMMON OBJECTIONS

Charities will suffer without the Charitable Deduction

Nobody gives to Charity for the deduction

Would you give away $10,000 to get a $3,500 reduction in your tax? Why not just pay the extra $3,500 and pocket the remaining $6,500?

Every available study shows that people are more willing to give to charity when they have more disposable income.

COMMON OBJECTIONS

You can’t lower taxes on everybody and still bring in the same revenue

This is true.

However, you can bring more people into the base.

Foreign VisitorsIllegal Aliens Anyone being paid “under the table”Drug DealersPimps / ProstitutesEven little kids selling lemonade - when they buy lemons and sugar.

COMMON OBJECTIONS

Must repeal the 16th amendment first

Without a current tax plan in place, the US would have no source of revenue. That would be totally unacceptable.

Once the FairTax is in place, repeal of the 16th amendment will be almost unanimous.

Remember, the 16th amendment only AUTHORIZES Congress to implement an Income Tax. It doesn’t REQUIRE it.

COMMON OBJECTIONS

Congress will have both a Sales Tax AND an Income Tax

H.R. 25 includes abolishing the current Internal Revenue Code.

It also sets up a “Sunset Clause” where the FairTax is repealed and the Income Tax is reinstated if the 16th amendment to the Constitution is not repealed within 7 years.

We currently have both with taxes imbedded in everything we buy

COMMON OBJECTIONS

It’s just another Tax Break for the “Rich”

The “Rich” currently are responsible for over 60 % of the purchases of new goods in the US. As they purchase more, they will pay more in taxes.

With the prebate, low and lower middle income families will pay NO FEDERAL TAXES.

COMMON OBJECTIONS

It’s just another Tax Break for the “Rich”

The “Rich” currently are responsible for over 60 % of the purchases of new goods in the US. As they purchase more, they will pay more in taxes.

With the prebate, low and lower middle income families will pay NO FEDERAL TAXES.

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Finally, SO WHAT? What is the purpose of taxes – fully fund the government or declare war on the rich?

If you get all of the entitlements you are eligible to receive AND pay no Federal taxes, why should it matter what anyone else pays in taxes?

WHAT CAN YOU DO?

Visit FairTax.org for more information.

Use the tax calculator to see your anticipated tax burden

Contact your congressman and urge him/her to co-sponsor H.R. 25

(202) 224-3121

Urge congressional candidates to add adoption of the FairTax to their campaign goals

Tell your friends and “LIKE” it on Facebook