I swear its like talking to a wall.
HELLO DO I HAVE YOUR ATTENTION?
Family of 4 at poverty line PRESENT TAX SITUATION
INCOME - $20,500
FICA TAX = 0.0765*20,500=$1568
EIC CREDIT = $4819
TOTAL TAX PAID=$1568-$4819 = -$3248
Family of 4 at poverty line "FAIR TAX" SITUATION
INCOME - $20,500
TOTAL ANNUAL PREBATE=$400*12=$4800
TOTAL ANNUAL SALES TAX (ALL MONEY SPENT) = 0.23*$20,500=$4715
TOTAL TAX PAID=$4715-$4800 = -$85
-$85 IS LARGER THAN $-3248 - THEY PAY MORE TAXES UNDER FAIR TAX
Hello!! Are you that dense!
The earned income credit is the exact same thing as the prebate. People who receive the EIC do so because they do not make enough money... BUT they are still taxed. They more than likely will end up with a negative tax bill, but in the same way, someone making at or below the poverty line is not going to spend all of that $400/month giving them a "TAX CREDIT".
What is so hard to understand about that?
Immie
You're babbling again. let me try it over.
Family of 4 at poverty line PRESENT TAX SITUATION
INCOME - $20,500
FICA TAX = 0.0765*20,500=$1568
EIC CREDIT = $4819
TOTAL TAX PAID=$1568-$4819 = -$3248
Family of 4 at poverty line "FAIR TAX" SITUATION
INCOME - $20,500
TOTAL ANNUAL PREBATE=$400*12=$4800
TOTAL ANNUAL SALES TAX (ALL MONEY SPENT) = 0.23*$20,500=$4715
TOTAL TAX PAID=$4715-$4800 = -$85
-$85 IS LARGER THAN $-3248 - THEY PAY MORE TAXES UNDER FAIR TAX
It is pretty convenient to set your numbers at every dime earned being spent on taxable purchases (which is highly improbable as used items are not taxable) and assume that there would be zero tax liability and in fact a full tax credit under the current system.
By the way, where did you get your $4800 calculation for the EITC? According to this site it would be significantly lower approximately $3500.
http://homepages.nyu.edu/~jf1264/furman_2006_taxreformpoverty_taxnotes.pdf
Also, once again,
IT IS NOT ONLY INCOME TAXES THAT ARE ELIMINATED
Gasoline 18.4 cents per gallon in 2008 approximately $2.20 per fill up. I fill up my tank about 3 times a week so let's say at 10 gallons per fill up we are talking about $300/year
Federal Taxes on cigarettes $1.01/carton in '09. Don't smoke myself so can't estimate that but what is the average # cartons per day for a smoker? $365/year per carton.
Telephones, tires etc. etc. etc. all of these taxes are eliminated under the Fair Tax.
Here is a link from About.com with a neutral analysis of the Fair Tax.
Fair Tax - What is the Fair Tax Plan - Definition of the Fair Tax Proposal
A group known as Americans for Fair Taxation developed the Fair Tax Act of 2003 which would abolish all federal personal and corporate income taxes, gift, estate, capital gains, alternative minimum, Social Security, Medicare, and self-employment taxes. It would replace them with a federal retail sales tax of 23% to be administered by existing state sales tax authorities. The sales tax would not apply to imports, goods used by businesses to produce other goods, or used goods.
The Fair Tax would require the repeal of the 16th Amendment. The IRS would be disbanded and defunded.
Normally, a 23% sales tax would impact the poor the most. Therefore, the Fair Tax Act proposes that a prebate be paid equivalent to 23% of the poverty level. According to the Department of Health and Human Services, the poverty guideline for a family of four in 2008 is $21,200. The Fair Tax act adds an amount to remove the marriage penalty, which raised the income level to $27,380. This means a family of four would receive a check for $525 per month, or $6,297 a year, to cover the cost of the sales tax. (Source: FairTax Prebate Explained)
It seems my numbers for the household of four was outdated. So $6300 per year is a closer estimate again bringing our numbers much closer.
Without even trying your number of -3250 raises when you add in all the non-income taxes that we pay and will be eliminated and a more reasonable figure for the EITC and the figure you came up with as if someone making $20,500 would spend every dime on taxable purchase drops which is preposterous.
Take a look at the Fair tax calculator provided.
Americans For Fair Taxation: FairTax Versus Obama Tax Plan
Earned Income Tax Credit households face the highest marginal tax rates creating a disincentive to work. Payroll taxes impose regressive rates on labor.
FairTax prebate untaxes spending up to the poverty level, literally untaxing the poor. Since taxation is based on consumption, the FairTax allows taxpayers maximum choice as to the level and timing of taxation. The FairTax rewards hard work, savings, and the accumulation of wealth, although all wealth is taxed when spent.
By the way, I don't agree with the statement, "Earned Income Tax Credit households face the highest marginal tax rates creating a disincentive to work". The disincentive to work is laziness and the desire to let the government support you while you sit around and drink beer. I do not believe that people want to work at minimum wage and raise three children. They have an incentive to get out from under the burden of such a life and most work towards that goal.
You can keep pulling numbers out of your ass in order to justify your support of the current tax system which benefits only the rich and politically powerful, but it does not change the fact that most people including the poor, would be better off under the Fair Tax.
Immie
