This is fantastic. The Fair Tax website should really have a calculator to show exactly what you are showing. Another favorable benefit of the Fair Tax Act to consider: Eliminates the corporate tax, so those taxes that would get passed on to the consumer are gone.
@@JHEntertainment98 Price gouging has more to do with volatility, instability and uncertainty, ie the huge upswing in gas prices, rise in wages, lawless looting/theft, uncertainty surrounding Covid workplace practices, etc. Companies aren’t going to take the risk of losing money so they hedge by raising prices.
@@joshhoward1289 that has nothing to do with price gouging. Corporations see they can charge more and people will still pay so they just keep upping them.
That's why sitting president say it will kill middle class because now more individuals will go out to make more money because you are not penalized like you are with the current taxation. I can read thru the lines. Many turned down great opportunities cause they didn't want to lose their food stamps
Ok so I have one question. The fair tax act would be across the board for both goods and services, correct? Sending a child to daycare would now fall under this tax- correct? So let's say you have two children in daycare you would now have to pay this 23 or 30% sales tax in addition to the daycares fees? If that's the case I don't see how one would have more buying power if you're paying tax on things like services which didn't exist before. Please help me make sense of this...
So this bill will add a 23% tax to everything. Including things like food, bills, doctors visits, and medicine. So how exactly am I going to end up with more money?
Can you do an example for very impoverished individuals such who only receive disability? For example if a person only receives social security of about in total 10k-12k per year. What rebate would they get and spending power?
The prebate you get doesn't depend on what you bring in but on how many people you have in a household. A single guy making 20k a year gets the same prebate as a single guy making 200k a year.
I've been looking for some good videos that describe this so I can share it with others who are unaware of this. I'm all for it, as a minimalist, who's single, and I make around 75k Gross a year this would be a boon for me. Although I'm still curious how this may affect low income families or single parents. Perhaps they could overhaul food stamps, or create a necessities card/program for food, hygiene, and medical products. I'm also curious about people on fixed incomes like SSI, IRA, 401k, disability, ect.. Many of them are already struggling due to inflation, supply and demand shortages, and insane interest rates. Not to mention what was brought up in some other videos was what about US citizens who are living abroad in countries outside the US but still making a US income? I like the overall idea of the Fair tax act, but it also leaves a lot of questions and what if scenario's as well.
Hi Travis. Interesting video. I think the situation would be different for a person who is retired and derives a significant amount of income from long term capital gains and qualified dividends in a non-qualified account. Most of this income would be taxed at 0% or 15% under the current tax code with no tax applied to consumption. In addition, the retired person would not be paying FICA. It might be worth a second look. Speaking of FICA, you had a person earning $10MM in ordinary income paying $154K in FICA in one of your examples. I believe only $160K of ordinary income is subject to FICA tax. Shouldn't the FICA number be much smaller for a high earner?
This is going to be an absolutely huge tax hike on people who are purchasing big items (homes, land, vehicles, etc.) that are not currently subject to both a national sales tax and state, and in some cases local taxes. This tax system disincentives owning real assets. How about we stick to the original federal tax scheme, i.e, no direct taxes on individuals and limit tax collection to tariffs, duties, and excises on international trade? Seems way simpler and also encourages economic activity...unlike both the income and "fair" tax systems.
@@TravisSickle not really I dont think. Unless there is still a business write off system baked into the new tax system, not only will the purchase price of everything be increased by 23% but the cost of production will increase by the same amount, leading to a real tax rate of 46-60% across the board. Can you go into how this would affect the macro economics of supply and demand?
@@Joseph-eh4rs it looks as if it will screw everybody, regardless of income level. The real issue is that the federal government, before the questionable income tax amendment was passed, was prohibited from any kind of direct taxation. And, the only reason a tax cab be imposed to this day is to pay the debts of the government; not to collect revenue. This tax, if not directly proportioned to the debt, is more illegal garbage coming out of Washington
We’ll because there would be no taxes on a lot of the production and distribution of products, companies would get some breathing room to lower prices competitively so it wouldn’t be as bad as you think
What about those of us that are retired? Wouldn't we be impacted the most since we already paid taxes on our money (ROTH) and still have to pay the 30% (Sorry 23%)?
No tax on pre-tax accounts, extra income etc, plus the rebate would offset some of the Roth taxes assuming you’re taking that amount out each year. It’s the same as groceries or housing when you isolate one variable it may not look better but overall it may.
@@TravisSickle Thank you for your answer, but I still believe those of us that have already paid taxes on our retirement savings and have no income would get a very poor deal. If there is no more tax on Pre-tax savings, it would be no different than ROTH, right? So I would have paid ~20% converting my IRA to ROTH for nothing... I believe they need to do some more thinking on this solution. Wold they also do away with Capital Gains?
@@MyWasteOfTime yes. Cap gains would be gone. The type of situation you’re talking about actually happens all the time today. Taxes overall are way too high and so convoluted today that most don’t realize the amount they’re paying or how to navigate them. The base cost of goods would likely fall as well.
Also, looking at your 50k calculation. You used a household of 4 for the "Fair Tax" calculation and MFJ for the current tax calculation to determine the standard deduction. What about the child tax credits (assuming 2 in the household are children) and the EIC? Calculation looks much different, even assuming the employer gives you your share of employer paid payroll taxes. Which they wouldn't.
This is very valid. Two kids would be $4,000 credit. Plus an EITC of $1,159. As tax credits I think this would go directly to their spending power…so add $5,159. Still better off with Fair Tax. On the flip side, these numbers are assuming you spend every last dollar on taxable items for the fair tax. And, he didn’t mention that there would no longer be corporate taxes which are typically passed on to the consumer. Regarding the payroll tax, he has to make an assumption. These are paid as a direct result of having employees so it is at least a fair assumption to pass this on to the employees. Will they? Who knows, but be fair to Travis. It is a reasonable assumption.
Yeah that is a pretty solid point. There are some assumptions made in the math here. That make it seem like you technically have more spending power. The employer paid taxes do not necessarily come back to the employee and there would be no reason to either. I am not against it inherently but it does shift the burden of taxes onto those who are consumers. Inherently this would just further widen the gap of income inequality without some off setting measures. As he said in the video if you don't spend it and save a significant portion you come out way ahead.
Lets be honest.... .The Fair Tax is just more crap from the folks who did away with your pension and "gave you" something less (the 401K and good luck). The same folks who did away with your lifetime healthcare and "gave you" something less (cost sharing or an allowance for you to outright buy it yourself and good luck). It ain't rocket science. There is nothing elegant or sophisticated about it. Its all "do away with" and give you something less and good luck. AND, it ain't like they had to do it. The money is and has always been there. Its just gone into skyrocketing record executive compensation and record corporate profits. And, here they come again is all it is.
If the employer doesn’t increase pay due to employee tax savings, the savings will likely be passed on to lower prices to customers. So maybe workers get the tax savings, or maybe prices are lower, or a combination of the two. Either way it’s better because you get your whole paycheck. It encourages people to be thrifty and save.
@Frank B there is no incentive to lower prices, though because people are already willing to pay said price for goods. If a company catches a tax break it gets passed on to shareholders or owners. Market forces dictate price, not tax breaks. Most of the time, you'll just see stock buybacks etc. For example if I sell milk for $3 bucks a gallon. And it costs me through labor overhead and taxes $2 to get that milk to market. If I catch a tax break that lowers my cost to $1.90 a gallon. The consumer isn't really going to save much to make a noticeable difference and my competitors get the same tax break so 🤷. Why not just take the increased margin? I think the flaw in the logic is assuming companies are altruistic. They are not. Unless their is more profit to be had by lowering prices or increasing wages they won't do so.
Edit: I’ve been thinking about this off and in today and I realize a need to edit my previous post for two main reasons: 1. My analogy was painfully confusing, at best. 2. I did not address various fatal flaws in your argument. My previous conclusion still stands. Your was and is wrong. The reason is simple: a loan is not income. Literally any economist or financial adviser will say this. Since any monthly sales tax offset payment is just a loan it therefore has zero effect on purchasing power. It is not my birder to answer my question of how/why was your math wrong? The answer is clear when considering an analogy: Person A lives in a zero sales-tax world and wants to buy the most expensive car he can. He makes 50k a year. That means he can buy a 50k car. Person B lives in a 30% sales tax world and makes 50k a year. He too wants to buy the most expensive car he can, however the government “loans” him 15k a year as a sales-tax-offset. In this work he can still only buy a 50k car. Why? Because the 50K car + 30% sales tax equals 65k. Conclusion: your claimed increase in “buying power” is an illusion. A loan simply is not income either financially or economically. But wait, wait, wait…it gets worse. I have assume a 15k per year tax-offset payment. That is not in HR25. The reason is axiomatic: if we return 100% of a 30% percent sales tax, then that leaves zero percent in revenue generated by the 30% sales tax. The authors of HR25 are not that stupid, hence the reason tax-offset- payments would be limited to the amount paid by someone living at the federal poverty line (which is somewhere around 26k). To make the math easy, let’s make that 25k per year. Thus, the 50k earner will be treated like a 25k and his total tax-offset-payment goes down to 7,500. The balance will have to be made up out of the 50k earned income. Thus, under the 30% regime proposed by HR25 a person making 50k a year (and paying 30% sales tax) will see his total spending dollars closer to 42,500. That is lower than your projected spending power under the current regime that you calculate to be 43,6894. In other words, your math is wrong. I feel that I need to give on more analogy about loan versus income: Let’s say I want to buy a house for 50k. Assuming zero closing costs, I can buy a house worth 50k. Now, let’s say I have 50k cash, but the bank adds a new 30% fee (I.e. 15k net) that must be paid to complete the purchase. The bank will give you that 15k fee-offset and you pay it back at the time of closing. Yes, the entire transaction is for 65k, but my ability to purchase has not changed at all. Under either setup I can still only get a 50k house.
“He makes 50k/year, he can buy a 50k car…” No, he can’t. If his salary was 50k, he only brought home around 38.5k. Under Fairtax, assuming prices stay the same (which they likely wouldn’t, since tax costs are no longer baked into the price of goods), a 38.5k car would cost 50k after the Fairtax. So his 50k salary would buy him the same car. Plus he would still have the tax rebate up to the poverty level in his pocket.
@@frankb7645 With respect, you did not respond to the majority of my comment and the numbers are not as simple as you make them. I am happy to explain; First off; I my analogy was not provided to demonstrate a real-world scenario based on current tax rates. It was clearly and explicitly provided to demonstrate that the proposed sales-tax-offset payment does not increase buying power. Why? Because it is a loan, not income. Moving on, your numbers are assuming a 25% income tax rate. First off, the current tax rate up to 50K is not 25%. It is 10% up to 10.275$ and 12% up to 45K+/-. For the sake of argument, I’ll give you 12%. That is 6K. And that is less than the 15K an earner making 50K, but paying 30% sales tax. (Quick target, yes, I know my numbers ignore state income tax, sales tax, etc. I can address those if needed, but there are thus far unnecessary). My first few sentences clearly state that I take exception to the math because a loan is not income and therefore to argue a sales-tax-offset increase purchasing power is flawed logic. But, for the sake of argument let’s for with that…you still haven’t responded to the second prong of my response. The response to my comment completely failed to assess that that this sales-tax-offset-payment is capped based on federal poverty level income. The bill says will we reimburse people for the 30% sales tax, but only only income up the the federal poverty level. Assuming that is 25k a year, their offset payment may cover 100% of their paid sales tax (I.e. 7.5K). But this is not true income above the poverty level making, for example, 50K. Instead, a person making two-times the poverty level must pay, out of pocket, 1/2 of 30% sales tax on 50K (assuming they spend everything they make). The math is simple: make 25K and pay 30% sales tax = offset payment or 7.5k. But if you make 50k, then you must still pay 30 percent which is 15K…and due to cut off levels this person only gets 7.5K. There are people for whom a sales-tax-offset will be great. Not so for the majority of others, especially the middle class. The are other majors issues are that this tax 1) is regressive and 2) would be harmful to the economy as a whole. I need to explain those two concepts concurrently: let’s say I make 75k and live off of 50K. I pay 30% sales tax on that 15K and therefore have 10K left over. I have ZERO incentive to purchase anything made or sold in the U.S. That 10K is gone from the economy and I will move it offshore and spend it offshore whenever possible. This also explains why it is regressive. People making less money will pay a higher percentage of their income that the rich. A person making 50K will pay 15K in sales tax. The better off will pay that 30% up to a threshold after which is is a better financial choice not to spend. Thus, this sales tax is a disincentive to consumer spending which drives the majority of GPD.
Honestly at first I wasn't so sure, but this video made it seem a little better. I still think that 30% is a bit much and it should be closer to 20% But it appears to be a step in the right direction, and the fact that some of our politicians are even considering what at least seems to be a better tax system I think shows some improvement in our country. If this isn't some scam to make it seem like they're doing good while also putting more money in their own pockets. I think we're all too used to that happening. I'm praying for the future of this country. We can do it, we just all need to continue focusing most on where we agree and be willing to honestly and civilly debate why we disagree. We are winning. They are little wins, but wins none the less.
I think you might be referring to equal vs equitable. I would put fair and equitable in the subjectively challenging category. All my spreadsheets are on the discord channel which is free for channel members.
There’s an incentive to make more money, yes. Because the richer you are the lower percentage of your income goes to expenses. Another way of saying this is it’s a tax break for the wealthy. I’m going to do great under this system. But it’s common sense. If you make 100k, your expenses are 100k so you’re paying the full 23% on that money.
@@TravisSickle OKay I did some super ugly math: Current single filer @50k 50k 22% 11,000 39k 7% 2,730 Total Tax 27% Fair tax filer @ 50k 39k 23% 8,970 Total: 17% At the low-income level assuming they spend the same amount they would pay less.
I offered anyone 50,000 dollars if they could simple show where Fairtax lying bastards have an actual personal retail sales tax of 22 (or 30) % to replace all other fed taxes. Yes Yes their slogans dazzle the stupid. How else would they fool you? But quite repeating their goofy lying slogans as facts. L look at their math and details -- not at their slogans. But apparently you could not on your best day even FIND their footnotes or FIND they math equations. Try again. And ask Neal to help you . For some reason Neal seems to have run away like a punk after his Fairtax crap was exposed. I'd love to ask Neal a few questions about why he lied to so many people, and if he is sorry for it, or just sorry he was exposed?
This calculation is a great first effort. I hope you follow thru and refine this based on some of the good comments. However it falls out, just continue to be the honest broker. (It is sad the advocates of this Act haven’t already done this!) Assumptions. You have to make some assumptions. I would clearly track those and state them up front. You are always going to have people disagree with them but at least you’d be transparent. Adjust your computations to clearly state number of dependents. Add the EITC. Look at it from a retiree’s standpoint. I am in favor of this Act, but the numbers have to work. I love the fairness, transparency, simplicity. I love the idea of eliminating the tax return and lobbying involved in these tax decisions. I love the mentality change to reward the saver. Many things to like about this. Collecting taxes should not be so political, burdensome, and complicated.
What about paying a loan or mortgage payment?.. do you have to pay 30% on top? A single person spent exactly $1050 a month it would come out even with the $365 Monthly Rebate.. Would property taxes go away or would they charge 30% on top of your yearly property taxes??? if so that sounds like double taxation.. of taxing a tax..
How could a person get around the fair tax? Could you start a business and have the business purchase day to day goods. There has to be a way around the fair tax for smart people like there is a way around the income tax right?
@@TravisSickle right. so what’s the point in changing the tax structure if the same people that get screwed by the current tax will get screwed by fair tax and the people that avoid income tax will just avoid the fair tax. It’s really just about getting rid of payroll, estate, and gift tax right?
@@claybob simplicity, transparency and most of all, in my opinion, unity. We need to stop thinking who should pay and start asking why the government really needs so much money.
So, we save the money. It's not taxed, yeah great. Sounds perfect. My question on that is, how is that money backed? Our dollar used to worth silver now it's like layaway. Right?
so every dollar you don't spend are tax free but the question is what are we going to do with the money we did not spend? Let's say that I have a small business, and I want to grow my business by buying more computers and desks which is going to be more expensive because now I have to pay more sales tax. I don't think this is gonna work for people who wants to invest their money like this unless there is some sales tax break for businesses.
This won't change my goals. I'm still packing my bags and moving overseas to Thailand or Ecuador as America still too expensive. Just need to find that remote work and I'm out of here. Average US home is about $ 465k for simple 2 to 3 bedrooms when I can get the same in Ecuador for about $ 70k.
Our government appears to be just trying to maintain its financial stability, while keeping up with the current way we are earning and spending our money. Due to inflation, more people are spending less money on goods and services. Meanwhile fewer people are working outside of their homes. Lots of people are either working from home, doing side gigs, retiring, being laid off, or starting their own businesses. But meanwhile, we still need Social Security, Social Security Disability, SSI, Veteran Benefits, Medicare, Medicaid and other programs or assistance. Infrastructure has to be built and maintained, and national security has to remain strong. Maybe this new tax system will lighten the load and level the playing field for everyone. It’s the Great Reset. I’m hoping that it will be helpful. 🙏🤞
I am guessing here so if you went & buy milk at $5.00 and this fair tax of 23% you pay $6.15??? Which is a $1.15 so if you spent $100 bucks on groceries at 23% $123.00?
I'm semi-confused and I want to explain this to people. Are there less write offs for wealthier people and how does this work for people going paycheck to paycheck? Or do they get the allowance and it goes towards that. I see this as a way to live off of welfare.
Also this will give one party more influence because the other party depends on voters who live for government aid which I have no issue with, I have used assistance in time of need for my babies. But it really the undertone that they will have no leverage if this was to go thru
If you work a regular job with taxed taken out all year, the government uses that money and interest on that money all year. But when you file taxes, you get most of all that money back. So, this sales tax would be worse.
@@TravisSickle With every paycheck, your employer withholds some of your earnings for taxes. If too much is withheld, it's true that you will receive a refund, but when you really think about it, by waiting until tax season to claim that money back, you've essentially provided the IRS with an interest-free loan during the year.
Just another way for big corporations to pass the tax burden onto average citizens while not having to pay any taxes themselves through massive loophole built into this bill.. Totally crappie bill that would further widen the wealth disparity
So basically, if the Fair Tax act is to be implemented, just don't spend any money. 30% increase in sales tax so I guess this inflation was just a trial for what's to be if this bill is passed.
With every single product we purchase today they are taxed numerous times at different levels they are called embedded taxes, in addition to that we have our income taxed as well. Under the fair tax all those embedded taxes would be removed thereby causing the prices to drop, add in The Fair tax and the prices come back up to about what they are now. The difference being your income isn't being taxed in addition to all of the embedded taxes. A product is only taxed one single time at the retail level. With today's tax code, if your salary is $1,000 a week, your check isn't $1,000 is it? It is $1,000 minus all of the federal and state deductions. Under the Fair tax if your salary is $1,000 a week, you get $1,000 a week minus State deductions if you live in a state that has income tax.
People, don't let yourself be suborned into endorsing the notion that the federal government has a legitimate claim on an unlimited portion of every American's personal property-- enforceable by one means or another-- in exchange for nothing more than being spared getting a headache filling out a bunch of tax forms each year (or going to the trouble to learn the truth about the law). -- learn at howyoubecomeliable
And something else your not putting into the current tax laws is we are taxed on our income+homes+vehicles+food+everything you buy... So instead of being taxed a hundred times you get taxed when ever you buy something not while earning it. If you save your money and don't spend it then it's not taxed which is not the total case right now. It is insane that we have been going to work to agree to be taxed for our time. This new law would let us be taxed on things we want to buy.
I have a question does the child tax credit apply after fairtax passes? and I didnt know we would get our fica money back from our employers that is really good news. thanks for the video Travis it helps a lot
In regards to the child tax credit, under the fair tax there would be no child tax credit because you're not having any taxes deducted from you. The child tax credit is only used to get money back that was withhelded from you. An analogy that I like to use is- you have a coupon for $2 off a Big Mac (that your child tax credit) , but McDonald's is giving out Big Macs for free (The Big Mac being taxes withheld), if they're not charging anything for the Big Macs you don't need your coupon.
Can we ask our employers to add our shares of all the tax breaks my employer received in the TCJA? They seem to have forgotten to add that to our checks, looks like it went to the executives checks instead.
@Travis Sickle Why would we be entitled to the employer-paid half of the payroll tax? How is that different from any other business tax expenses? It's foolish to expect business to give that piece back to employees with their current track record.
@Frank B Or you can look at the tax cuts that Trump passed recently and see that none of those things happened. Corporations bought back stock and gave executives big bonuses.
So i did the barest of research into the National sales tax and there was 1 glaring issue that immediately stood out to me. Each state is responsible for collecting these taxes because they are collected at the point of sale. The state then is to recieve a portion of the taxes if they turn em over to the federal government.... What happens when the red states, and lets be honest, it would be the red states to withhold the taxes? Do we just cease to have a federal government? Do states take international trade agreements upon themselves? We kinda need the federal government, don't ya think?
The only problem I have is everyone pays based on thier living expenses Someone who makes 100k a year might live on 80k per year, while some who makes 500k per year might live on 250k per year. Different standards of living because your income is higher so you can spend more and still have more left over That's 80% of income vs 50% of income. As much as I hate an income tax, how would you argue that a 10% flat income tax on business and individuals (they are taxed the same so people won't hide money in their businesses) isn't better or less fair. No dedications for anyone.
I have some concerns I would like answered The wealthy spend less of their total income (let's say 20%) than the middle class does of their total income (let's say 80%) Wouldn't it be better to tax businesses on their purchases, or tax businesses on thier incomes, so that more of circulation of money is touched other than the required spending of most Americans? Or another way to say it would be 100k per year person spends 80k per year living. Saving 20k per year. And paying tax on the 80k. That's 80% of their income taxable 500k per year spending 250k per year living That's 50% of their income taxable, but they have 250k untaxed vs 20k untaxed. I think that's a problem. If there was a lower tax rate that effected the spending of businesses, it would effect everyone more equally. ------ As I'm writing this I'm realizing it's wrong. The tax a business would pay would bake that tax into the price of their good. Therefore still only effecting the end user, no matter thier percentage of income is used for living expenses. I guess maybe one answer is the "product " of a saving money that the rich use would need to be taxed. Not sure how that would work.
more of an economics question but if the GDP is higher and the rate is lower, you could potentially arrive at the same net tax. again, more of an economics debate.
The FairTax reform would be even better if passed in conjunction with something like the clifford Hugh Douglas Social Credit system (an economic debt-free credit and monetary model; not to be confused with the Chinese Social Credit Score). Both of these systems working in unison, it seems to me, would turn our economy around in very short order, while at the same time greatly reducing both the size and the power of the federal government, putting that power back in the hands of the People and their respective states.
This changed my perspective but I still have my questions like will the mega ultra wealthy pay more or less taxes? But employers won't give the FICA to employees
Not being a smart aleck or anything of the sort. Worrying about what somebody else is doing (hating the wealthy) trying to use the tax code to punish someone else is a waste of your time and effort. Speaking for myself, I want there to be as many wealthy people as possible.
He's actually running calculations, so he's doing far more than other people that have spoken about this, but his numbers are very high-level and don't paint an accurate picture. You leave out credits that greatly help low income earners. Looking at the Child tax credit and earned income credit. Yet you use a larger household size for prebate calculation. Use household of 2 for prebate calculation or account for child tax credit and EIC. Doubt the numbers come out in favor of "Fair tax" for lower incomes then.
@@TheJerry93 in regards to the child tax credit, it is used to get money back that was withhelded, being that no federal taxes are being withheld there is nothing to get back. The analogy that I like to use is- you have a coupon for $2 off a Big Mac (child tax credit) but McDonald's is giving out Big Macs for free. There's no need for your coupon.
@Michael Hennessey The child tax credit and EIC are refundable, at least in part. You can end up in a situation where you have a negative tax liability if your income is low enough. You'd pay zero in taxes and get back more than what was withheld.
@@TravisSickle FICA is no longer collected after earning that amount. BTW, your video is by far and away the best explanation of the 23% vs 30% that I have seen. I’ve been recommending it.
Whoa. This is extremely misleading. Focusing on spending power when comparing tax plans is like comparing apples and oranges. "Under tax plan A I'll oh such and such in taxes while under tax plan B I'll owe such and such". Thats how a fair comparison can be determined. I feel this was done intentionally bc if you run the numbers you can see that the "fair" tax plan isn't all that fair for people who are spending roughly 60% of their annual income on day to day purchases.
at 60% it's even more beneficial to be under the fair tax act. You get that rebate check no matter how little you earn to cover the taxes of those expenses.
@@TravisSickle @Travis Sickle You are mistaken. For individuals who spend a good portion of what they earn, the newly proposed tax bill is extremely problematic. For example for someone who makes $72k a year under the current tax plan, their effective tax rate would be about 14.6% which comes to about $8.6k. Mind you if you include the $12.4k standard deductions you'd pay even less. Now let's say you make $72k per year but you spend $60k a year ($5k every month). Under the newly proposed "fair" tax plan you would pay over the course of the year 30% of your spent $60k which is about $18k in taxes. Even if you reduced your expenses to $3.5k per month for the year it comes to $42k yearly ($3.5 x 12 = $42k). Over the course of the year you'd still spend $12.6k in taxes. Even if you did take the rebate into consideration for an individual it won't out perform the standard deductions already provided. For those who own their own business and have enough deductions that out perform the existing standard deductions, it makes even less sense to buy into the newly proposed tax plan. Unless of course your income is so high that on a yearly basis you're spending far less than half of it.
I'm currently an accounting major, and the fair tax act seems really cool and a great positive. My only concern is when I go into my masters program tax classes, hahaha
Do you really think that the employer is just going to give me back my half of FICA that they pay in now? No way. They are going to keep that and give themselves a bonus. But anyway. Continue. 5:16
@Travis Sickle if 'everybody in every tax bracket' pays less income tax, there will be a deficit in the federal budget. That's not a thing the US government is willing to accept, so it will have to get paid for somewhere. Who is going to make up the difference? The wealthy, or the people who need it most? So when we go to the grocery store everything will cost at LEAST 30% more, and the people who use food stamps and poor people aren't going to be able to take care of themselves at all bc everyone knows they won't raise taxes on the wealthy to cover it. It will be the assistance programs that lose it. Heaven forbid a billionaire pay more than 8% income tax, let's make sure the poorest of the poor pay 30% and can't scrape by.
No offenset but next time you teach something -- learn it first That means learn what Fairtax told you an everyone else, but if you were smart enough to read their "footnotes" and "assumptions" and in their goofy ass hilarious math equation -- you would be exposing that shitl, like a big boy, What a terrible example you are to students. Take another look
Right now we are double taxed. We are taxed on our income, then we are taxed when we purchase something. We are taxed to death right now!
This is by far the most detailed and accurate explanation of the fair tax I have seen yet.
This is fantastic. The Fair Tax website should really have a calculator to show exactly what you are showing.
Another favorable benefit of the Fair Tax Act to consider: Eliminates the corporate tax, so those taxes that would get passed on to the consumer are gone.
Cutting corporate taxes still hasn’t cut price gouging. Supply side rarely if ever works.
@@JHEntertainment98 Price gouging has more to do with volatility, instability and uncertainty, ie the huge upswing in gas prices, rise in wages, lawless looting/theft, uncertainty surrounding Covid workplace practices, etc. Companies aren’t going to take the risk of losing money so they hedge by raising prices.
@@joshhoward1289 that has nothing to do with price gouging. Corporations see they can charge more and people will still pay so they just keep upping them.
@xryz 😎
That's why sitting president say it will kill middle class because now more individuals will go out to make more money because you are not penalized like you are with the current taxation. I can read thru the lines. Many turned down great opportunities cause they didn't want to lose their food stamps
I’m cautiously optimistic about this act as of now. Sounds like it essentially incentivizes earning and saving.
thanks for sharing.
Very interesting 🤔 thank you for a great explanation. Looking forward to more info as it comes
Ok so I have one question.
The fair tax act would be across the board for both goods and services, correct?
Sending a child to daycare would now fall under this tax- correct? So let's say you have two children in daycare you would now have to pay this 23 or 30% sales tax in addition to the daycares fees? If that's the case I don't see how one would have more buying power if you're paying tax on things like services which didn't exist before. Please help me make sense of this...
You are already paying around that on your entire check before you put them in daycare. Now it would just be for the money you spend on the daycare.
So this bill will add a 23% tax to everything. Including things like food, bills, doctors visits, and medicine. So how exactly am I going to end up with more money?
The real question you need to be asking is why does the government need 23%?
And this does not even include other taxes that will be removed from businesses and corporations. This is just better for everyone.
This is the best explanation on RUclips. Thank you, thank you!
Can you do an example for very impoverished individuals such who only receive disability? For example if a person only receives social security of about in total 10k-12k per year. What rebate would they get and spending power?
The prebate you get doesn't depend on what you bring in but on how many people you have in a household. A single guy making 20k a year gets the same prebate as a single guy making 200k a year.
I've been looking for some good videos that describe this so I can share it with others who are unaware of this. I'm all for it, as a minimalist, who's single, and I make around 75k Gross a year this would be a boon for me. Although I'm still curious how this may affect low income families or single parents. Perhaps they could overhaul food stamps, or create a necessities card/program for food, hygiene, and medical products. I'm also curious about people on fixed incomes like SSI, IRA, 401k, disability, ect.. Many of them are already struggling due to inflation, supply and demand shortages, and insane interest rates. Not to mention what was brought up in some other videos was what about US citizens who are living abroad in countries outside the US but still making a US income?
I like the overall idea of the Fair tax act, but it also leaves a lot of questions and what if scenario's as well.
I'm sure we'll see more of this in the future.
how much more spending will there be, how would prices change
Doesn’t FICA fund social security? Will that program be maintained under the fair tax act or will they advance towards sunsetting it?
It will be maintained.
Hi Travis. Interesting video. I think the situation would be different for a person who is retired and derives a significant amount of income from long term capital gains and qualified dividends in a non-qualified account. Most of this income would be taxed at 0% or 15% under the current tax code with no tax applied to consumption. In addition, the retired person would not be paying FICA. It might be worth a second look. Speaking of FICA, you had a person earning $10MM in ordinary income paying $154K in FICA in one of your examples. I believe only $160K of ordinary income is subject to FICA tax. Shouldn't the FICA number be much smaller for a high earner?
Social security was capped at $147k for 2022 but Medicare isn’t capped, 1.45%.
@@TravisSickle Ah. Got it. Thanks.
Good points on considering the retirees.
The income tax imposed on investment income and pension benefits or IRA withdrawals is repealed. This is a positive for retirees.
This is going to be an absolutely huge tax hike on people who are purchasing big items (homes, land, vehicles, etc.) that are not currently subject to both a national sales tax and state, and in some cases local taxes. This tax system disincentives owning real assets. How about we stick to the original federal tax scheme, i.e, no direct taxes on individuals and limit tax collection to tariffs, duties, and excises on international trade? Seems way simpler and also encourages economic activity...unlike both the income and "fair" tax systems.
At first glance, you might think that, but you would be mistaken.
@@TravisSickle not really I dont think. Unless there is still a business write off system baked into the new tax system, not only will the purchase price of everything be increased by 23% but the cost of production will increase by the same amount, leading to a real tax rate of 46-60% across the board. Can you go into how this would affect the macro economics of supply and demand?
Great way to screw middle class and widespread under the table cash deals.
@@Joseph-eh4rs it looks as if it will screw everybody, regardless of income level. The real issue is that the federal government, before the questionable income tax amendment was passed, was prohibited from any kind of direct taxation. And, the only reason a tax cab be imposed to this day is to pay the debts of the government; not to collect revenue. This tax, if not directly proportioned to the debt, is more illegal garbage coming out of Washington
We’ll because there would be no taxes on a lot of the production and distribution of products, companies would get some breathing room to lower prices competitively so it wouldn’t be as bad as you think
What about those of us that are retired? Wouldn't we be impacted the most since we already paid taxes on our money (ROTH) and still have to pay the 30% (Sorry 23%)?
No tax on pre-tax accounts, extra income etc, plus the rebate would offset some of the Roth taxes assuming you’re taking that amount out each year. It’s the same as groceries or housing when you isolate one variable it may not look better but overall it may.
@@TravisSickle Thank you for your answer, but I still believe those of us that have already paid taxes on our retirement savings and have no income would get a very poor deal. If there is no more tax on Pre-tax savings, it would be no different than ROTH, right? So I would have paid ~20% converting my IRA to ROTH for nothing... I believe they need to do some more thinking on this solution. Wold they also do away with Capital Gains?
@@MyWasteOfTime yes. Cap gains would be gone. The type of situation you’re talking about actually happens all the time today. Taxes overall are way too high and so convoluted today that most don’t realize the amount they’re paying or how to navigate them. The base cost of goods would likely fall as well.
A simple solution to this would be some kind of one time rebate based on the value of the Roth.
Also, looking at your 50k calculation. You used a household of 4 for the "Fair Tax" calculation and MFJ for the current tax calculation to determine the standard deduction. What about the child tax credits (assuming 2 in the household are children) and the EIC?
Calculation looks much different, even assuming the employer gives you your share of employer paid payroll taxes. Which they wouldn't.
This is very valid. Two kids would be $4,000 credit. Plus an EITC of $1,159. As tax credits I think this would go directly to their spending power…so add $5,159. Still better off with Fair Tax.
On the flip side, these numbers are assuming you spend every last dollar on taxable items for the fair tax. And, he didn’t mention that there would no longer be corporate taxes which are typically passed on to the consumer.
Regarding the payroll tax, he has to make an assumption. These are paid as a direct result of having employees so it is at least a fair assumption to pass this on to the employees. Will they? Who knows, but be fair to Travis. It is a reasonable assumption.
Yeah that is a pretty solid point. There are some assumptions made in the math here. That make it seem like you technically have more spending power. The employer paid taxes do not necessarily come back to the employee and there would be no reason to either. I am not against it inherently but it does shift the burden of taxes onto those who are consumers. Inherently this would just further widen the gap of income inequality without some off setting measures. As he said in the video if you don't spend it and save a significant portion you come out way ahead.
Lets be honest.... .The Fair Tax is just more crap from the folks who did away with your pension and "gave you" something less (the 401K and good luck). The same folks who did away with your lifetime healthcare and "gave you" something less (cost sharing or an allowance for you to outright buy it yourself and good luck). It ain't rocket science. There is nothing elegant or sophisticated about it. Its all "do away with" and give you something less and good luck. AND, it ain't like they had to do it. The money is and has always been there. Its just gone into skyrocketing record executive compensation and record corporate profits. And, here they come again is all it is.
If the employer doesn’t increase pay due to employee tax savings, the savings will likely be passed on to lower prices to customers. So maybe workers get the tax savings, or maybe prices are lower, or a combination of the two. Either way it’s better because you get your whole paycheck. It encourages people to be thrifty and save.
@Frank B there is no incentive to lower prices, though because people are already willing to pay said price for goods. If a company catches a tax break it gets passed on to shareholders or owners. Market forces dictate price, not tax breaks.
Most of the time, you'll just see stock buybacks etc.
For example if I sell milk for $3 bucks a gallon. And it costs me through labor overhead and taxes $2 to get that milk to market. If I catch a tax break that lowers my cost to $1.90 a gallon. The consumer isn't really going to save much to make a noticeable difference and my competitors get the same tax break so 🤷. Why not just take the increased margin?
I think the flaw in the logic is assuming companies are altruistic. They are not. Unless their is more profit to be had by lowering prices or increasing wages they won't do so.
You know we need to spread this word out more. It just went quiet
Edit: I’ve been thinking about this off and in today and I realize a need to edit my previous post for two main reasons:
1. My analogy was painfully confusing, at best.
2. I did not address various fatal flaws in your argument.
My previous conclusion still stands. Your was and is wrong. The reason is simple: a loan is not income. Literally any economist or financial adviser will say this. Since any monthly sales tax offset payment is just a loan it therefore has zero effect on purchasing power.
It is not my birder to answer my question of how/why was your math wrong? The answer is clear when considering an analogy: Person A lives in a zero sales-tax world and wants to buy the most expensive car he can. He makes 50k a year. That means he can buy a 50k car. Person B lives in a 30% sales tax world and makes 50k a year. He too wants to buy the most expensive car he can, however the government “loans” him 15k a year as a sales-tax-offset. In this work he can still only buy a 50k car. Why? Because the 50K car + 30% sales tax equals 65k.
Conclusion: your claimed increase in “buying power” is an illusion. A loan simply is not income either financially or economically.
But wait, wait, wait…it gets worse. I have assume a 15k per year tax-offset payment. That is not in HR25. The reason is axiomatic: if we return 100% of a 30% percent sales tax, then that leaves zero percent in revenue generated by the 30% sales tax. The authors of HR25 are not that stupid, hence the reason tax-offset- payments would be limited to the amount paid by someone living at the federal poverty line (which is somewhere around 26k). To make the math easy, let’s make that 25k per year. Thus, the 50k earner will be treated like a 25k and his total tax-offset-payment goes down to 7,500. The balance will have to be made up out of the 50k earned income. Thus, under the 30% regime proposed by HR25 a person making 50k a year (and paying 30% sales tax) will see his total spending dollars closer to 42,500. That is lower than your projected spending power under the current regime that you calculate to be 43,6894. In other words, your math is wrong.
I feel that I need to give on more analogy about loan versus income: Let’s say I want to buy a house for 50k. Assuming zero closing costs, I can buy a house worth 50k. Now, let’s say I have 50k cash, but the bank adds a new 30% fee (I.e. 15k net) that must be paid to complete the purchase. The bank will give you that 15k fee-offset and you pay it back at the time of closing. Yes, the entire transaction is for 65k, but my ability to purchase has not changed at all. Under either setup I can still only get a 50k house.
“He makes 50k/year, he can buy a 50k car…” No, he can’t. If his salary was 50k, he only brought home around 38.5k. Under Fairtax, assuming prices stay the same (which they likely wouldn’t, since tax costs are no longer baked into the price of goods), a 38.5k car would cost 50k after the Fairtax. So his 50k salary would buy him the same car. Plus he would still have the tax rebate up to the poverty level in his pocket.
@@frankb7645 With respect, you did not respond to the majority of my comment and the numbers are not as simple as you make them. I am happy to explain;
First off; I my analogy was not provided to demonstrate a real-world scenario based on current tax rates. It was clearly and explicitly provided to demonstrate that the proposed sales-tax-offset payment does not increase buying power. Why? Because it is a loan, not income.
Moving on, your numbers are assuming a 25% income tax rate. First off, the current tax rate up to 50K is not 25%. It is 10% up to 10.275$ and 12% up to 45K+/-. For the sake of argument, I’ll give you 12%. That is 6K. And that is less than the 15K an earner making 50K, but paying 30% sales tax.
(Quick target, yes, I know my numbers ignore state income tax, sales tax, etc. I can address those if needed, but there are thus far unnecessary).
My first few sentences clearly state that I take exception to the math because a loan is not income and therefore to argue a sales-tax-offset increase purchasing power is flawed logic. But, for the sake of argument let’s for with that…you still haven’t responded to the second prong of my response.
The response to my comment completely failed to assess that that this sales-tax-offset-payment is capped based on federal poverty level income. The bill says will we reimburse people for the 30% sales tax, but only only income up the the federal poverty level. Assuming that is 25k a year, their offset payment may cover 100% of their paid sales tax (I.e. 7.5K). But this is not true income above the poverty level making, for example, 50K. Instead, a person making two-times the poverty level must pay, out of pocket, 1/2 of 30% sales tax on 50K (assuming they spend everything they make). The math is simple: make 25K and pay 30% sales tax = offset payment or 7.5k. But if you make 50k, then you must still pay 30 percent which is 15K…and due to cut off levels this person only gets 7.5K. There are people for whom a sales-tax-offset will be great. Not so for the majority of others, especially the middle class.
The are other majors issues are that this tax 1) is regressive and 2) would be harmful to the economy as a whole. I need to explain those two concepts concurrently: let’s say I make 75k and live off of 50K. I pay 30% sales tax on that 15K and therefore have 10K left over. I have ZERO incentive to purchase anything made or sold in the U.S. That 10K is gone from the economy and I will move it offshore and spend it offshore whenever possible.
This also explains why it is regressive. People making less money will pay a higher percentage of their income that the rich. A person making 50K will pay 15K in sales tax. The better off will pay that 30% up to a threshold after which is is a better financial choice not to spend. Thus, this sales tax is a disincentive to consumer spending which drives the majority of GPD.
July 16, 2023
So even if someone isn't making money they would still get the 11k prebate?
ruclips.net/user/shortsotmVzDLXK4s?feature=share
Honestly at first I wasn't so sure, but this video made it seem a little better. I still think that 30% is a bit much and it should be closer to 20%
But it appears to be a step in the right direction, and the fact that some of our politicians are even considering what at least seems to be a better tax system I think shows some improvement in our country. If this isn't some scam to make it seem like they're doing good while also putting more money in their own pockets. I think we're all too used to that happening.
I'm praying for the future of this country. We can do it, we just all need to continue focusing most on where we agree and be willing to honestly and civilly debate why we disagree.
We are winning. They are little wins, but wins none the less.
I like the positive attitude and open mind.
@@TravisSickle thank you for the compliment, and thank you for talking about the idea in such detail. I really appreciate it. 🙏🩷
I would enjoy a copy of this spread sheet, great explanation. I think the discussion is not whether the TaxAct is fair, but is it equitable.
I think you might be referring to equal vs equitable. I would put fair and equitable in the subjectively challenging category. All my spreadsheets are on the discord channel which is free for channel members.
@@TravisSickle Yes, I definitely should have chosen the word equal over fair. I'll hop on the discord channel, thanks.
There’s an incentive to make more money, yes. Because the richer you are the lower percentage of your income goes to expenses. Another way of saying this is it’s a tax break for the wealthy. I’m going to do great under this system. But it’s common sense. If you make 100k, your expenses are 100k so you’re paying the full 23% on that money.
But don’t forget that monthly check to everyone. Even those earning zero.
@@TravisSickle OKay I did some super ugly math:
Current single filer @50k
50k 22% 11,000
39k 7% 2,730
Total Tax 27%
Fair tax filer @ 50k
39k 23% 8,970
Total: 17%
At the low-income level assuming they spend the same amount they would pay less.
Very simple and complete explanation. And people still won't get it because of a closed mind.
exactly.
I offered anyone 50,000 dollars if they could simple show where Fairtax lying bastards have an actual personal retail sales tax of 22 (or 30) % to replace all other fed taxes. Yes Yes their slogans dazzle the stupid. How else would they fool you? But quite repeating their goofy lying slogans as facts. L look at their math and details -- not at their slogans. But apparently you could not on your best day even FIND their footnotes or FIND they math equations. Try again. And ask Neal to help you . For some reason Neal seems to have run away like a punk after his Fairtax crap was exposed. I'd love to ask Neal a few questions about why he lied to so many people, and if he is sorry for it, or just sorry he was exposed?
This calculation is a great first effort. I hope you follow thru and refine this based on some of the good comments. However it falls out, just continue to be the honest broker. (It is sad the advocates of this Act haven’t already done this!)
Assumptions. You have to make some assumptions. I would clearly track those and state them up front. You are always going to have people disagree with them but at least you’d be transparent.
Adjust your computations to clearly state number of dependents. Add the EITC.
Look at it from a retiree’s standpoint.
I am in favor of this Act, but the numbers have to work. I love the fairness, transparency, simplicity. I love the idea of eliminating the tax return and lobbying involved in these tax decisions. I love the mentality change to reward the saver. Many things to like about this. Collecting taxes should not be so political, burdensome, and complicated.
What about paying a loan or mortgage payment?.. do you have to pay 30% on top?
A single person spent exactly $1050 a month it would come out even with the $365 Monthly Rebate..
Would property taxes go away or would they charge 30% on top of your yearly property taxes??? if so that sounds like double taxation.. of taxing a tax..
Exact same math. It’s irrelevant what you buy. The math is the same.
How could a person get around the fair tax? Could you start a business and have the business purchase day to day goods. There has to be a way around the fair tax for smart people like there is a way around the income tax right?
That would be the same for today too.
@@TravisSickle right. so what’s the point in changing the tax structure if the same people that get screwed by the current tax will get screwed by fair tax and the people that avoid income tax will just avoid the fair tax. It’s really just about getting rid of payroll, estate, and gift tax right?
@@claybob simplicity, transparency and most of all, in my opinion, unity. We need to stop thinking who should pay and start asking why the government really needs so much money.
@@TravisSickle that sounds great for the people that aren’t paying now and won’t pay under the fair tax either.
So, we save the money. It's not taxed, yeah great. Sounds perfect. My question on that is, how is that money backed? Our dollar used to worth silver now it's like layaway. Right?
It's based on the credit of the US government. That is all.
For those with Roth IRAs and Roth 401Ks, what happens? Will those be taxed again?
all income would be tax free.
so every dollar you don't spend are tax free but the question is what are we going to do with the money we did not spend? Let's say that I have a small business, and I want to grow my business by buying more computers and desks which is going to be more expensive because now I have to pay more sales tax. I don't think this is gonna work for people who wants to invest their money like this unless there is some sales tax break for businesses.
Business-to-business purchases for the production of goods and services are not taxed.
If every income backet is better off, how is it supposed to be revenue neutral, as its advocates claim?
ruclips.net/user/shortsiaYUyaortFA?feature=share
This won't change my goals. I'm still packing my bags and moving overseas to Thailand or Ecuador as America still too expensive. Just need to find that remote work and I'm out of here. Average US home is about $ 465k for simple 2 to 3 bedrooms when I can get the same in Ecuador for about $ 70k.
It shouldn't change your goals.
Our government appears to be just trying to maintain its financial stability, while keeping up with the current way we are earning and spending our money.
Due to inflation, more people are spending less money on goods and services. Meanwhile fewer people are working outside of their homes. Lots of people are either working from home, doing side gigs, retiring, being laid off, or starting their own businesses.
But meanwhile, we still need Social Security, Social Security Disability, SSI, Veteran Benefits, Medicare, Medicaid and other programs or assistance. Infrastructure has to be built and maintained, and national security has to remain strong.
Maybe this new tax system will lighten the load and level the playing field for everyone.
It’s the Great Reset. I’m hoping that it will be helpful. 🙏🤞
thanks for sharing.
I am guessing here so if you went & buy milk at $5.00 and this fair tax of 23% you pay $6.15??? Which is a $1.15 so if you spent $100 bucks on groceries at 23% $123.00?
Yes. But remember, no income tax and you get a check for the basics to pay that tax on said groceries.
wrong if you bought 5.00 milk that exaclty what it would be at the cash register, it inclusive just like the price of gas!
Will the government make less money since the people will keep more of their money and the businesses will pay no taxes?
govt needs to spend less. I think this is the overall point.
I'm semi-confused and I want to explain this to people. Are there less write offs for wealthier people and how does this work for people going paycheck to paycheck? Or do they get the allowance and it goes towards that. I see this as a way to live off of welfare.
Ask questions on our discord chat: Join Link discord.gg/enuJThjHJ9
Also this will give one party more influence because the other party depends on voters who live for government aid which I have no issue with, I have used assistance in time of need for my babies. But it really the undertone that they will have no leverage if this was to go thru
If you work a regular job with taxed taken out all year, the government uses that money and interest on that money all year. But when you file taxes, you get most of all that money back. So, this sales tax would be worse.
No. That’s just wrong.
@@TravisSickle With every paycheck, your employer withholds some of your earnings for taxes. If too much is withheld, it's true that you will receive a refund, but when you really think about it, by waiting until tax season to claim that money back, you've essentially provided the IRS with an interest-free loan during the year.
Doesn’t this mean that the Govt would get to double tax money that has already been saved in Roth Retirement Accounts.
Yes
Fairtax for the WIN! Next talk about investment under the Fairtax system. no tax on income or investments.
that is a great point! At the end of the day, the government just needs to spend less and let the people do their thing.
Just another way for big corporations to pass the tax burden onto average citizens while not having to pay any taxes themselves through massive loophole built into this bill..
Totally crappie bill that would further widen the wealth disparity
not exactly.
So basically, if the Fair Tax act is to be implemented, just don't spend any money. 30% increase in sales tax so I guess this inflation was just a trial for what's to be if this bill is passed.
It’s actually hard to say. Base prices will likely fall.
With every single product we purchase today they are taxed numerous times at different levels they are called embedded taxes, in addition to that we have our income taxed as well.
Under the fair tax all those embedded taxes would be removed thereby causing the prices to drop, add in The Fair tax and the prices come back up to about what they are now.
The difference being your income isn't being taxed in addition to all of the embedded taxes.
A product is only taxed one single time at the retail level.
With today's tax code, if your salary is $1,000 a week, your check isn't $1,000 is it? It is $1,000 minus all of the federal and state deductions.
Under the Fair tax if your salary is $1,000 a week, you get $1,000 a week minus State deductions if you live in a state that has income tax.
@@TravisSickle how can you predict that
People, don't let yourself be suborned into endorsing the notion that the federal government has a legitimate claim on an unlimited portion of every American's personal property-- enforceable by one means or another-- in exchange for nothing more than being spared getting a headache filling out a bunch of tax forms each year (or going to the trouble to learn the truth about the law). -- learn at howyoubecomeliable
One thing that was not added to this that I think is important is state sales tax.
That’s irrelevant to federal taxes.
And something else your not putting into the current tax laws is we are taxed on our income+homes+vehicles+food+everything you buy... So instead of being taxed a hundred times you get taxed when ever you buy something not while earning it.
If you save your money and don't spend it then it's not taxed which is not the total case right now. It is insane that we have been going to work to agree to be taxed for our time. This new law would let us be taxed on things we want to buy.
If the pricetag says 100000$ it not 123000$ the tax is figured in not on too of
I have a question does the child tax credit apply after fairtax passes? and I didnt know we would get our fica money back from our employers that is really good news. thanks for the video Travis it helps a lot
It would replace all the credits and deductions. There would be no tax filings like we have today.
In regards to the child tax credit, under the fair tax there would be no child tax credit because you're not having any taxes deducted from you. The child tax credit is only used to get money back that was withhelded from you.
An analogy that I like to use is- you have a coupon for $2 off a Big Mac (that your child tax credit) , but McDonald's is giving out Big Macs for free (The Big Mac being taxes withheld), if they're not charging anything for the Big Macs you don't need your coupon.
@@michaelhennessey8927 oh I thought the child tax credit was refundable.
@@ThePineappleIsCherry if you're not having any federal taxes deducted, why would you be getting a refund?
@@michaelhennessey8927 I thought under the current tax system the child tax credit was refundable.
IT will Be Better For MARRIAGE?
Maybe
@TravisSickle That's Is Very True?
Can we ask our employers to add our shares of all the tax breaks my employer received in the TCJA? They seem to have forgotten to add that to our checks, looks like it went to the executives checks instead.
What tax breaks were the employees entitled to that you are talking about?
@Travis Sickle Why would we be entitled to the employer-paid half of the payroll tax? How is that different from any other business tax expenses? It's foolish to expect business to give that piece back to employees with their current track record.
More likely they will reduce the price of their products or services. If not, someone else will, and competition will force prices down.
@Frank B Or you can look at the tax cuts that Trump passed recently and see that none of those things happened. Corporations bought back stock and gave executives big bonuses.
@@frankb7645 Exacly !
So i did the barest of research into the National sales tax and there was 1 glaring issue that immediately stood out to me. Each state is responsible for collecting these taxes because they are collected at the point of sale. The state then is to recieve a portion of the taxes if they turn em over to the federal government....
What happens when the red states, and lets be honest, it would be the red states to withhold the taxes?
Do we just cease to have a federal government? Do states take international trade agreements upon themselves?
We kinda need the federal government, don't ya think?
No.
The only problem I have is everyone pays based on thier living expenses
Someone who makes 100k a year might live on 80k per year, while some who makes 500k per year might live on 250k per year. Different standards of living because your income is higher so you can spend more and still have more left over
That's 80% of income vs 50% of income.
As much as I hate an income tax, how would you argue that a 10% flat income tax on business and individuals (they are taxed the same so people won't hide money in their businesses) isn't better or less fair.
No dedications for anyone.
I have some concerns I would like answered
The wealthy spend less of their total income (let's say 20%) than the middle class does of their total income (let's say 80%)
Wouldn't it be better to tax businesses on their purchases, or tax businesses on thier incomes, so that more of circulation of money is touched other than the required spending of most Americans?
Or another way to say it would be
100k per year person spends 80k per year living. Saving 20k per year. And paying tax on the 80k. That's 80% of their income taxable
500k per year spending 250k per year living
That's 50% of their income taxable, but they have 250k untaxed vs 20k untaxed.
I think that's a problem.
If there was a lower tax rate that effected the spending of businesses, it would effect everyone more equally.
------
As I'm writing this I'm realizing it's wrong. The tax a business would pay would bake that tax into the price of their good. Therefore still only effecting the end user, no matter thier percentage of income is used for living expenses.
I guess maybe one answer is the "product " of a saving money that the rich use would need to be taxed. Not sure how that would work.
There is no such thing as a Fair Tax!
That was back during the pre Eisenhower era. Today, that’s not the case
This is fairer than anything else out there. And we are never getting rid of taxes without a bloody revolution, so let's do the best we can.
I agree, it's just the name of it.
let's.
Will the government make less money since the people will keep more of their money?
more of an economics question but if the GDP is higher and the rate is lower, you could potentially arrive at the same net tax. again, more of an economics debate.
Thank you for showing it without the FICA. We’re still better off. 6:59
thanks
The FairTax reform would be even better if passed in conjunction with something like the clifford Hugh Douglas Social Credit system (an economic debt-free credit and monetary model; not to be confused with the Chinese Social Credit Score).
Both of these systems working in unison, it seems to me, would turn our economy around in very short order, while at the same time greatly reducing both the size and the power of the federal government, putting that power back in the hands of the People and their respective states.
Fair tax act prebate
now im more confused 🤔😂
This changed my perspective but I still have my questions like will the mega ultra wealthy pay more or less taxes? But employers won't give the FICA to employees
Genuinely curious, why do you care if wealthy pay more or less?
Not being a smart aleck or anything of the sort.
Worrying about what somebody else is doing (hating the wealthy) trying to use the tax code to punish someone else is a waste of your time and effort.
Speaking for myself, I want there to be as many wealthy people as possible.
He's actually running calculations, so he's doing far more than other people that have spoken about this, but his numbers are very high-level and don't paint an accurate picture.
You leave out credits that greatly help low income earners. Looking at the Child tax credit and earned income credit. Yet you use a larger household size for prebate calculation.
Use household of 2 for prebate calculation or account for child tax credit and EIC. Doubt the numbers come out in favor of "Fair tax" for lower incomes then.
@@TheJerry93 in regards to the child tax credit, it is used to get money back that was withhelded, being that no federal taxes are being withheld there is nothing to get back.
The analogy that I like to use is- you have a coupon for $2 off a Big Mac (child tax credit) but McDonald's is giving out Big Macs for free. There's no need for your coupon.
@Michael Hennessey The child tax credit and EIC are refundable, at least in part. You can end up in a situation where you have a negative tax liability if your income is low enough. You'd pay zero in taxes and get back more than what was withheld.
I question FICA numbers over $160,200 income.
Why is that?
@@TravisSickle FICA is no longer collected after earning that amount. BTW, your video is by far and away the best explanation of the 23% vs 30% that I have seen. I’ve been recommending it.
I should have said SS is no longer collected.
Fair tax??? Is this some kind of double-speak? There's nothing fair about this tax. Screw the middle class and make top 1% richer.
Why is this?
Did you even watch the video?
You still would have to pay for state tax on top of that!!!
Not if you live in a tax free state:)
@@Phoenix-gu2fk no state is tax free. You make the differences in other taxes
Capital gains?
Would be gone.
Whoa. This is extremely misleading. Focusing on spending power when comparing tax plans is like comparing apples and oranges. "Under tax plan A I'll oh such and such in taxes while under tax plan B I'll owe such and such". Thats how a fair comparison can be determined. I feel this was done intentionally bc if you run the numbers you can see that the "fair" tax plan isn't all that fair for people who are spending roughly 60% of their annual income on day to day purchases.
at 60% it's even more beneficial to be under the fair tax act. You get that rebate check no matter how little you earn to cover the taxes of those expenses.
@@TravisSickle @Travis Sickle You are mistaken. For individuals who spend a good portion of what they earn, the newly proposed tax bill is extremely problematic. For example for someone who makes $72k a year under the current tax plan, their effective tax rate would be about 14.6% which comes to about $8.6k. Mind you if you include the $12.4k standard deductions you'd pay even less. Now let's say you make $72k per year but you spend $60k a year ($5k every month). Under the newly proposed "fair" tax plan you would pay over the course of the year 30% of your spent $60k which is about $18k in taxes. Even if you reduced your expenses to $3.5k per month for the year it comes to $42k yearly ($3.5 x 12 = $42k). Over the course of the year you'd still spend $12.6k in taxes. Even if you did take the rebate into consideration for an individual it won't out perform the standard deductions already provided. For those who own their own business and have enough deductions that out perform the existing standard deductions, it makes even less sense to buy into the newly proposed tax plan. Unless of course your income is so high that on a yearly basis you're spending far less than half of it.
It's not 30%!!!! Stupid math. The differences between 23% (the actual tax) and 30% (the uniformed lie) can be steep. Do the proper math.
I'm currently an accounting major, and the fair tax act seems really cool and a great positive. My only concern is when I go into my masters program tax classes, hahaha
With the fair tax..
What about the people on
social security disability
How will this affect them
better off. Get the income plus advance checks.
Do you really think that the employer is just going to give me back my half of FICA that they pay in now? No way. They are going to keep that and give themselves a bonus. But anyway. Continue. 5:16
thanks
This is a terrible tax bill and this grifter is shilling for it
You're lying its 23percent
Weird propaganda.
What is misleading about it?
@Travis Sickle if 'everybody in every tax bracket' pays less income tax, there will be a deficit in the federal budget. That's not a thing the US government is willing to accept, so it will have to get paid for somewhere. Who is going to make up the difference? The wealthy, or the people who need it most? So when we go to the grocery store everything will cost at LEAST 30% more, and the people who use food stamps and poor people aren't going to be able to take care of themselves at all bc everyone knows they won't raise taxes on the wealthy to cover it. It will be the assistance programs that lose it. Heaven forbid a billionaire pay more than 8% income tax, let's make sure the poorest of the poor pay 30% and can't scrape by.
@@kirajohns452 that is just based on income taxes...net spending is a different story. Also, people that live off the books would now be paying taxes.
@@TravisSickle so how would this impact corporations as opposed to individuals?
@@TravisSickle also illegals would be forced to pay as well and that's a good thing!
No offenset but next time you teach something -- learn it first
That means learn what Fairtax told you an everyone else, but if you were smart enough to read their "footnotes" and "assumptions" and in their goofy ass hilarious math equation -- you would be exposing that shitl, like a big boy, What a terrible example you are to students. Take another look