HOSTILE ARGUMENT: THE FAIRTAX WILL BE ADDED ON TOP OF STATE SALES TAXES
This Grassroots Corner continues a series on hostile questions and comments that people may raise about the FAIRtax. Many of these suggested responses will be good comebacks for you to have in your pocket when you need them. Some of these suggested responses can be too long to insert into an actual conversation. You may want to boil them down to where they'll be more useful when you're talking face-to-face with someone attacking the FAIRtax.
This week, we take on the criticism that the FAIRtax will be added on top of state and local sales taxes, making the combined sales tax rate go through the roof.
It is true that under the FAIRtax, states and localities will be free to levy their state and local sales taxes on goods and services the same way they’re doing today. And many probably will. But the argument is a red herring.
Remember that the FAIRtax replaces the Federal income and payroll taxes. So, the proper question to ask is that when you consider a taxpayer’s total tax burden of Federal, state and local taxes, will that burden be heavier under the FAIRtax? For most people, the answer to that is “no”.
To a much greater degree than the income tax, the FAIRtax lets people control how much tax they pay by adjusting their spending habits. And the FAIRtax greatly expands the tax base.
People who are here illegally, who are getting paid under the table in cash, or who make their money by less than legal means are more than likely not filing income tax returns. But these people still have to buy things, so they all become taxpayers under the FAIRtax. And when more people are paying taxes, each individual’s share of the total tax burden goes down.
The FAIRtax bill actually gives states a mild incentive to adopt “Conforming State Sales Taxes” by assisting states that adopt such taxes with out-of-state collection. These conforming state sales taxes are mini-versions of the federal FAIRtax.
These mini-versions adopt the same broad tax base as the federal FAIRtax and provide for a “Prebate.” In Alabama, Nebraska, and Georgia there are serious legislative efforts underway to adopt mini-FAIRtaxes ahead of the federal bill. Part of the discussion in Georgia and Alabama is how to replace county sales taxes with a statewide bill.
The FAIRtax does not require states to adopt conforming state sales taxes, but if the Federal government scraps its income/payroll tax system for the FAIRtax, it’s a good bet that many states will voluntarily follow suit. Many state income taxes are based on the federal income tax. Without a federal income tax, states would have to rewrite their state income tax laws. States would be foolish not to simply follow suit and replace their income/payroll tax systems with a state-level mini-FAIRtax.
So, even though state and local sales taxes on top of the FAIRtax may make the overall tax rate on retail purchases seem high, goods and services will still be more affordable. Pre-tax prices will drop significantly, and people will have more money in their pockets when there are no Federal deductions from their paychecks and they’re getting the prebate every month.
It’s purchasing power that really counts, and purchasing power goes up with the FAIRtax.
I would love to hear from you about how to squeeze this explanation into a soundbite.
Yours In the FAIRtax Movement!This Grassroots Corner continues a series on hostile questions and comments that people may raise about the FAIRtax. Many of these suggested responses will be good comebacks for you to have in your pocket when you need them. Some of these suggested responses can be too long to insert into an actual conversation. You may want to boil them down to where they'll be more useful when you're talking face-to-face with someone attacking the FAIRtax.
This week, we take on the criticism that the FAIRtax will be added on top of state and local sales taxes, making the combined sales tax rate go through the roof.
It is true that under the FAIRtax, states and localities will be free to levy their state and local sales taxes on goods and services the same way they’re doing today. And many probably will. But the argument is a red herring.
Remember that the FAIRtax replaces the Federal income and payroll taxes. So, the proper question to ask is that when you consider a taxpayer’s total tax burden of Federal, state and local taxes, will that burden be heavier under the FAIRtax? For most people, the answer to that is “no”.
To a much greater degree than the income tax, the FAIRtax lets people control how much tax they pay by adjusting their spending habits. And the FAIRtax greatly expands the tax base.
People who are here illegally, who are getting paid under the table in cash, or who make their money by less than legal means are more than likely not filing income tax returns. But these people still have to buy things, so they all become taxpayers under the FAIRtax. And when more people are paying taxes, each individual’s share of the total tax burden goes down.
The FAIRtax bill actually gives states a mild incentive to adopt “Conforming State Sales Taxes” by assisting states that adopt such taxes with out-of-state collection. These conforming state sales taxes are mini-versions of the federal FAIRtax.
These mini-versions adopt the same broad tax base as the federal FAIRtax and provide for a “Prebate.” In Alabama, Nebraska, and Georgia there are serious legislative efforts underway to adopt mini-FAIRtaxes ahead of the federal bill. Part of the discussion in Georgia and Alabama is how to replace county sales taxes with a statewide bill.
The FAIRtax does not require states to adopt conforming state sales taxes, but if the Federal government scraps its income/payroll tax system for the FAIRtax, it’s a good bet that many states will voluntarily follow suit. Many state income taxes are based on the federal income tax. Without a federal income tax, states would have to rewrite their state income tax laws. States would be foolish not to simply follow suit and replace their income/payroll tax systems with a state-level mini-FAIRtax.
So, even though state and local sales taxes on top of the FAIRtax may make the overall tax rate on retail purchases seem high, goods and services will still be more affordable. Pre-tax prices will drop significantly, and people will have more money in their pockets when there are no Federal deductions from their paychecks and they’re getting the prebate every month.
It’s purchasing power that really counts, and purchasing power goes up with the FAIRtax.
I would love to hear from you about how to squeeze this explanation into a soundbite.
Jim Bennett
AFFT Grassroots Coordinator & Secretary
🇺🇸 Call For Pictures & WriteUps - When others see your activity, they are inspired, the process snowballs and Representatives, Senators and, yes, even the President start to listen to you and me. Please send your material to me at Jim.Bennett@FAIRtax.org.
🇺🇸 The Official FAIRtax Store - Don’t forget to order your FAIRtax gear from the FAIRtax Store.🇺🇸 We've Got You Covered, If You Let Us Know - If you are planning an event, we have event insurance coverage available for you. Email me the "who-what-where-when" and I will obtain for you a COI. Once the event is underway, it's too late.
🇺🇸 CPAC Finally, save the dates: February 24-27, 2022 (probably), for either Orlando, Florida, or Washington, D.C. (National Harbor, Maryland). Plan to be at the CPAC (“Conservative Political Action Conference) annual convention. The FAIRtax Guys were there this year and say next year we need to turn out in numbers. You don’t need to be a conservative to attend and help the FAIRtax.