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Originally Posted by Pballer
The whole point of getting rid of the income tax is to starve Medicare and Social Security. Payroll taxes will not fund nearly enough for benefits. Gutting Medicare and Social Security is the Republicans' dream.
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Except - as I said - income tax doesn't fund Social Security or Medicare. FICA payroll contributions fund it. It's a separate line item on your paycheck. Even if you don't have anything taken out of your paycheck for income tax at all - you'll still see a FICA deduction.
The "Fair Tax Act" has nothing to do with fairness, and everything to do with keeping the poor poor, and the rich, rich. Here's the actual text of the Act:
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FairTax Act of 2021
This bill imposes a national sales tax on the use or consumption in the United States of taxable property or services in lieu of the current income taxes, payroll taxes, and estate and gift taxes. The rate of the sales tax will be 23% in 2023, with adjustments to the rate in subsequent years. There are exemptions from the tax for used and intangible property; for property or services purchased for business, export, or investment purposes; and for state government functions.
Under the bill, family members who are lawful U.S. residents receive a monthly sales tax rebate (Family Consumption Allowance) based upon criteria related to family size and poverty guidelines.
The states have the responsibility for administering, collecting, and remitting the sales tax to the Treasury.
Tax revenues are to be allocated among (1) the general revenue, (2) the old-age and survivors insurance trust fund, (3) the disability insurance trust fund, (4) the hospital insurance trust fund, and (5) the federal supplementary medical insurance trust fund.
No funding is authorized for the operations of the Internal Revenue Service after FY2025.
Finally, the bill terminates the national sales tax if the Sixteenth Amendment to the Constitution (authorizing an income tax) is not repealed within seven years after the enactment of this bill.
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So - if you buy a condo complex (investment) then you are exempt from paying sales tax on the property. But if you're a homeowner and buy a condo in that complex, you have to pay a minimum of 23% sales tax on it.
How many people in this country, who are currently college students preparing for life away from their parents' homes, will be able to afford a house PLUS 23% of its cost stacked on top of it, by the time they turn 30? What kind of home will they be able to afford?
There's a good looking house in Ocala for $220,000. 1236 square feet, 3bed 2 bath, 2-car garage, built in 2001 so not very old. That sales price will now be 270,600.
Don't forget the states will be responsible for collecting the tax and handing it over to the Fed, and the states have to be paid for THEIR work - so you can just bump the property tax up to cover that expense. Because local/municipal/county property tax is
not the same as sales tax. Closing costs on a home like that would be around $8,000.
So the $220,000 house is now almost $280,000 after all is said and done. That's going to make a lot of homebuyers ineligible for their mortgage. Even if they can afford the house and the closing costs, they have just been forced to lower their standards of what they can afford, assuming they need a mortgage (which most people in this country need, if they want to buy a house).
And yet - that rich guy who wants to buy a family compound and write it off as an "investment" won't have to pay a dime.