Re: Fairtax: how does this math work out?


"js" <jonathansmith99@xxxxxxxxx> wrote
> The difference is, at the end of the week the pay envelopes
> of working Americans will have more cash and the amount
> of more cash will be EXACTLY equal to the amount
> they need to pay at the cash register for the NST.


Now that's not quite true, is it.


Take a single individual (maybe a highschool drop out, making $700 a week
claiming single status. His (or her) tax withholdings according to the
tables should be $53.55 in Social and Medicare and $60 in Federal
withholding. Another $24.78 comes out in State withholding.

Keeping the state withholding intact, his net check jump up by $113.55
dollars to a whopping $675.22. Making the tiny leap of judgement to state
that this worker is slsightly loose with his saving/investment habits and he
spends every dime of his net pay, his buying piwer isn't $675.22, but
$519.40 because tack on 30% sales tax to his purchases and he's now flat
broke. Sales tax paid = $155.82

Yet, you'll notice that his net check only increased by $113.55. Where does
he get that extra $42 from so he can make ends meet? Will his boss be nice
and increase his pay along with the other 300 employees that are in similar
straits? Will he take a second job?

He lost buying power for sure. What happens on a global scale when buying
power is lost?

Can we all say "depression"?



> It makes NO difference to employers and none to wage earners. That's zero
> sum.


Not on an individual basis.



> The long term effect could well be positive on the
> economy BECAUSE there is an apparent incentive to save


Look - the economy doesn't grow unless someone SPENDS money. Think about it
for a long while.



--
Paul A. Thomas, CPA
Athens, Georgia
paulthomascpapc@xxxxxxxxxxxxx



.

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