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.

thanks for sharing.

exactly.

not exactly.

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.

The real question you need to be asking is why does the government need 23%?

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

I'm sure we'll see more of this in the future.

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.

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The income tax imposed on investment income and pension benefits or IRA withdrawals is repealed.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.

kzfaq.infoiaYUyaortFA?feature=share

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. 🙏🩷

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.

Exact same math. It’s irrelevant what you buy. The math is the same.

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.

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.

all income would be tax free.

It will be maintained.

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.

Business-to-business purchases for the production of goods and services are not taxed.

thanks for sharing.

Yes

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.

It shouldn't change your goals.

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.

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That’s irrelevant to federal taxes.

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 !

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

It's based on the credit of the US government. That is all.

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.

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.

No.

“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

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.

Fair tax act prebate

Ask questions on our discord chat: Join Link discord.gg/enuJThjHJ9

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.

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!

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.

Not if you live in a tax free state:)

@@Phoenix-gu2fk no state is tax free. You make the differences in other taxes

Would be gone.

Maybe

@TravisSickle That's Is Very True?

better off. Get the income plus advance checks.

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.

Why is this?

Did you even watch the video?

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!