K, I'll re-run it at 15%, will edit this post.
EDIT:
Inputs:
Annual Income: $20,000
Income Tax: $3000 (15%)
Single's Tax Return
Not receiving Social Security Benefits
No Mortgage
No money in IRAs, 401k's, or other pretax plans
$5000 in a savings account (pat yourself on the back doing that at 20k a year)
$0 to charity
$0 in tuition (I'm a student thanks to Pell Grants)
$0 in 'cash gifts' or gift cards (?)
$15,000 in 'used items' (please note this is a very misleading part of this calculator. It's the only place you can input how much of your money you spend, on anything, in the whole calculator. However, it's called the 'used' items, and the info button claims it is only for used car sales and garage sales and the like. What about spending on food? People do that occasionally.)
Combined Local and State Sales Tax: 6%
Proposed Fair Tax Rate: 23%
and the results are:
With the Fair Tax, you get:
-166.54% MORE
spendable income.
$7,330.75 MORE
purchasing power.
$7,570.73 LESS
federal taxes.
EDIT2: Here is how they are trying to trick you with this calculator. The only 'expenditures' listed is for 'used' items. If you plug what you plan to spend in, I'm not sure how the 'used' item affects the result. I suppose it depends on whether they want to make 'used' items taxable or not. I'm guessing not taxable because not only does it create a huge loophole (bets on whether companies can use it?) but it would require people to keep track of it. Plus, having it be the only expenditure available for input in your calculator not covered by the sales tax sure makes it look good, even if it breaks the calculator for purposes of anything but a corporate propaganda tool.
EDIT3: Here are the results if you only spend $500 on 'used' items.
With the Fair Tax, you get:
41.24% MORE
spendable income.
$3,995.75 MORE
purchasing power.
$4,235.73 LESS
federal taxes.
It looks much nicer, doesn't it? However, remember this is BEFORE YOU BUY ANYTHING THAT THIS TAX AFFECTS. If you have $15,000 to spend due to putting $5k in a savings account, you will actually have about $11.5k (I didn't do the math) if you fit the inputs above, if you spend it on items with taxes on them.
Food costs I just calculated here:
http://www.cnpp.usda.gov/usdafoodcost-home.htmputs me at $2011.20 for living a 'thrifty' eating lifestyle annually.
15k-2k =13k
13k x .23 = 2990
13k - 3k = 10k
So, after food and $5000 to savings, like this proposal encourages due to removing taxes on bank profits (including yours), you have roughly $10,000 to pay for taxable things.
Note that this imaginary fellow is not in debt, has no plans to enter debt, and lives with his parents.
For someone else, 400$ a month, an extremly good price for an appartment: $4800 annual = $5200 left, before utilities. Since you are purchasing these things, my guess is there would be tax on them. $1104 on the rent alone. $4100 left. The apartment we rent out costs about $100 a month in utilities, meaning $1200 annually. $2900 left. Taxes on utilities: $276 ; $2425 left for gas, deodorant, soap, and anything else purchasable that isn't edible. Oh yeah, we might be legally required to pay for insurance by the time the Fairtax becomes a looming threat (2012)
Here is a short rundown of how government subsidies work for insurance:
http://www.csmonitor.com/USA/Politics/2010/0320/Health-care-reform-bill-101-Who-gets-subsidized-insuranceWhat's the formula for aid?
Let’s start with people who are unemployed, self-employed, or work for businesses that don’t offer insurance. Beginning in 2014 (that’s right, this is four years away), these people would be able to shop for coverage in new “health exchanges,” a sort of online bazaar in which insurers would hawk different kinds of plans. We’ll talk more about how these malls might work in our next story.
Congressional budget experts figure that about 25 million people will shop for coverage in these exchanges. That’s a pretty big market. Of these, about 19 million are likely to be eligible for financial aid.
The cutoff level would be an income of four times the federal poverty level. For one person, that’s about $44,000 a year. For a family of four, the comparable figure is about $88,000.
Subsidies would be figured on a sliding scale, with those who make less getting a bigger boost and those nearer the top getting a smaller one.
The formula is pretty complicated. Basically, though, people who make three or four times the poverty level would get enough federal money so that they would not have to pay more than about 10 percent of their income for a decent health insurance package.
People who make less would have to pay a smaller slice of their income for coverage. For instance, individuals who make about $14,000, and four-person families with incomes of about $29,000, would not have to pay more than 3 to 4 percent of their incomes for insurance.
And those who make even less – under 133 percent of the federal poverty level – would be able to enroll in a newly expanded Medicaid program.
The federal subsidy would go straight to the insurer. It would look like a discount on the policy to the customer.
Amusingly enough, I have to wonder if the government would tax itself.
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Topic: The "America Question" (Read 19556 times)