kuyu
Sep 3, 2004, 11:11 AM
OK, I've decided to put together a good comparison of the economic consequences of the Current and Fairtax systems. I'll use four scenarios: Poor, middle class, upper-middle class, and rich (all single, non-head of household, in this example). Yearly income for each will be $10,000, $32,000, $70,000, and $200,000. I will refer to each group as A, B, C, and D, repectively. I have not figured this out yet, so it's not loaded. I'll be computing the numbers as I type.
The numbers for Single A ($10,000/year all of which is spent):
Current: Effective Rate=5.25%
Fairtax: Effective Rate=1.64%
The numbers for Single B ($32,000/year all of which is spent):
Current: Effective Rate=11.67%
Fairtax: Effective Rate=16.33%
The numbers for Single C ($70,000/year all of which is spent):
Current: Effective Rate=18.75%
Fairtax: Effective Rate=19.95%
The numbers for Single D ($200,000/year all of which is spent):
Current: Effective Rate=26.00%
Fairtax: Effective Rate=21.93%
If, under the Fairtax system these same individuals spend their current disposable income under the Current system (for discussion, say 75%), the rates change.
For A ($10,000/year. $7,500 spent)
Current: Effective Rate=5.25%
Fairtax: Effective Rate=-4.11%
For B ($32,000/year. $24,000 spent)
Current: Effective Rate=11.67%
Fairtax: Effective Rate=10.58%
For C ($70,000/year. $52,500 spent)
Current: Effective Rate=18.75%
Fairtax: Effective Rate=14.20%
For D ($200,000/year. $150,000 spent)
Current: Effective Rate=26.00%
Fairtax: Effective Rate=16.18%
Seems like the middle class take a hit under the Fairtax system if they spend all their money. But, if they spend the same under fairtax that they did under the current system, they are better off. Also, the "poor" effectively pay negative tax under fairtax by spending their current disposable income. If requested I'll compute the numbers for heads of households with families in these same earning groups.
I got the info for these computations at
http://www.bdo.com/about/publications/tax/taxindv_oct_03/2003FedRates.asp
http://partners.financenter.com/abcnews/learn/guides/itaxbasics/itaxstdded.fcs
http://www.fairtaxvolunteer.org/smart/faq-main.html#3
The numbers for Single A ($10,000/year all of which is spent):
Current: Effective Rate=5.25%
Fairtax: Effective Rate=1.64%
The numbers for Single B ($32,000/year all of which is spent):
Current: Effective Rate=11.67%
Fairtax: Effective Rate=16.33%
The numbers for Single C ($70,000/year all of which is spent):
Current: Effective Rate=18.75%
Fairtax: Effective Rate=19.95%
The numbers for Single D ($200,000/year all of which is spent):
Current: Effective Rate=26.00%
Fairtax: Effective Rate=21.93%
If, under the Fairtax system these same individuals spend their current disposable income under the Current system (for discussion, say 75%), the rates change.
For A ($10,000/year. $7,500 spent)
Current: Effective Rate=5.25%
Fairtax: Effective Rate=-4.11%
For B ($32,000/year. $24,000 spent)
Current: Effective Rate=11.67%
Fairtax: Effective Rate=10.58%
For C ($70,000/year. $52,500 spent)
Current: Effective Rate=18.75%
Fairtax: Effective Rate=14.20%
For D ($200,000/year. $150,000 spent)
Current: Effective Rate=26.00%
Fairtax: Effective Rate=16.18%
Seems like the middle class take a hit under the Fairtax system if they spend all their money. But, if they spend the same under fairtax that they did under the current system, they are better off. Also, the "poor" effectively pay negative tax under fairtax by spending their current disposable income. If requested I'll compute the numbers for heads of households with families in these same earning groups.
I got the info for these computations at
http://www.bdo.com/about/publications/tax/taxindv_oct_03/2003FedRates.asp
http://partners.financenter.com/abcnews/learn/guides/itaxbasics/itaxstdded.fcs
http://www.fairtaxvolunteer.org/smart/faq-main.html#3
