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Small-Scale Question Sunday for July 28, 2024

Do you have a dumb question that you're kind of embarrassed to ask in the main thread? Is there something you're just not sure about?

This is your opportunity to ask questions. No question too simple or too silly.

Culture war topics are accepted, and proposals for a better intro post are appreciated.

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Yes. How does the FairTax proposal work?

Flat percent gross receipts tax with one exception: If enacted, every business pays 25% of the receipt price of goods and services directly to the federal tax authority, except for used goods. This ensures that goods from used jeans to used skyscrapers are only taxed once, ever: you buy it, it is yours to resell without government interference. This protects private property rights.

Flat universal rebate: Every citizen and legal resident gets a direct-deposit monthly rebate, 1/12 of 25% of the federal poverty income level (with certain adjustments for married, kids, etc., adjusted yearly). This dollar amount is supposed to recoup the taxation paid by the poorest, so the government doesn’t cost them a dime on net. Everyone gets an identical flat amount, rich or poor, a true national dividend. This can even benefit the unbanked, who can get a checking/savings account due to the guaranteed nature of the deposit. This makes it fair.

Ends FICA payroll withholding: Income tax is eliminated permanently and the income tax amendment repealed. FICA withholding is replaced with a one-time downward wage adjustment equivalent to the FICA calculation, whereupon workers get their full contractual wages with no taxation, no April 15, and no fear of the taxman ever again. This ends government intrusion.

Ends the IRS: Replaces a unionized bureaucracy/federal revenue police force/retirement fund for bureaucrats with an automated system and a much smaller revenue enforcement bureau aimed solely at businesses. This yields cost savings for every taxpayer in every bracket, while keeping the plan a revenue neutral replacement for income taxes.

Ends investment taxes: This encourages people to invest without fear of jail or penalties.

It's a new form of Affirmative Action in South Africa where they check your skin tone with a pantone strip and adjust your income taxes accordingly. Or so the name naively suggests (I do recall reading about it, thinking it was a good idea, then forgetting everything else).