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The "Fair Tax" if applied to me. [1]

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Date: 2023-01-26

Actual Numbers for the GOP "Fair Tax" plan.

To see if this hurts me, and by guess, other people, I thought I would look at the last 27 days of spending and the last 27 days of pay checks to do a real world look. I thought it would be worse than it is. For me.

I am middle class, lower really, working 135 hours in two weeks for one check and 127 in the other check for two weeks. Yes, lots of over time, most forced. I am paid well for my field, after 11 years at the job. (But less than other services in the area for my time).

I pulled up my Fold card and Bank Account to see what I spent since the first of the month. (My pay checks cover 31 Dec to 27 Jan).

My first thought was sales tax would be charged like it is in the state, Food, some services, investments, utilities would be exempt, as well as donations to churches/charities.

But reading the information says "everything". I doubt it means donations to charities, or investment in 401ks, but I'm going to go with "everything" I spent money on. I am not counting transfer from my checking to my Fold card as being taxed. I am counting my credit card payments and mortgage since one artical said the interest would be taxed but I didn't want to have to figure out that so I just added the whole amount to the taxable total. (which does mean i’m paying sales tax on top of sales tax, rather than sales tax just on the interest on the sales tax)

The numbers.

From 1 Jan to 27 Jan I spent a total of $5,611.63 on everything: food, comics, crypto, gold/silver, 401k, chruch tithing, gas, utilities, credit card, student loan, home loan et al.

The number of the tax is reported to be 23% but wierdly figured. ($100 would have $30 of tax, which in non-political math is 30%, but in political math $30 is is only 23% of $130) Since i'm normal, I'm using the 30% number.

30% of $5,611.63 is $1,683.49 in "fair tax" sales tax. Ouch!

In the same time, I had taken from my two paychecks Federal Income Tax of $1,534.35. (but I normally get back about 30 to 38% refund because we have 0 deductions taken out as a way to force us to save and the refund goes into the mortgage fund and covers most of that for the year, so really $951 in taxes)

Some repots say Social Security tax would be ended also, that would be $606.23 more.

So my numbers would be a loss of $149.14 to a positive $457.10 if they included SSI. ( or negative $732.50 to negative $126.26 if based on my real refund tax payments)

The other thing they claim is that each and every person would get 23% of the poverty threshold "refunded" to them each month. I have a family of five, so that would be $8082.20 a year or $679.50 a month. Almost a real UBI light.

If that is added in, that would be "free" money and would cover 44% of my monthly sales tax. which means the governement would get $1,004 after the UBI light payment, which is less than what they took out if they stop taking out SSI. (oh,and some reports say the states will get to keep up to 25% of the sales taxes as collected)

We won't ask how that works out for the budget, but my ballpark number is that is around $690 billion, almost the entire miltiary budget each year. And with less taxes collected by my example, i'm not seeing this balancing the budget with out massive cuts we all know will never happen.

I do know that I would be a lot more frugal on my spending, a lot of the $3 to $5 impulse buys would be reduced and the number of things bought second hand for cash would also go up.

So yes, their plan would give me a break slightly on a big view. But I would bet the numbers are a lot less at lower incomes. I don't have numbers that i could work for someone making less than me but even reducing the numbers by 30% in spending and taxes, the UBI light does make a real difference but not quite enough to break even. I see advantage if someone is making 50% more than me but spending at my level.

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[1] Url: https://www.dailykos.com/stories/2023/1/26/2149525/-The-Fair-Tax-if-applied-to-me

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