By Patrick R. Burkett
February 05, 2013
The 23% tax is included in the stated price of each item or service. Thus for a $100 item, $23 goes for taxes, and the remaining $77 pays the cost of the item. This is the same as saying that if you are in the 25% income tax bracket, for every $100 you earn, $25 goes for taxes and you keep $75. On the other hand if you divide $23 by $77 you come up with a 30% tax; but to be fair, your income tax rate by this same method would be calculated by dividing $25 by $75, which is 33%. And if you add in your $7.65 payroll tax for social security, you now pay $32.65 and keep $67.35, which is really a 48.5% tax. Thus the 30% Fair Tax rate is definitely better.
Patrick R. Burkett
Received February 02, 2013 - Published February 05, 2013
Viewpoints - Opinion Letters:
Representations of fact and opinions in letters are solely those of the author.
Your full name, city and state are required for letter publication.