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Old April 5th, 2011, 10:38 AM   #1
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** Employers’ FICA taxes are equivalent to a federal sales tax **







Currently Wage earners directly pay for FICA 7.65% of their wages. Employers also pay an equal FICA payment based upon their payrolls. Enterprises generally pass all of their expenses onto their customers. Employers’ 7.65% of their payrolls effectively behave similar to a federal sales tax.







If labors’ portion of aggregate prices is 1/3 of aggregate prices, employers’ FICA taxes behave as a federal sales tax exceeding 2.6%; if its portion is ½, employers’ FICA behaves as a sales tax of almost 4%. (Refer to the following message entitled “Current federal sales tax rate” for further explanation).







Currently wage earning families FICA expenses are directly 7.65% of their wages and indirectly what’s effectively the federal sales tax. If they spend their entire incomes derived from wages, they are paying somewhere between 10.25% and 11.66% for FICA. (Regardless of income sources, (due to employers’ FICA all purchasers of U.S. products pay between 2.6% to 4% for the equivalent of a federal sales tax).







Because FICA is directly levied upon employers’ payrolls, unlike other sales taxes, this tax levied upon enterprises increases in step with their payrolls, thus discourages hiring and is a more specific drag upon aggregate wages and the economy.







** There’s no logical relationship between income and medical needs; fundings for both Medicare and Soc. Sec. Annuity programs are insufficient. **







Currently wage earners and employers each directly pay 7.65% of payrolls for FICA taxes which are allocated as 12.4% for SS retirement annuities and 2.9% for Medicare. Both programs’ fundings are insufficient.







SS retirement annuity benefits are primarily dependent upon wage earners’ lifetime incomes. There is absolutely no logical relationship between income and medical need. The termination of Medicare or SS retirement annuities would be a net economic detriment to our nation.







I advocate no portion of FICA payroll tax should used to fund any portion of Medicare. Medicare should be entirely funded by a general tax based upon a broader than U.S. aggregate payrolls) base. Similarly in recognition of SS retirement annuities’ contributions to our economy, that program’s funding should be shared by FICA and a broader based general tax.







Respectfully, Supposn
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Old April 5th, 2011, 10:44 AM   #2
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** Current federal sales tax rate **



Currently a 7.65% Based upon payroll is directly levied upon employers. Enterprises generally pass their expenses onto their customers. Employers’ FICA taxes effectively act as a federal sales tax. The rate of what’s effectively a sales tax is dependent upon the portion of aggregate prices that’s attributable to labor expenses.



If labor is 1/3 of aggregate prices:



[(0.0765/3) / 1 - (0.0765/3)] = 0.0255 / 0.9745 = 2.61% sales tax rate.



If labor is 1/2 of aggregate prices:



[(0.0765/2) / 1 - (0.0765/2)] = 0.03825 / 0.9675 = 3.97% sales tax rate.



/////////////////////////////



If a sales tax can be devised with a tax base exceeding twice USA’s aggregate payrolls, and less than ½ of those sales prices is attributable to labor, then 9.1% of payrolls, (i.e. 4.55% of employers’ payrolls and employees wages) could be replaced with a single 4.55% sales tax



To any extent that labor is attributable to less than half of the sales taxes' applicable prices, tax revenues will increase due to these tax modifications; but this tax modificatrion is of no advantage if aggregate prices subject to the sales tax do not exceed twice the labor imbedded within those prices.





Respectfully, Supposn
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Old April 5th, 2011, 10:13 PM   #3
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I'm self-employed, and pay a 15.2 percent "self-employment" tax.



I'm penalized more than a wage earner.



Your points are good ones Supposn.
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Old April 6th, 2011, 12:58 AM   #4
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ImagineThat, you are part of a minority but certainly a vital minority.







As usual the self employed were not a primary consideration when this proposal was formulated but (for a change) within this proposal the self-employed will particularly benefit.







I’m not a statistician. I do not know if a yet to be drafted federal general consumption tax’s base would be at least twice the total amount of USA’s aggregate payrolls. Unlike many other questions, I’m confident the U.S. Congressional Budget Office and the White House’s Office of Management and Budget can each definitely determine that answer with little uncertainty.



In the least acceptable circumstance, (i.e. the aggregate prices applicable to the sales tax are ONLY twice USA’s payrolls), wage earners would enjoy a net benefit due to this proposal. Although federal revenues’ would not be increased by replacing 9.1% of payroll with a 4.55% sales tax, gross prices would only be increased by 2.25%.



If U.S. aggregate prices are now only twice the amount of our aggregate prices, 4.55% of employers’ payrolls now behave as a 2.3% federal sales tax. Voters may listen to how a shift from 4.55% of their wages to 4.55% tax of their purchases is a net gain; they will not listen if the expressed rate of sales tax is greater than the expressed rate of taxes upon gross wages.








Respectfully, Supposn



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Old April 6th, 2011, 07:04 AM   #5
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I am in the minority as a self-employed person, yet individual business owners provide many jobs, and it's said the majority of new jobs, never researched that to affirm its veracity.



I focused on my having to pay a 15.2 percent self-employment tax, but really, who pays it? My customers. So, add that cost into your calculations.



Funny but true story. One night falling asleep and when I was in the 28 percent federal income tax bracket, for whatever reason my mind goes .... I pay 28 percent federal income tax..... and 15.2 percent self-employment tax .... and the local sales tax is 7 percent ...... HOLY CRAP, that adds up to 50 percent I thought with eyes popping open wide.
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