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Subject:  Re: Roth VS Traditional Date:  8/11/2004  2:03 PM
Author:  JAFO31 Number:  41933 of 88507

rookieJoe: "Sounds like Bush thinks abolishing or reducing income tax in favor of sales tax is worth considering.

A quote from Bush:
You know, I'm not exactly sure how big the national sales tax is going to have to be, but it's the kind of interesting idea that we ought to explore seriously

The chances are probably slim to none that this will actually happen any time soon, but if it did... Ouch! Everyone who did ROTH conversions would have basicly made a donation to uncle sam. They voluntarily pay income tax to convert to a ROTH, then income tax goes away, then we can pay extra sales tax in retirement."

Fairtax has looked at this, and their revenue neutral number is a sales tax of nearly 30% (they call it 23% inclusive, which means that if total bill, including tax is 100, then tax is 23; by normal calculations of sales tax that would be 23/77 = 29.87% sales tax).


And it would be a huge hit for Roth IRAs, but also for traditional IRAs too because a large number of people have a marginal FIT below 30%.

Regards, JAFO

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