Fair Tax (1 Viewer)

[Jeff Miller]

The core problem of a "Fair Tax" is, from a logical standpoint, the heaviest burden falls on the Middle Class, as they "spend" a significantly larger portion of their income in the retail sector then the richest income bracket, and therefore a higher percentage of middle class income will end up being taxed then (wealthier tax brackets). This makes the tax fundamentally regressive, as opposed to progressive, which is from a base logic perspective fundamentally stupid.

To get around this a lot of different bells and whistles are being attached to the idea, such as a cross-board rebate that will proportionally mean more to the poorest and not taxing "necessities" like food.

But then you're falling into the exact same trap you're supposed to be getting away from, which is the income tax with all of it's assorted bells and whistles (deductions, exceptions, credits, etc).

"all men are created equal..."

except the rich...sock it to them....

 

[pancho]

I think is is the best option that I have heard. Here is a pretty good analysis of it.

http://economics.about.com/cs/taxpolicy/a/fairtax.htm

 

[SoonerJim]

"all men are created equal..."

except the rich...sock it to them....

That's Obama's point: "a tax break "they" never needed and never asked for"

So presumably, it can be removed without consequence. I wonder what the ceiling is on that line of thinking. The other candidate wants to garnish wages to fund mandatory health coverage, a plan defeated by Democrats in CA.

Assume we've exhausted the supply side ethos. We then choose between competing visions of income acquisition and redistribution. We KNOW what McCain thinks.

"What a country!"
-Yakov Smirnov, Branson comedian fixture

 

[Sandman]

But then you're falling into the exact same trap you're supposed to be getting away from, which is the income tax with all of it's assorted bells and whistles (deductions, exceptions, credits, etc).

Honestly, my biggest problem with the income tax is that it requires people to report to the government what they make. I don't mind making exceptions and "bells and whistles" with the sales tax as long as it doesn't require you to report income. Plus, I don't think that ANY citizen (even the rich) should be required to hire an accountant in order to prepare tax forms for the government (Cov has a stroke). The government should tax in the least intrusive manner possible.

 

[Bless U Boys]

I would like it only because of the millions of people who currently don't pay taxes, illegals / cash workers who lie about income. Also, the rich who come up with these loopholes, and evade paying what they owe.

 

[SoonerJim]

This is Limbaugh's dictum: the tax code is the lever of state power. It will NEVER abrogate its data collection authority. Getting income pre-16th amendment was OK when we took care of our own, and wars and bodies were cheap.

Today, it's cradle to grave, and every child is precious in Hillary's sight. An entity which legally extracts $3 trillion at the federal level alone isn't going away by dissolving its milk supply.

 

[LSSpam]

"all men are created equal..."

except the rich...sock it to them....

A depressingly common misconception.

The first thing you have to understand when deciding who gets to foot the bill in terms of taxes is that wealth as you undoubtedly define it doesn't exist in a natural state.

That is to say, the concept of debt/credit, "ownership" as is legally defined, even money at it's most basic form is solely a function of the government. That's right, the wealthy, by definition, are pro-big government.

Because no government, at the most libertarian/anarchistic form, there is no wealth, at least not as we think of it. Your house only belongs to you because the government says so and is willing to enforce that. If there was no government your house would merely belong who whoever was in it at that moment and willing to fight for it.

In otherwords, the people who benefit the most from law and order are the wealthy because, frankly, there are a lot more poor people with a lot less to lose. Therefore the "burden" for the government's function, by philosophical necessity, rests on the shoulders of the wealthiest and then on down. This is in their own self-interest.


Beyond which, just from a strictly utility standpoint it's in their interest to shoulder a higher portion of the tax burden. Bill Gates makes more money from Microsoft then he pays in taxes, this is how he got enormously wealthy. That Microsoft is successful requires the existence of a substantial middle class and healthy business sector (also dependent on a substantial middle class) in order to buy his product. If they did not exist, his wealth wouldn't.

Therefore it is fundamentally in Bill Gate's interest to shoulder a larger part of the tax burden because the net "receipt" in terms of a healthy customer base with large amounts of disposable income is to his great benefit. This is not a dollar-to-dollar ratio. Each additional dollar a Middle Class family gets from Bill Gates is recycled numerous times in the economy. It's like investing, literally. Every Bill Gates dollars means 20 middle class dollars. Or something, I actually don't have the economics in front of me.

It would be enormously short-sighted of Bill Gates to want to pay the same taxes as a middle-class family. What Bill really wants is a government that spends his money more effectively, Given that maybe he could pay less. But Bill is undoubtedly well aware that, by necessity, he shoulders a greater burden then the Middle Class. It's in his best interests.

 

[LSSpam]

Honestly, my biggest problem with the income tax is that it requires people to report to the government what they make. I don't mind making exceptions and "bells and whistles" with the sales tax as long as it doesn't require you to report income. Plus, I don't think that ANY citizen (even the rich) should be required to hire an accountant in order to prepare tax forms for the government (Cov has a stroke). The government should tax in the least intrusive manner possible.

That's a very good argument and by far the strongest one. I'm pro "No I won't show you my "papers" *******", so you're striking a chord in my heart there buddy

 

[Pure Energy]

A progressive national retail sales tax.

I'm ok with this. Without a federal income tax it will free up thousands of dollars for people to spend (or save) so I wouldn't expect a negative impact on the economy. Plus, you would have direct control over your tax amount. I would like to see this limited to products and services with an exemption for untilties and morgage payments, and a cap on home purchases.

A prebate to ensure no American pays federal taxes on spending up to the poverty level.

Absolutely NOT. the poor make more use of government services than any other economic group, if they are going to be the benificiearies of such services, then should pay into them just like everyone else. No one should ever pay 0 tax.

Dollar-for-dollar federal revenue neutrality.

I'm good with that, with an exception for defense spending during wartime.

Repeal of the 16th Amendment through companion legislation.

Or at the very least, clairfy it with every explicit limitations. I doubt it will ever be repealsed. Once you give the government power to tax, they will never, ever, let that power go.

Just to clarify 2 points...

1) The tax is a flat % applied to the sales price of an item (not progressive from the sense that the more income you make the higher percentage you pay). Here's an example....a person buying a car that stickers for $70K today would pay roughly $90K after fairtax (keep in mind they're take home pay has shot up by the entire amount they pay in taxes today) and a person buying a $20K car would pay roughly $26K (fairtax math is a bit confusing [which is one of my questions/issues with it] to me so I'm using 30% to keep it simple). So the first person paid $20K in taxes while the other paid $6K; both paid the same percentage. My guess is if this proposal ever passed...highly unlikely but if it ever passed, you'd see tinkering with the percentages for high luxury items and necessities.

To your second point...if people are no longer required to report their earnings and the government no longer tracks earning (part of the fairtax proposal); there's no way for the government to track if someone got more from their prebate than they actually earned during the year.

 

[Hoyasaint]

Honestly, my biggest problem with the income tax is that it requires people to report to the government what they make. I don't mind making exceptions and "bells and whistles" with the sales tax as long as it doesn't require you to report income. Plus, I don't think that ANY citizen (even the rich) should be required to hire an accountant in order to prepare tax forms for the government (Cov has a stroke). The government should tax in the least intrusive manner possible.

I agree with a VAT or national sales tax.

1) It taxes people for their spending, rich people spend more than poor people thus they pay more.

2) The government has a huge interest in seeing people save more. The more an individual saves the less likely he is to become a burden on the state in unforseen circumstances and old age. By "punishing" spending, you create a natrual incentive to save.

3) Americans are not natural savers. When most people get a raise they'll typically find themselves down the line in a situation that is not significantly different than before the raise, they just spent things more on things.

4) Necessities can easily be exempted from taxes, many states already do such things so clearly it can be done.

5) The 'black market' that would rise out of this would likely be minimal (if exist at all) unless the sales tax was prohibitively high, at which point there would be no point in changing the system.

6) As long as there is a code that provides methods to lower your taxes to achieve certain benefits (support working mothers, encourage home ownership, encourage higher education, encourage savings, etc) the richest of the country will continue to hire accountants and lawyers to get them through every loophole in the code. Fix a hole and 12 more are found. Some people become part of the upper class just on finding loopholes.

 

[CT Saints Fan]

I support the elimination of the income tax, replaced by a sales tax. I believe the income tax to be too intrusive. The government has no business knowing what I make a year and where my money is kept. Plus, people have to gather up as much documentation at the end of every year to try and prove that they don't owe any more tax, or that they paid too much.

With the sales tax, you pay as you go. There isn't a shock come April that you owe more money in taxes. Plus, I would imagine that the federal government could greatly reduce the size of the IRS. You wouldn't completely eliminate it, but you wouldn't need it to be the size it is today. Most (if not all) of the states have a sales tax that they collect. Let the states collect the federal sales tax at the same time and forward it on. I would think that would be the most efficient and least intrusive manner to collect taxes.

Brilliant. Which is why it'll never happen. Big Accounting will make sure of that. They know where *all* the bodies are buried - literally and figuratively.

 

[Pure Energy]

Fundamentally people claim they want Change. Pretty much everyone agrees the current income tax system is kludge, onerous, unfair, expensive, manipulative, inefficient, intrusive, etc. However, people continue to believe tweaking the current system (politicians call use the word "reform") will in some way shape or manner change things for the better. Let's get real about tax "reform"...as soon as a loophole is addressed...tax attorney's find another loophone. When that one is closed the cycle repeats itself.

Don't believe me....look at the pages of federal tax rules over the years in the graph below.

IMO, For politicians to loose their grasp on the tax carrot/stick they wield it'll take a Boston Tea Party type revolt by the plebeians. For true change to happen, people don't have to care about this issue a little; they have to care about it a lot! The Fairtax proposal probably needs some tweaks, but it has to be a whole lot better than continuing with the current muck of a tax system we have today.

 

[V Chip]

Just a few things about the Fair Tax proposal, I think a lot of people haven't read it or don't know these things (heck maybe there are things I don't even know, I'm just finding out about the details myself).

• Fair tax will have no exceptions. Taxes would be collected on everything, from food, to rent, to clothing, to services, goods, etc.
• Tax would NOT be collected for anything used (although how this would be enforced, I don't know)
• Tax would not be collected for things used to build something, just the final product.
• Prebates would be the same for everyone -- Joe Nojob would get the same Prebate amount as Richie Rich (assuming both single).
• The Sales tax would be 30% on everything (although it will also be described as 23% if determined inclusively).

It's odd because it sounds like I'm pushing the FairTax but I'm dubious of it; it's just that so many people I have heard pushing it that I wanted to find out more, hear more pros and cons, and of course I like Saintsreport EE debates.

 

[pancho]

One of the few things that I agree with Boortz on is the fair tax, and here is an interesting perspective on going from the fair tax to the current tax system:

http://boortz.com/nuze/200705/05112007.html

A FAIRTAX TALE ....

I have a little scenario I would like to paint for those of you out there who just insist on finding something wrong with the FairTax. Admittedly, the FairTax isn't perfect. No tax plan is. How, after all, can you come up with a perfect way for a government to take its operating funds from its subjects? If you know an easier and more equitable way to do it, by all means, let me know!

I'm going to ask you to crank up your imagination for a moment here ... and by "you," I mean those of you who think that this FairTax thing is a bad idea and you're not prepared to come on board.

I want you to imagine a scenario. Don't worry about whether or not this scenario is possible .. Just accept it as I present it, and then consider the alternative picture I'm going to also present. Simple as that.

Let's imagine that the FairTax is the law. We've been operating under the FairTax since the day you drew your first paycheck. It's all you know. Here is your imaginarily "reality."

* On every payday you get your complete paycheck. There are no deductions. If you earn $2,000 per week, you get a check for $4,000 every two weeks.
* You never have to save receipts or create any records pertaining to federal taxes.
* You can invest money without paying any taxes on it.
* You don't have to pay taxes on the money you earn through your investment portfolio.
* You pay no taxes on any money you put in your savings account.
* When you die you get to leave your entire estate, everything you own, to whomever you wish. The federal government will take no taxes from your estate. Your death is not a taxable event.
* When you go to the store to buy an item, and the price tag says $19.99, you will had a $20 bill to the cashier and get one penny back. The price tag is the price.
* There are four people in your household. You, your spouse and two rug rats. At the beginning of every month you get a check or a credit to your checking or charge card account in the amount of $506.00 to compensate you for the federal sales taxes that are included in the price of everything you buy; right up to the poverty level.

All in all .. not such a bad deal. You keep all of the money you earn and you get five hundred bucks a month from the feds. Plus .. you only pay taxes when you spend money.

Now .. .here comes some politician who has a grand scheme for a new tax system. He wants to explain it to you. Here's his great idea ..... give him a listen and tell us what you think.

The plan is simple. First the federal sales tax is going to be removed from the price of everything you buy. This will mean that everything will cost 23% less than it does now. But ... he's going to levy an income tax on every single individual and business who plays any role at all in bringing those products to the marketplace. These people and companies are all going to pass the cost of these taxes down the economic line to the final consumer of the products they manufacture. These taxes will end up embedded into the prices of products in our retail marketplace, bringing those prices right up to the current level. So .. no loss, no gain.

Next your political benefactor is going to take away your $500 per month prebate from the government. In its place he's going to tax every penny you earn. It doesn't matter where the money comes from. Your salary, your investment income, winnings at the track ... whatever you earn and however you earn it, it's going to be taxed.

Wait! He's not through. He's also going to tax your wages for Social Security and Medicare. He's going to try to soften the blow by telling you that your employer is going to match the taxes he takes out of your paycheck, but you're employer has made it clear that this money is all going to come out of the money he has budgeted to hire you. You'll probably lose out on your next raise while the boss his accounting in order.

There are some more nifty ideas in your congressman's tax reform plan. When you die your family is going to have to file a complicated estate tax return. A huge amount of the wealth you have managed to build during your life is going to be sent to the government. Your survivors may well have to sell the family business in order to come up with the money to pay for these death taxes.

One more thing .. you're going to have to keep records of all of your financial transactions. Every year you're going to have to spend no less than about 30 hours or spend hundreds of dollars to hire someone to fill out tax forms for you. If mistakes are made you will be hit with a huge penalty and interest. Oh .. and the government is going to have access to all of your financial records to make sure that you are paying everything you "owe."

The question, of course, is why does this politician want to change the tax system in this way? Power, that's why. They want to be able to enact little changes to the tax code that will benefit certain constituents ... which constituents will then benefit the politicians -- with money or with votes. Under the FairTax system these politicians have no power to favor one group of voters over another for the benefit of votes. The new system would give them that power.

Your choice, my friends. If we had the FairTax now ... would you be willing to make the switch?

 

[St. Widge]

Just a few things about the Fair Tax proposal, I think a lot of people haven't read it or don't know these things (heck maybe there are things I don't even know, I'm just finding out about the details myself).

• Fair tax will have no exceptions. Taxes would be collected on everything, from food, to rent, to clothing, to services, goods, etc.
• Tax would NOT be collected for anything used (although how this would be enforced, I don't know)
• Tax would not be collected for things used to build something, just the final product.
• Prebates would be the same for everyone -- Joe Nojob would get the same Prebate amount as Richie Rich (assuming both single).
• The Sales tax would be 30% on everything (although it will also be described as 23% if determined inclusively).

It's odd because it sounds like I'm pushing the FairTax but I'm dubious of it; it's just that so many people I have heard pushing it that I wanted to find out more, hear more pros and cons, and of course I like Saintsreport EE debates.

Based on that I'm not for it. 30% is way too high. The first thing we need to do is slash spending on dumb things and then figure out what the real Constitutional limits on responsiblities the Feds really have. Then figure out a tax % from there. It ought to be really low.

I know it's wishful thinking. I support a use/sales tax over any form of income tax. IMO, income tax is wage slavery. Why should you be punished for earning income? Paying based on what you use seems more fair. What I want is a flat national sales/use tax and I'm not sure that that is what people mean by "fair tax."

And onepeat, it is not a "tax on the poor" it's a tax on everyone equally based on the amount of services they consume. Why should someone using the same services not pay the same price? If you use more services, you pay more. Therefore, the "rich" pay more and the "poor" pay less and both only pay for what they consume.