Fair Tax Under Attack

[tmorr37]

Fair Tax, Flawed Tax
Does adding 30% to the price of every house sold sound like a good idea to you?
http://www.opinionjournal.com/extra/?id=110010523
BY BRUCE BARTLETT
Sunday, August 26, 2007 12:01 a.m.

Former Arkansas Gov. Mike Huckabee's unexpectedly strong second-place showing in the recent Iowa Republican straw poll is widely attributed to his support for the FairTax.

For those who never heard about it, the FairTax is a national retail sales tax that would replace the entire current federal tax system. It was originally devised by the Church of Scientology in the early 1990s as a way to get rid of the Internal Revenue Service, with which the church was then at war (at the time the IRS refused to recognize it as a legitimate religion). The Scientologists' idea was that since almost all states have sales taxes, replacing federal taxes with the same sort of tax would allow them to collect the federal government's revenue and thereby get rid of their hated enemy, the IRS.
Rep. John Linder (R., Ga.) and Sen. Saxby Chambliss (R., Ga.) have introduced legislation (H.R. 25/S. 1025) to implement the FairTax. They assert that a rate of 23% would be sufficient to replace federal individual and corporate income taxes as well as payroll and estate taxes. Mr. Linder's Web site claims that U.S. gross domestic product will rise 10.5% the first year after enactment, exports will grow by 26%, and real investment spending will increase an astonishing 76%.
In reality, the FairTax rate is not 23%. Messrs. Linder and Chambliss get this figure by calculating the tax as if it were already incorporated into the price of goods and services. (This is known as the tax-inclusive rate.) Calculating it the conventional way that every other (This is called the tax-exclusive rate.)
The distinction is confusing, but think of it this way. If a product costs $1 at retail, the FairTax adds 30%, for a total of $1.30. Since the 30-cent tax is 23% of $1.30, FairTax supporters say the rate is 23% rather than 30%.
This is only the beginning of the deceptions in the FairTax. Under the Linder-Chambliss bill, the federal government would have to pay taxes to itself on all of its purchases of goods and services. Thus if the Defense Department buys a tank that now costs $1 million, the manufacturer would have to add the FairTax and send it to the Treasury Department. The tank would then cost the federal government $300,000 more than it does today, but its tax collection will also be $300,000 higher.

http://www.opinionjournal.com/images/storyend_dingbat.gif
This legerdemain is done solely to make revenues under the FairTax seem larger than they really are, so that its supporters can claim that it is revenue-neutral. But for the government to afford to purchase the same goods and services, it would have to raise spending by the amount of the tax it pays to itself. The FairTax rate, however, is not high enough to finance the higher spending it imposes. Therefore the proposal only works if federal purchases are cut by 30%, close to $300 billion--the increased cost imposed by the FairTax.

Similarly, state and local governments would have to pay the FairTax on most of their purchases. This means that it is partly financed by higher state and local taxes. It's also worth remembering that state sales taxes now average 6%, which means that the total tax rate will be 36% on retail sales.
State sales taxes have long exempted all but a few services because of the enormous difficulty in taxing intangibles. But the FairTax would apply to 100% of services, including medical care, thus increasing their cost by 30%. No state comes close to taxing services so broadly.
Consumers would also find themselves taxed on newly constructed homes. Imagine paying 30% to the federal government on top of the purchase price of your next house.
Since sales taxes are regressive--taking more in percentage terms from the incomes of the poor and middle class than the rich--some provision is needed to prevent a vast increase in taxation on the nonwealthy. The FairTax does this by sending monthly checks to every household based on income.
Aside from the incredible complexity and intrusiveness of tracking every American's monthly income--and creating a de facto national welfare program--the FairTax does not include the cost of this rebate in the tax rate. As noted earlier, the FairTax is designed only to match current revenues and does not cover any increased spending that it may require. Since the rebate will cost at least $600 billion the first year, either federal discretionary spending would have to be cut by 60% or the rate would have to be five percentage points higher than advertised.


Rejecting all the tricks of FairTax supporters and calculating the tax rate honestly--by including the higher spending that it mandates and by being realistic about what could actually be taxed--professional revenue estimators have always concluded that a national retail sales tax would have to be much, much higher than 23%.

A 2000 estimate by Congress's Joint Committee on Taxation found the tax-inclusive rate would have to be 36% and the tax-exclusive rate would be 57%. In 2005, the U.S. Treasury Department calculated that a tax-exclusive rate of 34% would be needed just to replace the income tax, leaving the payroll tax in place. But if evasion were high then the rate might have to rise to 49%. If the FairTax were only able to cover the limited sales tax base of a typical state, then a rate of 64% would be required (89% with high evasion).
I've emphasized problems with the FairTax rate because public opinion polls have long shown that support for flat-rate tax reforms is extremely sensitive to the proposed rate, with support dropping off sharply at a rate higher than 23%. But there are also massive technical and administrative problems with collecting all federal taxes at the checkout counter and relying entirely on state governments to collect the federal government's revenue.
Among the problems: What possible incentive would the states have to be vigorous in their federal tax collections? What is to stop them from slacking off and giving their citizens a tax cut at federal expense? What about states with no sales taxes? What's to stop people from bypassing retail outlets and buying their goods from producers or at wholesale, tax-free?
Perhaps the biggest deception in the FairTax, however, is its promise to relieve individuals from having to file income tax returns, keep extensive financial records and potentially suffer audits. Judging by the emphasis FairTax supporters place on the idea of making April 15 just another day, this seems to be a major selling point for their proposal.
Yet all but six states now have state income taxes. So unless one lives in one of those states, this promise is an empty one indeed. In short, the FairTax is too good to be true, and voters should not take seriously any candidate who supports it. Mr. Bartlett was deputy assistant secretary of the Treasury for economic policy from 1988 to 1993.
http://www.opinionjournal.com/extra/?id=110010523

[tmorr37]

This Is The Most Uneducated Article I've Ever Read

[tmorr37]

AND ALL THE RESPONSES ARE ALL NEGATIVE LIKE THE ARTICLE

Please note: We don't post all responses, and we don't post responses immediately. If we do use yours, we reserve the right to edit for length and clarity. Without your name, e-mail address, city and state or country, we cannot process or post your response. Your e-mail address will only be used to contact you regarding your response and will not be posted.

SO JUST THE ONES THEY WANT TO HEAR

[AAD]

Seems like another rebuttal from FairTax.org will need to be added to their list...

http://www.investorsiraq.com/showpost.php?p=462547&postcount=97

[bikey]

so am i reading this correctly that the fair tax is a bad thing? i mean i dont understand it but i sure wouldnt want to pay 30% more for real estate or a new car ie; large purchases as this would break me as a "little guy"...you get what im saying?

[imluvinit]

Who wrote this crap? I just read the first part and started laughing,I couldnt go any further,too funny.I agree this is the most uneducated article I have seen in a long time.

[NewTexasgold]

It seems strange to consider revamping or yet totally changing the tax system all of love to diss... Anyway, I found this article from the FairTax.org website that explains the Fair Tax platform.

http://www.fairtax.org/PDF/FairTaxExecutiveSummary.pdf

[jasleeds]

Whoever wrote this article has not read the actual text of the proposal and has only regurgitated the negative opinions of others--we have to note where this came from "opinion jurnal." One thing that is true about the article is the amount of tax when comparing inclusive and exclusive taxes. Fair Tax has always made sure to explain the difference between the two and a majority of the supporters understand the difference. So in closing, the idiot who wrote that article hasnt done enough of his/her homework.....

[dinardo]

Neal Boortz (co-writer of the Fair Tax book) would eat this guys lunch.....then bang him over the head with his lunch box.

[jimbo]

This article makes me sick. When the American people have a chance to be free from the IRS they come out with this. This is a way of the Liberal Democrats loses control of the American people. For once in history the moment the Fair Tax passes our Goverment will no longer know anything more about the finances of the American people. And will nolonger control the people through taxation

[KWASIA]

Analysts in Nigeria are applauding the government for halting a plan by the Central Bank to change the nation's currency, the naira. On Saturday, Nigerian President Umaru Yar'Adua said the Central Bank's governor had no right to announce the change without the president's prior approval. Some say the government's move to scrap the plan may be a sign it is more committed to due process of law. In mid-August, Central Bank Governor Chukwuma Soludo announced the plan, which involved dropping two zeroes off the Nigerian currency. The governor said the change would make it easier to manage inflation and would alleviate the burden on consumers who have to carry large bundles of naira bills just to buy daily staples.

Lagos-based economist Ayo Teriba says the Central Bank did not allow sufficient public discussion before announcing its decision earlier this month. Teriba says the Central Bank acted rashly, making Nigeria appear unstable. "The Central Bank's announcement created the impression that Nigeria was unable to control its own Central Bank. So the President's order has eliminated that impression," said Teriba. Critics of the currency change say it is a waste of resources since the government recently spent millions of dollars printing new naira that would have become obsolete. Social activist Otive Igbuzor of Action Aid Nigeria says he sees the plan as costly, with few benefits. "The re-denomination is not going to put more food on the table, it is not going to increase production. It is not going to decrease poverty," said Otive Igbuzor. Igbuzor says Mr. Yar'Adua's move to reign in the bank could mean the country is moving toward an era of more transparent leadership and law-abiding behavior. "I think what this will do is, it will make the bank be more conscious of what it does and follow due process which is good for the system, it is good for the institution," added Igbuzor. Central Bank officials have said the plan, which was to take effect next August, would enhance confidence in the currency, help control inflation, and make exchange with other currencies easier. They say they did consult with Mr. Yar'Adua before announcing the new policy. But Minister of Justice Aondoakaa says the Central Bank, by law, has to get approval in writing from the president before changes are made. Nigeria has one of the largest economies in sub-Saharan Africa. Much of its revenue comes from its oil industry

[trusty]

Where's my soap box?

One of the more important aspects of the Fair Tax wasn't highlighted in the document.

There are billions and billions of dollars of taxable income that goes untaxed each year.
What about the drug dealers..that is now tax free money.
What about the people that want to be paid in cash for their services so they don't have to report the income.

If they would factor in the lost taxes on these income(s) I believe the projected percent would drop considerable.

D
R
U
M
R
O
L
L

Trusty

[WAYNE T]

Calling it a fair tax just seems a mis-labeling to me. I make 20,000 dollars. I spend all my income . I pay tax on 100%.
You make $2.000,000. You spend $200,000 of your income. You pay taxes on 10% of your income.

Explain how that is fair.

[trusty]

Calling it a fair tax just seems a mis-labeling to me. I make 20,000 dollars. I spend all my income . I pay tax on 100%.
You make $2.000,000. You spend $200,000 of your income. You pay taxes on 10% of your income.

Explain how that is fair.
---------------------

A lot of people making 2M are paying no tax though.

Trusty

[jasleeds]

Calling it a fair tax just seems a mis-labeling to me. I make 20,000 dollars. I spend all my income . I pay tax on 100%.
You make $2.000,000. You spend $200,000 of your income. You pay taxes on 10% of your income.

Explain how that is fair.


First off, you are basing it on income, Fair Tax is based on consumption. So you spend 20K a year so would probably pay about 6K in taxes. The person who spends 200K is paying 60K in taxes. He spend 10x what you do and pays 10x what you do in taxes....how is that not fair? Just because someone is well off doesnt mean they should pay higher taxes.

[yunowu]

Who wrote this crap? I just read the first part and started laughing,I couldnt go any further,too funny.I agree this is the most uneducated article I have seen in a long time.

No argument here !! :no: :no: :no:

[Voyeur]

When I read something like this regardless of how I feel about the subject I feel motivated to respond. This opinion editorial is both uninformed and contains LIES. Out and Out lies. The editor is responsible for what goes in. The editor let lies be printed as truth in his paper.

Please respond here; Be nice, show the person that your are intelligent and educated. No your response won't be published, there is no fame involved but at lease your response will make it to the right person. I personally am going to demand a retraction or correction of Lies stated as facts. Lies do not fall under the catagory of opinion. The facts are the facts.

Please respond here: newseditors@wsj.com (newseditors@wsj.com)

When has the IIF not called out a BSer.....NEVER.
Thanks,
Voyeur.

[Voyeur]

Here's my email to the Editors of the Wall Street Journal:

Dear Sirs/Madams:

I read the Op-Ed article on the Fair Tax by Bruce Bartlett .

I am contacting you to too express my concern for the truth. Clearly Mr. Bartlett has not read H.R. 25/S. 1025 .
It doesn't matter what Mr. Bartlett's opinion is whether for or against the fair tax as long as his facts are straight.
This article contains many out and out lies.
Opinionated or not, you the editor are responsible for the facts in the story.
You the Editors have allowed lies to be printed in your publication.
I am astounded that the Editors of the Wall Street Journal would allow such blatant disregard for the truth.

I, as a reader, demand either a retraction or a correction.
Again, I don't care what Mr. Bartlett's opinion on the subject is because he has a right to it.
BUT, the facts are clear on this subject and Mr. Bartlett has LIED in this article.
Again I, as a reader, demand either a retraction or a correction.

Sincerely,

[tmorr37]

Calling it a fair tax just seems a mis-labeling to me. I make 20,000 dollars. I spend all my income . I pay tax on 100%.
You make $2.000,000. You spend $200,000 of your income. You pay taxes on 10% of your income.

Explain how that is fair.

Goto fairtax.org and get educated on this and let us know
We have been there :wave:

[sgmunson]

I see a lot of support for this Fair Tax, and I see several issues presented that haven't been responded to here - and please don't send me to the Fair Tax website - been there already and there's just not enough time in my schedule to digest that whole thing and/or find what I'm looking for. I could support the concept if I thought that my taxes as well as the taxes of those less fortunate than myself would actually either stay pretty much the same or perhaps even decrease. However, what I see of most examples is that my tax liability increases considerably, as does that of most folks making less than I do, as we all tend to spend the vast majority of our income because we simply do not make enough money to have any appreciable savings. An earlier post refers to someone making 20K and having to spend 6K on taxes, yet this person would currently pay around 3.75K, and thus it APPEARS to be a rather CONSIDERABLE INCREASE in taxes to those LEAST ABLE to afford it. I would like to think that someone here knows whether or not this example is accurate or not, and knows the Fair Tax well enough to provide several examples, at various points in the range from 20K to 100K incomes. I seem to recall seeing some examples on the Fair Tax website, and at the time, I wasn't sure I could validate their assumptions, and I was distinctly uncomfortable with the ones I thought I understood, so I'm also looking for opinions and facts either supporting or opposing such assumptions, as often, the devil is in the details...

Steve
(aka sgmunson)
:wave: :wave:

[WAYNE T]

I also went to Fair Tax site. I see no answer there to the question. I pay a percent on all my money. Someone else would get by with paying on a small percentage of their income.

'how is that fair?'

[ih2005]

I could support the concept if I thought that my taxes as well as the taxes of those less fortunate than myself would actually either stay pretty much the same or perhaps even decrease. However, what I see of most examples is that my tax liability increases considerably, as does that of most folks making less than I do, as we all tend to spend the vast majority of our income because we simply do not make enough money to have any appreciable savings.

Consider the following, Steve:

With regard to effective percentages that different income groups would pay, as shown charted in the article, Prof.'s Kotlikoff and Rapson (10/06) have said,

"...the FairTax imposes much lower average taxes on working-age households than does the current system. The FairTax broadens the tax base from what is now primarily a system of labor income taxation to a system that taxes, albeit indirectly, both labor income and existing wealth. By including existing wealth in the effective tax base, much of which is owned by rich and middle-class elderly households, the FairTax is able to tax labor income at a lower effective rate and, thereby, lower the average lifetime tax rates facing working-age Americans.

"Consider, as an example, a single household age 30 earning $50,000. The household’s average tax rate under the current system is 21.1 percent. It’s 13.5 percent under the FairTax. Since the FairTax would preserve the purchasing power of Social Security benefits and also provide a tax rebate, older low-income workers who will live primarily or exclusively on Social Security would be better off. As an example, the average remaining lifetime tax rate for an age 60 married couple with $20,000 of earnings falls from its current value of 7.2 percent to -11.0 percent under the FairTax. As another example, compare the current 24.0 percent remaining lifetime average tax rate of a married age 45 couple with $100,000 in earnings to the 14.7 percent rate that arises under the FairTax."

Study: http://snipurl.com/kotcomparetaxrates

Further,

"...once one moves to generations postdating the baby boomers there are positive welfare gains for all income groups in each cohort. Under a 23 percent FairTax policy, the poorest members of the generation born in 1990 enjoy a 13.5 percent welfare gain. Their middle-class and rich contemporaries experience 5 and 2 percent welfare gains, respectively. The welfare gains are largest for future generations. Take the cohort born in 2030. The poorest members of this cohort enjoy a huge 26 percent improvement in their well-being. For middle class members of this birth group, there's a 12 percent welfare gain. And for the richest members of the group, the gain is 5 percent."

Study: http://snipurl.com/kotftmacromicro

(BTW, we have a Michigan state FairTax initiative (which is true to the national principles). Please visit: http://michiganfairtax.org also join us at http://tinyurl.com/7lssy (http://michiganfairtax.org also join us at http://tinyurl.com/7lssy) to be kept up to date with our progress.)

[Voyeur]

I see a lot of support for this Fair Tax, and I see several issues presented that haven't been responded to here - and please don't send me to the Fair Tax website - been there already and there's just not enough time in my schedule to digest that whole thing and/or find what I'm looking for. I could support the concept if I thought that my taxes as well as the taxes of those less fortunate than myself would actually either stay pretty much the same or perhaps even decrease. However, what I see of most examples is that my tax liability increases considerably, as does that of most folks making less than I do, as we all tend to spend the vast majority of our income because we simply do not make enough money to have any appreciable savings. An earlier post refers to someone making 20K and having to spend 6K on taxes, yet this person would currently pay around 3.75K, and thus it APPEARS to be a rather CONSIDERABLE INCREASE in taxes to those LEAST ABLE to afford it. I would like to think that someone here knows whether or not this example is accurate or not, and knows the Fair Tax well enough to provide several examples, at various points in the range from 20K to 100K incomes. I seem to recall seeing some examples on the Fair Tax website, and at the time, I wasn't sure I could validate their assumptions, and I was distinctly uncomfortable with the ones I thought I understood, so I'm also looking for opinions and facts either supporting or opposing such assumptions, as often, the devil is in the details...

Steve
(aka sgmunson)
:wave: :wave:


Steve,
The best advice I can give you is to beg, borrow,buy or steal the FairTax book.
I knocked it out in an evening. It's really not a bad read and answers all of your questions.

Voyeur.:wave:

[jasleeds]

I see a lot of support for this Fair Tax, and I see several issues presented that haven't been responded to here - and please don't send me to the Fair Tax website - been there already and there's just not enough time in my schedule to digest that whole thing and/or find what I'm looking for. I could support the concept if I thought that my taxes as well as the taxes of those less fortunate than myself would actually either stay pretty much the same or perhaps even decrease. However, what I see of most examples is that my tax liability increases considerably, as does that of most folks making less than I do, as we all tend to spend the vast majority of our income because we simply do not make enough money to have any appreciable savings. An earlier post refers to someone making 20K and having to spend 6K on taxes, yet this person would currently pay around 3.75K, and thus it APPEARS to be a rather CONSIDERABLE INCREASE in taxes to those LEAST ABLE to afford it. I would like to think that someone here knows whether or not this example is accurate or not, and knows the Fair Tax well enough to provide several examples, at various points in the range from 20K to 100K incomes. I seem to recall seeing some examples on the Fair Tax website, and at the time, I wasn't sure I could validate their assumptions, and I was distinctly uncomfortable with the ones I thought I understood, so I'm also looking for opinions and facts either supporting or opposing such assumptions, as often, the devil is in the details...

Steve
(aka sgmunson)
:wave: :wave:

Steve,

Several businesses work together to make one final product, lets take a telephone for instance.....one company molds the plastic and pays tax, one does the electronics and pays tax and the final company sells it and pays tax. Companies also pays a butt-load of cash for tax compliance/avoidance(however you want to see it). This all makes the product 20-30% more expensive. Once the FairTax kicks off these businesses will no longer pay these taxes/compliance costs, dropping the price of things 20-30%. So now you have your whole paycheck and are paying approximately the same price for things after the 23% inclusive tax. So now everyone, including drug dealers, illegal immigrants, tourists and the tax savy rich are paying taxes to the US. The IRS would no longer be in the picture so people wouldnt have to hide their money overseas, therefore, bringing money back into US financial institutions. The more money they have the more they can invest and make profit, the more they profit the better interest rates they can give.

The example I gave earlier about the 6k in taxes was a quick guestimate off the top of my head just to make a point, it wasnt an exact figure. We also need to remember that everyone will get a check back from the government paying us back up to the poverty level, so people at the poverty level or below actually pay no taxes at all. If you have anymore questions please let me know and I will try to find you an answer. I want as many people to have a good understanding of this as possible so that we can have a better chance of getting this bill passed.

[jasleeds]

I also went to Fair Tax site. I see no answer there to the question. I pay a percent on all my money. Someone else would get by with paying on a small percentage of their income.

'how is that fair?'


Again I ask, how is it fair that someone who is better off pay more taxes? I see that as punishment for doing well. They have probably worked very hard to get where they are and to make the money they make. You're still stuck on income vs. consumption. Read my post to Steve and see if this helps clear things up for you.

[tpackDinar]

I also went to Fair Tax site. I see no answer there to the question. I pay a percent on all my money. Someone else would get by with paying on a small percentage of their income.

'how is that fair?'

Wayne, around the first 15,000 is exempt from taxes in the form of a prebate check payed to you monthly. I'm not going to go into this but it is in the bill HR25 so of the 20,000 dollar income you will only pay taxes on 5000. Please, for the people who have not read this bill take the time and go read it. Once you understand how this will save you in taxes and increase rev. in this country I'm sure you will support it.

Tpack

[sgmunson]

I did mention that I simply do not have the kind of time required available... I haven't read a book in over a year because I have to spend the time insuring there's enough income to pay the bills. So please don't ask me to do something that takes money off the table.

As to you what you did say, I have to be concerned, as it seems to me that the tax "benefits" the companies realize are unlikely to make it back to the consumer... Corporate greed is running rampant these days, and a sudden "windfall" is far more likely to go into corporate coffers than anywhere else. Thus I can't agree with that price reduction assumption at all. It just doesn't wash. Without the price reductions being IMMEDIATE, there will be a significant problem for those whose income level requires them to spend pretty much 100% of their income. Getting past that problem would appear to me to require that there be a price freeze to a tax-inclusive level, across the board, that's a part of the legislation, that is only slowly lifted, as folks get used to the idea - otherwise, you get a SIGNIFICANTLY MASSIVE DOSE of inflation. You simply CANNOT expect businesses to do the right thing right away unless compliance is mandatory. The trend in ALL businesses worldwide has clearly been going toward "get away with everything possible, and maybe even illegal if we think we can get away with it", and it's been going that way for at least the last 17 years. Businesses have become addicted to the idea of good times, and will now do whatever it takes to recreate the dot com type of boom whenever conditions allow it.

I have a hard time believing there's an answer to this, so if someone has done significant survey work or has demonstrable data to refute it, I would like to see it, and it will have to be convincing. After all, I can't even count on correct change at a restaurant any more, so what's the incentive for businesses to cut prices when the alternative is pure profit ? Obviously, the restaurants don't care all that much about their customers, and you can't tell me larger businesses do... Look at Microsoft, for example... Look at the health care industry, or the American auto makers... How about banks and insurance companies?

Let's assume the rate can actually be 23% - and let's assume that the "prebate" can actually work (I see the IRS being re-tasked to achieve that goal, as opposed to being eliminated - they're the only ones with enough data to get the job done), that means that my income goes up by 7.65% (FICA & Medicare) plus the percentage of my income that's being taken out in income tax, which is rather less than 15.35%. So right away, I see an immediate loss of the difference, and the only recovery is this prebate, which would be 23% of 15,000, or $287.50 a month. Thus, if my income tax deduction is at 10%, I have to make up 5.35% of my income. This will thus cover incomes up to $64,485.98. However, now look at those paying alimony, and you'll soon find that they're screwed big time - they're used to paying out maybe 5% or 6% in income tax due to the deductability of that alimony. Now they have to make up 10% of their income. Suddenly, this prebate is only good up to incomes of $34,500. I happen to fall into the edges of this scenario, as my alimony payments ended in late June. So I'm kind of half in, half out, but I've been paying a lot less in income tax because of it, and this is my adjustment year. Next year I may have to adjust again, depending on my wife's employment. Seems to me that somewhere along the line, I'm not likely to survive this Fair Tax. Although I really do want to be wrong about this... so far all I see is a pipe dream.

Steve
(aka sgmunson)
:wave: :confused: :wave:

Steve,

Several businesses work together to make one final product, lets take a telephone for instance.....one company molds the plastic and pays tax, one does the electronics and pays tax and the final company sells it and pays tax. Companies also pays a butt-load of cash for tax compliance/avoidance(however you want to see it). This all makes the product 20-30% more expensive. Once the FairTax kicks off these businesses will no longer pay these taxes/compliance costs, dropping the price of things 20-30%. So now you have your whole paycheck and are paying approximately the same price for things after the 23% inclusive tax. So now everyone, including drug dealers, illegal immigrants, tourists and the tax savy rich are paying taxes to the US. The IRS would no longer be in the picture so people wouldnt have to hide their money overseas, therefore, bringing money back into US financial institutions. The more money they have the more they can invest and make profit, the more they profit the better interest rates they can give.

The example I gave earlier about the 6k in taxes was a quick guestimate off the top of my head just to make a point, it wasnt an exact figure. We also need to remember that everyone will get a check back from the government paying us back up to the poverty level, so people at the poverty level or below actually pay no taxes at all. If you have anymore questions please let me know and I will try to find you an answer. I want as many people to have a good understanding of this as possible so that we can have a better chance of getting this bill passed.

[WAYNE T]

I still will beat the dead horse back to life. Referring me to another place for understanding won't work. If it such a great thing , then you know how to tell me how it is fair. The only answer I have seen so far is, " you must hate rich people and expect them to pay out of proportion."

I want everyone, equally , rich and poor, Republican and Democrat, Aetheist, muslim, christian, jew. Everyone to pay on all their income. Will the fair tax accompish that? If not, then I need an explanation of it's fairness.

If one person pays on all their income, and another pays on 1% of their's, is that fair?

I also read the bill. I don't know how the IRS will pay everyone in the US, monthly, a return on their tax , up to the national poverty level. Who will decide what are basic goods allowed to be used in the exemption. And then , if it is to work, seems to me, the IRS would need a lot more, agents, accountants, Supervisors, secretaries, bosses.

[Voyeur]

I did mention that I simply do not have the kind of time required available... I haven't read a book in over a year because I have to spend the time insuring there's enough income to pay the bills. So please don't ask me to do something that takes money off the table.

As to you what you did say, I have to be concerned, as it seems to me that the tax "benefits" the companies realize are unlikely to make it back to the consumer... Corporate greed is running rampant these days, and a sudden "windfall" is far more likely to go into corporate coffers than anywhere else. Thus I can't agree with that price reduction assumption at all. It just doesn't wash. Without the price reductions being IMMEDIATE, there will be a significant problem for those whose income level requires them to spend pretty much 100% of their income. Getting past that problem would appear to me to require that there be a price freeze to a tax-inclusive level, across the board, that's a part of the legislation, that is only slowly lifted, as folks get used to the idea - otherwise, you get a SIGNIFICANTLY MASSIVE DOSE of inflation. You simply CANNOT expect businesses to do the right thing right away unless compliance is mandatory. The trend in ALL businesses worldwide has clearly been going toward "get away with everything possible, and maybe even illegal if we think we can get away with it", and it's been going that way for at least the last 17 years. Businesses have become addicted to the idea of good times, and will now do whatever it takes to recreate the dot com type of boom whenever conditions allow it.

I have a hard time believing there's an answer to this, so if someone has done significant survey work or has demonstrable data to refute it, I would like to see it, and it will have to be convincing. After all, I can't even count on correct change at a restaurant any more, so what's the incentive for businesses to cut prices when the alternative is pure profit ? Obviously, the restaurants don't care all that much about their customers, and you can't tell me larger businesses do... Look at Microsoft, for example... Look at the health care industry, or the American auto makers... How about banks and insurance companies?

Let's assume the rate can actually be 23% - and let's assume that the "prebate" can actually work (I see the IRS being re-tasked to achieve that goal, as opposed to being eliminated - they're the only ones with enough data to get the job done), that means that my income goes up by 7.65% (FICA & Medicare) plus the percentage of my income that's being taken out in income tax, which is rather less than 15.35%. So right away, I see an immediate loss of the difference, and the only recovery is this prebate, which would be 23% of 15,000, or $287.50 a month. Thus, if my income tax deduction is at 10%, I have to make up 5.35% of my income. This will thus cover incomes up to $64,485.98. However, now look at those paying alimony, and you'll soon find that they're screwed big time - they're used to paying out maybe 5% or 6% in income tax due to the deductability of that alimony. Now they have to make up 10% of their income. Suddenly, this prebate is only good up to incomes of $34,500. I happen to fall into the edges of this scenario, as my alimony payments ended in late June. So I'm kind of half in, half out, but I've been paying a lot less in income tax because of it, and this is my adjustment year. Next year I may have to adjust again, depending on my wife's employment. Seems to me that somewhere along the line, I'm not likely to survive this Fair Tax. Although I really do want to be wrong about this... so far all I see is a pipe dream.

Steve
(aka sgmunson)
:wave: :confused: :wave:

Let me take a shot at some of your concerns. I won't address what I'm not sure about because that would just be possible BS anyway and BS is what the FairTax is aimed at eliminating.

1. Businesses, initiation and compliance:: If the FairTax started tomorrow all businesses would be exempt from paying the 23% tax to the government to the tune of the amount currently held as assets for resale. This is due to the fact that the business has had to pay the imbedded taxes and fees on those items already held. This would allow the business to charge the same price as before for those products. All new products purchased/manufactured for resale would, within a short period of time, be purchased at the rate devoid of the imbedded taxes/fees and could have the 23% tax assessed. Still, the business is charging the same price for the same retail product.
GREED: Show me a greedy business overcharging for a product and I'll show you ten other vendors selling the same product that are willing to substantially undercut the others. The laws of ecconomics will prevail.
Initially it will be a bit of a free-for-all but in short order all will be forced by market forces to comply or die.

Taxes paid enough through sales tax:: Consider this one fairly, somewhat, isolated example. I use this example because I know of at least 10 occurances of it. OK,, A wealthy individual purchases a $100k - $250K luxury boat to use to do business on with other business persons and to "seal deals", a place of work and opportunity (this can also be an airplane according to IRS regulations.) Currently, this is a tax deductible asset. Under the FairTax, the US gets 23% of the retail on the new purchase of these items. The list of tax shelters goes on and on and on as we all know.
More Taxes to collect:: No more deductions for corporate expense accounts (how much is that alone??) .
If a drug dealer buys a Ferarri, they pay 23% tax.
Every single foreign tourist, that comes to Disneyland and Buys a Goofy doll pays 23% tax.
Every single illegal alien that buys a set of furry dice pays 23% tax.
Trillions of dollars in offshore accounts placed there to avoid the abusive US Tax code would come back into the US market because NOW it is a better deal. The amount of income on the now non-taxable interest alone is staggering. BUT, the money is here and can be used by the US banking system instead.
Cruise ship lines would relocate to the US. How many Cruise ships have you seen out of a US port. NONE. Why? the abusive tax code. The number of jobs and money coming into this ecconomy just by this industry alone is, dare I say, HUGH. All of these employees then go buy new 42" flat panel TVs and guess what...pay 23% tax.
I could go on but I believe my point is made.

LOST OPPORTUNITY: Every business owner that I know(and there are a considerable number) has made choices for their businesses based on how that decision will affect their Tax liability. If it doesn't pay enough after Uncle Sam gets his cut,,well, they don't do it. If Uncle Sam didn't get that cut and only got paid on sale of new items those businesses would be doing things that they currently cannot or will not because of the tax implications. They would be free to come up with new inovative ideas, hire visionary employees to expand on those ideas and all of the while not have to pay part of their SS, Medicare, Fed Withholding, etc. every freaking week. This is what makes impractical for a good company to breakout into a more risky venture. As it is a good company must be go with what is known to work or the Tax Man just might eat their lunch.

There would have to be some oversight.
This is a extremely incomplete assessment and perhaps even some bad examples but fairly accurate.

Voyeur.:wave:

[jasleeds]

I still will beat the dead horse back to life. Referring me to another place for understanding won't work. If it such a great thing , then you know how to tell me how it is fair. The only answer I have seen so far is, " you must hate rich people and expect them to pay out of proportion."

I want everyone, equally , rich and poor, Republican and Democrat, Aetheist, muslim, christian, jew. Everyone to pay on all their income. Will the fair tax accompish that? If not, then I need an explanation of it's fairness.

If one person pays on all their income, and another pays on 1% of their's, is that fair?

I also read the bill. I don't know how the IRS will pay everyone in the US, monthly, a return on their tax , up to the national poverty level. Who will decide what are basic goods allowed to be used in the exemption. And then , if it is to work, seems to me, the IRS would need a lot more, agents, accountants, Supervisors, secretaries, bosses.


OK so here is where we agree to disagree. FairTax gets rid of income taxes and creates a consumption tax. You want everyone to pay taxes based on income...therefore you want an income tax...therefore you dont want the FairTax. Im not going to try and sell the FairTax if its not even close to what you want.

[Voyeur]

I still will beat the dead horse back to life. Referring me to another place for understanding won't work. If it such a great thing , then you know how to tell me how it is fair. The only answer I have seen so far is, " you must hate rich people and expect them to pay out of proportion."

I want everyone, equally , rich and poor, Republican and Democrat, Aetheist, muslim, christian, jew. Everyone to pay on all their income. Will the fair tax accompish that? If not, then I need an explanation of it's fairness.

If one person pays on all their income, and another pays on 1% of their's, is that fair?

I also read the bill. I don't know how the IRS will pay everyone in the US, monthly, a return on their tax , up to the national poverty level. Who will decide what are basic goods allowed to be used in the exemption. And then , if it is to work, seems to me, the IRS would need a lot more, agents, accountants, Supervisors, secretaries, bosses.

Let me see if I can help Wayne,

Under the current system neither the rich nor the poor pay on 100% of their income. The rich have tax shelters and the poor get all or more than all of their tax assessment back.

As far as basic goods amounts, they (and I can't remember the name of the firm) have been determining every year for years and years what the basic goods cost per person, family of four, etc is. That part is pretty cut and dried.

Hope this helps,

Voyeur.:wave:

[WAYNE T]

It still escapes my feeling of "fair tax".
If I make one dollar and you tax one dollar because necessity makes me spend it, and you make 3 million dollars and your necessities are 3 hundred thousand, so you are taxed on three-hundred thousand, then that is not fair, imo. You walk away with 2million 700 thousand untaxed.

How, pray tell, can anyone consider that, 'fair'?

[Voyeur]

It still escapes my feeling of "fair tax".
If I make one dollar and you tax one dollar because necessity makes me spend it, and you make 3 million dollars and your necessities are 3 hundred thousand, so you are taxed on three-hundred thousand, then that is not fair, imo. You walk away with 2million 700 thousand untaxed.

How, pray tell, can anyone consider that, 'fair'?

If you make one dollar and one dollar is taxed because necessity make you spend it then the tax will be refunded to you because you live below the poverty level. Voyeur.

[tmorr37]

As to you what you did say, I have to be concerned, as it seems to me that the tax "benefits" the companies realize are unlikely to make it back to the consumer... Corporate greed is running rampant these days, and a sudden "windfall" is far more likely to go into corporate coffers than anywhere else.
Steve
(aka sgmunson)
:wave: :confused: :wave:

economics 101
No company pays taxes, Period. They collect them. The consumer pays all taxes.

[tmorr37]

Today, a family of four with an income of just $22,500 pays 10.3 percent of their income in federal taxes (income and payroll). A family earning $45,000 pays 16.5 percent of their income in federal taxes. Under the FairTax, a family of four earning $22,500 (even spending all of their income) pays no federal taxes at all, and the same family of four earning and spending $45,000 pays an effective tax rate of only 11.5 percent tax on their taxable purchases.
Most economists, however, consider that it is really the employee that pays the matching employer portions of Social Security and Medicare withholding taxes and federal unemployment taxes through lower wages. If we make this assumption, the burden of the income tax system on taxpayers becomes even more dramatic. A family of four earning $22,500 annually pays 19.9 percent of their income in federal taxes compared to paying no federal taxes under the FairTax, and a family earning $45,000 pays 25.1 percent of their income in federal taxes compared to 11.5 percent under the FairTax. Under the FairTax, Americans have more control over the timing and the amount of taxes they pay, and an enhanced opportunity to improve their financial condition.

http://www.fairtax.org/site/PageServer?pagename=about_research_tax

[zig49ky]

MORE ABOUT THE FAIRTAX

Here is a statement from Leo Linbeck, Chairman of Americans for Fair Taxation, regarding that Bruce Bartlett column which appeared in The Wall Street Journal over the weekend.

Dear Editor,

The FairTax was developed many years ago, totally independently of any other proposal, group or movement. The FairTax is a product of more than $20 million of advanced economic research, as well as detailed conversations with citizens as to their preferences defining the best possible national tax system.

Many groups and individuals have agitated to replace the deeply flawed income tax system apparently including the Church of Scientology. As a founder of Americans For Fair Taxation, I can state categorically, however, that Scientology played no role in the founding, research, or crafting of the legislation giving expression to the FairTax.

Mr. Bartlett is equally wrong about many other aspects of the Fair Tax. We are disappointed but hardly surprised by such distortions about the FairTax from the very economist who once opined that the income tax system just needed, a little "tweaking".

Leo Linbeck, Chairman and CEO
Americans for Fair Taxation

I hope this makes a difference, but we all know that from this point on opponents of the FairTax will be able to demagogue any supporter by simply stating that "my opponent is involved with the Church of Scientology in trying to change our tax system.

The 23 percent FairTax is not added to the price of everything you buy ... it is already included in the price of everything you will buy, just as the embedded taxes are included today. You remove one, you add the other.

If the people of this country were not so ill-served by this hideous government education system that is suffocating our nation this type of demagoguery wouldn't work.

[zig49ky]

The axioms of taxation have never changed and never will.

It may be amusing to some that with all of the brilliant minds behind the FairTax and all of the
effort put into studying the issue, FairTax.org ended up in the same place as did our Founding
Fathers. From their study of history, these men (without the benefit of computers or advanced
degrees in economics) determined to build a tax system that had at its base these never-changing
fundamentals of taxation:
• Only people pay taxes.
• Consumption taxes are the oldest form of taxation for many good reasons.
• Consumption tax rates are self-limiting.
• Consumption taxes, throughout history, have enhanced civil liberties and more.
• Direct taxes (income taxes/poll taxes/head taxes), throughout history, have been the tools
of tyranny.
• Uniformity of taxation wards off special interest manipulation.
These points address common questions regarding the FairTax plan:
�� The FairTax is revenue neutral at $0.23 out of every retail dollar spent.
�� The FairTax lowers the lifetime tax burden for most Americans.
�� The FairTax benefits retirees who depend mostly on Social Security.
�� The FairTax preserves the overall progressivity of the federal tax burden.
�� The FairTax dramatically improves the U.S. economy.
�� The FairTax improves the international competitiveness of American producers.
�� The FairTax promotes home ownership better than the current system.
�� The FairTax simplifies tax compliance, thereby reducing tax evasion.

[AAD]

MORE ABOUT THE FAIRTAX

Here is a statement from Leo Linbeck, Chairman of Americans for Fair Taxation, regarding that Bruce Bartlett column which appeared in The Wall Street Journal over the weekend.

Dear Editor,

The FairTax was developed many years ago, totally independently of any other proposal, group or movement. The FairTax is a product of more than $20 million of advanced economic research, as well as detailed conversations with citizens as to their preferences defining the best possible national tax system.

Many groups and individuals have agitated to replace the deeply flawed income tax system apparently including the Church of Scientology. As a founder of Americans For Fair Taxation, I can state categorically, however, that Scientology played no role in the founding, research, or crafting of the legislation giving expression to the FairTax.

Mr. Bartlett is equally wrong about many other aspects of the Fair Tax. We are disappointed but hardly surprised by such distortions about the FairTax from the very economist who once opined that the income tax system just needed, a little "tweaking".

Leo Linbeck, Chairman and CEO
Americans for Fair Taxation

I hope this makes a difference, but we all know that from this point on opponents of the FairTax will be able to demagogue any supporter by simply stating that "my opponent is involved with the Church of Scientology in trying to change our tax system.

The 23 percent FairTax is not added to the price of everything you buy ... it is already included in the price of everything you will buy, just as the embedded taxes are included today. You remove one, you add the other.

If the people of this country were not so ill-served by this hideous government education system that is suffocating our nation this type of demagoguery wouldn't work.

The yellow part was very hard to read, so let's try again below...

"The 23 percent FairTax is not added to the price of everything you buy ... it is already included in the price of everything you will buy, just as the embedded taxes are included today. You remove one, you add the other."


Other info:

Social Security and health care benefits of an aging population. These macroeconomic gains
have important microeconomic welfare implications. In the long run:

• Low-income households experience a 26.7 percent welfare gain under the FairTax

• Middle-income households experience a 10.9 percent welfare gain

• High-income households experience a 4.7 percent welfare gain

This is a very progressive long-run outcome. (See chart below.)

Progressivity also marks the entire transition. Low-income households, which are
initially alive at the time of the reform, whether they are young, middle age, or old, all
experience welfare gains ranging from 8.3 to over 20 percent. Who pays for these gains? The
answer is hardly anyone. The initial rich elderly and rich middle aged, as well as some middle
age/middle-income households are somewhat affected, but their welfare losses are quite small
compared to the welfare gains experienced by the current poor and future generations.

In switching from taxing income to taxing consumption and adding high progressivity via
a rebate, the FairTax introduces many progressive elements into our fiscal system, removes one
very regressive element (the payroll tax), and provides much better incentives to work and save.
Switching to the FairTax raises long-run capital intensity, thus raising long-run real wages by 19
percent compared to the base-case alternative. The reform also generates major welfare gains for
the poorest members of society, including those now retired and those yet to be born.

Page 6 - http://www.fairtax.org/PDF/FairTax-Fundamentals_and_facts-070122.pdf

[jasleeds]

It still escapes my feeling of "fair tax".
If I make one dollar and you tax one dollar because necessity makes me spend it, and you make 3 million dollars and your necessities are 3 hundred thousand, so you are taxed on three-hundred thousand, then that is not fair, imo. You walk away with 2million 700 thousand untaxed.

How, pray tell, can anyone consider that, 'fair'?

Im a capitalist, I do what I can to make as much money as possible. I think you are a socialist and are looking at this in the wrong way. Do you really think someone spends 300K out of necessity? No.... People who can spend 300k spend it cuz they can and want to, and they would pay taxes on it under the FairTax. Most people who make 3 mil dont pay taxes cuz they can afford the good tax lawyers advice on how to avoid it. Fair is everyone being able to keep their entire paycheck and spend it on exactly what they want/need to instead of the government telling you that you have to put money into socialist accounts like Medicare and Social Security. Fair is that no matter who you are you will pay the same tax as the next person on any products you buy. Its not fair to tax the wealthy at a higher rate just cuz they work harder to make more.

[NewTexasgold]

I have seen almost everyone talk about how its not fair, and focus on income. The fair tax is not about an income tax its about taxing a person's spending. I make roughly 85K after taxes each year. I spend roughly 68K of my salary each year, under this fair tax proposal the fair tax rate would be on the amount I spend each year, 68K. The taxes I would pay equal 11K a year. I paid well over 20K in taxes, when you look at income tax, capital gain taxes etc. I think paying 11K is far better for me than what I normally pay. The fair tax would bring a level playing field to all people, since it taxes spending and not your income. All the current taxes, capital gains, death taxes, income taxes would cease! Think of it as one national sales tax. Medicare taxes, and Federal taxes would no longer be deducted from your paycheck, it would cease! You the worker would keep this money, so just look at your paycheck the next time you get paid, an think what you could do with that money in your pocket vs. sending it the the Federal Gov! Also, stockholders could benefit from corporations that could add to their bottom line from keeping the payroll taxes. We already pay sales taxes each time you go to the store, its the same principal, but with the all the other current taxes being eliminated.

[sgmunson]

It's nice to see someone thinking things are better under the Fair Tax, but your post doesn't explain how, and relies on an average. An average isn't going to help someone in the year of implementation, when most of the grief would make it's appearance. I'm really not interested in a quoted average. I'm far more interested in exactly how I'll be taxed and exactly how much, compared to what's being paid right now. How it averages over the years is a secondary issue.

Steve
(aka sgmunson)
:wave: :wave:

Consider the following, Steve:

With regard to effective percentages that different income groups would pay, as shown charted in the article, Prof.'s Kotlikoff and Rapson (10/06) have said,

"...the FairTax imposes much lower average taxes on working-age households than does the current system. The FairTax broadens the tax base from what is now primarily a system of labor income taxation to a system that taxes, albeit indirectly, both labor income and existing wealth. By including existing wealth in the effective tax base, much of which is owned by rich and middle-class elderly households, the FairTax is able to tax labor income at a lower effective rate and, thereby, lower the average lifetime tax rates facing working-age Americans.

"Consider, as an example, a single household age 30 earning $50,000. The household’s average tax rate under the current system is 21.1 percent. It’s 13.5 percent under the FairTax. Since the FairTax would preserve the purchasing power of Social Security benefits and also provide a tax rebate, older low-income workers who will live primarily or exclusively on Social Security would be better off. As an example, the average remaining lifetime tax rate for an age 60 married couple with $20,000 of earnings falls from its current value of 7.2 percent to -11.0 percent under the FairTax. As another example, compare the current 24.0 percent remaining lifetime average tax rate of a married age 45 couple with $100,000 in earnings to the 14.7 percent rate that arises under the FairTax."

Study: http://snipurl.com/kotcomparetaxrates

Further,

"...once one moves to generations postdating the baby boomers there are positive welfare gains for all income groups in each cohort. Under a 23 percent FairTax policy, the poorest members of the generation born in 1990 enjoy a 13.5 percent welfare gain. Their middle-class and rich contemporaries experience 5 and 2 percent welfare gains, respectively. The welfare gains are largest for future generations. Take the cohort born in 2030. The poorest members of this cohort enjoy a huge 26 percent improvement in their well-being. For middle class members of this birth group, there's a 12 percent welfare gain. And for the richest members of the group, the gain is 5 percent."

Study: http://snipurl.com/kotftmacromicro

(BTW, we have a Michigan state FairTax initiative (which is true to the national principles). Please visit: http://michiganfairtax.org also join us at http://tinyurl.com/7lssy (http://michiganfairtax.org also join us at http://tinyurl.com/7lssy) to be kept up to date with our progress.)

[sgmunson]

But, there has yet to be a post which clearly delineates answers to several problems I can see:

1.) Assume a middle class working couple with a total annual income in the 50K to 60K range.

2.) Assume they spend 100% of their income because the economy requires that level of income just to survive if you own your own home (well, actually, the bank owns most of it).

3.) Normal tax liability between FICA, Medicare, and Federal Income Tax is roughly 18% on, say, $55K, or $9900.

4.) New tax liability is 23% on $40,000 of that $55K, or roughly $9.2K, for a potential savings of ~ $700.

5.) Now figure in a reduction to normal tax liability due to alimony deductibility, of $2300, and suddenly, this assumed person is $1600 in the hole for the year.

Show me how the Fair Tax fixes that problem ? And let's also start looking at the temporary effects as businesses who AREN'T paying taxes see this sudden windfall, and at first, start to spend it on themselves, and then only slowly realize that competition is going to make that go away. In the 6 month to as long as 2 years adjustment period that seems likely, with many high-profit industries perhaps never adjusting, the folks on the edge are going to get whacked, as they simply won't be able to survive that adjustment period. Show me exactly how this new tax scheme solves that problem ?

Somebody please educate us all on the devilish details, as all I can see at the moment are some rather seriously intractable problems that might well push quite a bit of the middle class right into the poor house.

I would really rather be wrong, though... I love the concept - it's the execution I'm concerned about.

And come to think of it, how about the real estate market. 23% is HUGE !!! That would absolutely destroy the housing market, making even the most modest of homes completely unaffordable to the average person buying those homes, and pushing home ownership even further away for the folks most in need of a home of their own. I say no way you could do that right off the cuff. You'd need 23 years to get that done and have the real estate market be capable of absorbing it, assuming that the market was rather strong when this starts. As the market exists today, I doubt you could even add 1% as a tax without a major collapse. IMO...

Steve
(aka sgmunson)
:wave: :wave:

[jasleeds]

But, there has yet to be a post which clearly delineates answers to several problems I can see:

1.) Assume a middle class working couple with a total annual income in the 50K to 60K range.

2.) Assume they spend 100% of their income because the economy requires that level of income just to survive if you own your own home (well, actually, the bank owns most of it).

3.) Normal tax liability between FICA, Medicare, and Federal Income Tax is roughly 18% on, say, $55K, or $9900.

4.) New tax liability is 23% on $40,000 of that $55K, or roughly $9.2K, for a potential savings of ~ $700.

5.) Now figure in a reduction to normal tax liability due to alimony deductibility, of $2300, and suddenly, this assumed person is $1600 in the hole for the year.

Show me how the Fair Tax fixes that problem ? And let's also start looking at the temporary effects as businesses who AREN'T paying taxes see this sudden windfall, and at first, start to spend it on themselves, and then only slowly realize that competition is going to make that go away. In the 6 month to as long as 2 years adjustment period that seems likely, with many high-profit industries perhaps never adjusting, the folks on the edge are going to get whacked, as they simply won't be able to survive that adjustment period. Show me exactly how this new tax scheme solves that problem ?

Somebody please educate us all on the devilish details, as all I can see at the moment are some rather seriously intractable problems that might well push quite a bit of the middle class right into the poor house.

I would really rather be wrong, though... I love the concept - it's the execution I'm concerned about.

And come to think of it, how about the real estate market. 23% is HUGE !!! That would absolutely destroy the housing market, making even the most modest of homes completely unaffordable to the average person buying those homes, and pushing home ownership even further away for the folks most in need of a home of their own. I say no way you could do that right off the cuff. You'd need 23 years to get that done and have the real estate market be capable of absorbing it, assuming that the market was rather strong when this starts. As the market exists today, I doubt you could even add 1% as a tax without a major collapse. IMO...

Steve
(aka sgmunson)
:wave: :wave:


First, about the housing market, only new homes would be taxed. Anyone buying a used home wouldnt have to pay the tax, so most people would be ok there. The FairTax is only on New Goods and Services, so the same would go for vehicles and stuff like that, no tax on old stuff cuz it was already taxed.

Now about your proposed situation, this might sound bad but everyone has to take responsibility for where and how they live. If you choose to live in an area that costs 60K a year or if you chose to get married and then get divorsed and have to pay alimony then that is on you, the government shouldnt compensate for personal problems such as these. After the FairTax goes through and someone is having problems paying alimony then they need to go back to the judge to see if they can reduce the payment. Or if they are having problems paying the bills in the area they live then they probably need to sell the house, take the equity and move to an area that is more favorable for the bank account. Things will adjust after it is implemented and it will take time and wont be easy at first but nothing this big could never be easy to transition to.

[MettleOfMan]

First off, you are basing it on income, Fair Tax is based on consumption. So you spend 20K a year so would probably pay about 6K in taxes. The person who spends 200K is paying 60K in taxes. He spend 10x what you do and pays 10x what you do in taxes....how is that not fair? Just because someone is well off doesnt mean they should pay higher taxes.

We shouldn't punish people for succeeding in this country. As a single male over 40 I can't tell you the number of times I received an annual salary increase just to see a bit less in my paycheck. I ask for more vacation in lieu of more salary but unfortunately companies don't work this way. So we reward folks for under-achieving and I personally don't think this is the sort of country we are trying to rebuild. You should pay your share, not everyone else's share, and what's fair... the END.

thanks
ran

[DrunkenUncle]

Fair Tax is an Ok system.

It works great for the Cayman Islands and many other areas of the World.

They add a 20 % tarrif on all goods sold. Then they have a 7.5% tax on all real estate. It works perfectly for them and it could and would work here as well.

I prefer a Flat tax with a income exclusion.

For a single person the deduction is $20,000 so you would pay no tax on the first 20k of income.

For a couple $50k to do away with the penalty associated with marriage and allow extra funds to support children if the couple has any.

Then every bit of income would be taxed above that at 15%. No further deductions nor higher tax rates. Everyone would pay the same percentage.

Our national investments and savings would sky rocket from individuals because the capital gains would have fallen so low. This would offset the corporations many special tax breaks, loopholes of major corporations when they kick funds up to DC.

This would also decrease the Lobbyists from day one by at least have. You could do your taxes on a Postcard and we could cut the IRS in 1/2 while still increasing audit and review by 40%.

Now the Liberals would cry that it is just a big break for the rich but if you are low income it would be a lifesaver. You would be able to keep your entire check for 60% of the workforce. Imagine the spending then - -

We should also allow anyone 35 or younger to opt out of Social Security. They prevent the deduction from being taken out if they signed a waver to their right to S.S.I. for anything but Disability in the future. This would nearly reduce future responsibility for Social Security beyond the Baby boomer's. Erase the future IOU entirely! (The Government would be able to plan an actual end date to this horrid program that is an entitlement that has only hurt most of Americans - in the long run).

The increase in our Nations productivity from the gains of intelligent tax workers, accountants, and additional legal that deal in tax law only now could push us into a new age of creativity and personal freedom as a Nation.

In order to balance our budget we would also require that every federal contract now and forever outlaw the Cost Plus Format. If you do not know what that is - it basically allows the Nation to pay a contractor anything for a service then pay an agreed upon profit on top of all expenses.

So if a major contractor charges you $900 for a toilet seat they make more money. If they charge $50 for a box of nails they make more. Stay in the best hotels yes, you guessed it they make more.

Cost Plus should be outlawed. All contracts should be bid on and agreed to in advance. We would not have to always go with the lowest bidder and we would still save Billions.

:shhh:

Don't think 15% would work, (well when everyone pays including the major companies) push it to 17%. Still it would be much easier for all concerned.

Then also include a 25% tariff's on all imported goods. China would still be the top seller to Walmart it would just mean that USA based companies would have a fighting chance when combined with lower taxation for smaller companies now. The American farmer would have his business increase many times over since imported beef, fruit and vegetables would be out priced for the most part.

One possible side effect again, would be the saving of the Rain Forrest because one of the main reasons it is being destroyed is greed related to the raising of cattle for sale in the USA.

Some of the people in the tax business now could even go into business as a micro farmer providing vegetables to local grocers. Just like people used to all over the USA 20 years ago. You have to be able to budget well and watch fluid and chemical levels and many other processes that they would be fine at. From 1 acre you can easily farm enough in a greenhouse to earn a living for a family of four.

[sgmunson]

You seem to be saying "tough nuts" to an awful lot of people, simply because they may have made a mistakre or two in the past, and many of whom might NOT have sufficient equity to sell, so the "Fair Tax" might seem rather unfair to that group, and might appear to them to be implemented just as they thought they finally had things under control. I don't think that's a responsible position to take. Finding out that this new tax only taxes new goods IS good news, however, so that's a good thing. Although, given that, new housing starts would pretty much disappear to the extent that many builders would be out of business long before there would be sufficient recovery. Do you tell them "tough nuts" too ? Seems to me this "Fair Tax" hasn't been fully baked yet, and isn't anywhere near as fair as it might seem.

On the personal side, I've made mistakes that were primarily a result of a lack of proper education on the topics involved, and by the time I was sufficiently educated, it was too late to avoid serious fiscal damage. On the repair path, I've moved to a lower cost of living area now, but the damage was sufficient that the equity was unable to eliminate all the debt, so fiscally things are still a struggle (my "sufficient education" didn't completely arrive until I was already involved in the dinar).

So I should be penalized for things society & parents failed to do ? Doesn't quite ring fair to me...

Steve
(aka sgmunson)
:wave: :wave:

P.S. Liquidating what dinar I have would not have enough of an impact to make it worth the effort.

First, about the housing market, only new homes would be taxed. Anyone buying a used home wouldnt have to pay the tax, so most people would be ok there. The FairTax is only on New Goods and Services, so the same would go for vehicles and stuff like that, no tax on old stuff cuz it was already taxed.

Now about your proposed situation, this might sound bad but everyone has to take responsibility for where and how they live. If you choose to live in an area that costs 60K a year or if you chose to get married and then get divorsed and have to pay alimony then that is on you, the government shouldnt compensate for personal problems such as these. After the FairTax goes through and someone is having problems paying alimony then they need to go back to the judge to see if they can reduce the payment. Or if they are having problems paying the bills in the area they live then they probably need to sell the house, take the equity and move to an area that is more favorable for the bank account. Things will adjust after it is implemented and it will take time and wont be easy at first but nothing this big could never be easy to transition to.

[jasleeds]

You seem to be saying "tough nuts" to an awful lot of people, simply because they may have made a mistakre or two in the past, and many of whom might NOT have sufficient equity to sell, so the "Fair Tax" might seem rather unfair to that group, and might appear to them to be implemented just as they thought they finally had things under control. I don't think that's a responsible position to take. Finding out that this new tax only taxes new goods IS good news, however, so that's a good thing. Although, given that, new housing starts would pretty much disappear to the extent that many builders would be out of business long before there would be sufficient recovery. Do you tell them "tough nuts" too ? Seems to me this "Fair Tax" hasn't been fully baked yet, and isn't anywhere near as fair as it might seem.

On the personal side, I've made mistakes that were primarily a result of a lack of proper education on the topics involved, and by the time I was sufficiently educated, it was too late to avoid serious fiscal damage. On the repair path, I've moved to a lower cost of living area now, but the damage was sufficient that the equity was unable to eliminate all the debt, so fiscally things are still a struggle (my "sufficient education" didn't completely arrive until I was already involved in the dinar).

So I should be penalized for things society & parents failed to do ? Doesn't quite ring fair to me...

Steve
(aka sgmunson)
:wave: :wave:

P.S. Liquidating what dinar I have would not have enough of an impact to make it worth the effort.



Sorry if I sound "tough luck" like. I just got the image in my head of people who think the government should do everything for them instead of doing things for themselves, I promise Im not saying you are one of those people.

IMO, the new housing market wouldnt be hurt for the fact that the building materials to build the house would be cheaper since the companies dont pay taxes and then after the tax it would put things about where they are now and the people will have more money in their pockets since they have their whole paycheck.

I do believe things would be better after the tax for the fact that you will have all of your money in your paycheck, plus the money you get back for the prebate to cover up to the poverty level. So if things stay about the same price and you have more money in your pocket to pay for things then you shouldnt have a problem. I think you are letting the percentages get to your head and work things out of proportion.

[WAYNE T]

The best of intentions will not make the 'fair' tax fair.

And in my opinion, the flat tax is worse.

If you want fairness, decide what a high end for a normal standard of living, then place a sales tax on all goods, then everyone who earns more than that high end normal, should be required to pay income tax at some rate.




the b

[jasleeds]

The best of intentions will not make the 'fair' tax fair.

And in my opinion, the flat tax is worse.

If you want fairness, decide what a high end for a normal standard of living, then place a sales tax on all goods, then everyone who earns more than that high end normal, should be required to pay income tax at some rate.




the b


So here it comes to punishing those who make more money again. Why do you want this? So what happens when you start make more than 20k a year and you end up not spending all of your income? You put some money away in savings and someone comes to you and says, you made more than me and didnt pay taxes on all of your money like I did. You need to pay taxes on the money you saved....Is that fair? Someone now wants to punish you cuz you did better than them. Are you ok with that?

[Fisherman]

I like the idea of a flat tax. It's much much better. But where did you get this 15 - 17%? 10% is more than enough. Everyone pays 10% on income. If someone makes a dollar, that's only ten cents! You get to keep ninty cents! It's good, it's simple, it's better! Ten percent! No exclusions. Why should someone be excluded? They get to keep $0.90 of every dollar! If they make less, they pay less!

The fair tax is not fair just like our present system is not fair.

[richsoon]

I kinda like the idea of taxation during the colonial days. A few redcoats come knocking at your door and demand some shillings (without representation), you stick a musket in their faces and tell them to go away, then a few months later you form a militia, start skirmishes out in the forested trails, and take over a boat and dump a bunch of tea into the harbor in protest. Good times back then..

[WAYNE T]

If I now make 20k, and over the years rise to 2million per, I should pay tax on every dime. The taxes are used to keep a corral around us, of sorts, so that other countries, crooks , theives, people with ill intent cannot take advantage. We each use the military as protection. You earn 2M under that protection and should pay your share. I earn 20k, and should pay my share.

[richsoon]

If I now make 20k, and over the years rise to 2million per, I should pay tax on every dime. The taxes are used to keep a corral around us, of sorts, so that other countries, crooks , theives, people with ill intent cannot take advantage. We each use the military as protection. You earn 2M under that protection and should pay your share. I earn 20k, and should pay my share.


I pay way more in taxes every year than the average American makes. My problem is that Im seeing my tax money go toward things like building walls south of Texas and Arizona for no apparent reason, supporting a dumb war that kills my friends, immunizing skinnies down in some country I cant even pronounce, and building jails for marijuana smokers. When my tax money goes back toward educating my children and paying for my health care is when Ill actually enjoy giving up my 38+%.

[jasleeds]

I like the idea of a flat tax. It's much much better. But where did you get this 15 - 17%? 10% is more than enough. Everyone pays 10% on income. If someone makes a dollar, that's only ten cents! You get to keep ninty cents! It's good, it's simple, it's better! Ten percent! No exclusions. Why should someone be excluded? They get to keep $0.90 of every dollar! If they make less, they pay less!

The fair tax is not fair just like our present system is not fair.


Still doesnt make it fair due to the illegals and any other person being paid under the table. So still not everyone is paying taxes. Fair is everyone paying taxes at the same rate.

[Fisherman]

Still doesnt make it fair due to the illegals and any other person being paid under the table. So still not everyone is paying taxes. Fair is everyone paying taxes at the same rate.

Well, income or sales tax which ever they go with, 10% is more than enough as long as everyone is paying the same. No exclusions. No refunds. No writeoffs. Everyone, even the poorest can pay 10%.