anyone heard of the fair tax?

[nakedfrog]

Can we keep the freakin' partisan comments to P&N?

 

[Queasy]

Originally posted by: Rogue
Ahhh...the true rise of the black market in the United States would be upon us. A whole new type of crime syndicate involved.

There will always be those looking to get around whatever tax system is in place. It is inevitable.

 

[DivideBYZero]

Originally posted by: mugs
I assume since it's only on "NEW" purchases that houses and stocks that have had a previous owner would not be taxed?

Dream on!

 

[MagicConch]

Only on 'new' part could be abused fairly easily IMO, especially if non-profits don't pay the tax (or even if they receive a rebate). They could lease out their assets and use that as their basis for generating revenue so to speak. Essentially everything in your house could technically be owned by an entity that somehow avoids taxation. It could also give the words holding company a whole new meaning 😉

 

[Kalbi]

Originally posted by: Rogue
Ahhh...the true rise of the black market in the United States would be upon us. A whole new type of crime syndicate involved.

much harder than you think. taxes will be already added into cost of good at the upper level, not at the register, i.e. $10 + 23% but the price of the good will be 12.30

 

[Kalbi]

Originally posted by: Koenigsegg
Yes, it's pretty much as simple as it can be.

Thus this system would make accountants/auditors/etc. pretty much obsolete.

how would this make accountants/auditors obsolete? maybe H&R Block, but those are tax accountants.

tax accountants won't go obsolete either bc there will still be laws regarding how to book the taxes, tax planning, etc.

we accountants are here to stay.

 

[Kalbi]

Originally posted by: m2kewl

Originally posted by: Kalbi

Originally posted by: m2kewl

Originally posted by: Toasthead
yeah its been around a while. It makes too much sense for politicians to ever approve it.

yeah, our fearless leaders are too pussified to implement anything remotely close.

they're too busy hawking up religion in the edumacation system and warmongering the ME for sludge :roll:

yet it's the democrats you vote for that are adamantly against a national sales tax replacing income tax...

hey i'm an independent. i've advocated tax changes and end of SS since i registered on ATOT. i was for steve forbes tax changes when he ran, too bad the public was too brainwashed by the democratic/republican propoganda machine...

and how did you know how i voted??? 😛

you were anti-religion/war so i ASSumed

 

[Digobick]

Originally posted by: acemcmac
this is VAT, is it not?

No, it's simply a sales tax. A value added tax (VAT) imposes a tax at every intermediate step of production. The Fair Tax only taxes the final product, not the goods that went into making that product.

 

[dullard]

Note: I speak in general terms here since there are multiple versions of that "fair tax". Thus my comments may or may not apply directly to the link in question.

There are multiple hurdle. Some of the hurdles are:

1) It is a massive tax increase for the poor. Thus, what do we do about the poor that cannot afford food/shelter anymore. (A) You can make the food/shelter tax free - which leads to a long list of exceptions, loopholes, and eliminates the simplicity of the fair tax. Also a one size fits all approach (poor people must buy items on the list) never works for everyone. (B) You can give rebates to the poor. But then, you still need the entire income tax system (and the IRS) to keep track of who is poor/rich. And the drug dealer example used in this thread again gets away without paying tax since drug dealers don't have reported income.

2) Even after that, it is still a massive tax increase for the working poor. I have not yet seen a fair tax that remembers the earned income credit.

3) It encourages smuggling. The rich can buy all their items out of the country, ship them in, and never pay a dime in US tax.

4) It encourages the black market. Buy everything on the black market and never pay a dime in US tax. Income tax is easy to enforce - since both the employer and the employee send separate statements to the IRS. A sales tax doesn't have that second independant source. Thus black markets and smuggling are much harder to stop than income tax fraud.

5) It usually is combined with assumptions that spending will decrease dramatically. The tax rates will be much higher than the low rates advertised if government spending increases like it usually does. I think spending cuts are a separate issue - don't try to make the fair tax look good by pretending spending will suddenly be slashed.

6) I like a wealth tax, where those who have wealth pay tax. Sadly, the fair tax doesn't address this issue. Note: a wealthy person is completely different from a person with high income.

I gotta go for the day, but there are other similar critical issues that must be addressed.

 

[Maverick]

This would never work...people would simply stop buying things new and start buying everything second hand.

It would encourage conservation and environmental lifestyles though.

 

[Koenigsegg]

Originally posted by: dullard
Note: I speak in general terms here since there are multiple versions of that "fair tax". Thus my comments may or may not apply directly to the link in question.

There are multiple hurdle. Some of the hurdles are:

1) It is a massive tax increase for the poor. Thus, what do we do about the poor that cannot afford food/shelter anymore. (A) You can make the food/shelter tax free - which leads to a long list of exceptions, loopholes, and eliminates the simplicity of the fair tax. Also a one size fits all approach (poor people must buy items on the list) never works for everyone. (B) You can give rebates to the poor. But then, you still need the entire income tax system (and the IRS) to keep track of who is poor/rich. And the drug dealer example used in this thread again gets away without paying tax since drug dealers don't have reported income.

2) Even after that, it is still a massive tax increase for the working poor. I have not yet seen a fair tax that remembers the earned income credit.

Read the link.

 

[robothouse77]

Originally posted by: Koenigsegg

Originally posted by: dullard
Note: I speak in general terms here since there are multiple versions of that "fair tax". Thus my comments may or may not apply directly to the link in question.

There are multiple hurdle. Some of the hurdles are:

1) It is a massive tax increase for the poor. Thus, what do we do about the poor that cannot afford food/shelter anymore. (A) You can make the food/shelter tax free - which leads to a long list of exceptions, loopholes, and eliminates the simplicity of the fair tax. Also a one size fits all approach (poor people must buy items on the list) never works for everyone. (B) You can give rebates to the poor. But then, you still need the entire income tax system (and the IRS) to keep track of who is poor/rich. And the drug dealer example used in this thread again gets away without paying tax since drug dealers don't have reported income.

2) Even after that, it is still a massive tax increase for the working poor. I have not yet seen a fair tax that remembers the earned income credit.

Read the link.

totally

 

[Queasy]

Originally posted by: dullard
1) It is a massive tax increase for the poor. Thus, what do we do about the poor that cannot afford food/shelter anymore. (A) You can make the food/shelter tax free - which leads to a long list of exceptions, loopholes, and eliminates the simplicity of the fair tax. Also a one size fits all approach (poor people must buy items on the list) it doesn't work for everyone. (B) You can give rebates to the poor. But then, you still need the entire income tax system to keep track of who is poor/rich. And the drug dealer again gets away.

The current Fair Tax proposal being written about by John Linder and Neal Boortz and introduced in legislation (HR25) gives a monthly rebate for all families for the basic necessities of life according to the size of their family.

2) Even after that, it is still a massive tax increase for the working poor. I have not yet seen a fair tax that remembers the earned income credit.

Why should their be an EIC? One of the benefits of the Fair Tax proposal is that income re-distribution schemes like the EIC are done away with because they should not be needed.

3) It encourages smuggling. The rich can buy all their items out of the country, ship them in, and never pay a dime in US tax.

They can do this now. There will always be people looking to job the tax system.

4) It encourages the black market. Buy everything on the black market and never pay a dime in US tax.

Again, people will always be looking to job the tax system.

5) It usually is combined with assumptions that spending will decrease dramatically. The tax rates will be much higher than the low rates advertised if government spending increases like it usually does. I think spending cuts are a separate issue - don't try to make the fair tax look good by pretending spending will suddenly be slashed.

I've never seen any assumptions that gov't spending will drop dramatically. If anything, maybe it will help make the general populace more aware of what their representatives are spending.

6) I like a wealth tax, where those who have wealth pay tax. Sadly, the fair tax doesn't address this issue. Note: a wealthy person is completely different from a person with high income.

Horrible idea IMHO. Another income re-distribution scheme.

You should call into Neal Boortz's show sometime or send him an email. He's a huge proponent of the Fair Tax and would be able to intelligently answer most of your concerns. Read the Fair Tax book that is coming out on Aug. 2nd as well.

 

[Jack Ryan]

Why can't we just have a flat tax rate? 10% for all no matter what. How hard is that?

 

[Nitemare]

Originally posted by: Ausm
Never will happen


Ausm

Yup, not enough money coming in for the government to throw away on useless programs...

 

[Mo0o]

Interesting idea

 

[robothouse77]

Originally posted by: KMDupont64
Why can't we just have a flat tax rate? 10% for all no matter what. How hard is that?

you'd hear too much that higher income people aren't being taxed enough.

 

[EagleKeeper]

This is at the Federal level. State/local revenue streams need to be taken into account.

What about imports/exports.

 

[Queasy]

Originally posted by: EagleKeeper
This is at the Federal level. State/local revenue streams need to be taken into account.

Fair Tax FAQ

How are state tax systems affected, and can states adequately collect a federal sales tax? No state is required to repeal its income tax or piggyback its sales tax on the federal tax. All states have the opportunity to collect the FairTax; states will find it beneficial to conform their sales tax to the federal tax. Most states will probably choose to conform. It makes the administrative costs of businesses in that state much lower. The state is paid a ¼ of one percent fee by the federal government to collect the tax. For states that already collect a sales tax, this fee proves generous. A state can choose not to collect the federal sales tax, and either outsource the collection to another state, or opt to have the federal government collect it directly. If a state chooses to conform to the federal tax base, they will raise the same amount of state sales tax with a lower tax rate ? in some cases more than 50 percent lower ? since the FairTax base is broader than their current tax base. States may also consider the reduction or elimination of property taxes by keeping their sales tax rate at or near where it is currently. Finally, conforming states that are part of the FairTax system will find collection of sales tax on Internet and mail-order retail sales greatly simplified.

What about imports/exports.

Fair Tax FAQ

How does this affect U.S. competitiveness in foreign trade? Since all U.S. exporters immediately see an average 20-percent reduction in their production costs, they experience an immediate boost in their competitiveness overseas. American companies doing business internationally are able to sell their goods at lower prices but similar margins, and this brings jobs to America.

In addition, U.S. companies with investments or plants abroad will bring home overseas profits without the penalty of paying income taxes, thus resulting in more U.S. capital investment.

And at last, imports and domestic production are on a level playing field. Exported goods are not subject to the FairTax, since they are not consumed in the U.S.; but imported goods sold in the U.S. are subject to the FairTax because these products are consumed domestically.

 

[Digobick]

Originally posted by: dullard
Note: I speak in general terms here since there are multiple versions of that "fair tax". Thus my comments may or may not apply directly to the link in question.

There are multiple hurdle. Some of the hurdles are:

1) It is a massive tax increase for the poor. Thus, what do we do about the poor that cannot afford food/shelter anymore. (A) You can make the food/shelter tax free - which leads to a long list of exceptions, loopholes, and eliminates the simplicity of the fair tax. Also a one size fits all approach (poor people must buy items on the list) never works for everyone. (B) You can give rebates to the poor. But then, you still need the entire income tax system (and the IRS) to keep track of who is poor/rich. And the drug dealer example used in this thread again gets away without paying tax since drug dealers don't have reported income.

The current proposal calls for option B: rebates. And you don't need the income tax system because all valid Social Security cardholders who are U.S. residents would receive a monthly rebate. Going by today's calculations, a single person would receive at least $178 per month, and a married couple would get at least $357 per month. To see how much your family would get, go to this website: FairTax Rebate.

2) Even after that, it is still a massive tax increase for the working poor. I have not yet seen a fair tax that remembers the earned income credit.

You are correct to some extent. Not including the monthly subsidy (which is intended to cover the cost of food at the poverty line), the poor would pay higher taxes than they do now. However, the cost of goods would decrease because the busninesses producing and selling them aren't being taxed.

3) It encourages smuggling. The rich can buy all their items out of the country, ship them in, and never pay a dime in US tax.

4) It encourages the black market. Buy everything on the black market and never pay a dime in US tax. Income tax is easy to enforce - since both the employer and the employee send separate statements to the IRS. A sales tax doesn't have that second independant source. Thus black markets and smuggling are much harder to stop than income tax fraud.

I won't argue with you much here. This is the biggest argument I have against the FairTax. However, with any sweeping tax change there will be major hurdles, and it then becomes a question of whether the good outweighs the bad.

5) It usually is combined with assumptions that spending will decrease dramatically. The tax rates will be much higher than the low rates advertised if government spending increases like it usually does. I think spending cuts are a separate issue - don't try to make the fair tax look good by pretending spending will suddenly be slashed.

Are you referring to government's spending or individual spending? I have read that business and personal tax returns cost our nation approx. $250 billion annually; I would expect that to at least drop somewhat. However, any tax breaks that states receive would go away, which would increase their debt. I'd have to do more research before I could comment on spending.

6) I like a wealth tax, where those who have wealth pay tax. Sadly, the fair tax doesn't address this issue. Note: a wealthy person is completely different from a person with high income.

I gotta go for the day, but there are other similar critical issues that must be addressed.

The one other problem I see is double taxation. From Wikipedia: The FairTax proposal does not address the transition effect on taxpayers who have accumulated significant savings from after-tax dollars, especially retirees who have finished their careers and switched to spending down their life savings. Under the FairTax proposal, this money would be fully taxed again as it is spent. Critics have spoken out against the FairTax proposal, claiming that it would result in double taxation.

 

[Gravity]

Too easy for black market economy to be built around it.

 

[TheAdvocate]

I'm very saddened to see that only dullard gets why this is such a horrible idea. Of course Boortz & his cronies love it - it's a consumption tax, which will shift the tax burden ridiculously far down the pyramid and cement the aristocracy in the U.S.

A consumption tax does not tax the wealthy (not the high income folks, the wealthy, a fundamental and essential difference). The wealthy earn passive income (not taxed), make finite purchases, including like kind exchanges that will not be taxed, and as a % of income, will pay tenths or hundredths of pennies on the dollar for every dollar the average college educated professional pays in what I'd call inelastic or fixed cost consumption (everyone needs transportation, housing, food & other basic necessities).

As it is, there are numerous loopholes for the rich (not the high income folks) to avoid paying income taxes through. It boggles my mind that they openly lobbying for even more via this system. I annuallys ee hundreds of individual tax returns, and speaking very practically, the lion's share of income tax is paid by high salary inviduals and sole proprieters who do not have adequate wealth planning/management provisions in place to shield thier income. Even when a wealthy indiviudal does tend to pay tax, it is at the much lower (thank you Dubya) capital gains rate.

I don't play partisan politics. I think horrible things about partisanship and will not join a political party. I also despise that govt spending is way out of control under both political regimes over the past couple of decades. That is the area that needs to be addressed, and is one of the few times I tend to agree with Boortz and his self serving political/social policies. We're attacking the wrong side of the problem.

 

[Quasmo]

I LOVE the Fair tax, preordered the neal boortz book and can't wait to read it.

 

[Kalbi]

Originally posted by: TheAdvocate
I'm very saddened to see that only dullard gets why this is such a horrible idea. Of course Boortz & his cronies love it - it's a consumption tax, which will shift the tax burden ridiculously far down the pyramid and cement the aristocracy in the U.S.

A consumption tax does not tax the wealthy (not the high income folks, the wealthy, a fundamental and essential difference). The wealthy earn passive income (not taxed), make finite purchases, including like kind exchanges that will not be taxed, and as a % of income, will pay tenths or hundredths of pennies on the dollar for every dollar the average college educated professional pays in what I'd call inelastic or fixed cost consumption (everyone needs transportation, housing, food & other basic necessities).

As it is, there are numerous loopholes for the rich (not the high income folks) to avoid paying income taxes through. It boggles my mind that they openly lobbying for even more via this system. I annuallys ee hundreds of individual tax returns, and speaking very practically, the lion's share of income tax is paid by high salary inviduals and sole proprieters who do not have adequate wealth planning/management provisions in place to shield thier income. Even when a wealthy indiviudal does tend to pay tax, it is at the much lower (thank you Dubya) capital gains rate.

I don't play partisan politics. I think horrible things about partisanship and will not join a political party. I also despise that govt spending is way out of control under both political regimes over the past couple of decades. That is the area that needs to be addressed, and is one of the few times I tend to agree with Boortz and his self serving political/social policies. We're attacking the wrong side of the problem.

and the reason why "rich" should pay a higher percentage of their income is?

 

[robothouse77]

Originally posted by: TheAdvocate


A consumption tax does not tax the wealthy (not the high income folks, the wealthy, a fundamental and essential difference). The wealthy earn passive income (not taxed), make finite purchases, including like kind exchanges that will not be taxed, and as a % of income, will pay tenths or hundredths of pennies on the dollar for every dollar the average college educated professional pays in what I'd call inelastic or fixed cost consumption (everyone needs transportation, housing, food & other basic necessities).

yes, under this plan the weathy, and everyone else, will not be taxed on their income. so first of all, why even bring up that point?

second of all, the wealthy will be buying, you know, things. art, cars, houses, jewelery, etc. so how do you figure that they will find a loop hole out of being taxed for these items, unless they do it illegally?