Originally posted by: Craig234
Originally posted by: Rally2xs
Thanks. I try to explain it as I would want it explained to me, and use examples. That generally helps. Its one thing to say, for instance, that the "fair tax" would bring $10 - $15 Trillion into the US in foreign investment, and that didn't mean a heckuva lot to me when I read it. But said another way, that we'll get our textile industries back from overseas, and we'll get our electronics industries back from overseas, and we'll get our auto industries reliefe from the (unfair, I believe) foreign competiton, and we'll slow or halt outsourcing of the medium and high tech jobs - now, that means something to pretty much everybody.
I don't see how the 'fair tax' has th effects you describe on protecting our industries from foreign competition. Please elaborate.
Hello again,
I will gladly explain. This is one of the aspects, actually the main aspect that has me so excited, and we haven't really even gotten into it yet.
For decades, foreign industry has held an obvious advantage of having cheaper labor. However, they also have hidden advantages mostly from their governments. Our industry has to greatly help our workers insure themselves, while their governments provide reduced or free healthcare. Our industries have to come up with a pension system for our workers, while government benefits including the aforementioned healthcare expense again give foreign industries an advantage. Then in the end, our government piles on the 2nd-highest corporate taxes on the planet, while foreign governments, all except Japan, do not tax their industries as severely.
So, our industries lost out to foreign competition, and our own industries seek to ship as many jobs out of the USA, to Canada, Mexico, and across big waters, as they can.
Now, hold onto your hat, 'cuz here comes the sweet part.
By changing the taxing METHOD, all those crushing federal taxes on industry go away. The big thinkers of the fair tax estimate that US produced goods go down in price by 20%. So, lets work with that number.
I recently priced a Jeep Liberty and a Toyota FC Cruiser. The Toyota was slightly higher at right around $25K, and due to some sales action at Jeep, the Liberty was around $24K when equipped the way I was interested in. Both were equipped with about the same features.
Imagine the Jeep suddenly dropping 20%. The Jeep instantly becomes priced at $24K - $4.8K = $19.2K. Not too bad, our American product will sell overseas at $19.2K now. I think Jeep will sell more of them at that price.
But in the USA, the Jeep gets taxed at 30% by the fair tax. OK, that Jeep becomes priced at $24,960, still slightly lower than the Toyota. Still desirable, but watch what happens next. The Toyota, if built overseas (lets pretend it was, I don't know where it was really built) gets taxed at 30% too, and suddenly costs $32,500.
Now, that's a big difference. Will Toyota ever import another FC Cruiser to the US? No, it won't. If it does, it won't sell many. And, overseas, Toyota will be competing with a Jeep Liberty costing $19.2K. Which vehicle will the English, Germans, French, Italians, etc. etc. buy, the Toyota or the Jeep?
Bet you they buy more Jeeps than Toyotas.
How many foreign manufacturers are going to build factories in their own country after we become a nation of zero corporate tax? Not many, I would suspect. Even if Nikon is going to build cameras and sell them to Germans, I think they're likely to still want to build their factories here. And of course if they're going to sell their cameras to Americans, they're definitely going to want to build their factories here.
So, that's what I'm looking forward to so intensely, a complete turnaround of the American industry's decades-long effort to flee this country, leaving behind rusting hulks of factories and lives, and instead rush INTO the country, and build factories just as fast and as big as they can. We will be THE place to build anything in the world. Nobody will be able to match our economy of manufacture.
I see the burnout in the rust belt not as a victory of the foreign workers and companies over GM, Ford, and Chrysler, over US Steel and Alcoa Aluminum, but as the ravages of a terribly flawed taxation METHOD that has sucked production and research dollars out of US industries, and made it impossible to compete.
That can make some sense, but how is that 'fair tax' (what a propragandistic name, by the way; I suggest "cute puppies fair tax"); this sounds more like criticism of 'free markets'.
I believe it to be "fair" tax in that it doesn't hammer our poor people in so many ways. Firstly, it?s the current income tax that has MADE a lot of our poor people be poor people. Then, a tax that is a fixed percentage of the _selling price_ of new items at retail makes sure that nobody ever OWES the government for taxes. If you don't have the money, you just don't buy the product. And finally, all the Nation's citizens are spared from paying the taxes on the necessities of life as calculated in the poverty level. So, even a family of 4 that makes TWICE the poverty level of $26K, that is, $52K, still gets all the tax they will pay on every dollar they spend up to $26K. That happens even if somehow they manage not to spend all of that 1st $26K. For instance, be a soldier. They get housing, food, etc. free. They're not going to expend their entire salary on anything - they'll be able to save something. And then they get $230 - $300 a month in the mail as well, as the "prebate." Good to be a soldier, as long as the shells aren't flying toward you.
Going back, I think you're repeating concern is the regressive nature that is usually a feature of a tax such as a consumption tax. So, I'll address that.
Yes, one of the key attributes of any tax changes is the net shift in who pays how much, and why the wealthy support this tax, to reduce their share and put it on others.
I think that the wealthy support this tax because they see a way to accumulate more wealth when they can build factories, open new mines, process steel, etc. in the USA without having their industries taxed out of existence as they have been over the past 50 years.
Of course, if they build up industries as fast as they can, and foreigners do the same thing - build in the USA - we're going to run out of workers. (That's a good thing?)
I'm concerned about it too, BTW, and here's what I like about the "fair tax." With the fair tax, everybody from your favorite street person all the way up to Bill Gates, gets a check every month (or electronic transfer, most likely, for those that can make use of it) the fair tax rate multiplied by the poverty level. Right now, for a single person, the poverty level is around $11K. But lets just say it's $12K to make the math simple. If it was $12K / yr, then it'd be $1,000 per month as the poverty rate, and either $230 / mo or $300 / mo in everybody's pocket, direct from the gov't. Where are they going to get that much money? From the people they give it to, when they spend all that money on the necessities of life. I have more reading to do to figure out whether it is $230 or $300, but it's "free money" to offset the otherwise regressive nature of the tax.
Could people just take the monthly money and live on it? Probably. Maybe some will, by living 15 - 20 people to a house with low rent anyway, splitting the rent and all the utilities, and buying the cheapest food. They may get tired of spaghetti every night, but still consider it better than working. Do I expect a lot of that? Nope.
You can't get money from nowhere
Don't forget about the prebate of $230 - $300 / month - that's not nothing, and the government is getting it all back from the people they give it to as they spend and pay that back in tax, then they go and give it to people all over again the next month. But, some people could live 10 - 15 in a house (barracks?) and pool their $2300 - $4500, and probably get by, if they can all stand each other in those close quarters without killing each other.
and I don't think this tax will present any rosy scenarios for the less well off;
Sorry, a more rosy scenario for the less well off is exactly what I'm seeing. I see them getting money directly from the government, I'm seeing them get every penny they earn, without income tax and social security tax and medicare tax being taken out of it. They'll get every penny. And of course the "prebate" will nuke all their taxes up to the poverty level. That's a pretty good deal, I think.
And _that_ doesn't even take into account the explosive growth in industry. As more activity occurs, vastly more jobs are created. The people that are working at Wal Mart right now, and have the capability to work in electricity, or a machine shop, or other skilled jobs that have gone overseas and impoverished them will once again be able to apply their skills. Those would be the skills that they chose early in live, the skills for which they probably had the best aptitude and which they likely enjoyed the most. Who _enjoys_ tagging prices on stuff at Wal-Mart or any other retailer? Maybe a few. Certainly not a skilled machinist, or pipefitter, or millwright.
And when we start running out of those that move from low paying jobs to higher paying jobs, then there are the people that are sitting home right now, because they don't _have_ to work for one reason or another, but would do so if it paid well. They will come pouring out of their homes when they find that they can make $30 an hour for being a good typist and being able to run an office. If one industry won't pay them that, then another one that desparately needs a secretary will.
I'd say let's stick to the numbers for different groups.
?
In reality, even the most "sure thing" has to be tried, and can have surprising results. But I'm more excited about the "fair tax" than anything I've come across for a long time. I believe that we would be the world's biggest and best tax haven, and we could stop the rest of the world and their "work for peanuts" laborers from gutting our cities like they have done to Detroit and to a lesser extent Pittsburgh and the remainder of the industrial midwest, otherwise known as the "rust belt."
I don't want to be the world's tax haven
I do. There's some really big advantages to it. People build industry, and mine things, and process the mined stuff into products like steel and aluminum. And when they do that, it creates jobs. Industrial jobs are the best jobs you can get.
- I think civilization has a price tag and I prefer the highly developed higher-taxing blue state systems to the less-developed lower-taxing 'red states'. I prefer a higher taxing more developed European nation to the lower-taxing less developed nations. The bottom line is that you need tax revenues to do some useful things, and if you slash taxes, you lose things bad to lose.
Slash taxes? Its really hard to remember, when talking about taxes at all, that not everyone you talk to is talking about slashing taxes. This taxation METHOD is revenue neutral. That is, the US Government gets exactly as much money as they are getting with the current system, the system that has sucked the life out of our industrial might, and impoverished our people to a large extent. (And I believe will complete the process eventually, when there will be the very, very rich and the very, very poor and nobody in between. I really, really believe that will happen - there's no end to the downward spiral of most of the Nation's people's prosperity. It just continues, unabated. Even Microsoft want to move jobs offshore now, at least if the President make some new tax rule he was talking about.
I'm all for discussion of constructive policies, and avoiding the Detroit scenario.
Glad to hear it. I really, really believe that this is it. I've never heard of anything that approaches the potential that this does.
Again, I think more 'facts' would be helpful than impassioned exceitement about the utopian picture you expect. Specifics about how taxes shift for groups and how you pay for the costs we have. If your utopia rests on "by the govenment spending 75% less, things will be so nice", say that, and I'll disagree but we'll have a clear issue.
Again, I never said anything about the government spending less. The government will receive exactly the same amount of money that they do now. They will just get it from a National sales tax and not from the people's income and the corporation's income which, incidentally, the corporation doesn't pay, but their customers pay. That is, if there is a corporation that is building you a very, very nice car, by hand, for $100,000, and it takes the company 1 month to build this car with meticulous care, and then the government comes along and slaps them with a $1,000 corporate income tax for each month, what do you think you're going to pay for that car now? That's right, $101,000. You paid the tax, not the corporation. You're their only source of money, so you're going to pay the tax. All customers pay all corporation's taxes. There's just no other way to do it.
The recently negotiated $14 / hr union starting wage in the auto industry is an example of this nonsense - That's about $29K / yr, as opposed to a $26K / yr poverty level for a family of 4. You can't tax a guy like that and help run the country. But the other aspect of this fair tax that we haven't gotten into yet is that the foreign money coming into this country will build thosands of factories. As they keep proliferating, the factories will start running out of employees, and then... WAGES WILL GO UP!!! The union contract will be out the window, as employers vie for workers and begin offering them more money than union scale. After that, the sky's the limit.
I'm not buying any of the 'oh my gosh the world will move all their jobs to the US and everyone will be moving into mansions with the amazing wealth' without evidence.
Maybe not mansions, but the world _will_ move their factories to a place where they can operate without paying corporate taxes.
There are a lot of missing dots in your scenario, including the above-mentioned issue of why the US would suddenly receive all this investment, and why the wages would be high compared to the cheap global labor, the effect on tax revenues for the government, and more.
Hope I covered that clearly above.
In my mind, and this is just my own "take" on it, the fair tax is just another "tax the rich" scheme, only it make all of us "the rich." Wages will go up and there won't be a thing industry can do about it. We could even stop worrying about the illegal aliens - just declare amnesty, train 'em up to be production workers and milwrights and electricians and tool and die men and etc... and TAX THEM TOO!!!! I think in maybe a decade or so we could be paying off the National Debt.
You realize that 'amnesty' under the current tax system would also let us 'stop worrying about the illegal aliens, train them up and 'TAX THEM TOO' and, um, pay off the debt.
No, it wouldn't, not now. We don't have all the jobs to give them in order to get them out of the very-low-paid agricultural jobs that they perform. They would simply be more starving American citizens, existing on food stamps and competing for scarce work opportunities.
I read an account recently of what illegal alien labor has done to some unionized janitors in Los Angeles. They had jobs at $12 an hour and had health benefits and the whole thing. These were mostly black people too. But the illegal aliens arrived and started going to work for "scab" companies that didn't need the union labor, and wages fell drastically. I forget what it devolved to - I seem to remember $3 an hour, which they could get away with if the business was not such that it "crossed state lines" in its operations so the Federal minimum wage doesn't apply. But then again, these are ILLEGAL aliens so really, NO laws apply.
That's not a 'fair tax' issue. It also leaves out a hell of a lot as far as why we haven't just opened the borders and said 'hey everyone come here and train up and woo hoo'.
Well, we can't provide jobs for them, its just that simple. Unemployment is 9.4% now. It will likely be more next month. Personally, I do not believe that there will be a "recovery" from this recession. We will _not_ get back to the prosperity that we had before. It will be less. We will go on, and on, and on at a permanent lowered state of prosperity, until the NEXT TIME there's ANOTHER recession, and then it'll go down some more. And stay that way. It?s the spiral I was talking about before. I think we're heading for a country of very, very, very rich people, and very, very, very poor people, and absolutely nobody in between.
Of course, that's just my take on it, although I have to warn ya', I'm generally a pessimist in most everything else. This just looks that good to me!
Usually, when I say something about drinking the kool-aid, it's pretty critical, but the comment just fits your enthusiasm too well not to say it here.
I think I have very good reasons for being so optimistic about this. No issue gets my optimism unless it is very, very, very good. I tend to believe that if anything can go wrong, it will. I tend to be right a lot more than when I'm optimistic. So I limit optimism, but THIS IS DIFFERENT. This is playing to human nature, and every mother's son's desire to get ahead. People will go for this. I know they will.
Hey, no problem - I won't go as far is saying its dishonest, it's just unusual math with that "advertising critter" easyspeak that is designed not to shock people with what I would consider the truth... a 30% tax rate. But y'know what? I did my own situation, and compared to the tax I already pay, having that go away and paying a "fair tax" of 30%, I still come out $6K or so better than before, and then you add in the prebate, and it gets up to $8K or $9K better than before.
And there's more, but this is getting long - but I haven't really found any bad news in this yet. I think if we pass this, we're all going to do very, very well.
I don't mean dishonest as in "saying 1% when it's really 30%", I mean dishonest in terms of playing games with the numbers to try to mislead people. "I did not have sexual relations [as defined by the trial judge narrowly that lets me use this phrase that SOUNDS like something it isn't, but shhhhh] with that woman, Ms. Lewinsky."
I've been looking for the hook in the whole thing, haven't found it yet. Suggest you go to the
www.fairtax.org site and look for it too. I obviously need help, since I've failed to find the hook. It all looks really good. Go ahead, find the flaw. I can't, not so far.
I think they have no reason to use a different way of describing the tax rate to make it look lower other than deception.
Sure they do. 30% is kinda shocking when you're used to a 3 or 4% sales tax rate. Its natural to recoil like seeing a snake. But this is a lot better than that, because you keep all the $$$ you earn - no withholding.
You think people willl do well; let's get to the numbers and talk. How about some numbers that are based on our current econonmy, not predicitons of huge foreign investment, etc.
Sure.
It costs $265 billion dollars just to collect the income tax. It will largely go away, as not nearly as many people need to be policed - just retail vendors. State income tax collectors could easily and cheaply be paid to do it for the Federal government since they already have the infrastructure in place to do it for their states.
There exists a $1.5 TRILLION dollar shadow economy that never gets taxed, since it was set up for the express purpose of avoiding income tax. 30 percent of $1.5 trillion dollars is $450 billion dollars, an amount that would have balanced the federal budget until just recently.
Virtually no tax is collected presently on sales of illegal narcotics, marijuana, meth, and all the other drugs, and still including illegal alcohol in places. We would get the money for the Federal government when those people doing it live well with their illegal proceeds. When the bad-guy drug dealer buys a new twin-engined SCARAB Cigarette boat for $200,00K, well, Uncle is going to get $60K from that sale. Repeat often, as bad guy lives high. Repeat that by a seriously huge number of bad guys dealing drugs that don't pay taxes at all right now.
If you want other examples, there's tons of stuff on the web, and you can find this stuff 'til the cows come home. I mean, we, the honest people who pay our taxes, are getting so hosed, and so laughed at, by the yahoos mentioned above, in such massive volume, that it doesn't even approach funny. Its just sickening. And it really, really, really ticks me off!!!!
See what you can find out. I haven't found the hook yet? it may not actually be there.
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