Debunking the Fair Tax myth

[ayabe]

I ran across this article the other day: Linkage


"And the claim that the FairTax is really progressive in nature, alleviating the tax burden of the poor and shifting it to the wealthy? Wrong again. Again, the President's Advisory Panel for Federal Tax Reform final report showed that, with the prebates, the overall tax burden on middle-class Americans would increase. "


While this is sort of on the back burner for now, in the unlikely event that R's retain control of both HoC's this will come up.

 

[theeedude]

No kidding. Republicans supporting tax reform that will shift burden from rich to middle class. Color me shocked!

 

[Todd33]

The overall federal effective tax rate paid by those earning between $15,000 and $50,000 per annum would increase from 3.6 to 6.7 percent, while the overall federal effective tax rate paid by those earning greater than $200,000 annually would drop from 53.5 to 45.9 percent. That's an 86% increase in the effective tax rate on middle Americans, and a 14% drop for the richest among us. William Gale gives it to us in terms of something we're familiar with - he estimates that while "taxes would rise for households in the bottom 90% of the income distribution . . . households in the top 1% would receive an average tax cut of over $75,000."

Now I see the motivation. The GOP represents the rich and uses ignorant evangelicals for votes. What tools.

 

[Cerb]

It's misleading. The article, Fair Tax advocacy articles, etc..

The relative tax (and now insurance, too) burden shifting towards the middle class and poor is due to having elected leaders that do not care about those that elect them.

Any tax system can work well, and any tax system can abysmally fail. If Fair Tax were put in place, in just a few years, more laws would be added that make it difficult and benefit those that pay for major party political campaigns.

Fair Tax could certainly work, IMO, but it is a second step to economic reform, not a first.

 

[zendari]

Are you suggesting that the rich pay more than their flat fair share of tax?

 

[Whoozyerdaddy]

Almost every objection brought up in that Daily Koz piece was addressed in the Fair Tax book.

His assertion that the tax is really a 30% tax is all a matter of how you choose to do the accounting. The Fair Tax people have been very clear in their statements that the tax would be a component of the total price you pay for an item. There is no deception there. And, in fact, they frame their argument by saying that, right now, 23% of the retail price you pay every day is federal tax. The idea is to replace the hidden tax component of the retail price with a plain-as-day tax that shows up as a line item expense on your receipt. By the author's logic, the 23% tax component that currently exists in the retail price of every item is really a 30% tax. Either way, whether it's hidden in the price or shows up as a line item at the bottom of the reciept, the tax remains the same.

And for every expert study he cites there are others that claim the opposite and support the FT.

It's an interesting opinion piece but he doesn't raise any new issues that haven't been addressed already. Pretty much the same arguments that arise from the anti-FT camp over and over.

I'm a proponant of the FT. But I'd also settle for a flat tax. ANYTHING but what we have right now. My tax return for last year was 15 pages long and so complicated that Turbo Tax F'ed it up and put income in the wrong slot. (A minor nightmare I'm dealing with now) Listening to my tax guy try to explain to me about line 21 and schedule C and pub 525 page 30 blah blah blah blah... made me want to cry. Rube Goldberg would be proud.

 

[theeedude]

What a bunch of baloney. Corporations don't pay taxes on the full retail price (revenue). They only pay taxes on the profit.
Also, Republicans hate the middle class with a passion to propose that kind of tax.

 

[themusgrat]

In a perfect world, i think everyone would pay flat taxes, not taxes based upon wealth. If u think about it, the way it is, the rich are supporting the poor, and while thats a good thing, it isnt the gov's job to do it? But i agree with the tax system in place, the economy would plunge without it i think.

 

[ayabe]

Originally posted by: Whoozyerdaddy
Almost every objection brought up in that Daily Koz piece was addressed in the Fair Tax book.

His assertion that the tax is really a 30% tax is all a matter of how you choose to do the accounting. The Fair Tax people have been very clear in their statements that the tax would be a component of the total price you pay for an item. There is no deception there. And, in fact, they frame their argument by saying that, right now, 23% of the retail price you pay every day is federal tax. The idea is to replace the hidden tax component of the retail price with a plain-as-day tax that shows up as a line item expense on your receipt. By the author's logic, the 23% tax component that currently exists in the retail price of every item is really a 30% tax. Either way, whether it's hidden in the price or shows up as a line item at the bottom of the reciept, the tax remains the same.

And for every expert study he cites there are others that claim the opposite and support the FT.

It's an interesting opinion piece but he doesn't raise any new issues that haven't been addressed already. Pretty much the same arguments that arise from the anti-FT camp over and over.

I'm a proponant of the FT. But I'd also settle for a flat tax. ANYTHING but what we have right now. My tax return for last year was 15 pages long and so complicated that Turbo Tax F'ed it up and put income in the wrong slot. (A minor nightmare I'm dealing with now) Listening to my tax guy try to explain to me about line 21 and schedule C and pub 525 page 30 blah blah blah blah... made me want to cry. Rube Goldberg would be proud.

Ehh let's not turn this into a Global Warming debacle, we are dealing with hard numbers here and unless someone wants to argue that mathematics is just a "theory" there's not much to discuss.

When the President's own Advisory Panel for Federal Tax Reform claims that this will increase taxes on the middle class, all things considered, I have to take that as a fact.

 

[TheAdvocate]

Again, the President's Advisory Panel for Federal Tax Reform final report showed that, with the prebates, the overall tax burden on middle-class Americans would increase.

In other breaking news, water is wet. Of course, don't tell that to the partisan proponents.

I don't mind simplifying the tax code at all. But not at the cost of shifting the burden to our dwindling middle class.

but it is a second step to economic reform, not a first.

Best point in this thread. The mislabeled "fair tax" (actually should be called the "middle class oppressive consumption tax") attacks the wrong end of the argument. If we want change, we need to, as a country, address serious spending reform, and not just along idealogical lines (cut all defense or cut all social programs, both are stupid). To do this, we need to reform campaign financing, possibly by outlawing financial contibutions altogther (free speech is exercised when you VOTE, not by what favors you buy), so the politicians don't have a stack of IOUs in their inbox awaiting repayment on their first day in office.

 

[Whoozyerdaddy]

Originally posted by: ayabe

Originally posted by: Whoozyerdaddy
Almost every objection brought up in that Daily Koz piece was addressed in the Fair Tax book.

His assertion that the tax is really a 30% tax is all a matter of how you choose to do the accounting. The Fair Tax people have been very clear in their statements that the tax would be a component of the total price you pay for an item. There is no deception there. And, in fact, they frame their argument by saying that, right now, 23% of the retail price you pay every day is federal tax. The idea is to replace the hidden tax component of the retail price with a plain-as-day tax that shows up as a line item expense on your receipt. By the author's logic, the 23% tax component that currently exists in the retail price of every item is really a 30% tax. Either way, whether it's hidden in the price or shows up as a line item at the bottom of the reciept, the tax remains the same.

And for every expert study he cites there are others that claim the opposite and support the FT.

It's an interesting opinion piece but he doesn't raise any new issues that haven't been addressed already. Pretty much the same arguments that arise from the anti-FT camp over and over.

I'm a proponant of the FT. But I'd also settle for a flat tax. ANYTHING but what we have right now. My tax return for last year was 15 pages long and so complicated that Turbo Tax F'ed it up and put income in the wrong slot. (A minor nightmare I'm dealing with now) Listening to my tax guy try to explain to me about line 21 and schedule C and pub 525 page 30 blah blah blah blah... made me want to cry. Rube Goldberg would be proud.

Ehh let's not turn this into a Global Warming debacle, we are dealing with hard numbers here and unless someone wants to argue that mathematics is just a "theory" there's not much to discuss.

When the President's own Advisory Panel for Federal Tax Reform claims that this will increase taxes on the middle class, all things considered, I have to take that as a fact.

That same panel also considered eliminating the home mortgage deduction. Not a great group to quote.

Anyway... Like I said at the end, at this point I'd support anything that simplified our current system.

 

[Genx87]

My problem with a national sales tax is perception is reality for many people. Sure they take home more bucks but when they come upto the cash register and see a whopping 30% tax on whatever they are buying they may not bother buying many things and it slows our economy.

The current system is a mess but people have been so brainwashed into believing the money is gone and out of sight they happily spend away even if the effective tax rates end up the same in the end.

 

[brandonbull]

Originally posted by: Genx87
My problem with a national sales tax is perception is reality for many people. Sure they take home more bucks but when they come upto the cash register and see a whopping 30% tax on whatever they are buying they may not bother buying many things and it slows our economy.

The current system is a mess but people have been so brainwashed into believing the money is gone and out of sight they happily spend away even if the effective tax rates end up the same in the end.

So what you are saying is that with historically low levels of savings plus more money in the pocket Americans will cut back on spending?

 

[Genx87]

Originally posted by: brandonbull

Originally posted by: Genx87
My problem with a national sales tax is perception is reality for many people. Sure they take home more bucks but when they come upto the cash register and see a whopping 30% tax on whatever they are buying they may not bother buying many things and it slows our economy.

The current system is a mess but people have been so brainwashed into believing the money is gone and out of sight they happily spend away even if the effective tax rates end up the same in the end.

So what you are saying is that with historically low levels of savings plus more money in the pocket Americans will cut back on spending?

It wont surprise me if people cut back on non-essential spending as they decide the tax rate is very high for items.

 

[ebaycj]

Originally posted by: Genx87
My problem with a national sales tax is perception is reality for many people. Sure they take home more bucks but when they come upto the cash register and see a whopping 30% tax on whatever they are buying they may not bother buying many things and it slows our economy.

The current system is a mess but people have been so brainwashed into believing the money is gone and out of sight they happily spend away even if the effective tax rates end up the same in the end.

Genx87, Normally I can't stand the things you spout, but I think this comment actually has a decent bit of merit to it.

The only way a high sales tax could possibly not have that negative effect, is if they passed a federal law saying that all advertised prices for everything must INCLUDE sales tax (and all other surcharges e.g. bottle deposit). If it says $1.00 in the store you pay $1.00 at the register. Then the store would lop off 30% tax from that $1.00 (total of $0.23) and send it to the government. The remainder ($0.77) would be kept by the store as income.

 

[blackangst1]

I've never understood why those opposed to a FT think its unfair for the rich to pay a higher percentage of their income than middle class...a common argument is that the rich have tax shelters. Well, most middle class Americans dont take advantage of tax shelters currently available to them, so whats the point?

I think the largest problem with a FT or flat tax is unemployment. Think of how many attorneys, econimists, think tank groups, accountants, etc are employed BECAUSE of our tax system. The numbers are huge...

Anyway...I'd love to see a fair tax myself.

 

[TheAdvocate]

Originally posted by: blackangst1
I've never understood why those opposed to a FT think its unfair for the rich to pay a higher percentage of their income than middle class

Umm, those opposed do not have a problem with it, generally speaking.

 

[Engineer]

My current taxes are not complicated and ANY (ANY) plan that would cost me MORE in taxes, I do not support....PERIOD!

And I would bet that a huge majority of the people feel the same way (If they have to pay more, then stick it). Of course, in the slightest chance that there would be a cut in my tax rate, then I'm all for that (yes, I'm greedy for MY money). Of course, I don't see it happening.

It will take decades to change the tax system (major change) if it even changes at all.

 

[Whoozyerdaddy]

Originally posted by: ebaycj

Originally posted by: Genx87
My problem with a national sales tax is perception is reality for many people. Sure they take home more bucks but when they come upto the cash register and see a whopping 30% tax on whatever they are buying they may not bother buying many things and it slows our economy.

The current system is a mess but people have been so brainwashed into believing the money is gone and out of sight they happily spend away even if the effective tax rates end up the same in the end.

Genx87, Normally I can't stand the things you spout, but I think this comment actually has a decent bit of merit to it.

The only way a high sales tax could possibly not have that negative effect, is if they passed a federal law saying that all advertised prices for everything must INCLUDE sales tax (and all other surcharges e.g. bottle deposit). If it says $1.00 in the store you pay $1.00 at the register. Then the store would lop off 30% tax from that $1.00 (total of $0.23) and send it to the government. The remainder ($0.77) would be kept by the store as income.

That is EXACTLY how the Fair Tax is intended to work. There is no lump tax added on to the final bill. The tax is incorporated into the price. If the product is labeled $1, you pay $1. At the bottom of the receipt there is a line that tells you how much you paid in tax but that amount is not added on as an additional charge when you get to the register.

In a lot of respects it's very similar to the way payroll withholding works now.

 

[HombrePequeno]

Originally posted by: Whoozyerdaddy

Originally posted by: ayabe

Originally posted by: Whoozyerdaddy
Almost every objection brought up in that Daily Koz piece was addressed in the Fair Tax book.

His assertion that the tax is really a 30% tax is all a matter of how you choose to do the accounting. The Fair Tax people have been very clear in their statements that the tax would be a component of the total price you pay for an item. There is no deception there. And, in fact, they frame their argument by saying that, right now, 23% of the retail price you pay every day is federal tax. The idea is to replace the hidden tax component of the retail price with a plain-as-day tax that shows up as a line item expense on your receipt. By the author's logic, the 23% tax component that currently exists in the retail price of every item is really a 30% tax. Either way, whether it's hidden in the price or shows up as a line item at the bottom of the reciept, the tax remains the same.

And for every expert study he cites there are others that claim the opposite and support the FT.

It's an interesting opinion piece but he doesn't raise any new issues that haven't been addressed already. Pretty much the same arguments that arise from the anti-FT camp over and over.

I'm a proponant of the FT. But I'd also settle for a flat tax. ANYTHING but what we have right now. My tax return for last year was 15 pages long and so complicated that Turbo Tax F'ed it up and put income in the wrong slot. (A minor nightmare I'm dealing with now) Listening to my tax guy try to explain to me about line 21 and schedule C and pub 525 page 30 blah blah blah blah... made me want to cry. Rube Goldberg would be proud.

Ehh let's not turn this into a Global Warming debacle, we are dealing with hard numbers here and unless someone wants to argue that mathematics is just a "theory" there's not much to discuss.

When the President's own Advisory Panel for Federal Tax Reform claims that this will increase taxes on the middle class, all things considered, I have to take that as a fact.

That same panel also considered eliminating the home mortgage deduction. Not a great group to quote.

Anyway... Like I said at the end, at this point I'd support anything that simplified our current system.

Why should mortgage interest payments be deducted? Should there also be deductions for interest paid on car loans? Cars are just as essential as houses are. That's the problem with all of these deductions; there will always be people arguing that they are needed. That's what makes tax reform so bloody hard. And the Tax Reform Panel is actually a good group to quote because believe it or not, they are fairly intelligent people and they did come up with a few good ideas in their tax reform plan.

As for this "fair" tax...I think a national sales tax is stupid. It would retard spending and thus slow economic growth. It would also make it much more beneficial for internet based companies like Amazon to move out of the country. Here in WA, the state government is having problems getting more revenue because more and more people are buying online and the majority of those companies are based outside of the state. A national sales tax also has the problem of being regressive because lower income quintiles spend a higher percentage of their income on goods. The rebate seemingly helps this but there is a problem with it. That's essentially free money and it would actually promote working fewer hours (you're "making" more for the same hours worked and the same amount of effort).

 

[BaliBabyDoc]

Originally posted by: Genx87

Originally posted by: brandonbull

Originally posted by: Genx87
My problem with a national sales tax is perception is reality for many people. Sure they take home more bucks but when they come upto the cash register and see a whopping 30% tax on whatever they are buying they may not bother buying many things and it slows our economy.

The current system is a mess but people have been so brainwashed into believing the money is gone and out of sight they happily spend away even if the effective tax rates end up the same in the end.

So what you are saying is that with historically low levels of savings plus more money in the pocket Americans will cut back on spending?

It wont surprise me if people cut back on non-essential spending as they decide the tax rate is very high for items.

But that's how we got here in the first place. Many American households are in a pinch b/c they spent a ton of money on BS non-essential items. Our excessive consumption culture will come to an end. Why not have it end with Americans making prudent decisions about how to spend their money?

 

[thraashman]

My view is that the reason the rich are taxed higher is because it IS a fair tax. The fairness of it is that the rich are being taxed a higher percentage because it's the rich's exploitation of the lower and middle classes that make them rich! They're being taxed on their exploitation of the capitalistic society they live in. Even after taxes they still make a huge amount more per year than the lower class. Stop complaining! If you make 50 million and are taxed 25 million, that's still more money than I'll probably ever see in my lifetime.

 

[blackangst1]

Originally posted by: thraashman
My view is that the reason the rich are taxed higher is because it IS a fair tax. The fairness of it is that the rich are being taxed a higher percentage because it's the rich's exploitation of the lower and middle classes that make them rich! They're being taxed on their exploitation of the capitalistic society they live in. Even after taxes they still make a huge amount more per year than the lower class. Stop complaining! If you make 50 million and are taxed 25 million, that's still more money than I'll probably ever see in my lifetime.

You, sir, are a poster child of class envy.

 

[brandonbull]

Originally posted by: blackangst1

Originally posted by: thraashman
My view is that the reason the rich are taxed higher is because it IS a fair tax. The fairness of it is that the rich are being taxed a higher percentage because it's the rich's exploitation of the lower and middle classes that make them rich! They're being taxed on their exploitation of the capitalistic society they live in. Even after taxes they still make a huge amount more per year than the lower class. Stop complaining! If you make 50 million and are taxed 25 million, that's still more money than I'll probably ever see in my lifetime.

You, sir, are a poster child of class envy.

Not everyone can be rich.

Lower income families do not use "tax shelters" because the small disposable income.

Give people more money each week in their paycheck and watch the spending increase.

Billions could be saved each year by simplifying the current tax system.

 

[blackangst1]

Originally posted by: brandonbull

Originally posted by: blackangst1

Originally posted by: thraashman
My view is that the reason the rich are taxed higher is because it IS a fair tax. The fairness of it is that the rich are being taxed a higher percentage because it's the rich's exploitation of the lower and middle classes that make them rich! They're being taxed on their exploitation of the capitalistic society they live in. Even after taxes they still make a huge amount more per year than the lower class. Stop complaining! If you make 50 million and are taxed 25 million, that's still more money than I'll probably ever see in my lifetime.

You, sir, are a poster child of class envy.

Not everyone can be rich.

Nor should everyone be. Wealth often times, not always but certainly often, is linked directly to fruits of one's work. That's fair, and the basis of which our society breathes.

Lower income families do not use "tax shelters" because the small disposable income.

I'm not talking about low income, Im talking MIDDLE CLASS. like 30-50k/year. Nevertheless, low income pays so little income tax anyway, so they dont NEED shelters.

Give people more money each week in their paycheck and watch the spending increase.

Right. Give people a raise because they are crying. Please. This is America. If you want more money, go earn it.

Billions could be saved each year by simplifying the current tax system.

/Agree. And dont forget billions BACK into the economy via the pocketbooks of the rich.