Debunking the Fair Tax myth

[HombrePequeno]

Originally posted by: smack Down

Originally posted by: Genx87

Originally posted by: smack Down

Originally posted by: Genx87

Originally posted by: smack Down

Originally posted by: Genx87

Originally posted by: smack Down

Originally posted by: ProfJohn
If by a "fair tax" we are talking national sales tax then it is a very bad idea.

The rich can spend another 5% of every dollar on goods without blinking an eye, the poor would suffer though as their buying power would drop.

A MUCH better plan is the "flat tax" where we have an income tax rate that we all pay without and deductions etc etc.

I would actually go for a graduated flat tax. Say the poorest pay nothing, and then the rate slowly rises from say 10% up to 15 or 20 for the "rich"

This would be fair to everyone as we would all pay taxes, except the very poor.
And it would eliminate the HUGE burden tax preperation places on our economy.

Plus, one page tax returns for 90% of the country who only have jobs and bank/stock investments as income.

That is what we have now just with higher precentages. We need higher precentages to meet the revenue requirements

or /gasp reduce the size of govt?

Taxation shouldnt be about budget control, it should be about what is best for the economy. Having the federal govt suck up 30% of our GDP in taxation only to expand itself isnt a good thing for the people of this country. It stiffles growth and oppresses the middle and poor classes.

If the budget doesnt make the cut, that is a spending issue, not a taxation issue.

Sorry taxes are to pay for goverment. Go ahead cut the goverment then you can cut taxes.

Sounds like a plan. Gut the govt by 50%, lower taxes by 60%.

Go for. But I would like to see you find even 10% of teh buget to cut that wouldn't piss off at 50% of the voters.

There is more than enough pork in that budget to cut.

But we are getting away from my point. You dont use taxation as a tool to balance a budget. You use fiscal responsibility to do it.

I find it amazing in this country the congress has convinced people budget shortfalls are a result of the people not giving enough through taxes instead of congress spending like a bunch of drunken sailors.

We happily agree and ask for more taxation to balance that budget and the cycle continues where we are paying 30% of our GDP and rising to the feds and the govt expands at record rates.

There are two ways to balance a budget cut spending or raise taxes. Raising taxes fairs better for most people because the rich will feel it the most where as cutting spending will hurt the poor. There are more poor then rich so lets raise taxes.

It really depends on where you're cutting spending. Not all of our budget goes to helping the poor, you know. If you think corporate welfare goes towards helping the poor, I have a bridge I'd like to sell you. You're argument that there are more poor than rich as a reason for raising taxes is a badly thought out one. Just because there are more of one doesn't mean you should take from the less populous one. Should we tax minorities because there are more white people in the US? Taxing the rich at a higher rate makes more sense in my eyes because the government can raise a lot more funds by raising taxes on them by 1% than if they raise taxes on poorer quintiles by 1%.

Also, raising taxes doesn't necessarily only hurt the rich. Sure, you can target it towards them but that's not what you said. We could always institute a VAT like many European countries have done and that would definitely hurt the poor more than the rich.

I personally think the amount of taxation right now is fine. I would prefer less deductions so we have a simpler tax code but overall, taxation isn't too bad right now. It's the budget I have a problem with. There's too much pork in our government right now. That google type search feature showing how much of your money goes to what may help keep some of the pork down but I doubt it.

 

[blackllotus]

Originally posted by: Genx87
This country allows you to make what you want of your life.

A cursory glance at the poverty situation in this country reveals how flawed your claim is. Try becoming rich off of a 20k salary. You'll find that its a little difficult to make progress when you can't afford anything besides bare-bones necessities.

 

[Vic]

Originally posted by: blackllotus

Originally posted by: Genx87
This country allows you to make what you want of your life.

A cursory glance at the poverty situation in this country reveals how flawed your claim is. Try becoming rich off of a 20k salary. You'll find that its a little difficult to make progress when you can't afford anything besides bare-bones necessities.

Are you implying that people in America don't ever have the chance to better themselves? A cursory glance would prove you wrong.

 

[Stunt]

The ability to grow weath is much easier when you have money so yes it does make sense that "fair" taxation is progressive. I also agree those who can afford taxation the most should pay the most tax. The current tax code is an exponential curve where capital growth is typically a linear curve. Therefore I'd like to see less burden on the lower extreme and increasing taxation at a linear rate beyond current maximum levels.

Over time, the goal will be to shift this curve not flat but a universal shift lower with reduced government spending and dependence on entitlement.

 

[smack Down]

Originally posted by: HombrePequeno

Originally posted by: smack Down

Originally posted by: Genx87

Originally posted by: smack Down

Originally posted by: Genx87

Originally posted by: smack Down

Originally posted by: Genx87

Originally posted by: smack Down

Originally posted by: ProfJohn
If by a "fair tax" we are talking national sales tax then it is a very bad idea.

The rich can spend another 5% of every dollar on goods without blinking an eye, the poor would suffer though as their buying power would drop.

A MUCH better plan is the "flat tax" where we have an income tax rate that we all pay without and deductions etc etc.

I would actually go for a graduated flat tax. Say the poorest pay nothing, and then the rate slowly rises from say 10% up to 15 or 20 for the "rich"

This would be fair to everyone as we would all pay taxes, except the very poor.
And it would eliminate the HUGE burden tax preperation places on our economy.

Plus, one page tax returns for 90% of the country who only have jobs and bank/stock investments as income.

That is what we have now just with higher precentages. We need higher precentages to meet the revenue requirements

or /gasp reduce the size of govt?

Taxation shouldnt be about budget control, it should be about what is best for the economy. Having the federal govt suck up 30% of our GDP in taxation only to expand itself isnt a good thing for the people of this country. It stiffles growth and oppresses the middle and poor classes.

If the budget doesnt make the cut, that is a spending issue, not a taxation issue.

Sorry taxes are to pay for goverment. Go ahead cut the goverment then you can cut taxes.

Sounds like a plan. Gut the govt by 50%, lower taxes by 60%.

Go for. But I would like to see you find even 10% of teh buget to cut that wouldn't piss off at 50% of the voters.

There is more than enough pork in that budget to cut.

But we are getting away from my point. You dont use taxation as a tool to balance a budget. You use fiscal responsibility to do it.

I find it amazing in this country the congress has convinced people budget shortfalls are a result of the people not giving enough through taxes instead of congress spending like a bunch of drunken sailors.

We happily agree and ask for more taxation to balance that budget and the cycle continues where we are paying 30% of our GDP and rising to the feds and the govt expands at record rates.

There are two ways to balance a budget cut spending or raise taxes. Raising taxes fairs better for most people because the rich will feel it the most where as cutting spending will hurt the poor. There are more poor then rich so lets raise taxes.

It really depends on where you're cutting spending. Not all of our budget goes to helping the poor, you know. If you think corporate welfare goes towards helping the poor, I have a bridge I'd like to sell you. You're argument that there are more poor than rich as a reason for raising taxes is a badly thought out one. Just because there are more of one doesn't mean you should take from the less populous one. Should we tax minorities because there are more white people in the US? Taxing the rich at a higher rate makes more sense in my eyes because the government can raise a lot more funds by raising taxes on them by 1% than if they raise taxes on poorer quintiles by 1%.

Your confused the fact that there are more rich then poor isn't why we should raise taxes, it is why we will raise taxes rather then cutting spending. The W types can only screw the voters so many times before they decided to vote for people looking out for their intrests.

 

[Genx87]

Originally posted by: smack Down

Originally posted by: Genx87

Originally posted by: smack Down

Originally posted by: Genx87

Originally posted by: smack Down

Originally posted by: Genx87

Originally posted by: smack Down

Originally posted by: ProfJohn
If by a "fair tax" we are talking national sales tax then it is a very bad idea.

The rich can spend another 5% of every dollar on goods without blinking an eye, the poor would suffer though as their buying power would drop.

A MUCH better plan is the "flat tax" where we have an income tax rate that we all pay without and deductions etc etc.

I would actually go for a graduated flat tax. Say the poorest pay nothing, and then the rate slowly rises from say 10% up to 15 or 20 for the "rich"

This would be fair to everyone as we would all pay taxes, except the very poor.
And it would eliminate the HUGE burden tax preperation places on our economy.

Plus, one page tax returns for 90% of the country who only have jobs and bank/stock investments as income.

That is what we have now just with higher precentages. We need higher precentages to meet the revenue requirements

or /gasp reduce the size of govt?

Taxation shouldnt be about budget control, it should be about what is best for the economy. Having the federal govt suck up 30% of our GDP in taxation only to expand itself isnt a good thing for the people of this country. It stiffles growth and oppresses the middle and poor classes.

If the budget doesnt make the cut, that is a spending issue, not a taxation issue.

Sorry taxes are to pay for goverment. Go ahead cut the goverment then you can cut taxes.

Sounds like a plan. Gut the govt by 50%, lower taxes by 60%.

Go for. But I would like to see you find even 10% of teh buget to cut that wouldn't piss off at 50% of the voters.

There is more than enough pork in that budget to cut.

But we are getting away from my point. You dont use taxation as a tool to balance a budget. You use fiscal responsibility to do it.

I find it amazing in this country the congress has convinced people budget shortfalls are a result of the people not giving enough through taxes instead of congress spending like a bunch of drunken sailors.

We happily agree and ask for more taxation to balance that budget and the cycle continues where we are paying 30% of our GDP and rising to the feds and the govt expands at record rates.

There are two ways to balance a budget cut spending or raise taxes. Raising taxes fairs better for most people because the rich will feel it the most where as cutting spending will hurt the poor. There are more poor then rich so lets raise taxes.

You really believe that line o crap the democrats tell you when taxes are raised?
Cutting spending fairs better for everybody because it keeps more money in the pockets of the people and less in the hands of corruptable politicians.

It just amazes me how the size of the govt expands and the gap between the poor, middle class and the rich continues to grow. Yet you cant connect the dots to save your life.

 

[piasabird]

This might actually raise the taxes on the poorest people in America.

This means for basic staples such as Milk, Meat, Flour, Sugar, Eggs....

You would have to pay a 23% Sales Tax.

It does not take a rocket science to figure out that this is only beneficial to people with more disposable income. This is a regressive tax that will convice wealthy people to invest instead of buying high-ticket items. It is only the ultra rich that could be hurt by this. Then it will probably not apply to the purchase of Yachts, Cars and boats, since they are taxed in a different manner.

 

[Aisengard]

Ya, this'll be great for the consumer-based economy too. Let's discourage people from consuming! That'll REALLY give this economy a kick in the pants!

 

[brandonbull]

Originally posted by: Aisengard
Ya, this'll be great for the consumer-based economy too. Let's discourage people from consuming! That'll REALLY give this economy a kick in the pants!

What would discourage people from consuming?

 

[Aisengard]

Taxes on consumable goods inherently discourage people from buying said goods. Unless you live in bizarro-world.

One good thing is that our country would probably turn into more of a savings-strong economy than a debt-strong one. Of course, our current economy would have to undergo an extreme paradigm shift to achieve that, since it depends on people living beyond their means and buying the exact same 'luxury' items that would be taxed under the 'fair tax' plan.

 

[brandonbull]

Originally posted by: Aisengard
Taxes on consumable goods inherently discourage people from buying said goods. Unless you live in bizarro-world.

One good thing is that our country would probably turn into more of a savings-strong economy than a debt-strong one. Of course, our current economy would have to undergo an extreme paradigm shift to achieve that, since it depends on people living beyond their means and buying the exact same 'luxury' items that would be taxed under the 'fair tax' plan.

So you are saying that people get more earnings in their paychecks would cause a decrease in purchases?

 

[d3n]

This year my family pulled in about 120k. My wife does not work so she can home school and about 24k of what we get is tax exempt direct from the US Treasury. Some of this money goes to non income based social security support of an adopted child that in all likelihood is here because of illegal immigration. The way things are the Gov can only tax about 65k. I would end up paying more for a fair tax system but I am all for it. Everyone, even illegals would be paying their share to the system.

I am for a fair tax.

 

[piasabird]

I like the idea that everyone pays, but there are always people who fail to pay like property tax like Clair McCaskel not paying tax on her Condo in Missouri. There are probably plenty of people that would start buying things overseas with a tax like this. Another big problem is a lot of this tax money would be collected from small businesses. A lot more care would have to be used to monitory of the sales tax locations, and the sales tax would need to be paid on a more frequent basis, otherwise some business could be hording and not paying tax on a large scale. It could cause a trend in bankrupt cases for small businesses. It might be easier if they had to pay tax daily or weekly to prove they can keep up. Now a business might pay tax on a quarterly basis.

Just think, by raising your own crops you can save 25% on Tax.

I am surprised people dont raise their own Tobacco. I wonder what the government would do if I started a Tobacco Coop, where I collected the Crop and dried and cured it and then returned it to the grower in a packaged form and was paid only the value added or was paid in a percentage of the crop. I think the tax on Tobacco is like raping the public, and I dont even smoke.

 

[HombrePequeno]

Originally posted by: brandonbull

Originally posted by: Aisengard
Taxes on consumable goods inherently discourage people from buying said goods. Unless you live in bizarro-world.

One good thing is that our country would probably turn into more of a savings-strong economy than a debt-strong one. Of course, our current economy would have to undergo an extreme paradigm shift to achieve that, since it depends on people living beyond their means and buying the exact same 'luxury' items that would be taxed under the 'fair tax' plan.

So you are saying that people get more earnings in their paychecks would cause a decrease in purchases?

This is a case of substitution effect versus income effect. If your income stays the same but it becomes cheaper to save relative to spending, you put more into savings. That means our consumption driven economy would initially slow.

That's assuming that income stays equal which in this case it would not. The lower and middle income brackets would end up with less money. I haven't read up on the details of the Fair Tax plan in a while but I fairly confident taxation is shifted more towards the middle class.

That's one reason I'll never be pro-consumption tax; they're all regressive. I think it's a much better idea to just simplify our current income tax by eliminating most deductions and the AMT.