Fair Tax

[charrison]

Originally posted by: dmcowen674

Originally posted by: charrison

Originally posted by: dmcowen674

Originally posted by: charrison

Originally posted by: dmcowen674

Originally posted by: charrison

Originally posted by: dmcowen674

Originally posted by: charrison

Originally posted by: dmcowen674

Originally posted by: charrison

Originally posted by: dmcowen674

Originally posted by: charrison

Originally posted by: dmcowen674

Originally posted by: zendari
What is the rich's "fair share" Dave?

Actually paying.

You think it is OK that they get a free Hummer???

who is getting free hummers?

You didn't take your massive SUV Tax break??? :shocked:

Oh, maybe you got a wannabe SUV.

IF i Had business I might had used it the accelerated deprecation, but that still does not equate to a free hummer or suv.

Oh come on, a little honesty wouldn't hurt.

There was an article in here showing the massive amount of people that got their just about as close to free as you can get Hummers a while back.

I understand they made the break a little smaller this last Tax cycle but it is still there.

Accelerated depreciaiton does not equal a free hummer.

Bahhahahaa then why have it???

On that we can agree.

The tax code is filled with giveways, including this one, but that still does not mean hummer are free.

The tax code needs to be simplified. Let the tax code be about collecting taxes and economic/social engineering. No tax breaks for anyone and lower marginal rates for all.

OMG, didn't think that was possible.

So you are actually for the Fair Tax???

The fair or flat would be a good alternative to the crap we have for tax collection now. I am against an income on the grounds that it lets the goverment know too much about it citizens. Why should the goverment know where its citizens work and how much they make. I have never understood why people allow this great invasion of personal privacy.

I would much prefer the fair tax over the flat tax. You buy it, you pay taxes on it. You dont buy it, you dont pay taxe. Simple.

Interesting, you are the exception rather than the norm in Republican circles.
Most prefer having that control factor.

And here is where you are wrong. Most republicans would be more than happy to scrap the tax code and replace it with something far more simple.

Really? If that were true then how come they haven't pushed it through in all these years in full power now???

Too busy spending and phoney wars perhaps?

I guess you missed the fact that the president setup a commision to study what would be the best alternative to current tax system. IF I recall correctly that commision should be done with their study soon. Lets hope they act on their findings...

 

[Whoozyerdaddy]

Originally posted by: dmcowen674


Interesting, you are the exception rather than the norm in Republican circles.
Most prefer having that control factor.

And here is where you are wrong. Most republicans would be more than happy to scrap the tax code and replace it with something far more simple.[/quote]

Really? If that were true then how come they haven't pushed it through in all these years in full power now???

Too busy spending and phoney wars perhaps?[/quote]

They are working on it now. For crying out loud... Steve Forbes was the loudest proponent of the flat tax. Republican. The Fair Tax legislation has been introduced by republicans.

What's happening is the same thing that always happens. Politicians of both parties are in the business of getting re-elected. They are a cautious breed when it comes to changing the status quo. They are not going to enact anything this radical without knowing that their constituants want it.

I can't believe I even have to address this with you.

 

[Whoozyerdaddy]

Originally posted by: Bowfinger

Originally posted by: Whoozyerdaddy
Did you read my explaination to your concerns about used vs. new goods under the Fair Tax?

Yes, and I'd already addressed them. Your explanation is good math but bad consumer psychology. You did not address either real-world example I gave of people shifting their buying patterns for far less than 23%: bootlegging of cigarettes and shopping on-line to avoid much more moderate sales taxes. Lacking a controlled environment where we can better test our competing theories, all we can do at this point is agree to disagree.

You also didn't address anything I said about your taxes == penalty theory.

I re-read your post again and I think you're still missing the point. But here goes anyway...

Online sales will carry the embedded sales tax just like B&M stores will. Imported goods will also carry the embedded sales tax. So unless these items are smuggled it won't matter how they are purchased. They will be taxed. People shop for ciggs on line now to avoid STATE sales taxes. This is a federal tax that can't be circumvented by the internet.

Smuggling brings us to your other point. Which I did address BTW... I've already made the point about black markets and tax avoidance. It happens now in many ways, just the way you describe it and in other ways you didn't list. Changing the method by which we collect taxes will not change this. Apparently you think that EVERYONE will start doing this if we switch to an embedded sales tax. Well, everyone wont. The people who cheat or avoid will continue to do so. I'm not denying that. But considering our current system I'd say the temptation to cheat is quite a bit higher now. In either case it's nothing new... and as such it is not a valid reason to not try something new.

When there is an income tax, the just man will pay more and the unjust less on the same amount of income.
Plato, The Republic

As for shifting buying patterns toward used goods I countered your argument with a real life explaination. The only difference between used goods now and used goods under the fair tax is that people will know how much tax is embedded in their purchase. That's all. Get into all the psychology you want. It's just guessing on your part. (Or did I miss the psychology degree hanging on your wall?) The economic and pricing structure for new vs. used won't change at all.


As far as the higher tax rates = penalty thing goes... Other people addressed it. We aren't in a club. If some dollars are taxed more than others under the same system that is inherently unfair. If my 25,001st dollar is taxed at a higher rate than my 25,000th dollar then I am paying an added penalty for my success. I've said before that taxes are necessary and need to be collected. But to say that after you earn this much you have to pay an even steeper tax... That is a penalty.

 

[Stunt]

Whoozyerdaddy, I have a couple issues with this "fair tax" system.

You have already admitted that money is easier to accumulate when you are already wealthy, as shown here:

Originally posted by: Whoozyerdaddy

Originally posted by: Stunt
Reaching higher levels of wealth creates an environment where you have far more opportunity to save, invest and accumulate more wealth.

That's true.

Therefore all your system will do is penalize (to borrow your word) those who buy products and services, which you already know are the key stimulus in the economy. People will try to avoid paying taxes by investing and saving money.

This will be absolutely disastrous for the economy, as people pull out of buying goods and services, the country's core stimulus will go into a tail-spin; this will encourage people to take their investments out of the country. Then what?...Your plan will make a Japan out of the US, good luck with that idea

If you really want a feasible plan, you need massive taxation for investors to reduce the amount of "easy money" generated. This would counter the inherently regressive taxation system you are supporting.

 

[Whoozyerdaddy]

Eesh... that is so wrong I don't even know where to start.

Originally posted by: Stunt
Whoozyerdaddy, I have a couple issues with this "fair tax" system.

You have already admitted that money is easier to accumulate when you are already wealthy, as shown here:

Originally posted by: Whoozyerdaddy

Originally posted by: Stunt
Reaching higher levels of wealth creates an environment where you have far more opportunity to save, invest and accumulate more wealth.

That's true.

Therefore all your system will do is penalize (to borrow your word) those who buy products and services, which you already know are the key stimulus in the economy. People will try to avoid paying taxes by investing and saving money.

You are misunderstanding my use of the word "penalty". If the tax is the same for everyone then there is no penalty. The penalty reference comes in when a specific tax is increased based soley on the amount to tax. If the tax rate is higher merely because there is more to tax, then is there a penalty. There is no "tax penalty" in the Fair Tax.

This will be absolutely disastrous for the economy, as people pull out of buying goods and services, the country's core stimulus will go into a tail-spin;

Since your first statement is incorrect this one doesn't matter. But since it's here... Pull out of buying goods and services? How is that even possible? How could you live without goods and services? You can't live without spending money (short of moving out into the woods, chopping firewood and killin' varmits for dinner). Come on...

this will encourage people to take their investments out of the country. Then what?...Your plan will make a Japan out of the US, good luck with that idea

This contradicts your first statement. It doesn't matter anyway... everything past your first paragraph is silly since your point in the first paragraph was a based on a total misinterpretation of something I said.

Come on... Investing is not a tool to avoid a sales tax. It's what you do with money left over from your basic expenses. The fact that people would have more to invest is a GOOD THING. Investment is what drives growth.

And since you brought it up I will quote from one of my earlier posts...

Whoozyerdaddy

Think about it, the US becomes the most corporate tax friendly zone on earth. All those businesses and all the jobs associated with them that have moved over seas to avoid the punative tax system in the US will come back. And they'll bring more with them. Foreign manufacturers who want to compete on an equal cost footing with US goods will have to manufacture their products inside the US. By eliminating the embedded tax on US produced exports, those goods will have a competitive advantage in overseas markets. US exports rise.

What corporation in its right mind wouldn't relocate to a place that didn't charge them any income tax? How on earth would that curtail domestic investment in any way?

If you really want a feasible plan, you need massive taxation for investors to reduce the amount of "easy money" generated. This would counter the inherently regressive taxation system you are supporting.

Cripple investment, good idea. :roll: That's just silly. How is it regressive if the poorest pay the least (nothing really) and the richest pay the most?

Why do you have issues with it anyway? Aren't you in Canada?

Here's an idea. Instead of misinterpreting one word in a 100+ post thread and deciding, based on that misinterprtation, that the central idea is bad, buy the book and read it.

 

[Stunt]

Income tax is fair to everyone too. Anyone who is at the same wage will pay the same rate.
By taxing goods and services, you are indeed pealizing people for buying products.
If i saw a massive tax rate on a 2nd car vs. no costs to keeping it in the bank and saving, or investing; i'd invest.

You are absolutely naive about economics aren't you...people can stop spending. Look up Japan's current economic situation.
An oman of things to come with your half-assed system.

Time for you to go study some monetary policy buddy...you have no idea wtf you are talking about.
You say that taxing goods WILL NOT keep people from buying, yet contradict yourself by saying taxation on investing WILL cripple investing.

Yes I'm from canada...how does that change the flaw in your argument and contradictions?

 

[imported_tss4]

Originally posted by: charrison

Originally posted by: tss4

Originally posted by: charrison
The fair or flat would be a good alternative to the crap we have for tax collection now. I am against an income on the grounds that it lets the goverment know too much about it citizens. Why should the goverment know where its citizens work and how much they make. I have never understood why people allow this great invasion of personal privacy.


I would much prefer the fair tax over the flat tax. You buy it, you pay taxes on it. You dont buy it, you dont pay taxe. Simple.

The flat tax would tell the government how much and what you are spending your money on. How is that any less an invasion of privacy than the flat tax (knowing a person's income)?

Yes but it does lower marginal rates and remove deductions.

But you said specifically " I am against an income on the grounds that it lets the goverment know too much about it citizens. "

That doesn't appear to be any less true for a sales tax. So how can you you reconcile that since a sales tax is just as intrusive. Also, I agree that a sales tax would remove deucations, but it will not lower margianl rates for all income levels... just certain ones.

 

[sixone]

Originally posted by: Stunt
Income tax is fair to everyone too. Anyone who is at the same wage will pay the same rate.
By taxing goods and services, you are indeed pealizing people for buying products.
If i saw a massive tax rate on a 2nd car vs. no costs to keeping it in the bank and saving, or investing; i'd invest.

You are absolutely naive about economics aren't you...people can stop spending. Look up Japan's current economic situation.
An oman of things to come with your half-assed system.

Time for you to go study some monetary policy buddy...you have no idea wtf you are talking about.
You say that taxing goods WILL NOT keep people from buying, yet contradict yourself by saying taxation on investing WILL cripple investing.

Yes I'm from canada...how does that change the flaw in your argument and contradictions?

To follow your logic, if a sales tax discourages spending of disposable income, then an income tax discourages working - or a least working legally and actually paying the tax. How many million illegal immigrants do we have working in the country, getting paid under the table, and not paying their fair share? If they are going to benefit from being in our country, they should be contributing something as well.

And I don't believe that you wouldn't buy that car. Maybe you'd choose more carefully, save until you had enough to pay cash, or buy a used car, but if you need it, you'd get it.

Too many Americans are over their heads in debt. We need to give people an incentive to think twice or three times before spending money they don't have.

I have to pay an accountant hundreds of dollars a year to keep track of the ins and outs of the tax code. I can think of lots of things I'd rather do with that money, it would really add up fast. And the fair tax wouldn't put him out of business - he's also in the investment business, which would skyrocket if people do invest more than they do now.

 

[sixone]

Originally posted by: tss4

But you said specifically " I am against an income on the grounds that it lets the goverment know too much about it citizens. "

That doesn't appear to be any less true for a sales tax. So how can you you reconcile that since a sales tax is just as intrusive. Also, I agree that a sales tax would remove deucations, but it will not lower margianl rates for all income levels... just certain ones.

How is a sales tax intrusive? You don't have to give out your social security number every time you buy something. You don't have to make a report to the government every year on how much tax you paid.

 

[Engineer]

I'll give it a go as long as I don't have to pay more than I do now. (I would dare say that 99% of the US public would say the same).

 

[Whoozyerdaddy]

Originally posted by: Stunt
Income tax is fair to everyone too. Anyone who is at the same wage will pay the same rate.
By taxing goods and services, you are indeed pealizing people for buying products.
If i saw a massive tax rate on a 2nd car vs. no costs to keeping it in the bank and saving, or investing; i'd invest.

You are absolutely naive about economics aren't you...people can stop spending. Look up Japan's current economic situation.
An oman of things to come with your half-assed system.

Time for you to go study some monetary policy buddy...you have no idea wtf you are talking about.
You say that taxing goods WILL NOT keep people from buying, yet contradict yourself by saying taxation on investing WILL cripple investing.

Yes I'm from canada...how does that change the flaw in your argument and contradictions?

If you needed the car you'd buy the car.


Have you read anything in this thread? Do I really have to start over from the beginning?

1. Currently, for every retail purchase you make, 22% of the price is composed of one federal tax or another. It goes straight to the IRS. It's called embedded tax. It's made up of all the taxes incurred from manufacuring and bringing the prouct to market. This is our current system

2. The Fair Tax proposes to remove that embedded tax component from the retail price of the item by eliminating all those federal taxes. Income tax, payroll tax, death tax, capital gains tax, etc. gone.

3. All of those federal taxes are replaced by an 23% inclusive sales tax. This is different from an EXclusive sales tax where the tax is added on at the end of the sale. An inclusive sales tax has the tax as a component of the retail price. (Just as it is today) Since you are replacing 22% of embedded federal tax with a 23% sales tax, the retail pricing doesn't change.

4. Results. The overall retail price of items you purchase today cost the same tomorrow with the Fair Tax.

You have more money to spend. Since you no longer pay income or payroll tax you get your entire paycheck. If you make $5000 a month you take home $5000 instead of $3800.

All that has happened here is the replacement of many taxes with one tax. Everything you buy, every service you pay for currently has an embedded tax hidden in the price.

Look...
When a product is produced, employees have to be paid to produce it. The employer of those employees have to pay their salaries, and payroll taxes and pass the witholding of that employee to the IRS. In addition the company has their own taxes to pay. As does the trucking company that brings the product to the store. And the store has employees to pay and taxes to pay. And there is tax built into the electricity they use to keep the lights on an the insurance they pay for... and on and on and on... It's a very messy way to collect tax. But the net result is that it is collected and the cost is about 22% of every service and item you pay for.

All the fair tax does is eliminate that entire messy system and simply replace it with an honest one-step tax.

I might not have a PhD in Econ. But this is quite a list of guys who think this is a fabulous plan. The list starts on page three. But it might shed some light for you if you read the whole thing.

 

[Engineer]

Since everything we buy has an embedded portion of federal tax, so everyone says....do the prices fall and then the new tax get added on, or do companies get greedy and leave prices alone and then add the new tax on?

2nd, you won't bring home $5,000 if you make $5,000 as local and state taxes don't change (at least at this point and I doubt that they will as many states are back to surplus mode).

 

[Stunt]

Originally posted by: sixone

Originally posted by: Stunt
Income tax is fair to everyone too. Anyone who is at the same wage will pay the same rate.
By taxing goods and services, you are indeed pealizing people for buying products.
If i saw a massive tax rate on a 2nd car vs. no costs to keeping it in the bank and saving, or investing; i'd invest.

You are absolutely naive about economics aren't you...people can stop spending. Look up Japan's current economic situation.
An oman of things to come with your half-assed system.

Time for you to go study some monetary policy buddy...you have no idea wtf you are talking about.
You say that taxing goods WILL NOT keep people from buying, yet contradict yourself by saying taxation on investing WILL cripple investing.

Yes I'm from canada...how does that change the flaw in your argument and contradictions?

To follow your logic, if a sales tax discourages spending of disposable income, then an income tax discourages working - or a least working legally and actually paying the tax. How many million illegal immigrants do we have working in the country, getting paid under the table, and not paying their fair share? If they are going to benefit from being in our country, they should be contributing something as well.

And I don't believe that you wouldn't buy that car. Maybe you'd choose more carefully, save until you had enough to pay cash, or buy a used car, but if you need it, you'd get it.

Too many Americans are over their heads in debt. We need to give people an incentive to think twice or three times before spending money they don't have.

I have to pay an accountant hundreds of dollars a year to keep track of the ins and outs of the tax code. I can think of lots of things I'd rather do with that money, it would really add up fast. And the fair tax wouldn't put him out of business - he's also in the investment business, which would skyrocket if people do invest more than they do now.

You have to work to earn money. You don't have to spend anything more than house, food, transportation. Income is manditory, goods and services are not.

Any basic economics class will tell you that taxing a good will lower the demand for that good. Having a sales tax is a deterant, income is not.

With this new tax system, there is no question it favours saving and investing not spending, go look at Japan.

 

[sixone]

Originally posted by: Engineer
Since everything we buy has an embedded portion of federal tax, so everyone says....do the prices fall and then the new tax get added on, or do companies get greedy and leave prices alone and then add the new tax on?

The greedy companies will have to lower prices, or lose sales to their competition who already did.

 

[Engineer]

Originally posted by: sixone

Originally posted by: Engineer
Since everything we buy has an embedded portion of federal tax, so everyone says....do the prices fall and then the new tax get added on, or do companies get greedy and leave prices alone and then add the new tax on?

The greedy companies will have to lower prices, or lose sales to their competition who already did.

An assumption.

 

[Whoozyerdaddy]

Originally posted by: Engineer

Originally posted by: sixone

Originally posted by: Engineer
Since everything we buy has an embedded portion of federal tax, so everyone says....do the prices fall and then the new tax get added on, or do companies get greedy and leave prices alone and then add the new tax on?

The greedy companies will have to lower prices, or lose sales to their competition who already did.

An assumption.

Actaully, proven fact. Back in the mid 90's when Newt shut down congress an airline tax that was up for renewal expired. At first the airlines tried to ride it for the extra revenue. 10 days later, the missing tax component was reduced out of the price of tickets on every airline. It only took ten days. When the shutdown was over and congress came back they renewed the tax and prices went up.

 

[Engineer]

Originally posted by: Whoozyerdaddy

Originally posted by: Engineer

Originally posted by: sixone

Originally posted by: Engineer
Since everything we buy has an embedded portion of federal tax, so everyone says....do the prices fall and then the new tax get added on, or do companies get greedy and leave prices alone and then add the new tax on?

The greedy companies will have to lower prices, or lose sales to their competition who already did.

An assumption.

Actaully, proven fact. Back in the mid 90's when Newt shut down congress an airline tax that was up for renewal expired. At first the airlines tried to ride it for the extra revenue. 10 days later, the missing tax component was reduced out of the price of tickets on every airline. It only took ten days. When the shutdown was over and congress came back they renewed the tax and prices went up.

Alright, more of a hyphethosis, not a proven fact. It probably would happen, but then who really knows?

Like I said above, as long as I don't pay more than I do now, then it's OK with me. If the rich pay less and the poor pay more, then let them bitch about it. I've changed my mind and I vote myself the treasury.

Now off to look for some loopholes...

 

[Whoozyerdaddy]

Originally posted by: Stunt

Originally posted by: sixone

Originally posted by: Stunt
Income tax is fair to everyone too. Anyone who is at the same wage will pay the same rate.
By taxing goods and services, you are indeed pealizing people for buying products.
If i saw a massive tax rate on a 2nd car vs. no costs to keeping it in the bank and saving, or investing; i'd invest.

You are absolutely naive about economics aren't you...people can stop spending. Look up Japan's current economic situation.
An oman of things to come with your half-assed system.

Time for you to go study some monetary policy buddy...you have no idea wtf you are talking about.
You say that taxing goods WILL NOT keep people from buying, yet contradict yourself by saying taxation on investing WILL cripple investing.

Yes I'm from canada...how does that change the flaw in your argument and contradictions?

To follow your logic, if a sales tax discourages spending of disposable income, then an income tax discourages working - or a least working legally and actually paying the tax. How many million illegal immigrants do we have working in the country, getting paid under the table, and not paying their fair share? If they are going to benefit from being in our country, they should be contributing something as well.

And I don't believe that you wouldn't buy that car. Maybe you'd choose more carefully, save until you had enough to pay cash, or buy a used car, but if you need it, you'd get it.

Too many Americans are over their heads in debt. We need to give people an incentive to think twice or three times before spending money they don't have.

I have to pay an accountant hundreds of dollars a year to keep track of the ins and outs of the tax code. I can think of lots of things I'd rather do with that money, it would really add up fast. And the fair tax wouldn't put him out of business - he's also in the investment business, which would skyrocket if people do invest more than they do now.

You have to work to earn money. You don't have to spend anything more than house, food, transportation. Income is manditory, goods and services are not.

Any basic economics class will tell you that taxing a good will lower the demand for that good. Having a sales tax is a deterant, income is not.

With this new tax system, there is no question it favours saving and investing not spending, go look at Japan.

You're missing the point. The tax is there TODAY. It exists NOW. It's embedded in the price of everything you pay for. All the fair tax does is change the collection method from taxing income to taxing expenditures.

Besides, reality shows us that taxation rarely changes the demand for a product. People still smoke, drink beer and buy gas. As a matter of fact, despite record high gas prices (it may not be caused by tax but cost is cost regardless of whether its caused by taxes or market forces) people are driving more than ever and the demand for gas is more than ever.

Again... read the book.

 

[Stunt]

No...right now we have a small sales tax, progressive income tax and investment taxes.
Your suggestion turns everything into a sales tax. This will cause massive saving and investing, and cripple the economy; much like Japan.

Demand for gas is inelastic. There is no comparable alternative, if it comes down to buying a new house with 20+% building tax, and investing free of tax, you will screw up everything.

Again, learn economics.

 

[Engineer]

Just curious Stunt, you mention Japan. Does Japan have such a "fair tax"?

 

[Whoozyerdaddy]

Originally posted by: Stunt
No...right now we have a small sales tax, progressive income tax and investment taxes.
Your suggestion turns everything into a sales tax. This will cause massive saving and investing, and cripple the economy; much like Japan.

Why do you think people won't spend anything? Prices won't be any higher than they are now. So that can't be a reason. People will have more money in their pockets so that can't be a reason. And if they choose to invest their left overs, how is that a bad thing? Besides, they need gas for their cars (heck, they need cars), groceries (try to live without those), electricity, clothes, internet access, tooth paste, hair gel, diapers, etc, etc, etc... How are people just going to stop buying this stuff. And if it costs the same, why would they?

Any current sales tax isn't federal. It's state or local. The Fair tax is federal only. And it's nowhere near as simple as you protrayed it.
Federal tax consists of:

Income Tax
Payroll Tax
Capital Gains Tax
Federal Gas Tax
Death Tax
Federal Telephone Access Tax
etc...
etc...

And yes, the Fair Tax gets rid of all of that for an INclusive sales tax. That means the price on the tag is what you pay. It's not like you are going to bring merchendise tagged at $100 to the register and pay $123 for it. If it's $100 on the tag you pay $100. That is what "inclusive sales tax" means. The tax is an included component of the retail price. And yes, the Fair Tax encourages saving and investment. As a matter of fact, that's one of the huge pluses they are touting about the system. I've said it to you at least five times now. Investment is a GOOD thing.

Also, the problem with the japenese economy is not lack of consumption. It's lack of investment. They ONLY save. They don't invest. Their banks were at one time offering negative interest rates to get them to invest. It's a cultural thing that has nothing to do with their tax system.

 

[Stunt]

Originally posted by: Engineer
Just curious Stunt, you mention Japan. Does Japan have such a "fair tax"?

No they do not. Sixone and Whoozyer keep insisting that people will always spend and there is no alternative or avoidance of this fact. Japan is an example where their people are currently saving too much, investing and not spending.

A tax system as he suggests would favour the same scenario.

 

[Engineer]

Originally posted by: Whoozyerdaddy

Originally posted by: Stunt
No...right now we have a small sales tax, progressive income tax and investment taxes.
Your suggestion turns everything into a sales tax. This will cause massive saving and investing, and cripple the economy; much like Japan.

Why do you think people won't spend anything? Prices won't be any higher than they are now. So that can't be a reason. People will have more money in their pockets so that can't be a reason. And if they choose to invest their left overs, how is that a bad thing? Besides, they need gas for their cars (heck, they need cars), groceries (try to live without those), electricity, clothes, internet access, tooth paste, hair gel, diapers, etc, etc, etc... How are people just going to stop buying this stuff. And if it costs the same, why would they?

Any current sales tax isn't federal. It's state or local. The Fair tax is federal only. And it's nowhere near as simple as you protrayed it.
Federal tax consists of:

Income Tax
Payroll Tax
Capital Gains Tax
Federal Gas Tax
Death Tax
Federal Telephone Access Tax
etc...
etc...

And yes, the Fair Tax gets rid of all of that for an INclusive sales tax. That means the price on the tag is what you pay. It's not like you are going to bring merchendise tagged at $100 to the register and pay $123 for it. If it's $100 on the tag you pay $100. That is what "inclusive sales tax" means. The tax is an included component of the retail price.

I have a hard time buying the idea that prices won't be any higher than now. If you remove 1.8 trillion in personal income taxes and 200 billion in corporate income taxes, it will have to be shifted somewhere. Sounds like magic tricks if you (or anyone) thinks that prices will lower and taxes added = same price. Not happening.

Thanks for your explanation Stunt. I do tend to agree that people will spend less if prices are raised with added taxes (and they will be) regardless if they bring home more money or not. Do I run out and spend more when (Not happening this year) I get raises? No.

 

[Whoozyerdaddy]

Originally posted by: Engineer

Originally posted by: Whoozyerdaddy

Originally posted by: Stunt
No...right now we have a small sales tax, progressive income tax and investment taxes.
Your suggestion turns everything into a sales tax. This will cause massive saving and investing, and cripple the economy; much like Japan.

Why do you think people won't spend anything? Prices won't be any higher than they are now. So that can't be a reason. People will have more money in their pockets so that can't be a reason. And if they choose to invest their left overs, how is that a bad thing? Besides, they need gas for their cars (heck, they need cars), groceries (try to live without those), electricity, clothes, internet access, tooth paste, hair gel, diapers, etc, etc, etc... How are people just going to stop buying this stuff. And if it costs the same, why would they?

Any current sales tax isn't federal. It's state or local. The Fair tax is federal only. And it's nowhere near as simple as you protrayed it.
Federal tax consists of:

Income Tax
Payroll Tax
Capital Gains Tax
Federal Gas Tax
Death Tax
Federal Telephone Access Tax
etc...
etc...

And yes, the Fair Tax gets rid of all of that for an INclusive sales tax. That means the price on the tag is what you pay. It's not like you are going to bring merchendise tagged at $100 to the register and pay $123 for it. If it's $100 on the tag you pay $100. That is what "inclusive sales tax" means. The tax is an included component of the retail price.

I have a hard time buying the idea that prices won't be any higher than now. If you remove 1.8 trillion in personal income taxes and 200 billion in corporate income taxes, it will have to be shifted somewhere. Sounds like magic tricks if you (or anyone) thinks that prices will lower and taxes added = same price. Not happening.

Thanks for your explanation Stunt. I do tend to agree that people will spend less if prices are raised with added taxes (and they will be) regardless if they bring home more money or not. Do I run out and spend more when (Not happening this year) I get raises? No.

All that income tax and corporate tax is figured into the retail cost of everything you buy right now. It works out to be about 22% of the retail price for every item and service paid for int he US. If you wipe out all federal taxes you remove that 22% component from the final retail price.

I think this is the sticking point that people have a hard time getting through. There is not a specific tax on what you buy now. But built into the retail price of everything you buy is the vendor's profit AND the cost of production which happens include all the federal taxes on all the people and companies involved with the production and bringing to market of that product or service. Think of it another way. You pay income tax and payroll tax right now and that is incorporated into every product or service your company sells. So when someone else pays for your product or service a portion of that sale goes to pay your salary and therefore your tax.

What the fair tax does is relocate the collection point from YOU to the things you buy. It eliminates all federal taxation, effectively removing the exisitng 22% component from retail goods and services and replaces it all with an inclusive sales tax... that tax replaces the 22% that disappeared when your taxes and your company's taxes (by virtue of their elimination) stopped being a cost component of the retail price of your company's products or services.

The result is that prices aren't raised.

It's not about inducing people to spend more. That is not required to make the system work. Its about being able to more easily afford what you would normally buy while giving you more opportunity to invest and save.

 

[Engineer]

Originally posted by: Whoozyerdaddy

Originally posted by: Engineer

Originally posted by: Whoozyerdaddy

Originally posted by: Stunt
No...right now we have a small sales tax, progressive income tax and investment taxes.
Your suggestion turns everything into a sales tax. This will cause massive saving and investing, and cripple the economy; much like Japan.

Why do you think people won't spend anything? Prices won't be any higher than they are now. So that can't be a reason. People will have more money in their pockets so that can't be a reason. And if they choose to invest their left overs, how is that a bad thing? Besides, they need gas for their cars (heck, they need cars), groceries (try to live without those), electricity, clothes, internet access, tooth paste, hair gel, diapers, etc, etc, etc... How are people just going to stop buying this stuff. And if it costs the same, why would they?

Any current sales tax isn't federal. It's state or local. The Fair tax is federal only. And it's nowhere near as simple as you protrayed it.
Federal tax consists of:

Income Tax
Payroll Tax
Capital Gains Tax
Federal Gas Tax
Death Tax
Federal Telephone Access Tax
etc...
etc...

And yes, the Fair Tax gets rid of all of that for an INclusive sales tax. That means the price on the tag is what you pay. It's not like you are going to bring merchendise tagged at $100 to the register and pay $123 for it. If it's $100 on the tag you pay $100. That is what "inclusive sales tax" means. The tax is an included component of the retail price.

I have a hard time buying the idea that prices won't be any higher than now. If you remove 1.8 trillion in personal income taxes and 200 billion in corporate income taxes, it will have to be shifted somewhere. Sounds like magic tricks if you (or anyone) thinks that prices will lower and taxes added = same price. Not happening.

Thanks for your explanation Stunt. I do tend to agree that people will spend less if prices are raised with added taxes (and they will be) regardless if they bring home more money or not. Do I run out and spend more when (Not happening this year) I get raises? No.

All that income tax and corporate tax is figured into the retail cost of everything you buy right now. It works out to be about 22% of the retail price for every item and service paid for int he US. If you wipe out all federal taxes you remove that 22% component from the final retail price.

I think this is the sticking point that people have a hard time getting through. There is not a specific tax on what you buy now. But built into the retail price of everything you buy is the vendor's profit AND the cost of production which happens include all the federal taxes on all the people and companies involved with the production and bringing to market of that product or service. Think of it another way. You pay income tax and payroll tax right now and that is incorporated into every product or service your company sells. So when someone else pays for your product or service a portion of that sale goes to pay your salary and therefore your tax.

What the fair tax does is relocate the collection point from YOU to the things you buy. It eliminates all federal taxation, effectively removing the exisitng 22% component from retail goods and services and replaces it all with an inclusive sales tax... that tax replaces the 22% that disappeared when your taxes and your company's taxes (by virtue of their elimination) stopped being a cost component of the retail price of your company's products or services.

The result is that prices aren't raised.

It's not about inducing people to spend more. That is not required to make the system work. Its about being able to more easily afford what you would normally buy while giving you more opportunity to invest and save.

So the price of the product incorporates the current income tax (some 1.8 Trillion) of the US workers? So this fair tax now eliminates that payout to the worker? If that is true, then the company isn't going to pay those taxes to the government or worker, i.e. there would be a reduction of the workers pay by that amount to make up for the lost money by lowering the sales price.

It's smoke and mirrors, at least the way you're describing it. There is no way that you can keep prices the same (including this new fair tax) and eliminate corporate taxes and income taxes and still make everything balanced and rosey. This is fantasy land math and it's not going to happen. While there may be some tax factored into the price of items in this country, I highly doubt that 22% is added for federal tax alone.

There is no way that you can simply give the worker all of their "income" tax back and the corporations their "business" tax back, charge the "same" price for all items (including this fair tax) and still have a revenue stream for the government. The money doesn't just magically appear.

I've read through the fair tax site several times before and just did part again. It's not going to work the way they say it will, IMO.

P.S. The average person doesn't pay 25%+ federal tax (including SS, etc), either. Calculate your tax rate and see what you really pay. Most people are really surpirsed. I did this to several co-workers who thought that 22% would be great, until they realized that their net federal rate including SS and Medicare was around 15 to 18%.

Smoke and mirrors...you can't get something from nothing and this is what they are selling.

Now if they are saying "RAISE" taxes (i.e. prices) by 23% on items (not lowering price, just adding more tax), then I'll buy part of the theory, but the way you describe it.