Fair Tax

[Whoozyerdaddy]

All I can say is read the book. All of these arguments and objections are addressed in the book. What's more, there is a list of economists as long as your arm who think this is the best thing since sliced bread.

You are right. Most people's effective tax rate is around 18% (Mine is 19%) but that is on everything you make. 22% would be on everything you spend. Do you spend every penney you make? Nope.

And your salary is your salary regardless of taxation. Your company can't keep your withholding. And since they no longer have to pay the back half of your payroll tax you just became a cheaper employee.

Tax --> paid by you --> who is paid by your company --> who is paid by the sale of goods. $$$ from sale of goods --> your company --> to you --> your taxes

I'll try one more time.

Let's erase all federal taxes. Done. Nobody pays any federal taxes. Individuals and corporations are free from all federal taxation. YAY! The cost to produce and market goods and services just dropped by 22%. Competition (as per my earlier example) causes prices to drop 22%.

Now what? We just killed all revenue to the federal government. Not good. The gov needs money. We have an army and FBI guys and cattle inspectors that need to get paid. What do we do? Do we rebuild the old system? Or do we try something new?

Well... one thing we know is that the old tax system accounted for (was equivilant to) 22% of all the money spent on retail sales in the US. Why not just add a sales tax in to all retail purchases to cover those costs? That sounds a lot easier than trying to revive a dozen or more independent taxes. One catch-all tax sounds easier than a dozen specific taxes with 60,000 pages of rules and regs to follow. Plus it allows us to tax all those guys who work under the table.

Revenue neutral.

 

[Stunt]

America vs. Japan

 

[Whoozyerdaddy]

Originally posted by: Stunt
America vs. Japan

Ok.. So I read it. It says what I've said three times now. The Japanese are culturally predisposed to save rather than invest or spend while americans tend to spend whatever they take in.

America on the whole has never been known for its conservative saving habits. Especially in comparison with the Japanese culture which values savings and stability for the future far above consumerism and material goods.

This data shows the average American's marginal propensity to consume has increased. The marginal propensity to consume refers to how much of every additional dollar earned will be spent rather that saved.

Consumption expenditures compared to personal savings, described in column 7, further shows the striking tendencies of the American public to spend rather than save.

This data observed by economists Dean Maki and Michael Palumbo led to an empirical study in 2001 entitled "Disentangling the Wealth Effect: A Cohort Analysis of Household Savings in the 1990s". Their study showed these saving and spending patterns were consistent with a direct view of the 'wealth effect' on American consumers. The wealth effect is defined as 'an increase in money or assets which directly causes households to increase their consumption and decrease their savings'.

So this is my question... How do we relate to the Japanese in our spending habits? According to your own link, the Japanese are culturally predisposed to save while we seem to be predisposed to spend. The more disposable money we have the less we save and the more we spend. Makes the Fair Tax look like an even bigger boon that I'm advocating it to be. What's more, it directly counters your assertion that more money in our pockets will cause us to save rather than spend.

Thank you for proving my point against your assumption.

 

[Thug Esquire]

Originally posted by: KingofCamelot
I like the concept, but doubt it will ever become a reality. A simple tax code system would cause a lot of people to lose jobs. What about tax firms? H&R Block would surely not be happy with a new simple tax system in which all the work is done without any effort.

Oh no, ANYTHING but losing H&R Block!

 

[3chordcharlie]

Originally posted by: Dissipate

Originally posted by: Stunt
Safety Regulation, Roads, Traffic management, Drinking Water, Military, Border Patrol, Policing, Fire Protection.

And for the more compassionate: Adequate Healthcare, Schooling for those not born into fiscally sound families.

Throughout history all of those services have been provided by the free market extortion free.

*sigh*

No, they really haven't, and where they've been tried, they failed and were replaced by superior 'socialized' systems. But please, feel free to keep dreaming.

 

[Davegod]

Say I've been carefully saving and have $10,000 in the bank. All this has some from taxed income. Now take away taxed income, and shift the tax to what I'd eventually be buying with my savings, and I pay double taxation. You could argue the government could issue tax credit for this, but that would be insanely open to extreme abuse, and would require the credit to be upfront hence taking the figures out of current budgets.

Over the full year, the prebates thing would work out evens in terms of how it looks on a peice of paper. But it's more than a little nieve to suggest that this actually works out evens in the wider context. Governments finances dont work on year end figures, it's all about flows of currency. A prebate cheque would be like an interest free loan, it takes finance out and slowly puts it back in for no gain. It's a negative flow situation, it takes money out of availability for current government spending.

I dont know why people have the idea they will be paying the same amount for goods and yet earning more. The only way there's going to be the same amount of revenue going to the government while the burden of tax is reduced is if the administration of taxation is more efficient. By the way, all that inefficiency is being spent somewhere, and nearly all of that is ending up as something taxable, mainly jobs. Everybody is not going to be better off, the best you can hope for is a shift in the tax burden from the poor towards the rich, preferably in a manner that does not hinder economic progression.

For businesses, administrating sales tax is at least as problematic and expensive as income tax. The place I work runs payroll and sales tax returns for several clients - we charge about the same but around half of our clients (who dont have a consistent run of employees each being paid constant salaries) would still require us to run their payroll, and our costs would be only slightly less since the software does nearly all the income tax work anyway, we even only need to check the figures look OK before submitting the Return electronically. Further, the work we do for sales tax goes straight into the work we do making their annual accounts - the fee's for sales tax work subsidises the annual accounts fee. My point is take any figures on costs of administrating taxation with a pinch of salt, they are just the sort of figures which would be grossly misleading - unintentionally or not.

Businesses also pay sales tax on their purchases "up front", i.e. before they have made their own income resulting from it. By contrast, taxes deducted from salaries are paid in leu, usually quarterly. This means increasing sales tax directly results in exaggerating cash flow problem (new innovations have worse cash flow, incumbent cash cow products have better cash flow). Cash flow is by far the biggest killer of new businesses, even highly profitable ones, so a larger sales tax weakens entrepreneurship. Obviously this flow has to go somewhere, and yes the businesses who have low materials input costs relative to output will do well - i.e. services, not manufacturing and production which is where USA economy is relatively weak.

Of course if the proposal comes into force, I'll happily go work in USA for a few years to build up a nice bank balance before coming back home to spend it.

 

[Dissipate]

Originally posted by: 3chordcharlie

Originally posted by: Dissipate

Originally posted by: Stunt
Safety Regulation, Roads, Traffic management, Drinking Water, Military, Border Patrol, Policing, Fire Protection.

And for the more compassionate: Adequate Healthcare, Schooling for those not born into fiscally sound families.

Throughout history all of those services have been provided by the free market extortion free.

*sigh*

No, they really haven't, and where they've been tried, they failed and were replaced by superior 'socialized' systems. But please, feel free to keep dreaming.

Do you want to place a bet on that?

 

[3chordcharlie]

Originally posted by: Dissipate

Originally posted by: 3chordcharlie

Originally posted by: Dissipate

Originally posted by: Stunt
Safety Regulation, Roads, Traffic management, Drinking Water, Military, Border Patrol, Policing, Fire Protection.

And for the more compassionate: Adequate Healthcare, Schooling for those not born into fiscally sound families.

Throughout history all of those services have been provided by the free market extortion free.

*sigh*

No, they really haven't, and where they've been tried, they failed and were replaced by superior 'socialized' systems. But please, feel free to keep dreaming.

Do you want to place a bet on that?

Pick one - I'm willing to concede rent-a-cops have been known to do a good job, but that's not really 'law enforcemnet' now is it.

 

[Dissipate]

Originally posted by: 3chordcharlie

Originally posted by: Dissipate

Originally posted by: 3chordcharlie

Originally posted by: Dissipate

Originally posted by: Stunt
Safety Regulation, Roads, Traffic management, Drinking Water, Military, Border Patrol, Policing, Fire Protection.

And for the more compassionate: Adequate Healthcare, Schooling for those not born into fiscally sound families.

Throughout history all of those services have been provided by the free market extortion free.

*sigh*

No, they really haven't, and where they've been tried, they failed and were replaced by superior 'socialized' systems. But please, feel free to keep dreaming.

Do you want to place a bet on that?

Pick one - I'm willing to concede rent-a-cops have been known to do a good job, but that's not really 'law enforcemnet' now is it.

I'll go for military. Or in other words 'national defense.'

 

[3chordcharlie]

Originally posted by: Dissipate
I'll go for military. Or in other words 'national defense.'

Fair enough - how well did it work out for Saddam when he tried to privately procure a military, contracts and all?

 

[Bowfinger]

Originally posted by: 3chordcharlie

Originally posted by: Dissipate
I'll go for military. Or in other words 'national defense.'

Fair enough - how well did it work out for Saddam when he tried to privately procure a military, contracts and all?

More to the point, did mercenaries sell their services directly to the Iraqi people (or any other citizenry, for that matter), or did they contract with the government? Dissipate insists the private sector can -- and did -- provide every public service directly to the population, without need of centralized government and taxes. It's a silly notion, with "national defense" being an especially absurd counterexample. How would the mythical Dave's United Defense Company (DUDCo) pay its bills? Would it contract with each person individually? What about people who don't want to pay for defense, or who think DUDCo is overpriced? How does DUDCo avoid providing defense to them while still defending everyone else in the country?

Where does DUDCo get the R&D money to keep pace with the military developments in all the other countries, countries who do still have centralized governments with a well-funded military? How does DUDCo maintain funding for a trained military, ready to respond to threats, when its customers feel the world is safe? How does DUDCo stop a Hitler? How does DUDCo stand off a USSR?

Finally, and perhaps most important of all, why? Why would I want to trust my family's well-being to the self-serving whims and apathy of my neighbors? Why would I want to put even more essential service monopolies (and many are effectively monopolies, the entry cost for potential competitors is prohibitive, especially in areas already developed) in the hands of unregulated corporations whose only interest is separating me from as many dollars as they possibly can? Whether he likes it or not, it is in the public's best interests to have a government taking care of many services.

 

[BoberFett]

I consider myself a libertarian, yet I realize that the government should provide many services. Roads, law enforcement, fire departments, etc. Some libertarians believe the free market could take care of it all, but that's as much a pipe dream as true communism. When choosing a private police force or fire department, you'd first have to make sure those companies were allowed to drive on the private road that runs in front of your house. You'd likely end up with police and fire monopolies run by those who own the roads, at which point you have no more freedom of choice than you do under current government run systems.

Still, this has nothing to do with a sales tax in place of income tax, so I'm not sure what the point is.

 

[3chordcharlie]

Originally posted by: BoberFett
I consider myself a libertarian, yet I realize that the government should provide many services. Roads, law enforcement, fire departments, etc. Some libertarians believe the free market could take care of it all, but that's as much a pipe dream as true communism. When choosing a private police force or fire department, you'd first have to make sure those companies were allowed to drive on the private road that runs in front of your house. You'd likely end up with police and fire monopolies run by those who own the roads, at which point you have no more freedom of choice than you do under current government run systems.

Still, this has nothing to do with a sales tax in place of income tax, so I'm not sure what the point is.

Dissipate rejects the legitimacy of any and all taxes because he rejects the legitimacy of any and all government.

So if you can show that some services need to be supplied by government, you have given a useful defense of that said government has the legitimate authority to tax in order to create those services.

 

[Engineer]

"taxes are the price of a civilized society"

Edit: Oliver Wendell Holmes Jr

(wrong yahoo quote)

... and all Americans would pay lower taxes if everybody was honest on their returns

 

[tw1164]

While a bit off topic, we could help lower taxes by adding a balance budget amendment.

 

[Stunt]

Originally posted by: tw1164
While a bit off topic, we could help lower taxes by adding a balance budget amendment.

Ugh...the US is in a deficit situation, spending would be cut or taxes raised.

Balanced Budget ammendments are dumb in any shape and form.

 

[Dissipate]

Originally posted by: Engineer
"taxes are the price of a civilized society"

Sir Winston Churchill

... and all Americans would pay lower taxes if everybody was honest on their returns

Uh, that quote is not from Winston Churchill. That was from Oliver Wendell Holmes Jr.

Text

Wow, it is getting really bad. The authoritarians can't even remember who said what anymore when trying to justify their insane religion.

 

[Engineer]

Originally posted by: tw1164
While a bit off topic, we could help lower taxes by adding a balance budget amendment.

We are already paying less in taxes now than we spend, but that would keep the interest from ballooning on the debt as we would have less debt. Hell, I used to be for a full out balanced budget, but have since backed off slightly after seeing some of the usefullness of debt (but not debt 24/7/365 for decades). Debt growth slower than the economic growth can be usefull and the increased revenues from the economic growth can dwarf the debt (but not at the current pace of debt growth).

 

[Stunt]

Engineer, not only that, but our economy goes in cycles; we cannot afford to lay off huge amounts of government employees and funding for short bursts at a time. Or else you will get waves of stpid graduates, half fixed people from heathcare, high crime periods.

There is nothing wrong with deficits, just as long as the average budget (over time) is balanced. That being said, this is not the case in the US currently...

 

[Engineer]

Originally posted by: Dissipate

Originally posted by: Engineer
"taxes are the price of a civilized society"

Sir Winston Churchill

... and all Americans would pay lower taxes if everybody was honest on their returns

Uh, that quote is not from Winston Churchill. That was from Oliver Wendell Holmes Jr.

Text

Wow, it is getting really bad. The authoritarians can't even remember who said what anymore when trying to justify their insane religion.

I just remembered the quote and did a Yahoo search!

That's what Yahoo came up with so I assumed it to be right...I'll edit!


P.S. I'm not saying that the tax code shouldn't be fixed, I just see this "fair tax" as smoke an mirrors in that there is no way that you can drop 2.2 trillion in income taxes and not place it somewhere and still have the same or more reveune to the government.

P.S. #2: And I'm well aware of your anti government (especially federal) view!

 

[Dissipate]

Originally posted by: BoberFett
I consider myself a libertarian, yet I realize that the government should provide many services. Roads, law enforcement, fire departments, etc. Some libertarians believe the free market could take care of it all, but that's as much a pipe dream as true communism. When choosing a private police force or fire department, you'd first have to make sure those companies were allowed to drive on the private road that runs in front of your house. You'd likely end up with police and fire monopolies run by those who own the roads, at which point you have no more freedom of choice than you do under current government run systems.

Still, this has nothing to do with a sales tax in place of income tax, so I'm not sure what the point is.

There are respectable economics professors in universities in the U.S. teaching anarcho-capitalism today. It is only a pipe-dream so much as people continue to believe in government. In other words, as soon as people stop believing in politics, the state disappears.

Your objections and numerous others have been dealt with. I invite anyone to come on over to the newbie/antagonist forum at anti-state.com.

 

[BoberFett]

Originally posted by: 3chordcharlie
So if you can show that some services need to be supplied by government, you have given a useful defense of that said government has the legitimate authority to tax in order to create those services.

OK, except that we're discussing the fair collection of those taxes here.

 

[imported_tss4]

Originally posted by: Dissipate

Originally posted by: BoberFett
I consider myself a libertarian, yet I realize that the government should provide many services. Roads, law enforcement, fire departments, etc. Some libertarians believe the free market could take care of it all, but that's as much a pipe dream as true communism. When choosing a private police force or fire department, you'd first have to make sure those companies were allowed to drive on the private road that runs in front of your house. You'd likely end up with police and fire monopolies run by those who own the roads, at which point you have no more freedom of choice than you do under current government run systems.

Still, this has nothing to do with a sales tax in place of income tax, so I'm not sure what the point is.

There are respectable economics professors in universities in the U.S. teaching anarcho-capitalism today. It is only a pipe-dream so much as people continue to believe in government. In other words, as soon as people stop believing in politics, the state disappears.

Your objections and numerous others have been dealt with. I invite anyone to come on over to the newbie/antagonist forum at anti-state.com.

Are there any examples in history where your system has worked over a sustained period of time?

 

[Dissipate]

Originally posted by: tss4

Originally posted by: Dissipate

Originally posted by: BoberFett
I consider myself a libertarian, yet I realize that the government should provide many services. Roads, law enforcement, fire departments, etc. Some libertarians believe the free market could take care of it all, but that's as much a pipe dream as true communism. When choosing a private police force or fire department, you'd first have to make sure those companies were allowed to drive on the private road that runs in front of your house. You'd likely end up with police and fire monopolies run by those who own the roads, at which point you have no more freedom of choice than you do under current government run systems.

Still, this has nothing to do with a sales tax in place of income tax, so I'm not sure what the point is.

There are respectable economics professors in universities in the U.S. teaching anarcho-capitalism today. It is only a pipe-dream so much as people continue to believe in government. In other words, as soon as people stop believing in politics, the state disappears.

Your objections and numerous others have been dealt with. I invite anyone to come on over to the newbie/antagonist forum at anti-state.com.

Are there any examples in history where your system has worked over a sustained period of time?

Yep, for just about an entire decade right here in the U.S.

Pennsylvania's Anarchist Experiment

 

[BoberFett]

Originally posted by: Dissipate
Yep, for just about an entire decade right here in the U.S.

Pennsylvania's Anarchist Experiment

The Branch Davidian compound worked for a while too.