Fair Tax

[ShawnD1]

Who spends more money the rich or poor? When you can answer that question then you would understand who would pay the higher tax load.

I'll help the thread along and answer this for everyone. Poor people spend more. This is why Toyota is worth more than Ferrari. This is why Walmart is worth more than Sears.

 

[Deudalus]

Maybe you will answer my question: How will be the tax burden be shifted with the Fair Tax? Who will pay more and who will pay less with this tax plan?

Those who spend the most will pay the most taxes.


Let me break it down for you......

POOR FAMILY is a family of 4 bringing in 4000 per month.
RICH FAMILY is a family of 4 bringing in 40000 per month.

You have necessities in life which every group needs (food, utilities, etc). For the sake of simplicity lets assume that those necessities total 20k per year for a family of four.

At a sales tax rate of 18% that would mean 3600 dollars in taxes are paid yearly on those necessities. That amount breaks down to 300 dollars per month that they would spend and that amount would be reimbursed to all families of 4 monthly.


Subtracting 20k for necessities leaves 28k of disposable income for Poor Family and 460K of disposable income for Rich Family.

So who do you think is going to spend more after that?

If Poor Family spends EVERY NICKEL THAT THEY HAVE that means they will pay 5000 dollars in taxes that year.

If Rich Family spends EVERY NICKEL THAT THEY HAVE that means they will pay 82,800 in taxes that year.


The idea is to tax people based on what they purchase that they do not need to live and believe me the BIG CONSUMERS in this country and every other is not the poor and middle class.

 

[Deudalus]

I'll help the thread along and answer this for everyone. Poor people spend more. This is why Toyota is worth more than Ferrari. This is why Walmart is worth more than Sears.

Horrible analogy.

Firstly, the rich and poor both shop at Wal-Mart. If your analogy was true then K-Mart would be in better shape than Target and that for damn sure isn't the case. Wal-Mart does so well because they sell food DRASTICALLY cheaper than everyone else to get people into the store and buy their toasters. Sears isn't even the same business model as Wal-Mart.

Secondly, Toyota's mission statement is to sell a shit ton of relatively inexpensive cars. Their CEO Mr. Toyoda actually said that at Congress.

Ferrari's mission statement is to sell a handful of very expensive cars of to a handful of people. Ferrari doesn't appeal to the masses because they do not want to. Ferrari would not be Ferrari if they offered a 30,000 station wagon.

Use that thing sitting on the top of your neck for something other than breathing and eating.

 

[wiseoldowl]

What a name "Fair Tax" :biggrin:

There is nothing fair about the fair tax, it's a totally regressive tax designed by the rich for the rich.

The prebate makes the FairTax progressive not regressive. Let’s look at three families of four. One family earns $30,000 per year; one earns $50,000 per year and the other earns $75,000. To keep it simple, let’s assume all three spend their entire earnings on new goods and services. When you add the annual prebate of $6702, the family with an annual income of $30,000 would have spendable income of $36,702 giving them a tax after prebate of $1739 for a tax rate of 4.74%. For the family earning $50,000 the tax after prebate would be $6339 for a tax rate of 11.18%. For the family earning $75,000 the tax after prebate would be $12,089 for a tax rate of 14.80%. Of course each family could reduce this percentage through savings and used purchases, but that is one of the beauties of the FairTax; you have more control of amount of tax you pay through your buying and saving practices.

One other thing to keep in mind, even if you earned $12-Million per year someone, someday will spend the entire $12-Million. It may not be your children or your childrens' children, but someone down the line will end up spending it all. Up until that time, it will more than likely be invested in the US rather than offshore. Since investment returns will not be taxed until spent, what would be the advantage of investing offshore? The more investing done in the US, the more jobs created, the stronger our economy becomes.

 

[Deudalus]

The prebate makes the FairTax progressive not regressive. Let’s look at three families of four. One family earns $30,000 per year; one earns $50,000 per year and the other earns $75,000. To keep it simple, let’s assume all three spend their entire earnings on new goods and services. When you add the annual prebate of $6702, the family with an annual income of $30,000 would have spendable income of $36,702 giving them a tax after prebate of $1739 for a tax rate of 4.74%. For the family earning $50,000 the tax after prebate would be $6339 for a tax rate of 11.18%. For the family earning $75,000 the tax after prebate would be $12,089 for a tax rate of 14.80%. Of course each family could reduce this percentage through savings and used purchases, but that is one of the beauties of the FairTax; you have more control of amount of tax you pay through your buying and saving practices.

One other thing to keep in mind, even if you earned $12-Million per year someone, someday will spend the entire $12-Million. It may not be your children or your childrens' children, but someone down the line will end up spending it all. Up until that time, it will more than likely be invested in the US rather than offshore. Since investment returns will not be taxed until spent, what would be the advantage of investing offshore? The more investing done in the US, the more jobs created, the stronger our economy becomes.

Fantastic post.

 

[GuitarDaddy]

You guys should follow Wesley Snipes lead He also claimed federal income tax was unconstitutional, but it didn't work out so well for him maybe you will fair better

I'll leave you alone now, go back to your tinfoil hattery

 

[wiseoldowl]

Maybe you will answer my question: How will be the tax burden be shifted with the Fair Tax? Who will pay more and who will pay less with this tax plan?

Much of the tax burden will be shifted to illegal aliens, and those who currently cheat or don’t even file a tax return. Since the FairTax is designed to be revenue neutral, the addition of these individuals will broaden the tax base thus decreasing the tax burden on the honest Americans who are currently making up the taxes now being lost by those not currently paying anything.

 

[IceBergSLiM]

You guys should follow Wesley Snipes lead He also claimed federal income tax was unconstitutional, but it didn't work out so well for him maybe you will fair better

I'll leave you alone now, go back to your tinfoil hattery

what happened to that guy in like Vermont or new Hampshire that penned himself up in a compound refusing to pay taxes on the same grounds that it was illegal?

 

[Deudalus]

You guys should follow Wesley Snipes lead He also claimed federal income tax was unconstitutional, but it didn't work out so well for him maybe you will fair better

I'll leave you alone now, go back to your tinfoil hattery

Thanks for your lack of contribution.

Enjoy your applesauce.

 

[ShawnD1]

Horrible analogy.

Firstly, the rich and poor both shop at Wal-Mart. If your analogy was true then K-Mart would be in better shape than Target and that for damn sure isn't the case. Wal-Mart does so well because they sell food DRASTICALLY cheaper than everyone else to get people into the store and buy their toasters. Sears isn't even the same business model as Wal-Mart.

Something tells me you've never actually been inside a Walmart. Their food is the same price as their competitors on most products. The only stuff that's cheap enough to even talk about is the store brand stuff. Also, rich people don't shop at Walmart. Go there and look at the people waiting in line. How many of them are even wearing shirts? These are not rich people.
A good 90% of stuff at Walmart can be found at Sears. Vacuum cleaners, Microwaves, clothes, etc.The biggest difference is that Sears sells moderately good stuff at a moderately high price. Walmart sells shit and very low prices. I think I paid $12 for the Walmart jeans I'm wearing.

You made a good argument about Ferrari not wanting to be popular. Can you name 1 luxury brand that is worth more than Toyota? Remember that Toyota is known for making cheap cars for poor people. Some Corollas in the 90s didn't even have a clock.

I'll help you out by solving the mystery. No car company is worth more than Toyota. They're currently the largest car company. They got there by selling cheap cars for poor people. BMW and Mercedes wish they were worth as much as Toyota.

 

[HumblePie]

Again as pointed out, the major problems with a fair tax system are as follows.

One, the rich and wealthy do not need to spend their money. They already have everything the need typically. The poor do not and spend most or all they earn.

Two, the rich do not have to buy anything in America. Like offshoring jobs, they can shuffle around where every thing they purchase comes from. The less fortunate do not have the opportunity.

The rich can always go back to a barter system for good among each other. Bartering = no money = no tax. Rich guy needs a new TV and makes couches? Easy, find the rich neighbor that makes TVs and do a reasonable trade.

For all people, it opens up a black market. And while it takes two to tango, there will always be sellers looking to save on not having to deal with tax forms and collecting and buyers looking for cheaper prices. Top that off with the criminal element always looking for this crap, and it spells disaster in terms of extortion, crime waves, and black market problems the likes America has not seen in a long time.

Progressive tax works, but it has so many loopholes because the rich lobbied for those. They just need to be removed and it will work again. A tiered income/net worth tax every year with more tiers and no shelters for anything. Do that and no more loopholes. With no loopholes it is harder for tax evasion.

 

[werepossum]

The prebate makes the FairTax progressive not regressive. Let’s look at three families of four. One family earns $30,000 per year; one earns $50,000 per year and the other earns $75,000. To keep it simple, let’s assume all three spend their entire earnings on new goods and services. When you add the annual prebate of $6702, the family with an annual income of $30,000 would have spendable income of $36,702 giving them a tax after prebate of $1739 for a tax rate of 4.74%. For the family earning $50,000 the tax after prebate would be $6339 for a tax rate of 11.18%. For the family earning $75,000 the tax after prebate would be $12,089 for a tax rate of 14.80%. Of course each family could reduce this percentage through savings and used purchases, but that is one of the beauties of the FairTax; you have more control of amount of tax you pay through your buying and saving practices.

One other thing to keep in mind, even if you earned $12-Million per year someone, someday will spend the entire $12-Million. It may not be your children or your childrens' children, but someone down the line will end up spending it all. Up until that time, it will more than likely be invested in the US rather than offshore. Since investment returns will not be taxed until spent, what would be the advantage of investing offshore? The more investing done in the US, the more jobs created, the stronger our economy becomes.

Agreed, fantastic post. I absolutely love the FairTax as it does several things. First, it takes all tax burdens off the very poor, those at or below the federal poverty level - no payroll taxes! Everything new is taxed, but the prebate means people at or below the federal poverty level (for their household size) pay no federal taxes whatsoever. Everyone gets the same prebate, based only on household size.

Second, the FairTax forces everyone to see the actual effective tax rate. Even if the government sends you that 23%, you still hold it in your hand before you spend it. Hopefully this will calm cries for new entitlements, by far the biggest threat to our republic.

Third, the FairTax encourages savings. Anything not spent is tax free, which means we have more capital for lending AND the individual has savings of his own, not some amorphous government promise.

Fourth, American companies' products are taxed at exactly the same rate as those of foreign competitors, which will make American companies much more competitive. Even if a country subsidizes a company completely, charging it no taxes, it is still taxed in America at the same rate. Right now imports are effectively untaxed by the USA, which means American-based companies pay all corporate taxes. Since all corporate taxes must be passed to either customers or stockholders, this makes American-made products more competitive and American-based stocks more profitable. And imported goods will contribute to the federal tax coffers.

Fifth, the FairTax encourages recycling and reusing used products, since they may be sold without federal tax consequences. Thus our landfill requirements are reduced and our importation is reduced.

Sixth, the FairTax moves tax collection and verification responsibilities back to the states, who almost all have sales taxes now and therefore have these mechanisms in place. This includes the black market issue, as the states have this concern already.

Seventh, the FairTax moves welfare programs such as Earned Income Tax Credit back to the states where they belong. The cost of living in rural Tennessee or Mississippi has virtually nothing in common with the cost of living in New Jersey or New York or California, yet the federal government must treat working poor in the same way.

Eighth, the FairTax greatly simplifies our tax code and reduces our compliance costs. Right now a big portion of our national labor goes into tax code compliance. An awful lot of smart, well-educated people spend some or all of their time in tax preparation, advice, and paperwork. A VAT is similarly expensive; a flat tax is even less expensive, but is unfair on the poorest Americans, making it not even worth their while to work. The FairTax is probably the lowest overhead federal tax plan with a chance of passing or providing a moral, fair tax collection method. Also, the FairTax would free up lots of valuable time of accountants and lawyers for other, more productive purposes.

Ninth, the FairTax removes the federal government's intrusiveness into your life, as well as the threat of the IRS, and replaces it with something the federal government should be concerned with anyway - counting people. It's easy to misunderstand a particular tax code requirement and incur big penalties and the threat of prison time; it's quite a bit harder to miscount the number of people living in your home. And counting people is necessary anyway for providing the proper representation and public services and accommodations.

Tenth, the FairTax punishes people who are here illegally or who earn their livings through illegal activities. On the run from the law? No prebate for you. Illegal alien? You're missing a check every month by being illegal. Drug dealer or gun runner gang banger? You still pay taxes.

Eleventh, the FairTax largely removes the government's ability to set one group against another, because everyone pays the same base rate and everyone gets the prebates which are based only on head count and the federal poverty rate. Everything new gets taxed, so they can't pay off one industry by making it tax exempt. Congress could still game the system to a degree by raising the poverty rate, or adding surcharges on luxury goods, or adding sin taxes, but adding tax exemptions for a favored company or industry would be eliminated. Promises to take more money away from other people and give it to you would be largely meaningless as well.

Twelfth, it would make America a haven for investment. Move a company here and pay no tax on profits unless and until those profits are moved out of the country.

I don't see Congress ever voting away its greatest power, the ability to reward and punish via the tax code. But I'd love to see the FairTax implemented.

 

[Vette73]

You made a good argument about Ferrari not wanting to be popular. Can you name 1 luxury brand that is worth more than Toyota? Remember that Toyota is known for making cheap cars for poor people. Some Corollas in the 90s didn't even have a clock.

I'll help you out by solving the mystery. No car company is worth more than Toyota. They're currently the largest car company. They got there by selling cheap cars for poor people. BMW and Mercedes wish they were worth as much as Toyota.

Nope, that would be VW.

http://www.autospies.com/news/Volks...-Worlds-Biggest-Market-Value-Automaker-35728/

"Volkswagen AG today surpassed Toyota Motor Corp. to become the world's biggest automaker"

And that is even more true today with Toyota's sells and stock down a good bit.
And Toyota does not sell to poor people, they sell to lower to mid-income people. Poor people buy used cars, new cost to much.

 

[ElFenix]

You guys should follow Wesley Snipes lead He also claimed federal income tax was unconstitutional, but it didn't work out so well for him maybe you will fair better

I'll leave you alone now, go back to your tinfoil hattery

i think there's been a drive-by

 

[piasabird]

One thing that might make sense is stopping the moratorium of sales tax on the internet. This would provide some much needed help to impoverished states. If the federal government wanted to start a sales tax, they might start it on the Internet.

There was a Nissan dealer Near St Louis, MO advertising the Altima for 13,900.00. This just shows that cars are way overpriced.

 

[Deudalus]

Something tells me you've never actually been inside a Walmart.

Something tells me you still live at home and don't have to do much grocery shopping.

Their food is the same price as their competitors on most products. The only stuff that's cheap enough to even talk about is the store brand stuff.

Completely untrue. Wal-Marts business model is pretty simple. They charge as little as possible for food because they know when they get you there you will also buy light bulbs, a toaster, a frying pan, or something else that they make their money on.

Get educated.

Also, rich people don't shop at Walmart. Go there and look at the people waiting in line. How many of them are even wearing shirts? These are not rich people.

I shop at Wal-Mart because its cheaper. I'm a long freakin' ways from poor.

A good 90% of stuff at Walmart can be found at Sears. Vacuum cleaners, Microwaves, clothes, etc.The biggest difference is that Sears sells moderately good stuff at a moderately high price. Walmart sells shit and very low prices. I think I paid $12 for the Walmart jeans I'm wearing.

The biggest difference is that people shop for groceries twice a week or so. People who need a new Microwave might go to Sears once a year or not at all because they only reason they go there is to make an appliance purchase.

If someone is going to Wal-Mart for groceries twice a week and need a microwave it isn't hard to figure out whether its Sears or Wal-Mart that is going to sell them their microwave.

You made a good argument about Ferrari not wanting to be popular. Can you name 1 luxury brand that is worth more than Toyota? Remember that Toyota is known for making cheap cars for poor people. Some Corollas in the 90s didn't even have a clock.

Toyota is more valuable for the same reason Wal-Mart is more valuable than Sears. It is better to sell in bulk than to sell an item occasionally.

You win by spamming. That is how the Allies won World War 2. For every Tiger tank that Ze Germans made we made 4 shitty Sherman tanks. Before Pearl Harbor we had a small Navy. By the time the Japanese surrendered we had more boats than the rest of the Allies and Axis powers combined. Look it up.

Is it any coincidence that Germans make Porsche, Mercedes and BMW where we make Ford and Chevy?

 

[Deudalus]

One, the rich and wealthy do not need to spend their money. They already have everything the need typically. The poor do not and spend most or all they earn.

The poor spend most of what they earn on necessities which they would be reimbursed for.

Two, the rich do not have to buy anything in America. Like offshoring jobs, they can shuffle around where every thing they purchase comes from. The less fortunate do not have the opportunity.

Realistically do you think they would spend all the money required to do this? This is not to mention that those countries have taxes too.

Do you really think they are going to fly to Italy and buy a Ferrari there to save 9% in taxes?

The rich can always go back to a barter system for good among each other. Bartering = no money = no tax. Rich guy needs a new TV and makes couches? Easy, find the rich neighbor that makes TVs and do a reasonable trade.

Once again do you really think this is feasible? Think about what you are saying..

 

[werepossum]

The poor spend most of what they earn on necessities which they would be reimbursed for.



Realistically do you think they would spend all the money required to do this? This is not to mention that those countries have taxes too.

Do you really think they are going to fly to Italy and buy a Ferrari there to save 9% in taxes?



Once again do you really think this is feasible? Think about what you are saying..

Plus if imported the new (or used) Ferrari is subject to import duties.

 

[Deudalus]

Agreed, fantastic post. I absolutely love the FairTax as it does several things. First, it takes all tax burdens off the very poor, those at or below the federal poverty level - no payroll taxes! Everything new is taxed, but the prebate means people at or below the federal poverty level (for their household size) pay no federal taxes whatsoever. Everyone gets the same prebate, based only on household size.

Second, the FairTax forces everyone to see the actual effective tax rate. Even if the government sends you that 23%, you still hold it in your hand before you spend it. Hopefully this will calm cries for new entitlements, by far the biggest threat to our republic.

Third, the FairTax encourages savings. Anything not spent is tax free, which means we have more capital for lending AND the individual has savings of his own, not some amorphous government promise.

Fourth, American companies' products are taxed at exactly the same rate as those of foreign competitors, which will make American companies much more competitive. Even if a country subsidizes a company completely, charging it no taxes, it is still taxed in America at the same rate. Right now imports are effectively untaxed by the USA, which means American-based companies pay all corporate taxes. Since all corporate taxes must be passed to either customers or stockholders, this makes American-made products more competitive and American-based stocks more profitable. And imported goods will contribute to the federal tax coffers.

Fifth, the FairTax encourages recycling and reusing used products, since they may be sold without federal tax consequences. Thus our landfill requirements are reduced and our importation is reduced.

Sixth, the FairTax moves tax collection and verification responsibilities back to the states, who almost all have sales taxes now and therefore have these mechanisms in place. This includes the black market issue, as the states have this concern already.

Seventh, the FairTax moves welfare programs such as Earned Income Tax Credit back to the states where they belong. The cost of living in rural Tennessee or Mississippi has virtually nothing in common with the cost of living in New Jersey or New York or California, yet the federal government must treat working poor in the same way.

Eighth, the FairTax greatly simplifies our tax code and reduces our compliance costs. Right now a big portion of our national labor goes into tax code compliance. An awful lot of smart, well-educated people spend some or all of their time in tax preparation, advice, and paperwork. A VAT is similarly expensive; a flat tax is even less expensive, but is unfair on the poorest Americans, making it not even worth their while to work. The FairTax is probably the lowest overhead federal tax plan with a chance of passing or providing a moral, fair tax collection method. Also, the FairTax would free up lots of valuable time of accountants and lawyers for other, more productive purposes.

Ninth, the FairTax removes the federal government's intrusiveness into your life, as well as the threat of the IRS, and replaces it with something the federal government should be concerned with anyway - counting people. It's easy to misunderstand a particular tax code requirement and incur big penalties and the threat of prison time; it's quite a bit harder to miscount the number of people living in your home. And counting people is necessary anyway for providing the proper representation and public services and accommodations.

Tenth, the FairTax punishes people who are here illegally or who earn their livings through illegal activities. On the run from the law? No prebate for you. Illegal alien? You're missing a check every month by being illegal. Drug dealer or gun runner gang banger? You still pay taxes.

Eleventh, the FairTax largely removes the government's ability to set one group against another, because everyone pays the same base rate and everyone gets the prebates which are based only on head count and the federal poverty rate. Everything new gets taxed, so they can't pay off one industry by making it tax exempt. Congress could still game the system to a degree by raising the poverty rate, or adding surcharges on luxury goods, or adding sin taxes, but adding tax exemptions for a favored company or industry would be eliminated. Promises to take more money away from other people and give it to you would be largely meaningless as well.

Twelfth, it would make America a haven for investment. Move a company here and pay no tax on profits unless and until those profits are moved out of the country.

I don't see Congress ever voting away its greatest power, the ability to reward and punish via the tax code. But I'd love to see the FairTax implemented.

Greatest post ever.

I would love to hear arguments against any of this.

 

[werepossum]

Greatest post ever.

I would love to hear arguments against any of this.

Why thank you. I'm blushing beneath my whiskers.

 

[ObscureCaucasian]

It's a definitely intriguing idea... tax people on what they consume and not on what they produce (essentially what income tax is). It would be interesting to see what sales tax rate would be required to raise the same amount of revenue.

 

[Patranus]

I very much support a national sales tax but ONLY if income tax is repealed.

A national sales tax is really the only "fair" tax there is.
If you are poor, you will pay less.
If you are "rich" you will pay more.

If you are "poor" but live outside of your means, you will pay taxes and contribute to the inevitable burden you will put on society.

I could see the "progressives" pushing for a national sales tax (or any new national tax) without a reduction in income taxes.

 

[JeffreyLebowski]

That's only because you aren't thinking.

Pre-bates given to people below a certain poverty level means they are being refunded for certain things that they buy that are generally considered necessities. Like soap, detergent, things like that.

The idea is to make the necessities in life taxed less and less.

Beyond that, you are taxed based on what you purchase.

Poorer people spend a higher percentage of their money on necessities. If you make those things tax free then they are largely not paying taxes.

Rich people spend a higher percentage of their money on non-necessities. So you tax the boats, the yachts, the personal planes, the high end cars. You know the things that the uber-rich right off on their taxes as a "corporate need" and whatnot. You do realize that you can currently write off season tickets to the Lakers, trips, 5 star dinners, golf memberships, and plenty of other things right?

A flat sales tax doesn't care what its fore (pun intended), it only cares if money is spent on a non-necessity.


Do you truly think that someone making 30k a year pays the same amount of money in sales tax as someone who makes 1 million per year?

If so you sure do have some fuzzy math.

Fair tax = everyone is on equal footing. There is nothing "FAIR" about people who make more being exempt from rebates/pre-bates. IF you want a Fair tax. Everyone pays the same percentage of their income regardless of income level. The people that use the most government assistance pay little or nothing into it. People that never need the service pay the most for it. That isn't fair.

 

[Deudalus]

It's a definitely intriguing idea... tax people on what they consume and not on what they produce (essentially what income tax is). It would be interesting to see what sales tax rate would be required to raise the same amount of revenue.

Roughly 18% from everything that I have read and understand.

 

[Deudalus]

Fair tax = everyone is on equal footing. There is nothing "FAIR" about people who make more being exempt from rebates/pre-bates. IF you want a Fair tax. Everyone pays the same percentage of their income regardless of income level. The people that use the most government assistance pay little or nothing into it. People that never need the service pay the most for it. That isn't fair.

Another fair point was made to extend a pre-bate for necessities to every household based on the amount of people living there.

That would be perfectly fine for me.