FairTax Plan

[HeroOfPellinor]

Originally posted by: DrPizza

Originally posted by: Queasy
AGAIN - the price of goods will stay approximately the same because the cost of goods will drop. Companies will see a savings of ~20-25% in producing goods because they no longer have to worry about spending time and money complying with federal tax laws. Also, the Fair Tax only applies to new goods. Used goods are exempt because they were already taxed once.

Now imagine you are a business owner and you hear that there is a place where you don't have to worry about tax laws and can concentrate on making your product. Where do you think you'd like to set up shop? Country A with thousands of nigh indecipherable tax laws or Country B with none?

That 20 - 25% figure is one of the biggest exaggerations I've seen. Are you suggesting that 1/5 of the workforce at a company is involved in complying with federal tax laws?? In fact, it'd have to be more than 20%, because a companies costs also include raw materials for whatever product they're making. Are there major costs other than accountants (and a lot of paper and a few computer programs) to comply with tax laws?

edit: I'd believe 2.0 to 2.5%
Maybe there's a decimal missing?

25% may be high but 2.0% is very low. When you consider the man-hours not only in accounting but also human resources and lawyers and consulatants in determining the proper worker comp classification and state and county jurisdictions and the man-hours and consequential mark up of the systems built to accomodate the myraid iterations of taxation and you can start to see it adding up to over 10% easy.

That's not including the sheer tax savings from payroll taxes which comprise another, what 17-20%.

I'm not sure if this is quite the correct approach. I like the idea of a simplified and more fair system. but there are a few too many variables in this system for me to be comfortable with it.

I am sure, however, that you'll not find a rational and intelligent discussion about it here. We've already had The Patriot Act brought up into the discussion.

 

[Rangoric]

How would this get rid of the IRS? And why do people think businesses will be able to fire their accountants?

Who will collect that money?
Who will do the numbers for a business to determine how much they owe the governement?

 

[jackace]

IMO Corporate America should be responsible for more of this countries tax revenue. Yes they pass those costs on to consumers, but then we have a choice to save our money or spend it and be taxed.

With the current system me personally I get taxed on all the money I make BEFORE any of my expenses are factored into the equation. Corporate Tax allows the corporation to subtract all expenses FIRST then pay tax on what's left. It's easy for a large corporation to "find" all sorts of expenses when it comes time to pay there taxes. These problems are easily seen. Just look at the army of accountants and lawyers most of these corporations employ for the sole purpose of avoiding paying taxes.

 

[drinkmorejava]

The major flaw in the idea is that just because a company saves 25% of their total cost they assume this will mean a product will be significantly cheaper. Say a random product sells for $2.50 and is at equilibrium in a perfectly competative market. $1 is raw resources, $2 is labor, and $0.50 is operating costs including tax compliance. What happens when the company cuts 25% of their operating costs, you get 50 cents x 25% = 12.5 cents which equals .9%. For almost all consumer goods, the capital costs, raw resources, manufacturing labor, and profit markup >>>>>>>than all other operating costs.

 

[Jack Ryan]

There was a time where I thought this was the greatest idea ever. After much research and discussion with family and friends, I don't think this is feasible. Not only do I think it is not a good idea, it will never happen because of all the retired people who would now have to pay tax (by spending) on their "tax free" retirement accounts, amongst other things.

A better option is a flat tax.

 

[DougK62]

I like the idea of a clear-cut "fair" tax, but I don't think we'll see it in my lifetime.

 

[Brainonska511]

Originally posted by: Jack Ryan
There was a time where I thought this was the greatest idea ever. After much research and discussion with family and friends, I don't think this is feasible. Not only do I think it is not a good idea, it will never happen because of all the retired people who would now have to pay tax (by spending) on their "tax free" retirement accounts, amongst other things.

A better option is a flat tax.

How about keeping the progressive tax but making it so that no matter what your source of income is, it is taxed within a certain bracket (no exclusions or lower rates for capital gains and stuff) and have a limited number of tax deductible items, such as college expenses, charitable donations, and a handful of other things that are worthy of such deductions?

I'm against a flat tax just for the reason that it is more unfair on those that make less money. 25% taken out for taxes for someone making $30,000/yr is worth more (marginal utility wise) compared to the person making $200,000/yr

 

[XMan]

Originally posted by: jackace
IMO Corporate America should be responsible for more of this countries tax revenue. Yes they pass those costs on to consumers, but then we have a choice to save our money or spend it and be taxed.

Corporate America doesn't pay taxes - increase their taxes, they will increase what they charge their customers to continue their business models.

Eliminating those taxes wouldn't automatically reduce their prices, but the FairTax crowd has committment from a few larger retailers that they would do so, and help drive the market forces downward.

 

[Jack Ryan]

Originally posted by: Brainonska511

Originally posted by: Jack Ryan
There was a time where I thought this was the greatest idea ever. After much research and discussion with family and friends, I don't think this is feasible. Not only do I think it is not a good idea, it will never happen because of all the retired people who would now have to pay tax (by spending) on their "tax free" retirement accounts, amongst other things.

A better option is a flat tax.

How about keeping the progressive tax but making it so that no matter what your source of income is, it is taxed within a certain bracket (no exclusions or lower rates for capital gains and stuff) and have a limited number of tax deductible items, such as college expenses, charitable donations, and a handful of other things that are worthy of such deductions?

I'm against a flat tax just for the reason that it is more unfair on those that make less money. 25% taken out for taxes for someone making $30,000/yr is worth more (marginal utility wise) compared to the person making $200,000/yr

So basically leaving it how it is? No thanks.

The argument of 25% being unfair to people who make less is BS to me. The person making 30K a year would pay 7.5K but the 200K person would pay 50K???? Sorry, that already isn't fair, to the person making 200K! Why would the person making 30K complain about this?

To be truly "fair", each person should pay a set tax, set as in 10K a year or whatever, to be a part of this glorious country. Tax PER PERSON, not income. Now we know that will never happen, so at least tax income equally percentage wise.

 

[smack Down]

Originally posted by: Jack Ryan

Originally posted by: Brainonska511

Originally posted by: Jack Ryan
There was a time where I thought this was the greatest idea ever. After much research and discussion with family and friends, I don't think this is feasible. Not only do I think it is not a good idea, it will never happen because of all the retired people who would now have to pay tax (by spending) on their "tax free" retirement accounts, amongst other things.

A better option is a flat tax.

How about keeping the progressive tax but making it so that no matter what your source of income is, it is taxed within a certain bracket (no exclusions or lower rates for capital gains and stuff) and have a limited number of tax deductible items, such as college expenses, charitable donations, and a handful of other things that are worthy of such deductions?

I'm against a flat tax just for the reason that it is more unfair on those that make less money. 25% taken out for taxes for someone making $30,000/yr is worth more (marginal utility wise) compared to the person making $200,000/yr

So basically leaving it how it is? No thanks.

The argument of 25% being unfair to people who make less is BS to me. The person making 30K a year would pay 7.5K but the 200K person would pay 50K???? Sorry, that already isn't fair, to the person making 200K! Why would the person making 30K complain about this?

To be truly "fair", each person should pay a set tax, set as in 10K a year or whatever, to be a part of this glorious country. Tax PER PERSON, not income. Now we know that will never happen, so at least tax income equally percentage wise.

Taxes are not supposed to be fair and by definition can't be fair. A fair tax would be 100% voluntary but that wouldn't work because then on one is going to pay it.

 

[smack Down]

Originally posted by: XMan

Originally posted by: jackace
IMO Corporate America should be responsible for more of this countries tax revenue. Yes they pass those costs on to consumers, but then we have a choice to save our money or spend it and be taxed.

Corporate America doesn't pay taxes - increase their taxes, they will increase what they charge their customers to continue their business models.

Eliminating those taxes wouldn't automatically reduce their prices, but the FairTax crowd has committment from a few larger retailers that they would do so, and help drive the market forces downward.

Complete and utter BS that corporate America doesn't pay taxes. They are already selling products at a price that will give them the highest amount of profit and if they tried to pass on tax it by increasing price it would reduce not increase their profits. Think about is a hamburger worth a dollar more to you because McDonald's has to pay a tax?

 

[SampSon]

Go read the studies by the Fair Tax group and decide for yourself.

If the Fair Tax were passed, companies would be forced to lower their prices accordingly to stay competitive AND because the public would be aware that these companies are seeing cost savings. All it would take is one company to drop their prices and the rest would follow.

I read the two PDF studies listed in the business section of the fairtax.org site and I don't buy that for one hot minute.

 

[mugs]

Originally posted by: smack Down

Taxes are not supposed to be fair and by definition can't be fair. A fair tax would be 100% voluntary but that wouldn't work because then on one is going to pay it.

How can you say that a fair tax would be 100% voluntary? We all have some say in how our money is spent, and we all benefit from at least some of the expenditures of the government. Would you say that in order for Walmart to be fair they'd have to make payment 100% voluntary? Mandatory taxes are not inherently unfair.




Does anyone have an answer for this?

Originally posted by: mugs
How would the FairTax plan handle someone who has a lot of money in savings? Seems like I'd be paying a huge sales tax on top of the huge income tax I already paid on that money.

 

[smack Down]

Originally posted by: mugs

Originally posted by: smack Down

Taxes are not supposed to be fair and by definition can't be fair. A fair tax would be 100% voluntary but that wouldn't work because then on one is going to pay it.

How can you say that a fair tax would be 100% voluntary? We all have some say in how our money is spent, and we all benefit from at least some of the expenditures of the government. Would you say that in order for Walmart to be fair they'd have to make payment 100% voluntary? Mandatory taxes are not inherently unfair.

At walmart the payment is 100% voluntary. If I want don't want the item or the price I don't pay for it.

 

[mugs]

Originally posted by: smack Down

Originally posted by: mugs

Originally posted by: smack Down

Taxes are not supposed to be fair and by definition can't be fair. A fair tax would be 100% voluntary but that wouldn't work because then on one is going to pay it.

How can you say that a fair tax would be 100% voluntary? We all have some say in how our money is spent, and we all benefit from at least some of the expenditures of the government. Would you say that in order for Walmart to be fair they'd have to make payment 100% voluntary? Mandatory taxes are not inherently unfair.

At walmart the payment is 100% voluntary. If I want don't want the item or the price I don't pay for it.

Did you read any of my post other than the part about Walmart?

 

[ElFenix]

Originally posted by: DrPizza

That 20 - 25% figure is one of the biggest exaggerations I've seen. Are you suggesting that 1/5 of the workforce at a company is involved in complying with federal tax laws?? In fact, it'd have to be more than 20%, because a companies costs also include raw materials for whatever product they're making. Are there major costs other than accountants (and a lot of paper and a few computer programs) to comply with tax laws?

edit: I'd believe 2.0 to 2.5%
Maybe there's a decimal missing?

you're neglecting to remove the cost of income taxes, payroll taxes, blah blah, in addition to the overhead of administering the current tax regime.

obviously, your employer is willing to pay you anything lower than what they're currently paying you (including the portion of payroll taxes levied on them), and you'd be willing to work for anything above what you're currently being paid after income and payroll taxes. presumably, you'd wind up somewhere in the middle.

 

[XMan]

Originally posted by: smack Down

Originally posted by: XMan

Originally posted by: jackace
IMO Corporate America should be responsible for more of this countries tax revenue. Yes they pass those costs on to consumers, but then we have a choice to save our money or spend it and be taxed.

Corporate America doesn't pay taxes - increase their taxes, they will increase what they charge their customers to continue their business models.

Eliminating those taxes wouldn't automatically reduce their prices, but the FairTax crowd has committment from a few larger retailers that they would do so, and help drive the market forces downward.

Complete and utter BS that corporate America doesn't pay taxes. They are already selling products at a price that will give them the highest amount of profit and if they tried to pass on tax it by increasing price it would reduce not increase their profits. Think about is a hamburger worth a dollar more to you because McDonald's has to pay a tax?

They're ALREADY passing the cost of their taxes on. Think about it. Where do they get money to pay taxes from? The tax fairy?

 

[JS80]

Originally posted by: Sunrise089
The plan is wonderful. People jump on it though without understanding the details...but what can you expect in this partisan age?

One thing to always ask Fairtax critics: they nearly always through out this "It helps the rich and is regressive" argument. Go ahead and ask them how a plan that MAKES THE POOR PAY ZERO NET TAXES is somehow "anti-poor".

The prebate in the Fairtax was genius, or would be in a rational world. Unfortunately there is nothing guaranteeing political opponents of the Fairtax act like rational human beings, so they've decided to take a "ignore and lie" strategy.

it's anti-poor because you're supposed take money from the middle class and hand them over to the poor so they can vote for you. Democracy at it's finest. Take a look at how well democracy is working in Venezuela!

 

[JS80]

Originally posted by: silverpig

Originally posted by: redly1
sounds like a good way to tank the economy

That's what it seems like to me too.

Say a family makes $40k. They're better off with no income taxes, and can buy what they need without tax, and then get taxed heavily on the "extras". As people like the extras, they'll probably spend their extra cash on them, keeping the economy up.

Now picture a business owner worth $10 mil. He's smart and reinvests his money tax free and just gets richer. Because he can invest tax free and because buying a Corvette is now 30% more expensive, he'll be smart and invest rather than spend.

What's more, when this guy decides to buy that summer house with the convertible, he'll buy the place in another country at a 30% discount. I'm sure there'd be duty charges to get it into the US, but why couldn't he buy, register, and "keep" it in Canada?

GDP = consumption + investment + (government spending) + (exports - imports)

Take economics first, then opine.

 

[Engineer]

Originally posted by: SampSon

Go read the studies by the Fair Tax group and decide for yourself.

If the Fair Tax were passed, companies would be forced to lower their prices accordingly to stay competitive AND because the public would be aware that these companies are seeing cost savings. All it would take is one company to drop their prices and the rest would follow.

I read the two PDF studies listed in the business section of the fairtax.org site and I don't buy that for one hot minute.

I tend to agree. I just don't see the 20 to 25% of the current costs of business as being income taxes. We, the employee, pays the income tax (payroll taxes), not the business. Sure, they have certain accounting fees but it's not close to 20-25%. IMO, BS.

 

[ElFenix]

Originally posted by: jackace
IMO Corporate America should be responsible for more of this countries tax revenue. Yes they pass those costs on to consumers, but then we have a choice to save our money or spend it and be taxed.

With the current system me personally I get taxed on all the money I make BEFORE any of my expenses are factored into the equation. Corporate Tax allows the corporation to subtract all expenses FIRST then pay tax on what's left. It's easy for a large corporation to "find" all sorts of expenses when it comes time to pay there taxes. These problems are easily seen. Just look at the army of accountants and lawyers most of these corporations employ for the sole purpose of avoiding paying taxes.

first, what you're proposing is a revenue tax, not an income tax. if a business that makes pencils buys wood and graphite, then makes those into pencils, and sells them 1% over cost, then what is their income? that 1% over cost. but you would not tax that, you'd tax their gross receipts. good luck having all those low-margin businesses around anymore.

corporations have a much easier time hiding revenue and avoiding taxes than anyone else. additionally, it's not consumers, nor is it shareholders, that pay for the corporate income tax. that only leaves employees, and guess which employees are getting hit with the lion's share?

Originally posted by: Jack Ryan

To be truly "fair", each person should pay a set tax, set as in 10K a year or whatever, to be a part of this glorious country. Tax PER PERSON, not income. Now we know that will never happen, so at least tax income equally percentage wise.

and you would create the worst economy in the history of the world doing that.

Originally posted by: Engineer

I tend to agree. I just don't see the 20 to 25% of the current costs of business as being income taxes. We, the employee, pays the income tax (payroll taxes), not the business. Sure, they have certain accounting fees but it's not close to 20-25%. IMO, BS.

no, you both pay the income taxes. and whoever has the lower elasticity pays more of it. just because the legal burden is on you doesn't mean that you're actually paying all of that. if there was no income tax, you would expect to make more than your after tax and your employer would expect to pay less than your pre-tax.

 

[techs]

HaHa. Someone found that web page again.
Short version....it is a gimmick to switch the cost of running our country away from the super wealthy and onto the middle class.
Studies were done and guess what?
The super rich don't purchase goods in anywhere near the proportion to their income.
Short versio....it would have saved Bill Gates 12 Billion according to estimates a few years back when that website was posted.
Guess who will then pay that 12 Billion.
You guessed it. You and I.

 

[JS80]

Originally posted by: techs
HaHa. Someone found that web page again.
Short version....it is a gimmick to switch the cost of running our country away from the super wealthy and onto the middle class.
Studies were done and guess what?
The super rich don't purchase goods in anywhere near the proportion to their income.
Short versio....it would have saved Bill Gates 12 Billion according to estimates a few years back when that website was posted.
Guess who will then pay that 12 Billion.
You guessed it. You and I.

super wealthy don't pay tax to begin with, what's the diff?

 

[Jack Ryan]

Originally posted by: ElFenix

Originally posted by: Jack Ryan

To be truly "fair", each person should pay a set tax, set as in 10K a year or whatever, to be a part of this glorious country. Tax PER PERSON, not income. Now we know that will never happen, so at least tax income equally percentage wise.

and you would create the worst economy in the history of the world doing that.

Hey you know what, I'll make some outrageous claims too...

Pigs fly... hell is frozen... the sky is red....

I win!

 

[smack Down]

Originally posted by: XMan

Originally posted by: smack Down

Originally posted by: XMan

Originally posted by: jackace
IMO Corporate America should be responsible for more of this countries tax revenue. Yes they pass those costs on to consumers, but then we have a choice to save our money or spend it and be taxed.

Corporate America doesn't pay taxes - increase their taxes, they will increase what they charge their customers to continue their business models.

Eliminating those taxes wouldn't automatically reduce their prices, but the FairTax crowd has committment from a few larger retailers that they would do so, and help drive the market forces downward.

Complete and utter BS that corporate America doesn't pay taxes. They are already selling products at a price that will give them the highest amount of profit and if they tried to pass on tax it by increasing price it would reduce not increase their profits. Think about is a hamburger worth a dollar more to you because McDonald's has to pay a tax?

They're ALREADY passing the cost of their taxes on. Think about it. Where do they get money to pay taxes from? The tax fairy?

Where they get the money doesn't matter. The price of the good would be the same with and with out the tax. The tax simple decreases the corporations profit.