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Replacement tax proposal at www.fairtax.org

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Thanks tss4. That makes sense.

I do want to point out the "drug dealer" phrase. I got it from a local political ad where the candidates were going tit for tat about the sales tax. It's a propaganda phrase. A lot of people just trying to eek bye unreport their income like waiters, small time lawn care, ebay sellers, etc. They should pay tax too, but the "image" is entirely different.

Politically I think it's a super hot potato. It would give political opponents a lot of ammo whether it be the truth, misleading or a lie. Also I think sales tax is commonly seen as regressive. I would be surprised if this is the tax reform. A flat tax is much more palatable.
 
I agree, I think its more likely that bush will simplify the current system resulting in a flatter tax burden. This proposed sales tax just seems like such a leap form our current system. But, we'll see.
 
Just want to compliment everyone - this is turning out to be a good, civil bipartisan thread!
 
Originally posted by: irwincur
Why not, the people that want it are clearly in power.
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That's the thing. They don't really want it, they just want to act like they do. I predict this bill will sit in committee for a very long time.

Furthermore, this is not the only alternative tax scheme that has been brought up. Numerous alternative tax schemes within the past couple decades have been introduced, and none of them have gone anywhere. There is simply too much power to be had by having an enormously complex tax code. Not only is this a great boon to tax lawyers, and big tax return preperation firms like H&R Block, but it is an enormous tool for pandering to special interests.

To think the politicians are just going to throw this in the trashcan conjurs up the old saying: "I'll believe it when I see it."
 
A sales tax would kill most investments. Whos going to want to build a new say reasturant when they have to pay 25% tax on all food, on the building, on the stove, on the there equipment. Lets guess the resturant cost 1 million in taxable purchases before they see there first dollar. let also assume the resturant down the street has been open long enough to not be effected by still paying off the tax on the originial investment. Say both have 10,000 taxable purchases a year. Now one reasturant will pay 252500 in tax the first year. The other reasturant will pay 2500 dollars in tax. Who is going to want to risk opening a restrant when the majortity of the tax burdan is payed before you make a dime.

With the current system I would go out and build another reastruant to keep my taxes down. The current system rewards investment and punishes cashing out, the fair tax rewards cashing out and discoruages investment. Which is bad for the economy.
 
Originally posted by: conjur
It will hit those with lower income much more than those with higher income. Unless a credit is issued back for those making under, say, $40k/yr or higher if they have a family.
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yeah, i was wondering about that myself.

youd have this federal sales tax and a local sales tax when purchasing goods, plus if yor state takes out income taxes, youre still hit with that.

seems kind of flimsy to me....
 
Whos going to want to build a new say reasturant when they have to pay 25% tax on all food, on the building, on the stove, on the there equipment.

Read through it before you make a decision. Business to business transactions aren't taxed.
 
Originally posted by: conjur
Originally posted by: ajf3
They can predict all they want but if someone is going to have to pay an extra $4-5k on, say, buying a new car or an extra $20-30k on a new home, it's going to hurt.

Thats the point your missing. You might be paying an extra 4-5k on a car when you buy it, but you haven't been taxed on the money you're using yet. When you buy that car now, you probably already paid several thousands of dollars in taxes on the money you use to buy it. PLUS - the market price of the car will actually fall due to the lower overhead the corp who built it has - and the fact that they don't have to pay corp taxes to build it.

You're paying it one way or the other - this way is just better due to simplification.
Click to expand...
But, the point you're missing is that most people spend what they get. When it comes time to buy that car, they won't have that extra $4-5k and will end up financing that amount.
Click to expand...

And that's somehow not their own fault? I for one would have an additional 15K/yr to throw around in income tax alone. So, if I set that aside in a bank account, I can buy a brand new car outright every 1 1/2 years!.
 
Originally posted by: JoLLyRoGer
Originally posted by: conjur
Originally posted by: ajf3
They can predict all they want but if someone is going to have to pay an extra $4-5k on, say, buying a new car or an extra $20-30k on a new home, it's going to hurt.

Thats the point your missing. You might be paying an extra 4-5k on a car when you buy it, but you haven't been taxed on the money you're using yet. When you buy that car now, you probably already paid several thousands of dollars in taxes on the money you use to buy it. PLUS - the market price of the car will actually fall due to the lower overhead the corp who built it has - and the fact that they don't have to pay corp taxes to build it.

You're paying it one way or the other - this way is just better due to simplification.
Click to expand...
But, the point you're missing is that most people spend what they get. When it comes time to buy that car, they won't have that extra $4-5k and will end up financing that amount.
Click to expand...

And that's somehow not their own fault? I for one would have an additional 15K/yr to throw around in income tax alone. So, if I set that aside in a bank account, I can buy a brand new car outright every 1 1/2 years!.
Click to expand...

What a hoot. If you set it aside in a bank account, you are going to have to pay inflation tax.
 
Originally posted by: Dissipate
Originally posted by: JoLLyRoGer
Originally posted by: conjur
Originally posted by: ajf3
They can predict all they want but if someone is going to have to pay an extra $4-5k on, say, buying a new car or an extra $20-30k on a new home, it's going to hurt.

Thats the point your missing. You might be paying an extra 4-5k on a car when you buy it, but you haven't been taxed on the money you're using yet. When you buy that car now, you probably already paid several thousands of dollars in taxes on the money you use to buy it. PLUS - the market price of the car will actually fall due to the lower overhead the corp who built it has - and the fact that they don't have to pay corp taxes to build it.

You're paying it one way or the other - this way is just better due to simplification.
Click to expand...
But, the point you're missing is that most people spend what they get. When it comes time to buy that car, they won't have that extra $4-5k and will end up financing that amount.
Click to expand...

And that's somehow not their own fault? I for one would have an additional 15K/yr to throw around in income tax alone. So, if I set that aside in a bank account, I can buy a brand new car outright every 1 1/2 years!.
Click to expand...

What a hoot. If you set it aside in a bank account, you are going to have to pay inflation tax.
Click to expand...

Inflation Tax? Your stretching a little. There are quite a few ways to invest so that you beat inflation, yet can keep your the money fairly liquid. And there would be no tax on the earnings.
 
Originally posted by: Genesys
Originally posted by: conjur
It will hit those with lower income much more than those with higher income. Unless a credit is issued back for those making under, say, $40k/yr or higher if they have a family.
Click to expand...

yeah, i was wondering about that myself.

youd have this federal sales tax and a local sales tax when purchasing goods, plus if yor state takes out income taxes, youre still hit with that.

seems kind of flimsy to me....
Click to expand...

Please read it before jumping to conclusions. Everyone gets a credit for the tax they would pay up to the poverty level. So, you're tax free to the poverty level (which is something like 12k). So if you spent ALL of the 48k you earned in a year, you would pay 3/4 of the 23% on the 48k which is an effective tax rate of about 17%. This system appears to hit the upper middle class where they are likely to not be able to take advantage of the mortgage rate deduction anymore. Lower and middle class should do pretty well under this system.
 
Originally posted by: tss4
Originally posted by: Dissipate
Originally posted by: JoLLyRoGer
Originally posted by: conjur
Originally posted by: ajf3
They can predict all they want but if someone is going to have to pay an extra $4-5k on, say, buying a new car or an extra $20-30k on a new home, it's going to hurt.

Thats the point your missing. You might be paying an extra 4-5k on a car when you buy it, but you haven't been taxed on the money you're using yet. When you buy that car now, you probably already paid several thousands of dollars in taxes on the money you use to buy it. PLUS - the market price of the car will actually fall due to the lower overhead the corp who built it has - and the fact that they don't have to pay corp taxes to build it.

You're paying it one way or the other - this way is just better due to simplification.
Click to expand...
But, the point you're missing is that most people spend what they get. When it comes time to buy that car, they won't have that extra $4-5k and will end up financing that amount.
Click to expand...

And that's somehow not their own fault? I for one would have an additional 15K/yr to throw around in income tax alone. So, if I set that aside in a bank account, I can buy a brand new car outright every 1 1/2 years!.
Click to expand...

What a hoot. If you set it aside in a bank account, you are going to have to pay inflation tax.
Click to expand...

Inflation Tax? Your stretching a little. There are quite a few ways to invest so that you beat inflation, yet can keep your the money fairly liquid. And there would be no tax on the earnings.
Click to expand...

Indeed, a bank account is not one of them though. Banks inflate the currency, causing prices to rise, this is a transfer of wealth from us to the banks.

The banks are guaranteed billions of dollars in interest every year, almost completely risk free. How is this possible? The enormous leverage granted to them by government of being allowed to loan out 10 dollars for every 1 dollar deposited. Hence, by putting money in a bank account, you are increasing the inflation tax on yourself.
 
Originally posted by: Dissipate

Indeed, a bank account is not one of them though. Banks inflate the currency, causing prices to rise, this is a transfer of wealth from us to the banks.

The banks are guaranteed billions of dollars in interest every year, almost completely risk free. How is this possible? The enormous leverage granted to them by government of being allowed to loan out 10 dollars for every 1 dollar deposited. Hence, by putting money in a bank account, you are increasing the inflation tax on yourself.
Click to expand...

the gov't shouldn't be printing so much money. the banks are rather neutral in terms of causing the expansion of the money supply.
 
Originally posted by: cjchaps
So, what would be the incentive for people or companies to make charitable contributions?
Click to expand...

turns out that tax reasons don't seem to be the biggest reason. when the tax incentives to contribute decreased recently, charitable donations actually went up. the speculation in the journal was that people with tons of money that make most of these charitable donations are more concerned with how their are viewed by their social peers than with getting a tax break.
 
Originally posted by: Dissipate
Originally posted by: tss4
Originally posted by: Dissipate
Originally posted by: JoLLyRoGer
Originally posted by: conjur
Originally posted by: ajf3
They can predict all they want but if someone is going to have to pay an extra $4-5k on, say, buying a new car or an extra $20-30k on a new home, it's going to hurt.

Thats the point your missing. You might be paying an extra 4-5k on a car when you buy it, but you haven't been taxed on the money you're using yet. When you buy that car now, you probably already paid several thousands of dollars in taxes on the money you use to buy it. PLUS - the market price of the car will actually fall due to the lower overhead the corp who built it has - and the fact that they don't have to pay corp taxes to build it.

You're paying it one way or the other - this way is just better due to simplification.
Click to expand...
But, the point you're missing is that most people spend what they get. When it comes time to buy that car, they won't have that extra $4-5k and will end up financing that amount.
Click to expand...

And that's somehow not their own fault? I for one would have an additional 15K/yr to throw around in income tax alone. So, if I set that aside in a bank account, I can buy a brand new car outright every 1 1/2 years!.
Click to expand...

What a hoot. If you set it aside in a bank account, you are going to have to pay inflation tax.
Click to expand...

Inflation Tax? Your stretching a little. There are quite a few ways to invest so that you beat inflation, yet can keep your the money fairly liquid. And there would be no tax on the earnings.
Click to expand...

Indeed, a bank account is not one of them though. Banks inflate the currency, causing prices to rise, this is a transfer of wealth from us to the banks.

The banks are guaranteed billions of dollars in interest every year, almost completely risk free. How is this possible? The enormous leverage granted to them by government of being allowed to loan out 10 dollars for every 1 dollar deposited. Hence, by putting money in a bank account, you are increasing the inflation tax on yourself.
Click to expand...

Ok, so I'm missing your point here. Are you criticizing the fairtax proposal somehow or are you just making the point that one shouldn't put money in the bank?
 
Just more illusions from the masters of smoke and mirrors.

Who benefits most? People not spending much of their income on taxable items. No tax on real estate, stocks, bonds and other financial instruments. No tax on company cars, jets, yachts. What part of the population is that, anyway?

It also ignores the necessity of actually raising taxes in order to meet expenditures. One third of all non-SS federal expenditures are made on borrowed money, and that can't go on forever. Nor has any rightwinger ever accepted my challenge to outline a politically acceptable balanced budget that doesn't include tax increases...

Under the proposed scenario, who'll accept the brunt of such increases? Not people who spend a relatively small % of their income on taxable items, that's for sure...

 
Originally posted by: ElFenix
Originally posted by: Dissipate

Indeed, a bank account is not one of them though. Banks inflate the currency, causing prices to rise, this is a transfer of wealth from us to the banks.

The banks are guaranteed billions of dollars in interest every year, almost completely risk free. How is this possible? The enormous leverage granted to them by government of being allowed to loan out 10 dollars for every 1 dollar deposited. Hence, by putting money in a bank account, you are increasing the inflation tax on yourself.
Click to expand...

the gov't shouldn't be printing so much money. the banks are rather neutral in terms of causing the expansion of the money supply.
Click to expand...

They are not neutral at all.

Text
 
One downside i see is jobs. The IRS code for as cumbersome as it is creates thouseands of jobs. All of you are mentinoing that companies will save on overhead. Well those savings on overhead are coming by someone being fired because they are no longer needed to do their job.
 
Originally posted by: gutharius
One downside i see is jobs. The IRS code for as cumbersome as it is creates thouseands of jobs. All of you are mentinoing that companies will save on overhead. Well those savings on overhead are coming by someone being fired because they are no longer needed to do their job.
Click to expand...

That should be the last thing to consider. If they are not needed, we are saving money, making the government more effecient.
 
These are not government jobs here. These are private sector jobs. Jobs and careers people like you and me piad thousands in student loans in order to get a college education just to get these jobs. I am not for complication of the tax code but I certainly know we DO NOT need more people on unemployment.
 
Originally posted by: gutharius
These are not government jobs here. These are private sector jobs. Jobs and careers people like you and me piad thousands in student loans in order to get a college education just to get these jobs. I am not for complication of the tax code but I certainly know we DO NOT need more people on unemployment.
Click to expand...

I thought you were talking about IRS jobs, my bad. Anyways, about the private sector jobs that would be affected by a change(CPAs), change your line of work. Back in the day, blacksmiths were probably very common, do you know any today? Times change, you got to evolve, it's life.
 
Originally posted by: gutharius
These are not government jobs here. These are private sector jobs. Jobs and careers people like you and me piad thousands in student loans in order to get a college education just to get these jobs. I am not for complication of the tax code but I certainly know we DO NOT need more people on unemployment.
Click to expand...

These jobs are not regular jobs. These jobs are jobs that suck the life out of the rest of the economy, these are jobs that we want to eliminate. Yes they are jobs in the free market, but why do they exist? They only exist because of government legislation. Hence, the free market would dispense with these jobs very quickly if it were not for the tax code. These jobs do not create wealth as regular jobs do, they destroy it.
 
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