FairTax: is it fair and could it work?

[Cuddy_Duck]

Do any members support the proposal? If so, would they care to explain their reasons?

Likewise for members who oppose.

This link to wikipeida explains the proposed system.

en.wikipedia.org/wiki/FairTax

 

[St_Francis]

I have read the book and I like the idea. People would pay a rate similar to what they pay now, and receive a monthly “prebate” which would cover the taxes paid for the necessities of life. The government would have the work of auditing reduced by a huge percentage, and many resources would be opened up for companies as they would not have to work around an incredibly complex tax code.

Plus, the government would lose a way of manipulating us

 

[rlg94086]

It is fair…not sure if it would work

Things I like about it:

• Lessens consumerism
• Makes taxes more visible
• Simplifies the tax process
• Makes the US a tax haven for business, which might reverse the movement off-shore
  What I am concerned about is what the change in our consumer habits might have on the economy. I know for me, because I am frugal, my taxes would be much, much lower. Used items aren’t taxed. I have no problem buying used. Would more people buying used, keeping things longer, etc. cause a large enough decrease in the purchase of new goods to affect the economy adversely?

BTW…the better link to check it out is the Fair Tax site. The FAQ site is particularly helpful: fairtax.org/site/PageServer?pagename=about_faq

 

[blessedtoo]

Would more people buying used, keeping things longer, etc. cause a large enough decrease in the purchase of new goods to affect the economy adversely?

%between%

Think about how happy that would make the “earth is dying” crowd! All that recycling of goods?

 

[ribozyme]

Think about how happy that would make the “earth is dying” crowd! All that recycling of goods?

I am more concerned about population control. Poverty seems to be an insurmountable menace to challenge and it will be harder to dent it when there are more people in poverty. Of course, less people will not stress the biosphere that much.

A right wing political agenda isn’t going to change my pessimistic view regarding the world.

 

[Exalt]

Do any members support the proposal? If so, would they care to explain their reasons?

Likewise for members who oppose.

This link to wikipeida explains the proposed system.

en.wikipedia.org/wiki/FairTax

It is a regressive tax where it matters most - high brackets of income.

You tax the middle class, four-person families the most money, percentage wise, and you let the rich get off with paying much less than they do now.

That is downright immoral.

 

[Ridgerunner]

It is a regressive tax where it matters most - high brackets of income.

You tax the middle class, four-person families the most money, percentage wise, and you let the rich get off with paying much less than they do now.

That is downright immoral.

It seems to me many of the very wealthy manage to avoid their “fair share” of taxation anyway, no matter what, and the middle classes, being collectively the greatest tax resource, always end up paying the bulk of the taxes.

This proposal at least gives middle class people some element of control over the taxes they pay; something presently only the wealthy enjoy.

It really is initeresting to consider the possibility that the quality of goods might improve if used goods are not subject to the tax. For something “used” to be useful, it has to last. I’m not much of a consumer myself, but I do buy a fair number of tools and equipment. The best stuff is almost always American in origin (if it can be found) Some elements of what often seems a “throwaway economy” in which a person goes through a succession of cheap, largely foreign, goods that fall apart, might be discouraged.

If “taxing the wealthy” really matters, it seems to me they will pay a reasonable share. Some few wealthy people don’t spend any more than middle class people do. Small businessmen, at least in my experience, seem particularly that way. But the truly wealthy spend a lot. I go through a ritzy shopping area, and it takes my breath away to see the cost of some of that stuff and the number of very well dressed people throwing money at it. I drive a used BMW (They’re actually pretty cheap for what they are. I bought a 7 series program car with 30,000 miles on it for less than the cost of a new Chevy mid-sized car.) Going into the dealership for the occasional repair, I just can’t believe the sticker prices on the new ones. But people are there just the same, laying out $80,000 or $90,000 for four wheels to drive around. I don’t think we have to worry too much about whether the rich will spend money.

 

[mary_bobo]

I have read the book and I like the idea. People would pay a rate similar to what they pay now, and receive a monthly “prebate” which would cover the taxes paid for the necessities of life. The government would have the work of auditing reduced by a huge percentage, and many resources would be opened up for companies as they would not have to work around an incredibly complex tax code.

Plus, the government would lose a way of manipulating us

It would also bring in revenue from those sources that now avoid taxes, the under the table jobs.

 

[buffalo]

Think about how happy that would make the “earth is dying” crowd! All that recycling of goods?

Not having to print the tax code would save trees! Many trees! It would also help with the global warming issues as Congress would have nothing to argue about! Tax preparers will not be happy as most of them are just filling out forms.

 

[Jolly_Joe]

Actually, that’s one thing it very much wouldn’t do. Why would you think a contractor who avoids paying Income tax on his income would magically start to pay sales tax on his sales? He won’t.

There is also the massive loophole of exempting business. It make sense, but at the same time. You would be amazed how many things would be bought for business and used by the consumer just to avoid the tax. Which again is done now too.

That’s one thing that concerns me about the proposal is I don’t know if the proponents actually are so gullible they believe what they say or if they are lying, but in any case, real world wouldn’t be quite as perfect as they present.

This is not to mention the rate they use is not high enough to do what they claim it will, but they use the old the economy will grow enough to make up the difference arguement.

Also, they present it as a different rate than it is. I thing without looking they say it’s a 23% tax, but it’s not. You pay 23 cents out of a dollar or 23 cents of tax on 77 cents of consumption which is really close to a 30% tax rate.

I get nervous when people seem to be trying to deceive me in order to get my support. I know it’s pretty common but it doesn’t seem like a good sign, because if I can catch some obvious things, what am I missing that’s not so obvious?

JJ

 

[Ridgerunner]

Also, they present it as a different rate than it is. I thing without looking they say it’s a 23% tax, but it’s not. You pay 23 cents out of a dollar or 23 cents of tax on 77 cents of consumption which is really close to a 30% tax rate.

JJ

That’s like saying I presently pay 30 cents out of 70 cents of income that I can spend on consumption, so my supposed 30% tax rate is really 43%.

Neither is true.

 

[stinkcat_14]

I am more concerned about population control. Poverty seems to be an insurmountable menace to challenge and it will be harder to dent it when there are more people in poverty. Of course, less people will not stress the biosphere that much.

A right wing political agenda isn’t going to change my pessimistic view regarding the world.

Of course, the US and China have below average fertility rates and above average pollution rates. I have never understood the idea that having less kids reduces pollution.

 

[ricko]

I don’t like it nor do I trust it. Now the government will set up another bureau to dispense these prebates. I don’t want more government bureaus I want less. Why not something really simple that would also eliminate the IRS. I’m talking about a flat 10% income tax. It would be collected as it is now in the form of witholding from your paycheck. Businesses would pay on their profits (income). No deductions, no loopholes and no IRS. No filing at the end of the year, no having to keep receipts or any records except how much you earned. Now I call that fair and simple. We live on a fixed income and now so will the government.

 

[Neil_Anthony]

A sales tax that large would give rise to an underground economy, where people would buy and sell things under the table.

 

[Ridgerunner]

A sales tax that large would give rise to an underground economy, where people would buy and sell things under the table.

People do that now. I think, though, in the case of new goods, it might not be so easy. You have to get the new stuff from the manufacturer in order to sell it. It wouldn’t be too hard for the IRS to require manufacturers to electronically file sales the way banks, etc, file 1099s. If the computer was set up to flag buyers who didn’t seem to sell what they bought, one inventory check by the IRS would tell the tale. It would probably be simpler, actually, that what auditors have to go through now, tracking down income.

Certainly people could make things themselves and sell them to individuals “under the table”, but people do that now and don’t pay tax on the income. Besides, there really is a limit to what most people can manufacture themselves, and a limit to the people they trust.

 

[Ruthie]

I have wanted to replace the income tax with a federal sales tax for years!

The main reason I like it is that it’s based on what you spend.

This means that someone like me, who has proportionately less of my pension check to spend because of high medical expenses will pay less tax, without having to itemize deductions. And you can control how much tax you pay. If you don’t want to support the government, buy everything second hand.

No more inheritance tax. No more capital gains tax.

“Misers” who support the economy through savings/investments, would not be penalized for doing so.

I don’t like the rebate idea, though. I’d support simply exempting food stamp items from the tax. The infrastructure is in place already (in the stores) to separate food stamp items from other stuff, so it would be easy to do.

The IRS can then spend their time driving around to garage sales making sure they aren’t selling “new” items to avoid taxes…

Ruthie

 

[stinkcat_14]

No more inheritance tax.

I actually don’t mind the inheritance tax. After all, it is a tax you pay when you are dead. It’s the taxes while I am living that I don’t like.

 

[rlg94086]

I don’t like the rebate idea, though. I’d support simply exempting food stamp items from the tax. The infrastructure is in place already (in the stores) to separate food stamp items from other stuff, so it would be easy to do.

I thought the same thing initially. This is the answer in the FAQs:

Why not just exempt food and medicine from the tax? Wouldn’t that be fair and simple?

Exempting items by category is neither fair nor simple. Respected economists have shown that the wealthy spend much more on unprepared food, clothing, housing, and medical care than do the poor. Exempting these goods, as many state sales taxes do, actually gives the wealthy a disproportionate benefit. Also, today these purchases are not exempted from federal taxation. The purchase of food, clothing, and medical services is made from *after-*income-tax and *after-*payroll-tax dollars, while their purchase price hides the cost of corporate taxes and private sector compliance costs.

Finally, exempting one product or service, but not another, opens the door to the army of lobbyists and special interest groups that plague and distort our taxation system today. Those who have the money will send lobbyists to Washington to obtain special tax breaks in their own self-interest. This process causes unfair and inefficient distortions in our economy and must be stopped.

The way I see it, with the prebate, your frugal food shopper will do just fine.

Ruthie:

The IRS can then spend their time driving around to garage sales making sure they aren’t selling “new” items to avoid taxes…

Ruthie

Sounds good to me - garage sales, flea markets, swap meets.

 

[ribozyme]

Of course, the US and China have below average fertility rates and above average pollution rates. I have never understood the idea that having less kids reduces pollution.

The simple IPAT equation. The United States has an above average rate of pollution because of its affluence (which is a proxy for consumption).

 

[stinkcat_14]

The simple IPAT equation. The United States has an above average rate of pollution because of its affluence (which is a proxy for consumption).

Of course, and what it means is that because we have fewer kids, we can now afford bigger houses that require more oil to heat and thus create more pollution. At least the pollution comming from kids is biodegradable. My old tv’s are not biodegradable.