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mapleoak
Guest
And those who do not earn income may enjoy the services our country offers without paying for them.
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mapleoak
Guest
Consumption and pollution are not one and the same. In fact more people to consume goods means better business for farmers and manufacturers. More effecient methods are developed for agriculture, which means food can be produced and distributed more efficiently, which means fewer starving people.
Suudy
Active member
As I understand it, this exemption is only for items for re-sale, not for use. If a office buys coffee and toilet paper, they are not exempt from the sales tax. However, if they are a coffee or toilet paper distributor, they are exempt from the tax, and collect the tax on the resale.
This is in contrast to the value added tax (VAT). The VAT adds taxes at every stage of sale. So the manufacturer collects the VAT when selling to a distributor. And the distributor collects the VAT when selling to a retail chain. And the retailer collects the VAT when selling to a consumer. Thus in a VAT, and items is taxed more often (though perhaps at a lower rate).
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rlg94086
Guest
You explained that well Suudy. Currently, some business owners hide personal expenses in their business operating expenses, but that is because the tax is on profit. The current system requires businesses to show their income and deduct their expenses. It is fairly easy to call some things business expenses that are actually for personal gain. By taxing only the goods that are resold, it would close the very loophole that Jolly Joe is concerned with.
A VAT and sales tax have the same end-effect: they are paid by the consumer (iow the consumer always gets it in the end
). The only difference is that a VAT has a lot more paperwork and tracking attached to it.
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Jolly_Joe
Guest
That’s possible. The VAT is a nightmare in record keeping.
And there are a lot of good potential things about a tax like the Fair Tax.
There are some painful things too. Like when you get that big hospital bill and there’s tax added to it. Or you’ve been saving to buy a house and now you need to pay a bunch of tax on it up front. Or when the credit card company raises your interest rate to astronomical levels and to add insult to injury, they tax you on the interest.
Those sorts of things.
And it’s not to say there isn’t tax hidden in the price of a lot of things now. It’s just that people’s experience tends to be that prices don’t come down overnight when something like a hidden tax is ended.
There’s clearly less complication than now. And it does end up helping our products compete overseas because exported products completely escape taxation. And imported items are taxed when bought. I like that.
I’m just not sure the proponents are being honest.
Like what do you actually think the chance is that the tax can be kept in place on everything. Actually not quite everything. There are some exemptions already built in for various reasons. So it’s not no exemptions, the law already recognizes there are reasons to be exempt.
So I would think that just like the Income tax results in a constant stream of people lobbying to get advantages under the income tax and real estate taxes have a constant stream of people trying to get advantages under them, I see no reason a national consumption tax won’t have such a constant stream of lobbying and trying to get an advantage nor do I see any indication the government wouldn’t give it to them.
I would expect a special case where just like the Fed gives exemptions from Income tax for businesses built in certain places or in certain programs. They would extent the same sort of thing to consumption taxes. Build in a renewal community and not pay taxes would be so automatic you would think you could just as well write it in now.
Come back in 100 years, it will likely look like the IRS code.
On one note I’m not familiar with. I know donations to charities are exempt but are purchases by charities? What would the Catholic Church’s position be if they had to pay tax when they build a new church? Or buy church supplies.
I’m not sure if charities pay it or not. Maybe someone knows.
JJ
And there are a lot of good potential things about a tax like the Fair Tax.
There are some painful things too. Like when you get that big hospital bill and there’s tax added to it. Or you’ve been saving to buy a house and now you need to pay a bunch of tax on it up front. Or when the credit card company raises your interest rate to astronomical levels and to add insult to injury, they tax you on the interest.
Those sorts of things.
And it’s not to say there isn’t tax hidden in the price of a lot of things now. It’s just that people’s experience tends to be that prices don’t come down overnight when something like a hidden tax is ended.
There’s clearly less complication than now. And it does end up helping our products compete overseas because exported products completely escape taxation. And imported items are taxed when bought. I like that.
I’m just not sure the proponents are being honest.
Like what do you actually think the chance is that the tax can be kept in place on everything. Actually not quite everything. There are some exemptions already built in for various reasons. So it’s not no exemptions, the law already recognizes there are reasons to be exempt.
So I would think that just like the Income tax results in a constant stream of people lobbying to get advantages under the income tax and real estate taxes have a constant stream of people trying to get advantages under them, I see no reason a national consumption tax won’t have such a constant stream of lobbying and trying to get an advantage nor do I see any indication the government wouldn’t give it to them.
I would expect a special case where just like the Fed gives exemptions from Income tax for businesses built in certain places or in certain programs. They would extent the same sort of thing to consumption taxes. Build in a renewal community and not pay taxes would be so automatic you would think you could just as well write it in now.
Come back in 100 years, it will likely look like the IRS code.
On one note I’m not familiar with. I know donations to charities are exempt but are purchases by charities? What would the Catholic Church’s position be if they had to pay tax when they build a new church? Or buy church supplies.
I’m not sure if charities pay it or not. Maybe someone knows.
JJ
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estesbob
Guest
I have done thousands of tax returns the last 27 years and can assure you this simply is not true. Whenever I hear somebody talk about tax loopholes for the rich I always ask then where they are at because I have some clients who sure could use them
Again you are operating under a false premise. In fact there are more “loopholes” for the poor and middle-class then there are for the “rich”.
Based on my years of dealing with taxes I can tell you that the majority of people know two things for certain. Number one:they pay too much in taxes and number two: everybody else pays too little. Most people’s definition of “rich” is anybody that makes more money than they do.
Suudy
Active member
Don’t forget, even if the fair tax passed, it doesn’t eliminate all the local and state taxes that exist. If you have state income tax, you’ll still have that at the end of the year.
However, it doesn’t need to be a separate line item. Since the retailer collects the tax, they just charge you as part of the overall cost. So while it may seem irritating to see a separate line item for a sales tax, it isn’t something we have to write a separate check to pay.
I find the home purchase example interesting. This tax line item is not something that would probably show up in the mail after you close. It would likely be handled as a closing cost, like any other pre-paids (e.g. insurance, taxes, appraisal, etc). And it is frequently the case that you can get sellers to pay those costs, so I don’t think it would make it more painful to buy a house than it already is. (But it does stink for the seller, who already pays an excise tax on the sale of a home.)
Remember, it is the retailer that directly pays the taxes, not you. I know, indirectly you pay through an increased price. And we are used to seeing a separate line item on receipts for sales tax. Often companies make offers like “We’ll pay the sales tax!”
However, it doesn’t need to be a separate line item. Since the retailer collects the tax, they just charge you as part of the overall cost. So while it may seem irritating to see a separate line item for a sales tax, it isn’t something we have to write a separate check to pay.
I find the home purchase example interesting. This tax line item is not something that would probably show up in the mail after you close. It would likely be handled as a closing cost, like any other pre-paids (e.g. insurance, taxes, appraisal, etc). And it is frequently the case that you can get sellers to pay those costs, so I don’t think it would make it more painful to buy a house than it already is. (But it does stink for the seller, who already pays an excise tax on the sale of a home.)
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stinkcat_14
Guest
I would suggest that your clients need to find a better accountant. For example, consider Teresa Heinz Kerry who has a net worth of around $1 billion and when her husband ran for president, she paid a lower average tax rate than the typical taxpayer.
opinionjournal.com/extra/?id=110005781
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estesbob
Guest
You have a basic misunderstanding of tax law, which is very common.
She has a lower average tax rate because a large part of her income is from capital gains and qualified dividends which are taxed at 15%. All taxpayers get this rate on capital gains and dividends except for those are in the 10% bracket who pay only 10% on their capital gains and qualified dividends. Since everybody pays the same rates on these how is that a tax break?
Now in * real* dollars did she pay more taxes than the average taxpayer?
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ribozyme
Guest
So she doesn’t EARN her money; she just lives off of capital gains. The rich do not have to work for their money significantly (although if you are a money manager, that is a job that requires plenty of diligence, but the people who place their money in John Paulson’s funds do not have to work for their high returns).
Here is the key point: the wealthy are taxed less than those who actually have to work.
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estesbob
Guest
So in real dollars you pay more taxes than Theresa Heinz?
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rlg94086
Guest
Well, from a % standpoint, my guess is that Ribo pays either 100% or 0%…depending on how you look at it.
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ribozyme
Guest
So do you believe that everyone should simply pay an equal amount of money? You are advocating some MORE regressive than a flat tax.
The question here is the proportion paided on their income, not the absolute amount of money they have to pay.
And if I were in her position, I would rather pay more taxes (this is an acceptable price and I do not consider it a significant burden), and having that money would allow me to engage in significant philanthropy just like my hero George Soros.
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estesbob
Guest
Where did you see me advocating that.? In fact I am arguing against the fair tax which is basically a flat tax
The question here is do the rich have loopholes available them that are not available to everybody else. The answer is no.
George Soros had to bankrupt a country putting tens of thousands into poverty to make his money. The fact that he now giving some of his ill-gotten gains to charity does not hardly undo the sins of the past. Al Capone gave money to orphanages but that hardly makes him a role model
Nobody is stopping Teresa Heinz from paying more taxes. You can write a check to the Treasury dept for any amount you want and they will take it. I remember when all the griping about the Bush tax cuts was going in Liberal circles I made a standing offer on my radio show that I would do anyones tax return for free who wanted to do it based on the rates in effect before George Bush cut the taxes. I had no takers.
I note that you pay no taxes and it is very easy for those who pay no taxes to lecture the rest of us on how much we should pay
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mapleoak
Guest
I don’t think he pays any taxes.Well, from a % standpoint, my guess is that Ribo pays either 100% or 0%…depending on how you look at it.
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ribozyme
Guest
What is this country that Soros bankrupted?
I know Soros speculated against the British Pound, the Swedish Krona, and the Italian Lira in 1992. I also know he lost when he made an $8 billion bet against the yen in 1994. However, Soros did not cause the Asian financial crisis.
Of course, Soros’ currency speculation was not immoral, or moral; his financial activities were amoral.
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Ted_in_Charlott
Guest
Let’s look at this from the point of view of increasing cash in the consumer’s pocket. Currently if you make say $1000/wk you “take home” maybe $700. So you have $300 taken from you even before you get your check. You get to spend $700 on what you want.
Under a possible “Fair Tax” plan you would get the whole $1000. That is a $300 raise to do with as you see fit. A $300 raise on a $700 check is 40%+ increase. Let’s remember the 40% number.
Ok we have $1000 cash now. How much will we spend? Let’s say $900. If the $700 worth of goods has 30% VAT/FT attached then the $700 now equals about $910. I don’t think I have heard a rate as high as the 30% so let’s just say the $900 is correct. Why is that important? Because if you remember we make $1000 then spend $900 we save $100. So the consumer comes out ahead in this.
Compliance would be simplified. But what I like most is that the underground “employees” would get the same $700 (since he doesn’t have taxes taken out) and when he spends his $700 we collect taxes on him we weren’t getting.
How many additional hundreds of billions would be collected?
Under a possible “Fair Tax” plan you would get the whole $1000. That is a $300 raise to do with as you see fit. A $300 raise on a $700 check is 40%+ increase. Let’s remember the 40% number.
Ok we have $1000 cash now. How much will we spend? Let’s say $900. If the $700 worth of goods has 30% VAT/FT attached then the $700 now equals about $910. I don’t think I have heard a rate as high as the 30% so let’s just say the $900 is correct. Why is that important? Because if you remember we make $1000 then spend $900 we save $100. So the consumer comes out ahead in this.
Compliance would be simplified. But what I like most is that the underground “employees” would get the same $700 (since he doesn’t have taxes taken out) and when he spends his $700 we collect taxes on him we weren’t getting.
How many additional hundreds of billions would be collected?
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stinkcat_14
Guest
Actually it is you that has a misunderstanding of tax law as it applies differentially to the rich and the poor.
And this reflects a conscious choice that she made (most likely with the help of tax advisors). She could choose to get all of her income from labor, which would be fully taxed. She could also choose to put her money in savings accounts or taxable bonds, which also would be fully taxed. She has the choice however, to put it in tax exempt bonds and securities which generate capital gains and lower taxed dividends.
How many poor people have capital gains? While they have the option in theory, in reality, it is not an option for them. Same thing with municipal bonds. While in theory they can buy them, few of them have enough assets to open a brokerage account.
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estesbob
Guest
Everything I said is demonstrably true. All you responded with is the usual class warfare rhetoric. You’d be surprised how many people have capital gains and qualified dividends Anybody that is invested in mutual funds. Anybody who has a 401(k) or most other types of retirement plans. Anybody in a company stock program. Any union worker who is going to have a pension is getting the benefit of these rates. Teachers retirement is heavily invested in stocks and bonds.
It is true that the poor can not structure their income to take advantage of these rates but it is also true they pay no federal income tax so the rate is irrelevant. In fact they can take advantage of the earned income tax credit, a refundable credit that is available even if they owe no taxes.
I suggest you find yourself a socially conscious CPA to prepare your tax return using the rates in effect when Jimmy Carter was president. You need to put your money where your mouth is.
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rlg94086
Guest
Exactly my point (100% and 0% of $0 is $0)
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