http://www.fairtax.org/ Any opinions on this.

[sasapurdue]

Anyone have an opinions on what this site proposes? Is the solution really so simple? Please discuss.

[abathur]

It looks reasonable to me. I tried discussing it with my parents and my mom just started ranting and raving about how she was positive it was a ploy to increase her taxes and refused to listen further.

Wonder how much money we'd save just from not having to fund the IRS.

[Xylix]

A sales tax system has a lot of advantages, though I'm a bit leery of the 'flat tax' effect it exudes and hence my first instict is to make the following modifications:


Remove/reduce 'sales' taxes on basic necessities: e.g. Food, or at least non luxury food. Steak and candy bars and other crap should still be taxed in full.

and to cover that Increase taxes on luxury items: e.g. the shiny new 1000 hp sports car...



But if such modifications were inacted, oh yeah! I'd defininetly go for it.

[meshou]

Sales tax systems would pull all their money from the poor. If you're rich enough, you just get all your luxuries out of country,

My favorite flat tax: 12,000 a year credit (that is, you basically get a card from the government that grants acess to 1,000 a month) for any citizen over six years old, and accessable to any individual over 16, or legally emancipated. Abolish wellfare (except for healthcare for the direly ill) all together, abolish social security all together.

Flat tax of 15% on all wages, and keep property tax. We'd save money, and the increased taxes would be made up for by the tax credit. And for those it's not, they're rich to the point that 12,000 a year is chump change anyway.

[Xylix]

Sales tax systems would pull all their money from the poor. If you're rich enough, you just get all your luxuries out of country,

True, and putting a stop to it would require taxing goods being brought into the country...


As for 'taking all the money from the poor', well if you don't tax basic necessities it won't effect the poor all that much, and Fairtax is already designed to 'rebate' all taxes collected below the poverty line.



My favorite flat tax: 12,000 a year credit (that is, you basically get a card from the government that grants acess to 1,000 a month) for any citizen over six years old, and accessable to any individual over 16, or legally emancipated. Abolish wellfare (except for healthcare for the direly ill) all together, abolish social security all together.

Flat tax of 15% on all wages, and keep property tax. We'd save money, and the increased taxes would be made up for by the tax credit. And for those it's not, they're rich to the point that 12,000 a year is chump change anyway.

That would also work, though you'd never get it past the Republicans that would be screaming about how it is completely unfair and would destroy our economy.

[Xylix]

Since we are talking about taxes:

From the San Francisco Chronicle (http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2004/04/11/INGV560VO41.DTL)

[abathur]

A sales tax system has a lot of advantages, though I'm a bit leery of the 'flat tax' effect it exudes and hence my first instict is to make the following modifications:


Remove/reduce 'sales' taxes on basic necessities: e.g. Food, or at least non luxury food. Steakcandy bars and other crap should still be taxed in full.

and to cover that Increase taxes on luxury items: e.g. the shiny new 1000 hp sports car...



But if such modifications were inacted, oh yeah! I'd defininetly go for it.


Exceptions are how the current taxcode becomes muddled and maligned.

The "FairTax" proposal DOES include a flat sum of of awarded funds, however it is determined by theoretical sales tax on the poverty level income. I think this value should probably be increased to some extent, however, I feel the recompense for the appropriate sales tax is sufficient for lower income persons, rather than bothering to come up with a complex set of what falls under what negated or reduced brackets and constantly evaluate new products to ensure they are properly categorized.

Perhaps meshou has a point on out of country luxuries (I'm not sure how the fair tax addresses it.) Though if the rebate is done appropriately I'm not sure I'm convinced such a system would be significantly harmful to poorer citizens. Not to mention it encourages activities of economic growth rather than spend spend spend.

[Xylix]

Exceptions are how the current taxcode becomes muddled and maligned.

The system is going to become muddled and maligned no matter what. Even as the government collects taxes, it'll turn around and hand off billions in corporate welfare. The only real advantage the 'fairtax' system has here is visibility. You know WHAT is being taxed, and you know that EVERYONE gets taxed the same, at least in that area.


Hence, Company B, is hurt by the taxes on luxury cars just as much as the new tiny company J. Of course, you can still virtually guarentee Congress will find some way to prop up Company B.


As for rebates for the poor. I have the funny feeling they'll disappear, or made so painful to get your hands on that they may as well not exist.

[Hypnos]

Sales tax systems would pull all their money from the poor. If you're rich enough, you just get all your luxuries out of country,
You have to pay import duties (http://www.usitc.gov/tata/hts/bychapter/index_2005.htm) if you bring in items regularly or buy big-ticket items.

This used to be the primary source of US federal revenue until the income tax gained momentum WWII onward.

[garak]

Exceptions are how the current taxcode becomes muddled and maligned.

Plus, poor people are hardly only buying necessities. They're buying lots of alcohol and tobacco and lottery tickets.

[meshou]

That would also work, though you'd never get it past the Republicans that would be screaming about how it is completely unfair and would destroy our economy.I don't see how it would be unfair, as there would be no poverty line (is in, you make less than 10,000 a year, you still get taxed, but the credit more than makes up for it).

The only way it'd be unfair is that if you own property, you pay taxes on it, which is not unreasonible. If you make more money, you should pay more taxes. That's why we have a percentage tax.

The rich already pay that high right now, I believe. Or should, since I pay about 13%, and the rich pay higher taxes already.

[sbw]

It looks reasonable to me. I tried discussing it with my parents and my mom just started ranting and raving about how she was positive it was a ploy to increase her taxes and refused to listen further.

Wonder how much money we'd save just from not having to fund the IRS.

your mom is an ESXJ, isn't she?

we would save a huge amount of (tax) money by not having to fund the IRS, but government is not in the business of eliminating jobs so as to be more efficient or not fuck over its constituents. those last two simply don't exist as incentives.

so, it ain't happening. which is the surest test of whether or not it's a good idea, because it is.

do I win the cynicism prize?

Scott

[sbw]

You have to pay import duties (http://www.usitc.gov/tata/hts/bychapter/index_2005.htm) if you bring in items regularly or buy big-ticket items.

This used to be the primary source of US federal revenue until the income tax gained momentum WWII onward.

thanks, hypnos. I just knew you'd chime in with a helpful piece of info.

and everyone remember that we used to not even have an income tax. for, like, a long time, and stuff.

Scott

[sbw]

I don't see how it would be unfair, as there would be no poverty line (is in, you make less than 10,000 a year, you still get taxed, but the credit more than makes up for it).

The only way it'd be unfair is that if you own property, you pay taxes on it, which is not unreasonible. If you make more money, you should pay more taxes. That's why we have a percentage tax.

The rich already pay that high right now, I believe. Or should, since I pay about 13%, and the rich pay higher taxes already.

I paid 28% when I had a job, and rich people pay a lot more than that.

the property tax will never go away--that's a state tax, wherein they claim that all the money goes to government (err, public) education. the more likely scenario is that a slush fund for other budget shortfalls is created from that source of money. a similar example is the tobacco settlement money, which is allegedly used for anti-smoking education, but has basically been a slush fund as described above (because something like 46 or 47 of the 50 states are currently running a budget deficit on the state level, in addition to the federal government).

Scott

Scott

[abathur]

your mom is an ESXJ, isn't she?
Scott

That's what I've decided. I'm pretty sure it's ESFJ. Luckily she was lax on rules, because she doesn't really get me and would probably have been really stifling if she was more assertive.

[C.J.Woolf]

I gotta ask -- Who benefits? How about, those who make far more than they spend; i.e., the rich? Some non-rich people might also benefit, but that would be incidental.

If the plan is revenue-neutral, then sales taxes will go up a lot, and that will shift the tax burden downward on the income scale. I really doubt its backers will be honest about what a revenue-neutral tax rate would be for fear of sticker shock. When Steve Forbes tried to sell a flat tax he stated a rate that was 5-10% too low to be revenue-neutral.

Maybe relevant, maybe not: I noticed the Senate sponsor of the "fair tax" bill is Chambliss. He's the prick who impugned Max Cleland's Vietnam service (in which he lost three limbs) during his campaign. I'm inclined to see any bill he sponsors as guilty by association.

[abathur]

Who benefits? The only way the rich are really going to benefit more is:

1. using the money to produce economic development (as investment) later increasing the income they recieve, but also building the economy as a whole providing resource demand, some service/product and a job.

2. saving

It's very arguable as to what benefit "saving" money is, as money is only really good when you're using it to BUY things. I mean, I can be sitting on one mil cash, not spend a penny, presumably you're seeing a benefit under a sales tax--but I'm not seeing any benefit of this untaxed money unless I spend it on something. My choices for spending? Investing, if I don't want to be taxed, or goods, if I want to see some tangible short term benefit.

Fact of the matter is, "saving" or "investing" are the only forms of "tax evasion." Ultimately, the only point to saving is to spend later (and be taxed.) I don't have a problem with investing in the economy as a way to go avoid taxation... do you?

[sbw]

Who benefits? The only way the rich are really going to benefit more is:

1. using the money to produce economic development (as investment) later increasing the income they recieve, but also building the economy as a whole providing resource demand, some service/product and a job.

2. saving

It's very arguable as to what benefit "saving" money is, as money is only really good when you're using it to BUY things. I mean, I can be sitting on one mil cash, not spend a penny, presumably you're seeing a benefit under a sales tax--but I'm not seeing any benefit of this untaxed money unless I spend it on something. My choices for spending? Investing, if I don't want to be taxed, or goods, if I want to see some tangible short term benefit.

Fact of the matter is, "saving" or "investing" are the only forms of "tax evasion." Ultimately, the only point to saving is to spend later (and be taxed.) I don't have a problem with investing in the economy as a way to go avoid taxation... do you?

you ARE "seeing [a] benefit", though. money equals freedom. most people don't have the options (not working, traveling, mountains of coke, whatever) that come with that theoretical one mil cash of your example.

Scott

[mgb]

My favorite part of that site is how simple they keep saying it is.

The first problem I noticed is that there aren't business taxes. Since you aren't taxing revenue or business to business purchases, there will be an immense drop in revenue from that. As a person, I would immediately setup a corporation for myself and buy everything through that and just call it "production" material, exempting me from ever paying taxes. Since it took me 30 seconds to come up with, I'm sure most people will be able to come up with it even less time.

At 23%, the price of goods will either have to go down or you will get an automatic 23% inflation. I'm sure over time that would be corrected, but until it was corrected, it would be a mess.

If you don't have a lot of money, 23% of your income is a lot to lose, especially if you are counting on some sort of rebate coming down the road.

They maintain that consumption will stay high. If you change the taxation system this dramatically I think people will change the way they charge for things dramatically.

I think it sounds simple. But I think it's too simple and does very little to take into account how the world really works. In essense, it's overly simple.

[abathur]

you ARE "seeing [a] benefit", though. money equals freedom. most people don't have the options (not working, traveling, mountains of coke, whatever) that come with that theoretical one mil cash of your example.

Scott

And that's not a benefit of wealth that the presence or absence of an income tax changes. What you're claiming as a benefit is SECURITY. An insurance policy, for instance, is security. It does you no fucking good unless you use it.

No amount of "saving" money to keep it from being taxed saves you from the fact that, to actually benefit from that money, it must be used. Tax it now or tax it later--unless you want some socialist system you aren't going to significantly affect the "freedom" available to any person. Especially since the 100,000$ worth of "freedom" you have sitting in the bank will only buy you 77K worth of "freedom" just like 77K post tax now.

Granted, I'm not blindly advocating it (in reference to mg) and it should certainly be carefully analyzed to determine precisely what effect it might have. The lack of pre-final product taxes might be problematic, but it also encourages production. I'm not enough of an economist to say (I don't know about you.)

[Xylix]

I don't see how it would be unfair, as there would be no poverty line (is in, you make less than 10,000 a year, you still get taxed, but the credit more than makes up for it).

I don't think it's unfair. In fact, I'd say that as computers/programs/robotics eliminate an increasing number of jobs a credit system is the only rational and fair system.

Then again, I think accumulated private wealth over 100 million or so should be heavily taxed as well... because no single citizen has any bussiness with that kind of accumulated money and the legal/political leverage that comes with it.


However, I imagine the reason Republicans would see your credit system as unfair would be because: The 'workers' would be taxed to provide 'handouts' for the 'bums'. Basically the same reason they object to welfare.


Personally, I'm all for a credit system. However, I know we don't have enough non-human production methods / human production multipliers to pull it off. Such a system gives far too much encouragement to loaf. I doubt I'd ever get a job! =D

However, once the technology is available the system would be self driving, much like open source software.

That, and a hell of a lot more relaxing!

**Currently 12,000 year for 300 million individuals would run around 4.6 trillion dollars a year.


The only way it'd be unfair is that if you own property, you pay taxes on it, which is not unreasonible. If you make more money, you should pay more taxes. That's why we have a percentage tax.

Excepting that some forms of wealth are mechanisms that make even more wealth. As those with access to these have substantially greater leverage, often without justification (inherited) this gives these individuals a substantial and unfair advantage.

This is why the estate tax exists. There is nothing fair or righteous about inherited wealth, especially multigenerational inherited wealth.


Hence I see property tax as being good, when targeted at absurdly high concentrations of wealth, or non-reproducable wealth (e.g. land), as good. Actually, I see targetting liquid savings above certain values as good too, as large hording of liquid savings damages economic flow, and one can easily invest in exchangable material wealth (gold) or companies (stock).



we would save a huge amount of (tax) money by not having to fund the IRS, but government is not in the business of eliminating jobs so as to be more efficient or not fuck over its constituents. those last two simply don't exist as incentives.

We collect somewhere in the range of 2 trillion dollars a year. With the exception of the top three no other government programs really run higher than 100 or so billion, and most run much smaller. So I can't imagine the elimination of the IRS making more than a 1-4% difference on actual budget.

You could get a greater effect just by cutting out all the pork and corporate handouts.


I gotta ask -- Who benefits? How about, those who make far more than they spend; i.e., the rich? Some non-rich people might also benefit, but that would be incidental.

That's true in ANY economic senario.

Besides, a 'better' tax codes doesn't need to be perfect. It only needs to be better the the current one... which is rediculously shitty. Personally, I'd lean for the sales tax simply for the greater transparency. That alone should help keep the government in line (it won't keep it in line, it'll just help). Face it, nearly everyone will be pissed if taxes on Rice or Ramen are higher than on a Yatch or private jet.

It also provides a better, and fairer mechanism of economic control over certain goods. Want to phase in green power? Cut taxes! Want to phase out coal power? Raise taxes! The market place will self organize and take care of the rest.


However, the supporters do make me a tad suspicious. If this is supposed to be so 'fair' and 'friendly' why aren't any Democrats on board?


Who benefits? The only way the rich are really going to benefit more is:

How about in the form of actual collected taxes? How much would this system collect from the guy earning 40,000 and the guy earning 400,000 compared to the current system? Remeber, benefit is rated from the current system.

[abathur]

That's a rather asenine question to ask ME as there are a rather large number of variables and a presumably necessary statistical average that must be considered. You're going to have deductions and expenditures of greatly varying amounts. I know people who make 30K a year and have far more available income than people earning half a million. As I said, I think the rebate rate should probably come up some to make the tax a little more progressive than it currently is. That's largely an issue of how people are taught to deal with money. Most of the people who are actually savings minded enough to not be spending most of yearly income in either investment or consumption are those who started out poor or middle class and put a lot of sweat and hard work into upward mobility. Old money heirs are often very loose with money they didn't earn. Celebrities branded with middle-class consumerism also making rather easy money also often spend a lot. Most doctors and lawyers I know live pretty high. The only rich people I know living significantly less lavishly than they could afford to are entrepreneurs who didn't start out with a whole lot.

I'm not sure what the huge issue with accumulated liquid wealth is. Unless it's sitting in a private vault it IS being used in the banking industry to fund the business and personal loans driving auto, home and new business development. Perhaps if assets are staying out of the economy for really long periods of time, but in reality it's the people with large pools of assets that are in a position to start pouring money back into the money when times are bad. Sure, that's an instance of them being able to invest when the rich get rich and the poor get poorer, but without persons in the position to expand during weak times the ultimate result is mutual failure. When shit goes bad--someone has to be in a position to start spending again.

[sasapurdue]

Listening attentively...

[Wiki]

Plus, poor people are hardly only buying necessities. They're buying lots of alcohol and tobacco and lottery tickets.
Yes alcohol, gasoline, lottery ticket taxes ae all regressive. The fair tax would get most of its income from people who buy luxury items like Hummers and investment properties. I signed the petition and highly recommend this.

[nottaprettygal]

This is why the estate tax exists. There is nothing fair or righteous about inherited wealth, especially multigenerational inherited wealth.

Hrm. How does everyone feel about the estate tax, and the fact that the House has already voted in favor of repealling it?

I'm pretty disgusted by the idea.

[abathur]

Repealing it, or the tax in general?

I don't agree with the estate tax really. I think most of the smart monied people figure out the appropriate ways around estate tax other than in sudden/accidental deaths anyways. There are people "worth" a lot of money out there, but most of those aren't holding a majority of that in forms that truly keep it out of the economy. They're investing money, spending money, and holding property (which they're paying property taxes on.) I think upper middle class is probably more likely to suffer from estate tax than the rich as the assets are more likely to be unpaid for, yet still taxed.

Not to mention the way a lot of second+ generation money didn't work hard for what they have and tend to go through it like water maintaining or increasing the lifestyles their parents raised them with. I don't have statistics but I don't imagine large amounts of money hoarded out of use by old money families is nearly as common here and now as it would have been in aristocratic europe, for example.

[Dman]

It’s another scheme designed to concentrate wealth. If you believe wealth should be concentrated, then it is a good idea. Republicans are constantly trying to concentrate wealth.

Just think about this – remember that jerk Forbes? He thought a flat 15% income tax was the fairest no-brainer solution. Guess what? He makes all his money on dividends, interest, rents, royalties, and inheritance. Under his plan, he would pay NOTHING in taxes ever, but benefiting from government roads, military, police, etc. Sound fair? His argument is that everyone would get a tax break. But he conveniently never mentions the horribly damaging repercussions of wealth concentration that would ensue.

He did make a good point though about the sales tax, what about buying a house. You ready to pay sales tax on a $250k house?

So you say you exempt first-time homebuyers, or real estate entirely, or poor people should not pay anything, or luxury items are taxed heavier, etc. Wrong.

You see, once you start making all kinds of exceptions and limitations to the national sales tax, you start the entire process all over again, the lobbying, the special interests, this should be exception, that should pay more, etc. etc. before you know it the whole thing is a nightmare again.

It’s no solution. Not that I think the current system works fine, I don’t have a clue as to what would work any better though.

Ultimately it depends more upon who’s in charge and executing the system as to whether one system works better than another.


The fair tax would get most of its income from people who buy luxury items like Hummers and investment properties. I signed the petition and highly recommend this.

That would be hurting the middle class the most, believe it or not, not the wealthiest. I’m sure the ultra-elite would be proud of you.

[Dman]

I read a little bit more on that site.

The entire premise is based upon the assumption that the economy will “boom” and make everyone rich and live higher standards, eliminating the poor, making it easy to buy a house, easier to pay for medicines and the associated sales tax if you’re sick, etc. Many of the answers in the FAQ’s revolve around this circular logic. “If it passes, you’ll have so much money you can afford to pay 20% tax on that $250k house, or on your medicines you need to survive!” Although this may be the case in the immediate short term, what happens in the long run?

Wealth concentration at a much greater rate even than currently. The site compares itself as superior to the flat tax, but ultimately it results in the same thing, just gets there differently (as in it’s easier to sucker people than the flat tax was).

Someone explain to me how this doesn’t result in greater wealth concentration, or that they believe wealth concentration is a good thing.

[abathur]

Why don'y you explain to us how it will result in greater wealth concentration...?

[Dman]

Why don'y you explain to us how it will result in greater wealth concentration...?

Basically, the middle class has a significantly less proportion of discretionary income to invest than the wealthy do. Meaning that the middle class spends majority of their earnings simply maintaining their status quo. The wealthy have vast amounts of wealth to use in order to acquire more wealth, far exceeding what they need to pay the bills (it takes money to make money). So, while they are paying a national sales tax on their consumption (which is nothing compared to their income), they are paying nothing on any of their investments, which snowballs to create more and more and more wealth for them. So the middle class is perpetually stuck working for a living while the wealthy are getting richer and richer.

The existing system attempts to curtail this through things like interest and dividends being taxed, estate tax, alternative minimum tax, etc. in an effort to somewhat limit this concentration of wealth and have them pay a “fair” share. Granted, under the current system the wealthy still find loopholes around it, but at least it’s more difficult and occasionally illegal. The national sales tax would open the floodgates to allow the elite to make as much as they wanted to unhindered. The rationale is that this extra money that the elite make “trickles down” to the lower classes, creating more job creation and such. It’s Reaganomics and it’s BS. It sounds fair in theory but regardless it leads to concentration of wealth in a few hands.

[Dman]

You decide -

http://en.wikipedia.org/wiki/Trickle_down_effect

http://en.wikipedia.org/wiki/Wealth_concentration

Edit - one more, see particularly the section titled "Effects on distribution of tax burden"
http://en.wikipedia.org/wiki/National_Sales_Tax

[Dman]

Sorry for the multiple postings in a row on this, but I have to get it out while I have time, don't know when I'll have more time to respond, so -

Other items to note in that wikipedia article are in the “other indirect effects” section.

- Existing real estate owners/investors would experience a huge one-time gain, while those not in the game would suffer even larger roadblocks to buying. In other words the wealthiest people, who have vast and/or expensive real estate holdings, make out the best while the poorest people lose.
- Financial securities would experience upward pressure. Similar to above, the wealthiest who have the majority of securities would benefit.

They’re also showing signs of deception in the proposal by saying “23%” over and over again. It’s 23% tax of the GROSS PAYMENT, in which the “gross payment” INCLUDES THE TAX. In other words that means you are truly paying 30% tax. Why are they being deceptive?

Reminds me of the fine print you get in the mail 6 months after you sign up for a great credit card with low rates and no fees, saying they are now going to charge you double the APR and charge you to close your account or if you don’t carry a balance. Most people throw this away, because it looks unimportant and they had read the fine print when they first got the credit card (which has now been superseded).

Anyways, if you think the national sales tax is a great idea and you recommend it, please read this – (regardless of the obscure site it is coming from they make some excellent points, although I do disagree with some of their views).

http://www.jpfo.org/fairtax.htm

Bottom line = whether you agree it’s better or not, you have to admit it’s not a clear cut, win-win solution that it's purported to be. The rich will certainly get richer though, that is clear.

[abathur]

You tend to ignore the give and take of a rather fair and balanced article on the wiki. There have been some reasonable potential problems pointed out by some. Some others contend that won't even be a problem.


As previously discussed, the FairTax will apply to new homes. Many economists state that the embedded cost in new home construction is an estimated 25% and home prices would stay consistent. Since the FairTax will not be applied to existing homes and their cost is closely linked to new home prices, any cost change in new home prices will also be reflected in used home prices. If new home costs were to inflate, homeowners would enjoy a capital gain on the value of their home. Conversely, non-homeowners (future homebuyers) would face a loss as their future expenditure on a home would rise. However, with families bringing home their entire paycheck, the FairTax would allow the faster accumulation of a down payment as savings and investment are not taxed.
I'm not reading the same certain doom and gloom in there you seem to be. It's a question. A question to answer, for sure. Something to spin as a clear pitfall to the system? Hardly.

As for the "23%" and "30%" --It's explained on the official fair tax site. Unless you're completely uncapable of functional level reading, there's nothing hidden.

To make it easy:
Bob earns 100$
Bob is taxed 23%
Bob has 77$
Bob can buy a 77$ product

Ted earns 100$
Ted is not taxed yet
Ted has 100$
If Ted buys a 77$ product with a ~30% sales tax, he spends 100$.

What they say on the site (several times if I remember correctly) is that the 30% sales tax is roughly equivalent to the 23% income tax.

Sure, it's not cut and dry. Like previously held assets essentially deflating in value overnight as they've already been purchased with taxed money and if they are, or were they to be liquidated for spending would again be taxed.

[sbw]

And that's not a benefit of wealth that the presence or absence of an income tax changes. What you're claiming as a benefit is SECURITY. An insurance policy, for instance, is security. It does you no fucking good unless you use it.

No amount of "saving" money to keep it from being taxed saves you from the fact that, to actually benefit from that money, it must be used. Tax it now or tax it later--unless you want some socialist system you aren't going to significantly affect the "freedom" available to any person. Especially since the 100,000$ worth of "freedom" you have sitting in the bank will only buy you 77K worth of "freedom" just like 77K post tax now.

Granted, I'm not blindly advocating it (in reference to mg) and it should certainly be carefully analyzed to determine precisely what effect it might have. The lack of pre-final product taxes might be problematic, but it also encourages production. I'm not enough of an economist to say (I don't know about you.)

I think I finished second in the "most libertarian" poll (with a bunch of negative expletives attached; I've never been so proud) behind my hero robespierre. so I'm certainly not espousing any sort of 'socialist' distribution system. your original point, I think, was that savings are useless, in macro terms, because it's money being taken out of the economy. in some cases this may be true; but rich, retired people tend to continue actively managing their funds (or paying a professional to do so; there's another positive externality, that all the people at schwab get a check)...which generally means re-investing those savings, whether that means stocks, or real-estate, or whatever.

an insurance policy is not security in the same way that cash is. it protects me if I'm sick, or gives cash (coincidence?) to my relatives if I die. a mountain of cash means I can do whatever the hell I want right now, which is not a provision included in any insurance policy. if such a thing existed, I would sign up--maybe I should start this "fun insurance" company, and disburse a free 8-ball, perhaps even a hooker, with every new policy.

Scott

[sbw]

Quote:
"As previously discussed, the FairTax will apply to new homes. Many economists state that the embedded cost in new home construction is an estimated 25% and home prices would stay consistent. Since the FairTax will not be applied to existing homes and their cost is closely linked to new home prices, any cost change in new home prices will also be reflected in used home prices. If new home costs were to inflate, homeowners would enjoy a capital gain on the value of their home. Conversely, non-homeowners (future homebuyers) would face a loss as their future expenditure on a home would rise. However, with families bringing home their entire paycheck, the FairTax would allow the faster accumulation of a down payment as savings and investment are not taxed."

fuck! naturally, I didn't read the whole article...it certainly would drive up the price of surrounding used homes...this shit would make me rich, too bad it won't happen...

Scott

[abathur]

an insurance policy is not security in the same way that cash is. it protects me if I'm sick, or gives cash (coincidence?) to my relatives if I die. a mountain of cash means I can do whatever the hell I want right now, which is not a provision included in any insurance policy. if such a thing existed, I would sign up--maybe I should start this "fun insurance" company, and disburse a free 8-ball, perhaps even a hooker, with every new policy.

Scott
;)

And as stated--that is a benefit of a mountain of cash in any system. Yet if you go do anything you want right now (other than the 8 ball and the hooker) you're going to get hit up with a tax for doing it. Tax system is 100% irrelevant this argument against the presence of wealth. So it seems it has no presence in an argument about such a system!

[Dman]

You tend to ignore the give and take of a rather fair and balanced article on the wiki. There have been some reasonable potential problems pointed out by some. Some others contend that won't even be a problem.


I'm not reading the same certain doom and gloom in there you seem to be. It's a question. A question to answer, for sure. Something to spin as a clear pitfall to the system? Hardly.

As for the "23%" and "30%" --It's explained on the official fair tax site. Unless you're completely uncapable of functional level reading, there's nothing hidden.

To make it easy:
Bob earns 100$
Bob is taxed 23%
Bob has 77$
Bob can buy a 77$ product

Ted earns 100$
Ted is not taxed yet
Ted has 100$
If Ted buys a 77$ product with a ~30% sales tax, he spends 100$.

What they say on the site (several times if I remember correctly) is that the 30% sales tax is roughly equivalent to the 23% income tax.

Sure, it's not cut and dry. Like previously held assets essentially deflating in value overnight as they've already been purchased with taxed money and if they are, or were they to be liquidated for spending would again be taxed.

So…it doesn’t make the rich richer? Or is that a good thing?

I linked the wiki article specifically to show a balanced side. I’m just stating my personal take on it, in which the rosy assumptions outlined by the proponents do nothing to offset the potential negative outcomes.

The spin on the “However, with families bringing home their entire paycheck, the FairTax would allow the faster accumulation of a down payment as savings and investment are not taxed” argument is the circular logic I was referring to earlier. Ok, so you can save faster, but you still have to pay $75k in tax on top of a $250k home. That is significant to me and cannot be glossed over by “but you can save faster” BS.

And no, the 30% is not hidden, but why not just call it 30%, which it is. Why even bother with the whole 23% business? It’s still deceptive no matter how you cut it. Including the notion that 30% sales tax is roughly equivalent to 23% income tax.

[mgb]

I have a question. How is the tax collected? I mean, you buy a house, pay 23% tax, to whom? Do you pay it to the seller who in turn gives it to the government or do you write two checks, one to the seller and one to the government.

And if it's paid to the seller, why wouldn't the seller just take off? I mean, having sold the house and having an extra 23% in their pocket.

The idea that it will cause an entire part of the government to just disappear is silly. Someone is going to have to collect those taxes. And when they aren't paid there will have to be another someone else to go after them. And given the insane amount of checks flying in there is going to be a great deal of paperwork.

[abathur]

Many economists state that the embedded cost in new home construction is an estimated 25% and home prices would stay consistent.

That is to say: "Many economists say the reduction in the cost of products required to produce new houses could likely reduce the price of a new home enough to compensate for the tax. If this doesn't hold..."

You would bother with the 23% because that's meant to convey the equivalency of the sales tax to the income tax people are actually used to paying, rather than relating it to a sales tax which is not only a scarrier number, but inaccurate in relation to the form people are used to spending. If grandma wants to give you 5000 lira, what information is more useful to you--that she's giving you 5000 lira, or that she's giving you $3,694?

Tax collection issues would seem to be rather relevant. The wikipedia article discussed collection fees paid to states which encourage them to collect as much of the money as possible. I think the businesses get to keep a small fraction too. Whether that amount of bonus legally is enough to keep most from under-reporting and risking legal problems? A question worth looking into for sure.

[C.J.Woolf]

The entire premise is based upon the assumption that the economy will “boom” and make everyone rich and live higher standards, eliminating the poor, making it easy to buy a house, easier to pay for medicines and the associated sales tax if you’re sick, etc. Many of the answers in the FAQ’s revolve around this circular logic. “If it passes, you’ll have so much money you can afford to pay 20% tax on that $250k house, or on your medicines you need to survive!” Although this may be the case in the immediate short term, what happens in the long run?
1. Implement "fair tax" (or flat tax, or "trickle-down economics")

2. ??? (or, A MIRACLE HAPPENS)

3. Profit! (Well, the rich do, anyway.)

[Sue Denim]

1. Implement "fair tax" (or flat tax, or "trickle-down economics")

2. ??? (or, A MIRACLE HAPPENS)

3. Profit! (Well, the rich do, anyway.)
Where are my underpants?

[Xylix]

That's a rather asenine question to ask ME

It is a perfect legitimate question. How much the rich less or more the rich / middle class / poor are taxed in actual dollars is the standard method of measuring actual benefit as compared to the current system.

If this question cannot be answered then the statement:

--- Who benefits? The only way the rich are really going to benefit more is: ---

Is not based on any evidence.


So I ask you, how do you know this? Have you looked at the standard Metric? The answer you have given is a flat out no. Thus, I conclude you have no concept of how this actual effects the poor or rich.



You're going to have deductions and expenditures of greatly varying amounts.

This is fallacy. The specifics of the current system are irrelevant to the general conception of Income tax vs Sales tax.


I know people who make 30K a year and have far more available income than people earning half a million.

This is fallacy.

Disposable income is more closely related to expenses living expenses, and has NOTHING to do with a discussion on taxes.

The legitimate thing to talk about would be the income left after taxes for the $500,000 earner, and the $30,000.


That's largely an issue of how people are taught to deal with money.

This is a seperate issue.

But I agree, generally, no matter the tax situation if individuals spend wisely their situation will improve.

However, one must have sufficient money with which to improve their situation.




I'm not sure what the huge issue with accumulated liquid wealth is. Unless it's sitting in a private vault it IS being used in the banking industry to fund the business and personal loans driving auto, home and new business development.

I will defer my statment on that for the moment. It really isn't that relavant to a discussion on the FairTax.


I don't agree with the estate tax really. I think most of the smart monied people figure out the appropriate ways around estate tax other than in sudden/accidental deaths anyways.

That isn't a valid attack on the concept of the estate tax. All that calls for is the rerendition of the tax in a more enforcable form. Not the repealing.


There are people "worth" a lot of money out there, but most of those aren't holding a majority of that in forms that truly keep it out of the economy.

The estate tax is essentially a method to defeat the accumulation of wealth over generations. Not to return the money to the economy.

This attack isn't valid.


I think upper middle class is probably more likely to suffer from estate tax than the rich as the assets are more likely to be unpaid for, yet still taxed.

What do you base this conclusion on? Have you looked at the value of wealth collected from each group from the estate tax? Or are you basing this off the fact that congress has poked 10,000 loopholes in the tax?

A good estate tax would tax both liquid and solid wealth being passed on at death. So if your statement is: The current estate tax is flawed: I'd agree. However, that isn't a sufficient call to not HAVE an estate tax, only to fix it.


As a little side: amongst the middle class acumulated wealth pretty much is always equal to the value of their house. At least 90% of the wealth in the US is concentrated in the hands of the top 10%

Further, you can always make estate taxes progressive.



Not to mention the way a lot of second+ generation money didn't work hard for what they have and tend to go through it like water maintaining or increasing the lifestyles their parents raised them with.

Which explains exactly why class migration is so low in this country....

Fact: Most of the rich stay rich, most of the poor stay poor.
Fact2: If you are rich, you were probably born rich, and likely your grandparents were rich.


This statement of yours doesn't mesh with reality.




It’s another scheme designed to concentrate wealth. If you believe wealth should be concentrated, then it is a good idea. Republicans are constantly trying to concentrate wealth.

Ah Dman! While I might not always agree with you, at least argue well!



Ultimately it depends more upon who’s in charge and executing the system as to whether one system works better than another.


THAT I can agree with!

Though I'd saw you can look at the basic features that each tax system always has. For instance, sales tax puts the burden of collection in the hands of the corporation/government while income tax relies on the people/corporations/government.

Hence, it is easier to track sales taxes, as you have to track less entities.

On the other hand, high sales taxes (30% or so in traditional form) can create a black market for goods. Especially once special interests start raising taxes on luxury goods.

Viscea versa there is already a market for 'illegally' avoiding income taxes...

So you can evaluate the two methods. Conceptually Sales tax has SOME advantages, but to be better than the current system it probably needs a hellish number of modifications.

Most likely the best solution, like in all the rest of nature is a composite of different taxes.


You tend to ignore the give and take of a rather fair and balanced article on the wiki. There have been some reasonable potential problems pointed out by some. Some others contend that won't even be a problem.

For all that I love Wiki, it is neutrally spun. As such, it tends to treat abysmal or great ideas much much more mildly than it should.


To put it another way: Some people contend the world is flat, or that a giant Chaos Cloud of Hawking Radiation is going to obliterate the solar system.

A contention does not mean that the contention has any value, or is based off of anything resembling reality.



As for the "23%" and "30%" --It's explained on the official fair tax site. Unless you're completely uncapable of functional level reading, there's nothing hidden.


I would consider framing something in a non traditional manner, especially when it produces more mild numbers as smacking of deception. Further, after reading wiki I'm aware that these numbers are the LOWEST ones produced by groups viewing this tax.

Which also smacks of deception.

I say again: Why if this is so fair and nice is it only supported by Republicans?


the FairTax would allow the faster accumulation of a down payment as savings and investment are not taxed

?

Home cost I: 200K
Home cost F: 260K

Income I= 100K - 23% = 77K
Income F= 100K - 0 = 100K

Home I / Income I = 2.6
Home F / Income F = 2.6

Numerically they are exactly the same. There will be no faster accumulation of the down payment (unless for some reason you aren't paying taxes on that...), or on paying off the house as the house will be more expensive.

It will 'raise' the value of currently owned buildings though, but only for CURRENT owned buildings. For everyone else who buys homes for the next several decades it will have no effect. (As home worth == amount spent on the home)




And as stated--that is a benefit of a mountain of cash in any system.

There is no benefit of the extra cash in this system, excepting that it allows better purchasing power for buying stock...

But, that extra stock purchasing power would cause a hike in stock values... thus returning purchasing power to where it was. (Same supply, more money = higher cost)

Essentially all you are doing is creating a very strange sort of inflation, in which all 'wealth' increases in value by ~30%, while it's purchasing value drops ~30%. It's a game of imaginary numbers, any concievable 'benefit' there of is only from a temporary lag before wealth reaches it's new value.

During that period you won't have economic growth, you'll have individuals feasting on the flesh of the less wise.



Tax system is 100% irrelevant this argument against the presence of wealth. So it seems it has no presence in an argument about such a system!

Not if you're taxing wealth! ;)

That is what the estate tax is all about, and Property Tax for that matter.

Further FairTax is eliminating such taxes on wealth, so yes taxes on wealth and the accumulation there of are VERY relavant to this discussion.




If grandma wants to give you 5000 lira, what information is more useful to you--that she's giving you 5000 lira, or that she's giving you $3,694?


The useful amount is the amount I'd be holding in my hand after she gave me the damn money. =D



Tax collection issues would seem to be rather relevant. The wikipedia article discussed collection fees paid to states which encourage them to collect as much of the money as possible. I think the businesses get to keep a small fraction too. Whether that amount of bonus legally is enough to keep most from under-reporting and risking legal problems? A question worth looking into for sure.

Tax collection amounts are VERY relevant. The Wiki article also gave the cost of collecting money ~400 billion (much higher than my guestiment). If that can be cut then there IS a huge econmic advantage. That's no imaginary number, that's 25% systematic inefficiency.

Equally, are the illegal black markets that will open up with goods being sold for substantially less and the corresponding growth of organized crime that will be associated.




The idea that it will cause an entire part of the government to just disappear is silly. Someone is going to have to collect those taxes. And when they aren't paid there will have to be another someone else to go after them. And given the insane amount of checks flying in there is going to be a great deal of paperwork.

I too am supicious that this will have such a large impact. Though, I am sure it would have 'a' impact.

[Dman]

Let’s step back and look at the big picture. Why does anyone here truly want to see tax reform? To make it fair? Bull. It's really about making it easier and less taxing on YOU personally.

So how does this plan offer solutions to these two points?

Let’s start with the tax rate. Ask yourself what is your total EFFECTIVE federal tax rate now? My hunch is that for most people here, it is far below 30% - or even 23%. In fact, the average total effective federal tax rate (income tax plus social security & medicare) is less than 20%. http://www.cbo.gov/showdoc.cfm?index=5324&sequence=0#table1A That’s the AVERAGE. Very, very few people are paying even that much, and even fewer are paying more. Only if you’re ultra-rich are you paying higher than this.

Now, take that tax savings, say 20% for simplicity, and add that to your current take home pay. Now deduct savings, and get to your disposable income. Take 30% of that and this is what you would pay. Still sound like a good idea? Keeping in mind that I’m sure most people here effectively pay much less than even 20%. You would have to save a large portion of your money to make it worthwhile, and as mentioned before, you can only save large amounts of your money if you are making large amounts of money. i.e. favors the rich

(BTW – another deception of the “fairtax” is that they don’t discuss the “effective” tax rate on your income, only the marginal brackets. For instance they say “most people are in the 15% bracket, plus 7.65% FICA, that’s 23% right there!” but this is deceptive, because you don’t pay 15% on ALL of your income – plus it assumes you have absolutely no deductions. As can be seen from the link I provided, the real effective rate you pay is less than 23%. Besides, as we discussed before fairtax is 30%, not 23%. Weasels.)

Ok, so maybe not such a cheaper alternative (again unless you’re super rich) but it’s simpler you say, and costs less to prepare your taxes. Ok, so you don’t spend $20 on TurboTax this year. Because it’s sooo hard to do your taxes. Whatever. How many of you have actually tried to do your taxes? Ok, so it takes maybe 3 or 4 hours. Wow. Granted there are some that are a headache to do and are worth paying a professional to do, but those are typically not the norm... again unless you're rich. If all you have is wage income, some interest, a couple stock sales, mortgage interest, childcare expenses, and other extremely common tax variables, it shouldn't take you more than about an hour or two of actual prep time. At most. For the vast majority of us this isn't rocket science, people. It's your money and you should know pretty well how it's spent and how it's received...you just have to put the little numbers on the forms you get in the mail in the right little boxes on the tax form, and maybe actually read the tax form instructions. You don't even have to do that if you buy TurboTax.

So we want to radically shake up the system to an uproven, unknown one where there are a lot of “assumptions” so we can pay basically the same, if not more, in taxes, plus save a couple hours of tax prep time a year, so that the tax structure will be more "fair" - meaning it's even easier for the rich to get richer (which I haven’t seen any refute of).

Sign me up! I highly recommend this! suckers

[abathur]

Christ. You two are a study in selective reading.


It is a perfect legitimate question. How much the rich less or more the rich / middle class / poor are taxed in actual dollars is the standard method of measuring actual benefit as compared to the current system.

If this question cannot be answered then the statement:

--- Who benefits? The only way the rich are really going to benefit more is: ---

Is not based on any evidence.


So I ask you, how do you know this? Have you looked at the standard Metric? The answer you have given is a flat out no. Thus, I conclude you have no concept of how this actual effects the poor or rich.

The statements are very different. There is quite the tangible difference between saying how something could work (READ: THIS IS HOW THE RICH COULD BENEFIT) and absolutely stating the relative benefits of the rich over the poor. I'm a student. Almost everyone I know is 1. Independent of their parents and 2. Not making enough money to be above the poverty threshold. Comically enough, only a few of these people are "poor." Thus, a clear instance of how things can vary. Yes, excuse me, I'm completely capable of noting how the rich would gain money without being the encyclopedia of statistics and knowledge necessary to precisely answer the effects on every family in America.

*places monitor to head* (And in my best unjustifiably judgemental voice): Thus I conclude you have no concept of my ability to answer a question, nor do you know the difference between a general theoretical question and a question making significant assumptions about spending habits that would require significant statistics to back up.



This is fallacy. The specifics of the current system are irrelevant to the general conception of Income tax vs Sales tax.

This is lunacy. Current deductions and expenditures have a significant place in the discussion of the change between an income and sales tax system where current purchase that are essentially refunded by the government would then become taxed purchases. You're telling me the "expenditures" or "that money a sales tax might actually make" and the "deductions" or "the tab the government is picking up but would be no longer doing under a sales tax" is irrelevant? What planet do you live on?


This is fallacy.

Disposable income is more closely related to expenses living expenses, and has NOTHING to do with a discussion on taxes.

The legitimate thing to talk about would be the income left after taxes for the $500,000 earner, and the $30,000.

This is false? How would you know? Perhaps you know these people better than I do? Or perhaps there's some functional issue with the understanding of the term "fallacy"? I stated a fact, as I know it in my life. Perhaps it is "irrelevant" to the argument, but it is by no means "fallacy." Disposable income is perfectly relevant mind you as far as "spending" this money goes. (I'm also pretty sure DISCRETIONARY income is related to "living expensis" and "disposable" income is "what you have after taxes."

The point is--and still stands. I know people with a lot of money who spend every penny every month and have no spare room for anything. No eating out, no going to movies, no vacations. Yet I know families living on half the income who have a significant amount of savings, and still spend money on entertainment. That is to say, there are plenty of "rich" people who are spending every penny, and plenty of lower middle class people who aren't.


This is a seperate issue.

But I agree, generally, no matter the tax situation if individuals spend wisely their situation will improve.

However, one must have sufficient money with which to improve their situation.

It could be said. I'm not sure I fully agree, though. My mother was born into quite a bit of wealth and has been perpetually strapped economically no matter what she earned (under 40K.) My father was born into a dirt-poor family of 5, has never gone to college and virtually never makes purchases on credit. Even as just a small business owner (he's had opportunities to expand and turned them down, IMO he could be doing significantly better if he had wanted the work that accompanied those opportunities. He started his business a year after I was born (around that time my parents divorced.) As a young child I remember riding in his old POS beat up white pickup. Now? 20 years later with no degree and no significant starting capital he's living in a 300,000$ home in a nice subdivision, paid for, with two paid cars, no credit, no debt. He's gone from a member of the lower class to upper middle class just on a level head and some hard work. I didn't live with him, so I guess I didn't live upward mobility--but it sure as hell isn't a myth, and you can sure as hell do it from scratch.



That isn't a valid attack on the concept of the estate tax. All that calls for is the rerendition of the tax in a more enforcable form. Not the repealing.
Good boy. It's a statement of opinion.


The estate tax is essentially a method to defeat the accumulation of wealth over generations. Not to return the money to the economy.
What is the net effect? As I said, despite loopholes there's not a significant "American Aristocracy" which is and has been rich for many many generations. (as far as I can tell from my observation.) Most of the people with significant holdings have either made it themselves, or it was produced within a generation or two.


What do you base this conclusion on? Have you looked at the value of wealth collected from each group from the estate tax? Or are you basing this off the fact that congress has poked 10,000 loopholes in the tax? I'm basing it on the obvious logic. The upper middle class are those most likely to be monied enough to owe the tax, yet the least likely to have the dedicated lawyers, advisors and other loophole finders to take appropriate advantage of the other ways to pass on wealth before death.


A good estate tax would tax both liquid and solid wealth being passed on at death. So if your statement is: The current estate tax is flawed: I'd agree. However, that isn't a sufficient call to not HAVE an estate tax, only to fix it.I see merit to an estate tax--I just think that merit is to prevent significant amounts of money staying in the same place for multiple generations. Perhaps I'm wrong, but I believe a lot of the accumulated wealth today is still held by those who did the accumulating. (the biggest exception is probably what, the Walton's? re: walmart.) It's a touchy issue. Estate tax can hurt middle class entrepreneurial families--this is the good side of business. These are the non-corporate entrepreneurs who economic policies should be supporting more than they do, and who I believe I have significant reason to worry about their well being under an estate tax. Does that clarify my position? It's not that I don't agree I guess, I just don't feel there's enough of an old money problem to even have the door open on those effects to smaller local and regional business families.


As a little side: amongst the middle class acumulated wealth pretty much is always equal to the value of their house. At least 90% of the wealth in the US is concentrated in the hands of the top 10%


Further, you can always make estate taxes progressive.
Significantly, if done at all. And under circumstances where the intentions of such actions and the spirit is protected from later decisions to nudge down that amount for the support of some new social program.



Which explains exactly why class migration is so low in this country....

Fact: Most of the rich stay rich, most of the poor stay poor.
Fact2: If you are rich, you were probably born rich, and likely your grandparents were rich.


This statement of yours doesn't mesh with reality.
So are you agreeing with my statement, using it to support your facts, and then saying it isn't based on reality? As for your "facts"

In the last ~ 30 years approximately 5% of those who were poor at the beginning of that time period are still poor.

_only_ 5% of those people have been consistently poor over this period. Of those living in poverty at that time 30 years ago I believe some 30% or so are now in the top quarter of income. (but omg you said "Fact:" before it!)

Fact 2: Perhaps there is SOME merit here, but I don't believe it is anything close to as absolute as you state. Those born rich of course have significantly greater opportunity, yet the above statistics indicate a significant number of those determined to be poor at any given time will rise up out of that poverty during their lifetime. That is, IMO (and in combination with my personal experience) significant support for upwards mobility.


On the other hand, high sales taxes (30% or so in traditional form) can create a black market for goods. Especially once special interests start raising taxes on luxury goods.

Viscea versa there is already a market for 'illegally' avoiding income taxes...

So you can evaluate the two methods. Conceptually Sales tax has SOME advantages, but to be better than the current system it probably needs a hellish number of modifications.

Most likely the best solution, like in all the rest of nature is a composite of different taxes.
Black market may well be a product, though, for people who make their income illegally and previously escaped taxes, they would have to buy all their goods on the black market to continue escaping taxation (i.e. drug dealers making several hundred grand a year and rolling around in $80,000 cars who would then have to buy the cars on the black market, steal them, or be taxed on them.) Another give and take. I don't know which way it comes out better--certainly another something to investigate carefully. Indeed, the best solution may be a good combination of taxes (which I haven't seen yet.)



For all that I love Wiki, it is neutrally spun. As such, it tends to treat abysmal or great ideas much much more mildly than it should.


To put it another way: Some people contend the world is flat, or that a giant Chaos Cloud of Hawking Radiation is going to obliterate the solar system.

A contention does not mean that the contention has any value, or is based off of anything resembling reality.
Likewise with cited problems. Apparently the qualification for a "valuable" contention is "a contention you agree with."


I would consider framing something in a non traditional manner, especially when it produces more mild numbers as smacking of deception. Further, after reading wiki I'm aware that these numbers are the LOWEST ones produced by groups viewing this tax.

Which also smacks of deception.

I say again: Why if this is so fair and nice is it only supported by Republicans?

Since they state the numbers up front on the site and clearly explain the difference between the numbers given, I'll still "contend" (whether that makes me a lunatic or not) that it's only deceptive to those with some functional understanding problem. Sure, it's in the lowest term that happens to be most closely related to that "reality" thing (how people pay taxes now) but both sides of the story are openly told. Perhaps if they just said it was a 23% tax and never said anything else (though by income, it IS still 23%, so even then deception is rather minimal.)

Party line is a contention for sure, and I wouldn't want to see the system pass as is without significant support from the Democratic party (despite my personal support for it.) As for my party allegiance--I have not chosen yet, nor do I particularly plan to (I sure as hell have no intention to allign with the Republican religious right.) Despite this, my father, a strong independent, supporter of clinton and critic of Bush also supports the FairTax system (just found out when I saw him yesterday, though, so we haven't spoke about it much yet.)



It will 'raise' the value of currently owned buildings though, but only for CURRENT owned buildings. For everyone else who buys homes for the next several decades it will have no effect. (As home worth == amount spent on the home)
I genuinely don't see how. (not being a smartass this time) Perhaps if new building cost rises significantly so older buildings significantly grow in value. Note, however, a building worth 100,000K now, bought with taxed money before (we'll say 140,000 "earned) sold for 120K is only going to give you 92K of purchasing power after taxes. If goods prices fall under the system and the tax is incorporated in a way that basically maintains consumer price, however, it seems like no purchase power would be lost, yet no significant increase in housing values would seem to occur then. Perhaps there's something I'm not considering.



Not if you're taxing wealth! ;)

That is what the estate tax is all about, and Property Tax for that matter.

Further FairTax is eliminating such taxes on wealth, so yes taxes on wealth and the accumulation there of are VERY relavant to this discussion.
*bashes his head into a wall* The relevance being the constant recurring theme of "oh, but the rich can go buy an 8ball and a nice hooker if they need it." in which case, as I said, the tax system has no relevance. There's probably a very small number of the population who are going to be able to buy an 8ball and a whore under one system and not another. Not to mention the lack of effect an estate tax would have on that. Savvy?




The useful amount is the amount I'd be holding in my hand after she gave me the damn money. =D
Not if you can't go to walmart and spend lira. ;)


I too am supicious that this will have such a large impact. Though, I am sure it would have 'a' impact.
True--it's arguable. Though that's not the only benefit. There are also large reductions in the amount of money individuals and businesses are forced to spend just to calculate taxes. (I'm not sure what the stat is, but I seem to remember hearing that just over 50% of filers pay to do so. I don't know how much the average payment is, but I know my parents pay several hundred additional dollars (essentially a "tax" in an of itself for anyone with finances more complex than can easily be calculated alone and without some obscene amount of knowledge on the tax code.) I think there are probably much better uses of government, individual and corporate expenses to keep records and calculate taxes.

<3

[Dman]

abathur - suggestion -

could you please include in your quotes the member from whom you are quoting from. For a second I thought you were responding to me, and I was a little confused, before realizing those were not my quotes! (it's been a long day)

Thanks

[abathur]

A fine suggestion indeed. However, I didn't feel like doing that on top of quoting and replying everything I already had.

[Dman]

There are also large reductions in the amount of money individuals and businesses are forced to spend just to calculate taxes. (I'm not sure what the stat is, but I seem to remember hearing that just over 50% of filers pay to do so. I don't know how much the average payment is, but I know my parents pay several hundred additional dollars (essentially a "tax" in an of itself for anyone with finances more complex than can easily be calculated alone and without some obscene amount of knowledge on the tax code.)

That statistic, made up or not, doesn’t mean anything. I used to work for a CPA firm, and a large number of people pay to have their taxes done when they have already done all the work for the CPA (by filling out a questionnaire).

Today, TurboTax is essentially that questionnaire, and like I mentioned before all you have to do is fill in the boxes. It’s ridiculously simple, people just have a false sense that taxes are so hard and confusing. You don’t even need Turbotax in the vast, vast majority of cases, but it’s cheap and makes people feel better anyways.

Hell, my own brother was paying hundreds of dollars every year for an accountant to do his taxes, and when I found this out I asked to see his tax return. It was so simple it was not funny. He now buys turbotax for $25 at Costco every year and does them himself.

It’s just like I.T. – everyone who doesn’t do it for a living thinks it’s so hard, and they pay through the nose to have “professionals” do it for them. The reality is if you sit down and actually put a little thought and effort into it, you find it’s very easy.

There’s your free advice from your friendly neighborhood Dman for the day.

[iponjs]

Regardless of any changes we make, you can be sure that the gov't will spend more money than any corporation would to figure out how to make the change. Then they'll piss away more money trying to put the system together at the last minute in time for some election, then they'll spend more money fixing the problems incurred during the rush job...

Rather than changing the tax system, fix the root of the problem - the inefficency of the organization doing the taxing. Once they prove that they can manage $$ like proper adults, THEN discuss changing the current tax system. Otherwise, it's just another election platform.

However, IF we must change, I suggest taxing people on the amount of waste/emissions they generate, not the money they take in.

Dman is right - buy TurboTax and worry about something else.

[abathur]

That statistic, made up or not, doesn’t mean anything. I used to work for a CPA firm, and a large number of people pay to have their taxes done when they have already done all the work for the CPA (by filling out a questionnaire).

Today, TurboTax is essentially that questionnaire, and like I mentioned before all you have to do is fill in the boxes. It’s ridiculously simple, people just have a false sense that taxes are so hard and confusing. You don’t even need Turbotax in the vast, vast majority of cases, but it’s cheap and makes people feel better anyways.

Hell, my own brother was paying hundreds of dollars every year for an accountant to do his taxes, and when I found this out I asked to see his tax return. It was so simple it was not funny. He now buys turbotax for $25 at Costco every year and does them himself.

It’s just like I.T. – everyone who doesn’t do it for a living thinks it’s so hard, and they pay through the nose to have “professionals” do it for them. The reality is if you sit down and actually put a little thought and effort into it, you find it’s very easy.

There’s your free advice from your friendly neighborhood Dman for the day.

Of course. *I'm* not the one doing that. None the less, I believe we spend a silly number in billions every year on figuring and recordkeeping for taxes, and then another silly number in billions to collect it.

[mgb]

I was lazy before, but I dug up some tax statistics.

One thing that bothered me about this tax plan is that corporations wouldn't have to pay any taxes at all. The consumers are responsible for items they buy from corporations and corporations don't pay any corporation to corporation taxes. Why is this bad I guess is the first question. Well, that's a lot of tax revenue to lose. Even if Coca Cola isn't paying any taxes, there are bound to be a lot of companies that do, and those companies make a hell of a lot more money than an individual.

According to The House of Representatives (http://64.233.167.104/search?q=cache:RvlqXXJl4vEJ:www.house.gov/jec/tax/04-20-04.pdf+what+percentage+of+the+US+federal+budget+comes+from+corporate+taxation&hl=en&client=firefox-a) the US taxes corporations at a rate of 35% (some other sites list it at 21% which is probably a more fair number), plus 0-12% in state taxes. I am sure there are loopholes and minimums, but that's a significant amount of money to lose.

The assumption is that consumers will pick up the slack, but I don't see how they will, unless they are encouraged to spend more money, and therefore lose more of their money to taxes, which defeats the entire purpose of of changing the tax rate.

Basically, I see this as an opportunity to cut a whole bunch of "expensive" social programs because they would no longer be affordable for the government as it loses tax revenue under the guise of helping everyone out.

[sbw]

Where are my underpants?

I stole them. I mean, uhh, the republicans stole them.

Scott

[Fallout]

I don't see why we can't just jack up taxes on the rich and cut back spending on blowing people up in Iraq...and then cut some of those taxes for low-income people.

[Xylix]

abathur - suggestion -

could you please include in your quotes the member from whom you are quoting from. For a second I thought you were responding to me, and I was a little confused, before realizing those were not my quotes! (it's been a long day)

Thanks

A very good suggestion, and you should have aimed that statement at me too. ;)





The statements are very different. There is quite the tangible difference between saying how something could work (READ: THIS IS HOW THE RICH COULD BENEFIT) and absolutely stating the relative benefits of the rich over the poor. I'm a student. Almost everyone I know is 1. Independent of their parents and 2. Not making enough money to be above the poverty threshold. Comically enough, only a few of these people are "poor." Thus, a clear instance of how things can vary. Yes, excuse me, I'm completely capable of noting how the rich would gain money without being the encyclopedia of statistics and knowledge necessary to precisely answer the effects on every family in America.


I'd contend that NO you can't know without evaluating the real numbers. Taxes are often a game of deception by many parties, and the only 'real' thing is often how much each individual (or group) is taxed in actual dollars.

Hence: Your statements are speculation and should be regaurded as such. That is as opposed to if you HAD done the statistical research.

And no, I don't expect you to do the research, I expect you to not voraciously hold onto statements you know have very little support and I'll try to do the same... ;)





This is lunacy. Current deductions and expenditures have a significant place in the discussion of the change between an income and sales tax system where current purchase that are essentially refunded by the government would then become taxed purchases. You're telling me the "expenditures" or "that money a sales tax might actually make" and the "deductions" or "the tab the government is picking up but would be no longer doing under a sales tax" is irrelevant? What planet do you live on?


The concept in here is that Sales taxes and Income taxes are essentially methodologies. Specific deductions, variations, and special interests can apply to each. To label the specific failings of 'A' specific income tax system and then measuring it against a 'hypothetical' and 'super pure/idealized' vision of another is fallacy.

It would be like arguing all blimps are stupid because they explode into fire balls, you know? Like the Hidenburg.


Now, discussing judgeable results from the methodologies, is relevant. Such an example would be tax collection.

Anyone of course, is free to question whether something is





This is false?

No I said it was fallacy:

n. pl. fal·la·cies

1. A false notion.
2. A statement or an argument based on a false or invalid inference.
3. Incorrectness of reasoning or belief; erroneousness.
4. The quality of being deceptive.


I even said why: Disposable income is more closely related to expenses living expenses, and has NOTHING to do with a discussion on taxes.

That is, your 'counter' has nothing to do with taxes, but is being used, intentionally or not, as such.




The point is--and still stands. I know people with a lot of money who spend every penny every month and have no spare room for anything. No eating out, no going to movies, no vacations. Yet I know families living on half the income who have a significant amount of savings, and still spend money on entertainment. That is to say, there are plenty of "rich" people who are spending every penny, and plenty of lower middle class people who aren't.

There reason this is, and continues to be a fallacy is:

So? Why should I care? What the hell does this have to do with Income tax or Sales tax? If you'd like to make an argument to connect this to taxes... it then it might be relevant.




It could be said. I'm not sure I fully agree, though. My mother was born into quite a bit of wealth and has been perpetually strapped economically no matter what she earned (under 40K.) My father ... blah ... blah ... blah ... <snip> -but it sure as hell isn't a myth, and you can sure as hell do it from scratch.


Ah, your point is that social mobility exists. I agree. However, there just isn't very much of it, and it is shrinking. I'm a strong advocate of social mobility. Hence progressive taxes and taxes on wealth.


As I said, despite loopholes there's not a significant "American Aristocracy" which is and has been rich for many many generations. (as far as I can tell from my observation.) Most of the people with significant holdings have either made it themselves, or it was produced within a generation or two.

Uh, no. If this were the case then such a huge chunk of the poor wouldn't be black now would they?

The Bush's are an 'excellent' example of a muli-generational wealthy family that would in any other nation be called 'nobility'.

http://www.faculty.fairfield.edu/faculty/hodgson/Courses/so11/stratification/income&wealth.htm

Besides, as you can see, the distribution of wealth is terrifyingly scewed. There is no reason to allow it to persist through multiple generations.


I'm basing it on the obvious logic. The upper middle class are those most likely to be monied enough to owe the tax, yet the least likely to have the dedicated lawyers, advisors and other loophole finders to take appropriate advantage of the other ways to pass on wealth before death.


The middle class don't have much wealth to tax. So it isn't very relevant to them. Further, if you want to remove the lawyers, just write the damn laws in crystal clear language.

The flaws of the current system are not inheriant in an estate tax, anymore than blimps are inheriantly filled with hydrogen or painted with a material closely resembling rocket fuel.




In the last ~ 30 years approximately 5% of those who were poor at the beginning of that time period are still poor.


Yeah... sure... that's why all the cities are filled with the black who are poor, and have been poor for the last.... TWO HUNDRED YEARS.

http://en.wikipedia.org/wiki/Cycle_of_poverty
http://en.wikipedia.org/wiki/Social_mobility
http://ohioline.osu.edu/hyg-fact/5000/5702.html
http://news.bbc.co.uk/1/hi/programmes/from_our_own_correspondent/4159974.stm

From the last:
""If you are born into poverty in the US," said one of its authors, "you are actually more likely to remain in poverty than in other countries in Europe, the Nordic countries, even Canada, which you would think would not be that different.""

I really need to see where you got those numbers. Are they including situational poverty (e.g. college students)? If they are that is a highly unusual way to count poverty.




Black market may well be a product, though, for people who make their income illegally and previously escaped taxes, they would have to buy all their goods on the black market to continue escaping taxation (i.e. drug dealers making several hundred grand a year and rolling around in $80,000 cars who would then have to buy the cars on the black market, steal them, or be taxed on them.) Another give and take. I don't know which way it comes out better--certainly another something to investigate carefully. Indeed, the best solution may be a good combination of taxes (which I haven't seen yet.)

The real concern with a black market isn't that a few tens of billion of tax dollars will disappear into it. The problem is the potential that those tens of billions of dollars will go directly to ORGANZIED CRIME, turning it into a super bussiness the likes of which hasn't been seen since the prohibition days.

In otherwords, not only do tax dollars vanish, you 'spend' them on creating crime. Worse, many individuals won't see it to be that big of a deal to buy a few things here and there off the charts.

The problem further, becomes larger the higher taxes, or higher the incentives. Hence, if luxury items are taxed 'higher', expect lots of under the table purchases. Further, for those living on or near the poverty line the incentives are very large as it could substantially reduce spending.

Now, such a black market is only a possibility, but once it gets started... well its going to take decades to uproot it.


Apparently the qualification for a "valuable" contention is "a contention you agree with."


Nope, my statement there meant: A contention is not sufficient to dismiss. The contention must have 'strong enough' backing. So you can't just say "Some people would contend otherwise!"

You must say "Some people contend otherwise because of X" where X is sufficiently strong.





I genuinely don't see how. (not being a smartass this time) Perhaps if new building cost rises significantly so older buildings significantly grow in value. Note, however, a building worth 100,000K now, bought with taxed money before (we'll say 140,000 "earned) sold for 120K is only going to give you 92K of purchasing power after taxes. If goods prices fall under the system and the tax is incorporated in a way that basically maintains consumer price, however, it seems like no purchase power would be lost, yet no significant increase in housing values would seem to occur then. Perhaps there's something I'm not considering.

Not understand is fine. I'll do my best to clarify here.


Lets take two examples House 1, 100K bought before the tax change, House 2, 130 K bought after the tax change.

Now, if the tax only applies to new goods -- which FairTax indicates then to recouperate costs:

House 1: Sells for 100K
House 2: Sells for 130K (30K from the new tax)

However, due to the market, the seller of House 1 will take advantage of the situation to make extra money.

Thus:

House 1: Sells for 120-130K
House 2: Sells for 130K

and the seller of House 1 pockets the extra 20-30K. However, this is just an imaginary game, no new wealth was introduced to the pool, so all this can do is redistribute who has what. In this case those that gain are the people like the owner of House 1, those that lose are those with bank accounts comparitively larger than their wealth (if I had 10,000 dollars it now is 'worth' $7,777)


So you have wierd inflation, material wealth gains 'value' and stored 'money' loses value. Now, wealth is much more concentrated amongst the rich, but so are large bank accounts. The poor rarely have cash OR wealth. And the middle class are mostly in huge amounts of debt, but have little wealth. Creditors however, would be hit the worst.

Somehow... I'm not crying tears for those creditors.



A simplier way to put it is to extract ourselves complete from the situation.


Lets take for example: There are X things, and Y people.

Now, a tax effects neither the number of things, nor the number of people. Hence you still of have X things and Y people. The only thing that can change is who has what.


That's why I call it a game of imaginary numbers.




*bashes his head into a wall* The relevance being the constant recurring theme of "oh, but the rich can go buy an 8ball and a nice hooker if they need it." in which case, as I said, the tax system has no relevance. There's probably a very small number of the population who are going to be able to buy an 8ball and a whore under one system and not another. Not to mention the lack of effect an estate tax would have on that. Savvy?


Well, the lack of taxes on wealth, or the removal there of ARE amongst my big concerns on the FairTax. So yeah, it isn't easy not to focus on that aspect.



Not if you can't go to walmart and spend lira.

That's what money changers are for! Or blind sales men... but I repeat myself. ;)

[Dman]

Rather than changing the tax system, fix the root of the problem - the inefficency of the organization doing the taxing. Once they prove that they can manage $$ like proper adults, THEN discuss changing the current tax system. Otherwise, it's just another election platform.

Amen!


I was lazy before, but I dug up some tax statistics.

One thing that bothered me about this tax plan is that corporations wouldn't have to pay any taxes at all. The consumers are responsible for items they buy from corporations and corporations don't pay any corporation to corporation taxes. Why is this bad I guess is the first question. Well, that's a lot of tax revenue to lose. Even if Coca Cola isn't paying any taxes, there are bound to be a lot of companies that do, and those companies make a hell of a lot more money than an individual.

According to The House of Representatives (http://64.233.167.104/search?q=cache:RvlqXXJl4vEJ:www.house.gov/jec/tax/04-20-04.pdf+what+percentage+of+the+US+federal+budget+comes+from+corporate+taxation&hl=en&client=firefox-a) the US taxes corporations at a rate of 35% (some other sites list it at 21% which is probably a more fair number), plus 0-12% in state taxes. I am sure there are loopholes and minimums, but that's a significant amount of money to lose.

The assumption is that consumers will pick up the slack, but I don't see how they will, unless they are encouraged to spend more money, and therefore lose more of their money to taxes, which defeats the entire purpose of of changing the tax rate.

Basically, I see this as an opportunity to cut a whole bunch of "expensive" social programs because they would no longer be affordable for the government as it loses tax revenue under the guise of helping everyone out.

More evidence that this scheme is designed to make the rich richer (I know, I sound like a broken record, but some people don’t get it yet).

Also if I haven’t already mentioned this yet, note how they try to distance themselves from the “flat tax” proposals. That is because everyone initially jumped on the flat tax bandwagon as well, before eventually opening their eyes and realizing what a scam it was. The problem is that “fairtax” has the same agenda, which is to eliminate the progressive nature of our current system with one that is regressive. They deceptively try to spin it as progressive, since those under the poverty line get rebates and such. But the real problem is the range from middle and upper middle class to the uber-rich. They try to mask the regressive-ness of it by putting some progressive features in the lowest income ranges. But once you move beyond this, it goes away and becomes totally regressive at the mid-upper ends (where it counts).

Also found more evidence of deception on their site. Look at the FAQ’s, number 14.

They state if he spends $10M his effective tax rate is 22.96%. This is totally misleading, essentially a lie. They explicitly state that your consumption spend is GROSS, meaning it includes the tax. So if he spent $10M, the $2.3M tax is INCLUDED in that amount. So in reality, he spent $7.7M on actual goods and services (plus $2.3M tax on these = $10M spent). In real-world math, not false deception math, a $2.3M tax on $7.7M of goods and services = effective tax rate of 29.8%. Weasels.

They also rely very heavily upon the notion of “hidden” taxes of 23% for goods and 25% for services that people pay under the current system. Do you know where these figures come from? One guy from Harvard, Dale Jorgenson. And the only research of his that I found said that he thought electric utility prices would drop 23% and telecommunications would drop 25%. Ok, that’s two of the roughly 3 million things you pay for every year. Even worse, I read some of his paper (here - http://post.economics.harvard.edu/faculty/jorgenson/papers/BURDEN_web.pdf )
and he explicitly states on the bottom of page 2 that shifting the tax base from income to consumption SHIFTS THE BURDEN OF TAXATION FROM THE RICH TO THE POOR. Anyways, his actual proposal has nothing to do with fairtax or switching to a purely consumption based tax. He even disses the fairtax proposal on page 27. His proposal is actually a horribly complex mixture of existing tax system, parts of flat tax, parts of sales tax, and other stuff.

Here’s another interesting read about Dale Jorgenson and fairtax’s use and misleading practices regarding his work –

http://www.freerepublic.com/focus/news/1470200/posts?page=1

Here’s a snippet – “On page 84, you make it clear though that even though the workers will keep all of their paychecks for a big raise, you still believe that because of “the disappearance of the embedded taxes, the total price paid for consumer goods will remain very nearly the same”.
By assuming these two things together, you are misrepresenting Jorgenson’s report and double-counting the tax savings, first by giving them to the worker as a pay raise, and then at the same time assuming that there was a cost savings to the business.”

And

“So, Dr. Jorgenson, whose report you are relying on to support your calculation of embedded taxes, is stating that in making those embedded tax calculations he was not assuming that the worker would keep his current after-tax amount, NOT that the worker would keep all of his current gross pay-check. By reducing the gross pay of the worker to the current after-tax amount, the producers would see a cost reduction that would allow them to reduce selling prices. There would be no increase in take-home pay.”
And from here - http://money.cnn.com/2005/09/06/pf/taxes/consumptiontax_0510/?section=money_latest
“What The FairTax Book fails to mention is that prices can only fall this sharply if companies cut wages. I asked Jorgenson about this, and he agreed. Say your salary is $100,000 a year today, but you take home $80,000 after taxes.
Your company is still paying that extra $20,000. In a FairTax world, it will save that money, and be able to lower its prices accordingly, only if it can reduce your salary to $80,000. In other words, your take-home pay is the same as before. Sure, you'd get to "keep 100 percent of your paycheck," as Boortz and Linder repeatedly write, but it would be a smaller paycheck. That's kind of a big thing to leave out. “


I’m finding the more research I do on this subject, this fairtax stuff, the more BS and deception it seems to be. How many of you proponents of this have really looked deep into this, rather than simply reading their propaganda?

[Jacque]

Why argue in theory, there are states without incomes taxes. Texas and Florida come to mind.

State taxes (http://www.itepnet.org/whopays.htm) are essentially regressive BECAUSE of sales tax. It's worse than a flat tax.

Florida:

TOTAL TAXES (as a share of income) :

Lowest 20%: 14.4%
Second 20% 11.3%
Middle 20%: 9.9%
Fourth 20%: 8.2%
Next 15%: 6.9%
Next 4%: 5.0%
Top 1%: 3.0%

[Ptah]

Thread necro time.

I've been reading up on FairTax. I'm ok with it minus the "prebate" stuff. That's where it all comes apart to me.

Any other opinions?

[SWPIGWANG]

*looks at date*

Okay, 2 year necro and offering no useful point of view?

If I weren't a forum n00b I'd be hounding for blood....hell I'm hounding for blood anyways.

STRIKE HIM DOWN!
---
btw: regressive taxes: nuff said

[deuteros]

I'd rather not give the IRS any money. The FairTax system keeps the IRS but under a different name.

[Ptah]

I'd rather not give the IRS any money. The FairTax system keeps the IRS but under a different name.

Be that as it may, I'm still for something that at least seems a step in the right direction. I'm still researching if that's the case, although it certainly seems so (for the most part; again, the "prebate" nonsense is a very, very hole in the whole thing).