"Fair Tax"

[kingkilburn]

I am totally in favor of the US going to a "Fair Tax" system.

For those that don't know what it is:
FairTax - Wikipedia, the free encyclopedia (http://en.wikipedia.org/wiki/FairTax)
Americans For Fair Taxation: Americans For Fair Taxation (http://www.fairtax.org/)



The basics of it are that all income and capitol gains taxes are thrown out in favor of a higher sales tax. The idea is that you pay your fair share of the tax burden through what you buy rather than on the basis of what you make.

What does Zilvia think?



Please don't turn this into an anti-tax thread.

[Walperstyle]

Tax overseas business more then local, thus promoting local jobs.

First post = i win.

[kingkilburn]

All that does is dissuade overseas businesses from coming here at all. There is no point in taxing businesses. They will just pass that cost on to the consumer any way.

[ronmcdon]

Tariffs aren't anything new.

Problem is that it's not always so clearly defined what constitutes as an overseas business.
You get american companies who outsource their labor.
You get companies that assemble parts from all over the world, which may or may not involve american businesses somewhere in the way.
(realistically, not a lot of companies can remain cost effective having their manufacturing stay in the U.S.).
Even a product that's manufactured entirely abroad, stimulates distributors and retailers in the U.S., and gets sales taxed.
We can, however, always offer incentives for business.
Lot of states are actually are doing this to attract large businesses.

To be fair the US has been pretty adamant about the tariffs.
We need to look no further than Obama imposing tariffs on tires made in China
It applied to American, Japanese, European owned companies who happened to use Chinese factories to make their tires.
Really doesn't do anything, as the companies will just move their plants to the next most cost effective country.

Personally I'm for free trade for the most part.
However, I do say we hit back countries who throw tariffs at our exports.
I'd wager we have far more economic influence than most countries.
(although perhaps China is the only country we should think twice before offending).

About taxes, I'm more inclined towards a flat income tax, federal and state.
I actually believe in a low (or no) sales tax.
When ppl are buying shit, that is stimulating the economy.
The higher you tax, the less inclined they will spend (at least in their state, OR excluded).

I'm always for smaller gov't myself.
Naturally, my stance is always for less taxation & spending, in reasonable moderation.

[kingkilburn]

I wouldn't mind a flat tax either I just like the fair tax more.

I really don't like being taxed on both ends though.

[KA24DESOneThree]

The fair tax still unfairly punishes the rich because they can afford to buy expensive consumer goods.

That $275,000 Ferrari may not look like such a good deal when it's $357,000; this would lead to a disincentive to purchase inside the US and an incentive to purchase outside the US. A millionaire might drive a base-model Prius here in the states (former price: $22,800; Fair Tax price: $29,640) but have a fleet of exotics in Switzerland.

Let me list some common prices before and after the Fair Tax, respectively:
Base F150: 21,850/28,405
Base Sentra:15,420/20,046
Base Fit: 14,900/19,370
Owens-Corning R30 home insulation, 88 sq. ft.: 66.88/86.94
Hass avocados: .99/1.29

Purchasing power has gone down and debt will go up. Lenders will have to lend more for the same car/truck/house.

So proponents of the Fair Tax say, "No, purchasing power has gone up. People who previously paid income tax now can spend that money helping the economy!"

The problem is that the poor still won't pay due to the structure. The poor use funds inordinate with their income; they're a losing economic class because of our nanny state. This tax even goes so far as to GIVE THE POOR MONEY if they purchase below a certain amount. Another incentive to be lazy and stupid, methinks.

So, once again, those who prosper under this draconian "free market" (what a farce that phrase is when applied to our system here) are punished for their success, and those who utilize the government the most, who receive the most funding yet do nothing with it, will not pay a dime.

Fair? I think not.

Take this Fair Tax and shove it.

[kingkilburn]

I don't agree with your assesment of "fair tax" but you are dead on about our farce of a free market.

[drift freaq]

Honestly guys if you think Congress would impose a VAT(which is actually what a fair tax is) which they so dearly want to do and lower or get rid of income tax? That is a laugh.

The current congress wants nothing more than to increase taxes however they can. Mainly to cover the rampant spending the current administration has embarked upon to supposedly fix the economy. LOL

They would add a VAT and keep the income tax right where its at.

[kingkilburn]

It's laughable to say they want to raise taxes to cover THIS administration vs any other since Reagan.

Here is chart for reference and disregard the red vs blue because in reality it's meaningless.
http://www.city-data.com/forum/attachments/elections/21040d1212792152-what-will-you-give-up-pay-national_debt.jpg

Congress just wants more money to play with in general. They will get it where ever they can and I don't fault them for it, but it is up to the citizens to say when. That goes for the budget as well as the taxes.

[drift freaq]

Ya of late they all seem to just want to spend money without accountability. Bush spent more than most Republicans have ever spent.
Now Obama seems intent on making that look like chicken feed with all his programs. I am neither Republican or Democrat at this point. More like I am just disgusted. LOL

[ronmcdon]

probably most of the Rep spending is on military & wars.
02 spike was probably from Iraq.

that chart (assuming it's legit), doesn't account for the bailout years,
nor the Obama admin.
no way that's going to be cheap.

don't blame me, voted for Hilary @ the democrat primaries.

[kingkilburn]

Military and wars is no excuse for poor budgeting.

[ronmcdon]

not saying it's good or bad,
just hypothesizing the reason behind the spikes.
military spending is expensive.

[kingkilburn]

Yeah but Reagan spent more not waging war than the previous two decades did while actually fighting one. More was spent in '85 than Carter's entire presidency.

[KA24DESOneThree]

We waged war on the Russians through the Afghans, and we're fighting some Afghans because of it.

I don't understand the idea behind the "fair tax." A "fair tax" would be one which provided us with defense (not in the form of a standing army) and limited government. This tax system does not promise that; instead it uses the same system of legalized theft and punishes the rich through their purchases rather than their earnings. Purchases will be made elsewhere, I guarantee that; I often buy from outside the state rather than inside to avoid paying the 8.75% sales tax, and cash can certainly help people forget about the Franchise Tax Board.

I take offense at the name; a tax is inherently unfair. This tax, which is welfare for the destitute, takes the unfairness to another level.

Stop paying your taxes if you find the current system so repugnant. Force change, don't ask for it. The government doesn't care, as long as you feed the leviathan. Stop feeding the leviathan, and the leviathan will shrivel and shrink.

[kingkilburn]

Please don't turn this into an anti-tax thread.


Thanks for reading the thread before posting.

[g6civcx]

I haven't made up my mind about this "fair" tax situation yet. Please answer the following question for me.

When people argue taxes, nobody brings up the fact that income and taxes are directly related to each other. Namely:

Gross Income - Taxes = Net Income

When you change the tax code, everyone's gross income and net take-home pay changes because taxes can increase or decrease your gross income by encouraging/discouraging certain behaviours.


I want to maximise my Net Income. I don't care what tax structure is used.

Can you comment on how "fair" tax will affect the Gross Income variable of the economy in general, and any specific industry you may want to discuss?

[kingkilburn]

For the average person their gross income remains largely unchanged in the end. What changes is how and when you are taxed.

I think have the money move through more hands before the government gets there cut would be good for the economy.

[KA24DESOneThree]

It would also mean a larger government tax force to attempt to curb the dramatic reduction in receipts as non-corporate stores take cash in order to avoid the tax, meaning more government spending on enforcement and the likelihood of harsher penalties. This spending is planned to be dumped on the states; where is California going to come up with the money to fund this idea when it's $20B in the red? If it's a national tax, you can bet there will be a federal overseer, and here comes the IRS again, just this time it's the Tax Assessment Bureau.

Fair tax is supposedly pro-business. I would like an Austrian-school-educated economist to analyze the fair tax further. Freedom is kinda a big deal.

Our tax structure currently, and the fair tax structure which is proposed, is keeping our businesses weak in comparison to global competitors. Low taxes mean low prices and a consumer base with more disposable income. When you add difficulties like collecting and sending in tax revenues, the businesses have to add more workers for the same profits. Gross income goes down, or prices go up.

Kingkilburn, there is no way to have a tax thread without bringing up the idea that taxation is wrong. Any discussion of taxes, especially one of a tax purporting itself to be fair, must have an opposing side; I'm not just opposing the fair tax but taxation in general.

I would like to add this question: How is this tax fair?

[g6civcx]

For the average person their gross income remains largely unchanged in the end. What changes is how and when you are taxed.

You can use fiscal and tax policies to dramatically affect the average person's income if you wanted to.

You can use taxes to affect just about anyone's income in reality.

[ronmcdon]

I dont think 'fair tax' is pro-business at all.
On the contrary its probably the most anti-business tax i can think of.

Bieng pro business would be to reduce taxes entirely, lol

[kingkilburn]

Sales tax is already handled by local government. They already have enough employeys to collect, the amount they collect will just be higher

If you want to discuss whether taxation is ok or not in general that is a different topic and although related detracts from the topic of this thread. An apropriate oposing argument would be the current form of taxing is better or another form all together.

g6civcx
With the proposed percentage of sales tax the tax burden is about the same.



Sorry about the typos. i'm posting this from my phone.

[kingkilburn]

Sales tax is already handled by local government. They already have enough employeys to collect, the amount they collect will just be higher

If you want to discuss whether taxation is ok or not in general that is a different topic and although related detracts from the topic of this thread. An apropriate oposing argument would be the current form of taxing is better or another form all together.

g6civcx
With the proposed percentage of sales tax the tax burden is about the same.



Sorry about the typos. i'm posting this from my phone.

[g6civcx]

With the proposed percentage of sales tax the tax burden is about the same.

Your statement assumes homeostatic personal behaviour. Some people won't know the difference, but there will be at least a percentage that will modify their personal behaviour to reduce tax liability.

With our current income tax structure, you need to book income as reimbursed expenses as much as possible to reduce gross income. You will also want to maximise your deductions and credits as well.

With sales tax, you would want to reduce financial transactions as much as possible and resort to barter. Sales would be booked as part reimbused expenses and part income.

I haven't thought enough to decide which is better.

[lewisfk]

Tax overseas business more then local, thus promoting local jobs.

First post = i win.

That means dissolving NAFTA! And yes it would create jobs, but everything would cost more! Look at the price of an average mid size sedan made by an American company! It cost around 15k, the import cost around 15-18k. The point im making is the American vehicle is not made in the USA. There made in Mexico or Canada and badged made in America! It's the same with your pants, shirts and we all know our shoes! Before you say tax all imports make sure the out come doesn't fuck us even worse! Greed is the number one culprit, stop it and you will see the result in months!

[g6civcx]

The point im making is the American vehicle is not made in the USA. There made in Mexico or Canada and badged made in America!

Thank you for the point.

Honda/Toyota/Subaru/Hyundai/Kia/etc. have all opened US assembly plants so they can list USA as the final point of assembly already. Imposing tariff will just hurt companies like Ford/GM/Chrysler who still have plants in Canada and Mexico.


Logic is lacking.

[ronmcdon]

Sales tax is already handled by local government. They already have enough employeys to collect, the amount they collect will just be higher

If you want to discuss whether taxation is ok or not in general that is a different topic and although related detracts from the topic of this thread. An apropriate oposing argument would be the current form of taxing is better or another form all together.

g6civcx
With the proposed percentage of sales tax the tax burden is about the same.



Sorry about the typos. i'm posting this from my phone.

Was just responding to KA24DE-something's claim that fair tax is somehow pro-business.
ultimately with taxation & incentives you're just dealing with rewards and punishment (assuming all else equal).

I don't agree that it's pro-business to discourage in-state sales by higher taxes.
good luck especially with stimulating auto & real estate sales.
not like you can buy that out of state.

Our current system does a fairly decent & balanced job in taxation, for the most part.
Govt takes a chunk out of most things equally.
If they want to encourage some specific spending in area, they give out tax incentives and/or low rate loans.
(i'm sure i'm repeating what's already said before but that's my stance anyhow)

[sirfallsalot243]

That $275,000 Ferrari may not look like such a good deal when it's $357,000; this would lead to a disincentive to purchase inside the US and an incentive to purchase outside the US.

Wrong. The cost to the buyer *should* be about the same. The difference is WHEN the taxes are being taken.

That $275,000 Ferrari is $275,000 of already taxed money. Take the GROSS income of that $275,000- the amount that that 275k used to be before taxes were taken out, and it should be around $357k. The AMOUNT of tax isn't whats in question here. WHEN the taxes are applied is what were debating.