FairTax. Yay or Nay?

[gwprod12]

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

 

It looks good to me. I vote Yay!

[Numberzz]

That would be a fantastic idea.

[Alessandro17]

We have something like that in Europe (it is called VAT), but we pay it on top of all other taxes!

 

It is an extremely unfair tax (VAT), because it is the same for rich and poor.

[apowerr]

If the fair tax was put into effect, hopefully we could see a drastic cut in federal spending in general, and an end to social programs.

It is an extremely unfair tax (VAT), because it is the same for rich and poor.

Doesn't that make it fair, a tax that doesn't discriminate and is the same for everyone?

[gwprod12]

No, by that definition, a poll-tax is fair ($20,000 per person). That's nothing to someone who makes a million a year, but everything to someone who makes $20,000 a year.

 

VAT isn't sales tax and it isn't a fair tax, as it increases the price of something in every stage of the pipeline. In the US, there is one too, it's just hidden.

 

The idea of the FairTax is that it is a consumption tax, all new goods bought are taxed. There are no other (federal taxes). That would be inherently regressive, except that there is a set starting point (based on your situation). Well, if you read the wikipedia article, it explains it.

[Alessandro17]

Doesn't that make it fair, a tax that doesn't discriminate and is the same for everyone?

 

I am not of that opinion, but that is me. Here in Italy we have plenty of people below the poverty line (an income of less of €580 a month) who must pay VAT (20%) on everything.

[apowerr]

No, by that definition, a poll-tax is fair ($20,000 per person). That's nothing to someone who makes a million a year, but everything to someone who makes $20,000 a year.

I am not of that opinion, but that is me. Here in Italy we have plenty of people below the poverty line (an income of less of €580 a month) who must pay VAT (20%) on everything.

My bad, an equal tax wouldn't be everyone pay x amount, it'd be everyone pay x percent.

[Rez.]

This guy seems to think it's not fair at all. If his numbers are correct, I would tend to agree with him.

 

Fair Tax Is Not Fair

[gwprod12]

That's not fair either, actually, lol.

 

If there is a flat tax (which there is, payroll taxes), and I make $10,000 a year, $1000 is a much greater hardship to me than $10,000 is to someone who makes $100,000.

 

That isn't even remotely fair.The main logic behind the progressive tax system is this: "It's not fair that someone making $1m a year pays 50% of their income in taxes, while the person making $20,000 a year only pays 17% in taxes. It's also not fair that one person makes $1m a year and someone else makes $20,000 a year."

 

Or...

 

The veil of ignorance, where a tax system is designed without knowledge of the individual's financial situation. The designer designs a tax system which screws the rich to feed the poor (75% tax rate, which massive government subsidies of food and housing, etc), the veil is removed, and he is a rich man, he's screwed himself. Or the designer designs a tax system which screws the poor to further enrich the rich (The aforementioned Poll Tax), the veil is removed and he's a poor man, he's screwed himself. An equilibrium must be designed so that no one is screwed by the system.

 

I hope that makes sense.

 

Rez: the situation outlined by that guy is indeed unfair. It's also not the FairTax ;-p

 

FairTax rebates against poverty level, thus causing a family of 3 making $22900 a 0% tax rate. Currently, a family of 3 making $22900 has an effective federal tax rate of 11% (payroll taxes + small income tax).Also. If a wealthy person puts away half of their income... what good does it do them? When they spend it, they pay the FairTax.

 

As an example: A single person making $30,000 a year for (age 18 - 65) 37 years, who (somehow manages) to put $10,000 of their income into savings each year, would pay about 15% of their income in taxes. (30% x ~10,000)/20,000. This is about what they're paying now in income tax. When they stop working, they will have $370,000 in the bank (+interest, which I'm too lazy to figure right now). Because social security is (in theory) unaffected by this, they will have a retirement income enhanced by savings. If they continue their $20,000 a year lifestyle, that will last them at least 18.5 years, of which they will pay at most, 15% taxes.

 

I don't advocate it as a perfect system, but it's worth looking at closely.

[Rez.]

My understanding or interpretation of what the blogger was going on about was as follows:

- I believe the current tax system works on brackets, Lower income to higher income with smaller percentage takes from

the lower income than the higher income. I guess it's based on the idea that the wealthy have little bit more to give than

those less fortunate in life.

 

- Fair tax proposes that an individual's expenditures be taxed rather than their total income. According to this guys math,

That would mean lower incomes would be paying more taxes than the those of a higher income (Atleast percentage wise)

 

Personally, I wonder what safety mechanism they have in place for those making money in (Insert Country Here) and spending

it overseas.

But I digress, Back to work.

[gwprod12]

Yeah, that's kinda right. Wealthy people are taxed more, not because they have more to give, but because the necessary expenses of living don't scale with income. Someone who makes $100,000 a year might only spend $30,000 a year feeding, housing and clothing themselves... but someone making $20,000 doesn't spend only $6000 doing the same. They spend almost all of their money to do so.

 

A $1 loaf of bread would remain a $1 loaf of bread (the tax is inclusive... as in, for every dollar spent, $0.30 is taxes, like gas or cigarettes, rather than exclusive: A $1 item costs $1.30 at the register). Because the loaf of bread is already being taxed by a combination of value added taxes, business taxes and taxes on the wages of the person buying it. According to the FairTax theory (I'm not an economist), prices of real goods would decrease or stay the same, while real income would increase (no payroll taxes, etc).

 

As for buying goods directly from another country (not from an import retailer), that would an issue of sales tax evasion, as it is today. I haven't any idea how that would be handled.

 

The whole point of this tax idea is to keep revenue neutral, keep individual taxed income basicly the same, etc.

 

But the benefits are...

 

Undocumented people would pay the highest percentage of taxes, because they would receive no rebates.

No one could escape taxation on new goods and services, as they do today by lying about their income, or receiving income from an illicit source

Removing the horrendous bureaucracy of the IRS etc

Increasing the tax base to include drug dealers, prostitutes, etc and so forth.

Single point of taxation (the retailer), who has no incentive to cheat on the tax.

Simplification. Taxes are only paid by the retailer.

The taxes you pay are determined by you. If you can somehow manage not to buy any new goods or services, you pay (effectively negative) tax no matter what your income rate is.

 

The FairTax also has one other theoretical benefit. It is estimated that about 20% of taxes owed are uncollected. This would decrease with FairTax, increasing revenue for the federal government (which could be returned as a break in taxes to everyone).

[Alessandro17]

Single point of taxation (the retailer), who has no incentive to cheat on the tax.

Simplification. Taxes are only paid by the retailer.

 

Well...

Let me tell you what happens in Italy:

1)Retailers collect the tax (VAT) but don't give it to the Government.

2)A special police (Guardia di Finanza) is needed to make sure that retailers don't cheat...

3)Retailers need accountants...

[gwprod12]

In the US, most retail transactions are done by large retail chains. Having their business shut down permanently because they withheld taxes that are paid by the customer... that's a gigantic risk to take, and more likely than not, a phenomenally stupid one.

 

I don't know how it works in Italy though.

 

However, small businesses might fudge their sales. But if they get audited, they're closed.

[Alessandro17]

I don't know how it works in Italy though.

 

Business don't get shut down permanently. They get a hefty fine.

Some don't seem to have any fear. Corruption?

[FUKKU]

Doesn't that make it fair, a tax that doesn't discriminate and is the same for everyone?

It's not the same for everyone and it hurts a lot more at the lower levels where you're spending most of your paycheck just to meet your basic food/clothing/shelter/transport needs. Poorer people spend far more of their income as a percentage than rich people do. I guarantee you the cleaning lady making $300/week has a smaller percentage of her check left in the bank at the end of the week than the $300/hour lawyer. A credit/rebate system for those in lower income brackets can offset this, but it still makes the system more complicated than it currently is for a good percentage of the population.

 

There's also the criticism that because of the savings/spending issue above, a 20-30% rate is very optimistic. Some economists claim a national sales tax would have to be around 80-90% to compensate for the losses in income, capital gains, etc. taxes as well as the propensity for rich people to save (thus they'd never be taxed since their consumption is put off).

[OryHara]

God damn people are dumb.

Just eliminate the Federal Reserve. {censored} Idiots.

 

Fairtax? Do you want your grandchildren paying 12 bankers for the rest of their lives?

You people are dumb as hell.

[Paranoid Marvin]

God damn people are dumb.

Just eliminate the Federal Reserve. {censored} Idiots.

 

Fairtax? Do you want your grandchildren paying 12 bankers for the rest of their lives?

You people are dumb as hell.

 

Maybe you will be respectable enough to say that when at least half of your posts on this forum aren't idiot ramblings, because as it standas at the moment, all of them seen to be.

 

Till then, just do yourself a favor and shut up

[OryHara]

Maybe you will be respectable enough to say that when at least half of your posts on this forum aren't idiot ramblings, because as it standas at the moment, all of them seen to be.

 

Till then, just do yourself a favor and shut up

 

Oh yea. You REALLY know how the U.S. federal government works.

 

Until you get a clue how the system runs. Do us all a favor and shut your yap hole

before you say something stupid that I will embarrass you with.

[killbot1000]

Oh yea. You REALLY know how the U.S. federal government works.

 

Until you get a clue how the system runs. Do us all a favor and shut your yap hole

before you say something stupid that I will embarrass you with.

 

 

Dude, you spout off things that are obviously NOT going to happen (eg. GET rid of the federal reserve). It's not gonna happen, get over it.

 

The Civil war is over by the way, the confederacy lost...

 

Your future is anarchy, and no place for a civilized person

 

Look to the future, not the past for the answers to the problems that exist NOW.

[gwprod12]

And um... The Federal Reserve has essentially nothing to do with taxes.

[OryHara]

And um... The Federal Reserve has essentially nothing to do with taxes.

 

Ok little kid. Then who do they collect them for? Who is Ben Bernake if you are so smart?

Who does the "National Debt" go to? why, and how does it work if you are so smart?

 

Think your so smart little kids? Lets see what YOU have to say Mr. Oz.

Here. Let me help you.

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

 

Prove me wrong.

 

Dude, you spout off things that are obviously NOT going to happen (eg. GET rid of the federal reserve). It's not gonna happen, get over it.The Civil war is over by the way, the confederacy lost...Your future is anarchy, and no place for a civilized personLook to the future, not the past for the answers to the problems that exist NOW.

I'm not even going to dignify myself to answer your idiocy.

[gwprod12]

You cannot make the argument that taxes only exist because of the federal reserve. The Federal Reserve doesn't collect taxes, doesn't use revenue.

 

The federal reserve serves one function, it keeps the value of the money supply stable, something that a commodity currency does automatically through supply and demand.

[OryHara]

You cannot make the argument that taxes only exist because of the federal reserve. The Federal Reserve doesn't collect taxes, doesn't use revenue.

 

The federal reserve serves one function, it keeps the value of the money supply stable, something that a commodity currency does automatically through supply and demand.

 

Then why is the dollar worth less then 4 cents on the international market? Why is the housing market collapsing? Why does Ben Bernake keep injecting money into the stock market and causing inflation? Why is China threatening to dump the dollar, as well as 3 other countries?

 

A currency isn't real unless you have something of value to back it. Who owns the gold in fort knox? HINT: Its not the Federal, State, or local governments.

 

That doesn't sound like a stable currency to me.

 

The federal reserve serves NO function, and wasn't created until 1913. According to the constitution, only "CONGRESS has the power to COIN money, and regulate the value thereof."

[gwprod12]

You're claiming that the Federal Reserve is not fulfilling it's only function. Maybe you're right. What does it have to do with our tax system? Nothing.

[OryHara]

You're claiming that the Federal Reserve is not fulfilling it's only function. Maybe you're right. What does it have to do with our tax system? Nothing.

 

Like most sheeple you still didn't research it.

 

When the government buys a tank etc... They go to the fed reserve and borrow $1m for the tank. The fed loans them the money. They write a check, get the tank, and send the bill up through a commitee in congress, or a department. They then go to the American people, tax them 1.2 million, and then pay it to the fed reserve. 200k interest goes to the fed reserve for private profit.

 

When the stock market is in trouble, the fed prints up some more money and "injects" it into the stock market. There is more money in the public, so the dollar is worth less. Prices rise, and minimum wage stays the same. Its called INFLATION. Thats why the housing market is so {censored}ed up right now. And that is why we HAD THE GREAT DEPRESSION. duhhheee. Read about it.

 

Its all together called a system of CREDIT. It is not REAL money. The Fed reserve owns the gold in Ft. Knox. Its all fake paper monopoly money.

 

So tell me now. Why do we need the Federal Reserve?

 

And why are we even paying taxes? Answer, to make the fed reserve bankers rich! duh. People didn't pay "income taxes" until the 1950s. Like I said. If you want to be informed, and know whats going on in the real world, you need to get online, and research it, instead of leaving your head stuck in an ipod. No offense, but that is where the world is going. To hell in a handbag because of their ignorance.