CNN talking Fair Tax now.

[SpartanStu]

They have a panel of people debating a Fair Tax instead of income tax.

Seems interesting. They are saying a Fair Tax (National sales tax) of 23% to replace wage taxes of ~22%

It sounds like a good idea, but I think it would put the breaks on our economy.

So if we stop spending we would lower the amount of taxes collected by the government.

They are also saying that citizens below the poverty level would get a check each month to increase the costs of having to pay the Fair Tax on essentials.

What do you think?

[New User]

spending would go waay down. It would kind of punish the middle class that make too much and are above the poverty line, but what if they had 3 or 4 kids, thats a lot of things that they will need to buy.

[SpartanStu]

Originally Posted by Darkness

spending would go waay down. It would kind of punish the middle class that make too much and are above the poverty line, but what if they had 3 or 4 kids, thats a lot of things that they will need to buy.

But the argument is that they are already paying ~22% now with the wages they make. It would be a wash for the 3-4person family who lives within their means.

The rich who buy the million dollar yacht would pick up "their fair share" of the tax burdon. Since they usually dont have wages that are taxed, and are the biggest consumers.

[Jack's Smirking Revenge]

Originally Posted by SpartanStu

They have a panel of people debating a Fair Tax instead of income tax.

Seems interesting. They are saying a Fair Tax (National sales tax) of 23% to replace wage taxes of ~22%

It sounds like a good idea, but I think it would put the breaks on our economy.

So if we stop spending we would lower the amount of taxes collected by the government.

They are also saying that citizens below the poverty level would get a check each month to increase the costs of having to pay the Fair Tax on essentials.

What do you think?

The first red flag is the way they calculate the 23% rate: it's inclusive, meaning that the tax would be 23% of the total amount you pay for an item, including the tax. The fair tax proponents admit that it's inclusive, but they know most people won't have any idea what that means.

Darkness is correct when he says it would be bad for the middle class. It's an obviously regressive tax: the wealthy spend a smaller percentage of their income than the middle and lower classes do, so they'd end up paying a smaller percentage of their income in taxes. He's also correct on the fair tax's effect on spending, which would hurt the economy.

The only thing the fair tax has going for it is the ability to stop people from hiding money from the IRS. It would also lower IRS overhead, but not eliminate it. The proponents overplay the simplicity of it. There would be more adjustments made for other income levels, and industries will lobby like crazy to have their products and services exempted. Politicians won't deprive themselves of opportunities to grant those favors for voters and donors.

[New User]

I would like to see a higher luxury tax, on cars over 30K, second homes, yachts, boats, recreational vechicles, TV's over 40 inches, guns, perfumes, jewlery, ect. Non-essential goods.

[Todd Farkman]

Originally Posted by Jack's Smirking Revenge

Darkness is correct when he says it would be bad for the middle class. It's an obviously regressive tax: the wealthy spend a smaller percentage of their income than the middle and lower classes do, so they'd end up paying a smaller percentage of their income in taxes. He's also correct on the fair tax's effect on spending, which would hurt the economy.

But if you exclude food from the tax, it makes it a little more even. But maybe we also tax the purchase of stock/bonds and many investment instruments as well. So aside from a cash account or IRA, you would pay taxes to invest.

The problem with our economy IS spending. It's great to have a consumer drivien economy if ppl at least save a little. The beauty of the sales tax is that it encourages ppl to spend less. That is a GOOD thing. If you enjoy an economy that lives on borrowing over our heads, then we're screwed anyway.

I am starting to come around on the sales tax.

There would be more adjustments made for other income levels, and industries will lobby like crazy to have their products and services exempted. Politicians won't deprive themselves of opportunities to grant those favors for voters and donors.

Well that happens now. Hopefully, in an attempt to keep it simple congress would make the effort to avoid many exemptions.




I think this is great to talk about. But the issue is NOT taxes. The issue is SPENDING. The only thing I like about this salles tax is that it changes ppl's minds on spending. Otherwise we haven't addressed the real problem.

Our gov't is so corrupt right now it boggles my mind. Ugh.

[ErnieMcCracken]

Reduce taxes by taking away tax breaks and create a level playing field. It would absolutely collapse the economy but the home mortgage tax break should be killed.

[New User]

Originally Posted by ErnieMcCracken

Reduce taxes by taking away tax breaks and create a level playing field. It would absolutely collapse the economy but the home mortgage tax break should be killed.

What would be the incentive of owning a home? The tax break for owning a home helps lots and lots of homeowners. I take it that you do not own a home? I would not mind a national sales tax across the board on all non-food items, 1 percent addition to sales tax could bring lots of revenue to the federal gov.

[SpartanStu]

Originally Posted by Jack's Smirking Revenge

The first red flag is the way they calculate the 23% rate: it's inclusive, meaning that the tax would be 23% of the total amount you pay for an item, including the tax. The fair tax proponents admit that it's inclusive, but they know most people won't have any idea what that means.

Darkness is correct when he says it would be bad for the middle class. It's an obviously regressive tax: the wealthy spend a smaller percentage of their income than the middle and lower classes do, so they'd end up paying a smaller percentage of their income in taxes. He's also correct on the fair tax's effect on spending, which would hurt the economy.

The only thing the fair tax has going for it is the ability to stop people from hiding money from the IRS. It would also lower IRS overhead, but not eliminate it. The proponents overplay the simplicity of it. There would be more adjustments made for other income levels, and industries will lobby like crazy to have their products and services exempted. Politicians won't deprive themselves of opportunities to grant those favors for voters and donors.

As I understand it the capital gains tax is less than the wage tax. And those with the greatest amount of wealth spend more than the average family.

One other thing to consider would be foreigners who vacation here. They would make up a share of federal income they are not paying without a sales tax.

[SpartanStu]

Originally Posted by Darkness

What would be the incentive of owning a home? The tax break for owning a home helps lots and lots of homeowners. I take it that you do not own a home? I would not mind a national sales tax across the board on all non-food items, 1 percent addition to sales tax could bring lots of revenue to the federal gov.

Im not sure it would include homes. They were talking about the tax being a one time only tax. Meaning if you bought a used car there would be no fair tax on it. Im assuming the arguement would cary over to homes as well. I suppose the tax would apply to new construction.

[Ignignokt]

Originally Posted by SpartanStu

Im not sure it would include homes. They were talking about the tax being a one time only tax. Meaning if you bought a used car there would be no fair tax on it. Im assuming the arguement would cary over to homes as well. I suppose the tax would apply to new construction.

That would be catastrophic. You would basically create a situation where people had to pay 22% more for a new house, thus creating a situation where there would be a HUGE disincentive to new home building.

And how do you even define "one time tax?" What about the 2x4s and paint and all the other supplies that go into building a home? I would assume those are taxed. Are you taxing them twice when you tax the new home? At what point does something become greater than the sum of its already-taxed parts so it is OK to tax again?

[ErnieMcCracken]

Originally Posted by Darkness

What would be the incentive of owning a home? The tax break for owning a home helps lots and lots of homeowners. I take it that you do not own a home? I would not mind a national sales tax across the board on all non-food items, 1 percent addition to sales tax could bring lots of revenue to the federal gov.

It goes all in the idea of killing tax breaks all together and creating a more clearly constructed tax system which everyone understands. Eliminate tax breaks and loopholes and lower the overall rate all together. The value of the tax break ends up inflating the value of the home because it ends up being built into it. I sincerely like the idea of a progressive tax system that everyone understand and doesnt make lawyers or CPA's to profit in on as a cottage industry to cash in on because its too confusing. I also like other ideas as posted on this thread. Our current tax system should be innovated in new ways. What we have going on is stupid and caters who cash in on it. I honestly think a bipartisan effort could lead to a radically different environment.

[DeHannen]

Originally Posted by Ignignokt

That would be catastrophic. You would basically create a situation where people had to pay 22% more for a new house, thus creating a situation where there would be a HUGE disincentive to new home building.

And how do you even define "one time tax?" What about the 2x4s and paint and all the other supplies that go into building a home? I would assume those are taxed. Are you taxing them twice when you tax the new home? At what point does something become greater than the sum of its already-taxed parts so it is OK to tax again?

There will never be enough tax revenue to cover the continued and unfettered expectation of expanding government programs. The problem isn't with revenues, it is with spending.

[tuff bob]

The national sales tax isn't completely without issue, see this example:

BBC NEWS | Business | Pringles 'are not potato crisps'

However, it beats the pants off the current system. A fair tax is one a regular joe can comply with without having to hire somebody to file their annual paperwork.

[Dr. X]

I'm still sorting this one out. I hate the income tax and think it should be outlawed.

I also think that pork barrel spending and deficit spending at the federal level should result in death by hanging for the Senators, Reps and Presidents that vote and sign said spending into law.

But one thing at a time.

The FairTax plan is a comprehensive proposal that replaces all federal income and payroll based taxes with an integrated approach including:

• A progressive national retail sales tax.
• A prebate to ensure no American pays federal taxes on spending up to the poverty level.
• Dollar-for-dollar federal revenue neutrality.
• Repeal of the 16th Amendment through companion legislation.

The FairTax Act (HR 25, S 1025) is nonpartisan legislation. It abolishes all federal personal and corporate income taxes, gift, estate, capital gains, alternative minimum, Social Security, Medicare, and self-employment taxes and replaces them with one simple, visible, federal retail sales tax administered primarily by existing state sales tax authorities.


The FairTax taxes us only on what we choose to spend on new goods or services, not on what we earn. The FairTax is a fair, efficient, transparent, and intelligent solution to the frustration and inequity of our current tax system.


The FairTax:

• Enables workers to keep their entire paychecks
• Enables retirees to keep their entire pensions
• Refunds in advance the tax on purchases of basic necessities
• Allows American products to compete fairly
• Brings transparency and accountability to tax policy
• Ensures Social Security and Medicare funding
• Closes all loopholes and brings fairness to taxation
• Abolishes the IRS

The FairTax Five
The gloves are off as critics try to pick apart the FairTax. Trouble is, it's just a replay of the same five FairTax myths:

• "The 23% rate is misleading. It's actually 30%"
  Well, actually...
• "It's not enforceable and evasion will be rampant"
  Well, actually...
• "It will not be revenue neutral at 23%"
  Well, actually...
• "The FairTax is not politically viable"
  Well, actually...
• "The FairTax is regressive and shifts the tax burden onto lower and middle income people"
  Well, actually...

Americans For Fair Taxation: Americans for Fair Taxation

[Todd Farkman]

"used goods are tax free"

Hmmm, i wonder what the impact of that would have. That would be very good for the environment as ppl would be more prone to buying used and less waste would occur

[Todd Farkman]

Originally Posted by Darkness

What would be the incentive of owning a home? The tax break for owning a home helps lots and lots of homeowners. I take it that you do not own a home? I would not mind a national sales tax across the board on all non-food items, 1 percent addition to sales tax could bring lots of revenue to the federal gov.

what incentive should there be for having a home?

Or having children?


Why not have an incentive for dumping toxic waste...

Bush bragging about the high percentage of home ownership is like bragging about the high ownership of SUVs. Homes are not for everyone. We should be focusing in on creating cities/towns that are highly centralized to stop wasting energy.

[Todd Farkman]

Originally Posted by Ignignokt

That would be catastrophic. You would basically create a situation where people had to pay 22% more for a new house, thus creating a situation where there would be a HUGE disincentive to new home building.

And how do you even define "one time tax?" What about the 2x4s and paint and all the other supplies that go into building a home? I would assume those are taxed. Are you taxing them twice when you tax the new home? At what point does something become greater than the sum of its already-taxed parts so it is OK to tax again?

You have to look at it this way. 20% of your check is getting wiped out already. So it just shifts the tax burden.

What you can do with the Fair Tax is save more money now. Instead of dumping 25% of your income to Fica and income taxes.

It would encourage ppl to save more. Just think if you rented first and all that money that used get taken away is now yours. And who knows, prices may fall as businesses have less overhead to deal with regarding taxes.

[New User]

Originally Posted by Todd Farkman

what incentive should there be for having a home?

Or having children?


Why not have an incentive for dumping toxic waste...

Bush bragging about the high percentage of home ownership is like bragging about the high ownership of SUVs. Homes are not for everyone. We should be focusing in on creating cities/towns that are highly centralized to stop wasting energy.

You should not get punished for having either. I own a home, and let me tell you that home owners care much more about the property and community than renters. A home does not equal SUV. Not even close. Owning a home ties familes closer to communities than renters. I agree with ignkotot on this one.

[SBSpartan]

Originally Posted by Ignignokt

That would be catastrophic. You would basically create a situation where people had to pay 22% more for a new house, thus creating a situation where there would be a HUGE disincentive to new home building.

And how do you even define "one time tax?" What about the 2x4s and paint and all the other supplies that go into building a home? I would assume those are taxed. Are you taxing them twice when you tax the new home? At what point does something become greater than the sum of its already-taxed parts so it is OK to tax again?

That is false. You should actually read about the FairTax before commenting because this statement is false. You would not pay 22% more for anything.

[SBSpartan]

Originally Posted by Dr. X

I'm still sorting this one out. I hate the income tax and think it should be outlawed.

I also think that pork barrel spending and deficit spending at the federal level should result in death by hanging for the Senators, Reps and Presidents that vote and sign said spending into law.

But one thing at a time.
[/list]


Americans For Fair Taxation: Americans for Fair Taxation

Someone is doing their FairTax homework!

[Ignignokt]

Originally Posted by Todd Farkman

"used goods are tax free"

Hmmm, i wonder what the impact of that would have. That would be very good for the environment as ppl would be more prone to buying used and less waste would occur

I seriously doubt it would change behavior that much. The real effect would be that if there are any situations where the tax is not charged, people would come up with all kinds of loopholes to avoid paying the tax.

Seriously...let's say Ford sells a car. Who in the supply chain does and doesn't pay a tax? Does the company who makes the bolts used to weld metal together pay tax? How about the people who make windshields? Or the company that makes seat belt buckles? Do they all pay tax and then the consumer also has to pay on the final product? What about if a Ford employee drives it around for 500 miles? Is it then "used?"

There are just so many loopholes and edge cases that this thing will cause. It will replace today's accountants with people who are experts on when "Fair" Tax is and isn't owed. It's just trading one evil for another, AND it's a regressive tax to boot.