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Posted: 3/1/2006 3:13:56 PM EDT
[Last Edit: 3/1/2006 3:14:43 PM EDT by An_AR_Addict]
fairly new guy to the site but love it.... finding it very helpful with many gun related topics

I for one am in Favor of the Fair Tax plan


http://www.fairtax.org

check it out and ask some Questions i'll answer to the best of my ability.


i saw no one had anything posted on the topic and seeing as how this could have a HUGE impact on all of us i'll bring it up......

TAX talk = can of worms
Link Posted: 3/1/2006 3:44:24 PM EDT
FOR IT. its good for America
Link Posted: 3/1/2006 3:45:10 PM EDT
For it
Link Posted: 3/1/2006 3:47:30 PM EDT
[Last Edit: 3/1/2006 3:48:02 PM EDT by GeorgiaBII]
Tagged for the blood and gore this is sure to stir up.


I'm all for it btw.
Link Posted: 3/1/2006 6:21:40 PM EDT
hey some funny info...

http://news.yahoo.com/s/nm/financial_hrblock_earns_dc

The company, which is in the middle of tax season preparing other people's tax returns, said it had underestimated its own "state effective income tax rate" in previous quarters - meaning it owes another $32 million in back taxes! So here we have a tax giant - a veritable American icon of the tax-filing season - waylaid by the difficulty inherent in complying with the income tax laws. How can anybody defend such a system? (this was emailed to me as a member of fairtax.org)
Link Posted: 3/3/2006 9:09:16 AM EDT
[Last Edit: 3/3/2006 9:09:53 AM EDT by dumbyhotshot]
Id rather see a flat tax across the board.
Link Posted: 3/3/2006 10:46:03 AM EDT
This should be on the top of the list for the President to try and push through Congress.
Link Posted: 3/5/2006 5:57:01 PM EDT

Originally Posted By dumbyhotshot:
Id rather see a flat tax across the board.




why?

not thats it a bad idea at all, i just think that people should see the options that are out there.

either the flat tax or the consumption tax would be a heck of alot better than the one we have. i'd take eitherr but i like the fair tax better.

Copied from fairtax.org Q# 36 under FAQ:

What about the flat tax? Would it be better and easier to pass? The flat tax and the FairTax share some important similarities. They are both flat-rate taxes that are neutral with respect to savings and investment. The flat tax, however, retains the invasive income tax administration apparatus and can easily revert to a graduated, convoluted mess, as it has many times over many years.

Very few people really understand the flat tax. Its authors will tell you it is a consumption tax that uses the income tax system for implementation. Only an academic or government bureaucrat would dream up a consumption tax that needs the invasive income tax apparatus for its application, when one can simply have a retail sales tax and reduce the bureaucracy by 90 percent or more! In addition, a large part of the burden of the flat tax – the business tax – will remain hidden from people in the retail price of goods and services.

In contrast, the FairTax is simple, easy to understand, and visible. It cannot be converted into an income tax.

Under a flat tax, individuals would still file an income tax return each year similar to today’s 1040 EZ. While this is a simple postcard, the record keeping required to fill in the blanks is still long and burdensome. Under the FairTax, individuals would never file a tax return again, ever! Under the flat tax, the payroll tax would be retained and income tax withholding would still be with us. Under the FairTax, the payroll tax, which is a larger and more regressive tax burden for most Americans than is the income tax, would be repealed. Under the FairTax, what you earn is what you keep. No more with-holding taxes; no more income tax.

Notwithstanding flat tax proponents’ honorable intentions, income tax reform has been less than a success in the past. Congress has tried to reform the income tax again and again, with the result being greater complexity and, generally, higher rates. The problem is the income tax, and it is time to stop tinkering with it.

Flat tax supporters have made major political attempts to pass their reform, including the efforts of former Majority Leader Dick Armey and presidential candidate Steve Forbes, and yet, their efforts have not progressed politically for several years. With every debate, the flat tax loses grassroots and congressional support to the FairTax. It is time to junk the entire income tax system and start over with a tax system that is more appropriate for a free society and better able to meet the needs of the information age.
Link Posted: 3/6/2006 6:52:21 AM EDT
The problem with changing the tax method is existing savings.

This money has already been taxed once as income. Taxing it again when spent is not ‘fair’ in any way.
The argument that the tax burden will remain the same is not correct.
If I was living off my savings/investments I would have zero tax burden since I have no income.
Now another scheme comes along and wants to tax my money a second time.

The politicians are never going to even try for any tax method that clearly shows who is paying how much. It makes it harder to raise taxes by playing with the tax law.

Transparency is not necessarily their goal.
Link Posted: 3/6/2006 1:30:40 PM EDT
[Last Edit: 3/6/2006 1:34:13 PM EDT by An_AR_Addict]

Originally Posted By brickeyee:
The problem with changing the tax method is existing savings.

This money has already been taxed once as income. Taxing it again when spent is not ‘fair’ in any way.
The argument that the tax burden will remain the same is not correct.
If I was living off my savings/investments I would have zero tax burden since I have no income.
Now another scheme comes along and wants to tax my money a second time.

The politicians are never going to even try for any tax method that clearly shows who is paying how much. It makes it harder to raise taxes by playing with the tax law.

Transparency is not necessarily their goal.



The taxes built into the goods we buy today are roughly 22% so to have a 23% national sales tax would wipe most of those taxes out leaving you with a 1% increase in taxes on goods.

savings I believe are not taxed as income , however; invements are, I beleive they are taxed as investment income. You should not really rely on savings accounts for the bulk of your income it will not yield a high enough return on investment compaired to investment like stock (which can be taxed as income) and would not be taxed under the fair tax. One major advantage to passing the fairtax is that your investments would yield more than enough to cover any additional tax.

Remember those same politicians were elected by us to work for us. If you dont like them tell them, want somthing passed tell them. They only have as much power as we give them. No one wants their guns taken away we fight for that. I believe controling our elected officials is more important then Americans being able to own firearms. Because if they truly work for us them in that sence we wont loose our firearms. If we cant even have somthing as good as a new tax system that robs politcians of thier unfairness then we might as well lay all our Rights down in Washington tomorrow.
Link Posted: 3/6/2006 1:48:51 PM EDT
”savings I believe are not taxed as income , however; invements are, I beleive they are taxed as investment income. “

Neither saved money nor invested money is taxed.
You are taxed on the income both earn, either interest or dividend.
You are additionally taxed on the increase in the value of an investment like stock above the purchase price (capital gain) at sale.

I did not ask for investment advice.
I simply pointed out there is a problem with changing the tax method.
Claiming it will ‘balance out’ does not answer the problem of double taxation.
Balancing out would be at best an average sort of thing.
With one foot in boiling water and one frozen in ice, you are comfortable, on average.

If you are going to propose and support things like this you need to be a little better informed about what is taxed and when it is taxed.
Link Posted: 3/6/2006 4:01:23 PM EDT
[Last Edit: 3/6/2006 4:12:38 PM EDT by gsu2720]

Originally Posted By brickeyee:
If I was living off my savings/investments I would have zero tax burden since I have no income.
Now another scheme comes along and wants to tax my money a second time.


This is only partly true. Funds will be withdrawn from pension plans, 401k plans, and IRAs without the burden of an income tax. You will still have to pay the retail sales tax, but when you made the contributions, you were allowed an income tax deduction. People who invested in Roth IRAs and after-tax retirement investments will break even.

If you are going to propose and support things like this you need to be a little better informed about what is taxed and when it is taxed.

Before you accuse people of not knowing how the Fair Tax works, maybe you should take the time to do some reading on the subject. If you have not read the book, you should. It will answer all of your questions.
Link Posted: 3/6/2006 6:18:40 PM EDT
I read about two thirds and stopped since it is not fair and does not treat previously earned and taxed money fairly. It is a poorly conceived plan that fails to address the real problem of the tax code being used for social engineering.
The base amounts not subject to tax will be manipulated as surely as the present code.

“Funds will be withdrawn from pension plans, 401k plans, and IRAs without the burden of an income tax. You will still have to pay the retail sales tax, but when you made the contributions, you were allowed an income tax deduction.”

Not on all contributions. Before Roth there were often advantages to placing money in an IRA even using after tax dollars.

“People who invested in Roth IRAs and after-tax retirement investments will break even.”

How? I already paid taxes on the principal. The only amount not taxed was the capital gain. Now when I spend the money I get hammered on the principal. Any “break even” will depend directly on investment return.


“Before you accuse people of not knowing how the Fair Tax works”

I did not say you did not understand the ‘fair tax’. I said you did not understand how the present system works.

“savings I believe are not taxed as income , however; invements are, I beleive they are taxed as investment income.”

This is a gross misstatement of what is taxed on investments.
If you do not understand what is taxed now, how can you determine what would be fair in a new system?
Link Posted: 3/6/2006 6:20:03 PM EDT
[Last Edit: 3/6/2006 6:23:41 PM EDT by brickeyee]
I read about two thirds and stopped since it is not fair and does not treat previously earned and taxed money fairly. It is a poorly conceived plan that fails to address the real problem of the tax code being used for social engineering.
The base amounts not subject to tax will be manipulated as surely as the present code.

“Funds will be withdrawn from pension plans, 401k plans, and IRAs without the burden of an income tax. You will still have to pay the retail sales tax, but when you made the contributions, you were allowed an income tax deduction.”

Not on all contributions. Before Roth there were often advantages to placing money in an IRA even using after tax dollars.

“People who invested in Roth IRAs and after-tax retirement investments will break even.”

How? I already paid taxes on the principal. The only amount not taxed was the capital gain. Now when I spend the money I get hammered on the principal. Any “break even” will depend directly on investment return.

There are also many investments held outside of the investments you have named. I already put after tax money in them and have been paying taxes on the re-invested dividends. The only tax not cpatured yet is the long term capital gain. Depending on what that amount is may or may not allow a consumption tax to be called 'fair'.

“Before you accuse people of not knowing how the Fair Tax works”

I did not say you did not understand the ‘fair tax’. I said you did not understand how the present system works.

“savings I believe are not taxed as income , however; invements are, I beleive they are taxed as investment income.”

This is a gross misstatement of what is taxed on investments.
If you do not understand what is taxed now, how can you determine what would be fair in a new system?

And just out of curiosity how come no one wants to call it a 'consumption tax'?
A little to much to the point maybe?
Link Posted: 3/6/2006 7:49:17 PM EDT
[Last Edit: 3/6/2006 7:51:24 PM EDT by gsu2720]
brickeyee,

What you fail to realize, or at least acknowledge is the fact that there is an embedded tax in every retail product and service that we buy. These range anywhere from 20% to 26%.

If the Fair Tax were implemented, the competitive forces in the marketplace would cause prices to fall by the amount of the embedded tax. This tax is made up of corporate income tax, withholding taxes, etc. These taxes are not paid by businesses; they are passed on the consumer in the price of the product.

For this reason, a coat that costs $100 today will decrease in price by about 20%. The new $80 coat will then be subject to a 23% sales tax. The new cost of the coat is $98.40. So even though you are paying the sales tax, your "double-taxed savings" have greater purchasing power. Inflation has just decreased by 1.6%! Not to mention that you get to keep all of your paycheck; a 20%-35% raise!!
Link Posted: 3/6/2006 8:12:07 PM EDT
The Fair Tax, and the return
to the Gold Standard would
be wonderful.
Link Posted: 3/6/2006 8:20:11 PM EDT

Originally Posted By An_AR_Addict:
fairly new guy to the site but love it.... finding it very helpful with many gun related topics

I for one am in Favor of the Fair Tax plan


http://www.fairtax.org

check it out and ask some Questions i'll answer to the best of my ability.


i saw no one had anything posted on the topic and seeing as how this could have a HUGE impact on all of us i'll bring it up......

TAX talk = can of worms




Against it the latest attempt was watered down bullshit that did not dissolve the IRS and income taxes were still required above $38,000(Fairly close) nor did it remove subsidies, excise, vice, death, or gas taxes! Also .23 cents on the dollar was insanely high by contrast to what reasonable people would want. No pork will be cut with current bullshit attempts that have no chance anyway. The houses will not curtail non-defense pork spending nor wil they participate in unemploying massive amounts of USGov employees.
Link Posted: 3/6/2006 8:29:04 PM EDT
[Last Edit: 3/6/2006 8:34:50 PM EDT by Mattl]
What is needed is so simple it cannot happen.


.3-8 cent national sales tax collected at point of sale and routed to a Dep. of Treasury account/agency that would need only employ 3% of the current IRS empolyees to run.
Exmptions on housing to encourage ownership and fuel to encourage travel and commerce. The rate of taxation should not vary based on income that would force some agency to track and enforce what the IRS does now if it does not dissolve this type of agency it only reshuffles assets and gives them another name.


reapeal taxes on:
Gas
Income
Vice = BATFE
Death
Property
Tarriffs
Investment
Int­erest gains


Dissolve IRS and BATFE


Curtail Congressional spending and Government regulation of private industries.

Privatize Social Security but mandate savings.

Link Posted: 3/7/2006 5:38:15 AM EDT
What you fail to realize is that you do not understand enough about the existing tax system to be trumpeting how to change it.

And I wil lask again:
And just out of curiosity how come no one wants to call it a 'consumption tax'?
A little to much to the point maybe?
Link Posted: 3/7/2006 6:18:53 AM EDT

Originally Posted By brickeyee:
And just out of curiosity how come no one wants to call it a 'consumption tax'?

I will call it a consumption tax for the fact that you only pay the tax if you buy something.
What is so appealing about the Fair Tax, is that it is a voluntary tax.
There will be no federal agents kicking down doors to collect taxes.
There will be no seizing and selling of assets to collect taxes.
Finally, the government will be out of the business of income redistribution, and it will start to be a tax collector like it is supposed to be.
Link Posted: 3/7/2006 12:44:14 PM EDT
[Last Edit: 3/7/2006 12:46:49 PM EDT by An_AR_Addict]
What you fail to realize, or at least acknowledge is the fact that there is an embedded tax in every retail product and service that we buy. These range anywhere from 20% to 26%.

If the Fair Tax were implemented, the competitive forces in the marketplace would cause prices to fall by the amount of the embedded tax. This tax is made up of corporate income tax, withholding taxes, etc. These taxes are not paid by businesses; they are passed on the consumer in the price of the product.

For this reason, a coat that costs $100 today will decrease in price by about 20%. The new $80 coat will then be subject to a 23% sales tax. The new cost of the coat is $98.40. So even though you are paying the sales tax, your "double-taxed savings" have greater purchasing power. Inflation has just decreased by 1.6%! Not to mention that you get to keep all of your paycheck; a 20%-35% raise!!

well said.

to "brickeyee":

I did read the whole book a while ago and though i may not under stand all of the tax codes i do unstand that this tax does work. it works as the best over all tax. i am 20 in college and working and for people my age this would be the best thing to ever happen. yes there will be people who are older and have had time to invest large sums of money that will not benifit AS MUCH from the fair tax. i did not mean any harm in what i wrote. and as for

"If you are going to propose and support things like this you need to be a little better informed about what is taxed and when it is taxed."

ya your right i should have taken the time to sit and read about what i was talking about even if i did not like doing so. because i should not post what i dont know. i did not post it as fact though i said "i believe"

"brickeyee": "I read about two thirds and stopped since it is not fair and does not treat previously earned and taxed money fairly. It is a poorly conceived plan that fails to address the real problem of the tax code being used for social engineering.
The base amounts not subject to tax will be manipulated as surely as the present code.

I said it before NO POLITCIAN WILL WILLINGLY CUT PORK SPENDING. thats up to us as the voters to make them. should i get a list of elected politicians who were fired by the voters in mid term becuase of goinging against the peoples will? I'm just saying that we give to much power to the GOV when in fact rigth now we still have the upper hand if we use it. If anyone has a better plan for the country as a whole then the fairtax man i'll jump on board and back it, might not be the best in doing so but i will try.
Link Posted: 3/7/2006 12:48:44 PM EDT
I think the consumption/sales tax is probably the way to go.

Think about it - the guy that buys a $200.00 pair of pants and the guy that buys a $20.00 pair of pants will pay the same percentage of tax for their product.
Link Posted: 3/9/2006 2:06:48 PM EDT
[Last Edit: 3/10/2006 6:08:28 AM EDT by Scorp1us]
FairTax is a joke every supporter relies on the claims that it will repeal the 16th Amendment and "defund" the IRS.

Well the 16th amendment issue is a red herring. Congress got its power to tax incomes from the consitution itself. Income taxes will still exist.

Nevermind that most people are paying taxes on wages voluntarily. No one reads the definitions of 26 USC 3401, 3121 which define what "wages" are taxed and later chapter allow for witholding on those defined "wages". The question is folks, do you have "wages" as defined? And if you don't why are you paying taxes on them?

So provided that I have no income tax liability despetite working full-time (thanks to the standard deduction) , why would I want to move to a consumption tax where I will surely pay more?

What we should do is tax corporations (which escape a lot of income tax) to take it off the people. Also, eliminate free trade. And going back to funding the government through tarriffs.
Link Posted: 3/13/2006 11:38:30 PM EDT
Flat Tax
Link Posted: 3/14/2006 4:12:51 AM EDT

Originally Posted By ljtag:
Flat Tax

Care to elaborate?
Link Posted: 3/27/2006 1:32:43 PM EDT
How about no taxes?
Link Posted: 3/31/2006 8:30:11 AM EDT
No taxes? Be realistic. You do like that little thing called "The Interstate" you drive on, don't you? You do like another little thing that protects you from the bad guys called "US Military".........

Neither of the points discussed here are really "fair" to all. There is no such animal. It's a wild "pipe dream" of thinkers that ignore the true reality of life.

Let's look at what's fair about a flat tax.................I'll even use a previous poster's example........


the guy that buys a $200.00 pair of pants and the guy that buys a $20.00 pair of pants will pay the same percentage of tax for their product.


Ok the guy that buys those $200.00 pair of pants pays, say 7.5% in sales tax now or $14.00 in tax. The guy that buys the $20.00 pair of pants pays the same 7.5% sales tax or $1.50..............

but here's the rub..........the big spender makes 100 times more money than the little spender, yet the little spender doesn't get a 100 times discount on the actual dollars spent for sales tax. Big spender makes $250,000 per year, little spender barely squeaks by on $25,000 a year.

So who's really getting hurt by the "fair tax,flat tax"? It's the little guy. The little guy cannot afford to pay that $1.50 in taxes, yet the big guy doesn't even notice it................'cept when he bitches about the "high cost of living".

In all "fairness" there is no single solution that works for every wage earner in the US today. That's why the tax code is so complex. And it sux the way it is now.
Link Posted: 3/31/2006 5:14:48 PM EDT
[Last Edit: 3/31/2006 5:33:36 PM EDT by gsu2720]

Originally Posted By MarkBall:
but here's the rub..........the big spender makes 100 times more money than the little spender, yet the little spender doesn't get a 100 times discount on the actual dollars spent for sales tax. Big spender makes $250,000 per year, little spender barely squeaks by on $25,000 a year.


That is not at all true. Under the Fair Tax plan, the poor pay no tax at all.

  • The Fair Tax is eliminates social security and medicare withholding, so the poor receive an immediate 7.65% raise. Not to mention that they receive 100% of their paycheck.
  • The Fair Tax allows every person/family to buy the necessities of life tax free. There is a prebate system where the family is issued a credit for the amount of tax they are expected to pay before they even pay them.
  • Used goods are not taxed. This allows low income earners to further avoid paying taxes.
  • The Fair Tax encourages people to save. If people don't want to pay a lot of tax, they can save their money for education or retirement.
  • Since the Fair Tax is a consumption tax and not a tax on initiative, it allows for an increased rate of savings.
  • The Fair Tax allows people to spend money on education without having to pay taxes. This removes one of the excuses that the "poor" have for not getting work.
By the way, $250,000 is only 10 times $25,000, not 100 times. Also, someone who makes 10 times more also spends 10 times more. Thus they pay 10 times more tax.

If your goal is to help the poor contribute more to society, then you should punish them for being poor. There are some exceptions, but poverty is a behavioral disorder. How do you eliminate a behavior that you don't want your dog to have? You reward him for doing good and punish him for doing bad. The solution is not to cater to the pitiful poor. We are in the position that we are in now because we, as a society, are afraid to hurt anyone’s feelings.
Link Posted: 3/31/2006 8:16:36 PM EDT
gsu2720

+1


BTW. What is your major in school? Saw you on another thread and i remember you saying your were in college.
Link Posted: 4/1/2006 3:34:47 AM EDT

Originally Posted By An_AR_Addict:
gsu2720

+1


BTW. What is your major in school? Saw you on another thread and i remember you saying your were in college.

Accounting, I will graduate thie May. Are you in college?
Link Posted: 4/1/2006 4:35:02 PM EDT
yes i go a community college right now and work for my dad full time. next fall i will go off to school to finish my bachelors in Economics and Politics.

This semester i have an economics class that we had an open research topic. I listen to talk radio alot (RushLimbaugh, Neil Bootz, Sean Hannity) Neil talks alot about the fair tax it made sense to me. I bought the book and went to hear him talk about it in Orlando FL. So for my research topic i chose the HR-25 tax plan or "Fair Tax".


I understand the bulk of the fair tax and i like it. i may not be the best person to explain it to others however.


Question. I keep thinking about this one, will the fair tax eliminate Class 3 firearms taxes?
It would be cool if it did no?


BTW: all my Prof in school who are in the business dep agree with the fair tax.
Link Posted: 4/1/2006 4:57:31 PM EDT
23% (more or less) national sales tax on the final sale of all new goods and services. No exceptions or exempt categories.

EVERYBODY gets a rebate check for 23% x the amount of income determined to be poverty level, or bare minimum a person will spend to survive on food, medicine, clothes, etc, with none left over.

It would be much more efficient, especially once you fired the 90% most incompetent IRS employees, and sent the rest out to make sure stores were collecting the tax.

"Progressives" frequently refuse to discuss a fairer tax system because they don't know about the rebate and believe it is a regressive tax that charges poor people more because a higher portion of their income is for necessities. The current tax system is a disincentive for working to increase one's paycheck, but the only activity discouraged by the fair tax is wasting money on frivolous crap.
Link Posted: 4/1/2006 5:04:47 PM EDT
AN_AR_Addict

+1 for Neal Boortz. I can't get him on the radio at school, so I stream him from his website.

As far as eliminating the transfer tax, I don't think it will for the fact that the transfer tax is coded into law. If the fair tax explicitly mentioned this law, it might be able to eliminta it. I would think that the GCA of 1930-something would have to be repealed in order to eliminate the tax. It would be nice though. I would be able to afford that silencer that I have had my eye on.

Where are you going to go to school?

Most of my professors believe in the Fair Tax or a Flat Tax.
Link Posted: 4/1/2006 7:01:53 PM EDT
People always say tax corps, make them pay more etc.. Corperations DO NOT PAY TAXES, they are passed to the consumer. The more you make a corp pay, the more expensive their products or services become. The consumer pays any tax that is levied on a corp.
Link Posted: 4/1/2006 7:11:31 PM EDT

Originally Posted By sta1treeman:
People always say tax corps, make them pay more etc.. Corperations DO NOT PAY TAXES, they are passed to the consumer. The more you make a corp pay, the more expensive their products or services become. The consumer pays any tax that is levied on a corp.

This is a common tactic used by politicians. They raise taxes on the evil corporations, consumers are happy. Then the corps raise prices to account for the increase in taxes. Then consumers bitch about high prices. Then politicians lower individual taxes. And voila, the 50% that are too stupid to live in a free society are ecstatic that they are paying less in taxes. When, in reality, they are paying the same amount of tax as they were in the fisrt place.
Link Posted: 4/1/2006 7:54:43 PM EDT
Daytona beach community, though its going to change to just Daytona beach college they got the state OKAY to become a 4 year school.
Link Posted: 4/1/2006 11:57:04 PM EDT

Originally Posted By gsu2720:

Originally Posted By sta1treeman:
People always say tax corps, make them pay more etc.. Corperations DO NOT PAY TAXES, they are passed to the consumer. The more you make a corp pay, the more expensive their products or services become. The consumer pays any tax that is levied on a corp.

This is a common tactic used by politicians. They raise taxes on the evil corporations, consumers are happy. Then the corps raise prices to account for the increase in taxes. Then consumers bitch about high prices. Then politicians lower individual taxes. And voila, the 50% that are too stupid to live in a free society are ecstatic that they are paying less in taxes. When, in reality, they are paying the same amount of tax as they were in the fisrt place.

Unfortunatly their are a lot of uneducated people that want to stick it to the man. When in reality they are sticking it to themselves. The average taxpayer should be glad about a corp. finding, and using a tax loophole, it saves the consumer money in the end. I own a small business, and purchase my inventory tax exempt. I then collect taxes at POS, and pay them to the county, and state. Also the federal taxes owed are built into the cost of every item I sell. The only taxes I pay personnally are my payroll checks, and from dividend income qtly. Those too are built into the cost of every item I sell. I have a figure(income ammount) I shoot for every year, and that is after tax income, my prices are set accordingly, as are the prices of every business in existance. Workmans comp, employee health insurance, shrinkage, and other fees associated with doing business , are included as well. All my competitors have the exact same expenses, so their prices are in line with mine. The average joe should think of these things everytime they request an increase in wages, benifits, taxes etc.. when it comes to business, because they will be the ones paying the bill, the corp is just the evil middle man.
Link Posted: 4/2/2006 1:25:00 PM EDT

Originally Posted By gsu2720:

Originally Posted By MarkBall:
but here's the rub..........the big spender makes 100 times more money than the little spender, yet the little spender doesn't get a 100 times discount on the actual dollars spent for sales tax. Big spender makes $250,000 per year, little spender barely squeaks by on $25,000 a year.


That is not at all true. Under the Fair Tax plan, the poor pay no tax at all.

  • The Fair Tax is eliminates social security and medicare withholding, so the poor receive an immediate 7.65% raise. Not to mention that they receive 100% of their paycheck.
  • The Fair Tax allows every person/family to buy the necessities of life tax free. There is a prebate system where the family is issued a credit for the amount of tax they are expected to pay before they even pay them.
  • Used goods are not taxed. This allows low income earners to further avoid paying taxes.
  • The Fair Tax encourages people to save. If people don't want to pay a lot of tax, they can save their money for education or retirement.
  • Since the Fair Tax is a consumption tax and not a tax on initiative, it allows for an increased rate of savings.
  • The Fair Tax allows people to spend money on education without having to pay taxes. This removes one of the excuses that the "poor" have for not getting work.
By the way, $250,000 is only 10 times $25,000, not 100 times. Also, someone who makes 10 times more also spends 10 times more. Thus they pay 10 times more tax.

If your goal is to help the poor contribute more to society, then you should punish them for being poor. There are some exceptions, but poverty is a behavioral disorder. How do you eliminate a behavior that you don't want your dog to have? You reward him for doing good and punish him for doing bad. The solution is not to cater to the pitiful poor. We are in the position that we are in now because we, as a society, are afraid to hurt anyone’s feelings.



Your right it is only 10 times more. My Bad..........

Anyway, who is to say what item is a necessity & which item is not? The government? Yeah, right. They also say we can't have Class IV weapons..........they aren't necessary. But that's another arguement............

Buying used things is a great idea, but would you buy "used underware", or "used bedsheets". I wouldn't, no matter how little money I have. That's just an oversimplication though. Look at this another way.... Imagine the less fortunate people want to buy a car, they try to buy a "used car" in good mechanical shape. But wait, that more fortunate person wants to buy the same used car, to avoid taxes. Suddenly the demand for the used car is so great, the price is put out of reach of the "less fortunate" person.

So who is hurt by this "no tax on used items"? The guy making megabux or the little guy? Now it's not the tax/no tax issue, but the basic price of goods sold.

So what do we do about it? Punish the poor? Ok, we can punish them by taking away their "entitlements" & make them work for a living. Hmmm that makes sense. Until you look at the "poor" that are working, doing the jobs you yourself refuse to do. Many of these people do not fit the stereotype of the classic "welfare mom" or crack addict. Many of these people are working at entry level positions & continue to do so because it is what they love to do. So if they are contributing to society, why punish them by taking away from them?

I would much rather pay out "my tax dollars" to one that is working, trying to get ahead, trying to make a life & become self sufficient, rather than pay out to the ones that "fit the stereotypical welfare moms".

The fair tax looks good on paper, however it's unworkable, because it will (in the end) get more government involvement in our lives than what it is now. At the same time if you think a simple loaf of bread is expensive now, pass legislation to a "Fair Tax", that $2.00 loaf of bread will suddenly become $50.00.

Then where will a poor college student be?
Link Posted: 4/2/2006 1:36:02 PM EDT
[Last Edit: 4/2/2006 1:38:49 PM EDT by MarkBall]
And another thing, what is 7.65% to someone making $10,000 a year? Not very much. Not enough to allow that person to pull themselves up out of the hole they are in. And what about the company portion of the SS tax (another 7.65%) the company is forced to pay? Does that go to the employee? Do you think the employer will reduce it's costs by that much? What about the elimination of the payroll dept of those companies? Do you think they will eliminate the positions in that company?

If you believe that, I have some land for sale about 30 miles south of Corpus Christi TX.

The only ones to benifit from the "Fair Tax" is businesses & the wealthy wage earner that can afford to pay the suddenly inflated prices of used items. Virtually 1/3 of the US population would be starving in the streets within a couple months.

Myself, I've been in a position where I could not buy food for my family. I pulled myself up by the bootstraps & am making a comfortable living now. I buy used vehicles because I cannot justify spending more money on a car than what my house is worth. I don't live in a big city, mainly because I don't want to, but also because I cannot afford the prices of houses.

The classification of "poor" would have to be raised significantly (to the point where the poor can earn $60,000 a year) to cover the cost of purchasing "used items". Your arguments are sound, if you ignore market forces, inflation & what the weathy would do. In otherwords, your argument sounds like a politicians wet dream.

Maybe the only way this would work, is to have a "sales tax" on every item sold in the US today. Even on the private sales face to face. States already do that with sales taxes when you sell your car privately.
Link Posted: 4/2/2006 6:19:02 PM EDT
MarkBall, you obviously haven't read the Fair Tax proposal. You are trying to make a good argument, but your premise is just wrong. You believe that the prices of goods, new or used, are going to skyrocket. This just won't happen.

There are embedded taxes in the amount of 20%-22% in every new item we buy.

These are made up of payroll taxes, FICA taxes, corporate income taxes, etc. With the implementation of the Fair Tax, they are gone.

Albeit, the prices will remain the same for a short time, competition in the marketplace will force companies to reduce their markup to the point it was at before the Fair Tax.

Now you have a situation where, in general, prices have decreased anywhere from 20%-26% based on the industry.

When you add the 23% Fair Tax, the prices of goods are still lower than the were before the Fair Tax.
For Example: A car that costs $30,000 under the current system will decrease by about 19% or $5700. The Fair Tax price of the car is now $24,300. There is now a 23% sales tax that is levied on the car in the amount of $5589. The final price of the car is $29,889.

Why would the "fortunate", who by the way are not fortunate just hard working and successful, want to buy a used car when they can buy a new car at a discount?

The only way that a loaf of bread would cost $50, is for every bread maker in the country to agree to fix their prices. But wait, that won't work either. As soon as they fix their prices, I am going to start baking bread and selling it for $3 a loaf. If my competition does not lower their prices, soon I will have 100% of the market share, and they will be out of business.

One thing you fail to realize about used goods is a thing called depreciation. A car that cost $20,000 new will only be worth $6,000-$8,000 after 5 years. When the person making $25,000 a year wants to buy the car, they are not going to pay more than the car is worth. If they do, they deserve to be poor.

Used cars will not experience a jump in prices above their value. Price is dictated by what someone is willing to pay for something. No one that I know is willing to pay 20%, 30%, 40% or more for something than it is worth. When was the last time that you agreed to sell your car to someone, and when another person came along to offer you a little more, you took your car back and sold it for more.
Link Posted: 4/3/2006 5:29:22 AM EDT
[Last Edit: 4/3/2006 5:35:43 AM EDT by MarkBall]

Originally Posted By gsu2720:
MarkBall, you obviously haven't read the Fair Tax proposal. You are trying to make a good argument, but your premise is just wrong. You believe that the prices of goods, new or used, are going to skyrocket. This just won't happen.



Actually I have read this one or a version of this several years ago. Now the price of goods sold....Look at the current price of oil. There is no decrease in production of crude, there is no decrease in refinery production, there are excessive stocks in US inventory now................but why are we still paying (in places) almost $3.00 a gallon? This is the free market in action. Why is it still almost $3.00 a gallon? Because that is what consumers are willing to pay. Hence, no reduction in the price of gasoline.

Now I know this is an oversimplification of the crude oil vs gasoline pricing schemes out there, but this is the facts. Look at the last year's profits reported by Exxon. "Record profits", caused a Congressional investigation that is still ongoing.


There are embedded taxes in the amount of 20%-22% in every new item we buy.

These are made up of payroll taxes, FICA taxes, corporate income taxes, etc. With the implementation of the Fair Tax, they are gone.

Albeit, the prices will remain the same for a short time, competition in the marketplace will force companies to reduce their markup to the point it was at before the Fair Tax.

Now you have a situation where, in general, prices have decreased anywhere from 20%-26% based on the industry.



Ok, I'll buy that. But what you fail to realize, businesses - either private or corporate - will not gladly give up that money they had once been paying out in taxes. That is all profit for them & they would be stupid or just poor business practitioners if they chose to reduce prices based on this. So your argument the prices will decrease, ain't gonna happen. Do you really think Walmart would reduce their prices that much? Don't think so, even if it is their corporate policy to bring consumers the lowest priced products possible. That is easy money for them.

And I do have my own business, in competition with others. None of us would reduce our prices unless ordered to do so by a court. And that ain't gonna happen.



When you add the 23% Fair Tax, the prices of goods are still lower than the were before the Fair Tax.
For Example: A car that costs $30,000 under the current system will decrease by about 19% or $5700. The Fair Tax price of the car is now $24,300. There is now a 23% sales tax that is levied on the car in the amount of $5589. The final price of the car is $29,889.

Why would the "fortunate", who by the way are not fortunate just hard working and successful, want to buy a used car when they can buy a new car at a discount?



You really cannot be that niave.......Give $5589 to the government? Are you crazy? Why would you do that when you could spend the $24,000 on a car & not give the government a dime? Think the hard working person that can afford it won't do that? I'm absolutely sure that there are about 95% of the hard working people that would. I'm one of them. If I could buy something like a 2006 car (appropriately used of course) for $24,000, I'm in line for the next one. What I would refuse to do is pay $30,000 plus another $5700 to the government, plus any state sales tax, local property tax which effectively puts that car in the $40,000 price range.

Gotta get me one of those tomorrow.................... you betcha!!


The only way that a loaf of bread would cost $50, is for every bread maker in the country to agree to fix their prices. But wait, that won't work either. As soon as they fix their prices, I am going to start baking bread and selling it for $3 a loaf. If my competition does not lower their prices, soon I will have 100% of the market share, and they will be out of business.


Ok, you got me there. I blew the price up on a whim............ What you have to realize, businesses aren't going to reduce the price much. No where near the 23-26% you envision. Maybe around 5-10% at the max.

Look at it this way, a "widget" currently costs you $10.00 to produce. (with the existing tax structure) If the current tax structure is done away with, it now only costs you $7.50 to produce. You have an automatic $2.50 profit built into your current price. Say you need to sell 100,000 units to break even (prior to the tax change), your ramped up to produce that 100,000 units & there is sufficient demand for that many units every year.

Now the tax change occurs, the demand for those 100,000 units remains. Your competitors continue to sell them at a competitive price to yours, you want a greater market share, so you reduce your price by 10%. Suddenly you have to ramp up to produce 150,000 units, but you have less profit to produce it. So you operate at a loss (temporarily) while you get ramped up to produce more.

Pretty soon, others have dropped thier prices, but in an effort to stay in business, you have to raise your prices the following year. Either that or go out of business.

So tell me where did that immediate $2.50 profit per widgit go? Into marketing, increased payroll costs, production costs etc....... There is no profit at the end of the year, because it had to be spent to increase production. But now you have excessive production capacity, the demand is less (due to market forces/competition) and you are losing money the second year.

Think that scenerio won't happen? Look at the big 3 automakers. Happens every year.

[ b]

One thing you fail to realize about used goods is a thing called depreciation. A car that cost $20,000 new will only be worth $6,000-$8,000 after 5 years. When the person making $25,000 a year wants to buy the car, they are not going to pay more than the car is worth. If they do, they deserve to be poor.

Used cars will not experience a jump in prices above their value. Price is dictated by what someone is willing to pay for something. No one that I know is willing to pay 20%, 30%, 40% or more for something than it is worth. When was the last time that you agreed to sell your car to someone, and when another person came along to offer you a little more, you took your car back and sold it for more.



Ok, with the change in the tax structure, there is no more depreciation. None you can deduct from your taxes anyway. Used cars will increase in value, because that is what everyone will want to purchase. Very few people will want to spend the money on a new car & give their money to the government, when they have a choice not to. It's not they are greedy, they just want a fair value for thier dollar. So why would you buy a new car for dang near $30,000 when you can get one barely used for $24,000? You would be throwing away $6,000. If you are serious about throwing it away, PM me I'll send you my address.

BTW, I'm only jabbing at your arguments, not the person. I'm Mark, have been in business for several years, worked for several companies where I was responsible for budgeting a department, know what it's like to raise a crop of wheat, corn or raise cattle. I have personally witnessed the market forces when cars first went over $20,000, now a well equipped auto is over $30,000 (don't believe the commercials on TV, they really are over $30,000) I've witnessed the rise in prices of used cars, because all the taxes are less expensive on one you can buy for $5-10,000 less.

I majored in Health Care in college, but I also have the equivilent of a MBA in economics. Both macro & micro. So don't take offense to anything I say here, I'm providing a counter argument to the assumptions made by the Fair Tax organization.

Good discussion.
Cheers
Link Posted: 4/3/2006 7:29:15 AM EDT

Actually I have read this one or a version of this several years ago. Now the price of goods sold....Look at the current price of oil. There is no decrease in production of crude, there is no decrease in refinery production, there are excessive stocks in US inventory now................but why are we still paying (in places) almost $3.00 a gallon? This is the free market in action. Why is it still almost $3.00 a gallon? Because that is what consumers are willing to pay. Hence, no reduction in the price of gasoline.

First of all, the price of oil is dependent on more than what people are willing to pay for it. It is apparent that the U.S. is not going to touch its oil reserve. This being the case, the only place to get oil is from OPEC countries. OPEC is essentially a worldwide oil monopoly. It is a group of countries that get together and collectively determine how much oil they are going to produce and sell. The price of oil is also based on the amount that we know exists. They aint makin any more, at least not for another 5 million years. The pricing of oil is similar to the increase in value of land. They aint makin no more land either. Thus the value increases.

There are taxes built into the price of gasoline at the pump. There are both federal and state taxes. Under the Fair tax plan, not only will the embedded taxes from the transportation and refinement be eliminated, the federal excise tax will be gone also. Prices will have to drop. If they don't, the existing firms in the industry create an opportunity for new entrants into the market. This will reduce the existing market share for everyone. You may be willing to reduce your market share in order to have a higher margin, but the rest of the world isn't.


Ok, I'll buy that. But what you fail to realize, businesses - either private or corporate - will not gladly give up that money they had once been paying out in taxes. That is all profit for them & they would be stupid or just poor business practitioners if they chose to reduce prices based on this. So your argument the prices will decrease, ain't gonna happen. Do you really think Walmart would reduce their prices that much? Don't think so, even if it is their corporate policy to bring consumers the lowest priced products possible. That is easy money for them.

And I do have my own business, in competition with others. None of us would reduce our prices unless ordered to do so by a court. And that ain't gonna happen.



Here again, you fail to realize the opportunity that is present for new entrants if the existing firms do not lower prices. Just like my bread example, anyone can start selling gas, tires, cars, clothes, etc. Demand alone does not dictate the price of goods.


You really cannot be that niave.......Give $5589 to the government? Are you crazy? Why would you do that when you could spend the $24,000 on a car & not give the government a dime? Think the hard working person that can afford it won't do that? I'm absolutely sure that there are about 95% of the hard working people that would. I'm one of them. If I could buy something like a 2006 car (appropriately used of course) for $24,000, I'm in line for the next one. What I would refuse to do is pay $30,000 plus another $5700 to the government, plus any state sales tax, local property tax which effectively puts that car in the $40,000 price range.

Gotta get me one of those tomorrow.................... you betcha!!



You give that money to the government already, you just don't know it. Where do you think the embedded taxes come from? They aren't just made up. They consist of taxes that the steel company incurred doing business. The steel maker passes his tax burden on to the fabricator by increasing the price of his steel to cover the taxes he had to pay. The fabricator pays the inflated price of steel, and by doing so he is reimbursing the steel maker for the taxes that he had to pay. The fabricator is then subject to the same taxes that the steel maker had. The fabricator increases his prices to cover the taxes he must pay. When Ford buys the components that make up their cars, they are reimbursing, in the form of inflated prices, the tax burden that every step in the chain has had to pay. Then Ford incurs a tax liability that is passed on to the final consumer of the automobile. When we buy the car, truck, or SUV, we are paying every bit of the tax burden that the entire chain has had to pay.

So essentially you are already paying $30,000 for a $24,000 car. I would not pay $30,000 for a car and $5700 in federal taxes either. The beauty of a free market is that if any step in the chain does not lower their prices, they are asking for more competition. If the new entrants sell the exact same thing, the only way to compete is to lower prices. This will force everyone in the chain to lower prices for fear of inviting unwanted competition.


Ok, you got me there. I blew the price up on a whim............ What you have to realize, businesses aren't going to reduce the price much. No where near the 23-26% you envision. Maybe around 5-10% at the max.

Look at it this way, a "widget" currently costs you $10.00 to produce. (with the existing tax structure) If the current tax structure is done away with, it now only costs you $7.50 to produce. You have an automatic $2.50 profit built into your current price. Say you need to sell 100,000 units to break even (prior to the tax change), your ramped up to produce that 100,000 units & there is sufficient demand for that many units every year.

Now the tax change occurs, the demand for those 100,000 units remains. Your competitors continue to sell them at a competitive price to yours, you want a greater market share, so you reduce your price by 10%. Suddenly you have to ramp up to produce 150,000 units, but you have less profit to produce it. So you operate at a loss (temporarily) while you get ramped up to produce more.

Pretty soon, others have dropped thier prices, but in an effort to stay in business, you have to raise your prices the following year. Either that or go out of business.

So tell me where did that immediate $2.50 profit per widgit go? Into marketing, increased payroll costs, production costs etc....... There is no profit at the end of the year, because it had to be spent to increase production. But now you have excessive production capacity, the demand is less (due to market forces/competition) and you are losing money the second year.

Think that scenerio won't happen? Look at the big 3 automakers. Happens every year.



This is fundamentally flawed logic. If you are only going to produce enough widgets to break even, then you are not a very smart businessman. But I will ignore this.

Without knowing what the price, fixed costs, and variable costs of widgets in your scenario are, it is hard to counter with numbers. So we will assume that widgets sell for $10, there is a fixed cost component of $6, and a variable cost component of $4.

If you need to sell 100,000 units to break even, you have a fixed cost of $600,000. Fixed cost will not change, they are fixed. So if your costs to produce widgets are $600,000 fixed + $400,000 variable, you will break even selling 100,000 units.

Using this logic, if the price to produce falls to $7.50, the fixed component will not change. It will remain $6, and the variable component will now only be $1.50. This is good. You now sell 100,000 widgets at $10 a piece generating $1,000,000. You subtract your fixed costs of $600,000 and your variable costs of $150,000, and you are left with a profit of $250,000.

Now, if you must reduce the price to $9 or buy 10% you will have revenue of $900,000. Your combined fixed and variable costs of $750,000 will not change. Thus you will still have a profit of $150,000.

Now lets say that demand has increased to 150,000 units at the new price of $9. This is a very steep demand curve, but OK. In order to break even with increased production, all you have to do is sell your product at a price that equals the variable cost component, because the fixed costs are being covered by the 100,000 units you are already producing.

You now have $150,000 to spend on increased production. Considering you have the room for the increase in production, you are now selling 150,000 widgets. This generates revenue of $1,350,000. Your fixed costs of $600,000 and your variable costs of (150,000x$1.5) $225,000 leave you with a profit of $525,000.

As you can see, there is no need to raise prices the next year to stay in business. As for the big 3, Ford showed a profit of $2 billion last year. If they could decrease their variable costs by 19% and decreased prices by 10% to gain market share as in the above scenario, they would have shown an increase in profits of $9 billion.


Ok, with the change in the tax structure, there is no more depreciation. None you can deduct from your taxes anyway. Used cars will increase in value, because that is what everyone will want to purchase. Very few people will want to spend the money on a new car & give their money to the government, when they have a choice not to. It's not they are greedy, they just want a fair value for thier dollar. So why would you buy a new car for dang near $30,000 when you can get one barely used for $24,000? You would be throwing away $6,000. If you are serious about throwing it away, PM me I'll send you my address.


There will be no more need for business to deduct depreciation on their tax returns because there will be no tax returns. Individuals cannot recognize and deduct depreciation from their taxes anyway.

I agree that people will not do things just because they will have to pay taxes. My father is a prime example. He owns his own business in the metro Atlanta area. He will not give himself a raise because he will have to pay more taxes than he does now. This is stupid, even if you must pay an increased marginal rate of tax; you are still better off than you were before the raise.

It kills me to see people wanting to donate money at the end of the year just to claim a charitable deduction. They spend $1000 so that they can get a $250 deduction. They are still out $750. This makes no financial sense whatsoever.

Going back to my point a few paragraphs ago, we are already paying $30,000 for a car that is only worth $24,000. The difference is that the government schools have done a great job dumbing down the population. That is an argument for another day.


I majored in Health Care in college, but I also have the equivilent of a MBA in economics. Both macro & micro. So don't take offense to anything I say here, I'm providing a counter argument to the assumptions made by the Fair Tax organization.

Good discussion.
Cheers



This has been fun, and no offense taken.

Chris
Link Posted: 4/3/2006 9:03:51 AM EDT
Fair Tax all the way.
Link Posted: 4/3/2006 12:42:21 PM EDT
[Last Edit: 4/3/2006 12:48:18 PM EDT by MarkBall]
Ok, first of all, the oil embargo of the 70's was just that. There was no oil. Taps were shut off in the mideast, we didn't prepare for it. A few years later, there was talk about OPEC decreasing the production again, causing panic & the oil companies didn't slow or halt production, just raised the prices.

Happened again in the 90's, then with last years hurricanes. Took about 3 weeks for production to resume to pre-hurricane levels, oil stocks returned to pre-hurricane levels within 60 days. No "tax" increases have been made to that oil, no great jump in demand (in fact it's about 5% lower now than it was prior to the hurricane). But the price of oil is still near $60.00 a barrel of crude.

Why is that? An oversimplification, in preperation to the travel this summer. Oil companies still have the same refineries running at the same capacity, producing the same amount of finished product as before. Consumer demand for gas has decreased slightly (maybe/maybe not 5% isn't much of a drop) Supply of refined oil is excessive right now and the price of gas is still $2.85 in my area.

Ok, so competition should bring the price down using your logic. However it's not going to come down, because the oil companies won't let it. They are the ones purchasing the commodities, they are the ones with the fixed cost & variable costs associated with the refining of the crude. Why would they cut their profit margin if they wouldn't have to? There are no laws saying they can only make $x.xx of profit. Nope they aren't going to drop the price, it's here to stay. They would be pretty stupid to do that anyway. Their investors would rake them over the coals.

New entrants into the marketplace? Ummmm you forget the start up costs associated to make that loaf of bread or a "widgit". My former boss used to work for Allied Signal. He ran the purchasing dept & when a manufacturer asked the cost of 1 landing gear trunnion.........it was $140,000. But if the same manufacturer asked what it would cost them to purchase 5000 landing gear trunnions, the individual cost became around $3000.00 each.

You forgot the hidden costs associated with starting a new production line. All the capital costs, the labor costs, the raw materials cost...........even if you ignore the tax consequences. Or the hidden corporate taxes that (as you rightfully pointed out) are passed onto the next user of their product. So to create a new business to sell a loaf of bread, you would not be able to do it for the same cost basis as the established companies that charge a higher price than you would.

I haven't forgotten about the corporate taxes paid out & how that money is recovered by the purchaser of the product produced. However, no company in that chain will reduce their prices just because the government tosses the tax consequences out the window. None of them will. They will continue to charge the same amount they always have. It's pure profit for them.

As far as your dad not giving himself a raise............I know exactly what he goes through. I went 4 years without a paycheck once during that whole time, before I was able to begin to pay myself. But that is another story entirely................

I do agree in the idea of a person having to "give away" $1000.00 to save $250.00 in taxes. That doesn't make sense to me either. But growing up on a farm, I saw farmers wait until December before they bought a new pickup, tractor, piece of equipment..........all because they needed a deduction for their taxes. They might have spent $50,000 on that tractor & only were able to show a "loss" of $12,000.00 But this is what was allowed & the farmer didn't have to pay out money that was "non-recoverable".

I do agree with the intent to reformat the tax system. However, I disagree with the way these people want to do it. It sounds too good to be true (and you know what they say about those things).

The most fair tax is to tax everyone the same. Period. You make $xxx.xx per year, you pay in $xxx.xx taxes & be done with it. No loopholes, no special corporate taxes, no special "incentives", just a once a year fee for earning money. That fee is based upon what is listed on a schedule, and the choice to have it withheld by your employer is yours. No SS taxes, no special Medical Accounts, no special "Earned Income" credits, just a flat fee.

For instance, someone makeing $10,000.00 a year, pays $100.00 at the end of the year. Someone making $100,000.00 pays in $12,000.00 at the end of the year. A coporation making 250 million bucks a year gets taxed at the top rate of 20% or $50 million bucks due at the end of the year. The more the person (corporation) makes, the more that person (corporation) pays in. But putting an end to the "redistribution of the wealth" is the most important thing to do immediately. That & getting rid of the IRS and that convoluted tax code. Not a sales tax, not a consumption tax, but a tax for money earned from your labor.

Heck we could even use the current tax tables only cap the top rate at 20%. By elimination of loopholes, deductions, earned income credits, tax incentives to save etc...etc...etc.............. There would be fewer problems with the tax collections. Look at the paper that would be saved. Your W-2 shows you earned $27,256.56 in the year. You owe $3,437.62 in taxes. (I'm just throwing figures in here to illustrate) You had your taxes withheld at a rate of $132.22 each paycheck, you owe $0.00 at the end of the year. Oh yeah, if you withheld at a $140.00 rate, the excess you paid in, well that's your "donation" to the common good. It doesn't get returned to you. Period, never, ever.

Or you owe $3437.62 at the end of the year because you opted out of the withholding. You invested that money at a 3% interest rate, you write a check to pay your tax liability, you end up with $103 in your pocket at the end of the year. That's all yours, free & clear. In other words your taxed on what you earn "from your labor". Period. Investments don't count. Want to retire when your 65, better be saving when your much younger & investing it. No Government handout with this tax plan.

The Fair Tax system is a pipedream. But then again, so is the one presented here.
Link Posted: 4/4/2006 5:30:06 AM EDT
MarkBall, we just need to agree to disagree. We could go on forever discussing the pros and cons of different tax reforms.

To me, the biggest plus that the Fair tax has going for it is that it un taxes productivity. Under the current system, and the one that you propose, you are still being taxed on your work. There will still be people like my dad who will not give himself a raise even if the money is there to do so, because they don't want to give any more money to the government.

Taxing income is still a means of income redistribution. Even if the rate is the same no matter how much you make, politicians who are looking to buy votes can still manipulate it. Another thing to consider is revenue neutrality. An income tax with a flat rate low enough for the poor to afford will not be revenue neutral. A tax at the retail level is the only way to prevent corruption of the tax code, and to ensure revenue neutrality. And any system where business is taxed, the individual taxpayer is still footing the bill.

With the removal of the income tax burden, there would be a lot of companies that would relocate to the US. Daimler-Chrysler said during their merger, that if the US did not have such a regressive tax system, they would have located their headquarters in Detroit instead of Germany. Plus, a retail tax would generate revenue from every tourist that visited the US. No type income tax is capable of doing that.

Good points and a fun thread.

Chris
Link Posted: 4/4/2006 9:44:24 AM EDT
Yes this was fun. It just goes to show, differing opinions can be discussed without the typical name calling, "your mama wears combat boots" kinds of insults that are regularly traded in discussions of this type.

I do agree that we need to do something about the current tax system. However, I'm not smart enough to lay one out that would work. But..............maybe a combination of differing ideas would work? A "retail tax", plus a minimum tax on income earned from direct labor, plus a elimination of the "redistribution of wealth"............might even be some other ideas that are workable.

Anything that would get the "tax" system out of the hands of the politicians that could control it. And make it so the "New IRS" doesn't have the policing ability it has now. Not without direct congressional approval. IRS needs oversight, big time. That & get rid of the BATFE. There is little oversight there.

But that's another discussion.

It's been fun Chris. Glad to have met you & had an intelligent discussion. Maybe other readers will follow along, agree/disagree, discuss more, have better ideas, have off the wall ideas........ At least it's on peoples minds.

Cheers, have a beer on me.
Mark
Link Posted: 4/4/2006 11:16:58 AM EDT
This has been a good thread. I wish the tax code were changed at least to the point that I could do my own taxes. I work for the FD, own a small business, have some rental property, stock and other investments etc..., I couldn't begin to do my own taxes. If I did, it would cost me a fortune in deductions(I would miss). I like so many others have to pay an accountant, and take his word that it is correct. I pay him, and then the govs. I think accountants will lobby hard against tax reform, specialy reform that ends in not having to file taxes. Maybe one day we will be so lucky...Treeman
Link Posted: 4/4/2006 5:54:32 PM EDT
They will still need accountants to review payrolls, corporate costs, small business costs.........

Dealing with money, there's always someone that will profit. Be it taxes, accountants, the .gov, etc...

Accountants will always be a necessity. If nothing more than for businesses to be able to send the money through.

'Sides I rather like my girlfriend..............she's an accountant!!
Link Posted: 4/4/2006 7:47:03 PM EDT
LOL if Accountants were going to be out of a job i dont this Chris (gsu2720) would be suporting the fairtax. seeing as thats what his degree will be in. just a thought.


Its been great to see people really just clearly state their reasons for or against somthing and listen the all sides.

+1 for sportsmanship.
Link Posted: 4/4/2006 8:34:10 PM EDT
Don't misunderstand me, my accountant is my best friend at this point. In the future, if he were not needed for tax filing, there would still be plenty for him to do. As it stands now, he hands me a stack of papers, says sign here, and here, and pay this, to these folks, and this to these other folks. I know when I pay my sales tax monthly, exactly what I'm paying. When corp. tax time comes, and personal tax time, that is where I'm at his mercy, and that is what I wish I could completly understand.
Link Posted: 4/5/2006 3:44:25 AM EDT
As far as accountants go, the only opposition to the Fair Tax that I know of is from the H&R Block and Jackson-Hewitt types. There is a lot more to accounting than just tax preparation. No offence to anyone who works for these companies, but the majority of these "accountants" have never had to show any kind of proficiency at their craft. The majority of them just have to sit through a class, and then they are hired. There is a push within the IRS to require tax preparers to be CPAs. This will eliminate the above companies anyway.

To the majority of accountants, tax season is a wild, high-speed train ride.

Accountants also prepare financial statements, conduct audits for public companies, they work with the Justice Dept. to identify fraud, they work with MNCs to compile and report financial information, and many other jobs too numerous to mention.

You will hear gripes from H&R Block, Jackson-Hewitt, and the like; just remember, if the IRS has its way, they will be out of business anyway.
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