Certainly here is a more open view stating both the pro's and con's from an economist........
http://economics.about.com/cs/taxpolicy/a/fairtax.htm
I like how he certainly does open up some different views on this...
Certainly here is a more open view stating both the pro's and con's from an economist........
http://economics.about.com/cs/taxpolicy/a/fairtax.htm
I like how he certainly does open up some different views on this...
One aspect of the discussion that I think has been overlooked in this debate is the fact that corporations don't actually pay taxes. All they do is pass on their tax bill to their customers. So while it's true that a 30% sales tax sounds crazy high, it sounds a bit more reasonable when you realize that something like 20% of what we pay to a corporation actually goes to pay for their taxes.
Example:
Current System: I earn $10/hr. after taxes I keep $7. I want to buy a TV that costs $100. To earn that $100 I have to work a little over 14 hours.
Fairtax: I earn $10/hr. I keep all of it. I want that same TV I only have to work 10 hours. This is not mentioning that because of their own tax savings combined with competition the price of that TV might be more like $80.
Savings under the Fair Tax plan: 4-6 hours of work.
Sign me up for the fairtax plan.
Originally posted by Ushgarak
So that's what attracts you most? Squeezing the immigrants? You'll get bugger all from them that would actually massively affect the country, and besides which, do you have nay idea how much lagrer the black market will become if the only official tax is sales taax? Why would you think this is a magical, unbeatable solution?This is a nursery school idea. A first year Economics undergrad could point out why logic, intelligence and history shows that an idea like this is shot full of holes. It's obscene.
And you think the way to help the burden on the middle class is to make it offiical??
It;s unfair, it is arbitrary, and it is eventually counter-logical. All 'Pay as you spend' taxes are unfair to those with lower incomes and that cannot be avoided by any means. The pathetic lure of 'everyone would have more money under this system' is ptitiful.
Ok. History check here. The Federal Income Tax didn't even exist until 1862 and, when it was inaugerated, the top tax bracket was a whopping 5%! 3 years after the end of the Civil War, the tax was repealed. From 1868 until 1913, when the 16th amendment was passed, government revenues came from custom duties, excise taxes, and taxes based on the sale of liquor and tobacco. In other words, the system you describe as being inpracticable, illogical, and too stupid to contemplate was, in fact, the system that this county used for much of its early history.
Why is it unfair and unprogressive to tax based on consumption? Is it more enlightened to draw class/income lines and conduct political wars over which income bracket gets whacked the worst? You seem to argue that it is axiomatic that rich people should always share a disproportionate burden. I think this thinking is completelly irrational and based on little more than class hatred. Is this your logic, for instance, when you go out to dinner with friends and the bill comes? Regardless of what is eaten by each person, does the highest income earner shoulder a progressively higher burden of the bill? Let's say you earn $50,000 per year and I earn $100,000. But you had the fillet mignon for dinner and I had the soup and house salad. Despite the fact that your share of the $100 bill is $80, should I have to pay more because I earn more? If any logic comes into play, it would seem to argue for a per person itemization based on consumption, not the other way around.
Originally posted by docb77
One aspect of the discussion that I think has been overlooked in this debate is the fact that corporations don't actually pay taxes. All they do is pass on their tax bill to their customers. So while it's true that a 30% sales tax sounds crazy high, it sounds a bit more reasonable when you realize that something like 20% of what we pay to a corporation actually goes to pay for their taxes.Example:
Current System: I earn $10/hr. after taxes I keep $7. I want to buy a TV that costs $100. To earn that $100 I have to work a little over 14 hours.
Fairtax: I earn $10/hr. I keep all of it. I want that same TV I only have to work 10 hours. This is not mentioning that because of their own tax savings combined with competition the price of that TV might be more like $80.
Savings under the Fair Tax plan: 4-6 hours of work.
Sign me up for the fairtax plan.
I just realized that I had made a small miscalculation in my example. The $80 figure would be the price before the tax was added, if no market pressures changed the price up or down.
so $80 + 30% fairtax = $104
The final price would be slightly higher than under the current system. But since I'm still getting the entire $10/hr from my check I still save almost 4 hours worth of work.
Even if the company decided to be greedy and keep the $100 starting price it would be:
$100 + 30% fairtax = $130
at $10/hr it would take 13 hours to earn that TV, so I would still save at least an hour of work.
Didn't read the whole thread of course...........but
I HATE ALL TAXES.....It wasn't until WWII, I think, That it was that we had the income tax, and it was only to be temporary......now look!! 😠
It's all a money game......for instance here, in the US, when the economy is good, kids are left to their parents and the state tries to work with them......when the economy is bad, more children are taken out of families and put into foster care, because for each one the gov. makes money......also, we have a new law here, that if one is pulled over of certain offences, or commit certain offences, there is a new tax that not only are they to pay the court, and state as used to be, but now, you pay 2 and 3 years of costs...........I know people that work in the court system.
Deb, We all know that taxes suck, but they are a fact of life. The fair tax is just an attempt to make the system more equitable. A way to fund the government without playing all those "money games".
Check out www.fairtax.org for a better explanation of how that would work.
OK........but I hate taxes, it a money game.....and we as a society can work with each other to get things done WITHOUT taxes..........I believe this........
If taxes keep going at this rate, we will all be working to pay the government which IMO is too large anyway.......What do they call it now?? Socialism......I'm against it.
Originally posted by debbiejo
OK........but I hate taxes, it a money game.....and we as a society can work with each other to get things done WITHOUT taxes..........I believe this........If taxes keep going at this rate, we will all be working to pay the government which IMO is too large anyway.......What do they call it now?? Socialism......I'm against it.
I agree, government needs to be more limited. But there are certain things that the government has to take care of. Defense is the Big one, but infrastructure comes to mind too. A lot of the stuff that the federal government does should probably shifted to a more local level, but that's really not what this proposal is about. It's about making the tax code simpler and putting control of it in the hands of the people.
Originally posted by debbiejo
The const...............in the fact of the old taxes f what I Ssa after wWII................IS FALSE.MONEY, MONEY...................ALWAYS MONEY AND NOTHING ELSE...you don't think so?..............Look at your history!!!!!!!
While I do think that there is a lot of truth in the Constitution, I don't think that it is necessarily in the administrative methods that were laid out. That being said, I do think that the income tax, and property taxes, are the wrong way to go about funding the constitutional operations of the Government.
Taxes, on their own, aren't inherently wrong. What is taxation without representation. And while we do get to elect representatives in our govt. More and more I get the feeling that they are only interested in staying in power rather than actually representing those who elected them. That's what's wrong with the current system.
Originally posted by docb77
While I do think that there is a lot of truth in the Constitution, I don't think that it is necessarily in the administrative methods that were laid out. That being said, I do think that the income tax, and property taxes, are the wrong way to go about funding the constitutional operations of the Government.Taxes, on their own, aren't inherently wrong. What is taxation without representation. And while we do get to elect representatives in our govt. More and more I get the feeling that they are only interested in staying in power rather than actually representing those who elected them. That's what's wrong with the current system.
Income tax and the IRS are both abominations. I'm definitely a big advocate of the straight-up consumption tax.
We've become such sheep about the taxation of our income. Part of the problem is that the taxes are taken directly from our paychecks, so we never actually see the money going out. If the American people actually had to cut a check to the government each month for 30-45% of their income, there would be rioting...
Great article in National Review on this issue.
What Can the Government Tax?
The answer, never set in stone, may be changing.
By Bruce Bartlett
Last week, a federal appeals court in Washington handed down an important decision relating to the definition of income for tax purposes. What is important about the decision is that it is the first in decades to say the Constitution itself limits what the government may tax. If upheld by the Supreme Court, it could significantly alter tax policy and possibly open the door to radical reform.
In the case, a woman named Marrita Murphy was awarded a legal settlement that included compensation for physical injury and emotional distress. The former has always been tax-exempt, just like insurance settlements. Obviously, it makes no sense to tax as income the payment for a loss that only makes one whole again; one is not being made better off and therefore there is no income. But under current law, compensation for non-physical injuries is taxed.
Murphy argued that just as compensation for physical injuries only makes one whole after a loss, the same is true of awards for emotional distress. In short, it is not income within the meaning of the 16th Amendment to the Constitution. The appeals court agreed, ruling that Murphy’s award for emotional distress is not income and therefore not taxable.
Tax experts immediately recognized the far-reaching implications of this decision for other areas of tax law. Tax protesters have long argued that the 16th Amendment does not grant the federal government the power to tax every single receipt that it deems to be income. Yet, in practice, that is what the Internal Revenue Service does.
The problem is that the very concept of income has never been defined in the tax law. It is pretty much whatever the IRS says it is. Tax analysts generally use a definition devised by two economists, Robert Haig and Henry Simons, which says that income consists of consumption plus the change in net worth between two points in time.
But the Haig-Simons definition goes far beyond that of the tax law. Most important, it includes unrealized capital gains. There also is no room in the Haig-Simons definition for things like 401(k) plans, IRA accounts, or other retirement savings, nor for lower tax rates on realized capital gains.
Under Haig-Simons, owner-occupied homes would be treated as businesses, with homeowners taxed on the implicit rent they pay to themselves, less depreciation. And if your home’s value increases over the course of a year, Haig-Simons implies that you should pay taxes on this event, even if you don’t sell your house.
Clearly, the IRS is not going to tax any of these events, nor would Congress allow it to do so. But because tax analysts implicitly accept the Haig-Simons definition of income, even though it appears nowhere in law, there has been a long-term tendency for the IRS to push the limit of what can be considered taxable income.
Now, a federal court has said there is a constitutional limit.
I would like to see the court go further in regards to the question of whether interest constitutes income. To economists, some portion of the interest we receive on our savings is merely compensation for loss — loss of the immediate enjoyment we would receive if we consumed our income today instead of saving it.
Think of it this way. Would you be satisfied receiving your paycheck a year from now instead of on payday? Of course not. You would be suffering a real loss if you had to wait a year to get paid for your work. But if you were offered, say, 10 percent more in a year, you might be okay with this. Collectively, our willingness to put off consumption today for greater consumption in the future is what determines the pure rate of interest.
But in the view of many great economists, such as John Stuart Mill, the future interest one receives is merely compensation for the loss of immediate satisfaction. Therefore, it is not income, and something more like an insurance settlement that simply makes us whole.
Obviously, market interest rates are more than simple discounts between the present and future, as my example implies. Interest rates also represent a return to risk and an adjustment for expected inflation. In principle, however, some portion of interest is the compensation for loss, and therefore not income.
Given the logic of the Murphy decision, it is quite possible that the risk-free, inflation-adjusted rate of interest could also be excluded from taxation on constitutional grounds. Following through on this logic consistently would revolutionize taxation and eventually lead to a pure consumption tax, which most modern economists favor.
I’m not predicting the Supreme Court will follow this logic. But for tax analysts, it does represent the opening of an interesting possibility.
why do the rich scream bloody murder at the notion of them being taxed the same percentage of income as the middle class? or more to the point, scream bloody murder at ANY taxes? the best solution they can come up with in an economic crisis: cut taxes for the rich 😱 hey, it worked in the 80s...no it didnt
Originally posted by PVS
why do the rich scream bloody murder at the notion of them being taxed the same percentage of income as the middle class? or more to the point, scream bloody murder at ANY taxes? the best solution they can come up with in an economic crisis: cut taxes for the rich 😱 hey, it worked in the 80s...no it didnt
Actually, I bet the rich would absolutely LOVE to be taxed at the same rate as the middle class. I know I'd prefer a 25% rate to a 40% rate.