Posted on 10/19/2006 5:11:50 PM PDT by pigdog
As specified in Congressional bill H.R. 25/S. 25, the FairTax is a proposal to replace the federal personal income tax, corporate income tax, payroll (FICA) tax, capital gains, alternative minimum, self-employment, and estate and gifts taxes with a single-rate federal retail sales tax. The FairTax also provides a prebate to each household based on its demographic composition. The prebate is set to ensure that households pay no taxes net on spending up to the poverty level.
Bill Gale (2005) and the President’s Advisory Panel on Federal Tax Reform (2005) suggest that the effective (tax inclusive) tax rate needed to implement H.R. 25 is far higher than the proposed 23% rate. This study, which builds on Gale’s (2005) analysis, shows that a 23% rate is eminently feasible and suggests why Gale and the Tax Panel reached the opposite conclusion.
This paper begins by projecting the FairTax’s 2007 tax base net of its rebate. Next it calculates the tax rate needed to maintain the real levels of federal and state spending under the FairTax. It then determines if an effective rate of 23% would be sufficient to fund 2007 estimated spending or if not, the amount by which non-Social Security federal expenditures would need to be reduced. Finally, it shows that the FairTax imposes no additional real fiscal burdens on state and local government, notwithstanding the requirement that such governments pay the FairTax when they purchase goods and services.
(Excerpt) Read more at people.bu.edu ...
"It is not the complexity of the code which makes the requirement for having thousands of tax collectors."
Wrong as hell, dude!!! Obviously you've not read the papers conclusions on evasion and enforcement.
Even today, millions of taxpayers pay quarterly extimated tax payments ... no withholding. It's not that far a stretch to expand that population. Every April 15, millions more taxpayers write checks to cover their outstanding tax bill ... funds not withheld.
From an implementation standpoint moving to eliminate withholding is trivial compared to implementing the FairTax. And from a philosophical standpoint, I'd guess there would FAR greater agreement among taxpayers to lobby for withholding elimination, or to at least make withholing truly voluntary, that there currently is to lobby for the FairTax.
Just because some paid for wienie writes a paper does not make it true. Besides you have never demonstrated much reading comprehension, despite all your rhetoric.
Trying to destroy something is far easier that trying to create it in the first place. Why don't you try it?
Now, now, remember that doing those personal attacks always gives you a rash.
Dimples puts of heck of a lot more thought in her posts than you do yours. Your posts consists of three things:
1. Personal attacks.
2. Telling people to read something, usually something you don't really understand yourself.
3. Or some statement about something being disproven or wrong without any rationale or explaination.
I'll grant you the importance of paying the tax out of pocket (as you might guess, I favor the elimination of withholding over the FairTax.) However the rest of your description of a "hidden tax" doesn't wash. I get a "receipt" twice a month from my employer telling me EXACLTY how much income and payroll tax I paid (both for the period and the year.) If I want to I can double the FICA tax a know the total income and payroll tax paid by me or on my behalf. The total of the income and doubled payroll tax represents over 85% of my total Federal Tax burden (and likely more, unless I'm paying Gift/Estate taxes ... which also not hidden.) By the end of the year, I'll know, out in the open, over 90% of my Federal Burden.
The rest, about 10%, it truly hidden. But I know what it is to a higher degree of accuracy than if I had to add up the tax on over 5,000 receipts per year (presuming I could even get my family to save them all) and deduct my prebate.
Of the "hundreds" of taxes buried in the price of a new car, MOST of them are unaffected by the FairTax. Only Payroll, Income, and Profit taxes are affected, all the excises remain. If there are truly "hundreds" (and I suspect that to be a bit of hyperbole), the FT only eliminates three. (New cars don't contain Estate/Gift taxes ... the only other tax the FT eliminates.)
So. In your world, is taxing income better than taxing consumption?
Guessing at your meaning when you use these terms, I'd say no. Believe it or not, I do believe taxing consumption to be a superior form of taxation. However, permit me to quibble over the definition of the terms "income" and "consumption". As used by economists, the term "consumption" means "income" less "investment." In that context, I do agree that the taxation of investment is a bad thing. As such, I would support a true consumption tax.
Where I take issue with the FairTax is over the point of collection of the tax (and certain falsehoods under which the FairTax is marketed.)
I prefer replacing the personal and corporate income taxes with a flat consumption tax (excludes investment) paid by individuals from wages with incentives to save otherwise taxable labor income for personal retirement. Call it a "labor income" tax. No withholding; not progressive; uniformly flat rate; taxes due monthly.
The FairTax doesn't incent retirement savings, per se, and it doesn't force Joe Taxpayer to write a monthly check ... instead it makes him feel like he's getting something back by sending him a prebate.
I favor the radical reform of SS/MC (funding and benefits) that reduces and ultimately eliminates the programs in favor of personally funded and owned retirement accounts. I prefer to keep their funding separate from a general tax so as to keep a sharp eye on the programs
The FairTax doesn't address entitlement reform and more importantly, BURIES the funding in the general revenue. BAD IDEA!!!!
I favor the elimination of the Estate/Gift Tax.
This, the FairTax does.
I favor binding the spending of excises to their intended purpose with NO mingling of such funds with "general revenues." If the purpose sunsets (like the funding Spanish American War) then the tax sunsets.
The FairTax does not do this ... it makes no attempt to reform excises at all. I fear excises will become the preferred "sneak-a-tax" under a FairTax regime.
There are other options, but these should give you an idea of the kind of tax/spend reforms I prefer.
Ultimately, however, I believe it more important to spend political capital on spending reduction and entitlement reform than it is on tax reform.
They are seizing old peoples' homes here in PA for unpaid property taxes. (They've doubled in some instances in this last year).
That would happen with any tax system if people don't pay taxes but it will probably happen less with The Fair Tax since taxpayers will have more power to decide when and how much they will be taxed.
I believe the same mentality that is capable of atrocities like that wouldn't hesitate to lie and revive the income tax.
If by relive the income tax you mean eventually have an income tax again in addition to a consumption tax consider Congress could have implemented a national sales tax along with our current income tax a long time ago but they new doing so would have brought the wrath of the their constituents down on them to the point where Congress critters would have lost their jobs.
I recommend you visit The Fair Tax website at the link of above for more information.
Second, as families change, so does the status of the rebate. Out of work, new job with much higher pay, etc. Who monitors this?
The Department Of Health will determine the poverty level for a family H.R.25 SEC 303
And I would assume that fraud will still happen. Don't kid yourself, it will happen. Everyone is assuming that there will be no black market,/P>
Fraud/tax evasion may still happen but to a much less extent Fair Tax FAQ #33 as it will be much easier to comply. Compliance will occur for the consumer when they purchase an item. It will be easier to catch tax evaders since there will be far fewer. People will be less inclined to cheat with the rebate reducing the effective tax rate to less than is currently paid with the income tax.
Also out of State purchases could be interesting.
By interesting I assume you mean difficult. The Fair Tax will not be anymore difficult for out of state purchases since the tax will still be collected at the point of sale. The individual will have paid his/her tax at that point and need not fill out any tax forms.
The bottom line is, there is no safe sane method of taxation. (Period)
I have no idea what you mean by this statement but The Fair Tax is far simpler, requiring far less paper work and compliance is much easier.
The FairTax is that you will get all the money you earn and the cost of goods should be less because of the less taxes employers pay. No Way. Think this out. It's a wash. What you gain in the paycheck if withholding is not taken out will only be taken out at the time of purchase.
The Fair Tax is revenue neutral Fair Tax FAQ #6 but factoring the rebate will result in an effective tax rate Fair Tax FAQ #5 that will result in a lower tax rate than the income tax.
Oh, I forgot, buy used goods - no tax. Good news for the poor. Whoopee, yard sales!!!!!!! Hey, flea markets, best goods straight from Mexico, China, etc.
It is good news for everyone not just the poor because used goods will be tax free for all economic classes. Is suggest you spend some time reading the bill The Fair Tax Act H.R. 25 and visit the American For Fair Taxation website before making anymore inaccurate statements about The Fair Tax.
If anything, the amount of tax paid is totally lost in plain sight under the FairTax by dicing up the payments into thousands if tiny daily bits.
The tax paid isn't lost at all. It will be printed on the receipt just as it is for state sales taxes.
Then buried further by the prebate. You will NEVER know how much tax you really paid unless you keep track of EVERY receipt you get ... and properly deduct your prebate. There is no summary accounting.
The prebate is determined by the size of the family and income level. Fair tax FAQ #3
If you want to make taxpayers painfully aware of their tax burden, simply eliminate withholding and force Joe Taxpayer to write a monthly check ... rather than receive one.
They will be aware with a consumption tax every time they make a purchase. It will be printed on their receipt. Eliminating holding is only tinkering with the existing oppressive income tax code and does not abolish the IRS.
holding=witholding
Oh yeah, he does do that a lot too.
An excellant and most important point!
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