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 ...
So what does taxing consumption have to do with achieving a generationally equitable fiscal policy? Again, essentially everything. The reason is that the current elderly as well as the baby boomers, who will shortly retire, have one primary economic activity left to accomplish - consumption. And under a consumption tax, they will pay a lot more in future taxes than they would under the current tax system. Although the elderly as a group would share in the burden of a consumption tax, the poor elderly - those living exclusively on Social Security benefits - would not because their benefits are indexed to the consumer price level and are thus guaranteed in real terms.They want your money.To recapitulate, given the likely path of government spending and the inevitable aging of our society, our children and our children's children are in for extremely rough sledding. Indeed, the CBO-FED study suggests they will face lifetime net tax rates (1) that are 80 percent higher than those we face if nothing is done. This generational imbalance, rather than the treatment of the rich versus the poor within a generation, is the fundamental issue of economic justice facing us today. Consumption taxation can address that issue by asking the current and near-term elderly to do their fair share in helping to achieve generational balance.
"Unfortunately, there is an ignorant hoard out there that falls for this cynical pretense. "
Indeed there are ... but you seem not to realize who they are. As for "the flaw" (as you put it), one has to presume that means that should the income tax laws be changed to tax such accumulated and already-taxed savings that the government would somehow "owe you" and some financial adjustment should be paid. I don't think so. You pays your money and you takes your chances under any tax system, but especially an income based tax system, that the tax laws will NOT be changed so that you can benefit in the future. Yet if you look back you will see that is a fool's game. Income tax laws have frequently been changed in the past - seldom to the benefit of the taxpayer - and will no doubt be changed again in the future should income taxes remain.
To believe that because you have lived and earned under a given tax system and prospered to some degree does not mean that the government "owes you" by refunding all of the taxes you previously paid since, after all you were only following the tax laws and making your choices re taxable vs. nontaxable savings. The tax money you paid was spent by the government on pencils, paper, and pilotless drones as well as many other things. Do you think that these government expenditures (that you, Mr. Taxpayer, have allowed I might add) might somehow be retrieved by the government??? I think not - those tax monies are gone; spent. Why should the government now "owe you" for following the law and now, in effect, double pay for the tax revenue you provided under that law???
The answer is, of course, they not only shouldn't but they won't. Under the FairTax, though, you would have a much better shot at getting back what YOU THINK the government "owes you" since income is not taxed. The fact you choose to blow your funds on a executive boat, a land cruiser, or other expenditure is, however, your choice - and neither the government (not the other taxpayers who provide its tax revenues) owe you a single red cent.
I meant post-tax income savings.
You do not seem to understand that the existing tax system also taxes "accumulated wealth" but in quite a different manner - and in a way that is even more punitive that the voluntary consumption payments under the FairTax and allows no comparable tax free income provision as does the FairTax.
The income tax measures taxing accumulated wealth now are the confiscatory measures such as the estate and gift taxes and for the income tax itself not only some very high marginal rates but the imposition of what amounts to an additional tax on everything one spends (some of which would not be taxed under the FairTax) in the form of the hidden tax costs embedded in prices of EVERY thing purchaased (plus the effect of having to earn more originally to spend that sum of money).
So trying to pretend that one tax system taxes "accumulated wealth" and the other does not is certainly ill-informed as well as disingenuous. They both do.
I believe that I have the right to argue and collect supporters who would oppose the unscrupulous "FairTax" scheme. I believe that showing the group of voters who would be screwed by this scheme that they would be loosers should something like this be enacted, that by numbers, as well as principle, will succeed in defeating this crooked scheme as it is presented, Pigdog.
Why pigdog, I gathered that quote because you asked for it.
That surely indicates you think it is morally wrong for taxpayers to have charge of their own money and have any decision in when or how it should be taxed but that rather government should take in the funds and then allow the taxpayer whatever it decides is proper. You'll find that most FairTax supporters disagree with your view completely.
Say what? How did you get from an investment in infrastructure (that's stuff like highways, sewers, bridges) to morality? Show me a country that does not invest in infrastructure that is an economic success.
The answer should be obvious and the taxpayer is far better off (as is the government due to the more stable tax base) by having other resources to draw on if required.
Sure, even if I have to borrow more money to buy necessities and pay the 30% sales tax, interest and tax on the interest and financial services to keep money flowing to the government during a time I can't provide a living for myself and my family.
What was that you were saying about morality?
"... the "Home [sic] Simpson" voter/taxpayer who has no clue of just how good he already has it....
... and this once again from Mr. "nothing inherently wrong with and income tax"."
Cut the spending you stupid b*%$#tar%$s!
"I believe that I have the right to argue and collect supporters who would oppose the unscrupulous "FairTax" scheme. I believe that showing the group of voters who would be screwed by this scheme that they would be loosers should something like this be enacted, that by numbers, as well as principle, will succeed in defeating this crooked scheme as it is presented, Pigdog."
Indeed you have such a right provided you can offer a better tax system in its place - and most people realize the income tax system we have ain't it. Just bitching about one aspect of something isn't sufficient. You have a few of those who presently profit in some manner by the present system, but none have been able to offer any valid improvements for most taxpayers as does the FairTax and I doubt you'll do so either but merely - like those others - descend into the attack only mode in your efforts to defeat the FairTax.
As for being "screwed", the present system "screws" far more that would ever be done by the FairTax. Le's also realize that your little apocryphal example of "screwing" is nothing of the sort but merely an indication of the type of "government owes me" mentality that has helped us get to where we are with the income tax. But be sure to document your "facts" with studies from recognized, reputable sources so they may be reviewed and analyzed by others who do not agree with you. The lead-in paper is one example of the type of disclosure expected.
It seems to me that an income tax is much more fair than a consumption tax. Those who receive an income are much more capable of paying taxes than those who are dependent on their savings for the necessities of life. All my life, I've managed to pay income taxes, and put some savings aside so as to be able to take care of myself when I will not be receiving income. And now these scumbags want to come along and confiscate what I've put aside so that they may enjoy more current $.
"... the after-tax wealth spent by the upper income levels goes toward reinvestment in businesses that create and maintain jobs and payroll for those 'working their way up' ..."
That may be true whatever the percentage, but that reinvested wealth is not taxed under the FairTax nor - unlike the income tax - is the income from it. So all in all the FairTax is clearly the preferable system as shown by your quote.
And create the largest entitlement system in history.
I want the estate taxes to be abolished, and there have been bills to accomplish that recently. We re close to permananent repeal.
additional tax on everything one spends (some of which would not be taxed under the FairTax) in the form of the hidden tax costs embedded in prices of EVERY thing purchaased
How much would that be pigdog?
You are surely joking. I've not dependent on government at all for my livelihood or expectation that "government owes me". If anything, I've been guilty of tolerating leaches in this society to fester and use the government to suck more sustenance from the productive people in this society, time to clean house I guess.
I've been consistently self-dependent. My problem is that I planned on consistency from government - what else can a person do? Presume that government will suddenly reverse policy? Turn things upside down for the heck of it? I'm sure you knew about this all the time! I'll bet you have no after tax savings or assets, and are completely dependent on SS and medicare for your retirement.
but that reinvested wealth is not taxed under the FairTax nor - unlike the income tax - is the income from it.Yes it is, it's taxed when it's spent and it's entire value, not just the interest, is reduced because of the sales tax.
You can look at your savings or you can sit and count it but it has no value untill you spend it and that is exactly when it loses it's value under the Fairtax scam.
If you're "owed" back taxes, then so am I and so are all of the hundreds (or whatever) who've paid their taxes in the past. In fact, those who had to pay estate taxes should also get their "taxes back" I guess.
It's human nature to want special treatment like that, but getting it is quite another matter especially when there's no other reason you should have the special treatment besides being you.
Before you go off the deep end on this matter buying into the rhetoric of the demagogues of "30% tax on everything", I suggest you make an honest effort to us the FairTax Calculator to see what your effective FairTax rate might be under realistic circumstances.
"Destroy productivity and make everyone a pauper."
Quite the contrary - nor are here any real economic studies that back up your overheated rhetoric. There are, however, a number of them to show just the opposite - more benefit to the taxpayer and greatly increased economic activity.
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