Posted on 01/26/2023 4:41:48 AM PST by Hostage
It’s called competition.
If one paper towel manufacturer pockets the savings and another passes them along to the consumer, guess which one is going to get more sales.
Get rid of ALL that crap
SIMPLIFY
we are trying to make it SIMPLER.
There are millions of people with Roth IRAs planning to spend them down during retirement. Not to mention the trillions of dollars in other savings and investments in citizen’s hands.
You’re hand-waving away a fatal problem.
A tone of hostility rather than discourse can limit response. Putting that aside, here is how it works:
There is no “fatal” anything in allowing Americans certain limited temporary exemptions from consumption tax. Exemptions are always temporary and single-use during a period of transition.
Exemptions are always temporary for the simple reason that once exercised, the exempt assets are no longer exempt. Hence, a wave of exempt transactions is followed by ongoing non-exempt waves. The impact on Treasury has less to do with the amount of exempt money than it has to do with the velocity of non-exempt money.
Purchases of used assets are always exempt.
Exemptions can be granted to documented assets that remain after federal tax treatment. It is a trivial task to designate asset classes as post-tax. Accountants do this as a matter of course; ebitda versus post-ebitda net profits.
Funds remaining after taxes are easily verified from bank or recorded financial statements. An individual can carry a payment card linked to a bank or financial entity that designates how many dollars are exempt, and how many are not within a framework of rebate tagging.
Each purchase can calculate how much tax is owed based on exempt versus non-exempt dollars used. The tax can be reduced as a matter of course depending whether rebate limits have been reached. Rebates can be done real-time.
Transitory exemptiions can fold in with rebate allowance credits. Rebates are ongoing and permanent.
Repeating: Any tax exemption would be transitory and of minimal effect because once the exempt funds are used, they become non-exempt.
After a short few years, exemptions will be rare to non-existent. In this sense, transitory exemptions can be used to make a consumption tax very appealing because the current income tax system does not allow for consumption to avoid embedded taxes in products and services.
The income tax system leads to double, triple, multiple taxation. Simply put, our post-tax funds are used for purchasing items that are loaded with embedded taxes passed on to us. We pay the taxes of producers when we purchase their products.
Exempting certain fund accounts or conversion of qualified assets is straightforward. Accounting practices can clearly designate which assets have already undergone federal income tax treatment. Assets so designated can be credited with exemption status when used in retail transactions.
Card transactions linked to banks can easily keep track of how many exemption credits remain until they are used up. This is a tractable process requiring only a designation and/or registration of exempt assets. Keeping in mind exempt assets are transitory, they won’t exist for long inside a rebate framework.
A prevalent example in use today that can be adapted for rebates and exemptions is the cashback Visa/MasterCard. A cashback system can be modified to preload exempt or rebate credits with offsetting debits for each retail transaction.
Cash transaction exemptions will need outside verification. Scannable coupons or card verification might be used, otherwise cash purchases will be taxed. Cash can be or be supplemented with rebate cash.
All the above are under the hood workings. The FairTax system in operation is designed to be easy and simple.
The highest negative to focus on with problem solving is in #22 above.
The reality is in the expectation of much pushback, perhaps “fatal” or the 51-year variety, because the past one hundred years have coincided with the building of an income tax infrastructure that would need to be demolished. That alone makes the FairTax a radical proposition no matter how much it outshines its competition.
Deradicalization of FairTax policy can be achieved via special economic zones. County level FairTax implementation is feasible, especially in rural areas or counties with sparse population. Outside commerce would need conditions and restrictions.
There are trillions in exempt assets out there right now. Over $1T in personal real estate, over $1T in Roth IRA accounts, trillions in securities and other investments and well over half a trillion in bank deposits.
Many people plan to live off of these assets for the rest of their lives and most hope to leave some to future generations.
Temporary in this case is many decades or longer.
Exemptions can be granted to documented assets that remain after federal tax treatment. It is a trivial task to designate asset classes as post-tax. Accountants do this as a matter of course; ebitda versus post-ebitda net profits.
It is trivial because all assets, except tax-deferred ones like traditional IRAs, are exempt.
Funds remaining after taxes are easily verified from bank or recorded financial statements. An individual can carry a payment card linked to a bank or financial entity that designates how many dollars are exempt, and how many are not within a framework of rebate tagging.
Except for IRAs all funds in bank and investment accounts are exempt. After the FAIR tax gets rolled out how do we know if a purchase was made with pre- or post-FAIR funds? Are we going to need to freeze all existing accounts and set up new, post-tax accounts?
Money is fungible and you can’t track both types in the same account. Different individuals will make different choices about which funds they want to spend.
Each purchase can calculate how much tax is owed based on exempt versus non-exempt dollars used. The tax can be reduced as a matter of course depending whether rebate limits have been reached. Rebates can be done real-time.
Every merchant is going to need an IT system which has access to a database of everyone’s remaining pre-FAIR assets so they can calculate in real time what percentage of any given purchase was exempt and issue a rebate. This system has to be in place when the tax is implemented and will have to be maintained for at least 100 years.
After a short few years, exemptions will be rare to non-existent.
Sorry, but this is delusional. How about retirees? How about people who inherit pre-FAIR property from their parents? We’re talking trillions in life savings.
Exempting certain fund accounts or conversion of qualified assets is straightforward. Accounting practices can clearly designate which assets have already undergone federal income tax treatment. Assets so designated can be credited with exemption status when used in retail transactions.
Again, except for IRAs all assets are exempt. As you said the categorization is trivial. The problem is the implementation.
It’s easy in theory to say “these accounts are exempt”, it’s much harder to freeze each of these accounts to new deposits, set up new ones for all the post-FAIR income, implement the IT systems in every financial institution to track and report this in real time and provide customer service for twice as many accounts overnight.
Card transactions linked to banks can easily keep track of how many exemption credits remain until they are used up.
Who says I want to use my old assets first? Are we forcing people to do this? Why do I have to use my savings to buy something when I rather fund it with my current income?
Cash transaction exemptions will need outside verification. Scannable coupons or card verification might be used, otherwise cash purchases will be taxed.
If I sell my car, which I bought with taxed dollars, and my neighbor pays me in cash I’m going to be double taxed when I spend the money?
All the above are under the hood workings. The FairTax system in operation is designed to be easy and simple.
I don’t take issue with the design. I like consumption taxes in the abstract. I just think the FAIR tax is completely unworkable in the US because of the practicalities of implementation.
County level FairTax implementation is feasible, especially in rural areas or counties with sparse population.
No, those people will have accounts with nationwide financial institutions and buy from vendors all over the country so all the same IT issues remain.
> “There are trillions in exempt assets out there right now”
So what? And your point is?
> “Over $1T in personal real estate”
Real estate sales are not subject to FairTax except in cases of new construction or new remodeling upgrades not previously purchased at the consumer level.
> “over $1T in Roth IRA accounts,”
> “trillions in securities”
> “and other investments”
> “and well over half a trillion in bank deposits”
So what? What’s your point?
> ‘Every merchant is going to need an IT system”
Wrong. Cashback credit cards do this routinely. Receipts showing detail are automated just as they are for elderly and disabled on EBT/Snap. All the accounting is by computer. Merchants don’t need to do anything.
You look like you’re waging some sort of bizarre jihad here. There are no points in your rant.
The only intelligent argument raised against the FairTax over the years is explained in #22 of this thread.
If you’re obsessively fixated with fear that the awful FairTax might become reality, calm down ...... don’t worry. It’s highly probable you and moi ain’t gonna see it in our lifetimes because it’s disruptive techno policy with pushback by too many vested interests.
It could possibly happen following a real Storm the Bastille type revolution.
But we’ll likely get CCP Social Credit Score Marxism before we ever see a tax system that is fair and simple.
But I could be wrong. Americans might wake up tomorrow each with an extra +40 IQ points by divine intervention and demand the FairTax thingy.
That’s a fantasy on par with Pelosi gladly letting the Ruby Red Slippers go to Dorothy.
Uh-huh
There are trillions of dollars out there in assets on which income taxes have already been paid.
When those dollars are spent they need to be exempt from the consumption tax unless you want to sell everyone on double taxation. Those dollars won’t be spent in our lifetimes so your notion of a short transition is out.
Cashback credit cards do this routinely. Receipts showing detail are automated just as they are for elderly and disabled on EBT/Snap. All the accounting is by computer. Merchants don’t need to do anything.
LOL. It’s all done by computer, not by the merchants’ IT systems. Whatever.
You said:
”Each purchase can calculate how much tax is owed based on exempt versus non-exempt dollars used. The tax can be reduced as a matter of course depending whether rebate limits have been reached. Rebates can be done real-time.”
The computers will “handle it.”
It could possibly happen following a real Storm the Bastille type revolution.
Of course, if we reboot everything and start from scratch a consumption tax should be on the table. Until then there’s a real world where we live.
> “There are trillions of dollars out there in assets on which income taxes have already been paid.”
> “When those dollars are spent they need to be exempt from the consumption tax unless you want to sell everyone on double taxation.”
That’s exactly what I’ve been posting. Assets previously taxed should be exempt from FairTax. Same as inventory on the shelves that were produced during the Income Tax Era.
All of these Income Rax Era assets and products should be transacted free from any further taxation. They are transitory. Once they’re gone, they’re gone!
Right, and I've been pointing out why that's a practical impossibility.
They are transitory. Once they’re gone, they’re gone!
Shouldn't take more than a hundred years or so.
> “Right, and I’ve been pointing out why that’s a practical impossibility.’
Wrong. You do not have the tech background and experience to support that assertion.
> “Shouldn’t take more than a hundred years or so.”
Wrong again. And even if true, so what?
I have seen many arguments against the FairTax. Yours ranks in the bottom half.
The only legit argument against the FairTax is given in #22 of this thread.
Your argument is specious from both ends.
1. Every retail prodict today has hidden embedded taxes of 25% or more.
2. When withdrawals from your purported retirement account of already taxed funds are made for retail purchases, you’re paying the 25% taxes embedded in the products you purchase.
3. You have made no argument against the present embedded taxes caused by the Income Tax system.
Therefore, you rant against the FairTax with hysterical false arguments, yet fail to address the current system that does the very thing you object to, that taxed funds should not be taxed again.
I think I am responding to a halfwit.
I won’t waste more time on this.
Congrats- you’ve just created a whole group of democrat voters with no skin in the game.
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