When the most powerful Nation in the world goes something like the flat tax, what will be the total ramifications in the world marketplace? My guess, it would be HUGE and lead to a worldwide reform. I'd be interested in hearing more about the flat tax from this angle. How would the heavily socialist nations cope? Could they cope?
When the most powerful Nation in the world goes something like the flat tax, what will be the total ramifications in the world marketplace? My guess, it would be HUGE and lead to a worldwide reform. I'd be interested in hearing more about the flat tax from this angle. How would the heavily socialist nations cope? Could they cope?
They are coping now with their flat wage taxes collected at source, coupled with VATs which are essentially a flat tax implementation on business. Nasty thing about flat taxes is they hit businesses which endup passing it on to consumers in higher prices, and employees in lower wages and the voter has no idea of the real level of tax he really ends up paying one way or another. That is how the EU manages to tax 50% of their GDP and totally stagnate their economies. Hide it behind the veil of a business, and a government can get away with economic homicide.
The Flat Tax; Chapter 3, by Robert Hall and Alvin Rabushka
| In our system, all income is classified as either business income or wages (including salaries and retirement benefits). The system is airtight. Taxes on both types of income are equal. The wage tax has features to make the overall system progressive. Both taxes have postcard forms. The low tax rate of 19 percent is enough to match the revenue of the federal tax system as it existed in 1993, the last full year of data available as we write. Here is the logic of our system, stripped to basics: We want to tax consumption. The public does one of two things with its income—spends it or invests it. We can measure consumption as income minus investment. A really simple tax would just have each firm pay tax on the total amount of income generated by the firm less that firm’s investment in plant and equipment. The value-added tax works just that way. But a value-added tax is unfair because it is not progressive. That’s why we break the tax in two. The firm pays tax on all the income generated at the firm except the income paid to its workers. The workers pay tax on what they earn, and the tax they pay is progressive. To measure the total amount of income generated at a business, the best approach is to take the total receipts of the firm over the year and subtract the payments the firm has made to its workers and suppliers. This approach guarantees a comprehensive tax base. The successful value-added taxes in Europe work this way. The base for the business tax is the following: Total revenue from sales of goods and services less purchases of inputs from other firms less wages, salaries, and pensions paid to workers less purchases of plant and equipment The other piece is the wage tax. Each family pays 19 percent of its wage, salary, and pension income over a family allowance (the allowance makes the system progressive). The base for the compensation tax is total wages, salaries, and retirement benefits less the total amount of family allowances. |
With FairTax our country can compete again in the world market place, especially for those items we make mostly via automated processes.
You don't have all that embedded tax built into a product, so its price when sold to Britain or Japan becomes competitive.
Yes, when the money from japan comes in, it will be taxed when spent.
Who cares if a socialist country can cope? Certainly not I.