Posted on 04/04/2006 2:17:28 PM PDT by Eaglewatcher
That's a value added tax! Not the same thing at all! It is more complex and has different objectives.
In Ontario they have a 15% sales tax and high marginal income tax rates. A girlfriend's father, of modest income (something like $50K USD), was in the 50% bracket. Pass the fair tax, and we can be just like our brothers in Kanuckistan.
Employee gets gross pay. FICA is eliminated from business side. Business eliminates tax compliance cost. Between employee getting gross pay and business eliminating FICA and compliance cost purchasing power remains about the same as with the income tax. The big benefit is eliminating the Marxist income tax with its Gestapo IRS that will be replaced with a voluntary free-market orientated consumption tax.
Only for those with incomes and who see their take home pay rise. Those who saved and on fixed incomes will lose purchasing power.
Zon: Employee gets gross pay. FICA is eliminated from business side. Business eliminates tax compliance cost. Between employee getting gross pay and business eliminating FICA and compliance cost purchasing power remains about the same as with the income tax. 63Always Right: Only for those with incomes and who see their take home pay rise. 64
You're making progress. The vast majority of people work for a living and will see their take home pay rise and their purchasing power remain the same.
Those who saved and on fixed incomes will lose purchasing power.
Most savings are subject to the present tax system with taxes due each year. With the FairTax savings are not taxed -- only when a person spends savings on new retail items is the FairTax tax applied. Most underlying assets from which fixed incomes are derived are subject to paying tax under the present tax system. It's but a very small category of people that will pay more tax under the FairTax. That excludes illegal aliens and underground economy which will see a tax increase with the FairTax -- people that are now cheating the system.
Then maybe I've misunderstood the nature of this provision. If I'm running a business, and I purchase items not with the intent of reselling them, but merely with the intent of using them for my business (for example, office supplies, computers, tools, etc.), would I get taxed on them or not?
"We the people" is a fiction designed to promote the illusion that the non-consenting are actually consenting after all. For example, "we the people" passed a multi-trillion-dollar prescription drug benefit. Does that make me a consenter? No: it makes me a robbery victim.
Ummm, no savings are not taxed, earning on savings are taxed. Two very different things. The fairtax is not a good deal for retirees. Prices will go up under the fairtax, their bank accounts will not.
That excludes illegal aliens and underground economy which will see a tax increase with the FairTax -- people that are now cheating the system.
And most of those people will still cheat the system under the fair tax. Unless you have a way to get prostitutes and drug dealers to remit their tax on the goods and services they sell, they will still be cheating the system out of just as much if not more money under the fairtax. When I provide a legal service to an individual, I will have to remit $23 on every $100 gross I collect. The prostitute under the fairtax will not remit any taxes on what she collects. Just because she has to pay sales tax when she buys goods is no different than today, as embedded taxes are included in legal purchases today. You are not gaining a dime from the illegal economy, but you do open the door for even more illegal activity from the black markets.
If you purely use the item for business, you owe no tax. But if you ever convert it to a personal use or a mixed use, then a sales tax will be owed.
In Ontario they have a 15% sales tax and high marginal income tax rates. A girlfriend's father, of modest income (something like $50K USD), was in the 50% bracket. Pass the fair tax, and we can be just like our brothers in Kanuckistan.
The FairTax HR25 and S25 eliminate the income tax, abolish the IRS and call for repealing the 16th amendment. There will be only a consumption tax, no income tax. The Marxist/socialist income tax and Gestapo IRS will be eliminated and replaced with a voluntary free-market orientated consumption tax.
The motives of people who oppose the FairTax must be examined.How about it's just a bad idea?
Are they just protectiong thier personal loop hole?Isn't that what you're doing?
Everyone I talked to, whether they are already retired or still 10 years away, believes that also. Hell, some even believe that it is a ploy to institute more socialist programs and government control after a huge segment of the population is bled of their wealth.
BTW, please don't bastardize the language by abusing words like "voluntary" and "free-market". There's no such thing as a "free-market tax"; tax is by definition compulsory, and the free market is by definition non-compulsory. And income tax is just as "voluntary": you're free to have zero income, and hence avoid the tax.
earning on savings are taxed.
Correct. Taxing earnings on savings decreases compound growth. The FairTax doesn't tax earnings and thus increases compound growth.
Just because she has to pay sales tax when she buys goods is no different than today, as embedded taxes are included in legal purchases today.
They will not be paying the compliance cast that they are today.
You are not gaining a dime from the illegal economy,
Wrong! You are not always right -- neither conservative nor correct. If the illegal economy remains static the economy gains from not paying $400,000,000 (four hundred billion) compliance cost. That waste of 400 billion dollars is lost opportunity regained. Speaking of economic opportunity. Rep. Bill Archer, Chairman, House Ways and Means Committee:
"A recent survey was done, in Europe and Japan, of the major corporations and I was astounded at the results. They were asked, 'If the US abolished its income tax and went to a sales tax, would that have any impact on your decisions?' Eighty percent of the corporations said they would build their factories in the United States of America. Twenty percent said they would move their international headquarters to the United States of America."
Boatloads of new jobs and economic boom. With the increased tax base and economic growth -- increased retail sales = increased tax revenues -- will continue the momentum to reduce the FairTax rate. Every person feeling the effect of how much government really cost them at the cash register -- seeing that 23% of their purchase is federal tax --will have them quick to demand government reduce spending.
Interesting. One fellow I know who I consider to be very intellegent, said that he would have to become a criminal and get what he needed from the black market. He also said that black market goods would come pouring across the borders and the Gestapo needed to control that would make the IRS look like a small town cop by comparison.
[and I purchase items not with the intent of reselling them]
I did not say 'reselling' those same items. You are correct that you would skip the tax on office supplies, etc. What is important is that your business reports higher retail sales -- or B2B sales -- than the aggregate of what you deferred on your business inputs.
So, yes, you can buy $100,000 worth of office supplies, computers, tools, etc. and defer paying the FairTax. However, if you do not collect the FairTax -- or a B2B certificate# -- for an amount that exceeds that $100,000, you will be audited. So you could cheat a little bit by purchasing a computer for home using your business certificate. That is the same thing people do now -- they charge the expense to their business and reduce the business' profits and therefor the income tax and SS/M tax they owe. This currently saves them at their marginal rate -- higher than the 23% FairTax, which means the FairTax offers LESS incentive to cheat this way than the current system.
Remember, the States will still know quite a bit about your business -- how many employees and their wages, total revenue, industry, etc. -- and any FairTax deferrals (which they'll also have down to the individual item level) that statistically are too far from similar businesses will trigger an audit. Enforcing the FairTax probably would not have been possible 20 years ago, but with the tools available to crunch a database today, it will be very risky to cheat much.
If that's true, then Kellis wasn't giving me the full story at #49. He said there that every purchase by a business has to be tied to a retail sale by that business or sale to another business. But that's not possible in the case of items purchased only for use by that business.
There's no such thing as a "free-market tax"; tax is by definition compulsory, and the free market is by definition non-compulsory. And income tax is just as "voluntary": you're free to have zero income, and hence avoid the tax.
That's' like comparing a homeless person with no job to a person earning at the poverty level.
A person spending at the poverty level with the HCA prebate/demogrant will not pay any tax. They will not be forced at the point of a gun to pay tax as they are with the income tax.
The present system taxes income. It's not voluntary even when the wage-earner gives the government an interest free loan for a year and gets a full refund. The wage-earner is forced at the point of a gun to pay tax. The FairTax taxes out-of-pocket spending above the poverty level -- the prebate covers the tax. Used items are not taxed. A person can live and not be forced at the point of a gun to pay tax out-of-pocket. The FairTax is free market orientated and will lead to user fees which is free market. The income tax and flat income tax are compulsory.
A family of four spending at the poverty level has a zero effective tax rate. A family of four spending $48,000 has an 11% effective tax rate. A 22% effective tax rate applies to a family of four spending above $500,000.
a-g can you post the effective-tax-rate table? Thanks.
Enforcing the FairTax probably would not have been possible 20 years ago, but with the tools available to crunch a database today, it will be very risky to cheat much.
Unless, of course, you happen to be well-connected. That's the whole problem with the current system, and so it makes no sense to go through all this trouble to fight for a new system that will essentially preserve some of the worst features of the current one.
You're never going to eliminate what you call "embedded taxes", no matter what you do. Even if the "Fair Tax" is enforced in a completely honest fashion, the sales taxes that workers have to pay will one way or the other have to be factored into their income, which will have to be factored into the prices of the products they make, which will result in another one of them "hidden tax" boogeymen. There's just no way around it, ever. But in the process of trying to find a way around it, you run the risk of creating extra complications that create potential loopholes for unscrupulous types, as well as extra opportunities for government pencilnecks to stick their noses where they don't belong.
Just keep it simple: Everybody pays the same rate, no exceptions.
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