Boortz and Lidner's Fair Tax - Could it Happen Here?

TPM Cafe ^ | 8/23/05 | Chris Fonzone

[Toddsterpatriot]

FairTax will encourage investor money back from the Cayman Islands, and other offshore tax shelters.

Now all you have to do is convince the bottom 50% of earners who pay no income tax that paying 17% or 23% additional sales tax is suddenly a good idea.

[aquila48]

That was Fonzie - "Sit on it".

[Little Ray]

Its high the "poor" started paying their fair share!

[FBD]

Fairtax takes that into account. They won't have to.
There is an embedded 22 percent tax in everything you buy.
Corporations (all business) pass their taxes, along with the rest of their costs, to the consumer. It averages about 22 percent. Absent that 22 percent embedded tax, prices will drop accordingly. You said you were a free marketer, so I'm sure you understand this concept.

Plus they will get a monthly rebate in the same fashion that folks get a Social Security check.
The federal govt has the machinery in place to do this, and can send these checks to you, using your Social Security number. Will that cost money to run that operation? Yes, but keep in mind the savings of over 10 billion per year that it costs to operate the IRS.

Keep in mind, they would NEVER have to file for income taxes again. Their paycheck would be theirs to keep, all their investments, and savings would be theirs to keep.
100%

BTW, our current income tax system started out as a flat tax. I believe it was around 2-4%. So much for the flat tax...income taxes need to be eliminated, not tinkered with.

Read the plan: http://www.fairtax.org/

[phil_will1]

". . .so I do not understand why the 'Forbe's formula' for tax reform is not looked at more seriously."

Perhaps one reason is that it is not, by Mr. Forbes own admission, revenue neutral. According to President Bush's criteria, that is a deal-killer in and of itself.

Secondly, Mr. Forbes backs the Burgess bill, which does not replace a single page of the current code (including the AMT), but instead adds a flat tax option to the 60,000 page mess we now have.

Third, it does not touch one of the biggest problems with our current system, which is the imbedding of the cost of our tax system into our goods, making them less competitive in the world wide market than would otherwise be the case.

That is enough for starters.

[phil_will1]

Final Results - Kudlow & Co.

= = = = = = = = = = = = = = = = = = = = = =
Flat Tax vs: FairTax POLL - August 25, 2005
= = = = = = = = == = = = = = = = = = = = =
L I V E V O T E
This vote has closed. The final results are below.
Total Votes: 2952
'Flat taxers' want a 17% income tax for everyone.
'Fair taxers' want a 23% sales tax. Which do you prefer?

Flat Tax 26%

Fair Tax 74%
= = = = = = = = = = = = = = = = = = =

[Toddsterpatriot]

Fairtax takes that into account. They won't have to.

Like I said before, should be easy to explain to the people who are too stupid to understand the benefits of a privatized Social Security system.

You've got your work cut out for you.

[Man50D]

Excellent results especially when you consider flat taxers were intially considerably ahead.

[FBD]

"Like I said before, should be easy to explain to the people who are too stupid to understand the benefits of a privatized Social Security system."

HA! Yes, you've got that right, FRiend.
However, under the FairTax plan, no more FICA is deducted from these dolts paychecks. That should appeal to anyone.... even a stupid socialist.

[ForGod'sSake]

Thanks for the ping FBD. I'll start by saying I would be FOR almost anything that would rid us of the confiscatory IRS. A tool that can and has been used by unscrupulous politicos to tarnish their enemies. Not to mention, a way for big brother to track virtually every penny we earn and spend, eh?

BTW, has the "national sales tax" proposition morphed into the "fair tax", or is it still around in some fashion? I generally disagree with the notion that there should be a poverty thershold below which taxes could/would be reimbursed or never collected in the first place. Not sure how that would work anyway. Anyhow, if EVERYONE pays their share, we will gain some allies in the fight against the exorbitant tax load we're presently under.

FGS

[phil_will1]

"BTW, has the 'national sales tax' proposition morphed into the 'fair tax', or is it still around in some fashion? I generally disagree with the notion that there should be a poverty thershold below which taxes could/would be reimbursed or never collected in the first place. Not sure how that would work anyway. Anyhow, if EVERYONE pays their share, we will gain some allies in the fight against the exorbitant tax load we're presently under."

There have been a couple of sales tax proposals, but the FairTax is the most thoroughly researched version and the one that is now gaining momentum. It has a rebate as a central component. The rebate is available to every legal resident and effectively ensures that no one who applies for it pays taxes on the necessities. It is the simplest and fairest way to ensure that the system isn't regressive, which would be the kiss of death politically. I think that you will find that, with everyone paying the same rate, you will get the downward pressure on the rate that you are looking for.

[FBD]

Check out Boortz's book, FGS. It's a quick read. I burned through it in two evenings. You'll enjoy it.

It's been calculated that:
Everything we buy in both goods or services, has an embedded tax of about 22% (on the average) right now. This will disappear with the elimination of corporate income tax, and market pressure will cause prices to fall by...22 percent.

23% percent has been deemed revenue neutral, with a rebate check to cover basic necessities.
This rebate will keep the poor and the elderly from getting wiped out by this tax. It's a good idea.

The federal govt has the check writing capacity to cut a monthly rebate check to everyone with a social security number. They already cut 50 million checks per month, no problem. This could also be electronically debited to you.

The cost of cutting these checks can be covered by the elimination of the billions of dollars per year that it costs to operate the IRS.

Elimination of personal and corporate income taxes will bring trillions of dollars into the United States. No more need for offshore banking! Watch the jobs and industry come streaming back to the US. Oil tankers, freighters, and cruise ships that are now almost all foreign flagged, (because of our corporate taxes) will resume sailing under the American flag.

We will become the tax haven for the world! and that...is a good thing.

[ForGod'sSake]

I could be wrong since I'm not up to speed on any national sales tax proposals, but it seems like a convoluted process to assure that no one pays sales tax on necessities. I'm not even sure a definition could ever be agreed upon what with the Dims and their media enablers likely fighting it every step of the way.

Texas has only a sales tax and there are certain items that are automatically exempted from sales tax, like foodstuffs, maybe pharmaceuticals, etc. Seems like a better approach than having a federal agency still in place to handle, AND encourage, exempt individuals. Anything else it just the same old income redistribution scheme with a different format, eh?

In any case, I'll need to do some boning up on it to really get a better understanding of how it's supposed to work.

FGS

[phil_will1]

"I could be wrong since I'm not up to speed on any national sales tax proposals, but it seems like a convoluted process to assure that no one pays sales tax on necessities."

That is one of the ingeneous aspects of the FairTax. Exempting specific items is a nightmare for the reasons that you mention. The FairTax gets around that by using a monthly rebate that every legal citizen is eligible to file for. It rebates the sales tax equivalent of poverty level puchases for a given size family. That way everyone pays at the checkout counter. Because the rebate is fixed for a given family size, the more you consume, the higher your effective tax rate is. However, savings and investment are no longer penalized, no one pays the tax on necessities, and hundreds of billions of $$$ are saved in compliance costs.

[FBD]

>"I could be wrong since I'm not up to speed on any national sales tax proposals, but it seems like a convoluted process to assure that no one pays sales tax on necessities."<

-There is no exemptions on any new products, and that includes food and medicine. What happens is, a "prebate" check gets cut, to everyone, based on the HHS poverty level need for the cost of basic necessities. This keeps from hurting the elderly, whose income is fixed, and have paid income taxes all their lives. Their rebate check will cover the tax they pay on foods and medicine, etc.

The federal govt cuts over 50 million checks per month right now. They have the machinery to send monthly rebate checks to EVERYONE with a social security number. This is setup for heads of household, and based on their number of dependents. Possibility of fraud? Sure...can't be any worse then the fraud right now, right? Keep in mind the billions of dollars saved annually by the shutting down of the IRS. That savings alone more then makes up for the cost of cutting the checks.

BTW, selling a used car will require NO tax. It's tax has been paid already. Garage sale, used merchandise of that nature are tax free. Again it's a one time tax on new goods and services.

[Toddsterpatriot]

It's been calculated that:
Everything we buy in both goods or services, has an embedded tax of about 22% (on the average) right now. This will disappear with the elimination of corporate income tax, and market pressure will cause prices to fall by...22 percent.

23% percent has been deemed revenue neutral, with a rebate check to cover basic necessities.

See, this is one of the problems I have with the "Fair Tax". Prices will fall by 22% and then the tax will raise prices by 23%? My back of the envelope calculation (0.78 x 1.23=0.9594) shows prices will drop by 4%, while the income tax is eliminated and the government collects the same amount of revenue. Does that about cover it?

It's got a bit of a perpetual motion machine feel to it.

[FBD]

>"It's got a bit of a perpetual motion machine feel to it."<

-I know what you mean. Karl from Ohio came up with these calcs:

http://www.freerepublic.com/focus/f-news/1470200/posts?page=173#173

[snowsislander]

This will disappear with the elimination of corporate income tax, and market pressure will cause prices to fall by...22 percent.

Is that the same "market pressure" working in the oil market, where a barrel of oil is currently selling well above its cost of production?

My experience is that prices are generally a function of what the market will bear, and are not all that strongly correlated to the cost of production, even in industrial commodities.

[pigdog]

Try this %. Your low-earners current pay payroll/withholding tax at a rate of 15.3% (in addition to whatever they pay in income tax ... say another 10 or 15% or more).

Now, how does the FairTax rate look at 23% (and these are both tax inclusive rates which are directly comparable)?

[Toddsterpatriot]

Now, how does the FairTax rate look at 23%

So, a $100 item is now $123? Or $129.87?