Posted on 02/01/2008 12:06:25 PM PST by Man50D
There has been much misunderstanding-deliberately promoted by income tax system defenders recently-about the effects of the FairTax on different income segments of the taxpaying public. Let's clear the air a bit.
The greatest benefits of tax reductions under the FairTax, according to respected economists, accrue to low income taxpayers (an average 14% reduction) then to the middle class taxpayers(an average 7% reduction) and then even to the wealthy (an average 5% reduction).
How can this be and still raise enough revenues to replace all taxes now collected under the income tax system? It's because the taxpayers base is dramatically broadened under a consumption tax by bringing in illegal immigrants, as consumers, and the $1.5 trillion annual underground economy. In addition, the very wealthy pay the full 23% rate on spending, which is an increase over the typical 15% capital gains tax now paid on dividends and stock gains when redeemed (Warren Buffet's recent complaint). In a nutshell, the more you spend under the FairTax, the more taxes you pay. Remember, too, that all the gimmicks that those with tax lobbyists and tax lawyers are able to exploit in the current 67,500 pages of income tax regulations also disappear (along with the role of tax lobbyists as there are no exemptions, loopholes or deductions).
The President's Advisory Panel on Tax Reform declared that taxes would go up on the middle class under a consumption tax when they ignored the definitions in the actual pending FairTax legislation and created their own flawed consumption tax. They quietly loaded it with exemptions they felt more "realistic", ignored the distributional effects of eliminating highly regressive FICA taxes (you know, the ones that represent the highest tax payments by low and moderate income taxpayers) and refused to examine the $22 million of FairTax research. They then declared a consumption tax (which many writers have wrongly assumed was the FairTax) as requiring a higher rate and punitive to the middle class.
The FairTax monthly prebate actually wipes out all federal taxes on the poor and a diminishing amount of taxes are reimbursed the further one is from the poverty line.
There is great resistance to the FairTax within the circles of those who profit from the complexities of the income tax code. Last year 53% of all lobby expenditures in Washington, DC were paid to tax lobbyists. It's big business that includes not only lobbyists and tax related think tanks and tax reforms groups (entirely devoted to tweaking the income tax code) but academicians who have built careers on understanding the arcane details of the code.
Add to that the center of resistance to a simple, transparent system without gimmicks-the Congressional tax writing committees themselves. In truth, Congressional Members from both parties are addicted to using the tax code to reward friends and contributors, punish opponents and inept attempts to manipulate citizen behavior through the code. In other words, our tax writing process is driven by all the wrong reasons.
This is the single biggest reason that our tax code is so complex that it costs taxpayers $265 billion a year just to complete tax returns. It is so complex that the IRS can't answer taxpayer questions right more than six of ten times. It is so complex, the IRS comes up $350 billion short of owed taxes every year (raising the average taxpayer bill by about $2,000 annually).
On the merits, the FairTax takes politics out of the tax code and the tax code out of business decisions. It is the politics that are tough because passage requires overcoming powerful institutional players. To this end, Mike Huckabee and a host of other candidates have joined 72 Congressional co-sponsors and a growing army of citizens who believe that the public can still drive public policy ( a novel idea first suggested by the Founding Fathers). Otherwise, we are stuck with a system that makes debt more favorable than wealth, puts the "Made in America" label at a severe competitive disadvantage and punishes labor and investment. It's a system driven by politics, power and profit instead of economics or fairness. It's a lucrative gig for those in Washington and a destructive torture for everyone else.
Instead of borrowing money from the Chinese to pay out rebates to American taxpayers (as welcome as they will be) maybe we should think about what happens to the American economy when we make the USA the most desirable "tax haven" in the world. We have lost at least $12 trillion in American capital to offshore locations in recent years. Economists who have studied the FairTax agree that this wealth and a lot more in foreign investment will rush to our shores once the FairTax is enacted.
As FairTaxers say, "Dare to Be Fair". The FairTax won't be perfect and the transition will require adjustments but compared to the badly broken income tax system that so bedevils taxpayers and damages our economy, it's well worth it.
The FairTax research-as well as a recent article on how the FairTax helps the middle class by brilliant Boston University economics chair, Larry Kotlikoff, can be found at FairTax.org
“The “first step” hasn’t even made it to committee, or even garnered 15% support in one house, so repealing a constitutional amendment is a bit of a stretch, at least in the mind of any thinking person...”
I showed you that the Fair Tax does indeed have 15% support in one house, The House of Representatives.
funny how you miss #138, but expected.
Sorry. I’m involved in more than one discussion. Didn’t see your post.
Yes I do. Just follow this link.
LOL.
Well, I see the point. Its another lesser of two evils. Don’t get me wrong I hate the current tax system (even though I get nearly all of my money returned because I spend 7-9 months every year deployed; this won’t always be so) I just don’t want the FT to get approved as a gateway to enabling even more illegals to enter the country and more illegals to get their “benifits” because under FT they technically contribute to the tax system the reap they benifit of. I think a clause should be added to the FT proposal that spells it out in our “Living Constitution” that contributing to the FT system does not give the contributor rights to “social” benifits (welfare, food stamps etc), nor garuntee illegals the right to remain in the US. Another possible solution is to announce we are granting them all shamnesty. We’ll post notices telling them come one come all to these specific locations. We’ll spend about three weeks gathering them up for their “amnesty cards” and benifit statements. Once we have them all there, we load them up in semi-trucks...and “return to sender.” After which we build the wall and pass the FT.
And you have absolutely no proof of any kind that the Fair Tax won't be successful anywhere. All you have is totally unsubstantiated speculation.
>>The greatest benefits of tax reductions under the FairTax, according to respected economists, accrue to low income taxpayers (an average 14% reduction) then to the middle class taxpayers(an average 7% reduction) and then even to the wealthy (an average 5% reduction).<<
I am just so impressed with this Fair Tax thing - it raises more money but lowers everybody’s taxes!
Heck its like free money falling out the sky.
Fine. So on the "supply" side we agree -- the criminal pays no income tax today, nor will he collect the Fair Tax tomorrow. It's a wash.
Now, what about the "demand" side? I agree that, under the Fair Tax, we will collect revenue from the criminal when he buys something.
BUT, we collect that money today when the criminal buys something! It's just that the taxes are hidden, embedded in the retail price of the product. The Fair Tax simply makes them visible.
Today, corporate income taxes, compliance costs, FICA, employee withholding -- are all built into the price of the product. The manufacturer collects this money when he sells the product and forwards the tax money to the federal government.
On the "demand" side, therefore, it's also a wash. No additional revenue is collected by the government.
Suits me.
That’s certainly more in keeping with SQL arguments. LOL.
You have a rather vivid, though stupidly wrong, imagination. I never said anything remotely resembling that idiocy.
BTW, How long did it take for your buddies to formulate that response for you? I looks an awful lot like some FT/TP freepmailed it to you for posting.
Unlike you, I don't need someone like the DNC, or anyone else to formulate my responses to a person of you very limited understanding of the English language -- or of anything else, for that matter.
****I can hardly wait for your next DU type childish insult. You have gotten so juvenile that it's actually getting funny.
You didn’t miss anything.
It isn't.
Why don't you go trolling somewhere else where pre-school level "humor" is suitable for the population -- like your home port -- DU or the DNC?
OOOOPS!!! Sorry, I saw the and, without looking at who sent it, thought it was our favorite troll, again.
Post yanked. Lose these kind of snide comments if you want to keep posting on these threads.
And don’t try to be cute by hiding your personal attacks in a link.
I know xcamel threw the first punch in this particular exchange, but don’t retailate.
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