Fair Tax?

[nate_in_austin]

I'm a little confused on exactly how a Federal Sales Tax (instead of Federal Income Tax) is fair? The math seems to show it is drastically disperportionate based on income. For example: A person who makes $20K/yr pays 15% tax on $100 worth of groceries. This equals .075% of this person's annual income. A person who makes $150K/yr pays 15% tax on $100 worth of groceries. This equals .01% of this person's annual income. Sounds like the poor are paying a disperportionate percentage of taxes. Granted, rich people probably buy more expensive food. But for this equation to equal out, the richer person would have to spend $750 on groceries for every $100 the poorer person spends. No matter how you slice it, that's a lot for one person to eat in one week.

The toughest part to beleive is this math is supported by Ben Streusand who has an extensive background in economics! I agree we need tax reform, but I don't think the poor should be paying more under any new system.

[Slings and Arrows]

[raloxk]

I dont think it would apply to groceries

[foreverfree]

No, but I got bump.

foreverfree

[mcg1969]

Assuming you are not ZOTted...

First of all, certain necessities can be made exempt from the sales tax, such as groceries. Thus, those who spend nearly all of their income on such necessities won't be paying that much in taxes. I'm not sure if the most recent proposals make such an exemption but in my opinion it ought to follow similar exemptions states apply to such necessities.

Secondly, rich people don't just buy food you know. They buy more expensive cars, eat at more expensive restaurants, go to more expensive entertainment (more often), buy more luxury items, etc. In other words, they make more, so they spend more. Thus they are taxed more.

In the end, assuming the necessity exemption I spoke of, I predict that wealthier people will pay a larger fraction of their income in taxes than a poorer person.

[Leaning towards Libertarian]

A 23%, single rate, single-stage tax will be applied to the sale of all new consumer goods and services at the final point of consumption. Used items will not be taxed. Business-to-business purchases for the production of goods and services will not be taxed. Most importantly, you will keep 100% of your paycheck; there will be no more income, capital gains, self-employment, gift and corporate taxes. In addition, prices will drop by an estimated 20–30% and all households will receive a monthly rebate check.

Under the FairTax, no American will pay taxes on necessities. The rebate will be equivalent to the tax paid on essential goods and services. The rebate will be mailed before the tax is actually paid. The rebate will be paid in equal installments at the beginning of the month. The size of the monthly rebate will be determined by the federal poverty level for a particular household size. (Household is defined here as one or more individuals.)

[lewislynn]

I dont think it would apply to groceries

It does, it applies to everything including itself and other taxes.

[lewislynn]

Under the FairTax, no American will pay taxes on necessities. The rebate will be equivalent to the tax paid on essential goods and services

What are my necessities and what do they cost me?

[Bogey78O]

So?

[proudpapa]

Yo Nate. Welcome to freerepublic.

Let me help you with the math. You make basic food necessities exempt. And then items like cars, boats, printers, clothing and restaurants, airfare, and gasoline not to mention internet/cable get taxed. If you're poor you buy more basics, and pay a lot less in taxes. If you're wealthy you decide how much you're willing to pay in taxes based off what you decide to purchase.

[Joe Hadenuf]

I'm a little confused on exactly how a Federal Sales Tax (instead of Federal Income Tax) is fair?

Let me help you. You are getting f***ed. See, simple.

[lewislynn]

LOL!

[Gunslingr3]

all households will receive a monthly rebate check.

Which will turn into a welfare check as it is continually driven up (with the tax rate of course) in pursuit of 'fairness' in life.

Why trade the noose for an electric chair?

[steplock]

It ain't fair - HOW can I cheat on taxes with a sales tax???


Answer ... you can't!

[navyblue]

And then the 150K guy purchases a 70K Mercedes and pays 15% tax on that which comes up to .07 of his income. So it all works out, doesn't it?

[Wissa]

I paid tax on my earnings over the years and saved quite a bit of what was left instead of spending it all. With the national sales tax, I'd now have to pay taxes on the same money AGAIN as I spend it?

[annyokie]

We pay taxes on food in Oklahoma but not in California or Pennsylvania. In Pennsylvania you don't pay tax on clothes but you do on towels and sheets and toys.

In PA milk is regulated, it cost $X everywhere from the market to the gas station, not in CA or PA where it varies by county.

On CA you can buy liquor at the supermarket until 2 am when the bars close, anything from Budweiser to Jack Daniels. In PA, you must got to the package store for booze and the beer distributor for a case of beer. In OK you can buy all of the above in liquor stores or buy "near beer" at Wal-Mart.

In OK and CA you can buy cigarettes from the Tribes at their Smoke Shops and pay no taxes, not so in PA.

Tax code is very complicated and I am citing the above three states because they are my experience.

[navyblue]

Yup! That's what's called a gotcha!