Posted on 06/17/2004 9:19:07 PM PDT by Remember_Salamis
I believe this has been updated recently; they have 2004 Family Consumption Allowance rates.
FairTax Bump. This will get a lot of discussion going.
Yeah, but for how long? What did our income tax start at? Something like 1/2 of one percent I think.
Fairtax bump
And its all a great plan, which I would vote for, but it's not ever going to happen and here's why.
If we ever did implement this kind of tax structure it completely places the highest benefit of your dollars on savings. In other words you only pay a tax if you purchase something. Since 1.) The Americans have never been big on savings, we're too much of a got to have it now culture, but we do like to not pay taxes, not spending their money would just about kill them.
And since consumerism is what drives the economy these days, if people started saving their money instead of buying "things," most of which they don't really need, the economy would collapse.
Just my thoughts on the subject but I still wouldn’t hold my breath waiting for it.
Ping
You we should keep our current corrupt system because a new system has the POTENTIAL for corruption??? Our Founding Fathers admitted that there is no perfect tax system, but a nation CANNOT have sovereignty without taxation. That's why in such documents as the Federalist Papers (#21) is strongly argued for.
The FairTax is designed to restrain lobbyist efforts to put loopholes in, to the farthest extent possible. Here's a quote from FAQ #5:
"#5: Why not just exempt food and medicine from the tax? Wouldn’t that be fair and simple? Exempting items by category is neither fair nor simple. Respected economists have shown that the wealthy spend much more on unprepared food, clothing, housing, and medical care than do the poor. Exempting these goods, as many state sales taxes do, actually gives the wealthy a disproportionate benefit. Also, today these purchases are not exempted from federal taxation. The purchase of food, clothing, and medical services is made from after income tax and after payroll tax dollars, while their purchase price hides the cost of corporate taxes and private sector compliance costs.
Finally, exempting one product or service, but not another, opens the door to the army of lobbyists and special interest groups that plague and distort our taxation system today. Those who have the money will send their lobbyists to Washington to obtain special tax breaks in their own self-interest. This process causes unfair and inefficient distortions in our economy and must be stopped."
Consumerism, or a consumer-based economy, is nothing more than Keynesian economics (demand-side economics). I would even go further to state that our current pop culture and the debauchery it entails is a natural outgrowth of Keynesianism, which encourages massive spending. Also, we actually have a negative tax rate, so any savings would be a good thing.
Just like Ronald Reagan, I am a supply-sider, just like most republicans are. We are deciples of the Milton Friedman supply-side school of Economics. Sometimes it;s referred to Austrian Economics as well due to the incluence of Ludwig Von Mises (http://www.mises.org).
Americans used to be big savers, but savings are discouraged under the current system (1913-). Before that, under a system heavy with excise taxes (a form of consumtion taxes), savings were encouraged because they were not taxed. It will change back the other way very easily.
Our current economic "boomlet" (can't call it a boom yet) was sparked by the president's 2002 dividend tax cuts, which were supply-side to the core. That encouraged savings and investment. Keynesian Democrats argued that it would cause spending to drop, derailing the economy; it did just the opposite.
Most of John Maynard Keynes economic theories have been proven false, most of them by the ultra-high inflation of the late 1970s, a direct result of Keynesian economics.
Close, and it didn't apply to most people
Figures 1 and 2 illustrate this point. Figure 1 shows the personal income tax structure as initially imposed in 1913, while figure 2 indicates what this tax system would look like in 2004 dollars.
| Figure 1: 1913 Personal Income Tax System |
Figure 2: 1913 Personal Income Tax System in 2004 Dollars |
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| (A $3,000 exemption for single filers and $4,000 for a married couple.) | (A $847,125 exemption for single filers and $1,129,494 for a married couple.) |
No, capitalism requires savings. We've taken advantage of being one of the world's best r-o-i capital havens, but the world is changing. Eliminating taxes on investment would reassert that status, and provide even more savings for the capital goods that make our workers so productive.
Make it 10% and I'm in.
10% won't cover today's government expenditures? Too bad. Time to start trimming the fat.
I'm a big advocate of making the gubmint use one form of taxation only. With all the different ways they swindle us, it's easy for politicians to play the shell game. With one form of taxation, the people would be better able to quell the outlandish growth of government.
Oops, that should have been $56,757 for single filers and $75,676 for married couples. Adjusted the wrong number...
Funny they should use this example. 5.25% is precisely what we are paying on our 130,000 dollar 30-year mortgage.
This argument has defeated itself. It promises to deliver something that already exists.
If you spray the inside of your car with New Car Smell, does it make the car new?
I wouldn't consider Friedman an Austrian. An Austrian wants hard money, Friedman wants a steady rate of inflation. I also haven't seen him oppose fractional reserve banking, which causes inflation and aids and abets the welfare state.
If you want to pay 10% in taxes under the NRST, you can do that. That's because (1) there's a Family Consumption Allowance that every family recieves for taxes needed up to the poverty line. That knocks your effective rate down dramatically. Then, you only pay on item CONSUMED, which does not include savings, investment, education, or used items (including homes). Items already bought, such as a house.
Here's a good example for a family of 4 who makes an above-average %$80,000 a year. After the FCA, their effective tax rate is only 15.8%. to be able to drop your effective rate to only 10%, you would have to spend (consume) less than 75% of your income. That's not too hard with a sizable mortgage or kids in college. Any difference can be made up by saving a little bit. If you had a $1,666/mo. mortgage, you would only pay 10%. A $1,666 mortgage is a $238,000 house at a 30-year mortgage with a 7% interest rate.
That's the true beauty of the FairTax: the TAXPAYER decides how much in taxes he wants to pay. In theory one can pay ZERO taxes by living like a pauper if one wants. Now what do you think???
If you've got a 5.25% fixed rate, can I have the number to your mortgage broker?
Another point: under the current system, you can only deduct the interest on a mortgage, and even then you only really deduct/save what's above the standard deduction level of $9,700.
Yes, but they're both supply-siders.
ALL of the economic models related to the FairTax show that consumption, in a worse-case scenario, wouldn't drop by more than 1 or 2 percent. In fact, many of the modeling shows a slight increase in consumption. After all, money is worthless if it can't buy anything. Here's a good example of how it works:
Step 1: You invest in a factory to buy new equipment.
Step 2: That factory is now more productive and making more money.
Step 3: The factory can do one of three things with the increased profits: (1) wages are increased, or (2) dividends to shareholders are increased, it is (3)reinvested. Option three simply repeats the cycle, putting the process in an upward spiral pf profitability. Options 1 and 2 both put money ion pockets of consumers
Step 4: the worker/shareholder with more money can either (1) invest it, or (2) spend it. If it's invested, more money WILL come out the other end again.
This is basic supply-side economics in a nutshell.
What are my "essential goods and services" and what do they cost me?
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