Bump for later read!
Huge BUMP!!
I think this is where this idea falls apart. I just don't think there's any way in hell a company's going to start charging lower prices because their costs are less. I think retail products will still cost the same as they do now, and the companies who produce these retail products will simply pocket extra profits.
Take, for example, a compact disc. CDs cost, retail, pretty much the as they did 15 years ago, even though the cost to produce a CD has declined dramatically.
ping
Of course, this is assuming the embedded taxes will be removed by businesses. Some economists believe so.
Even if prices do not drop the part that was used to pay corporate income taxes once those are gone, the rebate and option for freedom in what you pay tax on STILL makes the FairTax the best plan out there.
I am pretty darn sure that prices would drop to the 35 dollar range as Boortz predicts, however. Why? They would need to drop in order to keep customers from sticker shock. Perhaps they could get by with 38 bucks or so. They would get a couple bucks more profit than now (since again, that extra dough above 35 now is currently used for taxes anyway, so its removal would just make common sense). But, it would not be an outrageous amount, and consumers would be able to choose what to get their taxes paid on.
Not sure. In Ca, we already pay 8.25% sales tax which would make the rate 28.5% to 31.5%. Would not be a savings to me.
I paid as much as 50% of all my pay to the government most of my working life, and now that I'm ready to retire and spend whats left, they will no longer tax earnings, but spending.
Yeah, this thing will look real good to folks in my situation.
I would like to see a lot of the other taxes abolished. There is a tax on everything, now-a-days, and the government says they still don't have enough money.
Let me guess....I'm an illegal alien, right ?? Right ?
Bump for the NRST!
Glancing through this thread, it doesn't appear anyone has addressed the obvious positive aspects of this plan in their criticism of it. When it's all said and done, will we really be paying LESS to uncle Sam? I don't think so, but I could be wrong. But let's say that's right, and that I pay the same amount to the BLOATED government we have today, or even MORE. Like 1-5% more. Even if that's true, then....
1. I will keep, on average, (depending where they 'put me') 20-30% MORE. Now, careful here, because if you're saying something like "47, you fool, you just admitted it's going to stay the same", no I'm noooottt! Think about it. I'll still be paying the same in taxes, yes, but I'll get to KEEP MORE money. So obviously what this means is that I'll still pay the same in taxes (or maybe 1-5% more), but I'll get at LEAST 20% more in TAKE home pay.
2. What about the rise in prices for all goods, as these exorbadant taxes are imposed on all goods? (which, as far as I understand it isn't true, it's imposed on all NEW goods, not used). Even if it's true that it's all goods, then still, as Neil Boortz pointed out, market forces will drive the prices down, as the companies that are making the products WILL NO LONGER HAVE TO PAY THEIR TAXES.
What's the bottom line picture here from these two points? In the worst case scenario (where my net effective taxes go up by 1-5%), I STILL get to keep 20-30% MORE of my own money! Not only that, but after a period of time where free enterprise "works its magic", the prices for everything will be VIRTUALLY THE SAME.
That is unless one has a pessimistic, paranoid version of business, i.e, "Nah 47, all the companies will just 'agree' to keep their prices higher, even though they're not paying any taxes anymore, just to gouge us, the little guy". Yeah, ok, THAT'S a realistic view of free market enterprise. Actually, it's like I said, pretty paranoid.
As a side note, I wonder why some on here, FR of all places, are fighting the idea of getting rid of the IRS and AUDITS. Throw out everything I just said above, and concentrate on THAT. If this system does nothing else but play a shell game with our money, and, in the end, ends up making us pay ~5% more in taxes, BUT, at LEAST, eliminates the threat of AUDITS, can't we all agree that at least THAT makes it worth it?
Or are there a bunch of tax lawyers and CPA's on these NRST threads?
Tell me how they would prevent tax fraud with the fair tax? Wouldn't it be a heck of a lot easier to hide your purchases than your income? The whole nation will become a bartering nation and the level of retail purchases will fade into oblivion. Someone educate me here.
There has been virtually no discussion of the state income taxes, which would continue, along with Soc Sec and Medicare. In California, there is also mandatory State Disability Ins, which now covers "Family Leave" for bonding with your new child, which followed your planned pregnancy. I hate Family Leave. It taxes non-child producing employees for the intentions of others. BARF.
Based on the above, you would NOT get a 100% paycheck.
There are also dedections for insurance and 401's, etc.
There is a great increase of government jobs here. Not good.
Someone has to process the "rebates" and verify what category you are in. Welfare already showed us that women came in to sign up for welfare with children that weren't theirs. When your family grows or shrinks, this is an enormous tracking problem, computers or not.
I would rather the government spends a lot less money on finding out who is or is not entitled to VOTE and to make sure they can only VOTE ONCE in ONE place.
IMO, a better way than the "rebates" is to carefully select what items are "basic living necessities" and just NOT tax them. Some states don't tax items now that they consider necessary, like bread, milk, etc.
If you don't tax it in the first place, you don't have to come up with a schedule for rebates, there are no over rebates or under rebates, the customer just never pays it in the first place. END OF DEAL!!!
This is part of the KISS method of accounting: KEEP IT SIMPLE, STUPID.
Paycheck? What paycheck? I'm way too busy supporting all those low-paid, disposable illegal immigrant guest workers to receive a paycheck.
Its fun to think about the "what-ifs" of this kind of tax scheme. How would our lives change?
First, the government wants it because it generates a one-time acceleration of tax collection, and a tax increase! A huge fraction of our economy is conducted via debt, in other words, purchases of goods and services with income NOT YET EARNED (the tax pull ahead). Pay the tax on the purchase, and it is collected well before the earning takes place, EVEN IF THE DEBTOR GOES BANKRUPT AND DEFAULTS ON THE LOAN (the tax increase), and never earns the "income". You are now taxed according to what you can borrow! If the government loved having people in debt before, you ain't seen nothin' yet!
Which leads us to:
Second, the banks and credit card issuers have to love it! A 23% increase in every purchase translates into a rapid rise in credit balances, as people think their increased take-home income allows them to consume at the same rate. Higher balances equal higher interest payments, as we pay interest ON THE TAXES WE PAID! This will do much more than offset the small administrative cost of sneding the money to the feds.
And a third: travel outside the country will represent consumption outside the tax jurisdiction. (Today the US taxes your income no matter where in the world it was earned.) So Congress will move to create all manner of charges for foreign travel, calling it "taxing the rich."
Come on now, you all can think of lots of fun things about this tax, can't you?
Okay, here's another one:
How does this tax change affect the feds interest in controlling the borders? On one hand, they will absolutely want to stop all smuggling of OTHERWISE LEGAL goods, which represent a loss of tax revenue. On the other, illegal drugs, weapons, and other black market items can't be taxed anyway, because there is no legal sale, so who cares?
As for illegal aliens, hey, they spend money here so bring 'em in!!
Just exactly what does a duck DO to a June bug?
I don't have to imagine that, I just have to ask my wife what it feels like to receive 100% of my paycheck.