Posted on 04/17/2005 10:57:02 AM PDT by Somewhat Centrist
Alright, since signing up for ancient_geezers ping list I’ve read up on the FAIR Tax proposal. I have some reservations, and would like to know what the supporters of this initiative has to say about them. I’m not American, and there is no such initiative on the table in Norway, so my position on this issue won’t have any impact on wether or not this proposal is implemented. I am motivated only by personal interest, and my only agenda is to improve my own understanding of these taxation issues, and possibly improve the understanding of others as well, trough discussion and debate. These are my primary reasons for not supporting the FAIR Tax outright:
1. Repeal of the business tax I know you are going to tell me that businesses are going to pass on the taxcut in the form of higher wages and/or cheaper products, I pretty much agree. My objection is that if businesses pass on the entire taxcut, so that the owners come out expecting the same revenue, the average business would now have a much smaller margin to work with before possibly loosing money. At the same time they would also be more likely to churn out way higher profits than expected. In short they would absorb the risk previously carried by government in that government tax-revenue would be proportional to business revenue, dampening deviations from expected turnout.
In this scenario investment would be discouraged due to high risk. In effect what would probably happen is only some of the tax-cut would be passed on to employees/consumers, while the investors would keep the rest as payment for shouldering the risk. Much of this money would find its way offshore, as more than half of Wall Street is owned by foreigners, or so I’ve read. This could also lead to a very high number of bankruptcies in recessions, which could prolong and deepen them. More bankruptcies would lead to higher interest rates, discouraging business even more.
2. Retail sales tax in lieu of VAT In the event that the law is followed a sales tax does exactly the same thing a VAT does, the only difference lies in the way the taxes are collected. Each tax taxes the retail-value of an item sold once, and only once at a fixed rate, but while the retail tax taxes the whole sum at one sitting, as the item is sold, the VAT taxes value as it is added to the item each time it changes hands. A flat tax is levied against an item each time it changes hands, but all taxes incurred against goods and services used to produce the item are deductible. Thus the producer is only liable for the value he has added to the item. The tax taxed added value, thus it is a value added tax.
Thing is, by levying a 40% inclusive tax at the retail level (states taxes added in) you add a huge incentive for criminal elements. Remember this isn’t 40% of the value of the work they perform, its 40% of the value of all items that pass trough their possession, the surplus of a legal retailer many times over. Retail level tax cheats are given the opportunity to cheat not only on their own taxes, but to cheat on the taxes of everyone who has participated in making the stuff they sell. Concentrating tax collection at the retail level might reduce compliance costs of legal enterprises, but I fear it will also present a huge opportunity for criminal elements, one they are unlikely to pass up.
In terms of services The FAIR Tax works exactly the same way as a service-inclusive VAT, perhaps with the exception of the taxable employer bit, where I side with the FAIR Tax in deeming the employer more likely to pay those taxes than the employee. (service-provider)
3. Border enforcement issues If the FAIR Tax is to work, then it will have to be incurred against every item entering the US, used or not, otherwise “used” items would flood across the border, and be legally traded as used items inside the states. Local retailers would be bypassed. One would have to catch people buying stuff just across the border, and the people having friends or family outside the US mail them stuff. With all kinds of crap being available at roughly half price just across the border smuggling would likely become a massive problem. I don’t know how this could be enforced short of shutting down the borders.
4. Foreign vacations/money going abroad I’m not the only one seeing people working tax free in the US without spending a lot, only to send the money to relatives outside the US, leave the US for an early retirement outside the country, or blowing all or at least a lot of their money on free vacations am I? I mean, to an extent some people are doing it already, imagine how it would take off given a consumptiontax of 40% tax inclusive.
5. Dealers in used consumer capital Would used car dealers pay taxes for the “services” they provide in buying used cars and selling them at a profit? How about real estate or everyday crap? Not pivotal, just wanted to throw it in there.
What are you talking about? Can you explain how your status as a non "paycheck taker" harms you with respect to the fair tax? Are you saying it is easier for you to evade taxes with an income tax? You realize you would get the same check as people who are paycheck takers, right?
"You were a little unimformed on the rebate works, but you make several valid points. This tax is a major kick in the ass to self-employed people, and btw people on fixed incomes. And yes, income must still be reported for SS benefits and unemployment benefit purposes."
Ok, how informed do I have to be to know when I'm getting screwed? I still have to belong to a ponzi scheme called Social Security, I still have to carry around a Slave Surveillance Number like a cow, I still have somebody digging around in my bank account just because I choose not to work for somebody else, and I'm still getting the shaft by the socialists that prefer to use me and my "service" to get the IRS off *their* backs. Frankly, I don't have to know what part of a dead animal stinks the worst to know it still stinks.
Let's say I'm "self-employed" and I fix computers out of my garage once in a while. Right now I have the IRS up my ass like everybody else. I report the $100 I took in and pay tax on it when I file. After NRST, I STILL have IRS (or the state equivalent) up my ass only now I have my very own personal IRS agent. I don't have a retail store, I'm not a corporation, I don't even have a cash register (although I'll be required to get one - how do you think retail cash receipts get audited?)My incentive under NRST is to go get a paycheck job, not become a tax collector and have my own personal IRS agent. So much for small businesses that provide a "service." You wanna make tax collectors out of retail stores selling manufactured goods who are already collecting taxes in the cash registers they already own, fine. Leave me TF out of it. NRST does nothing for me except give me incentive to fold up my small business "service" and let my customers get hosed by some idiot at CompUSA.
Here's the killer. Their "sales tax" is "23% of the gross payment". It taxes taxes and anything else included in a "gross payment".
Using simple numbers, if you presently take $100.00 cash for a service and then pay 23% tax you'd have $77.00 after tax income.
After the sales tax if you take $100.00 cash, remit $23.00 you have $77.00 BEFORE tax income...you'd really only have $59.29 after tax income.
The only way you can have a service and maintain your income is to raise your price 30% (the amount of the tax).
$130.00 (gross payment) X .23 (gross payment tax)= $30.00 (rounded)
Before the sales tax the feds got $23.00 from your $100.00 service...after the sales tax the feds would get $53.00 from your $100.00 service....
To get your usual $77.00 after tax income you'd have to collect $130.00 not $100.00. The $30.00 you'd be required to collect from your customer plus the $23.00 they'd collect when you spent what's left.
So, if I'm "self-employed" providing a "service" before NRST, I have an IRS headache, and AFTER NRST I STILL have an IRS headache. Meanwhile I have all of those paycheck people to thank who would rather turn me into a tax collector with my own personal IRS auditor so they can avoid filing. Sounds like a good deal to me. NOT. But hey, there's more paycheck people than the "self-employed" providing "services" so screw 'em. Yeah, that's not socialist.
Hey, I can always go get a frontal lobotomy and get a paycheck job at CompUSA.
One benefit to the NRST is instead of waiting to file on a yearly basis, you will have submit monthly sales tax reports.
Yea and it's simple. Just add up your gross income and send them 23% of it..the first year. Who knows after that?
Have you tried a laxative? I suggest a fast acting one.
No comment...
I agree. I might not register either. That's all there is to it. Don't register for the check and you won't get it.
What ARE you talking about?
If you were previously NOT claiming your income from fixing computers, then you no wonder you think that you're right to be POed because now you will have to account for that income. Of course you could always choose to continue to cheat.
OTOH, if you are declaring this income and paying taxes then you really are confused.
If you charged the $100, after tax you are netting about $75 and then paying the imbedded tax on everything that you buy. That tax of (low balling it) 20% leaves you $60 after taxes.
Under the FairTax, if you charge the same $100 plus tax you remit the tax, keep the $100, and don't pay the imbedded on your purchases. Bottom line -- your are better off. If you lower your price because your tax costs are reduced, you are still no worse off.
I can't see what you're agitated about. Read to bill, get the facts, and then get on board. In the end, more people will have more computers and you'll have more computers to fix.
KoolAid. That's the ticket. It will taste better with KoolAid, especially when Congress gets done with your beloved bill.
I think you have broken the code. But, as you say, if he is taking his chances now he can continue to do so. I don't know why one would make him feel more guilty, or threatened, than the other.
BTTT
Dude, it's hypothetical. I don't fix computers or anything else for a living. I don't provide any "service" for a living. Considering what an academic exercise getting rid of the IRS is, I would have thought proponents of the idea would be a little more reasonable when it came to admitting defects in their proposal and try and refine it. I guess not.
Thanks for the explanation. Your refusal to consider the facts and the logic of the arguments presented, combined with your abrasive attitude, successfully hide your intentions.
If you truly wanted an explanation and a defense of the NRST you got plenty of it. Just look at it if you are interested.
caught this haggis on Art bell smoked salmon from chicago commercial
The sponsors and co-sponsors will vote against the bill if it does not remain faithful to it's objective. Without that support, the bill will die and we stay where we are.
Put your fear aside and take a chance at reining in government. Put yourself back in charge of your tax bill.
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