Posted on 08/03/2005 4:51:43 PM PDT by RobFromGa
A simple question...
So, under the FairTaxI get to keep my whole paycheck, prices for everything I will buy will stay the same even with the taxes included, and I get a prebate check from the govt every month. And businesses pay no taxes.
Where is the extra money coming from...
What is wrong with this reasoning below?
1. Right now the government collects $X in the form of all taxes.
2. All taxes are really paid for by consumers in the end result, either directly, or in the cost of their purchases which allow businesses to collect money in order to pay taxes. Companies do not really pay taxes they jsut collect them and pass them on.
3. The FairTax will collect the same $X per year in the form of taxes but using a different method.
4. Under the FairTax, the price paid for goods will not rise because getting rid of all the taxes built into goods will cause the prices to drop, then the FairTax will add onto the new lower price, resulting in the same price paid by consumers.
5. So, for a given taxpayer, shopping (consumption) will be revenue neutral. Ie. Prices are the same as before.
6. And each given taxpayer will get a "prebate" check every month that they are not getting now.
7. And each taxpayer will pay no taxes on capital gains, or on savings.
8. And, each taxpayer will no longer pay any taxes on income, or payroll taxes.
9. And, there will be no Fair Taxes on any purchases made for a business.
Are these all true so far?
Again, I get to keep my whole paycheck, prices for everything I will buy will stay the same even with the taxes included, and I get a prebate check from the govt every month.
Where is the extra money coming from???
There are literally several million small businesses like mine that sell services, not products, and are specifically set up to minimize tax compliance issues, as I have done. For folks like us, our tax compliance costs would jump 10 or 100-fold under the so-called "fair tax."BTW, do you know what the largest part of sales tax compliance cost is? It's the business having to pay the ~2-5% credit card transaction fee for the sales tax people put on their charge cards.
Well, that was certainly weak.
The reason that it doesn't seem reasonable to YN is that he dismisses outsourcing as a part of the labor supply. With outsourcing, the labor supply is, for all practical purposes, unlimited.Labor supply is domestic labor.
Of course, when you are YN, you don't need stinkin' sources. You make a statement and everyone is supposed to accept it as the law of the land.RobFromGa, I'll leave it to you who's provide more independant sources. I think I do pretty well.
It doesn't have to raise additional revenue. The revenue is being collected in a different way. The cost of paying CPA's to figure taxes is eliminated. People who hide income and avoid taxes that would otherwise be paid will now pay those taxes. That's additional income. Foreigners who shop in America, who weren't previously paying taxes will now be paying taxes. That's additional revenue that didn't exist before.
yep....it doesn't excite me much
but i can see how it would appeal to employees on salary getting soaked.....especially singles w/o children
i can make around 35-40k per year before even being liable for income tax because of my children
folks will say that is horrible but
let them see my property and f/e bills or my 15% FICA
i can remember when folks thought a 9-11% national sales tax would suffice 25 years ago..
regards!
In fact, its more likely that you will not have increased compliance costs. It sounds as though most of your business would not be taxed to your customers. As far as purchasing untaxed goods that would be aseily handled by your having a sales tax exemption certificate - which many state now make regular use of. Once you're on file with a given supplier, it's a very simple thing.
With the portion of your business you do collect taxes on, though, the reporting there is quite simple amounting to about a 2 or 3 line report and you are well paid to do the collecting and reporting - as the bill calls out.
The FairTax won't help with workers comp but unemployment insurance may or may not be helped depending - can't say. And yes, wages would be reported to the SSA which is required for purposes of the exissting laws govering that entitlement. That would be a good bit less onerous than the payroll reporting, etc. rigamarole that you now go through and there would be no payment for that required - reporting only which is much less of a burden.
It's hard to see exactly what you mean about most of your compliance costs remaining since there is no longer any reporting or filing not only of payroll taxes (or depreciation schedules or net operating loss carry forwards - or back, etc.) but also income taxes and the corresponding paperwork (and sometimes audit entanglements). Could you be a bit more explicit as to what these entail? It may very well be that some things you think may be required actually are not.
It's doubtful you'd somehow be red-flagged. If you were audited, it would quickly become clear there was no mone for the auditors to pick up and they would migrate elsewhere. Unless you were a very large business I doubt you'd be bothered much at all (unless someone snitched on any illegal activities you might be into:-)).
I honestly believe you are frightening yourself unnecessarily and having a sales tax exemption is not a huge bureaucratic thing but quite simple. And it is very unlikely you'r be greatly pestered with continual audits or with ridiculous requests to prove this or that. Some realism needs to enter into this in your mind. After all, how often has the IRS audited you? (rhetorical only),
After all, the preponderance (75 or 80%) of retail sales from a dollar standpoint is done by around 20% of the businesses. If you are outside that 20% they're not too likely to pick on you too much. Just comply with the FairTax law (which is quite straightforward) and you'll be better off in several ways I think.
You know it's real hard to take advice seriously from a person named pigdog!
:-)
Of course YN has a similar problem.
I think that if you use your sales tax exemption certificate most sellers will accept those rather readily and there will be little paperwork involved for you. Those who don't will quickly prove to be the exception.
I believe you're scaring yourself. There is no FairTax boogeyman so what compliance costs is it you believe will increase? Can you be more specific? I think that's the exact opposite from what most small businesses will experience.
Using your legitimate business exemption certificate is quite simple and it would be shortsighted not to do so - and cost you money as well. By all means, you should make every legitimate use of it.
Ripe for abuse ... and do you think the present system is not abused (and greatly so).
Do you know that the IRS figures that 20-25% of what they collect in tax revenues are NOT collected due to non-compliance ... and that does not mean evasion or illegal activity? That's a good bit of "abuse" right there.
When you throw in illegal activity (forgetting evasion for now) such as illegal aliens, etc., you're talking about HUGE, HUGE "abuse". And remember we've ignored evasion.
There are even people who conduct what you believe to be abuse under the FairTax who are now doing similar sorts of abuse presently. Overall, I think the FairTax will be better in that regard since the system is simpler and evasion, etc is more likely to be spotted cince there are fewer audit points.
The tax emption ticket is certain not business unfriendly (unless a bogus use is made of it and then ...).
(Denny Crane: "Sometimes you can only look for answers from God and failing that... and Fox News".)
You know the old cartoon joke - on the Internet, no one knows you're a pig (... or a dog)!
It's just an old family name, anyway:-)
Compared to what we currently have I would say yes it does.
Payroll, Social Security and Medicare taxes would be repealed too. You pay a quarter of your income under a FairTax system. Highway robbery? Well under the current income tax, you pay HALF of your income to the government. So with a FairTax that's like a 25% tax cut. You get to keep money you don't spend. What wrong with that? That ought to be the basis of truly fair tax system.Right. We'll all be paying 25% less and the government will make the same in revenue. Got it.
(Denny Crane: "Sometimes you can only look for answers from God and failing that... and Fox News".)
Actually Nightie, it's NOT a point of contention at all. You SQL trolls are the only ones I know trying to claim that and we now find out (as one of the FairTax supporters noted previously) that you only allow certain sources of which you approve - sort of a Nightie rules rule, eh???
On a related topic did you know that 30% of all mail in reabates are never returned, another 10% are thrown out for incorrect documentation. This could work like that
If you're a businessman and so lazy as to let a dollar escape from you that way, then I'm sure you are quite happy with not taking income tax deductions due you now. No wonder so many small businesses go belly up in their first five years if such laxness is the general case.
Running a business and doing it properly is a choice of vocation. If you are not up to the requirements then how do you expect to stay in business?
I think Saxby Chambliss was a sponsor before but I'm not sure now.
Senator Chambliss is the sponsor for the FairTax legislation (S.25) in the Senate.
What are you talking about?
Do you stop to pick up a penny that you see across the street? Or are you too "lazy"?
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