Posted on 04/26/2006 8:29:38 AM PDT by Eaglewatcher
Americans are disenchanted with the federal income tax system. And why not? Only accountants and agents of the Internal Revenue Service understand the 8 million words on the 60,000 pages of the complex Tax Code. Given some of the horror stories over the years about conflicting interpretations from one IRS office to another, even that assumption is suspect.
According to an Ipsos Poll, eight out of 10 people recently surveyed think the system is unfair. Indeed, the only clear common ground for agreement between the various income groups in the poll appears to be their unhappiness. And they are echoing the sort of complaints heard a year ago when Uncle Sam held hearings on simplifying the code.
Any tinkering with the current system by Congress likely will be perceived as political manipulation in response to pressures exerted by special interests. For despite congressionally mandated, administration-recommended reforms, the code remains cumbersome and intimidating, complete with social engineering breaks and loopholes. So why not eliminate the unfair, distrusted and generally despised code and replace it with something far more equitable and efficient and less labyrinthian like the FairTax.
Taxpayers wouldn't have to worry about being audited by the IRS or making mistakes on their income tax forms. Gone would be corporate taxes, self-employment taxes, gift taxes, estate taxes and capital-gains taxes as well as the income tax. Yet, the bottom line for federal revenue would remain the same.
Everyone would contribute to the national sales tax. Collections would be made at the point of purchase. A system of monthly rebates could be set up for the poor making less than a federal income threshold. Much of the paperwork required by the IRS would simply disappear, replaced by sales tax collection forms. Such efficiency and simplicity would be an economic spur.
One would think that politicians whose jobs depend on being popular with voters would leap at the opportunity to get rid of the disliked tax code. Some day, they will.
I am asserting that nrst will subject to taxation [at the time of spending] the money which has already been taxed and currently could be spent without taxation at federal level. I am asserting that this will constitute double taxation. More, I have done all additions and subtractions so well that if this pig ever tries to fly, I will be contributing to the legal expenses of tying it down in courts till after I pass away.
No Slob, your presentation makes no sense at all. Capital gains aren't taxed under the FairTax when they are earned. Only that portion spent - and spent for taxable things - is taxed and even then an individual's effective tax rate will not be 23% (no one will ever pay that effective rate) but much lower. Even spending at twice the poverty level results in a very nominal effective tax rate.
"Capital cost" (whatever you think that might mean) isn't taxed by the FairTax so that comment makes no sense at all. All income under the FairTax is untaxed until spent and even then the taxpayer has full control of his consumption in both amount and timing ... unlike the present tax system.
I see. Thank you for the reply.
THe problem I have with your position is that it presupposes that federal taxes and tax costs are paid with magic money.
If the farmer pays his workers' payroll taxes in wages, where does the money to pay those payroll taxes come from SGlob?
If the farmer pays his ER portion of FICA, where does that money come from?
If the farmer pays any income taxes, where does that money come from?
Of course, the money to pay taxes comes from sales revenues - ie prices to the next producer....say a miller.
So the miller must pay sufficiently high prices to cover the aforementioned costs (among others) of the farmer.
ANd of course when the miller sells to the bakery, he'll have to sell for enough to cover his costs - which include the tax costs of the farmer and the miller.
...
And so on until the retail consumer pays the taxes and tax costs of all producers in the chain of production.
Hence prices today already include federal taxes and tax costs.
The nrst eliminates those existing taxes and replaces them - it doesn't add to them.
The extent to which federal taxes reduce purchasing power of post-tax money will remain nearly constant. Folks who have saved post-tax will have the same purchasing power they expected when they saved.
However, those of us who save pretax (do you know the proportion of pretax to posttax savings/investments?) will have a nice increase in purchasing power over what we expected - as the savings will never be income taxed.
AHem... illegals will pay 23% always. Grin.
Let's assume you spend 100% of what you earn, and you earn $100. Under the present system SS/MC receives $15.30. Under Fair Tax you receive and spend your entire $100. You get $81.30 worth of merchandise and pay $18.70 in Fair Tax. SS/MC still needs $15.30 out of your $100 of gross earnings, so this leaves $3.40 to cover what presently is generated by income tax, which equates to a 3.4% federal income tax rate. If you are paying 3.4% federal income tax then, yes, please educate me.
You have not factored in the rebate. Factoring in the rebate will result in a lower effective tax rate than we have with our current tax system. Those on the lowest end of the income scale will receive more from the rebate than they will pay in taxes. Fair Tax FAQ #48
THis is a weakness to some, a strength to others.
It's been pointed out to you many times that even under the present tax system, your "untaxed money" will be tax again when it is spent because of the embedded tax costs caused by business income taxes - and there's no way you can escape that, while with the Fairtax any investor has many beneficial options that will benefit him financially over and above what the present system would do as shown in this post.
In addition to that, no one will pay the full FairTax rate, but rather an efective rate of much less. Perhaps even you would be able to figure that out since you have "... done all additions and subtractions so well ...". If so, you'd realize that your pronouncements hold little credence.
My bad - you're right of course ... (are they "individuals?)
They don't qualify for the prebate either.
Yes this is why they ALWAYS pay the max rate!
(should've added a DUH! for me on my post, but didn't)
I luvvit!!
I said where - by the fact that I was expecting to have to pay income taxes on it but no longer have to. So the amount that I was going to have to send to Uncle Sam will stay in my bank account. THat's where the increase comes from.
Just you try to withdraw and spend it - and then talk about "increase". What you didn't pay in income tax, you'll pay under the different heading. Decrease for all those who have already paid taxes there will be, that's for sure.
Why is Gslob afraid to post in the forum? He prefers private email?
Yep. And the bill is revenue neutral. See how it comes together?
Decrease for all those who have already paid taxes there will be, that's for sure.
But we just showed why that's not true right here. That's for sure.
You got that right! My post was interrupted before I could add that tax reformers will be attacked by both sides on this...
babies... argh...
Anything that will consign the IRS to the dust bin of history can't be that bad.
Yes it can, and much, much worse.
He must be ashamed of some of the stuff ... can't say I blame him since it's pretty stoopid and he may not want others to see it because of that.
It matches his posts, though.
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