Huckabee campaigning for 23% sales tax

That $100 of goods (under the income tax system) will now be $90 ... and you don’t pay an added tax of $30.

In that case, 30% would be $27.

Divide that amount by the number of soles in the Country and send them all the very same bill. Period. Everybody should pay the same amount and people that are more industrious, talented or lucky should not have to carry the others.

Shoes don't pay taxes, people do.

In Grayling (used to live up in DeTour Village in the U.P.).

LOL

...I’m paying over $350.00 a month for health insurance.

My parents are paying $650 a month for their "free" health care.

Those living off interest or capital gains or donations or family wealth do not pay any taxes at all.

Which version of the flat tax exempts interest and capital gains?

While the FAIR tax sounds simpler and fairer on its surface it really isn’t - take some time, if you are really bored to read HR 25; the bill that Huckabee supports.
http://thomas.loc.gov/cgi-bin/query/z?c110:H.R.25.IH:

My take on the FAIR Tax is that is a just shell game. It doesn’t even pretend to lower the total amount of taxes collected by the Feds and so it does not make the Federal Government more fiscally responsible and force it to lower spending on pork and bread and circuses as any real tax reform should, rather it just shifts around the burden and the collection method.

From Fairtax.org:

The FairTax is replacement, not reform. It replaces federal income taxes including personal, estate, gift, capital gains, alternative minimum, Social Security, Medicare, self-employment, and corporate taxes.

It also purports to be revenue neutral and progressive because everyone would pay the same amount based on what they spend and since the “rich” spend more, they will pay more. That sounds fair doesn’t it?

From Fairtax.org:

Wealthy people spend more money than other individuals. They buy expensive cars, big houses, and yachts. They buy filet mignon instead of hamburger, fine wine instead of beer, designer dresses, and expensive jewelry. The FairTax taxes them on these purchases. If, however, they use their money to build job-creating factories, finance research and development to create new products, or fund charitable activities (all of which help improve the standard of living of others), then those activities are not taxed.

Those evil “rich” people living in their big houses, lounging around on their yachts all day, eating filet mignon instead of hamburger, drinking fine wine instead of beer, wearing designer dresses, and expensive jewelry and driving their luxury cars. Bad rich people. How dare they spend their money on luxuries! Maybe Huckabee wants us all to ask WWJD? It panders to the populist agenda of taxing the rich rather than looking at the real issues of what our Federal Government actually spends and the Constitutionality of its spending and rather attempts to shift the burden and administration of the current taxation structure from employers and workers to retailers and consumers. Basic shell game: “First you see it now you don’t; now you see it again, now you don’t, where is it? Nobody knows. Place your bets (suckers)!”

The truth is that high income people currently pay a lot in taxes. Yes, they spend more in total because they can afford to buy the products and services they purchase and what they choose to spend on so called luxury items keep a lot of business in business and a lot of not so rich people employed. Just who is working to build those houses, cars, yachts and raise prime beef cattle that eventually become filet mignon? The wealthy also contribute a lot of money to charitable causes which are already tax deductible up to certain limits. And the “rich” and the businesses they own already currently receive tax credits for investing in R&D and reinvestment in job-creating factories.

And if you look at the percentage of dollars spent on necessities vs. total income, the middle class and poor actually spend a greater percentage of their total income on necessities than the wealthy therefore under the FAIR Tax plan the rich would pay less and the middle class and poor would actually pay more proportionately than they do today.

The truth is that the wealthy may “want” to spend on luxury items but they don’t “need” to. The rest of us still need to spend the same amount on necessities many of which are not currently taxable.

From Fairtax.org:

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.

Not true in most cases as many employer health insurance plan premiums are deducted from pay pre-tax, meaning that they are not taxed and many plans now include health savings plans or FSA’s where I can put aside an amount from my pay before taxes to pay for deductibles and prescriptions on a pretax/non-taxable basis. Also many states do not currently tax food and clothing and many services. This plan would only encourage states to bring their sales tax in line with the new Federal standard and add state sales taxes to all new purchases including food and clothing and all services. And if states are encouraged to eliminate state income taxes, they would most likely enact increased sales taxes to off set the difference without any incentive to decrease spending.

And just who is considered wealthy. According to the FAIR Tax plan?

From Fairtax.org:

The size of the prebate is determined by the Department of Health & Human Services’ poverty level guideline multiplied by the tax rate. This is a well-accepted, long-used poverty-level calculation that includes food, clothing, shelter, transportation, medical care.

According to the FAIR Tax rebate calculation chart, a two parent household with two children with an income of $27,380 per year would get a monthly rebate (pre-bate) of $525 per month. How many of us could reasonably support a family of four based on this calculation?

Let’s say this family of four with a yearly income of $27,380 spends a very modest $900 month on housing. Since rent would be taxable under this plan, $900 per month becomes $1,107.00 a difference of $207.00.

Let’s say this same family of four spends a very modest $150 week, $600 per month on groceries, $600 per month becomes $738 per month, a difference of $138. We are already up to $345 of the “pre-bate”

Let’s say this same family of four spends a very modest $50 dollars per person per month on doctors’ visits and prescription and over the counter medications, all of which becomes taxable and from $200 becomes $246 per month for a difference of $46.

What if you have a child who is very ill and you have to spend more in doctor’s visits and prescriptions than the Department of Health & Human Services says you should be spending? You are still only entitled to poverty level calculation.

And what if you and your spouse decide you both need to work in order to support your family. Daycare is not only no longer tax deductible; it now costs you 23% more.

Add to that a 23 % Federal sales tax on gasoline, utilities, auto repairs and all services not currently taxable by most states, then add in state sales tax on currently taxable goods and services and state income taxes and you quickly add up to a lot more than $525 per month. And if you are a family of four with an income very modest income of $30,000 per year, you don’t get squat in the form of a pre-bate.

How much do we and the rich really pay in taxes?
http://www.taxfoundation.org/news/show/250.html

This year's numbers show that both the income share earned by the top 1 percent and the tax share paid by the top 1 percent have reached all-time highs. In 2005, the top 1 percent of tax returns paid 39.4 percent of all federal individual income taxes and earned 21.2 percent of adjusted gross income, both of which are significantly higher than 2004 when the top 1 percent earned 19 percent of AGI and paid 36.9 percent of federal individual income taxes.

If I am in the 50% range of all tax payers, I pay an average tax rate of 13.84% and if I am in the bottom 50%, I pay on average 2.98%.

So if I’m in the top one percent I’d be really happy to reduce my tax from 36% to 23%. If I’m in the 50% bracket as I’m in now at 13.84%, I’m getting screwed. People in the bottom 50% currently paying 2.98% are even more screwed.

Some will say, but you will get a bigger net paycheck without all those federal withholding taxes. That is true but people at the so called poverty level and students and retirees can currently claim exemptions from most payroll tax withholding up front.

But what about the elimination of corporate income taxes? Won’t that lower the cost of goods and services? Yes and no. Manufacturers and retailers don’t currently pay state sales taxes on materials that go into the manufacture of tangible personal property - it is already an end consumer tax. If I own a manufacturing business and no longer have to pay corporate income tax, I might have a very good incentive to lower my sales price. But if I am a service provider who does not have to currently collect and remit any sort of sales tax, I might be inclined to offset the reduction of corporate income to cover the added administrative burden of collecting and remitting the new Federal sales tax.

States that don’t currently have a state sales tax will have to create a new or expanded agency to comply with the federal sales tax collection and remittance and states already collecting sales tax will have to expand their agencies and workforce and who will pay for that and how?

Retail businesses collect the tax from the consumer, just as state sales tax systems already do in 45 states; the FairTax is simply an additional line on the current sales tax reporting form. Retailers simply collect the tax and send it to the state taxing authority. All businesses serving as collection agents receive a fee for collection, and the states also receive a collection fee. The tax revenues from the states are then sent to the U.S. Treasury. So who is paying for those fees? Is that really factored into the supposedly revenue neutral 23%?

While this sounds simple, “simply an additional line on the current sales tax reporting form” I know it’s not all that simple.

But also consider that if consumers also have a strong incentive to buy used goods over new ones, the already reduced of a used product plus a savings of 23%, then the manufactures of new products will suffer and have to reduce their work force. More people will fall below the poverty level and less taxes will be collected and more already mandated services will have to be provided and suddenly 23% will have to be raised.

I will have a much bigger incentive to go to E-Bay and buy “used” products tax free than buying new ones. I will have a much bigger incentive in buying an existing home than a new one. So what happens to those people working for manufacturers and in the construction industry?

I can see this plan as being disastrous to the economy at its inception.

After the FAIR Tax is first implemented, I can see that people will at first rejoice at having 100% of their gross pay in their pockets. But the first time they go to the grocery store, gas station, doctor’s office, clothing store, hair dressers, pay that first utility bill; people will go into shock. While in theory that would be a good thing in making taxation less transparent and more realistic, human nature will not see it that way. Most of us will see it as a huge tax increase and out of fear, most of us will greatly reduce our spending to the very bare necessities. Many retailers and service providers will suffer the consequences and in the end without any meaningful tax reform, we will all pay for it but the rich will still be able to buy their yachts and eat filet mignon while a working class family of four will be lucky to afford macaroni and cheese and basic medical care provided they don’t loose their job.

But won’t we all feel better believing that the rich are finally paying their fair share in taxes without any of us demanding our government to be more responsible for its spending?

Only consumption is taxed - and not all of that even ... and not all of your income is spent for consumption since many non-consumption items are not taxed.

However, things you might not initially think of as consumption ARE taxed, for instance, a bank or investment service.

Think of everything you would refuse to buy used... used food... used undies... the list goes on and on...

Think of everything you would refuse to buy used... used food... used undies... the list goes on and on...

LOL! So True. I would personally not be too inclined to buy “used” food and undies, but you’d be might be very surprised to find what people are selling on E-Bay and at yard sales.

Though we moved to AZ a couple years ago, I had to take a job back in the UP running a 153 Fabtec for a outfit there. The construction business fell all apart here-a well known fact if anyone watches the news.

So I work a couple months up there and fly back here for a few weeks. Last time I worked 58 days straight and now will tkae off till Jan 25 and go back till spring break hits.

God, has the logging business ever gone to the dogs. Its root hog or die now-a-days. Still waiting to hear if they are gonna strike the pulp mills up there. Thats what was up when I left.

Apparently you don’t “see” the huge percentage deducted from you check each payday like so many of us do.

Does that mean you don’t pay it?

You statement about the 500% increase is wrong (and inapplicable to boot).

And, in fact, most of those who now actually pay x% in income tax will normally much less than that with the FairTax. I guess you don’t grasp that (either).

It really sounds as though you haven’t read the bill or even visited the FairTax website. What you describe is basically what the bill does.

Business to business transactions are not taxed (unlike the present system) since they are not consumption. It so states in the bill.

Nope - savings aren’t taxed under the FairTax - nor are capital gains. Only consumption that you control.

The Lord doesn’t define “income” - the IRAS does (and can arbitrarily penalize you to boot). The Flat Tax is still based upon income (and the definition thereof from the same party).

Sorry, but NO - the VAT is a completely different sort of tax system and taxes things as they pass along the production chain multiple times.

The FairTax does not tax those transactions at all - only consumption.

Nonsense. Where are the voters in your dream scene that allow this to happen having passed the FairTax and gotten rid of the income tax??? Sitting on their thumbs??? Shame on them.

If there’s sufficient voter impetus to pass the FairTax, there’s enough to keep it on a reasonable course for quite a while since most taxpayers will be happy to be out of the clutches of the IRS and paying lower taxes to boot.

This, of course, does not apply to those now illegally not paying income taxes. They’ll pay the FairTax when they consume just like everyone else.

Your observations are right on the money and even now without the added cost of entitlements the FairTax rate would be something less than 15% - and that’s with the prebate included in the rate.

I’d sure go for the 10% figure you mention if we could only force spending reductions on the madmen on Capitol Hill.

What I believe in is a tax system that is far superior to the income tax system you defend. And I did completely read your post in question - and huge numbers for years prior.

Characterizing yourself as a “voice of reason” is grossly ironic.

After all, you’re the one saying a flat tax is the way to go and you don;’t seem to understand that’s still an income tax with the definition and overview of “income” in the hands of the IRS. And THAT'S what you're failing to see.

That means they can change the definition by IRS regulation fiat (and do) making all your fanciful “zero tax planning” go out the window. Nothing to prevent a move on their part to seize all funds on which you receive “income” (their definition) until they can decide how much to give back ... come to think of it - that’s pretty much what they do now. Perhaps you disagree?

I’d rather see a tax on consumption which I have some control over.