Posted on 12/24/2007 7:55:05 AM PST by Alex Murphy
Then use that to see what you’re paying in taxes under the FairTax.
When I'm older, I won't mind paying a new, 30% sales tax when I spend that money?
And when you get old enough that the government MAKES you sell some of that so that they can collect taxes from you, you'll have an even different perspective.
I already paid taxes on my income. I already pay taxes on my interest, dividends and capital gains. Why do I want to pay 30% more when I spend my savings?
If I were 22 years old with no savings and just starting a career, a sales tax might sound great. Maybe it is your perspective that is wrong?
At least Huckabee's 23% plan lets you sell your house, re-invest the money so that it makes you money to live on in your old age.... and not pay taxes on the sale of the house.
You've got no options except sit on it and don't take anything out, until the government makes you. Oh I guess if you have it in a passbook savings you can spend it :)
“... but with exemptions for food, clothing and housing, and allowances for child care, for example.”
Peachy. So people that spend all their money on these things would pay nothing in taxes ? How is that fair ? Doesn’t it cost the government something to protect their lives, rights, and freedoms ? Why should they get that protection for free when others have to pay for it ?
What incentive does somebody have to vote against wasteful government when they know that they won’t be the ones that have to pay for it ?
The FairTax as written already untaxes too many people by providing a Prebate — a check to use to pay the FairTax on the stuff they buy up to poverty level spending. Add to that the fact that education, used goods, mortgage interest and property tax are not taxed under the FairTax, and you end up with a HUGE number of people that would pay NOTHING in net taxes. Not even the SS/M taxes they pay now. Yet they would still be eligibale for SS/M benefits when they retire. The size of the SS/M spending will explode with all those voters demanding better benefits but not having to actually pay any taxes for them.
The key to responsible voter behaviour is to make sure there is always a direct tax consequence that hits that voter — higher taxes for bigger government and lower taxes for smaller government. Any plan that attempts to untax any voter is a bad idea.
We need to REVERSE the trend toward apathy amongst voters, where they look at nothing but the benefits they’ll receive from government because they know the tax will be paid for by somebody else.
From the bottom of page 1 of the article,
[To ease the effect on the poor, they propose a “prebate” — a monthly cash payment to every family — to cover sales taxes on spending up to the federal poverty level.]
On page 2, it even mentions the cost of the prebate at up to $600B/yr. You can object to other portrayals in the article, but the Prebate is covered.
I don't.
And you haven't paid taxes on the re-invested dividends, or on mutual funds, or on individual stocks appreciation in a taxable account, unless you're re-trading the whole thing every year.
I pay taxes on the dividends in the year they're paid. I pay taxes on the capital gains in the year they're realized.
And you haven't paid tax on the equity in your house yet. But you will when you sell it.
Only if the gain is more than $500,000. Under the sales tax, I'd pay 30% on not only the gain, but also on the purchase price. Sounds great! Not.
The FairTax replaces Income Taxes and Payroll Taxes and Estate & Gift Taxes. It does NOTHING about Federal Gasoline taxes, Phone taxes, Liquor taxes, Tobacco taxes, etc. Nor does it have anything at all to do with local taxes like sewer tax.
You only pay those in a taxable account, and only when you re-trade them. I'll repeat my question.... why are you trading in a taxable account instead of an IRA or 401?
Yes, I know.
I'll repeat my question.... why are you trading in a taxable account instead of an IRA or 401?
I'll repeat my answer, I do both.
So you compare you're current mark to market tax liability against the 23% value, less what you might have earned at say 5% (a conservative number) annually. That's the cost difference. Right?
Don’t forget that the FairTax wraps SS/M funding into itself, either. So retirees that have contributed their entire working lives end up paying on all their purchases to feed the SS and Medicare beast all over again.
And contrary to your view that the prebate is a good thing in that it negates the spending up to poverty level spending, I take the opposite view. To whit, that it is a BAD thing to try to untax anybody for the general fund spending that is in fact necessary — defense, judiciary, etc. Why should the poor not have to pay for national defense, judiciary, federal prisons, interstate highway systems, etc. ? The prebate would do more than make those things free to the poor. It would give them credit for SS/M benefits even though they would end up paying zero in SS/M taxes after the prebate negates all the FairTax for them.
I’d like to get rid of the IRS also. I’d like to eliminate the tax overhead on businesses. I’d like to get the benefits of the FairTax without the problems it has. I would do that by leaving SS/M as it is, eliminating the prebate to make sure everybody contributes to the general fund spending, and use a rate of 12% to reduce the evasion that higher rates would cause. 12% FairTax with no prebate would bring in enough revenue to completely replace the personal and corporate income taxes.
As far as the other effects on retiree savings goes, a 12% rate would not be much different net than what we’d pay under the existing system. Keep in mind that most retiree savings will be taxed at higher than 12% when withdrawn if it was in IRA or 401k accounts. The exception is Roth IRAs. Even regular savings accounts will be taxed on the earnings each year.
You'd only pay that on a new house which wouldn't have a gain, only a profit.
Long term capital gains are 15%. Never claimed they were zero.
Huckabee's plan is 23% on the portion of it that you spend.
30% added to every purchase. That's on not only my capital gain but also on my original investment.
That's the cost difference. Right?
Wrong. Say I invested $100,000 and now have $200,000. 15% of my $100,000 gain is $15,000. 30% of $200,000 is $60,000.
See the difference?
“PLUS, you get a prebate check for the amount of taxes expected to be paid by a family at a poverty level income.”
That is the single biggest problem with the FairTax and why it isn’t a fiscal conservative’s issue. Suddenly people at poverty level (actually more than poverty level since mortgage interest, education, used goods, etc. aren’t taxed) pay NOTHING in taxes. They have no incentive to vote for smaller, more cost-effective government, and in fact have every incentive to vote for larger Medicare and SS benefits because they don’t even have to pay for those anymore. No matter how high the FairTax rate would need to be jacked up to pay for more ‘gimme’ spending programs, their prebate will also be increased enough to cover their higher taxes at the cash register.
I'm talking about what I'd pay when I spend the proceeds.
Compare that against Huckabee's 23%. 23% of the entire value. (that's the worst case scenario that you spend it all)
Now put the entire value on a complete spend decline of 15 years (65 to 80). Assume 5% annual growth for re-investment in each of those 15 years. The difference between your current tax liability and Huckabee's 23% value ..... less the tax free investment profits you could have is the real difference between status quo and Huckabee's plan.
The only thing you missed is that Principled is lying.I didn't "miss" that at all, friend - it wasn't there. And I certainly don't know WHO is lying but if I were involved with porno I'd probably be more likely to lie about it. Are you accusing Principled of being involved in porno and lying about it or is it you who is lying about it or maybe the poster you claimed wasn't involved with it?
You seem to know the parties involved which is more that I can say. Since you "were there", are you perhaps involved in the FR porno bunch? Just asking to get things straight ... but I still can't figure what this has to do with the FairTax - but maybe it titillates you anti-FairTax guys (I assume you're guys) as you seem to like to go "off-topic".
There were numerous examples even of how purchasing power substantially increases for a given purchase under the FairTax. These were complete numerical examples which I’ve not seen you or anyone else refute.
So I’ll certainly not bother to repeat them. Since you were apparently “on the threads” at that time judging from your posts, I’ll merely believe you were unable to understand the economic studies as well as the actual examples ... or perhaps that you don’t wish to believe them for your own reasons. That’s fine, too.
There's no free lunch with the Fairtax.Actually the only parties I've noted who make such a claim are those opposed to the FairTax rather than FairTax proponents. Instead, those favoring the FairTax have furnished myriad examples of how it would work (and how purchasing power would increase for most taxpayers - but not those in the areas such as illegal aliens, drug dealers, etc) while opponents merely make wild statements with few factual studies behind them.
Most people with any sense of equanimity who've read the President's Tax Panel's report on the matter realize that the tax they "reviewed" and commented so negatively about was not the FairTax at all. Instead they picked up the favorite attack weapons of Bill Gale and Bruce Bartlett who are both well-known opponents of the FairTax and who continue to demagogue around any circle they can in DC.
After all, they know which side their bread is buttered on since they live off of some form of tax funding which might very be badly affected by the FairTax. Simple self interest. What's your motivation?
Read the bill’s provisions on existing inventory.
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