Posted on 12/01/2004 8:25:22 AM PST by Tumbleweed_Connection
Ping
I'm not totally sold on this idea. What if there is a bad year and people don't buy that much? I am certain Congress will find a way to add an 'emergency' tax for years like that.
Could you please explain how a flat tax, based on my income, is a "consumption" tax???Economically, income is equal to savings and consumption (ie. you can only save/invest or spend the money you make). Therefore, if you tax income but exempt savings you really taxing consumption.
Say I make $100 and save $20 of it and spend the leftover $80.There are some differences, but economically a flat tax is a consumption tax (just not a sales tax). BTW, as our current income tax allows for more tax free saving accounts (e.g. IRA, 401(k), etc.) it becomes more of a consumption tax.
The tax with a 20% (inclusive) sales tax would be $16.20% x $80 = $16The tax with a 20% flat tax (a tax on income minus savings) would be the same $16.20% x ($100 - $20) = $16
"If you consume $40,000 a year and you make $50,000 a year, would you feel it is fair if a guy who made a half a million dollars a year but spent $40,000 a year paid the same tax you do? I think you wouldn't feel it's fair," said Buck Chapoton, former assistant treasury secretary.
Blather from a socialist Robin Hood. Steal from the rich and give it to the poor. A thief in the night. Criminals disguised as do-gooders. Crimes legitimized by the color of law.
Your response is logical -but it does not address TIMING. I choose when I make the purchase and therefore pay the tax. A flat tax would still allow for the payroll deduction of MY MONEY based on the timing of my income - not my consumption. Semantics maybe, but I want control over the amount and timing of my payments to Uncle Sugar.
I'm not totally sold on this idea. What if there is a bad year and people don't buy that much? I am certain Congress will find a way to add an 'emergency' tax for years like that.What a lot of people don't realize is that the FairTax rate would change every year by law. The 29.87% rage (23% inclusive) is just for the first year. After that the Social Security Administration will have to determine on a yearly basis what the rate would have to be for them to collect the same amount as would have been collected with the current system. So if sales do go down (and income doesn't) the rate will go up without a vote in Congress! Conversely, if sales go up and income doesn't, the rate would go down that year.
What if it's a bad year and people don't earn much?
How would a home purchase be handled? I see that as very problematic, since a lot of people would borrow extra money to pay the sales tax on a house, and it would take years just to pay off the tax portion of the principal.
For example, one buys a $300,000 house. Tax would be $69,000, making the purchase $369,000. If 10% down payment is made, it would take 6 years for your principal to be paid down below the original house price.
This could leave a lot of people very upside-down - owing much more than a house could be sold for.
And you can't have a policy that only *new* houses be taxed, because that would absolutely destroy the new construction market.
That's what I worry about too.
How would a home purchase be handled? I see that as very problematic, since a lot of people would borrow extra money to pay the sales tax on a house, and it would take years just to pay off the tax portion of the principal.And you are being taxes on a portion of the interest.
Wouldn't a flat tax be better?
30% sales tax, yes, people are honest and patriotic enough to pony that much up every chance they make a purchase.
Yes -- and remember, if it is claimed to be a commercial purchase, then it is exempt from the 30%. One could expect that a large number of personal conversions might happen with such a large difference in price, far above the current state sales tax rates that are generally in the 5-9% range.
Likewise, any service that is provided, such as surgery or plumbing services, are also taxable at 30% under the Fair Tax. A certain amount of tax evasion can be expected on a 30% services tax.
I think it is to be expected that used goods will become favored over new ones if the Fair Tax were enacted. Certainly the advantage of buying a slightly used Lexus for 30% less than a brand-new one is one that many people would take advantage of.
The thing that anti-tax conservatives need to realize is that when people "do something" about a tax that they don't like, it usually involves cheating on the tax or developing an underground economy. The path of least resistence is evasion, not changing the law or fighting the government. Anti-evasion efforts cost money (thus increasing government spending) and often hurt law abiding people more than the tax cheats.
Concur. Before I would even consider a NRST, I would want some sort of assurance that it would take a 4/5 (or 7/8 or 90%) majority to increase and a simple majority to decrease.
They (the burearats and poli-ticks) work for me.
I don't work for them...
Why wouldn't a flat tax need a ceiling? Couldn't it go up to?
And not only do you pay interest on any money borrowed to pay the tax, but you have to convince a lender to lend you money far above your equity in the home.
If I remember the details correctly, the Fair Tax does address this by creating what I judge to be a moral hazard: basically it creates an indemnity of a type so that lenders that lend against a tax payment can be made whole if the borrower defaults.
This indemnification if invoked is to be paid by the taxpayers.
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