Replace the Income Tax System with a national sales tax? (Poll: 83% Yes)

Vote.com ^ | Dec. 2005 | Vote.com

[FairOpinion]

YES! 83% (8832 votes) A consumption tax would be great for the American economy. Do away with complicated income taxes!

NO! 17% (1761) A consumption tax would not be fair for low-income households. Keep the current income tax system!

We'll send your vote to your congressional representative and senators.

[phil_will1]

"Your scheme would also create an entire industry of 'phony' corporations which would purchase consumption items 'wholesale' to avoid paying the taxes."

Under the FairTax, items purchased for personal consumption would be taxed, even if paid for by a corporation. That is to avoid the type of fraud you are concerned about.

[phil_will1]

"Trust me. The politicians will win."


“I discussed the importance of abolishing the income tax because of its tendency to form a habit of servility in the souls of a people that accept it. Servility of soul is bad not only in itself, it is also an open door through which will soon walk the abuses of ambitious government power. Leaders who find themselves with governmental power over a servile people will be quick to conclude that such a people exist to serve them.”
Alan Keyes “The Power of the Purse”, WorldNet Daily, August 27,1999

[freedumb2003]

Neither version asks the proper question:

1) Would you prefer to pay $30,000 out of your $60,000 take home pay for your new Toyota AND PAY YOUR CURRENT MARGINAL FEDERAL TAX RATE OF APX. 13% (ed note: my guess)? 2%

or

2) Would you prefer to pay $39,000 out of your new $90,000 take home pay for your new Toyota AND PAY NO FEDERAL INCOME TAX? 98%

[phil_will1]

"My point is not this specific example alone. My point is that society has reasons to stimulate an ownership society, and helping people get to that status benefits society, without the Fair Tax aspect of being totally neutral."

Good point. There is no public policy initiative that I can think of that would be more consistent with an "ownership society" than one which eliminates the federal government's first claim on your wages.

[phil_will1]

"Currently, a family of four with a gross income of $40,000/year and taking only the standard deductions and exemptions pays exactly $0 in Federal Income Taxes."

Most families at the low end of the income scale pay more in FICA and other payroll taxes than they do in income taxes.

"Under the 'Fair Tax' plan, given that they 'consume' their entire earnings the family would see the cost of their purchases rise from 40,000 to $49,200."

Not if a substantial amount of their consumption consisted of US produced goods.

"In exchange for what? The five or six hours that they now spend filling out a 1040?"
Well, for starters
1. Freedom from having their incomes confiscated and the tyranny of the IRS
2. a stronger, faster growing economy with more good job opportunites
3. greater visibility of the tax burden to all Americans, which will exert downward pressure on tax rates and govt spending

"I don't get it."
Several of us on this thread have noticed that.

[phil_will1]

"The problem with the 'fairer' flat tax is that .....it, like EVERY tax always does, can go up. By the time you add up what you're paying in local and state taxes, you'd eventually be back to square one re: paying 50% or more of your income in taxes."

"It is a signal advantage of taxes on articles of consumption, that they contain in their own nature a security against excess. They prescribe their own limit; which cannot be exceeded without defeating the end proposed, that is, an extension of the revenue. When applied to this object, the saying is as just as it is witty, that, 'in political arithmetic, two and two do not always make four.' If duties are too high, they lessen the consumption; the collection is eluded; and the product to the treasury is not so great as when they are confined within proper and moderate bounds. This forms a complete barrier against any material oppression of the citizens by taxes of this class, and is itself a natural limitation of the power of imposing them."
Alexander Hamilton in Federalist #21

[phil_will1]

"You go to your friends store and he rings up a $100 item for $25. You pay tax on the lesser amount. How is that easier to police?"

Two scenarios:
1. The store only takes in $25, in essence giving the customer a 75% discount. I think we can all agree that that just isn't going to happen on any significant basis. Businesses aren't going to forego 75% of their revenues to aid their customers in avoiding the sales tax.
2. The store takes in the entire $100, but only attributes $25 to the sale. Where did the other $75 come from? Manna from heaven? Gift income? How many businesses get 75% of their revenues from gifts? Think that might be a bit suspicious when they are audited?

Do you have any substantive concerns about the FairTax?

[Petronski]

Open note to those who took this poll: What would your answer be to this question: "Attempt to replace the income tax system with a national sales tax but fail to kill the income tax and end up with both?"

[phil_will1]

"In my example above, what price would the Feds see?....$25. And the tax on the $25 will be calculated correctly. The Feds will go on their way fat, dumb and happy, not knowing that they were cheated."

Have you ever heard of double entry bookkeeping? Are you aware that a set of books must balance? You DO understand that that $75 in cash will have to have an offsetting entry somewhere on the company's financials, right?

You are paranoid, friend.

[gooleyman]

Do you have any substantive concerns about the FairTax?

-----
Absolutely. I have found that many times the name of an idea has little to do with the actual implementation of it. It is more or less just a way to sell it. There are always unintended consequences with any Government program. The pro people give all the good reasons for it and the con people give all the bad reasons against it.

My concern is the process of getting it passed into law. The Fair Tax web site says there will be a parallel path to get the National Sales Tax passed and to get the Income Tax repealed. Suppose we get one and not the other. Then we're stuck with both of them. Try getting rid of either one of them then. You will have been suckered.

During the debate over Social Security and savings accounts, the example of Chile (I think it was Chile) was put forward as an example of success with savings retirement accounts. Put forward a country as an example of sucess having switched over from IT to NST.

[gooleyman]

You are paranoid, friend.

-----
Another Freeper put it best in his tagline. "Just because you're paranoid doesn't mean they're NOT out to get you."

Did you see my example earlier concerning used cars sold between private owners. Those prices are routinely reduced so as not to pay as much Sales Tax. I won't admit to having done it myself, but I've witnessed it MANY times. People do that with a Sales Tax rate of only 7%, think what they'd do if it were 30% (23% NST + 7% State Sales Tax)

Concerning my $100/$25 example: Sure, if that friend I mentioned in my example is an employee at a store, he can't easily do that for you. That's traceable. I'm talking about a store that's owner operated...a Ma and Pop type arrangement. In that case there would be no one to know that he got $100 for the item you bought. I NEVER mentioned that you paid any less than the $100 price for the item. You simply didn't pay full tax.

Be that as it may, like I've always told my kids, don't think ANY government bill, law or program will be a panacea. Before the ink is dry on any bill, SOMEONE, SOMEWHERE has figured out a way to cheat it. Mark my words, this one which you and other believers are touting so mightily is no different. You have very little faith in criminal human nature. Try and make it foolproof and they make smarter fools. I just think it plays to the bandwagon mentality.

I still say a LOW FLAT TAX with NO DEDUCTIONS is better. The mechanism (IRS) is already in place. Companies already know how to handle that. The NST adds a completely different monkey wrench into the mix. Let it Go.

[lewislynn]

With all that said, it's still interesting that such overwhelming majority would vote yes on this question.

It's not surprising an overwhelming majority would vote yes. Aside from people wanting to take the easiest route, it's also because most everyone understands what a state sales tax is, how it works and it's usually a low rate ...which is nothing like a federal sales tax beginning with lying about the "sales tax rate" itself.

Ask the same "overwhelming majority" if they also favor sales taxes on all their internet purchases.

[gooleyman]

Our current tax system with its loopholes,credits,refunds along with the IRS trying to enforce a 60,000+ page tax code system results with many people not paying taxes, legally and illegally.

You make the case very well for the Flat Tax with NO Deductions. Immediately, those 60,000 pages get reduced to a handfull. All tax forms reduce to a half page. "How much did you earn? Multiply that by 15% and remit that amount. Thankyou"

-----
The IRS would not grow with the Fair Tax...The Treasury Department will be in charge of collecting the tax.

The same number of people that work for the then defunct IRS would be needed over at the Treasury Department. And then some. Someone still has to collect the taxes. Someone still has to do the administrative work and Someone still has to go out and whup the deadbeats up-side the head.

I still say it will be harder to police. Right now you deal with a single number, income, for each person per year. Sure a person may have multiple income sources, but how many people work more than 2 or 3 jobs. With the NST, you deal with hundreds, maybe even thousands of little transactions by each person per year. And remember, each item in your shopping cart is a transaction, not the total order. Each price must be right or else you paid too much or too little in NST. Show me how that's easier to track.

[gooleyman]

By the way thanks for the link to FairTax.org. I didn't (couldn't) read it all, but it looks like a comprehensive site.

My ultimate fear still is having the so called "Fair Tax" pass and the repeal of the IT (which the site says would be on a parallel path) to fail. Thus we'd be stuck with both. Try getting rid of either one of them in that case. HAH!! Good Luck. Even if the cards fall right, some Liberal Congress will cook up some emergency to make enough dimwits believe we need the IT again "temporarily." We see how "temporary" it was this time, 80 years later.

[lewislynn]

A penny or two?...no try 23 pennys per dollar. That makes your real tax rate around 30% assuming you have a state sales tax.

Wrong again.

(b) Rate-

`(1) FOR 2007- In the calendar year 2007, the rate of tax is 23 percent of the gross payments for the taxable property or service.

Try 30 pennys on the "gross payment" including the state sales tax.

$1.00 + 7% state = $1.07 plus 30% federal = $1.39 (gross payment)

That makes your real sales tax rate around 39%

.23 X (of) $1.39 (gross payment) = $0.32 (or 32% federal "sales" tax)

[lewislynn]

I doubt VERY much it would take 23 cents on the dollar to equal what the feds presently rake in through the income tax.

First of all it's not 23 cents ON the dollar it's 30 cents ON the dollar and you're right, it SHOULDN'T, but the Fairtax group for one think everyone should get a government check based on the size of your "qualified family". Those checks would be mailed out every month BEFORE and even if you DID NOT PAY ANY SALES TAXES which, using their own graph creates even more people collecting government funds with out contributing a dime....Hence the 30% tax.

[Man50D]

You make the case very well for the Flat Tax with NO Deductions. Immediately, those 60,000 pages get reduced to a handfull. All tax forms reduce to a half page. "How much did you earn? Multiply that by 15% and remit that amount. Thankyou"

The Flat Tax is definitely better than our current system but the Fair Tax eliminates all federal taxes and replaces it with one consumption tax. The 60,000 pages are reduced to zero and there are no tax forms to submit.

Two thoughts to consider. Our current tax code started out as a Flat Tax. The consumption tax is a concept our founding fathers endorsed. Read Federalist paper No. 21 written by Alexander Hamilton. Passing the Fair Tax would be in keeping with how they believed citizens should be taxed.

[lewislynn]

Jennys cool:

I doubt VERY much it would take 23 cents on the dollar to equal what the feds presently rake in through the income tax.

You are correct. It would not take a 23% FairTax rate to replace the income tax.

Nice try but you're a fraud. She didn't say "23% Fairtax". You know she assumed the obvious and you should have corrrected here. Of course when you're trying to cover up the truth why would you?

23 cents ON THE DOLLAR is not the same as a 23% Fairtax rate, You know it and you're lying through your teeth to cover it up.

[lewislynn]

FAQ #47: I know the FairTax rate is 23 percent when compared to current income taxes. What will the rate of the sales tax be at the retail counter?

30 percent. This issue is often confusing, so we explain more here.

[Kellis91789]

My $60,000 number and $90,000 figures were intended to show the difference in take home pay -- the former including income and payroll taxes, and the latter no income or payroll taxes.

In other words, starting with a $90,000 gross income in both cases, under the current system a single person might take home $60,000 and then have to go buy the Toyota. So your taking away an extra 13% is superfluous.

If arguing for the FairTax, inflating the numbers causes skeptics to assume all your numbers are wrong. So it is best to keep numbers accurate and conservative.