Looking at tax alternatives

The Edmund Sun ^ | April 20, 2006 | Bob O’Bar

[Man50D]

Yes, I understand. And they will pay that Fair Tax of 23% which replaces the 23% that is currently being collected throughout the production chain and paid by the corporations. I got it.

Now, what replaces the money the federal government was receiving from personal, not corporate, income taxes?

You clearly do not understand the Fair Tax will tax a much broader base of taxpayers than the personal income tax, including the 50% that don't pay personal income taxes, not to mention all the personal income tax loopholes with our current oppressive tax system. Collecting from that 50% and eliminating all the Personal income tax loopholes will enable the Fair Tax to be revenue neutral.

[Eaglewatcher]

I thought that the idea of a post was to share the content of the article not to show that the article had appeared in the main stream press.

[robertpaulsen]

You told me back at post #58 that my $100 item currently contains $23 in taxes that corporations have paid in the production chain. Did you not?

Do you wish to change your statement?

[Man50D]

You told me back at post #58 that my $100 item currently contains $23 in taxes that corporations have paid in the production chain. Did you not?

Do you wish to change your statement?

Why don't you try focusing on one issue at a time. Your post #80 has to do with personal income taxes which I replied to in post #81. Now you want to jump back to something we have already discussed, hidden taxes passed onto the consumer by corporation. Don't be redundant by stating the obvious and asking a question that has already been answered.

[robertpaulsen]

Fine. You had your chance.

So, per your post #58, today's $100 item contains $23 in built-in taxes paid by corporations. (Per my pie chart, that represents 10% of government revenues). Currently, the government also receives personal income taxes and FICA contributions.

Under the Fair Tax, I will still pay $100 for the item, and it will contain $23 in Fair Tax and I no longer pay income taxes or FICA.

Under your plan, the government is going to come up way short. Unless we're going to sell 10X as many items.

[socialismisinsidious]

Under your plan, the government is going to come up way short

boohoo, cry me a river. You mean the government might have to tighten its belt, become fiscally responsible and accountable, become cost efficient, and stop the vote buying with someone else's money?

Good!

Unfortunately it won't without a lot of yelling.... the FairTax is revenue neutral...you can find the calculations at FairTax.org.

[robertpaulsen]

"You mean the government might have to tighten its belt, become fiscally responsible and accountable, become cost efficient, and stop the vote buying with someone else's money?"

Of course not. They'll simply say they made a mistake and raise the Fair Tax to 40%.

[Man50D]

Under the Fair Tax, I will still pay $100 for the item, and it will contain $23 in Fair Tax and I no longer pay income taxes or FICA.

Try paying attention and read what I posted in #81. The tax base will be much broader under the Fair Tax making up the difference for the 50% who don't pay income taxes. It will also eliminate all the loopholes.

A consumption tax is also a more reliable source of income because even when people lose their jobs during hard economic times they still must make purchases. Fair Tax FAQ #9

You think taxing consumption will ruin the economy but a member of the first Continental Congress, signor of the Constitution and first Secretary of The Treasury, Alexander Hamilton endorsed a consumption tax in Federalist paper #21. He stated "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."

His understanding of finances and how to fund a government was far more comprehensive than any knowledge you possess about taxes.

[socialismisinsidious]

No. Under the FairTax the majority of people will be paying taxes (unlike now) so if the people don't want the % to be raised then they have the power and the voice to stop it...The people will be paying attention b/c it is their pocketbook being affected not just some 'rich' guy's.

One of the biggest problems with the income tax is that the majority of people don't care b/c they aren't the ones being screwed. Every time the class envy button is pushed the apathy button is triggered.

Now the congresscritters can add a layer here, tweak a loophole there, take what they want when they want it and most people don't even know/ don't directly feel it so they don't care.

Unless people have a vested interest in watching the bureaucrappers they won't.

[lewislynn]

Now the congresscritters can add a layer here, tweak a loophole there, take what they want when they want it and most people don't even know/ don't directly feel it so they don't care.

And the "congresscritters" just can't wait to stop themselves from doing it too.

BTW, the Fairtax claims 100% paychecks and prices about the same as now. So you think the same people who don't look at 1099's, W2's or their tax returns when they sign them would suddenly become aware of the tax printed on a receipt at the bottom of the bag before they throw it in the recycle bin?

[socialismisinsidious]

People can understand one line on a sales receipt! And they will feel it when they pull the money from their pocket, esp. if the rate increases. People don't look at their 1099's, W2's or their tax returns b/c they can't understand them.

Not to mention the income withholding is stealth....congress doesn't want people to know what they are paying in taxes. Congress knows to throw people a little bit back, a "refund" b/c the people will forget that it was their money in the first place!

So yes I think that people will look at the sales receipt and if they don't and they get a 40% rate then so be it.

Right now congress does the old: divide-and-conquer, hide-and-disguise strategy..hard to do with one visible tax. Besides look at post #85 (federalist paper #21) if congress raises the rate too high then they will have to deal with a decrease in revenue. Basic economics in a free market system.

[pigdog]

And than you for your nonsense nonsense. You don't begin to comprehend what the FairTax does for most taxpayers and for the US economy ... and that's greatly benefit both.

Most individuals will have a lower tax burden under the FairTax and be completely free of the tax police state we have now where you're guilty untless you can proove your innocence.

The economy will be greatly boosted by attracting not only investments from off shore (and repartiating some previously US-based funds that walked away because of the tax system) but it will air US exporters lower their prices by removing the income tax component that is is all goods they presently sell.

And you're the one lacking credibility, robbert, since the 23% tax rate has been proven by several economists to be revenue neutral (in fact, due to Bush's recent tax cuts it will probably now be lower than 23% - something like 19%). Credibility? Yours is zero (if not less)!!!

In #73 you claimed that someone in Congress had introduced your "plan" of cutting 50% in spending. What is the bill number? And show us the statement where the President has pledged to sign it. Otherwise you remain merely a liar.

[pigdog]

One of your more ignorant questions. You don't seem to realize that your pie chart includes a good deal of business income tax from non-corporate sources in what is labelled "Individual Income Taxes".

The upshot of that is that your pie chart is incorrect AND misleading. It also means your entire post makes no sense.

[pigdog]

And weren't you the guy proclaiming earlier in the thread that government spending should be cut 50%??? Now you whine because you think they don't get enough money?

Which is it, fool???

IAE as I just told you your pie chart is wrong (as are you) and business income taxes are more than just corporate income taxes. You seem to not know the difference.

You're also wrong since under the FairTax the price would drop and you'd have much greater takehome pay plus the prebate meaning that your effective tax rate would be far less than 23%. No one would ever pay the full 23% as an effective tax rate - never. You will be much better off overall since your disposable personal income will be greater than at present under the income tax.


You've also been told several times that the FairTax has been determined by several independent economists to be revenue neutral so your so-called "ananlysis" is truly haywire.

[pigdog]

No such raise is in the cards - and you'd know it if you'd paid attention, robert.

The more likely effect is a lowering of the rate due to the expansion of economic activity and the tax base. You'd know that, too, if you'd paid attention.

[pigdog]

Sure do, Looey, because unlike you most people can read and comprehend!

[Badray]

My bad.

I saw cut spending to 10% and then quit reading.

So, what is the bill number?

Who sponsored it? How many consponsors?

What president said that he'd sign it into law? What are it's chances of passage.

I'm not saying that it isn't a worthy ideal, but it has to pass first. For it to pass, it has to have congressional support. We can't even get those tiny tax cuts made permanent. How do you expect to get a 50% reduction in spending?

[Badray]

Here is where you show how disingenuous you are.

The tax base is changing from income to consumption.

Not everyone has an income. Everyone consumes.

Tourists, pimps, prostitutes, drug dealers, the idle rich, and everyone else who isn't paying an income tax today will pay a consumption tax..

[robertpaulsen]

"Tourists, pimps, prostitutes, drug dealers, the idle rich, and everyone else who isn't paying an income tax today will pay a consumption tax."

The biggest lie of them all.

First of all, you're going to exempt tens of millions of "taxpayers" with the monthly federal stipend. Plus, everyone is now part of the new welfare class and beholden to the federal government -- say goodby to privacy if you want your monthly "prebate" check. Think it will be a Katrina-type debit card?

Second, anyone breaking the law today and not paying income taxes will find a way not to pay the fair tax. Please. That's what they do.

One way (for anyone) is to simply incorporate their business -- the prostitute is now a "consultant", and the clothes, the car, the "home office", she buys are now untaxed business expenses. I see an explosive growth in Sub Chapter S corporations.

Third, a 30% Fair Tax coupled with a 3% State Income Tax, coupled with a 7% State Sales Tax, coupled with a 10% City Sales Tax invites cheating. Half the cost of a product is tax! Plus I still have to pay property taxes!

Forget about the prostitutes and drug dealers. You're going to bring back the barter system, especially in the sevice sector -- the dentist gets a new roof and the roofer gets some dental work. With the IRS gone (right?), who's going to check on these things?

Fourth, any money I currently have in savings is now worth 30% less. Thanks.

Fifth, who's going to buy new products? Expect a surge in tax-free "used" products, whether they're used or not.

Lastly, as a result of all the above, federal income will fall far below expected levels resulting in ... an even higher Fair Tax.

[robertpaulsen]

"You're also wrong since under the FairTax the price would drop and you'd have much greater takehome pay plus the prebate"

So prices will drop 23% (the embedded tax plus compliance costs, right?), my take-home pay will rise 30% (federal tax deductions plus my share of SS), plus I'll receive $500./month in a prebate check.

Have I got all that correct?

You are so full of it. Who is so stupid as to buy this nonsense you're trying to sell?