Posted on 05/11/2007 5:30:56 AM PDT by Dick Bachert
I have a little scenario I would like to paint for those of you out there who just insist on finding something wrong with the FairTax. Admittedly, the FairTax isn't perfect. No tax plan is. How, after all, can you come up with a perfect way for a government to take its operating funds from its subjects? If you know an easier and more equitable way to do it, by all means, let me know!
I'm going to ask you to crank up your imagination for a moment here ... and by "you," I mean those of you who think that this FairTax thing is a bad idea and you're not prepared to come on board.
I want you to imagine a scenario. Don't worry about whether or not this scenario is possible .. Just accept it as I present it, and then consider the alternative picture I'm going to also present. Simple as that.
Let's imagine that the FairTax is the law. We've been operating under the FairTax since the day you drew your first paycheck. It's all you know. Here is your imaginarily "reality."
On every payday you get your complete paycheck. There are no deductions. If you earn $2,000 per week, you get a check for $4,000 every two weeks. You never have to save receipts or create any records pertaining to federal taxes. You can invest money without paying any taxes on it. You don't have to pay taxes on the money you earn through your investment portfolio. You pay no taxes on any money you put in your savings account. When you die you get to leave your entire estate, everything you own, to whomever you wish. The federal government will take no taxes from your estate. Your death is not a taxable event. When you go to the store to buy an item, and the price tag says $19.99, you will had a $20 bill to the cashier and get one penny back. The price tag is the price. There are four people in your household. You, your spouse and two rug rats. At the beginning of every month you get a check or a credit to your checking or charge card account in the amount of $506.00 to compensate you for the federal sales taxes that are included in the price of everything you buy; right up to the poverty level.
All in all .. not such a bad deal. You keep all of the money you earn and you get five hundred bucks a month from the feds. Plus .. you only pay taxes when you spend money.
Now .. .here comes some politician who has a grand scheme for a new tax system. He wants to explain it to you. Here's his great idea ..... give him a listen and tell us what you think.
The plan is simple. First the federal sales tax is going to be removed from the price of everything you buy. This will mean that everything will cost 23% less than it does now. But ... he's going to levy an income tax on every single individual and business who plays any role at all in bringing those products to the marketplace. These people and companies are all going to pass the cost of these taxes down the economic line to the final consumer of the products they manufacture. These taxes will end up embedded into the prices of products in our retail marketplace, bringing those prices right up to the current level. So .. no loss, no gain.
Next your political benefactor is going to take away your $500 per month prebate from the government. In its place he's going to tax every penny you earn. It doesn't matter where the money comes from. Your salary, your investment income, winnings at the track ... whatever you earn and however you earn it, it's going to be taxed.
Wait! He's not through. He's also going to tax your wages for Social Security and Medicare. He's going to try to soften the blow by telling you that your employer is going to match the taxes he takes out of your paycheck, but you're employer has made it clear that this money is all going to come out of the money he has budgeted to hire you. You'll probably lose out on your next raise while the boss his accounting in order.
There are some more nifty ideas in your congressman's tax reform plan. When you die your family is going to have to file a complicated estate tax return. A huge amount of the wealth you have managed to build during your life is going to be sent to the government. Your survivors may well have to sell the family business in order to come up with the money to pay for these death taxes.
One more thing .. you're going to have to keep records of all of your financial transactions. Every year you're going to have to spend no less than about 30 hours or spend hundreds of dollars to hire someone to fill out tax forms for you. If mistakes are made you will be hit with a huge penalty and interest. Oh .. and the government is going to have access to all of your financial records to make sure that you are paying everything you "owe."
The question, of course, is why does this politician want to change the tax system in this way? Power, that's why. They want to be able to enact little changes to the tax code that will benefit certain constituents ... which constituents will then benefit the politicians -- with money or with votes. Under the FairTax system these politicians have no power to favor one group of voters over another for the benefit of votes. The new system would give them that power.
Your choice, my friends. If we had the FairTax now ... would you be willing to make the switch?
I don’t know about defending the status quo, but I beleive that if you have a problem with government spending, then that is where you should focus. other thatn that you’re creating an environment where people THINK something’s hapenning, only to find out that nothing of substance has changed - they still get rooked.
Start thinking about honesty, and maybe you will see the error of the Free Lunch Fairytale. There are none so blind as those who are convinced of the truth of something that is wrong.
Believe me, I'm standing my ground. A lot of us are...
i’d look at how other countries get their money.
OR
i’d consider ALL money coming in as income - regardless of source, and tax every dollar at the same rate for everybody.
at x percent, everybody’s paying based upon income, the rich pay more, the poor pay less, everybody has a stake in the government, and with no exemptions, it remains really ‘fair’.
it’s simple, enforceable, transitionable, and really fair. And if the ‘poor’ gripe about payign their fair share, then there’s that public outcry you wanted.
Why? Is there some country that's truly free and has a better long-term economy than the U.S.?
i’d consider ALL money coming in as income - regardless of source, and tax every dollar at the same rate for everybody. at x percent, everybody’s paying based upon income, the rich pay more, the poor pay less, everybody has a stake in the government, and with no exemptions, it remains really ‘fair’. it’s simple, enforceable, transitionable, and really fair.
How is that so different than taxing all money going out as consumption with a flat rate, other than the consumption tax reducing the number of monitoring/collection points by about 90% (~20 million retailers vs. ~200 individual filers) and front-loading the system to hamper investment? That's simpler and more enforceable, and equally as fair (if not more so given the fact that you have the freedom to invest some of that money without having to pay taxes on it first).
Geez, I'm in proofreading hell today...
This part of the statement should apply to the income tax, not a true consumption tax, of course.
It potentially is a lot less intrusive, but. You do have to file reports. You file to get your monthly prebate check and you file if you buy something from a non-registered or overseas retailer. It is naive to think the new-IRS will not be looking into personal records. A clear reading of the bill says otherwise. If the new-IRS just thinks you might owe taxes, they have the authority to demand your records.
The current system hides most of the tax burden, takes it at the wellhead, and plays one group of citizens against another. Until you get it out where everyone can see it, and unifies the self-interest of the American people, you won’t see spending addressed.
England is a monarchy, with subjects. I am not a subject, but a citizen, and if that difference is lost on the writer, no wonder they are pushing this.
There is no free lunch, the money has to come out of someone's pocket, and in the end, the taxpayer will get it in the 'end'.
The parasitic classes love the idea of getting a check, but the proponents of this ignore the fact that someone has to issue and distribute these checks. Someone would still have to enforce the tax law, so there would still be an army of government minions sucking up our substance so it can be unConstitutionally redistributed. Never mind.
Just get government back within its Constitutional constraints and we'd really save a grundle.
Because I see it as killing my business. I really don't see how new homes will be able to compete against existing homes sales under this scheme. The way it is set up, new homes will be at a 30% disadvantage from existing homes the day after this is passed.
It’s not a question of paying less tax, it never was.
No, but it is marketed that way. The old keep 100% of your paycheck and prices stay the same routine is the main staple of the fairtax pitch.
It’s the need to get the stinking KGB IRS out of American lives.
Then market the plan that way. Although I think the freedom claims are grossly overstated it should be an improvement. I can guarentee you, collecting $2.5 Trillion will be intrusive into everyone's life, I don't care how you do it.
“Nope, don’t want to earn more money, because I’ll be taxed more on it.”
I am a small business owner and i have heard that phrase before.....several times as a matter of fact....you have no idea how dumb the sheeple are.....
Name, address, and SSN. Pretty much what you need to file to vote in most districts. (Might not be a bad idea to link the forms to save folks the trouble.)
Supply and demand. As the demand for older ("untaxed") homes rise, their prices will too, until the cost advantage of old vs. new settles back to equilibrium again (people will pay extra for new homes because they believe they get extra value for them).
That is the absolute truth of the matter VERY well stated!
As all Fair Tax opponents do, you lie about the tax rate. It is a 23% inclusive rate. Not a 30% exclusive rate.
At least be honest in your commentary. Though that is usually not the case with Fair Tax opponents. They always lie and change the terms.
Well, they really don't have much choice. Defending the income tax is a tough slog...
It is estimated that at least $10 TRILLION in US capital is invested outside of the US for favorable tax treatment. Remove the that competitive advantage from foreign nations and that $10 TRILLION and TRILLIONS more will come pouring back into America.
A real economy killer, huh.
???? A 23% inclusive tax rate is a 30% exclusive tax rate. The bottom line, a $100 untaxed item will be $130 under the fair tax. Whether is it calculated as 23% of $130 or 30% of $100 (like how every state does it) is mute. Calling it a 23% inclusive tax is just misleading as no one outside of the fairtax crowd have any idea what you are talking about.
“Nope, don’t want to earn more money, because I’ll be taxed more on it.”
Laugh, but it is absolutely true. I remember when I was a small child in 1980 my father was offered a very big promotion which also required relocating. As a small kid, all I could see was what his salary and bonus plan was. And they were big numbers. A sizable amount over what he was getting at the time.
He turned the job down and I asked him why he didn't want to make that money. In my first lesson in economics and taxes, he showed me that at the higher salary and new location, he would actually has LESS money in his pocket after taxes.
So yes, an increased tax burden will lead people to elect to not earn more.
90% of home builders will be in bankruptcy as they wait around for thie equilibrium.
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