lets go through the process.
how much of a persons income do you think is spent on "consumption" at varying levels of wealth? here is a huge hint. Its not equal. While living conditions do change, and its not a 1:1 correlation, the poorer you are the more you spend on basic expenses that would be heavily taxed under any consumption tax system. So, while the tax rate is even across the board the result is a regressive tax that effectively punishes the poor for buying food and clothing.

second, no system proposed for "tax relief" cuts taxes on the poorest americans. its financially impossible to do so and stay revenue neutral, a requirement of any "reform" plan.


if you want to really fix this country's finances there are all sorts of ways to do it. for instance, you could cap social security payments, raise the maximum amount taxed, and probably still manage to lower the FICA rate. you could stop bleeding money for a war with no purpose. you could change the inheritance tax system and funnell all the money into schools. there are all sorts of options that dont rely upon theoretical models of a new tax system that is designed by and for the richest people in this country.

2/4/2007 11:15:43 PM

It seems the only people who are pushing "fair tax" or "consumption tax" initiatives are the wealthy.

2/5/2007 12:27:08 AM

Quote :

"...would be heavily taxed under any consumption tax "

Incorrect. The FairTax has the rebate aspect. This completely removes the poor from paying any federal tax. They pay Social Security tax now which is incredibly regressive. This would be eliminated under FairTax. The poor pay no fed taxes.

Quote :

"...financially impossible to do so and stay revenue neutral,"

Incorrect. Many expert economists have developed the FairTax plan to be revenue neutral. Do some more research on this before you marry this stand.

Quote :

"the only people who are pushing "fair tax" or "consumption tax" initiatives are the wealthy. "

The FairTax would be the first fed tax which actually taxes wealth instead of earnings. The income tax hurts upcoming younger people more than the established rich. It strips away money during the stage of life you need it most. Instead of hitting mainly wage earners, the FairTax will hit everyone who spends money..including the super rich who may not need to earn any more income.

Every wage-earner would get to keep his whole paycheck. No withholding at all.

2/5/2007 9:27:09 AM

Its is fairer in that everyone pays and the PERSON can control thier consumption. I think basic food and clothes under 40 dollars should not be taxed.

So your basic argument is that this "hurts" poor people? Working people will have more money at thier disposal. THe govt can elinimate the IRS, and people could no longer "hide" income from the govt. It is collected when you spend it, you can also control your own spending and limit how much you tax you would pay, in some regards.

2/5/2007 10:16:27 AM

Quote :

"Incorrect. Many expert economists have developed the FairTax plan to be revenue neutral. Do some more research on this before you marry this stand."

the base assumption of any fair tax is that it will lower the upper level of the tax rates. to do so, and be revenue neutral you have to raise the tax level on other people. its supposed to be a zero sum game. if the top is paying anything above 17 or 23 or whatever you choose then someone else will have to pay more. its not complicated.


When told that the only people pushing the fair tax you respond with talking points about the benefits of the fair tax. way to refute an argument.


eyedrb. you arent getting it. "controlling your own personal spending" is a fallacy pushed by the right to make poor people look evil or dumb. you cant control your spending when the basic requirements of survival force you to spend most of your pay check every month. the difference between the percentage of monthly income that the poor spend on BASIC food and shelter is huge compared to what the middle class and what the richest pay.

2/5/2007 11:26:18 AM

revolt, were as I would argue that poor people are provided food, shelter, healthcare, babysitting, etc etc...

Its the working poor who I think would rather take home thier whole check. If you dont want to live in a have and have not society, try moving to a socailized nation. There will always be those in a capitalistic society. The good thing is you are able to change your status for the most part. But, you get penalized for being successful, and reward those who choose to do nothing for reproducing, and making more people who choose to do nothing. At least make them pay thier sales tax.

I think you are missing the point that we will save billions by not having the IRS, or tax returns, etc. etc. And people will have MORE MONEY, that they earned.

2/5/2007 2:23:52 PM

no tax is free of administrative costs. and any tax is going to create a certain amount of fraud. to think otherwise is naive.

2/5/2007 6:32:55 PM

Quote :

"the base assumption of any fair tax is that it will lower the upper level of the tax rates. "

Under FairTax, the tax burden will be spread over a more broad base. ..almost twice as many people will pay the FairTax as currently pay income tax.

Also these people will pay....
-Foreigners visiting the US will pay into our Social Security system whenever they buy souvenirs
-The Wealthy who have their money now tucked away in low tax municipal bonds and such will now pay more with the sales tax.
-Cash only income tax evaders will pay sales tax.
-Criminals who don't report their income will now pay tax when they buy something.
-Illegal aliens who now live off the books will pay tax.


A nice quick overview of the FairTax can be found here:
http://www.geocities.com/cmcofer/al-ose.html

2/5/2007 8:09:25 PM

earthdog gets it, good post. It is the fairest tax.

revolt, if the "poor" cant afford housing and food as you stated, then how can they afford 3-5 kids? And funny how we are the only country whose poor population is morbidly obese. Think about it.

2/5/2007 8:59:52 PM

Sorry if this was already stated, but would people not have to pay taxes on their million dollar portfolios ?

2/5/2007 9:52:32 PM

when they bought them, I would think. But there would be no reason to put money overseas or in tax shelters. More money stays in the US.

2/5/2007 9:56:57 PM

What do you mean when they bought them?

2/5/2007 10:12:24 PM

^^^^^you are getting facts from a geocities site???
all that is is a bunch of talking points with no references from some random guy. i trust lonesark over that shit.

Quote :

"Under FairTax, the tax burden will be spread over a more broad base. ..almost twice as many people will pay the FairTax as currently pay income tax. "

First of all, I would like to thank you for proving that poor people would have a huge tax increase.
As for the claim that it would be twice as many people paying, i was unable to find a single credible website that said anything about the amount of the population that paid in. Do you have a link?

Quote :

"The Wealthy who have their money now tucked away in low tax municipal bonds and such will now pay more with the sales tax. "

How does that follow at all?

Quote :

"-Cash only income tax evaders will pay sales tax. -Criminals who don't report their income will now pay tax when they buy something. -Illegal aliens who now live off the books will pay tax."

What is it they say about hopes and dreams and candy? Something about you continuing to spew talking points for no reason.



^^the correct answer is no. thanks for playing though.

[Edited on February 5, 2007 at 10:15 PM. Reason : up]

2/5/2007 10:14:49 PM

Quote :

" i was unable to find a single credible website that said anything about the amount of the population that paid in. Do you have a link?"

http://www.fairtax.org/PDF/TaxingSalesUnderFairTax.pdf

Lots of facts and figures...but there you go.

Quote :

"First of all, I would like to thank you for proving that poor people would have a huge tax increase."

Gosh I don't know how many more ways to tell you this...but under the FairTax...
the POOR PAY NO FED. TAXES.

Quote :

"but would people not have to pay taxes on their million dollar portfolios ?"

They will pay taxes on their portfolios as they spend their money. Let's say in one year Mr RichBags earn no income but still hold millions of dollars. He wouldn't pay any income tax.
Under FairTax, he will begin to pay fed tax whenever he spends money on goods and services.

2/6/2007 1:27:15 AM

either you are talking about an income tax, which you seem to be arguing against, or you are talking about a consumption. under a consumption tax of course the poor will pay more.
or do you plan on offering rebates to the poor?

Quote :

"http://www.fairtax.org/PDF/TaxingSalesUnderFairTax.pdf"

i said credibile.

2/6/2007 7:58:21 AM

Quote :

"They will pay taxes on their portfolios as they spend their money. Let's say in one year Mr RichBags earn no income but still hold millions of dollars. He wouldn't pay any income tax. Under FairTax, he will begin to pay fed tax whenever he spends money on goods and services."

So, what happens if they decide to retire somewhere outside the US?

2/6/2007 8:28:38 AM

david, I would assume the same thing that happens if they retire now and move. LOL

2/6/2007 9:18:36 AM

Not if their permanent residence was still in the US.

2/6/2007 9:24:11 AM

well if they take thier money overseas, I dont see how you can tax them..esp if they sold thier house. Im not sure what tax they would pay now if they did that?

2/6/2007 9:46:36 AM

Quote :

"under a consumption tax of course the poor will pay more."

For example, under FairTax a family of four can spend up to $19,600 per year without paying any fed tax. Each household recieves a monthly rebate equal up to the gov't poverty level to offset what they paid in sales tax. The Poor Pay No Fed Tax.

Quote :

"So, what happens if they decide to retire somewhere outside the US?"

Many people do this now to escape paying income tax. Look, people are going to try and cheat the system. People cheat the current system to the tune of millions of uncollected dollars.

2/6/2007 10:55:42 AM

Instate the fair tax, then watch the black market flourish and the tax revenues be less that projected.

2/6/2007 10:58:48 AM

Quote :

"For example, under FairTax a family of four can spend up to $19,600 per year without paying any fed tax. Each household recieves a monthly rebate equal up to the gov't poverty level to offset what they paid in sales tax. The Poor Pay No Fed Tax."

How are you planning on administering such a system?

2/6/2007 12:49:28 PM

Quote :

"watch the black market flourish "

With the FairTax, it will take at least two people to cheat the system. The retailer doesn't charge the customer the tax. Under the incom tax, it only takes one person to cheat.

In States, about 85% of the sales tax is collected by 15% of all businesses. Most of these retailers will not risk losing their business just to let you off the hook paying the sales tax. The individual States would be responsible for collecting the FairTax and sending it in to the Feds. Many states have sales taxes and are very effective at enforcing collection.

Will there be cheating? sure. But we have massive cheating now. In 2001, the IRS director stated that Americans avoided paying $290 Billion in income tax, even with increased staffing. So if the FairTax keeps cheating under that amount, we are winning.

The FairTax will eliminate a lot of the compliance costs since the IRS would now be watching about 15 million retailers instead of 130 million tax-filers. And the states would be doing all the collection grunt-work.

Quote :

"How are you planning on administering such a system?"

The rebate would be mailed out to each head of houselhold each month. The gov't currently mails out millions of social security checks, so that wouldn't be a problem. Eventually, you may see people being issued debit cards that are merely re-charged each month. This would result in more massive gov't savings.

2/6/2007 1:51:39 PM

Quote :

"The individual States would be responsible for collecting the FairTax and sending it in to the Feds."

I doubt that would work very well.

Quote :

"The rebate would be mailed out to each head of houselhold each month. The gov't currently mails out millions of social security checks, so that wouldn't be a problem. Eventually, you may see people being issued debit cards that are merely re-charged each month. This would result in more massive gov't savings."

is this magical fairy land or reality?

2/6/2007 10:35:19 PM

Have I mentioned that I would prefer a VVAT, or Visible Value Added Tax?

We would need to keep most forms of taxation: corporate, capital gains, inheritance, etc, because I don't think the tax should be any higher than 20%, cover whatever is left with targetted luxury taxes.

My favorite tax, the VVAT, has the same benefits of a regular VAT: each individual actor is only marginally taxed so the urge to cheat is minimal; it taxes exported goods; it is nearly impossible to avoid; it taxes both crooks and liars. The added feature to make the tax visible to the populous is an extra line on all receipts showing the approximate quantity of taxation. For example, if the final sale price was $120 the receipt will report that out of this purchase $20 was paid in taxes.

On top of that rebates can be issued, I suppose, varying depending on the number of dependents to maintain reduced or negative taxation rates on families, poor and otherwise.

2/7/2007 1:19:55 AM

Quote :

" because I don't think the tax should be any higher than 20%"

why?

i dont know enough to debate different types of value added vs visible value added vs current system, but I think the base of your assertion, that we would have to keep most of our taxes and pick the rest up with specific luxury taxes is something i would agree with.

2/7/2007 1:23:47 AM

While a few European contries have demonstrated that VAT's remain effective in excess of 20%, it just bugs me to think our Federal Government cannot manage to fullfill its meager duties with a whopping 20% of everything.

[Edited on February 7, 2007 at 1:36 AM. Reason : .,.]

2/7/2007 1:35:56 AM

Quote :

"receipts showing the approximate quantity of taxation"

That wiggle room makes me too nervous. VATs can hide specific taxes aimed at specific stages of production. Congress could add taxes at many different stages. Too much temptation to sneak in barely visible tax increases.

The FairTax would show a specific and more visible tax amount on your receipt. Everyone would notice immediately when the tax was increased.

2/7/2007 10:41:47 AM

I agree, even a VVAT is subject to sneaky maneuvers from Congress. So, we will need to be vigilant and watch the laws congress passes and write articles in the local newspaper condemning such behavior.

But this minor problem of oversight pales in comparison to the severe drawbacks of such a large sales-tax, which can also be monkeyed with (higher sales-tax on certain goods, etc).

2/7/2007 12:11:19 PM

^
So true.
Whatever system we put in place has to be watched closely. Politicians can only get away with this stuff if we aren't paying attention and let them.

2/8/2007 10:41:57 AM