I really don't understand people who disagree with consumption taxes on a basic level.

If a message board of college students/alumni can't wrap their heads around the benefits of consumption taxes then we'll never be able to sell the old & stupid on it.

It would promote rapid growth in the economy.

You don't champion growth by using a tax system that discourages WORK, SAVINGS, & INVESTMENT. Those are three drivers of the economy for gods sake.

3/25/2008 6:18:49 AM

You also don't champion growth by turning a large percentage of the population into criminals, as a 23+% consumption tax would.

3/25/2008 8:00:33 AM

Is fair tax the marketing term for a national sales tax?

3/25/2008 8:34:20 AM

Yes.

3/25/2008 8:39:35 AM

skokiaan, its not just a national sales tax, it also has a prebate and ends other forms of federal taxes.

Id be more for it if it didnt have the prebate (so we can do away with another govt dept to provide it) and just have food and clothes nontaxed.

Yes, people wont be punished for saving and being responsible...however, I think this will BOOM the economy as the majority of americans just cant stand having extra money.

3/25/2008 8:44:41 AM

Quote :

"You also don't champion growth by turning a large percentage of the population into criminals, as a 23+% consumption tax would. "

You can't just make blanket statements w/out explaining yourself. One of the arguments for the Fair Tax is that it will reduce tax evasion, charge drug dealers/etc on the money they make, and encourage people to keep their money in the US market as opposed to overseas. So how would this lead to more criminals? IMO it would discourage it. It has already been said that you may start a big black market, but that has already been discussed and I disagree that it would be any more of a problem than it is right now. If you sell shit underground, you still have to pay taxes with the money you earned when you buy from legit companies.

I'm not saying you're wrong, but I want to hear why you think MORE people would become criminals since the argument is that the FT would discourage this behavior.

3/25/2008 9:00:56 AM

one of the statements against the "blackmarket" arguement is currently it only takes one person to cheat on taxes, with the fairtax it will take two. fwiw

3/25/2008 9:03:01 AM

^^It fell off the truck.

3/25/2008 9:08:32 AM

^^I got that, I dont know how that would turn "a large percentage" of the population into criminals

[Edited on March 25, 2008 at 9:09 AM. Reason : ]

3/25/2008 9:08:53 AM

I think the hype about the supposed "economic boon" the FairTax proposal is another place where the rhetoric feels a bit overheated.

For example - we assume the tax is revenue-neutral. Taking the assumption that we make some moderate gains in efficiency (i.e., through compliance costs), the net inflow to the Federal Government is assumed to be relatively constant - so all that money is still getting diverted away from the private sector. A little less is diverted, since compliance costs are lowered, but generally the Fed is ending up with the same order of magnitude of the GDP.

About the only case I can see where any net difference occurs - assuming no net change in consumer behavior - is in the net inflow of "sheltered capital" back to the U.S. from corporations keeping assets overseas. Which brings about two points - first, what is the actual proposed net effect of these corporations keeping their assets here rather than in Bermuda? i.e., are we to really expect such a significant difference?

Second, if this end is the largest economic lever of the FairTax, its effect can easily be duplicated even with very modest changes to the tax code: eliminate (or drastically reduce) the corporate income tax, and the effect of capital inflow would essentially be the same. In that sense, the proposal isn't entirely necessary to capture the gains it claims it would bring - it simply exposes a larger moral hazard in the existing tax structure.

3/25/2008 9:45:30 AM

Quote :

"I'd be skeptical that businesses would actually adjust prices to reflect the supposed 24% savings on their production"

Businesses might try to 'keep' the embedded tax savings for themselves, but competition will eventually get them. They will get more by keeping their customers happy than keeping the tax savings of buyers who are racing over to competitors.

Quote :

"like once this were to happen it would be hard to change if it fucks up? "

Our country has been run on a number of tax systems throughout history. Like the AMT, the income tax was originally sold to the public as a way to get the super-rich to pay taxes. Americans were told that only 1% of the country would ever have to fill out a return.

We've been under this onerous income tax for so long now that it seems permament, but it isn't. We have changed systems before and can do it again.

3/25/2008 9:46:48 AM

Quote :

"about 85% of statistics are made up on the spot"

drunknloaded, 55% of lobbyists in DC are indeed tax lobbyists

Quote :

"I'd be skeptical that businesses would actually adjust prices to reflect the supposed 24% savings on their production, to make it so that we aren't being shafted with a 30% sales tax."

Talk to any economist worth their salt, and they'll tell you it'll drop.

A couple years ago, legislation was set to expire at midnight that required people to pay a TSA fee when they bought an airplane ticket. This fee was on the order of a few dollars. How long did it take airline fares to drop as airlines tried to one up each other? A couple hours. Don't underestimate a company's drive to beat the other guy.

Quote :

"On top of that, that 23% was an average"

This is true. The reason it's a flat 23% on everything though is to take away power from politicians. Right now, politicians buy votes my promising tax breaks for this company or for this segment of the population. Under the Fair Tax, if politicians want to raise taxes, they have to raise them on EVERYONE. Think how hard that would be.

Quote :

"Id be more for it if it didnt have the prebate (so we can do away with another govt dept to provide it) and just have food and clothes nontaxed."

The Fair Tax would never be passed in congress without the prebate. And it would hardly change the amount of taxes the poor are paying now. Also, should people be taxed on what you need to survive? Keep in mind EVERY household regardless of income will get this check. Once again, no playing favorites.

Something else to think about. Major credit card companies have come forward and volunteered to distribute the prebate funds to people. They've even offered to PAY the government for the privilege.

Also, the idea of not taxing food and clothes would open the door for other items to be exempt, then we'd have another complicated tax mess on our hands. Besides, should the billionaire spending thousands of dollars on catering for a single get together not pay the tax?

3/25/2008 9:48:58 AM

Quote :

"drunknloaded, 55% of lobbyists in DC are indeed tax lobbyists"

I'm willing to bet industry lobbyists who have lobbied on behalf of their industry to get a tax cut or tax exemption get classified as a tax lobbyist. You could make the argument that every single real estate and home builder lobbyist in North Carolina last year was a tax lobbyist. But that doesn't make them one.

3/25/2008 10:04:15 AM

Quote :

"I'd be skeptical that businesses would actually adjust prices to reflect the supposed 24% savings on their production, to make it so that we aren't being shafted with a 30% sales tax."

I'm gonna agree with the others that this will NOT be the case. If there are 10 companies making widgets and they pass the Fair Tax, one of those 10 companies WILL drop their prices to achieve an edge on the other 9. The others will follow suit, some even dropping their prices more until you have equilibrium.

3/25/2008 10:23:44 AM

Quote :

"I'm gonna agree with the others that this will NOT be the case. If there are 10 companies making widgets and they pass the Fair Tax, one of those 10 companies WILL drop their prices to achieve an edge on the other 9. The others will follow suit, some even dropping their prices more until you have equilibrium."

That assumes that the consumer base is liquid. The evidence tends to point in the opposite direction.

[Edited on March 25, 2008 at 10:26 AM. Reason : .]

3/25/2008 10:25:20 AM

What the hell kind of statistics are you looking at?


If you're a business owner and all of a sudden you have a product that is priced 23% above equilibrium, are you telling me you're not going to attempt to gain a competitive edge by decreasing your prices?

Take an econ course.

[Edited on March 25, 2008 at 10:27 AM. Reason : my response was to the edited portion of nutsmackers that you can no longer see.]

3/25/2008 10:26:26 AM

Quote :

"What the hell kind of statistics are you looking at? If you're a business owner and all of a sudden you have a product that is priced 23% above equilibrium, are you telling me you're not going to attempt to gain a competitive edge by decreasing your prices? Take an econ course."

econ and business management are different. Just look at the airline industry. One company raises its costs and all the others quickly follow suit.

3/25/2008 10:28:20 AM

Quote :

"I'm willing to bet industry lobbyists who have lobbied on behalf of their industry to get a tax cut or tax exemption get classified as a tax lobbyist. You could make the argument that every single real estate and home builder lobbyist in North Carolina last year was a tax lobbyist. But that doesn't make them one."

Actually, all lobbyists in DC have to register as lobbyists. So I doubt every real estate and home builder in NC is considered a tax lobbyist. However, some may have hired lobbyists to speak on their behalf.

Once again, about half of the lobbyists in DC are tax lobbyists. Without a tax code that's easy to manipulate, these people are out of jobs, and maybe politicians will begin to listen more to the people who hired them in the first place.

3/25/2008 10:30:06 AM

As for issues concerning price drops after the implementation of the Fair Tax, here's how it would work. Once the Far Tax is passed, and the income tax repealed, the Fair Tax would go into effect on Jan 1 of the next year. It won't be something unexpected.

This means businesses will have months to prepare. Months to figure out how they can undercut the other guy, and ALL of them are going to see who can be first out of the gate with the lowest prices to try and get as much market share as possible.

3/25/2008 10:33:55 AM

Quote :

"Actually, all lobbyists in DC have to register as lobbyists. So I doubt every real estate and home builder in NC is considered a tax lobbyist. However, some may have hired lobbyists to speak on their behalf. Once again, about half of the lobbyists in DC are tax lobbyists. Without a tax code that's easy to manipulate, these people are out of jobs, and maybe politicians will begin to listen more to the people who hired them in the first place. "

I never said they were all lobbyists. I did say their lobbyists were lobbyists. You make the fatal assumption that all those "tax lobbyists" lobby for are taxes. In reality, they lobby for a specific industry or cause and if a tax becomes part of their clients concern then they lobby on that. That does not make them a tax lobbyist and removal of the tax code doesn't take their job away either.

Quote :

"This means businesses will have months to prepare. Months to figure out how they can undercut the other guy, and ALL of them are going to see who can be first out of the gate with the lowest prices to try and get as much market share as possible."

and CDs were going to cost less than cassettes. LOLOLOLOLOLOLOLOL

[Edited on March 25, 2008 at 10:34 AM. Reason : .]

3/25/2008 10:34:05 AM

Wouldn't it be possible to test something like this in individual states before implementing it on a national level? Say, exempt one state from paying income/corporate taxes and just raise the sales tax. Michigan would be a good place to try it, I think. Their economy is already in the shitter and it shouldn't be hard to improve it if this is a legitimate idea. The disproportionate number of poor people would showcase how this is a regressive tax though, in my opinion.

It also seems like fraud and tax evasion would be way easier to get away with under the FairTax. Someone said companies wouldn't be charged for purchases? But what about when the company is the consumer. What about computers and office supplies that are sold directly to companies or schools or whatever without ever passing through a retail store. It seems like the government would have to track every individual transaction which would result in an increase in bureaucracy, which seems to be one of main selling points for this tax.

Also, can anyone find me a chart or something that shows the sources and percentages of tax revenue for the country? I looked, but can't find one.

[Edited on March 25, 2008 at 11:07 AM. Reason : ]

3/25/2008 10:43:52 AM

^ That means to pass the Fair Tax, it would require 2 constitutional amendments. One to modify the constitution so only Michigan is exempt from the income tax, and then again to get rid of it completely. Way too much work and way too hard. I want to say another small country may have implemented it already, but I'm not sure and I'm having trouble finding out. Anyone know?

Fraud wouldn't be nearly as easy. As stated before, right now it only takes 1 person to cheat on their taxes, and there's a lot more people who could be cheating. Over a hundred million more. Under the Fair Tax, two people would have to cheat, the seller and the buyer, making it much harder. And with only businesses to keep track of and not individuals, the government could keep a closer eye on things.

As for business to business sales, only products sold to the end consumer (you and me) would be taxed. If a company buys staplers for their office, they don't get taxed. The companies themselves would keep track of their transactions, as they already do anyway. Did you know every year, companies have to count every single item of value in their business? From the computers, to the desks, everything, so they can pay property taxes on them each year.

Taking away the hassle of payroll taxes, corporate income taxes, capital gains taxes, and income taxes and tell companies they only have to keep track of purchases in case of an audit will make things a lot simpler. And companies will welcome it.

[Edited on March 25, 2008 at 11:13 AM. Reason : typo]

[Edited on March 25, 2008 at 11:13 AM. Reason : ]

3/25/2008 11:11:46 AM

Quote :

"^ That means to pass the Fair Tax, that require 2 constitutional amendments. One to modify the constitution so only Michigan is exempt from the income tax, and then again to get rid of it completely. Way too much work"

Why would the Constitution have to be amended at all?

and I you bought into too much disinformation.

3/25/2008 11:14:30 AM

Quote :

"As for issues concerning price drops after the implementation of the Fair Tax, here's how it would work. Once the Far Tax is passed, and the income tax repealed, the Fair Tax would go into effect on Jan 1 of the next year. It won't be something unexpected."

Why is everyone assuming markets will adjust to take the money which was originally taxed through wages and grant it to customers?

The company promised to pay me $50,000 a year. It is in my contract. Just because it stops withholding 25% of it for the IRS does not make my salary $37,500. Such would be a violation of my contract with my employer.

As such, this story is much more complicated than the FT people let on. Wage costs will not change, as such costs have not changed. While the elimination of corporate taxes would over-time increase competition and drive down prices, even with fore-warning this process will take awhile, and no amount of corporate competition will drive down wages. On the contrary, increased corporate competition will tend to drive up wages before it starts driving down prices.

In effect, the government will have overnight re-negotiated every wage in the country higher, some by 15%, others by 35%. Everyone will feel richer, until they find the 23% sales tax at the store.

So, the economic assertion that prices will fall by 23% is absurd; marginal costs will not have changed, so prices before the tax will largely remain the same. As such, prices for new goods after the tax will be 23% higher. Overall, this would appear to most as a sudden onset of overnight inflation in the amount of 23%. Prices jumped 23%, wages jumped in accordance with your earlier income tax bracket. What will not have changed, of course, is everyone's bank account, which is still the same size as it was before the changeover, it just buys 23% less.

As for my earlier assertion: income taxes require at least two people to be criminal: one person to pay you and not declare it to the IRS, and you to accept payment and not declare it to the IRS. It is the same with the FT: one person to sell you a good and not declare it to the IRS, and you to buy it and not declare it to the IRS.

The difference, to me, is the average customers buying a flatscreen TV off the back of a truck, from his neighbor, or from a store has no way of knowing if a crime has been commited or if the price is just cheap. Especially when the receipt given to the customer says the tax was collected; how is the customer to know different? Or, how is the customer to know that the TV was new when the seller proclaims it has been in use for years?

The income tax cannot be evaded in the same way. Under the income tax, both the employer and employee make declarations to the IRS; neither has any way of knowing what the other party reported; so failure to report honestly has a high probability of getting caught.

Finally, doing away with all corporates taxes is fine if, and only if, congress at the same time eliminates liability protection for stock holders. Such protection was a gift in exchange for paying taxes in the first place, and it was a bad deal for society at large.

3/25/2008 11:15:47 AM

let's also not forget about the rampant inflation that will be a result of the Fair Tax.

3/25/2008 11:17:56 AM

Quote :

"As for business to business sales, only products sold to the end consumer (you and me) would be taxed. If a company buys staplers for their office, they don't get taxed. The companies themselves would keep track of their transactions, as they already do anyway. Did you know every year, companies have to count every single item of value in their business? From the computers, to the desks, everything, so they can pay property taxes on them each year."

Don't you see how easy this makes fraud now? The government would have to track trillions of transactions every year. Also, what if a company buys items for its workers? That's technically fraud under the FairTax. So much collected sales tax revenue would be lost because companies are, themselves, a large consumer in the economy that it would throw off the estimated amount of revenue.

I also have no problem seeing two entities helping each other to pay less in taxes. You seem to think that the same people who work so hard to evade taxes now will become completely trustworthy as soon as we switch to this new system.

3/25/2008 11:21:24 AM

Quote :

"Everyone will feel richer, until they find the 23% sales tax at the store. So, the economic assertion that prices will fall by 23% is absurd; marginal costs will not have changed, so prices before the tax will largely remain the same. As such, prices for new goods after the tax will be 23% higher. Overall, this would appear to most as a sudden onset of overnight inflation in the amount of 23%. Prices jumped 23%, wages jumped in accordance with your earlier income tax bracket. What will not have changed, of course, is everyone's bank account, which is still the same size as it was before the changeover, it just buys 23% less."

30%. If we are to take your scenario at its literal interpretation (i.e., static price), the net tax is an additional 30% surcharge to the price. So the end cost has increased by 30% - 23% is, again, the "inclusive" rate.

This is why advertising the rate as "23% inclusive" bugs me.

A sidebar, however - while the employer's contract on the income tax wouldn't go away, they would have 6.5% of a FICA contribution which would vanish (the employer half of the contribution, which is not considered part of your salary). So, you would see a slight drop in overhead, although this would still not be the dramatic drop proposed by FT proponents. So the objection still has merit.

[Edited on March 25, 2008 at 1:29 PM. Reason : FICA]

3/25/2008 1:17:46 PM

Quote :

"Why would the Constitution have to be amended at all? "

The federal income tax is the 16th amendment to the constitution. To change or remove that amendment would require either another amendment, or a vote to remove it.

[Edited on March 25, 2008 at 1:25 PM. Reason : the 9 was right above the 6]

3/25/2008 1:19:02 PM

16th. 19th is universal suffrage.

3/25/2008 1:19:58 PM

Quote :

"The federal income tax is the 19th amendment to the constitution. To change or remove that amendment would require either another amendment, or a vote to remove it."

If implementation of the Fair Tax and the removal of the income tax were to be the goal, then a Constitutional Amendment would be entirely unnecessary. A Constitutional Amendment only creates a larger barrier for your FT people.

3/25/2008 1:20:56 PM

Quote :

" Don't you see how easy this makes fraud now? The government would have to track trillions of transactions every year. Also, what if a company buys items for its workers? That's technically fraud under the FairTax. So much collected sales tax revenue would be lost because companies are, themselves, a large consumer in the economy that it would throw off the estimated amount of revenue. I also have no problem seeing two entities helping each other to pay less in taxes. You seem to think that the same people who work so hard to evade taxes now will become completely trustworthy as soon as we switch to this new system."

I addressed the fraud issue earlier as well as the issue of tracking transactions. I don't think people will "become completely trustworthy as soon as we switch to this new system". In fact, I said just the opposite. I said fraud would still occur, as there will always be people trying to cheat the system, but laid out arguments as to why they would be minimal. Please go back and read all the posts before adding your opinion. Otherwise this thread will just keep repeating itself over and over.

[Edited on March 25, 2008 at 1:23 PM. Reason : ]

[Edited on March 25, 2008 at 1:23 PM. Reason : ]

3/25/2008 1:22:44 PM

^^ I believe the stated goal of a constitutional amendment would be to "salt the earth" - i.e., to totally prevent an income tax from returning under the FairTax plan, while it was in place. In other words, to avoid having a NST and an income tax.

[Edited on March 25, 2008 at 1:23 PM. Reason : ^^]

3/25/2008 1:23:03 PM

^ exactly

3/25/2008 1:24:04 PM

I could theoretically see a drastic cut in the income tax and a supplement with a NST or VAT. But whatever system we have, there needs to be some form of the Income tax.

3/25/2008 1:27:29 PM

Quote :

"But whatever system we have, there needs to be some form of the Income tax."

Why do you feel this way?

If you tax something, you create a disinsentive. We want people to work hard and save and invest. Our current tax system encourages spending and discourages investment by taxing it twice, and heavily.

If you read the benefits in the first post, a tax on only consumption would revitalize this economy and make us a almost unbeatable on a global market.

If we drastically lower the income tax and supplement it with a VAT or NST, the income tax will only creep up over time and we'll be stuck with two taxes instead. Politicians won't be able to resist the urge to buy votes by saying, "We'll tax those evil rich people over there and give you tax breaks!". Which is how it was originally sold to the public. Politicians promised the income tax would ONLY tax the top 1% of income earners. That's changed a lot now hasn't it?

We know we can't trust politicians not to use power where they can get it, so why not take away the option entirely?

3/25/2008 1:34:58 PM

^^ why? It's clear that income tax is the most difficult to collect and creates the largest red tape burden of any taxes out there. If we could get rid of one type of tax, this should be it.

We're not where close to that, but you know.

[Edited on March 25, 2008 at 1:36 PM. Reason : ]

3/25/2008 1:36:24 PM

LoneSnark, I'm afraid you've completely misunderstood how the Fair Tax works. Please go back and reread some earlier posts.

3/25/2008 1:36:54 PM

Quote :

" Conclusion Like other consumption taxes, the full replacement retail sales tax has pro-retail growth features. Nevertheless, the Panel does not recommend a full replacement retail sales tax. Without a large cash grant program to ease the burden of the tax, a retail sales tax would not be appropriately progressive. A cash grant program to make the tax appropriately progressive would cost at least $600 billion per year – which would make it America’s largest entitlement program. The Panel concluded that it was inappropriate to recommend a tax reform proposal that required the federal government to collect and redistribute this amount in additional revenue from taxpayers. The Panel also was concerned with administrative and compliance issues associated with a retail sales tax, as well as difficulties involving coordination with existing state sales taxes. "

http://www.taxreformpanel.gov/final-report/TaxReform_Ch9.pdf

Original:

http://www.taxreformpanel.gov/final-report/

I mean instead of creating an entire, complicated and short sighted tax system using your own dimwitted intellectual resource, at least try and understand what other people have come up with first.

3/25/2008 1:38:16 PM

Quote :

"LoneSnark, I'm afraid you've completely misunderstood how the Fair Tax works. Please go back and reread some earlier posts."

Read: You completely disagree with me. Please leave and stop posting your logic in my thread.

3/25/2008 1:43:28 PM

Quote :

"I mean instead of creating an entire, complicated and short sighted tax system using your own dimwitted intellectual resource, at least try and understand what other people have come up with first."

Firstly, I'm not using my "dimwitted intellectual resource", I'm drawing on the knowledge of Harvard economists and others who designed this plan. Note, it's also the ONLY tax reform plan created entirely by the private sector and not the government.

Second, the president's tax reform panel did not look at the Fair Tax plan. They looked only at a generic national sales tax plan.

The Fair Tax removes all payroll taxes, the panel did not take this into account when saying a large cash grant program would be needed.

The Fair Tax removes all corporate income taxes and capital gains taxes, the panel did not take this into account.

I repeat the Fair Tax was not considered by this panel. Prices on products as a whole would barely change, so costs of items would not be an issue.

Compliance issues have been beat to death in this thread already. Read above.

Implementation would by far be the easiest part of this. Most states already collect sales taxes, the infrastructure is already in place. Also, states would be reimbursed a small percentage of the sales tax collected to mitigate collection costs. And yes this cost was accounted for when arriving at the 23% tax rate.

So, SandSanta, I suggest you actually read the source your quoting so that you don't appear "short sighted" or appear to be "dimwitted" intellectually.

[Edited on March 25, 2008 at 1:48 PM. Reason : typo]

3/25/2008 1:48:24 PM

Quote :

"why? It's clear that income tax is the most difficult to collect and creates the largest red tape burden of any taxes out there. If we could get rid of one type of tax, this should be it."

What makes the income tax harder to collect than a sales tax?

3/25/2008 1:49:51 PM

Quote :

" Read: You completely disagree with me. Please leave and stop posting your logic in my thread."

He said prices would jump 23%. He completely ignored, or chose not to read, the part about the embedded taxes we already pay.

I have no problem with logical criticisms. I do however take issue with people making baseless claims without fully understanding the topic they're arguing.

[Edited on March 25, 2008 at 1:52 PM. Reason : ]

3/25/2008 1:50:38 PM

Quote :

"What makes the income tax harder to collect than a sales tax?"

It costs Americans something along the lines of $400 billion dollars filing taxes so the government can collect about $900 billion.

10 people can call the IRS with a tax question and get 10 different answers. Wrong ones. (This isn't hyperbole, this is truth, and this was actually done)

As of 2003 there were 50,000 pages of income tax code. The Fair Tax is a couple hundred.


With the Fair Tax, sales tax is collected as usual, except more money is collected. Much simpler.

3/25/2008 1:58:04 PM

Quote :

" It costs Americans something along the lines of $400 billion dollars filing taxes so the government can collect about $900 billion. 10 people can call the IRS with a tax question and get 10 different answers. Wrong ones. (This isn't hyperbole, this is truth, and this was actually done) As of 2003 there were 50,000 pages of income tax code. The Fair Tax is a couple hundred. With the Fair Tax, sales tax is collected as usual, except more money is collected. Much simpler."

You make some pretty outlandish statements without providing any sort of citation. Likewise, brevity isn't always simplicity. Other than making the tax code shorter I have yet to see how this would make anything easier. You have already acknowledged the ability to defraud the system, which is why you mention the government going up people's asses. If anything, the Fair Tax would only provide for a more cumbersome tax system in which people and companies will constantly have questions on whether or not a certain purchase is taxable. Fraud, intended and unintended, will plague the system from the get go.

3/25/2008 2:16:14 PM

Quote :

" Second, the president's tax reform panel did not look at the Fair Tax plan. They looked only at a generic national sales tax plan. The Fair Tax removes all payroll taxes, the panel did not take this into account when saying a large cash grant program would be needed. The Fair Tax removes all corporate income taxes and capital gains taxes, the panel did not take this into account. I repeat the Fair Tax was not considered by this panel. Prices on products as a whole would barely change, so costs of items would not be an issue. Compliance issues have been beat to death in this thread already. Read above. "

with

Quote :

" The Panel considered a number of proposals to reform the income tax, including replacing the entire income tax system with a broad-based national retail sales tax. A retail sales tax is perhaps the most obvious form of consumption tax because it is imposed on the final sales of goods and services to consumers. Like other consumption taxes, the retail sales tax does not tax normal returns to saving and investment and thus may lead to greater economic growth than our current tax system. "

/any validity your points might of had.

3/25/2008 2:22:56 PM

^ I fail to see your point with that quote. The tax panel studied a tax plan that got rid of only the income tax, and replaced with only a national sales tax, with no talk of payroll taxes, prebates, etc. All you did was reiterate my point.

Please read what the Fair Tax will actually do, then reread the tax panel's study. You'll find they're entirely different. Then come back to me with thoughts, opinions, etc.

[Edited on March 25, 2008 at 2:45 PM. Reason : ]

3/25/2008 2:44:04 PM

Quote :

"He said prices would jump 23%. He completely ignored, or chose not to read, the part about the embedded taxes we already pay. I have no problem with logical criticisms. I do however take issue with people making baseless claims without fully understanding the topic they're arguing."

Except that he did make a logical argument, that being that salaries aren't going to necessarily go down by 30% with the advent of the tax changeover, as that comes from the employee's portion of the pay. So, minus FICA on the employer side, the employer still has the same overhead as far as staff costs go. Frankly, it's a valid criticism that deserves more than a brush-off.

Quote :

"Second, the president's tax reform panel did not look at the Fair Tax plan. They looked only at a generic national sales tax plan."

What made their criticisms substantially inapplicable to the FairTax plan?

Quote :

"The Fair Tax removes all payroll taxes, the panel did not take this into account when saying a large cash grant program would be needed."

What exactly is the "prebate" portion of the FairTax plan if not a "large cash grant program?" With or without payroll taxes getting the axe, the large cash rebate is an inherent part of your own proposal, something this panel explicitly considered as to the question of countering regressivity. They essentially considered the FairTax plan in all but name only.

Quote :

"The Fair Tax removes all corporate income taxes and capital gains taxes, the panel did not take this into account."

Actually, I'm pretty sure they did, given that their own proposal addresses these two. Regardless, this is not a substantial rebuttal to the flaws they point out.

Quote :

"I repeat the Fair Tax was not considered by this panel. Prices on products as a whole would barely change, so costs of items would not be an issue."

This assumes several things - a fast equilibrium transition with little arbitrage, as well as what LoneSnark pointed out, that being the "stickiness" of staff overhead costs.

Quote :

"Compliance issues have been beat to death in this thread already. Read above."

They've been addressed, that hardly makes them non-trivial.

Quote :

"Implementation would by far be the easiest part of this. Most states already collect sales taxes, the infrastructure is already in place. Also, states would be reimbursed a small percentage of the sales tax collected to mitigate collection costs. And yes this cost was accounted for when arriving at the 23% tax rate."

The issue they're pointing out is that typically sales taxes are exclusively collected by states. Adding in the Federal Government into sales taxes - even a little (i.e., with any NST, not just the FairTax) is going to complicate things. That's just a fact - it's not really a matter of debate.

[Edited on March 25, 2008 at 3:13 PM. Reason : more]

3/25/2008 3:07:14 PM

Quote :

"Wouldn't it be possible to test something like this in individual states before implementing it on a national level? Say, exempt one state from paying income/corporate taxes and just raise the sales tax. Michigan would be a good place to try it, I think. Their economy is already in the shitter and it shouldn't be hard to improve it if this is a legitimate idea. The disproportionate number of poor people would showcase how this is a regressive tax though, in my opinion. "

IIRC, florida collects all their state taxes in this manner. some other states do as well.

my $.02...as long as people can show the revenue to the government to be neutral, I am all full the fair tax...either that, or a flat percentage for everyone to pay. this complicated, backwards shit we have now has to go.

3/25/2008 3:18:00 PM

so the government is going to give you the money at the beginning of the month? and then get 23 percent of it back guarenteed? this seems odd...i'm trying to like conceptualize it and shit

3/25/2008 3:22:00 PM

I don't see how people say this lets the rich people off in that it's a consumption tax... rich people buy more stuff and more expensive stuff thus locating the burden of tax on them.

3/25/2008 3:24:19 PM