a conservative's estimate...har har har

2/15/2006 10:22:22 AM

With the FairTax, every wage earner will have more take-home pay to spend, save and invest, supporting economic growth in every way. Work, savings and investments will no longer be penalized. Savings and investments will grow b/c citizens will no longer pay taxes on their investment income, including earnings from life insurance investments. The resulting increased savings will expand the pool of funds available for lending and will in turn bring DOWN interest rates.

With the elimination of the payroll tax and related compliance costs, the cost of doing business in this country will drop dramatically. The United States will be the only country in the world with a zero rate of tax on income, ensuring it becomes the most attractive place for foreign companies to locate facilities and CREATE JOBS. Capital lost to foreing investment will be repatriated to our shores and foreign investment will increase in American plants and facilities. (The fact that the Daimler-Benz HQ was relocated to Germany after the "merger", was almost purely a tax decision, if the FairTax was in effect at that time, this almost assuredly would not have happened. This is just ONE example.)

2/15/2006 10:47:41 AM

im still kinda confused how a consumer tax is supposed to encourage spending

2/15/2006 10:50:36 AM

Forgot to mention one more thing, I'm quoting the FairTax website:

Quote :

"Most importantly, the FairTax does not burden U.S. exports as they are with the current income tax. So the FairTax allows U.S. exports to sell overseas for prices 22 percent lower, on average, than they do now, with similar profit margins. Lower prices sharply increase demand for U.S. exports, thereby increasing job creation in U.S.manufacturing sectors. At home, imports are subject to the same FairTax rate as domestically produced goods. Not only does the FairTax put U.S. products sold here on the same tax footing as foreign imports, but the dramatic lowering of compliance costs in comparison to other countries' value-added taxes also gives U.S. products a definitive pricing advantage which foreign tax systems cannot match."

This would definitely help our trade deficit as well, which any economist will tell you is a much bigger issue than our budget deficit.

2/15/2006 10:56:45 AM

Quote :

"im still kinda confused how a consumer tax is supposed to encourage spending "

Because, you're taking home 100% of your paycheck (ie. you make $50K a year, you take home $50K a year) so you have more money to spend on products that will be about the same price as they were before. So if you take the ratio of the product price to your take-home pay, its much cheaper. Therefore, if a good is cheaper to you, it encourages spending.

Obviously, the fact that you can save money and pay no taxes or spend it and pay tax encourages savings as well. THIS IS A GREAT THING, THIS IS WHAT THIS COUNTRY NEEDS. We as a country spend way too much money already. ( I believe in 2004, as a country, we consumed about 1% more than we earned!, that should NEVER happen). Saving is the key to the lower-class (even the middle-class these days) creating wealth, not living paycheck to paycheck and working their way into debt.

2/15/2006 11:06:08 AM

but if im poor im probably taking home all or most of my paycheck already
and now stuff costs more

2/15/2006 11:08:53 AM

Quote :

"Couldn't we just flatten and simplify the income tax system?"

L-Snark, we tried this in 1986 with Reagan's tax reforms. It basically lowered rates and eliminated many deductions. Over the years, the tax code has been complicated more and more until it's the mess we have now. Now once the Fairtax is passed, politicians will try to corrupt it in order to further their goals. But, because of the transparancy of the tax, it will be much more difficult to quietly sneak through adjustments which help special interest groups.

No matter what system is in place, it's the taxpayer's responsibility to keep an eye on those rascally politicians.

2/15/2006 11:30:53 AM

Quote :

"Obviously, the fact that you can save money and pay no taxes or spend it and pay tax encourages savings as well. THIS IS A GREAT THING, THIS IS WHAT THIS COUNTRY NEEDS. We as a country spend way too much money already. ( I believe in 2004, as a country, we consumed about 1% more than we earned!, that should NEVER happen). Saving is the key to the lower-class (even the middle-class these days) creating wealth, not living paycheck to paycheck and working their way into debt."

you ever think that income tax ISNT the problem when it comes to ppl not saving and working themselves into debt? i dont even see how it logically follows. if you dont have any money, taxes or no, you have to spend that shit. add onto that ppl wanting more than they can afford and taxes are the least of their worries.

2/15/2006 11:38:40 AM

Quote :

"ppl wanting more than they can afford and taxes are the least of their worries."

True..the FairTax won't fix people with no self-control. But it will help those who do have self-control in their spending.

2/15/2006 11:46:10 AM

Obviously the tax isn't the sole problem, but it definitely doesn't encourage saving as the FairTax does.

Not to mention poor people (as well as everyone else) will receive 100% of their income every paycheck, in addition to a prebate for the tax due on necessities.

2/15/2006 11:53:55 AM

and you dont see how the prebate system is also going to become overly complicated?

2/15/2006 12:23:54 PM

Quote :

"Over the years, the tax code has been complicated more and more until it's the mess we have now."

It took me roughly 20 minutes to do my taxes the other day.

In fact, the entire U.S. income tax code, all 50 states' tax codes, and a nice GUI can fit onto one H&R Block CD.

2/15/2006 12:44:50 PM

Quote :

"and you dont see how the prebate system is also going to become overly complicated?"

The prebate system would actually be very uncomplicated. Congress sets an amount that a family of 'x' number of people need to survive. Each household registers the amount of people in their household with Social Security numbers in one centralized database, and a check is sent each month for that household that will cover the tax for the amount of necessities. Very simple.

Quote :

"It took me roughly 20 minutes to do my taxes the other day. In fact, the entire U.S. income tax code, all 50 states' tax codes, and a nice GUI can fit onto one H&R Block CD. "

Over 20,000 pages of complex regulations have been created to govern our income tax code, which consists of over 1.3 million words, according to a study by the Joint Committee on Taxation. Due to this complexity in the Internal Revenue Code, tax compliance alone costs Americans $250 billion a year.

That doesn't seem all that simple to me, whether you can fit it on a 1 cd or not.

That's great that it only took you 20 mins. 1) You may or may not have gotten all rebates entitled to you. 2) For many Americans it takes much longer, and more than half push it off to tax 'professionals' (who make as many mistakes or more) which cost even more money. When you start to add in many different sources of income like capital gains, interest/dividend payments, rental income as well as all the different deductions it can get quite cumbersome.

2/15/2006 1:10:13 PM

i think thats too simple to work

2/15/2006 1:16:35 PM

Well I appreciate your opinion.

2/15/2006 1:17:17 PM

so if im poor and im getting a check each month couldnt i just not work
that sound pretty sweet

2/15/2006 1:20:29 PM

Well, let's think about this. If congress is giving you a stipend for the TAX due on the necessities to live, then you're not going to make it very long, unless you're letting people in your family die of hunger while you take all the money.

2/15/2006 1:42:02 PM

Quote :

"Obviously the tax isn't the sole problem, but it definitely doesn't encourage saving as the FairTax does."

i hear you but im saying that encouragment doesnt make much (if any) of a difference to most ppl with problems saving money.

i also have said and still agree that the prebate either has to be overly complex (which it currently isnt) or will have problems.

there just seems to be some piece of the puzzle that is missing whether i can disect fairtax effectively or not. replacing a bloated and complex system with a (pretty much) sentence long tax plan logically has to have some issues.

2/15/2006 5:04:41 PM

Why can't it be that easy? I think we're just so used to the way big government applies red tape to everything that we think that things can't be that easy.

We've grown up all our lives, as have our parents and grandparents, with an income tax, so we think it must be the best way. This is just some outside the box (albeit very simple) thinking, that makes too much sense.

And this legislation won't come from politicians because it takes away power from them. The only way they will listen is if their jobs are threatened, that's why this has to be a grassroots effort. If they see the movement gaining popularity with their voters, then obviously they will jump on.

2/15/2006 6:35:26 PM

By the way, if anyone's even remotely interested in the FairTax, there is a networking and educational event at the Carolina Inn in Chapel Hill on February 25th at 9am. There will be guest speakers there and you can fire your questions and/or arguments at them.

2/15/2006 6:38:35 PM

duke needs to make it so you can only post once per thread every 30 mins, cuz you cant handle the responsibility of editing your own posts.

as far as simplicity is concerned...if it is so easy, why dont all the other industrialized nations do it?

2/15/2006 7:09:59 PM

Quote :

"but if im poor im probably taking home all or most of my paycheck already and now stuff costs more"

No you don't. I make just about the poverty line and almost 20% of my paycheck gets taken out each check. Sure most of that comes back at the end of the year, but I'd rather have it now to put into things like savings and invesments.

2/15/2006 9:41:37 PM

^ They do. Canada has the sales tax, Europe has the VAT. Sales tax is very popular the world over. The only difference is that only America has a government small enough to fun everything using just one form of taxation.

2/15/2006 9:43:20 PM

^^then you suck at filling out your paperwork when you started the job

2/15/2006 9:45:07 PM

Quote :

"replacing a bloated and complex system with a (pretty much) sentence long tax plan logically has to have some issues."

That feeling you're getting, cyrion, is your innate common sense realizing that this plan can work and is much simpler than the mess we currently have to suffer with. Sure there will be some bumps in the road, but those can be worked out.

If we can put a robot on Mars, we can fix our tax code. The main necessity is the political willpower to do it. Politicians and lobbyists will fight this hard, because they will be losing a lot of the power they hold over us now.

If, once the FairTax is in place, we actually start shrinking the size and cost of the federal gov't, that 23% starts to decrease. We paid for our federal gov't for many years with just tariffs and duties. The 1894 income tax passed by congress was struck down by the Supreme Court as violating the Constitution. That's why politicians had to use wealth envy to get the 16th amendment through that allowed for the tax.

[Edited on February 15, 2006 at 10:51 PM. Reason : .]

2/15/2006 10:50:39 PM

boy am i glad to see this pile of shit at the top again

2/16/2006 7:21:08 AM

Quote :

"If we can put a robot on Mars, we can fix our tax code. "

They tried to fix the tax code once but they screwed up because one agency working on the tax code was using english units of measurement while the others were using metric.

2/16/2006 8:05:03 AM

^ har har

and i dont think comparing america in 1894 to america today is a good comparison by any means.

2/16/2006 9:17:55 AM

FairTax = good for rich republicans

-ZiP!-

2/16/2006 9:19:11 AM

So all democrats are poor?? John Kerry, Ted Kennedy, The Clintons, Joe Biden, Tom Dashle, John Edwards, Erskine Bowles.... Yep, they're all poor.

^you're statement has no credibility. There are more rich democrats than republicans. Republicans build their wealth, Democrats inherit theirs or win it in frivolous lawsuits.

2/16/2006 10:11:08 AM

Quote :

"FairTax = good for rich republicans"

Here's a good response...

Quote :

"Embedded taxes change FairTax analysis William Donald Tabor Jr. co-state director for FairTax.org in Virginia. Recent letters have expressed concern that the poor or middle class might be harmed by adoption of the FairTax (http://www.FairTax.org) based on a deep misunderstanding of both the FairTax and the current system. We cannot assess the effects of the FairTax without comparing it to the reality of our current income and payroll tax system. One cannot buy a loaf of bread without paying the income taxes of the baker. The price of that loaf of bread contains the cost of the flour, and the income of the baker, but it also contains the taxes the baker pays. After all, the baker does not have a money tree from which to pluck dollars to pay his taxes, he must get those funds from his customers, like any other business. Further, the price of that loaf of bread contains the taxes of the miller, the farmer, the trucker and the grocer and those of all their employees. Those income and payroll taxes cascade through the production process and eventually make up more of the cost of that loaf of bread than the profits of any of those who worked to produce that bread. Those many layers of taxes on productive work make up the embedded tax component of the price of bread or any other goods or services we buy. On average, that embedded tax component is 22.4 percent of the price of everything we buy, from a loaf of bread to brain surgery. So, the true tax burden on the working poor is 28.4 percent, (their FICA tax of 7.65 plus plus 22.4 percent of their remaining take-home pay, which goes to pay the embedded taxes hidden in the price of everything they buy). Even if the poor paid the entire 23 percent FairTax, they would be better off than now, but they don't. The FairTax provides a rebate of all tax paid on spending up to the federal poverty line to everybody. This cancels out all taxes for those living at or below the poverty line, $25,660 a year for a married couple and two children. For the same family earning twice the poverty line ($51,320), half their taxes are rebated, yielding an effective rate of 11.5 percent. And even at triple the poverty level, $76,980, their effective rate is only 15.3 percent, still far better than the 28.4 percent the poorest of the poor pay now. So, who loses? The idle rich, illegal aliens, criminals, "off-book" workers and others who escape the current system through evasion or legal loopholes. Tax lawyers and lobbyists who make their livings from the complexity of the current system will also come up short. Foreign goods sold in the U.S. will no longer get a free ride while production of American-made goods and services bear the whole tax burden. But those of us who work for a living, or who get by on a fixed income, will be far better off."

2/16/2006 10:56:51 AM

Quote :

"you're statement has no credibility."

Quote :

"Republicans build their wealth, Democrats inherit theirs or win it in frivolous lawsuits."

Tee hee.

Not that you are trying to build any credibility yourself...

2/16/2006 11:03:30 AM

FairTax = Bad for idle Rich Republicans (and idle rich democrats, and drug dealers, and prostitutes, and tax "cheaters", and illegal aliens....)

2/16/2006 11:07:54 AM

is this the part of the thread where you and earthdogg just make up crap?



oh wait that was the whole thread

2/16/2006 7:13:27 PM

so how come taxes are embedded when the baker has to pay income taxes, but not when he has to pay a 23% tax on the flour, sugar, etc that goes into his bread?

2/16/2006 7:33:06 PM

It's only a tax on final goods.

But it's still a terrible idea.

2/16/2006 8:35:33 PM

my bad, but i still dont "get it" even after all these explanations.

though i dont see why flour wouldnt be a final product from a flour producer. unless the baking company vertically produces, but shrug.

[Edited on February 16, 2006 at 8:42 PM. Reason : .]

2/16/2006 8:40:41 PM

Well, I guess a government agency would have to define what constitutes flour as a final good and flour as a capital good. Yay small government!

P.S.: what if a bakery buys their ingredients from a supermarket? OR DID I JUST BLOW YOUR MIND?



[Edited on February 16, 2006 at 8:47 PM. Reason : .]

2/16/2006 8:46:17 PM

thats half the reason i hate this proposition. i always get some dumb and some normal questions about the tax plan while reading responses or article. i ask them and get an answer that just makes it more and more and more complex. i just dont see the point, nor the revenue neutrality, but thats another story.

2/16/2006 8:50:43 PM

^, ^^, ^^^

Actualy, that wouldn't be too hard to do I don't think. You could do it a couple ways, either the business gets a tax refund on manufacturing expenditures each month or you could make a business license that must be presented to make a tax exempt purchase for a business, much like universities and government employees present a tax exempt credit card when buying for their institutions already.

2/16/2006 11:24:09 PM

i'd love to give the Fair Tax a shot...I'm not 100% convinced, but I think the idea has some definite merit. I think it would surely be better than what we have now.

i mean, what's the worst case scenario...we don't generate enough revenue to cover what we're spending?

2/16/2006 11:28:54 PM

Quote :

"what's the worst case scenario"

The Libertarians will get their way

2/16/2006 11:57:29 PM

i could go for some of that right now

although my capital-L Libertarian brethren are, well, completely ridiculous.

2/17/2006 12:00:28 AM

Quote :

"so how come taxes are embedded when the baker has to pay income taxes,"

OK..let's take another try at the embedded tax thing.

The embedded tax is the costs of corporate income taxes and corporate income tax compliance costs. These taxes are incorporated into the price of the finished product. Your employer is paying half of your social security, he's getting that money back in the price of his product...that's an embedded tax. Corportations spend millions of dollars each year complying with the huge amount of income tax reporting requirements. Those costs are included in the price of the product. That also makes up that embedded 23% of the price of the product.

Quote :

"Well, I guess a government agency would have to define..."

It's fairly simple. When a business buys goods for producing their product or service, they do not pay tax on it. Similar to the retailer who purchases goods for re-sale, he pays no sales tax on those items. The FairTax is a retail consumption tax. All final products are taxed ONCE at the retail level. So if a bakery buys their ingredients from a supermarket to produce their final product, no tax paid, no need for another go'vt agency... and no mind blown.

Quote :

"You could do it a couple ways..."

The tax is supposed to be embedded into the price of the item you are buying. So the Baker would purchase his ingredients, paying the FairTax. He would then keep track of those purchases (as businesess do now) and deduct the Fairtax paid from the Fairtax collected from his retail customers.

2/17/2006 12:02:57 AM

oh, I almost forgot:

Quote :

"You people never address the fact that the lower and middle classes spend more on goods as a percentage of their income."

In all seriousness, the worst case scenario is that the working class is crushed underneath an increased tax burden, while America enters another Guilded Age. The best case scenario is... um... a slightly simplified tax system that has no impact on revenue?


[Edited on February 17, 2006 at 12:20 AM. Reason : .]

2/17/2006 12:09:27 AM

^ i was thinking that too, but ill elaborate for ED's sake.

Quote :

"The embedded tax is the costs of corporate income taxes and corporate income tax compliance costs. These taxes are incorporated into the price of the finished product. Your employer is paying half of your social security, he's getting that money back in the price of his product...that's an embedded tax. Corportations spend millions of dollars each year complying with the huge amount of income tax reporting requirements. Those costs are included in the price of the product. That also makes up that embedded 23% of the price of the product."

no shit, you know that wasnt what i was having a problem, but just couldnt resist the urge to post the same crap over and over again. i get it, i didnt get that the ingredients werent taxable.

either way corps are going to have to still verify their taxables to show that they arent deducting things they shouldnt. you see, this is what i was saying earlier. things look simple on paper but get more complex as you discuss further issues.

on an unrelated point, i think it is a bit foolish to think that prices on consumer goods will drop as well. you've got a consumer base with higher overall incomes (hypotheticall) who are used to current prices. i just dont see it happening.

2/17/2006 12:19:15 AM

Quote :

"but just couldnt resist the urge to post the same crap over and over again."

Hey..an honest mistake. I don't enjoy posting the same stuff over and over again. (it hurts my typing finger).

Quote :

"either way corps are going to have to still verify their taxables to show that they arent deducting things they shouldnt."

True. No one is claiming that there won't be some amount of gov't bureacracy with the FairTax..we're still talking about the federal gov't here. But instead of 150 million people worrying about tax compliance, you now will have about 15 million.

Quote :

" think it is a bit foolish to think that prices on consumer goods will drop as well."

My understanding, cyrion, is that prices will pretty much stay the same. The sales tax will replace the embedded taxes. The big difference is that you get to keep your whole paycheck. You get to decide when to pay federal taxes -and how much- through your spending.

2/17/2006 12:46:51 AM

I just got a nice little video from UseNet on the fairtax proposal, and it actually does make sense.

#1: there is a 23% sales tax on all new goods
#2: every American with a valid SS Card receives a check for the quantity of tax that would be collected if they spent up to a certain amount ($20k or so for a family of four).

So, math to answer questions:
Family earning $20k a year: $20k * 23% = $4600(sales taxes paid) - $4600(tax rebate) = $0 = 0%
Family earning $50k a year: $50k * 23% = $11500(sales taxes paid) - $4600(tax rebate) = $6900 = 13.8% of income
Family earning $200k a year: $200k * 23% = $46000(sales taxes paid) - $4600(tax rebate) = $39100 = 19.6%

Of course, this does not yet take into account the "investment" portion of income. But there is another element of the system: the tax evidently doesn't apply to used purchases. Purchase a used car, and it is exempt from the tax. The rich don't buy used shit.

Quote :

"So the rich are paying less taxes, corporations aren't paying any taxes, and investments are no longer taxed. My question is this: Where does the money come from?"

The answer given in the video is that under the previous system a large segment of the "rich" took advantage of hidden tax loop-holes and businesses took advantage of tax-subsidies. As such, many corporations and rich people already pay tax rates far lower than one would expect. The so called "Fair Tax" would eliminate all these tricks, ultimately increasing the tax rates for people that previously could afford lobbyists and tax attorneys.

Also, individuals with "illegal" incomes, such as mobsters and drug dealers, are currently not-taxed at all. Under the sales-tax, like everyone else, they would be paying the 23% sales tax whenever they purchased a new gun or a stick of chewing gum. "Some estimates of the size of the underground economy in the U.S. alone range to up to $1 trillion." (sayeth the Wikipedia entry)

[Edited on February 17, 2006 at 1:34 AM. Reason : wikipedia]

2/17/2006 1:08:45 AM

there is all kinds of "illegal" income besides criminal stuff. tons of people get paid under the table (with illegal immigrants being one outstanding example).

2/17/2006 1:15:05 AM

Quote :

"I just got a nice little video from UseNet "

Can you post a link to the vid?

2/17/2006 2:26:33 AM