Anyone heard of the FairTax Act?


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NyeKass
January 16, 2006, 12:13 PM
Compare the FairTax, the Flat Tax and the Income Tax





16th Amendment

Current Income Tax: No Change.
Flat Tax: No Change.
FairTax: Proposes repeal.

Complexity

Current Income Tax: Very complex. 20,000 pages of regulations. IRS incorrect over half of the time.
Flat Tax: Witholding continues. Individuals and businesses must still track income and file income tax forms.
FairTax: Individuals do not file. Businesses need only to deal with sales tax returns.

Congressional Action

Current Income Tax: Used by lobbyists and the wealthy for tax breaks and loopholes. Used by bureaucrats for social engineering.
Flat Tax: Has some problems, but is far superior to current law.
FairTax: 23% Linder/Peterson FairTax Act (H.R. 25). Employees receive 100% of pay. Social Security and Medicare funded from consumption tax revenue, not your paycheck.

Cost of Filing

Current Income Tax: $225 billion in annual compliance costs.
Flat Tax: Significant simplification costs are somewhat reduced.
FairTax: No personal forms are filed. Significant cost savings.

Economy

Current Income Tax: Taxes savings, labor, investment, and productivity multiple times.
Flat Tax: Imposes a tax burden some of which is still hidden in the price of goods and services.
FairTax: Un-taxes wages, savings, and investment. Increases productivity. Produces significant economic growth.

Equality

Current Income Tax: The current tax code violates the principle of equality. Special rates for special circumstances violate the original Constitution and are unfair.
Flat Tax: A flat tax is an improvement of the current income tax, but it is still open to manipulation by special interests.
FairTax: Taxpayers pay the same rate and control their liability. Tax paid depends on life style. All taxes are rebated on spending up to the poverty level.


Foreign Companies

Current Income Tax: Current tax code places unfair tax burden on U.S. exports and fails to neutralize tax advantages for imports.
Flat Tax: A flat tax taxes exported goods and does not tax foreign imports to the U.S., creating unfair competition for U.S. manufacturers and businesses.
FairTax: Foreign companies are forced to compete on even terms with U.S. companies for the first time in over 80 years.

Government Intrusion

Current Income Tax: Current tax code requires massive files, dossiers, audits, and collection activities.
Flat Tax: A flat tax still requires personal files, dossiers, audits, and collection activities.
FairTax: As the Founding Fathers intended, the FairTax does not directly tax individuals.

History

Current Income Tax: The 1913 income tax has evolved into an antiquated, unenforceable morass, with annual tax returns long enough to circle Earth 28 times.
Flat Tax: A flat tax just wonít stay flat. Starting out nearly flat in 1913, the income tax grew out of control with top rates over 90% until the Kennedy administration.
FairTax: 45 states now use a retail sales tax.

Interest Rates

Current Income Tax: Pushes rates up. Biased against savings and investment.
Flat Tax: Reduces rates 25-35 percent. Neutral toward savings and investment.
FairTax: Reduces rates by an estimated 25-35 percent. Savings and investment increase.

Investment

Current Income Tax: Biased against savings and investment.
Flat Tax: Neutral toward savings and investment.
FairTax: Increases investment by U.S. citizens, attracts foreign investment.

IRS

Current Income Tax: Retained.
Flat Tax: Retained with reduced role.
FairTax: Abolished.

Jobs

Current Income Tax: Hurts U.S. companies and decreases available jobs. Payroll tax a direct tax on labor.
Flat Tax: Positive impact on jobs. Does not repeal payroll tax on jobs.
FairTax: Makes U.S. manufacturers more competitive against overseas companies. Escalates creation of jobs by attracting foreign investment and reducing tax bias against savings and investment.

Man-hours Required for Compliance

Current Income Tax: Over 5.4 billion hours per year.
Flat Tax: Reduced.
FairTax: Zero hours for individuals. Greatly reduced hours for businesses.

Non-filers

Current Income Tax: High tax rates, unfairness and high complexity harm compliance
Flat Tax: Reduced tax rates and improved simplicity will improve compliance.
FairTax: Reduced tax rates and fewer filers will increase compliance.
Personal and Corporate Income Taxes

Current Income Tax: Retained.
Flat Tax: Retained in a different form.
FairTax: Both are abolished.

Productivity

Current Income Tax: Inhibits productivity.
Flat Tax: Increases.
FairTax: Increases.

Savings

Current Income Tax: Decreases savings.
Flat Tax: Increases savings.
FairTax: Increases savings.

Visibility

Current Income Tax: The current tax code is hidden, embedded in prices, complex, and incomprehensible. Taxes are withheld from paychecks.
Flat Tax: The business component of the flat tax and payroll taxes are hidden and would be embedded in prices. Taxes are withheld from paychecks.
FairTax: The FairTax is highly visible and easy to understand. No tax is withheld from paychecks.

This is something being pushed by Rep. John Linder. What does everyone think?

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HankB
January 16, 2006, 12:29 PM
It means unemployment for a lot of government (IRS) bureaucrats and employees of companies like H&R Block. It's a bitter pill to swallow, but I could live with that. :neener:

The only real problem with the FAIR tax - which is basically a consumption tax - is that if .gov DID decide to adopt it, it's likely to be in addition to the income tax, rather than in place of it.

In other words they'd muck it up in the implementation . . as they do most good ideas.

Car Knocker
January 16, 2006, 12:46 PM
NyeKass,

Source for this document? Link?

Bruce333
January 16, 2006, 12:58 PM
Some other threads on the subject:

http://thehighroad.org/showthread.php?t=117031
http://thehighroad.org/showthread.php?t=108212
http://thehighroad.org/showthread.php?t=158949

Also:

http://fairtax.org/

Rem700SD
January 16, 2006, 01:15 PM
Read Steve Forbes' book on his tax proposals. He makes a very good argument against consumption tax, and for a flat tax.

fourays2
January 16, 2006, 01:58 PM
this makes far too much sense to have any hope of ever passing.

Firethorn
January 16, 2006, 02:24 PM
It's been posted before, and most of this boards members seem to like it including me, but don't have much hope of it passing. It'd cost the politicians both their loopholes and ability to 'social engineer' by mucking with the tax rates.

Note: Even though I support it, I know that I'd come out on average behind on it. I'm military and because of our deployment schedule, I don't pay much in income taxes. Of course, this'd make the BX/PX's(no sales tax) competitive again against walmart and their ilk. Then again, Minot's BX is so lousy that most of my shopping would have to be catalog/online. Of course, you try being a walmart/sears/kmart type store with a fifth of the floorspace.

CAnnoneer
January 16, 2006, 02:32 PM
FairTax sounds great on paper, but in reality is only implementable as an addition to the current system, not a replacement of it.

For starters consider the fact that about a third of tax revenue comes from the wealthiest 1 percent of individuals. These guys have to increase their spending several times to pay the same amount under FairTax. Thus if ever adopted as replacement, FT would drastically decrease tax revenue and bankrupt the government. The bureaucracy and social programmers would never allow it.

Also, consider the paperwork that businesses have to do in addition to what they do now. That would mean extra equipment and labor, therefore increasing operational expenses.

Bruce333
January 16, 2006, 03:08 PM
For starters consider the fact that about a third of tax revenue comes from the wealthiest 1 percent of individuals. These guys have to increase their spending several times to pay the same amount under FairTax. Thus if ever adopted as replacement, FT would drastically decrease tax revenue and bankrupt the government. The bureaucracy and social programmers would never allow it.
If the fairtax is implemented as suggested (a replacement for the income tax) the IRS as we know it would be virtually eliminated. They would only have 50 customers instead of millions. The IRS FY 2005 budget was $10.674 billion. That's a lot of money that wouldn't be needed.

Also, consider the paperwork that businesses have to do in addition to what they do now. That would mean extra equipment and labor, therefore increasing operational expenses.?? What equipment and extra labor? It would increase the tax collected and the amount paid to the State. There are only 5 States that don't have a State sales tax, so yes it would be an increase for businesses in those States. But, you are also removing the recording and payment of employee income taxes, which reduces the cost of doing business.

scout26
January 16, 2006, 08:21 PM
"I can get it for you wholesale."

grampster
January 16, 2006, 09:48 PM
The Fair Tax will never happen until the Legislature and Executive branches of .gov are filled with patriots rather than primping and preening egotistical bloviators.

bogie
January 16, 2006, 10:00 PM
Plus think about all the private accountants and lawyers... And the businesses who don't make a move without considering the tax implications... I think that a national sales tax, coupled with the removal of the income tax (which only dates back, what, 60 or so years?), with the "necessities of living" rebate to take care of the poor folks, would be the best thing to hit this country's economy since the fifties...

1911 guy
January 16, 2006, 11:26 PM
Under our current tax system, the wealthy pay the largest dollar amount of tax, but a smaller percentage than the middle class. The poor get refunds larger than their annual incomes. This leaves the middle class stuck with a higher percentage burden than the wealthy, also paying the poor for EIC, which is either a joke or a travesty, I'm not sure which.

A use use tax would distribute the burden equally, depending on amount of income spent, rather than total or what cannot be hidden in tax shelters. Also eliminates collecting money from someone else for doing nothing. That smacks of communism. The use tax would also tax non-legitimate wage earners such as drug dealers and such, further lightening the load on Americans who have been picking up that slack our entire lifetimes.

White Horseradish
January 16, 2006, 11:43 PM
The one problem I see here is the assumption that the wealthy would shop in US. One could buy, say, a yacht in the Caribbean.

Matthew748
January 17, 2006, 07:49 AM
I have read a few publications on this topic and think that it is just a back door attempt to get a general federal sales tax in place. If passed, the .gov would announce that it would be phased in over the next 10 years or so, but would stop at year 2.

Itís just like Social Security. According to the original legislation, Social Security funds are supposed to be kept totally separate and only disbursed for qualified Social Security expenses. No lending, no borrowing, no nothing. In reality this does not happen. They are not even shy about it. Heck, payroll tax payments are composed of federal withholding, Social Security withholding, and Medicare withholding all lumped into one and paid to the Treasury Dept. They do not even have the decency to loot the Social Security fund the old fashioned way, now they get the payments directly.

Given this, who really thinks that the .gov would give up personal income tax income in favor of consumption/sales tax? They want both, not one or the other.

Optical Serenity
January 17, 2006, 07:51 AM
I'm fortunate enough to live in atlanta, and hear Neal Boortz' radio show everyday. His book on Fairtax is awesome.

Herself
January 17, 2006, 07:59 AM
Let the Feds add a new tax? When have they ever repealed an old one?

There's a Federal tax on your phone bill. Know why it is there? Simple; a telephone tax was added to help defray the costs of the Spanish-American War! T. R. and the Rough Riders are all long dead, and we're still paying. Come to think of it, Cuba is long lost and we're still paying!

Those who want the "fair tax" may get it -- but we will never be rid of the income tax by adding another, no matter what promises are made.

No new taxes. None! We need to whittle away at the existing ones, not add to them!

--Herself

The Drew
January 17, 2006, 09:20 AM
The only right way to implement this is by constitutional amendment. That amendment MUST outlaw federal income taxes and the IRS.

Otherwise as others have said that this tax would just be in addition to income tax, or the income tax would just come back in a few years.

DunedinDragon
January 17, 2006, 09:43 AM
What a lot of people don't realize when it comes to taxes is that's about the only REAL leverage government has for trying the influence economic trends such as hiring, capital investments, savings, college attendance, etc. The fair tax or a flat tax sounds fine until you try to figure out how you're going to entice companies to possibly go into debt in order to make capital investments to bring around a soft economy. The only other leverage the government has, and they really don't have it, is trying to influence the Fed to restrict or open up the money supply, but that only affects lenders and takes a long time to filter down through the economy. You may not like that idea, but I'd rather the government have some economic leverage point than being solely subject to "feel good about the economy" or "feel bad about the economy" as the only way that economic trends get changed.

I'm not saying that's necessarily how the government USES the current tax system all the time, but theoretically that's what it's really intended to do. I suppose a "consumption tax" could ideally be used to influence spending by raising or lowering taxes on categories of items, but that gets almost as complicated as the current system and just as open to misuse and special interests.

To me, the tax system in place is like our justice system...it ain't all that good, but it's better than any alternatives I've seen.

Don of Kalifornia
January 17, 2006, 10:38 AM
I've read Neil Bortz (sp) book on the Fairtax..if it works as in the book it seems like a great idea, no income tax and removes the hidden tax from items.

I'd say read the book before deciding..

NyeKass
January 17, 2006, 11:26 AM
Thanks Guys:
There is alot of information here, I will read the book and see what comes of it. All of your input is greatly appreciated.

jpthegeek
January 17, 2006, 11:40 AM
Hey guys. My local congressman litterally wrote the book on this:

http://www.amazon.com/gp/product/0060875410/sr=1-1/qid=1137512167/ref=pd_bbs_1/102-5157962-1252162?%5Fencoding=UTF8

Fairtax site:

http://www.fairtax.org

This is a link to Boortz's site. He's a local radio guy her who wrote the book with Linder:

http://www.boortz.com

Tim Currie
August 9, 2006, 12:22 AM
Gooootta read the book!

I just picked it up on an impulse buy at Border's the other day and can't put it down, I'll finish it tonight. If the arguments and research in the book are legit ( so far it at least seems very logical) then the FairTax would be the best thing this county's seen since....well before I was born.

If you haven't read the book and are of the opinion that this is a bad idea or wont work, go get the book! At the very least it will be an easy and entertaining read (the author is a freakin genius actually in his writing abilities...)!

:cool: go get it!

Lupinus
August 9, 2006, 12:28 AM
I just wanna know whos bright idea it was to make anyone under 26 not able to get the 400 or whatever it is automatic refund.

Oh thats right, as it was explained to me it is because those over 26 generally have families and blah blah. In other words mommy and daddy are taking care of you otherwise :cuss:

Get rid of income tax, stick in a sales tax, and be done with it cause that is as fair as it gets.

publius
August 9, 2006, 07:34 AM
The IRS FY 2005 budget was $10.674 billion. That's a lot of money that wouldn't be needed.
2005 Federal spending was 2.472 trillion.

Saving ten bucks will put you on your way to paying a $2,472 bill, but not very far on your way.

1911 guy
August 9, 2006, 08:12 AM
Do you know that under the current tax system we will need an 80 percent tax (yes you read it right) to break even as a country in the next twenty six years? Something has to change.

WeedWhacker
August 9, 2006, 08:15 AM
Twenty-six years is a LOOOONG time in this day and age (Information Age, etc.).

As I recall, "Social Services" takes up the lion's share of the federal budget, which encompasses things such as schools, welfare, etc. The interest on the "national debt" comes in at second place, with military spending in third (at 500-600 billion dollars, IIRC).

pcf
August 9, 2006, 09:42 AM
Anyone who thinks that a flat tax would get rid of the IRS is smoking something. More likely the IRS would grow and become more aggressive to crack down on "off book" sales, private party sales and collect sales tax on bartered services.


Do you know that under the current tax system we will need an 80 percent tax (yes you read it right) to break even as a country in the next twenty six years? Something has to change.

Have you checked your taxes lately, between Federal, State, County and City Taxes you're probably 50-70% of your income in taxes already.

Federal Income Taxes
FICA
Federal Excise Taxes
Federal Taxes on services
Federal Commodity Taxes
Built in Federal fees on products
Capitol Gains taxes
State income tac (if applicable)
State Property Tax
State Excise Taxes
State Taxes on Services
State Commodity Taxes
State Sales tax
State vehicle taxes
etc, etc, etc

Derby FALs
August 9, 2006, 10:50 AM
The amount of tax is a secondary problem. We wouldn't need near the percentage we pay today if the fedgov could be pruned. The biggest problem with that is the amount of people it would put out of work...

xd9fan
August 9, 2006, 11:17 AM
anyone thinking any serious tax relief will come out of this crop of Republicans is smoking something as well.

pcf
August 9, 2006, 12:08 PM
The amount of tax is a secondary problem. We wouldn't need near the percentage we pay today if the fedgov could be pruned. The biggest problem with that is the amount of people it would put out of work...

Bingo, treat the problem, not the symptoms.

Tim Currie
August 9, 2006, 04:46 PM
I'll assume nobody's read the book.....

I don't get it, here and all the other forum discussions I've read on this topic all end up looking the same with people getting in to all kinds of tangents. The point is not that the gov't is TOO big, the point is not the national debt, welfare, etc, etc, etc.

The point is that this is doing SOMETHING and taking a step in a better direction.

Are you telling me you'd PREFER keeping our income tax system the same and trying to fight down the ridiculous system that we have now over getting gov't OUT of your income and having a drastically simpler and more efficient tax system on goods sold???

Can anyone see how much more transparent that a sales tax is to the general society? You look at your receipt and right there it lists the dollar amount of your federal tax! That might help open peoples eyes to the size and spending of our gov't just a little....?

Anyway, I'm not here to go over all the details and explain things to anyone if they haven't read all the info yet. Just here to say pick up the book, it's a worthwhile read regardless of where you currently stand on the issue.

Tim

fourays2
August 9, 2006, 05:59 PM
the last thing the.gov wants is for people to know how much tax they are paying. the sales tax is a brilliant idea but pols will lose the ability to sick the IRS on their foes so it's a non-starter for that reason alone.

Zrex
August 9, 2006, 06:12 PM
Its all just a really big house of cards. Some day it is all going to collapse and it won't be pretty. It will make the great depression look like the company christmas party.

Derby FALs
August 9, 2006, 08:09 PM
Are you telling me you'd PREFER keeping our income tax system the same and trying to fight down the ridiculous system that we have now over getting gov't OUT of your income and having a drastically simpler and more efficient tax system on goods sold???

Nope, but FAIR Tax will still feed the flames. Just a different source. It will reduce IRS though. The only way is to cut fedgov and no politician is willing to do that. It is ridiculous that they spend all but two weeks in DC when they should be home listening to their neighbors.

ConstitutionCowboy
August 9, 2006, 08:29 PM
Every head of household gets a check from the government as a pre- reimbersment of taxes at the poverty level. The tax is only applicable to new manufactured items - the only easily and accurately traceable items to be taxed. There are no taxes on bartered or used items for sale.

I like it. Bring it on and Git 'er done!

Woody

"For every power usurped by government, the People lose a right." B.E.Wood

auschip
August 9, 2006, 09:47 PM
I still haven't been able to get anyone to explain to me how this won't discourage home ownership. I did read the faq on the website, and believe it may have a couple huge holes. The first, is that the tax for purchasing the house must be rolled into the note. I ran some rough numbers, and assuming a 1% point drop in the interest rate your savings on a 30 year mortgage are roughly $3k over the life of the loan (again these are rough numbers).

The second hole, is that the fairtax doesn't take into account that fewer people would be able to qualify for the increased loan amount required to purchase a house. In effect, what happens is your average home price goes from $150k to $200k. Factor in the areas that already have inflated housing costs, and you have a potentially huge problem.

The problem I have, is I want a new tax system that works, and is fair. I however, don't want to trade one problem for another.

Waitone
August 10, 2006, 09:13 AM
Fair Tax is a nice idea devoid of reality.

Reality is congress has waaaay too much power because of the current system. Govennment types don't willingly surrender power.

Federal reserve and existing tax system are merely two faces of the same coin. If you want a better economic environment you have to deal with both faces, not just one. Since our federal reserve is a component of a global system, change in the USofA ain't gonna happen.

Lots and lots of people make a living because of the current tax code. No politician will threaten the livelihood of so many people.

Can someone show me the gun related content of this thread?

Glock Glockler
August 10, 2006, 10:00 AM
Can someone show me the gun related content of this thread?

Threads in the L&P forum do not need to be gun related, that would be the general discussion forum.

pcf
August 10, 2006, 11:29 AM
Can someone show me the gun related content of this thread?


Next time someone ask why "nannyism" is alive and well in America.......no need to look for "liberals" to blame.

At least half of what you pay for a firearm before sales taxes will end up the governments' pockets. Taxes are very relevant to firearms, their cost and how that cost affects our ability to purchase and shoot firearms.

HankB
August 10, 2006, 11:51 AM
Can someone show me the gun related content of this thread?The price of your new gun would be the sale price PLUS the FAIR tax rate.

The sale price, however, would probably go down because the manufacturer, distributor, and dealer would no longer have to build into their markups provision for Fed income taxes.

Your income (i.e., take-home pay) would go up by the amount you're paying in Federal income tax today.

Depending on your income bracket, you may actually be able to buy more or better guns.

mons meg
August 10, 2006, 12:55 PM
In effect, what happens is your average home price goes from $150k to $200k. Factor in the areas that already have inflated housing costs, and you have a potentially huge problem.

You're forgetting that with Fairtax you just got a 25% raise in your take home pay...

auschip
August 10, 2006, 12:57 PM
You're forgetting that with Fairtax you just got a 25% raise in your take home pay...

But everything just got 25% more expensive to match my raise.

mons meg
August 10, 2006, 01:00 PM
But everything just got 25% more expensive to match my raise.

Yes, that's part of it. But now you CHOOSE when you are taxed. And you SEE how much the tax is, instead of the nefarious witholding scheme we have now. The Feds still get their money, but now it's all out in the open.

auschip
August 10, 2006, 01:12 PM
Yes, that's part of it. But now you CHOOSE when you are taxed. And you SEE how much the tax is, instead of the nefarious witholding scheme we have now. The Feds still get their money, but now it's all out in the open.

The only way to choose not to be taxed, is not to consume, and that only works for the short term. Currently, everytime I get paid I see how much the tax is. It isn't something hidden or surprising.

mons meg
August 10, 2006, 01:19 PM
Check out the rebate schedule in the FairTax FAQ, they are already covering basic survival consumption.

True, you do see your witholding, but it doesn't "hurt" like it does when you go get a new stereo system and throw down the dollar bills.

I've read several of these NST proposals on Cato and elsewhere, and I think the FairTax might actually have some legs if more people got educated on it. I really believe it's more about advancing the cause of liberty than anything else. It's about taking back control.

auschip
August 10, 2006, 01:49 PM
The rebate for a two person household is $4508. Using the 25% tax figure, this comes out to $18,032 of spending before you get hit with taxes.

I read an interesting article against any type of consumption tax recently, let me see if I can find it again.

Here it is:

http://www.mises.org/story/1768

Wiley
August 10, 2006, 06:08 PM
Sorry, auschip, et.al., you've got it wrong.

1. This is the big one: You are already paying a 23%+/- imbeded FEDERAL tax on every thing you buy, new and used. Due to competition prices would go down by approx that 23% within days if not minuets. So a $100.00 item already has 23% IMBEDED. The fair tax would result in you paying $100.00 same as now. $77.00 plus $23.00 national sales tax.

You're not paying any more or less. BUT, your take home pay will increase by the ammount of withholding, FICA, Medicare.

NET GAIN FOR THE TAXPAYER. And every month you would have the amount pre-bated that would equal what the sales tax would be on items up to the poverty level.

2. Only NEW items would be taxed. Buy a new house, car, whatever - pay national sales tax. BUY USED - NO TAX. Zero, zip, nada.

The only exemption in the law is for tuition.

Please go to http://www.fairtax.org and read a little before making comments. If you don't you'll just look like Steve Forbes: Silly.

CaesarI
August 11, 2006, 01:55 AM
Auschip's link to: http://www.mises.org/story/1768

Is a very solid piece, but suffers from the fact that it addresses numerous ideas for a consumption tax, as opposed to directly addressing the "Fair Tax" national sales tax. I recommend reading it. Those unfamilair with Austrian economics will likely run into a few difficulties.

The argument that Rothbard presents specifically against a national sales tax, such as the "Fair Tax" is incorrect, in my opinion, however, given the reputation of Rothbard I am open to criticism of my analysis here.

The major section where I feel the argument makes an error is here:

Consider: all prices are determined by the interaction of supply, the stock of goods available to be sold, and by the demand schedule for that good. If the government levies a general 20 percent tax on all retail sales, it is true that retailers will now incur an additional 20 percent cost on all sales. But how can they raise prices to cover these costs? Prices, at all times, tend to be set at the maximum net revenue point for each seller. If the sellers can simply pass the 20 percent increase in costs onto the consumers, why did they have to wait until a sales tax to raise prices? Prices are already at highest net income levels for each firm. Any increase in cost, therefore, will have to be absorbed by the firm; it cannot be passed forward to the consumers. Put another way: the levy of a sales tax has not changed the stock already available to the consumers; that stock has already been produced. Demand curves have not changed, and there is no reason for them to do so. Since supply and demand have not changed, neither will price. Or, looking at the situation from the point of the demand and supply of money, which help determine general price levels, the supply of money has remained as given, and there is also no reason to assume a change in the demand for cash balances either. Hence, prices will remain the same.

The analysis incorrectly fails to take into account that incomes *would* rise (owing the the absence of FICA and income taxes), and therefore prices would be subject to raising as well. Further, the analysis fails to take into account the manner in which businesses pass on expenses incurred from the present system to customers. The removal of the present hodgepodge of laws should allow manufacturers, wholesalers, and retailers to absorb cost cuts in the ultimate price on the product that would, in the very least, partially compensate for the increased cost due to the sales tax.

The major criticism in Rothbard's article is that we worry too much about "how we pluck the goose" rather than how much is plucked from the goose. This criticism is answered in a few ways:

First, the easy reduction in government expenditure by the reduction in scope of the IRS.

Second, the hidden costs of the present system are eliminated. These costs include significatly: poor business decisions made for their tax implications, and the cost of compliance (record keeping, accountants, legal fees).

Third, and most "fuzzy", making the total federal government cost visible to the public may make shrinking the size of the federal governement easier politically. This could also be accomplished by stopping income withholding as Rothbard suggersts in the article.

I am not wholly convinced on the "Fair Tax" but for the most part it sounds good to me. My principle hold-out is that it sounds entirely too good to be true :-) That and the oft mentioned (in this thread) unfeasability of it politically. I noticed on their website that they have not found a single Democrat to sponsor the bill, this is discouraging.

-Morgan

pcf
August 11, 2006, 02:34 PM
2. Only NEW items would be taxed. Buy a new house, car, whatever - pay national sales tax. BUY USED - NO TAX. Zero, zip, nada.

Can you define a new and used good. We've never meet but I bet we have almost identical descriptions of "interstate commerce" and somehow I bet both of descriptions will be 180 degrees opposite of the Government's and the Supreme Court's. Same applies to "public use".

Do you think if there was a "fair tax" and given the current composition of the Supreme Court, that "new or taxable good" will be defined as "recently manufactured and not previously purchased at retail" and "used or non-taxable good" will "describe any item that's not new"? I have a Bridge in Brooklyn........

What taxable services? Are you ready to go to jail because you didn't pay your taxes when you helped your neighbor paint his house?

Wiley
August 11, 2006, 06:13 PM
[pcf, please go to the fairtax.org site. Look at the faq, and look at HR25, the bill to implement the Fair Tax. And yes, you'd win the bet.]

From the Fairtax.org site:

What is taxed? The FairTax is a single-rate, federal retail sales tax collected only once, at the final point of purchase of new goods and services for personal consumption. Used items are not taxed. Business-to-business purchases for the production of goods and services are not taxed. A rebate makes the effective rate progressive.

The key point is that goods and services are only taxed ONCE.

I would not be subject to jail because I am not in the business of house painting. No commercial service was provided. To think otherwise is the same as thinking that you must pay workmans comp ins. for your kid when he mows the lawn.

PLEASE, do a little reading on the site or spend a couple of bucks on Rep. Linder's book.

No taxing scheme is perfect, the Fair Tax is far better than the current system, and better than any of the proposed alternatives.

Tim Currie
August 11, 2006, 07:19 PM
Finally someone else who has read the book and doesn't just jump to conclusions. :cool:

Sometimes I get the feeling that alot of people's belief's here are that NOTHING will work or ever make a difference and all we do here is bitch about what's wrong. Instead of seeing how something might make some progress in the right direction we argue about why it is not perfect.... hmmm..

ceetee
August 12, 2006, 09:59 PM
The removal of the present hodgepodge of laws should allow manufacturers, wholesalers, and retailers to absorb cost cuts in the ultimate price on the product that would, in the very least, partially compensate for the increased cost due to the sales tax.



Have you ever seen a manufacturer lower his price because his costs got reduced due to tax cuts? Have you ever seen a manufacturer lower his price because his costs got reduced for any reason?

Thinking that manufacturers are going to automatically pass on any cost savings to their consumers is a pipe dream of the highest order.

DRZinn
August 13, 2006, 02:13 AM
Thinking that manufacturers are going to automatically pass on any cost savings to their consumers is a pipe dream of the highest order.Ummm, it's called competition.

Wiley
August 13, 2006, 08:14 AM
Ceetee,

You wrote: Have you ever seen a manufacturer lower his price because his costs got reduced due to tax cuts? Have you ever seen a manufacturer lower his price because his costs got reduced for any reason?
You, and I, have seen suppliers lower prices due to the elimination of a tax.

Some years ago the federal air travel tax expired. Congress didn't renew it promptly. The airlines, knowing that it would eventualy be renewed, kept collecting it until word got out and there was an outcry by air travelers.

One airline got the message and dropped thier prices, across the board, by the amount of the tax. IN LESS THAN AN HOUR ALL OF THIER COMPETITORS HAD FOLLOWED SUIT.

OK, that little red herring has been gutted, filleted, and cooked.

In addition, Neal Boortz, co-author of the 'FairTax Book', has said that he knows of at least one national retailer that will cut thier prices some WEEKS prior to the effective date of HR25. Any retailer that tries to 'hold the line', tries to 'squeeze' more profit will be toast.

All it takes is one business in a sector to cut prices and competition will force all competitors to match. And to think that any business wants to spend money being a tax collector is illogic of the first order. (You do know that businesses DO NOT pay taxes, don't you? They only collect taxes that you pay?)

[I can see the next argument: The FairTax will get the 'working poor' fired. Even Art's Grandma would use the full spelling of BS on that one.]

Next! One chair, no waiting!

Malum Prohibitum
August 13, 2006, 09:14 AM
To those who doubt the FairTax can be implemented - hey, this was being pushed in 1990 when no politician would touch it. Now, Georgia's John Linder not only sponsored it, but he has many cosponsors and an actual bill.

The only reason it has not been pushed harder is because you have not called and written your Representative and Senator.




www.georgiapacking.org

Derby FALs
August 13, 2006, 12:34 PM
Finally someone else who has read the book and doesn't just jump to conclusions.

Sometimes I get the feeling that alot of people's belief's here are that NOTHING will work or ever make a difference and all we do here is bitch about what's wrong. Instead of seeing how something might make some progress in the right direction we argue about why it is not perfect.... hmmm..

It's like having a thorn in your foot that you pad instead of removing. Is that really progress?

chas_martel
August 14, 2006, 11:51 AM
The FairTax is a shame.

It is just more class warfare.

The FairTax is anything but "fair". It
disproportionately taxes those that
are the most productive. We would still
be left with an "unfair" tax system.

Why does taxing have to be tied to
how much you make? Should it
not be tied to how much you take?

PS: Yeah, I read the book........it is a crock.
Just more of the same ole crap!


PPS: Your first clue should be its name.
Fair should be eliminated from the dictionary, IMO.

HankB
August 14, 2006, 12:00 PM
Have you ever seen a manufacturer lower his price because his costs got reduced for any reason? Of course not - that's why personal computers are so much more expensive now than they were 10 years ago. :rolleyes:

No4Mk1*
August 14, 2006, 03:36 PM
I am blessed to have a high income and thus I am in a high tax bracket. During the last year I spent about 40 hours directly gathering and preparing my personal income tax which is extremely complicated due to various sources of income and special rules which limit deductions for higher income earners. I spent another 40 hours setting up retirement accounts, pre-tax flexible spending accounts, and keeping records of tax deductable expenses throughout the year. In years to come I may consider reducing my work hours because the current tax code makes it very tempting for me to work part time.

So the current tax code eliminates at least 2 weeks of my productivity every year and is tempting me into early "half retirement."

Phetro
August 14, 2006, 03:48 PM
2005 Federal spending was 2.472 trillion.

Saving ten bucks will put you on your way to paying a $2,472 bill, but not very far on your way.

You're right! That's why we need to cut government spending too. Unless you think they're authorized to spend money on the things they spend money on...:rolleyes:

chas_martel
August 14, 2006, 03:59 PM
No4Mk1*, the problem is that the fairtax targets you.

You are being asked to shoulder more of the tax burden.

I like you go thru much work, actually my CPA and lawyer,
to see my taxes completed. But no way do I want
it replaced by the Fair Tax. Ain't no such thing as fair
anyway.

I tell you guys, and gals, the Fair Tax is just more class warfare.
Go read the book if you don't believe me.

It just sits things up for more spending by drunken politicians.

It is not an answer, it is a diversion.


Hank, computers went down in cost when the demand
caused economy of scales to kick in.

No smart business person sets his price based on cost.
That is Sales and Marketing 101

Jeff Timm
August 14, 2006, 04:50 PM
publius commented, "
Quote:
The IRS FY 2005 budget was $10.674 billion. That's a lot of money that wouldn't be needed.
2005 Federal spending was 2.472 trillion.

Saving ten bucks will put you on your way to paying a $2,472 bill, but not very far on your way."

To quote a formerly famous politician, "A billion here, a billion there and pretty soon you're talking real money." Barry Goldwater.

Geoff
Who is a proponent of the Fair Tax!

Jeff Timm
August 14, 2006, 05:02 PM
chas_martel says a whole bunch of stuff that makes no sense, and obviously never read the book as he claims.

Yes, it still taxes the RICH! When the Rich Mr. Smith buys his new Mercedes a Cadillac, he pays Federal Tax on it. Ninety days later when she wants a new one in a different shade of pink, he trades it in and a poor downtrodden worker buys it used and DOESN'T PAY ANY FEDERAL TAX ON IT!

It's a simple little system, in that the taxes we pay now hidden away from view are brought upfront and personal.

Geoff
Who will gladly pay the fair tax as opposed to the IRS taxes which hold the threat of prison. I can always avoid the tax by buying used, but used prices will rise a bit, and used food will never become popular. :D

Wiley
August 14, 2006, 10:25 PM
Chas,

Which book did you read?

"The Flat Tax Revoloution" by Steve Forbes OR
"Fair Not Flat" by Edward J. McCaffery OR
"The FairTax Book" by Neal Boortz and Congressman John Linder?

If it was other than "The FairTax Book" you have read the wrong book.

The current tax system is a highly progressive INCOME tax system. Thats why you and No4Mk1* and I spend an inordinate amount of time and money to come up with a 'taxable income' that the IRS may or may not agree with.

Steve Forbes would change that to a single INCOME tax rate for all taxpayers. A grossly simplified example would be if your income was $1.00 and the flat tax rate was 20%, your tax would be $0.20. With his plan, you could file your taxes, supposedly, on a postcard. For most taxpayers it would be a vast simplification depending on how and what income is defined. The IRS would still have to exist since the same tax evations would still require investigation and prosecution.

Based on the writeup on Amazon.com, McCaffery's plan would be a progressive CONSUMPTION tax i.e., the more you spend the more you are taxed: up to $20K spent, 0%; the next $60K spent, 15%; above $80K spent would have a 'supplemental tax' of some unmentioned percent. It, supposedly, would eliminate the income, estate and, gift taxes. but still would require the filing of tax returns. It makes no mention of Social Security and Medicare withholding.

Frankly, I am unfamiliar with this plan but from the writeup it sounds as cumbersome as the current income tax system and as socialist i.e., wealth redistribution not by income but by spending. Gotta keep those receipts to prove to the IRS that your spending was below the limit, fill out various spending schedules for vaious limits, etc. and still have some portion of your pay withheld.

The FairTax is not an income tax, it is not a consumption tax. It is a sales tax that would completely replace the current FEDERAL tax system including all withholding for Social Security and Medicare. Every cent you are paid goes into your pocket. YOU choose what to pay tax on when you spend. (Admitedly, buying a used #2 wood pencil just to avoid taxes is a bit silly but Jack Benny would do it.)

AND, to address your objections, Chas, the FairTax would treat every individual EXACTLY the same. No classses, no carveouts, no exemptions, no deductions, the only item not taxed would be tuition.

Of the three schemes the only one that meets your objections is McCaffery's and if you read the writeup on Amazon, you'll see why.

bamawrx
August 14, 2006, 11:05 PM
Any "good" tax system starts with NO REPORTING OF INCOME. Period. Its none of the goverments business how much money you make.

That is the best part of the fair tax. Make as much as you can and be careful how you spend it and you will be more free and in control. That is worth trying, and just think of all the overseas manufacturers that will have to move their operations here to take advantage of the new code!

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