Fair Tax

[ShawnD1]

It is impossible to avoid this tax so no more stories of Warren Buffet's secretary paying more taxes than he does.

Warren Buffet's tax rate is incredibly low is because the majority of his money is in the form of investments. Stocks are little pieces of paper that say you own a certain percentage of a company, so basically Warren Buffet has part ownership of many different companies. Companies are only taxed when they make money.

If his 10 billion dollars just sits there and does nothing, he pays no tax on it because it didn't earn anything. If it grows in value, he still doesn't pay any tax on it unless he sells it or it pays a dividend. This is similar to the way your house gains value but you don't immediately pay a lump sum of tax. You only pay the tax when someone buys it from you. At that point your investment (primary house, secondary house, or stock) is income and can be taxed as a type of income depending on what it is.



Also, the reason we don't have VAT as a replacement for income tax is because it would make selling things a complete nightmare. You put your item on craigslist, guy pays you the money, you fill out your government tax forms.

You might be laughing, thinking "we already have sales tax in my state and they don't do that!" That's because we don't have a large black market for tax-free goods. If the sales tax was 30% then the government would care quite a bit about you selling stuff on craiglist and not claiming it on your taxes. It would go in the same category as getting paid under the table to avoid income tax.

 

[Modelworks]

You have NO IDEA how much shit wealthy people write off.

No clue.

You are looking at big purchases by a few and thinking it will offset the smaller amounts paid by the masses. It will not.

 

[3chordcharlie]

If his 10 billion dollars just sits there and does nothing, he pays no tax on it because it didn't earn anything. If it grows in value, he still doesn't pay any tax on it unless he sells it or it pays a dividend. This is similar to the way your house gains value but you don't immediately pay a lump sum of tax. You only pay the tax when someone buys it from you. At that point your investment (primary house, secondary house, or stock) is income and can be taxed as a type of income depending on what it is.



Also, the reason we don't have VAT as a replacement for income tax is because it would make selling things a complete nightmare. You put your item on craigslist, guy pays you the money, you fill out your government tax forms.

You might be laughing, thinking "we already have sales tax in my state and they don't do that!" That's because we don't have a large black market for tax-free goods. If the sales tax was 30% then the government would care quite a bit about you selling stuff on craiglist and not claiming it on your taxes. It would go in the same category as getting paid under the table to avoid income tax.

VAT includes directly in its name the reason that you would not need to do this.

 

[Descartes]

Absolutely.

Wanna know why?

Mark Cuban buys a 50 million dollar plane for his Mavs team? That's a business expense write it off.

People write off cars, Saints season tickets, Hornet season tickets, memberships to TPC golf course, trips to here, trips to there, gasoline, food, going out to eat dinners with "clients", and tons of other crap.

All of that literally is subtracted from their taxes.

You have NO IDEA how much shit wealthy people write off.

No clue.

I think you have a very limited understanding of how the tax system works in this country.

1) This has nothing to do with the wealthy. You can run a business and not be wealthy and still limit your tax liability. And that's the way it should be. People taking the risk of building a business shouldn't be penalized by taxing the dollars they put in and taxing the gains as well.

2) No, he's not writing off a $50M plane. There is such a thing as amortization, and many of the expenses have limitations. For meals and entertainment, you can typically only deduct 50% of the amount.

So, really you're not speaking reality here. People aren't "writing off cars" and other nonsense (granted, there were and still are some amortization loop holes that applied to vehicles over a certain weight).

And let's forget the taxes that are applied to business owners in the first place. With *that*, you have no idea. The amount spent annually on tax-related issues alone accounts for much of the savings gained by many smaller businesses.

 

[GuitarDaddy]

Absolutely.

Wanna know why?

Mark Cuban buys a 50 million dollar plane for his Mavs team? That's a business expense write it off.

People write off cars, Saints season tickets, Hornet season tickets, memberships to TPC golf course, trips to here, trips to there, gasoline, food, going out to eat dinners with "clients", and tons of other crap.

All of that literally is subtracted from their taxes.

You have NO IDEA how much shit wealthy people write off.

No clue.

Don't quit your day job to become a financial analyst :biggrin:

Your proposed idea of taxation is nothing new in fact its older than I am which is quite old and is widely considered a crackpot theory. Not only would it not work, but it would be extremely unfair and quite stupid. And as someone above posted the great incentive would be to aquire everything on the black market.

 

[Descartes]

Warren Buffet's tax rate is incredibly low is because the majority of his money is in the form of investments. Stocks are little pieces of paper that say you own a certain percentage of a company, so basically Warren Buffet has part ownership of many different companies. Companies are only taxed when they make money.

If his 10 billion dollars just sits there and does nothing, he pays no tax on it because it didn't earn anything. If it grows in value, he still doesn't pay any tax on it unless he sells it or it pays a dividend. This is similar to the way your house gains value but you don't immediately pay a lump sum of tax. You only pay the tax when someone buys it from you. At that point your investment (primary house, secondary house, or stock) is income and can be taxed as a type of income depending on what it is.



Also, the reason we don't have VAT as a replacement for income tax is because it would make selling things a complete nightmare. You put your item on craigslist, guy pays you the money, you fill out your government tax forms.

You might be laughing, thinking "we already have sales tax in my state and they don't do that!" That's because we don't have a large black market for tax-free goods. If the sales tax was 30% then the government would care quite a bit about you selling stuff on craiglist and not claiming it on your taxes. It would go in the same category as getting paid under the table to avoid income tax.

I don't know about Buffet's specific situation, but he no doubt paid a substantial amount of tax on those dollars before it became a capital gains tax in the first place.

 

[ShawnD1]

I don't know about Buffet's specific situation, but he no doubt paid a substantial amount of tax on those dollars before it became a capital gains tax in the first place.

Depends how it was done. Jumping back and forth between companies is a great way to get raped on taxes. You pay tax on the profits every time you sell.

Your tax rate is far lower if your investments are long term buy and hold investments. If you bought Google at $10 and it went up to $100, it's entirely possible to pay 0% tax on that money because Google has never paid any dividends. As long as you don't sell it, you won't pay any tax on it.

Guys like Bill Gates and Steve Jobs pay incredibly low taxes. It's not because they're criminal masterminds. It's because much of their value is due to growth of the company. It's entirely possible to run a company worth a billion dollars where you have 100% ownership, but you only pay yourself 100k per year. Your personal income is only 100k, so you personally pay income tax on 100k. On paper it says you're worth orders of magnitude more than that, but that doesn't change the fact that your salary is still only 100k. (Warren Buffet is absolutely insane and probably does only pay himself 100k. I've heard myths that he wears cheap suits and drives an old pickup truck.)

A similar example would be your average American middle class responsible person with a 401k and Roth IRA. Maybe you get paid 50k per year. You put away a bunch of money in these two government-authorized tax shelters and let your money grow tax-free. When you're ready to retire at 65, you're worth over a million dollars. Of course your personal income is still only 50k and you still only pay income tax on 50k, but the balance sheet says you are rich.

 

[Zorkorist]

These are the people that reform Health Care Dadelous.

I know you see why we need to limit Government...

-John

 

[Deudalus]

So, really you're not speaking reality here. People aren't "writing off cars" and other nonsense (granted, there were and still are some amortization loop holes that applied to vehicles over a certain weight).

Considering that we own a sign printing business as a side gig and we wrote off our printers, computers for design work, and a Ford F-250 to deliver signs with then I beg to differ.

 

[Deudalus]

Don't quit your day job to become a financial analyst :biggrin:

Your proposed idea of taxation is nothing new in fact its older than I am which is quite old and is widely considered a crackpot theory. Not only would it not work, but it would be extremely unfair and quite stupid. And as someone above posted the great incentive would be to aquire everything on the black market.

Old and senile apparently.

Don't make a blanket statement saying what you think is true Pops.

Tell me why its unfair.

Actually do some reading and understand what the Fair Tax is and then tell me why you think the way that you think if you indeed think at all and don't just randomly cough up random bullshit.

 

[Jack Ryan]

The only fair tax would be every single citizen having the same tax responsibility, be it 5K a year, 10K a year, etc.

The next best thing would be a flat tax, but we should try and limit the federal government so that number stays around 10%. Ending federal entitlements would be a good start.

States should have more power in what they do. Not just because that is how it was designed to be but because they have to compete with each other (for citizens, businesses, etc). Want to live in a state that has social programs? Great, go ahead and move there.

Another idea is to have a flat tax as a base and then OPTIONAL contributions for social programs. If you think SS or everyone having health care is a good idea, well you can donate more of your income to those programs. Leave it as optional so people who don't want government assistance don't have to contribute.

 

[Siddhartha]

With all the arguing about the Flat Tax I think honestly the way to go is the Fair Tax.

The Fair Tax basically taxes everyone based on what they buy.

The beauty of this tax is that you can make certain things tax free. These things would be any type of food, utilities, used goods like cars, and so on and so forth. This makes it less regressive.

You can further give people back pre-bates at the beginning of the month if they are lower on the income scale which covers any taxes that they pay.


This tax is great beyond that because people are taxed on what they CONSUME! You want people to go green? Want people to consume less? Tax people based on what they consume!

It is impossible to avoid this tax so no more stories of Warren Buffet's secretary paying more taxes than he does.

You would no longer have "tax cheats" who get in trouble and can't pay their taxes living in prison along with rapists and murderers.


The IRS and the War on Drugs has made more Americans criminals than any two things in American history.

This solves that problem. No more filing your taxes, your taxes are paid every time you purchase something.

What would be wrong with that?

Be honest, in this tax plan how will the tax burden be shifted? Who will pay more and who will be less taxes?

 

[Soltis]

Maybe this is somewhat off-topic, but I just don't understand how any tax system or gov that gets most of its money from "rich" people or people who work hard enough to afford more than the bare minimum in quality of life expects to last if its function inevitably causes less and less of those people to appear?

Another question being would you rather put in 130% and get back 85% or put in 0-15% and get back 20-35%?(call it putting in effort or money or w/e but assume that you have to put in something)

 

[wiseoldowl]

Don't quit your day job to become a financial analyst :biggrin:

Your proposed idea of taxation is nothing new in fact its older than I am which is quite old and is widely considered a crackpot theory. Not only would it not work, but it would be extremely unfair and quite stupid. And as someone above posted the great incentive would be to aquire everything on the black market.

It’s widely considered a crackpot theory by illegal aliens, those profiting from the underground market, the 20,000 Washington tax lobbyists, and all those in congress who are afraid of loosing their power over the people. Everyone else who has really studied the FairTax; I repeat, has really studied the FairTax, understands what great benefits it would bring to all honest American citizens.

As for the black market, the IRS’s 2004 estimate of revenue lost due to tax evasion was over $260 Billion. Like any tax system, there will be tax cheats under the FairTax, but it will be much more difficult to do so. With the FairTax you will need two to tango, the buyer and the seller.

Every year as more and more people become aware of the FairTax, it grows in strength. Come next election, if you are a politician not supporting the FairTax, good luck getting elected.

 

[wiseoldowl]

How is this tax fair? If I want to eat less to save up to buy a new car, I'll be paying more tax than someone who uses all is money on food. It is not fair in any way. Also, how is pre-bates fair?

Fair tax to me is everyone pays the same rate no matter how much or how little you earn. End of story.

First of all, under the FairTax, all goods and services are taxed except college tuition, and used goods. The prebate which is determined by family size, (for example: $415 per month for a couple and $559 for a family of four) is meant to offset the tax on necessity item such as food, clothing and utilities.

Prebates are fare because every legal citizen will receive the same prebate at the beginning of each month based on family size. Notice I said legal family.

 

[wiseoldowl]

Prebates don't make it far for anyone except the ones not paying taxes. Everyone should pay the same rate no matter what. Why punish productive people just because they earn more money?

Your statement makes no sense. Everyone would pay the same tax rate under the FairTax, and everyone would receive the same prebate based on family size; how is this punishing productive people? Our current system is the one punishing productive people. If you need to take on a second job to support your family, you will most likely be thrown into a higher tax bracket causing you to not only pay a higher tax on your additional earnings but all your earnings.

 

[GuitarDaddy]

Old and senile apparently.

Don't make a blanket statement saying what you think is true Pops.

Tell me why its unfair.

Actually do some reading and understand what the Fair Tax is and then tell me why you think the way that you think if you indeed think at all and don't just randomly cough up random bullshit.

I've done quite enough reading on the fair tax, it's been supported by the fringe element that claim income tax is unconstitutional for at least 30yrs. More people support repealing SS and medicare than support the fair tax.

And whats not fair about it? Simply it taxes spending not income which allows wealthy people to amass huge sums of untaxed wealth while working class folks bear most all the tax load.

And call me names all you want, but your the one supporting fringe fairydust policy thats supported by less than 1% of the population. Abolish income tax gimma a break

 

[wiseoldowl]

Where the heck did you get this idea?

Of course the sale of used goods requires sales tax.

And your assumption in your OP that you can't cheat on a 'sales tax' is dead wrong. VAT fraud is a big deal in Europe.

Edit: You won't get rid of the IRS either, a VAT requires an awful lot of work by the IRS etc

Fern

A VAT and the FairTax are totally different. The VAT is added on at each level of production and is paid by everyone in that chain of production. The FairTax is added on by the seller of the goods or service at the point of final consumption and only he must file and submit a tax return. The number of tax returns to be monitored under a VAT way out number that of the FairTax. You will still need a government agency to monitor these returns, but it sure will be smaller than our current IRS.

 

[Tom]

Every tax scheme has flaws, so the best solution is what we have, all kinds of taxes.

 

[wiseoldowl]

I've done quite enough reading on the fair tax, it's been supported by the fringe element that claim income tax is unconstitutional for at least 30yrs. More people support repealing SS and medicare than support the fair tax.

And whats not fair about it? Simply it taxes spending not income which allows wealthy people to amass huge sums of untaxed wealth while working class folks bear most all the tax load.

And call me names all you want, but your the one supporting fringe fairydust policy thats supported by less than 1% of the population. Abolish income tax gimma a break

I love it when FairTax bashers throw out unsubstantiated percentages such as only 1% of the population opposes the FairTax; and more people support repealing S.S. and Medicare.

If you were such an expert, you would know it is the FairTax not the fair tax and you would know that Medicare is capitalized not medicare.

 

[wiseoldowl]

What about a frugal stud who tries to live on the bare minimum so he can purchase a nice home or car later on in life? He gets screwed by the annual prebate.

Again you make no sense. Two years of annual prebates would make a nice down payment on a house.

 

[Siddhartha]

I love it when FairTax bashers throw out unsubstantiated percentages such as only 1% of the population opposes the FairTax; and more people support repealing S.S. and Medicare.

If you were such an expert, you would know it is the FairTax not the fair tax and you would know that Medicare is capitalized not medicare.

Maybe you will answer my question: How will be the tax burden be shifted with the Fair Tax? Who will pay more and who will pay less with this tax plan?

 

[Deudalus]

I've done quite enough reading on the fair tax, it's been supported by the fringe element that claim income tax is unconstitutional for at least 30yrs. More people support repealing SS and medicare than support the fair tax.

Guilt by association politically is bullshit, you would think with all of these decades you have apparently spent on the Earth you would develop a bit of wisdom.

Hitler supported Universal Health Care. Does that make it wrong? Guilt by association at work.........

And whats not fair about it? Simply it taxes spending not income which allows wealthy people to amass huge sums of untaxed wealth while working class folks bear most all the tax load.

You obviously haven't studied it much or are not intellectually equipped to understand what you read.

Who spends more money the rich or poor? When you can answer that question then you would understand who would pay the higher tax load.

 

[Hacp]

First of all, under the FairTax, all goods and services are taxed except college tuition, and used goods. The prebate which is determined by family size, (for example: $415 per month for a couple and $559 for a family of four) is meant to offset the tax on necessity item such as food, clothing and utilities.

Prebates are fare because every legal citizen will receive the same prebate at the beginning of each month based on family size. Notice I said legal family.

Why do you give an exemption to college tuition? More government handouts? Can we afford it?

Also, this 400 dollar a month check is just another government handout. A person could grow his own food(or collect it from a food bank), live off the land, then collect his prebate and laugh his way to the bank.

 

[Hacp]

Your statement makes no sense. Everyone would pay the same tax rate under the FairTax, and everyone would receive the same prebate based on family size; how is this punishing productive people? Our current system is the one punishing productive people. If you need to take on a second job to support your family, you will most likely be thrown into a higher tax bracket causing you to not only pay a higher tax on your additional earnings but all your earnings.

Everyone does not pay the same rate if you have a prebate. Introducing a prebate means some people pay lower rates than others.