Possible New Fair Tax System...

[Juice Box]

There is a new 'Fair Tax' system that is being proposed in washington which would basiclly work as follows:

1) You keep 100% of your paychecks...no income tax
2) You are only taxed on the things you buy
3) Federal Sales tax would go up 1-3% on everything you buy

IMO...this would be MUCH better than a flat tax becuase it taxes people for their SPENDING rather than their EARNINGS....which would be more fair to the poor and end up taxing the rich. Any opinions on the system?

http://fairtax.org

edit: read a bit more...apparently there will be a 23% Tax on ALL NEW PURCHASES...no matter what (same for everyone)...but if its a used purchase..normal sales tax applies. So they are trying to tax the people that want to live lavishly

 

[imported_Kensai]

Sounds pretty good.

 

[dxkj]

Originally posted by: Kensai
Sounds pretty good.

Yeah... right... like that would work.


It would bankrupt the government.... you go from paying 10+% tax on your income and 5-7% on normal items (for a total of at LEAST 17% to only getting taxed 10% on items... the math is funnay, it just doesnt work



plus they will still suck all that other crap out of your paycheck....

 

[Juice Box]

Originally posted by: dxkj

Originally posted by: Kensai
Sounds pretty good.

Yeah... right... like that would work.


It would bankrupt the government.... you go from paying 10+% tax on your income and 5-7% on normal items (for a total of at LEAST 17% to only getting taxed 10% on items... the math is funnay, it just doesnt work



plus they will still suck all that other crap out of your paycheck....

No...the extra sales tax will go into SS....Think about it...if you are getting a lot more in your paycheck..you are obviously going to spend a lot more...simple supply/demand

when people have more money, they will buy more expensive things

 

[dullard]

Do we really need the 3rd Fair Tax thread this week? Heck, one was just posted today in the proper P&N forum.

As for my opinion, no I wouldn't vote for it. Too many loopholes, the wealthy can get off without paying a penny in taxes. It'll also be a huge boon for black markets where everything is tax free.

 

[5LiterMustang]

Originally posted by: Juice Box
There is a new 'Fair Tax' system that is being proposed in washington which would basiclly work as follows:

1) You keep 100% of your paychecks...no income tax
2) You are only taxed on the things you buy
3) Federal Sales tax would go up 1-3% on everything you buy

IMO...this would be MUCH better than a flat tax becuase it taxes people for their SPENDING rather than their EARNINGS....which would be more fair to the poor and end up taxing the rich. Any opinions on the system?

http://fairtax.org

I've read about a dozen books on flat taxes and NST's, I have to say the latest book I'm reading by STeve Forbes on the Flat tax has just about convinced me. 3% is NOT nearly enough for an NST to work. In fact the lowest number I've read about being proposed is 8% realistic estimates put it around 18%.

ANYTHING is better than what we have now but I'm starting to think the Flat Tax at 17% with generous personal and child exemptions is by far the best alternative.

 

[Gravity]

Too good to be true I'm afraid.

 

[PawNtheSandman]

Sounds good, but it looks like I would be buying everything on eBay in order to get around the taxes.

 

[Juice Box]

Originally posted by: PawNtheSandman
Sounds good, but it looks like I would be buying everything on eBay in order to get around the taxes.

knowing the government...they'd enforce that too...seeing as though it would be a FEDERAL tax rather than a state tax

 

[FoBoT]

Originally posted by: dxkj

Originally posted by: Kensai
Sounds pretty good.

Yeah... right... like that would work.


It would bankrupt the government.... you go from paying 10+% tax on your income and 5-7% on normal items (for a total of at LEAST 17% to only getting taxed 10% on items... the math is funnay, it just doesnt work



plus they will still suck all that other crap out of your paycheck....

did you read about it? that isn't what it says. your comments don't reflect what is in the proposal

 

[JJWalker]

So now all drug dealers and illegal immigrants would pay taxes? I like it!

 

[dullard]

Originally posted by: Juice Box
So they are trying to tax the people that want to live lavishly

Except those people buy the purchases without the 20+% tax out of the country and then pay 0% US taxes.

Originally posted by: JJWalker
So now all drug dealers and illegal immigrants would pay taxes? I like it!

Except that the black market will boom to avoid the 20+% tax, so these people will just continue their illegal ways and pay no taxes. Plus many variations of the fair tax (yes, there are others, not just the one linked above) give tax credits to the poor people. Thus the drug dealers with $0 income are considered poor and may get those tax credits (depending on the fair tax version).

 

[Juice Box]

Originally posted by: dullard

Originally posted by: Juice Box
So they are trying to tax the people that want to live lavishly

Except those people buy the purchases without the 20+% tax out of the country and then pay 0% US taxes.

perhaps they will create heavy import duties to prevent this?

 

[dullard]

Originally posted by: Juice Box
perhaps they will create heavy import duties to prevent this?

That is politically and economically quite dangerous. Anytime a tarriff is imposed, you run the risk of angering the international community. They often respond with similar taxes on US goods. Say goodbye to any US company that is significantly an exporter (and the jobs with them).

 

[PingSpike]

The government just adds taxes, it doesn't remove them. At least not until there's a bloody revolution.

 

[Juice Box]

Originally posted by: dullard

Originally posted by: Juice Box
perhaps they will create heavy import duties to prevent this?

That is politically and economically quite dangerous. Anytime a tarriff is imposed, you run the risk of angering the international community. They often respond with similar taxes on US goods. Say goodbye to any US company that exports (and the jobs with them).

that is a good point....I guess they'd have to find some way around that

 

[dullard]

Originally posted by: Juice Box
that is a good point....I guess they'd have to find some way around that

You begin with a great simple tax idea. Then as you fill each loophole, you create another loophole or another problem. Eventually, this simple tax plan becomes a massive tax nightmare. Just like what happened to our simple income tax system.

Other things to think about:
[*]The welfare system is based on income and so are many other benefits to the poor (cheaper housing, school lunch, reduced phone bills, etc). What do we do with all these programs? What about colleges and scholarships and student loans? No more income to verify for all of this.
[*]Income tax is double checked - employer and employee both submit documents. Sales tax has just one check. Massive fraud is possible. Suppose a store reports just 1/10th of their true sales and collects the "fair tax" as profit. No one can possibly verify the truth of the sales.
[*]Social security must be completely redone. It is based entirely on income tax.
[*]Most retirement plans (based on income) must be scrapped and replaced.
[*]Housing will be significantly affected. Say goodbye to the mortgage tax deduction, and many will default.
[*]Wealth redistribution must be redone. Currently a family of 3 on $50k income is a lot wealthier than a family of 5 on that same $50k income in the same city. Thus, the government assists the family of 5 with child tax credits. The fair tax taxes the family of 5 more (since they cannot save as much and must spend more). Same goes for all other wealth redistributions.

I'm not saying that redoing some of the above is a bad thing. But the "fair tax" must incorporate a lot more than the simple idea that website says. We are talking about scrapping virtually everything we know and replacing it with something different. One person may benefit greatly, but another will be greatly harmed. Which are you? If you are greatly harmed would you still vote the same way? Or would you (like most people) vote without realizing that you might lose (or gain) bigtime in other areas?

 

[Toasthead]

like I said in the 5 other fair tax threads. It makes waay too much sense for our politicians to ever act on it.

 

[ShadowBlade]

thatd be awesome
you could not pay taxes if you wanted, you could just never buy anything

 

[upsciLLion]

Originally posted by: ShadowBlade
thatd be awesome
you could not pay taxes if you wanted, you could just never buy anything

It would decrease spending and increase investment quite a bit. Something of which this nation is in dire need.

 

[pmoa]

no way in hell would that work

 

[tm37]

Originally posted by: Juice Box

Originally posted by: dxkj

Originally posted by: Kensai
Sounds pretty good.

Yeah... right... like that would work.


It would bankrupt the government.... you go from paying 10+% tax on your income and 5-7% on normal items (for a total of at LEAST 17% to only getting taxed 10% on items... the math is funnay, it just doesnt work



plus they will still suck all that other crap out of your paycheck....

No...the extra sales tax will go into SS....Think about it...if you are getting a lot more in your paycheck..you are obviously going to spend a lot more...simple supply/demand

when people have more money, they will buy more expensive things

But everything will be more expensive.

 

[Juice Box]

Originally posted by: upsciLLion

Originally posted by: ShadowBlade
thatd be awesome
you could not pay taxes if you wanted, you could just never buy anything

It would decrease spending and increase investment quite a bit. Something of which this nation is in dire need.

QFT...with the crappy interest rates recently...no one is making investments

 

[Juice Box]

Originally posted by: tm37


But everything will be more expensive.

the ratio of which the amount of $$ you will get in a full check would easily out-weight the amount the tax would cause goods to be more expensive

 

[AdamDuritz99]

Originally posted by: dullard

Originally posted by: Juice Box
that is a good point....I guess they'd have to find some way around that

You begin with a great simple tax idea. Then as you fill each loophole, you create another loophole or another problem. Eventually, this simple tax plan becomes a massive tax nightmare. Just like what happened to our simple income tax system.

Other things to think about:
[*]The welfare system is based on income and so are many other benefits to the poor (cheaper housing, school lunch, reduced phone bills, etc). What do we do with all these programs? What about colleges and scholarships and student loans? No more income to verify for all of this.
[*]Income tax is double checked - employer and employee both submit documents. Sales tax has just one check. Massive fraud is possible. Suppose a store reports just 1/10th of their true sales and collects the "fair tax" as profit. No one can possibly verify the truth of the sales.
[*]Social security must be completely redone. It is based entirely on income tax.
[*]Most retirement plans (based on income) must be scrapped and replaced.
[*]Housing will be significantly affected. Say goodbye to the mortgage tax deduction, and many will default.
[*]Wealth redistribution must be redone. Currently a family of 3 on $50k income is a lot wealthier than a family of 5 on that same $50k income in the same city. Thus, the government assists the family of 5 with child tax credits. The fair tax taxes the family of 5 more (since they cannot save as much and must spend more). Same goes for all other wealth redistributions.

I'm not saying that redoing some of the above is a bad thing. But the "fair tax" must incorporate a lot more than the simple idea that website says. We are talking about scrapping virtually everything we know and replacing it with something different. One person may benefit greatly, but another will be greatly harmed. Which are you? If you are greatly harmed would you still vote the same way? Or would you (like most people) vote without realizing that you might lose (or gain) bigtime in other areas?

If you go to the website and read teh FAQ, that will answer most of your questions.