Obama to crack down on business taxes

[cybok0]

http://www.comcast.net/articles/news-general/20090504/US.Obama.Taxes/

[HDRoberts]

Good. Trying to avoid taxes by hiding profits overseas is WRONG.

[cybok0]

Agreed, plus this will bring back some money.

[fallout2600]

Hell yeah! That's tons of money in the US treasury, right where it belongs. Hopefully he can defeat the corporate lobbyists on the issue.

[stevenl]

The FairTax would solve this problem.

[HDRoberts]

The FairTax would solve this problem.

Fairtax, I personally believe, has its own problems.

[stevenl]

Certainly not worse then the current 324923042309million page tax system we have now. Plus you will only pay taxes when you choose to.

[HDRoberts]

While I agree simplifying the tax code is good, that doesn't mean Fairtax is the way to go.

I feel it is a regressive tax. It will create an underground economy of tax cheats. And lastly, as someone who is free of paying into social security, it will screw me.

[stevenl]

Depending on your station in life you could be getting a prebate to make up for that.

Also how does it create an "underground economy" The products have to pass from the factory, to a distrubuter then a wholesaler then typically to the store. In each of those moves the people have to verify they do not need to pay taxes on the goods. Once it hits the store then they have to collect taxes on the goods.

and its not regressive. Those who have more and spend more pay more taxes. Sorta like today. However unlike today they can decide how much they really want to pay. Instead of it just being taken from them. The same goes for you and I. Now I can make th decisions of where ALL my money goes. That extra 400$+ per pay check will be really nice for me. 800+ a month. It will benefit everyone who is working greatly. and those who are retired well you get the prebate, those in poverty they get a prebate..

The only thing I dont like is how they try to claim its only "23%" When in reality its 30%. If I spend 100$ on an item im paying 30$. The way they look an item is 77$ I pay 100$ for it so they say of that 100$ you spent 23% in taxes. But thats bunk math.

[HDRoberts]

Depending on your station in life you could be getting a prebate to make up for that.

Also how does it create an "underground economy" The products have to pass from the factory, to a distrubuter then a wholesaler then typically to the store. In each of those moves the people have to verify they do not need to pay taxes on the goods. Once it hits the store then they have to collect taxes on the goods.

The "prebate" I don't think handles the regression well enough. First, it only covers necessities. Durable goods are a different story. The wealthy can, inherently, afford goods which are more durable than the poor can. They might buy something costing twice as much, but it last 3 times longer, so they pay less tax. Also, the prebate doesn't take into account the propensity of the rich to save. Yes, they may eventually spend it, but for years, revenue may be driven more by the poor.

If by "that" you mean my social security, do you honestly believe that the government will be willing to send me a big fat check every year to make up for my lack of social security payments? More likely, they will force me to join social security, depriving me of more money now, and probably paying me back very little later. Heck, they could demand the money now in our well-manages public employees retirement system be turned over to social security.

And we can't close our borders to people or drugs now? Why won't people be slipping in with untaxed goods to sell?

[fallout2600]

Concerning FairTax, if we truly are a consumer based economy, then what happens when another recession hits and consumer spending drops dramatically, the tax stream would get squeezed. How does the Feds make up for the lack of tax revenue?

[cybok0]

Concerning FairTax, if we truly are a consumer based economy, then what happens when another recession hits and consumer spending drops dramatically, the tax stream would get squeezed. How does the Feds make up for the lack of tax revenue?

:thumbup::thumbup::thumbup:

[fallout2600]

That is why I support a Flat Tax. You know what you owe the govt regardless of any outside variables.

[cybok0]

That is why I support a Flat Tax. You know what you owe the govt regardless of any outside variables.

Agreed, make a percentage and everyone has to pay the same percentage, if they make it 6% then someone who makes $20,000 pays $1200 in taxes and someone that makes $1,000,000 pays $60,000 in taxes, seems fair to me.

Of course the percentage will probably be higher.

[HDRoberts]

and its not regressive. Those who have more and spend more pay more taxes. Sorta like today. However unlike today they can decide how much they really want to pay. Instead of it just being taken from them. The same goes for you and I. Now I can make th decisions of where ALL my money goes. That extra 400$+ per pay check will be really nice for me. 800+ a month. It will benefit everyone who is working greatly. and those who are retired well you get the prebate, those in poverty they get a prebate..

The only thing I dont like is how they try to claim its only "23%" When in reality its 30%. If I spend 100$ on an item im paying 30$. The way they look an item is 77$ I pay 100$ for it so they say of that 100$ you spent 23% in taxes. But thats bunk math.

Since you added some points, I'll address them. I partially addressed the "regressive" issue above. But one more point. I'll be screwed as a single person. Married couples, despite sharing a multitude of expenses, will get a double prebate. I won't The tax code certainly isn't fair to single people now, but it is better than Fairtax. I'll get a measly $100 per check. And I don't know where you get your figures, but based on http://www.fairtax.org/PDF/FairTaxPrebateExplained2007.pdf you are only getting $800/month if you are married with 6 kids.

I do agree, though, the math they use is ridiculous. It's a 30% sales tax, on top of the 7.75% I already pay in Cuyahoga County, OH.

[fallout2600]

Agreed, make a percentage and everyone has to pay the same percentage, if they make it 6% then someone who makes $20,000 pays $1200 in taxes and someone that makes $1,000,000 pays $60,000 in taxes, seems fair to me.

Of course the percentage will probably be higher.

Yep, totally agree.

[fallout2600]

Since you added some points, I'll address them. I partially addressed the "regressive" issue above. But one more point. I'll be screwed as a single person. Married couples, despite sharing a multitude of expenses, will get a double prebate. I won't The tax code certainly isn't fair to single people now, but it is better than Fairtax. I'll get a measly $100 per check. And I don't know where you get your figures, but based on http://www.fairtax.org/PDF/FairTaxPrebateExplained2007.pdf you are only getting $800/month if you are married with 6 kids.

I do agree, though, the math they use is ridiculous. It's a 30% sales tax, on top of the 7.75% I already pay in Cuyahoga County, OH.

I agree with you after taking a look at that website. It looks great on paper to some people, but its just another tax scheme. Far too many details, eventually it will be so complicated, no one will understand it.

[HDRoberts]

Yep, I'm a loser in the Fairtax system. I used their calculator, and they say I get $675 more. Problem is, they think I pay $2,900 in social security I don't pay.

I put in some typical "rich guy" numbers, and it seems they are winners, too. I guess we are headed to a big revenue shortfall with that system.

Of course, I bet everyone magically comes out a winner with their calculator.

[fallout2600]

They are probably using the calculator as a way of collecting data.

[stevenl]

Concerning FairTax, if we truly are a consumer based economy, then what happens when another recession hits and consumer spending drops dramatically, the tax stream would get squeezed. How does the Feds make up for the lack of tax revenue?

The same thing that happens right now. How many millions are out of work now. guess what. No money from them. They no longer have income so they pay no taxes (generally) but they will still continue the need to buy things. It may not be as nice as what they used to buy but they still need stuff.

[stevenl]

Agreed, make a percentage and everyone has to pay the same percentage, if they make it 6% then someone who makes $20,000 pays $1200 in taxes and someone that makes $1,000,000 pays $60,000 in taxes, seems fair to me.

Of course the percentage will probably be higher.

The fairtax is designed to keep the same amount of money that rolls in today, into the government. If the FLATTAX is implanted do you know how high they estimate that % will need to be to cover the shortfall of losing all that money from the rich? Estimates I have read, have the number anywhere from 35% to 50%. The lack of that rich guy making 1mill paying currently around 300k in taxes he now pays 60k. Great for him but who makes up the short fall? The guy making 20 and his measly 1200 isnt going to come close they need a lot more from him.

[stevenl]

Since you added some points, I'll address them. I partially addressed the "regressive" issue above. But one more point. I'll be screwed as a single person. Married couples, despite sharing a multitude of expenses, will get a double prebate. I won't The tax code certainly isn't fair to single people now, but it is better than Fairtax. I'll get a measly $100 per check. And I don't know where you get your figures, but based on http://www.fairtax.org/PDF/FairTaxPrebateExplained2007.pdf you are only getting $800/month if you are married with 6 kids.

I do agree, though, the math they use is ridiculous. It's a 30% sales tax, on top of the 7.75% I already pay in Cuyahoga County, OH.

The 800$ is the money I will now not have to pay uncle sam. Thats about the avg I pay to the system a month. Sure I "overpay" slightly so I may get back a few hundred in a "refund" but thats not the point.

Look at whatever you have taken out of your check right now for taxes (if you are your own boss you likely (aisde from SS) just pay whatever you owe at the end of that year, but whatever that amount is, is the amount per month you will have in your pocket. I dont need to spend that extra 800. I can use a little bit to cover my extra cost of paying the tax (which for the most part is minimal as my spending is mainly food and such a 30% increase on my costs to buy stuff that 800$ covers it well with money left over.)

For those that save, then good for them. But when that rich guy buys that mercedes and pays 10-15k in taxes thats where you get the money from. Hes not going to all of a sudden stop buying that car each year. In fact he will now have even more money in his pocket so he may even buy a nicer one.

That guy making 1 million remmeber he only pays 60k now instead of 300.. He can spare an extra 100k now to buy that bentley..

You also have to understand that all those embedded taxes you pay now will be eliminated, so if you believe in the free market the prices of those goods will begin to go down.. No longer does wal-mart pay 20billion in taxes, that money can now be used to invest into the company and they can cut prices even lower and still keep profits the same.

[stevenl]

Yep, I'm a loser in the Fairtax system. I used their calculator, and they say I get $675 more. Problem is, they think I pay $2,900 in social security I don't pay.

I put in some typical "rich guy" numbers, and it seems they are winners, too. I guess we are headed to a big revenue shortfall with that system.

Of course, I bet everyone magically comes out a winner with their calculator.

The people who pay no taxes will now have to pay taxes. Imagine that.. everyone paying a bit.. However the prebate will make up for most of those taxes you will have to pay extra.

If I read you earlier you said you will get a 100$ a month prebate.. thats 1200/year. If your yearly tax is going up 675 that prebate well and covers it.

[HDRoberts]

The fairtax is designed to keep the same amount of money that rolls in today, into the government. If the FLATTAX is implanted do you know how high they estimate that % will need to be to cover the shortfall of losing all that money from the rich? Estimates I have read, have the number anywhere from 35% to 50%. The lack of that rich guy making 1mill paying currently around 300k in taxes he now pays 60k. Great for him but who makes up the short fall? The guy making 20 and his measly 1200 isnt going to come close they need a lot more from him.

Agreed, Flat Tax isn't the way.

My proposal: Eliminate almost all deductions. Taxes should be filed per household, deduct an allowance for each household member. No other deductions, and no loopholes to avoid taxes. Simply lower everyone taxes.

[HDRoberts]

The people who pay no taxes will now have to pay taxes. Imagine that.. everyone paying a bit.. However the prebate will make up for most of those taxes you will have to pay extra.

If I read you earlier you said you will get a 100$ a month prebate.. thats 1200/year. If your yearly tax is going up 675 that prebate well and covers it.

Really, most fairtax proponents argue those in extreme poverty would make money, not paying any taxes. Even so, a few hundred bucks from poor people won't balance the federal budget.

But if you say that those that pay no taxes will pay taxes with fairtax, while the rich make out, congratulations on having a regressive tax.

The calculator takes the prebate into account. Me, middle class tax payer, making less than $50k, is out $2,200 more under Fairtax.

When I redo the calculation, assuming that I pay social security and invest what I didn't pay PERS (deducting social security cost), and it does admit I'm out $1900.

[fallout2600]

I'll say it again, FairTax is a scheme. Any system that claims to have no losers is a scheme. This has also been designed by Huckabee and promoted by Newt. I'm surprised to see stevenl supporting Newt after his rants about how much he hates the "Drill Here Drill Now" crowd. These guys are grasping for a base of voters while trying to convince people that they have the perfect tax plan.


As Mr. Huckabee correctly points out, there can be advantages to taxing consumption rather than income. FairTax proponents assert that a 23 percent tax rate would generate sufficient revenue to replace the income, payroll, corporate and estate taxes. But that claim is based on a misleading computation that in turn is based on a series of improbable assumptions. The actual tax rate would have to be far higher to generate the same revenue that the government collects now.

First, the 23 percent figure is disingenuous. If the current price of a widget is $1, a 30-cent sales tax would be added at the register under the FairTax. Because 30 cents is 23 percent of $1.30, backers of the tax claim that the tax rate is 23 percent. In addition, to make the claim that the tax would bring the same amount of money into the Treasury, FairTax proponents assume that the government is paying tax to itself on its purchases.

The Presidents' Advisory Panel on Tax Reform -- that's President Bush's tax panel -- calculated that the rate would have to be at least 34 percent, not 30 percent, "and likely higher over time if the base erodes, creating incentives for significant tax evasion." Brookings Institution economist William Gale puts the rate at 44 percent -- and his calculation doesn't take into account cheating, for which there would be ample incentive.

Furthermore, the 30 percent rate assumes that the tax would be imposed on a broad range of goods and services that has no precedent -- putting a hefty and politically implausible extra tax bite on purchases of new homes, rent, food, health insurance, medical care and mortgage interest.

Source: http://www.washingtonpost.com/wp-dyn/content/article/2007/12/30/AR2007123001909.html

If under Bush they estimated the actual rate needed to be up to 44%, then what do you imagine the rate would have to be under Obama and his 3.5 trillion dollar budget?

Secondly, the govt could increase the rate at any time, same is true for the Flat Tax. Are we sure we want that type of tax control over all of us? I mean, at least now, class warfare is holding the tax rates down for the majority of America which is the middle class.

[vurbano]

Good. Trying to avoid taxes by hiding profits overseas is WRONG.And there's a real easy way to make up for those lost profits when you tax me. Enjoy your price increase.

[vurbano]

Flat tax is the only blind tax that treats everyone the same. It is the only fair way to do it. EVERYTHING else is social engineering

[HDRoberts]

Flat tax is the only blind tax that treats everyone the same. It is the only fair way to do it. EVERYTHING else is social engineering

Fortunately enough, I am an engineer. :)

I can't see what is so wrong with high income earners paying a higher marginal rate. You make more money, you still make more money. No wealthy person has ever been taxed to the poor house.

With a marginal tax system, everyone is treated the same. Your first $50k is treated the same as my first $50k. Taxed at the same rate. Thing is, my income stops there, others go on. Make more, then the rate goes up. I sure which I could move up a tax bracket.

We just have to close the loopholes that makes Warren Buffet pay a lower tax rate than his own secretary.

[HDRoberts]

And there's a real easy way to make up for those lost profits when you tax me. Enjoy your price increase.

I thought competition was supposed to keep prices low under the free market?

Vurb, now also a supporter of tax evasion!:)

[vurbano]

Fortunately enough, I am an engineer. :)

I can't see what is so wrong with high income earners paying a higher marginal rate. I am a P.E and I do. And believe it or not I am not rich. I believe every dollar should be taxed equally it should matter how many of them I have or do not have. people should not be punushed for working hard. And if they do not work hard they should suffer. When you do not charge one flat rate you are practicing welfare.

[HDRoberts]

I am a P.E and I do. And believe it or not I am not rich. I believe every dollar should be taxed equally it should matter how many of them I have or do not have. people should not be punushed for working hard.. When you do not do that you are practicing welfare.

How are people punished? They are still making more money. You act as if the marginal tax rate peaks at 110%. It stops at 39%. And under my proposal, that number could go down. And again, where do you get the idea that everyone who makes less than you doesn't work hard. If people aren't working, they still won't pay taxes under a flat tax.

[vurbano]

How are people punished? .Every dollar they have is not being taxed at the same rate as every dollar everyone else has.

[msmith198025]

Every dollar they have is not being taxed at the same rate as every dollar everyone else has.

I agree. They should all be taxed the same

[vurbano]

And again, where do you get the idea that everyone who makes less than you doesn't work hard. If people aren't working, they still won't pay taxes under a flat tax.
Take away their tax system welfare and they will scream. The solution for them is to get a second job and encourage their children to get more education. Cut out the giant welfare system that is the US tax code and we will have a more responsible more motivated people in the US.

[HDRoberts]

Every dollar they have is not being taxed at the same rate as every dollar everyone else has.

Uh, no, their first X dollars are taxed at the same rate as everyone else. That is the idea of a marginal system.


Take away their tax system welfare and they will scream. The solution for them is to get a second job and encourage their children to get more education. Cut out the giant welfare system that is the US tax code and we will have a more responsible more motivated people in the US.

I'd love to see you explain how someone is to work 2 jobs, go to college, maybe even raise kids, all while giving 20 some percent of their income to the government. All while the rich enjoy what amounts to a 10% raise. Their screams will be for good reason. And that hardly seems motivating.

[froggigger]

Lots of folks here do not understand the Fairtax. The price on the shelf is what you pay. If an item has a $100 price tag, you pay $100. The Fairtax is embedded in the price just as embedded taxes are in the price of everything you buy today. The difference is that the embedded taxes everyone pays today is hidden. Under the Fairtax, if you buy an item that has a shelf price of $100, the receipt says $77 for the item, $23 Fairtax, total $100. Call it 23% or 30%, calculated inclusive or exclusive, and the numbers come out the same.

People don't understand that what they pay in income and payroll taxes is not their total tax burden. Every purchase one makes includes on average a 22% tax burden from upstream taxation. The buyer never realizes it is being paid, just the way government likes it. Under the Fairtax, no one pays more than 23%, or 30% if you prefer to calculate it that way. It will also tax wealth at a higher rate. Most wealthy people pay the 15% cap gains tax rate because they have no income but live off investments. The Fairtax will increase that to 23% when they buy stuff, and the wealthy buy a LOT of high price stuff.

Consider too that one's buying power will be greater. One of three things will happen. One, without the upstream taxation, prices will drop on average 22% and your take-home pay will be about the same. Or second, prices will remain the same but one will have more take-home pay because no federal taxes are deducted from the paycheck. Or third, and most likely, it will be a combination of the two previous examples. Prices will likely drop by some percentage, and take-home pay will increase by some percentage.

As for consumption taxation v. income taxation, consumption is a more stable source of revenue than income. This chart compares adjusted gross income v. personal consumption expenditures.

14

The Fairtax was not designed by Huckabee and Newt. They are just supporters. There has been more study and more money spent on the Fairtax than any other tax system---ever. It ain't perfect but it's a heck of a lot closer to perfection than what we have now. Our current tax code is a politicians playground and it needs to go. ANY new tax system is better than what we have now.

[froggigger]

Uh, no, their first X dollars are taxed at the same rate as everyone else. That is the idea of a marginal system.

I'd love to see you explain how someone is to work 2 jobs, go to college, maybe even raise kids, all while giving 20 some percent of their income to the government. All while the rich enjoy what amounts to a 10% raise. Their screams will be for good reason. And that hardly seems motivating.

It a rare person indeed who "gives" income to the government. It is taken. Plus, the 20% isn't all they pay. Don't forget the hidden average 22% tax they pay every time the register rings up a sale. Then you have the most regressive tax of all that hits poor people hardest. Payroll taxes. The problem is government spending. If you really want tax rates to go down then tell your beloved government to stop spending so dad-blamed much, much of it to buy votes.

[HDRoberts]

Lots of folks here do not understand the Fairtax. The price on the shelf is what you pay. If an item has a $100 price tag, you pay $100. The Fairtax is embedded in the price just as embedded taxes are in the price of everything you buy today. The difference is that the embedded taxes everyone pays today is hidden. Under the Fairtax, if you buy an item that has a shelf price of $100, the receipt says $77 for the item, $23 Fairtax, total $100. Call it 23% or 30%, calculated inclusive or exclusive, and the numbers come out the same.

People don't understand that what they pay in income and payroll taxes is not their total tax burden. Every purchase one makes includes on average a 22% tax burden from upstream taxation. The buyer never realizes it is being paid, just the way government likes it. Under the Fairtax, no one pays more than 23%, or 30% if you prefer to calculate it that way. It will also tax wealth at a higher rate. Most wealthy people pay the 15% cap gains tax rate because they have no income but live off investments. The Fairtax will increase that to 23% when they buy stuff, and the wealthy buy a LOT of high price stuff.

Consider too that one's buying power will be greater. One of three things will happen. One, without the upstream taxation, prices will drop on average 22% and your take-home pay will be about the same. Or second, prices will remain the same but one will have more take-home pay because no federal taxes are deducted from the paycheck. Or third, and most likely, it will be a combination of the two previous examples. Prices will likely drop by some percentage, and take-home pay will increase by some percentage.

As for consumption taxation v. income taxation, consumption is a more stable source of revenue than income. This chart compares adjusted gross income v. personal consumption expenditures.

14

The Fairtax was not designed by Huckabee and Newt. They are just supporters. There has been more study and more money spent on the Fairtax than any other tax system---ever. It ain't perfect but it's a heck of a lot closer to perfection than what we have now. Our current tax code is a politicians playground and it needs to go. ANY new tax system is better than what we have now.

Nice explanation... of why it won't work. If what you say is true, revenues will drop like a stone. How would we cope with that all the sudden? As fallout showed earlier, 30% is way to low to get it to be revenue neutral. If we really are paying 22% already (I'm skeptical of that), an 8% increase is all that is needed? Unless we start taxing food, housing, and other things that aren't taxed now. Even then 40% may not be enough.

If ANY system is better, I propose one where only people making more than $75k pay taxes.:)

[msmith198025]

See HD, you are against YOU paying more (from what I have gathered on here), but for others (in some cases). I dont get that. You because you dont have kids, but for some others because they make more. Everyone has their agenda. Both have points.
You have a good one with having to pay so much more because you are single without kids.
The rich, because many are small business owners that look good on paper, but cant afford this increase, no matter how big or small.

[msmith198025]

I'd love to see you explain how someone is to work 2 jobs, go to college, maybe even raise kids, all while giving 20 some percent of their income to the government.

No one said it was easy, but are you saying it does not happen? Are there not parents that do exactly this?

[froggigger]

Nice explanation... of why it won't work. If what you say is true, revenues will drop like a stone. How would we cope with that all the sudden? As fallout showed earlier, 30% is way to low to get it to be revenue neutral. If we really are paying 22% already (I'm skeptical of that), an 8% increase is all that is needed? Unless we start taxing food, housing, and other things that aren't taxed now. Even then 40% may not be enough.

If ANY system is better, I propose one where only people making more than $75k pay taxes.:)

You still misunderstand. The 22% is not all the people pay now. It's just a hidden tax that people pay and don't even realize it over and above what they know they pay. You can't just add 8% to that 22% to get any figure that means anything. Apples/oranges. Food and housing and other thing are taxed now. The food producer paid taxes on the equipment he used, taxes on the seeds/seedlings, fertilizer, tractors, etc. The taxes are all overhead that were passed on. The truck that delivered the food was taxed as was its fuel, oil, etc. Then the final retailer pays taxes on the brick and mortar, electricity, etc. It's the same scenario for housing. All these taxes pass on to the final consumer, and when all is said and done, the average is a 22% higher final price due to all the upstream taxation. Only the final consumer pays the taxes. Upstream, taxes are overhead and are passed on.

The scenario you laid out in the final sentence is just liberal class warfare hogwash. :p

[Bear Paws]

[QUOTE]You still misunderstand. The 22% is not all the people pay now. It's just a hidden tax that people pay and don't even realize it over and above what they know they pay. You can't just add 8% to that 22% to get any figure that means anything. Apples/oranges. Food and housing and other thing are taxed now. The food producer paid taxes on the equipment he used, taxes on the seeds/seedlings, fertilizer, tractors, etc. The taxes are all overhead that were passed on. The truck that delivered the food was taxed as was its fuel, oil, etc. Then the final retailer pays taxes on the brick and mortar, electricity, etc. It's the same scenario for housing. All these taxes pass on to the final consumer, and when all is said and done, the average is a 22% higher final price due to all the upstream taxation. Only the final consumer pays the taxes. Upstream, taxes are overhead and are passed on.:thumbup:


The scenario you laid out in the final sentence is just liberal class warfare hogwash. :p That is until he starts making 75K. Like if there is a wage-price spiral as in the 1970s.. He even may see the AMT trap.
He may suddenly get tax religion.

[fallout2600]

Lots of folks here do not understand the Fairtax. The price on the shelf is what you pay. If an item has a $100 price tag, you pay $100. The Fairtax is embedded in the price just as embedded taxes are in the price of everything you buy today. The difference is that the embedded taxes everyone pays today is hidden. Under the Fairtax, if you buy an item that has a shelf price of $100, the receipt says $77 for the item, $23 Fairtax, total $100. Call it 23% or 30%, calculated inclusive or exclusive, and the numbers come out the same.

People don't understand that what they pay in income and payroll taxes is not their total tax burden. Every purchase one makes includes on average a 22% tax burden from upstream taxation. The buyer never realizes it is being paid, just the way government likes it. Under the Fairtax, no one pays more than 23%, or 30% if you prefer to calculate it that way. It will also tax wealth at a higher rate. Most wealthy people pay the 15% cap gains tax rate because they have no income but live off investments. The Fairtax will increase that to 23% when they buy stuff, and the wealthy buy a LOT of high price stuff.

Consider too that one's buying power will be greater. One of three things will happen. One, without the upstream taxation, prices will drop on average 22% and your take-home pay will be about the same. Or second, prices will remain the same but one will have more take-home pay because no federal taxes are deducted from the paycheck. Or third, and most likely, it will be a combination of the two previous examples. Prices will likely drop by some percentage, and take-home pay will increase by some percentage.

As for consumption taxation v. income taxation, consumption is a more stable source of revenue than income. This chart compares adjusted gross income v. personal consumption expenditures.

14

The Fairtax was not designed by Huckabee and Newt. They are just supporters. There has been more study and more money spent on the Fairtax than any other tax system---ever. It ain't perfect but it's a heck of a lot closer to perfection than what we have now. Our current tax code is a politicians playground and it needs to go. ANY new tax system is better than what we have now.

frog, I thought you were a free market, small govt guy. I can't believe you are falling into the FairTax trap. All it is the shifting around of where hidden taxes are. Its redistribution of wealth with a nice spin on it. At the end of the day, it just looks good on paper and sound great. By in order for it to work, you might tax home more money, but the taxes on the goods will go up. NOTHING will change, it will all balance itself out. This is a scheme properly titled "Fair" Tax to make everyone feel better than things are "fair".

If we truly want change, reduce govt spending to 7% of what it is now. Then either appeal the 16th amendment or hit EVERYONE with a 7% Flat rate tax on income. Then I might consider it. But don't give me the bogus idea of that I'm getting more take home money, but prices increased, so I saved no money. This is Keynesians gone mad. People need to save money, not re-inflate the same bubbles that keeps popping and allowing the govt to fix price and steal our wealth.

[HDRoberts]

See HD, you are against YOU paying more (from what I have gathered on here), but for others (in some cases). I dont get that. You because you dont have kids, but for some others because they make more. Everyone has their agenda. Both have points.
You have a good one with having to pay so much more because you are single without kids.
The rich, because many are small business owners that look good on paper, but cant afford this increase, no matter how big or small.

No, I'll gladly pay more for an increase in government services. Everyone gets good health care and free college or other secondary education, that would be worth it.

When it comes to the kids thing, what I'm against is the tax code rewarding lifestyle choices. You all act like you are for everyone being treated the same, but not really. Yeah, kids are expensive, but that is a choice you made.

I would also gladly pay a higher marginal rate if my income was higher. I don't get what is so hard to understand about this. The bottom line is you make more money, YOU STILL MAKE MORE MONEY regardless of the tax code. Even at the top rate, ever $100 you bring in gross adds $61 to your pocket.

Businesses are another issue. Business owners should be taxed by what they pay themselves, not some contrived estimate of the changing value of their business. Yes, something needs to be done there. But we shouldn't make that an excuse to lower taxes on the rich and raise taxes on the poor, which is exactly what a flat tax does.


No one said it was easy, but are you saying it does not happen? Are there not parents that do exactly this?

No. People may work 2 jobs, possibly raising kids, and go to college, all paying LESS THAN 20% of their income to the government.


You still misunderstand. The 22% is not all the people pay now. It's just a hidden tax that people pay and don't even realize it over and above what they know they pay. You can't just add 8% to that 22% to get any figure that means anything. Apples/oranges. Food and housing and other thing are taxed now. The food producer paid taxes on the equipment he used, taxes on the seeds/seedlings, fertilizer, tractors, etc. The taxes are all overhead that were passed on. The truck that delivered the food was taxed as was its fuel, oil, etc. Then the final retailer pays taxes on the brick and mortar, electricity, etc. It's the same scenario for housing. All these taxes pass on to the final consumer, and when all is said and done, the average is a 22% higher final price due to all the upstream taxation. Only the final consumer pays the taxes. Upstream, taxes are overhead and are passed on.

The scenario you laid out in the final sentence is just liberal class warfare hogwash. :p

Well, the last part was just sarcastically showing that ANY other tax system wouldn't necessarily be better.

I think you misunderstand my point. You seem to be saying that 22% of what we pay for anything is taxes. That may be true. But how can abolishing income tax, and slightly raising that tax you say we already pay to 30% be revenue neutral? That's the problem. Any tax system someone proposes where everyone magically has more money is hogwash. It is not revenue neutral. Somebody has to be a loser if someone is a winner. It is pure logic.

[Skyhi]

Besides the obvious (nobody likes to pay taxes), what exactly do you guys dislike so much about our current system? If somebody told me that tommorow my wife and I were going to be making $350k, but we'd have to pay a 39% tax on every dollar over $350k, I'd be happier than you could imagine......

[HDRoberts]

Besides the obvious (nobody likes to pay taxes), what exactly do you guys dislike so much about our current system? If somebody told me that tommorow my wife and I were going to be making $350k, but we'd have to pay a 39% tax on every dollar over $350k, I'd be happier than you could imagine......

I'd like to hear this answer, too. Seems most posters firmly believe every penny of their taxes is sent to a welfare mom with 12 kids who pays no taxes themselves.

[Skyhi]

Businesses are another issue. Business owners should be taxed by what they pay themselves, not some contrived estimate of the changing value of their business. Yes, something needs to be done there. But we shouldn't make that an excuse to lower taxes on the rich and raise taxes on the poor, which is exactly what a flat tax does.



I don't think this occurs.....if it does, could you provide a link? Businesses can be creative with their deductions, but I don't think they're calculating their income taxes based on the value of their business.

I agree with you, however, the the fair/flat tax would have to be incredibly high to be revenue neutral.

[Skyhi]

I don't think it's unfair for wealthy people to pay more. Bill Gates has a lot to lose, so he is benefiting from military/law enforcement protection a lot more than I am. :)

[fallout2600]

Besides the obvious (nobody likes to pay taxes), what exactly do you guys dislike so much about our current system? If somebody told me that tommorow my wife and I were going to be making $350k, but we'd have to pay a 39% tax on every dollar over $350k, I'd be happier than you could imagine......

Honestly, I got no problem with the current system and to come full circle, I think Obama is doing the right thing by attempting to reclaim legitimate tax money back from companies that are "smart" enough to hide it. My beef with the current system or the fairtax system is that it doesn't do enough to restrain govt spending. When the politicians need to find more money, they increase the tax rate at will.

[Skyhi]

Honestly, I got no problem with the current system and to come full circle, I think Obama is doing the right thing by attempting to reclaim legitimate tax money back from companies that are "smart" enough to hide it. My beef with the current system or the fairtax system is that it doesn't do enough to restrain govt spending. When the politicians need to find more money, they increase the tax rate at will.

That's a valid point, but unless there is a constitutional ammendment that will always be the case.

[msmith198025]

Besides the obvious (nobody likes to pay taxes), what exactly do you guys dislike so much about our current system? If somebody told me that tommorow my wife and I were going to be making $350k, but we'd have to pay a 39% tax on every dollar over $350k, I'd be happier than you could imagine......

I think it works as well as an overcomplicated tax system can, but I do have problems with it. And most of them come back to how hard many small business owners are hit.

[stevenl]

frog, I thought you were a free market, small govt guy. I can't believe you are falling into the FairTax trap. All it is the shifting around of where hidden taxes are. Its redistribution of wealth with a nice spin on it. At the end of the day, it just looks good on paper and sound great. By in order for it to work, you might tax home more money, but the taxes on the goods will go up. NOTHING will change, it will all balance itself out. This is a scheme properly titled "Fair" Tax to make everyone feel better than things are "fair".

If we truly want change, reduce govt spending to 7% of what it is now. Then either appeal the 16th amendment or hit EVERYONE with a 7% Flat rate tax on income. Then I might consider it. But don't give me the bogus idea of that I'm getting more take home money, but prices increased, so I saved no money. This is Keynesians gone mad. People need to save money, not re-inflate the same bubbles that keeps popping and allowing the govt to fix price and steal our wealth.

How is it shifting hidden taxes? Under the fair tax they are no longer hidden. Everyone will know exactly the tax they pay. Also how is it "redistrubution of wealth"

[stevenl]

Really, most fairtax proponents argue those in extreme poverty would make money, not paying any taxes. Even so, a few hundred bucks from poor people won't balance the federal budget.

But if you say that those that pay no taxes will pay taxes with fairtax, while the rich make out, congratulations on having a regressive tax.

The calculator takes the prebate into account. Me, middle class tax payer, making less than $50k, is out $2,200 more under Fairtax.

When I redo the calculation, assuming that I pay social security and invest what I didn't pay PERS (deducting social security cost), and it does admit I'm out $1900.

Those in poverty already make money under the current system. Its a huge welfare sytstem our tax code. How is the fairtax regressive though? Because those that dont pay will now have to pay? Thats not regressive thats fair. Everyone paying the same tax. But those under a certain income level will get a prebate to help them out.

[HDRoberts]

I don't think this occurs.....if it does, could you provide a link? Businesses can be creative with their deductions, but I don't think they're calculating their income taxes based on the value of their business.

I agree with you, however, the the fair/flat tax would have to be incredibly high to be revenue neutral.

Just a "for instance", my parents small home-based business. The value of inventory counts as profit. So money sitting on the shelves at the end of the year counts the same as actual money in their pockets for taxes.

[msmith198025]

Just a "for instance", my parents small home-based business. The value of inventory counts as profit. So money sitting on the shelves at the end of the year counts the same as actual money in their pockets for taxes.

Bingo, and this is what kills alot of companies, moreso right now.

[stevenl]

I'll say it again, FairTax is a scheme. Any system that claims to have no losers is a scheme. This has also been designed by Huckabee and promoted by Newt. I'm surprised to see stevenl supporting Newt after his rants about how much he hates the "Drill Here Drill Now" crowd. These guys are grasping for a base of voters while trying to convince people that they have the perfect tax plan.



Source: http://www.washingtonpost.com/wp-dyn/content/article/2007/12/30/AR2007123001909.html

If under Bush they estimated the actual rate needed to be up to 44%, then what do you imagine the rate would have to be under Obama and his 3.5 trillion dollar budget?

Secondly, the govt could increase the rate at any time, same is true for the Flat Tax. Are we sure we want that type of tax control over all of us? I mean, at least now, class warfare is holding the tax rates down for the majority of America which is the middle class.


The fairtax or any tax system can not control spending. Thats a different beast. The fairtax is desinged to be revenue neutral. Bringing in the same money today as the current system does.

Under the current system they can increase taxes as well. But under the current system they can do it without most people knowing, by playing with the code they can raise adn cut taxes for certain groups and not others and do many creative things. Youd have to be a tax genious to see they raised taxes.. Under the fairtax though if they raise taxes EVERYONE will know it the day they do it. It will make it harder for them to raise taxes because we would all know exactly what they did and when.

[HDRoberts]

Those in poverty already make money under the current system. Its a huge welfare sytstem our tax code. How is the fairtax regressive though? Because those that dont pay will now have to pay? Thats not regressive thats fair. Everyone paying the same tax. But those under a certain income level will get a prebate to help them out.

Ill just quote what I said in a previous post:

The "prebate" I don't think handles the regression well enough. First, it only covers necessities. Durable goods are a different story. The wealthy can, inherently, afford goods which are more durable than the poor can. They might buy something costing twice as much, but it last 3 times longer, so they pay less tax. Also, the prebate doesn't take into account the propensity of the rich to save. Yes, they may eventually spend it, but for years, revenue may be driven more by the poor.

[stevenl]

what regression? There is no regression. Everyone pays the same tax. No regressive system at all. If the rich buy something that costs twice us much they pay twice as much taxes.

and if the rich save hey good for them. But they will still spend. They will spend more then the poor so they will still pay more taxes.

The revenue will not be driven by the poor. They dont spend enough. The rich spend way more. Sure it may become closer to being balanced (instead of the top 5% paying 50% of the taxes as it is now). But the spending power will remain reletivly the same.

[HDRoberts]

http://en.wikipedia.org/wiki/Engel%27s_law

That is what makes sales taxes regressive.

[stevenl]

That makes no sense at all. Poor people may spend the majority % of their income on "needed items" Rich people will spend the majority on luxury items which cost more (which means they pay more taxes)

There is no regression. Everyone pays the 30% when they buy things. You dont want to pay the 30% well then cut back spending. The fairtax is the only system you can really 'control' your tax burden. You dont have to have that big screen tv. If you dont pay it, you dont pay no taxes on it. You choose to pay the taxes.

[HDRoberts]

Regression refers to the percent of INCOME paid toward taxes, not the actual tax value or percent of tax paid as sales tax.

[stevenl]

The fairtax is not about income though. It does not matter how much you make under the fairtax everyone will pay the same % of taxes when they purchase goods.

Why should I be punished for making 75k a year? Why should bill gates be punished for making billions ?

When I buy my toyota I will pay 30% tax.. When he buys his mercedes he will pay 30%. He is still paying way more taxes then I am. I will buy a car every few years he may buy one every year.. If I win the lottery why does uncle sam take 40% of it? What did they do to get that money? When I spend that money though I will pay taxes on the spent money.

[HDRoberts]

When talking regressive versus progressive taxes, it is always about income.

I guess some people will keep drinking the Fairtax Kool-Aid.

[stevenl]

Ill keep drinking my kool-aid you keep your wealth envy.

[HDRoberts]

Oh, I why haven't you Fairtaxers answer my earlier question: Who is a loser under Fairtax? If everyone is a winner, it is not revenue neutral.

[stevenl]

Not sure what you mean by losers? If you mean everyone will now have to pay a fairshare of taxes and there will be no more tax-welfare then I guess the losers will be those who rely on that welfare.

The loser will be that single mother of 2 who makes 20k a year pays no taxes and gets 3k$ back as a "refund" which is nothing more then a welfare check..

[fallout2600]

When I buy my toyota I will pay 30% tax.. When he buys his mercedes he will pay 30%. He is still paying way more taxes then I am. I will buy a car every few years he may buy one every year.. If I win the lottery why does uncle sam take 40% of it? What did they do to get that money? When I spend that money though I will pay taxes on the spent money.

Go back and read frog's post, the FairTax may not completely eliminate your income taxes. As a result you are still being double taxed. It isn't a change, its just changing the percentage of different taxes, but it all ends up the same for each individual. That's why the calculator used your personal data to compute the end results. By putting a little more money in your hands, you get the illusion that you make more money, when the reality is that you will still spend it on the same stuff you always spent it on, the only difference is that the stuff you normally buy will be more expensive. The govt will still collect the same money, but the only difference is that you feel "better" about it being "fair". Unless they completely eliminate income tax, its just a hack to please the masses.

[HDRoberts]

What I mean is if some people pay less taxes under Fairtax, others HAVE to pay more.

So you answered it. We will shift a large chunk of the tax to a single mother of 2 making $20k. But wait, according to Fairtax proposers, a single mother of 2 gets $4,048 annual prebate, based on a $17,600 consumption allowance. So assuming she spends all $20k on taxable items, the government collects all of $552. I hope we have a lot of single mothers of 2.

[stevenl]

It does eliminate the income tax completly. You need to read his post again. It eliminates all payroll taxes, capital gains taxes, amts. etc.

You will get to keep ALL The money you earn. You will only pay taxes on what you spend. Also with the removal of the embedded taxes you may even have a net gain of buying power.

[stevenl]

What I mean is if some people pay less taxes under Fairtax, others HAVE to pay more.

So you answered it. We will shift a large chunk of the tax to a single mother of 2 making $20k. But wait, according to Fairtax proposers, a single mother of 2 gets $4,048 annual prebate, based on a $17,600 consumption allowance. So assuming she spends all $20k on taxable items, the government collects all of $552. I hope we have a lot of single mothers of 2.

Your right. So now instead of her getting a check for 3k she will now pay 552$ in taxes. That is fair. Why should she get 3k$ for nothing? She should pay taxes like anyone else. She uses the same roads I do. She already has access to more social programs then I do. I cant get housing assitance. I make to much. I cant get food stamps, I make to much. Why shouldnt she now start paying some taxes?

So she pays only 552 but the government gains 3552 (because they are not sending her that check)

[fallout2600]

It does eliminate the income tax completly. You need to read his post again. It eliminates all payroll taxes, capital gains taxes, amts. etc.

You will get to keep ALL The money you earn. You will only pay taxes on what you spend. Also with the removal of the embedded taxes you may even have a net gain of buying power.

Maybe I'm interpreting in incorrectly, but this:


One, without the upstream taxation, prices will drop on average 22% and your take-home pay will be about the same. Or second, prices will remain the same but one will have more take-home pay because no federal taxes are deducted from the paycheck. Or third, and most likely, it will be a combination of the two previous examples. Prices will likely drop by some percentage, and take-home pay will increase by some percentage.

3rd option means they will adjust the prices of goods (hidden upstream taxes) down a little and adjust down the income tax a little. That implies you still pay income tax!

Am I wrong?

[stevenl]

I think what he is saying about take home pay increase is the form of a raise. Because your company will no longer be spending 6.5% of your salary on SS taxes, they may give that 6.5% to you the employee. Or they will use the extra money to lower prices, to be more competitive.

But under the fairtax you pay 0 income taxes. You pay 0 payroll taxes. The fairtax is the ONLY taxes you pay (aside from your state taxes which are independent)


Imagine a company like walmart with almost 1million employees. They pay 6.5% per employee (based on their salary) in SS taxes. Now that no longer have that to pay that so they have 3 options. Option 1. They give their employees a raise. 2. They have lower overhead so they cut prices. or 3. they just take more profit..

The free Market though makes 1 and 2 more likely. Because remember Target gets the same break. and if Target wants to be competitive with wal-mart they will drop their prices in which case walmart will follow suite. To get employees walmart will have to keep pay rates high enough to attract them.

[fallout2600]

stevenl, you make a great sheep for Newt and Huckabee. :)

[HDRoberts]

Imagine a company like walmart with almost 1million employees. They pay 6.5% per employee (based on their salary) in SS taxes. Now that no longer have that to pay that so they have 3 options. Option 1. They give their employees a raise. 2. They have lower overhead so they cut prices. or 3. they just take more profit..

The free Market though makes 1 and 2 more likely. Because remember Target gets the same break. and if Target wants to be competitive with wal-mart they will drop their prices in which case walmart will follow suite. To get employees walmart will have to keep pay rates high enough to attract them.

What's to stop WalMart and Target both from going with option 3?

[stevenl]

JC Penny. And the other hundreds of retailers around the nation.

The Free Market my friend.

[HDRoberts]

Yes, so many people who are headed to Walmart or Target wind up a JC Penny. Sorry, but history has shown that the free market doesn't stop collusion.

[stevenl]

Right because Target and Wal-Mart shareholders will be just fine with them not trying to increase market share....

When Wal-Mart entered the scene they won the market because they were competitive. If they want to keep their lead they need to remain competitive. If Target wants to take over the top spot they will need to be even more competitive. The number 2 3 4 5 6 7 guys keep the #1 guy in check.

[fallout2600]

Back on topic:

http://www.bloomberg.com/apps/news?pid=20601109&sid=aWoQkk2WY1oc&refer=home


Seagate Technology, the world’s largest maker of hard disk drives, is headquartered in Scotts Valley, California. Yet the documents it files with the Securities and Exchange Commission list its address on South Church Street in George Town, the capital of the Cayman Islands.

Seagate (http://www.bloomberg.com/apps/quote?ticker=STX%3AUS) is just one of the companies that may be affected by President Barack Obama’s proposal yesterday to raise about $190 billion over the next decade by outlawing techniques used by U.S. companies in offshore locations to avoid paying taxes. While the U.S. corporate tax rate is 35 percent, Seagate paid an effective tax rate of 5 percent in the year ended June 2008, according to data compiled by Bloomberg.
30% tax savings, wow.


Gotta agree with the President on this:


A five-story office building on South Church Street in the Caymans serves as the official address for 18,857 corporations. That building, called Ugland House, is listed in SEC (http://www.sec.gov/) filings as Seagate’s headquarters. About half those Cayman companies had billing addresses in the U.S., according to a 2008 GAO study.
President Obama referred to Ugland House yesterday.



“On the campaign, I used to talk about the outrage of a building in the Cayman Islands that had over 12,000 businesses claim this building as their headquarters,” Obama said. “And I’ve said before, either this is the largest building in the world or the largest tax scam. And I think the American people know which it is: The kind of tax scam that we need to end.”

[HDRoberts]

Wow indeed.

[stevenl]

Under the fair tax they would have no reason to be in the Caymans.

[fallout2600]

Or they could simply close the loophole and require those American companies to pay their taxes. Seems like it would much easier to close the loophole than create an entire new tax system.

[stevenl]

Easier yes, but better for the nation? no. These companies spent billions on lobbiest for these loopholes they arent going anywhere. There will always be a loop hole somewhere some how in a system as complex as ours. Heck they estimate we spend over 250billion $'s to be tax compliant.

[Carl]

about time the corporations would pay something.

[stevenl]

What are you talking about. They already pay more then you will make in your lifetime.

[vurbano]

What are you talking about. They already pay more then you will make in your lifetime.:thumbup:

[vurbano]

When I buy my toyota I will pay 30% tax.. When he buys his mercedes he will pay 30%.
And when he buys a toyota to dodge your taxes the fair tax goes in the trash.:augentreher:

[stevenl]

He will still pay the Fairtax on a toyota.. I guess its possible he could fly to japan and buy a toyota there and hope it meets US standards to drive on the road here and then ship it back to the US.. I assume though it would be more expensive then just buying it at his local dealer...

[froggigger]

frog, I thought you were a free market, small govt guy. I can't believe you are falling into the FairTax trap. All it is the shifting around of where hidden taxes are. Its redistribution of wealth with a nice spin on it. At the end of the day, it just looks good on paper and sound great. By in order for it to work, you might tax home more money, but the taxes on the goods will go up. NOTHING will change, it will all balance itself out. This is a scheme properly titled "Fair" Tax to make everyone feel better than things are "fair".

If we truly want change, reduce govt spending to 7% of what it is now. Then either appeal the 16th amendment or hit EVERYONE with a 7% Flat rate tax on income. Then I might consider it. But don't give me the bogus idea of that I'm getting more take home money, but prices increased, so I saved no money. This is Keynesians gone mad. People need to save money, not re-inflate the same bubbles that keeps popping and allowing the govt to fix price and steal our wealth.

You have read enough of my stuff to know exactly where I stand. Sure the best alternative is for government to cut spending and stand aside and let the free market work. The reality is that will not happen unless the voters wake up or a constitutional convention is called. Neither is likely. Government will continue to grow and take more of the achiever's incomes. Since government ain't going to change, we need to have more fiscal transparency. The Fairtax doesn't address government over-spending, or government created bubbles, or government stealing our wealth. It's not going to educate the government economists that think Mr. Keynes' has the only credible economic plan. It does deal with the transparency. There is not a person alive in the USA that can tell you exactly how much they pay in taxes. No one knows. With the Fairtax, everyone will know to the penny what they pay if they so choose to keep up with it. That little tidbit alone will be invaluable to everyone except the politicians who use the tax code to play their political games. That is why I support the Fairtax.

[Bear Paws]

Back on topic:

http://www.bloomberg.com/apps/news?pid=20601109&sid=aWoQkk2WY1oc&refer=home

30% tax savings, wow.


Gotta agree with the President on this:

A five-story office building on South Church Street in the Caymans serves as the official address for 18,857 corporations. That building, called Ugland House, is listed in SEC filings as Seagate’s headquarters. About half those Cayman companies had billing addresses in the U.S., according to a 2008 GAO study.
President Obama referred to Ugland House yesterday.
Thats a building for the law firm of http://www.maplesandcalder.com/default.aspx
for Legal Service of Record and advice.

I'm just small potatoes, I get my mail at;
The Huntlaw Building,
75 Fort Street
George Town Grand Cayman
Cayman Islands

[froggigger]

Well, the last part was just sarcastically showing that ANY other tax system wouldn't necessarily be better.

I think you misunderstand my point. You seem to be saying that 22% of what we pay for anything is taxes. That may be true. But how can abolishing income tax, and slightly raising that tax you say we already pay to 30% be revenue neutral? That's the problem. Any tax system someone proposes where everyone magically has more money is hogwash. It is not revenue neutral. Somebody has to be a loser if someone is a winner. It is pure logic.

Pure logic dictates taking into account all the pertinent information and not trying to pass opinion as logic. I'll be the first to admit that is extremely hard to get out of the income taxation mindset. It's what we all know, and it's hard to accept that there may be a better way for government to fund itself.

The consumption base is significantly larger than the income tax base, and any other alternative. It imposes the lowest tax rate of any revenue-neutral alternative and the same income is never doubly taxed. For example, taxable adjusted gross income in 2001 was $6.17 trillion. The total taxable consumption base was $11.244 trillion which, at the 23% Fairtax rate, would generate $358 billion more than the taxes it replaces. These are not "pull out of the butt" figures. It's all documented on http://www.fairtax.org/site/PageServer

The Fairtax also encourages saving, but not at the expense of retailers. Even Alan Greenspan correctly states that consumption taxes encourage savings and capital formation, which in turn drives economic expansion. It does, however, take time. Since the Fairtax reduces the tax bias against savings and investment, they will initially grow faster than consumption. Over time, increased capital stock results in higher output, higher productivity, and then higher consumption.

BTW, the losers will be the evil greedy wealthy folks you despise so much. The Fairtax is actually more progressive than the income tax. The wealthy in general pay capital gains taxes which currently are 15%. With the Fairtax, they will pay 23% on all purchases, and the wealthy buy a lot of stuff---expensive stuff.

[froggigger]

Besides the obvious (nobody likes to pay taxes), what exactly do you guys dislike so much about our current system? If somebody told me that tommorow my wife and I were going to be making $350k, but we'd have to pay a 39% tax on every dollar over $350k, I'd be happier than you could imagine......


I'd like to hear this answer, too. Seems most posters firmly believe every penny of their taxes is sent to a welfare mom with 12 kids who pays no taxes themselves.

The biggest problem is that no one knows exactly what their tax burden is. Government likes it that way. Why muddy the waters with trivial details. :augentreher:

[froggigger]

Honestly, I got no problem with the current system and to come full circle, I think Obama is doing the right thing by attempting to reclaim legitimate tax money back from companies that are "smart" enough to hide it. My beef with the current system or the fairtax system is that it doesn't do enough to restrain govt spending. When the politicians need to find more money, they increase the tax rate at will.

It's not the intent of the Fairtax to restrain government spending. It will, however, be a lot more transparent if government wants to increase taxes. They can no longer have "targeted" increases. If they raise the Fairtax percentage, everyone pays more and everyone knows they are paying more.

[froggigger]

Those in poverty already make money under the current system. Its a huge welfare sytstem our tax code. How is the fairtax regressive though? Because those that dont pay will now have to pay? Thats not regressive thats fair. Everyone paying the same tax. But those under a certain income level will get a prebate to help them out.

Actually, everyone gets the prebate. It's based on family size and the poverty level. In essence, everyone spends tax-free up the the poverty level.

[froggigger]

Just a "for instance", my parents small home-based business. The value of inventory counts as profit. So money sitting on the shelves at the end of the year counts the same as actual money in their pockets for taxes.

Under the Fairtax, their inventory would receive a one-time credit for taxes already paid, ie. embedded taxes. After that, the inventory is just that. Inventory---and it's not taxed. There are no more embedded taxes in what they pay for an inventory item.

[froggigger]

Oh, I why haven't you Fairtaxers answer my earlier question: Who is a loser under Fairtax? If everyone is a winner, it is not revenue neutral.

I answered it. The wealthy are the losers. You should love that part of it.

[froggigger]

Go back and read frog's post, the FairTax may not completely eliminate your income taxes. As a result you are still being double taxed. It isn't a change, its just changing the percentage of different taxes, but it all ends up the same for each individual. That's why the calculator used your personal data to compute the end results. By putting a little more money in your hands, you get the illusion that you make more money, when the reality is that you will still spend it on the same stuff you always spent it on, the only difference is that the stuff you normally buy will be more expensive. The govt will still collect the same money, but the only difference is that you feel "better" about it being "fair". Unless they completely eliminate income tax, its just a hack to please the masses.

I don't know which post you are referring to but enacting the Fairtax requires the repeal of the 16th amendment first. It is no hack.

[Bear Paws]

Besides the obvious (nobody likes to pay taxes), what exactly do you guys dislike so much about our current system? If somebody told me that tommorow my wife and I were going to be making $350k, but we'd have to pay a 39% tax on every dollar over $350k, I'd be happier than you could imagine......Sure...Its easy to give it away if came easy..
You might not be if it took you 10-20 years of hardly any income busting your nuts 80+ hours a week to achieve that. Thats most of small business owners. Living only on hot dogs, beans and a dream for years...

[froggigger]

Maybe I'm interpreting in incorrectly, but this:



3rd option means they will adjust the prices of goods (hidden upstream taxes) down a little and adjust down the income tax a little. That implies you still pay income tax!

Am I wrong?

Yes, you're wrong. :) Basically, income and payroll taxes are no longer required to be taken from a paycheck because they no longer exist. The employer also no longer has a matching contribution. That means X amount of money can be removed from the price structure, or the same X amount of money can remain with the employee, or a middle ground can be reached where the employee keeps some and the prices drop some. Whichever way it goes, the total pay increase, or total price drop, or total combination of both, can't exceed X.

[froggigger]

What's to stop WalMart and Target both from going with option 3?

Competition.

[froggigger]

Back on topic:

http://www.bloomberg.com/apps/news?pid=20601109&sid=aWoQkk2WY1oc&refer=home

30% tax savings, wow.


Gotta agree with the President on this:

Pass the Fairtax and the issue will be moot. ;)

[froggigger]

about time the corporations would pay something.

Corporations do not pay tax. Tax is overhead and is passed along in the price structure.

[froggigger]

What I mean is if some people pay less taxes under Fairtax, others HAVE to pay more.

So you answered it. We will shift a large chunk of the tax to a single mother of 2 making $20k. But wait, according to Fairtax proposers, a single mother of 2 gets $4,048 annual prebate, based on a $17,600 consumption allowance. So assuming she spends all $20k on taxable items, the government collects all of $552. I hope we have a lot of single mothers of 2.

She is already paying about the same amount of tax. She just doesn't know it and government darn sure won't tell her. Embedded taxes, remember?

[fallout2600]

You have read enough of my stuff to know exactly where I stand. Sure the best alternative is for government to cut spending and stand aside and let the free market work. The reality is that will not happen unless the voters wake up or a constitutional convention is called. Neither is likely. Government will continue to grow and take more of the achiever's incomes. Since government ain't going to change, we need to have more fiscal transparency. The Fairtax doesn't address government over-spending, or government created bubbles, or government stealing our wealth. It's not going to educate the government economists that think Mr. Keynes' has the only credible economic plan. It does deal with the transparency. There is not a person alive in the USA that can tell you exactly how much they pay in taxes. No one knows. With the Fairtax, everyone will know to the penny what they pay if they so choose to keep up with it. That little tidbit alone will be invaluable to everyone except the politicians who use the tax code to play their political games. That is why I support the Fairtax.

I hear ya' and I can see the transparency argument. In that regard, its better than the current system.
I still think this will only put money in your hand and increase prices. Whether that is a good thing or not, is debatable. Regardless, its central planning that will allow the govt to collect any percentage of taxes they want as a sales tax. Also, we the next recession hits and people can't afford the increased prices and tax revenue drops, they will be forced to increase the percentage on the masses.

[HDRoberts]

First, since Fairtax ONLY replaces federal income tax, not locally imposed income tax and property tax, how does it completely inhibit hidden taxation? When you say 22% is from upstream taxation, I bet a lot is from state and local taxes, which Fairtax does not address.

If you ask me, we need to eliminate property taxes, sales taxes, and the rest and only have an income tax. Then, every April 15 (or earlier), everyone would get to see exactly what they paid. Capital gains from stock or real estate should count as income.


Pure logic dictates taking into account all the pertinent information and not trying to pass opinion as logic. I'll be the first to admit that is extremely hard to get out of the income taxation mindset. It's what we all know, and it's hard to accept that there may be a better way for government to fund itself.

The consumption base is significantly larger than the income tax base, and any other alternative. It imposes the lowest tax rate of any revenue-neutral alternative and the same income is never doubly taxed. For example, taxable adjusted gross income in 2001 was $6.17 trillion. The total taxable consumption base was $11.244 trillion which, at the 23% Fairtax rate, would generate $358 billion more than the taxes it replaces. These are not "pull out of the butt" figures. It's all documented on http://www.fairtax.org/site/PageServer

The Fairtax also encourages saving, but not at the expense of retailers. Even Alan Greenspan correctly states that consumption taxes encourage savings and capital formation, which in turn drives economic expansion. It does, however, take time. Since the Fairtax reduces the tax bias against savings and investment, they will initially grow faster than consumption. Over time, increased capital stock results in higher output, higher productivity, and then higher consumption.

BTW, the losers will be the evil greedy wealthy folks you despise so much. The Fairtax is actually more progressive than the income tax. The wealthy in general pay capital gains taxes which currently are 15%. With the Fairtax, they will pay 23% on all purchases, and the wealthy buy a lot of stuff---expensive stuff.

So it's a lower rate, we just pay it more often. I fail to see how this is not musical chairs. Ad we really spent nearly twice what we earned? Really?

Which brings up another problem with Fairtax: credit card debt. Now, millions of Americans will put their tax burden on charge cards. That's gotta be bad for the economy.

As to the wealthy, I think it would be better to roll capital gains in with income, and eliminate that loophole. While it is true, some individuals that live solely off accumulated wealth are losers, I don't think it will work. First, there aren't that many trust fund kids around. Second, what is to stop them from living abroad, thus avoiding Fairtax altogether?


Competition.
Nash game theory. A simple economic concept. You do what is best for your company based on knowing the decisions of others. Others decided to keep it as profit, you keep it as profit, and remain competitive. You decide the other way, and lower prices, then your competitor lowers prices and remains competitive. Same end result, but you just lowered your own profit.

[HDRoberts]

Oh, as to the original topic, here is an intersting article from 2004, 5 years ago, about this problem. Yet Bush did nothing.

http://faculty.law.wayne.edu/tad/Documents/Country/David_Evans_offshore.pdf

Another shocking statistic:

"The Cayman Islands have about 40,000 residents and the same number of companies."

[HDRoberts]

Sure...Its easy to give it away if came easy..
You might not be if it took you 10-20 years of hardly any income busting your nuts 80+ hours a week to achieve that. Thats most of small business owners. Living only on hot dogs, beans and a dream for years...

And you probably benefit in that time from having a lower tax rate than your competitors, who had already "made it." Imagine if, on the meager income you had, you also had to pay 30% on every dollar you took.

I'm also sure there are many others who took 10-20 years of hardly any income, working 80 hours a week that don't ever make it big. Yet ye should punish them.

Lastly, you knew our tax system going into starting your business. If you didn't like it, you should have stuck to your old job. But now that you have made it, time to change the rules to your own advantage.

[stevenl]

[QUOTE]First, since Fairtax ONLY replaces federal income tax, not locally imposed income tax and property tax, how does it completely inhibit hidden taxation? When you say 22% is from upstream taxation, I bet a lot is from state and local taxes, which Fairtax does not address.

If you ask me, we need to eliminate property taxes, sales taxes, and the rest and only have an income tax. Then, every April 15 (or earlier), everyone would get to see exactly what they paid. Capital gains from stock or real estate should count as income.

Thats between you and your state. The fairtax is for federal taxes only. In FLA we dont have income taxes only sales tax.


So it's a lower rate, we just pay it more often. I fail to see how this is not musical chairs. Ad we really spent nearly twice what we earned? Really?

Yes its musical chairs. Its designed to be revenue neatural. The other difference is now everyone will know exactly what they pay and they can decide if they want to pay it or not. Unlike the current system.

and as to the last question you answer it in your own post.


Which brings up another problem with Fairtax: credit card debt. Now, millions of Americans will put their tax burden on charge cards. That's gotta be bad for the economy.

This is how we spend more then the "income" of course that Income is "taxable income" I assume minus all deducations and such. If you bought a 200k house in 2001 you didnt earn 200k so thats how spending out paces income. We are a debter country btw. But how is this any worse then the current economy?


As to the wealthy, I think it would be better to roll capital gains in with income, and eliminate that loophole. While it is true, some individuals that live solely off accumulated wealth are losers, I don't think it will work. First, there aren't that many trust fund kids around. Second, what is to stop them from living abroad, thus avoiding Fairtax altogether?

So you want to punish all the old and retired people that much more? And if they do want to live abroad guess what. Under the current system they want pay taxes either!


Nash game theory. A simple economic concept. You do what is best for your company based on knowing the decisions of others. Others decided to keep it as profit, you keep it as profit, and remain competitive. You decide the other way, and lower prices, then your competitor lowers prices and remains competitive. Same end result, but you just lowered your own profit

Walmart didnt beat out sears and kmart by "seeing what those two are doing" They sacrificed profit to be the lowest price on the market. Sears and Kmart didnt adjust look what happend. ? They are worthless now. The same thing will happen when the fairtax is put in place. If a new business comes along and wants to take walmarts market share, they will have to beat it some how. When they do come along walmart will need to compete or die.

[stevenl]

And you probably benefit in that time from having a lower tax rate than your competitors, who had already "made it." Imagine if, on the meager income you had, you also had to pay 30% on every dollar you took.

I'm also sure there are many others who took 10-20 years of hardly any income, working 80 hours a week that don't ever make it big. Yet ye should punish them.

Lastly, you knew our tax system going into starting your business. If you didn't like it, you should have stuck to your old job. But now that you have made it, time to change the rules to your own advantage.

The fairtax makes it easier and cheaper to start a business. Business creates jobs and expands the economy. If your a small busienss owner or thinking about opening one, the fairtax is your friend.

[HDRoberts]

Thats between you and your state. The fairtax is for federal taxes only. In FLA we dont have income taxes only sales tax.

That's my point. It doesn't effect state taxes. So how much of that 22% is state taxes? And it doesn't create transparency if all taxes are not covered.



Yes its musical chairs. Its designed to be revenue neatural. The other difference is now everyone will know exactly what they pay and they can decide if they want to pay it or not. Unlike the current system.

"they can decide if they want to pay it or not" - How? By living in poverty despite their income? Come on, that's like saying people can avoid income tax by not having any income. It's an alternative just about no one chooses.



This is how we spend more then the "income" of course that Income is "taxable income" I assume minus all deducations and such. If you bought a 200k house in 2001 you didnt earn 200k so thats how spending out paces income. We are a debter country btw. But how is this any worse then the current economy?

First, housing is taxable? If it is not, than that should not count toward the consumption base. If it is, everyone owning a home is screwed as housing would have to instantly go up 30%, which won't happen.

My theory is that consumption base includes a lot of supply-line purchases by businesses which would be tax exempt.


So you want to punish all the old and retired people that much more? And if they do want to live abroad guess what. Under the current system they want pay taxes either!

Well, by counting capital gains as income, we don't make the retiree pay the same percent as a rich guy pulling millions in stock options out of the market. And, with income tax (provided Obama seals these loopholes) you want to make money here, you pay income tax here. Plus, you are advocating shifting some tax burden to them. That won't work if they leave.


Walmart didnt beat out sears and kmart by "seeing what those two are doing" They sacrificed profit to be the lowest price on the market. Sears and Kmart didnt adjust look what happend. ? They are worthless now. The same thing will happen when the fairtax is put in place. If a new business comes along and wants to take walmarts market share, they will have to beat it some how. When they do come along walmart will need to compete or die.

Walmart beat Sears and Kmart (although both are still in business) with a combination of selling cheap Chinese crap and low paid workers. If that is what the free market brings, I want no part of it.

[stevenl]

[QUOTE]That's my point. It doesn't effect state taxes. So how much of that 22% is state taxes? And it doesn't create transparency if all taxes are not covered.


Again The fairtax has nothing to do with State taxes. The 22% is based on federal taxes. States have differenet tax structures it will be on a state by state basis what the savings is from state taxes.


"they can decide if they want to pay it or not" - How? By living in poverty despite their income? Come on, that's like saying people can avoid income tax by not having any income. It's an alternative just about no one chooses.

Most people will always need an income because they need food. So people will always need to buy "certain items" but you can control under the fair tax if you buy that luxury item or not and pay the tax on it. If you inherit 10millionf rom daddy dieing you do not need an income. You could put all that money in a no-interest account and live off of it for the rest of your life and pay no federal taxes. Under the fair tax though that rich guy will have to pay taxes.



First, housing is taxable? If it is not, than that should not count toward the consumption base. If it is, everyone owning a home is screwed as housing would have to instantly go up 30%, which won't happen.

There are no exemptions in the fairtax. You have to get out of the mindset that everything is just "going up 30%" First off your income is going up as well. Instead of having 20-30% taking out each check you now will keep that money.


My theory is that consumption base includes a lot of supply-line purchases by businesses which would be tax exempt.

Not sure if that is calculated or not, but Id assume it was not. Based on the research they did and the reason for it.



Well, by counting capital gains as income, we don't make the retiree pay the same percent as a rich guy pulling millions in stock options out of the market. And, with income tax (provided Obama seals these loopholes) you want to make money here, you pay income tax here. Plus, you are advocating shifting some tax burden to them. That won't work if they leave.

So we count it as income adn instead of the retiree paying only 15% he has to pay 20-30% depending on his income? The retired guy gets the advantage of already buying most of his stuff. So yes he will get a tax increase on new items, but he already has most of the stuff he needs. He will only pay that increase on needed items. But remember it want be 30% you have to consider he now doesnt pay that 15%.


Walmart beat Sears and Kmart (although both are still in business) with a combination of selling cheap Chinese crap and low paid workers. If that is what the free market brings, I want no part of it.

Wal-Mart has raised the standard of living for so many people in this nation its not funny. Wal-Mart pays its worker a very fair wage and gives them benefits their education and job do not warrant. I mean how much money does someone whos only skill is to push buttons on a machine and tell people how much they owe then the machine tell them how much change to give back? Oh and dont give that cashier money after they hit enter heaven forbid they have to do math on their own...

[HDRoberts]

The 22% is based on federal taxes.

Source?


Most people will always need an income because they need food. So people will always need to buy "certain items" but you can control under the fair tax if you buy that luxury item or not and pay the tax on it. If you inherit 10millionf rom daddy dieing you do not need an income. You could put all that money in a no-interest account and live off of it for the rest of your life and pay no federal taxes. Under the fair tax though that rich guy will have to pay taxes.

If you inherit $10M from daddy, daddy paid income tax.

However, I'm mainly disputing the "you can avoid it" argument. A person get's a $10,400 consumption allowance. I'd like to see the average person who lives on that.


There are no exemptions in the fairtax. You have to get out of the mindset that everything is just "going up 30%" First off your income is going up as well. Instead of having 20-30% taking out each check you now will keep that money.

So, before fairtax, I bought my house for $113,300. Fairtax is enacted, and I sell my hose for what I paid, $113,300. Now I have to send $26,000 to the government? I only break even if my hose sells for $147,000. Yep, property owners are screwed. Sorry, but a bump in pay will not cover that (especially when I'm paying 30% sales tax on everything I buy).



Not sure if that is calculated or not, but Id assume it was not. Based on the research they did and the reason for it.

Yep, don't let facts get in the way of a good argument. :)


So we count it as income adn instead of the retiree paying only 15% he has to pay 20-30% depending on his income? The retired guy gets the advantage of already buying most of his stuff. So yes he will get a tax increase on new items, but he already has most of the stuff he needs. He will only pay that increase on needed items. But remember it want be 30% you have to consider he now doesnt pay that 15%.

I don't get what your saying. In the beginning you say he pays 15%, at the end you say he doesn't.


Wal-Mart has raised the standard of living for so many people in this nation its not funny. Wal-Mart pays its worker a very fair wage and gives them benefits their education and job do not warrant. I mean how much money does someone whos only skill is to push buttons on a machine and tell people how much they owe then the machine tell them how much change to give back? Oh and dont give that cashier money after they hit enter heaven forbid they have to do math on their own...

Yeah, right.


* In 2001, sales associates, the most common job in Wal-Mart, earned on average $8.23 an hour for annual wages of $13,861. The 2001 poverty line for a family of three was $14,630. ["Is Wal-Mart Too Powerful?", Business Week, 10/6/03, US Dept of Health and Human Services 2001 Poverty Guidelines, 2001]

* A 2003 wage analysis reported that cashiers, the second most common job, earn approximately $7.92 per hour and work 29 hours a week. This brings in annual wages of only $11,948. ["Statistical Analysis of Gender Patterns in Wal-Mart's Workforce", Dr. Richard Drogin 2003]

Benefits?


Wal-Mart reported in January 2006 that its health insurance only covers 43% of their employees. Wal-Mart has approximately 1.39 million US employees. [http://www.walmartfacts.com/docs/1625_jan2006healthcarebackgrounders_576890240.pdf]
* Since the average full-time Wal-Mart employee earned $17,114 in 2005, he or she would have to spend between 7 and 25 percent of his or her income just to cover the premiums and medical deductibles, if electing for single coverage. [Wal-Mart 2006 Associate Guide and UFCW analysis]

* The average full-time employee electing for family coverage would have to spend between 22 and 40 percent of his or her income just to cover the premiums and medical deductibles. These costs do not include other health-related expenses such as medical co-pays, prescription coverage, emergency room deductibles, and ambulance deductibles. [Wal-Mart 2006 Associate Guide and UFCW Analysis

http://wakeupwalmart.com/facts/

[stevenl]

[QUOTE]Source?

fairtax.org



If you inherit $10M from daddy, daddy paid income tax.

And under the fair tax the son will pay taxes to. Arent you happy those rich get punished?


However, I'm mainly disputing the "you can avoid it" argument. A person get's a $10,400 consumption allowance. I'd like to see the average person who lives on that.

I dont spend more then 10,400 on food or consumables a year. Maybe we will now that were having a baby. But I can control how much taxes I pay. By controlling what I buy. Under the income tax system I really cant control it without taking a pay cut. Which would hurt me more then not buying that flat screen.



So, before fairtax, I bought my house for $113,300. Fairtax is enacted, and I sell my hose for what I paid, $113,300. Now I have to send $26,000 to the government? I only break even if my hose sells for $147,000. Yep, property owners are screwed. Sorry, but a bump in pay will not cover that (especially when I'm paying 30% sales tax on everything I buy).

You keep ignoreing that your income is now on avg 20-30% higher. Also your not assuming the price of goods will naturally go down because of the loss of embedded taxes. And as far as your house goes. When your house gains value (and you sell it) you will pay taxes on it So your house already has to gain enough value to cover those taxes to make selling it worth while. Under the fair tax you will not.



Yep, don't let facts get in the way of a good argument. :)
:augentreher:


I don't get what your saying. In the beginning you say he pays 15%, at the end you say he doesn't.

Under the current system he pays 15% Under the fairtax he doesnt.



Yeah, right.

REally? So before walmart people were able to buy goods that cheap? Heck if not for walmart I couldnt afford a lot of things. Consumers won because of walmart.



Benefits?

Yes walmart pays unskilled workers according to your source on avg 8.23 an hour. thats a lot more then minimum wage. Which if they are full time employees is 17k a year. (Where did your site get the 13k number? Is that for part time employees?) They also provide health insurace whicn only costs about 7 to 25% of their income to cover the premium. That sounds like a good deal to me, specially when the cost of health insurance is MUCH higher then that if they didnt have the choice to get it from walmart.

A family of 4 may spend between 20 and 40% Which sounds like a good deal to considering the cost of health insurance.

A good portion of walmart employees are part timers. People looking for extra income. Ive event hought about a night job their at one point when I needed some extra income. Another group are people who use walmart just for the benefits. From the stock plans to retirement plans to the health plans. There working there is only to give the family medical coverage, while the other parent has a higher paying job, but with no benefits. Perhaps a business owner or contracter type person..

Anyone who works at walmart as their sole source of family income have certainly made bad choices in life. But luckily for them there are stores like walmart around that can provide them income even though they made bad choices in life and the prices are low enough at walmart they can afford nice things on their low income.

[stevenl]

Also that site says the AVG fulltime walmart worker in 2005 earned 17,114 so if two parents worked there that would be 34228. If they have 1 child they are well above poverty and can meet their families needs. If they have 4 kids well they made bad choices and thats not walmarts fault.

[HDRoberts]

fairtax.org

And their source?



And under the fair tax the son will pay taxes to. Arent you happy those rich get punished?

No, under fairtax, Dad makes and saves all that money tax free. The government has to wait until sonny decides to spend it before you see a dime. That's one of the fairtax problems. They assume everyone spends what they earn.


I dont spend more then 10,400 on food or consumables a year. Maybe we will now that were having a baby. But I can control how much taxes I pay. By controlling what I buy. Under the income tax system I really cant control it without taking a pay cut. Which would hurt me more then not buying that flat screen.

Well, if your fine living off Ramen noodles, I guess fairtax is for you.



You keep ignoreing that your income is now on avg 20-30% higher. Also your not assuming the price of goods will naturally go down because of the loss of embedded taxes. And as far as your house goes. When your house gains value (and you sell it) you will pay taxes on it So your house already has to gain enough value to cover those taxes to make selling it worth while. Under the fair tax you will not.

No, as I said, my pay bump doesn't make up for my loss of $26k on selling my house because 23% of the purchase price goes to the government. "My house already has to gain enough value to cover those taxes." Huh, my house is worth $147k? Really? I don't get what you are saying.



Under the current system he pays 15% Under the fairtax he doesnt.

So another magic Fairtax winner: retirees. Yet still the tiny list of losers, namely welafre moms and rich people with no income. Yeah, that will cover the shortfalls of all the "winners" which are paying lower taxes.


REally? So before walmart people were able to buy goods that cheap? Heck if not for walmart I couldnt afford a lot of things. Consumers won because of walmart.

Guess I'm living high on the hog because I buy NOTHING from Walmart. In fact, I can nearly always find a lower price elsewhere.



Yes walmart pays unskilled workers according to your source on avg 8.23 an hour. thats a lot more then minimum wage. Which if they are full time employees is 17k a year. (Where did your site get the 13k number? Is that for part time employees?) They also provide health insurace whicn only costs about 7 to 25% of their income to cover the premium. That sounds like a good deal to me, specially when the cost of health insurance is MUCH higher then that if they didnt have the choice to get it from walmart.

A family of 4 may spend between 20 and 40% Which sounds like a good deal to considering the cost of health insurance.

A good portion of walmart employees are part timers. People looking for extra income. Ive event hought about a night job their at one point when I needed some extra income. Another group are people who use walmart just for the benefits. From the stock plans to retirement plans to the health plans. There working there is only to give the family medical coverage, while the other parent has a higher paying job, but with no benefits. Perhaps a business owner or contracter type person..

Anyone who works at walmart as their sole source of family income have certainly made bad choices in life. But luckily for them there are stores like walmart around that can provide them income even though they made bad choices in life and the prices are low enough at walmart they can afford nice things on their low income.


Also that site says the AVG fulltime walmart worker in 2005 earned 17,114 so if two parents worked there that would be 34228. If they have 1 child they are well above poverty and can meet their families needs. If they have 4 kids well they made bad choices and thats not walmarts fault.


I highlighted an important part of your quote. A lot of Walmart part timers are part time because the company does not give them sufficient hours. I worked in a similar situation situation myself working my way through college at a chain gas station/convenience store. The pay was good, when the computer started scheduling, no one was getting many hours. Heck, I took a lower wage position because it guaranteed 30 hours a week. After one year (we were hired at the store opening), most of my colleuges who did want full time reported that they averages right at 30-31.5 hours a week, right below the level needed for benefits. This is what Walmart has been accused of doing, ensuring people don't get benefits.

Also, as to wages, I bet many are higher due to state minimum wage laws. In Ohio, the minimum wage is $7.30, not the $6.55 (formerly $5.25) federal.

Lastly, the benifts may seem cheap, but that is because they are.


What Wal-Mart's website leaves out: Coverage is affordable, but using it will bankrupt many employees. Wal-Mart's most affordable plan for 2006 includes a $1,000 deductible for single coverage and a $3,000 deductible for family coverage ($1,000 deductible per person covered up to $3,000). [Wal-Mart 2006 Associate Guide]

In a state analysis, the Massachusetts Department of Health and Human Services found that in 2003, Wal-Mart covered only 52% of total health care premium costs compared to K-Mart which covered 66%, Target which covered 68%, and Sears which covered 80% ["Employers Who Have 50 or More Employees Using Public Health Assistance," Division of Health Care Finance and Policy, 2/2005]

[stevenl]

[QUOTE]And their source?

Many years and millions of dollars of research.




No, under fairtax, Dad makes and saves all that money tax free. The government has to wait until sonny decides to spend it before you see a dime. That's one of the fairtax problems. They assume everyone spends what they earn.

They need to spend to live. They dont need to earn to live. They already got there 10 million. Yes they paid taxes on it, but now dad passes it on to son. Who now does not need to get a job and earn income. He can use the legacy money from daddy. So now son can live his whole life tax free (federally) if he chooses. Under the fair tax though this evil rich kid with the silver spoon now must pay taxes. This is an area the fairtax is "unfair" to the rich. And all those people wtih "old money" The bloombergs the hiltons etc. All those "rich kids with silver spoons" who really do not have to work do not have to have an income will now need to pay taxes to live.

and Why wouldnt the fairtax assume people spend what they earn? We have done that for decades. Heck we spend MORE then we earn. Thats a fact. So of course people will still spend.



Well, if your fine living off Ramen noodles, I guess fairtax is for you.

Hey its my choice though. Under the current system I really dont have a choice. Except to make less. In which case It will hurt me more. I dont have to buy ramen noodles though. I can just choose to buy a cheap car instead of a luxury car, or buy a cheap tv instead of a luxury tv. I can control how much Im willing to pay in taxes.




No, as I said, my pay bump doesn't make up for my loss of $26k on selling my house because 23% of the purchase price goes to the government. "My house already has to gain enough value to cover those taxes." Huh, my house is worth $147k? Really? I don't get what you are saying.

You dont have a loss on your home. You buy a 100k house you pay 30k in taxes. So your house has to gain 30k to make it worth while to sell it. So what do you do? Well you LIVE in the house until it reaches that point and dont sell it till you can get that much out of it. You have not lost anything until you choose to sell it which you do not have to do.. But lets say under the current system, you buy a house for 100k and its now worth that 130k number were looking at. Under the fairtax you pay no taxes, under the current system that 30k is considerd an income an you pay taxes on it.



So another magic Fairtax winner: retirees. Yet still the tiny list of losers, namely welafre moms and rich people with no income. Yeah, that will cover the shortfalls of all the "winners" which are paying lower taxes.

it certainly will. We spend way more then we earn. The welfare mom loses only her free ride.



Guess I'm living high on the hog because I buy NOTHING from Walmart. In fact, I can nearly always find a lower price elsewhere.


Then you are the minority. Wal-Mart is not the cheapest in everything. I mean monoprice has cables WAY cheaper.




I highlighted an important part of your quote. A lot of Walmart part timers are part time because the company does not give them sufficient hours. I worked in a similar situation situation myself working my way through college at a chain gas station/convenience store. The pay was good, when the computer started scheduling, no one was getting many hours. Heck, I took a lower wage position because it guaranteed 30 hours a week. After one year (we were hired at the store opening), most of my colleuges who did want full time reported that they averages right at 30-31.5 hours a week, right below the level needed for benefits. This is what Walmart has been accused of doing, ensuring people don't get benefits.

Also, as to wages, I bet many are higher due to state minimum wage laws. In Ohio, the minimum wage is $7.30, not the $6.55 (formerly $5.25) federal.

They are part timers because its walmarts choice. Its also the employees choice to stay or not. You even said you made a chocie to leave to find a better job ebcause your employer didnt get the hours you needed. Wal-Mart is not forcing anyone to work in their stores. If wal-mart was not around what would these people be doing?

Walmart still pays on avg more then Ohios minimum wage.



Lastly, the benifts may seem cheap, but that is because they are

Then quit and go work for target or some other store who better suites you. You have a choice to work for walmart or not. If the benefits work for you then stay at walmart if not find other employeement.

[HDRoberts]

Many years and millions of dollars of research.

Ahh, I trust research by fairtax supporters that supports fairtax. Well, at least about as much as that Wrigley gum study that said gum chewing makes you smarter (seriously: http://children.webmd.com/news/20090423/math-plus-chewing-gum-equals-better-grades )

How about an independent source?



They need to spend to live. They dont need to earn to live. They already got there 10 million. Yes they paid taxes on it, but now dad passes it on to son. Who now does not need to get a job and earn income. He can use the legacy money from daddy. So now son can live his whole life tax free (federally) if he chooses. Under the fair tax though this evil rich kid with the silver spoon now must pay taxes. This is an area the fairtax is "unfair" to the rich. And all those people wtih "old money" The bloombergs the hiltons etc. All those "rich kids with silver spoons" who really do not have to work do not have to have an income will now need to pay taxes to live.

That may be true for people now, but not in the future, when people will be making untaxed fortunes that they will pass on.


and Why wouldnt the fairtax assume people spend what they earn? We have done that for decades. Heck we spend MORE then we earn. Thats a fact. So of course people will still spend.


Hey its my choice though. Under the current system I really dont have a choice. Except to make less. In which case It will hurt me more. I dont have to buy ramen noodles though. I can just choose to buy a cheap car instead of a luxury car, or buy a cheap tv instead of a luxury tv. I can control how much Im willing to pay in taxes.

These statements don't mesh. People will outspend their earnings, well, everybody BUT you. Yeah, right.



You dont have a loss on your home. You buy a 100k house you pay 30k in taxes. So your house has to gain 30k to make it worth while to sell it. So what do you do? Well you LIVE in the house until it reaches that point and dont sell it till you can get that much out of it. You have not lost anything until you choose to sell it which you do not have to do.. But lets say under the current system, you buy a house for 100k and its now worth that 130k number were looking at. Under the fairtax you pay no taxes, under the current system that 30k is considered an income an you pay taxes on it.

"You buy a 100k house you pay 30k in taxes." - Um, no, I bought my house before fairtax. I have only paid property taxes (a local tax that doesn't go away).

So every homeowner is now stuck in their houses until the value goes up 30% What a great system. :augentreher:

Also "Under the fairtax you pay no taxes, under the current system that 30k is considered an income an you pay taxes on it." - Uh, under Fairtax, I also make no money (because I did pay taxes, that's where the $30k goes). Under the current system, my house value goes up 30%, I keep most of it.


it certainly will. We spend way more then we earn. The welfare mom loses only her free ride.

I hope there are a LOT of welfare moms. :augentreher:


Then you are the minority. Wal-Mart is not the cheapest in everything. I mean monoprice has cables WAY cheaper.

I know very few Walmart shoppers.


They are part timers because its walmarts choice. Its also the employees choice to stay or not. You even said you made a chocie to leave to find a better job ebcause your employer didnt get the hours you needed. Wal-Mart is not forcing anyone to work in their stores. If wal-mart was not around what would these people be doing?

Walmart still pays on avg more then Ohios minimum wage.

Then quit and go work for target or some other store who better suites you. You have a choice to work for walmart or not. If the benefits work for you then stay at walmart if not find other employeement.

I took a different job with the same company. I went from Cashier to stock-boy. I could find no other job at the time (this was the '03-'04 downturn)

If Walmart was not around, they could probably find jobs at all the mom-and-pop places they forced out of business.

[vurbano]

No, under fairtax, Dad makes and saves all that money tax free. The government has to wait until sonny decides to spend it before you see a dime. That's one of the fairtax problems. They assume everyone spends what they earn.



Excellent post. It really points to a major flaw in the fair tax. Lets remember, its the rich pushing the fair tax. Neal Boortz already owns his jet.

[HDRoberts]

Excellent post. It really points to a major flaw in the fair tax. Lets remember, its the rich pushing the fair tax. Neal Boortz already owns his jet.

There's you birthday present, Vurb. I agree with you!:)

[froggigger]

I hear ya' and I can see the transparency argument. In that regard, its better than the current system.
I still think this will only put money in your hand and increase prices. Whether that is a good thing or not, is debatable. Regardless, its central planning that will allow the govt to collect any percentage of taxes they want as a sales tax. Also, we the next recession hits and people can't afford the increased prices and tax revenue drops, they will be forced to increase the percentage on the masses.

The consumption base is a lot more stable than the income tax base. In recessions, people do spend less but it's usually because they have less, or no, income. No income, no taxes. Using the consumption base makes it much less likely that government will need to increase the rate to keep their revenue up. In either case, government will never live on less year to year.

The Fairtax will not cause prices to increase. The worst case is that they will remain the same, but people will have more to spend---and that's before taking into account the prebate. On top of that, I haven't even mentioned how it will be a boom on the economy with businesses operating in an environment free of taxation and compliance costs.

[fallout2600]

On top of that, I haven't even mentioned how it will be a boom on the economy with businesses operating in an environment free of taxation and compliance costs.

I agree with you there, if implemented, it would cause massive consumerism to take place. The Keynesians will have an out right consumer orgy. At least people will have the money to spend instead of stacking up debt on credit cards.

[froggigger]

HD, you are woefully uninformed on even the basics of the Fairtax, yet you try to make a case that it won't work. Most of your questions are basic and are covered on the Fairtax website. There is a search box on the bottom of the page and I'm sure your questions can be answered there. Once you do that, we can have an intelligent discussion without your side being based purely on opinion. Peruse the site, then come back with questions. We will either answer it or tell you outright we don't know. There is nothing to hide. BTW, also do some research on consumption spending in the USA, then compare it to income. It's enlightening.

[froggigger]

I agree with you there, if implemented, it would cause massive consumerism to take place. The Keynesians will have an out right consumer orgy. At least people will have the money to spend instead of stacking up debt on credit cards.

The Keynesian's will figure out a way to take credit for the explosion, too. :eureka:

[stevenl]

[QUOTE]Ahh, I trust research by fairtax supporters that supports fairtax. Well, at least about as much as that Wrigley gum study that said gum chewing makes you smarter (seriously: http://children.webmd.com/news/20090423/math-plus-chewing-gum-equals-better-grades )

How about an independent source?

Feel free to present some. I gave you my source and if you can disupute it have at it.



That may be true for people now, but not in the future, when people will be making untaxed fortunes that they will pass on.

See thats the beuty of the fair tax. It punishs those evil rich who pass on their wealth. Now that money will be taxed everytime someone spends it, instead of just once when it was earned. I mean I couldnt explain it any more elementary then I already did and you still dont seem to get it.

Heres how it currently works.

1. You make money it gets taxed.

2. You die and pass that money on to your kids.

3. They can now live the rest of there lives income free off that money..

Heres how it works under the fair tax.

1. You make the money tax free

2. You die and pass it on to your kids.

3. They will pay taxes every time they spend that money.

See under the fair tax that money is constantly taxed as it gets circulated through the economy. It doesnt punish you for earning money.




These statements don't mesh. People will outspend their earnings, well, everybody BUT you. Yeah, right.

What do you mean? I mean technically 3 years ago my spending WAY out paced my earnings when we bought our house. This last 2 years though my earnings have not. But for the nation overall spending does out pace earnings.




"You buy a 100k house you pay 30k in taxes." - Um, no, I bought my house before fairtax. I have only paid property taxes (a local tax that doesn't go away).

I was talking abotu under the fairtax. Please follow along.


So every homeowner is now stuck in their houses until the value goes up 30% What a great system. :augentreher:

Your not stuck in it. You can sell it. Its your loss though. But there has never been a time when home values have not gone up over time. its like the stock market. Home values and the market have ups and downs but over time they always win and always go up.


Also "Under the fairtax you pay no taxes, under the current system that 30k is considered an income an you pay taxes on it." - Uh, under Fairtax, I also make no money (because I did pay taxes, that's where the $30k goes). Under the current system, my house value goes up 30%, I keep most of it.

You make no money if you sell it only after it gained 30% anything passed that will be your money point.


I hope there are a LOT of welfare moms. :augentreher:

Millions.




I know very few Walmart shoppers.

Good for you, but the other 300million in this country probably know plenty. Otherwise wal-mart would not be as big as they are.




I took a different job with the same company. I went from Cashier to stock-boy. I could find no other job at the time (this was the '03-'04 downturn)

Well then the cashier at wal-mart should do the same. Or find a new employer. Its not wal-marts fault.


If Walmart was not around, they could probably find jobs at all the mom-and-pop places they forced out of business.

Then good luck finding healthcare from a mom and pop. The majority of those small business do not even offer healthcare for their employees. They also will not pay much more then walmart if any more. The avg "gas station" in this area pays around 7$ an hour (at least it did when I worked at one part time 7 years ago).

What you dont realize is people work at wal-mart by choice. if they dont like walmarts policy then quit and find another job.

[froggigger]

http://wakeupwalmart.com/facts/

Now there is a good unbiased site. :augentreher: Notice at the bottom of the page it says "United Food and Commercial Workers International Union". That tells the whole story. Walmart's reputation is dragged through the mud because it has so far avoided becoming a union shop. War has been declared for that reason, and that reason alone.

Walmart is a tremendous benefit to the public but they are maligned by critics that are economically ignorant. "Wal-Mart causes unemployment," "Wal-Mart lowers wages," and "Wal-Mart reduces access to healthcare." Then we have "Wal-Mart destroys communities," "Wal-Mart treats its female employees unfairly," "Wal-Mart causes greedy consumerism," "Wal-Mart desecrates sacred ground." Anyone that didn't know better would think Walmart is the root of all evil in the world. The "critics" push their agenda through websites like the one above that say they provide public education on their very wrong version of Walmart's economic affairs.

You can't understand the economic significance of Walmart without first understanding wealth. It is not the same as money. Money is just a medium of exchange for wealth and derives its value from the pool of wealth available for trade. Money becomes more valuable as a result of increasing wealth and a fundamental concern of economics is learning which policies create the most wealth. The wealth of the entire nation should be the focus when looking at Walmart's impact on the economy. Only then can one determine if Walmart is "bad" for the USA.

Critics either can't see or don't care that Walmart is responsible for a large increase of total wealth and the group that has benefited most has been the ones with the lowest incomes. That is a tough concept for the left because they don't seem capable of understanding that it is even possible to create more wealth. Productivity increases and lower prices mean nothing to critics.

The critics also love to complain that Walmart lowers wages. Of course, the reasons given are just flat out wrong. No one forces anyone to work at Walmart and Walmart is not its employee's caretaker. Walmart just buys the services that they are selling. No company can just arbitrarily have power over wages and Walmart is no exception. They want to pay as little as possible and the employee wants to earn as much as possible. If the employer's wages are too low, a potential employee can look for work elsewhere. Conversely, if a potential employee wants too much pay, the employer will pass him over. Employer and employee reach a middle ground that is acceptable to both parties. As with all other goods, pay is determined by all the factors that go into supply and demand.

About the only criticism that holds any validity at all is health care. Even that is a stretch. Walmart doesn't offer the greatest health insurance but it has nothing to do with corporate "greed". It's a result of our ridiculous over-regulated, top-heavy with government health care system. Government intervention is the problem, not Walmart.

[froggigger]

So, before fairtax, I bought my house for $113,300. Fairtax is enacted, and I sell my hose for what I paid, $113,300. Now I have to send $26,000 to the government? I only break even if my hose sells for $147,000. Yep, property owners are screwed. Sorry, but a bump in pay will not cover that (especially when I'm paying 30% sales tax on everything I buy).

You know, if you would take the time to actually educate yourself on what you are arguing against it would save us all of a lot of time. Used items and property are not taxed. Only new stuff is subject to the Fairtax. So building an identical house to yours under the Fairtax will cost about 22% less than what you paid, but adding the Fairtax to get final selling price will make both houses very close to even money.

New identical house built without 22% embedded taxes:

$113,000 - 22% = $88,140

Add the Fairtax:

$88,140 + 23% = $108,412

That's easily ballpark, my friend, and to answer what I anticipate will be your next question, land is not taxed at transfer because there is no consumption.

[HDRoberts]

You know, if you would take the time to actually educate yourself on what you are arguing against it would save us all of a lot of time. Used items and property are not taxed. Only new stuff is subject to the Fairtax. So building an identical house to yours under the Fairtax will cost about 22% less than what you paid, but adding the Fairtax to get final selling price will make both houses very close to even money.

New identical house built without 22% embedded taxes:

$113,000 - 22% = $88,140

Add the Fairtax:

$88,140 + 23% = $108,412

That's easily ballpark, my friend, and to answer what I anticipate will be your next question, land is not taxed at transfer because there is no consumption.

I'll respond more later. But one note: if what you say is true, they Fairtax supporters need an education. It was Stevenl that said housing was taxed. He said EVERYTHING is taxed. If fact, that is why he stated that the consumption tax base was so much larger, and why fairtax supporter numbers show spending at twice income: buying houses.

[froggigger]

I'll respond more later. But one note: if what you say is true, they Fairtax supporters need an education. It was Stevenl that said housing was taxed. He said EVERYTHING is taxed. If fact, that is why he stated that the consumption tax base was so much larger, and why fairtax supporter numbers show spending at twice income: buying houses.

There has been a lot of back and forth and I missed where he said that but, if he did, he is mistaken.

"Finally, the sales of existing homes, the most common properties bought by first-time homebuyers, are not taxed upon purchase or sale and this has a corresponding downstream positive impact on the sale of new homes. The seasonally-adjusted statistics for 2005 show that about three-quarters of all home sales are projected to be existing homes. Most important to this analysis, it must be understood that the proceeds from the sales of existing homes most often provide the ultimate resources for the purchase of new homes. Since these proceeds are no longer taxed, the market for new homes benefits."

http://www.fairtax.org/PDF/TheFairTaxTreatmentOfHousing.pdf

[HDRoberts]

There has been a lot of back and forth and I missed where he said that but, if he did, he is mistaken.

"Finally, the sales of existing homes, the most common properties bought by first-time homebuyers, are not taxed upon purchase or sale and this has a corresponding downstream positive impact on the sale of new homes. The seasonally-adjusted statistics for 2005 show that about three-quarters of all home sales are projected to be existing homes. Most important to this analysis, it must be understood that the proceeds from the sales of existing homes most often provide the ultimate resources for the purchase of new homes. Since these proceeds are no longer taxed, the market for new homes benefits."

http://www.fairtax.org/PDF/TheFairTaxTreatmentOfHousing.pdf

Here is how the conversation went (starting around reply 109). We were debating how large the consumption base is. He said


This is how we spend more then the "income" of course that Income is "taxable income" I assume minus all deducations and such. If you bought a 200k house in 2001 you didnt earn 200k so thats how spending out paces income. We are a debter country btw. But how is this any worse then the current economy?

I responded

First, housing is taxable? If it is not, than that should not count toward the consumption base. If it is, everyone owning a home is screwed as housing would have to instantly go up 30%, which won't happen.

I got this response:

There are no exemptions in the fairtax. You have to get out of the mindset that everything is just "going up 30%" First off your income is going up as well. Instead of having 20-30% taking out each check you now will keep that money. (emphasis added)

The conversation continued, but that is where I got the idea. But if housing won't be taxed, then I renew my previous objection. The consumption base isn't that big. Oh, I see the research on the fairtax website. What I see is numbers largely pulled out of thin air.


Now there is a good unbiased site. :augentreher: Notice at the bottom of the page it says "United Food and Commercial Workers International Union". That tells the whole story. Walmart's reputation is dragged through the mud because it has so far avoided becoming a union shop. War has been declared for that reason, and that reason alone

I admit it's a union site. But, you notice EVERYTHING that I quoted from had a non-union source, some of it directly from Walmart sources. The statisitcs are true.




New identical house built without 22% embedded taxes:

$113,000 - 22% = $88,140

Add the Fairtax:

$88,140 + 23% = $108,412

That's easily ballpark, my friend, and to answer what I anticipate will be your next question, land is not taxed at transfer because there is no consumption.

Um, now that I look at that, you miscalculated. Fairtax is 23% INCLUSIVE. That means you have to add 30%, not 23%

$113,300-22%= $88,374
$88,374+30%= $114,886

But I'm tired of this argument. The fairtaxers can't see through the smoke and mirrors.

DIRECTLY from the fairtax website:


The FairTax rate of 23 percent on a total taxable consumption base of $11.244 trillion will generate $2.586 trillion dollars $358 billion more than the taxes it replaces.


Over time, the FairTax benefits all income groups. Of 42 household types (classified by income, marital status, age), all have lower average remaining lifetime tax rates under the FairTax than they would experience under the current tax system.

Yep, revenues go up, but everyone magically has more money. Yet I'm the crazy one for doubting the system.

[Skyhi]

Now there is a good unbiased site. :augentreher: Notice at the bottom of the page it says "United Food and Commercial Workers International Union". That tells the whole story. Walmart's reputation is dragged through the mud because it has so far avoided becoming a union shop. War has been declared for that reason, and that reason alone.


I was a member of that Union for 10 years. Wal-Mart employees would be very wise to join.

[stevenl]

I'll respond more later. But one note: if what you say is true, they Fairtax supporters need an education. It was Stevenl that said housing was taxed. He said EVERYTHING is taxed. If fact, that is why he stated that the consumption tax base was so much larger, and why fairtax supporter numbers show spending at twice income: buying houses.

I wasnt clear and went off on a longer post, but NEW houses are taxed, not old houses. So once you buy your house and you sell it the new owner does not pay taxes.

[stevenl]

Yep, revenues go up, but everyone magically has more money. Yet I'm the crazy one for doubting the system.


The answer to that is real simple. The consumption base is MUCH larger then the income base. So you have more people paying taxes so it requires less from each person.. Just think under the fairtax even the "black market" rich people like the drug dealers etc will pay taxes when they buy stuff. Illegal immigrants will pay taxes, tourists will pay taxes. Everyone who is in this nation and makes a purchase of a consumable will pay the tax. That is why the overall rate is lower for everyone because the tax base just grew. More people paying taxes means less each needs to pay to keep the same amount.

This is another way income is lower then spending. Spending also includes spending from tourists etc, which is HUGE in my area. Also That new car you buy.. etc. Your more then welcome to provide some counter-facts to prove that we do not spend more then we earn but I know you cant.

[fallout2600]

Few items to think on:

1) The FairTax does not repeal state income tax, so 100% of your paycheck will not be a reality.

2) Assuming 30% of the price of goods is "hidden tax", by replacing the "hidden taxes" with a sales tax of the same rate, then price would remain the same initially.

3) On price of goods, the FairTax also doesn't repeal state and local taxes on goods, so if state and local taxes get raised, prices on goods could increase.

Also, we haven't even discussed the laws of supply and demand. Let's talk bread for example. If companies are long on bread, then supply and demand will drive the price down, but if companies are short on bread, then supply and demand will drive the price of bread up. Even though the govt can control price thru taxation, there is absolutely no guarantee that the free market won't drive prices up and/or down.

[stevenl]

Few items to think on:

1) The FairTax does not repeal state income tax, so 100% of your paycheck will not be a reality.

2) Assuming 30% of the price of goods is "hidden tax", by replacing the "hidden taxes" with a sales tax of the same rate, then price would remain the same initially.

3) On price of goods, the FairTax also doesn't repeal state and local taxes on goods, so if state and local taxes get raised, prices on goods could increase.

Also, we haven't even discussed the laws of supply and demand. Let's talk bread for example. If companies are long on bread, then supply and demand will drive the price down, but if companies are short on bread, then supply and demand will drive the price of bread up. Even though the govt can control price thru taxation, there is absolutely no guarantee that the free market won't drive prices up and/or down.

1. The fair tax has nothing to do with state taxes. (Take note niether does our current tax syste) The fairtax is about federal taxes. State taxes you need to take issue with your state on.

2. So what your saying is your buying power will stay the same (Thats what we have been saying also) Aside from your numbers being wrong (They say 22% not 30% of the price is embedded taxes) The point is the same. Under the fairtax your buying power will remain the same.

3.Again see #1

As far as the market goes, that also has nothing to do with the fair tax. Prices will go up and down under any tax system based on the fair market. The fairtax tough does not "pick winners and losers" like the current system does by giving "breaks to industry A but not industry B".

[fallout2600]

1. The fair tax has nothing to do with state taxes. (Take note niether does our current tax syste) The fairtax is about federal taxes. State taxes you need to take issue with your state on.

2. So what your saying is your buying power will stay the same (Thats what we have been saying also) Aside from your numbers being wrong (They say 22% not 30% of the price is embedded taxes) The point is the same. Under the fairtax your buying power will remain the same.

3.Again see #1

As far as the market goes, that also has nothing to do with the fair tax. Prices will go up and down under any tax system based on the fair market. The fairtax tough does not "pick winners and losers" like the current system does by giving "breaks to industry A but not industry B".

Listen man, I'm all for a better system. I'm all for a complete end to loopholes. Its just that the fairtax.org site doesn't put all the info on the table. They can't claim prices will go down. The free market will determine that. Also, they base all their claims on producer prices, not consumer pricing. So, there's wiggle room there. Who's to say companies won't pocket all that extra money instead of using it to bring down cost? You have to admit that they are making claims that simply can't be proven.

At lunch today, I was listening to a FairTax guy on the radio, he was saying that FairTax would bring 12-15 Trillion dollars back into our country b/c all the companies would move their wealth back in America from over sea havens. How the hell does he know that? How can he prove that? They may be completely happy leaving their money right where it is.

Also, they claim to repeal the 16th amendment on the website. Well,


FairTax advocates claim that their plan would repeal of the 16th Amendment. However, all H.R. 25 does is repeal Subtitle A of the Internal Revenue Code of 1986 that relates to income taxes and self-employment taxes and Subtitle C that relates to payroll taxes and the withholding of income taxes. The only mention of the 16th Amendment in H.R. 25 is when it says: "Congress further finds that the 16th amendment to the United States Constitution should be repealed."


To repeal the 16th Amendment would require a constitutional amendment. Can Congress be relied on to pass a constitutional amendment that repeals the 16th amendment after a national sales tax has already been enacted? And even if Congress passed a constitutional amendment, it would still have to be approved by three-fourths of the states. Without the repeal of the 16th Amendment, what is to prevent an income tax from being imposed again after a national sales tax has been enacted?


Source: http://mises.org/story/1814

[stevenl]

[QUOTE]Listen man, I'm all for a better system. I'm all for a complete end to loopholes. Its just that the fairtax.org site doesn't put all the info on the table. They can't claim prices will go down. The free market will determine that. Also, they base all their claims on producer prices, not consumer pricing. So, there's wiggle room there. Who's to say companies won't pocket all that extra money instead of using it to bring down cost? You have to admit that they are making claims that simply can't be proven.

Well the free market will determine if the price goes up or down. But even if prices do not go down guess what? You have the prebate and more money in your check to make up the difference. However the market will bring prices down. When the cost to do business goes down, companies will begin competeing for market share thus driving prices down. Thats only a natural part of the free market. Sure they can pocket the money, or they can use it to gain more market share.



At lunch today, I was listening to a FairTax guy on the radio, he was saying that FairTax would bring 12-15 Trillion dollars back into our country b/c all the companies would move their wealth back in America from over sea havens. How the hell does he know that? How can he prove that? They may be completely happy leaving their money right where it is.

Not sure his exact numbers but there are many sources you can look for to see how many TRILLIONs of dollars are hidden over seas because business is scared of the taxes. Think about how many business would be benefitted by bringing there operations back to the US? How they can now invest capital in US markets without fear of the taxes? You want to see the capital markets go crazy? Enact the fairtax, the markets will not know what to do with all that money... It just makes common sense based on the free market.. No more 15% capital gains tax? Thats like getting a 15% raise...



Also, they claim to repeal the 16th amendment on the website. Well,
Source: http://mises.org/story/1814


The fairtax does not repeal the 16th amendment. It does require that to happen though. There are two bills in congress. 1 to repeal the fairtax. Which is a constitutional amendment and another bill to enact the fair tax.

[fallout2600]

Not sure his exact numbers but there are many sources you can look for to see how many TRILLIONs of dollars are hidden over seas because business is scared of the taxes. Think about how many business would be benefitted by bringing there operations back to the US? How they can now invest capital in US markets without fear of the taxes? You want to see the capital markets go crazy? Enact the fairtax, the markets will not know what to do with all that money... It just makes common sense based on the free market.. No more 15% capital gains tax? Thats like getting a 15% raise...

I will definitely agree with this. If we get a capital injection of 12-15 trillion into the system. The markets will go nuts. The money people lost with the market crash should be recovered. The other thing to be noted is, think of all the jobs that would return home to the USA if companies moved back.

[vurbano]

[quote=fallout2600;10642]

The fairtax does not repeal the 16th amendment. It does require that to happen though. There are two bills in congress. 1 to repeal the fairtax. Which is a constitutional amendment and another bill to enact the fair tax.

They should put anyone that believes that will happen in a straight jacket.:free-happy-smileys-

[fallout2600]

They should put anyone that believes that will happen in a straight jacket.:free-happy-smileys-

That what I was trying to tell stevenl!

There's no chance this current Congress will rid themselves of that kind of control.

[stevenl]

That what I was trying to tell stevenl!

There's no chance this current Congress will rid themselves of that kind of control.

no its not. you were trying to say why the fairtax was no good. i agree with you that the current bunch in congress do not want to lose the power ythe current system gives them. but does not mean the fairtax is bad. the fatc that they dont like it means it mmust be good for us

[fallout2600]

no its not. you were trying to say why the fairtax was no good. i agree with you that the current bunch in congress do not want to lose the power ythe current system gives them. but does not mean the fairtax is bad. the fatc that they dont like it means it mmust be good for us

Go back to post 135 and read my quote from the Mises Institute.

[vurbano]

There's a better chance of seeing the 4 horsemen of the Apocalypse descend from heaven than to see the 16th amendment and the IRS go away. Under any congress. Period. EVER

[froggigger]

Here is how the conversation went (starting around reply 109). We were debating how large the consumption base is. He said

I responded

I got this response:
(emphasis added)

The conversation continued, but that is where I got the idea. But if housing won't be taxed, then I renew my previous objection. The consumption base isn't that big. Oh, I see the research on the fairtax website. What I see is numbers largely pulled out of thin air.

Consumption spending totals are not pulled out of air. Consumer spending is a known entity every year. Sure, forecasts are made for future years that may be accurate or inaccurate, but that's why they are forecasts. Previous years, however, are derived from actual data. So, all that being said, I'll start your homework for you this time.


"In the U.S. economy, two-thirds of production and expenditures are devoted to consumer spending, or personal consumption expenditures (PCE), which include most of retail sales, as well as households' expenditures on such items as rent, utilities, and much of medical care. Because this is such a large sector of the economy, the forecast accuracy of PCE affects the forecast accuracy of some of the key variables that policymakers focus on, such as unemployment, incomes, inflation, and interest rates. A large body of research has documented that measures of income, wealth, and interest rates, which indicate consumers' ability to spend, do consistently help forecast future consumer spending."

http://www.frbsf.org/publications/economics/letter/2008/el2008-19.html#3

Dale Jorgenson, Ph.D. of Harvard University found the Fairtax revenue neutral at a tax-inclusive rate of 22.9%; Laurence Kotlikoff, Boston University, found it revenue neutral at a tax-inclusive rate of 24%; James Poterba of Massachusetts Institute of Technology found it revenue neutral at a tax-inclusive rate of 23.1%. These were independent studies. In 2003, the total taxes the Fairtax repeals accounted for $1.67 trillion. In that same year, the economy produced goods and services valued at $11 trillion of which $9.6 trillion was actually consumed. Once other ajustments are made, the consumer base is in the neighborhood of $8.7 trillion. To generate tax revenue that was repealed in that year, the Fairtax rate would have to be 19.2%. That is derived by the simple calculation of dividing the taxes replaced by the total consumption, ie. 1.67/8.7=19.2%. That rate replaces the taxes lost with the repeal but when the prebate is added in to the mix, the actual rate rises to a tax-inclusive rate of 23%.

So, again, I present data and you present "...I renew my previous objection. The consumption base isn't that big." Instead of just saying it, lets see some data to disprove the figures I gave. If you are correct and I'm wrong, it should be trivial.


I admit it's a union site. But, you notice EVERYTHING that I quoted from had a non-union source, some of it directly from Walmart sources. The statisitcs are true.

The true measure is Walmart's impact on the economy as a whole, and it has been a very positive impact.


Um, now that I look at that, you miscalculated. Fairtax is 23% INCLUSIVE. That means you have to add 30%, not 23%

$113,300-22%= $88,374
$88,374+30%= $114,886

But I'm tired of this argument. The fairtaxers can't see through the smoke and mirrors.

All that proves is that you are going to complain about the Fairtax no matter what. First, you complained when you thought all home sales were taxed because you couldn't recoup your investment for a long time. Now that you know existing home sales aren't taxed, you're complaining that I didn't use 30% instead of 23% for new home sales. Well, hells bells, at 30% a new home costs a couple of thousand more than your existing home instead of a few thousand less using 23%, so, at 30%, you have already recouped your investment---and then some. I wouldn't have to look through the smoke and mirrors if you'd stop generating them. :augentreher:


DIRECTLY from the fairtax website:

Yep, revenues go up, but everyone magically has more money. Yet I'm the crazy one for doubting the system.

Until you separate income taxation from consumption taxation in your own mind, you'll never understand. I kind of get the feeling you don't want to understand.

[froggigger]

I was a member of that Union for 10 years. Wal-Mart employees would be very wise to join.

It would end Walmart being Walmart. Unions would force higher prices and negatively impact the economy, not to mention all the unsustainable legacy costs that would begin to accumulate. We need a market return to freedom, not bigger unions.

[froggigger]

Few items to think on:

1) The FairTax does not repeal state income tax, so 100% of your paycheck will not be a reality.

2) Assuming 30% of the price of goods is "hidden tax", by replacing the "hidden taxes" with a sales tax of the same rate, then price would remain the same initially.

3) On price of goods, the FairTax also doesn't repeal state and local taxes on goods, so if state and local taxes get raised, prices on goods could increase.

Also, we haven't even discussed the laws of supply and demand. Let's talk bread for example. If companies are long on bread, then supply and demand will drive the price down, but if companies are short on bread, then supply and demand will drive the price of bread up. Even though the govt can control price thru taxation, there is absolutely no guarantee that the free market won't drive prices up and/or down.

1. Like Steve says, the Fairtax only deals with taxation at the federal level. There is a good chance, though, that after the states see how well the Fairtax works, they may go to a similar consumption tax to replace current revenue streams.

2. Exactly the point. Revenue neutral. Naturally, revenue will fluctuate a bit year to year but it will fluctuate less than under the income tax.

3. Again, states do what states want to do. The Fairtax doesn't address them.

[froggigger]

Listen man, I'm all for a better system. I'm all for a complete end to loopholes. Its just that the fairtax.org site doesn't put all the info on the table. They can't claim prices will go down. The free market will determine that. Also, they base all their claims on producer prices, not consumer pricing. So, there's wiggle room there. Who's to say companies won't pocket all that extra money instead of using it to bring down cost? You have to admit that they are making claims that simply can't be proven.

Look, with the Fairtax, cost to provide a good or service will decrease around 22% average. The market will decide how much prices drop in actuality, if at all. I just do not believe a company will be able to keep that entire 22% and add to their bottom line. No way can a true free marketeer believe that. My belief is that a combination of lower prices will go hand in hand with take-home pay increases and the two will total close to that magical 22%. I can't prove it but I know well how a free market works (not to say our market is laissez-faire free but you get the jist of what I'm saying).


At lunch today, I was listening to a FairTax guy on the radio, he was saying that FairTax would bring 12-15 Trillion dollars back into our country b/c all the companies would move their wealth back in America from over sea havens. How the hell does he know that? How can he prove that? They may be completely happy leaving their money right where it is.

They'll charter a private jet right under Barney Frank's nose and send it off to bring back all the offshore money. If they brought back the money today, it would be triple-taxed. Foreign-made profits are taxed in the country the profit was earned in. When the money is brought home, they are taxed again. The third hit comes when the dollars are paid to stockholders as dividends. It's not just big corporations hiding funds offshore, either. There are a lot of small and mid-sized companies banking offshore, too. Some well-heeled individuals also do the same. Why would a company not bring the funds home if all the multiple layers of taxation were removed?

BTW, the question was asked of Alan Greenspan how long would it take for the offshore funds to come home after enactment of the Fairtax. His one-word reply---months.


Also, they claim to repeal the 16th amendment on the website. Well,

Source: http://mises.org/story/1814

Legislation can't repeal a constitutional amendment. The Fairtaxer's know that and do not make the claim. They do say that repeal of the 16th is a requirement within a certain time under the Fairtax. Abolishing the income, payroll, etc. taxes under the legislation gets the ball rolling. The Austrians simply got this one wrong. The article was from 2005. The bill may have changed a bit since then. Just a guess. Anyway, the very last section of the actual Fairtax legislation states:


TITLE IV--SUNSET OF SALES TAX IF SIXTEENTH AMENDMENT NOT REPEALED

SEC. 401. ELIMINATION OF SALES TAX IF SIXTEENTH AMENDMENT NOT REPEALED.

If the Sixteenth Amendment to the Constitution of the United States is not repealed before the end of the 7-year period beginning on the date of the enactment of this Act, then all provisions of, and amendments made by, this Act shall not apply to any use or consumption in any year beginning after December 31 of the calendar year in which or with which such period ends, except that the Sales Tax Bureau of the Department of the Treasury shall not be terminated until 6 months after such December 31.

http://www.govtrack.us/congress/billtext.xpd?bill=h111-25

[froggigger]

There's a better chance of seeing the 4 horsemen of the Apocalypse descend from heaven than to see the 16th amendment and the IRS go away. Under any congress. Period. EVER

As long as the media and the government education system continue to shape opinion, you are right. Government will have to be dragged kicking and screaming to the signing table for it to ever happen. The politicians are not about to give up any power and the Fairtax will just about neuter them---or spaying if you can get close enough to Pelosi without getting bitten. :devil-0060:

[fallout2600]

BTW, the question was asked of Alan Greenspan how long would it take for the offshore funds to come home after enactment of the Fairtax. His one-word reply---months.


Greenspan? Seriously? One of the main guys who engineered the housing bubble by continually dropping rates? Not much credibility there. I think the guy has lost his mind in his old age. He used to be a free market guy but turned to the Keynesian dark side of consumerism. This whole plan is designed to re inflate the bubble and encourage people to spend when they need to learn to save. A major surge on the market is not what we need, we need a stable market that grows with time, otherwise we invite the govt right back in to "correct" things and further regulate, and when the bubble bursts and everyone loses their wealth again, how will that pan out?

[froggigger]

Greenspan? Seriously? One of the main guys who engineered the housing bubble by continually dropping rates? Not much credibility there. I think the guy has lost his mind in his old age. He used to be a free market guy but turned to the Keynesian dark side of consumerism. This whole plan is designed to re inflate the bubble and encourage people to spend when they need to learn to save. A major surge on the market is not what we need, we need a stable market that grows with time, otherwise we invite the govt right back in to "correct" things and further regulate, and when the bubble bursts and everyone loses their wealth again, how will that pan out?

I'm no Greenspan fan, either. I just used him as an example because most people have heard of him. He isn't the only one who has made similar statements. Keep in mind that the government bucket will still have the same amount of money placed in it as pre-Fairtax. It just comes in from a different direction. The Fairtax is not designed to re-inflate a bubble. While it's true that it will grow the economy over time as a side benefit, it's major purpose is simply a revenue-neutral replacement for the income tax. It's not going to stop the Fed or the government from doing what they are currently doing, but it will make it very clear to every person how much they are contributing to the fiasco.

[fallout2600]

I'm no Greenspan fan, either. I just used him as an example because most people have heard of him. He isn't the only one who has made similar statements. Keep in mind that the government bucket will still have the same amount of money placed in it as pre-Fairtax. It just comes in from a different direction. The Fairtax is not designed to re-inflate a bubble. While it's true that it will grow the economy over time as a side benefit, it's major purpose is simply a revenue-neutral replacement for the income tax. It's not going to stop the Fed or the government from doing what they are currently doing, but it will make it very clear to every person how much they are contributing to the fiasco.

And that is a valid point, there will be more transparency.

Its just scary that Americans would agree to allow a central govt to tax every new thing they buy at such a rate (including medical visits). And on top of that, if the govt wants to spend more, they can increase the rate. Have we really gotten to the point where we're ok with such taxation? Shouldn't we the people being fighting the spending? Being that's what's causing the need for such taxation.

[froggigger]

And that is a valid point, there will be more transparency.

Its just scary that Americans would agree to allow a central govt to tax every new thing they buy at such a rate (including medical visits). And on top of that, if the govt wants to spend more, they can increase the rate. Have we really gotten to the point where we're ok with such taxation? Shouldn't we the people being fighting the spending? Being that's what's causing the need for such taxation.

Government taxes darn near everything now. Medical visits have an embedded tax cost, too. What's scary is that the masses are too uninformed to realize it. Government increases taxes now by claiming "It won't affect you" and the people buy it without question. With the Fairtax, if the rate is raised, everyone will see it before their eyes every time they buy something or use a service. It can't be hidden. I agree we should fight the spending but, as I said before, until the people demand it with their vote, or a constitutional convention is called to address it, transparency is the next best thing.

[fallout2600]

Government taxes darn near everything now. Medical visits have an embedded tax cost, too. What's scary is that the masses are too uninformed to realize it. Government increases taxes now by claiming "It won't affect you" and the people buy it without question. With the Fairtax, if the rate is raised, everyone will see it before their eyes every time they buy something or use a service. It can't be hidden. I agree we should fight the spending but, as I said before, until the people demand it with their vote, or a constitutional convention is called to address it, transparency is the next best thing.

Good points.

[stevenl]

And that is a valid point, there will be more transparency.

Its just scary that Americans would agree to allow a central govt to tax every new thing they buy at such a rate (including medical visits). And on top of that, if the govt wants to spend more, they can increase the rate. Have we really gotten to the point where we're ok with such taxation? Shouldn't we the people being fighting the spending? Being that's what's causing the need for such taxation.

So your ok with the government taking your money now without you knowing vs the fairtax where you will know exactly when the money is taken and how much? The government cant just "raise the rates" under the fairtax. I mean technically they can, but they will then have to answer to the millions of voters who will be complaining about it. Under the current system though if the want more money they sneak a line or two in the tax code and no one is the wiser. Under the fair tax we all will know what they are doing.

[fallout2600]

So your ok with the government taking your money now without you knowing vs the fairtax where you will know exactly when the money is taken and how much? The government cant just "raise the rates" under the fairtax. I mean technically they can, but they will then have to answer to the millions of voters who will be complaining about it. Under the current system though if the want more money they sneak a line or two in the tax code and no one is the wiser. Under the fair tax we all will know what they are doing.

Nope, never said I was ok with that. I just see the spending as out of control and switching to fairtax does nothing to throttle it, that was my point. Nothing more, nothing less. I agree the fairtax would be more transparent and have political consequences if they voted to raise it, but political consequence hasn't stopped them from taxing us to death before and I think it won't stop them in the future. So by agreeing to fairtax, you also have to agree with the current level of spending, and I don't. I'd rather throttle the spending then agree on a national sales tax that is revenue neutral at a reasonable rate. To me its putting the buggie in front of the horse. That's my position on it, you don't have to agree with it.

[stevenl]

To agree with the fairtax you do not have to agree with spending. Two different issues.


I dont think anyone disagrees that spending is WAY to out of control. Except those in washington.

[froggigger]

Nope, never said I was ok with that. I just see the spending as out of control and switching to fairtax does nothing to throttle it, that was my point. Nothing more, nothing less. I agree the fairtax would be more transparent and have political consequences if they voted to raise it, but political consequence hasn't stopped them from taxing us to death before and I think it won't stop them in the future. So by agreeing to fairtax, you also have to agree with the current level of spending, and I don't. I'd rather throttle the spending then agree on a national sales tax that is revenue neutral at a reasonable rate. To me its putting the buggie in front of the horse. That's my position on it, you don't have to agree with it.

We're in agreement 99.9%. Government is out of control and something needs to be done before it's too late, if it isn't too late already. I'd like nothing better than to throttle the spending but I don't see it happening no matter how we're taxed.