Fair Tax - a social time bomb?
- Thread starter Handy
- Start date
The assumption here, is that the removal of these "hidden" taxes will lower the cost (to consumers) of goods.
I can guarantee this will not happen. Corporations will charge the same and the extra profits will be gleefully pocketed. The consumer, on the other hand, will simply pay 20% more for the same items.
Simply because my paycheck will not have the Fed income taxes taken out, will not alleviate the "pain" of having to pay 20% more for the items I normally buy.
I can guarantee this will not happen. Corporations will charge the same and the extra profits will be gleefully pocketed. The consumer, on the other hand, will simply pay 20% more for the same items.
Simply because my paycheck will not have the Fed income taxes taken out, will not alleviate the "pain" of having to pay 20% more for the items I normally buy.
I admit I do not understand the "Fair Tax" system ... but in it's simplest form for the purpose of arguement ...
I'd be looking at a savings of $25K per year in federal tax. (Give or take a little but we'll keep the numbers simple)
To spend that additional money in taxes again , I'd have to purchase $125K worth of stuff per year. Realistically , purchases vary , I assume we're talking about everything we buy being taxed from our cars to homes to clothing etc etc.
Tax will most likely be collected on utlities and services .
Luxury items like say , a boat would be taxed , tax figured into a loan and disbured over many years in payments like your home.
Food would most likely be exempt.
Realistically , the most I'd spend a year on these payments and throughout the year at an average monthly budget would be somewhere around $5-6K per month. (or $60-72K per year) .... Sounds to me like my bank account will grow very quickly each year and the Social Security I will never see I won't need.
In Fact , My surplus money each month / year will be such that I'm gonna increase my spending a little , make a few more investments , buy an couple more guns each year
From my point a view , unless I simply don't understand the "Fair Tax" system , I'd be all for it.
The poor who don't pay taxes now , who's wellfare and foodstamps I pay for now , would be given the same tax breaks they always have gotten , and the economy as a whole would prosper.
Sure there might be a little less in the coffers for things like big banquets and social functions for the government parties . SO what. I've never been invited to one anyway. I just help pay for them.
I'd be looking at a savings of $25K per year in federal tax. (Give or take a little but we'll keep the numbers simple)
To spend that additional money in taxes again , I'd have to purchase $125K worth of stuff per year. Realistically , purchases vary , I assume we're talking about everything we buy being taxed from our cars to homes to clothing etc etc.
Tax will most likely be collected on utlities and services .
Luxury items like say , a boat would be taxed , tax figured into a loan and disbured over many years in payments like your home.
Food would most likely be exempt.
Realistically , the most I'd spend a year on these payments and throughout the year at an average monthly budget would be somewhere around $5-6K per month. (or $60-72K per year) .... Sounds to me like my bank account will grow very quickly each year and the Social Security I will never see I won't need.
In Fact , My surplus money each month / year will be such that I'm gonna increase my spending a little , make a few more investments , buy an couple more guns each year
From my point a view , unless I simply don't understand the "Fair Tax" system , I'd be all for it.
The poor who don't pay taxes now , who's wellfare and foodstamps I pay for now , would be given the same tax breaks they always have gotten , and the economy as a whole would prosper.
Sure there might be a little less in the coffers for things like big banquets and social functions for the government parties . SO what. I've never been invited to one anyway. I just help pay for them.
Gotta disagree. Taxes at the producer level are nothing more than a cost, no different that raw materials, labor, and overhead. Removing taxes on producers will be the equivelent of reducing the cost of labor substantially which will in the near term increase the gross trading margin the producer makes. Once that occurs greed intervenes and the producer is tempted to trade lower margin for higher unit sales. Prices will fluctuate up and down until a new equilibrium is established. Every market or business has a natural gross trading margin (and ultimately net profitability). You can find operations of higher profitability and lower profitability but they are few and far between. Move to a sales tax from a producer tax and pricing will jockey around for a while and then settle into market norms generating "normal" profitability.
DavidJBlythe
New member
When I get home (at the office right now) I'll try to tell you what you are going to get out of the book... and what it's effect on society would be.
But I still suggest getting the book.
Really.
I'll Be home at 2:30 CT.
But I still suggest getting the book.
Really.
I'll Be home at 2:30 CT.
That little rebate system makes a mockery of the idea of a simple tax system. If the "necessities of life" don't need to be taxed, then don't tax them in the first place. At a minimum, taxing necessities and later rebating the tax requires the existence of a massive and useless bureaucracy.
Oh, I forgot, you can't practice social engineering unless you collect a lot of taxes to redistribute without regard to who paid the taxes.
A few other things:
If you buy a $200,000 house, it will cost $240,000, but will be worth $200,000 if you sell it the next day. If you move often, you are effectively taxed more than someone who stays put. Someone in the military, for instance, would pay four times the effective tax rate of someone who moves once a decade.
Would anyone buy or sell property after that?
What are "goods for sale"? Should I buy a $40,000 car from GM, or contract with Ford to purchase $10,000 worth of materials and another $30,000 in labor to make me a car? You'd pay $8000 in tax for the GM, but only $2000 for the Ford.
Why buy at all? If I buy a pair of $40 slacks, they cost me $48. But if I lease my pants for $40, that's all they cost.
No loopholes for the rich - wrong. Why buy luxury items like a plane or yacht here? Foreign plane, foreign registry, foreign (low) sales tax.
And if people do find these loopholes, who's going to stop them? The point was to get rid of the IRS!
What are goods, what are services or labor? What is the difference between buying something that had a labor cost and employing someone to make you something? "We'll tax the sales" is not a simple idea. When people find a way around paying something, the only thing the Fed can do is raise the tax more.
If you buy a $200,000 house, it will cost $240,000, but will be worth $200,000 if you sell it the next day. If you move often, you are effectively taxed more than someone who stays put. Someone in the military, for instance, would pay four times the effective tax rate of someone who moves once a decade.
Would anyone buy or sell property after that?
What are "goods for sale"? Should I buy a $40,000 car from GM, or contract with Ford to purchase $10,000 worth of materials and another $30,000 in labor to make me a car? You'd pay $8000 in tax for the GM, but only $2000 for the Ford.
Why buy at all? If I buy a pair of $40 slacks, they cost me $48. But if I lease my pants for $40, that's all they cost.
No loopholes for the rich - wrong. Why buy luxury items like a plane or yacht here? Foreign plane, foreign registry, foreign (low) sales tax.
And if people do find these loopholes, who's going to stop them? The point was to get rid of the IRS!
What are goods, what are services or labor? What is the difference between buying something that had a labor cost and employing someone to make you something? "We'll tax the sales" is not a simple idea. When people find a way around paying something, the only thing the Fed can do is raise the tax more.
garand_shooter
New member
On the plus side, people who aren't paying taxes now, would be drawn into the system. People who work under the table, money made through crime like drug dealers, prostitutes, etc. For once the cocaine dealer buying a Lexus would be contributing to the system...
DavidJBlythe
New member
Alright Handy... you obviously really really don't know that much about the Fair Tax after reading your last post. I would imagine that the only real thing you have right now is that one email from the guys at fairtax.org. Every single thing and I mean EVERY question you have asked about the Fairtax is answered in the book. Even your question about buying houses! I really don't have time to paraphrase THAT much information here. You have asked questions from nearly every chapter! If you really want to know more about this, please get the book.
Please keep in mind that the Fairtax is not a tax after the price of an item has been set. For instance... and this is in the book, too... when you go to the store to buy your $40.00 pants... they will not hit the tax button on the register and knock the price up to $48.00. The Fairtax is invisible and you wont even see it. For the reasons why this is... I leave it to you to buy the book.
Please keep in mind that the Fairtax is not a tax after the price of an item has been set. For instance... and this is in the book, too... when you go to the store to buy your $40.00 pants... they will not hit the tax button on the register and knock the price up to $48.00. The Fairtax is invisible and you wont even see it. For the reasons why this is... I leave it to you to buy the book.
If the manufacturers do not lower their price due to the cost of production reduction, how long will it take for another manufacturer to take advantage of the situation and begin competing with the first manufacturer? The prices will level out based on cost of production.
The fair tax only taxes new items. New building materials, new cars, new guns. Pre-owned houses, cars and guns are not taxed (except for state/local sales tax)
Handy, in reading your posts you show concern that people might curtail their spending on consumer items. Americans could use some incentive to save. Saving and investing are good for the economy too.
kennybs plbg
New member
The goverment is in the business to make money, if anyone thinks their going to save money your crazy. The lower class poor is going to pick up the slack, it ain't going to happen. Move to NY State for tax lessons, we're experts here.
kenny b
kenny b
This is why I ended my post to Handy, "I hesitate to get into an argument with a man who has 6,800 posts here at TFL, so this is adios."
When I posted that, you were well under 6,800 posts, now you are well over that mark, and still haven't bothered to read the book, or do some google searches to find analysis of the sales tax methodologies.
You question is, would a national sales tax have a terrible effect on the US economy. The question also is, does an income tax; SS tax; Medicare/Medicaid tax, etc, have a terrible effect on the US economy. The answer to my question is YES.
The income tax allows (requires) government to spy on Americans to make sure they pay the tax. It violates the 4th and 5th amendments as well as the 6th and 7th, in many instances. It allows legislators and lobbyists to control behavior with the use of nickel-and-dime tax credits/deductions. SS reduces investment which would normally create growth. Medicare takes money out of insurance industries which also pulls money out of investment s well as providing a bureacratic health care system filled with byzantine DRGs and threats of punishment to physicians who dare to assign a diagnosis which a Medicare bureaucrat might disagree. The income tax and other government programs are so powerful (in an eeeevil sort of way), that Americans are clawing at each other with every election cycle or judicial nominee.
Will a nat'l sales tax *change* the economy? I surely hope so... for the better. But not as much as reducing taxation and spending altogether along with regulation and Big-Brotherism.
Although I understand the rebate systems to remove sub-poverty-level tax payments inclusive in some of the NSTax plans, I'd rather just exempt things such as food (grocery or restaurant), medical treatment (doctor or witch doctor), clothing, and housing (be it rent or purchase).
Then, again, I'd like to see federal spending and taxation reduced down to 25% of the current level. But we ain't gonna see that. And with the current level of understanding in the public, and the need for control in D.C., I don't think we'll se a NSTax either.
Handy, do some reading. Nobody here wants to be your googlebitch.
Rick
When I posted that, you were well under 6,800 posts, now you are well over that mark, and still haven't bothered to read the book, or do some google searches to find analysis of the sales tax methodologies.
You question is, would a national sales tax have a terrible effect on the US economy. The question also is, does an income tax; SS tax; Medicare/Medicaid tax, etc, have a terrible effect on the US economy. The answer to my question is YES.
The income tax allows (requires) government to spy on Americans to make sure they pay the tax. It violates the 4th and 5th amendments as well as the 6th and 7th, in many instances. It allows legislators and lobbyists to control behavior with the use of nickel-and-dime tax credits/deductions. SS reduces investment which would normally create growth. Medicare takes money out of insurance industries which also pulls money out of investment s well as providing a bureacratic health care system filled with byzantine DRGs and threats of punishment to physicians who dare to assign a diagnosis which a Medicare bureaucrat might disagree. The income tax and other government programs are so powerful (in an eeeevil sort of way), that Americans are clawing at each other with every election cycle or judicial nominee.
Will a nat'l sales tax *change* the economy? I surely hope so... for the better. But not as much as reducing taxation and spending altogether along with regulation and Big-Brotherism.
Although I understand the rebate systems to remove sub-poverty-level tax payments inclusive in some of the NSTax plans, I'd rather just exempt things such as food (grocery or restaurant), medical treatment (doctor or witch doctor), clothing, and housing (be it rent or purchase).
Then, again, I'd like to see federal spending and taxation reduced down to 25% of the current level. But we ain't gonna see that. And with the current level of understanding in the public, and the need for control in D.C., I don't think we'll se a NSTax either.
Handy, do some reading. Nobody here wants to be your googlebitch.
Rick
Rick,
You didn't end your post. Instead you insulted me - twice. I wish you had left with just the one dismissive, assinine comment and gone back to what you do - post exclusively on the Legal forum.
My question has nothing to do with the math of the proposed system but about the mindset of American consumers and their reaction to a change in where they are taxed. Your wise ass responses do nothing to answer that question.
I'm also sorry I was unable to "read the book", let alone buy it in two days.
Pipoman,
As to the "new stuff is taxed, only", who's going to buy a new house and be the one to bear the tax burden on that property for all future owners? Not me. Probably not you, either.
You didn't end your post. Instead you insulted me - twice. I wish you had left with just the one dismissive, assinine comment and gone back to what you do - post exclusively on the Legal forum.
My question has nothing to do with the math of the proposed system but about the mindset of American consumers and their reaction to a change in where they are taxed. Your wise ass responses do nothing to answer that question.
I'm also sorry I was unable to "read the book", let alone buy it in two days.
Pipoman,
You are illustrating my point. What happens when people in the most consumer driven, credit seeking economy on earth significantly change their behavior.
As to the "new stuff is taxed, only", who's going to buy a new house and be the one to bear the tax burden on that property for all future owners? Not me. Probably not you, either.
The fact that used is almost always cheaper than new has not curbed the purchase of new guns, cars, clothes, or homes in the past.
There is currently no sales tax on pre-owned homes, there is sales tax on new construction materials.
The cost of pre-owned homes is always commensurate with the cost of new (as it is with all things). Free markets will always equalize prices.
I simply disagree with this premise. If you look at your paycheck now and the gross is $500 and your net is $400. How would your spending change if your check was $500 and the items you normally purchase were within 5% of what they currently cost?
You do seem interested enough in this subject to read the book, it is worth your time and a good read. If the purchase price is an issue you could get on the waiting list at the library. (I am not trying to "beat a dead horse" but you have never indicated your intention to read it)
DavidJBlythe
New member
This may not be the best way to gain another supporter of the FairTax 
Handy PM me your street address and I'll mail you my copy for you to read. You can just mail it back when you are done reading it. I don't want to turn you off the the idea but rather encourage you to become a supporter. They talk about social issues and social impact in the 170+ pages.
Sorry if I was mean in previous posts.
David
Handy PM me your street address and I'll mail you my copy for you to read. You can just mail it back when you are done reading it. I don't want to turn you off the the idea but rather encourage you to become a supporter. They talk about social issues and social impact in the 170+ pages.
Sorry if I was mean in previous posts.
David