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Letter: Floundering economy

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  • Alfred Phoenix, AZ
    Dec. 13, 2013 8:54 p.m.

    @Ultra Bob:
    "If a flat tax rate were applied to the business out flow of money the tax could be collected easily and be easy to audit."

    So, who'd pay the tax, the business or the out-flow recipient? If the business pays, it would soon go out of business from foreign competition, etc., due to the added tax burden.

    If the recipient pays, that's what we have now, mostly... where the business collects the (income) tax and remits to the IRS... for wages, anyway. And wages (labor) is the lion's share of the cost of goods and services produced in the US.

  • Truthseeker SLO, CA
    Dec. 13, 2013 8:55 p.m.

    Wouldn't the Fair Tax rate have to be somewhere between 28-35%?

    Does anyone think the deduction for charitable contributions and mortgage interest deduction is going to go away without a fight?

  • wrz Phoenix, AZ
    Dec. 13, 2013 8:38 p.m.

    The problem with a federal sales tax is... the government would not give up the income tax, so we'd end up with both. Not a good idea.

  • Shaun Sandy, UT
    Dec. 13, 2013 8:16 p.m.

    @mike richards. Are you saying republicans do not send out pleas for contributions from corporations? Who is your lobbyist for all your causes and wants in Washington? It certainly is not the republicans because they just are giving you lip service,

  • The Taxman Los Angeles, CA
    Dec. 13, 2013 7:40 p.m.

    @lost in DC

    "YOU may only spend $100k of the $3MM, but I think in that regard you would be in the minority."

    I disagree. My most wealthy client, a multi-billionaire, spends a small fraction of his annual income. Why (using my example) should my effective tax rate be one-thirtieth of the middle-class taxpayer?

    "And do you not think there would be an overall economic benefit to the other $2,900,000 that you reinvested?"

    No because I invest in (non-initial offering) equities. My investing activity does not create jobs. Further, I don't believe minor "trickle-down" economic benefit justifies poor tax policy.

    "I frequently see tax returns in my job - I get nauseated seeing people living in $3MM homes with $200k cars claiming net losses of $800k on their 1040s. I'm sure doing tax planning for wealthy individuals, you see the same thing as well."

    Yes, but your (non sequitur) observation has nothing to do with the Fair Tax. We need tax reform, but the Fair Tax is not it.

  • Semi-Strong Louisville, KY
    Dec. 13, 2013 6:55 p.m.

    Mike Richards,

    I won't go down the Obamacare road with you.

    But I agree wholeheartedly that our first priority is to get rid of the corrupt politicians. Those exist on both sides of the aisle. And yes, until we get rid of them, no change to this or that tax system will be of any help.

    Good legislators would work well with any tax system. Bad legislators will make any system a problem.

  • Mike Richards South Jordan, Utah
    Dec. 13, 2013 6:08 p.m.

    Those telling us that corporations "own" Washington are wrong. Harry Reid, and every other Democrat, has his staff send out "pleas" for "contributions on every bill. Read the book, "Extortion" by Peter Schweizer and then let's discuss who is at fault.

    ObamaCare was meant to profit those who wrote that legislation and those who would profit from the court battles generated by that legislation. There was no attempt to help you and me. That bill was written to enrich Obama and his followers. Anyone who disagrees only has to show us that ObamaCare has no contradictions, that it lowers health-care costs by $2,500 per family, that it allows us to keep our insurance policies and our doctors; otherwise, they will have to admit that Obama lied to us and that everyone involved in that process lied to us. It was not the "corporations" who lied to us, but the Democrats who overturned the will of the people and passed legislation that will haunt us for generations.

    A flat tax or a sales tax or a restructured tax will not solve anything until the corrupt politicians who fleece us are removed. There is no "porportion" involved!

  • Ultra Bob Cottonwood Heights, UT
    Dec. 13, 2013 5:17 p.m.

    Government should be paid for in proportion to the benefit to the individual citizen.

    While far from perfect the very best measure of the benefit received is the personal income. Simplicity is the best way to design a personal income tax to reduce errors, be dependable, fair and easy.

    If a flat tax rate were applied to the business out flow of money the tax could be collected easily and be easy to audit. Every out flow of money from a business operation regardless of why or wherefore, is income to someone. It may be the wages, dividends, or other expenses. It would not matter if they are Americans or where they live. All people who derive an income from American business would pay the tax.

    No individual tax forms and the wages are paid without any deductions for taxes.

  • Ultra Bob Cottonwood Heights, UT
    Dec. 13, 2013 4:39 p.m.

    “The poor spend less so they would be taxed less, the rich spend lots more so they would be taxed more.”

    A rich person, in a Fair Tax world, having the ability to shop any where in the world, would not buy anything from an American dealer and thus have no tax to pay.

    The poor man who must shop and buy from the neighborhood store or the internet in which cases he pays the full tax on everything he buys.

  • Ultra Bob Cottonwood Heights, UT
    Dec. 13, 2013 4:18 p.m.

    The Fair Tax is a lie. It is neither fair or adequate to fund our nation.

    The writer betrays himself with his ending statements:
    “All of a sudden America arguably becomes the low-cost place in the world to do business and therefore the place to build your new factory. Good paying jobs return. Americans win.”
    The only way America could become the lowest cost place in the world to build and operate a factory is if the wages in America are the lowest in the world. Good paying jobs will not be found in the lowest cost place in the world.

    America would only win if business operations prosper; which requires consumers with money to spend. If wages are low and the taxes high for the consumer business will die.

  • lost in DC West Jordan, UT
    Dec. 13, 2013 1:51 p.m.

    Schnee,
    the problem with your argument is it supposes the lower income brackets PAY income tax. 47% do not.

    Semi-strong
    thank you for the clarification. I don't have a strong feeling one way or the other about this, though I do tend to lean in favor of taxing consumption over production. I think there could be a transition built in to any system to ease the distruptions of which you speak.

    Taxman,
    YOU may only spend $100k of the $3MM, but I think in that regard you would be in the minority. And do you not think there would be an overall economic benefit to the other $2,900,000 that you reinvested? I frequently see tax returns in my job - I get nauseated seeing people living in $3MM homes with $200k cars claiming net losses of $800k on their 1040s. I'm sure doing tax planning for wealthy individuals, you see the same thing as well.

  • Shaun Sandy, UT
    Dec. 13, 2013 1:38 p.m.

    @Mike Richards. The day the rich and corporations do not own and operate Washington is the day our constitution will actually mean something.

  • Semi-Strong Louisville, KY
    Dec. 13, 2013 1:32 p.m.

    Mike Richards,

    The logical end to your statement would be a flat tax. Not a flat RATE tax, but a flat tax AMOUNT. Then, the poor and wealthy are truly equal in what they pay for each and every service.

    Is that not the logical conclusion from your argument? After all, why should tax have anything to do with what someone earns?

  • Mike Richards South Jordan, Utah
    Dec. 13, 2013 1:08 p.m.

    The DUTY of the Federal Government is clearly listed in Article 1, Section 8. The seventeen areas which we have delegated to the Federal Government are enumerated. There is not "redistribution of wealth" on that list. There is no food, housing, clothing, or any other "personal welfare" item on that list.

    It goes without saying that those who receive "personal gifts" from government should be hit the hardest when the government charges its citizens for those "gifts". Why would anyone think that a wealthy man should pay more to drive down the Interstate than a poor man? Why should anyone think that the rich man should pay more to defend his State against enemies, foreign and domestic, than the poor man. Read the Constitution carefully. The military is used to defend the STATES against attack, not the people. Defending the people is left to the States or to the people (militia).

    A national sales tax would be minimal IF the people demanded that the government stay out of their lives except as enumerated in the Constitution. People would refuse services if they had to pay for them.

  • The Taxman Los Angeles, CA
    Dec. 13, 2013 12:28 p.m.

    First, I do not work for the IRS. I do international tax planning for large companies and wealthy individuals. I do not have a dog in this fight, but have attended tax conferences where this tax has been discussed.

    This proposal has been around for 13 years or so, and has failed to gain a strong following for several reasons. One big issue is regressivity.

    Let's say I had a great year and earned $3 million in consulting fees. I do not live a lavish lifestyle and only spend about $100K per year (I invest the rest). Under current tax law, my entire $3 million is subject to federal income tax. However, under the Fair Tax only $100K of my income would be subject to tax. Contrast that with a middle-income wage earner who earned $100k (and therefore does not qualify for "pre-bates" or other Fair Tax relief) and spent the entire $100K. Our federal tax obligations would be the same. In short, the rich would still get richer while the middle-class pays most U.S. federal taxes.

    BTW, I know from first-hand (outsourcing projects) experience, wage rates, not tax rates, drive the location of unskilled jobs.

  • Semi-Strong Louisville, KY
    Dec. 13, 2013 11:37 a.m.

    lost in DC,

    No, I don't work for the IRS.

    This would be a massive economic disruption on several levels. To how we invest, buy real estate, save, who pays how much tax, etc., etc.

    The letter writer ignores all of that and proposes that this one action will solve all of our problems. I have simply never seen it work that way (hence my comment).

    As others have pointed out, we don't simply have a revenue problem. We have a spending problem.

    It is the job of those who propose a new program to show us why it would work. It is the job of the unconvinced to remain so the proponents prove their case beyond a reasonable doubt.

    This letter does not even come close to making a reasonable or verifiable case.

  • atl134 Salt Lake City, UT
    Dec. 13, 2013 11:16 a.m.

    @BadgerBadger
    "The real reason liberals won't go for this, they can't control everyone's lives through the IRS including targeting people or groups who have conservative, patriot, etc in their name."

    Liberals want these groups to pay taxes. This sales tax method has two options, either
    A: These groups still having to file for tax exempt status (no change from current system)
    B: These groups will have to pay sales tax for their purchases, just like everyone else (liberals get what they want).

    Current regulatory law requires all groups to not get tax-exempt status if over half their work is political. Most groups liberal and conservative should not have tax exempt status based on what the law currently says. Also, liberal and conservative groups were both looked at (Issa's report that he requested chose to deliberately only look at conservative groups and ignore liberal groups), and in fact the only group to be denied tax-exempt status was a liberal group.

  • Badgerbadger Murray, UT
    Dec. 13, 2013 11:01 a.m.

    liberallarry

    I thought you abhorred the ability of large corporations to dodge all income taxes through loopholes. Now you worry about peanuts from a small businessman. With no income tax, there would be plenty of former IRS guys to set up stings for such situations.

    The real reason liberals won't go for this, they can't control everyone's lives through the IRS including targeting people or groups who have conservative, patriot, etc in their name.

  • Schnee Salt Lake City, UT
    Dec. 13, 2013 10:41 a.m.

    We'd lose with a sales tax instead of an income tax. Think of it this way. Let's say for sake of simplicity that current income tax rates are 10% for the bottom 1/3, 15% for the next 1/3, and 20% for the top 1/3.

    A sales tax affects everyone equally, so let's say that in order to generate the same amount of revenue we need a 17% sales tax. (The reason it's higher than the simple average of 15% is because that 20% was applied to higher income totals and the 10% to lower income totals so it's weighted towards that side. Alsonot all income gets spent, especially by the rich who aren't living paycheck to paycheck, so you have to tax the spent amount more to make up the lost revenue from people choosing to save money which keeps it untaxed.)

    So we'd still be increasing taxes on those at the bottom and giving a tax cut to those at the top. Why would that be a good idea? Wealth inequality is already bad enough as it is.

  • lost in DC West Jordan, UT
    Dec. 13, 2013 10:01 a.m.

    I have no problem with taxing consumption rather than production

    OK, Semi-strong, what’s wrong with it, other than it is neat and plausible? YOU must work for the IRS, and see YOUR job in jeopardy from it. Liberal Larry exposed one potential problem, could you not have done at least that much?

    Liberal Larry,
    What you describe is already being done in many small retail establishments to avoid state sales taxes, so yes, there is a shortfall, but overall the net effect would be beneficial. I’m sure we could make adjustments and corrections as we went along.

  • SEY Sandy, UT
    Dec. 13, 2013 9:15 a.m.

    Liberal Larry nailed it. Government almost never takes the unintended consequences of their actions into account. They assume all will behave the same way before and after legislation.

  • Mike Richards South Jordan, Utah
    Dec. 13, 2013 8:58 a.m.

    What is the correct percentage that the government should take from us? Wilson told us the 2% or close to it was all that the government would ever need. FDR had some people paying 95% of their income. How much would Obama require? He's often told us that he would not increase the taxes on the poor or middle class and then he signed into law the largest tax increase on the poor and the middle class that has ever been levied in American history.

    What is a fair sales tax?

    How about if the Federal Government strip itself of all spending that is not part of its 17 core duties? Those duties could easily be handled by requiring a tax of 5% or less. The economy would boom. People would prosper - but government could not force us to look to Washington for our bread and milk. In other words, any tax that reduces Washington's reach into our lives will never be passed.

  • Roland Kayser Cottonwood Heights, UT
    Dec. 13, 2013 8:49 a.m.

    When it comes to manufacturing jobs, the U.S. is actually a lower cost producer than most of the developed world. But we're still not competitive with places where employees will accept jobs at 50 cents an hour.

    What we need to do is look at Germany, whose manufacturing sector is the envy of the world, despite the fact that their industrial workers are paid considerably more than ours. It's not all about lower wages. Germany is beating us with better infrastructure and a more highly skilled workforce, areas where the U.S. used to excel, but now find ourselves lagging.

  • SEY Sandy, UT
    Dec. 13, 2013 7:30 a.m.

    The US doesn't have so much a taxing problem as it does a spending problem. No tax scheme will keep politicians from overspending.

  • liberal larry salt lake City, utah
    Dec. 13, 2013 7:11 a.m.

    A tax on all new goods and services. Doctors are really going to love that! Can you imagine when the plumber gives you two bids, one for the "taxed" price of $1000 and one for the cash price of $800?

    A huge sales tax will either create a huge enforcement apparatus, or we will have the worlds largest underground cash economy!

    If you are trying to undermine the federal government, this is a good place to start.

  • Semi-Strong Louisville, KY
    Dec. 13, 2013 6:35 a.m.

    There is always a well-known solution to every human problem – neat, plausible, and wrong.
    - H. L. Mencken

  • high school fan Huntington, UT
    Dec. 13, 2013 1:51 a.m.

    Everybody should be happy with this as it would close all the loop holes. The poor spend less so they would be taxed less, the rich spend lots more so they would be taxed more. The legal people, the illegal people, the visitors would all be taxed the same so there would be no discrimination.
    Congress would never go oft it though as they would lose their power.