@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.
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?
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.
@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,
@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.
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.
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!
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.
“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.
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.
Schnee,the problem with your argument is it supposes the lower income
brackets PAY income tax. 47% do not.Semi-strongthank 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.
@Mike Richards. The day the rich and corporations do not own and operate
Washington is the day our constitution will actually mean something.
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?
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.
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.
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
@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, eitherA: 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
liberallarryI 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.
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.
I have no problem with taxing consumption rather than productionOK,
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.
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.
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.
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.
The US doesn't have so much a taxing problem as it does a spending problem.
No tax scheme will keep politicians from overspending.
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.
There is always a well-known solution to every human problem – neat,
plausible, and wrong. - H. L. Mencken
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.