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Quote :

"You're ignoring what the meaning of "progressive taxation" is. As INCOME goes down, TAX RATES go down. It is not as SPENDING AFTER THE POVERTY LINE goes up, TAX RATES go up, that's irrelevant because it is not tied directly to income. By the DEFINITION of progressive taxation, only income taxes are truely progressive."

A progressive tax is a tax by which the tax rate increases as the taxable base amount increases.

It doesn't have to be tied to income to be progressive. As long as someone who has the ability to spend more money pays more taxes, it is no different than income. It is actually more progressive because of the higher brackets end up with a higher tax liability if they choose to spend money on new goods.

For all the rest of your points, the logic is just not there that it would increase the costs of goods above and beyond what they already are due to the nature of the system we are in of wages being garnished before we actually realize what we earn. If you were able to take home your entire gross income, you would be no worse off in this system. Actually you would probably be better off because you would probably get a 15% raise with the elimination of the payroll tax.

The house builder would not have to pay income tax (along with his subs, suppliers, and their subs and suppliers). The price of the new house would drop by the amount of taxes they were paying and then sales tax would be added. It is revenue neutral and the new house would cost roughly the same.

As far as the tax evasion, certain business expenditures would need to be illegal. That's not that big of a problem. It would certainly be more concise than the current tax code.

Regardless, you are still stuck in the comparison of Sales Tax/VAT to income tax.

As far as Sales Tax vs. VAT, Sales Tax is loads simpler and much easier to trace. It would not be nearly as convoluted as a VAT.

7/27/2011 4:10:48 PM

Quote :

"By the DEFINITION of progressive taxation, only income taxes are truely progressive."

According to the dictionary I checked, while income taxes can be progressive, not all progressive taxes need to be income taxes.

7/27/2011 4:15:08 PM

Quote :

"My proposal herein is simple. Eliminate the existing U.S. personal and corporate income tax system altogether and replace it with a VAT -- a great tax swap of historic proportions. One argument against such a swap is that it would require the repeal of the 16th Amendment, which is wrongheaded since the 16th Amendment gives Congress the power to levy an income tax, but does not mandate that it do so. Several VAT critics are also arguing that while the VAT is efficient, fair, and effective, it would, however, raise too much money, too easily and thus encourage the purchase of more public services. They seem to like the existing chaos and inefficiency."

Quote :

"For many VAT critics, their goal is not to define the method by which the U.S. government raises taxes or to improve its efficiency but to slash revenues as a means of cutting government, or "starve the beast.""

http://www.huffingtonpost.com/pat-choate/vat-and-the-great-tax-swa_b_551120.html

He makes a better argument directly against the VAT in "Saving Capitalism", but the point that many people's preferred taxes are less oriented towards raising revenue through a manner that encourages competition that is still progressive and more towards trying to crash government stands. If the FairTax and the VAT are both consumption taxes that fall hardest on big consumers, and one is compliant with trade laws and raises "too much" revenue but still isn't putative (when coupled with a repeal of corporate and income taxes) and the other one could be illegal by way of trade laws and may or may not be aimed moreso at wrecklessly crashing instead of responsibly reforming, why choose that one over the other?

7/27/2011 4:52:05 PM

Quote :

"It doesn't have to be tied to income to be progressive. As long as someone who has the ability to spend more money pays more taxes, it is no different than income."

Ok, then explain this. I make $100 and spend $1, you make $50 and spend $2. You make half as much as me yet you would be taxed twice as much. I have the ability yo spend more money but I pay less taxes.

Quote :

"For all the rest of your points, the logic is just not there that it would increase the costs of goods above and beyond what they already are"

But they were, when you shift what is and isn't taxed, you effectively subsidize it, and you must keep this in mind.

Quote :

"As far as the tax evasion, certain business expenditures would need to be illegal."

Like what? It has never been stated in the Fairtax book. It's not as if these are literally invasions, very little of what is made is an ACTUAL "final good".

7/27/2011 4:54:50 PM

Quote :

"other one could be illegal by way of trade laws and may or may not be aimed moreso at wrecklessly crashing"

Source?

Quote :

"Ok, then explain this. I make $100 and spend $1, you make $50 and spend $2. You make half as much as me yet you would be taxed twice as much. I have the ability yo spend more money but I pay less taxes."

Why did you only spend half as much? How much is the monthly prebate? Were you able to grow your own food and not have the grocery bills like I did? What did you create that enabled you to spend less?

Quote :

"Equity – The Consumption Tax is Not Regressive Many people view moving to consumption taxation as regressive. These same people would view switching from our current system to a tax on existing wealth, whose proceeds are used to lower the taxation of labor income, as highly progressive. But it is not possible to hold both beliefs since a consumption tax is identical to a tax on existing wealth and current and future wages, and a tax on existing wealth and current and future wages is identical to a tax on consumption. If people who oppose a consumption tax understood that it embeds a significant wealth tax, they would likely support it. In this regard, it is paradoxical that Democrats appear to oppose consumption taxation, whereas Republicans appear to support it. Economists measure tax progressivity in terms of lifetime net tax rates, specifically as the ratio of the present value of lifetime net tax payments divided by the present value of lifetime resources (initial wealth plus the present value of future labor earnings). Politicians like to measure tax progressivity in terms of current taxes divided by current income. But current income is not a useful measure of a person or household’s economic resources. Warren Buffett may have zero current income this year if his capital losses are large enough to offset his capital gains, but his personal resources are immense. By measuring tax progressivity incorrectly, politicians conclude that a consumption tax is regressive, whereas economists view it as proportional. This makes sense. Since a consumption tax is, in essence a tax on existing wealth and the present value of wages, taxing consumption at a fixed rate is taxing economic resources (existing wealth and the present value of wages) in proportion to the level of those resources. By adding its demogrant/prebate, the FairTax transforms a proportional consumption tax into a progressive one. Table 2 below shows that the FairTax reduces lifetime net tax rates substantially (thanks to its base broadening), while enhancing tax progressivity."

http://waysandmeans.house.gov/UploadedFiles/Kotlikoff__Tuerck__Testimony.pdf

7/27/2011 5:39:31 PM

Quote :

"Why did you only spend half as much? How much is the monthly prebate? Were you able to grow your own food and not have the grocery bills like I did? What did you create that enabled you to spend less?"

What does that have to do with progressiveness? Is whether or not a tax is progressive dependent on whether or not I grow my own food?

7/28/2011 9:30:12 AM