Quote :

"The income tax is one of the few worth keeping. I would even consider expanding it"

Oh my goodness. It would be interesting to come back when you are in your prime money-making years. When your income is growing, but the expenses of a new family, and houses and such are taking its toll. Then, as you see 40-50% of your hard-earned income siphoned away by a huge and wasteful gov't, and you think how that money could've been spent on things more personally important to you. Let's see if you still think the income tax system needs expanding then.

7/25/2006 1:24:08 PM

Quote :

"How can you save too much and invest too much at the same time?"

Saving and investing are the same thing.

Quote :

"America will become the worlds biggest tax-haven, creating jobs and investment."

Or, more likely, america's economy will go down so fast you'll hear a flushing sound.

Quote :

"When your income is growing, but the expenses of a new family, and houses and such are taking its toll. Then, as you see 40-50% of your hard-earned income siphoned away by a huge and wasteful gov't, and you think how that money could've been spent on things more personally important to you. Let's see if you still think the income tax system needs expanding then."

I wouldn't have any problem with it. I know I owe my success in part to the US government and economy.

7/25/2006 2:06:50 PM

Quote :

"I know I owe my success in part to the US government and economy."

So do we, and implimenting my V-VAT system would make us all even more successful.

Of course, the real purpose of a change in taxation is simply to make it more visible in hopes that people will vote more actively against government largess. If we could magically shrink the federal government to a reasonable size, say 10% of GDP, it would no longer really matter what tax system you used. Of course, I would still prefer by V-VAT system, simply because it would finally tax criminals.

7/25/2006 5:18:22 PM

by making it more beneficial to deal in black markets?

7/25/2006 5:24:10 PM

Quote :

"Of course, the real purpose of a change in taxation is simply to make it more visible in hopes that people will vote more actively against government largess."

Finally some honesty.

So instead of a system that spreads out the burden in such a way as to make it acceptable to most tax-payers, you want to have a system that's so god-awful that it'll be politically unsustainable.

You people are bonkers.

7/25/2006 6:16:58 PM

Quote :

"So do we"

Then why do you want to ruin it?

7/25/2006 7:27:29 PM

Well, in so far as it raises money to fund government my V-VAT system is not aweful, it is rather straight forward (many european countries use a similar tax). It reduce tax distortions, reduce criminality, and reduce enforcement costs. All of these are benefits I could live without if the revenue required to find the government wasn't as substantial. But since it is so huge, an added benefit is that it makes government largess visible on a day-to-day basis, everytime you buy something.

Quote :

"Then why do you want to ruin it?"

Human society is not as fragile as you let on. Even if you are 100% correct and our tax reform wrecks everything then we can switch back with the swipe of a Presidential Pen.

[Edited on July 25, 2006 at 7:31 PM. Reason : .,.]

7/25/2006 7:29:02 PM

Quote :

"many european countries use a similar tax"

But they do not use it exculsively.

Quote :

"But since it is so huge, an added benefit is that it makes government largess visible on a day-to-day basis, everytime you buy something."

This bothers me as well. Not as much with you, but moreso with fairtax proponents. What they want is smaller government and less taxes, and ultimately no government and no taxes. So they come up with this underhanded replacement and act as if it isn't serving that interest.

Quote :

"Human society is not as fragile as you let on."

I'm not saying the world's going to end, but you guys could do substaintial damage to the economy. I'd rather it not happen, considering it's my money that will lose value.

Quote :

"Even if you are 100% correct and our tax reform wrecks everything then we can switch back with the swipe of a Presidential Pen."

What about the depression we'd have been thrown into? Yeah, let's go into depression just so we can watch this half brained scheme go up in smoke!

7/25/2006 7:42:08 PM

Quote :

"What they want is smaller government and less taxes, and ultimately no government and no taxes."

I find that hard to believe, but trust me when I say that is not very likely to be the result. In all honesty, even making taxes more visible won't change much and might even have no effect whatsoever.

Quote :

"I'm not saying the world's going to end, but you guys could do substaintial damage to the economy. I'd rather it not happen, considering it's my money that will lose value."

You still have yet to explain how my V-VAT could do any damage to the system. If it isn't raising enough money just raise the rate. And just to remind you, a V-VAT is applied to all products including capital goods, so since savings = investment the rich cannot escape the tax. It doesn't matter whether you buy a $1 hamburger or a $1 million factory, you paid 20% in taxes.

7/25/2006 8:00:14 PM

I'm all for this...I don't buy a lot, so it sounds good to me.

7/25/2006 8:09:06 PM

Quote :

"I find that hard to believe, but trust me when I say that is not very likely to be the result."

Oh I know it won't happen, but I can' pretty much tell it's what they want. They're just anarchists of a different color.

Quote :

"You still have yet to explain how my V-VAT could do any damage to the system."

You're going to replace replace the income tax system right? Then I'd say you have the same problems as fairtax.

Quote :

"a V-VAT is applied to all products including capital goods, so since savings = investment the rich cannot escape the tax"

Does it tax financial capital?

7/25/2006 8:19:20 PM

Quote :

"What they want is smaller government and less taxes, and ultimately no government and no taxes"

Jeez I don't know how many times I have to say it before it sinks in. Hard-core libertarians and the anarcho-idiots you're referring to DO NOT WANT the FairTax...because it is a TAX. The people who want the FairTax want an easy to understand, visible tax that doesn't punish achievement, promotes savings, and reduces gov't intrusion into our private financial lives.

The people who do not want the FairTax are power-hungry politicians, K-Street lobbyists who make a living gaming the tax system, and communists who want capitalism to fail.

7/25/2006 10:36:04 PM

Quote :

"but I don't think I could get in a serious discussion with you any more than I could with a monkey with downs syndrome."

You are right. You'd probably lose in that argument too. And I'll take the fact that you didn't address anything else I had to say as a tacit admission of defeat...

Quote :

"So instead of a system that spreads out the burden in such a way as to make it acceptable to most tax-payers..."

Newsflash, but no one has EVER said they thought their taxes were fair. No one. No one will ever say that the the taxes they pay are acceptable. Just like no one will ever say that they are paid too much. The only way the current system is "acceptable" is that it is more acceptable to the poor because they pay a lower percentage, while the rich get assraped for effectively no reason at all. It's tyranny of the majority at it's worst, with absolutely NO concern for fairness or justice. And your statement reaks of the class warfare bug that plagues democrats and liberals to this day.

[Edited on July 26, 2006 at 12:02 AM. Reason : ]

7/25/2006 11:56:34 PM

Quote :

"Oh my goodness. It would be interesting to come back when you are in your prime money-making years. When your income is growing, but the expenses of a new family, and houses and such are taking its toll. Then, as you see 40-50% of your hard-earned income siphoned away by a huge and wasteful gov't, and you think how that money could've been spent on things more personally important to you. Let's see if you still think the income tax system needs expanding then."

That's right. Liberals just need to grow up and get jobs, and then they'll understand. Especially the ones who are over 30 and earning $75,000 a year. Lazy welfare bastards, the lot of them.

The net taxation on an individual is all that matters where personal finances are concerned. The income tax never hit you more than the alternate minimum tax, or the payroll tax, or consumption taxes, or property tax, or the various types of investment taxes which you also probably want to get rid of.

7/26/2006 12:40:53 AM

Quote :

"The people who want the FairTax want an easy to understand, visible tax that doesn't punish achievement, promotes savings, and reduces gov't intrusion into our private financial lives."

It's just an overt attack agianst the government involvement in anything. You know as soon as this is enacted the tax will up prices on everything, lowering consumption, thus lowering government tax revenue. You mean to starve it.

Quote :

"and communists who want capitalism to fail."

Yeah, income tax is really causing capitalism to "fail" . Can you name the primary method of income every industrialized nation has used for the past 5 decades?

Quote :

"And I'll take the fact that you didn't address anything else I had to say as a tacit admission of defeat..."

What you said was idiotic nonsense. I couldn't actually reply to the subject matter of your post, if there was one at all. You say all money is taxed and spent, what in the hell does that have to do with anything? What the hell are you trying to say?

Quote :

"No one will ever say that the the taxes they pay are acceptable."

I don't have a huge problem with mine, I'd say they are acceptable.

Quote :

"while the rich get assraped for effectively no reason at all"

They get taxed for a very good reason, heavy concentration of wealth is bad for the economy.
The rich can't take all the credit for their wealth, they used our economy to get it, they benefit the most from our economy, this goes inversely with income, the poor benefit the lease. Thus they should pay for it. Conventiently them paying proportionally keeps the economy healthy. It keeps that money in motion rather than simply gaining interest, this keeps the economy going. This is why every non-tourism based first world country uses the income tax system.

7/26/2006 1:03:24 AM

Quote :

"Newsflash, but no one has EVER said they thought their taxes were fair. No one. No one will ever say that the the taxes they pay are acceptable."

I think the taxes are fair. Rational people realize that the money has to come from somewhere. If they think that the price is too high, changing taxation systems won't change that, will it?

Quote :

"The only way the current system is "acceptable" is that it is more acceptable to the poor because they pay a lower percentage, while the rich get assraped for effectively no reason at all. It's tyranny of the majority at it's worst, with absolutely NO concern for fairness or justice. And your statement reaks of the class warfare bug that plagues democrats and liberals to this day."

Since when does equal percentage = equal burden? 23% of $500,000/yr is no where near the burden of 23% of $25,000/yr for obvious reasons.

7/26/2006 1:12:20 AM

Quote :

"Since when does equal percentage = equal burden? 23% of $500,000/yr is no where near the burden of 23% of $25,000/yr for obvious reasons."

the 23% FairTax is not applied to income. It's applied to consumption. Someone making $25K will pay no where close to 23%. Only the richest of rich would end up paying 23% on their consumption.

The FairTax isn't trying to reform high taxes. It is just changing the way we pay them so that it is more visible, less intrusive, and doesn't punish achievement. Despite what a few very vocal TWWers say, most Americans are fed up witht he income tax and the IRS and want something better. The FairTax is one of those alternatives.

7/26/2006 8:59:55 AM

Quote :

"the 23% FairTax is not applied to income. It's applied to consumption. Someone making $25K will pay no where close to 23%. Only the richest of rich would end up paying 23% on their consumption."

Actually, everyone would pay 23% except sub-poverty citizens, who pay nothing. Sucks for the slightly-above poverty citizens, but I guess they'll have to take it for the team. Sucks for the middle-class too, who will be paying hundreds of times the percent of their income in taxes that the richest quartile would pay. I guess they'll have to take it for the team. Maybe everyone except the top 1% of earners will take it for the team. But that's what teamwork is all about, you put some in, and it may possibly trickle back to you, if you're lucky.

Onto other issues.

I haven't crunched any numbers, but I don't think a 23% sales tax would be enough support the federal government as is. It would have to come along with huge cuts, and even then the deficit looms over the piddly tax revenue.

Quote :

"Despite what a few very vocal TWWers say, most Americans are fed up witht he income tax and the IRS and want something better. The FairTax is one of those alternatives."

You are truly the artist of anecdotal evidence. But even if you were right about public opinion, that does not make you right from an economic perspective.

But again onto other things.

Because I will still contend that with 30% sales taxes setting the pace for consumption, and no taxes at all to control investment, you're setting yourself up for a macroeconomic disaster. Investment outpacing growth is more dangerous than the short-term effects of regressive tax policies.

Only an Austrian economist would be okay with that. And nobody takes them seriously, except other Austrian economists.

And finally, this would not dissolve the IRS. This would not shrink the IRS. The taxes may be simpler, but they're being processed monthly instead of quarterly or biannually, and people will find many creative ways to be classify their household as impoverished, or child-rearing, or any number of other exceptions that still exist under the tax. Only now instead of just rich people doing it, everyone is doing it.

[Edited on July 28, 2006 at 11:50 PM. Reason : they ask for this... I have no reasons for editing...]

7/28/2006 11:46:32 PM

Quote :

"Actually, everyone would pay 23% except sub-poverty citizens, who pay nothing. Sucks for the slightly-above poverty citizens, but I guess they'll have to take it for the team. Sucks for the middle-class too, who will be paying hundreds of times the percent of their income in taxes that the richest quartile would pay. I guess they'll have to take it for the team. Maybe everyone except the top 1% of earners will take it for the team. But that's what teamwork is all about, you put some in, and it may possibly trickle back to you, if you're lucky."

Ok, as I said, I don't buy the Fair Tax thing completely but you're going to have to back that up. How is everyone going to pay 23%

7/29/2006 12:05:29 AM

That is the flat rate of the tax. It is not dependant on income, but consumption, under a fixed rate.

That does not say the percent of income that gets paid on the tax. That varies depending how much income you have, with a steadily lower percent for higher incomes.

7/29/2006 12:25:43 AM

Quote :

"Actually, everyone would pay 23% except sub-poverty citizens"

You are absolutely incorrect on this. Everybody gets the prebate for taxes paid up to the poverty level. That lessens the tax 23% for everyone except the super-spenders.

Quote :

"I haven't crunched any numbers, but I don't think a 23% sales tax would be enough support the federal government as is."

Well the people who put HR25 together actually did "crunch" the numbers, and the 23% rate works.

Quote :

"...that does not make you right from an economic perspective"

I don't see any evidence that you are any more right from an economic perspective either.

Quote :

"The taxes may be simpler, but they're being processed monthly instead of quarterly or biannually, and people will find many creative ways to be classify their household as impoverished, "

The states will be administering the national sales tax on behalf of the federal gov't. 45 states already have the sales tax so they have the infrastrucure in place. The IRS will be much condensed and no longer snooping into our private financial affairs.

People can try to classify themselves all they want, but it won;t change anything. The FairTax prebate is sent to all families regardless of income.

The second FairTax rally goes on as we speak in Orlando today... Thousands have showed up so far.

[Edited on July 29, 2006 at 11:48 AM. Reason : .]

[Edited on July 29, 2006 at 11:48 AM. Reason : .]

7/29/2006 11:47:37 AM

Quote :

"Everybody gets the prebate for taxes paid up to the poverty level. That lessens the tax 23% for everyone except the super-spenders."

No, it lessens it for the upperclass and sticks it to the middle and lower middle class. The poor consume more of their income than the rich do.

Quote :

"Well the people who put HR25 together actually did "crunch" the numbers"

They can't even work with percentages correctly.

Quote :

"I don't see any evidence that you are any more right from an economic perspective either."

I've provided it, I emailed it to several fairtax groups. I posted it on the fairtax jack-off-a-thon message board, only for it to get deleted. I've yet to hear a reasonable arguement agianst any of my points.

Quote :

"The second FairTax rally goes on as we speak in Orlando today... Thousands have showed up so far."

I thought there was a big nambla convention over there right now.

7/29/2006 12:41:41 PM

Quote :

"It's just an overt attack agianst the government involvement in anything. You know as soon as this is enacted the tax will up prices on everything, lowering consumption, thus lowering government tax revenue. You mean to starve it."

I don't see it lowering consumption.

7/29/2006 1:32:36 PM

If the price of goods goes up, less goods will be purchased.

7/29/2006 3:47:58 PM

Kris, you are making an obvious mistake.

Just because prices doubled, for example, does not mean relative prices have increased. If incomes double due to the elimination of withholding taxes then prices MUST double just to hold consumption flat (and since doubling incomes didn't build any new shinny factories it follows that consumption must remain flat).

7/29/2006 7:56:32 PM

Quote :

"it lessens it for the upperclass and sticks it to the middle and lower middle class."

Let's say you are married and earn $19,600. And, if we follow your logic, you spend all of your income. Under the FairTAx, you would get a monthly prebate of $376..for a annual total of $4508.

$19,600 (the poverty level for a married couple) x 23% (FairTax) = $4508. Tax = ZERO!

Now let's that same couple earns $25,000 and spends $19,600. Their prebate remains the same. So they still end up paying ZERO Tax!

Let's say they blow all $25,000 of their income. And let's say they spent it only on new products. (No tax would be charged on used items). Their tax would be $25,000 x 23% = $5750

Now we factor in their prebate : $5750 - $4508 = $1242 fed tax.

Under the current income tax system, this couple would owe...

$25,000 - $11,800 (deductions/exemptions) = $13,200. Tax owed $1318.
And this does not include the Social Security and Medicare taxes that were withheld, which would make their tax even higher. And if they were self-employed, their taxes would be even higher.

Quote :

"If the price of goods goes up, less goods will be purchased."

Once the embedded taxes (income, social security, tax compliance costs) are removed, prices will basically remain the same.

7/29/2006 11:28:14 PM

Quote :

"Just because prices doubled, for example, does not mean relative prices have increased. If incomes double due to the elimination of withholding taxes then prices MUST double just to hold consumption flat"

The relative price will have increased because taxes are applied on it. This will effect the demand curve. If the price of everything had increased, your statement would be accurate, this, however is not the case.

Quote :

"Let's say you are married and earn $19,600. And, if we follow your logic, you spend all of your income. Under the FairTAx, you would get a monthly prebate of $376..for a annual total of $4508. $19,600 (the poverty level for a married couple) x 23% (FairTax) = $4508. Tax = ZERO! Now let's that same couple earns $25,000 and spends $19,600. Their prebate remains the same. So they still end up paying ZERO Tax!"

$25000 for two people isn't even close to middle or lower middle class.

I've done my own research, I provided it to you and everyone else. I saw a signifigant spike in tax burden for the lower middle and middle class and sloped off as income went up.

Quote :

"Once the embedded taxes (income, social security, tax compliance costs) are removed, prices will basically remain the same."

No they won't. Taxes effect cost, they do not neccesarily effect price. You need to learn that cost does not neccesarily directly impact cost.

7/30/2006 3:23:42 AM

Quote :

"cost does not neccesarily directly impact cost"

what's that you say?

Besides, why is everyone so certain that "savings" are not taxed? They aren't putting the money in a matress, they are investing it. Are investments exempt from the tax? Best I can figure, they are spending just like anything else. Sure, even if you spend all of it on stock, that stock is a share of a company which consists of a lot of capital, (computers, buildings, trucks, tubes) all of which were taxed at 23%. Sure, this tax is indirect, but it was still taxed.

Not all businesses are equal, but if this business happens to be one that consumes capital (needs to buy new computers every year just to stay in business) then company cash is constantly being burned by the tax, spending what otherwise would have been the return of your stock investment, so indirectly you ARE being taxed because the entity you purchased shares in is being taxed.

I could imagine stock prices falling because of the FairTax (or my V-VAT) because previously companies only paid a percentage of their profits, now they are being expected to pay a percentage of all capital expenditure, regardless of profitability. Labor costs are untaxed, profits are untaxed, but all capital rollover and fresh investment is taxed at 23%. Overall, I suspect most company's total tax bills will have increased.

[Edited on July 30, 2006 at 9:35 AM. Reason : .,.]

7/30/2006 9:18:02 AM

Quote :

"but all capital rollover and fresh investment is taxed at 23%."

I'm not sure I'm totaly following you here, but with the FairTax, all business-to-business purchases are not taxed. Investment profits also are tax-free. So there will be no longer any tax consequence in production and investment!

BTW Yesterday's FairTax rally in Orlando attracted 10,000-12,000 people.

[Edited on July 30, 2006 at 10:46 AM. Reason : .]

7/30/2006 10:43:48 AM

Quote :

"that stock is a share of a company which consists of a lot of capital, (computers, buildings, trucks, tubes) all of which were taxed at 23%"

Nope. Those weren't final goods. Fairtax only taxes final goods.

Quote :

"BTW Yesterday's FairTax rally in Orlando attracted 10,000-12,000 people."

It got beat by nambla then

[Edited on July 30, 2006 at 11:37 AM. Reason : ]

7/30/2006 11:36:30 AM

Quote :

"Nope. Those weren't final goods. Fairtax only taxes final goods. "

Maybe I'm misinterpreting what the fair tax is saying, but since the computers, buildings, trucks and tubes are not being resold in the final product, they would indeed be final goods. I think we went over this once with your law mowing business example, where you claimed that the lawn mower would not be a final good because you are mowing lawns, but that just wouldn't be true. The product you are selling as a business is not a lawnmower or lawn keeping tools or anything similar, the owner ship of the lawnmower remains in your business, and therefore the lawn mower is a final good.

7/30/2006 2:35:28 PM

how about no tax on food?

7/30/2006 2:39:20 PM

Quote :

"all business-to-business purchases are not taxed"

Then it is the dumbest tax ever. When I go buy a new computer at Sam's for $1000 I have a $230 incentive to commit fraud. Hell, everyone in America will set up home businesses overnight, selling each other tax-free goods.

Or, you could be reasonable, use my V-VAT system, and tax everything that moves.

7/30/2006 5:16:30 PM

Quote :

"everyone in America will set up home businesses overnight"

I'm not an expert, but here's what I've picked up from my research...

Each business will register with the state they do business in. Most businesess are already registered in states that currently have a sales tax.

The wholesaler, supplier set-up remains the same. Businesses purchasing items for re-sale or materials that go into production would continue to pay no tax.

When the business purchases goods and services from a retail establishment, they pay the tax. Then they deduct their sales tax from the sales tax they collect from their customers.

For businesess that produce and sell something that is not a final taxable product, a system of tax refunding will probably be developed. The general idea is that every product and service gets taxed once and only once.

So If you attempt to set up a shady lawn-mowing business with the intention of doing as few mowings as possible while paying no sales tax, it probably won't work. Let's say you buy a fancy new car that is going to be "used" to transport your mower to customer's yards. You would be allowed to deduct the sales tax you paid for the car from the sales tax you collect from your customers. at $10 a mowing, you may have to mow over 2500 yards to collect enough tax to off-set the tax you paid on your $25K car. You might want to get a used car instead...and pay no tax on it.

[Edited on July 30, 2006 at 10:25 PM. Reason : .]

7/30/2006 10:24:24 PM

Quote :

"Maybe I'm misinterpreting what the fair tax is saying, but since the computers, buildings, trucks and tubes are not being resold in the final product, they would indeed be final goods."

You're not misunderstanding what fairtax is saying, you simply don't know what final goods are.

Quote :

"I think we went over this once with your law mowing business example, where you claimed that the lawn mower would not be a final good because you are mowing lawns, but that just wouldn't be true."

Yes it would. The final good is the mowed lawn, the lawn mower is an intermediate good.

The classic example is cars and tires. You could go out an buy tires, and those tires are a final good. Now suppose a car dealership bought those exact same tires you did, they are then an intermediate good as the car they are put on is the final good.

Generally this is concept is used in calculating GDP so that you do not count a good twice.

Quote :

"Then it is the dumbest tax ever. When I go buy a new computer at Sam's for $1000 I have a $230 incentive to commit fraud. Hell, everyone in America will set up home businesses overnight, selling each other tax-free goods."

This is one of my main problems with it. Everyone would set up some small business and claim their home, car, and other expensive purchases as tax-free, AND THIS WOULDN'T EVEN BE FRAUD. It would be completely legal.

Quote :

"So If you attempt to set up a shady lawn-mowing business with the intention of doing as few mowings as possible while paying no sales tax, it probably won't work."

Why not? If you use that car once it is an intermediate good, the problem is that you have defined no line here.

7/30/2006 11:34:23 PM

^ That sounds like fun, but whenever I go into Sam's Club they request your information up front for the purpose of not charging you sales tax in the first place. Now, if my memory is true this system should work fine right now because the tax is only 7% and only certain stores are expected to make a big deal out of it.

Nevertheless, now that I understand the system, I must ask why? Why not tax business activity? This is kind of like government subsidisation of business activity, which is not necessary. It is a great idea to get out of the way of business, but subsidies are too far and will probably result in imbalances. I'm not entirely sure what they are, but the incentive to crime is not my only complaint...

[Edited on July 30, 2006 at 11:41 PM. Reason : asdf]

7/30/2006 11:40:23 PM

Quote :

"Why not tax business activity?"

because for some reason liberitarians love to fellate big business

Quote :

"but the incentive to crime is not my only complaint..."

My problem is that it isn't even crime, you can go around taxes legally.

7/31/2006 12:13:55 AM

Quote :

"whenever I go into Sam's Club they request your information up front for the purpose of not charging you sales tax in the first place"

When you as a business, go to SAMs Club to buy something for your business..you WILL BE charged the tax. You then will deduct that tax from the sales tax you collect from your customers.

Quote :

"The final good is the mowed lawn, the lawn mower is an intermediate good."

Both the mowed lawn and the mower are final goods. If you have registered with the gov't as a bona-fide business, you will charge your customers the sales tax for the mowing. You will be charged the sales tax for the mower. You can then deduct the tax you paid on the mower from the tax you charged your customers. It's one way to stop people from setting up fake companies.

Quote :

"The classic example is cars and tires"

If you buy tires for your personal use, you pay the sales tax. If your dealership buys tires from the wholesale producer, they pay no sales tax (Just like it's being done currently). You won't be able to just go into a store and show them a form and get to buy stuff tax-free.

Quote :

"the problem is that you have defined no line here."

Wrong..some more. The FairTax is applied to final goods at retail level. Simple as that.

You will have to be a registered seller and possess a registered seller certificate issued by the state sales tax authority.(just like now). You will have to send in monthly sales and tax reports (Just as all retail businesses do now). If you can't produce enough sales, you won't collect enough sales tax to cover the tax you paid for retail items. In that case, I believe you are out of luck...try a different business.

If you have a registered seller certificate and send in reports with lots of tax-free purchases and little of no sales, you will probably be audited. You will have to save and produce invoices on any thing you did not pay tax on and justify it's exempt status. And since there are many fewer taxpayers than with the income tax (140 mil wage-earners vs 20 mil businesses) the gov't will have more time to zero in on the Kris's of the world. I'm sure there will be hefty rewards for turning in tax-cheats as well.

Quote :

"Why not tax business activity? "

That's what a VAT essentially does. It hides the tax along the way in the form of embedded taxes. The idea behind the Fairtax is that products and services get taxed JUST once at retail level. This keeps it a very visible tax which is easy to spot when a crafty politician tries to raise it.

7/31/2006 2:21:41 AM

Quote :

"If you have registered with the gov't as a bona-fide business, you will charge your customers the sales tax for the mowing."

Weird, I also figured service type jobs that did not involve the transfer of any property (hair cuts, lawn care) were also exempt in North Carolina, not that the Federal should work the same way.
http://www.ncsu.edu/iei/forums/2006%20Community%20Forums/resource.library/Sales%20Tax.pdf

Quote :

"That's what a VAT essentially does. It hides the tax along the way in the form of embedded taxes. "

That's why I like my V-VAT system, it scraps the income tax without the problems associated with a selective sales tax, in which goods for export are exempted, certain industries are exempt, certain people are exempt, all the things that congress is certain to do.

7/31/2006 8:43:36 AM

Quote :

"In this way, the only way the rich can avoid paying the full tax is to never spend nor invest their money."

Quote :

"Nope. Those weren't final goods. Fairtax only taxes final goods."

So which is it? Are investments taxed or not? Like I said before, the rich wouldn't even come close to their current income bracket if they spent ALL their income on new goods. In reality, they will probably be paying a lot less because they aren't going to spend 100% of their income on final goods. Looks like A) the middle class is going to get fucked or B) goverment spending is going to get cut in half.

7/31/2006 9:58:27 AM

Quote :

"the problems associated with a selective sales tax, in which goods for export are exempted, certain industries are exempt, certain people are exempt, all the things that congress is certain to do."

The relatively low 23% rate is workable only because the FairTax is on all goods and services, everybody pays it..even gov't. If politicians start exempting their special interest supporters, the tax rate will have to go up. Consumers notice this and start applying pressure to law-makers.

Quote :

"Are investments taxed or not?"

Investments are no longer taxed. No income is taxed, only consumption. You can produce products and services as well as make investments tax-free.

As for the wealthy. There are some rich folks who have a lot of money but no longer earn any more. They pay no income tax. The FairTax will tax wealth because when the rich spend their wealth, they now pay fed tax.

The working class who have little wealth to rely on must live off of their paychecks. That's who the income tax hits the hardest. With the FairTax, wage-earners keep their whole paycheck. No Withholding, No payroll tax, no medicare tax. A married couple can spend $19,600 per year before they begin paying any fed. tax. And remember that the tax is not applied to used goods.

7/31/2006 10:12:58 AM

Quote :

"Investments are no longer taxed"

Do we really need to subsidize investment like this? If capital goods were not exempt it might lower the relative tax even more, below 20% even.

7/31/2006 1:10:35 PM

Quote :

"Both the mowed lawn and the mower are final goods."

Wrong. In this case, the mower is an intermediate good.

Quote :

"You can then deduct the tax you paid on the mower from the tax you charged your customers."

I've never seen anything about this on the fairtax site. Can you point me to it?

Quote :

" If your dealership buys tires from the wholesale producer, they pay no sales tax (Just like it's being done currently)."

That depends on the state. The dealership will have to pay federal taxes on those tires.

Quote :

"The FairTax is applied to final goods at retail level."

The problem here is that a good can be both final and not final at the same time.
This isn't fair as you'd never tax any businesses. Double taxation is really the only drawback to incorporation. I'd incorporate myself for whatever I do. Let's say I work as a garbageman. I'd now incorporate myself as Kris' Garbage Contracting. We have one employee, me. My contracting firm is hired by my normal job to work 40 hours a week at my normal wage. My home is the headquarters for KGC, my car is the business vehicle for me to travel to my job sites (work), and both of these are business purchases, intermediate goods, along with anything I eat on the job.

This isn't cheating, this is incorporation, you could do it right now, the drawback would be that your income would be taxed twice.

Quote :

"You will have to send in monthly sales and tax reports (Just as all retail businesses do now). If you can't produce enough sales, you won't collect enough sales tax to cover the tax you paid for retail items."

This idea only applies for retail businesses. Many businesses deal almost exclusively in business to business purchases, which under your system, wouldn't have to deal with tax at all considering they sell no final goods.

Quote :

"And since there are many fewer taxpayers than with the income tax"

In your system, you would have 140 million businesses, if not more. There's simply no reason not to incorporate ones self if your remove income tax. Everyone would incorporate themselves, and NO ONE would pay taxes.

7/31/2006 2:28:54 PM

[NO]

7/31/2006 2:57:00 PM

Lots of talk in this thread that I shouldn't realistically be expected to read, but...

I've actually been reading about this whole FairTax deal. If the supporters are right, then this sounds like the fucking golden goose. I mean, I'd love to see this work. Here's my only issue, and why I think It'll never survive:

underground economy. its not that hard to take it underground, and retailers will do so to spur sales. any plans on how to stop that, fairtax fans?

oh yeah, and people will start sitting on their eggs and not put that money back into the economy. however, i see general frugality as a virtue.

[Edited on August 24, 2006 at 1:02 AM. Reason : .]

8/24/2006 12:55:14 AM

I'm fairly certain that even if all this crap happened, there's still be an April 15th.

8/24/2006 2:26:27 AM

wow i'm glad to see this steaming pile of shit is back

8/24/2006 8:09:08 AM

Quote :

"underground economy. its not that hard to take it underground, and retailers will do so to spur sales. any plans on how to stop that, fairtax fans?"

Well, the income tax system also has this problem (doesn't tax liers, criminals, and idiots).
My V-VAT system would not suffer this problem as going underground only avoids about 5% in taxes.

8/24/2006 8:17:10 AM

Quote :

"take it underground, and retailers will do so to spur sales. any plans on how to stop that, fairtax fans?"

Under the current system, it just takes one person to cheat. Under the FairTax it will take two..the buyer and the seller. We don't see a lot of headlines about massive runaway fraud with our state sales tax. That's because the state has a pretty good control on retailers. When the retailer is facing the possibility of losing his entire business and personal assets on the chance of giving you a deal on a lawn mower, it's not to hard to guess what he will do.

In any system there will be fraud. It's better to evaluate the different ideas on their over-all benefits. One thing most people agree on is that the current system is horrible and must be replaced.

8/24/2006 10:56:22 AM