Quote :

"I don't see how people say this lets the rich people off in that it's a consumption tax... rich people buy more stuff and more expensive stuff thus locating the burden of tax on them. "

People love to whine. They simply dont want everyone to be treated equally by the govt. Any reasonable person would see that if you buy more expensive stuff, you would pay more taxes.

3/25/2008 3:26:35 PM

Quote :

"Implementation would by far be the easiest part of this. Most states already collect sales taxes, the infrastructure is already in place. Also, states would be reimbursed a small percentage of the sales tax collected to mitigate collection costs. And yes this cost was accounted for when arriving at the 23% tax rate."

Whenever sales tax adjustments are made in the State Legislatures, there is always a major headache for small business owners and Departments of Revenue.

3/25/2008 3:33:56 PM

based on oevures last post, sounds like this is gonna save rich people a ton of money

3/25/2008 3:36:26 PM

Quote :

"He said prices would jump 23%. He completely ignored, or chose not to read, the part about the embedded taxes we already pay. I have no problem with logical criticisms. I do however take issue with people making baseless claims without fully understanding the topic they're arguing."

As DrSteveChaos pointed out, I was flawed in my analysis because the sales tax is not 23% but in fact 30%. Similarly, as DrSteveChaos also pointed, I did fail to include the payroll taxes that employers do pay (FICA, SS, etc) which he said was about 6.5%. Therefore, accepting Marx's labor-price theory, we can asume retail pre-tax prices will fall 6.5% before jumping 30% due to the tax. So, what previously sold for $100 will now sell for $93.50 + $28.05tax = $121.55 for an after-tax price increase of 21.55%. This is fine for the employed because their wages are fixed by contract between employer and employee.

You have mentioned no part of Fair Tax law that externally modifies every labor contract in the land, so why do you assume that it does?

3/25/2008 3:41:13 PM

Quote :

"based on oevures last post, sounds like this is gonna save rich people a ton of money "

rich people already pay a fuck-ton of money into the tax system. porportionally, they pay 10-15-20% more in than the rest of us. that isnt right.

our goal should be porportionally equal contribution into the tax system. whatever is the best way to achieve that, I am all for. its not right for one group to pay zero dollars and another to pay 40% of their income just because they are successfull. we should encourage success...it would only stimulate the economy.

3/25/2008 3:55:47 PM

Quote :

"Good luck proving to the government you're actually running a legitimate business. There's still going to be oversight, and I'm sure fairly large consequences for people who try to abuse the system. "

well there goes the "its more efficient" argument.

3/25/2008 3:58:04 PM

The richest 1% of people make over half the money in the country. If you make more money... you pay more money. They pay a disproportionately high amount of money because there are certain things lower class people need to buy that they would not otherwise be able to afford if they paid more in taxes and rich people can more comfortably afford to pay higher taxes. It's fairly simple.

3/25/2008 4:18:06 PM

Quote :

"The richest 1% of people make over half the money in the country. If you make more money... you pay more money. They pay a disproportionately high amount of money because there are certain things lower class people need to buy that they would not otherwise be able to afford if they paid more in taxes and rich people can more comfortably afford to pay higher taxes. It's fairly simple. "

Our govt should treat everyone equally, imo. Taxing people a higher percentage simply bc they earn more is not fair. I support the fair tax, and then the flat tax.. that way people can choose how much to pay in one, and everyone takes home the same percentage in the flat tax. Both are alot more fairer than the current system. If they were treated equally, there would be no need for oversea bank accounts, tax shelters, etc. But then, who would dems blame for their shitty lives?

3/25/2008 4:29:59 PM

Quote :

"we can asume retail pre-tax prices will fall 6.5% before jumping 30% due to the tax."

Some FT people acknowledge that prices may rise at the start for a while. This is due to the fact that employers will not take away the amount of pay to employees that currently covers their taxes.

But they won't jump 30%. The absence of the embedded taxes that are paid at all stages of a product's manufacturing will lower costs enough for sellers to avoid a 30% increase.

But the idea is that, over time, the $11 trillion in off-shore accounts- now no longer needing sheltering- will return to the US in the form of higher productivity...thus lowering prices.

America will become the tax-haven of the world for manufacturers. Our exports, now free of fed taxes, will beat up on other countries' exports.

The FairTax is far from perfect, but a hell of a lot better than the current income tax.

3/25/2008 5:30:34 PM

Quote :

"But the idea is that, over time, the $11 trillion in off-shore accounts- now no longer needing sheltering- will return to the US in the form of higher productivity...thus lowering prices. America will become the tax-haven of the world for manufacturers. Our exports, now free of fed taxes, will beat up on other countries' exports."

I repeat my assertion that this rhetoric is a little bit overheated. First, these gains aren't exclusively captured by the FairTax proposal alone - eliminating the corporate income tax, which has been suggested by many, many economists - or at least, dramatically reducing it, would also produce this effect.

That being said, I again pose the question "What is the actual impact of this capital flight?" If this capital is sitting in a bank account in Barbados, hauling it back to the U.S. isn't having the exactly astonishing effect proponents are making it out to. At best it frees up capital for use by investment banks to loan out - but basically, if businesses can afford to leave capital sitting in a bank, it means it's not being used. Which means if we're shuffling numbers on a ledger, here.

3/25/2008 6:35:46 PM

^ Becoming the #1 tax haven and THE place to setup business would create a suddenand large need for money with which to grow and start businesses. Having trillions of dollars back in the US available would certainly help this process along and would get used quite eagerly.

3/25/2008 8:10:00 PM

This is actually a pretty entertaining thread. I haven't seen intelligent discussion on TWW in years.

Lonesnark presented the first good counter-arguments I've ever heard about the fair tax by using the wages/sticky example. I don't think wages are quite as sticky as he proclaims but obviously contract wages do exist to a certain extent in our society. That effect could be mitigated by passing reform well before the changes take effect.


Furthermore I just want to point out that anyone who thinks the rich should not pay a higher percentage is retarded. Look at what government protection provides. If you think it would be cheaper to hire an army to protect your land, assets, and family then you are sadly mistaken.

On the other hand I loathe government entitlements. If people must be poor and incapable of self-subsistence they should be relegated to certain locations (Durham) and not allowed to commingle in areas (Chapel Hill/Raleigh) with people who can handle the world. Tell them they can have the fucking prebate if they conform to basic rules (no reproducing, one and done death penalty, no wandering outside of their county, etc). I'd be very willing to see gov't spending go towards preventing crime (free abortion with subsequent tube tying, legalized crack houses, etc) than enabling it (tax breaks), protecting it (proven innocent until guilty), and encouraging future spawning (EITC).

[Edited on March 25, 2008 at 9:27 PM. Reason : a]

3/25/2008 9:20:43 PM

Double post, I'll take this opportunity to re-iterate poor people are a detriment to society and rich people are being given unfair advantages under the current system at the expense of the people making them rich (the overachieving middle class workers).

[Edited on March 25, 2008 at 9:24 PM. Reason : a]

3/25/2008 9:22:27 PM

Quote :

"no reproducing"

Here's to that!

3/26/2008 8:51:59 AM

Quote :

"no reproducing"

This is ideal but not exactly feasible. How many centuries of social trends would we have to buck to make this reality? I mean we can try to educate people but I think that a majority of poor people will still breed more than the middle class on average.

3/26/2008 9:15:14 AM

Time to bring back eugenics?

3/26/2008 9:22:25 AM

Yea let's not and say we didn't even discuss it.

3/26/2008 9:23:22 AM

Quote :

"Double post, I'll take this opportunity to re-iterate poor people are a detriment to society and rich people are being given unfair advantages under the current system at the expense of the people making them rich (the overachieving middle class workers)."

a capitalistic society cannot exist without poor people.

3/26/2008 9:33:33 AM

^ Why?

If by poor then you mean individuals with less than average wealth or income then yes, you are by definition right.

But, if by poor you mean unemployed and homeless then you are absolutely incorrect. Poverty often has a cultural component to it and if such cultural tendencies were removed then they few remaining individuals with real mental illnesses could be easily subsisted through charity.

3/26/2008 9:45:44 AM

Poor are those people who live below the poverty line. In a capitalistic society it is impossible to have no one below the poverty line. There is no way everyone can be lifted above the poverty line; because even if everyone made at least $50,000 a year the poverty line would move above that; because the cost of goods would inevitably increase.

3/26/2008 9:51:44 AM

That's pretty specious reasoning, based upon an incredibly loose definition of the the "poverty line." If you mean the "poverty line" will always be the lowest fraction of the standard of living in a society, the adjective "capitalistic" is unnecessary - any stratified society, not just capitalism, will produce this. Including your fabled "social democracies" - or do those whose chief means are society's support no longer count as "poor" if we have the right system in place?

In that sense it's an entirely unilluminating observation.

A better question is how the standard of living for even the lower income fractions of society compares to others. And as bad as it is for those in the lowest income quintile here (and it can be bad), it's far better than any third-world country.

3/26/2008 10:16:24 AM

Quote :

"In a capitalistic society it is impossible to have no one below the poverty line."

Show me another economic system that has raised more people out of poverty than capitalism.

3/26/2008 10:22:42 AM

Quote :

"That's pretty specious reasoning, based upon an incredibly loose definition of the the "poverty line." If you mean the "poverty line" will always be the lowest fraction of the standard of living in a society, the adjective "capitalistic" is unnecessary - any stratified society, not just capitalism, will produce this. Including your fabled "social democracies" - or do those whose chief means are society's support no longer count as "poor" if we have the right system in place?"

Considering that we have mr. capitalism (RallyDurham) specifically saying that poor people are a detriment to society, it isn't specious. And yes, all economic systems will have poor people, I recognize that fact. RallyDurham does not.

3/26/2008 10:26:01 AM

I can't tell who is liberal and who is conservative in this thread. That is such a wonderful thing!

3/26/2008 10:27:50 AM

Quote :

"nutsmackr ...Fraud, intended and unintended, will plague the system from the get go. "

Yeah, because the current tax system is soooo free from cheating. Give me a break. Have you ever heard of the EITC ? I know lots of "poor" people who make more money than I do and yet get back $4000 from the federal government each year. Not to mention the many ways that the super rich can essentially cheat the system because of how the tax system is built.

So to attack the FAIR tax as being the harbinger of fraud just rings a little hollow with me.

"Fraud, intended and unintended" that is exactly how I feel each time I do taxes, I'm never sure I've actually reported them correctly.

Finally, there was some squabble on the last page about the constitutional amendment being uncessary... The FAIR tax is actually a specific plan as opposed to the general idea of a flat tax of which there are apparently several proposals... Anyway the FAIR tax has as part of its structure that it will only go into effect after the income tax is eradicated. This is part of the FAIR tax proposal, you cannot take it away and still call it the FAIR tax. The reason for this is quite obvious. The reason is that we do not trust the government to not use the income tax if it has the option. There will always be an excuse to ratchet up the tax as times goes on then in the end we could have a double tax of income and national sales tax. That is why the amendment is tied to the FAIR tax, because without that provision no one like myself could rationally support such a proposal.

[Edited on March 27, 2008 at 4:05 PM. Reason : .]

3/27/2008 4:04:17 PM

Anything that doesn't tax interest on Savings, CD's, Bond's, etc... I would consider.


I almost blew a gasket when doing my taxes last weekend. Paying a tax on saving....paying a tax on investing in the US Government.


We live in Socialist State.

3/27/2008 5:04:45 PM

80 economist said this would be good....they say gdp would grow at 10.5 percent and that 11 trillion in foriegn market money would come to the us

[Edited on March 27, 2008 at 9:02 PM. Reason : something about repealing the 16th amendment]

3/27/2008 9:02:26 PM

Quote :

"80 economist said this would be good....they say gdp would grow at 10.5 percent and that 11 trillion in foriegn market money would come to the us"

I'm just starting to learn about this thing, but 80 economists or scientists or historians agreeing on something doesn't mean shit as far as its viability.

4/5/2008 6:31:25 PM

my finance professor told our class he thought it was good also...he said our corporate taxes are just too much here now

4/5/2008 6:42:27 PM

Quote :

"he said our corporate taxes are just too much here now"

comparatively, yes, which means they probably need to be lowered to rates similar to Europe, especially with regards to companies investing in facilities here in the states.

i don't like sales taxes because compared to other taxes, they fall disproportionately on lower income persons (regardless of deductions off the top). Not to mention, local and state govts. already rely heavily on sales taxes and simply throwing more on top, even if you get rid of other federal taxes, might have an unexpected effect on consumer spending and behavior. Economics is a social science for a reason. You can develop a scenario, but it always depends on human behavior being rational, which it isn't.

4/5/2008 7:27:21 PM

I read for a bit and skipped a bit, so if th(is/ese) question(s) ha(s/ve) been posed already, sorry in advance. I'm trying to obtain an overall perspective of how the fair tax economy would work. I'm assuming off the bat that the government, when all is said and done, would hope to collect roughly what it collects now. However, now with the fairtax system, needless complexity (i.e., middle man expense, bloated IRS, overseas accounts, whatever, etc.) is averted and so the capital driving these complexities would be loosened up. Also, my understanding is that the federal revenue comes purely (or almost) from consumer taxes on goods and or services. So, if the gov't is no longer collecting on people's income, how on the whole can we be paying roughly the same for a $100 toaster - inclusive/exclusive whatever - and expect the federal revenue to remain the same? Are we saying that the purging of the tax code is so marvelous that it essentially frees up enough capital to not have to collect income or other taxes? Because the absence of income tax and progressive oriented taxes like capital gains would burden the new consumer tax with making up the difference. Also, if it is correct that the wealthiest contingent of the population currently pay the majority of our federal revenue, they will be paying much less so in the absence of progressive taxes.

Unless that new freed-up capital is a staggering amount, I would expect a sharp jump in prices of consumer products across the board, as vendors pass the cost on to the consumer. Again, this all assumes the gov't hopes to collect the same revenue as under the previous system.

Am I way off or missing something here?

4/5/2008 11:07:45 PM

Quote :

"he said our corporate taxes are just too much here now "

Just wait until obama takes over... Gotta punish those evil companies that pay taxes, employ people, produce products that make life better, lower local utilities..... Yep, the nonworkers need more money to raise the 4 kids they shouldnt have had, and the high school drop out should be making 70k a year afterall. Then we have the houses that people wanted, but couldnt afford... they need tax payer money so they dont have to deal the with consequences of their bad decisions.

Meanwhile more companies will go overseas.. We have priced ourselves out of the global market, and raising taxes further really wont help businesses. But what do you expect from the braintrusts over at the DNC that thinks raising taxes on gas companies will somehow lower gas prices to consumers. LOL

4/6/2008 9:23:05 AM

Quote :

"And yes, all economic systems will have poor people, I recognize that fact."

Just to clarify, you are wrecking the terms to use them this way. You can only say capitalism must have poor people if by poor you mean that in a society consisting of Bill Gates and Steve Jobs, Steve Jobs is considered poor.

This is absurd. The term 'poor person' should be reserved exclusively for those unable to afford basic necessities. And by this definition many capitalist countries today may have already eliminted their class of poor people. There is a lot of evidence that those classified as living below the poverty line are really doing nothing of the sort but are simply classified as such due to temporary unemployment. For example, a family with a hundred thousand dollars in the bank that takes a year off from work is technically classified as living below the poverty line. We see this in the consumption patterns of those classified as below the poverty line which invariably consume substantially more than their annual income. ("In the latest survey, for every dollar of reported pretax income, the poorest fifth of American households reported spending $2.31!") As such, while their IRS income places them in poverty, their actual living standards are actually much higher than their income alone could allow. From this we can conclude that a statistically significant number of those classified as living in poverty are only visiting, realize this is the case, and are spending accordingly.

http://www.aei.org/publications/pubID.13711/pub_detail.asp

[Edited on April 6, 2008 at 9:32 AM. Reason : .,.]

4/6/2008 9:29:43 AM

I don't support the 'fair tax' but i do support a Flat income tax. I think its bullshit that 40% of Americans do not pay or even get a credit back on federal taxes. Yet it is these lower echelons to whom a majority of the gov't social programs pay out to. Last night I had a discussion with my liberal buddy about universal health care. I do not support uhc but I wouldn't be AS pissed if the working and lower classes actually chipped in to pay for their own fucking health care.

4/6/2008 11:41:53 AM

personally i think i like the fair tax cause it will allow me to live the way i'd prefer to live and reap the benefits

like all i would ever do is buy used shit and hardly buy anything in the store

4/6/2008 11:43:17 AM

Don't fool yourself, the price of a used car is connected to the price of a new car. If everyone stopped buying new cars and thus they stopped making them then very quickly we would find ourselves without enough cars for everyone. As the price of used cars shot up closer to the new astronomical price of new cars people would once again assume the old patterns.

To be numerical, there is the short and long term impacts. In the short term, every person that opts to take a used car instead of a new car is competing with other buyers of of the existing (read fixed) supply of used cars. But, more importantly, as the demand for new cars falls so will the production, and every new car that is not built today is one fewer used car that is available from now on. Both trends will tend to drive up used car prices until equillibrium is restored.

On the other hand, if the importation of used cars is allowed then it is conceivable for markets to sell a disproportionate ratio of new cars in Canada only for the cars to be shipped to America for resale once used, thus avoiding the tax and enabling America's used car market to withstand the shrinkage of America's new car market.

[Edited on April 6, 2008 at 12:09 PM. Reason : .,.]

4/6/2008 12:05:48 PM

would i still have to pay for universal health care(if it were created) or social security if we got the fair tax?

[Edited on April 6, 2008 at 12:10 PM. Reason : or taxes in general?]

4/6/2008 12:10:05 PM

^
Yes you would be paying for the federal gov't through the national sales tax.

At least you wouldn't have to strip down each year, turn and cough for the IRS

4/6/2008 8:32:52 PM

i use to like the fair tax and that greenspan supported it...but come to find out greenspan isnt so great himself

[Edited on April 28, 2008 at 6:28 PM. Reason : ^interesting...so that 23 percent covers EVERYTHING?]

4/28/2008 6:27:52 PM

We need to address fair wages, fair labor practices and fair benefits before we ever talk about fair tax

As I see it, there isn't a whole lot of fair anything in our current system. Supporting a fair tax is like shaking someone's right hand and punching them with your left.

4/28/2008 6:51:41 PM

Quote :

"interesting...so that 23 percent covers EVERYTHING?"

Yep.. It covers everything we take in as fed. income tax, social security & medicare.

Quote :

"Supporting a fair tax is like shaking someone's right hand and punching them with your left. "

It's more like getting rid of our antiquated and enormously complicated tax system that most Americans can't stand.

4/28/2008 8:47:42 PM

yeah really...this makes things way simpler

4/28/2008 8:57:19 PM

so when does an item become not "new" - because not many consumers pay for goods that haven't been purchased previously by some manufacturer/reseller

4/28/2008 10:01:31 PM

File form RB/CZ/907/X with information retrieval and someone will get back to you in 20 to 30 business days with an answer to whether or not your product is more or less likely to be classified as 'new' upon re-examination after you file your monthly receipts.

4/28/2008 11:39:43 PM

Quote :

"A fairtax is a regressive tax "

how in the hell do you figure that, SandSanta?

Not as progressive as the current system is not the same thing as regressive.

4/29/2008 12:06:10 AM

A 23% sales tax would result in rampant black markets.

People will stop buying shit and horde their money.

Wages and markets will go apeshit crazy all over the place.


I actually don't mind the idea of the fair tax. Theoretically it would work (like many proposed systems) if you could just drop it in and magically be in the midst of it.

The problem is, getting it STARTED would take an act of Marshall Law in the US. He government would essentially have to halt, then reboot the entire US economy. All prices would have to be temporarily fixed, all commodities and assets frozen, and all wages instantly adjusted.

Otherwise the above shit would happen and sent everything spiraling out of control for years (or until the old system was reinstated). I still also fail to see how the Fair tax affects imported goods and raw materials (as well as exportation). It *seems* (and I'm totally reaching here) that imported goods would become prohibitively expensive, while exported goods would become massively cheaper for foreign nations.

4/29/2008 12:07:36 AM

Also the concept of "only tax what's new" absolutely will not work.

You will have HUGE "used" markets popping up abusing the letter of the law. Whatever consitutes being "used" will be butchered to the letter of the law.

You'd see cars with the exact percentage of "used" parts being placed in, to sell for massive discounts. Same for any other fixed asset other than maybe buildings. Also, the loss of income from selling homes and cars would be a HUGE loss for state governments.

4/29/2008 12:10:44 AM

the states wouldn't have anything to do with the FairTax, though. It would be a federal thing.

and I agree-the problem wouldn't be with the system, per se. it would be in the transition.


personally, i think maybe the best solution would be to meet in the middle with a GREATLY simplified (and noticeably less progressive) income tax, coupled with some sort of consumption tax (either a sales tax or a VAT).

4/29/2008 12:15:12 AM

Quote :

"File form RB/CZ/907/X with information retrieval and someone will get back to you in 20 to 30 business days "

Actually...fairly simple. A new item is something on which the sales tax has not yet been charged. The idea is that the tax is paid only once on an item.

That's the general idea, now it wil take smart people like L-Snark to figure out the details.

Quote :

"A 23% sales tax would result in rampant black markets"

You're paying about 23% now in embedded federal taxes. And we don't have rampant black markets. All the Fairtax does is take the embedded fed. tax component of products and services and re-embeds it as a sales tax. Therefore, no more need for the income tax and handing over your personal income information to the gov't every year.

Quote :

"The problem is, getting it STARTED "

There is a plan to get it going. No price-fixing, no re-boots, no sacrificing virgins. Fear not. Check out FairTax.org for the boring details.

Quote :

"imported goods would become prohibitively expensive, while exported goods would become massively cheaper for foreign nations."

With FairTax, we could finally compete effectively with foreign countries. Some countries remove VAT and other taxes from items being sold overseas. Our products would now also be sold with no federal tax component. With no federal taxes on production, companies (and jobs) would be flocking to the U.S. to take advantage of the savings.

Quote :

"income tax, coupled with some sort of consumption tax "

Would you really want to have two tax systems that congress could screw around with? If passed, FairTax won't go into effect until the 16th amendment is repealed. Smart thinking there.

4/29/2008 1:51:27 AM

yeah, that's my big worry about doing it that way. more room for those weasels to screw around with the system(s).

4/29/2008 2:23:03 AM