Quote :

"However, when you buy something for your business that a consumer could buy, you would pay the sales tax."

A consumer could buy anything a business could buy. If I want to by a wheel bolt for a 747 airline, I could do that. Or for a big one, consumers can buy labor, like maid service.

Quote :

"THat is my understanding how that works."

Then you don't understand what final goods are.

2/23/2010 11:27:10 AM

Cheating is a problem with any tax system. Clinging to the current system because a new one might also have its criminals, isn't a good enough reason to keep the income tax.

My current problem with the FairTax is the fear that rascally politicians will try to get their favorite lobbysist's products/services exempted. With so many hands on it, I doubt the final system would resemble much of the original plan. We would probably end up with some nasty VAT tax instead.

2/24/2010 12:38:10 AM

How many times can I say this? It's not cheating, you just don't realize how many things are intermediate goods.

2/24/2010 12:21:49 PM

Quote :

" still don't see why so many people are completely against the idea of a consumption based tax. The fact that the tax code is so absolutely complicated now with loophole after loophole, it would just be easier if the sales tax was a much higher rate. I'd love to actually bring home the salary that was negotiated when I was hired to do my job. I save as much as I can during the year as well. I was just furious when I did my taxes this year. I followed the instructions on the form and was therefore claiming 2 on federal. So was the wife. When I did our taxes this year, came up with a $2,700 bill to the feds. That's just nonsense. I know the first gut reaction is to claim it's a pointless idea because it taxes the poor. How does the rebate for the necessities not counter that? I also think it would really helps to bring in taxes on the income that is never reported to the government. Now i'm not as well versed as many of you, and I've only read the Fair Tax book once, so I'm prepared to be ripped apart. I just personally feel that the way our taxes are handled in this country are so far out of whack that at least SOMETHING has to be done. "

I have read bits and pieces of this thread so this may have already come up. I think the one major advantage our current tax system is the fact that it is dynamic. We have been consistenly adjusting and fixing the system for years. Sometimes we make it better sometimes we make it worse. We always make it more complicated but the overall goal is to be more fair.

Here are some of the problems with our current tax system...

1. Undereducated tax "professionals"
2. Unethical tax "professionals"
3. Earned income credit fraud
4. Schedule C fraud
5. Under or non-reporting of income
6. Fraudalent dependent claims

The good news is that all of our current problems can easily be solved, and its not the fair tax (which is in no way close to being fair). We need a stricter IRS. We need more audits. We need the code to be enforced and there to be legimate consequences for fraud.

2/24/2010 7:58:18 PM

yes. clearly we need more of the problem and that will fix it!

2/24/2010 8:34:38 PM

^^ How about a tax system that doesn't require tax "professionals" and a lawyer on retainer to navigate?

2/24/2010 8:57:42 PM

How about a plane that doesn't require a pilot's license and flight school?

2/24/2010 9:28:17 PM

flying a plane is intrinsically difficult. the tax system shouldn't be

2/24/2010 9:35:23 PM

What about the law in general?

2/24/2010 11:47:15 PM

Quote :

"yes. clearly we need more of the problem and that will fix it!"

If you dont lie, cheat, or steal on your taxes this wont be a problem.

Quote :

"^^ How about a tax system that doesn't require tax "professionals" and a lawyer on retainer to navigate? "

How do you implement the fair tax and eliminate tax professionals? Most business already use accountants to handle their sales tax. How will the prebates or rebates work? How will people file to receive them?

2/24/2010 11:53:28 PM

Businesses will still use accountants, they will focus more on finances than taxes.

Prebates are figured the same for everyone, up to the poverty level. So EVERY citizen would get say 400 a month. Thus treating everyone the same. This is to make sure that the poor still dont have a federal tax burden. Id rather it not be in there, but everyone is in the same boat.. so I can stomach that.

2/25/2010 10:54:07 AM

Quote :

"I think the one major advantage our current tax system is the fact that it is dynamic. We have been consistenly adjusting and fixing the system for years."

Yes we have, over the years, "fixed" a system that was originally sold to us as a way to punish only the ultra-rich. Now it snares millions in a over-complicated, over-taxing 67,0000 page mess. The top 10 percent of taxpayers pay over 70% of the income tax. The bottom 50% pays only about 3% of federal taxes. what is fair about that?

2/25/2010 11:22:11 AM

Quote :

"Prebates are figured the same for everyone, up to the poverty level. So EVERY citizen would get say 400 a month. Thus treating everyone the same. This is to make sure that the poor still dont have a federal tax burden. Id rather it not be in there, but everyone is in the same boat.. so I can stomach that. "

How do you figure if you are below or above the poverty level? What type of income counts? Do they have to file a return to figure income and then rebate?

Quote :

"Yes we have, over the years, "fixed" a system that was originally sold to us as a way to punish only the ultra-rich. Now it snares millions in a over-complicated, over-taxing 67,0000 page mess. The top 10 percent of taxpayers pay over 70% of the income tax. The bottom 50% pays only about 3% of federal taxes. what is fair about that? "

Over-complicated: yes
Over-taxed: not even close

Its fair to the bottom 50%, not fair to the top 10%, and who knows about the middle 40%. There is no way that you can satisfy the bottom 50% of the population with the fair tax as they will pay more taxes.

2/25/2010 8:32:55 PM

howaboutno, they figure what the average person at or below the poverty level would spend in taxes per month. Then send out that amount to everyone in the form of the prebate. Its the exact same amount for everyone. So you, I, and bill gates would get the exact same amount. So the poor would still not have a tax burden. Unless they spent a lot more.

2/25/2010 8:59:47 PM

They do spend a lot more, percentage wise. They can't help it, it's marginal propensity to consume, with each dollar you make you are going to spend less of it. Fairtax pushes the burden onto the middle and lower middle classes as demonstrated below:

2/25/2010 9:19:10 PM

Quote :

"They do spend a lot more, percentage wise."

I LOVE the whole percentage wise... bs speak. Technically EVERYTHING costs more, percentage wise, when you dont make shit.

Guess what, a McDonalds cheeseburger doesnt cost the same for you and I, percentage wise. So does everything else.

Ill counter and say that the prebate is, percentage wise, a lot more for lower income earners than upper income earners. Oh dear.

2/25/2010 9:22:56 PM

Quote :

"Ill counter and say that the prebate is, percentage wise, a lot more for lower income earners than upper income earners."

Yes, but it's fixed, thus the growth in taxes per income over autonomous consumption causes a greater tax burden on those of lower income.

2/25/2010 10:53:54 PM

A greater marginal tax burden. It should take quite a bit more income before the percentages equal out.

2/26/2010 10:05:48 AM

Quote :

"There is no way that you can satisfy the bottom 50% of the population with the fair tax as they will pay more taxes."

The folks who developed the FairTax knew that it wouldn't have a chance of passing if it actually made the poor pay any taxes. That is why the prebate was put in. No one will pay any federal tax who earn up to the poverty level. Every taxpayer gets the monthly prebate.

2/26/2010 10:36:36 AM

This would still psuh those who are above the poverty line to it.

2/26/2010 7:15:01 PM

Would the FairTax pay for health care?

2/27/2010 11:18:49 PM

^
The Fairtax is only intended to collect the same amount of federal taxes that the current income tax does. It does nothing to reduce or increase taxes. It is only another method of collecting tax.

2/28/2010 10:47:21 AM

it does increase and decrease taxes for certain people

2/28/2010 11:13:59 AM

Quote :

"The folks who developed the FairTax knew that it wouldn't have a chance of passing if it actually made the poor pay any taxes. That is why the prebate was put in. No one will pay any federal tax who earn up to the poverty level. Every taxpayer gets the monthly prebate. "

It seems really inefficient to have the prebate be monthly for everyone… why just not take that income off the top? That’d save in overhead costs, and reduce chances of fraud, and be much easier to manage overall.

2/28/2010 1:04:53 PM