A few questions about FairTax

[MakersandIce]

Making all interest income from investments and capital gains tax free would be as much of a boon to the rich as the Fair Tax.

Not taxed under the fairtax.

 

[LadyFunkenstein]

LMAO, thanks. Best laugh of the night. The fucking Chinese OWN your economy.

Chinese aren't driving the trucks.
Chinese aren't laying bricks.

Without the money coming from the pockets from the middle class - the people who do the bulk of the work in this country - there would be nobody here to buy Chinese made products. This is not a chicken-n-egg thing, you are simply an idiot.

 

[TWB]

Some startling facts about income tax

This is the data for calendar year 2003 released by the Internal Revenue Service.

The share of total income taxes paid by the top 1% of wage earners rose to 34.27% from 33.71% in 2002. Their income share (not just wages) rose from 16.12% to 16.77%. However, their average tax rate actually dropped from 27.25% down to 24.31%.

Think of it this way: less than 3-1/2 dollars out of every $100 paid in income taxes in the United States is paid by someone in the bottom 50% of wage earners.

The top 50% were those individuals or couples filing jointly who earned $29,019 and up in 2003. (The top 1% earned $295,495-plus.) Here are the wage earners in each category and the percentages they pay:

The top 1% pay over a third, 34.27% of all income taxes. (Up from 2003: 33.71%)

The top 5% pay 54.36% of all income taxes (Up from 2002: 53.80%).

The top 10% pay 65.84% (Up from 2002: 65.73%). The top 25% pay 83.88% (Down from 2002: 83.90%).

The top 50% pay 96.54% (Up from 2002: 96.50%). The bottom 50%? They pay a paltry 3.46% of all income taxes (Down from 2002: 3.50%).

The top 1% is paying nearly ten times the federal income taxes than the bottom 50%!

And who earns what? The top 1% earns 16.77% of all income (2002: 16.12%).
The top 5% earns 31.18% of all the income (2002: 30.55%). The top 10% earns 42.36% of all the income (2002: 41.77%); the top 25% earns 64.86% of all the income (2002: 64.37%) , and the top 50% earns 86.01% (2002: 85.77%) of all the income.

This is a great argument against the fair tax, as it would redistribute the tax burden significantly from the highest taxpayers to the middle class.

 

[MakersandIce]

This is a great argument against the fair tax, as it would redistribute the tax burden significantly from the highest taxpayers to the middle class.

The best argument for the fairtax. It would equally distribute the tax burden. Everyone would take home all of their paycheck. The tax would be applied to what is bought.......and those with more money are going to spend more...and pay more taxes.

 

[TWB]

The best argument for the fairtax. It would equally distribute the tax burden. Everyone would take home all of their paycheck. The tax would be applied to what is bought.......and those with more money are going to spend more...and pay more taxes.

Not to my way of thinking. Under the "fair" tax the tax burden is determined by spending. The wealthy spend a lower percentage of their income.

I would support a fair tax with an income tax for those over a certain bar, say $100,000 or $120,000. Even a flat income tax would be more "fair" than the allegedly fair tax.

 

[TWB]

The best argument for the fairtax. It would equally distribute the tax burden. Everyone would take home all of their paycheck. The tax would be applied to what is bought.......and those with more money are going to spend more...and pay more taxes.

Oh, and, what this means is, despite the allegedly revenue neutral nature of the fair tax, it will be a significant tax increase for the majority of americans, and a tax cut for the rich.

 

[Ulaven_Demorte]

Not taxed under the fairtax.

Exactly my point. Not taxing Interest Income and Capital gains, as in the Fair Tax, and LadyF's thinking is a HUGE boon to the wealthy who can afford to invest a significant portion of thier money as opposed to the lower and middle classes who can only invest a small amount, or nothing.

 

[LadyFunkenstein]

Exactly my point. Not taxing Interest Income and Capital gains, as in the Fair Tax, and LadyF's thinking is a HUGE boon to the wealthy who can afford to invest a significant portion of thier money as opposed to the lower and middle classes who can only invest a small amount, or nothing.

You have a hard time telling when a person is kidding, I suspect.

 

[pipercatt]

Dig it out. I'd be interested to hear exactly how they plan to combat this particular problem not only in the housing industry, but the auto industry and any other retail industry where used materials will be bought and sold.

When you finish with that question, look up the others I posted at the bginning of the thread.

Without reading the rest of the thread, I have no idea if anyone else had the same sentiment: Get off your fucking lazy ass and pick up your own copy of the book and read it, dufus. Answer your question for your self.

 

[Gringao]

I'm not sure what version of the FT this is all about, but I'm more of a fan of the National Retail Sales Tax than a reconfigured income tax. It taxes consumption, not productivity...much fairer, though I wouldn't fight a flat tax.

 

[Ishmael]

Same stories, different days.

First of all, the new house would cost about the same. While there would be an embedded 23% inclusive tax, there would be comiserate savings to the builders based on current tax cascade effect and compliance costs. In other words, the price wouldn't change. There is some concern regarding used (pre-lived in?) houses in that they wouldn't be taxed at all. There are those that believe all home owners will immediately drop the price by 23% because the owner no longer has to pay taxes. But as most people don't pay taxes anyway that may be a little too extreme. And if the commercial people want to start a price war, that's their lookout.

There has been some discussion regarding imports. Particularly Chinese in origin. The Chinese advantage is labor costs. It's unlikely that this tax system will have any effect regarding Chinese imports of labor intensive goods. Automated industries will undoubtedly be a different story.

What hasn't been mentioned is the draw this tax would have regarding foriegn investments and the building of foriegn owned maunufacturing facilities. They're going to want to avoid taxes in their countries too.

Not all reports of any stature predict wholesale cheating. That's a red herring. Any schemes of that nature will be quickly dealt with. Just as the 'barter' schemes of 20 years ago were dealt with.

Ishmael

 

[Ulaven_Demorte]

I'm not sure what version of the FT this is all about, but I'm more of a fan of the National Retail Sales Tax than a reconfigured income tax. It taxes consumption, not productivity...much fairer, though I wouldn't fight a flat tax.

the Fair Tax is a National Retail Sales Tax. A rose by any other name... would smell the same.

 

[Ulaven_Demorte]

Same stories, different days.

First of all, the new house would cost about the same. While there would be an embedded 23% inclusive tax, there would be comiserate savings to the builders based on current tax cascade effect and compliance costs. In other words, the price wouldn't change. There is some concern regarding used (pre-lived in?) houses in that they wouldn't be taxed at all. There are those that believe all home owners will immediately drop the price by 23% because the owner no longer has to pay taxes. But as most people don't pay taxes anyway that may be a little too extreme. And if the commercial people want to start a price war, that's their lookout.

There has been some discussion regarding imports. Particularly Chinese in origin. The Chinese advantage is labor costs. It's unlikely that this tax system will have any effect regarding Chinese imports of labor intensive goods. Automated industries will undoubtedly be a different story.

What hasn't been mentioned is the draw this tax would have regarding foriegn investments and the building of foriegn owned maunufacturing facilities. They're going to want to avoid taxes in their countries too.

Not all reports of any stature predict wholesale cheating. That's a red herring. Any schemes of that nature will be quickly dealt with. Just as the 'barter' schemes of 20 years ago were dealt with.

Ishmael

Same answers, same lack of any supporting facts.

 

[Ulaven_Demorte]

You have a hard time telling when a person is kidding, I suspect.

Sometimes.

It can be hard to hear a voice of reason when they're drowning in a sea of stupidity.

 

[JazzManJim]

But you have to have money to invest. If you are just making ends meet, that is a tall order.

Agreed. I see more opportunity to get out from under that burden with the tax I described, though. After all, if you've opened the floodgates to investment, you're going to grow businesses like gangbusters. Folks are going to have to take the new jobs, and the improved jobs that investment creates. You're talking about an employee's market in relatively short order, which put the poor in a much better position to become not poor.

 

[JazzManJim]

Exactly my point. Not taxing Interest Income and Capital gains, as in the Fair Tax, and LadyF's thinking is a HUGE boon to the wealthy who can afford to invest a significant portion of thier money as opposed to the lower and middle classes who can only invest a small amount, or nothing.

And??

 

[Ulaven_Demorte]

Originally Posted by Ulaven_Demorte
Exactly my point. Not taxing Interest Income and Capital gains, as in the Fair Tax, and LadyF's thinking is a HUGE boon to the wealthy who can afford to invest a significant portion of thier money as opposed to the lower and middle classes who can only invest a small amount, or nothing.

And??

And, then you're not taxing all income. It makes no difference if I work making $20 / hour 40 hours a week and am taxed on the money I make or if I invest $100,000 and make a 10% return on my investment. Personal labor vs. making money work for me. Income is income.

 

[MakersandIce]

Not to my way of thinking. Under the "fair" tax the tax burden is determined by spending. The wealthy spend a lower percentage of their income.

I would support a fair tax with an income tax for those over a certain bar, say $100,000 or $120,000. Even a flat income tax would be more "fair" than the allegedly fair tax.

Yes, the burden is shifted to spending.............as it should be.

People shouldn't be penalized for working harder and making more money. On;y when they spend it should they be taxed.

 

[Ishmael]

Originally Posted by Ulaven_Demorte
Exactly my point. Not taxing Interest Income and Capital gains, as in the Fair Tax, and LadyF's thinking is a HUGE boon to the wealthy who can afford to invest a significant portion of thier money as opposed to the lower and middle classes who can only invest a small amount, or nothing.



And, then you're not taxing all income. It makes no difference if I work making $20 / hour 40 hours a week and am taxed on the money I make or if I invest $100,000 and make a 10% return on my investment. Personal labor vs. making money work for me. Income is income.

Wealthy???????? Pretty well pins your mind set, and vocation. Thief.

Ishnael

 

[JazzManJim]

And, then you're not taxing all income. It makes no difference if I work making $20 / hour 40 hours a week and am taxed on the money I make or if I invest $100,000 and make a 10% return on my investment. Personal labor vs. making money work for me. Income is income.

It makes a great deal of difference when it comes to the engine of the economy. Remember the golden rule: taxing a thing decreases the likelihood that the thing will happen.

Okay, so the converse is that by taxing investments, you're making a great PENALTY to the rich. Well, no. ACtually, you aren't. The rich will just do other things with their money that won't leave it exposed to taxation, like take it overseas.

 

[Ulaven_Demorte]

Wealthy???????? Pretty well pins your mind set, and vocation. Thief.

Ishnael

Yes, wealthy. It's not news that someone making, as an example $200,000 a year or more is going to be able to save at a much higher rate than someone making $30,000 all else being equal.

So why shouldn't interest income be taxed? it's fair, anyone who uses money to make money is taxed on the profit made. You act like the entire savings amount will be taxed repeatedly and it's not.

Income is Income and should be treated as such.

 

[Ulaven_Demorte]

It makes a great deal of difference when it comes to the engine of the economy. Remember the golden rule: taxing a thing decreases the likelihood that the thing will happen.

Okay, so the converse is that by taxing investments, you're making a great PENALTY to the rich. Well, no. ACtually, you aren't. The rich will just do other things with their money that won't leave it exposed to taxation, like take it overseas.

Investment income and Capital gains are taxed now. Stating that getting rid of investment income and capital gains taxes will induce economic growth across the board sounds like Reagan's old trickle down economics plan that didn't exactly trickle down.

If you reduce or eliminate taxes on interest income from investments and capital gains two things happen. Those who can invest make more, and those who can't get no benefit. Unless you're a small businessman in the diamond tipped cane polishing business or a monocle smith.

 

[TWB]

Without reading the rest of the thread, I have no idea if anyone else had the same sentiment: Get off your fucking lazy ass and pick up your own copy of the book and read it, dufus. Answer your question for your self.

The book doesn't answer all the questions. It is not a critical analysis of the fair tax, just a long one sided brochure. Additionally, there are inaccurcies. For instance it incorrectly gives the impression that prices will go down and wages will stay the same, which is not possible.

Additionally, as I said before, for the vast majority of Americans, especially those who spend their entire income and are not saving, this will amount to a large tax increase.

I like the idea of a sales or value added tax being the basis of the tax structure, but the amount of tax burden placed on the middle class without an income tax for the people who are benefitting the most from our society, the rich, is just not going to work. A hybrid system which places an income tax on persons making higher incomes would resolve some of the problems with the "fair" tax.

 

[TWB]

Same stories, different days.

First of all, the new house would cost about the same. While there would be an embedded 23% inclusive tax, there would be comiserate savings to the builders based on current tax cascade effect and compliance costs. In other words, the price wouldn't change.

Ishmael

Of course if this is true, the wages paid to the workers who build the house would have to have been reduced by 23%. You won't therefore, "keep your whole paycheck" as the authors incorrectly assert.

 

[Cap’n AMatrixca]

For those of you who think this is such a brilliant idea. I have yet to get a satisfactory answer to these questions among others:

How will this Fair tax affect housing development, that is, NEW houses being built that will cost ~23% more since only those houses will be subject to taxation under Fair tax. Why would someone not buy a home thats a few years old that is identical in features/size/location for say 15% less but still more expensive than prior to the Fair tax as a used home. it's a free market right. You can either pay the tax on a new house, or pay the owner of a used home that has upped his price to just under what you would pay for a new home. So housing prices go up and new construction goes down. If not, why not?

How do you prevent abuses of this system? Services by thier nature are MUCH more difficult to tax than are goods. Which is why most states only attempt to tax very few of them yet the fair tax attempts to tax ALL of them. Example: Every time you have to go to the doctor or hospital you would be hit with an additional 23% tax for services on your bill. This WILL lead to increased insurance premiums as the insurance companies pass along thier new tax to the consumer.

Every serious analysis has concluded that a Federal sales tax would have massive evasion. Taxing the spending of drug dealers and others not currently paying income taxes will not come close to compensating for the new evasion opportunities that will be created. Since it is not in the interest of either retailers or consumers to pay the tax, and because all of the revenue is collected at the point of final sale, it will be too easy for tax-free deals to be made with producers and wholesalers. Although evasion of state sales taxes is relatively small, that is only because the rates are low enough that it is not worth the trouble. However, where rates are high on things like tobacco, evasion is also high. A vast amount of foreign experience indicates that retail sales taxes cannot be collected much above 10 percent without breaking down.

Then there is a very severe problem of taxing business inputs under a sales tax. These must be exempt from tax in order to avoid cascading -- taxes being levied on taxes -- which creates serious economic distortions. To avoid this under the Fair tax, every business, no matter how small, would need some sort of exemption certificate, which would create unlimited opportunities for evasion, or they will have to be extensively audited in ways at least as onerous as under the income tax law.

Also, what about savings plans contributed to before implementation of the Fair tax? Moneys that have already been taxed once in the form of income tax. Are they not going to be subjected to taxes yet again when the money is spent?

This is what you were going on about? This is what I was supposed to be running away from?

How st-st-st-stupid do you thing I am?

When you remove the imbedded taxes that go into the construction of that home, it's cost will go down 23%. When you tax that amout at 23%, it will come out less, not more...




I got no further use for you; math is the language of science, and economics is a science, not alchemy.