The "Fair Tax". Please Support it.

Discussion in 'Politics, Religion, Social Issues' started by Daveway, Aug 3, 2005.

  1. Daveway macrumors 68040

    Daveway

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    #1
    I don't know if this has been mentioned here before, but I feel very strongly about it and want to spread the word.

    There is a bill in front of Congress now called the Fair Tax.
    Summary:
    • No more income taxes
    • No more IRS
    • All taxes paid at retail level for non essential items
    • No FBI agents hunting you down

    Obviously this is a very simple list of it. You even still get a return.

    Go to www.fairtax.org to sign the petition.
     
  2. CanadaRAM macrumors G5

    CanadaRAM

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    #2
    Two words about a massively increased retail sales tax (and it would have to be massive - and in addition to state and local taxes)

    Black Market.

    Doomed to failure. For a recent example, the Canadian experiment with raising the tax on cigarettes to discourage smoking. An immense tobacco smuggling and distribution network sprung up overnight, complete with all the usual suspects that operate outside of the law. Unfortunately, when the Gov't caved and dropped the taxes again, the smugglers simply converted their established networks to guns and drugs.

    It didn't help that US tobacco companies supported the smugglers by supplying massive amounts of product ($millions per order) to "retailers" in border communities, and even (as in Europe) cooked the books to provide tax-free "export" product (18 billion cigarettes) that was turned around back into Canada via the smugglers.
    http://www.healthwatcher.net/Smuggling/nyt970825smugbig.html
    http://airspace.globalink.org/cknw.html
    http://www.smoke-free.ca/pdf_1/RCMP-Chron-2001.PDF

    This isn't to hijack this thread, but to illustrate that as soon as taxes are raised to the point where there is sufficient profit to cover the costs/risks of lawbreaking, the criminals will move into the territory.

    If drugs didn't have a 1000% profit margin, and rather had the same margins as, say, an Apple dealer, who would bother to push them?
     
  3. Daveway thread starter macrumors 68040

    Daveway

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    #3
    Not exactly. Because of the lack of income tax from companies, retail prices my fall and the sales tax would add up to much more than what it is now.

    I mean who wouldn't want to get rid of income tax? The fact is that the current system is an utter mess. It's time for reform.
     
  4. CanadaRAM macrumors G5

    CanadaRAM

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    #4
    Reducing or eliminating income tax makes zero imact to the employer. It is the employee who funds all of the income tax via payroll deduction or lump sum.

    Reducing or eliminating corporate taxes -- one would have to be excessively naive to think that that would result in anything but higher retained profits and shareholder dividends. Prices will never drop in anything like the same level. And you know what? It doesn't make a blamed bit of difference -- because the tax is visible, and the net savings are there for the cheaters, it doesn't matter whether your iPod Micro went from $189 to $179. Black market will happen.

    Look at our community even. Apple revs machines and drops the price - great. THe next week we get more posts on whther Apple will check up on cheaters zooming the Education store, or whether AmazonMallEggBuy will ship without state sales tax.
     
  5. Sun Baked macrumors G5

    Sun Baked

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    #6
    But this is the political section...

    Some people are bound to have memories as short as the politicians they talk about. ;)

    Edit: BTW I'm talking about short memories, not Ross Perot.
     
  6. Daveway thread starter macrumors 68040

    Daveway

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    #7
    But Hey. Ross Perot had GREAT display boards. :D

    BTW I did do a search, but it wasn't on the first results page.
     
  7. katie ta achoo macrumors G3

    Joined:
    May 2, 2005
    #8
    I agree with the Fair Tax. I really hope it gets passed.

    We talked about it during Fed Challenge one day.

    Consumer spending may drop for the first few quarters while the prices are higher, but as people realize more and more that they aren't paying taxes on their income, the wealth effect may take place. Since they are keeping 100% of their paycheck, it appears that they are making more money. Since they will have more disposable income, they'll spend more, bla bla bla, yada yada yada, greater GDP growth, higher M2 velocity, blah bla bla.

    Everyone's happy!

    while inflation may rise just a wee bit, due to having more M1 in the system.. ehhhh it's probably not much.

    AND WE SHOULD TOTALLY GO FOR IT BECAUSE CHINA JUST REEVALUATED THE YUAN!!!!


    I miss economics.. it's the only thing I'm looking forward to going back to school for... (I don't wanna take calculus! Nooooo!)
     
  8. broken_keyboard macrumors 65816

    broken_keyboard

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    #9
    Some other alternatives to income tax:
    1. Government Lottery
    2. Contract Tax - when you make a contract with someone you have to get a government stamp on it or it is no legally enforcable. Govt charges 1% the amount of the contract for the stamp.
     
  9. skunk macrumors G4

    skunk

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    #10
    It'd be just as wide open to abuse as VAT is here. What happens when you get a bill for $10,000 + 19% Tax? Why, you try everything in the book to avoid paying the 19%, of course. Every kind of bogus barter, or simply not declaring sales, would spring up instantly. It's not a real-world solution to anything.
     
  10. miloblithe macrumors 68020

    miloblithe

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    #11
    What would happen if corporations didn't have to pay taxes? Without government enforcement looking into their books, wouldn't _every_ company turn into an Enron/Worldcom scandal?

    That'd be great for the economy!
     
  11. pubwvj macrumors 68000

    pubwvj

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    #12
    While I think this would be great I doubt it will pass.
    Something that would be more likely to pass is a minimal income tax (say 10% after the first $15,000 per year per wage earner) plus the usual FUTA/FICA/Med tax (another 10% including both halves) and then a large sales tax (say 15%).

    Now you get to the tricky part. People are going to want excemptions for home mortgage interest, charitable contributions, essencials like bread, etc. But we should have no excemptions. Just make it flat across the board. The above "after the first $15,000" takes care of the excemption need. As soon as we start adding exemptions back into the system every special interest group will want its special excemption and the tax code will be a morass like it is now. K.I.S.S.
     
  12. IJ Reilly macrumors P6

    IJ Reilly

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    #13
    Oh, but it is. It's a real-world solution to the wealthy having to pay their fair share of taxes. Investigating the the backers of this plan tells you most of what you need to know. But as I said, been there done that.
     
  13. Sayhey macrumors 68000

    Sayhey

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    #14
    A national "Flat Tax" would fit nicely in this administration's agenda of shifting the tax burden toward those least able to pay it and to future generations. Sales taxes are inherently regressive and the idea of replacing a progressive income tax with this scheme should be repugnant to anyone who remotely understands the meaning or the word "fair." There are all kinds of tax reforms that I'd get behind; this one is absurd.
     
  14. skunk macrumors G4

    skunk

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    #15
    "The louder he talked of his honor...."
    Anything this Administration calls "fair" should have anyone with any sense running in the opposite direction as a matter of course.
     
  15. stridey macrumors 65816

    stridey

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    #16
    I think this tax would be terrible, personally. It turns a blind eye towards who can afford to support the government at what levels, and instead makes you pay taxes on everything regardless of if you can afford to pay or not. Income tax is a good thing, because it makes the people who can afford to support the government do so. I know it might be difficult to believe, but a lot of people work very hard just to put food on the table. Doesn't it seem fair to leave them with as much of the money they make as possible, and leave some of the heavier spending in the hands of those who don't have to worry about the bare necessities?
     
  16. Daveway thread starter macrumors 68040

    Daveway

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    #17
    This new system does include a rebate.
     
  17. pubwvj macrumors 68000

    pubwvj

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    #18
    No, this is actually a very progressive tax. People who earn a lot of money spend a lot of money. When is the last time you heard of a poor person buying a $3,000,000 home, yacht, BMW, 2nd home, jet plane, etc? The rich spend more and if there were a consumption tax they would pay more.

    No, income tax is a bad idea. The income tax punishes productivity. Capital gains tax would better achieve your social goals. A sales tax (consumption) is the best idea because it punishes consumption and rewards saving.

    One of problems with the current income tax is that the rich do not pay it. There are thousands, make that tens of thousands, of ways of getting out of paying taxes and the rich have the fancy accountants and lawyers to help them make the most of all those tax breaks.

    If you want a fair tax system, make it apply to everyone, based on how much they spend with no exceptions. Keep It Simple Stridey - K.I.S.S.
     
  18. mkrishnan Moderator emeritus

    mkrishnan

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    #19
    Daveway, this does seem like the most fair rendition of the flat tax model I have ever seen. It sounds as if rebates will be automated to the extent that most stable low-income-earners will be able to use them.

    But I still have concerns. Even though those rebate checks come in *advance*, you know that relatively poor people are going to have a hard time budgeting them out, without assistance in developing monetary planning. This is going to feed into payday lending and other exploitative schemes, when they run out of their rebate checks, and the immediate impact of the tax is high to them, because their necessity spending is such a large part of their income. So I have fears that the most vulnerable people will run out of advance money and end up borrowing against their next advance, etc, etc....

    Also, what about the indigent, and those who either do not have bank accounts or otherwise have limited means of check cashing? I didn't see this issue in the FAQ but I might not have looked closely enough.

    In any event, I want to say again, at the end of all of that, that this really does seem like an attempt to create a fair taxation system that protects the vulnerable, instead of a "fair" one which has some face validity to them but ends up exploiting them.
     
  19. zimv20 macrumors 601

    zimv20

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    #20
    have you got any real figures on what % of income the different income classes actually spend on consumer goods?

    and what is your definition of "rich?"
     
  20. Don't panic macrumors 603

    Don't panic

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    #21
    well, we can thank our friends in washington for this (especially at a certain address of Penn Ave). i would surmise the solution would be to cut the loopholes and get rid of the unfair tax breaks?

    on topic, I agree with those who oppose this proposal. however I would support the replacement of income tax on the first $ 50.000 with an equivalent sales tax on luxury items
     
  21. Sayhey macrumors 68000

    Sayhey

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    #22
    Not even close to correct. It not "progressive" in the least. While it is true that a national sales tax could generate monies from the sale of luxury items, it in no way compensates the effect on the low wage earner. When you have to pay 19% on the necessities of life (more than double what most sales taxes are today) you have placed a huge burden on those least able to sustain it. It is one thing for those who make $100,000 plus to pay 19% on food for the family; it is another thing all together to double the tax burden on single heads of households earning minimum wage on what they need to survive.
     
  22. skunk macrumors G4

    skunk

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    #23
    Add to that: what is the definition of "spending"? Is the use of a company jet, company health benefits, company housing, etc, counted as personal spending?
     
  23. skunk macrumors G4

    skunk

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    #24
    Exactly: rather than ensuring the present system is not abused, they would prefer to replace it with another system even more open to abuse.
     
  24. miloblithe macrumors 68020

    miloblithe

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    #25
    It would also incentivize spending money abroad, such as on vacations, for that segment of society that could afford to do so. More importantly, what would prevent people from buying goods in Canada and Mexico where they would be much cheaper and reselling them in the US for an intermediate price.

    As others have suggested: HUGE black market. => HUGE increases on government anti-smuggling and other law enforcement spending to compensate.
     

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