Tax reform

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This seems to be quite a diverse bunch, so I thought I would throw this out for debate. I am a big proponent of the fair tax, national retail sales tax if you will. You can find more info here.


http://www.fairtax.org/

I am quite disappointed in the President's tax reform committee their idea of tax reform is raising taxes. The system needs to be overhauled from the ground up, it stifles our economy and cost jobs. It is what sends many businesses overseas. Thoughts?[/url]

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I don't see the required constitutional amendment anyplace in their FAQ, although I'll admit I more skimmed than read it. Not to mention what a whopper this will be in states with a high tax burden already. 35% or more at the counter, plus state income taxes, plus the unreduced federal taxes other than income? Goddamn, that'd likely be more than poor people pay now.

And, of course, food and medicine are exempt from sales tax here now. So this makes them instantly 30% more expensive. Oh joy.

But wait there's more! You'll be paying taxes on services too, which are by and large untaxed here now. Oh, happy day! A 30% cost of living adjustment!

On the other hand, think how simple this will be. In Massachusettes for example unflavored cough drops will be taxed at 30%, flavored cough drops at 35%. Gardeners, paper boys, hair stylists, farmers, and so on will all do the extra tax paperwork for free, without passing the cost on to you at all!

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I like it. But, (just to play devil's advocate for a minute) this basicly eliminates capital gains tax and any tax on surplus income. The only people with any substantial capital gains and surplus income are the wealthy, who pay much more now than they would under the current system (unless they are cheating). The only people who pay less now than they would under the new system are the VERY wealthy, who can afford the expertise to find loopholes and the money to fight an audit, and the cheaters who aren't going to pay anyway. So, even though I do like it, I think that politically it will have trouble because most voters are stupid and opponents can call it a tax break for the rich.

I reserve the right to come back and edit and/or delete this post when I have read the site a little more. ;P

This plan does not substantially change the amount of federal tax you pay. With all the embedded tax burden we pay in goods and services now it probably will be a little less. The big plus in my opinion is that there are no loopholes. Everyone pays taxes even people in the US illegally and criminal enterprises will now be taxed. With the removal of corporate income taxes we will see many of the companies that have gone offshore come back to the US, in fact I believe we will see many foreign companies move to the us for the tax benefits. More jobs means more taxes for the government and a booming economy for the US.

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I don't see the required constitutional amendment anyplace in their FAQ, although I'll admit I more skimmed than read it. Not to mention what a whopper this will be in states with a high tax burden already. 35% or more at the counter, plus state income taxes, plus the unreduced federal taxes other than income? Goddamn, that'd likely be more than poor people pay now.

And, of course, food and medicine are exempt from sales tax here now. So this makes them instantly 30% more expensive. Oh joy.

But wait there's more! You'll be paying taxes on services too, which are by and large untaxed here now. Oh, happy day! A 30% cost of living adjustment!

On the other hand, think how simple this will be. In Massachusettes for example unflavored cough drops will be taxed at 30%, flavored cough drops at 35%. Gardeners, paper boys, hair stylists, farmers, and so on will all do the extra tax paperwork for free, without passing the cost on to you at all!

This plan is revenue neutral for the federal government. You will be paying basically the same in federal tax as you do now. As far as State taxes go, you pay these now so you still stay pay them after. You have to remember you will be receiving your entire paycheck and nothing will be taken out. You will also get a check each month from the government for the cost of taxes on the basic necessities.

The gardeners, hair stylist and newspapers will definitely pass along any cost they incur with this system. In fact that is a point you should consider in the current system. With the tax burden eliminated the cost of doing business is going to be much less. As for the paper work, I think the cost of figuring out 23% will be far less costly than the price businesses like that pay today when doing their income taxes at the end of the year.

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I have been in favor of a consumption tax for a long time, in theory. But do you see that this will be considered, by some, a tax break for the rich? I am all for tax breaks for the rich. I hope to be one of the rich so I can enjoy those tax breaks one day.

Another argument I have heard against this is that it will give incentives to trade on the black market for many items and increase crime.

I still like it. I mean I really really like it but, I dunno what the total effect will be or if it is politically feasible.

I promise to read the site more when I am more awake and sober.

Oh sure anybody that is against it will throw the tax break for the rich out there as argument #1. It doesn't really hold true if you really analyze the plan, but why let facts get in the way.

I was hopeful it might get serious attention at one time but I really don't think anyone in Washington has the balls to make any meaningful reforms. Social security, for example, is a mess everyone knows it can't work the way it is but they would rather pass it off and hope it doesn't go bust before they get out of office.

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It is a tax break for the rich. Poor people tend to spend 100% of their income just to survive, all of which will be taxed now. And I think you grossly underestimate how costly this might be in total. Apart from being illegal, which still seems to be a point glossed over by proponents.

As an example of hidden costs, government debt instruments are attractive to people in high tax brackets because the interest paid is tax free. Should corporate issues be tax free tommorrow, treasuries and munis will suddenly become complete dogs. The most likely result would be an economic disaster.

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It is a tax break for the rich. Poor people tend to spend 100% of their income just to survive, all of which will be taxed now.

No that is not true. They will receive a check each month for the amount of tax they would spend on the necessities. So if they live below the poverty level they will pay no tax. BTW all poor people don't spend 100% of their income to survive. Many of them spend their money on other things. In fact many are poor because of what they spend their money on.