The Fair Tax

[schuerm26]

Why have we not begun this method of taxation yet? Is the ONLY reason because of all the tax shelters the higher ups have with our current system (these get reps votes by constantly changing our current system)?

From everything I have read about this it is fair to everyone, and will GREATLY reduce the amount of tax cheats we have. This sums it up for people that don't know what it is.

www.fairtax.org (http://www.fairtax.org)

http://www.johnlinder.com/IssueDetails.asp?IssueID=9

"What is the FairTax plan?

The FairTax plan is a comprehensive proposal that replaces all federal income and payroll based taxes with an integrated approach including a progressive national retail sales tax, a prebate to ensure no American pays federal taxes on spending up to the poverty level, dollar-for-dollar federal revenue neutrality, and, through companion legislation, the repeal of the 16th Amendment.
The FairTax Act (HR 25, S 1025) is nonpartisan legislation. It abolishes all federal personal and corporate income taxes, gift, estate, capital gains, alternative minimum, Social Security, Medicare, and self-employment taxes and replaces them with one simple, visible, federal retail sales tax administered primarily by existing state sales tax authorities.
The FairTax taxes us only on what we choose to spend on new goods or services, not on what we earn. The FairTax is a fair, efficient, transparent, and intelligent solution to the frustration and inequity of our current tax system.
The FairTax:

Abolishes the IRS
Closes all loopholes and brings fairness to taxation
Ensures Social Security and Medicare funding
Brings transparency and accountability to tax policy
Allows American products to compete fairly
Reimburses the tax on purchases of basic necessities
Enables retirees to keep their entire pension
Enables workers to keep their entire paycheck"Any thoughts on this?

Some other things are that you get a pre-bate from the Government up to the poverty line. This means a check every month from the government to buy necessities. EVERYONE gets this, not just low income.

Studies have shown that prices would be pretty much comparable to what they are now as all the hidden tax fees in the price would vanish.

Used items are NOT taxed. This system only taxes items 1 time. Unlike our current system which taxes the same good over and over again.

There is also a book called The Fair Tax Book by Neal Boortz and Congressman John Linder that goes in to depth about this.

[GuilewasNK]

I know Neal Boortz has been backing this for a long time now. I want to dig deeper into it before I decide what I think, but the general idea is good IMO.

[dtcarson]

The only real 'negative' I can think of to it is that people who are, say, 60 or older when it went into effect, would have any tax-advantaged savings negated. But they could easily create a one-time exception for people over X or some other workaround.
Other than that, the only negatives I've heard of are not negatives (the IRS would be out of a job! Accountants would have to find other work!) or class warfare (the poor would pay more than those evil rich!), and lots of positives.
Everything else I can think of is a positive.
* Save millions of dollars and manhours in tax compliance.
* Abolish or drastically shrink the size of one of the largest most powerful most inaccurate government organizations.
* Drastically reduce the power of federal politicians to kiss up to lobbyists/special interest groups by throwing them tax bones.
* Make people's "contributions" to the overfed government painfully obvious, thus (hopefully) making it harder to raise taxes.
* Putting people in control of their own tax bill (I know, the politicians are afraid of this one).
* Remove tax incentives/workarounds which primarily benefit those with lots of money or the ability to hire accountants to find those workarounds (not that I'm inherently against playing the rules to maximize your savings, but "the poor" usually don't get to take advantage of those.)

The main reasons we don't have this is because a large portion of politicians power is related to taxation--taxing certain industries/businesses/demographics, and reducing taxes to reward those who support them. It's a shell game...they make us feel lucky and thankful when we get 200 bucks back in April, without telling us that we could have invested that money for a year and earned interest. Politicians love power, and taxation is a very large part of their power.
The Fairtax Book is a very eye opening, easy to read book, I highly recommend it.

[schuerm26]

The only real 'negative' I can think of to it is that people who are, say, 60 or older when it went into effect, would have any tax-advantaged savings negated. But they could easily create a one-time exception for people over X or some other workaround.
Other than that, the only negatives I've heard of are not negatives (the IRS would be out of a job! Accountants would have to find other work!) or class warfare (the poor would pay more than those evil rich!), and lots of positives.
Everything else I can think of is a positive.
* Save millions of dollars and manhours in tax compliance.
* Abolish or drastically shrink the size of one of the largest most powerful most inaccurate government organizations.
* Drastically reduce the power of federal politicians to kiss up to lobbyists/special interest groups by throwing them tax bones.
* Make people's "contributions" to the overfed government painfully obvious, thus (hopefully) making it harder to raise taxes.
* Putting people in control of their own tax bill (I know, the politicians are afraid of this one).
* Remove tax incentives/workarounds which primarily benefit those with lots of money or the ability to hire accountants to find those workarounds (not that I'm inherently against playing the rules to maximize your savings, but "the poor" usually don't get to take advantage of those.)

The main reasons we don't have this is because a large portion of politicians power is related to taxation--taxing certain industries/businesses/demographics, and reducing taxes to reward those who support them. It's a shell game...they make us feel lucky and thankful when we get 200 bucks back in April, without telling us that we could have invested that money for a year and earned interest. Politicians love power, and taxation is a very large part of their power.
The Fairtax Book is a very eye opening, easy to read book, I highly recommend it.

The over 60 "negative" is really the only truthful negative have heard also. Being perfectly honest though, nothing is going to be perfect, and that really is a small price to pay for the tremendous benefits the fairtax would give our country.

For more info go to John Linder's webpage, I linked it in the first post. Also read the last paragraph of the post above as to why this truly hasn't been inacted yet. There are truly no negatives to this system for us the American people or the countries economy, only positives.

[SpazX]

OK, I have a question. How can everyone pay less money and still have the same amount of funds?

EDIT:

If I'm not mistaken, the current federal income tax for people making over around $350,000 is 35% and that's before sales tax, capital gains, etc. on anything they buy.

So if they spent their entire paycheck on luxury goods and paid the 23% fairtax, they'd have a 12% drop in taxes. Am I reading something wrong here?

I admit I'm no tax expert.

[elprincipe]

OK, I have a question. How can everyone pay less money and still have the same amount of funds?

EDIT:

If I'm not mistaken, the current federal income tax for people making over around $350,000 is 35% and that's before sales tax, capital gains, etc. on anything they buy.

So if they spent their entire paycheck on luxury goods and paid the 23% fairtax, they'd have a 12% drop in taxes. Am I reading something wrong here?

I admit I'm no tax expert.

I'd like to know more about the math as well. They claim on their site that it raises the same amount of revenue as the current tax system, yet the rates are lower...does simply eliminating the IRS bureaucracy result in 1.8% less taxation? That seems incredible to me. I definitely like many of the goals outlined, especially the elimination of payroll taxes and the "pre-bate" which, when combined, as I see it could eliminate taxes for those making under $30,000, something I've long advocated.

[schuerm26]

1 way it makes up a HUGE amount of income is by EVERYONE having to pay taxes. Illegal Immigrants? Check. Tax cheats? Check. Why? EVERYONE HAS to buy stuff. There is no way around it.



Go check out the book from the library. It explains everything FAR better than any of us on here could. It will be the best 180 pages or so you have ever read. I will warn you though that you probably will get EXTREMELY frustrated at how easy it would be to implement and how great it would be for the people, yet our Government won't do anything for us.

It breaks down how they came up with the idea of "withholding" so most people don't actually know how much they are paying or think they don't pay taxes at all since the government is "giving" them money.

It basically breaks the cost of goods down to a level where they have found out there is about a 22% embedded tax cost already in the goods we buy. With the fair tax, those costs are no longer in the product hence price dropping competitions will ensue. So you are basically going to be paying the exact same cost on goods with the 23% tax on the goods after implemented, BUT you are getting a 100% paycheck. There are NO other taxes.

As for the above post, in the book it does state approximately how much the IRS costs us. I'll try to find the number but I can assure you it really is an incredible number. It's a complete waste the way our system is now.

Found some numbers:

In 2002 Individuals and Businesses spent 5.8 billion hours complying with the tax code, an effort that cost an estimated $194 Billion

100,000 people work for the IRS chewing up a budget of $10 Billion a year

It also talks about the lost investments (opportunity costs of withholdings) for the people and it comes out to nearly $24 Billion in interest payments that Americans lost out on.

It's a whole bunch more stuff in there but to sum it up, the book says it is safe to assume that $500 billion a year is spent JUST TO COMPLY with the tax code.

As stated above, it's easiest just to check out the book from the library as Im just pulling bits and pieces. It is an easy read but really gets the point across of just how wasteful and ridiculous our current system is.

[GuilewasNK]

1 way it makes up a HUGE amount of income is by EVERYONE having to pay taxes. Illegal Immigrants? Check. Tax cheats? Check. Why? EVERYONE HAS to buy stuff. There is no way around it.


That is the awesome part.

[Reality's Fringe]

I stay away from most tax issue discussions because, as an economics student, I'm taught to distance myself from issues of equity. I will say, however, that consumption taxes are the most efficient (no deadweight loss), extremely difficult to avoid(but there are ways for big entities to get around it, in addition to issues with collection), and have a positve effect on savings and investment(but at the cost of dramatically reduced consumer and producer surplus). I haven't taken the time to read the outline of this plan, but I'm assuming it addresses the major equity concern with a consumption tax being the "unfairness" to low income households purchasing necessities (ie it's progressive on consumption, but regressive on income)?
I firmly believe that the tax code in the United States has become too hopelessly obfuscated and difficult, but I don't see it changing anytime soon. The most likely evolution will be an eventual flat tax with a standardized deduction built in (so that you could fill out your tax on a postcard, and believe it or not a flat-tax is inherently progressive) before a system based entirely around consumption.

The real problem here is that people will be EXTREMELY adverse to changing the tax system, especially to something as readily apparent as a sales tax (even if it means the abolishment of the income/property tax). Additionally, most consumption taxes are added in ADDITION to income taxes instead of being substitued in lieu of (see any country with a VAT. A VAT has the EXACT same end effect of a national sales tax). At anyrate, don't expect this to happen anytime soon, and when/if it does, expect a shock to the the LRAS and AD due to the job loss of many accountants and bureaucrats.

[schuerm26]

I stay away from most tax issue discussions because, as an economics student, I'm taught to distance myself from issues of equity. I will say, however, that consumption taxes are the most efficient (no deadweight loss), extremely difficult to avoid(but there are ways for big entities to get around it, in addition to issues with collection), and have a positve effect on savings and investment(but at the cost of dramatically reduced consumer and producer surplus). I haven't taken the time to read the outline of this plan, but I'm assuming it addresses the major equity concern with a consumption tax being the "unfairness" to low income households purchasing necessities (ie it's progressive on consumption, but regressive on income)?
I firmly believe that the tax code in the United States has become too hopelessly obfuscated and difficult, but I don't see it changing anytime soon. The most likely evolution will be an eventual flat tax with a standardized deduction built in (so that you could fill out your tax on a postcard, and believe it or not a flat-tax is inherently progressive) before a system based entirely around consumption.

The real problem here is that people will be EXTREMELY adverse to changing the tax system, especially to something as readily apparent as a sales tax (even if it means the abolishment of the income/property tax). Additionally, most consumption taxes are added in ADDITION to income taxes instead of being substitued in lieu of (see any country with a VAT. A VAT has the EXACT same end effect of a national sales tax). At anyrate, don't expect this to happen anytime soon, and when/if it does, expect a shock to the the LRAS and AD due to the job loss of many accountants and bureaucrats.

It's not the people that are adverse to changing the tax system (go ask anyone what they think of our tax system and the IRS). It is the higher ups in Washington and of companies and interest groups that are adverse to change. WHy? They are protected from taxes under our current system. They wouldn't be under the fair tax.

As for it being "unfair" to low income households. That is completely not true. EVERY head of household (no matter of income) is sent a Government pre-bate check up to the poverty line. Example in the book is that a family of four (2 adults and 2 kids) would receive a check every month for about $490 or so. This is to cover your necessities.

What is great about this system is it treats everyone equal. You aren't punished for being succesful.

Yes there are still going to be some tax cheats. Are there going to be less than the current system. Without a doubt.

As for it being apparent as to what you are paying. That is a huge plus in my mind, as I would guess it would be in others. It's unfortunate but a LOT of people have no clue what the government is actually taking from their paychecks.

[evanft]

As long as it ensure that the lower and middle class don't see their tax rates go up (which I doubt they will, but still), I'm all for it. That, in all honestly, is my only real concern with the whole idea. Oh, and certain things, like groceries, medical care, and mortgages, at least those under a certain amount, shouldn't be taxed.

I LOVE how this would basically force everyone to pay taxes, and would provide a lot more transperancy in the system. I mean, it makes illegals pay the maximum possible tax rate. How can you not love that?

[Ikohn4ever]

i mean it sounds good in theory, i just dont know how one goes about changing the whole tax system. It seems like an almost impossible task to get everyone to agree on one thing

[dtcarson]

As long as it ensure that the lower and middle class don't see their tax rates go up (which I doubt they will, but still), I'm all for it. That, in all honestly, is my only real concern with the whole idea. Oh, and certain things, like groceries, medical care, and mortgages, at least those under a certain amount, shouldn't be taxed.

I LOVE how this would basically force everyone to pay taxes, and would provide a lot more transperancy in the system. I mean, it makes illegals pay the maximum possible tax rate. How can you not love that?

Actually the only way for this to work is if there are *NO* exceptions. Buying beer or buying milk, buying caviar or buying bread, you pay the same tax rate. Otherwise we're in the same boat as we are now--milk should be exempted because it's 'essential', hmm, snack foods should have a higher tax rate, etc.
However, the prebate attempts to counter that argument on the front end--that is, each taxpayer is given X$ a month in advance of any taxes paid, to cover the taxes they would pay on 'essentials' and basic living expenses. Another benefit to doing it this way, instead of exemptions, in addition to just being easier: now the 'poor' save tax dollars by buying stuff with wic or food stamps, or in the future by having it exempted--which is fine, if they're buying that stuff. With the FairTax Prebate, if they (or anyone) are very wise with their spending, they can actually *make* money, since the prebate is cash in hand. This actually gives the ultrapoor the opportunity to build some savings and assets, so they can stop being so dependent on the government (if they want). Of course, certain people in the government don't *want* the ultrapoor to be self-sufficient, which is another obstacle.

[schuerm26]

Actually the only way for this to work is if there are *NO* exceptions. Buying beer or buying milk, buying caviar or buying bread, you pay the same tax rate. Otherwise we're in the same boat as we are now--milk should be exempted because it's 'essential', hmm, snack foods should have a higher tax rate, etc.
However, the prebate attempts to counter that argument on the front end--that is, each taxpayer is given X$ a month in advance of any taxes paid, to cover the taxes they would pay on 'essentials' and basic living expenses. Another benefit to doing it this way, instead of exemptions, in addition to just being easier: now the 'poor' save tax dollars by buying stuff with wic or food stamps, or in the future by having it exempted--which is fine, if they're buying that stuff. With the FairTax Prebate, if they (or anyone) are very wise with their spending, they can actually *make* money, since the prebate is cash in hand. This actually gives the ultrapoor the opportunity to build some savings and assets, so they can stop being so dependent on the government (if they want). Of course, certain people in the government don't *want* the ultrapoor to be self-sufficient, which is another obstacle.

There aren't ANY exceptions (except for used items, everything is only taxed 1 time). Even services are taxed.

As has been said before, everything about this makes sense for Americans. This DOESN'T make sense for politicians who manipulate the tax code for votes and those with power that within our current system are sheltered from our tax code. We'll see who wins out. This thing has been gaining a ton of steam though. Before tax day, fairtax.org had set a goal of 100,000 faxes to representatives letting them know that people want change. They smashed that goal and got 137,000. It really is up to the people.

I got a response from my representative and he said that he thought the idea was great but wouldn't support it until the 16th Amendment was repealed. For the life of me I can't remember his name right now.

[bmulligan]

So what happens when people start deciding to barter with each other and avoid the tax?

What happens in an economic downturn when people stop spending? You still think you're going to get that $490 check every month ?

[t0llenz]

There are ways around any tax system you set up. This system has the barter system, gift loopholes, and merely those incredibly wealthy who just don't spend their money as much or find loopholes such as spending their money in...Canada or a country that's a bit more of a distance away.

My biggest problem with this system is the prebate -- I can already see this turning into a system whereby you vote for the people who will give you the highest prebate. People can use their vote to give themselves money. It's the same problem I have with the negative income tax (http://en.wikipedia.org/wiki/Negative_Income_Tax), which I still think is a better system than the Fair Tax...but, that's just me.

[schuerm26]

There are ways around any tax system you set up. This system has the barter system, gift loopholes, and merely those incredibly wealthy who just don't spend their money as much or find loopholes such as spending their money in...Canada or a country that's a bit more of a distance away.

My biggest problem with this system is the prebate -- I can already see this turning into a system whereby you vote for the people who will give you the highest prebate. People can use their vote to give themselves money. It's the same problem I have with the negative income tax (http://en.wikipedia.org/wiki/Negative_Income_Tax), which I still think is a better system than the Fair Tax...but, that's just me.

Correct me if Im wrong but the pre-bates are based on the established poverty levels (which change over time but that isn't because of individual candidates). It isn't individual candidates who are saying how much people get in prebates

[MrBadExample]

I have to be somewhat skeptical given Neal Boortz's support since he is not the most enthusiastic supporter of lower income workers. I've listened to him talk about it for a few years now and it does sound good in theory. But this is a man who loathes government spending so I don't think he would lose any sleep if the government took in less money.

I also don't care for the "Fair Tax" name. Much like the "Patriot Act", it's a little too Orwellian for my tastes. I'll leave it up to smarter economists than me to debate, but don't tell me I have to support it because it has "fair" right in the name.

[niceguyshawne]

This actually gives the ultrapoor the opportunity to build some savings and assets, so they can stop being so dependent on the government (if they want). Of course, certain people in the government don't *want* the ultrapoor to be self-sufficient, which is another obstacle.

The ultrapoor already have the opportunity to save in the current tax system. Most of them do not take advantage of it. Spreading their government subsidy payments throughout the year would not change that.

[t0llenz]

It is based on poverty levels -- but that doesn't mean that an entire platform for a party or a clump of candidates could be to say, "I'm going to increase your pre-bate." Whether it's supposed to be that way in theory or not -- that's what my biggest fear is that people will figure out a way to boost up the pre-bate until it's basically just cutting a high level check to all people in the US.

[Fanboy]

This sounds like a good way to nip that whole pesky "tourism" thing in the bud.

Unless there's some rebate for people upon leaving the country (we offer a rebate on our lowly 7% GST here in Canada), I see a fairly swift drop from the #3 worldwide destination.

I didn't see anything about a tourist rebate on the fairtax.org site linked above.

[mykevermin]

It cleverly circumvents earnings-based taxation by placing the focus on a consumption-based taxation. While part of me likes the fundamental idea (I firmly believe that anyone driving up the price of oil vis-a-vis their desire to purchase and drive a gas-guzzling fucking Humvee ought to pay twice what I do per gallon of gas, even if that isn't what's being debated here), I feel that there's something sinister at play here.

It involves means of earnings; this allows the wealthy and those with actual savings to earn even more money via investments and capital gains, 100% tax free, while those at the bottom have a greater tax burden shifted to them. After all, since we're going to be taxing based upon what people consume, rather than what they earn, the top-5% family that spends as much as the bottom-5% family pays the same in taxes. As far as "equity" is concerned, that's a disgustingly oversimplified version of how your tax dollars work.

It's "fair" if you think of it very simply. It's not "fair" if you think of it in terms of how "valuable" money is at various levels. Any post-consumption-and-tax monies are usable for tax-free earnings in non-employment settings; this is something that, while currently available to the wealthy and not the poor, is at the very least, taxed as earnings.

I also feel that this is a sinister way to avoid the "death tax." All those poor, poor, poor, emaciated, National Geographic cover-looking American horror stories. All of their dead families' assets over $4 million is taxed at 50%. GASP! What are they going to do with $4 million + 50% of the remainder?

Hold a bake sale to pay rent, that's what! :roll:

Though, be my guest and go for it. I can't wait until your middle-class white suburban neighborhood schools turn to shit because of the poor funding it receives now that there are no sizable property taxes used to fund them. You guys can find out what the inner city has known for decades!

I can't wait until those $490 checks start rolling in. Somehow they've taken the much-maligned concept of "government handouts" and turned it into something that those outside the poverty level feel entitled to. Feel the burn? It's cognitive dissonance, baby!

[dtcarson]

There's no such thing as "government handouts". There's government redistribution of citizens' money.
I have no problem with circumventing earnings-based taxation. The 'rich' are more likely to be able to play legal games with their taxes then the 'poor' (I myself save 1500/year or so using FSAs and feel absolutely no guilt about it, after all, when the government takes 45% of my yearly bonus for my contributions toward helping my company generate millions of dollars in income, profit, investment, and share payouts, they feel no guilt about that).

Property taxes are primarily state or local; the FairTax plan abolishes federal income taxes (though states are free to do what they want with their taxes; some states already have no property taxes or no income taxes).

The top 5% would pay the same 'rate' as the bottom 5%; however, their effective rate would be much greater, because it's highly likely that in actual dollars that top 5% is spending much more than the bottom 5%; though the 'rich' like to make their money turn into more money (as I think all of us do), they are also more likely to spend more of it. And even if there are a few Uncle Scrooge types who won't spend a single gold coin, those are probably also the same people now who end up paying 1500$ on income and assets of millions due to wise accountancy. Though we both buy a new car, I'm more likely to buy a sub-25k car that suits my needs, the 'rich' are more likely to buy the 85k Jaguar or the 150k Ferrari.
Ranking money's 'value' should not be the government's job. And if it is, that's all the more reason to support the FairTax. It allows people to have more control over their own money; it gives everyone the prebate which, in the case of the 'poor' is really their own money, and allows them to do with it what they will. People put more importance and value on their own money and the money they earn or handle than that which is "given" to them.
Speaking about 'fairness', I won't be sneaky about it--I have no problem with saying I'd like the death tax abolished. I'm highly unlikely to have it affect me, but it strikes me as morally wrong as you apparently feel driving a Humvee is (although recent research shows driving a Hummer is actually more efficient and less costly than driving a hybrid Prius).
It's fair because it is applied to everyone equally, and gives everyone control over how much taxation they are subjected to.

[mykevermin]

Speaking about 'fairness', I won't be sneaky about it--I have no problem with saying I'd like the death tax abolished. I'm highly unlikely to have it affect me, but it strikes me as morally wrong as you apparently feel driving a Humvee is (although recent research shows driving a Hummer is actually more efficient and less costly than driving a hybrid Prius). It's fair because it is applied to everyone equally, and gives everyone control over how much taxation they are subjected to.

The top 8,800 households are subject to the death tax. The rest of the United States is not.

I think this "fairtax" notion is conflating two issues: it makes a massive logical leap from "the current system is unnecessarily complex and flawed" to "we should tax on consumption instead!" There's a huge chunk of logic missing in that equation.

The "fair" talk is merely semantic. I could argue that it is "fair" to tax people at a graduated rate based upon their annual earnings and assets. That's pretty damned fair to me. I'm sure it isn't to you, but that's precisely the point. The only "fairness" involved is a semantic sleight of hand that creates a strawman argument that somehow a flat consumption based rate of taxation is naturally more "fair" than something based on earnings.

Now, a logical step would be to move from "our federal income taxation system is unnecessarily complex and flawed" to "let's simplify it without stepping away from income-and-asset based taxation."

The "fairtax" proof is in the pudding. Common goods will become absurdly expensive as a consequence of reallocating *everyone's* federal taxes due equally among purchased goods and services. That's something else I think is overlooked. Many of us live with 6-7-8% sales taxes, and a few with 9%, I believe. If Neal Boortz thinks that a "fairtax" consumption-based system will lead to anything below 17-20% sales tax, he's absurd. And that's "taking money out of people's hands," to use the old GOP "I spend my money better than the government" parlance.

Most importantly, if all you anti-federalist types out there support this system, you'll have to keep in mind the amount of government oversight necessary to ensure that businesses are taking taxes fairly. The biggest hurdle to overcome would include the aforementioned bartering that would inevitably result (and I'm a handy gardener, so I'd be all 'bout some bartering!), but also monitoring and surveillance of online purchases, eBay sales, Craigslist sales, and things like that. Those can't be omitted from the "fairtax."

I'd be thrilled to see the study that claims Hummers are more environmentally friendly than a Prius. If you find that link, please PM it to me, as I don't want to (no pun intended) cloud up the discussion here.

[SpazX]

Let me get this straight:

It has been said that the richer people pay more than the poorer people because of their larger amount of money spent. At the same time it has been said that people shouldn't worry about the 23% tax because of the "embedded" tax that taken out will essentially keep prices about the same.

Extrapolating from that the goods that the rich are buying will also be priced about the same, no? So the 3 million they spend now on goods will essentially be the same 3 million with the tax applied. So nothing changes for the rich or the poor besides the fact that the rich are now tax-free on investments, etc. that they usually already make, while the poor get an extra couple grand a year so that they can afford food (is that not the point of welfare?).

The middle class is then basically unaffected besides being able to buy some more superfluous shit since they're usually fine anyway and just like to bitch about taxes.

I'm not trying to say that this is a complete money-grab by the rich (I'm sure there are plenty of genuninely good-meaning people behind it), but it seems more and more like something rich people are trying to convince poorer people to do so that they get more money by playing off the poorer's disdain for taxes.

I'd also like to reiterate Myke's point that even though the percentage is equal it's not "fair". 23% from someone making 30,000 a year is much much much (I can't emphasize that enough) more significant to that person than 23% of 5 million would be. Even assuming that prices are the same and it's essentially an invisible tax the gain for someone making 30k is hardly anything compared to that of the person making 5 million.

A better solution to me would just be to have more tax brackets with higher percentages for more wealthy people and lowering the percentage on poorer people. That would probably also end up with more tax money available also so that it would not only give the poorer more money, but the government more money for public works (provided they're held accountable for their spending...)


I'm being cynical, I know, so if I'm in error please explain it to me.

[dtcarson]

The "fair" refers to the fact that it's the same rate, applied equally, to everyone participating in one activity (buying new goods/services.) One idea behind the Fairtax is that it's set to be revenue neutral. Personally, I don't want the government getting any more money. They need to use the money they take from us more efficiently/constitutionally. And if they "needed" more taxes, increasing the FT percentage is highly visible to everyone, so unless people feel it's really 'needed', the idea is there would be resistance.
Spazx: I see what you're saying, but your word choice shows your thinking: If I get a tax refund, or a tax prebate, or tax advantaged savings, I'm not "getting" money. I'm *keeping* my own money. Who knows better how to spend/use your money, you or the government?
The middle class would see a benefit, because if they wanted to be frugal, they could save money and perhaps move to the upper class, since they'd be taxed on their consumption. Same with the lower class. If they decide not to consume very much, they could actually build up wealth. Right now we have, what, negative 2% savings rate? That's a bad thing. Not everyone would save, in fact, most people probably wouldn't save much, since they're used to spending, so the government would still get its revenue.
Ebay, etc, would be (mostly) filtered, because the majority of those goods are used. As of now, much of that is not being taxed. If you want to barter, that's fine, that's not taxed now either, so it's no different. Bartering is not the 'sale of new goods'. And while many people will barter, many others won't or can't (compare game tradelists to things like Goozex).
The FairTax rate, last I saw, was estimated to be 23%.
Regarding 23% of 30k versus 23% 5 million--they are being taxed on their *consumption*. The millionaire is virtually certainly going to spend more on new goods than the 30k-aire; the taxes on one vacation home in the tropics is more than the 30k-aire would pay in taxes in years, and that's if s/he didn't try to stretch the dollars by buying used.
The level of government oversight required to implement a Fairtax would be orders of magnitude less than the current IRS monstrosity.
The price of goods should go down because right now that price contains overhead for levels and levels of taxation, which would no longer exist. For most products, "new price + FT" should roughly equal "current price plus sales tax (if any)".

[Reality's Fringe]

I think the main problem is it's called the "Fair Tax" and not the "More Efficient Tax." That being said:

Let me get this straight:

It has been said that the richer people pay more than the poorer people because of their larger amount of money spent. At the same time it has been said that people shouldn't worry about the 23% tax because of the "embedded" tax that taken out will essentially keep prices about the same.


I highly doubt this would happen. It seems to just be wishful thinking on the part of those in favor. The Tax incidence will more than likely be shared with the producer, but expect prices to rise depending on demand elasticity.


Extrapolating from that the goods that the rich are buying will also be priced about the same, no? So the 3 million they spend now on goods will essentially be the same 3 million with the tax applied. So nothing changes for the rich or the poor besides the fact that the rich are now tax-free on investments, etc. that they usually already make, while the poor get an extra couple grand a year so that they can afford food (is that not the point of welfare?).

Ehh, not exactly. The $3,000,000 is taxed prior to receipt. Let's say (for the sake of arguement) that they pay 35% on that specific income.
That leaves them $1.95 Million to spend on goods when they were going to spend, say, the entire $3,000,000. That means that there's $1.95 million they can spend on consumables withou(Federal) tax. With each dollar being spent on a consumable at 23%, that's actually only $690,000 in federal revenues. The reality is that the rich also benefit from this tax. Whether or not that's "fair" is up to you, all I can tell you is that increased domestic consumption does wonders for the per capita K stock and % growth of real GDP.


The middle class is then basically unaffected besides being able to buy some more superfluous shit since they're usually fine anyway and just like to bitch about taxes.
Eh, my family is considered "Middle Class" and our combined income is roughly $50,000. We live paycheck to paycheck. You can thank the unchanging classification of "middle class" for that one.



I'm not trying to say that this is a complete money-grab by the rich (I'm sure there are plenty of genuninely good-meaning people behind it), but it seems more and more like something rich people are trying to convince poorer people to do so that they get more money by playing off the poorer's disdain for taxes.
Probably, but it's not like there's no benefit for the poor, ESPECIALLY if handled correctly, and that's a BIG "if", but it can be done if you have a team of people working on it who AREN'T politicians.



I'd also like to reiterate Myke's point that even though the percentage is equal it's not "fair". 23% from someone making 30,000 a year is much much much (I can't emphasize that enough) more significant to that person than 23% of 5 million would be. Even assuming that prices are the same and it's essentially an invisible tax the gain for someone making 30k is hardly anything compared to that of the person making 5 million.

I could say something about average tax rates and returns to national investment, but that's neither here nor there. In purely normative terms, I agree (somewhat).


A better solution to me would just be to have more tax brackets with higher percentages for more wealthy people and lowering the percentage on poorer people. That would probably also end up with more tax money available also so that it would not only give the poorer more money, but the government more money for public works (provided they're held accountable for their spending...)


Higher percentages don't count for shit with the ability to exploit. Also, I could again say a bunch of boring crap about investment and national savings, but no one really cares. Also, you'd REALLY have to have faith in your politicians to spend that extra money wisely, and that would ONLY work if they lowered rates for "poor" families by less than those raised for "rich" families.



I'm being cynical, I know, so if I'm in error please explain it to me.

It's really another issue of equity Vs. efficiency, with broad definitions of "equitable". It's a hard situation.

[evanft]

The top 8,800 households are subject to the death tax. The rest of the United States is not.

I think this "fairtax" notion is conflating two issues: it makes a massive logical leap from "the current system is unnecessarily complex and flawed" to "we should tax on consumption instead!" There's a huge chunk of logic missing in that equation.

The "fair" talk is merely semantic. I could argue that it is "fair" to tax people at a graduated rate based upon their annual earnings and assets. That's pretty damned fair to me. I'm sure it isn't to you, but that's precisely the point. The only "fairness" involved is a semantic sleight of hand that creates a strawman argument that somehow a flat consumption based rate of taxation is naturally more "fair" than something based on earnings.

Now, a logical step would be to move from "our federal income taxation system is unnecessarily complex and flawed" to "let's simplify it without stepping away from income-and-asset based taxation."

The "fairtax" proof is in the pudding. Common goods will become absurdly expensive as a consequence of reallocating *everyone's* federal taxes due equally among purchased goods and services. That's something else I think is overlooked. Many of us live with 6-7-8% sales taxes, and a few with 9%, I believe. If Neal Boortz thinks that a "fairtax" consumption-based system will lead to anything below 17-20% sales tax, he's absurd. And that's "taking money out of people's hands," to use the old GOP "I spend my money better than the government" parlance.

Most importantly, if all you anti-federalist types out there support this system, you'll have to keep in mind the amount of government oversight necessary to ensure that businesses are taking taxes fairly. The biggest hurdle to overcome would include the aforementioned bartering that would inevitably result (and I'm a handy gardener, so I'd be all 'bout some bartering!), but also monitoring and surveillance of online purchases, eBay sales, Craigslist sales, and things like that. Those can't be omitted from the "fairtax."

I'd be thrilled to see the study that claims Hummers are more environmentally friendly than a Prius. If you find that link, please PM it to me, as I don't want to (no pun intended) cloud up the discussion here.

I think the general response to that is that removing the income tax will greatly reduce costs for businesses, and will thus have an immediate effect on prices. This will make the consumption tax hit less severe, especially since it would (at least, this is how I read it), only be applied at the final stage, and not on the intermediate stages of production and supplier-seller relations.

[elprincipe]

But this is a man who loathes government spending so I don't think he would lose any sleep if the government took in less money.

What's wrong with the government taking in less money? They spend way too much as it is.

[SpazX]

I highly doubt this would happen. It seems to just be wishful thinking on the part of those in favor. The Tax incidence will more than likely be shared with the producer, but expect prices to rise depending on demand elasticity.

I agree, but wishful thinking aside I was just going with their premise.


Ehh, not exactly. The $3,000,000 is taxed prior to receipt. Let's say (for the sake of arguement) that they pay 35% on that specific income.
That leaves them $1.95 Million to spend on goods when they were going to spend, say, the entire $3,000,000. That means that there's $1.95 million they can spend on consumables withou(Federal) tax. With each dollar being spent on a consumable at 23%, that's actually only $690,000 in federal revenues. The reality is that the rich also benefit from this tax. Whether or not that's "fair" is up to you, all I can tell you is that increased domestic consumption does wonders for the per capita K stock and % growth of real GDP.

I was assuming the income tax was removed and going with the "fair tax" numbers. Even though state taxes would still in effect, etc. I was just assuming a person spending 3 million as an example (regardless of how much they actually made) to compare the fact that they say the rich bear the burden moreso than the poor (I recall something about caviar and expensive cars in their FAQ), but also say that prices would not change significantly, which basically nullifies any difference.


Eh, my family is considered "Middle Class" and our combined income is roughly $50,000. We live paycheck to paycheck. You can thank the unchanging classification of "middle class" for that one.

I considered a caveat about "middle class," but didn't want to write too much. I hate the definitions as well, but I have no idea what other terms to use so I think of "middle class" as those who can afford the necessities as well as some luxuries. It's fun to have discussions while using different definitions :-P.


Probably, but it's not like there's no benefit for the poor, ESPECIALLY if handled correctly, and that's a BIG "if", but it can be done if you have a team of people working on it who AREN'T politicians.

Yeah, I see the benefit, but I can't accept giving the poor something to satisfy while giving the rich huge amounts of extra money. I share your distrust of politicians, but yeah....


Higher percentages don't count for shit with the ability to exploit. Also, I could again say a bunch of boring crap about investment and national savings, but no one really cares. Also, you'd REALLY have to have faith in your politicians to spend that extra money wisely, and that would ONLY work if they lowered rates for "poor" families by less than those raised for "rich" families.

This is my departure from conservative economics: I can't trust the business guy more than the politician. I have some hope that the politician can get something good done for the people since that's at least what s/he's supposed to do. I can't bring myself to really trust somebody that runs a business though whose only motivation is based upon and indeed encouraged to be pure greed.

For that reason I give them slightly less of my cynicism.

I'm no econometician (or economist) so as far as actual numbers I have absolutely no idea what the hell I'm talking about. I'm just going purely on their logic.

[defiance_17]

As a tax accountant, I'd like to keep my job. Fuck the rest of you. :lol:

[MrBadExample]

What's wrong with the government taking in less money? They spend way too much as it is.
My point is I can't take Boortz at face value when he says the Fair Tax is revenue neutral. He would love it if there wasn't enough money for government schools and social programs.

I would love to see the government take in less money and spend it more wisely. I just have a feeling you and I would disagree on the "wisely" part. :)

[elprincipe]

My point is I can't take Boortz at face value when he says the Fair Tax is revenue neutral. He would love it if there wasn't enough money for government schools and social programs.

I would love to see the government take in less money and spend it more wisely. I just have a feeling you and I would disagree on the "wisely" part. :)

I don't know enough about him to say, so I can't comment. But I would probably disagree with most here on the "wisely" part, so nothing unexpected there :D

[RollingSkull]

My point is I can't take Boortz at face value when he says the Fair Tax is revenue neutral. He would love it if there wasn't enough money for government schools and social programs.

So would I. I went through government school. ;)

[dtcarson]

But a business guy has incentive to run his business well. (Theoretically) if he succeeds, his business is more profitable, he, his employees, his shareholders, and his customers all profit/benefit. I will say that there was a period where the sole goal of running a business was (artificially and falsely) jacking up their stock price/value and not thinking of long term growth (ironically enough this occurred during a Democratic presidential term, and was taken as a "good" thing), and there are certainly some scumbag CEOs who get in, ride the company to the ground, then bail out with their fifteen million dollar golden parachute, but I think those are the (very visible) minority.
But ultimately, except for a few business/industries (subsidized farming, etc) most private industry either succeeds at some level or dies, or at least catches itself in its death throes and makes changes (I saw that Delta is now out of bankruptcy). Government programs do not do that, their income to a great extent is virtually guaranteed.
Theoretically, yes, the politicians is supposed to "help" people. Of course, the definition of "help" varies (which is helping a junkie: getting him off the drug, or giving it to him?), and which people? However, for the vast majority of congresspeople, after no more than one term in office, "help" usually means "try to financially benefit, or hinder the opponents of", and "people" means "those people or lobby groups who give me millions of dollars in lobbying or campaign donations". It's the rare politician who does not succumb to the power and benefits of being able to write the rules, and the few who do are usually punished or ostracized (like that one fellow a couple years back who wanted a symbolic vote on the automatic congressional pay raises--in retribution a policy was floated that if if you vote against it, even if you're outvoted, you don't get it.)
Even if government revenues did decrease, I think most people would agree that the government does take too much of our money and spend it on things they shouldn't. We can certainly disagree on what they 'should' spend it on, but just like the concept that "the current tax system is, if not broken, severely damaged", most people probably agree on the base statement.

[SpazX]

But a business guy has incentive to run his business well. (Theoretically) if he succeeds, his business is more profitable, he, his employees, his shareholders, and his customers all profit/benefit. I will say that there was a period where the sole goal of running a business was (artificially and falsely) jacking up their stock price/value and not thinking of long term growth (ironically enough this occurred during a Democratic presidential term, and was taken as a "good" thing), and there are certainly some scumbag CEOs who get in, ride the company to the ground, then bail out with their fifteen million dollar golden parachute, but I think those are the (very visible) minority.
But ultimately, except for a few business/industries (subsidized farming, etc) most private industry either succeeds at some level or dies, or at least catches itself in its death throes and makes changes (I saw that Delta is now out of bankruptcy). Government programs do not do that, their income to a great extent is virtually guaranteed.
Theoretically, yes, the politicians is supposed to "help" people. Of course, the definition of "help" varies (which is helping a junkie: getting him off the drug, or giving it to him?), and which people? However, for the vast majority of congresspeople, after no more than one term in office, "help" usually means "try to financially benefit, or hinder the opponents of", and "people" means "those people or lobby groups who give me millions of dollars in lobbying or campaign donations". It's the rare politician who does not succumb to the power and benefits of being able to write the rules, and the few who do are usually punished or ostracized (like that one fellow a couple years back who wanted a symbolic vote on the automatic congressional pay raises--in retribution a policy was floated that if if you vote against it, even if you're outvoted, you don't get it.)
Even if government revenues did decrease, I think most people would agree that the government does take too much of our money and spend it on things they shouldn't. We can certainly disagree on what they 'should' spend it on, but just like the concept that "the current tax system is, if not broken, severely damaged", most people probably agree on the base statement.

I assume that was directed towards me, right? I agree with you about politicians and their corruption due to lobbying, etc., but that is exactly why I wouldn't trust the business guy more than the politician. You say that politicians are corrupted by lobbying groups, and I agree, but lobbying groups are fronts for businesses that are looking out for business interests.

So, therefore, the politicians are corrupted because they are looking out for business interests (becuase they pay them to), but if we take away the politician's money and power and transfer it to the business, that makes it better? That doesn't seem logical to me: it seems like you're saying that politicians are corrupted by businesses, therefore we should take their money and give it to businesses, the very people who are corrupting the politicians!

And this is my point - a politician is corrupt when they look out for business interests over the interests of the people, but a business that looks out for business interests above all else is doing its job.

I'm ending the discussion here though, so that it doesn't go into a discussion about competition, etc. and mess up the thread.

So back to the fair tax...

[dtcarson]

Businesses/industry aren't the only lobbyists politicians are beholden to. There's definitely industry-related PACS such as the legal industry/lawyers; there's single-issue PACs such as NRA or Planned Parenthood; there's other groups such as Moveon or Swift Boat, all of whom give money and have power. Separating into "business" versus "government" is limiting.
"So, therefore, the politicians are corrupted because they are looking out for business interests (becuase they pay them to), but if we take away the politician's money and power and transfer it to the business,"
The politicians have money from three sources: their own (from their prepolitical career, or marriage, or investments), taxation (power of money), and contributions. There's no such thing as "taking money from politicians" as you speak of it--it's people/businesses keeping their own money/declining to contribute.
Not all politicians are corrupted by business--some are corrupted by power, or votes, or the various other lobbying organizations. And some aren't truly "corrupt", they just act so as to provide a return on the investment of their contributors.
"politician is corrupt when they look out for business interests over the interests of the people, but a business that looks out for business interests above all else is doing its job."
Exactly. Politicians are supposed to be 'for the people'. Businesses should run their business with the goal of long-term growth and profit. Now, usually that helps people as well (my company does well, so I get a raise/bonus, we invest in R&D and improve our products, helping our customers, etc.) We are luckily mostly moving away from relying solely on the stock-price driven measurements, since that can be too easily manipulated for short term gain for few and long term harm for many.

Anyway, yeah, like someone said early, one major 'fair' thing about the FairTax is that it removes all exemptions and loopholes, which most people (especially the poor) either do not qualify for, or are not aware of how to take advantage of them. Every other negative I've heard (apart from the60-year-old one I mentioned in my first post) is either false or also a negative of the current system.

I do feel sympathy for the people in the private tax industry who would most likely be out of a job. However, I think that's being overestimated--first, many states still have various taxes. Second, is tax accountancy similar to investment planning? I would think there would be room in that industry. Third, harsh as it sounds, industry changes and advances and evolves--we don't really have a buggywhip industry anymore, but that should not have stopped the car from being produced.

[Raynre]

The basics sound like a good idea, but I think I'll have to dig a little further until I really make a decision...

[UncleBob]

I see a lot of people who seem to want to make "the rich" pay more taxes than everyone else.

I'm left wondering why "the rich" should have to?

[schuerm26]

I see a lot of people who seem to want to make "the rich" pay more taxes than everyone else.

I'm left wondering why "the rich" should have to?

That is why the fair tax is great. You aren't penalized for being productive.

[mykevermin]

I see a lot of people who seem to want to make "the rich" pay more taxes than everyone else.

I'm left wondering why "the rich" should have to?

Very simply put,

1) They are better equipped to - if you consider the cost of goods and living standards today, along with the fact that the median income in the US hasn't budged more than $1,000 in 16 years (around $46K/year), you'll realize that shifting the burden from the wealthy onto the middle and lower class is inconceivable. If you thought American's negative savings in 2005 and 2006 were something, wait until you do this.

2) It is their moral obligation to repay the society that helped make them wealthy in the first place. They generated wealth on the backs of their laborers, on the support of government subsidies, and on the purchases made by the consumers. Anyone foolish enough to believe that wealth is generated by an individual no their own, and not by the efforts of hundreds or thousands of members of the social structure, is a simpleton. Now, there are those wealthy who think that they're great philanthropists, because they create jobs - the other end of that coin is this: the jobs leaving the country right now to outsourcing include skilled labor and phone support jobs - stable, skilled work, right? What's replacing it is (nothing in the inner city, anyway) unskilled retail and service work. In this case, you have two things operating: first, the wealth are increasing their wealth by means of moving jobs from the country and taking those jobs away from their fellow citizens and placing them into the hands of nations who will do it cheaper. That wealth is artificially generated, because it is due to backdoor managing, not "growing the company." Second, it flies in the face of the notion that the wealthy are great benevolent beings to this nation.

As far as I'm concerned, the answer to those who don't like to pay taxes is rather simple. If you don't like to pay taxes, or prefer to only pay taxes on your consumables, there is NOTHING standing in your way.

I'm not kidding.

Go get a job that pays you $15,000 a year. You'll get every bit of taxable income back at the beginning of the year. Surely a low-income subsidy as well.

Don't want to earn that little? Then shut up and pay your taxes. Be aware of what I'm saying, and don't put words in my mouth. I'm not saying "taxes are spent widely," I'm not saying "taxes are spent efficiently and gathered fairly." I'm pointing to one group of people, those pricks who think that being a top 1% income earner somehow makes them a targeted and oppressed group, and saying "shut the fuck up because you're privileged and you know it." If you feel so goddamned oppressed, quit your job, get up at 5AM and stand in line at a "Manpower." Then you'll find out what the fuck oppression looks like in the US.

[dopa345]

I see a lot of people who seem to want to make "the rich" pay more taxes than everyone else.

I'm left wondering why "the rich" should have to?

Agreed. People keep saying that the "rich" need to pay more but the top 25% tax bracket already pays for 83% of the total tax revenue so I'm not sure how much more people expect the "rich" to pay.

The consumption tax is intriguing and I think the whole fear that this lets the wealthy shelter more of their money tax free is an unfounded one since if they are able to save more money, obviously they going to spend more and therefore be subject to the tax. I would gladly trade the current payroll tax (which is basically extortion) for a 20% sales tax.

[UncleBob]

1) They are better equipped to[...]

2) It is their moral obligation to repay the society [...]

Soo.... because they can and because they should, eh?

While it's all well and good to believe that those who have should give to those who need, is it right for a government to *force* that? I mean, should we, as a people, give our government the power to legislate morality (not that they don't try to any chance they get as it is...)?

[mykevermin]

You're falsely turning this into an issue of morality; if you insist upon doing so, that's fine. Just don't expect me to debate on the grounds of morality, because any sort of "fairness" concept has morality built into it. Even the notion of having people pay based on their consumption has "morality" built into it. We could go in circles all day long on "fairness" and "morality," and never come any closer no matter how many words we use.

Instead, I'd like to see how you would resolve the notion that the entire economy would be fucked to hell if a greater tax burden were shifted to the lower and middle classes without a substantial increase in the wages they earned. For a refresher, go back to my first post on this page (the one you thankfully edited down when quoting me).

[UncleBob]

Umm... you're the one who turned it into an issue of morality.

"2) It is their moral obligation to repay the society"

You talk about shifting the tax burden. I'm more interested in making the tax burden less on everyone. Let's cut government spending. A lot.

Additionally, and I know there's no way in heck this would ever pass, but let's tax people in one fair, simple way. Let's put together a budget for the government for next year. Now, take the sum of all that, divide it by the number of people in the US and each person (Man, woman, child of any age) pays $X. If you can't afford to pay your share, then you get to work it off doing a government job (cleaning a park or something) at a standard rate of pay - which will be garnished until you've paid your taxes for the year.

If the $X per person is too much, then the government needs to cut back spending. If the government can't cut back spending, then we need to elect politicians who know how to run a business within a reasonable budget.

[mykevermin]

It's incorrect to act as if your "everyone pays X" notion is without morality. I hope you can see that much.

As for cutting spending, that's a separate issue entirely from a debate on what segment of income earners ought to pay in taxes. If government spending is low (not in our lifetime) or high (indeed ours), it ought to be unrelated to what any income quintile pays as a portion of overall tax revenue.

[elprincipe]

You talk about shifting the tax burden. I'm more interested in making the tax burden less on everyone. Let's cut government spending. A lot.

Additionally, and I know there's no way in heck this would ever pass, but let's tax people in one fair, simple way. Let's put together a budget for the government for next year. Now, take the sum of all that, divide it by the number of people in the US and each person (Man, woman, child of any age) pays $X. If you can't afford to pay your share, then you get to work it off doing a government job (cleaning a park or something) at a standard rate of pay - which will be garnished until you've paid your taxes for the year.

If the $X per person is too much, then the government needs to cut back spending. If the government can't cut back spending, then we need to elect politicians who know how to run a business within a reasonable budget.

I'm all for cutting government spending (believe me, I agree with the "a lot" part...like maybe 70-80 percent cut for the federal government, over time of course as to not cause a huge shock), but this plan is crazy. You would have poor mothers take their four kids under 8 years old and force them to sweep streets or pick up trash from the park, all while Bill Gates doesn't even spend 1 second (his accountants do it) on his pittance of tax. Does that really sound fair to you? It certainly doesn't sound fair to me.

The fact is that some people have it better than others. Most of the time these people have it better than others due to their good choices, hard work and intelligence (although too many through other means, sadly). I am not saying go back to the days of 90% upper brackets, but since government needs money for necessary operations, I find it much more acceptable for someone making $500,000 to pay $25,000 per year than someone making $50,000 to pay $25,000 per year.

[schuerm26]

I'm all for cutting government spending (believe me, I agree with the "a lot" part...like maybe 70-80 percent cut for the federal government, over time of course as to not cause a huge shock), but this plan is crazy. You would have poor mothers take their four kids under 8 years old and force them to sweep streets or pick up trash from the park, all while Bill Gates doesn't even spend 1 second (his accountants do it) on his pittance of tax. Does that really sound fair to you? It certainly doesn't sound fair to me.

The fact is that some people have it better than others. Most of the time these people have it better than others due to their good choices, hard work and intelligence (although too many through other means, sadly). I am not saying go back to the days of 90% upper brackets, but since government needs money for necessary operations, I find it much more acceptable for someone making $500,000 to pay $25,000 per year than someone making $50,000 to pay $25,000 per year.

That last sentence is pretty absurd.

It is a tax on CONSUMPTION! That "poor" mother with 4 kids? She gets a check based on the poverty level from the Govt. to buy her necessities. Anything other than necessities she has a CHOICE to buy, and if she chooses to, she must pay a tax. If she doesn't choose to buy new products (she can buy used all she wants and pay no tax), then she doesn't pay tax.

It is simple, fair and encourages saving. EXACTLY what that poor mother of 4 from your scenario needs. A FULL paycheck every 2 weeks (or whatever) and her CHOICE on how much tax she will end up paying.

In the book they refer to SEVERAL studies that say with the fair tax, a person faces lower lifetime tax rates than the current system. Look into it, it is extremely fair to everyone (hence the name). It's about time we start treating everyone EQUAL and not penalizing success.

What is exactly "fair" about our current income tax system?

[UncleBob]

I think he was talking about my crazy plan where each person has to pay in $X for their equal percent of the tax burden. ;)

For children, the parents are responsible for paying their part of the taxes. If they can't afford it, perhaps they shouldn't have had four children to begin with.

As someone who doesn't have children, I'm tired for paying to take care of other people's children because they can't keep their pants up and don't know how to use a condom. If you have a child, you'd better be able to take care of it because if I wanted to take care of some children, I'd have my own. At least then I could make 'em mow the yard and do the dishes...

[evanft]

Umm... you're the one who turned it into an issue of morality.

"2) It is their moral obligation to repay the society"

You talk about shifting the tax burden. I'm more interested in making the tax burden less on everyone. Let's cut government spending. A lot.

Additionally, and I know there's no way in heck this would ever pass, but let's tax people in one fair, simple way. Let's put together a budget for the government for next year. Now, take the sum of all that, divide it by the number of people in the US and each person (Man, woman, child of any age) pays $X. If you can't afford to pay your share, then you get to work it off doing a government job (cleaning a park or something) at a standard rate of pay - which will be garnished until you've paid your taxes for the year.

If the $X per person is too much, then the government needs to cut back spending. If the government can't cut back spending, then we need to elect politicians who know how to run a business within a reasonable budget.

That's an awful idea.

[UncleBob]

Every Citizen's vote counts equally in this country. So why should one citizen have to pay more than another citizen to support it?

[schuerm26]

Every Citizen's vote counts equally in this country. So why should one citizen have to pay more than another citizen to support it?

Well, even with the fair tax, the Rich will be paying more to support it, though The system that provides this support will be set up fairly for everyone. I get what you are saying and I agree one hundred percent.

[UncleBob]

The thing I do like about the FairTax (and I do like the FairTax) is that we (as Americans) can actually save and invest our money and not be punished for doing so.

I think this is one of the things that really hurts our economy as a whole. I know everyone is all about milking the rich and letting them pay for everything, but all of these tax laws that tax savings and investments just end up making the evil rich people save and invest their money in other countries where they aren't punished. How about we get rid of the system that punishes savings and investments and actually encourage not only our own citizens into saving and investing in US industries, but let's get some of those rich people from other countries to invest in US, since they'll be able to do so without huge chuncks of their earnings being taken out to cover taxes...

[schuerm26]

not to mention all the companies that will be setting up home bases in the USA because of the tax laws. Check out the book, it really opens your eyes to how screwed up our current system is.

[UncleBob]

Own it in hardcover - purchased the day it was released. :)

[elprincipe]

I think he was talking about my crazy plan where each person has to pay in $X for their equal percent of the tax burden. ;)

Correct. And to schuerm, I don't think too much is fair in the current system, totally agree with you there. It's a sickening spoils-based system.

For children, the parents are responsible for paying their part of the taxes. If they can't afford it, perhaps they shouldn't have had four children to begin with.

As someone who doesn't have children, I'm tired for paying to take care of other people's children because they can't keep their pants up and don't know how to use a condom. If you have a child, you'd better be able to take care of it because if I wanted to take care of some children, I'd have my own. At least then I could make 'em mow the yard and do the dishes...

This is all fine and good, but not a realistic solution. I certainly understand animosity towards those who are irresponsible and expect the government to bail them out. I thought welfare reform was a fabulous idea from the beginning and think it has worked out very well. But come on, your plan is a pretty harsh on a heck of a lot of people, don't you think?

[UncleBob]

Yes and no. In a perfect world where government spending is about 80% less than it is now (an number I just pulled outta my butt, but probably around where it should be) and everyone actually wants to contribute their fair (i.e.: equal) share (and screw those who don't), I think my plan is perfect. ;)

However, I know it would never go over. I'd probably get through a plan for forced sterilization of welfare parents first... Who's for that one? :)

[schuerm26]

LINDER ANNOUNCES RECORD 60 CO-SPONSORS FOR FAIRTAX BILL

5/9/2007

May 8th, 2007 Washington, D.C. - Congressman John Linder (GA-07) announced today that his revolutionary tax reform legislation, the FairTax, achieved 60 co-sponsors, which is a record number for H.R. 25. “I am ecstatic, but I have to say, I am not terribly surprised. This has been the case all year. Grassroots support across the nation is motivating Members to call us up and ask for information on the FairTax, and when they read it they are always eager to put their name on the bill.”
Congressman Linder pointed out that the FairTax is the most highly co-sponsored piece of tax reform legislation in U.S. House of Representatives. In fact, the Flat Tax, which is the only other serious piece of tax reform legislation in the U.S. House of Representatives, falls far short of that number with only four.
“Again, I am just not surprised. In fact, this past Saturday I traveled to Macon, Georgia, to speak to another FairTax training session. They had around 50 people come out for several hours, on a Saturday, to learn how they can better educate others on the FairTax. That is real passion, and it is real traction, and I think that is what you see reflected in this incredible list of co-sponsors.”
Congressman Linder also expressed his appreciation to Representatives Darrell Issa (CA-49) and John Boozman (AR-03) for being the most recent cosponsors of H.R. 25, and for surpassing the bill’s highest number of co-sponsors in merely the first four months of the 110th Congress.


From fairtax.org

[mykevermin]

http://thomas.loc.gov/cgi-bin/bdquery/z?d108:h.r.00025:

Latest Major Action: 1/7/2003 Referred to House committee. Status: Referred to the House Committee on Ways and Means.

:rofl: :rofl: :rofl: :rofl: :rofl:

So, in 4+ years, the only change has been the addition of 6 co-sponsors? Hold the presses, this is front page material! :rofl:

[schuerm26]

http://thomas.loc.gov/cgi-bin/bdquery/z?d108:h.r.00025:

Latest Major Action: 1/7/2003 Referred to House committee. Status: Referred to the House Committee on Ways and Means.

:rofl: :rofl: :rofl: :rofl: :rofl:

So, in 4+ years, the only change has been the addition of 6 co-sponsors? Hold the presses, this is front page material! :rofl:

You think something like tax reform is overnight work? This would take power AWAY from government and give it to the people, and you think this is going to happen quickly? The flat tax only has 4 co-sponsors.

Just go to the fairtax website and look at the letter from Hillary Clinton. It is full of misinformation. Half the idiots in Washington don't even take the time to understand how this would help the people of the USA. Or more likely the fact that this actually helps people doesn't really matter to them.

[mykevermin]

I didn't say it was overnight work; I was pointing out what you (and, I assume, Boortz' website) intentionally omitted: that the legislation has collected dust for over 4 years and done nothing in that timeframe except added 6 co-sponsors.

Which makes me wonder, and I don't have the time to look at this, but since this bill has sat through 3 sessions of the house, just how *many* of those co-sponsors are still holding office? ;)

[dopa345]

This may seem like a dumb question, but what elements of the current tax system do people think is unfair? I agree, the system seems inherently broken and like everyone else, I think I pay too much and the payroll tax is basically a government mugging every month. However, ask yourself what proportion of the tax revenue should the top 50% in income and bottom 50% of income should be responsible for and look up what the actual percentage is and you may be surprised.

I don't think the revenue stream is the main problem. The problem is government spending which changing the tax system doesn't address. The government, in a sense being the largest corporation in the country is also going to be the most inefficent in its spending. Cut government spending, let all Americans keep more of their income and therefore giving individuals more personal economic responsibility. For example, phase out social security and give wage earners more of their money to invest or save as they see fit to prepare for their own retirement. Phase out Medicare and allow people use that money to select their own health care based on their individual needs. In the end, I think everyone, "rich" or "poor" would be a lot happier.

[UncleBob]

While I agree that government spending is the main issue that needs reformed, the problem with our current system of collecting taxes is that it is horrendous.

Pretty much everything you do is taxed - and at multiple steps during the process. Complying with the tax code is an expensive task for a lot of people and, as I said before, with a "FairTax"-type idea, you're encouraged to save and invest instead of automatically handing over 30% of your paycheck to Uncle Sam. Add to that all of the poeple who don't pay taxes due to the questionable sources of their income, at least this way they'll be paying back something into the system.

[mykevermin]

It's a confluence of things, I'm sure you know. The complexity of the tax system is often interpreted as being "unfair," and government spending is often seen as "unfair." Lastly, the proportion of income tax paid by those above the median is often considered "unfair." These messages often get mixed by those against the income tax.

Now, the only thing that I agree with is that government spending is out of control. A cursory glance at what the government takes in annually versus what it spends, and those trend lines from Nixon through today, add a lot of credence to the "big government" banter (though, outside of 4 years of Carter and 8 years of Clinton, the past 37 years have been all Republican).

What do we cut in government spending, though? Two areas where money can be cut, IMO, are in the military and corrections. By allowing privatization of those industries, we've created substantial problems, including (1) the vested interest of the capitalist class in perpetual war and punishment of our citizens, and (2) contrary to all those pro-privatization arguments, remarkable increases in what we spend in those two categories.

Of course, if you even think about proposing cuts in military spending or spending less on prisons, you've just effectively ended your political career.

I think many Americans are of the "have their cake and eat it too" variety. During the 2004 election, several polls showed that some of the most pressing issues for people included increased spending on education, increased spending on health care, and tax cuts. - I think we all want tax cuts, but aren't prepared for the ramifications of that. We can cut arts funding, we can cut bridges to nowhere, and we can cut TANF (completely!) and see unimpressive returns. If we eliminated TANF entirely, every household would have an additional $17/month (based on my own estimations from half a year ago), for one example.

EDIT: corrected "household" for "american." big difference there.

[dopa345]

What do we cut in government spending, though? Two areas where money can be cut, IMO, are in the military and corrections.

Ironically, these are two aspects I would NOT want to cut. In my mind, the government's main, and arguably only role, is to safeguard the lives and property of its citizens though I would imagine your view would be completely different. Such is the tragedy of democracy... (just kidding).

[mykevermin]

Ironically, these are two aspects I would NOT want to cut. In my mind, the government's main, and arguably only role, is to safeguard the lives and property of its citizens though I would imagine your view would be completely different. Such is the tragedy of democracy... (just kidding).

Of course my view is different, but not in a way that says "I disagree with safeguarding lives and property." ;)

I also think that the vast majority of Americans agree with not wanting to cut those two areas, making the incorrect guess that "cutting funding" = "cutting effectiveness." That's why I said "say goodbye to your political career if you dare make these suggestions." The closest we've come in over 3 decades is Bush's 2004 SOTU mention to offer tax breaks for businesses that hire ex-prisoners and additional resources for rehabilitation and training for soon-to-be-released offenders. I don't know what ever became of that proposal, though.

That's the sad irony - these are two areas where it would be easy to reduce the costs of operation and save taxpayers money, but they are also two areas where people seem cognitively opposed to cutting funding. Instead, they toy around with irrelevant hypotheticals like eliminating those welfare programs that will net them $17 a month per household, and send crime rates through the roof (thus increasing the costs of operating corrections). ;)

I see tax cuts hurting students the most; I'm covered via scholarships and assistantships, so I "don't feel it," but my first three years of graduate education (2002-2005) were marked by 3 consecutive 9.9% tuition hikes. This is due primarily to needing to compensate for the reduction in federal funds allocated to the state for education purposes. The Bush tax cuts, along with a conservative philosophy of taxation, helped create many schools (I'm not alone) that had a roughly 33% jump (after controlling for graded increases) in tuition over 3 years. That's absurd - it shifts the costs onto those people who are at their most financially vulnerable (those paying college tuition, families and students alike), and also, by raising the cost of tuition, makes a college education and even less attainable goal for underprivileged and poor children, no matter how much effort they put into their schooling.

[schuerm26]

While I agree that government spending is the main issue that needs reformed, the problem with our current system of collecting taxes is that it is horrendous.

Pretty much everything you do is taxed - and at multiple steps during the process. Complying with the tax code is an expensive task for a lot of people and, as I said before, with a "FairTax"-type idea, you're encouraged to save and invest instead of automatically handing over 30% of your paycheck to Uncle Sam. Add to that all of the poeple who don't pay taxes due to the questionable sources of their income, at least this way they'll be paying back something into the system.

It's not only the "unfair" aspect of it, it is also the complexity issue and cost of compliance issue. In the fair tax book there is an example (I can't give exact page or specifics since I don't have the book here), but it was saying something about getting a certain amount of accountants to do a tax return for a business. NONE of the tax returns came back the same way and NONE of them were correct. It is absurd when tax laws have become so complicated that you can't get correct information from accountants NOR can you get correct information from the IRS. In the book they quote some study where about 50% of the time you are getting incorrect information from the IRS when you call in for help (don't quote me on the 50% as I don't have the book here, but it is absurdly high)

The cost of compliance issue is a large one also.

In 2002 Individuals and Businesses spent 5.8 billion hours complying with the tax code, an effort that cost an estimated $194 Billion

That is just complying with the tax code, not including the money you actually are paying in taxes.

[mykevermin]

In 2002 Individuals and Businesses spent 5.8 billion hours complying with the tax code, an effort that cost an estimated $194 Billion

That's roughly $33/hour - are they arguing that's what we pay others to do our taxes, money lost due to lost productivity, or both?

I doubt it's productivity; after all, we don't get a "tax holiday" or take a 20 hour week to get our taxes done. We all still put in a full 40+, of course. So explain this statistic to me in a meaningful way, because I don't quite get it.

Additionally, arguments about cost and complexity are countered by the AMT, making fairtax moot.

[evanft]

That's absurd - it shifts the costs onto those people who are at their most financially vulnerable (those paying college tuition, families and students alike), and also, by raising the cost of tuition, makes a college education and even less attainable goal for underprivileged and poor children, no matter how much effort they put into their schooling.

Which of course lowers the average income level, thus lowering tax revenues and increasing crime, which in turn increases the cost of corrections. It's a beautiful thing, isn't it?

On a side note, am I the only one who sees education as the silver bullet for most problems. I mean, if you looked at societal ills vs. income level, I'd put a good amount of money on there being an inverse relationship.

And shit, while we're at it, anyone have numbers that determine how much in overall tax revenue someone with a 4 year generates over their lifetime vs. someone with just a high school diploma? I have to imagine that it's a lot more than the cost of 4 years of tuition at your average college.

[UncleBob]

Which is why I wish politicians would get their heads out of the back side of the Teacher's Union and support school choice and private education vouchers.

[SpazX]

It seems to me, in the same vein as myke and evanft's comments, a lot of these tax reforms vastly underestimate the complexities of life.

[mykevermin]

Which is why I wish politicians would get their heads out of the back side of the Teacher's Union and support school choice and private education vouchers.

Please. This deserves a topic of its own; neither Democratic "more funding" policies, nor Republican "close 'em down and send 'em to christian private schools" policies come close to alleviating the substantial cultural and community-level disadvantages faced by those in poverty.

When a third grade student is told that they're going to be suspended for a day for fighting, and their response is "gimmie ten days, I don't give a fuck!" to the *teacher*, we're dealing with something that demands our attention far more than schools. (this is but one example of what one friend has to deal with on a near-daily basis in a public school she teaches at).

The irony of the Republican school voucher system isn't that it's a bad idea, but it's half-baked. The notion of "mixed-income schools" (which is essentially what vouchers lead to) provides social stimulus to those living in poverty. When you're surrounded by drugs, crime, and unemployment, there's no incentive to go to school; after all, you don't know many people who have benefited from education, so why bother yourself? It's a dead end street! Providing a social environment that reinforces, to a small degree, that education can be a useful conduit towards a good standard of living, however, is something worth paying attention to. Just not by itself.

Why is it half-baked? Because the promotion of such a policy was imposed at the same time as Congressional Republicans, along with the Bush administration, have tried their damndest to completely cut off funding for Hope VI initiatives (which is essentially creating mixed-income communities by redistributing section 8 housing so it isn't clustered in one area). It's too counterintuitive to be irony, so it's more schadenfruede, IMO.

[UncleBob]

Why do you assume all private schools would have to be Christian or religious in any way?

Anywhoo, since we can't kick out the students who just don't want to be there, why don't we get those who *do* out of there and into a better classroom?

Additionally, the private sector does almost every thing better than the government (since they have to work harder, because when they fail, they don't get to make the taxpayers foot the bill). Would large-scale private schooling be any different?

[SpazX]

Why do you assume all private schools would have to be Christian or religious in any way?
Well are they not mostly religious now? You can't have a voucher to go a school that doesn't exist. I don't think myke was responding to what could possibly happen in a hypothetical future.

Anywhoo, since we can't kick out the students who just don't want to be there, why don't we get those who *do* out of there and into a better classroom?
Isn't that kind of ignoring the real problem?

Additionally, the private sector does almost every thing better than the government (since they have to work harder, because when they fail, they don't get to make the taxpayers foot the bill). Would large-scale private schooling be any different?
I don't see why they would necessarily do things better given the same funds.

EDIT: To expand on that, what I'm saying is that part of the reason why private schools work now is because they don't have to deal with the problems that public schools do. So to automatically say that in the same situation with the same funds they would do a better job is a leap I'm not prepared to make.

[UncleBob]

1) I am of the belief that if private school vouchers were passed, there would be more private schools. Simple supply and demand.

2) There are two "real problems". First, you have the kids who don't want to learn. Second, you have the kids who do want to learn, but get screwed because of the kids who don't want to learn, their disruptions and the time and attention that the school has to focus on them. Which one of those two groups do you think concerns me the most? I'm thinking "help those who help themselves."

3)Private schools have a proven track record of doing a better job educating children while spending *less* money per child.

Granted, this could change if large amounts of private schools get set up and start accepting a larger variety of childern.

But private schools have one major advantage over a government school. They can kick a child out for almost any (reasonable) reason. You want to be a trouble maker? Fine - go somewhere else and do it. We're here to learn.

[UncleBob]

Let's say the government set up Government owned Grocery stores. Now, in order to fund these stores, everyone has to pay taxes. In exchange for paying taxes, you get to go to the grocery store and get an alloted amount of food for "free".

Now, since the government is set up with this store, they don't have to worry about taxes as much. Also, stuff like paying employees and utility bills? Yeah, Mr Taxpayer will foot that bill. No worries about running a business here.

Meanwhile, if you want to go somewhere else to buy groceries - for whatever reason (better selection elsewhere, whatever) - you're going to deal with a private business who does have to worry about taxes, utilities, employee wages, etc., etc. And they don't get to make the taxpayer pay for it whenever they screw up. So, natually, the privately owned store isn't going to be giving away the food like the government owned store - they're going to have to charge. Quite a bit more.

Meanwhile, if you choose to shop at the privately owned store, you're still paying into the government owned store. No opting out here, every one pays in. So, if you want the better food, you end up paying twice.

Sound like a good deal? Let's switch that around a bit...

Let's say the government set up Government owned schools. Now, in order to fund these schools, everyone has to pay taxes. In exchange for paying taxes, you get to go to the school and get an educated for "free".

Now, since the government is set up with this school, they don't have to worry about taxes as much. Also, stuff like paying employees and utility bills? Yeah, Mr Taxpayer will foot that bill. No worries about running a business here.

Meanwhile, if you want to go somewhere else to get educated - for whatever reason (better education elsewhere, whatever) - you're going to deal with a private business who does have to worry about taxes, utilities, employee wages, etc., etc. And they don't get to make the taxpayer pay for it whenever they screw up. So, natually, the privately owned school isn't going to be giving away the education like the government owned school - they're going to have to charge. Quite a bit more.

Meanwhile, if you choose to get educated at the privately owned school, you're still paying into the government owned school. No opting out here, every one pays in. So, if you want the education, you end up paying twice.

[dtcarson]

Primarily because they wouldn't be *given* the same funds--they would have to *earn* them, and compete for customers.
Most of the problems public schools have to deal with are the thinking that throwing money at a school is automatically good, and that bureaucrats five levels above the classroom decide what and how to teach, instead of people in the school. Add to that tenure and the difficulty in many systems of getting someone fired, and the fact that there is very little external motivation for a teacher to work hard, and it's a wonder we have as many literate people as we do. Education is important, too important to be left to government bureaucrats."To stay out of poverty in America, it's necessary to do three simple things, social scientists have found: finish high school, don't have kids until you marry, and wait until you are at least 20 to marry. Do those three things, and the odds against your becoming impoverished are less than one in ten. Nearly 80 percent of everyone who fails to do those three things winds up poor."
http://www.city-journal.org/html/14_4_working_poor.html
Unfortunately, not many people have respect for education anymore, least of all those who need it most (who are currently in poverty situations). There are lots of kids who don't like or want education, in part because of the lack of positive effect they see from it, and because they don't get the support/reinforcement from their home. While I think the current public school system is overgrown and inefficient and is not the best method to educate our youth, I know there are some good teachers in the system, and virtually every one of them wants and needs reinforcement from the parents.
There are non-religious private schools, though most of them, admittedly, are either religious or disciplinary; however, even as an atheist I wouldn't necessarily mind that, depending on the level of religiousity in the school. I'm confident enough in my beliefs to not fear sending my child to a religious-based school, and I wouldn't necessarily mind him being exposed to other belief systems than mine, so that he can first, learn diverse viewpoints and second, make up his own mind what he believes. Now, I wouldn't send him to Sister Mary Catherine's School of the Holy Handwhacking Ruler, but I don't think they do that anymore (very much.)

[dtcarson]

1) I am of the belief that if private school vouchers were passed, there would be more private schools. Simple supply and demand.

I think so too. If money were no object, I would definitely send my son to a private school. Plus there could be more diverse schools, instead of the virtually 'one size fits all' system now; artistic-based, science-focused, all boy/girl, freeform, very structured, etc.


But private schools have one major advantage over a government school. They can kick a child out for almost any (reasonable) reason. You want to be a trouble maker? Fine - go somewhere else and do it. We're here to learn.

This is true, but on the flipside, the school would have more motivation for helping that child to learn. Now if a kid isn't doing well in public school, who really cares? The teachers teach to the tests and the admins worry about their NCLB ratings. When my mom and dad taught, every year they got kids who shouldn't have been promoted, but were, either because nothing else could be done or they just wanted to move them along.
But with private schools, if the kid is doing poorly (and of course if the parents care about education), they can take their business elsewhere, so it's in the schools and the child's best interest to really work at helping that student.

[SpazX]

1) I am of the belief that if private school vouchers were passed, there would be more private schools. Simple supply and demand.

Alright, I can go with that, but as of right now any vouchers would most likely be sending the kids to a religious school, so that's what myke was saying.

2) There are two "real problems". First, you have the kids who don't want to learn. Second, you have the kids who do want to learn, but get screwed because of the kids who don't want to learn, their disruptions and the time and attention that the school has to focus on them. Which one of those two groups do you think concerns me the most? I'm thinking "help those who help themselves."

That's true, but the kid that doesn't learn anything doesn't really need help s/he just needs to be left alone. I think the kids that are acting up could be dealt with better within the same public school setting. Public schools just don't really seem to care about those kids. They give them the worst teachers and just let them do whatever.

3)Private schools have a proven track record of doing a better job educating children while spending *less* money per child.

Granted, this could change if large amounts of private schools get set up and start accepting a larger variety of childern.

But private schools have one major advantage over a government school. They can kick a child out for almost any (reasonable) reason. You want to be a trouble maker? Fine - go somewhere else and do it. We're here to learn.

How is kicking the kid out a solution though? If you just kick out any kid that needs extra help for motivation/whatever, then that's doing damage to society.

Now if you propose that there could be another school for those kids and they wouldn't be kicked out into the street to cause trouble, then that's good (Although having the same system within a public school would also be good).

So my question with all of this is money. There are plenty of ways that people that have money can already help their kids outside of school if they're a problem in school and can put them in private school if they want. It's the people without money that benefit from the public education system. So does your private school system work based on tuition paid by the parents like it does now or on tax-supported vouchers that just allow people to pick between different schools?

[elprincipe]

So my question with all of this is money. There are plenty of ways that people that have money can already help their kids outside of school if they're a problem in school and can put them in private school if they want. It's the people without money that benefit from the public education system. So does your private school system work based on tuition paid by the parents like it does now or on tax-supported vouchers that just allow people to pick between different schools?

I'll throw in my $0.02 on this. I'd like to see the public school system done away with and a all-private system put in in its place.

The money question is a good one. Obviously, the people who need the most help to turn into productive members of society are those who come from poorer, often one-parent families where they are not taught anything at home and not encouraged to learn at home. Add to this that many of the schools these kids go to are the worst schools around; good teachers don't want to teach there; they are surrounded by drugs, gangs and other crime; and other problems. Realize also that these school systems have less support from their local communities, especially financial support, due to them being located mostly in impovershed, inner-city areas.

The solution is to equalize funding, so that rich suburban school kid A gets as much government funding as poor inner-city kid B. Of course, this cannot keep parents from increasing funding from their own pocket, but you can at least guarantee that kids from poorer neighborhoods have an opportunity to go to a decent private school that fits their needs.

Here is a good example. Washington, DC, the city across the river from where I live, is expected to spend more than $16,000 per pupil this year, close if not tops in the nation. It also is home to one of the worst school systems in the country. Let's say we give a $10,000 voucher to the parents for each child for private education. In a class of 20 children, that's $200,000 worth of funding, so even after overhead and administration I see teacher salaries going up (and, thank God, being incentivized). But wait, the government would give $10,000 in the form of a voucher to each child, regardless of whether the lived in Northwest, Capitol Hill or Anacostia...and the parents could choose where their children would go to school (and thus their teachers, what they would concentrate on, discipline...).

And thus we have improved everybody's lives (except for those of the massive status-quo bureaucracy) while saving the government $6,000 per student (not taking into account extra money coming in from sale of school properties).

[mykevermin]

"To stay out of poverty in America, it's necessary to do three simple things, social scientists have found: finish high school, don't have kids until you marry, and wait until you are at least 20 to marry. Do those three things, and the odds against your becoming impoverished are less than one in ten. Nearly 80 percent of everyone who fails to do those three things winds up poor."

Please. You're confusing correlation for causation. If "social scientists" found this out, then the authors of the article you quote would be more than happy to cite them by name, as they do with so many other sources in the article.

The whole argument is a red herring - by making this argument, they're ignoring how poverty recreates itself over generations (that is, between dropping out, having kids out of wedlock, and marrying early, you have poor parents having poor children who remain poor). You're ignoring time effects in favor of hand-selected variables that seem to imply some sort of "personal choice" to remain in poverty.

I'm not against completing your education, planning parenthood, and calculated marriages - but I'm also not daft enough to think that poverty would disappear if people followed these three tenets. The reason that is? Because those are what you would call "spurious" variables, that do more to implicate the cultural environment people grow up in (high poverty, high joblessness, high public assistance, high arrest/incarceration rate, minority concentration, etc.), and how the structure and setup of peoples' communities effects their life chances, including the probability of dropping out, having unplanned children, or early marriages.

[speedracer]

As a tax accountant, I'd like to keep my job. Fuck the rest of you. :lol:
C'mon now. You don't actually think anything *anyone* can possibly think up would knock us out of biz, do you? :D

That's the real joke here. We know there will always, always, always be a way around a "fair share" of taxes. That's what "they" don't get. Unless you're doing Grandma's EZs, what accountants are really being paid for is:

1. Where's is come from?
2. Where's it goin?
3. How do I keep Uncle Sam's hand out of it?

Very intelligent people are paid vast sums of money to find ways around tax. It ain't (realistically) to "comply with tax code". That $XXXXXXXXX zillion is wasted just to comply" argument is hogwash. I don't have the answers (who does?), but let's stop pretending that Boortz is anyone's friend but his own. Hell, I was laughing out loud by the third paragraph. (http://www.fairtax.org/site/PageServer?pagename=about_basics_thumbnail) If I was an offshore, I'd send an friggin brigade of lobbyists to help this one.

It's good that people are talking about this kind of stuff. I like that some econ nerds showed up too. They're needed to bring macro into better focus. Good points (mostly) all around. But it ain't never gonna be fixed until we can remove the human element.

Good luck with that one.

Oh, and good points all around from mykevermin. Good form.

[MrBadExample]

Here's a good article from FactCheck (http://www.factcheck.org/taxes/unspinning_the_fairtax.html) that explains how the Fair Tax would have to be 34% and mostly benefits those making over $200,000.

[mykevermin]

Keep in mind the Treasury Dept. calculated that second argument (higher tax proportions to everyone but those making over $200K per year, and those making under $15K per year).

The discussion of tax-exclusive and tax-inclusive prices is particularly fascinating, and shows just how intentionally sinister some of the fair tax proponents really are.

[evanft]

Indeed.

[elprincipe]

MBE - thanks for posting that, a very interesting article indeed, regardless of your views on this issue.

[schuerm26]

The FairTax Rate: a 23% tomato or a 30% tomato?

05/31/2007
As the FairTax gains more national attention, questions have again arisen about whether the FairTax rate is 23 percent or 30 percent. In the toxic environment that often accompanies public policy debates, FairTax.org has even been accused by some of misleading the public, even though full descriptions of "tax-inclusive" and "tax-exclusive" calculations abound on our Web site. We hope the following explanation puts all such questions to rest -- at last.
Let’s use an example to illustrate the difference between tax-inclusive and tax-exclusive tax rates.
Assume there is a worker named Joe who earns $125 and spends all of his earnings. Let’s further assume that the government requires him to pay $25 in taxes.
If the government put a tax on Joe’s income, he would earn $125 before tax and would have $100 after tax to spend at the General Store. Thus, Joe has to earn $125 to have $100 to spend. Joe would also have to file an income tax return.
If the government put a tax on what Joe spends, he would earn $125 and would have $125 to spend at the store. Of the $125 paid by Joe to the storekeeper, $100 would be for the goods he bought at the store and $25 would be taxes that the storekeeper would send to the government. Joe would not have to file a tax return, as the storekeeper sends the tax in to the government.
Either way, Joe pays $25 in taxes and the government gets $25 in taxes. With a tax on income, Joe pays the $25 directly to the government, and with the tax on spending (sales tax), he pays the $25 in taxes indirectly when he buys something from the General Store. The General Store sends the tax that Joe paid to the government.
http://www.fairtax.org/images/content/pagebuilder/12903.jpg
We may report the tax rate as $25/$125 = 20 percent, which is the tax-inclusive rate (meaning that the tax is included in the base). Alternately, we may think of the tax rate as $25/$100 = 25 percent, which is the tax-exclusive rate (meaning the tax is excluded from the base). The 23 percent FairTax rate set out in HR 25/S 1025 is a tax-inclusive rate, as is the current personal income tax, whereas most state-level sales taxes are quoted on a tax-exclusive basis. For ease of comparison, FairTax.org gives the tax rate both ways. Both rates are relevant, since the FairTax is replacing an income tax system, and 23 percent correctly represents the tax burden compared to the current system.

http://www.fairtax.org/site/PageServer

[mykevermin]

:rofl:

I feel like I'm watching a street game of 3-card monty.

What the fact-check article points out includes several things. Foremost among them is that, when we think of sales tax, we think "tax-exclusive pricing," right? So, when we think of sales tax, we think of a % to pay over the listed price of a good. "Tax-inclusive," as a %, is smaller (see MBE's link again) than tax-exclusive. In the end, the "23%" fair tax figure is simultaneously 23% (tax-inclusive) and also 30% (tax-exclusive).

Now, the article you post (and, for fuck's sake, you've been slumming the vs forum long enough to know you should post a fucking link to your fucking source) tries to have it both ways; I've never seen such an obvious attempt to obfuscate the issue. So, while your post suggests that the % is 23, it never even *BEGINS* to tackle the criticism that hit it the hardest:

that a 23% tax-inclusive rates embedded in the price of goods is equal to a 30% tax-exclusive sales-tax rate. So, when fair tax advocates say "23% sales tax," it's a deliberately insidious argument, because you willingly neglect the easy explanation to opt for the apples-to-oranges tax rate comparison, versus a more sensible apples-to-apples comparison (standard 6-8%+ sales tax rates we pay now compared to 30%+ under the fair tax).

It's an easier sell to people if they're misled into thinking that it's a 23% sales tax, and not 30%. What's most bothersome is that the fair tax response to these criticisms doesn't even use its own proposed tax percentages in their hypothetical chart, making the comparison seem even more suspicious; moreover, 25 and 100 break down so cleanly in a number of ways that something could easily be hidden in there. I'll have to take a look at it again when my head isn't spinning from alcohol.

[Kayden]

1.00 * 23% = .23 tax and .77 item

.23 / .77 = .2987%


Oh...

Now I get it.

[schuerm26]

:rofl:



that a 23% tax-inclusive rates embedded in the price of goods is equal to a 30% tax-exclusive sales-tax rate. So, when fair tax advocates say "23% sales tax," it's a deliberately insidious argument, because you willingly neglect the easy explanation to opt for the apples-to-oranges tax rate comparison, versus a more sensible apples-to-apples comparison (standard 6-8%+ sales tax rates we pay now compared to 30%+ under the fair tax).



How exactly is that Apples to Apples? Flat tax you have the 23 percent tax as explained above and nothing else. You can't compare that to a 6% sales tax that we currently have since you are paying other taxes as well. Am I missing something from your comment?

[mykevermin]

Because it's "hidden" in the cost of the goods. It's tax-inclusive. What's sinister about it is based on this:

1) 23% inclusive or 30% exclusive, it's the same number, really
2) the tax is on consumed goods (tacos, homes, video games, and more tacos)
3) it's intentionally deceiving to talk about a 23% tax on consumable goods, *knowing* that you're talking about a different percentage entirely from a 6-8% sales tax. To see fair tax proponents bristle when you call the tax precisely what it is (a 30%+ sales tax) shows how sinister their intentions are. Whether you call a Chevy a "car" or "automobile," you mean the same thing, right? So why do fair tax people try to defend a claim about their plan when it is premised on a mathematical proof of what they want?

As I said, it's easier to sell to people if you say "23% tax on consumable goods" with no further explanation, because they're thinking of that % the same way they think of sales tax as it is currently calculated. That's deception, because those people aren't saying "30-34% sales tax on consumable goods." In fact, they get *pissed* that you make such a claim (despite the fact that it's true!). That's why it's an apples-to-oranges comparison; because proponents are changing the equation for taxes on purchased goods without informing the average person.

Let me frame it like this: Suppose I have two questions:
1) How do you feel about a 23% sales tax replacing out current system of taxation?
2) How do you feel about a 30% sales tax replacing out current system of taxation?

Do you think the same % of people would support those, or do you think more people would support #1 over #2? 23%, as a lower number, has greater appeal (despite not being genuinely represented by those who support a consumable tax).

[schuerm26]

Because it's "hidden" in the cost of the goods. It's tax-inclusive. What's sinister about it is based on this:

1) 23% inclusive or 30% exclusive, it's the same number, really
2) the tax is on consumed goods (tacos, homes, video games, and more tacos)
3) it's intentionally deceiving to talk about a 23% tax on consumable goods, *knowing* that you're talking about a different percentage entirely from a 6-8% sales tax. To see fair tax proponents bristle when you call the tax precisely what it is (a 30%+ sales tax) shows how sinister their intentions are. Whether you call a Chevy a "car" or "automobile," you mean the same thing, right? So why do fair tax people try to defend a claim about their plan when it is premised on a mathematical proof of what they want?

As I said, it's easier to sell to people if you say "23% tax on consumable goods" with no further explanation, because they're thinking of that % the same way they think of sales tax as it is currently calculated. That's deception, because those people aren't saying "30-34% sales tax on consumable goods." In fact, they get *pissed* that you make such a claim (despite the fact that it's true!). That's why it's an apples-to-oranges comparison; because proponents are changing the equation for taxes on purchased goods without informing the average person.

Let me frame it like this: Suppose I have two questions:
1) How do you feel about a 23% sales tax replacing out current system of taxation?
2) How do you feel about a 30% sales tax replacing out current system of taxation?

Do you think the same % of people would support those, or do you think more people would support #1 over #2? 23%, as a lower number, has greater appeal (despite not being genuinely represented by those who support a consumable tax).

Well couldn't you then say #2 is just as sinister of opponents of it since you are essentially getting the same thing?

Obviously more people, who have no knowledge of it, would support #1 as it sounds better. But people claiming that it is a 30% tax to make it sound bad are essentially doing the same thing, just for different reasons.

[mykevermin]

When you consider *how* the % are presented, then your claim in the post just above this falls apart. It's sinister b/c when talking about consumer goods, a tax-exclusive rate is a common metric that we all understand. After all, it's on every receipt we get.

That's not to say that we don't have tax-inclusive goods. Alcohol and tobacco products come to mind immediately. However, whether either of those, paychecks, or anything else, when we discuss concepts of tax-inclusivity, we don't tend to talk about them as a percentage, do we?

It's mostly problematic because proponents of consumption taxation (what I'll now call it, since "fair tax" is such a flagrantly loaded phrase) have changed the metric of tax % being debated, but not clearly informed those they wish to persuade. So, to be honest, discussing consumption taxation in the form of "30-34% sales tax" is more fair and not sinister, since it is done in the framework of a common understanding of tax rates.

[dopa345]

Even if it is a 30% sales tax, isn't that still better than the government taking away 35% of your paycheck upfront? At least you have control over how you're being taxed.

[elprincipe]

Even if it is a 30% sales tax, isn't that still better than the government taking away 35% of your paycheck upfront? At least you have control over how you're being taxed.

I think the point myke is making is that the way they present the percentages is deliberately calculated in a different fashion from our current sales taxes, thus confusing a lot of people (see the article again for this, even among proponents). The argument on whether it's better or not is a whole other issue. But as myke said, the attempt at obfuscating the issue is puzzling from those who want a more fair system.

[elprincipe]

2) the tax is on consumed goods (tacos, homes, video games, and more tacos)

http://www.youtube.com/watch?v=1-VPdpunnL0

[schuerm26]

I think the point myke is making is that the way they present the percentages is deliberately calculated in a different fashion from our current sales taxes, thus confusing a lot of people (see the article again for this, even among proponents). The argument on whether it's better or not is a whole other issue. But as myke said, the attempt at obfuscating the issue is puzzling from those who want a more fair system.

How is it confusing a lot of people? It comes out to the exact same. it's just a matter of wording, not fudging numbers. 30% or 23% you are coming out the same. Don't get me wrong though, I understand completely what Myke is saying.

[Kayden]

Its confusing because people are stupid. If you told someone 23%=30% they'd look at you like you were retarded. Normally they'd be right, but not in this instance. Well, they still might be right, but not for that reason.

How is it confusing a lot of people? It comes out to the exact same. it's just a matter of wording, not fudging numbers. 30% or 23% you are coming out the same. Don't get me wrong though, I understand completely what Myke is saying.

[mykevermin]

How is it confusing a lot of people?

I think it's because they "disguise" the tax rate underneath the phrase "tax-inclusive," which is not a commonly understood concept.

Now, discussion such as this helps us understand precisely what is meant by the consumption tax. That's good, no matter your opinion on it. Regretfully, people want sound bites and short, easy to swallow sentences before making an uninformed opinion; so, in the end, we can blame the average person's lack of interest in discovering the complexities of a new tax scheme just as much as we can blame consumption tax proponents' bristling at the mention of a 30+% sales tax rate. After all, even if consumption tax proponents were up front about it, that doesn't necessarily mean it would resonate any more or less with the average person (despite that "23%" is more appealing than "30%."

BTW, thanks for linking your source earlier, and sorry for being snarky in the morning. I was hungover in that sort of "god almighty I'll never drink again as long as I live" manner. No excuses, though.

[elprincipe]

How is it confusing a lot of people? It comes out to the exact same. it's just a matter of wording, not fudging numbers. 30% or 23% you are coming out the same. Don't get me wrong though, I understand completely what Myke is saying.

I didn't say it was fudging numbers. But the fact remains that they calculate it in a different way that current sales taxes, and naturally the average person sees it as a bigger sales tax...thus, the average person may be confused about the exact number. For an honest discussion we should be comparing numbers calculated the same way.

[wvburen]

The Official FairTax.orgsm Response to FactCheck.org article, “Unspinning the FairTax”

The following are excerpts in summary form of the Fairtax.org’s official response to the factcheck.org article, “Unspinning the FairTax.” You can find the complete version here:
A FairTax rebuttal: Response to FactCheck.org article “Unspinning the FairTax” (http://www.fairtax.org/site/PageServer?pagename=news_myths_factcheck)

Introductory Remarks
Recently, we noted that FactCheck.org – a site apparently devoted to “objective” analysis – had taken a very biased tone against the FairTax and was propagating false and misleading statements. We shared with FactCheck.org our view that tax reform, like so many other national public policy issues, must be resolved in the crucible of public opinion based on accuracy. And because of the impartial reporting for which FactCheck.org is supposed to be devoted, we expressed to them grave concern that false and misleading facts appeared on their site in “Unspinning the FairTax” posted on May 31, 2007. We did so in the hope they might correct the misstatements and ensure that future reporting is more accurate.

The ability of the American people to properly analyze candidates and the policy they support is only as good as the accuracy in the analysis and reporting. And that, in a nutshell, is the very important mutual goal we share.

Unfortunately, we were successful only in part. Despite our telephone discussion with Joe Miller of FactCheck.org, FactCheck.org refused to correct blatant errors; for example, insisting that presentation of a chart on distribution that purported to be the FairTax but actually was an entirely different tax plan was acceptable. We pointed out to FactCheck.org that the FairTax taxes all consumption above the poverty line equally at 23 percent. We explained why the FairTax was more progressive and was revenue neutral. We also detailed that under the FairTax the vast majority of American families will be much better off because the economy will boom, U.S. economic competitiveness will be enhanced, compliance costs will fall, and incomes will grow. According to measures that capture real-world economic effects, the gains disproportionately go to low- and middle-income groups. Americans For Fair Taxation regards such an outcome as fair, just, and equitable.

We will continue to work to ensure accurate reporting on behalf of Americans For Fair Taxation. In the meanwhile, we want our supporters to understand the nature of FactCheck.org’s mistakes and biased effort.

(A) The proposal to which Gov. Huckabee referred is not a 23 percent tax, but rather a 30 percent tax.

This sentence is false and misleading. The FairTax is a 23 percent tax as measured by the same basis we measure all of the federal taxes it replaces.
Since the FairTax is a replacement for income and payroll taxes, and they are both measured, reported, and quoted on a tax-inclusive basis, it is appropriate to use the 23 percent tax-inclusive rate when referencing the rate. To do otherwise as FactCheck.org seeks would actually be misleading. In other words, apples should be compared to apples, not to oranges, and the tax-inclusive rate of the income and payroll taxes today should be compared to the tax-inclusive rate of the FairTax tomorrow.

To quote the tax panel’s final report, “Although tax-exclusive and tax-inclusive rates are both valid ways of thinking about tax rates, the easiest way to compare the retail sales tax rate to the state sales taxes paid by most Americans is to consider the tax-exclusive rate. On the other hand, it is appropriate to compare the retail sales tax rate with current income tax rates by utilizing the tax-inclusive rate” (page 208). We don’t disagree. That is why we refer to the rate in the appropriate tax-inclusive manner.

(B) And it is revenue-neutral only through an accounting trick.

This sentence is false.
If the FairTax were to exempt government from tax and if federal spending were held constant, then the purchasing power and size of the federal government as a share of the economy would be dramatically increased. Further, not taxing government consumption would artificially make government consumption appear cheaper and promote increased consumption via government. So, though a wash, there would be negative economic consequences if the FairTax did not continue the practice of taxing government consumption. This is not an accounting “trick” any more than it is an accounting trick to tax government workers and the income of government goods and services providers today.

(C) [The FairTax] will collect more money from those earning between $15,000 and $200,000 per year and less from those earning more than $200,000 per year.

This sentence is false. And FactCheck.org's own document shows their statement to be false.
FactCheck.org’s statement is based on a U.S. Treasury Department analysis (Figure 9.4 of which is shown) of a plan which is not the FairTax. The chart and the Treasury study depict an alternative retail sales tax plan invented by the Treasury Department that had a different tax base than the FairTax. In fact, the chart depicts a “plan” that does not repeal payroll taxes, which are 41 percent of personal income taxes, and leaves out more than $771 billion in regressive taxes that fall mostly on the poor and middle-income wage earners. Although the chart label refers only to federal income taxes paid, this point is not made in the discussion of the results, thus almost begging for the reader to wrongly infer that the distributional picture portrays the FairTax.

Since the payroll tax is regressive and is the largest tax paid by lower- and middle-income Americans, ignoring the fact that the FairTax repeals payroll taxes is tantamount to ignoring what the FairTax is when analyzing the FairTax.

A recent study by Dr. Laurence Kotlikoff, that does analyze the distribution of the FairTax, was conveniently ignored by FactCheck.org, although brought to their attention. That study finds that the FairTax lowers remaining average lifetime tax rates, thereby enhancing overall progressivity. This occurs because the reduction in rates is proportionately much greater at the low end of the earnings distribution than at the high end.

(D) It is possible that the FairTax would make most people better off, but much of that gain would be a direct result of making the tax code less fair.

This sentence incorrectly assumes that economic growth will be distributed unfairly. The FairTax is called “fair” because it disproportionately benefits the poor and middle class and the economic studies support this statement.
The FairTax entirely untaxes the poor and reduces the tax burden on the near poor substantially. The FairTax taxes all consumption above the poverty line equally at 23 percent. The FairTax is progressive, and by two out of three commonly used measures of progressivity is more progressive than the current system. Finally, and most importantly, under the FairTax the vast majority of American families will be much better off because the economy will boom, U.S. economic competitiveness will be enhanced, compliance costs will fall, and incomes will grow.

[C]onsumers would pay taxes on a great many things that may not intuitively seem like consumption. The list would include:
(E) Interest on credit cards, mortgages and car loans

This sentence is misleading. The FairTax does tax the loan service charges or fees charged by the lending institution to the borrower. If the lending institution does not separately state these charges, but rather rolls them into the interest rate for the loan, then a portion of the interest is really hidden services charges. The FairTax taxes only that small portion of interest. A more noteworthy effect of the FairTax on interest, which dwarfs the above, is that the FairTax will bring down interest rates by about 25 percent.

(F) The result is that many FairTax supporters (about 15 percent of those who wrote to us, for example) do not understand that the 23 percent figure is tax-inclusive.

When 85 percent of the public understands a relatively complex tax issue, then it would seem that FairTax is (1) not being misleading and (2) doing a pretty good job of explaining the issue. We would bet that those same people do not know that the current income, payroll, capital gains, alternative minimum, and estate taxes are also expressed as tax inclusive, which is the whole reason for making the honest comparison in the first place.