FairTax Act-Is it a viable solution?

I am like so confused, if the cost of the F-34 is the same, it could not be true that "farm prices...will also come down as costs are eliminated":

"If the government spends $50 million today for an F-35 and for the sake of simplification, we change to a consumption tax where the elimination of embedded costs of income taxes and overhead result in a 20% decrease in the cost then the item costs $40 million. With a 25% consumption tax it would increase the cost back to the original $50 million." (Shiva_TD) http://www.politicalforum.com/budget-taxes/200086-fairtax-act-viable-solution-30.html#post4691446

That is why on page 31 I said, "Cost savings seem to be vaporizing in the rhetorical attempts to make the thing sound revenue neutral."

There would obviously be a reduction is the costs of any complicated product that has many sub-contractors and suppliers whose income taxes and overhead (software and accountants need for income taxes) are embedded in the costs of the retail product, almost like a VAT, but most foods are a less complicated product with far fewer sub-contractors than an F-35. Obviously the cost of the plane should go down more than the cost of basic food staples.

It is somewhat obvious in the attempt to sell the consumption tax that Shiva_TD is attempting to placate the poor with lower food costs.

For the most part a potato, an onion, a tomato, and even flour or whatever goes into your Paste' Fazul will not go down in price at all in comparison to the cost of a plane which he put "back to the original" price.

The only way farm prices go down as a result of this change is if the income of the farmer is diminished, but we already had that discussion and Shiva_TD balked at the idea of the loss of income by the executive:

http://www.politicalforum.com/budget-taxes/200086-fairtax-act-viable-solution-30.html#post4699871

 

Supply and demand does not create inflation. Inflation is a result of the discount in the free market on Federal Reserve (promissory) notes because the Federal Reserve does not redeem them in lawful money (gold and silver coins produced by the US Mint) in compliance with the law.

The argument being presented is that people will not pay a tax if they know it's a tax but will pay the same amount if the tax is embedded in the cost of the products and services they purchase. Of course I would rally against a 30% to 39% consumption tax as would most Americans and demand that the US government spend less money so that the tax rate could be lowered. As of right now though we're not paying the taxes required to fund our government with 38% of all government spending being borrowed money. The 30% to 39% consumption tax would reflect Americans actually paying for government expendatures and yes, there would be a major rebellion against government spending at this level.

A somewhat sobering fact is that although it's been refinanced over the years the taxpayers today are still paying for the American Revolution in 1776! At no point in the history of the United States has the US government been debt free.

http://www.publicdebt.treas.gov/history/1700.htm

 

It is like you paint a picture of the United States without the people. I wonder where I have seen that before?

Of course they would rally against a 30% to 39% consumption tax as would most Americans and demand that the US government raise the prebate?

But, then the reality kicks in that the aristocracy of the self-sustaining "landed estate" is immune from the tax, as Thomas Paine and Thomas Jefferson said, and instead of demanding the government cut spending they will demand a return of the congregation working toward ECONOMIC PARITY.

 

True, people could demand a higher prebate level but that also increases the tax rate required because of the related expendatures.

The United States was not founded upon a principle of economic parity but instead upon the principle of equal economic opportunity.

I'm always amazed when people bring up "economic aristocracy" in America considering that most wealthy individuals are self-made and do not inherit their wealth. Of course owning land also results in taxation for those with large estates as the maitenance of those estates is not without cost. Do people really believe that Bill Gates mows the lawn on his estate on Mercer Island or does he employ a gardening service to do it for him?

 

I do not see the logic that the hard work of cutting spending is the first reaction when raising the prebate would be far easier for those "people" so inclined to have voted for Obama.

A landed estate does not have to have a Biltmore House, or Bill Gates massive residence that I believe I heard he counts part of it as office space, many millionaires live frugally, drive simple old pickup trucks, and that may be how some of them got there in the first place.

http://www.affiliateblog.com/images/swalton.jpg

An "aristocracy" does not necessarily require hereditary advantages. An "aristocracy" can include simply a government corrupted by special interests of the 1% (like Obama agreeing to continuing the Bush tax cuts...), or simply those who are thought to be superior.

Because of the previously existing tax consequences of an "aristocracy" that included self-made men like George Washington and his Whiskey, or any self-made member of the King George's government that supported taxes on ale instead of Thomas Paine's progressive taxes, "equal economic opportunity" is more likely under impost taxes than excise taxes or consumption taxes.

The abolition of the "Death Tax," which is supported by just about everyone I have seen who supports the Fair Tax, could only increase the likelyhood of an aristocracy based upon primogeniture, and "exterpate the overgrown influence arising from the unnatural law of primogeniture, and which is one of the principle sources of corruption at elections." (Thomas Paine, Rights of Man, Everyman's Library, Alfred A. Knopf, 1994, p, 221)

Thomas Paine did not say it was the only source of corruption.

"Several of the most heavy and productive taxes are so contrived, as to give an exemption to this pillar, thus standind in its own defense. The tax upon beer brewed for sale does not affect the aristocracy, who brew their own beer free of this duty." (Thomas Paine, Rights of Man, Everyman's Library, Alfred A. Knopf, 1994, p, 193)

That "pillar" does not have to inherit to benefit from a consumption tax, they simply must be superior in some respects. Once their superiority pays off, then their ability to be free of the duty becomes manifest. And in increasing proportion the inherited ability to manufacture or serve, regardless of superiority, reduces the ability of the superior progeny (of the less superior) to compete in the market.

If I was Bill Gates my grass would be cut by millions of kids playing an on-line Zelda like game and not knowing they are cutting my grass to get fake rubies.

 

Shiva TD,

"I would disagree with this provision but then I oppose the FairTax.org proposal on other grounds as well (while supporting a consumption tax). Of note with my small business I only pay sales taxes quarterly which would necessitate the State only paying quarterly. It would be unrealistic to expect a State to make payments based upon receipt of payment of a tax as it would drive sending checks daily to the federal government. That is pure stupidity."

We certainly are in violent agreement here. But the fact that you don't support the Fairtax as described in HR25 does not give you license to revise the legislation. It is what it is, and I can assure you that my many suggestions for revisions have fallen on deaf ears in Congress. HR25 seems to be written on those clay tablets. Too bad!

 

If suddenly the State is collecting $2 trillion per year in taxes for the feds, that money is going to be accruing some form of interest, and interest on $2 trillion can be a lot of money, so I doubt the feds are going to allow the money to remain very long in the hands of the State...paying only quarterly would imply the State is holding onto about $500 billion which should have some income opportunities...

 

I do understand how so much of the accounting is handled electronically. But I also know, especially when dealing with the government, that nothing is free...there will be costs and these costs will be determined by the demands of the feds. Regarding quarterly payments, I suspect the feds will demand their tax money almost in real time...

 

This is the way I am looking at this; Tomorrow in the mail I get a letter telling me no more federal taxes...and I exclaim YIPPEE!! Then we chat about this some wondering what we should do with the extra money we have? Our first thoughts I'm sure will be to spend more on the farming operation, and if any is left we might have higher profits. But I know the last thing we are going to decide is the next day to arbitrarily lower the prices of our products. Now I cannot speak for the next farmer-Joe, but I'm guessing they will be thinking the same things. Running a business solely on competing pricing is stupid because eventually everyone will be out of business...so other things like quality, or uniqueness, or whatever, coupled with supply and demand, will determine our market prices...

 

If there is higher demand than supply, prices will increase...this is inflation.

This is all that I have been saying is the primary debate will be the psychological effects on the consumer at the point of purchase.

And no matter what Americans demand, just as we are going through the process today, in which an idiot president, and an idiot Congress, and it appears an idiot super-committee are incapable of reducing a measly $120 billion per year from the budgets. I'll bet a make-believe farm that we won't reduce the federal budgets by more than $100 billion per year and even this will expire when the USA decides to spend more than it has...

 

Considering that the taxes are really collected to fund the following year's federal expendatures why not let the States keep any interest to pay for compliance so the federal government receives 100% of the tax revenues?

 

I do oppose HR25 and I've also written about my objections to it. My objections have also been ignored but I'll keep writing and I am on FairTax.orgs email list so I keep informed. As noted we can support a consumption tax while opposing specific legislation related to a consumption tax.

 

I don't think the federal government is going to allow the States to invest and gamble with 'their' money. And we know that all politicians will jump on any money laying around like a bum on a ham sandwich! Those taxes will be required to be forwarded to the feds almost in real time...

 

I still believe my idea has some validity...which is to keep the existing federal income tax system, clean up the obvious loopholes, make sure the tax rates make sense, and in parallel have a national sales tax of 2-3%. This will involve all Americans in supporting the government and will supplement the income tax income. No American should balk at paying 2-3% sales tax in order to support their government...

 

Here's an unintended consequence of a national sales tax. If you impose a significant sales tax and have US companies collect them, then those companies will eventually be replaced by foreign companies who are not subject to U.S. law. People will start buying from Chinese on-line merchants.

No problem. We can just collect the tax from the consumer? Think about it. Who is going to open, evaluate and collect for millions of packages per day. A national sales tax would be a disaster for any U.S. consumer oriented company. Gotta love that global economy, huh?

 

It is in the process of figuring what income tax rates make sense that everyone would balk, then why tax Joe's plumber's product when the other guy cannot vote for anything?

A tax on consumption would be more fair if the first tax raised were impost taxes on those products from nations that do not fully enfranchise their people, it would level the playing field of the increased cost of merchandise from disenfranchised workers (who present less baggage to their government in the form of demands). There would be no effect in trade relations such as trade wars between enfranchised nations who have the baggage of a people and the political economic principle of supply (good paying jobs) and demand (decreases for Change).

In our current situation of a trade deficit, similar to the one that existed with our homespun guys vs. British industry, an increase in a Fair Tax or other domestic tax would not be needed except to pay for those wars and products were we lack the domestic resources and must trade for titanium...or oil...on the world market.

If we want to increase domestic production of energy, it would be best if the energy from free industry was not taxed as much as dictatorial energy.

Simply taxing all consumption equally has no effect on fairness of either enfranchisement or in equaling the domestic economic opportunity.

Since Shiva_TD said, "The United States was...founded...upon the principle of equal economic opportunity," and since the silver spooned inheritors have an advantage in the marketplace over those facing startup costs, therefore, there can be no such thing as "equal economic opportunity" without a "Death Tax" or some tax upon inheritance. Junior can still work the family business and then Senior can sue and loose his business to Junior and all those startup companies. Aladdin did not deserve an inheritance, as his father died of heart failure because his son did not want to learn the family trade. I know what it is like after plowing all day to have the father say, "one day all this will be yours." So I am surely aware of the threat of the "Death Tax" to those whose sons do not work to own 20% of OCC.

If we have a progressive inheritance tax similar to what Thomas Jefferson and Thomas Paine proposed to break up large property holdings, and implement impost taxes on goods from nations with disenfranchised workers, and only increase domestic taxes such as a Fair Tax to pay for whatever is not covered by the other taxes, then it really is getting closer to sounding FAIR and more viable for both sides (that really voted for automatic cuts in the first place).

Fair is not what both sides want. Fair would be a tax on net worth (what one wants the government to protect) instead of consumption or income, and fair would be too hard to implement to be viable.

My mother is for getting rid of the income tax and for a consumption tax, but she is against any inheritance tax. I just think it would be somewhat more viable, and easier to sell, if the first tax raised were impost taxes on those goods from disenfranchised nations.

 

A consumption tax just shifts the tax burden on to do those who use most of their income on consumption and away from people like the wealthy who spend a far smaller percentage of their income on consumption. There is nothing fair about that at all since the median income earner would be paying tax on 80% or more of their income while a top 1% income earner would be paying tax on 20% or less of their income.

If the desire is to tax spending, people spend their money on many things that are not consumer goods, things like stocks and bonds etc. A fair tax should apply to this sort of spending as well. If you think not, you should explain.

 

A more balanced set of taxes, not simply one tax, goes farther in insuring that everyone who has something substantial to protect pays something. Until our deficit is paid down I think you are somewhat right. If the rich do not want to pay a higher percentage of what they have to protect than another they should hire them, if not "Que Sera, Sera (Whatever Will Be, Will Be)."

You said and asked:

"Further, applying tariffs in general for the sake of supposed 'leveling the playing field' IMO takes away all incentive for US industry to become more competitive...why try when the government will protect us?"

Maybe you missed this part of what I said:

"There would be no effect in trade relations such as trade wars between enfranchised nations who have the baggage of a people and the political economic principle of supply (good paying jobs) and demand (decreases for Change)."

It is perfectly reasonable not to have tariffs on products from any nation that has an enfranchised population, as our industry must be competitive, but since when can our industry compete against slavery? Not applying tariffs to level the playing field of enfranchisement takes away all incentive for their industry to support enfranchisement.

I doubt very much that Thomas Jefferson was jealous of those who had accumulated wealth, as he said:

"I am conscious that an equal division of property is impracticable. But the consequences of this enormous inequality producing so much misery to the bulk of mankind, legislators cannot invent too many devices for subdividing property, only taking care to let their subdivisions go hand in hand with the natural affections of the human mind. The descent of property of every kind therefore to all the children, or to all the brothers and sisters, or other relations in equal degree is a politic measure, and a practicable one. Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions of property in geometrical progression as they rise." http://press-pubs.uchicago.edu/founders/documents/v1ch15s32.html

The "absurd" of a wealth tax is called "holy" by the Obamanation, it is in his "holy" Koran: http://en.wikipedia.org/wiki/Zakāt

And it is a matter of interpretation as to whether that is obligatory or could be forced should you decide that our Constitution's provision "to establish an uniform Rule of Naturalization," not exclude a so-called "religion" with taxes.

Like I said, "too hard to implement to be viable." And my mother hated it when they came into her house and assessed her furnishings in the STATE of Georgia. I basically use the Net Worth tax as a tool, primarily in opposition to flat income tax people. You figure your net worth and compare it to someone richer to see if you are paying 4% of your net worth in taxes like I was in the eighties and compare it to they guy with $250 million who was running for Governor and paying .75% of his net worth in taxes. Then you shove the flat income tax up their ass, because it can make the disparity worse. http://en.wikipedia.org/wiki/Wealth_tax

"In 1999, Donald Trump proposed a once off 14.25% wealth tax on the net worth of individuals and trusts worth $10 million or more. Trump claimed that this would generate $5.7 trillion in new taxes, which could be used to eliminate the national debt.[3]" http://en.wikipedia.org/wiki/Wealth_tax#Arguments_in_favor

That is kind of funny when he is the sometimes the darling of the Foxy Blonde Legs Channel.

It does seem fair that the only truly fair tax "is one in which 100% of Americans are paying some share of the cost of government," but you just got through arguing to "pass on to heirs if I wish without government meddling." And just about anyone of means can avoid paying any Fair Tax.

You cannot both have "pass on to heirs if I wish without government meddling" and "100% of Americans are paying some share of the cost of government," when it is clear that absent a revolution or good morals the silver spooned inheritor Charles St. Evrémonde has a considerable advantage over a Madame Defarge. The Evrémonde estate does not have to hire Madame Defarge at a decent wage making the wine at his winery, that her husband must pay Fair Taxes on while the Evrémonde estate pays no Fair taxes whatsoever on their wine as Thomas Paine previously argued. If you dig back you can find a guy sympathetic to our cause arguing against consumption taxes in the Parliament prior to the revolution, all those arguments against consumption taxes are still viable.

Why should 100% of our people pay to support our government when our tax system encourages 100% of their people to be disenfranchised? There is certainly no need to have imposts on British goods now, as our industry should be able to compete against all free men. And right now our industry cannot compete against oil imports, which is like the Roman Amber trade dumping gold into the pockets of barbarians.

Considering what Thomas Jefferson said in my quote of him above, and the birth of the Republican Party with regard to the sales tax or excise on whiskey, there is some irony in a Republican party that wants to tax whiskey and Tea consumption. That is why I call these evildoers the anti-Tea Party.

 

When I was against the Bush tax cuts before 9/11, after I voted for him the first time, after having voted for Andre V. Marrou in 92 when we got rid of Wyche Fowler, it was for the very reason of what happened; cutting taxes because of a market correction due to the dot com bubble only increased the deficit. And after 9/11 running a deficit in a "long war" was stupid, but still I voted for Bush over the domestic traitor who would have only given our people some protection from politically motivated prosecutions by judges appointed by the rulers of disenfranchised peoples like those of Omar Bongo. Those who claim the Bush/Obama tax cuts had nothing to do with the deficit are talking 100% politics, which is why I voted for McCain over the one who belonged to the congregation working toward ECONOMIC PARITY. I do not think it was the poor who gave six credit cards and a mortgage for a doctor's house with an ARM to the truck driver whose Debt to Income ratio could not sustain it, which resulted in many being hurt for rich people's irresponsibility. Why should the rich not pay the same percentage of what they want protected as a poorer person? Taxing the 'rich' is necessary too, but I am willing for them not to have to pay the same percentage of their net worth in taxes as another because of the simple economics and odds of greater capacity that excess wealth throughout history has made for an interesting show called "Connections," where those of leisure and means had the time and money to invent great things that all did not work right the first time.

If all of Apple Corporation's off-shore workers are disenfranchised they are all slaves that have a master.

Absolutely, there will be a downside to the economy if the wealth is taxed directly more than the Airbus countries, because the rich can afford to leave and can afford to punish.

It is a lie that all people are consumers. A person of means can easily not consume anything his estate does not make, they did it for thousands of years before any government of the people existed.

Do you actually believe that the USA will implement a tax system that will blatantly benefit everyone who is enfranchised and steal from the wealthy slave drivers?

Expecting 100% of our people to buy your red herring, and to wash your dishes, when you own the principle means of its production is ridiculous.

The purpose of considering another tax system if not political leaves only greed (which affects politics), because patriotism demands politics. The word "politics" is not a dirty word.

{Newt 2012, as I still have an old bumper sticker to use}

 

Too much diatribe for me to respond...but thanks for the read...

 

Sorry but I have read too many issues of Mother Earth News, and too many old books where the pottery shed and blacksmith were inside the walls of the villa, ignoring that "all of their manufacturing [is] off-shore," to believe it is impossible for someone to go totally off grid on domestic consumption for purposes of avoiding a "Fair Tax."

 

Your statements are impractical. Sure some person some where can go totally off-grid but this one person, and their 'extreme' acts, is not representative of the US citizenry.

It is each individuals choice to decide their level of consumption...it is also their 'private' choice to do so without judgement from others...