FairTax Act-Is it a viable solution?

Yep, and two of those have large oil reserves, and also tax property at a high rate. And one of them has casinos.

So the scheme will work if you build a bunch of casinos and discover oil or natural gas. Otherwise, it is impractical and regressive.

By the way the Texas ]and Nevada economy is a shambles, with huge amounts of defered infrastructure maintenance, large poverty rates and huge deficits.

You seem to be looking only at the benfits of your scheme, not the burdens, which is a typical conservative trait.

 

Same reasons states should not do it. It is a regressive tax that burdens the poorer more than the richer.

You can make an argument for a sales tax in states that rely heavily on tourist income (like Florida) because it effectively taxes out of state residents, if the regressive nature of the tax is offset by progressive taxation mechanisms.

 

No matter the amount of federal tax income required, it primarily comes from people and business.

The first question might be how to split the tax income between business and people? 50/50? 45/55? 40/60?

On both sides of business and people, we will always have some percentage of businesses and people who aren't going to pay any federal income taxes. They will live and function in the USA but will contribute a minimum or nothing to support the USA.

For those who believe we should not burden the less fortunate with supporting government, then the next question might be what percentage of business and people are reasonably acceptable to pay little to nothing? The answer to this question is determined by knowing how much the 'few' are willing to pay for those who do not pay?

At some point, and I'll argue we are at that point today, those who already pay the lion's share of taxes, aren't going to pay much more. IF we can assume that the wealthier are not going to tolerate much more than another $100 billion per year in additional tax income, this says that 'all other' Americans must support government or they must agree to reductions in government.

No matter if it's a fair-tax, or flat tax, or today's income and corporate and capital gains taxes, the bottom line is the same! We have too many people paying little to nothing, and people in the middle barely making ends meet, and the wealthier refusing to accept a lot more tax responsibility. Tax gimmicks aren't going to work!

 

Income is not taxed under the "Fair Tax" plan, only consumer spending.

 

What are the wealthy who are far wealthier over the past 30 years going to do if we raise taxes from the decades low levels they are at now? Move to France? Bon Voyage. Just remember to keep paying those federal taxes on money you've gotten here.

 

The only taxable business entity is a C corp. All else is pass through. So this analysis isn't really viable.

Since C corps are given the benefit of independent status, shielding shareholders from responsibility, they are also tax. That's fair. You shouldn't get a benefit without a commensurate burden.

As to taxing the rich more, it's the easiest thing in the world to do and good social policy. Nobody claims it will pay off the debt that Bush and his profligate conservative policies built up over 8 years. It will take time. The first step is more revenues, and those revenues should come from large corporations and the rich for obvious reasons: they have the money.

 

I'll say it again. 5 states in the US have only one source of income. That the sales tax. Real estate taxes are a local tax.

Second the Fair Tax advocates always talk about a prebate. This is cash aimed at the poor who can't afford the tax.

Lastly, it's a lie when you say that roads are in bad shape in Nevada. I was there a month ago. Those roads are in great shape. So I don't know were you get your facts from.

 

There are also five states that have no state sales tax.

 

So what type of consuming does a business transact? What part(s) of business transactions will be taxed with a 'fair tax'?

How much 'fair tax' will a person pays who earns $20K/per year?

 

You would be naive to under-estimate the global options available today for investments.

You can suck a couple more percent from the wealthy, but if you tried to do what you propose, you will find out just how naive you are...

 

Why would you think they don't take advantage of the global options already?

 

And...a fair-tax or flat-tax or national sales tax, all of these will be consumption taxation added on top of the local and state taxes which are already in place. For example, where I live the sales tax is 9%, so with a fair-tax, when I dine at a restaurant, I will now be paying 9% + fair tax rate (10%?) so my bill will show 19% tacked onto the food prices! Yes by not paying income taxes I would have more cash, but I suspect when people have more take-home pay they will spend more on cars/homes/boats, etc., but since most live pay-check to pay-check, many are going to balk at paying 19% tax on their smaller consumption purchases.

An interesting consumption might be gasoline in which I believe the current federal taxation is around $.184 per gallon?? Where I live in CA the gas price today for 87 octane is $3.95/gallon. In CA we pay $.18/gallon in state fuel tax, plus 6% state sales tax, plus 1.25% county tax, plus 9% local sales tax.

If this was changed to a fair-tax scenario, when I spend $3.95 another 10% or 39 cents will be added for the fair-tax. If the federal government currently gets 18.4 cents, but the fair-tax calculates to 39 cents, which amount are we going to pay in a fair-tax scenario? No matter, all the other state and local taxes stay in place...

 

I know these options are in place today so this makes it even easier to up the ante outside of the USA. If you tried to significantly raise taxes, all of the advertisements on TV will be telling everyone how to invest their money elsewhere! Taxes are just like so many things in life in which we can force stuff on people but at some point the 'forcing' backfires and you start to see negative results. If you ask for 2-3% tax increases...no problem, but when you go beyond some number, this just creates fraud and other options.

I'll say what I always say on this topic; the tax problems stem from tens of millions of Americans not paying a dime! And the spending problems stem from idiot presidents and Congress' with out of control spending. Why should anyone pay another dime of tax until the idiots in Washington get the spending under control??

 

So we don't run up so much debt?

 

No, in fact, C corps are taxes as an entity, and then shareholders are taxe on dividend distributions separately. S corps are pass through. Only the owners pay taxes.

The difference is Bush and the GOP run up debts in the goods time when you should, and waste the money on wars and tax cuts for the rich.

No, for a lot of reasons, all of which you're pretending to ignore.

Actually small businesses hire more people, so tax them less and big corporations more. Large corporations have benefits, but come with lots of bad effects. Time to seek a more moderate model for our economy.

Yep, keep repeating that and keep ignoring the plethora of sound public policy reasons for a progressive tax system.

By the way, what's wrong with being envious of people who don't have to work and who have in inordinant influence our lives. Normal people should be jealous and mad. Only abnormal **********s want to be subjugated by the superwealthy. It must suck to have a serf mentality like you do.

 

The fair tax is revenue neutral.

You are not applying a tax on existing tax structure. So taxes will not go up. You first eliminate all taxes. This will force the price of things to go down. Then you apply the fair tax on the lower prices of goods and services.

All Americans will not notice a difference in what they pay. So your scenario does not hold water.

 

And what about the car dealer that sells it's new cars to a middleperson for $1, then the middleperson sells the cars to the public as used (even though they are still new) at a 30% discount and undercuts the competition (because they don't have to charge the 30% FairTax?) And then hands a percentage of the profits under the table back to the original dealer?

 

General Fear is incorrectly repeating the long discredited Fairtax "free lunch" myth. The only way retail prices won't increase significantly is if all of us accept a reduced paycheck by the amount of our current tax withholding, and that isn't going to happen. The Jorgenson 1997 embedded tax study did conclude that the average embedded taxes were 22%, but he assumed that we all would give up our withheld amounts in order to get the maximum business cost reduction. Employee payroll deductions were two thirds of those embedded taxes, so if we get 100% of our pay/pensions, the best businesses can do in reducing tax costs is 10%, including income taxes, payroll taxes, and compliance costs. Remove 10% and add the 30% sales tax and retail prices will rise by 17% on average. The public will certainly notice that!!!

DA60, nice try, but your fraudulent scheme won't work. Better get a "get out of jail free card" because you will need it. Do you really think that the Treasury agents won't discover sales of a $25,000 car to some middle man for $1.00? How does that look on the books? And, since "used" means tax previously paid, where is the tax money? I think you are confused about the term "used".

 

My point was that one of the things that FairTax lovers say is that it would greatly reduce the size of the IRS. I say it would greatly increase the size.

Because now they would have to monitor almost every transaction to make sure that it was on the up and up.

Every time someone had a sale - they would have to clear it with some local FairTax office.

And how would sale's be regulated? The FairTax people would have to set a minimum sale price for every item sold in America.

They would have to or the scheme's I mentioned above would go on every day so people could get around the huge 30% sales tax.




Imo, the only way the FairTax would REMOTELY work is if it was on sales of ALL items - both new and used.

 

DA60,

I agree with you that the new Sales Tax office isn't liable to be much smaller or cheaper. But, I think you are overdoing the need to monitor every transaction. Look, either weekly or monthly depending on the retail business size, a report is sent in. It simply shows total sales, multiplies by 23% and includes a check for the tax amount. The State collection office ought to be able to scan that report and determine if there are any errors. Simple.

If a business wants to cheat, how will they do it? I would think that if a car dealer has done an average business of $10 million annually, and post Fairtax, their sales drop to $5 million in order to avoid sending in the tax, the federal tax auditor from the State collection agency would be there the next day. And, if retail sales revenue turns out to be less than business purchases, either the dealer is going bankrupt or he is going to jail.

I don't support the Fairtax, and what I would be more worried about is cheating by the State Treasurers. It's possible that a State in financial difficulty might decide that the State needs that tax revenue more than the federal government? Just saying!

 

Well, my point is that businesses will find the level they can cheat at where the government won't catch them.

I guarantee you that at 30% taxes - TONS of businesses will think up TONS of ways to get around paying the tax.

I could list some of my thoughts...but since you are against the tax in the first place, I'll save it for someone who is not.

 

It would be easy enough to police retail transactions if they were required to be electronic. There are only a few firms that manage all the electronic transactions. The IRS would just need a few hundred computer geeks to look over the code and monitor and audit the transaction networks. Under the fair tax proposal only those selling new goods would be required to submit to this regime.

If you are going to go that far, an electronic transaction tax that taxed all electronic transactions could fund the government with a 0.002% or less tax rate. Of course, there are plenty of ididotic arguments against this, from the tax evading Wall Street traders that a transaction tax, no matter how tiny, would stifle the markets and bring about worldwide economic collapse, another from the tax avoiding libertarians who decry that this would lead to the elimination of cash money and there ability to trade freely on black markets for new goods. Prostitutes, drug dealers and the DEA are also a big constituency against an electronic transaction tax. These last few groups seem unable to grasp that cash cards can be made untraceable and cash would still have a legitimate purpose. The purchase of used goods.

As usual, this leaves us with an unworkable flat tax shipwrecked in the shoals of ideological imbecility.

 

Deficit spending can be reduced ASAP but seems both parties are unwilling to consider this. Raising tax rates, changing tax rates will take forever. Look at Obama's deficit committee who cannot even find $120 billion per year in budget reductions?? The idiots are spending $3.5 trillion and they can't even find $120 billion! Prior to an election none of them have the balls to take this type of action...