FairTax Act-Is it a viable solution?

Super! Finally some correct reference to MRT! Does the US avoid poverty and unemployment traps? I would suppose, given how relatively useless the US welfare state, that wouldn't be difficult

 

No matter your comments, unless YOU can provide evidence to the contrary, as of today, the federal income tax system is progressive! If you believe it is regressive, then show me the proof...

 

It IS NOT well-taken. It is progressive! It might not be 100% progressive, but it is progressive. Anyone who believes it is regressive, provide the data...

 

You didn't listen, did you.

Google effective rates. You'll find that the graph goes up and down along the brackets so that some higher brackets have a lower effective rate than some lower brackets.

Sorry, reality hurts.

 

I know this...but no matter...overall...the federal income tax system remains progressive. If you and others wish to call it regressive, which is the only other choice to progressive, then please provide some data which supports 'your' opinions.

Yes...I do believe in reality...

 

You destroy your own argument. You refer to a progressive tax system without knowing the effective MRTs. You're therefore peddling prance deliberately

 

Who cares how much more progressive it can be? The FACT remains that today it is progressive! BTW; how much more do you want the few taxpayers to pay over the lion's share they are paying today??

Please name 'one' argument for making the federal income tax system more progressive?

It is progressive and sure it can become more progressive and it can become less progressive but what's the point? Name a single reason to make the system more progressive?

We can make you smarter than you are but what's the point? It's progressive...this is fact...this is reality. What purpose can it serve to make the system more progressive?

 

You've missed the point.

The marginal rates are mildly progressive, and thus, the effective rates are more or less flat, with even some regression.

The way to fix that is to have steeply progressive rates. Then the flattening out of effective rates won't lead to regressivity.

In short, mildly progressive income tax rates result in no progressivity at all in the real world.

 

Another deliberate misrepresentation. You don't know the MRTs. You only have a weak understanding of how aspects of taxation are supposed to work.

 

Obviously haven't read any of this thread, but how I can't see how any of these tax reduction or flat tax schemes is gonna help me... the nuevo poor family?
- Worked good job for 22 years
- Company merged and I stupidly took early retirement package with 2 year no compete clause in effect
- Lost lots of money during 2 years trying to make my own business work.
- Since then, had a few good jobs but with companies who went bancrupt and now am on unemployment for more than a year... thank God!.
- Only jobs I can get are minimum wage due to my age and limited pharma experience. If I take a job chance and it doesn't work, we lose our home... that's how close our situation is.

Last tax return due to all the so called loopholes was only about 8% of our total income after our deductions.

A flat tax of even 9% on our INCOME only would mean we could not pay our homeowners tax and therefore result in us becoming homeless... which might though result in our kids being able to get into college on grants?

 

How can you possibly know whether ANYONE on here is doing ANYTHING 'deliberately'?

The answer is - you cannot.

I suggest you look up the word 'exactitude' in the dictionary.


Have a nice day.

 

Because the fellow is educated and knows that, without those MRTs, he cannot support his argument. Bit obvious really!

 

I oppose the FairTax.org proposal, which is reflected by the Fair Tax Act, but support the replacement of income taxes with a consumption tax with prebates. FairTax.org has already corrupted the tax proposal they're making and here is a key problem with it.

FairTax.org proposes an inclusive rather than an exclusive tax and there is a difference between the two. Using easy numbers a 25% inclusive tax is the same as a 33 1/3% exclusive tax as far as revenue but it changes the prebates being issued and the prebates are what makes a consumption tax progressive. By way of example a 25% inclusive tax on a product where the consumer pays a final cost of $100 is $25 of the purchase price so the product costs $75 plus the $25 in tax or a 33 1/3% exclusive tax being applied to the product price.

The "prebate" which makes a consumption tax progressive is the tax rate multipled by the prebate level. If we assumed a $10,000 prebate level as an example the 25% inclusive rate would result in a $2,500 prebate but if the 33 1/3% exclusive rate is used the prebate is $3,333.33. If a person were to spend that $10,000 on taxable new goods and services the 25% prebate would not cover the taxes which would equal $3,333.33.

The prebate level determines how progressive the tax is so long as the tax rate is based upon the actual taxes that are spent based upon that amount of money. Only an exclusive tax rate can be used because it accurately reflects the amount of taxation imposed on the prebate level of expendatures. If Congress wants to make the consumption tax more progressive they simply raise the prebate level or if they want to make it less progressive they reduce the prebate level.

I've seen several arguments that are really irrelevant to the replacement of income taxes with a consumption tax. The thread is not about other possible forms of taxation although some might advocate them. If those forms of taxation want to be discussed then they need their own thread. I've read comments about "spending" but the means of taxation is about funding government and not about the programs the government chooses to spend the money on.

The real questions here really relate to whether the means of taxation are fair and equitable and no form of taxation is more fair and equitable than a consumption tax with prebates. Everyone, based upon household size, receives the identical prebate and everyone pays the identical tax rate on all new goods and services. There can be no exemptions and the tax can only be applied on new goods and services (or used goods entering the country where the tax has not previously been imposed).

There was an argument that it would be hard to collect and that people would evade it. This is false as there would be less evasion than we have under today's income tax system. Instead of 150 million tax returns there would only be businesses collecting the taxes and the penalties for evasion would be adequate to discourage business from evading collecting and paying the tax.

 

Again...I have not missed any point.

I understand completely what you are saying...but no matter...the federal income system remains progressive! You might wish it to be regressive and desire to focus on it's regressive components, and you continue to use your glass half-empty emotions, but overall it is progressive!

One factual example of the tax system is a (*)(*)(*)(*)-load of Americans don't pay a dime in federal income taxes while others are paying thousand$ and hundreds of thousand$ and million$ in taxes.

This fact cannot be denied! If it could possibly be regressive, the (*)(*)(*)(*)-load of Americans who are paying zero federal income taxes today would be paying more than the middle and upper income tax payers.

Can any of you pro-regressive people show some data that unequivocally states that the US federal income tax system is regressive???

 

You've provided no MRTs and therefore you cannot defend your argument. There's no debate in that. Of course reference to MRTs would actually describe that you're just naively taking tax rates in isolation and failing to understand how tax systems operate

 

We really need to toss out all considerations for taxation other than it's designed purpose of funding government exependatures. It is not a means for "taking from the rich and giving to the poor" although that might be the intentions of government expendatures. A 100% income tax on the wealthy does nothing for the poor lacking any government spending related to the poor. It merely makes the wealthy poor.

When addressing a tax we should first and foremost be concerned with whether it's fair. The only way that this can be accomplished is if everyone is subjected to the identical conditions established for the tax. Only a consumption tax with prebates provides the identical criteria for everyone. Everyone receives the same prebate and everyone pays the same tax rate on new goods and services. All new goods and services are taxed at the identical rate regardless of origin at the point of consumption.

At the same time a consumption tax can be highly progressive because the prebate, as a percentage of an individual's income, is greater for low income workers than it is for higher income earners. The "prebate level" establishes how progressive the tax is.

 

Even better; just go across the border to Mexico, buy the car, bring it across the border, and resell it as used. There's not a thing the government could do to stop that bleeding, because of NAFTA.

 

Relative impact is something that should be considered. 10% of someone barely making ends meet is much more of a burden than 10% from someone who is free to reinvest most of their income. Not to mention there are huge disparities in benefits--the rich get far, far more from the government than the poor. Welfare isn't even close to Wealthfare.

Which is unfair because different income groups spend different percentages of their income on products. People who are barely keeping their heads above water, so to speak, are going to pay at a much higher rate than people who stuff most of their income in a savings account under such a regime.

The only fair way to tax people is a graduated income tax; no exemptions, no deductions (other than deductions required to prevent double taxation), and falling equally upon all sources of income.

Prebates don't even come close to solving the problem, they just shift the burdensome point higher. Alright, so you give people a prebate for what they'd pay up to the poverty level. That just shifts the point at which the unfair tax becomes unfair up $20,000 a year or so. It's still more unfair to middle income earners than it is high income earners.

 

Here are some of the reasons I like the Fair Tax.

1.) No more IRS. I will never ever be bothered by the IRS. If you know a victim of the IRS you will know that they are almost as bad as the mafia.

2.) Jobs, jobs, jobs. Why would a corporation expand overseas and pay taxes on their profits when they can operate in the US tax free. All those manufacturing jobs and jobs that have been outsourced will return. Programming jobs come back. Not only will US firms return. Foreign companies will want to open up shop here.

3.) Export increase. Products made in the US will not have a tax component to it. At present, 20% of the price of a product goes to paying federal taxes. With the Fairtax US made products will be 20% cheaper.

4.) Money will pour into the US. All the world's rich people will want to come to the US. Why would a Swede stay in Sweden and pay 50% to 80% in taxes when he can be in the US tax free. When money starts to pour into the US we will be the worlds creditor nation.

5.) Investment in the US economy will increase. People can invest in Wall Street and not have to pay taxes on their earnings.

6.) Divide and conquer ends. Our present tax system allows politicians to pit one group against another to increase taxes. The common example is "we will tax the rich" or "big business will pay for it." With a Fairtax, we all pay the same amount. If you want to raise taxes, then we all have to pay.

7.) Stealth taxes end. Today Washington sneak in taxes into all type of legislation. They nickle and dime people to death. By financing taxes thru just one tax, that comes to an end.

8.) The welfare state will shrink. In countries were people don't have to pay for government programs, the welfare state explodes. In the end, you get a situation like Greece were the country becomes bankrupt. When people actually have to pay for the welfare state, people are less eager to demand more government.

 

No, you'll just have the Internal Sales Service coming and inspecting every transaction you make.

Companies aren't leaving the US because of the taxes. They're leaving the US because labor is way cheaper overseas, and just as good. Businesses don't move their operations overseas over relatively minor differences in the tax code.

Then the fair tax isn't revenue neutral.

Because the United States is a (*)(*)(*)(*)hole. Who would want to live in the US when they could live in Sweden?

For some reason, fair taxers are under the mistaken impression that ladling water out of the left side of the bucket won't reduce the water level on the right side of the bucket. Income and consumption are two aspects of the same thing. When you tax consumption, you're still taxing income, you're just taxing it on the other side. Rather than being taxed when you get it, it's taxed when you use it. The practical difference is nil.

I like progressive taxes, why would this be a reason I should support the fair tax?

So you think it's better for the government to engage in a little foreplay before they (*)(*)(*)(*) you just as hard as always?

No it won't. The welfare state will expand tremendously, as ever more people are shifted down into poverty by excessive prices and regressive taxation.