Fair Tax?

[jiffy]

Americans For Fair Taxation:

What would be the biggest problem with having a fair tax? Does anyone have any insight on this idea?

[jim schmidt]

Nothing. But a flat tax isn't a fair tax. It's a regressive tax.

[flylooper]

Sure. Let's say everyone pays 30% income tax.

You make 60,000/yr. and pay 18K of it in income taxes.

Another guy makes 6 million a year. He pays. 1.8 million in income taxes.

Of the two, which is the more materially affected taxpayer? Who suffers most?

Let's say a poor person making, say, 30,000/yr has to pay 9K. What kind of damage to you think a 9K tax bill has on a person earning only 30K and netting 21K?

Keep in mind, a quart of milk costs the same to all three taxpayers.

Get it?

[jim schmidt]

As an aside, I always used to advise my corporate clients never to use fairness as an explanation for any employee compensation or benefit change.

Fairness, like common sense, is purely in the eye of the beholder. Often, what seems fair to one person seems entirely unfair to another.

[Truck]

Originally Posted by flylooper

Sure. Let's say everyone pays 30% income tax.

You make 60,000/yr. and pay 18K of it in income taxes.

Another guy makes 6 million a year. He pays. 1.8 million in income taxes.

Of the two, which is the more materially affected taxpayer? Who suffers most?

Let's say a poor person making, say, 30,000/yr has to pay 9K. What kind of damage to you think a 9K tax bill has on a person earning only 30K and netting 21K?

Keep in mind, a quart of milk costs the same to all three taxpayers.

Get it?

Yeah, I get the person making 30k needs to find a second job or possibly think a post high school education. Hell, in the state of Delaware, if you can go graduate high school with a 2.5GPA the state will pay for your first 2 years at community college.

[jim schmidt]

Originally Posted by Truck

Yeah, I get the person making 30k needs to find a second job or possibly think a post high school education. Hell, in the state of Delaware, if you can go graduate high school with a 2.5GPA the state will pay for your first 2 years at community college.

That's a nice benefit that ought to be available to everyone, everywhere.

[Truck]

Originally Posted by jim schmidt

That's a nice benefit that ought to be available to everyone, everywhere.

Here is the problem with it. I graduated community college the year before this program went into effect. Therefore, I know a lot of the faculty. I think the program is a great idea and really is helping some people. However, from the faculties point of view, it's dragged of a lot of trash into the school. When I say trash I say students that attend less then a year, disrupt classes, skip classes and actually tend to promote violence on campuses. These are the kids that are in school because its free and they don't want to work. I know from my experience at least, you tend to work at school a hell of a lot harder when its coming out of your pocket.

The biggest problem is marine wild life could pass through a public high school with a 2.5GPA.

[jiffy]

I don't think anyone has even read the link.

A short snippet for those saying the burden is put on the poor and middle class.

"The FairTax is regressive and shifts the tax burden onto lower and middle income people"

The truth: The FairTax actually eliminates and reimburses all federal taxes for those below the poverty line. This is accomplished through the universal prebate and by eliminating the highly regressive FICA payroll tax. Today, low and moderate income Americans pay far more in FICA taxes than income taxes. Those spending at twice the poverty level pay a FairTax of only 11.5 percent -- a rate much lower than the income and payroll tax burden they bear today. Meanwhile, the wealthy pay the 23 percent retail sales tax on their retail purchases.

Under the federal income tax, slow economic growth and recessions have a disproportionately adverse impact on lower-income families. Breadwinners in these families are more likely to lose their jobs, are less likely to have the resources to weather bad economic times, and are more in need of the initial employment opportunities that a dynamic, growing economy provides. Retaining the present tax system makes economic progress needlessly slow and frustrates attempts at upward mobility through hard work and savings, thus harming low-income taxpayers the most.

In contrast, the FairTax dramatically improves economic growth and wage rates for all, but especially for lower-income families and individuals. In addition to receiving the monthly FairTax prebate, these taxpayers are freed from regressive payroll taxes, the federal income tax, and the compliance burdens associated with each. They pay no more business taxes hidden in the price of goods and services, and used goods are tax free.

How can the FairTax generate lower net tax rates for everyone and still pay for the same real government expenditures? The answer is two-fold. Firstly, the tax base is dramatically widened by including consumer spending from the underground economy (estimated at $1.5 trillion annually), and by including illegal immigrants, those who escape their fair share today through loopholes and gimmicks. In addition, 40 million foreign tourists a year will become American taxpayers as consumers here. Secondly, not everyone's average net tax burden falls. For households whose major economic resource is accumulated wealth, the FairTax will deliver a net tax hike compared to the current system.

Consider, for example, your typical billionaire, of which America now has more than 400. These fortunate few are invested primarily in equities on which they pay taxes at a 15 percent rate, whether their income comes in the form of capital gains or dividends. In addition to having the income from their wealth taxed at a low rate, the principal of their wealth is completely untaxed either directly or indirectly. Assuming they and their heirs spend only the income earned on the wealth each year, the tax rate today is 15 percent. In contrast, under the FairTax, the effective tax rate is 23 percent. Hence, the very wealthy will pay more taxes when the FairTax is enacted. In a nutshell, those who spend more will pay more but low, moderate and middle income taxpayers will benefit from the greatest gains in reduced tax liabilities.

[Silic0nJ3sus]

Taxation, yet another one of the things I like about Germany. A progressive tax would be nice much the same as they have. Make more, pay more. They do the same thing with traffic tickets, the more you make the more you pay...great idea if you ask me.

[jim schmidt]

Originally Posted by jiffy

I don't think anyone has even read the link.

The truth: The FairTax actually eliminates and reimburses all federal taxes for those below the poverty line. This is accomplished through the universal prebate and by eliminating the highly regressive FICA payroll tax. Today, low and moderate income Americans pay far more in FICA taxes than income taxes. Those spending at twice the poverty level pay a FairTax of only 11.5 percent -- a rate much lower than the income and payroll tax burden they bear today. Meanwhile, the wealthy pay the 23 percent retail sales tax on their retail purchases.

Under the federal income tax, slow economic growth and recessions have a disproportionately adverse impact on lower-income families. Breadwinners in these families are more likely to lose their jobs, are less likely to have the resources to weather bad economic times, and are more in need of the initial employment opportunities that a dynamic, growing economy provides. Retaining the present tax system makes economic progress needlessly slow and frustrates attempts at upward mobility through hard work and savings, thus harming low-income taxpayers the most.

In contrast, the FairTax dramatically improves economic growth and wage rates for all, but especially for lower-income families and individuals. In addition to receiving the monthly FairTax prebate, these taxpayers are freed from regressive payroll taxes, the federal income tax, and the compliance burdens associated with each. They pay no more business taxes hidden in the price of goods and services, and used goods are tax free.

How can the FairTax generate lower net tax rates for everyone and still pay for the same real government expenditures? The answer is two-fold. Firstly, the tax base is dramatically widened by including consumer spending from the underground economy (estimated at $1.5 trillion annually), and by including illegal immigrants, those who escape their fair share today through loopholes and gimmicks. In addition, 40 million foreign tourists a year will become American taxpayers as consumers here. Secondly, not everyone's average net tax burden falls. For households whose major economic resource is accumulated wealth, the FairTax will deliver a net tax hike compared to the current system.

Consider, for example, your typical billionaire, of which America now has more than 400. These fortunate few are invested primarily in equities on which they pay taxes at a 15 percent rate, whether their income comes in the form of capital gains or dividends. In addition to having the income from their wealth taxed at a low rate, the principal of their wealth is completely untaxed either directly or indirectly. Assuming they and their heirs spend only the income earned on the wealth each year, the tax rate today is 15 percent. In contrast, under the FairTax, the effective tax rate is 23 percent. Hence, the very wealthy will pay more taxes when the FairTax is enacted. In a nutshell, those who spend more will pay more but low, moderate and middle income taxpayers will benefit from the greatest gains in reduced tax liabilities.

Well then, it must be true, huh?

[bumblebee]

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 Fair Tax is not a flat tax on income. Here is the link to the Fair Tax website so you can read the bill they are trying to introduce for yourself

Americans For Fair Taxation:

[SXSMITH]

Originally Posted by jim schmidt

Nothing. But a flat tax isn't a fair tax. It's a regressive tax.

Actually, everyone paying the same tax rate is quite fair.

You just have an agenda and a distored view of equality.

My state income tax is a flat rate for everyone. And they don't have NEAR the problems of your politically diseased 'progressive' system.

Can't you just get over your guilt?

[SXSMITH]

Originally Posted by jim schmidt

That's a nice benefit that ought to be available to everyone, everywhere.

Except Michelle Obama says you shouldn't waste money on college.

Try public service.

[SXSMITH]

Originally Posted by Silic0nJ3sus

Taxation, yet another one of the things I like about Germany. A progressive tax would be nice much the same as they have. Make more, pay more. They do the same thing with traffic tickets, the more you make the more you pay...great idea if you ask me.

If the rate is flat the more you make the more you pay.

It just removes the government from controlling your life and playing favorites.

We should actually get away from taxing people who want to work (and save) and just tax sales.

But that will never work as you believe we can never pay enough in tax.

[FastNinja76]

"Fair tax" or a flat tax is a good idea. It seems to make sense. This way, you eliminate the loop holes. Does anyone think its "fair" that the top 5 or 10 percent of earners pay around 90% of the taxes? Lets make it a set percentage, and leave those making 40k or less out of it.