The FairTax - gaining steam!

[Mr._johngalt]

Well said!!  I wish more people had this attitude.

I am suspicious of anything that has to call itself "fair."  That immediately implies to me that it is not.  Say something often enough, no matter how untrue, and people start to believe it.

This is a dumb topic.
This is a dumb topic.
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This is a dumb topic.
This is a dumb topic.
This is a dumb topic.
This is a dumb topic.
This is a dumb topic.

 

[Mr._johngalt]

They already have such a "hotline" under the current system.

Yeah, and if that's not Orwellian I don't know what is.

JG

 

[Mr._johngalt]

Actually, I want to fire many of those.  The businesses that the govt have to audit will be much lower in number.  In 2003, the IRS had 143 Million returns (130 individual returns, plus others were corporate, partnership, trusts, etc) http://www.fairtaxvolunteer.org/smart/WaysandMeansRebuttal.pdf page 9

With fairtax, all you need to worry about will be businesses.  Surely, out of  130 M individual returns in 2003, some may be businesses (sole proprietorship, etc), but I don't think it will be a large percentage.  Most trusts will cease to exist; there's no purpose for them.  So, conservatively my estimate is that there would only be about 15-20 million tax paying/forwarding entities you'll need to worry about.  If you fire 50% of IRS auditors, your audit rate will still be about 3%, about 4 times 0.77%. 

Plus, sales tax will be pretty hard, if not harder than income tax, to cheat.  Let's say you run a barber shop,  you can't cheat your sales volume, IRS (then may be called fairtax enforcer) can just look at the parking lot camera and count your customers.  If you're a chiropractor, you have all those insurance claims that will keep you in check.  How about Mr. Handyman who takes cash to fix your toilet?  I'll say there's no difference.  If he wants to cheat now, he doesn't report that cash income.  If he wants to cheat under fairtax, he either doesn't collect it or doesn't report it.  No difference. 

The govt can even discourage sales tax cheat by having a hotline that if you think someone is not reporting sales tax, you can be the whistleblower and can have a piece of that extra collection pie.  It would not be easy to cheat, at least not easier than the current convoluted system where honest citizens or even IRS folks don't know what is cheating and what's not.

amt, you may be the most naive person I've ever encountered and that's
saying something.

JG

 

[amt]

Is all that fluff done to impress the uninformed?

Payroll taxes and unemployment taxes are the same thing, so that's a duplicate.

Federal income tax and payroll withholding are the same thing, so that's a duplicate.

Tax on social security/pension and federal income tax are the same thing, so that's a duplicate.

The "income tax" recordkeeping will be replaced with "sales tax" recordkeeping, so that's a non-issue.

Come on, no IRS?  Are you for real?

Now, don't be too picky; it's directed to our President;  does he know those differences?

If you say payroll taxes and unemployment taxes are the same,  I'll pick the unemployment taxes only and pass on payroll taxes for my business.  Can I do that??

Ditto for federal income tax and payroll witholding.  Can I skip payroll witholding?? I know I can save a bundle in accountant fees if so.

SS tax and income tax are the same??  Then why do people complain about having to pay income tax on SS?  I understand your point, but there's also a reason for people being touchy when their SS income is taxed.  Don't you think?

Do you honestly believe that income tax record keeping and sales tax record keeping will be the same.  If so, I'm 100% with you.

No IRS, for real?  Betcha.  It can be so much smaller that you won't recognize it.

 

[amt]

amt, you may be the most naive person I've ever encountered and that's
saying something.

JG

Would you care to elaborate?

 

[Mr._johngalt]

As the starter of this thread (and a hope-to-be ER in 9 years), I can see the questioning of the plan by retired folks.  However, for us still in the work force, I think it would be a good deal.

Just another little bit of information...The book is debuting #1 on the New York Times Non-Fiction Bestseller list to be published on August 21.

Well, it's going right on my "must read" list.

JG

 

[retire@40]

If you say payroll taxes and unemployment taxes are the same,  I'll pick the unemployment taxes only and pass on payroll taxes for my business.  Can I do that??

I copied incorrectly from your list, I meant self-employment tax, and that is the same as payroll tax.

Ditto for federal income tax and payroll witholding.  Can I skip payroll witholding?? I know I can save a bundle in accountant fees if so.

It's the same tax.  It's federal tax withheld from your pay to help you budget your federal tax payment.

SS tax and income tax are the same??  Then why do people complain about having to pay income tax on SS?  I understand your point, but there's also a reason for people being touchy when their SS income is taxed.  Don't you think?

Go back and read what I wrote.  I never said SS tax and income tax are the same.  I said the tax on SS/pension and federal income tax are the same.

Do you honestly believe that income tax record keeping and sales tax record keeping will be the same.  If so, I'm 100% with you.

Yes.

No IRS, for real?  Betcha.  It can be so much smaller that you won't recognize it.

Maybe in a dream, but not in real life.  Go back and read my Europe VAT post.

 

[Mr._johngalt]

Would you care to elaborate?

Are you kidding? Unless you are jerking us around, you seem to believe that the IRS/tax collection system can be totally overhauled, and that
people will climb on that bandwagon, and most incredibly, that
somehow this will make things better and more efficient, maybe even
a smaller more streamlined government apparatus. I would guess
you also believe in the tooth fairy and the Easter Bunny.

JG

 

[BigMoneyJim]

I was going to offer to set up a web site for critics of the "fairtax" to build so can avoid supporting arguments and say "read the site and then try to disagree". But it occurred to me this has probably already been done:

http://www.brookings.org/comm/policybriefs/pb31.htm
http://www.lewrockwell.com/orig4/cox4.html
http://www.mises.org/story/1814
http://www.lafayettesbest.com/category/summary.html
http://www.freerepublic.com/forum/a3b5b25282ac4.htm
http://www.gigo-soapbox.org/gigo/2002/06/18.shtml
http://www.freerepublic.com/focus/f-news/1303381/posts ( for and against arguments )

(I haven't read all these; just copied links and scanned them quickly.)

Now we can let the websites battle it out.

I just thought of something...it's difficult or impractical to buy used school supplies and used clothing for growing kids. Parents of children will be hit the hardest with the "fair" tax system.

 

[BUM]

Hi retire@40,

I think you need to relax with all this. Theres a fairtax nut gentleman a few blocks from here. He's got a nice red, white and blue sign on his lawn that points to the fairtax website. We all pass by on our daily walks, jogs, pooping the dogs,etc. If he is outside he gets a nod, maybe a neighborly wave, but thats it. That all he gets because everybody knows the guy's addicted to a pipe dream. A fantasy. Kinda like that guy on the other thread who dropped dead from playing too much Pong or whatever it was.



BUM

 

[charlie]

JG, every now and then the American people get riled up enough
about something to do the "impossible". Think Prohibition and
subsequent repeal. Think woman suffrage. Think emancipation.
Think "man on the moon". etc, etc, etc.

If you are a libertarian, or at least a follower of the Rand Cult, one
would think you would be interested in the "fair tax" idea, at
least as an intellectual exercise.

Yes, the whole idea is probably doomed to failure because of
cynics like you and the vast majority of others who are
spoon fed their "opinions" by special interest groups.

But, IMO, it is not good enough to reject a radical idea out of hand
just because it seems impossible or conflicts with your personal
biases.

I think this idea deserves careful, thoughtful analysis. Like I said
before, I am still in the information soak mode ...... leaning
toward acceptance, but still have reservations about
already taxed savings, how much prices will really drop, etc.

Cheers,

Charlie

 

[Nords]

Re: The FairTax fantasy

I just thought of something...it's difficult or impractical to buy used school supplies and used clothing for growing kids. Parents of children will be hit the hardest with the "fair" tax system.

Totally disagree-- our kid's fantasy is to live between Office Max & Staples so we spend a lot of our time watching for used school supplies.  (She's accumulated over 200 different wooden pencils, just in time to make the leap to mechanical pencils.)  

Try Goodwill or just about any summer garage sale.  We've even found paper towels still sealed in plasticwrap & unopened hand sanitizer, let alone notebooks & pencils.  I think our kid has enough school supplies to take care of HER future kids.

Business Week estimates the "gray" economy as about 10% of GDP.  (FWIW they also estimate the drug economy as another 10%, but credible sources are hard to evaluate.)  Perennial mall shoppers will be hardest hit by the "fair" tax.  But the malls will empty out pretty quickly as the economy moves to resales & barter.

 

[Mr._johngalt]

JG, every now and then the American people get riled up enough
about something to do the "impossible".  Think Prohibition and
subsequent repeal.  Think woman suffrage.  Think emancipation.
Think "man on the moon".  etc, etc, etc.

If you are a libertarian, or at least a follower of the Rand Cult, one
would think you would be interested in the "fair tax" idea, at
least as an intellectual exercise. 

Yes, the whole idea is probably doomed to failure because of
cynics like you and the vast majority of others who are
spoon fed their "opinions" by special interest groups. 

But, IMO, it is not good enough to reject a radical idea out of hand
just because it seems impossible or conflicts with your personal
biases. 

I think this idea deserves careful, thoughtful analysis.  Like I said
before, I am still in the information soak mode ...... leaning
toward acceptance, but still have reservations about
already taxed savings, how much prices will really drop, etc.

Cheers,

Charlie     

A very thoughtful post Charlie.

Yes, I am cynical to a fault. I expect very little from people and they rarely even come up to what I expect. It's not that I am not interested
in the debate. It's just that I'd rather debate something that might
have , ...........oh, say a .0000000000001 chance of happening.
This idea is DOA.

JG

 

[amt]

JG, every now and then the American people get riled up enough
about something to do the "impossible".  Think Prohibition and
subsequent repeal.  Think woman suffrage.  Think emancipation.
Think "man on the moon".  etc, etc, etc.

How true!

Here's an interview with the author of the now famous Fair Tax book.

http://www.smartmoney.com/theproshop/index.cfm?story=20050811

 

[Austin_Explorer]

The "income tax" recordkeeping will be replaced with "sales tax" recordkeeping, so that's a non-issue.

Tax record keeping for individuals would be ZERO. That is not a "non-issue". It may be a wash for businesses. I run a very small side business and I already collect sales tax for the state of Texas. It's a trivial task compared to my 1040 return!

 

[amt]

Tax record keeping for individuals would be ZERO.  That is not a "non-issue".  It may be a wash for businesses.   I run a very small side business and I already collect sales tax for the state of Texas.  It's a trivial task compared to my 1040 return!

I totally agree. That's why I mentioned that if the recordkeeping burden for fairtax is the same as that for the income tax, I will not support it; but every common sense in my body tells me otherwise.

 

[scrood]

I think the FairTax is an interesting concept....one question:

Why do proponents assume that employers will pay their employees the same gross pay?

 

[BUM]

BINGO!

 

[razztazz]

I think the FairTax is an interesting concept....one question:

Why do proponents assume that employers will pay their employees the same gross pay?

Yep. I've mentioned this before, I think on another board. You work for 100 bucks and your boss pays you 100 bucks because he knows you really only get 70 bucks of it and you need the 70 bucks to live on.

If he knew you didn't have to pay taxes he'd just start paying you 70 bucks and tell you to F off you're life hasnt changed any. But now his bottom line gets real fat. There is no market incentive inherent in this scenario to cause anybody to lower prices since the public has the same amount of take-home pay as before. Plus he gets even fatter as he no longer pays taxes himself, plus he gets to fire at least some of his accounting overhead.

It's a wealth concentration and redistribution trap based on a government policy

 

[scrood]

Extreme profit margins (usually) ensure that competitors will drive the price down....

I just think that in the short term, salaries and prices will fluctuate and then both will probably settle somewhere lower. This makes the evaluation of the FairTax a little more complicated.

This "muddiness" does not necessarily kill the idea for me....

If some states can "survive" with just a sales tax, then why can't the Fed?

 

[charlie]

I seriously doubt that employers will be able to keep all of the
benefit of zero taxes. Some will go to product price reduction just
to keep up with the competition in the fight for market share.
Some will be given back to the shareholders in the form of
increased dividends. Some will be retained as extra profit and,IMHO,
some will be passed on to the employees.

The great hand of Adam Smith will parcial it out according to market
place forces.

Cheers,

Charlie

 

[charlie]

BTW, razztazz, what employer could keep a straight face when he
argues that the employee "only needs $70 now instead of $100"
when the employee has to pay a 30% sales tax for the same basket
of goods?

Get serious, man!

Cheers,

Charlie

 

[razztazz]

BTW, razztazz, what employer could keep a straight face when he argues that the employee "only needs $70 now instead of $100" when the employee has to pay a 30% sales tax for the same basket of goods?
Get serious, man!
Cheers,
Charlie

Marketing, taking advantage of people, and favorable legislation. You get serious.

Some will be retained as extra profit and,IMHO,
some will be passed on to the employees.

The great hand of Adam Smith will parcial it out according to market place forces.

Cheers,

People who work for a living have to depend on YOUR opinion to get what's coming to them? Gee, how can we NOT afford to vote for this?

Just because "the market" parcels out this and that a certain way does not mean it is the best way. It is simply ---A--- way. The way the mop flopped. And will by definition favor those with an advantage and therefore not subject, or less subject, to those market forces.

As far as Smitty's hand, even he spoke of it only in theoretical terms admiting that it probably would not work in real life due to people's darker nature. Particularly the Merchant Class and Master Maufacture6rs, as he called them. Read the book. It's long but very illucidating. And holds little resemblance to current business models or economic theories

 

[charlie]

razztaz, I can see it is pointless to argue with you and a waste
of my time.

Have a good day.

Charlie

 

[BUM]

Hi charlie,

Gaining steam, or losing steam, I think you're getting steamed.

"We certainly are not going to find the answers in here." ... Andy Sipowitz


BUM