Final-Fan said: Hey, I never even thought of THIS objection! "And then there's the fact that quite a lot of our consumer products—the TVs mentioned previously, for example—are made outside of this country. A reduction in payroll taxes on US companies isn't going to do much to bring down the price of a Japanese-made TV. But the price of that TV will still go up by 23%." http://qando.net/details.aspx?Entry=2443 What about that? [edit: Actually, now that I think about it, if the "wages and prices both rise" option was taken -- and I think it's the most likely outcome -- then this would not become a problem.]

So we are going to have 23% inflation overnight now?  I would say this would reverse the initial premise that saving would be higher and thus interest rates lower.  Inflationary economies have the highest interest rates.  It would just back to my other point.  Are people buying new now that they have all this money or are they buying used?

Final-Fan said: Eomund said: The biggest reason I feel that the FairTax is the best system to replace the current tax system, is something that only one person so far has mentioned. Look at senseinobaka (I like that name by the way) for that on page 4 of this thread. I will reiterate it here. The FairTax is the largest shift in federal power of any tax system short of removing all taxes. It takes the power of the Federal government and gives it back to the people. There are armies of lobbyist firms in DC that try to get Congress to insert a loophole for their client, or tweak the system in favor of one group. With the FairTax, it is not impossible, but the lobbyist firms cannot as easily screw with the FairTax. Expect big resistance from these firms when the FairTax is being seriously discussed as future policy. This is perhaps the biggest reason that I support the FairTax, less Federal power over my life. They have power through the tax code, giving exemptions here, raising taxes there, and trying to dictate what size of a house I can own! A democrat senator, a fairly well known one, proposed that the Home Mortgage Deduction be removed for people that own a home larger than 3500 sq. feet. Thankfully it was shot down early. This just goes to prove my point that there is power in the Tax Code and when it becomes much harder to change that code, the people have less to fear. There are all kinds of "special" sales tax rates today. Food & clothing are not taxed but sometimes they are but at a discount; some things get taxed more; etc. etc. IMO it is foolish to believe that manufacturers, sellers, and major users of various products would not push for special tax rates on retail items related to whatever their area of interest is. I'm positive, in fact, that there are sales-tax-related schemes the human mind has not yet dreamt of that would be proposed not five minutes after people see huge consequences or advantages to their pocketbooks. IMO the FairTax would actually worsen these problems as businesses are (quite naturally) the best at coldly doing what is best for their own finances ... including lobbying for special-interest tax cuts. Average Joe isn't out there bugging Senator Spendsalot for a tax break on beer guts.

HR 25, which is the Fair Tax bill, isn’t written like that. There is no flexibility and amendment process to add a loophole. In other words, and I will state this in all caps that way I don’t run the risk of understating it, TAX LOBBYIST WILL LOSE THEIR JOBS. It all comes down to one number, the effective tax rate, and currently HR 25 has it at 23%, and that effective tax rate is the only thing that can be changed, but I'd like to see how congress could do that without pissing off the American public.

This is the reason that the prebate exists. Food, cloths, shelter, and medicine will be taxed at the effective rate. The prebate is to give everyone that tax money up to the poverty line. So all basic needs will go untaxed, up to the poverty line. If you get more than you need then you will be taxed.

 

@Final-Fan:

You seem to doubt the numbers pretty strongly. Remember this bill has already been written by mathematicians, economist, and statisticians (note: Notice how this list excludes corrupt congressmen, senators, and politicians) who were given a lot of money and resources for research. The numbers work and are proven to be sound in theory. Debating the revenue neutrality is a weak position since you will have to do millions of dollars of research before you can even offer an educated opinion. 

Taxes are fine. The rich pay more because they receive more. Being a member of a society brings with it an ethical code that you can screw around with, but you can't totally ignore it without being amoral. Pay to play.

senseinobaka said: Final-Fan said: Eomund said: The biggest reason I feel that the FairTax is the best system to replace the current tax system, is something that only one person so far has mentioned. Look at senseinobaka (I like that name by the way) for that on page 4 of this thread. I will reiterate it here. The FairTax is the largest shift in federal power of any tax system short of removing all taxes. It takes the power of the Federal government and gives it back to the people. There are armies of lobbyist firms in DC that try to get Congress to insert a loophole for their client, or tweak the system in favor of one group. With the FairTax, it is not impossible, but the lobbyist firms cannot as easily screw with the FairTax. Expect big resistance from these firms when the FairTax is being seriously discussed as future policy. This is perhaps the biggest reason that I support the FairTax, less Federal power over my life. They have power through the tax code, giving exemptions here, raising taxes there, and trying to dictate what size of a house I can own! A democrat senator, a fairly well known one, proposed that the Home Mortgage Deduction be removed for people that own a home larger than 3500 sq. feet. Thankfully it was shot down early. This just goes to prove my point that there is power in the Tax Code and when it becomes much harder to change that code, the people have less to fear. There are all kinds of "special" sales tax rates today. Food & clothing are not taxed but sometimes they are but at a discount; some things get taxed more; etc. etc. IMO it is foolish to believe that manufacturers, sellers, and major users of various products would not push for special tax rates on retail items related to whatever their area of interest is. I'm positive, in fact, that there are sales-tax-related schemes the human mind has not yet dreamt of that would be proposed not five minutes after people see huge consequences or advantages to their pocketbooks. IMO the FairTax would actually worsen these problems as businesses are (quite naturally) the best at coldly doing what is best for their own finances ... including lobbying for special-interest tax cuts. Average Joe isn't out there bugging Senator Spendsalot for a tax break on beer guts. HR 25, which is the Fair Tax bill, isn’t written like that. There is no flexibility and amendment process to add a loophole. In other words, and I will state this in all caps that way I don’t run the risk of understating it, TAX LOBBYIST WILL LOSE THEIR JOBS. It all comes down to one number, the effective tax rate, and currently HR 25 has it at 23%, and that effective tax rate is the only thing that can be changed, but I'd like to see how congress could do that without pissing off the American public. This is the reason that the prebate exists. Food, cloths, shelter, and medicine will be taxed at the effective rate. The prebate is to give everyone that tax money up to the poverty line. So all basic needs will go untaxed, up to the poverty line. If you get more than you need then you will be taxed.   @Final-Fan: You seem to doubt the numbers pretty strongly. Remember this bill has already been written by mathematicians, economist, and statisticians (note: Notice how this list excludes corrupt congressmen, senators, and politicians) who were given a lot of money and resources for research. The numbers work and are proven to be sound in theory. Debating the revenue neutrality is a weak position since you will have to do millions of dollars of research before you can even offer an educated opinion.

 Also note many mathematicians, economists and staticians disagree with the plan as well.

Kasz216 said: senseinobaka said: Final-Fan said: Eomund said: The biggest reason I feel that the FairTax is the best system to replace the current tax system, is something that only one person so far has mentioned. Look at senseinobaka (I like that name by the way) for that on page 4 of this thread. I will reiterate it here. The FairTax is the largest shift in federal power of any tax system short of removing all taxes. It takes the power of the Federal government and gives it back to the people. There are armies of lobbyist firms in DC that try to get Congress to insert a loophole for their client, or tweak the system in favor of one group. With the FairTax, it is not impossible, but the lobbyist firms cannot as easily screw with the FairTax. Expect big resistance from these firms when the FairTax is being seriously discussed as future policy. This is perhaps the biggest reason that I support the FairTax, less Federal power over my life. They have power through the tax code, giving exemptions here, raising taxes there, and trying to dictate what size of a house I can own! A democrat senator, a fairly well known one, proposed that the Home Mortgage Deduction be removed for people that own a home larger than 3500 sq. feet. Thankfully it was shot down early. This just goes to prove my point that there is power in the Tax Code and when it becomes much harder to change that code, the people have less to fear. There are all kinds of "special" sales tax rates today. Food & clothing are not taxed but sometimes they are but at a discount; some things get taxed more; etc. etc. IMO it is foolish to believe that manufacturers, sellers, and major users of various products would not push for special tax rates on retail items related to whatever their area of interest is. I'm positive, in fact, that there are sales-tax-related schemes the human mind has not yet dreamt of that would be proposed not five minutes after people see huge consequences or advantages to their pocketbooks. IMO the FairTax would actually worsen these problems as businesses are (quite naturally) the best at coldly doing what is best for their own finances ... including lobbying for special-interest tax cuts. Average Joe isn't out there bugging Senator Spendsalot for a tax break on beer guts. HR 25, which is the Fair Tax bill, isn’t written like that. There is no flexibility and amendment process to add a loophole. In other words, and I will state this in all caps that way I don’t run the risk of understating it, TAX LOBBYIST WILL LOSE THEIR JOBS. It all comes down to one number, the effective tax rate, and currently HR 25 has it at 23%, and that effective tax rate is the only thing that can be changed, but I'd like to see how congress could do that without pissing off the American public. This is the reason that the prebate exists. Food, cloths, shelter, and medicine will be taxed at the effective rate. The prebate is to give everyone that tax money up to the poverty line. So all basic needs will go untaxed, up to the poverty line. If you get more than you need then you will be taxed. @Final-Fan: You seem to doubt the numbers pretty strongly. Remember this bill has already been written by mathematicians, economist, and statisticians (note: Notice how this list excludes corrupt congressmen, senators, and politicians) who were given a lot of money and resources for research. The numbers work and are proven to be sound in theory. Debating the revenue neutrality is a weak position since you will have to do millions of dollars of research before you can even offer an educated opinion.  Also note many mathematicians, economists and staticians disagree with the plan as well.

Last I heard, the FairTax projections were assuming tax evasion rates of zero percent. That is a very stupid combination of economics, statistics, and mathematics. Now, I haven't read the FairTax bill itself. Does it specifically prohibit special tax rates aside from the general sales tax rate? (Don't you dare give a bullshit answer on this: don't say yes unless you know for a FACT.) Otherwise, you can bet your ass those lobbyists will not be losing their jobs ... and even if there is, they'll lobby to take out the prohibition. Sure, the first thing they'll argue for will sound good and you'd have to be heartless to deny the (whoever the beneficiaries will be) but that's EXACTLY what happens to the income tax. There's nothing particularly complex about the basic income tax bracket system, and you could just as easily argue, "well there's no way they'll put in special tax brackets for ___"! And they didn't. They added writeoffs, deductions, etc. And there was no public outcry, or not nearly enough of one. I'm 100% sure that someone will think of something when the FairTax is almost the ONLY tax around. "Debating the revenue neutrality is a weak position since you will have to do millions of dollars of research before you can even offer an educated opinion." AHAHAHAHA. We're not even talking about the revenue neutrality per se right now, but tell you what. You go do your own millions of dollars of research and then tell me I need to do the same -- or we can both look at the studies that other organizations have done.

Sorry I haven't been responding guys. While at work I actually had to.... *gasp* WORK! Also when I came home I didn't rush to this debate like I have been, I simply enjoyed a night off. I will respond today to the things that I can.

Alright, after reading the bill (both the actual bill FairTax Bill a simple english summary) I have a few more insights that bear talking about.

The main arguments currently against the FairTax in this thread are:

1) Tax evasion will be rampant.

2) The FairTax will become as convoluted as the current Tax code.

3) Price increases on imported goods by adding the FairTax.

4) A person can simply import goods from another country.

5) Administering the Prebate will be expense and will form a new agency.

6) People will simply barter their goods to avoid the tax. 

1) You say that people will evade the FairTax, and you are right. However, it is of note that there will be a reporting system via telephone or other means to report violations of FairTax Law (Section 501(d)). There will also be a rewards program for people who "assist ... in discovering or prosecuting tax fraud may be remunerated" (Section 501(h)). This will help in keeping down the evasion rate. I understand that this will not eliminate tax evasion, but it will help cap it. This is not the only anti-evasion measure. Another measure will be that every business shall designate a tax matters person (Section 502). I must assume that this person will have some say in the business dealings. If the tax matters person is found out to be lying, then he, along with the perpetrator, will be prosecuted for tax avoidance, which can be punishable by upto 2 years in prison (Section 505). That person will not risk his own interests for that. 

2) The FairTax rate is determined the sum of the General Revenue rate, the Social Security rate, the Medicare rate (Section 101). The rate can be adjusted, but only by adjusting these three rates. HR-25 calls for a General Revenue rate set at 14.91, a Social Security rate at 6.31, and the Medicare rate at 1.78 (Section 904, for a combined Federal Tax Rate of 23%. The revenue raised by the FairTax is allocated proportionately between the three rates, as determined by the each rate's proportion to the total Federal Tax Rate (Section 904) (eg. General Revenue @ 14.91 gets 64.83% of FairTax revenue, etc.)

3) Section 905 lays the groundwork for adjusting the the FairTax rate within Treaties between foreign governments. The FairTax rate applied to imported goods produced outside of the US Tax system can and most likely will be adjusted to a more favorable rate. We do this mutually with the other country. This will put American goods on a much better competitive footing internationally. Exported goods have no tax bill, either embedded or applied (Section 102 and 203). This will help revive more jobs in manufacturing and production.

4) When imported goods (going directly to an end user) go through customs they must have a declared value, which will be taxed. The purchaser is responsible for paying the FairTax (Section 101). Since these goods have not been under any US Tax before this, all goods, whether new or used, will be taxed under the FairTax. The FairTax defines a used item as one that has not been taxed either under US Income laws or under the FairTax (HR-25 Page 17 line 12). So all imports that are not for business use will be taxed.

5) The Prebate will be administered by the Social Security Administration in the form of checks in the mail, electronic funds transfer to a bank account, or a "smart card" which can be used much like a bank debit card (Section 304). 

6) People that barter goods are responsible to pay the FairTax on the item priced at current market values (Section 103(f)). If they fail to pay they will be penalized for failure to comply just as they would if they did not remit the FairTax to the STA of their state. Consequently if two people barter goods, they both get things of equal value to them with no loss of profit, therefore IMHO no tax should be assessed. If two businesses do it, it is an business to business transaction and is already FairTax free.

Any more questions that I can do my best to answer? I will add them to new lists to answer from HR-25 itself, with commentary provided by myself. 

1) See Barry Bonds trainer who is in jail (I think still) for not ratting out Barry Bonds. Paying someone really well to be a lackey and a scapegoat really can and will happen. People will risk 2 years in Jail if it means they get to make a lot of money.


2) I still don't see how this prevents them from taking this out... at first for an exception for say... war victims, or single mothers etc.

3) So goods going outside of the country don't have the fair tax applied to them. Sounds like another good way to avoid the fair tax. Make the products here, then sell them in a corporation created in a country with a favorable rate and then ship them back when people buy them online, now at the lesser agreed opon rate.

Or just say they're being shipped overseas when a third of the listed shipments are being sold in the stores.

4) This doesn't prevent people from misstating it's value.

5) I sure hope they fix the Social Security Administration then... as they already do a really inadequete job with what they have now. It took us forever to get my grandma's SS right.

6) So the Fair tax is also a Gift Tax if you make what is being given.

6a) So does that mean lumber isn't part of the fair tax. IE lumber i would buy and other construction matierals, like say glue etc.

6b) If these items are being taxed isn't that penalizing really small buisnesses AKA people who buy things from places like Office Max and sell there crafts online.

Kasz216 said: 1) See Barry Bonds trainer who is in jail (I think still) for not ratting out Barry Bonds. Paying someone really well to be a lackey and a scapegoat really can and will happen. People will risk 2 years in Jail if it means they get to make a lot of money. Yes, but not as many people will not want to pay that kind of price for someone else. I cede that some people will, but there are also people under the current system who do the same. 2) I still don't see how this prevents them from taking this out... at first for an exception for say... war victims, or single mothers etc. There are a few exemptions already. Non-profit organizations (including churches) can be exempt, provided they apply for it and are accepted. If other groups get exempt later, they would have to apply as well and meet criteria. 3) So goods going outside of the country don't have the fair tax applied to them. Sounds like another good way to avoid the fair tax. Make the products here, then sell them in a corporation created in a country with a favorable rate and then ship them back when people buy them online, now at the lesser agreed opon rate. Or just say they're being shipped overseas when a third of the listed shipments are being sold in the stores. That is a lot of work for a simple tax cut, and that would be a somewhat traceable attempt to avoid the tax and therefore fraud. 4) This doesn't prevent people from misstating it's value. True, and people do this now. Customs checks things already, how much do they miss on excise taxes and other things currently? I have no figures about this. 5) I sure hope they fix the Social Security Administration then... as they already do a really inadequete job with what they have now. It took us forever to get my grandma's SS right. I agree that the SSA is a huge agency and largely inefficient. However I also believe that the electronic dispersal would be easy to impliment and manage. 6) So the Fair tax is also a Gift Tax if you make what is being given. Just as a note, the FairTax also eliminates the Gift tax. But I think you were referring to what the FairTax would be like when applied to bartering. Even with that explanation it is incorrect as the goods traded are not going one way. I do not believe that the government should be involved in a level of business that makes [edit: removed extra word] person to person trade or barter taxable. If they did then every time friends trade games we would need to pay the tax. I simply do not believe that is 1)possible to trace, or 2)Fair in any way. If the FairTax becomes that burdensome, even I will move to reduce the government involvment in my life at that point. 6a) So does that mean lumber isn't part of the fair tax. IE lumber i would buy and other construction matierals, like say glue etc. What? If you barter, buy, or otherwise purchase lumber and you are not an authorized business (one that has the business to business exemption) you will/should pay the FairTax. 6b) If these items are being taxed isn't that penalizing really small buisnesses AKA people who buy things from places like Office Max and sell there crafts online. Small businesses can claim a tax credit for such items with the STA of their state. They will be refunded for the tax applied to their purchase. [EDIT: Also people who make these "crafts" are either doing this for one of two reasons, for supplimenting their income, or as a hobby. If the craft is to suppliment their income I would submit that they will have more disposable income with their wages and the Prebate. If the crafts are a hobby then the person will not be eligible for tax exemption. The FairTax defines a hobby as not a for-profit venture. In order to receive the business to business tax exemption, the received "gross payments for the sale of taxable property or services that exceed the sum of-- (1) taxable property and services purchased; (2) wages and salary paid; (3) taxes (of any type) paid," (Section 701). In other words if you spent a combined total of $10,000 on the "hobby of crafting," including wages, taxes, and goods purchased to make the crafts, you would need to get paid $10,000 or more. If you met that requirement, you can get the Business to Business exemption.

I am going to guess that you did not actually read the bill yet.... That's ok, because that is why I am here.

[EDIT: to everyone visiting this thread who are people who are new to the FairTax, or have limited knowledge, please ask questions. I will answer them inbetween answering the rest of the posts]

I'll do a thorough response later, but for now: Your list neglects my objection that the FairTax gives a huge tax cut to the rich that's paid for by the middle (and lower-middle and upper-middle) class.

I'll be checking the posts for other possible oversights.

[edited out my little misunderstanding.]