Eomund said: Also note that in our business model, Final-Fan and Eomund, Inc., the prices of our raw materials would fall, because we would not pay the FairTax to the company selling us the paper. Their cost of business would also go down and so our raw materials, namely paper, would go down as well, further reducing the cost of business.

Right, but remember:  aside from "efficiency savings", the income (et al.) tax-to-FairTax switch is supposed to be a zero-sum game.  The money's got to come from somewhere.  If it doesn't, there's something wrong with our numbers. 

What we need is a more skilled mathematician...

Eomund said: Final-Fan said: I don't want to derail my "first one issue, then the next" strategy because I fear this thread would bog down quite quickly, but I want to address one thing in your exchange with cleveland124: Him: "My biggest problem with the fairtax is currently we have a lot of #'s but they are all projections. No one knows for sure what the first year with this tax would be like." You: "Is this all that is stopping you? How many countries had an income tax before America?... none that I recall. America has always been on the leading edge of things and would continue that tradition with the FairTax." Yes, and far be it from me to stand in the way of progress, but this is an awful risk we would be taking to replace our ENTIRE tax system with one that has never been tried on any even remotely comparable scale of size and scope (AFAIK). The UK actually had an income tax before we did but it was a war tax so maybe it shouldn't count. I don't know if any other country had an income tax on a permanent basis before we did in 1913, because Wikipedia doesn't mention it one way or the other and that is where I got all my info. Well, that and the Treasury site it linked to. http://en.wikipedia.org/wiki/Income_tax_in_the_United_States http://www.treas.gov/education/fact-sheets/taxes/ustax.shtml The income tax started out as a tax on the rich! ("Less than 1 percent of the population paid income tax at [first]." -- Treas. site) Also, it was implemented to supplement tax revenue that was (A) becoming increasingly inadequate and (B) collected mainly through tariffs and taxes on specific goods such as chewing gum -- inefficient, haphazard, and half-assed all around. But more importantly to the discussion, this new income tax did not REPLACE the existing taxes -- it supplemented them, and when the new method of taxation was found to be more effective, supplanted the old ways. (Tariffs as revenue sources, random excise taxes.) So in that way, the FairTax proposal -- which, as I have been given to understand, would take full effect overnight -- is nothing at all like the introduction of the income tax. Rather, a FairTax proposal like the initial income tax proposals would, say, call for replacing 10% of the income tax with a national sales tax of whatever size would make it revenue-neutral, and call for another shift of, say, 15% every five years if an economic review board gave the thumbs-up each time. We would be entirely converted in 35 years. Not only would this guard against the plan being disastrous in and of itself, it would help people and businesses both adjust to the new system. The current "all-in-one" proposal is a leap of faith into the unknown which is unmatched in the history of taxation in the United States and possibly in modern history. I agree with your not wanting to derail this thread point, but I felt like I needed to respond. The FairTax does not replace every tax that our government levies. It will only replace Income Taxes, Corporate Taxes, Estate Taxes, Gift Taxes, Capital Gains Taxes, AMT, Social Security Taxes, Medicare Taxes, and self-employment taxes. It leaves in effect a few taxes like the excise tax. Anyways that is hardly much to mention I would assume, just throwing that out there.

Yes, but the POINT is that when the income tax was introduced it didn't ERASE the old major sources of income. Correct me if I am wrong but I believe that the taxes you name constitute over 90%* of current federal tax revenue? At the time excise taxes and tariffs were that source of income; today they are merely policy tools AFAIK. (Don't smoke; use American farm produce; etc. etc.)

P.S. I'm all in favor of continuing this one line of questioning; not derailing the thread was why I only picked one thing out of that exchange to discuss.

*Finally got it! This was hell to find but I finally got a source that seems trustworthy on this: http://www.nashvilleareainfo.com/Default.aspx?Page=FederalTaxes
2004 stats: personal income taxes: 43%; Social Security AND other payroll taxes: 39%; corporate income taxes: 10%; excise taxes: 4%; all other taxes, including estate, gift, and customs taxes: 4%. So it looks like the FairTax would replace about 95% of federal tax revenue sources.

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.

I always found it funny that my dad was in the top Quartile in the US. What with his job in a GM Plant as a skilled tradesman. That was the day i knew the quartiles were seriously screwed up.

He's a big fan of the flat tax. Even considered voting for Perot.

Eomund said: Kasz216 said: I've worked for peopel who have avoided sales tax before. It's actually quite easy from what I can tell. This is espiecally easy if you get your products overseas as you can always just pay for a certain number of products on the record at an inflated cost and have them ship more to you. These additional items just never being recorded in the sales logs with the extra profits pocketed. The FairTax does not tax inventory, it doesn't even tax the number of units sold. Think of it as taxing the total sales @ retail. So having a few extra untis not accounted for in your warehouse means very little. If you were to sell them on the side and not record them in any sales log, that is a definate discrepancy in profit in the bank account and would be traceable. If they went another step further and were depositing that side money into a private account, it could go undected for a while, but eventually things surface and questions will be raised. Having one point of sales just makes it easier because they can do it on a smaller level and reap the same amount of profits if not more. If they were to do that it is not just a FairTax issue, but a blackmart type issue and could be prosecuted as a bigger criminal act. Other commonly done practices include marking some units as either stolen, damaged during shipping or replaced with defects. Considering the large number of products that can be destroyed in some places this can be quite effective. This is a very valid point. One that could be managed by requiring all DOA or Shipping Damaged goods to be returned to the vendor and counted, then reported to the State for cross-referencing. As far as stolen goods go, a company that did that would face similar issues as above. For example, some distributors mark products as damaged, that were, the cans dented, boxes slightly ripped. (this hapens A LOT) and then turn around and sell these products to the workers at the plant/store to stores for cheaper goods or just to other people they know. (Or just pocketed themselves.) There would be a much greater reason to "accidentally" rip the packaging on these items, or even just mark them as such like above. The way this stuff is done, a looking over of the books or a manifesto isn't going to work, and even hands on inspections are pretty impossible to nail someone on. I will answer above. You raised very good questions. But for now we rely on honesty in business already, and what would make the FairTax any different? I understand your concerns, but these things are, for the most part, enforceable and checkable.

 You miss the point of the Above.

 Say I have Clocks I get from China, I buy 10 for 10 dollars and sell them for 30.  Instead I can buy "10" for 20, get 20.  Then I sell them each for 30, not having to pay the tax on those extra 10.  Instant profit.  You can say it's traceable, but it hasn't stopped these companies before.

As for the Damaged goods... once again... what if these are from overseas.  There would be no Sales tax on these in the first place.  These are just some of the smaller "every day" exploits that go on.  It'd be scary to see what they would be like if the sales tax was higher.  

These are black market issues but it's the kind of things that happen every day and would continue to even on a higher scale with the fair tax, the evasion rate might even end up higher then the more complicated current rate.  This stuff even happens in the "bigger" stores.  It would also likely up how much the bigger stores get taken advantge of instead of lessing it. 

Heck, i'd be fine with a slow transition into a fair tax to see how it'd work... however i still think it'd be best to keep a no deductions version of the income tax that just takes your money based on your paygrade for stabilties state. As a sales tax seems extremely unstable. Sure you see the money invested in stocks EVENTUALLY but if the investors are any good that's like 20-30 years from now, unless buying new stocks would have a tax to it. (or selling stocks.)

But stability can be another one of the items to hit down the rode.

If the right-wing says something is fair then it most definitely isn't. They have the Orwellian "double-speak" down to a science.

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.

EO fairly good response.  My problem is we still end at the same point.  There are so many market forces that it is hard to tell exactly where it's going to fall.  You point to Airlines as an example for all businesses.  Let's talk about Gas companies.  They are exceedingly profitable.  Demand has stayed strong at all price points and I've heard every reason under the sun for why costs keep improving.  They are also a very highly taxed industry.  Your telling me that we are going to get a dollar for dollar credit on their decreased costs?  In same of the industries where there is strong competition, like airlines maybe, but my guess is it'll vary widely accross different industries, with some giving a 1 to 1 price decrease and others giving a very small cut for the consumer. 

I think I would be much more for the tax if it was phased in as discussed above.  This gives us time to figure out how businesses/consumers will react to changes.  Plus it'll be alot easier going from 7% in sales tax to 15% than 7% to 30%. 

The other things are people are saying that some used good demand would increase and some less tourism would occur.  These are real dollars being taken from our economy that would have been given to businesses.  Again, it may be overall a small portion.  But, being in the 50,000-100,000 bracket, my effective tax rate is around 11%.  Your saying my net pay should be the same as the company will save this.  Your saying that they will pass this savings onto me, keeping consumer items at the same price.  This is fine, but if I'm paying a 23% tax that is a real pay decrease for me.  As such, I'll be forced into buying used goods to come to the same point I would have been in before.  Maybe that's fine as I'm sure I don't pay as much as a "rich" individual, I'm just saying that too many variables, too many different percents.  For all we know companies won't give us as much back, the middle class and poor will be pushed into the used markets, and the rich will all save their money leaving no one to pay this sales tax or it could just wash and everyone would save the cost the complaince. 

Again, I know the current system is complex, and costs a lot of money.  But, people have still not ascertained how the fair tax would be any better.  Is it really better to not give a medical exemption to an individual that has had a catatastric year and paid 25% of their income to hospitals?  Is it better to not give an exemption to a student going to school?  I could go all day with examples.  The details in the current law make sense to me. 

Your example on impossible controls is not necessarily true either.  Games can be good with simple controls (like wii sports) or good with "complex" controls like Bioshock.  Complex doesn't mean impossible.  And simple doesn't mean better.