Great insight Sqrl. This is why a fairer tax system is needed. I have never been employed by a poor person. If we drive the "filthy rich" to leave because they perceive, and rightly so, that they are being "milked dry"/"Ridden hard and put up wet"/"Treated unfairly" then who will we tax next? Where will the jobs come from?

I work for a small business and the owner isn't rich. We aren't doing as well as we would like. But under the FairTax they would not be under the burden of matching my Social Security contributions or paying other hidden taxes. My company wouldn't pay any taxes for employing me at all. That would free up capital to Advertise, give me a needed pay raise, and/or lower costs to bring in more new clients.

Consider also this. You are currently under the FairTax. You don't have to worry about filing a 1040A, 1040, 1040EZ, or any kind of tax return form for the IRS (which would not exist). You simply take home every penny they earn and spend it the way you want to and where you want to.
Now some slick politician tells you about a great plan for tax reform.
You ask him "What kind of plan?"
He says that he will abolish this UNFAIRtax and replace it with an income tax.
You ask for more information.
He tells you that it is really easy and all you have to do is file a claim every April the 15th with a new agency that will have the power to seize your assets called the IRS. He further explains that you can get all these "Tax Exemptions" and "Tax Credits" that will count against your tax bill every year.
You ask how the tax will be collected.
He tells you that it will be collected before you even know it is gone. It will be taken out of your paycheck before you get paid every week or two. He further says that the "evil corporations" will be taxed as well and there will be all sorts of new taxes like the capital gains tax and the estate tax.

Now since you live under the FairTax would you switch to our current system?

Look Legend you are acting childish. The Rich are Rich for one of two reasons. They achieved that wealth through hard work and blood, sweat, and tears; they inherited that wealth from someone who did. Who are we to punish those people for their achievement? We are not entitled to their hard work. We should not punish people for making the money to buy 3 houses and 5 SUVs.

The illegal immigrant issue is another talk altogether. There are many problems needing to be fixed on that front. And Washington does NOT want to fix the current problem. They have again refused to build the border fence to secure America. They took the money appropriated for the fence out of the omnibus budget TODAY! F*** those bastard politicians. I WANT MY COUNTRY SECURE FROM A BLATANT SECURITY HOLE! IT IS THEIR JOB TO ENSURE TO PROTECT AMERICA AND THEY ARE REFUSING TO DO IT! ..... 1,2,3,4,5,6,7,8,9,10..... ok.... sorry but that is a sore issue for me. Pray do not bring it up again.

Legend11 said: I agree, I mean how is someone supposed to live with only 3 houses? And only 5 SUVs? Seriously how can anyone function with only 5 SUVs? And now those bastards in Washington are coming down hard on the illegal immigrant hired help? How dare they?!???! Why in hell can't the Government just keep it's greedy hands out of their pockets? That need to survive to ya know...

What was the point of this?

If you want to make a point then perhaps you could do it in a civil way so that people can respond to it. Nothing in your post is really an argument, its just a bunch of sarcasm meant to attack the people you disagree with without putting your own view up for discussion.

Edit: I'll also say that regardless of how much you or anyone else disagrees with their motives they are well within their rights to pick up and leave. Complaining about that reality isn't going to change the fact that its happening.  And I doubt anger will bring anyone food or jobs when the economy tanks.

I've got a hypothetical situation for you, Eomund: You address the specific criticisms people have posted instead of spinning fairy tales.

I will do so tomorrow, my wife says I need to go to bed because I work tomorrow... sheesh, work.... like I need to get paid or something...

Eomund said: The illegal immigrant issue is another talk altogether. There are many problems needing to be fixed on that front. And Washington does NOT want to fix the current problem. They have again refused to build the border fence to secure America. They took the money appropriated for the fence out of the omnibus budget TODAY! F*** those bastard politicians. I WANT MY COUNTRY SECURE FROM A BLATANT SECURITY HOLE! IT IS THEIR JOB TO ENSURE TO PROTECT AMERICA AND THEY ARE REFUSING TO DO IT! ..... 1,2,3,4,5,6,7,8,9,10..... ok.... sorry but that is a sore issue for me. Pray do not bring it up again.

I don't mean to get you all riled up Eomund but I just did a little poking around and was shocked to find that: http://cuppapolitics.blogspot.com/2006/05/clinton-tougher-on-border-than-bush.html http://usliberals.about.com/od/immigration/a/IllegalImmi.htm Highlights: --Clinton hired more agents per year than Bush. (average as of the May '06 newspaper article) --More illegal immigrants were intercepted in any five-year period of Clinton's presidency than the first five years of Bush's. --In 2004, the US fined ZERO companies ZERO dollars for employing illegal immigrants. --When the INS was folded into Homeland Security, the hiring of an additional 10,000 agents -- 2000 per year -- was required by a law Bush signed in 2005. The White House then submitted a plan calling for 210 additional agents in 2006. (Congress made a rare bipartisan effort to push through plans for 1500 instead.) Even leaving aside comparisons to other administrations ... ZERO in 2004? God damn it.

I'm all for it since I like to save for tomorrow and invest.

Questions:
Do you pay tax on rent or buying a house?

Do you pay tax on medical bills?

Is estate tax eliminated?

Eomund said: This thread isn't simply a Pro-FairTax only thread. I want the detractors to factually attack it so they can be set straight....

You should probably avoid telling everyone that you're right and they're wrong right off the bat if you want to foster an open discussion.

Also, I know this was brought up already (sorry for coming to the thread late) but the 23%/30% thing is really important. When you tell someone that a tax is 23%, they assume that a $1.00 item now costs $1.23, when it would actually cost $1.30 (because 30 cents is 23% of $1.30). Yes, it's an inclusive tax, and we get that, and it doesn't matter, because misleading is misleading no matter how technically correct it may be. The Fairtax is a 30% sales tax.

I'm in favor of a consumption tax, btw. I don't like all this "prebate" stuff, I think that we should instead just not charge the consumption tax on basic needs like food, clothing, the first $20,000 of your first car's value, the first $X of your home's value or the first $Y of your rent each month, etc.

As far as the issue of spending decreasing because of people saving more money, this is not such a big problem, but it is the reason that we need a transitional period. Two things are going to happen simultaneously: Prices will go up, and paychecks will go up. Consumers might have "sticker shock" for a few seconds until they realize that they're also making a lot more money. Yes, savings will be encouraged even after the "sticker shock" wears off, but this is not a bad thing. When people have more money saved, they will spend more money because they will be more financially secure. A good average credit rating is good for the economy, not bad.

 

EDIT: Ah, used goods!  I knew I was forgetting something.  I would think used goods that are sold back from a reseller would still have the Fairtax applied.  But you wouldn't need to pay a tax at a garage sale or anywhere that you don't need a business license.

i think this thread demonstrates exactly why voters should at least take a lesson or two in economics so that politicians' ridiculous proposals can get laughed off.

all the reasons are sensible, but a deeper analysis as in classical economics reveals the pros and cons in fuller detail. the problem is that they proposals ARE sensible--on surface--and politicians exploit this.

not to suggest that the current state of economic theories is anywhere close to the point where it gets even the simplest of problems right. the whole subject is just too complicated, and ultimately, politicians are the ones paid to make decisions. but i hope there's at least SOME economic reasoning guiding them.

again i use the canada GST example: from what i've read, it's more politically motiviated. or bush's tax cuts--again looks more politically motivated than "stimulating the economy", though it's not at all clear-cut how the effects turned out.

people often say a beneficial dictatorship is a better gov't system than democracy. it's possibly true as long as you ignore the possibility of the dictatorship going out of whack. let's see... china, for instance, for the last 15-20 years have been doing almost everything right, making decisions that simply can't be made in democratic countries--just look at the mess India constantly finds itself in. then again, maybe 8% growth is good enough anyway, aiming for 10+% isn't really necessary.

anyway, end rant.

Andir said: JMan said: Simple: Large amount of income =/= being rich =/= paying more tax. 1. People who are rich and save their money (to make more money with) aren't spending it. So that ties up a good deal of the "potential" tax. 2. Just because you have a large income does not necessarily mean you live the wonderful life. 100,000 in NYC doesn't go nearly as far as it does in Denver, Colorado. The expense difference causes those people in higher cost of living states to pay a larger portion of the taxes. Is that "fair"? 3. Large Families may have a large income and a huge expense bill. Is it fair to make them pay more tax when their overall standard of living may be lower? By the way, poor people are more likely to have large families than rich. And that's just off the top, without even digging into this. I'm sure there's some standard response to all of those, so go ahead and post them and let's see where this goes. By the way, I'm heading out, so don't expect a response from me anytime soon. And I'm not opposed to the fair tax. I'm posting what I consider my first concerns the concept. My few concerns on your perspective here are that there a very few people (percentage wise) that are in the very high tax bracket and those with money will likely find a way to spend it (or whoever inherits it will.) In essense, the money will be spent in one form or another, those that save their money for a later date re-inforce the economy later when it's needed. If they are out of a job and not contributing to the income tax, they are most likely still spending money and paying the consumption tax. In effect, those that save for a rainy day are protecting the economy in the grand scale of things. And about the cost of living. The 23% you would be spending on everyday things would likely be less than you pay out in taxes unless you are one of those that lives with your credit card maxxed out and every penny goes to repay that month to month. The poor will likely be those that spend the entire paycheck as you noted, but the percentage going out is less than that being spent in income taxes, add that to the "prebate" and you'll likely have more money in the "less fortunate" people's hands year to year.

Well, the problem here is that the wealthy accumulate wealth, not spend it. Sure, they spend some, but have you seen the top earners in the world? Do they stagnate? Do they go down each year? No, as I recall, they have more money year after year. It's typically a function of "money working to make more money". If they pass it on to their heirs, their heirs are now wealthy and just as likely to hold it. But under the current tax system, that money can't pass from generation to generation untouched because of the inheritance tax. That encourages the person to do something with it rather than just hoard it, because eventually the government will get it anyway.

And no matter how you argue it, there is simply no way that I would end up paying less in federal taxes overall. If I pay less, then somebody else has to pay more because the federal government is spending it. They'll set the rate high enough to keep the total tax revenue the same (or more). The only way I pay less is if the federal government stops spending as much and lowers the tax rate. And that's applicable to both versions of the tax code anyway.

New concern #1: What about all this money people, including me, have set aside in Roth plans specifically to avoid tax? Now that's taxable? Is that fair that we paid tax on it and have to pay tax on it again when somebody who did a regular IRA only has to pay the tax once?

Old concern (#3): Is it fair when two people make the same amount of money but one has to pay more in expenses (foster parents, for instance) that the one that has more expenses is now covering a larger part of the tax burden because of the fair tax?

Just off the cuff, I'm thinking it needs to be exactly the opposite. What about inverting the fair tax system? If you save money, they tax it. If you spend it, you don't get taxed. That would stimulate the economy and force rich people to start doing something with their money rather than keeping it tied up in stocks, unless the stocks are performing well enough to outpace the taxes. To me, this seems just as logical if not more so than the fair tax being proposed. The poor would pay none of the taxes unless they had enough disposable income to start saving (in which case, they are moving out of the "poor" classification, no?) And the rich would have to start spending lots of money / giving it away to other people who would spend it. That would have a massive stimulation for the economy. Of course, this is the real world, and more likely the rich would just find another way to hide their money so they could keep what they've earned. That's what they do. That's what I would do too if I were rich.