Fair Tax?

[m2jordan]

In the end it will make no difference. I voted no for simple reasons. In Wyoming for some reason you can not add the taxes you pay for large items like cars. So it would simply put me out of reach to purchase a car weather it is used or new. And for those of you that say they will not charge taxes on used items at a dealership, yea right and the sun rises in the west. The government will warp this and any other tax scheme to get what they want no matter what voters say.

Simply put it will have an effect on commerce as most people will delay buying stuff as they will not be able to afford it. It has already been stated here that when someone doesn't need something they think twice about buying it and it costs more.

Simply put, how many here would pay 23% more for your favorite gun.

[cjive134]

How is this "fair" again? I person making $20000 a year buys a household good for $1000 and pays a tax of 10%. That tax translates to 1/2% of his total income. Man making $100000 buys the same thing and pays a tax equal to .1% of his anual income.

[gsh341]

Some quick points.

(Stay with me, some of these are hard to comprehend at first glance.)

The Fair Tax is a national sales tax and NOT a Value Added Tax (VAT). The VAT adds taxes at every level of production. The grain that a farmer sells to the mill is taxed, the flour the mill sells to the baker is taxed and the bread the baker sells to you is taxed. If each item is taxed along the way the taxes imposed can become absolutely huge.

The Fair Tax only taxes you on the final product and only on new products. Second hand clothing and anything else you buy used is not taxed at all. This is a benefit to the poor because they can spend $100 and get 10 pairs of used jeans. If you spend $110.70 you get 3 pairs of new $30 jeans. If you buy a $5,000 used car you pay $5,000, if you buy a $20,000 new car you pay $24,600 after tax.

Since you would recieve your entire paycheck with no withholdings of any sort your $30,000/yr job will actually pay $30,000 rather than $23,602 ($6,398 in taxes). And don't forget that your employer pays the other half of your FICA so that's an additional $2,295 that he could be paying you if he didn't have to pay that tax. So the total actual tax on a $30,000/yr wage is $8,693/yr!

In the Fair Tax plan you would be paying only an estimated $6,900 and that's only if you spent every dime you made on all new products. In reality it would be about $5,500 once you removed the used goods and your investments from that equation. So the average $30K/yr employee would recieve an estimated $898 tax break. Plus they would never file another tax return or run the risk of an audit.

Plus, since the corporate income tax would be gone the corporations would have more money to reinvest in the comapny or give pay raises.

And did anyone think about every person in the country being subject to this tax? That's all the citizens, all the non-citizens and all the tourists. If you think that's not a big deal, consider that international tourists spend about $10 billion each month in the US. That's another $2.3 billion in taxes collected every month (or $27.6 billion per year) just from the tourists.

International Visitation in the United states

Also consider the huge cost saving of getting rid of the IRS itself. The IRS costs about $11 billion each year.

[gsh341]

Originally Posted by cjive134

How is this "fair" again? I person making $20000 a year buys a household good for $1000 and pays a tax of 10%. That tax translates to 1/2% of his total income. Man making $100000 buys the same thing and pays a tax equal to .1% of his annual income.

How much do you spend each year on new goods? If you make $20,000 you would probably spend about $16,000 if you saved 15% in a Roth IRA.

If someone makes $1,000,000 year, they will likely spend over $750,000.

So you paid $3,680 in taxes and the millionaire paid $172,500 or more in taxes.

For the mathematically challenged the poor person paid 2.13% of what the rich person did in taxes for that year, but both paid the same tax rate. I used the Fair Tax recommended rate of 23%.

However, if that household good you mentioned was used (even just slightly used) it cost that poor person NO tax at all!

[winnet22]

Originally Posted by XDConvert9mm

That only accounts for the Revenue side. As has been pointed out, this is 23% of the total after a 30% tax has been added on. Semantic games here.

The consumer will see how much is going to the Govt. on their sales receipt, sure. What they will not see line itemed out is that this same tax is levied at every level of the distribution process. The greatly inflated cost of goods prior to arrival on the store shelf due to this multilayered tax process will not be transparent in the least.

This does nothing to improve transparency as far as Govt. spending is concerned.

Wrong!!!!! If you were to study up on the FairTax, you would see that the FairTax is only added on at the point of sale to the consumer.

[cjive134]

Originally Posted by gsh341

How much do you spend each year on new goods? If you make $20,000 you would probably spend about $16,000 if you saved 15% in a Roth IRA.

If someone makes $1,000,000 year, they will likely spend over $750,000.

So you paid $3,680 in taxes and the millionaire paid $172,500 or more in taxes.

For the mathematically challenged the poor person paid 2.13% of what the rich person did in taxes for that year, but both paid the same tax rate. I used the Fair Tax recommended rate of 23%.

However, if that household good you mentioned was used (even just slightly used) it cost that poor person NO tax at all!

The point is, the person who can least aford to pay taxes is paying the same tax at the person who can most aford to pay taxes. In fact, if you work out the the numbers you provided the millionare pays about a 17% tax and the 20000-aire pays about 18%. How is it fair again to tax a poor person the same amount, or in this case, 1% more than the person who can most aford to pay that tax?

Even the most mathmatically challenged person can see that the poor person is going to have less money to pay for goods that he needs to survive while the rich person is going to have much more money with which to spend on things for comfort and pleasure.

[Dutchman3]

Originally Posted by gsh341

Since you would recieve your entire paycheck with no withholdings of any sort your $30,000/yr job will actually pay $30,000 rather than $23,602 ($6,398 in taxes). And don't forget that your employer pays the other half of your FICA so that's an additional $2,295 that he could be paying you if he didn't have to pay that tax. So the total actual tax on a $30,000/yr wage is $8,693/yr!

In the Fair Tax plan you would be paying only an estimated $6,900 and that's only if you spent every dime you made on all new products. In reality it would be about $5,500 once you removed the used goods and your investments from that equation. So the average $30K/yr employee would recieve an estimated $898 tax break. Plus they would never file another tax return or run the risk of an audit.

I don't know who does your taxes, but as an AARP tax volunteer, I believe that on a gross income of $30,000, payroll contributions and federal income tax withholdings amount to $5050, not $6398? And, you can't expect businesses to increase your pay by the amount of their FICA share. That money should go to reducing business costs.

[tARfoo]

Originally Posted by cjive134

The point is, the person who can least aford to pay taxes is paying the same tax at the person who can most aford to pay taxes. In fact, if you work out the the numbers you provided the millionare pays about a 17% tax and the 20000-aire pays about 18%. How is it fair again to tax a poor person the same amount, or in this case, 1% more than the person who can most aford to pay that tax?

Even the most mathmatically challenged person can see that the poor person is going to have less money to pay for goods that he needs to survive while the rich person is going to have much more money with which to spend on things for comfort and pleasure.

Hrm, let's see:

Millionaires/Billionaires that make up less than 1% in this country that also happen to currently PAY taxes.

Tens of millions who are either here illegally and/or those who are doing everything they can to not pay ANY taxes at all.

In some really Common Sense type way, I'm thinking that the title of Fair Tax is more positioned towards the latter. Let's try and keep the "fair" arguments where they probably should be, instead of worrying how Uncle Billionaire is going to "get over" somehow.

[vafish]

I voted yes because it means everyone pays taxes. Right now there is a log of illegal aliens that get paid in cash and never report their earnings. There are a lot of people that understate their income and cheat on their taxes.

If you change it to a national sales tax people only get taxed on what they spend. Don't want to pay taxes? Don't buy new goods. Very simple. Used goods would actually hold their value very well. Instead of throwing millions of tons of serviceable stuff into the trash every year people would be reselling it.

But I recall when I lived in Australia and they started up a 10% VAT. At the time they voted for it the people were told once the VAT was passed they wouldn't need an income tax. Guess what? income tax didn't disappear.

[Reverenddel]

Fair Tax on everything except:

Health items (IE: medications-OTC/Prescrip, Doctor visits, etc)
Unprepared foods
Toiletries (Deodorant, TP, toothpaste, etc.)

Everything else? TAX!