Fair tax

[tallguyinheels]

This is the hot topic at our work today...

Actually not that controversial, other than it proposes we get rid of the IRS and replace all federal tax revenue (individual and coorporate income, FICA, estate, and others) with a National Consumption, or Sales Tax of 23% on all goods or services. Most prices we pay will be the same, it logically proports, because the cost of the income taxes imbedded in the products we buy is on the average about 23%. And it is called the fair tax because everyone will get a "prebate" each month to cover the tax paid on essential items - food, transport, etc. Because of the this nothing will be exempted from the tax. The "prebate" amount is only determined by the number of family members - a family of six gets more than a family of three as will cost them more to by the essentials.

Things I like about the Fair tax.

It is intelligently progressive. When Shaq goes out and buys a $250,000 custom Hummer - He pays $57500 in taxes... more than about 30 or 40 of us normal folk will pay in consumption taxes for the whole year. If he uses that same $250K to buy stock in Apple computer he pays nothing.

It generates government income from "Cash only" or "undocumented" workers and "illegal" economies (such as drug dealers) because they use their income to buy stuff - and the "undocumented workers" will have to become documented in order to recieve their rebate. Tourists from other countries also will contribute to our tax revenue. Remember, the price of a Disney World ticket won't like go up, the taxes go to the government during the transaction of purchase instead of the transaction of paying its workers.

It benefits the older and retired folk, because they live on fixed income and they likely are done with much of their "major" purchases in their life. The monthly amount they get from government will be addition income than they do not get now - notice that Social Security benefits payments are not effected, only the source of the SS revenue has changed. And the prices do not change for the stuff you buy.

American manufactured goods are the ones that will benefit greatly - so we will see a resurgence of foreign investment in American Labor - instead of the other way around. A product made in China with non-American labor will not be able to adjust their price downward as far as the American produced product because it contains less income tax savings.

www.fairtax.org

[Bubba136]

I like that idea. However, I don't like the 23% tax rate. I would rather see one around 10% to 12%.

[Dr. Shoe]

It is a superbly efficient form of taxation. No need for tax auditors etc, it doesn't matter if you keep your money "off-shore", tourists and foriegn nationals who wouldn't otherwise pay tax will be caught in the net too. I think that the Government's Tax income will increase so much that coupled with the reduced expenditure on the tax collection expense the tax could well drop as low as 12% after a few years. As stock is not taxed (and neither is the income) this encourages inward investment. Why bother with the "prebate"? A family of three will spend less and so pay less tax than the family of six. This looks like a sop to keep the tax administartors happy. Question: Will the tax only be applied at the retail sale or at all stages of distribution (like VAT)? If I buy a quantity at wholesale to reatail in my shop am I exempt the tax, or do I claim it back? Wow, I like it!

[j-turbo2002]

I am in support of Fair Taxation! I have been for quite some time. I received the book the other day and I need to start reading.

[hoverfly]

I am in support of Fair Taxation!

I have been for quite some time.

I received the book the other day and I need to start reading.

If you have not read it yet I suggest the you pick up a copy of, America: Who really Pays the Taxes? By Donald L. Barlett and James B. Steele. It's an eye opener to our tax system.

[j-turbo2002]

Yes, I have heard of that book before however, I did not bother to read it because a mathematician friend of mine said that it lacks some detailed and credible analysis. Now, keep in mind I do not know that this is true or not because I have not read the book (but I will one of these days). However, all that being said, it would not surprise me if that were the case because typically, when you read books like this, usually the author just throws out numbers and problems at you and then says things like, "This is bad because...........". In these books, there is never really any hard mathematical analysis that proves what they say is bad or good respectively. I am hoping that this new book has some analysis. However, if it does not, I will not be surprised.

[Dr. Shoe]

Hopefully this system may cross the atlantic though I doubt Brussels will allow it!

[j-turbo2002]

Well, I finally had a about an hour to spare tonite and I decided to crack the book open and do some reading. I read the Preface, A Word from Congressman John Linder, A Word from Neal Boortz (the author), the Introduction, Chapter 1: The History of Our Income Tax, and Chapter 2: ..........Then Came Withholding. So far I have been pretty impressed with what I have read. The author(s) candidly set you up for what you are about to read and then they give the breakdown of what the book will cover in the Introduction. To be brief, I have been very inpressed with the historical accounts in Chapters 1 and 2. In Chapter 1, the author(s) give a very well summarized history to the income tax system and how it came about (i.e., the reasons for it to come into existence). In Chapter 2, the author gives a well detailed historical perspective as to the present day concept of withholding and how it came to be in existence. I have yet to get into the real "nitty-gritty". More on that later...........

[texasbumpkin]

This is a little off topic, but I think that it is rather interesting that people who reside within Washinton DC are taxed, yet not given representation in government.

[Dawn HH]

It sounds like an idea that could help save everyone some tax money and still catch the ones that cut their taxes by loop-holes or pay as little as they can. This way everyone is equal and taxed equally. The tax rate needs to be cut substantially and as quickly as possible. Then we could eliminate the IRS and a few other offices that we don't really need. I like the idea myself and will be very much surprised if it ever will be instituted. Cheers--- Dawn HH