And you thought the IRS is bad news?

[Firethorn]

Now, there could be a good reason they don't want to do that, but I can't see it.

The idea I got from the fairtax explanation is that Rich people, as a rule, also spend far more on food, clothing, and medical care than the non-rich people.  Thus, it's another way to get money out of them.

Based on 30% the Fair Tax that isn't will be a tax increase for the majority of middle class and lower class Americans.

Just curious, but what percentage to you think that the middle and lower class pay now?

Hmm ... that would make sense.

How is that audited?

Generally by going over the business's own records and a bit of common sense.  A office supply store might sell pens, but not likely fertalizer.  A garden supply store probably sells fertalizer, but not pens.  They also generally keep track of stock for sale differently than stock for use.

[Werewolf]

Just curious, but what percentage to you think that the middle and lower class pay now?

At the Federal Level which is all the not so Fair Tax  would impact - a lot less than 30%.

For example I earn right at $50K/year. Last year my federal withholding ran about  480/month. After filing and just taking the standard deduction on a joint return I got back $9 (I pre-calculate what I think my total tax will be and have that deducted - I'll be damned if I'm gonna give the feds anymore than I have to - it isn't like they're paying me interest on my prepaid annual tax).

So that's a bit less than $6000 which made my marginal rate about 12%. Add Fica and the other crap which runs 7.8% or so and federal wise I paid 20% to the feds. $50K puts me in the top 20% of wage earners in the USA so I imagine most pay less than 20%. At the federal level 30% is a screw job.

Of course 18% isn't the whole tax burden you've got the state which rips off even more. 8% sales tax, for me $700 a year property tax, car tags and a host of other hidden fees built in to utility bills. All of which is irrelevant because all we're talking is the feds.

Simple math - most Americans will get screwed.

[doczinn]

The idea I got from the fairtax explanation is that Rich people, as a rule, also spend far more on food, clothing, and medical care than the non-rich people.  Thus, it's another way to get money out of them.

I figured that, but most of the food difference, I suspect, is eating prepared food in restaurants, which would still be taxed. You could even tax those ready-to-eat foods to even it out a little more. As for health care, just decide what procedures are "essential" (not limited to life-saving emergency care, but some middle ground) and tax the rest.

[Firethorn]

Sorry for the delay in response, I was busy for a while.

Maybe not so simple, Werewolf

You pay 20% to the feds.  Are you married?  Any children?

By my best figure, you'd end up paying ~19% if you're single.  Less if you don't spend your entire income.  Do you invest any?

You see, the sales tax rate is 23% inclusive, which is a comparable rate for how an income tax works.  You see, with income tax the money you're using to pay the tax is also taxed.

I drafted up an excel spreadsheet that figures it out, including a quick calculater to switch between after price tax and inclusive tax rates.

Results:
Money Earned:    $50,000    
Money Spent:    $50,000    
Poverty Level   $9,000   
Sales Tax Percentage:   30%   
Tax rate:   23%   *Note:  You have to figure the tax as an Inclusive tax to make it like income.
Taxes:    $9,461.54    
Income tax % equivalent:   19%

Making half the income?

Money Earned:    $25,000
Money Spent:    $25,000
Poverty Level    $9,000
Sales Tax Percentage:   30%
Tax rate:   23%
Taxes:    $3,692.31
Income tax % equivalent:   15%

Double?

Money Earned:    $100,000
Money Spent:    $100,000
Poverty Level    $9,000
Sales Tax Percentage:   30%
Tax rate:   23%
Taxes:    $21,000
Income tax % equivalent:   21%

[Firethorn]

Current marginal tax rates for people
2006 Rebate table

Oops, looks like I'd have to figure singles as 9.8k, not 9k.

For a family of four, it'd be $26,400 annually rebated to the family, which would drop somebody earning $50k down to 11%

Money Earned:    $50,000
Money Spent:    $50,000
Poverty Level    $26,400
Sales Tax Percentage:   30%
Tax rate:   23%
Taxes:    $5,446
Income tax % equivalent:   11%

[LAK]

[Fly320s]LAK, do you mean the FairTax isn't fair because the rich are taxed the same as the poor, including prebates?  

Just to clarify:  The prebate only covers the tax that will be paid on essential household items on a per-person basis.  Each month every person, or household, will receive a check to reimburse the household/person for the taxes spent on the necessities of life.  It won't be much money; I think around $400/person.  Everyone receives the prebate, regardless of income.  No one will pay taxes out of pocket (without the prebate covering it) unless they choose to spend more money than is covered by the prebate.  So, if Bill Gates only spends enough to stay alive then he will have paid the same tax as a single person living below the poverty line.  Both people will receive a prebate to cover the taxes incured to stay alive.[END]

.... The problem is the amount of the tax, and what it is spent on as far as I am concerned. Let me reiterate that the only solution to our "tax problem" is to take the big shiny ax to all socialist spending - foreign and domestic - and the hundereds of other programs for various things whether it is the never ending "wolf studies" to things like CDC's ventures into areas out of it's realm of purpose.

It is wrong on principle as I have mentioned. The money is being spent on all this, by the trillion, and then passed onto the lowest wage earner. It is not the average voter who controls the WH and Congress. It is big corporations and the wealthy who attach their strings via huge campaign contributions to the sole two parties, who both in turn have steadfastly pursued a course of global and domestic socialism, exporting jobs, theft, waste - and the devaluation of our currency  - without any regard to principle. At least not from any conservative standpoint.

Get rid of the spending, attach tariffs to cheap imports, pay off the national debt, get the bloodsuckers off our backs with REAL money, and I would wholeheartedly support a sales tax. Because we wouldn't need a sales tax or income tax. Until then, it is a gross injustice to the average American - just as is the income tax and the IRS.

------------------------------------------------------------

http://ussliberty.org
http://ssunitedstates.org

[Werewolf]

Just to clarify:  The prebate only covers the tax that will be paid on essential household items on a per-person basis.  Each month every person, or household, will receive a check to reimburse the household/person for the taxes spent on the necessities of life.  It won't be much money; I think around $400/person.  Everyone receives the prebate, regardless of income.

Surely that cannot be right...

$400/month per person. No Way! That means any lowlife scumbag worthless teat who's never held a job for more than two weeks at a time in their life like my worthless brother will get $400 plus the welfare and Social Security benefits he's getting to just lay around and smoke dope? Or a worthless teat drug addict woman can just pump out kids and get $400 a month/kid which she'll use for drugs and not to offset the expense of basic living needs?

No WAY! Not even the morons in Congress are that freaking stupid? HELL if there's 300 million people in the country thats 120 billion dollars a month sent out - 1.4 trillion a year. And I'd bet a dollar to a doughnut that the bleeding hearts would insist on sending that check to all the illegal immigrants here too. Just keep the prebate and lower the rate of not so fair tax. At the very least make it a requirement that one must be a wage earner to get the prebate.

OR BETTER YET SCRAP THE WHOLE TAX CODE AND JUST GO TO A FLAT TAX!

[Firethorn]

$400/month per person. No Way! That means any lowlife scumbag worthless teat who's never held a job for more than two weeks at a time in their life like my worthless brother will get $400 plus the welfare and Social Security benefits he's getting to just lay around and smoke dope? Or a worthless teat drug addict woman can just pump out kids and get $400 a month/kid which she'll use for drugs and not to offset the expense of basic living needs?

He's overestimating the payment.  For an individual, it'd be $188, not $400.  For a family of four, it'd be $506/month.  As for getting welfare for doing nothing - well, I'd agree with you that that needs to be stopped.

No WAY! Not even the morons in Congress are that freaking stupid? HELL if there's 300 million people in the country thats 120 billion dollars a month sent out - 1.4 trillion a year. And I'd bet a dollar to a doughnut that the bleeding hearts would insist on sending that check to all the illegal immigrants here too. Just keep the prebate and lower the rate of not so fair tax. At the very least make it a requirement that one must be a wage earner to get the prebate.

Then you get rid of those politicians.

OR BETTER YET SCRAP THE WHOLE TAX CODE AND JUST GO TO A FLAT TAX!

What would your suggestion for this flat tax be?

Flat fee per citizen?
Flat percentage?
Flat percentage, after a standard deduction is met?

[Werewolf]

OR BETTER YET SCRAP THE WHOLE TAX CODE AND JUST GO TO A FLAT TAX!

What would your suggestion for this flat tax be?

Flat fee per citizen?
Flat percentage?
Flat percentage, after a standard deduction is met?

Flat rate - about 15% to 17% on all income regardless of source - no deductions period. Kill the capital gains tax all that does is discourage savings and investment.

A guy that earns a 100 Mil a year isn't gonna spend a 100 mil so he's only gonna pay the 30% on part of what he earns. That same guy who earns a 100 mil under a flat tax system will pay 15 to 17 mil. If he sells stock or other investments then the gain on the sale is considered income. If he lives off his cash balance and earns nothing he pays nothing. More power to 'im.

The welfare puke that only makes 10K a year pays out 1500 to 1700.  Does it hurt him more - damn right it does. Maybe if it hurts enough the sucker will make the effort to improve him/herself. Welfare reform of the mid 90's has shown that to be true.

With no deductions it will be harder to hide income from the goobermint which will still need auditers but the IRS won't have the power it has now.

For the middle class when you get old you convert your investments to cash, pay the one time tax on your gain and then live off the cash - no income - no tax. If the cash isn't enough then put it in interest bearing instruments and amortize your withdrawals so you've got zero when you think you'll no longer be around (for most folks around 80). Screw the kids let'em work for their money just like we did.

The poor can just starve for all I care - they made their beds they can enjoy starvin' in 'em.

The rich - well - they're gonna stay rich no matter what the government does - it's their money they earned it or inherited it - good for them. None of the rest of us deserve their money anymore than the poor deserve ours. BUT with a flat tax I can almost guarantee they'll pay more out than they do nowl (which is a crap load - the top 5% of wage earners pay out something like 50% of the taxes).

Possible consequences: The housing market is negatively impacted. The marriage penalty goes away. Investment - in an effort to defer taxes increases. I'm sure there would be other unintended consequences. Can you think of any?