Fair Tax

[seeker_two]

Main "hiccup" to the Fair Tax is the gov't infrastructure needed to process and issue the "refund" checks. The expense of that could be better spent on reducing the sales tax from the beginning.

One big thing I like......by letting the states be in charge of the tax collection, states can get back the influence that they lost when they lost the power to elect Senators. FEDGOV gets too high-horsey = states strangle them with purse-strings....

Fashion the National Sales Tax like the Texas Sales Tax (no tax on unprocessed foods, meds, etc.), and it'll all be good....

[Doggy Daddy]

Want a bigger monthly gov't cheese prebate check?  All you need is a bigger family.  Or smaller verifiable income.  I don't see how that could be troublesome at all.  [/sarc]

[lupinus]

I would prefer that essentials, like food clothing housing and medicine, just not be taxed or taxed at a reduced rate.

Plenty of state sales taxes do this, a fed system can too.

[charby]

The problem with leaving some items not being taxed is that once 1 or 2 items have been given a tax free status, then powerful lobbyists will try to get more items tax free.

Also more weathly people tend to spend more on food then poor folks, pretty easy to figure out, poor will buy hamburger and the weathly will buy fillet mignion.

It really is a fair tax because you are taxed on consumption not income, want to pay less tax then purchase less items. The prebate works because it keeps items from being tax free.

What is wrong with a household counting on the prebate check as part of their monthly budget, it just means that up to a certain amount spent each month will be "tax free".

Also the arguement about having more offspring to get more money also applies to welfare/foodstamps/etc that aren't going away with the fair tax.

[Ben]

I hate income tax as much as the next guy, but "Every person pays %10 on everything over $X in a year, on both income and capital gains on investments" has the advantage of utilizing existing bureaucracy instead of creating new, and only requires fed monitoring of two things they already track ie income and cap gains.

I would not mind this except I have a beef with the capital gains tax. To listen to Obama, et al., the only people who make capitol gains profits are those Wall Street guys that wear top hats like the little Monoply game guy. There's a lot of us working stiffs that stick our money in investments that may realize capitol gains (outside of the allowable pre-tax retirement set-aside).

If I cash out any of those investments, I get hit on capitol gains taxes based on money invested that I was already taxed on via payroll taxes. So in essence, I'm double-taxed on my earnings. This is part of what's burning me up about Taxaggedon if it goes through - the ridiculous increase they want for capitol gains taxes makes the little guy investors like me want to stick our dough in a mattress and never let it see the light of day.

[Levant]

Any tax program used to write government checks to any individual is not a fair tax.  Government checks should go to government employees and contractors only and then only in payment for an honest day's wages and fair prices on products.  There is never any reason why government should take my money and give it to someone else.  That's never fair.

[charby]

Any tax program used to write government checks to any individual is not a fair tax.  Government checks should go to government employees and contractors only and then only in payment for an honest day's wages and fair prices on products.  There is never any reason why government should take my money and give it to someone else.  That's never fair.

I don't think you understand, everyone gets a rebate. You are being refunded your money.

[Balog]

Ben: yeah, I hear on you on the cap gains thing. I was mainly thinking of it as a way to keep the leftists and squishes from getting all upset about "the rich" who have no income aside from capital gains not paying taxes.

Perhaps >$X for income, >$Y for cap gains where $Y is high enough to not constitute a bar to entry for smaller investors?

[drewtam]

I think we could achieve the sales tax system now without rebuilding the entire law. Continue with an income tax, just make yearly net increases in savings, equities, bonds, house principle payments, etc tax deductible.

This would have the same effect of being a consumption tax, because all savings & investment would be tax deductible. The only benefit it would not capture is the simplified tax code. But it would avoid prebate checks and the almost inevitable result of having both a sales tax and an income tax.

I know the fair tax says get rid of income tax before adding sales tax, but that is not how the "compromise" in Washington works. Just look at Illinois: 1-2%/yr Property tax + 7-10% Sales tax + 5% Income tax. One of the many states in the country that "has it all". Now think, is the Federal gov't going to follow the Illinois & California example, or the Florida & Texas example (sales + property tax). Which do you think? Yeah, I know which one to place my bet on.

[zahc]

True but if you read the fair tax information only newly built houses will be taxed and only on the building materials and labor to build it. Used houses will be sales tax free.

And what makes you think it will stay that way? What makes you think that the government will revel less in micromanaging a sales tax, than they do in micromanaging an income tax now? Remember, the income tax was like 1% when it was introduced. Somehow, I can't read this post without thinking 'Sucker'.

[charby]

And what makes you think it will stay that way? What makes you think that the government will revel less in micromanaging a sales tax, than they do in micromanaging an income tax now? Remember, the income tax was like 1% when it was introduced. Somehow, I can't read this post without thinking 'Sucker'.

As Congressman King said, the people keep it in check, you don't like it, you vote them out.

[zahc]

Ah, but remember, there is no 'You' here--no solid block of voters; a fiction. Only special interests, classes, and races, and regions, all of which have different incentives and who derive different benefits from a given tax policy. Mr. King's suggestion could just as well be applied to the current income tax. Why is it not working with the income tax? Why would it work with a sales tax?

[brimic]

It might work better than the current system we have but implementing right now is just fiddling on the deck of the Titanic. Until we can reduce the size and scope of the federal government in a very significant manner, no tax scheme is going to be fairer let alone pay off our debt anyway.

We might as well wait until our economy really tanks or until our weimar-dollars hyperinflate because all of the numbers on the prebate chart are going to need a few more zeros after them.
Any prebate or tax exemption scheme is going to be ripe for abuse and social structuring as well.

[HankB]

. . . Also more weathly people tend to spend more on food then poor folks, pretty easy to figure out, poor will buy hamburger and the weathly will buy fillet mignion . . . 

And yet I've seen people at the grocery store buying high grade steaks and jumbo shrimp with food stamps, when my shopping cart has hamburger. 

[RevDisk]

Most fair tax (or flat tax) arguments I've seen have all had pretty serious poison pills. Most of them want no capital gain taxes, no corporate taxes, some rebate, or a sales tax.

Why not add up all the revenue the IRS gets from individuals, figure out what percentage that would be per person for anyone making over X, and call it a day? No exemptions or deductions. Before anyone goes ballistic over the cutoff, seriously, the amount collected by anyone under say $15k would probably not balance out the costs of collecting it. I just tossed out $15k, I have no idea what the real number would be. Knowing some folks in that bracket, they really need the cash more than scoring some ideological point. If you really need to make an ideological point, put a $1 tax on anyone under whatever the sane cutoff would be.

[Scout26]

I'll go back to my "Pay all your taxes at the polls". 

A Flat tax of say 10-12% (on everything) and you won't have to send out refund checks. 

I'm sorry, but if you live in this country, you have skin in the game, you need to pony up and help pay for roads, sidewalks, bureaucrats, and soldiers.  Having to write out a check to the state and local .gov's at the polls and you can bet your ass people will be involved in their .gov's. 

And the flat tax can be on income (you make X you pay 10% of X) if over 18 (voting age) and paid at the polls.  Or a 10% sales tax on everything.  No rebates.   

All other taxes have to be eliminated first.   

[RevDisk]

And the flat tax can be on income (you make X you pay 10% of X) if over 18 (voting age) and paid at the polls.  Or a 10% sales tax on everything.  No rebates.   

Including or excluding capital gains?

[Ben]

Ben: yeah, I hear on you on the cap gains thing. I was mainly thinking of it as a way to keep the leftists and squishes from getting all upset about "the rich" who have no income aside from capital gains not paying taxes.

Perhaps >$X for income, >$Y for cap gains where $Y is high enough to not constitute a bar to entry for smaller investors?

Understood. It's kind of a sticky wicket I guess. There should be a fair way to include capitol gains in an overall fair tax. I just get jittery if I see it separated, because I think it can become a target to those who want to "soak the rich", with the unintended (or intended) consequences of also soaking little guys that just want to try and get a leg up on non-government funded retirement.

[AZRedhawk44]

If you really need to make an ideological point, put a $1 tax on anyone under whatever the sane cutoff would be.

It's more than the ideological point... many of those folks are beneficiaries of redistributive tax programs.  For many of them, doing taxes in the first couple months of the year means getting a check from the government far in excess of whatever withholding taxes they might have been hit with.

I do like your notion of "no one is free." 

Kill the redistributive nature of the income tax system, make minimum tax due $1, and we can talk about where the income line is where taxes increase past $1.

[brimic]

Why would you tax capital gains in a consumption tax system?

[Ben]

Why would you tax capital gains in a consumption tax system?

I think we may have both a "fair tax" and a "flat tax" discussion going on at the same time.

[cordex]

My major complaints about the Fair Tax are as follows:
1. One major selling point is that price on goods will fall as existing built-in tax costs are reduced, so the average price would remain approximately steady even after the tax hit.  This, however, is not true when it comes to commodities and imports which together make up a huge amount of what most people buy.
2. Such a high sales tax would change behavior away from expenditure.  This would drastically slow our economy.
3. I really, really don't like the prebate concept for reasons already stated by others.

Is it perfect?  Absolutely not. 
That said, is it worse than what we have right now?  Not by a long shot!

[Ron]

I think the distinction between all the federal taxes should be eliminated.

Fed withholding, SS and Medicare all go into the general fund correct?

It needs to be expressed as one number and one percentage.

This breaking it down into component pieces on the pay stub is nothing but a lie.

Until the spending on entitlements is reigned in all tax reform is just moving around the proverbial deck chairs IMHO.

[Boomhauer]

And yet I've seen people at the grocery store buying high grade steaks and jumbo shrimp with food stamps, when my shopping cart has hamburger. 

Cue the screaming of "that doesn't happen!!!!111!!" or "only a small portion of people do that111!!!!!!111" (really, then why am I surrounded by such when I go to the *expletive deleted*ing grocery store?)

We also need to get rid of property taxes. You don't actually own a home. You pay mortgage to the bank and then you pay rent to the .gov for the privilege of being allowed to keep that property. Bullshit, I say. I don't pay yearly taxes on my furniture, appliances, guns, etc...why should land and house be any different.

[Tallpine]

As Congressman King said, the people keep it in check, you don't like it, you vote them out.

Yeah, that has certainly worked well so far