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I know that's the argument. But I have just enough accounting, auditing, and tax skills to know how books are cooked and how cheaters rig things and get around thngs. And a Fair Tax gives us no more protection against government gerrymandering the system or practicing gestapo tactics than does an income tax. And it is way too easy to hide little manipulations of the system and for little manipulations to not be immediately obvious.
The beauty of the flat income tax is that everybody will pay it with no way to 'help' or 'benefit' one group without helping or benefitting all - at least without being completely obvious. And any changes or extortionary tactics also affect those the government depends on to vote for them or keep them in power and will be immediately noticable on their pay stubs.
This assumes no exemptions, deductions, or write offs. I highly doubt that such a flat tax could exist in this society.
A flat tax can still be targeted to social engineering. Exemptions for solar power, write offs for education, etc. It can, thus will be abused.
A national sales tax is indirect. Indirect taxes cannot be targeted. If one buys, one pays tax - no way out of it. I don't like VAT, because it seeks to hide tax, make it out in the open. Total the goods, add 20% - let people know how much they are paying and they might find that suddenly they don't see the need for IRS junkets. Exempt food, exempt medicine - other than that - all retail sales get taxed - at the same rate, no exemption, no exception.
Sales tax proponents always make that argument, but basic math doesn't support it. If the cost of the tax were already baked in to goods, revenue would be significantly higher than it actually is.
As an undergraduate math major and an MBA, I don't have any idea what you just said. What does that mean "revenue would be significantly higher?"
As for the Fair Tax, basic logic supports it. All taxes are already baked into the price of products we buy today other than the death tax. For a revenue neutral level, if you remove a bucket of water from a pool and put a bucket of water into the pool, you end up with the same amount of water in the pool.
BTW, the difference in your discussion on the tax rates is really perspective. According to the fair tax analysis, you can look at the sales tax either as 23% or 30%, it's how you measure it, it's the same.
If you measure it like a sales tax (meaning added to the price of a product), it's 30%. If you measure it like an income tax (taken out of the price of the product), it's 23%. But the $ amount of the tax taken for the item doesn't change which ever way you look at it.
I really don't get which part was so challenging for you. If what you were saying was true, revenues would be higher than they are today. Since you were a "math major", we'll put it in equation form.
If what you claimed was true, revenues today would be X + Y, where X = current revenues and Y > 0.
If you take the claims of the "FairTaxers" at face value, they're claiming everyone gets a tax cut, but that revenue would remain the same. That's simply not possible with a big magical asterisk.
As a conceptual matter, the rate is a matter of "how you look at it", but 30% is the only honest way to frame. The public thinks of sales taxes as the percentage added, not the percentage of the total. Quoting the rate as 23% is a bit of sophistry designed to mislead the public. Then again, that's the whole point.
I know that's the argument. But I have just enough accounting, auditing, and tax skills to know how books are cooked and how cheaters rig things and get around thngs. And a Fair Tax gives us no more protection against government gerrymandering the system or practicing gestapo tactics than does an income tax. And it is way too easy to hide little manipulations of the system and for little manipulations to not be immediately obvious.
The beauty of the flat income tax is that everybody will pay it with no way to 'help' or 'benefit' one group without helping or benefitting all - at least without being completely obvious. And any changes or extortionary tactics also affect those the government depends on to vote for them or keep them in power and will be immediately noticable on their pay stubs.
This assumes no exemptions, deductions, or write offs. I highly doubt that such a flat tax could exist in this society.
A flat tax can still be targeted to social engineering. Exemptions for solar power, write offs for education, etc. It can, thus will be abused.
A national sales tax is indirect. Indirect taxes cannot be targeted. If one buys, one pays tax - no way out of it. I don't like VAT, because it seeks to hide tax, make it out in the open. Total the goods, add 20% - let people know how much they are paying and they might find that suddenly they don't see the need for IRS junkets. Exempt food, exempt medicine - other than that - all retail sales get taxed - at the same rate, no exemption, no exception.
Exemptions, deductions, and exceptions lead to... the need for a large government entity to regulate, oversee, and monitor... a true flax tax does not.. when you add all those things into a flat tax, you get: a disguised progressive tax that is subjective in nature... otherwise, what we have now, which is what got us to this fucked up situation to begin with
There is one other aspect of the Fair Tax I wonder if its advocates have thought through.
If you live in a border state - Texas, New Mexico, Arizona, California, Washington, Idaho, Montana, Michigan, New York, Vermont, New Hampshire, Maine, you have a whole lot of folks living within driving distance of countries who might offer lower taxes. And in this internet driven world, I could see a large upsurge in ordering a lot of merchandise from other places when the shipping would be less than the taxes if the stuff was bought at home.
Perhaps not really a problem. Just something I have been thinking about as I try to find a system that makes most sense to me.
A more efficient tax system would promote more growth, but there is no evidence to suggest it would produce so much growth that it would more than pay for itself.
Exemptions, deductions, and exceptions lead to... the need for a large government entity to regulate, oversee, and monitor... a true flax tax does not.. when you add all those things into a flat tax, you get: a disguised progressive tax that is subjective in nature... otherwise, what we have now, which is what got us to this fucked up situation to begin with
If the tax is low enough on a flat income tax, no exemption would be necessary. Imagine the logstics of mailing out or electronically transmitting all those prebates on a fair tax system. People moving, their economic circumstances constantly changing, etc. etc. etc.
Compare that to a true flat income tax. Make it low enough and there would need to be no exemptions at all. But if you needed a somewhat higher rate than apply a flat exemption of $2,000 or $5,000 or whatever to a person's total earnings. Everybody gets the same flat exemption. Everybody pays the same percentage of whatever income they earn over that exemption amount. If the exemption is $10,000, those earning $10,000 get all the taxes they pay back at the end of the year. The guy making a million pays taxes on $990,000. So he gets the same refund as the guy making $10,000 but he pays 99% more in taxes than the guy making $10,000.
The democrats may think it funny that they spent all of the stimulus money on shovel ready crap. To me it is the best example of why we can't afford to send any money to this federal government. We should let our States be responsible for our general welfare, apparently the feds, only care about spending our money to line their own pockets.
If the tax is low enough on a flat income tax, no exemption would be necessary. Imagine the logstics of mailing out or electronically transmitting all those prebates on a fair tax system. People moving, their economic circumstances constantly changing, etc. etc. etc.
Compare that to a true flat income tax. Make it low enough and there would need to be no exemptions at all. But if you needed a somewhat higher rate than apply a flat exemption of $2,000 or $5,000 or whatever to a person's total earnings. Everybody gets the same flat exemption. Everybody pays the same percentage of whatever income they earn over that exemption amount. If the exemption is $10,000, those earning $10,000 get all the taxes they pay back at the end of the year. The guy making a million pays taxes on $990,000. So he gets the same refund as the guy making $10,000 but he pays 99% more in taxes than the guy making $10,000.
This still requires that income be reported to the government. The corruption is inherent. First in the motivation to lie about income - then in the definition of "income." Are investment returns income? Will you be taxed on money you already paid taxes on just because you invested it? Quite the disincentive to invest. And what of capital gains? Are they treated differently? Are scholastic grants "income?" Even with a flat tax, we end up right back in the mess of corruption we have now.
Abolish all direct taxation, let the federal government raise revenue needed through fees, tariffs, and national sales tax.
If the tax is low enough on a flat income tax, no exemption would be necessary. Imagine the logstics of mailing out or electronically transmitting all those prebates on a fair tax system. People moving, their economic circumstances constantly changing, etc. etc. etc.
Compare that to a true flat income tax. Make it low enough and there would need to be no exemptions at all. But if you needed a somewhat higher rate than apply a flat exemption of $2,000 or $5,000 or whatever to a person's total earnings. Everybody gets the same flat exemption. Everybody pays the same percentage of whatever income they earn over that exemption amount. If the exemption is $10,000, those earning $10,000 get all the taxes they pay back at the end of the year. The guy making a million pays taxes on $990,000. So he gets the same refund as the guy making $10,000 but he pays 99% more in taxes than the guy making $10,000.
This still requires that income be reported to the government. The corruption is inherent. First in the motivation to lie about income - then in the definition of "income." Are investment returns income? Will you be taxed on money you already paid taxes on just because you invested it? Quite the disincentive to invest. And what of capital gains? Are they treated differently? Are scholastic grants "income?" Even with a flat tax, we end up right back in the mess of corruption we have now.
Abolish all direct taxation, let the federal government raise revenue needed through fees, tariffs, and national sales tax.
Okay so we go with a sales tax. What is it applied to? On the seed that is sold to the farmer to grow wheat? On the wheat that is sold to General Mills to be ground into flour? On the flour that is sold to the baker? On the cake the baker sells to the grocery store? And again on the cake the grocery store sells to me? Or only the retail sales involved?
This still requires that income be reported to the government. The corruption is inherent. First in the motivation to lie about income - then in the definition of "income." Are investment returns income? Will you be taxed on money you already paid taxes on just because you invested it? Quite the disincentive to invest. And what of capital gains? Are they treated differently? Are scholastic grants "income?" Even with a flat tax, we end up right back in the mess of corruption we have now.
Abolish all direct taxation, let the federal government raise revenue needed through fees, tariffs, and national sales tax.
Okay so we go with a sales tax. What is it applied to? On the seed that is sold to the farmer to grow wheat? On the wheat that is sold to General Mills to be ground into flour? On the flour that is sold to the baker? On the cake the baker sells to the grocery store? And again on the cake the grocery store sells to me? Or only the retail sales involved?
In texas and florida, your home, your food products and production tools, production land etc. are pretty much the only things that are not applicable to sales tax. http://www.window.state.tx.us/taxinfo/taxpubs/tx96_280.pdf IOW they don't put a sales tax your right to life. They do put a sales tax on the extras. For land we have a smallish annual property tax. It seems to work to me and seems to be a fair system to all. I rarely find people complaining hard about the state taxes. Though I can say that some of the retired communities balk when there are property tax or sales tax increases in a city to pay for school bonds and such.
Good question...If national sales taxes are applied to all purchases at the same rate at every step of the production to end user purchase process, the end user would bear the majority of the tax burden. I say this because most likely the taxes paid by the producer(s) would simply be passed along to the next step in the process.If the tax is low enough on a flat income tax, no exemption would be necessary. Imagine the logstics of mailing out or electronically transmitting all those prebates on a fair tax system. People moving, their economic circumstances constantly changing, etc. etc. etc.
Compare that to a true flat income tax. Make it low enough and there would need to be no exemptions at all. But if you needed a somewhat higher rate than apply a flat exemption of $2,000 or $5,000 or whatever to a person's total earnings. Everybody gets the same flat exemption. Everybody pays the same percentage of whatever income they earn over that exemption amount. If the exemption is $10,000, those earning $10,000 get all the taxes they pay back at the end of the year. The guy making a million pays taxes on $990,000. So he gets the same refund as the guy making $10,000 but he pays 99% more in taxes than the guy making $10,000.
This still requires that income be reported to the government. The corruption is inherent. First in the motivation to lie about income - then in the definition of "income." Are investment returns income? Will you be taxed on money you already paid taxes on just because you invested it? Quite the disincentive to invest. And what of capital gains? Are they treated differently? Are scholastic grants "income?" Even with a flat tax, we end up right back in the mess of corruption we have now.
Abolish all direct taxation, let the federal government raise revenue needed through fees, tariffs, and national sales tax.
Okay so we go with a sales tax. What is it applied to? On the seed that is sold to the farmer to grow wheat? On the wheat that is sold to General Mills to be ground into flour? On the flour that is sold to the baker? On the cake the baker sells to the grocery store? And again on the cake the grocery store sells to me? Or only the retail sales involved?
In New Jersey 'necessities' are exempt from sales taxes.Okay so we go with a sales tax. What is it applied to? On the seed that is sold to the farmer to grow wheat? On the wheat that is sold to General Mills to be ground into flour? On the flour that is sold to the baker? On the cake the baker sells to the grocery store? And again on the cake the grocery store sells to me? Or only the retail sales involved?
In texas and florida, your home, your food products and production tools, production land etc. are pretty much the only things that are not applicable to sales tax. http://www.window.state.tx.us/taxinfo/taxpubs/tx96_280.pdf IOW they don't put a sales tax your right to life. They do put a sales tax on the extras. For land we have a smallish annual property tax. It seems to work to me and seems to be a fair system to all. I rarely find people complaining hard about the state taxes. Though I can say that some of the retired communities balk when there are property tax or sales tax increases in a city to pay for school bonds and such.
And in New Mexico we don't really have a sales tax but rather pay a gross receipts tax on almost all goods and services that we buy. The formula of what is taxed and what is not is complicated and often difficult to understand. Essentially distributorships with pass through products are not taxed on money received for those products but almost everything else is. But property taxes aren't the issue when it comes to a Fair tax or flat tax or whatever means of funding the Federal government is concerned.
Again we have already paid hefty federal taxes on the money we earned prior to retirement. And we saved what we could for our retirement and almost everything we have has been subjected to those hefty taxes already. So if we have to pay federal sales taxes now when we spend that money, most especially if it substantially raises the cost of the products we buy, we are being double taxed in a very cruel way. And if the Fair Tax is assessed as a value added tax all along the way, it will substantially raise the cost of goods and services that we buy.
This is something that I think really does have to be addressed in the process of choosing the most fair method of raising revenues for the Federal government.
In New Jersey 'necessities' are exempt from sales taxes.In texas and florida, your home, your food products and production tools, production land etc. are pretty much the only things that are not applicable to sales tax. http://www.window.state.tx.us/taxinfo/taxpubs/tx96_280.pdf IOW they don't put a sales tax your right to life. They do put a sales tax on the extras. For land we have a smallish annual property tax. It seems to work to me and seems to be a fair system to all. I rarely find people complaining hard about the state taxes. Though I can say that some of the retired communities balk when there are property tax or sales tax increases in a city to pay for school bonds and such.
And in New Mexico we don't really have a sales tax but rather pay a gross receipts tax on almost all goods and services that we buy. The formula of what is taxed and what is not is complicated and often difficult to understand. Essentially distributorships with pass through products are not taxed on money received for those products but almost everything else is. But property taxes aren't the issue when it comes to a Fair tax or flat tax or whatever means of funding the Federal government is concerned.
Again we have already paid hefty federal taxes on the money we earned prior to retirement. And we saved what we could for our retirement and almost everything we have has been subjected to those hefty taxes already. So if we have to pay federal sales taxes now when we spend that money, most especially if it substantially raises the cost of the products we buy, we are being double taxed in a very cruel way. And if the Fair Tax is assessed as a value added tax all along the way, it will substantially raise the cost of goods and services that we buy.
This is something that I think really does have to be addressed in the process of choosing the most fair method of raising revenues for the Federal government.
These would be clothing, footwear( not athletic) food( unprepared) paper products for school purposes and some other items.
Shoppers from border communities in New York and Pennsylvania, shop in New Jersey.
Foe example, the mall parking lots in Bergen county are loaded with cars bearing NY license plates.
Okay so we go with a sales tax. What is it applied to? On the seed that is sold to the farmer to grow wheat? On the wheat that is sold to General Mills to be ground into flour? On the flour that is sold to the baker? On the cake the baker sells to the grocery store? And again on the cake the grocery store sells to me? Or only the retail sales involved?
In texas and florida, your home, your food products and production tools, production land etc. are pretty much the only things that are not applicable to sales tax. http://www.window.state.tx.us/taxinfo/taxpubs/tx96_280.pdf IOW they don't put a sales tax your right to life. They do put a sales tax on the extras. For land we have a smallish annual property tax. It seems to work to me and seems to be a fair system to all. I rarely find people complaining hard about the state taxes. Though I can say that some of the retired communities balk when there are property tax or sales tax increases in a city to pay for school bonds and such.
And in New Mexico we don't really have a sales tax but rather pay a gross receipts tax on almost all goods and services that we buy. The formula of what is taxed and what is not is complicated and often difficult to understand. Essentially distributorships with pass through products are not taxed on money received for those products but almost everything else is. But property taxes aren't the issue when it comes to a Fair tax or flat tax or whatever means of funding the Federal government is concerned.
Again we have already paid hefty federal taxes on the money we earned prior to retirement. And we saved what we could for our retirement and almost everything we have has been subjected to those hefty taxes already. So if we have to pay federal sales taxes now when we spend that money, most especially if it substantially raises the cost of the products we buy, we are being double taxed in a very cruel way. And if the Fair Tax is assessed as a value added tax all along the way, it will substantially raise the cost of goods and services that we buy.
This is something that I think really does have to be addressed in the process of choosing the most fair method of raising revenues for the Federal government.
As an undergraduate math major and an MBA, I don't have any idea what you just said. What does that mean "revenue would be significantly higher?"
As for the Fair Tax, basic logic supports it. All taxes are already baked into the price of products we buy today other than the death tax. For a revenue neutral level, if you remove a bucket of water from a pool and put a bucket of water into the pool, you end up with the same amount of water in the pool.
BTW, the difference in your discussion on the tax rates is really perspective. According to the fair tax analysis, you can look at the sales tax either as 23% or 30%, it's how you measure it, it's the same.
If you measure it like a sales tax (meaning added to the price of a product), it's 30%. If you measure it like an income tax (taken out of the price of the product), it's 23%. But the $ amount of the tax taken for the item doesn't change which ever way you look at it.
I really don't get which part was so challenging for you. If what you were saying was true, revenues would be higher than they are today. Since you were a "math major", we'll put it in equation form.
If what you claimed was true, revenues today would be X + Y, where X = current revenues and Y > 0.
If you take the claims of the "FairTaxers" at face value, they're claiming everyone gets a tax cut, but that revenue would remain the same. That's simply not possible with a big magical asterisk.
As a conceptual matter, the rate is a matter of "how you look at it", but 30% is the only honest way to frame. The public thinks of sales taxes as the percentage added, not the percentage of the total. Quoting the rate as 23% is a bit of sophistry designed to mislead the public. Then again, that's the whole point.
Your mistake is in believing that the economy is something that can be described by using the fixed contents of a pool of water. The moral equivalence of someone that still believes the earth is flat.
Time, market and work efficiency, human incentives and detractors, all come into play.
A socialist society will fail by every measure, every time.
A more efficient tax system that promotes work and provides incentives for growth based investments is more likely to result in a bigger pool at points in time in the future than a tax system that punishes work and provides dis-incentives for growth based investments.
What you have to decide is do you want to punish workers and long term investments, or punish sloth and short term profit taken at the expense of growth.
