The Fair Tax Primer

[buckeye45_73]

I think the whole prebate thing can be done away with. it makes no sense to charge people more only to give some of it back

If we implemented a consumption tax tomorrow there would be no income tax or FICA deductions taken out of a person's pay so they would have more money than they used to have to buy what they need. We can exempt groceries, medicines, clothing and other necessities from the consumption tax so that the people who spend most of their money on these necessities will avoid the consumption tax.

The idea isn't to eliminate taxes, just to shift how the taxes are collected. While i agree that government needs to be a LOT smaller and thus our taxes should go down, this thread is really dealing about tax collection, not amount of them.

Right. I have been very careful not to assign a number to the Fair Tax for that reason.

How and why it works is separate from how much it should be.

Good point, details are important, but I agree, getting the logic and concept out makes sense, then we can assign an amount and see how It works.

 

[Jarlaxle]

I believe we should repeal income taxes and enact a Fair Tax.

I believe consumption taxes are superior to taxes on production.

At the same time, I acknowledge a sales tax is regressive.

There are at least two big advantages to a sales tax, however. First, everyone has to pay it. Second, it is a lot harder to hide a tax hike.

You want to give free puppies to hookers? Fine, we'll raise the sales tax to pay for that.

Say what!?!

Suddenly, people won't be so quick to give away taxpayer dollars any more. The days of "gimme gimme gimme, and make that guy over there pay for it" will end. A hike in the Fair Tax will affect everyone!


The Fair Tax is a kind of sales tax, however it attempts to mitigate the regressive nature of a sales tax with a "prebate".

Each month, every adult American would receive a stipend which would offset the tax on things we all have to buy to survive. The prebate would be the same for everyone. A person in abject poverty gets the same prebate as Bill Gates.

That, in a nutshell, is the Fair Tax.

In subsequent posts, I will discuss some of the difficulties in implementing the Fair Tax. But let's get the ball rolling with your thoughts first.

Why not just scale the tax rate like income tax? To me the whole idea of everyone getting a monthly government check is a non-starter.

Exempt non-prepared food, exempt medicine, and clothes under $50 bucks.

Everything else gets taxed on a rising scale.

As soon as you open the door to exemptions, you have opened the door to wide spread corruption. Our current tax structure has been thoroughly corrupted by carve-outs for special interests. We need to slam that door and nail it shut. ZERO exemptions.

Otherwise, you will have politicians being bribed with large wads of campaign cash to exempt milk, coal, yachts, rubber duckies, popsicles with plastic sticks (but not wooden ones), Trump office supplies, and so on and so on and so on.

As soon as you allow exemptions, you have to increase the Fair Tax to offset those exemptions. Everyone suffers for it. Exemptions are theft.

Would a house be subject to this tax?

 

[BluesLegend]

I'm forced to pay 10 times as much income tax as the average taxpayer for the same government services, that doesn't seem fair to me.

 

[ThisIsMe]

I think the idea has real merit. My initial concerns though are around how it would impact seniors who don't have an income or prospects to really increase their income and are now faced with higher taxes on goods. The stipend would help but I would want to really think through scenarios that would ensure it wouldn't hit seniors the hardest.

Personally, I think once you reach a certain age, you should be done paying taxes. 62, 65, whatever. You've worked all of your life, and paid into the system all your life. Once you reach an elderly age, I think you have paid enough.

Just my thoughts.

 

[ThisIsMe]

I believe we should repeal income taxes and enact a Fair Tax.

I believe consumption taxes are superior to taxes on production.

At the same time, I acknowledge a sales tax is regressive.

There are at least two big advantages to a sales tax, however. First, everyone has to pay it. Second, it is a lot harder to hide a tax hike.

You want to give free puppies to hookers? Fine, we'll raise the sales tax to pay for that.

Say what!?!

Suddenly, people won't be so quick to give away taxpayer dollars any more. The days of "gimme gimme gimme, and make that guy over there pay for it" will end. A hike in the Fair Tax will affect everyone!


The Fair Tax is a kind of sales tax, however it attempts to mitigate the regressive nature of a sales tax with a "prebate".

Each month, every adult American would receive a stipend which would offset the tax on things we all have to buy to survive. The prebate would be the same for everyone. A person in abject poverty gets the same prebate as Bill Gates.

That, in a nutshell, is the Fair Tax.

In subsequent posts, I will discuss some of the difficulties in implementing the Fair Tax. But let's get the ball rolling with your thoughts first.

I agree. Fair tax would put everyone on the same playing field, and a consumption tax would allow you to dictate how much tax you want to pay, by how much stuff you want to acquire.

Consumption tax also helps to get rid if a lot of the tax loopholes people talk about so much.

The only drawback I can see are people who truly are in need of assistance. A high consumption tax would hurt them the most. There would inevitably have to be some exceptions for them.

 

[Norman]

I believe we should repeal income taxes and enact a Fair Tax.

I believe consumption taxes are superior to taxes on production.

At the same time, I acknowledge a sales tax is regressive.

There are at least two big advantages to a sales tax, however. First, everyone has to pay it. Second, it is a lot harder to hide a tax hike.

You want to give free puppies to hookers? Fine, we'll raise the sales tax to pay for that.

Say what!?!

Suddenly, people won't be so quick to give away taxpayer dollars any more. The days of "gimme gimme gimme, and make that guy over there pay for it" will end. A hike in the Fair Tax will affect everyone!


The Fair Tax is a kind of sales tax, however it attempts to mitigate the regressive nature of a sales tax with a "prebate".

Each month, every adult American would receive a stipend which would offset the tax on things we all have to buy to survive. The prebate would be the same for everyone. A person in abject poverty gets the same prebate as Bill Gates.

That, in a nutshell, is the Fair Tax.

In subsequent posts, I will discuss some of the difficulties in implementing the Fair Tax. But let's get the ball rolling with your thoughts first.

I agree...

Never fall to the baits of the leftists. He indeed is pointing out a superior form of taxation. So next, it's not time to replace the old taxes with this fair tax, but come up with new ways of taxation and add them on TOP of all the existing taxes. First get everyone to admit that indeed it's superior taxation, then pass it, but forget about the replacing anything.

Leftists always do this...

 

[Skull Pilot]

My only issue with the Fair Tax is the "prebate" thing.

It seems silly to charge a higher rate of a tax only to have to incur the cost if giving every single person in the country a check every month

We already have high tax rates and massive borrowing to cover the $1.4 trillion of tax expenditures each year.

So your objection is demonstrating an ignorance of a much worse situation which already exists.

My objection is charging a higher rate of sales tax then incurring the expense of sending every single person in the country a check every month is fucking stupid just lower the rate and eliminate all the extra paperwork and expenses

I guess you don't understand what a regressive tax is.

*sigh*

A tax is a fucking tax.

It never makes sense to charge a higher rate then give some of it back

Just charge a lower rate and be done with it.

My apologies. I was called away for a few hours, but I wanted to respond to this.

Imagine a 20 percent Fair Tax. Now imagine that for survival it is necessary to spend $500 a month on necessities. That means the total tax on those necessities would be $100. But under this system, you have received a $100 prebate, and so you spend $0 on taxes for your basic needs.

Now imagine your way. Let's have a lower sales tax of only 15 percent. You spend $500 on necessities. That means the total tax on those necessities would be $75. Since you didn't get a prebate, you are out $75.

Therefore, the poor suffer a lot less with the Fair Tax than they do under a flat sales tax.

I know how the prebate is supposed to work

Why not just make those necessities tax free? That way the people who spend most of their money on necessities avoid the bulk of the sales tax. Then there is no need to incur the expense of sending every person in the country a check every month.

 

[Skull Pilot]

The Fair Tax introduces transparency.

Under our current system, our politicians are paid big bucks to sneak all kinds of gifts into the tax code which allows special interest to pay less tax. There are only two ways to offset these gifts to the leeches:

1) Increase tax rates on everyone

2) Borrow

Our government does both. It raises tax rates and borrows heavily from our enemies, at interest. All to accommodate the $1.4 trillion a tax expenditures.


With the Fair Tax, you get a lot more transparency.

And you replace it with a government check to every person that then allows government to control them even more.

No. Thank. You.

It's replaced with a prebate which mitigates the regressive nature of a sales tax.

In exchange, EVERYONE has skin in the game. As I explained several times in this topic already, this will also mitigate excessive spending, because if people demand more spending they have to pay the bill out of their own pockets.

We currently exist in a scheme whereby you get a deduction which someone else has to make up for with higher taxes.

A prebate is nothing more than a government check to cover the things that are supposedly "essentials"

Once people get accustomed to getting government $$, they expect it, and see it as government's money, and not theirs.

sooner or later some people will get more $$ due to government not being able to control itself or its need to get people to vote for it for free stuff.

You will end up with what we have now, except now government has people expecting their monthly handout and has leverage to say "HEY those guys want to cut your check!!!" Vote for me and I will increase it!!!!

Instead we already have a mechanism for consumption based tax exemptions, via what happens with sales tax.

You don't "take" from people. everyone gets the same tax free items, unprepared foods, medicine, and clothes under $100 dollars.

The prebate is just another type of welfare check

So are tax deductions, exemptions, and credits. I don't hear you complaining about those!

A tax deduction is not the same as a welfare check.

But if we are going to have an income tax I'm all for getting rid of all deductions and moving to a flat income tax

 

[Skull Pilot]

If I understand 'Fair Tax' - i.e switching to sales tax only correctly, the problem is that people with higher incomes receive considerably more money than they need for consumption. They would have the option of simply not spending their money...they could squirrel it away in savings accounts or just invest it in stocks or bonds.

I guess that if there sales tax were applied equally to all equity purchases it may be O.K., but it just seems that anyone at the low end of the income scale...who lives pay check to pay check...would be paying a tax on their full income, where as the wealthy would have the option of just not spending money.

That's why there is a prebate. The prebate nullifies the taxes on necessities.

As for the rich, they already "squirrel away" their wealth in stocks and bonds. The top one percent own 50 percent of the stock market.

No longer would they be able to get massive deductions for their massive mortgages. No longer would they be able to enjoy any deductions, exemptions, or credits.

At the same time, no longer would anyone be penalized with a higher income tax for making more money.

Just don't tax necessities and there is no need for the prebate

 

[Skull Pilot]

If I understand 'Fair Tax' - i.e switching to sales tax only correctly, the problem is that people with higher incomes receive considerably more money than they need for consumption. They would have the option of simply not spending their money...they could squirrel it away in savings accounts or just invest it in stocks or bonds.

I guess that if there sales tax were applied equally to all equity purchases it may be O.K., but it just seems that anyone at the low end of the income scale...who lives pay check to pay check...would be paying a tax on their full income, where as the wealthy would have the option of just not spending money.

If it was done correctly there would be no tax on groceries, clothes, shoes, and prescriptions.

Rich people will always spend more than poor people and they will always buy more expensive things.

No, you do not want exemptions for the reasons I stated earlier. Once you open that door, it will drive a wedge that will completely corrupt the system.

You do not want our politicians to have the power to decide who gets a tax exemption. They will be bribed via campaign contributions to exempt yachts, and business jets, and towers with their names on them.

There is no deciding who gets a tax break if it's a sales tax the seller collects the tax and sends it in. Just like I do now with my state sales tax. It would be the product at the end sale that gets taxed not any person or group

It doesn't matter who makes the product I sell.

So don't tax groceries, clothing up to a certain dollar amount, prescriptions etc

It doesn't matter who manufactures these items because it is not the manufacturer that pays the sales tax it is the consumer

 

[martybegan]

A prebate is nothing more than a government check to cover the things that are supposedly "essentials"

Once people get accustomed to getting government $$, they expect it, and see it as government's money, and not theirs.

You have precisely the same attitude about your deductions, credits, and exemptions! You have demonstrated that sense of entitlement in spades today.

You believe yourself to be entitled to them, even though they come from other people's pockets in the form of higher tax rates and heavy borrowing which will have to be paid back by future generations of taxpayers.

Under our current system, special interests pay our politicians a lot of money to put all kinds of exemptions, deductions, and credits into the tax code. And as Devin Nunes pointed out, that kind of bullshit forces our government to increase everyone's tax rates.

Most of the tax expenditures put in the tax code are done quietly and in secret. And Republicans are the biggest offenders of this kind of thievery.


As I pointed out earlier in the topic, there would be only two points of contention with the Fair Tax, and they would be completely transparent. You can't hide them. The two points of contention would be how high to make the Fair Tax, and how big to make the prebate.

That's. It.

That is a far greater good (or lesser evil, if you prefer) than our current system.

The only deductions I usually take are the local income tax one, and some small work expenses. I don't have a house, i don't have kids, I don't have one of those side businesses that people use to cut costs. I donate a small amount and claim that. That's it. So I am probably one of the people on the wrong side of the deduction equation, and I don't have your virulent jealousy of those who do. And I still think a government check every month (call it whatever you want) is a terrible idea.

 

[martybegan]

What he is saying is everyone gets deductions, and some of them he doesn't like. blah blah blah.

Not theft. stop being such a melodramatic ninny.

And the sad thing is that i agree with you on the concept of consumption based taxation rather than income based, but you are such a thick headed idiot that you can't even take that and then rant over the implementation of it.

Wrong. Nunes states quite plainly, leech, that tax expenditures require raising everyone's tax rates in order to offset those gifts.

Everyone has to pay higher taxes. Period.

They are theft. Pure and simple.

Since everyone gets some form of deduction, it usually balances out.

No, that is not true at all. Not even close to being true.

it's more true than you are letting on.

I get my deduction, they get theirs, and everyone pays less than the marginal rate. You want to complain that it is complex and hides real costs? Fine do that.

I will give you a simple example to demonstrate just how wrong you are and how regressive deductions are.

The Mortgage Interest Deduction.

The bigger your mortgage, the bigger deduction you get. In other words, the more wealthy you are, the more you get to take off your tax bill.

Since the more wealthy you are the more you pay in taxes I never had an issue with this once even though I have never owned a house.