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.

Without a prebate, you're cutting welfare checks, unless you eliminate welfare. Either way, you're cutting checks, and the government already has to do much of that anyway with tax collection in April. This would just be much simpler and get those taxes in front of people's faces.

I didn't post that.....

 

[Some Guy]

True, the main thing would be to setup a system where people cant cheat the system. So on a website you could have a retail and a non retail section. retail pays the tax, non retail would have to file out paperwork as to why they shouldn't and if they cheat they get hit with tax fraud. something akin to that, same for brick and mortar.

That's needlessly complicated, IMO. If you're buying something to make something else, then you're still buying something from someone and thus would pay a tax on it.

The trickier things come in the form of buying precious metals or stocks. You're technically buying something tangible but you're also kind not, since the purpose of buying precious metals or stocks is to essentially convert your money into something that you want to make you more money, so do you still just collect capital gains on those instead.

No one said there wouldn't be details to work out!

 

[Some Guy]

I didn't post that.....

Sorry. Not sure how that happened.

 

[buckeye45_73]

True, the main thing would be to setup a system where people cant cheat the system. So on a website you could have a retail and a non retail section. retail pays the tax, non retail would have to file out paperwork as to why they shouldn't and if they cheat they get hit with tax fraud. something akin to that, same for brick and mortar.

That's needlessly complicated, IMO. If you're buying something to make something else, then you're still buying something from someone and thus would pay a tax on it.

The trickier things come in the form of buying precious metals or stocks. You're technically buying something tangible but you're also kind not, since the purpose of buying precious metals or stocks is to essentially convert your money into something that you want to make you more money, so do you still just collect capital gains on those instead.

No one said there wouldn't be details to work out!

See I hate VATs.....not into that at all....just tax it retail. If you did a VAT, prices would be ridiculous and make us less competitive in the global market.

 

[g5000]

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.

 

[g5000]

First cut BLOATED government spending then we can talk about taxes.

Start with the Pentagon.

Raise the Social Security and Medicare eligibility age to 70, and index the age to 9 percent of the population going forward.

Right, a 70 year old granny can stand all day on a factory floor. Hopefully she will die before she collects one dime of the social security and medicare benefits she was forced to purchase. Hell lets raise the age to 80.

That's the point of social security, it was not meant to be a retirement program for everyone..when it started the average age of death was under 65 years old

You are ignoring a few facts. Government assholes stole $2.8 trillion dollars of OUR Social Security money and blew it on stupid shit. Now they have no way of paying us back OUR money so government assholes want to raise the retirement age to cheat people out of benefits, or means test to cheat people out of benefits. Those are the facts this BS about people living longer is a crock of shit excuse, the issue is government spent our money.

We are living DECADES longer than our ancestors did when SS was enacted. Therefore, we should be working longer.

Common sense.

 

[g5000]

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.

 

[g5000]

Let's see if you are dumb enought to call Devin Nunes a libtard liar blah blah blah...

Here is Nunes explaining that every credit, deduction, and exemption is paid for by raising tax rates on everyone: No tax reform without border adjustment tax, Rep. Nunes says

"If people wanted to drop the corporate rate from 35 to say 33, 32, maybe 30, we could probably do it. But if you go back to several years that we looked at doing just that, the goal was to get to 25 percent, and by the time every lobbyist, every special interest group in town, representing every major corporation in this country, the tax rate was automatically all the way back above 30 by the time you put everybody's special loophole in."


Read that a hundred times if that is how much it takes for you to comprehend it.

I know you won't.

Nunes sits on the House Ways and Means Committee. That's the committee responsible for taxation.

Nunes clearly states that every deduction, exemption, and credit is paid for by raising tax rates on everyone. That's why I call them government gifts, because they are. They are theft from someone else's pocket.

Leeching.

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.

 

[g5000]

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!

 

[g5000]

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.

 

[Bootney Lee Farnsworth]

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.

No, no, no.

What we really need is many more tax expenditures.

 

[g5000]

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.

 

[g5000]

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.

No, no, no.

What we really need is many more tax expenditures.

Without tax expenditures, our tax rates would be much lower than they are now.

And you could do your taxes on a postcard.

You should be asking why that isn't the case, and you should be carrying torches and pitchforks to TH3 SWAMP™ to ask why.

 

[g5000]

The first and foremost basis for taxation should be determining how much money the government needs to fulfill it's obligations (what those obligations should be is open to debate)

Second they need to have a tax policy that ensures that the government has enough money to fulfill those obligations AND to pay down it's debt at a reasonable rate.

Unfortunately for the wealthy, you can't squeeze blood from a rock. You can't get money from people who don't have money. That means that it's the wealthiest that will have to pay the lion's share.

I believe that anyone that makes more than a doctor or even as much is getting way more money than they deserve. So I don't have any qualms about taxing the daylights out of the wealthiest.

I disagree.

No one should be denied the fruits of their own labor.
Why should the guy who never aspires to be more than a bag boy be treated any differently than a guy who paid risked everything he owns to start a business?

If we are going to have an income tax it should be a flat tax.
The consumption tax is OK if it's done right.

I agree no one should be denied the fruits of their own labor. They should be denied the fruit of other people's labor.

If they were denied the fruits of other people's labor, no one would be wealthier than doctors.

Why should someone that risks his wealth be entitled? If he's truly 'risking' then he hasn't done his due diligence and he deserves to lose his wealth. If he has done due diligence, then he's not really risking.

If I own a business and pay you the wage you agreed upon for your labor than I am not denying you the fruits of your labor am I?

And if no one ever took a risk then there would be no small business, no entrepreneurs, and no economy.

So If I take the risk to start a business then I should also reap the reward of a higher than average income. What right do you have to any of that if you didn't take the risk?

Exactly right.

And under the Fair Tax, you would not be penalized with a higher tax rate because you made more money.

 

[g5000]

The pre-bate idea is in lieu of not taxing certain items.

Bingo.

Thank you.

 

[g5000]

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.

We disagree a lot, but I have to agree with you and the logic and reasoning behind it. It wont happen because it would unite us......and some folks like to pit groups against each other.......BUT I am onboard with a fair tax

Yeah, I've been thinking a great deal lately about the "divide and conquer" strategy being used so effectively against Americans.

Someone wants us all at each other's throats for a reason.

 

[Bootney Lee Farnsworth]

Without tax expenditures, our tax rates would be much lower than they are now.

And you could do your taxes on a postcard.

You should be asking why that isn't the case, and you should be carrying torches and pitchforks to TH3 SWAMP™ to ask why.

I know.

I just like fucking with you. You preach it so often, I can't resist.

 

[g5000]

And second, how would much higher sales tax impact consumer spending? Would it slow the economy down?

I'm sure initially it would as people would have to have an adjustment period. People who pay income taxes wont be effected as they would get that money to offset....the poor and ederly would need an adjustment...but after that period....it should work well for everyone. We all pitch in and if it needs to be raised, we all have to agree.

g5000 mentioned early in the thread that that's the big difficulty in starting it up. So if i'm 60 years old, you're now telling me i paid income taxes for 40 years and now i'm paying those taxes again when i go to spend my money as well? That would suuuuuuck. But, perhaps that could be adjusted on the prebate. Give the oldsters some more cash.

When everyone is paying $50 for a meal at McDonald's, they'll finally go "WTF? Why are taxes soo high?" Oh, that's cause the government spent almost $400k last year to study if quails are more sexually active when high on cocaine.

Yes, the biggest stumbling block to enactment is the fact that all existing savings have already been taxed by the current income tax.

There would have to be a scaled adjustment period with a well-defined expiration to compensate for this problem.

 

[g5000]

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.

 

[buckeye45_73]

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.

We disagree a lot, but I have to agree with you and the logic and reasoning behind it. It wont happen because it would unite us......and some folks like to pit groups against each other.......BUT I am onboard with a fair tax

Yeah, I've been thinking a great deal lately about the "divide and conquer" strategy being used so effectively against Americans.

Someone wants us all at each other's throats for a reason.

yeah, I mean sure there are disagreements and sometimes it gets nasty, but I really don't like pitting groups of people (blacks vs whites, young vs old, rich, vs poor, ect), ?I do think the Fair tax would do a lot of the things you talked about and would unite and be very beneficial. Like you said, you want to raise taxes, cant blame another group, you have to actually convince people it's a good idea.......which means there will be a lot less of it....and I'm all for it.