Why not the Fair Tax?

[WinterBorn]

The OP conflates the "Fair Tax" typically referring to a "Flat Tax" across all income levels with a "Value Added Tax".

We buy a toaster every 10-years or so, a car every 7 or 8 years, one or two houses, the OP has no clue how the math doesn't work.

The US 2024 Federal Budget is $7.3T and current income is about $5T, so show us how the OP's proposal covers $7.3T.

And you buy groceries every month.
You pay utility bills every month.
You spend money on entertainment and going out (weekly?)

The Fair Tax is simply a consumption tax on every dollar spent on new goods and services.

 

[Lisa558]

Yes, there will be a serious fight from those who profit from our convoluted tax code.

Trivia Fact: In the US, we spend $500 billion and 6.5 billion hours complying with tax code. Not paying taxes, mind you.

And that’s to say nothing about the time spent. When I owned my own business, I spent long afternoons with my tax accountant - and maintaining my own meticulous tax records - that could have been better spent developing new clients, completing projects, or training subordinates.

 

[kyzr]

And you buy groceries every month. You pay utility bills every month.
You spend money on entertainment and going out (weekly?)
The Fair Tax is simply a consumption tax on every dollar spent on new goods and services.

To cover $7.3T in spending a year taxpayers would need to cover an average $73,000 each. Totally impractical.
Plus, every tax dollar would come from the point of sale instead of withholding, so there is a serious opportunity for sellers scamming the tax revenue.

Dumb idea. Unless you own a store.

 

[WinterBorn]

And that’s to say nothing about the time spent. When I owned my own business, I spent long afternoons with my tax accountant - and maintaining my own meticulous tax records - that could have been better spent developing new clients, completing projects, or training subordinates.

Exactly! And developing new clients, completing projects and training subordinates would all increase income. Which increases the taxes.

 

[WinterBorn]

To cover $7.3T in spending a year taxpayers would need to cover an average $73,000 each. Totally impractical.
Plus, every tax dollar would come from the point of sale instead of withholding, so there is a serious opportunity for sellers scamming the tax revenue.

Dumb idea. Unless you own a store.

The Fair Tax would also tax people who are paid cash under the table. I bet that is worth more than is lost to scamming.

Besides, if you own a business and you scam the tax system, you go to jail. Send a few to jail and watch the scamming drop.

 

[frigidweirdo]

Otherwise known as a consumption tax.

From the Neal Boortz radio show, this is broken down into 5 parts but each part is pretty short:

Part 1:



Part 2:



Part 3:



Part 4:



Part 5:



And here’s another talk he had on it that gives more context:

Neal Boortz FAIRtax vs Republican Tax Plan

So, the key points are:

Eliminates all federal taxation from your check.

You get to keep 100% of your earnings (state taxes are addressed in the presentation as well)

Eliminates all corporate taxes, which will create an economic boom as companies all over the world will want to move their headquarters to America to take advantage of being able to operate tax free.

There is no longer a need to file taxes, so there is no longer a need for an IRS.

Not a single penny of the fair tax is paid until your very basic needs are met (housing, food, etc), this is done in the form of a prebate that the government sends you at the beginning of each month.

How it’s done:

A 20 million dollar study was done on the fair tax, and the result was, they found out that, depending on the product, from start to finish, the entire process from raw material to finished product, there is between 18% and 25% in taxes paid from manufacturers and suppliers that adds to the cost of the product.

The proposal is tax neutral, which means the consumer will pay no more for a product than they did before.

The idea is to eliminate those taxes, which will lower the cost of goods and services, but charge a 23% sales tax on everything you buy.

Here’s how it works:

The example given was a $100 toaster. They estimate the taxes paid in the process of manufacturing that toaster was 23%, or, $23 out of $100. So, if you take those taxes out of the process, the taxes that the makers would have to pay in the process of making that toaster, it would lower the cost of the toaster to $77. At the point of sale, a $23 tax is charged for that toaster.

$77 goes to the retailer and $23 goes to the government. The retailer gets paid, and the customer is still paying $100 for that toaster…the same as they did before. All of this is from you being able to keep 100% of your income, and getting a prebate so all your basic needs are paid for.

*****
My comments are…YOU could control the amount of tax you pay dependent on how much you buy/consume, those who buy more expensive things (rich people) pay more in taxes.

So, what is wrong with this plan? Where does it fail? Seems like a solid idea to me…thoughts?

And this fucks over the poor. Which is why the rich are telling you it's a "fair tax"

It's about as fair as person being born into a poor family with no legs, no arms, cancer in the head and HIV/AIDS in their blood and another being born healthy in a rich family.

 

[frigidweirdo]

The Fair Tax would also tax people who are paid cash under the table. I bet that is worth more than is lost to scamming.

Besides, if you own a business and you scam the tax system, you go to jail. Send a few to jail and watch the scamming drop.

All that happens is the scammers pay the politicians who create loopholes....

 

[kyzr]

The Fair Tax would also tax people who are paid cash under the table. I bet that is worth more than is lost to scamming.

Besides, if you own a business and you scam the tax system, you go to jail. Send a few to jail and watch the scamming drop.

How would the Fair Tax know who is being paid under the table? (It can't, unless the US goes cashless and we all get chips that transfer money)

So do you want the government's AI tracking every dollar we "spend" and takes the (25% ???) tax out automatically from your bank account. What happens if you run out of money and need food?

 

[there4eyeM]

Wages should not be taxed, the tax should be on buying the service (the employer pays for purchasing labor). So, yes, workers should receive all their pay and pay taxes on purchases. The problem is that the tax on purchases is essentially a flat, or regressive, tax and, thus, implicitly unfair. There must be a system in which those for whom consuming is disproportionately expensive are shielded from this exploitation.

 

[22lcidw]

And this fucks over the poor. Which is why the rich are telling you it's a "fair tax"

It's about as fair as person being born into a poor family with no legs, no arms, cancer in the head and HIV/AIDS in their blood and another being born healthy in a rich family.

I believe it may be the fair tax that will send a check out to people quarterly at different income levels to offset any discrepancies. This tax though may make the federal government stronger as its harder to get things done under the table cheaper.

 

[WinterBorn]

And this fucks over the poor. Which is why the rich are telling you it's a "fair tax"

It's about as fair as person being born into a poor family with no legs, no arms, cancer in the head and HIV/AIDS in their blood and another being born healthy in a rich family.

Do a little research on the Fair Tax.

One of the features is that there is a "rebate" of the 23% spent on taxes for the first $20k income (or whatever is the living wage in that area).

So the poor are not being fucked over like they are now.

 

[WinterBorn]

All that happens is the scammers pay the politicians who create loopholes....

There are no loopholes.

Every sale is taxed. No exceptions.

 

[WinterBorn]

How would the Fair Tax know who is being paid under the table? (It can't, unless the US goes cashless and we all get chips that transfer money)

So do you want the government's AI tracking every dollar we "spend" and takes the (25% ???) tax out automatically from your bank account. What happens if you run out of money and need food?

The Fair Tax is a consumption tax. It is paid when you spend the money, like a sales tax.

No need to be intrusive. Just tax it when they spend it. So the Fair Tax also protects the people from an intrusive IRS.

As for the "What happens if you run out of money and need food?", the same thing that happens when you run out of money and need food now.

 

[frigidweirdo]

Do a little research on the Fair Tax.

One of the features is that there is a "rebate" of the 23% spent on taxes for the first $20k income (or whatever is the living wage in that area).

So the poor are not being fucked over like they are now.

I've done plenty. It's a scam.

Let's say I'm a poor dude and I spend 100% of my wages. And I'm paying 20% sales tax on that. That's 20% of all I earn.

Imagine a rich dude, he's spending 1% of all his wages, so he's spend 0.2% of what he earns on taxes.

Now, imagine I earn $50,000 a year. I pay 10% sales tax and I pay 20% tax on my wages.

That's me paying $10,000 a year on income tax and $4,000 a year on sales tax.
If it were 20% on sales tax that's me paying $10,000 a year.

Now, imagine I earn $10 million a year and I spend say $200,000 a year.

So, with income tax at 20% I'd be paying $2 million a year. For my $200,000 I'd be paying $20,000. That's me being taxed $2,020,000

If it were 20% sales tax, that's him paying $40,000 a year.

Which would you rather pay? $2,020,000 or $40,000. Fuck yeah I'd pay the lower amount.

Now, we could do many, many different calculations for it. Obviously I just pulled figures out of the air.

The govt is going to want to bring in X amount in taxes.

If rich dude is paying $40,000 instead of $2,020,000, then the government needs to find that money.

Take a look at the UK right now. The Tories (conservatives) decided to not give the local councils as much money as they used to get. The councils are in charge of things like garbage collection, maintaining the roads, plenty of local things.

In London they're increasing how much it costs to drive on the roads, they're increase all kinds of things so poor people end up paying more to cover the shortfall.

Basically what would happen is that sales tax suddenly rises from 20% to 40% and poor people are fucking screwed.

 

[kyzr]

The Fair Tax is a consumption tax. It is paid when you spend the money, like a sales tax.
No need to be intrusive. Just tax it when they spend it. So the Fair Tax also protects the people from an intrusive IRS.
As for the "What happens if you run out of money and need food?", the same thing that happens when you run out of money and need food now.

Your consumption tax can't cover the $7.3T Federal Budget. Do the math. Unless you add a 4% Federal Sales Tax to the system we have now. A 4% or so Fed sales tax gets us the revenue we need, but punishes the bottom half of incomes.

 

[frigidweirdo]

There are no loopholes.

Every sale is taxed. No exceptions.

But who says this? The politicians who made the law? The same politicians who make loopholes for EVERYTHING?

Who said that people with jobs could claim government money? Fucking politicians bribed by fucking WALMART said so.

 

[Care4all]

Yes, they are still paying $100 for the toaster. But they receive all of the gross salary. So they bring more money home.

If you make $10 an hour, and work a 40 hour week, your gross pay is $400.
Under the current clusterfuck of a tax system, you will likely pay 25% in taxes, So you bring home $300 a week.
Under the Fair Tax, you would receive $400. And your taxes would be paid with a consumption tax on what you spend.

Also, the taxes are accessed on all new goods and services. So buying a used car is exempt.

But what about social security and Medicare taxes???

 

[kyzr]

Your consumption tax can't cover the $7.3T Federal Budget. Do the math. Unless you add a 4% Federal Sales Tax to the system we have now. A 4% or so Fed sales tax gets us the revenue we need, but punishes the bottom half of incomes.

As a follow-up. Adding a 4% Fed sales tax now is the most likely way to transition to your "consumption tax", by raising the tax in phases.

 

[Lisa558]

Wages should not be taxed, the tax should be on buying the service (the employer pays for purchasing labor). So, yes, workers should receive all their pay and pay taxes on purchases. The problem is that the tax on purchases is essentially a flat, or regressive, tax and, thus, implicitly unfair. There must be a system in which those for whom consuming is disproportionately expensive are shielded from this exploitation.

That’s why there would be the pre-payment amount given out to cover taxes on essential expenses.

 

[ThisIsMe]

23% of every purchase goes to the government, and everyone will be paying. That’s how they raise revenue.

Right.
The government takes out the $23 in taxes currently in the toaster and then adds it back in.

What’s wrong with the math?

I used to pay income tax and $23 in toaster tax. Now I pay no income tax and $23 in toaster tax.

Right.
The government takes out the $23 in taxes currently in the toaster and then adds it back in.

Well, the taxes in the manufacturing process are removed, lowering the cost to produce it, but then the 23% tax is added on the back end, giving that money to the government, and this would be on ALL goods and services.

I used to pay income tax and $23 in toaster tax. Now I pay no income tax and $23 in toaster tax.

I see where you are coming from, but I think the idea is, you used to pay, depending on income, between, on average between 0% and 22%, with those making over $500,000 in the 37% bracket. But, also remember, those numbers are reduced by all the exemptions and loopholes. Remember the stories of google and Facebook paying 0% tax rates? They wouldn’t be able to do that under a fair tax.

So, if you were a family in a 15% tax bracket in your income, but you also paid between 7% to 9% sales tax on all goods and services, now you’d keep all of your income, and just pay a 23% sales tax on everything.

Plus, you’d have more companies wanting to do business in the United States, which could have an effect on the economy. More jobs, potentially higher wages, etc.

Is this not a good thing?