Why not the Fair Tax?

[Lesh]

Would it?

Wouldn’t it make low income folks who have no federal tax liability have to pay tax on every penny they spend?

 

[Concerned American]

Ok, so close that loophole.

Then you are getting yourself right back into the IRS bureaucracy that your scenario has done away with. This idea is not well thought-out. When it is said in the opening that "it will be the same as it is now" while saying it is different, it is doomed. If it remains the same then someone is just spending more money to fool more people.

but you’ll pay that countries taxes, plus the 23% US tax.

They do that in CA already, more bureaucracy and the related costs.

 

[Anathema]

But you’d have more money in your bank because of zero taxes being withheld

No. I’d have more money under mattress, not in the bank…. and a far lower standard of living than I have right now.

 

[Toddsterpatriot]

The plan is no good because the wealthy do not just sell products that can have a tax added.
But you have this wrong.
Now you pay $23 in income tax on the wages you buy a toaster with, and the change is to eliminate income tax entirely and only pay a $23 sales tax when you buy the toaster.

Now you pay $23 in income tax on the wages you buy a toaster with, and the change is to eliminate income tax entirely and only pay a $23 sales tax when you buy the toaster.

That's not the claim made in the OP.

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 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.

Do you understand the claim? Currently, you pay income tax and $23 extra for your toaster, due to taxes. Got it?

Eliminating the individual and corporate income tax brings the $100 toaster down to $77.
At that point, the government collects zero and you keep your entire paycheck.

Now, they add the $23 sales tax (30% of $77) to the cost of the toaster, the government collects just as much as they did before, I keep my entire paycheck and the toaster costs
the same as it did before.

It's magic!!!!

Or, the math is really, really bad.

 

[Toddsterpatriot]

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.

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 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.

Do you understand the claim? Currently, you pay income tax and $23 extra for your toaster, due to taxes. Got it?

Eliminating the individual and corporate income tax brings the $100 toaster down to $77.
At that point, the government collects zero and you keep your entire paycheck.

Now, they add the $23 sales tax (30% of $77) to the cost of the toaster, the government collects just as much as they did before, I keep my entire paycheck and the toaster costs
the same as it did before.

It's magic!!!!

 

[Lesh]

Now you pay $23 in income tax on the wages you buy a toaster with, and the change is to eliminate income tax entirely and only pay a $23 sales tax when you buy the toaster.

That's not the claim made in the OP.

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 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.

Do you understand the claim? Currently, you pay income tax and $23 extra for your toaster, due to taxes. Got it?

Eliminating the individual and corporate income tax brings the $100 toaster down to $77.
At that point, the government collects zero and you keep your entire paycheck.

Now, they add the $23 sales tax (30% of $77) to the cost of the toaster, the government collects just as much as they did before, I keep my entire paycheck and the toaster costs
the same as it did before.

It's magic!!!!

Or, the math is really, really bad.

Wouldn’t every component of that toaster be taxed at that Fair” rate as well as the final product?

 

[Toddsterpatriot]

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 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?

I understand the idea, I dispute the really bad math.
If they had said, you keep your entire paycheck and everything costs 23% more,
it would have sounded less like perpetual motion.

 

[Blaster]

The current tax system is terrible.

 

[Concerned American]

I understand the idea, I dispute the really bad math.
If they had said, you keep your entire paycheck and everything costs 23% more,
it would have sounded less like perpetual motion.

Sounds like a long, drawn out, repackaging of Bubba Clinton's VAT tax to me. It won't result in a tax reduction for anyone.

 

[Toddsterpatriot]

Wouldn’t every component of that toaster be taxed at that Fair” rate as well as the final product?

Not from what I remember. If the toaster maker buys a $10 part, he gets his Fair Tax rebated because the part becomes the toaster which is taxed. The tax is only charged on the end product.

 

[Toddsterpatriot]

Sounds like a long, drawn out, repackaging of Bubba Clinton's VAT tax to me. It won't result in a tax reduction for anyone.

In the OP, everyone saves all their income tax and there is no change in price. Magic!

 

[Concerned American]

The current tax system is terrible.

Any tax system sucks. The majority of those taxes support useless, parasitical bureaucrats with very little going to support the needs of the taxpayer. Case in point, the latest foreign aid bill. $60B for Ukraine, $20B for Israel, $13B for Taiwan---and NOTHING to address the foreign INVASION on our southern border.

 

[my2¢]

Never trust a new tax with its promise that it'll eliminate the old tax. Surest way to end up with both.

The Fair Tax is not only 30% on toasters and other products but also on all services. It's 30% of a haircut and it'll be part of your bank and insurance statements for the services they render. That 30% will also be added to your out-of-pocket medical costs. With medical care cost already being a leading cause of bankruptcy, it doesn't make sense to heap on another 30%.

And then there's the other side of the equation. Eliminating the IRS while sending monthly rebate checks to every registered household. Now isn't that ripe for abuse!

 

[Fort Fun Indiana]

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

This is not how the shared burden of income tax works.

Your gross salary will decrease, in real dollars, if it is not taxed.

 

[Toddsterpatriot]

Your gross salary will decrease, in real dollars, if it is not taxed.

How?

 

[22lcidw]

At every level of production being manufactured there is a tax. From the ground up in all ways to the final product. It adds up.

 

[DudleySmith]

Because instead of Warren buffet finding way to shield his taxes and lower his exposure to minimize the taxes he pays, when he wants to build a new building for his business, or wants to buy a new rolls Royce, or a new plane, or a new mansion, or take a trip to Greece, or the extravagant lifestyle he lives, he and any other billionaire would have to pay the 23% tax on it.

Rich people buy bigger toys…and they will be forced to pay for it.

As far as shifting the taxes to lower income people, that is where the prebate comes in, right? All of your basic needs are met before a penny of tax is paid, at least what the plan says…

Now, I will agree that it could be a bigger burden on lower income in the fact that 23% of purchases is a bigger feat for poorer people than it is for rich people. I admit i hadn’t thought of that. But again, doesn’t the prebate offset that?

Would revenue not increase due to rich people not being able to shield their money? It wouldn’t matter what Swiss bank account they had, all purchases would be subject to the fair tax

Obviously you've never read the Bills, and few at the top spend all their incomes on toys, except when buying out businesses and building monopolies, hence why stocks and bonds should also be included.

lol at the 'prebate' gimmick. Unless you're also planning some guaranteed income scheme 'basic needs' aren't going to be met. by any 'prebate'.

 

[DudleySmith]

They've been pushing this idea for 25 years. It's never happening.

Well, they've been lying out thier asses for years about it, that's why nobody will vote for it outside of those who can't do math.

 

[Fort Fun Indiana]

How?

It's a shared burden. Like sales tax. Everyone pays taxes. That's figured into gross pay offers.

 

[whitehall]

If Boortz want's to propose legislation he needs to run for office or convince some politician to support his idea.