The FairTax Discussion Thread

[CuteOldGuy]

Johnny Cap made a reasoned response to the FairTax in another thread, and Captain Midnight also appeared to be able to discuss this rationally. I would love an intelligent and civil discussion on this topic. If I am the obstacle to civil discussion, I will promise to not engage in insults, and I will refer to posters by their chosen handles, or a respectful abbreviation.

I'm willing to give this a try. It could be a lot of fun!

It's late, so if one of you want to get it started, go ahead. And I am serious. I WILL NOT toss out the first insult, or disrespect.

[BigLouie]

Ill out a quick end to this. It will never happen because the people who put up the money to get people in this country elected like their tax breaks and really don't want to give them up. Any discussion while stimulating would be next to useless

[Thibodaux]

How about "zero" taxes? Just let the government keep printing all the $$$$$ it needs.

[BJerk]

Fine - I think a 23% sales tax is so high people would go to great lengths to avoid it. A three hundred dollar escort would have to tack on $69 dollars - is anyone going to pay that?

[Jackie S]

Originally Posted by BigLouie

Ill out a quick end to this. It will never happen because the people who put up the money to get people in this country elected like their tax breaks and really don't want to give them up. Any discussion while stimulating would be next to useless

And, the Demagogue that wants the status quo of more Government controle knows that he can promise people anything for nothing and count on their vote.
We have already reached that point.

I am satisfied with the tax system at this point, because the max I can pay on my income is a little over 39 percent, a a little over 15 percent on unearned income. There are those that would make me pay a lot more.

Here is a real kicker. I will start drawing my Social Security in a couple of weeks when Imturn 67. I will use it to pay the Medicare premium that the Government forces me to pay, even though I have private insurance, which according to the Government is now considered "supplemental".

[RALPHEY BOY]

Originally Posted by BJerk

Fine - I think a 23% sales tax is so high people would go to great lengths to avoid it. A three hundred dollar escort would have to tack on $69 dollars - is anyone going to pay that?

Hookers pay Federal Income/State Income taxes?

[CJ7]

start a poll, professor

[Whirlaway]

That didn't take long......

[CJ7]

Originally Posted by Whirlaway

That didn't take long......

COG is against paying of others healthcare, but he's for paying others prebate that's included in a fair tax ....

a fair tax kills the IRS, and that's his whole MO

we've had this exact discussion, he just doesn't remember ..

a for/against fair tax poll seems reasonable

[JohnnyCap]

First of all, if the inability to make a difference is a reason to not discuss then we might as well all cut our tongues out. We're anonymously on a board based on activity that enough would frown upon even were it not at odds with the legal system. If its a waste if your time its a waste of your time to proclaim its a waste of time.

Taxes would not be a starting point for reform to me, but all this shit is intertwined so it wouldn't take long to get back to taxes in any discussion of reform. Seeing how this nation was conceived, at least in part, as a revolt against taxation without representation, one good question would be do you feel represented? I don't.

But the topic is FairTax. I have not scoured the website, but browsed it. It has the feel to me of a rich uncle patting me on the back saying, "There, there, you'll be okay," while he takes my wallet. This is just a gut impression, of which I suspect the origin is the assumption that with less taxes employers will hire more. I suspect employers will pocket more.

23% as a sales tax is a difficult concept to digest. Because it is only on new goods and services, how big will the used market get? How will the picture change as people use products much much longer to avoid that tax bill? If it's new services, do you only pay it on virgin escorts? What is a used service?

Some things I would like to see in tax reform:

-besides basic health needs, those who use more pay more. For example, I would like to see a direct correlation between road and fuel usage and cost. If one is a retailer having goods shipped all over the place, or if one drives a shitload to earn more money, one should pay more.

-some sort of restriction on how an elected official can look for his/her next job. Certainly tax dollars are being wasted when an incumbent has to start campaigning so far in advance.

-as for basic health needs, what the fuck? It's 2014, are we really to think care should be denied anyone? Let's make up our minds; either those who can afford health care can pay for it and the rest can die in the street, or we can provide basic standards for everyone and split the costs. There are a shitload of issues to be dealt with, no doubt, but let's decide our basic principles, as someone wisely suggested in the other thread, and go from there. For me, having a middleman insurance agent is a complete waste that only creates more corruption.

That's enough for now, probably well off topic, but how can we discuss taxes without discussing their purpose?

[CuteOldGuy]

Ok. Not a bad start. BL is probably right, it won't happen because it takes a lot of power out of the hands of the elite.

However, I will address the 23% sales tax issue. The economists who have helped draft the FT have determined that embedded in the price of every good or service we buy, is the cost of tax and tax compliance. Tax and compliance costs are included in the overhead of all business people which have to be recouped in order for the business to be profitable. On average, this was calculated to be about 23% of the price of the G or S.

What the FT proposes is to eliminate those taxes and compliance costs, effectively reducing the costs that have to be recouped, so that on average, the price of the G or S can be reduced to 77% of the original price. The FairTax would then add a tax equal to 23% of the total price, effectively keeping the price level constant.

One argument offered in opposition is, "What if the business refuses to lower their price?" Of course, a business could so choose, but that opens the door to competitors who see a profit to be made by entering the market and undercutting the greedy company. For example, say that a can of Coke and Pepsi each cost $1.00. After the FT, the price needed to make the same profit is now $0.77. Let's say Coke drops its price to $0.77, and the FT is added, the resulting cost at checkout is $1.00. Then suppose PepsiCo decides to reap megaprofits by not reducing their price. A can of Pepsi would cost $1.23. Since Coke and Pepsi are easily substituted for each other, Pepsi would experience a significant drop in sales, and Coke a significant increase. Pepsi would have to reduce its price in order to regain market share.

Granted, these are generalities and averages. Overall, the price level would remain constant before and after the implementation of the FairTax. Some products and services will experience greater price fluctuations than others. But overall, it will remain the same. Add to that the fact that people will no longer have federal withholding taken out of their pay for income tax, SS, and Medicare, actual purchasing power will increase.

And for the record, I oppose the prebate. But it's not a deal breaker for me. I'd rather see no tax at all on groceries and prescription medicines. I think that would accomplish the same thing as the prebate, without the government knowing where you are. But they do, anyway. The prebate is the weakest part of the program.

[Doove]

Originally Posted by CuteOldGuy

What the FT proposes is to eliminate those taxes and compliance costs, effectively reducing the costs that have to be recouped, so that on average, the price of the G or S can be reduced to 77% of the original price. The FairTax would then add a tax equal to 23% of the total price, effectively keeping the price level constant.

So you're essentially proposing that we eliminate individual tax revenues, and require the government to sustain itself solely on corporate tax revenues? Good luck with that.

Add to that the fact that people will no longer have federal withholding taken out of their pay for income tax, SS, and Medicare, actual purchasing power will increase.

And how much of that "increased purchasing power" will be eaten up by the resulting inflation that comes with it?

[CuteOldGuy]

Actually, Doove, the FairTax will replace all individual and corporate income taxes and estate tax. The resulting inflation is a good question, but complex. I will address that later.

Thanks for joining our discussion!

[JohnnyCap]

I realize your example COG is over simplified. But, if the manufacturer, in this case Coke, and the retailer, whomever, can lower that portion of their cost that is taxation and tax compliance, which would be about an 18.5 cent reduction for a 23% tax to return it to a final out-the-door price of the same dollar, how can that make up enough revenue to abandon all income tax? It seems it would only break even with the taxes specific to that product.

[CJ7]

actually a Fair Tax isn't fair ... the only way to lower your tax burden is to spend less. I seriously doubt the upper class will choose spending over investing while the middle class is more or less forced to spend the majority of their income .. thus the middle class is paying more tax than the upper class does