Fair tax?

[Gigantuous]

Anyone heard of this? Any feedback about it?

Personally, I think it's a fantastic idea. Eliminate -all- federal income tax, and put in place a 23% imbedded nation-wide sales tax.

No corporate income tax allows for greater spending/investing in the corporation itself, ie. expansion, hiring more workers, -cosuming- (where the taxes come from) more goods in order to expand, etc.

No personal income tax allows for greater spending on consumable goods (again, where the taxes will come from), investing in savings accounts/retirement accounts/medical savings accounts (which would help alleviate some of the healthcare crisis issues).

Essentially, we would still be taxed (because the government has to be funded -some- how), but we'd get more for our dollar (in terms of consumable goods and also government services).

It would also put a huge amount of political power into everyday peoples' hands. Don't like what the government is doing? Only buy the necessities. Basically, -you- choose how much you pay in taxes.

The only thing I've heard from nay-sayers is "It would increase the cost of goods!" Well...from what I understand, there is -already- a 22% federal sales tax in place. So, it would increase the federal sales tax 1%. However, in the case of a worker with no children or family, it would decrease taxes by 32%. That's a net-gain profit of 32% to do with as you please. I don't know the tax bracket for single income families, or double income families, so feel free to share and work the numbers for your own cases.

I'm surprised this hasn't garnered national attention, honestly. To me, it's the absolute fairest, best way of tax collection I've ever heard of. No tax breaks, no loopholes, no ducking out. You earn $1000 a week, you keep $1000 a week (speaking just in terms of federal taxation. state, county, and local income taxes would still occur, I'm sure).

It would eliminate the parasitic industry that consists of H&R Block, etc. You could slimline the IRS down to a fraction of it's current monstrous size, which would save the government money.

To me, it's just a win-win all the way across the board.

What say you folks?

[Gan]

http://forum.gsplayers.com/showthread.php?t=28819

[TheEschaton]

"No corporate income tax" doesn't mean more money to re-invest in the company, it simply means more money for corporate CEOs.

[Keller]

And a 22% federal sales tax? The only possible explanation is someone extrapolated the federal corporate income tax (which gets pushed along to consumers in the price of good/services purchased) and called it a sales tax.

Also, the "fair" tax is going to be highly regressive without a substantial demogrant, which will never be approved because there is strong political pressure not to "give handouts".

I've been skiing all day and don't really feel like a full fledged answer -- but those are my two initial contributions. We'll see where this thread goes and I'll contribute more after this weekend.

[Clove]

"No corporate income tax" doesn't mean more money to re-invest in the company, it simply means more money for corporate CEOs.

It means a larger ROI for investors. And it most certainly does mean more money to reinvest into the company.

[Gan]

"No corporate income tax" doesn't mean more money to re-invest in the company, it simply means more money for corporate CEOs.

CONSPIRACY ALERT!!!


(socialist alert)

[Gigantuous]

"No corporate income tax" doesn't mean more money to re-invest in the company, it simply means more money for corporate CEOs.

While it is a possibility that some CEOs would do this, I'd think that these business giants would and do already grasp the idea that expansion = more money in their pockets.

If you own five factories with a 50m profit (totally arbritrary (I think I just butchered that spelling) number), expanding to 10 factories would obviously yield a higher profit than just taking any tax break and stuffing it in your pocket.

Pretty simple logic, to me.

[Gigantuous]

And a 22% federal sales tax? The only possible explanation is someone extrapolated the federal corporate income tax (which gets pushed along to consumers in the price of good/services purchased) and called it a sales tax.

Also, the "fair" tax is going to be highly regressive without a substantial demogrant, which will never be approved because there is strong political pressure not to "give handouts".

I've been skiing all day and don't really feel like a full fledged answer -- but those are my two initial contributions. We'll see where this thread goes and I'll contribute more after this weekend.


You could be right, I'm not sure. I believe I stated in my original post that I wasn't certain about that, but I might be wrong. I haven't picked up the book that was written about the FairTax idea, although I plan to as it's simply a topic that I'm very interested in.

On a side note: Where you skiing at?

[Drunken Durfin]

I highly suggest the Fair Tax book to anyone who has not read it. It states all of the issues, even the arguments against the proposed system, in a clear and easy to read way. Not only that, it gives a very good history of the tax system we currently have, how it was put in place and a lot of facts that most people don't know about.

http://www.amazon.com/FairTax-Book-Saying-Goodbye-Income/dp/B000UENRO2/ref=pd_bbs_1?ie=UTF8&s=books&qid=1204345702&sr=1-1

Even if you are totally against the concept, the book is very informative and might just change your mind. Personally I cannot say enough good about it, most of what you hear negative on the airwaves are from people who are misrepresenting the facts. Read the book, read the proposed legislation, make up your own mind.

[Gigantuous]

There's also a second book that answers a lot of the critics questions, authored by those same folks, I believe.

Thanks for the link, Durfin.

[Warriorbird]

I've read both. I think the most damning critique for me is that the suggested percentages won't generate enough revenue and would have to be raised.

[Latrinsorm]

If you own five factories with a 50m profit (totally arbritrary (I think I just butchered that spelling) number), expanding to 10 factories would obviously yield a higher profit than just taking any tax break and stuffing it in your pocket.

Pretty simple logic, to me.You really have to look at it from the game theory perspective though. Our hypothetical CEO has to assign a likeliness factor to gaining X dollars from expanding versus the likeliness factor (100%) to gaining the money he or she puts directly into his or her pocket. If a person only has a 50% chance of making 10 million versus a 100% chance of making 5 million, I'd say almost everyone would take the 100%.

[Keller]

On a side note: Where you skiing at?

Colorado. Copper Mountain yesterday, Keystone today. Breckenridge tomorrow.

Again, and I want to reiterate this point because it's the single biggest issue with the Fair Tax.

Either (1) you're going to have to provide lower rates for "essentials" or (2) provide a demogrant ($5000 REFUNDABLE tax credit) or the "fair" tax will be highly regressive.

(1) is not preferred because you're going to fubar the efficient system if you start allowing preferential rates, even zero rates, on "essentials" because everyone is going to want their product to be "essential". Plus you're just adding complexity to a system which was meant to make the tax system less complex. Not that it will be 1% as complex as the current system, but one can imagine that with politics as they are today, it will only get worse from there.

(2) is preferred (by economists, I'll get cites when I get home), but is politically untenable. Can you imagine the field day Rush Limbaugh would have with that idea?