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Let's talk about the Fairtax
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Author:  sam3611 [ Sat May 12, 2007 7:46 pm ]
Post subject:  Let's talk about the Fairtax
I think this is an issue that our leaders need to be discussing. The Fairtax is basically a tax that replaces all the other taxes with a 23% sales tax. I think the Fairtax is a good idea, and if implemented, will lead to a better economy.

So disscuss
Author:  IantheGecko [ Sat May 12, 2007 7:50 pm ]
Post subject: 
Why do you think it's a good idea? How will it lead to a better economy?
Author:  Didymus [ Sat May 12, 2007 7:56 pm ]
Post subject: 
I disagree. I think taxes should be based on income rather than on sales. You're talking nearly a 1/4 mark-up there. That would almost completely impoverish some people! $100 worth of groceries would be $125 instead, and that is just outrageous.

Now, I'm not entirely convinced that people with very high incomes should be paying nearly 50% in income taxes, but at the same time, it's ridiculous to expect people below poverty level to bear a huge weight of the tax burden. There needs to be some way to balance that out.

Now, it might work if the sales tax was incremented based on necessity. Staple food items, for example, could be, say, 3%, whereas luxury items, like X-Boxes and Wii's, could be closer to 30%. Also, rather than calculating sales tax at time of sale, the tax on any given item should already be calculated and posted in the retail price. So that when you go to buy your potatoes, if the price says $5, then you pay $5, and the $.15 is taken out of that.

The problem might come in when purchasing things like vehicles, which, while a necessity to some, do have a certain amount of luxury about them. Perhaps like a 10% on the vehicle itself, but higher percentages on upgrades and options.

Right now, the tax laws are so complicated, that unless you're a basic wage employee, you've got to hire an accountant. Heck, I'm probably going to make less that $20,000 this year, but the tax laws regarding ordained clergy are so complicated, I have to have an accountant, even though I barely have enough income to justify one. Thankfully, one of my parishioners is a CPA, and he usually takes care of them for me. But, even still, I'm willing to bet that more than 35% of that is going to go to taxes, leaving me with about $13,000 to live on the whole year. I would be very much in favor of any system that would simplify my taxes and ease some of that burden on me.
Author:  sam3611 [ Sat May 12, 2007 8:00 pm ]
Post subject: 
Yeah, I probably should've elaborated more before I posted =p


I think it's a good idea because it will get rid of the IRS and their 60,000 page tax code. People will be able to keep all of their pay check, and thus they will be able to buy more things. This will improve the economy.

I don't completely understand everything about it yet, but I am trying to learn. :ehsteve:

Quote:
How does the FairTax affect wages and prices?

Americans who produce goods and earn wages must pay significant tax and compliance costs under the current federal income tax.

These taxes and costs both reduce after-tax wages and profits and are then passed on to the consumers of those goods and services in the form of price increases.

When the FairTax removes income, capital gains, payroll and death taxes, the pre-FairTax prices of these goods and services will fall. The removal of these hidden taxes may also allow wages to rise.

Exactly how much prices will fall and wages will rise depends on market forces.

For example, in a profession with many jobs and too few to fill them, wages will likely increase more than in fields where there are too many employees and not enough jobs.

http://www.fairtaxvolunteer.org/smart/faq-main.html#17
Author:  Didymus [ Sat May 12, 2007 8:19 pm ]
Post subject: 
Sam, there it a little block with an [x] in it at the top of your post. If you click on it, it will allow you to delete your posts, so long as someone doesn't post immediately after you. Please get into the habit of using it.
Author:  IantheGecko [ Sat May 12, 2007 8:21 pm ]
Post subject: 
I'm with Didy on this; the poor wouldn't have very much money left after they bought groceries & whatnot. It doesn't work out. Why don't we just cut taxes on the lower & middle classes and increase taxes on the wealthy?
Author:  Didymus [ Sat May 12, 2007 8:24 pm ]
Post subject: 
Because the wealthy are already paying a drastically disproportionate percentage in taxes. But the essential problem seems to be the complexity of the tax laws themselves. As I said, I will probably make less than $20,000 this year, but because of the way the tax laws are set up, I'm willing to bet I'll pay a much larger percentage on my income than a wage employee who made the same amount. Why? Because I'm ordained clergy, that's why. For no other reason. Ridiculous? Absolutely.
Author:  IantheGecko [ Sat May 12, 2007 8:30 pm ]
Post subject: 
Maybe a tax break for the clergy would violate the establishment clause.
Author:  furrykef [ Sat May 12, 2007 9:42 pm ]
Post subject: 
Didymus wrote:
I disagree. I think taxes should be based on income rather than on sales. You're talking nearly a 1/4 mark-up there. That would almost completely impoverish some people! $100 worth of groceries would be $125 instead, and that is just outrageous.

Now, I'm not entirely convinced that people with very high incomes should be paying nearly 50% in income taxes, but at the same time, it's ridiculous to expect people below poverty level to bear a huge weight of the tax burden. There needs to be some way to balance that out.


And it is balanced out. People below the poverty line won't have to pay the full 23%; they'll receive a monthly tax rebate. Thus, it's a progressive tax and not a flat 23% tax.

It kind of bothers me that people will reject things like FairTax before they see that their concerns have already been addressed. Even though I can point that out to you guys, that means that there are other people out there who don't realize that and might reject it out of hand. I'm not saying I'm in favor of it yet, because I don't have a fully educated opinion, but I'm not going to reject it until I look at it in more detail. I think any kind of tax reform is worth at least considering.

You can read more about FairTax on Wikipedia and, of course, its own website.

- Kef
Author:  Amorican [ Sat May 12, 2007 9:44 pm ]
Post subject: 
Didymus, how in the world can you possibly live on that little money? Does the church pay for anything? Your rent or food? I know the Catholics work that way, but I don't know about you.

I don't know about this fair tax thing. Won't it encourage people to not spend their money? Don't we need people to spend their money to keep the economy growing?
Author:  Didymus [ Sat May 12, 2007 10:18 pm ]
Post subject: 
Amorican wrote:
Didymus, how in the world can you possibly live on that little money? Does the church pay for anything? Your rent or food? I know the Catholics work that way, but I don't know about you.

I don't know about this fair tax thing. Won't it encourage people to not spend their money? Don't we need people to spend their money to keep the economy growing?

At the time I took this call, I was serving two congregations, and between the two of them, I was making nearly $36,000 a year. That was actually very comfortable for me. But last year, one of the congregations started having some problems - financial and conflict issues - which ultimately led to my resignation early this year. Which meant my income was cut in half. Frankly, the stress I was under there wasn't worth it, anyway.

But I also don't think it's fair for Good Shepherd to have to suffer just because Faith(less) couldn't get it's act together. So for now, I'm committed to serving Good Shepherd. I realize I won't be able to forever (and if I had a family, I wouldn't be able to now). But we'll just have to see.

But to answer your question, a portion of that income is designated as housing allowance. I don't have to worry about taxes on that portion.
Author:  What's Her Face [ Sun May 13, 2007 11:49 am ]
Post subject: 
furrykef wrote:
And it is balanced out. People below the poverty line won't have to pay the full 23%; they'll receive a monthly tax rebate. Thus, it's a progressive tax and not a flat 23% tax.


That percentage is very odd issue though. Take a look at what the bill says:

Sec 101 Imposition of Sales Tax wrote:
FOR 2007 - In the calendar year 2007, the rate of tax is 23 percent of the gross payments for the taxable property or service. [emphasis mine]


So if I'm not wrong, that means for an item worth $1.30 including taxes, you'd deduct 23% of $1.30, which is 29.9c. So that means the actual tax rate is nearly 30% of the untaxed price. They're essentially calculating the sales tax rate in the same way that you calculate income tax.
Author:  IantheGecko [ Mon May 14, 2007 1:02 am ]
Post subject: 
So you're paying the same amount as income tax, just in a different way?
Author:  furrykef [ Mon May 14, 2007 3:21 am ]
Post subject: 
It depends on how much you spend. And hey, I'm cool with doing it a different way. No messy tax forms. No stupid IRS procedures. Illegal immigrants end up paying taxes. There's lots of good that can come from this, but of course there's potential for bad things, too, so we have to look at it carefully...

- Kef
Author:  Amorican [ Mon May 14, 2007 6:21 am ]
Post subject: 
The poor get a certain percentage back? But does that mean they have to save the receipts from every purchase they make? Including cash transactions? I predict massive amounts of fraud.
Author:  Didymus [ Mon May 14, 2007 6:52 am ]
Post subject: 
The only way I see that working at all is if the tax is varied according to the purchases made. Necessary food stuffs, for example, would have a minimal tax, whereas stereo equipment and such would carry a premium percentage. Otherwise you're right back to square one, only this time, the poor would have to hire accountants.
Author:  furrykef [ Mon May 14, 2007 7:34 am ]
Post subject: 
Amorican wrote:
The poor get a certain percentage back? But does that mean they have to save the receipts from every purchase they make?


I think the rebates would still be determined by income. There's no other practical way to do it.

- Kef
Author:  putitinyourshoe [ Mon May 14, 2007 1:11 pm ]
Post subject: 
even a rebate seems a bit frightening, consider someone who doesn't have enough money to buy food under current tax code (who pays no income tax, because their income is that low) and then the fairtax is implemented. the rebate might have to be very quick or else i could see them having less money than before.

and honestly, i imagine a fartax world in which the rich would exploit some type of loophole (international buying? and then importing--and if there is no tax on that...) and then the tax would be incredibly regressive.

i like the current income tax, except that i just want to see less corporate tax breaks. if corporations went a single year actually paying all of the taxes they are supposed to, i'd be amazed.
Author:  furrykef [ Mon May 14, 2007 4:05 pm ]
Post subject: 
putitinyourshoe wrote:
even a rebate seems a bit frightening, consider someone who doesn't have enough money to buy food under current tax code (who pays no income tax, because their income is that low) and then the fairtax is implemented. the rebate might have to be very quick or else i could see them having less money than before.


I'm sure it's not going to happen like that. The first rebate would be given before the tax is implemented. They're given in advance based on estimations.

Quote:
and honestly, i imagine a fartax world in which the rich would exploit some type of loophole (international buying? and then importing--and if there is no tax on that...) and then the tax would be incredibly regressive.


There always has been heavy taxes on importing stuff, hasn't there? I doubt there'd be more loopholes here than there already are with income tax.

- Kef
Author:  Amorican [ Mon May 14, 2007 5:29 pm ]
Post subject: 
But what if the person manages to go a whole month without spending any money? Like they bought all their food at Costco and it lasted a long time. And they don't drive. Do they still get a rebate on taxes they didn't pay?
Author:  furrykef [ Mon May 14, 2007 6:24 pm ]
Post subject: 
I don't think it'd be too easy to game the system that way, or they wouldn't be making the proposal... I don't know what safeguards they have against this sort of thing; I'll have to read up on it...
Author:  What's Her Face [ Mon May 14, 2007 6:35 pm ]
Post subject: 
Amorican wrote:
But what if the person manages to go a whole month without spending any money? Like they bought all their food at Costco and it lasted a long time. And they don't drive. Do they still get a rebate on taxes they didn't pay?


Title 2, Chapter 3 of this (PDF file) should explain how the rebate is determined. Essentially, personal spending habits shouldn't effect anything - just whether the household is below poverty level.
Author:  barwhack [ Wed May 16, 2007 6:45 am ]
Post subject: 
This tax could be made non-regressive -- so it wouldn't punish the poor -- by simply exempting all goods that are needed to support life. Only luxuries -- to be defined by elected/accountable politicians -- would ideally be taxed. If that were done this would be a "use tax" for the economy, fully ajustable to bottom line demands of government, and fully adjustable on an individual basis -- you could choose not to pay simply by foregoing luxuries; it would stop punishing achievement -- which is really what an income tax does (especially with "brackets"); it would be far more open to scrutiny, since numbers could be calculated at home on a calculator -- (grossTotal x 23%) = govTake; and it would free a huge chunk of cash, now spent on tax prep and CPAs (who sift a 63000 page document called that "tax code" for some $N0 000 000 000 per year -- yes, tens of billions). Bean counters would get other jobs; we'll always need them. So aside from the remediable "regressiveness" of the tax; I'm all YES.
Author:  Chackly [ Wed May 16, 2007 5:40 pm ]
Post subject:  first time poster omg
Hello all

The fairtax bills are HR25 and S25 in the house and senate respectively. Under these bills, the "essentials of life" - food, clothing, and medicine - will not be taxed at all. Because these things constitute the vast majority of the purchases made by the impoverished, the poor will ultimately end up paying very little taxes.

Secondly, the bills include a provision by which, every year, every single person in the country (not just the poor) will receive a refund check from the government. The amount of this check will be equal to the amount of taxed spending done by people at or below the poverty level. So basically, if you are in poverty, not only will you end up paying less in taxes, but the taxes you do end up paying will be refunded to you anyway.

Thirdly!

Under our current system, a staggering portion of the prices that we pay for almost everything is already from taxes. In the case of cars for example, if you trace back the amount of taxation on the materials, manufacture, corporate income, and sales tax, it can total as much as 40% of the final sale price. One of the ultimate goals of the fair tax is to eliminate double taxation like this. Most of these taxes will vanish and be replaced with the simple, 24% consumption tax.

Just think - when the mill buys ore to turn into steel, that's taxed. When the manufacturer buys steel to turn into a chassis, that's taxed. When they buy rubber, plastic, or subwoofers, that's taxed. The workers building the car or smelting the ore or uh...mixing? the plastic? are paying income tax. All these, gone, and replaced with one, single, simple tax at the register.

With all this said, I'm still not entirely convinced that it would be better than a good ol' Milton Friedman flat tax, but it would certainly be a great deal better than the bloated and corrupt monstrosity we have today.
Author:  Chackly [ Wed May 16, 2007 6:02 pm ]
Post subject: 
and I see most of this was already explained by people more eloquent than me

oh jeeze

I am not good at internet
Author:  IantheGecko [ Wed May 30, 2007 5:09 pm ]
Post subject: 
I've been looking at the Fair Tax since Presidential candidate Mike Huckabee brought it up, and I think it's amazing. The poor (and anyone who buys frugally) pay less, and the rich pay more. If the rich want to pay less, they can donate to charity, build buildings for jobs, or finance research & development for new products.
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