H.R.25, aka FAIRTAX proposal

[S2M]

I've always wanted to debate the pros and cons.

Recognizing we have some astute political minds here, figured this topic could be bandied about.

....discuss.

[S2M]

Guess I misjudged you folks.

I guess I should have typed OBTUSE, instead of astute.

[verslibre]

Usually people who start a thread topic will actually kick things off with, you know, some comments.

Not just "discuss."

[S2M]

Not to put TOO fine a point on it, but at the time I posted it I was busy. I gave it the weekend.

Many views, zero replies.

I will craft something by day's end.

[verslibre]

I was gone all weekend.

[Monker]

Well, in general, I think any type of federal sales tax is a bad idea, for many reasons:

Sales tax along with property tax is the main way states collect their tax. It is very hard to predict how the states will be affected if the federal government also has a sales tax.

Adding a federal sales tax nationwide would cause instant inflation and would be very, very hard on the economy. How the economy adjusts and how long it would take is very much a wild guess.

If there is only a sales tax being paid, their is NO WAY to track how much tax the different demographics will be paying. IMO, that is a huge benefit for people like Trump who probably want to hide the fact that they pay no tax at all.

One of the main reasons people advocate for a national sales tax is that it supposedly affects all people equally. I very much disagree with that. The richer you are the easier it is to simply buy good and services from outside of the country - avoiding the sales tax completely. There is nothing stopping a millionaire from buying his next yacht in Canada, or where ever in the world he wants to, and avoid paying any tax at all. In fact, it's not that hard for most of us to simply order stuff online from other countries right now. Many people take advantage of ordering online to avoid paying STATE sales tax....so it is very foolish to think that people won't do it to avoid federal sales tax. Anyway, the same problem would persist where the richest people could pay 0 tax (like Donald Trump's last public tax return from 100yrs ago).

Also, what about USED stuff? Are only new homes sales going to be taxed, or will older homes be taxed as well...if they are, is that not double taxation, taxing the sale of something twice? The same with cars, boats, and any other more expensive item. What is to stop people from buying used stuff and avoiding taxes that way?

Are we going to tax food? Are we going to tax medicine? Are we going to tax EVERYTHING...what exceptions?

If there are going to be a bunch of rules to say what is taxable and what isn't, it's not really simplifying the tax code much.

Simplifying the current tax code is the way to go, IMO. Remove loopholes that mostly the rich people use. In addition, get rid of Capital Gains tax and count it as regular income and have it taxed the same way as everybody has interest income taxed on their saving account. In fact, I have always thought interest on savings accounts should be tax free to help out those who are not in the stock market. The goal should be that if you are in a specific tax bracket - that is the tax you pay - with very few exceptions.

[S2M]

I'll respond to all your points by night's end, Monker..

Quickly...it's not so much that it taxes every one equally, as it taxes EVERYONE. Many folks don't work, work under the table, or work in dubious avocations: drug dealers, illegals, prostitutes...they don't pay income tax, but the DO consume...

And to your point about buying things from other countries? There's a built-in mechanism for that - VERY high import tax...

[tj]

Some good points. My thoughts below:

Well, in general, I think any type of federal sales tax is a bad idea, for many reasons:

Sales tax along with property tax is the main way states collect their tax. It is very hard to predict how the states will be affected if the federal government also has a sales tax. This is the case for most programs. Some things are pretty clear, much - however is not because there are too many variables involved (particularly human nature and people's response). Obamacare is a pretty good example. Some people claim "I told you so" (in several cases, I am one of those people) about price increases, exchange failures, etc. Other parts - both successes and failures of it were not even on the radar.

Adding a federal sales tax nationwide would cause instant inflation and would be very, very hard on the economy. How the economy adjusts and how long it would take is very much a wild guess. Agree again here. Not as much if it is a wholesale replacement of the current code, but adding it in any way to the current labarinth of the code will be difficult.

If there is only a sales tax being paid, their is NO WAY to track how much tax the different demographics will be paying. IMO, that is a huge benefit for people like Trump who probably want to hide the fact that they pay no tax at all. What does it matter? Trump/Koch/Clinton/Soros will still have to buy groceries (for example), so he will pay something.

One of the main reasons people advocate for a national sales tax is that it supposedly affects all people equally. I very much disagree with that. The richer you are the easier it is to simply buy good and services from outside of the country - avoiding the sales tax completely. There is nothing stopping a millionaire from buying his next yacht in Canada, or where ever in the world he wants to, and avoid paying any tax at all. In fact, it's not that hard for most of us to simply order stuff online from other countries right now. Many people take advantage of ordering online to avoid paying STATE sales tax....so it is very foolish to think that people won't do it to avoid federal sales tax. Anyway, the same problem would persist where the richest people could pay 0 tax (like Donald Trump's last public tax return from 100yrs ago). Online ordering is actually probably the easiest way to track and tax stuff. The record of all my Amazon transactions is right there for me and the IRS to see.

Also, what about USED stuff? Are only new homes sales going to be taxed, or will older homes be taxed as well...if they are, is that not double taxation, taxing the sale of something twice? The same with cars, boats, and any other more expensive item. What is to stop people from buying used stuff and avoiding taxes that way? It is that way now with most sales taxes. The manufacturer and middleman is paying tax on his property (if not the materials used in production) and passing that cost on to me as the consumer in the cost of the merchandise. If I buy a used car, I have to pay sales tax on it, even if it is only a year old and the previous owner paid $2000 in taxes on it. Buying only used won't get you the latest iPhone.


Are we going to tax food? Are we going to tax medicine? Are we going to tax EVERYTHING...what exceptions? Many, if not most, states do tax food. The exemptions are what got us into the code we have now.

If there are going to be a bunch of rules to say what is taxable and what isn't, it's not really simplifying the tax code much. Great point.

Simplifying the current tax code is the way to go, IMO. Remove loopholes that mostly the rich people use. In addition, get rid of Capital Gains tax and count it as regular income and have it taxed the same way as everybody has interest income taxed on their saving account. In fact, I have always thought interest on savings accounts should be tax free to help out those who are not in the stock market. The goal should be that if you are in a specific tax bracket - that is the tax you pay - with very few exceptions. - I don't disagree with the first and second sentences. I would have to consider the rest before deciding. Either way, getting agreement on what to get rid of is the problem. Republicans would fight tooth and nail to get rid of business taxes and Democrats would do the same to keep them. No easy answers in application.

[S2M]

First of all, I've read Neal Boortz's 'Fairtax Book, so I may a little better equipped to handle these questions...

Next....and let me make this very clear. The Consumption Tax, is revenue neutral(meaning it raises the same, if not more, revenue as the current Tax code.

Next....and people NEVER even think of this: The Fairtax will save everyone from the cost of tax PREPARATION, AND COMPLIANCE. For several years, the Tax Foundation has calculated the cost of complying with the increasingly complicated federal tax code. They estimated that in 2002 individuals, businesses, and non-profits spent 5.8 BILLION hours complying with the tax code.-an effort that cost an estimated 194 BILLION.

From Boortz's book, 'Most Americans' paycheck are debited 25% for income tax, and nearly 8% for payroll taxes....BEFORE the paycheck even reaches the hand of the worker., This, of course, doesn't include the nearly 8% that every employer must pay on behalf of every employee....and virtually all economists agree that this extra 8% effectively comes right out of the employee's paycheck too! That's 41%...you wouldn't give up that 41% debacle in lieu of a 23% consumption tax at the register?

BTW, if the Fairtax is implemented, EVERY other tax goes the way of the Dodo...no inheritance tax, no business tax, no payroll tax....NO OTHER TAX WILL BE LEVIED.

Anyone against this system is just plain nuts.

The Fairtax will repeal:

Individual income tax
Alternative minimum tax(AMT)
Corporate and business income taxes
Capital gains tax
Social Security tax
Medicare Tax(along with all other federal payroll taxes)
self-employment tax
Estate taxes
Gift Taxes

All of those lovely taxes will be replaced with a single-rate personal consumption tax....on NEW goods and services.

The Fairtax ISN'T:

a VAT or value-added tax like in Europe. VATs are added at every stage of production, and hide tax costs in the price of goods.

The Fairtax is a REPLACEMENT for- not an addition to - our current federal taxes. It is NOT a tax INCREASE. It's NOT a tax cut either...It is simply a tax replacement.

[S2M]

As of 6/16, not ONE democrat has offered support for this bill. So I'm with you Repubs as far as Liberals and their HUGE government agenda.

Now, I need to go check my temperature...I can't believe I actually wrote that last bit there.

[S2M]

http://fairtax.org/videos/neal-boortz-explain-the-fairtax

I'm just going to assume everyone was so amazed at Linder's, and Boortz's plan, that it rendered them speechless.

[ebake02]

Regarding the federal sales tax, I vote for a federal penny tax. Add an additional $.01 to every sales transaction regardless of what it is, a pack of gum, a house and everything in between. It’s small enough that nobody would notice but it would raise a shit pile of money when you think about how many sales transactions take place in this country every day.

[S2M]

Regarding the federal sales tax, I vote for a federal penny tax. Add an additional $.01 to every sales transaction regardless of what it is, a pack of gum, a house and everything in between. It’s small enough that nobody would notice but it would raise a shit pile of money when you think about how many sales transactions take place in this country every day.

The entire point of H.R 25 is to change the tax code from thousands of pages, to 170 some odd pages, get rid of the IRS, and move towards transparency.

The Penny Tax would do absolutely nothing.

Do me a favor...track your next check from your Gross until it's gone...and tell me/us the ratio between actual material goods procured(you can include services too if it applies), and the taxes paid out(from EVERY transaction) from that same Gross. I'm willing to bet the taxes will make up close to 65%-70% of the amount. And that would be fucking egregious.

Another point of the bill, is not to get more money from each taxpayer, but to get more TAXPAYERS. Broaden the tax base, and collect from people who are currently not in the tax loop. Illegals, drug dealers, prostitutes...etc. Even KIDS. Kids are consumers as well...