The Fair Tax Plan

[mlk_man]

The FairTax Plan is a nonpartisan national grassroots campaign to replace the federal income tax system with a progressive national retail sales tax. It provides a "prebate" to ensure no American pays federal taxes on spending up to the poverty level, dollar-for-dollar federal revenue replacement and, through companion legislation, repeal of the 16th Amendment.

www.fairtax.org (http://www.fairtax.org)

[GGal]

It won't ever happen.

And it wouldn't work. The middle class would be paying even more than their fair share per their income.

The only way it could be fair is if we also legislated a nice intangible tax so that the wealthy paid tax on their holdings and investments.

The Federal income tax code does need major overhaul, though.....because the middle-class and upper-middle class ($100,000 - 300,000) pay entirely too much of the pie.

The wealthy have so many shams going on (abusive transactions and tax-shelters), and are getting away with gazilions.

Just to give you an idea of some of the latest and greatest schemes:

1. Mr. A owns 100,000 shares of stock x, worth $1,000,000. Stock x is a good solid company. Mr. A enters a contract with Foreign Bank, whereby Foreign Bank prepays $1,200,000 to him and he agrees to forfeit the stock in 10 years. He turns over the stock as collateral. This is the simple version of the story. But the Government has taken the position that this a sale of the stock on the date of the contract (because that's what the parties intend....it is a sham to defer the income for 10 yrs). And you just would not believe how much money we are talking about. I saw one dude on SEC.gov who has entered into several of those contracts this year.....one for over $500 million.

2. Mr. X buys 2000 acres of land. Half of it is open crop and pasture. Half is low land on the creek, and loaded with pine and hardwood. Mr. X "donates" an easement to XYZ Charity that is a protector of wildlife and land - the easement consists of an agreement by Mr. X that he will not sub-divide the 1000 acres or otherwise improve it. Mr. X retains all timber rights. Mr. X's attorney (who promoted the scheme) hires an appraisor for a report that says the easement is worth $2 million. So Mr. X takes a $2 million deduction for charitable contribution. Now what Mr. X and the appraisor fail to take into account is the value of the timber retained by Mr. X, and the fact that the value of the land and timber did not decrease when he gave the easement. It was a sham. He couldn't have subdivided it anyway, because it was protected by Federal law as low-land - the Corp of Engineers polices that. This is going on all over the country.

Now don't you want equal protection under the law?

I vote no to national sales tax because I don't believe it will be fair to middle class.

GA

[SkyPilot]

The problem is not so much how much revenue can be raised, but rather, how much the Gov't is spending. Tax codes will never be fair, because fair is a matter of perspective, and all tax codes are regressive for somebody.

However, one might make the argument that the more regressive, the more fair, in that everyone in a leaky boat will sink at the same time.

That would contemplate taxing you not on what you have, but deciding how much you should have left. Hmmmm... that sounds familiar... "each according to his ability, each according to his need..."

Feeling a bit surely this morning, I am.... :D

[Show-me]

Government spending is definitely a problem and always will be.

What about the E-bay, on-line purchases, drug dealers, prostitutes, immigrants, flea markets, etc? Basically everyone not paid on the books or on the up and up.

I luv the simplicity and the fact that there would be no loop holes for anyone. Personally I would probably get dinged. It would help separate the wants from the needs and maybe the savings rate would go back up a bit.

Discloser: I voted "not sure" and my tax liability last year was $147.:D

[SkyPilot]

This would also tax the underground economy (mafia, drugs, etc...) as well, which is huge and pays no tax at present.

[nnuut]

From what I've read the fair tax is UNFAIR, the poasses pay hardly nothing, middle classes (what's left of us) pay more than now. Democratic malarkey!:mad: No offense to the GOP!:blink:

[GGal]

While I am against replacing our current system with a national sales tax, I do concur that "non-filers" are the cause of a big part of the tax gap, and some combination tax system that includes some amount of sales tax could go a long way toward closing that part of the tax gap.

Of course, cheaters will find a way to cheat, no matter what.

I think we need to hire more Revenuers (tee hee) to go after the non-filers.

GA

[grandma]

While I am against replacing our current system with a national sales tax, I do concur that "non-filers" are the cause of a big part of the tax gap, and some combination tax system that includes some amount of sales tax could go a long way toward closing that part of the tax gap.

Of course, cheaters will find a way to cheat, no matter what.

I think we need to hire more Revenuers (tee hee) to go after the non-filers.

GA
There you go! We could hire unemployed fellows - go out in groups of two-three; ....bounty hunters, of sorts ...except where that is illegal - they could have different job description & title - `National Treasury Recovery' - get a percent of the recovered treasures. Street People may do well at this; simply because of my imagined perception of them being able to hold their own out there in a very tough situation.
..turn our whole outlook upside down -http://i4.photobucket.com/albums/y106/triso/carsparkingpluto.jpg

[FundSurfer]

From what I've read the fair tax is UNFAIR, the poasses pay hardly nothing, middle classes (what's left of us) pay more than now. Democratic malarkey!:mad: No offense to the GOP!:blink:

poasses pay nothin' now. I didn't get the middle class paying more. Don't think it is unfair either. I am suspicious when Libertairian Neal Bortz is in favor. He thinks the republicans should make it a platform issue for '08.

Me personally, I'd be in favor. I don't think it will ever happen. Too big of a change. People don't like big changes.

[GGal]

Hello Surfer,

I didn't say the middle class would pay more dollars. I said they would pay more % of their income....because the middle class spend a much higher % of the income than the wealthy do......

So to make it fair, we would have to also have an intangible tax on investments over a certain amount, because the wealthy have more to sock away than we middle class.

And if you think the middle class are not carrying the bulk, let me try to find the stats for you......

The wealthy and the big corporations are where all the abusive tax shelters are, and they are significant.

GA

[FundSurfer]

The wealthy and the big corporations are where all the abusive tax shelters are, and they are significant.


This is actually why I am for the fairtax. Tax shelters go away because of simplification. Rich may pay smaller percentage but they will pay more than they do now. Also, they have to pay eventually. Otherwise they don't spend the money. Corporations will also be spending and paying.
see the link below
http://www.fairtax.org/fairtax/faqanswers.htm#14
and
http://www.fairtax.org/fairtax/faqanswers.htm#49

[GGal]

Hire more Revenue Agents! And give me a big raise.

GA

[GonePostal]

This would also tax the underground economy (mafia, drugs, etc...) as well, which is huge and pays no tax at present.
...and don't forget "illegal aliens"!

I read the book some time ago, and from what i remember, the price of things stay relatively the same...with all of the imbeded taxes of goods taken away. As someone stated the rich my not pay a % wise equal the the middleclass, but there's always a "Paris Hilton" in the family who'll blow it all!!:D

Oh yea, one more positive to it was that corporations, factories,..etc. would
"storm" to the US for the tax breaks, instead of leaving...

[KevinD]

I thought I'd bump this thread back to the top to see if anybody here has given any consideration to the FairTax since this thread was started back in 2006.

I posted this a while back on another forum that I'm on so I thought I'd share it here. This is my explanation of how the FairTax would work.


Lets say you own the Acme Anvil Company.

The mining company that mines the iron ore has a corporate income tax that they have to pay and they have pay roll taxes for their employees to submit to the Feds. These things don’t just take care of themselves so they have to pay accountants to fill out the forms and submit them to Uncle Sam. The taxes and the cost of compliance (accountant) are expenses associated with the business and will be passed on in the price of their product.

The foundry that smelts the ore into iron also has a corporate income tax return to file and corporate taxes to be paid. They also have pay roll taxes for their employees, W2’s to be mailed, accountants to pay to make sure they comply with the tax code...all passed on to the next link in the food chain.

Eventually the anvil ends up in the hardware store. The store owner has employees of his own to withhold taxes on and a schedule C to file. He most likely has an accountant that he has to pay to make sure he is in compliance with the tax code and guess what? He passes those expenses along to the poor Coyote who is going to try to drop the anvil on the Road Runner.

All those taxes...corporate and withholding...and the costs associated with compliance with the tax code GO AWAY!!! You get 100% of your pay in your pay check...no more withholding!

Will the companies pass those savings along to the consumer? FairTax proponents say “yes” due to competition. The price of goods goes down and then the FairTax is added back bringing the cost back to approximately where it was before the embedded taxes and cost of compliance were done away with.

But what about the poor people?

For this exercise lets assume that it takes $24K/year for a family of 4 to provide for the basic necessities of life...food, cloths, shelter, transportation. It matters not whether you live in a shack or a million dollar home...the basic necessities to sustain life are 24k/year or 2k/month. Anything above that is not a necessity. If the FairTax rate is 24% then that would equal $480/month.

The FairTax would provide a “PRE-bate” to cover the tax on the basic necessities. Each month the Feds would mail a check, make a direct deposit to a checking account or stored value/debit card in the amount equal to the tax that would be expected to be paid on the basic necessities of life. Every household would get this pre-bate. It matters not how much money you bring home. In fact...under the FairTax...it’s none of the gubments bidness how much you bring home...only how many members there are in the household. In the above example...if the household income is only 24k...that family would have NO TAX LIABITY AT ALL...none. Heaven forbid if they bring home 25k that year they would have to pay the FairTax on $1000....or $240 for the year.

If you can afford a yacht and all I can afford is a rowboat...I pay 24% on my rowboat and you pay 24% on your yacht. If all I bring home is 50k and I spend it all...I pay 24% on everything above the determined “necessities of life.” If you bring home 500k and you don’t want to spend it all in order to keep from paying the FairTax and all you spend is 50k...what good is the other 450k if you’re not going to spend it? If I bring home 50k and I don’t want to pay the FairTax...I guess I’ll have to start a savings account. OMG!!!

But none of the above is why I like the FairTax. I like the FairTax because there are no individual income tax forms to fill out. If you aren’t smart enough to fill out the forms yourself and have to pay H&R Block to fill them out for you, under the FairTax you won’t have to do that any more...no more cost of compliance for individuals. No more deadlines to be met by April 15th. No more quarterly payments to be paid. Business decisions would be made according to the needs of the business not the tax implications of the decision. Not to mention the lobbyist that influence government officials to pass laws that give tax breaks to special interest groups. No more tax forms equals no place to hide spending disguised as tax cuts.

Please...buy both books and read them. Educate yourself on the proposal. I think you’ll like it.

[fabijo]

I thought I'd bump this thread back to the top to see if anybody here has given any consideration to the FairTax since this thread was started back in 2006.

I posted this a while back on another forum that I'm on so I thought I'd share it here. This is my explanation of how the FairTax would work.

I read up on the Fair Tax before and I like it. Pennsylvania has some legislation on the table to do something similar for school taxes - the largest portion of your property taxes. I tried searching for it just now, but it looks like the site for the major organization supporting the bill forgot to renew their domain. :(

[jon]

Is there a unbiased chart someone knows about that compares fair tax with flat tax?

[DrFaustus]

I read up on the Fair Tax before and I like it.

I like it as well. But I don't think it will ever happen. Too many people are making hay off of the complicated tax code. Consider:

1) Politicians.
They use the tax code to push social engineering or to buy votes. Tax cuts each child you have, tax cuts to buy a hybrid, tax cuts to install solar panels on your house ...

2) Tax Accountants
H&R Block and their ilk would scream bloody murder if something like the Fair Tax ever came into being. A whole block of professionals would be out of work at the stroke of a pen.

I'm sure I could go on ... but work is calling

[Silverbird]

Taxing companies to employ people is a dis-incentive to hiring. "Fair tax" looks similar to the VAT in the EU, and the tax system of many other industrialized countries. With this kind of tax is you have to figure out a way to make sure that products that are both bought by companies for assembly into a final product and by final consumers (for instance, computer hard drives) only get taxed once. It also can be fustrating to consumers trying to figure out the final price of an item (call it sales tax prime). However, overall it's more fair - and is an incentive to (gasp) save and (gasp) invest and (double gasp) employ people in the US.

By the way, on the political hay, there will be plenty still availble, trust me. Excemptions to VAT, etc. Accountants will be employed to keep track of VAT payments and papers for supplier to producer transactions, etc.

It's a matter of what you are taxing, and what kind of behaviour your tax causes. We have insisted on a consumption economy, taxing corporations cause it sounds good and the consumers don't see it in their prices. Problem comes when those consumers don't get paid enough to consume.

[Steadygain]

Taxing companies to employ people is a dis-incentive to hiring. "Fair tax" looks similar to the VAT in the EU, and the tax system of many other industrialized countries. With this kind of tax is you have to figure out a way to make sure that products that are both bought by companies for assembly into a final product and by final consumers (for instance, computer hard drives) only get taxed once. It also can be fustrating to consumers trying to figure out the final price of an item (call it sales tax prime). However, overall it's more fair - and is an incentive to (gasp) save and (gasp) invest and (double gasp) employ people in the US.

By the way, on the political hay, there will be plenty still availble, trust me. Excemptions to VAT, etc. Accountants will be employed to keep track of VAT payments and papers for supplier to producer transactions, etc.

It's a matter of what you are taxing, and what kind of behaviour your tax causes. We have insisted on a consumption economy, taxing corporations cause it sounds good and the consumers don't see it in their prices. Problem comes when those consumers don't get paid enough to consume.

Thank you - that is an excellent explanation.

FAIR TAX - To me is Warren Buffett's idea; The more you make - the more Tax you pay. We are indeed a consumer driven economy but largely sheilding the most powerful and richest from paying their share.

[Intrepid_Timer]

A billion is a difficult number to comprehend, but one advertising agency did a good job of putting that figure into some perspective in one of its releases.
A. A billion seconds ago it was 1959.
B. A billion minutes ago Jesus was alive.
C. A billion hours ago our ancestors were living in the Stone Age.
D. A billion days ago no-one walked on the earth on two feet.
E. A billion dollars ago was only 8 hours and 20 minutes, at the rate our government is spending it. While this thought is still fresh in our brain... let's take a look at New Orleans…
It's amazing what you can learn with some simple division. Louisiana Senator, Mary Landrieu (D) is presently asking Congress for 250 BILLION DOLLARS to rebuild New Orleans. Interesting number... what does it mean?
A. Well.... if you are one of the 484,674 residents of New Orleans (every man, woman, and child) you each get $516,528.
B. Or... if you have one of the 188,251 homes in New Orleans, your home gets $1,329,787.
C. Or... if you are a family of four... your family gets $2,066,012.

Accounts Receivable Tax
Building Permit Tax
License Tax
Cigarette Tax
Corporate Income Tax
Dog License Tax
Federal Income Tax
Federal Unemployment Tax
Fishing License Tax
Food License Tax
Fuel Permit Tax
Gasoline Tax
Hunting License Tax
Inheritance Tax
Inventory Tax
IRS Interest Charges (tax on top of tax)
IRS Penalties (tax on top of tax)
Liquor Tax
Luxury Tax
Marriage License Tax
Medicare Tax
Property Tax
Real Estate Tax
Social Security Tax
Sales Taxes
Recreational Vehicle Tax
School Tax
State Income Tax
State Unemployment Tax (SUTA)
Telephone Federal Excise Tax
Telephone Federal Universal Service Fee Tax
Telephone Federal, State and Local Surcharge Tax
Telephone Minimum Usage Surcharge Tax
Telephone Recurring and Non-recurring Charges Tax
TelephoneState and Local Tax
Telephone Usage Charge Tax
Utility Tax
Vehicle License Registration Tax
Vehicle Sales Tax
Watercraft Registration Tax
Well Permit Tax
Workers Compensation Tax
STILL THINK THIS IS FUNNY? Not one of these taxes existed 100 years ago... and our nation was the most prosperous in the world. We had absolutely no national debt... We had the largest middle class in the world... and Mom stayed home to raise the kids. What happened?
Can you spell ‘politicians’? I hope this goes around the USA at least a BILLION times. What the heck happened???

[Silverbird]

What happened is we have been allowed to borrow off budget, so when there's a real rainy day emergency, we're already under financial water. States are not allowed to borrow off budget, so when they drown and the pumps break, that's it.