I've long supported the idea of eliminating income tax entirely at all levels and replacing it with a much higher sales tax. Say, 23% federal sales tax with up to an additional 10% permissible by states (current county/city sales taxes are grandfathered in). A system like that would accomplish a few key goals:

 

1. Eliminate income tax fraud, and make it just short of impossible for people to hide from taxes.

2. Encourage fiscal responsibility: buying a $40,000 car will cost you $3,300 more in taxes than a $30,000 car would. That sort of hard number might prompt people to buy within their means rather than taking out a second mortgage on their condo to get a car that they can't afford their payments on anyway.

3. Ensure that people are contributing more or less equally to the tax system. You'll always have the millionaire who buys a Ford Focus, but by and large, people will spend to or slightly above the level that they can afford. The guy making $250,000 per year that buys a Ferrari will pay much more in tax than the guy making $50,000 a year who buys a Camry.

 

It's not a perfect system, but going away from income tax and moving to a sales tax-based system instead would solve a lot of the problems we have now.

Interesting point in how it would effect spending. Absolutely it wold since the price would go up quite a bit due to the taxes and even though you now have more money in your pocket the dollars seem to not go as far making you spend less or at least better. 

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Who's calling top 20% rich?  My wife and are lower middle class (probably less considering we have 5 children). It's the Top 1% that's rich (people making $430,000/year or more)

 

My wife and I make a decent amount of money.  Probably would be considered lower middle class.  We're not so great at saving money though, because we have five children.   I think Fair Tax sounds like an okay idea, but I'm not sure about the execution.  It would certainly affect spending habits, which in turn would affect the rate of Fair Tax.  Of course for me, I used the fair tax calculator and found that my wife and I would be paying FAR more in taxes than we are now.  I'm sure it'd save some people money, though I wonder just how much.  

 

The best way that I can describe it is this.  Say you decide to buy a new TV, and it costs $200 (just a round number to keep things simple).  Say the Fair Tax Rate is at 20% (again using simple numbers).  Your total cost for that TV is going to be $240.

 

Now say that a "rich" person wants to buy the same TV.  The cost to them would be $240.

 

Now again say that a person that is a lower income earner saved up some money and decided to buy the same TV.  Guess what the final cost is?  $240.

 

In this case, three people from three different income levels pay the same amount of tax.  That's what I call "fair".

 

Now a "rich" person might want to buy a $45,000 car.  That person would pay 20% tax on the price of that car which would make the final price $54,000.  Now look at a "middle class/income" person buying a car.  If they choose to buy the same car, then they would pay the same tax on that car (20%) and the final price would be... guess what?  The same.

 

Here is what one of the beauties of The Fair Tax is.  It would only apply to purchases of new stuff.  So if the middle class person decides to buy a used vehicle that costs say $30,000, then that's all that they pay.  There is no tax added to the purchase.

 

Think about this for a moment.  Would a "rich" person buy "used" stuff?

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There are 10 kinds of people in this world.  Those who understand binary and those who don't.

Keep in mind the fair tax is proposed to replace All federal taxes it's not just the income tax.


The other thing it does and this is why it'll never pass is it takes away the power of taxes from politicians. America doesn't like the new war it's waging we simply stop buying new things and don't pay taxes the people not Washington has the power.

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The best way that I can describe it is this.  Say you decide to buy a new TV, and it costs $200 (just a round number to keep things simple).  Say the Fair Tax Rate is at 20% (again using simple numbers).  Your total cost for that TV is going to be $240.

 

Now say that a "rich" person wants to buy the same TV.  The cost to them would be $240.

 

Now again say that a person that is a lower income earner saved up some money and decided to buy the same TV.  Guess what the final cost is?  $240.

 

In this case, three people from three different income levels pay the same amount of tax.  That's what I call "fair".

 

Now a "rich" person might want to buy a $45,000 car.  That person would pay 20% tax on the price of that car which would make the final price $54,000.  Now look at a "middle class/income" person buying a car.  If they choose to buy the same car, then they would pay the same tax on that car (20%) and the final price would be... guess what?  The same.

 

Here is what one of the beauties of The Fair Tax is.  It would only apply to purchases of new stuff.  So if the middle class person decides to buy a used vehicle that costs say $30,000, then that's all that they pay.  There is no tax added to the purchase.

 

Think about this for a moment.  Would a "rich" person buy "used" stuff?

Yes for sure some would but that's irrelevant. Does fair tax actually cover non taxing of reselling of goods? What collectibles or antiques. how does it cover only first time purchased items?

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Keep in mind the fair tax is proposed to replace All federal taxes it's not just the income tax.


The other thing it does and this is why it'll never pass is it takes away the power of taxes from politicians. America doesn't like the new war it's waging we simply stop buying new things and don't pay taxes the people not Washington has the power.

I don't know if I like the idea all the way but I like giving the power of the purse to the people. Since technically it should be ours anyways since congress is SUPPOSED to work for us. 

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Yes for sure some would but that's irrelevant. Does fair tax actually cover non taxing of reselling of goods? What collectibles or antiques. how does it cover only first time purchased items?

The reason used goods are not taxed is logistics. For example in the fair tax the burden of tax collection and payments is on the licensed business selling a service or good. So if I buy item X from a business the tax is included in the sticker price. The business is then responsible for determining how many X items it sold and how much in taxes it pays to the government. Now I'm the owner of X item and I'm done with it im going to sell it to you but it would be unreasonable to expect me as a private consumer to collect and pay the taxes on it. They treat the reselling of an item the same regardless if it's from a business or private individual.


Also consumables or non cooked goods are still tax exempt, and there's prebates paid out monthly instead of one time refund checks paid out annually. The prebate is predetermined estimate on the additional cost of the sales tax on low income families that receive a check each month to help cover the cost(it's designed to avoid the dispute over income distribution it's strictly designed just to change how we collect the taxes).

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The reason used goods are not taxed is logistics. For example in the fair tax the burden of tax collection and payments is on the licensed business selling a service or good. So if I buy item X from a business the tax is included in the sticker price. The business is then responsible for determining how many X items it sold and how much in taxes it pays to the government. Now I'm the owner of X item and I'm done with it im going to sell it to you but it would be unreasonable to expect me as a private consumer to collect and pay the taxes on it. They treat the reselling of an item the same regardless if it's from a business or private individual.


Also consumables or non cooked goods are still tax exempt, and there's prebates paid out monthly instead of one time refund checks paid out annually. The prebate is predetermined estimate on the additional cost of the sales tax on low income families that receive a check each month to help cover the cost(it's designed to avoid the dispute over income distribution it's strictly designed just to change how we collect the taxes).

Sure I see personal burden. What about shops that sell collectible card games. I know from personal experience that is big business with tons of money. Are you saying if I went to buy singles from them (cards pulled from packs) that those would be tax free? If that is the case than I'd be interested to see how much sales tax would be lost based on items no longer being taxable. I bet it's a ton. So much that no state would go for it. 

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Sure I see personal burden. What about shops that sell collectible card games. I know from personal experience that is big business with tons of money. Are you saying if I went to buy singles from them (cards pulled from packs) that those would be tax free? If that is the case than I'd be interested to see how much sales tax would be lost based on items no longer being taxable. I bet it's a ton. So much that no state would go for it. 

 

State sales taxes are not changed by the fair tax. 

 

The <b>FairTax</b> is a proposal to reform the federal tax code of the United States. It would replace all federal income taxes(including the alternative minimum tax, corporate income taxes, and capital gains taxes), payroll taxes (including Social Security and Medicare taxes), gift taxes, and estate taxes with a single broad national consumption tax on retail sales. 

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Silly mortals, allured by the mathematical equation set forth by the banking cartels over centuries of meticulous forethought, shadowed through various channels of distribution placing the peon in thy kingdom and then here you guys are placating the grand ponzi scheme...you can't make this [BLEEP] up!

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Your beliefs become your thoughts,
Your thoughts become your words,
Your words become your actions,
Your actions become your habits,
Your habits become your values,
Your values become your destiny.

Can't wait to actually read this entire thread! But I do want to mention one thing I would like corporatists to consider...


Prior to Reagan the rich and big corporations paid a significantly larger tax rate. From Reagan on, we were sold that lower taxes would benefit the rich, and then that money would make its way throughout the economy as the rich started spending that money. Jobs would be created and everyone would win.


What we have seen is the opposite for the last 30 years. Taxes have continuously lowered and the gap between the rich and the rest of us has increased. The middle class, as someone else mentioned has been slowly dying.


So why continue a tax policy that we've implemented since the 80's that is having the opposite effect of what is was sold to do?

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Can't wait to actually read this entire thread! But I do want to mention one thing I would like corporatists to consider...


Prior to Reagan the rich and big corporations paid a significantly larger tax rate. From Reagan on, we were sold that lower taxes would benefit the rich, and then that money would make its way throughout the economy as the rich started spending that money. Jobs would be created and everyone would win.


What we have seen is the opposite for the last 30 years. Taxes have continuously lowered and the gap between the rich and the rest of us has increased. The middle class, as someone else mentioned has been slowly dying.


So why continue a tax policy that we've implemented since the 80's that is having the opposite effect of what is was sold to do?

 

You don't know that it's had the opposite effect.   It's possible that it did benefit us all.   It's possible that if we had not done it, we would be even worse off.  

 

Your logic is like saying, they told me I had to go to the dentist or I would lose my teeth.   Yesterday I had to have a tooth pulled.  So going to the dentist hasn't worked!   I think I will stop going to the dentist.   Or, they told us that exercise would make us healthy.   So I've exercised for the last 3 years.   Then yesterday I got sick.   So exercise hasn't worked! 

 

Do you remember the luxury tax on boats that was passed in the 1990s?   The target was the rich.   But what happened was, it threw a bunch of blue collar boat builders out of work.   http://articles.baltimoresun.com/1991-06...s-harrison

 

My point is, taxes on rich people can have a negative effect on poor or middle class people. 

 

What do you think happens to all that money the rich accumulate?   They either spend it or save it.   If they spend it, that creates a lot of jobs for people who make and service the things rich people buy.   If they save it, they can put it in a bank, where it increases the supply of money available for mortgages and loans, thereby lowering interest rates so more middle class people can buy homes or automobiles.   Or the rich people can invest it, and that invested money either raises the value of the middle class person's 401k plan, or it is invested in a new business that employs poor and middle class people.  

 

My point is, raising taxes is not a good way to fight income inequality.    I mean, you might rein in income inequality, but at the same time, make everyone poorer. 

 

By the way, what is a "corporatist"?  

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Marty, while your point is well written it I don't believe it to be well thought out to a productive assertion.


First, my analysis is based on facts, outcomes, and then a logical deduction based on those facts. Your example of the dentist and doctor is the logic of fools. Only a fool would blame the dentist for his tooth, in your example. My analysis is not based on foolish logic. I'm not calling you a fool, I'm saying that the arguement your example tries to create is a red herring or a deflection in attempt to defeat my analysis. But I don't think it works well in this case.


Now, to say that lowering taxes has helped us be better off is an acceptable hypothesis, but I'm not sure facts can back this theory up. On the flip side, just looking at the facts since the beginning of trickle down economics, it's a pretty solid argument to say that supply side economics is profoundly effective. Specifically, it's helped the wealthy and hurt everyone else. I think there are actual studies that back this up.


The link you provided was an interesting read. But the article buries the lead!! As one should expect from a corporatist newspaper, it failed to headline the fact that the recession probably had more to do with the issues in the article than the 10 percent tax hike. That analysis is in the article, but it's buried at the bottom.


As for the corporatist term, I think those that defend the wealthiest among us while ignoring the will of most of us can be considered corporatist. It's just a term I threw out there. Oligarchs would be another term I'd use...

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Marty, while your point is well written it I don't believe it to be well thought out to a productive assertion.


First, my analysis is based on facts, outcomes, and then a logical deduction based on those facts. Your example of the dentist and doctor is the logic of fools. Only a fool would blame the dentist for his tooth, in your example. My analysis is not based on foolish logic. I'm not calling you a fool, I'm saying that the arguement your example tries to create is a red herring or a deflection in attempt to defeat my analysis. But I don't think it works well in this case.


Now, to say that lowering taxes has helped us be better off is an acceptable hypothesis, but I'm not sure facts can back this theory up. On the flip side, just looking at the facts since the beginning of trickle down economics, it's a pretty solid argument to say that supply side economics is profoundly effective. Specifically, it's helped the wealthy and hurt everyone else. I think there are actual studies that back this up.


The link you provided was an interesting read. But the article buries the lead!! As one should expect from a corporatist newspaper, it failed to headline the fact that the recession probably had more to do with the issues in the article than the 10 percent tax hike. That analysis is in the article, but it's buried at the bottom.


As for the corporatist term, I think those that defend the wealthiest among us while ignoring the will of most of us can be considered corporatist. It's just a term I threw out there. Oligarchs would be another term I'd use...

 

Just one note, the biggest problem that caused the financial crisis in 2008 was undeniable bad home mortgage loans. Those loans where state mandated in the 90's had those loans never been required and banks where left on their own to gauge if a consumer was a good investment or not when making home loans the housing crisis likely never happens.

 

It's just a small point that illustrates the issue is government interference with the markets. While the intention is noble to make sure everyone has a chance at the American dream of owning a home, it created an enviroment where risky loans where not really that risky. They where backed by the feds. So you can't blame capitalism, or capitalist, or low taxes for a down economy (it's the downs that kill the middle class, the rich can bounce back from a bad mortgage note, the middle class it devastates their net-worth and takes almost a life time to correct) when you have constant interference with the balance of investments and return. Supply side economics only works when the market has to weigh the risk against the reward. Take away the risk and it's a different economic system all together.

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Eric, I think we tend to argue the different sides of the same ciin!


One could also argue the mortgage crises occurred because of the deregulation of loan processing.


Ugh, at work... gotta go

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Eric, I think we tend to argue the different sides of the same ciin!


One could also argue the mortgage crises occurred because of the deregulation of loan processing.


Ugh, at work... gotta go

 

Same here we will solve the world's ill's later tonight

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It's easy to blame the government for the mortgage crisis but there were loan officers and banks handing out loans to clients who had no business taking them, especially the notorious ARMs. It was a perfect storm of stupidity. Including certain clients who knew better.

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It's easy to blame the government for the mortgage crisis but there were loan officers and banks handing out loans to clients who had no business taking them, especially the notorious ARMs. It was a perfect storm of stupidity. Including certain clients who knew better.

And what would've happened to the bank if they declined those loan applications?

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“An empty vessel makes the loudest sound, so they that have the least wit are the greatest babblers.”. - Plato

It's easy to blame the government for the mortgage crisis but there were loan officers and banks handing out loans to clients who had no business taking them, especially the notorious ARMs. It was a perfect storm of stupidity. Including certain clients who knew better.

 

Pretty much.


http://www.forbes.com/sites/stevedenning...1/22/5086/

 

 

 

Out of the top 25 subprime lenders in 2006, only one was subject to the usual mortgage laws and regulations. The nonbank underwriters made more than 12 million subprime mortgages with a value of nearly $2 trillion. The lenders who made these were exempt from federal regulations.

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I was wrong about Trent Baalke. 

State sales taxes are not changed by the fair tax. 

 

The <b>FairTax</b> is a proposal to reform the federal tax code of the United States. It would replace all federal income taxes(including the alternative minimum tax, corporate income taxes, and capital gains taxes), payroll taxes (including Social Security and Medicare taxes), gift taxes, and estate taxes with a single broad national consumption tax on retail sales. 

So you are saying Florida, sales tax would jump up what 27-28%? wow

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Just one note, the biggest problem that caused the financial crisis in 2008 was undeniable bad home mortgage loans. Those loans where state mandated in the 90's had those loans never been required and banks where left on their own to gauge if a consumer was a good investment or not when making home loans the housing crisis likely never happens.

 

It's just a small point that illustrates the issue is government interference with the markets. While the intention is noble to make sure everyone has a chance at the American dream of owning a home, it created an enviroment where risky loans where not really that risky. They where backed by the feds. So you can't blame capitalism, or capitalist, or low taxes for a down economy (it's the downs that kill the middle class, the rich can bounce back from a bad mortgage note, the middle class it devastates their net-worth and takes almost a life time to correct) when you have constant interference with the balance of investments and return. Supply side economics only works when the market has to weigh the risk against the reward. Take away the risk and it's a different economic system all together.

Wait... The fact the banks gambled with our economy and willfully caused it's collapse is the governments fault? You hatred of regulation borders on silly and uncompromisingly extreme at times. 

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