WTF? A 30% sales tax? End the IRS? Who's the wacko in Congress with this idea?

I am well aware of that. However, not every state taxes its items the same, ie what is and what is not taxed under their sales tax laws. All states have a sales tax its goods, and some even tax certain services for sales tax. Furthermore, the rates are not the same among the states, the average is 8% with state and local sales taxes, but can get as high as 17%, such as Nevada for instance that does not have a state income tax and relies heavily on its gambling and tourism trade for revenue. The other item is the separate sales taxes for alcohol and cigarettes for instance. These are higher than the more traditional ones. And then you have the hotel and occupancy rate taxes that apply. That too is a form of sales tax. And all of this will still have to be paid to the state on top of whatever national retail sales tax you want to impose. Yes, it relies on the state, but it does not get rid of the state and local sales taxes already in existence. the final conundrum is the states with a state income tax. Since the federal would be eliminated under this bill, state income taxes may also be eliminated under this bill as well. If that is the case, then states would have to make up lost revenue for the lack of a state income tax AND would have to increase their property and/or state or local sales tax rates.

https://www.taxpolicycenter.org/briefing-book/how-do-state-and-local-sales-taxes-work

 

Any form of this that passes both Houses will have been subjected to a number of revisions.

You also expressed doubt over very concept of fairness, which vacates your claim that this is unfair. If you cannot measure fairness, how can you measure unfairness?

The EU VAT Tax hasn't vacated tourism in Europe.

 

The real scenario is to remove all direct federal tax. Then have them take money from the states equally based on per capita population.

Amendment
Section 1- The federal governments power to tax income is hereby revoked.
Section 2- The 16th amendment is hereby repealed.
Section 3- No funds acquired from one state by the federal government shall be transferred to another.

 

the new Fair TAX proposal has some bennies on the low end that are nice, but let's be clear, it is NOT a progressive tax, and for that reason, liberals will not support it. In our view, without progressivity on the high end, it's not fair.

 

Quite well every time it's been tried tax receipts climbed every year under Reagan.

 

Perhaps we don't do that now but there's no reason we couldn't in the future.

 

Yes, and it can't go on indefinitely.

 

Europe's VAT is also not progressive.

 

That matters NOT A TWIT. The state and the city and the count all that different.

States WOULD NOT have to eliminate their income tax if they didn't want why do you make that claim?

 

If you don't tax medicine, groceries, rent, public transit, education, and domestic use of water and energy. You can actually pay zero in taxes if you set your mind on it. The rich will pay the majority of the tax because they spend it on a lot of non-essential goods. Canada and Washington state has a similar sales tax structure.

 

Income is not the factor by which the poverty level is determined. It is determined by the cost of basic necessities of living. Now such a number can easily be viewed as income since that is where people mostly get the money. But we don't need to know what individuals incomes are to determine the cost of things such as housing and minimum food for X number of household members.

Incorrect. Wages are not taxable under Fair Tax. That's the whole purpose of the bill, to take tax away from wages and move them to comsumption.

T

Anything purchased from outside the US is subject to import taxes, and there is nothing in the bill to end import taxes.

Government services are not retail, and subsidies are not services or products.

No it won't. A two person household consumes the same amount of basic necessities, regardless of whether it is a single income or a two income household.

Income tax is already on top of state sales tax. Again, all that is happening is removing the taxes along the line that ultimately the consumer pays anyway, and placing it as a single visible sales tax. The cost of the product will go down because there is no longer a tax component in production.

Then why isn't this already being done? Retailers are not going to price out their customer bases. Especially if they know that a competitor just has to go lower than them and still make the same margin they used to.

Part of the bill is that a business has to show where their product came from and went. If the product is made but can't be accounted for by sales then the business is fined for greater than the product and the tax.

 

Which has nothing to do with the fact that the bill takes away taxes from the paycheck beyond just the income tax. So in order to figure out the comparison, you have to compare everything. Which means that one has to figure income tax, SS tax and all the other federal taxes removed from a paycheck, because that is what this bill does.

That is misinformation. Salaries and wages are not taxed. That is income and income is no longer taxed. The take home pay will be 100% minus whatever the state charges in income tax, not figuring for any medical insurance or voluntary or judgement withholdings.

More misinformation. Everyone who is a citizen gets the prebate, period. There is no income level at which a person no longer gets the prebate.

First off all, to be equivalent, you have to compare them equally. Sales tax is an exclusive tax, while income tax is an inclusive tax. Otherwise you are comparing gallons to liters, and 1 gallon is not equal to 1 liter. So let's do the math real quick. Numbers for example's sake. If a person makes $100 and has an income tax of 17%, that means that $17 comes out of his pocket to pay the tax leaving him with $83. Now to look at it as a sales tax, for that same amount, we would have to start at the $83 and have a tax rate that would bring the total to $100.
$83 + ($83 * tax) = $100
$83 * tax = $100 - $83
$83 * tax = $17
tax = $17 / $83
tax = 20.48% or 20.5%
So a 20.5% sales tax is equivalent to a 17% income tax. So if they are paying a 17% income rate right now, at most there is a 10.5 point increase (calling it a percent increase is incorrect, because we are not raising the tax rate by a certain percentage, but by an absolute number). But keep in mind, that the poverty level is based upon base retail and doesn't account for the fact that people can buy used nor does it account for sales. So both these things can cause a person's actual tax to go down, while still getting the full prebate, since the prebate is based upon the poverty line.

Convert in either direction, but if you don't then you are not being honest about the amounts.

 

The 30% sales tax rate is the same as a 23% income tax rate which is the average. Furthermore, Texas could drop its sales tax rate to 2% if it didn't have exceptions, and still make the same amount in taxes as it already does. And by doing so, you tax the consumption of these things beyond basic necessity use. Food used for a party which is beyond the basic need for survival? Why not tax it? Medical procedures such as cosmetic surgery for other than damage repair? Why wouldn't you want that taxed? And the easiest way to handle that logistically is to tax it all, and then hand people the money to cover the taxes for the basic necessities.

 

And what third party would that be?

 

On this we agree. Also in Europe, the price is given with the tax at the end included. So they know even less how much they are paying in taxes for that product. Makes it very easy to increases taxes and no one will really know how much was tax and how much was market forces.

 

A. It will never make it that far. It won't even pass the house at the end of the term. Already, there is substantial opposition to this bill within the House itself and within the GOP.
B. Again, fairness is not a term that is used for any type of tax system. Hence why I literally said, there is no fair tax system at all no matter how you tax things. It does simpliffy things a whole lot, but at what cost here. And that cost would be everyone is not going to be responsible for paying and collecting that tax to send it to the state. That is the thing about sales taxes. It is 100% passed to the consumer. Income taxes are not 100% and it can vary from 10% or less to 30% because it is an indirect cost to the business and the consumer.
C. The EU VAT is taxed at every level of production. When you go to the EU and it cost 10 Euros, that is what you are going to pay, period. It may cost the business 5 Euros or 11 Euros. But the cost is alredy embedded into the price. And a VAT is not a sales tax. It is an ad valorem tax. And some states have that in their own tax system with certain purchases.

https://tax.thomsonreuters.com/blog/what-is-the-difference-between-sales-tax-and-vat/

 

The Fair Tax is designed to be revenue neutral. Now by that, it means that with all factors the same, the Fair Tax will generate the same amount of taxes and the income and other payroll taxes do currently. It doesn't account for things like businesses wanting to base here since there is a lower tax burden than elsewhere in the world.

 

That's rather neither here nor there on this topic. They can do that whether the revenue source is income tax or consumption tax.

 

A general one yeah. That's all a VAT is; a consumption tax at every level of the production process. That's the reason why the Fair Tax makes the tax only at the retail level.

 

I don't care at all what the Fair Tax is designed to accomplish. Americans are not paying enough.

 

Which is why I prefer VAT.

 

First that does not change the fact that they are two different types of taxes and trying to compare them at straight numbers without converting between types is dishonest. Secondly, you still do have that "luxury" as you call it, just through a different medium. By taking advantage of sales and resale shopping, one can lower their effective tax rate, because they are still getting the full prebate.

 

You are the one who brought the term into the discussion. There is nothing logically impossible about a fair tax system. [/quote]That is the thing about sales taxes. It is 100% passed to the consumer. Income taxes are not 100%[/quote]
Over the long term GDP=GDI.

So what? I told you that the proper sales tax rate would be something in the low 20% range, which you claimed would destroy tourism and I pointed that the EU VAT, which is also in this same general range has not destroyed EU tourism.

 

That's a completely different topic though. The Fair tax isn't intended to address whether the government is spending too much or citizens are taxed too little. Those are completely separate issues from the method by which those taxes are collected.

 

Yes, and . . . . ?