FairTax Act-Is it a viable solution?

Absolutely correct and yes there would be ways for a person to go completely "off grid" but they would generally be living a miserly existance in doing so. They would also be the rare exception similar to the wealthy individual that invests hundreds of millions of dollars in tax exempt bonds and pays no income taxes today. It happens but it is very rare in reality.

 

For me it is two-fold.

First of all it makes taxation totally transparent. Instead of embedded taxation that is passed on to the consumer in the costs of products and services it is collected when a person purchases the goods and services. As some have noted if the cost of a product is increased by 20% because of embedded the people will simply pay it and not think twice about it but if a 25% tax is imposed at the time of purchase people start to object to it. Same amount of money is being spent by the consumer but when the people realized it was a tax then they would object.

Next is that if it's set up correctly it's absolutely fair and progressive. Everyone pays the same identical tax rate and receives the identical prebate and the prebate, which has far more impact on low and middle income earners relative to income, makes it highly progressive.

 

The odds are you are correct, and most reasonable people would agree, but IMO the possibility removes the word “fair” from the tax proposal. And you can bet that if viable and implemented a few years later some smart “liberal” will be all over those millionaires living off grid, as if “surprise.”

I just think that covering all the bases in important, up front, because there will be judgment. There really is no reason for me to say more about the matter, what I wanted to say has been said.

I personally back when I found out I only had a 10 mph average annual wind speed, and the Mother Earth News Blue Max wind generator made from an old alternator was impractical, I would have liked the idea of going totally off grid. I also remember quite well looking at my paycheck one day and thinking that I could have bought a used car with what was taxed that week. The used car that I eventually did get at an auction I later sold to a deaf woman for a dollar.

 

Why not lower income people living off the grid?

I don't personally think any federal tax system is 'fair' unless every able-bodied American is paying/contributing something.

Too many people given a 'free ride' encourages what?

A nation can create larger and larger government programming, but all of it must be funded, and extracting too much out of the private sector has it's downside.

 

What minimum contribution would satisfy you?

 

I serioulsy doubt that there would be no objections to an excessive consumption tax rate and I don't believe it would fall on deaf ears. Today we have both Republicans and Democrats objecting to income taxes and the Congress does not raise nearly enough money to pay for spending and that is because both major parties refuse to fund their expendatures. At best, even from the "tea party" members of Congress we get BS calls for spending cuts that come no where near balancing the budget.

Some would pay less and some would pay more but it would be based upon personal financial decisions. Today, for example, how much does a major drug dealer making $1 million or more per year pay in income taxes? Overall the cost of taxation goes down though because much of the cost is not the tax but instead the other costs that the income taxes impose. As I've noted before the compliance costs for 80% of all enterprises in the US averages 3.84 times the cost of the tax collected. The government gets $1 but the consumer pays $4.84 for that $1 in tax to be collected and sent to the government.

 

An anthropologist calls them Hunter Gatherers, Democrats call them homeless, and since rich Republicans do not want to employ them at high enough wages to make them pay income taxes, therefore, rich Republicans want more hunter gatherers to exist to vote for a Democratic “free ride.”

 

Pay anything more than zero$ and/or volunteer to help the USA.

It's not really the amount of tax but more about each American taking ownership of the nation. Zero is unacceptable and enabling.

In lieu of sending money, volunteer to fill jobs on government contracts or in the local communities. Again, doing nothing is unacceptable and enabling...

 

Wages are determined by supply and demand...not by Republicans or Democrats...

 

FDR did this with the CCC camps for the chronic unemployment problems of the 1930's but with 18 million unemployed today and with 38% of all households not paying any personal income taxes it would be difficult to do today. They could be used to pick up trash along the freeways but there is a liability issue because some of these idiots would be hit by cars. They could also be used for cleaning up the tagging going on in communities but that would require millions of gallons of paint and Goof-Off (the best thing I've found for removing spray paint). I don't know if there's enough work for all the bums we have when it comes to not paying anything in federal personal income taxes.

 

In other words: their votes are for sale.

 

Our employment problems IMO can never be solved. We have millions of Americans in communities all across America and I'm guessing most are not going to relocate to find work. For those with no to few job skills or eduction, what type of work is going to magically appear for them? For those with higher-skills or more education, in many cases, they must relocate to where the jobs are. For all of those today over 40 years of age, how many will relocate to follow the jobs...almost none is my answer. The creation of jobs is not keeping up with the current needs much less with population growth. IMO this issue will worsen and I'm not sure what all the people will be doing to get by?? The super-economy that we created and enjoyed during the past 50 years was great, however, much of the business has evolved or relocated, while the people have not evolved and they just stay put...a formula for disappointment. I heard a guy yesterday say 'I know there are some jobs in the next county...but I'm not going over there'. We have a different culture now which appears stubborn, with feelings of entitlement, with less skills to offer, definitely immobile, but want everything in life. Since this thread is about the FairTax lastly I will say that no matter what tax system we adopt, if we can't get people back to work, then a tax system will be the least to worry about...

 

Employment is a huge component of why a consumption tax (with prebates) is preferrable to our current income tax system. Everyone agrees that productions costs would be less, including opponents, although there is disagreement over how much less. We can use low-ball figures of about 10% or higher estimates of 20% or more but even a 10% reduction in the retail cost for exported goods would increase the competitiveness of US manufacturing and that would increase demands for labor. Many of these jobs would be low-skilled manufacturing jobs on assembly lines and those are the type of jobs we could really use the most. The lower the cost of an exported item the more demand and the more jobs.

It is true that some individuals simply refuse to relocate for work. I'm not one of those and I've moved over 8,000 miles total in the last 10 years for work. Sure, it would be nice to live in a small remote mountain town but there just isn't work there that would support me so I move to where the work is. In some cases, when there is a shortage of labor, the jobs do come to where the people and some would wait, perhaps forever, for that to happen. That is just pure stupidity that we can't do much about.

But once again, by lowering the costs of production by eliminating non-value added costs is the best way to create more demand and jobs. Eliminating a tax burden on production, which income taxes impose, would result in signficantly lower costs of 10% or more which would create more demand on the international markets for US produced goods and more jobs for Americans.

 

I don't disagree but then in doing comparisons we'd have to compare what the income tax rate would be if we had zero deficits. We can't compare today's underpayment in taxes with a tax system that fully funds government.

 

I agree about the comparison, but from my perspective I would never approve a different tax system unless it balances the budget along with government policy to control spending...

 

That is just never going to happen. All the low wage manufacturing jobs left a long time ago and will never return. Manufacturing in the US is now highly automated and there are few low skilled jobs.

The US could compete in low-skilled manufacturing assembly line type work only if the standard of living of US workers was reduced to third world levels. It is a naive expectation.

I moved more than 5,000 miles for work every year for ten years. My particular skills were in high demand and I made a lot of money. All of my co-workers burned out. I did too eventually. No amount of money was enough to get me to move again.

There are limits to what people can do, something you seem to ignore, perhaps deliberately.

US manufacturers have a lower tax burden than their competitors in the EU already, competitors who are still able to beat them in international markets on price because US manufacturers employee health care costs are 50% or more higher. If the goal is to make US manufacturing more competitive in international markets nothing would make more of a difference than the US moving to taxpayer funded universal health care.

 

Absolutely correct when the statement is made that supply and demand will dictate lower prices. We don't have a supply-side problem but instead we have a demand problem because of prices. If prices are lowered then demand increases.

Let's look at this from a farmers standpoint. A US farmer today is competing with farmers in Mexico, Agentina and New Zealand and they have to do so on a cost basis. If the cost of agricultural goods remains the same for the imported goods and is reduced by 10%-20% for US produced goods then the US farmer can establish a competitive advantage both in the United States and internationally with these other countries. It would make sense for the farmer to lower the cost of their agricultural products to increase the domestic and international demand for them. The farmer could have more net profits by lowering prices than by keeping the higher prices because of the increased demand created by the lower prices.

Increasing demand by eliminating non-value-added costs is the key to increasing our GDP and embedded taxation/adminstrative costs are the greatest single non-value-added cost inherent in US goods and services.

 

The reason the low-skill manufacturing jobs left the United States was because the US could not compete based upon the costs of the products. It wasn't that the workers couldn't produce the products. Embedded taxation and the related adminstrative compliance costs increase the cost of US produced goods by somewhere between 10% and over 20% depending upon who does the analysis but even at 10% a reduction in cost of that much would increase demand, and the number of jobs, significantly. The embedded tax/adminstrative costs are the largest single non-value-added cost related producing a product in the United States.

Yes, there can be some stress with moving from one part of the country to another and sometimes we'll accept lower wages simply to avoid moving or because we really enjoy where we're living. This changes though if the decision is between putting food on the table or going hungry. I don't like moving and so I've put a high pricetag on any company that wants to employ me over the last few years. If they want me then they have to pay double what I'm making currently so long as I'm gainfully employed. If I was unemployed then the criteria changes as working is superior to not working but as long as I've got a job that I'm happy with I can demand any amount I choose before I'll accept employment that would require me to move.

The wages for low-skilled manufacturing jobs are less than for high-skilled manufacturing jobs but they are still typically higher than the wages for service sector jobs. With an increase in demand for both because of greater market share for US goods on international markets the wages for both would increase over time. That would result in an increased standard of living overall for Americans.

The tax burden being referred to is just the corporate income tax and not all taxation. The corporate income tax is very insignificant when we address the cost of a product or service as it only relates to the profit. If, for example, a corporation makes 10% net profit and pays a 20% tax on it the total tax on gross revenues is only 2%. Based upon a study I once read though for 80% of all US businesses the cost of adminstering that tax by the enterprise is 3.84 times as much as the tax collected and those expendatures are deductable and come out of gross revenues. That would mean that the cost of the tax when both the tax and adminstrative costs are combined equals about 15% of gross revenues if my math is correct. It is true that for very large corporations this is far less but for the vast majority this is the cost of the tax. Add to that the payroll taxes paid by the enterprise which are not included when comparisons are made between the income taxes on US business and European enterprises.

The problem with taxpayer funded (i.e. single-payer) government funded health care is that it's more expensive than group insurance for corporations and way more expensive than the average cost of insurance for individual private insurance policies. This was quite evident when the Democrats were discussing health insurance and health care costs before "Obamacare" was passed. They often used flip-charts showing the high costs related to current government health insurance programs and then jumped from that to blaming private insurance. Just keep a couple of numbers in mind and that is a private health insurance plan in the United States only averages a cost of about $4000 but the CBO when calculating the cost of a government run single-payer program came up with an estimated cost of between $5000-$7000 for an individual. A single-payer government program is more expensive than private insurance and it would increase the cost of health care in America and not reduce it.

One thing of importance though is that whether someone supports private insurance or a single-payer system it has no impact on whether we have an income tax or a consumption tax. The same amount of revenue must be collected from the American People in either case. The difference is do we hide the taxation as a component of the costs and services for US business which makes us less competitive internationally or do we tax at the consumption level where the taxes are clearly evident and it lowers the costs of our exports so we're more competitive internationally?

 

Yeah, remember the cigarettes the Democrats were handing out to the hunter gatherers in Chicago when Dick Tracy, and Mary Poppins, and Jive Turkey voted?:

“Though they tried to bribe that night
Tuesday was not the time to light
Tempting inducements away from the right
Twisted media could not predict
Thrice counted ballots because of the thick
Their demonstration’s are a delight
The democrats brought to light
That they are not so bright
They can’t even punch the holes right.”

If the rich do not supply jobs so people can pay taxes, they cannot expect the demands to go away. Unemployment may get rid of Obama, but after Obama is gone regardless of the tax system those jobs better miraculously show up.

 

The question is can we agree to try something new without burning the bridges of the 16 amendment?