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

There is NOTHING anecdotal about retail sales taxes we have centuries of experience all across this country.

You don't seem to understand you would not be filing a federal tax return at the end of the year. No more paying accounts to do it.

No it won't. Most of the poor taxes will be pre-bated to them and the rich buys LOTS more than the poor and will be paying LOTS more in sales taxes.

The FairTax preserves the overall progressivity of the federal tax burden.
The FairTax not only lowers remaining average lifetime net tax rates, it also maintains and, indeed, enhances overall progressivity in the tax system. Consider middle-aged married households. The FairTax average lifetime tax rate is very low – only 1.5 percent – for the couple with $20,000 in annual earnings, and much higher – 20.5 percent – for the couple with $500,000 in annual earnings. The reduction in the tax rate is proportionately much greater at the lower end of the earnings distribution than at the high end. In switching to the FairTax, the $20,000earning couple experiences an 86 percent cut in their average tax rate, whereas the $500,000earning couple experiences a 42 percent cut.8

The FairTax: A very progressive long-run outcome
To get another meaningful picture of how persons in various income groups fare under the FairTax in the aggregate, Dr. Kotlikoff models the dynamic macroeconomic and microeconomic effects of replacing the income tax system with the FairTax.9 His model considers three income classes within each generation. It compares what the economy is like under the FairTax versus what it would be like if the current system were to remain in place. This approach gives a realistic view of the impact of America’s aging population, coupled with high and growing health and pension benefits that necessitate much higher payroll taxes, with potentially damaging effects on the U.S. economy. The FairTax offers a solution to this dismal economic future. The shift to the FairTax raises marginal labor productivity and real wages over the course of the century by 18.9 percent and long-run output by 10.6 percent. Moreover, the FairTax reduces by half the long-run increase in the effective rate of wage taxation needed to pay the Social Security and health care benefits of an aging population. These macroeconomic gains have important microeconomic welfare implications.

In the long run:
• Low-income households experience a 26.7 percent welfare gain under the FairTax
• Middle-income households experience a 10.9 percent welfare gain
• High-income households experience a 4.7 percent welfare gain

This is a very progressive long-run outcome.
https://mr.cdn.ignitecdn.com/client.../0100/56de541e69702d238f630100.pdf?1457411102

Do you believe our entire tax system should be based on one person?

The lower incomes get the biggest tax alleviation.

What is fair about the bottom half of earners paying virtually nothing and the top 20% paying 90%?

 

The way you talk, you'd think the US is the only country in the world to have tried a fair tax. https://worldpopulationreview.com/country-rankings/countries-with-flat-tax Turns out they're not. And you're going to argue about how these countries are undeveloped with their social programs, etc. But I thought the US was 'exceptional'!

A big part of the reason a lot of these countries aren't as productive is the sheer lack of manpower and resources compared to the US. Even if these countries all went to a progressive tax system tomorrow, all of them would still have logistical issues. Either due to distance, shipping, or flat out production in comparison to major economic powers.

Much has been made of Russia's lack of access to the sea and that was before the war started. Even if a Liberal utopia arose in Russia, you'd find many challenges unique to Russia's geographical situation.

Now, none of the numbers ever proposed were as high as the number by these countries either. Famously, Herman Cain had a 9-9-9 proposal. It would be a significant reduction of taxes on most Americans, while yes a subtle increase on the poor. But it's a fair proposal that would get the government off of the people's back. The real reason social programs would be impacted: Less government funds.

Oh well, Uncle Sam has to learn how to make due with less.

 

First of all, the fair tax is not the same as the flat tax. The fair tax proposal replaces the income tax with a sales tax. I am not aware of any other countries trying it.

As to the flat tax, it is instructive to look at passages from the article you cite:

"A flat tax is a tax system in which everybody, no matter what his or her income may be, pays the same percentage in taxes. For example, if the flat fee is set at 15%, someone who earned a billion dollars would pay 15% in taxes - $150 million – while someone who earned $10,000 would pay 15%, equal to $1500. Critics of the flat tax argue that it places an unsustainable burden on the poor, and they also look at countries that have flat charges and are unable to provide social services for the poor.

Greenland, for example, has a flat tax, and at 45%, it is one of the world’s highest taxes. Nevertheless, Greenland has few of the social services that many developed countries have. Similarly, Mongolia and Kazakhstan have flat taxes of 10%, and Bolivia and Russia have flat taxes of 13%, yet these countries do not have well-developed social sectors. Hungary and Romania have flat taxes of 16%, and Lithuania and Georgia have flat charges of 20%. Many of the countries with flat fees have lower standards of living than the nations that surround them."

The last sentence is critical here: "Many of the countries with flat fees have lower standards of living than the nations that surround them". I don't know, but I haven't heard of Mongolia, Bolivia, Georgia, etc, being the next economic powerhouses, so I am not sure why it is that the GOP is anxious to model our system of taxation after them.

 

Nah, I don't need to watch conspiracy theory nonsense.
If they are educating their viewers on the topic, I am sure you'd have plenty of links to share.

 

Maybe they could/should tax the higher level purchases at a higher rate?

 

It's the good ole correlation equals cause. So, let's pinpoint Greenland. At a 45% tax rate, it should be more than enough to provide services,and yet it does not. Why? I have to presume that money's going elsewhere for them, but it does show that a high tax rate does not necessarily equate to gross domestic product and therefore economic activity.

Bernie Sanders yearns for the days of the 40's where we can have a 60% rate(he forgets that a huge portion of that was in the Great Depression, the worst economic period in modern human history.). The reason I support the idea, at least in theory of everyone paying the same percentage in taxes is that the vast majority of people would be able to keep more of their paycheck.

This is similar in Democrats attacking both the Bush/Trump cuts, only to find both times: Yes, the middle class benefited from rebates. It's very simple and there's no conspiracy: Either we funnel the money to the government, or we funnel it to ourselves. And Liberal voters want to funnel the money to the government. And okay, that's fine but then don't complain about the wage issue when most of your money is financing SS/Medicaid, etc.

The question is why doesn't the left look at Fat Uncle Sam the same way they look at Jeff Bozos? The Left disdains the Koch brothers, etc. Why not be equal opportunity in disdaining those who horde money? Is it because the government hordes money for a good cause?

 

I never claimed the retail sales tax was anecdotal. The only inference you can draw form my comment is precisely the opposite.

Since the income tax was created, we have NEVER had a sales tax to replace the income tax, and YOUR personal example WAS, indeed, anecdotal.

Did you not read what I wrote?

Yes, I understand the attractiveness to the consumption tax, anecdotally

Did I not explain to you the following?

but making policy based on anecdotal experience is unwise. The lawmakers should make tax policy as it affects the whole.

And now you conflate my reference to your anecdotal example with the entire retail sales tax of the past, which explains why you would err and say 'you do not seem to understand....." blah blah blah?

Please tell me you are not that stupid.

Absolutely false. The less a person makes, the greater percentage of his or her income is spent on wants and needs, and, though the overall amount increases, it DECREASES as a percentage of income, and thus the effect is a REGRESSIVE tax, not a progressive tax.

I guy making $40k per year probably spends most of his disposable income on needs and wants, but a guy making $500,000,000 a year, even if he spent $10 million on personal needs and wants, it's still ONLY TWO PERCENT, and 30% of two percent is a net 6% of the guy's income. That's regressive.

Well, for one thing, I do not know whether it's true that the top 20% pay 90%. But if it were true, I'd say everything is fair about it, because the upper 50% own 99% of the nation's wealth. Assets are cash in solid form, so I don't make distinctions between hard and soft assets and any argument that goes 'well, we never have factored in wealth in the tax scheme' can take a hike, and that's just how I see it. My view is that, given that the upper 50% own 99% of the wealth, the progressive tax should start at the upper 50% bracket, and increase progressively to the top. The bottom 50% should only pay 1% of the tax burden, and I'm basing this on the Federal reserves wealth distribution tables.

the organization for Fair Tax has presented a one sided analysis.

It doesn't square with my understanding because at the extreme, I can't see now it would be fair, and if it's not fair at the extreme, it's likely that it's not fair at other junctures of income leading up to the super high brackets.

So, I will wait until I see a third party analysis who is not on either side.

And yes, I see how the prebates offer relief at the bottom, but it's still regressive at the top.

 

Florida and Texas have no income taxes but have sales taxes. We had no federal income tax until the early 1900's. European countries have all sorts of combinations.

What's your point?

I misread your stentence. Yes we agree no more filing your taxes and saving that cost and government intrusion into your personal affairs.

Keep that up and your post will start disappearing.

Absolutely false and itnis no longer tied to income so thos rich people who all pay and you want to tax their wealth will be paying taxes now.

The guy making $40k will still apy a fraction of what the rich guy will that is progressive.

Feel free to give me your number but in the meantime how is the top 20% paying even 80% of all taxes while the bottom 50% pays virtually nothing fair.

And we do not tax wealth we tax income you are conflating the two.

No they are not.

First you would have to access the wealth of every citizen and then keep a running account so that at some point and tax due could be calculated. How would you do that? Then when and how would you collect it. Once a year? What if I did have enough cash to pay it does the government take an interest in my assets until they are sold?

No more so than yours.

What's not fair about having you entire paycheck and paying less in taxes?

So, I will wait until I see a third party analysis who is not on either side.

And yes, I see how the prebates offer relief at the bottom, but it's still regressive at the top.[/QUOTE]

So let's bring this bill forward to committee and hold hearings with the experts.

 

"Conspiracy"? What on earth are you babbling about now?

 

Responding to your nonsense that media is suppose to educate the populace on some tax plan.
The media reports.
If this plan has any legs and you think the media should educate us, then this R plan should be all over RW media.
And you would be providing links to show how this tax plan is better than what we have now.

 

Yes the media is supposed to keep the people up on events. I have already explained why it is better. Do you oppose committee hearings? If so why?

 

You have no authority for me to believe this is a better tax system than what we have.

The media reports on what sells them advertising. That's how they make a living and income.
Have I said I oppose committee hearings? Maybe you can find my posts stating so. If you can't then why ask such a nonsensical question.

 

One, the bill won't even pass the GOP-led house. Second, a national retail sales tax would be the largest tax increase ever on the American public, espeically the middle class and the lower class. Keep in mind this will add to the already existing state and local sales taxes that would apply. third, the GOP is trying to lower the "tax rate" by changing the definition. Unfortunately, that is not how sales tax is calculated. Furthermore, it changes the burden from tax collecting from individuals to the government. And if the government wants its money, it will revamp the IRS to collect those taxes. No one here has been through a sales tax audit and it is very little you can do. If the numbers don't add up, you are charged with not collecting sales taxes. At the state level, they can shut you down for that until you pay, plus all the penalities and interest before you open up again. It will make pretty much everything expensive, even services. So if you pay someone, you have to add the sales tax to that amount that you pay someone, even if it is something like a babysitter or fixing the roof on your home, or constantly other home improvement projects. This will kill a lot of small businesses that are in the construction industry and do odd jobs and other types of jobs for these types of services. Finally, the states will keep their money and not send it to the government. This happened when we had the Articles of Confederation where each state decided to keep the money and not send it to the national government for one reason or another.

So, I really wouldn't worry about this. It is more of a gimmick by the Freedom Caucus than a true solution.,

 

It is no way better by any means. All of the medicines that you are paying for will cost more. The money you are currently receiving will be basically the same. Hence you will lose money in the long run,. Any jobs you hire for, any services you pay for, such as services to fix your car or maintenance, will cost more. Pretty much anything you buy will cost more. And if you don't pay the sales tax and you are caught in a sales tax audit, you have no where to run and no where to hide. It is all about numbers and those numbers WILL favor the government in all things.

 

that is true, but new cars would be more expensive. For instance, a 30% tax on a $45000 brand new car would increase that cost to $58500. this is not an investment per the bill. It only includes real property for everyone and real and personal property for businesses only. So, for the average person who is buying it for themselves, it can get quite expensive. The other problem you have is every time you take the car in for maintenance and repair. You usually pay sales tax on the parts. Now, you will pay sales tax on the parts AND the cost of labor. congrats.

 

This is a CPA's take on the National Retail Sales Tax.



https://www.taxnotes.com/research/f...gislation/h.r.-25---fairtax-act-of-2023/7fvfx

The links I listed are the professionals who do this for a living. The first one is a CPA and the second is Tax Analysis written by CPAs for CPAs.

 

Actually, it is a lot easier to do that. Sales Tax Audits use primarily a bank account analysis and assumes that all proceeds into the bank are subject to the sales tax. It is up to you to prove that it is not subject to the sales tax.

 

the problem with prebate is how do you define that when you eliminate income. Second, the prebate is only for the "poor" however that is defined. The Rich don't want it. and the middle class, the ones stuck in the middle won't get it and don't have the money or moxie to do what the rich will do, buy everything outside the US and ship it here. Once you define how the prebate is defined and who will get it, you still need an agency to send it, track it, manage it, and make sure no one tries to get it twice.

Actually, the rich will. they will not shop in the Gucci Stores or anywhere else in the US. How they avoid paying the tax is actually purchasing the products overseas and shipping them here. They will now do this more often, set up LLCs and other business entities to purchase these items and use them for personal use, among other things. And they won't complain about the prebate, except may DJT who thinks everyone and everything is owed to him somehow.

It is not revenue Neutral per say. The rate is believed to account for the same amount of revenue that income taxes get. However, it is highly regressive with the middle class bearing the biggest brunt of it. Furthemore, one of its problems is tax collection. It changes the tax collection burden from the individual to the government. And that is something that should not be done.

It also makes it awkward and there are so many loopholes. For instance, you have a buddy who repairs cars. You take your car in to get repaired. Let's say it costs $2000 for labor and $1300 for parts. Both parts and labor are now going to be taxed. Do you just pay the $3300 in total and let him pay the tax out of that $3300? Or do you add the sales tax to the $3300 so that your friend does pay the tax? Or do the two of you come up with a scheme not to pay any tax at all until the government comes in and does a sales tax audit? If that happens, would your friend be that loyal to you or not?

 

You need to read the bill. The state collects it and then sends it to the Federal government. Somehow, the states will come up with ingenious ideas to keep it. But the problem is that everyone is now goiong to be responsible for collecting the sales tax and sending it to the state first. But I would suggest you read the damn bill. I would suggest you read Title 1, section 103 of the bill for starters. It won't be a few according to the bill.

 

I do not know if there are differences in the bill from the actual FairTax, I am not an expert, but under the FairTax to my understanding, business-to-business purchases in the production of goods and services are not taxed. So, all those hidden taxes that are currently embedded in an automobile, for instance, will disappear, making cost of production less. Those taxation costs are no longer passed along to the consumer. You cannot just tack 30% onto the current cost of an automobile to arrive at what it would cost under the fairtax. Similarly, service businesses will be relieved of current tax burden they have to embed into the retail cost of their services as well.

 

Under HR 25 in the 118th Congress, the bill would make new vehicles that are not business use more expensive. What that would do is create higher demand for used cars, which would mean used cars would become more expensive, just without the tax. In my TaxNotes Link, It is literally the current version of the bill, all 118 pages. Chapter One is about definitions. But Chapters 2 through 7 is where the nitty gritty comes in. Basically, states would have to comply with federal National retail sales tax definitions and that would hurt mostly states who rely heavily on state and local sales taxes for funding the government. The problem is this bill won't even pass the House since there are already about a dozen or some GOP members who are against this bill and another three dozen on the fence. Add the Democratic Party's total opposition of the bill, and this bill will probably die in committee, namely the House Ways and Means Committee when the current session ends.

 

YES the infrastructure is already in place merchants collect just as they have and your claim about the state stealing it from the feds is nonsense.

 

And you will have more money to spend in them. Have YOU read it? All federal withholding on your paycheck goes away.

And you will have more money to spend.

You act like there has never been sales taxes in this country more nonsense.

 

Do you or do you not support having hearings on it I can't read your mind.