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Everything that I've read or heard about Fair Tax sounds great...and I don't think that I've ever heard anyone come out strongly against it. Just the thought of tax being based on consumption rather than income seems fundamentally fair. I would love to be in a position that I could control the taxes that I paid. I would think that manufacturing would take a hit as people tried to avoid buying new cars etc...but other than that, what's not to love about it?
I don't claim to be an expert here, and admittedly, need to learn more, but I'm willing to bet that there are some on the forum that have studied it extensively and I'm curious to hear what you think.
A good idea which will fail.
The Europeans tried the same thing. Remember the VAT (value added tax)
Was a good idea until the Socialist took over then changed the then, separate European nations charters and added back the income taxation. Now they have income tax, social security style taxation, and still the heavy VAT tax.
I have never seen a "tax" that was fair in the first place. Neil has an overall good idea, but the parasite politician will do everything in their power to have it overrode.
The other issue is inbedded cost due to taxation. Under the Fair Tax companies will supposedly lower the cost of goods due to the disappearance of embedded cost due to current taxation.
On this issue I look at our manufacturing and current corporate structures.
Remember, they shipped our entire manufactuing base to the Communist due to labor unions demanding such high fixed costs to manufacturing.
Well, here we are with container upon container of crap coming over from Communist China, Communist Vietnam, etc., with slave labor cracking a buck a day..... Have you noticed any less costs to the goods at the retail stores? I have not. The quality sucks but the cost is still though the roof. So much for the citizen benefitting from lower fixed or embedded cost eh?
The only way to make the Fair Tax really fair is to eliminate the Mortgage Interest Deduction. This would increase taxes for many people, not lower them.
Since we were talking about Welfare on another thread, what kind of Welfare is this? You buy a home and opt for the "Interest only" loan. Then you get to deduct this "Interest" (which really amounts to Rent since you aren't really paying anything towards the home) from your taxes. Why can't poor people do this? Just call the "Rent" "Interest" and make it tax deductible?
Anyway, because of the "Mortgage Interest Deduction" I don't think the Fair Tax will become a reality anytime soon.
Just the thought of tax being based on consumption rather than income seems fundamentally fair.
Compare two different situations.
A) You make $100,000 per year, and your expenditures for things you consider absolutely essential (food, shelter, transportation, health care, etc.) could be maintained a less than $50,000 per year, letting you control whether or not you pay taxes on the other $50,000. If you choose not to consume tangible items that are taxes, you essentially have 50% of your income tax-free.
B) You make $20,000 per year, and you wish you could afford even the most basic expenditures on that amount. It's even harder, however, because you have to pay taxes on 100% of your income, because all of it must be spent.
Only a conservative who has never had to live paycheck-to-paycheck and worry about where the next dollar is coming from would consider that fair.
A good idea which will fail.
The Europeans tried the same thing. Remember the VAT (value added tax)
Was a good idea until the Socialist took over then changed the then, separate European nations charters and added back the income taxation. Now they have income tax, social security style taxation, and still the heavy VAT tax.
Hi,
Not sure what you're driving at here, but there never was a VAT without Income Tax in Europe, at least not in the UK. VAT replaced the old sales tax regime back in the 1970s. Income tax was enacted in the mid 19th century.
We live in a consumer driven economy. This type of tax would completely destroy that.
IMHO, the only REAL answer is to kill all deductions, and set a flat tax. No lying on your returns, no tricky deductions, no saving receipts and boxes of other miscellaneous papers. Just a flat tax.
You made $50,000 last year, you pay $7500. You made $10,000 last year, you pay $1500. No handouts, no accounting tricks.
Hi,
A flat tax is actually a regressive tax. Folks with lower incomes are hit harder by the tax than folks on higher incomes. Each dollar taken in tax on the lower income person is more likely to cut into basic living expenses. At a 10% rate, $2K is a heck of a lot more money to a person making only $20K than $10K is to someone making $100K.
Here's my controversial opinion: A 10% progressive rate on defined bands until you reach 100% on $1M/year. It makes sense. You don't make a $million a year and not shaft someone in the process. Say YES to a maximum wage!
My opinion is simply "too bad". I should not have to give a larger piece of my pie because I worked harder to get where I am. Those that are content to make $20,000 a year should work a little harder. I didn't get where I am because 6 numbers came up. A flat tax levels the playing field. I am not at war with the poor, or the rich. I'm in the middle, and I think everyone should have to pay the same percentage. Under the current rules, I actually KNOW people who have TURNED DOWN a raise because it would have ended up costing them MORE money. That's just absolutely silly.
The REAL victims of our current system are those who get off their duff and work TWO jobs instead of complaining about the salary at their ONE job. They drive themselves into higher brackets, and end up paying 50% of the income from their second job in taxes. Thats not only ridiculous, its criminal.
Hi,
A lot of teachers, policemen, firemen, and other hard-working people make $20K or less. Meanwhile a person with a trust fund can sit and do nothing yet make a fortune on interest. So who deserves to keep a bigger piece of pie?
I'd like to see the math where someone pays 50% of their higher rate of income in taking a second job. The highest rate is only 35% on income over $326,000.
I'm not at war with the rich either, I just think we should always err in favor of the middle and lower class. It would be awesome if most of us would only have to fork over 10% or less in income tax.
And a 100% tax on income over $1M/yr would only cause 144,000 people to scream. Who cares?
From what I've read about the flat tax, for the government to collect what it currently collects, the tax rate would have to be around 30% to 35% -- and that's with no deductions. Wealthy people who are writing off the Mortgage Interest on those million dollar homes would SCREAM if that ever came into being. They would be paying a lot more than they currently do.
From what I've read about the flat tax, for the government to collect what it currently collects, the tax rate would have to be around 30% to 35% -- and that's with no deductions. Wealthy people who are writing off the Mortgage Interest on those million dollar homes would SCREAM if that ever came into being. They would be paying a lot more than they currently do.
Hi,
I'm not sure. 30-35% would be at the very top end of the tax scale as it is right now. And today the wealthy and even moderately wealthy are able to write off a number of things from their returns. How could it be that a flat tax with no deductions would be somewhere near the higher rate when the average rate now (with deductions) isn't that high?
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