The tax man has cometh!

[Sabre]

Got to agree with you, Storch.  However, I also think we can do better (I'm an optimist).

Mars01: Yours is a common concern, regarding whether reduced cost will translate to reduced price to the consumer.  However, that is in fact how the US market works.  While there are exceptions, the fact is that competition and other market forces (supply and demand, for example) are what drives the price of most goods and services.  This is the rule, not the exception, as you suggest.  

I will even give you and example.  Not long ago, one of the major car manufacturers in this country decided to grab a bit more market share.  So, they offered "employee pricing" to non-employees.  Within two weeks, the other car companies had followed suit (under various names), including even foreign companies.  Price fixing is illegal, and in any case is hard to arrange (no honor amoung theives, after all).

I encourage you to read up on this bill, as well as what people on both sides are saying.  And remember, individuals and businesses shell out as much as $300 billion each year to comply with the tax code.  Another $600 billion is lost due to business decisions made based on impact of the tax code.  Add to that the $10-$12 billion annual operating budget of the IRS and you've got nearly a trillion dollars a year cost to collect taxes (which does not include the actual taxes paid).

Right now, we have a system that discourages savings and investment.  The Fair Tax would reverse that, and put completely into the hands of each citizen to decide how much tax you want to pay to Uncle Sam.

Finally, the US would become a tax haven to the world, as the Fair Tax also eliminates corporate taxes (along with the gift tax, the death tax, the marriage penalty, medicare, and medicade witholdings).  Did you know that companies in the US have to pay money into social security and medicare accounts for each employee, above and beyond what comes out of a worker's paycheck?  That cost, like every other, is passed on to the consumer.

[eskimo2]

Man, I’ve been advocating this basic concept my entire adult life, before I ever even heard or read anyone else propose it.  The biggest difference between my idea and this is the sales tax rate would be a variable: Alcohol might have a 50% tax while milk might be 10%.  A 2 person car that only gets 15 mpg might have a 50% tax while a 5 passenger car that gets 50 mpg might be 20%, etc.  Basically luxury items are heavily taxed, while essentials are taxed considerably less.

[Mickey1992]

I am all for it, but how many jobs would be eliminated as a result in the accounting/tax profession?

[eskimo2]

My father-in-law is a part time accountant; I guess this would put him out of business.  He’s 87 though, plenty of time to learn a new trade.

[eskimo2]

Originally posted by Mickey1992
I am all for it, but how many jobs would be eliminated as a result in the accounting/tax profession?

Think of all of the blacksmiths/horse shoers who were put out of business when automobiles took over…  Accountants provide a valuable service only because our tax laws are inefficient and create a lot of unnecessary paper work.   It would be a tough transition for them, but it would create a more productive society.

[midnight Target]

23 Percent?

LOL... you've got to be kidding?

[eskimo2]

Originally posted by midnight Target
23 Percent?

LOL... you've got to be kidding?

But look at what you don't pay:

• The individual income tax
• All individual and employer payroll taxes including Social Security, Medicare, and federal unemployment taxes
• The corporate income tax
• The self-employment tax
• The estate and gift tax

[Mickey1992]

Originally posted by midnight Target
23 Percent?

LOL... you've got to be kidding?

Uncle Sam takes 20.8% of every paycheck of mine as it is now, and that doesn't include capital gains or AMT.  I will end up saving money considering that my mortgage payment won't be taxed.

[Mickey1992]

I would think that the largest group that would be against this plan would be retirees.  Their income would remain the same and prices would suddenly jump 23 percent for any spending valued at greater than the poverty level.

[Shamus]

Originally posted by eskimo2
Man, I’ve been advocating this basic concept my entire adult life, before I ever even heard or read anyone else propose it.  The biggest difference between my idea and this is the sales tax rate would be a variable: Alcohol might have a 50% tax while milk might be 10%.  A 2 person car that only gets 15 mpg might have a 50% tax while a 5 passenger car that gets 50 mpg might be 20%, etc.  Basically luxury items are heavily taxed, while essentials are taxed considerably less.

But then you would have the special interest groups back in the middle of it trying to change the rate of "their" tax.

shamus

[Seagoon]

Hello Lasersailor,

Originally posted by lasersailor184
Wrong.  The 16th ammendment had nothing to do with congress' ability to tax us, but their ability to spend that tax money.

I won't pretend to be an expert in tax or constitutional law, but I believe the 16th ammendment was actually necessary because the constitution as it was originally written forbade direct taxation that was not "in proportion to the Census or Enumeration herein before directed to be taken." In other words prior to the ratification of the 16th ammendment all taxation had to be proportional or related to the total tax burden of each state in the union. This was intended by the founders to ensure that states could not be taxed unequally, so that say Virginia tax payers shouldered a greater portion of the tax burden than New York tax payers.

A census therefore, had to be taken first in order to determine what the ratio was.

An income tax however, ignores proportionality or ratio from state to state, so if a lot of rich people live in NY and a lot of poor people live in WV then the tax payers of New York will proportionally pay a considerably larger amount of the total tax revenues taken in by the Federal Government than West Virginians. The 16th ammendment made this disproportionate taxation possible:

"The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."

When the ammendment was passed in 1913 one of the main arguments was that proportionality wasn't a big deal because no one would ever be taxed more than around 2% of their income anyway, rates higher than that were widely considered to be confiscatory and tyranical.

- SEAGOON

[storch]

you beat me to it seagoon.  that's exactly right.

[Sabre]

Originally posted by Mickey1992
I would think that the largest group that would be against this plan would be retirees.  Their income would remain the same and prices would suddenly jump 23 percent for any spending valued at greater than the poverty level.

Many of them are, but it's because they haven't looked at the details.  First, they like everyone else would receive a prebate check each month, to cover the tax up to the poverty-level.  Like everyone else, they would be in control of what and how they spend after that.  Remember too that used goods and services are not taxed.  Likewise, their income would not be taxed (even though it's at a lower rate right now, some is still taxed).  Also, as noted earlier,   Finally, their estates would no longer be taxed when they die, and neither would cash gifts to family.

Eskimo: Your hearts in the right place, but playing with the tax rate based on what you buy would only re-introduce special interests back into the equation, as they lobby for a lowering of the sales tax on behalf of their clients.  Remember, that's one of the reasons for doing this, to end special interest influence.  It's called the "Fair Tax" because it applies equaly to everyone and everything.  Their are better ways to encourage people to buy a Prius over a Ram Mega Cab.

[Mickey1992]

Originally posted by Sabre
Remember too that used goods and services are not taxed.  

"The FairTax taxes us only on what we choose to spend on new goods or services, not on what we earn."  - from the website

I hear people talking about repealing the Gift Tax frequently.  Only annual gifts greater than $12K are taxed.  Are there really that many people giving that much in gifts to family/friends?  (and that's 12K PER PERSON.  So you can give a gift to a family of 4 up to $48K in value and it won't be taxed).

[Seagoon]

Hi Mickey1992,

Originally posted by Mickey1992
I am all for it, but how many jobs would be eliminated as a result in the accounting/tax profession?

It would ultimately even out. Americans pay billions each year in order to have their taxes prepared, that is money they can not spend on other goods and services, education, health care, etc. so other non-service sectors of the economy would benefit from the fresh capital that would be freed up.

Also keep in mind that the accountants who would suffer the most are the part-time "tax season" preparers. There would still be plenty of work for the professional bean counters in corporations, the financial sector, the legal system, and of course our ever-more-bloated government.

- SEAGOON