What do you think of the fair tax?

I've recently learned of the fair tax and with the little I know about it, it seems like it would do wonders for the economy. For those who don't know what all it entails, here is what I've leaned so far:

• It gets rid of all federal income taxes (personal, corporate, gains, payroll and others
• Income tax is replaced with a flat sales tax of about 23%
• It also includes a monthly rebate based on family size

If I've missed anything, let me know.

There definitely seems to be some valid concerns over how effective it would be such as if tax revenue would remain neutral, promoting under the table selling, and how it would shift the tax burden.

So my questions are
1. Do you think it would improve our economy?
2. Is is it feasible/are these or other concerns valid?
3. Would it ever really be implemented?

My answers:
I definitely think it would improve our economy. It would promote job growth like nothing else, giving international corporations a tax haven to locate to. The cost saving with not having to maintain our current tax code would be huge. The immediate tax benefit would be huge to the work force with no payroll taxes. The biggest concern that I see is if it would really remain revenue neutral. As far as under the table dealing, I can't imagine it would promote it anymore than our current system does. Also, with payroll taxes cut, how would SS/Med survive. Last, it's definitely a radical idea to wipe our current tax system and start over. I don't know if would ever fly.

Hmmm...I could order all my crap online! No Sales Tax!

A.) In spite of the continued existence of the idea among Ron Paul supporters and a few other economic ignoramuses, it's long since been shown to be kind of a dumb and wildly UNprogressive system of taxation that shifts the burden onto the poor and working class and reduces the taxes on the wealthy even more than what they've been getting away with over the last 100 years.
The wealthiest people in this country pay a lesser rate than at any time in history since the income tax was imposed.
Middle class Americans also pay a lower percentage in taxes than at any time in history since the early part of the last century.

B.) It does not necessarily reduce the burden of a complex tax system, because as soon as you put it in place, politicians and lobbyists will begin altering it for their own benefit and within a decade there would be just as many exemptions and formula alterations to the fair tax system as there are in place today - and just as many and just as expensive tax enforcement branches of gummint to insure they get their full share of it.

A dumb gimmick accepted by dupes.

Say you've saved post-tax money for years and now have to spend it. You'll pay a hefty 23% sales tax on money that's already been taxed. Is that fair?

Why give rebates on the tax instead of not tax the money in the first place?

Don't assume that all consumption will be taxed at 23%. Generally, consumption of high-dollar items will be exempt, as would be expected of any tax system advocated by Steve Forbes, and products will be penalized because services won't be taxed (the current situation with sales taxes).

What proof do you have that the Fair Tax will promote job growth? Remember, Europe has long had very heavy sales taxes but hasn't created many new jobs.

Quote from larrymoencurly : A dumb gimmick accepted by dupes. Say you've saved post-tax money for years and now have to spend it. You'll pay a hefty 23% sales tax on money that's already been taxed. Is that fair? Why give rebates on the tax instead of not tax the money in the first place?

Sorry, I probably wasn't clear on what exactly takes place. There is no "post tax" money. You get every cent you earn. There is know income tax. In your scenario, the money you save on not paying income tax would greatly outweigh the 23% spent on retail purchases. As far as the rebates, the money isn't taxed first. In fact (again i should have been more clear) they are prebates based on current poverty levels.

Anonymouse, with point B, i agree with you. With the tax burden, wouldn't the wealthy be far outspending the middle class and poor. It seems the percentage of tax burden would increase on the wealthy. That mixed with the tax prebates would seem to greatly benifit the lower class. If i'm missing something or over simplifying something, let me know.

Apart from it being unprogressive, do you have any other disagreements?

Quote from hoser83 : Sorry, I probably wasn't clear on what exactly takes place. There is no "post tax" money. You get every cent you earn. There is know income tax. In your scenario, the money you save on not paying income tax would greatly outweigh the 23% spent on retail purchases. As far as the rebates, the money isn't taxed first. In fact (again i should have been more clear) they are prebates based on current poverty levels.

The conceptual part you are missing is that NOBODY pays 23% federal taxes now, except those who earn a great deal more than they actually need anyway.
Those people would get the reductions, the rest of us who manage to pay an effective rate of 10% to 17% would experience a tax INCREASE on every single thing we buy.
That covers just about every middle class working stiff in America.

Do you make in excess of a million dollars per year?
Are you willing to pay an additional 9% more in taxes than you do now so that those who earn a million dollars per year can save on their taxes?
Because that is what you are asking for.

Quote from Anonymouse : The conceptual part you are missing is that NOBODY pays 23% federal taxes now, except those who earn a great deal more than they actually need anyway. Those people would get the reductions, the rest of us who manage to pay an effective rate of 10% to 17% would experience a tax INCREASE on every single thing we buy. That covers just about every middle class working stiff in America. Do you make in excess of a million dollars per year? Are you willing to pay an additional 9% more in taxes than you do now so that those who earn a million dollars per year can save on their taxes? Because that is what you are asking for.

What you are not realizing is that not only would you not pay income tax, but you would also not pay ss and medicare tax. Not only that, but your employer woudn't pay ss and medicare tax on your behalf. Those taxes amount to over 15% of income for those working class stiffs (but far less than 15% for the very rich).

You also aren't factoring in embedded taxes. When I go to the store to buy a loaf of bread, I am paying the wheat farmer's taxes, the truck driver's taxes, the store's taxes, the cashier's taxes, etc. Every tax every step of the way has to be included in the prices of goods or companies would not make a profit. If those taxes were eliminated competition would ensure that the prices of goods drop.

Politicians are scared of taxes like this because they are FAR MORE TRANSPARENT than our current tome of tax laws, meaning it's far more difficult for them to include neat little loopholes for their friends, and a lot easier for Joe Blow to know EXACTLY how much of his check is going to Uncle Sam to piss away. That, and with a simpler tax structure, the majority of the IRS and supporting systems could be culled, and there are powerful lobbies there.

There is no merit in having bureaucracy just for the sake of it. Simply and streamline laws (such as taxation) as much as possible and we will all benefit (unless you're a power hungry politician, that is).

A more proper name for it is "Fair and Balanced Tax."

But on a more serious note, would you impose the "fair tax" on sale of services? For example, you buy the services of a maid, do you pay the fair tax? You hire a gardener and a butler, sales tax?

I think it would be great! I save 10% right off the top and the 40% not paying tax would have no choice now. I also think if any is put in a 401K should be tax free if it is used strictly for retirement. The advantage would be a 40% gain in tax revenue because the slackers would have to pay. I don't understand why the libs want the rich to pay more than anybody else pays. They hire us and give us jobs and they'll most likely stay in the country because they won't be unfairly taxed. Also the IRS would be eliminated which would be less government control. There are nothing but benefits for the people and limiting government and their spending. They'll be just like the people they represent they'll have to work with what they get (in taxes). I also think their pay should be cut in half so as to not make a career out of serving the people and taking complete advantage of us and they can work their second job to make ends meet like the rest of us.

Quote from martib : I think it would be great! I save 10% right off the top and the 40% not paying tax would have no choice now. I also think if any is put in a 401K should be tax free if it is used strictly for retirement. The advantage would be a 40% gain in tax revenue because the slackers would have to pay. I don't understand why the libs want the rich to pay more than anybody else pays. They hire us and give us jobs and they'll most likely stay in the country because they won't unfairly taxed. Also the IRS would be eliminated which would be less government control. There are nothing but benefits for the people and limiting government and their spending. They'll be just like the people they represent they'll have to work with what they get (in taxes). I also think their pay should be cut in half so as to not make a career out of serving the people and taking complete advantage of us and they can work their second job to make ends meet like the rest of us.

Admittedly the bold (by me) part is not as bad as Mumbai trip costing $200M a day but it is as hilarious.

Quote from TRNT : A more proper name for it is "Fair and Balanced Tax." But on a more serious note, would you impose the "fair tax" on sale of services? For example, you buy the services of a maid, do you pay the fair tax? You hire a gardener and a butler, sales tax?

Why would you? Your giving them a pay check same as you get. Unless your buying a service from a larger business then yes business is business and doing business is taxable. If your paying out it should be taxable. If you can afford a maid or gardener you can afford to pay the tax. It's a luxury.

Quote from TRNT : Admittedly the bold (by me) part is not as bad as Mumbai trip costing $200M a day but it is as hilarious.

Kinda makes you think Barry really don't get it huh?