H.R. 25. The Fair-tax proposal. What are your opinions on this?

[b06jgm]

Honestly, it's receiving a lot of positive publicity from dems and pubes alike. However, admittedly, most of the dems I talk to are "moderate". They seem to be in support of it and reading the proposals for HR 25, it sounds like a good idea. I mean the more you spend, the more you pay in tax. Plus, everyone from rich to poor alike would get a "deduction" for food, clothing and shelter amongst other things.

What does the far-lefters like you have to say about it?

If you want more information or have no idea what I'm talking about, click here:

<A HREF="http://www.fairtax.org"> Fair Tax </A>

[trotsky]

1. Terrible.

Think of those on the lower end of the income scale. Unless you can grow all your own food and make your own clothes after you weave your own cloth after you spin your own thread, this "fair tax" will hit the poor disproportionately hard.

[RivetJoint]

2. I thought the fair tax

did not tax necessities up to the poverty level?

[trotsky]

3. Define "necessities" and "poverty level".

The devil's in the details.

[b06jgm]

6. Elaborate please. I'll be honest. I'm for this thing. Convince me

otherwise.

[trotsky]

13. You should be asking "fair tax" proponents.

Get the details. Find out what they consider "necessities" and also what they define as the "poverty level."

Here's the basic deal:

Say Person A makes $30,000 a year, and Person B makes $300,000 a year. Both want to buy a car. Now obviously A is going to buy a cheaper car than B. So let's say A gets a $20,000 Saturn and B gets a $60,000 luxury car.

A "fair tax," in order to maintain current treasury levels, has been estimated to have to be at least 15%, probably 20%. But let's be EXTREMELY generous and say it's only 10%.

A pays 10%, which is $2000. B pays 10%, which is $6000.

But A just paid almost 7% of his income in taxes, and B paid only 2%!

That's "fair"?

[Nederland]

100. Try reading the site

What you described is not how the proposed tax works. Please at least try to understand something before you criticize it.

[Kathy in Cambridge]

109. You've been here a while. People have been arguing this for years on DU

If you had a star, you could do a search and check out some of the threads. I recall one a few months back that was quite long-I'll try to find it.

BTW the supporters of the 'fair tax' are RW conservatives.

http://www.geocities.com/cmcofer/asupp.html

Mot people on DU have more than a basic grasp of economics, and quite a few on this thread know the tax code inside out. The proposed tax is bullshit.

[AP]

60. One of many reasons it's bad is that even if you exclude necessities,

rich people spend a tiny % of their income. Poor peoplel spend most (and often MORE than their income). A 20% VAT on 10% of your income is a 2% income tax rate. 20% VAT on 100% of your income is a 20% tax. If you're poor you shouldn't have a tax rate that's 10 time the effective rate of tax on rich people.

Furthermore, poor people tend to buy consumer goods at the bottom end of the quality scale and which quickly depreciate. You buy a Casio watch for 40 bucks. It breaks, you buy another one 3 years later. Over three years, you've paid about 20 bucks tax just to keep a watch on your wrist.

A rich person buys a rolex and pays more tax. But 10 years later, you sell it for more than you paid for it. If end up paying no tax over those 10 years. If you sell it privately and the government doesn't know about it (or if non-retail sales aren't taxed), for anything greater than 20% of the original cost, you cover your tax. Since the VAT tax is meant to replace an income tax, there's no tax on your capital gain (and there wouldn't be one on your capital loss -- but say there is a deduction for the loss on things you buy as investments, then you get a deduction, if they still allow that).

See how that works?

A sales tax is a strategy to shift the tax burden totally off the rich. You just have to buy things that never depreciate lower than the VAT rate, and you never pay taxes.

[Kanary]

85. Clearly stated -- this needs to be SHOUTED for those who cannot GET IT!

THanks for laying it out so clearly.

People who don't "GET IT" after reading what you have written, simply don't give a rip about poor people.

Kanary

[AP]

111. I think the people who act like they don't get it actually do know what

I'm saying, and that's why they argue for a flat tax.

[Kanary]

149. I think so, too. THat's why I'm losing any hope with Dems.....

I think there is simply no concern left for poor folk.

The only thing that matters is what affects each person, alone.

So, I guess they'll all have to learn the hard way. As one songwriter said about non-disabled people.... "Temporarily able-bodied". None of us know when we'll lose the use of our limbs. Christopher Reeves certainly didn't.

So, the temporarily middle-class will have to experience themselves. And, the way this country is going, that's not too far off.

Kanary

[AP]

151. I don't think they're Dems.

[Kanary]

164. You may be right here, but working on campaigns has shown me

just how uninformed many Dems are, especially about poverty issues.

I got very discouraged about the state of the Party.

:( :( :(

Kanary

[AP]

174. That's a sign of the success of the right wing to elevate indentity...

politics over the unifying theme that democrats stand for the transfer of political, cultural and economic power down and out to the people, whether it's in terms of race, gender, the tax code, giving communities more control over their environment, or whatever.

The right has managed to divide the left into islands of interests and then present those interests as incompatible with each other.

Best example: turning gay rights into something about getting gays more involved in the military and religion. UGH! (It shoudl be about making all workers wealthier by giving them employee benefits and legal protections, regarldess of religious issues like marriage, or military service.)

The job of Democrats today is to merge all those islands with a unifying message.

[Kanary]

180. We Dems *LET* the RW divide us!

What I should have added to my last post is .... just look at how many DUers praise Clinton, and refuse to acknowledge the damage he did to people in poverty with his welfare deform. That depresses the hell out of me!!! :mad:

"The job of Democrats today is to merge all those islands with a unifying message."

Exactly! What I've been saying over and over and over and over....... and it goes nowhere. Me, my, mine. So, I've come to the place where I don't support others' issues unless I know they will support mine. AND THAT PISSES ME OFF THAT I'VE HAD TO COME TO THAT!! During the Vietnam years, all the different groups were cooperating and helping each other. THAT was our strength. Look at us today. Divided wimps.

Pah.

:nuke:

If you have any ideas of how to make that "job" a reality, I'm all ears.

Kanary, looking for the "ears" emoticon...... ~~guffaw~~
edited to say... thanks, AP -- you don't know how much it means to me to have this conversation with someone here! I'm soooo very tired of the divisions!

[RivetJoint]

8. Food, clothing, shelter, medicine

the Federal poverty levels are already defined.

I'm not saying I'm for the Fair Tax, I don't know enough about it, but if it exempted most of food, clothing, shelter, medicine, and basic transportation, it might not be that bad for the poor.

[trotsky]

14. Sure, those are already defined *for the current tax code*.

Find out what flax taxers.. sorry, "fair" taxers want.

[pnb]

212. Why don't you actually check the website in the original post

The things that are exempted ARE listed there.

[AP]

220. "Fair" Tax isn't aimed at poor or rich. It's aimed at middle class.

The poor have no money, so you're never going to tax them enough to support an infranstructure at just the level at which the rich are guaranteed more wealth without having to work hard to get it.

For the rich to get the society they want, they have to tax someone besides themselves, and the only other people creating any wealth for them to get their hands on is the middle class.

The "Fair" Tax is aimed squarely at shifting the tax burden on to the middle class and off the rich.

So forget the poor. They have nothing to give you. A "Fair" Tax will create way more people for sure, and that's when we'd get rid of it if we had one. But it's the middle class who will be losing all their money with a "Fair" Tax.

[TahitiNut]

66. The tax burden on the unemployed wouldn't decrease ...

... just because they had no income. What would the tax rate be on purchasing of equities? (That's "spending" isn't it?) What about corporations? Do people get the same tax breaks that're given to corporations? Where the 'value added' doesn't exist (like real estate) then what's the tax rate?

Taxing "goods and services" means taxing medical care, increasing the cost of that care by 20% or more. Think about legal services that would be increasingly unavailable to anyone but the affluent.

[b06jgm]

4. It does not. Every individual would receive a monthly

benefit whether you make $1000 a month or $1000 a day. In the truest definition of "fair" it is just that and that can't be denied.

[ima_sinnic]

5. are we going to have to prove our income level when we buy?

what does "not taxing up to the poverty level" mean, anyway?

[RivetJoint]

11. Read the literature.

Decide for yourself. I'm just starting to read about it. AFTER, I've learned what it entails ,I'll make a decision.

[Egalitariat]

30. Everybody gets a rebate check for the taxes you would have....

to pay in order to live at the poverty level. This poverty level would be based on your own circumstances, such as whether you are married and/or have dependents.

[AP]

61. The tax itself would be a big reason people were poor.

And giving a support check to the poor would come out of the huge burden the middle class would be bearing.

This is just a way to get middle class people to pay all the taxes in America.

[papau]

7. "far-left" - get real- -moderate center folks like myself can see the rich

screwing the middle class - again.

The rich get 90% of the income from investments - This "fair" tax means that never gets taxed.

Who the hell named it "fair" ????

Oh, I forgot - it was proposed by the far-right - and indeed they are the ONLY ones giving it "positive publicity".

[BOHICA06]

17. No, that income (and all income) would be taxed

when the rich fat cat consumes something like his HUMMER or gold plated bathroom fixtures.

If each family/individual is being compensated to certain level of - a hold harmless - then we end up taxing what we do best - consume.

Also removes the regressive payroll taxes of FICA & Medicare - time to pull out the ledger sheet and a sharp pencil to see the +s & -s

[papau]

45. WRONG - the accumulation of wealth is UNSPENT money - NEVER taxed

and this does not compute with grade school math.

I am an Actuary and was on many of the Insurance Industry lobbying groups when the "fair tax" was discussed.

"time to pull out the ledger sheet and a sharp pencil to see the +s & -s" is BULLSHIT -

been there - done that - have the report.

The very limited "consumption tax on the rich" that we actually tried had to be dropped after a few years because the rich are so good at moving their purchases around the world to avoid such a tax (remember when big boats and big cars had a special tax?)

The studies by the various groups are still in my possession - and new and better studies have been done (my last one is dated 1998).

The world of GOP assertion - with AEI "experts" providing "facts" is a joke that belongs only on Fox.

Unfortunately this class war fare - screw the middle class - is the right way to go - crap is never challenged by our "liberal media" as they sells us down the river.

I am curious as to where you are getting your numbers - if you have numbers as to the tax obligation movement between income classes (Fairtax has been discredited by just about everyone - but if that is the location we can use DU mail and I will be glad to once again explain why it is a bunch of lies and hidden effects to help the rich).

[Blue Wally]

117. They would be taxed when they spent the income

from the investments

[ima_sinnic]

9. Repukes want this--THEREFORE it benefits only the rich

--I don't care HOW they spin it, if there's not something, a BIG something, in it for the rich, the Republicans would NOT be hyping this. Their idea of "fair" is what's profitable for the 1% of people, the greed-heads who control 90% of the resources.

[b06jgm]

21. You are a cynic. Fact is that nothing in life is fair, but this

at least allows it to move closer. Not all republicans are rich, I promise you. Many republicans aren't even supportive of many financial decisions. Both my parents are republicans who are not rich at all, I promise. They don't support Bush's economic plans, but stand behind him for various reasons. Yes, they're churchy and I'm sure that has something to do with it, but I love them very much.

[trotsky]

26. Is it cynicism or realism?

Look at the history of tax code changes proposed by Republicans over the past 25 years. Every single one of them is tilted towards the investment class. They've managed to convince people that "trickle down" works (even though it never has) and so that's what they use to justify every tax plan.

[b06jgm]

28. Do you invest?*

nm

[trotsky]

33. Oh please.

"Investment class" does not include "everyone who invests."

[Kathy in Cambridge]

67. I used to invest-but have no money to anymore

since Bush came to office. Please don't tell me you buy the Grover Norquist Fait Tax bullshit.

And calling us 'far left'? Your stripes are showing. But then again, Duluth GA is a hobed of liberal thought. :eyes:

[ima_sinnic]

29. I'm talking about Republican legislators & politicians

... not the deluded and gullible voters, who screw themselves every time they vote Republican

[AP]

64. You can't do math.

Republicans who aren't rich are either racists, religious extremists, deluded, stupid or all of the above. There's no other way to explain why you would support a party that has no interest in your financial well-being and who want to shift the entire tax burden on to you.

[joe1991]

219. Exactly

I don't know how people get caught up in the RW lies.
People, no matter what, you will ALWAYS pay taxes.
The fairest tax system ever is a progressive tax.

The BEST thing we could to is fight to close
all the loopholes for the rich.

[Gothmog]

10. This is a regressive tax that is not fair

VAT or value added taxes are simply sales taxes that are inherently regressive. Of course the right wing nut cases like it because this tax will be a huge tax cut for the upper income brackets.

[Egalitariat]

31. The rebate component of this plan nullifies this argument***

nm

[trotsky]

38. You wish.

A "rebate" as you described it would reimburse according to income level, not according to what someone actually paid in taxes. So for instance, if they have a rough month where a major appliance dies, etc. and they pay a lot more than "normal," their rebate won't cover it.

[Egalitariat]

44. That's a valid argument. I just wanted to make sure its opponents...

were not ignoring that important component of the plan. And most of the posts in this thread are ignoring it.

[DenverDem]

12. "far-lefters" WTF is that?

Bite me.

[b06jgm]

16. Dude, you're far left. We're all left. What are you talking about?*

nm

[DenverDem]

18. publican buzz words.

Meant to demonize moderate Democrats, this is bullshit.

[b06jgm]

22. No, a moderate at least listens to the other side with

some semblance of understanding. Your words typically respond to their statements as "BS" or "Fake" or farce. So are you saying there's no such thing as far right-wingers either? They respond to you as "BS" "Fake" or "farce". Just see the forest for the trees, that's all I ask.

[Name removed]

70. Deleted message

Message removed by moderator. Click here to review the message board rules.

[JHB]

78. Keep in mind, we've heard this tune before...

Just because that "fair-tax" place is new to you, it doesn't mean it's new to others here, nor does it mean their basic spiel is anything new, either. And here at DU we get a constant stream of provacateurs who "innocently" point to something and ask what "we" think, only to condemn "us" for not paying sufficient attention to yet-another-repackaging of something we've dealt with over and over again.

Here's a few non-"far-left" arguments, in the interest of "understanding":
http://rivrdog.typepad.com/rivrdog/2004/08/fair_tax.html
http://www.taxfreedom101.com/library/misc/020618.htm
http://qando.net/archives/003712.htm
http://taxpolicycenter.org/publications/template.cfm?PubID=8747
http://www.brook.edu/views/papers/gale/20040812.htm

http://blog.dccc.org/mt/archives/000870.html

[AP]

82. Jeez. When you lose the factual part of the argument, turn to personality,

eh?

Why don't you focus on the facts?

[ima_sinnic]

32. "far-lefters like you," as in your original post

says it all.

why say anything like that at all? do I say "lefties like us"?

Freudian slip much? enjoy your stay no matter how brief as you attempt to indoctrinate us "far-lefters" with yet another scam perpetrated by the current hijackers of our formerly pleasant republic.

[papau]

46. Well said :-)

:-)

[Kathy in Cambridge]

68. Good post

:toast:

[UdoKier]

104. "Dude", I gotsa a bigga pizza pie for you-a!

[Strawman]

213. I think he prefers Godfather's Pizza

The pizza company run by FairTax.org spokesman and Club For Growth darling, Herman Cain.

http://www.cainforussenate.org/news-dev.asp?articleid=78

Real "moderates" seem to be behind this....NOT

[lapfog_1]

15. ignore for a moment how "fair" this is...

it would completely wreck our economy.

One of the ideas behind this is that America needs more investment
capital, therefore, let's find a way for Americans to save money.
Well, if we tax spending rather than earning, that will encourage
people to save money (and not spend it). But the simple truth
is that this is not true. We are now and have for a long time a
CONSUMPTION based economy. It's not more capital that is needed,
but more consumers. Taxing consumption will send the economy
into the toilet so fast it would make 1930-1931 seem like a
picnic.

We need to think these things through, much like NAFTA and other
"free trade" agreements that sounded so good, and much like the
current outsourcing mania. All these things have unintended
consequences which are very long term negative for America.

[ProfessorGAC]

20. Good Counter Position

To further your statement, there is no such thing as a "saving economy". Economic vibrancy requires the production of goods and services, the consumption of those goods and services, and rapid circulation of currency.

Without those, there is no reason for the "saved" money to be reinvestment, even by the bankers, in anything other than long term gov't securities.

That does nothing to improve efficiency, or encourage innovation.

It is a preposterously bad plan, for exactly the reasons you stated, and more. It has no macroeconomic merit, whatsoever.
The Professor

[TahitiNut]

89. That's an excellent summary - for people who think in terms of 'systems'.

Unfortunately, most people don't think systemically and fail to perceive the dynamics and the systemic impact of reactive/exploitative behavior.

Virtually EVERY one of these alternative tax proposals favors those who live and get wealthy off the labor of others. (Sheesh!) From the same people who brought us the Great Depression and the Age of Robber Barons!

[ProfessorGAC]

99. Don't Forget The Merger Felons and S&L Crooks

This is the same fiscal philosophy that brought us that crowd as well.

Robber Barons, Margin Scam Artists (of the 20's), S&L thieves, (like Li'l Georgie's brother), and merger crooks like Milken and Boesky.

All these types support a flat task, as it is consistent with their economic philosophy. Hmmmm. I wonder if there's a correlation.
The Professor

[TahitiNut]

106. Indeed. The economic cheats, parasites, pickpockets, and predators.

Organized crime at the highest levels.

[Nederland]

107. Oh Please

Most of Europe taxes consumption and I don't see many people on the left talking about how their system sucks--quite the opposite in fact.

[Kathy in Cambridge]

113. That's because Europeans don't pay for things like healthcare & education

healthcare is a big chunk of a family's budget.

[Blue Wally]

124. Because

their Value Added Tax pays for their medical care and unemployment.

[Kathy in Cambridge]

138. It also comes from their payroll taxes

most of Western Europe has lower infant mortality, longer life expectancy and better quality of life than the US (I think we were ranked 39 globally in that regard).

[RivetJoint]

144. I think we were ranked 7th, not 39th

we were in at least the top 10.

[Nederland]

159. Amazing

Do doctors and nurses in Europe work for free? :eyes:

Make no mistake, they DO pay for it, they just pay for it through taxes.

[Kathy in Cambridge]

161. Gee, you're a class act

:eyes: yourself

Ask what percentage an American pays out of their earned income to pay for health insurance and it is much higher than a European's.

[Hong Kong Cavalier]

19. The links and resources page has the AEI on it...

The Heritage Foundation, the Heartland Institute, and the Cato Institute. All are listed under the "General Public Policy Research Organizations:" section.
Interesting. I'll admit, I haven't read the entire website, but I like to know where these ideas that get a "lot of positive publicity from dems and pubes alike" like to reference and link to.

No tax plan the Republicans have put together in the last twenty years has EVER benefited the poor and middle class unless it benefits the rich even more. Many times, it merely screws over the poor under the guise of a carnival charlatan doing the cups and balls trick. This is most likely no different.

[ima_sinnic]

36. proves my point above perfectly

-- the only people who are FOR this are those same who are also noted sniffing PNAC's behind, or already thoroughly enmeshed in neocon scams--those who stand to gain financially.

[Hong Kong Cavalier]

40. I noticed that

And was just about to post a reply to your post above.
Nice.
:toast:

[rock]

23. "Fair Tax" is an oxymoron

The words don't go together.

[b06jgm]

24. This is true. No tax is fair. They should call it the "more fair than

what we have now" tax.

[ima_sinnic]

49. "more fair"???BWAHAHAHAHA!

so far you have not really succeeded in pimping this agenda on this board. but your efforts are amusing.
the "more fair" tripe has been more than answered in the accumulation of posts above yet you continue blithely blathering on about it.

[Misunderestimator]

88. "Pimping this agenda" Right on!

:thumbsup:

As if us "far-lefties" could be convinced by such simplistic talking points or would even entertain anything that comes from a RW mouthpiece.

[papau]

52. "more fair than what we have now" tax.??? - what a joke - the rich pay

you how much to post this ?

Or is it just your Team - the GOP - that you are trying to advance via paying off all those Corporate and Rich folk campaign contributions via yet another screwing of the middle-class.

Does anyone in the GOP ever retain anything they learn in economics (outside of unproven/unproveable supply side assertions)?

[ima_sinnic]

57. hey, are we just one on a list of boards, or are we "special"?

Do you receive your assignments by e-mail, or do you just do your own surfing?

... just wondering how you guys work.

[Dees]

25. Far lefter?

I ain't no far lefter but here's what I think. You want tax reform? How about starting with repealing the Bu$h tax cuts.

It does not matter how the right presents a new tax equation. Flat tax, fair tax, sales tax, VAT it's basis is to let the wealthy off the hook. It's been the heart and soul of the Repuglican party for decades. Wealth should not be taxed. Wealth creating more wealth should not be taxed.

[Egalitariat]

27. Don't ignore the rebate that is included in this plan....

All Americans will receive a monthly rebate check equal to the sales taxes paid to live at the poverty level.

So, if you are a single mom, and for argument's sake the "official" poverty level for your circumstance is $29,000 per year and the "fair tax" is 22%, then you will get a monthly rebate check for $531.67 so that you, in effect, pay $0 in taxes if you live at the poverty level.

That, just gets you to even. The way this thing becomes a winner is when the prices of goods and services go down because small businesses no longer have to pay so much money for tax compliance.

[trotsky]

34. Naturally.

I mean, businesses just love to lower their prices rather than give higher profits to their shareholders.

[Egalitariat]

39. I'm sure they'd love to. But I build homes, and I can promise

you that my competition would not allow me to do it.

[trotsky]

43. Ah yes, in the perfect market economy.

Wake up - we don't live in a perfect world. Competition or not, businesses' first reaction to a windfall is not to lower prices.

[Misunderestimator]

90. Ooohhh.... this is another...

flypaper thread... yippee

[Kathy in Cambridge]

123. Actually it's more like flies on shit

;-)

[JHB]

51. And having "abolished the IRS"...

...who oversees the distribution of these checks, determines eligibility, is responsible for preventing and/or investigating fraud and abuses, etc.?

Not to mention, who collects all these monies from all these transactions -- and who prosecutes those who fail to send it in?

[ima_sinnic]

65. notice the vast gaping silence in response to this question--

since the proponents of this plan are the same ones obsessed with "smaller government" (ie, an end to social services), the work you describe could be "privatized"--a plan that could pay double for the corporacrats: the tax savings themselves among the very rich, and then the contracts for administering the plan.

[vision]

63. The poverty level is not that high

If a single mom is making $29,000 than she would have to have a family of 7! A family of three to be at the povety level can only make around $15,000.

http://aspe.hhs.gov/poverty/03poverty.htm

[JHB]

116. Is that rebate a rebate, or just a check?

Reading the text of the bill, it seems to me that EVERY family has to register, and they get a generic payment (based on Federally-determined poverty levels and family size), NOT a "rebate" based on what they paid in consumption tax.

If it's not based on what individuals paid in, isn't that "handouts" to those that didn't pay as much?

I forsee an unmentioned "phase 2" where THAT bit of "unfairness" gets "fixed", and I tend to be cynical about exactly what would change (and what ELSE would change).

[Egalitariat]

122. By definition, those that "didn't pay as much" would be...

living below the poverty level. If they get a "handout", as you call it, I won't complain.

[JHB]

139. By what definition? And others _will_ complain, count on it.

The tax is based on spending, the payment is based on income. They are not, "by definition," the same thing.

And again, compliance requires enforcement. How is state accountants and investigators monitoring your spending less intrusive than federal ones investigating your income?

[Egalitariat]

145. The payment is not based on income. It's based on....

how much you would be required to spend in order to live at the poverty level. So they are, by definition, the same thing.

As to your second question, the plan does not monitor individuals' spending. Everybody gets a rebate check, therefore this kind of monitoring is not necessary.

We already enforce sales taxes just about everywhere PLUS we enforce a ton of other stuff as well. So the tax will keep the existing enforcement for sales taxes and do away with all the other stuff.

[JHB]

156. "The plan does not monitor individuals' spending"...

... I think you misunderstand: this is a system that encourages non-reportage of transactions (with one or both parties pocketing the unpaid tax). If it becomes the primary form of tax collection, then then avoidance schemes will balloon as much as they do now, just in different forms. Collection enforcment will require the investigation and monitoring of many, many people in order to make compliance significantly safer than avoidance.

How is that better than what we have now?

[Egalitariat]

169. The problem you identify here, as well as its solution....

already exist today. How many times have you paid for something at a family-owned store and seen the Mom or Pop simply put the money in their pocket and not ring up the cash register.

We have to enforce that now PLUS we have to enforce a million other things: hidden income, cash under table, bogus deductions, aggressive depreciation, etc.

Under the Fair Tax, there is only one enforcement point, and it's not even a new enforcement point -- the point of sale.

[JHB]

191. We both acknowledge an existing enforcement problem...

...but where you think the change will help focus efforts, I think it will be more akin to smothering a small flame with a tankerload of gasoline -- it could happen, but I think it more likely that it will blow out in directions you don't expect.

And as I maintain elsewhere: to remain revenue-neutral, this tax structure will actually increase the tax burden on the middle.

Meanwhile, progressive taxation has a proven record of helping to EXPAND the middle class. Why is that "unfair"?

[MadHound]

128. LOL friend, now check out the reality of the matter

The federal poverty rate is much lower than your speculation. Here, check it out for yourself.

<http://aspe.os.dhhs.gov/poverty/03poverty.htm>

Oh, and by the by, by having a VAT, you are almost assured of a massive reccession as soon as it is implemented. With essentially the price of all goods and services going up, people will cut back drastically on their spending, and since consumer spending is what drives our economy, when it drops, so does the economy. Nice double hit for the poor and working class there friend, a regressive tax AND a recession to boot. And this benefits the vast majority of Americans how?

[MadHound]

129. LOL, and then there is the reality of the matter friend

The federal poverty rate is much lower than your speculation. Here, check it out for yourself.

<http://aspe.os.dhhs.gov/poverty/03poverty.htm>

Oh, and by the by, by having a VAT, you are almost assured of a massive reccession as soon as it is implemented. With essentially the price of all goods and services going up, people will cut back drastically on their spending, and since consumer spending is what drives our economy, when it drops, so does the economy. Nice double hit for the poor and working class there friend, a regressive tax AND a recession to boot. And this benefits the vast majority of Americans how?

[MadHound]

35. Well, like other VATs, it is a regressive tax

One that would fall particularly hard on those least able to afford it, even if there is a "poverty level" exception.

First off, most estimates I've seen say that if we were to replace income taxes with a VAT, that such a tax would have to be upwards of twenty percent in order to make up the revenue brought in by income tax. Even if we go for a more modest ten percent, that ten percent would be added onto state, country, and city VATs. Thus, in most urban area we are talking about an additional twenty percent of the purchase price being tacked onto the bill. Even in rural areas that don't have any city VATs, you're still talking a thirteen to fifteen percent mark up.

Second, like any other VAT, the tax burden would fall disproportionately hard on those who are least able to afford it, the poor and working class. Even with an exception for those below the poverty level, the question still is who can better afford that extra ten percent VAT? The rich, with their millions, or the poor and working classes, who have to count every penny? Meanwhile, with all of the tax burdens removed from investment incomes and the like, the rich will continue to get richer, and the poor will bear the increasing burden of paying for our government. This is simply not fair.

Think about it, a single mother with two kids, making 18,000/yr(above the federaly mandated poverty level, would be getting back aprox $600-$800 due to not having to pay income taxes, yet this same woman would have to pay out nearly $1800 in VATs(for when you are living at that income, with kids, you cannot save any money, and any income you have is already spent). That hurts, and when you are living at that income level, it could quite easily send you over the edge into poverty. Meanwhile, the person making a cool mil a year, spending say a half million/year would have to pay aprox. $50,000. For somebody at that income level, $50,000 is no big deal, you know, ho-hum, I can't get that new Caddy this year. Meanwhile, this self same person would not be having to pay $300,000 in income tax. Hmmm!

Sorry, I agree that we need tax reform, but VATs like this are simply thinly disguised ploys to shift the tax burden from the rich who can afford it to the poor and working class who can't.

[RivetJoint]

37. You seemed to ignore the rebates

on food, clothing, housing, etc.

[trotsky]

41. And you seem to have neglected to provide ANY details.

Which makes it kind of difficult for us to address them, doesn't it?

[Egalitariat]

47. Details in Post #27****

nm

[vision]

74. faulty details

a single woman that makes $ 29,000 would have to have a family of 7 to be considered at the federal poverty level.

[Egalitariat]

84. Please read Post #27 again....

When it says "for argument's sake", it means that I'm just using that number to illustrate a point.

But since you're so good at calculating poverty levels, you can use the math shown in Post #27 to figure out what the rebate checks would be given someone's circumstances.

[vision]

199. IOW

the poverty level is pulling any number out "for argument's sake" is ok. The poverty level is based upon family size and to use the example of a single mother making the poverty level at the income that was supposed in post # 27 the single mother would have to have a family of 7.

The poster in # 27 is the one postulating the $500 rebate on faulty numbers. Shouldn't accurate numbers to be used to back up the arguement?

[RivetJoint]

48. READ the literature

I've stated that I'm in the MIDDLE of reading about this. I suggest you do as well, before you make half-informed statements.

[trotsky]

50. So all of your statements to this point have been half-informed too?

Thanks for the clarification.

[RivetJoint]

55. My statements have been to "read the literature"

I mentioned the rebates becasue I HAVE read that part, unlike the poster who went through an elborate analysis about a single mother with two kids, when he did not KNOW about the rebate function.

[ima_sinnic]

53. reading their crap is like listening to one of Bush's speeches

90% BS + 10% fluff ... afterward you have to go scrape off your shoes.

[papau]

56. Do you think that folks at DU have not studied this to death for 30 years?

So you are "in the MIDDLE of reading about this"

Well that is good.

It may take more time to come up to DU speed than the few weeks remaining before the election - but it good to have additional knowledge!

read on!

:party:

:toast:

:-)

[RivetJoint]

59. I don't need to read it for 30 years

I can read faster than you obviously...

[Kathy in Cambridge]

72. Papau and other DUers are very well-informed about tax issues

if you had a star, you could search on many posts over the past few years that address the 'fair tax' and 'flat tax'.

[RivetJoint]

77. I've seen how well informed some are

that's why they knew ALL about the rebates and about the federal poverty levels.

[papau]

118. Yes we do know "all about " them - your point - or better - your studies?

:-)

[RivetJoint]

140. You question?

In English? My point: it is obvious that some are not nearly as brilliant as they thought, since they did not know the poverty levels nor the rebate issue.

[papau]

143. We are talking transfer of tax burden from Rich to not rich - the question

is "Why do you favor such a transfer?"

[RivetJoint]

146. I'm not in favor of that at all

and fail to see how you came to that conclusion.

[papau]

187. Sorry - but you are in favor of that-the studies all show thw rich benefit

So now the question is:

Why do you pretend you do not know that the studies as to which economic class wins under the "fair tax"?

[RivetJoint]

188. Sorry - where did I say I say I support

this "fair tax?"

[papau]

200. LOL - OK - correct - you never did say you support the "fair tax" -

peace

:-)

[RivetJoint]

204. Thank you! Peace Back!

[Egalitariat]

147. How do you figure that?

Bill Gates spends a lot more than he "earns" in income according to the IRS's definition of income. He'd pay alot more in taxes than he does now.

People at or below the poverty level would pay $0. People just above the poverty level would pay such a small fraction of their income, even thought the tax isn't based on income, that you'd need a fancy calculator just to get past all the 0's to the right of the decimal place.

[papau]

192. Bull -Bill Gates = GOP Blue smoke and mirrors as your assertions are lies

The tax on 60 Billion on death plus the tax on investment earnings is between 100 and 200 times any sales tax "fair tax" that Gates would pay.

Do folks on the GOP side ever look at the research - or do they just make up debating points - it feels like a discussion with an 10 year old grandkid who has self esteem issues.

At least the AEI tells partial truth lies - and there is some work for those of us at DU as we find the whole truth and point out the lies. In this case the AEI refuses to discuss class wealth transfer - and that is the "partial Truth lie" that is in their presentation.

[Egalitariat]

196. Think about what you just accused me of while you consider....

that Bill Gates has given nearly all of his wealth to the Bill & Melinda Gates Foundation. There will be no death tax.

The investment income is earned by a 501c3 that will pay no taxes to any government.

The only taxes that Bill Gates pays right now is on his income (his salary), and his salary is extremely low relative to his wealth. He spends much more than he earns in income (according to the IRS's definition).

You just had smoke coming out of your ears while accusing me of not knowing what I'm talking about. And I do.

[papau]

201. Gates has 20 B in the Foundation - 40B is outside of the Foundation -

Does those in the GOP ever get the numbers correct?

The 501c3 investment earnings will indeed be protected - as long as enough money goes out as grants each year.

Again you sound like a fellow that went through the finance section of a life insurance agent training course -

The 50,000 members of DU include many PhD/CPA/FSA folks running around who are not afraid to give me or anyone else a peer review email (we are polite to each other and do not expose ALL when there just may be a communication problem rather than an analytical disagreement). If you want to play in field on the board I welcome the opportunity to read your thoughts.

But please do not assume that we do not have a few folks here whose resumes can get their discussions and analysis published in any professional financial publication. Indeed please do assume that there are not "famous name" folks on the board.

Some of us have working in and eventually running Fortune 50 Financial Institution Tax operations. So international discussions are best made assuming others on the board have at their fingertips knowledge, data, and various studies which will be used to compare against what is posted.

Now the Professor, AP, Frodo(a prior GOPer who did have a good background), and another dozen active folks are being nice to me today in not correcting things like the 20/40 split of Gates fortune that I post above. I have not chased the latest Gates 501c3 filing, nor the latest Stock prices applied to his share holdings in various operations so as to get his total monies outside the foundation. We generally allow each other some space as long as the thrust of the discussion is not affected.

Again, you say you know a bit about this topic - and that is great!

Welcome to the conversation - just do not expect to blow anything by via a simple assertion. That only works with GOP controlled media.

:party:

:toast:

:-)

[Egalitariat]

202. I thank you very much for your heads up...

and I would have not doubted otherwise about the collection of intellect that frequents this board. I have always been impressed by our membership here.

There are many in this thread with their hands covering their ears making lots of noise w/o trying to understand the plan. I don't like that.

I'm as far left as they come on ALL social issues, and I'll be accused here of being on the right economically (although I consider myself a moderate).

I just do not think the Fair Tax is a RW scheme to transfer wealth from the middle class to the rich. The current system is just an unwieldy, difficult to enforce, difficult to comply with, dinosaur. It needs to be changed drastically.

I like the Fair Tax plan for its simplicity and (relative to the current tax code) fairness. We need extreme change in the tax code, and I think this is a good way to do it.

My only real concern about it would be the transitional period, but I believe it to be a necessary evil, because the tax code has got to change.

[papau]

203. In combination with other changes the "fair tax" could work in the sense

that the burdens on the rich would not be reduced. The fair tax rate would be over 50% if we want to collect the same amount of tax as currently and allow for the credits/rebates/and exclusions proposed - plus the leakage that we know the rich will cause. It would not be "fair" in that the rich pay much less, but it could be installed.

The Canadian experience is that Financial transactions must be zero rated - so that you MUST have something like a progressive income tax to be fair.

But alternatives do exist if we want them. We could have a yearly wealth tax. We could also have all assets written up as to basis to something close to market, and a tax paid on that gain each year. It would eliminate the need for a "death tax" recapture of the unpaid capital gains tax. But I doubt the rich will let us do this! :-)

We could - as was intended in 1916 - tax investment income at 100 cents on the dollar - the same as wages.

We could have a "Flat Tax" on income that includes investment income at 100 cents on the dollar, replacing both the FIT and the payroll tax, with a 20,000 per return and 10000 per person and 5000 per child deduction plus a deduction for all mortgage interest for the first million of mortgage. The tax rate would be around 36 to 38%.

Many possibilities - if only the rich did not buy votes with their campaign contributions so as to stop the above type changes.

[Egalitariat]

62. It's apparent that those who had studied it for 30 years...

were not aware of a rebate component that completely removes the tax liability of someone living at or below the poverty level.

[ima_sinnic]

69. that rebate thing is a joke

... keep trying, though--your efforts to pimp this stupid plan are amusing. The poverty guidelines are set very very low, somebody spells it out exactly in another post around here.

So the people in deepest poverty get a "rebate"--whoop de ding dong!
What about the "working poor," the many many who try to support a small family on, say, 18K. Not to mention the middle class. All of these people will end up paying taxes way out of proportion to their income.

[RivetJoint]

73. 18K IS below the

federal poverty level for a "small family" of four.

[ima_sinnic]

112. whatever.

you haven't gotten the point YET? that those just above the so-called poverty line would end up paying crippling taxes. they would be taxed to death. this burden would diminish ever so gradually as one goes UP the income scale. plain as day. sheesh, go peddle this EXTREMELY BAD IDEA somewhere else.

[RivetJoint]

131. Depends on what the flat tax rate was

Those making just above the poverty line (for family of four)now pay 10% on income up to about $14K and 15% on income above 14K. Under this plan, they'd pay nothing for income under $18K and the consumption tax rate (whatever it is) for what they spend above that. How is that crippling?

That said, there are a lot of thngs I DON'T like about this "fair tax," but your point is inaccurate.

[papau]

125. Try again-the huge tax shift is away from the rich and to the middle class

As your side - the far right GOP - have noted - in dollars the poor do not pay much tax - indeed mainly the Soc Security payroll tax offset by the EIC.

By the way - where does the Payroll tax go away - it just gets renamed the savings - the individual account private savings "modern" pension that ends the rich sharing a bit of their payroll tax with the poor.

Do you folks ever get tired of screwing the poor.

[TahitiNut]

189. To lengthen a rug, cut off one end and add it to the other end.

I realize those who buy into this scam have some hallucination that this benefits the short rugs more than the long rugs. It just ain't so.

[MadHound]

54. What rebates? I looked at your link, and found no mention of those

Is this a proposal of your own? Even so, I doubt that such a "rebate" would be enacted into law. For if you did that, then you would have to increase your VAT in order to make up for the revenue from not rebates for "food, clothing, housing, etc" It is simply a matter of balancing the books. Thus, instead of an across the board VAT on everything of ten percent, you would have an across the board VAT of 20+% percent on everything excepting food, housing and clothing. This includes such neccessaties as medicines, utilities, gas,water, school supplies, etc. Once again, the poor and working class would be subsudizing the rich. Sorry, but that won't fly.

So let me ask you something friend. Are you one of the monied class who would actually benefit from this Ponzi scheme, or are you one of those who have been deluded into thinking that they will benefit from this "someday"? If you are the latter, then I find you to be cold hearted and greedy. If you are the latter, then you need to wake up, because you are being taken for a ride friend.

[RivetJoint]

58. You did not look at "my" link

I did not provide one.

The rebate would HAVE to be an integral part of this proposal, otherwise there is NO WAY I'd even come close to supporting it.

What's the "monied class?" And how am I cold-hearted and greedy if I feel that ONLY because of the rebates does this become something I MIGHT someday support?

Ponzi scheme? You mean like Social Security?

[AP]

75. A rebate would only help people below whatever threshold you chose and

the people just above it would be burdened the most. And the farther you got from it, the lower your burden would be. Ie, the richer you were, the lower your effective tax burden.

Where do intend to start putting the hurt on? To whom do you want to shift the highest effective tax rates.

Whoever you do that to, you'll be destroying.

Why can't we just spread out the burden throughout the entire income range. Why can't we just have effective burdens that gradually rise all along the income spectrum to match the marginal decrease in the value of a dollar as you have more dollars? Ie, why can't we have progressive tax rates at reasonable increments throughout the income range?

[RivetJoint]

79. As I've stated in other possts I'd be in favor of

a graduated flat tax mechanism:

< $20K = zero tax
$20-40K = 10%
$40-75K = 15%
$75-125$ = 20%
$125-200K = 25%
$200-300K = 30%
$300-500K = 35%
500K < = 40%

[AP]

102. "a graduated flat tax" isn't a flat tax.

And I'm not clear if that's an income tax or a sales tax. And if it's a sales tax, how do you keep track of people's income or expenditures?

Why can't we just have a real progressive income tax THROUGHOUT the range of incomes that people actually earn, starting at 0%, going up to 500M, where nobody pays more or as much as someon marginally wealthier than they are? If you did it that way, you probably wouldn't even need a top rate that's all that high, and it wouldn't even apply to that many people.

[RivetJoint]

105. Yes, it is a "flat tax"

because there are NO deductions and it is on ALL income. It's FLAT across each income bracket.

[AP]

119. That's not the definition of a flat tax.

A flat tax is a tax that is the same for everyone regardless of their wealth.

Wealth is a product of how much money you already have. The rich want to have a tax which doesn't take into account how much money you have. They want to pay the same % as everyone else, whether it's a flat income tax or a flat sales tax. Either way, it's unfair.

[Dees]

126. I think graduate infers progress...does it not?

Progress (progressive). Maybe progressive graduated flat tax.

[RivetJoint]

134. You are right.

I call it flat because there are NO deductions and it is for ALL income.

[Dees]

141. I think your 500K <= should be >= greater than.

[RivetJoint]

142. Yep!

I can't type for crap!

[Egalitariat]

83. Nope. Everybody, even Bill Gates gets a rebate....

That's the beautiful part. Those just above the poverty level get checks too. There are millions upon millions of pages in the tax code that help identify what kind of tax payer you are.

Knowing the difference between all the classes of taxpayers is an extremely expensive activity that becomes unnecessary.

The economy bears a huge expense in government expenditures, business expenditures, and consumer expenditures in order to comply or enforce compliance with the tax code. Most of these costs will disappear.

[trotsky]

86. "There are millions upon millions of pages in the tax code"

You mean the tax code that the "fair tax" would abolish?

LMAO

You can't even keep your argument internally consistent.

[Egalitariat]

91. Yep. That's right. The disappearance of those millions...

and millions of pages is the best part of the Fair Tax. I'm glad you made the point, as I obviously did not do as well as I had hoped.

[trotsky]

92. Exaggerate much?

I misunderstood that post - I thought you meant that the existing tax code would help figure out how to dispense the rebates. I.e., the existing tax code that would be abolished. Thus the inconsistency.

But anyway, "millions" of pages?

[Egalitariat]

110. Obviously, I do exaggerate. The Internal Revenue Code...

is 2.8 million words, not pages. It's only 6000 pages long.

I apologize.

[papau]

130. Can the right get any numbers correct? Vol 1 & 2 IRS Code via CCH is

6395 pages.

The actual text of the Code in that publication is 692 pages before the procedure/administration section that does not affect the actual tax - just the information reporting.

[AP]

170. And the pages I want to cut out: the ones that reward wealthy people

with more wealth without having to work to earn it, and NOT the ones that maintain progressivity, or give deductions for activity that creates more social wealth for people to participate in.

[papau]

184. You get an Amen from this row of the Choir! :-)

:toast:

:-)

[RivetJoint]

93. It is consistent

he's saying the so-called fair tax will eliminate those "millions" of pages.

[AP]

103. If those 1000 pages are making the tax code work, and ensuring that we...

...have a tax code which isn't a giveaway to the super wealthy, they're worth it.

I'd rather have a 1000 pages that prevent a flat tax, than a 2 page flat tax code.

[RivetJoint]

108. Or adopt a system

where there are NO deductions and a flat tax for ALL income across defined income bands. Then, we can do away with those thousands of pages.

And how can it be a giveway, when taxation is a "taking?"

[AP]

133. Deductions aren't the problem. The problem is using deductions to encourag

economically unproductive activity (like sending jobs overseas) and to discourage good things (like making money from work).

Taxation isn't a "taking."

It's a collective sharing of the burden of providing an infrastructure that makes people wealthier.

Get rid of all taxes and we'll have a poorer society for everyone because no one person would be willing to pay for roads or courts and all the other things that allows society to make great deals of wealth.

Do that for a decade, and people will be begging for the return of the "takings" scheme.

[RivetJoint]

137. I was using the term

"taking" to counter your term "giveaway."

Taxation is a GOOD thing, but it IS a taking.

[AP]

152. A 20% sales tax is a giveaway for the rich.

How many things do you think rich people buy that depreciate to less than 20% of its value? Their Rolexes? Their Rolls Royces?

I'd limit it to their toiletpaper, but they'll make more than they spend on toiletpaper in a lifetime from selling their rolexes.

Anytime you have an item that doesn't depreciate to less than 20%, you can sell it to pay for your VAT. That means you'd have an effective tax rate over your life time of 0%.

If you don't think that's a tax code that's a giveaway to the rich, then you aren't thinking.

[RivetJoint]

157. How do you give away to people

something that is already theirs (i.e., they money they earned)?

The "wealthy" buy TONS of things that do not apperciate, especially services. Get real.

And if they sold their Rolex (and they don't all appreciate, BTW); they'd buy another.

Very few cars appreciate in value as well.

I don't agree with this fair tax thing, but your logic is lacking.

[AP]

158. Psst. You're not taxing EARNED income with a flat tax. Your taxing...

...expenditures. And if you're taxing expenditures that don't depreciate below 20% of their value, and you resell them (or even use them to secure a loan, which isn't taxed either) then you're not taxing people at all.

By the way, you don't have to buy something that appreciates to avoid having a tax burden. You just have to buy something that doesn't depreciate below the tax rate.

Anytime anything approached 20% (or whatever it was) just sell it and you've broken even on taxes.

The people who would end up paying taxes over their lifetime would be people who had to buy consumer goods which became worthless. Poor people. So they get hit twice. They're paying a bigger % of their income in taxes, and it's all lost money, because they're spending the money on things that become worthless (and fast).

[RivetJoint]

162. You have a tax burden EVERY TIME you

buy something including services. Buy a steak at Morton's but only eat 1/2 and sell the other half...there, no tax burden. Yeah, right.

Even NOT taxing people at all is not a "giveaway."

[AP]

167. What 's your point? The sales tax is incredibly regresssive. Yes.

And we're talking about ONLY getting tax from sales tax. When you start raising revenue only from a 20% sales tax on unexempted goods, we (god willing) wouldn't be taxing food and you will surely turn tax planning into a game of buying lots of goods which appreciate and selling your goods before they depreciate below the tax rate.

That's what tax lawyers will do for a living.

DUH!!!!!!!!!!!!

[RivetJoint]

172. 1. I said I was

NOT in favor of this.

2. You are NOT paying attention (the premise is we would NOT tax food below a certain income level)

3. MOST goods do NOT appreciate. Even Rolexes and cars.

4. Selling those goods will generate MORE taxes

This tax doesn't sound like a good idea, but you haven't figured out whay yet. Keep trying!

[AP]

176. I can't keep repeating myself. I've addressed each of those points.

So you want a less complicated tax code, but who want to make individulas charge sales tax on non-retail private individual to private individual sales of watches and cars? It's hard enough to collect those taxes at the retail level.

We would capture that income as capital gains and capital losses (unearned income) but that's what the sales tax is meant to replace (in addition to earned income taxes).

So, it sounds like you're going to need another million pages of tax code and revenue agents to scour the newspapers and the auction houses and the country clubs when people sell their rolexes.

[RivetJoint]

177. Where did I say I supported this?

Exactly. Drop it.

[AP]

183. Whether you support it or not, you should be accountable for your

repetition of misstatements about what this all ab out.

[RivetJoint]

185. What mistatements?

Show me where I have been factually wrong.

I just blew your silly "sell it before it depreciates to 20% of it's value" argument out of the water.

[AP]

190. Here:

3. MOST goods do NOT appreciate. Even Rolexes and cars.

- I've repeated several times that the goods you buy don't have to appreciate for you to have a net 0 tax burden. You just have to sell them for 20% of their cost or more and you've covered the tax burden.

4. Selling those goods will generate MORE taxes

- How? No flat taxers propose anything other than a tax on retail-to-public sales. And the way that income is currently collected on the sale of collectibles is by declaring it on your personal income tax form -- the very thing that the flat taxers are trying to replace.

-So, if you want to collect tax on non-retail sales, you're going to need an entirely new set of tax regulations and enforcement mechanisms. Is that what you're proposing? More taxes? A new beauracracy to collect taxes?

[RivetJoint]

205. Wrong

Statement 3 is accurate. Most goods do NOT appreciate.

Statement 4 is also accurate. Once you sell something, you will most likely but a newer, better one. Hence more tax revenue.

[JHB]

210. Statement 3's accuracy is not the point...

The fact that they can retain up to or over 20% of their sale value (and thus their untaxed sale will null out the burden of their initial taxation, whereas this is not true for most items bought farther down the income scale) _is_.

And as brought up later, it does not tax business-to-business sales, so those who can arrange to make their purchases on "the company tab" avoid the tax altogether.

[AP]

217. And it doesn't tax resales either. So the only people who get hit are

people who have no choice but to make their purchases from a retailer.

Auction houses aren't retailers, so, if you're rich, you could never pay taxes on all your furniture.

But if you're middle class and you don't want to buy your furniture from a salvation army, but can't afford the auction houses, you'll pay tax on everything.

It will be the people who buy at IKEA who pay the most taxes as a % of income. And it very well could be the middle class who pays the most absolutely too. It would be VERY easy for a rich person to make a large % of their purchases tax free. You have your company buy the boat and you buy your silverwear at Sotheby's.

[AP]

215. You're wrong.

Most consumer goods poor people buy depreciate to zero. And if they don't, you find those goods end up in pawn shops. Rich people have the option of turning their consumption into low- to no-tax burden investment (just take a look at the auction houses) and will do that even more if the only way we collect tax is through a national sales tax.

[AP]

101. Time for some math.

Up to the threshold you chose, the effective tax rate would be 0%. Just above it, it would be the worst -- 20% (or even more if you go into debt year over year -- in that case it would be an income tax rate of infinity, because you'd be paying tax on money you don't even have and don't make). But the farther out you get on the income scale, and the lower your consumption is as a % of your income, your effective tax rate would approach 0%.


The tax burden would look like this (y axis is your effective income tax rate):

.......................Infinity XXX

...................................20%XXX

.....................................................10%XXXXXXX

0% XXXXXXXXXXXXXX.............................................XXXXXXXXXXXXX
Income:...$5K.......$20K.......$100K.........................$100M


Get it?

[Egalitariat]

114. Nope. Just above the threshold the effective tax rate would be...

.00000001% and so on. Because tax payers just above the threshold, as well as all other taxpayers, would get the rebates as well.

The effective tax rate would then increase from .00000001% up to 100% depending on how much more you spend than what would be required to live at the poverty level.

The poverty level (threshold) used would need to insure people in those circumstances didn't "need" to go into debt year after year in order to live.

[AP]

121. What are you talking about?

Explain your tax code. Income or sales? What are the rates? What are the exclusions? What are the brackets?

[Egalitariat]

132. The "Fair Tax" is a sales tax. There is one rate....

although things like medicine, food, and clothing might be exempt. There are no brackets, deductions, or anything else.

Everybody (I really mean everybody) gets the rebate of the amount of taxes they, based on their "situation", would be required to pay in order to live at the poverty level. By situation, I mean the things you have to know in order to calculate the poverty level (whether you're married, # of dependents, where you live, etc).

The beauty of the system is its simplicity. The current Internal Revenue Code is extremely expensive for the IRS to enforce. The "Fair Tax" would not be. The current Internal Revenue Code is extremely expensive for taxpayers and business to comply with. The "Fair Tax" would not be.

Right now, I pay my accountant about $250/year to compute my taxes. I also pay (embedded in the price of goods) for Publix to pay it's accountants and lawyers when I buy Tide from Publix. And I pay for Procter & Gamble's accounts and lawyers (also embedded) for the same bottle of Tide.

All these costs go away. Cynics will tell you that Publix and P&G will simply keep the cost savings as profits to distribute to their shareholders. Academics will tell you the market economy (via perfect competition) will force these companies to pass along the savings to their customers (me). The truth is that it will fall somewhere between.

So, in the end, the cost of the good goes down but the tax on the good goes up. Does it become a wash? Maybe, maybe not. But by giving a rebate on the taxes paid to live at the poverty level will ensure those who have to live at or below the poverty level pay nothing in taxes, and those that live just above it pay very little.

And the government would require less money to operate because the cost of enforcing tax compliance would almost (relative to the current IRS) disappear.

That's why I like this plan.

[AP]

150. See post 60, and anyone not willing to pay an accountant 250 bucks to save

them a couple thousand dollars is either a fool or is unlikely to have the business sense to be making enough money for it to make sense to hire an accountant.

It's also a tiny price to pay to ensure that society has a tax code that doesn't shift all its burden on to the middle class.

A "fair tax" may be cheap to impose, but will be incredibly costly to society when it begins to widen the already intollerable gap between rich and poor.

And companies that make profits by selling consumers goods will have smaller profits. Cost goes up (and they'll go up 20% right off the bat before companies have to lower their prices and profits decrease) and sales decrease. They wont' have much savings because big corps already only pay effective tax rates on their income of between 2 and 4%. There won't be any income windfalls for them.

And a sales tax does impose the highest burden on the people just above wherever you decide a person's "situation" warrants that they start paying the tax, because those are the peoplel most likely to be spending the greatest % of their income on taxable items, and the tax burden diminishes towards zero as the ration of income to money spent on taxable items gets wider and wider (ie, the richer you get, the lower your tax burden).

[Egalitariat]

115. Nope. Just above the threshold the effective tax rate would be...

.00000001% and so on. Because tax payers just above the threshold, as well as all other taxpayers, would get the rebates as well.

The effective tax rate would then increase from .00000001% up to 100% depending on how much more you spend than what would be required to live at the poverty level.

The poverty level (threshold) used would need to insure people in those circumstances didn't "need" to go into debt year after year in order to live.

[papau]

135. Gee - a guaranteed per person welfare check - just like the GOP made fun

of when the Dems proposed the idea in 1972.

Indeed I still like the idea - just not as a replacement "offset" for a tax change that screws me to the wall.

[Kathy in Cambridge]

136. What good are rebates when most poor and lower middle-class folks

live paycheck to paycheck? They need cash in hand from earned income in order to pay for basic necessities needed at that moment. When I was younger and a renter, my state (MA) only allowed you to deduct a maximum of $3000 annually. In eastern Mass-where most of the population is-the average monthly rent for a 2 bedroom is $1800, and in the immediate Boston area, it's significantly more. BTW my state just set a record in 2003 for evictions and foreclosures because of our booming economy.

You obviously have no clue how the majority of people live in this country.

[AP]

153. Wherever you draw that line, the people just above it pay the highest tax

rate as a percentage of their income.

People say, "oh will cut it off at $X" which sounds so great for the people below that threshold.

But for the people just above it, they're getting the shaft.

[Egalitariat]

160. OK, let's think this through.....

For this argument's sake, let's say the threshold is $20,000 and the tax rate is 20%. Here are some scenarios.

1) I earn and spend below the threshold

I spend $ 15,000
Taxes paid 3,000

My rebate -4,000

Total taxes paid -1,000
My tax rate is - 6.67%


2) I earn and spend exactly at the threshold

I spend $ 20,000
Taxes paid 4,000

My rebate -4,000

Total taxes paid 0
My tax rate is 0%


3) I earn and spend just above the threshold (the case that you seem to be most worried about)

I spend $ 22,000
Taxes paid 4,400

My rebate -4,000

Total taxes paid 400
My tax rate is 1.8%


That's hardly getting hammered. In any tax system, including the one now, those just above the threshold are going to have to pay taxes. In our system now, those just above the threshold pay very little. In the Fair Tax, those just above the threshold pay very little as well.

I don't see why you make that argument so strenuously. How is it different than any tax system?

[AP]

163. Your measure is what you spend. It should be your income.

No do those numbers against hypothetical incomes (and this is all in post 60).

What if you make 25K and spend 35K a year? What's your tax rate.

And, by the way, the bottom quintile of Americans has a NEGATIVE net worth of 10K bucks, so a LOT of Americans are in the position of spending more than they make. You have them paying tax on money they never earned. That's an effective INCOME tax rate of INFINITY.

What if you make 100K and spend 20K a year. Your effective tax rate is 4%. This is down from a marginal rate of about 33%, so your tax burden on your next dollar income would have been reduced to 1/8th of what it is today.

DO YOU GET THIS YET?????

[RivetJoint]

166. Who the HELL makes

$100K and spends just $20K of that?? At least use some real examples!

[AP]

168. RICH PEOPLE!!! THAT'S WHAT MAKES THEM RICH!!! THEY SPEND MUCH LESS

THAN THEY MAKE!!!

That's why sales taxes are so regressive. The richer you are (the more you DON"T spend relative to your income) the lower your tax burden.

DAMN, you have to be stupid to believe the flat tax BS.

[RivetJoint]

173. NO ONE makes $100K and spends just $20K

That's just silly. And $100K is NOT rich. Good God! USe some freaking LOGIC in your arguement.\

Again, I'm NOT in favor of this, but YOU are making silly arguements to back your point.

[AP]

178. How about 500K income and 100k expenditures. How about 1 million vs 300K

Any way you look at, as that gap increases, your tax burden drops.

And it's really just when you spend on unexempted items which depreciate below 20% that you'd have a tax burden.

When you buy things that increase in value or depreciate less than to 20% of their value, you be able to sell the item to cover the tax at a later date.

Who buys itmes like that? Not people who buy Casios.

[RivetJoint]

182. Your arguement would be stronger if you

used realistic numbers once in awhile. Try it.

So, I buy a watch for $100 and pay $20 in taxes. I sell it next year for $50 (it's 50 % of its value, so I'm above your 20% threshold). I pay the taxes (covering it a later date, like you said). Now I have $30 and NO FUCKING watch. Let me sell all my stuff for 30 cents on the dollar, have nothing, and then buy it all again! See how silly your arguement is??

[AP]

193. That's rich coming from the person calculating effective tax rates based..

...EXPENDITURE to TAXES PAID calculations, rather than income/wealth to taxes paid, and the person who tries to claim that Bill Gates is going 4 million bucks in debt year over year to support his life style.

That's very rich.

As for the hypothetical: why'd you sell the watch? If you'd have no watch, you probably wouldn't sell it. But so long as its part of your assets, worth 50% of its value, it's leveragable, and, when you die, will be sold off. Your lifetime tax burden, until that watch drops below $20 is zero dollars.

For a poor person, they keep having to buy the cheepo watch every few years, they keep depreciating to zero. They have nothing left over in their estate. Over their lifetimes, they've paid hundreds of dollars in taxes and have nothing to show for it.

And if you did sell it, so long as you covered the tax part of the purchase price, you've gotten that money back and have effectively paid no taxes. You just paid for the watch. People who buy crap which doesn't hold its value end up paying for both parts: the cost of the item AND the tax.

Notice that the wealthier you are, the more likely it is that you buy things that don't depreciate much. That's part of being rich. Even your consumption is an investment, whether it's a house or furniture or a rug or the art you hand on the wall. "Hang in there" Kitty posters end up in the trash. The Renoir doesn't.

That's how sales tax is a burden on poor people and a double benefit for the rich (it lower your effective tax burden at the time of the purchase and gives you a chance to recoup your tax burden completely later).

I'm glad you're starting to understand.

[RivetJoint]

206. Your lifetime tax burden on that watch is $20

Selling the watch nets you nothing, because you are DEAD!. No matter what the watch is worth when you die, you PAID a $20 tax on it.

[AP]

214. You are not a smart man.

A sales tax shifts the tax burden off of people who can afford Rolexes and on to people who can only afford Casios.

[Egalitariat]

179. I get it, but I don't think you do....

the premise of the Fair Tax is that the "threshold" is designed so that you don't have to spend more than that to live.

Under this premise, I'll talk to your points one by one.

1) I make 25K/year and spend $35K/year (and I have to spend $35K to survive).

I spend $ 35,000
My taxes 7,000

My rebate -7,000 (35,000 threshold * 20%)

Taxes paid 0

Effective rate $0/$25,000 income = 0%

The premise is that the threshold considers the need. If your hypothetical person only needed $25,000 to survive but chose to spend $35,000, then he's going to pay a higher rate. But he's choosing to do this. Here's what his taxes would look like:

I spend $ 35,000
My taxes 7,000

My rebate -5,000 (25,000 threshold * 20%)

Taxes paid 2,000

Effective rate $2,000/$25,000 income = 8%


Or, we can take a look at Bill Gates, who had income of about $1 million (according to the IRS definition of income) last year.

I spend $ 5,000,000
My taxes 1,000,000

My rebate -7,000 (35,000 threshold * 20%)

Taxes paid 993,000

Effective rate $993,000/$1,000,000 income = 99.3%

[AP]

181. You clearly don't get it.

People often don't have a chocie about going into debt. They have collegeand car loans. If you don't chose to make those expenditures, you relegate yourself to greater poverty.

You want to burden people making those choices the most. Those are the people who need the most help.

Bill Gates isn't making 1 mil a year and spending 5 mil.

You're totally misrepresenting reality to make your argument.

He's making millions of dollars and has millions more. He spends a tiny % of what he has, and even that is on stuff that doesn't depreciate in value, so he'll meet his tax burden if he sells those items or takes loans agains them.

[Egalitariat]

197. My point was that Bill Gates has very little income

(as defined by the IRS) that is taxed. He has a ton of money, and he has a ton of money coming in every year, and he spends a ton of money, but not much of it is income that is taxed.

He'd pay much more in taxes he he was taxed on consumption than if by income. No doubt about that.

I get the suspicion that you don't understand how income is defined by the IRS.

[AP]

216. Like I said, you clearly don't get it.

Bill Gates's spending on items that depreciate to less than 20% is probably a tiny fraction of what he makes. He will recoup all his tax burden by selling his assets for a tax-free profit. He won't feel a sales tax at all. A big reason he won't fee it is because it will be a tiny percentage of his already too low tax burden.

That the US taxes most of Gates's earnings at 15% is a separate problem that isn't solved by allowing to pay an even lighter tax burden. Oh, and once you stop taxing income, you can be sure that Bill will get most of his wealth from his salary.

Duh.

[JHB]

165. See number 154 below.

The rich pay less, the poor get a subsidy (the "negative tax" you pint to above).

If it's revenue-neutral, that means a net loss for the middle.

What's fair about that?

[AP]

80. Poor people and many middle class people go into debt year over year.

They'd be paying tax on money they don't even have.

That would be new, eh?

And there's a spiral effect. You'd immediately be 20% more in debt thanks to the tax, which would mean you'd have to finance even more of your purchases, which means you'd be paying even more tax on money you didn't have. And as long as you don't make more than you spend, the compounded interest would soon become one of the biggest factors in ensuring that you keep paying more and more taxes on money you don't have.

How fucked up is that?

Bottom one fifth of Americans ALREADY have a net worth of NEGATVE 10,000 dollars.

The range of Americans spending all they make reaches disturbingly far into the middle class, and will only creep farther up the income scale with a flat tax. And that isn't fair.

[JHB]

42. Look at the details: it would effectively raise the tax rate...

...for the vast majority of taxpayers, while lowering it for high incomes ... and that's making the no-basis-in-history assumption that high-income people spent all they made.

Nor does it mention how, having abolished the IRS, they intend to collect these taxes nor what legal loopholes there may be. (Do they have to pay the tax if they buy a yacht from an offshore dealer? What if it's not a yacht, but anything?)

How are low-income people going to be rebated their tax money? At the register? Does that mean they have to be issued a "poor card" or something?

Or do they have to file with the (now abolished) IRS? And do what? Produce every single receipt for every purchase over the year? Which would mean that in order to not lose THEIR MONEY, they'd have to keep the scrupulous financial records (and we all know how easy it is to keep records consisting of hundreds, maybe thousands of usually-curled scraps of paper, sorting them, and tallying up the tax lines).


Why is it so left-wing to advocate progressive taxation, even with high marginal rates. Whatever ideological qualms you may have with it, it has the benefit of having been tried and been wildly successful in creating a prosperity shared in by the large majority of the population (look at the US economy in the 50s and 60s).

[rocktivity]

71. Rich get richer scheme

If median income, rather than poverty levels, were used as a yardstick, maybe.

:headbang:
rocknation

[gpandas]

76. "fair tax" reminds me of...

"no child left behind", and "clean air act", both misnomers to the super-max. repukes love the nifty phrase to describe the exact opposite to what they are actually doing. american sheeple love to shout meaningless slogans, without having to think.

[rman]

81. No amount of framing this issue (by calling it "fair" tax),

and no amount of pushing it over and over again (it's the zillionth time this comes up on DU), will result in acceptance of this sceme - or should i say "scam".

[JHB]

97. Consider the sponsorship of this bill:

http://www.geocities.com/cmcofer/asupp.html

54 Republicans and a conservative Democrat
(http://www.issues2000.org/House/Collin_Peterson.htm)

http://news.minnesota.publicradio.org/collections/special/2004/campaign/congress/peterson/
A country-music playing Democrat, Collin Peterson feels more at home with President Bush than he did with former President Bill Clinton. Then again, Peterson isn't shy about siding with Republicans on big votes, such as prescription drugs and HMO legislation.

Peterson was one of seven conservative Democrats who formed the "Blue Dog" coalition. It was a play on the phrase "Yellow-Dog Democrats," party loyalists who would vote for a yellow dog if it ran on the Democratic ticket. Some Blue Dogs say they were choked blue by their party. But Peterson has pulled back some, complaining that the coalition has become too partisan and too focused on elections.

[Name removed]

87. Deleted message

Message removed by moderator. Click here to review the message board rules.

[The Voice]

94. Please read this

http://www.itepnet.org/sale0904.pdf

A choice snip:

As a result, replacing most federal taxes with a national sales tax would mean very large tax increases on most Americans and very large tax cuts for the wealthy. The tables that follow speak for themselves, but a few important points can be highlighted:

# In virtually every state in the union, the bottom 80 percent of taxpayers would face much higher taxes under a sales tax. Nationwide, these tax increases would average about $3,200 a year.

# Put another way, on average the 80 percent of Americans in the middle- and lowerincome ranges would pay 51 percent more in sales taxes than they now pay in the federal taxes that the proposed national sales tax would replace.

# In contrast, the best-off one percent of all taxpayers nationwide would get average tax reductions of about $225,000 each per year.


You may wish to support tax and spend Repugnantomics by paying more taxes; however, I'll pass.

The Voice

[Misunderestimator]

95. Hey there fella! Welcome to DU... Who are you voting for this year?

Just kind of curious.

[SharonAnn]

96. So the wealthier you are, the lower the % you pay.

The poorer you are, the higher the % you pay.

Sounds like a typical rich Republican tax scheme.

[papau]

127. Well said :-)

:-)

[AP]

155. "Oh, but we'll only start imposing it at $X." Uh, HOW? And, what about the

middle class person just above that level? Why do they get shafted the most?

Oh, BECAUSE THOSE ARE THE PEOPLE CREATING ALL THE WEALTH FOR OTHER PEOPLE IN AMERICA! They're the engine of the economy which helps the super rich ride around in the back seat, making a lot of money without having to do anything.

The middle class is where the wealth is created, so we have to use unfair labor laws and the tax code to transfer the wealth to the top.

Now I get it.

[Kathy in Cambridge]

98. Which candidate would be more likely to support this: Bush or Kerry?

Is it safe to assume you'll be voting for President? If so, who is your chosen candidate?

[UdoKier]

120. What is it you guys say?

oh yeah, ZOT!

[JHB]

148. Does it tell you anything that the "think tanks" that support this...

...were by and large the home bases and support systems for the "experts" who came up with *'s Iraq policy?

And how did those "expert" plans fair when they tried them for real? Hmm?

These days, the "ivory tower pointy-headed" people are on K-Street, DC.

[MUSTANG_2004]

221. Which think tanks?

The one that I know of that advocates a sales tax (Cato), was opposed to invading Iraq, and, now that we did, they advocate a speedy retreat.

Here's one of their quotes from shortly after the invasion:
"Sometime in the coming months, U.S. forces may well happen upon some VX canisters or anthrax stockpiles, and the administration will breathe a sigh of relief. Such a discovery may change the media's focus, but it can't change the facts: This war did not avert a serious threat to the United States. Instead, it may have created new ones."

And here's a more recent quote:
"The Bush administration should commit to a formal plan for military withdrawal that would have all U.S. forces out of the country within one year of the handover of political sovereignty: July 1, 2005.
Military presence is too costly and fuels anti-U.S. propaganda."

[toddzilla]

154. The only argument you need to use...

Do the rich pay less under this plan? yes.

Do the poor pay less under this plan? yes.

Will there be enough money for the gov't to operate under this plan? yes.

So then, logically, the middle class will have to pay much more in taxes overall.

[Bridget Burke]

171. My opinion? Another Republican scam...

To save money for the very rich & screw everybody else.

Details? See other messages in this thread. And all the other threads touting Republican tax plans.

"Far lefters"?

[ComerPerro]

175. Its bullshit. Its regressive bullshit, and they have been pushing for this

For quite some time.

Its obvious why the wealthiest Americans want this: it is one of the most regressive tax proposals in history.

But I can't figure out why any average American would want this. It screws them over. Terribly.

[Dark]

186. Here is something I found on it.

No tax on used goods. No tax on business inputs. With the FairTax, if you choose to buy any new good or service, the sales tax is charged just as state sales taxes are computed today. If you choose to buy used goods - used car, used home, used appliances - you do not pay the FairTax. If, as a business owner or farmer, you buy something for strictly business purposes (not for personal consumption), you pay no consumption tax. So, in deciding what to buy, you get to choose whether or not you pay the federal consumption tax.

This to me will have positive and negative consequences. By having no tax on used goods, that will cut down drastically on production. People won't buy anything unless it's used becaused it would be so much cheaper.

Although, it would help the environment (less trash)

From: http://www.fairtaxvolunteer.org/smart/sketch.html

[AP]

195. No tax on used goods means that you can resell your goods, make back

the tax you originally paid, and have no tax burden over your lifetime.

That's a big part of how regressive the tax scheme is.

[camero]

194. This tripe again?

Next, you'll more than likely tell us how "trickle down" is good for the economy.

Nothing fair about the "fair tax". It's a regressive sales tax in disguise.

[freestyle]

198. As described on that website, this is horrible.

Especially the total exemption of business to business transactions. That is such a huge loophole that the system is unworkable from the outset. I could see plenty of people setting up dummy businesses so that they personally consume nothing and escape all taxation. People already use corporate structures to reduce taxation, and you can be damn sure they would use them to escape it entirely. The end result is Leona Helmsley's idea that only the little people pay taxes.

[AP]

218. Not taxing business-to-business transactions is important for sales tax,

but it's also a good example of why the sales tax is such a bad tax to begin with, and an example of why it's a really bad idea to try to get all your revenue from it.

It's good to encourage many companies involved in the supply chain. If you taxed every business to business transaction, you'd encourage one company controlling the entire chain of distribution. Every business would be a vertically integrated monopoly because they could sell things at a lower price than companies which add 20% to the cost of an item every time it changes hands before it reaches the consumer.

[Darranar]

207. A very bad idea...

firstly, this would essentially establish a flat tax, which would harm the poor, and secondly, money that the rich don't spend would simply stagnate.

[Strawman]

208. What Dems in Congress support this?

Tell me, so I can donate to their primary opponents in the next election.

[JHB]

211. See #97 above.

Sponsors & cosponsors are 54 Republicans and 1 "blue dog" Dem.

[UdoKier]

209. Why is this disruptor thread still here?

It's a disgusting anti-poor people GOP proposal, has NOTHING to do with fairness, posted by a very dubious person.