Taxing consumption versus taxing earnings?

[g5000]

Something to sink your teeth into:

Fair Tax Act of 2011: Read The Bill: H.R. 25 - GovTrack.us

SEC. 101. INCOME TAXES REPEALED.

Subtitle A of the Internal Revenue Code of 1986 (relating to income taxes and self-employment taxes) is repealed.

SEC. 102. PAYROLL TAXES REPEALED.

(a) In General- Subtitle C of the Internal Revenue Code of 1986 (relating to payroll taxes and withholding of income taxes) is repealed.

(b) Funding of Social Security- For funding of the Social Security Trust Funds from general revenue, see section 201 of the Social Security Act (42 U.S.C. 401).

SEC. 103. ESTATE AND GIFT TAXES REPEALED.

Subtitle B of the Internal Revenue Code of 1986 (relating to estate and gift taxes) is repealed.

TITLE II--SALES TAX ENACTED

‘SEC. 101. IMPOSITION OF SALES TAX.

‘(a) In General- There is hereby imposed a tax on the use or consumption in the United States of taxable property or services.

‘(b) Rate-

‘(1) FOR 2013- In the calendar year 2013, the rate of tax is 23 percent of the gross payments for the taxable property or service.

‘(2) FOR YEARS AFTER 2013- For years after the calendar year 2013, the rate of tax is the combined Federal tax rate percentage (as defined in paragraph (3)) of the gross payments for the taxable property or service.

‘(3) COMBINED FEDERAL TAX RATE PERCENTAGE- The combined Federal tax rate percentage is the sum of--

‘(A) the general revenue rate (as defined in paragraph (4)),

‘(B) the old-age, survivors and disability insurance rate, and

‘(C) the hospital insurance rate.

‘(4) GENERAL REVENUE RATE- The general revenue rate shall be 14.91 percent.

 

[manifold]

Income taxes tax good behavior (production).

I am coming around to the Fair Tax, which taxes consumption. I kind of support something like the GST they have in Canada, but the Fair Tax seems a lot simpler, cheaper, and more transparent, and tougher to cheat.

The Fair Tax is a national sales tax of sorts.

Under the Fair Tax, everyone gets a "prebate" to offset the regressive nature of a sales tax.

The Fair Tax eliminates the need for Social Security tax, income tax, Medicare tax, death tax, capital gains tax, EVERY tax. Therefore, it eliminates a shitload of collection points. Less paperwork for employers and everyone else except retailers. And the IRS can shrink to a tiny fraction of its current size. And you don't need H&R block to do your taxes any more.

It also gives exporters an advantage since exports aren't taxed at all. Business to business transactions are not taxed like they are in a VAT.

To cheat on the Fair Tax, both the buyer and seller would have to agree to cheat, and I don't see that happening at Best Buy.

Plus, anyone who earns their income illegally would have to pay a sales tax.

The best part is that everyone would know instantly when Congress had raised their taxes, and would feel the effects immediately.

There would be no hidden tax increases.

And nobody, not even Big Oil or Wall Street, gets a carve-out.

The oxymoronic "fair tax" is a big fat joke, that does absolutely nothing to address the completely out of control spending that's going on at all levels.

We need to slash spending by no less than half, not find a "fairer" way to make us all defacto economic slaves to politicians and bureaucrats, who are supposed to be our servants.

The two are not mutually exclusive. This thread is about fair taxation. If you have thoughts about that, please share them.

 

[Oddball]

Something to sink your teeth into:

Read The Bill: H.R. 25 - GovTrack.us

SEC. 101. INCOME TAXES REPEALED.

Subtitle A of the Internal Revenue Code of 1986 (relating to income taxes and self-employment taxes) is repealed.

SEC. 102. PAYROLL TAXES REPEALED.

(a) In General- Subtitle C of the Internal Revenue Code of 1986 (relating to payroll taxes and withholding of income taxes) is repealed.

(b) Funding of Social Security- For funding of the Social Security Trust Funds from general revenue, see section 201 of the Social Security Act (42 U.S.C. 401).

SEC. 103. ESTATE AND GIFT TAXES REPEALED.

Subtitle B of the Internal Revenue Code of 1986 (relating to estate and gift taxes) is repealed.

TITLE II--SALES TAX ENACTED

‘SEC. 101. IMPOSITION OF SALES TAX.

‘(a) In General- There is hereby imposed a tax on the use or consumption in the United States of taxable property or services.

‘(b) Rate-

‘(1) FOR 2013- In the calendar year 2013, the rate of tax is 23 percent of the gross payments for the taxable property or service.

‘(2) FOR YEARS AFTER 2013- For years after the calendar year 2013, the rate of tax is the combined Federal tax rate percentage (as defined in paragraph (3)) of the gross payments for the taxable property or service.

‘(3) COMBINED FEDERAL TAX RATE PERCENTAGE- The combined Federal tax rate percentage is the sum of--

‘(A) the general revenue rate (as defined in paragraph (4)),

‘(B) the old-age, survivors and disability insurance rate, and

‘(C) the hospital insurance rate.

‘(4) GENERAL REVENUE RATE- The general revenue rate shall be 14.91 percent.

Snowball's chance in hell.

 

[Oddball]

Income taxes tax good behavior (production).

I am coming around to the Fair Tax, which taxes consumption. I kind of support something like the GST they have in Canada, but the Fair Tax seems a lot simpler, cheaper, and more transparent, and tougher to cheat.

The Fair Tax is a national sales tax of sorts.

Under the Fair Tax, everyone gets a "prebate" to offset the regressive nature of a sales tax.

The Fair Tax eliminates the need for Social Security tax, income tax, Medicare tax, death tax, capital gains tax, EVERY tax. Therefore, it eliminates a shitload of collection points. Less paperwork for employers and everyone else except retailers. And the IRS can shrink to a tiny fraction of its current size. And you don't need H&R block to do your taxes any more.

It also gives exporters an advantage since exports aren't taxed at all. Business to business transactions are not taxed like they are in a VAT.

To cheat on the Fair Tax, both the buyer and seller would have to agree to cheat, and I don't see that happening at Best Buy.

Plus, anyone who earns their income illegally would have to pay a sales tax.

The best part is that everyone would know instantly when Congress had raised their taxes, and would feel the effects immediately.

There would be no hidden tax increases.

And nobody, not even Big Oil or Wall Street, gets a carve-out.

The oxymoronic "fair tax" is a big fat joke, that does absolutely nothing to address the completely out of control spending that's going on at all levels.

We need to slash spending by no less than half, not find a "fairer" way to make us all defacto economic slaves to politicians and bureaucrats, who are supposed to be our servants.

The two are not mutually exclusive. This thread is about fair taxation. If you have thoughts about that, please share them.

I already have...The only fair way to tax is make those who use public services pay for them via excise taxes and user fees.

 

[manifold]

yep.

I could be on board with this too under one, fairly significant, condition - That the most consumed resource in the entire economy also be subject to the tax, and that's labor.

how do you plan on taxing that? You mean services?

The same way any other consumption is taxed, the amount spent multiplied by the tax rate. I'm not trying to give a flippant answer, but it's as simple as that. Say the rate is 10%. A company buys raw materials for say $100,000, and pays a tax of $10,000. The same company then buys $75,000 worth of labor to manufacture something from those materials, and pays a tax of $7,500.

 

[manifold]

The oxymoronic "fair tax" is a big fat joke, that does absolutely nothing to address the completely out of control spending that's going on at all levels.

We need to slash spending by no less than half, not find a "fairer" way to make us all defacto economic slaves to politicians and bureaucrats, who are supposed to be our servants.

The two are not mutually exclusive. This thread is about fair taxation. If you have thoughts about that, please share them.

I already have...The only fair way to tax is make those who use public services pay for them via excise taxes and user fees.

Who pays for the military?

 

[asaratis]

Income taxes tax good behavior (production).

I am coming around to the Fair Tax, which taxes consumption. I kind of support something like the GST they have in Canada, but the Fair Tax seems a lot simpler, cheaper, and more transparent, and tougher to cheat.

The Fair Tax is a national sales tax of sorts.

Under the Fair Tax, everyone gets a "prebate" to offset the regressive nature of a sales tax.

The Fair Tax eliminates the need for Social Security tax, income tax, Medicare tax, death tax, capital gains tax, EVERY tax. Therefore, it eliminates a shitload of collection points. Less paperwork for employers and everyone else except retailers. And the IRS can shrink to a tiny fraction of its current size. And you don't need H&R block to do your taxes any more.

It also gives exporters an advantage since exports aren't taxed at all. Business to business transactions are not taxed like they are in a VAT.

To cheat on the Fair Tax, both the buyer and seller would have to agree to cheat, and I don't see that happening at Best Buy.

Plus, anyone who earns their income illegally would have to pay a sales tax.

The best part is that everyone would know instantly when Congress had raised their taxes, and would feel the effects immediately.

There would be no hidden tax increases.

And nobody, not even Big Oil or Wall Street, gets a carve-out.

You get the message. The Fair Tax is NOT regressive. The Fair Tax is unavoidable (no way to get around paying it). The Fair Tax would drastically reduce the size of the IRS. The Fair Tax would eliminate the need for the government to know how much income you make.

There's not much anybody could do to make it any fairer.

Since it reduces the size of government and reduces the control that government has over the people...IT WILL NEVER HAPPEN! Liberals will fight tooth and nail to maintain BIG government! Liberalism is a mental disorder.

 

[konradv]

Wow, a real topic that asks a good question. Are you lost?

State tax systems are terribly regressive, if the bottom pay no federal tax they damned sure foot the bills for the states.

http://www.itepnet.org/whopays3.pdf

My own state, Alabama, comes in near the top for it's very low top rate and heavy consumption taxes.

I thought a low top rate was supposed to stimulate the economy, because the "job creators" would have more money to do their thing! Why would Alabama be 46th in income while my home state, MD-the bluest of the blue, is #1?!?!

I know we're right next to DC, but not everybody works there.

List of U.S. states by income - Wikipedia, the free encyclopedia

 

[g5000]

Here's the prebate part in the Fair Tax Act:

‘SEC. 301. FAMILY CONSUMPTION ALLOWANCE.
Each qualified family shall be eligible to receive a sales tax rebate each month. The sales tax rebate shall be in an amount equal to the product of—
‘(1) the rate of tax imposed by section 101,
and
(2) the monthly poverty level.

According to this site, the current monthly poverty level for a family of four is $1,921.

The rate of tax in section 101 is 23 percent.

So the product of the tax and the monthly poverty level means a rebate each month of $441.83 for a family of four.

That is a check that would come to EVERY family of four every month. Not just poor families. The definition of "qualified family" is in Section 302:

SEC. 302. QUALIFIED FAMILY.
(a) GENERAL RULE.—For purposes of this chapter, the term ‘qualified family’ shall mean 1 or more family members sharing a common residence. All family members sharing a common residence shall be considered as part of 1 qualified family.

So the first $441.83 of sales taxes you pay each month would be returned to you.

 

[chikenwing]

So you're saying a system that only taxes consumption would be best?

yep.

I could be on board with this too under one, fairly significant, condition - That the most consumed resource in the entire economy also be subject to the tax, and that's labor.

mmmmmmmm what would be the rate .oo1 %? isn't an income tax already doing that??

It would be a step back,and a huge new bureaucracy,we have the sale tax system basically in place.

 

[konradv]

Income taxes tax good behavior (production).

I am coming around to the Fair Tax, which taxes consumption. I kind of support something like the GST they have in Canada, but the Fair Tax seems a lot simpler, cheaper, and more transparent, and tougher to cheat.

The Fair Tax is a national sales tax of sorts.

Under the Fair Tax, everyone gets a "prebate" to offset the regressive nature of a sales tax.

The Fair Tax eliminates the need for Social Security tax, income tax, Medicare tax, death tax, capital gains tax, EVERY tax. Therefore, it eliminates a shitload of collection points. Less paperwork for employers and everyone else except retailers. And the IRS can shrink to a tiny fraction of its current size. And you don't need H&R block to do your taxes any more.

It also gives exporters an advantage since exports aren't taxed at all. Business to business transactions are not taxed like they are in a VAT.

To cheat on the Fair Tax, both the buyer and seller would have to agree to cheat, and I don't see that happening at Best Buy.

Plus, anyone who earns their income illegally would have to pay a sales tax.

The best part is that everyone would know instantly when Congress had raised their taxes, and would feel the effects immediately.

There would be no hidden tax increases.

And nobody, not even Big Oil or Wall Street, gets a carve-out.

You get the message. The Fair Tax is NOT regressive. The Fair Tax is unavoidable (no way to get around paying it). The Fair Tax would drastically reduce the size of the IRS. The Fair Tax would eliminate the need for the government to know how much income you make.

There's not much anybody could do to make it any fairer.

Since it reduces the size of government and reduces the control that government has over the people...IT WILL NEVER HAPPEN! Liberals will fight tooth and nail to maintain BIG government! Liberalism is a mental disorder.

I'd fight it because the rich wouldn't be paying their fair share. If lower taxes really led to more jobs, sure. There's just no evidence that that's the case.

 

[g5000]

I'd fight it because the rich wouldn't be paying their fair share. If lower taxes really led to more jobs, sure. There's just no evidence that that's the case.

How would the rich not be paying their fair share? The poor spend a larger proportion of their income on necessities. So they buy groceries, and they get about $442 of that back from the government.

A rich guy buys a $50 million dollar airplane and pays $11.5 million in taxes on it. And HE gets $442 of that back from the government.

 

[Oddball]

The two are not mutually exclusive. This thread is about fair taxation. If you have thoughts about that, please share them.

I already have...The only fair way to tax is make those who use public services pay for them via excise taxes and user fees.

Who pays for the military?

Imposts and duties.....As opposed to tariffs, which are protectionist.

Then, we can greatly reduce the spending on a standing military by closing the scads of bases America is maintaining on foreign soil, and returning to a state militia based form of national security and border enforcement.

 

[manifold]

yep.

I could be on board with this too under one, fairly significant, condition - That the most consumed resource in the entire economy also be subject to the tax, and that's labor.

mmmmmmmm what would be the rate .oo1 %? isn't an income tax already doing that??

It would be a step back,and a huge new bureaucracy,we have the sale tax system basically in place.

Right, and we could use the existing sales tax system. I'm simply saying add labor purchases to the list of taxable goods & services.

 

[Immanuel]

Fair flat tax. No exemptions, no excuses, no exceptions.

On earnings, with no distinction between wages and capital gains?

If so, I could be on board with that, if it were to replace all consumption taxes.

Problem is that so many of us would start working under the table that it isn't even funny. People would begin telling employer they will only work if they get paid in cash and no "W-2". Or they will not work that overtime if they get taxed on it. The rich (business owner's) will still earn income that they don't declare.

I think a flat tax is much fairer than what we have today. I don't think it will be fair.

I very much support "The Fair Tax", but do realize that it could have unintended consequences and that bothers me. Too bad we can't give it a try so to speak in a sample of the country i.e. a single state. Unfortunately it wouldn't work because of all the interstate commerce.

Immie

 

[Immanuel]

Income taxes tax good behavior (production).

I am coming around to the Fair Tax, which taxes consumption. I kind of support something like the GST they have in Canada, but the Fair Tax seems a lot simpler, cheaper, and more transparent, and tougher to cheat.

The Fair Tax is a national sales tax of sorts.

Under the Fair Tax, everyone gets a "prebate" to offset the regressive nature of a sales tax.

The Fair Tax eliminates the need for Social Security tax, income tax, Medicare tax, death tax, capital gains tax, EVERY tax. Therefore, it eliminates a shitload of collection points. Less paperwork for employers and everyone else except retailers. And the IRS can shrink to a tiny fraction of its current size. And you don't need H&R block to do your taxes any more.

It also gives exporters an advantage since exports aren't taxed at all. Business to business transactions are not taxed like they are in a VAT.

To cheat on the Fair Tax, both the buyer and seller would have to agree to cheat, and I don't see that happening at Best Buy.

Plus, anyone who earns their income illegally would have to pay a sales tax.

The best part is that everyone would know instantly when Congress had raised their taxes, and would feel the effects immediately.

There would be no hidden tax increases.

And nobody, not even Big Oil or Wall Street, gets a carve-out.

The oxymoronic "fair tax" is a big fat joke, that does absolutely nothing to address the completely out of control spending that's going on at all levels.

We need to slash spending by no less than half, not find a "fairer" way to make us all defacto economic slaves to politicians and bureaucrats, who are supposed to be our servants.

You are right, the fair tax does nothing to address government spending. Neither does the current income tax system nor the flat tax.

I don't understand why that is your reason for being against The Fair Tax.

Immie

 

[konradv]

I already have...The only fair way to tax is make those who use public services pay for them via excise taxes and user fees.

Who pays for the military?

Imposts and duties.....As opposed to tariffs, which are protectionist.

Then, we can greatly reduce the spending on a standing military by closing the scads of bases America is maintaining on foreign soil, and returning to a state militia based form of national security and border enforcement.

Please tell us the difference between duty and tariff. They're both imposed on things from abroad, so how can one be protectionist and the other not?

 

[DiamondDave]

Fair flat tax. No exemptions, no excuses, no exceptions.

On earnings, with no distinction between wages and capital gains?

If so, I could be on board with that, if it were to replace all consumption taxes.

Also with no ceiling and no floor... every dollar earned by every citizen, period, no exceptions, no loopholes

 

[Immanuel]

Something to sink your teeth into:

Read The Bill: H.R. 25 - GovTrack.us

SEC. 101. INCOME TAXES REPEALED.

Subtitle A of the Internal Revenue Code of 1986 (relating to income taxes and self-employment taxes) is repealed.

SEC. 102. PAYROLL TAXES REPEALED.

(a) In General- Subtitle C of the Internal Revenue Code of 1986 (relating to payroll taxes and withholding of income taxes) is repealed.

(b) Funding of Social Security- For funding of the Social Security Trust Funds from general revenue, see section 201 of the Social Security Act (42 U.S.C. 401).

SEC. 103. ESTATE AND GIFT TAXES REPEALED.

Subtitle B of the Internal Revenue Code of 1986 (relating to estate and gift taxes) is repealed.

‘SEC. 101. IMPOSITION OF SALES TAX.

‘(a) In General- There is hereby imposed a tax on the use or consumption in the United States of taxable property or services.

‘(b) Rate-

‘(1) FOR 2013- In the calendar year 2013, the rate of tax is 23 percent of the gross payments for the taxable property or service.

‘(2) FOR YEARS AFTER 2013- For years after the calendar year 2013, the rate of tax is the combined Federal tax rate percentage (as defined in paragraph (3)) of the gross payments for the taxable property or service.

‘(3) COMBINED FEDERAL TAX RATE PERCENTAGE- The combined Federal tax rate percentage is the sum of--

‘(A) the general revenue rate (as defined in paragraph (4)),

‘(B) the old-age, survivors and disability insurance rate, and

‘(C) the hospital insurance rate.

‘(4) GENERAL REVENUE RATE- The general revenue rate shall be 14.91 percent.

Snowball's chance in hell.

True, but that is because Congress has the power to enact it and enacting it would greatly deminish Congress' power to wield the tax stick in favor of their benefactors.

Immie

 

[Oddball]

You are right, the fair tax does nothing to address government spending. Neither does the current income tax system nor the flat tax.

I don't understand why that is your reason for being against The Fair Tax.

Immie

Because it's an unapportioned direct federal tax.

Because it's WAY too high.

Because its claim of being "revenue neutral" assumes that the feds will keep running idiotic welfare wealth redistribution scams, which need to be ended altogether.

Because it does absolutely nothing to address the massive bloat of federal spending and bureaucracy.

And that's just off the cuff.