FairTax in Ways and Means committee...

[insein]

I had an interesting evening tonight. I went to a market research study based on "voting" as the general category. So i assumed politics was on the bill and went there as the young conservative. Eventually it was discovered that we were to discuss the Fairtax. For those unaware of what the fairtax is heres a quick link to give you the run down.

http://www.fairtax.org/

Heres a list of the cosponsors along with John Linder (R) of GA.

http://thomas.loc.gov/cgi-bin/bdquery/z?d108:HR00025:@@@P

COSPONSORS(54), ALPHABETICAL [followed by Cosponsors withdrawn]: (Sort: by date)
Rep Akin, W. Todd [MO-2] - 4/10/2003 Rep Baker, Richard H. [LA-6] - 3/26/2003
Rep Bartlett, Roscoe G. [MD-6] - 10/2/2003 Rep Beauprez, Bob [CO-7] - 6/2/2003
Rep Bilirakis, Michael [FL-9] - 11/18/2003 Rep Bonilla, Henry [TX-23] - 4/2/2003
Rep Brady, Kevin [TX-8] - 3/18/2003 Rep Burns, Max [GA-12] - 3/31/2003
Rep Burton, Dan [IN-5] - 5/6/2004 Rep Carter, John R. [TX-31] - 3/31/2003
Rep Collins, Mac [GA-8] - 2/25/2003 Rep Cubin, Barbara [WY] - 3/2/2004
Rep Culberson, John Abney [TX-7] - 2/25/2003 Rep Deal, Nathan [GA-10] - 3/17/2003
Rep DeLay, Tom [TX-22] - 3/26/2003 Rep DeMint, Jim [SC-4] - 9/3/2003
Rep Doolittle, John T. [CA-4] - 3/25/2003 Rep Duncan, John J., Jr. [TN-2] - 9/24/2003
Rep Flake, Jeff [AZ-6] - 2/25/2003 Rep Franks, Trent [AZ-2] - 4/2/2003
Rep Gingrey, Phil [GA-11] - 3/31/2003 Rep Goss, Porter J. [FL-14] - 5/11/2004
Rep Granger, Kay [TX-12] - 7/21/2003 Rep Graves, Sam [MO-6] - 4/27/2004
Rep Gutknecht, Gil [MN-1] - 3/26/2003 Rep Hall, Ralph M. [TX-4] - 2/25/2003
Rep Hefley, Joel [CO-5] - 4/3/2003 Rep Hensarling, Jeb [TX-5] - 6/2/2003
Rep Hoekstra, Peter [MI-2] - 2/6/2004 Rep Isakson, Johnny [GA-6] - 9/3/2003
Rep Jones, Walter B., Jr. [NC-3] - 9/3/2003 Rep Keller, Ric [FL-8] - 9/15/2003
Rep King, Steve [IA-5] - 2/25/2003 Rep Kingston, Jack [GA-1] - 4/8/2003
Rep Lewis, Jerry [CA-41] - 4/2/2003 Rep McInnis, Scott [CO-3] - 10/8/2003
Rep Miller, Candice S. [MI-10] - 6/2/2004 Rep Miller, Gary G. [CA-42] - 4/30/2003
Rep Miller, Jeff [FL-1] - 4/30/2003 Rep Neugebauer, Randy [TX-19] - 10/29/2003
Rep Norwood, Charlie [GA-9] - 3/17/2003 Rep Otter, C. L. (Butch) [ID-1] - 7/14/2004
Rep Pearce, Stevan [NM-2] - 3/25/2003 Rep Peterson, Collin C. [MN-7] - 1/7/2003
Rep Sessions, Pete [TX-32] - 5/11/2004 Rep Shadegg, John B. [AZ-3] - 3/31/2003
Rep Smith, Nick [MI-7] - 7/9/2004 Rep Stearns, Cliff [FL-6] - 5/4/2004
Rep Tancredo, Thomas G. [CO-6] - 4/30/2003 Rep Taylor, Charles H. [NC-11] - 9/15/2003
Rep Thornberry, Mac [TX-13] - 3/11/2004 Rep Toomey, Patrick J. [PA-15] - 3/10/2004
Rep Wilson, Joe [SC-2] - 5/22/2003 Rep Young, Don [AK] - 4/30/2003
Sen Chambliss, Saxby [GA] (introduced 7/30/2003) Sen Miller, Zell [GA] - 7/31/2003

With those in bold i think i can trust it.

At first the way it was presented had me skeptical. I see the benefits if the new system is implemented properly. Im just worried about it being a bigger scam because the government never truly does with less money. Also my one big worry is the proposal is that a poverty line is drawn. Everyone receives 23% of that poverty line in the form of a rebate. So say the poverty line is $18000. Whether you make $500,000 or $10,000, you still get a rebate of $4140. I see this as a big welfare check to those that have no incentive to get a job. But on the whole it seems like a good idea. It cuts the fat out of the tax code which is ridiculous right now and makes it simply "fair" for everyone.

According to the presenter, it ill will be presented to congress within the next 2 to 3 months. So be on the lookout. It was an interesting evening to say the least.

 

[ScreamingEagle]

Im just worried about it being a bigger scam because the government never truly does with less money.

So am I....kept wondering why there is all this sudden fanfare to change over to a "Fair Tax" system...then it hit me when you said that...

It's not really about smoothing out the current system. They've let us put up with the IRS hassles for years. It's not really about poverty lines or levels nor about business creation either. It's not even about being "fair" to the public...in fact, you could say it's just the opposite! What it's really all about is "their" (government) money or should I say their potential lack of it. Same old story folks....follow the money.

Why are some in Congress so eager to suddenly lay a whopping 23% sales tax on top of us? You can bet it is for the money. I now suspect that it is being pushed in order to prevent a slump in tax receipts that they see coming in the future years from business slowdowns. With all the outsourcing of labor and materials and with more business moving overseas there is less and less tax income from the business world. What better way to prevent a backslide in total taxes than to replace those losses into the form of a hefty tax on the people instead? And then call it a "Fair Tax" to make it marketable.

If we just let the system remain the same, the cost of things we buy should be going down because it costs less and less to make them so therefore we should be paying less and less for them...and therefore less taxes on them as well. Some think we are entering a financial period of deflation due to excess capacity. However, with the incredibly high 23% Fair Tax on every purchase, our costs will not go down as they should.

"Fair" Tax be

 

[Annie]

So am I....kept wondering why there is all this sudden fanfare to change over to a "Fair Tax" system...then it hit me when you said that...

It's not really about smoothing out the current system. They've let us put up with the IRS hassles for years. It's not really about poverty lines or levels nor about business creation either. It's not even about being "fair" to the public...in fact, you could say it's just the opposite! What it's really all about is "their" (government) money or should I say their potential lack of it. Same old story folks....follow the money.

Why are some in Congress so eager to suddenly lay a whopping 23% sales tax on top of us? You can bet it is for the money. I now suspect that it is being pushed in order to prevent a slump in tax receipts that they see coming in the future years from business slowdowns. With all the outsourcing of labor and materials and with more business moving overseas there is less and less tax income from the business world. What better way to prevent a backslide in total taxes than to replace those losses into the form of a hefty tax on the people instead? And then call it a "Fair Tax" to make it marketable.

If we just let the system remain the same, the cost of things we buy should be going down because it costs less and less to make them so therefore we should be paying less and less for them...and therefore less taxes on them as well. Some think we are entering a financial period of deflation due to excess capacity. However, with the incredibly high 23% Fair Tax on every purchase, our costs will not go down as they should.

"Fair" Tax be

Well if you are above 50k or so, you will pay much less. Then there are us others...

 

[Mr. P]

Well if you are above 50k or so, you will pay much less. Then there are us others...

Under 50k? There are no brackets in the fair tax. Your tax will be payed according to how much you buy.

 

[Annie]

Under 50k? There are no brackets in the fair tax. Your tax will be payed according to how much you buy.

Yep, 100%. Unfortunately there are those of us that are in the 'working poor' with no 'extra income'. I cannot 'put aside' monies for 401k or anything like that. It takes all of my check to survive-you are right, no brackets.

On the other hand. If my needs are met by an income of 50k, I'll be taxed on that. The rest is mine to save, without tax. Very good deal, if I make well over 50k.

 

[Mr. P]

Yep, 100%. Unfortunately there are those of us that are in the 'working poor' with no 'extra income'. I cannot 'put aside' monies for 401k or anything like that. It takes all of my check to survive-you are right, no brackets.

On the other hand. If my needs are met by an income of 50k, I'll be taxed on that. The rest is mine to save, without tax. Very good deal, if I make well over 50k.

Check the link in the first post K..Your take home will increase..you'll be better off..

 

[ScreamingEagle]

Check the link in the first post K..Your take home will increase..you'll be better off..

How can you say better off if goods continue to cost less and less? A person paying taxes the regular way will be able to buy more goods with their dollar. Less, if they pay almost a 25% premium for them.

As Kathianne indicates, there is a break even point. By placing the tax on the consumption end, there is the potential for more tax. By keeping the tax on the income end, there is the potential for buying more goods - even by those with less income (unless taxes were increased).

 

[Mr. P]

How can you say better off if goods continue to cost less and less? A person paying taxes the regular way will be able to buy more goods with their dollar. Less, if they pay almost a 25% premium for them.

As Kathianne indicates, there is a break even point. By placing the tax on the consumption end, there is the potential for more tax. By keeping the tax on the income end, there is the potential for buying more goods - even by those with less income (unless taxes were increased).

Taxes can always be increased..The Fair Tax gives YOU control over how MUCH tax you pay vs an income tax..

You both should look into this a bit more..I think. You're paying more than 30% now.

 

[Annie]

Check the link in the first post K..Your take home will increase..you'll be better off..

No, I won't. I've been in contact with one of the originators of this, from U of Chicago. There are very serious people pushing for this. Serious in the way of thinking it's a good alternative, and serious in credentials to be heard.

I've argued with this friend, whom I've also gotten blottoed with, that there are real problems for those of us that are working, some at 'essential' positions, that cannot make ends meet now. This will throw us into poverty, because there are no provision for exemptions.

 

[Nuc]

Sales tax based schemes discriminate against young people. New families need to buy cars, furniture, appliances and so on. Old people already have that stuff.

 

[Mr. P]

No, I won't. I've been in contact with one of the originators of this, from U of Chicago. There are very serious people pushing for this. Serious in the way of thinking it's a good alternative, and serious in credentials to be heard.

I've argued with this friend, whom I've also gotten blottoed with, that there are real problems for those of us that are working, some at 'essential' positions, that cannot make ends meet now. This will throw us into poverty, because there are no provision for exemptions.

You're sounding like a lib, K.
"I'll have no exemptions", and "This will throw us into poverty", didn't you already say you were poor?

Anyway, tell me, why won't this work for you?
Really, I want to know from your angle why you don't think this will work.
I think it's a great idea and FAIR for all..

 

[Mr. P]

Sales tax based schemes discriminate against young people. New families need to buy cars, furniture, appliances and so on. Old people already have that stuff.

LMAO...did someone give these things to OLD people?
Hell no, they bought it and paid the TAX..lame Nuc...LAME..

 

[insein]

Now i had the same reactions at the study. How would this possibly work. According to the presenter and Neal Bortz' book, the Fair tax would bring in equal if not more taxes for the government because it would tax those who dont pay any taxes right now. People like illegal immigrants and drug dealers who skirt the system by working under the table. They would then get their cut from them through the products they buy like cigarettes, food and gas.

It also doesnt tax supplies. Selling raw materials or even partial materials to manufacturers will NOT be taxed. Only the end product would be taxed. So if a carpenter went to Home Depot and bought materials to build a house, he wouldnt pay any taxes. Only the person buying the home would pay taxes on the sale. Then if the house is resold, taxes would not be paid on it by the person buying the house used. Same with Cars. Used cars would have zero tax on them. Only new cars would be taxed. The idea behind this is to promote competition by eliminating Federal costs on businesses.

The main drawbacks i forsee are that the state and local taxes are NOT affected. So the biggest scam, property taxes will still be in effect in most of the country. However, the idea of not paying the government 30 to 40% of what you MAKE is an idea i can see merit in. Eliminating complicated taxes is a start in the right direction.

Another good point is that a national Sales tax is visible. Right now, taxes are an invisible costs to all Americans. If the government raises the sales tax, it will make headlines just like when gas prices go up. There will be a public outcry to explain why they are being raised. Right now, if taxes get raised, 90% of the public is none the wiser.

This is what people have been craving. One tax plan for all people. Eliminate class warfare that the tax brakets create. ITs not something that overnight will change all that ailes us but its definitely a step in the right direction.

 

[Annie]

You're sounding like a lib, K.
"I'll have no exemptions", and "This will throw us into poverty", didn't you already say you were poor?

Anyway, tell me, why won't this work for you?
Really, I want to know from your angle why you don't think this will work.
I think it's a great idea and FAIR for all..

Wrong Mr P. I said 'working poor', at least for taxes. I qualify for earned income credit, which seems to those with money some kind of 'give away', but all it does is reduce how much I do pay in taxes. As for federal taxes, I pay very little. They still get SSI.

Now I already pay 6.75 on all purchases to the great state, of Illinois. Now you want that to increase to nearly 30%, with NO guarantee that they won't increase it? The states are not going to remove theirs.

Federal taxes on gasoline are not that high, but now we're going to add 23%. Wow, just think of that price increase. Again, won't really hit many of the SUV drivers, but most definately could make it impossible for some to get to their jobs.

I own my own home, I'd like to be able to continue doing so.

Basically this is a way to make it possible for those who REALLY have some money, to have most of it sheltered from taxes. Savings would increase dramatically for them.

 

[Nuc]

LMAO...did someone give these things to OLD people?
Hell no, they bought it and paid the TAX..lame Nuc...LAME..

My point is that couples starting out get hit with huge taxes because there are large expenditures involved with starting a family.

Old people bought their stuff over the course of decades. What is difficult to understand here?

 

[KarlMarx]

Whether you are for it or against it, this tax will have one benefit.... it will help people realize just how much government costs....

I presented an example on another post.....

http://www.usmessageboard.com/forums/showpost.php?p=282674&postcount=12

And since there won't be a payroll deduction, you'll have to consciously pay it each time you consume goods and services (with payroll deduction, people tend to think of the money as not being there)....

Under such a system, each time a politician promises a government give away .... they'll either lose the election or get a lot of scathing mail.... so that will stop....

Under the current system, the rich are the ones pay most of the taxes, and therefore, most of the cost of government is borne by them.

The one party that stands to lose the most by this law is, of course, the Democratic Party. They have maintained their hold on power by being generous with other people's money (which is what Machiavelli, in "The Prince", suggests for the despot that wishes to hold onto power).

Of course, the next step that must happen to make such a tax truly "fair" is to reduce government spending ... a lot. Otherwise, it will be a cinch that such a "value added tax" will eventually be in the neighborhood of 50% or better.

 

[KarlMarx]

Wrong Mr P. I said 'working poor', at least for taxes. I qualify for earned income credit, which seems to those with money some kind of 'give away', but all it does is reduce how much I do pay in taxes. As for federal taxes, I pay very little. They still get SSI.

Now I already pay 6.75 on all purchases to the great state, of Illinois. Now you want that to increase to nearly 30%, with NO guarantee that they won't increase it? The states are not going to remove theirs.

Federal taxes on gasoline are not that high, but now we're going to add 23%. Wow, just think of that price increase. Again, won't really hit many of the SUV drivers, but most definately could make it impossible for some to get to their jobs.

I own my own home, I'd like to be able to continue doing so.

Basically this is a way to make it possible for those who REALLY have some money, to have most of it sheltered from taxes. Savings would increase dramatically for them.

My feeling also, is that for such a tax to be fair, it will be simpler (and much easier) to exclude housing, medicine, food and clothing from such taxation rather than rebate the taxes on the first 50,000 dollars. Since most people in Kathianne's situation spend most of their disposable income on such things, they would, in effect, be paying little in federal taxes.

 

[insein]

My feeling also, is that for such a tax to be fair, it will be simpler (and much easier) to exclude housing, medicine, food and clothing from such taxation rather than rebate the taxes on the first 50,000 dollars. Since most people in Kathianne's situation spend most of their disposable income on such things, they would, in effect, be paying little in federal taxes.

But then that wouldnt be fair now would it. I asked the same question and then came to realize, if we start restricting one item (food, medicine, clothing, etc) over another to NOT be taxed, lobbyist will storm Washington and demand that congressmen make THEIR product tax free. It would never end. Tax everything so everyone pays on what the consume.

As for Kathianne's concerns, you still receive a credit. Except everyone receives a credit instead of just those meeting certain criteria. You get 23% of the poverty line back as a credit. So if the poverty line is $18,000 then we all receive $4140 back in January every year. If they raise or lower that tax rate, then you receive that percentage of the poverty line back. So people will still get a sizeable credit back on the items they buy. If your poorer, it will be a bigger size you get back percentage wise but itll be the same for everyone amount wise.

 

[Mr. P]

Check out the example tax returns folks, it's better..
As far as I know there will not be a return, it's just a comparison.

http://fairtax.org/tax_returns.html

 

[KarlMarx]

But then that wouldnt be fair now would it. I asked the same question and then came to realize, if we start restricting one item (food, medicine, clothing, etc) over another to NOT be taxed, lobbyist will storm Washington and demand that congressmen make THEIR product tax free. It would never end. Tax everything so everyone pays on what the consume.

As for Kathianne's concerns, you still receive a credit. Except everyone receives a credit instead of just those meeting certain criteria. You get 23% of the poverty line back as a credit. So if the poverty line is $18,000 then we all receive $4140 back in January every year. If they raise or lower that tax rate, then you receive that percentage of the poverty line back. So people will still get a sizeable credit back on the items they buy. If your poorer, it will be a bigger size you get back percentage wise but itll be the same for everyone amount wise.

The approach I suggested previously is exactly how the sales tax is implemented here in New York State (and, I assume, in other states as well). Since you don't pay tax to begin with, the money is in your pocket now, you don't have to wait for a rebate check and have to fill out forms to boot.

The problem I see with the proposed approach is that it is still focused on income, the government would have to determine the "poverty line" and so on. It's too complicated.

Businesses will be responsible for collecting taxes, there won't be a need for a large beauracracy called the IRS.