Whats your thoughts on the Fair Tax?

[NebraskaDem]

From their site....

Simply put, the FairTax replaces the way we're currently taxed - based on our annual income - with a tax on goods and services. The FairTax is a voluntary “consumption" tax: the more you buy, the more you pay in taxes, the less you buy, the less you pay in taxes.
It's simple.

Everyone pays their fair share of taxes, and with the FairTax rebate, spending up to the poverty level is tax free. The Federal government is fully funded, including Social Security and Medicare, and you don't need an expert to determine your Federal taxes.
It's simple.

[Son of California]

1. I think its an awesome fucking idea

totally behind it.
Fuck the IRS

[BlueEyedSon]

5. Regressive. Tax. Sucks.

[Ready2Snap]

71. Just the name "Fair Tax" sends shivers down by back

If there's one thing we should be fully conscious of, and wary of, it's the Orwellian twisting of language
that is currently pervasive, and the hallmark of neo-con agenda legislation;
"Clear Skies Initiative", "The Clean Water Act", you name it, they put a "newspeak" name on it.
I don't see any difference this time.

[Wabbajack]

2. It's that a rightwing plan?

[TahitiNut]

4. Clues: Neil Boortz and John Linder (R-GA)

D'oh!

[TahitiNut]

3. FIRST, put a "fair" tax on BUYing stock.

Next, tell me about the "tax on goods and services" that corporations will be paying on everything they buy. The same rate? The same "exemptions" that actual living, breathing human beings get? How about those folks who do their buying overseas? Do they get taxed less on goods and services they buy from workers who aren't Americans?

[TahitiNut]

67. (crickets)

:shrug:

[Stil]

6. Call me a pessimist

But I am sure no matter what it sounds like our present congress, senate can make it unfair. It still would have several problems working. For instance internet sales. Especially ones from overseas. Or sales made on out of country trips.

[sendero]

7. If it sounds fair to you....

... then either you are rich or you are not too damn bright.

[NebraskaDem]

8. Curious...

what you mean by that?

[Name removed]

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[Name removed]

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[sendero]

14. Look...

... if you are legitimately thinking this idea has merit, well ok. But I do wish you'd think about it a minute before you come here and post all wide-eyed and giddy.

Because trust me, it is in fact bullshit.

You want a "fair" tax? Simple. An income tax with no deductions, credits or other distortions that is "progressive", i.e. you make $30K you pay 15%, you make $150K you pay 20% and so on.

All the rest of these proposals are just efforts to make the tax system even less fair, i.e., fuck over the poor and middle class and favor the rich.

[NebraskaDem]

19. All I did

was ask for peoples thoughts and then you said it was stupid so I asked why.

[Jim Sagle]

9. Sux.

[Name removed]

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[NebraskaDem]

13. Good god

I was just asking what you all thought...never fucking mind

[The Jacobin]

18. You need to get a thick skin quick

First of all, its a stupid idea. Expect stupid ideas to get bashed around here.

Second, even good ideas get bashed by somebody around here. This is the Democratic party - the party of arguments and ideas. If you can't defend your idea and shrug off attacks quickly, you'll never make it. It's not like the repugs and freepers where they wait to hear what the leaders say then parrot it until they croak.

[NebraskaDem]

20. I'll keep that in mind

thanks.

[WCGreen]

25. You just sounded like a lot of the republicans I know

who are enamored with the flat tax or a consumption tax....

Unfortunately, the countries economy is far too sophisticated to right now and far too many businesses decisions have been made based on the rules now in place that small businesses that depend on depreciation and other forms of write offs in order to purchase needed equipment, not just Hummers and SUV's, that to change over would put a fair amount of burden on their shoulders...

Also, all the responsibility for collection a consumption tax would now fall onto the small businesses that would have to push their record keeping to the nth degree just to comply forcing more and more cash into the hands of the large corporations....

I am sure that is not what you expect when touting or even floating the idea of an consumption tax....

Forgive me for calling you a freeper.....

I have no idea who the hell you are or what your intentions are....

I feel so cheap and republican like now.....

[bvar22]

44. You really need to ammend your post!

You said:
most of the poor people don't pay taxes now



You need to corrrect this statement to:

most of the poor people don't pay INCOME taxes now



The way you said only adds fuel to Rush Limbaugh.

The WORKING POOR pay a greater percentage of their income on taxes than the Middle Class or the RICH. Payroll Taxes and Sales Taxes take a HUGE wack out of the Working Poor's disposable income!

Even the destitute must pay Sales Taxes.

[Jeff In Milwaukee]

52. Same goes for businesses...

Mom and Pop business (even small corporations) pay a larger percentage of corporate income taxes than do the behemouth multi-nationals. But many of the small businesses drank the Kool-Aid and believe that eliminating the Estate Tax will somehow help them -- and consistently vote Republican.

[Medical Speaking]

69. Small Business would be hurt.

It would put my small business OUT OF BUSINESS.

[The Jacobin]

15. Total Crap

This couldn't be more regressive if it tried.

On the other hand, I am not totally opposed to a flat tax if (1) EVERYTHING is included - payroll income, dividends, capital gains, and all the accountant-created categories used by repugs to get out of taxes in the first place; and (2) the tax starts at every dollar earned over, say, twice the median income.

[Jeff In Milwaukee]

53. Gephardt developed a flat tax proposal

Don't have a link or I would post it. But what you describe is basically what he proposed. A dollar is a dollar and they all get taxes (with a base exemption for the working poor).

[GracieM]

61. "EVERYTHING is included"

An example of tax loopholes:

A family member of mine started buying rental properties about 25 years ago and now owns about 25 houses, 3 apartment complexes, and 5-6 commercial buildings. His goal each year is to get his taxable income as close to zero as possible and he gets damn close. All this while his net worth goes up between a quarter and half a million per year. His taxable income is $10K and his net worth goes up $500K?

[Telly Savalas]

16. How does the tax collection agency know you've spent above poverty level?

You carry around a card to swipe every time you buy something? You keep all of your receipts and pay taxes at year's end?

If we abolish the IRS, then whose responsibility is it to collect revenues for the federal government? Are they serious with this "voluntary" tax business, that'd we'd be on the honor system paying it? That's the dumbest suggestion I've heard all week.

It's really irritating that every right-wing crackpot idea for instituting a regressive tax code is justified by claiming that our current system is too complicated. Why stop with the tax code? If you ask me, our entire system of government is waaaay too complicated. It should be replaced with a much simpler feudal system like in medieval Europe.

[dcfirefighter]

22. They tax every purchase

and 'rebate' each SSN / family an amount equal to the tax rate x poverty level spending. e.g. each adult gets ~$10,000 x 0.28 = $2,800, and each child gets ~$900. All this in monthly payments. This makes it progessive as compared to CONSUMPTION, but as several have already pointed out, it is REGRESSIVE compared to income.

1 & 1/2 good things about it: 1) it eliminates the payroll tax (while retaining funding for SS) This makes labor at least 7% cheaper, which isn't insignificant. This should increase employment by several percent within a year or two. An increase in employment also means better wages for everyone.

2) half a good thing (i'm no protectionist) is that it is a defacto 30% tarriff on imported goods, while our exports are not taxed at all, anywhere in the chain of production.

One HORRIBLE thing that makes it a non-starter in my eyes is the elimination of taxes on investment income, more particularly investment income from non-produced things like land, water, crude oil, airwaves, etc. This, and this alones, leaves the system as an open-loop, positive feedback, cycle to accellerate the accumulation of unreproduceable wealth into the hands of a few.

[WCGreen]

28. Sorry DC but the collection would fall to the retailers....

Adn the payroll tax would still be collected... That is the only fair way to collect something that is based on your earned income.....

[dcfirefighter]

76. Nope, it replaces the payroll tax

according to their site. Retailers collect a sales tax, as retailers do in 48 states & the DC.

from their website (www.fairtax.org)
"Exactly what taxes are abolished? The FairTax is replacement, not reform. It replaces federal income taxes including, personal, estate, gift, capital gains, alternative minimum, Social Security, Medicare, self-employment, and corporate taxes."

Only retail sales tax & monthly check: for 2004 it would have been $178 / mo. per adult + $61 per dependent child. This covers spending at the poverty level (for now).

If it passed, ownership of real property would shortly be out of reach of anyone who didn't own any.

[Greyhound]

17. Just how is a billionaire paying the same tax as a disabled person fair?

[applegrove]

21. It is a dupe. We have consumption tax in Canada on top of income tax.

If you go to the mall - you pay some taxes. It covers our health care. But you HAVE TO HAVE INCOME TAX! Otherwise you end up with uber elites. Those rich freaks need to be connected in a wholeistic way to the rest of the people in the country. Consumption tax of 15% in Canada only covers part of our excellent programs. The smaller part.

This is a trick. And did you see the letter where they guy wants the 16th amendment to be repealed? That is your income tax act. Income tax is the only way to ensure 'you go it together'. The rich already seem to vote with their money by sending it all to the GOP think tanks. A consumption tax will just free them up to send more. To make more kool-aid drinkers.

What the rich want is to be making money all over the world through corporations.. and not have that come back to schools, etc. They will buy homes all over the world. They already back CEOs who send jobs willy-nilly and fund & influence the GOP.

Don't fall for it.

[NaturalHigh]

23. On the surface, it might not look so bad.

If you dig into it and do the math, though, it's not remotely feasible. I'm not one of the people who wants to tax the upper brackets 75% or more until they bleed, but I do believe in a progressive tax. This particular proposal would tax the hell out of the middle class. In order to generate enough revenue to run the country, the tax burden on just about everything you buy would increase the cost by at least a third.

On Edit: Please don't construe this as an attack. I was very interested in this idea when I first heard about it (or something like it) a couple of years ago. The more I read, though, the more I realized this was a disaster waiting to happen.

[welshTerrier2]

24. the "Fair Tax" is anything but ...

welcome to DU, NebraskaDem !!!

my "fair tax" is to tax wealth - not just income !! and not just spending ...

taxes are a contribution citizens make to the national, state and local priorities established by their duly elected officials ...

each citizen should be required to pay taxes based on their ability to pay ... that would be a "fair tax" ...

we have mistakenly come to accept the concept that ability to pay correlates directly to the amount of INCOME someone earns ... BUT THAT IS VERY WRONG !!! and focussing on the amount one spends is also not necessarily indicative of "ability to pay" ...

a person with an income of say, $100K per year may indeed have a greater ability to pay than someone earning $40K ... graduated tax rates based on income are therefore a very reasonable starting point ... but, what is a fair tax for a multi-billionaire with earnings mostly derived from tax-sheltered investments ... that person may have close to zero taxable income ... they are not paying anything even close to their ability to pay ... and there is no indication that they necessarily spend a greater proportion of their income than poorer people ... in fact, it is very likely they spend a much smaller percentage ... so, in effect, the "Fair Tax" based on spending would actually provide a lower tax rate (comparing spending to net worth) than the current system ... there's nothing fair about that tax at all ...

a fairer system of taxation would include the taxing of wealth; not just income ... for too long, Americans have been conditioned to think of taxation primarily in terms of the income tax ... with a clearer focus on tax fairness, that needs to be changed ... a system that taxes not just income (at lower rates), but also taxes wealth (at graduated rates), would be a much better, much fairer tax system ... whether an individual chooses to spend that wealth should not be relevant at all ... having wealth means having the ability to pay whether that wealth is spent or not ...

[WCGreen]

29. Adn to top it off, those who own things benifit

far more than those of us who don't own a lot...

The whole country is geared toward protection of property....

so why shouldthose of us who have the scraps left to "own" have to pay for all of the government that is primarily focused opn protecting property rights......

Most of the Judical system...

Most of the cabinet positions....

The armed forces....

Our way of life, come on, they are there to protect the overseas interest of the people who own things.....

[welshTerrier2]

31. not sure exactly what you mean ...

if your point was focussed on taxing the "scraps left to "own"", no problem ... go ahead and exempt whatever is fair ...

so, and i would exclude certain "necessities" (like a primary residence up to some value), perhaps we only tax wealth beyond some amount ... maybe that amount is $100K or maybe it's $500K or maybe it's a million ... i'm not writing tax tables here; i'm trying to set the standard as "ability to pay" ...

it seems outrageous to me that a multi-billionaire with most of his assets tied up say, in real property or in tax exempt investments, might have virtually no taxable income ... and while we're at it, why should investments only be taxed when there is a gain on a sale?

it seems to me that if one citizen earns $50K and has a family of four and another citizen has billions invested in stocks but makes no stock sales, the billionaire has a greater ability to pay ... we've been conditioned for so long to accept our current tax system that we see very little creative thinking on taxes from the left ...

the right gets all juiced about flat taxes and fair taxes and all sorts of nonsense ... the left can't seem to see beyond increasing the income tax rates on the wealthy ... i'm all for graduated rates but i really think we can do better ...

[WCGreen]

33. that is where I split on the wealth thing

The income should only be taxed when it is actually relialized and not recognized....

What happens if you tax the wealth during an economic bubble....

That certainly isn't fair...

No the only tax should be when the money is actually realized....

[welshTerrier2]

37. allow me to clarify ...

you said "The income should only be taxed when it is actually relialized and not recognized" ...

just to be clear, i'm not talking about taxing income regarding this investment ... i'm talking about taxing the asset whether it makes a gain in the future or it doesn't ... could the investment eventually become worth much less due to an "economic bubble" ... of course it could ... and then you would have fewer assets and pay a lower tax ...

think of my little system like this ... the government, rightly or wrongly, decides they need to raise a certain amount of money to do a bunch of really important stuff ... what's the right way to tax the citizens?

take a somewhat overstated example to clarify the objectives i'm seeking ... say you only have two citizens in your imaginary country ... one citizen earns $50K and the other citizen earns zero ... but the zero earner owns 10 billion shares of a high quality stock ... in my world, the zero earner has far more "ability to pay" than the $50K guy ... so, i go to the zero earner guy and i say "look, you can afford to pay more taxes than the other guy" ... income, and whether the zero earner actually sells any of his stock for a gain is not the issue ... he has massive wealth and a much greater "ability to pay" ... the $50K guy would be expected to contribute to the country's priorities to a lesser degree ...

now, to your point about taxing the income of the stock transaction when a gain is "actually realized", that's fine ... now you're talking about how to tax income ... i have no problem with hybrid systems that seek a relationship between taxing income and taxing wealth ... it should enable us to drastically lower tax rates on income ... the goal here is not to collect more taxes ... so, on the sale of stock, if a gain is realized, only then would the proceeds be subject to INCOME TAX ... but the asset itself, prior to any sale, would be included in the net worth calculation ...

is that clearer?

[WCGreen]

34. I'm tired so maybe I didn't make my point....

The whole country, the cost of running the country, is geared toward protecting wealth. so the people who own the most, earn the most have the most vested interest in protecting things the way they are...

So, by the true sense of the word fairness, those who benefit the most from the way our country is organized and operated should pay the most for this oprotunity...

Take the armed forces. Granted, beyond the protection of our borders, which, BTW, they aren't doing a very good job of, most of the purpose of the US armed forces is to protect wealth over seas. That is why, for instance, we invaded Iraq and not Sub Saharan Africa where the brutalization of the people is far worse...

All I am saying is that if you break the Government out by purpose, most of the government is there to protect the property rights.. Unless of course, as in the recent Supreme Court ruling, your property rights go up against the perceived profit motive of a richer and more powerfully entity than you. Then, the property rights are thrown out the window......

[welshTerrier2]

40. preaching to the choir ...

i completely agree with your points about the government protecting the assets of the wealthy ... in fact, i would go far beyond that point to argue that all federal policy is designed not just to protect the assets of the wealthy but to help investors in massive trans-national corporations generate even more income ... that's what an imperialist government is all about ...

[WCGreen]

41. Cool. Now I can go to bed....

[welshTerrier2]

42. nite ...

have a good one ...

read my other response to you in the morning :hi:

[Wabbajack]

26. You know I'm starting to think

we should tax ONLY the rich.

[NebraskaDem]

27. At the risk of being attacked

;-)

What is considered rich? I guess i mean are we talking the the small biz owner that makes 100K or the guys like buffett that make god knows what. Just curious.

[nookiemonster]

30. I define rich as far above the 100k threshold

100k would still be middle class in my opinion.

Let's say, for sake of argument, 500k or above. It's just an arbitrary number that I pulled out of my you-know-where, so don't get too worked up.

A reference point, perhaps.

[AuntPatsy]

36. I agree with you that rich in my book begins at or around the 500 level

[Amonester]

35. In my opinion, the rich r all those who make over 100K

(+ annual inflation rate). That's just my opinion. May be right; may be wrong, but I think I'm right on the money...

As for the taxation, Canada ain't perfect (lots of "negative pressures" from the US, and some "positive pressures" as well), but the Federal Government underestimates it's surplus year after year, and it's got Public Health Care to manage (it shares funding with some Provincial governments).

Ok, it doesn't overspend on the military, although it's been spending more and more on security and defense since 2001 (by a big annual percentage, and growing each year).

[Amonester]

39. Ooops... I forgot...

The idea I was suggesting was: why not examine (study) how the country up north structures it's taxation system to see what's good about it (recurrent surplus) and see what could fit in the US?

[AuntPatsy]

38. Well, I don't see anything wrong with taxing those with more money

than the local clerk working for minimum wage at a convience store. I don't see why people with money have a problem with in effect amounts to sharing with those less fortunate....

I look at it this way, you can't take it with you, and it is a good feeling knowing you have aided in helping others less fortunate. And it has nothing to do with what the conservs always gripe about, out and out lying about Dems being the party of welfare queens and they shouldn't have to shoulder the load, this from the party of supposedly higher moral grounds that act like they care about those less fortunate.

[Wabbajack]

62. STFU FREEPER SCUM!!!!!

Just kidding. ;)

I'm gonna say millioniares and up are rich.

[johnaries]

32. It's pro-Dynasty. The Bushistas support having most of the wealth and

power in the hands of a few, just like in the days of Rockefeller, the Vanderbilts, etc. The whole purpose of the Estate Tax was to minimize dynasties. Now, the Repukes rename it the Death Tax, make up some bullshit about it hurting farmers (who it doesn't affect), and then try to abolish it. This unFAIR Tax will let the rich and powerful invest and gain more money, and buy more corporations and gain more power. Eventually, using the money to buy the government.

It's already happened before in our country.

It's another example of Bush Cronyism.

Think of the Progressive income tax in this way - a person who earns $20k a year and pays 5% (just as an example) keeps $19K a year to live on. A person earning $200k and paying 20% gets to keep $160K to live on. A person earning $1mil and paying 30% gets to keep $700k to live on. Even with the higher bracket, which of these people would you rather be?

Also, many of the tax deductions are (supposed to be) incentives to get those who can afford it (such as Large Corporations) to act in ways that benefit the country - such as donating large amounts to charity, or being environmentally responsible.

Edit to add: Welcome to DU! :hi:

[flaminbats]

43. a national sales tax isn't fair..

nor would it be an effective way to raise revenue during a war without an exit strategy. I believe most taxes should take income into consideration, otherwise they eliminate most positive effects of federal programs to help the disabled and poor.

The best means of reforming our tax code is to first pay down the national debt..thus reducing the amount of tax dollars annually wasted on interest payments. Another means is to give people a reward for paying taxes. If everyone was covered under Medicare..more young people would be willing to pay the higher tax rates necessary to keep this program solvent. Another option would be the Nunn-Domenici tax, a progressive..thus fair consumption tax. Welcome to DU NebraskaDem!

http://scholar.lib.vt.edu/VA-news/VA-Pilot/issues/1995/vp950502/05020007.htm

[NAO]

45. It's very regressive. Regressive/Progressive tax explained in simple terms

Progressive & Regressive taxes/taxation explained.

Progressive & Regressive taxes describe the tax table, not a political opinion. It's like a mathematical function. Most often these are called progressive or regressive tax tables or taxes.
In a progressive tax, the more you earn, the higher your tax rate.
In a regressive tax, the less you earn, the higher your tax rate.

The classical progressive tax is income tax.
The classical regressive tax is sales tax.
But there are many taxes and fees that are more extreme of each kind. Combined with this tax theory and these examples, a great deal can be induced about economics and politics.

Because most people are involved in preparing their progressive federal income taxes it is fairly well understood. And because most people are not involved in calculating their regressive taxes, it is fairly poorly understood. So we will concentrate on explaining regressive taxes, and how the two combine to make up our system, and most systems of taxation.

All known functioning systems of taxation have a balance of progressive and regressive taxes. This idea is almost never debated, the debates are over where the balance point should be, how much burden should be on the "rich", and how much burden on the "middle" and "poor"? For simplicity we will combine "middle" and "poor" just say "rich" and "poor", and put that dividing line somewhere between $50,000 and $500,000, as you wish. But we could just as easily have selected (say) $25,000 or $750,000 for our dividing line between "rich" and "poor", the principles are the same.
In a progressive tax, the more you earn, the higher your tax rate.
In a regressive tax, the less you earn, the higher your tax rate.
Progressive taxes soak the rich, regressive taxes soak the poor.


An example of why sales tax is regressive.

If progressive taxes soak the rich, and regressive taxes soak the poor, why do we almost never hear the term, "soak the poor"? Perhaps that is a "loaded" question?
Let's imagine two frugal traveling salesmen. They each have to buy a new car every four years to (say) keep up appearances, and they need reliable transportation.
(One guy makes 20K, the other 300K)
Run the numbers on a the RATE of total income each pays on on 5% sales tax.

Poor Boy buys a $20,000 car pays $1000 or 5.0% of his income.
Rich Boy buys a $60,000 car pays $3000 or 1.0% of his income.

Poor Boy has 5 times the tax bite, or rate of tax on a car. Rich Boy hardly feels sales taxes.

Then run the numbers on a $30 pair of Levis, and the tax rate discrepancy triples.
Sales tax is NOT a flat tax.

much more at the website that is the source of this material:
http://www.psnw.com/~bashford/taxation.html

[rman]

46. Does it put a tax on such things as stocks, shares, options?

I didn't think so.

Those are not "goods and services" according to those who benefit from those things not being defined as such. Coincidentally those are the same people who get to define just what are "goods and services".

[AtomicKitten]

47. I think Neal Boortz Sucks Ass

Period.

[Mountainman]

48. It's not fair at all. It is a right wing scheme to cut taxes on the

wealthy. The price for necessities that poorer people can't afford will go up making them even less affordable.

Stop calling this unfair tax a fair tax!

Any tax plan from the right is a plan to move wealth from the poor and middle class to the wealthy.

How do you like my fair tax. Don't tax people until they have a certain amount of income over the cost of food and housing and other necessities.

Then tax the wealthy because they have more material wealth for the government to protect.

Screw you and your fair tax!

[Bush_Eats_Beef]

72. National Retail Federation press release

Consumption Tax as a Replacement for the Income Tax

Options for replacing the income tax with a consumption tax include proposals for a National Retail Sales Tax, a Flat Tax (as originally conceived by Hall & Rabushka, although a Flat Tax can be designed to be an income tax), a Value Added Tax, and a consumed income tax (like the Nunn-Domenici USA tax). Below are bullets setting forth some of the specific problems with adopting a consumption tax as a replacement to the income tax.

*

Consumption taxes are highly regressive, and, therefore, do not meet the President’s criteria of being fair to all. Because lower-income households tend to spend a higher portion of their income, they would pay a higher tax relative to income level than would upper income households. A recent NRF study of H.R. 25, a proposal for a national retail sales tax, found that if that bill were enacted, families with income less than $18,000 a year would get a tax cut (because of the bill’s rebate of the tax up to the amount of the poverty level), and families with income over $100,000 would get a tax cut (because they do not need to consume as large a percent of their income). However, families with incomes between $18,000 and $100,000 a year would have a tax increase. Families earning between $18,000 and $35,000 a year would have the largest tax increase because most families in this income category must use all of their earnings for living expenditures and have no ability to save, regardless of the tax incentive to do so.

*

The transition from an income tax system to a consumption tax system will cause the economy to decline for several years, and therefore, does not meet the President’s criteria of being pro-growth.

o

A study performed for the NRF’s Foundation by PricewaterhouseCoopers (PwC) in 2000 found that following enactment of a national retail sales tax the economy would decline for three years, employment would decline for four years, and consumer spending would decline for eight years. Although the study showed that the economy would begin to grow in the fourth year, it found that the increase in economic growth over the ten-year modeling period was relatively modest compared to disruptions to the economy during the transition years and questioned whether the gain was worth the pain.
o

The 2000 PwC study found that following enactment of a flat tax, the economy would decline for 5 years, employment would decline for 5 years, and consumer spending would decline for 6 years. Economic growth in years 6 through 10 would be even more modest than under the national retail sales tax.

Consumption Tax as an Addition to the Income Tax

Several witnesses that appeared before the advisory panel suggested that a VAT be enacted as an add-on to the current income tax system, as a means to finance social security, pay for repeal of the alternative minimum tax and other income tax reforms, and fund other governmental priorities. This model is similar to that used in many European countries.

*

Adding a VAT in addition to the income tax will lead to a higher overall level of taxes as a percent of GDP, which will not foster economic growth.

o

An early NRF study of an add on VAT found that GNP would decline for four years after enactment and consumer spending would decline even longer. (Obviously, projections change depending on how the VAT is designed, but it appears clear that for several years the economy would decline compared to where it otherwise would be.)

o

According to a recent study by Dan Mitchell of the Heritage Foundation, the best evidence that a VAT will lead to substantial growth in the level of taxation comes from the European example. In the mid-1960’s, before any European country adopted a VAT, the burden of government in Europe was only slightly higher than it was in the United States. In Europe tax revenues were about 30% of GDP, while in the United States tax revenues were about 27% of GDP. The VAT proved to be a very easy tax to raise because it is built into the price of goods and hidden from consumers. Forty years later, taxes in Europe amount to approximately 41% of GDP, while taxes in the United States remain at about 27% of GDP. The European experience demonstrates that the VAT is a very easy tax to increase to fund increased government spending.

*

Adding a consumption tax to the income tax adds more regressivity to the tax system and does not meet the fairness requirement.
*

Adding a consumption tax to the income tax will increase complexity. Small businesses have enough trouble meeting the burdens of collecting and remitting payroll and income tax withholdings. To also impose on these businesses the burden of collecting and remitting a VAT or national retail sales tax will greatly increase their compliance burdens.

http://www.nrf.com/content/default.asp?folder=govt&file=talkPoint.htm&bhcp=1&bhfv=2&bhqs=1

[thiscrowlives]

49. Rather than criticize .....

..... what ideas do people have to make it work? I personally hate the IRS and income taxes. Talk about a screwed up system. There are so many loop-holes and twists and turns in the present code, I think that it is time to do something.

Maybe just a good cleansing purge of the current tax code? Start over with straight-forward income tax with no deductions, write-offs, etc. Sure, the congress will riddle it back up with loop-holes and shelters ....... over time. But, for a few years at least, it can be made somewhat fair.

The problem I have with INCOME taxes is that it hits working people ... not wealthy people. The really rich in this country don't need or have income ..... at least not income that is proportionate to their wealth. We need some sort of tax code that really taxes the truly wealthy and exempts the poor and working poor.

[welshTerrier2]

50. "ability to pay"

welcome to DU, thiscrowlives !!

taxes should be based on ability to pay ... focussing solely on income and ignoring wealth fails to do that ...

see my post #24 and the subsequent discussion above ...

[thiscrowlives]

54. hi welshterrier

.... thanks .... I admit I glossed over that the first time I read this thread. I agree that some sort of ability to pay or net worth type of scheme would be the most proportionate and fair, overall.

[Jeff In Milwaukee]

55. No Deductions?

Part of what makes the income tax fair is the presence of deductions -- the principle being that the IRS won't tax you beyond your ability to pay. That being said, we have to understand that not all incomes are created equal.

a) Bob is single with no dependents and earns $50,000 per year as a network administrator.

b) Nancy is divorced with two children and a non-working ex-husband (i.e., no child support). She also has an developmentally disabled brother for whom she provids support, including adult daycare. Both of Nancy's kids are in an after-school program (which she pays for) and have fulltime daycare in the summer. Nancy also makes $50,000 per year sitting the cubicle directly adjacent to Bob.

If both of these taxpayers were taxed at the same rate, clearly Nancy would be in dire straits trying to pay the support for three dependents, including fulltime care for her brother. So the IRS lets her take deductions for this additional expenses -- deductions can be a pain in the neck, but they're not the problem.

Let's be clear on something. Don't hate the IRS -- they are just the bill collector for the United States Congress and can only enforce the laws that Congress writes. Congress conveniently uses them as the bad guy, but the fact is that the IRS Ombudsman (there really is such a thing) routinely recommends changes to the tax laws to make filing your taxes easier. Those recommendations are routinely ignored by Congress.

[Name removed]

51. Deleted message

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

[peace frog]

56. Nice try but no sale...

... not at half the price.

[banana republican]

57. Tax People Based on the Benefits they Receive.

People who have incomes over $1,000,000 receive more benefits from:
1) Defending the country (and protecting their source of income)
2) Local police (keeping their homes safe and protecting their millions in diamonds & art work)
3) Use of local infrastructures to produce their income (water sewage & garbage; roads & highways; electricity; telephones; etc)

Therefore they should be paying more in taxes to support those services not less...

[TroglodyteScholar]

58. Analysis aside...

Anything from the Right that has a name like "Fair Tax" or "Healthy Forests Act" is sure to be the exact opposite of what it sounds like. If Niccolo Machiavelli's _The Prince_ is the right wing's Old Testament, George Orwell's _1984_ is their New Testament. Believe it.

War is Peace
Freedom is Slavery
Ignorance is Strength

[baldguy]

59. Nice name

But like most other conservitive ideas, the idea is exactly the oppisite of what the name describes. The "Fair Tax" is massivly UNfair. The simple fact is that the rich should pay more in taxes - simply because they can afford to. A person doesn't NEED the $100,000 über-luxery car and the 150,000 sq ft McMansion - but they seem to sell well enough.

A true "fair tax" would be take into account what people actually need to live - and only tax income over & above that amount on a progressive scale.

Just like they pay more for homes, cars, clothing and everything else. They also get more back from services from the govt - in the fact that govt serves everybody, and the rich have more things to protect.

[ClassWarrior]

60. Do you mean the National Sales Tax? To go with our National IDs?

NGU.

[Adelante]

63. I prefer a "fairer tax"

Under Wes Clark's Families First Tax Reform, a family of four making up to $50,000 will pay no federal income taxes and all taxpaying families with children making up to $100,000 will get a tax cut. The Families First Tax Reform will shift the tax burden from those who are struggling to get by to those with the most to spare. The entire proposal is offset by closing corporate loopholes and by a 5 percentage point rate increase on income over $1 million a year. The rate increase will only reach the income-over $1 million-of the top 0.1 percent of taxpayers.

http://www.clark04.com/issues/familiesfirst/summary/

[Strelnikov_]

64. The Orwellian Name Is The Give Away . . .

that it will not be fair at all.

Implementation of a progressive income tax without all of the deductions, which mostly go to the rich, would be a real 'FairTax'. Said income to include interest, dividends and capital gains. If you can spend it, it's income.

With 'FairTax', say hello to the black market/barter economy.

[norml]

65. It's not a "Fair Tax" it's a National Sales Tax.

Those selling it sell it by claiming that...

1. The sales tax rate would be low and stay low.

2. The rebate would be generous and would remain generous.

3. Prices would fall because the "Hidden Tax" would be removed.

While I seriously doubt all three of these claims I'll mainly deal with the "Hidden Tax" fraud.

1. I've never known prices to fall after a tax cut, have you?

Since the last big top heavy tax cut prices have gone up, haven't they?

2. Conversely if there is such a thing as a "Hidden Tax" in which taxes are passed down to consumers through higher prices, then let's really simplify things by having all taxes collected that way by taxing only the biggest of businesses and the highest of incomes and letting the taxes trickle down through this mythical "Hidden Tax"?

[Bush_Eats_Beef]

68. Yes, "Fair Tax" is the "National Sales Tax"...here are a few links:

Tax reform or impasse?
By Bruce Bartlett
August 3, 2005

http://washingtontimes.com/commentary/20050802-093835-4780r.htm

The national sales tax
Bruce Bartlett
May 3, 2005

http://www.townhall.com/columnists/brucebartlett/bb20050503.shtml

Retailers File Comments Urging Rejection of Consumption Tax

http://www.nrf.com/content/default.asp?folder=press/release2005&file=NRST-comments.htm&bhfv=2&bhqs=1

Bush economic agenda may be in trouble
Social Security overhaul is stalled, tax fix has been delayed. Will the reforms happen -- ever?
June 17, 2005: 2:25 PM EDT
By Krysten Crawford, CNN/Money staff writer

http://money.cnn.com/2005/06/17/news/economy/bush_agenda/index.htm?section=money_latest

[Name removed]

66. Deleted message

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[warrens]

70. It's another shift the tax from the rich to the middle class scheme

The wealthy don't spend, they invest or save. They spend no more than you do on the basics (food, transportation, clothing, although they probably spend considerably more on housing, which is probably exempt from the tax) which means it's yet another regressive tax.

[AnarchoFreeThinker]

73. Also fair: the used car tax, the food stamps tax, and the apt. tax

and don't forget the thrift store tax, the pawn shop tax, and the homeless tax. All fair, just like the fair tax.

[AllieB]

74. A fair tax is an oxymoron

the theory that you're proposing is a right-wing meme. If you did your homework, you'd realize that the 'fair tax' movement is funded by right-wing think tanks and figures like Grover Norquist.

You should google Fair Tax and Grover Norquist-there's lots of information there! :-)

[Darranar]

75. It's an unfair tax. Totally opposed. n/t

[Moderator]

77. locking

You now know what DUers think of the "Fair Tax"

Not much, so it seems.