[Kevin_C]

The Fair Tax has been slowly gaining support in congress in the last few years. What do you guys think of it?

Details, Details, Details:
The Fair Tax is a proposal to remove the Income, Social Security and Medicare Tax and replace them with a sales tax that will tax every consumable good once in the item's lifetime.

How it works:

1) First thing every month every person with a social security card will recieve a rebate check that represents the amount a person with a yearly income of at the poverty line would spend in the sales tax. For a single person with no children, that is 9,800 dollars currently in the US. The rebate would be 2254 dollars.

2) Items that are brand new and never used have a 23% sales tax. This would bring in about the same amount of tax money to the federal government as all of the current federal income taxes combined.
Note that this tax only applies to new items. New cars are taxed, but used aren't. Business purchases are also not taxed.

3) Income tax would no longer be a part of the cost of production for any item. On adverage this would lower the cost of new items by around 20%. It will vary item to item. The new sales tax will increase the price by 23%. There should be no huge difference in prices due to the sales tax.

4)It is a progressive tax. Due to the rebate people who make less than the poverty line have less than 0% net taxes. People who spend around 30,000 a year will pay a net tax between 11 and 16 percent. People who spend 200,000 per year on new items will pay around 21 to 22 percent net sales tax. This is after the rebate remember. Before the rebate everyone pays 23% sales tax.

What do you guys think? Should we get rid of the income tax and replace it with the fair tax?

check out the Fair Tax FAQ for more info

[katkinkate]

Sounds a bit like our 'Goods and Services Tax' (GST). We were told it would replace all stamp duties and wholesale tax and various other taxes and fees that bump up the prices and maybe even reduce the income tax a little. They eventually got it through all the review process and started it up. As far as I know none/not many of the other taxes were stopped and prices for everything went up even higher. It sounds good but it's just another way to get your money. You can be guaranteed they (the govt) will be getting more out of it than the people.

[Princess]

If it passes, I'll be buying lots of used items. Sounds interesting in theory, but you just know Congress will find a way to mess it up.

[Specop_007]

I just hate taxes.

[Kylon]

I think it's another way to help the rich.

The dumb/poor folk who are ignorant and uneducated will tend to buy out of convenience, things that are near here.

The rich on the other hand, if taxes are too high, can simply spend their money somewhere else.

So essentially what would happen, is it would be mainly the poor and the middle class paying all the taxes.

However, there are some ways they could make it work to our advantage.

They would have to prevent capital flight and spending in foreign countries by the rich, perhaps have a tax on capital flight equivalent to what they'd save, or more by spending in a foreign country.

Also, we shouldn't tax necessities. Cosmetics should be taxed, medicine should not. Big Macs should be taxed, food should not. Beer/alchohol should be taxed, water should not. Video games should be taxed, educational materials for the most part shouldn't be. We should also tax heavily fashion clothes, as most of them are overpriced, and although it would severly hurt the fashion industry, it would pump alot more revenue into the government.

Luxury goods should be taxed by almost 100%, with the exception of your first wedding ring(people who marry twice, if they don't have their old wedding ring, well then, they'll have to pay the tax). Most Jewelery is marked way, way over what it cost them to make it.

Tools should not be taxed, as they are used/can be used to produce resources for the civilization and or save resources.

Basically certain goods should be taxed almost too extinction, other goods should be made more readily available(like infrastructure used to produce resources, such as solar cells, tidal turbines, stirling engines, or robotics pieces).

Essentially everything that's really good for us we shouldn't tax, and all the things that are trinkets, should be super heavily taxed, this way we curb consumer spending, conserve resources, and focus the resources into the purchasing of things we need.

[Ludi]

I'm mostly anti-tax, personally.

[Kevin_C]

$this->bbcode_second_pass_quote('Kylon', 'I') think it's another way to help the rich.

The dumb/poor folk who are ignorant and uneducated will tend to buy out of convenience, things that are near here.

The rich on the other hand, if taxes are too high, can simply spend their money somewhere else.

So essentially what would happen, is it would be mainly the poor and the middle class paying all the taxes.

[Roy]

$this->bbcode_second_pass_quote('', ' ')the fair tax replaces the income tax, the price of every item in the US will drop an adverage 20% before the 23% sales tax.

[smallpoxgirl]

Sounds like a great deal to me. Always struck me as a profound waste of humanity all those shmucks down at HR Block spending their lives filling out forms. I think discouraging purchase of new items would be a huge ecological benefit and a big benefit to the poor. The throw-away economy would tank, but IMHO that's not a bad thing.

[strider3700]

I'd love it. I pay more in taxes each year then I actually spend on goods. Dump the income tax and I'd have even more saved. Of course this could crash the economy as saving would be a much better option then spending on questionable purchases.

[greenworm]

I never understood why the poor/lower middle class pay taxes, I mean if they collectively organized and revolted against this slavery how could the irs actively prosecute millions of cases. Nevermind the fact that income tax law is little vague and not mentioned in the constitution.

[Tyler_JC]

http://www.fool.com/news/commentary/200 ... 030104.htm

"The average corporate profit margin in the United States has been around 8% for the past 25 years."

If corporations did not lower their prices, that margin would increase to 28%, right? Well that could never happen in anything even close to a free market. Everyone would get into the game if the profit margins were in the high 20% range.

Large profits encourage more competition.

If I can make $100 in profit for every 1 dollar of product I sell, what's to stop everyone in the country from selling my product?

The price of my product will drop signficantly as more people move in to get a share of the enormous profits.

My profit margin will fall drastically. Eventually I will only be able to make about 8 cents in profit per product.

The world's corporations do not work together to keep prices high, if they did, corporate profit margins would be a lot higher than just 8.3%.

Big Oil especially has weak profit margins. Even with record oil prices, Exxon's thrid quarter profit margin in 2005 was only 9.9%. Oil prices went up drastically and Exxon is only a few points better than the historical average. Corporate profit margins have a pretty firm ceiling. The Fair Tax theory claims that the cost of each product would fall by 20% for the average corporation. This very likely means a 20% drop in consumer prices.

Take a look at this graph:



This concept is one of the more fundemental concepts in economic theory and it looks like a sound theory to me.

Anyone care to challenge one of the premises?

[Tyler_JC]

$this->bbcode_second_pass_quote('greenworm', 'I') never understood why the poor/lower middle class pay taxes, I mean if they collectively organized and revolted against this slavery how could the irs actively prosecute millions of cases. Nevermind the fact that income tax law is little vague and not mentioned in the constitution.

[128shot]

wow, people just hate the rich on this forum


I wish I was ignorant enough to be that jealous and egotistical about myself to think that my opinion on somebody who is ultra wealthy-who I never met before even-is such a bad person. I mean fuck'em! they only employ you.....

[smallpoxgirl]

Actually we don't hate all rich people 128shot....just you.

[holmes]

SPG, They aint elites. They are the BASE! Fk em. Im a free man with a noble conscience. They wealthy love ponzi schemes. They are inconducive to true freedom. They are mostly simple scum that create massive complex problems. Worhtless turds in my view. Complex individuals usually live simple existence. Einstein. If the turds would stop the ponzi and the schemes and the egendas and the overlording my ass then it would be fine. Yet they steal taxes for the poo and downtrodden and to fortify their ponzi. I see through thier BS like a window. Im rich. Materialism is not rich. Im no hater. Just dont add me into your scheming shit. and they are. The base is what Bush the cock smoker calls em. I call them hashstains on the underwear. wealthy prefessionals do not impress me. take their oil and machine appendages away they are fetus's slapped onto the bare earth. below even me.

[greenworm]

$this->bbcode_second_pass_quote('', 'M')y friend, the Tax Police would simply garner the wages of everyone who did not pay.

[ChicknLittle]

I think this is a system that might favor the wealthy... and therfore it has a chance of becoming law. The poor(er) spend all of their income on things necessary for survival (food, housing, transportation) that would be taxed, while the wealthy spend a very small percentage on their income on actual things and more on investment/savings which would not be taxed as they are not goods/services. It is a step backward if your goal is to have the wealthy pay more taxes than the poor. If the poor are given exemptions (as proposed) then the burden of taxes would fall on the lower-middle and middle class much more heavily than the wealthy.

[Daculling]

$this->bbcode_second_pass_quote('Kylon', 'B')eer/alchohol should be taxed,

[128shot]

$this->bbcode_second_pass_quote('ChicknLittle', 'I') think this is a system that might favor the wealthy... and therfore it has a chance of becoming law. The poor(er) spend all of their income on things necessary for survival (food, housing, transportation) that would be taxed, while the wealthy spend a very small percentage on their income on actual things and more on investment/savings which would not be taxed as they are not goods/services. It is a step backward if your goal is to have the wealthy pay more taxes than the poor. If the poor are given exemptions (as proposed) then the burden of taxes would fall on the lower-middle and middle class much more heavily than the wealthy.