Equality?

[DuncanONeil]

Where is the money to provide such excellent care supposed to come from?
A realignment of tax brackets & codes, along with a severe realignment in prioritizing how tax dollars are spent. Respectfully,
TS

The FairTax woul;d be better than what we have now!!!!

[SadisticNature]

The FairTax woul;d be better than what we have now!!!!

Fair Tax is a system that is even easier to defraud than the current IRS. How many contractors do you think are going to under report or fail to report work under this system? If they do now they risk having their client claim any deductible work on their taxes and if the IRS tracks it they can show the unclaimed income. The IRS isn't great at it, but it does provide some disincentive. FairTax actually encourages people to be dishonest because from the perspective of the above board guy whose prices are 30% higher, how many sales do you think you get against the guy who cuts corners and claims a much lower bid, adds on the 30% sales tax and doesn't report it.

Also the switch from a largely income tax based approach to a largely sales tax based approach is double taxation on anyone who has already taxed income in investments, this can be a huge issue for retired individuals and will probably result in increased social security expenditures as more individuals become vulnerable in retirement.

Some industries are entirely killed by a high sales tax as well. For instance professional poker would move almost entirely outside the US if there was a X% tax for all entry fees with X around 30%. In this environment there are no poker pros, the edge of the best players in the world at the game is around 25% so they couldn't pay the rake + the tax and still make a living.

Lastly while the tax deduction rules are complicated and need simplification, removing the ability to make deductions entirely would eliminate the governments ability to encourage certain actions. Lack of deductions for charity would result in fewer donations, hurting many charities. Inability to provide financial incentives for marriage and children would result in lower birth rates and the need for more immigration to keep a population level that supports economic growth and funds existing programs. The inability to provide tax deductions for making choices with fewer external costs would result in a lot of individuals externalizing costs to the detriment of society.

High sales taxes would force increased welfare payments and drive up the minimum wage as well. When you shift more of the tax burden onto the poor, the programs that they need to get by will need more money.

[steelish]

Fair Tax is a system that is even easier to defraud than the current IRS. How many contractors do you think are going to under report or fail to report work under this system? If they do now they risk having their client claim any deductible work on their taxes and if the IRS tracks it they can show the unclaimed income. The IRS isn't great at it, but it does provide some disincentive. FairTax actually encourages people to be dishonest because from the perspective of the above board guy whose prices are 30% higher, how many sales do you think you get against the guy who cuts corners and claims a much lower bid, adds on the 30% sales tax and doesn't report it.

The free market has a lot to do with who succeeds and who doesn't. Regardless of prices, offer a substandard product and word gets around. Also, America currently has a 38% Corporate tax - the highest in the world. Doing away with the corporate tax and adding a higher tax at the point of purchase would result in corporations lowering product costs. If they can't sell their product, they can't make money...supply and demand.

Also the switch from a largely income tax based approach to a largely sales tax based approach is double taxation on anyone who has already taxed income in investments, this can be a huge issue for retired individuals and will probably result in increased social security expenditures as more individuals become vulnerable in retirement.

We're already double-taxed. We have our income tax and we have our sales tax (which differs state to state).

[SadisticNature]

Two types of taxes is not necessarily doubling the taxation. Taxing the entirety of an income tax on said money, then turning around and raising the sales tax massively is true double taxation.

Getting taxed X% sales tax for small X and Y% income tax for a larger Y is not double taxation compared to paying 30+% sales tax. For anyone who has Y around 30%, the sales tax is actually comparable.

When Ontario introduced the PST, they replaced an internal manufacturing tax, with an external sales tax. The tax was larger, but none of the savings from scrapping the manufacturing tax got passed on to the consumer.

As for free market success rates, my point is consider the following for two contractors with:

-Similar Quality of Work
-Similar Track Record

Offer 1:

$100,000 + 30% sales tax $30,000 =$130,000

Offer 2:
$77,000 + 30% sales tax $23,100 = $101,000

The only difference being in Offer 2 the sales tax never actually gets paid to the government. Offer 2 is not substandard quality, its a huge savings due to cheating on taxes.

The free market has a lot to do with who succeeds and who doesn't. Regardless of prices, offer a substandard product and word gets around. Also, America currently has a 38% Corporate tax - the highest in the world. Doing away with the corporate tax and adding a higher tax at the point of purchase would result in corporations lowering product costs. If they can't sell their product, they can't make money...supply and demand.



We're already double-taxed. We have our income tax and we have our sales tax (which differs state to state).

[DuncanONeil]

You did get it wrong!
" Taxing the entirety of an income tax on said money, then turning around and raising the sales tax massively is true double taxation. "
Does not occur! The FairTax terminates income tax. It is not an additional tax!!!

Two types of taxes is not necessarily doubling the taxation. Taxing the entirety of an income tax on said money, then turning around and raising the sales tax massively is true double taxation.

Getting taxed X% sales tax for small X and Y% income tax for a larger Y is not double taxation compared to paying 30+% sales tax. For anyone who has Y around 30%, the sales tax is actually comparable.

When Ontario introduced the PST, they replaced an internal manufacturing tax, with an external sales tax. The tax was larger, but none of the savings from scrapping the manufacturing tax got passed on to the consumer.

As for free market success rates, my point is consider the following for two contractors with:

-Similar Quality of Work
-Similar Track Record

Offer 1:

$100,000 + 30% sales tax $30,000 =$130,000

Offer 2:
$77,000 + 30% sales tax $23,100 = $101,000

The only difference being in Offer 2 the sales tax never actually gets paid to the government. Offer 2 is not substandard quality, its a huge savings due to cheating on taxes.

[SadisticNature]

For the basis of clarification.

Income tax occurs currently. If I have money I have saved from now, that is post-tax money, and I have paid income tax on it. If fair tax were to be implemented and I go out and spend that money, I am being double taxed on it, no ifs and ands about it.

So while UnfairTax terminates income tax it doesn't do so retroactively and hence doesn't solve this double taxation problem.

You did get it wrong!
" Taxing the entirety of an income tax on said money, then turning around and raising the sales tax massively is true double taxation. "
Does not occur! The FairTax terminates income tax. It is not an additional tax!!!

[DuncanONeil]

For the life of me I can not understand how you can harbor such a basic misunderstanding of what we are talking about. Especially when in the very message you respond to it clearly states the FairTax terminate income tax. Yet your claim of double taxation is based on paying income tax and the FairTax.
In addition to the income tax the FairTax eliminates:

• Social Security Tax
• Corporate Taxes
• All other payroll taxes
  
• estate
• gift
• capital gains
• alternative minimum
• Medicare, and
• self-employment,
  

Again THERE IS NO DOUBLE TAXATION!!!!!!!!!!!!!

For the basis of clarification.

Income tax occurs currently. If I have money I have saved from now, that is post-tax money, and I have paid income tax on it. If fair tax were to be implemented and I go out and spend that money, I am being double taxed on it, no ifs and ands about it.

So while UnfairTax terminates income tax it doesn't do so retroactively and hence doesn't solve this double taxation problem.

Quote:
Originally Posted by DuncanONeil View Post
You did get it wrong!
" Taxing the entirety of an income tax on said money, then turning around and raising the sales tax massively is true double taxation. "
Does not occur! The FairTax terminates income tax. It is not an additional tax!!!

[DuncanONeil]

How does example two not get paid to the Government?

This is a basic misunderstanding of the FairTax as well.

Two types of taxes is not necessarily doubling the taxation. Taxing the entirety of an income tax on said money, then turning around and raising the sales tax massively is true double taxation.

Getting taxed X% sales tax for small X and Y% income tax for a larger Y is not double taxation compared to paying 30+% sales tax. For anyone who has Y around 30%, the sales tax is actually comparable.

When Ontario introduced the PST, they replaced an internal manufacturing tax, with an external sales tax. The tax was larger, but none of the savings from scrapping the manufacturing tax got passed on to the consumer.

As for free market success rates, my point is consider the following for two contractors with:

-Similar Quality of Work
-Similar Track Record

Offer 1:

$100,000 + 30% sales tax $30,000 =$130,000

Offer 2:
$77,000 + 30% sales tax $23,100 = $101,000

The only difference being in Offer 2 the sales tax never actually gets paid to the government. Offer 2 is not substandard quality, its a huge savings due to cheating on taxes.

[SadisticNature]

The person in example 2 defrauds the government and keeps the tax money for themselves. In an income tax model you are taxed on profits, so choosing to cheat on taxes is a matter of reducing profits.

In a sales tax model you are taxed on revenue, so the cheaters can easily drive the honest people out of business by offering far lower prices.

How does example two not get paid to the Government?

This is a basic misunderstanding of the FairTax as well.

[DuncanONeil]

So the provider of the goods or services is defrauding the Government by charging a lower price for his product?
Um if he charges a lower pirce for hias product the tax is less and still gets paid.
That is in fact on of the goals of the FairTax, lower prices and bigger paychecks!

The person in example 2 defrauds the government and keeps the tax money for themselves. In an income tax model you are taxed on profits, so choosing to cheat on taxes is a matter of reducing profits.

In a sales tax model you are taxed on revenue, so the cheaters can easily drive the honest people out of business by offering far lower prices.

[DuncanONeil]

The free market has a lot to do with who succeeds and who doesn't. Regardless of prices, offer a substandard product and word gets around. Also, America currently has a 38% Corporate tax - the highest in the world. Doing away with the corporate tax and adding a higher tax at the point of purchase would result in corporations lowering product costs. If they can't sell their product, they can't make money...supply and demand.



We're already double-taxed. We have our income tax and we have our sales tax (which differs state to state).

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.

[DuncanONeil]

[B]"Defraud"
It is easier to defraud under the current system. It only takes on actor to accomplish such an action. Under the FairTax such would require collusion among actors. The seller and buyer at least.
Of course the seller can charge what they see fit. Even if it is a smaller amount. Tax is still due. But if they report they charged less than was paid somebody else knows. You write me a receipt for $1,000 and charge me $1,200 I know what you are doing. I have no incentive to help you.
Say a job costs $1,900 and your scammer comes in and charges $1,900 minus tax of $437, i.e. $1,463 adding 30% for a fee of $1,902. He still sends 23% to the Feds. Where is the scammers gain?

"Double tax on investment"
The FairTax repeals the income tax imposed on investment income and pension benefits or IRA withdrawals. No form of savings or investment is taxed. The beneficiaries and owners of pension funds, IRAs, and 401(k) plans

"Poker"
One thing I think you may have misunderstood. 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.
Those that set up the tournaments are providing a service for which they take a fee, half of the entry. 23% of that fee is due to the Feds there is no increased cost to the entrant.

"Government encourage"
That is the whole point. Where did Government get the power to decide what companies or industries should succeed? They have no right to be picking the winners in losers in commerce.
You mentioned charity. You must agree that a significant factor in charitable contribution is disposable income. The Fair Tax improves that. Charitable contributions depend on one factor more than any other: The health of the economy (not tax benefits). As a wide range of economists agree on the economic expansion the FairTax delivers, charitable contributions benefit also. With the penalty for working harder and producing more removed, Americans are free to keep every dollar they earn, and a new era of economic growth and job creation is unleashed. Hidden taxes are history, Americans are able to save more, and businesses invest more. Capital formation, the real source of job creation and innovation, is facilitated. Gross domestic product (GDP) increases by an estimated 10.5 percent in the first year alone.

As U.S. companies and individuals repatriate, on a tax-free basis, income generated overseas, huge amounts of new capital flood into the United States. With such a huge capital supply, real interest rates remain low. Additionally, other international investors will seek to invest here to avoid taxes on income in their own countries, thereby further spurring the growth of our own economy.

Real wages are 10.3 percent, 9.5 percent, and 9.2 percent higher in years 1, 10, and 25, respectively than would otherwise be the case.
(Tuerck, David G., Jonathan Haughton, Keshab Bhattarai, Phuong Viet Ngo, and Alfonso Sanchez-Penalver, “The Economic Effects of the FairTax: Results from the Beacon Hill Institute CGE Model,” The Beacon Hill Institute at Suffolk University, February 2007. )

Disposable personal income is higher than if the current tax system remains in place: 1.7 percent in year 1, 8.7 percent in year 5, and 11.8 percent in year 10.
The economy as measured by GDP is 2.4 percent higher in the first year and 11.3 percent higher by the 10th year than it would otherwise be.
(Arduin, Laffer & Moore Econometrics, “A Macroeconomic Analysis of the FairTax Proposal,” July 2006. )

[SadisticNature]

Lets make the math less messy on the example.

Person A charges you:

$1000 + $300 in sales tax for $1300 total and reports the sale properly and sends the amount on to the government.

Person B charges you:

$770 + $230 in sales tax for $1000 total and doesn't report the sale properly, and doesn't send the amount on to the government. On your bill it appears as sales tax, but it doesn't get reported to the government that way, they just pocket it. It also appears to you as if the government got paid and you have no easy way of knowing they haven't.

So by going with person B for better price for the same quality customers are driving person A out of business. Why? Because he was being honest on his taxes.

As for poker tournaments, the typical entry for big live events is $10,000 + $100. The entry fee is 1% of the prizes + television and spectator revenues. If they were to take 50% of the entry as fees the industry would die, because no pros could make a profit on that. Paying 23% of an entry fee out of the 1% taken is a rather difficult thing to do! I also dispute that 23% is the actual correct number. It's far more likely to be 30%+, unless you want to increase the deficit dramatically.

For every economist claiming that this tax does better I can give you nine who disagree. The problem is the analysis assumes a fraud free model. If there is no fraud in either model then the UnfairTax drives the economy more aggressively, by forcing unprofitable and less profitable companies to pay a larger tax burden, which includes making marginally profitable companies unprofitable, and resulting in companies that are struggling slightly, going outright under. If you assume the government isn't going to bail out any of these companies (pretty big if given the track record), then the ones that succeed can drive the economy. However in any model where companies are allowed to defraud the taxation, the economy is driven almost entirely by fraudsters bankrupting honest taxpayers. This leads to needing to raise taxation as revenues decrease and further hurts the country.

[B]"Defraud"
It is easier to defraud under the current system. It only takes on actor to accomplish such an action. Under the FairTax such would require collusion among actors. The seller and buyer at least.
Of course the seller can charge what they see fit. Even if it is a smaller amount. Tax is still due. But if they report they charged less than was paid somebody else knows. You write me a receipt for $1,000 and charge me $1,200 I know what you are doing. I have no incentive to help you.
Say a job costs $1,900 and your scammer comes in and charges $1,900 minus tax of $437, i.e. $1,463 adding 30% for a fee of $1,902. He still sends 23% to the Feds. Where is the scammers gain?

"Double tax on investment"
The FairTax repeals the income tax imposed on investment income and pension benefits or IRA withdrawals. No form of savings or investment is taxed. The beneficiaries and owners of pension funds, IRAs, and 401(k) plans

"Poker"
One thing I think you may have misunderstood. 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.
Those that set up the tournaments are providing a service for which they take a fee, half of the entry. 23% of that fee is due to the Feds there is no increased cost to the entrant.

"Government encourage"
That is the whole point. Where did Government get the power to decide what companies or industries should succeed? They have no right to be picking the winners in losers in commerce.
You mentioned charity. You must agree that a significant factor in charitable contribution is disposable income. The Fair Tax improves that. Charitable contributions depend on one factor more than any other: The health of the economy (not tax benefits). As a wide range of economists agree on the economic expansion the FairTax delivers, charitable contributions benefit also. With the penalty for working harder and producing more removed, Americans are free to keep every dollar they earn, and a new era of economic growth and job creation is unleashed. Hidden taxes are history, Americans are able to save more, and businesses invest more. Capital formation, the real source of job creation and innovation, is facilitated. Gross domestic product (GDP) increases by an estimated 10.5 percent in the first year alone.

As U.S. companies and individuals repatriate, on a tax-free basis, income generated overseas, huge amounts of new capital flood into the United States. With such a huge capital supply, real interest rates remain low. Additionally, other international investors will seek to invest here to avoid taxes on income in their own countries, thereby further spurring the growth of our own economy.

Real wages are 10.3 percent, 9.5 percent, and 9.2 percent higher in years 1, 10, and 25, respectively than would otherwise be the case.
(Tuerck, David G., Jonathan Haughton, Keshab Bhattarai, Phuong Viet Ngo, and Alfonso Sanchez-Penalver, “The Economic Effects of the FairTax: Results from the Beacon Hill Institute CGE Model,” The Beacon Hill Institute at Suffolk University, February 2007. )

Disposable personal income is higher than if the current tax system remains in place: 1.7 percent in year 1, 8.7 percent in year 5, and 11.8 percent in year 10.
The economy as measured by GDP is 2.4 percent higher in the first year and 11.3 percent higher by the 10th year than it would otherwise be.
(Arduin, Laffer & Moore Econometrics, “A Macroeconomic Analysis of the FairTax Proposal,” July 2006. )

[DuncanONeil]

So you are taking the position that all business that currently charge a lower price are defrauding the States of their sales tax revenue?

Lets make the math less messy on the example.

Person A charges you:

$1000 + $300 in sales tax for $1300 total and reports the sale properly and sends the amount on to the government.

Person B charges you:

$770 + $230 in sales tax for $1000 total and doesn't report the sale properly, and doesn't send the amount on to the government. On your bill it appears as sales tax, but it doesn't get reported to the government that way, they just pocket it. It also appears to you as if the government got paid and you have no easy way of knowing they haven't.

So by going with person B for better price for the same quality customers are driving person A out of business. Why? Because he was being honest on his taxes.

As for poker tournaments, the typical entry for big live events is $10,000 + $100. The entry fee is 1% of the prizes + television and spectator revenues. If they were to take 50% of the entry as fees the industry would die, because no pros could make a profit on that. Paying 23% of an entry fee out of the 1% taken is a rather difficult thing to do! I also dispute that 23% is the actual correct number. It's far more likely to be 30%+, unless you want to increase the deficit dramatically.

For every economist claiming that this tax does better I can give you nine who disagree. The problem is the analysis assumes a fraud free model. If there is no fraud in either model then the UnfairTax drives the economy more aggressively, by forcing unprofitable and less profitable companies to pay a larger tax burden, which includes making marginally profitable companies unprofitable, and resulting in companies that are struggling slightly, going outright under. If you assume the government isn't going to bail out any of these companies (pretty big if given the track record), then the ones that succeed can drive the economy. However in any model where companies are allowed to defraud the taxation, the economy is driven almost entirely by fraudsters bankrupting honest taxpayers. This leads to needing to raise taxation as revenues decrease and further hurts the country.