Hey Taxman - Tell Me

REPLACE the 16th Amendment with the FAIR TAX!!! (www.FairTax.org)

 

The groundwork is being laid for a National Sales Tax with The Marketplace Fairness Act.

 

As long as a National Sales Tax is phased in as the Federal Income Tax is phased out...I'm all for it!

However, I prefer the Fair Tax because it mitigates the regressive nature of a Sales Tax.

 

Sales tax and gross receipt taxes for all the states combined totaled 243 billion dollars. So to replace the revenue generated by Federal Income Tax the effective rate would have to equal approximately 10 times the average state sales tax rate.

 

Actually, no it does not. The fair tax covers much more than state sales tax. Some for-instances house sales, all internet sales, ALL business to business sales, etc.

 

The "average" embedded income tax in product prices is 23%. Replacement of the Federal Income Tax with a 23% National Sales Tax is revenue neutral for former Federal Income Tax taxpayers. The revenue increase comes in the form of tax receipts on the "underground economy"...tax cheats, criminals, illegal aliens, and foreign countries that do business in America, but don't fund the infrastructure they use.

Most people talk about "raising taxes" or "reducing spending" as the only solution to our deficit problem. No one talks about expanding the tax base to those that use our resources but don't pay for them. Once you take embedded income tax out of the price of our product sold overseas...and add sales tax to foreign products sold in America...you'll see a FLOOD of jobs returning to America.

The problem is that no party (except the Tea Party) talks about this because they each have a vested interest in perpetuating the Federal Income Tax.

 

Only new home construction would be taxed and all the goods and services (lumber, plumbing, electrical, etc - which is taxed under most state sales tax codes) would be exempt being they are inputs into the construction of that new home. If you tax these services and inputs the Fair Tax is longer a Sales Tax it becomes a Value Added Tax.

Business to business sales - I am not sure what you are communicating here. These sales are taxed by the states under their sales tax codes. Except items purchased as inventory to be sold at retail and raw materials used to manufacture finished goods. Again taxing these items transforms the Fair Tax into a Value Added Tax.

Internet sales again these are also taxable under state sales tax codes. The problem here is the State's authority to force sellers from other state jurisdiction to collect and remit. Under the Fair Tax you still have the same problem instead of state borders it will be country borders.

 

This may help...

 

If there is a 22% imbedded tax on everything, does this mean I can get 22% off on my next Nimitz class aircraft carrier or will the good folks at Newport News be smiling a lot bigger. Government services is a sizable part of the economy and I'm sure they will exempt themselves. Will the base PX be charging a VAT or for that matter the neighboring Indian reservation. Who wouldn't drive 200 mile to buy their next car from "Honest Injun Motors" (sorry I had to use it because it is so used car). There is always a way into the underground economy. I know some people do buy "wholesale" and cheat the state sales tax system. I doubt that we will get rid of the IRS, but they will transform into a collection and enforcement agency for Fair Tax. I think generally its a good plan, but it's not all unicorns and rainbows. I would love to see it take a go providing we can come up with some intelligent leadership to implement it and prevent it from becoming another political miscarriage.

 

I would recommend you watch the video (above). You can jump past the song...

One point in the video (with which I disagree) is that the Fair Tax will remove the tax burden on tax deferred IRA and 401k accounts (or similar accounts). Since those accounts were tax "deferred" from before the Fair Tax is enacted, I believe there should still be a tax liability. In other words, they shouldn't receive better treatment than Roth IRAs where folks invested after-tax dollars...(jmho).

 

Help how? It disputes nothing I wrote.

 

As outlined in the video, the Fair Tax is a point of sale tax on new products, only; resale products are not taxed. For instance, a new car is taxed, a used car is not taxed because the taxes have already been paid and embedded in the resale price. How States administer their sales tax laws is completely independent of the Federal Fair Tax.

The Fair Tax is specifically designed not to be a Value Added Tax (VAT). VATs are hidden tax, similar to income tax. The Fair Tax is a transparent tax that everyone can see...and choose to pay.

Currently, state sales tax on internet sales is only collected if that company has a brick & mortar store in purchaser's state. Again, state sales tax collection would be independent of a federal Fair Tax. All internet sales of new products would be taxed under the Fair Tax. That is easily enforced on products produced and sold in the United States.

I have no idea how it would be collected on international internet sales...that's a good question. I'm sure that's been considered, but I don't know the answer (sorry). Please share if you find out before I do.

What really amazes me is how attached folks seem to be to the Federal Income Tax. It's like someone in an abusive relationship; they don't like getting beat up every night, but can't summon the courage to break away and seek help.

The Fair Tax isn't intended to "dispute" anyone or fight with anyone...it's just a tax alternative to be considered...or not. It's not being shoved down your throat like Obamacare. I think it makes a lot of sense...but that's just me. Everyone should draw their own conclusion.

 

In theory, yes...your Nimitz class aircraft carrier would cost 22% less. However, since the Fair Tax also funds Social Security and Medicare, the Government may have to pay the tax. The idea is to keep it simple...without exemptions for anyone.

If "Honest Injun Motors" only sells used cars, there wouldn't be a tax, anyway. However, that's a good question. I don't know how Indian tribes would be treated under the law. Since it's actually been drafted into a Bill in the past, I'm sure that's been considered...I just don't know the answer (yet). Please share if you find out!

 

Damn you Yak, I had to blow off the tread mill this morning to watch the video. Downloaded the white paper and a copy of HR25. The thing that has to be rock solid is the no exemptions part or we will wind up with more of what we already have. Preventing the Mall of Native America is going to be a tough one since Native American reservation are by treaty a separate nation and exempt from taxation. New housing may take a hit if I can renovate an older house and sell it tax free if I'm a contractor. Gave me a lot to think about. Thanks!

 

A key piece of the Fair Tax that gets overlooked is the part where so many more people are contributing- such as criminals, tax cheats and foreign visitors. The drug dealers who can't claim income, the tax cheats who misreport their income & foreign visitors who aren't required to pay now will be included in the system to the tune of billions of dollars per year.

 

I like the part about taxing foreign goods sold in this country and removing our embedded income tax when selling overseas. I think this will make jobs to EXPLODE in this country.

Unions support the Democratic party because they support collective bargaining. However, collective bargaining only works when there's more jobs than skilled people to fill them. What good does it do to bargain for a job that doesn't exist?

That's why Unions should "Ditch the Democrats" and get behind the Fair Tax!

 

In 2012 Sales tax and gross receipt taxes for all the states combined totaled 243 billion dollars. The US Gov’t generates over 2.4 trillion dollars through income tax. 2.4 trillion dollars is 10 times the amount all the states generated through sales tax. So the Fair Tax, which is essentially a national sales tax, will have to produce an effective sales tax rate 10 times greater than the average of all state sales tax rate to be able to replace the revenue generated through Income Tax.
5 states have no sales tax – Delaware, Alaska, Montana, New Hampshire and Oregon. Of the 45 states that do have a sales tax their rates range from 2.9% (Colorado) to 7.5% (California). So a fairly decent estimate of the average sales tax rate for all states would be about 5.2%. Adjust this rate by 10% because 10% of the states have no sales tax produces an average sales tax rate for all 50 states of about 4.7%.
Therefore the Fair Tax is going to have to produce an effective national sales tax rate of approximately 47%. The Fair Tax is promoting a tax rate of 23%. The only way to accomplish this rate is by expanding the scope of taxable goods and services generally contained in the state sales tax codes. In fact the retail value of these additional goods and service would have to equal the retail value of all the goods and service already being sales taxed by the states to produce the promised 23% Fair Tax Rate.
Honestly I don’t think it is there – not even close – not at the retail level.
The Fair Tax points to lost sales tax revenue due to internet sales. California estimates they lose at least a billion dollars a year in sales tax revenue because of it. In 2012 California generated 28 billion dollars in sales tax revenue. 1 billion lost to Internet sales is less than 4%.
Yes the sale of new homes would be taxable under the Fair Tax but the goods and services paid to construct those homes would not be. I am not aware of any state sales tax code that taxes the sale of permanent new homes. But almost all the state sales tax codes collect sales tax on the materials and services (plumbing, electrical, HVAC, etc) employed to construct that home. In other words these monies are included in the 243 billion dollars of sales tax revenues of the states. So the only expansion here is the profits of the initial developer or prime contractor.
Most goods and services are already included in most sales tax codes except Lawyers, Accountants, Engineers, Medical, college and private school tuition and sales to non-profit and government entities.

 

Some states also have State Income Taxes that leverage off the Federal Income Tax. As pointed out in the video, they will likely evolve to where they leverage off the Federal Fair Tax. State Sales Taxes will likely do the same...but they don't have to.

As far total revenue is concerned (also covered in the video), some describe the Fair Tax as a 23% tax, while others describe it as a 30% tax. The way to look at it...is that 23¢ of each dollar is tax. Another way to look at it is that...if you bought a product for $1.00, you would pay $1.30 (30¢ being 23% of $1.00).

However you look at it, the amount of tax collected would be "revenue neutral" at that rate. That's not to say there won't still be a budget deficit. The good thing is that taxation would be transparent...meaning, if taxes rise or fall, everyone sees it and everyone feels it. That will go a long way towards bring spending under control. That's why Democrats don't like the Fair Tax.

 

All I know about taxes is that I pay between 28 and 32 percent while Mitt Romney pays 13%. That seems fair.

 

Then you sure as hell don't know much about taxes. So, you just blindly pay your taxes without knowing anything about the tax code, deductions, shelters, etc. If you know so little about taxes, you'll find it best if you just shut up instead of opening your mouth and displaying your ignorance. Typical liberal. Remind me never to seek tax advice from you.