Hey Taxman - Tell Me

OK...please explain how the Fair Tax widens the gap between Rich and Poor. This I gotta hear...

 

Joe...Be Not Hasty to Envy the Condition of Others.

An Ass congratulated a Horse on being so carefully provided for, while he himself had scarcely enough to eat, nor even that without hard work. But when war broke out, the heavy armed soldier mounted the Horse, and rushed into the very midst of the enemy, and the Horse, being wounded, fell dead on the battle-field. Then the Ass, seeing all these things, changed his mind, and commiserated the Horse, saying: "How much more fortunate am I than a charger. I can remain at home in safety while he is exposed to all the perils of war."

The Ass and the Charger Fable
An Aesop's Fable
With the Moral: Be not hasty to envy the condition of others.​

 

Wealth pools at the very top of the ladder. Even Adam Smith the father of capitalism believed this and he strongly believed in the inheritance tax. Any consumption tax is by nature regressive.

A regressive tax is a tax imposed in such a manner that the tax rate decreases as the amount subject to taxation increases. "Regressive" describes a distribution effect on income or expenditure, referring to the way the rate progresses from high to low, where the average tax rate exceeds the marginal tax rate. In terms of individual income and wealth, a regressive tax imposes a greater burden (relative to resources) on the poor than on the rich — there is an inverse relationship between the tax rate and the taxpayer's ability to pay as measured by assets, consumption, or income.

 

Two neighbors came before Jupiter and prayed him to grant their hearts' desire. Now the one was full of avarice, and the other eaten up with envy. So to punish them both, Jupiter granted that each might have whatever he wished for himself, but only on condition that his neighbor had twice as much. The Avaricious man prayed to have a room full of gold. No sooner said than done; but all his joy was turned to grief when he found that his neighbor had two rooms full of the precious metal. Then came the turn of the Envious man, who could not bear to think that his neighbor had any joy at all. So he prayed that he might have one of his own eyes put out, by which means his companion would become totally blind.

Moral of Aesops Fable: Vices are their own punishment​

​

 

No one under the poverty level pays ANY tax...no Income tax, no Social Security tax, no Medicare/Medicaid tax...nothing.
Because it gets it revenues by broadening the tax base, taxes are reduced for all current tax payers.

How is that "regressive"?

Under the Fair Tax, if you want healthcare, buy healthcare. If you want education, buy education. Why is it so important to you that the money come from someone else?

 

Ahhh...I found a video of JoeNation in 1978! (nice hair)

 

Did you come up with that on your own? Or did you copy it from somewhere? If you copied it, please provide your source.

 

Here lies the problem - Congress should have invited Accountants instead of Economist to testify.

 

HR-25, The Fair Tax Act of 2013, is still in Committee (I think). It's a bit different that what was proposed in the Neal Boortz book. The bill has 73 co-sponsors so I hope at least a few of them have accounting backgrounds. I posted a summary of the bill along with a link to the full context in Post #57 (for your viewing pleasure).

 

Currently, people at a level of poverty that we deem low enough pay no income tax because they don't make enough. So you're saying that paying taxes on everything they consume would somehow "lower" what they pay? Did you just not read what regressive tax means?

 

I did! ...did you not read the Fair Tax?

Currently, corporations don't pay tax, they pass it along in the price of their products. Removal of the Income Tax removes between 19%-26% of the embedded price of products.The Fair Tax simply brings the price of the product back up to where it is now...meaning, "revenue neutral". Under the Fair tax, the poor receive a significant tax break!

That's the problem with the Federal Income Tax. You may "think" you're not paying it, but you are. It's hidden in the price of all the products you purchase. It's also hidden in the price of products sold overseas, whereas, foreign products sold in the US currently pay no tax at all.

Shouldn't foreign products sold in this country help maintain the infrastructure they use? We have to pay their consumption taxes. That's one of the reasons why, with the recent Free Trade Agreements, it's so advantageous for companies to move manufacturing jobs off-shore. You reverse that, and jobs will flood back to this country...further helping those in search of a well paying job.

Joe, please, take some time and look over HR-25, the Fair Tax Act of 2013 summarized in Post #57 with a link to the full text. You may be pleasantly surprised. Not only is the Fair Tax NOT regressive. It replaces the regressive payroll taxes of Social Security, Medicare, and Medicaid currently in place.

The best part of the Fair Tax is that it eliminates the hidden taxes embedded in the products we buy. When taxes go up or down everyone knows it; everyone sees it.

The gridlock in Washington is over "reducing spending" or "raising taxes". There's a third choice; "expanding the tax base"; bringing the US tax code into the 21st century...from a time of isolationism (1913) into the century of globalization (2013).

 

Joe, Wiki is your friend;

http://en.wikipedia.org/wiki/Distribution_of_the_FairTax_burden

I tried to paste the chart at the bottom of the article but the formatting turned to garbage.

 

Thanks, c jay!!

 

I think Wiki is actually the friend of the last person to take an interest in the topic. For example, if I am a Fair Tax advocate I might just skew the information I post in a positive direction leaving out details that do not support my opinion. Sometimes, I can actually include things I know are untrue. So I am willing to look at Wiki for some background knowledge and even post from Wiki but only after I have seen the same information in other sources. Wiki is not so much a friend as it is a brother-in-law that gets dragged to the family Thanksgiving event and wouldn't necessarily be welcomed had it not been for the crazy sister that saw fit to expose everyone to this guy though marrying him.

 

I have found Wikipedia to be more balanced than your average Liberal or Conservative think tank who sole goal is to present a point of view that is favorable those footing the bill. It's like baring the crazy brother in-laws from Thanksgiving, so you won't have to deal with them. Wiki is like an open smorgasbord with all welcome and reference links posted so you may take which ever road you choose.

 

A typical Married Couple Earning $39,300

pays $3,006.00 annual in FICA Tax
Income Tax rates in 2006 10% on 1st $7,550, 15% on $7,550 - $30,650
$39,300 - $10,300 (standard deduction in 2006) - $6,600 (personal exemption amt in 2006 times 2) = $22,400 AGI.
Income Tax owed
($7,550 * 10%) + ($14,850 * 15%) = $2,228 Income Tax
$3,006 (FICA) + $2,228 (Income Tax) = $5,234.00 annual tax burden.

FLAT TAX
2006 poverty guidelines for a family of 2 - $13,200
$13,200 * 23% = $3,036 (annual prebate)
$39,300 (Income) + $3036 (prebate) = $42,336 (Total potential spending)
$42,360 (potential) / 123% = $34,420 (potential value of goods and services purcahses)
$42,360 (potential) - $34,420 (retail value) = $7,940 (Potential Flat Taxes paid)
$7,940 (Flat taxes pd) - ($3,036 prebate) = $4,904 (Potential annual Tax Burden)

I use potential in computing the Flat Tax burden for several reasons.
It is based on 100% spending of income on only taxable consumer goods and services (no savings or non-taxable purchases).

BUT on the other hand the Flat Tax also taxes DEBT. Purchases made on credit.

 

A typical family described above most likely would purchase an older house and late model used cars, which under the current plan, would cut their tax burden by more than half. In order for the Fair Tax to be sustainable, it would have to apply to all goods and services. I know that this goes against their perception of double taxation, but that is something that they will have to accommodate.

 

Still doesn't solve the issue of Debt being taxed. Spending in an amount beyond one's annual income such as buying a new home with a 30 year mortgage.

These are some of the issues I have with the Flat Tax now being promoted to the general public.
I believe the 23% tax rate is significantly under estimated.
I believe the tax burden charts and graphs being presented are computed incorrectly and fail to take into account the taxes generated by spending the Prebate.
I do not believe the tax will get rid of the IRS and if it does it will be replaced by another agency just as onerous.
I have not been able to dtermine which entity is actually being assessed the tax. Is it the consumer or the retail business.
The Prebate requires the US Gov't to write a check to every household every month of the year.
I don't like the idea of transforming State Tax Authorities into a collection and enforcement arm of the US Government.

 

Based on the tones of the interviews I'm assuming they are thinking that the tax will be financed along with the house. This is fine for step one, but puts you over a cliff in steps two and three. Step two Financing: No banker will loan anyone more than 80% value on the house, or at least I think the days of 123% financing are gone. This leaves you with a 20 plus 30 percent down payment. When it is time to sell, Step three; Cost plus 30 is now your breakeven point. I hope plan on staying for a while and live in a good market.

The only solution I can come up with would be a pay-go approach. You pay tax on equity as it is being applied. Tax on the down payment and a monthly tax on the principle of the loan. In other word if you have a 1000.00 month note consisting of 750.00 in interest and 250.00 in principle then tax is applied to the principle. This leads me to the question of whether interest is subject to the Fair Tax? I don't think any of this has been addressed.

 

Why are "we" always trying to cut our own personal tax burden and then complaining about the national debt? We cut corporate taxes to zero, we provide loopholes to anyone that can pay for them, we gift corporations with millions of dollars in tax giveaways to get them to move from one state to the next, and then turn around and borrow 1 trillion dollars a year from China. You can always complain that the government spends too much but that is a complaint without a definable acceptable amount of spending that is acceptable. We obviously should be funding our own government and we certainly have both the corporate and individual wealth in this country to do so. While corporate wealth has increased year after year, their share of the tax burden has fallen year after year. While individuals have seen their incomes fall year after year, they have at the same time taken on more and more of the tax burden over the same period.
Now I am all for giving individuals a tax break but that can never happen without driving the national debt through the roof unless highly profitable corporations start paying a greater share. We cannot cut the federal budget to any significant degree without massive cuts to all social programs, all defense programs, and all entitlements. Nobody is willing to make any of those drastic cuts and we would all suffer enormously if those cuts were ever actually instituted. It seems the only logical course of action is to follow the money. Who is swimming in money right now? Is it you and I? Is it the government? No, it's pretty much corporations. A better economy would take us just so far but the money needed to kick-start that economy has only one source. Why is this so hard to understand?