This thread was inspired by a comment made in another thread regarding a flat tax on percentage. Myself, I am personally, staunchly opposed to the income tax. It is burdensome and costly. It invokes fear in the hearts of the citizens of this country. What taxpayer welcomes the thought of a letter from the IRS showing up in their mailbox? Who doesn't feel concern every year when they drop that return in the mail or hit the send button on their electronic return? The system is loaded with confusion... deductions, credits, expenses, depreciation, capital gains, taxable/nontaxable incomes. It is a part time occupation throughout the year simply to keep everything organized and categorized so that you can then sit down and spend many hours figuring it all out and entering the information or turn it all over and spend a bit more of your hard earned money to let someone else do it for you. So last year, I was thinking about this and what might be a better system. I liked the idea of a national sales tax in lieu of an income tax. People will always buy things. Everyone pays a tax not on their income but on what they consume. It seems much more fair. No more annual headaches, no more fear of audit, no loopholes, no cheating, no interest and penalties and no more having your money taken just because you earned it. The IRS can be scaled down, thus saving the government money in wages and pensions... most of all, every citizen can breathe easier and be free to earn money by whatever (legal) means and not worry about whether or not it has to be reported. Consider your coin collections. If you decide to sell some or all of your coins, do you really want to have to report the sale? After all, you've already paid the taxes on the money you earned that allowed you to buy the coins, and now by law, you must report and pay taxes on any profit that you've made once you sell them. Once you've factored inflation on top of capital gains tax, you can be quite sure that even though it looks like profit on paper, in reality you've probably taken quite a loss. After I convinced myself that it would be a better idea, I did a little Googling to see who else may have shared my feelings and perhaps organized a working system. I came across the FairTax organization. I like the outline they have provided and wonder what others might think about it.
Fair Tax!!! I love it! Taxes tend to discourage people from the taxed activity... whatever it is. If generating income through gainful employment (or self-employment) is taxed... then that activity is discouraged. But that is exactly the sort of activity the government of the US is pledged to promote! Conversely, we in the US already consume 25% of the world's resources... we buy too much stuff already. So taxing CONSUMPTION instead of income would tend to balance trade deficits as well as encourage a bunch of lazy-butts to get moving. Let's do it!
Original post did not format correctly. You can see the scorecard for your state here. Arkansas does not support FairTax.
I will bet I'm safe in saying that at the same time you feel this way, you like all the things that these taxs buy, and probably take advantage of as many of them as you can. Am I right?
MY state...Texas, already taxes almost everything I buy with sales tax. Not sure which one I like better, MORE sales tax or just a flat rate tax, everyone regardless of income pays a certain percentage. This way, even though it is a flat rate for everyone, you still get more from the rich as they make more thus they pay more on the same percentage...that seems a fair to me. I guess more sales tax works the same way as rich people buy more and spend more thus would end up taxing on more tax burden. My problem with taxes is not paying them as much as what is done with them. Nor do I think that we should discourage consumers from buying, I find the statement 'americans buy too much' to be rather subjective'...Consumer spending is a very GOOD thing for jobs...just spending beyond ones means is bad
I am not certain what of these things you may be referring to, OldDan. If you give me some examples, I will answer honestly. Understand that I am not opposed to taxes nor to the government generating revenue. I am opposed to the current tax system and the difficulty, burden and fear that it provides the citizens of this country. Taxes should not be a burden on the people... and I don't mean financial burden... they should be easy and simple for us to pay. A national sales tax makes it easy for us. We pay our taxes on each purchase we make not on each dollar we make. It is automatic, collected by the seller, and we need never think of it again. Think of the changes in politics with this system. No longer would there be arguing about one group getting the tax cuts while another does not. The national sales tax simplifies taxes and frees up the parties to argue new platforms. There's no escaping the tax. There are no tax shelters in this plan, there's no working under the table, even those who are in the country illegally and working will be paying taxes because the taxes are paid whenever they go to the store. No, OldDan, I am not opposed to taxes. I am not opposed to paying my fair share to keep this country going. I am opposed to the extra work that I am forced to do in order to pay those taxes... 1040s, schedule Cs, depreciation of equipment... MOST of all I am opposed to the fear of making a mistake, of being audited by a government entity that has been given the powers of kingship.
I lived in Amarillo for a short time, and I must say that one of my favorite things about living in Texas... aside from the steaks... was the fact that your state has no personal income tax.
Although I will agree that our tax system is a mess at best, some of the other options are distasteful, if not downright unworkable. Flat taxes would eliminate, among other desirable deductions, the mortgage interest deduction, and would discourage home ownership. As anyone who's ever lived next to a rental home can tell you, it's much nicer to have the owner living in the building. A national sales tax would also hit the poor much harder than the rich.
Have you ever considered getting yourself a good tax accountant? They pay for themselves easily with all the loop holes they legally exploit. They also take the burden off of audits because they are responsible for any mistakes. I use the same accountant every year and he saves me tons of money. I don't think this is as big of an issue as you are making it out to be. Taxes and death baby!
The FairTax plan is a comprehensive proposal that replaces all federal income and payroll taxes with an integrated approach including a progressive national retail sales tax, a rebate to ensure no American pays federal taxes up to the poverty level, dollar-for-dollar revenue neutrality, and the repeal of the 16th Amendment. They have taken all of those issues into consideration. If you read into the site, the plan really is very workable. A monthly rebate determined by size of household ensures that no family or person pays the tax up to a certain spending amount to be within the poverty level.
But it shouldn't be so complicated that you need to hire a tax accountant. You shouldn't have to seek out loop holes to exploit... There shouldn't even be loop holes to exploit.
I am amazed to read a well thought out answer that goes beyond slogans here on cointalk. Well done KLJ!!
As one who has done a great deal of work on both rentals and homes occupied by owners, I can tell you that the condition of the dwelling is entirely dependent on the quality of the occupant. I have seen many rentals that were immaculately kept, and many owned homes that were absolutely trashed. The Flat-Tax proposal was initially introduced by my Senator Arlen Specter back in 1995. His proposal keeps the deductions for mortgage interest and charitable donations. The thing that I don't like about the flat-tax is that interest/dividend earnings and capital gains are exempted. I do like the fact that estates are exempted. Essentially, this plan benefits the rich greatly. Let's say I work for a couple of years under the flat-tax. I pay 20% on what I earn for my labor. During that time, I play the stock market. I make some great trades and am able to make $2,000,000. Now under the flat-tax, there is no tax paid on the gains from my trading. So professional day traders will pay no tax from the start. So I've got $2,000,000 sitting there that I've paid no tax on. What to do? Obviously, I'll throw that into some CDs. Let's say I drop that entire $2,000,000 into CDs earning 5% compounded monthly. That will yield gains of about $102,000 for the year. Again, I pay no taxes on that yield. Now, I can live quite comfortably on less than $102,000 a year. Have never made near that much in my life. So, I am effectively retired now... living entirely off of my investment earnings and rolling unspent earnings over into new CDs and never again paying a penny in taxes. Not really fair to the rest.
There shouldn't be a lot of things but it's what we have to work with. I agree with you that the current tax system is long overdue for a change but it must benefit someone pretty handily or it wouldn't still exist. You just have to ask yourself who is benfitting from the current system. You can fill in the blank with anyone you wish ______?
If you want to see some intresting info about "Incom Tax" watch Freedom To Fascism a 1 1/2 hr Documentry Link is to Google video version
