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2004-12-01 Home Front: Politix

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Posted by Ol_Dirty_American 2004-12-01 4:50:44 AM|| || Front Page|| [11132 views since 2007-05-07] Top

#1 This requires a constitutional amendment to throw out the 16th Amendment. I doubt the state legislatures will agree to that as it will significantly reduce their ability to raise funds by piggybacking off the IRS.

The decline in the value of the housing stock is also a very real issue. But that's what happens when you take away a government subsidy.

Notwithstanding the above, it is a good idea. Your concerns about the low income folks are met by the elimination of the rapacious Social Security taxes they pay but do not receive benefits for and exemptions for food and perhaps clothing. I doubt it will pass if it results in starvation.

There was a thread on this a few weeks ago and one of the commenters was really gung ho. I'm sceptical it will happen, but want to hear the debate.

Posted by Mrs. Davis 2004-12-01 9:35:13 AM|| 2004-12-01 9:35:13 AM|| Front Page Top

#2 Don't forget that the Tah Ray Sah Kerry's of the world usually pay a whole lot less than you and I do.

Posted by 2b 2004-12-01 9:51:26 AM|| 2004-12-01 9:51:26 AM|| Front Page Top

#3 ODA, As put forth by Linder only new manufactured goods would be taxed. So buying used goods would avoid the tax.

Posted by domingo 2004-12-01 9:56:00 AM|| 2004-12-01 9:56:00 AM|| Front Page Top

#4 One thing I just thought of is I wonder if people will make purchases in other countries when they can due to their being no sales tax. For example large scale purchases like cars and planes etc... similar to how people go to NJ to shop to avoid paying NY sales tax... That could be really bad.

Posted by Damn_Proud_American 2004-12-01 9:56:38 AM|| [http://brighterfuture.blogspot.com] 2004-12-01 9:56:38 AM|| Front Page Top

#5 You have to declare goods at the border now. How does a sales tax change that?

Posted by domingo 2004-12-01 10:01:05 AM|| 2004-12-01 10:01:05 AM|| Front Page Top

#6 So you're saying we'd could apply the sales tax to goods purchased by americans outside of america and repatriated to america... that might work. You would need to somehow differentiate between things that are meant for resale in the US and things that are meant for consumption. For example a car dealershipi shouldn't be paying sales tax on goods they bring in to resell but a person who bought their car in canada should... it could get complicated but might be possible. Anyone see any drawbacks to that?

Posted by Damn_Proud_American 2004-12-01 10:04:30 AM|| [http://brighterfuture.blogspot.com] 2004-12-01 10:04:30 AM|| Front Page Top

#7 Thank's Mrs. D. I do not think that it requires us to throw out the 16th amendment though. We are not making income taxes illegal, we are just not charging any :).

The problem with stripping a subsidy on housing is that you are potentially clobbering the equity value of most families in the united states. But, I actually think housing keeps up in this situation regardless as people will theoretically have more money to buy a house. At the end of the day, I think you will be able to buy a house tax free or at a much lower tax rate if something like this passes.

Putting different tax rates on different items and/or excluding some items can bring back a bureaucracy that we were trying to avoid with income taxes.

Posted by Ol_Dirty_American 2004-12-01 10:13:07 AM|| 2004-12-01 10:13:07 AM|| Front Page Top

#8 DPA,
Not sure how this is addressed in Linders bill. However you are assuming that the purchase in Canada would be less expensive then purchasing in the US. Does Canada have a sales tax?

The point may be moot as some research contends that a sales tax would be price neutral. Basically the cost of an income tax is baked into goods already. Linder's website is a good place to start researching.
http://linder.house.gov/index.cfm?FuseAction=Issues.Detail&Issue_id=84
Also www.fairtax.org

Posted by domingo 2004-12-01 10:17:49 AM|| 2004-12-01 10:17:49 AM|| Front Page Top

#9 I saw a story on this last night and the tax would have to be 15-20%. Also they (the IRS) would have to start some program to supplement the lower income earners that don't pay taxes now. That creaking sound is my back when I think about who the tax burden will fall on after the dust clears. I would be in favor of implementing a combination of both. Lower taxes and institute a small national sales tax. If things work out (or not) when can revisit it in a few years.

Posted by Cyber Sarge 2004-12-01 10:20:17 AM|| 2004-12-01 10:20:17 AM|| Front Page Top

#10 A sales tax would be much better than what we have now.I favor a flat tax,evryone pays the same(individuals,corporations,that includes clergy who are tax exempt but live very well off the church,but are tax exempt)and I mean everyone.The Pastor at the local Baptist Church lives in new(less than 5years old)home valued at $173,000,late model vehicles,and pays no utilities,insurance or any other living expenses(even has church paid for ISP)and does not pay a dime in taxes.Not sure if it still holds true but the Catholic Church used to be the single largest property owner in the world and yet is tax exempt.

Posted by raptor 2004-12-01 10:21:56 AM|| 2004-12-01 10:21:56 AM|| Front Page Top

#11 DPA, I love it, this is another side benefit and will ensure much tighter border controls. Wouldn't want any tax dollars slipping away :).

Domingo:
Thanks, sorry, I have no details. I would imagine services would be taxed as well though, would they not? Does that mean rent gets taxed? If that is the case, it will equalize the removal of the mortgage deduction.

Posted by Ol_Dirty_American 2004-12-01 10:23:13 AM|| 2004-12-01 10:23:13 AM|| Front Page Top

#12 DPA, No repeal, no sales tax. The legislation discussed a few weeks ago did include repeal. If not, I'm against giving the government a new way into my wallet without removing an old one. Permanently.

Posted by Mrs. Davis 2004-12-01 10:23:27 AM|| 2004-12-01 10:23:27 AM|| Front Page Top

#13 The problem with a sales tax on such a scale is that it is hard to define objectively (see questions above) and inevitably leads to enormous pressure on business to keep track of absolutely everything AND give direct access to that information to the government.

The best solution today would be a flat tax on individual income. As for the "poor" -- let them carry a share of the national tax burden, and soon you may have more popular traction to reduce government spending. At the moment a majority of the American people pay no federal taxes -- hence their self-interest is to keep increasing taxes for government spending.

The ideal solution in a small-government world would probably be fees on contracts. All major social and economic interactions involve a contract, and include the expectation that government will help enforce it. It could even be optional, so that contracts without paid fee will not be enforced by the courts (but you may pick private arbitrators, who will charge you a little something of course).

Posted by Kalle (kafir forever) 2004-12-01 11:29:36 AM|| [http://radio.weblogs.com/0103811/categories/currentEvents/] 2004-12-01 11:29:36 AM|| Front Page Top

#14 This tax is very interesting to me. The way it's explained by Rep. Linder (R-GA) of my district is intriguing. Basically, there is a "built in tax" to everything we already buy for complying with IRS regs (again, this is just Federal Income Tax). The bill is supposed to repeal the 16th Amendment and will ONLY tax "new items." Therefore, you buy a used home, no tax. You buy used goods on Ebay, no tax. In theory, the "built in tax" for IRS compliance is 24-26% already, so with a market economy, prices would drop when you do away with IRS/16th Amend. and the 22-24% national sales tax bumps you back up to what you're paying today. The bill allows for a refund check monthly up to the poverty line for necessities (food, housing, clothing, etc.), so it covers the poor. Basically, you'd pay what you pay for goods today (only new goods, at that), the poor get a refund check monthly and we ALL get to keep ALL of our paycheck as far as the Feds are concerned. Take a look at your paystub and see how much is withheld for Fed. Income tax, Medicare and Social Security combined (which this would replace all those withholdings). Of course, passing the bill is another matter. Every time Rep. Linder comes home, I go hear him speak and he's gotten more and more backing for this. It will be a rough transition the first few years, but would be a BOOM for the economy. According to Linder, every single CEO/CFO he's talked with about this says they'd build their next manufacturing plant right here if this were to pass.

Posted by BA 2004-12-01 11:37:32 AM|| 2004-12-01 11:37:32 AM|| Front Page Top

#15 Another reason a sales tax is a nefarious device is that it hides the cost of government. How many people know how much tax they're paying on gas?

I want it to be a painful payment out of everybody's paycheck. Only then will a majority rise and demand that government be restrained again.

Posted by Kalle (kafir forever) 2004-12-01 11:50:08 AM|| [http://radio.weblogs.com/0103811/categories/currentEvents/] 2004-12-01 11:50:08 AM|| Front Page Top

#16 I have a suggestion-before anyone lauds this idea, go to each family member in your families, have them calculate what they paid last year on their 1040's (in terms of percentage of income and real dollars) and what they would pay under this scheme (same methods, taking into account the purchasing they did this year.) When I calculated it, I found my taxes went way up, wiping out the breaks made under Bush AND increasing my taxes even beyond that (using the 23% figure being batted around on cable). Many of your family members might find themselves in that same position themselves.

I am glad to see some creative economic thinking, but this idea should be tested out on each income bracket; if that doesn't happen, this passes, and American families subsequently have fewer dollars in their pockets to spend, then no economists can say they weren't warned.

Posted by Jules 187 2004-12-01 12:00:21 PM|| 2004-12-01 12:00:21 PM|| Front Page Top

#17 Presumably one of the overarching goals of the flat tax/sales tax approach is to encourage savings. If your family's aggregate taxes go up, Jules, it's likely because, overall, you're very heavy consumers. Granted that we want to continue to prime the pump of our grand consumer economy-- which accounts for 2/3rds of GDP overall-- but with the dollar falling rapidly and the budget deficit swelling we are facing a much bigger problem. As a nation we simply don't save enough.

This renders us extraordinarily, and dangerously, dependent upon foreign creditors. If the Asian central banks change their view of the relative risk/reward profile of US treasuries, and decide to dump them en masse, then we will be well and truly screwed. Interest rates will soar. The housing market will crash. Consumer demand will plummet, unemployment will rise, and the downward spiral will likely continue.

I for one would like to see much greater incentives for saving and disincentives for consumption, esp gasoline. Disruptive? Sure, but a lot less disruptive than a financial crash caused by our inability to save and cover our own debts.

Posted by lex 2004-12-01 1:26:16 PM|| 2004-12-01 1:26:16 PM|| Front Page Top

#18 Jules, did you take into account all your tax planning expneses and the tax planning expenses built into all the goods you buy? It may not be so bad afterall. Besides that, you have the bonus of more efficient taxation of the underground economy.

Kallee national sales tax will be closely watched. People throw fits when states raise their's and businesses better keep track of everything it is a tough competitive environment out there. Businesses will not be the ones crying about this bill. That's for sure.

Posted by Ol_Dirty_American 2004-12-01 3:06:32 PM|| 2004-12-01 3:06:32 PM|| Front Page Top

#19 There is a lot of misinformation/confusion in this thread. Far more than I can address. But so far no one has mentioned the most important reason for a value added consumption tax which is it is 'enconomically efficient'. Its cheap to administer, hard to avoid, and does not produce productivity killing economic distortions (and produces lots of unemployed accountants and lawyers).

Australia introduced such a tax (collected by the Feds on behalf of the states) a few years ago under very contentious circumstances. All political parties now support it and the Australian economy has boomed since its introduction.

Posted by phil_b 2004-12-01 3:29:37 PM|| 2004-12-01 3:29:37 PM|| Front Page Top

#20 Lex-Your assumption is incorrect. It's my sister-in-law that has consumeritis. ;)

You make a good general point about savings, but you're off target in my case.

ODA-I do my own tax planning and prepare my own tax returns, so that theory also is incorrect.

All I am challenging you to do, folks, is do the math, not just for yourselves, but for people in tax brackets above and below you. We support empirically-based arguments, right? OK-let's see if this idea passes the smell test.

Posted by Jules 187 2004-12-01 4:35:11 PM|| 2004-12-01 4:35:11 PM|| Front Page Top

#21 Compared to a flat tax, a national sales tax is extremely regressive - almost as regressive as a head tax, which is why lower-income people will find their taxes raised significantly. Currently, someone with an income of $12,000 pays $453 in Federal taxes. Assuming he spends all of his income, the Federal tax for him under a 23% sales tax regime is $2760, or about six times his current taxes. Politically, this may be a non-starter.

Posted by Zhang Fei 2004-12-01 4:45:37 PM|| [http://timurileng.blogspot.com] 2004-12-01 4:45:37 PM|| Front Page Top

#22 Not so, grasshoppa. Food, rent, busfare, perhaps clothing as well would all be exempt from the tax, so your hypothetical taxpayer would probably pay no more than 23% of whatever he/she spent on things like entertainment and electronics, which probably don't amount to more than $1000 per year.

Posted by lex 2004-12-01 4:52:57 PM|| 2004-12-01 4:52:57 PM|| Front Page Top

#23 Correction - the Federal tax calculated for the previous income level should have been $2244.

For someone making $24,000, his existing Federal tax would have been $2,084. Under a 23 per cent sales tax, assuming he saves $3,000 a year, his Federal taxes would be $3,926 per year, almost doubling his tax burden. Whatever one's feelings about the equitability of a progressive tax system, the imposition of a national sales tax may well swell the ranks of welfare recipients, in addition to the numbers of low-income Republicans voting for the Democrats. The question is whether enough latte-swilling Democrats will consider switching their votes to the Republican Party to make up for the loss of blue-collar Republican votes.

Posted by Zhang Fei 2004-12-01 4:57:05 PM|| [http://timurileng.blogspot.com] 2004-12-01 4:57:05 PM|| Front Page Top

#24 I am not understanding how anyone thinks companies will automaticly "lower prices" because they "save" money not required spend money of meeting income tax requirements? How is increasing the cost of food and energy supposed to get me to save money?

A flat 10% unescapeable income tax makes more sense. Rich or poor you pay. An the 10% is fixed by law no rasing it now lowering it period. If some trust pays you X dollars you pay tax on it. No sheltering income. IF it's income of any type and you live in the US you pay 10% up front. It's QED.

Posted by Sock Puppet of Doom 2004-12-01 5:01:43 PM|| [http://www.slhess.com] 2004-12-01 5:01:43 PM|| Front Page Top

#25 Rent is exempt but not mortgage payments?

I am completely doubtful, lex, if such a bill came to pass, that food, clothing, etc would be exempt. If that's the plan, then they better do some better marketing--get out front and guarantee those things will be exempt-otherwise, you are looking at MASSIVE opposition to the bill from lower and even middle income people, if Zhang Fei's calculation is right.

What would be wrong with a flat tax?

Posted by Jules 187 2004-12-01 5:02:04 PM|| 2004-12-01 5:02:04 PM|| Front Page Top

#26 Kalle - I'd be interested in your source for "a majority of American people pay no Federal taxes." Every American who draws a paycheck pays 9% (effectively 18%) of SocSec on the first $80K+, income taxes kick in at a fairly low rate, and there are a variety of exise taxes and so on. I would guess an extremely small percentage of adult Americans completely avoid any Federal tax. Most of those are the WSJ's "lucky duckies" at the extreme low end of the income scale who aren't avoiding taxes by means of their political pull, I can assure you.

Posted by VAMark 2004-12-01 5:02:15 PM|| 2004-12-01 5:02:15 PM|| Front Page Top

#27 lex: Not so, grasshoppa. Food, rent, busfare, perhaps clothing as well would all be exempt from the tax, so your hypothetical taxpayer would probably pay no more than 23% of whatever he/she spent on things like entertainment and electronics, which probably don't amount to more than $1000 per year.

From the article: Proponents seek a 23-cent national sales tax on all retail goods, everything from groceries to clothes, cars to electronics.

It looks like services aren't included, but I suspect that'll be a non-starter, since the US is a service economy in such a big way.

Posted by Zhang Fei 2004-12-01 5:02:46 PM|| [http://timurileng.blogspot.com] 2004-12-01 5:02:46 PM|| Front Page Top

#28 Re-For someone making $24,000, his existing Federal tax would have been $2,084. Under a 23 per cent sales tax, assuming he saves $3,000 a year, his Federal taxes would be $3,926 per year, almost doubling his tax burden.

It should raise nothing but a giggle to say that someone GROSSING $24,000 per year is saving $3,000 per year. Let's refigure that using, say, half that figure. Now what's their tax liability?

Posted by Jules 187 2004-12-01 5:06:33 PM|| 2004-12-01 5:06:33 PM|| Front Page Top

#29 VAMark: Kalle - I'd be interested in your source for "a majority of American people pay no Federal taxes."

I think he means no Federal income taxes - defined as monies not earmarked for Social Security or Medicare.

Posted by Zhang Fei 2004-12-01 5:08:48 PM|| [http://timurileng.blogspot.com] 2004-12-01 5:08:48 PM|| Front Page Top

#30 ??? Food would be exempt. Rent would almost certainly be exempt. Clothing probably would be as well. Assume your average $24k per yr income person spends the following annually on each of these items:

Food: $400 per month, or $4800 annually. Exempt.

Rent: $500 per month, or $6000 annually. Exempt.

Bus or metro fare: $100 per month, or $1200 annually. Exempt.

Clothing: ~$80 per month, or ~$1000 annually. Exempt.

That totals $13,000 in exemptions. Deduct another $3,000 in savings as per your example and you end up with only $8,000 that's consumed and taxed, which means taxes paid = 0.23 * 8000 = $1840.

Posted by lex 2004-12-01 5:09:30 PM|| 2004-12-01 5:09:30 PM|| Front Page Top

#31 If groceries and rent are not exempt then I oppose the bill wholeheartedly. Taxing these at 23% would of course be massively regressive and unfair.

Posted by lex 2004-12-01 5:12:10 PM|| 2004-12-01 5:12:10 PM|| Front Page Top

#32 Jules 187: It should raise nothing but a giggle to say that someone GROSSING $24,000 per year is saving $3,000 per year. Let's refigure that using, say, half that figure. Now what's their tax liability?

In this scenario, his Federal income taxes under a 23% sales tax regimen would be $4207 (vs the $2084 he pays today).

Posted by Zhang Fei 2004-12-01 5:13:04 PM|| [http://timurileng.blogspot.com] 2004-12-01 5:13:04 PM|| Front Page Top

#33 ZF: In this scenario, his Federal income taxes under a 23% sales tax regimen would be $4207 (vs the $2084 he pays today).

That should have read:

In this scenario, his Federal sales taxes under a 23% sales tax regimen would be $4207 (vs the $2084 he pays today).

Posted by Zhang Fei 2004-12-01 5:14:46 PM|| [http://timurileng.blogspot.com] 2004-12-01 5:14:46 PM|| Front Page Top

#34 lex: If groceries and rent are not exempt then I oppose the bill wholeheartedly. Taxing these at 23% would of course be massively regressive and unfair.

I don't know if it would be unfair. (The idea that the rich should pay more is generally held to be fair. But why is that? Simply because in a democracy, the poor can gang up on the rich? This is the kind of thinking that brought us the welfare state, where the very poor and the liberal elites ganged up on the middle class). But it would certainly push us back to the system of taxation prior to the introduction of the income tax.

Posted by Zhang Fei 2004-12-01 5:19:09 PM|| [http://timurileng.blogspot.com] 2004-12-01 5:19:09 PM|| Front Page Top

#35 I don't think it really boils down to class warfare. I think it's more a case of people giving up on imaginary thinking and working with the real numbers real Americans would have to deal with.

In my neck of the woods, there's a saying-you can't squeeze blood out of a turnip. If a wallet is empty, then it doesn't matter to me how good your product is, I'm not going to be buying it.

How about that flat tax?

Posted by Jules 187 2004-12-01 5:24:28 PM|| 2004-12-01 5:24:28 PM|| Front Page Top

#36 BTW-Thanks for the calcs, guys!

Posted by Jules 187 2004-12-01 5:25:04 PM|| 2004-12-01 5:25:04 PM|| Front Page Top

#37 Go to fairtax.org

http://www.fairtaxvolunteer.org/smart/sketch.html

I like everything about this except I think the rebate part of it is a bad idea (even though that makes it progressive). The tax rate would be much lower without it, and they gloss over the fact that some federal agency (IRS?) would have to administer the payments, keep track, make sure there isn't any fraud, etc.

Posted by David Fass 2004-12-01 5:34:30 PM|| 2004-12-01 5:34:30 PM|| Front Page Top

#38 Well, it's a marketing job of a sort, Mr. Fass. Thanks for the link, though.

Posted by Jules 187 2004-12-01 5:39:24 PM|| 2004-12-01 5:39:24 PM|| Front Page Top

#39 Exemptions from the Fair Tax website:

No tax on used goods. No tax on business inputs. With the FairTax, if you choose to buy any new good or service, the sales tax is charged just as state sales taxes are computed today. If you choose to buy used goods - used car, used home, used appliances - you do not pay the FairTax. If, as a business owner or farmer, you buy something for strictly business purposes (not for personal consumption), you pay no consumption tax. So, in deciding what to buy, you get to choose whether or not you pay the federal consumption tax.

No federal sales tax up to the poverty level means progressivity like today's tax system. Furthermore, to ensure that no American pays tax on necessities, the FairTax plan provides a prepaid, monthly rebate for every registered household to cover the consumption tax spent on necessities up to the federal poverty level. This, along with several other features, is how the FairTax completely untaxes the poor, lowers the tax burden on most, while making the overall rate progressive. However, the FairTax is progressive based on lifestyle/spending choices, rather than simply punishing those taxpayers who are successful. Do you see how much freer life is with the FairTax instead of the income tax?

Posted by Zhang Fei 2004-12-01 5:43:12 PM|| [http://timurileng.blogspot.com] 2004-12-01 5:43:12 PM|| Front Page Top

#40 What about the state sales tax we are paying now?
Are we looking at adding that on top of 23 cents on the dollar per item ?
oh the poor shall be poorer .....

Posted by dog111 2004-12-01 5:54:14 PM|| 2004-12-01 5:54:14 PM|| Front Page Top

#41 Jules 187: Well, it's a marketing job of a sort, Mr. Fass. Thanks for the link, though.

It appears that the 23% sales tax is also in lieu of the 15.3% Social Security / Medicare payroll tax. This changes my calculations drastically. The salary calculation for a $24,000 per year wage-earner was after these payroll taxes had been submitted. If you add the payroll tax back in, then the numbers change drastically. Let's start from the basics:

Current taxation system:
After SS taxes, but before Federal income taxes, no state income tax (as in Alaska, for example), $24,000 in income - pays $2084 in additional Federal taxes, leaving $21,916 of disposable income. He then spends $20,500 of that disposable income, leaving $1,416 in his savings account.

23% sales tax system:
15.3% representing SS taxes are added back in, meaning his take home pay is now $28,335. He spends $20,500 of that disposable income, incurring a Federal sales tax bill of $4,715, leaving him with a savings balance of $3120 for the year.

Sounds like a political winner to me.

Posted by Zhang Fei 2004-12-01 5:57:43 PM|| [http://timurileng.blogspot.com] 2004-12-01 5:57:43 PM|| Front Page Top

#42 It also works for the $12,000 wage-earner:

Current taxation system:
After SS taxes, but before Federal income taxes, no state income tax (as in Alaska, for example), $12,000 in income - pays $423 in additional Federal taxes, leaving $11,577 of disposable income. He then spends $11,577 of that disposable income, leaving $0 in his savings account.

23% sales tax system:
15.3% representing SS taxes are added back in, meaning his take home pay is now $14,168. He spends $11,577 of that disposable income, incurring a Federal sales tax bill of $2663, leaving him with a credit card debt of $72 for the year.

However, the sales tax rebate on necessities up to the federal poverty level takes care of this debt. The poverty level is around $18,000. This means the $12,000 wage earner gets every dollar of the sales tax spent on necessities rebated back to him. Assuming rent is covered, and he spends $450 a month on rent, he will get at least $1242 back, which means he not only pays off his notional credit card, he ends up with a savings balance of $1170, compared to $0 under the present system.

Posted by Zhang Fei 2004-12-01 6:10:43 PM|| [http://timurileng.blogspot.com] 2004-12-01 6:10:43 PM|| Front Page Top

#43 Much betta, grasshoppa. Wike it.

Posted by lex 2004-12-01 6:40:07 PM|| 2004-12-01 6:40:07 PM|| Front Page Top

#44 "It appears that the 23% sales tax is also in lieu of the 15.3% Social Security / Medicare payroll tax."

Where did you get that 15.3% figure? That looks like the "matching tax" of the employer has been added in. Let's stick with the employee end of it, if we can. Aren't those taxes 6.2 & 1.45, respectively?

Posted by jules 2 2004-12-01 6:48:21 PM|| 2004-12-01 6:48:21 PM|| Front Page Top

#45 lex: Much betta, grasshoppa. Wike it.

The problem here is tax neutrality - they need to collect as much money with a sales tax as they currently do with a whole complex of taxes. The corporate income tax is going away. And individuals are all paying less taxes? Something doesn't add up here. I suspect what they're hoping for is that the increase in disposable income is going to get people spending more money.

Posted by Zhang Fei 2004-12-01 6:48:53 PM|| [http://timurileng.blogspot.com] 2004-12-01 6:48:53 PM|| Front Page Top

#46 jules 2: Where did you get that 15.3% figure? That looks like the "matching tax" of the employer has been added in. Let's stick with the employee end of it, if we can. Aren't those taxes 6.2 & 1.45, respectively?

Under this plan, both sides of it are supposed to be eliminated. BTW, the employer doesn't pay that tax. The employee does. The employee's pay is reduced by the amount the employer supposedly pays for the tax.

Posted by Zhang Fei 2004-12-01 6:52:01 PM|| [http://timurileng.blogspot.com] 2004-12-01 6:52:01 PM|| Front Page Top

#47 WaiIt a second. Aren't you deducting 15% from the taxes the employee pays in your calculations? If so, you are saying that I am paying 15% + a federal tax, coming to a tax rate of 36% of my gross income? I don't think so.

I admit that I am no financial wizard, but as I recall from my payroll preparation days, I doubled those figures to come up with 941 tax payments for the employer.

Posted by jules 2 2004-12-01 6:57:26 PM|| 2004-12-01 6:57:26 PM|| Front Page Top

#48 jules 2: WaiIt a second. Aren't you deducting 15% from the taxes the employee pays in your calculations? If so, you are saying that I am paying 15% + a federal tax, coming to a tax rate of 36% of my gross income? I don't think so.

The 15.3% is the combined employee/employer SS tax. And yes - without the tax, the full salary would be paid to the employee. The employer vs employee pays distinction is only a notional one. The employer doesn't pay for your health care either - he just deducts the cost from the higher salary he would have paid you otherwise.

Posted by Zhang Fei 2004-12-01 7:08:48 PM|| [http://timurileng.blogspot.com] 2004-12-01 7:08:48 PM|| Front Page Top

#49 If so, that should be explicit in the bill. "Employee only pays 6.2 and 1.45%." Employers will thus have no exit for "adjusting pay".

Now I have to re-calc...sigh. Thanks Zhang.

Posted by jules 2 2004-12-01 7:17:04 PM|| 2004-12-01 7:17:04 PM|| Front Page Top

#50 Sorry. Went back and read 41. Duh.

I thought Social Security was in trouble? Now we're eliminating federal and Social Security taxes? So my net is my gross minus state taxes? Hmmm

Posted by jules 2 2004-12-01 7:36:33 PM|| 2004-12-01 7:36:33 PM|| Front Page Top

#51 Kalle (#15)

Not quite. A sales tax is very visible. When you go to Target or whatever, you pay $XX + $YY tax. It's a separate line on the receipt.

Now, a VAT would be a different story. That would be hideable and could be manipulated to punish "bad" products and reward "good" products.

Zhang Fei:
Your calculations forget the Earned Income Tax, which I presume would be eliminated. That helps the very-low income people with a partial rebate of their portion of the SS tax.

Posted by jackal 2004-12-01 8:24:13 PM|| [http://home.earthlink.net/~sleepyjackal/index.html] 2004-12-01 8:24:13 PM|| Front Page Top

#52 Another important feature of a Sales Tax would be that there would be no 1040 and no schedule A B C D E F G H I got a gal...

Eliminating the Income Tax would be a huge victory for civil liberties, too. People who complain about the PATRIOT act should look at the powers the IRS has. All the snooping in bank accounts, fishing expeditions, guilty-unless-proven-innocent burden of proof, asset seizure (well, the Drug Warriors keep that power I guess, but the IRS loses it) would be gone.

Posted by jackal 2004-12-01 8:29:27 PM|| [http://home.earthlink.net/~sleepyjackal/index.html] 2004-12-01 8:29:27 PM|| Front Page Top

#53 With the FairTax, if you choose to buy any new good or service,
To paraphrase Clinton, it all depends on what the meaning of good or service "is".
Here in Aus we have a GST (Goods and Services Tax) of 10%. One of the reasons for that figure was that it was felt that compliance would be reasonable at that figure. Above that the incentive for rorting would increase exponentially. At 23% I can assure you that there would be armies of tax accountants and lawyers only too willing to provide advice on avoidance/evasion. Heck I might even set up shop myself. Even after a cursory examination I can see many areas where you could back a semi trailer through.
The big problem would be cross referencing. If you eliminate income tax, you eliminate a (the) major referencing tool that is used by jurisdictions that use VAT or GST style taxation, to check on compliance.

Posted by tipper 2004-12-01 8:31:18 PM|| 2004-12-01 8:31:18 PM|| Front Page Top

#54 I didn't make it through all of the comments but there are a LOT of misconceptions above.

All new goods & services are taxed under the Fair Tax, period. This includes food, medical care, clothing, bus fare, etc. BUT you have to remember that all of these services currently include an embedded tax / tax compliance cost of 20-25% so a 23% sales tax would be a net zero in out-of-pocket cost for all of your goods and services (note that this will probably guarantee the continuation of our consumer culture since everyone will take more much more, have nothing deducted, and pay no more for goods & services than they do now).

The Fair Tax is NOT regressive because each and every household that cares enough to sign up willl receive a check from the federal government every month that "prebates" their tax liability for every dollar up to the poverty line. This allows ALL Americans to purchase exactly the same amount of goods and services tax-free each year. Those who choose to live more comfortable lifestyles will pay taxes to support them. Those who choose to (or are forced to) live on little can avoid the tax. Consider the potential positive impact of forcing consumers to make better decisions.

The Fair Tax includes a repeal of the 16th Amendment and the explicit abolition of all other federal taxes except excise taxes on specific goods.

This is a HUGELY good thing. I'd ask those that disagree to please, please, please go read through Rep. Linder's site and the fairtax.org site and do so with open minds. If there are losers here it is those who make and spend hundreds of thousands or millions of dollars per year. The rest of us win, it's not even close.

If you want to debate this offline, if you have concerns, if you think you're going to get screwed, drop me a line and I'll be glad to discuss the matter with you. If you don't like this it's either because you don't understand it or because you're making rock star money.

Posted by AzCat 2004-12-01 10:53:10 PM|| 2004-12-01 10:53:10 PM|| Front Page Top

#55 54? No Aris? Dis is prolly odd...

How 'bout no tax? No? Damn!

Posted by Conanista 2004-12-01 11:30:17 PM|| 2004-12-01 11:30:17 PM|| Front Page Top

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