The Fair Tax?

[Furious George]

Ah! How I could go on, and on, and on about how idiotic our current tax system. There have been numerous widely-known intellectuals, that have all stated that our tax system is ineffecient, and is a waste of resources. It alone, costs over $250 billion dollars a year to run this operation. That's $850 for every man, woman, and child in this country. Just so we can run an agency that collects, files, and enforces the tax. How regressive, and utterly idiotic is that?

It is estimated that over 40% of Americans don't even comply with the incredibly lenghty Tax Code. Why is that? Because the code is extremely lengthy, and extremely easy to evade. Now, is it just me, or is this single tidbit of information ENOUGH to inspire wide-spread discontent?

Here's some math, to show how Fair Tax, and our current Sales Tax/Regressive Sales Tax compare;

Bob is a hard-working construction worker, who makes $50,000/year.
Joe is a Company Executive, making $5,000,000/year.

Bob and Joe both live in New Jersey, with a nice Sales Tax of 6%.

Bob hoes to the local grocery store, and picks up the essential groceries. He pays a total of $212. $12 of that is taxes, or 1/4,166th of his salary.

Joe goes to the local grocery store, and picks up the essential groceries. He pays a total of $212. $12 of that is taxes, or 1/416,666th of his salary.

The match clearly shows that Joe is paying a lesser amount of his yearly income on taxes, than Bob is. I personally find this fact uneasing, and unfair, but many will argue to the contrary.

If we ever do instate the fair tax, this will not only guarantee that people like Drug Dealers and Theives DO pay taxes, it will also guarantee that every single American will never ever file a tax return, and they will always keep 100% of each and every paycheck. The fair tax allows this, because it would get rid of a Federal Tax, and all the taxes would be collected from the Businesses. Your tax rate, will be based on income, and not some flat rate, that rewards the successful, and hinders the poor. Everyone will pay an equal percentage of their income for every single taxable item.


Thoughts?

 

[l99999us]

I am not certain what you are advocating here....

Are you calling simply to have all taxes replaced by the sales tax.....

I personally don't think this is fair as from what you have mentioned it would hit the poor and those on limited incomes far more then the rich. While their are aspects of our current tax system that are unfair I don't think this would be an improvement and instead be the opposite.

what i would like to see is the closure of the loopholes that allow many rich people and corperations to avoid paying a fair tax (and often avoid paying any taxes all together). Then perhaps we could reduce the burden on the rest of us.

 

[Brandon]

I am actually in favor of this system. In my opinion fairness equals sameness. Each citizen has the same rights so why not the same tax rate. Doing this will also create a smaller government by default. No longer can they raise the rates for middle and upper class citizens in the name of fairness and tax equality. The government will have to lessen the tax burden across the board.

The other piece is the tax code in general. If you have an uber-convoluted system, it is easy for the elitists of society to escape their responiblity. It's hard for a upper class citizen to escape sales tax when you are buying a big screen TV at Best Buy.

My only problem is the tax rate in general. In order to maintain the government the rate has to be in the low to mid 20's. I would like to see it reduced to the mid to low teens.

 

[Furious George]

I am not certain what you are advocating here....

Are you calling simply to have all taxes replaced by the sales tax.....

I'm advocating the disassembly of our National Tax System (Which is highly inefficient, and a waste of resources) and replacing it with a tax that taxes each and every citizen equally. (You pay an equal percentage of your income towards a tax. See my 'math' above)

If we impose the Fair Tax, this--in turn--will require people who otherwise evade paying taxes (Mobsters, Criminals, Drug Dealers, etc) to pay taxes! When you're a drug dealer, you're not going to pay your taxes. But, when you are required to pay a tax on everything you buy, you cannot escape paying taxes.

I personally don't think this is fair as from what you have mentioned it would hit the poor and those on limited incomes far more then the rich. While their are aspects of our current tax system that are unfair I don't think this would be an improvement and instead be the opposite.

Once again, I think you're confused. What I'm proposing is that EVERYONE, rich or poor, will pay an equal PERCENTAGE of their salary on taxes. Our current tax system is a flat tax system. Basically, it means that no matter what your income is, you pay the same tax. This tax system rewards the successful, and hinders the poor. The system I propose is the opposite, and collects taxes equally ACROSS THE BOARD.

what i would like to see is the closure of the loopholes that allow many rich people and corperations to avoid paying a fair tax (and often avoid paying any taxes all together). Then perhaps we could reduce the burden on the rest of us.

That's the thing. You're confused again! (No harsh feelings, I'm horrible with wording) The Fair Tax would PREVENT loopholes from being opened up. Drug Dealers, Thieves, Criminals, and the like would be FORCED to pay taxes. Believe it or not, Criminals, Thieves, and Drug Dealers, DO eat food, and pay for luxuries, so this is the only viable way to make them pay taxes.

 

[l99999us]

Forgive me if I have misunderstood here. I am not trying to misinterpert your posts but only trying to understand what it is exactly you are calling for.

You seem to call the current system a flat tax but then advocate for the same thing (one that taxes citizens equally across the board).

While i do think their are elements of the current tax system that are unfair i am not sure this will change it. In fact it seems to punish the poor (who must spend most of their money on necessities and often have to choose between food and rent) far more then the rich who often are able to invest a large portion of their money.

I think the main problem with our current tax code is that it is written by the rich. What we should do is try and make our current system more fair instead of trying to replace everything with a sales tax which would be a majopr mistake in my opinion.

 

[Furious George]

Forgive me if I have misunderstood here. I am not trying to misinterpert your posts but only trying to understand what it is exactly you are calling for.

You seem to call the current system a flat tax but then advocate for the same thing (one that taxes citizens equally across the board).

While i do think their are elements of the current tax system that are unfair i am not sure this will change it. In fact it seems to punish the poor (who must spend most of their money on necessities and often have to choose between food and rent) far more then the rich who often are able to invest a large portion of their money.

I think the main problem with our current tax code is that it is written by the rich. What we should do is try and make our current system more fair instead of trying to replace everything with a sales tax which would be a majopr mistake in my opinion.

Ah! I see the problem, I meant to say that our current tax system is graduated

 

[l99999us]

Don't worry about it....

I probably make more errors in writing then most people here so i really don't think i can complain.

 

[framed]

Just so I've got it straight, youre calling the fair tax a flat income tax correct?

A few things to think about with that model:

1) It reduces incentives to save money and build wealth. While people shouldn't need these, its seems like many people do. A flat sales tax might achieve what you want while maintaining peoples incentive to save money. Your initial post you said a rich guy making say 1m and spending 100k would effectively cut his tax bill by 90% that year making it unfair. I agree it would cut his tax bill that year by 90%, but since he cant spend the money without incuring the (equal) tax in later years, how would it be unfair?

2) A completely flat tax has the effect of driving the poverty line up. (if you take 20% tax out of minimum wage, you're in trouble.) Most people I've talked to about flat taxes belive they should be imposed after a certian living wage is drawn off. eg: instead of a flat 20% income tax, a 21% income tax on all money earned over 15k in a year.

I'm in 100% agreement that our tax code is bogus and wasting the country's money. I think its important though to recognize that our tax code has been used rightly or wrongly as a means to incent social change over the years (home ownership via interest credits, education via deductable student loans, savings via the sales tax, minority owned business via tax breaks for those groups, cleaner air via polution credits) Abolishing all those things instantly may have some very serious ramifications (a housing crash, lower education rates, and others come to mind.)

I'd love to get rid of the loopholes though. You might be able to do that by passing a law that mandates all components of the tax code apply to a minimum number of people. (eg, 20,000 people across more than 5 states) to be part of the federal code. That would reduce the "john campaign contributor tax cut" type lines in the tax code that make it so bloated and take so much time to enforce.

The problem is senators don't like passing laws that limit the ways in which they can pay back favors.. shucks its a tough nut to crack.

 

[capitalist_junkie]

I just wish we had taxes coming from ONE source. Sales tax, income tax, and all that other tax is ridiculous. If it all came from one place, that would be much easier.