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Renters win but Mr. Roper loses. You see, he's not a corporation and doesn't pay corporate income taxes. He reports his income, does pay federal income tax, but does not pay into Social Security. So, under FairTax, his benefit is less -- not as much cash in his pocket. But I suppose that's ok - some will benefit more than others with FairTax, and Mr. Roper is just one of the ones who'll be paying the price for a reformed tax system.
So, if people truly will have more money to spend at first, then demand will go up for a finite amount of goods. For instance, I know gas is pretty fixed...and if we all will have much more money to spend then the prices of gas (fixed supply) will go up....because people will be more confident in accepting the price of gas and will buy more.
And lets say I have an apartment now for 700 per month. Without the income tax I would have, lets say, 500 more per month. I then look for a place for 1200 a month, a nicer place. But there are only so many 1200 a month apartments out there (under current system), and now there are many more people who can "technically" afford a 1200 a month apartment. So, what will happen is that the 1200 a month apartment will become a 1700 month apartment and a 700 month apartment will become a 1200. More demand, finite supply equals increase in price.
So, I am not sure it really matters which system we have in place.....the current system or the FairTax. I still will have my same market value (at whatever market prices end up in equilibrium....whether equillibrium says I make 20,000 or 25,000 a year)....I still have the same market value either way. So, therefore, my market value determines how much I can spend and how much I can save.....no matter what the economy/tax system is. As long as my market value is not affected by the economy and taxes....you can put whatever tax system you want. As long as everyone feels it the same....we are still all in the same boat with our own market values.
So, if people truly will have more money to spend at first, then demand will go up for a finite amount of goods. For instance, I know gas is pretty fixed...and if we all will have much more money to spend then the prices of gas (fixed supply) will go up....because people will be more confident in accepting the price of gas and will buy more.
And lets say I have an apartment now for 700 per month. Without the income tax I would have, lets say, 500 more per month. I then look for a place for 1200 a month, a nicer place. But there are only so many 1200 a month apartments out there (under current system), and now there are many more people who can "technically" afford a 1200 a month apartment. So, what will happen is that the 1200 a month apartment will become a 1700 month apartment and a 700 month apartment will become a 1200. More demand, finite supply equals increase in price.
So, I am not sure it really matters which system we have in place.....the current system or the FairTax. I still will have my same market value (at whatever market prices end up in equilibrium....whether equillibrium says I make 20,000 or 25,000 a year)....I still have the same market value either way. So, therefore, my market value determines how much I can spend and how much I can save.....no matter what the economy/tax system is. As long as my market value is not affected by the economy and taxes....you can put whatever tax system you want. As long as everyone feels it the same....we are still all in the same boat with our own market values.
Your one of them The Glass Is Half Empty guys hu? people smarter than me or you came up with this idea, and they aren't working for the IRS, think of them as The Untouchables, remember them? They work for us.
Renters win but Mr. Roper loses. You see, he's not a corporation and doesn't pay corporate income taxes. He reports his income, does pay federal income tax, but does not pay into Social Security. So, under FairTax, his benefit is less -- not as much cash in his pocket. But I suppose that's ok - some will benefit more than others with FairTax, and Mr. Roper is just one of the ones who'll be paying the price for a reformed tax system.
Uh...no, he doesn't lose.
Mr. Roper pays income taxes today, and he may very well pay costs to an accountant to figure out what his expenses, depreciation, profit, etc., will be. I honestly don't know if he has to pay self-employment tax by renting a property. If his property is held under a business name, then he does pay that tax, too. Under the FairTax, he doesn't pay any of those things.
Chances are good he's in a tax bracket higher than 23% (the FairTax amount), so he does see a tax savings. But whether he's in a 23% tax bracket or not, he doesn't pay the FairTax on his rental unit...the tenant does. He merely collects it. He loses no money, at all.
Last edited by joninclay; 01-29-2008 at 11:06 AM..
and if we all will have much more money to spend then the prices of gas (fixed supply) will go up....because people will be more confident in accepting the price of gas and will buy more.
That's true of any product or service, my friend. Supply and demand. If people want to spend their extra money on gas, they can do so. If enough people demand it, then the price will go up. But I doubt that most people will go "Hey, I've got more money! I know...let's go buy gas!"
No offense to anyone, but I'm moving my questions and debate over to the Politics and Other Controversies Forum cuz you're right, joninclay, we seem to be beating a dead horse here on the Jax forum. I've truly enjoyed this debate with my local chums, but ...
...considering the fact that our W2s arrived in the mail and I'm faced with the Awful Project of preparing for April 15th, I know - just know - there's a better way out there. But it's NOT the FairTax in its current form. The party line of "no more income taxes, so more money to spend" just does not cut it. It's really and truly not that simple, and vdecapio, you are headed in the right direction with your opinions. The Wall Street Journal has already discussed the fact that prices for used goods will probably jump over the price of new goods in some sectors because "used" would not be taxed, and "new" would. Remember, FairTax claims to be revenue-neutral and that means NO CHANGE -- so if we as consumers are footing the bill today, we'll foot the bill tomorrow too in some way-shape-form, so really, we will not have more money in our pockets at the end of the day. Please oh please do not tell me that prostitutes and Mafiosa and such will make up the difference. They're not part of the underground economy just because they don't want to admit their incomes. Also, don't tell me that CompanyXYZ will close its secret Cayman accounts and bring the money home - there are far more reasons why they hide their money than just income reporting.
Remember, FairTax claims to be revenue-neutral and that means NO CHANGE
I don't know how many other ways I can reiterate the point that it's revenue-neutral for the first year only! I'm curious why you keep clinging to the "revenue-neutral" part while ignoring the "for one year only" part.
Please oh please do not tell me that prostitutes and Mafiosa and such will make up the difference. They're not part of the underground economy just because they don't want to admit their incomes. Also, don't tell me that CompanyXYZ will close its secret Cayman accounts and bring the money home - there are far more reasons why they hide their money than just income reporting.
I won't tell you anything you're not willing to hear.
Who cares WHY hookers and Mafia dons and drug dealers are part of the underground economy? The fact is they ARE part of it, and they pay no income taxes. Under the FairTax, they buy stuff that winds up as tax revenue to the feds, tax revenue they otherwise wouldn't have paid.
Over the last few years, a number of American companies have moved their HQ or base of operations offshore to Bermuda. Why? To avoid oppressive taxes and unfriendly costs of doing business. So yeah, they'd come back home, and they'd bring their money with them. So would investors and companies based overseas, in order to avoid the oppressive taxes of their homelands.
The fact is that you have brought up a number of great concerns and "what if" scenarios, all of which were legitimate and valid. Yet in each and every one of those scenarios, I presented the evidence that showed the problems wouldn't be what you thought they might be, or showed that the FairTax would not be adverse (and would actually be beneficial). The facts weren't enough to persuade you, so I shall no longer try. No malice from me at all, though. I've enjoyed the intellectual exercise here, and the debate has, by and large, been a healthy one.
Until someone can show me a tax system that encourages commerce and innovation, doesn't encourage avoidance, keeps life simple, puts more money in our pockets while allowing the feds to get a sufficient amount to fund their operation, and doesn't require a translator, the FairTax is going to have to do for me. The income tax is awful, it doesn't work, and it needs to be killed.
geez, ... you guys have been busy . I'm swamped with work. Haven't been able to follow this forum.
This discussion has been enlightening. Its made me realize the rough road the Fairtax will travel. Politicians certainly don't want the Fairtax. The only shot it has of passing is if the constituency demands it. Loudly.
But most of the people alive now were born and raised within the current system. And having been conditioned all those years, most are probably afraid to go away from their comfort zone.
The people that will understand the Fairtax the most are people who've been or are business owners and independent contractors. Basically, non-employees. They're more aware of their daily finances and how much they're being taxed. Ironically, the "employees" are the ones that may benefit the most, since they're the ones getting crushed by the current tax system. But they don't know how they're getting screwed specifically.
We had this discussion during lunch today. Not one of my buddies could say how much they're paying in taxes. They're just hoping for a "refund" come tax time.
You know what? That would be a great time to read the Fairtax book. Right before you do your tax return. Read it sometime in February. Let's see how you feel while you're preparing your tax return.
Me, my only concern with the Fairtax would be the potential increase in revenue that the Government may reap. I mean, if the economic forecasts do happen, and the US economy doubles or triples in size a few years after the Fairtax is adopted, Government revenues would increase tremendously. They'd be spending more money than they know what to do with. Scary thought.
But I guess addressing government spending is another battle.
How about all the TV Evangelist, they don't pay tax ,but they will with fair tax, they wont be able to hide behind GOD anymore, bunch of three dollar bills.
geez, ... you guys have been busy . I'm swamped with work. Haven't been able to follow this forum.
This discussion has been enlightening. Its made me realize the rough road the Fairtax will travel. Politicians certainly don't want the Fairtax. The only shot it has of passing is if the constituency demands it. Loudly.
But most of the people alive now were born and raised within the current system. And having been conditioned all those years, most are probably afraid to go away from their comfort zone.
The people that will understand the Fairtax the most are people who've been or are business owners and independent contractors. Basically, non-employees. They're more aware of their daily finances and how much they're being taxed. Ironically, the "employees" are the ones that may benefit the most, since they're the ones getting crushed by the current tax system. But they don't know how they're getting screwed specifically.
We had this discussion during lunch today. Not one of my buddies could say how much they're paying in taxes. They're just hoping for a "refund" come tax time.
You know what? That would be a great time to read the Fairtax book. Right before you do your tax return. Read it sometime in February. Let's see how you feel while you're preparing your tax return.
Me, my only concern with the Fairtax would be the potential increase in revenue that the Government may reap. I mean, if the economic forecasts do happen, and the US economy doubles or triples in size a few years after the Fairtax is adopted, Government revenues would increase tremendously. They'd be spending more money than they know what to do with. Scary thought.
But I guess addressing government spending is another battle.
Thats the best part they will have to change the % one way or another up or down, this is a way to get a grip on and take back our government.
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. I'm swamped with work. Haven't been able to follow this forum. 
