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Probably just as ludicrous as the 'Fairness Doctrine' was.
A national retail sales tax of 30% but you get a private for it. Replaces income and payroll taxes. It hoses the middle class and 90% of economists think it is bad economic policy.
A national retail sales tax of 30% but you get a private for it. Replaces income and payroll taxes. It hoses the middle class and 90% of economists think it is bad economic policy.
Only 1/8th of an answer and B.S. on the 90% claim unless you can prove that...
Here's the FULL answer:
Quote:
I know the FAIRtax rate is 23 percent when compared to current income taxes. What will the rate of the sales tax be at the retail counter?
30 percent. This issue is often confusing, so we explain more here.
When income tax rates are quoted, economists call that a tax-inclusive quote: “I paid 23 percent last year.” For every $100 earned, $23 went to Uncle Sam. Or, “I had to make $130 to have $100 to spend.” That’s a 23-percent tax-inclusive rate.
We choose to compare the FairTax to income taxes, quoting the rate the same way, because the FairTax replaces such taxes. That rate is 23 percent.
Sales taxes, on the other hand, are generally quoted tax exclusive: “I bought a $77 shirt and had to pay that same $23 in sales tax.” This is a 30-percent sales tax. Or, “I spent a dollar, 77¢ for the product and 23¢ in tax.” This rate, when programmed into a point-of-purchase terminal, is 30 percent.
Note that no matter which way it is quoted, the amount of tax is the same. Under an income tax rate of 23 percent, you have to earn $130 to spend $100.
Spend that same $100 under a sales tax, you pay that same tax of $30, and the rate is quoted as 30 percent.
Perhaps the biggest difference between the two is that under the income tax, controlling the amount of tax you pay is a complex nightmare. Under the FairTax, you may simply choose not to spend, or to spend less.
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Is the 23% FAIRtax higher or lower when compared to the income taxes people pay today?
Most people are paying that much or more today — much of it is just hidden from view. The income tax bracket most people fall into is 15 percent, and all wage earners pay 7.65 percent in payroll taxes. That’s 23 percent right there, without taking into account the 7.65 percent employer matching! On top of that, you have to add in the business taxes and associated compliance costs passed on to consumers in higher prices.
Effective tax rates vs. stated tax rates
Because the 23-percent FairTax rate of $0.23 on every dollar spent is not imposed on necessities, an individual spending $30,000 pays an effective tax rate of only 15.5 percent, not 23 percent. That same individual will pay 17.3 percent of his or her income to federal taxes under current law.
Quote:
How does the prebate work? Under the FairTax, all Americans consume what they see as their necessities of life free of tax. While permitting no exemptions, the FairTax (HR25/S122) provides a monthly universal prebate to ensure that each family unit can consume tax free at or beyond the poverty level, with the overall effect of making the FairTax progressive in application. There is no marriage penalty as the couple gets twice the amount that a single adult receives.
While everyone pays the same tax rate at the cash register, the prebate results in effective tax rates (annual taxes paid divided by annual spending) that increase as the level of spending increases a progressive tax rate structure. For example, a person spending at the poverty level has a 0% effective tax rate, whereas someone spending at twice the poverty level has an effective tax rate of 11.5%, and so on.
You continue to use the FairTax faq and not go to the links if showed you that is anti-FairTax. This sounds like confirmation bias to me. The fact is the economy should suffer on this as I now have to pay $0.23 for every $0.77 can of veggies I buy at my local supermarket. Yes I do get a prebate of what $110 a month, but I also now pay more. Most groceries are tax free in most states so now the grocery bill goes up 23%. Think of it this way, if Joe spends $300 on groceries a month and now has to pay 23% more, that is $369, a $69 increase. This don't include taxed needs like clothes and gasoline.
You continue to use the FairTax faq and not go to the links if showed you that is anti-FairTax. This sounds like confirmation bias to me. The fact is the economy should suffer on this as I now have to pay $0.23 for every $0.77 can of veggies I buy at my local supermarket. Yes I do get a prebate of what $110 a month, but I also now pay more. Most groceries are tax free in most states so now the grocery bill goes up 23%. Think of it this way, if Joe spends $300 on groceries a month and now has to pay 23% more, that is $369, a $69 increase. This don't include taxed needs like clothes and gasoline.
That is precisely why VAT is the more suitable arrangement.
luxury goods taxed the highest and working down to zero for food books etc..
UK is 20% for luxury goods and steps down a couple of times then to zero for food and some limited necessities...
The Fair Tax and VAT are not on the agenda with this Congress. What this thread is about is the current CBO score of the bills that up for a vote soon. According to the CBO and other analytic organizations, the bills are worse for the most people than you can imagine.
That is precisely why VAT is the more suitable arrangement.
luxury goods taxed the highest and working down to zero for food books etc..
UK is 20% for luxury goods and steps down a couple of times then to zero for food and some limited necessities...
The VAT is good in idea but the issue is that luxury good taxes often hurts production. I think that is a problem even though I am not super pro-business but I think this would hurt just the same as the corporate tax rate. I proposed this in the past and was alerted to a story about yacht building that was curbed due to a local luxury tax. That said, the change in the U.S. corporate tax rate under the Congressional proposals don't work because it don't encourage in-sourcing or creating new jobs. The proposal SHOULD include a further reduced rate for U.S. job development. Say 2% (points) for every 10th of the entering into the fiscal year full-time workforce added by the end of the next fiscal year. So for a 5,000 employee company they would need to add 500 domestic full-time jobs to get a further tax cut.
Quote:
Originally Posted by MTAtech
The Fair Tax and VAT are not on the agenda with this Congress. What this thread is about is the current CBO score of the bills that up for a vote soon. According to the CBO and other analytic organizations, the bills are worse for the most people than you can imagine.
I agree but often times in any tax debate, we see the Flat Tax or sales taxes such as the VAT, Fair Tax and standard national retail sales tax as options. This is despite the tax proposal on the table is a change in the progressive tax code we have and the proposals (two on the floor of Congress, three if you include Trump's own proposal.)
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