Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
"...Also, why wouldn't a retiree just go to another country and get their income tax free, yet not be subject to the Fair Tax due to their purchases (and rent) being paid in a foreign country?.."
I'm not really sure what you mean by that. Could you explain that for me?
If someone is provided income from the US and goes to a foreign country, it seems that they would escape much of the tax obligation.
For example, I know of three retirees who spend the majority of their time in other countries, yet get passive income from investments, on top of their pensions and/or Social Security. One spends time in Panama, one in Costa Rica and the third bounces around a bit in Eastern Europe. Each spends between 8-10 months in the foreign country.
Today, they pay taxes on their income. Even though they spend a good portion of the year in a foreign country, they still pay US income taxes (less whatever foreign tax credits they are entitled to as partial year residents).
Under Fair Tax, it would seem that they would escape this obligation. The purchases they make while overseas, plus their rent, wouldn't be subject to the Fair Tax because they make the payments outside of the US.
Actually, the position of the Fair Tax authors (as far as I can tell from their website) is that the tax should not be included on money earned under the poverty level. It doesn't care whether the person is spending on food, shelter or clothing - only the first $10,230 spent gets exempted from the tax via the prebate.
However, the Fair Tax authors treat the prebate as tax-exclusive when applied, while the consumption tax is treated as tax-inclusive. If the Fair Tax advocates really wanted to be 'revenue neutral' on all spending at or below the poverty line, then the prebate for a single individual should be $3249 a year and not $2491.
The 23/30% is relevant because the Fair Tax advocates never mention the tax-inclusive/tax-exclusive argument. Most people, including up until now both you and me, assume that it is an increase in prices of 23% instead of the actual increase of 30%. Don't you think that people should know up front the exact effect of this consumption tax?
Proof please!
Do you have any proof that this massive tax shift will actually be revenue neutral?
The authors of the Fair Tax claim that it is revenue neutral, but others point out that the proponents' figures don't take into account under-the-counter sales, shifting of purchases offshore, and outright fraud when filing for prebate checks.
If the Fair Tax rate doesn't produce the same amount of tax revenue, would you be in favor of increasing the rate to 30% or 35%?
Do you really believe that pimps and prostitutes have offshore bank accounts? Do you have an accurate figure as the size of the prostitution industry in total yearly revenues? Can you tell us how much tax revenue is lost from this activity?
Do you think that pimps, prostitutes and drug dealers, who already work in a black market economy, can't figure out how to evade sales taxes on their purchases of legal items?
I don't believe that liberals scream about offshore accounts quite as much as they point out that thru tax deductions and lower capital gains rates the wealthy tend to pay an effective tax rate lower than the tax rate charged to their hired help.
And with a consumption tax, what's to stop the wealthy from consuming outside of the United States? I can see grey markets springing up where luxury goods are bought outside of the U.S. but brought in as "used goods". Heck, back in 1960 my grandfather used the automotive grey market to import a VW Bug and avoid higher import and sales taxes.
The rate is stated at 23% tax-inclusive because the system it is designed to replace is a tax-inclusive system. Either way, 23% tax-inclusive or 30% tax-exclusive rate, the same amount is paid in tax. Ever notice that those who bring up the argument never tell you the tax-exclusive rate for the income tax?
The problem with the argument that "more money in your paycheck helps you pay your bills" is the baseline statement that Fair Tax advocates make about it being totally revenue neutral.
If the corporate income tax is completely eliminated, and taxes on capital gains and dividends are completely eliminated (and the top 10% of earners make over 90% of the capital gains and dividends) it would seem that the overall tax burden for those other folks would have to increase from what they currently pay.
If this isn't true, how is the Fair Tax process completely revenue neutral?
Actually, the position of the Fair Tax authors (as far as I can tell from their website) is that the tax should not be included on money earned under the poverty level. It doesn't care whether the person is spending on food, shelter or clothing - only the first $10,230 spent gets exempted from the tax via the prebate.
However, the Fair Tax authors treat the prebate as tax-exclusive when applied, while the consumption tax is treated as tax-inclusive. If the Fair Tax advocates really wanted to be 'revenue neutral' on all spending at or below the poverty line, then the prebate for a single individual should be $3249 a year and not $2491.
The 23/30% is relevant because the Fair Tax advocates never mention the tax-inclusive/tax-exclusive argument. Most people, including up until now both you and me, assume that it is an increase in prices of 23% instead of the actual increase of 30%. Don't you think that people should know up front the exact effect of this consumption tax?
Proof please!
Do you have any proof that this massive tax shift will actually be revenue neutral?
The authors of the Fair Tax claim that it is revenue neutral, but others point out that the proponents' figures don't take into account under-the-counter sales, shifting of purchases offshore, and outright fraud when filing for prebate checks.
If the Fair Tax rate doesn't produce the same amount of tax revenue, would you be in favor of increasing the rate to 30% or 35%?
Do you really believe that pimps and prostitutes have offshore bank accounts? Do you have an accurate figure as the size of the prostitution industry in total yearly revenues? Can you tell us how much tax revenue is lost from this activity?
Do you think that pimps, prostitutes and drug dealers, who already work in a black market economy, can't figure out how to evade sales taxes on their purchases of legal items?
I don't believe that liberals scream about offshore accounts quite as much as they point out that thru tax deductions and lower capital gains rates the wealthy tend to pay an effective tax rate lower than the tax rate charged to their hired help.
And with a consumption tax, what's to stop the wealthy from consuming outside of the United States? I can see grey markets springing up where luxury goods are bought outside of the U.S. but brought in as "used goods". Heck, back in 1960 my grandfather used the automotive grey market to import a VW Bug and avoid higher import and sales taxes.
"...prebate..." to my knowledge is calculated the same way as foodstamps, unemployment, Soc. Sec. which would be tax-inclusive, wouldn't it?
"...tax shift..." Depends on what you call a tax shift. If you mean, no more 'pass the buck', hose the next guy and let me set his rate, instead of WE as Americans have one rate and it had better stay low considering no one is paying an income tax, then yeah, it is a tax shift. From Washington's coffers to the people who earned it, from poor to rich.
I believe people should pay the highest tax rate they would wish on someone else. Not set the rate for others to pay. To me, that is fair. For someone to sit, look at their neighbor's bank acct., house, etc. and then want to set a tax rate for him while avoiding the same rate is no different in motive, heart and maybe character than any thief, con artist, or armed robber plotting to steal from him. If I wouldn't want to pay a high tax rate, why be so low as to try to set a high rate for someone else to pay (unless I'm hoping to get hold of some of that money)?
The only reason companies endured 70-94% tax rates was they had no where, geo politically, they could go until after the 'fall of communism' when even communistic countries became more capitalistic. I seriously doubt that any of those companies are going to go the expense of relocating back to the US as long as there is a risk of those same confiscatory rates returning exists through the income tax. Even now, US companies pay @ 40% corporate tax rates while the rest of the world pays in the 20% range. As long as the tax rates are high, that money they are holding will stay off shore.'
"...revenue neutral..." got any proof it ain't. Please, don't post from factcheck, any of the Pres' councils, or any of the latest Democrat/pro-income tax campaigns, ITEP. It's all based on slight of hand; using A manufactured sales tax, such as a VAT, and/or an income tax as the basis for calculations then passing it off as 'so and so' said the Fair Tax will.... when I'll already know where you, and the rest of the critics, got your info and the Fair Tax was not what the information is based on.
The problem with the argument that "more money in your paycheck helps you pay your bills" is the baseline statement that Fair Tax advocates make about it being totally revenue neutral.
If the corporate income tax is completely eliminated, and taxes on capital gains and dividends are completely eliminated (and the top 10% of earners make over 90% of the capital gains and dividends) it would seem that the overall tax burden for those other folks would have to increase from what they currently pay.
If this isn't true, how is the Fair Tax process completely revenue neutral?
Expansion of the tax base from @ 75 million taxpayers to 300+ million and taxing sales which is a more stable source of revenue. The rich do have the money and can buy more (see any music video, red carpet event, "lifestyles", etc.) and pay more in tax. For them it is a break from the 40% rates and is a tax break for everyone else; we would have the control on our own tax rate and the govt. still gets revenue.
Even though the companies aren't paying all the taxes, it benefits their employees, the economy and the nation. Assuming they hoard money, it is going to be taxed eventually and, let's face it, what's the use of having all that money if you can't spend it and enjoy it? Even when the economy is down, they have money to spend and why not if a 23%(30%Tax-excl.) sales tax is all you have to worry about?
If someone is provided income from the US and goes to a foreign country, it seems that they would escape much of the tax obligation.
For example, I know of three retirees who spend the majority of their time in other countries, yet get passive income from investments, on top of their pensions and/or Social Security. One spends time in Panama, one in Costa Rica and the third bounces around a bit in Eastern Europe. Each spends between 8-10 months in the foreign country.
Today, they pay taxes on their income. Even though they spend a good portion of the year in a foreign country, they still pay US income taxes (less whatever foreign tax credits they are entitled to as partial year residents).
Under Fair Tax, it would seem that they would escape this obligation. The purchases they make while overseas, plus their rent, wouldn't be subject to the Fair Tax because they make the payments outside of the US.
Ok, I'm still a little confused. (It's late for me, I'm tired) Let me say that they wouldn't owe an income tax under the Fair Tax because the Fair Tax is a replacement for the income tax. Whatever they buy, or bring, in the US would be taxed. That's my best opinion based on the legislation, etc. However, I'm not an expert in tariffs, etc. I posted a link on the Fair Tax and compliance. Find and read it. It covers more of this and it's also on the http:///www.fairtax.org (broken link) site. Later. OTB
The VAT has been openly discussed as an addition to current taxes and not in concert with the elimination of the federal income tax and estate tax. It and/or a significant levy of "environmental fees" via Cap & Trade taxes is the ONLY way to raise the revenue to fund Obamacare.
Why do you think it is scare tactics only? Because the truth of Progressives and the way they tax is really scary?
If you don't want to see this vote out all Progressives on Tuesday.
What's worse is that those plans, with a VAT and income tax, are the very ones used as 'proof' the Fair Tax won't work when it isn't the Fair Tax being calculated in the 'plans.' A good example is the Factcheck.org article and the oft mentioned President's Council Report; if anyone bothered to click on the link to the report, they would see a plan using an income tax and a VAT, NOT the Fair Tax, yet, critics will use that information and plan to say "The President's Council's report concluded that" and say that it gave some pronouncement on the Fair Tax when the report wasn't even on the Fair Tax.
Why would people in government want to lie to the public about a plan that would allow that very same public to keep more money in their paychecks rather than sending it to Washington where those in Washington can decide which workers 'deserve' to keep the money they worked for and which don't? [begin sarcasm] Gee, that just might be a puzzler [end sarcasm] Of course, if they lie about it, the 'ignorant' public will believe it and they can keep auctioning our tax code and our government to the highest bidders while keeping all the suckers that are paying taxes busy.
Better solution is get rid of the income tax and replace it with the Fair Tax. Let them try to sell the code with our own earned money in our pockets rather in the hands of those in Washington.
"...prebate..." to my knowledge is calculated the same way as foodstamps, unemployment, Soc. Sec. which would be tax-inclusive, wouldn't it?
This actually doesn't answer my question about the prebate calculation. I've pointed out that the prebate for a single individual is computed "tax-inclusive"; shouldn't it be computed tax-exclusive? What am I missing here?
Quote:
"...tax shift..." Depends on what you call a tax shift. If you mean, no more 'pass the buck', hose the next guy and let me set his rate, instead of WE as Americans have one rate and it had better stay low considering no one is paying an income tax, then yeah, it is a tax shift. From Washington's coffers to the people who earned it, from poor to rich.
What I mean by tax shift is that those who earn more will naturally consume less than those who earn less. A person who spends $50K pays $15K in consumption taxes. If this person earns $50K then he pays a tax-inclusive consumption rate of 23%; if this person earns $100K then he effectively pays half the rate or only 11.5%. Compared to a flat income tax rate, it shifts more of the total payment of taxes to the person earning less money as weighted by income.
Quote:
I believe people should pay the highest tax rate they would wish on someone else. Not set the rate for others to pay. To me, that is fair. For someone to sit, look at their neighbor's bank acct., house, etc. and then want to set a tax rate for him while avoiding the same rate is no different in motive, heart and maybe character than any thief, con artist, or armed robber plotting to steal from him. If I wouldn't want to pay a high tax rate, why be so low as to try to set a high rate for someone else to pay (unless I'm hoping to get hold of some of that money)?
And then there are those on this forum who believe that the tax rate should be zero!
The tax rate isn't what you would have it be, nor what I would have it be but what the majority of us would have it be.
Let's put aside discussions about progressive tax rates. While I believe in a slightly progressive tax rate, I'll wager that you take the opposite view...and that neither one of us is going to change the other's view in the short term.
Quote:
The only reason companies endured 70-94% tax rates was they had no where, geo politically, they could go until after the 'fall of communism' when even communistic countries became more capitalistic. I seriously doubt that any of those companies are going to go the expense of relocating back to the US as long as there is a risk of those same confiscatory rates returning exists through the income tax. Even now, US companies pay @ 40% corporate tax rates while the rest of the world pays in the 20% range. As long as the tax rates are high, that money they are holding will stay off shore.'
Despite my previous statement, I think that we can both agree that a 70% upper tax rate is unacceptable.
As to the corporate tax rate of 40%, I believe I heard it reported that the effective tax rate is close to 20%, given all of the deductions available to corporations and through judicious use of offshore subsidiaries.
Quote:
"...revenue neutral..." got any proof it ain't.
That's not how a proof works and you know it (or should know it)!
You can't make a claim, and then ask someone to prove you wrong - it's called trying to prove a negative and it's a logically fallacy.
But I did dig into one of your linked documents (http://www.fairtax.org/PDF/MacroeconomicAnalysisofFairTax.pdf ) and came up with some numbers that make sense for 2004. Table 2 on page 6 shows that the revenue amount raised by the taxes proposed for cancellation is $1,756.6 billion. Table 3 on page 6 shows that the revenue amount for the consumption tax (less the prebates of $436 billion) is $1,862.6 billion. That's a net increase in revenue of $106 billion.
But in Table 3, the authors list $1,843.4 billion as "Total Government Consumption" subject to the consumption tax and an additional $372.5 billion as "Total Government Gross Investment". Curiously, these figures are subject to the consumption tax and account for $509.7 in consumption tax revenue.
Am I reading this right? Are governmental entities (federal, state and local) going to pay a tax to the federal government? Does this mean that state and local taxes have to rise in order to cover this new expense? Where does the federal government get the money to pay itself? Can you explain this to me?
Please note that without this self-inflicted tax, the Fair Tax revenues for 2004 fall to $1,352.9 and a net shortfall of $403 billion.
Additionally, it's 2010...how do the numbers hold up six years later? I used the tables from the report you provided, the 2009 and 2010 U.S. tax revenues from Wikipedia.com, and used the Personal Consumption for both 2009 and 2010 from the Bureau of Economic Analysis. And barring an explanation of government self-taxation, I've not included such revenues.
For 2009, income tax revenue was $2,524.9 billion, personal consumption was $10,285 billion, giving a net shortfall of $603 billion.
For 2010, income tax revenue is estimated to be $2,243 billion, personal consumption is estimated to be $10,376.7 billion, giving a net shortfall of $302.4 billion.
Quote:
Please, don't post from factcheck, any of the Pres' councils, or any of the latest Democrat/pro-income tax campaigns, ITEP. It's all based on slight of hand; using A manufactured sales tax, such as a VAT, and/or an income tax as the basis for calculations then passing it off as 'so and so' said the Fair Tax will.... when I'll already know where you, and the rest of the critics, got your info and the Fair Tax was not what the information is based on.
No offense, but nearly all of your information comes from exactly one website...the one advocating the Fair Tax. A few other person on this thread flatly rejected the self-same sources that you now cite - and I can't help but notice that you joined the forum yesterday and have only posted to this thread.
So MStreet, which one are you, Roysoldboy or Workingclasshero?
I did, and I came out with 6.5% more spendable income and my effective tax rate was lowered 5%. And if I was self-employed, my spendable income doubled and my rate dropped 20%!
But it seems to ignore any price increase on consumer goods and services due to the consumption tax. I mean, if I have 6.5% more spendable income but the price of a gallon of gas rises either 23% tax-inclusive or 30% tax-exclusive, am I really ahead of the game?
And it also raises the question - if my effective rate is going down, and if people above me have their effective tax rates going down even more, and if the truly poor aren't taxed due to the prebate, and if the Fair Tax is revenue neutral, then who is making up the shortfall in taxes collected?
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Not set the rate for others to pay. To me, that is fair. For someone to sit, look at their neighbor's bank acct., house, etc. and then want to set a tax rate for him while avoiding the same rate is no different in motive, heart and maybe character than any thief, con artist, or armed robber plotting to steal from him. If I wouldn't want to pay a high tax rate, why be so low as to try to set a high rate for someone else to pay (unless I'm hoping to get hold of some of that money)? 
[begin sarcasm] Gee, that just might be a puzzler [end sarcasm] Of course, if they lie about it, the 'ignorant' public will believe it and they can keep auctioning our tax code and our government to the highest bidders while keeping all the suckers that are paying taxes busy.
