The Benefits of the Fair Tax
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07-02-2014, 02:59 PM
The Benefits of the Fair Tax
I have to say, I'm becoming a proponent for this form of taxation.

For those who don't know, the Fair Tax is the abolishment of the existing Federal Income Tax and replacing it with a Federal sales tax on all purchased goods and services.

It seems to have a number of very good advantages. First off, it creates an incentive for people to save money. After all, the less you spend, the less you lose in tax. It also provides you with more money in your pocket come payday and you can control how much of that is lost in tax by what you purchase.

Second, as you save more, the banks benefit as they have more money to lend. This makes it easier for them to grant you a loan if you need money and raises the interest rates on savings accounts, allowing them to be more practical for retirement savings.

The amount of sales tax levied can be set according to the value of the good or commonidy. Expensive items such as exotic cars or private jets can have an additional 'sin tax' imposed upon them as could other vice such as alcoholic beverages, tobacco or marijuana.

Thoughts?

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07-02-2014, 03:06 PM
RE: The Benefits of the Fair Tax
Fair tax is only a benifit if a person or family is making enough where it does not take everything to make ends meet. It is a taxing system that favors high wage erners or people that live in low cost of living areas.
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07-02-2014, 04:04 PM
RE: The Benefits of the Fair Tax
(07-02-2014 03:06 PM)wazzel Wrote:  Fair tax is only a benifit if a person or family is making enough where it does not take everything to make ends meet. It is a taxing system that favors high wage erners or people that live in low cost of living areas.

Well that's one of the benefits of a Fair Tax is that no matter how much you earn, you get to keep more of it than you would under the current tax scheme. A person earning minimum wage still has to pay an income tax on that money; under the fair tax you keep all your gross pay and only are taxed when you have to buy goods and services. In the end you decide how much or how little you pay in tax by how lavish you live.

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07-02-2014, 04:10 PM
RE: The Benefits of the Fair Tax
How do you not have a tax like this already?

I thought most if not all western countries had some sort of GST (sales tax).
Ours is 15% on everything. And then you have higher taxes on things like tobacco and alcohol that cost the government extra due to health and safety reasons.

The idea to things like exotic cars more is stupid and defeats this notion of "fair".
If you have a flat rate on everything (ie: 15%) you're already paying more.
15% on $20,000 is less then 15% on $200,000.


This isn't the "fairest" way to tax though. To be completely fair you still need income tax. I don't use any less police or fire department services or street lighting or armed forces etc.. etc.. if I save all my money compared to spend it all.

You need a combination of sales and income tax.

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07-02-2014, 04:38 PM
Thumbs Down RE: The Benefits of the Fair Tax
Get rid of sales tax altogether. It's a tax burden on lower wealth people. Ordinary people spend much of their wealth buying necessary goods. Why force the majority of people to lose even more wealth because of that?

The fairest and most efficient tax is Progressive taxation. The less you have, the less of a percentage you're taxed. The more you have, the greater you're taxed. (in addition to getting rid of corruption, loopholes, and tax havens).
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07-02-2014, 04:46 PM
RE: The Benefits of the Fair Tax
(07-02-2014 04:38 PM)PoolBoyG Wrote:  Get rid of sales tax altogether. It's a tax burden on lower wealth people. Ordinary people spend much of their wealth buying necessary goods. Why force the majority of people to lose even more wealth because of that?

The fairest and most efficient tax is Progressive taxation. The less you have, the less of a percentage you're taxed. The more you have, the greater you're taxed. (in addition to getting rid of corruption, loopholes, and tax havens).

Actually on this.
While I don't agree with this, I do think healthy food (fruit/veg/milk/certain cereals) should be tax free for the consumer and junk food be treated like tobacco and alcohol.

Also, Carlo is proposing this instead of income tax so they wouldn't be "losing even more wealth".

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07-02-2014, 06:03 PM (This post was last modified: 07-02-2014 06:11 PM by earmuffs.)
RE: The Benefits of the Fair Tax
Tax isn't a hard concept to get right, it's just everyone seems to have differing opinions about it because of their various interests (they don't wanna pay tax) and not taking into account the grand picture.

The fairest way to tax people is:

Income tax.
The first X amount tax free (usually like $2,500-5,000).
The next X amount XX% (around 13-17)
The next X amount XX% (around 22)

etc.. etc.. until you get to a number, usually around $150,000 a year where everything over that is taxed at around 33-40%.
The percentages and what level of income is taxed at that percentage is subject to various factors, but the point is that it's an incremental tax system.

This should be done by the employer and it should come out of your wages the week you're paid as you're paid.

Sales tax (GST - Goods and Service Tax)
A flat % rate on all consumer goods and services.
Healthy food excluded (fruit/veg/milk/certain cereals/grain breads etc..)

"Sin" tax (as Carlo puts it. It does have an actual name but I've forgotten it)
On tobacco and alcohol and junk food (soft drinks/lollies/chocolate/crisps).

Business Tax
A flat rate for all businesses.
Though this could also work like income tax.

Investment tax
Tax on things like making a profit from trading shares.
A flat rate.

Other tax on other shit
Things like tax on profits made by selling property.
Or tax on profits made from selling artworks.
etc.. etc..
All a flat rate tax.
Things that wouldn't be considered "a job" or "a business", ie: hobby type stuff or rich people who buy and sell properties.


That's the fairest way to do taxation.
Everyone pays their share.

As for 'council rates', the government should allocate X amount of money to city councils based on population and rates shouldn't be needed.

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07-02-2014, 08:14 PM
RE: The Benefits of the Fair Tax
The only way to offset the financial hit poor people would take from a consumption based tax system is to offer them some form of prebate if their income falls below a certain level. If you can do that, you have an effective way of implementing a consumption tax without giving an unfair advantage to the wealthy. To be honest, I would have to look more into it but I could see myself favoring a national consumption tax in place of an income tax. I have a philosophical issue with the notion that by product of me making a living, the government is in some way entitled to a cut. People forget that the income tax is a relatively new concept in the United States.
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07-02-2014, 09:27 PM
RE: The Benefits of the Fair Tax
(07-02-2014 04:04 PM)Carlo_The_Bugsmasher_Driver Wrote:  
(07-02-2014 03:06 PM)wazzel Wrote:  Fair tax is only a benifit if a person or family is making enough where it does not take everything to make ends meet. It is a taxing system that favors high wage erners or people that live in low cost of living areas.

Well that's one of the benefits of a Fair Tax is that no matter how much you earn, you get to keep more of it than you would under the current tax scheme. A person earning minimum wage still has to pay an income tax on that money; under the fair tax you keep all your gross pay and only are taxed when you have to buy goods and services. In the end you decide how much or how little you pay in tax by how lavish you live.
While that sound good the buying power of that money will go down due to the increased tax has on the price of good and services. The sales tax increase will be significant to keep the revenue steam going. I have forgotten what the proposed numbers are iirc anyone in the bottom two brackets will be in worse shape. If we start getting into privates and stuff we will still have a progressive system that should just stay like it is.

My idea of a just tax system would be lower rates and no deductions at all. It would close a the loop holes and stop the cheaters. No more tax returns or tax day.
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08-02-2014, 02:38 PM
RE: The Benefits of the Fair Tax
I like you earmuffs, but I think you're blinded by tradition and not thinking it through.

First, remember that taxing anything discourages it, so you want to be careful to tax the things you want to discourage, like cigarettes, drugs, gasoline, wasteful consumption, etc., but it's crazy to tax and discourage good behavior, like working overtime, getting a good education to get a good paying job, etc.

Also, consider the relationship. Imagine the group of individuals providing you a service were a corporation, not a government. There are 2 models: 1) the corporation provides a service which you pay for (like you do already), 2) the corporation requires you to report to it every activity you engage in every moment of the day, and the corporation will tell you each year how much it will keep for itself and what it will leave you to live off. And this is for life, and follows you anywhere you go. If you build a colony on the moon and move there to escape the corporation, they will send astronaut auditors and agents to track you down and make sure you're not hiding anything, like, while on the moon, secretly baby sitting somebody's kid in exchange for a nice meal. Which is a more healthy model? #1 or #2? #1 is a voluntary relationship—you pay for what you get. #2 is a draconian, authoritarian, version of slavery.

But we're so used to it, we forgot what it is. For example, in my case, I fled the US in the 90's to live in Switzerland. Even after many years of paying Swiss taxes, and all my income coming from my Swiss business, not ever setting foot on US soil, or using any US services, the US STILL sends auditors halfway around the world to track EVERYTHING I'm doing. It's not about paying less taxes; in Switzerland taxation is all at the local level, and I choose to live in one of the highest tax places, Zürich, where taxes are actually more than in the US. But the US won't accept my Swiss tax return (which is the size of a postcard) as proof of income. No, I have to show up at the embassy with all my bank statements, credit card statements, etc., and document everything I've done every moment of every day, including every trip I've taken. They look at my ATM withdrawals and I have to explain everything I do. And it's now been leaked that, although the NSA data mining has done nothing to catch any terrorists, the contents of Americans' phone calls and emails get sent to the IRS to try to see who if anybody is engaging in any transactions they don't know about. Good deeds and acts of kindness become criminal offenses. If you break your leg and I mow your lawn to help you out, while you help my son with his math homework, we have committed a felony offense and risk going to jail if we haven't documented every detail of our interaction, sent it in to big brother so they can determine a fair market value.

And why? I'm not talking about paying less taxes. Let's assume we all pay the same taxes we do now, but we do it all through a large property tax, rather than a small property tax and large income tax. It can still be progressive; live in a multi-million-dollar mansion, and your tax is 10% of the value. If your only residence is a modest apartment, you could even have a NEGATIVE property tax (ie welfare) if you wanted to be progressive. With income tax, because the only way to collect it is to know everything everybody does every moment of the day, it's easy to avoid and requires draconian measures to hunt down people who run off to tax havens to do secret deals. With property tax, however, there's no possibility of avoidance; even if you buy the property in the name of an offshore company, the government still gets the tax just the same. And they don't need to invade your privacy, because it doesn't matter who is paying the tax. With income tax, you discourage working hard and making money—something that is very good for society. With property tax, you discourage wasteful, conspicuous consumption, something that is bad for society, leads to jealousy and class separation. With property tax, if the government gets wasteful, just leave. With income tax, I know that no matter where I go, even I DO build a rocketship and go to the moon, the IRS will be breathing down my neck for the rest of my life and there's no escape. It technically is a form of slavery, and is dehumanizing to have to explain to some government minder everything you do every waking moment of the day, and have the minder reading through your facebook posts and emails and listening in on phone calls to be sure you're not hiding something. We all make SO many sacrifices for the sake of income tax, and the government spends such a HUGE amount of money on collection and enforcement. Back in the US when they had an all-property tax system, government was able to run on a couple % of gdp. Now, with this draconian system of enforcement, government needs to take about 1/3 of the entire economy of the nation just to keep up.
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