The Benefits of the Fair Tax
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14-02-2014, 09:54 AM
RE: The Benefits of the Fair Tax
(14-02-2014 09:45 AM)toadaly Wrote:  
(14-02-2014 07:37 AM)wazzel Wrote:  1. Property tax is not voluntary. You have to live somewhere and even renters pay property tax. It is just rolled up in the rent payments along with insurance and other things the land lord has to cover. Just because they do not see it does not meant they are not paying it. Edit - This is old data, but apparently the tax burden for renters is higher than home owners, again putting more burden on lower wage earners since they can not afford to purchase a home. http://www.nmhc.org/Newsletter.cfm?ItemNumber=54914

User fees are the only voluntary taxes. But when you consider that the state is what makes the orderly ownership of property possible, that tax is justifiable. If there were no state to do this, individuals would have to either do it themselves at generally significant expense, or pay a third party to do it for them. To expect this benefit from the state, at no cost, is to expect a free lunch. That said, property taxes can certainly be abusive, like any tax can be.

Quote:2. Consumption taxes increase the tax burden for lower income and decreases it for higher earners, very regressive.

Not necessarily. It depends on how they are implemented. The governments analysis of the Fair Tax, for example, shows that the poor would be the greatest beneficiaries. I'm not a proponent of the Fair Tax, because I think the 'prebate' is a stupid idea, but it does at least demonstrate the feasibility of a progressive consumption tax. http://en.wikipedia.org/wiki/File:NRST-percentile.png

I do agree with your points, but to state that property tax is volentary is not true.

To me when you get to haveing to prebate a sales tax based system it is no longer a workable solution. It stays a progressive tax system under the misguided notion it is not. The general public does not dig into the nuts and bolts of these things so they will just look at the window dressing to evaluate.
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14-02-2014, 10:24 AM
RE: The Benefits of the Fair Tax
Wazzel, can you answer a couple questions to see if you thought this through?

(14-02-2014 07:37 AM)wazzel Wrote:  Property tax is not voluntary. You have to live somewhere

1. Is this statement true or false: "Shopping at John's supermarket is not a voluntary choice, because everybody needs to get food somewhere."

2. If you agree that it's 'false', because, although obtaining food is a basic requirement, WHERE you get the food from is voluntary, then how is this any difference from property tax?

Remember everybody needs to live SOMEWHERE, but when you have thousands of counties offering you a menu of services and prices (tax rates), you get to pick the place that offers you the best value, just like you get to pick where you buy your food.

(14-02-2014 07:37 AM)wazzel Wrote:  even renters pay property tax. It is just rolled up in the rent payments

YES! That was my point. Property tax is impossible to avoid. Whether you buy, rent, live in a hotel, crash on your friend's sofa, WHEREVER you are, there's land beneath you, and whoever owns that land has to pay property taxes because they NEED the counties services to grant them deed to the land. If you don't pay, a lien goes against the property, with interest, which much be satisfied before it can be transferred. Nobody ever goes to jail for not paying property tax and it requires no police enforcement because it's unavoidable.

3. Why do you think it's a bad thing to have a tax that is impossible to avoid so that nobody wastes their time and money with tax avoidance schemes?


(14-02-2014 07:37 AM)wazzel Wrote:  apparently the tax burden for renters is higher than home owners

That's a separate issue of what the tax rate. Property tax CAN be as progressive as you want. Poor people who live in small apartments with lots of kids could actually have a NEGATIVE property tax to help them pay living expenses, while luxury homes over X size pay triple the tax rate.

(14-02-2014 07:37 AM)wazzel Wrote:  I do not see where it discourages work. Most people would rather have what is left after taxes than all of nothing.

Imagine you run a factory with 100 workers, each making $26/hour, about $50k/year, and currently income is taxed at 50%, so they take home $25k/year. And if they work 2 shifts, that will double. Now, one politician is pushing for a very progressive income tax, so all income over $50k is taxed at 99%. This means if those who work 2 shifts, doubling their work hours from 40/week to 80/week, will see their take home pay go from $25,000 to $25,500. How many of your workers will be working to work two shifts to make an extra $500/year. What if the income tax is phased out, so all income over $50k is actually tax-free. This means if you work 2 shifts your take-home income goes from $25,000/year to $75,000/year.

4. In the above scenario, what is going to entice workers to work double shifts more? Increasing their take home pay from $25,000 to $25,000? Or from $25,000 to $75,000?


I would argue that it's the latter. And I would argue there is no magic cutoff where all people will respond at the same time. Even with a 0% income tax over $50k, some of your workers will still only work a single shift because it's more important to have free time with their family. I argue it's a gradual spectrum, so that at 0% tax rate, let's say half your workers are willing to work 2 shifts. And that every time you raise the income tax 1 notch at a time, the number of workers working 2 shifts will get less and less, so that by the time the tax rate reaches 100% on income over $50k, meaning the take home pay for working 2 shifts is identical to 1 shift, I don't think any of your workers are going to be working 2 shifts anymore.

5. What's wrong with my logic? If income tax really has no effect on how much people work, why doesn't a cash-strapped country like Greece just raise income taxes to 99%?


When you mention the current system is not the worst... Remember, with the current system, even acts of kindness become felony offenses. If you break your leg, and I mow your lawn, and in exchange you help my son with his homework, unless we document this transaction and report it to the IRS, we have committed a felony and could go to jail. The only way to ensure all income tax is collected is for the IRS to know everything about your life. Remember, Snowden leaked a secret IRS training manual showing agents have access to the NSA's databases, and they are trained to falsify paper trails so taxpayers don't realize that the IRS has been reading your emails and listening to your phone calls to try to find anybody engaging in any activity that is not being reported to big brother. And in the US, the law is that if you're born in the US, then the IRS has a right to know every activity you do every day for life--no matter where you live. You can build a rocket and go live on the moon to escape and try to live in peace, but the IRS will still send agents up to check on you and be sure you're reporting everything you do.

6. Since income tax requires the government to know every transaction you do every day of your life, you don't find it invasive, and a violation of your privacy? You wouldn't rather have a system where there are lots of tax regimes competing for your business, vying to offer you the best services at the best price, so you are free to choose which one gives you the best value?
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14-02-2014, 10:51 AM
RE: The Benefits of the Fair Tax
1 and 2 are dumb situations. Property and sales taxes are not volentary in the sence you can choose to pay or not. You purchasing choises influence the amout of sales and property taxes you pay as does where you choose to do busness and live.

3 I don't think it is a bad thing to make taxes impossible to aviod, I just do not se where sales or property taxes are the right answer.

4 and 5 are not realistic situations. I am sure you are exagerating for clairity to point out how you feel about progressive income taxation. I do not agree with your logic. People are willing to pay a higher percent in taxas as they move up the income ladder becasue they have more money in their pocket as they do so. When the upper tax bracket was over 90% people still wanted to make as much as possible.

6 What? An income based system does not tack every single trasaction I make. I do not see where going with one taxing scheme over another will change the level of goverment priviacy invasion. I suspect a sales tax system has the potential to be more invasive sine the taxes ARE collected off every trasaction.
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14-02-2014, 11:18 AM
RE: The Benefits of the Fair Tax
(14-02-2014 09:54 AM)wazzel Wrote:  I do agree with your points, but to state that property tax is volentary is not true.

I didn't say it was voluntary, I said it was justifiable. The only voluntary taxes are user fees.

Quote:To me when you get to haveing to prebate a sales tax based system it is no longer a workable solution. It stays a progressive tax system under the misguided notion it is not.

I agree the prebate is stupid, but I don't see how that negates the idea of progressive consumption taxes. An alternative to the silly prebate and a flat 23%, would be no prebate, but graduated levels of taxation on different goods and service. Milk, bread, and other basics could be tax free. Shoes priced under $20/pair could be tax free, with the rate of sales tax gradually increasing from 0% at $20, to 200% for shoes priced $1000/pair and higher....or whatever. You get the idea.

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14-02-2014, 11:30 AM
RE: The Benefits of the Fair Tax
(14-02-2014 10:24 AM)frankksj Wrote:  Remember everybody needs to live SOMEWHERE, but when you have thousands of counties offering you a menu of services and prices (tax rates), you get to pick the place that offers you the best value, just like you get to pick where you buy your food.

In an ideal world, maybe you could just go live somewhere else. But as it is, most of us are essentially slaves to the nation we were born in, because the progressive agenda has infected every nation on earth. You can't just pick up and go work somewhere else without a long and generally very expensive ordeal.

That said, I do agree that property tax is preferable to income tax. Some might object to this with the argument that the wealthy can make their money here and move it overseas to avoid the tax, getting the best of both worlds, and to a degree, that's true. But as long as their productive assets are taxed based on the market value, it's still justified. You would not assess a software company in Silicon Valley on the value of the building, but on the assessed market value of the company as a whole.

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14-02-2014, 11:30 AM
RE: The Benefits of the Fair Tax
(14-02-2014 11:18 AM)toadaly Wrote:  
(14-02-2014 09:54 AM)wazzel Wrote:  I do agree with your points, but to state that property tax is volentary is not true.

I didn't say it was voluntary, I said it was justifiable. The only voluntary taxes are user fees.

Quote:To me when you get to haveing to prebate a sales tax based system it is no longer a workable solution. It stays a progressive tax system under the misguided notion it is not.

I agree the prebate is stupid, but I don't see how that negates the idea of progressive consumption taxes. An alternative to the silly prebate and a flat 23%, would be no prebate, but graduated levels of taxation on different goods and service. Milk, bread, and other basics could be tax free. Shoes priced under $20/pair could be tax free, with the rate of sales tax gradually increasing from 0% at $20, to 200% for shoes priced $1000/pair and higher....or whatever. You get the idea.
There is no tax scheme that will be problem free or live up to everyone's idea of fair. The government (all levels) require a certian amount of money to provide services to the public. IMO by changeing up the scheme you are just playing tricks on the public. The total amount still has to be collected and unless you are on the upper end or lower end I doubt your bottom line will change much. If we want to pay less in taxes, which is really what the griping is about, we must be willing to live with less services from all levels of government. If we the public continually want more services from the government we better get used to paying.

When I say government I mean all levels not the federal level specifically.
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14-02-2014, 12:29 PM
RE: The Benefits of the Fair Tax
(14-02-2014 10:51 AM)wazzel Wrote:  1 and 2 are dumb situations. Property and sales taxes are not volentary in the sence you can choose to pay or not. You purchasing choises influence the amout of sales and property taxes you pay as does where you choose to do busness and live.

This is why discussing politics, economics, or religion is pointless, and not a real science. If you're debating a math issue, and you ask a mathematician a question he cannot answer without exposing a weakness in his theory, as a real scientist, this means he goes back to the drawing board and rethinks it.

However, I've seen that in a political thread, few are ever willing to challenge the assumptions. If a question is awkward, it's just dismissed.

My question was:

Is this statement true or false: "Shopping at John's supermarket is not a voluntary choice, because everybody needs to get food somewhere."


You just said that property taxes are not voluntary because, although thousands of different counties in hundreds of different countries all around the world are competing for your business and you're free to choose anyone you want, your argument is that because you have live SOMEWHERE, therefore, it's not a voluntary choice. My question shows the fallacy of that logic, because if you follow it through, then even buying food is not "voluntary". However, we know that's not true. We know it's silly to say that because we all need food, therefore it's not a voluntary decision WHICH store we choose to shop at. As Cathy points out, it's a reductio ad absurdum argument because it shows the original premise, which I challenged, if you think it throw, is absurd.

Therefore, it's pointless to debate. If you throw out an absurd premise, like saying property tax isn't voluntary because you have to live somewhere, and will ignore any challenges to that premise, and cling to it even when I prove it's absurd, what's the point in going on?

Same thing with income tax. Sure, my example was extreme case to prove a point. But the point is valid. Say you have 100 factory workers making $50k/year and there's no income tax. Now politicians are debating adding a tax on all income over $50k, and they're debating if the tax should be 40% or 50%. AT 40%, a factory worker doing double shifts will go from $50k/year to $80k/year. At 50% he will go from $50k to $75k. So, even with a subtle change in income tax rates, you've reduced the incentive for your workers to work double shifts, and chances are that fewer workers will do double shifts if the tax rate is 50% than 40%. The logic is irrefutable. But you refuse to accept any challenge to your assumption to your claim that income tax doesn't effect one's incentive to work. So, yes, again, I used a reductio ad absurdum showing that, if your premise were correct, than governments could just keep raising the tax rate over and over again until it 100%, and, according to your original claim, it wouldn't effect workers behavior at all. We know that's not true. But rather than rethinking your original claim, you just ignore the argument.

I wish people were willing to debate politics and economics pragmatically, like a real science, and not treat them like a religion where it's all based on faith and ideology.
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14-02-2014, 12:47 PM
RE: The Benefits of the Fair Tax
(14-02-2014 12:29 PM)frankksj Wrote:  However, we know that's not true. We know it's silly to say that because we all need food, therefore it's not a voluntary decision WHICH store we choose to shop at. As Cathy points out, it's a reductio ad absurdum argument because it shows the original premise, which I challenged, if you think it throw, is absurd.

If you don't want to continue to debate, why do you purposely misquote or mischaracterize what I said?? First of all, I said nothing about your ridiculous statement that buying food is voluntary.

But since you ask.

Buying food within a certain geographic location *is* voluntary but only to a small degree. You can 1) grow your own food, or you can buy from a store. If you buy from a store, you can decide which store offers the best deal. however, you are limited in choice to a certain geographic radius. You cannot drive 50 miles to say $0.75 per pound because the cost of gas would make the purchase actually $8.00 more per pound based on opportunity cost, and actual out of pocket costs.


Further, since we buy many different things at grocery stores, we are forced to buy some things that are more expensive at the store we are at, vs shopping at a different store. Why? Because the cost of gas would eat up any savings.


For example, I live in small town america. There are 2 major grocery stores, each in different towns approximately 30 miles apart. I live smack dab in the center of these two stores. Wegmans (my beloved Wegmans), and Tops. Wegmans may be offering specials on eggs, or milk, or gluten free products, but are more expensive than tops in products like meat, and cleaning supplies. Am I going to go to Wegmans for milk, then drive 30 miles to Tops for meat? No. Because gas is expensive. So is my time.

So, it is only voluntary to a small degree, within a limited amount of choices, and a limited geographic distance, and therefore, you're argument is again mischaracterizing what I said. So, buying food is - for all intents and purposes - mandatory. Please stop doing this.

A little rudeness and disrespect can elevate a meaningless interaction to a battle of wills and add drama to an otherwise dull day - Bill Watterson
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14-02-2014, 01:06 PM
RE: The Benefits of the Fair Tax
(14-02-2014 11:30 AM)wazzel Wrote:  There is no tax scheme that will be problem free or live up to everyone's idea of fair. The government (all levels) require a certian amount of money to provide services to the public. IMO by changeing up the scheme you are just playing tricks on the public. The total amount still has to be collected and unless you are on the upper end or lower end I doubt your bottom line will change much. If we want to pay less in taxes, which is really what the griping is about, we must be willing to live with less services from all levels of government. If we the public continually want more services from the government we better get used to paying.

When I say government I mean all levels not the federal level specifically.

Paying less is certainly part of it, and as a libertarian myself, I'd like to see government substantially smaller. That said, a tax system that is justifiable in terms of the value of services received, accomplishes two things.

The first is that it's a lot less politicized when there is reasoning for why your tax bill is what it is that extends beyond just "because we have the guns and you have to comply". It satisfies the innate sense of fair play if what you pay is commensurate with the benefit you receive.

The second, is that if the tax is avoidable in a way that does not harm overall productivity (property taxes and consumption taxes fit this, but income tax does not), then it puts a form of market pressure on government, which is something sorely lacking right now.

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14-02-2014, 01:10 PM
RE: The Benefits of the Fair Tax
(14-02-2014 12:47 PM)Cathym112 Wrote:  So, it is only voluntary to a small degree, within a limited amount of choices, and a limited geographic distance, and therefore, you're argument is again mischaracterizing what I said. So, buying food is - for all intents and purposes - mandatory. Please stop doing this.

That is assuming that, when you turned 18 and moved out from home, you had no choice in where you wanted to go. Personally, I'm a big city person. The moment I could afford it, I abandoned the small town I grew up in and moved smack in the middle of Manhattan. In NYC I had dozens of choices for supermarkets within a few blocks--some were expensive, most were very expensive. That's the price you pay to live in Manhattan. It costs more, but, if you're a city lover, you get a lot more.

On the other hand, some people love the country, or the beach. They may choose to start their family in a rural area. For them, they sacrifice the choice that city folks have and need to drive longer to get anywhere, however they get a lot more space, feel they're getting a lot more to live in the country.

See, it's voluntary. When you have thousands of local entities (be it supermarkets or governments) all competing for your business, all offering different pluses and minuses, all at different price points, then YOU ARE FREE TO CHOOSE. That, to me, is the key. Free will and liberty are respected.

However the current US tax system says if you're born in the US, then for the rest of your life, even if you move to Mars, you must report back to the IRS every transaction you do every day of your life until you die, and the government will decide how much they will take for themselves and what they will let you live off. If you don't like, tough. Your only escape is to die, and then the government will take it in with an estate tax anyway.

You seriously cannot see how one system is voluntary and the other is not?
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