Fair Tax of 2005

Discussion in 'Politics' started by Covertibility, Dec 18, 2005.

  1. There's been some mention of this idea in various threads so lets start one here.

    Here's the book: The FairTax Book

    Here's a critique of that plan which is pretty revealing: There is No Such Thing as a Fair Tax

    Anyone know the status of "HR 25 - The Fair Tax Act of 2005"
  2. BSAM


    The Fair Tax isn't perfect, but it's certainly a step in the right direction; and the IRS is a rouge institution which should have been abolished long ago.
  3. ^ what he said

    if not a fair tax than a flat tax. major tax reform is needed regardless.
  4. The main problem I see, is the law of unintended consequences. This will surely create a large black market for goods and services, and will certainly be a windfall for organized crime.
  5. Another problem is when someone checks out of a hospital after a major procedure and finds the IRS or whatever they will be known as as they ain't goin away, at their door asking where the 35+% tax (it's way higher than published by the fairtax.org folks) is. Imagine, you get out of the hospital after a $150K operation, not all that unusual, and the taxman wants $50K. Right now! Will your insurance pay it? HMMMMMMMMMMM.

    Remember that the tax rate published by fairtax.org is tax inclusive not exclusive as most of us are familar with. That means, their definition of a 35% tax for a $100 item is $35 is tax, and $65 for the item. That is a rate we all know and love as 53%-so to me they are already in trouble if they resort to this kind of subterfuge. So that means instead of the $50K I in error mentioned above, it really is more like $75K!!!

    Not to mention folks will get upset when they discover "services" covers stuff like police and fire protection and public libraries and trash collection and water and sewerage. Some of these may be exempt but I don't see it in HR25 while education is specifically exempted.

    There are many more reasons why it is a bad idea. Cheating as previously mentioned will be huge is just one. Imagine the size of the gummint agency needed to to stop the black market on most everything. Hell we spend billions trying to keep illegal drugs off the street, do you really think we can keep those expensive Gillette razor blades off to?

    Remember people are honest at at under 10% tax rate, but when it hits 50+, I kinda doubt they all will still be honest once they see their friends and neighbors cheating and getting away with it.

  6. BSAM


    Doug you seem to keep trying to tear down ideas for the elimination of the IRS. I'm starting to think that you or some of your kin/friends work for the IRS.

    You want to concentrate constantly on HR25. Perhaps HR25 isn't perfect. But it points in the right direction. What you keep trying to do is something akin to claiming Santa Claus is a bad dude just because he's a little overweight. He's a great dude! Let him deliver the gifts, we'll work on his weight problem soon enough. ;-) Merry Christmas.
  7. DrChaos


    Why exactly does a VAT (which is what this is) point in the right direction?

    Why would it "eliminate the IRS"?

    In nations that have this (and there are a number) there remains a significant bureaucracy devoted to computing and assessing and trying to find the cheaters, and finding, collecting and disbursing the money. And of course armies of lobbyists who successfully ask for and get special exemptions and rates on this and that and whatever.

    The issue is never "what are the tax rates", but "what exactly counts as income or taxable transactions". That is always the hard part and subject to cheating.

    It is a transaction based tax that's more complicated than sales taxes, and puts burdens on the suppliers of services.

    The only people it really really benefits both economically, and in bureaucratic burden, are really rich who can live off their dividends and bonds, and still have enough to compound by saving more. (Which I think is the point. Who wins? Why? Poor and middle class spend most of their income, because they have to. This hurts them more.)

    There are plenty of ways to cheat on the VAT too.

    The criticism of the FairTax from that guy is even more insane, on the other hand.

    Like this one:

    "Taxation is nothing but organized theft, and the concept of a 'fair tax' is therefore every bit as absurd as that of 'fair theft.'"

    About the same way that surgery is the same as "aggravated mayhem."

    People actually want some government services.

    I personally believe that the SS and medicare taxes (on wages only) should be eliminated on both employer and employee side and all shifted to income tax, and, capital gains, short and long, and dividends, and interest income should all be taxed equally, as was done in Reagan's 1987-88 tax reform. (There is no very good economic reason to tax differently I believe).

    Because capital gains are often lumpy, then you would be able to put off half of any gain and spread it out over the two succeeding tax years, automatically. This intrinsically gives a benefit to capital gains.

    This may smooth out government revenue as well.

    Capital losses should be deductable against up to half of income.
  8. Phew, i thought they were going to tax fairness there for a second.

  9. One of the biggest problems of the fairtax proposal is that everyone would recieve a monthly check ($300 I think) that would be a rebate on basic purchases.

    Thereby getting everyone used to government dependency.

    Another VERY BAD thing is that it taxes internet purchases. I belive it is necessary to keep the government OUT of the internet. NOt regulation and NO taxation laws. Once they start they will never stop.
  10. First of all there is nothing fair about the fair tax proposal, it's not any more or less fair to tax purchases than taxing income or wealth. A truly fair system would require each american to pay for precisely the share of government services he/she uses which is obviously impossible. For instance if someone files a lawsuit it's fair that he pays the judge's, court clerk's or bailiff's salary but if the plaintiff did not make any big ticket purchases that year he is not paying anything, the judge's salary will be paid by his neighbor who did not sue anyone but bought a new car and plazma tv instead. What's fair about that?

    The second problem is that only mathematically challenged can seriously believe that there will be benefits to american taxpayers. The proposal is revenue-neutral, collectively americans will pay exactly the same amount of money, it's a zero-sum game and someone's win will therefore be another's loss. Given that the proposal is supported by the rich I have a pretty good idea who the losers will be.
    #10     Dec 23, 2005