Would a fair tax plan work?

[brien]

Quote by: Zeebadee I agree, Brien. However, for the same reasons I believe a Fair tax system will never be adopted, it's possible that we may never see SS reform. There are just too many voters that would be pissed off by benefit cuts.

But Zee, what else can they do? If they have to tax the current workers to cover the SS benefits promised, the working class will surely revolt. There are just too many retirees coming in the next 20 years and not enough workers to support the current system

They pissed off the SS recipients before by taxing benefits, and got away with it. This resulted in taxing a tax that had already been paid by the workers, and there were no serious poltical ramifications from that act. Maybe they will increas the tax on the benfits to the retirees, as well.

One thing is for sure, something will have to change for the government to meet the obligations of the SS system over the next 20 years. This is a given already admitted by the government. The currrent slimey gang of politicians keep ignoring the problem and run from the issues like sandpipers away from the oncoming wave of obligations looming over their heads.

[Zeebadee]

Quote by: Captain Chaos I believe the prebate plan works around the regressiveness issue very nicely. If you are poor, you get a prebate every month based on average expenditures for people in that income bracket. Heck, if you are poor but save your money, under the fair tax plan you would receive negative taxation - that is, you would make money from it. Some kind of prebate or rebate plan could also be used for people with savings. Basically saying... OK, you have 100,000 dollars in a grandfathered savings account. When you take money out of savings it is assumed you will be spending it, and so you get a rebate for 23% of that money. I dunno - sounds like it would get messy and open to abuse, but it might be workable.

It seems to me that one of the big selling points of the Fair tax is that it broadens the tax base to include all Americans. But if you start handing out money to people that aren't paying taxes, you're effectively removing them from this tax base, thus forcing the tax rate up from it's estimated 23%. As that rate goes up, the prebates would also have to rise, thus exempting more people from the tax base.

[Captain Chaos]

It seems to me that one of the big selling points of the Fair tax is that it broadens the tax base to include all Americans. But if you start handing out money to people that aren't paying taxes, you're effectively removing them from this tax base, thus forcing the tax rate up from it's estimated 23%. As that rate goes up, the prebates would also have to rise, thus exempting more people from the tax base.

yup...

So, for it to work, they have to be very careful in how they design the prebate plan. Most poor people are not in a situation where they can save money - they have to spend nearly all of what they make. At least, that is their belief. Thus, most will be paying taxes anyway.