Would a fair tax plan work?

[Captain Chaos]

If you are unfamiliar with the fair tax idea, check out this article in wikipedia:

http://en.wikipedia.org/wiki/FairTax


It seems to me that the Fair Tax proponents present a very well thought out argument.

My opinion is that we should try it on a U.S. controlled island for a couple years - like Hawaii - to make sure that it has the expected effects. All theory should be tested, if possible, before applying it on a wide scale. This way, we could work out the kinks.


What do you guys think?

[Autolykos]

Do you really think that the US government is amenable to that kind of political experimentation?

- Rob

[Captain Chaos]

No...

But dammit - testing before implenting is a crucial concept. Businesses do it, why can't the government.

[Zeebadee]

This isn't a fair tax system, it's just another ripoff. For many years I have been taxed on my salary and income, yet, in spite of the confiscatory nature of the government tax system, I managed to save money anyway. I played by the rules, paying taxes on every dollar I ever made, and saved for my retirement as best I could. Now they want to change the rules, and tax me again when I spend what little they didn't extort from me the first time around. There are many more like me, so they better repeal the 2nd amendment before they try something like this thievery.

[Captain Chaos]

Well...

Zeebadee has a point. It would be a second round of taxes for folks who have already saved up a lot of money (which they paid taxes on when they earned it)...

For folks without significant savings, it would not present such a problem. Perhaps the prebate aspect of the fair tax plan could be modified to adjust for this problem somehow?

[brien]

Quote by: Captain Chaos If you are unfamiliar with the fair tax idea, check out this article in wikipedia: http://en.wikipedia.org/wiki/FairTax It seems to me that the Fair Tax proponents present a very well thought out argument. My opinion is that we should try it on a U.S. controlled island for a couple years - like Hawaii - to make sure that it has the expected effects. All theory should be tested, if possible, before applying it on a wide scale. This way, we could work out the kinks. What do you guys think?

We have debated this before. Tax reform is long overdue in the US. The single best benefit of dismatling the income tax would be the abolition of the IRS.

One has to examine the consequences of the two systems. Zee has a point, but a minor one really. The US has one of the lowest savings rates in the world.

Some say income taxes penalize production and success. It stifles workers from accepting overtime because it is set up as a regressive tax. The more one earns, the higher they are taxed while some corporations get away without paying their full and fair share of taxes. Why work harder when the large percentage of your earning are given over to Uncle Sam? Where is the incentive to increase productivity?

See this link on Corporate tax avoidance:

http://www.ctj.org/html/corp0205.htm

The current tax codes are so complicated that even the IRS can't say what is certain in the codes to taxpayers who seek their help during "tax time."

A National Consumption Tax, some say, is a fair and a better way to collect taxes at the point of sale. It is more immediate than collected four times yearly from business and self employed and annually from those involved in withholding. Currently the rate is about 24% that is being floaated around.

The third idea is the income flat tax. No deductions. We almost have this for the average taxpayer today. The home mortgage interest deduction is by far the largest deduction most people claim who file the "long" form. A charitable deduction is allowed and is taken by most filers. Small business benefit the most from deductions, and small business, imo is the backbone of the economy.

Who knows where ths is all going because these tax reforms can't seem to get through Way and Means. Even the Republicans, who are supposed to be the party of lower taxes and smaller government can't get it to the floor for a vote.

If you want to see the benefits of no income tax, look to the states that don't have one now.

Link: http://www.govspot.com/know/incometax.htm

from the link:

Which states have no personal income tax?

Seven states have no state income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. Two others, New Hampshire and Tennessee, tax only dividend and interest income. To see how other states compare, check out the Federation of Tax Administrators' listing of individual income tax rates for 2001.

Here is a table of rates and comparisons:

http://www.taxadmin.org/fta/rate/ind_inc.html

And here is one link for you Zee:

http://www.retirementliving.com/RLtaxes.html

The above link is an excellent link to see how your state stacks up in tax burden.

This next link will show you how NH, with NO income tax, ranks 49th in tax burden

From the same link as above.

Here is the truth:

Each state's tax burden represents a combination of state and local tax burdens. The table below uses information extracted from Tax Foundation reports and shows the effective state/local tax burdens as a percentage of income by state. Ranking by state can be found in column 1. Column 2 shows the tax burden as a percentage of income, column 3 is tax burden per capita, and column 4 shows income per capita.

Tax Burden Rank
Tax Burden
as a Percentage
of Income
Tax
Burden
Per Capita Income
Per Capita
United States
-
10.6%
$4,072
$38,376

Alabama
Alaska
Arizona
Arkansas
California
46
50
32
27
15
8.8%
6.6%
10.1%
10.3%
10.9%
$2,881
2,598
3,350
3,088
4,451
$32,599
39,499
33,156
29,999
41,022

Colorado
Connecticut
Delaware
Florida
Georgia
38
9
48
39
25
9.8%
11.3%
8.4%
9.7%
10.4%
$4,098
6,018
3,426
3,566
3,564
$41,987
53,152
40,964
36,734
34,327

Hawaii
Idaho
Illinois
Indiana
Iowa
5
31
14
12
26
11.7%
10.2%
10.9%
11.0%
10.4%
$4,496
3,159
4,335
3,796
3,709
$38,269
31,031
39,902
34,647
35,807

Kansas
Kentucky
Louisiana
Maine
Maryland
18
20
11
1
19
10.7%
10.7%
11.0%
13.5%
10.7%
$3,885
3,383
3,463
4,719
4,996
$36,209
31,639
31,358
34,935
46,562

Massachusetts
Michigan
Minnesota
Mississippi
Missouri
28
16
4
29
34
10.3%
10.8%
11.9%
10.2%
9.9%
$5,047
3,965
4,930
2,924
3,509
$49,203
36,751
41,363
28,591
35,408

Montana
Nebraska
Nevada
New Hampshire
New Jersey
42
6
43
49
17
9.5%
11.6%
9.5%
7.3%
10.8%
$3,108
4,294
3,758
3,136
5,234
$32,719
36,999
39,683
42,707
48,590

New Mexico
New York
North Carolina
North Dakota
Ohio
36
2
23
37
3
9.9%
12.9%
10.5%
9.8%
12.0%
$3,031
5,734
3,526
3,421
4,332
$30,642
44,571
33,732
34,808
36,054

Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
40
35
24
8
30
9.6%
9.9%
10.4%
11.5%
10.2%
$3,129
3,492
4,057
4,629
3,213
$32,661
35,300
38,849
40,331
31,480

South Dakota
Tennessee
Texas
Utah
Vermont
45
47
44
22
10
9.2%
8.6%
9.4%
10.5%
11.1%
$3,177
2,979
3,368
3,261
4,118
$34,647
34,568
35,913
30,917
37,025

Virginia
Washington
West Virginia
Wisconsin
Wyoming
41
13
21
7
33
9.5%
10.9%
10.6%
11.6%
10.1%
$4,056
4,334
3,212
4,289
4,120
$42,642
39,705
30,317
37,115
40,917

District of Columbia
-
12.8%
$8,092
$63,044

So, if you go to the link's table, we can see that those states that do not have an income tax, place less of a tax burden upon their citizens than those who do impose an income tax. This is a powerful argument to eliminate taxation through income. No need to try it in any state, just examine the data here.

[Autolykos]

Quote by: Captain Chaos No... But dammit - testing before implenting is a crucial concept. Businesses do it, why can't the government.

Well, the government isn't a business. Plus, businesses are more easily able to do it for the following reasons. First, they rely on voluntary contributions (except when they don't, i.e. government subsidies) to conduct their tests. Second, the tests are conducted in some sort of laboratory setting. Third, the tests have voluntary participants (if they have human participants at all). Government, on the other hand, is by definition an institution based upon coercion, the very antithesis of voluntary action. Also, government deals with human society as a whole -- there can be no laboratory setting there. These two things make it politically infeasible for government to conduct the sort of top-down "social testing" you propose.

- Rob

[Osborn F Enready]

I am against the fair tax.

I want to get back to constitutional taxation, of corporations, not citizens.

[Milton Bradley]

The confusing thing about the flat tax for me is that it seems like the poorer people would be forced to have all of their income taxed, as it is all spent week to week, while the affluent would only be taxed on a small percentage of their incomes that they actually spend. ( in country ) Then, there is the whole "can they beat the tax by buying foreign goods, and importing them" angle.


Also, the constitution states that taxes shall be levied fairly, and equally, so I see that as a major barrier to this idea being taken seriously by many because this plan is in no way fair to the lower income groups.


I smell something rotten in the Fair Tax, although I have yet to put my finger on it.

[brien]

[quote=Milton Bradley]


Also, the constitution states that taxes shall be levied fairly, and equally, so I see that as a major barrier to this idea being taken seriously by many because this plan is in no way fair to the lower income groups.
QUOTE]


Then how is the progressive income tax fair to those who work harder to earn more money? How is it fair to the guy who is forced to work overtime only to give most of it over in income tax?

[Captain Chaos]

Also, government deals with human society as a whole -- there can be no laboratory setting there. These two things make it politically infeasible for government to conduct the sort of top-down "social testing" you propose.

No way. They could do it. They just need to find a willing island and use a fair tax system there. What prevents them is political BS.

Surely you agree it is better to test something like this rather than just implement it as a whole? Politics may not allow for it - but it would be better.

[Captain Chaos]

Quote by: Milton Bradley The confusing thing about the flat tax for me is that it seems like the poorer people would be forced to have all of their income taxed, as it is all spent week to week, while the affluent would only be taxed on a small percentage of their incomes that they actually spend.

Read about the fair tax plan on wikipedia... It is specifically designed, in a rather straight-foward way, to not be regressive. Check out the 'prebate' part of the plan.

[PatrickHenry]

Quote by: Captain Chaos ... My opinion is that we should try it on a U.S. controlled island for a couple years - like Hawaii - to make sure ... What do you guys think?

I think it should be tried on the State of Georgia (preferably in the neighborhood of YOUR HOUSE) before you dump it on my home, you (expletive deleted)!

[Osborn F Enready]

Taxes, or fiat money, is not part of the answer.

Perhaps, if we had a government that wasn't so obscenely fat it could see its own feet, we would stop getting pissed on?

The only way it gets trimmed down, is by WITHOLDING MONEY FROM IT.

That means, FORCED reform.

If you do that, what happens? Your property is taken, you are evicted or jailed, or shot if you resist.

Very liberty based, huh?

[Captain Chaos]

I think it should be tried on the State of Georgia (preferably in the neighborhood of YOUR HOUSE) before you dump it on my home, you (expletive deleted)!

http://en.wikipedia.org/wiki/Anger_management

I would be willing to try it. I have my doubts about whether it would work - but I would be willing to experiment. Such an experiment could be formulated to control for any fiscal problems that might arise.

In other words, if the federal government has to pump money into the location to compensate for resulting financial problems - then that would demonstrate that it didn't work - without crashing the local economy.

It has to be tried on an Island, though - to prevent border crossing for buying cheaper goods.

[brien]

Quote by: PatrickHenry I think it should be tried on the State of Georgia (preferably in the neighborhood of YOUR HOUSE) before you dump it on my home, you (expletive deleted)!

Man oh man, It took a little longer than I expected, PH.

btw, I notice Hawaii is # 5 and Connecticut is # 9 in tax burdens. Man I gotta move back to NH. :)

[Milton Bradley]

Quote by: brien Quote by: Milton Bradley Also, the constitution states that taxes shall be levied fairly, and equally, so I see that as a major barrier to this idea being taken seriously by many because this plan is in no way fair to the lower income groups. Then how is the progressive income tax fair to those who work harder to earn more money? How is it fair to the guy who is forced to work overtime only to give most of it over in income tax?

You are asking me to defend the current system?


Come on, I thought you knew better than that.

[Captain Chaos]

Then how is the progressive income tax fair to those who work harder to earn more money? How is it fair to the guy who is forced to work overtime only to give most of it over in income tax?

I can answer the question of how progressive taxation is justified - to some extent. The answer is not one that I really accept, but it is how it is viewed by many.


The lower class works really hard, for low pay, while the upper class gets rich off of the efforts of the lower class.


I should start a separate thread just to discuss this point. It has some validity - but only some. The fact is, in America, the opportunity to rise is available to everyone.

[Apeman81]

FAIR is an acronym. Its meaning stems from someone asserting, no matter what the situation, that because of a perceived inequity of outcome, “that’s not fair”.

The acronym is Foolish And Ignorant Response (FAIR). Factors too numerous to list ensure that given a set of circumstances, the result of an action will not produce and equal outcome for all affected. But I digress.

The Fair tax described in the site given is a national sales tax. The idea is to leave the money in the pockets of the workers without taxation. Taxation only occurs upon the purchase of goods and services. Assuming a flat rate of taxation for all items, this would allow the wage earner to obtain the Gs and Ss he desires, free from governmental influences that occur when some expenditures are taxed at a higher rate then others.

Such taxation occurs today. Just buy some gasoline, tobacco, alcoholic beverages etc. The federal government is taxing those items at varying rates on a volume basis independent of purchase price.

As Zeebadee pointed out, to bring about such a change would adversely affect those who are now spending the money they have saved over time. It would not be fair (see first 2 paragraphs). Any change to the current method of taxation will adversely affect one group or another. As such, this reality should not be allowed to stand in the way of reform.

Overall, these plans are a diversion to keep us arguing amongst ourselves about how the government should take wealth it did not earn from those that did to spend as they see fit, rather than arguing with the government about whether or not they should be able to take the money from us, and how they should spend it once they have.

[tman_ndsu08]

Quote by: Zeebadee This isn't a fair tax system, it's just another ripoff. For many years I have been taxed on my salary and income, yet, in spite of the confiscatory nature of the government tax system, I managed to save money anyway. I played by the rules, paying taxes on every dollar I ever made, and saved for my retirement as best I could. Now they want to change the rules, and tax me again when I spend what little they didn't extort from me the first time around. There are many more like me, so they better repeal the 2nd amendment before they try something like this thievery.

Boo hoo.

The Fair tax is the best way that we can be taxed, since we're going to be taxed in one form or another.


And I don't want people like you screwing up any chance that we have to get it installed because of your whining.


Buck up and take one for the team.