FairTax potential effects on gambling

[bills217]

There's a new best-selling book out discussing a new proposal called the "FairTax." If you pay close attention to the news you may have already heard something about it.

It has a long way to go before it can become law obviously, but in theory, it would completely replace the income tax and all other current taxes, and replace it with a 23% sales tax on all goods and services. The IRS would become a thing of the past, and FairTax supporters (including me) claim it can be done revenue-neutral. (Rather than post basic questions about the FairTax on this thread, just go to www.FairTax.org (http://www.FairTax.org) and read the FAQ.)

No tax considerations whatsoever would be taken directly from gambling income, and since a professional internet gambler ideally has less work-related expenses than the average person (doesn't require an hour-long commute to work, etc.), it seems to me that the FairTax proposal might be VERY favorable for an online poker pro, who makes his living through offshore entities, and thus avoids the increased expenses a B&M player could logically expect to see under the FairTax. Remember, under this proposal the direct tax on income would be abolished entirely.

Let me know your thoughts on this.

[Quercus]

A flat tax will never happen in the US, regardless of how much fiscal sense it might make.

The ability to grant tax favors to friends and overtax enemies is a key power of politicians. They will not give it up under any circumstances.

[bills217]

"A flat tax will never happen in the US, regardless of how much fiscal sense it might make."

It is not a flat tax. Go read the FAQ on the website. All citizens would get a rebate up to poverty-level spending, actually making it more progressive than the current system, although I realize it has nothing to do with your main point about the power of politicians. Congressman John Linder is a co-author of the book and sponsor of the bill, so there's one politician who supports it.

If my understanding is correct, they have something mildly similar in Europe called value-added taxes (VAT's), so I think it's a realistic enough possibility to make it worth discussing, especially considering the apparent advantage it would give online poker pros.

[MicroBob]

I know very little about such things for the most part (I do know there are some top economists who think it would cause some big problems...especially at first).


But I do know that as an online poker player (full-time for income) I would LOVE to see such a tax.
Certainly would help us out in such situations as the IRS running around all over the place trying to figure out who has paid what they are supposed to be paying and who hasn't.

The thought that I would be saving however much money I would save if I were just a citizen of another country really kind of bugs me (even though I know of the advantages of being an American and some of the disadvantages of living elsewhere of course).


There are TONE of people today who aren't really thrilled with the tax-system as it is currently.
The tax-code is impossible to figure out in places. And who in the work-force loves seeing that HUGE chunk of their pay-check getting taken out month after month.


Indeed...my expenses are less due to no commute and other such stuff.



One of the guys who wrote the best-selling book was on the Daily Show the other night.
I guess this means he's probably touring some of the other talk-shows as well (such as the various morning network news-programs and what-not).

[sekrah]

If it were passed, It would be a huge advantage to everybody in the country, not just professional poker players.

If I were allowed to keep my entire paycheck, I'd probably work 80+ hours a week..

Goods would be taxed 23%, but the cost of making goods would fall as corporations would no longer be taxed, they can sell there goods at a lower price, and the net cost of goods would be very small.

But like the last poster said, anything that takes power away from the government (and this does), will probably never pass unless there was an overwhelming movement to get this through.

There are far too many idiots in this country who wouldn't understand the economics and implications behind the system.

[Quercus]

I'm familiar with the proposal. Its a rehash of the flat tax idea meant to make it more palatable. I want to say that Linder was on our local talk radio station one morning talking it up (though it may have just been a supporter.)

The last time a politician tried to push the flat tax on a national scale he was soundly defeated (Steve Forbes).

Its too bad though, our byzantine tax structure is just a nightmare of waste. Far too many smart kids going into the government created fields of tax law and tax accounting and not enough going into something useful outside of dealing with a bad tax code.

Not to mention the huge time burden placed on basically every adult in the US. How many lifetimes worth of manhours are burned for no reason every year just to pay taxes?

Anyway, this is probably starting to delve a little too close to the politics forum...

[MicroBob]

i agree with your ideas of man-hours wasted and smart-people who could be out curing cancer or something instead of making money off of the gross-confusion-waste-of-paper that is the U.S. tax-code.


I disagree about your Steve Forbes implication though.
The guy was soundly defeated not BECAUSE of his tax-plan but because he had zero personality (or....in fact....an almost-negative personality).
If he was able to more intelligently and perhaps charismatically present the tax-code then it could have gotten somewhere.


I cringe to admit this....but if a Republican weren't TOO wacky on the social issues I would seriously consider voting for him if he were to solidly put a flat-tax at the front of his agenda (and have the backers in congress to support it too).


(fwiw - I am more independent than anything but am willing to vote for whichever party...even republican which I typically do not identify with... if I think the candidate actually has a clue)

[Sifmole]

[ QUOTE ]

I disagree about your Steve Forbes implication though.
The guy was soundly defeated not BECAUSE of his tax-plan but because he had zero personality (or....in fact....an almost-negative personality).

[/ QUOTE ]

I am attending a wedding in 3 weeks that will give me a chance to answer a burning question... Is Steve Forbes that utterly boring in real life? I will let you all know.

[MicroBob]

i can answer that question without having to go to the wedding.
the answer is "more so."

although if he gets hammered at the reception you better believe I'm ging out of my way to party with that guy!!!

[bvaughn]

Absolutely, positively in favor of the fair tax. Bleeding heart liberals will cry that it negatively impacts the poor and benefits the rich, but if you listen (or read) the logical arguments for the fair tax you will realize that the poor aren't effected at all and the rich get to keep what they deserve to keep...their hard-earned fair share!

[MicroBob]

i'm bleeding-heart liberal enough that most democrats aren't 'left enough' for me. And I'm in favor of this.

[The Dude]

The FairTax proposal is a phenomenal idea. There are several things I like about income tax (its progressive nature, ability to encourage/ discourage economic behavior, and a few others), and when I first heard this idea I was opposed to it. But upon further investigation, I found that not only did FairTax's "consumption tax" adequately replace those things, it does a much better job of them.

I've spent a decent amount of time discussing this in the politics forum, so I won't go into great detail here, but those interested and/or skeptical really should check out www.fairtax.org (http://www.fairtax.org) and research it more.

I haven't read the book, but when I get back from my vacation it will be the first book I buy.

[itsmarty]

</font><blockquote><font class="small">In Antwort auf:</font><hr />
i'm bleeding-heart liberal enough that most democrats aren't 'left enough' for me. And I'm in favor of this.

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[bobbyi]

My state has no income tax, and one thing I like about it is that I don't have to worry about how to report gambling income to them, so I definitely hear what you're saying.

[jba]

[ QUOTE ]
[ QUOTE ]
i'm bleeding-heart liberal enough that most democrats aren't 'left enough' for me. And I'm in favor of this.

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[/ QUOTE ]

regardless of political viewpoint of you or any politician for that matter this will almost positively never happen.

lawyers and accountants literally make billions on helping people figure all this crap out and something like this will kill it. they have too much money and influence to allow something like this to happen.

nice thought though.



oh and I'm usually not a pessimist but stuff like this....

[AAAA]

While I am definitely in favor of anything that slows the growth of big government, and big business...and tax collectors (I am in favor of small government, and small businesses and responsible use of resources) I see a problem with the idea of a flat tax that is VAT or consumption based...it encourages more of tax evasion for bartering and drastically discourages innovation because there is a big incentive to make do with the old model or buying a used version because you don't have tax to pay.

The numbers that are being generated to say this is going to generate the same tax dollars we have today are flawed. The 23% won't cover the cost of government as we know it. Perhaps that isnt' a bad thing.

[bills217]

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I see a problem with the idea of a flat tax that is VAT or consumption based...it encourages more of tax evasion

[/ QUOTE ]

Did you consider that while that aspect certainly could increase slightly, all the CURRENT criminal tax evasion by drug lords, etc., would be essentially vanquished. Drug lords spend a lot of money. I'll let you decide which effect will be more significant.


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The 23% won't cover the cost of government as we know it.

[/ QUOTE ]

And your support for this is...?

Of course, as you say, even if it were true, that may be more of a pro than a con. /images/graemlins/smile.gif

[AAAA]

I did want to bring up the idea of how unhappy I am with the negative consequences for poker players of the Money Laundering rules.

Actually a big Pro for this would be the possible elimination of money laundering rules that the government passes to reduce drug money, but instead they call us criminals for helping someone move money from one site to another.

Let's hear it for the Fair Tax.

[jrbick]

[ QUOTE ]
Goods would be taxed 23%, but the cost of making goods would fall as corporations would no longer be taxed, they can sell there goods at a lower price, and the net cost of goods would be very small.

[/ QUOTE ]

Thus they would have more money to spend on healthcare as it stands now (hopefully that too will change, but i'm clueless as to such... just know that it SUCKS right now).

This tax idea really does take care of a TON of problems that are unrelated to the current mire that is our current Tax Code. Has anyone seen a printed copy of our tax code, btw? I'm pretty certain that it consumes entire shelving units. I vaguely remember a conversation I had w/ someone who had a copy of it and actually knew what he was doing w/ it.

[mosquito]

The "Fair Tax" is the same as (essentialy)the Value Added Tax employed by many nations, including Canada.

There are many, many problems with the system.

All plans look good on paper, but usually suck
when implemented.

Not to worry, ain't happening in the next 10 years.

[sekrah]

[ QUOTE ]
The "Fair Tax" is the same as (essentialy)the Value Added Tax employed by many nations, including Canada.

There are many, many problems with the system.

All plans look good on paper, but usually suck
when implemented.

Not to worry, ain't happening in the next 10 years.

[/ QUOTE ]


It's different than the European VAT.. They never removed the income tax and just threw on the VAT in addition, which is outrageous considering the tax rates in socialist Europe.

Income Tax is a dreadful concept. Punish people for working, yea.. Brilliant!

[meow_meow]

Won't somebody please think of the poor people at H&amp;R block?

[Derek in NYC]

One of the biggest stumbling blocks to tax reform is the massive middle class subsidy known as deductibility of home mortgage interest costs. We're saddled with in income/deduction based tax system forever, because nobody can touch this political third rail.

[djoyce003]

you can rest assured that the fair-tax will not reduce your tax liability whatsoever...the government is not in the habit of giving everyone tax breaks at once....they can't unless they want to ratchet up the debt...if the national sales tax were to go into effect and you are the average middle class american, my thinking is that your tax bill won't change whatsoever, and might go up a little bit.

In general sales taxes are very unfair because the average to lower class people spend a greater proportion of their income than the wealthy. Think about it. Guy making $2 million per year is not spending nearly all of his income. Say he spends $500k of it a year. He's taxed 23% on 1/4 of his income. Avg. Joe makes 50K a year. Under the currently tax laws he's taxed at like 10% on the firat 10k, 15% on the next 30 k, and then around 28% on the last 10, for a blended tax rate of WELL below 23%. Avg Joe pretty much spends 100% of his earnings....he is now paying MORE taxes, and the wealthy are paying less proportionally.

[sekrah]

[ QUOTE ]
One of the biggest stumbling blocks to tax reform is the massive middle class subsidy known as deductibility of home mortgage interest costs. We're saddled with in income/deduction based tax system forever, because nobody can touch this political third rail.

[/ QUOTE ]


AKA.. The biggest stumbling block is Economic Morons.. Detailed earlier in the thread.. /images/graemlins/smirk.gif