This would stop all the Gambling Tax Confusion -Fair Tax Act

[Jamey Saunders]

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They call it 23% because it uses pre-income-tax dollars.

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They use pre-income-tax dollars because under the Fair Tax there is no income tax.

Also, what hasn't been mentioned is that there is an embedded tax of approximately 22% in everything that we purchase today. In other words, the manufacturers of the products we buy pass on their "corporate income taxes" to us included in the price that we pay for those goods. Under the Fair Tax, market forces will, within a short period of time, push prices down, because those manufacturers will no longer have those taxes to pay. Their cost of business went down, so they can lower their prices. (And they will, because at least one of their competitors will think, "Hey, I can drop my price and undercut Company X and gain market share." What do you think Company X will do? Drop prices. Eventually, prices will reach equillibrium again, but without the embedded tax.)

The Fair Tax also takes care of the poor by providing every American with a monthly rebate of the taxes that would be paid on the "necessities of life", such as food, clothing and housing.

As for the rate, the OMB (Office of Budget and Management) put the rate at around 23%, although more current projections put it at around 18% just to be able to keep tax revenues at the current rate.

The Fair Tax would also tax tourists to the US, who don't pay income taxes, as well as the very well-off who don't work, but live on their savings. (No income = no income taxes, even if they're billionaires.)

The last thing is that if the US abolished the income tax, the corporate income tax would not exist, and the US could conceivably become the world's largest tax haven for businesses. Imagine the effect that would have on our economy.

Yes, I'm a proponent of the Fair Tax. Have you guessed by now? [img]/images/graemlins/grin.gif[/img]

[Jamey Saunders]

Oh, yeah, one other thing...

Someone mentioned the difficulty of calculating the tax at the point of sale. Not necessary, as by law the tax would be included in the marked price, just as it is with gasoline. Whereas with your state sales tax (if you have one), if you go to purchase an item that costs $20, you have to do the mental math to tell you that at a 7% sales tax rate it'll cost you $21.40 to get out of the store with the item, under the Fair Tax if you purchase an item marked $20, you'll pay $20 (plus your state sales tax, which you do already).

At the end of the year, the business owner's tax filing would look something like this:

"How much were your retail sales this year? Send us 18%. (Or whatever the percentage is...)"

[Shoe]

I also would like to see this bill passed.

If it did pass, I'm assuming all of the states will need to get rid of their income tax too and replace it with a state sales tax in the same manner? Or would that be up to each state too decide?

[Patrick del Poker Grande]

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I also would like to see this bill passed.

If it did pass, I'm assuming all of the states will need to get rid of their income tax too and replace it with a state sales tax in the same manner? Or would that be up to each state too decide?

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States would still tax however they want, just as they are free to do now.

[LinusKS]

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"The first is a wildly inaccurate guesstimation of the rate at which goods and services would have to be taxed to make up for the loss of the income tax. To make up for the loss of income taxes, the national sales tax would need to be somewhere in the 30-40% range - on top of whatever state and local taxes you already pay."

The 13% flat tax in Russia has been a raving success. Where do you get that bizarre 30-40 number from?

"The second lie is that income taxes are somehow inherently complicated.

They're not. What makes them complicated is things like the home interest deduction - which (naturally) people who own homes like. You don't have to have a mortgage deduction to have an income tax. It's just that people like it, so it's there."

Nobody is saying "inherently". They're just saying the current tax code is complicated. Which it obviously is. You've created a straw man argument.

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No. What I'm saying is that simplification of the tax system has nothing to do with a sales tax.[ QUOTE ]


"Sales taxes are actually more complicated than income taxes, because they have to be paid every time you buy a donut (or whatever). Income taxes only need to be figured once a year."

No, they are obviously not more complicated. National sales taxes will be figured automatically by the register, no fuss or muss. State sales tax is already figured into most purchases, this will just be at a higher number than before. Easy.

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Easy for you. (Except for the part about paying a higher number than before). More complicated for the businesses that have to account for the tax - especially small business people who provide services who don't pay any sales tax right now.[ QUOTE ]


"Besides, why should a single mother working at Denny's pay an extra 30% for diapers so that Bill Gates can collect his $20 billion a year tax-free?"

You're kidding right? Single mother's will not be paying 30% extra for their diapers. They will just be paying their tax at point of purchase. Your argument is disingenous.

CountDeMonet

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Uhh... so they won't be paying more... they'll just be paying their tax...

which just happens to be more.

What were you saying about disingenuous?

[LinusKS]

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The 13% flat tax in Russia has been a raving success. Where do you get that bizarre 30-40 number from?

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Oops. Missed that one.

The numbers are very simple. The US economy is worth about 11 trillion a year, according the the CIA World Factbook .

The current level of spending of the federal government is about 2 trillion, according to the Heritage Foundation.

If you subtract out government spending from the rest of the economy, that leaves a $9 trillion tax base.

Divide the one by the other, and you need a 22% national sales tax to pay for the government.

However, that's assuming every single good and service produced in the United States was subject to that tax - every haircut, every cup of coffee, every diaper, and every house.

If you exclude something - and virtually all the plans exclude something - you have to increase the taxes on everything else to make up for it.

[LinusKS]

The national sales tax is a massive attempt to shift the tax burden away from the rich and onto the backs of the poor, and to trick middle-class taxpayers into supporting it with phoney math and double-talk.

("Prices will go down! So it will be like you're not paying any tax at all!")

If you make $1 billion a year, and you spend $50 million, you pay tax under the NST on 5% of your income.

If you make $12,000 a year, undet the NST, and spend $12,000, you pay tax on every penny you make.

And if you spend $13,000 (for example, by selling what you have to get by), you pay tax on more than 100% of your income.

If you think that's fair, you'll like the NST.

And if you look forward to spending an extra 20% - or 30% or 40% - on the next new car or house you buy - you'll love it.

[rusty JEDI]

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And if you look forward to spending an extra 20% - or 30% or 40% - on the next new car or house you buy - you'll love it.

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I bet the banks are going to love this.

When you start your career you are at the lowest paid level, and under the current system your taxes are less. At this time you are also getting your life started and buying a house and a car. Under this fair tax system think how much bigger your mortgage and car payments will be. These 30% bigger loans add up to a lot more interest paid to the banks.

rJ