Lets Discuss Taxes

[therealUT]

Hopefully, the Fair Tax will make it to a vote...and pass. Then we will have plenty of government revenue.

 

[utvolpj]

It would be a 23% retail sales tax. (Note, it would not replace any state and local tax systems, as it is only a federal tax policy.) However, most of the research the book points to, states that there are already imbedded taxes of around 21.5% to 22.5% in every retail product purchased. So, in the theory of competitive markets, prices of goods would most likely not increase at all.

Well, you run into the problem of the 16th amendment which would have to be repealed (allows for income tax). It also has many holes in it (paraphrased from various sources):

1)raise the prices of most goods and services
2)favors those who live in low-cost areas (cost-of-living tax)
3)ruin the new home market
4)college tuition would go through the roof
5)no easy fix if a recession hits
6)reworking of all current state tax codes
7)death of the internet industry
8)increases the burden on retailers/wholesalers to prevent govt "double-dipping"
9)higher cost of govt since their purchases would be taxed too

While amazingly better than the current system it would still have its problems.

Flat-tax points:

1) 17% rate on personal income and corp profits (I have seen 14% proposed)
2) Exemptions for individuals: $13,200 for each adult; $4,000 for each child or dependent, and a refundable tax credit of $1,000 per child 16 or younger. A family of four would pay no federal income tax on its first $46,165 of income. (vary by plan but pretty close)
3) force IRS workers to go get new jobs because of ease in filing

I do not claim to be an expert on any plans but have read and studied quite a bit on this (econ major). It might also force politicians to use something other than taxes to get votes. I realize that increased govt and bureaucracy may be cosidered the cornerstone of the Democratic party so I may be showing my colors here, but I think most can agree that a change is needed.

 

[therealUT]

Well, you run into the problem of the 16th amendment which would have to be repealed (allows for income tax). It also has many holes in it (paraphrased from various sources):

1)raise the prices of most goods and services
2)favors those who live in low-cost areas (cost-of-living tax)
3)ruin the new home market
4)college tuition would go through the roof
5)no easy fix if a recession hits
6)reworking of all current state tax codes
7)death of the internet industry
8)increases the burden on retailers/wholesalers to prevent govt "double-dipping"
9)higher cost of govt since their purchases would be taxed too

While amazingly better than the current system it would still have its problems.

Flat-tax points:

1) 17% rate on personal income and corp profits (I have seen 14% proposed)
2) Exemptions for individuals: $13,200 for each adult; $4,000 for each child or dependent, and a refundable tax credit of $1,000 per child 16 or younger. A family of four would pay no federal income tax on its first $46,165 of income. (vary by plan but pretty close)
3) force IRS workers to go get new jobs because of ease in filing

I do not claim to be an expert on any plans but have read and studied quite a bit on this (econ major). It might also force politicians to use something other than taxes to get votes. I realize that increased govt and bureaucracy may be cosidered the cornerstone of the Democratic party so I may be showing my colors here, but I think most can agree that a change is needed.

I realize that as an econ major you have looked into this. I have an accounting degree and it still makes me no expert on taxes (because tax law changes every year.)

However, retail prices and cost-of-living would not increase. The reason is, that all goods that are on the market today already have imbedded taxes. These taxes amount to around 21.5%-22.5%. The Fair Tax is a retail tax of 23%...I don't believe that last .5% is going to make much of an effect on the market price.

Also, it is a Federal Tax, not a state tax. State and local taxes would not change, and the 16th Amendment would not be repealed. Just because the government has the right to levy income taxes, does not mean it must levy income taxes.

The above two arguments also correct your assumptions on housing and college tuition.

 

[utvolpj]

I realize that as an econ major you have looked into this. I have an accounting degree and it still makes me no expert on taxes (because tax law changes every year.)

However, retail prices and cost-of-living would not increase. The reason is, that all goods that are on the market today already have imbedded taxes. These taxes amount to around 21.5%-22.5%. The Fair Tax is a retail tax of 23%...I don't believe that last .5% is going to make much of an effect on the market price.

Also, it is a Federal Tax, not a state tax. State and local taxes would not change, and the 16th Amendment would not be repealed. Just because the government has the right to levy income taxes, does not mean it must levy income taxes.

The above two arguments also correct your assumptions on housing and college tuition.

While maybe not looking hard enough, I have yet to find a "fair tax" plan that included all the provisions you are including. Putting all those in still provides way too many places for smart accountants.

There are no taxes paid on items intended for resale. Who will police the home builder vs. the black marketeer? This would be a huge issue to my industry.

You are also claiming that the govt will STILL have the ability to impose income taxes but won't? I don't trust the govt that much!

 

[therealUT]

While maybe not looking hard enough, I have yet to find a "fair tax" plan that included all the provisions you are including. Putting all those in still provides way too many places for smart accountants.

There are no taxes paid on items intended for resale. Who will police the home builder vs. the black marketeer? This would be a huge issue to my industry.

You are also claiming that the govt will STILL have the ability to impose income taxes but won't? I don't trust the govt that much!

Its all in The Fair Tax Book, by Boortz and Linder. It does provide a lot to think about for smart accountants, however, since the taxes are paid per consumption, it takes away the jobs of us accountants. No forms, returns, etc.

Finally, I agree, it is as hard to put faith in our elected representatives as it is in our fellow citizens. These days, it seems like everyone is out for themselves, which leads me to a discussion about term limits, however, we won't start that here.

 

[utvolpj]

Its all in The Fair Tax Book, by Boortz and Linder. It does provide a lot to think about for smart accountants, however, since the taxes are paid per consumption, it takes away the jobs of us accountants. No forms, returns, etc.

Finally, I agree, it is as hard to put faith in our elected representatives as it is in our fellow citizens. These days, it seems like everyone is out for themselves, which leads me to a discussion about term limits, however, we won't start that here.

I will get that book and let you know what I think, thanks for the recommendation. I'm never against educating myself.

And you don't believe that a guy that's been in Congress since the 50's knows what the US needs? Shame on you :birgits_giggle:

 

[therealUT]

I'll go find a nice cozy corner to sit in now.

 

[volinbham]

Just wait until you see where we are in another couple of years

The current trend is favorable.