Are you in favor of the FairTax?

[gojujay]

Originally Posted by lochinvar

Actually, the real losers will be the charities and foundations where those people used to put their money to shelter it from taxes. No tax break, no donation...

Kinda' makes you wonder about what people really value, hmm?

[Insipiens]

Originally Posted by keith

Its exactly the same thing, with the exception that it replaces all other taxes something VAT in the UK or the GST in australia doesn't do.

In the UK VAT is 17.5% in Oz GST is 10% (and there are all the other taxes) but in both cases there are exemptions on food, books, childrens clothing and some others I think. A revenue neutral flat rate of 23% to replace all taxes thus looks a little hopeful (to put it politely) even if it is on everything.

It is not exactly the same thing. VAT (Value Added Tax) is intended to cover all stages of the production of goods and services. This means that VAT is charged on business to business as well as retail sales.
A business is entitled to credit VAT it pays against VAT it charges providing a net VAT burden on the "value added" by that particular business. Then there are a whole swathe of goods and services which are VAT exempt - so no VAT is charged but the business does not get credit for the VAT it pays.

VAT has a considerable cashflow impact on businesses and creates a significant compliance burden that would not apply with a sales tax only at the retail level.

The overall intention, however, is that the final consumer (usually but not always the retail customer) bears the burden of VAT.

[Insipiens]

Originally Posted by telkanuru

Is 23% even reasonable, though? As some of the european members of this board have said, their VAT is ~20%, and they still have all the regular taxes on top of that, and nowhere near our spending levels on military, etc.

Yes but we have an astoundingly wasteful Welfare State in the UK.
Taxes you pay in the UK:
11% National Insurance on the first c. £30K of earned (not investment) income
1% NI on remaining earned income
plus 3 bands of tax on (the same) income plus investment income at 10% 22% and 40% (latter applies above c.£35K) first £5.5K is exempt
VAT at 17.5% when you spend your money (except on somethings like property)
Stamp Duty at up to 5% when you buy a house
Customs Duty and VAT (including Duty on the VAT) when you import goods into the UK (Duty rate depends on the goods imported)
Inheritance Tax when you give away your money or die (at 40%)
Captial Gains Tax when you sell capital goods (same bands as income tax)
excise duty on petrol, alcohol tobacco etc (I don't even want to think about the rates).

[keith]

Originally Posted by Insipiens

VAT has a considerable cashflow impact on businesses and creates a significant compliance burden that would not apply with a sales tax only at the retail level.

yes but the fair tax would 'probably' end up as a payment/rebate system like VAT where it is passed along the chain until the end of the chain.

I agree on the burden bit, but that is why VATs are such marvellous money spinners; they are very tricky to avoid. My suspicion is that the people who have done the numbers on the 'fair tax' have used a VAT model, but the people selling it are using a sales tax model. Yet another reason that the 'fair tax' is a non-starter IMHO.

[keith]

Originally Posted by Insipiens

Yes but we have an astoundingly wasteful Welfare State in the UK.
Taxes you pay in the UK:
11% National Insurance on the first c. £30K of earned (not investment) income
1% NI on remaining earned income
plus 3 bands of tax on (the same) income plus investment income at 10% 22% and 40% (latter applies above c.£35K) first £5.5K is exempt
VAT at 17.5% when you spend your money (except on somethings like property)
Stamp Duty at up to 5% when you buy a house
Customs Duty and VAT (including Duty on the VAT) when you import goods into the UK (Duty rate depends on the goods imported)
Inheritance Tax when you give away your money or die (at 40%)
Captial Gains Tax when you sell capital goods (same bands as income tax)
excise duty on petrol, alcohol tobacco etc (I don't even want to think about the rates).

On the other hand, compared to the rest of Europe the UK has lower tax rates. So think yerself lucky

[oiuyt]

Originally Posted by Bayou Bum

Under the FairTax plan, assuming I saved nothing and spent 100% of my income, my taxes would be $69,995 - $20,000 (assuming this is the poverty level) x 23% = $11,499 which is less than I am paying now.

So you would pay less than you do now.

I doubt the Kerrys spent over $3 million on new goods last year (hard to do). So they would have paid less.

I doubt the Bushes spent close to $1 million on new goods last year (also extremely hard to do, although starting to get possible if you have a thing for multiple brand-new Bentleys every year). So they would have paid less.

Mmmm, everyone pays less. Yeah, bet THAT'LL be revenue neutral.... :)

-B :)

[oiuyt]

Given that recent findings have found that people are willing to pay more (total) to avoid having paid a sales tax...

-B :)

[Bayou Bum]

Originally Posted by oiuyt

So you would pay less than you do now.

I doubt the Kerrys spent over $3 million on new goods last year (hard to do). So they would have paid less.

I doubt the Bushes spent close to $1 million on new goods last year (also extremely hard to do, although starting to get possible if you have a thing for multiple brand-new Bentleys every year). So they would have paid less.

Mmmm, everyone pays less. Yeah, bet THAT'LL be revenue neutral....

-B

I'd bet they do spend that much a year. Hell, Kerry spends near that much on hair care alone. The current tax plan is designed so that it is difficult for people to get rich, but easy for those already rich to keep their wealth.

[Insipiens]

Originally Posted by keith

On the other hand, compared to the rest of Europe the UK has lower tax rates. So think yerself lucky

Or just slightly less unlucky. Personally I think the level of taxation in the UK is far too high.
I forgot to add council tax as well, which is set by local authorities and reflects the notional value of the property in which you live.

[epeemike81]

Originally Posted by Bayou Bum

The losers are the extremely wealthy who are high consumers but pay very little income taxes under the current system because of all the tax shelters, trusts, etc.

This claim is flat out false. Every study of sales taxes has shown that they are INCREDIBLY regressive, and that the poor pay a higher percentage of their income. prebates for the poor you say? okay, so then it shifts burden from the wealthy to the lower middle class, who will pay a much higher percentage than the wealthy.

as for the "extremely wealthy who ... pay very little income taxes," they, of course, will get hit by cap gains and dividend taxes, etc... oh... wait...

you do have to love the Orwellian nature of eliminating taxes on cap gains and dividends and then using the need to tax the super wealthy whose taxes you cut as a reason to migrate to a system which will disproportionately tax the poor (or lower middle class, in this case).

-m

[D+F+P=Hadouken!]

Originally Posted by Bayou Bum

I'd bet they do spend that much a year. Hell, Kerry spends near that much on hair care alone. The current tax plan is designed so that it is difficult for people to get rich, but easy for those already rich to keep their wealth.

I see nothing wrong with this. The majority of people have their money because they got an education and worked for it. I see no reason to 'steal' what was rightfully earned.

[keith]

Originally Posted by D+F+P=Hadouken!

I see nothing wrong with this. The majority of people have their money because they got an education and worked for it. I see no reason to 'steal' what was rightfully earned.

this is a commonly held delusion amoungst americans. Wealth (of the more notable sort) is normally inherited, as opposed to earned by the sweat of ones own hands.

(well one sweeping generalization deserves another)

[Soldier]

So why is it any more right to "re-distribute" an inheritance?

[jeff]

It would be a good reading assignment - go to the library and look up reasons for progressive taxation (this came up in last year's Economics and Taxation thread), and you'll see stalwart Republican (!) sources saying that progressive taxation ("wealthy pay more") as necessary to prevent a rigid class system with a super rich top crust lording it over an oppressed lower class whose members can never escape poverty.

Of course, all that thought has been thrown out the window, all tax policy today is oriented towards ensuring that the super rich keep everything, and that the tax burden is carried on the backs of the middle class.

BTW: In most countries with flat and consumption taxes, the reason proposed is to make the rich pay more than they previously paid (as they previously paid little or nothing) instead of less (as intended in the US), or to capture black market income in countries with vast illegal economies.

(I call and raise your sweeping generalization)

[Soldier]

You're just blaming Republicans because you're a bleeding-heart liberal pinko-commie Democrat.

(I'll see your sweeping generalization and raise you a hysterical ad-hominem)

[Inquartata]

All this raising over a pot that consists of two subway tokens and a Girl Scout Thin Mint...

[jeff]

The subway tokens might have historical value now - in NYC there's the dreaded "Metro Pass" that you swipe through a reader - several times - till it registers. Bonus, they can be used for tracking your movements. And the Girl Scout cookies? Feh!

Avast ye swabs, it's threadjack time!

PS: Soldier: those were the good Republicans! (A small but non-empty set)

[gojujay]

Originally Posted by jeff

The subway tokens might have historical value now - in NYC there's the dreaded "Metro Pass" that you swipe through a reader - several times - till it registers. Bonus, they can be used for tracking your movements. And the Girl Scout cookies? Feh!

Avast ye swabs, it's threadjack time!

PS: Soldier: those were the good Republicans! (A small but non-empty set)

A good Republicon is one who switches to the Libertarian Party

[jeff]

Originally Posted by gojujay

A good Republicon is one who switches to the Libertarian Party

More proof that there are very few good Republicons!