FairTax?

[Sehvekah]

So, time to toss the burning torch in here. Time will tell if it's into gasoline, water, or something else entirely....

Odds are at least some, if not most of you have allready heard about the so-called FairTax. Personally, I've been looking at it for a couple of weeks and, thus far, I like it. Far less tax evasion, no major upsets to the budget, end prices remain within 1-2% of what we're allready paying and we'd all have more money to spend.

Thing is, I've just been burnd too damn many times in life, and things that sound too good to be true, well, that's the reason behind the "so-called" remark there. Don't get me wrong, I do like the idea, I just keep getting the feeling there's an angle I haven't seen this from, or that there's something that their site isn't mentioning. Yes, this could be simple paranoia, but as I said, too little in life has even come close to living up to the hype.

So, thoughts? Reservations? Cheezy one-liners before you flame me into oblivion?

[Kerry Skydancer]

I believe it's been discussed here before, though that might have been somewhere else. The fly in the ointment is that it needs a constitutional amendment to implement, and that amendment had better simultaneously repeal the 16th, or we'll end up with sales taxes AND the never-to-be-sufficiently-damned income tax.

[Aurrin]

Hmmm... I gotta read up on this.

[Jfries289]

Of course, with a federal sales tax, there goes your happy go lucky tax free internet purchases.

You'll also have all those federal IRS employees who no longer have a reason for soaking up our tax dollars in wages (good for us, bad for them), and unemployment is never a good thing. Though, getting them into a job that produces instead of just consuming would also be good. Then you have the effects on CPAs, tax attorneys, and anyone else who's livelihood depends on the monstrous tax system we currently have. Now, I'm not saying we should stick with a bad system just because it would make some people un- (or less) necessary (that's communism/socialism kids, and that's a no-no).

You also have to consider the fact that the 'Fair Tax' is in effect a Consumer's tax, and I believe it would shift more of the tax burden onto the middle class. Those who make millions don't necessarily spend millions. Some of them have their sums because of their frugality.

And besides, if the government is still fully funded, that means the government is still recieving the same amount of money (minus what you'd save by not having to pay for the IRS), which means you are paying just as much in taxes and therefore have the same amount of spending power. It may seem like you have more money, but you just aren't paying their bill upfront. They still get theirs, so you still lose yours.

It might also stimulate the foreign markets instead of ours because corporations and the like who will buy in bulk may purchase more outside of the US (with their newfound untaxed funds) to reduce costs and make more untaxed dollars.

So, I really do like it in theory, but I have some questions as to it's actual beneficial effects.

[Jaydub]

Kerry Skydancer is correct that the 16th amendment must be repealed so income taxes can never raise thier ugly head again. Idaho is a good example but going the other way. Idaho had a sales tax and they passed an income tax and the sales tax was to go away. They now have the income tax and the sales tax is higher than when it was before they had the Income tax. If the repeal could be done I would support it. If not you could bet on having both the income tax and the sales tax in the future.

[Calbeck]

You also have to consider the fact that the 'Fair Tax' is in effect a Consumer's tax, and I believe it would shift more of the tax burden onto the middle class. Those who make millions don't necessarily spend millions. Some of them have their sums because of their frugality.

Still, enough of them buy yachts and mansions and so on and so forth...not to mention I think frugality should be rewarded in any event. -:)

[SolidusRaccoon]

I would rather have a flat tax.

[Maxgoof]

You also have to consider the fact that the 'Fair Tax' is in effect a Consumer's tax, and I believe it would shift more of the tax burden onto the middle class. Those who make millions don't necessarily spend millions. Some of them have their sums because of their frugality.

Still, enough of them buy yachts and mansions and so on and so forth...not to mention I think frugality should be rewarded in any event. -:)

Which would mean they simply purchase them abroad.

It would need to also have the same tax on all imported good, and a tax on all non-US registered planes and boats.

[Maxgoof]

I would rather have a flat tax.

I concur. A flat tax with a certain exemption for every dependent, no deductions.

No EIC, Child Tax Credit, or other means of siphoning off tax dollars using the IRS.

[Kerry Skydancer]

The point of Fair Tax, though, is also to get the Feds out of your bankbook. There is no real reason they have to know what your income is, after all, except to enforce the income tax.

You're right about the necessary loophole adjustments. Easy enough, though, just charge the sales tax for everything that's brought into the country for the first time. It would have the same effect as a tariff.

[RHJunior]

You know what? Forget the federal sales tax too. Throw it, AND the income tax out, and replace them both with a big fat goose egg. Zilch. Nada. Zip.

We could do it too, and never notice.

You know why?

Because for all the inconvenience, economic drag, and human suffering it causes, <I>The federal income tax only generates 1/3 of the federal revenue.</I>

That's right.

And allow me to point out something--- IT WASN'T ALL THAT LONG AGO THAT THE GOVERNMENT WAS OPERATING QUITE WELL ON 2/3 OF ITS CURRENT BUDGET, AND COULD DO SO AGAIN.

All we'd have to do is cut government spending by 1/3. Chop welfare. Axe Social Security. Privatise or eliminate every unconstitutional social program. That alone should cut a whopping huge chunk out of it. Drop the international charity crap too.... all it's bought us is the ingratitude of every nation we've helped. We BOMBED the Iraqis and they're frigging happy to see us! Everything else has been billions flushed right down the crapper. Put the NEA out on its ass, and put the scientists on notice that they'd better start looking for private financiers for their research.

If cutting all that pork and gravy isn't enough, do an across the board budget cut, starting with Congress's salaries and working down, by whatever percentage is necessary to make up the difference.
The only branch of the government that should be exempt from this is the military, because they're the only branch that is doing what it was damned well constitutionally commissioned to do--- kill people and break things and beat the shit out of anyone that looks at us crosseyed.

Even law enforcement could take a cut or three--- specifically in the areas involving enforcing the tax laws, the damn foolish business of prohibition and unconstitutional gun control laws. We're big boys now, we don't need Mommy to tell us what not to put in our mouths and that we shouldn't play with sharp sticks, and Alcohol, Tobacco and Firearms should be the name of a CONVENIENCE STORE, not a FEDERAL AGENCY.

Most of our government's revenue is spent supporting unneeded agencies, salarying redundant bureaucracies, and enforcing unconstitutional laws. We're being forced at gunpoint to pay for "services" we do not want, do not need, and cannot afford, at the behest of peope we did not elect.

[Maxgoof]

Small problem....

Social Security Tax and Medicare Tax are not counted when they add up the revenues generated by Income tax.

[Remmon]

I hate to tell ya this RH, but rather then cutting into social security and the like, you're better off cutting directly into bureaucracy itself, they could probably drop expenses by 25% just by cutting out loads of bureaucracy.

Then you can go about cutting into unneeded (or unwanted) programs. I share your opinion on financial aid to other countries. We send them money so they can buy our products made in their country?

On the other hand, keep hands away from government funded research. You need pure scientific research done purely for the reason of finding out wether some things are or are not true. There isn't going to be any privately funded research into fusion drives because you can't make money out of them untill you're quite a bit into the future.

As for taxes, we (I'm Dutch) have a highly progressive income tax AND a flat purchase tax with exceptions and reductions for certain things. As it stands our government spends way too much and I'm convinced we can keep our current levels of social security, education, welfare and medical insurances if we cut on the bureaucratic crap and toss a load of unneeded government guys out.

[Maxgoof]

I hate to tell ya this RH, but rather then cutting into social security and the like, you're better off cutting directly into bureaucracy itself, they could probably drop expenses by 25% just by cutting out loads of bureaucracy.

I quite agree.

On the other hand, keep hands away from government funded research. You need pure scientific research done purely for the reason of finding out wether some things are or are not true. There isn't going to be any privately funded research into fusion drives because you can't make money out of them untill you're quite a bit into the future.

Here I disagree. While funding for research is necessary, taking away any accountability from it produces such research as discovering that men and women really are different, divorce is bad for children, and that raising the temperature of ice causes it to turn into water. The process for funding research needs to be goal oriented to accomplish something, not back up an already re-conceived conclusion, which more than half of all research is actually doing.

As for taxes, we (I'm Dutch) have a highly progressive income tax AND a flat purchase tax with exceptions and reductions for certain things. As it stands our government spends way too much and I'm convinced we can keep our current levels of social security, education, welfare and medical insurances if we cut on the bureaucratic crap and toss a load of unneeded government guys out.

The problem is that the part of government that spends all the money are not elected. You would need to elect someone who would actually go in there and cut the deadwood. That's where the problem lies with that idea.

The biggest problem that all governments have with keeping costs down is that their revenue is not tied to performance. If a company makes a bad product, people don't buy it, and their revenue goes down. If an employee doesn't perform to certain standards he will not be getting that expected raise, and may even find himself looking for a new job. If government doesn't produce.....tough! You gotta pay taxes or end up in jail.

[Gengar003]

[petty] I don't want to have to pay tax on the internet.

I'll read up on it and post something intelligent maybe later or maybe not at all.

[Aurrin]

First off, you have to account for inflation. I don't know if Ralph's numbers do or don't, but I expect not. A dollar today doesn't go as far as it did 20 years ago.

But second, let's have a look at this, shall we?

Projected FY2006 Budget of the United States

Code: Select all

Department            Budget ($B)
----------            -----------
Defense                  419.3
Education                 56.0
Homeland Security         29.3
Transportation            11.8
Executive Office           0.3
Judicial Branch            5.6
Legislative Branch         4.1
Veterans Affairs          31.3
Energy                    23.4
Corps of Engineers         4.3
Treasury                  11.6
----------            -----------
TOTAL:                   597.0
out of                   840.3
Percent:                   71% of original

Source: Office of Management and Budget, FY2006 (Table S-3)

And these are only the ones you can't do without. Also, please note that the Department of Defence occupies 53% of the budget ALONE. To cut that much off of the total, you have to cut 66% off of everything else. And that's just not going to happen. And while other parts of it may not be 'essential', you are getting your money's worth off of them. Not all of them, but some of them. Scoff at federal research all you want, but it does get many things done. You want crack-pot science? Take a look at some of what DARPA does. Gay bombs and psychic warfare, anyone? (Yes, they REALLY researched that stuff!) If something's gotta give, the military is the branch that needs to be tightened the most, not exempt. They don't even attempt to spend wisely, because they know they can write themselves a blank check and the government will pay it. I'm not advocating less money to soldiers (So don't play the "support our troops" card. The very fact that they can't get armor to our troops after having that much money should tell you something is very wrong.) , I'm advocating less money to their internal beuraucracy and wastes. (Yes, they do have it, and LOADS of it.)

[Kerry Skydancer]

Aurrin, I have the very strong suspicion that you've never served. The military most certainly does not get a blank check; half the time they have to divert money from training and maintenance to do the things the politicians decide they need done. If you're talking about defense contractors gaming the system, that's a legitimate cost that can be reduced - but there's a lot less of that than the newsies will admit. Lack of corruption just doesn't sell papers, after all.

[Aurrin]

Aurrin, I have the very strong suspicion that you've never served. The military most certainly does not get a blank check; half the time they have to divert money from training and maintenance to do the things the politicians decide they need done. If you're talking about defense contractors gaming the system, that's a legitimate cost that can be reduced - but there's a lot less of that than the newsies will admit. Lack of corruption just doesn't sell papers, after all.

Once again, notice that I didn't say it was with the soldiers. In fact, I specifically said it was NOT with the soldiers. The waste and inefficiencies are higher up and off to the sides. And yes, the top brass can demand just about anything they want. Not further down, you can't. I'm not stupid. But the very top level can, and they're the ones who get the money allocated. (Either them or their proxies in Congress, but it might as well be the same thing.)

And yes, defence contractors 'gaming the system' does need to be reduced. That's one of the 'off to the sides' parts I was talking about.

[RHJunior]

Okay, let's look over those "cant do withouts."

Education--- privatise it. The government never had any business getting into it in the first place and it's been a complete screwup ever since. It has been proven repeatedly in a dozen different ways (including the voucher programs, where adopted) that private schools can provide a better education for a fraction of the cost.

Transportation--- that's a tad vague. Does it refer to highway maintenance, or things like public transit programs and other such? Or perhaps to the railway and airline bailouts?
Either way, that could be largely privatised as well. There is no reason on earth that private corporations couldn't put in bids to pave roads and highways and to maintenance bridges and the like. And let those whiny pussies in the airlines sink or swim like the rest of us, the mewling bastards.

Energy--- wtf? PRIVATISE. COMPLETELY. Perhaps if we leave the production of energy on the open market, and stop letting politicians use tax dollars for play money for windmills, we'll see some progress.

[BlasTech]

Hrmm ... i dont quite see some of that.

Education: No arguments about the better quality part, but its been my experience that the cost to the student is often far higher. Our private schools charge term fees (1/4 of a year) which are equivalant to 1/2 a year's uni education (under the government subsidised schemes)

Transportation: I thought that it was very hard to turn a profit on this. Epecially railways, our cityrail can only stay in business with alot of government support, and no private companies will touch it. (We used to have privatised railroads in certain parts of NSW but they promptly went bankrupt because of the high costs involved in running them.

Roads i could agree with you though. Roadway construction is open to private investment already, although some tollways are finding similar problems because motorists prefer to go the long way round instead of paying a $3.50 toll >.> ironically they probably use up more money in the petrol they use while stuck in traffic jams on their alternate routes ... morons :D

Energy: Our energy market is one of those situations where having a monopoly is the best method of production. That being said i guess the main reason for keeping it publically owned is to prevent that monopoly power over key infrastructure from falling out of government hands. Although they have corporatised Energy Australia (meaning they force it to act as if it was private already, turning profits and the like but they also regulate it to ensure power goes to normally unprofitable areas like the bush) Id lean towards this being a good thing because (like in our telecomunications industry) these sectors just wouldnt get these services otherwise.