Another (hopefully) simple question

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Permalink Reply by cary henderson on March 3, 2009 at 3:35pm

> Hi, What early Fair Tax efforts are you describing? The FairTax (HR25) is a simple, easy to understand one time only, tax on consumption at the retail level. Thus we call it Fair. It is progressive in that a provision known as the prebate un-taxes all spending up to the poverty level for every legal American family. We don't call it the perfect tax. There is no provision in it to cut government spending other than the fact that everyone will be able to see exactly how much the government is taking from with every purchase. Comment back please.

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Permalink Reply by Jim Tomasik on March 3, 2009 at 3:36pm

Fair is a relative term.

No one pays taxes on consumption up to the poverty line. This is ensured via the prebate. That is fair.

The more a person spends on new products and services the more he or she pays in taxes. That is progressive.

A person has more control over how much is payed in taxes by controling what he or she spends money to aquire.

If you have any more concerns, please contact me via private messaging.

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Permalink Reply by David Shipp on April 18, 2009 at 10:13pm

A person has more control over how much is paid in taxes by controlling what he or she spends on RETAIL acquisitions. Nothing is taxed twice, so second hand or used items such as used cars are not taxed. Thats FAir!!! In Fact that means that a person on a fixed income could conceivably live "Federal Tax" free.

Vote only for representatives who support Fairtax. Pass it on. IE: Mike Huckabee for president.
IN MY OPINION! Representatives who do not support Fairtax either do not have enough / correct information or are somehow (illegally) receiving benefit from the current tax system. Is there another reason not to support Fairtax?

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Permalink Reply by John K Eck SR on March 3, 2009 at 4:31pm

In the book FairTax: The Truth. Pages 179-190 address the "progessive issue".

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Permalink Reply by Richard Ivy on March 4, 2009 at 11:48am

Thank you to all who have responded thus far to my question. Please allow me time to digest the comments and review the references.

To me, a taxation system is fair only if it taxes all in proportion to the benefit they receive from the existence of the government and it is progressive only if it taxes all in proportion to the amount they can afford to contribute. If a person is making above the poverty level but is in fact just barely above the life sustaining level, it would not make much difference to him, his life would not change appreciably, if the government were replaced with almost any other one. A person who earns in the seven or more figure region, on the other hand, would be affected greatly if the government ceased to exist (anarchy) or were replaced with communism (for example). Similarly, a person who is just barely able to support himself and his family and has virtually no disposable income can’t afford to contribute to government. Someone, however, who has much discretionary income and can afford to save and/or invest can also afford to contribute to the government. Also, people in the lowest income regions receive little benefit from government services such as the highway system, the FAA, and others while those in the highest income regions benefit a disproportionate amount from them. Of course, when making assessments as to benefits and how much taxes are paid, all sources must be considered (federal, state, county, city, property, sales, gas, etc.).

I am lucky enough (or to be fair I worked “hard” enough) to be classified in the top 5% or so and, so, I am taxed at a higher rate than most but I do believe that is fair. Or, I should say, that money I make that is above their “bracket” is taxed at a higher rate – the money I make that is in their bracket is taxed as the same rate as theirs. Yes. I did work “hard” for what I have – I supported myself and a wife and child while I went to school – and in my career I worked “hard” to excel and advance my career. But do I work “harder” than those making less? Do I work “harder” at my computer that the laborer who works every day carrying bricks for a bricklayer – 8 hours a day? I think not. In fact, that was one of the jobs I had during school so I “know” not.

To answer a question from one responder to my question, the first I became aware of the “Fair Tax” initiative was in the early 80’s. The proposal was essentially a national sales tax that had no provisions for “prebates” or exemption of “necessities” or even the concept of “new” items. A very slightly modified proposal followed shortly. I believe Tom Delay was the author but it might have been another from Texas. I think that second proposal did have some provision to exempt the first “X” dollars in purchases.

One thing that does bother me about the responses I’ve gotten about “FairTax” is the focus on “retail” and/or “new” and “sales”. I fully support the concept that purchasing used items should be exempt (to promote recycling) and even that money put in a savings account should be exempt (to promote saving). But I think that non-retail purchases such as services (domestic, mechanic, broker, etc.), stocks, and investments should also be taxed, as should items purchases by businesses that are not ultimately sold “at retail”. Basically, anything a person or company pays or barters for would need to be taxed unless it is actually sold “at retail” within some limited time period. And we’d need to define a mechanism to ensure that those in a position to do so can’t avoid the taxes. I can envision a HUGE difficulty with trying to stay ahead of all the schemes and “clubs” that will come about. Think about it. How would “wholesale clubs” fit? What about auto leases? Demonstrator vehicles?

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Permalink Reply by Ron Wenrich on March 4, 2009 at 5:14pm

My understanding is that services to a final consumer will be taxed. As for barter, people barter right now and don't pay any tax for the service or good that is rendered in lieu of wages. With our current tax system, those that are in a position to avoid taxes already do so. No tax system has a 100% compliance rate.

I have a problem with paying due to your ability to pay. Its a good concept until you figure out that someone else is the judge of your ability to pay. Then you have to play catch up to fulfill your obligation according to someone else's standards. With the fair tax, if you can afford more expensive toys and want to spend your money on them, then you will pay a higher amount of taxes.

The same goes for how much government a person uses. I don't use all the government that is offered to me. There's a lot of waste I have to pay for as well as services I don't want or need. Again, its living to someone else's standards, not mine. If I set the standard, then I'll pay for it.

But, taxing industry only means that you'll be taxing a tax somewhere down the line. Ultimately, the consumer gets to pay that tax, since taxes are a cost of doing business and they are passed forward.

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Permalink Reply by John K Eck SR on March 4, 2009 at 5:26pm

On the website FairTax.org there is lots of info including the legislation. There is, or at least there was a 36 page document called Plain English Summary and also a 5 page document called FairTax Talking Points on the website. I have not recently looked for them there, but I have them in a pdf file and could send them to anyone that is interested. It's less reading than the FairTax books and just as informative.

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Permalink Reply by Richard Ivy on March 5, 2009 at 10:30am

Thank you for the fairtax.org address - it will help.

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Permalink Reply by John K Eck SR on March 4, 2009 at 5:39pm

One of the things that I find appealing is that people working in the underground economy i.e. drugdealers, hookers, gamblers, criminal aliens, anyone that is paid cash and do not pay into the current tax system would under the FairTax pay just like everyone else when they make a purchase, plus if they don't have a social security number they are not eligible for the monthly prebate. Foreign tourist will also contribute to the tax base, any number of sources that are not currently being tapped will contribute to the tax base.

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Permalink Reply by Jim Tomasik on March 4, 2009 at 5:58pm

Seems FAIR to me.... ;o)

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Permalink Reply by Richard Ivy on March 5, 2009 at 10:36am

There is a lot to that argument. Essentially you are putting it into the category of a VAT tax that is common in Europe. It would provide a way to have drug dealers, etc to contribute to running the government. On the tourist idea, though, I suspect that very quickly there would be a provision to exempt or rebate taxes paid by tourists - again, similar to Europe. Not doing so would absolutely devistate the tourist trade. Note that I believe they have both VAT and income tax in most of Europe.

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Permalink Reply by Richard Ivy on March 5, 2009 at 10:44am

By the way, I am not necessarily advocating this but legalizing drugs (at least the less dangerous ones), prostitution (a la Nevada), and gambling (a la Nevada, NJ, Indian reservations, horse/dog racing, state Lottos, and church bingo) would eliminate most of the ability to avoid collecting taxes on them.

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