Replace All Federal Taxes on Income with the Fair Tax Act , HR 25 and S 122
Why exempt used goods
Replies to This Discussion
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Permalink Reply by Dan Hunt on -
MrGadget
Used items are not exempt. The Fair Tax will tax a new item only once. It will not be taxed again as a used item since the tax will have already been collected once.
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Permalink Reply by MrGadget on -
My point was clearly that items should be taxed under FairTax regardless of their history. Cars may be sold by retail sellers numerous times, and every time that sale is subject to normal State sales tax. I'm looking for an explanation as to "Why" the decision not to apply FairTax the same.
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Permalink Reply by Dan Hunt on
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MrGadget
The Fair Tax Act bill has always been written to tax everything only once. Again, FTN is the wrong venue to express your disagreements with The Fair Tax. You need to contact Aaron Schutte at Americans For Fair Taxation headquarters in Houston , Representative Woodall's office or a local Fair Tax leader in your area to express your concerns. The latter can be found at www.fairtax.org.
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Permalink Reply by chiefcook on -
My question to you is "why should American people to be taxed multiple times for selling used items? The feds got their taxes once. The feds should set the example for the states to follow. The individual should not be forced to pay taxes more than one time.If both the state and feds are charging taxes, they should each have one chance to get their funding. Then they should limit their spending.
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Permalink Reply by MrGadget on
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Because it distributes the tax collected among multiple buyers over the life of the item, and at a significantly lower tax rate. FairTax, from what I've read, isn't intended to curb government spending, but rather to lower the cost of collecting the funds it needs, as well as broadening the base from which that tax is collected, and transparency. It's even stated as to be revenue neutral, so curbing spending isn't a goal. There may be an indirect effect in time, as costs may come down in some areas, including those goods and services consumed by government, and perhaps the reduction in government workforce over time.
Consider that State sales tax is rated as low as it is based on the understanding that higher priced items like cars tend to get sold multiple times. Instead of nailing that item for all the tax it might generate at the front, it's taken a little at a time.
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Permalink Reply by cary henderson on -
> State sales taxes used to only apply to new items. What happened had nothing to do with keeping rates lower. What happened was that government spent more, then needed more tax money to pay for that spending. The tax rate as a percentage of sales has risen substantially. An example, Nevada's sales tax rate was 1% in 1960. About 1965, the rate was raised to 2%. I can remember when the rate was raised to 3%, to pay for temporary cost overruns, the government stated that if voters approved the increase, it would result in a surplus so large that the rate would never need to be raised again. Guess what happened? There is no time in history when government did not spend all the taxes they received and still need more. They will always try to increase the revenue stream. We need to say enough!
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Permalink Reply by MrGadget on
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Again, spending isn't the point in question. Yes, State sales tax have increased in rates over time. If they were originally only on new goods, and now include more stuff, imagine the rates if the base hadn't been expanded.
If the full base is included from the start, the rate should be substantially lower, and would present less oppotunity of abuse/fraud, and virtually no room for "expansion" as you suggest.
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Permalink Reply by Marilyn Rickert on -
Hi McGadget!
The exemption of used goods are in the bill for several reasons:
1) to prevent the FairTax from becoming a VAT-- Value Added Tax
2) to promote upward mobility in economic status -- the opportunity for everyone to become more wealthy
3) to allow everyone to decide how much they are going to pay in taxes by controling what they purchase -- economic freedom
Since it is far more difficult to "cheat" with the FairTax than the income tax, the base is already far broader than any income tax proposal.
As with writing any tax legislation we need to decide what principals to follow -- FairTax was to benefit the individual while still raising the same amount of money for the government.
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Permalink Reply by MrGadget on
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There is no path to a VAT in used goods...they are still finished goods, likely taxed previously, not at the business-to-business level, not used in production of something else.
Where is the upward mobility when only new goods are taxed at a high rate? There are no jobs in producing used goods, only in trading them. There are millions of jobs in producing new goods, jobs that will surely be cut when demand for new goods is driven off. Any auto workers out there? Heavy equipment manufacturers? How much fun will it be to fly in 30-year old aircraft because new planes are too costly, or would we rather fly in new planes at triple the price?
Yes FairTax is more broad, however still not broad enough, and perhaps policy makers who decide such things may come to a similar conclusion. Exclusion of used goods presents a much larger opportunity to cheat than inclusion.
In my view, inclusion of used goods, while lowering the tax rate across the board, provides a more fair and more beneficial outcome to many more individuals. If total domestic sales is X and half of that is used goods, the rate would be cut in half by inclusion.
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Permalink Reply by Joe McCune on
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MrGadget,
In my opinion, if you want rampant fraud and abuse of the FairTax system, include taxing used items with the FairTax.
Used items are included in the FairTax, especially with big ticket items like cars and houses, the only difference is that no money is sent to the Federal Government, the original purchaser, aka taxpayer, gets a bit of a refund of the taxes they paid when they purchased the item new.
Also, do you want the feds poking around at your garage sale to make sure you collect and remit all of the taxes you are supposed to.
Unintended consequences are a bitch.
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Permalink Reply by MrGadget on
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By "massive retail industry" I was clearly not referring to incidental private sales such as garage sales by individuals...just the current retail used goods trade that exists and is taxed today at State level. In addition to the storefronts all over town, E-Bay is loaded with such merchants.
30% negative equity is a tough sell, and that's what you'd have compared to a used item purchased a day or more prior to enactment.
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Permalink Reply by Ron Wenrich on
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Let's back up a little bit. You've come on like gangbusters, which I don't mind, but let's look at some of the economics.
The Fair Tax puts the tax at the point of sale, not the point of production. That means there are no federal taxes on the wages, profits, or any other part of the input of a product or service. Although the 23% or 30% part of the final bill is a point-of-sale tax, the current tax structure has it put into the selling price of the product.
Will prices decline enough to offset the point-of-sale tax? I don't know. Some products might, but some products won't. It depends on the labor input part of the production. That's where most of the current tax is levied.
The upward mobility in new goods has a lot to do with our competitiveness in foreign markets. We've upheld our lifestyle by borrowing and having a declining value of our dollar. The decline is brought about by a lower GDP and a higher trade deficit. If you want to improve the trade deficit, then you have to lower your costs. Putting the tax on consumer instead of labor pushes those costs onto our shores, and we sell more products, and provide more employment, which spurs consumer buying. Exporting our taxes on labor isn't working out so well.
Taxing used items does not spread out the tax on a broader base. The base would actually be narrower, since you've raised the price of the used item. Some items get spread out over time, some items do not. Food is only used once, as is a service. Should these have a higher tax rate due to serviceability? With the tax at point-of-sale, you would spread that tax over all users, since its already has been paid.
Now, I have a question for the broader group. What is to prevent a tax on used items by the federal govt? There's all this talk about repealing the income tax laws, but nothing about preventing future taxation on used goods.
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