Anyone else know more about this? I've read the website www.iowafairtax.com but I'd like to know some of the cons. Can anyone shed some light on it?
Fair Tax?
- Thread starter ISUonthemove
- Start date
one 'Con' to this idea, is more items will sell on the blackmarket. the black market has more bark than bite.. .if you have ever paid someone in cash, it could be that service or product wasn't taxed=black market.
-keep.
for the record... I am all for an even tax... fair tax, flat tax... to me either one would be better than the current system (more you make the bigger % they take)
-keep.
for the record... I am all for an even tax... fair tax, flat tax... to me either one would be better than the current system (more you make the bigger % they take)
One con to any tax reform is the number of people who make their living from the current system.
I haven't followed the link, but if this is the large sales tax thing it would be disasterous at a state level. Namely because people would make all their purchases out of state. The black market problem was also brought up.
There is a reason many local taxes are on property, namely that people cannot circumvent them and regions need not compete with other areas.
I think there may be some merit to the "fair tax" on a national scale with certain tweeking necessary to prevent people from easily circumventing it.
There is a reason many local taxes are on property, namely that people cannot circumvent them and regions need not compete with other areas.
I think there may be some merit to the "fair tax" on a national scale with certain tweeking necessary to prevent people from easily circumventing it.
I like the idea of a 'fairtax' although I haven't looked into it in depth. Would different types of products be taxed differently?
Not to defend the current structure, but you do know that if one person has a $50,000 income and another person has a $200,000 income, they pay the same amount of taxes on the $50,000 part of the income. The higher percentage comes from the $150,000 more that the second person makes.
Americans For Fair Taxation: FairTax.org should answer most of your questions.
I've done a bunch of research on it and I don't see many drawbacks.
I've done a bunch of research on it and I don't see many drawbacks.
It is still a higher percentage.... IMO, we are all equal and should all pay the same amount.
- keep.
True, but think how much money is wasted on the IRS division. Also, there would still be a need for personnel to manage the fair tax, it just would be drastically reduced.
The thing I like a lot is that used good aren't taxed by the fair tax. If you buy a used car, it's not taxed because it has already been taxed before.
In the current system, if I win $10 million in the lottery...I will see about $6 million of that after taxes. If I decide to give cyclonekj $1 million of that...he is taxed an additional $400,000 (roughly) leaving him with $600,000. That $600k was about $1.67 million of my $10M winnings. And it just compounds if kj wants to give away part of his $600k.
But why should that person pay a higher percentage? It is not fair at all to make the wealthier people pay more than the poor people. Everyone wants to be treated equally, so everyone should be taxed equally. Either that or you get 1 vote for every $1 you make, thus the rich pay more and have more say in how the gov works. I am all for that.
There are very good reasons for a progressive tax system.
1. Many rich people have done nothing to actually earn their money. If you inherit a large sum you are often essentially set. Capital can create more capital.
2. To prevent an overconcentration of wealth. In America the wealthiest 1% control about a third of the wealth, the top 5% control about 60% of the wealth, and the top 20% control over 80%. Fundamental principles of equality push for a more even distribution of wealth. Marx had a few things right, although I disagree with some of his conclusions. In a very liberal economic system wealth tends to accumulate in the hands of very few. Massive disparities in wealth can lead to political instability, not to mention excessive numbers of poor people.
3. Moral Grounds. I believe that some prominant goals of the government should be to ensure equal opportunities, and to care for those who are in need due to no fault of their own (e.g. children). Examples of this in practice include public education, student loans, and various assitance to the poor. I think something similar to these programs needs to be in place no matter the tax structure. If a greater tax burden was placed on those who are not wealthy, they would have less ability to provide for some things on their own and would require greater government assistence to be in the possition they were in before. Why not just take the easier route of taxing them less in the first place?
I appreciate your hypothetical generosity. :biggrin9gp: (So does Uncle Sam.) But neither you nor I will receive much sympathy from the masses, who are glad to see huge amounts of tax revenue coming from those who are (now) rich.
1. I'm not sure why one should be penalized for having wealthy parents.
2. The redistribution of wealth you speak of sounds very much like socialism to me. No thanks!
3. I don't want our government dictating morals. Period.
Or you and your wife could 'gift-split' and give cyclonekj a tax free combined amount of 24K per year. This way you could give him 1million dollars tax free , it would just take 42 years.:wink0st:
A sales tax with no deductions that replaces the current income tax system would result in a huge change in the distribution of who pays taxes - and therefore has no chance of ever being adopted.
Example 1 - Single person, $75,000 income, no dependants, rents, low medical bills, doesn't donate to charity, spends all they earn.
Example 2 - Married, $75,000 income, 4 dependants, owns home, high medical bills, donates to charity, spends all they earn.
Under the current system, the second person will pay far fewer taxes because of the deductions - probably far less than one-half of the first.
Under the sales tax system both would pay the same tax since they are both spending $75,000. Because of that, it has no chance of ever passing.
Example 1 - Single person, $75,000 income, no dependants, rents, low medical bills, doesn't donate to charity, spends all they earn.
Example 2 - Married, $75,000 income, 4 dependants, owns home, high medical bills, donates to charity, spends all they earn.
Under the current system, the second person will pay far fewer taxes because of the deductions - probably far less than one-half of the first.
Under the sales tax system both would pay the same tax since they are both spending $75,000. Because of that, it has no chance of ever passing.
That is one argument I always hear. And it is total crap. I would bet that 95% of people with a high net worth have not inherited it. Yeah sure there are Paris Hiltons, but for every one of the, there are 10 people who started mowing lawns, hired a few more people, and built a small business into a pretty nice next egg.
Cyclonepride
Thought Police
Exactly! I have some more of my opinions on my blog, so I won't repeat them all here, but since when is redistribution of wealth a function of a free market society. The government should help people who are physically or mentally incapable of caring for themselves, period!
The very rich are theoretically paying more taxes. Theoretically. After all the loop holes are accounted for, a progressive tax is probably harder on the middle class, who are getting a decent income, but can't quite afford to buy 1000 acres of land or a bunch of business related equipment at the end of every year to avoid paying taxes.
Under the fair tax, everyone who buys anything has to pay. Including our neighbors who are not here legally. It also makes American businesses competitive. Anyone want to know why Toyota just passed GM in world sales? Any American manufacturer has approximately 22% built into the cost of their products to pay payroll and other taxes. That is why everyone is going overseas.
1. In the same vein one shouldn't get a windfall based solely on the wealth of the parents. Warren Buffet said it best, something to the effect of, "Kids should have enough money to [do] anything, but not so much that they can do nothing." Also, an increased tax rate on wealth that you have done little to earn is not much of a penalty. I would love to be in a situation where I would incur such a penalty.
2. Socialism is (roughly) an economic system where the government controls the means of production and distribution. A progressive tax system can and is used effectively in capitalist countries (such as our own). Part of the reasoning behind both is the same, and to a large part it is sound reasoning. Marx was in large part right regarding his theories of how capitalism would lead to very uneven wealth distribution. His conclusion that it would lead to socialism is flawed IMO though, largely because he did not account well for other means of placing checks on capital, such as unions and legislation through the democratic process such as anti-trust laws and the progressive taxes we are discussing.
3. The government usually doesn't dictate morals, but they are the basis for many policy decisions. Considering we live in a democracy where people vote based on moral considerations and expect their representatives to act on those considerations I think moral considerations will always be a part of policy.
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Cyclonepride
Thought Police
I agree that they do. However, what do you think of this scenario?
Company A makes a truck, in America, with a manufacturered cost of $12,000. Now add $2640 for the government's share. That's a cost of $14,640. They sell it at 20% margin, for a sale price of $18,300.
Company B makes a truck overseas at a manufactured cost of $12,000, but doesn't have to pay that 22%. They can sell that truck at a 20% margin for $15,000.
Company A is not going to sell many trucks. They have choices to make. either lower their profit margin drastically, and hope that they can move a lot more trucks, or lower their manufacturered cost to sell a truck in the same price range, thus cheapening their product.
I am sure there are many other factors, but the math doesn't work out too well for domestic manufacturers of any sort. Which is a large reason why our trade deficit is growing, and companies are moving to other countries to make their products.
