Posted on 01/23/2011 7:27:20 AM PST by jmaroneps37
When my financial advisor gave me a lot of caveats about the new Fair Tax surfacing in Congress, what I really heard him saying was, “You can’t trust government.”
The unintended consequences of the proposed Fair Tax are pause for alarm because “when they sell a Fair Tax, they don’t tell you about other taxes” that will conveniently remain on the books.
“In theory if the government says they’ll take away all other taxes, do they?”
The Fair Tax is a misnomer in Europe. The income tax was not abolished when they added a VAT value added tax or Fair Tax. The problem is, they are suffocating the average European citizen.
A United Kingdom VAT of 17.5% on top of a 50% income tax totals a 67.5% fed to the amorphous blob; in France: VAT 19.6%, income tax 40%, total 59.6%; Greece: income tax 40%, VAT 25%, total tax 65%; Spain: VAT 16%, income tax 45%. In Sweden a 25% VAT plus a 55% income tax results in an eye popping 80% tax individuals feed to the government wow! Denmark’s 83% is even worse!
”The United States is heading right down the same path,” my advisor tells me. Initially our current administration looks to propose a minuscule amount of only 1% or 2%, just like Europe started out imposing. Our 14 trillion dollar debt load is not sustainable, but he stresses VAT economies are deeply mired in gargantuan debt loads as well.
The American notion of hard work and perseverance enables anyone to get ahead here. “Do you think that can ever happen with tax rates between 60% to 80%?” he asks.
What would our lives be like with the European model of Obama’s redistribution of wealth? Consider never being able to buy a home....
(Excerpt) Read more at coachisright.com ...
repeal the 16th amendment first, then we can talk about it.
The Fair tax proposal is very clear that the Fair tax goes into effect only after the 16th amendment is repealed.
See tagline.
The Fair Tax is NOT a vat tax.
A vat tax is a hidden tax on profits.
The Fair Tax is a national sales tax that replaces income, payroll, capital gains, and corporate taxes.
Oppose the Fair Tax if you like, but don’t lie about it.
A VAT is something to stay away from under ANY circumstances!
A VAT is the unseen killer.
Once implemented government will take as demanded until nothing is left to take.
I see it as the withheld income tax on steroids, if you don't see it taken out of your hand, if you don't write a check for it, you won't miss it.
Anything Europe does, we should be running from.
Didn't we learn our lesson in the 18th century?
That way everyone pays.
No special political favors can be given.
If we must be taxed, the (true) fair tax as you have stated it, is the ONLY fair tax available.
This is a totally misleading piece on the FairTax, and it perennially surfaces whenever Tax Reform talk is in the air.
The FairTax is NOT A VAT, not even close. Inside the legislation for the FairTax Code (H.R. 25), there is a provision that the FairTax sunsets (dies) unless the 16th Amendment is repealed.
Anyone that does their due diligence knows the above and if they have been following the discussions here on FR and elsewhere, they know there is a cabal of lobbyists that work each day to spread disinformation and propaganda about the FairTax.
Once someone gets serious to really study the legislation which is only 134 pages long, they will see that the FairTax is vastly superior IN EVERY RESPECT to what exists today, from collection, to transparency, to enforcement and on and on.
Take the case of a 50% income tax and a 50% sales tax. Say you earn $1,500 and want to spend every dollar you can in the same year. So, after Income Tax you have $750 to blow. Buy something that cost $500 and give the last $250 to the gov't.
Note that %50% + %50% doesn't equal 100%. I would appear to be 2/3 * 100%.
Not true. The transition from one to the other is not set up to be done in a "fair" way. Savings made before teh transition and spent after get double taxed, BIG TIME.
I still need to clarify one nagging point on the Fair Tax.
I’ve paid taxes on my income all my life and have managed to put away enough in savings for comfortable support when I retire.
Now, no one pays income tax, but pays higher tax on everything bought. Pffft! There goes any advantage of having a tax protected nest egg.
So I worked hard, got paid, paid taxes on that money I earned and somehow managed to save some of it. Now some people have the idea they want to tax me again when I use the money in retirement that I was already paid taxes on? BS
I’ve been leery of Fair tax but I’m warming up to it if it can be passed pretty much intact.
H.R. 25
>>To promote freedom, fairness, and economic opportunity by repealing the
income tax and other taxes, abolishing the Internal Revenue Service,
and enacting a national sales tax to be administered primarily by the
States.<<
Full text (pdf file)
http://www.gpo.gov/fdsys/pkg/BILLS-112hr25ih/pdf/BILLS-112hr25ih.pdf
There is no way to accomplish a transition that doesn’t negatively affect in some way. We need to look long term. If we believe that a change is necessary, which it is, then we will need to accept the responsibility and acknowledge that there will be some pain.
Yeah, that would be like paying tax on your social security tax when you get payments.
That would be double taxation so they would NEVER tax your social security. /s
The current tax system is based on debt and penalizes savings.
The Fair Tax encourages savings (saving is tax free) and therefore encourages the resulting investment.
If you are a saver, changing to a tax system that encourages savings is an advantage that more than offsets the tax liabilities of consumption.
Add in your ability to engage in tax avoidance - buy used, buy less and don’t get tax (and these are things that savers do anyway), and the Fair Tax offers a huge advantage to savers.
It is a tax system DESIGNED for savers.
Me too.
It's the "pure form" that creates the hurdle however.
Politicians thrive on "picking away" at things until they are no longer recognizable for what they are meant to be.
They can't help themselves.
“Note that %50% + %50% doesn’t equal 100%. I would appear to be 2/3 * 100%.”
I caught that too. You don’t simply add up the taxes when combining, since they interact with each other. If that were the case, then a 50% income tax and 60% VAT would mean that people could not buy anything, but that would not be the case - as they would still have 50% of their income left over to buy overpriced consumer items.
The way to do the math for the case of a 20% income tax and 70% VAT is something like:
Start with $1.00
Take away 20% - you get 80 cents
Take that number and divide by 1.70 (one dollar plus 70% VAT)
You get 47 cents left, so your effective tax rate is 53%
Don’t ask me why it works, but it seems to work.
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