Skip to comments.A FairTax question - are investment transactions included as taxable end-user purchases? (vanity)
Posted on 04/08/2014 9:36:35 AM PDT by lump in the melting pot
An honest inquiry. I'm a big supporter of tax reform in general, and the FairTax in particular sounds like a very good proposal to me. Query as to whether investment purchases (stocks / bonds / ETFs / etc.) are included in the FairTax plan, and if so, at what rate (same as consumer purchases or different)? Opinions welcome as to whether this is or is not a good idea (increased tax base plus encouraging investing as a long-term purchase, vs. possible detriment to the financial market)?
Thanks in advance, the lump.
Only the fees the broker charges would be taxed under the Fairtax. The Stocks, bond, etc would not be taxed!
Very good question. Notice, this is a systemic problem with a “Fair” (national sales) tax. And, if you bought/sold and lost money, is there still a tax? Well, that is fine state of affairs.
And, if you decide to buy and sell property in cash (ostensibly with no IRS left to police you), how does the tax get administered? The “Fair” tax is anything but...
The fairtax only collects on new retail purchases , used items are excluded.
------also some interest paid and earned is taxable
But thats a small potato in the giant wharehouse of other taxes in Fairtax fine print.
I was a big fan of Fairtax myself, until I found out the 2 trillion dollars of “OTHER” taxes in Fairtax. Fairtazx does have a retail sales tax — yes, that would collect, say, 1.4 trillion. But Fairtax has to collect 3.5 Trillion to replace all other fed taxes, including SS and Medicare.
Do you know what Fairtax actually taxes? Yeah, you might think it's just retail consumption, but that's only the start.
All wage and pension “expenditures” are taxed for city county and states. Very cleverly included in the fine print, but vital to their math.
In fact, all expenditures whatso every (except education expenditures) are taxed! Your city and your county and your state, per Fairtax math, and per the clever fine print, are to send in —in advance!! — a 23% tax on expenditures.
No, this has nothing to do with retail sales, wages, and pensions are not retail sales, but the EXPENDITURE of wages pensions and all operatation costs are taxed!! This is entirely different than the retail sales tax, which you pay at time of purchase, and give to the retailer.
This is a much much larger source of revenue, and city county and states must send it in.
Furthermore, the fine print n Fairtax docs say they “assume” city county and states will “raise their tax rates appropriately”
But even that tax on all wage pension and operational expenditures is not enough, even with the retail sales tax. SO Fairtax ALSO taxes — again in the fine print, cleverly stated, and again their math depends on it - all medicare and medicaid CONSUMPTION. Really. If a cancer victim, for example, “consumes” 100K worth of surgery and chemo and rehab, they are liable, without exception, for 23% tax — or 23,000 dollars.
Read the fine print — it's there, because Fairtax documents claim their “tax base” (tax base is what they tax, by definition) is whatever “NIPA” defines as consumption expenditures. And NIPA defines quite a bit as consumption expenditures, including all medical consumption.
And remember, this is how Fairtax math adds up. ONLY, ONLY by taxing all these other things (on paper) like wage and pension expenditures, like capital investment expenditures, like medicare consumption, does the math add up.
Fairtax has artfully sold itself as a very simple personal retail sales tax. But that's not it at all.
Can Fairtax actually tax all cities 23% on their wage expenditures? OF COURSE NOT. Nor do they say they can!! They just “assume” it! Very clever really.
Also they “assume” all cancer victims will pay 23% tax on consumption of cancer care — even those on Medicare, etc. How do we know medicare patients are liable?
Because Fairtax “principle of interpretation” clever double talk, says they tax all consumption “without exception”. ANd elsewhere, cleverly, seemingly unimportant sentence, it says the person using or consuming any good or service is liable personally!
One again, do they think cancer victims on medicare or not, should and can and will pay 80 billion dollars, or a cancer victim 60 years old in a nursing home dying of breast cancer, will pay 46,000 dollars for her “consumption” of medicare benefits?
NO, they don't think she will pay a dime. But they do tax all consumption, including all medicare consumption, anyway, to make the math add up on paper.
So in all due respect, your question of taxing bonds stocks is kinda funny, because Fairtax is not even a tax plan. No, it's not. It's political theater. It sounds great, but it's more like a magic bunny that poops gold. No, that's not a magic bunny. And no, that's not gold poop. But it SOUNDS good.
They have no intention of passing it — they know better than I do it's a lovely bit of political theater. Not a tax plan