Posted on 09/27/2004 2:41:31 PM PDT by LowCountryJoe
The most popular of the various national retail sales tax plans is called the FairTax. It is in both houses of Congress today as HB 25 and SB 1493. It is a replacement, not an add-on, for the federal income tax and for federal payroll taxes collected to fund Social Security and Medicare.
The FairTax provides a dollar-for-dollar replacement of all revenues now collected through such taxes and eliminates the need for annual and quarterly income tax filings, the surveillance by the federal government of wages and investment income and the need for anyone to hire an expert in order to comply with federal tax laws.
The FairTax is a progressive tax. The biggest-spending wealthy will pay an effective tax of $23 for every $77 they spend on new products and services. The poorest get money back. American families would receive a monthly refund equaling the amount of sales tax a poverty-level family would normally pay.
As such, the FairTax eliminates federal taxes on the poor, including highly regressive Social Security taxes. This automatic refund won't mean much to the wealthy but will be quite significant to low- and moderate-income families and to those on fixed incomes. Everyone receives the refund, including the wealthy, in order to eliminate both means testing for the poorest Americans and the need to track earnings for everyone.
The FairTax has no exemptions, no shelters and no complex tax dodges available primarily to the wealthy and special-interest groups. The only thing every taxpayer can know about the current tax code is that it is an 8-million-word mess that no one has ever read. But even a child can understand the 13 words that define the FairTax: "The FairTax is applied to all new goods and services delivered at retail."
The FairTax captures billions of dollars of revenues currently lost in the underground economy. Even drug dealers would pay their share of taxes when they purchase goods and services. The simple fact is, the more money one spends under the FairTax, the more consumption taxes one pays. Those who buy luxury items pay more; those who live more modestly pay less.
The FairTax also eliminates the IRS' unwelcome surveillance of every penny of income earned, loaned, won or invested by American citizens. In place of the huge bureaucracy created to collect federal taxes, the FairTax uses the states' sales tax infrastructure to collect taxes at the point of retail sale.
The intrusive interest from our government into citizens' financial status is eliminated overnight.
We can achieve the dream of upward economic mobility for all if we first believe our goal is attainable. The FairTax — truly an issue that delivers on the promise of individual liberty — will survive the distortions of presidential politics, and with a demanding public, the FairTax will achieve the congressional passage and a signature from the White House. It all starts with telling the public the truth and believing we can change things. I believe.
• Herman Cain also has served as chairman of the Federal Reserve Bank of Kansas City and as CEO of Godfather's Pizza. He recently ran for the U.S. Senate from Georgia.
That's just a self-defense word against liberals. The trick is that everyone would be treated identically, and fairly, so the standard deduction would mathematically mean that people who spend less have a greater portion of the their taxes rebated.
Exactly! The big difference is that the Kerry's would lose all their tax shelters and pay the same rate as everyone else.
I think the fairest tax would be a "everyone pays the same amount" tax.
I don't give a whip about it being "regressive" as I cant even find the term in the Constitution. For everyone to be equal under the law they should be taxed equally.
The tax should be low enough for poor people to afford it and the government will have to live within it's means.
Politicians could no longer divide and conquer by proposing to tax the other guy. If they change the rate, they change it for everyone.
This tax would be liberating, for once you paid your charge, you are free to seek your dreams.
This tax should be called the Liberty Tax.
%1.5 Trillion times a 23% tax is.... a LOT of money! =)
$345 billion, to be exact. Of course, one could argue a lot of that economy is not taxable retail, but there's still a lot of people being paid under the table even if it's not that much. =)
Yup. So?
If the demand for used good goes high enough, then the price of used goods will rise in relation. And then it gets to the point of equilibrium where people either can't get the used stuff or just prefer the new stuff.
The supply of used items is finite, heh. And any 'new' used items that feed into this market will have been taxed once already. =)
But with the market-driven reduction on the prices of new items without imbedded taxes under FairTax, most purchases will cost, roughly, the same. People ignore bargains all the time (I'm a big used-item nut) and if overall prices are about the same, most people won't bother.
Question's I have: What will it cost the retailer to collect these taxes, how much will he get to keep for his efforts, lots of extra bookwork for the retailer.
What happens when we return an item?
What happens when there is a recession and no one is buying anything?
I never want to see services for Medical taxed.
Services need to be defined. There are a lot of other questions I think will come to mind later, but if passed later is to late, and "progressive" to me means just that, start at 20%, not enough no problem take it to 25% so and so forth.
Gasoline already has a 56 cent per gallon tax (18 cents federal excise tax, 18 cent state excise tax, and sales taxes at roughly 8 percent or 18 cents). Now we are going to add another 18 cents for a federal sales tax?
I agree a sales tax will be better. But it won't happen. It would be far too visible.
Does the incentive to prefer used goods to new goods that the tax proposal would produce mean we can count on the environmental wackos to cross the aisle and help on this one?
If you would like to be added to this ping list let me know.
John Linder in the House & Saxby Chambliss Senate, offer a comprehensive bill to kill all income and payroll taxes outright, and provide a IRS free replacement in the form of a retail sales tax:
H.R.25, S.1493
A bill to promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national retail sales tax to be administered primarily by the States.Refer for additional information: http://www.fairtax.org & http://www.salestax.org
What will it cost the retailer to collect these taxes,
Essentially the same it costs them now in 45 states that have state sales taxes, as they would collected in parallel, and certainly less than what businesses now pay directly and indirectly in complying with the income/payroll tax system that exists today.
how much will he get to keep for his efforts,
$200 per month or 0.25% of the percentage of the NRST collected whichever is greater. Certainly more than it provided by states for collecting state sales taxes today or paying income/payroll taxes for that matter, which is nothing.
lots of extra bookwork for the retailer.
Hows that happen? the tax is 23% of total sales revenue received. Nothing more than a business will have naturally in keeping its books for accounting purposes, and substantially less than they need to account, plan and report for the federal income/payroll tax system now.
What happens when we return an item?
The business receives a credit for the the tax on that item as they refund it to you.
What happens when there is a recession and no one is buying anything?
Guaranteed under such conditions even less income tax revenues are collected. Variability of retail expenditure tax base is less than the variablility of income tax base.
I never want to see services for Medical taxed.
I never want to see my dog's food taxed either, he eats better than I do. One can be certain that every one has their own little special pet thing they never want to see taxed. To make exception, any exception, is to invite in every groups special interest and idea on necessity not to be taxed.
Fact is everything including Medical services are taxed today via income, payroll, and self-employment taxes. OTOH, under the HR25 proposal taxes are pre-paid up to the the povertyline of expenditure for each household regardless of income or what it is spent on. The prepayment is determined by household size not income or actual expenditure.
Services need to be defined.
They are, read the legislation ==>[H.R.25].
bttt
Once upon a time there were milkmaids. They milked cows. As times changed, milking cows was more automated. Milkmaids were out of work.
There's about 47,000 IRS employees. The only ones crying about them being out of work would be them and their families. As for the tax services of HR Block, etc, all of a sudden there will be a lot of Americans who are getting their full paychecks instead of "take home pay" and a sizeable percentage of them just might want to invest their money and need financial/investing advisors. HR Block could adapt to the changes or die as a company.
Thanks, I will study it more. Perhaps some kind of cap needs to be put in place, instead of it going from say 20% to 25% to 30% and on and on, better to do it up front than wait until the politicians see the need to raise taxes again. Any ideas?
There is no room for a national retail sales tax. Just how much do you think people will accept when they go to buy something. The states and localities already have it at 8 percent.
Certainly there would be no room for a national retail sales tax if the federal income and payroll taxes were not repealed and you were faced with paying an additional tax out of your current takehome(i.e. after tax) pay.
However that is not the case, as all income and payroll (FICA * NC) taxes are repealed, both individual and business, replaced by a single rate single stage retail sales tax.
Under HR25, you would receive you full gross pay due. There would be no withholding or tax on income. You would pay a flat rate on your retail expenditures, and receive a fixed payment for tax upto the povertyline of expenditure each month dependant only on your household size.
I agree a sales tax will be better. But it won't happen. It would be far too visible.
Nothing ventured, nothing gained. Visibility is the entire issue, how does an electorate wear government imposed horseblinders exercise that "Eternal Vigilance" upon with our liberty depends.
"As a matter of fact, what the income tax does — and this is the debate that I think we always try to get into in order to let you and him fight, see — and the people of this country are led down a path where the actual control of their resources, which in the end is the control over their will, is handed off to the government." . . .
"The government then manipulates that will in order to destroy the freedom of our electoral system through the income tax structure, and we call the resulting slavery a free system."
"In point of fact, it is not as the founders understood, and the only way to restore real freedom is to give people back control over the income that they earn so that they won‘t, at the voting booth and in other phony issues, be subject to that manipulation."
"The only thing necessary for the triumph of evil is for good men to do nothing."
--Edmund Burke (1729-1797)
I never said rebate...
I said REPEAL (as in repeal the INCOME tax first) otherwise forgetabouttheflattax.
Perhaps some kind of cap needs to be put in place, instead of it going from say 20% to 25% to 30% and on and on, better to do it up front than wait until the politicians see the need to raise taxes again. Any ideas?
Caps on tax rate per-se is kind of meaningless, as an expansion of the tax base allows rates to remain unchanged or even lowered but individuals end up paying more taxes as an absolute amount regardless. The federal government can spend beyond current taxes creating deficits and wait for inflation to catch the revenue base up or even grow the tax base by including factors not taxed under a particular tax system.
Capping taxes is a poor way to control federal government. Past experience merely shows that the federal govenment is more than willing and able to run on perpetual deficits and increasing debt.
The only certain way to control governent is through the representatives you elect for office, and placing constitutional limits on levels of government spending with forced balanced budgets.
I'm working to pay my taxes... but I'll be back!
http://www.fairtaxvolunteer.org/smart/index.html
FAQ on the plan.
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