Skip to comments.A Fair Question about Fair Tax
Posted on 08/03/2005 4:51:43 PM PDT by RobFromGa
A simple question...
So, under the FairTaxI get to keep my whole paycheck, prices for everything I will buy will stay the same even with the taxes included, and I get a prebate check from the govt every month. And businesses pay no taxes.
Where is the extra money coming from...
What is wrong with this reasoning below?
1. Right now the government collects $X in the form of all taxes.
2. All taxes are really paid for by consumers in the end result, either directly, or in the cost of their purchases which allow businesses to collect money in order to pay taxes. Companies do not really pay taxes they jsut collect them and pass them on.
3. The FairTax will collect the same $X per year in the form of taxes but using a different method.
4. Under the FairTax, the price paid for goods will not rise because getting rid of all the taxes built into goods will cause the prices to drop, then the FairTax will add onto the new lower price, resulting in the same price paid by consumers.
5. So, for a given taxpayer, shopping (consumption) will be revenue neutral. Ie. Prices are the same as before.
6. And each given taxpayer will get a "prebate" check every month that they are not getting now.
7. And each taxpayer will pay no taxes on capital gains, or on savings.
8. And, each taxpayer will no longer pay any taxes on income, or payroll taxes.
9. And, there will be no Fair Taxes on any purchases made for a business.
Are these all true so far?
Again, I get to keep my whole paycheck, prices for everything I will buy will stay the same even with the taxes included, and I get a prebate check from the govt every month.
Where is the extra money coming from???
Can someone who understands this proposal please explain where the money is coming from?
can you or someone else knowledgable about Flat Tax answer this question?
Compliance costs. Running an IRS. Underground economy. Tax haven net increase in trade. There are trillions being either wasted or hidden right now.
I don't think you get to keep your whole paycheck under this system. It will just tax everyone at the same rate and remove the IRS code. So there will be no money wasted on just figuring out how much to pay.
Since everything else is neutral to the taxpayer, then you are saying that the compliance, underground, IRS costs, etc are equal to the entire revenue collections of the US government under the present system?
Another point to consider is that you are no longer being punished for working harder and earning more. You only get punished when you spend a lot.
A trillion annual on IRS operating and enforcement expenses alone.
How are you "punished" for spending a lot if the prices haven't gone up?
Not so. Under the fairtax system there is no longer any uncome tax.
We all wish it could be reality but I think most people know that it never could be.
I am behind it 100% but there are way too many people that will oppose it.
I own a small business. My own compliance costs with the current system amount to about a quarter of one percent of my revenues. In some years, a half of a percent.
That should pay for it. Yeah, that's the ticket.
No one ever accused fairtaxers of being intellectually honest. Few of their claims withstand intellectual scrutiny, but you can NEVER convince one of them of that.
Because you have to pay the tax. If you don't spend it, they won't come along and take it from you either.
They are, all told, quite substantial. A more interesting issue, however, is that certain monies that exist today on which tax has already been paid would be taxed again under the new system. The "transition effects" would probably be signifcant, but I don't know exactly what they'd be.
"A trillion annual on IRS operating and enforcement expenses alone."
Hey, it's only money.... we can print more, right?
see my tagline
That's higher than mine. I want to meet this business that is paying 30% of their gross in compliance costs.
I am still trying to figure out how they are going to get Trixie the local prostitute to collect and remit a 30% sales tax.
Amazing, 1/2 of all current federal tax revenues go to the IRS. I never knew....
I'm a senior who has many questions about the fair tax. But talking to Congressman Linder he assures me that all questions I have will be answered to my satisfaction and will make me a Fair Tax supporter.
Have you checked out the www.fairtax.org web site? Perhaps some of your questions will be answered there. I saw Linder and Boortz on Cavuto today and they claim everyone's paycheck will have NOTHING deducted....no SS..no medicare...no taxes whatsoever will be taken out.
I'm sure I have the same questions everyone has...if there are no taxes taken out how do we know the consumption tax will raise enough revenue to run the country? How can they tell for sure how much revenue will come in each year? What happens in years where sales are down and people aren't spending? How do we know the 23% won't be raised every few years? Trust me I want reform...just want to make sure we aren't going to be getting into a bigger mess!!
Or are you conveniently leaving that out again?
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