The FairTax Crowd Answers Jerry Bowyer

realclearmarkets.com ^ | January 11, 2008 | Louis R. Woodhill

[DivaDelMar]

You have absolutely no idea what you are talking about.

Here’s a link to Title 26 of the US Code:

http://www.access.gpo.gov/uscode/title26/title26.html

Here’s a link to the Code of Federal Regulations, Title 26:

http://www.access.gpo.gov/cgi-bin/cfrassemble.cgi?title=200726

Call me when you’re done reading and digesting all of them.

[ovrtaxt]

(pssst! people already do that- but don’t tell anyone, it’s a secret.)

[BfloGuy]

Would you trust someone pedaling a 30% sales tax as a 23% sales tax?

Reminds me of the bumper-stickers in the 70's usually seen on VW's -- I'm "peddling" as fast as I can.

I always wondered if they were traveling salesmen? Just didn't make sense otherwise.

[robertpaulsen]

"the FairTax rate is much lower than the current 35% top tax rates on personal and corporate income. The lower the rate, the less incentive for avoidance"

Right now what is it -- only 1% of taxpayers are eligible for the 35% top rate? And you know that 1% is doing their damnest to avoid it.

Compare that to 100% of the taxpayers eligible for 30% of every purchase. And the author claims there will be less avoidance!?

[Misplaced Texan]

At birth you are required to get a SSN.
Start school and your address and guardian addresses follow you for the next 12 years correllated to your SSN.
Get a job and your address and income are correllated to your SSN.
Buy a home and your credit and loan data is correllated to your SSN.
Everywhere you turn your identity is recorded.

Where do you plan on hiding your identity in a normal, routine life in the US in the 21st century?

The only people the Feds can’t find are illegal aliens.

The FairTax as written may not be the answer to the tax problem, but it is a step in the right direction. That direction is to tax the use of money rather than the labor of creating wealth or income.

I read an article by a proponent of a consumption tax in the early 90’s that I no longer have. However, his position, as I remember, was to tax every transaction. Receive a paycheck, deposit a paycheck, withdraw money, pay bills. However, the rate he proposed for Texas, as an example, was 1/4% which would eliminate all current sales, property, business and other taxes and create twice the then current tax revenue. That would mean an individual would pay no more than 1% of their income, at the most.

There would be no IRS tax forms to complete. The federal bureaucracy would be moved to the current state comptroller’s office for collection as it does state sales tax.

Consumption tax has too many advantages to dismiss. Every form of it should be studied and analyzed to provide a platform for elilminating the yoke of slavery imposed by having one work to pay the Boss (the Feds).

[ovrtaxt]

Oh, by the way- business related goods for use or consumption in doing business are indeed taxed, unless you plan to resell them at retail. That’s the only tax-free purchase you’re allowed to make.

At least, that’s how the sales tax works in FL.

[Mojave]

The exclusive FT rate applied to a shopping cart of the ‘basics’ establishes the prebate,

It has NOTHING to do with what the welfare recipent actually bought.

[foxfield]

That new Mercedes and computer and iPhone and HDTV will be for "business" purposes,

Buying something for use in your business does not make it exempt from sales tax. Buying something that you resell to another business is exempt.

People already evade income taxes by falsely claiming business expenses and mischaracterizing personal transactions. The Fair Tax addresses how taxes are collected; it cannot and does not address taxpayer morality.

[ovrtaxt]

Hey, if you’re going to use the inclusive 35% rate when spaking of the income tax, plase use the comparable inclusive FT rate of 23% for consistency’s sake. Thanks.

Either that, or quote the income tax rate in exclusive terms.

[ovrtaxt]

Do you have a reply to my post 47?

[Mojave]

I'm not sure what you mean.

I think that you do. The earlier version of a national sales tax failed to produce promised revenues because of massive evasion and avoidance.

[PubliusMM]

Thanks for setting me straight on this one. I’m so glad that there’s no fraud in the current income tax system.

Under the FT, the states will still cry and whine over internet sales. The FT has nothing to do with State or Local taxes, as you likely are aware.

So, what’s your real concern with the FT? The system we have in place sure ain’t working like most think it should. Do you have an alternative solution?

Taxing income is regressive, especially a graduated income tax model in which higher rates apply to higher income. Taxing consumption (the FT, for instance) provides a degree of control over when/where to pay the tax. If you don’t want to pay the tax, don’t make the purchase.

As a supporter of the FT, it’s my opinion that it would be a better model than the current one; lower compliance costs, more personal control, and I don’t have to tell the government how much I made, where I made it, and how much of it I saved/spent.
OTOH, I don’t care for the prebate concept. I’d rather see a slightly lower FT rate and no prebate to fool with. I see the prebate as a tool to infiltrate my privacy, again. I also don’t agree with the interest rate index outlined in the legislation. I can accept using the T-bill rate, but I think that should be just one component of the broader process of setting the limit, beyond which the FT would apply to the interest paid.

In short, there is still work to be done on the FT model, but even in its current form, it’s light years ahead of the BS system we are working with at present. And, regardless of the system in play...TAX reform without SPENDING reform is a task half done.

[Mojave]

Yes. See above.

[ovrtaxt]

Oh, I see. You’re equating the luxury tax to this. Delusonal doesn’t begin to describe that leap of logic.

[PubliusMM]

And your point? There’s no telling how I might spend a prebate check, and I’m not a welfare recipient. I might decide to restock my ammunition supply. Or, put some money down on some new bling for the significant other...
How is that germaine to the discussion?

In the interest of full disclosure...I’m no fan of government largesse in any form. I’m not a supporter of the prebate, either.

[robertpaulsen]

"What we need is a big dose of Social Security reform"

True. Plus Medicare and Medicaid reform. And eliminating the Department of Health and Human Services, eliminating the Department of Education, eliminating the Department of Commerce, eliminating the National Endowment of the Arts, eliminating the National Endowment for the Humanities, eliminating the Department of Agriculture, eliminating the Department of Housing and Urban Development, and eliminating the Department of Transportation.

Of course, once we did that, a Steve Forbes-type flat tax of 10% should be enough to cover all government spending. Cutting spending should be the priority -- not a "fairer" or "easier" way of stealing $3 trillion from the taxpayers.

[Mojave]

There’s no telling how I might spend a prebate check, and I’m not a welfare recipient.

Non sequitur. Welfare is welfare, regardless of how you "spend" it.

[Mojave]

You’re equating the luxury tax to this. Delusonal doesn’t begin to describe that leap of logic.

High federal sales tax on retail items versus high federal sales tax on retail items. Keep whistling your way through the graveyard.

[mad_as_he$$]

I have owned and run businesses for thirty years all of them successful I KNOW EXACTLY what filing requirements are and do them on a regular basis. Reporting taxable and non-taxable sales to business owners goes on every day and with the added layer of doing it to a screwed up Federal agency will make it worse. Have you every dealt with the Kalifornia Franchise Tax Board? They are the gold standard of screwed up agencies. The New unFair Tax agency will make them look like amateurs.

You do not think that businesses will sell stuff out the back door when they can charge the same price they used to sell it for and not pay taxes on the associated labor? Inventory shrink will be out of control. Every farmer will suddenly have a dramatic yield reduction and the products will go to the black market. I will run ALL of my night shifts off the books for inventory reporting. Sell the stuff at the flea market or using Amway type schemes.

I haven't even begun to get creative on ways to beat this foolish system. Here's another one. All of my employees get a pay cut that gets them into the prebate level. They all collect prebates and I pay them cash for the balance of the amount they used to make plus some more. Since I no longer have an obligation to report the details of how my business has been run there are no records for the Government to subpoena. Works for me!!!!!

I pay people to know the tax code just like I pay engineers and to know their field. My current accountant is an ex-IRS enforcement guy. We win every time they question something. Why? Because the IRS is full of slugs. All of those slugs will work in your precious new "unFair tax" agency.

Yes the IRS code is a large package. So what? the actual effect on the average Joe is minimal. Besides Jackson-Hewitt will do my taxes for $30 bucks and they got me a great refund!!!! How many time have you heard that? Do you think Joe Sixpack will support this program when you tell him his food is going to coast 30% more at the grocery store? Not likely.

[mad_as_he$$]

Yes. Most States are that way I believe.