Skip to comments.Why Democrats should love the FairTax
Posted on 02/25/2008 12:51:24 PM PST by Man50D
SUPPOSE A presidential candidate proposed taxing wealth and using the proceeds to reduce taxes on workers and provide a rebate large enough to cover taxes paid by poor workers. Such a candidate would be hailed by the left and reviled by the right.
Thus, it's remarkable that so many Democrats, with the exception of presidential candidate Mike Gravel, oppose the FairTax and so many Republicans, particularly presidential candidate Mike Huckabee, support it. In fact, the FairTax, which replaces all federal taxes with a federal retail sales tax and provides a rebate, represents a way to tax wealth, reduce taxes on wages, and disproportionately redistribute money to the poor.
A sales tax effectively taxes wealth?
It does. When we buy goods and services in a sales tax world, part of the payment goes to sales taxes. So we end up with fewer real goods and services.
Take Mr. Megabucks, who is sitting on $65 million and wants to buy a jet like Oprah Winfrey's - a 10-passenger, $50 million Global Express XRS. Under the FairTax, the jet costs him an extra $15 million because of the 30 percent sales tax. Mr. Megabucks gets the jet, but the extra $15 million, which he had budgeted for Beluga caviar, Dom Pérignon, and other flight snacks, goes to Uncle Sam.
(Excerpt) Read more at boston.com ...
Fair Tax ping!
it costs him $50 million...fair tax or no fair tax...*sigh*
an advocate of the fair tax, but still needs to get his information correct...
The author does not know the FairTax very well. After the embedded taxes are removed, the final cost of the jet after the FairTax is added will still be about $50 million.
Listen, any time a liberal see the word “tax” they get a tingly feeling that runs up their leg.
Why don’t democrats like the fair tax, even though it does everything they say they support?
Simple answer for this guy - they are about control - they could care less whether they “tax the rich” or “redistribute to the poor”, it’s about them being in control of the distribution.
no, when you feel that tingle going up your leg, it’s officially an “Obamingle”..heh
Not exactly so. The jet will have embedded taxes other than fed taxes, and there are “fees” that the fed will still have.
As this guy points out, the fair tax is anything BUT fair.
In its zeal to extract a pound of flesh from that dastardly “rich guy”, it screws savers, retirees, and anyone who prizes productivity and thrift over consumption. Those folks pay twice.
Of course, this explains why a class warfare populist nut like Huckabee likes it.
Professor Kotlikoff appears to be operating under the notion that Democrats actually want a tax system that operates fairly. That is the last thing they actually desire.
Democrats will oppose the Fair Tax for one simple reason... they can not use it to manipulate social policy, reward friends, or punish opponents as they can currently do with the Income Tax.
There’s also this little matter of the tremendous incentive it will give to a cash-only, barter, underground economy.
Or does Huck think human beings will simply roll over and do what is expected of them?
I could never understand the ginned-up enthusiasm for this untried measure when the Flat Tax has a long and successful history in a whole slew of countries.
Step away from the propaganda, go down to any small business, ask them what their gross sales were, and what their tax liability was. The embedded tax myth has to end sometime.
Second, the man pays no sales tax on his fifty million dollar plane because he's buying it used - extremely large private jets are purchased new.
I am SURE liberals LOVE the ‘fair tax’ right down to the nice Orwellian name.
Watch the comments here from pro- fair tax people. We can’t even get them to drop the ‘tax inclusive’ scheme. (because it shows that a 23% ‘tax-inclusive’ rate is really more like 30% the way you normally consider sales tax)
>> I could never understand the ginned-up enthusiasm for this untried measure when the Flat Tax has a long and successful history in a whole slew of countries.
Yep. The funny thing is.. the flat tax IS the “fair” tax!
HA HA HA HA HA HA HA ha ha ha ha ha ha ha ha ha ... you really believe that, don’t you.
Mr. Megabucks would simply purchase the Jet in a more tax friendly country and avoid paying the tax completely and the US government would get $0 in tax revenue exactly what they did when we put a tax on luxury yachts.
Why would a conservative support "fair tax" if it does everything claimed here, i.e. tax the rich and redistribute wealth?
For the opposite reason -
because it removes the control from the central government.
Amen. You said it all right there good sir.
Though I will add that the Democrats will oppose ANY tax change (VAT, Flat, etc.) that takes power away from the Federal Government.
Mr. Megabucks is going to buy his jet offshore and put it in an offshore holding company just like many people presently do to avoid the mere sales tax of some states. All very legal and nice and proper.
The author has no clue about real world business.
No, our economy needs a simple, transparent, EQUAL-RATE tax system. One that doesn't punish the earners and reward the deadbeats. Unfortunately, the fair tax as it's presented does not achieve this goal.
The mere fact that it is called the “Fair Tax” is reason enough for the Dems to oppose it. Call it the “Unfair Tax” and they will support it.
1 a: a story (as for children) involving fantastic forces and beings (as fairies, wizards, and goblins) called also fairy story b: a story in which improbable events lead to a happy ending2: a made-up story usually designed to mislead
The problem is not the tax system - it is the corpulent, corrupt government it feeds.
Changing the tax system is nothing more than a three-card Monte game unless you fix the underlying problem. Does anyone really think the government will take in less taxes with a different system?
I believe the fair taxers already admitted the alleged embedded taxes are only 7% AT BEST.
It really does not take into account the fact of offshore competition presently has a better corporate tax rate offshore. Being taxed differently but the same amount is pointless. We need to be taxed LESS.
You are patently WRONG on this point!
Under the FairTax, unlike the income tax, everyone would be able to save and invest with previously untaxed dollars. They would be able to gather in the profits from those investments without having to first consider the tax consequences as well.
For the first time in the lives of anyone living in the USA today we would be truly FREE!
but thanks to the fair tax scam’s rules (as written in HR 25 at http://www.thomas.gov ) if she does not go to the expense of producing an itemized reciept she will be a criminal. Of course according to the same section the CUSTOMER is also a criminal for not obtaining the reciept.
To reach the, yes, mythical 23% inclusive ‘Fair Tax’ rate, the average small business, which operates on a keystone profit scheme, would have to pay well over 18% of it’s gross sales in taxes. That means a small business that does $400,000 in sales would have to have to pay $72,000 in taxes on $200,000 gross profit.
It is a myth, even the people who originally implied that prices would remain the same after the imposition of FairTax have backed away from it.
Is there a percentage of a sale that could be tracked back to taxes? Yes. Is it significant? No more than the percentage charged by credit card companies to the business.
Would you mind telling us, with specificity, just how that would work?
>> Under the FairTax, unlike the income tax, everyone would be able to save and invest with previously untaxed dollars.
You’re being disingenuous.
I said it would screw retirees, as well as those who save so they can spend later.
Well, these poor folks were TAXED (highly!) when they EARNED the money.
And, they will be TAXED AGAIN at CONFISCATORY (30%) rates when they SPEND their hard-earned, and highly-taxed, money.
Tell me, how is that FAIR?
I’m afraid it is you who is patently wrong on this issue.
“...the Flat Tax has a long and successful history in a whole slew of countries.”
Which flat tax proposal do you support?
BTW, I support the FairTax over the flat tax because it addresses the broad range of economic challenges that this country faces far more effectively and comprehensively than the flat tax (or any other proposal).
1. the declining savings rate which is in negative territory
2. the massive trade deficit
3. the spiral of complexity and higher compliance costs
4. the SS and Medicare crisis
5. the federal budget deficit
Free from what? oldIRS vs NEW-IRS?
Free from book keeping? not according to HR25 which has the draconian registration and reporting requiremetns.
Free from lobbyists? not accordign to the K street lobbyists who will be marching to the Hill for all sorts of exemptions and from lobbyists.
Free from politics? not on you life as democrta demand a “living rebate check”.
Free from entitlement programs? not from the prebate/rebate entitlement program that dwarfs the wealfare and social security systsms. Especially around each election cycle. It will very well be the monthly living expense as social security has become from the socialist con job of FDR as a mere supplement for seniors.
The only Free will be trading the chains of the IRS slavery to the NewIRS slavery with new and improved draconian intrusivness and that fresh entitlement program scent.
As you have been told many many times already it isn’t just the taxes alone that get passed along but ALL the costs associated with those taxes as well. Every set of hands that touch the production of anything in this country today incurs those costs and they ALL wind up in the prices of goods and services sold at retail.
>> It taxed 1% of a person’s earnings on the first $20,000 and 7% above $500,000 when enacted in 1913. It was essentially a flat tax since so few people earned more than $20,000 and covered only .5% of the population
Huh? That isn’t “essentially” a flat tax. It “is” what it mathematically is! A PROGRESSIVE INCOME TAX.
Are you “fair tax” advocates addicted to dissembling? Must you shade the truth with every single point you try to make?
First of all I would like to know are we referring to Congresman Linder’s form of the tas. I asked him for a copy of his 65 page or longer bill and read most of it, so will list some of the things it proposes and some of the arguments for and against.
It suggests a 23% sales tax on all new items. There would be no tax on used items, presumably, old houses, cars, airplanes, clothes, furniture, etc. This would do a lot for recycling, and rehabilitation of run down neighborhoods.
It is suggested this would eliminate the IRS. However, a new sales tax office would be needed to collect the sales tax being paid for all new sales. Business people would have to file this information on a regular basis.
Some figure representing a percentage of the poverty level would be selected, and 23% of that figure would be paid to everyone each month as 1/12th of that poverty level figure. Thus poor people and all of us would get a guaranteed monthly payment. Enough to cover basic foodstuffs, rent, etc. A government agency would have to administer all this.
If people were not on the government radar, i.e., illegal immigrants, they would not get that monthly payment, but would have to pay the 23% on everything new they purchased.
There did not appear to be any mechanism for taxing money sent or taken out of the country, whether by illegal immigrants sending money back to their families, or by tourists and rich people taking money out of the country to travel, or purchase foreign cars, villas, yachts, artwork etc. Some countries have limits on how much money their citizens can take out of the country and they have to pay a tax on the excess amount. Perhaps the limit could be the same percentage of the poverty level used to send back to money to the people. Should this be taken under consideration?
What happens to purchases of life and health insurance, stocks, bonds, CD’s, and similar instruments? Are these considered new or used?
A fair tax or flat tax sounds nice and easy, but there are complications involved, and some beauracracy will still exist.
1. believe that taxing the creation of wealth is better for the economy than taxing the wealth when it is spent.
2. believe that returning peoples tax payments to them is welfare.
3. have no problem with a tax code that is wordier than the Bible.
4. believe the IRS is a good department and does a good job.
5. believe that the worst thing you could do is tax the wealth of old geezers who are living off of the sweat of the younger workforce.
6. love to tell everyone you see that the FairTax was created by Scientologists.
7. believe that what Bruce Bartlett says is the gospel and that scores of other credentialed economists are only paid shills.
8. have a habit of going to online chat rooms and posting insults about the Fairy Taxers.
9. think that calculating a tax the same way as the tax it is replacing is dishonest.
10. think the economy has always been fine under the income tax.
11. call the FairTax a cult because you cant think of anything else to say.
12. believe that cutting one tax by 25% and raising another by the same amount is inflationary.
13. think inflation is caused by high taxes.
14. think Milton Friedman is an idiot.
15. have a soft spot in your heart for European style VATs.
16. wrote the ten planks to the Communist Manifesto.
17. think the prebate is Marxist but not the Communist Manifesto.
18. sell some sort of tax advantaged product.
19. claim you clamor for tax reform but have no earthly idea how to do that.
20. ...howl in outrage when the BATF violates the 2nd Amendment but have no concerns when the IRS violates the 1st, 4th and 5th Amendments.
21. ...believe that having the bottom 50% of income earners pay little or nothing to the government has the best chance of limiting that government.
23. ...think that people give to charity just because there is an income tax.
Sorry but you are just WRONG!
I am one of those people who worked and saved for a lifetime and who is now retired. I and virtually everyone like me would be FAR better off under the FairTax!
What you are failing to realize is that every single one of those things you list IS happening to those folks today under the income tax!
“...embedded taxes are only 7% AT BEST.”
Correct me if I’m wrong, but any tax paid by a business is a cost of doing business, and must be recouped in the sales price of the service or merchandise. Payroll taxes alone are about 12%. So that’s the minimum amount that becomes embedded in the price.
Where on earth did you come up with 7% ???? The Social Security tax alone is more than that!
Taxes are also largely about control.
To most Dems (and a fair number of Pubbies) a tax structure with a higher revenue generation but low control is less desirable than one with a lower revenue generation, but more control.
That’s how I see it anyway.
The "central government" writes the laws on how much to tax and when. The "central government" enforces the collection of the tax. The "central government" taxes the rich and redistributes the wealth.
It sure sounds like the "central government" is in pretty firm control.
Gosh, I'm told my car is warming the planet, loads of times. Guess I should believe them too. Or all we have to do is hug those suicide bombers and they'll understand us. Or that the tooth fairy will be by with some coins for my pillow.
Tell me whatever you want; would be nice if you'd offer some form of reasonable evidence to support your conclusion. Because no economist anymore will stand up and continue this fiction. This is a thoughtful forum, where people actually communicate, not dictate 'you will think this way.' I challenge your conclusion - mine's easy to prove or disprove - there are well over 22 million small businesses across this nation, you can walk into any of them and talk to the owner, tell them how you're curious about this new fair tax thing, and get some rough numbers from them.
Almost every large corporation has publicly published gross sales, gross profit, net profit and gross taxes numbers that you can download from almost any financial site and go over yourself. Do not come up with the fiction that paperwork costs will be eliminated - there is a higher paperwork requirement in the FairTax plan, affecting tens of millions of people who will go from filing a yearly return to a monthly return.
We live in a very interesting time - the number of steps between the retailer and the factory floor is at an all-time low. It is why we, as an economy, are so efficient, vs most other nations. Enough with the propaganda.
“Thus, it’s remarkable that so many Democrats, with the exception of presidential candidate Mike Gravel, oppose the FairTax”
Not really. The FT significantly reduces the control of the masses to which the DhimmiRats incessantly aspire.
No...no surprise that they don’t support the FT.
And, the plane analogy seriously misspeaks the FT plan. This author needs to get the facts straight before spewing more incorrect information. We have enough of an uphill battle with the FT, without idiots like this adding to the burden.