Skip to comments.Flat Is the New Fair
Posted on 09/30/2011 5:41:07 AM PDT by New Jersey Realist
'Suddenly, liberal Democrats are making the same argument about the tax code that I've been making for 20 years," laughs former Republican House Majority Leader Dick Armey. "Welcome to the party." Mr. Armey, who along with Steve Forbes has been the torch bearer for the flat tax since the early 1990s, believes that the latest applause line from President Obama that "billionaires should pay the same tax rate as janitors" may be the political gateway to sweeping tax reform.
Mr. Forbes sees an opening here too and says: "The flat tax is the perfect issue for these times. It fixes the economy and doesn't cost a dime." He's right. It's the teed-up GOP response to a jobless recovery and the near-universal sentiment among voters that the tax code is corrupt beyond repair.
That case is inadvertently helped as Mr. Obama and his new best friend, billionaire Warren Buffett, barnstorm the country trashing the tax system for, as the Oracle of Omaha puts it, "coddling the super rich." In truth, the system isn't nearly as skewed in favor of those at the top of the income pyramid as they allege: Today the top 1% pay 38% of the income tax. But in Washington, perception drives policy. The virtue of a flat tax with no deductions is that it provides an ironclad guarantee that the rich pay no lower a tax rate than janitors and secretaries.
(Excerpt) Read more at online.wsj.com ...
Yea! That’s what I prefer, the flat tax.
Or a combination thereof....Herman Cain’s 9/9/9 idea is interesting.
All the more reason for Obama to hate it.
Russia has apparently done pretty well with a flat tax, from what I’ve read.
What I do know is this: Our current tax system is corrupt, unfair, and extremely destructive to our nation and our society. The current people in Washington, and CPAs across the nation, feed and nurture this true crisis.
Change is imperative.
I know I can't count on the current corrupt politician to make a good determination as to flat, fair, or whatever. The only thing I can do it support total regime change in Washington, and hope for leaders who care about the future of our nation.
But, do I pay the same tax rate since I'm jewish? Or, would that only be the case if I was a jewish janitor?
While I prefer a flat tax, I never confuse how taxes are collected with how much taxes are collected. We still have a huge overspending problem that needs fixing.
How about we cut government down to its constitutional size and, therefore, cut spending. Conservatives seem to be so dedicated to finding more efficient ways to fund the monstrous leviathan that is destroying us. My favorite is conservatives boasting that a tax cut will bring in more money. As if that’s a good thing. How about a tax cut that will bring in less money and starve the beast?
With about 50% of wage earners paying no tax, and some even getting a refund beyond what goes in, this idea is DOA, never going to happen.
The best we can hope for is a complete change to the fair tax or something very similar and an abolishment of the income tax by C amendment.
With all the money on K street in DC, any change that affects the livelyhood of those parasites may take an a bomb to actually change.
Speaking of Potomac City, recently went through that area and one would not know there is a serious recession in the country and very little construction in the outlying 57 er 50 states. That group is so insulated against any change to make them desire NONE. Very similar to Moscow under the commies when ordinary Russians could not even visit without special papers...sad. We have the best government that money can buy, even as we borrow the payment.
My husband and I agree. That flat tax is the way to go.
Most are missing the point of what is going on, it is not about taxes, not about which party is in control...it was all explained in this speech in a movie, Network...Ned Beatty is the speaker:
“...You have meddled with the primal forces of nature, Mr. Beale, and I won’t have it!! Is that clear?! You think you’ve merely stopped a business deal. That is not the case. The Arabs have taken billions of dollars out of this country, and now they must put it back! It is ebb and flow, tidal gravity! It is ecological balance!
You are an old man who thinks in terms of nations and peoples. There are no nations. There are no peoples. There are no Russians. There are no Arabs. There are no third worlds. There is no West. There is only one holistic system of systems, one vast and immane, interwoven, interacting, multivariate, multinational dominion of dollars. Petro-dollars, electro-dollars, multi-dollars, reichmarks, rins, rubles, pounds, and shekels.
It is the international system of currency which determines the totality of life on this planet. That is the natural order of things today. That is the atomic and subatomic and galactic structure of things today! And YOU have meddled with the primal forces of nature....!
....You get up on your little twenty-one inch screen and howl about America and democracy. There is no America. There is no democracy. There is only IBM and ITT and AT&T and DuPont, Dow, Union Carbide, and Exxon. Those are the nations of the world today.
What do you think the Russians talk about in their councils of state — Karl Marx? They get out their linear programming charts, statistical decision theories, minimax solutions, and compute the price-cost probabilities of their transactions and investments, just like we do.
We no longer live in a world of nations and ideologies, Mr. Beale. The world is a college of corporations, inexorably determined by the immutable bylaws of business. The world is a business, Mr. Beale. It has been since man crawled out of the slime. And our children will live, Mr. Beale, to see that perfect world in which there’s no war or famine, oppression or brutality — one vast and ecumenical holding company, for whom all men will work to serve a common profit, in which all men will hold a share of stock, all necessities provided, all anxieties tranquilized, all boredom amused.”
And now we have the chairman of the board, our distinguished Leader to bring us there.
I’m against a national sales tax and if you think that 50% won’t pay a flat tax, then what makes you think they would pay on fair tax? The gov’t would issue them a tax exempt card.
Sorry, I won’t be sold on the fair tax.
The main reason I could support the fair tax or 9/9/9 is that it brings in the illegals who skirt the system entirely now. (As long as the current tax code is abolished.)
Flat is fair except that the tax should not be on income but consumption instead!
You misread my post...I use the 50% stat to show this will never get a majority vote in any Congress...why vote to tax yourself??
As far as avoiding the sales tax, exactly how does one do that besides bartering? Since barter is going on now, nothing lost IMO.
I like the idea of no tax on income...the fair tax does away with the FICA taxes entirely...if you think the general fund is not going to be used to fund SS and Medicare anyway in the near future, think again.
Right now we pay an effective 18-19% income rate on our joint income after the approximate 15% FICA taxes (yes the employers portion is actually paid on our earnings)....so, an approximate 15% or even 20% fair tax does not bother me a bit especially considering we get a prebate each month too.
THE reason any politician would oppose tax reform is that
1) it takes power away from the politicians so that they cannot manipulate it to favor or punish groups or individuals
2) taxes become more transparent so that your average joe actually sees how much they are taking from him.
Sales taxes are only on new items, not on used items.
I prefer the fair tax.
With the fair tax, you snag people like drug dealers, prostitutes, and people who otherwise wouldn’t pay taxes.
You also reward savers, as money that’s saved and/or invested isn’t taxed unless you spend it.
Let’s say that i earn and want to invest $20,000 with the flat tax. If the tax is 10%, then I can only invest $18,000.
With the Fair tax, I can invest all $20,000.
I get to make money (interest/dividends) off that $2,000 for my retirement. When I spend it, I may spend part of it on things like my car insurance, phone bill, electric bill... things that aren’t taxed at all with the fair tax.
Consumption tax is a much better model than any sort of income tax. The notion that the government is entitled to some portion of my inocme is simply wrong.
If you are talking about a flat rate INCOME tax then I must respectfully disagree as that would retain the IRS and continue to allow government bureaucrats to define just what is, or is not, "income". Beyond that we have already been there and done that several times over the last one hundred years and we have what we have today.
Further, taxing income is taxing on exactly the WRONG end of the spectrum! We should be taxed on what we consume and NOT what we produce!
Bottom line is that the income tax is a SLAVE tax that comes to us straight out of the Communist Manifesto (second section toward the end) and is unworthy of ANY people who would call themselves FREE!
The REAL answer is here.
“This is the right way to go.”
No, it’s not. The USA has had five (5) flat INCOME taxes since 1861 and each time it grows back into a mess. Check the history for yourself.
The INCOME tax is like a cancer. You can make it ‘flat’ and it will spread and metastasize. Each new session of Congress thinks to tinker with the INCOME tax code and pats themselves on the back for fixing the tax problem when in actuality they are butcher like amateur surgeons who cut out a tumor leaving thousands of cancer cells behind to kill the patient later.
Pass a flat tax now and come back in 10 years to see the middle class is once again in pain from having their deductions cut, from having their tax rates go up, from the rich and wealthy finding clever ways to get their income classified as nontaxable or defined not as ‘income’.
Since 1913 there have been five major tax reforms, each reform making the tax code simpler and ‘flatter’, only to see such reforms undone by tax code amendments within 10 years or less.
Since the last major tax reform in 1986, there have been more than 20,000 amendments to the tax code and a quadrupling of tax lobbyists inside the Beltway.
The real lasting tax reform that is in line with the Founder’s original intent is here:
Study Study Study and ask questions.
U R absolutely right! Let me use your post as a vehicle to comment on the flat vs fair tax
The “Flat” tax is just a smaller version of the income tax. Can you imagine the debate over what to leave in or out of the new flat tax? Can you imagine the compromise? The bi- partisan bill that we will get stuck with?
That is just the beginning. Every congressional session after that, tax after tax will be added back to the tax code. Can you imagine the back door deals? I'll give you this tax if you give me this. Having all these taxes to put back in, is like dangling crack in front of an addict.
How long will it take until we are right back where we are today? NOT LONG!
That is why the “flat” tax is a terrible idea. It has a nice name, it “sounds” good, it sounds easy, but it is not the answer. The current tax code needs to be DESTROYED once and forever. The “FAIR” tax does just this. It REPEALS, let me say that again, REPEALS the income tax. No tweeking, no tinkering around the edges.
The FAIR tax “abolishes all federal personal and corporate income taxes, gift, estate, capital gains, alternative minimum, Social Security, Medicare, and self-employment taxes and replaces them with one simple, visible, federal retail sales tax administered primarily by existing state sales tax authorities.
This is HUGH!~ It replaces ALL these taxes, not JUST the income tax. DID YOU KNOW THAT? Does the “flat” tax do that?
Enables workers to keep their entire paychecks
Enables retirees to keep their entire pensions
Refunds in advance the tax on purchases of basic necessities
Allows American products to compete fairly
Brings transparency and accountability to tax policy
Ensures Social Security and Medicare funding
Closes all loopholes and brings fairness to taxation
Abolishes the IRS “
Look at your paycheck stub, get one out right now we'll wait. Now see that great big number on your check that you usually ignore? The one that might say “gross” or “total wages” THAT IS HOW MUCH YOU TYPICALLY WILL GET under the FAIT tax. That's right, you get it ALL, to spend as YOU want to.
Oh, also you will get a monthly “prebate” check so that lower income earners still pay less tax, or no tax. To you, the check may be a new lawn mower, to others it could be rent or groceries. You decide. (MONTHLY, remember, like twelve per year).
Now let's say congress wants to raise your taxes. Like make the 23%, let's say to 25%. Simple to understand? Can you imagine the public uproar?
Educate yourselves on the FAIR TAX. Just say “NO” to the flat tax.
By the way, Cain's 999 idea is no good. It keeps the income tax. This won't work. THE INCOME TAX MUST BE REPEALED. Nothing less will do.
Agreed. Make the tax the bluntest instrument possible: a simple rate structure spread over a very wide base with very limited exemptions. Lock that in via Amendment so future politicians can’t change the game easily.
Flat would be an improvement, but it preserves the IRS, which is a costly, intrusive and unconstitutional horror.
The beauties of the Fair tax include its simplicity and its natural tendency to encourage saving and investment. But the biggest beauties in the FairTax legislation as Linder crafted it was the elimination of the 16th Amendment (which was adopted under sketchy circumstances at best) and the axing of the IRS in its entirety.
I wish the Fair Tax had more support.
The Fairtax has more support, both in Washington and with the public, than ALL other tax reform proposals combined!
1) A rate of 23% seems awful high to me as a sales tax, and who's to say that rate can't increase in the future?
2) What happens in states that already have a sales tax, like in MA?
Red Sea Pedestrian custodians pay double! Read the fine print!
Every FREEDOM loving American should both do an on line search on the name Beardsley Ruml and find out for yourselves who he was. Then read the article at the link below where he explains what taxes are REALLY for in today’s America.
Obama’s flat tax... everyone sends in 70% of gross income...
You must remember that the fairtax replaces not only the personal income tax but social security and medicare payroll taxes as well.(The Corporate income tax and the inheritance tax go away as well.) You really should, in the privacy of your own home, play around with the Fairtax Calculator and see for yourself how you would fare under the fairtax.
As to the second part of this question, YOU and hundreds of millions of other taxpayers would see that the rate was not increased unnecessarily! Remember that today, under the income tax system, more than half of the public perceives that they pay no income tax and thus do not care what the rate is! Secondly these millionaires and billionaires the Obozo keeps talking about in reality pay very little income tax because they have arranged their affairs in such a way that allows them to live VERY well and consume like crazy while having very little in the way of "income". ALL of that would change overnight with the fairtax in place.
2) What happens in states that already have a sales tax, like in MA?
Fairtax has actually done a study on this and found that in Texas, which does not have a state income tax and everything is paid for with via property taxes and our state sales tax, we could do away will ALL state and local property taxes and lower the current state wide sales tax rate of 6.25% to a little less than 4% and raise the same amount of revenue with the sales tax alone simply by conforming our sales tax base to the Fairtax base! There are other benefits for states as well! You should take the time to read What's in it for the States.
The larger problem is not tax collection. The greater problem is spending. Until spending gets back under tax revenue, we are still borrowing money and that has to stop.
You say that you would have the full $20,000 to spend and that is true but it is not the full picture.
Even if the tax rate is the same between fair and flat tax(10% in your example), you end up with the same amount of goods. Under the fair tax, everything AND I MEAN EVERYTHING, would cost 10% above the cost of the goods - that is the tax burden. So the net effect is that the first $2,000 would go to taxes and $18,000 would go towards “goods”.
Thus, you end up with the same amount of goods. This is true if you buy products, commodities, even stocks and bonds. So your investment ends up being the same -UNLESS- you start allowing tax exempt status for some products. And once you do that, the fair tax is no longer fair.
Same tax, different side of the equation. The only way to make this difference to weigh heavily in the favor of fair tax would be not not tax interest earned on bank accounts, investment dividends, bond interest, etc. Then you would have a significant tilt towards fair tax.
With the Fair Tax, everything is not taxed. Your utility bills are not taxed. I don’t believe that college tuition is taxed. Used items are not taxed.
And my point was that $20,000 was my estimated *investments*, not money I plan to spend. The Fair Tax rewards savers.
So I get to earn money in my IRA or 401K off that $2000 before I spend a dime of it. When I do spend it, a large portion of what I spend will go to non-taxable things.
This increases the motivation to invest. More money goes into business development. The stock market goes up. Boomers can afford to retire. This *quickly* paves the way for the next two generations to catch fire in the workforce.
Now what to you say about the point that the Fair tax captures tax-dodgers (illegal immigrants, drug dealers, prostitutes, etc) where the Flat tax does not?
I’m for anything that makes *everyone* pay. Cheaters don’t get to dodge out.
Anything that will greatly simplify the tax code I am for.
Anything that will simplify and shrink government I am for.
Anything that makes it impossible for some hell bent marxist radical commie to manipulate and fundementally change our system against the people’s will I am for.
Anything that restores our Constitutional Republic to its former glory I am for.
Anything that restores basic common sense and values I am for.
Individual Income Tax
For a natural person or Subchapter S corporation a rate of: 10% on all income, however derived; no deductions
Corporate Income Tax
For a C corporation not paying dividends a rate of: 15% on all income, however derived; no deductions
For C corporation paying dividends a rate of: 0% (Dividends paid out are income to individuals or other corporations.)
Tariffs on Imported Goods
For Most Favored Nation, a rate of: 5% on all types (currently averaging 2.5%) For all other imports a rate of: 15%
Note: This does not solve the problem of inflation and capital gains, but this is just a tax proposal thread, so debating the gold standard isn't appropriate here. Also, this does not bring in quite the same amount as the 9-9-9 Plan, but we need to reduce what we spend, anyway.
The existing income tax causes prices to be higher in consumer goods and services by an average 22%. This is called embedded tax effects which we don’t see.
What the FairTax does is to say stop taxing everything in the production and service chains and everywhere in the middle and take all the taxation down to the end of the line at the consumer level; Shunt all the tax crap right down to the retail end. Voila 23%!
Problem is people will then SEE what the hell they’ve been paying.
But because it is transparent, every year Congress must vote on the Tax Rate and people will be watching what they do.
As it stands now it’s all smoke and mirrors.
I support the Fair Tax PROVIDED it is instituted by ONE amendment that SIMULTANEOUSLY (1) repeals the 16th amendment income tax, (2) intiates a national sales tax, and (3) prevents any other income tax being instituted by legislation
Otherwise, we are simply instituting another form of taxation, the sales tax, and trusting politicians to eventually get around to ridding us of income taxes.
I do not trust politicians.
Really? You actually believe that?
With the fair tax, you snag people like drug dealers, prostitutes, and people who otherwise wouldnt pay taxes.
Riddle me this:
A drug dealer and a prostitute, right? That's who you're going to collect taxes on. They avoid the income tax because they don't report their illicit income (from illicit sales of goods and services).
Do you honestly believe that the drug dealer and the prostitute will report their sales of taxable goods and services, and will collect and remit the fair tax on their sales? Do you think the drug dealer is saying, "The reason I don't report my illegal income on my yearly tax return is because I disagree with the income tax. I'll be happy to collect sales tax on my sales and send in a monthly report of my taxable sales, along with the sales tax that I collect." Do you expect me to believe that.
Black market transactions are untaxed. That's part of the definition of "black market." Drug dealers don't pay income taxes, and they don't collect and remit sales taxes. Prostitutes don't pay income taxes, and they won't collect and remit sales taxes for their services. The same transactions where taxes are evaded under the income tax will have taxes evaded under the so called "Fair Tax."
As for when they spend their money, right now, Drug dealers and prostitutes pay "embedded taxes" in the price of everything they buy. The price of everything includes the income taxes of everyone who is in the chain that brings that prodcut to market. The store pays income taxes on its profits, the wholesaler pays taxes on its profits. The manufacturer pays taxes on its profits, the raw materials suppliers pay taxes on their profits.
When you misrepresent your plan with ficticious advantages, one looks closer at the rest of the plan. The FairTax has some very nice points. I like some of the ideas. But the actual bill that implements it is scary when you read it. There's some really bad stuff in their plan as well.
If they buy anything new, they’ll be taxed, just like the rest of us.
If they don’t, they won’t be taxed, just like the rest of us.
The proposed 23% inclusive tax is really a 30% sales tax. Not the 10% that we used in our example.
The FairTax proposal assumes a 100 percent tax base on consumption. By way of contrast, most states that have sales taxes have roughly a 50 percent tax base. With the FairTaxs 100 percent base, consumers would pay taxes on a great many things that may not intuitively seem like consumption. The list would include:
Purchases of new homes
Interest on credit cards, mortgages and car loans
Gasoline (30 percent in addition to current taxes, which would not be repealed)
Further, it will have very little impact on tax cheaters. These so called cheaters are already paying sales tax when they purchase goods. Since the consumption is on new items, many will avoid the new tax by simply buying used products.
Further, it does not address the REAL problem of SPENDING. Congress can still and would continue to borrow more money to pay for more spending. There is no “starve the beast” with the fair tax.
Lastly, the rebate under the fair tax is under the control of Congress ... so you could very well end up in the exact same situation that we are in now with 45% of Americans paying no taxes at all. The only difference being that instead of tax deductions and credits, the taxes paid at time of sale are returned via the rebate.
The fair tax is not some great fix. It is just another means of collecting taxes that sounds good but in the final analysis it will end up being the same taxes collected, on the same people, for higher amounts, different name.
FYI the 9-9-9 Plan is now the first step in a two phased transition to the fair tax, according the Cain’s updated plan on his website. I do not support the 9-9-9 plan, but can support it as a transitionary step (though would prefer we jump straight to a FairTax). Taxing labor/income is an abomination.
(I am for the Fair Tax over an income tax.)
You’re post is spot on, K want to reiterate this point:
“Problem is people will then SEE what the hell theyve been paying.”
The payroll tax is perhaps the largest and most cunning fleecing of a population in the history of the world. Trillions stolen before anyone ever even sees their money. If people had their money and then had to part with it (rather than being stolen before they ever saw it), they would be up in arms.
our current system started out as a flat tax...
the fair tax is the way to go.
a tax on income is evil and controlled by malcontents.
consumption gets the money out of politics.
And under today's system, when they buy anything, they pay "embedded taxes," just like the rest of us.
If they buy anything new, theyll be taxed, just like the rest of us.
If they dont, they wont be taxed, just like the rest of us.
As I said above, the "black market" or "underground economy" always is untaxed. That's a major part of what "underground economy" and "black market" mean.
Have at it!
We all know the FairTax is the answer.
Let’s convince some more naysayers that the FairTax really is the answer.