Posted on 01/31/2008 4:03:19 AM PST by Man50D
Take a closer look and tell me again that government purchases should be tax exempt.
Sorry. I don’t see your point. please explain.
What is the point of collecting federal taxes on federal purchases, only to sent that exact amount right back to the Feds?
Do you think the trends represented there are a good thing or a bad one?
Would making government purchases tax exempt speed up or slow down the trends depicted?
Whatever point I thought I might have been making, this morning, was not well thought-out. Possibly I was thinking that if we know where they are at, why are they still here? But that would be a stupid thought also. When even the President does not care, who is going to?
First, I don’t think anything short of castration would stop Congressional spending. Sales taxes or no sales tax, they are gonna spend like drunks because they believe it will benefit their constituencies & get them elected.
Second, under the FT, products & services are cheaper across the board, because businesses no longer pay income taxes, so even if the Feds charge themselves a sales tax, it costs them nothing & the goods & services are still cheaper. If this windfall prompts the gov’t to spend even more money, you can hardly blame a taxation system for this.
Congressional spending has no relation to HOW the gov’t is financed.
I think you are dead wrong about this idea of de facto amnesty via the fair tax.
“The Fair Tax will substantially reduce illegal’s reason for staying in the U.S. since it will no longer encourage them to earn an income as the tax burden will shift from income to consumption. They will pay more in taxes with The Fair Tax than the income tax giving them more motivation to leave the country.”
Well stated, Man50, but I think we can make an even stronger case for the FT than that. Under the current system, illegals pay imbedded taxes via their spending (as do all of us), but many do not pay payroll and income taxes. IOW, they enjoy a preferential position in terms of our tax system. Under the FT, they would pay their federal taxes at the check-out counter (as would the rest of us), but they would not be eligible for the rebate. Therefore, their effective tax rate would be higher than legal residents.
Illegals would move from a tax preferenced position to a tax disadvantaged position under the FT.
“Why does the FT contain such a bureaucratic pig as the prebate, when sales tax exemptions are far easier to administer, & common sense tells everyone they are fair because they apply to everyone equally?”
If sales tax exemptions are so easy and straightforward, why is it that of the 45 states (+/-) that have sales taxes, no two of them have the same set of exemptions?
I think that is a stretch. We will not confer citizenship on visitors by taxing them, so why would we confer citizenship on illegal aliens by taxing them?
Under the Fair Tax, illegal aliens are treated exactly as visitors from another country.
It might morph into a wealth redistribution system. As written, it is nothing of the sort.
Under the current system, we give select groups “refundable credits” against tax never paid. If anything, your criticism should be levied against the current monstrosity, not the Fair Tax.
What “MIGHT” happen is irrelevant to the discussion. We MIGHT find out the moon is made of green cheese. Does that mean the Fair Tax, as written, is unworthy of consideration?
Why does the Fair Tax have a prebate?
Well, that was my first thought too. Why not simply exempt necessities? There are several reasons the bill was structured this way:
1. The Fair Tax taxes EVERYTHING, exempts NOTHING. That removes the influence of lobbyists on the system. Since there are no exemptions, there will be no reasons for lobbyists to troll the halls of congress with suitcases full of campaign cash.
2. The Prebate effectively exempts a specified level of spending per individual. This gives the individual the greatest personal freedom in selecting his or her market basket of essentials. Stated differently, my market basket of “essentials” is probably not the same as your market basket of “essentials.” If the government controls what is or is not an “essential” one or both of us will probably have to modify our choices to that which the government deems an essential——Hamburger vs. Hot Dog, Fresh Green Beans vs. Canned, low-fat “X” vs. Full Fat “X”, etc. Allowing the government to choose the “essentials” would create a huge opportunity for guiding and directing us to choices they deem worthy. NO THANKS. If I want butter on my table instead of margarine, I should be able to buy butter tax free.
3. Exempting “necessities” will reduce the tax base and drive up the rate. Allowing individuals to choose allows the base to remain as broad as possible, thereby keeping the rate as low as possible.
Hope that helps to clarify why the prebate method was chosen over the exemption method.
Just because the FT and a VAT CAN be calculated as a percentage of price does not make them equivalent in economic consequence or administration or enforcement.
The Fair Tax IS NOT as VAT in that it is not, repeat NOT levied at each stage of production. It is levied at the point of final sale. The organizations charged with collection are the retail sellers, not the producers.
The Fair Tax is similar to the VAT in economic consequence. It is eligible for full border-adjustment, as is the VAT.
Allow me to interject, if I may.....
The Fair Tax taxes government purchases to put them on an equal footing with the private sector.
And with respect to controlling spending:
Unless and until EVERY AMERICAN has a personal, vested, visible, pecuniary interest in the cost of government, the spending will continue unabated.
The low income people erroneously believe they pay no tax, so they logically call for another government program to solve their woe of the day. Unless and until this segment of the population sees and feels the pain of the tax system, they will continue to call for more spending.
Changing the way we collect revenue is ESSENTIAL.
Thank you!
That is the entire point that I have been trying to make throughout this exercise!
This is the only important point. The Fair Tax and the VAT are equivalent for all intents and purposes to the average person.
The other important point is that our manufacturing sector will not be burdened. THAT IS CRITICAL.
But they are NOT equivalent in efficiency.
The FairTax is FAR superior in that regard.
I don’t see that. The Feds know that any FT they pay on a purchase comes right back to them, so there is no equal footing. It is just an accounting entry for both the seller & the buyer. And why the need for equal footing, anyway?
“Changing the way we collect revenue is ESSENTIAL.”
I totally agree, but combining welfare with tax collection does not sit right with me. If the gov’t wants to send poor people money, let that be another program, & forget the idea of putting the entire population on the dole every month. The prebate really has NOTHING to do with tax collection. I really like a retail sales tax, exemptions or not. But I will never support the prebate, a casino owner’s dream come true.
And do you really think the pols are gonna allow sales taxes on baby formula, medicine, ....... & 100 other items that would be “cruel” to tax. Oh, they may start out with no exemptions, but when Kerry, Kennedy, Reid, & Co. weep uncontrollably on the Senate Floor while telling the story (with video) of some poor cripple child who can’t afford a Hover-round because of the 30% Federal Fair Tax, you can be sure wheelchairs+ will be exempt. Better to specify a humane set of exemptions from the beginning, & fight hard to minimize amendments.
I counted 26 states + DC that don’t tax food here:
http://www.taxadmin.org/fta/rate/sales.html
Looking at this list, I don’t see any states with exemptions that are bankrupt or have people agitated over sales tax exemptions - some are quite wealthy states. I’m gonna guess that no state with a sales tax but no exemptions sends a prebate check to every one of its citizens. Wonder why?
Couple things.....the Federal Government currently pays FICA tax on their employees. That’s government taxing itself. The Fair Tax is no different in that respect. Without the “equal footing” the government will become the preferred provider of everything.
The Fair Tax will NEVER pass without the prebate. That portion of the law makes the tax rates truly progressive. The Democrats will never pass a regressive tax “against the poor.” Can’t you just hear the demoguery and the wailing and the rending of garments? I don’t like it, but I realize that without it, the FT stands ZERO chance.
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