Skip to comments.FairTax / flat tax debate, Northfield, MN
Posted on 04/03/2008 12:03:31 PM PDT by Man50D
St Olaf's College, Northfield, MN
A debate will be held in Buntrock Hall, St Olaf's College, Northfield, MN at 8:00 PM, Thursday April 10th. The event is sponsored by the St Olaf College Republicans, but it is open to all interested parties regardless of political affiliation. David Strom, a graduate and professor at neighboring Carlton College will argue for the flat tax. Mr Strom is now President of THE FAIR MARKET INSTITUTE after a term as President of THE MN TAXPAYERS LEAGUE. He can be heard weekly on The Patriot, radio station 1280 AM, Saturdays from 9:00 am to 11:00 am. Dennis Madden will argue for the FAIR TAX. Dennis is the volunteer State Director for MN 4 FAIR TAX, an arm of AMERICANS FOR FAIR TAXATION, the grassroots organization working for the passage of HR 25 and S 1025, THE FAIR TAX ACT of 2007.
Date: Thursday, April 10, 2008
Time: 8:00 PM
Fair Tax ping!
I’ll take a flat tax please, with a side of fries.
With all due respect, its a waste of time.
St. Olaf is so ignorantly liberal. Save the effort for an audience that counts.
Using the effective tax rates provided at fairtax.org and comparing them to the effective tax rates under the current tax code, you’ll find that the fair tax is not anywhere close to as flat of a tax as the current tax code.
It sure is growing, just not at socialist St. Olaf.
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almost all workers find it hard to get over that 2% misc deduction....yet business men can routinely write off lunches, and drinks, and sporting events, and golf outings, etc etc...
the most egregious to me is the frequent flier miles/hotels that business men accrue.....the business pays for all of their out of town expenses and their flights, yet the business man gets to get all those free rides and hotel stays for him and his family....THAT should be absolutely taxed as income.....as should all the other freebies...
Maybe the St. Olaf Republicans should get together with the Carleton Republicans and the Macalester Republicans and they can form a baskeball team.
I wonder if Minnesotans for Glabal Warming will be there too...
this is why one ought to be a producer rather than a consumer...set up your own business and claim these same tax breaks! Anyone can do it with enough motivation...
“I don’t know about the “fair” tax......I do think that the current tax system favors certain groups....”
No doubt about that.
I think a better solution would be to just simplify the current code. Remove deductions and lower listed rates... it would be far less disruptive to the economy. I think people underestimate the broad effect a quick (less than 10 years) and massive change to the tax code would have.
They might get a full roster, but I’m not sure they’d be tall enough.
“Have you bothered to look at the 2007 1040 booklet? The 2007 tax table is 12 pages long! People only pay one rate at the cash register for The Fair Tax.”
The 2007 tax table can be summarized in just a few lines (see p.87 of the 1040 instruction book). The table is 12 pages long because too many fools can’t do basic math.
But that doesn’t address the “flatness” of the tax. The length or brevity of a tax table has no direct relationship to the flatness of the tax structure.
What is the challenge is the amount of legislation and departments that will need to change in relation to the Fair tax. Many of these departments and legislation fall under different governmental jurisdictions and would each require separate legal addressing. Of course, you then would run into situations known as Decree nisi where one law cannot be changed until another is fully changed and implemented. In many cases, you could have a circular decree nisi situation in regards to legal oversight of existing departments versus new ones created to oversee change (you can't implement X until you have a department to enforce it, and you can't create the department until you implement X..)
I asked a fair tax 'evangelist' who actually was pretty keen on tax law and worked for a congressman. He estimated that, in reality, it could take almost a decade to properly change all the laws and departments needed.
In other words, the reality isn't about the support side, it is about the actual changes needed to implement it.
I'm not saying the fair tax is all bad, just saying the flat could be implemented in a shorter time and a long term plan for converting to a fair tax could be developed and run.
I dunno, I went to Macalester and I’m 6’6”...I’m not sure what the selection is like these days.
Correction six rates. I left out 10%.
Don’t forget 0%
“You just refuted your own argument”
No, I didn’t.
My argument is that the current tax structure is actually FLATTER than the fair tax, using fairtax.org’s own data.
The complexity / length of a table has little to do with the flatness of the tax.
You’re pointing to a table that is 12 pages long as your proof. But that 12 page table can be summarized in less than one, IF you have the capability to do math.
But here’s the thing you’re missing: because of the “prebate” scheme, the actual effective tax rates people would pay would vary dramatically. Those below the poverty level would pay a distinctly different effective % of their income than someone well over the poverty level. In fact, they would receive (pay negative taxes) a significantly higher amount than they currently receive. It’s in fairtax.org’s own arguments!
Again - the length / complexity of a tax table has very little to nothing to do with the flatness of the tax structure.
If you want a flatter tax structure, the fair tax is a step in the wrong direction.
Think of complexity v flatness this way:
Option 1: 25% sales tax with a prebate for $20k in expenditures
a) Household in the lowest quintile earns an annual income of $15,900 pretax currently. If they spend it all, they pay $3975 in taxes, but get a prebate for $5000, so they pay an effective tax rate of -6.4%
b) Household in the middle quintile earns an annual income of $58500 pretax currently. If they spend it all, that’s $14625 in tax, with a prebate for $5000, for an effective rate of 16.5%
c) Household in the highest quintile earns an annual average of $231,300 pretax currently. If they spend all of it, they’ll get an effective rate of 22.8%. If they spend half of it, they see an effective rate of 10.3%
Option 2: The current tax structure.
case a) pays an average of 4.3% instead of -6.4%
case b) pays an average of 14.2% instead of 16.5%
case c) pays an average of 25.5% instead of 22.8% (10.3% if they only spend half)
Do you see? The fair tax has a simpler sounding structure, but it doesn’t result in flatter effective tax rates.
just wait till you find out about the monthly entitlement check mailed to every adult. (just wait for K street lobbyists to get a hold of clients who want exemptions, just wait for Robert Reich to start demanding a “living rebate” every month.)
Just wait till you find out about the mandatory federal registration.
it is all available without any propaganda for your dining and dancing pleasure at http://www.thomas.gov under the searh term “fair tax” or “HR 25”
actually if those frequent flyer miles are taxable and in fact they are assets in divorce proceedings assuming the lawyer is savy enough to take a look. In defense of those who do the actual traveling, those miles are often a reward for picking and PUTTIN UP with the aggrivation of a particular airline.
There are Republicans at St. Olaf??!! Perhaps there is yet hope.
You can bet it will be the 35% rate. The poor and the elderly will have their entire income taxed. The wealthy will have their villas off shore and pay no tax on what they spend. If you have saved, after tax money, When you spend that money it will be taxed again at 35%. NO THANKS
We’re wasting our time....
fairtax supporters are completely delusional....
And you have just suggested even more complexity to a horrid system.
I have been working on my personal taxes since mid-December, when I tried to guess what the rules would be to avoid the alternate minimum tax. (Congress passed the law in late Dec.) I learned about recapturing ordinary income on stock I acquired from my employer at a reduced price 20 years ago, and dug up dusty records to obtain the required data. I bared my financial and philosophical soul, telling the government where I got my income, how much it was and to whom I donated money. I paid taxes on inflation (sometimes know as capital gains). Stock I had held for twenty years tripled in price. How much of that was a real increase in purchasing power and how much was inflation? It doesn't matter, I paid tax on the entire gain. I have no idea how my depreciation is calculated, I just let the (not free) software do it.
I don't think I am alone in spending hours and days dealing with subtle intricacies of the tax code (sometimes correctly). Please don't tell us how to tweak and further complicate the current system. Let's ditch it and start over.
Technically, those frequent flier miles, and any other business assets that are used for personal, non-business purposes are taxable income. Often, however, the problem is in determining exactly how much is personal vs. business, and in interpreting complex, confusing regulations. Often, the final determination depends on peoples intent, and that opens the door to abuse. The FairTax would eliminate much of this awful situation.
actually the fair tax would do no such thing. There is a “computation of value” that OldIRS does which NewIRS will do.
Divorce Judges have been doing the calculation for decades. The fact is the FairTaxSCAMMERS have a very poorly thought out scam which has been shown as a failure in the past on similar schemes.
It is EASY to legally avoid consumption taxes. In 1991 it killed the luxury goods manufacturing in the USA. Now with the internet in 2008 it is easy to see in the “no shipping, no sales tax” to neutralize this sales tax with entitlement program.
I am curious. What failures? When, where, and under what conditions?
there are more than enough exampls on these fair tax scam threads.
any time you tax items which can be purchased elswhere with a lower tax people do so.
Look at duty free shops.
or the 1991 luxury tax.
look at LEGAL avoidance of state sales taxes.
the list goes on and on.
You don’t even touch on the fiasco of the Great Society wealfare state promoted with the included prebate/rebate...
every month the government sends FREE MONEY!
Every month the government sends money which, for virtually all of us, represents a refund of FairTax paid, but not owed. No one is obligated to pay FairTax below the poverty level of spending. Therefore, that amount of FairTax is refunded monthly.
I suppose none of us should get an income tax refund because, under your definition, it is also welfare.
I would be pleased to have an open and balanced discussion of the issues you raised. However, your reference to "scammers" makes me think you are pretty closed minded. Please correct me if I am wrong.
"Flat" in the context of tax rates refers to a uniform marginal rate of tax using a consistent base. Both nrst and flat income tax have flat marginal rates.
But neither is flat at all if you're looking at is effective rates. They both have a nearly infinite number of possible effective rates. It is absurd to claim one set of infinite possibilities is "flatter" than another.
In the same way the prebate affects effective rate WRT spending, income earned affects effective rate WRT income. You can devise a scenario for ANY effective flat income tax rate less than the stated marginal rate. Similarly, you can devise a scenario for ANY effective nrst rate less than the stated marginal rate.
So I don't know how you arrive at your claim that one is flatter than the other unless you're comparing marginal rate of one system to effective rate of the other system. Both have flat marginal rates, both have wildly variant effective rates. Please explain.
Now, if you really are asserting that the current tax structure is flatter than the nrst, I think you're mixing up marginal and effective rates for sure. On it's face, the current system has multiple [seven?] marginal rates yet the nrst has a flat marginal rate. Both have infinite possibilities for effective rates less than the marginal rate [or max marginal rate in the case of the current system.]
So again, there is no way to conclude that the current system is flatter unless you compare the marginal rates to effective rates, which is nonsensical. Please explain your assertion "My argument is that the current tax structure is actually FLATTER than the fair tax, using fairtax.orgs own data.
Still telling the same old stale lies, eh?
a refund? prefund? if your read HR 25 at http://www.thomas.gov it is for the GOVERNMENT DETERMNED necesities amount. This is K Street Lobbyist bonanza money. This means every industry will lobby (and pay campaign contributions) for those politicians who give the most government determent cecessity determination for their industry. IOW a bigger car sales tax determination, a computer purchased sales tax determniation, cell phone expense dtermination (on top of local and state taxes.
It is all fun fun fun and will be percieved as free money to the great society...
I wish that argument had prevailed in 1913 when they were working on the first income tax.
I have read the pertinent parts of HR 25 and recognize that some government bureaucracy has the responsibility of establishing the level of "poverty" spending. This is being done now, so no new bureacracy would be required. (I have read some pertinent parts of the IRS code also, but a much smaller percentage.)
If the FairTax is implemented as conceived, all legal residents will be sent the same amount as a refund. The refund will equal the amount of tax paid on the poverty level of spending. I know this is a simpler way to get a refund than filing and retrieving a bunch of income and deduction records, then filling out what seems like a ream of complex forms and mailing them off to the IRS. And if you make a mistake you risk penalties.
Those of us that favor the FairTax look at this simplicity as an advantage, not a disadvantage.
If the principle of equal refunds can be maintained, any change in refund level will be paid by all taxpayers, and may result in raising the FairTax tax rate. The cost of the refund is included in the revenue that must be collected to implement the FairTax. That will be visible to everyone and the voters will have a chance to respond at election time. If Congress tinkers with the FairTax by, for instance, charging more tax on some items than others, the tax system will no longer be the FairTax as proposed.
It has been my observation that most of those who oppose the FairTax assume it will be changed it in some way, then criticize the changed version.
To pass the FairTax intact will take an effort at least as large as the one that beat back amnesty for illegal immigrants. And we will have to do it again when Congress starts tinkering in response to lobbyists. I think the advantages are worth the effort.
OldIRS vs NewIRS.
-Either way the size the the government employee based remains the same.
-Either way the size of the government remains the same.
HR 25 does not change the constitution, it only changes law. The so called simplicity of HR 25 is a falicy as you now have to register as a vendor, you have to register as a government approved family (just wait for the new-socialist-family engineers to grab a hold of what is a family) You have to PROVE your exemption which is just more paperwork in tracking all the exemptions.
Of course this assumes your industry has not simply moved, like the 1991 luxury tax caused, outside of the USA.
We need a system of reducing the size of governemnt and reducing taxation.
The FairTaxScam is simply premised on the absurd notion that we are taxed enough but just by the wrong means.
We need som OTHER proposal to get rid of the current tax system. Then again for all we know this proposal could be just another clintonesque self donation tax trust write off.
As an example, you will not find me defending the current size of government. I think the FairTax would do some things very well, and some things not at all. The intent of those who proposed the FairTax is to save the government spending battle for later. The transparency of the FairTax would be helpful in attacking spending. And since everyone would be paying the same highly visible tax, it becomes harder to sell the idea that everything can be financed by taxing the other guy--the "rich", the corporations, the evil oil companies, etc.
I think your example of the luxury tax killing some industries in the US in 1991 would not hold true under the FairTax. The luxury tax was laid on top of the existing tax load and put domestic countries at a competitive disadvantage. The FairTax would put domestic countries at a competitive advantage by removing their taxes and thus lowering their cost of production. Foreign products with embedded taxes in their wholesale price would be at a disadvantage in our domestic market. Many FairTax proponents suggest the business reaction would for companies move to the USA from where the taxes are higher.
No, I don't believe bureaucracy would disappear entirely with the FairTax. I do believe requirements on both business enterprises and the private citizen would be much less. Those collecting the FairTax would be paid to do it, instead of the current practice absorbing the cost of collecting the state sales tax or withholding tax. The compliance costs of administering withholding, keeping track of all income and deductions and arranging affairs to minimize the tax load would go down in a major way.
I believe the income tax is thoroughly embedded in our culture. We all have accumulated a lot of knowledge of how our own situation is effected by the income tax law. The FairTax would make most of that obsolete, something that I believe scares people--especially those people whose living is based on dealing with the income tax and its effects.
The FairTax would have to be pretty terrible to be worse than the yearly experience I have trying to pay no more income taxes than are legally required. With FairTax, the tax is paid with the transaction and it is OVER. I don't have to track much of anything or tell the government much about my personal affairs. April 15 would be just another day. Hallelujah!!
“It has been my observation that most of those who oppose the FairTax assume it will be changed in some way, then criticize the changed version.”
Absolutely. In addition, the FairTax opponents believe that they , and only they, can predict what the FairTax will evolve into. What they don’t comprehend is that even in the unlikely event that their worst case scenarios do unfold, the FairTax would still be better than the system we have now or any alternatives proposed so far.
“I would be pleased to have an open and balanced discussion of the issues you raised. However, your reference to ‘scammers’ makes me think you are pretty closed minded. Please correct me if I am wrong.”
You aren’t wrong; you are right on target.