Lets talk about the Fair Tax proposal

[gwb72tii]

what do you mean social security/medicare are fully funded?

[Joey Link]

I don't think any of you are taking into account how fast that tax is going to add up on everything you buy. It's not going to be just a tax on the final good you buy over the counter.

Think of it this way. I make a simple widget that includes three parts. I buy those three parts and pay the 16% tax on them. I add that tax to my costs and adjust my retail price for my widget accordingly, which would most likely be about 30% to a whopping 50% for some types of business. Then I sell the product to you and you pay 16% of my old sales price plus my 30% to 50% markup because of the tax.

Your 16% VAT tax just turned into about a 30% tax. And that's assuming that the 3 parts I buy are made from raw material that hasn't been taxed yet. If not, then that 30% number starts going up fast.

Prices will go up very fast and you standard of living will most likely go down. Buying big ticket items like houses and cars will be very painful. You'll be paying massive interest on the tax you had to finance with your house. How painful will that be?

16% is way too high. 1% might be reasonable. You would end up paying about what the average is now for federal income tax at around 11%.

Not to mention nobody seems to be talking about social security and the other entitlement taxes the government charges you. Those will still be there and they are just as much of a tax as income tax is.

And, the biggest fear here is like always, the government will just want more money so they will find other ways to tax you to get more. They sneak in an income tax for those nasty rich people. Or they'll find a way to tax your usage of air... just about anything.

And, do you really think that state governments are 1) going to be willing to scrap their tax code, get rid of their sales taxes, get rid of their gas taxes, etc, because the feds say so? I doubt it. and 2) Do you really think the states are going to be willing to help the fed collect the fed's tax money? Not a chance.

Plus, if you think about this, you realize that business isn't going to pay tax, not really. They'll just pass it on to you in the form of increased prices. People will recognize this and instantly implement a tax on business income to make things fair.

Do you see where this goes? I would love to see a simplified and fair tax system (or better yet, no taxes at all... but nothing is free if you are free), but I don't think a VAT is going to work very well.

Sorry, I keep thinking up more reasons why this is bad. I can probably come up with more if you want.

You and I agree on almost everything else, and I like you. As respectfully as I can say it, this post of yours shows that you haven't read about what the tax proposal actually is and isn't. Businesses taxes are abolished all together, and all federal taxes are abolished (including Social Security and Medicare, though they're fully funded).

[rwh11385]

I like that only spending is taxed, so that saving could actually be encouraged. But then again, not sure it would work or all players would be for it: Tax accountants, IRS employees, state and local governments, people who are on fixed income, etc.

Plus, the classic American subsidizing of a home and a college education would be harder to handle... as well as donations. Unless VAT is lowered or eliminated for student loan debt and mortgage debt interest... etc.

As much as it is silly to tax people for earning money and not as much as when they spend it, I don't know if it would be possible to change given our set ways.

[Red88]

All the people in the IRS would be out of jobs!

[Hallen]

I don't think any of you are taking into account how fast that tax is going to add up on everything you buy. It's not going to be just a tax on the final good you buy over the counter.

Think of it this way. I make a simple widget that includes three parts. I buy those three parts and pay the 16% tax on them. I add that tax to my costs and adjust my retail price for my widget accordingly, which would most likely be about 30% to a whopping 50% for some types of business. Then I sell the product to you and you pay 16% of my old sales price plus my 30% to 50% markup because of the tax.

Your 16% VAT tax just turned into about a 30% tax. And that's assuming that the 3 parts I buy are made from raw material that hasn't been taxed yet. If not, then that 30% number starts going up fast.

Prices will go up very fast and you standard of living will most likely go down. Buying big ticket items like houses and cars will be very painful. You'll be paying massive interest on the tax you had to finance with your house. How painful will that be?

16% is way too high. 1% might be reasonable. You would end up paying about what the average is now for federal income tax at around 11%.

Not to mention nobody seems to be talking about social security and the other entitlement taxes the government charges you. Those will still be there and they are just as much of a tax as income tax is.

And, the biggest fear here is like always, the government will just want more money so they will find other ways to tax you to get more. They sneak in an income tax for those nasty rich people. Or they'll find a way to tax your usage of air... just about anything.

And, do you really think that state governments are 1) going to be willing to scrap their tax code, get rid of their sales taxes, get rid of their gas taxes, etc, because the feds say so? I doubt it. and 2) Do you really think the states are going to be willing to help the fed collect the fed's tax money? Not a chance.

Plus, if you think about this, you realize that business isn't going to pay tax, not really. They'll just pass it on to you in the form of increased prices. People will recognize this and instantly implement a tax on business income to make things fair.

Do you see where this goes? I would love to see a simplified and fair tax system (or better yet, no taxes at all... but nothing is free if you are free), but I don't think a VAT is going to work very well.

Sorry, I keep thinking up more reasons why this is bad. I can probably come up with more if you want.

[mrsleeve]

the republicans are just as bad as the democrats. i was listening to ron paul on bloomberg today and he is right. the two party system is a sham, they are both the same.

You are certainly right on that, we are set up to be a 2 party, but the problem is both party's are the same now just pandering to opposite ideological bases but taking us to the same destination

[kishg]

the republicans are just as bad as the democrats. i was listening to ron paul on bloomberg today and he is right. the two party system is a sham, they are both the same.

[mrsleeve]

How the frickin' hell did we allow our country to be run by anyone else but ourselves?


(standing on a soapbox with a bottle)

Your whole post brings up more good point about the IRS, but I will leave that alone.


To the quoted Our country was supposed to be run by people that were already successful and made a good life for them selves and wanted to be a public servant. It was not supposed to be a high paying CAREER position, that one could hold for life.

We as a society be come complacent and most have forgotten where we have come from and why we are even here. Thank you GOVT mandated public school curriculum, thank you modern life where history has no place in modern society.

We have the progressives to thank for all this, all the entitlements, the IRS, the FED, Emanate Domain, the modern Liberal Ideology that whats good for the many is the best for all. Even though this country was founded on the fact that if you violates 1 persons rights that cant happen. Those in power have forgotten that they work for us and that the only power the govt can have, is that which is lent to it by the people. Those in power only look out for them selves and whats serves them the best, till it comes election time again then the will lie and tell what ever we want to hear to get again. Thanks to the gerrymandering of congressional districts they stack the deck in the incumbents favor making hard to kick one out and get a new one in.

well shit I will step off this box

[z31maniac]

How the frickin' hell did we allow our country to be run by anyone else but ourselves?

By lazy asses who expect cradle-to-grave entitlement and are willing to trade freedom for "security."

[CBi]

Wasn't the whole purpose of founding America to be a land of citizens goverened by themselves?

Now we are "controlled" (laws are dictated to us, taxed, etc) by a giant entity called The Government.

Democrat/Republican, whatever...fuck all that. We need to get back to what our country is supposed to be about....freedom and liberty.

How the frickin' hell did we allow our country to be run by anyone else but ourselves?


(standing on a soapbox with a bottle)

[mrsleeve]

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^6

Then dont buy a new one


Thats the point if you really want it you will pay that, if not you will buy used if you are un willing to pay the taxes.

Plus when you are keeping 30% more of your pay check every week you can pay that 16% much easier

[kishg]

This is the point of the vat, those that need/want to have all the new stuff all the time, and have the money to afford it will still buy it (aka the rich will still pay the lions share of the taxes). Those that want to pay as little tax at possible wont buy the new or buy very little that they dont need. There are lots of up sides with this system

not an upside as far as i'm concerned.. i don't see why i would pay 16% on top of the customs duty that was already charged on that car and bmw already priced into what they're charging me.. at most i'm willing to pay 5%

[mrsleeve]

This is the point of the vat, those that need/want to have all the new stuff all the time, and have the money to afford it will still buy it (aka the rich will still pay the lions share of the taxes). Those that want to pay as little tax at possible wont buy the new or buy very little that they dont need. There are lots of up sides with this system

I love this idea, I could buy a new bmw every year! But i don't want to pay 16% VAT on it!

[Joey Link]

Buy one with 200 miles on it :)

[mrsleeve]

Yup with no income taxes I would get to keep all 2k+ a week I make (when I am working that is), and I would be able to pay all my shit off in 10-12 months and save up form my house and buy with cash with in the next 24-30 months. The IRS is one of my biggest soap boxes

It would be great, I imagine I could pay off my remaining debt (excluding student loans) in the next 12 months.

Then I would buy all kinds of stuff.