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« Flying at street level | Main | Pravda means "truth" »

Apr 17, 2007

Comments

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John G

Ed, you need to get behind the "Fair Tax"; that way you don't have to worry about filing taxes again.

Ed Cone

I'm not convinced on that one, John, although I'm interested in tax reform, and I'd be happy to learn more about it.

Paul Elledge

"other stuff not so much."

So why not make it so that you don't have to pay for that stuff?

Debra

Because we live in a society, in which we pay taxes to support the community, not just our individual interests.

A fair tax is not fair; it imposes a consumption tax (a national sales tax of 23%) which is unfair to lower income people and especially to those on fixed incomes (i.e. retirees). And the fair tax proposal is actually 30%, although its advocates go to great lengths to hide that fact.

And, as others have said, wasn't the Boston Tea Party about getting rid of a consumption tax?

Claims of the glories of the fair tax are unsubstantiated and often dubious. It is not voluntary, it will not eliminate the IRS, it creates new taxes, it makes it easier for the federal and state governments to raise taxes, it opens up huge potential for fraud -- I could go on and on.

The fair tax is not fair and its an idea with little basis in reality.

Bubba

"A fair tax is not fair; it imposes a consumption tax (a national sales tax of 23%) which is unfair to lower income people and especially to those on fixed incomes (i.e. retirees). And the fair tax proposal is actually 30%, although its advocates go to great lengths to hide that fact."

You haven't read the complete proposal regarding the provisions of the Fair Tax, have you?

It's either that, or you're not ashamed to emabarrass yourself on a public forum with a statement like that.

Debra

Fair tax proponent Neal Boortz insists throughout his book that the FairTax rate is 23 percent. It is not until near the end of the book — in the chapter, "Questions and Objections" — that he admits it is really 30 percent.

Do the math: in his book, Boortz used the example of a single mother with two children spending $45 a week on groceries. First, he makes the dubious claim that the removal of the taxes currently embedded in the price would lower the cost of the groceries to $35.10. Then he says: "Add the FairTax, and the groceries would cost $45.58." Um, Neal, any sixth grader could tell you that $35.10 plus $10.48 in sales tax is a tax rate of almost 30 percent—not 23 percent.

The fair tax idea is full of holes, and its proponants use smoke and mirrors and semantics to make it seem like its fair. Its not.

Jim Caserta

From my limited knowledge the fair tax would use a "prebate" to mimic the effect of the standard deductions. From this point, you can make the tax very progressive by tailoring the amount of the "prebate".

More info on the "progressivity" of the overall current tax codes @ WaPo & the New Republic.

From WaPo:

The accompanying chart contains the calculations for two scenarios -- a family of four with an income of $50,000, and a family of four with an income of $150,000. The chart shows the average total taxes paid and average expenditures for two years, 1983 and 2003 (the last year for which data are available). Looking first at the average American family with a $50,000 income, a couple of things jump out. First, even though the family has a relatively low income, the amount of money it paid in taxes at all levels was strikingly high in both years. In 1983, it paid 29 percent of income in taxes. In 2003, it paid 31 percent.

Taxes were easily the largest budget item for this family in both years. In 2003, for example, the family spent 24.6 percent of its income on its home, and 9.9 percent on transportation.

The second point worth noting is how little things have changed over time. Congress has been very busy tinkering with the tax code since 1983 -- adding child credits, expanding individual retirement accounts, patching the alternative minimum tax, etc. -- but the basic take after all the kerfuffle has changed very little for this family.

Looking now at the family with the $150,000 income, taxes are once again the No. 1 item in the household budget in both years. In 1983, the government's take was 30 percent, compared with 23.7 percent spent on the next biggest item, the family's home. In 2003, the take was 30 percent, compared with 23.5 percent going into the home.

Lots of things have changed, but one thing is constant: Government has been robbing Peter to pay Peter. The similarity between the tax proportion for the high-income family and that of the middle-income family will surprise many. That's because the federal income tax, which is steeply progressive -- the higher your income, the more you pay in taxes -- gets all the media attention. But other taxes that are less visible, such as sales taxes, hit lower-income families with a heavy thud and quickly fill in the gap between their lower federal income taxes and the higher rates paid by those with high incomes.


Debra

The "prebate" idea has been called the biggest system of social welfare ever proposed. One argument I've read states: "Millions of people who never took a dime from other taxpayers in the form of food stamps, SSI, AFDC, Medicaid, WIC, or housing assistance will now be on the federal dole via the prebate. The FairTax is welfare for the masses. It makes us all wards of the state."

Also Boortz supposedly envisions the prebate amount being issued to a card "like your bank debit card." These cards would likely provide huge opportunities for fraud, crime (criminals preying on people for their cards) and counterfeiting.

Roch101

I think the fair tax is intriguing. When I hear it discussed, it includes the idea of a "prebate" -- a cash payout to each individual to cover the tax on necessities, so I think it can be done without a regressive impact.

On a fundamental level, it also seems that it would encourage savings, investment and work initiative by taxing consumption instead of labor. That seems like it should appeal to liberals -- have those consuming more resources pay more tax. No?

Finally, I find it appealing because it would eliminate the numerous loopholes and complications that make it so that one's ability to navigate complexity determines one's tax exposure.

Jim Caserta

To me the tax code is way too complicated. The complexity leaves open narrowly focused benefits. A simpler system that remains revenue neutral would be preferable to me.

Is the standard deduction a massive tax break or just a basic element of the system? Because someone calls it something does not make it so.

Most of us pay our taxes at every paycheck and April is the deadline to "settle up". You can tell who gets a refund and who is paying by when they file.

L. James

If taxes were fair, I would have no problem paying them either. But more than 1/2 of every dollar we pay to Uncle Sam is used to bomb, kill and torture people overseas, or support a military subcontractor in a lavish lifestyle that we can only dream of.

And then there's the Wal-Mart tax. If you haven't heard of ithe Wal-Mart tax, consider how much you are paying so Wal-Mart, and companies like them, don't have to.

Here are some facts on how our tax dollars are subsidizing Wal-Mart:

Wal-Mart avoids paying state and local taxes by setting up fake shell companies out of state. Then they pay "rent" on the stores they own to their own fake company and deduct the cost of the rent as a business expense. According to the Wall Street Journal, this scam has enabled Wal-mart to avoid paying $3.39 billion in state taxes between 1999-2005.

Wal-Mart shifts other costs to taxpayers. It failed to provide company health care to more than 775,000 of its workers in 2006, which forced them to use Medicaid or the emergency room. Over the next 5 years, we taxpayers will pay $9.1 billion over the next five years to make sure Wal-Mart has a somewhat healthy workforce.

Wakeup Walmart reports that if Wal-Mart paid the taxes it owed in 2005:

9,500 additional police officers would be patrolling our streets.
21,963 students would have new classrooms
318,440 uniunsured children would have health care.

This example is just one company. There are many, many examples like it.

Paul Elledge

Debra,

No tax is fair.

jc

"Wakeup Walmart reports that if Wal-Mart paid the taxes it owed in 2005:
9,500 additional police officers would be patrolling our streets.
21,963 students would have new classrooms
318,440 uniunsured children would have health care."

Owed according to whom?

I'm certain they paid all the taxes they were legally required to pay. Why would they pay $.01 more?

Do you pay more than you're legally required to?

I dont and dont know anyone who does.

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