Tax reform

[awpitt]

As I have alluded to before - as much as I like the Fair Tax in principle - I'm not sold on it because there's little likelihood I can ever have an effect on the amount of tax I pay.
Especially once I retire, where my expenses might be the same, but my income will remain lower - and fixed.

When the government determines it needs "X" amount of money to run - they don't cut expenses. They raise taxes or run deficits.
As long as they run on that premise, they're always going to adjust the system to get the same amount, and the only way I pay less is for someone else to pay it for me.
And that's not happening.

Yes but govt operates this way regardless of the tax code, current or Fair Tax.

 

[SamSpade]

Yes but govt operates this way regardless of the tax code, current or Fair Tax.

That's exactly the point. If the government decides - we need 4 trillion dollars - it will create the tax laws under the Fair Tax so as to create that revenue.
So chances are pretty good you'll still pay the same amount.

I guess Monello explained one aspect I do like - even if you don't currently work - you'll still be paying taxes.
No more of this 47% not paying any federal tax, although I believe it is unlikely that the lowest earners will pay back anywhere near as much as they will GET in a prebate.
Still, it's always better when everyone pays rather than just those who work.

 

[GURPS]

I guess Monello explained one aspect I do like - even if you don't currently work - you'll still be paying taxes.

Indeed when that Welfare Queen buys that new 50 inch LCD TV for the Crib
... she's paying more than Just Sales Taxes under some Flat / VAT Tax Program


- although this is an argument progressives have used - Welfare Generates Sales for business and taxes for the Gov.

 

[Monello]

I'm not sold on it because there's little likelihood I can ever have an effect on the amount of tax I pay.

Under this scenario, if you don't want to be taxed, don't make the purchase.

Plus it eliminates any income tax preparation. IRS people can be moved over to FairTax personnel.

 

[SamSpade]

Under this scenario, if you don't want to be taxed, don't make the purchase.

Plus it eliminates any income tax preparation. IRS people can be moved over to FairTax personnel.

That's why it won't make any difference - we all have a minimum of stuff we have to buy.
Every analysis I've seen shows, I'll still pay the same.
Plus - (shrug) - it's going to be kind of invisible to me.

 

[awpitt]

That's why it won't make any difference - we all have a minimum of stuff we have to buy.
Every analysis I've seen shows, I'll still pay the same.
Plus - (shrug) - it's going to be kind of invisible to me.

That's where the prebate comes in. It gives you a certain amount of tax free spending which covers (most of) the minimum stuff we have to buy.

http://waysandmeans.house.gov/UploadedFiles/Americans_For_Fair_Taxation_10.pdf

 

[awpitt]

One example..... A couple with two kids can spend up to $31,000 tax free because of the prebate.

 

[SamSpade]

One example..... A couple with two kids can spend up to $31,000 tax free because of the prebate.

I guess it must depend on how much you spend and what is actually going to be taxed. Is my mortgage essentially taxed?
Utilities (electric, cable, cell phone)?
How much of my typical bills will have a tax embedded in it? At the end of the day, pretty much everything I earn gets spent.

Because this works one way - the prebate doesn't help me a lot IF everything I spend money on has a tax.
We have our cars now and they are paid for - but we WILL have to replace them, and that will be financed.
Pretty sure THAT will be taxed, and the cost will be spread out over years.

I mean, based on the prebate, I can minimize my spending but the truth is, just about every dime that comes in - goes out.
So how much am I really paying?

 

[Starman]

Ultimately if Americans cannot agree how much the government needs to run our country, then Fair Tax, or any plan with a large consumption tax component will not work.

Our government grows in perpetuity, just as the capitalist system does. It's not that it should be that way, but that's what we've allowed an unchecked government to become. Therefore the cost of running government will not decrease over time; it will only increase.

 

[Ken King]

HR 1 passes Senate 51-49 (w/amendments) now off to conference.

 

[Monello]

That's why it won't make any difference - we all have a minimum of stuff we have to buy.
Every analysis I've seen shows, I'll still pay the same.
Plus - (shrug) - it's going to be kind of invisible to me.

The pool of people paying into the system will double. Around 140,000,000 people earn income. 3+ Million are currently consuming. Plus no more payroll withholdings or IRS forms to fill out. No EITC, and other schemes(tax credits) that give people a refund more than what was withheld.

 

[awpitt]

I guess it must depend on how much you spend and what is actually going to be taxed. Is my mortgage essentially taxed?
Utilities (electric, cable, cell phone)?
How much of my typical bills will have a tax embedded in it? At the end of the day, pretty much everything I earn gets spent.

Because this works one way - the prebate doesn't help me a lot IF everything I spend money on has a tax.
We have our cars now and they are paid for - but we WILL have to replace them, and that will be financed.
Pretty sure THAT will be taxed, and the cost will be spread out over years.

I mean, based on the prebate, I can minimize my spending but the truth is, just about every dime that comes in - goes out.
So how much am I really paying?

Hey Sam... Here's an FAQ about The Fair Tax proposal that might help to answer some of your questions.

http://fairtax.org/faq