At an appearance in Austin radio talker Neal Boortz revealed audacious plans for the Fair Tax movement in the 2008 primary season.
On Tuesday when I'd usually stay home and make dinner for the family, we all found ourselves heading down to a Barnes and Noble bookstore in Austin for a special event. Well, special for me anyway, maybe not so special for the kids. My wife was late meeting us, so I sent our 14-year-old to the kids' section with her 4-year-old sister and instructions to read her Skippyjon Jones books until further notice.…
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— go to most recent comments26 - Clavos
jaz,
show me some proposal where middle income folks get excited (middle after removing the top and bottom 5 to prevent skewing of numbers by the mega wealthy and the destitute)
Even though I had to use tops, because that's what Census uses, I still showed you a range that is clearly middle income (80th percentile) and a narrower range than you specified, with a top income above $83K, and well below the 95th percentile you mentioned.
People in that range are in fact, supporting the idea, as I said.
27 - jaz
ok, just to avoid any more confusion...how about i clarify and state i mean those whose single income annual gross is between $26 and $52 thousand a year?
my study has put the "average" person in that kind of bracket (married two income earners would just double the figures, but i intentionally state single income annual gross for a reason)
that help clarify?
those above the figures i'm talking about have a different set of issues, as do those below...the figures themselves represent a HUGE segment of our population who actually work for a living, and represent those whose concerns i am talking about.
hope that helps
28 - Clavos
shift the burden from businesses paying their share and placing the burden on the retail consumer
Where the tax burden already is. If I make a widget for ten dollars in costs and pay the government another three in taxes on it before I sell it to you, will I sell it for ten or thirteen? (forget profit for the moment)
29 - Clavos
Those who make between $26K and $52K will pay less overall tax than they currently do, according to the proponents.
So, if that's true, and these folks are aware of and understand the tax, they will be in favor of it.
Yet another argument for getting a public dialogue going...
30 - jaz
Clavos...NEVER forget a Variable, it artificially skews the outcome.
all for dialogue, but again...everything i've read so far is based on flawed "supply sider" assumptions
so i'm still not only NOT convinced, but find serious flaws in the base line assumptions that appear "hidden" from the overview..and paint a far rosier picture than objective analysis suggests so far
31 - Clavos
jaz, you know what i meant...plug profit back in; it doesn't change the fact that i'm going to charge the tax i pay in the price of the widget.
to paraphrase pogo:
we have met the taxpayer, and he is us.
the consumer is the only real taxpayer.
32 - jaz
not buying it, Clavos..i do agree with some you state, but like the matching payments to SS and Medicare that corps make with their employees (and yes, i know it gets added onward as part of their costs calculations)... it appears as a way for corps to dodge paying in to the system for what they get out of it
do you REALLY think that if this is put in place, and those expenses are removed from corps they will lower their prices to the consumer?
or will they rather reap their sudden windfall and pocket this new non-taxed income, keeping the prices the same?
more and more, i'm NOT convinced this proposal is worthwhile
but i agree, the dialogue is important
33 - Clavos
do you REALLY think that if this is put in place, and those expenses are removed from corps they will lower their prices to the consumer?
or will they rather reap their sudden windfall and pocket this new non-taxed income, keeping the prices the same?
An important and key point. One that could be discussed and resolved, if enough people of good will are involved.
Way back upthread somewhere, I said I thought the idea has "good bones."
Now it's time to open discussion and put some flesh on those bones.
34 - Lumpy
I'm just happy that the fair tax exempts my magic the gathering cards from taxation. It's good law for entrepreneurial nerds.
35 - jaz
"An important and key point. One that could be discussed and resolved, if enough people of good will are involved."
the problem here is that the entire proposal is based on certain assumptions, supply sider as well as the point i raised, which you acknowledge
so far, i see this as a huge windfall to corps, those with "estates", and capital gains
still looking to see if the retail sales of stocks are taxed for the final nail
but here's a thought...
flip the script...
NO personal income tax or sales tax, instead use the principles of this proposal as a "seller's tax"...
a higher rate for imports, but every step and all middlemen along the way...you sell something in this country, you pay the tax...NOT the consumers
would appear to work keeping prices down, helping promote American business, cut out some layers of middlemen,and places no direct burden on ANY consumer, but rather makes it a "pay to play" system for business at each point of sale
how's that for a better solution which addresses most major concerns?
36 - Clavos
but every step and all middlemen along the way...you sell something in this country, you pay the tax...NOT the consumers
That part of your proposal is already substantially in place; the "hidden" taxes. Corps "pay" those taxes, but then they get built into the prices we, the consumers, pay them in the end.
The big drawback there, as I see it; is we don't see what we're paying, which is a big flaw of the current system,; not only with the "hidden" taxes, but with the whole withholding system, which tends to remove taxes from our consciousness (possibly excepting geeks like me, although as self employed, I'm no longer subject to withholding).
As I see it, corporations don't really pay taxes; they collect them on behalf of the government. Only the people pay taxes.
37 - jaz
i understand, you keep saying that over and over again...i get the point you are making, it's the basis for this entire proposal, coupled with supply sider economics
my point is that you flip the script, make it a sellers tax, rather than the consumers...yes, the seller places that into his cost and thus the price...
this would encourage less middlemen in the process, due to each such bumping the retail prices up, thus allowing a free market check and balance on consumer costs...if the retail price is too high, they buy something else
self correcting supply and demand
this would shift the entire tax burden from the Individual (directly, that is..i understand they are still paying in the end, but the mechanics now benefit the individual)to those who wish to sell anything anywhere in the Nation
all the same reasoning applies, but my proposal appears to place market forces on aiding the Demand side, rather than Supply side...and sets the onus on Supply as a cost of doing business
add a few percentage points extra on goods/services sold INTO the country...and you even help promote domestic businesses
all in all, it would appear to help combat inflation as well as promoting domestic economic factors
something the"fair tax" proposal does not appear to contemplate
still reading, but a good rule of thumb for me when dealing with any issues involving money....flip the script, is it still a good deal? if so..fairness is achieved, if not..somebody is scamming
38 - Dave Nalle
I thought the proposed Fair Tax rate is 23%?
And that it's based on a figure of 22% for all the current so-called "hidden" taxes?
The Fair Tax rate is indeed 23%, but what they really (and IMO deceptively) downplay on their website is the fact that it does NOT include SS or Medicare, which would either stay on as an income tax or be added into the Fair Tax as another 4-6% on the rate.
Dave
39 - Clavos
Didn't know that.
That IS deceptive. Makes you wonder what else they're hiding.
All the more reason for a national, open dialogue.
40 - Dave Nalle
They're not really hiding anything if you consider that the legislation is a matter of public record, but they aren't necessarily addressing all the issues as fully as they should.
IMO having SS continue as an income tax in combination with the Fair Tax defeats the entire purpose. Abolishing or phasing out SS would be the best course, but tacking it onto the FT as a sales tax would be acceptable.
I've been reading over the new FT bill and I'm going to post a summary at some point which covers all of the issues, including ones they gloss over.
Dave
41 - Clavos
Since it it public record, technically you're right, but it's not straightforward.
IMO having SS continue as an income tax in combination with the Fair Tax defeats the entire purpose.
I agree. The FT will only work well on a strict no income based tax basis, otherwise it will probably turn into an additional tax.
42 - Dave Nalle
I have the 'mitigating' circumstances on the SS confusion. Apparently they don't know what actual rate it will take to add SS in, so they are leaving it up to the SSA and the new federal office that would oversee the FT to determine what rate would provide the equivalent of the current revenue. The intent IS to tack it on to the FT, they just don't know yet how much that will increase the overall rate.
Dave
43 - STM
Small question here guys, but am I missing something here? Specially for Nalle, author of the headline ... so why would anyone unveil their campaign in an Austin. Wouldn't it get a tad cozy?
44 - Clavos
Nah mate. That one didn't cut it-strainig too hard.
Try again.
45 - jaz
beyond the worries about SS, what could be another palmed ace...
their own FAQ states - "The FairTax is a single-rate, federal retail sales tax collected only once, at the final point of purchase of new goods and services for personal consumption. Used items are not taxed. Business-to-business purchases for the production of goods and services are not taxed. A rebate makes the effective rate progressive."
"retail sales"...does this cover the aforementioned stock purchases?...by adding the personal consumption does this mean any business can buy any real estate desired with NO payment of tax...even worse, while a residential property would pay such tax as part of "retail"?
also, took at look at where this comes from...not encouraging at first examination, but am trying to keep an open mind
alarms also go off when the title appears so amiable..."Fair Tax" strikes me like a marketers wet dream in the same vein as "Patriot Act" or "Enduring Freedom"
grains of a good Idea, perhaps...but this ain't *It*, imo
damn shame, i'd like to be able to get behind something of this nature
the Tao of D'oh.
46 - jaz
beyond the worries about SS, what could be another palmed ace...
their own FAQ states - "The FairTax is a single-rate, federal retail sales tax collected only once, at the final point of purchase of new goods and services for personal consumption. Used items are not taxed. Business-to-business purchases for the production of goods and services are not taxed. A rebate makes the effective rate progressive."
"retail sales"...does this cover the aforementioned stock purchases?...by adding the personal consumption does this mean any business can buy any real estate desired with NO payment of tax...even worse, while a residential property would pay such tax as part of "retail"?
also, took at look at where this comes from...not encouraging at first examination, but am trying to keep an open mind
alarms also go off when the title appears so amiable..."Fair Tax" strikes me like a marketers wet dream in the same vein as "Patriot Act" or "Enduring Freedom"
grains of a good Idea, perhaps...but this ain't *It*, imo
damn shame, i'd like to be able to get behind something of this nature
the Tao of D'oh.
47 - Dave Nalle
Cozy? If it wasn't entirely clear from the article, the Austin 'unveiling' was only unique to those of us actually there. He's been doing more or less the same presentation in scores of locations on his book tour.
Dave
48 - Clavos
Dave,
I think Stan meant the car...
49 - Dave Nalle
By god, I think you're right. I forget about them, no longer living in the UK. Plus they're just Fords in drag anyway.
Dave
50 - Clavos
does this cover the aforementioned stock purchases
Dave said upthread he saw where it does. FWIW, stock sales on the open market to individuals are considered to be retail by the brokerages.
a residential property would pay such tax as part of "retail"?
Only new residential property pays, according to the web site. But you raise an interesting point in re raw land...
Re the name:
C'mon jaz, how much attention would they get if they named it the "Federal Sales Tax On Everything You Buy For The Rest Of Your Life"? Or, worse yet: "The Non-Discriminatory Tax."
It's just a name, Dude.
damn shame, i'd like to be able to get behind something of this nature
Contact them. Ask your questions. Suggest your changes.
They are asking for input.
51 - Clavos
FWIW, and for those who haven't heard:
Florida, which has no income tax, and raises the vast majority of its revenue through sales taxes and property tax, is considering rolling back the property tax and raising the sales tax, currently 6% statewide with a local option of 1%, to 8.5/9.5%.
The idea is that many folks are "trapped" in their homes who would like to move, but because of a cap in taxes on owner-occupied homes, they are paying well below market if they have been in the house a few years.
If they move, the house they buy will automatically be bumped up to market (at sale is the only time property taxes are not capped and can be raised significantly), thus costing them considerably more than the one they left, even if both are comparable in value. Hence the "trapping" effect.
If this measure passes, Florida will have the highest sales taxes in the nation.
52 - STM
Nalle said: "By god, I think you're right. I forget about them, no longer living in the UK. Plus they're just Fords in drag anyway."
Sorry, boys, couldn't resist when I saw the headline " ... unveiled in Austin". Lol, nice answer first up BTW Dave.
I had one in my late teens ... it was actually rebdaged as a Morris, and was slightly larger than a Mini but felt smaller on the inside. Doing ANYTHING in it was a squash, especially certain things of a nefarious nature (although it did beat one girlfriend's Fiat 500 hands down (or up, as the case may be).
I bought it second hand for the bargain-basement price of $100 off a "mate" who forgot to tell me that he didn't actually own it because he'd neglected to make the transaction official by not going through the old Department of Motor Transport and when I put the rego papers in, there was a link missing in the ownership chain going back to the previous owner. But it went great, except the knob on the gear stick fell off so I replaced it with a large ball of tightly wound sticky tape. Very good, except when you wanted to take your hand off the gearstick.
It also had one advantage over cars I drove in America .... the steering wheel was on the proper side of the car, thus allowing the driver to drive on the proper side of the road.
53 - Clavos
Doing ANYTHING in it was a squash, especially certain things of a nefarious nature (although it did beat one girlfriend's Fiat 500 hands down (or up, as the case may be).
C'mon, Stan. You were young and limber and full of hormones back then. You could have done it in a biscuit tin if you had to...
54 - Dave Nalle
Man, it took some looking, Jaz. Yes, real estate is taxed when it is sold, or on rent paid. From what I can tell the purchase of stocks, bonds and other financial instruments is not taxed at all.
The more I read the actual bill the less satisfied I am with it. The whole idea here was to eliminate complexity amd loopholes. The problem is that I'm finding loopholes and it's not so simple overall. I do understand the loopholes - which take the form of credits for various things - and why they exist, but they desimplify the whole thing.
Dave
55 - Dave Nalle
The Austin I had when I was living in the UK in the 80s was fairly decent size. Really too large for some of the small streets I had to drive down. I kept breaking mirrors on other cars' mirrors.
Dave
56 - jaz
"The more I read the actual bill the less satisfied I am with it."
/agree
57 - STM
"C'mon, Stan. You were young and limber and full of hormones back then. You could have done it in a biscuit tin if you had to..."
Lol. I would've squeezed into a matchbox if I'd had to.
58 - STM
"The Austin I had when I was living in the UK in the 80s was fairly decent size. Really too large for some of the small streets I had to drive down. I kept breaking mirrors on other cars' mirrors."
That's happened to me here in Chinatown, but I'm usually the victim, and the roads are the normal width ... in the case of your UK experience, that's probably because you were driving on the wrong side of the road, Nalle, like all bloody Yanks. I can never work out how Pommy drivers never seem to sideswipe each other when they're driving down some of those lovely country lanes. ... they never seem to, though. Now that IS a squash. You could barely manoeuvre down them on a bicycle.
59 - Dave Nalle
These roads didn't have 'sides', Stan. None of your nice, wide aussie boulevards in downtown Norwich or Lynn or Yarmouth.
Dave
60 - RJ Elliott
"I'm surprised at you, jaz, you don't usually go off half-cocked like that."
Bwahahahahahah!
Seriously though, when doesn't he?
61 - RJ Elliott
do you REALLY think that if this is put in place, and those expenses are removed from corps they will lower their prices to the consumer?
or will they rather reap their sudden windfall and pocket this new non-taxed income, keeping the prices the same?
Well, there's a little economic concept called "competition" that would come into play there, don't you think?
62 - RJ Elliott
"If this measure passes, Florida will have the highest sales taxes in the nation."
Scary. I'm a Florida resident, and I'm not a homeowner. Therefore, this measure would not directly benefit me, but would most definitely directly harm me.
Sounds like an effort to get a larger percentage of state government revenue from the tourists to me...
63 - STM
"Yarmouth."
Great?
64 - RJ Elliott
"That's happened to me here in Chinatown, but I'm usually the victim, and the roads are the normal width ..."
LOL!
65 - jaz
yo RJ...bite me fanboi
try reading all of the stuff before you start yer one liner non-sequitors
silly puppy...
for RJ.
66 - Dave Nalle
So long as you accept 'great' as a relative term. The birthplace of Cromwell is not what it once was.
Dave
67 - troll
on how to fund fascism:
what difference does it make how the protection money is collected - ?
68 - Clavos
Sounds like an effort to get a larger percentage of state government revenue from the tourists to me...
It definitely has that element to it.
The tourism industry is already squawking that we'll lose business.
I spent thirty years in the airline industry; I don't think a higher sales tax is gonna stop people from coming to see Mickey and SoBe.
It will impact you negatively, RJ. On the plus side: with the rollback in property taxes, all housing will have an instant drop in prices. If you want to and can, might be a good time for you to pick up a nice condo.
69 - doug-an-luke
Interesting reading especially clavos and jaz.
First, stocks and IRA type purchases will not have any special tax the 23% tax is imbedded. Those who today have savings in their IRA's will only pay taxes on these investments when they make a purchase of new goods and services. Also, no cap gains and no dividend taxes on investments. Social Security is funded from the Fair Tax and the only income reporting will be the income an individual makes to provide SS credit.
I ran a simple 1040A form using the 2005 tax schedule for a family of 4 making $27,770 taxable income.
First, if the Fair Tax program is truly revenue neutral then those in the lower 50% of the income earners who today pay only 3.46% (virtually no tax burden) of the total Federal income tax bill will receive additional revenues from the Feds. "Prebate" revenues starting at $2,200/year ($183/mo) for a single individual and varying as family size increases. Example: a family of four receives $5,902/year ($492/mo). The prebate insures no American pays tax on the necessities of life. This applies to all taxpayers equally, rich or poor, but obviously is of greater marginal value to the poor and lower middle class.
The Fair Tax legislation insures the poor will benefit most. Here is an example: Using the family mentioned above. A family of four with an income of $27,770 less FICA of 7.6% equals $25,660 disposable income. Assume two children with a full tax credit of $3,500 equals ($25,666+ $3,500) $29,160. Fair Tax produces (no FICA and no Income tax deduction) an income of $27,770, no Federal deductions, plus $5,902 prebates. This results in a disposable income of $33,672 a boost of $4,512 over the current system, 15.5% increase in total income! If the Fair Tax is revenue neutral then the poor will receive the greatest boost. (Note the employers share of FICA 7.6%, part of the cost of labor, provides an option for the employer to pay an additional $2,100 to the employee, thus the employee would then have a total boost of $6,612, a disposable income of $35,762 a whopping 22.6% increase, hmmmm! An interesting rate.)
Reference the purchase of luxury items such as airplanes or boats. The poor and lower middle class do not purchase such items, many of them do find good jobs in manufacturing such items. When a two million dollar boat is purchased some $460,000 in tax is paid. Also, Fair Tax will not apply to exports thus our national productivity will explode. The two million dollar boat listed above can be exported at a price of $1,540,000.
I have found that those who don't understand finances do not trust this program. for example they want a tax deduction for interest payment on a home. You can deduct all you want but $X from $0 Tax is still zero. In summary if you don't pay income tax you don't need a deduction.
70 - tbgunn
Guys
I have been monitoring this conversation and I just want to clear something up. Stock purchases are not taxed. They are not considered personal consumption. They are considered personal investments, which are not taxed. Any service fees charged by the broker are considered personal consumption and only that portion will be taxed, under the Fair Tax.
71 - jaz
then there's the big loophole, and explains much of why it's a horde of business folks as backers and directors
the devil is in the details, and the details show that while there are some good things in this proposal, it is inherently flawed in many ways...some of which are brought up in this very thread
clue indicator - when Nalle and i actually agree on something, you can be fairly certain it's bad/good in a non-partisan fashion
72 - Dave Nalle
Yes, thgunn, I pointed that out back in #54. The legislation as written doesn't make it terribly clear, but that's the conclusion I eventually reached.
And Jaz, while I agree that this is a loophole, the devastating impact on the economy of taxing investments at the rate proposed for consumable goods has to be taken into consideration.
At the very least 401K and IRA contributions ought to be untaxed, and other investments ought to be taxed at a lower rate, but again that adds complexity.
So yes, the plan isn't perfect by any means.
Dave
73 - jaz
i could go with exempting 401k and IRA accounts...
but to try and say that the day to day trading on the various exchanges is NOT "retail" is disingenuous at best by the folks who are proposing all this
and the same argument about overall prices at retail would apply to stocks, don't you think?
am still chewing on my previous idea of making it a "seller's tax" would have the benefit of exports having NO tax burden at all...
we will toy with it further when we are Recognized as the rightful Galactic Overlord!
74 - Dave Nalle
but to try and say that the day to day trading on the various exchanges is NOT "retail" is disingenuous at best by the folks who are proposing all this
I agree that they ought to be taxed in principle, but for practical and economic reasons maybe they shouldn't be.
and the same argument about overall prices at retail would apply to stocks, don't you think?
Absolutely not. The tax is oriented towards retail consummables, things from which you derive an immediate benefit. You don't get an immediate benefit from the purchase of a stock, in fact you may take a loss.
The way it OUGHT to be done - and this just occured to me - is that any gains on stocks and bonds should be taxed at the standard rate, essentially the capital gains tax ressurected under this system.
Taxing on the whole value of a share of stock is excessive. Taxing on any increase in value and any dividends or other gains is just right.
And a 29% tax on capital gains is 9% higher than we have right now, so that would be bonus revenue.
Dave
75 - jaz
interesting, but they are proposing full taxation of homes/real estate as being "retail" with businesses exempt (another BIG problem for me)
stocks should be treated the same as any other retail product...just my opinion, of course
point is moot, this bird ain't gonna fly anyway