Fair Tax System

I just wanted to start talking about some things. I just saw a thread "Oh Man....Bush Won". In it, this was said... "its the end of the world as we know it"

It made me think....you know what, maybe, hopefully, he is right. George Bush is the first president I have ever heard support this measure. The IRS would be eliminated, and taxes on all business as well as people below the poverty level would be...COMPLETELY ELIMINATED.

It is an end user tax. Which means basically, you dont have money taken out of your paycheck for the federal income tax. You only pay the tax when you buy something at retail. Businesses wouldn't pay this tax I don't believe. Which means they would 1) Have more money to pay their employees, 2) Have more money to hire employees, 3) have more money to buy things with, 4) have more money to invest. All of which are VERY GOOD THINGS.

He also supports a self controlled social security system. Which means, yes you would be forced to put into SS. But it would be your money. You would have some control over it, and when you died....instead of it just going away to the gov., you could will it.

He also supports healthcare savings....basically the same idea as above.

I hope we see these changes in our lifetime. I hope its the end of the world as we know it!

How do you account for families in that model ?

Let's say you have two people. A single guy living alone, and a guy who has to feed his family of four. Currently both lose the same 30% away from the initial paycheck. But when all the taxes are added to food prices and clothes etc., the familyman ends up paying 4 x much taxes as the single guy. The single guy puts the money he saves in bank and once he saves enough he flies to thailand or mexico, does drugs, buys sex, cheap house, cheap food etc... and never comes back.

If there's no mechanism to compensate for this then I don't think Bush will ever make it happen since he gained his political capital especially from people who believe in core family values. And if I remember correctly he didn't say he supports it but thought it's an interesting idea.



[edit on 8-11-2004 by vibetic]

one could do those things as of now, ofcourse a single person, if initiative exists, has more oppertunity to keep more money than a family

but take into accout combined income in a family, or in your vision does the mother stay at home, and also what about tax brakes for the families hmm

[edit on 8-11-2004 by Franki]

Originally posted by vibetic

Let's say you have two people. A single guy living alone, and a guy who has to feed his family of four. Currently both lose the same 30% away from the initial paycheck. But when all the taxes are added to food prices and clothes etc., the familyman ends up paying 4 x much taxes as the single guy.

[edit on 8-11-2004 by vibetic]

As I've seen the Nat'l sales tax / consumption tax proposed the rate was at 21% to do a dollar for dollar replacement of the current system.

Business taxes go to zero and prices are expected to fall as competition dictates.

There are cash credits paid to those below certain income levels irregardless of consumption tax paid and there were I believe levels of cash credits paid based on dependents.

The average low income person came out better with the reformed system when the combined cash credit and price reductions in goods were factored.

The removal of all deductions and shelters even with the lower 21% rate ensured more actual payment from upper income groups as I remember it.

Originally posted by vibetic
How do you account for families in that model ?

Let's say you have two people. A single guy living alone, and a guy who has to feed his family of four. Currently both lose the same 30% away from the initial paycheck. But when all the taxes are added to food prices and clothes etc., the familyman ends up paying 4 x much taxes as the single guy.

That is what makes it fair. Who uses more public services? The single guy or the family of four? I am willing to say that the family of four has a house, uses the schools, libraries more... I think this is still unfair to the single guy. Why should those who consume more services not pay more into the system?

Originally posted by Mainer
That is what makes it fair. Who uses more public services? The single guy or the family of four? I am willing to say that the family of four has a house, uses the schools, libraries more... I think this is still unfair to the single guy. Why should those who consume more services not pay more into the system?

That's a libertarian view, Bush is a pro-family conservative.

Originally posted by vibetic

Bush is a pro-family conservative.

Laughing my a** off

Thanks, vibetic

Originally posted by vibetic

Originally posted by Mainer
That is what makes it fair. Who uses more public services? The single guy or the family of four? I am willing to say that the family of four has a house, uses the schools, libraries more... I think this is still unfair to the single guy. Why should those who consume more services not pay more into the system?

That's a libertarian view, Bush is a pro-family conservative.

That�s not a libertarian view at all, actually. The libertarian view would be to privatize those schools, libraries and other services so they run better and cheaper. This would make it more equal; you wouldn�t have to worry about who takes more out of the system, as much of the system would not be there (in the government sense, anyways.) Next time you want to state something as being a libertarian view, please consult a libertarian first.

Originally posted by AlabamaCajun
Originally posted by vibetic
Bush is a pro-family conservative.

Laughing my a** off

Thanks, vibetic

At least he and his friends want people to believe he is pro-family
www.townhall.com...
www.mafamily.org...
www.probe.org...

And he is certainly conservative.

Originally posted by cavscout
That’s not a libertarian view at all, actually. The libertarian view would be to privatize those schools, libraries and other services so they run better and cheaper. This would make it more equal; you wouldn’t have to worry about who takes more out of the system, as much of the system would not be there (in the government sense, anyways.) Next time you want to state something as being a libertarian view, please consult a libertarian first.

I was referring to the basic idea of the preceding post that people pay proportionally to what they use. Let the schools, libraries etc. be privatized then the family of four will end up using more them and paying more for them. That I meant as libertarian. And I think it is, as I'm somewhat libertarian myself, people paying only what they need.

You're right I should've explicitly stated that taxes are no longer involved at that point. I didn't sufficiently register the implications of the last sentence ending with the words 'into the system'. I wasn't thinking about the tax part as my mind was merely comparing the attitude to the rightfulness of the pay-burden distribution. My sincerest apologies to all libertarians who were offended by my remark, it was meant to be positive.

I found this explanation of National sales tax from CATO Institute, a libertarian think tank.

The policy paper is from 1996 so the figures and percentages are lower than they would be now. The concept however remains virtually unchanged.

CATO

The current U.S. income tax system suffers from a multitude of defects that are well recognized by those who have to comply with the tax code each year. A major objective of the NST plan is to fix those deficiencies. For example, an NST should promote higher rates of economic growth by dramatically reducing the tax bias against work, savings, and investment. The marginal tax rate on consumed income that workers and investors face would be much lower, and the return on savings and investment would not be taxed until spent. Moreover, an NST would reduce economically inefficient distortions in the pattern of investments that are now dictated largely by tax shelters, deductions, and special-interest loopholes.

Wow, people actually responded with thoughts and stuff. WOW!

I do not know everything about this tax. I have just looked into it breifly. I do know that a similar system has been initiated in Russia with a 12 or 13% national sales tax, and it is supposedly doing alright.

As far as the family of four thing. I do understand the point you are trying to make. The fact of the matter is though, that the elimination of the IRS alone is a huge savings in government expenditures. If the US was to impose this form of tax...it would mean HUGE reform in government spending. Privatization of many government programs would occur as a result (at least at first). The goverment would get a good lesson in how to spend less. They need it.

Is the IRS a huge gaping sore on the American landscape? Yes.

It needs to go.

But a national sales tax? This is certainly reminiscent of the many shifts the government does to take and spend the same amount while "appeasing" the people.

I say do neither. Privatize ALL schools, privatize all Social Security etc. The Federal Government does not have the time, inclination, or efficiency to handle national problems with regard to money or wealth distribution.

Here's an idea, have the state tax us, and then have the states fund the Federal Government.

Originally posted by KrazyJethro
Here's an idea, have the state tax us, and then have the states fund the Federal Government.

I like this idea, so long as there would be limits on the amount and method a state could use to tax. This would return power over the federal government to the states, as it was and was meant to be. We too often forget it was the STATES that delegated power to the federal government, not the other way around.

Yes, it would be nice to have the states blackmail the Fed every so often.

But seriously, it is almost impossible to get people to notice that the Federal Government is the biggest problem facing America today.

NOT outside forces.

A flat tax system will make it a big advantage to be rich, earnings verses expenditure goes way up after a certain point. You get to horde away all the money you want and little tax money gets to the coffers. Lets figure a national tax at 20% the upper echelaun will be averaging about 2% taxes on their income. As for the person running the register at your local Wally Mart, 22% or more of their income is now going to taxes where on the current system the average is about 6%-10% depending on if groceries are taxed in your area.
Next, currently some people are paying about 30% on income, how do we make up for that loss? Guess, all those people living payday to payday. Someone really needs to crunch the numbers here, but the system is so big, few people can wrap there brains around it.

The worst idea ever to hit, privatization, corporations waste so much money it's not funny. Look what the big medical corps did to medicare, sucked it practically dry. HMO's, medical costs are now rising to a point that it is becoming a luxury. I don't blame Bush for all of it, but he's done nothing to help either. Go back to 1994 when a healthcare bill was introduced, instead of congress coming up with a way to put at least a minimum system in, they acted like children by comming up with names like "Hilary Care".

The real problem lieas in finding a congress that will put together systems that will work efficiently. The first issue should be to eliminate the paperwork needed to file taxes make up to 10 catagories of income sources and 10 catagories of deductions, this would fit on one page. Simple attached sheets one for deductions and one for incomes. In some cases is may take an extra page to list itemizations, but at least the code is simplified.

Why bother trying to set up a system that will step on as few a people as possible (which is a tenuous task, one not suitable for the Federal Government).

I'd much rather give people back all their money without tacking on more taxes in other areas. Everything else should stay the same for a while (of course everything would be incrimental so as not to shock the system).

Couple that with cleaning most of the legal clutter and political red tape built up against small businesses and companies.

Cleaning is about the most strenuous excersize in this plan. We need some true non-partisans (NOT bi-partisan) in there to assess the problems in spending and allocation of the federal government.

Of course this would free up some people from a job, but the benefits outweigh the temporary downside.

The problem with a flat or national sales tax is that it hurts the lower income family harder than the average or upper class.

Consider this. If there is a flat tax of say 20% payable by all people regardless of income. If a person is making $100,000 a year he is paying 20,000 in taxes leaving 80k in disposable income. A person making 10,000 a year is paying 2,000 in taxes leaving only 8k in disposable income. It hurts the rich less than the poor. It's a hell of a lot easier to live on 80k even with a family than a poor family living on 8,000. I am a Republican and I voted for Bush, but a flat/sales tax is not the answer.

Originally posted by just_a_pilot


Consider this. If there is a flat tax of say 20% payable by all people regardless of income. If a person is making $100,000 a year he is paying 20,000 in taxes leaving 80k in disposable income. A person making 10,000 a year is paying 2,000 in taxes leaving only 8k in disposable income. It hurts the rich less than the poor. It's a hell of a lot easier to live on 80k even with a family than a poor family living on 8,000. I am a Republican and I voted for Bush, but a flat/sales tax is not the answer.

Good point however every proposal that I've seen whether it be flat tax or sales tax has some kind of "floor" whereby the person making $8000 would pay no tax whatsoever, in the case of sales tax this person would receive a cash credit much grater than any sales tax paid giving them a net gain on income.

The sales/consumption tax is the fairer of the two in my mind because naturely the person making $100k in your example is going to spend more money and there for pays more in taxes.

The ultra-rich will be viewed as having the advantage because it takes only so much money to live on. With all incentive removed to shelter income the only vehicle left would be investment as a way to put cash to work - this is the money that drives the jobs engine.

The last number I heard on the cost of tax preparation to individuals and business was 1/4 of a trillion dollars every year. Think of this money directed to a productive use in the economy and thats only one small piece of the pie.

Very simply put the fewer steps between you spending your dollar and its return to you in salary or income - the more efficient the economy is and wealth is easier to build. We're all better off for it.

I just wanted to interject a point in case some people don't know this. I know that most of you do so don't take offense.

There is a big difference between a national sales tax, and a flat tax.

Originally posted by AlabamaCajun
people can wrap there brains around it.

The worst idea ever to hit, privatization, corporations waste so much money it's not funny. Look what the big medical corps did to medicare, sucked it practically dry. HMO's, medical costs are now rising to a point that it is becoming a luxury. I don't blame Bush for all of it, but he's done nothing to help either. Go back to 1994 when a healthcare bill was introduced, instead of congress coming up with a way to put at least a minimum system in, they acted like children by comming up with names like "Hilary Care".

Bad example here, HMO's are sort of private, there must fufull a large number of government mandates which destroy any hope of them becoming as efficient as a completely private corp.