Tax systems and reform. Oh what fun. - Page 4 - Political Fever

xjoe3x · #31 (**permalink**) 06-24-2008, 10:18 PM

Quote:

Originally Posted by mwillman

Here is an analysis of the fair tax idea.
that shows much better then I can that the fair tax is anything but fair.

FactCheck.org: Unspinning the FairTax

That site is more than a little dishonest.

I could tell as soon as I saw "How to Make 30 Look Like 23".

That is a frequently used dishonest statement.
Currently the income and payroll taxes are calculated inclusively.
Lets say you fall into the 15% income tax bracket.
That means of ever 100 dollars a person makes 15 dollars goes to the government.
If we calculated that exclusively than that 15% becomes 18%.

Now fairtax is also computed inclusively.
If we are going to compare the two current taxes is not not fair to compute the amount in the same way.
The fairtax is 23%. That means for every 100 dollars a person spends 23 dollars goes to the government.
If fairtar were exclusive then that become 30%.

Simply:
Inclusive
Income 15/100 = 15%
Fairtax 23/100 = 23%

Exclusive
Income 15/85 = 18%
Fairtax 23/77 = 30%

If we are going to compare the two they both need to be shown as inclusive or exclusive. Since the current system is inclusive it only makes sense that fairtax be calculated the same we for a fair comparison.

So already this site is being less than honest, but I will continue with what else they write.

Lets talk about the 34% by the Advisory Panel on Tax Reform. If they were right that means that the government is already taking that much from us, luckily they are wrong.

First off the panel makes its computations exclusively, so they are wrong right off the bat.

The site says fairtax expects full compliance, which they do not. They expect an improvement of in compliance, which there will be as fairtax makes it much harder to cheat. They assumed 15% cheating, which is one of the problems fairtax is going to help fix. So they are even more off.

Then we have this nice statement "Unfortunately, the Advisory Panel has thus far refused to release its methodology, making it difficult to reconcile its projections with those of Americans for Fair Taxation."
Oh isn't that convenient.

Also the panel did not account for the economic changes that fairtax will bring. Quoting the panel's report "[T]hese estimates do not account for how those behavioral changes will effect the economy. Instead the treasury department holds constant the Administration's projections for the future size of the overall economy." It does not account for things fairtax is going to do.

The panel's report is worthless and is done with bad calculations. It may as well be thrown out.

About it being regressive.
First they talk about sales taxes, but fairtax is more than a simple sales tax.
The prebate is determined in the 23% calculation so its cost is unimportant.
Second it does not talk about the improvement in jobs and the economy.
It does not address most of what I brought up about what makes fairtax progressive.
It also goes into percent paid. But right here it says "objecting that Treasury considers only the income tax." As I said before the payroll tax is the tax that falls more on the lower and middle classes. Since fairtax is replacing all tax this too is an unfair comparison.

Hopefully you can see the mistakes and dishonesty of this site.

mwillman · #32 (**permalink**) 06-24-2008, 10:28 PM

It just sounds kind of crazy to me.

No income taxes but we all pay a large sales tax but dont
worry we will give you a check at the start of each year that will give you the money you need to pay your taxes.

I dont see any improvement over the system we have and from the numbers I read on that site but that came from governmental sources seem to say that the middle class basically everyone between 20K and 200k range will pay more taxes then before and the highest levels will pay less taxes.

No I dont like it.
It is not worth the cost of changing it as far as I can tell.

xjoe3x · #33 (**permalink**) 06-24-2008, 10:33 PM

Quote:

Originally Posted by mwillman

It just sounds kind of crazy to me.

No income taxes but we all pay a large sales tax but dont
worry we will give you a check at the start of each year that will give you the money you need to pay your taxes.

I dont see any improvement over the system we have and from the numbers I read on that site but that came from governmental sources seem to say that the middle class basically everyone between 20K and 200k range will pay more taxes then before and the highest levels will pay less taxes.

No I dont like it.
It is not worth the cost of changing it as far as I can tell.

Well its not that large. It is just what we are paying now.

I would think you understand the problem with exemptions and special interests that we currently have. If we start exempting again that is what will start all over again, the prebate prevents that.

As I showed that site was just a big load of crap, full of dishonesty. There is plenty of improvement. Right off the bat we are getting rid of special interests buying our politicians for tax benefits. We get improved economy, something we really need right now. Increased real wages for all.

I would really recommend the books, or at least go over to Americans For Fair Taxation: and really research it. This is something that could really help all of us out a lot. Keep an open mind, we need to do something out the corrupt tax system we have in place.

mwillman · #34 (**permalink**) 06-24-2008, 11:07 PM

I think there are easier ways to limit special interests and tax exemptions without turning the whole tax system on its head.

I always have a problem with the term special interests becuase every interest can be described as a special interest and I think people have the right to petition there elected leaders.

xjoe3x · #35 (**permalink**) 06-24-2008, 11:13 PM

Quote:

Originally Posted by mwillman

I think there are easier ways to limit special interests and tax exemptions without turning the whole tax system on its head.

I always have a problem with the term special interests becuase every interest can be described as a special interest and I think people have the right to petition there elected leaders.

Well I would ask that you at least research fairtax more.

When researching sites here is some advice. If you see the site saying the rate is 30%, they are being dishonest it is a bad site try a different one. It is a quick way to pick bad sites off. Most bad sites I have seen will state that. Another thing to look for are these "studies" President's Advisory Panel on Federal Tax Reform and the Congressional Joint Committee on Taxation if you see these studies being used as proof. Both of these studies are incorrect and biased. If you see a site using these kinds of things they are either outright lying, stupid, and very misinformed.

I see what you are saying with the term, but you know what I am referring to by special interests in taxation. I do not know a better way to describe them.

What do you think we should do? We have been reforming our current code for a long time now and have not had success. We have a very complex code that is filed incorrectly the majority of the time. We have a 15% non-compliance. We have a code that is damaging to our economy and forcing business and money to go overseas. We have a very non-transparent system so it is hard for the people to tell the amount in taxes they pay. That is just some of the bigger problems with our system.

Fairtax is the best solution I have heard so far, if there is a better one I would gladly switch and take up the cause.

xjoe3x · #36 (**permalink**) 06-25-2008, 10:49 AM

Here are a few other benefits of fairtax I did not mention.

The first one has to do with illegal immigration. Many have big problems with illegal immigrants because they live here and do not pay taxes. That is understandable. Under fairtax these people will start paying taxes.

For that matter so will tourists and other visitors. Everyone that buys from here will pay taxes here.

The black market in the US who make there income off of illegal income who do not pay taxes will start paying them.

That will also widen our tax base. All of these people who are not paying taxes will start paying taxes.

Also the fairtax is more reliable than our current tax base. The consumption amount varies much less over time than does income. Consumption comes from three areas income, savings, and borrowing. While income only comes from income. Thus making fairtax more reliable.

wannabehippie · #37 (**permalink**) 06-25-2008, 11:05 AM

Fair tax is anything but fair. It will tax food, medicine, etc. That will end up hurting the poor and middle class more.

If an item now costs 100, under the fair tax it will cost 123 (assuming a 23% tax rate)

How is that fair to the poor and middle class. I am middle class, last year my effective tax rate was below 23%, so I will end up paying more in taxes.

Additionally under the fair tax proposal from the Fairtax.org website, rent would be taxed as well. So my 1100 montly rent goes up to 1353.

Even with the "rebate" that would be planned I would come out behind each month, with less money in my pocket.

As would most people who fall into the middle and lower classes.

Quote:

Originally Posted by xjoe3x

Many people think there needs to be change in regards to taxes. The currents US tax code is excessively long and riddled with loopholes and exceptions. The problem is in fixing it. So what do we do to fix it? What is the best form of taxation?

The AICPA(American Institute of Certified Public Accountants) recently listing principals of how to judge a good tax reform in 2005.
These principals are as follows:
1. Simplicity
2. Fairness
3. Economic Growth
4. Efficiency
5. Neutrality
6. Transparency
7. Minimizing Noncompliance
8. Impact on Government Revenues
9. Certainty
10. Payment Convenience

All of these principals are equally important according to the AICPA.
I find these principals to be accurate covering what a good tax reform would be.

Now what system fits these principals the best?
I find it to be the fairtax tax reform.
We need change and if you have a better plan please state it.
Lets go threw the fairtax relating to principals.

Simplicity: While not being as simple as some other forms fairtax is fairly simple. It is very simple compared to the current code, which in length is over 60,000 pages(USATODAY.com - Scrap the tax code).
That goes against a mere 53 pages according to my computer, pasted the bill into openoffice and saw how many pages there are. For the taxation part it is a simple 23% tax rate on all goods and services from business to consumer. It provides a prebate to families to cover the tax cost of necessities which is determined by family size. This would replace the multiple taxes already in place by the federal government.
"TITLE I--REPEAL OF THE INCOME TAX, PAYROLL TAXES, AND ESTATE AND GIFT TAXES

Sec. 101. Income taxes repealed.

Sec. 102. Payroll taxes repealed.

Sec. 103. Estate and gift taxes repealed."
GovTrack: H.R. 25 [109th]: Text of Legislation

One of the main principals of the fairtax was it simplicity. It does fairly well in this category.

Fairness: This can be a tricky one. How to we determine if fairtax is actually fair.
Exemptions: Exemptions lead to special interests and are not fair. Fairtax eliminates exemptions. It makes it harder for special interests and other influences to effect our tax code.
Education: Many would agree that taxing education would be detrimental and unfair. Well fairtax doesn't. Education is an investment and is treated as so.
The poor: It is important to many that we treat the poor fairly. This is done threw the prebate. The poor can get all their necessities completely tax free. The poor will also be helped by the boost in the economy, which will come up soon.
Equality: It treats all people equally.

Economic Growth: This is a large problem with the current code. Only consumer sales are tax America would become a tax haven to all business. The current tax code is making businesses go overseas. Fairtax will not only bring those back, but overseas businesses will come here. This will cause a boom in available jobs and foreign money coming to the US.
People with money are putting there money in foreign banks which is a drain on our economy. With this new tax code they would not need to do that and that money would come back to help fund our economy. They would no longer have a reason to go overseas for their banking needs.
Fairtax is a savings based tax instead of the consumer based tax we have currently. People would start savings more. Savings helps the economy, that is just economic fact.
It is also predicted that the real pay of all people would increase do to the economic growth caused by enacting fairtax.

Efficiency: This one is determined by many others in this case. Fairtax will be very efficient. As we will see later it will decrease the amount of tax evasion. It is simple and fair. All of these factors help in its efficiency. It is a very compact efficient way of taxation.

Neutrality: It is very neutral. It gets rid of the exemptions. It stops the special interests from getting tax benefits. As you can see many of these different categories tie together. It treats everyone the same.

Transparency Transparency is the ability to see how much you are being taxed. All the tax will be up front. 23%. Unlike now when you feel hidden taxes from all other things up to that purchase. Our current system is not all that transparent with the total tax burden you feel. You can not get any more transparent than this system.

Minimizing Noncompliance Of course we want to do what we can so that everyone pays taxes. Well with fairtax it would take two to cheat on taxes. Since taxes are done at the counter only. The seller would have to allow the consumer to cheat on the taxes. That would be harder than simply filling out your tax form wrong. It makes it much harder to cheat on your taxes. Most companies are not going to risk jail to help someone else save money on their taxes.

Impact on Government Revenues: Fairtax is revenue neutral. It is designed to make as much income for the government as it does now. That is what we want for tax collection. Spending is a different issue that most certainly needs to be addressed, but not in tax reform.

Certainty: How certain are they that fairtax will work. It was designed to be the best tax reform. Economist are the main influence in the fairtax and there is a very high certainty that fairtax will work just as it was meant to. This is not just any old guys plan.

Payment Convenience: This is another big improvement. Instead of having to collect from all those individuals they would only need to collect from businesses. The calculation for the payment is very simple. We currently have to file complex forms and individuals as well as businesses spend billions to plan and file taxes. This will be a huge reduction in convince.

As far as tax reform goes I see no better than fairtax.

So what do you guys and girls think?

xjoe3x · #38 (**permalink**) 06-25-2008, 11:14 AM

Quote:

Originally Posted by wannabehippie

Fair tax is anything but fair. It will tax food, medicine, etc. That will end up hurting the poor and middle class more.

If an item now costs 100, under the fair tax it will cost 123 (assuming a 23% tax rate)

How is that fair to the poor and middle class. I am middle class, last year my effective tax rate was below 23%, so I will end up paying more in taxes.

Additionally under the fair tax proposal from the Fairtax.org website, rent would be taxed as well. So my 1100 montly rent goes up to 1353.

Even with the "rebate" that would be planned I would come out behind each month, with less money in my pocket.

As would most people who fall into the middle and lower classes.

Yes it taxes them to stop exemptions. It covers the costs of the necessities anyway so people get the tax money for them.

As I have shown it will be very beneficial to the poor, they are looking to get the best deal from this tax. It will also be beneficial to the middle class.

Yes and people will either be getting their full income without taxes or companies will lower prices. Probably a combination of the two.

Again this will be beneficial to all, including you. You have a job right? Well you will be making more money now. Remember it repeals other taxes. You will also benefit from the increases to the economy.

mkfffe · #39 (**permalink**) 06-25-2008, 11:46 AM

Question: xjoe3x, you keep mentioning that prices will drop and/or your income will rise. Well here is the problem, with the 23% tax prices will rise, I doubt there can be anyone who can show how adding a 23% tax will lower prices, and with the amount of money now going into everyone's pockets because taxes are gone won't this combination raise prices further? You have more money to spend, therefore demand will go up for products, since supply probably won't change prices will rise. How does this system account for this.

xjoe3x · #40 (**permalink**) 06-25-2008, 12:06 PM

Quote:

Originally Posted by mkfffe

Question: xjoe3x, you keep mentioning that prices will drop and/or your income will rise. Well here is the problem, with the 23% tax prices will rise, I doubt there can be anyone who can show how adding a 23% tax will lower prices, and with the amount of money now going into everyone's pockets because taxes are gone won't this combination raise prices further? You have more money to spend, therefore demand will go up for products, since supply probably won't change prices will rise. How does this system account for this.

Rrr I almost had this post done and the computer decided to restart for updates. How irritating is that!?

This is a pro-saving and investment system. It encourages people to not spend, but rather save for the future.

About prices. There will be some reduction in price because of the reduction in compliance costs. Individuals will also have more money because of that reduction.

Not counting that reduction and the improvement to the economy:
If a product costs 100 dollars right now you should expect a 0-23 dollar increase in price. The higher the increase means that the paycheck of that company's employees went up respectively.

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