I wonder how many $$$$ have been used by tax accounting firms, tax lawyers, and other business entities to defeat and resist any discussion of a fair and equitable tax system. A flat tax may not be the perfect answer but if would do away with the huge loopholes better known as exemptions which seem to benefit the wealthy a lot more than the middle class or other working classes.
|The Armey Shelby flat tax, advocated by Steve Forbes during the 1996 Presidential primary campaign and recently reintroduced in Congress by Armey, entails scrapping the existing tax code.
Instead, taxpayers would pay a flat 20 percent of income for the first two years, a rate that would then fall to 17 percent afterwards.
Individuals and businesses would pay the same rate, and all deductions and would be eliminated. The only income not subject to the tax would be the first $33,800 of income, which would be exempt for everyone.
While it has the appeal of simplicity, the plan has drawn fire because it would eliminate popular tax breaks such as the mortgage interest deduction enjoyed by millions of home owners.
President Clinton has argued against a flat tax, saying that it would not provide the government with enough money to pay its bills.
Under this plan, a family earning $50,000 with two children would pay $2,990 in federal taxes at the 17 percent rate, according to the Tax Foundation, a non-partisan tax analysis group in Washington.
That compares with $3,967 the same family pays under the existing system.
The Flat Tax could be interesting, but a complete ditching of the IRS in favour of a National Sales Tax makes more sense, ultimately. The way it works is by having a simple, nation-wide tax on all new, retail purchases (businesses would not be charged for wholesale purchases, so they would not have to increase their prices accordingly).
For the complete information, check out this site.
|Traveller wrote: |
|The Flat Tax could be interesting, but a complete ditching of the IRS in favour of a National Sales Tax makes more sense, ultimately. The way it works is by having a simple, nation-wide tax on all new, retail purchases (businesses would not be charged for wholesale purchases, so they would not have to increase their prices accordingly).
For the complete information, check out this site.
Not sure about that. I was trying to look at the section on seniors (I got roth IRAs and pretaxed accounts) and it sounds like they are just dancing around the issue. Looks like I will wind up paying a second tax on those monies when I spend them. Of course, like I said, I had a hard time understanding what they were saying about plans that were taxed up front.
Sounds fair to me. If you *must* have an income tax, then keep it simple and fair like this:
1) What was your income last year?
2) Multiply that by 10% (or whaterver %). BUT NO DEDUCTIONS OR TAX SHELERS!
3) Send that in.
Now what could be fairer that that. And the simplicity is extremely important. I think a lot of people just don't even bother to file taxes at all, because it's too much of a complicated hassle. Or they pay too much, while the rich who can afford to hire beady-eyed accountants and lawyers so that they pay little or no taxes at all. This would solve both problems.
That plan would be good for the rich, and bad for the poor.
the FairTax plan is actually very good.. I was against the idea at the onset, mostly because I thought it was the same as the original flat tax concept.. but this is a national SALES TAX that would replace (not be added to) the federal income tax.. the plan is explained very well in the FairTax Book written by Neal Boortz
what's great about it, is this:
no IRS.. which means billions of dollars per year aren't spent on being compliant with rules that even the IRS employees don't understand
everyone pays the same tax rate.. no more screaming about loopholes and the rich not paying their fair share.. even non-citizens will pay taxes whenever they purchase something in the US
every person will have control over how much he pays in taxes, since he can choose what he buys
corporations will eliminate their off-shore headquarters because there will be no more need once the tax dodging will be unnecessary.. which in turn means corporations from other nations will almost certainly move to the US, creating jobs
the influx of businesses will be a huge boost to the economy, and the government will have more money than they ever grabbed through income taxes.. and without having to operate a billion dollar agency (IRS) to collect the monies
there are many unflattering reviews of the FairTax Book, but invariably the book explains the FairTax concept in distorted terms.. they incorrectly quote the sales tax rate while comparing it to under-stated income tax brackets, as well as other critical parameters
if you want to know what is in the book, you'll have to read the book itself, rather than what some politically-biased economist wants you to think it says.. it's very clearly written, in terms anyone can understand
chances are you'll be a supporter after reading it
and this plan is good for both the rich AND the poor
|every person will have control over how much he pays in taxes, since he can choose what he buys |
That is completely not true. Perhaps you've never been at the bottom, but you need to buy things to live - food, clothing, shelter. Poor people pay a much higher proportion (if not all) their income for their basic needs in products and services. That means they cannot avoid the tax. Rich people, on the other hand, do not. They have much larger disposable income which is essentially no longer taxed. That's a terrible scheme under which poor people cannot avoid being taxed on all their income, but where rich people essentially get a tax break because a large part of their income is no longer taxed. This idea would hurt the people who are worst off, and benefit the rich.
a good point, nopaniers.. and if you read the book, you'll see that your concern is eliminated as monthly allowances will be given for food, clothing, etc.. which means the poor will actually be paying less in taxes as a percentage of their income.. thus they will be better off
and yes, having been on my own since I was 19 (a bit more than 20 years now), and having been given absolutely zero handouts in my life, I'm well aware of what it's like to be on the bottom of the income scale
That is a good thing. You need a healthy rebate. Good answer but I'm not convinced.
Governments need taxes to pay for services. Regardless of the tax system, they are still going to need the same amount of money to pay for these services. If poor people are exempt, and rich people get a massive tax cut, then who is the difference going to come from? It seems like it's going to be the middle class...
People who buy books and CDs from Amazon will see the prices for these things go up. Is that right? For people like me, who don't live in America, I won't be happy about it. Do I get a tax break to compensate for it? If not, I'm likely to go elsewhere for my books.
no, the prices of things will not go up due to the FairTax.. it will stay the same.. because there will be only one tax imposed on the product, when it is sold to the end user.. this is not a VAT (value-added tax) system, where all the materials that go into the book (printing, publishing, paper, distribution, promotion, and even the writer's efforts) are all taxed.. the FairTax system wipes out a dozen level sof taxes before the book even goes on sale.. you, as a foreigner, will see no difference
as for tax cuts and government income, it's not a straight correlation.. think of a company that sells 1000 units of a product for $100 while their manufacturing cost is $70.. they see a net profit of $30,000 on all those units.. then they lower the price to $90 and sell 2000 units.. their net profit increases to $40,000.. they actually made more money by charging less
in the same sense, the government will receive more in taxes when they cut the tax rate (to a point, that is).. this has been proven many times, most noteably during the Reagan years
if people have more money coming in after taxes, they invest or spend more.. which in turn goes back into circulation, creating more jobs and being taxed more, which means more goes to the government
and nobody has mentioned anything about a "massive tax cut" for the wealthy.. you're rewriting the parameters of the proposed tax system, the same as all other critics have done
It sounds to me like you're promising things which are just illogical. You're saying that you should cut income tax, and also decrease sales tax. Where will the money for the services (education, health, police, ambulances, fire ect) come from? I'm asking you again: If the government is going to get the same amount of money: WHO WILL PAY?
Do you seriously think that when the government increases the tax on goods and services that their price will go down? I seriously doubt it.
And I don't buy this tax once business. You're proposing a sales tax. If I make, say shoes, and buy shoe laces to put on them, those shoe laces will cost me an extra 20%. The sole will cost me 20% more. The leather will cost me 20% more. And so on. But sales taxes get charged many times: once at each level of production. Each of those charges will add up, and be passed on to the consumer (plus the extra 20% the store has to charge). Unless you want to put in a massive system of extra bureacracy, you're not going to get around that.
I am saying that it is a massive tax cut for the wealthy. That is because it is. Essentially the extremely wealthy will pay no tax at all under your scheme. Only what they spend on goods and services will cost them money, and that is essentially nothing. In comparison the money that they invest will be tax free. This plan means that the wealthy pay no tax as a percentage of their income. That's a massive tax break.
|nopaniers wrote: |
|And I don't buy this tax once business. You're proposing a sales tax. If I make, say shoes, and buy shoe laces to put on them, those shoe laces will cost me an extra 20%. The sole will cost me 20% more. The leather will cost me 20% more. And so on. But sales taxes get charged many times: once at each level of production. Each of those charges will add up, and be passed on to the consumer (plus the extra 20% the store has to charge). Unless you want to put in a massive system of extra bureacracy, you're not going to get around that. |
If you actually read the information, you will find that the proposed, national sales tax is only levied at the retail level, and NOT "once at each level of production." Thus, your statement is its own refutation.
So basically you want to build in the world's biggest tax loophole. All I need to do is have my company give me benefits as part of my job instead of money and I'm tax free. Lawyers and politicians won't have to pay a cent of tax - but someone in a temporary or part time job serving chips down at the local pub won't have any option but to pay in full.
US retail sales are approximately $4.1 trillion per year. The US government has around $2.2 trillion budget. I simply don't get where you think the money is coming from. If you tax retail sales at something like 20%, there's no way you can break even.
What am I missing?
Let's just take one example: Gas.
Is the tax charged on gas or not? If it is, then you're going to have to pay 20% tax twice, and what you're saying is wrong. If it isn't then there's a massive hole in the budget.
read the book.. it answers all your questions