Fair Tax?? Seems like now would be a good time to try it. 16 posts by 7 users

Posted: 10/25/2008 at 03:56PM

The Fair Tax has no chance with Pelosi in control of the House, Reid in control of the Senate and Obama in the White House.

It is not too good to be true. I would suggest you read the followup on the Fair Tax by Boortz too.

Posted: 10/25/2008 at 04:45PM

Yes, I know it is a long shot because of special interests BUT if there ever was a time to try to pump up support now would be a good time in our current emergency situation. I'm surprised that the supporters in Congress haven't been more vocal about it. Maybe the plan needs a better PR company behind it and some Congressmen with more guts. If a guy can get aid for companies that make wooden arrows for children into the bailout package, certianly Linder can get people talking about how the Fair Tax can save the country for collapse.

Posted: 10/25/2008 at 08:16PM

Flat tax is not going to happen . . . too bad.

Posted: 10/26/2008 at 08:39AM

The Fair Tax is totally different than the Flat Tax--almost completely opposite.

The Flat Tax has one tax rate for all levels of personal income. The Fair Tax does not tax income at all--not personal income or corporate income. It taxes all goods and services at the point of payment. Actually, it would almost completely do away with the IRS and there would be no deductions.

FYI--Last year I calculated my income with Giuliani's tax plan, which took me all of 2 minutes to calculate. Ironically, it came out to almost the same as what I currently pay. However, I currently pay an accountant about $3000 to do them for me so in effect I would be saving.

While both tax plans are better than our current complicated system, the Fair Tax seems better than the Flat Tax because it would be impossible to dodge taxes like so many do and there would be no incentive for corporations to leave the US to move overseas.

Posted: 10/26/2008 at 09:34AM

I guess they would go the way of travel agents, cobblers and buggy manufacturers.

The lack of any mention of it during this financial crisis makes we wonder about the courage of its supporters. I mean, why bother supporting it at all if you aren't going to support it when we need it most.

Posted: 10/26/2008 at 05:45PM

The other big problem with making a major change to the tax code is the effect that it will have on business. Unfortunately, many businesses are structured around the tax code. For example, the rental business depends in part on the ability to depreciate the property and deduct operating expenses. If the income tax were suddenly removed in favor of another type of tax, it could significantly alter the profitability of the business. Could you imagine paying a 15% sales tax on rental property? Would services be taxed or just profits? Would rents be taxed (with a sales tax)? These things could destroy the rental business as it exists today. The same is true of thousands of other businesses. Of course, we could adapt, but the metrics of the business would certainly change.

It sounds simple, but the unintended consequences would be HUGE!

Mike

Posted: 10/26/2008 at 06:57PM

Mike,
Profits are not taxed for any business. Services and goods are both taxed equally, including internet goods, but the tax is not on top of what we are currently paying. The current cost of goods are already approximately 25% higher than necessary because of all the corporate taxes paid. (As consumers we currently pay corporate taxes for what we buy.) There is controversy about whether 23%, 25% or 30% would be the actual percentage of the tax in order to cover all our entitlement programs, debt, etc. but it is designed to replace all the taxes built into our prices already.

And you are right, business spend billions of manhours and dollars on figuring out ways to deal with the corporate tax structure. The Fair Tax would eliminate those expenditures, and yes, accountants would have to find another profession.

Really, before you discount it, read the book. Every criticism is discussed. Although I can't remember if what what is said about depreciation but you have to recapture that anyway when you sell.

Posted: 10/27/2008 at 04:50AM

Please read the books, because the points raised here are fiction in relation to the Fair Tax.

Taz and Shari,

I am 100% behind changing our tax system IF EVERYONE PAYS THEIR FAIR SHARE (keyword everyone). However, the fair tax and flat tax plans are nothing more than a fictional fantasy. The point of my earlier post is that the current tax system is set up to pick winners and losers (taxwise). Some industries get huge tax breaks and others get relatively few. I'm not saying that those companies wouldn't adapt with a major change in the tax code, but I am saying that the implications are huge, especially in the short run. As an example, look at this statement:

Rents would be taxed but since you are not paying income tax on the income the net on rents like every other product would stabilize at the levels they are now without the fair tax.

The current tax system is set up to allow rental property owners to pay artifically low taxes. The government allows depreciation of an asset that actually appreciates because they want to provide an incentive for the private sector to provide rental housing. They do that because the government is terrible at being a landlord (look at any government housing and see how successful that is)!

If that tax incentive were taken away and a 25% tax on rents were inserted, the difference in the tax paid would be huge, because I'm currently paying tax that is artifically low. Could that be passed onto tenants via higher rents? Unless the tenants get a raise, no. Many low income tenants simply don't have enough income to pay higher rents. Even if they did, many of the tenants have year long leases. They certainly aren't going to agree to a rent increase during their current lease period. An that's just one example out of thousands of different businesses.

The point is that a major change in the tax system will not happen because it would cause chaos and instability in the short term. As was also mentioned, our tax system is not really about money, it's about power. Our current tax system allows government officials to have power, through money given to them by special interest groups. A fair tax or flat tax would stop this money flowing to these politicians and they certainly aren't going to allow that!

Mike