All right, I think most folks here know my stance on online gaming, and on legislation of morality. But let's not take that into consideration for a moment.

The government is cutting itself off from billions in potential tax revenue here. I mean come on! With this kind of cash rolling in, who knows? Maybe some other social programs could be funded (I wouldn't be in favor of this personally, to be sure, but since these taxes would amount to a consumption based tax... or that's how I would see it anyway: yes the individual pays income tax on his winnings, but he made his money on his onesey, knowing that he was going to be taxed, and he played (and hopefully won) anyway), there's any number of possibilities. Hell... hey wait, here's an idea. What about using these tax revenues to give Social Security and Medicare (two social programs that I personally don't agree with but are in place already and have been for as long as I've been alive anyway) a shot in the arm, would this help their liquidity situations maybe?

I brought up SS and Medicare above as a fair possibility because here in Pennsylvania, the revenues generated by lotto and scratch tickets go "to help oder Pennsylvanians", or at least that's what is claimed anyway.

So PWC is trying to figure out ways to get more tax money for our depleted Treasury?

Here's a novel idea! How about stopping needless pre-emptive "wars of choice" based on false intel so certain war profiteers running our government can pump millions into their personal bank accounts.

Bush's war in Iraq is now costing us at least a billion a week -- and for what? A "war on terror"? "Terror" is a tactic used in war. You can't wage a war against a tactic. Bush is keeping his eternal "war on terror" undefined on purpose so he can keep it going on forever. BTW -- just who will be signing the surrender document when we win Bush's "war on terror"? What country? What country's leader? What military?

hey hey.. heres an idea.. you know.. instead of coming up with new and novel approaches to "generate revenue".


QUIT SPENDING IT ALL

just sayin..

Oh boy, I was hoping we wouldn't get off the point...

Listen, guys, I'm not disagreeing with you on the whole gub'mint spending less thing. I don't disagree with that at all. The point of the article, or at least the point I was trying to make, is that because of the social conservative's view of "That shalt not because I can't/wont" (as opposed to the liberal authoritarian "You will because I will") is cutting off a revenue stream that, as far as I can tell, no one would have any problem paying into because of the nature of the stream involved.

And now I have to get on the road, lest I be late for my seminar.

Letusreason is on some other planet. There is no amount of tax revenue that will put an end to deficit spending. It only becomes another platform for more deficit spending. We've got money sucking Vampires running this country.

Well he already ruled out a discussion on sin taxes. And he's chopped us off at the knee's on the topic of tax/spend.

Judging by the article, that leaves me with government involvement in the internet or pie.

I like apple :)

This is why we need the Fair Tax.

www.fairtax.org

Cheers,
Walt

This is over your head, Walt. The Fair Tax is a classic scam. They let you think one tax would replace another. But in the end, you'll have the new tax to pay on top of the original taxes.

Ray, go away.

Cheers,
Walt

RAY:

. . . you'll have the new tax to pay on top of the original taxes.

How so, Ray. Walt may not be interested but I am. I want to hear what you have to say.

Please elaborate for those of us whose minds are a little less closed.

Please elaborate for those of us whose minds are a little less closed.

Sadly, Walt is still alive.

Posted by Ray at 2008-02-09 10:44 AM | Reply

Walt, you would become a hero in the eyes of your countrymen if you sacrificed your life for your country. Even Zed would appreciate what you've given.

Posted by Ray at 2008-02-09 11:06 AM | Reply

So Twin, it is not a matter of open or closed mindedness, it is a matter of not wanting to deal with shit like this all the time.

I am very interested in the Fair Tax, I just don't want to keep getting drawn into useless conversations with tiny little keyboard warriors.

Cheers,
Walt

WALT:

" it is a matter of not wanting to deal with shit like this all the time."

Then don't. Nobody is bending your arm.

I want to hear what Ray has to say and don't want him to go away.

Ignore us both if that's your pleasure. I assume you have a scroll wheel on your mouse.

Ignore us both if that's your pleasure.

I don't want to ignore you twin, I am happy to do so, but you haven't yet given me a reason.

Cheers,
Walt

I am very interested in the Fair Tax, I just don't want to keep getting drawn into useless conversations with tiny little keyboard warriors.

Cheers,
Walt

Posted by Walt at 2008-02-10 08:33 AM | Reply

There is no cure for your stupidity.

Jeers
Ray

RAY:

Thanks, Toots.

I'll read that with interest . . . plus a few other sites I've found to better educate myself on the subject.

It's good stuff to know even though I consider Huckabee and his "fair tax" practically a moot point at this stage of the game.

Yes the fair tax was discussed a while ago. For Walt's edification, I think he was calling for a 23% increase which really translates to 30%. To show Walt what a liar Huckabee is here's how he got his 23%.

23% of 1.30 =.30

when

1.00 +.30 = 30% increase

"I just don't want to keep getting drawn into useless conversations with tiny little keyboard warriors."

Translation: I can't actually back up the FairTax with any solid economic theory, or explain away the contradictory rhetoric, so I'll run away from any actual debate by claiming superiority.

I expect better from you Dan. Normally you and I can carry on decent conversations.

Cheers,
Walt

23% or 30%, its just semantics. But the simplicity of the system seems all for naught if you still have to file and pay state income tax. And what about the existing state and city sales tax. Here in Az. we'd be talking about a 38.6% effective sales tax.

States and cities would have to participate to make it work. Don't get me wrong, I trust the many, many economist that preach the widespread benefits of a consumption tax.

But then again I also trust the 80% of economists that believe a necessary function of govt in a successful capitalist economy is wealth redistribution. So what do I know?

"Normally you and I can carry on decent conversations."

You never answered regarding the direct problems and conflicts surrounding the FT. I'll repost from the other day:

"If you already know this, what is the question for?"

Because the FT thinks it's allowed to use a formula no one else gets to use. If you go into your hometown store and buy a dollar item, you'll probably fork over, say, $1.07. They call that a 7% sales tax. If it costs $1.30, it's a 30% tax. The city with the 7% sales tax doesn't get to call it a 6.5% inclusive tax; why should the FTers get to call a 30% sales tax a 23% "inclusive" tax?

Oh, and the FT suggests states collect their "income" taxes at the retail level as well. So that 30% is more like 35%. And you didn't think that 7% sales tax was going to vanish, did you? So now it's 42%.

"Great question. Under the Fair Tax you would only pay once."

That doesn't answer my question, which, again, is this: the contention of the FTers is we already pay these taxes, embedded in the prices of the items we buy. But that's not true: we pay them in the prices AND at our work. Since the FT is revenue neutral, we'd have to pay our work taxes in the prices we pay at the retail level. If you're only paying "once", that bill is a whopper.

"Why would you want an iBook? I don't know how many "days" it would take. "

I don't think you understood the question. How much, at the checkout counter, would a $1000 item before the FT, cost AFTER the FT?

"If everyone kept their paycheck and did not spend a dime, we may have some problems."

Ya think? Consumer spending is 70% of the economy; you just put in a system that punishes consumer spending. You're also missing the point of that question as well: If, suddenly, consumers had their tax withholdings as spendable cash, yes, there would be buying. But without a commensurate rise in goods available, it's just more money chasing the same goods. That's the textbook definition of what causes inflation.

"Why would a small group of people be so vehemently opposed to changing the current system? Maybe they benefit from the current system and would not benefit from a new one."

Or maybe they recognize a promise of something for nothing when they see it.

"What is so great about the current system that makes this group of people try to slander and smear the idea of a fair tax?"

Who said anyone is slandering or smearing it? The FT imposes a 30% sales tax, but calls it a 23% tax. That's not a smear, that's pointing out the fact no other entity that tacks on 30% to the price of the item gets to call it 23%. Nor is it a smear to bring up the fact the FT charges intra-governmental taxes, something not done today. They also pretend prices will drop 20% overnight, yet claim the taxes they will still pay are currently embedded in those prices. It's not slander to point out those two points are contradictory. And it's certainly fair to bring up enforcement, something the FT sights avoid. With such a high premium on new transactions, lines will have to be drawn: will a new car cost the premium, but a used car won't? Huge fortunes could be won or lost. And since the incentives for a black market will skyrocket, the government will eventually require crosschecking. If every transaction becomes a taxable event, the IRS (or rather, the FTRS) will have to be empowered to investigate every transaction. And it's neither a smear nor a slander to ask how these new tax laws will be enforced.

"I agree that we need to pay taxes, but the current system is too onerous and needs to be radically simplified."

I'll agree with you there. But every time they meet to "simplify" the code, they add another 5,000 pages.

"23% or 30%, its just semantics."

Nonsense, a 30% rate is 30% higher than a 23% rate. Plus, they did some psych testing, and 23%-24% was the cutoff for support. 23% sounds doable; 42% sounds onerous. And folks are ignoring a seemingly unrelated fact: politicians do not want you to see all the taxes you pay at once.

Tiger,

No state is required to repeal its income tax or piggyback its sales tax on the federal tax. All states have the opportunity to collect the FairTax; states will find it beneficial to conform their sales tax to the federal tax. Most states will probably choose to conform. It makes the administrative costs of businesses in that state much lower. The state is paid a one-quarter of one percent fee by the federal government to collect the tax. For states that already collect a sales tax, this fee proves generous. A state can choose not to collect the federal sales tax, and either outsource the collection to another state, or opt to have the federal government collect it directly. If a state chooses to conform to the federal tax base, they will raise the same amount of state sales tax with a lower tax rate -- in some cases more than 50 percent lower -- since the FairTax base is broader than their current tax base. States may also consider the reduction or elimination of property taxes by keeping their sales tax rate at or near where it is currently. Finally, conforming states that are part of the FairTax system will find collection of sales tax on Internet and mail-order retail sales greatly simplified.

Dan,

Do you agree that the Fair Tax would abolish the IRS?

"Do you agree that the Fair Tax would abolish the IRS?"

Sure...and create a replacement enforcement unit...the FTRS (FairTax Revenue Service). See, that's the sell of the FT: No IRS! But you're kidding yourself if you actually believe a) there won't be enforcement, and b) the government is just going to take your word.

And look at the big picture: since all transactions will be taxable events, more transactions will be subject to investigation, not less.

the FTRS (FairTax Revenue Service)

Where are you getting that? Do you have a link to that or is that something concocted by opponents of the Fair Tax?

thanks Walt,

any comments on the wealth redistribution part?

"Where are you getting (FTRS)?"

You don't actually think there will be no enforcement arm of the tax system, do you? Helloooooo? Earth to Walt....

any comments on the wealth redistribution part

I have to accept and I agree that we need to pay taxes. I oppose "wealth redistribution".

-Walt

You don't actually think there will be no enforcement arm of the tax system, do you? Helloooooo? Earth to Walt....

Dan, when you buy cigarettes at the Citgo you pay tax yes? Who enforces that? When you buy something, like an iPod, at Wal-Mart, you pay tax right? Who enforces that?

now, isn't that wealth redistribution, unless we 're talking flat tax?

""Do you agree that the Fair Tax would abolish the IRS?""

Maybe I'm being too nuanced. No, I don't believe "the IRS" will be abolished. They may be named something else (I coined the term FTRS), and morph into something a little different, but don't kid yourself: we have had tax collectors since the dawn of civilization, and will in the future, no matter what the tax system becomes. Under the Fair Tax, all transactions are taxable events. Therefore, all transactions will have to be allowed to be investigated under any FT law. Call it what you will.

The tax collector will be at the point of sale! The taxes will then be sent to the feds. It is so simple.

Tiger,

now, isn't that wealth redistribution

I have already said that I am against income redistribution but acknowledge that some taxes are necessary for a functioning society.

Cheers,
Walt

Honestly Walt, Dan is correct and it doesn't take a PhD in econ to figure this out.

If you want a consumption tax then place it on imports and lower taxes on goods produced in America.

The Federal government needs to cut spending before it experiments with novel tax theories.

But the Fair Tax - as it is proposed - is an oxymoron that should never be made into law.

"When you buy something, like an iPod, at Wal-Mart, you pay tax right? Who enforces that?"

But I don't pay sales tax at my doctor's office, nor do I pay sales tax to the lawn company. And currently, sales tax isn't paid on labor. Under the FT it would be, and any enforcement arm would have to be empowered to crosscheck. One also shouldn't dismiss the sticker shock when the exuberance of a larger paycheck is met head-on with the reality of prices at least 30% higher.

And that doesn't begin to address the $600 billion elephant in the room: intra-governmental taxes. The FT relies on the government paying taxes to itself on the things it buys and sells within itself. So, in summation, the FT encourages larger government. Add that to the fact it punishes the driving force of the economy---consumer spending---plus the massive overnight incentives for a black market, and, well...who could resist?

Walt,
maybe you've said it already but I'd be interested to hear what tax structure you favor.

OA,

What is Dan right about?

Dan,
You didn't answer the question, you skipped right over the answer and jumped right onto currently "untaxed" services.

plus the massive overnight incentives for a black market, and, well...who could resist?

Granny Goody's annual garage sale will be held in the dark shadows of night, buyers scurrying about the basement and garage, flashlights piercing the darkness illuminating the contraband, an uneasy titillation among the miscreants as they wonder if the SWAT Team will pounce and take Granny away for tax evasion.

Could be an underground Reality Show...

Does the FairTax improve compliance and reduce evasion when compared to the current income tax?

The old aphorism that nothing is certain except death and taxes should be modified to include tax evasion. Tax evasion is chronic under any system so complex as to be incomprehensible. As a percentage of gross domestic product (GDP), tax evasion in 2001 is beyond 2.6 percent, compared to 1.6 percent in 1991. This represents over 16 percent of taxes due. Almost 40 percent of the public, according to the IRS, is out of compliance with the present tax system, mostly unintentionally due to the enormous complexity of the present system. These IRS figures do not include taxes lost on illegal sources of income with a criminal economy estimated at a trillion dollars. All this, despite a major enforcement effort and assessment of tens of millions of civil penalties on American taxpayers in an effort to force compliance with the tax system. Disrespect for the tax system and the law has reached dangerous levels and makes a system based on taxpayer self-assessment less and less viable. The FairTax reduces rather than increases the problem of tax evasion. The increased fairness, transparency, and legitimacy of the system induces more compliance. The roughly 90-percent reduction in filers enables tax administrators more narrowly and effectively to address noncompliance and increases the likelihood of tax evasion discovery. The relative simplicity of the FairTax promotes compliance. Businesses need answer only one question to determine the tax due: How much was sold to consumers? Finally, because tax rates decrease, tax evasion is less profitable; and because of the dramatic reduction in the number of tax filers, tax evaders are more easily monitored and caught under the FairTax system.

Does the FairTax tax used items?

The FairTax does not tax "used" goods but it is important to note that HR25 has a legal definition of the term "used". This is necessary to ensure that items are taxed only once and to prevent tax cheating.

Under the FairTax, for an item to be considered "used" it must be:

(1) purchased before the FairTax is enacted, or

(2) the FairTax on the item must have been previously paid.

Let's look at (1) above. Assume that Joe bought a new car in January of 2005. Let's further assume that the FairTax went into effect on Jan. 1, 2006. Since Joe owned the car before the enactment of the FairTax, it is considered a "used" car. It has the taxes from the existing tax system embedded in its price. Therefore, when Joe sells that car to Bill, Bill will not owe tax on the transaction.

Now, let's consider (2) above. The most common example is that Joe buys a new car for personal use and pays the FairTax on it. If Joe then sells his car to Bill, there would be no tax on it because the tax had already been paid. Let's look at another example. Assume that Joe owns a flower shop business and buys a van to use when making deliveries to his customers. No tax is charged on purchases for business purposes so that the FairTax on goods sold to consumers does not double tax, or put a tax on a tax.

If Joe decides to sell the van to his friend Bill (who is not in business) for use as his personal vehicle, then it would be a taxable sale to Bill. Why? Because Joe did not pay tax when he bought the van for his flower shop. Since no FairTax has been previously paid on that van; it is not considered used and the sale to Bill would be taxable.

If later, Bill decided he did not like driving a van and sold it to someone else, it would not be a taxable sale. Why? Because the tax had been previously paid (when Bill bought it from Joe) making the item "used" and not subject to tax.

"What remains are retail outlets collecting the FairTax."

And new ones: doctor's offices, barber's, the kid doing your lawn, and the guy doing your taxes. You're also increasing the incentive to drop to a cash society, since any other transaction will require a massive premium.

Dan you dodged the question again! Why are you hung up on doctors?

Guys it is late here and I need to run. I have appreciated the discussion. Just a parting question. Who likes the IRS? What is so bad about the Fair Tax and so good about the current system?

Cheers all,
Walt

" The most common example is that Joe buys a new car for personal use and pays the FairTax on it. If Joe then sells his car to Bill, there would be no tax on it because the tax had already been paid"

You've just killed Detroit, and made the national used car business A TON of money. You've also ended the ability of businesses to sell off old office stuff, except to other businesses. Good work!

"No tax is charged on purchases for business purposes"

Oops...nice trillion dollar loophole. That'll keep tax advisors busy for the next few decades.

Sorry, 1 last post then I go to sleep.

You anti-Fair Tax people are like granny hanging onto that Buick cause it "runs like a champ" but won't buy into that new fangled Cadillac cause it has too many moving parts that could break.

OK, good night all.

Cheers,
Walt

"Finally, because tax rates decrease, tax evasion is less profitable"

What is this author smoking? In a revenue-neutral situation, how do tax rates decrease? Especially since, when all the taxes are combined into one price, the rates will so dramatically seem to increase? Believing tax evasion will decrease, when the incentives and the prices increase, seems to defy logic.

"...at Wal-Mart, you pay tax right? Who enforces that?"

The sales tax folks, and yes, they could be retrofit to collect the FT and the state income tax as well. But you've incentivized evasion, and there will have to be enforcement.

"...like granny hanging onto that Buick"

Whatever you say, young Edsel. Now sleep well.

the $600 billion elephant in the room: intra-governmental taxes. - Danforth

That is a huge elephant in the room. Why on earth is intra-government trade be taxed? Self-defeating, no? Ludicrous, no? Classic government idiocy, no?

The temptation to go to a Cash economy would enormously increase, that is if "Cash" as such continues to exist. I can forsee a government banning actual cash above a certain amount for transactions in order to reduce fraud. (So there is one more government department to create)

And if 80% of tranactions are NOW at Walmart and other big box stores, I see a "FT" causing the demise of most of the smaller businesses that will find it even harder to compete.

BTW does anybody have any sense of how effecient or otherwise the EU VAT system is? All I know is it's a whopping 18% and they still have high rates of Income Tax as well.

Walt,
read one of Danforth's posts as yours. Major distractions in my enviro. Got it now.

Kerrin57,

Oh, Gee...your 11:55 claims we already pay income taxes and payroll taxes when we go to the doctor. But if that's the case, why do I pay those taxes separately?

OA,

What is Dan right about?

The Fair Tax would be an economic disaster.

My expertise is limited, and yet in pursuing a degree in agronomy I was required to take 2 classes in econ and 2 classes in ag econ, and I took an extra one at the senior/grad level. You'd be surprised what you can learn in a class on water economics at the University of Arizona.


Danforth has explained the fallacy in the argument the Fair Taxers present with regards to the impact on consumer prices as well as on consumer spending.

I've heard Neal Boortz claim that prices will fall, but that will only come as a result of reduced spending, and it will not be an even trade. Your cost at the register will be higher on everything you buy. The rebate for low income actually lowers the bar in terms of taxable income. IOWs, those on the lower end of the economic scale will pay more overall in taxes.

The benefit for high income earners is that they use a lesser percentage of their earnings for subsistence, and thus their tax rate is reduced.

This whole idea that it will replace all taxes and result in a reduced burden is nonsense. Gasoline taxes for example are now fixed per gallon but under the Fair Tax it would be taxed on the sale. That's an increase of at least 50% at today's prices.

To argue in the alternative, look at the Internet Market. Untaxed it has grown and saves consumers money. Small businesses can now operate in a niche market and do well on sites like eBay and others. Add 23-30% in sales tax and those one and two person businesses would fold.

I swear, every time I hear Boortz lying to his audience I want to jump in the booth and make him eat his microphone. I remember when KMOX in St Louis originated the talk format. There was none of this propaganda we hear on the talk circuit today. At the very least it is unhelpful if not pernicious.

"used goods"

That proves my point. No one would buy a new car anymore, but used cars would jump in prices, because they wouldn't come with the FT premium. Same with new houses, new appliances, new TVs, etc. The used market would explode, the "new" market implode, and prices would fluctuate accordingly.

" The used market would explode, the "new" market implode, and prices would fluctuate accordingly."

Probably the best deal, under that system, would be to wait outside the house of the guy who owns the most new car dealerships in the country, and wait until he has to sell his brand new 58" Panasonic HDTV secondhand.

"Add 23-30% in sales tax "


the difference between tax-inclusive and tax-exclusive tax rates.

The FairTax Rate: a 23% tomato or a 30% tomato?

Of course the government should spend less.

But I don't see that as an arguement against legalized online gambling. This is something the government can't and hasn't been able to stop anyway. They have only succeeded in discouraging the most casual online gamers. Millions of Americans are still gambling online. Our government can either continue their current policy of ensuring that all this money goes overseas or they can allow American businesses to compete in this market (where they would do very well) and collect billions in taxes.

The "Fair Tax" is for idiots and rich people

Oh for crying out loud!

All right, all right, maybe my intentions did go awry here. But for... how the hell did we get from online gambling to FairTax? What I was trying for was to show that the government, by trying to legislate morality (and I really don't see how they are doing anything but trying to legislate morality with the UIGEA), they are cutting themselves off from a revenue stream (which, since as how "We've got money sucking Vampires running this country", quoting Ray, and make no mistake I am in complete agreement with you here, they should be jumping at the chance to acquire).

Do I want the idiots running the country to reduce the amount they spend for hammers and suchlike? Hell yes I do! Do I think they will? Hell no I don't! As such, I am trying to deal with the facts on the ground: online gaming can and will generate income for those assholes, far more income than they'd generate passing feel-good legislation to disallow people something they might enjoy doing because their belief structure doesn't like it for whatever reason.

That's the point I was trying to make before. So I goofed a bit. See that's why I have a problem with both sides of the aisle.

Conservative Authoritarian mindset would be something like:
1) I don't like this/can't have this, because my beliefs don't allow for it.
2) Since I can't have it, you shouldn't be allowed to have it either.
3) Therefore you can't have it, so there, nyah nyah.

Liberal Authoritarian mindset would be something like:
1) I want this.
2) Since I want it, you should want it too.
3) Therefore you have to have it, nyah nyah.

Yeah, if I'd wanted to get this thread going in the direction I'd intended, I should never have taken the "moral question" out of it. My goof.

The "Fair Tax" is for idiots and rich people

Posted by Buffalo_Bob at 2008-02-10 01:50 PM


How profound.

One idiot for FT
Laurence J. Kotlikoff is Professor of Economics at Boston University, Research Associate of the National Bureau of Economic Research, Fellow of the American Academy of Arts and Sciences, Fellow of the Econometric Society, and President of Economic Security Planning, Inc., a company specializing in financial planning software. Professor Kotlikoff received his B.A. in Economics from the University of Pennsylvania in 1973 and his Ph.D. in Economics from Harvard University in 1977. From 1977 through 1983 he served on the faculties of economics of the University of California, Los Angeles and Yale University. In 1981-82 Professor Kotlikoff was a Senior Economist with the President's Council of Economic Advisers. Professor Kotlikoff has served as a consultant to the International Monetary Fund, the World Bank, the Harvard Institute for International Development, the Organization for Economic Cooperation and Development, the Swedish Ministry of Finance, the Norwegian Ministry of Finance, the Bank of Italy, the Bank of Japan, the Bank of England, the Government of Russia, the Government of Bolivia, the Government of Bulgaria, the Treasury of New Zealand, the Office of Management and Budget, the U.S. Department of Education, the U.S. Department of Labor, the Joint Committee on Taxation, The Commonwealth of Massachusetts, The American Council of Life Insurance, Merrill Lynch, Fidelity Investments, AT&T, and other major U.S. corporations. He has provided expert testimony on numerous occasions to committees of Congress including the Senate Finance Committee, the House Ways and Means Committee, and the Joint Economic Committee. Professor Kotlikoff is author or co-author of 11 books and hundreds of professional journal articles. His most recent book, co-authored with Scott Burns, is entitled The Coming Generational Storm. Professor Kotlikoff publishes extensively in newspapers, and magazines on issues of deficits, generational accounting, the tax structure, social security, Medicare, health reform, pensions, saving, insurance, and personal finan

So what kerrin? You found a smart guy who thinks it will work. Why I'm skeptical:

Every economic model begins by making assumptions.

I had to ask, why not begin with the facts?

NO: every economic model whether it pertains to taxes or not, begins with a set of assumptions, and if those are wrong then you will not get the result you expect.

I don't care how many honors a guy has, we've all seen how ideology can skew the "science" which is the wrong term because it is really mathematical models that they are proposing given a set of assumptions.

Frankly it's not much better than a crystal ball when it comes to predicting human behavior, and that is the real issue. How do we apportion the costs of our government in an agreeable way?

There's a bunch of smart guys behind it...most with this kind of crdentials.
Idiots?

I don't presume to be remotely close to having the knowledge of an economist. I just know we need to do something to get our country competitive in a world economy. We are on the wrong track. I think it takes many economists working together to come up with a solution. There are many that think FT would work....there are many who say it won't....but there are as many opinions out there as there are economists.
I just support tax change...not more complications ...driving more industry from our country.

G'nite...Gotta head out for the wilds of the north country.There's a strong wind blowing....prob be a bitch of a drive.

But you've incentivized evasion

Unlike the current system which promotes rampant compliance?

"Unlike the current system which promotes rampant compliance?"

It defies logic to believe prices will jump but the desire to avoid taxes won't.

And just because the current system is far from perfect doesn't mean the Fair Tax is better. Or viable, for that matter.

BTW does anybody have any sense of how effecient or otherwise the EU VAT system is?

While VATs are also consumption taxes, and better than income taxes, the FairTax is not a VAT. A VAT works very differently. It taxes every stage of production. It is much more complex and is typically hidden from the retail consumer. Second, in industrialized countries that have a VAT, it coexists with high-rate income tax, payroll, and many other taxes that, in some instances, have led to marginal tax rates as high as 70 percent. Third, all other industrialized countries, except Australia and Japan, have a much larger tax burden than the U.S., which requires higher rates and makes tax administration much more difficult. Lastly, a VAT is a lobbyist's dream, allowing them to install their loopholes unbeknownst to the purchaser. A retail sales tax, in contrast, is a lobbyist's nightmare, applied as it is under the bright lights of the retail counter.

And just because the current system is far from perfect doesn't mean the Fair Tax is better. Or viable, for that matter.

Morning Dan!

Two of the largest economies in the world rely almost solely on sales taxes: Florida and Texas. Many civilizations in history have relied solely on transaction-based consumption taxes: A percentage of a grain shipment in exchange for a safe harbor. Even a cursory study of history shows that nation/states that relied on consumption taxes flourished and prospered, supported democracies/republics, had expanding economies, and high levels of civil rights for their citizens. The exact opposite is true for empires that relied on income/poll/head taxes. These taxes were used to support despots, eventually collapsed the economies in which they were applied, and sundered civil rights.

The sales tax is a familiar tax, being a major source of revenue in 45 states and the District of Columbia. It is true, however, that no post-industrial nation, until now, has ever repealed its income tax and replaced it with a federal retail sales tax. However, England did repeal its detested income tax upon the defeat of Napoleon and enjoyed the fastest, longest expansion of its economy in its long history. An expansion that ended only with the -- you guessed it -- re-imposition of an income tax.

No other country has a system of government like ours, and no other country has led the world in so many fields as ours. It was France and Germany that forced the imposition of a VAT in addition to income taxes across the European Community. Shall we follow France's lead?

In contrast, we can observe the Irish Miracle that stems from their refusal to join the EU members in imposing high tax rates and their choice to follow their own path on taxation. Thus, we should simply strive to have the best tax system, period.

Two of the largest economies in the world rely almost solely on sales taxes: Florida and Texas

Not true - not even close. Property taxes being the most obvious. Gasoline taxes, impact fees, assessments, lottery, bonds for others.

Two states with the highest effective rates are Wisconsin and Texas, where rates exceed $18 per $1,000 of property value.

"Morning Dan!"

Morning Walt!

Now, back to the five questions:

1. Why does everyone else have to call it a 30% tax, but the FTers get to call it a 23% tax? If a one dollar product is now $1.30, isn't that a 30% tax? And if state income taxes and sales taxes will have to be tacked on, won't that make the dollar item $1.42 before I walk out?

2. Currently the driving force of the economy---70%---is consumer spending. The FT would punish consumer spending, at least on new items. Is that the overarching goal of the FT?

3. You've just incentivized the black market. If there's no more IRS, who will enforce the tax laws? And how will those tax laws be enforced?

4. If payroll and income taxes are currently embedded in the price of everything I already buy, why do I currently have to pay them separately?

5. FT supporters claim you'll get to "keep your paycheck". They also claim the prices will stay "essentially the same". Why should the FTers get to assume something that flies in the face of basic economic theory, that is, more money chasing the same goods is inflationary.

oh, plus an extra, the elephant question:

6. What about those intra-governmental taxes?

Dan,

I am at work so I dot have time to reply to each point. Let me narrow it down it a bit.

4. If payroll and income taxes are currently embedded in the price of everything I already buy, why do I currently have to pay them separately?

Do you agree or disagree that there are "embedded" taxes in manufactured goods? I think I understand your question to be, why should we have to pay them twice? If so, I would say that there are currently embedded taxes and would love it if we could just stop paying Federal tax altogether and let the government take them directly. Is your question a matter of whether or not embedded taxes exist? I do not think the Fair Tax claims that payroll and income taxes are embedded, rather "taxes" in a general sense.

The problem the way I see it is this.

It is a fact that people who get into gambling are oftentimes addicted. Gambling is an addiction. Of course, these people (just like drinkers and smokers, etc always say they can quit anytime ... but they usually don't quit)

I say, so what that online gambling would bring billions in taxes. In order to get these taxes, we would have yet another vice becoming mainstream. You know, as a society as are becoming more and more self-indulgent, childish, undisciplined and self-destructive.

And the people who stand to make money from "us" just don't care.

How about this?

Just think how many billions in taxes could be raised with legalized prostitution. Is that what this is all about? Making money has become such an obsession that we've lost our minds, integrity and common decency.

I must say that having attended a conservative Christian church, I understand some aspects of what is taught there. As individuals we need to clean up our act, or we're running headlong into utter darkness of the soul.

Btw ... the "Fairtax" doesn't tax used goods, which would be a disincentive to buy new. I am fairly convinced that is a bad idea and would be disastrous in the long run.

However, things that are bad in the long run don't seem to matter anymore.

Pass the bong...let's get high.

LEGALIZED POT WORTH BILLIONS IN TAXES.

and thats why the government shouldn't have any say whether I gamble or want a prostitute or smoke pot its none of their business

"In order to get these taxes, we would have yet another vice becoming mainstream."

Online gamiming is already "mainstream." There are hundreds of sites you can go to right now.

"As individuals we need to clean up our act, or we're running headlong into utter darkness of the soul."

Very possibly true, so YOU should not participate in any of those activities since you disagree with them.

Individuals are the absolute owners of their lives, and should be free to do whatever they wish with their own bodies or property, provided they do not infringe on the rights of another to engage in that same freedom.

As an individual I chose my own direction in life and dont need someone using force to restrict my liberty.

Oh and the fair tax...Im not convinced. Our tax sytem is overly complicated but the system itself is not the proplem. Spending is the problem.

The gov needs to focus on spending control not new ways to mask the problem.

If the fair tax is revenue neutral...then wouldnt I be paying the same amount in taxes...just in a new form? If this is true..whats the point?

"Do you agree or disagree that there are "embedded" taxes in manufactured goods?"

To a point, but I don't believe ALL payroll and income taxes are already embedded; otherwise, we'd have no need to pay them at work as well.

"I...would love it if we could just stop paying Federal tax altogether and let the government take them directly."

They already do. It's called withholding from your check. If you don't want to owe at the end, have a little more taken out each time. But you're kidding yourself if you actually believe the IRS will go away and not be replaced by some other enforcement arm.

I brought up SS and Medicare above as a fair possibility because here in Pennsylvania, the revenues generated by lotto and scratch tickets go "to help oder Pennsylvanians", or at least that's what is claimed anyway.

Posted by LetUsReason at 2008-02-10 06:15 AM | Reply | Flag:

Here is Mass they claim the revenues generated from Lotto go to education.

They're both scams. Here's how it works:

If the education budget was $405 million, and the lottery generates $100 million, the new budget isn't $505 million. it's still $405 million. The legislature just has an additional $100 million to spend when compared to the prior year. Same with PA and its "older Penns" bullshit.

Dan,

1. Why does everyone else have to call it a 30% tax, but the FTers get to call it a 23% tax? If a one dollar product is now $1.30, isn't that a 30% tax? And if state income taxes and sales taxes will have to be tacked on, won't that make the dollar item $1.42 before I walk out?

The FairTax is included in the price of retail goods and services. That means if you buy a $100 DVD player, the $23 tax is already included in the sales price. States will likely shift to the FairTax formula and include their sales taxes in the retail price.

2. Currently the driving force of the economy---70%---is consumer spending. The FT would punish consumer spending, at least on new items. Is that the overarching goal of the FT?

When people are empowered to keep all of their earnings and they receive a monthly Family Consumption Allowance ($525 per month for a family of 4), they will spend more, save more and give more. It expands the pie!

3. You've just incentivized the black market. If there's no more IRS, who will enforce the tax laws? And how will those tax laws be enforced?

Enforcement of sales tax collection is 90% more efficient than enforcement of income tax collection. The same state revenue agents who now collect the state sales tax will collect the federal FairTax. States and retailers will be paid for collecting the tax unlike today's system where businesses bear the burden of collecting taxes.

4. If payroll and income taxes are currently embedded in the price of everything I already buy, why do I currently have to pay them separately?

American businesses and families now spend more than $300 Billion just complying with our tax code. Add to that a maximum business tax rate of 35%, payroll taxes of 13.3% for the self-employed and 7.65% payroll tax matching funds for employees, 22% of the average price of our goods and services are tax costs built into the sales price.

5. FT supporters claim you'll get to "keep your paycheck". They also claim the prices will stay "essentially the same". Why should the FTers get to assume something that flies in the face of basic economic theory, that is, more money chasing the same goods is inflationary.

When those built in tax costs are removed and the FairTax is included in the price, goods and services will cost about the same as they do now - we'll just have more of our money to pay for them.

Cheers,
Walt

Will someone explain the 23% Vs 30% argument more clearly?


"23% of 1.30 =.30

when

1.00 +.30 = 30% increase" - From Ray So it still costs $1.30?

This doesnt make sense. I know I am missing something.

If Item A costs $1.00 currently and is taxed at 23% that is $1.23.

If Item A is under the Fair Tax it would cost $1.23. 1.00 X 23% = $1.23

So lets assume the FT people are correct and the removal of the "imbedded" taxes reduces the $1.00 Item by 23% to .77 cents. .77 + 23% = $.95

If the price remains $1.00 the increase is 30% but it still costs $1.00

As far as I can figure the Item will either cost .23 more on the dollar (23%) or be a 30% Tax but still cost the same 1.00. Is this correct? I know you would have to add in the current sales tax but we pay that now so nothing new to expect.

Im not a convert to the Fair Tax but the whole 23% vs 30% argument doesnt seem like the reason to oppose it. Unless of course I am missing something...which is possible. Thanks

If the fair tax is revenue neutral...then wouldnt I be paying the same amount in taxes...just in a new form? If this is true..whats the point?

You might be, but it would save my small business about $3000/year in tax preparation/payroll fees, not to mention the hours saved. I believe we should cut spending to the point we don't need a federal income tax, but in the meantime, anything would be better than what we have now.

If a man earns millions and pays his income taxes he pays a lot of money in income taxes.
If he earns millions and only pays taxes on what he spends then he pays far less.
If he pays less who will pay more to make up for the loss of revenue????
It always comes down to the same thing.
Working class Americans who don't have it to pay.
Can't get away from that on point about the "Fair TAx."
If the politicians who support it were honest with their supporters about it...they would only have wealthy supporters.