Flat Tax Better Than Fair Tax

[gravesdav]

I definately agree with Ron Paul's abolish the personal income tax and replace it with nothing.
But if I had to chose between the Flat Tax and Fair Tax I think I'd pick the Flat Tax.
A 23% sales tax on top of my 8% state sales tax is crazy. That would definately hurt consumption, and create black markets and a rise to organized crime.
The flat tax at least attempts to simplify things and make things a little more fair. As far as regulation goes, I think the Fair Tax would lead to an increase in the Federal Government trying to enforce and collect this huge federal sales tax.

[ARealConservative]

Flat tax is still a tax on labor - basically servitude.

A fair tax is a tax on new goods at the point of sale.

this is a no-brainer - Fair Tax is far, far better.

You could even argue the Fair tax is an involuntary tax.

[Cowlesy]

There is already a big black market for goods, and undoubtedly the demand for those goods would balloon.

As I recall from the old days, GDP=C+I+G+(EX-IM) would just shift the taxes from G to C, instead of just reducing G so that taxes would no longer be as necessary. Taxes on consumption would undoubtedly in my mind would stifle growth if nothing is done about spending.

Yes Economists, uber-oversimplified, but makes the point.

[fletcher]

There wouldn't really be a rise in price after taxes because of the decrease in taxes the companies would have to pay throughout production. Everything would be cheaper to produce, plus you would have much more money because you wouldn't be paying income taxes. The flat tax is a bad idea because it wouldn't stay flat. The second the Democrats get in power it is gone. The 16th amendment has to be repealed, which is why the fair tax is better.

[PennCustom4RP]

If I had to choose other than 'no' tax, I think Mike Gravels 'Consumption tax' sounds good, and should be explored further as an option.

Consume less, taxed less.

EDIT: I went to Gravels site to specifically see his plan, and it is a Fair Tax, he called it a Consumption Tax in one of the debates, and why I thought it different.

From his site.
FAIR TAX
http://www.gravel2008.us/issues
The Issues | Gravel 2008

There is only one entity in the U.S. that pays taxes: the individual. Businesses and corporations do not, they merely collect taxes from consumers of their products and pass on the taxes to the government. The Fair Tax proposal calls for eliminating the IRS and the Income Tax and replacing it with a progressive national Sales Tax on new products and services. To compensate for necessities, such as food, lodging, clothing, etc there would be a “prebate” to reimburse taxpayers for the taxes paid on necessities.

[Cowlesy]

I think the 900lbs Gorilla in the room is that people need to re-gear their expectations of what they expect the government to provide them.

[Brasil Branco]

There is already a big black market for goods, and undoubtedly the demand for those goods would balloon.

As I recall from the old days, GDP=C+I+G+(EX-IM) would just shift the taxes from G to C, instead of just reducing G so that taxes would no longer be as necessary. Taxes on consumption would undoubtedly in my mind would stifle growth if nothing is done about spending.

Yes Economists, uber-oversimplified, but makes the point.

Actually, it would still be C.

[RP08]

I'm most definitely not an expert on taxes, etc. and I have not yet decided fully which way to lean. "Fair" and "Flat" both have significant negatives on oposite ends of the spectrum. But, I do strongly believe that the current tax code is ridiculous and needs to change. Perhaps a hybrid of some sort would work.

Fair: What about people retiring who spent very little, and saved up money their entire lives then got to a point where they could start spending and enjoying what's left of the fruits of their labor?

Also, although (most) uber-rich people may spend more than the average Joe as part of lifestyle, they aren't getting richer by spending. If we compared how much they spend to how much they bring in, it would be a far lower percentage than me, for example. Which means they'd get taxed on a small percentage of income and I'd be taxed on nearly 100% of income, all of which is spent paycheck-to-paycheck just to make ends meet, as is the case for most Americans.

Flat: Considerations to people who don't "earn" much but HAVE a LOT of money through inheritance, old stock, a sold invention, etc.


I dunno. I'm not sold yet on any of the proposals I've seen, as I understand them.

[jaybone]

Any taxes according to the constitution must be indirect (sales, excise, taxes that can be avoided) or direct. If the tax is direct (as in income tax, cannot be avoided) it must be apportioned, meaning the same for ALL citizens regardless of income.

Now when you get into the legalities of the 16th amendment, you have to look at the definition of income, which is a whole nother ball of wax.

So, if I had to choose which eye the feds get to poke, I will take the constitutional tax, which would be the flat tax.

[RonPaulIsGood]

A 23% sales tax on top of my 8% state sales tax is crazy. That would definately hurt consumption, and create black markets and a rise to organized crime.
The flat tax at least attempts to simplify things and make things a little more fair. As far as regulation goes, I think the Fair Tax would lead to an increase in the Federal Government trying to enforce and collect this huge federal sales tax.

The FairTax is actually 30% (tax-exclusive). Tax evasion is easy in the FairTax proposal. The percentage may be much higher because of tax evasion.


The flat tax is a bad idea because it wouldn't stay flat. The second the Democrats get in power it is gone. The 16th amendment has to be repealed, which is why the fair tax is better.

The Democrats can easily change FairTax. FairTax makes the poor freeride because they can get monthly prebates instead of working. As soon as the Democrats get in power, the FairTax rate will also get higher and also the prebates. This will cause the middle class to freeride also. The upper class has to pay a rate much more than 30%, causing economic recession.

Also, the inefficient black market would be much higher. A 30% FairTax and a 8% state tax is 38%, but can be higher because of tax evasion and the increase of the black market. People will start buying stuff in the black market. As more and more people buy stuff in the black market instead of the non-black market, the FairTax rate will even be higher. Tax evasion will be even higher because companies try to keep prices cheap. Companies would work in the black market instead. This vicious circle will continue and the the FairTax rate might get to 90% until it is repealed.

[kylejack]

I'm just trying to imagine buying a house or something with 40% tax. Christ.

[mtmedlin]

Try googling the

APT tax

www.apttax.com

Glenn Beck interview, explains how it works

http://www.apttax.com/glennbeck.php

[mtmedlin]

The more I read about APT the more it makes sense and the overall tax burden is lower on Americans and actually puts a tax on foreign investors who make money on American market transactions.

[RP08]

Hmmm.... I haven't heard of APT. Just looking at it now, sounds interesting.

[LibertyBelle]

I think the 900lbs Gorilla in the room is that people need to re-gear their expectations of what they expect the government to provide them.


Yes, ask not what your gov't can do for you....but what you can do for yourself and others.

The Fair Tax is a complete scam, and would actually be 30% when all is said and done, it is not 'transparent' at all like they try to make it out to be. The gov't still needs a big program to organize/collect the tax and distribute whatever kickbacks they give from it. By saying we need the Fair Tax or Flat Tax what people are saying is that we still need big gov't programs and need something to prop them up. Just like saying we need Social Security reform....as if it should stay in place but just needs revising. It needs to go, not be revised.

By saying we need one of these taxes to replace the income tax, it is like saying the status quo is good we just need a different way to support it, and that anything is better than having to file taxes. No, we need to get rid of the unnecessary gov't programs, fiat banking, and repeal the 16th amendment and have none of this craaaap. No matter what, you are still being taxed on your labor. The inflation tax is a tax on your labor, more money is coming out of your pocket to pay for the goods. Same with the fair or flat tax.

[mtmedlin]

Hmmm.... I haven't heard of APT. Just looking at it now, sounds interesting.

Its at such a low rate that almost nobody feels it yet it raises massive amounts of cash. That in and of itself is its downfall. Just a minor 1/10 of 1% increase raises billions. With enough controls in place, it would be perfect but controling congress is like herding libertarians. :)

[RonPaulIsGood]

I'm just trying to imagine buying a house or something with 40% tax. Christ.

The Democrats just like to put a high tax like 90% Federal income tax rate in corporations because they are too ignorant. Putting that much of a high tax in corporations will make goods and services ten times more expensive. Subsidies will eventually be enacted. That will increase more Federal income tax so the government has to nationalize industries. All companies will eventually be nationalized and this state will eventually degenerate into a communist nation.

Corporate income tax is too high in the United States (usually 35%). There is already a 35% Federal income tax in corporations. Therefore, you already play 53.84% in hidden sales tax to compensate for the 35% tax in corporations.

This paragraph will assume that everything will have the same tax bracket. The top richest 0.1% only pays 17% of the Federal budget. Wouldn't it be better to just exempt the top richest 0.1% of taxes so you don't have to pay 53.84% in hidden sales tax to buy something from the top richest 0.1% (usually corporations)? That would be more beneficial for the poor people than welfare.

Exempting corporate tax would be beneficial to all since you do not have to pay 53.84% in hidden sales tax. Economic growth will spurt. Ron Paul will do it. Go Ron Paul!

[fsk]

Also, the inefficient black market would be much higher.


Why is the black market less efficient than the regular market?

I would think that the black market is more efficient, because you avoid taxation and regulation.

[libertarianguy]

test

[austin356]

It was mentioned above that switching to consumption based taxation would "stifle growth"...

I take issue with that; While there would be a short term consumer slow down it would all be savings based since it would then become a better savings and investment environment. Savings and investment and capital would have absolutely zero taxation. Savings is the root of all non-mal investment, and investment is the route of all growth in the long term.


I support eliminating practically all federal taxation; I think the Fairtax is promoted as something it isnt, but I will say the supporters are economically right in their claims of increased growth relative to the current system.



Also I here many people claiming they will pay much less taxes under the fairtax and people complaining their tax bill will soar. Most everyone's tax bill will pretty much stay the same, its just a different way of collecting. Some will benefit, some will lose, everyone as a whole is pretty much the same, though that sameness will be marginally better than the same burden before do to social and economic complexities, most of which are subjective in nature.

[RonPaulIsGood]

FarTax is very easy to evade and has prebates that benefits the poor people. It is a welfare scam.