What do you think of Huckabee's FairTax?

[Trinity alum]

The first point is that under any tax system, the total tax burden does not change. The tax burden is based on spending. If we spend it we either pay for it now through taxes or pay for it later through borrowing. The tax has to be paid.

 

Second, regarding exports. If you are correct and our exports cost more because of the tax burden, then in your example that $10.00 item that costs $12.50 overseas because of the tax burden means that $2.50 is coming into the US treasury from overseas. Sounds like the US tax burden would go up. There is no free lunch. Taxes are determined by spending. After that it's just a question of allocating who is going to pay them. I think we need drastic overhaul of the tax system to make it much simpler, but when someone tells you that everyone will pay less under their system, check their math.

[ladiesbballcoach]

The first point is that under any tax system, the total tax burden does not change. The tax burden is based on spending. If we spend it we either pay for it now through taxes or pay for it later through borrowing. The tax has to be paid.

 

Second, regarding exports. If you are correct and our exports cost more because of the tax burden, then in your example that $10.00 item that costs $12.50 overseas because of the tax burden means that $2.50 is coming into the US treasury from overseas. Sounds like the US tax burden would go up. There is no free lunch. Taxes are determined by spending. After that it's just a question of allocating who is going to pay them. I think we need drastic overhaul of the tax system to make it much simpler, but when someone tells you that everyone will pay less under their system, check their math.

 

Problem is that the cost of the item made by other countries is $10 because they don't have all the taxes on their exports. So, instead of buying the $12.50 American made item, the foreign consumers are buying the $10 Algeria (or pick another country) made-item. So $0 is the amount that is going into the US treasury from overseas. And 0 is the # of jobs created from selling that item overseas.

 

Tax burden does change if a consumer is wise. If they are buying used items instead of new, their tax burden changes. I recently bought a used car and paid a huge amount of taxes. Each time that used car is sold and transferred hands, the taxes are paid once again. Each year I pay property taxes on it.

 

Now my simplistic understanding of this is that I might NEVER pay taxes on cars again. Property tax is gone, so no tax there. (Unless this ONLY addresses federal taxes and state and local taxes still will be there.) I am buying used cars, so no taxes there. The tax is on only NEW items.

[Trinity alum]

Problem is that the cost of the item made by other countries is $10 because they don't have all the taxes on their exports. So, instead of buying the $12.50 American made item, the foreign consumers are buying the $10 Algeria (or pick another country) made-item. So $0 is the amount that is going into the US treasury from overseas. And 0 is the # of jobs created from selling that item overseas.

 

Tax burden does change if a consumer is wise. If they are buying used items instead of new, their tax burden changes. I recently bought a used car and paid a huge amount of taxes. Each time that used car is sold and transferred hands, the taxes are paid once again. Each year I pay property taxes on it.

 

Now my simplistic understanding of this is that I might NEVER pay taxes on cars again. Property tax is gone, so no tax there. (Unless this ONLY addresses federal taxes and state and local taxes still will be there.) I am buying used cars, so no taxes there. The tax is on only NEW items.

We have a federal system so changes in federal tax laws will not change your state and local taxes. Second, the discussion of tax burden is the total tax burden. Individuals can and do change their individual contribution to the tax revenue, but the total tax paid is based on spending.

[AcesFull]

and taxes arent part of that cost?

:thumb: Not only are taxes a part of product cost, the cost of complying with complex tax laws and idiotic laws like the Sarbane-Oxley act are also a big part of the reason that the US finds itself at a competitive disadvantage so often.

 

Ireland's labor costs are not low, but when the Irish slashed tax rates, corporations flocked to the country to set up shop. The unemployment rate dropped sharply and the Irish economy became the envy of most of the world. It's amazing how other countries apply the lessons that Americans learned and apparently have forgotten ourselves.

[Hearsay]

Does it bother anyone that the "Fair Tax" will be a regressive tax? In other words, since savings aren't taxed, the poor will be taxed more than the rich, who have a greater ability to save money and spend a smaller percentage of their income.

 

 

Ding, ding, ding. Winner, winner, chicken dinner.

 

Not to mention that philosophically, the tax of necessity punishes young families more than any other group, because it is young families who are the 'consumers' in our society, spending annually on car seats, minivans, furniture, and all other other 'consumables' to get their kids raised up, with little income left over savings. FairTax = lets tax lower middle class families!

[ladiesbballcoach]

Ding, ding, ding. Winner, winner, chicken dinner.

 

Not to mention that philosophically, the tax of necessity punishes young families more than any other group, because it is young families who are the 'consumers' in our society, spending annually on car seats, minivans, furniture, and all other other 'consumables' to get their kids raised up, with little income left over savings. FairTax = lets tax lower middle class families!

 

Disagree. Chad Johnson taxes on his $100,000 vehicle purchased new would be much more than the no sales tax paid on my used car. I am going to go out on a limb and say that the wealthy do not by a lot of used stuff.

 

The taxes on his lifestyle, the gold chains and gold teeth, would be much greater than what I spend my $$ on.

 

I think it benefits the wise consumer and those that budget smartly.

[Hearsay]

Disagree. Chad Johnson taxes on his $100,000 vehicle purchased new would be much more than the no sales tax paid on my used car. I am going to go out on a limb and say that the wealthy do not by a lot of used stuff.

 

The taxes on his lifestyle, the gold chains and gold teeth, would be much greater than what I spend my $$ on.

 

I think it benefits the wise consumer and those that budget smartly.

 

I know you don't intend it to sound as it did, but that was pretty judgmental. Are you saying that lower middle class folks only buy used stuff? The flea market and consignment store lobby groups would then definitely be in favor of this tax?

 

When we compare apples to apples, HHSDad is correct that the wealthy spend a much smaller percentage of their incomes on consumables than the middle class does, and so that as a percentage of income, the yoke is unequally burdened with the FairTax upon the middle class.

[swamprat]

When we compare apples to apples, HHSDad is correct that the wealthy spend a much smaller percentage of their incomes on consumables than the middle class does, and so that as a percentage of income, the yoke is unequally burdened with the FairTax upon the middle class.

I'd like to see some statistics on that. The rich may spend a smaller portion of their income, but they tend to buy more expensive items and replace them more often. They also consume more items period. They pay more tax, based on their consumption.

[ladiesbballcoach]

I know you don't intend it to sound as it did, but that was pretty judgmental. Are you saying that lower middle class folks only buy used stuff? The flea market and consignment store lobby groups would then definitely be in favor of this tax?

 

When we compare apples to apples, HHSDad is correct that the wealthy spend a much smaller percentage of their incomes on consumables than the middle class does, and so that as a percentage of income, the yoke is unequally burdened with the FairTax upon the middle class.

 

No I am saying me as a public school teacher buys mostly used stuff. I haven't bought a brand new car in 18 years. We shop a lot at thrift and consignment stores. My wife shops all the time on Ebay for kids clothes and we use yard sales.

 

That is not judgemental but to say that those people who spend wisely by not always having to have name brand and new is pretty smurt people.:thumb:

[ladiesbballcoach]

I'd like to see some statistics on that. The rich may spend a smaller portion of their income, but they tend to buy more expensive items and replace them more often. They also consume more items period. They pay more tax, based on their consumption.

 

I would assume that the sales taxes on one Lear Jet would do me for awhile in all the taxes I pay.

[Hasbeen]

I'm not sure I would agree with no sales tax on used items. For example, I usually replace at least one of our cars every two years. I seldom buy new, but I buy current year models with very low miles. Seems as if I'm getting away with something here.

[Hearsay]

I'd like to see some statistics on that. The rich may spend a smaller portion of their income, but they tend to buy more expensive items and replace them more often. They also consume more items period. They pay more tax, based on their consumption.

 

There is no question about that, but what we are talking about is not gross dollars, but gross percentage of income, which is what the question of tax burden focuses upon.

[swamprat]

There is no question about that, but what we are talking about is not gross dollars, but gross percentage of income, which is what the question of tax burden focuses upon.

If the rich are paying the majority of tax based on the dollar amount of consumption, aren't they still carrying the largest part of the the tax burden? The distribution of the burden would be the same as if they were paying the upper end of the current tax bracket. Actually, if this has no loop holes (I know. Dreaming), the most wealthy would pay more than they do now.

[AcesFull]

If the rich are paying the majority of tax based on the dollar amount of consumption, aren't they still carrying the largest part of the the tax burden? The distribution of the burden would be the same as if they were paying the upper end of the current tax bracket. Actually, if this has no loop holes (I know. Dreaming), the most wealthy would pay more than they do now.

I agree. A simpler tax system with no deductions would undoubtedly result in more taxes being collected from the super wealthy.

 

The wealthiest among us, including the Kennedys, Kerrys, and other wealthy US Senators who advocate ever higher marginal tax rates do not actually pay their "fair share." The loopholes in the tax code and trusts exist for the benefit of those who can afford the best tax attorneys and accountants.

 

The people who get hit the hardest are small business owners and others who are subject to high marginal rates but don't make enough money to pay somebody to them shelter it.

[Hearsay]

Good heavens, we are now attacking trusts, which have been around for centuries prior to the tax code. I am afraid I am a little overwhelmed by hyperbole here, and please don't anyone start using the phrase "fat cats."