From what I read it is all sales tax. No cutting a check to the government.

 

So the less I buy, the less tax I pay? I kinda like that.

I like the concept. Bottom line is our current tax code is almost more about behaviors than about revenue. Credits, deductions, etc. are all meant to entice the citizens to take certain actions. The Fair Tax gets out of the behavior modification tax system. I have not studied it much but the two big questions I have are:

 

1. Who is going to collect, administer and police the collection of the sales tax if the IRS is eliminated?

 

2. Retirement planning - Since there will be no immediate financial incentive for people to save for retirement, I worry how that would play out.

I like the concept. Bottom line is our current tax code is almost more about behaviors than about revenue. Credits, deductions, etc. are all meant to entice the citizens to take certain actions. The Fair Tax gets out of the behavior modification tax system. I have not studied it much but the two big questions I have are:

 

1. Who is going to collect, administer and police the collection of the sales tax if the IRS is eliminated?

 

2. Retirement planning - Since there will be no immediate financial incentive for people to save for retirement, I worry how that would play out.

 

Go to Fairtax.org for more information and answers. http://www.fairtax.org/site/News2?page=NewsArticle&id=10497&news_iv_ctrl=1501

 

In a nutshell...Advocates for pending FairTax legislation rail against the destructive effects and corrupted application of the income tax system. They point to trillions of dollars of private investment that are expected to flow into the United States with elimination of corporate and capital gains taxes. They love the idea of illegal immigrants and the entire underground economy joining the tax base. They endorse the idea of an universal monthly "prebate" to offset the tax on the necessities of life which eliminates federal taxes on the poor and provides the middle class with dramatic tax reductions. And they like the idea of a simple, visible tax on consumption that entirely replaces the income tax system, freeing work, savings and investment from the hobbling effect of such taxes.

Go to Fairtax.org for more information and answers. http://www.fairtax.org/site/News2?page=NewsArticle&id=10497&news_iv_ctrl=1501

 

In a nutshell...Advocates for pending FairTax legislation rail against the destructive effects and corrupted application of the income tax system. They point to trillions of dollars of private investment that are expected to flow into the United States with elimination of corporate and capital gains taxes. They love the idea of illegal immigrants and the entire underground economy joining the tax base. They endorse the idea of an universal monthly "prebate" to offset the tax on the necessities of life which eliminates federal taxes on the poor and provides the middle class with dramatic tax reductions. And they like the idea of a simple, visible tax on consumption that entirely replaces the income tax system, freeing work, savings and investment from the hobbling effect of such taxes.

 

 

I am 10000000000000000% behind this.

I like the idea of no federal income tax but a national sales tax. If I buy a $1500 used car, I pay a flat tax on that. If I have the money to buy a $150,000 car, I pay the same percentage tax on that. Seems fair to me. People will use their dollars to consume and the more they have, the more they will spend, generating tax dollars. Seems fair to me.

I like the idea of no federal income tax but a national sales tax. If I buy a $1500 used car, I pay a flat tax on that. If I have the money to buy a $150,000 car, I pay the same percentage tax on that. Seems fair to me. People will use their dollars to consume and the more they have, the more they will spend, generating tax dollars. Seems fair to me.

 

If the "FAIR" tax were in place at a rate of, oh lets say, 15% and you purchased a $200,000 home, would you mind paying $30,000 in sales tax on that purchase OR would you argue that homes should be exempt from the "FAIR" tax? If you are required to put 20% down (as most banks require), must you now come up with $70,000 for the down payment to include the tax? Or, would the tax be paid with the monthly mortgage?

I like the idea of no federal income tax but a national sales tax. If I buy a $1500 used car, I pay a flat tax on that. If I have the money to buy a $150,000 car, I pay the same percentage tax on that. Seems fair to me. People will use their dollars to consume and the more they have, the more they will spend, generating tax dollars. Seems fair to me.

 

from my understanding, theFairtax is only on new items.

 

So buying a used car would have no tax. The taxes have already been paid on it.

If the "FAIR" tax were in place at a rate of, oh lets say, 15% and you purchased a $200,000 home, would you mind paying $30,000 in sales tax on that purchase OR would you argue that homes should be exempt from the "FAIR" tax? If you are required to put 20% down (as most banks require), must you now come up with $70,000 for the down payment to include the tax? Or, would the tax be paid with the monthly mortgage?

 

 

Good question. I think the Fair Tax is only on new merchandise and don't know how homes fit in. Looks to me like the tax would be paid when materials were purchased, therefore embedded in the price of the house. From what I can gather, the study determined that almost every item of merchandise has about 22% of the MSRP embedded at this time. The fair tax will do away with those taxes and prices should go down on manufactured goods. Homes are a little confusing though.

If the "FAIR" tax were in place at a rate of, oh lets say, 15% and you purchased a $200,000 home, would you mind paying $30,000 in sales tax on that purchase OR would you argue that homes should be exempt from the "FAIR" tax? If you are required to put 20% down (as most banks require), must you now come up with $70,000 for the down payment to include the tax? Or, would the tax be paid with the monthly mortgage?

 

If I'm interpreting it correctly, there would be no taxes when purchasing an existing home. Not sure about new construction - I think there would be.

 

There's a section in there about tangible vs intangible goods that I'm not clear on.

 

Would like to see this spelled out for sure.

Good question. I think the Fair Tax is only on new merchandise and don't know how homes fit in. Looks to me like the tax would be paid when materials were purchased, therefore embedded in the price of the house. From what I can gather, the study determined that almost every item of merchandise has about 22% of the MSRP embedded at this time. The fair tax will do away with those taxes and prices should go down on manufactured goods. Homes are a little confusing though.

 

I don't think things that are purchased by a business for resale will be taxed. That gets into the value added arena. Because if a business is taxed for it when they buy it and you are taxed for it when you buy it, you get double taxation.

 

I'm thinking only new construction will be taxed.

If business taxes are disincentives to make more money, why would they not be deterrents to buying new things. If you don't buy new things, you don't need people to produce them. The car industry would collapse the housing industry would collapse, some textiles would do okay, but second hand stores would pop up all over the place. Where are the jobs created by the fair tax system? All in technology??

I don't think things that are purchased by a business for resale will be taxed. That gets into the value added arena. Because if a business is taxed for it when they buy it and you are taxed for it when you buy it, you get double taxation.

 

I'm thinking only new construction will be taxed.

 

I agree. If I were to build my own home the Fair Tax would be paid when I purchased the materials, say at Lowes, if I decide to sell the home several years later there would be no tax involved.

Would this not be a strain on the middle class? The poorer folks couldn't afford to buy, therefore paying no taxes. The wealthy could afford to buy anything and not miss their tax dollars. But the middle class would struggle to meet the demand of a 15-23% tax on everything new. And people complain now that the middle class pays all of the taxes in the current system.

 

Also, I'm not totally sure how this creates a ton of jobs. I'm not disputing it and I'm not necessarily against the idea of a fair tax. But I don't see how moving toward this would create jobs. Somebody fill me in.

Would this not be a strain on the middle class? The poorer folks couldn't afford to buy, therefore paying no taxes. The wealthy could afford to buy anything and not miss their tax dollars. But the middle class would struggle to meet the demand of a 15-23% tax on everything new. And people complain now that the middle class pays all of the taxes in the current system.

 

Also, I'm not totally sure how this creates a ton of jobs. I'm not disputing it and I'm not necessarily against the idea of a fair tax. But I don't see how moving toward this would create jobs. Somebody fill me in.

 

 

The middle, or any class for that matter will not have federal payroll deductions under the Fair Tax. In my situation that will amount to almost $2,000 (my wife included) more dollars a month we can deposit! Working folks will have more money in their pockets. Don't forget the "prebate" that the commerce department will determine the poorer folks will get. The poorer folks will pay a little, the middle class will pay a little more than them and the upper class will pay the most, hence "Fair tax".

 

Businesses and corporations spend billions a year merely keeping up with their taxes in this country, and that's on top of what they pay. This burden will no longer exist under the Fair Tax and IMO will encourage manufacturing to increase their work force and production.

 

In a sense it's almost the same money getting spread to more citizens without adding a real burden to any one group. And the biggest plus to it all is that it gives power back to The People and takes it away from government. It's not perfect by no means, and I don't think there is a perfect solution. IMO it is much better than the current system.

Also keep in mind that under the Fair Tax there will be no other federal taxes to pay by anybody. No inheritance tax, no capital gains tax, no death tax, no corporate tax, etc, etc, Shouldn't that help almost everything to do with the economy? EVERY tax dollar will come from the Fair Tax.

Edited April 16, 201016 yr by SKINPIG