It's election time and one of the issues that has and will always be brought up is taxes. You hear it from both sides. The republicans claim to be fiscally conservative. The democrats claim to only want to tax the rich. This year, a few of the candidates are pushing for what is known as the Fair Tax Act. This is one of those love it or hate it proposals. It seems that everyone knows everything about this act, but neither side is stating the same facts. If you don't know much about the bill, here are a few links that will help you out.
HR 25
S 1025
Fair Tax website

I have gotten into some discussions with other members in other non-related threads, and since some seem to have a strong opinion of the bill, I thought I would open this up. I appologize if this debate has already taken place here, I am not aware of any other threads and would like to discuss this with those that have opposed my views.

I have my position on this bill as many already know, but will wait to see where some others stand before stating my view. I will wait to make my point, at least until after the first response.

Questions for debate:
1. Why do you support the Fair Tax Act, and if you don't, why not?
2. Assuming the current tax system isn't perfect how would you fix it?
3. What are some other alternative solutions for the current tax system?

Please, just as in all other debate threads, expand on your answers beyond a simple yes or no.

I feel strangely compelled to answer these questions!

1 - I largely agree with the concept of a flat, or "fair" tax. The worry is that such a change would empty the tax coffers either by not collecting enough or by some sort of boycott on buying goods. The difference between the flat and fair taxes appears to be that a flat tax would simply be X% of your income. End of story. The fair tax is something more like a national sales tax. (Thus the fear of a "buying strike".)


While this is a sexy idea the taxation without representation flag goes up with this concept.

2 - I lean closer to the flat tax concept. You could still eliminate the IRS but the tax stream would be more predictable. It's also "kind of" fairer. I would recommend a flat tax with no loop holes.

3 - Beside the flat and fair there are many different rijiggerings of the current tax system but the all fail on the fact that they're as, or more complex to use. The fact is all the Government wants is to collect money - it's a pretty simple concept. It doesn't need to be so complicated it takes an industry to work it.

I am not sure how the taxation without representation flag goes up. Are you referring to the 12 million illegals, or the 40 million visitors and what representation do they deserve from a country that is not compelled to represent them?

They are paying US Federal (National) taxes. These aren't local taxes going the the municipality they originated from they are going to the US Federal Gov't. What's my compelling reason as a Parisian to pay them - to pay for the "upkeep" of America?

I agree with BAs point on what is really a national sales tax- don't like it- prefer a flat tax, no deductions, based on income and net worth increase year to year.

I would probably abolish the corporate tax as regressive, and the corporation doesn't pay taxes, the consumer pays the taxes in higher prices. I feel this way for all but "extraction" industries that use public lands and resources for profit- such as oil, mining, ranching.

Can you imagine the revenue we would have in this country if Bill gates actually paid 10% of his net increase in one year? Most guys at that level pay no taxes at all! If they do, it is a micro percentage of thier actual net increase.

I would like to see a 20% across the board flat tax, no deductables, on net worth or actual income. The "exempt" level would be anyone under 40k a year. Only those that make over 40k a year would pay any taxes at all, as far as federal tax goes.



I believe the issue of illegals not paying taxes is a seperate issue (they usually do, the poeple that hire them don't actually pay it though, they pocket that money )- instead, I would make hiring illegals a major felony, on the level with kidnapping, rape and murder, with mandatory minimum prison sentences and fines triple your net worth.

Actually, most countries have a tax that visitors pay to the country. When leaving the countries that I have visited, there has always been an exit tax of some sort. I admit that a national sales tax would be much more money, but the prinicple would be the same.


That is true, but for an entirely different debate, but I am with you brotha!

So, if the value of your property goes up 20 percent and you don't sell it, you think you should pay taxes on that increase? What if it goes down 20 percent the following year...then up to where it was the year before. Do you pay taxes on that 20 percent again because it went back down? Your theory sounds like a nightmare to me. If nothing else, a very large accounting nightmare and it would hurt those who save for the future, taxing those savings before they are liquidated.

I don't like the concept of any value added tax myself. And 23 percent is outrageous. I think the economy would be hit in a rather dire way if we started adding 23 percent to the price of everything. Heck, we have a direct example with the early 1990s luxury tax on large boats. Thousands were layed off and people stopped buying large boats. And that was only a 10 percent tax. That's for starters. Secondly, taxes on goods almost always go up with time. State taxes used to range around a half a percent and now they are higher then eight in some states. So tack on 23 percent and the rates are 30+ percent on top of cost for everything you buy. And once they charge 30 percent, heck, what's another percent or two or three...I see thrift stores and consignment shops making a killing in that future.

um, Mrs P, the value of my home went up over 30%, and yes, i was taxed on that increase. It hurt a bit, believe me. But I did say "net worth"- correct?

That means if I owe 200k on a home, and it is worth 225k, I would owe net worth taxes of 25k. 20% of that value is currently less than I pay in property taxes, or what I paid in income taxes some years. So yeah, I am cool with that.

Where it would hurt would be 100% jumps in value, like on the west coast. But I bet those "over-exurberance" in the housing market would be naturally better capitalist regulated, and the true value of the house much nearer to the "real" price it is worth.

But even so, I can see your point- and there could be an easy exception to write into law. No taxes on any personal residence on residences worth less than 500k.

But the problem is, you start getting all complex on the tax code like we already have a problem with- too many exemptions, especially for the uber-rich.

The main goal is to tap the uber-rich that really feel no pain at all at tax time, and pay micro-percentages of what they are really earning.

I currently have to collect sales tax. It is a royal pain. It is not simple. It is not enforced evenly. I know of professional services businesses who are told to tax sales differently than I do. It has to do with the question of what goods are sold versus what goods are part of service. I would not want an additional layer of this aggravation.

I do like that the Fair Tax makes people pay taxes as they go. It is not hidden from them. When I see people declare in shock that 23% tax is way too much, I know the current system is hiding that 23% from them effectively, which is not good.

It is also awkward that a monthly rebate needs to be sent out. Who decides how big this should be? Where is it sent?

The Fair Tax Act is not a VAT, only a sales tax. There is a difference. The definition of a Value Added Tax is: The intent of the Fair Tax Act is to eliminate the laundry list of taxes that we currently pay. In doing so, the actual costs of products would go down. In a different thread, I explained how the Fair Tax would work, so I am just going to copy and paste from the previous posting instead of rewriting the entire thing.

So, I hope this explains how by eliminating the IRS and all of the different taxes that we pay, the Fair Tax Act is not going to make goods more expensive.


Good question, and the framers of this bill have answered that question. In section 303 of S 1025, you will find this:

In short, to your first question of who determines the prebate, it would be the Department of Health and Human Services. To your second question, section 304 explains:

I hope this clears up your questions.

Edited to add, the emoticons in the quotes are purely coincidental, I copied and pasted directly from the bills, it just so happens that the way it was written translated to the faces!

Edited again to add:
Just to clear up another inevitable question, a qualified family is defined in section 302:

That section does go on to explain extenuating circumstances such as children living away from home, incarcerated individuals and how to register your family. It also goes on to explain what happens if you don't register annually.

This only works for the people who actually pay taxes. As we all should know the top 50% of the income scale pays about 96% of all income taxes. Thus the people who were paying nothing now would get hit with a big “tax” as they buy products and they then buy less and the country dives into recession.

I am much more inclined to go with the flat tax.

To me, the documentation as how the monthly rebate is done proves my assertion that it is awkward. How many times do we have to read through to grasp the ideas? It is not simple. Taxation needs to be simple. I still do not know who the nameless people are: 'determined by the Department of Health and Human Services poverty guidelines'. Who is that? I want names. Who are the responsive to?

It reads like a mish mash. Only heads of families get it? Split between whom? Whom qualifies? Why would not everyone qualify? There is a built in prejudice to being married or not? Why should marriage affect how an individual is taxed?

To be fair, it has to be simple.

Ok, go back to the sections I quoted above and realize that those at the poverty level and below essentially won't be paying taxes. Check out this pdf. to explain what I am trying to tell you. Some people will be paying a negative tax due to the prebate. Still a better deal for those that are poor than a flat tax which will actually be taxing the poor. Also, the Fair Tax encourages savings and investing because there is no capital gains tax.


Sorry that the bill doesn't explain who exactly will be determining the poverty level. Changing a bill every time someone quits would be counter productive. You are really reaching for reasons to object to this bill if you want actual names of feder al employees. Right now, the Department of Health and Human Services set the poverty guidelines that are used in the determination of all sorts of policies set forth by the government.

Yes, only heads of families, not the 12 year old kid living there. Why does that not make sense? Again, you seem to be reaching here.

Yes, there is a prejucide to being married. If you are living in a home as a married couple, you will be spending more money on necessities than a single person would. So, you should recieve more of a prebate since you are spending more. People with kids also get bigger checks as they are also spending more money. If you register as two adults living together, then they would split the prebate.
pdf.
Before continuing to reach for reasons, maybe read a little bit from the links I provided, if you can't find the answers after some effort, I will be happy to find them for you.


Have you ever read any bill that is put forth by Congress? The wording is always difficult to read, but if you slow down and put the sentences together, you can figure out what is being said. Bashing this bill because it is hard to read is rediculous. Open up any bill that supports one of your viewpoints and see how clearly it is written. All the bills in Congress are worded this way. Can you come up with any other reasons that I have not explained that this bill is not worthy of support? (besides you not liking the way Congress writes bills?)

Edited to add:
Here are some links to some other bills right now, see how easy they are to read. Disliking a bill for the ease of reading is really reaching:

HR 1


S 356


S.J.RES.1


H.R.6

A prebate doesn't offset the immediate cost of things. I got the prebate check 2 months ago, it's gone and I need to buy sheetrock now because I just broke a wall. Sheetrock was 20USD but now thanks to the fair tax it's 25USD. I need 5 sheets but I only have 100USD. I can only afford 4. (Or something.)

Plus the entire concept of a prebate is rife with problems not the least of which is that US Gov't is now spending money to collect it. Where as a flat tax is simple. Made 60K? That's great, give the gov't X% and you spring for the stamp!

Yes, again why I support the flat tax- simpler, and gets those uber-rich to pay as well. When they say "the 1% pay 95% of the taxes"- that would be correct- unfortunately- we lump the doctor making 350k a year in with Bill Gates. Not accurate or precise now are we?

A flat tax will probably lower the tax paid out by % for the Dr and raise it drastically for Bill Gates.

p.s.- I don't dislike Bill Gates or even dislike how he came about his money- I just use him as an easy frame of reference of how an uber-rich person can get away with no taxes at all, while that Dr can pay through the nose.

Actually, it offsets the cost before buying the products, that is why it is called a prebate, not a rebate. Because you will be saving money through no income taxes, and the prebate of taxes on the necessities of life, you should be able to save more money than you would if you had to pay income taxes. The IRS does not encourage savings because of income taxes and capital gains taxes.


Actually, you paid property taxes to your county or state with that increase. With your plan, you would pay that, as well as a 30% increase in your federal taxes due to the increase in your net worth, so you would be taxed both times.

In the Fair Tax Act, you don't pay any federal taxes on buying a home, unless you buy a new home, any home that has been lived in before is a used home.

I do not like a tax which has a prejudice to if you are married and if you have kids. The government should not care one cent if I am married or not or if I have kids. It is none of their business. It should be up to an individual if they want to be married or have kids. It should not be encouraged or discouraged by tax code. We need to simplify taxes and get away from the deductions quagmire. It is not fair to have government favoring one individual over another. The government should not care if someone is a head of household or not. If they pay taxes they should be treated the same as anyone else who pays taxes.


The wording should not always be difficult to read. If it is, simplify it. If it is not simple it will not be fair. That philosophy should apply to all laws.

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I do support the Fair Tax over our current system as it is simpler. I am just pointing out its deficiency towards the goal of being fair and simple. It is heading in the right direction but short of the mark. We should keep our eye on the target and not be satisfied for better but go for best.

Ok, so what you are saying is that no matter the size of the family, under the Fair tax, each family, or you can also look at it as each household, should get the same prebate? How does that make a lick of sense? Help me understand this. Secondly, you bring up deductions. In the Fair Tax Act, there are no deductions. Deductions is why the uber-rich get away with paying little to no tax. Under the Fair Tax Act, that doesn't happen anymore. Next you bring up the head of household issue. The government sends a prebate to the family. If that family wants both parents, or both single adults to receive a prebate, they can elect to do so. That is clearly explained in the pdf I linked to. I even quoted it. I can't make that point any clearer. If you are married, and you and your spouse have separate accounts and split the expenses, then you can elect that each of you get your prebate split between the two of you in two equal checks. I don't know how to make this clearer than I have in the previous post and this one. This really isn't rocket science.

Your argument about the wording and making it easier to read puts me at a loss for words. You are making an argument against a completely different topic. All bills are written this way, not just the Fair Tax Act. Write your congressman to ask why bills are so hard to read. That point does not make any difference to this bill. Drop it already. This bill is the most fair since everyone pays the same rate, and everyone gets the same prebate. It is extremely simple. Right now the majority of adult Americans are scrambling to gather up tax forms to try to get every deduction possible, and hope that they don't overlook something and get audited. Under the Fair Tax, there wouldn't be any filing. It is so simple that all you have to do is fill out a short registration form for your household, either have your prebate automatically deposited into your checking account, or simply open your mail. That is it. You don't have to do anything except purchase everything as you normally would. That is all you have to do to pay taxes. Your children will be paying federal taxes when they go buy some candy at the corner store. It is so simple a 12 year old can't screw it up, but under any income tax system, millions of adults screw it up every year either by cheating or simple error.

Alright. You say it is simple.

I have a simple question: Would I have to charge my clients the Fair Tax on services I provide?

I think you would. Do you charge state & local tax on the services you render now? Should you be?

Is there some sort of Net worth tax I'm not familiar with? I know that the capital gains are not taxed until they are realized. This is because:
1. It is not possible to to measure accural for many assets, like paintings, or even more common equities in interesting circumstances, like housing.
2. Capital gains are volatile.

Or, it would be a nightmare to figure out, like Mrs.P said.

I don't know what you do. Why don't you use the references to find out? More than likely, yes, but I can't say for sure. Collecting sales tax is simple, retailers do it all day, every day. You might have to put one more step in your business practices, but it does not complicate life. If collecting and paying sales tax was so difficult, it would have been abolished long ago.

Ok, go back to the sections I quoted above and realize that those at the poverty level and below essentially won't be paying taxes. Check out this pdf. to explain what I am trying to tell you. Some people will be paying a negative tax due to the prebate. Still a better deal for those that are poor than a flat tax which will actually be taxing the poor. Also, the Fair Tax encourages savings and investing because there is no capital gains tax.

So a prebate is to be paid monthly? You have to be kidding. Impossible to administer and implement – at best. I believe the tax would initially at least turn off buyers and our country runs on consumption.

The flat tax can be set up so that the poor have a flat tax rate of 0 – no problem. So mush simpler and straight forward.

You don't think that the government can't send out checks to millions of people every month? How do you think Social Security beneficiaries gets paid? How do you think government employees get paid? Once a year? Get real! This is something that already is going on. It is no different. Besides, the majority of Americans would prefer to have their money direct deposited into their checking accounts, which is one of the options and would be cheaper to run. How hard would that be to implement?

Flat tax again would be much more complex, similarly to the current system. All you are doing is making the rate the same, the complexity of the tax system stays the same. The IRS still runs everything invloved and people still end up cheating the system with deductions causing rates to increase. Every year people spend millions on tax professionals hoping to get a return, and every year people will have to pay into the system. It is still the complex, unfair, and non-transparent system we have today, but with only one rate. It is not any simpler or fairer than the current tax system. The rate is the only difference I know of, but if there is proposed legislation in Congress showing otherwise, please do share.

This is a pretty bold statement, please share with the class as to what drove you to this conclusion. Remember, I have already shown you how costs won't go up, how there is no filing, no deductions, you can split the prebate between two people if you choose, and the reason prebates are higher for households with two adults and with children. I also have shown that the wording is irrelevant to the actual bill, and that the government currently has the capacity to implement this proposal. Let's stick to the statement that I have quoted above and tell us why the tax will "initially at least turn off buyers".

Heckuva lively thread! Taxes matter to us, apparently....

First of all, I want to defend the present tax system - not the hundreds of pages of junk, but the underlying tax rates. The way to effectuate a truly progressive tax curve is by using increasing tax rates as income goes up - just the way we do it now. You just need to get rid of the garbage to see that.

Flat taxes are plainly regressive if the cost of basic subsistence is factored in (and it should be). A national sales tax is regressive in that taxing the cost of basic subsistence disproportionately hits the poor. The big fix in both cases is to add what amounts to a standard deduction or rebate - chop off the bottom end of the scale so the poor won't get hit so hard (or at all). But that doesn't solve the problem of the middle class taxpayers.

Take the flat tax - I've seen suggestions of a 20% flat tax rate, and you would need to incorporate a standard deduction of about $10,000 to keep the poor from grabbing pitchforks and torches. But the curve straightens out way earlier than it does presently, and who wins? The rich, of course (why else would Steve Forbes be championing the flat tax?). If you made $500,000, your taxes would drop a ton, from $151,000 to $98,000. If you made $100,000, your tax would go down modestly, from $19,920 to $18,000. If you made $75,000, your taxes would go from $13,217 to $13,000. If you made $50,000, your tax would go up, from $6967 to $8000. $30,000: $2934 to $4000. See the trend??? The rich guys get a huge break, while the middle class gets killed. Make whatever adjustments you want to the percentages and the standard deduction - the result is the same as long as the flat tax rate is lower than today's top tax rate of 35% ($357,000 incomes and above).

A sales tax looks better on paper, but the effect is the same, since the less money you earn, the higher percentage you will spend on taxable items. Incorporating that rebate has the same effect as the standard deduction in the flat tax example - it makes the taxation curve less painful near the bottom. But take a look at that sales tax rate: 23%. Still way lower than the 35% max rate we have now. So even if you earn $500,000 and spend every penny, your effective tax rate is just under 23%, and your tax still goes way down, from $151,000 to $115,000 (not even counting those rebates). It's amazing how the rich keep coming out on top when Republicans bring up tax reform.

Also, in defense of some of the extra baggage in today's tax code, there are a number of good (or good-intentioned) adjustments that probably do more good than harm. For example, the home mortgage interest deduction - encourages home ownership and stability. Inducements to save for retirement, give to charity, pay for college, make energy-saving improvements to your house, etc. - all good stuff. You could cut out 99% of the junk from the 1040 book and still keep those carrots for your taxpayers. I wouldn't differentiate passive income or capital gains, either.

Finally, the National Sales Tax site that I read said nothing about houses (that was coming later, they said). The potential for problems there is huge - will they tax the sale of new homes at 23%? That will cause some problems in the market.

And two replies with simple answers:






For being a simple tax no one has a simple answer.

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Just slip the words 'income tax' in place of 'sales tax' and you have a good argument to keep the status quo.

If all business transactions are retail I would agree with you that sales tax records are simple. But, if you have a combination service and retail, it is a major headache. In Illinois, sales tax application and rates differ with different uses of products and service is not subject to a sales tax. Then there is the question as to whether products used while providing a service are subject to sales tax. Frankly, a tax on all business transactions would be much simpler than taxing end products only.

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Just because you do not run a business does not mean the hassle of the Fair Tax does not exist. So it will be simple for you with a post card. Why should you care about others being burdened with complicated record keeping?

I suggest we find a tax system which does not hassle anyone. Find a system which is concise where answers are straightforward. There is a huge political loophole with playing with who and what is subject to the Fair Tax. We already have an income tax code subject to gerrymandering.

More simple questions:

Would the college student with a mowing business in the summer have to collect Fair Tax?

Would the high school student babysitting have to collect Fair Tax?

Would a raffle for a new car need to collect Fair Tax?

Would garage sales need to collect Fair Tax?

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One thing I like about the flat tax with a single deduction is that it is progressive. So, you are concerned that the rate is lower than 35%. Your argument could be to set the flat tax rate at 35% to allay your concerns. Make the deduction $100,000 and .....whalaa, schizam.....middle class is given a tax rate break, the top end is still paying the same (though I wish to argue the top end are not actually paying 35% now), and the flat tax looks pretty good to you.

John, I don't know if you took a look at this pdf, but I would be interested in learning how they have their information wrong about the effective tax rates for the various income levels. You have made some interesting claims, but nothing to back them up.


You haven't answered the questions of "what do you do" and "did you take the time to even read anything about the sales tax, or are you just running on talking points?" When you debate, you are supposed to find things about the issue that you have facts about that you don't like, and bring them up. So far, you have only been reaching. I can't answer for sure because I don't know what business you work for, what services you offer. You know, churches don't pay taxes. So, if you were in a church, you wouldn't pay any taxes. If you provide services at retail, then yes, you would pay the sales tax. I am really getting tired of doing homework for you.

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Not too difficult since all products and services would be subject to the sales tax. Everything new is taxable. You don't have to divide anything up. It all gets taxed. Pretty simple, huh? Here is another pdf that explains it for you. Again, I am doing your homework.


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First, record keeping for sales tax is not complex. A simple excel spreadsheet is all I use. Secondly, I don't know of any business that does not currently use an accountant of some sort to figure the taxes. I don't know that this is some complicated burdent as you seem to think. You then go on to suggest to find a tax system thta does not "hassle" anyone. What tax system do you suggest we use that doesn't require anyone to do anything at all so that they arn't burdned? I am really interested in learning what tax system would be easier than businesses reducing the number of checks they have to write to just one or two. I am curious of what loophole you are referring to. Everyone is subject to the Fair Tax, with the exception of churches. I really don't know how not filing taxes, not worrying about penalties and tracking deductions (much more complex than tracking sales tax) is a burden. How is a flat tax that requires you to fill out entire books about every penny you earned, saved, and spent is much easier? You have yet to explain this to me.


No


No


No


No

Those answers are pretty simple, or are they too complex for you?
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Again, I ask that you provide an explination that shows how this plan is much simpler than the Fair Tax Act, how there aren't any loopholes, how it is more progressive, and how the record keeping won't be as complex as the fearful businesses keeping track of sales tax. By the way, this pdf explains that:
So since the receipt will show the federal sales tax that was spent, it appears keeping track would be pretty easy. Again, we have been keeping track of state sales tax, why would the federal tax be so much more difficult?

The Fair Tax does appear to be more straightforward in determining sales tax than the system employed by the State of Illinois. Instead of looking at use or whether there was a service or not, it just taxes all retail transactions. To make it even better and more simple, I wished it taxed all transactions. There would be no need to keep track if items were used for retail use or not. If money exchanges hands, there should be a tax.

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A flat tax on income with a single deduction is progressive. As you make more money you pay a higher percentage of your income. To illustrate, I will use the figures used in the drewyork example ( 35% rate and 100K deduction).

income and tax are in thousands
Income.......Tax........effective % paid
25................0....................0
50................0....................0
75................0....................0
100..............0....................0
125..............9....................7
150.............18..................12
175.............26..................15
200.............35..................18
300.............70..................23
400............105.................26
500............140..................28
Million.........315..................32

As you can see, as your income increases the tax percentage increases, even though the tax rate is flat all all income earned after 100K. This is a progressive tax.

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As far as simplicity, a flat tax with a single deduction will be simpler with less paperwork than the Fair Tax. If you make less than 100K, there is zero tax to collect and that will reduce documentation. As a business owner, if your employees and yourself all make less than 100K, you do not have to collect tax every month. With the Fair Tax, you would need to collect information each month and send in money each month. With the flat tax w/single deduction, the employer give everyone a W-2 at the end of the year showing their income and with one postcard it would be done. The Fair Tax helps employees by greatly reducing paperwork but the flat tax with single deduction gives that to the employer, too.

There is no need for the rebate program as the money is never taken from people to begin with. Again, this would be simpler.

There is no inquires as to family status or marriage status. All individuals will be taxed the same. Again, this is simpler and more fair.

There are no inquires as to tax exempt status. If you earn it, you are subject to the same tax. Again, this is simpler and more fair.

Tax systems are more fair when the same code applies to everyone. That means no special categories and exceptions.

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I do recognize that the Fair Tax fits the goal of making tax collection more concise and it does reduce record keeping and people will be more cognizant of what they are paying in taxes. All of this is a major improvement. Still, a flat tax with a single deduction will be even more concise, reduce record keeping even more. I do think the Fair Tax does a better job of making people recognize how much tax they are paying.

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I did look through the Fair Tax pdf. It is not clear to me when a mowing business would need to collect Fair Tax and when they would not. Do you understand when it would ?

The reality is though dude- very few poeple that make 500k a year actually pay 32% of real income in taxes, very, very few. there are just so many loopholes. If you are paying that %, unless all of your money comes from wages, and even then, it shows that you have a very, very poor accountant that needs to be fired.

Like I also said- as far as the "pitchfork" thing goes- if you have no taxes below 40-50k, then the majority of the lower middle economic to poverty types have nothing to worry about- and would pay far less taxes than the middle class already pays.

The poeple who REALLY skate on taxes ARE the Steve Forbes, in actual dollars, he would be paying MUCH more under the flat tax, because of the lack of tax shelters for him to hide in. Most poeple like forbes don't pay even 5% in taxes of thier actual earnings, if any at all. That is what good accountants are for.

You have probably recalled news articles where the IRS spends most of it's enforcement dollars going after the 40-100kl earners, and don't really go after the Gates and Forbes type, because they are so well defended, and settle for pennies on the dollar with corporations like Exxon when Exxon is caught red-handed cheating!

That is another thing to put in the flat tax law, we should have a law saying that 90% of all enforcement by the collection agency will be focused on the top 1% of earners, starting at the largest earner and working it's way to the bottom.

The great big chart in the middle of the pdf I shared with you shows the same progression. Not seeing an advantage with the flat tax. I am still keeping track of every penny earned, saved and spent so that I can file. I would have to file at the end of the year no matter how much money I made so I can show proof that I didn't owe any taxes. The flat tax is still an income tax that must be reported, unlike the Fair Tax.

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First, I am curious if your flat tax is an actual proposal, or something that you are coming up with as a possible plan?

Now, I don't know how the flat tax is to be less paperwork than the Fair Tax, and who it is to be less for. For the consumers, they have to fill out one short form each year. The flat income tax they have to fill out complicated IRS forms that end up being multi page documents with complex calculations. For the business? One form to show tax collected per quarter with the Fair Tax. Under the flat income tax, the business still has to file paperwork showing the income of each employee proving the income level. Sales tax is paid quarterly, not monthly, so your claim of sending money each month is wrong.

So what you are saying is that under the flat income tax, you don't have capital gains taxes on your savings accounts or other investments? You don't have to file anything for programs such as HSA, or government benefits? You are telling me that under the flat income tax plan, all you do is pay income tax that is taken out of your paycheck, and do nothing else? Here is a scenario for you. In your chart that you drew up, at 100k, you don't pay any taxes. What happens if I start the year at that bracket, but because of bonuses, I end up earning more than $125k, and now I have to pay taxes, but all year, I was getting paid at $100k, so I didn't have any taxes deducted. Do I now have to go back and figure out how much tax I owe due to my bonuses, and have to write Uncle Sam a check to cover my tax liability? How simple will that be?

Under the Fair Tax, everyone is taxed the same. Everyone pays the same sales tax. You don't go to the register and have to pay one price if you are single, or a different price if you are married. Everyone pays the same tax rate, just like your flat tax. The difference is that to ensure the Fair Tax is not regressive on the poor, everyone receives a prebate for the amount a household would pay in taxes based on household size. This is based on the amount of money that household would be expected to spend if at the poverty level, no matter what level of income the household is at. This way, it is fair for everyone to get the same prebate, otherwise, it would not be fair giving one group the prebate and not another. It is kind of the definition of fair.


What special categories are there in the Fair Tax? The prebate? Why give every household the same prebate if some households are larger than others? The prebate is in reference to the amount of taxes the household is expected to pay. I don't know why I have to explain this to you again. The same tax rate applies to everyone in the United States. Even illegals. You can't cheat by claiming more credits and deductions under the Fair Tax because there are none.

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How do you figure the flat income tax will reduce record keeping. In the Fair tax, businesses keep track of what they already keep track of if the state has a sales tax, so the record keeping is not increased. The consumer doesn't have any record keeping. Tell me how your flat tax has less than zero record keeping?

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If you have a registered business, yes, you pay taxes. If you are a kid cutting lawns in your neighborhood, than no. If you are making a living at something whether it is mowing lawns, providing legal assistance or as a doctor, you have to pay taxes. If you are a 12 year old kid that is getting $20 to mow your neighbors lawn, then no. You really are working really hard to make this difficult, aren't you?


Really, a law specifically punishing people that are successful? Doesn't sound like we are still in the same style of government now.

No doubt that loopholes need to be fixed to make the rich pay something close to that top tax rate, but in my post I mentioned that. The main points were these:

1) the multi-rate tax curve we have now, minus all of the bogus adjustments, is curved, while the flat tax is a straight line and the national sales tax is probably close to a straight line. Curved, in the present direction, means taxes are progressive (the rich pay a higher percentage of income, not just more money). Straight is straight, and curved in the opposite direction is regressive. The flat tax and the national sales tax are considered by many to be regressive in practice, because when calculations take into account the basal level of spending a person needs to survive, the poorest have to spend the highest percentage of their income on those basic necessities. The rebate/standard deduction sort of makes up for this, but not along all parts of the curve.

2) When the top tax rate goes down and tax revenue is held steady, it is simple math that the rich will pay less, and somebody else has to make up the difference - that's us (unless you are one of those rich guys). There is absolutely no getting around that very simple calculation. The FairTax.org people want to make it look like everyone pays less, but that is clearly an impossibility. I know they say they factored in the tax savings in all of those other areas, but it's bad math. The changes would fall disproportionately on the middle class and the poor, either in higher taxes or higher prices or both.

So assuming you could somehow close all of those loopholes and start from scratch, the multi-rate tax curve that we have now is the more progressive tax system.






As you can probably guess by now, I'm not willing to reverse engineer all of those graphs and their math, but I prefer to attack it from another angle. And that angle is this: If the top tax rate on the richest Americans goes from 35% to 23%, how are you going to make up that shortfall? If consumers are paying 100% of the taxes, that means it falls on the poor and/or the middle class to make up that shortfall. You can't get simpler math than that.

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So, where do you make up the tax shortfall?

Hey, even in my defense of today's taxes, I still said that it has to be simplified and the loopholes closed. But you don't need a whole new system to do that.

Because a flat tax eliminates the rigging of "what tax bracket am I in" game. And, with the top 1% as they are called now, there probably should be three more tax brackets in that last bracket alone- 350k per year to 500k per year, 500k to 2 million per year, 2 million a year and above.

And take capital gains- getting rid of the dis-incentive to do well, is a good idea. The quickest way for the middle class shmoe to get a little leg up in the socio-economic ladder is to buy low, sell high. Like a house. There should be no capital gains taxes, no income taxes, at all, for those that "flip" thier personal residences- this is one of the best way to "float all boats"- a person that is making a measly 20k a year, and bought, say, fixer upper homes cheap, and sells them high, is bringing his entire family out of poverty- I know, I have done it now- twice

So the best way is to flat tax, stop the attempts to move up and down a ladder , and end 99% of the loopholes, end the corporate tax, etc. The corporate tax is actually very regressive- since the corporation won't pay those taxes, the consumer will. If you have a 30% corporate tax on a coat factory- where do you think that money is going to come from? you bet, the poor shmoe that needs a coat.

I explain it to my renters this way, when I up the rents on my places- I keep my profit margin at a steady 20%, have never changed that- all rent increases that I have ever made is 100% because of bond prices have increased my mortgage payment on the apartment. What- you think I am going to just eat my property taxes? No, I am not in biz to lose money!

I tell them, if you vote for a bond increase, you are voting for a rent increase, just that simple- so it better be worth it!

Uhh, no. Are you forgetting the 40 million visitors from other countries that spend money here? How about the 12 million illegal immigrants that are here? Not to mention, the rich spend a lot more money and will raise a lot more taxes than they do now with all of the loopholes. Just because their tax bracket is set to 35%, I think it has been established that they don't actually pay that. With the Fair Tax, they will be paying taxes by shopping on Rodeo Dr. One of their best hobbies.

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Care to share the source for your claims that drove you to your answer? Just because I did not mention any exceptions, doesn't mean that you have outsmarted the experts that designed this plan. Please back up your claim, if you can.



Ok, I wish someone would answer my question about this flat tax everyone is talking about. Is there specific proposal that anyone can link to that covers the flat tax. Right now, it seems we are comparing a couple of people's ideas as to a new tax system that they call a flat tax to an actual bill that is in Congress called the Fair Tax. This is comparing apples to oranges. Sure, you have your ideas for what a new tax system should be, but what research has been done, what specific legislation is proposed, and what resources do you have to back up your system.

If this flat tax that everyone is touting is just some ideas that are being thrown around the campfire, great. If there is an actual plan that is sturctured and an actual proposal built on research, fine. I just don't know if we are comparing apples to apples, or apples to oranges.

If this is actual legislation, please do share so I can read about it. So far, my objections to the flat tax that is being discussed have not been answered by anyone, so I have to assume that it is not an actual proposal, but I could be wrong.