Which is 'fairer:' Require everyone to take the stairs so that everyone does it the same way, or allow ramps to be built for individuals who can't walk so that everyone can have access?
1.) America currently has a progressive income tax (the more money you make, the more you're taxed). However, if everyone pays the same amount (in this case, a standard sales tax), the tax burden is taken off the higher incomes and distributed evenly over everyone. However, the lower and middle class families would be spending a greater percentage of their income to meet their needs. The poorest families would be paying the same amount for their needs as the ExxonMobil board of directors, who could essentially buy the poor family itself. Plus tax.
2.) The idea of "fairness" can be 'applied' a few different ways. One way would be to equalize the tax payers spending, so that everyone pays the same amount (NST). In this way, no one has to pay any more than anyone else ("fair?"). This is essentially the same thing as arguing that a handicapped person should take the stairs and not have a "special" ramp built for them. However, the other way would be to tax an individual's income. In this way, people who make less money don't have to divert quite as much of their pay to taxes, and more can be spent on family needs and necessities.
Could it work? Perhaps. But could it work fairly? Hell no.
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Naysayers railing against the FairTax become, ipso facto, defenders of the INCOME TAX system. Prof. Larry Kotlikoff believes that the current tax system IS bringing the country to nothing less than an "economic meltdown" by virtue of the invisibility of actual taxes paid. If Americans do not understand the true cost of their government, they're unlikely to hold Congress accountable - thus the enabling mechanism to continued profligate spending.
Even with the foregoing notwithstanding, do FairTax naysayers really believe:
• Workers love having their pay confiscated, hourly, through gov't withholding and don't mind getting their money back by involuntary servitude - to the tune of 50 hours/year (on average) - preparing an annual tax return?
• That certifying the number of persons in your family (annually, and, ancillarily, upon change in household) is an abrogation of our freedom - more intrusive and complex than filing a tax return every year subject to threats and intimidation by theIRS.
• It's better to have theIRS fishing through citizens' income transactions (complete with audits, interest, penalties, and threats against individuals, families, businesses as well as confiscation of their homes, property, and bank accounts) rather than - Gawd forbid - issuing a gov't check to an individual (while pretending that Social Security payments disbursement logistics really can't work for "prebates")?
• That an monthly advance tax rebate is the same thing as "being on the dole" ? (Only lobbyists, special interests, and business deserve "handouts" ? - the politician gets a payoff from a lobbyist, the lobbyist gets a payoff from its client, and the citizen gets higher taxes and/or prices that pay for it all.)
• "Hidden taxes" in higher prices are fine because they're not "taxes," per se? (Hey, forget that families are really paying business's costs for complying with a business income tax code - staff, consultants, submittals, etc.)
• It's far better to have a gargantuan tax collection "service" in Washington, than to have 50 decentralized, smaller, leaner state collection agencies collecting taxes from fewer sources?
• That the work by notable economists (paid tens of millions of $'s by Americans for Fair Taxation) doesn't carry weight because it was paid for by private funds instead of some gov't / quasi-gov't enterprise?
• That FairTax's backing by many economists doesn't carry any weight because (the Brookings') Wm Gale's testimony before the President's Commission on Tax Reform is - somehow - above all that?!
(NOTE: The Commission/Gale made up their own "consumption tax" requirements, as if that constituted a legitimate rebuke of the FairTax plan. Dr. Kotlikoff has requested - but never received - Gale's technical "modus operandi" which would definitively explain just how Gale's conclusions can be reconciled with Kotlikoff's well-documented technical work.
There is no reasonable equity of distribution under the current INCOME tax system. What's more, the Tax Code has become a "tinkerer's paradise" for 53% of the lobbyists who game it in Washington DC. It's a lucrative business, and the U.S. TAXPAYER pays for ALL of it in higher prices (i.e., a hidden tax which is incomprehensible to the average working person). We have been well-trained by our slavemasters to do their bidding; meanwhile, the rich and super-rich ensure that the bulk of their wealth will be spared from government confiscation.
FairTax gets rid of the shelters - and it replaces the corrupt income tax with an emminently equitable system that untaxes the basic necessities, but doesn't unfairly penalize those who sacrifice to build a better life for themselves and their families. Under the FairTax, the government no longer can use envy to divide the poor against the rich, nor pit the individual against their "strawmen" - businesses at all levels who simply collect taxes, and pass them along in higher prices.
Prices after FairTax passage would look similar to prices before FairTax - not "30% higher" as opponents contend - competition would see to it. So, the FairTax rate (figured as an income-tax-rate-non-comparative, sales tax) on new items would be 29.85% (on the new, reduced cost of items because business isn't taxed under FairTax - thus lowering retail prices by 20% to 30%), or 23% of the "tax inclusive" price tag - this is the way INCOME TAX is figured (parts of the total dollar).
Because the FairTax is progressive, the effective tax rate percentages, that different income groups would pay under the FairTax vary, and they are calculated by crediting the monthly "prebate" (advance rebate of projected tax on necessities) against total monthly spending of citizen families (1 member and greater, Dept. of HHS poverty-level data; a single person receiving ~$200/mo, a family of four, ~$500/mo, in addition to working earners receiving paychecks with no Federal deductions) Prof.'s Kotlikoff and Rapson (10/06) concluded,
"...the FairTax imposes much lower average taxes on working-age households than does the current system. The FairTax broadens the tax base from what is now primarily a system of labor income taxation to a system that taxes, albeit indirectly, both labor income and existing wealth. By including existing wealth in the effective tax base, much of which is owned by rich and middle-class elderly households, the FairTax is able to tax labor income at a lower effective rate and, thereby, lower the average lifetime tax rates facing working-age Americans.
"Consider, as an example, a single household age 30 earning $50,000. The household’s average tax rate under the current system is 21.1 percent. It’s 13.5 percent under the FairTax. Since the FairTax would preserve the purchasing power of Social Security benefits and also provide a tax rebate, older low-income workers who will live primarily or exclusively on Social Security would be better off. As an example, the average remaining lifetime tax rate for an age 60 married couple with $20,000 of earnings falls from its current value of 7.2 percent to -11.0 percent under the FairTax. As another example, compare the current 24.0 percent remaining lifetime average tax rate of a married age 45 couple with $100,000 in earnings to the 14.7 percent rate that arises under the FairTax."
Further, per Jokischa and Kotlikoff (circa 2006?) ...
"...once one moves to generations postdating the baby boomers there are positive welfare gains for all income groups in each cohort. Under a 23 percent FairTax policy, the poorest members of the generation born in 1990 enjoy a 13.5 percent welfare gain. Their middle-class and rich contemporaries experience 5 and 2 percent welfare gains, respectively. The welfare gains are largest for future generations. Take the cohort born in 2030. The poorest members of this cohort enjoy a huge 26 percent improvement in their well-being. For middle class members of this birth group, there's a 12 percent welfare gain. And for the richest members of the group, the gain is 5 percent."
It's well past time to scrap the tax code and pay for government the way that America's working men and women are paid - when something is sold.
(Permission is granted to reproduce in whole or part. - Ian)
I'm going to wager that you either didn't bother to read my post, got this long, boring, scripted propaganda piece from some fair tax site, or both. Please refrain from doing this. I understand what the NST is. It may "work," but my argument is that it isn't fairer than a progressive income tax system. I'm discussing principles. It doesn't matter what "Larry Kotlikoff" believes. Fundamentalist Christians believe that Katrina was the result of New Orleans sin.
The pivotal question, which goes to the heart of "tax fairness" is, "Who decides?" Who decides who pays at what rates?
Under the current system, politicians (with the help of lobbies) decide. There are more voting middle class and poor - and it's always easier to pit these against the rich - appeasing envious masses by promising them that you'll "soak the rich" all while maintaining an extremely abstruse tax code whose effect is to ensure that those with sufficient levels of wealth can not only maintain control of it, through shelters, but increase it at the expense of others.
Thus, taxing income creates barriers to actually building wealth (except for, and by permission of, the deciders).
Correctly, Mike Huckabee has deciphered that the FairTax provides tax payment options for those who are the source of tax payments, while it removes barriers for American working families to "reach another rung up on the ladder" by enabling them to conserve wealth, much like the rich currently do.
And FairTax permits any of us to do this without attorneys, consultants, offshore accounts, and other complex financial arrangements. Put simply, "You buy more, you pay more tax."
Under FairTax, no one, but you decides.
The rich, and this includes many politician/"deciders," do not want the FairTax (since "the rich" take most of their income in other-than-wages, they pay less, just ask Warren Buffett who, btw, has come out in favor of a progressive consumption tax such as is the FairTax) because it taxes accumulated past wealth (when it is spent/enjoyed). Politician don't want it because it would end their dealings with lobbyists.
Should we maintain an income tax system where stakeholders in our society pay nothing for it? It's an increasingly serious problem that will lead to the destruction of productivity and our economy (thus the link to Kotlikoff's dire warning).
As to my previous posting, I wrote all of it, based on lengthy hours of personal research, and in response to previous FairTax questions. The information, and links, are important to understanding the far-reaching ramifications of continuing to try to fix an un-fixable income tax system.
I'm sorry if you found it taxing to process.
Who spends a larger percentage of their income, upper or middle class? Agree to disagree. The point of the blog is to discuss concepts in harmonic discourse, not as a posting board for propaganda. I'm talking principles, your talking studies.
Also, disrespect will get you taxed a deletion real quick, so please refrain.
saying that "because you disagree with this means you agree with this" is already a logical flaw. the income tax has flaws. but the fair tax is just illogical. running a nation takes a lot of money, there is no way around that. a fair tax would require quite a hefty percentage to fund everything that taxes pay for. unfortunately, no one can decide just how much we would need. bringing in the fair tax without knowing this is difficult. the government would err on the side of caution and be as conservative as possible, making the percentage as large as possible. they cannot, of course, risk not taxing enough to keep the infrastructure of the nation stable. but if they over estimate, where would the excess go? back to the taxpayers? how would they know how much to give out to each person? and if its invasive to tell the government how many people live in your family, how is it not invasive telling then everything which you are buying? also, the rich do pay more tax. often a lot more. yes, some find loopholes to reduce their taxes, but most pay quite a lot of tax. but for the poor, they can actually get back -more- from a tax refund then they paid during the year. and how will necessities be determined? have you ever shopped with a family living off welfare? from a 20 dollar welfare check, they can only actually buy 15 dollars worth of stuff and the rest is given back to the government. so they get cereal, but its a no-name brand cereal. do they not deserve something as simple as the cereal brand they want, even if its only 10 cents cheaper? i dont see the government being able to make a distinction between necessities any better once they realize that the more things they tax, the more money they get.
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