Taxes and Budgets., Lets get Fiscal!

Okay, now whether you agree with low taxes or high taxes, I think we all agree the current tax code needs to be reworked (out of around 2 trillion dollars, around 300-500 billion dollars is wasted each year because of the tax system we use, and because of the system we use an additional 300 billion is missed out on). So how would you guys change the tax system would you offer a more single player tax system and if so what kind of system would you use but if you didn't what taxes would you keep and get rid of? Would you keep income and get away with capital gains or vice versea or get rid of property tax (a personal favorite of mine to get rid of personally)

Personally I think this country should really look into the idea of a fair tax system, I thought the idea was horrible when I first heard of it but the things being proposed actually make alot of sense, I would make some changed to the one being proposed now but it's to be considered. Like for example, the current one provides a voucher for all spending spent to the essential level, I agree and disagree with this, there should be vouchers but only for people around the poverty level.

Yeah getting long I know but also...

Since this is a fiscal thread, how about our budget? We gain a deficit of around 500 billion dollars a year, and that all adds to a debt that is making us pay around 300-400 billion dollars a year.So how would you balance our budget? What areas would you increase spending more and decrease some? Propose some ideas (Though keep it within reason, for example for 2007 we spent around 439.2 billion dollars for military now even if you don't agree with things like the military I think we can all agree that realistically our budget for that is not going to fall below 300 billion)

What exactly is "fair tax system" weasel words for?

This can answer more questions then I can and it should be read. http://www.fairtax.org/site/PageServer?pagename=about_faq.



Basically the idea is to repeal all current federal taxes and replace it with a 23-33% National Sales tax. (Note this doesn't mean something that cost a dollar would be 1.22-1.33, rather it would far cheaper then that because of taxes already in every item so it would be more like 1.01-1.05). The idea is that because everyone buys stuff, no one really can cheat (Black Market people for example may make their money illegally but in the end they still pay for it, same with illegal immigrants and everyoen else), people below a certain income level would get a rebate each month based on house size to compensate for basic living expenses. There's a few established benefits for all this.

-With the elimination of most of these taxes alot more businesses will come here (a huge amount of overseas business were polled on what would they do if the US, did this plan 80% said they would set up sites over here, 20% said they would make our country their new headquarters)

-Most of our paychecks would go up a huge amount since hidden taxes take about 40-50% of the average paycheck.

-It makes Congress more accountable to how they spend money, since we'd all be paying the same rate, any increase of revenue drawing would affect all and all would notice.

-The rich really wouldn't get that much of a benefit from because at the moment, the wealthiest Americans don't really pay income taxes to begin with, and use special tax shelters to merely pay a capital gains tax of 17% on the money they earn, in fact the biggest burden through this plan would be lifted off the lower-middle class.

-The Government could spend hundreds of billions of dollars less per year.


Again though, the idea isn't their specific plan, it's the general idea of a consumption base tax system.

So long as certain low-income foods aren't taxed, or are taxed less, it sounds fine. Since the poor spend a greater % of their income on food anyways, that's a basic progressive deal. I'm all for keeping the rich from getting out of taxes.

Except 30% is a steep tariff, even if it also applies to internal sales. I'm going to have to read the whole article before I throw in more than that.

It's not that it's taxed less, it's that families who are spending their money on said food get their money back, all items get taxed the same amount no matter what, that's one of the most important parts of the plan.

OK, after reading the actual FAQ... eliminating the taxes within the product creation and only taxing at the consumer level makes sense. Only tax it once, and so requires less paperwork, and so people spend time and money doing more important and productive things...

Ahh, alot of it counts on that last bit to make things work out.

And it says used goods aren't taxed, but if you're paying 15% more on new ones, people can charge 15% more on used, so that still won't increase my spending power.

But it seems to work well on paper, and can't be much worse than what we've got now.

Your spending power increases because, your paycheck raises higher then the price of goods do.

*blinks* Intriguing. It innately balances out taxation percentage between rich and poor since wealthy people spend more money, and also gets rid of the issue of illegal immigrants being below the radar of the IRS, which are my two major gripes with the current tax system. Hell, I'd not even care much at all about immigration issues if this were enacted, since simply being here lends to contribution to the government. Assuming expenditure amounts really are as stable as they say, I'm all for this.

How.

How does it get the same revenue while simultaneously taxing less?

It isn't taxing less. It's organized such that the same amount of revenue results, just with a different execution. It's taking a larger percentage of one larger sum of money (consumption expenditure) rather than taking smaller percentages from various sources. It gets more complex with the "prebate", but that is it in simplest terms. Far more specific analysis is done here.

This post has been edited by Shadow776 on May 6 2008, 03:37 AM

Then how do we have more money because of it?

Technically the government gets the same amount of money in the long run. Though initial paycheck size is larger since, rather than deducting taxes before you get your money, it is deducted as it is spent. Now, the higher paycheck may encourage people to buy more, but doing so would actually make them give more money to the government than they would otherwise.

I, for one, do not see it as having less money taken away, leaving more for me to spend on other things. I just see it as simultaneously more difficult for people to evade and simpler to execute. More difficult to evade in the sense that if you buy products by any conventional means you are paying it. That, combined with the fact that it is self-balancing since poorer people spend less and wealthier people spend more, makes it simpler. It can be pulled off with far less bureaucracy - the IRS could be vastly reduced if not replaced outright. And less required bureaucracy leads to less room for error or corruption.

This post has been edited by Shadow776 on May 6 2008, 03:59 AM

What prevents people from buying stuff from outside the country? Or is that made illegal under this scheme? It becomes even more attractive for rich people to do it, because the costs of getting the stuff into the country don't scale the same as the tax does.

Also, any tax that caps out at 23% is not progressive enough in my eyes.

After digging through the bill itself for a bit, I found this:

Apparently this tax only replaces domestic taxes, and import taxes stay as-is rather than becoming untaxed. Thus, imports cease to be any different.

Also, the price difference will probably not be as sharp as the full 23% being tacked on in addition, since the sellers no longer have to deal with corporate- or small-business-level taxes. As such, they can afford to drop prices by some amount after the 23% is added (not necessarily bringing a net decrease in price, but negating much of the increase). And since the overall size of people's paychecks would be larger without paying income tax, any increase that results from this tax would still be affordable.

As for the fixed 23%, it is only that since at that point it mimics the current amount of tax revenue. It would be up for change as much as any other tax rate would.

This post has been edited by Shadow776 on May 6 2008, 01:55 PM

Look, if the government is getting the same amount of money from this tax, and the populace is getting taxed less, then this tax plan must create money, possibly pulling it from the æther, or else someone's lying or mistaken.

The free money comes from fewer loopholes to exploit and less IRS people to pay. 'Cause, you see, it's simple.

Edit: One oft repeated point in the FAQ is that by taxing a corporation, you are effectively having sales tax, as they pass the increased costs down to the consumer. By moving all goods tax to the consumer level, they are making this more transparent to the consumer, rather then taxing them more.

But, yeah, I'd ask an economy professor to point out problems before I'd believe the web site that's gushin with naught but praise for the idea.

This post has been edited by Spriteless Girl on May 6 2008, 08:43 PM

I had to stop reading when it said the proposed system is good because it's what they used in the middle ages.

The Wiki article on the FairTax system offers a more balanced view of the issue, as well as plenty of links to articles and such on the matter, as would be expected.

However, it is very long and boring, so I haven't bothered to read through it.

So, is there any reason why you cannot tally up all of the sources of income for a person and then tax that? Not will not, or should not, but cannot?

To address your two overall questions, the way this gets the same amount of money while taxing each individual less is the fact that you are taxing individuals less but you are doing it from a far bigger pool, in the current system not everyone files taxes and a huge amount of people find ways to evade them (365 billion dollars is unaccounted for each year), this current system as long as you buy things, you're paying taxes which pretty much adds to everyone above the age of 15 including illegal immigrants, members of the black market and tourist.

Two) Another reason it generates the same revenue is because we also spend less money doing it, with it we're able to collect 300 billion less, and still get the same amount of things done.


You could do that but there are several flaws, some of them being illegal immigrants and members of the black market are discouraged, also it makes evasion easier. Plus the mere tallying up of so many individuals still makes a complex system, and doesn't really lower the tax burden enough to get the full benefit like increase businesses (which really is a major benefit when you look like countries like Ireland that lowered their taxes to around 17% compared to the rest of the EU having around 50% and now Ireland has the fasest growing economy in all of Europe and the second richest person per capita in the world)

Plus another thing is, is that taxing consumption is more reliable then taxing income.

I mean if you really wanted to increase revenue you could have this plus somewhere around 10% income tax for around the richest 1-10% of the country, but anything more then that would defeat some of the purposes of the whole idea, basically using the kind of tax system Europe does but have a far less extreme rate.