"Monday the President will be in state to rally with us against business killing taxes and regulations. Smart move on his part. The good people of Minnesota will be ripe for tax protestation on April 15th. Change is in the air. Let's just hope it is the right kind of change."
This is probably a good time to ask this question. Unless you knew you were getting oodles of money back from overpaying your taxes, this is the week you probably filed and paid. And chances are, you are not a happy camper right now. Besides the fact that our government servants don't know spit about how to manage our money, the fact we are overtaxed, rubs many the wrong way. Why? The basic unfairness of our taxes. Both on state as well as federal. So what do you do with an unfair system? Replace it with a Fair Tax system.
I mean, these socialists who are trying to take over our government, want to take our unfair tax system and make it even more unfair. Like a top rate of 70% or higher. Or like Elizabeth Warren said, "Let's go after people's wealth." So first we take the income, and then go after whatever wealth is left over. Then on the news this morning, some nut ball on the Democrat side running for President, wants to strip companies of their profits and give every person in this country $1,000/month. Huh? Welcome to crazy town folks.
The Fair Tax however, is just that. Not an income tax, it is a tax on what you consume. The more you consume, the more taxes you pay. The reverse is also true. The IRS goes away. April 15th becomes just another day again. The down side? The goods we buy would be more expensive. The up side? The wages you make would be 100% yours - no taxes withheld.
Me? I would love to see the Fair Tax initiated along with a balanced budget amendment. Why conflate the two? Our finances in the federal government are a mess right now. Zero discipline. That is why we have a national debt of over $20T and headed for $25T. We tax too much and spend too much. We are breaking the backs of the taxpayers so we can waste the money collected, and print more of what cannot be collected.
Monday the President will be in state to rally with us against business killing taxes and regulations. Smart move on his part. The good people of Minnesota will be ripe for tax protestation on April 15th. Change is in the air. Let's just hope it is the right kind of change.
Been following this for years. Countless advantages:-)
ReplyDelete-- Right off the top, we save over $400 billion just in record-keeping, filing, and overhead of the IRS.
-- Social Security reform is automatic
-- every savings or investment account becomes an IRA
-- our balance of payments and foreign trade problems go away
-- the new tax is perfectly progressive above the poverty line, perfectly progressive NEGATIVE income tax below it.
-- savings and investment strongly encouraged, growing the economy.
-- investment decisions made without tax considerations (no "distortions" of the economy for "winners and losers"
-- price neutrality (no increase in cost of goods)
-- taxes clearly visible with every purchase
-- Congress would have a very difficult time raising taxes
-- 75% of Congressional lobbying would disappear, making Congress more functional and less beholden to special interests
Even if forward-looking economists can argue the potential long-term benefits, they don’t appear to be big enough or sure enough to offset the near-term havoc that would be wreaked upon the middle class should such a plan go through.
ReplyDeleteMajor concerns include:
Penalizing the Lower and Middle Classes. Individuals and families that are above poverty level and considered middle-class will bear the brunt of the tax burden for the country. This is a progressive tax, which means that the wealthy pay more and the poor and middle class pay less as a percentage of their income.
Increasing Potential for Tax Evasion. Such a high sales tax rate would undoubtedly lead many to evade the tax, possibly through trade and purchasing goods in other countries.
Decreasing Overall Spending. Under this proposal, the best way to lower your tax burden will be to spend less. Too little spending is not good for any capitalist economy.
Eliminating Tax Deductions and Credits. Already being done by Feds.
Making State Income a Bigger Burden. Though federal income tax would go away, state income tax would remain, and of course it would no longer be deductible against federal taxes. The effect would be a great burden on residents of high income tax states like California and Minnesota.
Depending Too Much on Spending. Paradoxically, this tax is dependent on spending, but at the same time discourages it.
Increasing Costs for Immigrants. The prebate check system will not include non-citizens, significantly raising the cost of living, especially for lower-income immigrants, permanent residence (“green”) cardholders, and visa holders. It could also deter highly educated foreign workers with great careers, such as doctors, engineers, and technology sector workers, from immigrating.
I am just not seeing your complaints.
ReplyDeleteThere is a "transition plan" built into the legislation, the constitutional amendment to repeal the 16th would take time while everyone prepared, and it would be set to take effect at the start of the year following Ratification. No chaos, except for all the tax accountants, tax preparers, and IRS workers who would have to find honest work.
This tax is perfectly progressive on disposable income (i.e. above the poverty line) the burden on the lower middle class is trivial, and as spending approaches the top 10%, the tax Progresses asymptotically towards the base rate. This is unlike the current "progressive" system that taxes both the poor and the rich at higher real rates than the middle class.
Right now, drug dealers, illegal immigrants, and cheats of all kinds escape the income tax, but would have to Pay the FAIR tax.
The only way to escape it would be to buy used goods or do things like grow your own vegetables.
Decreasing overall spending and increasing savings and investment is actually GOOD for a capitalist economy. Since goods are price neutral, there should be little change in spending habits except for increased saving and investments. Right now you are penalized for savings, and frivolous spending is encouraged. The problem with the current tax system is the envy produced by your small business owner neighbor living "high on the hog." With the FairTax, he would be free to put more of that money back into his business and live more modestly. "Income inequality" would be less of a chanting point.
"Eliminating tax deductions and credits" is almost laughable when you still have 17,000 pages of IRS code to undo.
Awww. I have great sympathy :/^ for those politicians in high tax states. Nothing would prevent them from implementing a FairTax of their own, and they should.
Consistency of government income is actually a PLUS for the FairTax. When the economy contracts, incomes fall, but most spending (since it is for necessities) continues.
Let me get this straight. You are concerned that those who should not be here at all are finally paying taxes? As for highly paid immigrants, we should prefer, I think, that those jobs go to Americans wherever possible, and to raise the cost to the employer to prevent them from underpaying those foreigners. It is, in a word, FAIR.
Valid points all.
ReplyDeleteGreat discussion gents! Best so far!
ReplyDelete