Fair Tax…is it fair?

Got any strong feelings FOR or AGAINST the FAIR TAX?

fair tax

I had dinner Friday night with a BIG fan of it and wondered what you all think………

Thanks!

Z

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24 Responses to Fair Tax…is it fair?

  1. bocopro says:

    Don’t pretend to fully understand it all . . . especially the “prebate” thingy. What I DO know is that the IRS is bloated, corrupt, and inefficient. If I remember correctly, its operating budget last year was around $11 Billion — that’s with a B, now. It definitely needs fixin, and many of the exceptions, exemptions, and loopholes need tightenin up.

    My initial assessment is that more of the tax burden will shift from the very rich to the middle and lower classes. And people might be ignorant, but they’re very clever, so they’ll discover or invent ways to get around it, just as they’ve found ways to cheat the self-checkout scanners and ATMs.

    Any time a commodity is priced out of reach of ordinary people, alternate methods of obtaining it pop up, such as black markets, theft, barter, and so on. I can see an uptick in trading rather than selling, especially services and perishables.

    The biggest flaw in it seems to be that it does essentially nothing to curb runaway government spending and waste, and THAT’s as big a problem as anything else.

    Not sure how it would impact the housing market, once mortgage exemptions disappear, and I think the impact on tourism in many states, such as Florida and Hawai’i, might be very negative. Could help reduce illegal immigration, though, by forcing illegals to pay taxes that many of them can duck under the present system.

    Bottom line . . . the problem is not so much taxes, as the people running the system, the gubmint. I heard somebody say not long ago that if we want to do away completely with crime in this country, all we have to do is make Obama il capo di tutti capi.

    That’s a sorta take-off on Friedman’s quip that if we put the federal government in charge of the Sahara, within 5 years we’d have a global shortage of sand.

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  2. I have friends who are very pro Fair Tax.
    I am not convinced, for many of the same reasons as Bocopro.
    The “prebate” is awkward.
    The Fair Tax adds another tax, a consumer tax, that will engender black market activity, that might not replace, but end up supplementing existing tax.
    I think an income tax is the most manageable,even though both the Fair and Income tax (as implemented) make tax collectors out of the private sector (retailers and employers).
    Whatever we do, we need to get the non-payers back in the game.
    Perhaps a flat tax, or a flattened out progressive (the very name condemns it) tax with only three brackets.

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  3. It sounds good (For the first time in recent history, American workers will get to keep every dime they earn; including what would have been paid in federal income taxes and payroll taxes. You will get an instant raise in your pay! and The IRS is No Longer Needed.

    And if the Left opposes it, the Fair Tax must have some merit.

    As homeowners who have never had a mortgage (First, we rented; later, I inherited the family homestead), Mr. AOW and I have had a heavy tax burden all our married lives — never mind that our income rarely exceeded the national median income.

    However, as Bobopro said: The biggest flaw in it seems to be that it does essentially nothing to curb runaway government spending and waste. Unless those curbs would occur by default.

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  4. BTW, I have always been opposed to the concept of progressive taxation. Smacks of redistribution of income (and, consequently, wealth).

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  5. Kid says:

    Right, unless the government reduces spending it is going to suck as much money as it does now, so it comes down to semantics.

    Also every version I’ve seen so far has me paying more tax. I’d rather have tax cuts in the current system. The IRS isn’t going away, someone still has to collect the tax and unless obammycare goes away, the big increase in IRS agents isn’t going away.

    I agree with what everyone else said too.

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  6. According to the American Heritage Dictionary
    ACADEMIC: 3. theoretical; not practical

    This plan seems to fit that definition to a T. Ed, has summarized this so well I can add little or nothing more except the “Flat Tax”, advocated by Steve Forbes, would be much cleaner and its implementation far more feasible. That said, I’d like to know more about what Trump has in mind.

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  7. Mustang says:
    Here are the few things intended to unite Americans:
    1. All males serve in the military,
    2. All heads of household pay taxes, and
    3. All citizens report to jury duty when called.

    Well, the draft is gone so now only a small number of people actually serve the nation’s defense; people who do not protect the nation like to ridicule the folks that do. People will do almost anything to get out of jury duty; I have never seen so much whining as during voire dire. As far as taxpayers, only half of working individuals participate in the progressive tax scheme. I notice the US government is not doing very much to unite us lately. I suspect I know the reason, too.

    I think a flat tax sounds good, but the problem is that our government is not trustworthy. Suppose this year they announce a flat tax of 10% (which some are calling the tithing tax), and we all scream Yay! Next year congress raises it to 26% (the Huckleberry plan). If there were going to be a tax, it would help individuals and small businesses to be able to plan for paying it.

    I am in agreement with everyone here, however. Taxes will not solve our debt problem. We should restrict the government’s ability to raise revenue sufficient only to pay for things that are unquestionably constitutional. National Defense is constitutional; common core is not. We must curb spending, and we must size taxation to pay for the things that are lawful under our Constitution. Providing Obama phones to support flash mobs is not a constitutional expenditure, but neither is providing land lines to poor people. States can do that, but the feds cannot.

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  8. Mal says:

    What I see happening are side deals make with cash and no reporting. How do they plan on policing that? Also, it would cut a lot of purchases, esp. high ticket items, like autos. How about Real Estate? It opens a whole lot of worms, Z.

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  9. geeez2014 says:

    My first question to my friend was what Mal says particularly…What about luxury items? Will people stop supporting expensive ticket items? And his feeling is that when we have much more money to spend, we will still be able to buy those things. The tax rate he supports is 26%, I believe…..that’s a little more than twice what we pay here in California in Sales Tax.

    In a sense, I guess, our total tax system gets constructed ON SALES TAX, right? Since you pay at point of purchase? Am I getting that right?

    Sure does encourage people to buy when they get their whole weekly or monthly salary in their check……..

    Andyes, SOME type of tax collection would have to be conceived and so it’s not QUITE ‘getting rid of the mean ‘ol IRS’…but at least WE wouldn’t have much to do with this new entity; the retailers would, right?

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  10. Baysider says:

    I believe that everyone should have some skin in the game. This sounds too much like a VAT. Which gets out of hand. I would only consider: 1) if it’s NOT a VAT, and by constitutional amendment they can only collect a fee on the final transaction; and 2) the 16th amendment is repealed FIRST.

    They are just looking for more money by slight of hand. Any time I see the word “fair” in a government proposal I go on red alert because I know that’s just click bait for the gullible.

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  11. Baysider says:

    I also think that someone is worried with so many people out of the work force. With the age demographic bulging older, and retirements looming, there may be fewer paychecks to tax. Mustang’s right, more taxes won’t solve anything. It will only enable the taxaholics to keep on with their drunken spending.

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  12. Baysider says:

    I believe proponents push this to bring in the ‘underground’ economy. That’s good, but I do not trust ‘them.’ “THEM” = the army of lawyers and accountants whose businesses would be severely curtailed by making the tax code ‘easy.’ Of course I’m sure congress will find work for them to do. Sorry for all the posts – I’m stream of consciousness as I’m rushing to get out to work.

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  13. skudrunner says:

    The Fair Tax has one drawback that will prevent it from ever being enacted. All Politicians have three things objective above all else. Stay in office, spend you money, devise ways to get more of it.
    The Fair Tax removes their ability to raise taxes on any specific sector of the economy, like tanning salons, to fund some pet project, like obamacare. If congress cannot use the IRS to intimidate the taxpayer they lose a lot of the power. It would capture revenue from the underground economy, campaign contributions used for personal use, drug trade and other tawdry enterprises.
    All for the Fair Tax because like the name says, it is fair therefore will never happen..

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  14. geeez2014 says:

    Baysider, that was the first thing I asked my friend (Jeanne H’s husband) “it sounds like a VAT”…but he doesn’t believe so; I didn’t really see a huge difference, but they exist.

    Mustang, you and a few others have voiced that I DON”T TRUST THEM issue; that’s an important one.

    And, wouldn’t it BE better if we got SPENDING DOWN first and then dealt with any tax changes that might look attractive then?

    Skudrunner, Ya, we haven’t seen a lot of “Fair” around here…except FAIRNESS to those who feel it’s only FAIR that the rich support them 🙂

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  15. @Mal,
    “What I see happening are side deals make with cash and no reporting…………………………………”

    Yeah, I’ve wondered the same thing(s). Trying to enforce this portends a potentially greater mess than what we already have. Also as long as we have a XVI Amendment, starting the, so called, “Fair Tax” is totally out-of-the-question. So we repeal that and plunge head-long into a system sure to be replete with unanticipated, untoward consequences; then where would we be? I’d like to see a “Flat” or flatter tax system which includes [all] income received so as to foster a better sense of being a real steak holder in the Nation that a reported 47% currently do not. Also, here in Colorado, permission from the people must be given to raise tax. That should be a further consideration when reforming same at the National level.

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  16. geeez2014 says:

    JMB and MAL; that is a very good point. What’s the overseeing mechanism that makes sure all taxes at points of sale are collected and recorded properly?

    Interesting point about State versus Federal taxation, John.

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  17. skudrunner says:

    We have a congress who is made up of millionaires trying to keep the underlings in line. The way to do that is to restrict their spending money through stealing from them and if the object, steal more.
    It is wonderful how the leftists appeal to the poor while keeping them in line with minimum wage, welfare and government assistance. Of course they are not robbed like the working middle class because they have little to rob.
    Can you cheat under the fair tax, sure you can by paying cash for some things. We can more than make up that amount by taping the underground economy which is estimated at over two trillion . Tax rates can be reduced by eliminating all deductions including mortgage interest, charities, churches but that would only benefit the rich of which congress is part of.
    As long as congress has the power to raise and impose taxes, they will continue to use it to their benefit.

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  18. Sparky says:

    Fair Tax, Consumption Tax, whatever, as long as they never steal more than 10%. The IRS must be abolished or our country will never be prosperous again.

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  19. Just realized, you asked “Is it fair?”
    What in life is?

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  20. geeez2014 says:

    I don’t feel one bit closer to having a clear sense of if this Fair Tax is workable or not, but you all gave us all a lot to think about, I guess.

    Ed…just a play on words for the title!

    Sparky..10%; wouldn’t that be nice? I watch those wonderful old movies where people went to night clubs and the clubs had huge expensive bands and the orchestra members lived on that income….and I wonder what the heck happened?

    Interestingly enough, “from 1791 to 1802, the United States government was supported by internal taxes on distilled spirits, carriages, refined sugar, tobacco and snuff, property sold at auction, corporate bonds, and slaves. The high cost of the War of 1812 brought about the nation’s first sales taxes on gold, silverware, jewelry, and watches.”
    Looks like we ran a country back then only on taxes on luxuries; to me, that’s rather like the Fair Tax?
    The part about taxing people, slaves, is hideous.

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  21. @ Z,

    “I don’t feel one bit closer to having a clear sense of if this Fair Tax is workable or not”

    What does it take?

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  22. Mustang says:

    It is not fair to tax the people in order to pay for unconstitutional programs. We should focus on this, otherwise, we lose control of government to a body of people who take the oath, but break the oath on the first day in Congress. IF WE DO NOT HOLD MEMBERS OF CONGRESS ACCOUNTABLE, then WE not THEY are the problem.

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  23. “WE not THEY are the problem.”
    Yeah, that about says it all!

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  24. Mal says:

    There is one way people would be less likely to cheat by paying cash and that would be to set the rate so low it wouldn’t be worth it. If the figure of over two trillion dollars Scudrunner said is the estimated underground business going on, then the sheer volume of business would balance things out. It might also make our politicians hesitate to raise taxes in fear of it returning underground again.

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