Fair Tax Act

[jch216]

I'm doing a persuasive speech about the fair tax act. I'm in favor of the national sales tax myself. Can anyone here argue some points against it? I'm having trouble finding the negatives.

Thanks.

[RADAR1797]

It depends on how your define a national sales tax. I prefer a flat income tax, but a national sales tax can ineffect acomplish the same goal.

Sales taxes as we know them no do not cover the sale of stocks or bonds. In order for a sales tax to be uniform and not favor the wealthy, it has to be on every transaction. That would mean when I buy a stock, I pay sales tax on it and also when I sell it, the purchaser pays sales tax on it. This could be cumbersome for the stock brokers and financial institutions.

A national flat income tax would be much easier to regulate. People simply put down all earned income, whether is be from interest, a job, sale of a stock, etc... and a percentage they make goes to the government. Now I would not start taxing income until someone makes over $10,000 a year. That being said, there is some compensation that can be built in for location. When I lived in Texas, everything was cheaper, here in DC $2000/month rent is the norm. If location determined minimum tax rates there might be some unintended consequences (people moving to the most tax advantages areas).

-RADAR

[jch216]

http://www.fairtaxvolunteer.org/smart/index.html


Follow the link above to see what I am doing my speech on.


I was thinking that a proposed 23% sales tax would be the best option because it is a voluntary tax. You pay a 23% consumption tax each time you purchase a new good or service for your own personal consumption above the federal poverty level. You would get a rebate check for the sales tax that you spend up to the poverty level.

[Omardeth]

sale tax is about the only real way we are taxed "fairly" . other than stocks and bond , most "regular " people don't have them , it taxes everybody the same . nomatter how much money you make .

[Ed_S]

From Thumbnail Sketch of the FairTax

Did you know that hidden income taxes currently make up 20% to 30% of all retail prices? It's true. According to Dr. Dale Jorgenson of Harvard, hidden income taxes are passed on to the consumer in the form of higher prices, from 20% to 30% higher than they would otherwise be for everything you buy.

Therefore, when the FairTax Act of 2001 abolishes the federal income tax system, prices will drop 20% to 30%.

Anybody that actually believes that is WAY too naive!!
OF COURSE a portion of what we pay for goods ends up going to pay the sellers taxes! It always will, no matter what system is in place!
Even if the above were true, few if any businesses would cut prices! Why would they throw away a windfall profit?

There is simply NO WAY this could do anything but cost you money and further screw up the economy. How so? But inhibiting spending, that's how. I know I'd go without things to avoid it.
What about major items like real estate and vehicles? If the tax applied to those no one would buy a home or car, and business spending on them would come to a halt!

Besides, you income could still be taxed as an expediture for your employer - see summary

Fair Tax Act of 2003 - Amends the Internal Revenue Code to repeal subtitle A (Income Taxes), B (Estate and Gift Taxes), and C (Employment Taxes) of the Internal Revenue Code.

Imposes a tax on the use or consumption in the United States of taxable property or services.

You are paid for the service you provide your employer, right? This just transfers the payment to the employer instead of the employee. You could forget ever getting a raise if every dollor you earn costs the boss $1.23

[Atomic Rooster]

I'm suprised our resident left wingers, MTAtech and shahani, haven't chimed in on this one about the evils of a fair/equal tax for everyone.

[Target]

I'm surprised Atomic Rooster didn't have anything of value to add to this thread, and instead decided to take a jab at MTAtech and shahani

[MTAtech]

OK, couldn't resist. What's wrong with sales taxes in general are that they disproportionately affect the people on the bottom of income ladder - those that spend most or all of their income. Since these low income people spend most of their money on items that are effected by the tax it hits them worse than us millionaires that spend our money on investments, mortgages, etc.

The other thing wrong with sales taxes are that they are double-taxation - a tax on money already taxed.

Also, how does foreign trade fit into the equation? Are sales to foreigners exempt? If not, doesn't that hurt foreign trade?

I favor a fair tax. The problem is that fairness depends upon whom you speak. The link kept using numbers and saying "you" currently pay. Currently, however, rates are indexed and that is fair. A consumption tax is not indexed.

[shahani]

In my opinion, VAT is the way to go. This is common in Europe and is, in essence, an ad valorem manufacturing duty. Aside from easier administration, this form of taxation plugs leaks in the sales taxation system by levying tax before goods leave a manufacturing unit.

A flat national sales tax, as pointed out, would have adverse effects on the lower income group by increasing the percentage of their income paid as sales tax as compared to those in higher income groups.

I read somewhere a very radical approach to taxation. No income tax. Only sales tax. Higher percentage for luxury goods/services and very low for commonly needed everyday stuff like gas, electricity, generic foods, and so on.

[originel]

My only problem with a national sales tax is what will the states do? this is one of the ways in which the states generate revenue...will the national government subsidize them for giving up this tax? or am i completely misunderstanding the federal sales tax? (i admit i haven't studied it much)

As for how it affects the poor versus rich i don't think it matters. Sales tax is a progressive tax no matter who regulates it (i.e. favors the wealthy as per reasons stated by MTAtech). But it's not like it will change one way or the other if it is standardized.

But anyways...back to the state issue. So let's assume that a national sales tax is imposed with revenue going to the states to make up for the loss in their own state sales tax. Each state will get the same proportion from the sales tax...but what about the states that have to charge more for sales tax because they don't have other forms of tax (like we have an estate tax in texas...but new mexico doesn't). how does that affect them?

also jch216, if you tried to give us a 23% sales tax all us texans would cry bloody murder and break off and form out own nation. I would be incredibly pissed if that happend...currently sales tax figures around the state are about 8%.

So that raises another question...even if we do form a national sales tax, how much would it be?