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POPEYETHETURTLE's Photo POPEYETHETURTLE SparkPoints: (0)
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4/21/10 6:11 P

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Well, based on an item only being taxed at the consumer end, the tax rate of 23% doesn't stand up.

The reason it doesn't stand up is that most corporations would pay next to no tax at all, as long as they were simply the method by which delivery took place. WE, as a taxpayer, would be responsible for making up the difference.

Depending on what state you live in, for example Missouri, you pay part of your sales tax to the city, the county and the state. Depending on the county and city, we pay between 7-8% (and yes, we pay taxes on food items). In addition, we pay State Income Tax, which averages in the final analysis, about 5%. We're looking at a minimum of 12%, just at the State level.

If 23% is at the Federal level, the total Fair Tax would come in with an effective rate about 35%. My effective tax rate, with current deductions, is about 17% Federal and 1% State.

The argument that corporations, carmakers, homebuilders, etc., would actually lower the costs saved through the taxes they currently pay is, IMHO, specious to say the least.

What happens when someone purchases a house for $1,000,000 and pays the 23 or 35% tax on it, and sells it for $1,200,000 a year later. Do they get a rebate of the tax they paid because the million two is less than the total (with taxes) they had actually paid for the house. Does the new buyer pay tax on the million two, or the difference between what the house originally cost and the current buying cost ($200,000)?

I could see it taking a long time to transition from one form of taxation to another, with many chances the bill would be repealed by another bill in a different Congress.

Just sayin'

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QTLIONESS13's Photo QTLIONESS13 Posts: 2,339
4/21/10 4:37 P

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Yeah but see I don't compare the VAT to the Fair tax though. The VAT is a tax that is added at every single stage of a process to produce a good. So for example when you make a widget out of steel. The company that mines the carbon and iron get slapped with a VAT when they sell the raw minerals to the company that makes it into steel. the Steel company sells it's finished product and gets slapped with another VAT. the widget company takes the steel blanks and punches them into widgets and then sells them and boom another taste of the VAT. so in the end you get a finished product that would say normally cost 10 dollars but slapped with the VAT 3 differents times it's price would probably be more like 18 bucks. The other problem not spoken about is that the VAT in most European countries is ON TOP OF income taxes ect! No thanks.

With the fair tax the sales tax would be on the finshed product.

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PC_BOB's Photo PC_BOB SparkPoints: (0)
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4/21/10 11:30 A

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I went to old trusty google.com and searched on value added tax, the worlds equivalent of a 'fair tax.' There are many nations in the world that use a form of this tax, rather than a sales tax. You can read all about it here:


en.wikipedia.org/wiki/Value_added_ta
x



Some countries have lower rates for food and medicine, rent, etc. and some don't. It's been in use in some countries for as long as 50-60 years. I could not find anything that specifically answers the question about individual state sales taxes, though. From what I could see, each 'state' takes a portion of the VAT to keep for themselves and the rest goes to the federal government, so maybe that takes care of the local taxes. I think it could work here, with some VERY careful planning and thinking. Unfortunately, I don't have a lot of faith in our congresses abilities in the financial areas. Just look at the way they are handling our money right now. No encouraging, to say the least.



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WILDHONEYPIE's Photo WILDHONEYPIE Posts: 2,126
4/20/10 11:35 P

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Thanks, Ruth. The more I hear, the more I think I could get behind this idea. It's late, but maybe tomorrow I can do a bit of surfing and see if I can find any other countries who have this system. And it would be interesting to know how it would impact state sales tax, if at all.

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QTLIONESS13's Photo QTLIONESS13 Posts: 2,339
4/20/10 7:11 P

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To answer some questions~ I hope this helps!


What other countries use this system, if any, and how is it working? ~ as far as I know, no one's tried it yet




What did the US do for revenue in the pre-income tax era? ~ pre-income tax, the federal government raised revenues through the sale of public lands (think the lousiana purchase, parts of what is now west virginia, ect)and through the of import taxes (i forget what the proper terms are for them though)





Lots of questions regarding the "prebate" or Family Consumption Allowance - can anybody go into more detail on that? Is it just for people living below the poverty level? And how is that determined? ~ according to what i've read, everyone gets a prebate. you, me, bill gates. what it is supposed to cover is the amount of money you would pay in taxes on food and medical care. The general idea is that people who don't make as much wouldn't spend as much money overall so it would be a big help. and at the same time, people who make a lot and ergo would spend a lot more would then be paying a lot more than they get back in their prebate.

*Also everyone gets the same amount of prebate, determined by the number of people in a household, this adds a bit of fairness and also means that people are penalized for making more money (i've had it happen when i was at walmart that working 40 hours a week meant i took home less money than if i worked 39! because i got bumped into the next tax bracket)




Somewhere the video mentioned that this system taxes food - I think I have a problem with that, although I guess it gets messy when it comes to snack foods v. fresh fruits, etc. and taxing them all eliminates lobbying from various producers. ~ this is why the prebate is important. to keep the system from getting clogged up with special interest lobbyists you have to tax everything! otherwise there would be a governmental group somewhere deciding what is taxable and what is not... and that would lead us right back where we are again.

hugs and love, Ruth

Edited at the * to finish answering a multi-part question.... i got distracted by munchkin

Edited by: QTLIONESS13 at: 4/20/2010 (19:22)
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PC_BOB's Photo PC_BOB SparkPoints: (0)
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4/19/10 10:38 P

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According to the video 23% is just about what we are paying now, for federal taxes. I have to wonder, though, about the 6-8% (or more) that most states are charging for state sales tax. Since a good deal of what we now pay for federal tax goes to the states, will it include money for the states, too? Seems like we are and would be paying state taxes twice. Ideally, there would only be one tax, the National Sales tax, and it would include everything. Bring all the taxes out in the open, so we can see just what we are paying and give us the final vote on any increases. I mean, by golly, this country belongs to us, the people of America. It doesn't belong to any politician, or special interest group, or any PAC, etc. It's time we made some people aware of this basic fact.

Learn from the mistakes of others. Life is too short to make them all yourself.


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WILDHONEYPIE's Photo WILDHONEYPIE Posts: 2,126
4/19/10 12:59 P

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Don't worry about the IRS workers -- they'll be running our health care.

As for that 23%, it seems high to me, too. But I guess the argument is that at least people will be able to see exactly what we're paying, rather than all the hidden taxes and the money skimmed off the top of our paychecks, and that there will be an outcry if it gets out of hand.

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PC_BOB's Photo PC_BOB SparkPoints: (0)
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4/19/10 12:10 P

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The concept of the fair tax has been around since AT LEAST the 80's. The details change, but essentially it means when you buy something you pay a federal sales tax. The more you spend, the more tax you pay. Poor people, under the poverty level, would pay the least. The original plan was for them to receive an annual 'refund' of everything they paid. Since they spend less overall, they would pay less in sales taxes, which would then be refunded to them, giving them an instant savings plan, received at the year end, just in time for Christmas (or the "Holiday Season.") Since they are already paying sales tax on everything they buy now, this would be a nice year-end bonus. This sales tax would replace all Social Security/Medicare taxes, all Federal taxes and be as 'progressive' as you can get. It's something you would think Mr B O could get solidly behind. My only question is whether it would also replace the myriad of state sales taxes that we are now dealing with. Another point I worry about is whether the amount, 23% in the video, could be changed too easily by a Congress on a tear to spend more? If we can control those urges and remove any and all exceptions, whether for businesses or private parties, then we can figure out, later, what to do with all those unemployed IRS workers. Just think of all the time wasted now, just filling out paperwork! I just spent over 40 hours doing my taxes this year. I lost track after that. All I have is my home, a rental house, and a VERY small online business. I sympathize with folks that have more than that to worry about. Think about it: NO MORE PAPER WORK!

President George Bush stated that this was to be one of his highest priorities when he was elected back in 2000. It got pushed to the back burner when other things came up. It will continue to be brought up. I don't know how it works in Europe. (From what I can see, though, Mr B O has plans for increasing the numbers of IRS agents, not reducing them.) Also, what happens in a down market, when we have a recession, and people are holding back on their big ticket purchases? That would be a problem, just like the privatization of Social Security. When the markets are down, EVERYTHING is down. But, I believe it is now time for everyone to start thinking about these questions, and working toward achieving a truly FAIR tax system for America.

I signed up with the Fair Tax organization. Actually, I tried to, but found out I was already signed up! I urge everyone to do the same.


PC Bob

Edited by: PC_BOB at: 4/19/2010 (12:15)
Learn from the mistakes of others. Life is too short to make them all yourself.


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WILDHONEYPIE's Photo WILDHONEYPIE Posts: 2,126
4/19/10 10:10 A

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I lean towards this system, but do have questions that maybe somebody here can answer:

What other countries use this system, if any, and how is it working?

What did the US do for revenue in the pre-income tax era?

Lots of questions regarding the "prebate" or Family Consumption Allowance - can anybody go into more detail on that? Is it just for people living below the poverty level? And how is that determined?

Somewhere the video mentioned that this system taxes food - I think I have a problem with that, although I guess it gets messy when it comes to snack foods v. fresh fruits, etc. and taxing them all eliminates lobbying from various producers.

Overall, I think anything that abolishes income taxes, estate taxes and the rest of the current tax code can only be a good thing.



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POPEYETHETURTLE's Photo POPEYETHETURTLE SparkPoints: (0)
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4/19/10 12:28 A

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Well, it could save some jobs.

Surely some of the current thousands of IRS agents could be detailed to a Fraud Detection Program.
Then a few more could be detailed to a Social Security Detection Program.

Heck, you could make them really efficient by making them outside contractors who are paid 10% of what they recover!

"A government big enough to give everything you want is also big enough to take everything you have."
-Ronald Reagan

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WHGRN60's Photo WHGRN60 Posts: 2,925
4/18/10 9:16 P

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One thing I don't like in the video is the idea of a "prebate", where everyone gets a check from the government once a month to cover the tax that someone at the poverty level would likely have to pay in a month. Just seems like that would be a recipe for fraud.

Wendy in NJ

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I think Congressmen should wear uniforms like NASCAR drivers, so we could identify their corporate sponsors.

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POPEYETHETURTLE's Photo POPEYETHETURTLE SparkPoints: (0)
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4/18/10 5:01 P

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Tim,

I don't know how the big dogs, State or Federal, would fit this in. Since government workers produce nothing, it couldn't really be a business expense. On the other hand, there are legitimate trips they have to make.

On topics like flying your kids and relatives all over the country, there should definitely be a use tax.

Maybe going on "Business trips" would require oversight by the Congressional Budget Office - or similar.

I don't have a site to go for to track the "details" (gotta find the devil), but I will start looking today.



"A government big enough to give everything you want is also big enough to take everything you have."
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SUNNY071's Photo SUNNY071 Posts: 2,513
4/17/10 10:54 P

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Fair tax sounds fair to me.

"Be ye kind one to another."


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WHGRN60's Photo WHGRN60 Posts: 2,925
4/17/10 8:15 P

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OK, I sat and watched the video, and now I like the idea even better!!!

Wendy in NJ

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I think Congressmen should wear uniforms like NASCAR drivers, so we could identify their corporate sponsors.

Check out my BLOG!! View it from my SparkPage.

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PERSISTENTTIM's Photo PERSISTENTTIM Posts: 7,676
4/17/10 8:13 P

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I am primarily thinking of the president, VP and congress. It just angers me that we pay them salary then also pay for jets, parties, homes and wasteful spending. I guess that would be more about government spending than taxes, it kind of ties in though.

I just finished watching this weeks "Stossel" on FBN and Neil Boortz was on talking about the fair tax. He made some good points.

Fact is Bob like John Stossel said, we have to get rid of the current income tax system. Is there a site or someone you follow about the Fair Tax?

Edited by: PERSISTENTTIM at: 4/17/2010 (20:14)
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POPEYETHETURTLE's Photo POPEYETHETURTLE SparkPoints: (0)
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4/17/10 7:39 P

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Tim,

I'm not trying to be rude or nasty.

What things does the government provide for their placeholders that are not provided to you and I.

I'm simply asking so I can better understand why a "flat tax" would be better than what I have just seen.

Thank you,

Bob

"A government big enough to give everything you want is also big enough to take everything you have."
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WHGRN60's Photo WHGRN60 Posts: 2,925
4/17/10 7:35 P

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I like the idea of a consumption tax. That way, you are taxed not on your productivity, but on what you use. So if you are a hardworking, high earning person who lives below your means, you'll pay less than the drug dealer who, on paper, makes no money, but in reality is rolling in cash, and spends it all on bling, fast cars, and booze.

Of course, if I say that out loud, I'll be called a racist...

The thing is, if someone complains about having to pay too much tax, the easy answer is, "buy less"! Might help some people curb their excessive spending habits.

Wendy in NJ

Co-Leader, Central Jersey Weight Busters Team www.sparkpeople.com/myspark/groups_i
ndividual.asp?gid=13706


I think Congressmen should wear uniforms like NASCAR drivers, so we could identify their corporate sponsors.

Check out my BLOG!! View it from my SparkPage.

I can do all things through Christ who strengthens me. --Phil. 4:13

IN GOD WE TRUST


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QTLIONESS13's Photo QTLIONESS13 Posts: 2,339
4/17/10 7:32 P

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I like the idea of the fair tax (if that's the one where they give you a pre-bate, and then tax on everything you buy)i like the idea that nothing is exempt (not even food or healthcare) so there is no need for lobbyists trying to get x or y exempted.

pinupinthemaking.blogspot.com/

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CAROLFAITHWALKR's Photo CAROLFAITHWALKR Posts: 16,576
4/17/10 5:22 P

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Fair and Flat both have pros and cons. Look them up on You Tube and search engines. Anything would be better than the IRS.

"Exercise integrity in the moment of choice. Quality of life, and your personal freedom, depends upon what happens in the space between stimulus and response." - Stephen Covey


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PERSISTENTTIM's Photo PERSISTENTTIM Posts: 7,676
4/17/10 5:11 P

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I think a flat tax is better. One problem I have with "The Fair Tax" is that some jobs specifically government jobs provide people with things the rest of us would have to buy. A flat tax is working in a lot of eastern European nations and would be wildly successful here.

In the confrontation between the stream and the rock, the stream always wins - not through strength, but through persistence. -Buddha

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DUMBSKITTY's Photo DUMBSKITTY Posts: 1,057
4/17/10 4:27 P

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I'm at work so I can't watch the video, but I can help you with affect/effect. "Affect" is a verb. It's something you do. You "affect" someone or something. "Effect" is a noun...So you were totally right in using "effect" in your post!

As for the fair tax...I haven't made up my mind yet if that's the "best" method yet...but hands down, it's better than how things are right now...

For our struggle is not against flesh and blood, but against the rulers, against the authorities, against the powers of this dark world and against the spiritual forces of evil in the heavenly realms. --Ephesians 6:12


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PMSLIVES's Photo PMSLIVES Posts: 24,285
4/17/10 4:10 P

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Just watched this and was wondering what others think of this idea. I've been hearing so much on it and finally got a chance to look it up. Wonder what effect (or is it affect? I hate using these two words, I'm always second guessing myself. Can some one help me here also?) it would have on the new healthcare law if we abolished the IRS? Of course, that shouldn't be a problem when we Repeal the Law!

www.fairtaxnation.com/video/fairtax-
it
s-time


Edited by: PMSLIVES at: 4/17/2010 (16:13)
Man looks at the outward appearance, but the Lord looks at the heart. 1 Samuel 16:7
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