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(Some Guy)   The Fair Tax: If it sounds too good to be true, it probably is. If it was devised by the Church of Scientology because they hate the IRS for not giving them tax-exempt status, it's probably batshiat loony to boot   (opinionjournal.com) divider line
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1610 clicks; posted to Politics » on 26 Aug 2007 at 1:09 PM (15 years ago)   |   Favorite    |   share:  Share on Twitter share via Email Share on Facebook



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Snowflake Tubbybottom
2007-08-26 12:15:15 PM  
The distinction is confusing, but think of it this way. If a product costs $1 at retail, the FairTax adds 30%, for a total of $1.30. Since the 30-cent tax is 23% of $1.30, FairTax supporters say the rate is 23% rather than 30%.
...
It's also worth remembering that state sales taxes now average 6%, which means that the total tax rate will be 36% on retail sales.

Two things here:
1. Its a bogus hypothetical because its the authors adding 30%, and then again adding sales tax which would no longer apply.
2. Products at retail already have embedded taxes included which would be reduced greatly by removing those taxes before adding the fair tax rate.

/would like to see a GAO scoring of this plan
 
ManRay
2007-08-26 12:28:38 PM  
The biggest problem with the FairTax: The Federal government would loose much of the power it has over citizens and states since it could no longer tinker with the tax system.

Aint' no way Congress is going to approve that.
 
TheHighlandHowler [TotalFark] [OhFark]
2007-08-26 12:31:03 PM  
FYI:

The Shadowy Story Behind Scientology's Tax-Exempt Status

New York Times, 9 March 1997 (new window)
 
Code_Archeologist
2007-08-26 12:31:25 PM  
Snowflake Tubbybottom: would like to see a GAO scoring of this plan

No, you wouldn't... accusations of government conspiracy, cover-up, and slander would soon follow any such report.
 
weave
2007-08-26 12:34:22 PM  
Blasted liberal, media, WSJ again I see.
 
dj_bigbird
2007-08-26 12:39:08 PM  
A "fair tax" would require that the Congress repeal the 16th amendment (the income tax). Do you REALLY think that will ever happen?
 
Mordant
2007-08-26 12:44:49 PM  
I've always wondered what the result would be. Would overall revenues be the same... just shifted to a different segment of the population ? Or would the government be content with less money to pay the bills ?

I wonder which segment of the population would be impacted by option #1... I wonder...
 
carmody
2007-08-26 1:13:07 PM  
Has anybody said, "Fark Scientology" yet?

Get help, Clams.
 
Smellvin
2007-08-26 1:13:59 PM  
dj_bigbird: A "fair tax" would require that the Congress repeal the 16th amendment (the income tax). Do you REALLY think that will ever happen?

No. It would just require the Congress not use the powers granted in the 16th Amendment. Now, THAT'S never going to happen.
 
StrikitRich
2007-08-26 1:20:18 PM  
Ah, another article that has to misrepresent the Fair Tax by basing their opposition on the lies that they present in order to dissuade people from jumping on board.

An item costing $1 under the present Marxist progressive system would still cost $1 under the Fair Tax. An item costing $100 would still cost $100.

It's a shame that the WSJ has to knowingly print lies in order to satisfy the status quo.
 
birdboy2000
2007-08-26 1:21:57 PM  
StrikitRich

Ah, that hallowed institution of marxism, the Wall Street Journal.

Do you realize how retarded your rhetoric sounds?
 
g026r
2007-08-26 1:23:06 PM  
Snowflake Tubbybottom

1. Its a bogus hypothetical because its the authors adding 30%, and then again adding sales tax which would no longer apply.

Why would the state sales taxes not apply? Would that not be up to the states to decide? Or does the Fair Tax include a provision that states the states can no longer collect their own regional sales tax?

/Honestly curious.
//If they were really nasty, they'd do what the Canadian provinces do: apply the regional sales tax on top of the federal.
///In which case, you'd be paying 37.8% extra with a 30% federal and 6% regional.
 
StrikitRich
2007-08-26 1:26:10 PM  
birdboy2000: StrikitRich

Ah, that hallowed institution of marxism, the Wall Street Journal.

Do you realize how retarded your rhetoric sounds?

Did you flunk reading comprehension is school? I called our current tax system Marxist, not the the WSJ?

Try understanding what someone actually said first and you yourself might not come out sounding retarded.
 
StrikitRich
2007-08-26 1:29:07 PM  
birdboy2000 - FARK's resident American socialist. Arguably a troll.

Ah, from your profile I see I wasn't too far off the mark calling you a retard.
 
birdboy2000
2007-08-26 1:31:22 PM  
Strikitrich

The wall street journal is a journal of international capitalism, not one which prints lies to preserve the status quo it's communist masters.
 
Browncoat
2007-08-26 1:40:05 PM  
Somebody at the WSJ needs to read this (new window) before embarrassing themselves further.
 
jbc [TotalFark]
2007-08-26 1:40:50 PM  
Snowflake Tubbybottom: 1. Its a bogus hypothetical because its the authors adding 30%, and then again adding sales tax which would no longer apply.

Why would it be bogus for states to continue charging a state sales tax?
 
StrikitRich
2007-08-26 1:42:59 PM  
From your rhetoric I see even more clearly that I was not too far off the mark in calling you a retard.

You should consider changing your handle to birdbrain200.
 
Superjoe
2007-08-26 1:45:52 PM  
As it is, the rich underpay through use of Cayman Island banking accounts and other loopholes.
 
cirby
2007-08-26 1:49:40 PM  
A couple of things:

First, the Scientologists didn't come up with the Fair Tax, they just decided they like the idea because it will save people money in the long run. FT was around for a loooooong time before they latched onto it.

Second, the author derides the FT by claiming it's 30% instead of 23%, which the FT folks get by using the tax-inclusive standard - which is how we figure income tax NOW. So his big technical complaint is that the Fair Tax folks computer their number in the same way the government does now with the existing income tax.

In other words, his two best arguments are a "guilt by association" and a "we should use a different set of calculations for FT and for the current system - whichever makes the FT look worse."
 
jbc [TotalFark]
2007-08-26 2:09:34 PM  
cirby: Second, the author derides the FT by claiming it's 30% instead of 23%, which the FT folks get by using the tax-inclusive standard - which is how we figure income tax NOW. So his big technical complaint is that the Fair Tax folks computer their number in the same way the government does now with the existing income tax.

Yes, but that's not how any other sales taxes are computed now. If you're going to tell people that it's a 23% tax to try to get them to buy into it, and then charge them 30 cents on the dollar if it actually does get implemented, you're going to have giant shiatstorm on your hands. People who don't understand the difference between tax-inclusive and tax-exclusive are going to feel like they've been lied to, and rightfully so.
 
Ceph
2007-08-26 2:11:40 PM  
Mordant: I've always wondered what the result would be. Would overall revenues be the same... just shifted to a different segment of the population ? Or would the government be content with less money to pay the bills ?

I wonder which segment of the population would be impacted by option #1... I wonder...

Most people overall would pay the same amount of tax.

The FairTax prevents tinkering with the tax system to give breaks to certain classes. Everything is taxed -- you can't just hide your yacht as "food expense" to get around the tax. Every time anyone adjusts the tax rate EVERYONE sees it on EVERY receipt. It should prevent much of the tax system abuse we have today.

The Fair Tax would, over time, make it beneficial for the government to reduce its own size to save money and increase liquidity.
 
Rincewind53
2007-08-26 2:16:11 PM  
I haven't heard a serious Fair Tax answer to the problems that the system would cause for people who, as it is, don't pay much or any income tax, but buy lots of consumer goods. I'm speaking of college students, for one. I made roughly 3,000 dollars doing various jobs last year. With an income tax rebate, I paid 0 dollars of income tax to the government. With the Fair Tax in place, I'd be paying much more for textbooks, for food, for entertainment, for everything, but not getting the benefit of not having to pay income tax. Why would I want such a thing, then?

/serious question.
 
PipOC
2007-08-26 2:21:34 PM  
Did anyone not know by now that the "Fair" tax is just a libertarian fallacy? I mean really now, no one in the entire party has an interest in improving the lives of anyone else, every policy initiative they put forward is only done in the interest of allowing people to amass as much personal wealth as they want.

/Eisenhower-Liberal
 
raistlinknight
2007-08-26 2:26:17 PM  
I don't particularly care about sales tax over income tax. I'm a libertarian, but I don't really have any qualms over an income tax (just some many of the things it's spent on). I would like a closer system to a flat tax, though.
 
raistlinknight
2007-08-26 2:27:51 PM  
raistlinknight: (just some many of the things it's spent on).

some

/Self: lern2striketag (and maybe preview)
 
LeatherPenguin
2007-08-26 2:30:13 PM  
jbc: Snowflake Tubbybottom: 1. Its a bogus hypothetical because its the authors adding 30%, and then again adding sales tax which would no longer apply.

Why would it be bogus for states to continue charging a state sales tax?

Exactly. Enacting FairTax would in no way change the individual states' tax schemes. The Feds can charge whatever usury rate they want, but they cannot stop the states from charging whatever they want. So
Retail price: $1.00
Fed Tax (30%): $0.30
State Tax 06%) $0.06
Total: $1.36

And that's leaving out Local tax. I live in NYC, where cigarettes are taxed up the wazoo. But if I drive about an hour north (or hop a bridge to NJ), the taxes on a carton aren't nearly as burdensome.
 
jbc [TotalFark]
2007-08-26 2:31:31 PM  
Ceph: The Fair Tax would, over time, make it beneficial for the government to reduce its own size to save money and increase liquidity.

Except that it doesn't reduce the government's size. The IRS remains in place to a.) collect "Fair Tax" revenues from businesses, b.) continue to collect the payroll tax for FICA and c.) administer "prebate" checks every single month. You've actually expanded the scope of the IRS.

If you actually want to reduce the size of the IRS, without switching to a regressive tax system, you should have the government send every taxpayer a post card about January 15. It would show only the worker's income for the previous year, what they've paid, their tax rate and total, their FICA total, and instructions on how to get their rebate or pay the difference. No more deductions. No more dependents. No more loopholes. This is what you made. This is what you owed. This is what you paid. This is the difference.
 
Dinjiin [BareFark]
2007-08-26 2:33:25 PM  
Mordant: I've always wondered what the result would be. Would overall revenues be the same... just shifted to a different segment of the population? Or would the government be content with less money to pay the bills?

A lot of it depends on how this "rebate system" would be implemented. Rebate checks could be based not only on income, but number of dependents, age or a host of other criteria.

Without a rebate system, a greater amount of tax revenue would be generated by low-income families since they effectively pay little to no income tax presently. Higher income families might be a wash - more income would be available for investments, but the loss of the capital gains bracket would mean higher taxes when they spend those gains.


Ceph: Most people overall would pay the same amount of tax.

The FairTax prevents tinkering with the tax system to give breaks to certain classes. Everything is taxed -- you can't just hide your yacht as "food expense" to get around the tax.

As mentioned before, this is true only if they reject the yearly refund check idea. The refund check could reintroduce many of the loopholes that exist today.


The Fair Tax would, over time, make it beneficial for the government to reduce its own size to save money and increase liquidity.

This will never happen. The majority of the politicians in Washington DC are fiscally irresponsible and will continue to vote for earmarks and various bits of pork. Government will continue to bloat and the people will continue to pay for it.
 
ManRay
2007-08-26 2:44:18 PM  
Rincewind53: I haven't heard a serious Fair Tax answer to the problems that the system would cause for people who, as it is, don't pay much or any income tax, but buy lots of consumer goods.

The Fairtax provides for a prebate equal to the poverty line for everyone. In other words, nobody pays any Federal taxes on the basic necessities of life up to that point. Your $3000 a year is below that threshold, so you should be fine.
 
dscott72
2007-08-26 2:45:00 PM  
This "opinion" has 2 flaws as I see it.

1) The item which would cost $1 then be taxed by .30 has imbeded taxes already added to it, those takes would be removed under the fair tax, so in essence the item would actually cost $.70, if not less (not sure of the actual calculation, but you get my point).

2) No where in the "opinion" does even mention that your take home pay would actually increase, all of the taxes and what not would be yours to spend.

And if any one says that corporate America would try to profit by keeping the embeded taxes in the cost of items would be wrong. All it will is to take one company to realize that they can remove those embeded taxes on their products and the rest will follow. See the airline tax that wasn't renewed a few years back, all airlines kept collecting the money for themselves, but as soon as one airline removed it, within HOURS the others followed suit.
 
cirby
2007-08-26 2:45:43 PM  
Exactly. Enacting FairTax would in no way change the individual states' tax schemes. The Feds can charge whatever usury rate they want, but they cannot stop the states from charging whatever they want. So
Retail price: $1.00
Fed Tax (30%): $0.30
State Tax 06%) $0.06
Total: $1.36


...except you forgot to subtract all of those miscellaneous Federal taxes that are currently rolled into sales prices, along with things like FICA, which is half paid for by the employers. You get over 6% off right there, not to mention a LOT of other "untaxes". A typical small business will gain almost ten percent in lost income right there, and the consumer will see an immediate decrease in prices (competition kicking in).

Then there's also the "paperwork overhead" that gets involved in everything. Simplify the tax code, and I get an entire DAY of extra time from not having to do my tax paperwork for April 15th. That's an almost 1/2% "tax cut" right there, for just one day of not screwing with paperwork.
 
jk3
2007-08-26 2:47:12 PM  
Rincewind32 : Why would I want such a thing

The answer is simple - the Prebate that the fairtax offers.
You'd get a check in the mail to cover all taxes up to the feds listed poverty level. For a single person with no dependants that would amount to a monthly check to you (as long as your a legal citizen) of $196 ($2,348 a year). And at the end of the year you don't have to file an intrusive tax form.

One key point missed here is that the cost of current goods and services all include a substantial 'hidden' tax that is paid by the producer as part of normal business operations. Most, if not all, of that goes away and the cost of doing business goes down. It will not be long before the competitive market drives the costs of the goods/services sold to consumers downward as well.
 
limeyfellow
2007-08-26 2:56:54 PM  
Matt, Matt, Matt.. You don't know income tax. I do!

You know who created income tax? Galactic Emperor Xenu did, thats who!

nypress.comView Full Size
 
StrikitRich
2007-08-26 3:03:00 PM  
It's not a $0.30 tax. Stop misrepresenting the facts!!!

The Fair Tax simply replaces the current $0.23 embedded Federal taxes and replaces ALL income and payroll taxes. That's it. You keep your ENTIRE paycheck.

LeatherPenguin - The Fair Tax only replaces federal taxes, therefore it has nothing to do with state and local taxes. Including them in your 'equation' makes no difference so is moot.
 
jbc [TotalFark]
2007-08-26 3:10:11 PM  
dscott72: 1) The item which would cost $1 then be taxed by .30 has imbeded taxes already added to it, those takes would be removed under the fair tax, so in essence the item would actually cost $.70, if not less (not sure of the actual calculation, but you get my point).

The item would still have those other taxes, such as property, embedded in the price. The "Fair Tax" does nothing to eliminate those taxes, and it actually imposes additional taxes on the manufacturer in the purchase of machinery, office supplies, et al. To assume the cost of the item would drop by an amount equal to the new tax is an unsubstantiated fallacy.
 
jbc [TotalFark]
2007-08-26 3:12:09 PM  
StrikitRich: It's not a $0.30 tax. Stop misrepresenting the facts!!!

It is a 30 percent tax, measured tax-exclusively, which is how all other sales taxes are measured. Stop being an idiot!!!
 
Pocket Ninja [TotalFark] [OhFark]
2007-08-26 3:24:42 PM  
I'm afraid that there's WAAAY to much overlap in this thread with my Handy-Dandy List Of People To Generally Avoid Talking To In The Interest of Preserving Sanity, which up to this point includes:

1) Scientologists
2) Athiests
3) 9-11 conspiracy theorists
4) Ron Paul supporters
5) Console fanboys
6) Fark libertarians
7) Flat-tax supporters
8) OS fanboys
9) Cat people
10) Freepers

Anytime you're in a thread and two or more of these populations are present, it's best just to back slowly away. Which I'll do now.
 
Axolotl
2007-08-26 3:31:41 PM  
Snowflake Tubbybottom 2. Products at retail already have embedded taxes included which would be reduced greatly by removing those taxes before adding the fair tax rate.

Unless you're referring to import tarriffs, or special taxes such as those on gasoline or cigarettes, there are no taxes embedded in retail prices until final retail sale.

cirby ...except you forgot to subtract all of those miscellaneous Federal taxes that are currently rolled into sales prices, along with things like FICA, which is half paid for by the employers. You get over 6% off right there, not to mention a LOT of other "untaxes". A typical small business will gain almost ten percent in lost income right there, and the consumer will see an immediate decrease in prices (competition kicking in).

This is wrong. See above. Also, FICA is a payroll expense, not a sales tax or cost-of-goods-sold. In theory, a business might reduce prices if their expenses go down, but there's no guarantee that will happen. Furthermore, FICA is insurance, not a sales- or income tax, so who says the so-called FairTax will have any effect?
 
schrodinger
2007-08-26 4:22:45 PM  
Rincewind532007-08-26 02:16:11 PM
I haven't heard a serious Fair Tax answer to the problems that the system would cause for people who, as it is, don't pay much or any income tax, but buy lots of consumer goods. I'm speaking of college students, for one. I made roughly 3,000 dollars doing various jobs last year. With an income tax rebate, I paid 0 dollars of income tax to the government. With the Fair Tax in place, I'd be paying much more for textbooks, for food, for entertainment, for everything, but not getting the benefit of not having to pay income tax. Why would I want such a thing, then?

1) Rich people spend a much smaller percentage of their income.
2) Rich people will therefore be taxed a much smaller portion of their income
3) Rich people can afford to hire advocacy groups.
 
ethernet76
2007-08-26 4:28:33 PM  
Rincewind53: I haven't heard a serious Fair Tax answer to the problems that the system would cause for people who, as it is, don't pay much or any income tax, but buy lots of consumer goods. I'm speaking of college students, for one. I made roughly 3,000 dollars doing various jobs last year. With an income tax rebate, I paid 0 dollars of income tax to the government. With the Fair Tax in place, I'd be paying much more for textbooks, for food, for entertainment, for everything, but not getting the benefit of not having to pay income tax. Why would I want such a thing, then?

/serious question.

Because the fair tax is a clever disguise for the rich paying less. It is neither fair or ever accurately represented.

The fair tax fails to properly account for marginal utility.

Walk into an IRS office explain the fair tax system. They'll laugh at you when a) you insist the IRS will become irrelevant b) it's better for poor people c) it wouldn't hurt the economy
 
ethernet76
2007-08-26 4:34:13 PM  
Axolotl: This is wrong. See above. Also, FICA is a payroll expense, not a sales tax or cost-of-goods-sold. In theory, a business might reduce prices if their expenses go down, but there's no guarantee that will happen. Furthermore, FICA is insurance, not a sales- or income tax, so who says the so-called FairTax will have any effect?

Reminds me of the Republican supply-side tax cuts during a bear market. Those trickle downs never seemed to make it to the people or result in increased job creation.

I know what I'd do if I were a company receiving a tax break in a bear economy. I'd buy back stocks. Workers wouldn't see one red cent of it.
 
Dinjiin [BareFark]
2007-08-26 4:58:43 PM  
Pocket Ninja: I'm afraid that there's WAAAY to much overlap in this thread with my Handy-Dandy List Of People To Generally Avoid Talking To In The Interest of Preserving Sanity, which up to this point includes:

1) Scientologists
2) Athiests
3) 9-11 conspiracy theorists
4) Ron Paul supporters
5) Console fanboys
6) Fark libertarians
7) Flat-tax supporters
8) OS fanboys
9) Cat people
10) Freepers

Anytime you're in a thread and two or more of these populations are present, it's best just to back slowly away. Which I'll do now.

I think you would be hard pressed to find many people in Fark who fail to meet at least one item on that list.


/strong match for 2 items on the list
//lukewarm match for 2 other items on the list
///I'm not a freak! I'm not! I'm not! I'm not, I say!
 
Damba
2007-08-26 5:26:39 PM  
Axolotl:
Unless you're referring to import tarriffs, or special taxes such as those on gasoline or cigarettes, there are no taxes embedded in retail prices until final retail sale.

Urm, no. *ALL* items for sale or for contract in the US have embedded taxes. I'm a widget maker, employed at $10/hr. I make 1 widget an hour. Widget parts cost the company $10. So we can sell the widget for $20 + profit?

No. The company has to shell out an additional $0.78/hr for FICA and $0.03 for Medicare. The widget part was taxed at 6 percent for another $0.06.

So suddenly, my widget cost $20.87. A 4.3% increase, and I'm using the most common taxes around.

There are a *LOT* more embedded taxes -- tariffs, gasoline, etc -- that add to product costs. Embedded taxes are easily 30% of current product and/or service costs.

Shame on Bartlett for intentionally ignoring economic realities.
 
astro716
2007-08-26 5:38:51 PM  
Let me get this straight: the FairTax(TM) would shift 30 cents on the dollar from exclusive taxes to inclusive taxes, and pay every citizen $3000 a month, and wouldn't need a department to administer this program?

I declare Shenanigans.
 
frankmanhog
2007-08-26 5:42:42 PM  
What bothers me about the "Fair" tax:

The tax rate for the ultra-high income people is much lower than under the progressive system.

The tax rate for people near the poverty line is 0 under both systems.

The total amount of revenue collected will be the same as with the current system.

If all of those statements are true, then somewhere between the ultra-rich and ultra-poor is a class of people who are going to see big tax increases.
 
Snowflake Tubbybottom
2007-08-26 5:45:26 PM  
jbc: Why would it be bogus for states to continue charging a state sales tax?

The bogus part of which I referred was that we should just accept the author's number of a 30% hike with no supporting evidence of same. The states may very well add a tax to goods but they already do now.

Its a facetious example to use the existing price of a good and then add another 30% to come up with the argument of why the fair tax is bad when in truth the existing embedded taxes in that good would no longer be. So that $1 good that took a raw good supplier who sold it to the manufacturer who made the product and then in turn sold it to the retail marketers has already been taxed 2-3 before it hit the retail shelves. So of that $1 good there may already be 15-20% worth of taxes included.

So lets say that product under the fair tax comes to market at $.80 plus the new fair tax rate of 23% making it $.98. And lets say we use the author's magically divined number of 30%.... the total becomes $1.04.....oh the horror!

/take a look for yourself and especially the prebates for the poor
//would really like that neutral accounting for a fair analysis
 
cirby
2007-08-26 6:12:18 PM  
Axolotl:
Also, FICA is a payroll expense, not a sales tax or cost-of-goods-sold.

You DO know what FICA is, and why they take it out, right? It's not an "expense," it's a friggin' government tax - taken out of your paycheck to make sure the government gets their cut (so you won't hit April 15th and be short a few thousand bucks). It's supposedly for Social Security and the like, but it's all going to the same government, and they move the cash around as they see fit. And since employers take out ANOTHER 6%+ to match it, there's 6% you didn't even know they were taking.

...and yes, the flat tax plans cover Social Security.

So yes, there's another 6%+ to kick in to the normal taxes you really pay but don't realize that you're doing it (I'm not counting the regular FICA dedcution you see in each paycheck, I'm only counting the amount your employer takes out that you never get to see).

Self-employed folks know all about this, too, since they have this "Schedule C" thing that shows you the numbers (and adds in the extra that you have to pay personally as part of your yearly taxes).
 
Truman Sparks
2007-08-26 6:17:28 PM  
Saw a news clip about a year ago showing Tom Delay endorsing the Fair Tax.

That's pretty much all I need to know about it.
 
LocalCynic
2007-08-26 6:33:13 PM  
StrikitRich: It's not a $0.30 tax. Stop misrepresenting the facts!!!

So what you're saying is that the FairTax isn't a tax, it's just a happy smiley donation. I'm guessing you'll be one of the first clowns to argue that "IT'S VOLUNTARY - YER DON'T HAVE TO PAY TER FAIRTAX!!!"

It's an excise tax. Period. It's basically the same thing as a VAT.
 
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