partially true, yeah, but having a ~35-40%% sales tax (including state taxes is going to encourage a LOT more under the table sales as well
Where did you come up with the 35-40%? Here's what Americans For Fair Taxation has to say about it:
Quote:
As the FairTax gains more national attention, questions have again arisen about whether the FairTax rate is 23 percent or 30 percent. In the toxic environment that often accompanies public policy debates, FairTax.org has even been accused by some of misleading the public, even though full descriptions of "tax-inclusive" and "tax-exclusive" calculations abound on our Web site. We hope the following explanation puts all such questions to rest -- at last.
Let?s use an example to illustrate the difference between tax-inclusive and tax-exclusive tax rates.
Assume there is a worker named Joe who earns $125 and spends all of his earnings. Let?s further assume that the government requires him to pay $25 in taxes.
If the government put a tax on Joe?s income, he would earn $125 before tax and would have $100 after tax to spend at the General Store. Thus, Joe has to earn $125 to have $100 to spend. Joe would also have to file an income tax return.
If the government put a tax on what Joe spends, he would earn $125 and would have $125 to spend at the store. Of the $125 paid by Joe to the storekeeper, $100 would be for the goods he bought at the store and $25 would be taxes that the storekeeper would send to the government. Joe would not have to file a tax return, as the storekeeper sends the tax in to the government.
Either way, Joe pays $25 in taxes and the government gets $25 in taxes. With a tax on income, Joe pays the $25 directly to the government, and with the tax on spending (sales tax), he pays the $25 in taxes indirectly when he buys something from the General Store. The General Store sends the tax that Joe paid to the government.
We may report the tax rate as $25/$125 = 20 percent, which is the tax-inclusive rate (meaning that the tax is included in the base). Alternately, we may think of the tax rate as $25/$100 = 25 percent, which is the tax-exclusive rate (meaning the tax is excluded from the base). The 23 percent FairTax rate set out in HR 25/S 1025 is a tax-inclusive rate, as is the current personal income tax, whereas most state-level sales taxes are quoted on a tax-exclusive basis. For ease of comparison, FairTax.org gives the tax rate both ways. Both rates are relevant, since the FairTax is replacing an income tax system, and 23 percent correctly represents the tax burden compared to the current system.
To review some of the research that determined a 23% (inclusive) rate is correct, please read Taxing Sales Under the FairTax: What Rate Works? This paper is a collaborative effort of 5 respected and independent economists.
Where did you come up with the 35-40%? Here's what Americans For Fair Taxation has to say about it:
that the tax rate quote on that page isn't sufficient to make up for the loss of an income tax, meaning your nationwide sales tax will have to be increased because cuts of that magnitude will not happen IN ADDITION TO the context the response was in to overall sales tax, which here is over 9% so combined state and federal sales tax will be about 35% when everything is said and done, which people will find ways to avoid paying as it then becomes a very substantial sum of money to add on to any purchase.
that the tax rate quote on that page isn't sufficient to make up for the loss of an income tax, meaning your nationwide sales tax will have to be increased because cuts of that magnitude will not happen IN ADDITION TO the context the response was in to overall sales tax, which here is over 9% so combined state and federal sales tax will be about 35% when everything is said and done, which people will find ways to avoid paying as it then becomes a very substantial sum of money to add on to any purchase.
One fair tax plus that often doesn't make the media is that it also taxes illegal money. By illegal money I mean drug and other crime money, illegals payed under the radar and other such money that income taxes are not payed on.
The money people use to buy drugs was already taxed as income, and it's used to purchase products that contribute to the taxed profits of businesses, and the taxable income of those business' employees. Illegal money is already taxed just as much now as it would (ostensibly) be under fairtax. In either straight income tax or fairtax, the illegal transaction does not contribute to taxation, and the otherwise legal transactions conducted with the illegal money do contribute to taxation.
Unless you're trying to say that drug dealers will be mailing their collected taxes to Uncle Sam, this reasoning is completely fallacious.
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We work together every damn day. --Jon Stewart
The money people use to buy drugs was already taxed as income, and it's used to purchase products that contribute to the taxed profits of businesses, and the taxable income of those business' employees. Illegal money is already taxed just as much now as it would (ostensibly) be under fairtax. In either straight income tax or fairtax, the illegal transaction does not contribute to taxation, and the otherwise legal transactions conducted with the illegal money do contribute to taxation.
Unless you're trying to say that drug dealers will be mailing their collected taxes to Uncle Sam, this reasoning is completely fallacious.
Simple, drug dealers (for example) don't pay income tax but the fair tax would hit them on every dollar they spend for consumer goods.
Simple, drug dealers (for example) don't pay income tax but the fair tax would hit them on every dollar they spend for consumer goods.
It's not "the fair tax" - it's "FairTax" and should never be mentioned without being capitalized, lest truly fair methods of taxation be conflated with this asinine proposale.
Let's look at all of the parties involved in each transaction.
First, there is a source of legitimately money being used to purchase an illegal product or service. Under income tax law, this legitimate money was already subject to taxation before it entered the equation.
Second, in either scenario, there is no tax collected on the illegitimate transaction(s). This means, of course, that under "FairTax", illegal products and services that do not include "FairTax" will be relatively cheaper than legitimate products and services that do include "FairTax". This may very well be the deciding point for someone choosing between drugs and food, for example.
Third, the illegitimate money is used to purchase legitimate products. In either income tax or "FairTax", the legitimate retailer pays taxes. With income tax, they pay taxes on their combined income, including the transactions made with the previously-taxed, illegitimate money. (They can shift their tax burden to their employees by lowering their profits, but their employees still pay taxes on their income) Under "FairTax", retailers pay taxes on each transaction, including the transactions made with illegitimate money.
Again, the idea that "FairTax" somehow produces tax revenue from illegal transactions that income tax does not is simply absurd.
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We work together every damn day. --Jon Stewart
If you read my posts earlier in this thread you would already know this..... To repeat the basics for the basic issue for you: no tax method can give everyone a tax cut and bring in the same amount of money
If you read my posts earlier in this thread you would already know this..... To repeat the basics for the basic issue for you: no tax method can give everyone a tax cut and bring in the same amount of money
and you miss the entire history of this thread, the FairTax website claims it won't put any extra tax burden on anyone, so who are these "more people"? since it gives money directly to each person? they can't be taxed less and taxed more at the same time, so either you are wrong or the FairTax website is wrong, which is it? do you really think getting money from drug dealers from a sales tax won't be offset by attempts to avoid the sales tax?
come on Eddie, you know this is another atempt to shift the burden to the working class and away from the rich
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