WTF? A 30% sales tax? End the IRS? Who's the wacko in Congress with this idea?

I would have thought that it was obvious that I was joking, while still correctly pointing out that the deficit seemingly only matters to Democrats when a Republican is in charge. Your charge of selectively being a deficit hawk depending on who is in office applies to both sides.

For you to act as if this is somehow related to Sarah Palin is quite a leap. To be clear, there is no such thing as the Sierra-Nevada Horsefly. I had assumed that would be obvious.

 

Yet, Dems don't claim to be deficit hawks. That would be the Republicans -- but only when a Dem is in the WH. Your whataboutism doesn't change the Republican hypocrisy.

 

And you know this, how?

https://www.cbsnews.com/news/fair-tax-act-republican-proposal-how-it-works/

The Fair Tax Act was introduced earlier this month by Rep. Buddy Carter of Georgia along with a group of conservative Republican co-sponsors, who claim the bill would simplify the tax code and make it more fair.

Similar proposals have been regularly introduced by a group of Republicans since 1999, but have never been given a floor vote. Some conservative Republicans have been pressuring House Speaker Kevin McCarthy to change that, given the slim GOP majority in the House.

 

So you don't believe that Democrats cry about the deficit when a Republican proposal is being debated, but don't typically say a word about the deficit regarding a Democrat proposal? The title of "deficit hawk" doesn't change this reality. It is the same hypocrisy that applies to both sides.

I have no interest in bickering endlessly about this because there is not much more to say on the issue, but if you don't understand this is two sides to the same coin, I am more than a little surprised.

 

Still a very small group. It will not get past the republican house let alone the democrat president.

 

Because it is hard to verify and audit sales tax payments than it is to verify and audit income. Sales tax is fraught with fraud which is very hard to detect. Sales taxes have plenty of plain errors (I didn't know there was a sales tax holiday last Friday or that kumquats get taxed but apples don't), though probably not as much as income tax.

 

It is done millions of times everyday The NST would not be subject to a tax holiday that is a local and state matter with THEIR sales tax. It comes right off their gross receipts.

Compare that to all the income that goes unreported and untaxed.

 

Really? Because I responded to a thread yesterday about one thing a professor said that outraged the right/republicans. Fox news is outraged that Xbox's have a power saving feature and that M&M's aren't turning Tucker Carlson on. Is this really something you thing is exclusive to the left/democrats?

 

How much federal income tax is withheld from your paycheck? Exclude social security and medicare taxes as those are separate. I pay an effective federal income tax rate of 17%. I usually withhold within 100 dollars over what I owe, so I get about 100 bucks back a year give or take. So a 30% increase on the things I buy is a tax increase...and I make six figures, so I think you really want to reconsider this statement about any "fair tax."

 

You are making stuff up. Where did I say exclusive to democrats?

 

And how much is this pre-rebate? And will it be provided all at once? This is a dumb idea. These pre-rebates are just ways to ensure the poor continue to spend freely thus ensuring the system remains the same only even better for the rich.

Furthermore, has anyone considered what raising the prices of all goods and services by 30% will have on the economy? I'm talking just the price tag. Some goods have risen not where near that recently and people freak out. Who cares about pre-rebates, I'm talking about human behavior here because economies run on human behavior.

 

Don’t forget that you will have an increase in take home revenue that you are free to invest. Also 401k’s will be tax free

 

The prebate amount is simple to calculate. If the tax is 30%, then the prebate is 30% of the poverty line, split into 12 monthly payments. The idea is that people who's income is at the poverty line are spending it all on necessities, and therefore should not be taxed. They can, of course, spend their prebate money on crack and hookers instead, if they choose to. But their drug dealer and prostitute will be taxpayers now too, even if they don't have a social security number.

Thus, the rich are the only ones who will pay a lot of tax under the fairtax. They spend the most, and they will lose all their loopholes and deductions, all their tax havens and all that. Middle class folks tend to buy used cars, they aren't taxed at all.

 

So 828.70 a month covers all necessities? In every part of the country? What do you consider necessities? Also, why would we do this? We can't even get right wingers to extend child tax credits to people, why would they go along with this pre-bate? Wouldn't they argue if you weren't paying taxes before you don't need any money back? Because they've said that many times. I just have lots of questions.

Uh, have you priced used cars lately? And I think you're missing the big picture. The rich can only buy so many cars. And they will alter their behaviors to avoid this tax. As well many Americans. That means we will buy less. So you will greatly reduce the income of the United States. Is that a desired effect? If so, that only hurts poor people the most. And the military a lot. Can you project how much tax revenue this plan will generate? And don't tell me it won't reduce spending. It will. So if that's not accounted for, then that projection is wrong.

I guess what confuses me is this. What's the problem statement? What are we trying to solve?

 

Lets not pretend that the dems tax model is better for society.

 

I hate that for you.. and every one needs to see what they are talking about instead of some lame OP again...

https://www.moneycrashers.com/fair-tax-act-explained-pros-cons/

The FairTax plan may be advantageous to many groups, especially the wealthy and those at or below the poverty line. Significant benefits include:

1. Paying Tax Only on What You Spend. Our tax system is currently based on tax brackets: The more you make, the more you pay in taxes. Under the FairTax plan, only the amount of income you spend gets taxed. For example, someone who makes $200,000 and spends $100,000 would pay only 11.5% of their income to taxes.
2. Helping Investors. Because the capital gains tax would be eliminated, individuals who can afford to invest will enjoy tax-free compound growth. That would be similar to having an individual retirement account (IRA) in which you could invest as much as you want and withdraw funds at any time without taxes or penalties. (Under current IRA rules, you can only invest a certain amount per year and must be 59 1/2 to withdraw funds without penalty.)
3. Making Tax Revenues Easier to Predict. Because consumption rates are much more stable than income, figuring out tax revenues will likely be simpler, and estimates will be more accurate.
4. Benefiting Businesses. Under the FairTax system, business-to-business purchases aren’t taxable. Only sales to consumers are taxed. Along with eliminating double taxation, the proposed plan would get rid of corporate income taxes, self-employment taxes, payroll taxes and taxes on capital and investments. That change could substantially benefit small businesses and corporations. Proponents of the FairTax say consumers would also benefit because wages and employment would increase and businesses would pass their savings on to consumers in the form of lower prices. However, there’s no guarantee that will happen.
5. Eliminating Tax Administration and Filing. Simply put, you’d no longer need to file a tax return with the IRS each year.
6. Providing Prebates. The monthly check would help offset some portion of every household’s sales tax payments, especially for families near and below the poverty line.

Disadvantages
While the FairTax plan sounds reasonable in theory, some economists say it would wreak havoc upon the middle class. That includes Alan Viard of the American Enterprise Institute, who studies federal tax and budget policy and sat for an interview about the subject with AEI.

Major concerns include:

1. Penalizing the Lower and Middle Classes. Detractors say that individuals and families above the poverty level and considered middle class will bear the brunt of the tax burden for the country. It’s billed as a progressive tax, which means that the wealthy pay more and the poor and middle class pay less as a percentage of their income. But that’s only true if individuals spend 100% of their incomes on taxable expenditures. In reality, very high-income taxpayers save a larger percentage of their income than low- and middle-income people. So this plan would indeed be regressive — meaning those with less money end up paying a higher percentage of their income in taxes.
2. Increasing Potential for Tax Evasion. One of the reasons Bush’s tax reform panel scrapped the FairTax idea was concern that a high sales tax rate would result in widespread tax evasion, possibly through trade and purchasing goods in other countries.
3. Eliminating Tax Deductions and Credits. Currently, many tax deductions and credits incentivize specific social policy goals, such as buying a home, giving to charity, getting a college education, and saving for retirement. The FairTax’s prebate is designed to make up for those lost deductions. However, because it’s given to all households rather than encouraging people to spend their income in certain ways, people may be less motivated to take certain actions that could benefit them in the future.
4. Making State Income a Bigger Burden. Though federal income tax would go away, state income tax would remain, and it would no longer be deductible against federal taxes. The effect would be a great burden on residents of high-income tax states like California and Hawaii. Moreover, unless you live in a sales-tax-free state, like Oregon or New Hampshire, you could pay your state’s sales tax on top of the FairTax — and on top of your state’s income tax. For a family living in Los Angeles making $100,000, that would be well over 40%!
5. Depending Too Much on Spending. This tax is dependent on spending. But since many wealthy individuals already invest on their own and in other businesses, they may be further motivated to do so. Those moves could benefit the economy overall, but since these activities would be nontaxable, the national burden shifts to the lower economic classes.
6. Increasing Costs for Immigrants. Prebate checks would only go to U.S. citizens. That would significantly raise the cost of living for lower-income immigrants, permanent residents, and visa holders. It could also deter highly educated foreign workers with highly sought-after expertise, such as doctors, engineers, and technology sector workers, from immigrating.

 

As someone that owned a couple small furniture stores early in my career, I look at this from a different perspective. If you put yourself into the mind of a retailer, if 30% of their gross collections were going to the federal government, they would without question take a large part of their cash sales and simply not report them.

Think about it.....If you sold a couch for $736 the cost of goods sold would be $368, which would give you a net of $368. After a 30% federal tax and 6% state tax, the customer would pay $1000, and you would owe the federal government $221, and the state $45.....OR.....you could not report the sale and keep $634 as your net. That is far too great of a temptation for what would not be a difficult scam to pull off. The only way to get caught would be for the government to conduct widespread business audits where they match inventory purchases with expected margins within various industries and then try in vain to insist that they know what your margin should be. It would be nearly impossible to police.

You might want to argue that most sales are with credit card, but under such a situation, it would be quite common for a savvy customer to say $736?....How about $650 cash? SOLD!

There is no way such a system would not result in out-of-control tax cheating, to the point that it would be unworkable. If one sale off the books takes your net revenue from $318 to $634, how often do you suppose that would happen that a retailer would hide sales and essentially double their net proceeds? WAY too much for it to be a realistic means of collecting all federal taxes.

 

The pre-bate is intended to offset the TAX amount, not the goods themselves. That way lower income groups will not be paying more for necessities in relation to their income.

Have you seen Jay Leno's car collection? In addition, most lower income buy used cars, which wouldn't carry sales tax according to what I've read. So only people buying new cars would be paying sales tax. The used car market was manipulated during the 'cash for clunkers' buyback, where used car inventories were depleted to buck up the car manufacturers. The pandemic shut downs are the current version of inventory reduction, as people held on to their older vehicles longer.

What problem are we trying to solve? The loop holes that some people claim that keeps the 'righ' from having to pay their fair share, the convoluted tax code that takes up 2600 pages, reduce the thugs of the IRS to minimal and out of the lives of the citizens based on guilty until proven innocent, the expense of running the IRS, to name a few.

 

The tax has no bearing on your profit margin, it is a pass through. And you will not stay in business very long not reporting your proper sales numbers to you revenue commission which loves to come and audit it and then you have to show what happened to your inventory.

 

It has a HUGE bearing on profit margin if you do not report it, which is my point. In the real-world example I provided, they essentially doubled their profit. That is an awfully large incentive to cheat. If you noticed, I said that I HAD two small furniture stores early in my career, under this proposed system, I would still HAVE them... wink wink.

For the revenue commission to enforce compliance via business audits would be FAR more laborious than via W-2 as they do currently. Auditing an individual currently is a simple process. Auditing a business with all of its inventory inflows and outflows is more complicated by many multitudes. They have no way of proving how many inventory clearance sales that a retailer has in a given year.. Having a second set of books to account for inventory sold is not that difficult. It already exists to evade state sales tax. If you added another 30% incentive on top of the current 6 or 8% sales tax ( plus less business taxes on profit), it would exist in FAR greater numbers. Proving this would be extremely difficult.

Yes some people would be caught, but far more would not.

 

I am unaware of a Dem threatening to cause the US to default on its debt obligations causing the US credit rating to be downgraded.

 

Why does it feel like every reply from you is a strawman where you are arguing against a point that was not raised?

Do you not like responding to what was actually being discussed? Give it a try sometime.

You might like how people would then take you seriously.

 

Right off gross receipts?? Does that include individuals. If I sell my car to somebody does he have to pay 30% on the $10,000, or if my house 30% on the $450,000? If I buy a $45,000 car from a dealer do I have to add $13,500? Can that be financed? How do you find the merchant who just every now and then (daily?) doesn't charge sales tax to his friends? Do you know how hard it would be for the government to demand copies of every daily receipt tabs, let alone copies of every sale slip? Ignoring that if a clerk or a manager wanted to they just wouldn't fill out a sales slip. Just give the guy his new pair of pants and put the cash or check into the drawer.

 

My understanding, it would be for new goods, not used.

I've been through several sales tax audits with the State. I would assume the feds would have an even bigger pole up their posteriors. The audits are not pleasant. AT ALL. And usually, if they catch one ongoing issue, they have you drag out records for another 5 years back. I see no reason why that intimidation practice would stop.

And for the record, audit #1 was when registers ran tapes. EOD tapes, itemized tapes, method of payment tapes, item by item tapes. After it was all over, the State actually ended up owing us money, since tax exempt organizations had made purchases and my predecessor hadn't declared them but paid sales tax we hadn't collected.

Audit #2 was rather quick and painless, as audits go. This time the claimed we had not been collecting sales tax from employees for their 'free meal'. Apparently, free is not free, even from employer to employee. They estimated based on the number of employees reported, but did not add any penalties or interest. Wasn't a whole lot, and now our employees pay $1 for their discounted meal, and 10 cents sales tax.

 

I like the idea too but if you think about it 30% is not enough to make up for the current taxation especially considering if there are going to be a lot of exemptions on things like food and rent. Imagine is you spend about $100,000 on stuff in a year. You are probably making 250K or more but you would only pay 30K in taxes. Currently you would pay much more in taxes overall. There would be a huge shortfall in taxes collected.

Even if you were just to use tax freedom day as a benchmark it is April 16 or 105 days into the year. That means on average 105/365 = 29% BUT the problem is that is for America as a whole. The majority of taxes come from the wealthy and the wealthy do not spend the same proportionate amount on stuff as the poor or middle class. There propensity to save is much higher. Unless the rich spend at the same percentage as the poor or middle class we will collect a lot less in taxes.

My guess is the New Tax Rate would have to be over 100%