I understand how you say that the Government's intake of cash would appear to be lower however, when it is taken into account that the prices of goods would stabilize and thus the prices wouldn't actually be that much higher than what they are currently.
That said, if you have more money to spend (even if it IS taxed at the register) you'll spend it. I know that sounds like a gross generalization but look at past spending trends and you'll see my point.
Let's not forget that the Government's annual contractors the IRS would no longer be needed in the regard that they currently are.
Lets also explore the options of new international business.... where will you open that new production plant? in America where you're not taxed on your employees and can negotiate a wage without getting advanced math involved or in.... say, Germany?
Which brings up another point with businesses. without the need for payroll deductions their HR/Accounting needs are sliced deeply (I say HR/Accounting even though it IS technically Accounting... but some HR dept.s do payroll for some reason)
As for hurting the poor I'm not sure I understand how the upper and middle classes are paying less tax whereas the poor are paying more taxes.
If everyone is paying the same tax rate on purchases, this nearly removed the "poor" from any tax liabillity at all since their consumption of goods is far below that of any other group.
Let's say that a poor family has a monthly income of $1000. under the current system that paycheck after taxes will be $667 which they'll spend every dime of just to get by (trust me, I've been there myself) leaving no savings or other means to better their lives. (remember that the definition of poor is not the poverty line.)
Okay, Same scenario but that person now takes home $1000 and buys the same $670 worth of goods. Their tax is $134 on purchased goods for a total spending of $804. meaning that they can stash nearly $200 in savings.
And then there's that monthly rebate check on consumed goods.
Now I like this idea because the tax money to the government will work by gathering an interest rate.
Your company does this as well if you get paid bi-monthly or every two weeks. that extra week YOUR money sits in THEIR bank account it accrues interest and makes money for the company.
I like the way you think and I am enjoying our logical conversation as well.
I just don't see in what ways the poor would be unfairly left out because of this tax cut... but I am open to new ideas, perhaps I've misunderstood something or I'm not seeing what you mean.
I think that for the poor, the poverty line didn't cross my line of thought earlier. Had the stipulation not been there that "consumption below the poverty line isn't taxed", the poor currently pay a lot less in taxes than our average joes, so the 30% at register tax (according to the site) would effectively make them pay more taxes than previously. Since it is there though, there is some incentive to save above the poverty line. (not consume above the poverty line). Savings wouldn't be taxed.
As to your example, $670 would be taxed at a 30% rate. This puts the total tax sum at $201. They pay a grand total of $871. There is still a savings of $129, but not as high as 200.
Now, let's assume that they do spend all $1000 they earn (in taxes and goods spent with the fair tax proposition). The government receives $230 (23% of total is the suggestion.) The government would lose $100 by the Fair Tax. Where would this be picked up?
Let's look at somebody earning 1,000,000 dollars. Assume they buy $1,000,000. They pay 230,000 in taxes. This is much less than the ~500,000 the government would get from them under the current system. Let's assume the loss of revenue for the government is 250,000 for each millionaire.
Where will this loss be picked up? Middle class?
Let's look at the upper echelon (150,000). Currently, they pay 33% (according to you or the site, I forget which.) So the government gets $50,000 from them, currently.
With the fair tax, the government can only get .23(150,000) or 34500. We can do this for every tax bracket, and see the government loses out on all of them.
Note that these costs are all BEFORE the deduction from the poverty line, and reimbursement for food and medicine. So the government is certainly receiving less money. Nobody can spend more than 100% of what they earn/have.
Now, this would be the only domestic tax the government has. (property tax may exist still, not sure, but it would either have to be jacked or not be enough.) Foreign taxes (tariffs, etc.) would have to be enacted, leading to less trade.
The IRS would become the Internal Reimbursement Service, and everyone would switch from tax code to making sure people got their reimbursements, and their reimbursements are fair. Little to no change there.
I'll conceed that it may be as high as 30, but I think we can agree that the savings of $129 is a lot higher than the savings of $0 and the tax rebate check hasn't been factored in yet either.
That $100 will be picked up in a number of areas. By cutting newly outdated offices such as the IRS (no longer needed) by the interest earned on the money paid, by more people having jobs (and thus a higher national consumption rate)
You are absolutely correct that a flat tax system would lessen the amount of money the government takes in from the higher wage earners in the nation but in reality, there are far more people in the middle and lower classes. Millionaires are more slim and those who are multi-millionaires are even HARDER to come by.
Also, think about the number of rich people who (legally or not) hide their money in tax shelters and never pay anything in taxes currently. with a consumption tax they would HAVE to pay their taxes just like everyone else.
With that in mind, who buys lavish posessions? the average joe or the guy with a $150,000 income and a porshe?
Now that said, the money will not only be recouped, but it will cause a windfall... it is estimated that nearly 20% of those making $150,000 per year either have cheated, or have found a legal way to not pay anything in 2003 taxes.
That's more than enough money for the overall 3% loss of revenue.
There may be a reduction in trade but there would be an increase of those trading companies, coming to the US to manufacture creating more jobs, and cheaper goods.
The reimbursements are a flat rate based on food consumption studies per person per age group.
All you do is let the government know your age, the age of your spouce/partner and the ages of your children(if any) and your check comes automatically.
There's a lot more information to the reimbursement but like you said, that site has a TON of information on it.
I understand how you say that the Government's intake of cash would appear to be lower however, when it is taken into account that the prices of goods would stabilize and thus the prices wouldn't actually be that much higher than what they are currently.
That said, if you have more money to spend (even if it IS taxed at the register) you'll spend it. I know that sounds like a gross generalization but look at past spending trends and you'll see my point.
Let's not forget that the Government's annual contractors the IRS would no longer be needed in the regard that they currently are.
Lets also explore the options of new international business.... where will you open that new production plant? in America where you're not taxed on your employees and can negotiate a wage without getting advanced math involved or in.... say, Germany?
Which brings up another point with businesses. without the need for payroll deductions their HR/Accounting needs are sliced deeply (I say HR/Accounting even though it IS technically Accounting... but some HR dept.s do payroll for some reason)
As for hurting the poor I'm not sure I understand how the upper and middle classes are paying less tax whereas the poor are paying more taxes.
If everyone is paying the same tax rate on purchases, this nearly removed the "poor" from any tax liabillity at all since their consumption of goods is far below that of any other group.
Let's say that a poor family has a monthly income of $1000. under the current system that paycheck after taxes will be $667 which they'll spend every dime of just to get by (trust me, I've been there myself) leaving no savings or other means to better their lives. (remember that the definition of poor is not the poverty line.)
Okay, Same scenario but that person now takes home $1000 and buys the same $670 worth of goods. Their tax is $134 on purchased goods for a total spending of $804. meaning that they can stash nearly $200 in savings.
And then there's that monthly rebate check on consumed goods.
Now I like this idea because the tax money to the government will work by gathering an interest rate.
Your company does this as well if you get paid bi-monthly or every two weeks. that extra week YOUR money sits in THEIR bank account it accrues interest and makes money for the company.
I like the way you think and I am enjoying our logical conversation as well.
I just don't see in what ways the poor would be unfairly left out because of this tax cut... but I am open to new ideas, perhaps I've misunderstood something or I'm not seeing what you mean.
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As to your example, $670 would be taxed at a 30% rate. This puts the total tax sum at $201. They pay a grand total of $871. There is still a savings of $129, but not as high as 200.
Now, let's assume that they do spend all $1000 they earn (in taxes and goods spent with the fair tax proposition). The government receives $230 (23% of total is the suggestion.) The government would lose $100 by the Fair Tax. Where would this be picked up?
Let's look at somebody earning 1,000,000 dollars. Assume they buy $1,000,000. They pay 230,000 in taxes. This is much less than the ~500,000 the government would get from them under the current system. Let's assume the loss of revenue for the government is 250,000 for each millionaire.
Where will this loss be picked up? Middle class?
Let's look at the upper echelon (150,000). Currently, they pay 33% (according to you or the site, I forget which.) So the government gets $50,000 from them, currently.
With the fair tax, the government can only get .23(150,000) or 34500. We can do this for every tax bracket, and see the government loses out on all of them.
Note that these costs are all BEFORE the deduction from the poverty line, and reimbursement for food and medicine. So the government is certainly receiving less money. Nobody can spend more than 100% of what they earn/have.
Now, this would be the only domestic tax the government has. (property tax may exist still, not sure, but it would either have to be jacked or not be enough.) Foreign taxes (tariffs, etc.) would have to be enacted, leading to less trade.
The IRS would become the Internal Reimbursement Service, and everyone would switch from tax code to making sure people got their reimbursements, and their reimbursements are fair. Little to no change there.
So the government has to cut back, still.
I've got to go, but I'll be back.
Reply
That $100 will be picked up in a number of areas. By cutting newly outdated offices such as the IRS (no longer needed) by the interest earned on the money paid, by more people having jobs (and thus a higher national consumption rate)
You are absolutely correct that a flat tax system would lessen the amount of money the government takes in from the higher wage earners in the nation but in reality, there are far more people in the middle and lower classes. Millionaires are more slim and those who are multi-millionaires are even HARDER to come by.
Also, think about the number of rich people who (legally or not) hide their money in tax shelters and never pay anything in taxes currently. with a consumption tax they would HAVE to pay their taxes just like everyone else.
With that in mind, who buys lavish posessions? the average joe or the guy with a $150,000 income and a porshe?
Now that said, the money will not only be recouped, but it will cause a windfall... it is estimated that nearly 20% of those making $150,000 per year either have cheated, or have found a legal way to not pay anything in 2003 taxes.
That's more than enough money for the overall 3% loss of revenue.
There may be a reduction in trade but there would be an increase of those trading companies, coming to the US to manufacture creating more jobs, and cheaper goods.
The reimbursements are a flat rate based on food consumption studies per person per age group.
All you do is let the government know your age, the age of your spouce/partner and the ages of your children(if any) and your check comes automatically.
There's a lot more information to the reimbursement but like you said, that site has a TON of information on it.
Reply
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