The Fair Tax Plan: Abolish the IRS

[SpyridonOCA]

well, I guess I'm not much of one for reading comprehension, but it seems like this might suffice...

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.

It's called the sixteenth amendment

The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people. - The Tenth Amendment to the Constitution of the United States


The Sixtenth Amendment was never fully ratified, and clearly violates the original meaning of the Constitution itself. You should judge the income tax by its fruits, and look at all the awful things the federal government has done because of how the income tax gave it the unConstitutional power to do so.

 

[ImmortalTechnique]

The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people. - The Tenth Amendment to the Constitution of the United States


The Sixtenth Amendment was never fully ratified, and clearly violates the original meaning of the Constitution itself. You should judge it by its fruits, and look at all the awful things the federal government has done because the income tax gave it the unConstitutional power to do so.

the sixteenth amendment WAS fully ratified. don't lie about that. amendments can be used to clarify or change the Constitution itself, or to change or repeal other amendments.

 

[burrow_owl]

As best as I can tell, Huckabee's plan is that tax elves will collect the sales tax and enforce the law.

No one's seriously considering voting for this intellectual vacuum of a man. I'm assuming that his jump in the polls is an elaborate hoax.

 

[burrow_owl]

It would do the opposite. The current tax system allows for corporations to have tax shelters overseas. Under the FairTax, everyone, including corporations, would have to pay for what they consume.

See: this has got to be a hoax, supra above.

 

[burrow_owl]

it wouldn't work because it...would cripple the economy

With our consumer-based economy, it absolutely would. His plan is turtles all the way down, except replace "turtles" with "retarded."

 

[Maxwell511]

It would do the opposite. The current tax system allows for corporations to have tax shelters overseas. Under the FairTax, everyone, including corporations, would have to pay for what they consume.

Ireland is a tax shelter for American companies and also has a VAT at 21%. But its reasons for being a tax shelter is the lower corporation tax and although not tax related they don't the same issues of having to take the full burden of educational or medical costs for the workers here than they would there. Nothing to do with income or sales taxes really, possible more with reducing the Debt.

 

[burrow_owl]

Ireland is a tax shelter for American companies and also has a VAT at 21%.

Notably, the VAT is reduced at the corporate level by various deductions - the full VAT rate is only paid by consumers of the end product. So the stuff about fair tax hitting corps is ridiculous - we would almost certainly grant large deductions to enable corps to reduce their effective fair tax rate to close to 0.

 

[kermit]

Corporations don't pay taxes. They pass the burden to the consumer.

That's not true. The price of goods is determined by the law of supply and demand. Production costs (including taxes) has little bearing.

With the fair tax, corporations no longer pass the burden of their own income tax to the consumer.

Under the fair tax corporations will have a higher tax burden as they would be taxed on all their raw materials. So, according to your first premise, they would pass that higher costs on to the consumer. The reality is that it will just lower their profits.

People will have their full paychecks to spend each week, and prices will stay close to what they are at now. It's a win win situation for everyone.

Except for those who are currently in 0% tax bracket.

The IRS isn't going to disappear though unless it is replaced by a different agency that handles the prebate checks.

The prebate is quite possibly one of the stupidest ideas ever conceived of in tax laws. It's an overly complex and fundamentally flawed solution to the main flaw of the fair tax. IMO, it's a much more elegant solution to simply make staples (food, clothing, etc) non-taxable.

 

[LonesomeTexan]

That's not true. The price of goods is determined by the law of supply and demand. Production costs (including taxes) has little bearing.


Under the fair tax corporations will have a higher tax burden as they would be taxed on all their raw materials. So, according to your first premise, they would pass that higher costs on to the consumer. The reality is that it will just lower their profits.


Except for those who are currently in 0% tax bracket.


The prebate is quite possibly one of the stupidest ideas ever conceived of in tax laws. It's an overly complex and fundamentally flawed solution to the main flaw of the fair tax. IMO, it's a much more elegant solution to simply make staples (food, clothing, etc) non-taxable.

Do you really believe that a 20% federal income tax on corporations has little impact on the price of the goods they produce? And the matching social security, medicare, and medicaid they pay for their employees? The real tax rate for corporations is much higher than 20%, and corporations wont ever see a dime in goverment benefits.

If my understanding of the fair tax is correct, items are only taxed at the retail level. Materials bought whole sale from a supplier wouldn't be taxed. The finished product is what gets taxed.

And that's where the prebate check comes in. People in the 0% tax bracket get their full paycheck each week (no payroll taxes) plus they get a government reimbursement every month.

I agree with you on the prebate issue. It is the sketchiest part of the plan. The problem with not taxing staples (food, clothing, ect.) is that the lines can become blurred with defining staple items are. For example, say a guy goes out and buys a $1000 suit. He doesn't pay a penny in taxes since technically, clothing is a staple. Meanwhile, a guy that buys a $20 pair of jeans isn't taxed either. It would be a loop hole for the wealthy to have essential items as staples. The prebate is much fairer than not taxing certain essential items.

 

[kermit]

Do you really believe that a 20% federal income tax on corporations has little impact on the price of the goods they produce? And the matching social security, medicare, and medicaid they pay for their employees? The real tax rate for corporations is much higher than 20%, and corporations wont ever see a dime in goverment benefits.

Production costs have little effect on the cost of a product. The company that I work for has seen drastic increases in our raw material costs. Guess how much more we can charge to our customers to offset that cost? If you guessed $0 you are correct. Industry competition prevents us from doing so.

If my understanding of the fair tax is correct, items are only taxed at the retail level. Materials bought whole sale from a supplier wouldn't be taxed. The finished product is what gets taxed.

I don't know all the details, you could be correct.

And that's where the prebate check comes in. People in the 0% tax bracket get their full paycheck each week (no payroll taxes) plus they get a government reimbursement every month.

And they have to hope that it covers their taxes.

I agree with you on the prebate issue. It is the sketchiest part of the plan. The problem with not taxing staples (food, clothing, ect.) is that the lines can become blurred with defining staple items are. For example, say a guy goes out and buys a $1000 suit. He doesn't pay a penny in taxes since technically, clothing is a staple. Meanwhile, a guy that buys a $20 pair of jeans isn't taxed either. It would be a loop hole for the wealthy to have essential items as staples. The prebate is much fairer than not taxing certain essential items.

No problem at all. PA has had this tax structure for a long time and no one seems to have a problems with it. That $1000 suit isn't taxable in PA. If you keep it simple an just accept that there will be some things that don't make sense the system will work much better than trying to fix all the oddities.

 

[burrow_owl]

The fair taxers deserve to be eaten alive for their stunning claim that a $1 purchase + $.33 = 25% tax. Usually people are stupid or dishonest. Huckabee - and any other huckster supporting the fair tax - is both.

 

[Douger]

Do property purchases and rent also get taxed 33 percent?
If they don't, then the plan might not be that bad.

 

[burrow_owl]

Do property purchases and rent also get taxed 33 percent?
If they don't, then the plan might not be that bad.

Think of the economic incentives such an exemption would create. Any corp or person looking to invest will be price pressured into investing in land. It would create a massive bubble.

 

[Maxwell511]

Notably, the VAT is reduced at the corporate level by various deductions - the full VAT rate is only paid by consumers of the end product. So the stuff about fair tax hitting corps is ridiculous - we would almost certainly grant large deductions to enable corps to reduce their effective fair tax rate to close to 0.

That's true, although it is not deductions really since the whole idea of VAT is to place the full burden on the final consumers. Essentially we don't really tax businesses at all and most of the government revenue comes from the people. We have very specific economic reasons to do that though and they probably don't exist in the US.