Dimming the light bulbs

[Krom]

At the risk of responding to a loaded question, with a loaded response...

The theory is supposed to go: Someone comes up with some new thing that is very profitable, they create a business and hire people to manufacture it, work with distributors to move it and retail to sell it. Everyone wins because the workers get a job and get paid, the person that came up with it gets a return on their investment and the economy goes round.

What happens now: Someone comes up with some new thing that is very profitable, unfortunately they came up with the idea while working for a giant corporation that automatically owns the invention, the giant corporation outsources the entire production to borderline slave labor in China and India and pockets all the profit for the elite few at the top, none of whom have ever had an original idea in their entire lives. The person that invented it gets paid what amounts to sawdust if they get anything from the invention at all, no new jobs are created, and ultimately everyone ends up scraping by in a "service sector" job barely able to afford this inexpensive thing.

The problem isn't a tiny portion of the population having the bulk of the 'wealth' and 'power', someone could control 90% of the wealth and power and we could still be better off than we are now. The problem is that this tiny minority are constantly trying to increase their wealth and power and they do it at the expense of everyone below them. If you use your wealth to build a better economic foundation for the entire country (something that is impossible for the middle class and poor to do on their own) then you can concentrate as much of it as you like and you will still pull everyone else up with you. But what the powerful and the wealthy are doing right now is using all their wealth and power to pull the rug out from under everyone below them so they can sell it and use the profit to by a yacht.

[null0010]

Well put, I say.

[Will Robinson]

God be with him...or Clapton...or SpongeBob...whatever works.

Fine. You want to be insulting, go live in your la la land where taxes are only for those stupid, lazy working lowlifes while the greedy wealthy people who runs things (so important!) think they're entitled to pay less by virtue of their stature. I was open and willing to talk with someone else to get a second opinion and continue the discussion with you and all you do is spout a snarky, degrading response. You're probably a paid Republican troll, because only Republicans and Tea Partiers are pitching the Fair Tax Act. ...

I find your refusal to read what is written and take it into consideration before offering your reasons against an idea to be a consistent method of debate here. You do it over and over and then if we take the time to explain the fact and that you are ignoring them to reach your conclusion you ultimately go off an a rant of generalizations of how the rich are screwing us and the repubs are the reason the rich can do it to us.
You are so consistant and bull headed in this practice that I felt for your husband when you said you were going to ask him his opinion. I imagined it very like a fat wife asking her husband if her dress makes her look fat....he's in a no win situation.

You say 'you were willing to continue the discussion with me'....ha...you haven't engaged in a discussion to begin with!
You were then, and are now, engaged in portraying the FairTax as something it is not based soley on your liberal training. You show no consideration of the data provided to you so you could know what you are talking about, ignoring the numerous contradictions between your assertions and the actual plan.
You show all sorts of prejudice toward the concept and prop up your Repub bogeyman as the evil master behind the plan just like you always do and then you have the arrogance to tell me if not for my little dig you would have been rationale?!? Lol!
I know you well enough to know that is bull★■◆● and my sympathy toward your husband is warranted if you dare put him between the rock and hard place!
I beg you on behalf of marital bliss everywhere to leave him alone and remain smug in your hateful ideological fog.

[Foil]

<E&C Moderator hat>

Okay, treading the edge of "getting personal" here. Tone it down, folks.

<glances at Will and tc>

[callmeslick]

[And you think that based on looking at the specifics of this plan or just because you expect it to disappoint?
I ask because if it is set up to broaden the tax base enough and the prebate is set right it could be progressive enough to keep the lower class burden down and get more from the upperclass and,yes, the very rich wouldn't be hurt relative to their income level but collecting revenue isn't about revenge...unless you are on the class warfare team of american politics.

my problem is that you cannot raise the necessary revenue without a staggering rate. Plus, you are nearly guaranteed to move sales of big-ticket items offshore and/or underground. Further, I have yet to see a sales tax scheme that doesn't unfairly burden the poor and especially the middle class. Finally, once you toss the 'prebate' stuff in there, it will be a devilish bureaucracy you're going to create to replace the current monster, I suspect.

Simply put, it can be done correctly with a slight progressive slant or it can be done poorly in a regressive way...it's all in the numbers. But you probably haven't even examined the numbers and studies to know have you?

yeah, I have, and have been hearing about this plan, or variants, for years. Personally, I think the simplest method that actually would generate sustainable, predictable revenue is the flat income tax, with exemptions of the first 30K in income. No writeoffs, no other exemptions, just a flat 15% or so of everything in the way of income. You wouldn't really be taxing capital gains more, but the sheltering would stop. Couple that with a lower corporate tax rate and NO writeoffs for government subsidies unless proven to be strategically necessary and focused, and you can actually afford to maintain the US as a weathy country that actually takes care of it's poorer citizens and provides stability and security for all of it's citizens.

[flip]

just a flat 15% or so of everything in the way of income

Agreed Slick. We were discussing this years ago and this seemed the logical choice. 15% across the board for everyone with a little equity to boot.

EDIT: Actually our figure was 10% but what the hell, Render unto Caesar what is Caesar's right?

[Lothar]

What do you think is the appropriate distribution of wealth?

What percentage of wealth should the top 1% have? How about the top 20%? Can you give a principled reason for why you picked those numbers?

I didn't come up with those numbers, someone else did. You disagree with them?

The numbers you gave are just data, and as a mathematician, I love data. I disagree with the way you present the numbers as if they prove something is wrong, without any explanation as to why those numbers are wrong or what the numbers would be if all was right with the world. That's why I ask, what numbers would signify the world was right, and what principles would you use to get those numbers?

I once saw a survey where Kerry voters said the top 20% should have 30% of the wealth, and Bush voters said the top 20% should have 35% of the wealth. It seems to me that when even Bush voters were proposing a far more radical wealth distribution than you'd get in Equalland with 64% at the top (or a simpler version with 36% at the top), that's a sign that people haven't done the math. Their numbers came from emotion, not reason. So I make it a point, when people make an argument about how the percentage of wealth held by certain groups is wrong, to challenge them to give a principled argument as to what system they think would be more appropriate and to show the math for what distribution that system would produce.

I don't mind if you want to argue that there are problems with the way wealth is distributed (as Krom did). I don't mind if you want to argue that you "feel" the rich have too much. I don't mind if you want to present an economic model you think is "ideal" and you can show that the top 1% would only hold 25% and therefore they have too much. I just mind if you misuse data by presenting a number and acting like it's scary or "obviously" wrong, without providing the appropriate math to back it up, particularly because in this circumstance everybody*'s mathematical intuition sucks.

* everybody except me and Colin, anyway

The problem isn't a tiny portion of the population having the bulk of the 'wealth' and 'power' [but] they do it at the expense of everyone below them.

I would agree with this, but only a little bit.

The wealthy people I interact with on a regular basis are not that way; they're venture capitalists or inventors or just really smart customer-focused people who want to make the world a better place. I think they're more typical of the very wealthy.

But there are some who primarily get their wealth at the expense of others. Some of them are execs on Wall Street -- very wealthy, and getting moreso through cozy relationships with the government (there are also the less wealthy UAW members who stole others' wealth in the GM bailout.) Some of them are corporate execs who take their employees' work and sell it for millions in profit without giving the employee a thing. The problem isn't that the wealthy have 43%; it's that a small part of that 43% is in the hands of total crooks.

Which brings us back to something Will has claimed is an advantage of the Fair Tax. One of the points of the system is to make those cozy government relationships less profitable by eliminating Congress' ability to give tax breaks to favored companies or industries. I don't know if Fair Tax actually accomplishes this, but I think it's a great idea if it works. Similar for the flat tax - no writeoffs plan slick just described.

[null0010]

Some pros and cons regarding the FairTax.

[Foil]

...in this circumstance everybody*'s mathematical intuition sucks.

Agreed. This is very true.

"The top X% of the population has Y% of the wealth" really gives very little information about the full distribution curve. The numbers can look really scary, or really reasonable, depending on which piece of data is chosen.

[That said, having seen more of the data, I will agree with the more subjective statement that, "the distribution of wealth in the U.S. is startlingly top-heavy".]

* everybody except me and Colin, anyway

Hey!! There are other mathematicians here, ya know.

The problem isn't a tiny portion of the population having the bulk of the 'wealth' and 'power' [but] they do it at the expense of everyone below them.

I would agree with this, but only a little bit.

The wealthy people I interact with on a regular basis are not that way...

It's an anecdotal example, but the sole top-1%-income person I've interacted with in recent memory certainly acts that way. He was regaling his audience with a new product that became super-lucrative once they got lobbyists to push a state bill mandating the product. Direct quote: "It's good when we can work it from the inside. We can be the ***holes and reap the rewards."

[Will Robinson]

.
my problem is that you cannot raise the necessary revenue without a staggering rate.

That doesn't seem to be the case though. There are tables that show what the new burden is to taxpayers in different pay scales and it has a nice progressive slant to it.
Add to that the increased net income weekly to the lower class with the related paycheck deductions removed.
Add in the incentive for employers to immediately give the employees a raise equal to the employers former share of the now non-existant payroll contributions (they can give a raise that costs then no change on their balance sheet).
Add to that the monthly pre-bate and the poor/lower class see an increase in income that is substantial relative to their current total weekly income.
After the essentials are purchased and their share of the FairTax deducted from that new level of take home cash flow they are on the positive side where the wealthy see a slight increase in tax burden.

In this plan any shift from the wealthy to the poor is direct, weekly! Not just an increase to the Congresses general fund that they "say" will go to the poor....and they can't create exceptions to the rules unlike any other plan.

. ... Plus, you are nearly guaranteed to move sales of big-ticket items offshore and/or underground.

I wonder if you are just guessing there. Buy your Rolls in Great Britain ? I think they charge tax as well. The impact of the program on increasing the underground trade has been looked at and the projections don't show cause for your concern.I think they said there would be no significant change in peoples incentive or ability to cheat the system. Just different methods in some cases. No system is perfect but the current system has many more problems than the much simpler more transparent FairTax.

Further, I have yet to see a sales tax scheme that doesn't unfairly burden the poor and especially the middle class.

Can you show me with real numbers how (and please check your sources because there has been a lot of false data released to destroy the FairTax)?

Finally, once you toss the 'prebate' stuff in there, it will be a devilish bureaucracy you're going to create to replace the current monster, I suspect.

The Social Security Administration. It already exists. They already send out checks monthly. No big deal...a little more paper...a few more jobs for displaced IRS agent to fill. Go check it out, this has been addressed.

Simply put, it can be done correctly with a slight progressive slant or it can be done poorly in a regressive way...it's all in the numbers. But you probably haven't even examined the numbers and studies to know have you?

yeah, I have, and have been hearing about this plan, or variants, for years. Personally, I think the simplest method that actually would generate sustainable, predictable revenue is the flat income tax, with exemptions of the first 30K in income. No writeoffs, no other exemptions, just a flat 15% or so of everything in the way of income. You wouldn't really be taxing capital gains more, but the sheltering would stop. Couple that with a lower corporate tax rate and NO writeoffs for government subsidies unless proven to be strategically necessary and focused, and you can actually afford to maintain the US as a weathy country that actually takes care of it's poorer citizens and provides stability and security for all of it's citizens.

That will not work because you haven't taken away the Congress' ability to create exemptions and play with rates etc.

The Fair Tax allows them to dial up or down a few modifiers ACROSS THE BOARD to arrive at the proper level. No mechanism for them to cater to corporations or special voter blocks in return for favor/contributions.

Also the economic boost from aspects of the FairTax is not there in those other plans. Without that it isn't so attractive.

It is the sum of all the parts that seems to make it worth the change.

[Will Robinson]

Some pros and cons regarding the FairTax.

Thanks for that.
Off the top of my head number 8 and number 10 are not legit complaints which makes that ringing endorsement.
And no mention of the effect of reducing cost to manufature or provide service which it has been projected in the economists studies of the plan will result in competition driving prices down. I think Wal-Mart was one of the participants who said they would immediately drop prices across the store to reflect the lower cost of doing business. The thinking is everyone will be driven to do this or suffer the losing end of a price war initiated by a competitor.

@slick: the flat tax has issues especially with enabling Congress to turn it right into the same mess. Lots of that and much more here : clicky

[Tunnelcat]

<E&C Moderator hat>

Okay, treading the edge of "getting personal" here. Tone it down, folks.

<glances at Will and tc>

Don't worry Foil. It's just not worth arguing over. Even if I got another person's take on things, Will has his fixed opinion. Krom made the best point anyway.

Lothar, the only point I want to make is that although the math would be informative and would quantify things, we are dealing with human beings. Emotions are what's in control of developments in our country today. How do you quantify emotions mathematically anyway? Even the markets are under more control from human emotions than from business logic and rational numbers. We're slaves to our right brains and since I'm no mathematician, I couldn't possibly make a good argument logically. Right now, emotionally, I feel the country headed down the toilet for the large majority of us and ending up as either a Fascist State or Plutocracy. I could probably find and cite all sorts of numbers from all sorts of places, but would it do any good? Numbers can be fudged to benefit one view or another on any topic anyway.

I sense, by who I talk to and from experience, that the working and middle class are losing ground and that the wealthy are making it big at their expense. I see it in my bills I pay and the products I buy. My dollar doesn't go as far anymore and the products I do buy are now expensive, but those that appear cheaper are more than likely to be of low quality and will fall apart as soon as I get them home. Even expensive stuff falls apart now, profit over quality. The government is hiding the inflation that is really going on, and yes, Obama's administration, just as Bush's before his, is guilty of the subterfuge. I see the real results in my food, medical and energy bills, especially medical. I can't afford the doctor anymore, no matter who's system we end up with. I see it in exorbitant banking fees for the privilege of borrowing their money and the almost non-existent rates of return on having them hold it in savings. I see it in the multitude of mortgage foreclosures, some caused by loans given to people who couldn't afford it and some caused by banks who didn't even bother to keep the necessary paperwork on those mortgages, giving them carte blanch to kick out as many struggling homeowners as they could get away with, and no one is doing anything about it. And all for what? To gamble in the Hedge Fund Market and make massive profits.

I keep hearing Conservatives say that lowering taxes will get the economy going and everything will be hunky dory. Yet even after the Bush tax cuts were extended just recently, I see little progress, just blame casting for the continuing morass. As taxes are being lowered for those that make the most, those that make the least are bearing more and more of the burden, so our schools, infrastructure and safety all degrade. It's the conservative's "Starve the Beast" strategy, the slow strangulation of the government they hate, that has been employed for the past 20, or even 30 years so, quite effectively. And it's the complacent Liberals, who squandered their long reign by over reaching on controlling everything and everyone and the overspending of our money like there was no tomorrow. They created the resentment that goaded conservatives on to fight everything today that might be deemed a little "socialistic". We're fighting between each other and killing our country instead.

[Spidey]

I have advocated going to a consumption based tax system for over 20 years, but the Fair Tax just doesn’t appeal to me, because it doesn’t address the largest single peeve I have with the income tax…that being X amount not being taxed, before the taxation begins…and the poverty level prebate, doesn’t cut it.

I don’t like the name either…way too gimmicky.

I would prefer to lose the prebate and exempt essentials instead…let the rate be higher if that’s the case, then it would look more like the ideas I was working with, and fill my requirement. The fact that some people consume larger amounts of medical services and such, doesn’t bother me…let them have the break.

I’m really not going to support something, that I consider retrogressive, in regards to the standard deduction. (which in my opinion is way too low)

[Will Robinson]

I have advocated going to a consumption based tax system for over 20 years, but the Fair Tax just doesn’t appeal to me, because it doesn’t address the largest single peeve I have with the income tax…that being X amount not being taxed, before the taxation begins…and the poverty level prebate, doesn’t cut it.

I don’t like the name either…way too gimmicky.

I would prefer to lose the prebate and exempt essentials instead…let the rate be higher if that’s the case, then it would look more like the ideas I was working with, and fill my requirement. The fact that some people consume larger amounts of medical services and such, doesn’t bother me…let them have the break.

I’m really not going to support something, that I consider retrogressive, in regards to the standard deduction. (which in my opinion is way too low)

I disagree and think there are people who earn so little they should be exempt from most taxes at the federal level until they are able to be self sufficient able to provide themselves with the basic essentials.
As for the exemption idea you support, you would have to keep Congress, by way of the IRS, in control of creating exemptions and it is proven time and time again that the Congress will not restrain itself from abusing that ability for their own selfish purposes. So you are , in effect, in favor of the very system we have...you just want to watch them write the excuses all over again.

...

I’m really not going to support something, that I consider retrogressive, in regards to the standard deduction. (which in my opinion is way too low)

How much difference between the current standard deduction and the cumulative total of the tax relief provided by the FairTax is there for a single taxpayer or family of four etc.? I haven't looked for that yet but it looks like you're saying you won't support the FairTax because of what that number is. I'm curious, what is it?

[Tunnelcat]

If there is any tax, on any thing, someone has to administer it. Money is money. There will always be some bureaucracy with some agenda, private or public, that will stick their fingers in the pot, have their say about what to do with it, how much to take in and how much and what to spend it on. And there will always be those that come up with creative ideas on how to NOT pay the tax. That's the catch with any system.

[Will Robinson]

If there is any tax, on any thing, someone has to administer it. Money is money. There will always be some bureaucracy with some agenda, private or public, that will stick their fingers in the pot, have their say about what to do with it, how much to take in and how much and what to spend it on. And there will always be those that come up with creative ideas on how to NOT pay the tax. That's the catch with any system.

Correct. And if your system has 600,000 pages of rules and exemptions AND allows selective changes of who pays what...
And the other system has only 60 pages of rules, has NO exemptions AND the only changes have to be done across the board effecting everyone equally...
Well, which one do you think lends itself to government and individual abuse?!?

You are running on pure emotion and ignoring facts. That leads to really bad legislation. It leads to the enabling and encouraging those that seek to come up with creative ideas to avoid taxation.

[Krom]

The problem isn't a tiny portion of the population having the bulk of the 'wealth' and 'power' [but] they do it at the expense of everyone below them.

I would agree with this, but only a little bit.

The wealthy people I interact with on a regular basis are not that way; they're venture capitalists or inventors or just really smart customer-focused people who want to make the world a better place. I think they're more typical of the very wealthy.

But there are some who primarily get their wealth at the expense of others. Some of them are execs on Wall Street -- very wealthy, and getting moreso through cozy relationships with the government (there are also the less wealthy UAW members who stole others' wealth in the GM bailout.) Some of them are corporate execs who take their employees' work and sell it for millions in profit without giving the employee a thing. The problem isn't that the wealthy have 43%; it's that a small part of that 43% is in the hands of total crooks.

Which brings us back to something Will has claimed is an advantage of the Fair Tax. One of the points of the system is to make those cozy government relationships less profitable by eliminating Congress' ability to give tax breaks to favored companies or industries. I don't know if Fair Tax actually accomplishes this, but I think it's a great idea if it works. Similar for the flat tax - no writeoffs plan slick just described.

I don't doubt it, I imagine most of the "top 1%" people are honest and try to use their wealth to keep their local economy flowing since the amount of wealth in the top 1% is so great that it is pretty much useless for any other purpose. Money is useful when it circulates but dangerous when it pools in an economy, most people understand this concept regardless of what percentage of the wealth they personally hold.

But then you have to consider that a good portion of this percentage of wealth is not actually held by 'people', it is held by multi-national corporations. Corporations don't think or act even remotely like individuals, they are soulless calculating machines that do not look out for or help anyone but themselves. There is a saying that goes: "None of us is as dumb as all of us." and it applies perfectly any group of people in a bureaucracy. Even if the bulk of the people running a company are smart and honest individuals, it only takes a one dishonest person with a voice to trigger mob mentality and cause an entire corporate board to sign off on the most asinine idiotic or outright immoral business practices in order to improve the corporate bottom line. I've seen the same behavior happen from watching bureaucracies at pretty much any level of government and private enterprise. Mob mentality rules, so the honesty and integrity of these corporations is defined exclusively by the least honest and most corrupt voices within them. And it isn't like someone on the corporate board decides one morning to be evil and triggers the mob, it is the result of hundreds or even thousands of smaller voices that nickel and dime the ethics and future away in order to squeeze every last bit of seemingly unnecessary wight (regardless of if it is fat or muscle) out of their domain. Once they all add up it produces this momentum that thoughtlessly chips away at the very foundations of the economy with reckless abandon.

[null0010]

If current tax codes are too complicated, wouldn't it be simpler to just simplify them rather than completely scrapping income tax and ignoring the potential power of an entire Constitutional Amendment?

[Spidey]

Just because congress has the power to tax income, doesn’t mean they have to.

[Will Robinson]

If current tax codes are too complicated, wouldn't it be simpler to just simplify them rather than completely scrapping income tax and ignoring the potential power of an entire Constitutional Amendment?

You really can't be serious. If the problem is politicians can't stop adding, subtracting and modifying the code to suit their agenda you want to ask them to modify it to fix all the modifications they have done?!?

Hey, lets ask pedophiles to re-direct their lust for little boys and girls by starting a babysitting service while you are at it!

The FairTax can't be implemented without the repeal of the 16th amendment, that is part of the FairTax Bill itself and it has to be that way because otherwise you just gave Congress an additional tax. That is what is wrong with the VAT (value added tax) type reform, you are just increasing their ability to tax and spend way too much and hide the real reasons (read: self serving vote buying) for that spending in the ever increasing mountain of tax code.

The idea of amending the Constitution is daunting but I think we can survive it, we've done a good job of it before....
I wonder if you can call a constitutional Convention to be limited to one amendment? Keep the process focused on the one issue. The way our representatives have become addicted to adding pork riders to bills it would interesting/scary to watch them try to pass additional amendments to the Constitution the way they amend bills on the floor of the Congress.

[null0010]

If current tax codes are too complicated, wouldn't it be simpler to just simplify them rather than completely scrapping income tax and ignoring the potential power of an entire Constitutional Amendment?

You really can't be serious. If the problem is politicians can't stop adding, subtracting and modifying the code to suit their agenda you want to ask them to modify it to fix all the modifications they have done?!?

You really can't be serious. If the problem is politicians can't stop adding, subtracting and modifying the code to suit their agenda you want to ask them to adopt the even bigger change of the "Fair Tax" ?!?!

[Will Robinson]

..


You really can't be serious. If the problem is politicians can't stop adding, subtracting and modifying the code to suit their agenda you want to ask them to adopt the even bigger change of the "Fair Tax" ?!?!

You don't make sense with that comment. The FairTax is a simple, much smaller piece of legislation with very limited authority imparted by its use compared to the legislation it replaces.

If the problem is their ability and proclivity to modify it you can't solve that by merely asking them to modify it to a form you like and then leave them with the same authority to continue modifying it! That is silly.

[Will Robinson]

Just because congress has the power to tax income, doesn’t mean they have to.

Yea but think about how the "income tax" came into being in the first place. They initially enacted a temporary tax supposedly not on wages, only on corporations, to pay for a war and then it never went away and quickly became a tax on wages and then they retroactively created a law to make it all constitutional. I just don't see any way a Congress would ever not turn to raising taxes as their primary way of funding all the 'needs' they can manufacture.

The FairTax is based on consumption instead of earnings, it's a broader base to pull revenue from and it is a progressive way as long as you supplement the lower class with a pre-bate of the proper amount.

[fliptw]

The complexity of current tax legislation, as onerous as it its, is less of a problem than what the members of Congress spend in their own backyards - which will still happen regardless of tax methodology.

Without a solid constitutional amendment, fair tax will be fair until one of parties promises to reduce its rate and the fairtax will turn into the mess the current income tax is now.

Changing the way the government collects taxes won't affect how congress spends it.

[null0010]

..


You really can't be serious. If the problem is politicians can't stop adding, subtracting and modifying the code to suit their agenda you want to ask them to adopt the even bigger change of the "Fair Tax" ?!?!

You don't make sense with that comment. The FairTax is a simple, much smaller piece of legislation with very limited authority imparted by its use compared to the legislation it replaces.

If the problem is their ability and proclivity to modify it you can't solve that by merely asking them to modify it to a form you like and then leave them with the same authority to continue modifying it! That is silly.

If Congress loves modifying the income tax code how on earth are you going to sell this FairTax idea to them? It's a pipedream. Simplifying the tax code is a more realistic goal.

[Will Robinson]

..

If Congress loves modifying the income tax code how on earth are you going to sell this FairTax idea to them?

You are right, they will hate it. Some of them have already taken it upon themselves to start misinformation campaigns against it.
At the same time, it was started by one of them and others have joined the movement.
The short answer is they will accept it when they have to.
The long version of that is, in part, that there is a strong effort to push for states to adopt it to replace the state income tax. It was expected if the Fed adopted the FairTax many states would follow suit because 45 of them already have the sales tax divisions of their revenue departments and their current income tax law is designed to piggyback on the Federal income tax forms.
So with that in mind the FairTax is trying to get a few of them to start up early. If that happens it will help break the ice.

It's a pipedream.

No, it's a difficult task.

Simplifying the tax code is a more realistic goal.

Simplifying that which was once simple, 550,000 pages ago, and then leaving the authority to continue writing more pages in the hands of the authors of those 550,000 pages is not a "realistic goal" if you want to change anything.

How long do you think it would take for the 535 members of congress to author new bills to start replacing those 550,000 pages?
Why do you think it would be easier to take those 550,000 pages and have Congress decide, item by item, which items will be removed or altered?!? That would be the much harder task to force them to do!

The FairTax, or any kind of reform that removes so much power from Congress will be difficult to pass and it needs to be in a way that gets done in a single installment so they can't infect it with amendments and exceptions etc. It has to be a big powerful change that enough citizens are calling for that Congress realizes they are either with us or unemployed.
No one jumps so quick or so shamelessly onto a charging bandwagon like a Congressman who senses re-election failure!

Difficult but not at all impossible. Especially with congress at an all time low in approval and the economy in ruins with them to blame for it.

[Will Robinson]

The complexity of current tax legislation, as onerous as it its, is less of a problem than what the members of Congress spend in their own backyards - which will still happen regardless of tax methodology.

Without a solid constitutional amendment, fair tax will be fair until one of parties promises to reduce its rate and the fairtax will turn into the mess the current income tax is now.

Changing the way the government collects taxes won't affect how congress spends it.

No, it won't change how they spend it but it will help make a lot of what they do transparent. There is a lot of vote buying done by handing out exemptions to tax code. Those will not happen anymore.
Any attempt to increase taxes will increase the tax for everyone and require a supermajority vote in the congress. That isn't an easy path to give your union supporters or your defense contractor supporters a deal in exchange for contributions to you or your party's campaign fund. The FairTax cuts the ties to lobbiests and special interests that used the tax code as the currency of the deal. the 600,000 pages of tax code was the smoke those deals were hidden behind. All gone.

No, it won't fix their spending habits but it is like taking Mom's purse of the kitchen counter and locking it up where the little rats can't sneak in and steal a $20 because she doesn't really remember how much is in there...

As for the constitutional amendment, the FairTax has, as a component of itself, a clause that says it can't be put into law until after the 16th amendment is repealed. There are no provisions for additional taxes or exemptions etc. without the supermajority approving.

[callmeslick]

The actual value in a house, is derived from living in it.

exactly. It's not a financial vehicle.

[callmeslick]

[That will not work because you haven't taken away the Congress' ability to create exemptions and play with rates etc.

no more or less so, theoretically, than by your sales tax.

[Will Robinson]

[That will not work because you haven't taken away the Congress' ability to create exemptions and play with rates etc.

no more or less so, theoretically, than by your sales tax.

The legislation that allows the current tax code allows congress to pass changes to all sorts of catagories and sub catagories of the law...600,000 pages of them at last count. It is the forest they hide the bad trees in...
Also the current legislation doesn't require a supermajority to amend it.

The FairTax does not have any provision for that kind of thing, it is based on sales not income there are no categories and no amendments without a supermajority. The only things congress can change in the FairTax according to it's rules are change the threshhold for determining the poverty line and adjust the pre-bate amount BUT in both of those you are affecting everyone! No way to dole out an exemption to your favorite special interest group.

So it certainly is much more resistant to manipulation/abuse by congress.

[null0010]

The FairTax does not have any provision for that kind of thing, it is based on sales not income there are no categories and no amendments without a supermajority. The only things congress can change in the FairTax according to it's rules are change the threshhold for determining the poverty line and adjust the pre-bate amount BUT in both of those you are affecting everyone! No way to dole out an exemption to your favorite special interest group.

Why not modify income tax code to be resistant to politically expedient change like that? Requiring supermajorities, etc.

[Will Robinson]

The FairTax does not have any provision for that kind of thing, it is based on sales not income there are no categories and no amendments without a supermajority. The only things congress can change in the FairTax according to it's rules are change the threshhold for determining the poverty line and adjust the pre-bate amount BUT in both of those you are affecting everyone! No way to dole out an exemption to your favorite special interest group.

Why not modify income tax code to be resistant to politically expedient change like that? Requiring supermajorities, etc.

Because the current system is based on income so you have to have all sorts of flexibility to adjust to peoples different and often multiple sources of income. Going after peoples discretionary spending is much more efficient and progressive without needing to create thousands of loop holes.

And because congress has decided to use the tax code as it's number one tool to force citizens to adopt behavior that suits them. Move your business to the ghetto and get a write off...use corn in your fuel and get rebate...use expensive toxic lightbulbs and get a deduction......whatever they think is important...or whatever they think you'll believe proves they are compassionate suddenly becomes tax law!!

I don't think you would like an inflexible income based tax rate.

Should the current administration get to decide what the corporate rate and it's write offs etc. are and lock it all in?
I don't think they have shown enough understanding of the business cycle and the stifling effect taxes have on the so called recovery to make them the right ones for the job!
And I'm sure you wouldn't have wanted the Bush administration to be able to set that corporate rate and it's write offs in stone!

Why leave that Pandora's box out on the table at all? You know the rats will justify opening it up again and again!

The consumption base is broader and requires so little policing compared to using income and removes so much of the social engineering that congress uses the tax code for. And of course without lobbiests trying to get tax consideration for their clients Washington is improved dramatically. Not perfected but certainly cleaned up quite a bit. what are they going to lobby for in regards to the FairTax?
and switching to a consumption base makes all our product more competitive over seas and makes our investment platform much more attractive with no capital gains tax.
Like I said before, it is the sum of all its parts that make it so much better. It isn't just a better way to collect revenue it is a nice shot in the arm for our economy and has some permanent benefits in that area as well.

[null0010]

what are they going to lobby for in regards to the FairTax?

Exemptions for this and that, just like they do now. Pay less sales tax in ghetto areas, pay less sales tax on "toxic" lightbulbs, pay less sales tax on high ethanol gasoline. I fail to understand how this Fair Tax thing is any less vulnerable to special interests than income tax.

[Will Robinson]

what are they going to lobby for in regards to the FairTax?

Exemptions for this and that, just like they do now. Pay less sales tax in ghetto areas, pay less sales tax on "toxic" lightbulbs, pay less sales tax on high ethanol gasoline. I fail to understand how this Fair Tax thing is any less vulnerable to special interests than income tax.

You haven't been paying attention. Exemption from WHAT?
Corporations and businesses don't pay tax to get an exemption from in the first place.
You need to read up a little bit on it here

[null0010]

Exemptions in sales tax. If something has a lower sales tax rate more people will buy it, increasing corporate profits.

[Will Robinson]

Exemptions in sales tax. If something has a lower sales tax rate more people will buy it, increasing corporate profits.

If by "sales tax" you mean a state or municipality's existing sales tax that has nothing to do with the FairTax.

If you mean an exemption from the FairTax, who exactly is going to lobby for lower sales tax in your scenario?

Businesses don't pay ANY tax on anything they buy to produce a good or service.
Anything they buy to consume they pay the one rate that everyone pays. There is only one rate that congress can adjust and it must be adjusted for everyone the same.
There will be no mechanism in the FairTax law to allow congress to make an exemption. Those laws that currently authorize congress to create deductions and exemptions etc. will have been repealed in order for the FairTax to be put into effect.
With no 16th amendment the only authority they have to tax will be as regulated by the FairTax law.
They would have to propose a new tax law and get it passed as something totally independent of the FairTax. It would be as if they tried to pass an additional income tax right now! How do you think that would go over?!?

[null0010]

There will be no mechanism in the FairTax law to allow congress to make an exception. Those laws that currently authorize congress to create deductions and exemptions etc. will have been repealed in order for the FairTax to be put into effect. With no 16th amendment the only authority they have to tax will be as regulated by the FairTax law.

Oh. Are you telling me the Fair Tax requires the repeal of a Constitutional Amendment? Something that's only been done one time, ever? And even then it was so people could get drunk?

So... it's a pipedream, then. We're back to square one.

[Will Robinson]

There will be no mechanism in the FairTax law to allow congress to make an exception. Those laws that currently authorize congress to create deductions and exemptions etc. will have been repealed in order for the FairTax to be put into effect. With no 16th amendment the only authority they have to tax will be as regulated by the FairTax law.

Oh. Are you telling me the Fair Tax requires the repeal of a Constitutional Amendment? Something that's only been done one time, ever? And even then it was so people could get drunk?

So... it's a pipedream, then. We're back to square one.

I asked you to read up on it.
I think if we can get fired up enough to repeal an amendment that made liquor illegal we could repeal one that affects all of us in a much more detrimental way than not being able to buy booze!
We have freed slaves and given women the right to vote. We can give ourselves a much better tax system

34. Can the FairTax really be passed into law?
Do women have the right to vote in this country? Did we pass Prohibition? Did we repeal it?
Do Civil Rights guarantee freedoms far beyond the lunch counter and mass transit?
Do free-market economies dominate Eastern Europe, peoples once under the boot of
communism?

All these were grassroots efforts that effected significant changes in our nation and the world. Is the current income
tax system any less a yoke around the necks of otherwise free peoples? We think not.
Passing the original 16th Amendment and the income tax wasn’t easy and repealing the income tax and the 16th Amendment won’t be easy either.
That is why the FairTax has undertaken to build a grassroots movement and grassroots alliances to support the effort.

When the FairTax generates unprecedented economic growth in the first few months of its effective date, citizens nationwide will make it clear to Washington that they want to make the change permanent. But this will only happen when the American people rally behind the effort, throw off the yoke, and demand rectification of 90 years of wrongs done by the income tax.

You don't know enough about it to make a judgement and speak for the rest of us. At least know what you are talking about before you tell us it isn't going to happen.

[null0010]

I still don't think it'll ever happen.

[Spidey]

“Passing the original 16th Amendment and the income tax wasn’t easy and repealing the income tax and the 16th Amendment won’t be easy either.
That is why the FairTax has undertaken to build a grassroots movement and grassroots alliances to support the effort.”

Yea, but with the attitude promoters seem to have about this idea…I doubt you will be able to gather enough support to move it anywhere.

Myself as an example, I already advocate consumption based taxes, but when I discuss this plan, I feel like I’m a heretic or something.

If you can’t get guys like me on board…good luck.