Fair Tax Act

[Hercules56]

The goal of the GOP is to collect just enough Federal revenue to pay for a bloated imperial military and hardcore border police.

Nothing else.

[Suddenly]

Originally Posted by lobosrul5

3% of PCE wouldn't even come close to replacing payroll tax. Payroll tax in 2021 generated $1.3 trillion. 3% of 15.9 trillion is only .48 trillion. And thats before any exclusions for tax on food and necessities, or a "prebate".

ETA: thinking about this, we just don't collect that much in the way of taxes... thats our main problem with the deficit. Total discretionary spending is only about 1.6 trillion, over half of which is for defense and veteran benefits. Mandatory spending is almost completely to keep seniors out of abject poverty and provided with healthcare. Even if you consider ALL other spending to be pork it only comes to $2,000 per year per person.

I agree about the overall amount of taxes. I'm more from the direction that if there is any tax that ought to go it's the payroll tax. If for political reasons if not economic. That crap needs to be included within the general tax structure rather than a flat tax that phases out for high earners.

[lobosrul5]

Originally Posted by Suddenly

I agree about the overall amount of taxes. I'm more from the direction that if there is any tax that ought to go it's the payroll tax. If for political reasons if not economic. That crap needs to be included within the general tax structure rather than a flat tax that phases out for high earners.

Ohh I see what you mean now. The best thing thing about the payroll tax is its legally bound to social security and Medicare. If those programs were tied to the general discretionary fund the odds of them being cut would be far higher.

And as an aside, while the tax itself isn't progressive the benefits for social security are. Retirees receive 90% of their income up to the first $1115 of monthly earnings, 32% up to $6,721, and just 15% above that (to the cap which should be done away with). Indexed to inflation for past earnings, and thats assuming age 67.

[lomiller]

Part of me thinks the Democrats should threaten to abstain from the vote and force the Republicans to either vote down their own proposal or commit political suicide by passing a bill that will tank the US economy and raise taxes on most of the voting public.

[lobosrul5]

Originally Posted by lomiller

Part of me thinks the Democrats should threaten to abstain from the vote and force the Republicans to either vote down their own proposal or commit political suicide by passing a bill that will tank the US economy and raise taxes on most of the voting public.

Even if the Senate passed it, Biden could just veto it. It would be political suicide on his part if he signed it.

[Random]

Originally Posted by Hercules56

The goal of the GOP is to collect just enough Federal revenue to pay for a bloated imperial military and hardcore border police.

Nothing else.

Hey now, don't forget about the mandatory "Christian" schools and relocation camps for undesirables.

[novaphile]

Originally Posted by Suddenly

Spending habits are going to change. This would be effectively a very large raise for people with higher than average income so they might spend more, etc. However...

Forecasting this is totally meaningless because 23% is too high stakes and it will be loopholed into oblivion by lawyers and lobbyists. The only forecast is that this will collapse the federal government.

Getting rid of payroll tax and replacing it with a national more like 3% sales tax exempting food and clothing to earmarked for social security / medicare would be worth looking at as that would be redistributive.

If you get rid of income tax, you'd probably need your goods and services tax to be more like 50%, and it is much harder to police than income tax.

Have any countries replaced income tax with a VAT/GST ?

When Australia brought it in, it was in ADDITION to income taxes, not a replacement of income taxes.

[dudalb]

Originally Posted by lomiller

Part of me thinks the Democrats should threaten to abstain from the vote and force the Republicans to either vote down their own proposal or commit political suicide by passing a bill that will tank the US economy and raise taxes on most of the voting public.

RIght now it's a free vote for the GOP. They can vote for it to satisfy their right wing suporters knowing it will not happen.
IF there was a real chance it would become law, I think it would probably die in the House.

[gnome]

Originally Posted by Hercules56

The goal of the GOP is to collect just enough Federal revenue to pay for a bloated imperial military and hardcore border police.

Nothing else.

Just enough to make sure that they can have islands of wealth in an ocean of poverty and not actually do anything about it, since (theoretically) the pitchfork mob can't get through the security.

[Nosi]

Originally Posted by Ranb

House Republicans to vote on bill abolishing IRS, eliminating income tax

https://www.foxnews.com/politics/hou...ing-income-tax



All I could find online was a 2021 bill from the 117th Congress.

Summary: H.R.25 — 117th Congress (2021-2022)
https://www.congress.gov/bill/117th-...ll/25?r=96&s=1



https://en.wikipedia.org/wiki/Consum...onsumption_tax



What are the odds that the GOP will make sure this benefits the rich more than it does the lower and middle class?

The rich already avoid tax almost completely, but the Republicans are always ready to slam the boot onto the necks of lower classes. They will ensure that we sit in the gutter until we die.

[Nosi]

Originally Posted by ahhell

This sort of goes back to whether I think the GOP legislators are serious, the never Kevin crowd mostly aren't, but they did have some valid points and demands. For instance, the house gets 72 hours to read a bill before they vote on it.

Are you SURE that was a Never Keven demand? That's too sensible for the Q crowd.

[Nosi]

Originally Posted by lobosrul5

Even if the Senate passed it, Biden could just veto it. It would be political suicide on his part if he signed it.

That wiley old silver fox knows where the political wind blows.

[Gulliver Foyle]

Originally Posted by ahhell

Consumption taxes are really quite common around the world, including the capitalist dystopias of Europe.

This will not pass but it is not obviously a bad idea.

Clearly a few democratic voters aren't thinking beyond, GOP bad.

Yes, but European countries also tax income and wealth too, quite often on a very progresive basis.

[The Don]

Originally Posted by Gulliver Foyle

Yes, but European countries also tax income and wealth too, quite often on a very progresive basis.

Yes.

Shifting the entire tax burden to a consumption-based sales tax would result in a massive shift in tax burden from rich to poor. Mrs Don and I are wealthy and spend about 1/3 of what we earn, the rest goes to savings. At a notional 23% tax rate, our tax burden is under 8% (of money we're awash in)

A poor person spends 100% (or more) of what they earn. Their tax burden is 23% (of money they don't have).

As has been pointed out upthread there'd also be severe economic impact as people delay or abandon non-essential spending and the wealthy would doubtless find a way to make tax-free purchases (by using corporate entities) meaning that the sales tax would actually have to be 30%, 40% or 50%.

Like so many populist ideas, it sounds good to the underinformed but it doesn't stand up to scrutiny. Unfortunately the underinformed tend not to subject things to scrutiny.

[The Great Zaganza]

simple solution would a progressive consumption tax, which would be easy to implement big luxury items like houses, cars and yachts - just make them 2, 3 or 10x as expensive and give the difference to the tax collector.
the added benefit would be that mansions would suddenly become a lot smaller and a lot less ostentatious. And no one would buy a billion dollar yacht if he had to give Uncle Sam another 9 billion for the privilege.

[The Don]

Originally Posted by The Great Zaganza

simple solution would a progressive consumption tax, which would be easy to implement big luxury items like houses, cars and yachts - just make them 2, 3 or 10x as expensive and give the difference to the tax collector.
the added benefit would be that mansions would suddenly become a lot smaller and a lot less ostentatious. And no one would buy a billion dollar yacht if he had to give Uncle Sam another 9 billion for the privilege.

Expensive houses, cars and yachts would simply be bought by corporate entities - who would be exempt or discounted when it came to consumption tax otherwise there'd be no investment.

[The Great Zaganza]

Originally Posted by The Don

Expensive houses, cars and yachts would simply be bought by corporate entities - who would be exempt or discounted when it came to consumption tax otherwise there'd be no investment.

doesn't matter - it's the purchase being taxed, not the entity buying it.
If a corporate entity wants to offset the tax it paid for a private plane, it would have to write off other assets.

But yeah, this is not the best way to tax the rich, as it would be IMMENSLY profitable to find ways around it.


a better idea would probably be the Common Ownership Self-Assessed Tax (COST): the principle being that there is a fixed tax rate for real estate by type and grade, but each owner can assess by themselves how much the object is worth. This could drastically reduce your tax burden, but the flipside is that you HAVE TO SELL AT THAT PRICE if someone offers to buy.
This would make it almost impossible to cheat on your taxes, as any deliberate undervaluation would mean you lose your property.

[Gulliver Foyle]

Originally Posted by The Don

Yes.

Shifting the entire tax burden to a consumption-based sales tax would result in a massive shift in tax burden from rich to poor. Mrs Don and I are wealthy and spend about 1/3 of what we earn, the rest goes to savings. At a notional 23% tax rate, our tax burden is under 8% (of money we're awash in)

A poor person spends 100% (or more) of what they earn. Their tax burden is 23% (of money they don't have).

As has been pointed out upthread there'd also be severe economic impact as people delay or abandon non-essential spending and the wealthy would doubtless find a way to make tax-free purchases (by using corporate entities) meaning that the sales tax would actually have to be 30%, 40% or 50%.

Like so many populist ideas, it sounds good to the underinformed but it doesn't stand up to scrutiny. Unfortunately the underinformed tend not to subject things to scrutiny.

I was going to edit that point in to my own post but, seeing it made five or six times already, deemed it superfluous. I once proposed advocating for a flat income tax as part of a group assignment in college, but after spending three weeks reading up on it, I nixed the idea.

[The Don]

Originally Posted by The Great Zaganza

doesn't matter - it's the purchase being taxed, not the entity buying it.
If a corporate entity wants to offset the tax it paid for a private plane, it would have to write off other assets.

That would place a massive burden on US corporate entities not faced by their international competitors and would make them less competitive.

An easy way round it would be for a corporate entity based outside the US to buy the asset and then lease it to someone in the US.

Originally Posted by The Great Zaganza

But yeah, this is not the best way to tax the rich, as it would be IMMENSLY profitable to find ways around it.


a better idea would probably be the Common Ownership Self-Assessed Tax (COST): the principle being that there is a fixed tax rate for real estate by type and grade, but each owner can assess by themselves how much the object is worth. This could drastically reduce your tax burden, but the flipside is that you HAVE TO SELL AT THAT PRICE if someone offers to buy.
This would make it almost impossible to cheat on your taxes, as any deliberate undervaluation would mean you lose your property.

I cannot imagine a system more open to abuse than that and the impact on people renting would be tragic - you have no security of tenure and are relying on the property owner to make an accurate assessment of property.

The upheaval for owner-occupiers would also be considerable. Imagine being forced to sell your property because someone else thinks it's good value. Hell I could simply use my financial muscle to **** with people I don't like or a very well-heeled individual could "cleanse" a town of undesirables by forced purchase of their property.

[The Great Zaganza]

Disagree.
The concept makes sense when properly implemented (for starters, it would be necessary to exactly know who owns what at any time), and would come with protections for renters. Already in most countries, new owners can't just evict previous tenants or raise rents quickly or massively.


The point is that such a system would incentivize the rich to screw each other rather than the poor or State.

[The Don]

Originally Posted by The Great Zaganza

Disagree.
The concept makes sense when properly implemented (for starters, it would be necessary to exactly know who owns what at any time), and would come with protections for renters. Already in most countries, new owners can't just evict previous tenants or raise rents quickly or massively.


The point is that such a system would incentivize the rich to screw each other rather than the poor or State.

Actually, they can screw whoever they please.

You value your house, entirely accurately and reasonably at $200k. It's the smallest and cheapest house in town. I decide that I want your house because I want the empty lot, I want to get rid of "your sort" from town or simply to **** with you because of some grudge, real or imagined.

I compulsorily purchase your house for $200,001. You cannot afford to buy another house in town and so you're out on your ear through no fault of your own.

Of course you could choose to value your house well over its true value to try to prevent this kind of thing but that means that you're paying well over the odds on your property taxes and it still might not prevent me from purchasing your house out from under you for what I consider pocket change.

[gnome]

Even if it's not about getting the tax value honest... what if I'm completely honest about the tax value of my home, but I simply don't want to move? Why should I be forced to?

[The Great Zaganza]

Originally Posted by The Don

Actually, they can screw whoever they please.

You value your house, entirely accurately and reasonably at $200k. It's the smallest and cheapest house in town. I decide that I want your house because I want the empty lot, I want to get rid of "your sort" from town or simply to **** with you because of some grudge, real or imagined.

I compulsorily purchase your house for $200,001. You cannot afford to buy another house in town and so you're out on your ear through no fault of your own.

Of course you could choose to value your house well over its true value to try to prevent this kind of thing but that means that you're paying well over the odds on your property taxes and it still might not prevent me from purchasing your house out from under you for what I consider pocket change.

There is never any protection if Rich people are willing to throw their money away to feel powerful - it's the basis of the US judicial system.

But remember that the rich twerp has to pay you at or above market price to get your house, meaning you can find something similar.
It's better than what's happening now

[TragicMonkey]

Originally Posted by The Great Zaganza

There is never any protection if Rich people are willing to throw their money away to feel powerful - it's the basis of the US judicial system.

But remember that the rich twerp has to pay you at or above market price to get your house, meaning you can find something similar.
It's better than what's happening now

No, it's not. If I buy a house it's because I want to live in the damn thing. I don't want to have to play games with guessing values and trying to outbid somebody else to keep my own damn house, nor do I want to move. If I buy something it's mine and I'll keep it as long as I like, and where I live I'm legally permitted to blow your head off if you try to take it from me against my will. There is nothing more un-American than taking away the right to own personal property.

[The Don]

Originally Posted by The Great Zaganza

There is never any protection if Rich people are willing to throw their money away to feel powerful - it's the basis of the US judicial system.

There's currently no easy path if they want my house and I don't want to sell. Under the tax plan you outlined there is

Originally Posted by The Great Zaganza

But remember that the rich twerp has to pay you at or above market price to get your house, meaning you can find something similar.

No, they have to pay me one dollar over the price I have set - let's assume that I've set the value to be the fair market value. It doesn't mean that I can afford another property and in any case, I don't want to have to move.

Originally Posted by The Great Zaganza

It's better than what's happening now

No it isn't. Currently there's no easy way for someone to force me to sell my house.

[lobosrul5]

Originally Posted by The Don

Expensive houses, cars and yachts would simply be bought by corporate entities - who would be exempt or discounted when it came to consumption tax otherwise there'd be no investment.

Yeah, executive compensation would probably include a house... also the FairTax as written only seems to tax new items. So, that would probably depress the market for new home sales while driving up the cost of existing homes. Great for everyone that already owns a home, horrible for people saving to buy a first home.

[lobosrul5]

Originally Posted by The Great Zaganza

doesn't matter - it's the purchase being taxed, not the entity buying it.
If a corporate entity wants to offset the tax it paid for a private plane, it would have to write off other assets.

But yeah, this is not the best way to tax the rich, as it would be IMMENSLY profitable to find ways around it.


a better idea would probably be the Common Ownership Self-Assessed Tax (COST): the principle being that there is a fixed tax rate for real estate by type and grade, but each owner can assess by themselves how much the object is worth. This could drastically reduce your tax burden, but the flipside is that you HAVE TO SELL AT THAT PRICE if someone offers to buy.
This would make it almost impossible to cheat on your taxes, as any deliberate undervaluation would mean you lose your property.

I'd value my home at 0 dollars and then rent it out.

ETA: oh wait, I got behind on this thread and missed the anyone can buy it at that amount... wow that'd be a nutty system.

[Random]

Originally Posted by lobosrul5

I'd value my home at 0 dollars and then rent it out.

ETA: oh wait, I got behind on this thread and missed the anyone can buy it at that amount... wow that'd be a nutty system.

Value it at $1, then set up a shell corporation to put a $50 million lien on the property...

[The Great Zaganza]

Yeah, no.
The concept is sound and would prevent the current excesses of companies buying homes and overcharging renters.
Which is also the reason why it will never be enacted.

[JoeMorgue]

I think the entire concept is a highly over-idealized misconception about what taxes in a democracy are.

Open secret people. "Paying for the society" is like... 1/4th of their actual purpose.

Taxes are bribes given to demographics that can swing elections.

Our huge, complicated tax code with rules and exceptions existing and not some simple "Everyone pay X or X%" plan is a feature, not a bug.

[The Don]

Originally Posted by The Great Zaganza

Yeah, no.
The concept is sound and would prevent the current excesses of companies buying homes and overcharging renters.
Which is also the reason why it will never be enacted.

It's only sound if you completely ignore the wealth of arguments against it.

[ahhell]

Originally Posted by gnome

Even if it's not about getting the tax value honest... what if I'm completely honest about the tax value of my home, but I simply don't want to move? Why should I be forced to?

Originally Posted by Nosi

Are you SURE that was a Never Keven demand? That's too sensible for the Q crowd.

Broken clocks and what not.

[novaphile]

Originally Posted by The Great Zaganza

doesn't matter - it's the purchase being taxed, not the entity buying it.
If a corporate entity wants to offset the tax it paid for a private plane, it would have to write off other assets.

But yeah, this is not the best way to tax the rich, as it would be IMMENSLY profitable to find ways around it.


a better idea would probably be the Common Ownership Self-Assessed Tax (COST): the principle being that there is a fixed tax rate for real estate by type and grade, but each owner can assess by themselves how much the object is worth. This could drastically reduce your tax burden, but the flipside is that you HAVE TO SELL AT THAT PRICE if someone offers to buy.
This would make it almost impossible to cheat on your taxes, as any deliberate undervaluation would mean you lose your property.

Robert Heinlein used to promote that idea, along with many of his naive economic ideas.

To a developer, my land is worth 1.5 million, but it only costs me $1000 per year in taxes to live here.

The assessed value is $600k (single house on a suburban block).

Should I be forced to sell my home to a developer?
(Who will get the profit from building four multi-storey homes on this block)

(Note I was recently offered $800k to sell, but if anyone gets the benefit of redeveloping my home, it's going to be me. Why should I be forced to hand over that profit to a developer?)

Capitalists hate people like me that have assets that they can't exploit.

[ZirconBlue]

Originally Posted by lobosrul5

Oh its been around for sometime:

https://en.wikipedia.org/wiki/FairTax

FairTax was a single rate tax proposal in 2005, 2008 and 2009 in the United States that includes complete dismantling of the Internal Revenue Service.[1] The proposal would eliminate all federal income taxes (including the alternative minimum tax, corporate income taxes, and capital gains taxes), payroll taxes (including Social Security and Medicare taxes), gift taxes, and estate taxes, replacing them with a single consumption tax on retail sales.

Indeed, if one were so inclined they could find discussions here on this forum dating back 15 years or so ago.

Originally Posted by lobosrul5

If the 23% really was on ALL personal spending in the United States, and spending did not go down as a result it would still be a net loss in revenue.

If this is the same plan that's been mooted out in the past, the 23% is the percentage of the total that is tax. It's actually a 30% add-on to the price.

[psionl0]

Originally Posted by novaphile

When Australia brought it in, it was in ADDITION to income taxes, not a replacement of income taxes.

That part is true but the original purpose of the GST was that states would use it to replace harmful "nuisance" taxes such as payroll tax and stamp duties.

Unsurprisingly, every state without exception opted to have bigger budgets instead.

[Norman Alexander]

Originally Posted by psionl0

That part is true but the original purpose of the GST was that states would use it to replace harmful "nuisance" taxes such as payroll tax and stamp duties.

Unsurprisingly, every state without exception opted to have bigger budgets instead.

It was also a sop to the states by the then conservative federal government (Howard). They had been pressing for more revenue from federal treasury. Howard appeased them by introducing a federal GST and saying that it would all be directed towards the states. It wasn't, of course. And even when some was, it wasn't equitably. Just like pre-GST.

[a_unique_person]

Originally Posted by psionl0

That part is true but the original purpose of the GST was that states would use it to replace harmful "nuisance" taxes such as payroll tax and stamp duties.



Unsurprisingly, every state without exception opted to have bigger budgets instead.

The cut of the GST for the states was never enough to allow the removal of stamp duty from the beginning.

[The Great Zaganza]

It's funny and sad that people judge an idea on the principle of "change this but leave everything else the same" instead of seeing it as part of a broader policy change.
Yes, implementing a COST scheme in the current system would be devastating, because taxation isn't the core problem when it comes to real estate development in the US.
Japan has figured it out, with rents in Tokyo being more affordable than in most big US cities.

But in order to get taxation from real estate, when need a system that can't easily be manipulated. If you are worried about low income renters getting evicted, just have the State own those properties, as is usual in many, many places: Singapore, for example, or the city of Vienna.

In short: don't be so quick to shoot the Messenger for problems that have nothing to do with the message.

[psionl0]

Originally Posted by Norman Alexander

It was also a sop to the states by the then conservative federal government (Howard). They had been pressing for more revenue from federal treasury. Howard appeased them by introducing a federal GST and saying that it would all be directed towards the states. It wasn't, of course. And even when some was, it wasn't equitably. Just like pre-GST.

I understand that all of it did go to the states. John Howard even tried to argue that GST should be a states' tax instead of a federal tax (of course that didn't wash since the federal government had total control over how the GST was distributed).

Of course, the distribution wasn't equal and it was never intended to be. The idea was always to give more GST revenue to those states where the votes mattered most.

[Norman Alexander]

Originally Posted by psionl0

I understand that all of it did go to the states. John Howard even tried to argue that GST should be a states' tax instead of a federal tax (of course that didn't wash since the federal government had total control over how the GST was distributed).

Of course, the distribution wasn't equal and it was never intended to be. The idea was always to give more GST revenue to those states where the votes mattered most.

Anyone who knew Howard's Way knew THAT was the real reason.