the Fair Tax is a regime that replaces all current income taxes and other levies with an across the board 30% or so tax on all products. Lower income people would receive a reimbursement each month. The plan advertises itself as fair, transparant, and simple. Honestly anything would be an improvement over today's overly complex scheme of social engineering.
Would you support it?

I have researched this and I support it.

(Regime???)

Yeah, I hate when people write "regime" instead of "regimen" but apparently they are legitimate synonyms.

As for the Fair Tax, it doesn't sound fair to me. I'd have to shell out the extra 30% and I won't get reimbursed because I'm not poor, but it would certainly hit me pretty hard because I'm not close to being rich either. As usual, the working/middle class gets scr*wed.

The Rabbi's description was inaccurate. EVERYBODY would be reimbursed monthly for basic expenses, not just the poor. It actually is quite fair. Probably the biggest difficulty will be enforcing the tax on merchants, but it's not as if the income tax is perfectly enforced as it is....

Who gets to decide what are "basic expenses"?


Of course income tax isn't perfectly enforced, but if only basic expenses are reimbursed, this encourages all other purchases to be made under the table as to avoid the tax. This tax is basically unenforceable.

The government decides what are considered basic expenses. And the current income tax encourages all income to be earned under the table. Big difference.

No, it doesn't. When it comes to income, unless you work for a very small company, no one's going to pay you under the table because there are health benefits, Social Security taxes, workers' comp, etc., that have to be paid.

Details, details.

This doesn't seem like a particularly good idea to me.

First off, I'm not convinced about revenue-neutrality - everyone who presents these proposals gives these low numbers that just don't make any sense - they don't pass the smell test.

Right now, people who are unable to save much pretty much live in the no-higher-than 15% tax bracket on all income. In other words, most, say over 80%, of their income is spent on something that would be taxable. Now they'll wind up paying 30% on that spending? Sounds like a higher tax rate to me.

What happens to capital gains taxes? The rich make most of their money through capital gains, not income, and spend a tiny fraction of their money on consumption. What about the estate tax, which is levied only on estates that are worth in the millions. That's gone too. Sounds like the rich get a pretty big tax break.

What about people who have money in IRAs and so on, who have saved money that was tax-exempt for retirement - they're going to have to pay taxes on that money now, since they plan to consume 100% of that money. Not very fair to the elderly, is it? (In the first generation, anyway.)

And finally, if an 8.25% sales tax rate is sufficient to inspire cash payments and cash business to avoid the takes, wouldn't a tax rate nearly four times as high be sufficient to inspire a widespread black market in nearly everything? And if you tie all purchases to social security numbers in order to administer the tax, aren't you creating an enormous privacy problem? Besides, what about all the illegals? If you can't buy toilet paper without a valid social security number, you're surely going to have an explosive black market problem.

You mean, brown and yellow?

First, people in lower brackets will get refunds to help with those expenses.

Capital gains taxes go. So do taxes on interest income or dividend income. Why should those forms of income be any different from any other form of income? But on the flip side, deductions for mortgage interest go too, and that is a benefit to the rich, who itemize. And if the rich benefit, good. They are rich because they work hard and have added value to the economy. You would think we would want to encourage that.

As for money in IRAs, it will be taxed under the present system when it is withdrawn as income. If people don't spend it they wont be taxed on it.

As for the incentive to cheat, that will exist no matter what. But since most big ticket items are paid for with credit cards (and not just big ticket items anymore) it is harder to cheat. For illegals, it is even better since illegals will pay taxes along with anyone else who buys stuff.

Finally the ones this really hurts are accountants, lawyers specializing in tax law, and bureaucrats working to collect present levies. And those are the very people who ought to be out of work and looking for something productive to do.

Ha! This system needs just as many accountants and probably twice as many bureaucrats to administer.

How do you figure?
Currently every business and every individual has to file an income tax return. This is very time-consuming and expensive (I just got done doing my own). The Fair Tax would eliminate all of it.
Estate planning would be a thing of the past, and plenty gets spent on that.
Business deals are always evaluated based on their tax consequences, which can get very complex. This would eliminate that.

Sales tax goes to the STATE and not the FEDERAL government. No state is going to be able to afford to give that up in favor a federal sales tax. Unless it also means that much of the money that gets collected goes back to the states. Yeah, that's real efficient. The management of this program will be a huge morass of bureaucracy and politics. No one will ever be able to keep track of who gets what rebates on what products in what states. And what about if you buy something and then return it? Do you have to return your rebate? What about items that you buy overseas but are shipped to America? What about items that you buy overseas and bring into America yourself? I could keep going.

This tax is neither fair nor simple.

Would that tax provide sufficient revenue for the gubment??
What if they decide to raise it to 40, 50 or 60%???

The problem is not the tax scheme (although there is certainly significant room for reform there), it is that the gubment spends far too much money, much of which is squandered outright. Until we deal with the root of the problem no modification will really help matters......

You haven't addressed the issues you yourself first raised.
ANyway, it is a national sales tax. European countries have them already as VATs.
How often have you bought something overseas and brought it in yourself? How often do you think that happens?
Your responses tell me you haven't given this more than 10 seconds' thought.

Ad hominem attack. FAIL.

have you ever visited frum brooklyn?

Ah yes different prices for cash or charge because "If you pay with a credit card I have to charge you tax"...

In Israel they have a 17% VAT and people try their very best not to pay it. I can only imagine what 30% would look like.......

Since when does frum Brooklyn have large firms? Basements and other businesses like that are small companies. Yes, it's very easy for them to cheat, which is why they do it.

Okay, I was wrong. Five seconds, if not less.

You have tax cheating today. But I would say the tax cheating under the new system would still be less than the tax avoidance that goes on today. And I don't think you can compare Israelis, who are basically dishonest scum bags, to Americans, who are basically good people.

Capital gains are different from other forms of income. I think the onus is on you to explain why they should be treated equally. One kind of income is money made from provisioning goods and services. Another kind of income is money gained from the appreciation of capital assets. Yet another kind of income is money gained through interest on loans of various kinds. Why should all these be taxed the same way? What, in your mid, are the purposes of taxation? (Isn't that really the key question!)

With regards to the IRAs, it's not fair to change the rules in mid-game. People have spent 40 years planning to live on this money, and suddenly they have a 30% shortfall in their retirement budget b/c of the change in tax scheme. That's not only unfair, it's robbing the elderly as they walk into retirement. For many people it will mean needing to work many more years. Most people don't have the option to not spend in retirement - they have saved what they will need to spend - that's what retirement planning is about.

As for the rich, I'm just comparing to the current system. I beleive that currently, the rich do not pay enough. That's an ideological position that you probably disagree with. Any system which further reduces the tax burden on the rich is a system I oppose. I think the rich have plenty of incentive to get rich even with somewhat higher taxes.

Saying there is always incentive to cheat is a cop-out. The question is how much incentive is there. Currently, incentive to cheat stands at 8% or so in NYS (or at least this form of cheating - cash purchases). Under the new system, incentives will be closer to 38% (Fed and state taxes combined). It is only plain sense that tells you that more people will cheat. People today use credit cards for large purchases, but that's not a law of nature. If you coudl save 38% by paying cash, you better believe people would pay cash. Hell, people would take cash advances off their credit cards to get that deal.

With illegals, the question again is one administration. How do they buy without a SS#?

As for lawyers, accountatnts, and so forth, what do you have against them? I thought you said the rich add value to an economy and should be rewarded? Why not lawyers and accountants? Did the fancy investment products they come up with not boost the economy? Didn't the various mergers and deals benefit the market and those who invested in it? Don't they spend income on goods and services? Why do you want them to lose their jobs? Do you think it would be good for the economy and the country if a million lawyers and accountants were suddenly out of work? Do you think they deserve to have this kind of personal devastation visited on them and their families?




Tax avoidance is legal (tax evasion is illegal). Comparing tax avoidance today with tax evasion under the new system is apples and oranges. And your last point... whatever.

Actually that was not an ad hominem attack.

Sure it was. It was attacking my person rather than my argument. The fact is, the flaws in this proposal are so immediately obvious that it makes no difference how much time I spent thinking about it.

The purpose of taxes is to raise money for the government, not to engage in sociological engineering.
That said, there is no difference between capital gains, investment income, or wages. All of them constitute some kind of return, either on capital or on labor. Thus there is no need to discriminate.
As I pointed out, IRA money is taxable today as income when it is withdrawn. Under the Fair Tax it will not be taxable as income. That sounds like a benefit to me. Further it will take away the necessity of people locking up money, unable to access it without large penalties. That also sounds like a benefit.
Tax avoidance is legal. How much of that goes on today? Lots, right. The Fair Tax will eliminate incentives to that, producing a more efficient economy. Yes, you might have some people who cheat, but many fewer people than who currently avoid.
As for lawyers, yes the things you mention do produce value. They would produce even more value if the principles to the deal did not have to pay accountants and lawyers to figure out the most advantageous way to do it to avoid taxes.
As for the rich not paying enough, the top 20% of earners pay 80% of the taxes. The bottom 40% of earners pay no taxes. How much more do you think the rich ought to pay? Bonus question: what happens to high income people when you tax them to the point there is no incentive to work?