Steeler

If you own a credit card, the big multi-nationals know a hell of a lot more about what you're up to than the feds do. And the feds can find out right quick if they want without even ringing the IRS.

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Acreo Aeneas

23%.

Okay before the business (big and small) start crying foul about how their profits are going to suffer and how they'll go bankrupt, think about how we're going to suffer.

I for one will probably end up getting only the bare essentials. Why? Well, the companies want their profit margins to keep growing, so they'll hike up pricing on all kinds of goods and services. It's not like we get paid more every year. In terms of gaming, you pay $50 for a game, but you spend anoter $12 or so in taxes. That's a lot of money.


Why doesn't the government just charge that tax hike on large corporations? They earn millions to billions a year. They can surly afford to "lose" a few thousand. It would be pocket change.

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TheFeniX

If anything, legitimate businesses already keep meticulous tax records (or they should). Hell, since I took over invoicing, I've come to find even our small business keeps records and receipts in house for 7 years before they go off to "real" storage.

I'm not saying "Fair Tax" is the way to go, but it wouldn't be as hard to implement as you would think.

Texas has a state sales tax (8.25%). I haven't noticed any form of underground tax evasion plan having any hold. The argument in of itself doesn't hold water. The tax increase would not force retailers to raise their prices anymore than a state sales tax would. They aren't losing any money because they collect the tax and send it off during each quarter. The only cost would be the record upkeep which would just replace the current army of lawyers that do their quarterly and end of the year taxes.

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ScratchMonkey

OTOH, suing a big corporation is presumably easier than suing the Fed.

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ScratchMonkey

Consumers tend to have a much larger effect on prices than producers. I was just reading how all the book sellers are forced to live with the same deep 45% discount of the new Harry Potter book to stay competitive.

Producers don't just pull a price out of a hat and impose it on consumers. Figure on raw costs, add the market average return on investment, and you've got a baseline price. If the price goes higher, more investors move in to rake in the excess profit, competition goes up, and the price goes back down.

Higher sales taxes are indeed a cost, and how much they affect the price depends on the elasticity of the price of that good.

For games, a lot of that $50 is the marketing cost, including the box and the trucks to move it to a store or your house. It's also an entertainment good, which makes its price less elastic. People will buy a popular entertainment item even if the price is outlandish.

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Wulfyn

How does tax work in the US ?

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ScratchMonkey

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El_Gringo_Grande

Generally I like the stated goals of the Fair Tax. An easy to understand, and transparent, tax system that will retrieve monies based on how lavishly people decide to live.

What I don't like is the deceptiveness of those pushing this particular plan.

They say it will only be 23% inclusive. Yea, but effective is actually closer to 30%. Why not just say that? (I hate marketing and this is nothing but marketing.)

Every body says that the rich (> 200k per year) will get a tax break. I don't have a big problem with this but fairtax.org is loath to admit this. This could be easily fix by adding an additional consumption tax on certain items or on items above a certain value. But this is not in the debate. Admit it and don't try to hide from this fact.

They fail to mention that many things would be taxed at that 30%. Rent, credit card interest, Mortgage interest...

They also count the Federal Governments purchases in their revenue neutral claims. This just seems silly to me. The government is going to tax themselves? Why not just get rid of that and adjust the tax rate to reflect that fact? More marketing I guess.

Many taxes like gasoline tax and other service taxes would not be repealed as far as I can tell.

It is the marketing I object to the most. Marketing means you have a product to sell and you are trying to hide the flaws and accentuate the positive. A product is something that will provide gains to somebody. Make somebody rich.

So who gains the most from this?

The estate tax is repealed. Money will stay in the family regardless of whether or not the children of those that earned the money worked for it or not. This is one group that gains.

A couple of people in this thread has pointed out the underground economy that could arise. I don't think it would be much bigger than what currently exists. But I could defiantly see the rich buying very expensive goods from other countries. I know they should pay for any good consumed in the U.S. but will they? Further if they buy and consume the goods in another country this country sees none of this. So they will benefit from our country and it's strength but will not return the favor if they decide to live the majority of their lives abroad.

Anecdotally I knew a person whose parents where rather wealthy. They spent about 80% of their time overseas. They worked for an American company so the income they made was taxed appropriately. Under this system 80% of their purchases would not be taxed for American purposes.

So those that worked and are protected by American laws but spent most of their time in another country would not contribute nearly as much as they should.

It just seems to me that those that gain the most from the power and greatness of America would pay, proportionately, the least for that privilege.

It seems to me that it helps in maintaining a ruling class. And this class is not determined on what it provides to the country but instead on how much money it makes.

I don't like that.

Or maybe my objection is simply that there is a ruling class based on wealth and this idea does nothing to change that. I won't support anything that does not put the middle class back in control.

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I’m not racists, I have republican friends. Radio show host.
- "The essence of tyranny is the denial of complexity". -Jacob Burkhardt
- "A foolish consistency is the hobgoblin of little minds" - Emerson
- "People should not be afraid of it's government, government should be afraid of it's People." - Line from V for Vendetta
- If software were as unreliable as economic theory, there wouldn't be a plane made of anything other than paper that could get off the ground. Jim Fawcette

Wulfyn

Thanks Scratch, that was a really interesting article. I had no idea how different it was over there.

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USN_Squid

There is a lot of misinformation in this thread about what is taxed and what isn't under the fairtax. If you're truly interested in learning more about the fairtax, please don't use this thread as a source of good information. Their website at www.fairtax.org has the details if you're willing to spend the time to read it.

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Acreo Aeneas

Well right, but that's only if the consumers are able to widely affect the pricing by having a majority demand a lower price. Also competition amongst companies in that specific product range contributes to it, but if it's a monopoly, the company has more power to set the price it thinks the consumer should purchase at (more power compared to those competing).


For those that live in the City of Chicago, our tax rate is currently 9%, which is a pretty big jump from past rates. I already think that's a pretty big tax especially on some more expensive items, like TVs and such.

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Acreo Aeneas

(after reading some more on FairTax from website...)
Hmm, I don't think as consumers we (middle class) will see much of a "relief" if this FairTax passes. From prior paychecks and such, taxes take away approximately 21% of my gross earnings per check (2 weeks). If a 23% tax is levied on future "personal consumption" including that of interest earned and such, it might be close to what we our current tax system takes. Of course without doing some math calculations, I can't say how close or how big or small of an improvement this bill might offer.

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Catman1975

If I had listed anything that would not be taxed in my previous post, please let me know. I started to read the actual bill, but I've been a little short on time because of work commitments and I have not made it through the entire site. I would like to know if I listed something as taxable that would not be taxable.

I agree with Acreo Aeneas, I don't the middle class will gain anything from this bill.

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ScratchMonkey

The extreme example is the 1-on-1 deal, such as buying a car from a private party. You want his car, he wants your money, and he has a monopoly on his car. Yet he still can't set whatever price he wants. The reason is that any product has competition. It may not be that of an exact replacement. For example, cable competes against satellite and telephone. Windows competes against Linux, BSD, Solaris, OSX. Oil competes with solar and wind and coal. Raise the price high enough, and people will switch. (The ease/resistance to switch is economic elasticity.)

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snooggums

The single sale of a single car is not a monopoly situation because there are other people selling cars, he can still set the price to whatever he wants and you can buy a different car. You can't have a monopoly on a single object, that's just ownership.

Windows would be fine if they did not engage in anticompetitive practices like not allowing their customers to sell items with other people's products, and working with manufacturers to only make drivers for their platform. If Windows had become the market leader because of quality then someone else could pass them in quality but when Microsoft stifles competition it becomes an abusive monopoly which is the problem with monopolies. This is the reason that Europe keeps fining them, they are not being competitive they are abusing a monopoly.

Oil is a regulated commodity, is subsidized (why is a record profit making industry subsidized?) and therefore does not compete with solar and coal as those are also subsidized and regulated. These commodities do not work on a free market, the oil conglomerates set the price and people pay because there are not reasonable options. Keep raising the price of gas (which the oil companies do together) and people will pay more because they don't have a cheaper competitor because they all have to sell at a specific regulated price range.

Cable does not compete with satellite or DSL. All three are different products and each company has a monopoly in each area in most cases as the government subsidized lines and right of ways to lay lines only goes to a single company. DLs offers decent up and down, Cable is high down and crap up, satellite has high latency. These three services do not actually compete. If there was more than one company that serviced or could service each house then there would be competition, but again this subsidized and heavily regulated industry is again not competitive.