humok
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Post by humok on Jul 19, 2011 19:30:01 GMT -5
I do not remember reading more BS. No tax is the fairest, but not reality. That being said the only fair tax is a flat tax across the board for every one working and receiving a pay check. 5% for each and all for example and no tax on anyone drawing SS benefits at least not on the SS checks they receive. That should be criminal simply based on the fact if you have paid into the system your entire life and on average can only draw for lets say ten years, if you are lucky, you will never draw out what they took all of your working life.
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2kids10horses
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Post by 2kids10horses on Jul 19, 2011 22:11:12 GMT -5
Angel,
In an earlier post, you asserted that you thought that your employer would lower your wages under the FairTax system.
I propose that, actually, employers would probably have to RAISE wages!
Let's say you make $50K a year. Currently, you pay half your FICA tax, and the employer pays the other half. Right? Your half is deducted from your pay. I think it is 7.65% of your pay. The employer kicks in another 7.65%. You never see it, it is paid directly to the Feds. But your employer sees it as a "Payroll" expense.
So, to your employer, you don't cost $50K per year, you cost $50,000 + $3,825, or $53,825 per year. $3,825 is 7.65% of your $50K salary.
So, now under the FairTax, your employer doesn't have to pay the extra $3,825 to the Feds. A windfall to your employer, right? Maybe, maybe not. You could make the point to your employer that he's already budgeted the full $53,825 as employee expense, by giving it all to you, his costs wouldn't rise, at all, and he would still be just as profitable as before the FairTax.
Would you actually have this conversation? Unlikely. However, you might look for work at other employers, and they might find they could hire you at more than $50K because it would still be less than the $53,825 they would have paid before. So, you might go to a new employer and get $52K. Of course, the employers would see this coming, and realize that if they didn't want to lose their good employees to the competition, they're going to have to pay more for their employees. So, the wage they are willing to pay would go up to an amount equal to the windfall! So, it is very likely that you would indeed get a $3,825 wage increase after the implementation of the FairTax.
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skweet
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Post by skweet on Jul 20, 2011 9:51:20 GMT -5
[Under fairtax - 57K income (I will explain that in a moment). 57,000*.23 = $13,100 & I will get a $6,775 prebate making my total tax bill $6,325. Current taxes - $3,325 = 5.5% Fairtax taxes - $6,325 = 10.5% I will pay 3K more under fairtax, which is equal to 5% of my income. ] Actually you will not be paying more under the fair tax. This is the key reason that congress will never go for it. In the service that I sell, I figured out that 12% of the price is taxes embedded from income taxes paid by the multiple steps of bringing the product to market. If income taxes on companies is increased by 10% then the price increases by 1.2%, and vice versa. This is a fair estimate for every product and service, so therefore, under the current system, if you spend $50k of your income, then you pay embedded taxes of $6k, and therefore 15.5% of your income. So you pay more. Congress likes the fact that you don't think that you pay these taxes, and would have a harder time raising taxes, under fair tax, when you are more informed. The reason a fair tax is "FAIR", is that it makes you a more informed taxpayer. i would be interested in seeing how you came up with that 12%. do you mind posting a spreadsheet so i can see your work? TYIA Start out with the end product being 100 sales price (either dollars or percent, as this will help us get to the answer). 20 is my production cost, 60 is my cost of other companies’ product or services (nuts and bolts, if you will), that leaves 20 net profit at an average tax rate of 24%. We start out with my income taxes on my 20 (at 24%) and we get 4.8 net taxes passed on to my customer. Then we go to the 60 that I paid as a customer, 12 of which was profit (to the customers I purchased the product or service), at a tax rate of 24%, or 2.88 net taxes passed to me, and then on to my customer. If we follow this through 10 steps, we get 11.92744 of the cost of my product being income taxes paid by the various companies and passed through to my customer. The numbers keep adding up (minutely), as steps from basic chemical components to the end product or service could be in the thousands. Eventually we end up at about 12%. I did not even take the time to add in the FICA, etc paid on the 20 of production cost, to my employees.
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Angel!
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Post by Angel! on Jul 20, 2011 10:37:32 GMT -5
Here is my problem with fairtax:
All the above statements don't mesh at all. Suppose every company is ok reducing their prices to account for the taxes they pay on their profit. Prices drop 12%. That means stuff does not remain the same price, but actually goes up ~14%.
To actually reduce prices the full 23%, they would have to also remove all the hidden taxes that their employees pay & they pay on their employees behalf - this means not paying the employer their FICA & also giving up the company's portion of the FICA as well as reducing the employees pay to account for their federal taxes. Thus if prices remain the same their is no way that incomes can rise.
The fair tax folks are trying to invent money out of the air & somehow everyone wins. The thing is the 23% accounts for all the corporate taxes paid down the line of companies involved in making a widget, & it includes all the employee FICA & federal taxes paid down the line of companies involved in making the widget.
So all the above is currently included in the price of the widget. So, for the price of the widget to remain constant, then none of the companies or employees can get any of that money that previously went to the govt. The price has to be reduced, company's income has to go down & employee's wages have to go down. Now all the money that used to go through these sources & eventually go to the govt is now going straight to the govt via the 30%. For me to start taking home my FICA means that the company can't reduce prices by 23% because not all the hidden taxes are taken out. So now prices have to go up.
What people also forget is that we are replacing taxes that previously weren't paid by either the employer or the employee. Taxes like estate tax & gift tax. So prices have to increase a small % to cover these taxes that weren't ever hidden taxes in a product.
skweet - you say that you estimate 12% goes to hidden taxes paid by corporations. What is your plan if this should happen? Would you lower prices 23% & if so, how are you going to make up the other 11% that aren't paid by corporate taxes? Are you going to just reduce your income or pass the reduction on to your employees as wage decreases? How does that work. How are you going to bring in the same income, pay your employees more (their share of FICA), & reduce prices 23%?
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Angel!
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Post by Angel! on Jul 20, 2011 10:44:31 GMT -5
I'm not necessarily against fairtax, I just find the fairtax website extremely misleading & I think many people don't understand it entirely. They just view it as this magic process where we now take home our entire gross income & our employer's share of FICA & prices don't change & that is impossible. The math just doesn't work out.
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skweet
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Post by skweet on Jul 20, 2011 11:15:44 GMT -5
Angel, I agree with some of the things that you are saying, but don't see them as an issue. [To actually reduce prices the full 23%, they would have to also remove all the hidden taxes], Yep these are embedded in the 23%, I only pointed out the 12% that are most demonstrative. [The fair tax folks are trying to invent money out of the air & somehow everyone wins.] I don't need anyone to pay less taxes, and I don't want anyone to pay more. The winner is the guy that wants to stick-it to the "rich" by raising their taxes, and doesn't know that he is the one ultimately paying. The loser is the congressmen that want continually increasing power, that can't raise taxes because the taxpayer is now more informed. [What people also forget is that we are replacing taxes that previously weren't paid by either the employer or the employee. Taxes like estate tax & gift tax.] No one is forgetting those taxes, they are ultimately embed ed in prices, at this time, too. [Would you lower prices 23% & if so, how are you going to make up the other 11% that aren't paid by corporate taxes? ] Yes, I wouldn't want to reduce my prices, I would like a greater price on my product, unfortunately my competition would like to steal my sales, and we would ultimately duel to the bottom price again under the new tax plan, relatively quickly. My employees would make the same take-home pay, but the government wouldn't get the 20% that they and I collectively pay for their benefit in forced entitlement taxes. That entitlement money would come out of the 23% fair tax. Ultimately, as the fair tax plan is revenue neutral, and is therefore cost of living neutral. It just makes it easier for you to see how much you really pay in taxes. It is harder to pull the wool over the sheep's eyes.
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Angel!
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Post by Angel! on Jul 20, 2011 12:17:58 GMT -5
My employees would make the same take-home pay That is exactly my point! Unlike what some fairtax people keep saying, I am not suddenly going to be bringing home my FICA, my employer's share of FICA, & my federal tax withholding. My takehome will remain the same, my overall income will drop. Another way to look at the issue I brought up with family with kids paying more. The annual prebate for a child is $876. Right now the child tax credit alone is $1K. Add in the child tax exemption of $3650 which most people get at 15%, giving them $550. And if you are like me, then another $600 in daycare credits for a single child. So right now I pay $2,150 less in taxes for a single child over a childless person. With fairtax I will only pay $876 less for a single child over a childless person. A cost of an extra $1275 taxes per child. This is going to cost people with children a lot more than their childless counterparts. I don't know if it fair or not, but it is definitely shifting the burden. Also, along the same idea. I keep hearing about making the taxes more visible, but remember you are also making the benefits of having children more visible. A child now means your takehome increases by $73/month. Financially smart people wouldn't think much of that, but people in poverty & already on welfare are just going to be more encouraged to have children than they already are because it will give them more cash.
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skweet
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Post by skweet on Jul 20, 2011 12:28:11 GMT -5
{ my overall income will drop.} I get your concern, but I don't think you remember that you did not get any of that money to begin with. It was priced into the product you sold your company (labor), and was ultimately part of the price of your company's product. No, the 20% of your income will not be given to you, then immediately taken back, as we have now. You would not get that income that goes to FICA etc. But since your FICA was already part of the price of the product, and now the total FT cost is 23% of the price of the product, the product will not increase. I agree that there should never be a benefit or punishment for personal choices, such marriage and having children. Skweet's FT proposal would be slightly different than the currently accepted model.
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Angel!
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Post by Angel! on Jul 20, 2011 13:49:35 GMT -5
{ my overall income will drop.} I get your concern, I think you misunderstand me. I am not really concerned on a personal level. I am just pointing out some of the misconceptions of fairtax that people don't understand. Twice in this thread it has been mentioned that takehome pay will be increased because they won't be withholding taxes & if you search the net & even the fairtax website, there are tons of references to takehome increasing because no more tax withholding, while prices remain constant. These people are all mislead & wrong. Take home your entire paycheck, then expect to see a 20-25% increase in prices. Here is a factcheck article on the subject. www.factcheck.org/taxes/unspinning_the_fairtax.htmlIt not only explains why the increase income + lower prices is a fairy tale, it also has graphs depicting how different income groups are affected by the tax change. There is some disagreement on details, but what they have posted & even some of the research papers on the fair tax website agree that the middle class will see their taxes rise, while those making over 150K will see a fairly large drop in their tax burden.
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fairlycrazy23
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Post by fairlycrazy23 on Jul 20, 2011 15:21:11 GMT -5
the 30% vs 23% is misleading, it is not wrong, just misleading.
Also, some prices will increase, you can't take away all income taxes (especially personal) , have prices basically remain the same and be revenue neutral. Primarily the products that will have increase prices will be those not produced domestically since they don't have the same embedded federal tax burden. But this is not a negative, it would effectively be a 'tariff' on imported goods, while not really being a tariff. Also government will be paying the fairtax, it looks like they took that out, mistakenly thinking it would somehow be offset, the fairtax simply moves the tax collection point to the POS.
What actually amazes me is take either the 23% number or the higher 30% number, isn't that simply an incredibly large chunk for the Federal Government to getting? But his is what they are actually getting now and it simply boggles my mind the Federal Government can eat up so much of our economy.
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fairlycrazy23
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Post by fairlycrazy23 on Jul 20, 2011 15:22:01 GMT -5
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djAdvocate
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Post by djAdvocate on Jul 20, 2011 15:45:45 GMT -5
Start out with the end product being 100 sales price (either dollars or percent, as this will help us get to the answer). 20 is my production cost, 60 is my cost of other companies’ product or services (nuts and bolts, if you will), that leaves 20 net profit at an average tax rate of 24%.
We start out with my income taxes on my 20 (at 24%) and we get 4.8 net taxes passed on to my customer.
ok, thanks. that is quite enough.
you make 20% net? that is a really high margin. with a margin like that, you really don't need to pass ANYTHING on to your customers.
my margins are historically 10%. i take about half of that and put it right back into the business. even though i am taxed on the balance, i consider it part of the cost of ownership. i get the business, in the end. my workers get a better than average wage. my customers get a great product at a fair price.
if businesses really consider profit taxes to be part of their cost of doing business, they are far more unscrupulous than i would have ever believed. but apparently, it is true.
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skweet
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Post by skweet on Jul 20, 2011 15:50:13 GMT -5
[These people are all mislead & wrong. Take home your entire paycheck, then expect to see a 20-25% increase in prices. ] Not necessarily, however, likely. If prices were to increase, then that would be a function of real net wages increasing, as the taxed withholding and income tax would go away. For instance I may decide that my $50k employee, that has 9% withheld, and 9% employer paid (not included in his advertised salary) is too important to lose, and that he/she is not capable of reconciling a net pay for net pay computation. In that instance, I might keep that salary the same, and build the extra cost into my price. On the other hand, I need to know that my competitor may not care about the employee and will drop the 9%, and tell them to take it or leave it. In that case the competition will be able to price lower than myself. Eventually the market will smooth it all out, and I can see where the website could be right, or you could, but the bottom line is that revenue neutral means lifestyle neutral. Crazy might have the angle that determines that increase. If foreign products are forced to have a 23% tax on the final sale, and domestic products are forced to have 23% increases as the component parts go through value added stages, the competing domestics might increase their price comensurate with the new market price set by the foreign competition. This would increase their profit, which results in more competition, and higher wages for the demanded employees.
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safeharbor37
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Post by safeharbor37 on Jul 20, 2011 16:13:34 GMT -5
The problem with the current tax system is that the public is completely mislead as to who is paying what. A "fair tax" would at least clarify how much of what is tax and allow the public to make informed decisions regarding their votes. Politicians like to obfuscate so that they can reward their friends [supporters] while convincing the public that it is the public that is being rewarded. What we need is more transparency in government in general and the taxes that the government levies in particular. How we get there is subject to discussion, but that we need to get there is obvious [to those paying attention] Elimination of deductions, subsidies, and other distortions of taxing is a first step to a tax system that allows the voting public to make informed decisions. A "flat" or "fair" tax system is just one means to get there.
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djAdvocate
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Post by djAdvocate on Jul 20, 2011 16:20:50 GMT -5
The problem with the current tax system is that the public is completely mislead as to who is paying what. A "fair tax" would at least clarify how much of what is tax and allow the public to make informed decisions regarding their votes. Politicians like to obfuscate so that they can reward their friends [supporters] while convincing the public that it is the public that is being rewarded. What we need is more transparency in government in general and the taxes that the government levies in particular. How we get there is subject to discussion, but that we need to get there is obvious [to those paying attention] Elimination of deductions, subsidies, and other distortions of taxing is a first step to a tax system that allows the voting public to make informed decisions. A "flat" or "fair" tax system is just one means to get there. i am not sure that is true, Safe. most FT proposals that i have seen include a high deductible. the one in the video, for example, includes one for "basic necessities" (who is to determine that is unsaid. i guess some Necessity Czar or something).
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2kids10horses
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Post by 2kids10horses on Jul 20, 2011 16:54:48 GMT -5
Angel,
In some of your posts, you infer that a manufacturer of widgets would have to buy his materials from a supplier, and have the pay the FairTax on his purchases. That is not the case. If a manufacturer is buying materials that are to be included in a product that will be sold at retail, he would not pay FairTax on those items. So, for example, if Dell buys cpu from Intel, Dell would not pay fairtax on those cpus. It's not until Dell sells the computers to a retail customer that the fairtax is charged. If Dell sells those computers to Staples to sell, then Staples does not pay fairtax when they buy the computers from Dell. The fairtax is charged to the ultimate consumer when Staples sells it at retail.
This is how the FairTax is different than a VAT. The VAT (Value Added Tax) collects a sales tax at every step.
The FairTax is only charged to the ultimate consumer. I don't know exactly how they're going to administer that, I guess you would have to be issued some kind of "tax exempt" code that the seller could enter in when the sale is made in order to bypass the tax calculation.
Oh... every sales slip is supposed to show what the real price of the item is, and how much the fairtax is. Just like a sales slip that shows today's Sales Tax in most states.
AND, the 23% rate was determined to be the rate that is supposed to collect the same revenue as today's income tax, social security, medicare, corporate income tax, alternative tax, and estate tax.
The PURPOSE of the fairtax is to make collecting tax easier (using existing sales tax methodology), collect tax from people who don't file taxes, collect tax from those who are paid under the table in cash, and to disconnect the "tax planning"issues from financial decisions.
There are billions of dollars tied up in the stock market that will continue to remain tied up because people don't want to sell their stocks because they have a large capital gain (unrealized), and they will have to pay tax on that gain if they sell. So they don't. That wealth is just sitting there. If they could sell some of that stock, tax free, they would use that money to buy stuff. Which would stimulate the economy. Create jobs. But, human nature being what it is, they would rather let it sit than pay taxes.
This is what the "tax the rich" people don't get. If you reduce the taxes on capital gains, the rich will liquidate their investments and spend the money! Which stimulates the economy. If you raise their taxes, they're just going to do more things to avoid incurring taxable income! It's self defeating! It's been proven before: They put a surtax on buying yachts. Did it raise revenue? NO!!! It killed the yacht industry. Obama now wants to kill the business aircraft industry!
They ought to do just the opposite! Make is EASIER for business to buy jets. More businesses would buy them, the industry would grow, hire people, these employees would pay more in taxes, etc.
UGH.
Rant over.
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fairlycrazy23
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Post by fairlycrazy23 on Jul 20, 2011 17:03:15 GMT -5
i guess some Necessity Czar or something). The fairtax details how the prebate is calculated it is not left up to a czar "The monthly prebate check is calculated by multiplying the annual poverty level spending published each year by the Department of Health and Human Services times the FairTax rate and dividing by twelve. Poverty level spending represents what it costs families of varying household size and composition to buy their necessities." Everybody gets the same amount (at least in the current version, I suspect that the prebate mechanism would eventually be used to pass on welfare)
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safeharbor37
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Post by safeharbor37 on Jul 20, 2011 17:05:01 GMT -5
dj, I'm OK with the basic deductible which provides some "progressivity." The point is to provide transparency to the system so that we can know what's going on. The example I like to use is that really "rich" people pay less tax because of "loopholes" [special entitlements which are not generally known by the public]. The Democrats, in particular, brag about wanting to "tax the rich," but surreptitiously leave these exemptions for their "friends" who, in many cases [like Warren Buffet] come out in favor of the "rich" paying more tax. The shenanigans of the likes of Bill Gates are just covers while they stash their wealth where it won't be detected. The idea is that we know what we pay in taxes and who pays it so that we can make intelligent decisions.
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Angel!
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Post by Angel! on Jul 20, 2011 17:10:20 GMT -5
Angel, In some of your posts, you infer that a manufacturer of widgets would have to buy his materials from a supplier, and have the pay the FairTax on his purchases. I did not infer that & if I implied otherwise anywhere, then that was a mistake or you misunderstood me. I understand the tax is only at the retail level & not in business to business transactions. Now I'm not rich, so I have no experience in this area. But, do rich people really avoiding taking money out of the market simply because of the capital gains tax? But, if they can avoid paying 15% tax on the profits, then they will decide to take the money out & spend it on new items at a 23% tax? Also consider now all their money that they choose to spend would be subject to the 23% tax, whereas before only the gains would have been subject to the 15%. I suppose if prices remain unchanged, this might happen because the ultimate cost is unchanged, but even the many of the research papers found on the fairtax website suggest that prices would likely rise 10-20%. But, putting a tax on all new consumer goods & services won't kill the entire us economy?
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Angel!
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Post by Angel! on Jul 20, 2011 17:11:22 GMT -5
Everybody gets the same amount (at least in the current version, I suspect that the prebate mechanism would eventually be used to pass on welfare) They are going to have to make up for all that lost EITC somehow ;D
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fairlycrazy23
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Post by fairlycrazy23 on Jul 20, 2011 17:23:58 GMT -5
Angel, But, putting a tax on all new consumer goods & services won't kill the entire us economy? Yes, it would if it was in addition to current taxes. Which I think was what several democrats wanted to do a national sales tax and/or a vat in addition to current tax code.
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fairlycrazy23
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Post by fairlycrazy23 on Jul 20, 2011 17:28:59 GMT -5
Everybody gets the same amount (at least in the current version, I suspect that the prebate mechanism would eventually be used to pass on welfare) They are going to have to make up for all that lost EITC somehow ;D Maybe a final version would include more welfare; I do know that I absolutely hate the tax code being used to hand out welfare. I remember when I first learned about the EITC, helping someone do there taxes and they had big refund I argued with them because I told them they where having too much taken out of each paycheck..I was wrong.
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skweet
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Post by skweet on Jul 20, 2011 17:47:51 GMT -5
I would be on board with a prebate equal to the poverty level of food and shelter. By that I don't mean just prebating the taxes for those products, but actually giving everyone enough to purchase those items (each adult, and each kid, up to two kids per parent, meaning one w/ your first BD, and one w/ your second (not any specific "you" just general "you)). Then raise the fair tax to 26%, or whatever it takes to be revenue neutral, with the added benefits. Then eliminate the minimum wage. No welfare, no Soc. Sec. if you want better than substistance life, then work.
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fairlycrazy23
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Post by fairlycrazy23 on Jul 20, 2011 17:55:42 GMT -5
I would be on board with a prebate equal to the poverty level of food and shelter. By that I don't mean just prebating the taxes for those products, but actually giving everyone enough to purchase those items (each adult, and each kid, up to two kids per parent, meaning one w/ your first BD, and one w/ your second (not any specific "you" just general "you)). Then raise the fair tax to 26%, or whatever it takes to be revenue neutral, with the added benefits. Then eliminate the minimum wage. No welfare, no Soc. Sec. if you want better than substistance life, then work. It is not the job of government to provide the necessities. We can not afford our current entitlements.
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skweet
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Post by skweet on Jul 20, 2011 18:09:57 GMT -5
{It is not the job of government to provide the necessities. We can not afford our current entitlements. } We provide them now, we will provide them in the future. If you think that SSI or Welfare, or any entitlement programs are going away (or even being reduced), in the future, then you are just crazy. I say simplify it, get rid of all the complicated programs, and give 'em a check. If the snort the check and starve, then that was their choice.
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djAdvocate
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Post by djAdvocate on Jul 20, 2011 19:30:15 GMT -5
i guess some Necessity Czar or something). The fairtax details how the prebate is calculated it is not left up to a czar "The monthly prebate check is calculated by multiplying the annual poverty level spending published each year by the Department of Health and Human Services times the FairTax rate and dividing by twelve. Poverty level spending represents what it costs families of varying household size and composition to buy their necessities." Everybody gets the same amount (at least in the current version, I suspect that the prebate mechanism would eventually be used to pass on welfare) so, that is like, 2% of federal poverty rate? so that is like...$200? wtf is that? some kind of sick joke? is that REALLY all they are offering?
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Post by djAdvocate on Jul 20, 2011 19:31:24 GMT -5
dj, I'm OK with the basic deductible which provides some "progressivity." The point is to provide transparency to the system so that we can know what's going on. The example I like to use is that really "rich" people pay less tax because of "loopholes" [special entitlements which are not generally known by the public]. The Democrats, in particular, brag about wanting to "tax the rich," but surreptitiously leave these exemptions for their "friends" who, in many cases [like Warren Buffet] come out in favor of the "rich" paying more tax. The shenanigans of the likes of Bill Gates are just covers while they stash their wealth where it won't be detected. The idea is that we know what we pay in taxes and who pays it so that we can make intelligent decisions. ok, thanks. i see your point.
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2kids10horses
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Post by 2kids10horses on Jul 20, 2011 19:57:39 GMT -5
Angel,
I'm not "really rich" either, but I do invest in the stock market. I have some Microsoft stock I bought about 15 years ago. Yes, I've made a tidy sum on it. (It was worth a whole lot more 10 years ago, but that's a story for another forum!) I paid about $5000 for it, and today I think it's worth about $25,000. So, I have a $20,000 gain if I sold it. Capital gains taxes would be about $3000. Ya know what? I don't want to pay $3000 of tax, so I'm not selling.
I mean, if I really NEED my money, I'd sell, but I don't so I'm not.
However, if there was no capital gains tax... hmmm... ya know, I might just go ahead and take my profit... Apple computers seems to be doing pretty good.... yeah, that's the ticket... I'll sell my Microsoft and buy Apple. Ya know, I really ought to reward myself for making such a good investment. I think I'll buy a nice big plasma TV. Yep, always wanted one. It costs, $3000? Cool! I'll buy it. And reinvest the $22,000 in Apple stock.
The above paragraph is EXACTLY how I think. Under the current tax law, the government gets NOTHING. If the fairtax were in place, the government would get 23% of $3000 ($690), and some manufacturer just sold a plasma TV. Which provided jobs for retailers, manufactorers, truckers, etc.
By the way, the Earned Income Tax Credit has been around, what, 5 or 6 years? How did you make ends meet before it was enacted?
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2kids10horses
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Post by 2kids10horses on Jul 20, 2011 20:06:11 GMT -5
By the way, the really rich people (Like Mr. Gates and Mr. Buffett) don't collect large salaries. They own companies.
Mr. Gates wealth is in the value of his shares of stock. Microsoft now pays a dividend, so, he's taxed on that, but back before the dividend, his wealth grew completely tax free because he didn't sell any shares. (I think along the way he DID sell a few, and he would have to pay capital gains on that profit, but he held on to the vast majority of his shares.)
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djAdvocate
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Post by djAdvocate on Jul 20, 2011 20:37:59 GMT -5
By the way, the really rich people (Like Mr. Gates and Mr. Buffett) don't collect large salaries. They own companies. Mr. Gates wealth is in the value of his shares of stock. Microsoft now pays a dividend, so, he's taxed on that, but back before the dividend, his wealth grew completely tax free because he didn't sell any shares. (I think along the way he DID sell a few, and he would have to pay capital gains on that profit, but he held on to the vast majority of his shares.) bingo, again! i am reading some great posts on threads today. the smart capitalists generate WEALTH rather than INCOME. that is because WEALTH is not taxed AT ALL while you are alive. and it is AMAZING what you can do with wealth. it can literally move nations.
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