mmhmm
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Post by mmhmm on Jul 19, 2011 13:24:46 GMT -5
Consumption taxes are the most regressive around because lower income people spend most of earnings to get by - whereas the rich spend less on consumption proportionaly and have other investements/income that would escape the consumption tax. I'd imagine the "rich" spend a lot more than the "poor". I knew a guy that lived paycheck to paycheck at $100k+/year income just as he did at $40k. He simply spent his increased income on more expensive toys. Depends on the person, floridayankee. Some people become rich by being very, very frugal. They're more interested in amassing money and assets than material goods. Others spend like drunken sailors regardless of their ability to afford it.
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AgeOfEnlightenmentSCP
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Post by AgeOfEnlightenmentSCP on Jul 19, 2011 13:30:13 GMT -5
Consumption taxes are the most regressive around because lower income people spend most of earnings to get by - whereas the rich spend less on consumption proportionaly and have other investements/income that would escape the consumption tax. Again, you simply have not read the Fair Tax book. It really gets old reading the same ignorant replies on this topic. Doesn't anyone actually CARE about ideas anymore?
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AgeOfEnlightenmentSCP
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Post by AgeOfEnlightenmentSCP on Jul 19, 2011 13:32:52 GMT -5
I mean not only would the working poor get their ENTIRE PAYCHECK with NO WITHHOLDING for ANYTHING-- no FICA, no Federal Income Tax-- NO WITHHOLDING, no more "Current Tax Payments Act of 1943" (State income taxes- like Illinois' truly regressive 5% flat tax on everyone would apply), but there would be a PRE-BATE= All the money expected to be paid in the Fair Tax on necessisties paid IN ADVANCE at the start of each month for these families who-- pay attention now: ARE ALREADY GETTING THEIR ENTIRE PAYCHECK.
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Post by Angel! on Jul 19, 2011 13:38:44 GMT -5
I mean not only would the working poor get their ENTIRE PAYCHECK with NO WITHHOLDING for ANYTHING-- no FICA, no Federal Income Tax-- NO WITHHOLDING, no more "Current Tax Payments Act of 1943" (State income taxes- like Illinois' truly regressive 5% flat tax on everyone would apply), but there would be a PRE-BATE= All the money expected to be paid in the Fair Tax on necessisties paid IN ADVANCE at the start of each month for these families who-- pay attention now: ARE ALREADY GETTING THEIR ENTIRE PAYCHECK. What does it matter if they are paying a total a 5K more in taxes each year as per my previous example? I included the prebate in that math. Explain to me how a family of 4 is better off paying 5K more in taxes than they do now? That was without even including the EITC they probably get, so it probably more like 6 or 7K more in taxes that they pay currently.
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Post by bubblyandblue on Jul 19, 2011 13:40:23 GMT -5
Who determines - "PRE-BATE= All the money expected to be paid in the Fair Tax on necessisties paid IN ADVANCE at the start of each month"? Funding of SS and Medicare, Infrustructure, Military etc.? - who gets to decide?
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AgeOfEnlightenmentSCP
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Post by AgeOfEnlightenmentSCP on Jul 19, 2011 14:06:55 GMT -5
I mean not only would the working poor get their ENTIRE PAYCHECK with NO WITHHOLDING for ANYTHING-- no FICA, no Federal Income Tax-- NO WITHHOLDING, no more "Current Tax Payments Act of 1943" (State income taxes- like Illinois' truly regressive 5% flat tax on everyone would apply), but there would be a PRE-BATE= All the money expected to be paid in the Fair Tax on necessisties paid IN ADVANCE at the start of each month for these families who-- pay attention now: ARE ALREADY GETTING THEIR ENTIRE PAYCHECK. What does it matter if they are paying a total a 5K more in taxes each year as per my previous example? I included the prebate in that math. Explain to me how a family of 4 is better off paying 5K more in taxes than they do now? That was without even including the EITC they probably get, so it probably more like 6 or 7K more in taxes that they pay currently. Well, as the math teacher used to say-- show me your work. Low income families will maintain a net 0% tax liability. EITC is welfare- I think that goes away, but I'm not positive about that.
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AgeOfEnlightenmentSCP
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Post by AgeOfEnlightenmentSCP on Jul 19, 2011 14:19:50 GMT -5
Who determines - "PRE-BATE= All the money expected to be paid in the Fair Tax on necessisties paid IN ADVANCE at the start of each month"? Funding of SS and Medicare, Infrustructure, Military etc.? - who gets to decide? With respect to FICA- nothing changes. The illusion that there's a seperate payment that goes into separate accounts for these programs goes away-- but since all FICA taxes go into the general fund to be used (and borrowed, and borrowed against) anyway the federal government pleases-- there are effectively no changes. The current federal proposals do include a monthly payment for each household, a prebate, in return for the sales taxes they would pay up to the poverty level. In other words, the sales taxes on spending up to the poverty level – $22,350 for a family of four – would be neutralized.
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Post by bubblyandblue on Jul 19, 2011 14:21:33 GMT -5
The illusion that there's a seperate payment that goes into separate accounts for these programs goes away - the accounting goes away?
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Angel!
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Post by Angel! on Jul 19, 2011 14:37:27 GMT -5
What does it matter if they are paying a total a 5K more in taxes each year as per my previous example? I included the prebate in that math. Explain to me how a family of 4 is better off paying 5K more in taxes than they do now? That was without even including the EITC they probably get, so it probably more like 6 or 7K more in taxes that they pay currently. Well, as the math teacher used to say-- show me your work. Low income families will maintain a net 0% tax liability. EITC is welfare- I think that goes away, but I'm not positive about that. OK - I'll do myself as an example because I already explained my taxes in another thread. My taxes for 2010: Gross income 60K, deductions - 11.4K standard, 14.6K for 4 exemptions, 4K for HSA, 6K for insurance, 3K for 401K, leaving a AGI of 21K. Tax on 21K is 2.3K. Add in 2K child tax credit & 800 for making work pay & suddenly I have a -500 tax liability. That is without even being eligible for the 1.2K daycare credit, which I will be getting this year. Add in FICA - 50,000*.0765 = 3,825. HSA contributions & insurance premiums are free from payroll taxes. My total 2010 tax liability $3,325. 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. Why I did 57K - I spend virtually everydime of my income other than what goes into my 401K. I spend every bit of the 4K I put in my HSA every year (4K is my deductable) & since HSA will no longer have special tax treatment that 4K will be taxed at the 23%. According to this fairtax article www.fairtax.org/PDF/TheImpactOfTheFairTaxOnHealthCare.pdf The 6K I pay in premiums will be taxed under fairtax. I kind of wonder who will cover the tax for the premiums my employer pays for me. So out of 60K, only the 3K I put into my retirement is untaxed, thus I am taxed on 57K. So, how does fairtax benefit me or anyone like me with a low/middle class income & a few kids? I keep hearing about how the poor won't pay any payroll taxes & that is a benefit. Part of EITCs purpose is to refund these taxes. That is why for very poor folks with no kids you can calculate EITC by multiplying 7.65% * their income. So, for many they already get their payroll taxes refunded. Again, where is the benefit?
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Post by maui1 on Jul 19, 2011 14:47:35 GMT -5
so angel- your example does not show that the fair tax is bad, all it shows is that you are one of those that is not paying your fair share, and one of the reasons that we are in the situation that we are in.
if everyone, living off of the system, fights reform in every which way, we are all doomed to failure, and then i wonder who will be taking care of the needy then?
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Post by djAdvocate on Jul 19, 2011 14:51:49 GMT -5
so angel- your example does not show that the fair tax is bad, all it shows is that you are one of those that is not paying your fair share, and one of the reasons that we are in the situation that we are in. if everyone, living off of the system, fights reform in every which way, we are doomed to failure, and then i wonder who will be taking care of the needy then? maui- just to clarify, are you including the Military-Industrial Complex in this?
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Post by Angel! on Jul 19, 2011 14:53:29 GMT -5
so angel- your example does not show that the fair tax is bad, I never said this made fairtax bad as a whole, I don't know if it makes it bad for our country. I do however see that it makes fairtax a bad deal for me personal & for many others like me. Since fairtax keeps getting advertised as better for the little guy because we will save so much money, I am just pointing out that isn't true for a lot of people. It isn't the tax saver that they are trying to make it out to be.
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Post by djAdvocate on Jul 19, 2011 14:56:15 GMT -5
so angel- your example does not show that the fair tax is bad, I never said this made fairtax bad as a whole, I don't know if it makes it bad for our country. I do however see that it makes fairtax a bad deal for me personal & for many others like me. Since fairtax keeps getting advertised as better for the little guy because we will save so much money, I am just pointing out that isn't true for a lot of people. It isn't the tax saver that they are trying to make it out to be. sure it is. it is just not a tax saver for the average American. ;]
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Post by Angel! on Jul 19, 2011 14:58:18 GMT -5
Let's try another example - PBP look at your situation. Rent is now going to be taxed, so are you as a landlord going to lower rents 23% so the final bill remains the same or are you going to keep rent the same so your gross income can remain the same?
People keep trying to say that our takehome will equal our current gross pay, but items will cost the same as today after tax is added. So if you lower your rents so that they cost the same as today for your renters, then how does that affect your income?
Keep in mind that according to the wiki article on the subject, mortgage interest over a certain rate will be taxed. That was based on the HR 25 bill introduced a few years back, although I was unable to find details on this subject, so I couldn't say how that might affect you.
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Post by maui1 on Jul 19, 2011 15:02:47 GMT -5
every system, of every kind, will have some losers......even a small loser at that.
are we stuck forever in a quagmire, that we can't get out of, just because we have it already? are we really that simple, as to not see beyond today's impact on our lives, and look to see the direction in which we are taking this country?
anyone that is young, or has children or grandchildren, has a vested interest in fixing our direction. if you don't, and are self centered, then i can see your unwillingness to fix what is obviously broken.
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Post by Angel! on Jul 19, 2011 15:04:44 GMT -5
every system, of every kind, will have some losers......even a small loser at that. Interesting that a system call FAIRtax should have losers. Maybe it isn't as fair as they claim.
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Post by djAdvocate on Jul 19, 2011 15:09:47 GMT -5
so angel- your example does not show that the fair tax is bad, all it shows is that you are one of those that is not paying your fair share, and one of the reasons that we are in the situation that we are in. it shows nothing of the kind. it shows that the "fair tax" has a different standard of fairness than the current system. it is THAT STANDARD that should be the point of the discussion, imo.
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Post by djAdvocate on Jul 19, 2011 15:13:54 GMT -5
every system, of every kind, will have some losers......even a small loser at that. are we stuck forever in a quagmire, that we can't get out of, just because we have it already? are we really that simple, as to not see beyond today's impact on our lives, and look to see the direction in which we are taking this country? of course not. but there are plenty of solutions that get us back to where we were in 2000 that have nothing to do with the "fair tax". we could cut defense spending 50%. that would cover about 30% of the difference right there. we could then take all of the changes that Obama just proposed, and cut another 30% from the defecit. and, of course, we could do a lot of other things that would make up the last 40%. social security has a really easy fix: lifting the regressive ceiling and means-testing. i mean- why are we always talking about scrapping things that can be fixed? not very eco-friendly of us. better to re-use than recycle! ;]
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Post by djAdvocate on Jul 19, 2011 15:15:10 GMT -5
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Post by floridayankee on Jul 19, 2011 15:16:51 GMT -5
i think that, proportionate to what they make, that is not correct. even at my modest CEO salary, a sizeable portion of my income goes to investment, not spending. if i made more, even more of it would go there. Are you going to save it forever or might you decide to spend it later in life?
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Post by djAdvocate on Jul 19, 2011 15:19:04 GMT -5
i think that, proportionate to what they make, that is not correct. even at my modest CEO salary, a sizeable portion of my income goes to investment, not spending. if i made more, even more of it would go there. Are you going to save it forever or might you decide to spend it later in life? unless i get caught up in our atrocious healthcare system (i have a plan for avoiding that fate), i will keep every penny of it.
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Post by cme1201 on Jul 19, 2011 15:31:38 GMT -5
Why are we always talking about taking away from those who have paid into the system just as I do or others so that those who are "less" fortunate can have more?
When did the definition of "fair" become as long as those who are less fortunate don't have to fell a pinch, FairTax would be fair in that if you consume you pay. I personally do not support a fair tax I support a flat tax rate that all pay bottom to top, simple deductions that apply to all classes not convoluted with you must kiss, lick, kick this posterior to qualify.
Paying someone thousands of dollars because they didn't make enough is not something our government should do.
Someone making 32k last year if married with 3 kids would have received some where in the neighborhood of an Eight Thousand dollar check, depending on the # of dependants on there W-4 form.
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Post by djAdvocate on Jul 19, 2011 15:41:02 GMT -5
Why are we always talking about taking away from those who have paid into the system just as I do or others so that those who are "less" fortunate can have more? that is based on an old standard of social justice that people like Locke, Jefferson, Kant, Smith, and Rousseau believed in. it is kind of a foundation of Western Civilizations, including ours: that a society is best measured by how it deals with those who are at least advantage. it would be a shame if this moral center were dispensed with in favor of "greed is good", but i suppose that is where we are heading.
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Post by djAdvocate on Jul 19, 2011 15:43:48 GMT -5
When did the definition of "fair" become as long as those who are less fortunate don't have to fell a pinch, FairTax would be fair in that if you consume you pay. that is not the current definition, imo. but perhaps there are those that would disagree. the current definition is that those who are less fortunate should be afforded the opportunity to right their lives and become good taxpayers, like the rest of us- lest they become, through scourge of malice or blight, an even greater burden to the rest of us. that is the standard. but we never actually talk about it anymore. sad.
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Post by Angel! on Jul 19, 2011 15:45:56 GMT -5
Oh, I just realized PBP got banned for a week. Too bad. I was so looking forward to him explaining how he was going to lower his rents 23% to keep the final rent the same, but at the same time was going to increase his income.
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Post by fairlycrazy23 on Jul 19, 2011 16:45:00 GMT -5
Oh, I just realized PBP got banned for a week. Too bad. I was so looking forward to him explaining how he was going to lower his rents 23% to keep the final rent the same, but at the same time was going to increase his income. Probably because the income from the rent won't be taxed as income, so instead of charging X to the renter where X includes his costs associated with income tax, he can charge Y+23%, where the renter can now see that as a renter some of the money he spends to rent goes to the federal government.
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Post by Angel! on Jul 19, 2011 17:00:43 GMT -5
Oh, I just realized PBP got banned for a week. Too bad. I was so looking forward to him explaining how he was going to lower his rents 23% to keep the final rent the same, but at the same time was going to increase his income. Probably because the income from the rent won't be taxed as income, so instead of charging X to the renter where X includes his costs associated with income tax, he can charge Y+23%, where the renter can now see that as a renter some of the money he spends to rent goes to the federal government. I suppose, but do you believe he currently pays 23% or more of his total income in taxes? Seems high to me because I thought that landlords were able to deduct insurance, interest, depreciation, etc from their taxes. Between the business related expense deductions, the standard deduction, the exemptions, & child tax credits, I would seriously doubt that 23% of his income goes to taxes. So I would think reducing that income to Y to allow the rents to remain constant would cause him an overall reduction in income. But, that is just a guess. I am not a landlord so I don't understand all the details & maybe I have that wrong.
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skweet
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Post by skweet on Jul 19, 2011 17:55:40 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.
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Post by djAdvocate on Jul 19, 2011 18:24:20 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
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fairlycrazy23
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Post by fairlycrazy23 on Jul 19, 2011 18:45:06 GMT -5
I suppose, but do you believe he currently pays 23% or more of his total income in taxes? Seems high to me because I thought that landlords were able to deduct insurance, interest, depreciation, etc from their taxes. Between the business related expense deductions, the standard deduction, the exemptions, & child tax credits, I would seriously doubt that 23% of his income goes to taxes. So I would think reducing that income to Y to allow the rents to remain constant would cause him an overall reduction in income. But, that is just a guess. I am not a landlord so I don't understand all the details & maybe I have that wrong. I don't know about being a landlord so am not that familiar with the tax ramifications when you own rental property. But with regards to your other argument were you will pay more in taxes, you forgot to take into account the federal embedded taxes that are part of the cost of practically everything you buy, remember in general prices will remain the same so you will actually have almost 3k more in purchasing power. It will look like you have increased the amount of taxes you paid to the federal government, but what actually has happened is you just now have visibility to the amount actually going to the federal government,before you just didn't see that a fair chunk of the price of everything was federal taxes and tax compliance.
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