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Post by hammer on Jun 9, 2009 15:40:49 GMT -5
Several years ago I read a book -- "The Fair Tax Book" -- by Boortz and Linder, that proposed a 23% National Sales Tax which would replace all existing Federal Taxes. Here is the website: www.fairtax.org. Anyway, I like the general thesis of the book because it addresses most of the faults of the current tax system. Among these are loopholes for the wealthy, the 9% GDP cost of collecting taxes (or whatever it is now), and the passing along of business taxes to the consumer. For those at the basic poverty level there would be no tax because they would get a rebate. One HUGE problem with the Fair Tax would be phasing it in because there are whole industries devoted to collecting taxes and they would lobby like hell to prevent its adoption.
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Post by soothsayer on Jun 9, 2009 16:09:17 GMT -5
The other problem, and maybe they address it, is that the only way this comes close to actually being a "fair" tax is if the revenue from wealth are added to the hopper of income. This means you get the same flat tax rate on dividends, interest, capital gains, etc. And then we also have to make sure there's a flat tax on corporations, one that they actually pay.
Really, this is what's most screwed up about the way we tax. We tax labor and consumption, but not wealth. Then we turn around and say we don't have the revenues for government programs when we also cut income taxes on the wealthy.
Why do we "punish" those who work "while rewarding those who can afford to live off the work of others? There is nothing fair about taxing the subsistence income poor and middle-income people need to survive at the same rate we tax the excess income of the wealthy. In truth, the flat tax is the baldest, most audacious scheme of all for finally and completely undoing a progressive tax system that has served this country well for decades."*
*David Sirota, Hostile Takeover
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Post by hammer on Jun 9, 2009 20:05:57 GMT -5
The other problem, and maybe they address it, is that the only way this comes close to actually being a "fair" tax is if the revenue from wealth are added to the hopper of income. This means you get the same flat tax rate on dividends, interest, capital gains, etc. And then we also have to make sure there's a flat tax on corporations, one that they actually pay. Really, this is what's most screwed up about the way we tax. We tax labor and consumption, but not wealth. Then we turn around and say we don't have the revenues for government programs when we also cut income taxes on the wealthy. Why do we "punish" those who work "while rewarding those who can afford to live off the work of others? There is nothing fair about taxing the subsistence income poor and middle-income people need to survive at the same rate we tax the excess income of the wealthy. In truth, the flat tax is the baldest, most audacious scheme of all for finally and completely undoing a progressive tax system that has served this country well for decades."* *David Sirota, Hostile TakeoverThe FAIR tax does not equal the flat tax. The FAIR tax is progressive because the more you buy the more tax you pay, so the wealthy (in theory) would pay more. However, if a wealthy person (or any person for that matter) doesn't buy much and saves their money that can actually be good for the economy also, because it increases the savings rate which means there is more capital for investment. So in this sense the FAIR tax is a self correcting brake on an overheated economy. Flat taxes are still income taxes which invites the practice of income hiding. It also means you need an IRS to collect the taxes. The FAIR tax doesn't need an IRS and hence you get a big boost in national productivity because you don't waste GDP on tax avoidance and collection services.
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