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Trump vs Clinton vs Johnson on Taxes

jonny5 said:
Its kind of moot though. After the fair tax he still pays no tax. All we're really doing is shifting the tax burden from income that his customer pays to sales tax that his customer pays. And in doing so getting rid of a lot of complexity and unfairness.
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Well, he was claiming that it would uniquely cost him money. It looks like that is not the case.

I'm not against the Fair Tax (though they claim we'd want to go a full year without revenue. That seems to me like a $3.2 Trillion non-starter) per se, I agree it's a better system than what we have in place. It's just not my particular preference.
 
jonny5 said:
No, there are two people involved. The customer who pays you $100 for your service, owes $23 in sales tax. You keep $77. If you then spend it on new sales, you owe 23% sales tax, $17.

....
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Whoa, if there's no income tax, why does TT only get to keep $77? Wouldn't the customer pay him $100, and then pay the gov't $23 on his/her purchase? Then, when TT spends the $100, he pays $23 tax on that.

ttwtt78640 said:
Slow down there, Skippy. I will discuss only the bolded above - tracking a single $100 bill paid for a few hours of labor. Out of that $100 the federal government, under the "fair tax", now expects to keep $23 when I get it and another $17 when I spend (what is left of) it - for total of $40 in federal tax paid on that single $100 bill (not counting any "prebates"). That, my friend, amounts to a 40% taxation rate (less any "prebates").

You go on to state that both of us now pay 23% income tax on that $100. That is pure fiction since many pay far lower (if any) effective FIT rates. For example, I now pay ZERO - my 1099 income does not exceed deductons so I do not even file.
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Same question as above...
 
ttwtt78640 said:
That (bolded above) is precisely my point.

I now owe income taxes only on my customer reported income (1099 used by landlords to allow them to write off rental property repair costs). Under the "fair tax" nobody (including myself) would benefit from reporting my labor income since there is no longer an income tax.
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I don't understand the confusion here. As a business, you collect and remit the sales tax. As an owner/employee, you keep the rest. Whoever hires you for a job would fill out whatever forms (if any) that would pertain to his business (like writing off an expense).

If the tax is only on consumer consumption (not business-to-business), I don't even know if a tax would apply in this case.
 
Critter7r said:
Whoa, if there's no income tax, why does TT only get to keep $77? Wouldn't the customer pay him $100, and then pay the gov't $23 on his/her purchase? Then, when TT spends the $100, he pays $23 tax on that.
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I think that, as a business, TT would collect $100 and remit $23 to the government. (He'd probably jack up his price by $23 (or $29) to cover that, so he still earns $100 for his labor.)
 
Gaea said:
That's misleading. He wants to impose a 28% consumption tax.

For someone like me, who already pays nearly 10% sales tax, that would cause prices for everything to skyrocket to obscene levels.

Want to buy a new car? Well, now you get to pay an extra $10,000 on that $35,000 car!

Honestly, Johnson's tax plan is the worst by far. It would destroy the economy.
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That's not necessarily true since you will now be paid the money that had been previously withheld by the I R S to go toward your income tax.
It would then be necessary to repeal the 16th Amendment so they would not reinstitute income taxes.

It is crazy to tax income because deductions are taken for what you spend it for. Logic says collect taxes on what is spent. (The rich would pay more because they spend more.) Our Founding Fathers had it right by not allowing an income tax.
 
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Gaea said:
Half of Americans don't pay anything in income tax as it is. The only people who benefit off Johnson's taxation system are the people who are obscenely rich.
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That's another reason for replacing income taxes with consumption taxes.
 
gmeyers1944 said:
That's not necessarily true since you will now be paid the money that had been previously withheld by the I R S to go toward your income tax.
It would then be necessary to repeal the 16th Amendment so they would not reinstitute income taxes.

It is crazy to tax income because deductions are taken for what you spend it for. Logic says collect taxes on what is spent. (The rich would pay more because they spend more.) Our Founding Fathers had it right by not allowing an income tax.
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A sales tax would be a drag on consumption, and consumption is what drives the economy.

Try this logic - does an income tax really discourage you from earning more money? Now - would a 23% sales tax discourage you from, say, buying a car?
 
I favor libertarians...

Probably vote that way again this year.

However, a national consumption tax or flat tax is a TERRIBLE idea.. terrible.

First.. its a tax on savings. If you have saved your whole life.. and are now retired.. and living off your savings.. that you already paid tax on ... you get to pay tax AGAIN every time you buys something. So you income was taxed and now your savings are taxed when you use them to buy goods and services.

Second: There is no reduction in the IRS.. in fact there is an increase in it. Now you have to track EVERY SALE.. every SERVICE.. not just income. And since the tax is only applied to those things that "have never been taxed".. there has to be a tracking system to make sure that tax.. on EVERY ITEM has been paid. Not just total sales.. but sales of things that are eligible for tax.. and sales not eligible for tax.

It becomes even more complex when you consider the "prebate" idea that people will get money.. PRIOR to paying tax. Can you imagine the hurdles with that one? Here is your check for what we THINK you are going to spend next month.? A smaller IRS? Hardly.. you know have to have a monthly tax return to calculate the next months prebate.

Third: It hurts American business because now the prices of goods and services go up. And because American goods tend to cost more to the consumer (the price break between quality and price) , the price will go up even more since its a percentage of price.

So now.. if you sell an American made roto molded ice cooler for 200 dollars.

And your Chinese competitor sells their cheap version for 100.00 A 30% tax means that the

Chinese cooler costs 130.00

but the America cooler now costs 260.00

So now instead of a cost break of 100. Its now a cost break of 130. Which could make the American cooler non competitive.

In addition.. the added tax may push high dollar luxury items.. to be made out of country to avoid the tax.

We experimented with a luxury tax (consumption tax) on things like yachts years ago.. with the idea of making those wealthy people pay more.

It ended up hurting the luxury yacht business in the US and the US lost more jobs, and more revenue from the job losses than it every collected in luxury tax.
 
cpwill said:
Well, he was claiming that it would uniquely cost him money. It looks like that is not the case.

I'm not against the Fair Tax (though they claim we'd want to go a full year without revenue. That seems to me like a $3.2 Trillion non-starter) per se, I agree it's a better system than what we have in place. It's just not my particular preference.
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I like it better than the current system, but its not my preference either.
 
Critter7r said:
Whoa, if there's no income tax, why does TT only get to keep $77? Wouldn't the customer pay him $100, and then pay the gov't $23 on his/her purchase? Then, when TT spends the $100, he pays $23 tax on that.



Same question as above...
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Yes, thats what I said in the follow up. I wasnt factoring in the customer no longer paying income tax.
 
JohnfrmClevelan said:
A sales tax would be a drag on consumption, and consumption is what drives the economy.

Try this logic - does an income tax really discourage you from earning more money? Now - would a 23% sales tax discourage you from, say, buying a car?
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Not if my paycheck is suddenly 30% larger. Whats the alternative, not have a car? I already pay 7.5% sales tax when I buy a new car. It doesnt dissuade me. Its just the cost of govt. Now if it was 80%, sure. Heck, if my income tax was 80%, I probably wouldnt work. Whats the point in taking home $1 an hour?
 
Interesting that no one seems to care about Hillarys plan to significantly increase taxes, or Trumps to make moderate changes. Is there really nothing concerning about those given one of them will actually win and the consumption tax will never happen?
 
jonny5 said:
Yes, thats what I said in the follow up. I wasnt factoring in the customer no longer paying income tax.
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But the $100 in this example was income for TT, not the customer. It was income for the customer earlier, but since (in this example) there's no income tax, TT's customer didn't pay tax on that $100 until he spent it for TT's services. So now the customer pays TT $100, then pays the gov't their $23 for tax. TT gets $100 for his services and then pays tax when he spends that $100.

Saying that the tax is inclusive of the $100 and TT only gets to keep $77 and then has to pay taxes on stuff when he spends that $77 means that TT didn't earn $100, he only earned $77, which gives (if the current calculation of sales tax is used) a sales tax rate of 29.9%, not 23%.
 
jonny5 said:
Interesting that no one seems to care about Hillarys plan to significantly increase taxes, or Trumps to make moderate changes. Is there really nothing concerning about those given one of them will actually win and the consumption tax will never happen?
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Any changes they make would be small. We've seen them all before, including what you say would be a "significant" increase in taxes. But a consumption tax is a sea change.
 
jonny5 said:
Not if my paycheck is suddenly 30% larger. Whats the alternative, not have a car? I already pay 7.5% sales tax when I buy a new car. It doesnt dissuade me. Its just the cost of govt. Now if it was 80%, sure. Heck, if my income tax was 80%, I probably wouldnt work. Whats the point in taking home $1 an hour?
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The alternative is a cheaper car, as Jaeger pointed out. And all else being equal, people prefer to save, not spend. We spend when we must, regardless of what we earn. A sales tax puts the incentive on savings, not consumption. It would be a drag on the economy, just for that reason.
 
Critter7r said:
But the $100 in this example was income for TT, not the customer. It was income for the customer earlier, but since (in this example) there's no income tax, TT's customer didn't pay tax on that $100 until he spent it for TT's services. So now the customer pays TT $100, then pays the gov't their $23 for tax. TT gets $100 for his services and then pays tax when he spends that $100.

Saying that the tax is inclusive of the $100 and TT only gets to keep $77 and then has to pay taxes on stuff when he spends that $77 means that TT didn't earn $100, he only earned $77, which gives (if the current calculation of sales tax is used) a sales tax rate of 29.9%, not 23%.
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29.9% is tax exclusive. since the fair tax is tax inclusive meaning the tax is included in the price of the item (there is not a separate line item on your receipt) then the rate is 23%.
RIght now sales tax is exclusive.

however TT then also won't pay any tax on anything he buys up to the poverty rate for the size of his family.
so TT appears to be retired. so if TT is married him and his wife would get a pre-bate check of 417 dollars a month.
so he could spend 21,785 dollars or so of tax free money.

if TT is single then he would get 209 dollars a month for the pre-bate.
 
JohnfrmClevelan said:
The alternative is a cheaper car, as Jaeger pointed out. And all else being equal, people prefer to save, not spend. We spend when we must, regardless of what we earn. A sales tax puts the incentive on savings, not consumption. It would be a drag on the economy, just for that reason.
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again Europe has massive income taxes and VAT taxes on top of it and people still spend.
so I guess you are wrong.
 
Critter7r said:
But the $100 in this example was income for TT, not the customer. It was income for the customer earlier, but since (in this example) there's no income tax, TT's customer didn't pay tax on that $100 until he spent it for TT's services. So now the customer pays TT $100, then pays the gov't their $23 for tax. TT gets $100 for his services and then pays tax when he spends that $100.

Saying that the tax is inclusive of the $100 and TT only gets to keep $77 and then has to pay taxes on stuff when he spends that $77 means that TT didn't earn $100, he only earned $77, which gives (if the current calculation of sales tax is used) a sales tax rate of 29.9%, not 23%.
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Im assuming TT would raise his price to make sure he keeps $100.
 
JohnfrmClevelan said:
The alternative is a cheaper car, as Jaeger pointed out. And all else being equal, people prefer to save, not spend. We spend when we must, regardless of what we earn. A sales tax puts the incentive on savings, not consumption. It would be a drag on the economy, just for that reason.
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So does income tax. It causes an increase in the price of everything. So this is drag neutral. You eliminate the drag on the economy that is the income tax, and replace it with the drag on the economy that is the sales tax. And in doing so you widen the tax base, simplify taxes, increase liberty and privacy, tax illegal activity, and save countless hours and money spent on tax compliance.
 
Like bits of all of them, agree with childcare deductions and reducing corporate taxes (as long as companies actually pay near the rate) from Trump's. Like the exit tax, and deductions (though rather everyone gets them) from Clinton's. Like the idea of a sales tax on new good from Johnson's, though want it on non-essentials and with an income tax rather then as a replacement to income tax.
 
ludin said:
again Europe has massive income taxes and VAT taxes on top of it and people still spend.
so I guess you are wrong.
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That proves nothing. How are their economies, compared to ours? Not so great.

It's not that people won't spend at all, it's that there is a disincentive to spend, which is the wrong incentive when economies run on consumption.

So I guess you are wrong. As usual.
 
jonny5 said:
So does income tax. It causes an increase in the price of everything. So this is drag neutral. You eliminate the drag on the economy that is the income tax, and replace it with the drag on the economy that is the sales tax. And in doing so you widen the tax base, simplify taxes, increase liberty and privacy, tax illegal activity, and save countless hours and money spent on tax compliance.
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The tax code could certainly be made simpler, even with an income tax. You don't think that the same forces pushing for tax loopholes wouldn't be pushing for loopholes in a sales tax?

At the heart of it, a tax on consumption is simply a disincentive to spending, whereas an income tax is hardly a disincentive to earning.
 
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