H R 115: the "fair tax"

ludin · Sep 6, 2017

Dittohead not! said:
They don't pay income taxes. Payroll taxes are more than 10%, and go to the "general fund" just like income taxes do.

Do you even know the difference?

payroll taxes are an estimate of what your income tax will be. the majority of the time payroll taxes are higher than your actual income tax. you over pay.
at the end of the year you file your taxes what you paid in payroll vs what you should have paid income tax.

payroll tax schedules are complicated messes. people don't realize how regressive payroll taxes are.

I'm Supposn · Sep 6, 2017

ludin said:
Do you even know the difference?

payroll taxes are an estimate of what your income tax will be. the majority of the time payroll taxes are higher than your actual income tax. you over pay.
at the end of the year you file your taxes what you paid in payroll vs what you should have paid income tax.

payroll tax schedules are complicated messes. people don't realize how regressive payroll taxes are.

Ludin, Regaeding the FICA payroll tax:

I'm Supposn said:
FICA taxproposal:

FICA is the most regressive federal tax. It’s particularly a burden upon the working poor and theirdependents. …
… This proposal would not increase net taxes upon the working poor and their dependents but due to the greater base of taxes upon USA’s general sales rather than upon payrolls, it increases federal revenues available for Social Security and Medicare. It would effectively reduce the net aggregate taxes levied upon employers, (i.e. it’s effectively a reduction of taxes upon enterprises); it effectively increases the net taxes levied upon all individual’s incomes not subject to FICA payroll taxes. ...

I'm Supposn · Sep 6, 2017

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Transcript of post #74:

blueliner7 said:
Post 67 has nothing to do with what we were talking about.

I'm Supposn said:

Refer to post #67.

Click to expand...

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Geee; and I thought I was keeping up with this thread.
Respectfully, Supposn

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Transcript of post #72:

I'm Supposn said:
blueliner7 said:

Lord Tammerlain said:

Which means the IRS probably can't shrink as most people think it could with a sales tax

Click to expand...

Once again, maybe. I think it would depend on how much oversight was needed. If the tax code were simplified enough possibly Treasury could handle it without having to maintain the IRS.

Click to expand...

Refer to post #67. Respectfully, Supposn

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Transcript of post # 67:

I'm Supposn said:
Lord of Planar said:

Well, going to a consumption tax or national sales tax would eliminate most duties of the IRS, shrinking that part of the government.

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Lord of Planar, many governments have both a sales tax, (which beyond USA's borders is likely to be a value-added tax), and an income tax. The reason that collection and compliance expenses and efforts are not of great increased costs for both as opposed to only one of the taxes is due to their shared use of commonly required data and tasks.

To the extent that income tax rates are reduced and replaced by increased sales tax rates, the numbers of individuals subject to income taxpayers are also reduced. The reduction will always be from the lowest income bracket of income taxpayers. Income tax collection costs per capita are less for lesser income earners. Although much fewer persons will be pay federal income tax, this will not be the significant reduction of IRS's collection costs and pervasiveness that fair-tax proponents are hoping for.

The replacing sales tax will be collected by all commercial enterprises. To the extent that reductions of income tax rates better enable simpler tax regulations, it will also enable some reduction of income taxpayers' compliance costs and efforts. Only the smallest enterprises will perceive significantly less IRS intervention.

Respectfully, Supposn[/QUOTE

What if...? · Sep 7, 2017

Lord Tammerlain said:
Lower income and lower middle class spend a much larger % of their income on basic necessities. Things that are not optional to live.

As you move up the income scale the % of income spent on basic necessities drop drastically.

So in this system (excluding rebates/prebates)

A single person earning say $100 000 who lived next door (paying the same rent) and lived the same lifestyle as a couple earning $20 000 would pay less tax

And a bunch of that money they didn't lose in taxes would go into the money piles.

Which are already big enough to manipulate markets and mess with governments.

Dittohead not! · Sep 7, 2017

ludin said:
Do you even know the difference?

payroll taxes are an estimate of what your income tax will be. the majority of the time payroll taxes are higher than your actual income tax. you over pay.
at the end of the year you file your taxes what you paid in payroll vs what you should have paid income tax.

payroll tax schedules are complicated messes. people don't realize how regressive payroll taxes are.

I know the difference. You obviously don't. Payroll taxes to fund Social Security and medicare are paid by everyone who gets a paycheck, regardless of their income level. The money goes into the general fund, just like income taxes do. When you file your taxes, and you've not made enough to pay income taxes, you still don't get your payroll taxes back.

ludin · Sep 7, 2017

Dittohead not! said:
I know the difference. You obviously don't. Payroll taxes to fund Social Security and medicare are paid by everyone who gets a paycheck, regardless of their income level. The money goes into the general fund, just like income taxes do. When you file your taxes, and you've not made enough to pay income taxes, you still don't get your payroll taxes back.

actually i know perfectly well. i just explained to you how it works and nothing i said was wrong.
changing the tax structure would not change any of that however it would give working people a better
leg to stand on.

evidently you don't approve of that.

I'm Supposn · Jul 9, 2019

Dittohead not! said:
Being considered currently in Congress: Opinions?

Dittohead not!, for another point of view:

I'm Supposn said:
Jaeger19, I'm pleased that you asked this question.
Progressive income taxes are not, (as conservatives wish us to believe), all that progressive. Due to the waivers, exceptions, and exclusions or reductions of tax rates upon favored classes of taxpayers or income sources, the character of our federal individual income tax system's progressive tax rates are less progressive than otherwise and less equitable among income tax payers.

I'm among those believing on that Fair-tax proponents are correct, in aggregate, wealthier individuals would be subject to as much or more net taxes if any proportion of our current progressive income tax system were transformed to a sales tax.

In my opinion, what's problematic are:
(1) I doubt the U.S. Congress would enact and in the future retain sufficient Pretax-refunds to compensate the poor that currently are not subject to income taxes.
(2) I don't believe we can or should attempt to effectively enforce a federal sales tax rate to sufficiently replace all federal revenues due to taxes based upon net incomes, wages, and payrolls, or even upon only individuals' net incomes and wages.
(3) Most Fair-tax proponents insist on the transformation be accomplished in a single step.

In my opinion, #3 should not be considered.
If the federal taxes are incrementally and simultaneously transformed, after one of the incremental steps, sales tax will approach an unacceptable rate and further increases will not be enacted.
If I'm incorrect, all federal taxes upon individuals' net incomes and wages would be eliminated. Conceivably, in that case, all enterprises' taxes upon net incomes and payrolls could also be eliminated.

Respectfully, Supposn

I'm Supposn · Jul 13, 2019

I'm Supposn said:
... Dittohead not! … In my opinion, what's problematic are:
(1) I doubt the U.S. Congress would enact and in the future retain sufficient Pretax-refunds to compensate the poor that currently are not subject to income taxes.
(2) I don't believe we can or should attempt to effectively enforce a federal sales tax rate to sufficiently replace all federal revenues due to taxes based upon net incomes, wages, and payrolls, or even upon only individuals' net incomes and wages.
(3) Most Fair-tax proponents insist on the transformation be accomplished in a single step. ...
... In my opinion, #3 should not be considered. If the federal taxes are incrementally and simultaneously transformed, after one of the incremental steps, sales tax will approach an unacceptable rate and further increases will not be enacted. ... If I'm incorrect, all federal taxes upon individuals' net incomes and wages would be eliminated. ...

Regarding (1), monthly pretax-refunds, (i.e. “prebates”): To the extent that federal revenue derived from taxes directly levied upon wages, (i.e. FICA levied upon employees) are replaced by a general sales tax, “prebates” should only be considered for persons receiving public assistances that are not effectively subject to cost of living adjustments.

Respectfully, Supposn

I'm Supposn · Jul 13, 2019

A suggested plan for incrementally transforming federal individual income taxes to a sales tax system:
Income brackets for individuals' taxes should be annually cost of living adjusted.

Each year, upon advice from the Congressional Budget Office, the Federal Reserve Board, the U.S. Congress shall annually determine:
What portion of the then lowest taxable income bracket or brackets shall thereafter be no longer subject to taxes upon individuals' incomes.

What, (if any) modifications shall be enacted regarding manners, amounts, or rates of provisions for augmenting the incomes of our population's poor.

What if (any) modifications of the federal sales tax rate shall be enacted.

It's my opinion if the federal taxes are incrementally and simultaneously transformed, after one of the incremental steps, sales tax will approach an unacceptable rate and further such transforming of our tax base will be suspended.
If I'm incorrect, all federal taxes upon individuals' net incomes and wages would eventually be eliminated. In that case, all federal taxes levied upon enterprises' net incomes and payrolls might also be eliminated.

Respectfully, Supposn

PirateMk1 · Jul 13, 2019

Dittohead not! said:
Being considered currently in Congress:

Opinions?

A transaction tax that takes smaller bites would be better and hit the upper end of the income spectrum harder. Kept under 2% you would be able to fund all the government so long as the government maintained business friendly policies.

I'm Supposn · Jul 13, 2019

H R 115: the "fair tax":

PirateMk1 said:
A transaction tax that takes smaller bites would be better and hit the upper end of the income spectrum harder. Kept under 2% you would be able to fund all the government so long as the government maintained business friendly policies.

PirateMk1, I assume by “transactions”, you're excluding the trade or sale of goods and service products, (which are usually subject to general sales taxes)?
The questions are if the tax you suggest is politically feasible to pass and enact, and what would be the economic and social consequences of the tax?

I suppose you do not envision the tax be applied to all government provided services? Some government services for which beneficiaries now are paying government's fees? You're considering transfers of ownership titles, contributions, withdrawal and transfers of funds to what, as applicable or not applicable to the transaction tax?

I haven't begun considering your proposal which is worthy of this forum's attention. Great Britain's Stamp Act was similar to what you're proposing. You're suggesting since our Revolutionary War, we come around full circle and enact our own transaction act.

Respectfully, Supposn

H R 115: the "fair tax"

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