H R 115: the "fair tax"

Dittohead not! · Jul 17, 2017

Being considered currently in Congress:

This bill is a tax reform proposal that imposes a national sales tax on the use or consumption in the United States of taxable property or services in lieu of the current income and corporate income tax, employment and self-employment taxes, and estate and gift taxes. The rate of the sales tax will be 23% in 2019, with adjustments to the rate in subsequent years. There are exemptions from the tax for used and intangible property, for property or services purchased for business, export, or investment purposes, and for state government functions.

Under the bill, family members who are lawful U.S. residents receive a monthly sales tax rebate (Family Consumption Allowance) based upon criteria related to family size and poverty guidelines.

Opinions?

Unitedwestand13 · Jul 17, 2017

My opinion: a bad idea that cripples the federal government's ability to govern effectively and it is a tax that would harm people with lower income.

Winchester · Jul 17, 2017

Dittohead not! said:
Being considered currently in Congress:

Opinions?

Sound's like a 1% wet dream.

haymarket · Jul 17, 2017

Dittohead not! said:
Being considered currently in Congress:

Opinions?

the usual tax shift to benefit the rich

PeteEU · Jul 17, 2017

Horrible idea. Flat tax has not worked anywhere, where they have tried it... especially on the scale needed here.

Lutherf · Jul 17, 2017

It's a stepping stone to universal income control. In time, under a system like this, all income would be filtered through the government and individuals would be given vouchers for whatever is deemed a "necessity". We'd be the Soviet Union in a matter of years.

Winchester · Jul 17, 2017

Lutherf said:
It's a stepping stone to universal income control. In time, under a system like this, all income would be filtered through the government and individuals would be given vouchers for whatever is deemed a "necessity". We'd be the Soviet Union in a matter of years.

Not to mention the social engineering regarding purchases. Have something "deemed" not socially acceptable, raise the tax on that item, get some good campaign contributions from an industry group, well lower the tax on their products.

ludin · Jul 17, 2017

Lutherf said:
It's a stepping stone to universal income control. In time, under a system like this, all income would be filtered through the government and individuals would be given vouchers for whatever is deemed a "necessity". We'd be the Soviet Union in a matter of years.

they can do that under the current system.
right now though.

the fair tax actually helps working people and lower income people. for poor people they get net income back. they are able to save and possibly invest and on top of that
they will have their full disposable income.

they are more apt to buy used items rather than new so they wouldn't pay tax on that either.

ludin · Jul 17, 2017

Winchester said:
Not to mention the social engineering regarding purchases. Have something "deemed" not socially acceptable, raise the tax on that item, get some good campaign contributions from an industry group, well lower the tax on their products.

they already do that now I don't see you complaining. they are called sin taxes.

Winchester · Jul 17, 2017

ludin said:
they already do that now I don't see you complaining. they are called sin taxes.

Yes they do already do it but to a limited extent and I can complain about sin taxes if you like. But a "fair tax" (I do so love me Orwellian Doublespeak) opens the door to everything being easily manipulated.

holbritter · Jul 17, 2017

Dittohead not! said:
Being considered currently in Congress:

Opinions?

I admit I didn't read the details of the bill, only the summary, but it sounds fair to me. Be taxed on what you purchase or services? Why would that be a bad thing for people in the lower and middle class?

ludin · Jul 17, 2017

Winchester said:
Yes they do already do it but to a limited extent and I can complain about sin taxes if you like. But a "fair tax" (I do so love me Orwellian Doublespeak) opens the door to everything being easily manipulated.

only if we allow them to do it. the fact is if they attempt to adjust the rate it is clear and is very much noticeable. any manipulation of the system would be quite noticeable as well.
they can't hide behind 100k's pages of tax code.

Winchester · Jul 17, 2017

ludin said:
only if we allow them to do it. the fact is if they attempt to adjust the rate it is clear and is very much noticeable. any manipulation of the system would be quite noticeable as well.
they can't hide behind 100k's pages of tax code.

:lol: Sure they can. If something like this passed, which there is no way in hell it will, it would be completely bastardized inside of 10 years.

Anagram · Jul 17, 2017

I'm not convinced it won't discourage consumption.

longview · Jul 17, 2017

I think if it replaces the income tax, and is not a value added tax.
I am also concerned in how expensive the rebate program would be,
I think the tax should be applied to everything except food and basic housing,
and not have any rebates.
It also should be defined as a final point of sale tax, to keep future politicians from applying the value add tax later.

Crovax · Jul 17, 2017

Anagram said:
I'm not convinced it won't discourage consumption.

Exactly especially since it targets the type of consumption that makes our economy go, middle class disposable income

Crovax · Jul 17, 2017

holbritter said:
I admit I didn't read the details of the bill, only the summary, but it sounds fair to me. Be taxed on what you purchase or services? Why would that be a bad thing for people in the lower and middle class?

Because they are required to spend more of thier income so it becomes a regressive tax

Crovax · Jul 17, 2017

ludin said:
they can do that under the current system.
right now though.

the fair tax actually helps working people and lower income people. for poor people they get net income back. they are able to save and possibly invest and on top of that
they will have their full disposable income.

they are more apt to buy used items rather than new so they wouldn't pay tax on that either.

The problem is that they can't afford to spend it to get it back. I haven't read this "fair tax" bill but the last one had a complicated system of prebates and as bad as that was having rebates is even more unworkable for the poor.

ludin · Jul 17, 2017

Crovax said:
The problem is that they can't afford to spend it to get it back. I haven't read this "fair tax" bill but the last one had a complicated system of prebates and as bad as that was having rebates is even more unworkable for the poor.

they don't have to spend anything. the prebate follows the federal poverty guidelines.

so for instance in 2013 a family the poverty level was. 31,040 the fair tax issues a pre-bate of 23% of that over the course of 12 months.
so a family would get 595 dollars a month in pre-bate.

it doesn't matter how much money you make everyone gets the same prebate. so the family that makes 1m a year gets the same prebate.
as the family that makes 20k.

so lets take that as an example. a family of 4 that is poor. they make 20k and they spend all 20k. they have a tax rate of 20,000(23%)= so their pre-bate tax is 4,600. they get a prebate total of 7,135 dollars a year. so they have an additional net positive of 2,535 dollars.
(this is also if they bought all new items and didn't buy used items (which there is no tax on used items).

so lets take the family that spent 1m dollars. 1m * 23%= 230k dollars in tax. they get the same 7,135 dollar prebate. so their tax bill would be 222k dollars.

they get prebates now however it isn't until the end of the year and they are paying regressive payroll taxes that hurt them more.

ludin · Jul 17, 2017

Anagram said:
I'm not convinced it won't discourage consumption.

look at states that just have sales tax. FL, TX, I think WA. it doesn't discourage consumption at all.
people have more money in their pocket. if I had to pay state income tax on top of sales tax I would be spending less.

ludin · Jul 17, 2017

Crovax said:
Because they are required to spend more of thier income so it becomes a regressive tax

no it isn't. pay roll taxes are more regressive than sales tax is.

RAMOSS · Jul 25, 2017

ludin said:
no it isn't. pay roll taxes are more regressive than sales tax is.

only if it is treated at a higher rate than investment income and long term capital gains . If the income from payroll and the income from capital gains were treated the same, then it would not be regressive.

ludin · Jul 25, 2017

RAMOSS said:
only if it is treated at a higher rate than investment income and long term capital gains . If the income from payroll and the income from capital gains were treated the same, then it would not be regressive.

that has nothing to do with being regressive.
It has everything to do with people need that money now, but instead of getting it now it goes to the government.

under the fair tax they pay 0 taxes up to the poverty level of their family size. meaning they keep everything their make + the prebate that they get.
after that they only pay taxes on any new items they get.

businesses will see huge cost savings in not having to pay payroll taxes themselves (which you pay via lower pay rates).

I'm Supposn · Aug 31, 2017

Dittohead not!, I'm a proponent of the “Fair tax” to be enacted within incremental steps and perceive many serious faults in the drafting of the 115th Congress's HR 25 bill.
Refer to the text entitled “Summary: H.R. 25 — 115th Congress (2017-2018)”.
within
https://www.congress.gov/bill/115th-congress/house-bill/25 .

Transferring Replacing our entire revenues federal taxes derived from federal taxes based upon incomes, to be replaced by a general sales tax in a single step would be extremely imprudent. It should be accomplished by incremental simultaneous reductions of taxes based upon incomes and increasing both the general sales tax and what the summary of the bill describes as the “sales tax rebate”

I believe after one of those incremental rounds, the general sales tax will approach an unacceptable rate that will interrupt, (if not entirely eliminate) further transformation of tax methods.
Our federal taxes system would then be somewhat similar that of most USA states and many foreign nations, we’d have both federal income and sales taxes. There are advantages and no significant disadvantages to having both taxes of with lesser tax rates rather than one of a greater rate.
Much of the same information necessary for administrating or enforcing one of the tax systems are common to both systems, There' little additional collection and compliance costs efforts for one rather than for both systems. That's been the experiences of states which levy taxes on both sales and incomes.
Refer to the first post of thread
https://www.debatepolitics.com/economics/284820-federal-sales-tax-5.html .

If I'm incorrect, sales taxes will not reach an unacceptable rate and federal income taxes will be entirely eliminated.

Respectfully, Supposn

pinqy · Aug 31, 2017

Dittohead not! said:
Being considered currently in Congress:

Opinions?

The Fair Tax proposals are fundamentally dishonest in that the stated tax is the percent of the price plus tax. In the U.S, sales taxes are added afterwards, so that if the price of an item is $100, and the tax is 10%, then the total cost is $110.00. But using Fair Tax math, the total cost is $110, of which $10 is tax, so they would say the tax rate is 9.1%.

Looking at the Bill: “(b) Rate.— “(1) FOR 2019.—In the calendar year 2019, the rate of tax is 23 percent of the gross payments for the taxable property or service."
And "gross payments" are defined as "“(5) GROSS PAYMENTS.—The term ‘gross payments’ means payments for taxable property or services, including Federal taxes imposed by this title."
To show the math, then, the amount of tax T on the price P is:
T = .23(T+P)
T= .23T + .23P
.77T = .23P
T = .299P

So in reality, it's a 30% sales tax. In the District of Columbia, then, which has a 10% sales tax, most goods would have a 40% sales tax on them.

And let's look at the prebate. I did the math, and assuming all families of size 2 or more include a married couple, the monthly prebate for 2017 would be
Size prebate
1 $231.15
2 $462.30
3 $542.42
4 $622.53
5 $702.65
6 $782.77
7 $862.88
8 $943.00

on average, yes that would make up for the price increase, but spending would increase as disposable income increases. That's a lot of math I don't feel like doing right now.

H R 115: the "fair tax"

master political analyst