Balancing The Budget

[mk 11]

I would prefer consumption.http://www.fairtax.org

That's...not a flat tax.

The reason the flat tax is favored by the ultra-wealthy isn't too hard to understand. It's because it's actually massively REgressive, and not flat. If you tax consumption only instead of income, you are effectively taxing 100% of the income of the lower and middle classes because they spend 100% of their income on consumption, whereas the wealthy spend a much smaller percentage of their incomes on consumption.

[akoff 0]

The reason the flat tax is favored by the ultra-wealthy isn't too hard to understand. It's because it's actually massively REgressive, and not flat. If you tax consumption only instead of income, you are effectively taxing 100% of the income of the lower and middle classes because they spend 100% of their income on consumption, whereas the wealthy spend a much smaller percentage of their incomes on consumption.

while there is some truth to this the numbers are still large. the wealthy (whatever that means) still do spend a vast amount of $ and the fact that they wouldbe taxed will not stop them from spending.

[ShakeZuma 585]

while there is some truth to this the numbers are still large. the wealthy (whatever that means) still do spend a vast amount of $ and the fact that they wouldbe taxed will not stop them from spending.

so you're saying that a change in tax structure would not effect people's spending habits? you may want to rethink your reasoning.

[Roll the Bones 74]

http://www.newyorker.com/reporting/2010/11...fa_fact_cassidyInteresting article on Wall Street questioning it's worth.

[CaneBrain 95]

so you're saying that a change in tax structure would not effect people's spending habits? you may want to rethink your reasoning.

very generous terminology here.

[strategy 4]

can we not make exclusions in a flat tax to mitigate the impact to the lower income people? I really, really like the idea of drastically reducing the number of people filling out tax paperwork, reducing the number of tax games, and all the rest.

[Balloon guy 158]

can we not make exclusions in a flat tax to mitigate the impact to the lower income people? I really, really like the idea of drastically reducing the number of people filling out tax paperwork, reducing the number of tax games, and all the rest.

You mean like a graduated income tax?

[LongLiveYorke 38]

can we not make exclusions in a flat tax to mitigate the impact to the lower income people? I really, really like the idea of drastically reducing the number of people filling out tax paperwork, reducing the number of tax games, and all the rest.

A tax doesn't have to be flat to be simple. Well-defined function of N variables would be just as simple, and it could be as progressive or regressive as one liked.

[Balloon guy 158]

A tax doesn't have to be flat to be simple. Well-defined function of N variables would be just as simple, and it could be as progressive or regressive as one liked. depending on the political party in power at the time

[strategy 4]

A tax doesn't have to be flat to be simple. Well-defined function of N variables would be just as simple, and it could be as progressive or regressive as one liked.

excuse me mr. math, I thought we were just talking about simply employing a gigantor sales tax. don't mind me!

[Skeleton Jelly 2]

excuse me mr. math, I thought we were just talking about simply employing a gigantor sales tax. don't mind me!

Sales tax is only simple to individuals. It can be very complex to BUSINESS.

[Balloon guy 158]

Sales tax is only simple to individuals. It can be very complex to BUSINESS.

If we create a graduated sales tax to protect the poor and make the rich pay their fair share we would simplify the actions needed to raise money.We could have RFD chips implanted in the individuals at birth, and update their information every tax year.When they buy something, a scan of their chip will automatically apply tax to their purchase based on their current social status.

[strategy 4]

Sales tax is only simple to individuals. It can be very complex to BUSINESS.

TRUE or FALSE: having only a sales tax would cut down on blood-sucking tax accountants, tax paperwork

[Balloon guy 158]

TRUE or FALSE: having only a sales tax would cut down on blood-sucking tax accountants, tax paperwork

So raising the unemployment roles is your solution to fixing the tax code?

[Skeleton Jelly 2]

TRUE or FALSE: having only a sales tax would cut down on blood-sucking tax accountants, tax paperwork

Short-term: True.Long-term: False.

[akoff 0]

so you're saying that a change in tax structure would not effect people's spending habits? you may want to rethink your reasoning.

not in a huge way. if you are poor and you spend 100 percent of your income on life needs you will still spend, if you are very wealthy you aren't going to not purchase something because of the tax basis, the only group that would possibly change spending habits is the middle class....but i kind of doubt that would happen. The one group that may consider the cost most is the high earners that haven't become wealthy. if you are in the 125k to 350k per year but just started earning those numbers...you don't have a net worth built up yet to considered wealthy but they may be aware enough to watch the tax value of life extras. but what do i know, this list only includes most everyone i associate with.

[akoff 0]

very generous terminology here.

funny guy, i am pretty comfortable with my understanding on people and spending habits...i will to bet i have much broader view of how people live on different income levels. granted that view doesn't include the 30k and lower group but they are at the 100 percent spend level anyway.

[SAM_Hard8 50]

can we not make exclusions in a flat tax to mitigate the impact to the lower income people? I really, really like the idea of drastically reducing the number of people filling out tax paperwork, reducing the number of tax games, and all the rest.

the fair tax gives a prebate to offset the costs of living expenses.

[dapokerbum 0]

Drug test anyone that is sucking off the governemnt teet. That right there should eliminate about 1/2 of unemployment claims, food stamps, and medicare.Also, I like the idea of raising the age of SS ... but we really just need to get rid of it and let people invest if they want to. Or a better way would be to set it up so that your SS payment coming out of your check each month went to an IRA and as such it would be treated like that. No more of the government taking loans against this money.Eliminate the Federal Reserve.Higher Land tax, less sales tax ( this may be more of a state level taxing and not actually help the federal budget)

[hblask 1]

The way to make the sales tax not regressive is to not charge taxes on necessities -- food, clothes, housing, and whatever else the "necessity du jour" is. If only necessities are taxed, then, by definition, the poor don't pay any taxes, and the richer you are the more you pay. It seems like a simple and politically acceptable solution. The only hard part is the lobbyists fighting to be declared necessities.

[strategy 4]

I want to hear the explanation for why this wouldn't reduce the amount of tax prep and collection infrastructure.

[Skeleton Jelly 2]

I want to hear the explanation for why this wouldn't reduce the amount of tax prep and collection infrastructure.

Just look at the post above you.Sales tax is regressive!Ok, we'll exempt necessities.I can't live without X! Vote for me because I got you tax-exempt ipods.Isn't the income tax code so ridiculous because people find loopholes and then those loopholes need to be fixed plus powerful people want certain tax favors so they get new rules and it just keeps getting bigger and bigger? Why wouldn't this happen to a national sales tax?

[hblask 1]

Isn't the income tax code so ridiculous because people find loopholes and then those loopholes need to be fixed plus powerful people want certain tax favors so they get new rules and it just keeps getting bigger and bigger? Why wouldn't this happen to a national sales tax?

It might, but that's still a significantly smaller burden on the average person. Only business owners would have to worry about it, and if they were clever, the govt could release the UPCs of all products that are exempt (or not exempt, whichever is easier). Basically it would be by industry though. This year, fast food is a necessity, it's tax exempt. Next year, it's a health hazard, it's taxed. The fast food place collects the money and sends it in at the end of the year.The code would still be ugly and distorted, but most of the complications would be at the legislative level.

[timwakefield 68]

This year, fast food is a necessity, it's tax exempt. Next year, it's a health hazard, it's taxed. The fast food place collects the money and sends it in at the end of the year.

So the government would get to decide at their whim whether entire businesses would succeed or fail? Not only is that obviously unfair, but it would tie government to big business way way closer than they are now. It almost seems Communist, in how closely businesses and government would be linked, and how much control it would give the government over the spending of its citizens. Would all grocery items be "necessary," or only healthy ones? Who decides which is which? "Special interest" times a thousand. Overall a horrible idea, which fortunately never had any chance of being anywhere close to the realm of happening. Note: This isn't meant as an attack on hblask's comments, just that his comments made me realize what is so insane about this idea. Anyway, from Sam's link:

The FairTax Act (HR 25, S 296) is nonpartisan legislation. It abolishes all federal personal and corporate income taxes, gift, estate, capital gains, alternative minimum, Social Security, Medicare, and self-employment taxes and replaces them with one simple, visible, federal retail sales tax administered primarily by existing state sales tax authorities.

Enables workers to keep their entire paychecksEnables retirees to keep their entire pensionsRefunds in advance the tax on purchases of basic necessitiesAllows American products to compete fairlyBrings transparency and accountability to tax policyEnsures Social Security and Medicare fundingCloses all loopholes and brings fairness to taxationAbolishes the IRS

So...the only problem I see there is that, in order for the federal government to continue providing the services it provides (the military, disaster relief, um, doing federal stuff), it would need to tax the balls out of everything "non-essential." New car, only $14,000!! Plus $17,000 sales tax! And that's not even including state sales tax, yay! Stamps $6 each, get 'em before they go to $7! Gas only $14 a gallon! But you kept your whole check so you're rich! Or would gas be a "basic necessity?" And as far as the "refund in advance of the tax on purchase of basic necessities," won't that just make things as complicated as they are now, with write-offs and dependents and exemptions and so on? A basic necessity to one person (an oxygen tank, or heavy winter clothing, or a car,) may either be useless or a luxury to another person (who doesn't live in a cold climate and hates oxygen and rides a subway to work in a city). I don't see this making anything less complicated, or really in any way better.The more I think about it and look at it, the more awful (and thankfully impossible) it looks.

[strategy 4]

So the government would get to decide at their whim whether entire businesses would succeed or fail? Not only is that obviously unfair, but it would tie government to big business way way closer than they are now. It almost seems Communist, in how closely businesses and government would be linked, and how much control it would give the government over the spending of its citizens. Would all grocery items be "necessary," or only healthy ones? Who decides which is which? "Special interest" times a thousand. Overall a horrible idea, which fortunately never had any chance of being anywhere close to the realm of happening.

ohio and probably others already prohibit sales tax on food items. fast food included.