The Fair Tax

[Althane]

So, I was driving to swim team, and decided to turn on the radio, to drown out my little brother.

Neal Boortz was on, and was talking about his Fair Tax, which is apparently a flat 23%ish sales tax that will replace every othe tax. As much of a butthead as he can be sometimes (ok, so that was very Ad Homnien of me. Ah well), it sounded pretty good, and I'm looking over the Wikipedia article right now.

Anyone else know anything about this, have comments, better list of pro/cons, and such?

[I_Like_Swordchucks]

Fair tax means basically everyone gets the same tax. In Canada right now, for instance, we have a progressive tax system. The less money you make, the less tax you have to pay. The more money you make, the more tax you have to pay.

I have split opinions about both, and unfortunately I'm operating on an obvious bias in both scenarios. For instance, I'm currently in medical school and have massive expenses and small incomes. For me to get heavily taxed (whereas I currently get little to no tax) would basically break me. However when I actually become a doctor and get my hopefully $250 grand per year job, I'd rather not get heavily taxed as well. In this case I'll get nearly a 50% tax rate and my income gets basically halved.

For the extremely wealthy and the extremely poor, the progressive tax system is good. The rich can afford ways to avoid taxes, and they don't suffer much anyway because they have money pouring out their asses. Poor people actually get to use what money they have.

The people who suffer the most with progressive tax is that middle class of making between 50 to 250 grand per year because they'll lose most of their income to taxes. Two years ago my father got a raise, and ended up actually making less money because the taxes went up more at that point than what his raise did. He would have done better on the fair tax, but a person making only $15 to $20 grand per year does better on the progressive system.

So there's complications in everything. Can you really call it "fair tax" when the world is never fair and not everybody is on the same footing?

[notasfatasmike]

To sum up my opinions: It's a terrible idea, made solely to save rich people money. That's a matter of fact. Mathematically, it tends to hurt poor people, incidentally, although that involves a lot of speculation.

Other problems include the fact that NONE of its supporters can decide what is "necessary" and hence "exempt" from the sales tax. OK, food is necessary: but what counts as "food" and what counts as a "snack item"? People need clothes: but is buying a $200 pair of jeans (or whatever, some really expensive designer thing) exempt, or do they have to pay? It's these questions that need to be answered before i could even think to consider the fair tax "fair".

(Edited twice: once for content, once for punctuation.)

[pictish]

Basically, with a progressive tax system rich people have to pay more. They are not made poor by this, and still live away their happy little lives.

Under a system with a tax like VAT or the fair tax - regressive tax - the poorer you are, the greater the percentage of your income will go to tax.

Now while I hardly love the idea of rich people not getting money they earned or whatever, I find it infinitely more desirable than taxing the poor more than the rich, which makes absolutely no sense.

[Althane]

Yet the rich will be paying more, because they (well, for hte most part) buy more.

I think its called the fair tax because everybody is charged the same percentage, and it doesn't varyon how rich you are, the government still gets 23%ish (heck, let's just call it a quarter) of every dollar you spend.

Hmm, y'know what, I'm going to read his book. I have to write an argumenative paper, why not do it on this?

[ElfLad]

And the thing is that most of the very rich people have loopholes to get out of paying taxes. With sales tax, rich people can't get out of paying it unless they go to another country, and I doubt many want that hassle.

[Fifthfiend]

Originally Posted by Althane

Yet the rich will be paying more, because they (well, for hte most part) buy more.

That's like saying the rich under the current system pay more, because they, for pretty much the entire part, have more money.

I mean true enough as far as it goes, but as a proportion of income, the poor and middle class spend vastly more than do the wealthy. I mean hell, having a huge amount of money that you don't have to spend on anything is basically the definition of wealthy.

[Althane]

Hey, I'm just being the puppet here, repeating the words.

I've thought about it and to make it really fair, it'd be better if it varied according to the income bracket you're in (and if said brackets were changed). Say, a rich person is taxed 50%, while a poor person is taxed more around 15%. Then it'd be a bit more of a "fair" tax.

[notasfatasmike]

If I recall correctly (I've never read Boortz's book, but I have read interviews with him and related items on the FairTax), one of Boortz's major complaints is that the current system is incredibly complicated. I agree with him on that; the fact that the average person cannot do their taxes without a lot of help or a lot of patientence is an indicator that something is wrong with the system. However, I don't think that taxing poor people more and rich people less is a good idea.

Basically what I'm trying to say is that, Althane, I like your ideas and would like to sign up for your newsletter. That, to me, seems like the start of a really good idea, and while it would need a lot of work, it's actually very clever.

UNRELATED POINT: I just remembered one of my other complaints about the FairTax - none of its proponents can ever explain to me how businesses pay taxes, which is a REALLY important question.

[Nikose Tyris]

the only really logical way to deal is in increments, in my opinion. If you earn less than, say, 15K a year and are a single independant, odds are you spend every penny surviving.

If you lead a family of 1 wife 3 kids, and make 60K, you'd be in a tax bracket, but a low tax, maybe 3% of your income.

The way we have it now... My friend Julie, a single mother, makes 22K a year and has 3 kids. Food bank is the only way she can feed her kids, and her eldest voluntarily goes hungry some nights to feed his siblings.

The system is broken badly in Canada right now. there's still not enough assistance out there. Not to mention the retarded things that have to be claimed, like my inheritance GIC interest. -_- bumps me up to a higher tax bracket and costs me end of year.