Fair Tax . . . You'd have to be crazy or rich to support this?

Question

Why would anyone support a tax policy that let's corporations off the hook? And here's another tip . . . rich people are rich because the save (invest) more money then they make . . . why would you give the rich tax free income on the money they do not spend when the average American can barely make ends meet . . . let alone save . . . If your making 900k a year you can probably afford to live off of 400K giving you a half million in tax free income . . . If your making 90k per year your probably spending everything you earn on on the basics with an odd vacation thrown in . . . so that's right . . . you have traded in the income that would normally be protected under standard deductions and agree to have it taxed so the guy that makes 900k can have tax free income. Good job. P.S. Common sense will tell you that if something has to be called "Fair" or "True" . . . it's not.

Answer 1

I am personally still looking into the details of the fair tax. I have to say that you have hit upon the only potential downside of the tax. Many upper class tend to have the ability to save more money than the poor, meaning they can stash away more tax-free money.

This may continue the trend of the rich getting richer. I really don't care if the rich get richer, as long as the poor don't get poorer. If everyone benefits, then who cares if the rich make more money off of their savings.

I am still digging through the details to figure out how I am going to get screwed if I support this form of taxation. It does seem to make a lot of sense though, and it will decrease the amount of fraud, paperwork, ect... and put more money into AMERICAS hands.

This was a good post, I was curious of what people thought about the rich being able to stash away money tax free.

Answer 2

I think 35% is a little high, like 20% too high, but the solution to this is simple, quit buying everything you see, and start saving your money.
Then maybe you could be one of those rich people, who invest wisely, and maybe you could save yourself all those capitol gains taxes that he would be saving.
Food and drugs would be exempt, perhaps housing would be exempt.
Seems like a pretty good solution to me.
For instance, whatever the tax was, we would only have to pay it once on things like gasoline.
Now we have to pay taxes on the taxes that are assessed all along the way from crude oil to gasoline.
On your electric bill, you wouldn't still be paying an excise tax that was assessed during the Spanish American war, to pay for that war. Which has been long since paid off, but we are still paying for it.
I don't now, nor have I ever made anywhere near 90k a year, and I still have investments, and manage to live decently, and I have 7 kids.

Answer 3

Even under a Fair Tax system, poor and middle class people would still ultimately pay a lower percentage of their income because deductions for dependents, etc would remain in place. Wealthy people have been taking advantage of loopholes in the current tax system for years because they can afford the lawyers and accountants necessary to do so. A Fair Tax system would get rid of all of the bureaucratic minutia we have now.

I personally advocate a Negative Income Tax, which is a variant of the Fair Tax. NIT would abolish all welfare programs and instead institute a fixed tax deduction system that would result in a guaranteed minimum income for all households.

Everyone pays the same tax rate - 25%. Automatically deduct $10,000 from your tax liability, and another $1,500 for every dependent in your household.

So if you're an average middle class taxpayer making $40,000 a year, your tax liability is $10,000. Minus the $10,000 GMT deduction and the dependent deductions if you have any. So basically income up to $40K would be tax free.

If you are a lower-class person who makes $12,000 a year on minimum wage, your tax liability would be $3,000. Minus the $10K deduction. So you would be getting $7,000 at least as a tax refund, giving you a net after tax income of $19,000.

An affluent household with a $200K a year income would pay $50K in taxes, minus $10K, or $40K (or a 20% real tax rate).

It's more efficient than welfare and it's more equitable because EVERYONE gets it, whether you make $20,000 a year or $2 million.

Answer 4

The fair tax is anything but fair.

I don't know where Joe U pulled his information from but he is 100% incorrect on all of it.

Neither the Fair Tax of 2005 (H.R.25/S.25) nor the Fair Tax of 2007 (HR 25/S 1025) provide for the abolition of all taxes. They eliminate all federal income, estate and capital gains taxes including corporate taxes, but do not eliminate any state income taxes.

The bills claim that the fair tax is 23%, but that is a misnomer. It really is a 30% national sales tax that is in addition to any state and county sales tax that may be in place where you are making your purchase. They come up with that deceptive number by saying that when you by something for $1, you end up paying $1.30 and when you subtract 23% from $1.30, you get back to $1.
Do you really want to pay an extra 30% sales tax on nearly everything that you purchase including gasoline, home heating oil and electricity. Gasoline in my area is now at $3.25 per gallon, the 'fair tax' would raise it to $4.22 per gallon.

The 'fair tax' applies to all government purchases so every highway or bridge that they build will cost 30% more, which means the states will have to raise their taxes to cover those costs.

The 'fair tax' does offer a monthly rebate check, but that is at the level of spending that someone living at poverty level would spend, which would amount to less than $200 per month per person.

Answer 5

Well, I'm certainly not rich ($30,000/yr isn't rich in my book) and I don't think I'm crazy, but I support the FairTax.

First, you speak of "letting corporations off the hook", but corporations don't pay tax, PEOPLE pay tax. Look at it this way: Corporations are made up of people. Say the company you work for has ten people. If the company owes $100,000 per year in tax, you might never personally see that tax bill but the $100,000 paid by the corporation is $100,000 that could have otherwise gone toward employee salaries including your. When expenses like taxes go up for corporations, they don't just take lower profits. They downsize or raise prices or demand concessions from the employee union.

As for rich people not spending money, they may not spend as high a percentage of their income as everyone else and therefore may not pay as high a tax rate. But under the current system, they pay even less. The FairTax replaces not only your federal income tax but also the Social Security / Medicare taxes, which are currently levied at 15.3% on every dime you EARN by working up to $90,000 (there is no standard deduction or exemption to this tax) but on nothing above $90,000 and on NONE of a rich person's investment income. (And I don't buy the argument that your employer pays half that tax for you; see my little rant above about how people pay tax, not companies). Much of the investment income of the rich is subject only to a 15-25% capital gains tax (if even that; rich people can afford to hire financial planners and tax consultants who help them shelter their assets from taxation), whereas the income of your hypothetical person earning $90,000/year is subject to 15.3% Social Security tax PLUS a federal tax rate of around 18% assuming a standard deduction and one exemption.

Anyhow, another thing about investing is that someone will spend that money eventually and pay the tax at that time.

Also, the FairTax does have a "standard deduction" of sorts, whereby everyone will get a check based on their family size which will cover the tax on spending up to the federal poverty level. If you spend less than that, you will actually have a negative tax rate (similar to how the earned income credit works today).

If you're still worried about paying more than the rich folks, toodle on over to http://www.fairtax.org/PDF/FairTaxCalculator.xls and type in your income to see what the difference would be.

A few other points:
The Fairtax greatly reduces the potential for tax fraud (currently rampant).
The FairTax forces illegal immigrants to pay their fair share of taxes.
The FairTax forces drug dealers and other criminals to pay taxes when they spend their ill-gotten money.
The FairTax keeps politicians from passing tax breaks for special interest groups at the expense of the majority of taxpayers.
The FairTax helps people save for college and retirement by not taxing any of the money that is saved.
The FairTax closes tax loopholes that are currently being legally abused by the rich.

A final (and to me the most convincing) argument for the FairTax is that it eliminates the hassle of dealing with tax forms every April 15th.

Answer 6

I'd be very happy making 90k a year!!

I moved out of the US and was told ALL my income was tax exempt up to 85k regardless of where it came from!! I was shocked to learn that tid-bit. Locally I pay taxes but they're a whole lot less than the US and in most cases what I don't report they don't know about.

Now I just visit the USofA. Life can be pretty good elsewhere.

Answer 7

A "fair tax" would be to eliminate ALL present taxes; federal, state, and local including SS tax, real estate tax, sales, tax, fuel tax, etc...ALL taxes.
Then, once the taxes are gone, apply a 35% sales tax on EVERYONE and EVERYTHING....NO exceptions. No BS exemptions, No discounts...everyone, every company, every corporation, every school, every club, every church, everybody must pay the 35% sales tax.
This would result in a lessened tax burden on all and everyone would be paying for what is being used. Revenues would flood into the Federal coffers to be redistributed to the various states and pork barrel projects just like now (until we get the pork out of DC...just wait, it's coming).

Answer 8

Although I agree that the rich should be taxed more then the middle class what I don't understnad about you question is the fact that you state that the 500K is not being taxed. While it might not be taxed to a "fair" level or the richer guy figures out more "write offs" to save on the tax rate if it is income it is going to be taxed. Even if it gets invested in a pre-tax investment or something else like that sometime down the road when it is withdrawn it will be taxed then.

Answer 9

I am not rich or crazy, yet I fully support the FairTax plan and here's why. America was founded on the principle of freedom of choice. If we don't like something, we have the freedom to choose something different.

However, under the current tax code, we have no freedom. The government has a gun to our head as we pick up our paycheck and tells us how much we owe them.

Under the FairTax, you would get your entire paycheck. The the amount you spend in taxes is YOUR CHOICE. You can choose to not give the government more money by not buying anything above and beyond the basic neccessities of life for a certain period of time. Poor people would the CHOICE to spend 0.0% of their income in taxes. Middle class people would have the CHOICE to spend 0.0% of their income in taxes. Rich people would have the CHOICE to spend 10% or 30% of their income in taxes. ( I used numebrs above 0.0 for rich people because we all known that a rich person cannot live with just the basic neccessities of life for any length of time at all.)

Here's another reason I like the plan. While the government has the gun to your head as you pick up your paycheck, the millions of illegal immigrants who are in this country getting paid cash under the table are getting away scot free without paying any taxes. They then take their TAX FREE income and send it home to Mexico for their family to live off of. Under the FairTax, ILLEGALS START PAYING THEIR FAIR SHARE into the system that provides them free health care!

Here's another reason I like the FairTax plan. Under the current system, corporations headquartered in the United States are double taxed for doing business outside the U.S. However, companies outside the U.S. are encouraged to send goods here under trade agreements that lift tariffs and other reasons. This is why companies are leaving the United States. Under the FairTax, corporate taxes would be eliminated making the United States the world's #1 tax haven for companies. Not only would American companies that have left come back. But foreign companies would beign to move their headquarters and operations here creating more jobs and boosting our economy which would increase your pay and give you more spending power on top of your CHOICE to pay taxes or not.

Here's another reason I like the FairTax plan. It's simple. NO MORE LOOPHOLES. People who spend money pay taxes, PERIOD.

While you've made it obvious that you hate the rich, your logic in denouncing this plan does not hold water. Rich people would pay WAY more than poor or middle class people under this plan because they would have more money to spend and their increased spending would create an increase in tax revenue for the government. Rich people would pay more. Illegal immigrants would pay more. Corporations would mover here creating more jobs and giving more people more spending power. Everybody wins under this plan.

I suggest you read the plan again. It appears your blind hatred of the rich clouded your vision of the facts of the plan. So read it again, and think about how it would benefit YOU! Look at how it would give YOU the CHOICE to pay 0.0% of your income in taxes if you so choose to. If you never did read the plan and just heard what you know about it second hand, check out my source below.

Answer 10

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