Fair Tax Monday

Today the State House will take up House Resolution 146 by my friend Rep. Tom Kirby. HR146 urges Congress to enact the Fair Tax and repeal the 16th Amendment.

Discuss how awesome this Resolution is and how fantastic the Fair Tax would be below.

91 comments

  1. Charlie says:

    I saw a lot of folks from the right going nuts on twitter this weekend because of a Senate vote to create a collection mechanism for states to begin to collect sales tax on internet purchases. I’ve stated my position in favor of this many times before, as e-commerce has an inherent advantage given when out of state merchants can charge less than those who invest in our state and locate jobs here.

    That said, for those of you who support the FairTax, riddle me this:

    Will you support (and do you understand that) internet sales will be taxed under a FairTax, and

    A similar proposal is part of the sometimes ongoing “grand bargain” budget discussions to eliminate the mortgage interest deduction. You folks really willing to give that up too?

    • Baker says:

      I support the FairTax, or the Flat Tax, or whatever the heck else can get our tax code down to a level where a human without a law or accounting degree can understand it. (I think Dems could get on board with this if it’s progressive in nature. Easier said than done, particularly with FairTax. One reason why Flat might be easier to get through)

      Taxing internet sales? Sure, what’s the problem?

    • Personally, I’m in favor of a consumption tax. Whether or not that’s the Fair Tax, I don’t know. I honestly haven’t read the book, but from what I understand I agree with it (except for the prebate). I’m one of those that would pay more under a “Fair Tax” than under the current tax system, as our small business (farm) gives us plenty of deductions. I’d lose those in addition to the mortgage interest deduction and the various deductions for the rental house we own. However, it also requires me to spend an inordinate amount of time doing my taxes. (And I even use TurboTax online.) I have no problem with paying sales taxes on internet purchases if that’s what it takes.

      On the other side of the equation though is government spending. We absolutely must figure out a way to cut spending beyond the “well, we’re not increasing spending as much as we were going to”. Every dollar needs to be under the microscope. Cut $5k here, another $5k there, and so on and so forth… eventually it adds up. Sure, that might mean that we’re not able to spend $385k studying the “plasticity in duck penis length”, but I think that’s probably a “need” we can live without, right? When you reduce spending, you don’t need to collect as much.

      • Al Gray says:

        Spending will be cut 40% by one means or another. Our poison will be chosen for us….inflation, default, asset seizures, or some of all of those things.

        Everything else is a distraction, especially deceptively-termed “fairtax” schemes.

        Prepare accordingly. In the case of tax reform you really do have to read the bill within the context of sales/use taxation as it is administered by the states. You have to understand when the bill says the consumer is responsible for the tax, has to keep receipts, is subject to audits, has to pay the tax on employer paid medical insurance premiums (going up 30% to 60% a year), has to pay the tax on 25% to 30% credit card interest to the extent that it exceeds 3%, and has to pay the tax on all kinds of services not taxable under state sales taxes (like city and county payrolls) that state reps either do not know what they are voting on, are trying to deceive, or are pulling a Pelosi in asking the public to accept another “fairtax” bill that has not been written yet.

        The bill the masses and a majority of Georgia Reps yearn for is in the mind of a talk show guy. You cannot find it in print as actual legislation after all of these years.

  2. Jackster says:

    I took a moment to read HB 146. Not sure who I bill my time to, but any how:

    HB 146, Verses 17-19:
    17 WHEREAS, the FairTax would provide every American household with a monthly prebate
    18 equal to the consumption tax spent on purchases up to the federal poverty level so that
    19 Georgians can purchase the basic necessities of life tax-free; and

    The argument I’ve often heard against sales taxes in lieu of income taxes is that poor families would see a relatively higher tax burden than non-poor families.

    Is this prebate supposed to account for the disparity here? Is there a table being set forth that would actually be a workable list of “allowable” basic necessities of life?

    Shouldn’t the level be higher than the poverty level as well? Most benefits programs and tax assessments have 2-3 times the poverty level as their cap.

    • Jackster says:

      My point is basically, if you’re going to fill a mostly useless vote with talking points, you should also include some talking points or language that address concerns for those who may not have voted for you in the past.

    • Charlie says:

      I’ll give you the concept here as argued by the FairTax supporters on the prebate (it doesn’t have a lot of fans in our reader community).

      The FairTax is designed to have one tax rate charged on the final sale of all goods and services, with no “picking the winners and losers” and no special rates for anyone. One tax, one rate. And, in theory you decide how much tax you want to pay based on how much you want to spend.

      the prebate is a fixed amount per individual to offset the taxes that would be paid on the ordinary basket of goods presumed that a person would have to buy during the year (or month?), and each person -rich, middle class, or poor – will be given a check for that amount.

      The theory behind this is that the poor people effectively pay no taxes. Rather than exempting “food”, each person pays tax on their food purchases. But rich people will be buying all steak and lobster (that’s how they roll) while poor people will be buying Ramen. The point is that if “food” were exempt, then the rich would be getting a bigger break off their lobster than the poor people are from their Ramen.

      Everyone pays on everything they buy, but everyone also receives a credit back based on what those in poverty are presumed to pay in tax for the basics.

      • Baker says:

        People that complain that the prebate would be oh so convoluted and complicated seem to be forgetting that the current we’re in is a million times worse than that could ever be.

        You literally fire almost the entire IRS. Some people are retained to mail some checks. I think it’s great.

        • Charlie says:

          No, you don’t fire the IRS. You re-name them and then they target investigating transactions instead of investigating incomes.

          Don’t think for a minute that there isn’t a compliance issue, and that personal scrutiny will be any less under a FairTax than under the current basket of taxes. The focus will change, but the need for collection will remain.

      • Jackster says:

        And so the part that is definately not progressive about it, is after the “basics”, poor people then pay a higher tax relative to their income than non poor people.

        So, if you have a $123 prescription, $100 is the prescription, $23 is the tax. You can see how then the tax is actually regressive for poor people, since the denominator in the tax burden equation is lower for po’ folks than non po’ folks.

        And I think that’s where people tend to say it’s not the best thing since sliced bread.

        • Charlie says:

          Well, another sticking point – it’s not a 23% tax, it’s a 30% tax. (They claim 23% using $100 purchase, $23 tax). On a $123 prescription, $36.90 would be tax, leaving $86.10 for the pharmacy.

          And this mythical “23%” that is really 30% was concocted a almost two decades ago. There’s no way those numbers have withstood the spending added during those last two decades. And they weren’t even real then, but that’s for further down this rabbit hole.

          • Jackster says:

            Well I’m using the #’s from the HB, since that is what our leaders are deciding to go with.

            But the point still stands – any goods (and I assume services) purchased outside of these basics would present a higher burden on families as their income approaches 0.

            Therefore, the limit of the tax burden for po’ folks approaches infinity: The lower the income, the higher the tax burden.

            Conversely, the limit of the tax burden for incomes approaching infinity becomes 0.

            If I could paste equations and graphs, I would.

            • mpierce says:

              Estimating the poverty level at $10000 for an individual:
              A person who makes and spends $10000 paid $0 in net taxes.
              A person who makes and spends $10001 paid $0.23 in net taxes.

              That’s your idea of tax rate approaching infinity?

              (assumes all spending is on new goods and services as used goods are not taxed.)

              • Jackster says:

                Your scenario isn’t set up correctly. Which is very important when doing limits.

                If you make and spend $10000, then arguably, part of it was for “basics” and part of it was for “non basics”. My limit is for the “non basics”.

                If you need a primer on limits, here you are: http://bit.ly/XBQiAm

                In your scenario, you spent $1. You paid $.23. Your income is 10,001. Your tax rate is .23/10001.

                Now, if you spent $1 and paid $.23 and your income was $8,001, then your tax rate is .23/8001. As your income decreases, your tax rate goes up.

                • mpierce says:

                  Your prebate is based on poverty level, not on spending habits. It doesn’t matter whether you spend the money on basics or not.

                  The person earning $8001 and spending $1 receives taxes instead of paying them.

                  • Jackster says:

                    Well, we’re saying it’s both… you get an amount of $$ for common “basic” spending habits, up to what a person at the poverty level would consume.

                    The math is still there evident, as you have offered nothing to upend it, that as your income decreases, your tax rate stays the same, so your tax burden goes up.

                    And, I might add, you happen to get a prebate, which basically shifts the lower limit of your income, but does not do anything for your diminished purchasing power.

                    • mpierce says:

                      that as your income decreases, your tax rate stays the same, so your tax burden goes up.

                      Nope. As a persons spending nears the poverty level, their tax rate nears zero. If their spending falls below the poverty level their tax rate is negative.

          • mpierce says:

            It’s intended to be revenue neutral, not to keep up with our out of control spending. Our current system hasn’t kept up with spending either.

            • Jackster says:

              Mr. Pierce,

              You’re not addressing the actual point there, which is the tax burden is higher for those who make less.

              Making the proposal less likely to pass, given the fact that the repubilcan party does not know how to adequately message, plan, or write policy for poor people.

              • mpierce says:

                Using above poverty level estimate:

                Person makes and spends $0 receives (not pays) $2300 in taxes. How high is that tax burden?

                • Jackster says:

                  So a person that makes and spends $0 receives $2300… are you really saying that this person would make $0 and spend $2300?

                  Why aren’t you willing to engage on how this tax would actually affect poor people?

                  • mpierce says:

                    I didn’t say anything about this person spending $2300. If you read it says “spends $0”. You are the one unwilling to see how the prebate works.

                    • Jackster says:

                      Oh, I get the prebate. I think it’s a little odd you’re saying that a poor person wouldn’t spend $2300.

                      Kind of makes your talking points seem like the only things you have thought about.

                    • mpierce says:

                      It’s an example. If you want that person to spend $2300 fine.

                      Person makes $0 and spends $2300
                      That person paid $529 in taxes and received $2300 in prebates for a net tax of -1771. Is that the hefty tax burden you were looking for?

            • Charlie says:

              “It’s intended to be revenue neutral, not to keep up with our out of control spending”

              Again, you’re quoting your talking points very well, as a true believer should.

              But you’re missing the point that these talking points are nearing a quarter century in age, and haven’t changed a bit. Our revenues and expenses have, significantly. Yet you guys still hold to your mythical 23% number that isn’t, and swear that it’s revenue neutral (also, isn’t).

          • mpierce says:

            it’s not a 23% tax, it’s a 30% tax.

            Inclusive vs exclusive.
            Do you quote the top marginal income tax rate at 39.6% or 66%?

            • MattMD says:

              Do you think the vast majority of people think of sales taxes on an inclusive basis?

              It’s deliberately misleading and I think you know that.

              • mpierce says:

                I don’t really care if it’s quoted exclusive or inclusive as long as the income tax that it is designed to replace is quoted on the same basis. To quote them differently is deliberately misleading.

                • Charlie says:

                  The fact of the matter is that adding the word “inclusive” doesn’t make it a 23% tax. If you buy something for $77 and pay $100, you’re paying a 30% tax rate. I realize the FairTax cultists want to create some new math to claim that this is not the case, but much like the point I argued with the stadium, when people start deliberately misrepresenting numbers to make a case for something my level of caution increases dramatically.

                  • mpierce says:

                    If you take home $77 after paying $23 in income taxes to the Feds, you would be paying the same 30% exclusive rate. But the government and you would both claim it was 23%. According to you, you would both also be creating new math to deliberately misrepresent. Perhaps you should look in the mirror first.

                    • Charlie says:

                      I’m quite ok with the relationship with my mirror. In it I see what is actually there, not just what I want to see.

                      And no, I don’t get to rename the percentages I pay just to make the concepts in a book neat for you.

                      Also, more importantly, almost no one in this country – at any tax bracket – faces an actual effective tax rate near 30%.

                    • mpierce says:

                      Yes they do. Try looking at your latest taxes and quote them on an exclusive basis. And don’t forget to include your payroll taxes as those are included in the FairTax rate. You completely ignore the example above because you know you argument holds no water.

                      FYI, as I have stated before, I have never read the FairTax book.

                    • mpierce says:

                      High School:
                      1st Place individual Cobb County Math Tounament
                      Top Math Team in State
                      8th Place in Georgia AHSME
                      780 Math SAT
                      AP Calculus (BC): 5

                      College:
                      B.A. Mathematics

                • Jackster says:

                  I think we can all agree:

                  If you are seeking to “sell” the Fair tax, it’s a lower tax rate.

                  If you are seeking to do anything other than that, it’s probably a higher #, regardless if you use the word REPLACE or some other qualifier.

          • seenbetrdayz says:

            “There’s no way those numbers have withstood the spending added during those last two decades.”

            Sounds like the problem is spending then.

            Well . . . I guess we already know that.

            Really, it doesn’t matter if they send angels to collect taxes, D.C’s out-of-control. It’s hard to get all heart-broken about revenue shortfalls when the American people are trying to get by, squeezed between inflation at the pumps and grocery stores, and a weak economy.

            We could revamp the entire tax collection system and if they continue to spend more than we make, this debate won’t go away.

            • Al Gray says:

              Georgia HB 146 commends the Fairtax as being revenue neutral, but here Linder is on video admitting that the 23% rate isn’t high enough to be revenue neutral.

        • Baker says:

          But…

          I don’t for a second believe it’s as easy as Boortz likes to make it sound, but a lot of the costs that have gone into making that prescription are embedded taxes. Those are all removed, so the price for the makers come down. Voila, same cost (tugs at collar and makes a kind of errgh sound)…

          Not saying I agree with all that but I think that’s what the hardcore FairTaxers will come back at you with. I haven’t heard this floated but I’d be in favor of a progressive rebate. And now people would be saying “but you’re just making it more complicated again”, [email protected]%, it’s still a million times simpler than what we have now.

          • Charlie says:

            Another problem with the fact that these numbers are based in concept and are over 20+ years old: We’ve made a heavy shift from domestic manufacturing toward a service based economy during this era. As such, there aren’t as many “embedded taxes”, and all industries are not affected equally.

            Your mom & pop service industry has very few embedded taxes, and will see this from their income/spending equation much like it was a flat income tax of 30%, and yet on their spending side of the equation they will still pay the sales tax on goods.

            While it would create an environment where manufacturing would be more cost effective in the US, pretending that it’s not an extra tax on those in the service sector defies the economics faced by them.

  3. saltycracker says:

    No problem with taxing all transactions including cash and barter.
    The government dies not need to encourage debt on property nor does it need to tax that property, tax the activity from it, not the ownership.
    Theoretically the fair tax would be higher to pay for the prebates and all those exclusions our legislators will fight over, forever. These “exceptions” make it an unfair tax with the purpose of building an agency to dole our the money and fail
    in enforcement.

  4. James says:

    I own a business. I can’t wait for the implementation of the Fair Tax (TM) and its business-to-business tax exemptions, as I’ll never have to pay taxes again!

    • Charlie says:

      And you have just described exactly why the IRS won’t go away.

      Instead, those same auditors will crawl up the posterior of every businessman and every individual they suspect of conducting untaxed transactions that aren’t value added. (Which is why a VAT would actually work better, but the FairTax cult thinks VAT’s, which economically work the same net-net, are somehow evil but their FairTax is pure.)

      The taxman won’t go away. He’ll just rebadge under a new agency, and it will be business as usual from the government scrutinizing your activities.

      • gcp says:

        Once again, yes to taxing internet sales under a fair tax. As for enforcement, much of the mechanism is currently in place as we do collect a state sales tax. Under a fair tax the yearly filing of taxes with all its complexity and fraud would be eliminated. “Nonprofits”, the “self-employed”, illegal aliens and criminals would actually pay taxes. As I have stated previously, all of us need food, gas, clothing, medication, housing. Very difficult to avoid these basics and thus avoid the fair tax.

        • Charlie says:

          It amazes me to see the number of people who know there is a significant underground economy, yet somehow seem to think that all these people participating off the grid do all their transactions on the grid.

          With the increase in the amount of taxes to be charged on each transaction will come a new and significant incentive to cheat – or to increase bartering.

          If you think the Feds and/or the states will sit by with status quo enforcement mechanisms and you as an individual will never have to do any compliance again, you are kidding yourself.

          Will it be better than now? Perhaps. Will the tax man be abolished? Never.

          • gcp says:

            The “barter” argument is a weak one. What item will you trade for gas at QT? Perhaps Kroger will let you mop the floor in exchange for a box of cereal. Or maybe CVS will let you exchange a few tomatoes from the backyard garden for medication. Sorry but you can’t “barter” your way out of the fair tax.

            • Charlie says:

              You are kidding yourself if you think folks aren’t creative enough to figure out ways to trade to save 30% off the cost of their purchases (more if you count state sales taxes that would likely rise to 10% or more as states also phase out income taxes).

              We’ve already got one commenter on here demonstrating that incorporating as a business and using a biz credit card is one possible workaround.

              Look further into what actually happens today with food stamp fraud or even better, theft of Tide laundry detergent to use as currency:

              http://www.nytimes.com/roomfordebate/2013/01/14/why-would-drug-dealers-use-tide-as-a-currency

              Again, the cognitive dissonance that you must display to see that this is a problem that taxes the underground economy yet can’t see how those same currently untaxed folks won’t find workarounds absolutely impresses me… but not in a good way.

              • gcp says:

                A biz credit card and a personal credit card would be treated equally at the QT gas pumps. Both purchases are made at QT which is a retail outlet. And that “underground economy” those folks already pay state sales tax, but that’s all they pay. They will continue to make purchases; they will just pay more under the fair tax. No matter how you try, you can’t escape the fair tax. I am still waiting for an explanation on the “barter” argument.

      • mpierce says:

        Which is why a VAT would actually work better

        And there won’t be any investigations/audits with a VAT? One of the advantages of the Fair Tax is that people see what the government is taking from them. When people look at the high price of goods they tend to blame big business without seeing how much of it is actually taxes to the government.

        • Charlie says:

          My my, the talking points are strong with you.

          “One of the advantages of the Fair Tax is that people see what the government is taking from them.”

          Despite the claims from the books and those part of the FairTax movement, there is nothing inherent about hiding the amount of a VAT from the consumer. That is only done because the European VAT laws specifically forbid it. The same could be done with a FairTax. Or not done with an American VAT.

          The number of people that confuse political talking points with economic policy do continue to amuse me however. So let’s keep playing.

          • mpierce says:

            I guess you chose to avoid the question, so I’ll ask it again. Would there be investigations/audits with a VAT?

            And you comment brings up another question. Do you really think the government is going to track the VATs every step of the way to calculate a total tax paid at final sale? I don’t think so.

            • Charlie says:

              My goodness you really are deep into the belief that the FairTax forces purity into an otherwise cruel and viscous world. It’s a tax system, not a messiah, and it doesn’t make the dishonest honest.

              First, yes. There will be audits with the current system, there will be audits under a VAT, and there will be audits under a FairTax despite what your book says. The actual bill says something very different. At no point have I avoided this. Quite the contrary, it’s one of the earliest points I brought up in this thread. Any of you that think there will be a system designed to take in trillions of tax dollars without an audit/compliance mechanism are kidding yourselves to the point of childish delusion.

              And yes, the government will track the purchases at every step regardless if this is a VAT or a FairTax (as they do now on corporate tax returns) for the precise reason given here as one way to potentially evade the tax. They will want to make sure items bought for personal consumption aren’t being embedded into the costs of production.

              And that’s also why they won’t just audit the businesses, they will find a way to audit individuals over this too – those who would be receiving these untaxed purchases. Ask Indy about how that works. He’s read the bill too.

              • mpierce says:

                My goodness you really are deep into the belief that the FairTax forces purity into an otherwise cruel and viscous world.

                I’m under no such belief. You are the one who brought up the VAT and claimed it would be better because the FairTax would involve audits.

                “At no point have I avoided this. Quite the contrary, it’s one of the earliest points I brought up in this thread.”

                That earlier post stating a VAT would also require audits is where exactly because I missed it.

                Any of you that think there will be a system designed to take in trillions of tax dollars without an audit/compliance mechanism are kidding yourselves to the point of childish delusion.

                And when did I make that claim? Are you trying to argue with yourself or some straw man instead?

                And yes, the government will track the purchases at every step regardless if this is a VAT

                Hidden from the consumer. Take a car with thousands of parts. They are not going to track each nut and bolt from each P.O. and document the taxes to inform the consumer what the final tax total was.

                • Charlie says:

                  Reading for comprehension is not your strong suit.

                  You also have no concept of auditing, which is done on every nut and bold, and each P.O. in every business today. That’s this compliance cost that you think you’re getting rid of, but you won’t be, because businesses that have to document every expense today to prepare for income tax audits will have to do so under the FairTax for the sales tax audits.

                  • mpierce says:

                    Again:
                    That earlier post stating a VAT would also require audits is where exactly because I missed it.

                    And when did I make that claim?

                    You also have no concept of auditing, which is done on every nut and bold, and each P.O. in every business today.

                    I didn’t say it wasn’t. The corporation is not the consumer. The costs are hidden from the consumer. A company is going to know they had 3 P.O.’s for 10000 bolts each and what the total tax is. They are not going to know what taxes were paid on the wages and equipment to mine the metal, the taxes involved in forming that metal, the taxes involve with shipping that metal, etc… Those tax costs are embedded in the final product and hidden from the final consumer.

                    • Charlie says:

                      Whether the tax cost is hidden or explicitly labeled is up to whether the government requires it to be hidden or labeled. This isn’t magic, it’s quite easy to make it happen where it is included on any transfer/sale document. Yet you’re totally hung up on it because of the doctrine of the FairTax.

                      I like the “concept” of the FairTax. It’s just the Kool-Aid drinkers can’t separate the reality of the bill, the concepts of the book, nor what is actual policy that can be changed within the current system or the FairTax to make either better or worse.

                      Not understanding that costs are hidden or expressed has nothing to do with your taxation method or collection scheme. It has everything to do with the enabling legislation that is used to put it into law.

    • “I can’t wait for the implementation of the Fair Tax (TM) and its business-to-business tax exemptions, as I’ll never have to pay taxes again!”

      Sales (consumption) taxes are charged to the end user of that particular item / product. My business pays plenty in sales taxes for items we consume (vs resell). Furthermore, never pay taxes again? I assume you never eat out? The full sales tax also applies to prepared meals like Chick-Fil-A, Taco Bell, Applebees, Chili’s, etc.

      • I think he thinks (and I’m not sure this is fully addressed by the Fairtax folks) that as long as he puts it on the corporate credit card and says it is a business expense – no tax.

        And I’ve yet to see a good counter to that argument – if you’re well off enough, you could shift most of your big expenses to a “business” expense – housing, cars, travel etc.

        • Charlie says:

          The mechanism will be the same as it is now. If you charge personal expenses to your business card, and your business gets audited, you’ll pay the tax plus a penalty and possibly face criminal charges.

          The thought that the feds will quit doing this is an empty pipedream. If anything, the enforcement on the business side will get much worse.

          • MattMD says:

            I think an increasing amount of black market ‘opportunities’ would open up for people trying to avoid the retail tax altogether. Just look at what happened with eastern seaboard cigarette smuggling to the north over the last decade or so.

          • But see, here’s the thing. Unless there’s something I’m doing differently, my business credit card still gets charged sales taxes on anything we purchase, unless I’ve given a copy of a tax exemption certificate to a particular vendor. (I think that’s form ST-5 from the Department of Revenue?)

            https://etax.dor.ga.gov/salestax/st3forms/st3_indx.aspx

            Using the restaurant examples above… is someone really going to give a copy of that form to TGI Fridays and ask them to not charge them sales tax on that meal? Just using a business credit card doesn’t automatically exempt you from paying sales taxes. (Or at least our business AMEX doesn’t, nor does our business debit card from SunTrust.)

            • MattMD says:

              I’m guessing he is talking in hypothetical’s since there is no national sales tax at this point. Still, even in the case of a national sales tax it doesn’t seem likely that a retail establishment would simply exempt someone from the national tax just because the credit card said “business” on it.

              Besides, you can get a business AmEx without even being incorporated.

  5. Baker says:

    Along this whole note in general, great special section in the Economist this week about fifty states trying to remain competitive globally and against each other. Worth checking out, great read. You can probably find some online, but the print is where its at.

  6. Al Gray says:

    Wow. This will be very amusing to see. Most of the legislators who vote for that resolution don’t have the faintest idea of what they are about to bring down upon their heads. Are politicians really this politically blind?

    Are they trying to bring the Georgia Democratic Party back from the dead?

    Math and demographics say this will be a very, very unwise vote.

  7. chamblee54 says:

    One good thing about having a blog is writing your opinions about something one time, and then copying them forever. The pictures here make more sense than talk about a fair tax. http://chamblee54.wordpress.com/2010/05/14/the-return-of-the-fair-tax/
    People who quote Mr. Boortz about the fair tax should look at his disclaimer. Squeal got a lot of mileage out of this thing. I suspect he does not really believe it, but knows a good gimmick when he sees one.

    • So essentially your argument is that a radio host you don’t care for wrote a book promoting this idea and you enjoy looking at black and white pictures from the past? 😉

      I’ll counter that with “Ronald Reagan” and “technicolor”. 🙂

      • chamblee54 says:

        Ronald Reagan was an actor. His greatest role was the POTUS. The national debt increased exponentially during his administration. Taxes were cut, and spending increased. Both democrats and republicans were in on the party.
        Technicolor is an obsolete process. The last movie that used it was The Godfather Part II

  8. MattMD says:

    I just don’t get why people still bring up the “FairTax”. Does anybody seriously think a 23-30% national sales tax would have a snowball’s chance of ever passing congress? From what I understand it’s never even made it up for a committee vote.

    Also, what happens with respect to the state/local taxes? If I buy something in Atlanta proper, wouldn’t I be paying a 31%-38% sales tax? I would bet my car that the middle class would get soaked the worse through this nutty idea. Speaking of which, imagine actually buying a car. The taxes would be astronomical considering what the Georgia government has just done with the ad valorem tax.

    Sorry, the idea is just absolutely impractical and is a diversion from serious talk concerning tax reform.

  9. Jackster says:

    To buzz’s last point:

    I’m very glad we have such a resolution as this to really get the base of voters who pay attention to such matters motivated and ready to go campaign, fund raise, and empathize with the rest of us about these issues.

    If only we could figure out a way for more resolutions with such a unifying and marketable message to be presented and voted upon, perhaps we wouldn’t have such a divide between democrats and republicans.

  10. Al Gray says:

    Bug meets windshield at 65 mph. The reps voting for that resolution have not a clue of what they are endorsing, but then the GOP has been mind-melded to fairtax mania for a very, very long time.

  11. Al Gray says:

    Let’s say Georgia spends $1 billion on Medicaid. Let’s say that government goods and services are subject to this 23/30% sales tax (per John Linder and GW Bush’s Tax Reform Commission 26/34%) as the Fairtax book says.

    Let’s suggest that the Reps voting for this resolution define where the new $230 to $340 million a year in Fairtax is coming from. Bear in mind that if the tax is not applicable to government spending, the rate explodes.

    They did read the bill they are promoting didn’t they? If not we need to cue up Demoncrat Speaker Pelosi’s retort “…. we have to pass the bill so you can find out what is in it….” The GOP laying claim to that will be 23/30% or 26/34% priceless.

  12. saltycracker says:

    Red herring distraction to the objective: Debating 23% or 30% (the tax is 30% of the selling price which represents 23% total cost) and semantics comparing the income tax (a percentage of AGI) (net income has additional deductions). Like when the legislators call a check beyond taxes paid a tax cut or unspent budgeted money a real savings.

    I believe Charlie has the best overview except for his confidence in the oversight checks and balances. At least if the process were simplified we might have a chance at a better collection rate than the current exploding underground economy. Unfortunately the legislature is rewarded for exceptions, rules, loopholes and bureaucratic empires.

  13. saltycracker says:

    Red herring distraction to the objective: Debating 23% or 30% (the tax is 30% of the selling price which represents 23% total cost) and semantics comparing the income tax (a percentage of AGI) (net income has additional deductions). Like when the legislators call a check beyond taxes paid a tax cut or unspent budgeted money a real savings.

    I believe Charlie has the best overview except for his confidence in the oversight checks and balances. At least if the process were simplified we might have a chance at a better collection rate than the current exploding underground economy. Unfortunately the legislature is rewarded for exceptions, rules, loopholes and bureaucratic empires.

    • MattMD says:

      So what is going to stop lobbyists from seeking exemptions from a national sales tax? The FairTax guys are just in a fantasy thinking that their idea is somehow magically exempt from human nature.

      As to the underground economy, I read a tax study said that after a sales tax exceeds 10% a significant amount of the population start to engaged in behavior to avoid the tax. How in the world can you possibly reason that an underground economy would not flourish in a world of 38-40% sales taxes (state and federal sales taxes).

      • saltycracker says:

        Cheating will not end. It is increasing exponentially today and the complexity and unfairness encourage folks to get on the train. We only have to turn on the TV and watch the commercials by the cottage industries getting you an unearned piece of the action.

        If folks feel their taxes are somehow fair they have a propensity to pay them. A criticism of the fair tax is an underground economy but a simplified system is easier to police and society is less likely to be sympathetic.

        But don’t sweat it, we have no visionary leaders that will ever pull off a true fair tax. So we are better to spend our time getting off the W-2, 1099 radar, maximizing deductions and lobbying for loopholes. At the end of the day, lawyers, CPA’s and lobbyists will carry our day.

        • MattMD says:

          Are you saying it’s easier to police a larger underground economy?

          I think politicians can reform the tax code and I think there is near-universal agreement that this needs to be done. However, people would never go for 38% national sales taxes. Can you begin to imagine how that would play out in the public arena?

          • saltycracker says:

            Don’t know if the underground economy would be larger than today. The list of occurrences in our weekly lives continues to expand. It is easier to police a clear, uncomplicated code and when every one is treated equally, it is better. Cheaters will continue.

            You might be right on 38% as most folks would rather we have the dozen or so imbedded or other named taxes, even if they totaled up more. Every time our legislators want to raise more money and avoid the appearances of a tax increase, they come up with a new term.

            Again, this debate is just for entertainment as our legislators will never allow anything close to fair.

            Thank you PP for spellcheck !

  14. I just want us to get to the point that we are not taxed multiple times. If you tax income, then quit with the sales tax, property tax, gasoline tax, etc. If you do a consumption tax, then don’t charge other taxes.

    I also do not like the idea of being taxed on income derived from dollars that were already taxed, like paying taxes on interest and after-tax investments. Of course, I wouldn’t mind an option to opt out of Social Security and Medicare, but that is another story. 🙂

  15. Al Gray says:

    Indeed. Had you won the $320 million Powerball pot last weekend and taken the cash option, you would have received $198 million, which would be taxed at 46%. Net of tax of $92 million you would have gotten $106 million. You can give away $5,125,000 of that free of estate and gift tax, but the rest would be hit again with estate taxes north of 50% when you die.

    Bernanke is taking care of the rest with his ZIRP inflation tax.

    Death and taxes are the certainties of life.

    • griftdrift says:

      ” the rest would be hit again with estate taxes north of 50% when you die.”

      Incorrect. Only the portion above the current cap would be taxed.

      And you’re taxed multiple times every time you buy a pack of gum.

      • Al Gray says:

        Your post looks like it agrees with me. Read again what I posted. You can give $14,000 per person away per year without impacting the $5,125,000 (the amount adopted in the 1/3/2013 compromise) gift and estate tax exclusion, but if you have given away the freeby amount, the rest is taxed at escalating rates. The compromise did set a 40% rate, instead of the maximum rate going to 55%.

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