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Re: I would pay considerably more.

Quote:

Originally posted by hoosier
OK, the Fair Tax proposal is about 23% or less.

Currently, you pay a min. 15% in income tax, plus another 15% FICA/Medicare (employee/employer shares). You're currently playing at least 30%.

If the Fair Tax goes, each month you get a check equal to 23% of the minimum cost of living. If the minimum cost of living is set at $2,000/mo., your check is at least $460.

The selling point of the Fair Tax is the big spenders pay more (perhaps you are one) and little spenders pay less.

Negative - I pay NO income tax right now. Thus, this tax would in no way shape or form cause me to be better off.

Re: Re: I would pay considerably more.

Quote:

Originally posted by KSig RC
You're making assumptions here that don't fit; I'm also not arguing the 'fair tax' but rather placing a general 'flat tax', which with earnings i have from employment and outside sources, non-liquid assets in my name for tax purposes, along w/ my consumption, I would most likely lose money on the deal from what I am told. I am not necessarily representative, and the loss is by no means crippling (or even statistically large), I was merely providing an anecdote to back up Rudey.

Now here's the real question for the Hoosier - doesn't any sort of flat-tax proposal being tied to the 'cost of living' index implicitly tax the lowest-income members of society? Here's the thought - so let's say we go to a 10% flat tax on all purchases, then refund the cost of living at some arbitrary amount. Now, the spending done by the poor for necessities will consume a far larger percentage of their income comparatively, but you're still refunding them the same percentage as the rich. While this seems, in theory, to be "saving the poor" from oppressive taxes, the reality is that what is kept (that 77%) from the taxes will be a disproportionate amount of, say, $22,000 per year than it would be for $220,000/yr. It is correct to say that the 220k will pay much more in taxes (which they already do, i might add), but this is offset by not paying taxes on the part of that income that is NOT spent - and the fact is, in this day and age, a significant portion of that income will be saved, or invested (and these investments are protected under this legislation, no?).

I'm a Republican and fiscal conservative at heart, and even I can see why Republicans would push this legislation. Hoosier, I'm sure you do too - it saves a ton of money for those who don't spend all their wealth, and it penalizes those who cannot keep a balance in the savings account from month to month. The poor are the ones spending all their money each pay period; whether it is for necessities or non-essentials is irrelevant, the fact that they are being taxed for 100% of their income while others are not still remains. That's the reality.

1 - nobody likes the current IRS system. I know of nobody pushing a "flat tax", it's the "Fair Tax Plan" which has the traction.
2 - if you have substantial income, you're already paying a lot of taxes
3 - all people (rich and poor) would receive the identical monthly refund ($460 in my example). This means the poor who now may pay almost no income taxes (due to deductions, earned income credit, etc.) would be paying no sales tax on their first $2000 per month in purchases, AND would pay no FICA taxes either. The poor would be better off with "The Fair Tax" plan.
4 - In addition, it gives the upper income groups more money, which they are likely to spend, buy services and products which lower income groups provide and mame.

It has a lot going for it. Don't confuse it with a flat tax.

Re: Re: Re: I would pay considerably more.

Quote:

Originally posted by hoosier
1 - nobody likes the current IRS system. I know of nobody pushing a "flat tax", it's the "Fair Tax Plan" which has the traction.
2 - if you have substantial income, you're already paying a lot of taxes
3 - all people (rich and poor) would receive the identical monthly refund ($460 in my example). This means the poor who now may pay almost no income taxes (due to deductions, earned income credit, etc.) would be paying no sales tax on their first $2000 per month in purchases, AND would pay no FICA taxes either. The poor would be better off with "The Fair Tax" plan.
4 - In addition, it gives the upper income groups more money, which they are likely to spend, buy services and products which lower income groups provide and mame.

It has a lot going for it. Don't confuse it with a flat tax.

I can't really discuss these points w/ my cursory understanding of the plan, except in theory or generalizations - so here's another question, since you're far better versed in this particular plan:

It seems specious to claim "everyone gets lower taxes! the rich, the poor, everyone!" How is this lower governmental tax intake accounted for in terms of spending cuts? In short - who takes the cuts? Where does this money come from?

As a head of household with tons of mortgage interest and deductions for child care, I wouldn't benefit from a flat tax.

As for the plan hoosier proposes, I don't see how they would keep track of that. Would you receive a check for (using the example) $460 each month? How would that be processed?

While I agree that our tax code should be simplified, I think this is the far extreme.

If I win $100 mil in the lottery someday, I will gladly pay my share of the tax!

Dee

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Originally posted by GeekyPenguin
A flat tax is regressive. It prevents the poor from accumulating wealth.
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Quote:

Originally posted by PhiPsiRuss
Which tax system enables and encourages poor people to accumulate wealth more effectively?

GeekyPenguin. Are you going to answer the question?

maybe you just get an ATM-type card

Quote:

Originally posted by AGDee
As a head of household with tons of mortgage interest and deductions for child care, I wouldn't benefit from a flat tax.

As for the plan hoosier proposes, I don't see how they would keep track of that. Would you receive a check for (using the example) $460 each month? How would that be processed?

Dee

The govt. currently sends out millions of checks (Social Sec., etc.) every month, so an addl. bunch of $460 checks wouldn't be a problem. Or maybe you just get an ATM-type card, and the $460 is put into your account electronicly monthly.

While you would lose the interest deduction and child care, you might save an equal or better amount on your next house (it would sell cheaper, since the lumber, appliances, etc. are not taxed). You lose your child care credit, but you save every place else, long after your kids grow up.

Quote:

Originally posted by madmax
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Originally posted by GeekyPenguin
A flat tax is regressive. It prevents the poor from accumulating wealth.
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GeekyPenguin. Are you going to answer the question?

The kind of tax that doesn't steal from the poor to feed the rich -- aka no tax on the poor. I don't pay any taxes so I don't get why Boomshiqua in the projects has to, it doesn't seem fair.

Quote:

Originally posted by GeekyPenguin
The kind of tax that doesn't steal from the poor to feed the rich -- aka no tax on the poor. I don't pay any taxes so I don't get why Boomshiqua in the projects has to, it doesn't seem fair.

Don't hate on Boomshiqua! She's doing the best she can. :( ;)

What about the home mortgage deduction?

What about the home mortgage deduction? The FairTax has positive effects on residential real estate far beyond this narrow question.

Today’s homeowners, if they itemize (and 70% do not), pay their interest with post-Social Security/pre-income tax dollars. They then pay their principal with post-SS/post-income tax dollars. Those who do not itemize get no advantages at all. Under the FairTax, all homeowners make their entire house payment with pre-tax dollars.

With the FairTax, mortgage interest rates fall by about 25 percent (about 1.75 points) as bank overhead falls; this is a huge savings for consumers. For example, on a $150,000, thirty-year home mortgage at an interest rate of 7.00 percent, the monthly mortgage payment would be $999.12. On that same mortgage at a 5.25 percent interest rate, the monthly payment would be $830.01. Over 30 years, the 1.75-percent decrease in interest rates in this instance would result in a $60,879 cost savings to the consumer.

Finally, first-time buyers save for that down payment much faster, as savings are not taxed.

Under the FairTax, home ownership is a possibility for many who have never had that option under the income tax system. Lower interest rates, the repeal of the income tax, the repeal of all payroll taxes, and the rebate mean that people have more money to spend, and have an increased opportunity to become home owners.

Quote:

You posted a platitude, but didn't answer my question. Try again.

Quote:

Originally posted by PhiPsiRuss
You posted a platitude, but didn't answer my question. Try again.

A progressive tax!

WHEEEEEEEEEEEEEEEEEEEEEEEE!

Quote:

Originally posted by GeekyPenguin
A progressive tax!

WHEEEEEEEEEEEEEEEEEEEEEEEE!

We already have a (f-ed up) form of progressive taxation, right? Whereby percentage-wise, the higher-income brackets pay more than lower brackets?

You need to expound, ace.

The people that propose a flat tax suggest that it start at around 32,000 dollars a year income.

So up to 32,000 a year you would get no tax. After 32,000 you get taxed on the extra amount.

So at $60,000 you get taxed on $28,000.

That seems to benefit the poor to me.

Quote:

Originally posted by James
The people that propose a flat tax suggest that it start at around 32,000 dollars a year income.

So up to 32,000 a year you would get no tax. After 32,000 you get taxed on the extra amount.

So at $60,000 you get taxed on $28,000.

That seems to benefit the poor to me.

That's not a flat tax. Its a single tax bracket with an exemption. It would be a major improvement over what we now have.