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Thread: Fair Tax Discussion Thread

  1. #1
    Jesus F'ing Christ Glazer's avatar
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    Default Fair Tax Discussion Thread

    This thread is to discuss the Fair Tax. What it is, what it does, and how can it be implemented.

    My congressman is the lead sponsor of the Fair Tax. And the radio talk show host I listen to every day is the author of the fair tax book. So I will try to answer any questions y'all might have.

    In a nutshell the Fair Tax is a national sales tax on all new goods and services collected at the point of sale. It is meant to replace personal and corporate income taxes, capital gains taxes, social security and medicare taxes, payroll taxes and estate taxes.

    http://www.fairtax.org/site/PageServer
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    PixieBob
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    now we got it straight. Thanks

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    For whom nothing is written. Oliveloaf's avatar
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    I appreciate the argument that a "fair tax" is rather unfair to lower-income folks.

    Simply, if you live hand-to-mouth, then you spend 100% or your income (as opposed to investing it) and are taxed on 100% of it.

    If you are doing better, say, and are able to save 40% or all you earn, then you are only taxed on 60% or your income.

    Is this fair? I don't know.

    You can make the point that when that invested money is eventually spent, it will be taxed like any other money.
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    Quote Originally posted by CatInASuit
    How does a Fair Tax work? And who is more likely to try and implement it Republican or Democrat?
    The Fair Tax is a 23% inclusive tax collected at the point of sale. The lead sponsor is a Republican but he is trying to build a non-partisan coalition of sponsors the move the bill further. The bill is gaining popular and corporate support.
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    Quote Originally posted by Oliveloaf View post
    I appreciate the argument that a "fair tax" is rather unfair to lower-income folks.

    Simply, if you live hand-to-mouth, then you spend 100% or your income (as opposed to investing it) and are taxed on 100% of it.

    If you are doing better, say, and are able to save 40% or all you earn, then you are only taxed on 60% or your income.

    Is this fair? I don't know.

    You can make the point that when that invested money is eventually spent, it will be taxed like any other money.
    The bill includes a prebate to all citizens on any tax paid up to the poverty level. Every month you will receive a check for the amount of tax you would pay on the basic necessities, about $400 per person.
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    For whom nothing is written. Oliveloaf's avatar
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    Does this apply to cars and houses?

    This would cripple the auto industry.
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    Quote Originally posted by PixieBob
    The one you mention won't get far either because large corporations control congress and won't want to close their loopholes.
    The large corporations are largely for the fair tax because instead of loopholes they pay no tax. (Which they don't really pay anyway they just pass the cost on to the consumer.)
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    Jesus F'ing Christ Glazer's avatar
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    Quote Originally posted by Oliveloaf View post
    Does this apply to cars and houses?

    This would cripple the auto industry.
    Yes it applies to all new goods and services. So used homes and cars would not be taxed. It would not cripple the auto industry because about 22% of the price of a new car covers all the taxes paid by every vendor in the chain of supply from mining the ore to putting the parts together. This is replaced by a 23% sales tax at the end. Prices will remain virtually unchanged. And you get to take home your whole paycheck.
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    The Queen Zuul's avatar
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    How would it ensure enough tax revenue was still coming in?

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    Oliphaunt
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    I am just a wee bit intellectually challenged when it comes to economics, but aren't sales taxes pretty much the definition of a regressive tax? Making that the only kind of tax in existence doesn't sound at all 'fair' to me.

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    Oliphaunt
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    What would stop any and all business from raising their prices using a newly-implemented Fair Tax as an excuse?

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    Jesus F'ing Christ Glazer's avatar
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    Quote Originally posted by Zuul
    How would it ensure enough tax revenue was still coming in?

    The Fair Tax was designed from the start to be revenue neutral. But when you remove the cost of figuring out how much tax a company owes and and remove payroll and matching taxes from the cost of doing business as well as putting more money in the hands of the workers. The economy will grow like we've never seen before.
    Last edited by Glazer; 30 Mar 2011 at 04:45 PM.
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    For whom nothing is written. Oliveloaf's avatar
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    I do see the argument for this, my favorite being massive simplification of the code.

    What are the odds a this ever actually being implemented?

    I can't see it.
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    Jesus F'ing Christ Glazer's avatar
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    Quote Originally posted by Orual View post
    What would stop any and all business from raising their prices using a newly-implemented Fair Tax as an excuse?
    Market pressure. If you raise your price your competitors will keep theirs down to gain market share just like it works now.
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    What is to stop corporations from cutting wages, using a newly-implemented Fair Tax as an excuse?

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    Quote Originally posted by Glazer View post
    Quote Originally posted by Orual View post
    What would stop any and all business from raising their prices using a newly-implemented Fair Tax as an excuse?
    Market pressure. If you raise your price your competitors will keep theirs down to gain market share just like it works now.
    Or they just have to raise their prices a little less to get the same effect.

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    Jesus F'ing Christ Glazer's avatar
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    Quote Originally posted by Orual View post
    I am just a wee bit intellectually challenged when it comes to economics, but aren't sales taxes pretty much the definition of a regressive tax? Making that the only kind of tax in existence doesn't sound at all 'fair' to me.
    No tax is paid up to the poverty level. The more you make the more you can spend, the more you spend the more you pay. If you don't spend but invest instead the economy grows more people have jobs and more money gets spent.
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    Quote Originally posted by Oliveloaf View post
    I do see the argument for this, my favorite being massive simplification of the code.

    What are the odds a this ever actually being implemented?

    I can't see it.
    Momentum is growing. If we let Congress know that their jobs depend on doing this it can happen. Just vote for people who support the Fair Tax. Write your congressman and tell him your support depends on their support of the Fair Tax.
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    Jesus F'ing Christ Glazer's avatar
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    Quote Originally posted by Orual View post
    What is to stop corporations from cutting wages, using a newly-implemented Fair Tax as an excuse?
    What's stopping them now?As the economy grows skilled employee become a valuable commodity and wages increase. Also the Fair Tax does not get rid of Unions.
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    Jesus F'ing Christ Glazer's avatar
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    Quote Originally posted by Orual View post
    Quote Originally posted by Glazer View post
    Quote Originally posted by Orual View post
    What would stop any and all business from raising their prices using a newly-implemented Fair Tax as an excuse?
    Market pressure. If you raise your price your competitors will keep theirs down to gain market share just like it works now.
    Or they just have to raise their prices a little less to get the same effect.
    Nothing is stopping them from doing this now except that their competitors will keep theirs low to gain market share. The free market really does work. Collusion and price fixing will still be against the law.
    Last edited by Glazer; 30 Mar 2011 at 05:07 PM.
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    Jesus F'ing Christ Glazer's avatar
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    This thread is sure boosting my post count.
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    Oliphaunt The Original An Gadaí's avatar
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    I'm really interested in this concept but I'd have to read more to say whether I'd be in favour of such a system or not. On the face of it, it seems superior to the status quo.

  23. #23
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    not to critisise anyone, but already someone has demonstrated an obstacle by asking if the fair tax is a "regressive tax" they did not get the part about refunds to those under the poverty line which eliminate that problem.

    And nobody sees the black market guys. They have to buy cars and clothes and other stuff so they pay taxes that they were not paying since they made no taxable income. All under the table.

    With a sales tax, everything eventually gets taxed.

    And someone will eventually ask about how this will affect illegal immigrants and then that lobby will be up in arms about illegals having to pay taxes they cant afford because they are not getting those refund checks.

    somewhere, someone will figure out a way to derail this fine idea. I'm sure the IRS Union will be against it for some reason. Probably because they will only be able to lean on companies that are not collecting the sales tax, and will no longer be able to torture innocent citizens and tax cheats. They won't have any more fun.

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    Jesus F'ing Christ Glazer's avatar
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    Quote Originally posted by The Original An Gadaí View post
    I'm really interested in this concept but I'd have to read more to say whether I'd be in favour of such a system or not. On the face of it, it seems superior to the status quo.
    http://www.fairtax.org/site/PageServer

    http://en.wikipedia.org/wiki/FairTax

    There ya go. I remember a couple of years ago that the Irish government was looking into the idea. I don't know what happened with it though.
    Last edited by Glazer; 30 Mar 2011 at 05:31 PM.
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    Quote Originally posted by PixieBob View post
    not to critisise anyone, but already someone has demonstrated an obstacle by asking if the fair tax is a "regressive tax" they did not get the part about refunds to those under the poverty line which eliminate that problem.

    And nobody sees the black market guys. They have to buy cars and clothes and other stuff so they pay taxes that they were not paying since they made no taxable income. All under the table.

    With a sales tax, everything eventually gets taxed.

    And someone will eventually ask about how this will affect illegal immigrants and then that lobby will be up in arms about illegals having to pay taxes they cant afford because they are not getting those refund checks.

    somewhere, someone will figure out a way to derail this fine idea. I'm sure the IRS Union will be against it for some reason. Probably because they will only be able to lean on companies that are not collecting the sales tax, and will no longer be able to torture innocent citizens and tax cheats. They won't have any more fun.
    Also you wont be forced to file a report on almost every detail of your life the the Federal Government every year.
    Last edited by Glazer; 30 Mar 2011 at 05:29 PM.
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    Many experts believe that when you remove the burden of taxes from business that many of the jobs that went overseas will come back. You will have to hide to keep from getting a good job.
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    Quote Originally posted by Glazer View post
    Quote Originally posted by The Original An Gadaí View post
    I'm really interested in this concept but I'd have to read more to say whether I'd be in favour of such a system or not. On the face of it, it seems superior to the status quo.
    http://www.fairtax.org/site/PageServer

    http://en.wikipedia.org/wiki/FairTax

    There ya go. I remember a couple of years ago that the Irish government was looking into the idea. I don't know what happened with it though.
    We ran out any money to do anything.

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    Quote Originally posted by The Original An Gadaí View post
    Quote Originally posted by Glazer View post
    Quote Originally posted by The Original An Gadaí View post
    I'm really interested in this concept but I'd have to read more to say whether I'd be in favour of such a system or not. On the face of it, it seems superior to the status quo.
    http://www.fairtax.org/site/PageServer

    http://en.wikipedia.org/wiki/FairTax

    There ya go. I remember a couple of years ago that the Irish government was looking into the idea. I don't know what happened with it though.
    We ran out any money to do anything.
    This could help with that. Just don't do it before we do. I don't want all the big companies going over there.
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  29. #29
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    Glazer mentions the real reason...that you won't have to explain why your hemmoroid is bigger than it should be, considering your paycheck. And they know this due to the fact that the Office of Homeland Cowardice has a camera in your toilet..kinda like a "CowardCam".

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    What about special cases, like the "sin taxes" on cigarettes and liquor? Or gasoline taxes? Would those be dropped, or simply incorporated?

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    Quote Originally posted by Peeta Mellark View post
    What about special cases, like the "sin taxes" on cigarettes and liquor? Or gasoline taxes? Would those be dropped, or simply incorporated?
    From what I understand the "sin taxes" are there to "encourage" certain behaviors. So they stay in place otherwise everyone would just start driving cross country wile drunk smoking like a stovepipe without a care in the world.
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    A Dude Peeta Mellark's avatar
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    Quote Originally posted by Glazer View post
    So they stay in place otherwise everyone would just start driving cross country wile drunk smoking like a stovepipe without a care in the world.
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    Another point I didn't mention earlier. There is no tax collected on export goods. This would give American products an advantage and help with the trade imbalance.
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    A Dude Peeta Mellark's avatar
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    Makes sense. But do imports have the same tax on them as everything else?

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    Quote Originally posted by Peeta Mellark View post
    Makes sense. But do imports have the same tax on them as everything else?
    Yes, as well as any embedded tax from the producing country that the manufacturer has passed along in the wholesale price. Which encourages you to buy American.
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    PixieBob
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    YES...SCREW CHINA.

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    Quote Originally posted by PixieBob View post
    YES...SCREW CHINA.
    China already has extremely low taxes on exports. As well as devaluing their currency. We need as level a playing field as possible.
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    It sounds very smiilar to VAT in the UK and Europe, which is a flat tax applied to goods which is then passed on to the government. Currently it stands at 20% and was recently raised from 17.5%.

    In general, there is not enough tax raised from it to support the government unless you were going for a very small version. It will proportionally hit the lower paid as they spend more of their money on goods than those who are better off. You will still need an income or corporation tax to try and fund the rest of the government.

    It will lead to a massive second hand market in everything, but it does mean recycling and selling on goods becomes a better option, than just buying new ones each time.

    The best way to get round hitting the lower paid so much is to not apply the Fair tax to those goods which can be considered necessities. eg. staple foods or utilities.
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    Jesus F'ing Christ Glazer's avatar
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    Quote Originally posted by CatInASuit View post
    It sounds very smiilar to VAT in the UK and Europe, which is a flat tax applied to goods which is then passed on to the government. Currently it stands at 20% and was recently raised from 17.5%.

    In general, there is not enough tax raised from it to support the government unless you were going for a very small version. It will proportionally hit the lower paid as they spend more of their money on goods than those who are better off. You will still need an income or corporation tax to try and fund the rest of the government.

    It will lead to a massive second hand market in everything, but it does mean recycling and selling on goods becomes a better option, than just buying new ones each time.

    The best way to get round hitting the lower paid so much is to not apply the Fair tax to those goods which can be considered necessities. eg. staple foods or utilities.
    The Fair Tax is the exact opposite of the VAT. The VAT adds a tax at every step of bringing goods to market. Money that could go to growth and innovation go to the tax man instead. In the Fair Tax plan there is no tax on good and services until they are sold. This reduces cost and increases the amount of money to grow business, hire new workers and improve efficiency.

    The VAT does not bring in enough money because it is a drag on the economy. Wile the Fair Tax takes the brakes off and lets the economy grow thus bringing in more revenue.

    And wile it is true that the poor pay a higher percentage of their income, the rich don't just bury their money in the yard they invest it growing the economy further. And they wont have to hide their money overseas to keep it from the tax man, bringing hundreds of billions back into our economy. The only real way the raise government revenue is to grow the economy. As the economy grows new jobs are created and wages increase thus fewer poor people. We will be begging Mexicans to emigrate instead of trying to stop them. America will once again be the land of opportunity.

    The Fair Tax does not apply to basic necessities it pays a check to each tax payer the amount of tax you would pay on basic necessities each month. This way luxury food items, clothing and huge utility bills on mansions are taxed.
    Last edited by Glazer; 01 Apr 2011 at 04:34 PM.
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    How will investment banking and foreign currency trading be taxed? Will those damned thieves (who produce zero goods and basically create money out of nothing) ever have to pay a penny in tax?

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    Quote Originally posted by hobbler View post
    How will investment banking and foreign currency trading be taxed? Will those damned thieves (who produce zero goods and basically create money out of nothing) ever have to pay a penny in tax?
    Yes when they spend it. Investment banking I wouldn't call theft. They are putting money back into the economy giving business capital to operate and grow. And money traders keep the value of money op which makes your money go further.

    The best thing about the Fair Tax is it's only purpose is to raise money for government operation. Not to punish people you don't like. If people are doing something we don't like, make a law. If it's something that's necessary don't punish them for it. Our current tax code punishes success, the Fair Tax encourages it.
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    Taxation isn't punishment and I'm tired of people calling it that. Taxation is contribution back into society, helping others receive the same benefits the tax-payer received or was eligible to receive.

    The current fiat money system as a whole is broken, and has been since Nixon took us off the gold standard. It's ridiculous. Investment banking doesn't create anything or effectively funnel money into new companies, nor do money traders keep the value of money anywhere. It's all speculation based off of fear mongering. There aren't goods being traded with fluctuating demands or a base value, just number conversion. Say I transferred money into Japan prior to the earthquake, currency got stronger, then I transferred it back out to USD at a profit. Where did the extra money come from or who lost money? It's a shell game played with people's savings or currency in the middle of being transferred. Why do you think the banks still have "holding periods" when inter-institution transfers happen almost instantaneously? For a $20 wire charge, my bank in the US can transfer money internationally and the money will be there within 5 minutes. When I lived in Kuwait, when I deposited $1,000 cash, that $1,000 was immediately available in my account. Same in Thailand. Why does a cash deposit in the US not clear until "sometime during the next business day."?

    Or just look at the way China is blatantly manipulating their currency to maintain a competitive edge longer than otherwise possible.

    Look up Sharia banking for an idea of how the banking industry should be run. Sharia compliant/regulated banks were the least affected banks by the last financial crash due to the restrictions placed on them. There aren't the massive gains of the Western system, but there aren't the massive losses or property issues.

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    Quote Originally posted by hobbler View post
    Taxation isn't punishment and I'm tired of people calling it that. Taxation is contribution back into society, helping others receive the same benefits the tax-payer received or was eligible to receive.

    The current fiat money system as a whole is broken, and has been since Nixon took us off the gold standard. It's ridiculous. Investment banking doesn't create anything or effectively funnel money into new companies, nor do money traders keep the value of money anywhere. It's all speculation based off of fear mongering. There aren't goods being traded with fluctuating demands or a base value, just number conversion. Say I transferred money into Japan prior to the earthquake, currency got stronger, then I transferred it back out to USD at a profit. Where did the extra money come from or who lost money? It's a shell game played with people's savings or currency in the middle of being transferred. Why do you think the banks still have "holding periods" when inter-institution transfers happen almost instantaneously? For a $20 wire charge, my bank in the US can transfer money internationally and the money will be there within 5 minutes. When I lived in Kuwait, when I deposited $1,000 cash, that $1,000 was immediately available in my account. Same in Thailand. Why does a cash deposit in the US not clear until "sometime during the next business day."?

    Or just look at the way China is blatantly manipulating their currency to maintain a competitive edge longer than otherwise possible.

    Look up Sharia banking for an idea of how the banking industry should be run. Sharia compliant/regulated banks were the least affected banks by the last financial crash due to the restrictions placed on them. There aren't the massive gains of the Western system, but there aren't the massive losses or property issues.
    Taxation shouldn't be punishment but with out current system it often is. That's one major reason we need to change it. Weather or not we go with the Fair Tax or not our current system is going to bankrupt us and needs changing. As to the rest of it your talking finance reform not tax reform. I'm not saying we don't need any finance reform that's just not what this thread is about.
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    It's one in the same. The investment and foreign exchange bankers play off of government created agencies/departments, which, of course, are funded by taxes. Getting rid of any taxation on investments would play into what those crooks want.

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    Investment bankers don't create money out of nothing. The invest it. They give it to other people who start new businesses, buy new equipment, hire more people and develop new and better products. All of which they get a share of for putting up the money. If you don't tax their (or those of anyone else) profits then they will invest that money. This is known as a good thing.

    Currency exchange allows people all over the world to trade goods and services. Of course some people speculate on the money market, people speculate on pork bellies too, so what. I know why don't we all institute Sharia Law then no one can trade pork belly futures either. Then we can all be happy killing our daughters for sleeping with whoever they want.

    This thread is about one way or funding the government. If you have a problem with the free market take it some ware else.
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  46. #46
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    No, I've got a problem with small minded people like yourself who think the world is a nice, simple complex place where the market really will limit itself. The issues I'm talking about are related to the Fair Tax, as it will allow the above listed people to completely skate out on contributing back to the societal pool that helped create the opportunities they take advantage of. It's all tied together, along with the insurance companies and damn near anything else financial. A "Fair Tax" isn't going to fix the problems we have, just punish poor people and create even more of a welfare state. What are those $400 checks if not welfare checks to everyone, that they'll become dependent on for buying every day goods?

    Personally, I'd much rather have the taxes come out of my check than watch the price of goods skyrocket and the dollar immediately devalue by 23%. Economic health is based off of consumer spending. Even if people have more money, the immediate jump in price of goods will cause a perceived extra cost. Best example is the transition to the Euro in Germany, where prices changed from 1DM to 1 Euro even though the DM was approximately 50% the value of the Euro. Spending plummeted and Germans still aren't convinced it was a good idea to change. Especially since their country is pretty much carrying the Euro at this point.

    I didn't say a single thing about Sharia Law, just that Sharia Banking is a pretty good concept. Prior of getting all derp derp on me, why not do a little research into the system? Your attempt to link me with extremist groups simply because I admire a culture's economic structure is pretty despicable.

  47. #47
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    Dragging this one back to the OP about Fair Tax.

    As far as I can see, the only difference between VAT and Fair Tax is that the latter is only applied to sales to consumers and is not paid at all on B2B transactions. Does this mean that a business would not have to pay tax at all, if the idea is to replace all forms of tax with a Fair Tax.



    Also, I still cannot see how this tax alone will pay for the government, unless the amount of purchases dramatically rises or the amount charged for each purchase goes up as well. Given that the current sales tax averages at 30%, how is cutting it to 23% going to make it work? And surely the tax would be fairer if you didn't have to put in a set of checks and rebates each month to try and provide some relief to the poorer families.
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