[RetiredNavy]

What do the experts in this room view about changing our Income Tax to the Fair Tax.

[Ken 297]

Fair tax by whose definition? The following is a little long but makes the point about tax cuts.

Let's put tax cuts in terms everyone can understand.

Suppose that every day, ten men go out for beer and the bill for all ten
Comes to $100.
If they paid their bill the way we pay our taxes, it would go something
Like this:

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.

So, that's what they decided to do.

The ten men drank in the bar every day and seemed quite happy
With the arrangement, until on day, the owner threw them a curve.
"Since you are all such good customers," he said, "I'm going to reduce
the cost of your daily beer by $20."Drinks for the ten now cost just $80.

The group still wanted to pay their bill the way we pay our taxes so the
First four men were unaffected. They would still drink for free. But
What about the other six men - the paying customers? How could they divide
The $20 windfall so that everyone would get his 'fair share?'
They realized that $20 divided by six is $3.33. But if they subtracted
That from everybody's share, then the fifth man and the sixth man would
Each end up being paid to drink his beer.
So, the bar owner suggested that it would be fair to reduce each
Man's bill by roughly the same amount, and he proceeded to work out the
Amounts each should pay.

And so:

The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 inste ad of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four continued
To drink for free. But once outside the restaurant, the men began to
Compare their savings.

"I only got a dollar out of the $20,"declared the sixth man. He pointed
To the tenth man," but he got $10!"

"Yeah, that's right," exclaimed the fifth man. "I only saved a dollar,
too. It's unfair that he got ten times more than I!"

"That's true!!" shouted the seventh man. "Why should he get $10 back
when I got only two? The wealthy get all the breaks!"

"Wait a minute," yelled the first four men in unison. "We didn't get
anything at all. The system exploits the poor!"

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn't show up for drinks, so the nine
Sat down and had beers without him. But when it came time to pay the
Bill, they discovered something important. They didn't have enough money
Between
All of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how our
Tax system works. The people who pay the highest taxes get the most
Benefit from a tax reduction. Tax them too much, attack them for being
Wealthy, and they just may not show up anymore. In fact, they might
Start drinking overseas where the atmosphere is somewhat friendlier.


For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible.

[Emland]

This is what retirednavy was referring to

Americans For Fair Taxation: FairTax.org

[RetiredNavy]

This is a great example on the current tax laws. The Fair Tax law is the attempt to remove all income tax with a flat sales tax rate on goods.

[NeedKarma]

I wonder how the ultra rich will find loopholes and shelters there. But you know they will.

[RetiredNavy]

I knew that would come out. It is amazing how jealous people of others successes. I am by far rich, but I was raised that you get what you earn through hard work or your family.

Facts, The top 5% of wage earners pay 50% of all personal income tax for the Federal Government. Why does it seem fare to take someone's money if not equally. We claim to be moral and ethical but what is moral and ethical in taking something you did not earn in the first place. I think that is stealing under the preface of law.

U.S. Income Tax Burden

[RetiredNavy]

The FairTax:

Abolishes the IRS
Closes all loopholes and brings fairness to taxation
Ensures Social Security and Medicare funding
Brings transparency and accountability to tax policy
Allows American products to compete fairly
Reimburses the tax on purchases of basic necessities
Enables retirees to keep their entire pension
Enables workers to keep their entire paycheck

[mr.yet]

The U.S. Constitution provides (in part):

The Congress shall have power To lay and collect Taxes, Duties, Imposts and Excises [.. . ] but all Duties, Imposts and Excises shall be uniform throughout the United States [.. . ][1]

The Constitution also provides (in part):

Representatives and direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers [.. . ][2]

The Constitution further provides:

No Capitation, or other direct, Tax shall be laid, unless in proportion to the Census or Enumeration herein before directed to be taken.[3]
The power to impose taxes (whether deemed direct or indirect taxes) is granted by Article I, section 8, clause 1. Indirect taxes (or "excises," in the parlance of the text of the Constitution) are required to be geographically uniform, according to Article I, section 8, clause 1 and the court decisions interpreting that provision (see Knowlton v. Moore
[4] and Flint v. Stone Tracy Co.[5]).

Article I, section 2, clause 3 and Article I, section 9, clause 4 of the Constitution states that all direct taxes are required to be apportioned among the state's population. This essentially means that the dollar amount of direct taxes imposed on the taxpayers in any given state is required to bear a relationship to the total dollar amount of direct taxes imposed in the entire nation that is equal to the ratio of that state's population to the total population of the nation.

Definitions of proportion

• the quotient obtained when the magnitude of a part is divided by the magnitude of the whole
• magnitude or extent; "a building of vast proportions"
• give pleasant proportions to; "harmonize a building with those surrounding it"
• symmetry: balance among the parts of something
• adjust in size relative to other things
• harmonious arrangement or relation of parts or elements within a whole (as in a design); "in all perfectly beautiful objects there is found the opposition of one part to another and a reciprocal balance"- John Ruskin



So a fair tax would have to be the same for everyone, every business and entity, etc.

Might work, but I doubt the Fed and the IRS will give up control.

[RetiredNavy]

I so agree. It is interesting that many complain how much control the Government has but they do not want to change this control. By taxing income the Government controls the individual contributions through earned income. Where as under the Fair Tax the individual controls their contribution by what they spend.

The top 20% will still be paying the bulk of the tax bill but they control the amount. For example is the Federal tax is 10% on finished good and a person buys a 70,000 car, they will pay 7,000 in Federal taxes. If people like me bought a 20,000 dollar car then I will pay 2,000 in Federal Tax. The great thing is if I think pay 2,000 in Federal Taxer is too much then I just buy a cheaper car.

[mr.yet]

There lays your problem, " Finished Goods" the Fed would want to even tax the production of goods like the current do. Now the proportion part is not equal.

[magprob]

Fair tax by whose definition? The following is a little long but makes the point about tax cuts.

Let's put tax cuts in terms everyone can understand.

Suppose that every day, ten men go out for beer and the bill for all ten
comes to $100.
If they paid their bill the way we pay our taxes, it would go something
like this:

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.

So, that's what they decided to do.

The ten men drank in the bar every day and seemed quite happy
with the arrangement, until on day, the owner threw them a curve.
"Since you are all such good customers," he said, "I'm going to reduce
the cost of your daily beer by $20."Drinks for the ten now cost just $80.

The group still wanted to pay their bill the way we pay our taxes so the
first four men were unaffected. They would still drink for free. But
what about the other six men - the paying customers? How could they divide
the $20 windfall so that everyone would get his 'fair share?'
They realized that $20 divided by six is $3.33. But if they subtracted
that from everybody's share, then the fifth man and the sixth man would
each end up being paid to drink his beer.
So, the bar owner suggested that it would be fair to reduce each
man's bill by roughly the same amount, and he proceeded to work out the
amounts each should pay.

And so:

The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 inste ad of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four continued
to drink for free. But once outside the restaurant, the men began to
compare their savings.

"I only got a dollar out of the $20,"declared the sixth man. He pointed
to the tenth man," but he got $10!"

"Yeah, that's right," exclaimed the fifth man. "I only saved a dollar,
too. It's unfair that he got ten times more than I!"

"That's true!!" shouted the seventh man. "Why should he get $10 back
when I got only two? The wealthy get all the breaks!"

"Wait a minute," yelled the first four men in unison. "We didn't get
anything at all. The system exploits the poor!"

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn't show up for drinks, so the nine
sat down and had beers without him. But when it came time to pay the
bill, they discovered something important. They didn't have enough money
between
all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how our
tax system works. The people who pay the highest taxes get the most
benefit from a tax reduction. Tax them too much, attack them for being
wealthy, and they just may not show up anymore. In fact, they might
start drinking overseas where the atmosphere is somewhat friendlier.


For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible.

WOW! That gave me a hangover !

[inthebox]

It seeems like a great idea.

You, the consumer, have total control over what you want to pay in taxes.

This coincides with capitalism and the free market, not socialism, or a certain segment of the population creating and lobbying for tax breaks or deductions/credit that influence each one of us.

I just so happen to start reading Thomas Sowell's "Basic Economics."

Can you refer other sites that have counter arguments or point to some disadvantages?

It almost sounds too good to be true.