A Day in the life of Joe Republican

[KazooSkinsFan]

* We've already talked about the 16th ammendment problem; I think that flaw is fatal. My other points probably won't seem as big of a deal. This point cannot be stressed enough, I think. I am scared to death to think that I might be taxed on my income and on my purchases, both as sanctioned national projects under the name of "reform."

On the 16th Amendment, I looked it up and they want the repeal but don't tie repeal to the proposal. Certainly you have my total agreement on fighting to repeal it (frankly regardless of the fair tax). But let's assume it's not repealed.

- Today, we have an income tax, there is no (Federal) sales tax
- With passage, there is no income tax, there is a sales tax

I don't understand the logic of how you feel you are safer to have an income tax with the danger of adding a sales tax versus having a sales tax and having the danger of an income tax. Can you explain that?

And again, I strongly, strongly want the 16th gone. I'm just not following how having A and not B rather then B and not A is safer in avoiding A and B.

[KazooSkinsFan]

I agree it is not in itself a tax cut (and is not designed to be), but don't you see the economic benefit of removing all the complexity and inefficiencies (e.g., company's acting to avoid taxes, not be more efficient) of our current code would in fact "cut" taxes?

And it would bring the current cash based economy (since they pay taxes when they spend, not earn) and shift taxes to foreign companies (since taxes are on products sold, not profits of American operations) reducing the portion of taxes being paid by current payers.

Both of these claims are ambiguous, so I'm not entirely sure how to address them.

OK, let me be more explicit then.

On point #1: Inefficiencies and complexity of the current system. Just a few

- Companies have tax accountants and lawyers and collect and track huge amounts of information just to pay taxes
- Companies pay people to structure complicated deals just to avoid taxes, for example, lease back scheme rather then just selling them products.
- Companies make decisions that are not for efficiencies but to avoid taxes, like where to put manufacturing facilities.
- Individuals hire lawyers and accountants to figure their taxes and figure how to minimize them.
- People hold onto stocks they should economically sell to invest in a better returning stock, but don't to avoid paying taxes
- Just read your taxes, all the complexity to fill out the form in the name of "fairness" is inane and in no way improve fairness.
- Taxpayers fund the IRS
- Companies hire lobbyists to influence taxes
- Politicians sell other favors with taxpayer money for the lobbyists and campaign contributions

On point #2: Spreading out the tax base. In other words, assuming the federal government receives the same revenue, adding taxpayers will reduce the burden on current payers.

- Cash economy. Believe it or not waiters and waitressess under report tips (gasp). Your lawn mower guy or snow plow guy operating on cash don't pay taxes (or underreport them). Illegals or legal day workers doing manual labor and receiving cash don't pay income taxes. By going to the fairtax, no one would pay income tax, the money would be received when they spend it. This means all those groups are now taxpayers.

- Foreign companies - Today they only pay taxes on US operations. By paying sales tax they pay the same rate as our companies. They are also now more incented to move operations into the US because there is no tax hit for doing that. Today they would want to keep operations outside the US to minimize their tax hit.

- Foreign tourists, they come they spend, they pay taxes.

- The rich - no more tax hedges, they buy stuff, they pay taxes.

And keep in mind prices will not go up because taxes are already embedded in the price of the products. They are just calculated directly in the price of the product instead of having tax after tax with different collection processes (i.e., inefficiency) driving up the cost of the tax code. For example:

- Corporate taxes, cost of company, in the price of the product already. And the corporate taxes of all the suppliers
- Personal income tax (and social security, medicare, etc.), are clearly a company cost to pay employees and are included in the price of their product.
- Interest tax (on bonds), bondholders know they need to pay tax, so companies have to pay more interest to cover, where does it come from? The price of the product
- Dividend and capital gains taxes - in the end returns must be real gains after taxes, again, product must be priced to provide sufficient return. Other companies pay the same taxes, so it's in the price.

Almost all taxes are already part of the price of the product except a few, like the death tax. We just are taxing the same money over and over and rolling it all into product prices. This is hugely inefficient. The Fair Tax says eliminate all that and just calculate a straightforward, simple tax once.

As a libertarian, this should be in the heart of your understanding. Every cost, including taxes and the cost of collecting taxes and the economic cost of decisions made by taxes are ALREADY in the price of the product. By eliminating all that and making taxes just a straight percentage, we are going to pure economic efficiency. This is the heart of the fair tax.

[Irn-Bru]

On the 16th Amendment, I looked it up and they want the repeal but don't tie repeal to the proposal. Certainly you have my total agreement on fighting to repeal it (frankly regardless of the fair tax). But let's assume it's not repealed.

- Today, we have an income tax, there is no (Federal) sales tax
- With passage, there is no income tax, there is a sales tax

I don't understand the logic of how you feel you are safer to have an income tax with the danger of adding a sales tax versus having a sales tax and having the danger of an income tax. Can you explain that?

And again, I strongly, strongly want the 16th gone. I'm just not following how having A and not B rather then B and not A is safer in avoiding A and B.

Okay, that's what I had thought about the FT, that it would go in effect even though the 16th amendment would not be repealed by its passage. I would feel much better about the FT if this wasn't the case.

The operative word here is "in danger of." Currently the only people talking about a national consumption tax are the FT advocates. I don't consider myself all that much in danger of a national consumption tax being enacted, simply because the federal government is likely to raise taxes in other ways when they do. Imposing a national consumption tax would be a huge injustice to our present system. FT advocates point out that the new tax is replacing another tax, which cancels out its intrinsic injustice.

However, suppose the FT is passed and the 16th amendment stays. Now the government has been given the power to 'legitimately' impose a sales tax, and what is the wording of the 16th amendment that still stands?

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.

At least right now we can argue against the constitutional authority of a consumption tax. How long do you think congress will wait after the FT passes until they start using their right to tax income, granted by the 16th amendment, and do so in addition to the FT?

[KazooSkinsFan]

If you use firefox there's a decent spelling check. It doesn't know a lot of words but at least it gets the obvious ones.

There's also an extension that's called 'Inline Definitions', which gathers definitions from the web without making you open a new tab or window. Between the built-in spell checker and inline definitions, I almost never have to leave the page where I'm writing.

Hey Irn-Bru, indeed, this is a great tool. Thanks! Took me a few minutes to figure out you had to right click to see the tool, it didn't seem like it did anything when I installed it. It would be nice if instructions were on the install page (or linked from it). But once I found it and used it I saw what you meant on how nice it is to be able to get definitions right there. Like you (before the extension) I was always opening another tab.

[KazooSkinsFan]

At least right now we can argue against the constitutional authority of a consumption tax. How long do you think congress will wait after the FT passes until they start using their right to tax income, granted by the 16th amendment, and do so in addition to the FT?

Constitutional authority is ignored now completely, so I don't see that as a benefit. Thanks FDR.

I know what you're saying on the taxes, but I just don't see how the Fair Tax really changes anything since new taxes are added now all over anyway. At least that way the government would have destroyed all other taxes once and people would say "wait a minute, I thought we got rid of all that...." and if they dont' say that nothing is changed.

But we both feel strongly we want the 16th to go away. As I said before regardless of whether the Fair Tax is passed. It's just the door open to buying influence like no other tax (except maybe corporate).