The “Fair” Tax

The “Fair” Tax

Postby Supposn » Wed Apr 20, 2016 9:10 pm

The “Fair” tax; first page of this two page post:

I concur with “Fair” tax proponents’ basic concept replacing federal taxes upon net incomes with a federal sales tax, which include compensating provisions to financially protect the working poor.

[Excluding the comparatively few persons with earning so extremely low as to qualify them for earned income credit, the minimum rate of federal taxes directly paid by the working poor is 7.65% of their gross employment derived incomes for their FICA payroll tax contributions plus approximately 10% of their remaining incomes after their net incomes have been reduced by their per capita deductions and their itemized or standard deductions.
The marginal federal tax rate upon working-poors’ net incomes can currently be considered as approximately 17.65%, which doesn’t include the additional federal taxes, imbedded within the prices for their general purchases.
That’s a high tax rate for the working poor and their dependents that are very often described as not paying federal taxes.]

Although I agree with Fair Tax’s basic concept, my opinions diverge from those that consider themselves as purer or more absolutely committed proponents of the fair tax.

I believe it would be imprudent to attempt transferring our major sources of federal tax revenues within a single day or a single year. The transference should be accomplished incrementally; but I do agree that each incremental step should simultaneously reduce the taxes upon net incomes, and increase both the sales tax and the provisions of federal law that would compensate the working poor for their net increased federal taxes.

I believe that after one of the incremental steps, the sales tax will approach an unacceptable tax rate and further transfers of tax revenue sources will have to be discontinued. If I’m incorrect, all U.S. federal taxes upon net incomes will be eliminated.

Refer to the second page of this two page post.
Respectfully, Supposn
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Re: The “Fair” Tax

Postby Supposn » Wed Apr 20, 2016 9:28 pm

The “Fair” tax; second page of this two-page post.

Enacting a Fair Tax.
The first incremental step or steps to enact a fair tax should be the extremely significant reduction of our FICA payroll tax.

Within the first of the incremental steps to enact a “Fair tax” I propose severely reducing the payroll tax for FICA. FICA is the most regressive of all federal taxes and it’s proportionally of the greatest burden to USA’s working poor and their dependents.

I’m a proponent for the entire elimination payroll taxes specifically earmarked to fund entitlements that are more of benefit to our entire nation rather than to narrowly favoring only employees and possibly their dependents. The political advantage to replacing FICA revenue earmarked for Medicare and other such programs with a general federal sales tax is to provide the funding of these broad entitlements from a tax base larger and broader than our nation’s payrolls.

I additionally propose within this first incremental step that we reduce the portion of FICA payroll taxes earmarked for social Security retirement and long term disability by one half and continue this policy of employees and employers each contributing one quarter of the funding revenues for such programs that more narrowly favor employees and possibly their dependents. The remainder of costs should be funded by a general federal sales tax.

These programs are of significant economic benefit to our entire nation but they never were or could have been properly and entirely funded only by employees and their families. Now rising costs of retirement programs are further beyond the total of employees plus employers funding.
The advancements of medical technology extend life spans but it still has not sufficiently improved the life quality of those extended years. We should not extend the minimum required retirement age or reduce retirement benefits but retirees extended life spans do require additional funding.
Those who complain of retirement programs’ rising costs are complaining because people are living longer. I’m told that in some primitive societies they just they just encourage their elderly to die.

This first act to transfer our tax revenue source by significantly reducing the FICA payroll tax, (i.e. the most regressive of all federal taxes) should indicate the U.S. Congress’s sincerity to compensate the working poor for the additional federal taxes they would otherwise be paying and additionally would put to rest the false conservative arguing the working poor do not fully pay their equitable portion of federal tax revenues.
These proposed transfers of tax revenue sources reducing FICA payroll tax contributions of both employers and employees would not increase employees or employers total federal taxes or reduce net federal tax revenues.

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Re: The “Fair” Tax

Postby Winchester » Thu Apr 21, 2016 8:23 am

Why do you think a sales tax with compensating provisions to financially protect the working poor is better than an income tax with compensating provisions to financially protect the working poor?

Why not just go to a straight property tax, the more real property you own, the more you pay in taxes.
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Re: The “Fair” Tax

Postby spacemonkey » Thu Apr 21, 2016 11:50 am

The money is there, the problem is the Neanderthals waste it on war instead of constructive things. Yep, its really that simple. **==
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Re: The “Fair” Tax

Postby Supposn » Sun Apr 24, 2016 12:03 pm

Winchester wrote:Why do you think a sales tax with compensating provisions to financially protect the working poor is better than an income tax with compensating provisions to financially protect the working poor?

Why not just go to a straight property tax, the more real property you own, the more you pay in taxes.


Winchester, Henry George’s concept of a single tax based upon land may have been more applicable to times when mining, timber, agriculture and ranching were of greater proportions of our nation’s economy.
Why would you believe that if our entire federal revenue were dependent upon the land tax, poor tenants would not need additional financial protection?

Computers make it feasible to for “a small basket” of various taxes not to materially increase aggregate tax overhead for administration and enforcement. There’s significant advantage to diversified sources of tax revenues.

Often when economic or commercial “cycles” reduce tax revenues from one source, other sources are less affected. This is similarly the case when revenues from one source increase significantly more than from other sources.
For the same reason, it’s more difficult for taxpayers to “game” a single tax rather than a few taxes funded by differing tax bases. Regardless of the tax method, taxpayers are tempted and some will attempt to legally avoid or illegally attempt to evade their tax obligations.

I believe dependence upon only a sales tax for federal tax revenue would require an unacceptable sales tax rate but even if it would be politically and economically feasible to do so, such great dependence upon a general sales tax is less preferable than also retaining other tax sources.

Our population’s individuals’ purchases and to a lesser extent our enterprises’ purchases proportional to their actual net incomes, more accurately than their income tax forms’ indications of their true net incomes.

But replacing any portion of income taxes with a sales tax would unjustifiably increase taxes upon the poor. To the extent that we shift any portions of our major tax revenue source from taxes based on net incomes to be replaced by a general sales tax, their must be provisions within and/or outside of our tax system for compensating the poor for their additional tax contributions, (i.e. for the sales taxes they will pay).

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Re: The “Fair” Tax

Postby IndependentProfessor » Mon Apr 25, 2016 2:59 pm

Forgot your source, Supposn.

Here it is.

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