Fair Tax Act

JM485 wrote:

That argument really doesn't hold though, because during a recession as people lose their jobs, income goes down, and corporate profits decrease the tax income decreases...

That argument really doesn't hold though, because during a recession as people lose their jobs, income goes down, and corporate profits decrease the tax income decreases as well.  The business cycle will always dictate tax revenue even under the current system.

TXDirt wrote:

The consumption tax is exactly needed because of everything you just typed out. Let’s just call it a 10% tax on everything. But let’s exclude food...

The consumption tax is exactly needed because of everything you just typed out.

Let’s just call it a 10% tax on everything. But let’s exclude food, healthcare, and housing for a moment.

It’s not a luxury tax. It’s a consumption tax.

You need to look at it differently.

It shouldn’t matter the things you buy. Who cares if it’s a luxury, or a necessity. That’s subjective. Your luxury might be my necessity. And vice versa.

You consumed (purchased) it. You pay a modest federal tax on it.

Lets first look at the starting point.

A. You start with more money because you are not taxed on what you earn. So, benefit immediately to you.

That is unless you prefer to have a smaller bank account. You earned it. You keep it.

Now let’s look at the car situation as an example.

Let’s say you make $100,000 a year. And let’s say I make $500,000 a year.

We are both in the market for a car. The consumption tax says every purchase we make is a 10% consumption tax.

BMW: $100,000

Tax on it: $10,000

Corolla: $50,000

Tax on it: $5,000

Both of us can afford either car.

Because I’m making $500k a year, I can obviously afford either one, so I go for the BMW because that’s what I want.

You, you can also afford either car. Sure, you are stretching your budget but you always wanted one.

What should you do?

Answer: Buy whatever car you want.

The consumption tax gives you choices.

Now, I didn’t get rich by being glitzy, I’ll do just fine with the Corolla. So I decide to buy the Corolla.

Wow! We both get choices.

Now just apply it to everything.

I like to buy fancy knives. I’ll pay 10% on those fancy knives, just the same as you will pay 10% on regular knives off Amazon.

Maybe you want to fly to Europe for vacation. You will pay the same 10% on tickets just like I’ll pay the same 10% staying state side for a staycation.

When it comes to a consumption tax (not a luxury tax) there isn’t one scenario you can provide that will show it to be unfair, or to reduce choice.

It increases fairness, it’s equitable to all, and it gives responsibility and authority over my money back to me. The person who earned it.

TXDirt wrote:

How about the the people down voting this explain why you prefer something else over a consumption tax. And what that “else” is. How is a...

How about the the people down voting this explain why you prefer something else over a consumption tax. And what that “else” is.

How is a consumption tax not equitable to everyone?

People living in poverty will pay very little in tax. The bulk of their income should be going to food and healthcare. Perhaps exclude tax on housing costs. That has to mean like 90% of their income goes to those three things. All that could be untaxed.

The middle class will pay the lions share of all taxes as this is the largest tax base. And they will actually greatly boost the economy and jobs market by having a much larger chuck of money to spend. Now that there would be no need for a payroll tax.

Rich people will pay the most on a per individual basis. They consume the most. That’s obvious.

What part of that don’t you like?

Or is the part about giving the decision and authority over how much you pay in taxes back to the individual tax payer the part you don’t like?

Is it you need to control everyone and every thing?

Please explain…

Carson610 wrote:

 As a person who is paid on a W2 and cannot hide any income I already pay 25-30% federal income tax on every penny I make...

 As a person who is paid on a W2 and cannot hide any income I already pay 25-30% federal income tax on every penny I make. I would much rather only pay tax on money I spend and increase my savings and investments by 25-30%. Also, this will collect tax on all money, no matter how it’s made. 

-MAVERICK- wrote:

Question concerning point number 3 of your previous post. I'm not American, but why should people who work their ass off to become successful have to...

Question concerning point number 3 of your previous post.

I'm not American, but why should people who work their ass off to become successful have to pay more taxes for wanting nicer things like cars, houses, etc.

TXDirt wrote:

Your question though is not logical. Tax money has to come from somewhere. We agree on that. The government is going to take your money. Either...

Your question though is not logical. Tax money has to come from somewhere. We agree on that.

The government is going to take your money. Either at the time you earn it (payroll tax) or at the time you spend it (consumption tax)

The payroll tax takes 100% responsibility and authority over my money from me and instead gives it to a government. In this case the US government.

The consumption tax gives back 100% of that responsibility and authority back to me.

How, you might ask?

Because I control the things I buy and consume. If I want to pay less in taxes, then consume less.

It’s that simple. I have control over MY money  Not a bunch of politicians.

Because of the silly payroll tax, many wealthy people pay little to zero in taxes. There are soooooooo many tax loopholes.

Go straight to a consumption tax and everyone pays their fair share and has 100% control over the money they earned.

No one is stopping a millionaire from buying a Bentley.

You would just pay a % tax on it at purchase.

No different than if I buy a Corolla. I would also pay a tax on it. Same % as the millionaire buying a Bentley. I’m just buying a cheaper car.

Typically those in poverty don’t buy a Bentley. Hence the vehicle they purchase would be a much smaller tax on them.

You could ask the reverse question, why can’t a person in poverty buy a BMW?

Well, under a consumption tax, they absolutely can. That’s totally their choice.

A consumption tax is both fair and responsible and equitable to all.

If a millionaire wants to buy a Corolla because he doesn’t like paying more in taxes then great! More power to him. Or he can buy the BMW. Or buy a used car.

I would love it if I could could be responsible for the money I’ve EARNED. I can decide what I want to buy. And I can ultimately decide how much I want to pay in taxes based on my consumption.

-MAVERICK- wrote:

A person in poverty cannot buy the BMW because he or she either doesn't have the education, skills, work ethic, etc. in order to earn enough...

A person in poverty cannot buy the BMW because he or she either doesn't have the education, skills, work ethic, etc. in order to earn enough money to justify the purchase of said vehicle while the millionaire possesses those things in order to afford it. 

IMO, a millionaire shouldn't have to pay more taxes on the things they consume. 

We have something new in Canada called the luxury tax. It sounds like what you want across the board. 

It targets vehicles and planes above 100k and boats above 250k. 

The luxury tax is equal to the lesser of 10% of the taxable amount of the subject vehicle and 20% of the amount above the price threshold. Buyers are required to pay one of the two taxable amounts, which is calculated as so:

1.The taxable amount multiplied by 10%

2. The amount that results from subtracting $100,000 from the taxable amount and multiplying the difference by 20%

We're liable to pay a tax that is either 10% of the total taxable amount or 20% of the amount above the price threshold, whichever is lower.

Let's you want to buy a car that costs 200k, you would have to first calculate:

1. 10% of the cost (20k).

2. 20% of 100k (the difference between 200k and 100k), which is 20k.

Since they are both the same price, choosing the lowest figure isn't an option, so you'd have to pay 20k in tax.

If the car was 150k then you would be paying 10k in tax since 10% of the total taxable amount (15k) would be lower than 20% of the amount above the price threshold, which for a 150k car would be 10k.

And then: 

"All other improvements (excluding accessibility modifications), additions, taxes, duties, charges, fees and amounts paid in respect of the delivery or importation will be included in the total price. The resulting luxury tax is then added to the cost of the subject item for the purposes of calculating the GST/HST. This results in GST/HST being calculated on the luxury tax." 

Where I live HST is 13%. 

Nevermind the luxury tax for a moment. 

Buy a Corolla for 30k and pay $3900 in HST tax.

Buy a 200k Bentley and pay 26k in HST tax. 

Shouldn't that be enough taxes paid? 

Carson610 wrote:

 As a person who is paid on a W2 and cannot hide any income I already pay 25-30% federal income tax on every penny I make...

 As a person who is paid on a W2 and cannot hide any income I already pay 25-30% federal income tax on every penny I make. I would much rather only pay tax on money I spend and increase my savings and investments by 25-30%. Also, this will collect tax on all money, no matter how it’s made. 

tcannon521 wrote:

If your effective tax rate is anywhere near 25 to 30% then your income level is in the top 99.9% of all Americans.    I hope...

If your effective tax rate is anywhere near 25 to 30% then your income level is in the top 99.9% of all Americans. 
 

I hope you are maxing out your 529, HSA, 401k and Roth for you and your spouse (if you have one) plus gifting $16,000 per child each year (tax free) into an investment account for them. 
 

Also, congrats on your success and always remember, you only have a high tax bill if you’re successful! 

APLMAN99 wrote:

I try to spend like I live in poverty, but I drive a BMW 7 Series....... Not sure where I fit in on the scale.  

I try to spend like I live in poverty, but I drive a BMW 7 Series.......

Not sure where I fit in on the scale.  

APLMAN99 wrote:

I try to spend like I live in poverty, but I drive a BMW 7 Series....... Not sure where I fit in on the scale.  

I try to spend like I live in poverty, but I drive a BMW 7 Series.......

Not sure where I fit in on the scale.  

plowboy wrote:

Beemers are a dream to drive...no argument.  But when they need work...that's no bueno for most folks.

APLMAN99 wrote:

I try to spend like I live in poverty, but I drive a BMW 7 Series....... Not sure where I fit in on the scale.  

I try to spend like I live in poverty, but I drive a BMW 7 Series.......

Not sure where I fit in on the scale.  

plowboy wrote:

Beemers are a dream to drive...no argument.  But when they need work...that's no bueno for most folks.

APLMAN99 wrote:

Low mileage, certified lease return and a deeply discounted 100K mile warranty……. That’s the only way I own one. The initial depreciation is insane, especially considering...

Low mileage, certified lease return and a deeply discounted 100K mile warranty…….

That’s the only way I own one. The initial depreciation is insane, especially considering that they just may be the best actual driving cars in existence (7 Series, not all BMWs). 

I hope to find a similar situation on a lease return M760i in a couple of years. Those 12 cylinder cars are gone but they aren’t forgotten by me!  Got to put about 100 miles on one and I feel like it could be like crack on demand to drive daily. 

APLMAN99 wrote:

Low mileage, certified lease return and a deeply discounted 100K mile warranty……. That’s the only way I own one. The initial depreciation is insane, especially considering...

Low mileage, certified lease return and a deeply discounted 100K mile warranty…….

That’s the only way I own one. The initial depreciation is insane, especially considering that they just may be the best actual driving cars in existence (7 Series, not all BMWs). 

I hope to find a similar situation on a lease return M760i in a couple of years. Those 12 cylinder cars are gone but they aren’t forgotten by me!  Got to put about 100 miles on one and I feel like it could be like crack on demand to drive daily. 

plowboy wrote:

I completely understand.  If you have the budget...drive what moves you.  But remember there are folks that will never have your numbers.

Carson610 wrote:

 As a person who is paid on a W2 and cannot hide any income I already pay 25-30% federal income tax on every penny I make...

 As a person who is paid on a W2 and cannot hide any income I already pay 25-30% federal income tax on every penny I make. I would much rather only pay tax on money I spend and increase my savings and investments by 25-30%. Also, this will collect tax on all money, no matter how it’s made. 

tcannon521 wrote:

If your effective tax rate is anywhere near 25 to 30% then your income level is in the top 99.9% of all Americans.    I hope...

If your effective tax rate is anywhere near 25 to 30% then your income level is in the top 99.9% of all Americans. 
 

I hope you are maxing out your 529, HSA, 401k and Roth for you and your spouse (if you have one) plus gifting $16,000 per child each year (tax free) into an investment account for them. 
 

Also, congrats on your success and always remember, you only have a high tax bill if you’re successful! 

Titan1 wrote:

Not really... 24% tax bracket is $178K-$340K 32% is $340K to $431K To be in the top .1% of earners in America you'd have to earn...

Not really...

24% tax bracket is $178K-$340K

32% is $340K to $431K

To be in the top .1% of earners in America you'd have to earn $3.2M

To be in the top 1% you'd have to earn $823K (taxable)

Top 5% $342K

Top 10% 173K

So, though Carson is doing well for himself...he's no where near the .1% of earners in America.

https://www.investopedia.com/personal-finance/how-much-income-puts-you-…

tcannon521 wrote:

If your effective tax rate is anywhere near 25 to 30% then your income level is in the top 99.9% of all Americans.    I hope...

If your effective tax rate is anywhere near 25 to 30% then your income level is in the top 99.9% of all Americans. 
 

I hope you are maxing out your 529, HSA, 401k and Roth for you and your spouse (if you have one) plus gifting $16,000 per child each year (tax free) into an investment account for them. 
 

Also, congrats on your success and always remember, you only have a high tax bill if you’re successful! 

Titan1 wrote:

Not really... 24% tax bracket is $178K-$340K 32% is $340K to $431K To be in the top .1% of earners in America you'd have to earn...

Not really...

24% tax bracket is $178K-$340K

32% is $340K to $431K

To be in the top .1% of earners in America you'd have to earn $3.2M

To be in the top 1% you'd have to earn $823K (taxable)

Top 5% $342K

Top 10% 173K

So, though Carson is doing well for himself...he's no where near the .1% of earners in America.

https://www.investopedia.com/personal-finance/how-much-income-puts-you-…

Carson610 wrote:

Titan has posted factual information.  

Titan1 wrote:

Not really... 24% tax bracket is $178K-$340K 32% is $340K to $431K To be in the top .1% of earners in America you'd have to earn...

Not really...

24% tax bracket is $178K-$340K

32% is $340K to $431K

To be in the top .1% of earners in America you'd have to earn $3.2M

To be in the top 1% you'd have to earn $823K (taxable)

Top 5% $342K

Top 10% 173K

So, though Carson is doing well for himself...he's no where near the .1% of earners in America.

https://www.investopedia.com/personal-finance/how-much-income-puts-you-…

Carson610 wrote:

Titan has posted factual information.  

tcannon521 wrote:

He stated he is paying 25 to 30% in taxes. That means his effective tax rate is in that range. Our tax code is a sliding...

He stated he is paying 25 to 30% in taxes. That means his effective tax rate is in that range. Our tax code is a sliding scale, (as you noted above) he only pays over 25% on income above 340k. He will need to make more than $650,000 a year (easily $700,000 before standard deductions and 401k contributions) to have an effective tax rate of just 25%. For him to be at a 30% effective rate, that’s about 1.3 million dollars a year. 

APLMAN99 wrote:

You have the right intentions, but we don’t have a sliding tax scale. We have a marginal tax rate system. There is a difference. 

Gworm wrote:

Paying 70% taxes is a great way to de-incentivise the people who create jobs for the rest of us. 

Gworm wrote:

Paying 70% taxes is a great way to de-incentivise the people who create jobs for the rest of us. 

TDeath21 wrote:

This is one of those ideas that theoretically sounds okay but would be awful in practice. I think we just need more tax brackets. Obviously if...

This is one of those ideas that theoretically sounds okay but would be awful in practice. I think we just need more tax brackets. Obviously if you make 578K yearly you’re doing amazing for yourself, but to be in the same tax bracket as someone making millions is a bit silly. Close the loopholes and add more tax brackets. We used to have a ton and the top tax bracket was 70% until the early 80s.

TDeath21 wrote:

This is one of those ideas that theoretically sounds okay but would be awful in practice. I think we just need more tax brackets. Obviously if...

This is one of those ideas that theoretically sounds okay but would be awful in practice. I think we just need more tax brackets. Obviously if you make 578K yearly you’re doing amazing for yourself, but to be in the same tax bracket as someone making millions is a bit silly. Close the loopholes and add more tax brackets. We used to have a ton and the top tax bracket was 70% until the early 80s.

Sully wrote:

If I make $2m/yr, why should the government be entitled to 70% of it (or even 25-30%)? Fuck them, they need to learn to cut back...

If I make $2m/yr, why should the government be entitled to 70% of it (or even 25-30%)? Fuck them, they need to learn to cut back instead of demanding more. 

Gworm wrote:

Paying 70% taxes is a great way to de-incentivise the people who create jobs for the rest of us. 

Shawn142 wrote:

It's not even worth taking up brain cells over because it's all just for show, just like impeachment and congressional investigations.  I doubt you could even...

It's not even worth taking up brain cells over because it's all just for show, just like impeachment and congressional investigations.  I doubt you could even get a consensus majority to pass something like this among House Republicans themselves never mind the Dems, Senate, or the President.  It's just done for the press and appearances.  

Shawn142 wrote:

It's not even worth taking up brain cells over because it's all just for show, just like impeachment and congressional investigations.  I doubt you could even...

It's not even worth taking up brain cells over because it's all just for show, just like impeachment and congressional investigations.  I doubt you could even get a consensus majority to pass something like this among House Republicans themselves never mind the Dems, Senate, or the President.  It's just done for the press and appearances.  

zehn wrote:

Which is the exact point I was making. All for show

avidchimp wrote:

I'm in the 38% tax zone with an amazing accountant. I'd happily pay a flat rate and get rid of the middle man.