Shoot down the Fair Tax idea in 2500 words or less.

[Jackpine Radical]

The so-called Fair Tax proposal as I understand it is a sort of VAT or sales tax. A FReeper-type cornered me the other day & insisted that a 29% VAT would be the fairest replacement for an income tax.

My objections were essentially that the poor have to spend a greater portion of their income on taxable expenditures, while the rich would be able to stash their cash untaxed, but I just couldn't get my points through to him & wonder if any of you can come up with some quick, killer arguments.

[trotsky]

It's not terribly quick, but it requires very few words.

Just have them go pull out their 1040 for last year, and pull off two numbers - their total tax, and their gross income. Divide the first by the second to get their income tax rate. Then compare it to 29%. I guarantee, especially if they own a home or have any other tax breaks, they pay less than half that under the system NOW.

[FARAFIELD]

2. yeah

Thats what is known as the "effective tax rate" my families effective tax rate is 13.4 so as you can see a 29% tax would totally blow, we make about 150k (and our house is paid for) still its not as much as it seems AND our taxes would go up 100%

[FARAFIELD]

1. heres my arguement

Fuck the rich pukes, they dont pay enough. (consideribly less than 2500 words.

[0rganism]

3. Why are we looking to replace the income tax?

I must be missing the premise here. I know why shrub and his asshole rich frat buddies want to tear down the income tax, as well as any other source of government revenue, but what's the context of your conversation?

[daa]

7. We aren't the repukes are

follow the money. The only way to get at the boomers savings is to tax it when they spend it. They paid tax when they earned it adn now they wasnt to tax when they spend. Transfer of wealth. Always follow the money.

[0rganism]

10. Yes, I know that, but I wanted to read the context

OP says he was told by some shill that the best way to replace the income tax was with the "fair tax". Why the premise? How did the OP and his conversation partner arrive at the conclusion that the income tax should be replaced?

[daa]

15. Here you go

http://fairtax.org/

[Jackpine Radical]

8. He wanted to replace income tax with the "fair tax."

Kool-aid is his favorite beverage.

[0rganism]

11. Just because? I mean, there has to be a reason

It wouldn't have to be a particularly good reason, but jeez, why should we proceed from the premise that the income tax -- slashed to hell as it is -- should be replaced at all?

[Jackpine Radical]

14. Income tax is too complicated, there are too many loopholes,

blah, blah. And probly in his mind the poor don't pay enough. Yeah, I know. And the guy us an AODA counselor or social worker or something for the county, too.

[don954]

4. simple, i would never pay a dime of taxes again

as I would go gray market/cash market for jsut about everything, along with just about the rest of the population. Enforcement would be a nightmare, you thought drugs were hard to regulate, well you haven’t seen nothing yet!

[tkmorris]

5. Another angle.....

If all Federal taxes are collected as a percentage of retail sales, people will try VERY hard not to purchase anything retail. What do you think will happen to our economy?

[Inland]

6. Jesus, where do you start?

I think that the real question is, how is it "fairer" than the income tax? How is it simpler?

those that argue against the income tax assume a perfect sales tax with one rate that nobody will tinker with. But if I assume that an income tax regime treats all income the same and no exceptions or deductions, that income tax is perfectly simple.

Thos that argue for the sales or VAT tax systems just assume that there will be one rate for everything. But that won't happen. If the politicians could resist making different rates and different treatments for "incentives" and "fairness", then the income tax too would be simple and fair.

Compare ideal to ideal, there's no problem with the income tax.

Ever look at schedule D? COMPLICATED! In fact, impossible to do without a computer. But why is schedule D complicated? Because Bush decided that cap gains would be taxed at different rates than normal income depending on how long you had held the capital. If all income is treated the same, the schedule disappears.

Thos that argue for the sales or VAT tax systems just assume that there will be one rate for everything. But that won't happen. If the politicians could resist making different rates and different treatments for "incentives" and "fairness", then the income tax too would be simple and fair. Ideal to ideal, income tax wins, since my granny would starve under a sales tax of 29%.

There was an article in the WSJ about canada's VAT, and how a single tray of donuts at Tim Horton's has four different taxes based on style and flavor. Compare real world with real world, income wins.

But you wanted the capper. Here is is: THE ARGUMENT THAT WILL FOREVER AND EVER PREVENT A VAT TAX. READY? HERE IT COMES:
VAT makes it easy to raise taxes. IT'A A PAINLESS WAY TO GET A TONE OF REVENUE! GOVERNMENTS LOVE THE VAT! Nobody knows how much they pay! Nobody knows how much VAT is included in the purchase price! It is a MONEY MACHINE AND IS PRACTICALLY INVISIBLE! Unlike an income tax where everyone can see exactly what we pay every year, a government using a VAT has a tax method that does nothing but bleed from a thousand tiny little cuts a day.

That sort of tax is fine for a statist European style country, but teh US would never tolerate it on the federal level.

[Telly Savalas]

9. It shifts the tax burden from the rich to the poor.

If someone thinks that's fair then there's not a whole hell of a lot you can say that'll make them see reason.

[calmblueocean]

12. How to destroy the UnfairTax in 3 steps + a whammy

There's many reasons the UnfairTax is a bad idea, but often the discussion gets technical very quickly, which just reinforces their notion that the UnfairTax is good because it's so simple. Here's a few ways to take on the UnfairTax that should hit at the gut level:


1. A lot of these folks get hung up on the issue of "fairness". Ask your buddy if he thinks it wouldn't be fairer if we collected taxes by dividing the federal budget each year equally by the number of taxpayers, and sending each a bill for their share.

If he says, "Yes" then tell him that his share comes out to $17,000 per year. When his eyes open wide, you remind him, "Isn't that fair? Are you not interested in paying your fair share, or do you think it's fairer to tax people based on what they can afford to pay?"

(If he counters by saying, "We should cut the gubbiment", tell him that nonmilitary discretional spending makes up only 18% of the budget, and we can do that without some new crazy tax scheme.)


2. If he says that eliminating the bureaucracy would save corporations money and bring prices down, ask him if he still thinks that businesses are in business to charge as much for their product as the market will bear. "If you knew I'd pay $4 for a gallon of milk, you wouldn't lower the price just because you made your business more efficient. You'd pocket the difference as profit."

Feel free to remind him how the record companies used to say that CDs would be cheaper to make than tapes, and that switching to CDs would bring prices down. And then remind him that prices went up, and the music industry was convicted of price fixing. Now we're moving to digital distribution, which costs them even less, yet they're still pushing to raise prices. Ask him why he's willing to let corporate America play him for such a chump with the UnfairTax. Why is he so willing to believe such obvious lies?


3. "But it'll help the poor," he gasps. "Everyone will be issued a monthly rebate check for the amount of tax up to the poverty level, so poor people won't be taxed at all!"

"That's the worst part," you tell him, shaking your head. "Think about it. If everyone got a million dollar check in the mail each month, a loaf of bread would cost $1000. When everyone's income goes up simultaneously, prices go up accordingly. That's how inflation works. So the poor would actually be hit the hardest."

Now for the bonus kicker:

"And do you really want to put every single person in America on welfare? Because that's what that monthly check is -- the biggest welfare program ever. Imagine a whole nation full of people knowing that they can't pay their bills without their monthly government check. You really think that's a better America?"

[Neil Lisst]

13. I'll say it in one sentence.

It can't be fair if it's worse on poor and middle income citizens than the current system.


http://www.webcomicsnation.com/neillisst

[lumberjack_jeff]

16. Did you take stupid pills? Five words

With a fair tax, one would know what they pay. I have no idea what I paid in sales tax last year.
With a fair tax, the rich would pay at least what the poor do. In Washington State (which has no income tax) the poor pay 17% of their gross pay in state tax while the richest 1% pay 3.3%.
A system in which the tax rate, after the personal exemption, would need to be 50+ percent is not fair, or even prudent. The personal exemption would be dropped every year to obtain the necessary revenue. The economy would stall.

[welshTerrier2]

17. the fairest tax ...

the fairest tax would be primarily based on wealth ... the fairness standard, by definition, should be based on ability to pay ...

neither the amount of income one earns nor the amount one spends reflects your ability to pay as well as the amount of wealth you have ... wealth is not a "transaction" that is arbitrarily affected by one year versus another or by purchasing decisions ...

the fairest tax system, allowing substantial exemptions for those living on fixed incomes, is one based on how much wealth you have ...

a multi-billionaire with little or no taxable income who chooses to make few or no purchases in any given tax year still has a far greater ability to pay than another person with little savings and an annual income of $100,000 who makes an average amount of purchases based on his income ...