Fair Tax Act

[msstate7]

Good idea, bad idea?
Pros, cons?
Any chance to actually be law?

[zitothebrave]

No chance it will be law.

The issue with every tax plan is there are flaws.

What the issue with consumption taxes is they tax people who spend more of their money at a higher rate.

So to give 2 examples. Person A makes 50K a year and spends 10K a year on food, personal goods etc. so they're getting taxed on 10% of their effective income. Person B makes 20K a year and spends 10K a year on cfood, personal goods, erc. so theyr'e getting taxed on 50% of their income, person C makes 50 million dollars a year and gets taxed on 1 million in food, personal goods, etc.a year. Or 2% of their effective income. Consumption taxes effectively burdon those who cannot save or invest.

The second downside to consumption taxes is it does lead to a slower market. In the example above, if you're rich, there's only so much stuff you can own. Sure you can buy new versions of it, but overall, at some point you're just buying **** to say you can. Meanwhile Poor people have less money to spend essentially.

The foolish part is people thinking there's no need for an IRS with this. But I live in NH where the bulk of the state's revenue (I forget the number but it's like 25% I think) comes from Room and MEals tax, and you can bet yout ass that they gave auditors that go to businesses to make sure they're collecting and paying the right amount.

And of course the next action is what is taxed. Is your electric bill taxed? Is your water bill taxed? Is buying a home taxed? When you're a company who provides a service, say an insurance company, pays someone out, is that consumption?

Final aspect is how are people taxed and at what point. For example, is a business taxed per item they create that can be consumed? And they just pass it along to the consumer. Does the consumer pay the price on their bill? Either way it's falls as an additional expense on businesses.

I'll look into the bill specs a bit more in a second, these are more general thoughts.

[Tapate50]

I’m a fan. There’s really zero need for larger govt when you can simplify things.

The more control you put in peoples hands the better.

[zitothebrave]

OK looking at the law a tiny bit. I'm not digging into it fully.

First off, abolishing the IRS makes sense in name only. What I don't get is they're doing a prebate. So every month someone is responsible for sending money to EVERY american. Someone's responsible for making sure people aren't dead, what's up with people in jail? Their families? Etc. What determines exactly when people are required to get a prebate? Income tax is easy, when you're capable of earning income you're taxed. What determines when you get prebate as anyone is capable of consuming. Someone has to be there to termine all these things and monitor those things. It seems like they're moving all of it to the SSA. So the SSA becomes the new IRS.

Second, it's passing the cost buck of collection and auditing to the states. Which basically means the ability of the Federal Government to collect taxes, is determined by a state's competency in collecting in said taxes. So what happens when it's clear a state isn't doing their job? Who's the auditor who audits the states?

Third, the reality is that this is toothless for the most part. The bill proposed is going to be automatically repealed or expire ro whatever the right term is after 7 years if the 16th Amendment isn't repealed. Because they know it will take no time for an income tax to return.