QuoteThis study assesses the fairness of each state’s tax system, measuring the state and local taxes paid by different income groups in 2007 (including the impact of tax changes enacted through October of 2009) as shares of income for every state and the District of Columbia. The report provides valuable comparisons among the states, showing which states have done the best â€" and the worst â€" job of providing a modicum of fairness in their tax systems overall. The study’s main finding is that nearly every state and local tax system takes a much greater share of income from middle- and low-income families than from the wealthy. That is, when all state and local income, sales, excise and property taxes are added up, most state tax systems are regressive.
http://www.itepnet.org/whopays3.pdf
...and yet again the rich get yet another unneeded break. How is this fair?
That study is old news, if you really want a scare, read about what will happen to Florida's state budget over the next 20 years thanks to the boomers moving here and fewer people working in the state. Payroll taxes will be through the roof, along with unemployment coverage. No business will want to move to such an unfriendly state, and those here, will have prices higher and higher. It is a good article in the Sunday TU on just this issue. And it is coming soon, question is, what are the leaders of Florida doing NOW, to stem the tide?
www.fairtax.org (http://www.fairtax.org)
Quote from: JeffreyS on November 23, 2009, 09:26:27 AM
www.fairtax.org (http://www.fairtax.org)
Fair Tax is a mis-nomer: it's highly regressive.
I don't want to get into a discussion about the fallacy of the "fair" tax scheme that was concocted by a dentist and a radio talkshow host, but take it from an economist such as myself, that lower income people spend a higher percentage of their income on consumables and thus would be paying a higher percentage of their income on sales tax under the "fair" tax scheme.
Even economist Bruce Bartlett, once an adviser to President Reagan, confirms this fallacy in the scheme.
And your counter proposal is? The current system? Do away with all tax on income?
To just say that State and local taxes are regressive is just silly. State and local taxes are largely based on property taxes in Florida. Taxes on your residence have nothing to do with your income. Would you suggest a higher property tax for upper income levels?
And rather than just dropping a name or ridiculing a proposal, tell us what is wrong with it. How do you think the Fair Tax is more regressive or unfair than the current system that is rife with political opportunism? And what exactly does the occupation of its creators have to do with anything? If we go by occupation then I suppose that only Faye is qualified to post here.
I see the Fair Tax as a simple and fair system. I don't believe in the current practice of buying votes through the tax system. Isn't a straight percentage of income the most fair method Faye?
Fair Tax discussion:
http://www.metrojacksonville.com/forum/index.php/topic,1488.0.html
I do not think the fair tax is perfectly fair. It is a stupid name. Most detract lament that it isn't fair and even with the prebate is not progressive enough(I tend to agree). The lowest income people would pay zero tax(the prebate). Remember the richest people income is not the best place to get money from them. So yes income percentage to income percentage you could make that argument. Less hoops to jump though less complicated systems tend to be an advantage to those who do not have teams of accountants and lawyers doing their taxes.
I guess if you want to keep the complicated(just that way so it can be corrupt) inefficient system until something perfectly fair comes along ok. I just think you are fooling your self if you believe it will ever be just as good to be poor as rich.
I was finished typing when the link to the discussion was posted so I will make any further remarks there.
The monstrosity that is our current tax system needs a complete remake / simplification. Fair tax is definately one way to simplify. I would like to see some serious national debate regarding it. I have heard the "regressive tax" arguments and believe this issue can be overcome.
Quote from: JeffreyS on November 23, 2009, 12:11:33 PM
I do not think the fair tax is perfectly fair. It is a stupid name. Most detract lament that it isn't fair and even with the prebate is not progressive enough(I tend to agree).
Thanks JeffreyS. As I said I will not get into a drawn-out discussion, but a few pieces may make things more clear to those who wonder what happens under the "Fair" tax:
QuoteFervent faith in Fair Tax defies reason
The Atlanta Journal-Constitution
Jay Bookman
Published on: 04/23/07
I wouldn't want to accuse Georgia's Fair Tax movement of being a cult, but it does have a disturbing number of cult-like attributes. Among other things, its adherents display an almost religious fervor for their cause, to the point that they become blind to the obvious irrationality of claims that are made on its behalf.
The prime advocate of the Fair Tax in Congress, U.S. Rep. John Linder (R-Ga.), claims the tax will do away with "all personal income taxes, corporate income taxes, payroll taxes, self-employment taxes, capital gains taxes and gift and estate taxes." Instead, those taxes will be replaced with a retail sales tax of 30 percent on all services and new goods.
Among other benefits, Linder claims that adopting the Fair Tax will drive down retail prices by 20 percent to 30 percent. That price drop would almost completely offset the Fair Tax's 30 percent sales tax, meaning that in effect, we could run the federal government for free.
But wait! If you act now, Linder will also throw in a 10.5 percent increase in the nation's gross domestic product the very first year the Fair Tax is in place. And as a special bonus, interest rates would also fall by 20 to 30 percent.
Linder and other Fair Tax advocates, including talk radio host Neal Boortz, make two other promises as well. First, they say, the Fair Tax will be revenue-neutral, generating just as much money as the current system.
Second, they promise that the Fair Tax will not shift the tax burden onto low-income households, as sales taxes usually do. To their credit, they make an honest effort to achieve that goal, using a monthly check to compensate low-income households for the higher sales tax they would pay.
But let's review. Under the Fair Tax, low-income Americans won't pay taxes; corporations won't pay any taxes either. Yet the Fair Tax is guaranteed to generate the same amount of revenue as today's system. Basic arithmetic requires that somebody's taxes increase. Who will that somebody be?
For example, would it be a typical middle-class two-income Georgia family with two kids, a mortgage and college tuition payments? As it happens, I have access to the tax returns of just such a family.
At www.fairtax.org, the main Web site of the Fair Tax movement, I plugged the Bookman family financial data into the FairTax calculator. The model reported that the Fair Tax would save me $7,500.
Suddenly, the Fair Tax didn't seem such a bad idea.
Still, the mystery remained: If the middle class pays less, and corporations and poor people don't pay anything at all, who pays more? The rich? That didn't seem likely given Republican enthusiasm for the Fair Tax, but again I turned to the FairTax calculator for help.
As it happens, I also had access to the 2006 tax return of a rather wealthy couple who reported an adjusted gross income of $765,801 and paid $203,021 in federal taxes. What would this couple, a certain George and Laura Bush, pay under the Fair Tax?
Plugging their data into the calculator, I learned that the Fair Tax woud cut their federal tax burden by $74,596.
I then began to punch invented numbers into the model, determined to find somebody, even a theoretical somebody, who would pay more. A family with $1.5 million in income, with a $4.5 million mortgage? Nope. Under the Fair Tax, they would save $436,624.
Finally, I hit paydirt. It turns out that a married couple with two children who rented their home and made $40,000 would, under the Fair Tax, pay $860 a year more in taxes than they do today.
Somehow, I doubt that will be enough to make the concept revenue-neutral.
In 2005, a panel appointed by President Bush to study proposed changes in the federal tax system reached the same conclusion, though its process was more sophisticated. It found that eliminating just the federal income tax leaving payroll taxes, estate taxes and gift taxes in place would require a retail sales tax of at least 34 percent. As it noted, "no state or country has ever levied a retail sales tax at a tax rate that even approaches the 34 percent required to replace the federal income tax system."
The panel also reported that replacing the income tax with a 34 percent sales tax would reduce taxes on just two groups: households making more than $200,000, and those making less than $30,000. For everyone else, the tax burden would increase.
So, a married couple with two children who rented their home and made $40,000 would, under the Fair Tax, pay $860 a year more in taxes than they do today, while others pay less..........Is that FAIR?
It cannot possibly be revenue neutral, and think of all the bureacrats needed and mailing expenses for those pre-bates.
This system is far from simple, as this Wall Street Journal article tells us ( warning the "Fair" Tax system is quite complicated):
QuoteFair Tax, Flawed Tax
Does adding 30% to the price of every house sold sound like a good idea to you? by BRUCE BARTLETT
Sunday, August 26, 2007 12:01 A.M. EDT
Former Arkansas Gov. Mike Huckabee's unexpectedly strong second-place showing in the recent Iowa Republican straw poll is widely attributed to his support for the FairTax.
For those who never heard about it, the FairTax is a national retail sales tax that would replace the entire current federal tax system. It was originally devised by the Church of Scientology in the early 1990s as a way to get rid of the Internal Revenue Service, with which the church was then at war (at the time the IRS refused to recognize it as a legitimate religion). The Scientologists' idea was that since almost all states have sales taxes, replacing federal taxes with the same sort of tax would allow them to collect the federal government's revenue and thereby get rid of their hated enemy, the IRS.
Rep. John Linder (R., Ga.) and Sen. Saxby Chambliss (R., Ga.) have introduced legislation (H.R. 25/S. 1025) to implement the FairTax. They assert that a rate of 23% would be sufficient to replace federal individual and corporate income taxes as well as payroll and estate taxes. Mr. Linder's Web site claims that U.S. gross domestic product will rise 10.5% the first year after enactment, exports will grow by 26%, and real investment spending will increase an astonishing 76%.
In reality, the FairTax rate is not 23%. Messrs. Linder and Chambliss get this figure by calculating the tax as if it were already incorporated into the price of goods and services. (This is known as the tax-inclusive rate.) Calculating it the conventional way that every other (This is called the tax-exclusive rate.)
The distinction is confusing, but think of it this way. If a product costs $1 at retail, the FairTax adds 30%, for a total of $1.30. Since the 30-cent tax is 23% of $1.30, FairTax supporters say the rate is 23% rather than 30%.
This is only the beginning of the deceptions in the FairTax. Under the Linder-Chambliss bill, the federal government would have to pay taxes to itself on all of its purchases of goods and services. Thus if the Defense Department buys a tank that now costs $1 million, the manufacturer would have to add the FairTax and send it to the Treasury Department. The tank would then cost the federal government $300,000 more than it does today, but its tax collection will also be $300,000 higher.
This legerdemain is done solely to make revenues under the FairTax seem larger than they really are, so that its supporters can claim that it is revenue-neutral. But for the government to afford to purchase the same goods and services, it would have to raise spending by the amount of the tax it pays to itself. The FairTax rate, however, is not high enough to finance the higher spending it imposes. Therefore the proposal only works if federal purchases are cut by 30%, close to $300 billion--the increased cost imposed by the FairTax.
Similarly, state and local governments would have to pay the FairTax on most of their purchases. This means that it is partly financed by higher state and local taxes. It's also worth remembering that state sales taxes now average 6%, which means that the total tax rate will be 36% on retail sales.
State sales taxes have long exempted all but a few services because of the enormous difficulty in taxing intangibles. But the FairTax would apply to 100% of services, including medical care, thus increasing their cost by 30%. No state comes close to taxing services so broadly.
Consumers would also find themselves taxed on newly constructed homes. Imagine paying 30% to the federal government on top of the purchase price of your next house.
Since sales taxes are regressive--taking more in percentage terms from the incomes of the poor and middle class than the rich--some provision is needed to prevent a vast increase in taxation on the nonwealthy. The FairTax does this by sending monthly checks to every household based on income.
Aside from the incredible complexity and intrusiveness of tracking every American's monthly income--and creating a de facto national welfare program--the FairTax does not include the cost of this rebate in the tax rate. As noted earlier, the FairTax is designed only to match current revenues and does not cover any increased spending that it may require. Since the rebate will cost at least $600 billion the first year, either federal discretionary spending would have to be cut by 60% or the rate would have to be five percentage points higher than advertised.
Rejecting all the tricks of FairTax supporters and calculating the tax rate honestly--by including the higher spending that it mandates and by being realistic about what could actually be taxed--professional revenue estimators have always concluded that a national retail sales tax would have to be much, much higher than 23%.
A 2000 estimate by Congress's Joint Committee on Taxation found the tax-inclusive rate would have to be 36% and the tax-exclusive rate would be 57%. In 2005, the U.S. Treasury Department calculated that a tax-exclusive rate of 34% would be needed just to replace the income tax, leaving the payroll tax in place. But if evasion were high then the rate might have to rise to 49%. If the FairTax were only able to cover the limited sales tax base of a typical state, then a rate of 64% would be required (89% with high evasion).
I've emphasized problems with the FairTax rate because public opinion polls have long shown that support for flat-rate tax reforms is extremely sensitive to the proposed rate, with support dropping off sharply at a rate higher than 23%. But there are also massive technical and administrative problems with collecting all federal taxes at the checkout counter and relying entirely on state governments to collect the federal government's revenue.
Among the problems: What possible incentive would the states have to be vigorous in their federal tax collections? What is to stop them from slacking off and giving their citizens a tax cut at federal expense? What about states with no sales taxes? What's to stop people from bypassing retail outlets and buying their goods from producers or at wholesale, tax-free?
Perhaps the biggest deception in the FairTax, however, is its promise to relieve individuals from having to file income tax returns, keep extensive financial records and potentially suffer audits. Judging by the emphasis FairTax supporters place on the idea of making April 15 just another day, this seems to be a major selling point for their proposal.
Yet all but six states now have state income taxes. So unless one lives in one of those states, this promise is an empty one indeed. In short, the FairTax is too good to be true, and voters should not take seriously any candidate who supports it.
Mr. Bartlett was deputy assistant secretary of the Treasury for economic policy from 1988 to 1993.
http://www.opinionjournal.com/extra/?id=110010523
Both articles made some very good points and both also told what I suspect the authors knew where lies(not mistakes).
The Fair Tax numbers on PreBate levels and total tax percentage may/ will always need tweaking based on the Governments needs. This will always be an easy to implement and easy for the public to see and understand prospect.
The arguments about taxes being based on income vs consumption tend to the ones I feel are thoughtful and trying to have meaningful debates.
Flat Taxes and Value Added Taxes have pros and cons also both are IMO far superior to our ncome tax.
Since I accused the Authors of knowingly lying I guess I have to point those out.
1. The Idea of what costs $1(with embedded tax) today it will cost $1 and .23 will be collected in taxes.It will not now cost $1.30. If something currently costs $1.30 it will still be $1.30 and .30 of that $1.30 will be paid as taxes.
I do give them credit for fear mongering that what is now $1 will have .30 of new taxes added.
2.Corporations will after not pay taxes. The lie is that they do not pass these taxes onto the consumer now. They do all of the costs they incur in doing business including taxes are collected at the register. Do corporations pay these taxes out of their family trust funds no. This is just a simpler more transparent way of collecting the taxes.
There is good debate about how this system could be tweak or even if another system is better. Somehow though what you get is name calling "They are a cult" then after firing the shot they say I won't be drawn into a debate.
Thanks Jeffrey... much better than a cut and paste... :)
Money and income have diminishing returns in so far as contributing to a more comfortable life. The difference between earning $20,000 and $30,000 is far greater than $40K is to $30K.
As such, you will never be able to tax the rich a high enough percent to make their total tax burden equivalent to what the poor pay.
Someone who makes $40K a year will likely need to spend the majority of it to be able to cover expenses. Thus all of their income will be taxed twice, once on earning it, once on spending it.
As you increase in income, your money becomes less and less useful to providing for your well being, so you need to spend a smaller percentage (THEORETICALLY). Thus, even though your income tax rate is Significantly higher, the money not spent is not taxed (THEORETICALLY).
Thus, it's never going to be totally fair for the poor. Short of a 98% tax rate on 'the rich', poor folks are always going to pay more.
Without picking one side or the other, I'd say one thing I like about the fair tax is that it penalizes consumption.
Quote from: BridgeTroll on November 24, 2009, 12:58:26 PM
Thanks Jeffrey... much better than a cut and paste... :)
Yeah, that's so typical of neoconism:
Policy analysis doesn't matter. Only politics matters. If the peepul support a rate of 23%, then who cares what the eggheads say? We're looking for votes here, not tax policy that actually works.
A capitalist society is the only one that I know where you can earn as much as you want, or since the 60s, earn as little thanks to Medicare and the "great welfare experiment" that has been blown so far out of proportion it now sucks every state and Federal budget of funds, because our society has gotten L-A-Z-Y, allowing for people to live off the state, instead of getting out there, pulling up the bootstraps and WORKING THEIR TAILS OFF for a better living.
Nothing in our constitution says you have to be poor and nothing says you will get rich, but your mind and ambition set the limits of your wealth. Forget the tax issues, get your lazy butts off the sofa throw away the Wii and get out and take responsibility for your own life and make the world a better place by living off your own self-worth, rather than sucking from the life of every taxpayer.
Quote from: mtraininjax on November 24, 2009, 11:48:26 PM
A capitalist society is the only one that I know where you can earn as much as you want, or since the 60s, earn as little thanks to Medicare and the "great welfare experiment" that has been blown so far out of proportion it now sucks every state and Federal budget of funds, because our society has gotten L-A-Z-Y, allowing for people to live off the state, instead of getting out there, pulling up the bootstraps and WORKING THEIR TAILS OFF for a better living.
Nothing in our constitution says you have to be poor and nothing says you will get rich, but your mind and ambition set the limits of your wealth. Forget the tax issues, get your lazy butts off the sofa throw away the Wii and get out and take responsibility for your own life and make the world a better place by living off your own self-worth, rather than sucking from the life of every taxpayer.
What a sick analysis of our current recession. It's so neocon boilerplate it isn't even funny.
I will ask you just one question: Do you think the almost 1 million people ( 11.5%) who are unemployed in Florida are just LAZY?
How dare you add insult to injury!
On second thought, one more question: What do you do for a living that hasn't been affected by the recession?
Let's step a way from the luxury of spouting LIES to hurt others, and to make oneself feel better than the rest.
We had to lay some people off this year. I do not think any of them where lazy.
tax can be collected from "income", "spending" or "wealth" non of them is fair. Tax not only pays for the expense of various level of government, which I consider approximately "pay for service" and "re-distribution".
I personally do not have problem with "pay for service" but I do have problem with "re-distribution". The re-distribution is pushing the country towards what the Soviet and Chinese have abandoned.
Disclaimer: I do not consider unemployment benefits , social security retirement, medicare benefits part of "re-distribution". They are insurance programs. They are not perfect but that is an other topic.