Fair Tax Act

[novaphile]

In the UK, this is VAT. In Australia, it is GST. Other names/acronyms in other countries. In the USA, you pay federal, state and even local sales taxes already. So this legislation is boosting these taxes while eliminating income and payroll taxes? Do they understand stagflation?

Agreed. These taxes have a couple of known problems.

1. They are pro cyclical, i.e. they make booms worse and busts worse, one could speculate that they favour stock market speculators who are able to make profits in both directions...

2. They are retrogressive, i.e. a poor person 'spends' a much greater proportion of their income and therefore has a higher effective tax rate.

 

[Suddenly]

It's just prepping the debt ceiling Christmas list.

This won't be on it as it's just too much too soon, but they need a lot of wacky stuff to not ask for as well.

 

[BobTheCoward]

We cannot escape the reality that if you tax something, an economy produces less of it, whether it is income or consumption (on the margin).

For example, if my wife was to look for a job, it would have to be entry level. But our married tax bracket makes the marginal increase of income significantly lower than a single individual or a married couple where the other partner also has an equivalent entry level pay. There are aeguments to not tax income.

 

[Suddenly]

We cannot escape the reality that if you tax something, an economy produces less of it, whether it is income or consumption (on the margin).

For example, if my wife was to look for a job, it would have to be entry level. But our married tax bracket makes the marginal increase of income significantly lower than a single individual or a married couple where the other partner also has an equivalent entry level pay. There are aeguments to not tax income.

Does this mean that their repealing the so called "death tax" will cause a massive die off?

Sounds reckless. Better make the estate tax 200% of the estate with no exception and we will all live forever.

 

[BobTheCoward]

Does this mean that their repealing the so called "death tax" will cause a massive die off?

Sounds reckless. Better make the estate tax 200% of the estate with no exception and we will all live forever.

On the margin, it would have an effect.

 

[ZiprHead]

House Republicans to vote on bill abolishing IRS, eliminating income tax

https://www.foxnews.com/politics/house-republicans-vote-bill-abolishing-irs-eliminating-income-tax

I just heard the CBO scored this as losing 114 billion in revenue to the government.

 

[Donal]

Consumption taxes are really quite common around the world, including the capitalist dystopias of Europe.

yes, forms of consumption taxes exist, to varying degrees of success.

This will not pass but it is not obviously a bad idea.

Clearly a few democratic voters aren't thinking beyond, GOP bad.

This wasn't a serious submission. Does the QGP deserve any serious consideration as legislators? What about the last 10+ years makes you think they earned that?

 

[dudalb]

I don't even think it will pass the House.
Fact is, McCarthy gave promises to individual members for their votes, knowing that on the floor they would lose.

 

[Random]

I just heard the CBO scored this as losing 114 billion in revenue to the government.

No, that's the amount they lose by "saving" money not hiring IRS agents to investigate rich people.

This consumption tax stuff is kind of out of left field, not something they have been pushing for months like the IRS security secret police force nonsense.

 

[lobosrul5]

No, that's the amount they lose by "saving" money not hiring IRS agents to investigate rich people.

This consumption tax stuff is kind of out of left field, not something they have been pushing for months like the IRS security secret police force nonsense.

If the 23% really was on ALL personal spending in the United States, and spending did not go down as a result it would still be a net loss in revenue.

2021: US Federal revenue was 4.03 trillion.
2021: Personal consumption spending was 15.9 trillion, so 3.657 trillion at 23%.

And thats if somehow no one changed their spending habits which is unlikely.

 

[lobosrul5]

No, that's the amount they lose by "saving" money not hiring IRS agents to investigate rich people.

This consumption tax stuff is kind of out of left field, not something they have been pushing for months like the IRS security secret police force nonsense.

Oh its been around for sometime:

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

FairTax was a single rate tax proposal in 2005, 2008 and 2009 in the United States that includes complete dismantling of the Internal Revenue Service.[1] The proposal would eliminate all federal income taxes (including the alternative minimum tax, corporate income taxes, and capital gains taxes), payroll taxes (including Social Security and Medicare taxes), gift taxes, and estate taxes, replacing them with a single consumption tax on retail sales.

 

[thaiboxerken]

We really need this bill to offset the wealthy from the oppression that they endure simply for having more than everyone else.

 

[Random]

Oh its been around for sometime:

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

FairTax was a single rate tax proposal in 2005, 2008 and 2009 in the United States that includes complete dismantling of the Internal Revenue Service.[1] The proposal would eliminate all federal income taxes (including the alternative minimum tax, corporate income taxes, and capital gains taxes), payroll taxes (including Social Security and Medicare taxes), gift taxes, and estate taxes, replacing them with a single consumption tax on retail sales.

Yeah, the idea has been around for a while, but there hasn't really been any indication that this was something they would push this cycle.

 

[Skeptic Ginger]

I just heard the CBO scored this as losing 114 billion in revenue to the government.

And of course the GOP legislators who can't do the math with very large numbers deny there will be a revenue shortfall. After all, look at all those zeros in the number of dollars the IRS collects.

 

[dudalb]

Yeah, the idea has been around for a while, but there hasn't really been any indication that this was something they would push this cycle.

As I siad, McCarthy probably promised a vote to some congressman in return for his support.

 

[dudalb]

We are going to see a lot of crackpot bill sin this house, which even most in the GOP will find too much.

 

[Skeptic Ginger]

Oh its been around for sometime:

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

FairTax was a single rate tax proposal in 2005, 2008 and 2009 in the United States that includes complete dismantling of the Internal Revenue Service.[1] The proposal would eliminate all federal income taxes (including the alternative minimum tax, corporate income taxes, and capital gains taxes), payroll taxes (including Social Security and Medicare taxes), gift taxes, and estate taxes, replacing them with a single consumption tax on retail sales.

Repeal and replace ... yep. The ACA repeal caught them off guard but enough time has passed they can start a new mantra.

 

[Suddenly]

If the 23% really was on ALL personal spending in the United States, and spending did not go down as a result it would still be a net loss in revenue.

2021: US Federal revenue was 4.03 trillion.
2021: Personal consumption spending was 15.9 trillion, so 3.657 trillion at 23%.

And thats if somehow no one changed their spending habits which is unlikely.

Spending habits are going to change. This would be effectively a very large raise for people with higher than average income so they might spend more, etc. However...

Forecasting this is totally meaningless because 23% is too high stakes and it will be loopholed into oblivion by lawyers and lobbyists. The only forecast is that this will collapse the federal government.

Getting rid of payroll tax and replacing it with a national more like 3% sales tax exempting food and clothing to earmarked for social security / medicare would be worth looking at as that would be redistributive.

 

[ahhell]

yes, forms of consumption taxes exist, to varying degrees of success.



This wasn't a serious submission. Does the QGP deserve any serious consideration as legislators? What about the last 10+ years makes you think they earned that?

Not much but I'd rather talk about the merits of the actual policy that just call people names. Not much about name calling convinces me that there's anything really wrong with this.

As to whether it was telegraphed that the fair tax would be a thing prior to now. That is almost certainly a result of the compromises McCarthy made. For most of the last 10 years, individual members haven't really advanced legislation. Its basically bee a top down thing. The Speaker's staff crafted legislation then springs it on the house and gives them a day at most to decide to vote for it.

This sort of goes back to whether I think the GOP legislators are serious, the never Kevin crowd mostly aren't, but they did have some valid points and demands. For instance, the house gets 72 hours to read a bill before they vote on it.

 

[lobosrul5]

Spending habits are going to change. This would be effectively a very large raise for people with higher than average income so they might spend more, etc. However...

Forecasting this is totally meaningless because 23% is too high stakes and it will be loopholed into oblivion by lawyers and lobbyists. The only forecast is that this will collapse the federal government.

Getting rid of payroll tax and replacing it with a national more like 3% sales tax exempting food and clothing to earmarked for social security / medicare would be worth looking at as that would be redistributive.

3% of PCE wouldn't even come close to replacing payroll tax. Payroll tax in 2021 generated $1.3 trillion. 3% of 15.9 trillion is only .48 trillion. And thats before any exclusions for tax on food and necessities, or a "prebate".

ETA: thinking about this, we just don't collect that much in the way of taxes... thats our main problem with the deficit. Total discretionary spending is only about 1.6 trillion, over half of which is for defense and veteran benefits. Mandatory spending is almost completely to keep seniors out of abject poverty and provided with healthcare. Even if you consider ALL other spending to be pork it only comes to $2,000 per year per person.