Fair Tax Act

[Hercules56]

The goal of the GOP is to collect just enough Federal revenue to pay for a bloated imperial military and hardcore border police.

Nothing else.

 

[Suddenly]

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.

I agree about the overall amount of taxes. I'm more from the direction that if there is any tax that ought to go it's the payroll tax. If for political reasons if not economic. That crap needs to be included within the general tax structure rather than a flat tax that phases out for high earners.

 

[lobosrul5]

I agree about the overall amount of taxes. I'm more from the direction that if there is any tax that ought to go it's the payroll tax. If for political reasons if not economic. That crap needs to be included within the general tax structure rather than a flat tax that phases out for high earners.

Ohh I see what you mean now. The best thing thing about the payroll tax is its legally bound to social security and Medicare. If those programs were tied to the general discretionary fund the odds of them being cut would be far higher.

And as an aside, while the tax itself isn't progressive the benefits for social security are. Retirees receive 90% of their income up to the first $1115 of monthly earnings, 32% up to $6,721, and just 15% above that (to the cap which should be done away with). Indexed to inflation for past earnings, and thats assuming age 67.

 

[lomiller]

Part of me thinks the Democrats should threaten to abstain from the vote and force the Republicans to either vote down their own proposal or commit political suicide by passing a bill that will tank the US economy and raise taxes on most of the voting public.

 

[lobosrul5]

Part of me thinks the Democrats should threaten to abstain from the vote and force the Republicans to either vote down their own proposal or commit political suicide by passing a bill that will tank the US economy and raise taxes on most of the voting public.

Even if the Senate passed it, Biden could just veto it. It would be political suicide on his part if he signed it.

 

[Random]

The goal of the GOP is to collect just enough Federal revenue to pay for a bloated imperial military and hardcore border police.

Nothing else.

Hey now, don't forget about the mandatory "Christian" schools and relocation camps for undesirables.

 

[novaphile]

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.

If you get rid of income tax, you'd probably need your goods and services tax to be more like 50%, and it is much harder to police than income tax.

Have any countries replaced income tax with a VAT/GST ?

When Australia brought it in, it was in ADDITION to income taxes, not a replacement of income taxes.

 

[dudalb]

Part of me thinks the Democrats should threaten to abstain from the vote and force the Republicans to either vote down their own proposal or commit political suicide by passing a bill that will tank the US economy and raise taxes on most of the voting public.

RIght now it's a free vote for the GOP. They can vote for it to satisfy their right wing suporters knowing it will not happen.
IF there was a real chance it would become law, I think it would probably die in the House.

 

[gnome]

The goal of the GOP is to collect just enough Federal revenue to pay for a bloated imperial military and hardcore border police.

Nothing else.

Just enough to make sure that they can have islands of wealth in an ocean of poverty and not actually do anything about it, since (theoretically) the pitchfork mob can't get through the security.

 

[Nosi]

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



All I could find online was a 2021 bill from the 117th Congress.

Summary: H.R.25 — 117th Congress (2021-2022)
https://www.congress.gov/bill/117th-congress/house-bill/25?r=96&s=1



https://en.wikipedia.org/wiki/Consumption_tax#Tax_burden_of_consumption_tax



What are the odds that the GOP will make sure this benefits the rich more than it does the lower and middle class?

The rich already avoid tax almost completely, but the Republicans are always ready to slam the boot onto the necks of lower classes. They will ensure that we sit in the gutter until we die.

 

[Nosi]

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.

Are you SURE that was a Never Keven demand? That's too sensible for the Q crowd.

 

[Nosi]

Even if the Senate passed it, Biden could just veto it. It would be political suicide on his part if he signed it.

That wiley old silver fox knows where the political wind blows.

 

[Gulliver Foyle]

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

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

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

Yes, but European countries also tax income and wealth too, quite often on a very progresive basis.

 

[The Don]

Yes, but European countries also tax income and wealth too, quite often on a very progresive basis.

Yes.

Shifting the entire tax burden to a consumption-based sales tax would result in a massive shift in tax burden from rich to poor. Mrs Don and I are wealthy and spend about 1/3 of what we earn, the rest goes to savings. At a notional 23% tax rate, our tax burden is under 8% (of money we're awash in)

A poor person spends 100% (or more) of what they earn. Their tax burden is 23% (of money they don't have).

As has been pointed out upthread there'd also be severe economic impact as people delay or abandon non-essential spending and the wealthy would doubtless find a way to make tax-free purchases (by using corporate entities) meaning that the sales tax would actually have to be 30%, 40% or 50%.

Like so many populist ideas, it sounds good to the underinformed but it doesn't stand up to scrutiny. Unfortunately the underinformed tend not to subject things to scrutiny.

 

[The Great Zaganza]

simple solution would a progressive consumption tax, which would be easy to implement big luxury items like houses, cars and yachts - just make them 2, 3 or 10x as expensive and give the difference to the tax collector.
the added benefit would be that mansions would suddenly become a lot smaller and a lot less ostentatious. And no one would buy a billion dollar yacht if he had to give Uncle Sam another 9 billion for the privilege.

 

[The Don]

simple solution would a progressive consumption tax, which would be easy to implement big luxury items like houses, cars and yachts - just make them 2, 3 or 10x as expensive and give the difference to the tax collector.
the added benefit would be that mansions would suddenly become a lot smaller and a lot less ostentatious. And no one would buy a billion dollar yacht if he had to give Uncle Sam another 9 billion for the privilege.

Expensive houses, cars and yachts would simply be bought by corporate entities - who would be exempt or discounted when it came to consumption tax otherwise there'd be no investment.

 

[The Great Zaganza]

Expensive houses, cars and yachts would simply be bought by corporate entities - who would be exempt or discounted when it came to consumption tax otherwise there'd be no investment.

doesn't matter - it's the purchase being taxed, not the entity buying it.
If a corporate entity wants to offset the tax it paid for a private plane, it would have to write off other assets.

But yeah, this is not the best way to tax the rich, as it would be IMMENSLY profitable to find ways around it.


a better idea would probably be the Common Ownership Self-Assessed Tax (COST): the principle being that there is a fixed tax rate for real estate by type and grade, but each owner can assess by themselves how much the object is worth. This could drastically reduce your tax burden, but the flipside is that you HAVE TO SELL AT THAT PRICE if someone offers to buy.
This would make it almost impossible to cheat on your taxes, as any deliberate undervaluation would mean you lose your property.

 

[Gulliver Foyle]

Yes.

Shifting the entire tax burden to a consumption-based sales tax would result in a massive shift in tax burden from rich to poor. Mrs Don and I are wealthy and spend about 1/3 of what we earn, the rest goes to savings. At a notional 23% tax rate, our tax burden is under 8% (of money we're awash in)

A poor person spends 100% (or more) of what they earn. Their tax burden is 23% (of money they don't have).

As has been pointed out upthread there'd also be severe economic impact as people delay or abandon non-essential spending and the wealthy would doubtless find a way to make tax-free purchases (by using corporate entities) meaning that the sales tax would actually have to be 30%, 40% or 50%.

Like so many populist ideas, it sounds good to the underinformed but it doesn't stand up to scrutiny. Unfortunately the underinformed tend not to subject things to scrutiny.

I was going to edit that point in to my own post but, seeing it made five or six times already, deemed it superfluous. I once proposed advocating for a flat income tax as part of a group assignment in college, but after spending three weeks reading up on it, I nixed the idea.

 

[The Don]

doesn't matter - it's the purchase being taxed, not the entity buying it.
If a corporate entity wants to offset the tax it paid for a private plane, it would have to write off other assets.

That would place a massive burden on US corporate entities not faced by their international competitors and would make them less competitive.

An easy way round it would be for a corporate entity based outside the US to buy the asset and then lease it to someone in the US.

But yeah, this is not the best way to tax the rich, as it would be IMMENSLY profitable to find ways around it.


a better idea would probably be the Common Ownership Self-Assessed Tax (COST): the principle being that there is a fixed tax rate for real estate by type and grade, but each owner can assess by themselves how much the object is worth. This could drastically reduce your tax burden, but the flipside is that you HAVE TO SELL AT THAT PRICE if someone offers to buy.
This would make it almost impossible to cheat on your taxes, as any deliberate undervaluation would mean you lose your property.

I cannot imagine a system more open to abuse than that and the impact on people renting would be tragic - you have no security of tenure and are relying on the property owner to make an accurate assessment of property.

The upheaval for owner-occupiers would also be considerable. Imagine being forced to sell your property because someone else thinks it's good value. Hell I could simply use my financial muscle to **** with people I don't like or a very well-heeled individual could "cleanse" a town of undesirables by forced purchase of their property.

 

[The Great Zaganza]

Disagree.
The concept makes sense when properly implemented (for starters, it would be necessary to exactly know who owns what at any time), and would come with protections for renters. Already in most countries, new owners can't just evict previous tenants or raise rents quickly or massively.


The point is that such a system would incentivize the rich to screw each other rather than the poor or State.