The government of the SUSA in the "Ashes" series was financed by a 20% flat income tax on all earned and unearned income. Many Eastern European countries, including Russia replaced their complex tax system with flat income tax systems and are enjoying great economic growth.

The Flat Tax was an idea that was popular back in the 1990s and was proposed repeatedly in Congress. However, it appears support has shifted from a Flat Income Tax to the FairTax plan which replaces the income, payroll, corporate, alternative minimum, capital gains, social security, medicare, estate and gift taxes with a 23% National Sales Tax. Now to make this tax a "FairTax", every adult American citizen will recieve a monthly "prebate" of $187/month with an additional $65/month for every child in that household. This will completely untax the poor and allievate the burden of the NST on working families making this tax a "FairTax".

So what kind of tax system should we adopt?

I was initially in favor of a combination of a flat income tax and a value added tax with annual tax credits to make the system more progressive. However, I realized that this would gives us the worst of both worlds. The invasion of financial privacy of the income tax and the escalated costs of a consumption tax.

I wasn't too keen on the FairTax plan at first. However, once I read the book, it made alot of sense. The fairest tax we can come up with is a progressive consumption tax because it taxes people on what they spend as opposed to what they earn. The FairTax would do away would be paperless for individuals alltogether. People will be able to take home 100% of what they earn. The FairTax would also collect taxes from all 300 million Americans plus the 50 million who annually visit our shores, not just the 160 million wage earners and businesses.

I noticed that so far, it is Flat Tax 3, FairTax 2. It is a close race so far. So for those who favor the Flat Tax over the FairTax, why do you so? Do you favor the Flat Tax because that is the tax system for the SUSA in the TSM or because the Flat Tax is superior to the FairTax for various reasons? If the latter, what are the reasons you think the Flat Tax would make a better system?

Hey Cinc! I think either the fair tax or the flat tax is way superior to what we have now! My only problem is the 23% national sales tax. If the church only takes 10% I think that the max the goverment should take is 10% and add to that State tax of 5%. Let the government tighten it's purse strings. Maybe they can temporarily add a % to pay of the national debt. But then again, I ain't no economist or accountant and what I say may be naive. But either fair or flat is better than what we have now. Aloha, ogi.

Don't think of it as the church taking your 10%. That is what God asks us to give to honor him.

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Don't Squat With Yer Spurs On

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I know it is easier to say let the government cut its budget than to try to reform the tax system. However, I think it would be an easier battle to reform the tax system than it would be to reduce government spending.

I know 23% sounds high. But remember this (1) under the FairTax plan, you are taking home 100% of your income (2) the FairTax plan eliminates the payroll tax which is regressive so your taxes are reduced even further (3) the FairTax plan eliminates corporate taxes which will make America the tax haven of the world (4) the FairTax plan eliminated the "embedded taxes" that constitute 20-25% of the cost of each product.

Now the FairTax plan does not eliminate state and local taxes. It is up to the states whether or not to do away with their tax systems and conform to the FairTax plan. However, the FairTax plan will transform the way the government is funded and will show how much the government is costing its citizens and the citizens will ask their leaders how their money is being spent.

Also, when the economy expands, the FairTax will raise enough revenue to pay its budget and run surpluses to pay down the national debt. Once the national debt is retired, the USG will save $200-400 billion a year on interest payments on the national debt which can be given back to the citizens or rebuild America's infrastructure, shore up social security, double the size of the military or fund a universal health insurance program.

Right there you have the one binding and sticking issue to the tax question.. if the states go for it.

IF an amendment could be made, binding the states to the flat or fair tax, then we have a second problem: getting companies to lower the cost of their products and services to reflect the true cost so the flat or fair tax can be brought forward and put into place to fairly tax as it is designed to do, meaning to take the places of the tax systems we have now. If you don't force companies to lower the cost of their products and services accordingly, we will see them keep the inflated prices, then add the new flat or fair tax on top of it.

IMHO, the only tax which makes any sense is the flat tax. Flat tax is consumption based, the more you spend in dollars, the more you pay in tax. A $1.00 item at the store with the 15% proposed tax rate is $1.15.. a $1,000,000 is $1,150,000. No matter who you are, your going to pay %15 on your purchase... period. I actually propose that it be on ALL items of purchase, to include food. Sounds harsh, but who do you know who does not eat? I don't have the cash for a boat or a Porcha, but I do for groceries.

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"...if they are angry, perturb them..." Sun Tzu - The Art of War

Well, the FairTax works by leving a flat inclusive rate on consumption. For a product that is $100, you pay $23 in FairTax and that would be reflected in your bill. Now to make this tax a "FairTax", every citizen will recieve a monthly "prebate" of $187 and an additional $65 for every child in that household. This would untax the poor and account for mandatory spending on the necessities of life such as food.

Let us take a family of four that makes and spends $30,000 a year. That family will spend $6900 in FairTax but will recieve monthly prebates totaling $6048. That family will only spend $852 in FairTax at the end. Now let us take a family that makes and spends $60,000 a year and pays $13,800 in FairTax. That family will still recieve $6048 in prebates and will still pay $7752 in FairTax. Therefore, the FairTax is a progressive consumption tax.

Now, prices really won't drop by 20-25% because people will want to take home 100% of their pretax income. You can't lower prices by 20-25% and have people take home 100% of their pretax income at the same time. That is like using the same dollars twice. However, the people win either way if either prices fall by 20-25% or they take home 100% of their pretax income.

The best thing about the FairTax is that there is no individual tax forms to fill out, it is difficult to cheat, it reduces the points of collection by 80%, promotes savings and investment, taxes the underground and offshore economies, and taxes the overall size of the economy as opposed to merely the wage earners and businesses.

Your going to have to post something on the fair tax. What you describe is nothing more than an over-glorified version of welfare.

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"...if they are angry, perturb them..." Sun Tzu - The Art of War

The FairTax is not an entitlement or welfare program. The prebates are merely a refund on the FairTax. The prebates are large enough for the poor and working class to recoup all the money they spend on the FairTax, nothing more. Therefore the FairTax untaxes the poor and working class.

The prebates have to be included in the FairTax because without the prebates, the NST becomes a regressive tax. With the prebates, the NST becomes a progressive consumption tax and it is the prebates that make the NST a FairTax. Economists claim the fairest form of taxation we can come up with is a progressive consumptiont tax.

Why allow the government to control that money in the first place?

So, we tax the working poor, like we already do, then give them back a check with the ideology that it un-taxes them?

OK.. stop there and take a look at this.

When we tax someone, then send out a check, we incur cost.

The man working at the Federal Tax center, doling out the check has got to be paid. He's not going to be a minimum wage earner, his job, like most government jobs are going to pay a decent salary.

The costs of paper and ink for the printing of checks has got to come from somewhere, not everyone is going to want to get their prebate check direct deposited in the bank.

Costs for postage and the postal system are going to be included into this rebate which the government has got pay in order for the guy beingbveing taxed to get his money back.

That's like breaking someones legs and then giving them the crutches later to make them feel good.

Lets also take a look at the fact that you want the Government to hold on to the money or even control who gets the money back in whatever way. I really thought the idea was smaller government, not a control factor from it.

Lets also take a look then on what happens when the Liberals DO take charge of the economy and get their hands on this system. When they know that they have ability to take funds and control them, do you really think that they are going to give them back?

K.I.S.s
Keep it simple.
Flat Tax on ALL consumables.
Everyone pays and the more you spend, the more you are taxed. No one carries the burden any more than anyone else. The incentive is still there to make money, if you don't spend it on frivolous expensive items, then you don't get taken to the cleaners, if you do spend it all on expensive baubles, then you pay for it.

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"...if they are angry, perturb them..." Sun Tzu - The Art of War

First of all, the same people that cut social security checks every month can be used to issue the prebate checks. The USG managed to issue checks for the recent tax refunds with no problems. Second, the IRS will be abolished because the collection of the FairTax will be conducted by the sales tax agencies of state and local governments who wil recieve half a cent for every 23 cents collected in NST. States with no state sales tax may contract the collection to the sales tax agency of another state or the USG itself.



The FairTax provides for the same monthly prebate for EVERYBODY. Paris Hilton will recieve the same prebate as the man living on the street. Now Paris Hilton may not care about recieving $187/month but would make a huge difference to the man on the street. No individual will recieve a higher or lower prebate than anyone else under the FairTax.




That would be the fault of the voters, not the FairTax. Even if we adopted your sales tax system without the prebates that would be included in the FairTax, Liberals can decide what products or services would be exempt from a sales tax. Moreover, Liberals can choose to replace the sales tax with a Value Added Tax (which functions differently from the NST) or bring back the income tax and we end up with both the income and consumption tax.



But the sales tax is still a regressive tax because families of the lower income brackets will be spending all they make to get by while the wealthy families may spend half or a fraction of what they make and sock away the rest.

Allow me to illustrate with two families of four. Family A makes and spends $25,000 and pays $5750 in NST, family A would be paying 23% of their income in taxes. Family B which makes $200,000 a year but only spends $100,000 and pays $23,000 in NST, Family B would only spend 13% of its income in NST.

Now let us take those same two families and sales tax rate and see what happens under the FairTax.

Family A still makes and spends $25,000 a year and pays $5750 in NST. However, Family A recieves $6048 in prebates and comes out ahead by $298. Family B also recieves $6048 in prebates but still in the end pays $16,952 in FairTax. Family B still pays 8% of its income in FairTax but Family A sees its tax burden eliminated.

Kolus, you and I both agree on a flat National Sales Tax on all goods and services. The part we disagree on is whether every citizen should recieve a monthly prebate on the NST as the FairTax plan proposes. I think in order for the NST to be a fair tax, monthly prebates have to be included.

I say flat tax on what you make, be it 10,000 a year or 10,000,000 you pay eaither 10 or 20% no deductions no hiding, its only fair.

monbade

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"Chief's have been taking care of this man's navy for a long time, Mr. Caldwell. Don't worry about him, he's got a lot of good sailors to take care of back there."

John Wayne in Operation Pacific

CINC:

[PHRASE NOT PERMISSABLE] by any other name is still [PHRASE NOT PERMISSABLE].

You are talking about taking from the rich and paying the poor.

You can't honestly sit there at your computer and not see that families, for the most part, whoearn more, spend more.

I don't know of a single high-waged earner out there who drives a Geo Metro or a Dodge Neon. Those people spend what they have with the philosophy that "I have it, its mine to spend, I'm going to spend it." and rightfully so.

The guy buying a Porche for $100,000 under a flat tax is going to be taxed at the same rate and pay equal tax burden of $10,000 for his car as compared to the guy who is buying a Kia Rio for $10,000 and paying $1,000 in tax.

If respecively the guy buying a Porche is making $300,000 a year, (this isnt going to happen in either case, but for the sake of simplicity) pays cash for his car, he is paying 1/3 of his salary for his car.

Likewise the man who makes 30,000 a year will be paying 1/3.

Where is the confusion in?

Its a matter of keeping the system simple. EVERYTHING which is bought or sold is taxed at a flat rate. Period. No exemptions, no exceptions. If you like to spend money, you will be taxed accordingly.

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"...if they are angry, perturb them..." Sun Tzu - The Art of War

As I said before, everybody recieves the same prebate. Also, you are forgetting that paying 23% of one's income in NST would be harder on a poor person than a wealthy person. Jesus himself, when he talked about ththing when everyone had to pay 10% to the temple said "The rich man paid his tithe out of his wealth, this poor woman paid her tithe out of her poverty. Which one sacrificed more."

The thing about a plain National Sales Tax with no prebates is that someone who is spending everything he earns to enable him/her or their family to get by than someone who is making alot more money and not having to spend everything he/she earns. That is why a plain National Sales Tax would be a regressive tax while under the FairTax plan the National Sales Tax would be a progressive consumption tax once the prebates are factored in.

A mere $187/month is not going to matter to someone making $100,000 a year. However, it will make a world of difference to someone who is making and spending $20,000 a year.

Also, a plain NST has been proposed in Congress before and has got nowhere in Congress. However, the FairTax plain enjoys vast grassroots support and is gaining momentum. Rush Limbaugh, Ron Paul, Sean Hannity, Alan Keyes, Mike Huckabee are all backing the FairTax plan as well as Libertarians Mike Gravel and Neal Boortz.