Tax Reform

[Azyael]

Bush has stated that one of the priorites of his next term will be tax code reform.

How exactly would you like to see the tax code reformed to?

What do you predict it will end up as?

[Aristotle]

National Sales Tax.

http://www.fairtax.org

[Gadiantor]

Two reasons I'd love to see a national sales tax are things that Ari has mentioned before:

1) Trust Fund kids don't get to avoid taxes and

2) Tourists share the tax burden

The other great tihng about it is that there are no loopholes to try and patch. Rich people can't hire tax lawers to find ways to shelter themselves from paying taxes. It is by far the most fair way of taxation.

[Ganthrol]

Doesn't this paragraph allow large corporations to dodge the tax?

No tax on used goods. No tax on business inputs. With the FairTax, if you choose to buy any new good or service, the sales tax is charged just as state sales taxes are computed today. If you choose to buy used goods - used car, used home, used appliances - you do not pay the FairTax. If, as a business owner or farmer, you buy something for strictly business purposes (not for personal consumption), you pay no consumption tax. So, in deciding what to buy, you get to choose whether or not you pay the federal consumption tax.

I'm for any tax program that taxes everyone fairly. There are too many loopholes now for large corporations and the rich, but the above paragraph still seems to let them escape the tax. And what about the topic of outsourcing? Outsourcing is not a domestic 'purchase', so how is that issue being resolved?

[Deokoria]

No, if it is still calculated as it is today, it is all about only paying tax on something once. Basically, the use tax exemption on businesses today is only for items that they intend to resell or items that will go into a finished product that will be resold. This is really only fair to get away from items being double taxed.

Furthermore, everyone always seems quite eager to put a large tax burden on businesses. When businesses pay less taxes, they operate at a more profitable margin, are able to expand and hire more people. More job openings means businesses start offering more competitive salaries which means people start making more money. This, in turn, puts more money in the hands of the consumers who will spend the money and generate the use tax. So instead of paying money in taxes, the money is paid to the workers who buy goods and pay taxes on the goods. The taxes are still getting paid, but there's that extra step of the money actually being in the consumers' hands first. When businesses are forced to pay huge taxes up front, there is no chance of the employees ever getting to see this money and decide what they want to do with it.

[Gaviani]

The National Sales Tax is a beautiful idea whose time will probably never come. So long as an electoral majority of people benefit from the colossally front-loaded "progressive" income tax system that we have in place today, a national sales tax will never materialize. When the bottom three quintiles (more than half of people) pay a net near zero or a literal negative in taxes, what makes anyone think in even the faintest notion they'd vote to BEGIN paying?

Sigh.

Preaching to the choir, I know.

[Gadiantor]

Originally posted by Ganthrol
Doesn't this paragraph allow large corporations to dodge the tax?

I'm for any tax program that taxes everyone fairly. There are too many loopholes now for large corporations and the rich, but the above paragraph still seems to let them escape the tax.

Corporations always pass on the cost of the tax to the consumer anyway, so in the end it is the consumer that is really paying for the corporations taxes. The more you tax a company or business the more they will be forced to charge to keep their profit margins steady. I've never seen taxing corporations as terribly useful because you're really taxing the consumer in the end. Just cut out the middle man!

[Grantref]

I have no idea what I'd like to see it end up as, but a national sales tax on everything except the necessities of life (food, heat, energy, clothing, broadband internet access, etc.) would probably be better than the labyrinthine tax code we have now.

I suspect it will end up being another tax break for the rich and lead to a national debt that will end up being more per capita than the average american will ever earn in their lives.

[tharun]

Just out of interest, do you know what current rate of tax you pay?

I mean, how much do you *actually* pay out of your initial income, after income tax, state tax, blah blah blah on your paycheck. THEN after that how much do you pay on sales tax and other taxes that hit you up along the line?

In a very simple measure, in the Uk I was, roughly, paying 20% of my income on income tax and 'national insurance' (on a low income), and then after that there was a 17% national sales tax on almost everything I bought in the shops. After that even, I was paying extra tax on cigarettes, and alcohol etc. above and beyond the 17% sales tax.

I think it would be reasonably fair to say that, all in all, I was spending 40%+ of my income on tax. As someone working for minimum wage.

What percentage of your income goes to some kind of tax or other in the country you live in?

-tharun

[Zimri]

I would bet that if you add up all the taxes I pay, including income (state and federal), sales, gas, property, tobacco, utilities, payroll (local), and then look at the taxes that are ALREADY paid on items I purchase that are included in the sales price, we pay close to or over 50% in taxes in the US.