Although I have learned much from and am a huge fan of many of the pre-industrial revolution Libertarians who's advocacy for fighting authoritian and statist government control over individual freedoms I have to say that on the issue of the Fair tax I have to take a more common sense approach. I have no health insurance, I have student loans building up because its tough 27 I'm working my rear off to get a 4 year degree so that I can better support my family.Realisticly I think that if more people knew that (aside from those below the poverty line) anyone making less than around 200,000 dollars a year will increase the percentage of taxes they pay to the Federal Government; there would be a lot more opposition here in the South to the Fair Tax.
I can't legitimately support raising the amount of taxes I pay to the federal government just to file taxes on a postcard sized form. Like most Americans I work hard for my money.
Why don't we divide the top income bracket so that the Bill Gates and Warren Buffets pay a higher rate than the bottom 50% of the top income bracket who are getting screwed over by a completely inequitable distrobution of top braket tax levels.
Thursday, June 5, 2008
Comment on Fair Tax blog post
I caught a Fair Tax blog post and made a quick comment (with typos and all!! I wish I could spell better without spellcheck)
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15 comments:
Jim,
If the premise you state were accurate that those making less than 200K would pay more in taxes, I'd be fighting against the FairTax. The fact is that premise is nonsense that came from the president’s advisory board.
The panel was not allowed to consider any proposal that abolished the payroll taxes and so, they calculated their own version of a consumption tax with payroll taxes still in place and made assumptions about the kinds of things politicians would exempt while passing a consumption tax. Under their proposed consumption tax (which was not even close to the FairTax as written and about which they have never released specifics) a lot of lower middle class people get hosed. I'd reject that one also.
You give us some insight into where you are financially, but not enough to compare your current situation with the same situation under the FairTax. If you add up what you spend in a year/month, subtract what you spend on tuition or used goods or debt repayment, do you come up with more or less each year than the poverty level for your family according to this list?
Single adult -- 10,400 /12 = $867 per month
Single w/ one kid -- 14,000 /12 = $1167 per month
Single w/ two kids -- 17,600 /12 = $1467 per month
Two adults -- 20,800 /12 = $1733 per month
Couple w/one kid -- 24,400 /12 = $2033 per month
Couple w/two kids -- 28,000 /12 = $2333 per month
Thanks for the response!
Actually I wasn't looking at those numbers. I was just plugging in the Congressional Buget Office's numbers on how much Federal taxes I pay. I'm under 10%. The Fair Tax would push my rate of taxation up to 23%. I'd be paying 23% to the Federal Government and paying more to buy a gallon of milk! A really bad idea in my book.
plus it'd be somewhere around 30% rate to not cut federal spending. I'm not for government thats too big. But we are already at a revenue rate that is far below our needs. The European and Asian countries are leaving us in the dirt because we are underinvesting in our infrastructure.
Plus there is a question of political power. Nowhere do I see any arguments as to how you would pass the Fair Tax and not still have some kinds of taxes put on top of that by another administration.
If you pay less than 10% now, you don't have a huge reserve that you spend from, and you are honest about your income, you will likely pay zero or very close to zero under the FairTax.
Do you know how the family consumption allowance (or prebate) works?
Read this:
http://www.fairtax.org/site/PageServer?pagename=about_faq_answers
David
Sorry, David, but the pre-bate does nothing more than put a majority of the country on the dole from the government. It creates the greatest welfare program in the history of this country (with the possible exception of SSI). If you think we have problems with too much government now, what will happen when we are all dependent of the government for however much is allowed as a pre-bate?
poverty level was 10,000 or so in '07 everyone gets a check so that you have at least povery level income.
1st problem the actual poverty level is far higher than that. In a complex economy there are a lot of external needs that must be met. The government calculated this "on the back of a napkin" or at least as the popular phrase goes. So first off the poverty level is inaccurate.
2nd. I make over the poverty level and I consume EVERYTHING I spend. Its not that I don't save or don't want to save... its that there is nothing to save. The CBO states (and if I need I can go get my tax records) that I get hit with under 10% going to the federal government. Now 23% will go to the federal government. I consume everything. COnsumption hits hardest those at the lower end of the income. A single mother with 2 children doesn't have to buy less milk than Bill Gates.
Basic goods and services are the majority of low and middle income expenditures.
3. Why are kids worth less than adults for a rebate? Are they a form of consumption? Two adults living in a house means two incomes to help pay for the rent. 1 adult and 2 kids means 1 worker is paying for 3 to live in that house. So two grown adults get a bigger % chunk from the government--are worth more... than what kids get you in this calculation.
What gives?
That might be a cultural thing. If you are in poverty in this country it is more likely that you are under 21.
I'm sorry. May I ask without intended insult that you try to hear what I am saying and respond to it? You don't seem to be hearing me. I can accept when someone hears me and disagrees, but it is frustrating when someone imagines they disagree without hearing what I am saying.
You summarize my position by saying "everyone gets a check so you have at least poverty level income", that is not correct. Indeed that would be the evil that yardman is projecting onto the FairTax. Everyone gets a check for the taxes they will pay the following month on poverty level spending. The check you will get is the inclusive tax rate (23%) times the poverty threshold for your family size. Do you see the difference and the reason?
The department of Health and Human Services has a pretty big napkin. http://aspe.hhs.gov/POVERTY/index.shtml
But you contradict yourself when you say their computations and guidelines are a) meaningless and b) a reason to reject the FairTax. They can be one or the other, but not both.
If your point is that it feels like poverty to live anywhere close to those guidelines, I agree with you.
Your second point is exactly why I want you to understand what the prebate does. Neither you nor the Gates household should have to pay tax on the milk and other groceries you need. Both should pay tax on money spent on food that is above the level of necessity.
You keep repeating that 23% of what you spend will go to he government. Because of the prebate, that cannot be true. If you spend at the poverty level, your effective tax rate will be zero. If you spend twice the poverty rate, you only pay taxes on the second half so your rate will be 11.5% (23%/2), if you spend 3 times the poverty rate, you will in effect pay 23% on two thirds of your spending and your effective rate would be 15.33%.
For the sake of this discussion, please take a couple minutes to figure up what you make and thus spend in a month (call this I for income), subtract what you spend on tuition (t) or used goods (u) or debt repayment (d) or give away (g) or save (s) to find your potential taxable spending (PTS).
I - (t + u + d + g + s) = PTS
Subtract from that the monthly spending allowance (A) next to your family size in my first post because you get the prebate to cover the tax on that amount of spending. The difference between those two numbers is the after-prebate taxable spending total.
TS - A = ATS
Multiply that by 23% to find your FairTax liability.
ATS x .23% = L
To get your effective tax rate, divide your liability by your income.
L / I = ETR
Tell us your ETR. I will bet you a buck it is less than the 10% you think you pay now.
Your third point is another thing to take up with the department of Health and Human Services. They compute that a head of household spending includes the costs associated with the home itself like electricity, rent, pots & pans, etc. They compute the spending for the offspring includes mostly food and clothing.
According to their guidelines a second adult living in the household actually raises the poverty threshold less than the first and thus if figured exclusively on poverty guidelines, the prebate for two people living apart would be higher than two people living together. The reason the second adult gets the same prebate as the first is because to do otherwise would have the effect of incentivising adults to live separate or lie about living arrangements. The thousands of focus group participants who helped shape the FairTax proposal are responsible for that adjustment.
Will respond more fully when I have some time (hopefully later today...
1) you were correct my word usage implied you get a check to get you to poverty level but that it is just to make sure people below poverty level don't pay taxes. Sorry language slip I knew what you meant but did not say it right.
2) poverty on a napkin was meant to point out that sociologist point out all the time that the "poverty measurement" was a guess. It doesn't accurately measure what level of income is equitable to receicve compensation so that the individual doesn't live in dysfunctional poverty and our economy isn't harmed by the drag that people in poverty put on an economy.
i.e. "poverty level" is a meaningless measurement. Its meaningless of fairtax folks just as much as for folk in congress.
1.5 You think its evil to make sure people have at least poverty level income? wow.
I'm not saying i'm paying 23% of my income to the federal government. I'm paying 23% of my money to the federal government. I like everyone under 200,000 a year pay less than 23% of their income to the federal government.
Fair Tax people are clever in that they always refute by saying... you won't pay 23% on everything you spend to the governemt. Its a consumption tax you only contribute when you spend. I don't care what I spend... I care about the percentage I contribute out of my income.
No one under 200,000 dollars a year is currently giving 23% of their income to the federal government.
3. I know the Fair Tax was well test marketed the people who fund this machine wanted its propaganda to be effective. But how many 5 year olds were asked the question of if it was equitable for a grown adult who can work should get more than an underdeveloped one that doesn't. One could speculate on the reasons for this but I won't go there. But it intersting. Any economic intro course will tell you that Housing is the largest expense in a households budget. I guess you guys testmarketed that opinion too.
Will respond more later... got to run for now.
cheers,
JIm
You wrote:
1.5 You think its evil to make sure people have at least poverty level income? wow.
I do not want anyone to starve or go without shelter. I routinely have someone living in my home who was homeless when I met him. I feed them, shelter them, and help them find jobs and housing on their own. But I no longer give cash to panhandlers or encourage people to sign up for welfare (medicade yes, cash payments no).
What I think would be evil is to give checks to everyone without regard to their efforts.
We have done a huge disservice to the poor by encouraging dependence on welfare payments. Helping with the homeless as much as I do, I run into many people who literally could make more in welfare and handouts than they can learning a skill and getting a job. I have fellow volunteers who spend all their time helping the homeless get government checks of one sort or another. I think they are doing more damage than good by rewarding inaction instead of action.
You seem to make the assumption that some group decided to create the FairTax as it is currently written and then paid economists to agree with them and test marketed to find out how to sell it. That is not how it happened.
Three wealthy oil men were discussing the mess we are in and each agreed to put up a million bucks to pay economists to start from scratch and figure out the best way to fund the federal government. As Leo Linbeck tells the story they expected some sort of flat income tax with a high personal exemption and were actually shocked when they got the results of a sales tax with a poverty exemption. Once they got that far, they were intrigued enough to continue to fund research to determine what the rate would have to be, how to protect the poorest of the poor, how to make it fair. It was allegedly during that phase that it began to be call the fair tax.
You still seem to think that the only people who get the prebate are people below the poverty level. Do you understand that all families get the prebate so that no family pays taxes on the very act of surviving (according to the dubious numbers provided by the department of health and Human Services)? It would be terribly unfair to untax anyone living in poverty and tax at 23% someone living just above. Is that what you are thinking happens under the FairTax?
Regarding the difference between children and adults, you do understand that the current system allows you to earn tax free around $8,000 (standard deduction) for an adult and an additional $3,500 (deduction) per child, right? The prebate is designed to (p)reimburse you for taxes paid on poverty level spending. It costs less to provide for the needs of a child than to provide for the needs of a single adult. You spend less to do so. You pay fewer sales taxes when you do so. There is less to reimburse.
You wrote:
“I don't care what I spend... I care about the percentage I contribute out of my income.”
Work the numbers as I laid them out. If you are anywhere near as poor as you indicate, you will pay less under the FairTax than you do under the current system.
Thanks for listening.
Still doing my homework... but the wow comment on second read looks pejorative it wasn't intended that way... I'm glad you are someone looking for effective ways of helping people out of poverty. We obviously haven't succeeded yet so we need more people trying to fix that...
some of the points on not helping poor people by incentivizing dysfunction are good...
I just worry about the term "evil" the connotations are huge and most people bandy it about rather carelesses and in a manner that harms the context of what we are trying to do... i.e. fighting terrorism, or fighting poverty... because of language the way people frame the world has huge repurcussion on how they act...
any who I'm still doing my homework...
and if we can start numbering or symbolizing the arguments I can keep up better and distinguish the different arguments because in a complex world there are arguments that seem to overlap and one wrong turn ends up leading to presuming a larger argument is a wrong when it might not actually lead to that conclusion.
Yes, the "wow" felt perjorative. Thanks for correcting. The "evil" was a bit hyperbolic. My use of the word was to try to refer to Yardman's condemnation of the prebate and quote the sentiment.
I'm anxious for you to turn in your homework. grin.
Regarding numbering issues:
First issue as far as I am concerned is to make sure you understand what the prebate does and why it was included in the proposal.
Second is to demonstrate to you that you will likely pay less in taxes once the FairTax passes than you do now--almost every honest taxpayer does.
I'd just as soon drop the topic about kids getting less prebate than adults since I think we've beaten that horse.
We will disagree on spending, so we should hold off on talking about that till we agree on a couple points.
I make about double the poverty level and I know I will pay less in taxes under the FairTax than the current system.
Oh, in my math homework assignment I said you multiply after prebate taxable spending by .23% to get your FairTax liability. I put too many symobls in there. You multiply it by .23 or by 23%. Math and remembring how to use symbols has never been my strong suit.
will need to print out davidfl10 comment/question and work on it on the train... running out of hours in the day and just threw out 10 bags of red mulch
Hehe,
I spent four hours today moving mulch, but I didn't buy it by the bag. I had a tree company drop it off in the driveway.
Reuse, recycle, renew.
To give you a whole new issue, I'm two thirds of the way through this lecture:
http://video.google.com/videoplay?docid=3340274697167011147&hl=en-CA
I'll wait patiently for the FairTax study.
Do your Fair Tax homework at OperationOffTheFence.org; then join the national grassroots movement of Citizens there....participants in 30 states and counting.
The Fair Tax will allow all American citizens, regardless of class or income, the ability to choose if, when, and how much federal tax they pay based on how they spend their money. Buy new goods or services - pay the tax. Buy used stuff, or education - pay no tax. The current embedded costs of the tax code will come out of the prices of all goods and services (yes, competition will do this); the Fair Tax is simply a replacement of those embedded costs.
Necessites (determined by you and your family, not the gov't) will be untaxed by virtue of the prebate. The Fair Tax levels the playing field by placing all the rest of us on the same level as the rich guy who right now holds all the aces in this game (he can afford the tax attorneys & CPAs to find loopholes; or lobbyists to create them).
No loopholes. No tax on income. No payroll tax. No paying taxes at the point of a gov't gun.
Constitutional taxation once again (the Fair Tax is the indirect uniform tax in the Constitution).
Freedom. Liberty. Sovereignty. Fair Tax.
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