Teh stupid, it hurts.

[carltonplace]

Investors prosper greatly under this plan, since corporations face lower operating costs and individuals have more money to save and invest. The reform significantly enhances the retirement savings and/or retirement spending power of most Americans. The purchase of stocks is considered a purchase for investment purposes and not personal consumption so they are purchased tax free. The service fees charged by the broker, however, are personal consumption and therefore subject to tax.

Since most of the stock market is comprised of individual retirement savings, this represents a huge boom to the average person.

So no tax on service purchases either, only on tangible goods.

Oil Filter <--23%
5W40    <--23%
Labor     <--not taxable

[Gaspar]

So no tax on service purchases either, only on tangible goods.

Oil Filter <--23%
5W40    <--23%
Labor     <--not taxable

Geeze!  Where do you get your info? 

Oil Filter <--23%
5W40    <--23%
Labor     <--23%

Services are taxed at the same rate.

Service providers are not exempt from the income tax today, and should not be exempt from the FairTax. Services now account for well over one-half of the gross domestic product (GDP). Neither consumption of services nor consumption of goods should be tax preferred. And it is economically foolish not to tax the fastest growing segment of our economy. Competition, not politics, should determine what goods and services cost.

Keep trying.  Eventually you will find something that will stick.

[nathanm]

Investors prosper greatly under this plan, since corporations face lower operating costs

That's weird. I thought you said that corporate income tax was effectively paid by the company's customers through increased prices. Not sure how anyone's operating cost is going to be reduced if it's a revenue neutral scheme.

[Gaspar]

That's weird. I thought you said that corporate income tax was effectively paid by the company's customers through increased prices. Not sure how anyone's operating cost is going to be reduced if it's a revenue neutral scheme.

That's the fun part.  The massive expenses corporations pay to comply with the federal tax code and payroll taxes is simplified.  So while revenue remains neutral, operating expenses and the uncertainty that continuous changes in tax code produce are greatly decreased.  Compliance costs also become far less of a burden for small businesses and emerging companies too.

 

Here's a way you can look at it.  Currently Americans spend 6.6 billion hours per year filling out tax forms—including 1.6 billion hours on the 1040 form alone.

That represents about a hundred billion dollars (or more depending) injected back into the economy.  Actually, even better, thats billions not taken out of the economy!

[Gaspar]

Also. . .when you think about it, all free market exchanges (both goods and services) produce value. 

The only exchange that produces no value is one that is derived out of force (not free market).  The time you spend doing taxes, or the money you spend on tax software, or the fees you pay for tax attorneys, and tax accountants, produces no value for you.  It is a one-sided transaction.  Sure the accountant, or software company makes money, as do the printers, and pulp mills that make the paper, but they do, not because you are gaining value from the service they provide, but because you are required to pay for their services through force.

In essence, compliance with the current tax code involves slavery.

[Ed W]

In essence, compliance with the current tax code involves slavery.

And of course, since corporations are good citizens, they'd pass along all those savings in the form of lower prices rather than use them to pad the bottom line, boost profits, and satisfy their shareholders.

I thought it was the Communists who were supposed to have an unrealistic ideal for human behavior. 

[heironymouspasparagus]

And of course, since corporations are good citizens, they'd pass along all those savings in the form of lower prices rather than use them to pad the bottom line, boost profits, and satisfy their shareholders.

I thought it was the Communists who were supposed to have an unrealistic ideal for human behavior. 

Haven't you heard?  All the Communists are gone, so we are left with Gaspar for unrealistic ideals.

[Red Arrow]

And of course, since corporations are good citizens, they'd pass along all those savings in the form of lower prices rather than use them to pad the bottom line, boost profits, and satisfy their shareholders.

I thought it was the Communists who were supposed to have an unrealistic ideal for human behavior. 

The heck with being good citizens.  They're dirty SOBs that want to steal their competition's business.  The "first" guy will lower his price just a bit since he has now some margin to play with.  Then the second guy will follow trying to steal business back.  And so on until the real new price happens.  I believe most businesses would rather have 10% of something than 15% of nothing.  Of course this only works in a free market.  

[Ed W]

The heck with being good citizens.  They're dirty SOBs that want to steal their competition's business.  The "first" guy will lower his price just a bit since he has now some margin to play with.  Then the second guy will follow trying to steal business back.  And so on until the real new price happens.  I believe most businesses would rather have 10% of something than 15% of nothing.  Of course this only works in a free market.  

You're describing the airline business and its race to the bottom. Each lowers their price in an attempt to gain market share until they reach an unsustainable level that doesn't offer much profit.  Then they complain that they're paying too much in taxes, putting pressure on government to reduce their taxes even further.

How did the so-called free market produce the recent spike in gas prices when the price of crude continues to decline?   

[heironymouspasparagus]

You're describing the airline business and its race to the bottom. Each lowers their price in an attempt to gain market share until they reach an unsustainable level that doesn't offer much profit.  Then they complain that they're paying too much in taxes, putting pressure on government to reduce their taxes even further.

How did the so-called free market produce the recent spike in gas prices when the price of crude continues to decline?   

Because we don't have free market capitalism.  We have capitalistic monopolism.

[guido911]

...so we are left with Gaspar for unrealistic ideals.

What about me? I'm unrealistic too.

[heironymouspasparagus]

What about me? I'm unrealistic too.

You're special....you have your own category.  Way beyond unrealistic...it's that rarified atmosphere you breath....

[Gaspar]

That's an interesting concept worth further exploration.

On the one hand we have a progressive tax system comprised of over 6,000 pages of regulations, restrictions, and forms that cost our economy hundreds of billions in compliance costs, and required a bureaucracy of 106,000 employees.  Each year we add to the code and increase the number of employees necessary to enforce that code by thousands.  While this code represents a rather simple progressive rate structure, it provides hundreds of deductions, loopholes, and requirements, that when met, reduce total tax liability and revenue.  Only the most wealthy and powerful have the resources to use the tax code to their advantage, and an estimated 60% of taxpayers are currently out of compliance, and criminals according to the IRS.  Constantly, the current progressive tax code becomes a political tool because it's increasing complexity, and the opportunity it affords various groups to loot or pillage the productivity of other groups.  Every time this happens the word "REFORM" is used, however the system never becomes easier to comply with, less expensive to implement, or less burdensome on the economy.  In fact, the opposite happens.

On the other hand, there is this idea of a Fair tax, that would still remain progressive, and keep revenue at the same levels, but would put the tax code out of the reach of politicians, and corporate manipulation.  It would, not by force, but by choice, cause everyone to pay their fair share based on the share of the economy they participate in.  It would emancipate 6 billion hours of unproductive forced labor every year, and introduce hundreds of billions of dollars back into the economy.  No one could legally escape paying taxes as they do today.  Those at or below the poverty line would still pay no taxes.  Savings and investment would be encouraged, and all of the savings and investment people participated in would be free of double taxation.  The burdon of uncertainty in forecasting tax liability and payroll liability from year to year would almost be eliminated.

To be realistic, you must be able to present concepts that offer some degree of sustainability.  As long as our tax system grows in complexity at the hands of politicians and the corporations capable of complying and manipulating it to their advantage, and as long as tax policy is fueled by the narrow sighted belief that government has the ability and duty to successfully pick winners and losers, we will remain on a very unsustainable and exceptionally unrealistic path.

So, when liberals say that the simple concepts of freedom and self government that this country was founded on are unrealistic, that rings as a complement to me.  Thanks!

[Conan71]

That's an interesting concept worth further exploration.

On the one hand we have a progressive tax system comprised of over 6,000 pages of regulations, restrictions, and forms that cost our economy hundreds of billions in compliance costs, and required a bureaucracy of 106,000 employees.  Each year we add to the code and increase the number of employees necessary to enforce that code by thousands.  While this code represents a rather simple progressive rate structure, it provides hundreds of deductions, loopholes, and requirements, that when met, reduce total tax liability and revenue.  Only the most wealthy and powerful have the resources to use the tax code to their advantage, and an estimated 60% of taxpayers are currently out of compliance, and criminals according to the IRS.  Constantly, the current progressive tax code becomes a political tool because it's increasing complexity, and the opportunity it affords various groups to loot or pillage the productivity of other groups.  Every time this happens the word "REFORM" is used, however the system never becomes easier to comply with, less expensive to implement, or less burdensome on the economy.  In fact, the opposite happens.

On the other hand, there is this idea of a Fair tax, that would still remain progressive, and keep revenue at the same levels, but would put the tax code out of the reach of politicians, and corporate manipulation.  It would, not by force, but by choice, cause everyone to pay their fair share based on the share of the economy they participate in.  It would emancipate 6 billion hours of unproductive forced labor every year, and introduce hundreds of billions of dollars back into the economy.  No one could legally escape paying taxes as they do today.  Those at or below the poverty line would still pay no taxes.  Savings and investment would be encouraged, and all of the savings and investment people participated in would be free of double taxation.  The burdon of uncertainty in forecasting tax liability and payroll liability from year to year would almost be eliminated.

To be realistic, you must be able to present concepts that offer some degree of sustainability.  As long as our tax system grows in complexity at the hands of politicians and the corporations capable of complying and manipulating it to their advantage, and as long as tax policy is fueled by the narrow sighted belief that government has the ability and duty to successfully pick winners and losers, we will remain on a very unsustainable and exceptionally unrealistic path.

So, when liberals say that the simple concepts of freedom and self government that this country was founded on are unrealistic, that rings as a complement to me.  Thanks!

I'm a proponent of the Fair Tax, but one thing I don't see is that the money spent on compliance is withheld from the economy now.  Ostensibly that's money that goes to tax attorneys and accounting firms which will recirculate that money throughout the economy via payroll, dividends for shareholders, and corporate expenses.

I mainly like the idea of the Fair Tax for getting rid of all the loopholes and gimmicks people employ for tax avoidance as well as you said, it takes it out of the hands of politicians and their special interests or power bases. 

[Townsend]

I mainly like the idea of the Fair Tax for getting rid of all the loopholes and gimmicks people employ for tax avoidance as well as you said, it takes it out of the hands of politicians and their special interests or power bases. 

That's why the Fair Tax will never exist.