Half-Baked Recipe for Economic Plan

[solemole]

– Read think discuss, don’t criticize, don’t antagonize

Required/recommended reading:

FairTax - Wikipedia, the free encyclopedia


Amazon.com: FairTax: The Truth: Answering the Critics: Neal Boortz, John Linder: Books

FairTax :: Home



DISCLAIMER: I’ve SKIMMED through the topic of “fair tax” and discussed a bit with acquaintances before… But lately, I’ve been daydreaming/meditating on what “fair tax” could mean to the U.S. economy.

Now I don’t assume to know everything about “fair tax” and I don’t know much about economics. But I bring these half-baked ideas on the table to share with people and am curious to see what they have to say about it.

I don’t want negative discussions or attacks. I will not get into arguments in this thread. I am only willing to listening to those people who have something constructive to say or have more thoughts for contribution. Therefore, I will not and cannot offer much more input, unless there is a reasonable and thoughtful discussion. In other words, I will stay out of sight for a while.

So please…
Don’t criticize, don’t antagonize… SUGGEST
What’s your contribution to the situation?

• According to Fair Tax policies (as listed in recommended reading), abolish all forms of U.S. taxes and April 15th Tax Day.
• According to Fair Tax policies, only collect RETAIL SALES TAX, things from which people buy.
• Fair Tax Logic: What you spend as a consumer will determine how much tax you will pay to the government. So the more extravagant, luxurious items the ridiculously rich (by any manner or means) buy, the more they also pays in taxes. And everyone else will pay taxes accordingly to their sales purchases.
• Fair Tax Logic (according to the book above, pgs. 14-16): Fair Tax would be simple, fair, voluntary, transparent, border neutral, industry neutral, and good for social security and medicare.
• Fair Tax Logic: People would be more considerate about their spending.
• Fair Tax Logic: Anybody (TOURISTS, FOREIGNERS, etc.) who spends anything in the US will pay retail sales taxes.
• My Own Idea (MOI): RETAIL SALES TAX should be 30% and distributed accordingly 5% local, 10% state, 15% federal.
• MOI: The advantage of consumer spending AND indicator of economy is PURCHASING POWER, not the GDP volume, stock prices, or the unemployment rate (as the 8 years ago would suggest). The more people could buy to live a comfortable life, should be the evidence of a healthy domestic economy.
• MOI: Should such taxes be too much a burden for consumer or business, then logic might dictate that consumer prices should be lower, and in turn, inflation by default would be moderated by the implementation of fair tax.
• MOI: With a impactful economic stimulus boost for consumer spending and current “deflation” of products and commodities, Fair Tax money should be enough to circulate more money for the current government to focus on other projects: such as, transportation and energy infrastructure, healthcare, and other government services, local state and federal.
• MOI: It would require restructuring major economic dynamics, institutions, and functions.
• MOI: It would also require strict regulation and oversight.

CAVEATS

Things I don’t know how Fair Tax would affect the following issues:

• Federal interest rate.
• “Following the money trail” for IRS, Secret Service, and other law enforcement.

Some other caveats I can’t remember… but maybe someone will bring it up.

(Kidding myself but… If this works, the rest of the world just might follow and the world economy might readjust itself.)

There, I’m finished talking.

 

[AliEnvy]

Hmmm interesting. Have only glossed over it so far and my first impression without looking at any details is that people with the wealth to purchase goods and services outside the system where there are tax advantages will do so - as they do currently. Under 'fair tax' their effective tax rates would still be lower than everyone else and capital would leave the system reducing national wealth. You have to give rich people a good reason to keep their money invested in the USA.

 

[solemole]

Companies from foreign corporations are likely to set up shop in US... err.. or better put, US would likely attract foreign companies to set up shop.

Or at least, so says the book, in an interview with Greenspan.

(Sorry, I didn't not read too closely with the details in the book. In fact, I didn't even finish it.)

 

[solemole]

Joe the Plumber is crusading for simple fair tax... FYI people.

Found out on HBO Bill Maher this past week.

Joe the Plumber needs your help to ABOLISH THE IRS

 

[Kieran McConville]

Well if Joe The Plumber is down with it, who are we to judge!

GUys, we need a flat tax rant, now.

 

[anitram]

Joe the Plumber is crusading for simple fair tax... FYI people.

Of course he is.

This is a terrible idea for a number of reasons. It disproportionately punishes the poor. The rich are free to go purchase their luxury items abroad (so this would probably do wonders for the Canadian economy) and there is just about zero way of effectively policing this or collecting taxes from them because it would involve a level of compliance and COSTS for other nations that they would simply have no interest in bearing.

There are about a zillion other problems as well.

 

[deep]

– Read think discuss, don’t criticize, don’t antagonize

So please…
Don’t criticize, don’t antagonize… SUGGEST
What’s your contribution to the situation?

when I read these requirements,

I decided I was not allowed to discuss fair tax , anything I would write would be on the critical side.

 

[martha]

when I read these requirements,

I decided I was not allowed to discuss fair tax , anything I would write would be on the critical side.

But at least you read the whole post, right?

 

[solemole]

Of course he is.

This is a terrible idea for a number of reasons. It disproportionately punishes the poor. The rich are free to go purchase their luxury items abroad (so this would probably do wonders for the Canadian economy) and there is just about zero way of effectively policing this or collecting taxes from them because it would involve a level of compliance and COSTS for other nations that they would simply have no interest in bearing.

There are about a zillion other problems as well.

What if fair tax was able to fund universal heath care and other "welfare programs" for the poor lean back on as a safety net?

Just a thought

 

[purpleoscar]

The "fair tax" idea would punish those who need big ticket items like cars or houses so in order for that to not be a problem then certain basic necessity items would have to be left off.

I think basic budgeting should be taught in schools. If most of the population just chooses ignorantly involving their money then no system will get people to save. Most people do save when they feel the urgency of retirement and understanding that the basic pillars of house, Retirement tax savings plans, and investments outside of those plans need to be accumulated over most of your working life to achieve some comfort when you are old and want to stop working.

It's the ant and the grasshopper story and the biblical Joseph story of fat years and lean years coming back again.