How much would the following cost under the Fair Tax plan? - Political Forum

Sebelius for VP, not Hillary · 11-29-2007, 07:32 PM

* $20,000 Saturn (the car)
* $20 shirt
* $200,000 house
* $100 book
* $1,000 computer

Shiva_TD · 11-29-2007, 08:45 PM

Quote:

Originally Posted by W.E.B. Du Bois

* $20,000 Saturn (the car)
* $20 shirt
* $200,000 house
* $100 book
* $1,000 computer

I will just tackle the first one.

According to The Fair Tax Book about 18% of the cost of an automobile is imbedded taxes so the $20,000 Saturn would have a sticker price of 16,400. There would be a federal sales tax of $3772 bringing the price to $20,172. So you are $172 more than the $20,000 original price BUT the positives are that you would probably be taking home all of your paycheck (no federal income, Social Security, or Medicare withholding taxes) AND state sales taxes, if applicable, would be less because they are based upon the sticker price. In WA state that would mean a reduction in the state sales tax (8.2% where I am) of over $300. Basically, overall you would spend slightly less under the Fair Tax than you would under current tax laws.

And, remember, if you buy the same Saturn used there is no federal sales tax.

And, since I just looked, let me cover buying a new $200,000 home. Yes, the Fair Tax does apply to a new home so there is a 23% tax applied. At the same time the imbedded taxes related to home building are about 25% so the price would be LESS than under the current system.... and, from what I understand, there isn't a federal sales tax on buying a "used" home regardless of appreciation in value.

Once again, I am not up on all of the details because the book leaves a few questions unanswered (e.g. is there a federal sales tax on lettuce if the farmer paid the tax on the seeds? The plant is just a growth of the seed and could be considered a "used" seed IMHO).

Of course there is a "prebate" for everyone to ensure that the federal sales tax if offset for the fundamental needs of the people.

Sebelius for VP, not Hillary · 11-29-2007, 08:59 PM

Thanks for answering the question, I don't buy the Fair Tax answer though. I don't believe that there are imbedded costs though.

Open question for the thread: where do these imbedded costs supposedly come from and how do they calculate how much they are?

oldscutlas · 11-29-2007, 08:59 PM

The biggest stumbling block for the fair tax act is the ultra-rich who own the politicians in washington. You ask the price of a 20,000 car. Let me ask what the taxes would be on a 500,000 car, or instead of a $20 shirt, how about a $5000 suit. The fair tax act would ensure the rich pay their fair share which is completely unacceptable to them. They like the current system which allows the politicians to write secret loopholes in tax law to accomodate the rich.

Having to pay a tax on the cavier and champagne they consume on a regular basis would break them don't ya know.

Sebelius for VP, not Hillary · 11-29-2007, 09:01 PM

Quote:

Originally Posted by oldscutlas

The biggest stumbling block for the fair tax act is the ultra-rich who own the politicians in washington.

I would be very interested to seem of these supposed ultra-rich and their strident opposition to the Fair Tax.

Quote:

Originally Posted by oldscutlas

You ask the price of a 20,000 car. Let me ask what the taxes would be on a 500,000 car, or instead of a $20 shirt, how about a $5000 suit. The fair tax act would ensure the rich pay their fair share which is completely unacceptable to them. They like the current system which allows the politicians to write secret loopholes in tax law to accomodate the rich.

Having to pay a tax on the cavier and champagne they consume on a regular basis would break them don't ya know.

How about we just close the loopholes instead?

oldscutlas · 11-29-2007, 09:19 PM

I would like to see a list of the ultra-rich that support it. You can't come up with this list because if they did favor it, their financial pets in washington would have put it through by now.

I once saw some stats on a federal sales tax that showed a 1% sales tax on every thing bought in america,whether new or used, would triple the amount of revenue the federal government gets from income tax.

Sebelius for VP, not Hillary · 11-29-2007, 09:43 PM

Quote:

Originally Posted by oldscutlas

I would like to see a list of the ultra-rich that support it.

OK, feel free to look for one. I asked you if you could show any facts to backup your claim that: The biggest stumbling block for the fair tax act is the ultra-rich who own the politicians in washington. Apparently, you cannot.

Shiva_TD · 11-30-2007, 08:41 AM

Quote:

Originally Posted by W.E.B. Du Bois

Thanks for answering the question, I don't buy the Fair Tax answer though. I don't believe that there are imbedded costs though.

Open question for the thread: where do these imbedded costs supposedly come from and how do they calculate how much they are?

I'll just give you a couple of examples of hidden taxes.

An employer pays about 7% in matching SS and Medicare taxes on employee wages.

An employer pays accountants to address income taxes both for withholding an corporate taxes. This is actually a very large expense related to doing business.

These are inbedded tax related to the income tax system. Where do you think tax attorneys get their paychecks? How much money do we spend just dealing with the income tax? It is a huge financial burden especially for a business. I will give you an example. I am just a simple engineer and my wife owns a small business. I have looked into having an accountant taking care of her books and it would cost several thousands of dollars every year. Instead I choose to do it myself but time is money and I spend at least 40 hours just filling out the goddamn tax returns so I am basically spending those several thousand dollars of my (uncompenstated) time taking care of the income tax.

And remember, when you buy a loaf of bread you are paying the costs of everyone that had a hand in producing that loaf of bread and included in that are all of the taxes that they paid. The farmer grows the wheat and pays income tax on his profits. Who ultimately pays that tax? The consumer, of course. And you are paying the income taxes of the workers at the bakery and the income taxes of the employees at the market and the corporate income taxes of every company that had anything to do with the production of that loaf of bread. Those are the hidden taxes that you and I pay as a consumer.

Once again, I am not totally for the Fair Tax initiative but I am certainly opposed to the current income tax.

Shiva_TD · 11-30-2007, 08:47 AM

Quote:

Originally Posted by oldscutlas

I once saw some stats on a federal sales tax that showed a 1% sales tax on every thing bought in america,whether new or used, would triple the amount of revenue the federal government gets from income tax.

Possibly true but the Fair Tax intiative only addresses the sales of new goods. This makes it inherently better for lower income families. How many poor people buy a new car? Hell, I make a lot of money and I've never bought a new car (I did buy a new Harley though). The figure of 23% of new good sales is established to provide the identical income to the government as the current tax system. If government spending went down per capita) then that rate would be less. The "prebate" also addresses the tax burden on essential items so the poor would not be adversely effected by the 23% federal sales tax. Do the rich also get the prebate? Yes, under the Fair Tax all Americans are treated equally (a novel idea).

Shiva_TD · 11-30-2007, 08:55 AM

Quote:

Originally Posted by W.E.B. Du Bois

How about we just close the loopholes instead?

The term "loophole" is a buzz word without much substance. For example, does the US government have the right to tax incomes of people earned in other countries? Of course not. So, because of our repressive income tax on the wealthy they move their money to countries where there is no income tax. Its called offshore banking. Remember, these people do pay taxes on the US derived income but not on their international investments. Could the US make it "illegal" one could ask. Well, considering that the people that would be targeted can afford to simply move to a different country all that closing such "loopholes" would accomplish is running the money of the wealthy completely out of the United States. They can afford to move an would.

Or, do you want to end the mortgage deduction? A lot of middle income and poor people would suffer if you do.

No, the "loopholes" really aren't loopholes at all. They are all supported by genuine reasons for their existance.