Ok, so Bush would like to eliminate other taxes & just have sales tax...

Why do Bush & his rich friends think this is a good idea? Obviously the main result would be that people would STOP SHOPPING, at least through normal channels, and corporations would have huge losses. Am I missing something? :shrug:

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Pay more than their share.

Like Robin Hood in reverse.

but then the right seems quite able to ignore all the research that shows this to be a con.

loop entirely.

At my income level, I spend everything I earn, except what is deducted for my 401K. Everything. That means my tax would be significantly higher in proportion to my earnings than the exec who makes 10 million/yr, spends one million of it and invests the other 9 million, the earnings on which he makes still more money.

It is a plan that will concentrate wealth in the hands of the already wealthy, making the middle class provide the vast bulk of the federal revenues.

It will also be a impossible to implement.

If we want simplification, why don't we just keep the progressive rates and eliminate most deductions (a.k.a. loopholes).

The "Fair Tax" is most definitely NOT fair.
We went over this months ago.

I think this is about the most fucked up definition of "fair" I've read in a while. It means that millionaires and billionaires would get huge tax cuts as the poor and working class have an even larger slice of the tax burden put on their backs.

When the tax structure is properly progressive, it acts AUTOMATICALLY to "smooth" out the downturns in the economic cycle. Works this way. Ec. downturn leads to reduced income in the aggregate (and individually for a number of people). B/c their taxes fall faster than their gross adjusted income the very nature of the tax structure acts (without any intervention, e.g., extension of unemployment benefits) to sustain buying power and thus demand, which in turn mitigates the effect of the downturn on employment. I am not sure (and maybe you could check with US history/ec. profs. whether income tax in the 1920's was progressive or flat, but this was one reason that FDR made the income tax progressive/increased its progressivity. Anywhoo, one theory might well be that we have gone too far (think payroll taxes, fee for service type financing, etc.) in flattening the progressivity of the tax system so it is less effective in "smoothing out" the downs (and, by extension, the ups) of the economic cycle. Hence, the current recession went deeper and lasted longer than it would have.

Note that under a flat tax, the potential for an ec. meltdown a la 1929 is increased to a virtual certainty. There is the thought that without progressivity in the tax structure, the lower demand leading to loss of jobs/income leading to less demand spiral can get beyond control (read Great Depression).

Figures.

it's not 'fair'. and just because they call it that, doesn't mean they aren't using that term to deceive the easily led. The quote you provided is proof of that.

"Simply put" subtexts as "For you morons".

You know, at one point in his wealth cycle (the early 90s) it was figured that Bill Gates' expenditure for a first class last minute full price ticket to LA, was the equivalent of someone with a 'normal' income spending 11 cents.

So if Bill Gates and I each buy a $200 bed or a refrigerator or have the plumber come over and fix a $200 leak in the bathroom, and we both pay $20 tax on the goods and services, who is going to suffer? And remember, I make so little on disability, that I don't file taxes right now.

Simply put, this is an idea cooked up and put forth by a group of morons and assholes.

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Interesting, isn't it?
Awfully quiet in here...

Stop shopping? Where else are they going to go? Not everyone has the means to go through other channels, probably the majority doesn't. So, they're f***ed. Only they won't realize because that's probably the same majority that voted for the assclown in the first place.

but most people buy a LOT of shit they don't really need. You know, hanging out at the mall for entertainment & buying a new outfit for Saturday night. The corporate consumer mentality depends on this. If they raise sales taxes to 20-30% (stats I've heard mentioned), I suspect most of these people will cut WAY back on their spending. I think that's a good thing, but for business owners & stock holders it would be a disaster. Hence, why do they support this plan? Why would they support something that will likely cost them a lot of business or put them totally out of busines? Something that will cause their stock prices to drop like a rock. What is their rationale? I can't figure it out.

Or are they just not thinking that far ahead? :shrug:

How very kind...

There have been times in My life when My costs for shelter were 100% of My income! Not counting food, heating, clothes etc!

Currently I live on < $1,000/month and I manage... but that is because I do NOT buy clothes (most of My outfits are either old cherished items or thrift store purchases!) meals at restaurants, etc!

Since I work at home, I do not buy gasoline, nor do I spend money on buses or transport. No films, no dinners out, and I manage.... Just.

Slap a sales tax on all the above and I go under. Fast! Groceries will become My largest expense, beyone My means.

IN fact, I just looked at My checkbook. For the last six months, it has been thus:
Rest
Food
Rent
Food
Rent
Food
Rent
Medical bill
Food
Rent
Food
Rent
Food

And I have spend 100% of My income. I have *nothing* in savings! In fact, I am still paying off the medical bill, 4 months later!

Buy too much stuff? HOGWASH!

Lady Sonelle

and somehow you think that's my fault?? Obviously you missed the entire subject & point of the post. That's ok. My feelings aren't hurt. Obviously I should have posted this in the economy & tax forum. :)

the main result, if what we're talking about here is a "consumption" tax (and I'm not exactly sure what Bush plan you're referring to here because I don't follow tax policy very closely). But assuming it is a "consumption tax," which is favored by some conservative economists, then these paragraphs, from a conservative economist, might explain their view on it:

"To see how this works, first consider what happens with the income tax to a person with $10,000 of pretax income. Assume for simplicity that the only tax bracket is 25 percent, that the market (pretax) interest rate on bonds is 5 percent, and that inflation is zero. Under the income tax, the individual pays $2,500 in taxes no matter what he does, and then can consume $7,500 of goods and services now. Or he can save $7,500, investing it in bonds paying 5 percent interest. In the first year the individual earns $375 interest (5 percent of $7,500), pays 25 percent of that ($93.75) in taxes, and is left with $281.25 of after-tax interest income. Added to his original $7,500, he now can consume $7,781.25 of goods and services, or 3.75 percent more than a year ago. Note that the market paid the individual 5 percent to postpone consumption. But the income tax reduced what he received to 3.75 percent.

Now look at what happens under a consumption tax. If the individual consumes all his income, he pays the same $2,500 in taxes and has the same $7,500 to spend on goods and services. But if he saves all his income, he can invest $10,000 because he gets a deduction for all income saved. In the first year he earns $500 interest (5 percent of $10,000), leaving him with $10,500. If he wants to spend all of that now, he must pay taxes equal to 25 percent of the full $10,500, or $2,625. That is because all withdrawals from savings are taxable. After paying his taxes, the individual can consume $7,875 of goods and services. That is 5 percent more than the $7,500 he could have consumed a year earlier. The individual receives the full 5 percent market interest rate, and there is no tax distortion between present and future consumption."

There is much more to the argument on both sides, and I am not defending this, just trying to answer your question. Read more of this guy's view at: http://www.econlib.org/library/Enc/ConsumptionTax.html

are one paycheck from the street.

The real effect is another cut in taxes on the rich.

Of course Bush now says he is against - and at the same time tries to accomplish the exact same thing - namely taxes on consumption with "savings" earnings not taxed - by killing the current FIT "income tax" approach and making it almost totally a "wage" tax.

Investment income goes nearly untaxed - and folks are told they got a tax cut - as the rich rob the country.

...include exemptions designed to minimize impact on the lowest earners.
Things like excluding food, rent and other essentials.
I'm not sure I would not prefer a flat tax with complete exemptions below a certain cut off level.
Savy corporations and many of the rich are able to pay very low marginal tax rates because the alter their spending and investing strategies to minize taxes. A flat rate would eliminate that. We could ensure that only the poor pay no taxes. A modified flat tax with perhaps three levels (increasing with income) would shift the pain to the higher earners.

People who barely make enough to cover their needs would be actually paying a big percent of their earnings into taxes. On the other hand, rich people, even with sybaritic luxury purchases, wouldn't pay near the percentage of their income and assets to meet the same percentage of the poor. It's a bad idea.

Actually, I don't think we should pay taxes at all. I think the government should take control of our natural assets and pay for what people need from the income generated. So by this I mean that, we the people, should own all of the oil, mineral and other natural resources that are right now owned by corporations, with the explicit purpose of generating revenue to provide the population with the civic works and programs a healthy democratic population needs.

Don't you know that only Adam Smith's invisible hand is capable of handling a national economy?

I believe in a healthy and regulated capitalistic economy, but I think natural resources belong to all the people and they should reap the benefits.

You do realize that by saying that you've been put on an extraction industries hit list.

I grew up in a mining camp. That's where I developed these ideas.

They don't see it. They're very dumb. Prices always regulate themselves. Goods are gonna sell at the lowest possible price. You try to tax that, it's gonna fall apart. Good luck regulating that with small government - oh what's that? You're gonna have shock troops in every grocery store and distributor in the country? Oh, ok. I guess that's one way to create jobs.

This is basic free market economics... if that's what they actually represented, they would understand this. So either they're very stupid or they have a much darker agenda in mind.

Just thinking about myself personally: if I was paying 30% sales tax I'd either do without or buy it outside the normal channels. And I'm not proud to say that I'm somewhat of a shopaholic. If others like me cut back on their spending, this consumer oriented economy will collapse. Surely I'm not the only one who sees this?? :shrug:

(thus technically fair), not everybody has the sames means of income which means it would hit the poor disproportionately (not fair). It would raise revenue however, which is something we aren't doing now with jr's tax cuts. The poor should have vouchers for food, energy, medicine and housing if they insist on doing this type of tax.