The Fair Tax

  • Thread starter Rich Stern [URL]http://www.fairtaxvolunteer.org/sm
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Rich Stern

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Hi all.



A few years ago, I became a proponent of the Fair Tax, a proposal to rid the U.S. of all income taxes in favor of a national, retail sales tax. At the time, it was a longshot, but I saw it as so fundamentally important to our nation that I joined the grassroots organization pushing the proposal.



Well, this proposal, now a bill in congress, has some legs. It has received siginficant backing by numerous legislators and academics, and has a geniune chance to positively affect the lives of Americans.



My view is there is no more important legislation that will happen in our lifetime. The repercussions include simplifying a badly broken, complicated and unfair tax system, removing an oppressive organization (the IRS) from our government, improving our economic efficiency, eliminating special interest tax favors, and holding our government more directly accountable for what they tax and spend.



I urge you to visit the following site and read a little bit about what this is all about.



I'll be happy to debate the issue for those who don't trust this plan.



If you support this idea, join Americans for Fair Taxation, and let your government representatives know that you support this plan.



Please visit fairtax.org.




http://www.fairtaxvolunteer.org/smart/faq.html
 
Unfair Tax System is not the word for it. I wanna' get tax breaks like the rich...OR...make it across the board:)

And yes "Porkbarrell" projects are OUT OF CONTROL!

Press On Dude!
 
I've long been a proponent of the "fair tax" program/idea... didnt realize there was an org devoted to it...



Thanks Rich!

 
Interesting. I'll have to take time to read and digest it.



Also interesting to see it here, as a friend of mine and I just finished lunch and were discussing a 'flat tax'.



Tex
 
I have mixed feelings about that, considering I am a Certified Public Accountant it hurts my profession to eliminate Income Taxes.
 
CJL, I understand. I like my CPA and don't want him to be harmed, either. I know lots of accountants, many of whom will have far weaker career opportunities if this comes to pass.



Do me a a small favor, for the benefit of the rest of us. You know the tax laws well. Give us your opinion without regard to personal impact on you. Take your "CPA hat" off for a moment and answer these questions:



Are the American people well served by the current system? Is it a good design? Is it well conceived and fairly executed? Does it add unneeded burden and inefficiency to the life of the average American? Is the current system easy for those in government to use for deception?

 
Rich,

Let my try to answer your questions without being a CPA, (I actually work in Corporate Reporting).



Are the American people well served by the current system?

If you mean the process in which we file annual taxes, I would say yes we are. In the last 5-6 years technology has increased the effeciencies of tax filing. If you mean tax brackets, well do you know what the Fed considers middle income? Yes the rich get tax breaks, but so does the middle income group. Consider the Capital Gains tax elimination for the gain on sale of your primary residence. This tax law change created in my opinion a huge spark in real estate. Think in terms of material amounts in numbers. If the "rich" got taxed the same as the middle income, well it would be a deterent in becoming rich. Our nation was built on Capitalism.



Is it well conceived and fairly executed? Maybe not, but it's getting better every year. i.e. Marriage Penalty is gone, capital gains gone, audit flags reduced.



Does it ad unneeded burden and inefficiency to the life of the average American?

Yes & NO, it could be a huge task at times, but technology is helping it get better. Do you know how many people count on there annual refund for forced savings or to get the big tag purchases? I don't think it's right but they do use it. I worked for a corp. that owned one of the larger tax prep businesses that we sold to franchisee's. Well there entire business relied on people needing there money "yesterday".



I'm not sure I understand your last question.



How would our nation benefit from a spike in our economy if we had a flat tax? Would the nations buying power for defense suffer from a "fixed income".



I am not arguing with you, but I guess I need to know more about how a flat tax would work.



 
Okay, while I'm all for the "flat tax" idea, there are more things broken than just income tax. When a business locates, relocates, or opens new stores based upon the tax breaks given by the municipality, there's a huge problem in my mind. It's my understanding that the Bass Pro to be built on the banks of Lake Ray Hubbard is being given gobs and gobs of free land and tax breaks.



I'd like to see that whole system eliminated. Taxation should be fair. To me, fair is a flat cost that each and every American pays for the priviledge of living here. I don't care how much you make or how much you spend, just a "this is how much it costs". No property tax, no "sin" tax, etc. Now, things like gas tax couldn't be eliminated because it truly is a "you use this much per gallon" issue. But whether I own 1 acre or 400 acres, it costs the government no more money to oversee it. You can argue police and fire resources MAYBE, but the education my child receives has no bearing on the cost of my house.



So, a flat-rate sales tax is only part of the solution (and in my opinion, not the best method -- but you can't make a welfare recipient pay taxes -- it's just not "fair" or some such nonsense).
 
Actually, TEE, the Fair Tax bill (H.R. 25) requires a repeal of the 16th Amenment of the U.S. Consistution. That would make it illegal for the United States government to collect income taxes.



So, yes, income tax would be eliminated with the passage of this bill.



Tax revenue would come from retail sales tax.



Let's look at a bass boat purchase as an example of the impact of this change:



Let's say an NTOWS member, we'll call him "Joe," makes $50K a year. Under the current tax system, after deductions, rebates, all the current convoluted rules, Joe pays about 20% of his income ($10K) to the federal government.



Joe decides to buy a new $20K Nitro bass boat. Joe pays for his boat in cash (he's been saving hard). In pre-tax money, Joe pays about $24K for the boat. That's how much he had to earn from his job to save the $20K for the purchase.



Now, in the new world of Fair Tax, Joe doesn't pay any income taxes. He makes $50K, he takes home $50K.



He goes to buy that $20K bass boat. But there is a 23% national sales tax on the boat. So the out-the-door price is $24.6K.



Hey, bad deal! It cost Joe more money for the same boat, right?!?



Nope. Read on.



Tracker Marine no longer has to pay income taxes either. No payroll taxes. No taxes on their own income. And they don't need as many accountants or lawyers anymore. Their cost of doing business just went down about 20%. They can produce boats for a lot less money than before.



Now, a cynic would say that Tracker will just take those savings and let them drop to the bottom line. But there's a problem: Competition. Ranger, Basscat, and a whole bunch of other bass boat makers just got the same windfall, and some of them are lowering prices! And used bass boats don't have any national retail taxes. So used boats are suddenly very attractive. Tracker now has to lower prices, and pass the savings onto customers, ASAP!



And now that new bass boat isn't $20K anymore. Tracker lowered the price to $16K. Joe's out the door price, national sales tax included, is about $19.7K. And Joe only has to earn $19.7K to pay for that boat, because he doesn't pay income tax!



The following year, Joe's elected representatives tell him the national tax rate must go up to 24% to pay for all of the federal programs they'd need to spend on. Joe goes to the polls in November and votes for the other guy, who says the rate should stay at 23% and spending should be controlled. No spin. No bank shots. No hocus pocus. Joe knows the current rate, listens to the politicians' pitches for what they'd like the rate to be, and doesn't need a PhD in supply side economics or taxation to understand which is better for him.



Simple. Fair.
 
But Mike, 7 years into my career and my salary has increased 4 times over. Would it be fair for me to be still paying the same tax?

Don't you think property tax incourages towns to allow business to exist in the town. I have a garbage land fill in my town, do you think I would want it there if it didn't help my taxes?
 
Rich, I hope you don't think I am being argumentitive "spelling", just making a point of view. I see your point on the boat example, but is Tracker paying any taxes now? The last company I worked for had a 800 million deferred tax asset due to Net operating losses. That means they charged the consumer the regular price, somehow "lost" money in total wink,wink, and never paid a dime of income tax, and won't pay taxes physical cash, until they erased that 800 million dollar loss!
 
CJL, yes, it's fair. You use the SAME resources I use. You call the exact same fire department, trash service, police department, etc. You get the exact same service. Pay ONLY for what you use, but you must pay for what YOU use. Freeloaders ain't us.
 
CJL, you can't help but see things as an accountant, and I certainly can't blame you for that.



In your response, you celebrate the elimination of capital gains tax on primary residence and the resulting liberation of wealth that drove a marketplace to new highs.



Don't you realize how loaded with irony that view is? It's like removing the fender of a rusted-out car and saying "Look how much less rust we have now! Think of all the savings we'll net when we repaint!"



You say that it's getting simpler for Americans. How about the Alternative Minimum Tax? A never-intended consequence of a complex mechanism to guarantee that purposely written tax loopholes have a trip-wire to make them worthless. How convoluted is that?



How about the young person who buys their first home? Then they have a life change, like a transfer to a new city, but they aren't certain they'll like the new city. The decision to keep or sell the first home becomes a complex tax matter requiring professional advice rather than a simple life question. The young person goes to friends and family to ask for advice, and Dad says, "Son, you better go ask your accountant what the best thing for you is. I don't know enough about passive rental activity and property depreciation to give you good advice." A real 'Father Knows Best' moment in American culture.



Small business owners like myself are encouraged by the tax code to go out and buy a 6,000 lb. truck because the Federal tax code says it is a good thing. It doesn't matter whether or not one needs a 6,000 lb. truck. Folks who sell life insurance policies door-to-door are getting 12 miles to the gallon while hauling around 25 pounds of sales literature. Yet, we are currently engaged in a foreign war that is at least partly rooted in our dependence on foreign energy sources.



A very high cost of American labor is payroll tax. Yet American corporations are villified by politicians for eliminating that burden with the hiring low wage workers overseas. That's like the postman repeatedly whacking your friendly dog with the rolled-up mail and getting mad at you when the dog can't take it any more and decides to bite.



Computer programs that do your taxes only mask the problem. The fact that a computer is required, that an entire segment of the software industry is dedicated to tax software, tells you everything you need to know about the current tax code.



In my opinion, it's broken.
 
MIke, I guess, maybe to heavy of a subject for me, I never really put that much thought into it.

I know other states don't have income taxes and I guess things work out for them.

I think someone who makes 150k a year can afford to pay more taxes than someone who earns 20k a year. Is it fair? I dunno.

I think the flat tax is just like health coverage for all americans, it's sounds good but probably would never happen. If it did happen, would quality of life be different? Would medical care be the same, I know HMO care is very different than paying a doctor in cash when it comes to what type of care you receive. Would desirable towns and states become less desirable?
 
P.S. CJL, I do appreciate your thoughtful comments; just don't agree.
 
I just want to be sure you guys understand:



The "Flat Tax" and the "Fair Tax" are very different:



- Flat Tax is a flat income tax plan.



- Fair Tax is a very specific national retail sales tax plan (actually now a bill in congress, HR 25).



They are substantially different and the terms should not be used interchangably.



The Fair Tax has a legitimate shot in the next few years of becomming the law of the land. It's worth studying the specifics.
 
Rich, the same here, I guess I am being a little narrow minded or haven't given it enough thought. Change is good most of the time, but is it to much of a change?



On a completely different topic - thanks for the website, it's the best
 
Rich,



My current sales tax is 9%. How would this work out if it passed. I read the explanation on the link you provided but did not understand. Maybe you can spell it out.



Wolf
 
CJL,



"I think someone who makes 150k a year can afford to pay more taxes than someone who earns 20k a year. Is it fair? I dunno. "



Heck no, it's not fair. That's called socialism. I can't afford to pay my share, and you make more, so you should pay my share. BULL HOCKEY! If you tax the rich enough and give enough to the poor, you have complete socialism.
 
Wolf, your state sales tax wouldn't change.



A 23% national retail sales tax would be added to your purchases, on top of the state sales tax.



You would no longer pay any federal income taxes. If your salary is $50K a year, you take home $50K a year. You only pay federal taxes when you buy something.



Every month, the feds would send you a check equivalent to 23% of what Americans must spend on basic necessities.



The last part sounds like it could get complicated, but it's not. If the average family of four must spend $2000/month for the basics of staying alive (food, clothing, shelter, medicine), the government rebates the tax paid on those basics, to everyone. The idea is that nobody pays tax on the most basic food, shelter, clothing, etc.



Someone living on a poverty level income would pay zero taxes.



The rest of us would pay taxes on what we SPENT above that poverty level.
 
I'm with Rich on this one. I've been a proponent of a national sales tax for alot of years. Thanks for bringing this to everyone's attention.



Craig
 
OK i'm with Rich and have been "talking this up" for a while with friends. I'm with Mike on the $150k thing. Remember someone making that much vs. someone making $50k IS paying more $$, since the progressive tax rate today enforces it AND even if there were a Flat Tax rate, the preson making $150k pays MORE (same % but more $$) then the person making $50k.



One more thing that REALY gripes me about the current system (and i've worked for the IN Dept. Of Revenue for a few years in the past so I see both sides. WHAT bothers me is the WITHOLDING for current system, which was instituted (someone I know will tell me exactly when) during I believe WWII to generate quicker cash flow for the US during War. If I remember correctly it was SUPPOSED to be removed after the war. Ask yourself or any of your friends/co-workers how much they take home, chances are a LOT of them will tell you their GROSS salary and NOT their true take home pay. Think about it, the government TAKES each paycheck an estimated amount (yes you get to help decide with deductions but you can NOT have ZERO taken out) and USES that money and gains INTEREST instead of YOU each year. AND most americans when they get a REFUND are HAPPY since they don't realize (since it dissapears each month) that it is REALY their money and their only getting back a VERY Small portion!! While I agree that the Fair Tax plan is a MAJOR step in the right direction, IF the current plan stays i'd LOVE to see us get ALL of our Paycheck (OK reasonably, meaning company deducted Medical and other expenses most be taken out) each month and let US invest and save the $$ and then pay the US Government what we owe on April 15th.



Just one more thought.
 
Trep, if the government did as you asked and let us pay on April 15 instead of hijacking our paychecks, there'd be a LOT of people neck high in schit come April 15... money owed and nothing to pay it with.
 
Rich,



The rebate is a sort of catch up idea to keep the tax from being Too "regressive"...correct? What about perks... No corporate income tax, correct? So, if "my company buys $700000 in building materials and pays "employees" to build a house the national tax is 23% on the $700000... no tax on the labor paid by the company and of course no tax to me when my company "gives" me the house as part of my salary... same thing if the company hires an employee to clean my house...wash my car... sit with my kids...



Next... my company buys me a six week vacation in Mexico... no federal tax paid on anything there... Company planes used for personal use...



How does the "fair tax" handle "barter" exchanges...



Are pension contributions going to be considered in the "fair tax" plan in some fashion...?



Our current tax structure has more than revenue goals... There is a lot of social engineering... economic policy and even some philanthropic spinoff...



A radical shift in tax policy will create untold (they are called unintended consequences) upheaval...



As one of my Professors once said; "Mr. Meyer...if it looks too good to be true... it usually is".
 
My wife and I make around $70-80k per year. With our 2 children and expenses itemized...we owed a very small amount of tax last year.

Here's my point: Although I support Fair Tax...it's the right thing to do...many people in my shoes will not support this because they do not pay much tax in their current situation. I would rather pay my fair share though...so rock on!!!
 
Greg, the national retail tax is on end-user purchasers of new goods and services only.



Goods used in production (such as the building material you describe) would not be taxable.



Your company giving you a vacation in Mexico...probably taxable, depending on specifics. Planes used for personal trips...probably not taxable.



I expect that barter exchanged designed to avoid retail taxes would be taxable.



Pension contributions wouldn't be taxable, just like any other form of income.



"Our current tax policy has more than revenue goals..." The relevant question is: Should it? I don't care for government social engineering. People living in freedom shouldn't be manipulated by government. People living in freedom should simply respect the freedoms of others. While it may be very difficult to live that concept to its fullest, we should continue to embrace it as a guiding principle in deciding how to govern ourselves.



"A radical shift in tax policy will create untold (they are called unintended consequences) upheaval..."



Well, nearly 100 years ago, the U.S. adopted a Constitutional amendment allowing Congress to levy income taxes. There was no upheaval. I submit to you that in the time since, we have meandered down a maze-like path of social engineering, government-inspired fraud, political shell games, and the creation of entire industries and large government bureacracy related solely to tax code complexity. Are these positive attributes? Are they worth preserving?
 
Well Rich I will submit one comment... The majority of our investment capital, the money on Wall Street, is money controlled by the "big" money managers (read that pension plans). Removing that component of our capital marshalling markets and you might destroy the American economy. (I admit using the word "might"...its that "unintended consequences" bugaboo.



The answer to your question; "should it?" is, yes. Government exists to "promote the general welfare". Since tax policy will always effect the economic "engine" of commerce and the "payers" choices (remember your own example of used versus new Nitros); those effects must be considered. You already admit to that concept when you admit to the rebate. As soon as there is even one exception it is no longer a "blind" system and social and economic consequences are going to result. Then, tax policy must (and should) consider the impact on "the general welfare" of the people. Social engineering is not always bad...free public education...IRAs designed to encourage or reward frugality that is good for the economy in general... Zoning is social engineering... Environmental policy is social engineering... our criminal justice system is social engineerring...



Government "always" is an intrusion on someone's "freedom" when it regulates conduct. The "trick" is to mainyain our way of life, "promote the general welfare" with the leasst and most sensible list of intrusions.



One of the old "adages" that are very true is that we are safest when the legislayure is not in session. Likewise, any involved in government will tell you that it is almost impossible to effect "change". Because the first is true, the second is a blessing. Despite all of the anecdotal incidents of "fraud, political shell games, etc."; we have a very benevolent government and the vast majority of "politicians" serving from town councils all the way to teh White House are good people and genuine public servants.
 
Rich I have read through the debate here but didn't see anything about:



1. The current tax added to gas. In my state this is about .30 on the dollar. Will this be repealed and lowered to the .24 fair tax??



2. Property taxes. Like house,cars, and boats. Would we still owe these every year??



Iam curious to the new bill. Some people will have a hardtime adjusting to not getting a tax refund, and paying more in taxes on goods. I believe the idea is good, and hope it works if passed.



Donnie
 
Ahh Snowman - Thats the point, too many folks have become WAY to reliant on the Government to DO THINGS FOR THEM. Our grandparents did JUST FINE before the witholding was put into place. Yes, like saving for retirement, there will always be people not bright enough to plan ahead, but that is not my problem it's theirs. And we would need some kind of (assuming you keep the current/similar system without witholding) education and plan to train those folks to save OR have stiff penalties for late payments.



Sorry, I don't have enough sympathy to let our government continue on a plan that was SOLD to our grandparents as a short term need, and costs ME more $$ in lost interest and use.



Trep
 
Mikel -When you said "we owed a very small amount of tax last year." is that you had to pay "a very small" additional amount on April 15th? if so then you paid a LOT more taxes!! You just don't remember them as they are witheld/deducted each paycheck.



Now if you mean you look at your year end W-2for the TOTAL under Federal income taxes that you write on your return minus your deductions on the return is a very small amount? Meaning you withold a very little through out the year for a total tax amount of a very little?
 
Greg, the current tax code is social engineering run amuck.



Yes, it is impossible to avoid social consequences with decisions about fairness in tax collection methods.



I choose to support a system that acknowledges minimizing social manipulation and improves transparency and accountability, rather than one that is rife with blatant attempts at social engineering and often deliberately obfuscates it's own impact on taxpayers, usually for political gain.



If you haven't read any of it lately, go to irs.gov and read some of the tax code. That any U.S. taxpayer could read a substantial amount of that code and come away thinking it is a good thing is laughable.



I agree, most government servants are good people. But often, good people in a bad system will behave in ways that even they wouldn't otherwise condone. The tax code is such a system, and generates such behavior. How else would you explain middle income families paying the alternative minimum tax, or government officials using terms like "off budget," or the indecipherable political rhetoric that accompanies each complex tax bill, leaving the American people unable to figure out the truth?



How is that good?!?!?



The complexity of the current tax code servers one purpose very well: It makes it possible for elected officials to deceive the American people about their money. Both honest and dishonest public servants use that lever, intentionally or not. And that's wrong, at a core level, in relation to the ideals of our founding fathers. It amounts to the moral equivalent of taxation without representation.

 
Rich,



I will be brutally honest here... I believe that it is naive to believe a "simple" tax structure will resolve the matter. As with anything that appears too complex we try to avoid it... We hope for a simpler solution... Our economy is a very complex one... Much more complex than in the 1860s when we first devised an income tax.



Would I like to see a much more simplified tax code,,,? Yes. Do I believe that we have the best that we can do...? No. But, I do not believe that a national sales tax will do anything to resolve the problem.



Taxation in England arose in the middle ages as a way of feudal lords to find additional funds for the operation of large teritories. The first death taxes were exacted by the superior lord when he performed the ceremony of "Livery of Seisen" (sp?). That was the ceremony where the estate pased from the deceased ancestor to the eldest son of a noble. While the living were free to deed lands and estates... there was no "intestate" succession that was automatic. Hence the feudal Lord would enact a fee for this service. The lesser Nobles objected to the fee and created the first "Trusts"... So, in reaction the Superior Lords regulated trusts and enacted laws and codes to defeat the trust's purposes of keeping the property from passing at death... Taxes begat lawyers... and so on...



Your flat sales tax will begat lawyers and they will spawn laws and regulations... tax avoidance schemes will arise and "loopholes" will be scrutinized and closed... In the end, the sales tax will have a bureacracy and a code just as rife with exceptions and regulation as our current tax code... (Of which the Federal Income Tax is only a portion, we have an Estate Tax structure, all kinds of excise taxes and duties and user fees... Taxes on marijuana and illegal drugs... Taxes on hunting and fishing equipment...etc)



You start out with your rebate on a fixed amount... will that be indexed to inflation...? If it isn't you will he harping on the rebate just like the alternative minimunm tax... Had that been indexed to inflation (a reasonable foresight) it would not be an issue...



Just how do these "public servants "deceive (us) about (our) money"?







Give me a few days, heck a few hours and I will begin to conccot schemes that will avoid the tax and you will have to react with "closures" of the "loopholes".
 
"Mikel -When you said "we owed a very small amount of tax last year." is that you had to pay "a very small" additional amount on April 15th? if so then you paid a LOT more taxes!! You just don't remember them as they are witheld/deducted each paycheck.



Now if you mean you look at your year end W-2for the TOTAL under Federal income taxes that you write on your return minus your deductions on the return is a very small amount? Meaning you withold a very little through out the year for a total tax amount of a very little?"



Actually, our total taxable liability was under $1000. We got a large refund. One thing I had forgotten though was that last year was a slow year for me. We made much less than we will this year. I'll bet we get hit a bit harder under the current system.
 
'Just how do these "public servants "deceive (us) about (our) money"?'



And I'm naive? Sheesh.



For your reference, here are some good reads:



Regarding the shell game known as Social Security Trust Fund:



http://www.salestax.org/library/gross_11-1-00.html



Regarding spending deception:



http://www.lp.org/lpnews/0401/winter_medicare.html



Regarding the rather un-Constitutional nature of IRS acivities:



http://www.thelawyerfromhell.com/alerts/taxabuse.html



There are endless research papers on these types of topics. And let's not forget there have been several well-documented cases where the IRS has been used as a political weapon: Outspoken opponents of presidential administrations seem to have really unfortunate luck when it comes to random IRS audits. Go figure.

 
Rich - One thing Beka and I were talking about last weekend that we have not researched an answer to, maybe you know, is:



- What happens to Roth IRA's that have already paid income tax and are now growing income tax free. In the Fair Tax plan, won't I pay federal tax YET again (through the National Sales Tax)? Which defeats the purpose of the Roth IRA?



What's your thoughts or info???
 
Rich,



I truly do believe you can sit down and understand this... Okay, if there is a "surplus" in the Social Security Trust fund... where would you have the government invest that money... Disney Stock? It is "invested" in US Treasury Obligations... Yup, Gov't IOUs... Where else is it supposed be be?



Now, as far as the "suspect" accounting... There is no lockbox... My left pocket can't really "owe" my right pocket money... If I "borrow" money from my checking acount (a "cash" deficit) and deposit those funds into a savings account... My net worth has not cahanged...



Don't get caught up in this "conspiracy theory" look alike... Be critical of even the critics...
 
Trep, any money a taxpayer has accumulated, be it savings, investments, IRAs, even hard assets, will be subject to the Fair Tax if converted to cash and spent at retail. That includes money in income tax defered plans. On the other hand, you can keep on investing that money, and any other money, as you see fit, without any tax rules. Any tax deferred gains you've made in IRAs will become yours, free of taxes.



The transition will hurt everyone at least a little, especially if you've tried to minimize or defer income taxes through the myriad of schemes the congress has invented.



Freedom is not without a price, I'm sorry to say.

 
Come on Greg, this isn't about conspiracy theories, and your use of the phrase is a shallow debating technique. Frankly, I'm surprised you even wrote that. I can point you to hard documentation on any aspect of the argument that I've used. I've already done so for much of my argument.



This discussion is about how government communicates regarding taxation and expenditures to the American people. It's not hard to find the truth in regard to these issues. It's all a matter of public record, and there is a massive volume of academic and professional research on this topic.



Feel free to point to research that supports your viewpoint.
 
Rich...



I don't need research to point to valid accounting principles... What you and your research call "fraud" are normal accouting principles... you can't owe yourself money... So as my example mirrors your "argument" and an internet page is not "Scholarly Research"... FASBA (Financial Accounting Standards Board) principles are available... show me how it is fraudulent for the government to invest the social security trust fund's surplus into treasury IOU's... There aren't two governments... Now, if the Social Security Administration was a separate entity... then it's surplus would be an asset and the gov't "debt" to it would be a "debt"... but it is not a separate entity... you cannot owe yourself... So no matter how many people say it is ... it isn't...
 
Greg, we are not talking about accounting fraud. We are talking about political fraud. If it was accounting fraud, people would be in jail. Congressman and Senators are not bound by the same rules that CEOs and CFOs are when communicating with the public.



On the one hand, we have politicians running around at election time saying Social Security is going broke.



On the other hand, we have those same politicians using the Social Security surplus to fund other projects, including big time pork.



The fudge in Social Security funds allows the politicians to pay for things with Social Security money that they can't get any other way. If Americans clearly understood that their retirement contributions were paying for federal buildings, weapons systems, welfare checks, stabilizing crop prices, etc., they'd be pissed, and rightly so: Their representatives are telling them that Social Security is in trouble, in order to win elections. Yet, those same representatives are taking excess contributions and spending it elsewhere.



If you went to a bank and said, I need a home equity loan, and the banker said, well, the only way we could lend you the money based on your situation is if you improve the value of your home. You say, no problem, I'm redoing the kitchen. They loan you the money. You use it to buy a car instead of redoing the kitchen.



It's not that you don't intend to pay it back. That's not the point. You were dishonest about it, and you tricked the bank into accepting more risk than they wanted based on your dishonesty. A hoodwink. That's what's going on with Social Security finances.



So, that aside, what do you like about the current federal income tax system?
 
The current system is bogus. I am a small business person and single, with the current system I am forced to either make payments on equipment on a continuous basis or pay more in taxes. If a small business person cannot pay cash for major depreciatable equipment, by the time it is payed for you are out of depriciation and find your taxable income has went way UP. There is no chance for a person who takes care of his property to keep it longer in hope of saving enough to pay CASH the next time.



Something has to change.
 
Mikel - I'm still stumped, and i'm NO accountant. You said you made last year 70-80k and "Actually, our total taxable liability was under $1000. We got a large refund.". Looking at the current Tax Table on www.irs.gov, it says as an example "if your taxable income is at least $75,000 But less then $75,050 and you are Married filing jointly your tax is $12,376". So at a taxable $75k a year your TRUE tax liablity is over $12,000!!! Now yes, you take deductions for kids, home interest, charitable contributions and such, so let's say you drop your taxable income to $60k, that still carries a true Tax Liability of $8,626!



In order to have a Tax liability of $1,000 (what you ACTUALY end up paying the IRS at the end of the year, NOT what you're refund or payment on April 15th is) you'd have to have a taxable income of $10,000 when married and filing jointly. EVEN the REALY Rich with FANCY lawyers can't drop their true earned income by 87%!!



Not trying to nit pick, but are you realy looking at how much TAX you pay??



Trep

 
Hey Trep last year 2003 and for 2002 i had depreciation of over 20,000 each year...Interest and taxes (real dollars) and other deductions were about $21,000... Anyway... two kids and educational expenses... reduced out taxable income by over $50000... I'll be forced to buy a new truck this year because the last one is fully depreciated....



Rich asked what I liked about teh current code... The way trucks are treated... The fact that my advertising expenses are deductible and I choose to advertise by fully subsidizing a profesional walleye fishing team...
 
Meyer, if you need to buy a new truck, look at the 04's... they're trying to give them SOB's away. just fyi.
 
Folks, I don't think the "fair tax" is the best tax structure out there, but Rich is telling us this one is actually being debated in Congress. If you want change, sometimes you have to pick the lesser of two evils. In this case, I see the "fair tax" as being the lesser. Sure, I'm all for a true FLAT tax, where every person pays one fee to live here regardless of income, property, or lifestyle. But I'm not foolish enough to believe the liberals would allow for that. So, I think for right now at least, you have to decide whether the "fair tax" is better or worse than our current system and call your politician and give him/her your thoughts on the matter. This is the ONLY way something will change. We can fight about the fine-tuning later on.
 
Funny side note: Walked into a convenience store today, and heard the manager explaining the fair tax to one of the clerks.



The word is getting out.

 
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