Re: Re: Overhaul of federal taxes The point is to refund the taxes that are paid on goods, up to the poverty level. So if I spend $1,000 on goods in a month, and the tax rate is 30%, I'd pay $300 in taxes. If the monthly tax rebate for my family size is $400 a month, then I've spent less on goods that the government assumed I would, and I can save that extra $100 for my own use. Conversely, if I spend $3,000 in a month (let's say I through a few huge tailgating parties), I'd pay $900 in taxes, while still only getting that $400 rebate, meaning I would wind up paying $500 in net taxes for that month. But if you never spend more that the amount that is rebated, you never pay any federal taxes. Plus your paychecks are larger each and every payday due to no federal withholding taxes. Plus prices on goods will drop due to fewer taxes on businesses and competition. The theory is that every family has a certain minimum threshold of spending that will be required. And the tax rebate makes such spending tax-free, for everybody. Could some people afford to pay the taxes? Sure. But the point is to switch from income-based taxation to consumption-based taxation, and eliminate the need to report your income to the government, claim various exemptions, etc. One simple rate, one rebate for everybody (based on household size), and things are suddenly a lot simpler. Do you think Steve Forbes (and others with his size of wealth) don't take advantage of plenty of existing (and legal) tax shelters, write-offs, etc.? I wonder what he effective tax rate is. Keep in mind all of those business expenses that get written off, depreciation costs on equipment, etc. No imagine if there were a simple, no-loophole 30% tax on every new good and service. It doesn't matter if it's a business buying that new SUV or Steve Forbes himself, there would still be a tax on it. No write-offs. Think about the new houses that people like Steve Forbes build. Add 30% tax to everything they buy (yachts, jets, restaurants, etc. I bet the difference in taxes would not be as great as you are thinking. I'll try to dig up some research on it, though. This is tempting, but it would lead to the same types of convuluted rules we have now (That bag of M&Ms is taxable, but that bag of chocolate pieces for cooking is tax-free, etc.. No exemptions at all makes things so much simpler, and as long as you don't spend more than the government's poverty level each year you will pay exactly 0% in taxes. Why do you assume "a deep recession for several years" would happen? Undoubtedly there'd be an ecomonic effect, but consider that before this is implemented there would be a big increase in purchasing as people took the last opportunity to buy things without the new tax, so any temporary negative effects afterwards could very well be negated by temporary positive effects from just before it's implemented. Agreed. Take a look sometime at the amount of money that small businesses pay each year to comply with the existing tax system. Well, I consider myself an independent, and am becoming pretty cynical about both the Democrats and Republicans when it comes to many things. The Republicans don't walk the walk when it comes to controlling government spending.
Keep in mind that you bring home more money each paycheck (take a look at your latest paystub and see how much more you'd have if you got to keep all of the federal withholding amounts). Plus your household would get a tax rebate each month for a few hundred dollars at least. Plus goods would drop in price since the businesses will be able to lower prices when their taxes go down too. Well, if we assume you and your friends are really outraged, let's look at your example. First, what percentage of the population would actually be willing and able to do this? How many farmers are there out there who would do this illegal sale? Well, people have all sorts of "under-the table" deals now, but I would wager that there would more money taxed under my plan than is taxed now. Keep in mind that all of a sudden the government wouldn't have 200+ million potential tax cheats. They'd have probably less than 1/10th of that (businesses who sell new goods to consumers or provide services). That increases the potential for being audited for a business, and the complexity of compliance will go down, and whenever you do both of those things you get less cheating, not more. Nope, you misunderstood the plan or I didn't explain it well enough. It would not matter one bit whether a corporation bought a vehicle or a person bought a vehicle... that tax rate is the same. No corporate taxes would exist either. (Guess who pays for those corporate taxes in the form of higher prices anyway)? So your example with the vehicles above would mean that the corporation would pay the 30% tax at the time of purchase. They could then do whatever they wanted to with them, since after something has been paid for once as a new item (and taxed) there would be no further taxation on that item. No doubt about it, some people would indeed try to cheat. But think of the people right now who don't pay taxes. People who are paid in cash, under the table. (Drug dealers, prostitutes, illegal aliens, etc.) How much in federal taxes do you think they are paying on their current income? Now switch to a consumption tax and when they buy things (cars, clothes, food, etc.) they'll suddenly start paying. And if you don't have a valid Social Security number, no refund for you, so any illegal aliens would not get the benefit of the tax rebate.
