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[srellim234]

Absolutely what I've been talking about, z. I'm glad someone else "gets" it.

[stebo0728]

I'm just trying to sort out the kinks. Would you be in favor of a flat tax that creates an exception where tax dollars, when taken away, couldn't put you into poverty?

I get the feeling that it's going to create some silly examples.

Imagine that, for the sake of argument, we decide that $20,000/year is poverty, and above that line is not. If the flat tax is 5%, and Tom makes $20,001.00, would it be that he's left with $19,000.95? Or is he only taxed up to the $20,000 buffer, and sends in $1.00? And wouldn't that mean that the person who makes $21,052.63 feel like the government is just knocking him down to poverty when it taxes him? And in any event, aren't you creating an inherently progressive system, albeit condensed?

I'm not trying to challenge your plan. I'm just mulling over the details. Might be a good idea.

I have spouted on length on a flat tax ... including having a simple threshold below which the person pays no taxes (albeit I am not totally in favor of this, since I think that everyone should feel an "ownership" of their responsiblity). Please feel free to search for these old posts of mine to understand where I stand on the topic.

Simplistically, my approach to handle the "poverty" problem. would be a straight reduction of the income by a fixed amount on which no tax is paid at all.

If the threshold is set at $20k (hypothetically), then my calculation recommendation is as follows:

1. How much income did you make?
2. If less than or equal to $20k, you owe nothing. Stop further calculations.
3. If more than $20k, then subtract $20k from that income.
4. Send in 15% of the result to the Feds and 5% to the State you live in.

No capital gains or capital losses modifications to income. You invest and do okay, good! You invest and lose, tough!

No deductions for anything - whether it is mortgage interest, medical bills, whatever! House ownership is not a "right".

Z

Actually, as big a proponent of the FairTax as I am, I do like your plan you've laid out here, with a few exceptions/concerns:

First, can you describe what protections are involved to ensure that this plan is not hijacked in nearly the same manner as our current plan has been? Thats important. As flat as a system as you have there, the minute you start excluding A, or penalizing B, or blah blah blah, you start working toward our current system again. What protections would you lay out to ensure this doesnt happen again?

Secondly, related to point 4, you say 15% to the feds, fair, then you say 5% to your state. There is my problem, do the Feds now dictate the rate of the States? What about the 5 states that dont currently have an income tax, do they now how to implement one? And is it to replace or add to the current measures they have for taxation? As long as that was a suggestive statement, and the States still have their say, then I can be appeased there, but if we're gonna start forcing taxation measures on the States, I have a big problem.

[srellim234]

The states do whatever they want for taxation. I believe it was just thrwn out there as an example of what could be done.

[srellim234]

So answer me this, how do you quantify how many times an item will be resold? Then base a taxation curve on this?

YOU DON'T HAVE TO!!!! The same low tax rate applies to EVERYTHING. If it's 5% it's 5%. New or used. Just as a sales tax is applied to hard goods now.

I can't wait to see the monstrosity that will be the bureaucracy set up to enforce this "Un-Fair Tax." I guess the federal government will decide how many rolls of toilet paper I get to use each month. Suppose it's 2? What happens when I undergo chemotherapy and get the runs? Where does the government get off intruding into my life and what qualifications do they have to tell me I don't need that extra toilet paper? How does the government track it to make sure I'm taxed on a third roll? What if I buy the 12 jumbo roll package at Costco? How is that taxed? What if I buy at Costco and Walgreens in the same month? Who makes sure I'm paying my tax based on the number of people in my household? What if I buy for my elderly parents who are blind and can't drive but live in their own house? And my niece buys for them next week?

How about toothpaste and dental floss? If I eat a lot of garlic, which is supposedly healthy, I guess I have to pay extra taxes on the extra toothpaste I use but what if my kids us tooth powder?. Are you going to issue rationing cards like food stamps but track what we spend them on? What if I use flosspicks and my wife uses 100 yd. rolls of floss? Who is going to track purchases and reconcile that?

The Fair Tax may sound like a good deal to you but it's definitely nowhere near practical to apply. It's a sham that is designed to allow those who want to run the government to take over people's lives and stomp on their rights even more than the current lousy setup we have.

[szh]

The states do whatever they want for taxation. I believe it was just thrwn out there as an example of what could be done.

Correct.

Z

[srellim234]

My apologies, stebo. I missed the "prebate" covering my questions about the toothpaste and toilet paper. What you are proposing, though, is that everyone in America get a handout from the government?

[szh]

No deductions for anything - whether it is mortgage interest, medical bills, whatever! House ownership is not a "right".

By the way, I am also opposed to deductions that are based on the number of people in your family.

So, if anyone chooses to have more kids than rational, then they need to figure out how to feed and clothe them before starting. I don't want our government to subsidize other people's selfish decisions to grow the world population faster than is good for all of us. No Octo-Mom's on the dole, please!

FWIW, this is one thing I might be "mind-changed" on - meaning that you might twist my arm that the $20k hypothetical poverty limit could have some limited modifications based on the number of people being supported.

But, let's be careful ... recently, I saw a relatively young couple (had to be in their early twenties at best) at an In 'N Out Burger with seven kids in tow! Clearly spaced a year apart in age! While I don't want to tell them to stop dropping kids every year, I do want to make sure that we are not "incentivizing" them with tax benefits somehow! This family is already going to use seven times as much public resources (education, etc.) from California as my family (with my one son)!

Z

[stebo0728]

My apologies, stebo. I missed the "prebate" covering my questions about the toothpaste and toilet paper. What you are proposing, though, is that everyone in America get a handout from the government?

Ok first, Ill speak to the bureaucracy issue you brought up before. Lets remember, the FairTax works from a supposition that people are responsible for themselves. The government wont sit back and decide how much of this, and how much of that, it will merely calculate the average amount of FairTax that will be paid by a household when spent on necessities. This amount is then sent, monthly, to EVERY household, rich or poor, thereby removing their tax liability on necessities. The assumption here is that regardless of a family's prestige level, they will have the same needs based on necessity. If they spend above this necessity level, then they pay taxes, because their prebate didnt cover the extra spending. Whats important to realize, is that the standard deduction does exactly the same thing, it just works differently because the income tax is a different animal, but the theory is the same, remove tax liability on necessities. It just looks differently because you are actually dealing with consumption tax.

Now as far as handout, i think the latter part of my last paragraph speaks to that a bit more, because again, the prebate is replacing the mechanics of the standard deduction. This allows you to tax everything rather than try to set up exemptions and what not. The prebate makes the most sense in dealing with this.

[stebo0728]

Z, I understand where you're coming from on the household deductions, but I think most miss the point of the deductions. The point is to determine what amount of income to exempt a household from in order to remove their tax liability on necessity items. Household size has to be used for this, as the larger the household, the more necessities required, the larger the deduction needs to be. Its not profitable for people to have kids based on their deductions. Now the EIC and child tax credits add more incentive to procreate, but the standard deduction alone is not all the amazing.

Now your plan also has a standard deduction, it just looks different. The 20k number you listed, thats your deduction, and your assuming that number to be an income level at which people cant live and pay taxes. This number also would need to be based on household size, but again it shouldnt be such that it becomes advantageous to have more children.

Now one more thing, you answered my States rights issue about your plan, and you've said NO EXEMPTIONS, and thats awesome, but my question is really more of, how will you ensure we never get exemptions in the future, or that if we do, what measures will ensure that hell and high water are involved to pass them?

[szh]

Z, I understand where you're coming from on the household deductions, but I think most miss the point of the deductions. The point is to determine what amount of income to exempt a household from in order to remove their tax liability on necessity items. Household size has to be used for this, as the larger the household, the more necessities required, the larger the deduction needs to be. Its not profitable for people to have kids based on their deductions. Now the EIC and child tax credits add more incentive to procreate, but the standard deduction alone is not all the amazing.

Agreed. Although I still don't like providing incentives to have more kids! Frankly, I'd almost rather see a penalty.

Now your plan also has a standard deduction, it just looks different. The 20k number you listed, thats your deduction, and your assuming that number to be an income level at which people cant live and pay taxes. This number also would need to be based on household size, but again it shouldnt be such that it becomes advantageous to have more children.

Agreed! I was catering to the "the poor need to helped" viewpoint.

Personally, I would not have any deduction whatsoever. Not even a $20k baseline "for the poor". All citizens should contribute to the tax burden in some shape or form.

Now one more thing, you answered my States rights issue about your plan, and you've said NO EXEMPTIONS, and thats awesome, but my question is really more of, how will you ensure we never get exemptions in the future, or that if we do, what measures will ensure that hell and high water are involved to pass them?

I have no idea.

My idea is a fantasy anyway, since I do not believe that US politicians have the guts to do anything anyway.

Z

[stebo0728]

Personally, I would not have any deduction whatsoever. Not even a $20k baseline "for the poor". All citizens should contribute to the tax burden in some shape or form.

Well, my support of a deduction certainly does not come from an "appease the poor" position. My support for it comes from my agreement with the notion that no person should pay taxes on the necessities of life, and the only way to come close to that with income tax, is to have a deduction. That notion is handled a lot more logically with the FairTax prebate, but if we are staying income tax based, then we need some way to ensure that families arent paying taxes at the cost of necessities.

Now if you disagree that people should not be taxed on necessities, then no deductions makes sense, and you wouldn't like the prebate either.

[srellim234]

Now one more thing, you answered my States rights issue about your plan, and you've said NO EXEMPTIONS, and thats awesome, but my question is really more of, how will you ensure we never get exemptions in the future, or that if we do, what measures will ensure that hell and high water are involved to pass them?

The exact same thing as your proposal. You already want to exempt stocks. You want to exempt used goods. You want to issue a prebate. What's to keep lobbyists from buying off Congress to add more things to the exempt list over time? What's to keep people from changing the prebate? While maintaining a "one person, one vote" majority rule? Supermajority rules simply mean that one person's vote is worth a lot more than another's.

[stebo0728]

Now one more thing, you answered my States rights issue about your plan, and you've said NO EXEMPTIONS, and thats awesome, but my question is really more of, how will you ensure we never get exemptions in the future, or that if we do, what measures will ensure that hell and high water are involved to pass them?

The exact same thing as your proposal. You already want to exempt stocks. You want to exempt used goods. You want to issue a prebate. What's to keep lobbyists from buying off Congress to add more things to the exempt list over time? What's to keep people from changing the prebate? While maintaining a "one person, one vote" majority rule? Supermajority rules simply mean that one person's vote is worth a lot more than another's.

[EDIT]
Lets be sure we are working with the same meaning of super majority. When I say super majority, I am meaning 66% of either house of congress in order to pass a proposal, as opposed to 51%. Simple majority only requires a few "uncle toms" of one party going across the aisle, and isnt really too hard to accomplish, but super majority requires a much larger measure of bi-partisanship to accomplish.
[/EDIT]

No super majority means that a proposal has to actually make sense to a larger portion of the legislators, meaning a larger portion of constituency of that larger portion of legislators. A super majority requires a much larger measure of bi-partisanship, and i nearly unobtainable to any but the most sensible of measures. I've laid out the fact that a super majority is a tool employed by the FairTax. My question was what Z's plan employed, and if its also a super majority, then thats an acceptable answer for me.

The largest thing to fear upon implementation of the FairTax, is that possibly special interest measures could be snuck in at the onset, but if we're diligent to keep that out, then once the plan is in effect, any special interest measures will be nearly impossible to implement, and any rate increases would be equally difficult as they also depend on a super majority.

As far as exemptions in my plan, where you see exemptions, I see logical differences in what constitutes goods and services, and what doesnt. Ive already conceded that I could see tangible stock being taxed, but again considering it a good, it would only be taxed at the IPO. Any subsequent trades would be non-tax. We just seem to have a fundamental disagreement on whether to tax used items, I believe that any item taxed more than once is improper, you disagree, and thats fine, but lets frame the disagreement as how it really is, not redressing it up as exemptions and special interests. Its a fundamental principle behind the plan, that goods only be taxed at their origination, and not one time more.

[srellim234]

[EDIT]
Lets be sure we are working with the same meaning of super majority. When I say super majority, I am meaning 66% of either house of congress in order to pass a proposal, as opposed to 51%. Simple majority only requires a few "uncle toms" of one party going across the aisle, and isnt really too hard to accomplish, but super majority requires a much larger measure of bi-partisanship to accomplish....

.....The largest thing to fear upon implementation of the FairTax, is that possibly special interest measures could be snuck in at the onset, but if we're diligent to keep that out, then once the plan is in effect, any special interest measures will be nearly impossible to implement, and any rate increases would be equally difficult as they also depend on a super majority.

As far as exemptions in my plan, where you see exemptions, I see logical differences in what constitutes goods and services, and what doesnt. Ive already conceded that I could see tangible stock being taxed, but again considering it a good, it would only be taxed at the IPO. Any subsequent trades would be non-tax. We just seem to have a fundamental disagreement on whether to tax used items, I believe that any item taxed more than once is improper, you disagree, and thats fine, but lets frame the disagreement as how it really is, not redressing it up as exemptions and special interests. Its a fundamental principle behind the plan, that goods only be taxed at their origination, and not one time more.

Your supermajority- Each minority vote is worth more than each majority vote. If a vote fails even though support was 65-35, each of the 35 votes is worth almost 2 votes for the othr side. You have forced people to give up the "one person, one vote" majority rule in election. Just more erosions of civil rights by encroaching on the value of a vote. All votes should be worth the same.

Your claim "if we're diligent" is exactly the same kind of argument to be made in ANY proposal. The fact that you assume under your plan we'll be any more diligent than we currently are or we will be under any other plan shows how much you've caved in to the propaganda. That was a very naive statement on your part.

[stebo0728]

Your supermajority- Each minority vote is worth more than each majority vote. If a vote fails even though support was 65-35, each of the 35 votes is worth almost 2 votes for the othr side. You have forced people to give up the "one person, one vote" majority rule in election. Just more erosions of civil rights by encroaching on the value of a vote. All votes should be worth the same.

Ok, bear with me, Im still processing the above, but as of yet, I dont follow. Democracy is majority rule right? And a republic is one step back from democracy in that you have representative government instead of outright democracy right? So 100 Senators, 65 vote yes, 35 vote no, how is there any diffence in value between the yes votes and the no votes?

Your claim "if we're diligent" is exactly the same kind of argument to be made in ANY proposal. The fact that you assume under your plan we'll be any more diligent than we currently are or we will be under any other plan shows how much you've caved in to the propaganda. That was a very naive statement on your part.

Well I dont place any large amount of security in deligence when discussing an income tax. But thats one of the beautiful parts about the FairTax, its not an income tax, its not mucked up in legal jargon, its a % printed on every receipt you stick in your pocket. Yes I think this will endure a great deal more diligence on our parts. Look at local sales tax fights. They are usually pretty nasty, and down to the wire. We have a local option sales tax here, an additional 1% for roads, and it was up for grabs again this past month, and in most counties it only won by less than a hundred votes, and in many counties it died altogether. When you see it everyday and its right in your face, you tend to pay a bit more attention. Will there still be oblivious people? Sure, but far less I believe, call that naive if you like.

[srellim234]

100 senators. 65 yea. 35 nay. In a supermajority the nays win. You've removed majority rule and forced the majority to be ruled by the minority. 35 votes outweigh 65.

[stebo0728]

100 senators. 65 yea. 35 nay. In a supermajority the nays win. You've removed majority rule and forced the majority to be ruled by the minority. 35 votes outweigh 65.

SMH ...

65 yes, bill proceeds, yes wins

how exactly do the 35 outweigh the 65 again? Or is this failed passive aggression?

[srellim234]

In your supermajority example you required 66 votes for something to pass. Nay votes, a minority of the votes cast, get their will as opposed to the majority of the votes cast. How hard is that to understand?

EDIT: It just occurred to me that maybe you were referring to the current Senate supermajority rules. If so, just change the numbers to 59 and 41. The votes of the few, 41, outweigh the votes of the many, 59. The minority imposes its will on the majority, meaning each of their votes have more impact and value than the others.

[stebo0728]

A ha, my mistake there, we're on the same page now, long day ...

So just shy of a pass means the minority wins. I can understand that, please stand by as I formulate my rebuttal ...

[stebo0728]

Ok, heres what I've got so far. The supermajority is reserved only for certain issues. Issues that when up against a wall, are better off not passing than passing without wide enough approval. One of these areas is taxation. Its better not to increase taxes, than to increase them based on a very minor majority. The supermajority gives a sort of "tolerance threshold". A vote resulting in 51/49 can be easily engineered, where as the super majority allows for a error %. You have a valid point in minority overruling majority in a result just shy of pass, but really its more like a message that "what we're trying to do is an extremely sensitive measure, so lets ensure enough of the voting body agree in order to proceed" If the vote fails due to 1 vote, then perhaps the measure just wasnt quite as necessary, lets try again with a different approach.

That may not satisfy you, and thats ok, because you do raise a good point. But I'll ask this, what other measures could be employed to be sure every little lobbied item doesnt get a pass behind closed doors?

[srellim234]

In our current system and structure I don't think we can rein in the lobbies.

As for the minority rule on sensitive issues, what is sensitive now may not be sensitive next week. I'm definitely not in favor of giving away the full power of anyone's vote, whether I agree with their side of the issue or not.

As I've said many times, after almost 57 years on this earth and watching family in Spain and Argentina and Chile go through all the cr*p they have with governments and financial meltdowns I'm really not sure how we move forward to prevent it from happening here. We seem to be doing an awful lot of exactly the same junk that scr*wed them up. We are just about 20 or 30 years behind them.

Yes, I do believe we must try and do something. I'm not an advocate of doing nothing just because we can't fix it all in one shot. I'm not willing, however, to compromise peoples' rights in order to get it done.