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Thread: fair tax?

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    Featured Member Starfire's Avatar
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    Default fair tax?

    Has anyone heard of this? My parents mentioned this to me recently, apparently the idea is to abolish income taxes and then have people only pay taxes on what they buy. I think it sounds like a good idea, but I don't know that much about it.

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    Veteran Member person's Avatar
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    Default Re: fair tax?

    That form of tax is called a "consumption tax". Several countries have such things (eg http://en.wikipedia.org/wiki/Goods_a...Tax_(Australia) ) - part of the reasoning being that it simplifies the tax system and reduces the possibility of evasion. It hasn't replaced all other taxes though - that would sorta throw economic incentives out of whack.
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    Default Re: fair tax?

    And that is the problem the great fear is that it just becomes "another tax" not instead of income tax.

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    Default Re: fair tax?

    ^^^ and there is a second problem that the 'uber rich' can afford to travel to europe or asia to buy their next yacht / private jet / Maybach limo ... use it a little bit, and then bring it back to the USA as 'second-hand' goods exempt from the US 'consumption tax'. Great news for Swedish shipbuilders / french aircraft manufacturers / german carmakers, but bad news for the equivalent US industries as well as for the IRS.

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    Default Re: fair tax?

    They tax the companies when they make money, they tax you when you get paid, they tax you when you invest your pay and it makes money, then they tax you when you use your savings to buy something, and if you bought a house they tax you if you sell the thing
    Once again, the conservative, sandwich-heavy portfolio pays off for the hungry investor
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    Featured Member keira0304's Avatar
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    Default Re: fair tax?

    Melonie, do you work for the IRS?
    "Life and death, energy and peace. If I stop today it was still worth it. Even the terrible mistakes that I made and would have unmade if I could. The pains that have burned me and scarred my soul, it was worth it, for having been allowed to walk where I've walked, which was to hell on earth, heaven on earth, back again, into, under, far in between, through it, in it, and above."

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    Featured Member Sveta's Avatar
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    Default Re: fair tax?

    ^^ I like that sig quote, kiera
    ~'A Seven Nation Army Couldn't Hold Me Back'~

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    Default Re: fair tax?

    kiera, melonies point is that the luxury goods companies in America would invariably suffer as a result of the 'fair tax,' and the economy as a whole may suffer as well. seriously, if you were taxed extra on everything you bought, you would be motivated to buy less stuff, right? And you would seek to find the stuff you did buy at the lowest price, thus transferring more American dollars onto the Walton's pockets (and china) instead of American small businesses, who's prices are higher.

    Noting this theory in no way indicated support or afiliation! with the IRS. I'm sure melonie dislikes paying the tax man as much as the rest of us, and she's probably better at tax minimization as well

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    Banned Melonie's Avatar
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    Default Re: fair tax?

    actually, the issue of attempting to tax luxury goods has already been tried ... with the short-lived 'luxury tax' enacted in the early 90's. After about a year it became glaringly obvious that the US boatbuilding industry as well as other luxury industries were about to go bankrupt, with tens of thousands of good paying jobs lost.

    The reason for this of course is that while a gov't can ATTEMPT to tax rich Americans, those rich Americans can and will seek options to avoid paying prohibitively high taxes. In the case of the 'luxury tax', lots of rich Americans discovered that they could easily pay for a european vacation on the tax savings difference in price between a (heavily taxed) US yacht and an (untaxed) Swedish yacht. It even gave birth to a new european industry ... professional boat sailors who were paid by US yacht buyers to sail the boat around to a few ports (in order to make the boat officially meet the definition of 'second hand') and then sail it to the USA on behalf of the new owner (who flew home from europe).

    Along the same lines, Mercedes Benz actually established a program through US dealers where rich American buyers could fly to Germany, take possession of their new Mercedes from the factory (exempt from US luxury tax), drive it around europe as part of a planned route vacation (to put 1000 miles on the new car to qualify it as 'second hand'), and then Mercedes would transport the now 'used car' to the US dealer while the new buyer flew home.

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