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Tax Day Special from INGBA!


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#11 pstall

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HUDDLER

Posted 15 April 2010 - 06:47 PM

I'm iffy on a flat tax. But, I do like revenues from LOWER taxes. So with that in mind somehow someway a wise study needs to be done to be able to project revenue lost or gained.

#12 ItsNotGonnaBeAlright

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Posted 15 April 2010 - 07:25 PM

The fair tax shifts the tax burden to the middle class who traditionally spend the highest percentage of their income. Not to mention the 6 months national economic collapse as prices soar during the span of time while inventory surpluses with embedded taxes are sold off before new, no embedded tax products can be sold.

It's a perfect tax plan for someone in their late 50s, early 60s who has already made it, has no kids to feed and has the time or wherewithal to send expense reports each month to the federal government for their fair tax rebate check.

Flat tax it. Everyone pays the same percentage of their income and we go about legislating that the government must live within our means.


First, the idea of percentage of income shifting the tax burden doesn't hold up. For conversation sake lets say that a person making $1,000,000 a year spends 10% of their income in a year while a person who makes $20,000 a year spends 90% of their income in a year. That equals out to $100,000 and $18,000 spent respectively, of which $23,000 and $4140 is fair tax.

Conversely, a 12% flat tax on income yeilds a taxation of $120,000 and $2400 respectively in flat tax. Wow, sounds great right? No, because under the fair tax, each person takes home exactly what they made and spent exactly what they wanted. Meanwhile, under our flat tax scenario, the rich guy takes home $120,000 less while the middle class guy goes home with $400 short of what he spent in a year under the fair tax without the benefits of lower overall taxation under the fair tax.

It's a bit more complicated than that, I know, but do you see the problem in principle?

As for that economic collapse, you do realise that all currently inventoried items when the fair tax is enacted are exempted from being sold with the sales tax? What happens after that, you say? Why would those new products lower in price? Well, there's no gaurantee that they would, that's true. But I know of thousands of businessmen who are begging to have the chance to be the first to lower their prices by 20% on their competitors.

Also, expense reports have nothing to do with you sending any info to the federal government and everything to do with an already calculated poverty level.

Edited by ItsNotGonnaBeAlright, 15 April 2010 - 08:09 PM.


#13 ItsNotGonnaBeAlright

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Posted 15 April 2010 - 07:44 PM

Addendum: That $2400 versus $4140 figure looks sexy for the middle class guy, but it still doesn't address the issue of embedded taxes. Follow me here, and lets say that embedded taxes fall from the current estimates of 22% to around 10% of a final sales price.

Our middle class hero took home $17,600 after the flat tax is subtracted. Then, again, he spend 90% of his income through the year, about $15,840. Embedded taxes from that $15,840 dollars spent would be, at even a 10% estimate, $1,584. Added to the income tax he spent, he got away with spending a total of $3,984. A full $156 less than the fair tax.

But wait...

Under the fair tax, he managed to save $2,000 of his original $20,000 income. Under the flat tax, he saved $1760. So he saved $156 to lose $240 in possible savings.