Hey I was checking out huckabee and the fairtax that he advocates; getting rid of the IRS and all taxes, and introducing a flat 23% retail sales tax. It sounds like a great idea to me. What are your thoughts on this? Any chance of it actually happening if he gets elected?

He's not going to get elected. And if he did chances would still be slim because he would have to get it past congress. I would like to see taxes simplified in the US but this would likely lose popularity quickly since it's regressive (poor people spend more of their income, and would thus pay a greater %age of their income in sales tax than rich people).

from what i have read you get a credit monthly, that would reduce the tax on low income to little or nothing. I read on article on wikepedia that explains everything a lot better. If you just google fairtax it is one of the first results.

Monthly tax rebate

Under the FairTax, households of citizens and legal resident aliens would receive a "Family Consumption Allowance" (FCA) based on family size (regardless of income) that is equal to the estimated total FairTax paid on poverty level spending according to the poverty guidelines published by the U.S. Department of Health and Human Services.[1] The poverty level guidelines vary by family size and represent the cost to purchase household necessities. The FCA is a tax rebate (known as a "prebate" as it would be paid in advance) paid in twelve monthly installments equal to 23% of poverty level spending for each household size. The rebate is meant to eliminate the taxation of necessities and make the plan progressive.[3] The formula used to calculate rebate amounts would be adjusted for inflation. To become eligible for the rebate, households would register once a year with their sales tax administering authority, providing the names and social security numbers of each household member. The Social Security Administration would disburse the monthly rebate payments in the form of a paper check via U.S. Mail, an electronic funds transfer to a bank account, or a “smartcard” that can be used much like a bank debit card.[1] The Beacon Hill Institute estimated the overall rebate cost to be $489 billion (assuming 100% participation).[27]

The President's Advisory Panel for Federal Tax Reform cited the rebate as one of their chief concerns when analyzing their national sales tax, stating that it would be "the largest (entitlement program) in American history", and contending that it would "make most American families dependent on monthly checks from the federal government".[7] Based on the advisory panel's tax rate (which differs from the FairTax legislation),[27] "the Prebate program would cost more than all budgeted spending in 2006 on the Departments of Agriculture, Commerce, Defense, Education, Energy, Homeland Security, Housing and Urban Development, and Interior combined."[7] Proponents point out that income tax deductions, tax preferences, loopholes, credits, etc. under the current system was estimated at $945 billion by the Joint Committee on Taxation.[27] This is $456 billion more than the FairTax "entitlement" (tax refund) would spend to cover each person's tax expenses up to the poverty level. In addition, it was estimated for 2005 that the Internal Revenue Service was already sending out $270 billion in refund checks.[27]

Please attempt to prove this at all.

People in debt are poor. People out of debt are rich. People in debt have spent more than 100% of their income. People out of debt have spent less than 100% of their income. Thus, poor people spend more of their income than rich people spend.

Yawn. All money is eventually spent. Regressive tax argument is stupid. Poor people take more out of the system than they put it. Fek em'.

I'm guessing you didn't make it through the gauntlet of a high school education. If memory serves, you're from Alabama, right?

J

I'm sorry I said fek you. It was rude. Poverty is okay. Consider a move to a Nordic country maybe?

Is there anyone with a little bit of insight that can offer an informed opinion. I'm initially skeptical about such proposals simply since it's so radically different than the way we do things now. Of course that doesn't necessarily mean it's a bad idea so I'm trying to keep an open mind.

I also read on Huckabee's website that only new goods would be taxes. So presumably lower income families can buy used goods and avoid the taxes altogether.

how would this affect business development? seems like businesses getting tax breaks helps business development and this may limit that?

many people bootstrap new businesses, knowing if they lose a few k in the first few years, they get to write it off on their taxes, taking from their taxable income from normal job...take away that benefit and some may not take the risk as easily/often

note: i may be way off here; i haven't researched fair tax

the more i learn about this the more it excites me. If course I am self-employed so i obviously would greatly benefit. But this plan has the endorsements of some very knowledgable and respected people. and the arguments against it just don't seem to hold any water. Its main detractors seem to be those that make their living in one way or another from our jacked up tax code. No suprise there. Anyone that passed this would be my hero...

as far as business, this would be huge. Most any business pays around 30% tax minimum...

it helps established businesses making a profit

it seems like it would hurt start-ups that are losing money

is this a bad assumption?

very quick and informative read...

I have a feeling that retirees living off non taxable retirement accounts are not going to like this

and retirees are the most powerful voting group

yeah those are some good points. Nice thing is the big businesses would be all for this, unless there is something i am totally missing. They could do a lot to get it passed i guess.

It depends on the business.

The tax code is the way it is partially because industries pay lobbyists to convince Congress to make changes to the tax code that benefits them in some way.

With Fair Tax, those benefits go away. If the net result is that someone has to pay more, they are going to fight against it.

Why wouldn't they?

because the money they were supposed to get tax free will now be taxed when they buy things. Although I guess there could be some sort of exmeption for accounts that were supposed to be tax free.

You have to keep in mind is that would make some people's incentive work less. Working 40 hours a week at 6 bucks an hour is only 240 or 960 a month, compared to what you get for doing nothing it may make sense to beg and make up the differential. Just a thought. Plus, how much money would this type of system generate? What programs would you cut?

I love the idea of getting rid of all the dead weight tax men of the country and the IRS. Yes there are a lot of kinks that must be worked out but I like the idea. I even like the idea of not a sales tax, but tax the business revenue directly. So when you go to taco bell you might pay $1.50 for a taco and the government gets $0.50, but you only see the $1.50.

Why not just a flat rate income tax?

There's no regressive BS (regressive doesn't just apply to the very poor; a family that makes $60k/yr will tend to spend a larger percentage of income than a family that makes $100k/yr)...

...it will be cheaper and easier to implement (you don't have to go through all the VAT BS that Europe is wading through right now: VAT police, absurdly strict records, tax arbitrage for multinationals, etc)...

...easier to enforce with less fraud (the repeat nature of income payments makes cheating harder, compared to the large marginal incentive for 1-time cheating for large purchases in a VAT format)...

...and it is more poltically feasible (you don't have to screw with tax codes nearly as much since the income tax is already in place and the generally accepted way for the Federal Gov't to raise revenue).

IIRC, the Economist estimated a couple years ago that the US could maintain its curent tax level with a flat, no-exceptions tax rate of below 30%.