Income Taxes

[H D]

My biggest objection to a consumption based Fair Tax is that it instantly raises the cost of goods by 10% to 15%. I don't think our ecomony can handle that now, or necessarily at anytime. That's just to big of a jump in what consumers pay for items.

People would have an instant bump in income of 15-25%. That means either increased spending or savings if the increase in cost of goods is only 10-15%.



States could and should still collect taxes as normal, however they want. Different states need the ability to collect taxes as necessary. Alabama's welfare needs are much different than Connecticut's whereas New York City's public works needs are much different than Sioux City. Besides, I still believe states are the testing grounds for policy. They need the ability to determine what to provide and how much it can cost the public through taxes.

 

[Richard L]

Hugh,

People would have an instant bump in income of 15-25%. That means either increased spending or savings if the increase in cost of goods is only 10-15%.

Good point! But I am not sure where you get the instant 15-25% bump in income? I assume that would be the increased take home pay without withholding taxes? That also assumes that everyone is working or has a job, or is was actually paying taxes and they were actually withholding that much? That would also require that people who are on fixed incomes like retirement pensions, Social Security, etc would also need that same 15-25% bump in income, and I think we both know that is not likely to happen. Social Security as well as Military and Government jobs base their cost of living increases on the cost of living index for the previous year...and that first year of transition could be financially catastrophic for them.



It may be that a Fair Tax may need to be phased in over a period of about 3-5 years where certain categories of goods are charged the Fair Tax each year as Income Taxes are decreased?



My 10-15% is based on the numbers that people have tossed around regarding possible Fair Tax rates added to all purchases.



I am also not sure the impact that a Fair Tax might have on the economy? If the people decided to save more, and not spend so much. I think if there was a short fall in collecting the Fair Tax, the government will just invent new taxes to make up for their excessive spending. It might be good if the Fair Tax law came with a mandatory balanced budget amendment.



I still lean more towards a Flat Tax much like the plan favored by the late TV talk show host, Tom Snyder. He always advocated a Flat 10% income tax with no exemptions and no exceptions...Government Statistics have proven that this kind of a plan would bring in more money than the government would know what to do with, and have a positive impact on the economy.



PS: I think both plans are better than the current Income Tax system....I think they both have good points and bad points....we only seem to hear the hype about the good points and nobody talks about the bad points, or even the unknown factors.



...Rich

 

[H D]

I would love a 10% flat tax.



I would love a balanced budget.



Until then, I'll just keep voting for politicians that are likely to do less damage than their opposition and keep figuring out how to keep as much of the money I earn as I can. Maybe someday I'll find some of those loopholes.:grin:

 

[Richard L]

Hmmmm? I wonder if I can claim the Federal Government as dependent on this years taxes??

:grin:



...Rich