Replacing the income tax with a consumption tax

[Mormon Red Death]

Originally Posted by DirtyHippieUTE

Is this the time period when I'm still trying to figure out the adult lock my wife has set on the tv?

Prebate:
The FairTax prebate is a rebate of taxes paid on spending up to the poverty level. It is paid, in advance, on a monthly basis and is equal to the FairTax rate times the family consumption allowance.

[il Padrino Ute]

Originally Posted by Detroitdad

I agree that living within ones means is important. But why should the means of the poor to purchase a car(in this hypothetical) be effected more greatly than the means of the wealthy, as it necessarily would in a consumption tax based economy?

Would that tax affect the ability for the poor to buy a less expensive car or an expensive car? Perhaps I'm odd, but I've always been of the belief that the only reason to have a car is to get from point A to point B.

Again, and as you agreed, it's about living within the means of an income, not making it difficult for some to purchase consumer goods and services.

[DirtyHippieUTE]

Originally Posted by Mormon Red Death

Prebate:
The FairTax prebate is a rebate of taxes paid on spending up to the poverty level. It is paid, in advance, on a monthly basis and is equal to the FairTax rate times the family consumption allowance.

Ah... I'll have to break out my Federal Taxation outline during the postbate.

[il Padrino Ute]

Originally Posted by DirtyHippieUTE

It's not that simple... Even if the poor guy does live within his means he still has to consume certain goods and the cost of those goods is not adjusted based on who is buying them (rich or poor). If you take a typical budget for school clothes, books, etc, the percentage of the buyer's total income will be much greater if he's poor.

Think of it this way... Everybody has to put gas in their car. Everybody is paying the same tax on gas. When gas prices go up, who feels the pinch more? The rich guy or the poor guy?

If the tax code were all this way, the poor would only get poorer while the rich got richer (not that that isn't happening now).

This is why I believe there should be particular exemptions that I posted previously: food, clothing and shelter. These are needs, not wants. If a consumer good is not a need, then tax it.

I can see the point you're making, but I disagree. Yes, when the gas prices go up, it affects the poor more than the rich; however, if you need to spend the money on fuel, cut back on something that isn't necessary.

I may come across as harsh and uncaring, but I don't mean to sound that way. I just believe in financial responsibility of the individual. And if one is poor, one can change that in a free market. It's all in the desire to make life better for ones self.

[Mormon Red Death]

Originally Posted by DirtyHippieUTE

Ah... I'll have to break out my Federal Taxation outline during the postbate.

a family of four gets like $900 a month

[Mormon Red Death]

whoops I am wrong... more like $400 a month for a family of four

[Mormon Red Death]

The FairTax eliminates taxes on essential goods and services (as measured by the poverty level expenditures estimated by the Department of Health and Human Services) by sending a rebate check to each taxpayer every month. The amount of the check is determined by multiplying the FairTax rate times the poverty level guideline. This is a well-accepted, long-used poverty level calculation that includes food, clothing, shelter, transportation, medical care, etc. Under the FairTax Plan, the poverty guidelines are adjusted to eliminate the marriage penalty. These adjusted guidelines are called the Annual Consumption Allowance. See Figure 1:

FAQ-2007 Prebate Chart-lower 48

Because of the rebate (or prebate, since the check is sent each month in advance of expenditures), people at or below the poverty level pay no federal taxes. This is why we say the FairTax untaxes the poor. But all American taxpayers will benefit from this, including seniors on fixed incomes and young people just starting out. As the chart shows, a couple will pay no federal taxes on the first $20,420 they spend.

[Mormon Red Death]

I don't know why the chart doesn't show up..

[DirtyHippieUTE]

Originally Posted by il Padrino Ute

I can see the point you're making, but I disagree. Yes, when the gas prices go up, it affects the poor more than the rich; however, if you need to spend the money on fuel, cut back on something that isn't necessary.

Unfortunately, you can only cut back so much. I (like you I assume) am really annoyed when I see people who I KNOW are on some sort of assistance buying a big TV or a PS3 or a new car, but those people aren't really the "poor" I'm worried about. You can't make laws based on the people who abuse the system. You need to address those who are truly in need.

I have had the sad experience of meeting and trying to work with people for whom walking to work is required because bus fare cuts in to the children's milk money.

[Mormon Red Death]

Originally Posted by DirtyHippieUTE

Unfortunately, you can only cut back so much. I (like you I assume) am really annoyed when I see people who I KNOW are on some sort of assistance buying a big TV or a PS3 or a new car, but those people aren't really the "poor" I'm worried about. You can't make laws based on the people who abuse the system. You need to address those who are truly in need.

I have had the sad experience of meeting and trying to work with people for whom walking to work is required because bus fare cuts in to the children's milk money.

under the fair tax those people would receive their whole pay check plus the ~$450 a month for the prebate. Seems to me that the poor would be a lot better off