another issue I am learning more about. I have been a self-employed single parent for over a decade and my income level hasn't changed much...and its not because I don't work hard! How would FairTax affect me?
Quite a large group of Congresspeople from both sides of the isle have put together an idea for revamping the tax system in the US. Check out FairTax.org.
I understand so little about the whole economic system, that I wouldn't even want to attempt to explain it to you. Hence the reason for this forum thread.
I was hoping others that know more would help me get some perspective.
It is a consumption tax. Pay no taxes except at the cash register. Think they use it in socialist Europe. Would probably pay like 30 cents on every dollar. Same rate for everybody. No IRS tax. No deductions. So seems to me if you spend most or all of your income at the cash register, food, gas, clothes, etc., you will pay taxes of 30%, which is a little less than what the rich pay now. However if you are rich, and only buy about the same as the poor to live, then taxes could be as little as, less the one percent, meaning they would have a
choice, as to how much they would pay. There would be offsets for the poor, but that seems to me to be the basic formula.
It doesn't sound like it will ever fly, especially with a Democrat in the White House and a majority in Congress. It would be a very radical change which would bring a certain amount of uncertainty and disruption. Also, despite some of the claims, it would be a regressive tax, bearing more heavily on middle and lower income taxpayers.
But it would be a nice big change, and could be tweeked for greater benefit to all.
But couldn't it become something better that what we have now...with so much waste and expenditure on pushing paper, red tape, bureaucratic time wasting, etc...?
I like gradual change...and big ones... if the pieces have been sorted out before hand and planned on to the best degree possible to cover potential problems that could come up.
I hate the fact that my taxes goes to pay for things I am morally and ethically against...because part of my spiritual beliefs, which have greater authority than man's government, have more authority than man's. I would like more equality...as above, so below. To at least have my choice and rights as a citizen.
I personally think that this would be a good idea. It would put the indiviual back into the decision wether or not to pay taxes. This would also stimulate savings growth. Those individuals that spend and spend like theres no tomorrow would stimulate economy. Either way it puts power/money back into the hands of the people to decide what to do with it.
FairTax is in fact a 30% flat rate, but if you're going to compare it to our current system to get side-by-side numbers we can discuss it works out to be about 23%, tax-inclusive, after all... it's not as if we're going to be spending every cent of our income at 30% on stuff. So for all intensive purposes, 23% works well for now. The numbers work out, and calculations abound as to why this is so, but I'll stick to the basics here.
So let's assume we have a fair tax situation, and every worker now has whatever% more income than they previously had. But the downside to this is that everything is now going to be 23% more expensive. The worker is in no way better off than when he started.
Now 23% taxes sounds like an incredibly reasonable rate, yes? But that's because we don't all understand what taxes truly are, and your true tax rate is probably well under this. What I call a "true" tax, i.e. government revenue, is oftentimes BELOW 23%. What you see in your paycheck is not true tax, but a combination of taxes, deductions for medical, etc. The payroll deductions are not true tax, as they are supposedly for use in an account, benefits to be drawn from it later. Your true tax rate (2007 figures) is 10% up to 7,824, 15% from 7,824 to 31,849, and 25% from 31,850 to 77,100. This means if you make $50,000 a year you pay $8,924 in taxes, or roughly 17.8%. FairTax just screwed you, pardon the language. In fact, anyone who is making under $120,000 a year gets screwed in this way (at which, by our current tax bracket for 2007, the overall rate would be 23%.)
I know that FairTax wants to get a policy so up to the poverty level you don't have to pay the sales tax, but the unfortunate thing about this is in the end the middle class bears the burden. In a FairTax system the wealthy don't get to pay their 33% tax bracket on their upper-levels of income, and the lower class doesn't pay taxes at the register. Where is this revenue going to be generated? You guessed it. Anyone who earns less than $120,000 a year.
Now we've lost a good deal of our income to more expensive goods. The middle class is supporting the lower and upper classes. And so we begin to save. We don't spend, we don't buy what we don't need, and we squirrel away our money. Economic contraction is imminent, and with that we get a recession because recessions are based on consumer confidence. If we see signs of ecnomic contraction we pull out of markets and IRA's and 401(k)'s and go into cash. Or banks, with a measly 2% return. Either way, no one's happy.
Another assumption is that wages would remain the same. Sure, they're not going to knock you down a notch from your current rate of pay. But it's been relatively proven that employers pay more to their employees to compensate for after-tax income being less due to the fact that consumers think of their income as cash post-tax (Dahl and Ransom, 2002; etc.) Employers would hire people on at lower levels, because they no longer need to adjust the gross income to match post-tax levels.
Also, a price change is always eventually balanced out by wages, and vice versa. It would seem at first that FairTax would equal out, but a closer examination would tend to show that as prices increase (by 23%, for simplicity sake) and wages would now increase (by 23%) it all balances out. But as is shown earlier, no one pays 23% in the taxes FairTax is targeting in this country unless they make $120,000 or more. If prices increase by 23%, and you earn $50,000 a year and your wage increase by 17.8% you begin to see the discrepancy. Your wages, essentially, fell.
Wow, I rambled on a bit, I just wanted to add a couple points, but I wrote a mini-thesis. I also wanted to get into the Federal Reserve and how their monetary policies would affect everything, etc. etc. etc. If anyone is still interested, I can add more to this topic, and perhaps publish it all in a Hub.
But please, feedback is always welcome.
Thanks for your time,
Jarrod Haze, M.P.P. 2007, Economic Policy and Quantitative Analysis
Irving B. Harris Graduate School of Public Policy
University of Chicago
Also, for a discussion of immigrant taxes and how we're benefiting currently, please:
http://hubpages.com/_jarrodhaze/hub/Illegal-Immigrants
And I used Juan as the immigrant, and John as the American. Please do NOT send me nasty e-mails calling me a racist, I've received so many of them so far. Keep comments and e-mails about the subject matter. I always appreciated feedback or critiques, after all, that is the only scholarly way to reach better conclusions.
Thank you Jarrod for your input. More would be good.
With all the economic minds out there, and the desire for most (I hope, I am not too nieve) to do the best for everyone of every income bracket, why haven't we come up with a plan that will work to do said?
What needs to be said and done to change things? Is the middle class going to have to stand up and yell to be heard?
by ga anderson 9 years ago
Much is heard of a demand that corporations and the wealthy pay their "fair share" of taxes, but I have heard little of what that share should be.With only a single restriction; that the discussion is about legal tax actions, what should that "fair share" be?One could say that...
by Scott Belford 13 days ago
This topic has come up recently across several forums, so I though I would start on specifically for this subject.The question comes up when mainly Democrats and some Independents complain that the wealthy do not pay their fair share in taxes. The rebuttal ranges from they already do to why should...
by Alex J. Reissig 12 years ago
Would you support a flat 15% income tax?Would you support a flat 15% income tax in this country? Other than a personal deduction (possibly in the neighborhood of 25k per individual/50k per couple) there would be no deductions.
by ptosis 7 years ago
yea or nea? Are you HAPPY! that the richest .01% get less taxes? I mean - they did earn it didn't they?Do they just work harder? Is everybody else just stupid and lazy? Hard work will only get you so far if circumstances aren’t amenable. Do you believe that “If you’re still poor at 35, you deserve...
by taburkett 12 years ago
The current tax code is detestible.Herman Cain recently introduced the 999 plan.Other politicians have introduced many plans previously.We have gotten nothing from the self-serving politicians.Do you believe we need a solid citizen centered plan?A plan has been formulated called the TRUE TAX that...
by SparklingJewel 13 years ago
I don't claim to be a big financial, economics know it all (how could anyone, frankly, but the link here is a conservative version of the current presidents tax creation scenario for next yearcan anyone that monitors similar information from the liberals post a comparison for us all to learn...
Copyright © 2025 The Arena Media Brands, LLC and respective content providers on this website. HubPages® is a registered trademark of The Arena Platform, Inc. Other product and company names shown may be trademarks of their respective owners. The Arena Media Brands, LLC and respective content providers to this website may receive compensation for some links to products and services on this website.
Copyright © 2025 Maven Media Brands, LLC and respective owners.
As a user in the EEA, your approval is needed on a few things. To provide a better website experience, hubpages.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.
For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://corp.maven.io/privacy-policy
Show DetailsNecessary | |
---|---|
HubPages Device ID | This is used to identify particular browsers or devices when the access the service, and is used for security reasons. |
Login | This is necessary to sign in to the HubPages Service. |
Google Recaptcha | This is used to prevent bots and spam. (Privacy Policy) |
Akismet | This is used to detect comment spam. (Privacy Policy) |
HubPages Google Analytics | This is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy) |
HubPages Traffic Pixel | This is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized. |
Amazon Web Services | This is a cloud services platform that we used to host our service. (Privacy Policy) |
Cloudflare | This is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy) |
Google Hosted Libraries | Javascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy) |
Features | |
---|---|
Google Custom Search | This is feature allows you to search the site. (Privacy Policy) |
Google Maps | Some articles have Google Maps embedded in them. (Privacy Policy) |
Google Charts | This is used to display charts and graphs on articles and the author center. (Privacy Policy) |
Google AdSense Host API | This service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy) |
Google YouTube | Some articles have YouTube videos embedded in them. (Privacy Policy) |
Vimeo | Some articles have Vimeo videos embedded in them. (Privacy Policy) |
Paypal | This is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy) |
Facebook Login | You can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy) |
Maven | This supports the Maven widget and search functionality. (Privacy Policy) |
Marketing | |
---|---|
Google AdSense | This is an ad network. (Privacy Policy) |
Google DoubleClick | Google provides ad serving technology and runs an ad network. (Privacy Policy) |
Index Exchange | This is an ad network. (Privacy Policy) |
Sovrn | This is an ad network. (Privacy Policy) |
Facebook Ads | This is an ad network. (Privacy Policy) |
Amazon Unified Ad Marketplace | This is an ad network. (Privacy Policy) |
AppNexus | This is an ad network. (Privacy Policy) |
Openx | This is an ad network. (Privacy Policy) |
Rubicon Project | This is an ad network. (Privacy Policy) |
TripleLift | This is an ad network. (Privacy Policy) |
Say Media | We partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy) |
Remarketing Pixels | We may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites. |
Conversion Tracking Pixels | We may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service. |
Statistics | |
---|---|
Author Google Analytics | This is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy) |
Comscore | ComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy) |
Amazon Tracking Pixel | Some articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy) |
Clicksco | This is a data management platform studying reader behavior (Privacy Policy) |